Read the full judgment text of CACV 116/2019 on BabelCite. This Court of Appeal judgment was delivered on 21 January 2020 before Kwan VP, Chu JA and Au JA.
Civil appeal – building management – common parts – deed of mutual covenant – unauthorised conversion of external wall and balcony soffits – Glass Wall and three signages erected by tenant of ground/1st floor units in a 1960s Causeway Bay building with no incorporated owners – whether the unit owner is liable under clause 10 of the DMC for the acts of its tenant where the tenant's specific acts were not expressly or impliedly authorised – whether the defences of acquiescence and waiver were properly pleaded and made out against the applicant's predecessors-in-title on the basis of co-owners' inaction from 2009 to 2013 – whether acquiescence and waiver bind successors-in-title as a proprietary interest or 'licence coupled with interest' – whether the applicant can rely on the bona fide purchaser for value without notice defence in respect of an alleged equity concerning common parts – whether declarations and mandatory and restrictive injunctions should be granted – exercise of discretion – Construction of clause 10 of the DMC: the words 'with his consent, express or implied' qualify the occupation and use of the unit, not the wrongful act itself, and on a proper grammatical and purposive construction the unit owner is liable for the acts of persons occupying the unit with its consent even where the specific act was not authorised; the judge below erred in construing the clause otherwise. Acquiescence and waiver: the defences as upheld by the lower court (implied representation through four years' inaction of all co-owners) were not properly pleaded; the pleaded case rested on alleged 'Common Assumptions' that the external walls were not common parts, which the judge found did not exist; even allowing for the informality of Lands Tribunal proceedings under s.10(5)(a) of the Lands Tribunal Ordinance, Cap 17 and Direction No 4 of 1 July 1986, allowing an unpleaded case caused real prejudice to the applicant. Proprietary interest: acquiescence, waiver, laches and estoppel by convention are generally personal defences that do not run with the land and do not bind successors-in-title; a 'licence coupled with interest' arises only where the equity is to be satisfied by the grant of a proprietary right, which the mere expense of construction and risk of liability to a tenant do not establish. Constructive notice: reservations expressed whether the doctrine applies to an equity concerning the common parts of a building that does not affect the title to the specific units purchased. Relief: following Incorporated Owners of Dragon View v Nalpak Ltd [1989] 1 HKC 549 and Billion Star Development Ltd v Wong Tak Chuen [2012] 2 HKLRD 85, an injunction is prima facie granted to protect a property right; absence of actual damage is not a sufficient reason to refuse; disproportionate hardship not made out as the 1st respondent's witness accepted that benefits reaped exceeded reinstatement costs; selective enforcement was reasonable given the absence of incorporated owners and limited resources. Outcome: appeal allowed; declarations granted; mandatory injunctions to demolish the Glass Wall and 3 Signages and reinstate the wall and soffits, and restrictive injunctions, granted subject to the applicant's undertaking not to enforce before 31 December 2022 or until the 2nd respondent ceases to be tenant of the 1st respondent; costs of the Tribunal and appeal to the applicant, taxed on the High Court scale, with a certificate for two counsel.
Legal issues: Construction of clause 10 of the DMC regarding owner liability for tenant's acts · Whether acquiescence and waiver were properly pleaded and made out against applicant's predecessors-in-title · Whether defences of acquiescence/waiver bind successors-in-title as a proprietary interest · Whether applicant can rely on bona fide purchaser for value without notice defence · Whether declarations and injunctions should be granted
Outcome: Appeal allowed. The decision of the Lands Tribunal judge dismissing the applicant's claim against the 1st respondent was set aside.
Cited by 4 cases · Cites 3 cases