有利工業貨倉大廈業主立案法團 v. 怡豐興業有限公司

LDBM 369/2015

[2019] HKLdT 10

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 369 OF 2015

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JUDGMENT

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Introduction

1.  At all material times, the applicant is the incorporated owners of Mercantile Industrial and Warehouse Building (the “Building”) situated at 16-24 Ta Chuen Ping Street, Kwai Chung, New Territories, Hong Kong.

2.  On 31 August 2015, the respondent became and remains the owner of unit 1A of the Building (the “Property”). By a deed poll dated 11 December 2015, the respondent divided the Property into 8 subunits and is seeking to rent them out in order to derive rental income from them.

3.  It is the dispute between the parties concerning the respondent’s installations of some air conditioners and related pipes on the external wall of the Building and the applicant’s refusal to sign 8 confirmations to CLP Power Hong Kong Ltd (“CLP’s Confirmations”) for consent of the connection of the 8 electrical installations in the subunits at the respondent’s request.

Applicant’s case

4.  On 7 November 2013, the applicant entered into a contract with a contractor for renovating the Building (the “Renovation”).  The Renovation included the work of renovation to the external wall of the Building, and that part of the work costed $1,628,550.

5.  To facilitate the Renovation to the external wall, the applicant issued the following announcements:-

   (i)  In an announcement dated 27 November 2013 (“November 2013 Announcement”), the applicant reminded the owners that they could not install anything on the external wall, and the neither the management committee nor the management company could approve any of such installations[1].

   (ii)  In another announcement dated 2 December 2013 (“December 2013 Announcement”), the applicant requested all owners to remove their unauthorized structures, including air-conditioners installed on the external wall[2].

6.  In order not to cause delay to the Renovation (which could result in compensation payable to the contractor), the applicant did not take time to vigorously enforce the DMC by demanding all owners to remove the unauthorized structures on the external wall.  At the management committee meeting on 8 April 2014 (“2014 MC Resolution”), it was resolved, inter alia, that:-

   (i)  After the Renovation to the external wall, no further installations on or alterations to the external wall would be allowed.

   (ii)  It was also acknowledged that the pre-existing unauthorized structures on the external wall were historical problems.  The applicant would urge the owners to remove them, though it would not take enforcement actions for the time being[3].

7.  The minutes of the 2014 MC Resolution have been posted up for the owners’ perusal as usual.

8.  The above policy not to take enforcement actions temporarily was re-confirmed by all owners who attended the annual owners’ meeting on 25 May 2017[4].

9.  Subsequent to the Renovation, the applicant noticed that some owners installed appliances on the external wall or altered the external wall. Between 2015 and 2016, warning letters were issued to those owners, who were demanded to take corrective actions. Six owners took corrective actions themselves, and another one undertook to do so, such that no legal actions were necessary.

10.  For those installations and alterations that existed before the Renovation, the applicant has issued another round of letters dated 7 August 2017 to these owners, urging them to take corrective actions.  Some owners agreed to do so.

11.  On 3 August 2015, the respondent’s contractor named Design 88 informed the applicant that it would set up scaffolds outside the Property to carry out works.  On 5 August 2015, the applicant swiftly reminded the respondent that owners could not make installations on or alterations to the external wall.

12.  Around 10 days later, the applicant discovered that the respondent had installed the following structures and alterations on the external wall (collectively called the “Alterations”): -

Common parts being occupied	Particulars
On the external wall of 1/F of the Building facing Ta Chuen Ping Street	Installing 5 air conditioners and related pipes
On the external wall of 1/F of the Building facing the back lane	Installing 6 air conditioners and related pipes
On the external wall of 1/F of the Building facing the back lane	Installing a 30 m long drainage pipe, with 150 mm  diameter
On the external wall of 1/F of the Building facing the back lane	Chiseling holes through the external wall of the Building and connecting the drainage pipe to the Building’s own sewage system

13.  On 31 August 2015 and 8 October 2015, the applicant through its solicitors demanded the respondent to stop the Alterations which were in breach of the Deed of Mutual Covenants (the “DMC”).  As the respondent did not accede to the demands, the applicant commenced this action on 7 December 2015.

14.  The gist of the applicant’s case is that the respondent has breached clause 10 of the DMC and Section 34I of the Building Management Ordinance (the “BMO”) by occupying the common parts of the Building without the applicant’s approval, which causes inconvenience to the Renovation of the external walls of the Building.

15.  Clauses 10(i)(iv) and 10(i)(v) of the DMC provide as follows:-

“10. Each party hereto shall be bound by and shall observe and perform the following covenants provisions and restrictions: -

(a)….

….

(h)….

(i) No owner shall do or cause or permit to be done any of the followings:-

(i)…

…

(iv) Do anything in the Common Parts of the New Building which may be a nuisance or cause annoyance to the other occupiers of the New Building;

(v) Place anything in or occupy to the exclusion of the other owners of the New Building any part of the New Building intended for common use;

……”

16.  Clauses 10(j) of the DMC also provides that:

“10(j) Any person authorised by a party to this Deed or by a person covenant to observe this Deed to use any Common Parts shall use it in a careful manner and shall not do anything which may likely cause damage or injury thereto or inconvenient the other owners.”

17.  The relevant section in the BMO is Section 34I, subsection (a) of which concerns conversion of those parts to a particular owner’s own use and subsection (b) of which concerns use of those parts in such a way as unreasonably to interfere with the use and enjoyment of those parts by other owners.

18.  Under Schedule 1 of the BMO, common parts include external walls.

19.  Further, on 13 August 2015, the respondent submitted the CLP’s Confirmations for the applicant to endorse for installing of the 8 independent electricity meters with different electricity loadings as follows:-

   (i)   Unit A101: 3-phase 60-amp;

   (ii)   Unit A102: 1-phase 60-amp;

   (iii)   Unit A103: 1-phase 60-amp;

   (iv)   Unit A104: 1-phase 60-amp;

   (v)   Unit A105: 1-phase 60-amp;

   (vi)   Unit A106: 1-phase 60-amp;

   (vii)   Unit A107: 3-phase 60-amp;

   (viii)   Unit A108: 3-phase 60-amp. 

20.  The existing electricity loading for the entire Property is only 3-phase 200 amp. 

21.  On 25 May 2017, a resolution was passed unanimously in the annual general meeting of the owners of the Building to reject the respondent’s application for the connection of the 8 electrical installations due to the possibility of over-loading of the electricity of the Building (the “2017 Owners’ Resolution”).[5]

22.  The applicant now seeks: -

   (i) a mandatory injunction that the respondent do remove the Alterations and do restore the external walls to their original condition before the Alterations were carried out on them;

   (ii) an injunction that the respondent do stop connecting the drainage pipe to the Building’s sewage system;

   (iii) an order that the applicant is empowered by the DMC to remove the Alterations and restore the external walls to their original condition should the respondent fail to comply with the abovementioned mandatory injunctions, and all the costs therein would be borne by the respondent; and

   (iv) compensation for any loss suffered by the applicant as a result of the alleged breaches on the part of the respondent.

Respondent’s case and counterclaim

23.  The gist of the respondent’s case is that: -

   (i) The respondent is entitled to install the relevant drainage pipes pursuant to clause 5(c) of the DMC, which states:

“5(c) The full and uninterrupted passage and running of water sewage gas telephone telex and electricity from and to its unit and/or part of the New Building through the sewers, drains, water-courses, cables, pipes, pumps, tanks and wires which now are or may at any time hereafter be in under or passing through the said and/or the New Building.”

   (ii) The respondent’s predecessor in title, a company named King Landlord Ltd, made an application to the applicant for approval of the subdivision of the Property as early as 28 December 2012, which the applicant rejected on 18 January 2013. Hence, the applicant was aware of the application as early as December 2012.

   (iii) The respondent’s predecessor in title, through Design 88, had already obtained permission from the Fire Services Department and the Buildings Department to commence the Alterations.  On 17 July 2015, the respondent’s predecessor in title through Design 88 informed the applicant of the permission obtained from the Buildings Department and that the Alterations would be commenced on 18 July 2015.

   (iv) The applicant’s rejection of the respondent’s application for approval of the Alterations was unreasonable.

   (v) There exist many other illegal structures of the same nature installed by other owners of the Building.

   (vi) The applicant’s tolerance to the other illegal structures amounted to acquiescence.

   (vii) It was unreasonable for the applicant to single out the respondent and enforce the DMC only against the respondent.

   (viii) The Alterations do not significantly affect the appearance of the Building. Neither do they cause significant inconvenience to the Renovation of the external walls of the Building.

24.  The respondent also counterclaims for the loss of rental since it has applied to the applicant on multiple occasions for installing independent electric meters and electric control panels for the 8 subunits in the Property. But for the applicant’s unreasonable rejection of its application, the respondent would have been able to rent out the subunits and receive rental income since as early as 8 April 2016.

Evidence

25.  There is one factual witness and two expert witnesses from the applicant’s side, who had all testified in court, as follows:-

   (i)  Ms Sau Ha Ling, the secretary of the management committee, who has filed four witness statements;

   (ii)  Mr Lau Hin Man, the electricity expert, who has filed one report of his own and a joint report with the respondent’s electricity expert;

   (iii)  Mr Andy Law, the valuation expert, who has filed one report of his own, and two joint reports with the respondent’s valuation expert.

26.  The respondent has five factual witnesses, one electricity expert and one valuation expert, who had also testified in court:

   (i)  Mr Yau Cheung Kwan (“Mr Yau”), the general manager of the respondent, who has filed two witness statements;

   (ii)  Ms Yau Ka Yan, the daughter of Mr Yau and the director of the respondent, who has filed one witness statement;

   (iii)  Mr Wan Chi Tak, an electricity workman, who has filed one witness statement;

   (iv)  Mr Ma Pui Hei Billy, an interior designer, who has filed one witness statement;

   (v)  Mr Mok Sheung Sum, another owner of the Building, who has filed one witness statement;

   (vi)  Mr Cheung Wing Ho, the electricity expert, who has filed one report of his own and a joint report with the applicant’s electricity expert;

   (vii)  Mr Jack Chan, the valuation expert, who has filed one report of his own, and two joint reports with the applicant’s valuation expert.

27.  The respondent has asked a Mr Leung Ka Chung[6] to make a witness statement, but has not called him to testify in court.  It is not disputed by the respondent that this statement does not become part of the evidence.

28.  Despite the relatively large number of witnesses, the factual disputes are actually rather limited. 

Main issues in dispute

29.  The following are the main issues in dispute:

   (i)  whether the respondent has breached the DMC and/or the BMO by making the Alterations;

   (ii)  whether the applicant has made any implied representation to the respondent that the Alterations would be tolerated;

   (iii)  whether it is inequitable to order the respondent to remove the Alterations;

   (iv)  whether the applicant is under a legal obligation to consider the respondent’s electricity application.

Whether the respondent has breached the DMC and/or the BMO by making the Alterations

30.  It is not in dispute that the external walls of the Building are the common parts within the meanings of the DMC and the BMO and that the applicant has never given express consent to the Alterations to the external walls made by the respondent.

31.  The Alterations consist of 3 main types of structures and alterations, (i) drainage pipes, (ii) holes, and (iii) air conditioners.  I will deal with them one by one below.

Drainage pipes

32.  Mr Poon for the respondent relies on clause 5(c) of the DMC and argues that the respondent is entitled to install the drainage pipes pursuant to the same.  In The Incorporated Owners of Yee Fung Garden v Basic Tech Limited and Tin Shing Company Limited[7], the incorporated owners sued the defendants for wrongful installation of gas pipe and a mandatory injunction to remove the pipe was sought.  In Yee Fung Garden’s case, the court was dealing with the clause in the subject deed of mutual covenant which is very similar to clause 5(c) of the DMC.  DHCJ Fung (as he then was) found in the first instance that there was a conversion of the common parts as the gas pipe had travelled through and emerged from the common corridor and granted such a mandatory injunction. The learned judge said in his judgment as follows:

“94. Mr Lai submitted that Part A of Section II of the DMC gives the owners of the commercial development the following easements, rights and privileges :

(a) to go pass and repass over and along and use the Commercial Common Area and Facilities for all purposes connected with the proper use and enjoyment of such Shop (Clause 1(a));

(b) The free and uninterrupted passage and running of water, sewage, gas, electricity and any other services from and to such Shop through the sewers, drains, watercourses, cables, pipes and wires which now are or may at any time hereafter be in under or passing through the Lot and the Building for the proper use and enjoyment of such Shop (Clause 3).

95. It was submitted that upon its proper construction, such rights extend to the installation of the gas pipe for the proper use and enjoyment of such shop.

96. It is clear that Clause 3 merely gives the owner the enjoyment of uninterrupted passage of, inter alia, gas through the pipes which are now or may at any time hereafter be in under or passing through the Lot and the Building. There is no mention of the right to construct additional gas pipe by the owner. Neither Clause 1(a) nor the words "the proper use and enjoyment" takes the matter further. I do not agree with the submission of Mr Lai.

97.   The allegation that the gas pipe has travelled through and emerged from the common corridor was not challenged. I find that there has been a conversion of the common parts.”

33.  However, on appeal to the Court of Appeal by the defendants, the mandatory injunction was set aside on the grounds as stated in paras. 33 and 34 of the judgment[8]:-

“33. The issue is whether there was an exemption where the occupation is for a gas pipe providing gas to private premises. The onus of showing that there was such an exemption was on the Defendants as the party seeking to assert the defence. In considering that the Defendants had failed to discharge the onus, the judge was influenced by the lack of evidence that the gas pipe had been approved by the utility company (paragraph 93 of the judgment). However he seems to have failed to take into account the fact that the pipe had been installed and certified by a qualified contractor.

34. In my view, if he had taken that into account, together with the Defendants’ rights to have the free and uninterrupted passage of gas through pipes (whether at the time of the DMC or thereafter) passing through the Lot and the Building, for the proper use and enjoyment of the Restaurant premises, a mandatory injunction would not have been granted.” (emphasis added)

34.  Mr Poon submitted that the respondent is entitled to install the water and sewage pipes on the external walls of the Building as long as the installation does not cause any damage or injury to the Building or cause nuisance or inconvenience to other owners of the Building.  He said that the external walls of the Building had been properly repaired and painted after installation of the air conditioners and pipes.

35.  Nonetheless, the Court of Appeal’s decision in Yee Fung Garden’s case is distinguished in another recent case 383HK Ltd v The Incorporated Owners of Tak Bo Building[9] also decided by the Court of Appeal which was dealing with almost exactly the same clause as clause 5(c) of the DMC[10]. The facts in 383HK Ltd’s case are very close to the present case. Cheung CJHC (as he then was) who considered that the subject clause did not give an individual co‑owner any right to install such connecting pipes over the common parts of the building, said in the Reasons for Judgment:

“ Right to install pipes over the common parts?

18. Turning first to the issue of whether the plaintiff has a right, whether subject to the defendant’s consent (and whether any such consent, if required, is itself subject to the requirement of reasonableness), to install connecting pipes over the common parts of the building for the supply of fresh water and drainage purpose, there are, in my view, several interrelated matters. First, there is the common law right of a co‑owner to use and enjoy each and every part of the land under co‑ownership subject to the question of ouster. Secondly, there is clause 3(c) of the DMC, which Mr Chan submitted gives the plaintiff the right to do so. ….

20. I now turn to the DMC, and in particular clause 3(c), to see whether it gives the plaintiff the right to install the pipes over the common parts of the building. In my view, clause 3(c) does not. What clause 3(c) provides is the right to have free and uninterrupted passage and running of water and sewage from and to a co‑owner’s part of the building either through the water and drainage pipes already constructed at the time of the making of the DMC or through any future pipes to be installed in the building. What it does not say is who has the right to install these future pipes in the building, particularly on or over the common parts of the building. It certainly does not say that an individual co‑owner has such a right.

…

22. Here, the undisputed context is that by design, there were no provisions for fresh water and drainage facilities to the individual shop units on the ground floor from the main water pipe and drainage of the building. That was the factual situation at the time the DMC was entered into. It does not mean, of course, that no new connection could be made to the main water supply or drainage system whereby such services would be provided. Indeed, clause 3(c) specifically envisages such a possibility in future. However, that still leaves the question of who has the power to do so. Given the layout and configuration of the ground floor, any connecting pipes must by necessity go over the common parts of the building. Moreover, there are no less than 35 shop units on the ground floor. If every shop owner on the ground floor is entitled to install his own connecting pipes, the resulting situation could be chaotic. Rather, bearing in mind that the DMC was entered into to govern the relationship between co‑owners and provide for good management of the common parts, if there was to be any future connection, it is reasonable to assume the DMC intended such connection to be done centrally by the owners’ committee, or after incorporation, the incorporated owners which, pursuant to section 29 of the Ordinance, acts through the management committee.

23. Moreover, by definition, not only would such connecting pipes be going over the common parts of the building, which are under the management of the management committee on behalf of the incorporated owners, but such pipes would also be connected up with the main water supply and drainage pipes of the building, which are common facilities squarely within the province of the incorporated owners through the management committee. Quite apart from the possibility of accidental damage to the main water and drainage pipes if not done properly, such connection work could, for instance, involve the temporary suspension of water supply to the building affecting all other owners and occupiers, requiring central coordination by the management committee.

24. It is therefore difficult to imagine a contractual intention under the DMC that each of the 35 co‑owners of the ground floor shop premises shall have a right to make such connection to the main water supply and drainage pipes. Rather, when one is concerned with the common parts of the building, as well as the main water supply and drainage pipes serving the entire building, the most natural entity to handle any such future installation and connection of pipes serving the ground floor units must be the incorporated owners.

25. Bearing in mind these considerations and the context in question, there can be no doubt that clause 3(c) does not give an individual co‑owner any right to install such connecting pipes over the common parts of the building. Rather, the matter is squarely within the province of the management committee acting for the incorporated owners.

26. Mr Chan relied on The Incorporated Owners of Yee Fung Garden v Basic Tech Limited, CACV 40/2003, 20 April 2005, where Yuen JA (with whose judgment the other two judges agreed) decided to discharge a mandatory injunction for the removal of a gas pipe unilaterally installed by a co‑owner over the common parts of a multi‑storey building despite the objection of the incorporated owners. …

27. Whilst Mr Chan sought to derive support from what was said by this court in that case for his contention that clause 3(c) gives his client the right to install the water and drainage pipes in question, he also fairly accepted that another way of reading the judgment in Yee Fung Garden was that this court was only dealing with the discretionary considerations concerning the grant of a mandatory injunction, particularly, when the gas pipe in question had already been laid and certified by a qualified contractor.

28. In my view, the latter reading is the correct reading of what has been said in Yee Fung Garden. ….” (emphasis added)

36.  In the present case, I cannot see any reason not to follow the Court of Appeal decision in 383HK Ltd’s case.  My interpretation of clause 5(c) of the DMC is that it does not give the respondent any right to install the drainage pipes over the common parts of the Building even though the relevant drainage pipes were installed by the qualified contractor and indeed approved by the relevant government authority[11].

37.  Clause 10(j) of the DMC only allows the respondent as one of the owners to use the common parts including the external walls but it has not said that the owners are entitled to install any structures, like drainage pipes or air conditioners, to the external walls.  In my view, this clause will not assist the respondent. 

38.  I consider that the installation of the said pipes obviously causes some damage or injury to surface of the external walls of the Building which contravenes clause 10(j) of the DMC.

39.  Turning to clause 10(i)(iv) of the DMC, it expressly requires the applicant to prove nuisance or annoyance to the other occupiers of the Building.  Nonetheless, no such evidence is produced before me.  Hence, I do not consider that the respondent is in breach of such clause.

40.  However, clause 10(i)(v) requires no proof of nuisance or annoyance.  I am of the view that the installation of the drainage pipes to the external walls contravenes clause 10(i)(v) as they no doubt occupy quite substantial or at least some part of the external walls to the exclusion of the other owners of the Building.  Thus, the respondent is in breach of this clause.

41.  In the circumstances, I am of the view that the installation of the drainage pipes is in breach of clauses 10(i)(v) and 10(j) of the DMC.

Holes

42.  For chiseling holes through the external wall of the Building and connecting the drainage pipes to the Building’s own sewage system, such works which must cause some damage or injury to the external walls are in breach of clause 10(j) of the DMC.

Air conditioners

43.  For installing 11 air conditioners, as clause 5(c) concerns the uninterrupted running of water sewage gas telephone telex and electricity but has nothing to do with the installation of air conditioners to the external walls or provision of air conditioning, I consider clause 5(c) entirely irrelevant.

44.  For the similar reasons as mentioned above, I am of the view that the installation of the air conditioners to the external wall is in breach of clauses 10(i)(v) and 10(j) of the DMC.

45.  I am also of the view that the installation of air conditioners as well as the drainage pipes to the external walls contravenes section 34I (a) of the BMO which concerns conversion of certain parts to a particular owner’s own use. Since subsection (b) thereof requires the proof that use of those parts in such a way as unreasonably to interfere with the use and enjoyment of those parts by other owners, I consider no breach of section 34I (b) as there is no evidence of unreasonable interference.

46.  To conclude, the Alterations are in breach of the DMC and section 34I (a) of the BMO.

Whether the applicant has made any implied representation to the respondent that the Alternations would be tolerated

47.  It is undisputed that there are many unauthorised structures existed before the Renovation.  In my view, the main argument of the respondent is simply that by acquiescing the other owners of the Building to erect the same or similar nature of the unauthorised structures and alterations to the external walls, the applicant has given the implied representation to the respondent that the Alternations would be tolerated.

48.  Mr Poon relied on The Incorporated Owners of Freder Centre v Gringo Limited & Marcello (Tax Free) International Department Store Corporation Limited[12], in which the Court of Appeal held that the incorporated owners’ acquiescence in a particular kind of breaches might constitute a representation to a particular owner that breach of the same kind would also be tolerated:-

“29. In Cheung Yuet & Anor v. The Incorporated Owners of Oriental Gardens [1979] HKLR 536, the appellants had breached the covenant of the deed of mutual covenants by adding enclosed extensions to their sitting rooms. At the same time, many other owners in the building had committed similar breaches of covenant by adding slightly less noticeable rooms to their flats. The trial judge granted mandatory injunctions requiring the appellants to demolish the extensions. In allowing the appeal, the Court of Appeal held that the breaches of covenant by the other owners were no less grave than the breaches committed by the appellants, and could reasonably have been considered by the appellants as a representation that the extensions would be tolerated. It concluded that the incorporated owners had acquiesced in the particular kinds of breach which the appellants had committed and it would be inequitable to compel the appellants to remove their extensions at the instance of the incorporated owners.” (emphasis added)

…..

32.  Mr Koo also argued that the Judge was correct to disregard similar breaches committed by other owners or occupiers because the other trade names or signs were put up at different times and on different parts of the external walls. We are unable to see the relevance of this. The kind of breach committed by the other owners is not a single act, but is continuous in nature. As noted above, there is no doubt that the applicant is well aware of the similar breaches committed by the other owners or occupiers. It is therefore immaterial that the other trade names or signs were put up at different times and at different locations.

33.  In our view, the Judge fell into error in disregarding as irrelevant that for a long time there have been similar breaches by the owners or occupiers of the other basement and ground floor units, and the applicant has taken no enforcement proceedings or actions against them. Had this and the fact that the 2nd respondent has exhibited two other business signs at other parts of the external wall been taken into account, the Judge ought to have found that there has been lying by on the part of the applicant, and that it could reasonably be taken by the respondents as representation that exhibiting or affixing trade name or business sign on the Building’s external wall would be tolerated by the applicant….”

49.  Mr Poon argued that evidence of similar breaches should be taken into account regardless of the time and location of their affixation as they demonstrate a continuous act of tolerance.

50.  With respect, I disagree. Freder Centre’s case can be distinguished at least on the fact that the incorporated owners only made the necessary demand for demolition some four months after the erection of the signboards whilst in the present case, the applicant had already made it clear to the respondent well before the commencement of the Alterations that the respondent could not install anything on the external wall after the Renovation by issuing the November 2013 Announcement, the December 2013 Announcement and 2014 MC Resolution.  Even if there may be such an implied representation made by the applicant as alleged by the respondent, the applicant has clearly revoked the same by issuing the said 2 announcements and 2014 MC Resolution to the respondent before the commencement of the Alterations.  The respondent cannot be said to be misled to believe that the relevant provisions in the DMC would not be enforced.  There is no evidence before me that the respondent is not aware of the said 2 announcements and 2014 MC Resolution which were issued to all owners of the Building including the respondent.  In any event, the respondent ought to have constructive, if not actual, notice of the same.

51.  In The Incorporated Owners of Hoi Luen Industrial Centre & Anor v Ohashi Chemical Industries (HK) Ltd[13], the court distinguished Cheung Yuet’s case and held that the existence of an express objection from the incorporated owners would prevent any owners from relying on acquiescence to breach the deed of mutual covenant after they have had notice of the objection. Bewley J in granting the injunction to order the defendant to remove the cooling tower said:

“23.  These matters go only to the issue whether it would be inequitable to enforce the terms of the DMC by way of injunction, not whether the plaintiffs are estopped from doing so. That depends on the state of the defendant's mind in February, 1992: in effect Mr Lee's mind. Whether or not subsequent notices came to his attention is irrelevant. When he erected his cooling tower in February, 1992, he was well aware that he was acting contrary to an express prohibition. He must have realised he was proceeding at his own risk. The fact that the July notice had not been enforced - one month after the expiry of the stipulated six months' grace period - does not persuade me that he was misled into believing that he could go ahead with impunity and that the DMC would not be enforced. I find that the defendant has not proved that the plaintiffs acquiesced in his erection of the cooling tower.” (emphasis added)

52.  After the said 2 announcements, there were some owners installing appliances to the external wall but from September 2015 to December 2016, various warning letters were issued to these owners demanding them to take corrective actions[14]. In my view, the applicant can at most be said to acquiesce the breaches committed by the owners before issuing the said 2 announcements but not after.

53.  Furthermore, I consider that judging from the photos provided, the installation of 11 air conditioners by the respondent is more grave and serious than the breaches committed by the other owners in terms of the scale and that it cannot reasonably have been considered by the respondent as a representation that the installation of 11 air conditioners would be tolerated.  In other words, the breaches committed by the other owners are not similar to that committed by the respondent in terms of gravity and seriousness.

54.  In the circumstances, I find that there is no lying by on the part of the applicant and the respondent’s defence of acquiescence fails.

Whether it is inequitable to order the respondent to remove the Alternations

55.  It cannot be disputed that the Tribunal has very wide discretion to order a mandatory injunction.

56.  To start with, I disagree with the respondent’s submission that the applicant’s rejection of the respondent’s application for approval of the Alterations was unreasonable since the application was said to be made by the respondent’s predecessor in title to the applicant for approval of the Alterations in 2012, while it was only until 11 September 2015 that the respondent became the registered owner of the Property.  Bearing in mind that they are 2 separate legal entities, the application by the respondent’s predecessor is irrelevant to the present case.

57.  I also reject the respondent’s submission that the applicant unreasonably singled out the respondent to enforce the DMC without taking similar action against other owners of the Building with similar structures. As mentioned above, I am of the view that the installation of 11 air conditioners by the respondent is more grave than the breaches committed by the other owners.  Besides, according to the evidence of Ms Sau, which is not challenged by the respondent, the respondent was the first owner who erected structures to the external wall of the Building after the Renovation.  Some owners who received warning letters from the applicant in 2015 or 2016 have taken corrective actions themselves (including the three management committee members), such that no legal action was contemplated as necessary by the applicant. For those owners who have not taken corrective action yet, warning letters were issued to them again on 11 August 2017[15]. I accept that the applicant has intimated legal actions against them.  Bewley J further said in Hoi Luen Industrial Centre’s case:

“22. It is in my judgment reasonable that the plaintiffs should test the water, so to speak, by taking action against the defendant and the other two owners before proceeding against the owners of the other cooling towers and split level air-conditioners. I am satisfied that this is their earnest intention should they succeed in this case and are able financially to maintain suit against recalcitrant owners.”

58.  I therefore accept that it is reasonable for the applicant to test the water by taking action against the respondent first, especially the breach committed is the most serious one, and then the other non-compliant owners, if necessary.

59.  Although the Alterations were installed by the qualified contractor and approved by the relevant government authority, the respondent is well aware of the objection of the applicant and still took the risk to proceed with the Alterations.  I do not see it inequitable to order the respondent to remove and reinstate the Alterations and a mandatory injunction shall be granted.

60.  Clause 9 of the DMC provides as follows:

“Without prejudice to the general powers conferred by the said Ordinance and the other powers conferred by this Deed it is hereby expressly declared that the said Corporation and/or the Management Committee shall have the following additional powers;

(a) The said Corporation shall have the control and administration of the Common Parts of the New Building with full power and authority to make any House Rules and Regulations as to the management of the New Building;

(b) The said Corporation shall have power to engage and remunerate professional management or services company or agent to undertake the management of the New Building or such lesser management services as the said Corporation may from time to time decide ;

(c) The Management Committee shall have the power to take down or remove any structure or fixture or other object erected affixed or placed on or to any unit and/or part of the New Building in breach of any of the provisions herein and all expenses of and incidental thereto shall be paid and recoverable from the defaulting owner;

(d) If any owner shall fail to carry out any work required of it to be done in accordance with the provisions of the said Ordinance and/or this Deed contained the said Corporation shall have the right to carry out such work for and on behalf of the defaulting owner at the costs and expenses of the defaulting owner and all costs and expenses of and incidental thereto shall be paid and recoverable from the defaulting owner;”

61.  In my view, the applicant is entitled to remove the Alterations and restore the external walls if the respondent refuses to do so according to this clause 9.  Thus, I would make such an order.

62.  In the Notice of Application, the applicant claims compensation for any loss suffered as a result of the breaches on the part of the respondent. However, no particulars or even evidence was given by the applicant in this regard.  Hence, no compensation will be awarded.

Whether the applicant is under a legal obligation to consider the respondent’s electricity application

63.  It is not disputed that the respondent’s application would result in increasing the electricity supply of the Property as a whole.  That is the reason why CLP Power Hong Kong Ltd requires the applicant to endorse its consent on the CLP’s Confirmations before the installation of the 8 electric meters in the 8 subunits.  Mr Siu for the applicant submitted that there is simply no legal obligation on the part of the applicant to consider the respondent’s application for increase in electricity supply.  He relied on Long Honest International Limited v The Incorporated Owners of Cheuk Nang Centre Phase I[16], in which the Tribunal ruled that the clause in question (which is similar to clause 5(c) of the DMC) only ensured that the owner would have uninterrupted access to electricity supply but it has nothing to do with an application for increase in electricity supply[17].

64.  On the other hand, Mr Poon for the respondent submitted that there is an implied term in the DMC that the applicant’s consent to installation of electric meters must not be unreasonably withheld, and that the applicant has breached such duty owed to the respondent by unreasonably refusing to endorse the CLP Confirmations for installation of the 8 electric meters.  He relied on Lee Yin Hong v Serenade Cove (IO)[18] , a case concerning building management dispute under a deed of mutual covenant prohibiting the keeping of dogs in flats except with the written permission of the incorporated owners, Cheung JA held at para. 11 that:-

“…A DMC is, after all, a contract under seal and the IO in the exercise of the contractual provisions of the DMC is subject to the established principles such as that it must exercise a discretion reasonably and where the IO is required to give consent, the consent must not be unreasonably withheld. The latter is a specific example of how a discretion is to be exercised. The Court’s task is to adjudicate whether there has been a breach of the contractual terms and not to exercise a supervisory function over the decision of the IO as if it is hearing a judicial review application on whether a discretionary power by a public body or tribunal has been lawfully exercised.” (With emphasis added)

65.  In my view, Lee Yin Hong’s case can be distinguished as the applicant in the present case is not required to give consent according to clause 5(c) or any other clause of the DMC.

66.  I also agree with the decision made in Long Honest’s case. Indeed, I consider that the most relevant and recent authority to this issue is 383HK Ltd’s case, in which Cheung CJHC (as he then was) not only distinguished Lee Yin Hong’s case but also rejected the argument of implied term. The learned judge made a very detailed analysis and said as follows:

“30.  ….  Here, we are concerned with the converse situation of an individual co‑owner seeking to install water and drainage pipes over the common parts of the building despite the incorporated owners’ objection.  In Success Industrial Building, Zervos J, in construing an almost identical clause 3 in the DMC there reached the same conclusion that when there is a system of pipework in place for the supply of gas (the issue in that case), an individual co‑owner of course has the right to free and uninterrupted supply of gas through the existing pipes.  However, where there is no system in place, “it still requires the incorporated owners to decide on a system to be installed in accordance with the decision making process as provided under the DMC” (para 70), as opposed to leaving the individual owners to their own devices and carry out installation works over the common parts of the building as they respectively see fit.  I agree.

31.  This reading of clause 3(c) and the DMC ties in perfectly well with section 34I of the Ordinance, which, as mentioned, prohibits anyone from converting any common parts of the building to his own use.  Here, despite submissions to the contrary, it is plain that the laying of a water or drainage pipe over the common parts of the building, whether along the concrete canopy or across the external walls, is caught by the prohibition in section 34I(1)(a).  Mr Chan argued that the plaintiff would not object to other owners using the same pipes by making an appropriate connection to them.  That would, in my view, only mean that these other co‑owners are equally guilty of breaching section 34I(1)(a).

32.  As to Mr Chan’s further argument that as a co‑owner, the plaintiff has a right under common law to install the pipes over the common parts of the building, that argument, with respect, must be rejected both at the level of common law and in the light of section 34I. Under common law, absent unanimous agreement, a co‑owner cannot dispossess and oust his fellow co‑owners by so using and occupying a particular part of the land in question as to prevent his fellow co‑owners (or any one of them) from using and enjoying it.  Section 34I(1)(a) simply codifies that common law position but makes a concession at the same time.  At common law, if all other co‑owners consent, there can be no ouster.  Section 34I(1)(a) makes life easier in that so long as the action is approved by the management committee by resolution passed by a majority present at a meeting of the committee, what cannot otherwise be done under common law can be done.

Is there a requirement of reasonableness?

33.  I now turn to the more restrictive position advocated by Mr Chan, namely, that a co‑owner may only install the connecting pipes over the common parts of the building with the consent of the incorporated owners (or the management committee), which, however, cannot be unreasonably withheld.  Here, Mr Chan relied on Lee Yin Hong v Serenade Cove (IO) [2011] 5 HKLRD 660, a building management dispute concerning a prohibition on keeping of dogs in flats except with the written permission of the incorporated owners under a DMC.  ……..

34.  I would make two observations.  First, what was said by his Lordship was in relation to the exercise of a discretion specifically conferred on the incorporated owners under the DMC.  In the present case, an example of such a discretion granted to the manager can be found in clause 4(p) of the DMC (not to repaint or redecorate or alter the appearance of the exterior of the building etc without the manager’s written consent).  As a matter of contractual interpretation, one can see the good sense and justification for implying the requirement of reasonableness into the exercise of the discretion vested in the incorporated owners or manager under the DMC.

35.  However, in the present case, where the DMC does not even provide for the right of an individual owner to install water or drainage pipes over the common parts of the building, the question of obtaining written consent does not even arise.  There is, therefore, no place for implying, as a matter of contractual interpretation of the DMC, a term to the effect that the incorporated owners or the management committee must not unreasonably refuse or fail to allow the individual owner to do so.

36.  My second observation is this.  What was said in Lee Yin Hong was in relation to contractual interpretation of a DMC.  It was not concerned with the statutory interpretation of section 34I(1)(a) of the Ordinance.  I am not aware of any authorities that impose, by way of statutory construction, a requirement of reasonableness on the management committee’s grant or refusal of consent by resolution in relation to the use of a common part of a building under section 34I(1)(a).  In my view, such a construction would only serve to introduce a substantial element of uncertainty to building management, and give rise to wholly unnecessary disputes amongst co‑owners and management committee.  Put in simple terms, the Ordinance provides for the orderly discussion and resolution of issues relating to management of the building and, particularly, the common parts of the building.  It provides for the management of the building by an elected management committee on behalf of the incorporated owners.  It provides for the holding of meetings and the procedures to be followed.  It provides for the passing of resolutions by a simple majority present at a management committee’s meeting.  It also provides for the means and procedure to elect and replace members of the management committee.  To impose on that elaborate design an additional requirement of reasonableness relating to a management committee’s resolution is, in my view, a
recipe for uncertainties and disputes.  It would also add an unnecessary, burdensome role to the courts and the Lands Tribunal regarding the use of common parts of buildings.  I can see no justification for adopting such an interpretation under a purposive construction.” (emphasis added)

67.  In the circumstances, I am of the view that the applicant simply has no legal obligation to consider the respondent’s applications for increase in electricity supply and that the respondent’s submission that clause 5(c) of the DMC provides an individual owner with the right to install electric meters for increasing electricity supply is rejected.  As a matter of contractual interpretation of the DMC, I disagree that there is any implied term of the DMC that the applicant must not unreasonably refuse the respondent’s application for installing electric meters.

68.  For the sake of completeness, after reading the reasons as stated in the 2017 Owners’ Resolution and hearing the evidence from the parties’ witnesses, I accepted that due to the possibility of over-loading of the electricity of the Building, it was reasonable to refuse the respondent’s application in the 2017 Owners’ Resolution even if there is such an implied term.  It is entirely irrelevant and too late for the respondent to adduce expert’s opinion at the trial to prove that the electricity was unlikely to be overloaded.  In my view, the respondent should produce its expert’s report for the consideration of the owners who were present in the meeting of 25 May 2017.  Besides, since the 2017 Owners’ Resolution was passed unanimously, I fail to see any reason why even the respondent’s representative who was also present in the said meeting would vote against its application. 

69.  In any event, I disagree that the applicant’s rejection of the respondent’s application causes or leads to the respondent’s failure to lease out the 8 subunits which are sub-divided from the Property.  In para 11 of the witness statement of Mr Yau[19], he had already admitted that the absence of independent water meters would make it impossible for the respondent to lease out the 8 subunits.  The respondent has not yet managed to arrange for independent water meters for the subunits. In other words, the Water Supplies Department has not approved for the installation of 8 independent water meters to date. So even if the applicant’s alleged breach is proved, the respondent would still not be able to lease out the 8 subunits.  Although Mr Yau sought to salvage this in re-examination by faintly saying that independent electricity meter is more important than independent water meter.  There is no reason why this Tribunal should accept this self-serving account, when it is contradicted by his own carefully drafted witness statement.  The purported explanation is also illogical as, in my view, the water meter or water supply is somehow equally important with the electricity meter.  The respondent fails to prove causation in any event.

70.  Last but not least, I do not think that the applicant would oppose the respondent to install 8 electric meters inside the 8 subunits provided no increase of the electricity supply.  In my view, the respondent simply wished to accommodate the needs or the business of the prospective tenants so that it will be much easier to rent the subunits out.  Indeed, there is no evidence before me that any of the prospective tenants have made the request of increasing the electricity supply.  I therefore fail to see how this can be regarded as loss suffered by the respondent.

71.  Accordingly, its counterclaim for damages must be dismissed.

Conclusion

72.  I now make the order as follows:

   (i)  an injunction that the respondent do remove the Alterations and do restore the external walls to their original condition before the Alterations were carried out on them within 28 days;

   (ii)  an injunction that the respondent do stop connecting the drainage pipe to the Building’s sewage system;

   (iii)  the applicant is empowered to remove the Alterations and restore the external walls to their original condition should the respondent fail to comply with the abovementioned injunction in para 1, and all necessary and reasonable costs therein would be borne by the respondent; and

   (iv)  the respondent’s counterclaim be dismissed.

73.  As costs shall follow event, I therefore make an order nisi that the respondent shall pay costs of these proceedings including all costs reserved, if any, with certificate for Counsel on the District Court scale, to be taxed if not agreed, which shall become absolute unless any of the parties apply to vary the same by summons within 28 days.  

74.  Lastly, it remains for me to thank both Counsel for their very assistance to the Tribunal.