彌敦道安寶樓業主立案法團 v. 寶力置業有限公司 and Others
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LDBM 51/2023 [2026] HKLdT 58 IN THE LANDS TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION BUILDING MANAGEMENT APPLICATION NO.51 OF 2023 __________________ BETWEEN
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_________________________ DECISION _________________________ 1.The Applicant seeks the following orders after having discontinued the action on 15 September 2025:
BACKGROUND 2.The Applicant is the Incorporated Owners of Amber House at Nos 777 - 781 Nathan Road, Kowloon, Hong Kong (“Amber House”). The 1st Respondent is the owner of Shop B1 (“Shop B1”), 1/F (including the Flat Roof), and 2/F of Amber House (collectively referred to as “the Premises”). The 2nd Respondent is the tenant in respect of 1/F (including the Flat Roof) of Amber House (“the 1/F Premises), and the 3rd Respondent is the tenant in respect of the 2/F of Amber House (“the 2/F Premises”). 3.I set out the salient undisputed events as follows:
4.The Applicant submitted this Tribunal should depart from the usual rule of making a costs order against the party whom discontinued the action (that is, the Applicant) for the following reasons:
5.The 2nd and 3rd Respondents have not participated in the proceedings since 15 September 2025 and have not filed any submissions or evidence in respect of the Applicant’s application for costs. 6.The 1st Respondent vehemently objects to the Applicant’s application for costs for the following reasons:
7.I shall not repeat each and every submission made by the parties’ respective counsel. Suffice to say, I have considered their submissions in reaching my decision and shall only deal with the salient submissions as relevant to the issues. 8.I now proceed to set out the legal principles governing the present costs application. THE LAW 9.The Tribunal’s power to award costs is set out in section 12 of the Lands Tribunal Ordinance, which states, inter alia:
10.In so far as the considerations to be had when considering the issue of costs after discontinuance, I find the legal principles to be succinctly summarized by HHJ S. Lo in the case of Bright China Investment Limited & others v Yip Siu Kwong Timmy & others [2018] HKLdT 46 as follows:
11.With the above principles in mind, I now proceed to consider the Applicant’s application for costs. WHETHER COMMENCEMENT OF PROCEEDINGS INEVITABLE AND WHETHER THE APPLICANT IS SUBSTANTIALLY SUCCESSFUL 12.The Applicant argued it should recover costs because the Applicant is duty bound to enforce the DMC and therefore must commence the present proceedings in discharge of its duties. Furthermore, because the Respondents have now removed Items 1 – 12 of the List, the Applicant is considered substantially successful in the present action. 13.There cannot be any dispute that the Applicant, being the IO of Amber House, is duty bound to enforce the DMC if there is any breach of the same. 14.It is undisputed the DMC did not assign any shares to the external walls. The DMC read together with the First Assignment does not state that the external walls have been assigned to the first or second owner. The DMC merely granted a right to use the external walls. In such circumstances, I am of the view the Applicant cannot be faulted for believing it had the duty to request the 1st Respondent and its occupiers to demolish and/or remove the structures on the external wall of the Premises. Whether the Applicant is correct in its belief is another question. Nevertheless, once the Applicant believed the Respondents were in breach of the DMC, the Respondents’ repeated failure to remove or demolish the said structures would inevitably lead to the present proceedings. 15.As for whether the Applicant has obtained most of the relief pleaded in the Amended Notice of Application, the 1st Respondent does not deny that most of the structures (that is, Items 1 – 12 of the List) have been removed and/or demolished since the commencement of these proceedings. However, the 1st Respondent submitted the following:
16.Having considered the 1st Respondent’s submissions, the without prejudice letters and the relevant draft consent summons, I do not accept the Applicant’s true aim of the proceedings is to extract a usage fee from the 1st Respondent for the usage of the external walls. 17.It is clear the relief sought in the original Notice of Application was a mandatory injunction against the Respondents mandating them to remove, inter alia, the structures at Items 1 – 12 of the List. It is not disputed that at the time of the filing of the Notice of Application, the Respondents did not heed to the Applicant’s requests to demolish and/or remove the same. It was not until almost 2 years later did the Respondents remove / demolish all the structures. However, even after the removal, the 1st Respondent still refused to reassure the Applicant it would not use the external walls in the future. Therefore, I do not find it peculiar the Applicant considered applying for a prohibitory injunction at the call-over hearing before HHJ Lam. 18.As for the Applicant’s offer of settlement relating to usage fees of the external walls, I do not find anything sinister in such offers. The offers were made in an attempt to avoid litigation. Offers of settlement inevitably involve compromising and offering potentially viable solutions in an attempt to resolve differences in position. I do not see how without prejudice offers of settlement can be seen as an indication of ulterior motives. I do not accept the 1st Respondent’s submission on any purported “true motive” behind the present proceedings. 19.In so far as the 1st Respondent alleges the Applicant is unable to prove it would be able to obtain a reinstatement order and/or a damages order against it, it is clear the majority of the Applicant’s pleaded relief is to have the structures demolished and/or removed. Hence the Applicant had achieved its main aim of having the Respondents remove the structures listed in the List. WHETHER THE APPLICANT WOULD HAVE LIKELY SUCCEEDED AT TRIAL 20.The 1st Respondent submitted it would have likely succeeded in defending the present proceedings because the 1st Respondent has the exclusive use occupation and enjoyment of the external wall of the Premises. 21.Having considered the evidence filed by the parties, the DMC, and the assignments, I am of the view the 1st Respondent would, taking its case at its highest, only be partially successful in asserting exclusive use and occupation over the external wall of the Premises. 22.The First Assignment between Yee Tak Investment Company Limited (as vendor) (“Yee Tak”) and Yau Kit Lai Josephine (as purchaser), in respect of the sale of Flat A of Amber House, does not stipulate the assignment of the external walls or any part thereof. The only mention of the external walls is where Yee Tak reserves a right to use the same. The reservation as set out in the First Assignment is as follows:
23.According to the Block Plan attached to the First Assignment, Amber House faces Nathan Road and a narrow scavenger lane. Although not defined in the First Assignment, it is common sense the front of the building is the side facing Nathan Road and the rear of the Amber House is the side facing the scavenger lane. 24.On a reading of the First Assignment, it is clear Yee Tak did not reserve the exclusive right to use the whole of the external walls of the Premises. Yee Tak merely reserved the right to use the external wall from 1st Floor to the Roof at the rear of the Building (“the Rear External Wall”). There is no mention of reserving the right to use the external wall of the Premises in so far as it faces Nathan Road (“the Front External Wall”). 25.I note the First Schedule of the DMC states the Vendor has the exclusive use and occupation of “THE WHOLE BUILDING (including all flats, floors, parts, flatted roofs, main roofs, and the exterior walls of the said building.” However, this must be read in conjunction with the First Assignment. 26.The Court of Final Appeal in the recent case of Donora Co Ltd v Incorporated Owners of Tsuen Kam Centre (荃錦中心業主立案法團) (2024) 27 HKCFAR 166 at paragraph 39 of the judgment, set out the proper approach to be adopted as follows:
27.Having considered the DMC and the First Assignment, I am of the view the DMC is consistent with the arrangement set out in the First Assignment. Clause 6 of the DMC is telling in that it refers to “the parties or party hereto who are or is entitled to the exclusive use occupation and enjoyment of the whole or part of the external walls.” This clause clearly envisages the situation where the external walls may not be wholly owned or used by one party. This mirrors the arrangement as set out in the First Assignment where it is clear Yee Tak did not intend to reserve the whole of the external walls for its exclusive use. Furthermore, this arrangement is consistent with the fact that the DMC does not allot separate shares to the external walls. 28.It was not until the Sub-Deed of Mutual Covenant (“the Sub-DMC”) executed by Denz Limited and Union Bank of Hong Kong Ltd (“Union Bank”) on 4 October 1995, was Union Bank given the right to use the Front External Wall of Shop B and B1. The use of the Front External Wall was limited to the shop front area on the Ground Floor as marked X to Y and Y to Z, respectively, on the plan attached to the Sub-DMC. There is no mention of any right to use the Front External Wall above the Ground Floor. Hence, I am of the view the Sub-DMC only permits the 1st Respondent to use the Ground Floor Front External Wall of Shop B1 as corresponding to the area marked Y to Z on the said plan. 29.However, the 1st Respondent’s use of the Front External Wall of Shop B1 is not without restrictions. Clause 7 (a) of the Sub-DMC does not permit any structural alterations to Amber House and does not permit the installation or fixture which would affect the supply of electricity or gas to other parts of Amber House. The same clause further restricts the use so that the 1st Respondent cannot cut or damage any of the main walls or beams or floors of the said Building. 30.Hence even if the 1st Respondent was entitled to use the Front External Wall of Shop B1, the 1st Respondent must still prove it did not contravene the Sub-DMC provisions in its use of the same. A determination of whether there has been any structural alteration is clearly a dispute of fact and law. 31.I am of the view that without the benefit of a trial to resolve the issues that require a factual determination, this Tribunal is not in a position to gauge which party is likely to succeed on their respective case in so far as the use of the Front External Wall of Shop B1 is concerned. 32.As for the use of the Front External Wall on the 1st and 2nd Floor of Amber House and the use of the canopy areas, subject to the 1st Respondent’s argument of laches and acquiescence, I fail to see how the 1st Respondent could maintain the DMC or the various assignments confer the exclusive right to use and occupy the same. Laches and/or acquiescence 33.The 1st Respondent submitted its tenants have been using the external wall of the Premises for more than 14 years. Hence the Applicant’s inaction of the years would have constituted acquiescence and/or laches. 34.I shall deal with this point briefly. 35.In the case of Centre Chase Investment Limited v The Incorporated Owners of Castle Peak Road International Industrial Building and anor [2026] HKCFA 26, the Court of Final Appeal opined that in appropriate cases, defence of waiver, estoppel or acquiescence may be available against incorporated owners in matters concerning the enforcement of a DMC. I cite paragraphs 56 and 57 of Mr Justice Lam PJ’s judgment as follows:
36.In the case of Mo Ying v Brillex Development Ltd and anor [2014] 3 HKLRD 224, Deputy High Court Judge Eugene Fung SC (as he then was) set out the test for acquiescence and laches as follows:
37.In the recent case of The Incorporated Owners of Pak Tat Mansion (百達大廈業主立案法團) v Tang Kee Tong Trading as Chili King (鄧屺堂經營麻辣王) [2026] HKCU 3077, HHJ LJ Cruden summarized the principles of acquiescence as follows:
38.The Applicant does not seem to dispute the 1st Respondent has been using the external wall of the Premises for over 14 years. However, the Applicant explained it had issued oral warnings to the 1st Respondent throughout the years objecting to the structures erected on the external wall of the Premises. This is disputed by the 1st Respondent. 39.It is trite that mere inaction or delay itself is insufficient to establish the defence of laches or acquiescence. The 1st Respondent must also establish the Applicant’s knowledge, and whether the Applicant’s enforcement is unjust. Needless to say, I am unable to resolve the said issues (which would inevitably involve factual disputes) at this juncture without the benefit of a trial. I therefore am unable to gauge with certainty which party would be the more likely to succeed had the matter proceeded to full trial. THE TIME LAPSE OF 3 MONTHS FROM REMOVAL OF STRUCTURES TO DISCONTINUANCE 40.The 1st Respondent further submitted the Tribunal should not grant the Applicant’s costs incurred after 19 June 2025, that is, when the Applicant had knowledge that all structures were removed/demolished by the Respondents. 41.The Applicant conceded there is a time lapse of 3 months from the removal of all structures until it discontinued the action. However, the Applicant does not view this lapse to be so inordinate so as to justify any adverse costs order. 42.I note the Applicant has not provided a clear answer on why they did not discontinue earlier. The Applicant merely explained that since the Applicant needed to consider the matter and seek legal advice, it was not a delay as such. 43.I find the explanation offered unsatisfactory. The Applicant clearly succeeded in having the Respondents remove the Items 1 – 12 of the List. Yet at the call-over hearing before HHJ Lam, the Applicant sought leave (or at least indicated they intended to seek leave) to amend the Amended Notice of Application to add a new injunctive relief. I am of the view that if the Applicant’s aim was to proceed with its claim for damages and the intended prohibitory injunction, it would not have chosen to discontinue the proceedings. It would seem that by discontinuing the action without proceeding on the other relief sought in the Amended Notice of Application, the Applicant’s main aim was to secure the removal of Items 1 – 12 of the List. Once those items were removed, there was no further reason for the Applicant to continue with the present proceedings. In such circumstances and for reasons already set out above, I fail to see how the Applicant can justify its claim for costs after 19 June 2025. SUMMARY 44.For reasons set out above, I am of the view this Tribunal is not in a position to gauge with certainty which party would be more likely to succeed had the matter gone to trial. Although the Applicant is not bound to win, I am of the view the 1st Respondent is erroneous in its belief that it had the right of exclusive use and occupation of the canopy areas and the Front External Wall of the 1st and 2nd Floor Premises. Having considered the evidence before me and the parties’ submissions, I am of the view that there should be no order as costs of the action, up to and inclusive of 19 June 2025. I therefore refuse the Applicant’s application for costs against the Respondents. 45.In respect of the costs of the action incurred after 19 June 2025 for reasons set out above and in accordance with the legal principles as cited, I see no reason to depart from the usual costs order upon discontinuance. 46.As for the costs of the present application for costs, costs should follow the event and the Applicant should pay the 1st Respondent’s costs. 47.In so far as the 2nd and 3rd Respondents are concerned, because they have not participated in the present proceedings since 15 September 2025, I will make no order as to costs as between the Applicant, and the 2nd and 3rd Respondents in respect of the Applicant’s present costs application. 48.I therefore make the following orders:
Mr Wong, Iverson C.M., instructed by Messrs C.W. Chan & Co., for the Applicant Mr Felix H.F. Tsang, instructed by Messrs Gallant, for the 1st Respondent The 2nd Respondent acting in person, absent The 3rd Respondent acting in person, absent |
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