Hysan Property Management Ltd and Another v. Pearl Global Ltd

HCA 1515/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1515 OF 2006

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Before: Hon Chung J in Court

Dates of Hearing: 21 to 24 and 28 May and 1 June 2012

Date of Judgment: 17 August 2012

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J U D G M E N T

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INTRODUCTION

1.The plaintiffs (the 2^nd plaintiff was joined as a party in September 2007 shortly after its incorporation) commenced this action in July 2006 seeking (among other things) various injunction orders compelling the defendant in effect to comply with the deed of mutual covenants (“the DMC”).

2.The defendant denies the claim and counterclaims for an injunction order to compel the plaintiffs to enforce the DMC.

3.There is also a related dispute concerning the defendant’s covered garage: on the plaintiffs’ case, the defendant has unlawfully extended the garage whereas on the defendant’s case, the pavement has encroached on part of its garage (which should have a length of 11.6 metres).

4.Setting out the brief background leading to this action will help to explain the issues raised herein.

BACKGROUND

5.“Overbays” is an up-market residential development on the southern side of Hong Kong Island built in about 1982 (“Overbays”). There are eight 3-storey townhouses.  They perch side-by-side each other on a slope above Repulse Bay Road.  Each townhouse has a covered garage on the ground floor next to its main entrance.

6.One side of the townhouses enjoys a view overlooking Middle Island and Deep Water Bay while the other side faces an access road (“the private road”)which runs from House 1 (sometimes called “House A”) (“House 1”) to House 8.

7.On the opposite side of the private road is a swimming pool for common use; a tennis court further up the swimming pool has a panoramic view of the townhouses.

8.In December 2002, the 1^st plaintiff (“Hysan Ppty Mgt”) was appointed Overbays’ property manager pursuant to the DMC to replace the former managers.  The 2^nd plaintiff (“the I.O.”) was incorporated in April 2007 to take over Overbays’ owners’ committee.

9.The defendant became the registered owner of House 1 in August 2004.  It is a corporate vehicle used to hold House 1; its shares are owned by Ms Leung and Ms Chang (mother and daughter).  House 1 was originally intended to be the home of Ms Leung, Ms Chang and Ms Leung’s mother (but has been left vacant up to the time of trial).

10.Renovation work at House 1 commenced in about October 2005. Whether it was due to personality discord, coincidental events, fate or other causes, apparently uneasiness (to use a mild word) started to crop up shortly after the defendant (through Ms Leung and Ms Chang) took over the possession of House 1.

11.This seemed to have intensified soon afterwards into a confrontation between the defendant and the plaintiffs (and quite possibly also the owners’ committee before the incorporation of the I.O.) (which ultimately led to this action).

12.First, the defendant discovered that items which were part of the abandoned communal flush water system were placed underneath House 1.  Letters were sent in August and September 2004 requesting for their removal.

13.Perhaps a consequence of the above discovery (and/or may be because of sewage leakage/spillage inside House 1 around that time), the defendant also found out that the original communal flush water system was abandoned, and replaced by a system whereby water from the swimming pool was used as flush water for the townhouses.  The said letter sent in August 2004 also pointed out the replacement system did not accord with the regulations concerned.

14.Further, the defendant also complained that staff of Hysan Ppty Mgt regularly passed through the backyard of House 1.  It is not entirely clear if the staff did so to “do the rounds” (part of Overbays’ boundary fence is situated at the back of the townhouses’ backyards), or to perform maintenance/repair of the communal service equipment.

15.Although there is no direct evidence about this, it can be inferred the defendant’s above complaints were not viewed with much favour by whoever has gotten used to the above arrangements (which must have been in place for years).  In any event, Hysan Ppty Mgt started sending letters to the defendant in December 2005 alleging breaches of the DMC (see, for example, para 63 to 65 below).

THE PARTIES’ RESPECTIVE COMPLAINTS

(a)  The plaintiffs’ complaints

16.The plaintiffs’ complaints against the defendant concern alleged breaches of the DMC.  There is however no complaint of contravention of the Buildings Ordinance (Cap 123) for the simple reason that all structural alterations at House 1 have been approved by the Building Authority.

(a)(1) Alleged breach of the DMC

17.The plaintiffs’ said complaints fall into two broad categories:

(a)  alterations made to parts of the exterior of House 1 itself;

(b)  alterations made to parts of House 1 which either encroach upon the common parts of Overbays, or obstruct the access right of Hysan Ppty Mgt.

18.The alterations falling within the para 17(a) category above are:

(1)  demolishing and erecting structural installations on the roof which alter House 1’s external appearance;

(2)  building a lift machine room on the roof which alters House 1’s external appearance.

19.The alterations falling within the para 17(b) category above are:

(a)  erecting a brick wall at the backyard which obstructs the right of access to Hysan Ppty Mgt to House 1’s open ground and the other townhouses;

(b)  removing a section of the common drainage pipe serving, and relocating the said pipe to outside, the management office;

(c)   removing and relocating a section of the common flush water pipe;

(d)  extending the length of House 1’s covered garage which also alters the external appearance and obstructs and/or encroaches upon the communal footpath.

(a)(2) Relevant provisions of the DMC

20.The provisions of the DMC relied on by the plaintiffs are set out below.

21.There are the usual provisions which provide that the owners of Overbays should be:

(1)  subject to and with the benefits of the rights and obligations set out in the 2^nd Schedule to the DMC (clause 3);

(2)  bound by and shall observe and perform the DMC (clause 4).

22.Clause 7(b) empowers Hysan Ppty Mgt (the emphasis below are supplied):

“To make, revoke and amend House Rules regulating the use, operation and maintenance of [Overbays] and the said buildings … The House Rules set out in the Fourth Schedule hereto shall come into force … ” (clause 7(b)(3));

“To prevent obstruction of any of the common parts … and/or … private road, the access road … ” (clause 7(b)(17));

“To remove any structure or installations, … fitting, obstruction or thing in or on the said buildings or any of them or [Overbays] … which contravenes the terms [contained in the DMC] … ” (clause 7(B)(18));

“To prevent any person from unlawfully occupying or using any of the common parts or areas of [Overbays] … or the said private road, access road, … or any part thereof” (clause 7(b)(20));

“To prevent and to take action to remedy any breach … of any of the terms and conditions contained in the said [Government Lease] … ” (clause 7(b)(21));

“To enforce the due observance and performance by the owners of the terms and conditions of [the DMC] and to take action in respect of any breach thereof … ” (clause 7(B)(26)).

23.The 3^rd Schedule to the DMC also provides:

“Not to make any structural alteration to any town house of which he is the owner except with the prior consent of the Managers nor cut, maim, injure, damage, alter or interfere with any part or parts of [Overbays] in common use or any of the sewers, drains, watercourses, conduits, pipes … ” (clause 3);

“Not to … suffer any obstruction to be placed … in the said private road, access road, lanes, footpaths or other common areas … ” (clause 5(b));

“Not to erect or permit or suffer any structure to be erected on any portion of any town house do or permit or suffer to be done anything which would in any way alter the façade or exterior appearance of such town house” (clause 7(b)).

(a)(3) Defence

24.Two main lines of defence have been put forth. The first line is in gist that there has been no breach of the DMC.  Thus:

(1)  the backyard brick wall is wholly inside House 1 and Hysan Ppty Mgt has no right of access to, or passage through, it.  In any event, right of access or passage is available through the iron gate on the brick wall;

(2)  the removed/changed roof structures have no or minimal effect on the external appearance of House 1;

(3)  the roof lift machine room has no or minimal effect on the external appearance of House 1;

(4)  there is no functional impairment resulting from the relocation of the common drainage pipe.  In any event, the management office is itself an unauthorized structure;

(5)  there is no functional impairment resulting from the relocation of the common flush water pipe.  In any event, the common flush water pipe was installed without the approval of the Water Authority;

(6)  the existing covered garage is shorter than appears in the House 1’s approved plan.  In other words, the common part of Overbays is encroaching upon part of House 1 and the so-called “extension” is nothing more than a reinstatement of the garage.

25.The second line of defence is waiver and acquiescence.  Two bases are advanced in support of this; namely, the plaintiffs’ non-action in relation to:

(a)  the renovation work at House 1;

(b)  alterations to other townhouses which have existed for a long time.

26.The waiver and acquiescence set out in para 25(a) above is based on the following averments in the re-re-re-amended defence (“the defence”):

“By a letter dated 3^rd October 2005, the Defendant informed [Hysan Ppty Mgt] that it would commence renovation … ” (para 15A);

“The Renovation Works included … the installation of the lift, lift machine room and lift lobby; and … the reinstatement of the Garage” (para 15B);

“[Hysan Ppty Mgt] did not respond to that letter … In particular, [Hysan Ppty Mgt] never asked for any building plans … ” (para 15C);

“Accordingly, the Defendant commenced the Renovation Works in around late October 2005 … the Defendant made no attempt to hide any of the Renovation Works and they were obvious to anyone viewing or inspecting [Overbays]” (para 15D);

“By a letter dated 9^th March 2006, when the Renovation Works had mostly been completed, [Hysan Ppty Mgt] complained for the first time that there were unauthorized renovation works at [House 1] without prior consent of the Plaintiffs … ” (para 15E);

“At an Owners’ Committee meeting held on or about 13^th March 2006 … [Hysan Ppty Mgt] for the first time requested plans of the Renovation Works from the Defendant … ” (para 15F and 15G);

“In the premises, the Plaintiffs have waived and acquiesced in the Renovation Works … ” (para 15I)

(emphasis supplied). Thus, the waiver and acquiescence is said to have arisen from (i) the plaintiffs’ failure to respond to the defendant’s letter, and (ii) what happened during the owners’ committee meeting.

27.Besides the above, the waiver and acquiescence set out in para 25(b) above is also based on the following averments in the defence:

“… the Plaintiffs have waived and acquiesced and are stopped from taking action under [the DMC] against the Defendant, and/or it would be unjust and inequitable in all the circumstances for the Plaintiffs to take action … due to the Plaintiffs’ refusal or failure to enforce the provisions of [the DMC] and to take action against the other owners of [Overbays], save and except to notify each of the owners … [various alleged contraventions of the DMC by those owners are then set out]” (emphasis supplied) (para 16).

28.It is also said that the plaintiffs have not come to court with clean hands in that the management office at Overbays is itself in the nature of an unauthorized structure.

(a)(4) Findings

29.As to whether the alterations to House 1 were structural in nature, the court has been assisted by expert evidence adduced by the parties.  To a very large extent, the experts are in agreement over that issue.  Where necessary, their opinion will be set out in more detail below.

(i)  Demolition/erection of roof structures

30.The plaintiffs’ closing submissions say:

“It cannot seriously be disputed that the demolition and erection of the structures on the roof of House 1 are ‘structural alteration’ or ‘structure … erected’ in breach of Clauses 3 and 7(b) of the Third Schedule to the DMC … ” (para 6).

This is confirmed by the defendant’s closing submissions:

“[The defendant] does not dispute that structural alterations to the Roof of House 1 were carried out in about March 2006 … ” (para 77).

31.The plaintiffs also argue that the alterations also affect the “exterior appearance” of House 1 in breach of clause 7(b) of the 3^rd schedule to the DMC and rule 6 of the house rules (para 6, plaintiffs’ closing submissions).  The defendant does not appear to take issue with the argument either:

“… commonsense dictates that it would be rare for structural alteration to be made without impacting on the appearance of [House 1]” (para 78, defendant’s closing submissions).

32.A finding that these alterations are structural and they affect the “exterior appearance” of House 1 is made accordingly.

(ii)  Roof lift machine room

33.In relation to “exterior appearance”, the plaintiffs emphasise the prominence of the lift machine room, lift lobby and new plant room on House 1’s roof (para 9, plaintiffs’ closing submissions). The description given to them in the plaintiffs’ closing submissions reads:

“The new lift machine room protrudes from the roof level upwards and replaces the low skylight which was previously located there. A lift lobby has been newly added next to the lift machine room. The old high skylight has also been partially demolished and re-constructed with the addition of a new plant room with air conditioning compressors located on the top” (para 9).

The defence takes no real issue about the above description (see, for example, para 77, defendant’s closing submissions (especially para 77(1)).

34.Whether the roof machine room is a “structural alteration” is to be determined in the same manner as set out in para 30 to 32 above.  The same finding as that in para 32 above should be made.

(iii)  Backyard brick wall

35.The brick wall was erected at House 1’s backyard.  It serves effectively as a partition wall between House 1 and House 2 (which juxtaposition each other).

36.The plaintiffs no longer pursue in their closing submissions the claim that the brick wall constitutes “obstruction to common area and the right of access conferred upon the manager” (para 28).  The reason they put forth for not doing so is that the “breach under this heading is clear” and it is thus unnecessary to pursue those matters.

37.I agree with the defendant that House 1’s assignment plans show that the brick wall is located within the area of House 1’s exclusive possession.  At the same time, the defendant accepts that Hysan Ppty Mgt has the right at all reasonable times on notice (except in the case of emergency) to enter House 1 for:

“rebuilding, repairing, improving, renewing, maintaining, cleansing, painting or decorating [Overbays] … or any part or parts thereof or any sewers, drains, watercourses, cables, pipes, pumps, tanks, wires, services or facilities therein” (clause B(1), 2^nd Schedule, DMC).

The defendant is willing to give such access in accordance with the above provision.

38.The brick wall must be a “structure” within the meaning of clause 7(b), 3^rd Schedule, DMC (the defendant does not contend otherwise).  But I do not consider it to have “in any way [altered] the façade or exterior appearance of such town house” by reason of its location and its shape and size.  In contrast to clause 3 (which is concerned with any “structural alteration”), an alteration of “the façade or exterior appearance” of a townhouse is also an ingredient of clause 7(b).

39.As stated above, the brick wall is located in-between House 1 and House 2, and effectively serves as a partition separating their backyards.  Behind the backyard of the townhouses is the boundary fence of Overbays.  The slope immediately outside of it is full of vegetation which hides that part of the townhouses from outside view.

40.As such, I am not satisfied the defendant has breached the DMC by erecting the brick wall.

(iv)  Common drainage pipe

41.There is no dispute that:

(1)  the defendant has relocated a section of the drainage pipe without the plaintiffs’ consent;

(2)  the said drainage pipe was an unauthorized structure.

42.Clause 3, 3^rd Schedule, DMC stipulates:

“[Owners are not] to … cut, maim, injure, damage, alter or interfere with any part or parts … of the sewers, drains, watercourses, conduits, pipes, cables, wiring, fixtures, equipment, apparatus, services or facilities of [Overbays]”.

43.I do not accept the defendant’s argument that the above provision does not apply to an illegal installation (cp para 124, defendant’s closing submissions).  However, I agree with the defendant no discretionary relief sought be granted in relation to such an installation (para 128 to 129, defendant’s closing submissions).  This is mainly because the management office (to which the pipe was connected) is admittedly an unauthorized structure and will later be demolished.

(v)  Common flush water pipe

44.Again it is common ground:

(a)  the defendant has relocated a section of the flush water pipe in common use (from the top of House 1’s garage to beneath the soffit via its side walls);

(b)  the above flush water pipe was an unauthorized item.

45.The same consideration and conclusion as that set out in para 42 to 43 above is applicable here (the communal flush system will be re-built).

(vi)  Garage extension

46.This dispute arises because of an inconsistency between:

(1)  the length of House 1’s covered garage stated in the approved plans (11.6 metres);

(2)  the actual length of House 1’s covered garage (before the defendant “extended” it (10.68 metres)).

The length difference is less than 1 metre (0.92 metre).

47.The section of the footpath immediately outside House 1’s covered garage would work out to be 1.6 metres in the approved plans.  Apparently a mistake has been made in the survey for preparing the approved plans.  As a result, the total length of that part of the actual site was insufficient to accommodate both an 11.6-metre long covered garage and a 1.6-metre wide footpath (unless the private road is narrowed).

48.The plaintiffs argue that the owner of House 1 (be it the defendant, its predecessor(s)- or successor(s)-in-title) should be bound by the “pre-extension” on-site measurement.  This argument relies on the sequence in which the conveyancing documents came to be signed:

(a)  the DMC was executed on 15 May 1982;

(b)  the first assignment of House 1 was dated 15 June 1982.

49.Based on the above sequence, the plaintiffs contend that the developer (being the vendor) has by 15 May 1982 already specified (by way of the DMC) which parts of Overbays would be its common parts.  Having done so, the developer no longer had the title or interest to assign to House 1’s owner the exclusive right to use, occupy and enjoy any portion of those common parts of Overbays.

50.The plaintiff’s contention has overlooked the fact that the plans attached to the DMC and the first assignment were all copies of the approved plans submitted earlier to the Building Authority.  The measurement of House 1’s covered garage stated in the approved plans has always remained the same: 11.6 metres.

51.Thus, merely considering the sequence in which the conveyancing documents were executed would not provide a satisfactory answer.

52.I agree with the defendant it is important that there is no stated width for the footpath immediately outside House 1’s covered garage in any of the title documents.  On the other hand, a perusal of the various approved plans show that the stated length of House 1’s covered garage remained as 11.6 metres.

53.It is also important that:

(1)  in the plans, the footpath disappears beyond House 5;

(2)  as at the time of trial, the footpath stopped at the main gate because it was blocked there by the main gate and the management office.  Pedestrians would have to use the private road to enter or exit Overbays.

54.I also agree with the defendant that, if it is necessary to do so, the private road can be slightly narrowed to accommodate the “extension” of the covered garage and the footpath.

55.Finally, the plaintiffs argue that the “extension” of House 1’s covered garage amounts to an alteration to its “exterior appearance”.  Because of the findings above, the said “extension” is nothing more than reinstatement work.  This cannot be what the provisions of the DMC aim at prohibiting.

56.The parties have not raised any argument based on common mistake of fact, namely, the actual site was unable to accommodate both an 11.6-metre cover garage and a 1.6-metre footpath (unless the private road is narrowed).

57.Chitty on Contracts (2008) 30^th Ed, Vol 1, para 5-017 states:

“Where the mistake is common, that is shared by both parties, there is consensus ad idem, but the law may nullify this consent if the parties are mistaken as to some fact or point of law which lies at the basis of the contract. In summary, if: (i) the parties have entered a contract under a shared and self-induced mistake as to the facts or law affecting the contract; (ii) under the express or implied terms of the contract neither party is treated as taking the risk of the situation being as it really is; (iii) neither party was responsible for or should have known of the true state of affairs; and (iv) the mistake is so fundamental that it makes the ‘contractual adventure’ impossible, or makes performance essentially different to what the parties anticipated, the contract will be void”.

58.It can well be argued here that the mutual mistake does not go to the basis of the contract: an 11.6-metre long covered garage which has a shortage of less than 1 metre can still properly be a covered garage.

59.Chitty has this to say about mistake as to the quality of the subject-matter:

“On mistakes as to the quality of the subject matter, Lord Atkin said:

‘mistake as to quality of the thing contracted for raises more difficult questions. In such a case a mistake will not affect assent unless it is the mistake of both parties, and is as to the existence of some quality which makes the thing without the quality essentially different from the thing as it was believed to be.’ [Bell v Lever Brothers Ltd [1932] AC 161, 218] (para 5-050)

In the light of Lord Atkin’s statement it has been suggested that a distinction should be drawn between a mistake as to the substance of the thing contracted for, which will avoid the contract, and mistake as to its qualities, which will be without effect” (para 5-051).

60.Thus, this is not a case where the DMC or the first assignment can be declared void under the doctrine of mistake (because the mistake only concerned quality, and not substance).  However, the mere fact that those were legally valid transactions cannot help to resolve the measurement conflict created by the differences between the plans and the actual site.  The discussion relating to common mistake is thus raised only for the sake of completeness.

(vii)  Waiver/acquiescence

61.The various bases on which the defendant advances its case of waiver and acquiescence has been set out in para 25 to 27 above.  In short, I find that none of those bases have been made out.

62.In relation to the case based on the plaintiffs’ alleged failure to respond to the defendant’s letter 3 October 2005 (para 26(i) above), the allegation is unfounded because of Hysan Ppty Mgt’s contemporaneous responses (including those set out below).

63.In a letter dated 9 December 2005, Hysan Ppty Mgt complained that the defendant’s renovators had removed part of the common flush water pipes and 2 water tanks.

64.In a letter dated 24 December 2005, Hysan Ppty Mgt complained about the backyard brick wall and a wooden hoarding.

65.In a letter dated 9 March 2006, Hysan Ppty Mgt complained of the relocation of the common drainage pipe and the structural alterations on House 1’s roof.

66.The allegation that waiver or acquiescence can be inferred from the events which took place during the owners’ committee meeting of 13 March 2006 (para 26(ii) above) also lacks merit:

(a)  the defendant did not specify the alterations it intended to make to House 1.  A casual mention (and discussion) that an internal lift would be installed is not a sufficient disclosure of the detailed works which this would entail;

(b)  the backyard brick wall and covered garage “extension” were not mentioned at all.

In other words, there was too little information disclosed to the owners present at the meeting to infer that they have waived, or acquiesced in, the defendant’s breach of the DMC.

67.The case of waiver/acquiescence based on the plaintiffs’ earlier non-action against the other owners of Overbays can only be based on injustice and inequity arising from the unequal treatment of the owners (para 27 above).

68.This is met with the plaintiffs’ undertaking to court in effect to enforce the DMC against all the owners of Overbays (the terms of the proposed undertaking can be found in para 75 below).  The defendant’s contention set out in para 28 above can also be disposed of by way of this undertaking.

69.In this connection, it should be noted:

(1)  the defendant does not contend (and there is no proper basis to show) that the undertaking is offered otherwise than with good faith and will be adhered to;

(2)  in any event, the defendant, being one of Overbays’ owners, will be in a position to monitor the plaintiff’s performance of their undertaking to enforce the DMC;

(3)  in the absence of contrary evidence, the only reasonable inference is that the undertaking has been offered with due authority from the owners of Overbays (the undertaking was mentioned by the court on the first day of trial and was offered in the closing submissions);

(4)  no criticism has been put forth regarding the terms of the undertaking being offered.

70.Insofar as there may be a case based on a “waiver” in the sense that the plaintiffs have given up the rights to redress any breach of the DMC, this cannot succeed because of the statutory duty on the part of an incorporated owners (and a manager) to enforce the deed of mutual covenants: s 16, Buildings Management Ordinance (Cap 344) and Kwok Mo Kai Doris v The Incorporated Owners of Karin Court, CACV 267/2005 (8 June 2006).

(b)  The defendant’s complaints

(b)(1) Alleged wrongs

71.The defendant’s complaints against the plaintiffs are set out in its counterclaim.  In gist, it is alleged that unauthorized structures and/or items in breach of the DMC can be found at other townhouses.  They have existed for a long time without intervention from the plaintiffs.  The major items of complaints are:

(a)  an illegal car port;

(b)  basement level enclosures forming an additional room;

(c)   air-conditioner compressors;

(d)  solar-energy installation on the roof;

(e)   structural extension at the first floor level;

(f)    sunshades which would require approval from the authorities;

(g)  illegal front and rear rooms;

(h)  unauthorized rooftop skylight alterations;

(i)  covering-up of light well;

(j)  large air-duct which would require approval from the authorities;

(k)  internal staircase which would require approval from the authorities;

(l)  the management office is an unauthorized structure;

(m)  the flush water system has not been approved by the authorities.

72.The status of the above items are either accepted, or undisputed, by the plaintiff’s expert (except possibly items (c) and (d) above (para 36, plaintiff’s closing submissions)).  In any event, by reason of para 61 and 68 to 69 above and 75 to 76 and 81(a) and (b) below, the precise status of those items need not be determined in this action.

(b)(2)   Relevant provisions of the DMC

73.The DMC provisions relied on by the defendant include those relating to the obligations of Hysan Ppty Mgt to:

“manage, control and keep in good repair and condition”, or “keep … in a clean and sanitary state and condition”

the common parts or common facilities of Overbays, such as:

“the swimming pool, common gardens, sewage disposal plant (if any), drainage”, “common lavatories, water pumps, tanks, pipes, sewers, drains, watercourses, cables and wiring”.

(clauses 7(b)(4), (8), (9) and (15)).

The defendant also says that Hysan Ppty Mgt is obliged to:

“remove any structure or installations … which is illegal or which contravenes the terms [of the DMC] … ” (clause 7(b)(18)).

(b)(3) Defence

74.By the time of closing submissions, the plaintiffs (correctly) did not seek to dispute the presence of illegal structures (or structures which contravene the DMC) at Overbays (para 3, plaintiffs’ closing submissions).  They accepted that the parties’ experts are in agreement about this.

75.Their response to the counterclaim can be summarized in the following passage:

“As the estate manager and the incorporated owners, the Plaintiffs wish to ensure that the provisions of the DMC are properly complied with. In order to directly address this issue, the Plaintiffs are willing to offer an undertaking to the Court in the following terms:

‘The 1^st and/or 2^nd Plaintiffs undertake to:-

(i)  use all reasonable endeavours to enforce the DMC against the relevant owners of Overbays in respect of [the items of breach set out in the parties’ schedule for use at trial are set out] as may be found by the Court to be in breach of the DMC including where necessary and subject to legal advice the taking of legal actions against the defaulting owners concerned in respect of those items of breach, with liberty to the 1^st and/or 2^nd Plaintiffs to apply to the Court for further directions; and

(ii)  as soon as practicable appoint an authorized person to prepare building plans for the construction of a new management office to replace the existing management office, submit such building plans to the Building Authority for approval and apply to the Building Authority for consent to carry out works shown in the building plans as may be approved by the Building Authority and, where necessary, apply to the Lands Department for all necessary consent, permission, approval or waiver to enable the new management office to be constructed’ ”

(para 3, plaintiff’s closing submissions).

76.The adequacy of the plaintiffs’ above undertaking has been addressed in para 61 and 67 to 69 above and is repeated here.

(b)(4) Findings

77.By reason of the matters set out under the previous sub-heading, I find that the plaintiffs have earlier failed to properly performed their functions of enforcing the DMC.

REMEDIES

78.In relation to the plaintiffs’ claim, an injunction order will be made in relation to the roof structures/demolitions, as prayed for in the re-re-amended statement of claim (para (b) to (c) and (g) to (h)).

79.In other words, no order will be made in relation to:

(1)  House 1’s covered garage;

(2)  the backyard brick wall;

(3)  the common drainage pipe (this is possibly conceded by the plaintiffs (para 43, plaintiffs’ closing submissions));

(4)  the common flush water pipe (this is possibly conceded by the plaintiffs (para 43, plaintiffs’ closing submissions));.

The declaratory relief appears to be unnecessary either.

80.In relation to the defendant’s counterclaim, only the declaratory relief is appropriate (both that as against the plaintiffs and that in the defendant’s favour (para (b) and (c) (insofar as (c) is consistent with para 78 above)).  The other relief sought therein is dismissed.

81.In relation to the injunction order sought by the defendant:

(a)  it is rendered unnecessary by the plaintiffs’ undertaking;

(b)  further, the order sought is a mandatory order to remove the items set out in the prayer for relief.  I agree with the plaintiffs that, the owners concerned not having been joined as parties to this action, it is inappropriate to grant such an order.

No damages are sought despite a prayer for relief to such effect.

OTHER MATTERS

82.The defendant has referred to several authorities in its closing submissions in support of its case regarding the plaintiffs’ allegedly unjust and inequitable enforcement of the DMC.  They have been taken into account when I determined this action.

83.The first in chronological order is Cheung Yuet v The Incorporated Owners of Oriental Gardens [1979] HKLR 536 which concerned the extension of sitting rooms beyond the authorized building line.  Many other owners committed similar breaches of covenant without intervention.  The court found that the incorporated owners had acquiesced in a particular kind of breach.

84.Incorporated Owners of Dragon View v Nalpak Ltd [1989] 1 HKC 549 was the next in time.  It involved the enlargement of a window which was impossible to observe except from rather obscure vantage points.  In view that other owners have done much with visible alterations, the court found the action to be an arbitrary enforcement which could lead to unjust and unfair result.

85.Champion Ray Ltd v Incorporated Owners of Workingberg Commercial Building, HCA 2926/2004 (10 July 2006) was concerned with the recovery of arrears of management fees. Arguments of waiver and acquiescence were raised based on cases such as the Oriental Gardens, but were rejected on the facts involved there.

86.In Hollywood Shopping Centre Owners Committee Ltd v Incorporated Owners of Wing Wah Building Mongkok Kowloon, HCA 1582/2007 (16 August 2010), a case involving the disputed ownership of an external concrete canopy, the court made a distinction between matters over which the incorporated owners had power to acquiesced in and those over which it had no such power.

COSTS ORDER NISI

87.There is no apparent reason to depart from the usual rule that costs should follow the event.

88.Neither party has been entirely successful in this action.  There will accordingly be a costs order nisi pursuant to Ord 42 r 5B(6) that each party is to pay its own costs of this action.

89.To avoid doubt, if it had been necessary to do so, I would have certified the trial to be suitable for attendance by two counsel.

Mr Anderson Chow, SC leading Mr Jin Pao, instructed by Mayer Brown JSM, for the plaintiffs

Mr Anthony Chan, SC leading Mr Paul H M Leung, instructed by Hau, Lau, Li & Yeung, for the defendant