THE INCORPORATED OWNERS OF FREDER CENTRE v. GRINGO LTD AND ANOTHER

LDBM 290/2013

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 290 OF 2013

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DECISION
LEAVE TO APPEAL AND STAY OF EXECUTION
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1.  After hearing evidence and submissions on the Application, judgment was handed down on 9 December 2014 (“the Judgment”).  I shall adopt the same nomenclatures used in the Judgment.  In short, my decision was that judgment be entered for the Applicant and injunctions be granted for the Respondents to remove the Trade Names from the External Wall which is the common parts of Freder Centre.

2.  Now the Respondents intend to appeal against my decision.  There is no dispute that the law applicable to leave application is governed by section 11AA of the Lands Tribunal Ordinance.  Mr Wu indicated that the Respondents would rely only on the ground that the appeal has a reasonable prospect of success but not on the limb concerning interests of justice.

The Intended Grounds of Appeal

3.  The Draft Grounds of Appeal are as follows:

It was erroneous:
(i)	to hold that any assigned space for purpose to affix/exhibit/paint its business name/business notice/advertisement (“the Assigned Space”) could not be implied but to expressly and unequivocally provide in the DMC;
(ii)	to find that there was no acquiescence by the Applicant in respect of the affixing/installation of the Trade Names;
(iii)	to hold that the 1st and 2nd Respondents could not rely on other trade names or advertisements exhibited at various places by other owners/occupiers of Freder Centre for about 20 years to establish the defence of acquiescence; and
(iv)	to grant the injunctive relief in favour of the Applicant against the 1st and 2nd Respondents without taking sufficient note that enforcement was arbitrarily brought against the 1st and 2nd Respondents only.

Meaning of Assigned Space

4.  It is said that since there is no definition of “assigned space” in the DMC this phrase should be interpreted in the light of business need and reality.  It is submitted by Mr Wu that in the circumstances of the present case the only meaningful assigned space for the purpose of affixing trade names, business notices or advertisement pursuant to Clause 14 of the DMC is the space immediately above the external wall of every shop entrance/shop front.  It is further submitted that every shop at the ground level or basement in any commercial building across the territory is doing the same, i.e. by exhibiting their trade names/signboard at the space immediately above the shop entrance/shop front.

5.  I agree it is not uncommon for signboards or trade names to be put up immediately above the shop although I would not say that this is the case for each and every shop at ground level and basement in Hong Kong.  They are not relevant to present case however as there was no background facts produced to explain why and how those trade names come to be affixed thereat and whether those parts where trade names were put up are common parts of a building.  More importantly I know not of the provisions in their deed of mutual covenant or if there are any. 

6.  Coming back to the present case, Clause 14 does, in my view, give effect to business need and reality and for this reason there are space assigned for such purpose, namely the directories at the lobby and near the entrance of the car park.  My finding was that the “assignment” of space for the purpose of trade names advertisement and signboards, by the natural and proper meaning, must be done expressly and not impliedly.  It is not disputed that the I.O. is duty-bound to manage and enforce the provision of the DMC, it has the power to approve the affixing of trade names and signboards.  This is the juncture where the business need and reality is to be catered for case by case.  As I have mentioned in paragraph 12-13 of the Judgment, there is virtually no evidence to show that the part above the shop is the assigned space.  Further, there was no evidence to show that the Respondents had asked the External Wall to be assigned to it for this purpose so that the business need and reality could have been considered.

Whether there was acquiescence

7.  The Respondents said that my finding on no acquiescence was erroneous.  Mr Wu confirmed that although he had produced 3 more authorities at the present hearing to support his case, the arguments advanced by him were basically same as those advanced at trial and I had already dealt with those arguments in the Judgment (paragraphs 20-24).  Further I have dealt with the existence of other signboards and trade names in paragraphs 25-26.

8.  The authorities raised by Mr Wu are cases in which decisions were made apparently in favour of the Respondents who had been in breach of the deed of mutual covenant.  In my view Cheung Yuet v. The Incorporated Owners of Oriental Gardens [1979] HKLR 536 is distinguishable for it was found that there was capricious enforcement; where in the present case, I have accepted the Applicant’s case that there was no capricious enforcement.  In Incorporated Owners of Dragon View v. Nalpak Ltd [1989] 1 HKC 549, Godfrey J had considered an undertaking given by the Respondents not to commit further breach as he refused granting an injunction (P553 lines D-F).  After reading the authorities submitted by the Respondents, I am of the view that those cases were decided on their own facts and should not be applied strictly to the present case.

9.  I understand that the Respondents also complained that I had failed to find that the enforcement was arbitrary with those evidences before me.  That was a finding of fact and such finding was made upon my acceptance of the I.O.’s evidence that they had financial constraint to enforce the long-exiting signboards and trade names, but they would take enforcement action against those recently installed fixtures for the time being.  Mr Wu has suggested that it would cost the I.O. almost nothing by issuing warning letters.  That may be right.  It was however not put to Mr Tang for him to explain at the trial and obviously warning letters would carry no force if not followed by legal proceedings.

10.  For the above reasons, I am not persuaded that the Respondents have made out its case that the intended appeal has a reasonable prospect of success.  I therefore dismiss the application for leave to appeal.

11.  As to the application for stay of execution, I have granted interim stay pending determination on the application for leave to appeal in the Tribunal.  Mr Wu said that even if his application for leave to appeal is refused, he would ask that stay be granted until determination of leave application in the Court of Appeal.  It is not suggested that that the Trade Names had posed any immediate danger or hazards to the Building or other owners, weighing the balance of consequence between keeping the Trade Names for a further short period of time and having them removed before a decision on the leave application in the Court of Appeal is pronounced, I agree that discretion should be exercised in favour of keeping them for the time being.  I therefore grant stay for a period pending determination of the leave application for appeal in the Court of Appeal or for 4 months from date of this decision, whichever is the earlier.

12.  The Applicant had mentioned in the written submission that if stay of execution is granted, the Applicant will ask for a security for costs pursuant to RHC Order 59 Rule 13. Since the stay granted was for a rather short period of time, I refuse such application.

Conclusion

13.  The application for leave to appeal is dismissed.  The application for stay of execution is granted pending determination of application for leave to appeal in the Court of Appeal or for 4 months from date of this decision, whichever is the earlier.

Costs

14.  Costs should follow the event.  The Respondents should pay the Applicant’s costs of the leave application.  Although I grant stay of execution, I do not find that the Respondents should get costs because it was not granted on merit but on discretion and balance.  Further the argument on stay took limited time only and it was basically part and partial to the leave application.  I order that the Respondents do pay costs of and incidental to the Summons taken out by them on 6 January 2015.  Such costs are to be taxed if not agreed at District Court Scale.  This is an order nisi to become absolute if no application is made to vary the same within 14 days from the date of this decision.