中紀投資有限公司 v. 青山道國際工業大廈業主立案法團

CACV 96/2021

[2021] HKCA 1737

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 96 OF 2021

(ON APPEAL FROM LDBM NO 118 OF 2017)

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REASONS FOR JUDGMENT

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Hon Yuen JA:

Procedural history

1.1.  In Lands Tribunal proceedings LDBM118/2017 (“the LT case”), the applicant is the owner of unit 2A (“the 2A owner”)  in a building called International Industrial Building (“the building”), and the respondent is the building’s incorporated owners (“the IO”). 

1.2.  The 2A owner’s complaint in the LT case was that the IO had failed to take action to remove 2 window frames installed at the 9^th floor level at the external wall of the building, which wall was a common part. The window frames had been installed or maintained by STL Co Ltd, the owner of unit 9A (“the 9A owner”). 

1.3.  The 9A owner was not a party in the LT case, although this question was raised prior to the hearing of the LT case in the circumstances set out in para. 10 in these Reasons for Judgment.

2.  The 2A owner’s application was dismissed by His Honour Judge S. Lo, presiding officer of the Lands Tribunal (“the PO”), in a Judgment dated 24 January 2020 (“the Judgment”). The 2A owner applied for a review, but the PO confirmed his Judgment in a decision dated 9 July 2020. 

3.  The 2A owner applied for leave to appeal, which was dismissed by the PO in a decision dated 11 January 2021.  The 2A owner then renewed his application for leave in this court in CAMP32/2021, which was granted by Lam VP (as he then was)  and Chu JA on 5 March 2021. 

4.  A Notice of Appeal was duly lodged in CACV96/2021 on 12 March 2021.  The IO filed a Respondent’s Notice on 7 April 2021.

Joinder order

5.  In the order granting leave, the court also ordered that there should be a directions hearing in the appeal to consider the question of joinder of the 9A owner.  

6.  On 12 November 2021, after hearing leading counsel for the 2A owner and the IO respectively, this court ordered:

(1)  STL Co Ltd, being the owner of Flat 9A of International Industrial Building, be joined as the 2^nd Respondent to this appeal;

(2)  the original respondent shall thereafter be referred to herein as the “1^st Respondent”;

(3)  the Appellant shall serve its Notice of Appeal, and the 1^st Respondent shall serve its Respondent’s Notice, upon the 2^nd Respondent within 7 days from today; and

(4)  the costs of and occasioned by the hearing today shall be in the cause of the appeal, with certificate for 2 counsel.

My reasons for making this order are as follows.

Factual Background

7.  The Deed of Mutual Covenant of the building contained a number of clauses regarding installations on common parts, including the following:

“10. Each owner of the said building hereby covenants with the others as follows:

(a)  Not to ... alter or interfere with any part ... of the said building in common use;

(c)  Not to do anything where by any insurance of the said building or any part thereof against fire may be rendered void or voidable or whereby the premium for any such insurances may be liable to be increased ...;

(e)  Not to ... affix ... any ... thing to the exterior of the said building ... or to any exterior wall ... of the said building;

(g)  Not to ... alter the appearance of the exterior of the said building or any part thereof;

(p)  Not to do anything which constitutes a breach of any of the terms covenants and conditions in the Crown Lease or such deeds or instruments under which the said premises is held”.

8.1.  As mentioned above, the 9A owner had, prior to July 2015, installed 2 window frames on the external wall of the building, which the IO did not dispute is a common part[1]. 

8.2.  On 20 July 2015, the Building Authority issued a notice under the Buildings Ordinance (“BO”)  requiring the IO to inspect the common parts including the windows[2]. 

8.3.  An inspector (AHL)  was appointed, who reported in April 2016 that the said window frames were unauthorized building works[3].

9.1.  In April and May 2017, the 2A owner requested the IO to take action to remove the window frames[4]. 

9.2.  When the IO failed to do so, the 2A owner commenced the LT case on 22 June 2017 against the IO for an order that it

“take such actions, including legal actions, against the [9A owner] of [the building] as are necessary for the removal of the 2 window frames installed at the external wall of the Building (the ‘Window Frames’)  and the reinstatement of the external wall and to restrain the [9A owner] from installing further similar structures”[5],

on the basis that the window frames were in breach of s.14(1)  of the BO[6], s.34I of the Building Management Ordinance[7] and the clauses in the DMC set out in para.7 above. 

9.3.  At a meeting on 27 July 2017, the Management Committee of the IO resolved (among other things)  to approve the existing non-structural installations on the external walls (including the 9A window frames)  until the external walls are repaired in the future, at which time the IO would decide on the appearance of the external walls and the installations affecting such appearance (“the 2017 resolution”)[8].

9.4.  After the 2017 resolution, a 2^nd inspection was carried out by a 2^nd inspector (KHP)  who stated its opinion on 22 December 2017 that the 9A window frames were non-structural, did not cause immediate danger and could be regularized, e.g. by the “Signboard Validation Scheme” [9]. 

9.5.  In March 2018, the 9A owner removed the existing window frames (referred to in the Judgment as the “Pre-Window Frames”)  and installed new ones on 18 March 2018 (referred to in the Judgment as the “Post-Window Frames”).  Its contractor (Tiff)  filed a Certificate of Completion of Minor Works on 22 March 2018.  On the same day, the Buildings Department issued a letter[10] acknowledging receipt of the certificate, which letter stated (among other things)  that it should not be understood as indicating that the documents lodged complied with the BO, and that the department would randomly inspect such works to see if they complied with the BO or not.

9.6.  As a matter of completeness, it would appear that on 13 July 2018, KHP issued a 2^nd report stating that the external wall outside the 9^th floor was “altered” [11].

PO’s question on joinder of 9A

10.1.  Obviously, the PO correctly considered that the 9A owner had an interest in the LT case, as it had installed the window frames (both pre- and post-), and would be affected if the IO were compelled by the LT to take action against it for their removal.

10.2.  At a hearing on 12 April 2019, the PO ordered the 2A owner (but not the IO)  to provide written submissions on whether it was necessary to join the 9A owner as the 2^nd respondent in the case.

10.3.  On 22 May 2019, Mr Patrick Siu, then counsel for the 2A owner, provided written submissions.  In para.3 of those submissions, the question was stated as whether the 2A owner should join the 9A owner as a respondent.  

10.4.  Mr Siu referred to s.16 BMO which provides:

“When the owners of a building have been incorporated under section 8, powers, privileges and duties of the owners in relation to the common parts of the building shall be exercised and performed by, and the liabilities of the owners in relation to the common parts of the building shall, subject to the provisions of this Ordinance, be enforceable against, the corporation to the exclusion of the owners ...” (Emphasis added).

10.5.  Mr Siu also referred to See Wah Fan v Tam Kam Yuk[12]in which the LT struck out the claim of a unit owner (SWF)  made directly against another unit owner (TKY)  for installing a gate on the common parts, and the sequel case See Wah Fan v Incorporated Owners of Ki Tat Garden (Phase I)[13]in which the Court of Appeal held (contrary to the IO’s submissions)  that SWF had the right to sue the IO in the LT for an order to compel it to take action against TKY.

10.6.  Mr Siu therefore submitted that: (1)  the 2A owner had no right to sue the 9A owner, (2)  the 2A owner had the right to sue the IO to compel it to take action against the 9A owner, and (3)  when the 2A owner sued the IO, it was not necessary for the 2A owner to join the 9A owner as respondent.

10.7.  Nevertheless, it was disclosed in the submissions that solicitors acting for 2A had informed the 9A owner of the LT case, and that if the 9A owner wished to join the proceedings, it (the 9A owner)  could take out the appropriate application.

11.1.  The PO did not respond to the above submissions from 2A and presumably accepted them.

11.2.  However, the PO did not pose the question to the IO whether it should join the 9A owner as third party.  Given the interest of the 9A owner in the subject-matter of the LT case, one would have thought that the IO should have issued a third party notice against the 9A owner under Order 16 r.1(1)  Rules of the High Court[14], which provides where material:

“Where in any action a defendant who has given notice of intention to defend, ...

(b)  claims against [a person not already a party to the action] any relief or remedy relating to or connected with the original subject-matter of the action and substantially the same as some relief or remedy claimed by the plaintiff; or

(c)  requires that any question or issue relating to or connected with the original subject-matter of the action should be determined not only as between the plaintiff and the defendant but also as between either ... of them and a person not already a party to the action;

then ... the defendant may issue a notice ... containing a statement of the nature of the claim made against him and ... the nature and grounds of the claim made by him or of the question or issue required to be determined”.

11.3.  Thus the LT case proceeded to trial with only the 2A owner and the IO as parties.

12.  As mentioned earlier, the PO dismissed the 2A owner’s claim.  As leave has been given to the 2A owner to appeal, it is undesirable here to say anything more about the merits of the claim at this stage.  However, when giving leave, the Court of Appeal ordered a directions hearing on the issue whether the 9A owner should be joined as a party to the appeal.

13.1.  Mr Abraham Chan SC leading counsel for the 2A owner[15], supported the joinder of the 9A owner as a party to the appeal as it (the 9A owner)  has a direct legal interest in the outcome, and joinder would avoid the potential for multiplicity of proceedings with possibly conflicting results if the IO were to fail in the appeal and then commence fresh proceedings against the 9A owner for removal of the window frames.

13.2.  Mr Chan Chi Hung SC leading counsel for the IO[16], submitted that:

(1)  joinder of the 9A owner would in effect give the 2A owner a “concurrent” right to sue a co-owner, when the intention of s.16 BMO was to give the IO the exclusive right to sue owners for breach of a DMC;

(2)  in any event, as the LT case has concluded, it is now too late at the stage of appeal to join the 9A owner.

Discussion

14.  I shall discuss submission (1)  first.  It is noted that Mr Chan Chi Hung does not dispute that the LT had the power to join the 9A owner as a third party, whether on application of the IO or on its own motion. However, he said that it should not exercise that power as that would be contrary to the legislative intention of s.16 BMO, suggesting that this court’s judgment in See Wah Fun supported this submission.

15.1.  With respect, the legislative intent of s.16 BMO is that a co-owner (such as the 2A owner)  is not permitted or required to sue another co-owner (such as the 9A owner)  when the complaint concerns common parts.  If one co-owner considers that another co-owner has used a common part, he should take up his complaint with the IO, and if he considers that the IO has, in breach of its duties, failed to take action against the offending co-owner, then he can issue proceedings against the IO to compel it to do so.  This was the ratio of this court’s judgment in See Wah Fun. 

15.2.  However, that does not mean that an IO cannot or should not issue third party proceedings against the offending co-owner.  The third party procedure does not give the complaining owner any “concurrent” right to sue the offending co-owner.  The right to sue the offending co-owner still remains with the IO “exclusively” in accordance with s.16 BMO.

16.  Mr Chan Chi Hung was unable to point to any part of this court’s judgment in See Wah Fun which militates against an IO’s use of the third party procedure. The IO’s argument in that case was more fundamental - it was that the complaining co-owner simply had no right at all to sue the IO to compel it to take action, which argument this court rejected.

17.  Of course, there may be cases in which the claim of the complaining owner is such that an IO may safely take the view that the claim has nothing to do with any particular co-owner, in which case the third party procedure would not be applicable.  However, in the present case, the third party procedure seems to be especially appropriate since: (a) the window frames were installed by the 9A owner on common parts, (b) it would appear to be the IO’s case that it had waived the 9A owner’s breach (thus pre-supposing a breach), and (c)  the validity of the alleged waiver is disputed (on grounds set out in the Notice of Appeal). 

18.  Mr Chan Chi Hung’s suggestion that if the IO fails in the LT’s case, it can then issue fresh proceedings against the 9A owner, is most unattractive.  It would entail multiplicity of actions, and same or similar questions would be tried twice, with the risk of inconsistent findings of fact.  This would also entail a waste of judicial time and manpower, which would be contrary to the spirit of the Civil Justice Reform. 

19.  For the above reasons, I rejected the submission that joinder of the 9A owner in the LT case under the third party procedure would have been against the policy or rationale of s.16 BMO.

20.  As for submission (2), there is no procedural bar to an entity being joined as a party at the appeal stage[17].  Mr Chan Chi Hung submitted that the 9A owner would suffer prejudice if it were to be joined as party to the appeal.  However, no evidence has been adduced in support of this submission which is made on behalf of the IO.  As for the 9A owner itself, it had been made aware of the LT case[18] as well as this joinder hearing, and it has chosen not to attend, or even to set out in its correspondence[19] what prejudice it would suffer if it were to be joined. 

21.  As for Mr Chan Chi Hung’s argument that the 9A owner might have some factual evidence in its favour, that will be a matter for the hearing of the appeal, at which time such orders may be made as appropriate after hearing all the parties. 

22.  Accordingly, submission (2)  also failed, and the order at para.6 above was made.

Hon Chu JA:

23.  I agree with the Reasons for Judgment given by Yuen JA.