The Incorporated Owners of Golden Industrial Building v. Yee Lim Investment Company Ltd

HCA 1126/2021

[2023] HKCFI 3314

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1126 OF 2021

____________

____________

________________

JUDGMENT

________________

A.  BACKGROUND

1.The plaintiff is the Incorporated Owners (the “I.O.”) of Golden Industrial Building (the “Building”).

2.The Building was completed in 1984 and the plaintiff was incorporated on 27 May 1998. The building is subject to New Grant No. 5430 (the “Government Grant”) and a Deed of Mutual Covenant dated 18 April 1984 (the “DMC”). The developer of the building was Kong On Investment Company Limited (the “Developer”). The defendant was the Manager of the Building until its appointment was terminated on 30 September 2009.

3.The Building has a carpark. There is a layout plan attached to a letter dated 28 June 1982 indicating the location of various carpark spaces (the “Layout Plan”). The Layout Plan was registered under Memorial Number TW250935. The Layout Plan shows that there are 16 loading/unloading bays on the First Floor of the Building. Another plan showing the layout of the carpark spaces was approved by the Building Authority on 16 September 1982 (the “BD Plan”).

4.By a first assignment dated 18 April 1984, a workshop on 9/F of the Building was sold by the Developer to one Chan Kou (the “First Assignment”). Pursuant to the First Assignment, the right to the loading/unloading bays of the Building were expressly reserved unto the Developer.

5.By an assignment dated 29 March 2005 (the “2005 Assignment”), the Developer assigned various properties in the Building to the defendant, including loading/unloading bays Nos. 2, 3, 4, 5, 10, 62, 63 (the “Subject Loading/Unloading Bays”). At the time of the 2005 Assignment, the defendant was the 99.8% shareholder of the Developer.

6.The remaining 9 loading/unloading bays were sold by the Developer to other purchasers between 1984 and 1989. There is no dispute that the defendant is the registered owner of the Subject Loading/Unloading Bays.

7.Since 1984, various parties, including the plaintiff, had rented the Subject Loading/Unloading Bays from the defendant and made rental payment to either the defendant or the Developer. There was no complaint or challenge about the ownership of the Subject Loading/Unloading Bays until late 2012 when the plaintiff first claimed that all the loading/unloading bays were common parts of the Building.

B.  CLAIM

8.The plaintiff seeks a declaration that the Subject Loading/Unloading Bays which had been assigned to the defendant are Common Areas of the Building within the meaning and intent of the DMC and/or the Building Management Ordinance (Cap 344) (“the BMO”) and consequential relief including the delivery up of vacant possession of the Subject Loading/Unloading Bays and an injunction restraining the defendant from obstructing other owners, occupiers or licensees of the Building from using the Subject Loading/Unloading Bays.

C.  ISSUES IN DISPUTE

9.The agreed issues in dispute are as follows:

1)  Whether the Subject Loading/Unloading Bays are common parts of the building. A sub-issue is whether there are management shares assigned to the loading/unloading bays.

2)  If so, whether the plaintiff is estopped from asserting that the Subject Loading/Unloading Bays are common parts of the Building.

3)  Whether the defendant was in breach of Clause 19 of the DMC and section 34I of the BMO.

4)  Whether the reliefs as sought by the plaintiff should be granted.

5)  Whether the plaintiff is barred from claiming the reliefs by reason of laches and acquiescence.

D.  ORAL EVIDENCE

10.Ms Szeto, the chairman of the I.O. and Mr Cheung, a director of the defendant respectively gave evidence for the plaintiff and the defendant.

11.In assessing credibility of the witness, I adopt the often cited principles in Hui Cheung Fai and Another v Daiwa Development Limited and Others[1] by Deputy Judge Eugene Fung SC at §§76-82:-

“76. In making my findings of fact in this case, I am guided by a number of general principles which judges apply as to fact finding and the assessment of credibility.

77. Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility: Onassis v Vergottis [1968] 2 Lloyd’s Rep 403 at 431 (Lord Pearce) …

78. In deciding whether to accept a witness’ account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events: eg Lam Rogerio Sou Fung v Tan Soon Gin George (unreported, HCA 2576/2005, 5 May 2011) §39 (Chu J).

79. In determining a witness’ credibility, I have also attached importance to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence. The latter type of consistency is often tested by a comparison between the witness’ oral testimony and his or her witness statement.

80. I have cautioned myself against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses (Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336 at §§36-37 (Bokhary PJ)), or from the assessment of the witnesses’ character (Esquire (Electronics) Ltd v HSBC [2007] 3 HKLRD 439 at §135 (Stock JA)) …” (emphasis added)

12.Whilst I consider both Ms Szeto and Mr Cheung to be guarded and evasive when answering questions posed to them during cross-examination, overall I find them truthful in the answers they gave. In any event, as can be seen, very limited issues, if any, turned on factual disputes.

E.  TAI FAT DEVELOPMENT (HOLDING) CO. LTD v THE IO OF GOLD KING INDUSTRIAL BUILDING

13.The plaintiff relies heavily on Tai Fat Development (Holding) Co. Ltd v The IO of Gold King Industrial Building[2] where there was similarly a dispute on whether 13 loading/unloading spaces were common parts of the building. The court at first instance found that the loading/unloading spaces formed part of the common parts (the “CFI Judgment”) for the following reasons:

1)  Despite the First Assignment having reserved the rights to the loading/unloading bays to the First Owner, it is ultimately the DMC that has to be looked at to see if there was any such agreement therein between the First Owner and the First Purchaser for the loading/unloading spaces to be the common areas of the building or for common use by all co-owners[3].

2)  Special Conditions 12 and 13 of the Government Grant stipulate that space shall be provided within the lot to the satisfaction of the District Commissioner, New Territories for the parking, loading and unloading of motor vehicles and specifying the minimum rate thereof and that the space so provided shall not be used for other purpose[4]. Such conditions are not only understandable but necessary for an industrial building. It is also inconceivable that such loading/unloading spaces can be privately owned as it would defeat its intended purpose.

3)  the definition of “common areas” in the DMC included loading and unloading areas[5].

4)  some car parking spaces were expressly designated to be for loading and unloading[6].

5)  no management shares were allocated to the relevant car parking spaces[7].

6)  the definition of “parking space” in the DMC as “each of those space intended for separate use and ownership” suggests that there are other car parking spaces not intended for separate use and ownership but for common use[8].

7)  The conduct of the First Owner in putting up the relevant car parking spaces for sale could not assist the proper interpretation to be placed upon the DMC[9].

14.The Court of Appeal upheld the CFI Judgment and considered that the relevant documents consist of the First Assignment, the DMC, the Special Conditions of Grant and the Approved Building Plans (the “CA Judgment”). The CA Judgment was upheld by the Court of Final Appeal[10].

F.  MANAGEMENT SHARES ASSIGNED TO THE LOADING/ UNLOADING BAYS?

15.Whether management shares have been assigned to the loading/unloading bays is a factor to be taken into account in the determination of whether they form part of the common parts under the DMC.

16.Unlike some other DMCs, the DMC for the Building only provides for the distribution of ownership shares, but not for the distribution of management shares.

17.The only provision for management obligations (in terms of management fees payable) for each workshop and parking space is set out in Schedule 2 of the DMC. There is dispute between the parties on whether management fees are payable for the loading/unloading bays under Schedule 2. The dispute arises this way: whilst there is no ambiguity as to how much management fee is payable for each of the workshops (as they are set out in a table form with an amount set out for each corresponding workshop) the amount payable for car parks are listed out in the format as follows:

BLOCK II
…
Car Park (Lorries) Nos. 23, 24, 25, 26, 27, 28, 29 and 30	@$40 p.m.
Loading/Unloading Bays Nos. 1, 2, 3, 4, 5, 6, 8, 10
Car Park (Private) Nos. 7, 9, 11, 13… 22, 31 and 32	@$30 p.m.
Container on trailer Space No.12	@$50 p.m.
BLOCK I
…
Car Park (Lorries) Nos. 35, 36, 37, 38, 39, 40, 41, 42	@$40 p.m.
Loading/Unloading Bays Nos. 57, 59, 61, 62, 63, 64, 65, 66
Car Park (Private) Nos. 33, 34, 43, 44, … 58, 60	@$30 p.m.

18.Ms Wong, counsel for the plaintiff contended that as there is no corresponding amount set out against the category of “Loading/Unloading Bays”, no management fee is payable.

19.Mr Lai, counsel for the defendant contended that based on the rate of use for the various parking spaces, there is a 3-tier system of fees charged for the parking spaces and the management fees payable for loading/unloading bays should be at $30 per month. However, there is simply no evidence on the rationale of how much management fees were set for each category of vehicles. There is also no evidence on the suggested rate of use of each category of car parking space. Mr Lai also could not justify why the management fees for the loading/unloading bays should follow the category of “Car Park (Private)” (in the line following) instead of following the category in the line above: “Car Park (Lorries)”.

20.The only basis that Mr Lai could put forward in support of his contention was that if it was intended that the loading/unloading bays would not attract management fees, there should be a corresponding “$0” against that category.

21.I am of the view that based on the natural reading of Schedule 2, no management fees are payable for the loading/unloading bays as there is no corresponding amount set out against that category of parking space. I do not see any basis of interpreting the amount to be paid for the loading/unloading bays to be either the same as the category above or the category below.

22.The effect of this interpretation would also be consistent with the conclusion I arrive at on the issue of “common parts” as set out below.

G.  COMMON PARTS?

Plaintiff’s Grounds

23.The plaintiff relies on the following in support of its contention that the Subject Loading/Unloading Bays form part of the common parts of the Building:

1)  Loading/unloading bays are classified as common areas in the DMC (this is disputed by the defendant).

2)  Special Conditions 18 and 19 of the Government Grant stipulate that spaces shall be provided for the loading and unloading of goods which cannot be used for other purposes. The grantee is to maintain such loading/unloading spaces in accordance with the Layout Plan.

3)  According to the Layout Plan and the BD Plan, the only areas available for loading and unloading of goods are the 16 loading/unloading bays on the First Floor of the Building.

4)  No management fee is payable for the loading /unloading bays (this is disputed by the defendant).

Defendant’s Grounds

24.Mr Lai submitted that based on the following, the Court ought to arrive at the conclusion that the Subject Loading/Unloading Bays do not form any of the common parts:

1)  The exclusive use, occupation and enjoyment of the loading/unloading bays had been reserved to the Developer under the First Assignment. At the same time, Mr Lai submitted that the DMC has not superseded the designation of the loading/unloading bays being for the exclusive enjoyment of the Developer under the First Assignment because:

a)  The definition of “Common Areas” in the DMC (inter alia) is:

“(a) Entrance Halls, Loading and Unloading Areas, Goods Handling Areas, Driveway Ramp(s) and Pedestrian Ways on the Ground Floor.” (emphasis added).

As such, Mr Lai submitted that as no relief for rectification was sought, the loading/unloading bays do not fall within the definition of common areas because they are located not on the Ground Floor, but on the First Floor (emphasis added).

b)  Any person vested with the undivided shares is defined as an “Owner” under the DMC and each of the loading/unloading bays have been assigned 8 undivided shares each. As such, the defendant is an “Owner” by virtue of the 2005 Assignment, who is liable to contribute to management fees and other expenses. Mr Lai submitted that it would not make sense if the loading/unloading bays can be common parts whilst the defendant have to bear the obligations as the owners of the Subject Loading/Unloading Bays.

c)  Special Condition 20 of the Government Grant expressly permits the sale of loading/unloading bays to individual owners:

“The grantee shall not assign, mortgage, charge, underlet or part with the possession of or otherwise dispose of any part of the lot or any part of any building or structure erected or to be erected thereon the use of which under these Conditions is or has been set aside or reserved for car parking or loading and/or unloading or any interest therein … without also and at the same time assigning, mortgaging, charging, underletting or parting with the possession of therewith an undivided share of and in the lot together with the right to the exclusive use and occupation of a part of the building…”.

d)  The sales brochure and the standard form of sale and purchase agreement and assignment adopted by the Developer and the First Purchaser contemplate the possibility of the loading/unloading bays being sold to individual owners.

e)  Compliance with Special Condition 18(b) of the Government Grant - requirement of loading/unloading bays to be used for their specific purpose can also be achieved by assignment of such loading/unloading bays to individual owners.

2)  The case Tai Fat Development (Holding) Co. Ltd v The IO of Gold King Industrial Building (supra) is distinguishable.

H.  DETERMINATION- COMMON PARTS?

25.For the following reasons, I am of the view that the Subject Loading/Unloading Bays do fall within the common areas of the Building.

Definition in the DMC

26.The starting point is whether the parties (the First Purchaser and the First Owner) to the DMC have agreed under the DMC that the loading/unloading bays are intended to be common areas. Such intention is to be gauged primarily by the words and language used in the DMC[11].

27.In construing the relevant documents, I adopt the often-quoted principle by Lord Hoffman NPJ in Jumbo King Ltd v Faithful Properties Ltd[12]:

“The construction of a document 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.”

28.Although the First Assignment has reserved the right to the loading/unloading bays to the Developer, this reservation can be displaced by the DMC if it provides otherwise[13]. In the present DMC, “Common Areas” is defined inter alia as: “(a) Entrance Halls, Loading and Unloading Areas, Goods Handling Areas, Driveway Ramp(s) and Pedestrian Ways on the Ground Floor.”

29.Mr Lai submitted that the term “Loading and Unloading Areas” is qualified by the words “Ground Floor” at the end of the definition. As there are no “Loading and Unloading Areas” on the Ground Floor, he submitted that the loading/unloading bays in the Building simply do not fall within the definition of “Common Areas” as they are on the First Floor of the Building.

30.Ms Wong submitted that one should read this definition disjunctively such that “Ground Floor” does not qualify the preceding terms, including “Loading and Unloading Areas”. Ms Wong submitted that after all, other than the “Loading and Unloading Areas”, the “Goods Handling Areas” and “Driveway Ramps” are also located on the First Floor.

31.I reject Mr Lai’s interpretation, as it would lead to the result that other areas such as the “Goods Handling Areas” and “Driveway Ramps” which are both located on the First Floor, would also fall outside the definition of “Common Areas”. This is clearly against the fact that parties do not dispute the “Goods Handling Areas” and “Driveway Ramps” are common areas in the Building.

32.As there are no loading/unloading areas on the Ground Floor and the only loading/unloading areas available in the Building are the loading and unloading bays on the First Floor, I am of the view that the reference to “Loading and Unloading Areas” in the definition of “Common Areas” in the DMC can only be reference to the loading and unloading bays on the First Floor. This is reinforced by Clause 19 of the DMC which also refers to “loading and unloading areas on the First Floor”.

33.Based on the above, I find the definition of “Common Areas” in the DMC includes “Loading and Unloading Areas” and as such, the loading and unloading bays in the Building would fall within the common areas under the definition in the DMC.

Requirement of sufficient loading/unloading spaces

34.It is accepted that Special Conditions 18 and 19 of the Government Grant require that sufficient loading/unloading spaces be provided within the Building.

35.It is clear from the Layout Plan and the BD Plan that the loading/unloading bays are all located on the 1^st Floor of the Building.

36.It is also not disputed that no alternative space on the Ground Floor (or anywhere else within the Building) can be legitimately used for loading/unloading purposes. Mr Cheung in his oral evidence also agreed that loading and unloading of goods by vehicles could only be carried out on the First Floor of the Building, as there is no access for vehicles on the Ground Floor.

37.In fact, the current situation of vehicles parking in the driveway on the First Floor to load and unload goods was one of the matters that attracted warnings from the District Lands Office in 2012 and 2019.

38.Mr Lai submitted that Special Conditions 18 and 19 can be complied with even if the loading/unloading bays are privately owned as the defendant remained willing to lease the Subject Loading/Unloading Bays to the I.O. for public use.

39.I disagree. Adopting the reasoning of Suffiad J. in the case of Tai Fat Development (Holding) Co. Ltd (supra), I am also of the view that allowing such spaces specifically reserved for the purposes of loading and unloading to be owned privately would defeat the purpose of requiring spaces to be created for loading and unloading goods:

“Therefore, although Special conditions 12 and 13 of the Government Grant make no stipulation or provision as to the ownership of such parking spaces which necessarily need to be reserved for such loading and unloading, it would be quite inconceivable that such parking spaces reserved for such loading and unloading purpose (and stipulated by those conditions not to be used for any other purpose) can be owned or in the exclusive possession of any one particular owner or individual as that would defeat its intended purpose.”[14]

40.This is reinforced by Clause 19 of the DMC which provides:

“Each of the parties hereto shall have no right unless specifically assigned to use any of the Car Parking Spaces and shall not in any event park his vehicle or vehicles on the loading and unloading areas on the First Floor for such period as may obstruct others in the use of such areas and shall promptly comply with the directions of the Manager and its staff in relation thereto. The Owner shall use the Car Parking Spaces for the purpose of Car Parking only and shall not place or store goods or other articles thereon.” (emphasis added).

41.Mr Lai submitted that the word “others” in Clause 19 only refers to those who are allowed by the private owners to be occupying the loading/unloading bays, and not the other users of the Building and as such Clause 19 of the DMC is consistent with private ownership of the loading and unloading bays. I reject this interpretation as Clause 19 goes on to provide that they will have to comply with the Manager and its staff in relation to such loading/unloading bays. If such loading/unloading bays were privately owned, it would not make sense to require them to comply with the Manager’s directions. Such interpretation would also go against the necessity for such loading/unloading bays to be provided for the use of the tenants and visitors of an industrial building.

42.Mr Cheung in his evidence said that the defendant had always remained willing to lease the Subject Loading/Unloading Bays to the I.O. so that Special Conditions 18 and 19 can be complied with even though the Subject Loading/Unloading Bays are privately owned.

43.This misses the point that a private owner has the right to exclusive possession of such loading/unloading bays and it is within their prerogative not to lease them out. Mr Cheung in his evidence also accepted that the defendant (as registered owners) has the right not to lease them to the I.O. As such, I find that Special Conditions 18 and 19 will be breached if such loading/unloading bays are privately owned.

Sales Brochure

44.The sales brochure is of no assistance as there is no legend providing which colour corresponds to common areas or otherwise.

Standard Form Assignment/Special Condition 20 of Government Grant

45.The fact that the standard form First Assignment and Special Condition 20 of the Government Grant seem to cater for the possibility of the loading/unloading bays is at best a neutral factor. Ultimately, if the loading/unloading bays fall within the definition of “Common Areas”, as I so find, they should not have been/be assigned.

Undivided Shares/Owner’s obligations

46.The fact that undivided shares are allocated to certain parts of the Building is not determinative of whether such parts are common parts or not. Undivided shares are also allocated to the external wall, and there is no dispute that the external walls are common parts of the Building.

47.I also reject the defendant’s argument that as the loading /unloading bays are “Units”, they must be intended to be capable of being assigned and privately owned. This is because the four pump rooms on the First Floor of the Building are also defined as a “Unit” in Clause 3(ii) of the preamble of the DMC, but there can be no dispute that such pump rooms are common parts of the Building that cannot be assigned. Whether a part of the Building falls with the definition of “Unit” thus has no bearing on whether it is a common part or not.

48.I reject Mr Lai’s argument that even if the Court were to decide that the loading/unloading bays are common areas, the Developer would remain an “Owner” of the Subject Loading/Unloading Bays by reason of the undivided shares assigned to them pursuant to the 2005 Assignment and as such will remain liable for the expenses and liabilities associated with them. If the loading/unloading bays are common areas, as I so find, they should not have been assigned in the first place and there is no room to contend that the defendant will remain an “Owner” and be liable for the related expenses in such scenario.

I.  PLAINTIFF ESTOPPED FROM ASSERTING THAT THE SUBJECT LOADING/UNLOADING BAYS ARE COMMON PARTS OF THE BUILDING?

49.The defendant submitted that even if the court is of the view that the Subject Loading/Unloading Bays are common parts of the Building, the plaintiff is estopped from alleging that the Subject Loading/Unloading Bays are common parts of the Building because of the following:

1)  The Developer and the First Owner, Chan Kou executed the DMC on the common understanding that the Subject Loading/Unloading Bays were common parts of the building.

2)  The Subject Loading/Unloading Bays were let by the Developer and subsequently by the defendant to various tenants, including the plaintiff. By renting the Subject Loading/Unloading Bays, the plaintiff had accepted that they were not common parts of the Building.

3)  The Developer and the defendant had performed all obligations under the DMC as if they were the owners of the Subject Loading/Unloading Bays, including payment of rates, government rent and contribution in accordance with the DMC.

4)  The plaintiff had only raised objection in 2012 on the defendant’s right to exclusive possession of the Subject Loading/Unloading Bays.

5)  The defendant continued to pay management fees until about January 2018.

6)  The defendant continues to pay all outgoings in respect of the Subject Loading/Unloading Bays and the plaintiff did not object to the defendant making such payments.

7)  The defendant submitted that losses were incurred by reason of reliance on the common assumption that the Subject Loading/Unloading Bays are not common parts:

i)  the defendant had purchased the Subject Loading/Unloading Bays together with other workshops and car parking spaces for HK$9,820,000.

ii)  The defendant had made payments in accordance with the DMC as an owner of the Subject Loading/Unloading Bays.

50.Estoppel by convention is concerned with a common assumption relied upon as a basis upon which the persons sharing such common assumption enter into a transaction or legal relationship. It is necessary for the party relying on the principle to show that it would be unjust for the other party to attempt to depart from the common assumption and that he would suffer detriment arising from his having entered into the relevant transaction on the basis of the common assumption if the other party were permitted to set up rights inconsistent with that assumption[15].

51.I am of the view that the defendant has failed to establish estoppel by convention against the plaintiff for the following reasons:

1)  There is no evidence put forward to support the contention that the Developer and Chan Kou executed the DMC on the understanding that the Subject Loading/Unloading Bays were not common areas under the DMC. In any event, what they subjectively believed at that time would be irrelevant in construing the true intention of the DMC. I already explained above why I came to the view that the Subject Loading/Unloading Bays are common parts under the DMC.

2)  Mr Cheung in his oral evidence had confirmed that the only reason why the defendant decided to purchase the Subject Loading/Unloading Bays was because they had obtained legal advice to the effect that they were not common parts of the Building and were available for acquisition. Mr Cheung also confirmed in his evidence that the decision to make such a purchase was not based on the fact that the I.O. had previously rented the Subject Loading/Unloading Bays.

3)  The evidence is that the rental agreements were entered into by the I.O. and management fees were collected under the mistaken belief that the Subject Loading/Unloading Bays were not common parts and could be owned by the defendant. Such evidence was not contradicted.

4)  The fact that the defendant continues to pay other outgoings in respect of the Subject Loading/Unloading Bays after the I.O. had asserted their stance that they form part of the common areas of the Building is the defendant’s own decision not attributable to the plaintiff.

5)  There is no dispute that between 2000 - 2008, one of the directors of the defendant was also the Chairman of the management committee of the plaintiff (the “MC”). Another director of the defendant was the Secretary of the MC. The Treasurer of the MC was an employee of the defendant as well as a relative to the Chairman. It can thus be said that the MC was controlled by the defendant when the rental agreements for the Subject Loading/Unloading Bays were first entered into between the defendant and the plaintiff (acting via the MC). It would thus be disingenuous for the defendant to rely on such rental agreements entered into by the plaintiff as a basis of estoppel, when the MC was in fact controlled by the defendant at the relevant time.

6)  There was no evidence on how much the Subject Loading/Unloading Bays were, independent from the workshops that were assigned to the defendant at the same time. In any event, the defendant had also leased out the Subject Loading/Unloading Bays since it became the registered owners. Profits of about HK$1.8 million would have been generated during such periods. As such, detriment has not been shown by the defendant and the estoppel argument fails.

J.  WAS THE DEFENDANT IN BREACH OF CLAUSE 19 OF THE DMC AND SECTION 34I OF THE BMO?

52.In view of my finding that the Subject Loading/Unloading Bays are common parts of the Building, the defendant would be in breach of both Clause 19 of the DMC (not to park on the loading/unloading areas) and section 34I of the BMO which provides that no person may convert any of the common parts to his own use unless it is approved by the owner’s committee.

K.  WHETHER THE PLAINTIFF IS DEBARRED FROM ENTITLEMENT TO THE RELIEFS DUE TO LACHES /AQUIESCENCE?

53.In order to succeed in a defence of acquiescence, the following needs to be shown[16]:

1)  There was on the part of the plaintiff an assent, or lying by in relation to the acts of another person;

2)  In view of the assent or lying by and consequent acts it is unjust in all the circumstances to grant the relief in question.

54.An I.O. could not have granted the right of any owner to act in contravention of the DMC or some other regulations unless such breach can be remedied. If that is the case, equity would not hold it to be bound by acquiescence[17].

55.In light of my finding that private ownership of the Subject Loading/Unloading Bays would be in contravention of the Government Grant and such breach is not within the I.O.’s power to acquiesce, the I.O. is not bound by its acquiescence.

56.In any event, whatever acquiescence the I.O. might be guilty of was only caused by the mistaken belief that the Subject Loading/Unloading Bays were not common parts of the Building.

57.In terms of laches, the I.O. was only made aware of the possibility that the Subject Loading/Unloading Bays might be common areas after the determination in the case Tai Fat Development (Holding) Co. Ltd v The IO of Gold King Industrial Building (supra) in 2012. After correspondence with the defendant, the I.O. had commenced an action in 2014. Against such circumstances, I do not consider that there was any inordinate delay. It will also not be unjust for the court to grant the relief as sought. The defence of laches/acquiescence fails.

L.  WHETHER THE RELEIFS SOUGHT BY THE PLAINTIFF SHOULD BE GRANTED

58.Given my finding that the Subject Loading/Unloading Bays are common parts of the Building, a declaration to that effect and an order for delivery up of vacant possession would be necessary, as the defendant is currently the registered owner.

59.However, as the Subject Loading/Unloading Bays are common parts of the Building, it would be inappropriate to order that they be conveyed to the I.O.

60.It will also not be necessary to order the defendant to comply with Clause 19 of the DMC as the defendant is in any event already bound by the DMC. An injunction is also unnecessary as there is no indication that the defendant would act in breach of the court’s ruling.

M.  ORDER

61.IT IS ORDERED THAT:

1)  There be a declaration that the Subject Loading/Unloading Bays constitute Common Areas of the Building within the meaning and intend of the Deed of Mutual Covenant dated 18 April 1984.

2)  The defendant do deliver up vacant possession of the Subject Loading/Unloading Bays for the use as a common part of the Building.

3)  Costs order nisi that the defendant do pay the plaintiff the costs of and occasioned by the action, with certificate for counsel, to be taxed if not agreed.

62.The costs order nisi will become absolute if no application for variation is made within 14 days hereof.

63.I thank Counsel for their assistance.

Ms Becky Wong, instructed by Lam & Partners, for the Plaintiff

Mr Alex Lai, instructed by Yung, Yu, Yuen & Co, for the Defendant