Incorporated Owners of Yue Sun Mansion v. Kam Man Fook Funeral Ltd and Another
Read the full judgment text of LDBM 246/2009 on BabelCite. This Lands Tribunal judgment.
1. The main issues for determination at trial are whether the 1 st Respondent’s business conducted at the relevant shop was in breach of the Deed of Mutual Covenant (“DMC”) in the sense that it was obnoxious, illegal, constituting nuisance or annoyance or it may lower the dignity of the Building; whether the 2 nd Respondent, as the Landlord of the shop, permitted such business be carried on there. Whether the Applicant, being the incorporated owners, unreasonably refused to consent to increase
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LDBM 246/2009 IN THE LANDS TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION Building Management Application No. 246 of 2009 _________________ BETWEEN
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__________________ J U D G M E N T ___________________ Introduction 1.The main issues for determination at trial are whether the 1st Respondent’s business conducted at the relevant shop was in breach of the Deed of Mutual Covenant (“DMC”) in the sense that it was obnoxious, illegal, constituting nuisance or annoyance or it may lower the dignity of the Building; whether the 2nd Respondent, as the Landlord of the shop, permitted such business be carried on there. Whether the Applicant, being the incorporated owners, unreasonably refused to consent to increase the electricity loading of the Building, thereby “unreasonably to interfere with the use and enjoyment of the common parts of the Building”. Background & the Claim 2.The Applicant is the owners’ corporation of Yue Sun Mansion (“IO”) situated at Nos. 177-191A, Wuhu Street, Hunghom, Hong Kong (“the Building”). 3.The 1st Respondent is the occupier and tenant of the premises known as shop D, Ground Floor, Yue Sun Mansion, No. 183 Wuhu Street, Hunghom, Kowloon, Hong Kong (“the Premises”). 4.The 3 named respondents, Fung Cheun, Fung Siu Lung and Fung Yuen Wah Belony became the registered owners of the Premises since 2006 and they are collectively referred to as the 2nd Respondent or Fungs. 5.By a written tenancy agreement dated 27th August 2008 between the 1st and 2nd Respondent, the 1st Respondent leased the Premises from the 2nd Respondent for a period of 2 years commencing from 5th September 2008 and expiring on 4th September 2010. 6.The 1st Respondent commenced its business in or about September 2008 at the Premises and soon after that, the owners and residents of the Building were dissatisfied with the nature of the business they conducted because they said it was burial related. The chairlady of the IO began to collect views from owners and occupiers and more than 90% of the replies objected to such business. They also raised objections by organising protests to different government departments, mounting banners of protests on the external walls of the Building, issuing letters to the 2nd Respondent. The IO then actively exchanged their views with the 2nd Respondent and at a later stage, there was a battle of solicitors’ correspondences. The 2nd Respondent, while maintained the shop was lawfully used as the “back office” and nothing indicated that its business is burial related, also raised that the IO unreasonably refused to consent to their application to the China Light & Power (“CLP”) to increase the electricity loading of the Building. Consequently, the 2nd Respondent is unable to rent the Premises to those high-power consumption business operators such as restaurant, fast food shop or laundry shop. The 2nd Respondent said that the consent unreasonably withheld amounts to “unreasonably to interfere with the use and enjoyment of those parts” pursuant to section 34I of Building Management Ordinance Cap 344. The 2nd Respondent said that “those parts” means “common parts”. Section 34I provides that:
Issues 7.Counsel for both parties are helpful to this Court in framing issues and result in the following boundary of issues:
Evidence Witnesses 8.Each party called one witness. Madam Tse Shui Ying (“Ms. Tse”), the chairlady of the IO, testified for the Applicant. Mr. Fung Siu Lung (“Mr. Fung”), the 2nd named person of the 2nd Respondent, testified for the 2nd Respondent. The parties also called a single joint expert, Mr. Ngan Yin Ling (“Ngan”) regarding the workability of increasing the electricity loading of the Building. The 1st Respondent is absent at trial. 9.Ms. Tse’s relevant evidence can be summarized as follows:-
10.Mr. Fung’s relevant evidence can be summarised as follows:-
Discussion Illegal purpose 12.Counsel for the Applicant, Mr. Fung submitted that on the available evidence, the 1st Respondent’s use of the Premises as burial undertaker was for illegal purpose under the DMC because it was being carried out without a licence, hence it was in breach of sections 92AB and 92C and Schedule 11A of the Public Health and Municipal Services Ordinance Cap.132 (“the Ordinance”). Consequently, it was used for “illegal purpose” as prohibited by clause 10(c) of the DMC. 13.Mr. Fung relied on following legal reference. Section 92AB provides that:
14.The prohibited or regulated activity is provided in Schedule 11A of the Ordinance, which provides ‘Undertakers of burials’, which phrase is defined under Regulation 3 of the Undertakers of Burials Regulation (Cap 132CB):-
15.Mr. Fung relied on Chan Yung Sing & others v Choi Chung Ching HCA 4830 of 2002 dated 30th May 2003 by Deputy High Court Judge A Horegarding the interpretation of “undertaker of burials”. In that case, the plaintiffs alleged that the defendant had committed various breaches of the tenancy agreement, including carrying on the burial undertaker business without a licence, thereby entitling them to forfeit the Defendant’s tenancy. The plaintiffs applied for summary judgment claiming, inter alia, possession of the premises, various injunctive relief and damages. Deputy Judge Ho granted the order of possession and injunctive relief. 16.In respect of the interpretation of “undertaker of burials”, Deputy Judge Ho gave his views from paragraphs 35 to 38:-
17.In short, to fall within the relevant “any duties connected with burial”, the task performed only needs to be connected with burial, and does not have to be actually carrying out the burial. Such duties or services were caught within the regulation whether it is for profit or free of charge. A person holds himself out as ready to accept such business is also caught by that regulation. 18.Mr. Fung relied on the following factual matrix to support the contention that the activities conducted at the Premises amounts to burial undertaking:-
19.Regarding the question of “illegal purpose”, Mr. Lam, counsel for the 2nd Respondent submitted that the above evidence is neither here or there. The key issue is what happened within the Premises, not outside the Premises. The business registration is just an indication that the 1st Respondent wished to carry out “funeral service”. He drew an analogy to a junior barrister with a business registration stating the nature of business as “legal services” but he might not do any business in chambers or he might act as a mediator. According to Fung’s evidence, the attempts to apply for the relevant licence were made to renew or renegotiate the tenancy agreement only. 20.Further, Mr. Lam referred me to a letter dated 21st September 2009 issued by FEHD, it is stated in substance that upon making repeated independent inspections of the Premises on average once every week, the FEHD found no evidence whatsoever of the Premises being used for any unlicensed undertakers of burials business of any kind. In short, no prosecution had ever been brought against the 1st Respondent. 21.In my views, when the ambit of argument relates to whether the Premises was used for illegal purpose, the focus is what happened within the Premises, not outside the Premises. Hence, I did not place weight on the evidence concerning the hearse on the question of “illegal purpose”. 22.However, I do not agree that the business registration is just an indication that the 1st Respondent wished to carry out the business of “funeral service”. It is not a mere wish, but a declaration of what would be and is the nature of business. Ms. Tse’s descriptions of the activities together with such declaration of the business amounts to “holding out”. The reason why her evidence is accepted is stated hereunder. Further, the 1st Respondent’s business operates at the ground floor shop. All indicates that the operator of the shop holds himself out as ready to accept burial or funeral business. It is caught by that regulation. 23.Moreover, in case of change of business, the business operator is under a duty to update it. Simply put, under the Business Registration Ordinance, Cap 310, the 1st Respondent was under a duty to keep the Commissioner of Inland Revenue updated about the particulars of the 1st Respondent’s business including its business nature with criminal sanctions in default: see sections 5(1), 8(1), 15(1)(f)&(i) of Cap 310 and Reg. 3(b) of and Form 1(b) of Schedule 9 to the Business Registration Regulations, Cap 310A. 24.The example of a junior barrister is not a good example. Firstly, nature of business is entirely different. Secondly, funeral service is interrelated with burial undertaking, is further regulated under Public Health and Municipal Services Ordinance Cap.132. It relates to the broader questions of hygiene and corpse disposal. The burial or funeral related activities are wider in range and thus require regulation and licence, while legal services, the nature of which is relatively simple, is regulated by another mechanism such as holding a practising certificate and compliance with the code of conduct. 25.The letter dated 21st September 2009 from FEHD is neither here or there. It concerns an unknown period of inspection by the relevant inspector. There is no evidence to suggest that in arriving at the tentative observation, the inspector was provided with a statement from Ms. Tse, the photographs, or the solicitors’ letters and the business registration now put before me. What the said inspector observed might be different from what Ms. Tse saw, bearing in mind they were not inspecting or observing the Premises at the same time. The letter does not affect my views based on the evidence now put before me. Similar comment was made by learned Deputy High Court Judge A Ho S.C. regarding this kind of letter in Chan Yung Sing case in paragraph 43. 26.Further, I do not accept that according to Mr. Fung’s evidence, the attempts to apply for the relevant licence were made to renew or renegotiate the tenancy agreement only. I do not see how Mr. Fung could speak of the intention of the 1st Respondent. Such intention was also contrary to the objective evidence. The documentary evidence shows that the 2nd attempt was made on 2nd June 2009 and was refused on 9th September 2009, at the time when the tenancy agreement still had one year to go. He made no further elaboration on what is meant by “renegotiate”. Besides, the attempts to apply for a burial undertaker licence transpires that the 1st Respondent knew or ought to have known that their business is the nature of burial undertaker, hence they were required to apply for the licence. 27.I shall deal with the evidence of the factual witnesses. Ms. Tse and Mr. Fung had different observations. On the question of credibility and reliability, I found it in favour of Ms. Tse in so far as there is conflict. I say this because her evidence is straightforward and unshaken. But Mr. Fung seemed to be unreliable when he said that nothing indicated the shop was used as an office in connection with the business of undertakers of burial. It was used as an ordinary “back office”. 28.From the photographs taken by him on the inside of the Premises, those taken on 9th September 2009 show some of the carton boxes contain more than 5 white lanterns and a box with funeral related pattern, the things that may not be found in an ordinary back office. He turns a blind eye as to what is depicted. Secondly, his solicitors once admitted that the Premises would be leased to the 1st Respondent for the purpose of business of undertakers of burials. Thirdly, the business registration speaks for itself and a reasonable landlord would have concerned what kind of business a tenant is undertaking. 29.If it is contended that the photographs alone are insufficient to say that the Respondent operated burial undertaking business, having accepted Ms. Tse’s evidence, the cumulative effect of the available evidence shows that the 1st Respondent carried on the business of burial undertaking. These evidence include what she observed before this proceedings: (i) she frequently saw customers wearing funeral dresses (素服), and Taoist priest (喃嘸道士) going in and out of the Premises; (ii) incense, paper-offerings, joss sticks were placed inside the Premises; (iii) a large placard bearing the descriptions of ( 金萬福壽儀) and schedule of funeral was affixed inside the Premises; (iv) after the commencement of proceedings, she could not see customers wearing funeral dresses going in and out but the said placard was still there. 30.Secondly, there are the objective evidence such as the 2nd Respondent’s solicitors admission that the Premises would beleased out for the purpose of business of undertakers of burials (該單位將租出以作殮葬商業務經營用途). 31.Thirdly, there is a declaration of the nature of business as “funeral services” in the business registration certificate. 32.Fourthly, there are evidence on the attempts to apply for the relevant licence before and shortly after the commencement of the tenancy agreement. 33.In the premises, the evidence discussed above clearly showed that the 1st Respondent was or had held himself out to be carrying on the business undertaking duties connected with burials. They were ready to receive customers requiring burial and funeral service. In other words, the 1st Respondent had conducted activities of an undertaker of burials within the meaning of sections 92AB of Cap 132. Not only there is no evidence that the 1st Respondent obtained the relevant licence, repeated applications were refused. I am satisfied that the 1st Respondent had, during the period from August 2008 and September 2009, conducted the activity of an “undertaker of burials” within the meaning of Section 92AB of the Ordinance. I am also satisfied that the 1st Respondent did open or keep open the Premises for that purpose. Although Mr. Fung mentioned that the 1st Respondent decided not to renew the tenancy agreement upon its expiry on 4th September 2010. He gave convoluted answers as to whether the 1st Respondent has given vacant possession as at the date of the trial. Nevertheless, it is undisputed that the 2nd Respondent has not yet received the key from the 1st Respondent. As to whether I shall grant the injunction against both the 1st and 2nd Respondents, I shall bear this in mind. 34.I also found that Mr. Fung turned a blind eye on what is apparent to him. From the objective evidence including the photographs and the subjective mind of the 2nd Respondent as reflected from their solicitors’ letter, he knew or ought to have known that the 1st Respondent carried on the burial undertaker business. In a nutshell, I find thatthe 2nd Respondentwas in breach of the same clause by suffering the Premises to be used for illegal purpose. Obnoxious, nuisance, annoyance, lower the dignity of the Building 35.Next question is whether the findings above amounts to obnoxious, nuisance, annoyance, lower the dignity of the Building. Although I find the question of illegal purpose in favour of the Applicant, it does not necessarily mean that the business is obnoxious, constituting nuisance, annoyance or lower the dignity of the Building. 36.I agree that the test to the above questions is an objective: Grande Properties Management Limited v Sun Wah Ornament Manufactory Ltd (2006) 9 HKCFAR 462 at 466:
37.As reflected from the residents’ replies, the activities and the get up of the business had the effect of creating visual and psychological discomfort to some of the residents, especially the elders. However, it seems to me that the available evidence is not sufficient to support the contentions that the business activities there were obnoxious, constituting nuisance or annoyance or lower the dignity of the Building. Regarding the question of nuisance, there has to be a real interference with the comfort or convenience of living according to the standards of the average man. An interference which alone causes harm to something of abnormal sensitiveness does not of itself constitute a nuisance: see Clerk & Lindsell, 2006 edition, paragraph 20-11. 38.This kind of visual and psychological discomfort also went beyond the recognised examples of actionable nuisance given in paragraph 20-09 of the said legal text. Whether this kind of visual and psychological discomfort is actionable, Mr. Fung is unable to provide any authority in support. Counterclaim 39.I now come to the 3rd issue: whether the IO is under a duty pursuant to BMO and/or DMC to consent to and endorse on a document known as “Confirmation of Agreement (from owners of rising mains for connection of electrical installation with an increase current demand)”, if so, whether the IO’s refusal or failure to give such consent amounts to “unreasonably interfering with the use and enjoyment of the common parts” by the 2nd Respondent. 40.The gist of the 2nd Respondent’s complaint is that without the IO’s consent, CLP will not increase the electricity loading of the Building. As a result, the Premises could not be leased to those high-power consumption business such as restaurant or laundry. 41.It is a common ground that when the electricity loading of the Building was at the level of “30 ampere”, the Building could provide the maximum of 900 ampere of electricity. The maximum record of the consumption of electricity was 815 ampere. In other words, there has never been shortage of supply of power. 42.It is also a common ground that in or about 2008, the IO consented to the increase of the electricity loading level from “30 ampere” to “60 ampere”. The related works were completed in 2009 and hence generated more units of electricity. Mr. Lam submitted that the IO’s failure or refusal to consent to further increase to the level of “100 ampere” amounts to “unreasonably to interfere with the use and enjoyment of the common part.” within the meaning of section 34I (1)(b)(i) of the Building Management Ordinance, Cap. 344. It provides that:
43.Mr. Lam further submitted that if the consent to increase the electricity loading was unreasonably withheld, the counterclaim should be allowed. He relied on Chung Lai Kuen v Choi Mei Shun and others LDBM 344 of 1999 dated 22nd March 2000 by the Presiding Officer Chow Siu Hung(as he then was). In that case, the applicant as a tenant of the commercial premises, complained about the IO’s refusal to increase electricity loading of the building, thereby suffering from damages and business loss. The Presiding Officer dismissed the claim on the ground that the applicant was a tenant who had no locus to lodge a building management claim under section 45 of the Building Management Ordinance. But he said by obiter that if the applicant could prove that the proposed increase is workable and permissible and the IO still unreasonably refused, the claim would have been allowed. 44.It seems to me that section 34I 1(b)(i) was not canvassed in that case, which is the section that the 2nd Respondent now seeks to rely on. I stay focus on the wordings of that section. The key words are not “the IO shall give consent reasonably” or “such consent shall not be unreasonably withheld.”. The key words are: “No person may… use or permit to be used the common parts of a building in such a manner as unreasonably interfere with the use and enjoyment of those parts by any owner or occupier of the building.” 45.Thus, the ultimate question is what did the IO do that was unreasonably interfering with the use and enjoyment of those parts by any owner or occupier? 46.With the common grounds in mind, I failed to identify any act or omission on the part the IO that was unreasonably interfering with the use and enjoyment of those parts by any owner or occupier. 47.The 2nd Respondent is all along enjoying the common parts without interference, including those parts with the supply of electricity loading at the level of 30 ampere, which was later increased to the level of 60 ampere. I do not accept that because the Premises cannot be “value added” then it would amount to “unreasonable interference”. There can still be a wide range of business that can be conducted at the Premises such as household utensils retailing business, packed snack shop, sale of mobile phone and accessories, sale of shoes, sale of garments .…. etc. 48.The parties also canvassed on whether IO has unreasonably rejected the 2nd Respondent’s request to further increase the electricity loading. Having found that the conduct of IO being complained of, did not amount to unreasonably interfere with the use and enjoyment of the common parts, it is not necessary for me to indulge into their arguments. Suffice for me to say that the 2nd Respondent failed to adduce sufficient evidence or provide plausible reasons to say that the IO is under a duty to do anything reasonable to facilitate the 2nd Respondent to fetch a higher return for the Premises. 49.In essence, the Counterclaim should be dismissed. Conclusion 50.I make the findings as follows:
Orders 51.Mr. Fung requested for nominal damages to be awarded for the breach of the DMC. I do not intend to do so as the injunctive reliefs and cost orders are sufficient to do justice. As said before, the 2nd Respondent gave an imprecise answer as to whether the 1st Respondent has given vacant possession of the Premises and in light of the arguments advanced by the 2nd Respondent, it is very likely that unless injunction be granted, the activities complained of would continue by the 1st Respondent with the 2nd Respondent’s consent. In short, I make the following orders.
Mr. Danny Fung instructed by Messrs Fan Wong & Tso for the Applicant Mr. Kenneth Lam instructed by Messrs SK Lam, Alfred Chan & Co for the 2nd Respondent 1st Respondent, acting in person and absent. |
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