THE INCORPORATED OWNERS OF PERTH GARDEN v. CHAN KWOK WAI

LDBM 339/2005

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Building Management Application No. LDBM 339 of 2005

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JUDGMENT

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Background 

1. The Applicant is the owners’ corporation of Perth Garden, at Nos. 5-9 Perth Street, Perth Garden, Homantin, Kowloon, Hong Kong (“the Building”).  The Respondent is the registered owner of Flat B, 11^th Floor, Garve Court of the Building (“the Flat”).  The Applicant alleges that the Respondent has erected a canopy and an illegal structure at the external wall of the Building, installed window-type air-conditioners at unauthorized areas and repositioned a window of the Flat by extending it from its original position (“the acts”).

2. In the Amended Notice of Application, the Applicant alleges that the acts have breached Clauses 4, 14 and 16 of the Third Schedule of the Deed of Mutual Covenant of the Building (“the DMC”), and seeks for a declaration that the Respondent is in breach of these Clauses.  The Applicant also seeks for an order that the Respondent do take all necessary steps to remove at his costs the air-conditioners, the canopy and the illegal structure at the external wall of the Building, and to reinstall the window at its original position.

3. The Respondent has no dispute that he has committed the acts, but alleges that the acts were not wrongful at all as consent was obtained from the then building manager before the commencement of the acts.  The Respondent contends that the Applicant has impliedly waived, acquiesced and/or abandoned the enforcement under the DMC.  The Respondent also contends that the Applicant has been acting unfairly in enforcing the DMC in that it favoured some of the owners by allowing their continual and visible violation of the DMC without taking any actions against them.

4. Thus, the issues in this case are whether the Respondent is in breach of the DMC, whether the Applicant has impliedly waived, acquiesced and/or abandoned the enforcement under the DMC, and whether the Applicant has acted unfairly.

Breach of the DMC

5. The Third Schedule of the DMC contains the following clauses:-

“4. Not to make any structural alteration to any flat of which he is the owner nor cut, maim, injure, damage, alter or interfere with any part or parts of the said premises or buildings in common use or any of the sewers, drains, watercourses, conduits, pipes, cable, wiring, fixtures, equipment, apparatus or services of the said premises and buildings and not to cut or injure the cement concrete flooring columns beams or girder of the said buildings or do anything whereby the structural strength thereof may be affected provided that nothing in this covenant shall affect the exclusive right reserved by the First Owner and the Company under Clause 3 of this Deed

…

14. Not to fix or install air-conditioners except in such places as are specifically reserved and indicated for the purpose or as the First Owner or the Mangers shall approve in writing or direct provided always that measures shall be taken to prevent excessive noise and condensation dripping on to the said premises or other parts of any buildings or the public area below.  No air-conditioner or other appliances or equipment shall be installed through any external wall and windows

…

16. Not to erect or put up any temporary or permanent structure or objects (including any radio or television aerial or advertising sign) outside any flat of which he is the owner nor in any way change the appearance of the said buildings or the uniform character or description thereof”

6. The Applicant had relied on Clause 4 of the Third Schedule of the DMC in the Amended Notice of Application.  However, the Applicant’s witness, Mr. Ma Kin Shing, made no reference to this clause in his witness statements or evidence.  Mr. Yeung, for the Applicant, in his closing submission, also made no reference to Clause 4, but simply relied on Clauses 14 and 16 of the Third Schedule of the DMC.  It seems that the Applicant has abandoned the reliance on Clause 4.  Even if it is not abandoned, there is no evidence that the structure of the Building has been affected by the acts.  Thus, I do not find that the Respondent is in breach of Clause 4.

7. There is no dispute that the air-conditioners were not installed at the reserved places of the Building for air-conditioners.  There is also no evidence to show that there was approval in writing or direction from the then building manager in respect of the acts.  However, the Respondent gave evidence that the then building manager, Harriman Realty Company, was fully aware of the acts because its staff had inspected the Flat several times when the decoration work was being carried out and raised no objection.  It had also refunded the decoration deposit to the Respondent indicating that the decoration work had complied with the requirements under the DMC.  Thus, even though there was no express consent by the then building manager, the Respondent argues that the then building manager had impliedly approved the acts.

8. I do not accept this argument.  Under Clause 14, the Respondent is clearly required to have written approval or direction from the manager in order to install the air-conditioners at places other than the reserved places.  The Respondent’s evidence merely shows that there was no objection from the then building manager.  It is not the same as having written approval or direction as envisaged by Clause 14.  I do not agree that implied approval is permitted by virtue of the clear wordings in Clause 14.  Without any express written approval or direction from the then building manager, the acts are clearly in breach of Clause 14.

9. The acts are also in breach of Clause 16 because permanent structures are erected outside the Flat and they changed the appearance of the Building.  There is no provision under Clause 16 to allow the manager to give approval or direction as in Clause 14.  So even if there were any implied approval as alleged by the Respondent, it will not operate to nullify the breach of Clause 16.

10. Thus, I find that the Respondent is in breach of Clauses 14 and 16 of the Third Schedule of the DMC.

Waiver, acquiescence and/or abandonment

11. The Respondent argues in the alternative that the failure of the then building manager to raise any objection and the refund of the decoration deposit show that the Applicant has impliedly waived, acquiesced and/or abandoned the enforcement under the DMC.

12. I do not accept this argument either.  Section 18(1)(c) of the Building Management Ordinance stipulates that an owners’ corporation shall “do all things reasonably necessary for the enforcement of the obligations contained in the deed of mutual covenant (if any) for the control, management and administration of the building”, and there are clear authorities enunciating the principle that an owners’ corporation or a manager cannot waive or acquiesce an owner’s breach of the terms of a deed of mutual covenant.

13. In The Incorporated Owners of Hoi Luen Industrial Centre and anor. v. Ohashi Chemical Industries (Hong Kong) Limited CACV 3 of 1995, Godfrey J.A. said this:-

“5. It has to be remembered that almost every multi-storey building in Hong Kong, residential and industrial alike, operates under a system of local law, being the rules prescribed for its management by a Deed of Mutual Covenant. So important is this aspect of Hong Kong life that the legislature has been compelled from time to time to intervene. In particular, it passed in 1972 the Multi-storey Buildings (Owners Incorporation) Ordinance, Cap. 344, under which incorporated owners are placed under a statutory duty to do all things reasonably necessary for the enforcement of the obligations contained in the Deed of Mutual Covenant: see s. 18(1)(c). When, then, the incorporated owners find that there is a breach of covenant being perpetrated by one of the owners, it is not only their right but their duty to seek to enforce the covenant. And one of the duties of the manager under the Deed of Mutual Covenant here, for example, is expressed as follows in part B of section 5:

“1. The Manager will manage the Land and the Building in a proper manner ……the Manager shall have the following duties …..;

(15) to remove any structure, ….. fitting or other things in or on any part of the Land  and the Building which have been erected in contravention of the terms of this Deed.”

6.  It follows that in the instant case the plaintiffs were not only entitled but bound to take proceedings for the enforcement of these covenants. It follows, too, that they could not have granted expressly to this defendant or any other owner of any unit in the building the right to act in contravention of the Deed of Mutual Covenant as this defendant has done. What cannot be done expressly cannot be done impliedly.  Although equity will sometimes restrain a plaintiff in the exercise of his legal rights because it would be inequitable and unjust in all the circumstances to allow him so to exercise those legal rights, equity will not hold him bound by acquiescence to allow something which he could not have allowed by express grant. (For these propositions, reference may usefully be made to The Incorporated Owners of Chungking Mansion v. Shamdasani, Civil App. 199 of 1991, 26 February 1993, so far, apparently, unreported.)”

14. Likewise, in The Taikoo Shing (Management) Ltd. v. Trillon (H.K.) Ltd., LDBM 35 of 1995, H.H. Judge Li said this:-

“Furthermore, disregarding the inherent powers of an owners’ incorporated enforcing the DMC with omnicompetent statutory authority, I am inclined to think that the applicant as the estate manager operating solely under a DMC is a trustee, not an agent, of the interests of all the owners in the Estate.  As such, the applicant cannot waive or lay to waste the rights of all the owners in the Estate that are enshrined in the DMC.  In fact, all the English authorities so often relied upon as applying the equitable defence of acquiescence seem to involve disputes between parties who are principles of their respective rights.  I have not yet been able to discover any reported English authority which considers the position of acquiescence by a collection of principals against their individual private rights through proxy or agency.”

15. The above authorities clearly show that the Applicant cannot waive, or acquiesce the Respondent’s breach of the DMC.  By the same token, the Respondent also cannot abandon the enforcement of the breach.  In fact, Mr. Lee, Counsel for the Respondent, does not seek to challenge the authorities at all.  In the circumstances, I do not find that the Respondent can rely on waiver, acquiescence and/or abandonment as a defence to the Applicant’s application.

Whether the Applicant has acted unfairly

16. The Respondent alleges that the Applicant has acted unfairly because the majority of owners in the Building, including most of the committee members of the Applicant, have breached the DMC themselves and no actions were taken against these owners.  According to the Respondent, about 70% of the flats in the Building, including those of 7 committee members of the Applicant, have windows in the sitting rooms repositioned, and about 60 odd flats have window/split type air-conditioners installed at the external walls that are not the reserved places for air-conditioners.  The Respondent argues that since the Applicant is seeking for equitable reliefs like declaration and injunction in the present application, it should come with clean hands.  When the Applicant has acted unfairly, it should not be granted with those equitable reliefs.

17. However, I do not find that the Applicant has acted unfairly.  I accept the Applicant’s evidence that there are limited resources for the Applicant to deal with all the breaches.  So it has to give priority to some cases over the others.  In the past few years, the Applicant has issued some other legal proceedings in the Lands Tribunal against some of the other owners for similar breaches of the DMC.  The Applicant finds that the extension of the window at the Flat is in fact more dangerous than some other breaches and is beyond the limit it can tolerate.  Hence, the Applicant has taken action against the Respondent before it does the same to some other owners.  I think the Applicant’s action against the Respondent is perfectly justifiable and reasonable.  There is no question of bias or unfairness on the part of the Applicant at all.

18. Moreover, the Applicant has a separate legal entity from its individual committee members.  Even when most of the committee members have breached the DMC themselves, it does not mean that the Applicant has come with unclean hands.  The Applicant, in its own legal entity, has a statutory duty to perform in enforcing the DMC.  This is not a duty to be carried out by the committee members individually.  The Applicant also represents all the owners collectively as a whole, not any individual owner or owners, no matter whether they are the majority or the minority.  Thus, it does not matter whether 70% of the owners have breached the DMC or not.  It will not cause the Applicant to come with unclean hands.

19. In the circumstances, I do not find that the Respondent can rely on the defence of unfairness at all.

Conclusion

20. By reasons aforesaid, I find that the Respondent has no defence to the application and the Applicant succeeds in its application save for the breach of Clause 4.

21. I therefore order as follows:-

(1)  A declaration that the Respondent is in breach of Clauses 14 and 16 of the Third Schedule of the DMC.

(2) The Respondent do take all necessary steps to remove at his own costs the air-conditioners at the unauthorized areas, the canopy and illegal structure at the external wall of the Building and to reinstall the window to its original position.

(3)  Costs order nisi: Save where there has been previous costs order made, the Respondent do pay costs of the application to the Applicant to be taxed on District Court Scale if not agreed.  If there is no application for costs within the next 14 days, this costs order nisi shall become absolute.