THE INCORPORATED OWNERS OF CHAMPION COURT v. PANG PING FAN PETER AND ANOTHER

CACV 317 /2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 317 OF 2006

(ON APPEAL FROM DCCJ No. 55 of 2005 )

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JUDGMENT

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Hon. Yeung JA:

1.  I agree with the judgment of Yuen JA.  An order is made in terms of para 22 hereof.

Hon. Yuen JA:

2.  This is the Defendants’ appeal from a judgment of Deputy District Judge W. Wong given on 6 July 2006 in DCCJ55/2005.  The action was commenced against both Peter Pang and Vivian Man (who are joint tenants of Flat 23A and part of the Roof of Champion Court, 67-69 Wongneichong Road, Hong Kong). In the District Court, only Ms Man took part in the proceedings but she represented Mr Pang as well.  As for the appeal, the Notice of Appeal appeared to indicate that the appeal was lodged by Ms Man only, but a document signed by Mr Pang containing his personal particulars was handed up to the court in which he authorized her to act on his behalf at the appeal as well.  In those special circumstances, we have treated the appeal as having been lodged by both of them.

3.  Champion Court (formerly known as Champion Building) is a block of flats on Wongneichong Road facing the Happy Valley race course and backing onto Ventris Road.  It was completed in 1972.  There are 2 units per floor.  The roof is accessible via a common staircase.  The lift engine room is situated there, and right in front of it is a passage designated in the Deed of Mutual Covenant (“DMC”) for common use.  At some stage an iron staircase has been constructed on the roof leading to the top of the lift engine room.

4.  Since 1992, the Defendants have been the registered owners of Flat 23A and part of the roof.  The original building plans annexed to the title deeds show that in the middle of that part of the roof, there was a structure described as a “drying shelter” (Appeal Bundle p.99), presumably a canopy to enable the occupants of Flat 23A to hang their laundry for drying when it rained.  According to the trial judge (who made a site visit), the roof of the canopy was made of concrete and it was originally supported by posts (Judgment paragraph 16). 

5.  It is not disputed that at the date these proceedings were instituted in 2005, the Defendants’ premises contained the following alterations from the building as constructed:-

(1)     an opening has been made in the ceiling of Flat 23A and an internal staircase built leading up to the roof, where an opening has been cut in the floor (Appeal Bundle p.107);

(2)     the “drying shelter” canopy has been extended up to the front of the building by hard plastic sheets, whilst on the other side the shelter has been extended to the back of the building by a  concrete slab (Appeal Bundle pp. 116-7).  This extension has formed the ceiling for a structure on the roof, enclosed on the sides by hard plastic sheets at the front half and by what appear to be concrete walls at the back half.  A cage of ironwire mesh covers those parts of the structure covered by hard plastic sheets (Appeal Bundle p.112).

6.  In January 2005 the Incorporated Owners of Champion Court issued a writ in the District Court against the Defendants claiming that the alterations were in breach of certain clauses of the DMC, the material parts of which are as follows:

- cl. 10(a): “... not to make any structural alterations in his part of the said Building which may damage the other parts thereof or cause any inconvenience to the other occupiers ... and not to cut or injure cement concrete flooring ... of the said Building or do anything whereby the structural strength thereof may be affected”;

- cl. 4(h)(i): “No owner shall without the consent in writing of the Agent [referred to in cl.4(a)] do cause or permit ... alter the appearance of the exterior of the said building or any part thereof”;

- cl. 4(h)(ii): “No  owner shall without the consent in writing of the Agent do cause or permit ... erect or affix ... any signboards bracket advertisement placard or illumination fitting or thing to the exterior of the said building ... or any part thereof”;

- cl. 10(b): “not to use his part of the said Building for any illegal ... purposes nor do or permit anything therein or thereupon which ... may be a nuisance or annoyance to or may cause damage or inconvenience to the other occupiers of the said Building”;

- cl.10(c): “... not in any way to obstruct or use for any other purpose than egress and ingress to the various parts of the Building such as halls staircases landings and fire-escapes”.

7.  The DMC also contained the following provision:

- cl.4(g)(iii): “The Agent shall have power and authority ... to remove any structure ... which is illegal or contravene the terms of this Deed and to demand and receive from the owner by whom such structure ... was erected or installed the costs and expenses of such removal”.

8.  The Defendants’ defence and counterclaim at trial were set out by the trial judge in paragraph 3 of his judgment. 

9.  In his judgment, the judge held that

-        the District Court had jurisdiction to hear the case (paragraphs 6-12);

-        the Plaintiff had power to sue (paragraphs 13-14);

-        with the exception of the drying shelter, the roofs and partitions or walls built on the roof were illegal structures which contravened cl.4(g)(iii) of the DMC (paragraphs 15-16);

-        the opening cut in the floor of the roof for the internal staircase contravened cl.10(a)of the DMC, that the Defendants could not rely on laches and that the Plaintiff had a duty and a right to ask the Defendants to comply with the terms of the DMC (paragraphs 17-19).

As for the Defendants’ counterclaim he held that:

-        the antennae erected on the common external wall between the 23^rd floor and the roof did not affect the view from both (paragraph 20);

-        there was no substance in the Defendants’ complaint about the noise from the water pump (paragraph 21);

-        the Defendants had failed to prove any loss for which the Plaintiff was liable.

10.  The judge ordered that the Defendants remove the illegal structures and rectify Flat 23A and its part of the  roof to its original state, and dismissed the Counterclaim.  

11.  In the Notice of Appeal, the 2^nd Defendant  (presumably also on behalf of the 1^st Defendant) raised the following grounds.  They:

(A)     doubted the authority of the Plaintiff to sue, as they alleged that the management committee had not complied with procedures required to instruct lawyers to commence the proceedings;

(B)     alleged that the subject alterations had been completed in 1972 and that they had been tolerated for the past 30 years; they questioned the motive of the Plaintiff who demanded the structures be removed only after space on the roof had been rented to Smartone for the installation of  telecommunications equipment;

(C)     alleged that the Plaintiff had waived its right to demand removal of the subject structure as it had received management fees for the illegal structure on the roof of the neighbouring Flat 23B, and demanded management fees from them for their structure;

(D)     alleged that they were unable to restore the roof to its original state as they did not know what the original state was like.

12.  Dealing with  ground (A), it is too late for the Defendants to raise it.  It is well-established law that any disputes concerning authority to sue must be raised by way of an application to strike out before a defence is filed (Russian Bank v Comptoir de Mulhouse [1925] AC 112).  As owners, the Defendants would have been able to ascertain whether the proceedings had been authorised before filing their Defence.  As summarised in Hong Kong Civil Procedure 2008, vol.1 para. 18/19/24, “… if the defendant desires to question the authority to sue in the plaintiff’s name, he must apply to strike out the plaintiff’s name at an early stage; he cannot by his defence dispute the authority, nor can he do so at the trial”.   

13.  Dealing with ground (B), the trial judge referred to the law on laches as set out in Snell’s Equity and which I reproduce below:

“Laches essentially consists of a substantial lapse of time coupled with the existence of circumstances which make it inequitable to enforce the claim.  Delay will accordingly be fatal to a claim for equitable relief if it is evidence of an agreement by the claimant to abandon or release his right, or if it has resulted in the destruction or loss of evidence by which the claim might have been refuted ... But apart from such circumstances delay will be immaterial ...”.  

14.  The judge held that there was no evidence of any agreement between the Plaintiff and the Defendants’ predecessors-in-title nor any loss of evidence.  I cannot see anything to show that the judge was plainly wrong in his assessment of the evidence at trial. 

15.  In any event as the judge rightly pointed out, it is the statutory duty of the Plaintiff to enforce the provisions of the DMC and unlike the breach of a covenant which incorporated owners are capable of acquiescing in (e.g. painting the lift lobby outside an owner’s flat in a colour of the owner’s choice), the Plaintiff cannot acquiesce in the retention of illegal structures. 

16.  First, that the structure on the roof was illegal is clear.  The Buildings Department was informed of the subject structure by a letter from the Plaintiff dated 16 June 2004 and after an inspection of the structure on the roof (but not the opening between Flat 23A and the roof which required internal access), the Buildings Department replied on 4 December 2004 confirming that the illegal structure on the roof was an unauthorised building work and that enforcement action will be taken.  There were therefore breaches of cl. 10(a) and (b). 

17.  Secondly, 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: see e.g. The Incorporated Owners of Chungking Mansion v Shamdasani, Murli Pessumal [1991] 2 HKC 342 and  The Incorporated Owners of Hoi Luen Industrial Centre & anor v Ohashi Chemical Industries (Hong Kong) Ltd [1995] 2 HKC 11, where Godfrey JA held:

“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”. 

18.  The third ground advanced by the Defendants was that the Plaintiff had waived its right to sue them because it had received management fees for the “penthouse” of Flat 23B and had demanded similar management fees for that of Flat 23A.  The matter in relation to Flat 23B was not raised in the Defendants’ defence or counterclaim, and in the Counterclaim the Plaintiff’s demand of management fees from the Defendants was mentioned only in the context of nuisance.  The judge therefore did not consider the issue of waiver.  Since this is a fact-sensitive matter, it would be inappropriate for this court to deal with it. 

19.  In any event, it is now clear that there is no substance in the allegation made by the 2^nd Defendant before us that she had already paid management fees for the structure on the roof.  At the hearing on 5 November 2007, the court gave an opportunity to the 2^nd Defendant to provide further submissions on this point after she had located the relevant payments.  However in her further written submissions it was accepted that she had made that allegation in error.  It would appear that what had happened was that after having demanded higher management fees as a result of the existence of the structure on the roof, the Plaintiff did not proceed with those demands.  (For the record, I would add that we had not given the Defendants permission to make further submissions on other issues and so, other than the clarification regarding payment of management fees, we have not taken the other submissions into account).

20.  As for ground (D), I do not agree that the Defendants would be unable to comply with the judge’s order.  The building plan of the roof has been annexed to the title deeds.  All that the Defendants need to do is demolish the alterations, fill in the opening and reinstate the drying shelter.  No doubt qualified contractors would be able to advise them what ancillary works are required.  There is no evidence that other plans are required or that they are no longer available at the Building Authority.

21.  Before concluding, I would point out that although the Defendants have not included this in the Notice of Appeal, there seems to be some substance in the 2^nd Defendant’s complaint that the iron staircase erected on the roof for access to the top of the lift engine room has trespassed on their property.  If one compares the position of the bottom of the staircase with the passage designated for common use in the building plan, it would appear that the staircase is not resting on common area.  However no ground of appeal has been raised on this issue and accordingly it would not be appropriate to make any order in this respect.

22.  For the reasons set out above, I would dismiss the appeal with an order nisi that the Defendants pay the Plaintiff’s costs.

Hon. Lam J:

23.  I agree and have nothing to add.