383hk Ltd v. The Incorporated Owners of Tak Bo Building

CACV 99/2017

[2018] HKCA 164

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 99 OF 2017

(ON APPEAL FROM HCA 1333/2011)

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BETWEEN

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REASONS FOR JUDGMENT

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Hon Cheung CJHC:

1.At the conclusion of the hearing, we dismissed with costs the plaintiff’s appeal from the judgment of Deputy High Court Judge Burrell dated 24 March 2017 in a building management dispute.  We now give our reasons.

The facts

2.The facts, largely undisputed, may be briefly stated.  The plaintiff is the registered owner of one of the 35 small shop premises at the ground floor shopping arcade of Tak Bo Building, a 22‑storey block situated opposite the MacPherson Playground on Nelson Street, Mong Kok.  The defendant is the incorporated owners of the building.  The 5^th to 22^nd floors are residential floors, whereas the ground floor to the 4^th floor are commercial ones.  The ground floor shopping arcade comprises 15 shops having frontages on the streets around the building, whereas the remainder are in the corridors which form a T‑shaped arcade inside the ground floor.  The building was designed and built in the late 1970s.  There were no provisions of facilities included for fresh water and drainage pipes to the individual shop premises on the ground floor. Owners and occupiers of the ground floor premises may obtain water supply from the 10 toilet units in one particular part inside the arcade.  The toilets are connected to the building’s main fresh water and drainage pipes.

3.As the deputy judge observed, the fact that the ground floor shops are not connected to the building’s water and drainage pipes has played a part in determining the general nature of the businesses that have been done in the shopping arcade since the early 1980s.  A survey done in 2013 describes about 50% of the shops as printing shops; others include car accessories, sports wear etc.  The evidence suggests that 4 of the 35 shops have apparently privately installed water pipes to their premises.  They are not recent installations but have been there for some time.  The defendant’s case is that none of them have resulted from consent being sought from the defendant, none of them have been approved and none of them are legal.

4.The plaintiff purchased unit 17 on the ground floor in 2009.  It wanted the provision of fresh water and drainage facilities to its shop.  It applied to the defendant for consent to carry out the necessary installation work.  It was refused.  The plaintiff nonetheless went ahead with the installation of water and drainage pipes to unit 17 to be connected up with the building’s main water and drainage pipes located at the rear of the building.  The work involved drilling two holes (25 mm and 40 mm in diameter for fresh water supply and drainage respectively) through the concrete canopy which ran around the outside of the building at the ceiling level of the ground floor shops.  The plan was then to run the pipes along the common parts of the building, that is, the surface of the canopy (per the deputy judge at paragraph 13 of the judgment) or the external walls of the building (per the plaintiff in the appeal), connecting with the main pipes at the rear of the building.  It is common ground that the installation work constituted an unauthorised building work.

5.To cut a long story short, the pipe installation work was not completed, and the defendant’s consent upon a renewed application was still withheld.  The drilled holes were eventually sealed up.

6.In July 2011, after obtaining permission from the Water Supplies Department, unit 17 was connected to a public water supply nearby.  But there is still no provision for drainage facility.

7.In the proceedings below, the plaintiff claimed that on a proper construction of the Deed of Mutual Covenant (“DMC”) it had a right to access the main pipes of the building for water supply and drainage, conditional upon no damage being caused to the building or inconvenience, nuisance or annoyance being caused to other occupiers.  The plaintiff sought a declaration to that effect.  The plaintiff also sought an order directing the defendant to give its written consent to the installation work required and an injunction preventing the defendant from interfering with the work. It also asked for damages.  Shortly before the trial started, the plaintiff amended the pleadings to argue there was an implied term that the defendant’s consent might not be unreasonably withheld.  However, the plaintiff did not seek to amend the terms of the declarations sought in the prayer for relief.

The judgment below

8.As mentioned, the deputy judge dismissed the plaintiff’s claim.  He started with the construction of the DMC.  In particular, he focussed his attention on clause 3(c):

“3. Each owner shall hold his part of the said building and the said premises subject to and with the benefit of the following rights privileges and obligations namely:-

…

(c) The free and uninterrupted passage and running of water sewage gas and electricity from and to his part of the said building through the sewers, drains, watercourses, cables, pipes, pumps, tanks and wires which now are or may at any time hereinafter be in under or passing through the said premises and building or any part or parts thereof.”

9.He read clause 3(c) to mean:

“‘Each owner’ (including Mrs Chan and her predecessors in title) has ‘the benefit of … running water … to his part of the building through … pipes [etc] … which’ (i) ‘now are’ (in 1980) or (ii) ‘may at any time hereinafter’ be … ‘passing through the …

building’.”

(para 22 of the judgment)

10.The deputy judge bore in mind the factual matrix that back in 1980 when the building was first constructed, it had no provision for water and drainage facilities to the ground floor shops.  He took the expression “may be at any time hereinafter” to refer to the possibility that in the future the owners of the building (or the defendant) decides to put in new piping, for whatever reason, anywhere in the building.  Only then, according to the deputy judge, might the ground floor have the “benefit of running water” through pipes etc.  Absent such new piping, the deputy judge reasoned, “there are no pipes etc from which the plaintiff can ‘benefit’ to access a new water supply” (para 23).

11.After referring to some authorities including Leung Nai Hang v The Incorporated Owners of Success Industrial Building (Sheung Hei Street), HCA 1570/2010, 31 October 2014, Zervos J and Cogi Enterprises Ltd v The Incorporated Owners of Malahon Apartments, CACV 108/2010, 29 June 2011, concerning almost identical clauses in comparable contexts, the deputy judge essentially concluded that whilst there was a right to run water and drainage pipes through the building or any part thereof, which were in existence at the time of the DMC, there was no right to lay any private pipes to connect with the existing main water and drainage pipes by encroaching on the common parts of the building.

12.The deputy judge also referred to section 34I of the Building Management Ordinance (Cap 344) (“the Ordinance”), which reads:

“(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.”

13.The deputy judge observed that the Ordinance does not contemplate the situation where a co‑owner acquires a right to encroach on the common parts of the building (para 30).  The deputy judge therefore concluded that the plaintiff had failed to establish that on a proper analysis, the DMC provided for or entitled the plaintiff to the right contended for.

14.Relevantly (for the purpose of this appeal), the deputy judge also rejected the plaintiff’s alternative argument that the defendant had unreasonably withheld its consent for the laying of pipes.  The deputy judge agreed with the parties’ common ground that it was for the plaintiff to establish that the defendant had unreasonably withheld consent: BG Global Energy Ltd v Talisman Sinopec Energy UK Ltd [2015] EWHC 110 (Comm).  He ruled that the defendant was entitled to rely on available grounds not specifically relied on at the time of refusal of consent in deciding whether the refusal was unreasonable.  The deputy judge then looked at all the facts including, in particular, the fact that the laying of pipes was illegal, which he regarded as “a crucial factor” (para 43).  He observed that the request for the installation was “for an illegal installation and was supported by an inaccurate plan” (ibid).  The deputy judge also took into account a number of factors which he described in paragraph 45 of his judgment:

“(1) The plaintiff made 4 or 5 requests prior to commencing the works in August 2010. All were refused. Save for the final one (which included the plumber’s drawings) none contained any detail as to exactly what was intended.

(2) The IO [Incorporated Owners] was concerned about the safety of the canopy. Any layman would be concerned about the drilling of holes in concrete cantilevered canopy at 1^st floor level above the street.

(3) It could not possibly be known whether or not other shop units with street frontages would follow suit having seen consent been granted to Unit 17. Expecting the IO to deal with each application on a case-by-case basis is unrealistic. Such a piecemeal approach would have been poor administration and management of the building by the IO.

(4) The nature of the commercial enterprises at ground floor level had operated successfully since 1980. I do not regard it as unreasonable for the IO to decide that it was in the building’s interest for similar enterprises to rent the units in the future. In 2013, 17 were printing shops, 5 sold car accessories, 5 sold sportswear and 3 sold bus tickets.

(5) For all practical purposes it was impossible to install a system of the type envisaged without running pipes across the common areas, in this case, on the cantilevered canopy.

(6) The possible illegality of the proposal was alluded to by the IO in its letter dated 12 July 2010 in which it reminded the plaintiff of clause 10(b) of the DMC (not to make alterations which may cause damage) and clause 10(e) (not to use the building for an illegal purpose). The letter also re-iterated its position that the installation of any pipes over the common area would lead to legal proceedings.

(7)     The plaintiff’s second witness of fact, Mr Wu Kun Wa, gave evidence of the Committee’s discussions through the minutes of its meetings.  It is clear that any holes in the canopy would be opposed because of safety concerns.  The committee members were clearly unwilling to give their approval to a scheme which lacked detail, which was not ‘in keeping’ with the established nature of the arcade’s business, which was a ‘one off’ application and which involved a plumber drilling holes in the canopy.”

15.The deputy judge concluded that consent was not unreasonably withheld.

16.The deputy judge also considered a number of other matters which no longer featured in this appeal, including the assessment of damages (in case the plaintiff was successful) for the refusal of the installation of pipes back in 2010.  For all those reasons that he gave in his judgment, the deputy judge dismissed the plaintiff’s action and gave judgment to the defendant for a very minor counterclaim.

The plaintiff’s arguments on appeal

17.Mr Edward Chan SC, appearing for the plaintiff (in this appeal but not below), together with Mr Simon Chiu, essentially contended that under clause 3(c) of the DMC and also as a co‑owner under common law, the plaintiff was entitled as of right to install connecting pipes, running over the common parts of the building, for fresh water supply and drainage purpose.  Secondly, if and insofar as consent from the defendant was required for such installation work, the defendant was by “an implied term”, not to refuse its approval unreasonably.  Thirdly, leading counsel criticised the deputy judge for wrongly placing the burden on the plaintiff to prove unreasonableness instead of requiring the defendant to prove that its refusal of consent was reasonable; for taking into account grounds not actually relied on by the defendant at the time of refusal of consent; and for wrongly concluding that the refusal was not unreasonable.

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. Lastly, there is section 34I(1)(a) of the Ordinance, which essentially prohibits anyone (including a co‑owner) from converting any common parts of a building to his own use without the authorisation by resolution of the owners’ committee or, where there is one, the management committee (as per section 34K of the Ordinance).  (In the rest of this judgment, I will simply use “management committee” to mean either the owners’ committee, or, as the case may be, the management committee.)

19.The position, as a matter of law, appears to me to be this.  The common law right described above is of course subject to the provisions of the DMC and of the Ordinance.  As between the DMC and the Ordinance, if the DMC provides for a right to do the thing in issue on or over the common parts of the building, the co‑owner may do so accordingly.  Section 34I(1)(a) does not stand in the way because in the scenario under discussion, the management committee would be bound under the DMC (as a contract between all co‑owners for the time being) to give its consent.  There is therefore no contradiction between the DMC and section 34I(1)(a) even though section 34C(2) says that in the event of any inconsistency between provisions contained in Part VIA of the Ordinance (where section 34I is found) and a DMC, that part shall prevail. If the matter is not empowered under the DMC, section 34I(1)(a) is determinative of the issue and everything turns on whether a resolution by the management committee authorising the act in question can be obtained.  To this extent, section 34I(1)(a) modifies the common law on ouster, as a resolution passed by a simple majority of the votes of the members of the management committee present at a meeting (per section 34D(2)) can now approve what under common law cannot be done without unanimous agreement of all co‑owners.

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.

21.As was observed by Chan PJ in Grande Properties Management Ltd v Sun Wah Ornament Manufactory Ltd (2006) 9 HKCFAR 462, para 2, the provisions of a DMC and the Ordinance are usually aimed at facilitating the management of the building by reducing conflicts among co‑owners on the one hand and preventing abuse by the manager and the majority owner on the other.  It is fair to say that most disputes are resolved by a purposive construction and common sense application of the relevant provisions of the DMC and the Ordinance.

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.  She said:

“32. As for breach of s.34I(1)(a) Buildings Management Ordinance, I think the occupation of common areas (albeit underground) must be a conversion of common parts. That must be so, as otherwise there would be nothing to stop owners digging up common parts and using underground areas for say, wine-cellars.

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.”

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.  In this regard, I note that the deputy judge below in that case had said, when dealing with the relevant provisions in the DMC there, which were almost identical to our clause 3(c):

“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.”

(HCA 6622/1998, 23 January 2003)

29.On appeal, this court did not disapprove of the deputy judge’s construction of clause 3.

30.As to the other authorities, I do not find Malahon Apartments to be helpful on the facts of the present case. There, the court was concerned with the laying of subsequent pipework along the ceiling of a shop assigned to the exclusive use and possession of an individual owner for sewage discharge purpose by the incorporated owners.  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.  Cheung JA, giving the lead judgment of the court, said:

“11. Although the duties and powers of the IO are specified by s. 18 of the Building Management Ordinance (Cap. 344), which include, among other things, to do all things reasonably necessary for the enforcement of the obligations contained in the DMC for the control, management and administration of the Estate, I am not convinced that one can import wholly the long established principles regarding the exercise of discretionary powers by public bodies or tribunals into what is essentially a contractual dispute between the parties. It is important to bear in mind that the rights and obligations of the owners in a multi-ownership development are based, first and foremost, on contract. 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.”

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.

Unreasonable refusal of consent?

37.The above being my conclusion, the question of reasonableness of the defendant’s refusal of consent to the plaintiff’s installation of the pipes over the common parts of the building becomes wholly academic and irrelevant.  For the sake of completeness, I would very briefly state my views.  First, I do not accept Mr Chan’s argument to the contrary, and I think the deputy judge was right in placing the burden of establishing that the refusal of consent was unreasonable on the plaintiff.  He who asserts must prove.

38.Secondly, I do not accept Mr Chan’s argument that on the question of whether consent was unreasonably withheld, the defendant was not entitled to rely at trial on available considerations that were not specifically relied on or mentioned by the defendant at the time of refusal.  If there is to be any requirement of reasonableness, which, by definition, is an objective standard, the purpose must be to strike a balance between good management of the building and fair use and enjoyment by a co‑owner of what is, after all, his own land and building.  Such a balance cannot be affected by the subjective assessment and emphasis by the incorporated owners or the management committee at the time, or even an error of judgment or slip on their part, resulting in a relevant consideration not being relied on or referred to when refusing consent.  Provided that such failure had not caused any real injustice to the relevant co‑owner, I do not see any good purpose being served by imposing an inflexible rule of restriction advocated by Mr Chan in the context of striking the right balance described above.  In short, if there is this requirement of reasonableness, all relevant considerations, whether expressly or specifically referred to or taken into account by the incorporated owners or management committee at the time of refusal of consent, may be taken into account by the court when assessing whether consent has been unreasonably withheld, provided that no injustice or unfairness would thereby be done to the co‑owner challenging the refusal of consent.

39.Finally, as to whether the refusal in question was unreasonable, it must be remembered that in this regard, the plaintiff was asking this court to disturb the deputy judge’s evaluation of facts by reference to a legal standard, that is, reasonableness, where the application of such a legal standard involved no question of principle but was simply a matter of degree.  As was pointed out by Lord Hoffmann in Biogen Inc v Medeva plc [1997] RPC 1, 45, whilst an appellate court would be more ready to differ from the trial judge’s evaluation of facts by reference to some legal standard such as negligence or obviousness, where the application of such a legal standard involved no question of principle but was simply a matter of degree, an appellate court should be “very cautious” in differing from the judge’s evaluation.  See also this court’s recent decisions in ZJW v SY, CACV 10/2017, 1 December 2017, paras 32 to 34, and Uni‑Creation Investments Ltd v Secretary for Justice [2018] HKCA 141, paras 30‑34.

40.I have referred to the deputy judge’s reasons for finding that given the burden of proof, consent had not been unreasonably withheld.  I see no good reason to disturb his evaluation of facts in terms of reasonableness.  In particular, I do not accept Mr Chan’s point that the real reason for the defendant’s refusal of the application was that the defendant was only prepared to entertain a joint or collective application by all ground floor shop unit owners, rather than by individual shop owners on a piecemeal basis.  Even assuming that was the main or real reason of refusal of consent, I am not prepared to say that from the perspective of good management of the building by the incorporated owners or management committee on the facts of the present case, the refusal was unreasonable.

41.For all these reasons, the appeal was dismissed with costs.  We also gave a certificate for two counsel.

Hon Cheung JA:

42.I agree.

Hon Yuen JA:

43.I agree with the Reasons for Judgment of the Chief Judge.

Mr Edward Chan SC and Mr Simon Chiu, instructed by Sit Fung Kwong & Shum, for the plaintiff

Mr Ambrose Ho SC and Ms Becky Wong, instructed by Chung & Kwan, for the defendant