The Incorporated Owners of Tai Wai Glamour Garden v. Wyp Hong Kong Ltd

LDBM 30/2021

[2023] HKLdT 21

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 30 OF 2021

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BETWEEN

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DECISION

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Background

1.The applicant is the incorporated owners of Tai Wai Glamour Garden (“the Building”) and the respondent is the registered owner of Shop 1 on G/F of the Building (“the Shop”). By a Notice of Application taken out herein on 2 February 2021, the applicant claims certain injunctive reliefs against the respondent.

2.The respondent filed the Notice of Opposition on 25 June 2021.

3.The applicant claims that the DMC as defined in paragraph 1 of the Grounds and Particulars of the Notice of Application is binding on all owners, including the respondent. It is claimed that the respondent has been in breach of the term of the DMC. Paragraph 5 of the Grounds and Particulars claims that “Under Clause 13 Section V of the DMC, no part of the Common Areas shall be obstructed or incumbered nor shall any articles boxes material refuse or any other matter or things be placed or left thereon nor shall any part of such Common Areas be used for any business or private purpose and no Owner will do or suffer or permit to be done anything in such Common Areas as may be or become a nuisance or cause annoyance to any other Owners or occupiers of [the Building]”.

4.The Common Areas have been set out in paragraph 6 of the Grounds and Particulars which is admitted by the respondent.

The Settlement Agreement (the Tomlin Order)

5.The parties have negotiated for settlement. As a result, a consent application has been filed on 21 April 2022 which I approved on 29 April 2022. The agreed terms of order are in the form of a Tomlin Order. The proceedings herein are stayed except for the purposes of enforcing upon the terms set out in the schedule attached to the consent order (“the Schedule”). The Schedule reads as follows :

“1. So long as the Respondent remains as the owner of the Shop:-

a) The Respondent shall not place in, on or over the Common Areas and/or the Estate Common Areas outside Shop I on Ground Floor of Glamour Garden, Nos. 1-5 Chik Fai Street, Nos. 22-26 Mei Tin Road, Shatin, New Territories (the “Shop”) (in particular he pedestrian walkways) any goods, chattels and/or things, or erect any unauthorized canopies therein, in contrary to the applicable Deed of Mutual Covenant;

b) The Respondent shall not permit its servant(s), agent(s), tenant(s) or licensee(s) to commit the acts set out in paragraph (a) above;

c) Insofar as any of the aforesaid acts in paragraph (a) and/or (b) are committed by the Respondent and/or its servant(s), agent(s), tenant(s) or licensee(s), the Respondent shall take appropriate action to abate or rectify the same as soon as practicable;

2. The Respondent shall pay the Applicant’s costs of the proceedings herein at the agreed sum of HK$80,000 forthwith as full and final settlement thereof.”

The Current Application

6.By a summons taken out by the applicant on 11 July 2022, the applicant applies for the case be proceeded again, on the ground that the respondent has failed to perform the terms as agreed in the Schedule. At the call-over hearing, upon further discussion, the applicant applies to amend the summons. By the amended summons filed on 22 August 2022, the application applies for the following reliefs: -

I. The Respondent be restrained from (a) placing in, on or over the Common Areas and/or the Estate Common Areas (in particular the pedestrian walkways) any goods, chattels and/or things whether by themselves, their servants/agents/tenants/occupiers; and (b) erecting unauthorized canopies in the Common Areas and/or the Estate Common Areas outside the Shop and/or in particular on the pedestrian walkways, or permitting to do the aforesaid obstructing acts thereon;

II. Further and/or alternatively, leave be to the Applicant to take all necessary steps to (a) remove goods, chattels and/or things placing in, on or over the Common Areas and/or the Estate Common Areas (in particular the pedestrian walkways) by the Respondent, their servants/agents/tenants/occupiers; and (b) remove the erection of the unauthorized canopies in the Common Areas and/or the Estate Common Area outside the Shop and/or in particular on the pedestrian walkways or permitting to do the aforesaid obstructive acts;

III. The costs of and incurred by the Applicant for the works done at paragraph 2 of this Summons be borne by the Respondent;

IV. Further and/or other orders and/or directions; and

V. Costs of this application be to the Applicant.

7.The amended summons is opposed by the respondent.

The Evidence from Parties

8.Mr. 謝家豪 (“Mr. Tse”) is the chairman of the applicant. He filed his supporting affirmation on 22 August 2022, and complains that the respondent has failed to comply with the terms of the Schedule. He said the respondent and/or his servants/agents/tenants/licensees is still placing goods and chattels at Common Areas of the Building and has not removed the unauthorized canopies. He further produced some photographs as “TKH-1” as evidence that on 18 May 2022 and 25 July 2022, goods have been place at Common Areas in particular pedestrian walkways outside the Shop, and the unauthorized canopies which are erected at the Common Areas have not been removed.

9.Mr. Tse said warning letters have been issued to the respondent. The respondent has not complied with the demand.

10.The Respondent opposed the application and filed the affirmation of Mr. 馮開枝 (“Mr. Fung”). Mr. Fung is a director and shareholder of the respondent. He has no dispute that the consent order was given by this Tribunal with the consent of both parties.

11.Mr. Fung explains that paragraph 1(a) of the Schedule only restrains the respondent from doing certain acts as set out therein (“the Acts”). Paragraph 1(b) restrains the respondent from allowing other people, including the respondent’s tenants to do the Acts. And paragraph 1(c) provides that when the respondent or other people including its tenants committed the Acts, the respondent shall “應在切實可行的情況下探取適當的行動，以消減或糾正相關行為。” The translation adopted by Mr. Fung and/or his legal advisor may not be exact, and for my ruling herein I shall rely on the exact wordings of the order, namely, “shall take appropriate action to abate or rectify the same as soon as practicable”.

12.Mr. Fung also explains that when negotiating for settlement, he has explained that he shall be treated distinctly from his tenant, and has clearly stated that what the respondent could do is limited. But for this summons, there is no application to vary the terms of the consent order.

13.Mr. Fung further explains that the respondent has never occupied the Common Areas of the said Building, or erected any canopy at the Common Areas. The Shop has all along been occupied by its tenants. He submits that the respondent has not been in breach of paragraph 1(a) of the Schedule.

14.Mr. Fung produced 3 tenancy agreements. He said after the second tenancy agreement with 馬春娜 has been terminated and returned possession of the Shop to the respondent on 21 February 2022, the respondent has purged the breach and reached a settlement with the applicant herein on 21 March 2022 and entered the Tomlin Order. But as an investor, the respondent has to let out the Shop and Mr. Fung produce the tenancy agreement of the current tenant of the Shop, Mr. 林劍平 (“Mr. Lam”) dated 24 March 2022.

15.Before signing the tenancy agreement with Mr. Lam, the respondent has through the estate agent orally informed Mr. Lam that he should not occupy the Common Areas of the Building, particularly the area in front of the Shop. And in the tenancy agreement with Mr. Lam, it has been stated that the tenant must comply with the DMC of the Building. (I believe he is referring to paragraph 4 of the tenancy agreement.) And paragraph 5(2) of schedule II of the tenancy agreement clearly stipulated that the tenant must not place any goods in front of the Shop.

16.Mr. Fung said after receiving complaint from the applicant in April 2022, he had orally and in writing requested Mr. Lam to purge the breach. And later, the respondent has applied for recovery of the Shop by action instituted in the Lands Tribunal.

17.The respondent has taken out an application in Lands Tribunal under LDPE742/2022 to request Mr. Lam to return possession of the Shop and to rectify the breach. The tenant Mr. Lam has applied for relief before this Tribunal on 23 September 2022 and agreed to rectify all breaches on or before 21 October 2022. A copy of the draft order has been produced as “馮-17”. The draft order provides that, upon the undertaking by Mr. Lam to this Tribunal that he would remove all the canopies in front of the Shop and would comply with the DMC and not to occupy the Common Areas in front of the Shop on or before 21 October 2022. And if Mr. Lam does not honour his undertaking, the respondent may apply for further directions. (The draft order has subsequently been sealed with the said undertaking from Mr. Lam.)

18.Pausing here, after hearing the argument, I have directed the parties to inform this Tribunal of the development of the LDPE742/2022 application before the date set for handing down this decision. The progress of the case has been reported.

19.For record, on the day of hearing, the breach has not been rectified by the tenant, Mr. Lam. From documents produced, the respondent has applied for LDPE742/2022 be restored for callover/direction hearing. And on 22 February 2023, the respondent and Mr. Lam reached another agreement that by consent, an order was given on 22 February 2023 by Member Pang (“Member Pang’s Order”) that Mr. Lam shall return possession of the Shop to the respondent with a stay of proceedings for Mr. Lam to rectify the breach, including the removal of all canopies in front of the Shop on or before 1 March 2023, and to comply with the DMC and not to occupy the Common Areas in front of the Shop in future. If Mr. Lam has purged the breach, the respondent shall discontinue the said action. From records adduced, Mr. Lam has yet not rectified the breach as required by Member Pang’s Order.

20.Having taken the aforesaid action, Mr. Fung submits that the respondent has not been in breach of paragraph 1(b) of the Schedule.

21.And in respect of paragraph 1(c), Mr. Fung submits in his affirmation that the respondent cannot be required to stop letting the Shop and keep it vacant. He has given warning to the tenants. And in the past 2 years, the respondent has terminated the tenancy of 2 different tenants to comply with the terms of the DMC. And he believes that it would not be effective.

22.And finally, Mr. Fung said the respondent could not be expected to remove the goods and chattels of its tenant(s) by itself. This would expose the respondent to claims by the tenant(s).

23.Mr. Fung further argues that the duty to enforce the DMC against occupiers rests with the applicant. The applicant may take legal action to compel the tenant to comply with the DMC and to recover all costs. Hence Mr. Fung considers that the respondent has not been in breach of paragraph 1(c).

24.Mr. Tse has filed an affirmation in reply. I do not go through all the details as this is more a submission than affirmation. I would deal with his answer under my consideration of the submission the applicant’s counsel.

Legal Principle

25.I should first deal with the legal principle on how to enforce a Tomlin Order. Mr. Tang, counsel for the respondent first refers me to the decision given by Mimmie Chan J in Lam Wong Kwan Ying & Another v Lam Sik Se, Tony HCA 1885/1987, at paragraph 3 :

“3. It is settled that the terms in the schedule to a Tomlin Order do not form part of the order itself (Luk Por v Chau Kim Hung, HCA 10369/1997, unreported, 8 October 2003; The Incorporated Owners of Hoi To Court v Chinluck Properties Limited, HCA 6171/1997, unreported, 24 August 2006). The only order made is for the proceedings to be stayed, with liberty to the parties to apply to the court to enforce the terms set out in the schedule itself, and/or to lift the stay. There is no question of enforcement of an order or judgment of the court. No separate action is required to seek enforcement of the terms in the schedule, where there is provision for liberty to apply in the order itself. The terms and conditions set out in the schedule constitute an agreement between the parties for the compromise of the action.”

26.I agree that the terms in the Schedule is not part of the order. And the applicant may seek to enforce the terms in the Schedule in the same action. I believe the applicant on sight of the decision of Luk Por agreed to amend the summons. And if we look at the body of the order, paragraph 1 reads :

“All further proceedings herein be stayed sine die, upon the terms set out in the Schedule hereto, except for the purposes of enforcing those terms;”

27.It is clear that the stay is subject to the proviso that proceedings may be continued to enforce those terms. The applicant may seek to enforce the terms of the Schedule in this action. And for application to enforce the terms of the Schedule, the question before this Tribunal is to consider if there is a breach of the terms in the Schedule, and if the objection from the respondent is arguable. I refer to the decision of Chu J (as she then was) given in The Incorporated Owners of Hoi To Court v Chinluck Properties Limited HCA6171/1997:

“15. As [noted] above, the plaintiff’s summons is to enforce the terms embodied in the Schedule to a Tomlin Order pursuant to the “liberty to apply” provision in the Order. There is no need for the plaintiff to commence a new action to make the application: see Reyes J’s decision on the point in Luk Por v. Chau Kim Hung (unreported) HCA 10369/1997, 8 October 2003, at paras.9-11.

16. Where, as in this case, a ground of opposition is raised, the court should decide whether the ground is arguable but the burden is no higher than that in a summary judgment application: Chan Yiu Sing Peter v. Lam Yat Wah [1990] 2 HKLR 92, 95I-96B.”

28.If the matter is clear and the respondent does not raise any arguable objection, the reliefs may be granted summarily. If an arguable objection is raised, it may be appropriate for the Tribunal to direct pleadings, discovery and a trial. I refer to the judgment of Bokhary J (as he then was) given in Peter Yiu Sing Chan v Madam Lam Yat Wah HCMP19/1972 & HCMP 3481/1973, and for this application I only need to refer to paragraph 1 of the headnote :

“It is open to a party to a Tomlin Order who seeks relief directed to the carrying into effect of its terms to seek such relief by way of summons. If the party who resists such relief raises an arguable defence or a triable issue, then it may be appropriate for the Court to direct pleadings, discovery and a trial. Otherwise the relief may be granted summarily.”

Discussion and Ruling

29.Mr. Poon, counsel for the applicant submits that the 3 sub-paragraphs under paragraph 1 of the Schedule shall be read together. He submits that :

“The language used in the [Schedule] are plain and clear that the respondent (a) “shall not place in, on or over”, (b) “shall not permit its servant(s), agent(s), tenant(s) or licensee(s) to commit the acts” and (c) “shall take appropriate action to abate or rectify”.

30.Mr. Poon submits that the sub-paragraphs should be read together. I believe he is submitting that if the breach is committed by the tenant of the respondent, the respondent is in breach of the terms of the Schedule and the applicant is entitled to the reliefs claimed.

31.I do not see the need to read the sub-paragraphs in the way that Mr. Poon suggested. It is more appropriate to look at each of the sub-paragraphs and see if the respondent has been in breach of any of them. Each of the sub-paragraphs should be construed to assess the scope of restriction.

32.Mr. Tang addresses me and emphasizes that as long as the respondent is not in breach of the terms of the Schedule, he should not be held liable for the act of the tenant. I do not agree with Mr. Tang that the act of the tenant could not constitute a breach of the terms. We have to read the precise terms in depth and I would analyze further hereinafter.

33.Mr. Tang submits that at all material times, the Shop has been let out and the respondent has parted with the exclusive possession of the Shop. He submits that there is no evidence that the goods and chattels placed outside the Shop, or any canopies outside the Shop or over the pedestrian walkways were placed by or belonged to the respondent. Mr. Tang said, the properties belong to somebody else, probably the tenant. Taking into account the affirmation of Mr. Tse, I agree with Mr. Tang that the applicant fails to show by evidence that the respondent has placed goods and chattels at the Common Areas itself, and/or erected the canopies outside the Shop in breach of paragraph 1(a) of the Schedule.

34.And having heard the argument, I agree that sub-paragraph 1(a) only covers the respondent’s personal acts. But that would not limit the scope of coverage of other sub-paragraphs.

35.Sub-paragraph 1(b) prohibits the respondent from permitting its servant(s), agent(s), tenant(s) or licensee(s) to commit the acts set out in sub-paragraph 1(a). It is clear that 1(a) would prohibit the respondent from committing the Acts by itself, and 1(b) extends to prohibit the respondent from “permitting” others, including its tenants, to commit the Acts.

36.On the evidence before me, it is not disputed that the Shop was let by the respondent to Mr. Lam. And I accept the evidence of Mr. Fung with the photographs, which shows that the pedestrian walkways were occupied by goods and chattels, and there were canopies over the walkways. And I accept the evidence of Mr. Fung that these belongs to the tenant Mr. Lam.

37.These acts are in breach of the DMC and are acts covered by paragraph 1(a) of the Schedule. The question remaining is whether the respondent has permitted the tenant to commit the breach.

38.Mr. Tang argues that the landlord would not be responsible for any tortious act, such as nuisance, committed by its tenant and he refers to some authorities which I do not repeat. I have no disagreement with those authorities. But here we are not dealing with the legal argument that under what circumstance would a landlord be responsible for the nuisance or wrongful act done by his tenant. I am to interpret the express provision to see if the respondent has been caught by the wordings of the terms and hence in breach.

39.Mr. Tang submits that the word “respondent” in the Schedule should not include its tenant. I agree. It is the obligation on the respondent not “to permit” its tenant to commit the Acts which is relevant. Mr. Tang refers to authorities on interpretation which are irrelevant.

40.Sub-paragraph 1(b) is clear that the respondent should not permit its servant(s), agent(s), tenant(s) or licensee(s) to commit the acts. The obligation on the respondent is not to permit. Yet the burden rests on the applicant to prove that the respondent has permitted, by direct evidence or by inference.

41.It may be argued that the evidence before this Tribunal is not sufficient to show, or to infer that the respondent has permitted its tenant Mr. Lam to commit the Acts. Alternatively, it may be argued that it is a point that has to go for trial when oral evidence would be heard. I would move on to the sub-paragraph 1(c) before I come back to this matter.

42.And for sub-paragraph 1(c), it is a provision that the respondent shall abate or rectify the breach if it is done by the respondent and/or its servant(s), tenant(s) or licensee(s). It is an additional provision that if the prohibited act is done by the respondent and/or its tenants, it has to take the appropriate action to abate or rectify the same. Again, this is an obligation imposed by the contractual term of the Schedule on the respondent to take action in some situations. It would be easier for the applicant to enforce, because all it has to prove is that the Acts have been done by the respondent or its tenant. Permitting is not a matter to be proved under sub-paragraph 1(c).

43.Hence reading the 3 sub-paragraphs separately, they set out different scenarios which the respondent is obliged to comply. I see no reason why, when the respondent is in breach of one of the sub-paragraphs, he is not in breach of the terms of the Schedule and shall rectify or abate the breach. However, the remedy must be proportionate and in answer to the breach.

44.On the evidence before me, I accept the submission that the applicant has not proved that the goods and chattels found at the Common Areas belong to the respondent. With the evidence, it may be arguable that it has been shown that the respondent has permitted its tenant to commit the Acts. But it is unarguable that the goods and chattels belong to the tenant and is occupying the Common Areas and the canopies have not been removed. Hence on the breach under sub-paragraph 1(c), I should dispose of the issue summarily.

45.In coming to my conclusion on sub-paragraph 1(c), I rely on the evidence of Mr. Tse. Further, the respondent has taken action to recover possession of the tenancy on the ground that the tenant has been in breach of the tenancy agreement by placing goods and chattels at the Common Areas. The 2 orders referred to hereinbefore clearly show that the tenant admitted he has been placing goods and chattels at the Common Areas, and has failed to remove the canopies, and the tenant applies for relief.

46.I note that the respondent has indeed taken action to recover possession of the Shop, which I presume is an act to rectify or abate the breach. It is unfortunate that the breach has not been purged. The question is whether the respondent has taken “appropriate action to abate or rectify the same as soon as practicable.”

47.Mr. Fung said in his affirmation that it is unrealistic if the respondent is not allowed to let out the Shop. I agree. Forfeiting the tenancy when the tenant is in breach is surely a way to rectify the breach. But there is no reason why, when the tenant is in breach of the tenancy agreement, the respondent as landlord could not apply for injunction against the tenant without terminating the tenancy. And as the said order shows, the tenant has given an undertaking to this Tribunal. I see no reason why enforcement proceedings could not be taken against the tenant based on the undertaking, which would not necessarily terminate the tenancy. The respondent has taken action resulting in the 2 consent orders in LDPE742/2022, but the breaches have not been rectified. And there are further actions that could be taken as I just mentioned. I found that the respondent has not taken the appropriate action to abate or rectify the breach.

48.The respondent also said, the duty to ensure the terms of the DMC are complied with rests with the applicant. And the applicant has failed to perform its duties, making a lot of occupiers of the shops in the Building occupying the Common Areas. He even alleges that Mr. Lam followed their practice to place his goods and chattels outside the Shop. It appears that the respondent wishes to argue acquiescence. This may be an issue in dispute has the case proceeded to trial. But the present application is only in relation to enforcement of the Schedule. Acquiescence does not apply. And generally, the failure of an incorporated owners to take action against other parties in breach of the DMC is not a defence to an enforcement action against one of the owners who is in breach.

49.With these findings, I rule that the respondent has been in breach of sub-paragraph 1(c) of the Schedule and no arguable objection has been raised. It is appropriate for this Tribunal to deal with the summons summarily. And it would not be necessary for the applicant to further rely on sub-paragraph 1(b).

The Terms of the Reliefs Claimed

50.In determining the reliefs, I have to pay regards to the breaches and the terms of the Schedule. The first relief claimed is that the respondent should be restrained from placing goods and chattels at the Common Areas whether by themselves or their, inter alia, tenants. This is an extended version of sub-paragraph 1(a) of the Schedule. On enforcement, this Tribunal should follow the agreed terms and not to extend the same. I therefore refuse to give this injunction.

51.The applicant also asks for leave for it to take all steps to remove goods chattels and/or things placed in the Common Area, and to remove the erected canopies. This would be pre-mature as the respondent could purge the breach after my order. Further, if the goods to be removed belong to a third party (namely, the tenant) who has not been given a chance to be heard, it would create injustice. Hence I would not approve the second relief claimed at this stage. This may be considered in future if the respondent does not comply with my direction hereinafter.

52.I believe the only direction I need to give is that the respondent do within 56 days or such longer period as this Tribunal may approve to take appropriate action to remove the goods and chattels of its servants/agents/tenants/licensees from the Common Areas of the Building and to remove the canopies erected in front of the Shop or on the Common Areas. I give 56 days as there is Member Pang’s Order which appears that the respondent may recover possession as the tenant has not purge the breach. Execution to recover possession could take some time. And there be liberty to apply to any presiding officer for extension of time or further direction by the parties.

53.And I also give an order nisi that the respondent do pay the applicant’s costs of this summons (including all costs reserved) to be taxed if not agreed on District Court Scale and there be certificate for counsel. The order nisi shall become absolute within 14 days unless there is any application to vary the same.

54.Finally, I wish to thank counsel for their assistance.

Mr Ryan WK Poon, instructed by SH Chan & Co, for the applicant

Mr Tyrone CH Tang, instructed by TK Tsui & Co, for the respondent