中紀投資有限公司 v. 青山道國際工業大廈業主立案法團

LDBM 118/2017

[2020] HKLdT 25

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 118 OF 2017

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DECISION ON REVIEW

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Introduction

1.  By the application for review and the affirmation of Chan Chun Wa (“Supporting Affirmation”), both dated 17 February 2020 and filed on 17 March 2020[1], the applicant asks the Tribunal to review the judgment handed down on 24 January 2020 (“Judgment”), pursuant to section 11A of the Lands Tribunal Ordinance, Cap. 17 (“LTO”) and LTPD: Review No. 1/2009 (“LTPD”).

2.  Unless otherwise stated, the same abbreviations as used in the Judgment will be adopted in this decision.

3.  By the Judgment, the Tribunal dismissed the applicant’s claims for, inter alia, an order that the respondent do take such actions, including legal actions, to enforce the DMC and the BMO against the owner of Flat 9A, for the removal of the Window Frames and the reinstatement of the external wall, and to restrain the owner of Flat 9A from installing further similar structures.

Principles regarding application for review

4.  The review process under section 11A of the LTO and the LTPD is a two-stage process.  First, the Tribunal has to decide whether there should be a review. Second, if the Tribunal decides to entertain the application, then pursuant to para 5(6) of the LTPD, “a hearing date will be fixed to deal with the second stage of the review process”.

5.  On 17 March 2020, I directed that “According to LTPD: Review No. 1/2009, the application for review taken out by the applicant shall be fixed for argument on a date in consultation with Counsel’s diaries before the Listing Officer”. Subsequently, I further ordered this application for review be fixed on 18 June 2020 for argument before me.

6.  Mr Law together with Mr Ho for the respondent submitted that the Tribunal has not made any actual ruling on whether the applicant has succeeded in stage 1, ie there should be a review.  With respect, I disagree.  By ordering a hearing date be fixed for review, it must mean that the application for review is entertained and has proceeded to the second stage.  It is unnecessary to have actual ruling on stage 1. 

7.  In the second stage of the review process, the Tribunal may review its decision and “on such grounds as it may think sufficient” may set aside, reverse, vary or confirm it pursuant to section 11A(1) of the LTO and the Tribunal may hear and receive any evidence it thinks fit for the purpose of determining the issue between the parties under section 11A(4) of the LTO.

8.  Mr Ng together with Mr Cheng for the applicant submitted that this application for review is made in accordance with the principle stated by the Court of Appeal in Group Leader Ltd & Ors v Hui Sun Fat [2016] 2 HKLRD 625 (at para 13 per Lam VP) that where a party wishes to run “additional substantive grounds not argued at the trial”, the proper procedure is to make an application for review to canvass the arguments.  Lam VP said in the Group Leader’s case as follows:

“13. This court has said previously that applications for leave are not the proper occasion for giving supplemental reasons for a judgment. It follows that generally it is not proper for additional substantive grounds not argued at the trial to be raised on such occasion. In the present case, we are of the view that the Director should have made an application for review to canvass the arguments based on section 8 so that the point could have been determined by the Tribunal on a proper footing. Be that as it may, the Tribunal accepted that the point, being one going to jurisdiction, could be canvassed on appeal and proceeded to consider its merits. For our part, we are grateful for the Tribunal’s view in that regard and we have no objection to the section 8 point being taken in the appeal. However, as for the future, we expect parties to adopt the proper procedure for the running of a fresh argument.”

9.  Mr Law for the respondent disagreed and submitted that Lam VP’s comments are obiter only since the appeal mainly concerns the issue of the Lands Tribunal’s jurisdiction and the locus standi of the Director of Lands in the Compulsory Sale Application.

10.  In my view, where a party wishes to run additional substantive grounds not argued at the trial of the Lands Tribunal proceedings, he or she may make an application for review to canvass the new arguments but it does not mean that such arguments will be entertained or accepted after hearing.  No doubt, the Tribunal retains very wide discretion whether to accept or reject the new arguments at the review process under section 11A of the LTO.  Nonetheless, this party is obliged to give good explanation as to why the new arguments not argued at the trial, especially if he or she is all along legally represented.  Furthermore, if the relevant issue under which the new arguments are to canvass is not raised or pleaded in the notice of application[2] etc, it is very likely that the new arguments will be rejected; otherwise, it will be against the fundamental principle of litigation which is the finality of trial. 

Grounds of Review

11.  The factual background of the present case has been summarised in paras 1 to 17 of the Judgment, which will not be repeated here.

12.  The grounds of review (the “Grounds of Review”) raised by the applicant are as follows:

Ground 1 -  The Pre-Window Frames were illegal structures and the respondent could not by the 2017 Resolution permit them to be constructed or retained.

Ground 2 -  The Post-Window Frames should in any event be regarded as illegal structures.

Ground 3 -  The Post-Window Frames were in any event never approved by any resolution of the MC.

Ground 4 -  The Window Frames were illegal structures also by reason of the breach of section 30B(8) of the Buildings Ordinance (“BO”).

Ground 1

13.  It is not in dispute that the incorporated owners are not capable to permit illegal structures to be constructed or to acquiesce in the retention of illegal structures.

14.  In IO of Champion Court v Pang Ping Fan Peter & Anor [2008] 5 HKC 312, the Court of Appeal held (at paras 15 and 17 per Yuen JA, with whom Yeung JA and Lam J, as they then were, agreed) that:

“15. … it is the statutory duty of the [incorporated owners] to enforce the provisions of the DMC and unlike the breach of a covenant which incorporated owners are capable of acquiescing in … the [incorporated owners] cannot acquiesce in the retention of illegal structures.

…

17. … that incorporated owners cannot acquiesce in the retention of illegal structures is by now well-established.  The rationale is that since it is not within the power of incorporated owners to expressly permit illegal structures to be constructed, it is consequently not within their power to acquiesce in their retention…” [Emphasis added]

15.  Mr Ng for the applicant submitted that the 2017 Resolution was simply ultra vires the power of the respondent or the MC to permit the retention of the Pre-Window Frames, which are illegal structures.  However, he agreed that the 2017 Resolution is not void entirely.

16.  As said in para 33 of the Judgment, I consider that the affixation of the Pre-Window Frames is no longer in issue as it has been uninstalled and immediately thereafter, the Post-Window Frames were affixed by Tiff as prescribed registered contractor under the minor works scheme.  I accept that if the Pre-Window Frames were illegal structures, the respondent or the MC could not by the 2017 Resolution permit them to be retained.  However, in my view, it is an academic question to be determined by the Tribunal since the ultimate question is whether the Post-Window Frames are illegal structures.  If yes, it must follow that the respondent or the MC is not capable to permit them to be constructed or to acquiesce in their retention.  If not, the next question is whether the 2017 Resolution on its true construction covers the Post-Window Frames.  In the circumstances, I do not see how Ground 1 alone will affect the outcome of the review decision.

Ground 2

17.  In relation to this Ground, the applicant relies on the supplemental report prepared by the applicant’s expert, Mr Tony CK Wong (“Mr Wong”), on 17 February 2020 (“New Report”) which is exhibited as “CCW-10” to the Supporting Affirmation.  In gist, the New Report supports the applicant’s contention that the Post-Window Frames are illegal structures.

18.  Before the preparation of the New Report, Mr Wong had prepared his own report dated 8 December 2017 and a joint report with the respondent’s expert dated 4 May 2018.  It is important to note that according to the order dated 7 February 2018, leave was granted only to the filing of the joint expert report but not any other reports pursuant to Order 38 rule 38 RHC.  According to the index of the Trial Bundle, the joint expert report dated 4 May 2018 was adduced as evidence at the trial.

19.  Order 38 rule 36(1) RHC states that:

“(1) Except with the leave of the Court or where all parties agree, no expert evidence may be adduced at the trial or hearing of any cause or matter unless the party seeking to adduce the evidence—

(a) has applied to the Court to determine whether a direction should be given under rule 37 or 41 (whichever is appropriate) and has complied with any direction given on the application.

…..”

20.  RHC is applicable in this case by virtue of section 10 of the LTO.  Needless to say, no leave is granted by the Tribunal and no agreement with the respondent is reached to adduce the New Report as expert evidence at the review hearing. 

21.  In my view, although the proceedings in the Tribunal is informal under section 10(5)(a) of the LTO, it does not mean that the applicant can adduce the New Report as fresh expert evidence at the review by simply exhibiting the same to the Supporting Affirmation.  Mr Law rightly submitted that at least, the respondent’s expert shall be given a chance to comment on the New Report.  I also consider that if such supplemental expert report is really necessary to assist the Tribunal to determine a particular issue, the applicant shall ask for a supplemental joint expert report rather than a report prepared by his own expert.  Unfortunately, no formal application for leave to adduce supplemental joint expert evidence under Order 38 rule 38 RHC is made by the applicant. Even if leave is granted to adduce the supplemental joint expert report upon application by the applicant, the parties’ experts may have to attend the review hearing for examination by the other side if the discrepancy of their opinion is very substantial.  In short, I conclude that it is not fair to the respondent if I allow the New Report to be adduced as evidence.

22.  Further, I consider that the applicant fails to explain why the New Report could not be obtained with reasonable diligence before the trial[3] bearing in mind that the applicant was all along legally represented and with assistance of Mr Wong [4]. 

23.  In the circumstances, I have no doubt to decline to exercise my discretion to adduce the New Report as fresh evidence under section 11A(4) of the LTO.

24.  Mr Ng for the applicant also argued that since the respondent fails to show that the works for re-affixing the Window Frames carried out by Tiff in March 2018 fell within the meaning of item 2.19 of the List of Class II Minor Works (“said item 2.19”) as stated in the relevant notice[5] and certificate[6], such works did not qualify under the minor works scheme as prescribed by the BO.  Hence, consent and approval of the Building Authority (“BA”) has to be obtained.

25.  To start with, it is a completely new issue which is not raised at the trial bearing in mind that the applicant is represented by Counsel not only at the trial but also at a lot of direction hearings including the pre-trial review on 31 July 2019.  If it is one of the issues in dispute, the parties shall set it out in the agreed list of issues dated 23 July 2019 which was signed by the parties’ solicitors[7] and filed pursuant to para 4 of the order dated 29 May 2019.  The applicant’s solicitors gave no or reasonable explanation for their failure to do so. 

26.  Mr Ng for the applicant argued that this issue is pleaded in para 6.1B of the Re-amended Reply filed by the applicant.  With respect, I disagree.  The issue whether the works for re-affixing the Window Frames carried out by Tiff in March 2018 fell within the meaning of the said item 2.19 is not pleaded.  Para 6.1B of the Re-amended Reply only pleads that the applicant denies that the relevant notice together with the relevant certificate is equivalent to the approval of BD.  The said item 2.19 is never mentioned in the Re-amended Reply or anywhere.  The respondent will be taken by surprise if this issue is allowed at the review hearing.

27.  Besides, this issue is not a pure question of law but a mixed question of law and facts. The Tribunal requires not only the submission by the parties’ lawyers but also factual evidence from the parties and their witnesses such as the owner of Flat 9A, Tiff etc or even the assistance from the parties’ experts.  In my view, the applicant at least shall seek to direct the parties’ experts to conduct a joint site inspection and then prepare a joint report on this issue before the trial.  However, no application for such direction is taken by the applicant. It is too late to do so at the review in view of the fundamental principle of the finality of trial.

28.  Mr Ng cited a decision of the Appeal Tribunal (Buildings), City Season Limited v Building Authority (case no. 336-2016), in which the BD received a complaint about the structures purportedly constructed under the minor works scheme and the Appeal Tribunal (Buildings) ruled that consent of the BA has to be obtained.  I consider that this case is distinguished as the parties to that case are the maker of the subject structures as appellant and the BA as respondent. Certainly, the applicant may lodge a complaint to the BD about the illegality of the Post-Window Frames and see the reply from the BD.

29.  Needless to say, the respondent will suffer prejudice[8] in the present case as it has been deprived of the right to call the owner of Flat 9A, Tiff or other relevant expert to give evidence on this issue at the trial.

30.  As said in para 14 of the Judgment, it was opined by KHP that the Pre-Window Frames (i) were non-structural; (ii) did not cause immediate danger; and (iii) could be regularized, eg by the “Signboard Validation Scheme” (違例招牌檢核計劃). The applicant did not adduce any evidence to challenge the opinion of KHP at both the trial and this review.  This opinion had been accepted by the Tribunal in the Judgment.  It is my understanding that after “regularization”, the relevant structures will not be regarded as illegal structures under the BO. Nonetheless, Mr Ng is in effect making the legal submission that the Pre-Window Frames could not be regularized on the ground that the relevant structures, namely the Window Frames are not “signboards” as defined in the said item 2.19. 

31.  Apart from the legal submission made by Mr Ng in this review, there is no specific evidence from the applicant in the witness statement or oral evidence at the trial regarding the meaning of the said item 2.19. I doubt very much that Mr Ng can make the legal submission without any factual basis from his client.  More importantly, no explanation as to why the issue regarding the meaning of the said item 2.19 cannot be raised earlier, is given by the applicant.  Based on the fundamental principle of the finality of trial, I do not think that I shall allow the applicant to have a second bite of the cherry[9].  I refuse to allow the applicant to canvass this new argument in the review process.

32.  Furthermore, the burden of proving the illegality of the Post-Window Frames must be on the part of the applicant but not the respondent.  I conclude that in any event, the applicant fails to discharge the burden.  Hence, Ground 2 must fail.

Ground 3

33.  As mentioned earlier, the real issue is whether the 2017 Resolution on its true construction covers the Post-Window Frames.

34.  Mr Ng for the applicant submitted that from the wording of the 2017 Resolution[10] itself, it was expressly stated to only approve of the structures then existing at the external wall of the Building (“批准本大廈外牆上現有的非結構性設施”) and there was no further resolution passed by the MC after the works for re-affixing the Post-Window Frames. 

35.  It is not in dispute that the Pre-Window Frames and the Post-Window Frames are in fact the same structures. The difference between the Pre-Window Frames and the Post-Window Frames is very technical, in that it is unknown as to how the Pre-Window Frames were affixed whilst the Post-Window Frames were affixed by Tiff as prescribed registered contractor under the minor works scheme in March 2018.  Obviously, it must be the intention of the owner of Flat 9A to “regularize” the Pre-Window Frames according to the opinion of KHP.  The owner of Flat 9A had notified the respondent about the minor works in March 2018 and the respondent raised no objection[11]. This evidence is not challenged by the applicant.  Mr Law for the respondent submitted that throughout the proceedings, the respondent has adopted the position that the scope of the 2017 Resolution covers the Post-Window Frames.

36.  In my view, the works done by Tiff undoubtedly improve the position of the Window Frames after March 2018.  The members of the MC are not lawyers when drafting the text of the 2017 Resolution.  If the MC in the 2017 Resolution expressly permitted, rightly or wrongly, the retention of the Pre-Window Frames even they may be illegal structures, there is no reason why the MC will not permit the re-affixation of the same structures (ie the Window Frames) in March 2018 or retention of the Post-Window Frames after “regularization”.  According to the 2017 Resolution, the main concern of the MC was whether the structures then existing at the external wall of the Building affects the structure of the Building.  If yes, they must be reinstated and if no, they will be permitted. There is no evidence that the Post-Window Frames affects the structure of the Building.  Hence, I consider that at the time of passing the 2017 Resolution, it is the intention of the MC to treat the Post-Window Frames as the structures then existing at the external wall of the Building and I come to the conclusion that the 2017 Resolution on its true construction covers the Post-Window Frames.

37.  Ground 3 is without merit.

Ground 4

38.  There is no dispute that the respondent was served with the BA Notices by which the respondent was required to carry out a prescribed inspection in respect of the common parts of the Building.  Part of the “prescribed repair” set out by KHP in the inspection report was for the removal and reinstatement of the unauthorized building works as identified therein, which included the Window Frames.

39.  Mr Ng submitted that the failure to remove and reinstate the Window Frames as a part of the prescribed repair was and continues to be a breach of the requirement under section 30B(8) of the BO on the part of the respondent.  Mr Ng further argued that re-affixing works by Tiff under the minor works scheme could not be regarded as “prescribed repair” within the meaning of section 30B(8) of the BO since they were not carried out under the supervision of KHP or a registered inspector, which is contrary to the requirements under section 30D(1)(b) and (4) of the BO.

40.  In my view, it is again a completely new issue, which is not raised at the trial. No explanation is given as to why this new issue cannot be raised earlier.  As mentioned above, if it is one of the issues in dispute, the parties shall set it out in the agreed list of issues dated 23 July 2019.  Mr Ng for the applicant conceded that this issue is not even raised or pleaded in the Amended Notice of Application or the Re-amended Reply filed by the applicant.  I therefore refuse to allow the applicant to canvass this new argument in the review process.

41.  In any event, I have great reservation that as a result of the breach of the BA Notices to carry out the prescribed repairs by the respondent, it will then render the Post-Window Frames to be illegal structures.  I consider that this Ground is without merit.

Conclusion

42.  Except Ground 1, all other grounds of review are rejected.  As said Ground 1 is academic, I order that the applicant’s application for review be dismissed and that the Judgment be confirmed.

43.  As costs shall follow event, I order that the applicant do pay costs of this application to the respondent with certificate for one counsel.  Parties have lodged and served their respective statements of costs and made respective oral submissions at the review hearing.  I summarily assess the respondent’s costs at $120,000 payable forthwith.