Guardian Property Management Ltd. and Another v. Lui Man Ho

BM No.: 83 of 1997

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Headnote

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Building management-breach of the deed of mutual covenant-injunction relief- discretionary remedy-whether unjust and inequitable to grant the injunction-laches-other remedy available

The respondent was a flat owner who in breach of the deed of mutual covenant erected an iron gate to enclose his car park some thirteen years before the respondents objected. A secured car park was necessary to the profession of the respondent. The iron gate did not pose any obstruction and there was no complain from individual flat owners all these years. The respondent had let pass opportunities of acquiring other similar facilities to store his cars.

Held: (1) Injunction relief remains a discretionary remedy. It was open to the respondent to show it would be unjust and inequitable to grant the injunction. The Incorporated Owners Of Hoi Luen Industrial Centre & Another V Ohashi Chemical Industries (Hong Kong) Ltd. (1995( 2 HKC 11, Incorporated Owners Of Dragon View V Nalpak [1989] 1 HKC 549 considered. (2) On the evidence it would be unjust and inequitable to grant the injunction. Injunction was refused and declaration granted instead. Hon Hing Enterprise Ltd. V Honolulu Land Investment Co. Ltd. & Anr. HCA No. A3557 of 1991

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BM No. 83 0f 1997

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Judgment

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Background

1. The Applicants are the management company and the incorporated owners of a residential estate in Shiu Fai Terrace. The respondent is the owner of a flat and two car parking space in that estate. At different times the respondent erected iron gates to enclose his car parking spaces. The first one was erected in 1982 or 1983, the second one, much later. It is not in dispute that the erection of the iron gates at the car parks constituted breaches of the deed of mutual covenant. The originating application related only to the first iron gate, the one at car park C1 at the 1st level of car park. It was then amended to include the second iron gate at car park C162 on the 6th level of the car park. The applicants objected to the erection of this second iron gate soon after it was done. At the hearing both parties had come to agreement (except as to costs) that upon the respondent's undertaking to remove the iron gate at car park C162, the applicants would not ask the tribunal for relief relating to it. The applicants now ask for an injunction order requiring the respondent to remove the iron gate at car park C1 and to restrain him from further breach.

Defence

2. The respondent in his notice of opposition raised the defence of waiver and estoppel. Mr. Chan for the respondent however did not pursue this defence. He relied solely on one point, namely, that it would not be equitable in the circumstances of this case for the tribunal to exercise its discretion to grant the injunction relief.

History of iron gate at car park C1

3. The respondent purchased his flat in the estate in 1982. Later in 1982 or 1983, he purchased car park C1. For security reasons he erected the iron gate in 1983 and 1984. Five years ago the then chairlady of the owners incorporation together with the respondent inspected the car park and took no action. No objection was communicated to the respondent until December in 1995. Earlier in April and in June the applicants wrote to the respondent and others requiring them to remove iron gates they erected at their car parks. No reference was made on these occasions to car park C1. The estate manager explained that this was due to a mistake on the part of those in charge. There is no reason to believe that the respondent was aware of this mistake at the time. While I accept that the omitting to refer to car park C1 in these two letters was a mistake, the fact remains that no objection was effectively communicated to the respondent relating to car park C1 until December 1995.

Discretion of the Tribunal in granting injunction relief

4. Mr. Chan rightly made the concession that there was no waiver or estoppel. The only ground he could have relied on is laches. An owners incorporation can only be as efficient as those who are in the management committee. Their members are running the management of the building out of good will and are hardly paid anything for their effort. Laches alone in this particular case would not be sufficient to establish a case of waiver or estoppel. Furthermore the owners incorporation is under a statutory duty to enforce the provisions of the deed of mutual covenant. In The Incorporated Owners Of Hoi Luen Industrial Centre & Another V Ohashi Chemical Industries (Hong Kong) Ltd. [1995]2 HKC 11, Godfrey J.A. expressed the view that as the incorporated owners could not have expressly granted the right to any owner to act in contravention of the deed of mutual covenant equity would not hold it bound by acquiescence. This dictum has been consistently followed in this tribunal. (see BM 35 of 1995 and BM 57-59 of 1997). If the defence of waiver, estoppel or acquiescence was raised, it would have failed.

5. Mr. Ng, for the applicants relied heavily on Ohashi in his argument. If he meant since the decision in that case the tribunal had no discretion in granting injunction, he must be wrong. I accept Mr. Chan's argument that the dictum of Godfrey J.A. did not mean to take away the discretion of the court. In an earlier case, Incorporated Owners Of Dragon View V Nalpak [1989] 1 HKC 549. Godfrey J, as he then was, refused to grant a mandatory injunction against the defendant flat owner requiring him to rectify the breach committed and held that injunction being a discretionary remedy it was open to a defendant to show that it would be unjust and inequitable to restore the position. If his lordship wanted to overrule or disapprove his earlier decision, or to change this well settled principle of law, he would have done so in more explicit terms in Ohashi. I accept Mr. Chan's submission. After the case of Ohashi , injunction remains a discretionary remedy as it has always been. In the instant case, like defendants in any other cases, it was open to him to show that it would be unjust and inequitable to grant the injunction. This was indeed the only defence his counsel pursued at the hearing.

Relevant factors

(1) Laches

6. It is not disputed that the applicants could have be taken action some thirteen years ago. Though this delay by itself was not a sufficient defence, it should be taken into consideration in the light of what position it brought about and its effect on the respondent. A passage in Spry's "The Principles Of Equitable Remedy", fourth edition P. 222 cited to me by Mr. Chan conveniently set out the principle applicable to the present case:

" The term 'laches' has commonly been used in two senses. In the first sense it refers simply to delay of the plaintiff in pursuing relief; and here it should be noted that delay by itself can no longer be thought to give rise to an equitable defence. In the second sense, which is the only sense in which it is now relevant in courts of equity, it refers to a position that the delay of the plaintiff in pursuing relief has brought about, and here it is the position caused by the delay, and especially its effect on the defendant himself, rather than the delay itself, which causes the court to deny relief."

Respondent's position

7. A secured car park close to his residence was of utter importance to the respondent's career. He was well known in the motor racing world here in Hong Kong and had won important races abroad . He also tested new cars brought into Hong Kong. Car park C1 was used for storing his rally cars and cars he was testing. I accept his evidence that there was a high risk of theft of his cars especially when he was about to participate in a motor race. His rally cars were valuable and not readily insurable. If his rally car was stolen close to a racing event, it was not pecuniary loss that worried him most but the damage to his career. He said he had been looking for similar facilities to store his car but to avail. I find that he must have been complacent all these years thinking that he could keep on using the iron gate at car park C1. He did not look hard enough for alternative facilities and this strengths his defence. Spry's at p.229 has this say:

"There are many ways in which the delay of the plaintiff may give rise to substantial prejudice to the defendant.-----Again during the period of delay the defendant ---may have let pass opportunities to mitigate his position, or - adjusted his affairs on the basis that the agreement in question would not be enforced in specie."

8. Since the respondent installed the iron gate at car park C1, the property market was rising consistently and persistently until recently. I am satisfied that because of the delay on the part of the applicants in pursuing relief, the respondent had let past the opportunity of obtaining suitable residence with an enclosed or secured car park to store his cars. He conducted his affairs on the basis that the deed of mutual covenant would not be enforced in specie. It is now difficult for him to look for similar facilities. I am satisfied that requiring the respondent to remove the gate would cause him disproportionate hardship.

Applicants' position

9. Against the prejudice on the defendant, I have to consider the effect on the applicants and other owners of the estate if injunction relief is to be refused. As to other owners, I accept that there was no objection to the installation of the iron gate until 1995 when the management committee decided to have all iron gates at the car park removed. In fact the iron gate posed no appreciable obstruction or danger to motor traffic at the car park. No inconvenience would be caused to other users turning round the corner or in or out of their car parking spaces. Other owners who had removed their iron gate might have a sense of grievance thinking that the respondent had a privilege. This view, if in fact held at all by anyone could not be justified. Every case depends on its merits. The respondent himself had to remove his other iron gate at car park C162. There was no question of personal privilege even if the tribunal refused to grant an injunction relating car park C1. If the full facts of the case and the full effect of the order I propose to make are made known to the owners, the grievance any of them would be minimal. There should not be any difficulty for them to ascertain the facts and the orders of this tribunal, say through the applicants. I have to bear in mind that as a matter of principle and fairness to all owners, the applicants had to take out the present proceedings and to insist on pursuing the injunction. The danger of other owners committing similar breach should also not be overlooked.

Conclusion

10. In balancing all these factors, and in view of the fact that other remedy is available, I do not think it just and equitable to grant the injunction. Damages is clearly not an appropriate relief. A reasonable and practicable remedy in all these circumstances is a declaration as Deputy Judge Burrell, as he then was, granted in Hon Hing Enterprises Ltd. V Honolulu Land Investment Co. Ltd. & Anr. HCA No.: A3557 of 1991 . I make a declaration of this Tribunal in the following terms:

(1) The gate at car parking space C1 at the first level of the car park of Greenville Gardens Of Shiu Fai Terrace, Stubbs Road, Hong Kong was erected in breach of the deed of mutual covenant.

(2) Neither the first nor the second applicants has given approval, license or permission, express or implied, for the installation of the said gate.

(3) Neither the first nor the second applicant has waived its right to, or has been estopped from, pursuing relief in respect of the breach.

Costs

11. In the premises, the applicants is fully entitled and justified in taking legal action against the respondent in respect of iron gates at both parking spaces. As to summons of applying for disclosure of witness statements, it is either late or misconceived if not both. If there was any ground for taking out the summons, it should have been taken out earlier so that it could be heard and dealt with much earlier than the trial date. As it happened it had to be dealt with just before the trial started and it served no useful purpose. It is only appropriate to disallow applicant's costs relating to this summons. I make an order nisi awarding costs to applicant (except costs relating to the summons for disclosure of witness statements) to be taxed if not agreed. The order would be made absolute in 14 days. There be liberty to apply.