Wing Ming Garment Factory Ltd v. The Incorporated Owners of Wing Ming Industrial Centre
Read the full judgment text of LDBM 89/2018 on BabelCite. This Lands Tribunal judgment was delivered on 17 April 2025.
1. This is an application by the applicant, Wing Ming Garment Factory Limited (“Wing Ming”) pursuant to section 31 of the Building Management Ordinance (Cap. 344) (“BMO”) to dissolve the management committee (“MC”) of the the respondent, the Incorporated Owners of Wing Ming Industrial Centre (“IO”) of the building known as Wing Ming Industrial Centre (“the Building”) and to appoint an administrator on the ground that the MC and, by extension the IO, has been unwilling and/or unable properly to p
Cited by 7 cases · Cites 22 cases
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LDBM 89/2018 [2025] HKLdT 20 IN THE LANDS TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION BUILDING MANAGEMENT APPLICATION NO 89 OF 2018 __________________________
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________________ J U D G M E N T ________________ 1.This is an application by the applicant, Wing Ming Garment Factory Limited (“Wing Ming”) pursuant to section 31 of the Building Management Ordinance (Cap. 344) (“BMO”) to dissolve the management committee (“MC”) of the the respondent, the Incorporated Owners of Wing Ming Industrial Centre (“IO”) of the building known as Wing Ming Industrial Centre (“the Building”) and to appoint an administrator on the ground that the MC and, by extension the IO, has been unwilling and/or unable properly to perform its statutory duties under the BMO thereby necessitating its dissolution. 2.Wing Ming’s case is that the MC is unable to perform its duties properly and is not fit and proper and should therefore be dissolved and replaced by an impartial, fit and proper administrator. Wing Ming does not claim damages, injunctive relief or any other equitable remedy, and/or the enforcement of the judgment of any Court or other tribunal. The IO opposes the application and denies the allegations. Wing Ming 3.Wing Ming was the developer of the Building, Wing Ming Industrial Centre, 15 Cheung Yue Street, Cheung Sha Wan, Kowloon, Hong Kong on New Kowloon Inland Lot No. 5491. On 2 March 1991, Super Kind Investment Limited as the 2nd owner (“Super Kind”) executed the 1st assignment with Wing Ming on 2 March 1991 (“the 1st Assignment”) and also entered into the Deed of Mutual Covenant (“DMC”) with Wing Ming and Essman Construction Company Limited (“Essman”), the then manager of the Building. Since 2 March 1991 Wing Ming has sold various parts of the Building. 4.As at the hearing, Wing Ming holds 133/1,323 shares (about 10.05% shareholding) in the Building:-
The IO 5.The IO was incorporated on 24 May 1993, pursuant to the BMO. The IO’s duties and powers are set out in section 18 of the BMO. The land and the Building 6.The Building is situated on New Kowloon Inland Lot No.5491, which is held under the Conditions of Sale No. 10715 dated 13 September 1974 as varied or modified by two modification letters with Memorial Nos. 1197335 and 2711336 (collectively, the “Conditions”). 7.The occupation permit of the Building (“OP”) was issued on 14 November 1978. Ownership of the Building 8.Prior to March 1991, Wing Ming was the sole owner of the land and the Building. 9.On 2 March 1991, Wing Ming sold the 6/F and 7/F and CPS 6 and 7 to Super Kind. At the same time, Wing Ming entered into the DMC with each of Super Kind and Essman as the manager of the Building. 10.The DMC was drafted and prepared with the legal assistance of Messrs. Deacons. “For the purpose of the sale and individual ownership” as evidenced under Recital (3), the DMC notionally divided the land and the building into 1,323 equal undivided shares and allocated such shares to various parts of the Building. 11.Over the following years, Wing Ming in its capacity as the developer sold several units with car park spaces (“CPS”) of the Building to the purchasers below. At all material times, Wing Ming has remained an “owner” of the Building within the meaning of section 2 of the BMO.
12.Part of Front Portion on the G/F has been carved out into Portion V1 and Portion V2 by a Deed Poll dated 15 May 1991 and Portion V1 was sold. 13.On or about 24 May 1993, the IO was registered as a corporation under section 8 of BMO. 14.The appointment of the first manager of the Building, Essman, was terminated by the IO on 1 June 1994 by notice given on 1 March 1994. The role as manager was initially taken over by Security Alliance Limited, which left after a short probation period, and from October 1994 onwards by Easyknit. Easyknit was replaced by Guardian Property Management Limited (“Manager”) in around 2004. The IO’s case is that GD Property Management was appointed the Manager of the Building around 1 October 2004. Each of the managers after Essman were appointed by the IO. At all material times, the Manager was and is the agent of the IO. 15.As at June 2022, the MC was composed of the following individuals.
The Ordinances and provisions in the Conditions and the DMC relied upon by Wing Ming BMO 16.Section 18 of the BMO provides:
17.Section 18(1)(c) of the BMO provides that the IO shall “do all things reasonably necessary for the enforcement of the obligations contained in the deed of mutual covenant (if any) for the control, management and administration of the Building. 18.Section 16 of the BMO provides that the rights, powers, privileges and duties of the owners in relation to the common parts of a building shall be exercised and performed by, and the liabilities of the owners in relation to the common parts of the building shall, subject to the provisions of the BMO, be enforceable against, the corporation to the exclusion of the owners. 19.Section 31 of the BMO provides:
20.There are provisions in the Conditions and the OP restricting use of the Building to godown and/or industrial purposes, and a provisions in the BO restricting any material change of use of a building, including inter alia:-
21.There are provisions in the DMC prohibiting any contravention of the covenants and conditions in the Conditions (collectively, the “No Contravention of Conditions Covenants”), including inter alia:-
22.There are provisions in the DMC prohibiting any contravention of the BO, including inter alia:-
23.There are provisions in the Conditions and the DMC setting out restrictions on the use of the car parking spaces (collectively, the “CPS Covenants”), including inter alia:-
24.There are provisions under the DMC prohibiting structural alterations and/or additions to the Building:
25.There are provisions in the DMC and the BMO prohibiting interferences with common parts of the Building, including inter alia:-
26.There are provisions in the DMC prohibiting any acts interfering with the exclusive use and enjoyment of the owners, including inter alia:-
27.The duties of the Manager (and, by extension, of the IO, as the Manager is the agent of the IO) are stated in the DMC as follows:-
28.There are provisions under the DMC in respect of the Manager/IO’s duties and powers, these include taking action for the enforcement of the DMC and/or the Conditions (collectively, the “Enforcement Duties Covenants”), specifically inter alia:-
The applicable legal principles 29.The IO has, inter alia, the statutory duties enumerated in section 18(1)(c) of the BMO, which provides that it is required to do all things reasonably necessary for the enforcement of the obligations contained in the DMC for control, management and administration of the Building. Those statutory duties impose a mandatory positive obligation on the IO. 30.In The Incorporated Owners of Hoi Luen Industrial Centre & Anor v Ohashi Chemical Industries (Hong Kong) Ltd [1995] 2 HKC 11, at 12I-13E, the Court of Appeal stated at 12I to 13E:-
31.In Jikan Development Ltd v IO of Million Fortune Industrial Centre and Others [2001-2003] HKCLRT 37, HHJ Stephen Chow held at [15]:
32.Mr Conney SC submits that on an application for dissolution of a MC under section 31(1) of the BMO, the most important consideration is whether it is able to perform the duties imposed on it by the DMC and the BMO. In performing these functions, it is impossible not to make mistakes, but unless they are serious, they should not justify dissolution of the MC. The Court will accept evidence on improvement to management of common facilities made by the MC, and will not lightly order ‘dissolution’: see Jikan, [15]-[17]. 33.In Jikan, the applicant raised various grounds to support its application to dissolve the MC, including (1) that, as the 1st ground, the MC failed to maintain proper records of account; and (2) that, as the 4th ground, the MC abused their positions and were derelict in duty by allowing the chairman of the incorporated owners to park his car at common areas of the Building and building illegal structures in common areas. In respect of the 1st ground, the tribunal held that this complaint has been resolved by a High Court action taken out by the applicant to compel the incorporated owners to maintain proper records of account: [9]. In respect of the 4th ground, the tribunal held that the MC’s failure to restraint the chairman from parking his car in the common area was not serious enough to warrant dissolution, and that the chairman had ceased the wrongful conduct in any event: [12.1] and [13]. 34.The tribunal would consider whether the alleged wrongdoings were done by the committee members in their capacity as owners or by the 2nd committee, which should not be held liable therefor: [14]. 35.The IO’s duty is to act reasonably. It is one of ‘proper’ management. It is not an absolute duty and does not turn a manager into an insurer. Hence in Lo Yuk Chu v Hang Yick Properties Ltd [1996] 4 HKC 278, the Court of Appeal said at pp 282 B-E, that:
36.Woo Man Fong v IO of Broadview Court (Shum Wan Road) and others, CAMP 339/2021, 8 November 2021, the Court of Appeal approved the tribunal’s approach to and the tribunal’s decision in refusing the appointment of an administrator under section 31 of the BMO. The Court of Appeal said:
The legal proceedings 37.These LDBM proceedings are the 3rd action between Wing Ming and the IO. There are altogether 6 legal actions raised by the parties. The substantive judgments delivered in each of those proceedings are relied upon by the parties. The 3 actions between the parties
The other 3 actions involving either party and other(s)
THIS ACTION: LDBM 89/2018 Procedural Background 38.On 17 April 2018, Wing Ming filed a Notice of Application in the Lands Tribunal, seeking an order (a) for the dissolution of the existing MC of the Building; and (b) for an administrator to be appointed in its place. The Application did not simply progress to trial. 39.The IO took out an interlocutory application dated 9 May 2018 seeking an order, inter alia, that (a) Wing Ming’s Notice of Application be struck out; and (b) further or alternatively, Sections C4 and C5 of the Notice of Application be struck out and/or the proceedings be stayed on the ground “that they are frivolous, vexatious and/or abuse of process of the court”. 40.Specifically, the IO argued that Wing Ming “raised a number of issues in Sections C4 and C5 of the Notice of Application which go to the enforcement of the Second Action Order. Such matters should be more properly dealt with by G. Lam J (as he then was) in the Court of First Instance. 41.The IO’s argument was rejected by W.Y. Ho DDCJ, Presiding Officer of the Lands Tribunal in the decision dated 17 August 2018 (the “1st LT Decision”). The Tribunal gave its reasons in §§22-26 of the 1st LT Decision. In summary:-
42.The IO sought leave to appeal against the Tribunal’s decision, including the intended Ground 2 that the Presiding Officer “erred in law in holding Sections C4, C5 of the Notice of Application should not be struck out”. Dismissing that application, the Tribunal held that this proposed ground of appeal had no reasonable prospect of success. The IO’s application for leave to appeal against the 1st LT Decision dated 17 August 2018 was dismissed in toto and leave was refused by decision dated 3 December 2018 (“LT Leave Decision”). The IO has not further appealed that refusal. 43.The IO maintains that even though the 1st LT Decision on 17 August 2018, answered the preliminary question in the negative, the IO’s case remains that the tribunal could still consider its jurisdiction and its exercise of discretion as a result of non-joinder of the members of the MC and/or of the MC itself. MC is not the IO itself. If complaint is made against the MC, the MC and not the IO should be made the respondent: see Jikan, [4] to [6]. Wrongful acts (if any) of the previous MC is not an act by the subsequent MC, and the latter is not liable for the act of the former: Jikan, [10.4]. The IO referred to its skeleton and authorities filed for those 2 hearings. 44.Wing Ming’s stance is that the IO is debarred from running this argument again at trial (this may concern issue estoppel). The IO disagrees submitting that the 2 Decisions are both ‘interlocutory’ in nature, not on ‘merits’, and are not ‘final’ decisions or judgment. It is just and reasonable to allow the IO to raise the issue of non-joinder at trial in the same LDBM action. Wing Ming’s pleaded case 45.In Sections C1 to C5 of the Re-Amended Notice of Application, Wing Ming has pleaded a number of grounds in support of its claim that the MC is unable to perform the duties imposed on it by the DMC and comply with the provisions of the BMO and/or the BO. Instead, the IO selectively targeted Wing Ming for alleged breaches of the DMC, BMO and/or BO, whilst failing to take any action against the members of the MC for breaches analogous to those alleged by the IO. 46.In short, the members of the MC failed to procure that the IO discharge its statutory obligations by failing to act against breaches of the BMO, BO, and/or DMC committed by its own members, such that it is inherently undesirable on a true construction of the object and intent of the BMO for the MC to remain in control of the IO. LIST OF ISSUES 47.Given the history it may come as no surprise that the parties were unable to agree a list of issues, notwithstanding numerous directions and orders to do so. Eventually, with counsels’ assistance, in opening Mr Cooney SC reported that:
48.In gist, the parties’ formulation is as follows:
THE EVIDENCE Site visit to inspect the Building 49.Wing Ming considered that the particulars of the circumstances and present condition of the Building are complex and involved multiple interrelated technical architectural and structural elements, which may not be readily intelligible from photographic evidence, and/or oral and/or documentary description. It applied for the tribunal to give directions for an on-site inspection of the Building with a view to ascertaining firsthand its present circumstances and mode of use. 50.The IO had resisted a site visit on the basis, inter alia, that there are various photographs taken by both parties, plans and drawings and absence of justification from Wing Ming. However, Mr Cooney SC did not maintain objection at trial. The tribunal conducted a site visit on 18 September 2024. The evidence includes the view and photographs taken on that day. Witnesses 51.Each party called 2 factual and 1 expert witnesses.
Exhibits 52.The exhibits produced at the trial:-
WING MING’S CASE 53.Mr Lin submits that the obligation incumbent on the IO to enforce the DMC is not subject to discretion but is a mandatory positive obligation. Failure to enforce the DMC, including selective enforcement of the DMC against certain owners as opposed to others, is on its face a serious default on the part of the IO. 1st Complaint: Failure to Enforce the User Restrictions in the Conditions (Section C1 of Re-Amended Notice of Application) The evidence 54.It is Wing Ming’s case that a majority of owners, tenants and/or occupiers of the premises on 1/F to 10/F of the whole floor areas had converted the premises’ user into one other than for industrial or godown purposes, without obtaining any approval and/or permission from the Building Authority and/or the Lands Department. 55.First, as evidenced by the photographs at Annexure 1 of Re-Amended Notice of Application, which were taken in the year 2016, some premises are and were at all material times used for commercial purpose such as office, shop and/or showroom. User of the Building other than for industrial or godown purposes is a contravention of Clauses 3(a) and 3(b) of the Conditions, the OP, section 25(1) of the BO, and the No Contravention of Conditions Covenants to the DMC. 56.Wing Ming engaged a private investigator Siu to conduct investigation of all the premises of the Building, who took up-dated photographs of the various premises in July 2021 and January 2022. The evidence includes that:
57.Wing Ming started to take photographs of the user of the various premises of the Building by other owners and/or their tenants in or around 2007 when the Mantex Action was instituted, comprising:
58.Those photographs were adduced as evidence of the use and conditions of the Building in the First and Second Actions, and the Court in each case accepted such evidence. Specifically in the Mantex Action, Chu J (as she then was) held:-
59.Second, the IO had chosen to take enforcement action(s) against Wing Ming and/or its tenants, namely (a) the Mantex Action, HCA 1505/2007; and (b) the HK Quality Brands Action, HCA 947/2014.
60.On the other hand, the IO through its solicitors Messrs. Hampton, Winter and Glynn (“HWG”) threatened to take action to seek an order for contempt against Mr Yuen as a director of Wing Ming for breach of the user condition of the Building, an allegation which Wing Ming denied. That exchange is evidenced by the letters of HWG addressed to Mr Yuen as a director of Wing Ming dated 19 January 2015 and 6 February 2015 and Mr Yuen’s letter dated 2 February 2015 to HWG. 61.Those two actions and the threatened action against Mr Yuen show that the IO had taken enforcement action against Wing Ming and/or its tenants for injunctive relief relating to the use of the G/F and Cockloft of the Building. However, Wing Ming is not aware of similar action(s) being taken by the IO against other owners by the MC, notwithstanding clear evidence of breaches of the DMC, OP, and/or BO by others. That was notwithstanding Wing Ming had repeatedly requested that the IO take such enforcement action. 62.Third, as evidenced by letter dated 6 December 2021 from the Lands Department to the Law Society, where a land lease restricts the use of the lot to “industrial and/or godown purposes”, it is of the view of the Lands Department that industrial use must involve a process of manufacturing and must take place within the lot concerned, whereas godown use must involve storage of goods and/or transient deposit and storage for delivery purposes. In the Building, however, except for a logistics centre, which occupied a very small area of the premises, the use of such premises by the other owners do not and cannot fall within the ambit of godown and/or industrial use. 63.Particularly galling to Wing Ming is that when it sought to take proper steps for change of user the IO obstructed it. Upon the application of Wing Ming to the Town Planning Board (“TPB”) for change of user of Wing Ming’s premises on the G/F and portion of the Cockloft, the IO wrote to the TPB to object. This is evidenced by (a) letter of the TPB to the IO dated 2 October 2018 together with a plan enclosed; and (b) the letter dated 22 October 2018 from HWG to TPB. 64.Fourth, the IO’s assertion that the majority of these premises are being used as ancillary offices pursuant to Clause 3(b) of the Special Condition of the Condition is untrue. Mr Yuen, who had first-hand knowledge of the circumstances of the Building over many years and the relevant period, observed that there was a marked absence of manual workers and/or vehicles that one would expect from a manufacturing and/or storage site. Mr Yuen was unable to observe any manufacturing process actually taking place in the Building. 2nd Complaint: Failure to Prevent and/or Stop the Conversion of Common Parts in the Car Park of the Building (Section C2 of the Re-Amended Notice of Application) 65.In the First Action, Reyes J determined that the areas of G/F marked “VOID” being those areas in front of the Car Parking Spaces No.2-10 in the DMC Plan (namely, the Void Area) were common parts of the Building. As such, any vehicles parked in the Void Area would be a conversion of the common parts, in contravention of Clauses 13 and 27 of Section IV of the DMC and section 34I of the BMO. 66.The DMC defines “Vehicles Parking Space(s)” and/or “Car Parking Space(s)” to mean all the spaces in the Building for parking of vehicles. These car parking spaces are shown coloured green in the coloured ground floor plan annexed to the DMC (the “DMC G/F Plan”). 67.As can be seen from the DMC G/F Plan, the word “VOID” was marked in front of the areas of car parking spaces no. 2, 3, 4, 5, 6, 7, 8 and 9. These Void Areas are also coloured green. 68.The fact that the Void Areas are common parts of the Building is not or should not be subject to dispute. In §61 of the Re-Re-Amended Notice of Opposition, the IO has expressly admitted that the Void Areas constitute parts of the common areas of the Building. 69.However, there are and were at all material times vehicles parked in the Void Areas in breach of Clauses 13 and 27 of Section IV of the DMC and section 34I of the BMO. Annexure 2 of the Re-Amend Notice of Application, photographs taken on 24 November 2016 and the photographs taken in August 2021, show that there is not only parking on Void Areas but also double parking of 2 vehicles in one CPS. 70.In the Second Action, the evidence of Mr Yuen which was unchallenged by the IO and Mr Luk, the witness of the IO, confirmed that the owners of CPS 5 to 10 unlawfully occupied the Void Areas in front of the relevant CPS to park 2 private cars. Hence, G Lam J (as he then was) observed at §339 of the Second Action Judgment:-
71.Wing Ming had written through its then solicitors Messrs. K&L Gates to the IO to inform the IO of the wrongful occupation of Void Areas by other owners by letter dated 11 May 2016. The IO through its then solicitors Messrs. S.H Chan & Co. replied to confirm the follows:
72.Nevertheless, the IO chose to take enforcement action(s) against Wing Ming and/or its tenants for occupying the Void Areas in front of CPS 2, 3 and 4. Wing Ming had duly paid mesne profits for occupation of such Void Area thereof in the sum of HK$811,855.00 with interest to the IO. This is admitted by the IO in §64 of the Re-Re- Amended Notice of Opposition. 73.Mr Lin submits that there is simply no reason why the IO should not or cannot claim mesne profits against other owners, tenants and/or occupiers who are in breach of the DMC and/or the BMO. Notwithstanding Wing Ming’s repeated requests, the IO has failed and/or refused to take any enforcement action against other owners, tenants and/or occupiers in breach of the DMC and the BMO. 74.According to Wing Ming such selective enforcement against Wing Ming and/or its tenant can only lead to one reasonable conclusion: the MC sought to enforce only against Wing Ming, but not against any of its members. 3rd Complaints: Failure to Prevent and/or Stop the Parking of Private Cars in Designated Parking Spaces for Lorries and/or Containers on Trailers (Section C3 in Re-Amended Notice of Application) 75.There have been continuing breaches of CPS Covenants, which the IO has failed to address and/or remedy. The CPS Covenants essentially provided, inter alia, that (i) one half of the car parking spaces should be used for loading and unloading of lorries; (ii) the car parking spaces should be used in accordance with the approved plan except with the prior written consent of the Directors of Public Works; and (iii) the car parking spaces should be used for the purpose of parking motor vehicles of the appropriate size only. 76.In breach of the CPS Covenants, the IO permitted the parking of private cars in designated CPS for lorries and/or containers on trailers (i.e. nos. 5, 6, 7, 8, 9 and 10). In particular, two private cars are and were at all material times allowed to be parked in the said designated CPS: see Annexure 2 to the Re-Amended Notice of Application, and the photographs. 77.CPS Nos. 5, 6, 7, 8, 9 and 10 are of larger size as shown in the approved Car Park Layout Plan. However, there are in fact 11 CPS (CPS Nos. 1 to 11) and a container parking space on the G/F of the Building. Special Condition 9(b) provides that of the space provided for parking, loading and unloading, one half shall be used for parking of private cars and light vans and one half for the parking, loading and unloading of lorries. If the container parking space is counted as a space for parking a lorry, there are 7 CPS for lorry parking which are more than half of the prescribed number. 78.However, despite Wing Ming’s repeated requests and demands, the IO has failed and/or refused to take any enforcement action against the owners, tenants and/or occupiers in breach of the CPS Covenants. Wing Mong relies upon the following contemporaneous documents and photographs which were exhibited and/ or produced as evidence:-
79.Wing Ming concludes that it is clear from the above photographs that there is not only unlawful parking on the Void Areas but also unlawful double parking of 2 vehicles in one CPS. Alterations in 1993 and 1994 of the Building 80.Wing Ming says that since about 1991, Wing Ming had intended to make a number of alterations to the Building. An architect firm was engaged to prepare alteration plans. Parts of the external walls on G/F facing Tam Nam Street was proposed to be replaced by glass panels. A cockloft was proposed to be constructed above CPS 2, 3 and 4 and certain Void Areas in the front of CPS 2, 3 and 4. 81.In 1993, the fire services facilities in the Building had to be repaired. The IO engaged a company called New Gas to carry out the work. As a result, on around 7 August 1993, New Gas installed a fire service pipe (the “Pipe”). Part of the Pipe passed at near ceiling height through the space over the Void Areas in front of CPS 2, 3 and 4, which Wing Ming claimed was its property and where, Wing Ming said, it had reserved in the DMC the right to build a loft. The First Action HCA 8805/1993 82.On 30 September 1993, Wing Ming instituted the first action against the IO and New Gas in its capacity as manager for having installed the Pipe through the space over the Void Areas in front of CPS 2, 3 and 4, in breach of the DMC. The IO counterclaimed against Wing Ming for unpaid management fees and joined Essman as a third party. 83.Soon after commencing the First Action, Wing Ming sought an interim mandatory injunction to remove the Pipe. That application failed at first instance before Barnett J on 26 January 1994. Barnett J thought that Wing Ming was bound to succeed on the issue of encroachment but nevertheless refused to grant an injunction. 84.Wing Ming appealed that decision to the Court of Appeal which in July 1994 held that there was no ground to interfere with the judge’s exercise of discretion and accordingly dismissed the appeal. 85.At the time when the Pipe was installed by New Gas, there was no loft over CPS 2, 3 and 4 or the void areas in front of them. Before July 1994 and despite the presence of the Pipe, Wing Ming began and completed the construction of a cockloft above CPS 2, 3 and 4 (as shown on the building plans) as well as the Void Areas above in front of CPS 2, 3 and 4. Wing Ming also erected a wall below this loft which enclosed CPS 2, 3 and 4, leaving the Void Areas in front of them as the Re-designated CPS 2, 3 and 4. 86.In July 1995, by agreement and without prejudice to the parties’ positions in the First Action, the Pipe was re-routed. 87.Thereafter, the First Action was dormant. In 2003, the IO issued an application to have the First Action dismissed for want of prosecution. This succeeded before the Master, but Wing Ming’s appeal against that decision to A. Cheung J (as he then was) succeeded in April 2015. 88.The First Action was finally tried before Reyes J in December 2007, who held, inter alia, that under the DMC, the Void Areas in front of CPS 2, 3 and 4 were not areas for parking vehicles but were common areas meant to be kept clear. Reyes J granted a mandatory injunction requiring Wing Ming to demolish the wall that enclosed the original CPS 2, 3 and 4. 89.Wing Ming appealed to the Court of Appeal in CACV 27/2008. It dismissed the appeal on 27 June 2008, affirming the decision below. On 17 June 2009, the Court of Appeal handed down its decision refusing to grant leave to Wing Ming and Essman (as third party) to appeal to the CFA. Wing Ming and Essman sought leave to appeal to the CFA. By a determination dated 16 September 1991, the Committee of the CFA refused to grant leave. 4th Complaints: Failure and/or Refusal to Engage Competent Contractors as well as Monitor and/or Verify DCL’s Repairs and/or Rectification Works (Section C4 in the Re-Amended Notice of Application) 90.In the Second Action, G Lam J (as he then was) ordered the IO to, inter alia, carry out repair and/or rectification works to deal with certain water leakage problems in the basement of the Building. I shall address the 4th Complaints below. Wing Ming conclusion 91.Wing Ming concludes that it must follow that the MC:
The necessity to dissolve the MC of the IO 92.Under section 31 of the BMO, the tribunal has the power to grant an order to dissolve the MC and appoint an administrator. It should exercise that jurisdiction where it is satisfied that: (1) the MC is unable or unwilling properly to perform its functions; and (2) the nominated administrator is a fit and proper person to be appointed: see Smart Wealth Asia Pacific Ltd v IO of Kelly Court LDBM 251/2013 (31 December 2013) at §§11-12; Jikan and see further approval of that approach in Woo Man Fong v IO of Broadview Court [2021] HKCA 1598. 93.Mr Lin submits that it should be plain that the IO is unable and/or unwilling properly to perform its duties and, in particular, to secure the compliance by the IO with the BMO and the Second Action Judgment. It should also be plain that a knowing and continuous breach of a statutory duty and/or an improper interference with compliance with a court order are serious defaults. 94.As regards the appointment of an administrator, Wing Ming proposes CBRE Advisory Limited as administrator (the “Nominated Administrator”) of the IO to replace the MC upon it being dissolved. Further, the Nominated Administrator is in all circumstances a fit and proper person to act in that capacity. It is impartial and has no prior connection with or financial interest in any of the owners of the Building. It has confirmed it is willing and able to act. 95.The tribunal is urged to: (a) dissolve the IO; and (2) appoint the Nominated Administrator as administrator, with costs to the applicant. IO’s CASE 96.At trial, Wing Ming gave notice that it would not pursue its C5 complaint. The IO’s view is that Wing Ming is not concerned about its C1 - C4 complaints but commenced these proceedings as a litigation tactic. C5 should be taken into account when considering whether this is Wing Ming’s litigation tactic, especially when the C5 injunction (Part Loft and G/F External Walls) has not yet been complied with, despite the passage of more than 10 years from the date of judgment of G. Lam J on 23 June 2014 to this trial date in September 2024. 97.The parties have relied on the same legal authority: Jikan per HHJ Stephen Chow, [15]-[17]. The legal principle is that under BMO, section 31(1), the most important consideration is whether a MC is able to perform the duties imposed on it by the DMC and the BMO. In performing these functions, it is impossible not to make mistakes, but unless they are serious, they should not justify dissolution of the MC. The tribunal will accept evidence on improvement to management of common facilities made by the MC, and will not lightly order dissolution. 98.The IO submits that the test is whether: 1) the IO is able to perform the duties imposed on it by the DMC and comply with the provisions of the BMO; 2) because it is impossible not to make mistakes, whether the IO has acted reasonably in the circumstances; and 3) whether the IO’s mistakes (if any) are serious. The test is not as formulated by Wing Ming in its Opening, which is whether the IO has been unwilling and/or unable to properly perform its statutory duties. Non-joinder and non-appearance of the relevant parties or stakeholders 99.A number of parties or stakeholders raised in Wing Ming’s complaints here (C1 to C4, selective targeting, fraud, dishonesty, C4 re Diploma’s workmanship, etc.) were not joined in these LDBM proceedings, namely, the MC and/or its members. 100.Wing Ming’s non-joinder of the relevant parties and/or stakeholders of parties or stakeholders will affect the tribunal’s decision as to whether to make a finding of fact concerning them. The MC should not be dissolved, when it or its members are not joined as a party. The IO addressed the earlier 2018 1st LT Decision and LT Leave Decision of DDJ W.Y. Ho. Selective targeting complaint in the First Action HCA 8805/1993 101.As to selective targeting, in the 1st Action, HCA 8805/1993, Reyes J in his Decision dated 5 November 2007 (interlocutory injunction, pre-trial in December 2007), held that:
102.Despite the Reyes J 5 November 2007 Decision, Wing Ming has never applied to the Court for an Order of specific performance requiring the IO to enforce relevant obligations under the DMC. 103.If Wing Ming is genuinely concerned with use and the Basement works, one would expect that Wing Ming would apply for an injunction in order to achieve its objective of remedying alleged wrongful use and alleged defective works, instead of the appointment of an administrator, who may or may not take action regarding alleged wrongful use or alleged defective works. The IO case - the primary issues Primary Issues 1 & 2: Whether the IO and/or its MC are able to carry out its duties and whether they have acted reasonably in the circumstances, with Wing Ming’s complaint C1 to C4 to be considered under this issue. 104.Mr Cooney SC submits that the IO and the MC are able to perform their duties, and they had acted reasonably in the proper management of the Building. This includes the IO’s retaining and remunerating a manager, currently Guardian, and other professional trade or business firm or person to carry out on behalf of the IO any of the duties or powers of the IO under the BMO and/or the DMC. Guardian is part of the ‘Savills’ and ‘First Pacific’ group, which is a competent, reputable, experienced, and established professional company in building management. The building management contract between the IO and Guardian is exhibited. Guardian continues to provide service to the IO. 105.As to Wing Ming’s subsidiary issues under C1 to C4 and selective targeting, the IO’s reply is as follows. C1 complaint: G/F to 11/F (Roof Floor) wrongful user non-industrial or godown use 106.As to C1 complaint, it is understood that Wing Ming is not asking the tribunal to make a finding on wrongful user of the 1/F to 11/F. Mr Cooney SC says this must be right, because the proper parties to any allegation of wrongful user (owners/tenants) are not joined in these LDBM proceedings. Issues A1 & A2 C1 complaint: non-industrial and non-godown use of 1/F to 10/F Issue A1: Whether a majority of owners, tenants and/or occupiers of the premises and/or the whole floor on 1/F to 10/F converted the premises’ user into other than for industrial or godown purposes, without obtaining any approval and/or permission from the Building Authority and/or Lands Department. Issue A2: If yes, whether such user was in contravention of Clauses 3(a) and 3(b) of the Conditions, the OP, BO s.25(1) and the No Contravention of Conditions Covenants of the DMC including the permitted level of ancillary office. 107.Wing Ming is not asking the tribunal to make findings with respect to allegations of wrongful user. Consequently, the tribunal does not need to make findings with respect to allegations of breach or contravention. Wing Ming’s case appears to be that the IO should have acted on suspicion of wrongful use and investigated further. 108.In any event, the IO’s position is, in summary, there is insufficient evidence of wrongful user. While the photographs might have shown some offices’ feature, this is not conclusive. The permitted level of ancillary offices is open to argument. One did not know the percentage of the alleged offices (if any) with respect to the whole use, and the nature of the use. 109.The Lands Department did not take enforcement action against 1/F to 10/F (or Upper Roof). The land search and Mr Chee’s 2nd witness statement evidence this. Issue A3 C1 complaint: non-industrial and non-godown use re 1/F to 10/F Issue A3: If A2 is answered in the affirmative, whether the IO failed and/or refused to take any enforcement action against other owners, tenants and/or occupiers in breach. 110.The IO has not taken legal action against owners, tenants or occupiers of 1/F to 11/F, but the IO says it has acted lawfully and reasonably for reasons set out here. Issue A4 re C1 complaint: non-industrial and non-godown use re 1/F to 10/F Issue A4: If sub-paragraph A3 is answered in the affirmative, whether the IO was in breach of the Enforcement Duties Covenants of the DMC, section 18(1)(c) of the BMO, any common law and/or equitable duties. 111.The IO’s case is that the Enforcement Duties Covenants of the DMC do not apply to the IO because the IO is not a party to the DMC. The DMC was sealed in March 1991. The IO was incorporated in May 1993. 112.The Enforcement Duties Covenants of the DMC do not apply to the MC by operation of DMC Section VII, B, cl. 7. Guardian is acting as Manager of the Building. The function of the MC is limited to: 1) representing the Owners in all dealings with Guardian; 2) giving to and receiving from Guardian notices on behalf of all the Owners and; 3) undertaking such other powers and duties as Guardian may delegate to the MC (there has been no such delegation). 113.There has been no breach of BMO section 18(1)(c), any common law or equitable duties for the reasons stated. 114.Each floor of the Building is huge and occupies about 13,000 square feet (applying to 1/F to 3/F) and about 10,000 square feet (4/F and above). Sometimes, the floor was divided into different units. This is explained in Mr Chee’s 2nd witness statement and as apparent from the site visit on 19 September 2024. 115.The photographs produced by the parties showed mostly the entrance and reception area of the units. They were brief in time (showing a few dates only). 116.Sometimes, Mr Chee was only able to stay outside the entrance to the relevant units and to look at the areas near the entrance, if the door is transparent. Recently, he was not able to enter most of the units. Even if he was able to enter, the stay was relatively brief in time and confined to limited areas. Compared to the huge size of the floors or the units, the observation of such stay was not sufficient evidence for one to draw the conclusion on the user. Similarly, the name plates or directories of the units were not sufficient evidence. There had been change of status of occupation, which needs to be considered. The IO does not have the right of entry to the units. 117.Further, there was no admission of wrongful user by the owners. Whereas there were concessions of wrongful user by Wing Ming and/or its tenants before Reyes J in HCA 8805/1993: see Judgment after trial, 20 December 2007, [19]. So too before DHCJ Seagroatt in HCA 947/2014, the HK Quality Brands Action, who granted unconditional leave to defend: see Decision date 23 June 2015, [2]. 118.Most units are not transparent in appearance and do not exhibit conclusively the features of office, showroom and retail shops. There is insufficient evidence that they are accessible by the public. 119.In fact, unless the unit is open to public, like the G/F shop rented by Wing Ming in the past, and unless permission is granted, one cannot enter a unit to investigate. The IO was allowed to inspect outside and/or at the reception area. 120.Mr Chee in his 2nd witness statement at [13], [14], [31] and [36], listed the host of factors he says should be taken into account on the question of enforcement. 121.Even if the IO or MC thinks it has sufficient evidence on the wrongful user and that it will be a straightforward case, the Court may not agree with the IO by granting summary judgment. Mr Chee refers to DHCJ Seagroatt’s Order granting unconditional leave to defend in the HK Quality Brands Action. There is a risk that a full trial will be required, which will be expensive and time-consuming. This makes the IO think twice in taking the relevant actions. It is a decision by the IO on the facts and evidence available, which may be different from case to case. 122.In particular, despite referring to the grant of O.14 judgment by Chu J. in the Mantex Action in 2007, DHCJ Seagroatt refused to grant O.14 judgment and granted unconditional leave to defend, finding that ‘equitable’ defences should be properly considered in a full trial and that they could not ‘easily or comfortably be resolved’ in the context of proceedings for summary judgment: see [19], [22]-[24] of DHCJ Seagroatt’s Decision, 23 June 2015, referring to the equitable defence of acquiescence, approval, encouragement, and laches at [20]. 123.Mr Chee further explained about the difficulty and uphill task to raise funds for litigation in the present environment, the lesson in the IO’s claim in the HK Quality Brands Action, referring to the IO’s failure to obtain O.14 judgment, and the better allocation of funds on the maintenance and repair works of the Building, in need of such works, which would be much more worthwhile. 124.Mr Cooney SC points out that the IO is right to be concerned about the risks and costs of litigation. The IO has spent $32,000,000 on litigation since 1993; and Mr Yuen had mentioned that Wing Ming had spent $50,000,000, including amount paid to the IO. Wing Ming’s complaint concerns numerous units, tenants and owners. The IO is wary, in light of DHCJ Seagroatt’s refusal to grant O.14 judgment. Various lengthy and expensive trials might be required to commence against different parties, if Wing Ming’s complaint is taken to court. This concern and consequent reluctance to institute proceedings is reasonable. There is not enough evidence of wrongful user to allay the IO’s concerns about litigation risks and costs. 125.Moreover, the Lands Department has not taken action about wrongful user on 1/F to 10/F (or 11/F). No warning letter on breach/contravention of user by the Lands Department or other department was registered against the 1/F to Upper Roof. The land search records, conducted in January and February 2024, are exhibited. 126.Yet further, as mentioned in Mr Chee’s 2nd witness statement, despite Reyes J’s remarks in the 5 November 2007 Decision in HCA 8805/1993, Wing Ming has never applied to the Court for an Order of for an injunction or specific performance requiring the IO to enforce the relevant obligations under the DMC. Wing Ming has not explained its reluctance to take action to remedy alleged wrongful use. 127.BMO section 18(1)(c) requires the IO to do all things reasonably necessary for the enforcement of the obligations contained in the DMC for the control, management and administration of the Building. 128.In summary, the IO is under a duty to spend money reasonably and to act reasonably. The IO takes the view that there is insufficient evidence of wrongful user as Wing Ming alleged. Wing Ming did not take action as suggested by Reyes J. There is no complaint and no user enforcement action by the government, including the Lands Department and the Buildings Department. In light of the litigation risks and costs, it is reasonable for the IO not to start legal proceedings, as the IO needs to persuade the owners to raise funds, which will probably be a lot. Issue B1 C2 complaint: void area parking Issue B1: Whether there were vehicles parked in the Void Area in breach of Clauses 13 and 27 of Section IV of the DMC and section 34I of the BMO. 129.This issue concern CPS 2-4 and CPS 5-10, not CPS 1 and 11. The IO says that the photographs do not show how long and extensive parking took place in the void area. 130.The IO asserts that whether the subject void areas are common areas is a complicated question. On the one hand, there are rulings by Reyes J and G. Lam J that the void area are common areas. 131.On the other hand, Wing Ming had challenged such ruling in the subsequent and recent Sanwa Action. The matter may reach the CFA. Despite the judgment by Reyes J and G. Lam J, in the Sanwa Action Wing Ming still submitted, by its Senior Counsel, repeatedly, that the void areas belonged to Wing Ming. In the Sanwa Action, Wing Ming argued that it had sold to Sanwa the void area in front of CPS 2 (described as Re-Designated CPS 2). Further, Coleman J noted that:
132.Mr Cooney SC fairly acknowledges that at trial, Mr Chee agreed that void area was common area, but added that the owners did not have that understanding, that they were just based on the contract or agreement at the time of purchase of the CPS to make decision on their conduct. 133.The Lands Department has not taken enforcement action against the alleged wrongful parking in void areas. 134.Wing Ming did not apply for an injunction or order (as indicated by Reyes’ J, if breach was found) to compel the IO to act. Issue B2 C2 complaint: void area parking Issue B2: If sub-paragraph B1 is answered in the affirmative:
135.Regarding Issue B2, the IO has not taken legal action. As to enforcement action, whether it was taken is open to debate. It is a matter of degree and discretion as to the action taken. Warning letters were issued by the IO, and Mr Chee’s 2nd witness statement explained:-
Issue B3 C2 complaint: void area parking Issue B3: Whether the IO contravened the HCA 8805/1993 Judgment, the Enforcement Duties Covenants of the DMC and section 18(1) of the BMO, any common law and/or equitable duties. 136.There is no contravention of the First Action HCA 8805/1993 Judgment because the Court did not make any order on Wing Ming’s claim against the IO. 137.The Enforcement Duties Covenants of the DMC do not apply to the IO because the IO is not a party to the DMC. The DMC was sealed in March 1991. The IO was incorporated in 1993. 138.The Enforcement Duties Covenants of the DMC do not apply to the MC by operation of DMC Section VII, B, cl. 7. Guardian is acting as Manager of the Building. The function of the MC is limited to: 1) representing the Owners in all dealings with Guardian; 2) giving to and receiving from Guardian notices on behalf of all the Owners and; 3) undertaking such other powers and duties as Guardian may delegate to the MC (there has been no such delegation). 139.There has been no breach of section 18(1)(c) of the BMO, any common law or equitable duties for the reasons set out below. 140.Void area parking is a complicated question. There are issues of legal costs, time and litigation risks. It is a matter of degree and discretion as to the action taken. 141.Mr Cooney SC explained that the IO needs to be very careful and responsible in deciding on the actions to be taken in respect of the void areas. The issues are complex. The amount of legal costs and time involved is potentially large. The litigation risks are high. Further, Wing Ming’s position in the Sanwa Action are matters the IO has taken into account. Declaratory and rectification relief were sought and obtained by Sanwa in the Sanwa Action, with appeal by Wing Ming. Equitable defences were raised before DHCJ Seagroatt by Wing Ming’s tenant successfully to obtain unconditional leave to defend in the HK Quality Brands Action. The void areas issue are not a simple one and have a long and complex history. There is Wing Ming’s (as developer and owner) conflicting stance in the Sanwa Action and in these LDBM proceedings, as identified by Coleman J in the judgment, [4] and [59]. The IO’s legal action over the void areas may probably require determination in a lengthy trial (with potential appeals) involving multiple owners and legal costs. 142.Assuming (which is denied by the IO) that there was wrongful parking in void areas, the action taken by the IO was reasonable in the circumstance and not a breach of the DMC, BMO or any common law or equitable duties. Mr Chee’s host of factors should be taken into account on the question of enforcement. The IO’s First Committee Members Meeting minutes, 6 May 2022, addressed the issue of double parking or parking of vehicles outside the parking spaces. After issuing two letters to all concerned owners/ occupants, the conditions resumed normal and acceptable. Members opined that if there was occasional short time parking, say, delivery of document to office etc, management staff should monitor the situation flexibly provided they did not cause any inconvenience to other occupants. Management Office would follow closely in order to maintain smooth operation of the carpark. 143.Sanwa is the owner of CPS 2, and Wing Ming the owner of CPS 3 and 4. Wing Ming extended its G/F premises by building a wall (built immediately below the loft: see Reyes’ J’s Judgment, 20 December 2007, [39]. This prevented CPS 2 to 4 from being used for car parking. The building of the wall demonstrated an intention to exclude CPS 2 to 4 from car parking and to occupy permanently the Void Areas as car parking spaces. This was an obvious instance of conversion of common area: Coleman J’s Judgment in Sanwa Action; and Reyes J’s Judgment in HCA 8805/1993, [7], [39], [128]-[129], [136], [153.3]. 144.Wing Ming’s actions were completely different from the actions of those who may park on the Void Areas. Those parking on the Void Areas have not acted so as to exclude permanently car parking spaces from use for car parking. Because of the very different nature of the parties’ respective actions, there has been no selective targeting. 145.At trial, Mr Chee agreed that void area was common area, but added that the owners did not have that understanding, that they were just based on the contract or agreement at the time of purchase of the CPS to make decision on their conduct. 146.The Lands Department has not taken enforcement action against the alleged wrongful parking in void areas. 147.Wing Ming did not apply for an injunction or order (as indicated by Reyes’ J, if breach was found) to compel the IO to act. Issue C1 C3 complaint: lorries and container on trailers parking Issue C1: Whether the IO caused, procured and/or permitted the parking of private cars in designated parking spaces for lorries and/or container on trailers. 148.This issue concerns CPS 5 to 10 or CPS 5 to 9. There is no evidence that the IO caused or procured the parking of private cars in designated spaces for lorries and/or container on trailers. Any parking must have been by private individuals. 149.Assuming (which is denied by the IO) that there was wrongful private car parking, the action taken by the IO was reasonable in the circumstances and not a breach of the DMC, BMO or any common law or equitable duties. Mr Chee’s host of factors should be taken into account on the question of enforcement. The IO repeats its reply to Issues concerning C2 void area complaint. Issue C2 C3 complaint: lorries and container on trailers parking Issue C2: If yes, whether the IO was in breach of the CPS Covenants. 150.The IO is not a party to the DMC. Hence, the IO cannot be in breach of the CPS Covenants. The IO repeats its reply to Issues concerning C2 void area complaint. Issue C3 C3 complaint: lorries and container on trailers parking Issue C3: Whether two private cars were allowed to be parked into one car park space thereby trespassing on the common parts of the Building in contravention of Clauses 13 and 27 of Section IV of the DMC and section 34I of the BMO. 151.While the IO takes the view that the void areas in front of CPS 5 to 10 are common areas, this is complicated as shown in the Sanwa Action and some owners’ understanding. 152.This is subject to the IO’s primary position that the tribunal does not and should not rule on this issue, because of the non-joinder and non-appearance of the relevant parties and/or stakeholders, and because the issue under section 31 of the BMO application does not require such a ruling. The IO repeats its reply to Issues concerning C2 void area complaint. Issue C4 C3 complaint: lorries and container on trailers parking Issue C4: If sub-paragraph C3 is answered in the affirmative:-
153.The IO has not taken legal action. As to enforcement action, whether it was taken is open to debate. It is a matter of degree and discretion as to the action taken. The IO repeats that the Enforcement Duties Covenants of the DMC do not apply to the IO because the IO is not a party to the DMC. The DMC was sealed in March 1991. The IO was created in 1993. The Enforcement Duties Covenants of the DMC do not apply to the MC by operation of DMC Section VII, B, cl. 7. Guardian is acting as Manager of the Building. The function of the MC is limited to: 1) representing the Owners in all dealings with Guardian; 2) giving to and receiving from Guardian notices on behalf of all the Owners and; 3) undertaking such other powers and duties as Guardian may delegate to the MC (there has been no such delegation). 154.There has been no breach of section 18(1)(c) of the BMO, any common law or equitable duties for the reasons set out below. 155.The Lands Department did not take enforcement action against the alleged wrongful parking. 156.Wing Ming did not apply for an injunction or order (as indicated by Reyes’ J, if breach was found) to compel the IO to act. 157.There are issues of legal costs, time and litigation risks. 158.It is a matter of degree and discretion as to the action required to be taken. 159.Assuming (which is denied by the IO) that there was wrongful private car parking, the IO maintains that the action taken by the IO was reasonable in the circumstance. Mr Chee’s host of factors should be taken into account on the question of enforcement. 160.This is subject to the IO’s primary position that the tribunal does not and should not rule on this issue, because of the non-joinder and non-appearance of the relevant parties and/or stakeholders, and because the issue under section 31 of the BMO application does not require such a ruling. Overview – Wing Ming 161.Wing Ming invites the tribunal to consider all the evidence before it with a view to finding whether it is able to draw any of the following conclusions:-
162.Turning to the specific complaints and remedies as pleaded by Wing Ming – bearing in mind that that it is the applicant’s prerogative to decide how best to prosecute his case, with a view to obtaining the relief for which he has prayed – the tribunal is invited to focus on the following salient matters. Thus, the abandonment of complaint C5 is consistent with Wing Ming’s position that it is not necessary for it to make out each and every complaint to succeed in this application. It is sufficient for it to show, by reason of the facts found by the tribunal in the matter of each complaint, that it would in all circumstances be proper and convenient for the tribunal to dissolve the MC of the IO and to replace it with an independent and neutral administrator. Equally, Wing Ming was not bound to apply for specific performance. It accepts it did not. 163.In that regard, the tribunal is invited to focus on the following preliminary matters. 164.First, the crux of this application is for (a) the dissolution of the MC of the IO and (b) the appointment of an administrator in its place. There is undoubtedly sufficient and cogent evidence for the tribunal to reach the conclusion that the MC of the IO is unwilling and/or unable to perform its duties and obligations under the DMC and the BMO and that it is, therefore, proper and convenient for the tribunal to exercise its statutory powers under the BMO to dissolve the MC and appoint an administrator in its place. 165.Second, Wing Ming’s case is that one of the reasons that the MC is unfit to act is that it has caused the IO to selectively target Wing Ming for enforcement. Other than Mr Chee, the manager and/or consultant of the IO, the IO has failed without any good explanation to call any member of the MC of the IO as witness(es) to give evidence before the tribunal when their impartiality and the performance of their duties are called into question in this case. Further, while Mr Chee claimed in his oral testimony that he carried out monthly inspections of the Building with the staff of Guardian, the IO saw fit not to call anyone from Guardian to give evidence. 166.Except the bald assertion by Mr Chee in cross-examination that they were busy, there is no explanation by the IO as to why none of the members of the MC was called to give evidence at trial. Nor is there any explanation as to why the staff of Guardian was not called to give evidence. The presence of Mr Luk Siu Ming (the current chairman of the MC) and Mr Ng Kwok-wing (“Ng”) (who is a member of the MC representing Sanwa (5/F)) at the trial speaks for itself. This was not disputed. Mr Cooney SC points out that the burden of proof is on Wing Ming. The IO is not obliged to call any witness. Wing Ming did not join members of the MC. It is open to Wing Ming to call whoever it saw fit. There is no property in a witness so Wing Ming could have called any of them itself. 167.In respect of the failure of a party to call a witness who might be expected to have material evidence to give on an issue, in Li Sau Keung v Maxcredit Engineering Ltd [2004] 1 HKC 434, by the Court of Appeal held at §§ 28 and 29 that where a person without explanation failed to call as a witness a person who he might reasonably be expected to call, it was open to the court or the jury as appropriate to infer that that person’s evidence would not have helped that party’s case. 168.In Telings International Hong Kong Ltd v John Ho, unrep., CACV 10/2010, 22 October 2010, Le Pichon JA held at §§ 79-81:
169.Mr Chee rejected the suggestion that there is hostility, at least not on the IO’s part. The history of litigation does not raise the relationship to the level of hostility. Mr Chee referred to his and Mr Yeun’s interest in music. 170.The IO says that Mr Chee’s position as a witness for the IO should not be challenged. He has given evidence on behalf of the IO in other proceedings and his evidence has been accepted. He has also given affirmations in these proceedings and he is well versed and able to give evidence on the material matters. The issue is that he is not a member of the MC, nor an owner. He is not employed by Guardian. He described himself as “the manager of the IO” and “the IO’s consultant”. 171.Third, contrary to the IO’s position, there was plainly prima facie photographic evidence of wrongful use, which Mr Chee acknowledged. A reasonable, well‑informed building manager should have conducted further inquiries/investigations and not simply shut its eyes and ears to clear indicia of wrongful use. That is without prejudice to the ultimate outcome of such inquiries/investigations. It has to be borne in mind that all those units in question are owned respectively by the other 6 owners whose representatives have all along been the members of the MC. Nevertheless, the fact that nothing that the tribunal has seen photographed prompted further queries or action is itself clear evidence that the MC has been unwilling and/or unable to take reasonable steps to ascertain propriety of use and so enforce the DMC. 172.Fourth, the tribunal must have regard to the meaning of the crucial terms “industrial” and “godown”. These are not terms of art, nor are they used in a statute. They should, accordingly and in principle, bear their ordinary meaning:
173.Further, as evidenced by letter dated 6 December 2021 from the Lands Department to the Law Society, where a land lease restricts the use of the lot to “industrial and/or godown purposes”, it is of the view of the Lands Department that industrial use must involve a process of manufacturing and must take place within the lot concerned, whereas godown use must involve storage of goods and/or transient deposit and storage for delivery purposes 174.Fifth, the MC has all along been dominated by the other 6 owners to the exclusion of Wing Ming (“6 Owners”). These 6 Owners hold 85.7% undivided shares in the Building and can dictate the management of the Building. Irrespective of whether Wing Ming attends the general meetings of the IO or is allowed by the 6 Owners to have its representative sitting on the MC, the 6 Owners will always have the final say on the operation of the MC and management of the Building. 175.Mr Chee has said that Mr Yuen would be welcome. However, at the general meeting of the IO which took place on 22 April 2021 after the issue of the present proceedings by Wing Ming, the 6 Owners unanimously voted in favour of the resolution for setting the number of members for the MC at 6 with each of their respective representatives appointed as members of the MC. The minutes of the general meeting of the IO that took place on 27 November 2023 also show the position. Mr Lin continues that it lies ill in the mouth of the IO to say that Wing Ming did not attend the IO’s meetings when Wing Ming would be outvoted and no useful purpose would be served by it attending the IO’s meetings. Mr Cooney SC replies that if Wing Ming were to attend and put forward a point or reasonable proposals there is no telling what the vote may be. However, in all the circumstances on balance I accept Mr Yuen’s evidence to the effect that this would be futile. 176.Wing Ming says that the IO/MC’s selective targeting of Wing Ming is well demonstrated by the 2 actions taken by the IO against the tenants of Wing Ming, namely, Mantex Action HCA 1505/2007 and the Hong Kong Quality Brand Action HCA 947/2014, and the claim by the IO in the Second Action, HCCT 60/2006 for the occupation of the Void Areas in front of CPS 2, 3 & 4. This in stark contrast to the inaction of the IO/MC in respect of the manifest and/or similar breaches of the User Restrictions in Clause 3 of the Special Conditions by other owners or their tenants. Clear examples are the medical centres operated on the 4th floor of the Building and the illegal occupation of the void areas in front of other CPS by other owners or their tenants. There is contrasting treatment. Mr Cooney SC points to the difference in available evidence. 177.Mr Lin submits that the failure to enforce the CP Covenants and the provisions of the DMC in respect of the illegal parking at the Void Areas by the IO is blatantly intentional. According to Mr Chee’s oral evidence, the IO has kept a register/list of the cars which are allowed by the owners of the CPS to be parked at the CPS and the register/list has been kept at the reception counter so that the caretakers would make sure that only those cars appearing in the said register/list would be allowed to park at the CPS. The caretakers are present at all times and monitor use of the CPS. Crucially, they have a list of the registration number of the vehicles permitted to use any CPS. Accordingly, the IO/MC know who is parking where. They have been able to identify the owners or tenants who have been in breach of the CPS Covenants and/or have parked their vehicles illegally at the Void Areas. They know the extent of the breaches of the CPS Covenants. Rather than putting a stop to the practice the IO/MC has condoned these breaches of the CPS Covenants and the provisions of the DMC. They have in effect encouraged these breaches by allowing vehicles which are not lorries to be parked at the lorry parking spaces and vehicles to be parked at the void/common areas. The IO/MC is not prepared to implement cost-effective measures such as wheel clamps to prevent these breaches. Mr Lin found it incredulous that the IO/MC is so complacent that they did not even bother to stop these breaches for a moment as a matter of window dressing exercise on the date when the tribunal conducted a site inspection of the Building. That is a fact. ASSESSMENT OF EVIDENCE Wing Ming 178.Mr Lin submits that in assessing the evidence of witnesses, the tribunal should consider whether the witness gave (1) evasive and argumentative answers; (2) tangential speeches avoiding the question; (3) explanations tending to blame legal advisers for pleadings, disclosure and evidence shortcomings; (4) self-contradictory evidence; (5) internally inconsistent evidence; (6) shifting cases; (7) new evidence; and (8) selective disclosure: Yu Man Fung Alice v Chiau Sing Chi Stephen [2020] HKCFI 2923, at §§61-62, per Coleman J. 179.Mr Chee and Mr Yuen were the two main factual witnesses in the trial. Mr Chee’s Evidence 180.As a matter of general observation, Mr Lin says that Mr Chee’s evidence clearly bears all the hallmarks of an incredible and unreliable witness. In respect of most, if not all, issues, Mr Chee’s evidence is characterised by (1) evasive and argumentative answers; (2) tangential speeches avoiding the questions; (3) self-contradictions; (4) internal inconsistency; (5) shifting cases; (6) new evidence; and (7) selective disclosure. 181.Whereas Mr Cooney SC considers Mr Chee should not be criticised for his demeanour, describing him as “a man of strong character”. He was certainly that. It does not follow from his style that he was not telling the truth. I am also reminded that Mr Chee has health issues and he required some indulgence, as well as to consider what he was coping with. 182.Mr Lin particularised specific matters. In terms of general demeanour and attitude, the tribunal should have observed that Mr Chee:-
183.The above is a fair account of some of Mr Chee’s evidence. 184.Further, Mr Lin continued that the following non-exhaustive examples show that Mr Chee’s evidence is contrary to the objective facts and/or contemporaneous documents and/or common sense:-
185.Mr Lin says simply put, the credibility of Mr Chee’s evidence is fatally undermined by a failure to engage with the questions put to him, a generally argumentative and hostile demeanour, and the proffering of incredible, hyperbolic responses to probing questions as to why the IO failed to take action that one would readily expect a reasonably competent MC to consider taking in the circumstances. The tribunal is therefore invited to attach no weight whatever to Mr Chee’s evidence and to reject it on the grounds that it was evasive, internally inconsistent, and plainly self‑serving. 186.In my view it is not that simple. Mr Chee’s adamant delivery is not held against him. Mr Chee was not well while giving evidence. I take this into account. He was allowed as much time as he indicated he required. 187.Mr Chee did choose to spar with Mr Lin. He appeared to feel a sense of responsibility to the members of the MC. He personally took responsibility for matters in the past. He even said that if anyone should go it was him. Either he was deliberately put up as a fall guy by the IO or he decided out of his loyalty to the MC, or members of it, to take the blame in order to protect the IO and MC. Clearly he should not take responsibility. He is not responsible for decisions of the IO. As a result I am not able to rely on his evidence. I do not dismiss his evidence out of hand. Where his evidence differs from that in documents or is unsupported by any other evidence I cannot rely on his account, as more particularly set out herein. Where his evidence differs from that of Mr Yuen, I prefer the evidence of Mr Yuen. Mr Yuen’s evidence 188.Mr Lin submitted that Mr Yuen gave his evidence in a firm, clear and calm manner. His answers to the questions posed by the IO’s leading Counsel were direct and straightforward. He did not give unnecessarily lengthy answers. Nor did he give any evasive and/or argumentative answers. His evidence was not shaken at all in cross-examination. The tribunal is invited to accept Mr Yuen’s evidence in its entirety. 189.Mr Cooney SC emphasised that Mr Yuen launched the application for tactical reasons. The history of the disputes and conduct of Wing Ming show that Mr Yuen’s evidence should not be accepted. 190.In my view Mr Yuen gave his evidence in a methodical manner. He was endeavouring to get every detail correct. I have considered his motives and reasons for bringing the present application. I fully appreciate that in other proceedings there has been findings against Wing Ming and Mr Yuen. On the evidence adduced here his account has not been undermined. I found his evidence given in these proceedings credible. I accept his evidence. Section C1 Complaint – Wing Ming’s case 191.Wing Ming repeats its position set out above. Mr Lin says that the pertinent point is that the tribunal is not asked to make a definitive ruling or factual finding as to whether a particular unit of the Building is or is not in breach of the user restriction covenants under the Conditions and/or the DMC. The crux of the matter is whether the MC has taken reasonable and proper steps duly to enforce the user restriction covenants, including but not limited to taking reasonable steps to inspect the premises, including entering the premises, and take enforcement action in case of breach. In that regard, its failure to do so notwithstanding plain prima facie evidence of wrongful use, for which no reasonable explanation has been proffered, is a plain indication of its fundamental unfitness to continue to act in that capacity. Thus, the tribunal is invited to evaluate the historic conduct of the MC as the critical factor in deciding whether it is proper and convenient for it to be replaced by an administrator. 192.The inspection allegedly conducted by Mr Chee and/or Guardian, cover 2 periods of time:-
The IO’s conduct between 2014 and 2018 193.In cross-examination, Mr Chee gave evidence for the first time that he and Guardian had purportedly carried out “visual inspections” of the Building on a monthly basis since 2014 or 2015. Mr Chee said that the main purpose of such “visual inspections” was not to find out whether any part of the Building had been converted to a wrongful use but to have a patrol in the Building to ascertain the condition of the units, whether they were clean, whether there were any obstructions in the corridors and other matters relating to routine maintenance and repair. When pressed, Mr Chee said that such “visual inspections” could only be carried out in the common areas of the Building because, in most cases, the occupiers of the relevant units would not grant them access. 194.Remarkably, there is not a single documentary record or any written evidence filed by the IO to support that bare assertion. Wing Ming therefore submits that such “visual inspections” did not occur at all and this is an ex post facto fabrication. If Mr Chee and/or Guardian had in fact conduct such “visual inspections”, it is surprising that the IO chose not to mention them in any of its pleadings or that Mr Chee thought them insufficiently relevant to merit even a short mention in any of his 3 witness statements. 195.That may be contrasted with the apparently prominent role that these “visual inspections” had in Mr Chee’s oral evidence. It appeared that the main justification proffered by Mr Chee to Wing Ming’s complaint of an unwillingness and/or inability to act was that the IO had taken reasonable steps by conducting these “visual inspections”. If, however, that account is rejected, not least for want of any independent evidence to corroborate it, then it would necessarily follow that the MC can provide no explanation at all as to why it remained oblivious to years of apparent wrongful use. 196.Even if the “visual inspections” took place (which is denied by Wing Ming), the effectiveness of such an approach to inspection to address the very serious problem of wrongful use is highly questionable. The mere fact that putting the IO’s case at its highest, such “visual inspections” were limited to the common areas and the visible reception/entry areas of the units without taking any written record of attempts to access the units themselves is clear evidence that such steps as the IO did take (assuming it took any at all) were by definition superficial, haphazard, and inadequate. 197.Mr Chee said that during the inspections in the 1st Phase, by way of observation from the exterior of the units, he and/or Guardian developed suspicions that certain units, other than those belonging to Wing Ming, had been converted to “illegal use”. Mr Chee further positively affirmed that he did not make any written record of such suspicion. As to whether Guardian kept a record, he was unsure. However, Mr Chee was evidently uninterested as he testified that neither he nor the IO asked Guardian if they had the record for such “suspicion”. That is notwithstanding it can only be assumed that the IO would have been aware that Mr Chee and/or Guardian had entertained those suspicions. Mr Chee fell far short of explaining why neither he nor the IO ever inquired whether there were any records whatsoever of well-founded suspicions of wrongful use. The tribunal is invited to draw the adverse inference to such a serious and inexplicable lack of any documentary record. 198.As to the reason why Mr Chee and/or Guardian had limited the inspections to the exterior and/or reception areas of each of the units, Mr Chee, conceded that he had not even requested permission from any of the owners and/or occupiers of the relevant units to inspect their interior. Mr Chee agreed that, in principle, there would have been nothing to prevent him from asking the MC to take further steps to inspect the interior of the units. Mr Chee, however, failed to do even that, which would not have been unduly time-consuming, expensive, and/or inconvenient, notwithstanding his suspicions of the wrongful use of some of the units. 199.The only reason Mr Chee gave for this omission was that as every member of the MC had a full-time job, they did not have the time to turn their attention to such matters. Mr Lin submitted that explanation is wholly unconvincing. It would have been straightforward for Mr Chee to telephone the relevant owners and ask their permission; otherwise Mr Chee could have simply discussed his concerns with the owner of the relevant unit(s) in building management meetings. Wing Ming says that this is another instance of the MC/IO’s constant failure to properly carry out the IO’s duties. 200.Mr Chee and/or Guardian’s inaction or unwillingness to act was a longstanding complaint on the part of Wing Ming and dates back to as early as February 2015. By its letter dated 2 February 2015, Wing Ming wrote to Messrs. Hampton, Winter and Glynn lodging a complaint with the IO at paragraph 3 of the letter:-
201.Coupled with Mr Chee’s evidence, it is clear that notwithstanding the complaint made by Wing Ming in February 2015, Mr Chee and/or Guardian continued, putting the IO’s case at its highest, to conduct nothing more than perfunctory “visual inspections” and elected to make the visual inspection of the reception areas without making any written record in those “routine works”. Worse still, Wing Ming’s written complaint did not spur Mr Chee and/or Guardian to even request access to the units they evidently suspected had been converted to wrongful use. 202.Mr Chee claimed that when he received Wing Ming’s complaint in February 2015, he and the IO took the matter very seriously. However, Mr Chee had already given his clear answer to the tribunal that when he carried out his inspections, he just walked down the corridor and observed what was readily discernible from common areas and/or reception areas of the units. In short, not even a reasonable complaint was sufficient for Mr Chee to take a more vigilant and thorough approach to his purported inspections or the IO to take any action. 203.During the 1st Phase, Mr Chee claimed that he recalled that 8/F of the Building was occupied by an architectural firm, which formed the basis of his suspicion of wrongful use. Mr Chee also claimed that the IO had issued letters to other owners for their suspected wrongful use of the premises before the commencement of this action, nevertheless, no such documentary evidence was produced in the trial bundles to support Mr Chee’s assertions in that regard. In any event, in my view even if letters were actually sent to other owners, this would support Wing Ming’s case that there was well founded bases to consider there may be wrongful user. The IO’s conduct after the commencement of this action 204.The IO’s case is that two inspections were carried out in mid-2018 and 2022. Both occasions were recorded in Mr Chee’s 1st witness statement. In so far as permission was required to enter any units, Mr Chee said that he had requested the owners of 3/F (Conwan), 4/F (Oriental Land), 6/F & 7/F (Super Kind) to grant access for inspection. This was apparently granted subject to the condition that Mr Chee and/or Guardian would be escorted by an employee of the occupier or owner, and that access would in any event be limited to the reception areas, with all the other areas being off limits. Consequently, there was no material qualitative difference between the thoroughness of the “visual inspections” carried out during the 1st Phase and these subsequent inspections in the 2nd Phase. They were all equally superficial and, ultimately pointless. 205.Mr Chee’s evidence confirmed that after the inspection in mid-2018, he did not request access for any further inspection. In cross‑examination Mr Chee conceded that after the mid-2018 inspection, the MC did not think that it should continue to ask for access from the other owners because Mr Chee and/or Guardian had already formed a view on the status of those units. Mr Chee further conceded that he did not ask the owners for permission because, as he saw it, “there was no need”. Although Mr Chee confirmed that he is very familiar with the members of the MC he failed to give any reason why he did not even bother to ask for permission to conduct follow-up inspections. He could have done so at no cost to himself or to the MC. 206.Turning to photographs taken by the parties, Mr Lin makes the general observation, made apparent by the table of comparison of photographs as extracted from the Trial Bundle, that the IO has selectively produced images of those portions of units, which on their face most suggest industrial and/or godown use. Conversely, the IO has selectively declined to produce photographs of units that appear on their face to suggest office use, as evidenced in Siu’s photo album. Mr Chee’s evidence on the particular units 207.In January 2022 Siu took photographs of units in the Building that on their face indicate non-permitted uses of multiple units. In each case, Mr Chee’s evidence was in effect that he declined to investigate further and/or take any remedial action for various reasons, which Mr Lin tabulated and summarised, adding comment, in a Table as follows:-
208.I bare in mind Mr Cooney SC’s point that the above account is not an exact record of the evidence. Also, that Mr Chee qualified his evidence on those units as being according to the photographs or what could be seen. 209.Having considered all of the evidence I accept Wing Ming’s submission that the IO did not conduct further investigation in respect of:
210.I have considered all of the photographs, including those taken by Siu. Siu was asked in cross-examination whether his observations of the units might have been mistaken. He rejected any such suggestion without hesitation. Mr Lin says his evidence was not shaken in cross-examination at all. I accept his evidence as to facts he observed and his photographs. 211.Siu, despite being an unknown independent investigator, was able to access various units and premises of the Building and to take photographs of the interior areas of certain units. Thus, Mr Lin considers it surprising that Mr Chee, in his capacity as the consultant/manager of the IO with his close working relationship with the MC and his personal friendship with the Chairman of the MC, could not obtain at least the same level of access. From this, it can readily be inferred that Mr Chee and/or the IO made no serious attempt to access the units and, by extension, did not take seriously the IO’s statutory obligation to enforce the DMC and the Conditions. Further, Mr Chee and the IO have selectively presented their evidence to the tribunal in a tendentious and self-serving manner to cover up the fact that they are unwilling to or unable to perform the IO’s duties under the DMC and BMO. 212.I have no hesitation in finding that the IO has been selective in presenting its evidence. It has chosen not to adduce evidence of the interior of units owned by members of the MC and IO, save those deemed favourable to the IO or simply innocuous. Further, the IO has not produced evidence, be it documentary or witnesses, that could shed light on the issues. Where a party without explanation fails to call as a witness a person who he might reasonably be expected to call, it is open to the court or tribunal as appropriate to infer that that person’s evidence would not have helped that party’s case. There is evidence that would be readily available the IO that has not adduced and there is no explanation for the omission. I infer that such would not be helpful to the IO. I bare in mind that the burden is on Wing Ming. Even without drawing adverse inferences against the IO there is substantial evidence in support of the complaints. 213.The IO relies on Mr Chee’s evidence to suggest that the costs of any enforcement action with respect to the wrongful use of any unit would be prohibitive. Mr Lin says such contentions should be rejected. The IO has not taken any further steps to conduct follow-up investigations after the alleged visual inspections. There is no written record of enforcement action even being discussed by the MC, much less with a reasonable pre-estimate of costs and a careful consideration of the benefits and risks of prosecuting an action. There is, therefore, simply no evidence of any internal decision-making process to assess what must have been obvious to the MC to be serious and systematic non-compliance with the permitted user restrictions of the Building. In the light of this absence of contemporaneous written evidence, the IO’s decision selectively to enforce the Conditions appears all the more arbitrary, selective and wrong. 214.Further, Wing Ming denies that the IO lacks funding. No evidence has been adduced as to how much further investigation and/or enforcement action, not necessarily leading to the institution of legal proceedings, would have cost and how this would have affected the aggregate resources of the IO. Here, Wing Ming repeats that the IO decided to expend substantial funds in defending this action with a view to preserving the current composition of the MC, instead of applying those resources to discharge its statutory obligations. 215.Mr Chee’s evidence elided the point that the IO should have taken reasonable steps to enforce the user restrictions covenants with legal proceedings. Wing Ming never advanced an argument that the IO should have spared no expense in doing so. That is a straw man argument. Instead, the core of its complaint is that the MC has deliberately shut its eyes and ears to systematic wrongful use of the Building in units owned and/or occupied by its members. 216.I find that Mr Chee and/or MC could, at a minimum, have requested permission to inspect the entire area or premises of each unit and maintained records of each such request and the reasons given (if any) for any denial, and of any inspections he was in fact allowed to conduct. He should then have raised any matters relevant to the IO discharging its statutory obligations with the MC for discussion. Importantly, there is a great deal the MC could and should have done short of commencing legal proceedings for wrongful use. This could include issuing warning letters which were properly followed up and seeking legal advice on how best to proceed. In the context of building management disputes alternative dispute resolution solutions should be pursued. Yet, none of these steps was taken by Mr Chee, the MC and/or the IO. 217.All that the IO did was issue letters dated 1 June 2019 to the owners in the matter of the permitted uses of the Building. In cross-examination, Mr Chee agreed that those letters were issued because Wing Ming commenced this action. Mr Chee agreed to the suggestion that all these letters were issued as a “window dressing exercise” to make it look like the IO had done something. Upon being asked whether any owners had contacted Mr Chee after the issuance of these letters, Mr Chee said he did receive some responses, but they were not in writing. When asked what the responses were, Mr Chee said that he did not make a note of them. Based on his recollection, the owners were more concerned with the use of CPS. 218.Therefore, the contention of the IO as to the evidence is untenable. Whether the photographs produced by Wing Ming constitute conclusive evidence of wrongful user is not the point. The tribunal should instead ask why, in view of the compelling prima facie evidence of non-permitted use, the MC did not take all reasonable steps to investigate the matter. Even if reasonable minds could differ on whether certain units were converted to wrongful use or otherwise. Mr Chee himself subjectively suspected unlawful user. Objectively there was ample evidence to show that was the case. I find that there was in any event, more than sufficient grounds for further inquiries, which were not made. I accept that the evidence at any given time may be some basis for a different approach, proceeding at a different rate and taking different steps. The IO may not be in a position to institute proceeding immediately and, if proper steps were taken, that may not be necessary. There are many steps that could and should be taken to investigate the issue. The first and most obvious is to ask the owners what the position is. Had this been a large estate or building with many owners, having no connection to the MC, that may only be the first step. However, the force of the IO’s argument is entirely lost when it is appreciated that all units are owned by the MC members, save for Wing Ming’s holding. They are in a position simply to disclose the use to which their units are put. It is conceivable that an owner not in occupation of its unit may not be sure of the use of its unit at any given moment. In that event a little more time may be required to access and ascertain the true position. The MC has taken no reasonable steps. The IO has made no inquires and conducted no investigations despite the obvious likely contraventions of the user provisions. 219.Mr Lin says in the same vein, it does not matter whether the Lands Department or the Building Department has taken enforcement action against 1/F to 10/F (and also 11/F), as suggested by the IO. In my view that there has been no enforcement action by regulatory bodies does not assist the IO. It cannot justify the IO’s prolonged inaction in enforcing the user restriction covenants. The IO is under an independent statutory obligation to enforce those user restriction covenants. That obligation is not contingent on the acts or omissions of any other body. 220.In reply to the IO’s other contentions Wing Ming says:
221.For the reasons aforesaid I find that:-
222.Regrettably, there is no prospect of any change in the absence of intervention. This has gone on for years. Not even the institution of these proceedings could spur action. There is not so much as an assurance or even a proposal of any future concreate action. 223.Mr Cooney SC relies on the authorities, including Jikan, that held in determining whether or not a MC is to be dissolved, the most important consideration is whether it is able to perform the duties imposed on it by the DMC and comply with the provisions of the BMO. In performing these functions, it is impossible not to make mistakes, but unless they are serious, they should not justify dissolution of the MC. I accept that the IO/MC is not under an absolute duty or an insurer. However, in respect of the 1st Complaint there is no question of mistake. I am satisfied that the IO/ MC has deliberately turned a blind eye to all the evidence. The reason being performing the duties imposed in this regard would require they take steps against themselves. I also accept that the tribunal may have regard to improvements made. Improvement made to other aspects of the management of the Building does not address the issue. There has been no improvement in how they have performed the duties in respect of user. 224.Wing Ming has maintained that the IO is “unwilling” to perform its duties. Mr Cooney SC maintains the test is “unable” not “unwilling”. Mr Lin replies that the test includes inability to perform because there is no will to do so. Further, the jurisdiction is wide. The language of section 31 of the BMO gives a broad discretion. Each case depends on its facts. In my view the most important question is whether the MC is able to perform its duties. I find that it is not. The reasons it is not include the evidence that establishes it is unable to discharge its functions because there is no will to investigate and put an end to any breach of the user conditions. 225.In my view a particularly significant fact is that the complaints lodged by Wing Ming in these proceedings can in no way be redressed by any re-election of the MC by virtue of the majority holding of the undivided shares in the Building by the 6 Owners. I accept that the 6 Owners are determined to exclude Wing Ming from the management of the Building. Mr Lin submits that the IO/MC was not even prepared to consider the very reasonable proposal put forward by Wing Ming for rectifying the water leakage issue. This is addressed below, but I do not take that into account against the IO, inter alia, because of the timing of Wing Ming’s proposal. 226.Dissolving a MC is a course of last resort. In my view the evidence readily establishes that the IO is unable to discharge its duties in respect of this complaint. The question is then whether this is sufficient or serious enough to grant the relief sought. In my view it undoubtedly is. I accept Wing Ming’s submission that this situation calls for the appointment of a third-party neutral administrator. 227.I will consider Complain 2 and 3 in any event. Thereafter I will address Complaint 4. Sections C2 and C3 Complaints 228.The Void area as shown in the G/F Plan was held to be common area by Reyes J. This is not a complex matter, as alleged by the IO. The IO has formally admitted the same in its Re-Re-Amended Notice of Opposition. Mr Chee also agreed that it is common agreed. However, as seen from the photographs taken in 2016, 2021 and 2022, it is clear that double parking of motor vehicles encroaching the Void area was common. Mr Chee agreed with that proposition in cross-examination. He further agreed that the photographic evidence showed double parking at CPS 5, 7 and 8. Those CPS are owned by owners represented on the MC. 229.Wing Ming adduced photographs that do show various incidents of double parking at the CPS owned by other owners represented on the MC on diverse dates, at different times, in November and December 2023 as well as June and July 2024. 230.CPS 5 to 9 are for lorry parking only. There were notices clearly stating “LORRY PARKING ONLY” on the rear walls of those CPS at the time of the site inspection. The photographs taken on 20 June 2024 show private vehicles, which were motor cars and not lorries, parked in the lorry parking only areas. In cross-examination, Mr Chee conceded that the owners represented on the MC would simply not comply with such notices and that there was nothing that he could do other than ask them to comply. He was unable to do anything. As a result, Mr Lin says those notices are no more than window dressing. Mr Chee has in effect admitted that he and the MC have no intention of enforcing the parking restrictions. 231.In cross-examination, Mr Chee said that despite the breaches of the provisions of the DMC in respect of the CPS by the CPS owners, he would not ask the caretakers to prevent them from parking their cars there or implement other low-cost measures such as wheel clamps. It is plain that the IO/MC has taken these breaches for granted. It is readily apparent that they have no intention to enforce the provisions of the DMC in respect of the CPS. There is no concrete proposal, much less undertaking, to make any changes in this regard. 232.Wing Ming refers to the IO excuses. Even if any owner understood that the Void area is a common area that is no excuse. That matter has already been definitively determined by Reyes J. There is no room for the IO to argue otherwise. Wing Ming’s position in the Sanwa Action is irrelevant to the issue to be determined on the present application. The issue is the conduct of the IO under the control of the MC and the fitness and propriety of the MC. The IO admits that the Void area is common area. For the avoidance of doubt I find that the Void area is a common area. 233.In my view whether the Lands Department has taken enforcement action against the unlawful parking in the Void area takes the matter no further. As with the permitted user restrictions, whether a regulatory body has taken enforcement action is a matter that is entirely separate from the self-standing obligation of the IO to enforce the DMC and procure compliance with the BMO. 234.I find as a fact that there has been the breaches and unauthorised parking as depicted in the photographs and seen at the site visit. This is not an isolated incident. It is an accepted practice by the IO. The CPS have been used as owners saw fit. The CPS Covenants and the provisions of the DMC and the proper use of the CPS has been disregarded for many years. This is readily distinguishable from the facts in Jikan, where the applicant was only able to show that the members of the 2nd Committee were derelict in duty in failing to restrain the second respondent from parking his car in the common area for the Building free of charge confined to the period April to December 2002. It was held that although the mistake was not negligible, it was not such as to render it necessary to dissolve the 2nd Committee. 235.The nub of Wing Ming’s complaint is not that the MC has not instituted legal proceedings for wrongful use of the CPS and common areas for parking private motor vehicles. The point is that the MC has done nothing at all. Mr Lin considers it perverse to assert, as the IO/MC appears to do, that because owners and/or occupiers systematically flout the rules, the rules themselves do not need to be enforced. The DMC binds all parties to it. If there is a breach, especially if that breach is sustained, it is not proper for the IO/MC to simply categorise it as a minor infraction and so ignore its existence. This is a matter of principle and fairness, and it is invidious for Mr Chee to attempt to justify the inaction of the MC by stating that any meaningful attempt at enforcement would be inconvenient. 236.I have to say that the proposition that car parking disputes would warrant dissolving a MC and appointing an administrator would seem unlikely. Unauthorised parking and parking disputes occur all over Hong Kong, doubtless every day. Measures are taken to enforce car parking restrictions, rules and regulations on an ongoing basis. The difference here is that no measures have been taken to put an end to the wrongful practice and there is no intention to change the status quo. 237.I find Complaint 2 and Complaint 3 proved. Given the extent and nature of the CPS issues established on the evidence that are not being addressed this is an additional reason to find that the IO is unable to discharge its duties. The CPS evidence fortifies my view that it is necessary to discharge the MC and appoint an independent administrator. Section C4 Complaint 238.I accept the IO’s submissions that the C4 Complaints are matters that should be raised in HCCT 60/2006 not before the tribunal. I shall not make any findings lest the matters be pursued elsewhere. I will set out the issues raised by Wing Ming to show they are no bases to dissolve the MC. In my view most of the issues are not matters that the MC or IO should be held responsible for. Others may be categorised as “mistakes”, so no basis to dissolve the MC. In any event it makes no difference to the outcome of the present application. Even without the C4 Complaints the application should be allowed. The Second Action HCCT 60/2006 239.Wing Ming commenced the Second Action on 18 August 2006. The IO filed a defence and counterclaim in September 2006. 240.Wing Ming’s claim in the Second Action related primarily to defects in certain structural or waterproofing elements of the Building, namely, the waterproof membrane in the Upper Roof floor, the soffit of the reinforced concrete slab which forms the ceiling of the 10/F, and certain walls, beams, pile caps and ceiling slabs in the Basement. In addition:-
241.The IO counterclaimed against Wing Ming for various alleged breaches of the DMC and of the BMO, including alterations to external walls and other unauthorised building works, occupation of common areas, and display of advertising and signs, seeking declaratory and injunctive relief. The IO also counterclaimed that Wing Ming had exclusively used or occupied parts of the Building that were, in fact, common parts and was liable in damages or to account for the benefits received. 242.In October 2013, the Second Action was tried before G. Lam J (as he then was). 243.On 23 June 2014, judgment was delivered (the “Second Action Judgment”) partly in Wing Ming’s favour and partly in the IO’s favour. 244.Specifically as regards Wing Ming’s claims:-
245.In relation to the IO’s counterclaim:-
4th Complaints: Failure and/or Refusal to Engage Competent Contractors as well as Monitor and/or Verify DCL’s Repairs and/or Rectification Works (Section C4 in the Re-Amended Notice of Application) 246.In the Second Action, it was ordered that the IO, inter alia, carry out repair and/or rectification works to deal with certain water leakage problems in the basement of the Building. In particular, in the Second Action, the IO was ordered to:-
247.For the purpose complying with the Second Action Judgment, the MC of the IO resolved on 8 January 2016 to engage Kenward Consulting (“Kenward”) to propose methods and designs of the repair and/or rectification works. Mr Robin Howes (“Howes”) of Kenward produced and submitted a report on proposed remedial measures accordingly in around November 2014 (“Kenward Report”). 248.After a tender process, Diploma Construction Limited (“DCL”) was engaged by the IO to carry out the repair and/or rectification works. 249.In about October 2016, the IO claimed to Wing Ming that the repair and/or rectification works in the basement of the Building as required by the Second Action Judgment had been completed. In light of the IO’s unilateral decision to adopt the advice of Kenward and to engage DCL, Wing Ming was concerned that the repair and/or rectification works would be sub-standard. To prevent this, and to ensure that the Second Action Judgment had been duly complied with, Wing Ming engaged Brightspect Limited (“Brightspect”) to investigate into the water leakage problem at the basement level of the Building. 250.There are 3 experts reports in total issued by Brightspect respectively dated:- (a) 3 March 2017 (“Brighspect March 03 Report”); (b) 20 March 2017 (“Brighspect March 20 Report”); and (c) 27 December 2018 9 (“Brighspect December 27 Report”) (collectively, “Brighspect Expert Reports”)
251.Wing Ming says that the Brighspect Expert Reports are an objective record of the situation of the Basement after the alleged completion of the works by the IO pursuant to the Second Action Judgment. These disclose that the IO breached the DMC, the BMO and the BO and further failed to comply with the Second Action Judgment. 252.In that regard, Wing Ming advances the following five complaints:-
253.In HCCT 60/2006, the IO was ordered by Hon G Lam J (as he then was) to rectify the defects and leakages in the walls in the Basement: see §§ 59-61 of the Judgment and to remove the old sump pit and rectify and reinstate the pile cap and floor slab at the location of the old sump pit: see §§ 68-72 of the Judgment. It was also held that the sump pit was either formed within a pile cap or formed out of the Basement floor slab, and both of these are common parts of the Building falling within the responsibility of the IO. Notwithstanding the said Judgment, the IO/MC saw fit not to do any do any waterproofing on the walls surrounding the Basement but to implement a dewatering system instead. This is so, despite the holding held at § 82 of the Judgment:
254.Wing Ming says, it is also difficult to understand the basis on which the IO/MC could have constructed another sump pit (catch pit) near the old sump pit which, as Mr Yau admitted, has opened up the Basement floor slab when the IO was ordered by the Court to remove the old sump pit on the basis that it was formed either within a pile cap or formed out of the Basement floor slab and both of these are common parts. This has well illustrated that the IO/MC has been performing its duty in a superficial, reckless, haphazard, and inadequate manner, and the inability and unwillingness of the IO/MC to discharge its duty properly under the DMC and BMO. The Kenward Report 255.On or before 30 October 2014, Howes of Kenward was asked by Mr Chee to prepare a report on alterations to a room in the Basement (the “Room”) to remedy the water leakage problem. 256.Howes had acted for the IO and gave evidence as an expert in two previous litigations HCA 8805/1993 and HCCT 60/2006. 257.Howes inspected the Room at various times, most recently on 30 October 2014. Later, Howes prepared the Kenward Report dated November 2014. 258.In the Kenward Report:-
The tender 259.On or about 16 July 2015, the IO advertised in Singtao Daily inviting tenders for works to be done in the Basement described on the Tender Form. The works to be done was described as “Re-instatement Works for Un-authorized Basement Room and Water-proofing for Lift Pits”. 260.DCL was the company which was engaged by the IO. DCL had entered into two contracts with the IO.
261.Mr Yau was assigned as the “site agent” responsible for the 2 Contracts between DCL and the IO. Mr Yau had attended the site for about 6 months and had supervised the work. 262.By a letter issued by DCL to the IO dated 9 November 2016, it was stated that the project of Basement tanking and backfilling of the Building was completed on 9 November 2016. The defects liability period ran from 10 November 2016 to 9 November 2017. DCL’s modification to the methodology for the repair works 263.Mr Yau gave evidence that DCL was given a copy of the Kenward Report in the tender process. In cross-examination, Mr Yau agreed with what Howes said in paragraphs 4 and 5 in the Kenward Report. In other words, as the external walls of the Basement were inaccessible, to prevent water leakage into the Basement, one had to waterproof the Room or tank the Room. 264.As regards the “Room”, Mr Yau testified that the “Room” was identified in the signed dewatering plan, i.e. the red square or the area behind the red square and marked as “Exhibit R2”. In this dewatering plan, “DEWATERING” means a sump and pump arrangement. The drainage system must be available for regular maintenance. 265.DCL modified the proposed remedial measures. For those purposes, it prepared the 1st Method Statement dated April 2016. 266.DCL submitted the 1st Method Statement to PS of Philip So & Associates Ltd (“PSAL”). The evidence of Mr Yau and PS suggest that before PSAL “approved or endorsed” the 1st Method Statement, they did not have any physical meeting, but they might have exchanged some communications by telephone. THE EXPERT EVIDENCE PS is neither an independent nor impartial witness – Wing Ming’s position 267.Wing Ming submits that PS is not an independent or impartial witness on the following grounds. 268.First, before PS prepared the Expert Report dated 30 March 2023 on behalf of the IO, he had been involved in the subject projects of the Building. As early as in April 2016, PS on behalf of PSAL issued a letter to the IO to endorse the 1st Method Statement prepared by DCL. 269.In cross-examination, PS frankly admitted that he was given monetary remuneration for issuing this letter. However, PS did not make full and frank disclosure as to his past involvement in this case. PS’s reliance on paragraph 8(d) of the “Declaration and Statement of Truth” in his expert report is far from sufficient. All that was stated in paragraph 8(d) was merely that “I had been engaged previously by Diploma to provide my professional opinion in relation to their dewatering proposal for this project” without any particularity. 270.Whereas, PS’s evidence revealed the true scope of his involvement including (a) review of documents; (b) attending discussion with Mr Kan of DCL or other staff around 2 to 3 times; (c) providing consultancy services and the provision of an opinion; (d) receipt of consultancy fees in the region of several thousand Hong Kong dollars per hour; (e) advising on the work procedure and work details; (f) providing opinion in the 1st Method Statements; and (g) being informed by DCL that they had dewatering project in the Basement of the Building (i.e. the repair works about pump systems to collect water and drain the water away). He claimed that he had not been informed that DCL proposed to construct a manhole system. 271.Wing Ming refers to the law on expert evidence summarised in Expert Evidence: Law & Practice, 5th Edn (2020), at 6-017 and 6-19:-
272.Wing Ming submits that it is far from satisfactory for PS to rely on paragraph 8(d) of the Declaration without giving the details of the works that he was involved in the subject project. The tribunal is invited to pay particular attention to the fact that PS owes a duty to the tribunal: he must give unbiased and objective evidence and not become an advocate for the party calling them. 273.Second, one of the main purposes of PSAL’s letter dated 2 April 2016 was to avoid having to make an application to the BD. Simply put, but for PS’s endorsement, DCL would have had to make an application to the BD with respect to the repair works. Thus, PS’s evidence cannot be regarded as independent or impartial. Instead, it was partial and self-serving. When PS was cross-examined on that matter, he only gave an evasive and ambivalent answer by saying that “it was a grey area”. However, most of the questions put to him could have been answered in a straightforward manner. For example, asked “whether building a manhole could tenably be said to be a maintenance work”, PS vaguely answered that “there exists a grey area” notwithstanding that it should be plain that the construction of a manhole would in most cases involve some structural alteration. 274.Furthermore, PS said that if the proposed works involved the construction of a new manhole, an application to the BD would have been required. Yet, when asked about the particulars of the subject project (i.e. there was no manhole and the current manhole had to be constructed after breaking open the floor slab to access the shaft), PS refused to answer the question as to whether such works were maintenance works or otherwise and again answered “this is a grey area”. As an RSE, PS could have simply given an answer based on the circumstances of the project and his expert opinion to the tribunal. 275.Third, PS testified that he gave his opinion on the 1st and 2nd Method Statements prepared by DCL; thus, he issued the letter dated 2 April 2016. However, the 2nd Method Statement was dated October 2016, 4 months after PSLA’s letter was issued. PS failed to give any satisfactory reasons as to how he could have approved the 2nd Method Statement. The IO’s position 276.PS’s independence should not be called in to question. First, PS’s involvement in the basement remedial works was disclosed to Wing Ming a long time ago. In fact, Wing Ming’s expert Mr Lee had more than once in his report referred to PS’s letter to the IO, 2 April 2016. In Re-Re-Amended Notice of Opposition, the IO referred to PS letter in [78], [85.1] and [90.1]. PS also disclosed his involvement in his report, 30 March 2023, A2/352-367, at 367 [Declaration d.]. 277.Second, at the hearing on 18 January 2023 before HHJ Michael Wong when expert evidence was ordered and the name of respective experts were named (Mr Lee and PS), Wing Ming did not object to the appointment of PS. 278.Third, the legal principle on an expert’s conflict of interest does not stand in the way of admissibility. The IO submits that it is a matter of weight. 279.In Daimler AG v Helge Herbert Leiduck and Anor, HCA 4089/1994, 12 March 2013 (IO’s consolidated authority no.5), Recorder Lisa Wong, SC (as she then was) held that:
280.As to C4 complaint, it is not fair for the tribunal to find, e.g., against Diploma as to the basement remedial work done by Diploma when it was not joined. The real issue is whether the IO was acting reasonably in appointing Diploma as the contractor. I accept that submission. 281.Mr Cooney SC points out that there is no absolute bar. Further, PS made proper disclosure. 282.I find that PS was actually involved in an impugned aspect of the works. His role was material. He ought to have more fully disclosed the nature and details of his involvement. His evidence is admissible. The tribunal cannot safely rely on it. In my view he does have a material potential conflict of interest. He would have been better deployed as a witness of fact. Whether or not he was called as a factual witness, the IO would have been better to have instructed an expert with no potential conflict of interest. However, it matters not because I am not prepared to find that Complaints 4 are bases to dissolve the MC and appoint an administrator. The IO’s new case that the building plans contained omissions or errors is not pleaded 283.In Mr Lee’s expert report, he refers to one “amended pile cap reinforced concrete details plan”. In cross-examination, leading Counsel for the IO raised for the first time “3 assumptions” to challenge Mr Lee’s expert evidence. 284.Mr Lin submits that those matters were not in the pleaded case of the IO. Previously, there had been no suggestion that the building plans might have contained errors or omissions. It is submitted that the line of cross-examination arising from these “3 assumptions” was only an afterthought to deflect responsibility for the defective works done by DCL. 285.While the informal nature of the proceedings in the Lands Tribunal gives significant discretion to the tribunal, enabling it to be free from other procedural restraints and/or formalities in order to do justice to the parties, it remains important to inform fairly and precisely the other side of the stance of the pleading party to enable it to prepare an appropriate response. Clear pleadings were particularly important at trials where evidence is to be given by witnesses since they enable the parties to identify the issues in dispute and to conduct witness examinations accordingly: Wing Hang Bank Ltd v Crystal Jet International Ltd & Ors [2005] 2 HKLRD 795, at 798J-799C, per Ma CJHC (as he then was). 286.Further, Wing Ming claims that there is no basis for the IO to challenge the accuracy of building plans. In fact, PS has also relied on the general building plans, structural plans, pile cap construction details, alteration and addition plans retrieved from the BD to render his expert report. In the Joint Expert Report, both Mr Lee and PS relied on the general building plans, the structural plans and pile cap construction details obtained from the BD. It was not until the cross‑examination of the experts that the IO asserted that the building plans allegedly contained the errors and/or omissions. 287.Further, in cross-examination, Mr Lee (who is a member of APSE) gave evidence that he is more than familiar with operating practice of the BD. In practice, upon completion of the foundation works, representatives from the BD would have visited the site to ascertain whether the works could be approved. In that regard, the representative would verify whether the works were carried out according to the plans in question. If there were any changes, then the BD would request the contractor to amend the plans and if the works had already commenced or been completed, and there were discrepancies between works and the plans, the BD would request the contractor to submit one amended set of plans for approval through the registered structural engineering (RSE). 288.I accept accordingly, it must be presumed that the records maintained by the BD must have been accurate and complete. The IO does not have reliable evidence to the contrary. The IO has not shown that the building plans contained material omissions or errors. 289.Even if the building plans contained material the omissions or errors as alleged, Mr Lee in cross-examination clearly pointed out that given that DCL was the contractor, if it had detected any errors or omissions in the building plans, it would have consulted chartered land surveyors for verification before initiating any work. The repair works in the Building should not have been labelled as “maintenance works” 290.The IO contends that the repair works on the Building should be categorised as “maintenance works” such that no BD approval was required. 291.PS testified in cross-examination that when DCL provided the 1st Method Statement to PS, Mr Kan of DCL informed PS that the project was just “maintenance work” for the Basement and he accepted that. Based on PS’s evidence, he had only (a) reviewed the documents, (b) attended the telephone conversation with DCL; and (c) been advised that DCL would proceed with the “maintenance works” before reaching his conclusions. It was therefore submitted by Wing Ming that PS failed to take any reasonable or active steps to ensure whether the repair works at the Basement qualified for exemption from the BD approval as “maintenance works”, notwithstanding that they involved structural elements. 292.As confirmed by PS in cross-examination, had he been the project engineer, he would have advised DCL to make an application to the BD. In that regard, he thought it would have been most prudent to consult with the BD on whether DCL would be required to make an application to the BD. Defects of the repair works conducted by DCL Defect 1 – The failure to engage a competent contractor for the design of the repair and/or rectification works 293.Wing Ming says that Kenward does not specialise in water leakage repair and/or rectification works. It should not therefore have been regarded by the IO as a competent consultant for the design of water leakage repair and/or rectification works. 294.Worse still, as noted in the Brighspect Reports, the design proposed by Kenward was defective and/or would not be effective to repair and/or rectify the water leakage defects as required by the Court Order under HCCT 60/2006.
295.Wing Ming had made known its criticisms of the design by Kenward and proposed other alternatives to the IO as early as September 2015, as evidenced by Wing Ming’s letter dated 29 September 2015 to the IO. Specifically:-
296.Nevertheless, the IO engaged Kenward and approved its plan without modification. 297.Whereas Wing Ming has endeavoured to conduct its research on the credentials and experience of Kenward, it was unable to find any material information about it. As seen from the brief CV of Howes, he is said to be experienced in fire safety engineering works and building surveying works. There is, however, no indication of him engaging in waterproofing works or leakage remediation. Defect 2 – The works in the Basement were not of a “maintenance nature” 298.The alleged “approval or endorsement” was evidenced by PSAL’s letter dated 2 April 2016 to the IO. In this letter, PS claimed that the works to be done by DCL were of a “maintenance nature”, thus an application to the BD was not required. 299.It was, however, wrong in principle for PSAL to classify that the works were of “maintenance nature”:-
Defect 3 – The “dewatering” proofing system was defective 300.DCL’s works are premised on the “dewatering” system. In Exhibit R2 and the plan, Mr Yau gave evidence that the “drainage pump” was newly built by DCL. DCL relies upon the “ledge” on this plan to suggest that the “dewatering” proof system was not defective. 301.The ledger is in the right hand column of Exhibit R2 and the plan (the “Ledger”) it was stated:-
302.In short:-
303.However, the “dewatering system” is not a method to prevent all water from flowing into the Basement. as admitted by Mr Yau in his 1st witness statement. However the main concerns of the IO were evidently the costs and the approval from the relevant authorities, not the effectiveness of a waterproofing program. In his oral evidence, Mr Yau confirmed that “the cost of implementing a waterproofing program from the exterior of the Building is too high and access to the external walls would require approval from any departments and authorities. Waterproofing the interior of the Basement is also costly and ineffective. This would cost HK$2 to 3 million and further maintenance works every 2 years at the cost of approximately HK$300,000.” 304.Wing Ming submitted that the alternative waterproofing scheme proposed by Wing Ming could and should have been implemented. Yet for the sake of costs, the IO preferred to engage DCL to implement the “dewatering system” which proved to be ineffective. Defect 4 – DCL had failed to do any waterproofing work in the entire Basement 305.Mr Yau claimed that according to paragraph 3 of the Ledger, DCL was not required to do any waterproofing on the wall surrounding the entire Basement and confirmed that no such works were in fact done. 306.The absence of such waterproofing works is inconsistent with the recommendation in paragraph 5(1) of the Kenward Report “[A]s access to the external faces of the wall and their junction with the pile cap is impossible the room must be waterproofed, or tanked, internally to prevent further water ingress.” For context, the external walls of the Basement are subterranean; accordingly, one cannot access them. It would follow that in order for remediation works to be effective ‘water tanking’ would have to be adopted, which means to convert the subject areas into the equivalent of a watertight tank. 307.In cross-examination, Mr Yau confirmed that DCL had only done the waterproofing in the “Room” highlighted in yellow in Exhibit R2. However, such waterproofing works were far from sufficient. If one intends to rectify the water leakage at the Basement and prevent water from entering the Basement as a whole, that requires the waterproofing or water tanking of the entire Basement, and not just the Room. 308.Mr Yau also confirmed that the “dewatering” method adopted by DCL was not to prevent the water from entering the Basement but only to drain out the water that flows into the Basement. Save and except the waterproofing work” of the “Room”, DCL had failed to do anything to prevent water from entering the Basement, which itself was the fundamental defect that the IO had been directed to rectify and cure. If DCL could do the waterproofing in the Room, there is no reason why it cannot do the waterproofing in the Basement. It all boils down to the unwillingness of the IO to spend money to do so. 309.In the Joint Expert Report, Wing Ming’s expert Mr Lee stated:-
310.Wing Ming submitted that the absence of satisfactory waterproofing to protect the entire Basement is manifest evidence that DCL’s works were defective. Defect 5 – The Unauthorised Void Area Sump Pit (IO’s version: Manhole System) Detailed particulars of the Void Area Sump Pit 311.According to the description of the IO, the Void Area Sump Pit consists of a sump, a manhole, and two pumps installed in the Basement room (also known as the staircase void / void area / void room /A-room). 312.In the Joint Expert Report, Mr Lee opined that A-room is a void area located on the pile cap. A brick wall had been constructed to enclose this void area and this area had also been filled up with sand. Thus, the repair works inside this area cannot be assessed as it is not accessible. The photograph shows that the opening of the staircase void in the Basement had been covered up. 313.In the Joint Expert Report, Mr Lee set out the particulars and function of pile cap. According to the Code of Practice for Foundations, a pile cap is defined as a concrete structure built on the head of a pile or a group of piles for transmission of loads from the structure above to the pile or group of piles. In other words, it is part of the foundation system which supports the loading of the superstructure above. The relevant plans of the pile cap are shown. The plan shows that the affected pile cap of the Building has 8 columns (C) located above it, namely C1, C2, C8, C9, C15, C16, C22 & C23. Thus, the integrity and strength of the pile cap are critical to the structural integrity of the Building as a whole. 314.In the Joint Expert Report, Mr Lee also set out the particulars and functions of the concrete cover. The definition of concrete cover to reinforcement is the shortest distance between the exterior face of concrete and the nearest surface of the reinforcing steel. In Mr Lee’s case, the thickness of the concrete cover of the pile cap is around 3 inches (76.2 mm) and it is located above the pile cap. The function of the concrete cover above the pile cap is to protect the reinforcement inside the pile cap from corrosion caused by environmental effects. Concrete is required to cover and protect the reinforcement inside it. The concrete cover is subjected to impact, wear and tear, ingress of moisture, and exposure to chemicals. In other words, the concrete cover plays an important role in the overall toughness and durability of the pile cap structure. Thus, if the reinforcement bars are not protected from the elements by an adequate concrete cover, they would begin to corrode due to oxidation. 315.As regards the structural drawing of the Building, the level difference between the G/F slab to the top level of the pile cap is 16.25 ft – 4.46 ft = 11.79 ft (3593.6mm). As per Mr Lee’s site inspection on 24 February 2017, the level from the manhole cover of the manhole located on G/F to the floor inside the manhole is 3474mm. The manhole base of the aforementioned manhole located on G/F to the Sump Pit base is 376mm. The overall depth from the manhole cover to the bottom of the Sump Pit is 3474mm + 376mm = 3850mm. 316.Thus, a 256.4mm deep sump pit (the “Sump Pit”) was constructed below the pile cap top level (i.e. 3850mm – 3593.6mm). That means it was constructed by the removal of the concrete cover of the pile cap as well as part of the reinforcement and the reinforced concrete of the pile cap. 317.The above particulars of the Sump Pit were not disputed by PS in the Joint Expert Report and in his oral evidence. The construction of the Sump Pit 318.In the Kenward Report, there is a drawing for the construction of the Void Area Sump Pit, suggesting that the “SUMP” (Manhole) would be built inside the pile cap. This drawing clearly shows that the Sump Pit (manhole) sinks into the pile cap. However, in Mr Yau’s oral evidence, he disagreed with this suggestion. On the contrary, Mr Yau referred to the top line of the pile cap, as shown in the drawing and suggested that the top of the pile cap was an indented one (i.e., that it naturally had the shape shown in the drawing, and that the Sump Pit had been built into a natural depression in the pile cap). 319.Yet, upon being asked the simple arithmetical question, that if: (a) the distance between the top of the pile cap and the slab is 3.6m, (b) the total depth of the manhole and sump pit is 3.85m, and (c) if 3.6m is to be deducted from that total length, there is a difference of 250mm, which means that there is at least an encroachment of 250mm onto the pile cap. Mr Yau, however, did not respond directly and answered that “there was errors and omissions, there were a lot of places which did not match with each other with plan or plans by the relevant authority”. 320.Nowhere in Mr Yau’s evidence or PS’s Expert Report was it ever suggested that there were any “omissions or errors” in the Building plans. 321.Mr Yau further confirmed that no precautions were taken to ensure that the manhole and Sump Pit would not encroach onto the pile cap, notwithstanding that the aggregate depth of the manhole and the Sump Pit from the floor level necessarily meant that it would encroach onto the level of the pile cap (i.e., a depth of 3.6m). He agreed with the suggestion put to him that any work which may encroach on the pile cap would require the approval of the BD, and there had nevertheless been no application to the BD for constructing the manhole. Plainly, this is an admission of serious fault on the part of DCL. 322.Mr Lin says Mr Yau then referred back to PSAL’s letter dated 2 April 2016 by asserting a wholly untenable point of documentary construction that points (b) and (c) therein were “related to the construction of a manhole”. Upon plain reading of this letter, there is no reasonable indication of any reference to a manhole, which is, as shown in the drawings, a substantial structure. 323.In the Joint Expert Report, Mr Lee stated that PS had not considered that the bottom of the Void Area Sump Pit was lower than the top level of pile cap (see: Kenward Report drawing), which means that a portion of the pile cap must have been removed to build the Sump Pit. 324.Wing Ming continues that contrary to PS’s opinion, none of the photographs in YKY-8 shows that either (a) the base of the manhole was placed on the top of the pile cap (and therefore did not encroach upon it) or (b) no dowel bar was penetrating the pile cap or breaking the concrete bar. In short, those photographs do not assist the IO’s case. 325.As the construction of the manhole and the Sump Pit has affected the pile cap’s structural integrity, it would follow that they have also affected the Building’s structural stability by reason of the critical role played by the pile cap in that regard. 326.Further, as the Sump Pit was constructed by the removal of the concrete cover of the pile cap as well as some part of the reinforcement and reinforced concrete of the pile cap, those operations should be taken to have affected the integrity and stability of the Building’s foundations in general. Moreover, and for the same reasons, the construction of the manhole and the Sump Pit constituted a structural alteration to the Building. The Sump Pit works were defective and/or sub-standard and/or incomplete 327.In the Joint Expert Report, Mr Lee stated his view that no application had been made to the BD. The works in the Sump Pit involved the structure of the Building, which were not exempted building works under the Minors Works Control System. Accordingly, an application for approval of plans and consent to the commencement and carrying out the building works were required. As no such application was in fact made, it must follow that the Sump Pit is an ‘unauthorised building work’. Without the BD’s records and independent testing, Mr Lee cannot confirm whether the Sump Pit is up to standard or not. 328.In addition, Mr Lee opined that there are at least 3 locations with water leakage on the wall/floor of the Basement. Accordingly, the Sump Pit is likely defective and/or not fit for purpose. Defect 6 – The Unauthorised Ditch and the Passage Sump Pit (IO’s version: Catch Pit System) Detailed particulars of the Passage Sump Pit 329.According to the IO’s description, it consists of a new catch pit (also known as catchment pit) constructed at the far corner of the Basement, a ditch and subsoil drain and a system of two sump pumps). This can be seen in Photo B17 of Mr Lee’s 4th Expert Report. The precise location of the Passage Sump Pit is shown in the Basement Layout Plan at marked in red “PASSGE SUMP PIT (CATCH PIT)”. 330.According to PS in the Joint Expert Report, the Passage Sump Pit has a depth of 650mm with size of about 500mm x 500mm. Mr Lee opined that this has damaged the basement reinforced concrete (“RC”) slab to house this size of pump pit. 331.Mr Lee added that the construction of the Passage Sump Pit and the ditch associated damaged the Basement floor slab and also damaged the existing waterproofing layer of the Basement floor, which increases the risk of flooding in the Basement. Agreement in the Joint Expert Report 332.In the Joint Expert Report, both Mr Lee and PS agreed that the Passage Sump Pit and its associated ditch works did not (a) damage the pile cap concrete cover; (b) affect the pile cap’s structural integrity; (c) affect the Building’s structural stability; and (d) damage the Building’s foundation. Disagreement in the Joint Expert Report 333.Mr Lin submits that for the purpose of the present application, strictly speaking, it may not be necessary for the tribunal to resolve the disagreements between the experts. To the extent that the tribunal considers it to be necessary for the disposal of this application, the disagreements between the experts are whether the Passage Sump Pit and its associated ditch works:- (a) damaged the Basement floor slab; (b) penetrated the R.C structure of the Basement floor; (c) were defective and/or sub-standard and/or incomplete; (d) were a structural alteration to the Building; and (e) involved the structure of the Building. I shall not resolve the disagreements. The Evidence 334.Mr Yau’s oral evidence confirmed that the depth of the Passage Sump Pit is 650mm. 335.In the attachment of the 1st Method Statement, there were certain handwritten drawings in the right bottom corner, which were a representation or illustration of how the Passage Sump Pit was to be constructed. In order to construct the Passage Sump Pit one has to break open the on-grade slab. Mr Yau confirmed that the slab was RC. As a result, the construction of the Passage Sump Pit would have required the approval of the BD. The IO’s position Issues D1 & D2 (C4 complaint: basement remedial works) Issue D1: Whether the MC failed and/or refused to engage a competent contractor to design the repair and/or rectification works for the purpose of complying with the Court Order under the HCCT 60/2006 Judgment. Issue D2: Whether the IO acted reasonably in consulting and engaging Mr Robin Howes, Kenward Consulting, Diploma and Philip So & Associates. 336.The MC or its members were not joined in these proceedings. Mr Cooney SC submits that it is unfair to make a finding against them, leaving aside the question of the legal consequence of non-joinder. 337.The MC has not failed and/or refused to engage a competent contractor to design the repair and/or rectification works to comply with the injunction by G. Lam J in HCCT 60/2006. The IO has acted reasonably. 338.The question is whether the MC and the IO knew or ought to have known that Howes, Kenward, Diploma or PS were incompetent. The relevant time for consideration of this question is when the IO entered into its contract with Diploma, 22 January 2016. There is no evidence that, in January 2016, Howes, Kenward, Diploma or PS were incompetent or that the MC or IO knew or ought to have known that Howes, Kenward, Diploma or PS were incompetent. I accept those submissions. 339.According to Mr Yau’s 1st witness statement at [3], Diploma is a General Building Contractor and a Specialist Contractor (Site Formation Works) both registered under the Buildings Ordinance (Cap.123). Diploma also operates together with and under its sister company, including ‘Diploma Construction & Engineering Company Limited’ (“Diploma’s sister company”), which also held other certificates under the Buildings Ordinance. Diploma has experience in undertaking all kinds of private projects including general building works, construction of village houses, steel works, building maintenance works, alterations and additions works, slope repair works, as well as drainage and waterproofing works. 340.Howes was an experienced Building Surveyor. Kenward was his firm. The tribunal will note that Wing Ming engaged a building Surveyor, Mr Lee, as its expert in this matter. Howes gave expert evidence on the basement problems (genesis of C4 complaint) before G. Lam J in HCCT 60/2006 and was not criticised by the Court. The expert issues cannot assist Wing Ming on this application. Whether Wing Ming’s claim should be denied for other reasons Post-Writ claim 341.In the Re-Amended Notice of Application, the IO pleads that Wing Ming’s new amendment constitutes a post-writ claim, bringing new causes of actions against a new party, namely, the newly constituted MC, which did not exist at the time the proceedings/writ were originally issued by Wing Ming on 17 April 2018. The IO therefore objects to Wing Ming’s amendment (see: §§1.10 and 40 of the Re-Re-Amended Notice of Opposition). 342.Mr Lin submits that objection is entirely misconceived. The proper respondent was at all material times the IO itself, which is the same legal person irrespective of the change of the composition of the MC from time to time. That is because the primary duty of the IO is to comply with the BMO. As the MC is in substance composed of representatives designated by the same owners of the Building, it is not relevant that there are different individual members if they represent the same owners as the MC as previously constituted. Hence neither the MC nor the individual members thereof are joined as respondents in this application. 343.Mr Lin says it would be nothing short of perverse if owners were able to defeat the exercise by the tribunal of its statutory jurisdiction to dissolve the MC simply by reshuffling their nominated representative. 344.Further a Notice of Application is not in the nature of a formal pleading like a statement of claim, and the informal nature of the proceedings in the Lands Tribunal gives significant discretion to the tribunal, enabling it to be free from other procedural restraints and/or formalities in order to do justice to the parties: see Great Source Enterprise Limited v Sino Estates Management Limited CACV 253/2003, unrep., 7 May 2004 at §§ 14-17 & 25-26. Hence the post-writ claim contention has no place before the Lands Tribunal. 345.In any event, even if the principle applicable to a formal pleading were to apply, the modern approach to litigation emphasises case management and efficient disposal of cases. It was held in Qianhai Xinhuakang Financial Holdings (Shenzhen) Ltd v Chen Jiarong [2020] 2 HKLRD 1320 that if there is no prejudice to the counter-party such as depriving him of defence like limitation, provided that there is close connection between the original claim and the post-writ claim, there is no reason why the court should insist the party to commence a new cause of action to deal with the post-writ claim: at §61, per Lok J. 346.It follows that the IO’s complaint about the post-writ claim has no substance at all. In my view there is no post-writ claim requiring dismissal of the application. The res judicata point 347.The IO relies on the point that “res judicata in interlocutory matters are less stringent” to re-argue their failed arguments in interlocutory application before DDJ WY Ho: see (a) 1st LT Decision dated 17 August 2018 (re: interlocutory application); and (b) LT Leave Decision dated 3 December 2018 (re: leave to appeal application). The legal principles have been argued before DDJ WY Ho and the IO’s contentions were rejected. 348.In Ghazi Faidi v Qantex Capital Markets Limited [2023] HKCFI 2184, DHCJ Sara Tong SC held at §45 that even if the principle of res judicata is not applied to interlocutory applications strictly, whether it constitutes an abuse of court process should be considered on a case-by-case basis. The principles of abuse of process apply to interlocutory hearings as much as they did to final hearings. The IO has completely failed to demonstrate any reason why it is entitled to re-argue those points for a third time in these proceedings. 349.Wing Ming invites this tribunal to adopt the reasoning of DDJ WY Ho in the following decisions:-
350.In my view the failure by the IO to seek leave to appeal from the Court of Appeal, after the 1st LT Decision and the LT Leave Decision, means that the holdings of the tribunal in those decisions are final for the purposes of these proceedings. I accept Mr Lin’s submission that there is, accordingly, no tenable reason to allow the IO to relitigate the failed argument on the question of joinder for a third time in the tribunal. 351.In a similar vein, Mr Lin submits that the IO’s contentions that these proceedings are incompetent, frivolous, vexatious and/or abuse of court process, most of the arguments raised by the IO are in fact a repetition in the interlocutory applications before DDJ WY Ho. As such arguments are premised on contentions that are res judicata, namely that: (a) that the MC or its members were not joined in these proceedings; and (b) the non-joinder and non-appearance of the relevant parties and/or stakeholders, i.e. MC or its members (§§119,175,178,182, 204 and 215 of RCS), they must fail in limine. 352.In any event, without prejudice to the foregoing and the reasoning of DDJ WY Ho in the aforementioned decisions. Wing Ming submits that the IO’s non-joinder contentions are wholly unmeritorious. Section 29 of the BMO delegates the powers and duties of the incorporated owners to the management committee and a management committee is the agent of the incorporated owners. Decisions and acts taken by the members of a management committee are not only the decisions and acts of the management committee, but also those of the incorporated owners: see The Incorporated Owners of Kwai Wan Industrial Building v Kwai Fung Industrial Ltd, supra, at §§22 & 23. 353.As the IO has to act through the MC, the participation of the IO in these proceedings must be done through the MC and the opposition of the IO in these proceedings must have been put forward by the MC on behalf of the IO. There is no suggestion that the stance of the IO in these proceedings is different from the stance of the members of the MC. Apart from mere technicality, it is difficult to see that there would have been any injustice caused by the non-joinder of the members of the MC to these proceedings. Further there is nothing to suggest that the real issues in dispute in these proceedings cannot be resolved without joining the individual members of the MC. Indeed all the issues in dispute have been fully dealt with by the parties at the trial. 354.Wing Ming does not seek any relief against or finding against any individual member of the MC. I make no findings against any MC member personally. Moreover, it is pleaded in §§40.3 and 54.7 of the Re-Re-Amended Notice of Opposition, inter alia, that the MC was changed on 10 December 2018 and 22 April 2021 and a newly elected MC is a separate entity which supersedes a previous MC. The MC was further changed on 27 November 2023. If the IO’s contentions were right, it would mean that apart from joining the then members of the MC at the time of the issue of these proceedings, these members as parties to these proceedings would have to be changed and substituted from time to time following the change of the MC, bearing in mind that the other 6 owners hold 85.7% undivided shares in the Building and can dictate the change of the MC. It would have resulted in great inconvenience and waste of time and costs without any real benefit to any party. Wing Ming submits that the IO’s contentions in this regard are nothing more than a desperate attempt to salvage the IO’s unmeritorious opposition to this Application. 355.In my view notwithstanding that the applications resulting in the 1st LT Decision and the LT Leave Decision were interlocutory, they should be taken as determinative for the purposes of these proceedings. If the IO wished to challenge those decisions the proper course was for the IO to apply to the Court of Appeal for leave to appeal. It did not. Further, I adopt the reasons set out in the 1st LT Decision and the LT Leave Decision to reject the IO’s arguments. Mr Cooney SC has said all that could possibly be said for the IO, on all issues. CONCLUSION 356.Wing Ming asks the tribunal to grant the relief sought namely, (a) an Order that the existing MC of the IO be dissolved; and (b) CBRE Advisory Hong Kong Limited (“CBRE”) or Mr Philip Li be appointed as the administrator of the Building. 357.In all the circumstances for the reasons set out above I order that the existing MC of the IO be dissolved and an administrator be appointed in its place. The Administrator 358.Mr Lin submits that there is no suggestion by the IO that CBRE and Mr Philip Li are not fit and proper to be appointed as the administrator. If the tribunal agrees that the MC should be dissolved either CBRE or Mr Philip Li are appropriate to be appointed as the administrator in place of the MC. 359.However, the IO does take issue with the CBRE and Mr Philip Li. One concern is that Wing Ming has approached CBRE and the terms of instructions proposed by CBRE refer to Wing Ming as “client”, in its letter dated 4 October 2023. CBRE may perceive Wing Ming as the entity it is to take instructions from. The concern is without merit. Wing Ming had to approach CBRE to be able to propose or nominate CBRE as an administrator. An appointment pursuant to an order under section 31, BMO is clearly to act as an administrator in place of the MC, not on behalf of Wing Ming. CBRE plainly understands this. 360.The IO challenge the expertise of CBRE and suitability of CBRE and Mr Philip Li to act in the position. I have considered not only the profile but all information provided. I am satisfied that they are fit and proper persons and suitable for appointment. 361.A more meritorious concern is the terms of the appointment and costs involved. The costs of an administrator is a substantial additional expense. Wing Ming does not accept that the IO has any financial difficulty. I am informed that Wing Ming is paying its management fees. In respect of HCCT 60/2006 there is an outstanding sum of HK$275,720 due from Wing Ming, which it is seeking to set-off. The IO disputes any right of set-off. That is not a matter for the tribunal. The IO has not shown that the costs are a basis to refuse the application. 362.The CBRE proposal is dated 4 October 2023 and was only valid for 3 months. It will be necessary to ascertain whether CBRE and Mr Philip Li are still willing to accept appointment and on what terms. That must be done before an order for appointment is made. The parties are to endeavour to agree terms for the appointment and submit terms and appointment letter for the tribunal’s approval. Failing which the parties shall lodge agreed draft directions for the determination of any outstanding issue within 21 days hereof. Determination of the primary issues in these LDBM proceedings 363.In summary I answer the primary issues as follows:
Order 364.I order and give directions as follows:
Costs 365.The starting point is that costs follow the event. Wing Ming has secured the order sought by the application. However, considerable time was spent on Complaint 4. Complaint 5 was not pursued but Wing Ming only notified the IO it no longer relied on Complaint 5 on the first day of trial. These were not minor or subsidiary issues. Doubtless considerable costs would have been incurred to deal with Complaints 4 and 5. Some allowance should be made in light of those matters not being determined in Wing Ming’s favour. I make a costs order nisi that the IO do pay Wing Ming 70% of its costs taxed on the District Court scale with a certificate for counsel. Either party may apply to vary the costs order nisi within 14 days hereof, failing which the nisi order shall become absolute. 366.I thank counsel for their assistance and measured approach in this application.
Mr Kenny Lin, Ms Chantel Lin and Mr Axis Yu instructed by Howell & Co., for the applicant Mr Nicholas Cooney SC and Mr Arthur Wong, instructed by Hampton, Winter & Glynn, for the respondent | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
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Further hearings and rulings under LDBM 89/2018