The Incorporated Owners of Kingdom Power Commercial Building v. Sheen Wealth Industrial Ltd and Another

DCCJ 4890/2018

[2021] HKDC 1342

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4890 OF 2018

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BETWEEN

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Before:  Deputy District Judge Sabrina Ho in Court

Date of Hearing:  4-6 May 2021

Date of Defendants’ Submission:  10 May 2021

Date of Judgment:  16 November 2021

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J U D G M E N T

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A.  INTRODUCTION

1.Kingdom Power Commercial Building (“the Building”)  is a multi-storey building in Hong Kong.  In 1968, construction of the Building was completed.  On 31 March 1987, Yien Yieh Commercial Bank Limited (“the First Owner”)  as the first owner and Goldriver Industries Limited as the second owner entered into a Deed of Mutual Covenant (“the DMC”).  There is no dispute that the DMC governs the mutual rights and obligations of the co-owners at all material times. 

2.The plaintiff is and was at all material times the Incorporated Owners of the Building.  The plaintiff was incorporated on 12 November 1997.

3.The 1^st defendant, Sheen Wealth Industrial Limited, was a former co-owner of the Building.  On 30 July 2004, the 1^st defendant entered into an Assignment with the First Owner[1] (“the 2004 Assignment”)  whereby it acquired, inter alia, the following (“the Property”):-

(1)  The sole and exclusive right and privilege to hold, use, occupy and enjoy:-

(a)  The Basement and the Store marked “S1” and the Lavatory marked “L” and respectively coloured Pink on the Basement and Ground Floor plans annexed to the DMC;

(b)  The Ground Floor and the yard appurtenant thereto (“the Yard”);

(c)  The Mezzanine Floor;

(d)  The First Floor, the Second Floor and the air-conditioning plant room on the roof of the Building;

(e)  Together with the rights of the First Owner as set out in the DMC including but not limited to the exclusive right to use a portion of the roof (“the Roof”), the upper roof, flat roof, canopy and the external wall

See: Second Schedule §1 (a)  of the 2004 Assignment.

(2)  Subject to the exceptions and reservations as contained in the DMC: see Second Schedule §1 (b)  of the 2004 Assignment;

(3)  Together with, subject to and with the benefit of all subsisting rights and rights of way (if any), privilege, easements and appurtenances thereto belonging or appertaining as contained in the DMC: see Second Schedule §1 (c)  of the 2004 Assignment.

4.The 2^nd defendant, Best Grace Development Limited, is the current owner of the Property.  The 2^nd defendant is an associate company of the 1^st defendant, both owned by Sheen Wealth Corporation.

5.On 21 November 2017, the 2^nd defendant entered into an Assignment with the 1^st defendant (“the 2017 Assignment”)  whereby it acquired the Property from the 1^st defendant:-

(1)  The Property was described in the 2017 Assignment in similar terms as in the 2004 Assignment;

(2)  With respect to the exceptions and reservations, §1 (b)  of the Second Schedule to the 2017 Assignment provided that:

“Exceptions and Reservations, etc.:-

All exceptions and reservations as are more particularly described defined or referred to in the Government Lease and the [DMC]”

(3)  With respect to the easements and other appurtenant rights assigned with the Property, §1 (c)  of the Second Schedule to the 2017 Assignment stated that

“Easements and other appurtenant rights the benefit of which is assigned with the Property:-

Together with all rights, rights of ways, interests, privileges, easements and appurtenances in, over, belonging of appertaining to the Property or at the time of this Assignment used, held, occupied or enjoyed by the Property and things attached to the Property or permanently fasten to anything attached to the Property”;

(4)  With respect to the easements and other appurtenant rights to which the Property is subject, §1 (d)  of the Second Schedule to the 2017 Assignment stated that:

“Easements and other appurtenant rights to which the Property is subject:-

Subject to such rights, right of way, easements and other appurtenant rights as are more particularly described contained defined or referred to in the [DMC]”.

B.  THE PARTIES’ CASE

B1.  The plaintiff’s case

6.It is the plaintiff’s case that the communal plumbing and drainage system of the Building, including (a) the fresh water tank and fresh water pumps; and (b) the flush water tank and flush water pumps (“the Plumbing System”)  have always been common parts and facilities of the Building. In about June 2016, the old flush water pumps were replaced by a new set. The Plumbing System is located in the Yard of the Property, as illustrated in pink in Plan I of the Re-Amended Statement of Claim dated 26 March 2021 (“the 1^st Area”, “the SoC”).

7.At a meeting of the plaintiff’s management committee (“the MC”)  on 29 November 2016, it was resolved that a licence agreement shall be entered into between the plaintiff and the 1^st defendant whereby the 1^st defendant shall grant a licence to the plaintiff allowing the Plumbing System to occupy the 1^st Area in the Yard. The term of the licence shall be 3 years commencing in November 2016. The monthly licence fee shall be HK$3,300.

8.The above oral agreement was reduced into a written licence agreement on 29 December 2017 (“the 1^st Licence Agreement”):

(1)  §2 of the Preamble of the 1^st Licence Agreement provided that “[the plaintiff] has requested [the 1^st defendant] to grant a licence for its own use and occupation for the purpose of the installation of Communal plumbing and drainage system (“the P&D system”)  at the portion of the Premises, for identification purpose only as shown hatched in the attached plan, as has agreed with [the 1^st defendant] to pay a monthly licence fee in terms and conditions hereinafter appearing”. As shown in the last page of the 1^st Licence Agreement, the area being licenced is larger than the 1^st Area and includes the lavatory.

(2)  Clause 2 of the 1^st Licence Agreement provided that the term of the licence shall be 3 years commencing on 1 November 2016 and expiring on 31 October 2019 (both dates inclusive);

(3)  Clause 3 of the 1^st Licence Agreement provided that the plaintiff shall deposit HK$6,600 as security for the due observance and performance by the plaintiff of its obligations under the 1^st Licence Agreement.

9.Further, it is the plaintiff’s case that in about October 2002, the plaintiff installed a group of fire-fighting system locating on different parts of the Roof (“the Fire-fighting System”):-

(1)  Sprinkler Pump Room No. 1 with Associated Pipes (“Part A”);

(2)  Sprinkler Pump Room No. 2 with Associated Pipes (“Part B”);

(3)  FS/Sprinkler Pump Switches and Sprinkler Pump Control Panel (“Part C”);

(4)  Sprinkler Jockey Pump Room (“Part D”); and

(5)  F.S. Fixed Pump Room (“Part E”).

The Fire-fighting System is shown in green and hashed in Plan II of the SoC (“the 2^nd Area”).

10.At a MC meeting of the plaintiff on 9 August 2017, it was resolved that a licence agreement shall be entered into between the plaintiff and the 1^st defendant whereby the 1^st defendant shall grant a licence to the plaintiff to allow the fire-fighting system to occupy Part A of Fire-fighting System Area on the Roof.  The term of the licence shall be for three years commencing on 1 November 2016. The monthly licence fee shall be HK$8,900 (“the 2^nd Licence”).

11.Pursuant to the 1^st Licence Agreement and the 2^nd Licence Agreement, the plaintiff has paid licence fees to the 1^st defendant in the total amount of HK$226,200 during the period from November 2017 to April 2018.

12.The plaintiff said that the 1^st Licence Agreement is null and void ab initio.  Further, the 1^st defendant and/or the 2^nd defendant has no legal right to demand the plaintiff to pay any fees for installing and/or maintaining the Plumbing System because:-

(1)  The Plumbing System located in the 1^st Area was installed by the Developer of the Building since the construction of the Building;

(2)  By virtue of the provisions in the DMC and/or Section 16 of the Conveyancing and Property Ordinance (Cap 219)  (“the CPO”)  and/or common law, the owners of the Building shall take and be subject to the rights, interests, privileges, easements, quasi-easements, or appurtenances of the Plumbing System located in the 1^st Area in the Yard;

(3)  Further and/or alternatively, when the 1^st and the 2^nd defendants acquired the Property pursuant to the 2004 Assignment and the 2017 Assignment respectively, they took the Property subject to the Plumbing System attached to the Yard being the things attached to or permanently fastened to the Yard, and/or acquired the Yard on an “as-is” basis; and

(4)  The 1^st and the 2^nd defendants’ predecessor-in-title has never objected to the installation of the Plumbing System in the 1^st Area.

13.The plaintiff further said that the 2^nd Licence Agreement is null and void ab initio.  The 1^st defendant and/or the 2^nd defendant has no legal right to demand the plaintiff to pay any fees for installing and/or maintaining the Fire-fighting System because:-

(1)  The Fire-fighting System was installed by the plaintiff in about October 2002, before the 1^st defendant acquired the Property.  The installation was consented to or ought to have been consented to by the First Owner, being the 1^st defendant’s predecessor-in-title;

(2)  By virtue of the provisions in the DMC and/or Section 16 of the CPO and/or common law, the owners of the Building shall take and be subject to the rights, interests, privileges, easements, quasi-easements, or appurtenances of the Fire-fighting System in the 2^nd Area on the Roof;

(3)  Further and/or alternatively, when the 1^st and the 2^nd defendants acquired the Property pursuant to the 2004 Assignment and the 2017 Assignment respectively, they took the Property subject to the Fire-fighting System being things attached to or permanently fastened to the Roof, and/or acquired the Roof on an “as-is” basis;

(4)  The First Owner has never objected to the installation of the Fire-fighting System in the 2^nd Area.

14.In §18 of the SoC, the plaintiff contended that even if the 1^st defendant had the right to grant the 1^st Licence and the 2^nd Licence, it had no authority to enter into the Fire-fighting System Licence as the registered owner of the Property as “it had already assigned the Property to the 2^nd defendant on 21^st November 2017 which was a date prior to the signing of the 2^nd purported Licence on 29^th December 2017”[2].  The parties have eventually omitted this issue from their Joint Statement of Issues in Dispute dated 16 June 2020 and the plaintiff’s Revised Statement of Issues in Dispute dated 20 April 2021.  I take it that this is no longer an issue which requires my determination.

15.The plaintiff therefore claims:-

(1)  A declaration that the 1^st defendant (and now the 2^nd defendant)’s use and enjoyment of the Yard is subject to the easement and/or quasi-easement and/or implied consent and/or acquiescence and/or estoppel for the plaintiff to install the Plumbing System in the 1^st Area;

(2)  A declaration that the 1^st defendant (and now the 2^nd defendant)’s use and enjoyment of the Roof is subject to the easement and/or quasi-easement and/or implied consent and/or acquiescence and/or estoppel for the plaintiff to install the Fire-fighting System in the Fire-fighting System Area;

(3)  A declaration that the plaintiff has the right to place, install and maintain the Plumbing System in the 1^st Area;

(4)  A declaration that the plaintiff has the right to place, install and maintain the Fire-fighting System on the Fire-fighting System Area;

(5)  A declaration that the 1^st Licence Agreement is null and void ab initio;

(6)  A declaration that 2^nd Licence Agreement is null and void ab initio;

(7)  Repayment by the 1^st and/or the 2^nd defendant of HK$226,200, being licence fees paid by the plaintiff to the 1^st and/or the 2^nd defendant under the 1^st Licence Agreement and the 2^nd Licence Agreement.

B2.  The defendants’ case

16.The defendants do not dispute that the communal plumbing and drainage system of the Building belong to the common parts and facilities of the Building.  The main plank of the defendants’ case is that at the time when the DMC was entered into, the old flush water transfer tank and the old flush water pump were disconnected from the Plumbing System.  Hence, the old flush water transfer tank and the old flush water pump could not have been part of the communal plumbing and drainage system as contemplated by the co-owners in the DMC.  It follows that the new flush water system installed in June 2016, which was in replacement of the old flush water system, does not form part of the communal plumbing and drainage system.

17.The defendant said that in about 2015, there were complaints by the owners of the Building about inadequate supply of flushing water.  During a MC meeting on 23 May 2016, it was decided that a contractor should be retained to install a flushing water supply system to resolve the problem.  As the MC was informed by Guardian Property Management Limited, the management company of the Building (“the Management Company”), that the Building did not have sufficient common area to accommodate the new flush water supply system, the plaintiff entered into the 1^st Licence Agreement with the 1^st defendant to license part of the Yard for installation of the new flush water system.

18.In the defendants’ Written Opening Submissions dated 27 April 2021 at §§32-33, in response to the plaintiff’s case based on estoppel, the defendants raised a new argument that even if the plaintiff had any right to use the 1^st Area by way of estoppel or quasi-easement, such right has been extinguished by abandonment as the flush water tank and flush water pumps in the Yard were clearly abandoned.  As I have indicated during the Oral Opening of the defendants, I am not prepared to allow the defendants to run this new line of defence as it was not pleaded in the Amended Defence and Counterclaim (“D&CC”).

19.As to the Fire-Fighting System, the defendant said that in a MC meeting on 20 January 2017, the Management Company reported that the Fire-Fighting System had occupied areas which the 1^st defendant and the owner of the 15^th floor of the Building had exclusive rights to use/occupy.  As a result, in the 9 August 2017 MC Meeting, the plaintiff and the 1^st defendant orally entered into the 2^nd Licence Agreement.

20.For the above reasons, the defendants contended that the plaintiff is not entitled to any of the reliefs claimed.

21.The defendants counterclaim against the plaintiff for:-

(1)  Arrears of licence fee under the 1^st Licence Agreement from 1 May 2018 (the month since the plaintiff ceased to make payment of the monthly fee)  up to 30 April 2019 (the month when the D&CC was filed)  in the sum of HK$39,600, being HK$3,300 X 12 months;

(2)  Damages at the rate of HK$3,300 per month thereafter.

22.At the date of this Judgment, the 1^st Licence Agreement has already run its full term.  Hence, any arrears of licence fee would come up to HK$59,400 (being the licence fee from 1 May 2018 to 31 October 2019, HK$3,300 X 18 months).

23.As to whether the defendants are entitled to claim for damages after the term of the 1^st Licence Agreement, this is a matter which I will discuss below.

24.As for the 2^nd Licence, its term was for 3 years from 1 November 2016. As of the date of this Judgment, its terms has expired.

C.  THE ISSUES

25.Based on the parties’ respective pleaded cases, the following issues have arisen for my determination[3]:-

The Plumbing System

(1)  Whether the flush water pumps are and were at all material times connected to the Plumbing System;

(2)  Whether the 2^nd defendant’s enjoyment of the Property is subject to the easement and/or quasi-easement and/or implied consent and/or acquiescence and/or estoppel for the installation of the Plumbing System;

(3)  Whether the 2^nd defendant acquired the Property subject to the Plumbing System being a thing attached to or permanently fastened to the Property, and/or acquired the Property on an “as-is” basis;

(4)  Whether the 1^st Licence Agreement was void ab initio as the 1^st defendant and/or the 2^nd defendant had no legal right to demand the plaintiff to pay any fees for installing and/or maintaining the Plumbing System in the 1^st Area;

(5)  Whether the 1^st and/or the 2^nd defendant is liable to repay the sum of HK$66,000 to the plaintiff, being the licence fees and deposit paid by the plaintiff under the 1^st Licence Agreement;

(6)  Whether the plaintiff is liable to pay the defendants the monthly fee of HK$3,300 under the 1^st Licence Agreement for the period from 1 May 2018 to 31 October 2019 (being HK$59,800)  and damages at a rate of HK$3,300 thereafter.

The Fire-fighting System

(7)  Whether the installation of the Fire-fighting System on the Roof was consented to or allowed by the predecessor-in-title of the 1^st and the 2^nd defendants;

(8)  Whether the 2^nd defendant’s enjoyment of the Roof is subject to the easement and/or quasi-easement and/or implied consent and/or acquiescence and/or estoppel for the installation of the Fire-fighting System;

(9)  Whether the 2^nd defendant acquired the Property subject to the Fire-fighting System being things attached to or permanently fastened to the unit and/or acquired the Property on an “as-is” basis;

(10)  Whether the 2^nd Licence Agreement was void ab initio as the 1^st and/or the 2^nd defendant had no legal right to demand the plaintiff to pay any fees for installing and/or maintaining the Fire-fighting System on the Fire-fighting System Area;

(11)  Whether the 1^st and/or the 2^nd defendant is liable to repay the sum of HK$160,200 to the plaintiff, being the licence fees and deposit paid by the plaintiff under the 2^nd Licence Agreement;

26.I will deal with the issues in turn in Sections E to M, after I set out the applicable legal principles in Section D below.

D.  RELEVANT LEGAL PRINCIPLES

27.It is well-established that whether a particular area is a common part of the building is a question of intention involving interpretation of the deed of mutual covenant in the context of the circumstances at the time of execution.  The principles have been recently summarised in Kong Wai Hsien & Ors v The Incorporated Owners of Tai Wai Glamour Garden [2019] 5 HKLRD 672 at §30 per Au JA:-

(1)  The construction of a deed of mutual covenant is not a game with words.  It is an attempt to discover what a reasonable person would have understood the parties to mean.  And this involves having regard, not merely to the individual words they have used, but to the agreement as a whole, the factual and legal background against which it was concluded and the practical objects which it was intended to achieve, citing Jumbo King Ltd v Faithful Properties Ltd & Others (1999)  2 HKCFAR 279 at 296;

(2)  Co-owners in a multi-storey building are tenants in common of the land where the building is situated. Each of them is prima facie entitled to exercise rights of possession over every part of the building in common with the other co-owners.  However, this “unity of possession” is modified by a deed of mutual covenant, under which, as a matter of contract among the co-owners, individual co-owners are given the right to exclusive use occupation and enjoyment (something just short of exclusive possession in law but no different from exclusive possession in practice)  of certain parts of the building (most notably, the individual units).  Common parts or common areas are merely convenient labels to describe any part or area in the building in respect of which no individual owner has been given the right to such exclusive use occupation and enjoyment, citing Hollywood Shopping Centre Owners Committee Ltd v Wing Wah Building Mongkok Kowloon [2011] 4 HKLRD 623 at 636-7 at §§45-48;

(3)  Section 2 of the Building Management Ordinance (Cap 344)  (and its predecessor ie, the Multi-storey Buildings (Owners Incorporation)  Ordinance)  provides that “common parts” means:

(a)  The whole of a building, except such parts as have been specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner; and

(b)  Unless so specified or designated, those parts specified in Schedule 1 of the BMO.

(4)  Hence, unless there is an express or implied term in the relevant deed of mutual covenant conferring the right to exclusive use, occupation and enjoyment of a part of the building to any of the co-owners, that part of the building would form the common parts of the building.

28.Amongst other things, Schedule 1 of the BMO provides that the following parts are common parts of a building:-

(1)  Section 6: “Water tanks, reservoirs, pumps, wells, sewers, sewage treatment plants, drains, soil pipes, waste pipes, channels, water-courses, gutters, ducts, downpipes, cables”, conduits, refuse chutes, hoppers and refuse container chambers”;

(2)  Section 10: “Lighting apparatus, air conditioning apparatus, central heating apparatus, fire fighting equipment and installations intended for the use and benefit of all of the owners generally and any room or chamber in which such apparatus, equipment or installation is fitted or installed”.

(Emphasis added)

29.Rights granted by a DMC to the co-owners over the common parts are not legal easements as one cannot have a real easement over one’s own property.  They are described as “quasi-easements” as they have the practical effect of a legal easement and will run with undivided shares in the land: see Jumbo King Ltd v Faithful Properties Ltd & Ors (1999)  2 HKCFAR at 295F-I, 297C-F per Hoffmann NPJ; Kung Ming Tak Tong Ltd v Park Solid Enterprises Limited & Anor FACV 1/2008 (unrep., 8/9/2008)  at Sections E1 and E2 per Li CJ.

E.  ISSUE 1: WHETHER THE FLUSHING WATER PUMP IS AND WAS AT ALL MATERIAL TIMES CONNECTED TO THE PLUMBING SYSTEM

E1.  The old flush water system and the new flush water system

30.As shown by the evidence, the old flush water system comprised, inter alia, an old flush water pump, a flush water transfer tank and a flush water tank.

31.There is no dispute that the above items were located in the 1^st Area in the Yard[4]. The flush water transfer tank was located right next to the fresh water transfer tank.  There was a minor disagreement between the plaintiff and the defendants as to whether the flush water transfer tank was a separate tank located immediately next to the fresh water transfer tank, or that there was only one transfer tank being separated into the flush water transfer tank and the fresh water transfer tank by a concrete slab in between.  I do not consider the above distinction to have any bearing in the present case.  For the purposes of this Judgment, I will proceed on the basis that the flush water transfer tank was a separate tank located immediately next to the fresh water transfer tank.

32.The new flush water system comprises two new flush water pumps, a control panel of the new flush water pumps (“the Control Panel”)  and the old flush water transfer tank which was being renovated.

33.As confirmed by Mr Wong Shui Nin Stanley of the plaintiff (“Mr Stanley Wong”)  with reference to the floor plan enclosed with the Management Company’s email dated 29 January 2016 at 14:26[5] and the photos enclosed with the Management Company’s email dated 17 May 2016 at 11:40[6]:-

(1)  The Control Panel came with the new flush water pumps;

(2)  The two new flush water pumps and the renovated flush water transfer tank are located in the 1^st Area[7];

(3)  The Control Panel is located on the wall of the lavatory, outside the 1^st Area. Its size is around two computer monitors.

34.In his oral evidence, Mr Lam Chi Kit who gave evidence for the defendants (“Mr CK Lam”)  confirmed that:-

(1)  The two new flush water pumps were installed in the same area (同一空間)  as the old flush water pump, even though he could not remember if the new flush water pumps were installed at the exact location occupied by the old flush water pump;

(2)  The Control Panel is installed on the wall of the lavatory.

E2.  Whether the old flush water tank and the old flush water pump were connected to the communal plumbing and drainage system at the time when the DMC was entered into and remained so when the 1^st defendant acquired the Property?

35.Upon considering the evidence, I find that the old flush water transfer tank and the old flush water pump were connected to or formed part of the communal plumbing and drainage system at the time when the DMC was entered into, and remained so at the time when the 1^st defendant acquired the Property.

36.While the co-owners may have ceased to use the old flush water transfer tank and the old flush water pump at some point of time, this does not mean that the above items have been disconnected from the flush water system or have ceased to form part of the communal plumbing and drainage system of the Building at the material times.

37.First of all, there was no suggestion in the DMC that the old flush water tank or the old flush water pump were excluded from the common parts and facilities of the Property.  Rather, the terms of the DMC show that the co-owners intended all the water tanks and water pumps (whether for fresh water or flush water)  which are for the common use of the co-owners shall form part of the common parts and common facilities of the Building:-

(1)  As the DMC did not contain any provision otherwise, pursuant to Section 6 of Schedule 1 of the BMO, all water tanks, pumps, drains and conduits ought to be common parts of the Building;

(2)  Clause 3(c)  of the DMC provided that “Each of the parties hereto hereby grants unto the other of them and his tenants servants agents licensees invitees workmen and others by him authorities…for all purposes connected with the proper use and enjoyment of his parts and units of and in the said building to which the grantee is entitled as aforesaid the following easements rights and privileges:…(c)  The free and uninterrupted passage and running of water sewage… from and to his part or unit of the said building through the sewers, drains, water-courses, cables, pumps, pipes, tanks and wires which are now or may at any time hereafter be in under or passing through the said…Building…”;

(3)  Clause 7(1)  of the DMC provided that “Except as otherwise herein expressly provided, the Manager shall be responsible for and shall have full and unrestricted authority to do all such acts and things as may be necessary or requisite for the management of the said building…the Manager shall have the following posers and duties: …

(o)  To keep in good repair and condition all water pumps, water tanks, pipes, sewers, drains, water-courses, cables and wiring in the said building which are for the common use of the occupants of the said building” 

(4)  Clause (a)  of the 4^th Schedule of the DMC provided that “The co-owners of the said land and the said building shall make monthly contributions set out in Clause (b)  to the Manager towards the costs and expenses of managing the common parts and common services and facilities of the said building including but not limited to…the expenses of an incidental to the maintenance of the water pump (including electricity charges)…”.

(Emphasis added)

38.Second, there was no suggestion in the documentary evidence that the old flush water transfer tank or the old flush water pump were disconnected or somehow excluded from the communal plumbing and drainage system at the time when the DMC was entered into in 1987 or before the 1^st defendant acquired the Property in 2004.

39.As recorded in the minutes, on 28 October 1997, an Extraordinary General Meeting (“the October 1997 EGM”)  of the plaintiff was held:-

(1)  Amongst others, the following parties were present: (a) two representatives from Yien Yeh Bank, the  predecessors-in-title of the defendants; (b) Mr Benjamin Hu, the representative of the owner of the 4^th Floor of the Building; and (c) 2 representatives from the Management Company;

(2)  At the meeting, the owners discussed the worn-out condition of the flush water pipes in the Yard and the need to repair them and remove the other unused pipes: see EGM Minutes §4.  There was no suggestion that the flush water transfer tank or the flush water pumps were abandoned or disconnected from the plumbing system;

(3)  The above shows that as of 1997, the flush water system existed and was in operation, subject only to repairs due to wear and tear.

40.After the 28 October 1997 Extraordinary General Meeting, there has not been any discussion about the flush water system in the plaintiff’s general meeting or MC meeting until about 2015, when the issue of low flush water pressure arose.

41.In about 2015, in response to the Management Company’s complaint about the low flush water pressure in the Building, representatives from the Water Supplies Department (“the WSD”)  carried out an inspection of the flush water system in the Building. In a letter from WSD to the Management Company dated 24 August 2015, the WSD said that during the inspection, it found out that the flush water transfer tank and the flush water pump originally approved by the WSD had been abandoned (停用及棄置)  and flush water was directly transmitted from the mains to the flush water tank on the roof.  The WSD suggested the Management Company to arrange for the flush water system to be reinstalled according to the original approved arrangement.  The WSD did not say in the letter that the originally approved flush water transfer tank and flush water pump have been disconnected from the plumbing system.

42.In an email from the Management Company to the MC dated 29 September 2015, it was stated that on 23 September 2015, there was joint inspection by, inter alia, the respective representatives from WSD and the Management Company.  During the inspection, it was confirmed that there was an abandoned water tank next to the fresh water tank, which was suspected to be the flush water transfer tank.  Further, there was an abandoned water pump nearby.  The Management Company suspected that the Building did have a flush water system years ago.  Again, the Management Company did not say that the old flush water tank and the old flush water pump have been disconnected from the plumbing system.

43.I have also considered the evidence of the parties’ witnesses.  However, they are not particularly helpful in this respect because none of witnesses have direct knowledge as to the condition of the old flush water tank and the old flush water pump at the time when the DMC was entered into or at the time when the 1^st defendant acquired the Property.

44.The plaintiff has called two witnesses: Mr Stanley Wong and Mr Hu Yung Chi Stanislaus (“Mr Stanislaus Hu”). The defendant has called one witness, Mr CK Lam.

45.Mr Wong only became a co-owner of the Building in October 2003.

(1)  In Mr Wong’s oral evidence, he accepted that:

(a)  He did not have personal knowledge of the matters which took place prior to 2003 and only relied on the documents; 

(b)  When he said in §9 of his Witness Statement that “…I would say that a plumbing system was installed since the first occupation of the Building. Like other buildings in Hong Kong, there is plumbing system in the Building being a common facility”, he was only expressing his personal view based on common sense;

(c)  He was uncertain whether the co-owners were using fresh water or flush water for flushing.

(2)  In §14 of Mr Wong’s Witness Statement, he referred to an email from the WSD to the new management company of the plaintiff, Fidelity Reality, dated 5 July 2018 and said that “In any event, the WSD Letter and the email of the Department to the Management Company dated 5^th July 2018 [P-49] (“the WSD Email”)  confirmed that the approved flushing water transfer tank and flushing water pump, which drawings were approved on 21^st December 2000, had been abandoned for long period. This means that the Plumbing System must be installed in the Yard well before the 1^st defendant becoming the owner of the Yard”.  However, on a proper reading of the above email, the WSD only said that it had conducted a final inspection of the replumbing works of the potable water system as per the drawings approved on 21 December 2000 on 6 February 2001 and found the installation to be acceptable.  The inspection has nothing to do with the flush water system.  Upon cross-examination, Mr Wong also accepted that the above email was unrelated to what he said in §14 of his Witness Statement.

46.Mr Stanislaus Hu is a director of Man Fung Hong Limited, the owner of 4^th Floor of the Building since December 1988:-

(1)  Mr Hu was not the person who used the 4^th Floor regularly. Rather, it was Mr Hu’s brother, Mr Hu Yung Fu Benjamin (“Mr Benjamin Hu”), who was the main user of 4^th Floor.  Mr Benjamin Hu passed away in 2010.  The Company has become a member of the MC in June 2018 and he is now the representative of the Company on the MC.  Mr Stanislaus Hu accepted that his knowledge about the affairs of the Building before he became the representative of the Company on the MC came from Mr Benjamin Hu and the minutes of the plaintiff or the MC’s meetings;

(2)  Mr Hu clarified in his oral evidence that he had not discussed with Mr Benjamin Hu the matters stated in §§7(a)  to 7 (c)  of his Witness Statement, namely, whether the plumbing system was located at its original position, whether there was any alteration to the plumbing system and whether the flushing pump was connected to the plumbing system since the Building was occupied.  Mr Stanislaus Hu further explained that the above topics were not discussed between him and Mr Benjamin Hu as it would be unusual for them to talk about the plumbing system of the Building;

(3)  What Mr Stanislaus did confirm in §10 of his Witness Statement was that since the Company has become co-owner of the Building, he was not aware of any minutes or notice from the MC indicating the alternation of the plumbing system or that the flush water pump was not connected to the plumbing system.  This is in line with the documents before the court.  As I have mentioned earlier on, after the October 1997 EGM, there was no record of any discussion about the flush water system in MC meetings or the plaintiff’s General Meeting until the co-owners started to complain about the low flush water pressure in 2015. 

47.As to Mr Lam, he only joined Kingdom Power Development Limited (“KPD”)  in July 2019.  KPD is an associate company of the defendants and Mr Lam’s duty includes managing the affairs of the defendants.  Mr Lam did not have any personal knowledge as to the matters which took place before he joined KPD, and he could only derive his knowledge from the documents available to him.

48.While it could be seen from various minutes of the MC and the plaintiff that the Management Company took the view that the entire new flush water system has occupied areas which the defendants have exclusive rights to use/occupy, neither party has called the representatives of the Management Company to give evidence to explain the basis of its view.

F.  ISSUE 2: WHETHER THE 2ND DEFENDANT’S ENJOYMENT OF THE PROPERTY IS SUBJECT TO THE EASEMENT AND/OR QUASI-EASEMENT AND/OR IMPLIED CONSENT AND/OR ACQUIESCENCE AND/OR ESTOPPEL FROM THE INSTALLATION OF THE PLUMBING SYSTEM

F1.  The flush water transfer tank and the flush water pump

49.As I have found under Issue 1 that the old flush water tank and the old flush water pump were connected to the communal plumbing and drainage system at the time when the DMC was entered into and remained so at the time when the 1^st defendant acquired the Property, the 1^st defendant and subsequently the 2^nd defendant’s enjoyment of the Property is and was at all material times subject to the installation of the Plumbing System including the old flush water tank and the old flush water pump in the 1^st Area.

50.After the installation of the new flush water system in June 2016, the old flush water transfer tank was renovated and reused.  The old flush water pump was replaced by the two new flush water pumps which are located in the same area as the old water pump.  The renovated flush water transfer tank and the new flush water pump became part of the communal plumbing and drainage system of the Building.  The 1^st defendant and now the 2^nd defendant’s enjoyment of the Property is subject to the plaintiff’s right to install the Plumbing System including the renovated flush water transfer tank and the new flush water pumps in the 1^st Area.

51.As the court observed in Jumbo King Ltd (supra)  and Kung Ming Tak Tong Ltd (supra), the plaintiff’s right to install the renovated flush water transfer tank and the new flush water pumps in the 1^st Area is a quasi-easement binding on the defendants and future successors-in-title of the Property.

52.Alternatively, when the 1^st defendant and subsequently the 2^nd defendant acquired the Property, they took the Property subject to the Plumbing System including the flush water tank and the flush water pump in the 1^st Area being things attached to or permanently fastened to the Yard.  Further alternatively, when the 1^st defendant and subsequently the 2^nd defendant acquired the Property, they took the Property on an “as-is” basis, subject to the Plumbing System including the flush water tank and the flush water pump in the 1^st Area.

53.As I have found that the renovated flush water transfer tank and the new flush water pumps are common parts and facilities of the Building and that the plaintiff has a right to install the Plumbing System including the flush water transfer tank and the new water pumps in the 1^st Area, I do not need to go on to consider whether the plaintiff’s right to install the above items has arisen by way of implied consent or acquiescence of the defendants, or by way of estoppel against the defendants.

F2.  The Control Panel

54.The remaining component of the new flush water system is the Control Panel.  For the reasons below, I am of the view that the 2^nd defendant’s enjoyment of the Property is not subject to any right of the plaintiff to install the Control Panel on the wall of the lavatory.

55.The Control Panel only came with the new flush water pumps.  There was no control panel in the old flush water system.  The Control Panel is located on the wall of the lavatory, outside the 1^st Area.  The co-owners clearly did not have the Control Panel in mind when they entered into the DMC back in 1987.  At the time when the 1^st defendant acquired the Property in 2004, the Control Panel was not there.  Therefore, the 1^st defendant and now the 2^nd defendant’s enjoyment of the Property is not subject to the plaintiff’s right to install the Control Panel on the wall of the lavatory.  In other words, the plaintiff does not have any quasi-easement to install the Control Panel on the wall of the lavatory.  This is also the position taken by the plaintiff in §21 (d)  of its Written Closing Submissions[8].

56.Similarly, at the time when the 1^st defendant acquired the Property in 2004, the acquisition was not subject to the installation of the Control Panel on the wall of the lavatory.  The 2^nd defendant is the successor-in-title of the 1^st defendant, its enjoyment of the Property is also not subject to the installation of the Control Panel on the wall of the lavatory.

57.The plaintiff’s alternative case that the 2^nd defendant’s right to enjoy the Property is subject to the plaintiff’s right to install the Control Panel on the wall of the lavatory based on implied consent, acquiescence or estoppel is premised on the allegation that “There was no objection by any predecessor-in-title of the defendants regarding the installation or placing of the Plumbing System upon the 1^st Area”: see §14 (d)  of the plaintiff’s SoC.  However, as the Control Panel is installed outside the 1^st Area and outside the Yard, it could not be said that the defendants or their predecessors-in-title “have not objected to the installation”.  Indeed, as recorded in the minutes of the MC meetings and the plaintiff’s general meetings, the installation of the Control Panel in June 2016 was carried out on the basis that the location which it will occupy is an area within the exclusive possession of the 1^st defendant and a licence is required.

G.  ISSUE 4: WHETHER THE 1^ST LICENCE AGREEMENT WAS VOID AB INITIO

58.While the plaintiff did not use the phrase “failure of consideration”, it could be discerned from §§13-16 of the SoC and the plaintiff’s Written Closing Submissions §§25-26 that the plaintiff’s basis for contending that the 1^st Licence Agreement was void ab initio is total failure of consideration:-

(1)  The 1^st defendant or the 2^nd defendant has not provided any consideration for the 1^st Licence Agreement, as the plaintiff was all along entitled as of right to install the Plumbing System in the 1^st Area;

(2)  The 1^st Licence Agreement is not legally binding for want of consideration: see eg Chitty on Contracts (33^rd Edn)  at §4.01;

(3)  Having found that the 1^st Licence Agreement is not legally binding, monies paid under the invalid agreement ought to be returned, on the basis of total failure of consideration.

59.In order to invalidate an agreement on the basis of total failure of consideration, a party must show that the failure of consideration is total.  Even if a very small part of the benefit which formed the basis for the payment has been conferred, no action will lie: see Goff & Jones: The Law of Unjust Enrichment (9^th Edn)  at §12-16.

60.In the present case, as I have found that the plaintiff does not have any right to install the Control Panel on the wall of the lavatory without the 1^st defendant’s (and now the 2^nd defendant’s)  consent, there is no total failure of consideration in the 1^st Licence Agreement.  Further, as illustrated in the floor plan annexed to the 1^st Licence Agreement, the area which was licensed covered both the Yard and the lavatory.  The 1^st defendant’s (and now the 2^nd defendant’s)  consent for the plaintiff to install the plumbing system in the lavatory clearly amounts to consideration flowing from the 1^st or 2^nd defendant to the plaintiff.

61.As there is no total failure of consideration, the 1^st Licence Agreement is valid.

H.  ISSUE 5: WHETHER THE 1^ST AND/OR THE 2^ND DEFENDANT IS LIABLE TO REPAY THE SUM OF HK$66,000 TO THE PLAINTIFF, BEING THE LICENCE FEE AND DEPOSIT PAID BY THE PLAINTIFF UNDER THE 1ST LICENCE AGREEMENT

62.As I have found that the 1^st Licence Agreement is valid, the plaintiff is not entitled to repayment of the sum of HK$66,000 from the 1^st and/or the 2^nd defendant, being licence fee and deposit which the plaintiff was contractually obliged to pay under the 1^st Licence Agreement.

I.  ISSUE 6: WHETHER THE PLAINTIFF IS LIABLE TO PAY TO THE DEFENDANTS THE MONTHLY LICENCE FEE OF HK$3,300 UNDER THE 1^ST LICENCE AGREEMENT FOR THE PERIOD FROM 1 MAY 2018 UP 31 OCTOBER 2019 AND THEREAFTER DAMAGES AT HK$3,300 PER MONTH

I1.  Outstanding licence fee under the 1^st Licence Agreement

63.As the 1^st Licence Agreement is valid, the plaintiff has to pay to the defendants the monthly licence fee of HK$3,300 under the 1^st Licence Agreement for the period from 1 May 2018 up to the end of the term of the 1^st Licence on 31 October 2019, in the total amount of HK$59,400 (HK$3,300 X 18 months).

I2.  Damages after the term of the 1^st Licence Agreement

64.After the expiry of the 1^st Licence Agreement, the plaintiff is not liable to pay any fees to the 2^nd defendant for installing and maintaining the renovated flush water tank and the new flush water pumps in the Yard, as they are common parts and facilities of the Building.

65.As for the Control Panel, since it has encroached on an area which the 2^nd defendant is entitled to exclusive enjoyment, the plaintiff should pay mesne profits to the 2^nd defendant for the occupation as a matter of principle.  The amount cannot be HK$3,300 per month as the area which the Control Panel is occupying is much smaller than the area covered by the 1^st Licence Agreement.  However, the defendant has not pleaded or put forward any submissions as to the amount of mesne profit which it is entitled to as a result of the installation of the Control Panel in the lavatory.  The defendant has not sought in its Counterclaim for the mesne profit to be assessed by the court and there is no order for split trial.  In the circumstances, I will not make any order for payment of mesne profit.

J.  ISSUES 7 AND 8: WHETHER THE INSTALLATION OF THE FIRE-FIGHTING SYSTEM ON THE ROOF WAS CONSENTED TO OR ALLOWED BY THE PREDECESSOR-IN-TITLE OF THE 1^ST AND THE 2^ND DEFENDANTS AND WHETHER THE PLAINTIFF CAN RELY ON PROPRIETARY ESTOPPEL

J1.  Whether the 2^nd Area is a common part of the Building

66.As a starting point, Clause 2 (c)  and the First Schedule of the DMC expressly provide that the First Owner shall have the exclusive right to use the Roof, including the 2^nd Area.

67.In §§36-40 of the plaintiff’s Written Closing Submissions, the plaintiff relied on the case of 徐偉業 v 東廬大樓業主立案法團 LDBM 10/2011 (unrep, 6/9/2011)  and argued that the areas which the Fire-fighting System are now occupying are common parts of the Building.  The plaintiff said that the Fire-fighting System is covered by the easement clause in the DMC as the Fire-fighting System is an upgrade of the existing system.

68.I do not agree with the plaintiff’s submissions.

69.On the plaintiff’s case, the Fire-fighting System was installed in the 2^nd Area in October 2002.  Prior to that, the fire-fighting system of the Building was not located in the 2^nd Area.  Hence, when the DMC was entered into in 1987, the co-owners including the First Owner would not have contemplated that the areas which the Fire-fighting System is now occupying on the Roof would be part of the common parts of the Building.  My view is reinforced by the fact that under Clause 2 (c)  and the First Schedule of the DMC cited above, the Roof including the 2^nd Area was expressed to be within the exclusive possession/enjoyment of the First Owner.

70.While Clause 7 (1)  (c)  of the DMC provides that the Manager shall have the powers and duties to “insure…the fire-fighting and detection equipment and all other common facilities installed in the said building…” and Clause 7 (1)  (i)  provides that the Manager shall have the powers and duties to “keep in good order and repair…all fire-fighting equipments in the [Building]”, they do not go on to say that the area which any future fire-fighting installations shall occupy will become the common parts of the Building.

71.Hence, the relevant issue here is whether the First Owner had consented or acquiesced to the Fire-fighting System being installed in the 2^nd Area and whether the other requirements of proprietary estoppel have been satisfied, such that the First Owner (and now the 1^st and the 2^nd defendants)  are estopped from denying the plaintiff’s right to install the Fire-fighting System in the 2^nd Area.

J2.  Proprietary Estoppel

72.The elements of a proprietary estoppel have been summarised in Bestkey Development Ltd v IO of Fine Mansion & Anor [1999] 2 HKLRD 662 at 669B-D per Liu JA, and more recently in Lau Kwai Ping v Fulland International [2020] HKCFI 1501 at §36 per Marlene Ng J:-

(1)  The claimant must have made a mistake as to his legal rights;

(2)  The claimant must have expended some money or must have done some act (not necessarily upon the owner’s land)  on the face of his mistaken belief;

(3)  The owner, ie the possessor of the legal right which the claimant claims it will be inequitable for the owner to enforce, must have known of the existence of his own right which is inconsistent with the right claimed by the claimant;

(4)  The owner must have known of the claimant’s mistaken belief of the claimant’s right; and

(5)  The owner must have encouraged the claimant in his expenditure of money or any other acts which he has done, either directly or by abstaining from asserting his legal right.

73.In the present case, there is no record of the First Owner giving any express consent for the plaintiff to install the Fire-fighting System in the 2^nd Area.  Therefore, the nature of any proprietary estoppel arising from the facts of this case can only be one of “estoppel by acquiescence”.

74.The doctrine of an estoppel by silence or acquiescence has been summarised by Cheung JA (as the Chief Justice then was)  in Mo Ying v Brillex Development Ltd [2015] 2 HKLRD 985 at §8.2:-

“1)  An estoppel by silence, inaction or acquiescence arises where ‘a reasonable man would expect the person against whom the estoppel is raised, acting honestly and responsibly, to bring the true facts to the attention of the other party known to him to be under a mistake as to their respective rights and obligations’ and this has been approved as the general principle underlying ‘estoppel by acquiescence’: see Spencer Bower on the Law Relating to Estoppel by Representation (4^th ed., 2004)  para.III.4.3, at p.48, citing Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890, 903F (per Lord Wilberforce). See also Lee Bing Cheung v Secretary for Justice [2013] 3 HKC 511 at [40]-[45] (DHCJ Marlene Ng).

2)  A duty to speak, such as to found an estoppel on silence will arise in circumstances:

(1)  ‘[w]here a person, having a title or right to property of any kind, perceives that another person is innocently, and ignorant, conducting himself with reference to the property in a manner inconsistent with such right or rights’: see Spencer Bower on the Law Relating to Estoppel by Representation (4^th ed., 2004), para.III.4.4(1);…”

See also: Lau Kwai Ping v Fulland International (supra)  at Section V per Marlene Ng J.

75.Here, the First Owner, being one of the signing parties of the DMC, must have been aware of its exclusive right to enjoy/use the 2^nd Area on the Roof.

76.As the documents show, the First Owner became the Chairman of the MC on 16 October 1997[9]. The First Owner was still the Chairman as of 31 January 2002[10]. The First Owner only ceased to be a member of the MC on 29 June 2005[11]. The First Owner must have known that the Fire-fighting System would be installed in the 2^nd Area.

77.According to the documents, especially the minutes of the plaintiff’s meeting and the MC meeting, the First Owner had never raised any objection to the installation of fire-fighting equipment in the Building, whether in the 2^nd Area or other parts of the Building.  Further, the First Owner had never complained that the installation of the Fire-fighting System would intrude into the 2^nd Area which it had exclusive right to use/occupy.

78.In reliance upon the silence of the First Owner, the plaintiff had changed its position by incurring expenses and placing the First-fighting System in the 2^nd Area in 2002, and in any event before the 2004 Assignment:-

(1)  On 10 December 1998, the Director of Fire Services issued a Fire Safety Improvement Direction (“the Direction”)  to the plaintiff, requiring it to improve the fire service installations and equipment in the Building. Amongst other things, Clause 2 (a)  of LC/101a enclosed with the Direction provided that an automatic sprinkler installation in accordance with the prescribed standard shall be provided for the common areas of the entire building;

(2)  The evidence shows that in about early 1999, the plaintiff engaged Chesterton Petty Limited as consultant for the Building’s fire safety improvement works: see consultancy services and fee proposal submitted by Chesterton Petty Limited to the plaintiff dated 9 February 1999.  Chesterton Petty Limited then engaged Realfit Engineering Ltd as the contractor to carry out the fire safety improvement works on the Building;

(3)  The fire safety improvement works must have commenced by May 2002, as there was an invoice issued by Realfit Engineering Ltd to Chesterton Petty Ltd dated 16 May 2002.  The invoice was marked “paid” by a stamp on the last page of the invoice;

(4)  As shown in a letter from the Director of Fire Services dated 6 December 2002, Welcon Engineering Co Ltd was another contractor responsible for the fire safety improvement works of the Building.  Certain Fire Service Installation drawings for the Building were submitted by Welcon to the Fire Services Department and approval was granted;

(5)  On 11 November 2004, Chesterton Petty Limited submitted the Acceptance of Final Account Assessment of the fire safety improvement works for the plaintiff’s approval.  The Final Account recorded that the final contract sum of the improvement works was around HK$2.6 million.  The fire safety improvement works must have completed before the Final Account Assessment was prepared.

79.In the circumstances, by reason of proprietary estoppel, the plaintiff had acquired an equitable proprietary right to install the Fire-fighting System in the 2^nd Area.  Such right is binding on the First Owner and its successors-in-title, including the 1^st defendant and the 2^nd defendant.

K.  ISSUE 9: WHETHER THE 2^ND DEFENDANT ACQUIRED THE PROPERTY SUBJECT TO THE FIRE-FIGHTING SYSTEM BEING THINGS ATTACHED TO OR PERMANENTLY FASTENED TO THE UNIT AND/OR ACQUIRED THE PROPERTY ON AN “AS-IS” BASIS

80.As I have found that the Fire-fighting System in the 2^nd Area was installed in around 2002, before the 2004 Assignment and the 2017 Assignment, the 2^nd defendant’s acquisition of the Property was subject to the Fire-fighting System, being things attached to or permanently fastened to the unit.  Alternatively, as the 2^nd defendant acquired the Property on an “as-is” basis, the acquisition was subject to the Fire-fighting System in the 2^nd Area.

L.  ISSUE 10: WHETHER THE 2^ND LICENCE AGREEMENT IS VOID AB INITIO AS THE 1^ST AND/OR THE 2^ND DEFENDANT HAS NO LEGAL RIGHT TO DEMAND THE PLAINTIFF TO PAY ANY FEES FOR INSTALLING AND/OR MAINTAINING THE FIRE-FIGHTING SYSTEM IN THE 2^ND AREA

81.From §§13-16 of the SoC and the Plaintiff’s Written Closing Submissions §§43-44, it can be discerned that the plaintiff is relying on total failure of consideration as the basis for suggesting that the 2^nd Licence Agreement is void ab initio.

82.As I have found that the 1^st defendant and the 2^nd defendant acquired the Property subject to the plaintiff’s right to install the Fire-fighting System in the 2^nd Area, the 1^st defendant and the 2^nd defendant have no legal right to demand the plaintiff to pay any fees for installing or maintaining the Fire-fighting System in the 2^nd Area.  It follows that the 2^nd Licence Agreement is void ab initio for total failure of consideration.

M.  ISSUE 11: WHETHER THE 1^ST AND/OR THE 2^ND DEFENDANT IS LIABLE TO REPAY THE SUM OF HK$160,200 TO THE PLAINTIFF, BEING THE LICENCE FEES AND DEPOSIT PAID BY THE PLAINTIFF UNDER THE 2^ND LICENCE AGREEMENT

83.As the 2^nd Licence Agreement is void ab initio, there is no basis for the 1^st defendant or the 2^nd defendant to retain the licence fees and deposits paid by the plaintiff under the 2^nd Licence Agreement.

84.The defendants have not pleaded any defence of change of position against the plaintiff’s claim for repayment in their D&CC.  Further, there is no evidence to support the change of position argument.

85.Therefore, the 1^st and/or the 2^nd defendant should repay the licence fees and deposits paid by the plaintiff under the 2^nd Licence Agreement, in the sum of HK$160,200, to the plaintiff.

N.  DISPOSITION AND COSTS ORDER NISI

86.I will make the following orders:-

(1)  A declaration that the 2^nd defendant’s enjoyment of the Property is subject to the plaintiff’s right to install and maintain the Plumbing System on the 1^st Area;

(2)  A declaration that the 2^nd defendant’s enjoyment of the Property is subject to the plaintiff’s right to install and maintain the Fire-fighting System on the 2^nd Area;

(3)  A declaration that the plaintiff has the right to place, install and maintain the Plumbing System on the 1^st Area;

(4)  A declaration that the plaintiff has the right to place, install and maintain the Fire-fighting System on the 2^nd Area;

(5)  A declaration that the 2^nd Licence is void ab initio;

(6)  The 1^st and/or the 2^nd defendant do repay HK$160,200 to the plaintiff, being the licence fees and deposit paid by the plaintiff under the 2^nd Licence Agreement.

87.For the avoidance of doubt, the plaintiff has no right to place the Control Panel in the Lavatory area without the 2^nd defendant’s consent as the 2^nd defendant’s exclusive enjoyment of the Property is not subject to the plaintiff’s right to install the Control Panel in the Lavatory.

88.While the plaintiff has succeeded in most of its claims, it has failed to show that it has a right to install the Control panel in the Lavatory.  Further, it has failed in its claim for a declaration that the 1^st Licence Agreement should be void.  In these circumstances, I will make an order nisi that the 1^st and the 2^nd defendants do pay 70% of the costs of the Action to the plaintiff, to be taxed if not agreed with Certificate for Counsel.

89.Lastly, I thank Counsel for their assistance.

Miss Wong Becky, instructed by Chung & Kwan, for the plaintiff

Mr Wang Justin, instructed by Lam, Lee & Lai, for the 1^st and 2^nd defendants