THE INCORPORATED OWNERS OF ELITE GARDEN v. SHUN HO ENERGY DEVELOPMENT CO LTD

LDBM 83/2019

[2022] HKLdT 28

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 83 OF 2019

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J U D G M E N T

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BACKGROUND

1.  The applicant is the incorporated owners of Elite Garden situated at No.11, Tsing Tsui Path, TMTL 183, Elite Garden, Tuen Mun, New Territories (“Elite Garden”). The 1^st respondent is the registered owners of the property known as unit A1 and A2, upper ground floor, of Elite Garden. The 2^nd respondent was the lawful tenant of the said premises operating a Chinese restaurant there under the trade name “Syria Hui Xuan Seafood Restaurant”. The applicant discontinued their application against the 2^nd respondent on 10 October 2019.

2.  Since 2007, the applicant entered into various licence agreements with the 1^st respondent permitting the 1^st respondent to erect/use signboard, cooling tower and grease filter tank at the common parts of Elite Garden upon payment of some agreed licence fees.

3.  The present proceedings only concern the last licence agreements entered into between the applicant and the 1^st respondent, information as follows:-

(a)	last licence agreement dated 28 January 2016 for erecting/displaying a signboard adjacent to the cooling tower upon payment of a one-off annual licence fee of $6,000 for the period from 1 January 2016 to 31 December 2016;
(b)	the last licence agreement dated 26 January 2016 for placing/using a cooling tower on the platform upon payment of a one-off annual licence fee of $7,500 for the period from 1 January 2016 to 31 December 2016; and
(c)	the last licence agreement dated 26 January 2016 for using the space/area at the rear ladder portion at the ground floor for erecting or placing a grease filter tank upon payment of a one-off licence fee of $3,000 for the period from 1 January 2016 to 31 December 2016.

4.  Parties are on common ground that the above licence agreements had expired without renewal and that the said facilities (i.e. the signboard, the grease filter tank and the cooling tower) are situated at the common part/area of the building.

APPLICANT’S CASE

5.  The applicant called Mr Leung Ting Kwok, the secretary of the applicant, as factual witness to give oral evidence at trial. According to Mr Leung, since about 2014, the applicant had noticed that the 1^st respondent had failed to properly maintain the drainages connecting with the grease filter tank and this caused leakage of grease water to the common parts of the Building. Despite repeated complaints by the residents, the 1^st respondent made no effective improvement to the situation.

6.  The last licence agreements for the signboard, the grease filter tank and the cooling tower respectively had all expired by the end of 2016. In February 2017, the applicant issued formal termination to the 1^st respondent to remind them of the expiration and termination of the licence agreements. The 1^st respondent was requested to demolish the erections and reinstate the common parts to their original state. But the 1^st respondent had refused to do so, in breach of the licence agreements[1], the provisions of the Deed of Mutual Covenant (“DMC”) and the Building Management Ordinance, Cap.344 (“BMO”).

7.  At trial, the 1^st respondent’s representative informed this tribunal that as a matter of fact, the signboard of the 1^st respondent had already been removed for some time. The applicant confirmed that the signboard was no longer in issue. Leave was granted at trial for the applicant to withdraw all the reliefs sought relating to the signboard such that the remaining erections in question are the grease filter tank and the cooling tower.

8.  The applicant seeks, inter alia, an order that the 1^st respondent shall forthwith cease placing and/or continuing causing and/or allowing and/or permitting the placing of any goods, cooling tower, grease filter tank and/or other erections or illegal structures in the common parts of the Building and that the 1^st respondent shall remove the cooling tower and grease filter tank at their own costs and restore the affected areas to their original appearance and/or position. The applicant also seeks damages.

1^st RESPONDENT’S CASE

9.  The 1^st respondent called Mr Ng Yiu Hoi, an officer of their property management department, to give evidence. The 1^st respondent’s case can be summarized as follows.

10.  It is contended that the previous grant of the use and enjoyment of the cooling tower and grease filter tank by the applicant to the 1^st respondent for a long period of time since 2007 to 2017 had created a legitimate expectation on the part of the 1^st respondent that these licence agreements would be continued after their expiration (“Legitimate Expectation Argument”).

11.  By allowing the 1^st respondent the continuous use and enjoyment of the cooling tank and the grease filter tank after expiry of the licences (i.e. since 1 January 2017) to commencement of the present proceedings, the applicant has acquiesced to the non-removal of the said structures and is therefore estopped from raising objection now (“Acquiescence Argument”).

12.  The applicant had directly and indirectly represented that they would renew the licence agreements in the following manners. First, after expiration of the licence agreements, the applicant requested the 1^st respondent to provide timetable of maintenance and to complete the maintenance work within 30 days. Secondly, the applicant had directed the management company to prepare the draft licence agreement for consideration which had led the 1^st respondent to believe that the licence agreements would be extended. In this connection, the 1^st respondent draw the Court’s attention to certain documentary proof which, in their opinion, evident the applicant’s promises/representation. Thirdly, the applicant had resolved in the incorporated owners’ (“IO”) meeting on 23 November 2018 that the 1^st respondent would be given one year (after expiry of the licences) as the grace period to rectify the situation which demonstrated that the applicant in fact anticipated the 1^st respondent’s continued use of the facilities. The 1^st respondent claim that in reliance on these representations, they had acted to their detriment by spending considerable amount of monies for the maintenance and upkeeping of the subject facilities (“Estoppel Argument”).

13.  The 1^st respondent further alleges that throughout the licence periods, they had properly maintained the erections and paid all licence fees and had suggested to the applicant some ways to resolve the water seepage problem in or about June 2016 which were rejected by the applicant. In their view, the applicant had failed to provide assistance to enable them to carry out the necessary repair and maintenance works. It is said that the overall management of the building was the duty of the applicant and the management company appointed by them. The applicant was wrong in requesting the 1^st respondent to assume the role of the management in relation to the maintenance of water tank (“No Breach of Duty to Maintain Argument”).

14.  The 1^st respondent submit that since the cooling tower and the grease filter tank had not been erected by the 1^st respondent and were not the 1^st respondent’s property, removal of such erections/installations would constitute trespass or conversion of the goods owned by others (“Trespass / Conversion Argument”).

15.  The 1^st respondent point out that the applicant said in their letter of 21 February 2017 that the licence agreements were terminated due to the 1^st respondent’s failure to obtain relevant approval from the government authorities on the installation of the grease filter tank. It is argued that if that was the reason of termination, it must follow that if the 1^st respondent is able to obtain approvals from the government authority, the applicant shall then be obliged to renew the licence agreements (“Obliged to Renew upon Obtaining Government Approval Argument”).

16.  To conclude, the 1^st respondent aver that the applicant was not entitled to the reliefs claimed. They counterclaim the declarations that the 1^st respondent be entitled to renewal of the licence agreements and the continuous use and enjoyment of the cooling tower and grease filter tank.

EXPERT EVIDENCE

17.  In the course of trial, the 1^st respondent attempted to raise some unpleaded technical issues concerning the cooling tower. It was submitted, without evidential basis, that the cooling tower forms part and parcel of the air conditioning system and that the technical feasibility of having the entire structure removed was queried. The 1^st respondent’s representative sought to introduce evidence in this aspect by the oral testimony of their factual witness.

18.  I pointed out to the 1^st respondent that their attempt, if allowed, would deprive the applicant of the chance to properly gather evidence and formulate argument to respond. The assessment of whether the removal of the cooling tower structure is technically feasible may require expertise and should go beyond the scope of factual evidence but regrettably their side (and also the applicant) obviously had elected not to prepare expert evidence for use at trial.

19.  Undesirable as it may be, the 1^st respondent’s attempt did prompt the concern of whether the mandatory injunction ordering the removal of the cooling tower should be granted or, if one is granted, whether the order could be practically carried out.

20.  During adjournment of the trial, parties were directed to seriously reflect on this question. After some written and oral submissions, the parties came to consensus that leave should be granted for both parties to appoint their respective expert[2] in the field of structural engineering who should compile a joint expert report to comment on issues relating to the cooling tower[3]. Trial was adjourned part-heard for the parties to obtain expert evidence.

21.  The applicant appointed Mr Pho Tjie Tjao Dennis (“Mr Pho”) and the 1^st respondent appointed Mr Tsui Leung Cho (“Mr Tsui”) as their respective experts. The parties had differences in the course of preparing expert evidence which were resolved by some interlocutory applications. At the end, a joint site inspection was conducted by the experts in June 2021, followed by joint expert meeting. Based on the mutual discussions, Mr Pho prepared a draft joint expert report for Mr Tsui’s comments. According to the applicant’s solicitors, despite Mr Tsui had actually agreed to the contents of the draft joint report and asked for a fair copy for signature initially, he later became evasive and refused to sign when the applicant tried to arrange for execution. As a result, the “joint” expert report was eventually signed by the applicant’s expert, Mr Pho, only.

22.  On the resumed date of the adjourned trial on 30 August 2021, the 1^st respondent submitted that since the applicant had been unable to file a joint expert report duly signed by both parties in defiance of the court’s expert directions, the applicant should be treated as having adduced no expert evidence and as such the court should only allow the 1^st respondent’s expert to give evidence at trial. This argument was rejected outright as it is quite apparent that the applicant’s inability to file a duly signed joint expert report was caused by Mr Tsui’s refusal to append his signature on the document. The 1^st respondent then applied for adjournment of the trial for their expert to peruse and execute the joint expert report. This application was also refused because ample time had already been given for the parties to prepare expert evidence amid the trial and no further adjournment would be allowed. The trial immediately proceeded.

23.  The 1^st respondent’s expert, Mr Tsui, attended court to testify in the afternoon. Time was given for him to read the joint expert report again and he was asked to identify which paragraph(s) of the report he disagreed or wished to correct or clarify. Interestingly, Mr Tsui said that he actually agreed to the contents of the entire joint expert report and therefore had already signed on it in the course of reading it just now. The real reason why then he did not sign the joint expert report earlier remains mysterious. The applicant’s expert, Mr Pho, testified afterwards. Their oral evidence basically tallied with what had been said in the joint expert report.

24.  In summary, the joint expert report tells that:-

(a)	The cooling tower supporting frame is a building work under the Buildings Ordinance, Cap.123 and its associated legislations. Its erection and alteration would require a formal submission of prescribed plans for the authority’s prior approval and consent. As there is no record of submissions for approval, the cooling tower is an unauthorized building works (“UBW”).
(b)	There is no record that the construction of the cooling tower together with its supporting structure have been properly checked or supervised on material and workmanship. There is also lack of maintenance for the existing frame supporting the cooling tower. Some members of the steel frame have been corroded, in particular some of the main supporting baseplates have become so rusted and delaminated that the fixing bolts were unrecognizable and would not be able to serve as the support for the frame without repairing. The dilemma is that as structural repairing work itself is a building work and require submission to the Buildings Department and since the cooling tower structure is by itself an UBW, its repair would involve the execution of another UBW which is prohibited under the Buildings Ordinance. It would be unsafe to allow for the cooling tower structure to remain.
(c)	Technically speaking, the cooling tower with its supporting frame can be demolished and/or removed in a due manner in accordance with the provision of the Buildings Ordinance and under appropriate provisions of the Minor Works Regulations.
(d)	The cooling tower forms part of the air-conditioning system serving only the 1st respondent’s premises. It is not part of the air-conditioning system provided by the building. Technically speaking, it is possible for the 1st respondent to have various alternative air-conditioning facilities in lieu of the subject cooling tower. The alternatives include:- (i) erecting a new-conditioning system with necessary supporting structure, with proper design and plan-submission procedures followed, and proper checking and supervision on materials and works. There are various optional types of air-conditioning system such as water-cooling system or air-cooling system (which is also being used by other premises of the same building). (ii) provision of air-conditioning facility from the existing cooling tower space at the podium of the building which space is proper and well-protected. (iii) provision of indoor air-conditioning system at the 1st respondent’s premises, with similar or alternative cooling-tower system with the use of ventilation via windows/louvres/ducts etc.

DISCUSSION

Chronology & Communications between the Parties

25.  From the documentary evidence, it is clear that the applicant did not renew the licence agreements with the 1^st respondent upon their expiration on 31 December 2016.

26.  In the meeting on 17 February 2017, the management committee (“MC”) acknowledged that both the two licence agreements regarding the erection and placement of the cooling tower and grease filter tank respectively had already expired on 30 December 2016. It was further resolved that the licence agreements shall be formally terminated and the 1^st respondent shall reinstate the common parts to their original state and condition within 14 days upon written notice to be served by the management company[4].

27.  On 21 February 2017, the applicant served termination notice[5] on the 1^st respondent to formally register the cessation of the licence arrangement.

28.  In or about June 2017, the 1^st respondent proposed to renew the licences.

29.  Item 6 of the minutes of the MC meeting of the applicant dated 23 June 2017[6] recorded that the 1^st respondent had failed to repair the damage done to the common parts of Elite Gardens. The applicant further put on record that if the 1^st respondent failed to comply with all the requisite repair and restoration works within 1 month, the management company would consider commencing legal proceedings to enforce the licence agreements.

30.  The applicant instructed their solicitors to issue a letter to the 1^st respondent on 12 July 2017[7] pointing out that the 1^st respondent’s use of the cooling tower and the grease filter tank had been adversely affecting other occupiers and also the rain water well of the Elite Garden.

31.  As shown in the minutes of the MC meeting held on 21 July 2017[8], it was resolved that:

“管理公司與「順豪」於7月20日行場視察有關設施，「順豪」口頭答應會準備行場報告予法團審閱，以確保有關維修項目能達到法團要求。會於稍後時間商討有關續借位置擺放事宜。”

32.  Then a MC meeting was held again on 22 September 2017. Item 4 of the minutes[9] recorded that:

“商討及跟進「順豪」（酒樓）水塔及隔油池協議終止後事項

雨水井報價及續約協議書，與會委員商討後，仍有待跟進。與會委員要求「順豪」維修及保飬工程表交給律師，由認可工程人士負責及承擔費用。「順豪」就有關漏水工程完工後，要求管理公司拍照做記錄。

33.  A MC meeting was held on 16 November 2017, item 4 of the minutes recorded[10] that:

有關之問題法團已於2016年1月份已經終止，同時亦就相關問題向「順豪」方面發出律師信進行通知，唯目前對方仍未就該等問題進行任何行動，而就有關問題「順豪」代表吳先生表示由於其新接手負責，故請委員會給予時間以便其進行了解並承諾會盡力協調法團與其公司解決有關之問題，經與會委員商議後要求管理公司協助提供維修報價，並去信相關業主要求對方負責因其租客使用不當之維修責任，並盡快進行維修……。”

34.  In the minutes of the MC meeting held on 25 October 2018[11], it is recorded in paragraph 8 that:

“ (八) 商討及議決「順豪」(酒樓) 水塔及隔油池終止協議後相關維修工程 (要「順豪」清拆回復原狀) 事宜

管委會委員查詢因隔油池油脂導致雨水井地渠淤塞，雨水井8月20日停工至今幾時真正維修完成。「順豪」代表吳先生表示目前未確實到動工日期。

「順豪」代表吳生表示目前冷氣房牆身及門窗未列入修復行動中，正準備在第二期工程時安排，未確實到動工及完工日期。

吳生表示會和Gold Peak曾生配合，天龍會污水渠工程均會按照並符合屋宇署指引之要求進行。

委員會亦向「順豪」代表吳生要求2017年7月12日終止協議程序，將水塔及隔油池即時回復原狀。

1) 管委會7比1決議通過「順豪」必須將隔油池及水塔場地即時回復原狀。

2) 管委會7比1決議通過禁止「順豪」及其租客進入未有借用協議之地方，包括2樓平台及地下隔油池。（授權港深聯合物業管理有限公司嚴格執行，如有人未經法團同意就擅自進入，物業管理公司有權報警處理。）”

35.  Documentary evidence actually shows that the applicant was dissatisfied about the 1^st respondent’s failure to repair the common parts of Elite Garden which had been damaged as a result of their use of the facilities and, therefore, insisted that the 1^st respondent shall rectify the same before licence renewal would be further discussed and granted.

36.  As the applicant opined that the 1^st respondent failed to remedy the situation despite ample time had been given, the applicant resolved in the MC meeting held on 23 November 2018 that no further time would be given for the 1^st respondent to make good their wrongs and that legal proceedings would be commenced to prevent further use of the common parts by the 1^st respondent. The relevant paragraphs in the minutes of the said MC meeting are appended below[12]:

	商討及議決採取法律行動向「順豪」（租戶為酒樓薈聚軒）收回各項公眾地方設施及使用權事宜
1.	順豪代表吴耀海先生於會內向委員會提交裝修申請及支票等以申請進行平台冷氣機房維修工程，經與會委員商討後要求對方於申請文件內附加工作內容，並且表明工程只允許進行結構修復，而有關鐵器及加裝水箱等部份均不得觸及，另外有關上述工程只視作還原部份設施的部份項目。由於法團已啟動法律程序準備根據本大廈《公契》賦予的權力，收回該公司佔用公眾地方的所有設施的使用權及拆除該等設施，故此上述不合格的裝修申請及支票，一律退回給順豪公司，不予受理。另外吴先生表示稍後會再約另一業主Profit More於下周視察及商討第二期之修復及分攤維修費用問題（Profit More代表表示從未收過電郵要約),期望下次會議能給予委員會回覆。委員會對此不予評論。
2.	終止順豪協議書至今，委員會已多次予順豪寬限時間達一年以上，以期望對方能按協議書處理及修復受影響的公用設施，消除損害公眾安全的嚴重隱患，可惜對方極力多次拖延仍未有實際修理行動，故經與會委員商討後，以6票贊成一票反對下聘用「何傳經」律師，代表法團處理及入稟法院收回有關之公眾部份，另外黃主席表示有關訴訟將可能會涉及一定費用，故此會於稍後之業主大會內議決通過相關費用。

37.  Having set out the chronology of events and communications between the parties, I shall now deal with the individual arguments of the 1^st respondent.

No Breach of Duty to Maintain Argument

38.  The 1^st respondent claim that they had properly maintained the facilities and therefore had not breached the licence agreements.

39.  This defence is out-of-focus because the breach which the applicant complains about in these proceedings as pleaded in their Notice of Application was the 1^st respondent’s failure to remove the erections/installations and to reinstate the common parts to their original state after expiration of the licences[13]. The 1^st respondent’s failure to repair and maintain was mentioned in the applicant’s witness statement to explain why the applicant had decided not to renew the licences[14]. The applicant did not take the initiative to raise it as a breach on its own in their application.

40.  More importantly, since the licence agreements do not contain any term obliging the applicant to renew the licence if the 1^st respondent had properly maintained the facilities, in my view, whether the 1^st respondent had properly repaired and maintained the cooling tower and the grease filter tank is irrelevant to the question of whether those facilities shall or shall not be removed.

Acquiescence Argument

41.  As a matter of law, the court has a discretion to prevent a person from insisting on his strict legal rights – whether arising under a contract, or on his title deeds, or by statute – when it would be inequitable for him to do so having regard to the dealings which have taken place between the parties[15]. The most common basis for this are acquiescence and estoppel. The underlying rationale of both these grounds is that it would be unconscionable for strict legal rights to be asserted in the circumstances of the case.

42.  Having considered all evidence before me in particular the communications between the parties after expiration of the licence agreements as summarized above, I could find nothing which suggests that the applicant had tolerated the 1^st respondent’s non-removal of the cooling tower and the grease filter tank after expiration of the licence agreements or had given up the right to enforce their rights over the unauthorized use of the common parts of Elite Garden by the 1^st respondent after expiration of the licence agreements.

43.  From the chronology of events and the records of communications, it is actually quite obvious that the applicant has been persistent in requiring the 1^st respondent to discharge of their pre-existing contractual obligations under the licence arrangements to remedy any damage to the common parts as a result of their use of the facilities. In my opinion, anything done or not done by the applicant after expiration of the licence could at most be translated as their giving the 1^st respondent the last opportunity to perform their obligations in order to see if the dispute could be resolved amicably without having to go to court and to see if further renewal of the licence would be justified. The 1^st respondent’s acquiescence argument is wholly unpersuasive.

Estoppel Argument

44.  Estoppel is based on conduct by one person which leads another to believe that action will not be taken against him or that, as a result of the former person’s acts or omissions, the latter person has acquired a right he would not otherwise have had[16]. To establish the defence of proprietary estoppel, the essential elements are representation, reliance and detriment.

45.  For representation, it must be shown that it is the owner of land who induces, encourages or allows the other party to believe that he has or will enjoy some right or benefit over the owner’s property. The representation must then be relied upon by that other party who acted to his detriment to the knowledge of the owner. The detriment would arise when the owner seeks to take unconscionable advantage of that party by denying him the right or benefit which he expected to receive[17].

46.  Turning to the evidence of this case, the 1^st respondent drew the court’s attention to the following documents which, in their opinion, record the applicant’s representations about licence renewal as well as their detrimental reliance:-

(a)	Summary of IO meeting dated 22 September 2017 prepared by the 1st respondent[18]: 主席黃生要求我司書面回應水塔，雨水井維修等動工日期及完工日期時間表，並要求管理公司楊生催促祥記下週內完成報價。 我司投訴老人院簷篷積水引致「金港酒樓」天花剝落，Profit More/梁先生回覆公司已聘請承辦商勘察現正等候報價，如我司需要行場檢查維修位置有否偏差，可與盧劍聲先生聯絡約時間一齊行場，確認有關維修位置是否正確。 席間黄生要求管理公司準備有關繼租水塔，隔油池等新協議文件交我司簽署。
(b)	Summary of the IO meeting dated 23.6.2017 prepared by 1st respondent[19]: 商討及議決「順豪」酒樓水塔及隔油池協議終止後事宜。 主席黃生表示已終止協議多時，我司到現在未見有維修行動，必須2星期內提交維修進度表及30日內完成所有維修項目，及要求管理公司發律師信按正常手續辦理，（會議期間有委員提出下次開會前未完成維修所有項目向我司提出訴訟）職回應我司已聘請專業結構工程師處理，及要求管理公司溫先生與我司聯絡協商有關維修進度。
(c)	Minutes of the IO meeting dated 16 November 2017 prepared by the 1st respondent[20]: 商討及跟進「順豪」（酒樓）水塔及隔油池協議終止後事項 席間，主席要求先維修好2樓冷氣機房損壞情況，包括i) 牆身裂縫，ii) 工字支架欠佳引至房門變形，iii) 水塔水盆保護網破壞， iv) 房內光線系統欠佳，v) 電制欠佳，vi) 房內天花裂縫，vii)冷媒喉隔熱物料破口有水外漏情況，另外viii) 地面雨水集蓄池壁面維修等，主席強調先處理好上述損壞項目，用者負責維修費用，完成後才商討協議條件，管理公司跟進。
(d)	Minutes of the IO meeting dated 21 July 2017 prepared by the applicant[21], contents set out in paragraph 31 above.
(e)	Minutes of the IO meeting dated 23 November 2018 prepared by the applicant[22], contents set out in paragraph 36 above.

47.  It should be noted that that the documents enumerated by items (a), (b) and (c) above were merely records prepared by the 1^st respondent instead of proper minutes of the IO meetings. The applicant challenges the reliability of these documents as the records of what had actually said or taken place.

48.  Clearly, even the 1^st respondent’s records show that the applicant had been persistently requesting the 1^st respondent to perform their pre-existing contractual obligations under the previous licence agreements to repair and/or reinstate the common parts concerned and to rectify the wrongs as a result of their previous use of the facilities. In the evidence, I do not see any materials suggesting that the applicant had ever promised that they would renew the licence agreements if the 1^st respondent had carried out the works. What had been said by the applicant, at most, was that the 1^st respondent had to perform their contractual obligations to repair and reinstate first before any renewal would be materialized and granted. As it turned out that the applicant considered the repair and reinstatement work had not been satisfactorily carried out by the 1^st respondent, the licence agreements have not been renewed in the end.

49.  Therefore, even assuming that the contents of the 1^st respondent’s evidence do represent accurate records of the things said and actions done by the relevant parties, the words said and actions done could not constitute the required promises or representation to form a promissory estoppel.

50.  I shall now turn to the applicant’s evidence, some are already covered by the discussions in the chronology.

51.  The first and foremost piece of evidence is the licence agreements. The clauses thereof showed that the applicant had not intended continual use of the said facilities by the 1^st respondent beyond the term of licence unless the licence agreements were formally renewed.

52.  Another piece of evidence is the minutes of the MC meeting of the applicant dated 17 February 2017[23], contents of which have been discussed above and shall not be repeated.

53.  In February 2017 the applicant served written notice on the 1^st respondent to formally terminate the various licence agreements. As I see it, at the time when the written notice was given, the licences had already expired by effluxion of time which means the service of the termination notice was strictly speaking unnecessary. Such notice albeit technically redundant should serve the purpose of conveying a clear message of the applicant’s intention to cease the licensing arrangement.

54.  As could be seen in the various MC meetings minutes held on diver dates as discussed above, the applicant had been persistent and consistent that if the 1^st respondent failed to comply with all the requisite repair and restoration works, legal proceedings would be commenced to enforce inter alia the licence agreements.

55.  To conclude, having considered all the evidence I disbelieve that the applicant would or did promise or represent to the 1^st respondent that the licence agreements would be renewed upon the latter’s carrying out remedial works to the damaged common parts. This is totally opposite to what the applicant had resolved to do after deliberation and discussion in various meetings. In any event there is no evidence to show that the 1^st respondent had actually remedied the situation whether reasonably or to the satisfaction of the applicant.

56.  Incidentally, the 1^st respondent claims that the applicant had requested the 1^st respondent to provide a timetable for completion of the maintenance works and had instructed the management company to prepare draft licence agreements for further consideration pending completion of the works. It is said that these also constitute representation.

57.  In my view, even if the provision of a timetable for rectification works is true (I make no such finding), this did not and should not alter the applicant’s position, which was rather clearly conveyed, that those works were referable to the 1^st respondent’s pre-existing obligations under the previous licence agreements rather than constituting any “consideration” or extra obligation to be performed by the 1^st respondent in return for licence renewal.

58.  In this regard, the case Lee On Management Ltd v Po Hing Laundry HCA No.2342/1987 could be of reference. In that case a supervisor of caretakers employed by the managers requested the defendant owner to find an alternative way of directing smoke away from the building. The defendant installed a new steam box, costing $75,000. The court found on the facts that there was no representation and rejected the defendant’s claim that the manager was estopped from taking enforcement proceedings and opined that an invitation to submit proposals for modification did not amount to an undertaking that those proposals would be approved.

59.  Likewise, in the present case, any preparation of draft licence agreements for potential consideration and discussion in future could not possibly amount to a representation or an undertaking on the applicant’s part that the licences would be renewed. Even if the 1^st respondent genuinely thought that the licences would be renewed despite the clear contrary intention of the applicant, in my view, a mistaken belief generated by hope was not capable of creating a representation.

60.  The 1^st respondent also allege that the applicant had resolved in the meeting on 23 November 2018 that one year would be given as the grace period for the 1^st respondent to rectify breach of licence agreements after their terminations which demonstrated that the applicant in fact anticipated the 1^st respondent’s continued use of the facilities.

61.  The relevant paragraph of the minutes recorded such contents: by the time of the MC meeting was held on 23 November 2018, the committee had already given plenty of time (more than a year since expiration of the licence agreements) for the 1^st respondent to fulfill their obligations under the previous licence agreements and to reinstate the common facilities as affected by their previous use. But despite the ample time given, the 1^st respondent had been playing delaying tactics without having taken any practical steps to remedy the situation. Therefore, after discussion, it was resolved that lawyers be instructed to commence proceedings against the 1^st respondent.

62.  I could not see how the above resolution could be seen as constituting the requisite representation to found an estoppel.

63.  As regards detrimental reliance, the 1^st respondent alleges that in reliance on these representations, they acted to their detriment by incurring the following expenditures for the maintenance and upkeeping of the subject facilities even after expiration of the licences:-

(a)	On 21 May 2017 (for cooling tower assessment and examination) at the sum of $16,000; and
(b)	On 11 September 2018 (for cleaning and repairing the grease filter tank) at the sum of $14,250.

64.  Such expenditure could hardly be regarded as substantial or considerable to begin with. Documentary evidence shows that the expenditure of $16,000 was incurred on 21 May 2017, even before the time when the 1^st respondent proposed to renew the licence agreements as per their own case. This should negate any element of “reliance” between the spending and any renewal negotiations.

65.  As for the spending of $14,250 in about July 2018, the documentary proof evidencing such an expenditure describes it as “清理及修葺食肆租客使用的隔油池油漬影響的後梯範圍”[24]. In another document[25], this expenditure is also described the works as relating to “清理及修葺受上述物業以往食肆租客使用的隔油池漬影響的後梯範圍”. All these suggest that this expenditure was referable to their pre-existing contractual obligations to make good any damage to the common parts of Elite Garden. The 1^st respondent was obliged to perform the same under the previous licence agreements in any event.

66.  The 1^st respondent argue that the sum of $14,250 paid consisted of the cleaning and/or repair fee not only of the grease filter tank but also the rain water well which they had no obligation to maintain. My view to this argument is that first, such allegation is unsupported by objective evidence. In any event, it is reasonably arguable that the cleaning and/or repair of the water tank was necessitated by the 1^st applicant’s inappropriate use/maintenance of the grease filter tank which therefore fell within the 1^st respondent’s responsibility.

67.  Regardless whether a fraction of the sum of $14,250 paid was for some facility not within the 1^st respondent’s responsibility and hence was in excess of their contractual obligations under the licence agreement, since I found that no representation had been made by the applicant, it could not be said that the tiny sum of payment spent by the 1^st respondent in excess of their existing contractual obligation, if any, had been made in consideration of or in reliance of any promise or representation by the applicant.

68.  Without representation and without detrimental reliance, the defence of estoppel could not succeed.

Legitimate Expectation Argument

69.  Legitimate expectation is a doctrine in the sphere of public law. The 1^st respondent has not cited any authority to support their contention that the doctrine of legitimate expectation could be applied to private law proceedings such as the present one.

70.  Even assuming (which I do not accept) that the concept of legitimate expectation can be imported from the public law to the present private law context, it is trite that a legitimate expectation is only created and given effect if the following crucial requirements[26]. First, any representation relied upon to support a legitimate expectation must be “clear and unambiguous” generally speaking. Secondly, to qualify as a legitimate expectation, it must be objectively reasonable and legitimate. Thirdly, a legitimate expectation will not be given effect when doing so means that the decision-maker must act contrary to his legal duties or would have to exercise his statutory discretion in a way which undermines the relevant statutory purpose.

71.  Turning to the facts of this case, the licence agreements in relation to the grease filer tank and cooling tower for the years of 2007, 2014, 2015 and 2016 were produced as evidence[27]. These agreements invariably specify a fixed licence period of one year. All the licence agreements of the cooling tower adduced contain the same Clause 3 to the effect that the licence could only be renewed upon execution of a new written licence agreement. The exact wording of Clause 3 is:

“本協議書到期後如需續約，必須重新定立協議書。”

72.  As regards the licence agreements for the grease filter tank adduced by the parties, the 2007 and 2014 agreements both contain a Clause 3 of the same wording set out above. Since 2015, the wording of Clause 3 had been modified to read as follows in the 2015 and 2016 agreements:

“協議書期滿前雙方可以兩個月書面通知對方解約, 此合約將每年檢討，甲方將擁有本合約之最終解釋權。”

73.  Evidently, the parties mutually intended and agreed that licence could be renewed only upon execution of a new licence agreement by the parties. For the licence of the grease filter tank after 2015 in particular, it had been explicitly agreed that licence would be subject to a yearly review by the applicant which should have the right of final interpretation of the licence agreement. It is a piece of hard fact that the parties could not enter into any new licence agreement after expiration of the last agreements by end of 2016.

74.  The clear wording in the various agreements coupled with the communications between the parties as discussed above, in my view, left no room for incubation of a legitimate expectation on the part of the 1^st respondent that the licence agreements would be continued after their expiration. The 1^st respondent’s legitimate expectation argument must fail.

Applicant Obliged to Renew Argument

75.  The 1^st respondent contend that since the applicant indicated in their letter dated 21 February 2017 that the licence agreements were terminated due to the 1^st respondent’s failure to obtain relevant approval from the government authorities on the installation of the grease filter tank, it follows that if the 1^st respondent is able to obtain such approval from the authorities, the applicant shall be obliged to renew the licence agreements.

76.  I am not persuaded by this argument. The said letter of 21 February 2017 merely sets out some of the background situation that led to the applicant’s decision not to extend the licence agreement. The licence agreements actually did not require the applicant to explain the reasons why the licence would not be renewed, not to mention obliging the applicant to renew the licence upon occurrence of certain events like the 1^st respondent’s capability to obtain government approval. Under the licence agreements, the applicant shall have liberty to decide whether to renew the licence or not to renew.

Trespass or Conversion Argument

77.  The 1^st respondent contends that since the cooling tower and the grease filter tank were not their properties, removal of such erections/installations would constitute trespass or conversion of the goods owned by others.

78.  It is beyond dispute that the cooling tower and the grease filter tank had been erected at the common part/area of Elite Garden to exclusively serve the 1^st respondent’s property. It falls within the realm of logic to say that if those structures were not erected by the 1^st respondent themselves they probably had been erected by the 1^st respondent’s predecessor-in-title. As a matter of uncontroverted fact, the 1^st respondent and/or their tenant have been using these facilities for their private commercial use and benefits for a long period of time and such use turned out to be at the expense of other owners of Elite Garden. In the circumstances, it is only fair for them to remove these erections upon cessation of the licence arrangements both as a matter of contractual obligation under the licence agreements or as a matter of fair implementation of the DMC. I see no merits in the 1^st respondent’s trespass or conversion argument. After all, there is no sign of any party having come forward alleging trespass or conversion against the 1^st respondent.

DMC, BMO & Licence Agreements

79.  Clause 5 of the DMC provides that:

“The owner or owners for the time being of each undivided 1046^th share in the said land and the said Building shall at all times hereafter be bound by and shall observe and perform the covenants provisions and restrictions set out in the Second Schedule hereto.”

80.  Clause 9 of the Second Schedule to the DMC provides that the owner or owners shall observe and perform, inter alia, the followings:

“Not to obstruct or encumber the communal areas, lifts, lobbies staircases passages or other areas within the said Building nor permit the same to be obstructed or incumbered nor to deposit any refuse, matter or other thing thereon nor to use any part thereof for any business or private purpose and no owner shall do or permit or suffer to do anything in such areas as may be or become a nuisance or cause annoyance to any other owners or occupiers of the other units in the said Building.”

81.  Third Schedule to the DMC set out the powers and duties of the Managers, under Clause 6 thereof, the Managers have the power:

“To keep the communal areas of the said Building well-lighted and in clean and sanitary state and condition and to prevent the obstruction thereof and to prevent any person from unlawfully occupying or using the communal areas or any part thereof.”

82.  Under Clause 10 of the Third Schedule, the Managers also have the power to:

“To remove any structure or installations, signboard, sunshade, bracket, fitting, obstruction or thing in or on or about the said Building or the said land or any part thereof which is illegal or which contravenes the terms of this Deed and to demand and recover from the owner by whom such structure or other thing as aforesaid was erected or installed the costs and expenses of such removal.”

83.  Section 34I of the BMO stipulates that:-

(1)	No person may
	(a)	convert any part of the common parts of a building to his own use unless such conversion is approved by a resolution of the owners’ committee (if any);
	(b)	use or permit to be used the common parts of a building in such a manner as-
		(i)	unreasonably to interfere with the use and enjoyment of those parts by any owner or occupier of the building; or
		(ii)	to cause a nuisance or hazard to any person lawfully in the building.
(2)	Any person who contravenes subsection (1) shall be deemed to be in breach of an obligation imposed on him by the deed of mutual covenant in respect of the building.”

84.  The licence agreements of the grease filter tank and the cooling tower[28] both require the 1^st respondent to remove the erections and/or reinstate the common parts/areas upon expiry of the licence agreements on 31 December 2016. By refusing to remove the erections and allowing the continued occupation of the common parts/area by those erections after expiration of the licence agreements, the 1^st respondent was in breach or in contravention of the relevant licence agreements, the DMC and the BMO.

CONCLUSION & DISPOSITION

85.  By reason of the above analyses and having considered experts’ opinion that the cooling tower is an unauthorized building works, that it would be unsafe to allow the structure to remain, that technically the cooling tower and its supporting frame can be safely removed, that after the removal the 1^st respondent would still have various options of alternative air-conditioning facilities, I am prepared to grant the injunction which I hereby do that the 1^st respondent do within 63 days from the date of this judgment dismantle and remove the cooling tower and the grease filter thank at their own costs and restore the affected common parts/area to their original condition. Should the 1^st respondent fail to comply with the above order within the prescribed time, the applicant shall be at liberty to carry out the dismantling, removal and reinstatement works at the reasonable costs of the 1^st respondent.

86.  Regarding the applicant’s claim for damages, since the applicant has not set out their case on quantum nor adduced evidence to substantiate their loss, I would only allow nominal damages of $100.

87.  The 1^st respondent’s counterclaim for the declarations that they are entitled to the renewal of the licence agreements and the continuous use and enjoyment of the cooling tower and grease filter tank are dismissed.

88.  It is fair for costs to follow the event. I order that the 1^st respondent do pay the applicant’s costs of these proceedings, to be taxed on the District Court scale if not agreed.