THE INCORPORATED OWNERS OF LUNG ON BUILDING v. OCCUPANTS AND ANOTHER

HCMP 2576/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2576 OF 2008

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J U D G M E N T

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1.  These proceedings were commenced by the Incorporated Owners of Lung On Building (“the Incorporated Owners”) under Order 113 of the Rules of the High Court.  The Incorporated Owners seek to recover possession against the occupants of a portion of the Roof on which a structure was erected, which structure (“the Roof Premises”) is identified by an area coloured pink on a Plan of the Roof attached to the Originating Summons.

2.  Lung On Building (“the Building”) is situated at Nos. 173-179 Pei Ho Street and No. 45 Un Chau Street, Kowloon.  A Deed of Mutual Covenant was made in December 1967 containing provisions to regulate the rights and liabilities of the co-owners of the Building.

3.  Undivided shares are allocated to the owners of the units on the Ground Floor to the 10^th Floor of the Building.  It is clear from the Deed of Mutual Covenant that the Roof is part of the common area of the Building over which no owner is entitled to claim exclusive possession.  It follows that no one would be entitled to claim any right to exclusive possession of the Roof Premises.

4.  When the matter came before me on 18 May 2009, I ordered that Mr. Fung Yuk Man, being the person presently occupying the Roof Premises to be joined as the 2nd Defendant in these proceedings: Order 113, rule 5.  In light of the evidence filed by Mr. Fung, I have further directed a hearing to enable the court to receive oral evidence with a view to finally disposing of the dispute between the parties: Order 28, rule 4.

5.  Such a hearing took place on 12 August 2009.

6.  The Incorporated Owners were represented by Mr. Kevin Li at the hearing.  Mr. Shum, its current treasurer, gave evidence on their behalf.  Mr. Shum has been a member of the management committee since about 1999, and I am satisfied that he is familiar with the affairs of the Incorporated Owners. 

7.  On the other hand, Mr. Fung testified in person in defence of the possession claim against him.  Although he was not legally represented, Mr. Fung was well able to articulate his arguments, and has produced a number of documentary evidence in support of his defence.

8.  Mr. Fung purchased the Roof Premises in May 2000 from the then “owner”, one Mr. Leung, at the price of $150,000.  The Roof Premises was a self-contained unit although its supply of water and electricity was charged to the same meter which served the unit immediately below, that is, Flat G on the 10^th Floor.

9.  At the time, the owner of Flat G on the 10^th Floor was one Mr. Chiu Sung Fai (趙崇輝) whom, I was told, was the then secretary of the management committee of the Incorporated Owners.  Mr. Chiu was aware of Mr. Fung’s acquisition of the Roof Premises. 

10.  Between Mr. Chiu and Mr. Fung, an apportionment account was kept which recorded Mr. Fung’s share of the water and electricity charges, as well as Mr. Fung’s contribution towards the maintenance costs of the Building between 2001 and 2003. 

11.  Mr. Chiu sold his unit in 2004.  Apparently, Mr. Fung was unable to secure the same arrangement with the new owner, and he therefore applied to the relevant authorities for separate utility meters.

12.  As it appears from the various documents produced by Mr. Fung, not only had the Incorporated Owners given their consent to his application for separate utility meters, the Incorporated Owners had in fact received payment from him in connection with his applications.

13.  In addition, ever since Mr. Fung had moved into the Roof Premises in 2000, the Incorporated Owners had charged him monthly management fees in the sum of $355, which he had duly paid. 

14.  In 2008, renovation works were carried out at the Building including the replacement of the lifts.  According to Mr. Fung, which I accept, there was an occasion in October 2008, the current chairman of the management committee, Mr. Lam, called at his Roof Premises and suggested to Mr. Fung that he should contribute $10,000 towards the renovation costs.  Mr. Fung indicated his agreement to the suggestion.

15.  However, before Mr. Fung had actually made any payment, he received a letter from the solicitors of the Incorporated Owners in November 2008 demanding him to vacate the Roof Premises and deliver up possession. 

16.  In light of the above, several issues arise and require determination in this matter:

(a) Whether Mr. Chiu’s knowledge of Mr. Fung’s acquisition of the Roof Premises should be imputed to the Incorporated Owners; and if so, what effect does such knowledge have on the Incorporated Owners’ claim against Mr. Fung;

(b)    Whether Mr. Chiu’s receipt of payment from Mr. Fung for water and electricity charges as well as a share of the maintenance costs constituted a bar to the Incorporated Owners’ claim;

(c) Whether the Incorporated Owners was precluded from recovering possession against Mr. Fung:

(i)  by reason of their having charged and received management fees from Mr. Fung over the years;

(ii) by reason of their having consented to and charged Mr. Fung in connection with his application for separate utilities meters in 2004;

(d)    Whether the Incorporated Owners was precluded from recovering possession by reason of Mr. Lam’s suggestion that Mr. Fung was to contribute towards the maintenance costs in 2008.

17.  On the first issue, Mr. Fung’s argument is that because of Mr. Chiu’s knowledge of his acquisition of the Roof Premises, the Incorporated Owners should be deemed to have consented to his occupation of the unit, and therefore cannot now withdraw such consent. 

18.  The difficulty with the argument here is that there is nothing to support the contention that Mr. Chiu’s knowledge should be imputed to the Incorporated Owners.  While I have no doubt that Mr. Chiu, because of his having to apportion the utility accounts with the occupant on the Roof Premises, would naturally be keen to know of any changes in the “ownership” of that unit, such knowledge is not to be imputed to the Incorporated Owners just because Mr. Chiu also happened to be a member of its management committee at the time.  My view is that the Incorporated Owners cannot be regarded as having acquired the knowledge through Mr. Chiu as to Mr. Fung’s purchase of the unit.  Hence, no question of the Incorporated Owners having consented to Mr. Fung’s occupation of the Roof Premises arises.  Mr. Fung fails on this point.

19.  For the same reason, Mr. Fung also fails on the second issue.  The apportionment with Mr. Chiu of the utility accounts and the contribution towards the maintenance costs was clearly a private arrangement between Mr. Chiu and Mr. Fung.  Whatever arrangement between Mr. Chiu and Mr. Fung on such apportionment did not involve the Incorporated Owners, and any such arrangement does not in law afford Mr. Fung a defence to the claim by Incorporated Owners for possession.

20.  The third issue gives rise to consideration of the questions of equitable estoppel and waiver. 

21.  For the present purpose, it matters not whether the question should be characterized as promissory or proprietary estoppel.  To rely on either specie of estoppel, it is necessary for Mr. Fung to establish that the Incorporated Owners had represented to him that he would be entitled to continue to occupy the Roof Premises despite the fact that the unit was an encroachment on the common area of the Building.  Mr. Fung would further have to establish that he had altered his position to his detriment in the expectation or belief that the Incorporated Owners would indeed agree to his continued occupation of the Roof Premises.

22.  In 2004, nothing suggests that the Incorporated Owners had given any serious thought as to whether Mr. Fung could rightfully occupy the Roof Premises when they endorsed Mr. Fung’s application for separate utility meters.  But whether or not they appreciated the full implication of their act, such endorsement was clearly an expression of their consent in respect of Mr. Fung’s occupation of the part of the Roof in question.  I think in the circumstances of the present case such consent did give rise to a licence in respect of Mr. Fung’s occupation of the Roof Premises.   

23.  That is, however, not to say that Mr. Fung is now immune from any action of the Incorporated Owners to recover possession.

24.  Such a licence is, of course, determinable.  And I find that it was indeed determined at the latest by the letter from the Incorporated Owners’ solicitors in November 2008.  (In this connection, I am not satisfied that the earlier notices, dated April and August 2005, had been brought to Mr. Fung’s attention, and these earlier notices were hence not effective to terminate his licence.)

25.  Therefore, even though Mr. Fung may well have a defence against him for trespass while the licence subsists, in my view he is no longer entitled to such a defence as from November 2008.

26.  Mr. Fung further relies on his payment of management fees which, it seems, had continued until at least February 2009.  The question is whether the act in demanding and accepting management fees ought reasonably to be understood to amount to a representation by the Incorporated Owners that Mr. Fung would have a right to continue his occupation of the Roof Premises.   

27.  I do not think so.  The fact remains that Mr. Fung is not only occupying the Roof Premises, he also uses the lift and is enjoying the common amenities of the Building, for example, the cleaning and lighting of the common passageway.  The fact that he has been asked to share in the management expenses is not, in my view, a promise or representation by the Incorporated Owners that they would not recover possession against him, nor could it reasonably have created any such belief or expectation on his part.

28.  A fortiori, such demand for payment of expenses could not reasonably be interpreted as a promise or recognition that he enjoyed any proprietary right or interest with respect to his occupation of any part of the Roof. 

29.  Furthermore, I do not think it is open to him to argue that his payment of the management fees was an act to his detriment.  He was merely paying for what he enjoyed.  Any defence of estoppel must fail.

30.  For the same reason as above, it is also not open to him to argue that the Incorporated Owners has waived their right to recover possession against him.  Any argument based on waiver also fails.

31.  On the fourth issue, while I accept as a matter of evidence that Mr. Lam did ask Mr. Fung in October 2008 for contribution towards the maintenance costs of the Building, as Mr. Fung had not in fact made any payment, no estoppel arises.  Mr. Fung’s agreement to pay for such expenses does not assist him in any way in his defence against the claim for possession by the Incorporated Owners.

32.  For the foregoing reasons, the Incorporated Owners are entitled to judgment in this matter.  There will be an order that the Incorporated Owners do recover possession of the portion of the Roof of Lung On Building as more particularly identified by the area coloured pink in the Plan attached to the Originating Summons herein.

33.  There will also be an order nisi that Mr. Fung should pay the costs of the Incorporated Owners of these proceedings, to be taxed if not agreed.