Spm Ltd v. Proper Invest Group Ltd
Read the full judgment text of LDBM 363/2009 on BabelCite. This Lands Tribunal judgment.
1. The main issue for determination at trial is whether the Respondent’s act or conduct amounts to changing the name of the Building, therefore unanimous consent of all owners is required. The Respondent failed to obtain the unanimous consent and thus, it was in breach of the relevant provisions in the Deed of Mutual Covenant (“DMC”)
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LDBM 363/2009 IN THE LANDS TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION Building Management Application No. 363 of 2009 _________________ BETWEEN
_________________ Coram: Deputy Judge C. Lee, Presiding Officer of the Lands Tribunal Date of Hearing: 3rd September 2010 Date of Handing Down of Judgment: 13th September 2010 _________________ J U D G M E N T _________________ Part 1: Introduction 1.The main issue for determination at trial is whether the Respondent’s act or conduct amounts to changing the name of the Building, therefore unanimous consent of all owners is required. The Respondent failed to obtain the unanimous consent and thus, it was in breach of the relevant provisions in the Deed of Mutual Covenant (“DMC”) Part 2: Background 2.The Applicant was and is the manager of the Building known as Sun’s Group Centre 新銀集團中心. It is situated at No. 200 Gloucester Road, Wan Chai, Hong Kong (“the Building”). Its appointment as the manager is evidenced in the Deed of Mutual Covenant of the Building (“DMC”) and the Management Agreement dated 1st March 1996. The DMC was registered in the Land Registry by Memorial No. UB 6564101. 3.The Respondent was and is the registered owner of the following parts of the Building:
4.It is revealed at a very late stage of the trial but the Parties agreed that the whole external wall of the Building is in fact owned by the Respondent. I shall come to its relevance later. 5.The Applicant, as the manager of the Building, seeks to enforce the DMC and claims against the Respondent for various reliefs:
6.Counsel for the Applicant, Ms. Cheung clarified that in the event prayer (1) is granted, they would not pursue prayer (3). 7.It is common ground that the name of the Building is Sun’s Group Centre新銀集團中心. In or about 2005 to 2007, the Respondent sought to change the name of the Building from Sun’s Group Centre新銀集團中心 to Silver Base Centre銀基中心. To achieve this, the Respondent first filed notices with the Land Registry to change the name of the Building, followed by the installation of inscriptions and plaque with the descriptions of Silver Base Centre銀基中心. This resulted in a litigation between one of the owners of the Building who contended successfully against the Respondent that unanimous consent of all the owners was required and was yet to be obtained by the Respondent as required by the DMC. Consequently, in or about April 2009, the Respondent altered the descriptions to the above inscriptions and plaque from Silver Base Centre銀基中心to Silver Base Group銀基集團. 8.The Applicant, being the management company, was of the view that such alterations were not good enough, the Respondent’s conduct still amounted to changing the Building’s name. Unless unanimous consent is obtained, the Respondent was in breach of clause 13 of Section J of the DMC and such conduct should be restrained. The Applicant relied on the photographs marked as Annexure I to depict the 2nd Inscriptions and the 2nd Plaque, so as to suggest that in substance, the Respondent’s act or conduct amounted to changing of the name of the Building. Secondly, it was in breach of clause 2(ii) of Section D of the DMC in that the 2nd Inscriptions and the 2nd Plaque caused confusion to the Building’s visitors, thereby interrupted the peaceful enjoyment of the office units. It is because the visitors to the owners and occupiers of the Building were confused as to whether the Building is known as Sun’s Group Centre 新銀集團中心or Silver Base Group銀基集團. It also relied on the testimonies of the general manager of the management company, Mr. Chang Wai Lun William (“Mr. Chang’) to state the complaints that he received in respect of the confusion on the name of the Building. The confusion resulted in delayed meetings or cancellation of meetings of occupiers’ clients. 9.The relevant provisions in the DMC are as follows:-
10.The Respondent advanced 2 contentions. Firstly, the installation of the 2nd Inscriptions and the 2nd Plaque does not amount to a change of the Building’s name for the purpose of clause 13 of Section J of the DMC. To the contrary, they are legitimate and proper use of the external walls or façade for advertising purposes, in accordance with clause 2(ii) of Section D of the DMC. Secondly, on evidence, there was no actual confusion. Even if there was confusion, it would not result in unreasonable interruption of the enjoyment of the office units. In other words, confusion does not cause unreasonable interruption. 11.At trial, the Respondent sought to adduce a witness statement, despite the unless order was imposed with debarring effect more than one month ago. The Applicant objected to the belated application. After preliminary submissions, Counsel for the Respondent finally withdrew the summons relating to the said application. Nonetheless, both parties’ counsel tried their best endeavours to simplify the matter and avoid further adjournment by agreeing to admit more photographs that depict the outlook of the Building, including the 2nd inscriptions and the 2nd Plaque from different angles, short distance, medium distance and long distance. Those photographs are helpful for this court to look at the full picture. The additional photographs are marked as A-1(a) to (c) and R-1(a) to (j). Part 3: Issues 12.Parties agreed to the issues as framed by this court at the outset: (i) whether the Respondent’s conduct, by installing the 2nd Inscriptions and the 2nd Plaque in or about April 2009, amounted to changing the name of the Building, hence in breach of clause 13 of Section J of the DMC; (ii) whether the 2nd Inscriptions and the 2nd Plaque caused confusion to the average 1st time visitors to the owners and occupiers of the Building as to whether the Building is known as Sun’s Group Centre 新銀集團中心or Silver Base Group 銀基集團, thereby unreasonably interrupted the enjoyment of the units of the Building as offices. Part 4: Admitted facts 13.It is admitted that in Pak Fah Yeow Investment (Hong Kong) Company Limited HCA 2589 of 2007 dated 12th September 2008 by Deputy High Court Judge Au, (as he then was), one of the owners of the Building successfully obtained summary judgment against the Respondent for the following orders:
14.Deputy High Court Judge Au (as he then was), held inter alia that according to the DMC, the Respondent failed to obtain the unanimous consent of all the owners to change the name of the Building. The above declaration and injunction should be granted. In respect of the scope of the injunction, counsel for the defendant (the Respondent here), Mr. Chong, submitted in that case that the injunctive reliefs should not restrict or limit the Respondent’s free use of the external wall and façade of the Building, which are their properties. In other words, Mr. Chong submitted that the Defendant should not be restrained from putting the 1st Inscriptions and the 1st Plaque on the façade or external wall of the Building. Deputy High Court Judge Au held that such use is subject to the DMC and the said installations (including the filing of the notices with the Land Registry to change of the name of the building) is effecting a change of the name of the building. As such, the conduct amounted to re-naming the Building and unanimous consent of all owners was yet to be obtained and was in breach of the DMC. 15.The Respondent appealed against the said judgment and its appeal was dismissed by the Court of Appeal: See Pak Fah Yeow Investment (Hong Kong) Company Limited CACV 311/2008 dated 3rd March 2009. Leave to appeal to the Court of Final Appeal was granted to the Respondent but the Respondent finally abandoned the appeal to the Court of Final Appeal. 16.In or about April 2009, the Respondent, apparently in purported compliance with the court orders, caused alterations to the descriptions in the inscription and the plaque: (i) in respect of the English words, they were changed from “Silver Base Centre” to “Silver Base Group”; (ii) in respect of the Chinese words, they were changed from “銀基中心” to “銀基集團”. The size, colour, materials used, position and other get up of the inscriptions and the plaque remains unchanged. The parties described the altered inscription and plaque as the 2nd Inscriptions and the 2nd Plaque. Part 5: Evidence 17.The only witness in this case, Mr. Chang, testified on two main aspects, firstly the size of the 2nd inscriptions and the 2nd Plaque compared with the plaque and stickers describing the true name of the Building. Secondly, the question on confusion. He testified that despite the alterations made to the said descriptions, since April 2009, he received numerous complaints from owners and occupiers (whose particulars were given in his statement) that visitors, clients and couriers are unable to locate the Building because the 2nd Inscriptions and the 2nd Plaque have confused them as to whether the Building’s name is “Sun’s Group Centre 新銀集團中心” or “Silver Base Group 銀基集團”. This further resulted in delayed meetings or cancellation of meetings. 18.Mr. Chang's relevant evidence can be summarised as follows:-
Part 6: Discussion 19.It is beyond debate that this case is different from Pak Fah Yeow case on 2 aspects. Firstly, the Respondent did not file any notice with the Land Registry to change the Building's name in the present case as it did in Pak Fah Yeow case. In fact, such notices were withdrawn according to Mr. Wong for the Respondent, apparently pursuant to the findings and orders of Deputy High Court Judge Au (as he then was). Secondly, any description in the original inscription and plaque such as “Centre” was changed to “Group” in the 2nd Inscriptions or the 2nd Plaque. 20.In respect of the question of confusion, the Parties agreed that the test should be one of “average 1st time visitor”, that is whether a reasonable and ordinary 1st time visitor would be confused as to the Building’s name. The Parties accept that the test should be “1st time visitor” because more visits by the same person would not be confused. In respect of the 1st issue, Ms. Cheung, counsel for the Applicant submitted that Mr. Chang’s evidence is unchallenged and should be accepted. The use of the external walls and facade by causing the installation of the 2nd Inscriptions and the 2nd plaque caused confusion among the average first time visitors as to whether the Building's name is Sun’s Group Centre新銀集團中心or Silver Base Group銀基集團. The confusion is the effect produced by the “de facto change”. Thus, confusion is one of the material factors to decide whether there is de facto change. Ms. Cheung further submitted that in Pak Fah Yeow case, by the mere fact of the existence of those inscriptions and plaque bearing “Silver Centre”, Deputy High Court Judge Au (as he then was) was satisfied that it amounted to a de facto change of the Building's name. She relied on paragraphs 74 to 75 of his judgment. Therefore, I should also follow the same conclusion based on the said mere but strikingly similar fact. 21.In respect of the 2nd issue, she submitted that confusion caused to the average 1st time visitor amounts to “unreasonably interruption of the peaceful enjoyment of office premises”. 22.In contrast, the Respondent submitted that regarding the 1st issue, the 2nd Inscriptions and 2nd Plaque do not amount to a change of the Building's name by conduct. The measures introduced by the management company in or about the end of 2009 will displace any contention of de facto change. Further, they were installed purely for advertising purpose. Regarding the 2nd issue, the Applicant failed to prove actual confusion. Even if there was actual confusion, the additional measures taken had the effect of avoiding or reducing any confusion. After all, the confusion caused, if any, was a mere inconvenience, it does not amount to unreasonable interruption of peaceful enjoyment of office premises. 23.In my view, it seems that Ms. Cheung misunderstood what was the evidential basis leading to Judge Au's conclusion. As he sets out clearly in his judgment from paragraphs 71 to 75 that he relied on the purported use of the external walls and the facade (the 1st Inscriptions and the 1st Plaque), including the Notices of Change with the Land Registry, in granting the declaration and the injunctions. Nor do I agree with Mr. Wong's contention that the measures introduced by the management company will displace any contention of de facto change. The logical progression should be: whether the Respondent's conduct amounts to de facto change of the Building's name, if its conduct amounts to a de facto change, next question is whether injunction should be granted, only by then I need to decide whether the de facto change caused confusion but the additional measures taken would avoid or reduce the confusion, hence on the balance of convenience, injunction should or should not be granted. I do not see how the confusion and additional measures are relevant to decide whether there is de facto change. After all, if there is de facto change, one cannot say the effect of confusion arising from the de facto change is much reduced because of the additional measures taken by the management company, thus there is no de facto change. This is contrary to the logical progression. 24.The ultimate question is whether the purported use of the external walls and facade amounts to a de facto change of the Building's name or it is for advertising purpose, which is a legitimate and proper use. 25.My understanding of Pak Fah Yeow case is that the filing of the notices shows the real intention to change the Building's name (1st factor), the subsequent installation of the 1st Inscriptions and 1st Plaque is to put this intention into action (2nd factor). In the present case, the Respondent says that there is no more such intention and mere installations are not sufficient. I do not agree. Although Deputy High Court Judge Au took into account the 1st and 2nd factors, he relied very much on the 2nd factor, the purported use of the external walls and facade with those descriptions in arriving at his conclusion. 26.Deputy High Court Judge Au’s relevant part of the judgment is extracted as follows:
27.The next question is whether the change of the reference from “Centre” to “Group” would make the conclusion different. My answer is “no”. In my view, it does not make any material difference. It is not only the descriptions that amounts to re-naming the Building, the size, layout, design and position of the 2nd Inscriptions and the 2nd Plaque was the same to the previous inscription and plaque save as to the reference to the Centre. They were large and placed near the main entrance and in the most conspicuous positions. Next question is whether such use of the external walls and facade is for advertising purpose. Mr. Wong submitted that Chang has agreed that a big signboard displaying Haier (Chinese), a renowned electrical appliances manufacturer from the PRC, is installed near the top of the external walls of the Building. He also referred me to A-5, a colour copy depicting the Building a few years ago. It shows that the adjacent building also had a sizeable signboard placed on the roof of the buildings, displaying “Canon”. Those are for advertising purpose and the public would not be misled into thinking that the building is Canon's building or Haier's building. I do not see how this observation may advance the contention of advertisement. Firstly, it seems to me that the reasonable man would have the general impression that those rooftop signboards are for advertising purpose, they may not bear any reference to the name of the building. Secondly, this case involves the 2nd inscriptions of about 4 floors above the main entrance, which is not only larger in size (about 4.2 feet x 18.1 feet), the material used akin to a sculpture, which looks like a more permanent in nature. In addition, there is even a bigger 2nd plaque near the entrance to the main lobby. To a reasonable man, such a big plague should have been a plaque showing a building's name, instead of for advertising purpose. Thirdly, if the 2nd Inscriptions and the 2nd Plaque were intended for advertising purpose, there should be reference to the nature of one's business, or the reputation, or the slogan, or the award, e.g. Silver Base Group, your reliable security company”; or “Silver Base Group, assist you to appreciate your wealth for the past 20 years”. If it is for advertising purpose, with such a size, layout, position, design, descriptions and get up, it goes beyond that purpose and is in effect changing the Building's name. 28.Once it amounts to a de facto change, the Respondent cannot rely on the management company, a third party's additional measures (by putting stickers and much smaller plaque under the 2nd Plaque), to say that there is no de facto change, though the confusion arising from such de facto change may be reduced, injunction should be granted to restrain the Respondent from getting rid of the prerequisite under the DMC, namely to obtain the unanimous consent of all owners to change the name. In my view, it is more of the reason that injunction should be granted when the Respondent intended to amend the descriptions slightly to get around their own problem in respect of the naming right. 29.Having ruled on the 1st issue, I do not need to rule on the 2nd issue. For completeness sake, especially evidence on confusion was adduced in this case (but not in Pak Fah Yeow case), I should cover this issue. I accept the evidence of Mr. Chang, his evidence is straightforward and unshaken. After all, Mr. Wong did not make adverse comment on Mr. Chang’s evidence in his final submissions. I am satisfied that on the evidence before me, especially the complaints by other owners and occupiers of the Building, there was actual confusion. I am also satisfied that the average 1st time visitor would be confused by the 2nd Inscriptions and the 2nd Plaque, not only because of the descriptions, the cumulate effect of its size, relative positions, colour, material used and get up, that creates an overall impression that the Building’s name is Silver Base Group銀基集團. Though the additional measures might reduce the confusion to a lesser extent, considerable confusion to average 1st time visitor would still be and continued to be caused by the 2nd Inscriptions and the 2nd Plaque. I say this because unlike other buildings in which external walls are common parts of the building so that majority owners or the management company could create a bigger and more attractive inscriptions and plaque to eliminate confusion, in the present case, the Building's external walls belong to the Respondent. However, I do not accept that such confusion amounts to unreasonable interruption on the enjoyment of the office units. The confusion would create inconvenience to average 1st time visitor, but I cannot accept that the confusion resulted in inconvenience has anything to do with enjoyment of the office units. The delayed meetings may occur but cancellation of meetings could have been avoided in future if those who organise the meetings emphasize more on “No. 200 Gloucester Road.” In short, the Applicant fails to establish the 2nd contention. 30.I am of the view that workable solutions could have been made out, if the parties are sincere to resolve the differences, to re-arrange the size, design, layout, descriptions and get up so as to accommodate the use of external walls and plaque for legitimate advertising purpose. Part 7: Conclusion 31.In a nutshell, I make the following orders:-
Ms. Karen Cheung, instructed by Messrs. Lau Kwong Hung for the Applicant Mr. Arthur Wong, instructed by Messrs. Wong and Wong for the Respondent |
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