THE INCORPORATED OWNERS OF DRAGON VIEW v. NALPAK LTD

1986, No. A3356

IN THE HIGH COURT OF HONG KONG

HEADNOTE

In 1985, the Defendant acquired a flat in a multi-storey building which had been built in 1965. Over the years the Plaintiff, the Incorporated Owners of the building, had suffered it to become encrusted with a number of visible alterations, including the installation of air-conditioners otherwise than in apertures provided for that purpose, in breach of the Deed of Mutual Covenant regulating these matters. The Defendant enlarged a window and installed air conditioners, in breach of its obligations, without obtaining the Plaintiff's consent. The Plaintiff claimed mandatory injunctions to compel the Defendant to restore the position but was primarily concerned to establish the principle that it was entitled to enforce the provisions of the Deed. The Defendant relied in part on the Plaintiff's "acquiescence" in the earlier alterations.

HELD : (1)    The Court would grant a declaration that the Defendant was in breach of its obligations; but the claim for mandatory injunctions should be refused;

   (2)    The question in such a case was not one of "acquiescence" but rather whether it would be just and equitable, in all the circumstances, to grant the plaintiff the discretionary remedy of an mandatory injunction.

 

1986, No. A3356

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. The Plaintiff is a corporation, registered under the Multi-storey Buildings (Owners Incorporation) Ordinance, of which the corporators are the owners of "Dragon View", 39 Macdonnell Road, Hong Kong. This is a building erected in 1965 which consists of four blocks, A, B, C and D, each of 16 storeys.

2. The Defendant is the owner of Flat D1. The Defendant acquired Flat D1 (a ground floor flat) in 1985 subject to and with the benefit of the Deed of Mutual Covenant dated 16th December 1964 relating to Dragon View. The Defendant was and is bound by the covenants, provisions and restrictions contained in the Deed of Mutual Covenant.

3. The Deed of Mutual Covenant provides, among other things, that :

(i)    No owner shall make any structual alteration to any apartment of which he is the owner or interfere with any part or parts of Dragon View in common use;

(ii)    No owner shall alter the exterior window glass or do any other act or thing which would alter or affect the exterior appearance of Dragon View;

(iii)    No air-conditioning or other unit shall be installed through any external wall except in the aperture provided.

4. After the Defendant acquired Flat D1, it was anxious to make it habitable for the intended new occupants and it instructed professional people and builders to plan and carry out suitable works of alteration and re-decoration.

5. Among other things, the Defendant wanted to construct a doorway in the exterior rear-room wall of Flat D1 which would have given access onto a piece of ground outside Flat D1, an otherwise inaccessible piece of ground which was plainly not intended to be used at all by anybody. (It is there simply because of the contours and levels of the site.)

6. By letter dated 30th November 1985, the Defendant informed the Plaintiff that the Defendant intended to construct a doorway in the exterior rear-room wall of Flat D1; and sought the consent of the Plaintiff.

7. The Plaintiff's Management Committee were contacted by circular about this, and expressed the view that consent ought to be refused. Accordingly, by letter dated 7th December 1985, the Plaintiff refused its consent. Further, by letter dated 13th December 1985, the Plaintiff asked the Defendant to confirm that it would not make any alteration or installation in Flat D1 not permitted by the Deed of Mutual Covenant.

8. Despite all this, the Defendant has in fact enlarged the window in the rear-room wall and by climbing over the lowered cill, which is now some 425 mm from the floor, it is possible to obtain access to the piece of ground to which I have referred.

9. The Defendant has, of course, altered the exterior appearance of Dragon View by this work. However, I have had the advantage of a view of the premises and it does have to be said that there is really no way in which you can tell that this work has been done, except by leaning over a 7 foot high wall which surrounds the building or by standing on step 5 or 6 of the stairway which runs by the side of the access road to the premises, from which, if you make the effort, you can see that the window has been enlarged because it is now a larger window than that of any other comparable flat.

10. And the Defendant has without consent installed air-conditioning units through external walls in what are described in the pleadings as "the pantry and the verandah" of Flat D1 not in an aperture provided. (What the Defendant has done in the case of "the verandah") is to enclose what was previously an open balcony, but no complaint is made in this action about that, the Plaintiff accepting that many other flats in Dragon View have had their balconies enlcosed, too.)

11. The Plaintiff has asked the Defendant to restore the position so as to comply with the provisions of the Deed of Mutual Covenant, But the Defendant has refused to do that.

12. This action came before me as a claim by the Plaintiff for mandatory orders to that effect, and for injunctions to restrain the Defendant from similar acts. As the hearing proceeded, it became apparent that the prime concern of the Plaintiff was to establish a point of principle, that is to say, that the building is used in common by a number of owners and unless each of them respects his obligations under the Deed of Mutual Covenant, the job of the Management Committee is made impossible. Further, says the Plaintiff, that job will be made not only impossible but intolerable if the Management Committee, faced with a clear breach of covenant of this sort, is not supported by the Court. I agree.

13. In Doherty v. Allman (1878) 3 Appeal Cases 709, at p.720, Lord Cairns, the Lord Chancellor, said :

"If parties, for valuable consideration, with their eyes open, contract that a particular thing shall not be done, all that a Court of Equity has to do is to say, by way of injunction, that which the parties have already said by way of covenant, that that thing shall not be done; and in such a case the injunction does nothing more than give the sanction of the process of the Court to that which is already the contract between the parties. It is not then a question of the balance of convenience or inconvenience, or of the amount of damage or of injury - it is the specific performance, by the Court, of that negative bargain which the parties have made, with their eyes open, between themselves."

As I pointed out in The Incorporated Owners of Mai On Industrial Building v, Hedit Limited HCA 6529 of 1987, 18th December 1987 (unreported), it is clear that this expression of the opinion of Lord Cairns (salutary though it is) cannot be applied blindly to the facts of any particular case without careful consideration. The grant of an injunction is a discretionary remedy. The grant of a mandatory injunction is a particularly strong remedy; and it is always open to a defendant against whom a mandatory injunction is claimed to show that it would be unjust and inequitable to require him to restore the position to what it was before he embarked on the works complained of.

14. In the present case, so far as the enlargement of the window is concerned, there is no other alteration of this type in the building. The Defendant having been refused consent to open up the doorway, claims to have thought that it would be in order if it simply enlarged the window instead. But it must have realised, as it seems to me, that that work would equally have been a breach of the provisions of the Deed of Mutual Covenant, Nevertheless, with its eyes open, it went on with it.

15. The installation of the air-conditioners is a subsidiary issue in these proceedings; but in relation to the enlargement of the window, the Plaintiff continues to claim that a mandatory injunction is, in all the circumstances, an appropriate remedy. At this point, I part company with the Plaintiff. The alteration was made over 3 years ago, and no harm has been done to anybody as a result of it. No damage has been suffered by any other owner, or by the Plaintiff. Although I disapprove of the Defendant's conduct, to grant a mandatory injunction, in the circumstances to which I have referred, would be unjust and inequitable; and I refuse to do so. (I refuse also to grant any mandatory injunction in relation to the air-conditioners.)

16. Dragon View is, in fact, encrusted with dozens of features which show that, over the years since 1965, either with or without the consent of the Management Committee (there are no records) the owners have done pretty much what they liked in the way of visible alterations, including the installation of air-conditioners. However, that is not, in my view, a representation by the Plaintiff that anybody who takes a flat is entitled to ignore his obligations under the Deed of Mutual Covenant; nor is it, in my view, "acquiescence" in any sense known to the law (despite the use of the term in this connection made by Huggins JA in his judgment in Cheung Yuet v. The Incorporated Owners of Oriental Gardens, [1979] HKLR 536). It does, however, show that arbitrarily to restrain one owner from doing what so many other owners have done in the past, whether with or without consent, or indeed with or without the knowledge, of the Management Committee, could lead to an unjust and unfair result.

17. The Defendant says in this connection that by reason of the various alterations to Dragon View in breach of the Deed of Mutual Covenant, the appearance of Dragon View has been altered; and that accordingly the alterations made by the Defendant which are complained of by the Plaintiff are to be judged or viewed in the context of the altered appearance of the premises.

18. This seems to me to be the right way of looking at the matter when I come to consider the exercise of the discretion conferred on me. I do judge what the Defendant has done in the context of the altered appearance of the premises and that is an additional reason why I exercise my discretion against the grant of-any mandatory injunction.

19. What then is the Court now to do? In my judgment, the correct course is for the Court to declare that in respect of each of the matters complained of by the Plaintiff, the Defendant is in breach of the relevant provisions of the Deed of Mutual Covenant. If the Defendant was threatening to commit further breaches in the future, I would be minded to grant injunctions, which would have the effect of prohibiting that, But in fact the Defendant, so far from expressing an intention to commit breaches of the Deed of Mutual Covenant in future, is prepared to offer undertakings which in effect clarify the position, including an undertaking, which I accept, not to make any use of the strip of land outside the rear wall window without the consent of the Management Committee. And the Defendant is prepared to give an undertaking that it will not whether by its servants, workmen or agents or otherwise howsoever make any further structural alterations to, Flat D1, and will not install any air-conditioning units through any external wall of Flat D1 (except in an aperture provided) again, without the consent of the Management Committee.

20. I wish this judgment to be read as vindiciating the Plaintiff to the extent that it comes to the Court in order to establish the principle. It has failed, for the reasons I have endeavoured to state, to obtain the mandatory injunctions for which it has asked. But since it may be generally believed in Hong Kong (as the Defendant suggested) that Deeds of Mutual Covenant are meant to be honoured more in the breach than in the observance, it is, I think important that all parties to such Deeds should know that its provisions are there to be observed, not flouted, Just as it is the duty of each owner to observe the provisions of the Deed of Mutual Covenant, so it is the duty of the Management Committee to see that that is done, The shole matter is made much more difficult if the Management Committee does not itself properly discharge its duties, If it allows or suffers numerous breaches without complaint over the course of the years, it is not surprising that after that no-one really knows where he stands, Of course, the officers of the Management Committee are frequently, as in this case, volunteers, But once they assume the duties of membership of the Management Committee, they must carry them out; and that means seeing to it that the provisions of the Deed of Mutual Covenant are performed and observed by all the individual owners.

21. I will ask Counsel for the Plaintiff to prepare and sign a minute of the appropriate order to give effect to this judgment (containing the declarations and undertakings to which I have referred) and to submit it to Counsel for the Defendant for his approval. When the minute has been signed and approved accordingly, it should be submitted to me, so that I can satisfy myself as to the terms of the order that is to be made as a result of this judgment.

22. There will be no order as to costs.