Goodyear Property Management Ltd and Another v. Cheung Yuet and Another

HCMP000777/1977

Deed of Mutual Convenant -- acquiescence in breaches of one kind -- whether tantamount to acquiescence in breaches of another kind -- where breaches not to the extent of altering the character of the estate -- delay in taking action against breaches.

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Coram: Yang, J.

Date of Judgment: 12 January 1979

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JUDGMENT

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1. In this case the Plaintiffs ask for mandatory injunction against the two Defendants in respect of certain unauthorized structures at their respective flats erected in contravention of a Deed of Mutual Covenant.

2. The site in question is Kowloon Inland Lot No. 8850, on which were built three apartment buildings. The north side of the site is bounded by Duke Street, the west by Knight Street, the south by Prince Edward Road, and the east by some apartment buildings built on other inland lots. Block A at Kowloon Inland Lot No. 8850 occupies the south-west part and Block B the north-west part of the site. Blocks C and D are in fact one building which occupies the whole of the eastern half of the site, with Block C in the south and Block D in the north. These buildings are collectively known as Oriental Gardens. The First Defendant is the owner of Flat C-704 in Block C, and the Second Defendant owner of the flat immediately above, known as Flat C-604.

3. Occupation permit for Oriental Gardens was issued on 6th February 1967, and a Deed of Mutual Covenant was entered into between the Hong Kong Land Investment Company Limited and each of the original purchasers.

4. It is necessary to quote in full some of the provisions in the Deed:

5. By sections 3 and 4 of the Second Schedule referred to in Clause 4, it is stipulated:

6. By section 3 of the Third Schedule referred to in Clause 20(b), it is provided, inter alia, that no owner shall paint the outside of the building or do or permit to be done anything which would in any way alter the facade or exterior appearance of the building.

7. The Defendants are not the original purchasers, but it is not disputed that they are nevertheless bound by the provisions in the Deed.

8. The First Plaintiffs are managers appointed under Clause 15 of the Deed to carry out the powers, duties and authorities of the Management Committee of Oriental Gardens. The Second Plaintiffs are the successors of the Management Committee. The First Plaintiffs are therefore the agents of the Second Plaintiffs.

9. Photograps of the buildings taken in 1966 and 1967 show that none of the flats in their original state had any balconies. However since 1971, or 1973 at the latest, a vast majority of the flats (including those of many committee members of the Second Plaintiffs) had had balconies of varying shapes and sizes constructed in contravention of the Deed, but without any action taken against them by the Management Committee, their successors or agents. There are also small extensions of the kitchens into the lightwell of Blocks C and D (Blocks A and B do not have lightwells).

10. The First Defendant purchased Flat C-704 in March 1971. At the time there was already a balcony outside the living room, presumably erected by the previous owner. The First Defendant then enlarged the balcony, in the form of a cage, so that she could "grow plants and hang clothing there". She also had a small extension made of the kitchen, which protruded into the lightwell. In June and July 1977, the space of the balcony was further extended and then enclosed with walls so that the extended balcony now became a part of the living room. There was also an extension to the toilet which protruded from the original external wall. Then there was an enlarged extension to the kitchen covering the whole length of it and protruding half way into lightwell in such a manner that if all the owners of the four flats on the same floor had similar kitchen extensions, the lightwell would be almost completely blocked at that level.

11. The assistant supervisor of Oriental Gardens employed by the First Plaintiffs first discovered the scaffoldings outside Flat C-704 in mid-June 1977 and the Committee of the Second Plaintiffs received a report of the matter on 17th June 1977 at one of their regular meetings. At that time, an iron rack could be seen protruding from the existing balcony and the walls of the toilet in question had been demolished. The assistant supervisor also received a complaint from the Second Defendant about the construction work at Flat C-704. On 20th June 1977 the First Plaintiff wrote to the First Defendant asking her to "countermand the construction" and reinstate the external wall to the original appearance forthwith to avoid any action that might be instituted. The letter made no specific reference to any other offending structures. Presumably it concerned only the balcony. I find as a fact that this letter reached the First Defendant.

12. On 25th June 1977 the Plaintiffs' solicitors wrote to the First Defendant complaining that she had failed to comply with the letter of the 20th June. The letter further informed the Defendant that the construction was in direct contravention of the Deed and gave her notice that unless she stopped the construction forthwith and reinstate the external wall to its original appearance within fourteen days, action would be taken against her. On the 7th July H.H. Lau & Company, solicitors acting for the First Defendant, wrote in reply and said they were instructed that the First Defendant had "stopped all construction work after receipt of the letter requesting her to stop such work. No work is being carried on any more." The statement is entirely untrue, for construction continued and was completed sometime towards the end of July. In the meantime, an extra-ordinary meeting of the Second Plaintiffs was held on 27th June to discuss Flat C-704 and the Second Defendant, who had complained about the construction at the flat above, was invited to attend. At the meeting, the Second Defendant complained that the work at Flat C-704 was affecting her flat. She was told that legal proceedings would be instituted against the First Defendant. Not being satisfied with this information she indicated that she would erect a similar structure at her own flat. She also decline an invitation to give evidence against the First Defendant in any legal proceedings that might be taken against her.

13. Sometime at the end of June the assistant supervisor informed the First Defendant of the Second Defendant's complaint. On the 16th July 1977 Second Plaintiffs put into the letter boxes of all flats a circular letter reminding the owners and occupants of section 3 of the Second Schedule and section 3 of the Third Schedule of the Deed and asked them to "observe the above regulations attentatively". I find as a fact that the letters reached the addressees including the First and Second Defendants through their respective letter boxes. Unlike the letter of the 20th June, this letter clearly brought to the notice of the First and Second Defendants all the structural alterations they were making or were about to make.

14. On or about 16th July 1977 scaffoldings were seen outside Flat C-604. The assistant supervisor told the Second Defendant to stop work but she intimated that she would continue with the work unless the extensions outside Flat 704 were demolished. The Second Defendant purchased the flat in 1973 and she added a cage-like balcony of some four or five feet in depth outside the living room. In mid-July and the end of August 1977, she had the balcony enclosed, turning it into a part of the living room. She also caused an extension to the kitchen, similar in width but shorter than that of Flat C-704. An inspection of the venue showed that the positions of the water pipes had been drastically altered because of the kitchen extensions of the two flats.

15. On 19th July 1977 the Plaintiffs' solicitors wrote to the Second Defendant referring to the circular letter of the 16th July and also sections 3 and 4 of the Second Schedule and section 3 of the Third Schedule of the Deed. She was told to stop the construction forthwith and to reinstate the exterior wall to its original appearance within fourteen days otherwise action would be taken against her. Again this letter appears to refer to the alteration of the balcony only and made no specific mention of the kitchen. I find as a fact that the Second Defendant recieved this letter.

16. Work at Flat C-604 continued both in respect of the balcony as well as the kitchen inspite of the letters. On 18th August, another circular letter of the Second Plaintiff was inserted into the letter boxes of all the flats. I find as a fact that the letter reached the First and Second Defendants through their respective letter boxes. The letter was in these terms:

17. Up to 20th August the scaffoldings outside Flats C-704 and C-604 were still standing. On 24th November 1977, just over three months after the last letter, legal proceedings were instituted against the Defendants.

18. Two flats were affected by the alterations at Flats C-704 and C-604. The owner of Flat C-804, whose evidence I accept, said that the rubbish thrown from the flats above him was permitted to accumulate on the roof of the kitchen and toilet extensions of Flat C-704 so that he was obliged to clean the roof of the kitchen extension once every three days but the roof of the toilet extension is hardly accessible. Also, dirty water is accumulated on the roof of the toilet extension. And the kitchen extension offers an easy foot hold for burglars climbing out of the lift lobby. On 23rd July 1978 he made a complaint to the Public Works Department but no action was taken by the department.

19. As to Flat C-604, the kitchen extension affected the light and flow of air at the kitchen of the flat below i.e. Flat C-504.

20. Since the beginning of 1978 there have been two unauthorized structures at two different flats which are now the subject matter of legal proceedings. There is a third unauthorized structure on which a solicitor's letter has been written to the owner concerned.

21. On the facts stated above, I find that the Defendants carried on the alterations and extensions to their flats inspite of the warning letters, and that the Plaintiffs were not guilty of delay or negligence in making their objections known to the Defendants and in taking appropriate actions against them. I also find (1) that the work done to the balcony, i.e. its conversion into a part of the living room, on each of the two flats is unique and entirely different in character and in user to the other balconies in Oriental Gardens; (2) the toilet extension of Flat C-704 is the first of its kind there, and (3) the kitchen extensions of the two flats are larger than other kitchen extensions and were such that they interfere with the lightwell. The toilet and kitchen extensions also caused nuisance and annoyance in the manner described by the owners of Flats C-804 and C-504. The water pipes were interfered with by the construction of the kitchen extensions.

22. The Defendants have therefore broken Clause 19(a), Clause 3 and Clause 4 of the Second Schedule, and Clause 3 of the Third Schedule.

23. The Defendants rely on four main grounds of defence, viz.,

24. In addition there are I think two other limbs of defence, namely (a) that the members of the committee of the Second Plaintiffs having extensions and alterations in their own flats, have not come to Court with clear hands, and (b) no nuisance or annoyance has been caused by the Defendants. I shall call these two the second line of defence.

25. A number of authorities have been cited in support of the first and the second main defences. Duke of Bedford v. British Museum⁽¹⁾ deals with the situation where the character and state of the property had altered so drastically that the restrictions in the covenant prohibiting such alterations were held to be no longer effective. In Roper v. Williams⁽²⁾ it was held (a) that the plaintiff landlord had delayed taking action against the defendant for five months and had acquiesed in the defendant's breach of covenant, and (b) that the plaintiff having let loose some other tenants, could not now restrain the defendant from infringing the covenant. Peek v. Matthews⁽³⁾ Knight v. Simmonds⁽⁴⁾, and Sobey v. Sainsbury⁽⁵⁾ are also cases dealing with acquiescence and the alteration of character of the estate. James L.J. in German v. Chapman⁽⁶⁾ said,

"That is to say, if there is a general scheme for the benefit of a great number of persons, and the, either by permission or acquiescence, or by a long chain of things, the property has been either entirely or so substantially changed as that the whole character of the place or neighbourhood has been altered so that the whole object for which the covenant was originally entered into must be considered to be at an end, then the covenantee is not allowed to come into the Court for the purpose merely of harassing and annoying some particular man where the Court could see he was not doing it bona fide for the purpose of effecting the object for which the covenant was originally entered into."

Main Defence (1):

26. On the facts of the case, the Plaintiffs took prompt and reasonable actions against the Defendants when they became aware of the constructions at the flats. The matter was eventually handed to the Plaintiffs' solicitors to deal with. True, there was then a lapse of three months before legal proceedings were formally instituted, but there was in my view no delay. The Plaintiffs were certainly not guilty of negligence or laches, and it cannot be argued that the Defendants were under any illusion that their infringements of the covenant were condoned. The fact that the Plaintiffs had failed to seek interim relief is not a bar to the grant of mandatory injunction (Wrotham Park v. Parkside Homes⁽⁷⁾).

27. As to the argument that the Plaintiffs had acquiesced in past breaches of the covenant and therefore cannot now enforce the covenants in the Deed, it is conceded on behalf of the Plaintiffs that the unauthorized balconies at Oriental Gardens were so numerous and longstanding that the Plaintiffs must be taken as having acquiesced in those breaches (Gaskin v. Balls⁽⁸⁾ per James L.J.). But acquiescence, estoppel or waiver (whatever one may choose to call it) with respect to the balconies does not mean that the Plaintiffs are now precluded from stopping extensions of rooms projecting out of the existing external walls (for these are what the Defendants have constructed). A balcony is quite different in nature and user to a room (see Chatsworth Estates Co. v. Fewell⁽⁹⁾ last paragraph).

28. It has not been argued that the Plaintiffs have acquiesced in the extensions of the toilet at Flat C-704 and the kitchen extensions of the two flats.

29. In the circumstances it will not be necessary for me to deal with the Plaintiffs' case that the structures at the two flats are illegal structures under sec. 14(1) and sec. 40(1) and (2) of the Buildings Ordinance, Cap. 123.

Main Defence (2):

30. Three authorites have been cited. In the Wrotham Park Case (supra) it was held that that the validity of a restriction in a deed of covenant should be upheld so long as the estate owner might reasonably take the view that the restriction remains of value to the estate, that as the estate did take such a view which was a reasonable one, the covenant was enforceable. Having regard to the Plaintiffs' present attitude, the position here is the same as that in the Wrotham Park Case. In the preset case, my judgment is that the fact that a majority of the flats has balconies does not amount to such an alteration of the whole character of Oriental Gardens as to allow the kind of sitting room and toilet extensions erected. The Plaintiffs' acquiescence in past breaches regards balcony is not a licence to occupants to build whatever extensions they fancy. It is in each case a question of degree (Chatsworth Estates Co. v. Fewell, supra, at p.231 penultimate paragraph), and there must come a point where a line has to be drawn.

Main Defence (3):

31. The Wrotham Park Case (supra) was also cited as authority for saying that in a suitable case damages could be awarded in substitution for an injunction. In Shaw v. Applegate⁽¹⁰⁾ Buckley L.J. said that the court would not grant relief to a covenantee if there had been a sufficient degree of acquiescence by the covenantee to disentitle him to enforce the covenant. The test was whether on the facts of the particular case the situation had become such that it would be dishonest or unconscionable for the person seeking to have the right enforced to continue to seek to enforce it. During the relevant period the parties seemed to have been really confused as to whether what the defendant was doing was in law a breach of the covenant, and, in view of that, it could not be concluded that the plaintiffs were acting dishonestly or unconscionable in seeking to enforce their rights under the covenant because of their failure to sue earlier. Accordingly, the plaintiffs should not be barred from all remedy. But the plaintiffs had made no application for interlocutory relief and the defendant had for almost six years built up goodwill and had invested considerable sums. In the circumstances an in junction would not be the appropriate remedy and the appeal should be allowed to the extent of entering judgment for the plaintiffs for damages and ordering an inquiry as to damages.

32. However, in the present case there had not been any delay on the part of the Plaintiffs nor can it be seriously argued that the Defendants had been led into expense or lulled into security or misled by the Plaintiffs' inaction. In any event the tendency of modern decisions is not to refuse an injunction merely on account of delay in instituting proceedings (see Copinger & Skone James on Copyright, 11th ed., para. 557, at p.238).

33. The sitting room and toilet extensions are analogous to the bay windows in Lord Manners v. Johnson⁽¹¹⁾, where it was held that there being a clear breach of covenant, the covenantees were entitled to their injunction without the necessity of showing damage. In the case now before this court, the Plaintiffs clearly had material interests sufficient to support a claim for injunction in that they have both the right and duty to see that no further breaches of the Deed of Covenant are tolerated. This is not a case where an award of damages will suffice.

Main Defence (4):

34. The Plaintiffs are content if the Second Plaintiffs only are held to have the necessary locus standi. The First Plaintiffs, being an agent of the Second Plaintiffs, should not be a co-plaintiff (see The Supreme Court Practice 1976, Vol. 2, p.627, para. 2028, first sentence under the heading "Agents"). The Second Plaintiffs' authority to sue is derived from the Deed of Mutual Covenant as well as sec. 18 of the Multi-storey Buildings (Owners Incorporation) Ordinance, Cap. 344. Also the parts affected by all the extensions in the Defendants' flats being the external walls (and therefore the "common parts" of the building as defined in sec. 2), the Second Plaintiffs have the authority under sec. 16 of the Ordinance to sue.

35. I now come to the Defendants' second line of defence. On (a), the conduct of the Committee members as residents must be distinguished from the conduct of the members as members of the Committee of the Second Plaintiffs. In my view this is not a case of the Plaintiffs not coming to court with clean hands. On (b), I have already found as a fact that that nuisance and annoyance were caused.

36. Judgment for the Second Plaintiffs against both Defendants as claimed with costs to the Second Plaintiffs. The Defendants must demolish the structures they have put up in the summer of 1977 and restore their respective flats to a state existing prior to the 1977 alterations and extensions.

Representation:

Mr. Robert Wei and Mr. Edward Chan (Wilkinson & Grist) for Plaintiffs.

Mr. Brook Bernacchi, Q.C. and Mr. Patrick Woo (H.H. Lau & Co.) for Defendants.

(1) (1822) 34 E.R. 1055.

(2) (1822) 37 E.R. 999.

(3) (1867) 3 Eq. Cas. 515.

(4) (1869) 2 Ch. D. 294.

(5) (1913) 2 Ch. D. 513.

(6) (1877) 7 Ch. D. 271, 279.

(7) (1974) 1 W.L.R. 798.

(8) (1879) 13 Ch. 324.

(9) (1931) 1 Ch. 224, 231.

(10) (1977) 121 So. Jo. 424.