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Civil Action1994

FAIRVIEW PARK PROPERTY MANAGEMENT LTD v. SUN WAI CHUN

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26569-EN-1999-02-09

FAIRVIEW PARK PROPERTY MANAGEMENT LTD v. SUN WAI CHUN

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HCA005782A/1994

HCA 5782 of 1994

IN THE HIGH COURT OF THE HONG KONG SAR

COURT OF FIRST INSTANCE

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BETWEEN
FAIRVIEW PARK PROPERTY MANAGEMENT LTD.Plaintiff

AND

SUN WAI CHUNDefendant

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Coram: The Hon. Mr. Justice Waung in Court

Date of Hearing: 2, 3, 4, 5, 6, 11, 12, 16 November 1998

Date of Handing Down of Judgment: 9 February 1999

 

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JUDGMENT

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1. Fairview Park is a very large development in Yuen Long, New Territories consisting of some 5,000 houses built in the mid nineteen seventies. A Deed of Mutual Covenant binds the owners of the houses and the manager of Fairview Park. The Plaintiff is the manager of Fairview Park under the Deed of Mutual Covenant. The Defendant is the present owner of House 43, First Street, Section G of Fairview Park ("House"). The House was first sold in 1976 by the developer Canadian Overseas Development Company Ltd. to one Lam Wai King who in turn sold the House to Christina Ma Kit Yi in 1987. In 1990, the Defendant Sun acquired the House from Christina Ma. Unlawful alterations were made to the House in 1987 probably on the instructions of Christina Ma and thereafter the Plaintiff had sought, without success to have the alterations reinstated. This Action was brought by the Plaintiff to have the unlawful alterations reinstated by the Defendant or alternatively by the Plaintiff but at the expense of the Defendant.

2. Fairview Park was a development consisting of various types of houses. The House in question is what was known as house type 5/2. Page D28 which is part of the Report of Dr. Vessey (the expert of the Plaintiff) shows that the house type 5/2 being divided into two houses separated by a party wall. The House, being on the right hand side of that plan is of two floors, with the ground floor consisting of the entrance through an open arch porch, by way of the main door of the House which opens into the Living and Dining Room, with the Kitchen being separated by a wall which faced the main entrance door. The open porch was formed by two arch openings at right angles to each other and two walls namely W11a and W11b. What happened was that these two walls W11a and W11b were knocked down and the open porch area was enclosed by erecting two different external walls (called at the Trial walls W12a and W12b) and the new main entrance door was set into wall W12b. The third wall which was knocked down was the Kitchen wall W7. The complaint of the Plaintiff is that there were altogether five unauthorised and wrongful alterations to the House, namely:-

(1) the removal of wall W11a;

(2) the removal of wall W11b;

(3) the removal of wall W7;

(4) the erection of wall W12a;

(5) the erection of wall W12b.

3. The Deed of Mutual Covenant contains the following material provisions:-

(1)Clause 5 which provides that each Owner (which by definition under Clause 1(d) includes the Defendant) shall be bound and shall observe and perform the covenants and provisions and restrictions set out in the Second Schedule:-
(2)The Second Schedule provides as follows:-
Paragraph 4(b)
"Not to make any alterations or additions to the exterior of any Unit or any building or to any walls and fences without the approval in writing of the Company."
Paragraph 7(a)
"Not to make any structural alterations to the Unit or sub-section or any part thereof nor to cut, maim, damage, interfere with any common plumbing wiring equipment apparatus and services."
Paragraph 15
"To observe and perform all the covenants conditions and provisions of this Deed and the Estate Rules."
(3)Clause 7(a) provides the Plaintiff Manager is to manage and provide services to Fairview Park and the Manger shall be responsible and shall have the full and unrestricted authority to do all such acts and things as may be necessary or requisite for or in connection with Fairview Park and any of the buildings thereon and the management thereof. The Clause further provides that the Manger shall have the powers and obligations set out in the Third Schedule.
(4)Clause 7(d) provides that it is lawful for the Manager at all times and from time to time to make revoke and amend such Estate Rules as it shall think fit for the management of the said Land etc.
(5)The Third Schedule provides as follows:-
Paragraph 1(d)
"The Manager shall have the........power........to remove any structure or installation.......which is illegal unauthorised or which contravenes the terms of these presents......"
Paragraph 1(h)
"The Manager shall have the........power......to make vary or annul any Estate Rules and any rules relating to the use of the open yards, gardens, lawns, parks, grounds, artificial lakes, bunds and rivers (if any) within the said Land and the estate roads."
Paragraph 2(d)
"To take such steps as may be necessary to enforce the terms of these presents and the Estate Rules."
(6)The Estate Rules provide as follows:-
Rule A10
"......As owner means each person in whom for the time being the legal estate in a unit is vested, successors in title are liable for any obligation under the Deed of Mutual Covenant left undone by their predecessors in title......"
Rule B4(b) and (h)
"No owner is allowed:-
(b)to alter the main structure, e.g. columns, beams, structural walls and etc. of any unit; ...................
(h)to alter or to seal up any doorways or window openings......"
Rule B6
"In existence at present are quite a number of unauthorised additions/alterations: the commonest being fixed type canopies. Upon discovery, owners are notified in writing and are given ample time to redress the breach. The Estate Management prones to persuasion rather than immediately resorting to legal proceedings.
Should persuasion fail, legal proceedings will be initiated in order of priority according to date of discovery and nature of breach. All unauthorised additions/alterations sooner or later have to be removed or rectified by owners themselves as the final solution, either forcibly (by Court Orders) or voluntarily (through persuasion and understanding.) Please don't follow suit other owners' breach. Prior consultation can alleviate future inconvenience."

4. On the 7th of June 1987, the staff of the Plaintiff discovered that unauthorised alterations works were carried out at the House. The unauthorised works were the following:-

(1) the removal of wall W11a;

(2) the removal of wall W11b;

(3) the removal of wall W7;

(4) the erection of wall W12a;

(5) the erection of wall W12b.

Photographs were taken by the Plaintiff's staff and by letter dated 2nd July 1987, the Plaintiff wrote to Madame Lam Wai King (whom the Plaintiff thought to be the then owner of the House) about the unauthorised removal of the kitchen and porch walls and the erection of the unauthorised external walls. The letter asked the unauthorised alterations be reinstated. No reinstatement took place and so by letter dated 25th September 1987, another letter was written but this time addressed to Christina Ma, the new owner of the House and asking that wrongful alterations be reinstated. A warning letter was written dated 22nd July 1988 by the Plaintiff to Christina Ma asking for reinstatement and said this case has been placed under constant review and as final resort, the Plaintiff would institute legal action to seek removal according to the Plaintiff's priority list.

5. On the 6th of October 1990, Christina Ma (known as Mrs. Chow) came to the office of the office of the Plaintiff when it was explained to her by the staff of the Plaintiff the necessity for the breaches to be reinstated and she agreed to such reinstatement but said that she required the assistance of her family to carry out the reinstatement works. She promised she would inform the Plaintiff office in 10 days about her decision as to the reinstatement works. She did not so inform the Plaintiff office nor did she carry out the work but instead it would seem that the House was sold to the present Defendant, Madame Sun. An important letter dated 1st November 1990 was then written by the Plaintiff requiring reinstatements and setting out the unauthorised alterations. In early 1993 according to the record of the Plaintiff, the necessary reinstatement works were observed as not having been carried out. So further letters requiring reinstatement were sent out by the Plaintiff and these were dated 3rd March 1993 (addressed to Christina Ma), 20th March 1993 (addressed to the Defendant Madame Sun) and 27th March 1993 (addressed to the Defendant Madame Sun). The letter dated 27th March 1993 was particularly relevant because in that letter the Plaintiff agreed to grant further time to the Defendant to rectify the alterations as result of the Defendant requesting Li Wan Hing of the Plaintiff to grant her more time to carry out the reinstatement works. The Plaintiff gave until the 30th of June 1993 for the Defendant to carry out the reinstatement works and a written undertaking was enclosed with the letter for the Defendant to sign. The Defendant did not sign the undertaking so Li Wan Hing wrote another letter dated 20th April 1993 to chase for the undertaking. By letter dated 30th April 1993, the Defendant Madame Sun wrote to Mr. Li and after acknowledging the necessity to carry out the reinstatement works, she asked for a further extension until 30th September 1993 to carry out the works saying that she had been obtaining quotations for the reinstatement works. This was the second request by the Defendant for more time to do reinstatement. Plaintiff again chased for the Undertaking to be signed by its letter dated 4th May 1993. On the 21st of June 1993, the Defendant Madame Sun came to the office of the Plaintiff to register her change of ownership of the House and it was on that occasion that the Defendant promised to the Plaintiff's staff that she would rectify all the breaches by 30th September 1993. This was the third request by the Defendant for time to do reinstatement. By letter dated 11th August 1993, the Plaintiff again chased for the signed Undertaking. On 14th September 1993, the Plaintiff's file record relating to the House ("Record Sheet") shows that the House was observed not to have rectified the unauthorised alterations and by letter dated 20th September 1993, solicitors for the Plaintiff wrote the formal letter to the Defendant giving formal notice of legal proceedings unless reinstatement works were carried out within 3 days. On the 25th of September 1993, the Plaintiff commenced the present action in the District Court. On the 24th of May 1994, this action in the District Court was transferred to the High Court.

ISSUES

6. The issues which were raised at the start of the Trial are the following:-

(1)Whether there were alterations in the House;
(2)Whether the alterations were structural;
(3)Whether the alterations whether structural or not, were in breach of the Estate Rules and/or the Deed of Mutual Covenant;
(4)Whether if there was breach of the Estate Rules, such Rules were ultra vires the Deed of Mutual Covenant and therefore not enforceable;
(5)Whether the Court should exercise its discretion by refusing to grant the remedy of reinstatement:-
(a)Acquiescence by non enforcement of breaches of other houses in Fairview Park;
(b)Delay;
(c)the unauthorised works' structural effect on the House;
(d)the authorised works' implication on the plot ratio.
(e)All the circumstances of the case.

CREDIBILITY OF WITNESSES

7. At the Trial, I heard oral evidence from six factual witnesses from the Plaintiff and one factual witness from the Defendant. The Plaintiff's six factual witnesses were:-

PW1-Mr. Lau Chung Hing who was the then Administrative Manager of the Plaintiff;
PW2-Mr. Li Wan Hing who was the then Estate Officer of the Plaintiff;
PW3-Mr. Chan Kin Sun who is the present Manager of the Plaintiff;
PW4-Miss Ivy Wong Yuet Ngor who is the present General Manager of the Plaintiff;
PW5-Chan Ming Sze who was the architectural assistant of Fairview Park development;
PW6-Yuen Chu Ming who was the then Senior Estate Officer of the Plaintiff.

The factual witness of the Defendant was the Defendant, Madame Sun Wai Chun herself. Two experts of the Plaintiff gave evidence, Mr. Wong Lup Yue and Dr. Vessey. No expert of the Defendant came forward to give evidence.

8. The factual witnesses of the Plaintiff gave good evidence and their evidence to a large extent were also supported by documents. I find they are credible and reliable witnesses. Madame Sun the Defendant however was not a good witness. She did not give her evidence well but her evidence was however of only marginal significance in terms of the issues which the Court has to decide for the Trial. All the factual witnesses were examined, cross examined and re-examined.

9. The two expert witnesses were however not cross-examined because of the unusual turn of events which I will describe later. On the basis of their evidence not being subjected to cross-examination, I find their evidence reliable and I accept their evidence. In particular I find the evidence of Dr. Vessel particularly compelling as he is not only technically highly qualified but impressive in every way when he gave his evidence with the aid of plans, drawings, blocks, model, pictures and demonstrations. He was an excellent witness.

UNUSUAL TRIAL PROCEEDINGS

10. Before I proceed to consider the various Issues, I should describe briefly the unusual features of the Trial as they might have a bearing on my findings.

11. The Trial started on the 2nd of November 1998 in the usual way with Mr. Johnson Lam appearing for the Plaintiff on the instructions of Messrs Kwan & Chow, Solicitors for the Plaintiff and Mr. Hubert Woo for the Defendant on the instructions of Messrs Hong Lee & Co. After the opening of Mr. Lam, the first day was taken up with PW1, Mr. Lau Chung Hing. 3rd of November 1998 was taken up by the evidence of PW2-Mr. Li Wan Hing, PW3-Mr. Chan Kin Sun, PW4-Miss Ivy Wong and PW5-Mr. Chan Ming Sze. That afternoon and the better part of the next day, 4th November however was taken up with legal question of scope of the Defendant's defence and whether they were material to the Trial. Mr. Chan resumed his evidence in the afternoon of the 4th November and his evidence was completed in the morning of the 5th November. PW6-Mr. Yuen then gave evidence followed by the remaining factual witness namely the Defendant Madame Sun who completed her evidence in the afternoon of the 5th November. The next day, 6th November 1998 was to be the start of the experts giving evidence, the Court having directed on day one of the Trial that the factual witnesses of both sides were to give evidence first and then followed by the experts on both sides. The relevance of this to the Defendant was the presence of Mr. Bing Choy who had originally scheduled to give evidence both as a factual witness and as an expert for the Defendant. On the 5th of November, Mr. Woo informed the Court that the Defendant would only be calling Mr. Bing Choy as an expert and not as a factual witness.

12. In the morning of the 6th November 1998, the Trial took a dramatic turn. After a ruling from me refusing Defendant leave to amend the rejoinder to plead illegality of the House, a discussion on the matter of Mr. Bing Choy giving admissible evidence as expert of the Defendant and the possible discovery of previous hearing relevant to the matter of Bing Choy, there was an outburst from Mr. Bing Choy. This then led to Mr. Woo making an application to disqualify me as the Trial Judge from further continuing with the Trial. I gave directions for the hearing of such application by Motion. I also gave directions for the hearing of the Plaintiff's Summons for discovery of the documents relating to the Defendant's Solicitors earlier application to the Court to cease to act. The matter was adjourned to 11th November 1998. In the morning of the 11th November however Mr. Woo sought an adjournment of the Motion to disqualify the Trial Judge. That application to adjourn the Defendant's Motion was opposed and after hearing argument from the parties I refused the application to adjourn the Defendant's Motion. Accordingly the Defendant's Motion to disqualify the Trial Judge failed and I indicated that I would give my reasons later. I then proceeded to hear the Plaintiff's Summons application. Mr. Lam for the Plaintiff completed his opening submissions in the morning and Mr. Woo started his answering submission when it was adjourned for lunch.

13. At the commencement of the afternoon hearing, Mr. Woo announced to the Court that the Defendant wished to appeal the Court's morning order refusing adjournment of the Motion, that the Defendant was withdrawing her instructions to her solicitors and Counsel and that Mr. Woo as Counsel without instructions from his solicitors could no longer act and therefore he was withdrawing from appearing at the Trial and the Plaintiff's Summons. Mr. Woo then left the Court. Miss Chung of the Messrs Hong Lee & Co. of course remained in Court as the firm was formally on record as Solicitors for the Defendant and the firm remained as such solicitors until either there was a formal filing of the Notice of Intention to Act in Person by the Defendant or an Order of the Court pursuant to a proper application by the solicitor to cease to act for the Defendant. The case was adjourned to wait for the arrival of Madame Sun who was coming to act in person, so it was said to the Court. The Court waited from about 3 p.m. to 6 p.m. for Madame Sun but there was no sign of Madame Sun even though again and again when the Court made inquiries the Court was informed that she was on her way from Yuen Long to the Court. Eventually at about 6 p.m. the Court adjourned the hearing to the next morning.

14. In the morning of the 12th November 1998, Madame Sun was not in Court and there was no filing of any formal Notice of Intention to Act in person. Miss Chung of Messrs Hong Lee & Co. which firm was still the solicitors formally on record as the Solicitors for the Defendant informed the Court that Madame Sun fell down in the Underground the night before and was taken to the hospital which was the reason why she could not attend the Court the previous day. Miss Chung told the Court that she spoke with the Defendant's daughter the evening of the 11th November and informed the daughter of the Trial continuing the next day and said that if Madame Sun wanted to act in person she would have to sign the Notice of Intention to act in person, a copy of which was then faxed by Miss Chung that night so that it could be returned to Miss Chung signed by Madame Sun. But upon returning to the office in the morning of the 12th November Miss Chung found that there was no Notice of Intention to act in person signed by Madame Sun but instead there was a three page fax in Chinese enclosing what is purporting to be a medical certificate. The three page fax shown to the Court by Miss Chung purported to say that Madame Sun was terminating the instructions to Messrs Hong Lee & Co. The Court took the view that the formality must be observed and that if the Defendant wished to act in person she must file formally the official Notice of Intention to Act in Person and that if Messrs Hong Lee & Co. wished to formally cease to act as solicitors for the Defendant they must issue the necessary Summons supported by Affidavit and that in the meantime the Court must regard Messrs Hong Lee & Co. as still being formally the Solicitors for the Defendant and the case would proceed on that basis. Miss Chung informed the Court that she had nothing to say and in the circumstances, the Plaintiff's Summons for discovery was completed. The Court then proceeded to give Judgment on both the Plaintiff's Summons for Discovery as well as on the Defendant's application to adjourn the Defendant's Motion to disqualify the Trial Judge. In the afternoon of the 12th November 1998, the Trial resumed with the expert Mr. Wong Lup Yue and Dr. Vessey giving evidence and with Miss Chung sitting in Court but refusing to either instruct Counsel or to participate at the Trial although the Court gave her leave to do so. There was accordingly no cross-examination of the two experts by the Defendant or her lawyer. The Trial was then adjourned to 16th November for final submissions. The first matter which had to be dealt with on 16th November was the Summons of Messrs Hong Lee & Co. to cease to act, the Summons and supporting Affidavit having been formally served on the Defendant. The Summons was heard in the absence of the Plaintiff's Counsel and solicitor and an order was made. However subject to and until the full compliance of Order 67 rule 6(1), Messrs Hong Lee & Co. remained formally as solicitors for the Defendant. The Trial then continued with Miss Chung being present in Court, but declining the invitation of the Court to participate in the Final Submission. The Final Submission was concluded in the afternoon of the 16th November 1998 with Judgment reserved.

ISSUE 1 - WHETHER ANY ALTERATION

15. The case of the Plaintiff is that there were five unauthorised alterations to the House, namely removal of walls W11a and W11b (porch walls), removal of wall W7 (kitchen wall) and erection of wall W12a and W12b (new external walls). At the Trial Mr. Woo for the Defendant had in fact admitted that there were these alterations but argued that they were not breaches. But even disregarding the admission of Mr. Woo, there was overwhelming evidence (which I accept) that there were these five alterations made to the House. First of all we have the Record Sheet of the Plaintiff (3/36-7) supported powerfully by the contemporaneous photographs (B40-41). Then there are all the letters from the Plaintiff to various owners (2nd July 1987, 25th September 1987, 22nd July 1988, 1st November 1990, 3rd March 1993, 20th March 1993, 27th March 1993, 20th April 1993, 4th May 1993, 11th August 1993, 20th September 1993) in addition to which there is also the letter dated 30th April 1993 from the Defendant to the Plaintiff admitting breaches and asking for more time to do reinstatement. In terms of documentation, there is also what was recorded in the Record Sheet the admission of alterations by Christina Ma on 6th of October 1990 and by the Defendant on 21st June 1993 to the Plaintiff's staff when each was seeking more time to do the reinstatement works. As said earlier the Defendant on three separate occasions acknowledged the breaches and asked for time to do reinstatements works.

16. At the Trial, the Court also heard the oral evidence from:-

(1)Chan Ming Sze as to the original state of the House by reference to the Building Plan No. BG5/2 and;
(2)Yuen Chun Ming, Lau Chung Hing, Li Wan Hung regarding the unauthorised alterations and the records kept by the Plaintiff of such unauthorised alterations and steps taken by the Plaintiff since their discovery for reinstatement.

I accept both the documentary and the oral evidence of the Plaintiff.

17. In the light of all the above, I have no doubt and I find as a fact that the aforesaid five unauthorised alterations were made to the House.

ISSUE 2 - WHETHER ALTERATION STRUCTURAL

18. This Issue arises because the Plaintiff is seeking the injunction relief of having all five alterations reinstated. It is therefore necessary to consider in respect of each of the five alterations whether such alteration was a breach of the Deed of Mutual Covenant. Paragraph 4(b) of the Second Schedule is the primary provision relied on by the Plaintiff to establish that in respect of each of the five alterations, there was a breach. It is to be noted that the prohibition against making alteration or addition in Paragraph 4(b) is directed generally to walls and there is no reference in Paragraph 4(b) to structural wall or structural alteration. This is to be contrasted with Paragraph 7(a) of the Second Schedule where the prohibition is directed to making structural alteration and Rule B4(b) of the Estate Rules where the prohibition is against alteration to the structural wall. According I find that in respect of all five alterations, these alterations were in breach of Paragraph 4(b) of the Second Schedule.

19. In relation to Paragraph 7(a) of the Second Schedule and Rule B4(b) of the Estate Rules, the case of the Plaintiff is that the kitchen wall (W7) is a structural wall and that therefore the removal of the kitchen wall was a structural alteration. Both Chan Ming Sze and Dr. Vessey by their reports and by their oral evidence informed the Court that the kitchen wall was a structural wall. I accept their evidence. I found the evidence of Dr. Vessey both as contained in his report and in his oral evidence to be compelling. In essence, his opinion that the kitchen wall was structural is that it was load bearing when it supports the appropriate ceiling slabs. I accept that opinion.

20. This opinion is to be contrasted with the opinion or assertion of Mr. Bing Choy who did not give evidence to the Court and whose expert report and witness statement therefore could not be accepted by the Court but who drew the conclusion that there was no structural alteration or there was no alteration to structural wall because there was no structural danger to the premises. As said by Mr. Lam, a safe structural alteration is nevertheless a structural alteration. I find as a fact that the kitchen wall was a structural wall and the removal of the kitchen wall was a structural alteration and accordingly this was in addition to being a breach of Paragraph 4(b) of the Second Schedule, also a breach of Paragraph 7(a) of the Second Schedule and Rule B4(a) of the Estate Rules.

ISSUE 3 - WHETHER ALTERATIONS BREACHES OF DMC OR ESTATE RULES

21. It follows from what was said earlier that in respect of the kitchen wall W7, my finding is that its removal was in breach of Paragraph 4(b) and Paragraph 7(a) of the Second Schedule and Paragraph 15 of the Second Schedule by reason of breach of Rule B(4) of the Estate Rules.

22. As for the removal of walls W11a and W11b (the porch walls) and the erection of walls W12a and W12b (new external walls), in my judgment these alterations all constitute breaches of Paragraph 4(b) of the Second Schedule.

23. It follows therefore that in respect of each and every one of the five unauthorised alterations, there was a breach of the Deed of Mutual Covenant and accordingly there is a right of the Plaintiff to seek reinstatement.

ISSUE 4 - WHETHER ESTATE RULES ULTRA VIRES

24. Reinstatement under the Deed of Mutual Covenant can take two forms. It can be either in the form of the Plaintiff Manager doing the work of reinstatement pursuant to the power given by Clause 7(a) and Paragraph 1(d) of the Third Schedule of the Deed of Mutual Covenant or alternatively in the from of forcing the Defendant owner, Madame Sun to do the reinstatement works pursuant to Rule B6 of the Estate Rules. This Issue relates to the question of whether the Defendant is obliged to do the rectification works pursuant to Rule B6 of the Estate Rules.

25. This point was raised by paragraph 3A of the Re-Amended Defence. As I understand the argument of the Defendant (which was made difficult sometimes by the way the submissions were made to me by Mr. Woo before his withdrawal from the Trial), the making of Estate Rules are limited to the use of open yards, gardens, lawns, parks, grounds, artificial lakes, bunds or rivers of the Fairview Park (these areas hereinafter referred to collectively as "common open areas") and any Rules made outside or not covered by the above purposes are ultra vires the Deed of Mutual Covenant. It should be noted that the Second Schedule provides under Paragraph 15 that each Owner (which includes the Defendant) "shall observe and perform all the covenants conditions and provisions of ........ the Estate Rules." Paragraph 2(d) of the Third Schedule provides that the Manager shall have the obligation "to take such steps as may be necessary to enforce the terms of ...... the Estate Rules". So far as these provisions go, there is nothing in these provisions to suggest the enforcement of the Estate Rules would only apply narrowly in respect of open common areas. I can then turn to Clause 7(d) giving the power of the Manager to make Estate Rules for the management of the Land and Paragraph 1(h) of the Third Schedule which gives two separate powers to the Manager, namely:-

(a)to make, vary or annul Estate Rules;
(b)to make, vary or annul any rules relating to the use of the open yards, gardens, lawns, parks, grounds, artificial lakes, bunds and rivers within the Fairview Park.

Under Clause 7(d), the power of the Manager to make Estate Rules is not limited to those relating to common open areas. The plain meaning of Paragraph 1(h) of the Third Schedule is that the Manager can make Estate Rules and in addition can also make rules relating to the use of common open area. The Estate Rules is thus seen to be different from rules relating to common open areas and in the face of that difference there is simply no room for an argument that the Estate Rules which can be made are limited to the use of common open areas and any provision-in the Estate Rules which relates to non common open areas is ultra vires Paragraph 1(h) of the Third Schedule or Clause 7(d) of the Deed of Mutual Covenant. There is with respect no merit whatsoever in this point of the Estate Rules being ultra vires the Deed of Mutual Covenant.

ISSUE 5 - DISCRETIONARY REMEDY

26. A large number of issues were raised on behalf of the Defendant (the Defendant herself in her evidence seemed to have no idea of what was said on her behalf) suggesting why the discretionary remedy of reinstatement should not be ordered by the Court, in the event that the Court finds that there were breaches of the Deed of Mutual Covenant. It seems to me that my starting point in respect of breaches of negative covenant is that the parties should be held to their bargain and although the well known principle as laid down by Lord Cairns in Doherty v Allman (1878) 3 A.C. 709 that injunction is "the specific performance, by the court, of that negative bargain which the parties have made, with their eyes open, between themselves" is now applied less vigorously than before, notwithstanding decision such as Sheperd HomesvSandham [1971] 1 Ch. 340 (see page 351), the court still gives a great deal of weight to the principle and the remedy of injunction will only be withheld by the court at trial if the court is persuaded that this will not produce a fair result. All the relevant circumstances therefore could be looked at in persuading the court that the remedy of injunction of reinstatement should be denied to the Plaintiff.

Acquiescence by Non Enforcement of Breaches of other houses in Fairview Park

27. It was said by the Defendant Madame Sun that it was unfair to single out her House for enforcement and that there were many other houses which had identical or similar breaches. She herself however did not elaborate or call any factual evidence to support her allegation. I find in any event that she was not a very reliable witness. So far as the Plaintiff's evidence is concerned, which I accept, the picture shown is quite the contrary and that there has been no case where the Plaintiff had expressly tolerated or impliedly acquiesced in the removal of identical or similar walls or in the erection of identical or similar walls. The evidence reveals in fact that it has been the consistent policy of the Plaintiff to object to unauthorised alterations such as the five alterations in question and it was pursuant to such policy that the Plaintiff acted in the way it did by steadfastly objecting to the existence of these alterations. There was no credible material admitted in evidence at the Trial to persuade the court that the Plaintiff had acquiesced in similar kitchen wall W7 or porch walls W11a and W11b being demolished or similar external walls W12a and W12b being erected. I find as a fact that there were no similar breaches which the Plaintiff had tolerated and did nothing about. The nature of the breaches seem to be different. Further, the fact that there might be similar breaches did not mean that the Plaintiff did not take steps to require reinstatement. There was no credible evidence that the Plaintiff did not take steps to require reinstatement and in fact the evidence seem to point to the fact that the Plaintiff did take steps. The Plaintiff might have been slow in taking steps to enforce reinstatement in cases of similar breaches but that is not acquiescence. I find as a fact that there was no acquiescence by Plaintiff with other similar houses in respect of similar breaches. In fact there is not even adequate evidence that there had been similar breaches in relation to similar houses.

Delay by the Plaintiff

28. In order to succeed with the defence of delay so as to defeat the grant of the injunction remedy, the Defendant must show first that the delay was unreasonable and secondly that the unreasonable delay had rendered unjust the grant of the injunction. The facts show that the Plaintiff had adopted a particular policy in relation to breaches which could be described as first persuasion and only when that had clearly failed then resort to legal proceedings. This policy was in fact set out in the Estate Rules and becomes part of the contractual arrangement between the Plaintiff and owners of houses in Fairview Park.

29. The Plaintiff followed this well-known policy and it could be said that there were positive responses from the owners. Christina Ma in fact in 1990 agreed to do the reinstatement but required time to seek assistance from family. The Defendant herself also agreed by letter of 30th April 1993 to undertake the reinstatement but requested time to do so. In June 1993, the Defendant also orally agreed at the office of the Plaintiff to undertake the reinstatement works. In these circumstances, I do not take the view that the Plaintiff had been unreasonable with its delay in seeking to have the breaches remedied. It has to be borne in mind that by reason of the huge size of the estate, the not infrequent occurrence of breaches of varying severity and the limited manpower resources of the Plaintiff, the Plaintiff was not unreasonable in adopting a priority system in considering legal action after the persuasion method failed. When the persuasion method was finally shown to have failed, the Plaintiff did not take long to institute proceedings. In the particular circumstances of this case having regard to the evidence given at the Trial, I find that there was no unreasonable delay. It follows that the first requirement of delay barring injunction failed. As for the second requirement of the Defendant showing that it was unjust in the circumstances to grant the remedy as result of the delay, the evidence is all one way in favour of the Plaintiff. There is every advantage and necessity for the Plaintiff to enforce the compliance with the Deed of Mutual Covenant and the Estate Rules and there has been no credible evidence that the Defendant had suffered any disadvantage or prejudice or changed her position adversely as result of the Plaintiff's unreasonable long delay. Therefore I conclude and find that there had been no unreasonable delay and that in the circumstances it is not unjust for the court to grant the remedy requiring reinstatement.

Structural effect of Kitchen Wall removal on House

30. The Kitchen Wall W7 was removed in 1987 some 11 years ago and the House has not fallen down. So does it mean that the removal of the kitchen wall has not adverse structural effect. Dr. Vessey was very fair in his evidence and said that the structural effect of the removal of the kitchen wall was not major but nevertheless real. It weakened the structural support and reduced the safety factor and this cannot be desirable or dismissed as totally insignificant. In all the circumstances, this aspect reinforces the necessity to grant the remedy and is not a reason for refusing the making of an order.

Plot Ratio Change

31. The enclosing of the Porch by Wall W12a and W12b and the knocking down of Wall W11a and W11b gave to the House an extra 35 sq. ft. This changed the plot ratio for the House which if tolerated would adversely affect the plot ratio calculation for Fairview Park as a whole and adversely affect the rights of other owners of Fairview Park and would expose the Plaintiff and Fairview Park to possible enforcement by the Hong Kong Government. (see paragraph 1C(e) of Re-Re-Amended Reply). This is another factor in favour of the court exercising its discretion to grant the injunction remedy.

Conclusion on Discretionary Remedy

32. My conclusion on the exercise of my discretion as to whether the remedy of injunction should be granted as opposed to an award of damages is that there are compelling and good reasons which require the Court to grant the injunction and there is no persuasive or powerful reasons which call for the remedy to be withheld. My judgment is that it is just and right that there should be injunction against the Defendant to compel reinstatement works to be undertaken to be done either by the Defendant or by the Plaintiff at the Defendant's expense.

CONCLUSION

33. The result is that judgment is to be entered in favour of the Plaintiff in the following terms:-

(1)An mandatory injunction to take effect 35 days from the handing down of this Judgment that in the absence of the Defendant having restored the aforesaid five alterations namely Walls W7, W11a, W11b, W12a and W12b to the satisfaction of the Plaintiff, the Defendant whether by its servants agents be restraining from hindering or preventing the Plaintiff, its servants, agents, contractors or workmen from entering into the House and from carrying out the reinstatement works of W7, W11a, W11b, W12a and W12b;
(2)The Defendant do indemnity the Plaintiff as to the costs and expenses of carrying out the aforesaid reinstatement works.

As for costs, having regard to the right of the Plaintiff under the Deed of Mutual Covenant to have its costs on an indemnity basis, the nature of this Action, the course of the proceedings and the submissions made to me on costs of the Action, in the exercise of my discretion I make an order of costs of the Action against the Defendant and hereby assess such costs by way of gross sum assessment under Order 62 rule 9(4)(b) at $1,600,000. This sum of $1,600,000 is in addition to the gross sum costs of $133,000 assessed by me under my Reasons for Decision dated 12th November 1998.

 

 

William Waung
Judge of the Court of First Instance
High Court

 

Representation:

Mr. Johnson Lam instructed by Messrs Kwan & Chow for the Plaintiff

Mr. Hubert Woo instructed by Messrs Hong Lee & Co. for the Defendant (from 2nd Nov. to 11 th Nov.) & Miss Chung of Messrs Hong Lee & Co. (from 11 th to 16th Nov.)

33855-EN-1998-11-12

FAIRVIEW PARK PROPERTY MANAGEMENT LTD. v. SUN WAI CHUN

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HCA005782/1994

HCA 5782 of 1994

IN THE HIGH COURT OF THE HONG KONG SAR

COURT OF FIRST INSTANCE

_________________________________

BETWEEN
FAIRVIEW PARK PROPERTY MANAGEMENT LTD.Plaintiff
AND
SUN WAI CHUNDefendant

_________________________________

Coram: The Hon. Mr. Justice Waung in Court

Date of Hearing: 11 and 12 November 1998

Date of Delivery of Reason for Decision: 12 November 1998

_________________________________

REASONS FOR DECISION

_________________________________

1. This Action is brought by the Plaintiff Manager of a large estate in the New Territories whereby the Plaintiff sought against the Defendant owner of a house, an injunction that three walls unlawfully removed in breach of the Deed of Mutual Covenant and Estate Rules should be reinstated. The Trial started on 2nd of November 1998 and by day 5, the 6th of November 1998, all the factual witnesses for both sides (some 7 in number) had been called and it remained to hear two experts for the Plaintiff and one expert for the Defendant. The expert engaged by the Defendant is one Bing Choy ("Choy") and the Defendant had filed four factual witness statements made by Choy and one expert report signed by Choy. The unusual situation of Choy being both a factual as well as expert witness was a matter noted and discussed between the Court and Counsel from an early stage of the Trial. On day 4 of the Trial, the Defendant Madame Sun gave evidence which revealed that Choy had been running the whole case for her from the very beginning in 1993 and that she had paid neither Choy nor the Defendant solicitors any money for the proceedings. On day 5 of the Trial, I indicated to the parties that there had been an earlier application by the Defendant's solicitor to cease to act and the material filed therein and what took place at the hearing on the 16th October 1998 might have a relevance to the forthcoming consideration of how to deal with the matter of Choy giving evidence as an independent expert witness.

2. What happened on the 16th of October application by the Defendant's Solicitor to cease to act was that Miss Chung and Choy appeared before me. Choy was the representative of the Defendant Sun. The material filed by the parties (2 Affirmation by Miss Chung and one Affirmation by Choy) and the course of the proceedings indicted an unusual involvement of an "expert" in the conduct and finance of the Defendant's case. The application to cease to act as solicitors was withdrawn at the hearing upon Choy agreeing to pay immediately a certain sum of money to the Defendant's Solicitors.

3. What followed upon the Court on the 6th of November bringing up the matter of the cease to act application was that there was heated debate between Mr. Woo on behalf of the Defendant and Mr. Lam on behalf of the Plaintiff with one side resisting the material being inspected by the Plaintiff and the Plaintiff wishing to see it. This in turn led to Mr. Woo suggesting that the Trial Judge is biased because of his reference to the cease to act material, to Mr. Woo saying that the Trial Judge should withdraw from the Trial and to Choy in open Court shouting to the Trial Judge that the Trial Judge had falsely accused Choy of being guilty of the criminal offence of champerty and maintenance and that he Choy was making an immediate complaint to the Chief Justice against the Trial Judge.

4. In the light of the suggestion by Mr. Woo that the Trial Judge is biased and should therefore withdraw from the Trial, at the invitation of Mr. Lam and with the apparent concurrence of Mr. Woo, I as the Trial Judge gave directions for the proper hearing of the two pressing issues before the Court, namely the application by the Defendant that the Trial Judge should be disqualified from continuing with the Trial Action and the application by the Plaintiff for the cease to act material. I gave direction for the hearing of the Defendant's Motion and the Plaintiff's Summons which included the timing of the filing of the supporting affidavits, the opposing affidavits, the reply affidavits and the skeleton argument in support of the applications. Originally the Motion and the Summons were to be heard on Tuesday, 10th November 1998 but at the special request of Mr. Woo and to accommodate him I amended the time, so that the two applications could be heard on Wednesday the 11th November 1998 and the Trial accordingly adjourned to that date.

5. What then following was a bizarre sequence of events with the following correspondence:-

1. Complaint letter dated 6th November 1998 from Choy to the Chief Justice ("Complaint Letter);

2. Letter dated 7th November 1998 from Hong Lee & Co. to the Trial Judge (received by the Clerk to the Trial Judge at 12.30 p.m.) enclosing copy of the Complaint Letter and copied to the Chief Justice, the Chief Judge, Choy, Madame Sun and Kwan & Chow (without enclosure of Complaint Letter);

3. Fax dated 7th November 1998 from Clerk to the Trial Judge to Hong Lee & Co. (transmitted at 2.00 p.m.) copied to the Chief Justice, the Chief Judge and Kwan & Chow;

4. Fax of 3 pages dated 9th November 1998 from Choy to Hong Lee & Co. copied to the Trial Judge, the Chief Justice, the Chief Judge and Madame Sun (received by Clerk to the Trial Judge at 2.15 p.m. on 9th November 1998);

5. Letter dated 9th November from Hong Lee & Co. to the Trial Judge enclosing copy of a second Fax (2 pages) dated 9th November 1998 from Choy to Hong Lee & Co., which letter was copied to the Chief Justice, the Chief Judge, Choy, Kwan & Chow, Madame Sun and Mr. Hubert Woo (received by Clerk to the Trial Judge at 3.25 p.m. on 10th November 1998).

6. In terms of court documents, the Defendant filed the Motion returnable 11th November 1998 but there was no supporting affidavit by the Defendant and accordingly in relation to that Motion, the Plaintiff did not file any opposing affidavit. In relation to the Plaintiff's Summons for inspection under Order 67 rule 6A, the Plaintiff filed its Affirmation in support (Affirmation of Kwan Tong Hong) on 9th of November 1998 and the Defendant by the 3rd Affirmation of Miss Chung, filed her Affirmation in opposition on 10th November 1998.

7. When this matter resumed on 11th November 1998, there were two issues which required to be resolved before the Trial could continue that day:-

1. Defendant's Motion that the Trial Judge be discharged from continuing with the Trial;

2. Plaintiff's Summons for inspection of the documents and transcripts relating to the Cease to Act application on the 16th October 1998.

8. Mr. Woo on behalf of the Defendant at the outset asked for the Defendant's Motion to be adjourned on the basis that the transcript of the whole Trial would be required for the preparation of the hearing of the Motion and that therefore the Defendant's Motion, the Plaintiff's Summons and the Trial should all be adjourned generally until such time as the Motion could be restored namely some 30 days after the Trial Transcript had been made available to the Defendant. This application to adjourn was opposed by the Plaintiff who wanted to get on with the Trial. The Plaintiff's experts have been standing by since the 6th of November.

9. A proper consideration of the Defendant's request for adjournment of her own Motion must start with the nature of the Motion. In civil proceedings, it is extremely rare to see an application made in the middle of the Trial (in our case more than half way) to have the Trial Judge discharged and for the Trial to start all over again. In the normal course of things, if a Trial Judge overstepped the line of what the law considered permissible and such overstepping resulted in an unfair trial to one party, the recourse is for the Court of Appeal to correct such error on appeal from the Judgment. It is not the practice of our system to encourage or to permit an interim application for a different tribunal. The safe guard is at the end of the process, not in the middle. What the Defendant is seeking is therefore a most unusual and drastic remedy and the Motion must be examined in that light.

10. It was because the proposed application to disqualify the Trial Judge was so unusual that in the interests of all parties, the direction was given on Friday 6th of November 1998 for the proper filing of Affidavits and lodging of skeleton argument. But that course agreed to by Mr. Woo for the Defendant at the hearing on 6th November 1998 was disavowed on Saturday 7th November 1998 at a time when everyone was going away for the weekend, by the Fax dated 7th November 1998 from the Defendant's Solicitor.

11. The reason given for this change of front is that the Defendant required the Transcript of the 5 day Trial and sufficient time to study these transcripts before it could proceed with the application. However, the Defendant's Solicitor and Choy were able to write full allegation letters on 6th, 7th and 9th November 1998 and the Defendant's Solicitor was able to issue the Motion with some 10 grounds without the Trial Transcript. The question on the Defendant's application for adjournment is whether the so called necessity to study the Transcript is essential to the Motion. I do not believe so. Affidavit can and should be filed by the Defendant deposing to the essential particular aspects of the Trial or the conduct of the proceedings which gave rise to each of the particular grounds in the Motion. The Defendant's Affidavit may be opposed in whole or in part by the Plaintiff's Affidavit. There may be a great deal of common ground or there may be some small areas where the conflict of evidence might have to be resolved by reference to either the Trial Judge's notes or the tape of the proceedings but there is simply no good reason why the application desired by the Defendant could not proceed in the absence of the official Trial Transcript.

12. In the course of the argument, the question of what happens in everyday litigation was discussed. It is of course almost unheard of for an application by a party to adjourn its own application on the ground that the party taking out the application is unable to support its own application until the production of the transcript. It is to be noted here that the parties in an action generally have no right to a transcript of the proceedings and it is only on appeal that for the assistance of the Court of Appeal, in addition to the judgment from the court below the Court of Appeal has the added assistance of the Judge's notes of the Trial or in modern days a transcript of the trial approved by the trial judge. The time for the lodging of the Notice of Appeal therefore does not stop merely because a party is waiting for the transcript and in fact without a proper Notice of Appeal there is no reason even for the Court to permit the production of a transcript.

13. This Trial has reached its sixth day and the Plaintiff wishes to have the Trial concluded as soon as possible. The Defendant has made open allegations and has issued the Motion but is unwilling to proceed with the Motion and seeks an adjournment of the Motion and of the Trial. I see no justification for such a course. The Plaintiff has its experts now standing by for a number of days and is extremely anxious and committed to complete this Trial. I am of course not unconscious that in reaching this Decision, it might seem that I am shutting out a complaint of unfairness which requires serious investigation but I am relieved that the nature of our legal system is such that if there is substance in the Motion which the Defendant is not prepared to prosecute now, then there will be a time and place in the Court of Appeal where the Defendant could justify her complaint, if that should ever arise. I therefore refuse the application of the Defendant for the adjournment of her own Motion. So far as the disposal of the Motion is concerned, I order that the Motion be dismissed, rather than withdrawn since the Defendant has objected to that course which I had suggested as being more beneficial to her.

14. I now turn to the Plaintiff's application for inspection of the 3 Affidavits filed in relation to the 16th October 1998 application of Cease to Act. The position in law on inspection of court documents is that a party to an Action is entitled under Order 63 rule 4 to inspect all court documents but that this right is somewhat curtailed by Order 67 rule 6A (which is unique to Hong Kong and not present in the English Rules). The Court has a discretion to permit inspection and the question on the Plaintiff's application is how should I exercise my discretion. In a very helpful submission, Mr. Lam has very fairly submitted (the Defendant in the course of the argument has dismissed the Counsel (Mr. Woo) so that Madame Sun could be said to be at an disadvantage which she chose to inflict on herself at a critical time) that the material sought to be inspected is admissible and relevant for the Plaintiff. Is Mr. Lam right.

15. The Defendant's expert evidence to be adduced by Choy covered several areas such as:-

1. whether the walls removed and erected were structural alterations;

2. whether the alterations would have any adverse effect;

3. whether the building plans produced by the Plaintiff are so inadequate as to affect the right of the Plaintiff to enforce the DMC;

4. whether the alterations made to the house will cause a loss of the plot ratio.

Choy is an important expert witness to the Defendant and as an expert witness in civil proceedings, he is supposed to be independent, objective, unbiased and not assume the role of advocate. (see The Ikarian Reefer [1993] 2 Lloyd's Rep. 69 at 81). From the Trial Bundles it might be said that Choy has played a significant role in the defence of the Action. His exact involvement however remains to be explored and this will have an important bearing in two ways:-

(a) whether the extent of the involvement of Choy was such as to lead the Plaintiff to successfully ask the Court to exclude his evidence completely;

(b) whether the extent of the involvement of Choy was such as to lead the Plaintiff to be able to demonstrate to the Court that no weight should be given to his evidence at all even if such evidence is admitted, on the basis that no Court could safely rely on an expert who is so much an advocate of the Defendant's cause.

The Cease to Act application heard by me on the 16th October contained material which will enable both the Plaintiff as well as the Court to better understand Choy's exact involvement and how the two questions referred to earlier should be decided. I start therefore with the premise that this is not a frivolous application by a party simply to know some irrelevant material about fees. This is a serious application by a Plaintiff who has a substantial and material interest in the documents filed by the Defendant and her solicitors which could have a serious bearing on the progress of the Trial.

16. Once relevance is established, then in the absence of any credible argument on non-admissibility (none was advanced to me), it seems to me that really the exercise of the discretion must proceed on the basis set out by Mr. Lam in his skeleton argument, namely balancing the relevance of the material for the fair progress of the Trial against any possible prejudice which inspection will cause to the Defendant, Madame Sun. In this context, I should emphasise that it is only the prejudice to Madame Sun, the Defendant and not the prejudice to any other person such as the Defendant's Solicitors firm or Choy that I should have regard to. What then is the prejudice to the Defendant by the Plaintiff's inspection. It was suggested in the 3rd Affirmation of Miss Chung that the material was privileged but this cannot be the case as the Defendant and the Defendant's solicitors by their own acts of placing the documents openly in the Court file have given up the privilege. By placing the documents in the Court file and therefore putting them in the open domain, the Defendant had made the material no longer confidential or secret. The Defendant in fact recognised that only one document was considered legally privileged and that is the Advice on Merits of Counsel by Mr. Y.T. Yeung which was referred to in paragraph 8 of the 2nd Affirmation of Miss Chung dated 15th October 1998 and which was therefore deliberately not exhibited to her Affirmation. Further, on the matter of revealing the Defendant's internal view on merits, Mr. Lam has in fact indicated that the Plaintiff is not interested in that aspect and does not wish to rely on anything in the material bearing on that question.

17. It seems therefore to me that in all the circumstances, I should accede to the application of the Plaintiff and I do so order that copy of the three Affidavits (two of Miss Chung and one of Choy) be made immediately available to the Plaintiff.

18. As for the Transcript of what occurred during the hearing on the 16th October 1998, I think it must follow from what I have said that if the Affidavits are revealed to the Plaintiff, then for the sake of completeness and good order the Transcript of the hearing on the 16th October 1998 should also be made available both to the Plaintiff and to the Defendant. The Trial would simply become most unsatisfactory if not impossible, should only part of the material be made available to the Plaintiff.

19. The Plaintiff Summons therefore succeeds and the Defendant's application to adjourn the Motion and the Motion itself fail. I order that the costs of the applications be borne by the Defendant and that these costs should be paid forthwith. In the special circumstances of the case, I exercise my discretion and access these costs under Order 62 rule 9(4)(b) in the gross sum of $133,000.

William Waung
Judge of the Court of First Instance,
High Court

Representation:

Mr. Johnson Lam instructed by Messrs Kwan & Chow for the Plaintiff

Mr. Hubert Woo instructed by Messrs Hong Lee & Co. for the Defendant

Miss Chung Sze Ching of Messrs Hong Lee & Co. for the Defendant on the 11th (afternoon ) and 12th of November 1998


Remarks:
On appeal by the Defendant to the Court of Appeal: Appeal dismissed with costs. Please refer to judgment CACV000271/1998.