THE INCORPORATED OWNERS OF KADOORIE AVENUE MANSION v. RISING DRAGON INTERNATIONAL LTD

LDBM 201/2013

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 201 OF 2013

________________

BETWEEN

	THE INCORPORATED OWNERS OF KADOORIE AVENUE MANSION	Applicant
	and
	RISING DRAGON INTERNATIONAL LIMITED	Respondent

________________

Before:

His Honour Judge K W WONG, Presiding Officer of the Lands Tribunal, in Chambers (open to public)

Date of Hearing: 2nd December 2014

Date of Decision: 22nd December 2014

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D E C I S I O N

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1. This is the hearing of the respondent’s following two applications:

i)   The applicant do serve further and better particulars (“FBP”) of paragraph 16 of its Notice of Application pursuant to Rule 13 of the Lands Tribunal Rules, Cap 17 (“LTR”) (“FBP application”); and

ii)  Certain parts of the Notice of Application and Reply are to be struck out pursuant to O18, r19 of the Rules of High Court, Cap 4 (“RHC”) (“striking out application”).

2. The FBP application and striking out application are the respective subject matters of the respondent’s summonses dated 20^th August and 3^rd September 2004.

Brief background

3. The Applicant is the incorporated owners of a multi-storey building known as Kadoorie Avenue Mansion standing at 205-207 Prince Edward Road West, Kowloon. The respondent is the owner of Flat 10A Car Port No.16 and Main Roof A (“Roof A’) of the Mansion.

4. It is the applicant’s case that the respondent has installed a number of antennas and radio based stations (“RBS”) together with some structures on Roof A and common parts of the building, acting in breach of the Deed of Mutual Covenants (“DMC”), Building Management Ordinance, Cap 344 (“BMO”) and Government lease. The unauthorized structures, antennas and RBS also constitute a nuisance and have caused annoyance, damages or disturbance to other owners and occupiers of the Mansion. By this application, the applicant seeks declarations that the respondent is in breach of various provisions of the Government lease, DMC and BMO. It also asks for orders against the respondent to remove those installations and for injunctions restraining installation of any structure, antenna and RBS on the common parts and Roof A of the Mansion.

5. The respondent filed a Notice of Opposition on 30^th June 2014 putting up various grounds of defence including the applicant turning a blind eye to its own breaches of various provisions of the DMC and building plans thus not coming to court with a clean hand, there being prior compromise between the parties, delay and laches. It also fights back with a counterclaim for a declaration that the applicant has breached its duties under S.18 (1) of the BMO and for an injunction compelling it to carry out its duties.

FBP Application

6. The respondent first filed and served a request to provide FBP of the Notice of Application on 22 July 2014. The applicant’s answers were given on 5 August 2014. In so far as the FBP application is concerned, the respondent now takes the view that the applicant has only failed to properly answer Request No.1 despite the aforesaid answers.

Request No.1

7. Request No 1 deals with paragraph 16 of the Notice of Application. The relevant part of the paragraph which attracts the respondent’s request for FBP is the particulars pleaded in subparagraph (b).  The last sentence after subparagraph (d) is the subject matter of the striking out application. For completeness sake they are repeated below:

“16. Without any prior written consent of the Property Manager or the Applicant and/or without obtaining the requisite permit(s) or approval(s) from the relevant Government department(s) or authority(ies), the Respondent has in breach of the above pleaded Clauses as contained in the DMC and also Section 34I of BMO caused or otherwise permitted or allowed the following acts or things to be done on the Main Roof A, namely :-

(a) …; and

(b) the installation of not less than 5 mobile telephone and/or other antennas with cables and associated equipments on the exterior wall and/or parapet wall or common part of the Building, such installation affecting the maintenance or repairing of the common water pipes and might impair or damage the same;

(c) …

(d) …

Insofar as it may be necessary, the Application will rely on the doctrine of res ipsa loquitur”

8. According to Mr. Chong of counsel for the respondent, subparagraph (b) does not tell whether there were actual incidents in the past which affected maintenance and repair. The defendant would like to know better the applicant’s case and if necessary, may need to call factual witness and/or even adduce expert evidence to rebut the applicant’s case. That is why the Request No.1 was made. The request and the applicant’s answers which the respondent considered insufficient are set out below:

   Request No.1

“(i) Please state the number of occasions as well as the details of each and every occasion when the installation of the antennas and associated equipments on Main Roof A had allegedly affected the maintenance or repair of the common water pipes;

(ii)  Please provide full particulars that how such installation had allegedly impaired or damaged the common water pipes including the exact locations and extent of damage or impairment to the common water pipes as alleged.”

Answers

“(i) The Applicant did not and does not keep any record of such occasions or incident. But with a number of antennas and/or their supporting poles or structures being affixed to parts of the inner surface of the parapet walls of the Main Roof A and the outer surface of the water tank situated on the roof top of the Building and over some of the water pipes or common water pipes also thereto affixed, repair and regular maintenance of the water pipes or common water pipes are rendered impossible or more difficult than it would otherwise be.

(ii) Answer (i) above is repeated.”(Emphasis in bold added by Mr. Chong in his submission)

9. The answers appear to confirm there having been such incidents in the past but no further particulars can be provided because the applicant kept no such record. Mr. Chong considers the answers insufficient. His submission can broadly be summarized as follows:

i)   Whether the applicant keeps any record is irrelevant and is no good answer because the applicant should make efforts to ascertain from, say, contractors, and other responsible personnel(s) for recollections of those incidents, if any.

ii)  The applicant is shifting its case: the case pleaded in the Application is that the maintenance or repairing is affected while the answers suggest maintenance or repairing is rendered impossible or more difficult. He submitted the former suggests repair was still possible but the latter means impossible[1].

iii)  The answers merely provide a general or theoretical scenario as to how the structures/antennas/RBS would render repair and maintenance impossible or more difficult instead of disclosing what exactly had happened in the past which the RBS damaged the pipes or their presence affected repair and maintenance.

10. Mr. Leung of counsel submits for the applicant that if there is no record, it means there is no recollection as well otherwise it would amount to record on the part of the applicant. He submits paragraph 16(b) never alleges there having been actual impairment or damages to common water pipes. It merely states that the installation of those structures/antennas/RBS might impair or damages the pipes. The particulars given by the applicant on 5 August 2014 are more than sufficient to deal with Request No.1.

11. At the hearing he confirms that the applicant will not be relying on any past incidents at trial to substantiate its case. It can be gathered from his submission that the applicant’s case is that once it is proved that there are installation of the structures/antennas/RBS on Roof A and/or the common part of the building, the real probability of pipes repair and maintenance being affected as pleaded will be apparent[2]. The alleged respondent’s response as to the finding of factual or even expert witnesses to rebut the applicant’s allegation in this regard are, according to Mr. Leung, somewhat “over the top”. In any event by the lengthy paragraphs 29 and 30 of the Notice of Opposition pleaded in response to paragraph 16 of the Notice of Application, the respondent, said Mr. Leung, is fully aware of what cases it is going to meet[3].

12. The starting point is O.18 r.12 RHC which provide:

“(1) Subject to paragraph (2), every pleading must contain the necessary particulars of any claim …;

…

(3) The Court may order a party to serve on any other party particulars of any claim, … or other matter stated in his pleading … or a statement of the nature of the case on which he relies, and the order may be made on such terms as the Court thinks just … ;

…

(3B) No order shall be made under paragraph (3) unless the Court is of the opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs.

…”

13. I consider it fair to say that there is no dispute between parties on the principles applicable to ordering FBP as both counsel have either referred directly to the often-cited authorities in this area including Kwok Chin Wing v 21 Holdings Ltd[4], Sinoearn International Ltd v Hyundai-CCECC Joint Venture[5], Aktieselskabet Danik Skibsfinansiering v Wheelock Marden & Co. Ltd[6], or some other cases which approved basically the principles enunciated in the aforesaid authorities. The function of a properly particularized pleadings has been succinctly summarized in Wheelock Marden by Bokhary JA (as the learned NPJ then was) and set out in paragraph 18/12/1 of Hong Kong Civil Procedure 2015 Vo.1 at p.409:

“(1) to inform the order side of the nature of the case that they have to meet as distinguished from the mode in which that case is to be proved;

(2) to prevent the other side from being taken by surprise at the trial;

(3) to enable the other side to know with what evidence they ought to be prepared and to prepare for trial;

(4) to limit the generality of the pleadings, the claim and the evidence;

(5) to limit and define the issues to be tried, and as to which discovery is required;

(6)  to tie the hands of the party so that he cannot without leave go into any matters not included …”

14. O.18 r.12 (3B) RHC is introduced by the Civil Justice Reform. It provides that no order under r.12 (3) will be ordered unless it is necessary either (i) for disposing fairly of the cause or matter; or (ii) for saving costs. Accordingly relevance is not the test. Necessity for the stated purposes must also be shown. The burden of proof is on the party bringing the application[7], i.e. the respondent in the present case.

15. In the Tribunal’s judgment, paragraph 16(b) may give rise to doubts as to whether the applicant is relying on the mere fact of installation amounting to breach of DMC and BMO or that past events will also be relied on. If past events are relied on, it will only be fair for the applicant to plead the particulars so that the respondent can prepare its case in rebuttal, if so advised. Request No.1 is therefore relevant and necessary for ascertaining the scope of the applicant’s case  and thus for saving costs, though it will be, according to the tribunal’s judgment, a bit exaggerated and far-fetched to suggest expert needs be involved to consider whether maintenance and repair have been or will be affected.

16. The question is whether the answers already provided are sufficient.

17. This tribunal does not share Mr. Chong’s submission that the applicant’s answers suggest a shifted case – from a case where repair and maintenance are possible to impossible. The original pleading suggests the said installations affecting repair and maintenance. It will be a matter of degree when repair is affected but still made possible or to the extent of being rendered impossible.

18. However, this tribunal accepts Mr. Chong’s another contention that the answer is insufficient. The simple answer by the applicant is that they keep no record of any such repair. It is not apparent from the applicant’s case that there were no such incidents in the past. Neither is the applicant’s express case that the ascertainment of particulars too laborious for the time being but they will be supplying the same later. It is also not the express case of the applicant that they will not rely on past incidents until Mr. Leung’s confirmation at the hearing after talking to those instructing him. Reasonable opponent will therefore be left in doubt as to whether at the end of the day the other side will put in evidence of past events to substantiate the pleaded particulars until in the middle of the hearing.

19. Having said the above this tribunal, however, does not intend to ask the applicant to file FBP of the answers already provided. It is because Mr. Leung of counsel has already confirmed on the applicant’s behalf that it will not be relying on past incidents. In the circumstances, though the requested particulars are considered relevant and necessary to help clarify and define the applicant’s case, in light of Mr. Leung’s confirmation it is no longer necessary for FBP to be ordered. The primary concern of whether or not factual rebuttal evidence need be prepared has been duly addressed. The FBP together with the confirmation aforesaid has basically helped clarify paragraph 16 (b) and served the purposes set out in paragraph 13 above.

Striking Out Application

20. As set out in the striking out summons, there are 3 areas in the applicant’s pleadings which are considered bad by the respondent and liable to be struck out. In the course of the hearing Mr. Leung concedes on behalf applicant on one area and partly on the second. The 3 areas are discussed below.

   Res ipsa loquitur

21. The applicant pleads in aid of the doctrine of res ipsa loquitur in paragraph 16 of the Notice of Application[8]. The respondent’s complaint is that this case is allegedly founded on, inter alia, breach of DMC, BMO but not negligence. As the doctrine is irrelevant it must be struck out for being bad in law.

22. Mr. Leung admits the applicant is not relying on the use of the phrase in the manner as it applies to negligence or breach of duty claim. Mr. Leung says it is only a short or fancy way of saying “the antennas installations built there speak for themselves”[9]. He, however, is unable to refer to authorities that this often-relied-on doctrine applies also to the causes of action now being sued on by the applicant. After several exchanges with the bench and taking of instruction from those instructing him, he confirmed, and this tribunal considers sensibly and correctly, that the applicant is not relying on the res ipsa loquitur doctrine pleaded.

23. In Sanfield Building Contractors Ltd v Li Kai Cheong[10], Bokhary PJ formulated the res ipsa loquitur rule in the following words:

“The important things to remember – and make clear – is that the expression [res ipsa loquitur] does not denote a doctrine but merely ‘a mode of inferential reasoning’ … This mode of inferred reasoning applies only to accidents of unknown causes. But it matters not that the immediate cause of an accident (eg. brake failure or a burst tyre) is known. As long as the cause on which the issue of liability actual turns (eg. why the brakes failed or the tyre burst) is unknown, the accident is regarded as one of unknown cause. The res ipsa loquitur mode of inferential reasoning comes into play where an accident of unknown cause is one that would not normally happen without negligence on the part of the defendant in control of the object or activity which injured the claimant or damaged his property. In such a situation, the court is able to infer negligence on the defendant’s part unless he offers an acceptable explanation consistent with his having taken reasonable care. The ‘essence’ of this was identified by Lord Radcliffe … It is, his Lordship said, that ‘an event which in the ordinary course of things is more likely than not to have been caused by negligence is by itself evidence of negligence’.”

24. The learned authors of Tort Law and Practice in Hong Kong, Sweet & Maxwell, 3^rd ed, 2014 at §4.214-25 indentify several requirements for reliance of the res ipsa loquitur reasoning such as (i) accident does not ordinarily occur without defendant’s negligence; (ii) the thing that cause the damage being in the defendant’s exclusive control; (iii) cause of occurrence unknown; and (iv) latent defect, etc. It is apparent from the aforesaid formulation by Bokhary PJ and the propositions by the learned authors that the pleaded doctrine or mode of reasoning is not applicable to the present case in which the causes of action have nothing to do with tort or negligence. Even if there is no concession by the applicant, this tribunal would have struck out the last sentence of paragraph 16 on the ground it tend to prejudice, embarrass, or delay the fair trial of the action.

   The Nuisance Issue

25. Paragraph 17 of the Application states: 

“Further, or in the alternative, the unauthorized erection or installation of such antennas and associated equipments on the Main Roof A as pleaded in Paragraph 16 hereof has become a nuisance and has caused annoyance, damage or disturbance to other owners, occupiers or inhabitants of the Building.

Particulars

(1) Though no acceptable scientific proof for the time being, mass news report throughout the years have widely published that the electromagnetic waive, microwaves or radiation emanated from mobile-phone antenna or associated equipment would or might cause the nearby person suffering from tinnitus, headache, and if exposed for long period of time, the same would or might endanger the central nervous system, immune system, cardiovascular, blood circulation system, or even worst, cause canner.

(2) The electromagnetic fields emitted from some of the antennas as pleaded in Paragraph 16 hereof are high and excessive and exceeds the limits for the general public.

(3)  The Applicant has received various complaints from other owners, occupiers or inhabitants of the Building about such unauthorized erection or installation of the said antennas and associated equipments as pleaded in Paragraph 16 hereof causing them to suffer from anxiety and depression as they fear that the electromagnetic waive, microwaves or radiation emanated therefrom would or might cause irreparable harm to their health.”

26. The request for FBP on this paragraph, particularly on paragraph 17(1) is understandable. It is because while one expressly acknowledges that there is no acceptable scientific proof for the alleged health hazards, one appears to rely on these unsubstantiated scientific evidence to prove one’s nuisance claim. The respondent made the following requests before applying for striking out:

“(1) Please provide copies of the mass news reports which allegedly reported that the electromagnetic wave, microwaves or radiation emanated from mobile-phone antenna or associated equipment would or might cause the nearby person to suffer from tinnitus, headache, and if exposed for long period of time, the same would or might endanger the central nervous system, immune system, cardiovascular, blood circulation system, or cause cancer;

(2) Please state what was the permissible limit of electromagnetic fields to emit from antennas;

(3) If there were report(s) showing there was excessive electromagnetic fields produced by any of the antennas, please produce copy(ies) of such report(s);

(4) Please identify which owners, occupiers or inhabitants of the Building made complaints;

(5) For each of these complaints, please state whether the complaint was made orally, in writing or otherwise;

(6) If any of the complaints was in writing, please provide copy(ies) of the complaint documents(s);

(7) If any of the complaints was orally made, please state the manner in which each of the oral complaint was made, in particular:-

(i) When was the complaint made;

(ii) Was the complaint made by the Complainant himself/herself or through somebody on his/her behalf;

(iii) If the complaint was made by somebody on the Complainant’s behalf, the identity of the agent of the Complainant;

(iv)  What was exactly said in such complaint.”

27. The applicant provides the following answers:

“(1) Copies of news reports are hereto attached.

(2) The transmitting frequencies of the antennas are in the 900 MHz, 1800 MHz and above 2000 MHz. According to the “Guidelines for Limiting Exposure to Time-Varying Electric, Magnetic and Electromagnetic Fields (up to 300 GHz)” published by the International Commission on Non-Ionizing Radiation Protection (ICNIRP) in 1998, the electric field limits for the frequency bands 900 MHz, 1800 MHz and above 2000 MHz are 41.3V/m, 58.3 V/m and 61.0 V/m respectively.

(3) A copy letter dated 26 June 2013 from the Office of The Communications Authority together with a Measurement Result is hereto attached.

(4) The Applicant did not keep a record of the complaints, but among other owners or residents of the Building who may also have done so, verbal complaints/concerns had been made/expressed by Chan Ting Wah and his wife of Flat 12A and Chen Elmer Yue Hsing of Flat 5B soon after the installation of the antennas in 1995 and written complaints/concerns about the antennas have also since the commencement of these proceedings been made/given by Ku Check Ng of Flat 2A, 陳英琪 of Flat 4B, Suen Nah Ping of Flat 10B and Chen Elmer Yue Hsing of Flat 5B in their letters all dated 30 July 2014. Further, the antennas were discussed at meetings of the management committee of the Applicant and meetings of owners of the Applicant and the majority of them attending supported the resolution of commencing legal proceedings against the Respondent for the removal of the antennas.

(5) Answer (4) above is repeated.

(6) The 4 letters all dated 30 July 2014 are hereto attached.

(7) (i) On a number of occasions since 1995 or thereabout;

(ii) With the exception of Chan Ting Wah’s wife, who made/expressed her complaint/concern to her husband, in each case, by the complainant himself;

(iii) Answer (7)(ii) above is repeated;

(iv)  With no record of the complaint, the Applicant cannot repeat what was exactly said in each of the complaints, but each complaint was about the possible harm that might be caused by the antennas to the health of those living in the Building.”

28. The respondent considers since there is express admission on the part of the applicant that they cannot prove scientifically any damages allegedly caused by the electromagnetic radiation, coupled with the fact that the applicant is not going to adduce expert evidence in this regard, paragraph 17 of the Notice of Application together with the answers should be struck out on the basis that they are scandalous, frivolous, vexatious, and may prejudice, embarrass or delay the fair trial of the action and/or otherwise are an abuse of process of the court.

29. In his oral submission, Mr. Leung informs the tribunal the applicant is no longer relying on paragraph 17(1) of the Notice of Application. The tribunal will therefore strike out the said subparagraph which the applicant will no longer rely on for the obvious reasons of saving costs. Mr. Leung, however, maintains paragraph 17(2) and (3) should remain.

30. It is Mr. Leung’s submission that striking out pleadings should only be made in “plain and obvious” case, and it is far from plain and obvious that the applicant would not succeed in establishing its case under paragraph 17. Mr. Leung’s case is that the proof of genuine fears on the part of the residents/owners of the Mansion, even though a subjective one, amounts to “disturbance”, “annoyance” or even “nuisance”[11].

31. From the particulars pleaded under paragraph 17 of the Notice of  Application, it is fair to say the applicant basically pleads the alleged adverse effects on health of the electromagnetic radiation, though unsubstantiated scientifically, constitutes a nuisance and has caused, inter alia, damage, disturbance and annoyance to resident/owners of the building. Nuisance, if proved, amounts to a breach of the DMC in the present case which the applicant is entitled to enforce. Damage, if proved, necessarily constitutes nuisance. It is, however, not clear from paragraph 17 whether the applicant is saying “disturbance” or “annoyance” is actionable per se. Neither is it apparent from the pleadings that these “disturbance” and “annoyance” constitute breaches of certain provisions of the DMC, nor these two heads are in fact coming under the umbrella of the nuisance claim. Mr. Leung’s submission does not serve to clarify this issue.

32. It is noted thatin a recent decision of this tribunal in The Incorporated Owners of Fanling Centre v Wong Yu Ting Terence[12], the incorporated owners sued for breach of a number of provisions of its DMC, including a covenant that “no owner do cause or permit or suffer to be done any act or thing which may be or become a nuisance or annoyance or cause damage to the other owners and occupiers” (emphasis added). In that case, on complaints of an owner whose daughter had unfortunately got brain tumour, the incorporated owners sued the respondent who erected a number of radio antennas on the roof for causing, inter alia, nuisance or disturbance to other owners of the building. No expert opinion was adduced to prove causation between the tumour and the antennas. The incorporated owners succeeded in obtaining mandatory orders for removal of the antennas. Proof of there being no peace of mind in the complainant was accepted and held to be sufficient to amount to a breach of the said covenant. The tribunal in that case considered the worries held should be reasonably held. The decision was upheld when the Court of Appeal refused to grant to appeal[13].

33. In the said decision, the learned deputy judge relied on a passage in the Halsbury’s Law of Hong Kong[14] which states that:

“Where the covenant is against any act which may lead to ‘annoyance, nuisance or damage’, it is wider, and is broken by anything which disturbs the reasonable peace of mind of an adjoining occupier. The disturbance needs not amount to physical detriment to comfort, nor need the adjoining occupier be a tenant of the same landlord” (Emphasis added)

34. No DMC was exhibited in the present case. From a perusal of the pleadings, it appears that the applicant is relying on, among other provisions, clause 8(d) of the DMC in particular which stipulates owners covenant with each other the following:

“Not to commit or suffer to be committed on the said Premises or the said Building anything which should become a nuisance to the other co-owners …”

35. The provision of the DMC in the present case is different and is obviously more restrictive in scope than that of The Incorporated Owners of Fanling Centre. Only nuisance constitutes a breach and any act short of nuisance appears insufficient. This tribunal considers The Incorporated Owners of Fanling Centre therefore not applicable as the covenant sued on in that case is of a wider scope. That is why this tribunal raises the query that it is not apparent from paragraph 17 of the Notice of Application as to whether the applicant is saying proof of “annoyance” or “disturbance” to other owners/residents breach of DMC.

36. In the tribunal’s judgment, disturbance and annoyance are not causes of action. One needs to establish the element of “disturbance of”, or “annoyance to” before one can successfully set up nuisance. Once set up it amounts to a breach of DMC. In Clerk & Lindsell on Torts, Sweet & Maxwell (20^th ed, 2010), at para 20.01, nuisance (or private nuisance) is defined as follows:

“The essence of nuisance is a condition or activity which unduly interferes with the use or enjoyment of land. … Nuisance is an act or omission which is an interference with, disturbance of or annoyance to, a person in the exercise or enjoyment of : (a) [public nuisance], or (b) his ownership or occupation of land or of some easement, profit, or other right used or enjoyed in connection with land, when in private nuisance.” (Emphasis added)

37. So by paragraph 17, the applicant is basically pleading nuisance caused by the radiation emanated from the antennas and RBS amounting to a breach of DMC. According to the classification in Clerk & Lindsell on Torts, nuisance of this kind belongs to the third class, namely, “unduly interfering with his neighbour in the comfortable and convenient enjoyment of his land”[15].

38. In the present case, the applicant admits that there is no scientifically acceptable evidence to show causation of any alleged harmful effect to the radiation emanated from the RBS. It sees fit to abandon paragraph 17(1). The question is therefore whether mere fear (thus causing disturbance to and annoyance of owners/residents or no peace of mind as in The Incorporated Owners of Fanling Centre) of the possible harmful effect of the radiation, though without scientific proof but honest and perhaps reasonable, is sufficient to substantiate a nuisance claim as a matter of law. Both counsel make no submission on the matter. It appears from Mr. Leung’s submission that if the applicant can prove residents/owners fearing of the effect of the radio waves generated by the antennas/RBS on their well-being, that amounts to “disturbance” and ‘annoyance”, and may amount to “nuisance”[16]. He refers this tribunal to no authorities.

39. With respect I disagree.

40. In the English court of appeal decision in Birmingham Development Co. Tyler[17], one of the many complaints by the plaintiff was that a brick wall erected on the adjoining land owned by the defendant was considered unsafe and would collapse onto the plaintiff’s site, thus presenting a danger to the latter’s workers entering a part of the plaintiff’s land adjoining the said wall. The defendant’s failure to abate resulted in the plaintiff stopping work on its own site. An injunction was applied. The English Court of appeal upheld the dismissal of the injunction by the first instance’s court.

41. Although as a matter of evidence the plaintiff in Birmingham Development Co. Tyler failed to discharge its burden of proof to establish the wall being actually dangerous and presented a risk, Rimer LJ, in his decision, proceeded on the basis that the plaintiff had a genuine, honest and reasonable subjective fear that the wall would collapse. The central issue identified by the learned judge was a proposition put forth by the plaintiff’s counsel: in order to establish nuisance it was not necessary for the plaintiff to prove an actual danger emanating from the defendant’s land causing interference or fear[18].

42. The learned judge answered the said question in the negative. Rimer LJ did not rule out “fear’ alone could found a case on nuisance as he considered that a claimant would have a case in nuisance if a house bordered his own property and its state of dilapidation was such that it presented a real danger of collapsing onto his property[19] (emphasis added). He elaborated:

“[20]Honest, perhaps reasonable, fear of danger is not enough. What is required before a nuisance can be proved is a well-founded fear, which means proving on the probabilities the reality of the danger that has given rise to the fear.”

“[21]The … cases show that it is not enough for a Claimant who asserts that his neighbour’s property or activities are dangerous to prove that he is frightened by them. What is required is proof that the fear is well-founded: that is, that the property or activities are actually dangerous, although it is not necessary to do more than prove that on the balance of probabilities.”(Emphasis added by Rimer LJ)

43. So subjective fear itself is insufficient. It must be well-founded and the activities complained of and causing the fear, i.e. the erection of antennas and RBS with telephone micro-waves emanating therefrom in the present case, must be shown to be actually dangerous to health on a balance of probability. It is the applicant’s own case that there is no scientific proof to link the alleged health hazards and the radiation. After abandonment of paragraph 17(1), apart from stating the electromagnetic field limits published by ICNIRP, what are left are no more than various complaints by owners/residents that they fear the radiation but these worries and fear, though genuine, will not be supported by any objective evidence. These complaints serve no useful purpose to advance the applicant’s case. If the applicant knowingly pleads a case which it will not or is unable to adduce acceptable evidence to substantiate, in the tribunal’s judgment it is scandalous and tends to embarrass his opponent. Further in response to the said pleadings the respondent may wish to put in evidence in rebuttal, thus delaying the fair trial of the real issues in the present case. In the tribunal’s judgment, paragraph 17, including subparagraph (1), should be struck out.  

   The Alleged Approval Issues

44. It is the respondent’s case that the applicant fails to enforce the DMC by allowing several unlawful acts to carry on within the building. The unlawful acts complained of are:

i)   The unlawful conversion of car parking spaces from 10 to 9[22];

ii)  The unlawful erection of illegal or unauthorized structure at the far end of the car park[23]; and

iii)  The unlawful erection of a watchman house[24].

45. In its Reply and Defence to Counterclaim, the applicant pleaded in subparagraph (c) of the respective paragraphs 6, 7 and 9 that the conversion of the car parking spaces or structures (as the case may be) were “approved by all the individual flat owners of the Building or otherwise not objected to by any of them until February 2013”. Apparently considered bad plea, the respondent raises request for FBP in respect of the approval pleaded in the 3 subparagraphs. The applicant answers each of the requests by three separate answers in almost identical terms as follows:

“The Applicant has no record (oral or written) of the approval of all or any of the individual flat owners to the [conversion/cover/the watchman room]. The Applicant says that the approval was tacit and/or implied and is evidence by the fact that there was no record of any objection made by any individual flat owners until February 2013 by the Respondent.”

46. Mr. Chong takes the view that since the applicant is an owners’ incorporation, its operation should be governed by the BMO. Any approval by owners must therefore be by owners’ resolution contained in meeting minutes which the applicant is now unable to produce. Further, the pleas of “approval”, “not objected to”, “no record”, “tacit approval” or “implied approval” are apparently internally inconsistent. The FBP provided rendered the original pleadings irrelevant and meaningless[25]. They therefore should be struck out on the grounds that they are “scandalous, frivolous, vexatious, may prejudice embarrass or delay the fair trial of the action, or otherwise an abuse of process”.

47. It is trite that the court should only exercise the power to strike out pleadings in plain and obvious cases. Disputed facts were to be resolved in favour of the party sought to be struck out. The claim must be obviously unsustainable, the pleading unarguably bad and it must be impossible, not just improbable, for the claim to succeed before the court will strike it out: see para 18/19/4 of Hong Kong Civil Procedure 2015 Vo.1 at p.435.

48. In the tribunal’s judgment, the aforesaid pleas, though with a lot of room for improvement, are broadly speaking, not inconsistent with each other. The fact that there was no record kept of any approval, as a matter of logic, does not necessarily follow that there is no approval. Approval of course can be evidenced by written resolution. However, it can also be inferred from documents other than proper resolution(s). What case the applicant can achieve eventually is a matter of evidence at trial. Whether the BMO will deem there being no approval because there being no resolution is an issue which the respondent has not yet properly made out.

49. It is further noted from the records of management committee exhibited by one Mr. Chan on behalf of the applicant the following:

i)   In a meeting on 26 June 1980, it was recorded, inter alia,  the following:

“(8) 管理室外牆紙皮石要更換

(10) 後屋外設輕便有蓋車位, 由9户户主負担費用

(English translation: (8) The mosaic tiles of the external wall of watchman room needs replacement.

(10) A small and convenient covered car park was set up at the back of the building, the expenses to be shared by 9 owners)”

ii)  In a meeting on 4 November 1980, it was recorded inter alia, the following:

“(4) 委員會通過屋後蓋美觀車房, 由有關户主負責費用, 圖則由委員會審核.

(English translation: (4) The management committee resolved that a beautiful car park is to be constructed at the back of the building, expenses of which are to be shared by relevant owner(s), and the plan is to be approved by the management committee.)”

iii)  In a meeting on 16 July 1981, it was also recorded inter alia, the following:

“林先生更提議將後面九個車位改為八個, 因涉及法律問題, 將延至九月 (sic: 仝) 人大會討論

(English Translation: Mr. Lam further proposed to convert the 9 car parks at the back to 8. Since legal problem is encountered, the [proposed conversion] will be adjourned for discussion of the owners meeting in September.)”

50. It can therefore be seen from the above that the management committee had already had full knowledge of there being 9 car parks as early as 1980. There appeared to have been discussion of the committee to further convert them from 9 to 8 in 1981 and they agreed to put the matter to the owners’ meeting for further discussion. It is therefore arguable that the then car parks condition (9 instead of 10) would be acceptable to the owners otherwise the committee would not have referred the matter to them for discussion with a view to a further modification. At least it is arguable that members of the management committee and all those in attendance had accepted the then car park condition (9 instead of 10). Further, the management committee agreed to incur expenses to re-make the external wall of the watchman room. It is at least arguable if the watchman room was built without approval the management committee would not have recorded any improvement work about it. Further, the construction of an extra covered car park even received the approval of the management committee.

51. Accordingly, it cannot be said for sure at this stage that the pleas set out in paragraph 46 above are inconsistent or bound to fail at trial. In the circumstances, this tribunal do not consider the respondent has make out a good case for striking out the approval pleas of the applicant discussed above.

Conclusion and Orders

52. By reasons of the above, the tribunal makes the following orders:

   FBP application:

i)   there be no order made of the application;

ii)  there be a costs nisi that the applicant do pay costs of the respondent on District Court scale, together with certificate for counsel, such order be made absolute if no application to vary the same is made within 14 days from today;

Striking out application:

iii)  paragraph 1 of the striking out summons be dismissed;

iv)  the last sentence in paragraph 16 of the Notice of Application, namely “Insofar as it may be necessary, the Applicant will rely on the doctrine of res ipsa loquitur.” be struck out;

v)  the entire paragraph 17 of the Notice of Application and the answers filed in connection with it be stuck out;

vi)  there be a costs nisi that the applicant do pay one-third of the respondent’s costs of the application on District Court scale, together with certificate for counsel, such order be made absolute if no application to vary the same is made within 14 days from today; and

vii)  for the purpose of taxation, one-third of the hearing time be appropriated to the hearing of the FBP summons and two-third to the striking out summons.

	(WONG King-wah)
	Presiding Officer
	Lands Tribunal

Mr Paul HM Leung, instructed by Chan & Tsui, for the applicant

Mr Patrick Chong, instructed by Hui & Lam, for the respondent

LDBM 201/2013

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 201 OF 2013

________________

BETWEEN

	THE INCORPORATED OWNERS OF KADOORIE AVENUE MANSION	Applicant
	and
	RISING DRAGON INTERNATIONAL LIMITED	Respondent

________________

Before: His Honour Judge KO, Presiding Officer of the Lands Tribunal

Date of Hearing: 20 November 2013

Date of Decision: 20 November 2013

___________________

D E C I S I O N

___________________

 

1.  On 16 October 2013, I heard the argument on the respondent’s summons to stay the proceedings in this case pending the final determination of LDBM 202/2013. I handed down my decision on 1 November 2013 dismissing the summons (“the Decision”). I further made an order nisi that there be no order as to the costs of that summons.

2.  There are now two applications before the court:

(1) the respondent’s application for leave to appeal; and

(2) the applicant’s application to vary the costs order nisi.

The application for leave to appeal

3.  The law applicable to the leave application is trite:

(a) A party may only appeal to the Court of Appeal against a judgment, order or decision of the Lands Tribunal on the ground that such judgment, order or decision is erroneous on point of law: section 11(2) of the Lands Tribunal Ordinance (“LTO”).

(b) No appeal may be made under section 11(2) unless leave to appeal has been granted by the Lands Tribunal or the Court of Appeal: section 11AA(1) of the LTO.

(c) Leave to appeal shall not be granted unless the court is satisfied that either (i) the appeal has a reasonable prospect of success; or (ii) there is some other reason in the interests of justice why the appeal should be heard: section 11AA(6) of the LTO.

4.  It appears that the respondent is invoking the “some other reason” limb here.  According to its counsel (Patrick Chong):

“… section 20A of the BMO [ie the Building Management Ordinance] is not very well drafted and it is very confusion. On the one hand, it provides that it is mandatory for the IO to comply with the section while on the other hand it provides that the contract shall not be void by reason that it does not comply with the tendering requirement. Faced with such situation, can a co-owner restrain the IO (in the present case, to stay the IO’s proceedings) to carry on the contract/retainer when the IO is knowingly in breach of section 20A?

…

How should the court reconcile subsection (1) and subsection (3) and what, if any, remedy should be granted when: (a) the IO had been warned about the requirement under section 20A(1); and (b) the contract has just been entered into and still at its infancy stage.  It is submitted that the above question is of general importance and merits the Court of Appeal to give some guidance.”

5.  Mr Chong complains that:

“When an IO is clearly acting in breach of section 20A, prima facie, it is submitted that the court MUST as part of its duty give effect to the law. If the court does not even enforce the section, it will only send a very wrong message to the general public that this section need not be complied with. It is submitted that this cannot be right.”

6.  And he poses the following “questions of law” for the Court of Appeal:

(a) “The Respondent invites the Court of Appeal to give guiding principles as to how the court or tribunal should exercise its discretion for applications for stay of proceedings in a case like the present where the Incorporated Owners have knowingly not complied with the mandatory requirement and statutory duty under section 20A of the Building Management Ordinance, Cap 344.”

(b) “In the circumstances, whether the Tribunal in the present case erred in exercising its discretion in refusing to grant a stay of the present proceedings.”

7.  I begin the discussion by observing that there is certain degree of inconsistency in Mr Chong’s approach.  On the one hand, he submits that the tribunal “must” grant a stay to enforce section 20A.  On the other hand, the questions he drafted presuppose the existence of a discretion for he invites the Court of Appeal to give guidance on how the discretion should be exercised.

8.  In my view, Mr Chong has not fully appreciated the arguments advanced by his leader (Anthony Houghton, SC) on 16 October 2013 in support of the respondent’s summons.

9.  At the hearing, Mr Houghton recognised that the substantive issues in this case and that in LDBM 202/2013 are different (see §22 of the Decision).  He conceded that the question of whether the applicant was in breach of section 20A and what should flow from such non-compliance should be determined in LDBM 202/2013 (see §11 of the Decision).  Although he had suggested at the early part of his oral submission that the result of LDBM 202/2013 might affect the validity of the proceedings in this case, he later clarified that the main plank of his submission is on case management (see §16 of the Decision).  The focus of the argument was therefore on case management and the application was dealt with on that basis (see §§20-22 of the Decision).

10.  Given the way the respondent argued its application, it was not necessary for me to deal with the interworking of the subsections in section 20A (see §4 above).  I only outlined the effect of section 20A (without deciding anything) to put the argument in context (see §§11-15 of the Decision).  I considered the application in the best light of the respondent but, even so, I did not find any reason, legal or procedural, to impose a stay.

11.  Insofar as Mr Chong is now suggesting that I had no discretion but to grant a stay (see §5 above), he is advancing a new ground not previously argued by his leader.  But he can present no authority in support of his proposition.  His suggestion runs contrary to what is provided in Order 1B of the Rules of the High Court in terms of the case management power of the court and must be rejected (see §20 of the Decision).

12.  Insofar as Mr Chong accepts that the power to stay proceedings is discretionary and the Decision is a testament of how I exercised the discretion in the circumstances of this case, it behooves on him to identify any error of law that warrants an appeal. There is no point in crying foul without identifying the error (see §6(b) above). 

13.  In any event, the Decision is essentially a case management decision.  It has been pointed out that the Court of Appeal is generally reluctant to interfere with judges on matters of case management: see Hong Kong Civil Procedure 2014, §25/1A/14.  And general guidance on how the court should exercise its case management power is already in place in terms of Order 1A.  I do not think there is any legitimacy in troubling the Court of Appeal with the questions posed by Mr Chong.

14.  Before leaving this matter, I should disabuse the suggestion that I have failed to pay sufficient regard to section 20A in the Decision.  I did refer to the judgment of the Court of Appeal in Wong Tak Keung Stanley to remind everyone that compliance with section 20A is mandatory and a statutory duty on the part of every owners’ corporation (see §35 of the Decision).  I do not think anyone properly reading the Decision would get the “wrong message” suggested by Mr Chong.  It is absurd to equate the refusal to stay the proceedings in the circumstances of this case with a general refusal to enforce the section.

15.  For these reasons, the respondent’s application for leave to appeal is dismissed.

The application to vary the costs order nisi

16.  In paragraph 36 of the Decision, I said that:

“I am entitled to take into account the conduct of the parties when it comes to costs: see Order 62, rule 5. The present application is premised on the applicant’s non-compliance which is not disputed for the purpose of the argument. I make a costs order nisi that there be no order as to the costs of the summons.”

17.  I made the point in the preceding paragraph that Mr Tsu (the solicitor representing the applicant) had been unable to explain why the applicant had failed to comply with section 20A in the first place.

18.  I also criticised both parties for not informing the court earlier of the fact that the applicant had convened an extraordinary meeting of the owners on 12 September 2013 and the resolutions passed at that meeting (see §25-34 of the Decision).

19.  For the purpose of his application to vary the costs order nisi, Mr Tsu has come back to:

(a) argue that section 20A should not apply as “the costs of [engaging C&T] was estimated at not more than $20,000 at the time”; and

(b) justify the applicant’s decision to withhold the meeting on 12 September 2013 and the resolutions from the court.

20.  He suggests that he only agreed on 16 October 2013 to proceed with the argument on the basis that the applicant had failed to comply with section 20A “at the suggestion of this Tribunal” which was “intended to save costs time and trouble of this Tribunal”.  He further argues that:

“The effect of the costs order nisi would effectively penalize the Applicant alone, leaving the Respondent not having to pay for its unsuccessful application. The summons was taken out by the Respondent and costs should follow the event.”

21.  Insofar as the applicant is now suggesting that section 20A should not apply, that was not its stance on 16 October 2013. 

22.  As I have noted in paragraph 7 of the Decision, the respondent had referred to the minutes of the applicant’s management committee in which Mr Tsu was reported to have said:

“… it was justified to take legal proceedings, and the cost would be under HK$400,000. If IO won the lawsuit, the cost would absorbed by the other side, and 90%-100% cost would receive normally. Moreover, the legal proceedings could be stop anytime if the relative owner agreed to remove antennas.”

23.  The applicant’s chairman had responded by suggesting that one of the considerations for engaging C&T was that:

“… the legal costs of not more than HK$20,000 quoted by C&T for the preparation, filing and service of the initial application to the Lands Tribunal for the commencement of the resolved legal proceedings was considered very reasonable.”

24.  On 16 October 2013, I dealt with the argument on the basis that there had been non-compliance on the part of the applicant.  That approach was partly dictated by the state of the evidence before me and partly by election of the parties (see §33 of the Decision).  Having made his election then, it is wrong for Mr Tsu now to blame it on the tribunal.  He represented the applicant at the hearing and he alone should be responsible for the shape and size of the argument advanced on behalf of his client.  If he had considered it necessary to insist that section 20A should not apply, he should have said so.

25.  In any event, I do not see how the stance adopted by Mr Tsu at the hearing could have prejudiced his client.  In my view, the arguments put forward by the respondent in support of the stay application could only be fully tested by taking the respondent’s case to the highest.  And I have made it clear that in so doing, I was not deciding anything (see §11 of the Decision).

26.  The costs of and incidental to all proceedings in the tribunal are in the general discretion of the tribunal: section 12(1) of the LTO.

27.  Although the applicant has successfully resisted the stay application, it did not succeed on the submissions of Mr Tsu.  As I recall, Mr Tsu was quite unable to cope with the points advanced by Mr Houghton and had to ask for a short adjournment to recuperate and to reorganise his thoughts.

28.  The stay application was an interlocutory application.  The principle that costs normally follow the event is no longer the prescribed usual order after the implementation of the civil justice reform but is just an option: see Order 62, r 3(2A) of the Rules of the High Court and Hong Kong Civil Procedure 2014, §62/3/3B. 

29.  It is wrong for Mr Tsu to view the costs order nisi as a penalty to the applicant alone as the respondent will also have to bear its own costs.

30.  I am entitled, under Order 62, rule 5, to take into account the conduct of the parties when it comes to costs, even conduct before the proceedings.  The stay application was premised on the applicant’s non-compliance with section 20A, which was conceded for the purposes of the argument. 

31.  In my view, Mr Tsu has still failed to come up with any credible explanation.  His latest suggestion that section 20A should not apply in the first place does not sit comfortably with the evidence before me.  If he were right, then the applicant’s chairman would not have to consider calling for an owners’ meeting to resolve to engage C&T (see §8 of the Decision) and it would not be necessary for the applicant to hold the meeting on 12 September 2013 (see §29 of the Decision).  All these prima facie inconsistencies will be fully explored in the context of LDBM 202/2013.  Insofar as he is suggesting that the engagement of C&T can be broken down into different stages with different value for each stage to avoid the operation of section 20A, this would be a matter for the court to consider in LDBM 202/2013 (see section 20A(7)(d)).

32.  And I find it surprising that Mr Tsu would come back to justify his initial failure to update the court with the important development in this case.  I repeat what I said in paragraphs 25-34 of the Decision.  The fact that a general meeting has been convened to consider the engagement of C&T is a factor affecting the result of LDBM 202/2013 (see section 20A(7)(b)) and would be relevant for the purposes of the stay application.

33.  There is no merit in the application and I confirm the costs order nisi.

Conclusion

34.  For the above reasons, I dismiss both summonses.

35.  The parties have failed their respective application.  The time and effort spent on each application is more or less the same.  In the circumstances, I shall make no order as to the costs of both summonses.

	(Justin Ko) Presiding Officer
	Lands Tribunal

Mr TSU Lung Sang Edmund of Chan & Tsu, for the applicant

Mr Patrick CHONG, instructed by Hui & Lam, for the respondent

LDBM 201/2013

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 201 OF 2013

________________

BETWEEN

	THE INCORPORATED OWNERS OF KADOORIE AVENUE MANSION	Applicant
	and
	RISING DRAGON INTERNATIONAL LIMITED	Respondent

________________

Before: His Honour Judge KO, Presiding Officer of the Lands Tribunal

Date of Hearing: 16 October 2013

Date of Decision: 1 November 2013

___________________

D E C I S I O N

___________________

 

1.  This is the interlocutory application of the respondent to stay the proceedings in this case pending the final determination of another case (LDBM 202/2013).

Background

2.  The respondent is the owner of Flat 10A and Main Roof A (“the roof”) of Kadoorie Avenue Mansion (“the estate”).  It is common ground that the respondent has placed antennas and radio based stations (“RBS”) on the roof.

3.  The owners of the estate resolved, at an extraordinary general meeting held on 23 May 2013, to commence legal proceedings against the respondent in the name of The Incorporated Owners of Kadoorie Avenue Mansion (ie the applicant) for an injunction to compel the removal of those antennas and RBS.

4.  On 17 July 2013, the applicant commenced this case through a firm of solicitors Chan and Tsu (“C&T”).  According to its pleaded case, part of the antennas and RBS rested on the common parts of the estate.  The installation was without the prior written consent of the applicant and the requisite Government approval and the respondent was in breach of the applicable deed of mutual covenants (“DMC”), section 34I of the Building Management Ordinance (“BMO”) and the conditions of exchange for the grant of the Government Lease respecting the estate.  It was also alleged that the antennas and RBS constituted a nuisance to the owners and residents of the estate. 

5.  In about the same time, the respondent commenced LDBM 202/2013 against the applicant for a declaration that the applicant ought to have complied with section 20A of the BMO and the Code of Practice on Procurement of Supplies, Goods & Services (“Code of Practice”) before instructing C&T and for an injunction restraining the applicant from appointing any firm of solicitors to pursue against the respondent in respect of the antennas and RBS without due compliance.

6.  The respondent has yet to file a Notice of Opposition in this case.  Its counsel (Mr Houghton SC leading Mr Chong) highlighted in their submission the defences canvassed in the affidavit of the respondent’s director (Mr Andrew Lee), which include:

(a)   the respondent has not committed any breach or nuisance;

(b)     there was a settlement reached in 2004 so much so that the respondent should be entitled to install the antennas and RBS on the roof;

(c)   the applicant has not come with clean hands as it has turned a blind eye to other breaches in the estate; and

(d)     there has been delay and laches on the part of the applicant in pursuing against the respondent.

7.  In his affidavit, Mr Lee referred to the following record in the minutes of the meeting of the applicant’s management committee held on 18 January 2013:

“Moreover, IO intends to take legal action to the existing installation of antenna at rooftop A. Lawyer Tsu commented that it was justified to take legal proceedings, and the cost would be under HK$400,000. If IO won the lawsuit, the cost would absorbed by the other side, and 90%-100% cost would receive normally. Moreover, the legal proceedings could be stop anytime if the relative owner agreed to remove antennas.”

He complained that as C&T’s fees would likely exceed $200,000, the applicant had been in breach of section 20A and the Code of Practice in engaging C&T without a tender.

8.  In an affirmation filed in opposition to this stay application, the applicant’s chairman (Mr Jerry Chan) did not deny the fact that there had been no tender.  He said that:

“Given the stance and attitude of the Respondent in these proceedings and the commencement by it of the LDBM202 Case and the legal costs that are likely to incur by reason thereof, I have discussed with other members of the Management Committee and we are considering calling for another Extra-ordinary General Meeting of the Applicant to consider and resolve (if thought fit) to engage and to confirm to engage C&T in further conduct of the present proceedings and the LDBM202 Case in the manner the Management Committee shall from time to time see fit.”

9.  He also stated that the respondent’s unit had been used by Mr Andrew Lee’s family since the 1970s.  The respondent began placing antennas and RBS on the roof in about 1995 when Mr Lee’s father was the chairman of the applicant.  Mr Lee himself as well as his brother had also been vice-chairman.  Mr Chan said he had gone through past minutes of the applicant but could not find any authorization for the antennas and RBS in question.  He estimated that the respondent had been deriving an income of $180,000 each month from such installations. 

Discussion

10.  Mr Houghton’s submission contained two strands.  First, he addressed me on the legislative intention behind section 20A making references to the proceedings in the Legislative Council and the Court of Appeal decision in Wong Tak Keung Stanley v The Management Committee of the Incorporated of Grenville House. [1]  Secondly, he submitted on case management.  He said that LDBM 202/2013 was relatively simple and its determination should be quick whereas this case might turn out to be an expensive litigation.  He said it was desirable from the point of view of case management to have LDBM 202/2013 determined first.

11.  Mr Houghton accepted that whether the applicant had been in breach and what should flow from such non-compliance should be determined in LDBM 202/2012 and he was not pressing for an answer here.  For the purpose of this argument (and see further below), I shall take the respondent’s case to its highest and assume (without deciding) that there has been non-compliance on the part of the applicant.  Nonetheless, it would be helpful to outline the effect of non-compliance so as to put the argument in context.

12.  Section 20A provides that:

“(1) The procurement of all supplies, goods or services required by a corporation in the exercise of its powers and the performance of its duties under the deed of mutual covenant (if any) or this Ordinance shall comply with such standards and guidelines as may be specified in a Code of Practice relating to such procurement.

(2) Subject to subsection (2A), any supplies, goods or services referred to in subsection (1) the value of which exceeds or is likely to exceed—

(a) the sum of $200000 or such other sum in substitution therefor as the Authority may specify by notice in the Gazette; or

(b) a sum which is equivalent to 20% of the annual budget of the corporation or such other percentage in substitution therefor as the Authority may specify by notice in the Gazette,

whichever is the lesser, shall be procured by invitation to tender.

…

(2B) Where any supplies, goods or services are required under subsection (2)(b) to be procured by invitation to tender, whether a tender submitted for the purpose is accepted or not shall be decided by a resolution of the owners passed at a general meeting of the corporation.

…

(5) A contract for the procurement of any supplies, goods or services shall not be void by reason only that it does not comply with subsection (1).

(6) Where any supplies, goods or services are required under subsection (2) to be procured by invitation to tender, a contract for the procurement of the supplies, goods or services which does not comply with subsection (2) or (2B)—

(a) subject to any resolution passed by the corporation under paragraph (b) or any order made by the court under subsection (7), shall not be void by reason only that it does not comply with subsection (2) or (2B);

(b) subject to any order made by the court under subsection (7), may be avoided by the corporation by a resolution of the owners passed at a general meeting of the corporation but only for the reason that it does not comply with subsection (2) or (2B).

(7) In any legal proceedings in relation to a contract for the procurement of any supplies, goods or services to which subsection (2) or (2B) applies, the court may make such orders (including whether the contract is void or voidable) and give such directions in respect of the rights and obligations of the contractual parties as the court thinks fit having regard to all the circumstances of the case, including (but not limited to) the following factors—

(a) whether the supplies, goods or services have been procured by invitation to tender;

(b) whether a general meeting of the corporation has been convened to consider the procurement of the supplies, goods or services;

(c) whether the Code of Practice referred to in subsection (1) has been complied with;

(d) whether the contract has been split, for the sole purpose of avoiding the compliance of the requirements in subsection (2) or (2B), from a contract which should have been made for the procurement of supplies, goods or services of greater value;

(e) whether the supplies, goods or services were urgently required;

(f) the progress of any activities or works in relation to the supplies, goods or services;

(g) whether the owners have benefited from the contract;

(h) whether the owners have incurred any financial loss due to the contract and the extent thereof;

(i) whether the supplier of the supplies, goods or services under the contract has acted in good faith;

(j) whether the supplier of the supplies, goods or services under the contract has benefited from the contract; and

(k) whether the supplier of the supplies, goods or services under the contract has incurred any financial loss due to the contract and the extent thereof.

(8) For the purposes of subsection (7), where the court makes an order that the contract is voidable at the instance of the corporation, it shall also make an order that a general meeting of the corporation be convened and held in such manner as the court thinks fit, so as to decide whether the contract is to be avoided.

(9)    For the avoidance of doubt, subject to section 29A, any person who enters into a contract for the procurement of any supplies, goods or services otherwise than in compliance with subsection (2) or, if applicable, subsection (2B) may be personally liable for any claims arising from the contract.”

13.  The Code of Practice, issued by the Secretary for Home Affairs under section 44(1)(a) of the BMO, contains an elaborate procedure for the tender exercise.

14.  In The Incorporated Owners of Jet Foil Mansion v Ying Kong Company Limited, [2] HH Judge Leung (as he then was) noted that section 20A had been amended since the Court of Appeal decision in The Incorporated Owners of Hip Wo House v Gallant King Development Limited[3] and said that:

“24. The current subsection (5) made clear that a contract shall not be void by reason only that it does not comply with subsection (1). The current subsection (6) made clear that a contract shall not be void by reason only that it does not comply with subsection (2) or (2B), unless the owners resolve at a general meeting to avoid it for that reason or the court orders otherwise under subsection (7).

25.   Under subsection (7), the court retains the discretion to still order whether the contract is void or voidable.  The court is expressly required to have regard to all the circumstances of the case including but not limited to the factors listed thereunder…”

15.  Thus, non-compliance per se does not automatically render the underlying procurement contract void but the owners may choose to avoid the contract.  The court also has the power to declare the contract void or voidable and, in the latter case, will call an owners’ meeting for the owners to decide.  Those who enter into a procurement contract without complying with section 20A and the Code of Practice may incur personal liability.

16.  Although Mr Houghton initially submitted that the result of LDBM 202/2013 would affect the validity of the proceedings here, he later clarified that the main plank of his argument was on case management.  He said that by mandating LDBM 202/2013 to go first, it would:

(a)   minimise the possibility of any satellite litigation or application on wasted costs;

(b)     clarify the position of the owners respecting C&T’s fees which could be substantial; and

(c)   make better use of judicial resources (eg avoid clash of diaries and duplication of evidence).

17.  In my view, the proceedings herein and the engagement of C&T are quite separate matters.  The applicant is under a positive duty to maintain the common parts of the estate and to do all things reasonably necessary for the enforcement of the obligations contained in the DMC for the control, management and administration of the estate: see section 18(1) of BMO.  It is the applicant’s case that the respondent is in breach of DMC and that part of the antennas and RBS rested on the common parts of the estate affecting the maintenance and repair of water pipes: see §16 of the Notice of Application.  The owners have resolved to pursue against the respondent in respect of the antennas and RBS.  The respondent does not challenge the resolution and the applicant is bound by it: see section 14(1) of BMO.  The Notice of Application in this case was confirmed by a statement of truth signed by Mr Chan as the chairman of the applicant.  The applicant could have commenced this case and proceeded with it with or without legal representation. 

18.  In the course of argument, Mr Houghton contended that if C&T’s engagement was subsequently avoided by the owners or declared void in LDBM 202/2012, that might create uncertainties over the proceedings here.  By way of example, he said that the validity of any service effected through C&T might become doubtful.  I do not agree. 

19.  Mr Houghton provided no authority in support of his contention.  The respondent is entitled, under rule 7(1)(a) of the Lands Tribunal Rules, to serve documents on the applicant via C&T for as long as C&T remains the applicant’s solicitors on the record.  No case has been made out that, taking the respondent’s contention to its highest, the outcome of LDBM 202/2013 might invalidate any of the proceedings here.

20.  This Tribunal certainly has the case management power to stay proceedings: see Order 1B, rule 1(2)(e) of the Rules of the High Court. [4] But that is discretionary and, in deciding whether to exercise the discretion, I should seek to give effect to the underlying objectives of the rules: see Order 1A, rule 2. 

21.  In my view, an order staying the proceedings here would not dissuade others from pursuing wasted costs.  There is no clear saving of judicial resources.

22.  Both parties seek to enforce the BMO against the other in their respective applications.  Majority of the owners of the estate have resolved to pursue against the respondent. They are entitled to expect this case to proceed as expeditiously as is reasonably practicable: see Order 1A, rule 1(b).  Any order staying this case will mean delay in bringing a close to the dispute on the antennas and RBS and the alleged nuisance.  Mr Houghton has accepted that the issues in these two cases are separate and distinct.  There is no obvious reason, whether as a matter of law or procedure, why the progress of this case should be dictated by the respondent’s case.  Imposing a stay in such circumstances will, in my view, instill a sense of injustice in the owners and is inconsistent with Order 1A, rule 1(d) (ie to ensure fairness between the parties). 

Conclusion

23.  There is no merit in the application and, for the reasons mentioned above, I dismiss the respondent’s summons.

24.  Before leaving the matter, I should mention two things.

25.  First,I find the waythe argument was presented unsettling.

26.  The sole basis for the stay application has always been the applicant’s failure to tender before engaging C&T – something that is required by the law. 

27.  There is no reference to any or any attempted compliance on the part of the applicant in the evidence or in the skeleton submissions. 

28.  In his written submission lodged for this hearing, Mr Houghton made the point that:

“25. In this case, there is no reason why the IO should not follow the law. They have been warned about the statutory procurement requirements as early as in June 2013. A tender exercise could have been easily carried out, and would properly take only one week to do so. There is no explanation why it was not done at all, or why they so insist only C&T can represent the IO.

…

28. As submitted above, there is no evidence before the court that the IO have formally appointed C&T, a fact which has been accepted by the IO. Therefore, C&T simply cannot act for the IO…

…

34.   The pragmatic and speedy solution is that the court should order the IO to convene a general meeting to consider whether the purported appointment of C&T should or should not be avoided with directions that the management committee should fully and frankly disclose to the owners of all relevant documents and information concerning the present litigation including the costs incurred thus far.”

29.  His oral submission was in the same vein.  That prompted Mr Tsu (solicitor for the applicant) to retort, when it came to his turn to address me, that an extraordinary meeting had in fact been held on 12 September 2013 in which the owners had considered several quotations and resolved to engage C&T.

30.  I was surprised that no one had seen fit to mention this earlier leaving the court with the impression that the applicant had somehow refused to comply with the law.

31.  Mr Houghton reassured me he had no intention of misleading the court.  He said that, this being an inter-partes application, there was no duty on either party to be full and frank.  He also took the view that the meeting had not been validly held so much so that the resolution should be invalid.  He submitted that no one would be prejudiced as those feeling aggrieved could apply to uplift the stay right away. 

32.  Surprisingly, Mr Tsu said he would not be relying on the latest development either.  He took the view that the resolution, being subsequent to the engagement of his firm, was irrelevant.  He was happy to proceed with the argument on the basis that there had been non-compliance on the part of his client.  At one stage, he even tried to find excuses in the order dated 15 August 2013 (which required leave for the filing of further affidavit) for not apprising the court of the latest development. 

33.  Given the stance adopted by the parties and the fact that there is no proper evidence on the recent meeting and resolution, I have proceeded on the basis that the applicant has failed to comply with the law.  However, the way the argument was presented does leave a bad taste in my mouth. 

34.  The fact that the applicant may have purged its failure and the fact that the owners may have approved C&T’s engagement are certainly relevant.  Had the respondent been serious about its application, it should have ensured that there is proper factual basis for a stay not only at the time of the application but also at the time of this hearing.  It would have been necessary for the respondent to deal with the fact that the applicant might have belatedly complied with section 20A.  If the owners have indeed approved the appointment, then there is no risk that C&T’s engagement may subsequently be avoided, and the resolution would provide a basis for C&T to charge its fees.  It has been a month since the meeting and the parties could have applied for leave to put in evidence to update the court on this important development.

35.  Secondly, Mr Tsu was quite unable to explain the applicant’s failure to comply with section 20A in the first place.  At one stage, he suggested that the applicant might have thought that it needed not follow the procedure.  The Court of Appeal has said in Wong Tak Keung Stanley with reference to section 20A(2) that: “When a statute declares that a thing ‘shall’ be done, the natural and proper meaning is that a peremptory mandate is enjoined.”[5] The Code of Practice begins by reiterating that all owners’ corporations shall comply with the code and section 20A.  So, compliance is mandatory and a statutory duty on the part of owners’ corporations.  The BMO is the very fabric that connects an owners’ corporation and its owners.  It would not be consistent for an owners’ corporation to, on the one hand, insist that its owners should comply with the law when, on the other hand, it is trying to shed its statutory duties.  And it would be unprofessional for any lawyer to advise or encourage his client to act in breach of section 20A and the Code of Practice.

36.  I am entitled to take into account the conduct of the parties when it comes to costs: see Order 62, rule 5.  The present application is premised on the applicant’s non-compliance which is not disputed for the purpose of the argument.  I make a costs order nisi that there be no order as to the costs of the summons. Unless an application is made to vary it, the order nisi shall become absolute 14 days after this decision is handed down.

(Justin Ko) Presiding Officer Lands Tribunal

Mr TSU Lung Sang Edmund of Chan & Tsu, for the applicant

Mr Anthony HOUGHTON, Senior Counsel and Mr Patrick CHONG, instructed by Hui & Lam, for the respondent

Please refer to HCMP3201/2013 for the relevant appeal(s) to the Court of Appeal.