THE INCORPORATED OWNERS OF CHUNG HING COURT v. CHOCOLATE RAIN JEWELERY & DESIGN CO LTD

LDBM 246/2016

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 246 OF 2016

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J U D G M E N T

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1.  Chung Hing Court (“the Building”) was built in or around 1989.  According to the Occupation Permit (“OP”)(B/231-232), the Building is a 12 storey building with 2 flats per floor from the ground floor to the 11^th floor, all for domestic use.  The Building is subject to a Deed of Mutual Covenant dated 6 April 1990 (“DMC”).

2.  The applicant (“IO”) was incorporated on 20 August 1994.  The respondent is the owner of a ground floor unit (“the Premises”) together with the yard abutting and adjacent thereto (“the Yard”) which was being acquired on 20 September 2006 (Assignment Plan at B/300). 

3.  The IO instituted these proceedings on 25 October 2016 alleging that the respondent had, in breach of the DMC:

a)   built a folding fence (“Fence”), pink in colour, at the frontage of the Premises affixed to the façade of the Building facing Peel Street (“the Façade”) (photo at B/207);

b)   installed a flag pole at the Yard; and

c)   used the Premises for business/commercial purpose other than as private residential premises which is a breach of the OP.

4.  At trial, the respondent admitted that there is a breach of the DMC as far as the use of the Premises and the flag pole are concerned.  Upon the undertaking by the respondent that it will cease to use the Premises for business purpose and to remove the flag pole within 7 days, the only issue remained at trial is the Fence which the IO contended that it is in breach of Clause 18 Section IV of the DMC.

5.  The relevant provisions in the DMC are copied herein for easy reference.

6.  Clause 18 Section IV of the DMC reads (B/248) (“Clause 18”):

“18. Subject to Subsection C of Section I and subject also to the provision contained in the preceding Clause 17, no Owner shall do or permit to be done any alterations to the walls or structure or façade of the Building or any act or thing which may or will alter the external appearance of the Building including, but not limited to, the colour and type of the external walls and the façade and the position of the windows and air-conditioning holes without the prior consent in writing of the Manager and the Manager may specify any conditions for giving such consent.”

7.  Sub-Section C(1) Section I of the DMC reads (B/241) (“Clause  C(1)”):

“C. SPECIAL RESERVATIONS

Subject to the Building Mortgage and the right (if any) of the Mortgagee therein the First Owner and its successors and assigns of the exclusive rights hereinafter mentioned and all persons authorised by it (or them) as well as the Mortgagee its successors and assigns so long as the Building Mortgage is subsisting shall have: -

(1)   The exclusive right and privilege to hold use occupy and enjoy or otherwise dispose of or deal with all external walls the main roof and flat roofs the Yards or open yards and storerooms of the Building and all other spaces of the Land and the Building not forming part of any Unit and not being areas or facilities intended for common use.”

8.  The IO alleged that the Fence built by the respondent is in breach of Clause 18, ie a structural alteration of the façade of the Building since it is not in line with the original design in the Building Plan of the Building.  The respondent’s defence is 2-fold:

a)   The Fence does not constitute a structural alteration since it falls outside the ambit of Clause 18 which is explicitly made subject to Clause C(1) giving the owner of the Yard the exclusive right over the external wall; and

b)   Even if the Fence is in breach of Clause 18, the IO has acquiesced to the said alteration.

Original Design of the Fence

9.  The Building Plans of the Building (B/216-219) consisted of, inter alia, Ground Floor Plan and Front Elevation Plan.  According to the Ground Floor Plan (“G/F Plan”), the Façade where the Fence located is being marked as “W. I. FENCE” (B/218).  There is no other information in the Building Plans as to the design of this “W. I. FENCE”. 

10.  The IO contended that from the Front Elevation Plan (enlarged copy at B/197), there should be a fence with iron bars at the Façade whilst the Fence installed by the respondent is a folding fence.  Hence, the Fence is not in line with the original design in the G/F Plan and there had been an alteration of the Façade in breach of Clause 18.  It is also the case of the IO that the Fence should not be painted in pink.  The IO is seeking for an order for the respondent to reinstate the Fence to the same design as those in the rear service lane of the Building (B/140).

11.  The respondent contended that the Building Plans does not show the colour or design of the “W. I. FENCE” and no one can tell whether it should be a folding fence or a permanently fixated fence and what colour it should be.

12.  On the argument as to what is the original design of the Fence, from reading the Building Plans, I find it more probable than not that the Fence should be a fixated fence of iron rods as contended by the IO.  The W. I. FENCE shown on the G/F Plan (B/218) is being marked as 2 straight lines only whilst the Front Elevation Plan showed the W. I. Fence as one with both bold and fine black lines.  3 of the perpendicular bold black lines are connected to the wall below the fence.  I agree with Mr Poon for the IO that these bold black lines tend to show the main structures of the W. I. Fence being attached to the wall and should not be a folding fence.  So the Fence installed by the respondent, being a folding fence, is apparently not in line with the original design of the Building.  As for the colour of the Fence, there is no evidence to show what should be the colour of the W. I. FENCE but I find this to be irrelevant in view of my findings to follow.

13.  It is not in dispute that before the Fence was being installed, there were 4 big panels of glass at the Façade (photo at B/115).  At the Owners’ Meeting held on 4 January 2016 (“4/1/2016 OM”), a Ms Liu representing the respondent (“Ms Liu”) was present and according to the minutes of the meeting (B/133-134), Ms Liu promised to demolish the unauthorised building works at the Premises and to reinstate the Façade according to the original Building Plans.  It is also not in dispute that the Front Elevation Plan (B/216) had been provided to the respondent.  As a result, the respondent arranged for the Fence to be installed. 

14.  In the minutes of the Owners’ Meeting held on 25 April 2016 (“25/4/2016 OM”) in which Ms Liu was also present, the IO had reminded the owners that before they were to reinstate the fence, they have to submit the drawings of the proposed fence to be installed to the IO for approval (B/121).  Yet, take the respondent’s case to its highest, the respondent is only saying that it did not receive any objection from the IO to the proposed folding fence but no objection cannot equate to consent or approval.

15.  As Mr Tang for the respondent had conceded in his submissions, the IO is entitled to request the respondent to reinstate the Façade to a condition stated by the IO.  As revealed from the facts cited above, this was in fact what the IO had been doing before this litigation.  The objection by the respondent that the IO should not specify the design of the Fence is unjustified.  By the same token, the IO is of course entitled to specify the colour of the Fence and I can’t see how the respondent can object to this.

16.  I find as a fact that the IO is entitled to ask the respondent to reinstate the Fence to a condition specified by the IO so what is the original design of the W. I. FENCE is neither here nor there.

Breach of Clause 18

17.  The respondent argued that Clause 18 is explicitly made subject to Clause C(1) which deals with the external walls of the Building as well as the yards of the Building, including the Yard where the Fence situated.  Clause 18 restricts all alterations to the external appearance of the Building except for those areas designated in Clause C(1) which is excluded when construing the effect of Clause 18.  The practical effect is that for the Yard which is within the exclusive use and enjoyment of the respondent, Clause C(1) allows the respondent a right to “deal with all external walls … of the Yards” and this must include any alteration of the external appearance of the same.  So reading Clause C(1) and Clause 18 together, Clause 18 had no application to the Fence at the Yard which has been specifically excluded from Clause 18 by Clause C(1).

18.  I find the interpretation of Clause C(1) suggested by the respondent is reading Clause C(1) out of context without reference to the last sentence in Clause C(1).  The yards referred to in Clause C(1) are the “Yards or open yards … of the Building … not forming part of any Unit …” (emphasis added).  The Yard of the Premises is one to the exclusive use and occupation of the respondent is beyond argument and it follows that the Yard formed part of the Premises.  So, the Yard of the Premises is not the yard anticipated in Clause C(1).  I fail to see how Clause C(1) can be of assistance to the respondent.

19.  The argument raised by the respondent that Clause C(1) is applicable in this case is misconceived.

Acquiescence

20.  Relying on the case of Hollywood Shopping Centre Owners Committee Limited v The Incorporated Owners of Wing Wah Building Mong Kok Kowloon, unreported, HCA 1582/2007 (16 August 2010), it is the submission of the respondent that the breach of Clause 18 in this case is a breach that the IO has power to approve, waive or acquiesce.  Since the IO had acquiesced to the alterations to the Premises by way of assent or lying by, it is thus unjust and inequitable to grant the relief sought by the IO. 

21.  The factual basis in support of acquiescence of the IO is that at least ever since the time the respondent acquired the Premises, there was no fence affixed at the Façade, whether to the specification of the original Building Plans or otherwise.  There is no written record of any request by the IO to reinstate the “W. I. FENCE” and the first written request was in June 2016.  The IO has acquiesced to the alterations to the external appearance of the Premises with full knowledge of the alteration for at least 12 years, ie from before 2003 when one 美美百貨 was the tenant of the Premises (as shown in the photograph at B/191).

22.  The IO argued that since the alteration is in breach of the Building Plans and prior approval from the government department is required, the IO cannot acquiesce in a breach of the law.  Alternatively, the IO had never acquiesced in the alteration since it is the evidence of the chairlady of the IO (“Ms Lam”) that she had raised objection with Ms Liu ever since year 2010.

23.  There is a factual dispute as to when the appearance of the Façade had been altered and whether the IO had acquiesced all these years.  The photograph at B/191 is not a photo of the 美美百貨 but of the respondent’s shop instead.  Ms Mak of the respondent also agreed to this under cross-examination.  However, Ms Mak had in her witness statement, tried to rely on the photo at B/191 to show that the Façade had already been altered at the time 美美百貨was in occupation in support of her case that she had visited the shop and saw the same as depicted in the photograph.  With her confirmation that the photograph at B/191 is not a photo of 美美百貨, Ms Mak’s evidence must be seen with some circumspection.  I do not accept the evidence of Ms Mak of the respondent in this regard and found her evidence not reliable.  There is no evidence to support the contention that the alteration had been there from before 2003.

24.  As for whether the IO had acquiesced to the alteration and had only raised objection with the respondent in 2016, I accept the evidence of Ms Lam of the IO that she had raised objection with Ms Liu ever since 2010.  In fact, Ms Mak also agreed under cross-examination that the IO had spoken with Ms Liu about the Fence back in 2010 but insisted that Ms Liu was only a staff.  There is no requirement that the objection should be raised with any particular person of the respondent or must be in writing directed to the registered address of the respondent.  Since the company record showed that Ms Liu is one of the directors of the respondent, the objection raised with Ms Liu should be sufficient notice to be brought to the attention of the respondent.

25.  I find as a fact that the Façade of the Premises was being altered from the time the respondent acquired the Premises and the IO had raised objection with Ms Liu ever since 2010.  Since there is only a lapse of 4 years in between, I do not agree that the IO had laid by or assent to the alteration but instead the IO had acted in timely manner.

26.  In the case of Hollywood Shopping Centre Owners Committee Limited, Mr Recorder Rimsky Yuen SC, having gone through the conflicting decisions including The Incorporated Owners of Hoi Luen Industrial Centre v Ohashi Chemical Industries (Hong Kong) Ltd [1995] 2 HKC 11 and The Incorporated Owners of Hong Kong House v Senfield Ltd, unreported, CACV 117/2003 (12 November 2003), came to the conclusion (at §65) that:

“65. In summary, the position can be stated as follows:

(1) whether or not acquiescence can be set up as a defence to a claim for breach of mutual covenants (whether express or implied by reason of section 34I(2) of the BMO) depends on the nature or type of breach in question;

(2) if the breach of mutual covenants in question is within the power of the incorporated owners to acquiesce, acquiescence can be a valid defence provided all the requisite elements giving rise to acquiescence are established; and

(3) on the other hand, if the breach of mutual covenants in question is beyond the power of the incorporated owners to acquiesce, the defence of acquiescence will not be available since the incorporated owners cannot acquiesce in acts which they in law cannot do”.

27.  In The Incorporated Owners of Freder Centre v Gringo Ltd and other, unreported, CACV 161/2015 (23 February 2016), the Court of Appeal found that in order to succeed in a defence of acquiescence, it must be shown:

“...firstly, there was on the part of the plaintiff, an assent or lying by in relation to the acts of another person; and secondly, in view of the assent or lying by and consequent acts it is unjust in all the circumstances to grant the relief in question: see Spry, Equitable Remedies, 9^th edition, p.56.” (at §26)

28.  I agree with the respondent that the breach under Clause 18 is one the IO is entitled to acquiesce since the IO can give their prior consent to any alteration to the external appearance and with conditions as well.  Such condition may include an approval from the relevant government department as required for the change of the Building Plans.  However, there is no acquiescence on the part of the IO as found above.

29.  In case I am wrong in my findings that there is no acquiescence on the part of the IO, the next question to consider is whether it is unjust in all the circumstances to grant the relief sought by the IO. There is no evidence adduced by the respondent in support of the fact that it would be unjust to grant the relief.  There is no hardship on the respondent in granting the injunctive relief but to the contrary, the respondent had enjoyed the benefit of using the Fence for many more years due to the inaction on the part of the IO.

30.  The defence of acquiescence must fail.

Conclusion

31.  Having considered all the evidence and arguments put forward by both parties, it is my findings that the Fence installed by the respondent is in breach of Clause 18 of the DMC and the defence of acquiescence and reliance on Clause C(1) raised by the respondent failed.

32.  The IO is entitled to the mandatory injunction sought in this case together with costs of this application.

The Order

33.  It is ordered that:

a)   The respondent shall remove the Fence and to reinstate the Façade to the specification stipulated by the IO within one month of this order;

b)   Penal notice endorsed;

c)   Personal service of this order be dispensed with;

d)   The respondent do pay the applicant costs of this application to be taxed if not agreed at District Court scale, with certificate for counsel.  Unless any of the parties apply by summons to vary it, the costs order nisi shall be made absolute upon expiry of 14 days.