THE INCORPORATED OWNERS OF MEI FOO SUN CHUEN - STAGE VI v. BILLION HAPPY INVESTMENT LTD AND ANOTHER

CAMP 291/2019

[2020] HKCA 726

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 291 OF 2019

(ON AN INTENDED APPEAL FROM LDBM NO 155 OF 2018)

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JUDGMENT

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Hon Yuen JA (giving the Judgment of the Court):

1.  This is the 2^nd Respondent’s application for leave to appeal from, and stay of execution of, a Judgment of the Lands Tribunal given on 31 July 2019 (“the Judgment”). Although the Judgment was written in Chinese, both the 2^nd Respondent and the Applicant are now legally represented and have provided written submissions in English only. Accordingly, this Judgment is written in English. The 1^st Respondent is not a party to the proposed appeal and has not been served with the application for stay.

Background

2.1.  In LDBM155/2018, the Incorporated Owners of Mei Foo Sun Chuen Stage VI (“IO”) instituted proceedings against the 1^st Respondent, the owner/landlord (“the Owner”) of a shop on a podium of the development (“the Shop”), and the 2^nd Respondent, the tenant of the Shop (“the Tenant”), for breach of the Deed of Mutual Covenant (“DMC”), the Supplemental DMC (“Supp DMC”), the House Rules and the Building Management Ordinance Cap 344 (“BMO”), arising out of the Tenant’s installation of¹ (1) a shopfront, and (2) an advertisement signboard. 

2.2.  Photographs of the shopfront were exhibited as “LCM-10”.  It comprised of boards which extended in front of the wall of the Shop and occupied common area. 

2.3.  Photographs of the advertisement signboard were exhibited as “LCM-14”.  It comprised of an extra board attached to a vertical frame of a window pane of the Shop, so that when the board is pushed outwards, it is perpendicular to the external wall.  The board had words and an arrow on it describing the nature of the Tenant’s business and the access route to the Shop. 

Proceedings

3.  In relation to the shopfront, the IO alleged that²:

(1)  the design had not received prior approved of the IO or its manager, contrary to cl.4(e) Second Schedule of the DMC³, and cl.5 Supp DMC⁴; and/or

(2)  it had altered the wall or facade of the building, contrary to cl.3 Supp DMC⁵; and/or

(3)  it protruded beyond the exterior boundary of the Shop, contrary to cl.8 Supp DMC⁶; and/or

(4)  it incumbered and converted common parts to private use, contrary to cl.22 Supp DMC⁷.

4.  In relation to the advertisement signboard, the IO alleged that⁸:

(1)  it was a “protruding advertisement sign with lighting on the window of the Shop” and it extended beyond the exterior boundary of the Shop, contrary to cl.8 Supp DMC⁹; and/or

(2)  as no approval for its installation externally had been obtained, it was contrary to Rule 19 of the House Rules¹⁰.

5.  The IO alleged that its management company had issued oral and written warnings to both the Owner and the Tenant soon after it discovered those installations.

6.  The Owner’s defence was that after receiving the IO’s warnings, it had requested the Tenant to remove the installations, but the Tenant had refused to do so.

7.1.  As for the Tenant’s defence, in relation to both the shopfront and the advertisement signboard, its first line of defence was that plans showing these installations had been provided to the management company on 11 August 2017, and there had been no objection.

7.2.  The Tenant also relied on acquiescence, in that the signs for a café and a ballet school had also been affixed to common parts in the same development.

7.3.  The Tenant also denied that the shopfront and the advertisement signboard breached the provisions of the DMC, Supp DMC and House Rules as alleged.

8.  The IO was legally represented, but the Owner and the Tenant were not.  In 2018-2019, there were a number of pre-trial reviews (“PTR”) before the Presiding Officer (“PO”) of the Lands Tribunal¹¹.

9.  The trial took place on 16 and 24 May 2019.  Witnesses were called by the IO.  The Owner was represented by its authorized representative Mr Chan, and the Tenant was represented by its authorized representative Madam Ng. 

The Tribunal’s Judgment

10.1.  In the Judgment¹², the Tribunal rejected the Tenant’s evidence that plans showing the installations had been provided in advance to the management company which had not objected to them: Judgment [25] - [31].

10.2.  The Tribunal also rejected the defence of acquiescence, as it found that the IO had given special permission for the signs of the café and ballet school to be maintained during a major renovation in 2010: Judgment [56].  The Tribunal also found that the management company had given both oral and written warnings to the Tenant soon after the latter installed the shopfront and advertisement signboard in 2017: Judgment [58] - [63].

10.3.  In relation to the shopfront, Madam Ng had admitted in cross-examination that it did occupy common parts: Judgment [35], and that the Tenant had not received written approval from the IO or the management company for its installation: Judgment [38].  Accordingly, the Tribunal found that it breached cl.4(e) Second Schedule of the DMC and s.34I of the BMO: Judgment [39].

10.4.  In relation to the advertisement signboard, Madam Ng had agreed in cross-examination that its main purpose was to attract customers and that it had elements of advertising.  The Tribunal found that whether it could also function as a window or not, its main purpose was to attract customers and it clearly had elements of advertising: Judgment [48].  Accordingly, the Tribunal found that it breached Rule 19 of the House Rules: Judgment [49] and cl.8 Supp DMC: Judgment [50].  The Tribunal also found that even if it were not regarded as a signboard or an advertisement, it still altered the external appearance of the building, and thus breached cl.8 Supp DMC: Judgment [54].       

10.5.  The Tribunal dismissed the IO’s claim against the Owner but gave a mandatory injunction requiring the Tenant to remove the said shopfront and advertisement signboard within 3 months. An order nisi was made for the Tenant to pay the IO’s costs (including reserved costs) with certificate for counsel.

Post-Judgment events

11.1.  On 12 August 2019, the Tenant¹³ issued a summons to vary the costs order nisi.  A hearing was held on 20 August 2019 during which the PO gave directions.

11.2.  On 26 August 2019, the Tenant¹⁴ issued a summons for leave to appeal and for a stay of execution.

11.3.  After hearings on 19 September 2019 and 4 October 2019, the PO gave a Decision on 1 November 2019 refusing both applications.

Applications to Court of Appeal

12.1.  On 15 November 2019, solicitors for the Tenant filed a summons in this court for leave to appeal and stay of execution.  The summons annexed a draft Notice of Appeal which contained different grounds from those put forward before the Tribunal. 

12.2.  In support of the summons, Madam Ng filed an affirmation in which she alleged that the PO had failed to adjudicate the matter in an impartial manner, and had interfered with the course of the hearing.  Madam Ng deposed that her solicitors would be requesting the Tribunal for audio recordings of part of the proceedings.

13.  Unfortunately, it was not until 21 May 2020 that all the requested audio recordings were made available¹⁵.  On 11 June 2020, Madam Ng filed a supplemental affirmation exhibiting audio recordings of certain hearings.  There was also provided to the court a draft “Amended” Notice of Appeal of the 2^nd Respondent (although no notice of appeal has been filed).

Discussion

14.  Having considered the papers, the court decided that pursuant to its powers under Order 59 r.14A(1) Rules of the High Court Cap 4A (“RHC”), it would determine this interlocutory application without a hearing on the basis of written submissions only, and informed the parties accordingly.

15.1.  Section 11 of the Lands Tribunal Ordinance Cap 17 provides:

“(2) Subject to section 11AA ... any party to proceedings before the Tribunal may appeal to the Court of Appeal against a judgment ... of the Tribunal on the ground that such judgment ... is erroneous in point of law”.

15.2.  Section 11AA of the said Ordinance provides:

“(1) ... no appeal may be made under section 11(2) unless leave to appeal has been granted by ... the Court of Appeal.

(6) Leave to appeal shall not be granted unless ... the Court of Appeal ... hearing the application for leave is satisfied that –

(a) the appeal has a reasonable prospect of success; or

(b) there is some other reason in the interests of justice why the appeal should be heard”.

16.  This court has considered the grounds of appeal in the draft “Amended Notice of Appeal” as well as the written submissions filed with court. 

17.1.  The 1^st ground is founded on the argument that the advertisement signboard was installed only on the window of the Shop, and was not attached to the exterior wall as such. 

17.2.  We do not consider there is a reasonable prospect of success in this ground because, irrespective of Rule 19, cl.8 Supp DMC provides expressly that

“In any case, all such¹⁶ signs or advertisements shall not extend beyond the exterior boundary of such shop ...”.

The advertisement signboard when pushed outwards clearly extends beyond the exterior boundary of the Shop. 

18.1.  In the 2^nd ground, it is argued that it is a question of law whether an installation on a window in an independent unit would constitute part of the appearance of the building. 

18.2.  Again, there is nothing in this ground.  The Tribunal was entitled to find on the facts of this case that the way in which the advertisement signboard jutted out of the Shop for long periods of time did alter the exterior appearance of the building. 

19.1.  In the 3^rd ground, it is argued that the Tribunal had rejected the defence of acquiescence by way of “circular reasoning” in finding that “the [Tenant] could not prove acquiescence because [it] had not obtained any written approval, whereas the very fact that no written approval was obtained is the reason why the [Tenant] would need to raise such a defence”.

19.2.  This is a misreading of the Judgment and there is no reasonable prospect of success in this ground.  The ratio was that the mere presence of other signboards on common parts does not of itself constitute acquiescence, as there were provisions in the DMC and Supp DMC for the IO or management company to give consent for them, and the evidence was that the IO did in fact give consent for those other signboards. 

20.1.  The 4^th ground was that the PO had failed to adjudicate the matter in an impartial manner and/or excessively interfered with the course of the hearing. Four specific instances, based on the audio recordings, were set out in the draft “Amended Notice of Appeal”.

20.2.  If this ground was established, then the interests of justice would require leave to be given.  For the purpose of considering this ground, the members of this court have listened to the audio recordings. 

21.1.  In relation to the instance at (a), which occurred during a PTR, it is submitted on the Tenant’s behalf that the PO asked the Owner to terminate the tenancy with the Tenant. 

21.2.  We are satisfied that the PO was not asking the Owner to terminate the tenancy. The context of the remarks was that at the time, the only defence of the Owner (which was not legally represented) was that it had already requested the Tenant to rectify the offending installations, but to no avail.  At the PTR, the PO informed the Owner’s representative that that may not be a sufficient defence in law, and he drew an analogy with other situations when it might not be sufficient for a landlord facing a claim for breach of the DMC to simply assert that he had already asked a tenant to desist from doing certain acts at the premises.  In view of the fact that the Owner was not legally represented, it was legitimate for the PO to do so.  It was entirely up to the Owner to decide what it would do vis-a-vis the Tenant.

22.1.  In relation to the instance at (b), it is submitted on the Tenant’s behalf that the PO reminded the Owner that it ought to maintain a good relationship with the IO. 

22.2.  This was said at a PTR when the PO was encouraging all parties to settle the matter.  There was nothing objectionable in what the PO said to the Owner’s representative.

23.1.  In relation to the instance at (c), it is submitted that the PO did not allow Madam Ng to speak because “she did not have the legal knowledge”. 

23.2.  That submission elided two passages at the same PTR.  The first passage came when Madam Ng had interrupted the lawyer for the IO who was making submissions.  She was rebuked by the PO for doing so.  Although the PO’s rebuke was unnecessarily long (as Madam Ng had immediately stopped interrupting), it cannot be said that he was unjustified in reminding her of the need for order in the proceedings. The second passage came in the context of Madam Ng’s reference to building regulations.  The PO explained that building regulations were different from provisions in the DMC, and he said it was not surprising that, not being legally qualified, she did not understand the difference between breach of those regulations and breach of the DMC.  There was no partiality or interference.   

24.1.  In relation to the instance at (d), it is submitted that the PO “openly questioned whether the authorized representative of the [Tenant] had studied in school, stating that she was not able to teach her offspring because she was illiterate, unlike the counsel who attended office in Central in [a] full suit”.

24.2.  The relevant passages occurred at a hearing for directions after the Tenant had applied to vary the costs order nisi.  It occurred after the trial and after the Judgment had been given. 

24.3.  In the course of that hearing, when Madam Ng expressed her difficulty in preparing written submissions, the PO regrettably used language which, though not intimidating, can be reasonably regarded by an objective observer to be humiliating to her personally.  It was unnecessary for the PO to ask if she had children and whether she hoped they would just follow in her footsteps or achieve something better.  All litigants, irrespective of their educational background or intelligence, are entitled to be treated with civility.  There was no justification to make such disrespectful personal remarks.  They were condescending to say the least, and the fact that they were not brief or made on impulse, but repeated in a verbose manner, only served to exacerbate the situation. 

24.4.  If those remarks had come during the trial when Madam Ng was giving evidence, there may well have been ground for the Judgment to be set aside for actual or apparent bias.  That would have been most regrettable as more time and costs would then have to be expended when none of the parties or their representatives had been at fault.

24.5.  Having said that however, the remarks came after judgment had been given, and there is no evidence that the PO displayed any actual or apparent bias against Madam Ng before or during the trial and before judgment.  Accordingly, we are not satisfied that the circumstances are such that the interests of justice require leave to appeal to be given.

Order

25.  The application for leave to appeal is dismissed.  It follows that the stay application should also be dismissed.  Having considered the statement of costs for summary assessment, we would order the 2^nd Respondent to pay the Applicant $35,000.  As this court considers that the applications are totally without merit, we make an order under O.59 r.2A(8) RHC that no party may request the determination to be reconsidered at an oral hearing inter partes.