THE INCORPORATED OWNERS OF FOO HOO CENTRE v. HONG KONG ALLIANCE IN SUPPORT OF PATRIOTIC DEMOCRATIC MOVEMENTS OF CHINA

HCMP 1037/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO1037 OF 2014

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DECISION
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1.  This is an appeal by the defendant against Master M Wong’s decision to dismiss its application for an order that, inter alia, these proceedings, which were commenced by originating summons, be continued as if the cause and matter had been begun by writ.

2.  The plaintiff is the incorporated owners of Foo Hoo Centre at 3 & 3A Austin Avenue, Kowloon (“the Building”) and the defendant is the registered owner of 3 out of 72 equal undivided shares of and in the land and the Building holding the exclusive right to use, occupy and enjoy the 5^th floor of the Building (“the Property”).  The defendant had acquired the Property by an assignment dated 17 December 2013.

3.  The defendant is a company limited by guarantee whose objects are, among others, to “promote any patriotic democratic movement and the cause of democratic reforms of China”, “support and assist students and autonomous student organisations in Beijing or elsewhere in China in their activities in promoting any patriotic democratic movement and the cause of democratic reforms of China” and “organise campaign and activities to promote demonstrate support and carry out any of [its] objects”.

4.  The underlying dispute concerns the use of the Property by the defendant as the “June 4^th Museum” or “June 4^th Memorial Hall”.  According to the affirmation of the Hon. Lee Cheuk Yan, chairman of the standing committee of the defendant, this involves using the Property “as a showroom or exhibition centre for displaying items kept by the Defendant over the years relating to the June 4^th Massacre.  The intention was to use the premises as a permanent showroom with displays to commemorate the 4^th June incident, and to educate the younger generation (especially local students and young visitors from Mainland China) who may not have much knowledge about what happened in the 4^th June Massacre but are interested to know about it”.

5.  The plaintiff considers the use of the Property for such purposes to be impermissible.  On 28 April 2014, the plaintiff issued proceedings by way of originating summons against the defendant for, essentially: (i) declarations that on the proper construction of the Deed of Mutual Covenant and Management Agreement dated 11 December 1990 relating to the Building (“DMC”) and the occupation permit dated 11 December 1990 issued by the Building Authority in relation to the Building (“Occupation Permit”), no part of the 4^th to 17^th floors of the Building may be used as a memorial hall or exhibition hall; (ii) declarations that the defendant is in breach of the DMC (including but not limited to clause 5.13 thereof) by using the Property as a memorial hall and/or exhibition hall, and that such use is in breach of the Occupation Permit; (iii) damages for breach of the DMC; and (iv) an injunction to restrain the defendant from using the Property as a memorial hall and/or exhibition hall.

6.  The dispute that the court has to determine at this stage is a procedural one concerning the mode of further conduct of these proceedings. 

7.  RHC Order 5 deals with the mode of commencing proceedings and rules 1 and 4 provide as follows:

“1. Subject to the provisions of any written law and of these rules, civil proceedings in the Court of First Instance may be begun by writ or originating summons.

4. (1) Except in the case of proceedings which under any written law are required or authorized to be begun by a specific form of originating process, proceedings may be begun either by writ or by originating summons as the plaintiff considers appropriate.

(2) Proceedings-

(a) in which the sole or principal question at issue is, or is likely to be, one of the construction of any written law or of any instrument made under any written law or of any deed, will, contract or other document, or some other question of law, or

(b) in which there is unlikely to be any substantial dispute of fact,

are appropriate to be begun by originating summons unless the plaintiff intends in those proceedings to apply for judgment under Order 14 or Order 86 or for any other reason considers the proceedings more appropriate to be begun by writ.”

8.  RHC Order 28 rule 8(1) provides:

“Where, in the case of a cause or matter begun by originating summons, it appears to the Court at any stage of the proceedings that the proceedings should for any reason be continued as if the cause or matter had been begun by writ, it may order the proceedings to continue as if the cause or matter had been so begun and may, in particular, order that any affidavits shall stand as pleadings, with or without liberty to any of the parties to add thereto or to apply for particulars thereof.”

9.  Order 28 rule 8 confers a flexible case management power on the court.  It is a discretionary power (note the word “may”) that can be exercised where the Court takes the view that the proceedings should “for any reason” be continued as if begun by writ.  Rule 8 does not specify or limit the possible reasons, but the usual ground relied upon by defendants is that there are substantial disputes of fact. 

10.  The rationale is that, in general, where there are substantial factual disputes, there should be pleadings so that the precise issues between the parties can be properly identified (although Order 28 rule 4(5) also empowers the court to order points of claim etc to be delivered and stand as pleadings without converting the proceedings into a writ action).  Lack of pleadings in complicated cases can often cause difficulties both at trial and on appeal; see e.g. Young’s Engineering Co Ltd v The Hong Kong and Shanghai Banking Corporation Ltd & Ors (unrep., HCMP 2676/2002, 18June 2004).  Cross-examination of the witnesses and discovery of documents may also be necessary for resolving disputes of fact, which are not automatically provided for in the originating summons procedure, although it is, again, possible for the court, where appropriate, to give specific directions for cross-examination of deponents of affidavits (see RHC Order 28 rule 4(4) and Order 38 rule 2(3)) and for discovery of documents (see Order 24 rule 3) without ordering the whole proceedings to continue as if begun by writ.

11.  These rules, like all the other rules in the RHC, must be exercised with a view to the furtherance of the underlying objectives of the Rules as set out in Order 1A and, ultimately, in the interests of justice.

12.  In the present case, Mr Erik Shum who appeared for the defendant submitted that the proceedings should be continued as if begun by writ because there is a great number of factual disputes, factual and expert witnesses will need to be called, and the plaintiff’s allegations of breaches of DMC are “all over the place” and need to be defined by pleadings.  In opposition to the application, Mr Daniel Fung SC for the plaintiff submitted that the case turns on no dispute of fact and that what divide the parties are questions of law.

13.  In his decision given in writing on 16 February 2015, Master M Wong held that there was no genuine or substantial issue of fact that required the proceedings to be turned into a writ action and dismissed the defendant’s application.  The defendant has appealed that decision to a judge in chambers.

14.  That the defendant has been using the Property as the June 4^th Museum is not in dispute.  According to the defendant, the Property has a usable net area of about 800 sq ft.  The part used as a showroom for exhibition accessible to the public has an area of about 700 sq ft.  The remaining part is for the internal use of the defendant’s staff.  The floor plan and photographs have been exhibited showing the use of different parts of the Property, e.g. ticket sales, photo-taking, cinematographic display, exhibition, display of reading materials and souvenirs sales. 

15.  The museum was officially opened on 26 April 2014.  It is open to the public upon payment of an entrance fee of $10 from 10 am to 6 pm every weekday except Tuesday and from 10 am to 7 pm every weekend and public holiday.  The defendant engages 4 employees (2 on a full-time basis and 2 on a part-time basis) to work in the Property, as well as 2 to 3 voluntary staff members to assist.

16.  According to the defendant’s own observation, each visitor spends about 25 minutes on average in the Property to view the exhibits and purchase items and souvenirs.  The defendant has a policy to ensure that the maximum number of visitors allowed at any one time is 40 people (excluding staff).  Since the official opening in April 2014 there have been an average of 150 visitors per day during weekdays and an average of about 350 visitors per day during weekends and holidays.

17.  I turn to consider what the plaintiff’s case is, based on the affidavits filed and the issues raised. While the originating summons complains of a breach of the DMC generally, the plaintiff’s affidavits refer only to clause 5.13 of the DMC and Mr Fung confirmed that this is the only provision in the DMC that the plaintiff alleges to have been breached by the defendant.  That clause provides:

“No owner shall use or permit or suffer any part of the Building owned by him to be used except in accordance with the Crown Grant, any applicable Building Regulations, other Government Regulations, Ordinances and the Occupation Permit, any other permit, consent or requirement as may from time to time be applicable thereto, and the covenants terms and conditions herein contained.”

18.  This clause, on its face, potentially brings into question an enormous range of laws and regulations.  For the specific laws and regulations relied upon one has to turn to the affidavits.

19.  In the initial affirmation of Chau Kwok Chiu, the chairman of the plaintiff, filed together with the originating summons, it is alleged that the use by the defendant of the Property as a memorial hall or exhibition hall was in breach of the Occupation Permit and therefore in breach of clause 5.13 of the DMC.  The Occupation Permit, issued by the Building Authority, relevantly provides as follows:

“I hereby permit the occupation of the new building … for the following purposes:

…

4^th to 17^th Floors (inclusive): Office and ancillary accommodation on each floor for non-domestic use.

…”

20.  The defendant submitted that the issues in the case with reference to its defence include the following:

“(a) Whether from the perspective of the land law in relation to both town planning and building regulations the defendant’s current use of the Property falls within the permitted use under the OP of “offices and ancillary accommodation”.

(b) Whether the only reason for stating the permitted use of the Property on the OP concerns purely the compliance of building regulations prescribed in the Buildings Ordinance in relation to the physical design and construction of the Property.

(c) Whether there is any allegation and/or evidence that the current use of the Property is in breach of any building regulations, and if not, whether in the absence of such allegation and/or evidence, there is any legitimate complaint or enforcement action the Building Authority could make or take.

(d) Whether on a true and proper construction of clause 5.13 of the DMC, any set of the defendant would not give rise to a breach of the same unless such act affects the rights and interests of the plaintiff and/or the co-owners of the Building.

(e) Whether there is any complaint of any breach of the OP by the Building Authority under the Buildings Ordinance which may affect the interests and rights of the plaintiff and/or other co-owners, and if there is no such complaint, whether that means there is no breach of clause 5.13 of the DMC.”

21.  The primary issue here seems to me to be whether the defendant’s use of the Property as the June 4^th Museum is a use in accordance with the Occupation Permit, i.e. office and ancillary accommodation.  Given that the actual use of the Property is not in dispute, these issues seem to me to be questions of construction and law that do not depend on the resolution of any dispute of fact.

22.  I accept that the phrase “offices and ancillary accommodation” in the Occupation Permit is not a statutorily defined term.  While the term has to be construed in its proper legal and factual context, with respect I cannot see how the exercise will depend, as Mr Shum submitted, on the precise number of visitors to the Property each day, what complaints have been received by the management of the Building and what measures have been put in place by the defendant to control the number of visitors to the Property. 

23.  Mr Shum submitted that whether the defendant’s current use of the Property falls within the use allowed by the Occupation Permit has to be seen “from the perspective of the land law in relation to both town planning and building regulations”.  The defendant has put forward a draft expert report and indicated that it will seek leave to adduce expert evidence in that form.  As no such application is before me I shall say as little as possible about the admissibility of the evidence. In the end it has to be borne in mind that construction is a question for the court.  In appropriate cases experts can help in establishing and informing the court of such factual and regulatory background as is relevant to the question of construction, but this does not necessarily mean that there are disputes of fact requiring the proceedings to be ordered to continue as if begun by writ. Specifically, so far as expert evidence on the history of land use control is concerned, even assuming it is admissible, factual disputes can be expected to be limited.  There is no inflexible rule that where a question of interpretation depends on background knowledge or matrix of facts, it cannot be determined by originating summons.  In fact, even though few questions of construction do not involve looking at some contextual background, as recognised in Order 5 rule 4(2) the originating summons procedure is in general appropriate for questions of construction.  Mr Shum relied on Memorial Park Hong Kong Ltd v Secretary for Justice (HCMP 2609/2010; 24 June 2011) as a case raising a question of construction of a Government lease in which the court nevertheless ordered the proceedings to continue as if begun by writ, but as Sakhrani J said there at §7, each case depends on its own facts.  The issue in that case concerned the meaning of the phrase “human remains” in one of the clauses of the Conditions of Sale, and the plaintiff there wished to adduce expert evidence on the customary manner of disposal of the dead among the Chinese population in Hong Kong in the period from 1934 to 1941 and rely on certain “background knowledge” or “matrix of facts” which apparently were not clearly identified.  I do not think that case assists the defendant in this case.

24.  Items (b) and (c) referred to in paragraph 20 above seem to me to be arguments that the defendant wishes to raise on the construction of the Occupation Permit.  They do not raise substantial disputes of fact.  Items (d) and (e) represent an argument of the defendant on the construction of clause 5.13 of the DMC.  If that argument succeeds, there may be a need to examine the extent to which the other co-owners and occupants of the Building have been affected.  There is some divergence in the evidence but those disputes seem to me to fall within a narrow compass.  In any event Mr Fung made clear to the Master (see paragraph 33 of the Master’s decision), and confirmed again to this court, that the plaintiff is prepared to accept the defendant’s evidence on such matters.  He also confirmed that, based on what the defendant has said so far, the plaintiff will not seek to cross-examine the deponents of the defendant’s affirmations. 

25.  Mr Shum also relied on certain allegations in Mr Chau’s 2^nd affirmation that complain of nuisance and loss of privacy being caused indirectly by the manner in which the Property has been used by the defendant.  But as confirmed by Mr Fung, the case is not about nuisance but what the permitted user is.  There is no claim for nuisance, nor any claim for breach of clause 5.14 of the DMC which prohibits the use of the common areas in such a way as to cause a nuisance or annoyance to other owners and occupiers.

26.  Mr Shum was correct in pointing out that the plaintiff had raised further allegations in the 2^nd affirmation of Mr Chau filed in September 2014.  There it is alleged that the June 4^th Museum falls within the definition of a “place of public entertainment” within the meaning of the Place of Public Entertainment Ordinance (Cap 172) (“PPEO”) and that the defendant has operated it without a licence, contrary to section 4 of the PPEO, which provides:

“No person shall keep or use any place of public entertainment without a licence granted under this Ordinance.”

27.  Under the same Ordinance, “place of public entertainment” is defined to mean-

“(a) so much of any place, building, erection or structure, whether temporary or permanent, capable of accommodating the public; and

(b) any vessel,

in or on which a public entertainment is presented or carried on whether on one occasion or more”.

“Public entertainment” is defined to mean:

“means any entertainment within the meaning of this Ordinance to which the general public is admitted with or without payment”.

“Entertainment” is in turn defined to include “any event, activity or other thing specified in Schedule 1”.

Schedule 1 relevantly provides as follows:

“1. The events, activities and other things referred to in the definition of ‘entertainment’ in section 2 of this Ordinance are the following or any part of any of them-

(a) a concert, opera, ballet, stage performance or other musical, dramatic or theatrical entertainment;

(b) a cinematograph or laser projection display;

(c) a circus;

(d) lecture or story-telling;

(e) an exhibition of any 1 or more of the following, namely, pictures, photographs, books, manuscripts or other documents or other things;

(f) a sporting exhibition or contest;

(g) a bazaar;

(h) (Repealed L.N. 120 of 2002)

(i) an amusement ride within the meaning of the Amusement Rides (Safety) Ordinance (Cap 449) or any mechanical device (other than such an amusement ride) which is designed for amusement;

(j) a dance party.”

28.  In the 2^nd affirmation of Mr Chau, it is further suggested that use of the Property as the June 4^th Museum breaches the Code of Practice for Fire Safety in Buildings 2011 issued by the Buildings Department.  Clause B21.1 and Table B5 of that code provide that in the case of premises whose use classification is “places of public entertainment” (meaning the uses listed in the PPEO), where the premises are located at a storey 12m or more above ground floor level, for an occupant capacity of 31 to 200, there should be a minimum of 2 exits and a minimum total width of exit route of 2400mm.  Mr Chau states that each of the two staircases of the Building measures only 1.05m in width, totalling 2.1m.  As the defendant’s affirmation stated, the maximum number of visitors admitted into the Property at any one time is 40, in addition to 6 or 7 members of staff.

29.  As I see it, the 2^nd affirmation of Mr Chau gives two further particulars of breach of clause 5.13 of the DMC, namely, breach of section 4 of the PPEO and breach of clause B21.1 of the Code of Practice for Fire Safety.  It would have been preferable if these allegations had been included in the 1^st affirmation of Mr Chau filed at the outset.  But as things stand these are all the allegations that have been made.  I do not think in these circumstances, that fact that the defendant has to find the allegations in two affirmations instead of one is a sufficient reason to order the proceedings to continue as if begun by writ.

30.  It is not in dispute that the defendant does not have a licence issued under the PPEO.  As Mr Shum appeared to accept, only one principal issue arises from these two breaches, namely, whether the museum is a “place of public entertainment” within the meaning of the PPEO so that by operating it the defendant is in breach of section 4 of the PPEO as well as the Code of Practice for Fire Safety.  This again seems to me to be a question of law and construction.  The nature of the activities available in the June 4^th Museum and the use of the Property have been described in the defendant’s affirmation and the website of the museum and are not in dispute.  Whether or not, having regard to what goes on inside it, the museum falls within the meaning of “place of public entertainment”, is to be answered by construing the statutory definition and applying that definition to the undisputed use of the Property.  That seems to me to be a matter of law quite capable of being dealt with in an originating summons.

31.  Mr Shum submitted that the plaintiff has made a claim for damages and that without a proper investigation of the facts it would not be possible to assess damages properly.  The position, however, as Mr Fung submitted, is that it is up to the plaintiff to prove any recoverable loss.  If on the evidence as filed the plaintiff fails to discharge that burden, then the court will award no or only nominal damages.  The plaintiff’s primary concern is to stop what it regards as a breach of the DMC.  The question of damages is, in my view, very much a subsidiary issue if it arises at all.

32.  Mr Shum further submitted that the extent and seriousness of the breach is relevant to the question of remedies.  In my view, as Mr Fung submitted, this is again very much a subsidiary issue, if at all.  Where a breach of a negative covenant is established, the general approach of the court, as stated by Godfrey JA in The Incorporated Owners of South Seas Centre, Mody Road v Great Treasure Development Ltd [1994] 1 HKC 197, 202 after reviewing the authorities, particularly Dohertyv Allman (1878) 3 App Cas 709, is as follows:

“Where a defendant is proposing to act in breach of an express negative stipulation binding upon him he will normally be enjoined from doing so, and, save in exceptional cases, damages will not be regarded as an adequate remedy”.

33.  For the foregoing reasons, I agree with the decision of the Master.  The appeal is therefore dismissed.  I make an order nisi that the defendant do pay the plaintiff forthwith the costs of the appeal to be taxed if not agreed.

HCMP 1037/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1037 OF 2014

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D E C I S I O N

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Background

1.  The plaintiff is the owners’ corporation of Foo Hoo Centre situate at 3 & 3A Austin Avenue, Kowloon Hong Kong (“the Building”), whereas the defendant is the registered owner of the 5^th Floor of the Building (“the Property”).

2.  Clause 5.13 of the Deed of Mutual Covenant and Management Agreement of the Building dated 11 January 1991 (“the DMC”) provides that: -

“No owner shall use or permit or suffer any part of the Building owned by him to be used except in accordance with the Crown Grant, any applicable Building Regulations, other Government Regulations, Ordinances and the Occupation Permit, any other permit, consent or requirement as may from time to time be applicable thereto, and the covenants terms and conditions herein contained.”

3.  The occupation permit of the Building (“the OP”) granted on 11 December 1990 expressly stipulates that the 4^th to 17^th floors (inclusive) shall be used as: -

“Office and ancillary accommodation on each floor for non-domestic use.”

4.  It is undisputed and indeed it is clear from the defendant’s own evidence that the defendant uses the Property or at least a substantial part of it as a museum called “The June 4^th Museum”.  The defendant expressly describes the operation as “a living museum” and “a contemporary history museum for the purpose of civic education”.  The Property is used as a showroom or exhibition centre for displaying items kept by the defendant over the years relating to the June 4^th Massacre.  The intention was to use the Property as a permanent showroom with displays to commemorate the 4^th June incident, and to educate the younger generation (especially local students and young visitors from Mainland China) who may not have much knowledge about what happened in the 4^th June Massacre but are interested to know more about it”.

5.  It is admitted by the defendant that the bulk of the Property comprises a “storeroom/showroom for exhibition where the public can have access”.  The defendant charges members of the public an admission fee for entry to the Property, and the museum is open to the public from 10 am to 6 pm on weekdays (save for Tuesday when it is closed) and from 10 am to 7 pm on weekends and public holidays.  The floor plan and photographs produced by the defendant reveal that different areas of the Property have been designated for different purposes, eg selling tickets, photo-taking, cinematographic display, exhibition, displaying reading materials, selling souvenirs, etc.  The defendant also conducts workshops and guided tours for visitors and uses the Property to sell books and souvenirs to the public.

6.  The plaintiff contends that the defendant’s intended use of the Property contravenes the DMC and the OP, but the defendant disagrees.  Thus, on 28 April 2014, the plaintiff issued an Originating Summons supported by an affirmation made by its chairman Chau Kwok Chiu on 25 April 2014 (“Chau’s 1^st affirmation”) seeking against the defendant inter alia:

(a) A declaration that on the proper construction of the DMC, no part or parts of the 4^th to 17^th floors (inclusive) of the Building may be used as a memorial hall and/or an exhibition hall;

(b) A declaration that on the proper construction of the OP, the use of any part or parts of the 4^th to 17^th floors (inclusive) of the Building as a memorial hall and/or an exhibition hall is in breach of the OP;

(c) A declaration that the defendant is in breach of the DMC (including but not limited to Clause 5.13 thereof) by using the Property as a memorial hall and/or an exhibition hall, whether under the name of “June 4^th Museum”, “June 4^th Memorial Hall: or otherwise;

(d) A declaration that the defendant’s use of the Property as a memorial hall and/or an exhibition hall, whether under the name of “June 4^th Museum”, “June 4^th Memorial Hall” or otherwise, is in breach of the OP;

(e) Damages for breach of the DMC;

(f) An injunction to restrain the defendant, whether by itself, its servants, agents or otherwise howsoever, from using the Property as a memorial hall and/or an exhibition hall (whether under the name of “June 4^th Museum”, “June 4^th Memorial Hall” or otherwise), and/or for any purpose other than those permitted under the DMC and the OP.

7.  On 11 July 2014, the defendant filed an affirmation of Lee Cheuk Yan (“Lee’s affirmation”) opposing the Originating Summons, and on 19 September 2014 the plaintiff filed in reply an affirmation of Chau Kwok Chiu (“Chau’s 2^nd affirmation”).

8.  The present application before me is the defendant’s application by way of Summons dated 7 October 2014 for an order pursuant to Order 28, rule 8 of the Rules of the High Court (Cap 4A) that these proceedings be continued as if the cause and matter had been begun by writ and consequential directions for pleadings to be filed by the parties, as well as an order that the parties do within 28 days after close of pleadings take out summons for directions regarding expert evidence.

9.  The defendant’s application is disputed by the plaintiff and was heard by me on 29 January 2015.  Here is my decision.

Applicable legal principles

10.  Order 28, rule 8(1) of the Rules of the High Court (Cap 4A) provides that:

“8.—(1) Where, in the case of a cause or matter begun by originating summons, it appears to the court at any stage of the proceedings that the proceedings should for any reason be continued as if the cause or matter had been begun by writ, it may order the proceedings to continue as if the cause or matter had been so begun and may, in particular, order that any affidavits shall stand as pleadings, with or without liberty to any of the parties to add thereto or to apply for particulars thereof.”

11.  The parties have no dispute that the main reason for an originating summons proceedings to be continued as if begun by writ is that there can be shown on the available evidence genuine or substantial issues of fact (see para 28/8/2 of Hong Kong Civil Procedure 2015, Vol 1; Shum Wah Ming v The Estate of Chen King Ngo (deceased) & another [1996] HKLY 1151; and Securities and Futures Commission v Tiger Asia Management LLC [2011] HKEC 842).

12.  However, the defendant also relies on the following cases to support its application:-

(a) In Young’s Engineering Company Limited v The Hong Kong and Shanghai Banking Corporation Limited & ors (unrep, HCMP 2676/2002, 18 June 2004), it was held that practitioners who chose to proceed by way of originating summons should reflect on its appropriateness not only when the proceeding is launched but also when the case progresses with evidence filed by parties involved.  The lack of pleadings in complicated case can often cause difficulties to the trial judge as well as on appeal.

(b) In Memorial Park Hong Kong Ltd Secretary for Justice (unrep, HCMP 2609/2010, 24 June 2011), at a directions hearing on the plaintiff’s originating summons, the plaintiff asked for directions for, inter alia, expert directions.  The issue between the parties was as to the meaning of the words “human remains” in General Condition 15 of the General Conditions of Sale, and the plaintiff wished to seek expert evidence on the customary manner of disposal of the dead among the Chinese population in Hong Kong in the period 1934 to 1941. The court stated that it was clear that by the framing of the scope of the expert evidence the plaintiff wished to rely on custom.  It was also clear from the affirmation filed for the plaintiff that the plaintiff relied on “background knowledge” or “matrix of facts” in support of the meaning of the words “human remains” in General Condition 15.  That being so, all the material facts should be pleaded so that the defendant and the court would know what were the relevant factual matters relied on as part of the “background knowledge” or “matrix of facts”.  The pleadings would clearly define the issues between the parties and once the pleadings had closed, the court would then be in a position to see whether the application for the adducing of expert evidence was a proper application.  As a matter of proper and effective case management, the court should exercise its discretion and order that the proceedings do continue as if begun by writ and give directions for the filing of pleadings.

13.  The defendant submits that it is obvious from the above principles that the order asked for by the defendant would only help to have effective resolution of the disputes between the parties and would not prejudice the plaintiff in any way.  However, if the plaintiff ought to have anticipated that there would be substantial disputes as to the facts which would render the originating summons procedure adopted inappropriate, the court would penalize him as to costs upon making an order under Order 28, rule 8 (see para 28/8/2 of Hong Kong Civil Procedure 2015, Vol I; Lam Pak Cheung v Lin Zhen Lue [2009] 1 HKLRD 35; Woo Chiu Lin v Leung Chi Ying (unrep, HCMP 4493/1999, 23 November 2000)).

The defendant’s defence

14.  The defendant contends that, as can be seen from the Originating Summons and the affirmations of the parties, there are genuine and substantial issues of fact, and that expert evidence is needed to resolve the issues between the parties.  The defendant summarises its defence (in the absence of pleadings) as follows: -

(a) From the perspective of the land law in relation to both town planning and building regulations the defendant’s current use of the Property being part of its ordinary and usual business of showroom and exhibition room for education and storage purposes does not fall outside of the permitted use under the OP of “offices and ancillary accommodation” and thus there is no breach of the OP.

(b) By reason of the source of the power to issue the OP by the Building Authority under the Buildings Ordinance the only reason for stating the permitted use of the Property concerns purely the compliance of building regulations prescribed in the Buildings Ordinance in relation to the physical design and construction of the Property.  In the absence of any allegation and/or evidence that the current use of the Property is in breach of any building regulations, there is no legitimate complaint or enforcement action the Building Authority could make or take, hence there is no breach of the OP; or alternatively, the alleged breach, if any, is purely technical in nature.

(c) On a true and proper construction of clause 5.13 of the DMC, any act of the defendant would not give rise to a breach of the same unless such act affects the rights and interests of the plaintiff and/or the co-owners of the Building.  In the present case, in the absence of any complaint of any breach of the OP by the Building Authority under the Buildings Ordinance which may affect the interests and rights of the plaintiff and/or other co-owners, there is no breach of clause 5.13 of the DMC; or alternatively, the alleged breach is purely technical in nature.

(d) Further or alternatively, by reason of the above, even if there is a technical breach of clause 5.13 of the DMC, the court should not exercise its discretion to grant the equitable relief of injunction and the plaintiff has suffered no loss whatsoever.

15.  The defendant submits that as the plaintiff has not made or threatened to make any application to strike out any part of the defendant’s defence, the live issues in the case as framed by the aforesaid defence include, inter alia, the following: -

(a) Whether from the perspective of the land law in relation to both town planning and building regulations the defendant’s current use of the Property falls within the permitted use under the OP of “offices and ancillary accommodation”.

(b) Whether the only reason for stating the permitted use of the Property on the OP concerns purely the compliance of building regulations prescribed in the Buildings Ordinance in relation to the physical design and construction of the Property.

(c) Whether there is any allegation and/or evidence that the current use of the Property is in breach of any building regulations, and if not, whether in the absence of such allegation and/or evidence, there is any legitimate complaint or enforcement action the Building Authority could make or take.

(d) Whether on a true and proper construction of clause 5.13 of the DMC, any set of the defendant would not give rise to a breach of the same unless such act affects the rights and interests of the plaintiff and/or the co-owners of the Building.

(e) Whether there is any complaint of any breach of the OP by the Building Authority under the Buildings Ordinance which may affect the interests and rights of the plaintiff and/or other co-owners, and if there is no such complaint, whether that means there is no breach of clause 5.13 of the DMC.

16.  The defendant contends that the defence involves technical matters relating to the different regimes of land use, regulations and practice and definitions of terms relating to land use.  In the premises, the defendant has already engaged experts in the areas of land surveying (Mr Clarence K Y Chan, Registered Professional Surveyor) and town planning (Mr Ng Wing Fai Stanley, Registered Professional Town Planner) to give preliminary expert opinions to assist the court.  They have prepared a draft joint expert report exhibited at “LCY-7” of Lee’s affirmation to assist the court to understand the areas where the defendant seeks to introduce expert evidence.  Expert directions will need to be obtained from the court in relation to the formal production of the expert report.

17.  The defendant disagrees with the plaintiff’s contention that the construction of clauses in the DMC (which is a multiparty contract) and the OP is purely a question of law to be decided by the court.  The defendant submits that from its defence, there is clearly a need for expert evidence in the areas of surveying and town planning to assist the court in the determination of the issues in the case and the court should not deprived of useful evidence in relation to the issues in the case.  In particular, the first question to be answered: whether the use of the Property by the defendant falls within the permitted use under the OP of “offices and ancillary accommodation” – must be examined from the perspective of the land law in relation to surveying, town planning and building regulations.

18.  In order to answer this question, the nature of the business of the defendant is important – in turn, the complexity, the scale and the objective and business of the operator (ie, the defendant), and the intensification of use (including number of visitors, whether there are nuisance complaints, and management measures in place) must be examined.  It follows that factual evidence on the nature of the defendant’s business, the number of visitors to the Property every day, whether there have been complaints and whether measure have been put into place by the management to control the intensification of use of the property must all be taken into consideration.

19.  The defendant also contends that expert evidence is necessary to assist the court in determining the objective and purpose for stating the “permitted use” of a certain property on an occupation permit, and whether the only reason for stating the permitted use of the Property on the OP concerns purely the compliance of building regulations prescribed in the Buildings Ordinance in relation to the physical design and construction of the Property.  Expert evidence is further needed to assist the court to determinate whether use of land in deviation of the original “permitted use” in an occupation permit would lead to any action by the Building Authority.

Issues of facts on the plaintiff’s own case

20.  The defendant further contends that there are issues of facts on the plaintiff’s own case.  In Chau’s 1^st affirmation, he sets out the alleged factual basis for the plaintiff’s claim as follows: -

(a) On 21 December 2013, the defendant announced to be public that it would use the Property as a memorial hall and/or exhibition hall under the name of “June 4^th Memorial Hall”.

(b) From the defendant’s website, it could be seen that the “June 4^th Memorial Hall” would be opened in around April 2014.  The defendant will charge an admission fee of HK$10 (standard) or HK$5 (discounted).  The two previous temporary “June 4^th Memorial Halls” had attracted 19,000 and 23,000 people to visit respectively, and in the busiest 3 months in the past 2 years, the number of visitors was as high as 20,000 to 30,000 people.

(c) Chau has been advised by the plaintiff’s legal advisers that the proposed use of the Property as a memorial hall/museum is in breach of the DMC and/or the OP because such use is not a permitted use as prescribed in the OP.

(d) There are only 2 elevators serving the Ground Floor to the 17^th floor of the Building, each having a maximum load of 700 kg.  the Building and the elevators cannot accommodate and serve a large number of visitors and heavy usage would give rise to genuine safety concerns.  This reinforces the fact that the defendant’s use of the Property as an exhibition or memorial hall is not “office use” as intended under the DMC and the OP, and the plaintiff reserves the right to file further evidence, including expert evidence, in this regard.

21.  Thus, the defendant contends that the plaintiff’s own case requires evidence on the nature of the defendant’s business as well as the number of visitors and capacity of the Building facilities (including elevators) to support such loading safely.  Indeed, the plaintiff has reserved the right to file expert evidence to support its case.

22.  The defendant further contends that from Chau’s 2^nd affirmation, it is even more evident that the court would need to hear factual evidence to resolve the factual disputes between the parties as follows: -

(a) In reply to Lee’s evidence that the defendant has not received any complaints regarding the number of visitors to the Property, Chau gives lengthy evidence on the complaints allegedly received by the management company, the security staff and the Management Committee of the Building, and the alleged crowds gathering outside the Building which purportedly led to blockage of the entrance and necessitated police officers to come to the Building to maintain order.

(b) Chau further makes an allegation that there was nuisance caused and loss of privacy which resulted from media filming people including occupants entering the Building.  It is also alleged that the quiet enjoyment by occupants were disturbed when visitors wanting to enter the Property “mill[ed] around the elevators and the lobby area”.

(c) It is moreover alleged that there have been multiple complaints received by the plaintiff from owners and tenants of the Building regarding the heavy use of the elevators by visitors to the Property, the ringing of doorbells by strangers, visitors inadvertently triggering the safety alarm and causing disturbance to occupants of the Building, security concerns and lack of manpower to maintain security at the Building.  Such concerns were discussed during the meetings of the Management Committee and/or owners.  Chau purports that the volume of visitors to the Property has necessitated more security staff to be hired, resulting in extra costs and burden to the plaintiff.

23.  In Chau’s 2^nd affirmation, he further gives evidence to rebut the defendant’s case that the use of the Property could not possibly affect the rights and interests of the co-owners of the Building or the plaintiff.  He states that:-

(a) The Building is only served by 2 elevators with a capacity of 7 persons each, and 2 sets of staircases.

(b) The complaints and disruptions since the opening of the June 4 Museum has been substantial, and it is clear from the physical layout and design of the Building that it was never intended to accommodate an exhibition/memorial hall open to visitors from the general public.

24.  The defendant contends that the allegation of nuisance clearly requires factual evidence from the parties.  The plaintiff’s case that the physical layout and design of the Building was never intended to accommodate and memorial hall open to the public requires expert evidence.  There are clearly factual disputes on the volume of visitors to the Property and the effect it has on the occupants of the Building (as the records of visitors put forth by the parties differ greatly from each other).

25.  Moreover, the plaintiff has, in Chau’s 2^nd affirmation, raised further and new allegations against the defendant which were not stated in the Originating Summons or Chau’s 1^st affirmation in support of the application, namely,

(a) The allegation that the defendant’s use of the Property is contrary to section 4 of the Place of Public Entertainment Ordinance (Cap 172) as “the June 4 Museum … comprises a cinematograph or laser projection display area, a lecture area and an exhibition area displaying pictures, photographs, books and manuscripts” and needs a licence for operation.

(b) The allegation that the defendant’s use of the Property is in breach of provisions in the Code of Practice for Fire Safety in Buildings 2011 due to the staircases of the Building being not wide enough.

26.  The defendant contends that the plaintiff should not be allowed to introduce new issues in a piecemeal fashion by merely mentioning them in supporting affirmations.  The defendant is entitled to know from a clear pleading what the plaintiff’s entire case is.  As stated in the Court of Final Appeal judgment in the recent case of Sinoearn International Ltd v Hyundai-CCECC Joint Venture (2013) 16 HKCFAR 632 at para 30: -

“A party must raise all the issues he wishes to raise to be dealt with at the trial. Parties are not entitled to have issues recently thought up dealt with separately and piecemeal. The other party is entitled to know from a clear pleading what is the entire case he has to meet so that he can decide whether particulars should be sought; how he should plead in response; what discovery he is entitled to; what evidence he should adduce to meet it; and what points of law should be taken …”

27.  Thus, the defendant submits that there is a need for pleadings to clearly state and define the case of the parties.  In particular, the plaintiff needs to clearly set out all the provisions and material facts relied on by it in its pleadings so that the defendant and the court would know what are the provisions and relevant factual matters relied on and the defendant would be able to fairly and properly prepare and present its defence.

No factual dispute in this case

28.  However, having considered the submissions of both parties carefully, I agree with the plaintiff that, on its true analysis, this case turns on no dispute of fact.  The only issue in dispute is one of law – whether the defendant’s use of the Property described above is in breach of the DMC and/or the OP.

29.  The defendant’s suggestions that there are factual disputes on matters such as the nature of the defendant’s business, the number of visitors to the Property, whether the defendant has caused any nuisance, whether any complaints were made with regard to the defendant’s use of the Property and whether the defendant has implemented adequate crowd control measures etc are all not relevant to the court’s interpretation of the DMC and/or the OP and cannot be relied on to convert the present proceedings to a writ action or distract the court from determining the sole issue in this case.

30.  The plaintiff’s case is that the defendant’s use of the Property is in breach of the DMC and/or the OP because, on a true and proper interpretation of the DMC and the OP, such use is not permitted.  This is simply a question of law to be decided by the court in interpreting the DMC and the OP, bearing in mind all the relevant circumstances.  As held by Deputy District Judge Anthony Chow in Yeung Ching Lau v Incorporated Owners of Century Industrial Centre & others (unreported, DCCJ 381/2006, judgment delivered on 24 July 2006), the interpretation of the DMC is a question of law and does not involve any “conflict of evidence”.  Also in Ever Famous Limited v Donny International Limited (unreported, HCA 1507/1998, judgment delivered on 11 December 2006), Recorder Kwok, SC, held that proper interpretation of the DMC is a matter solely for the court.

31.  The issue in this case is similar to that raised in The Incorporated Owners of Tuen Mun Hung Cheung Industrial Centre (Phase 1) v United Hong Kong Ltd (unreported, HCMP 2991/1998, judgment delivered on 22 November 1999), in which the plaintiff proceeded by way of an originating summons, raising as an issue whether there was a breach of the deed of mutual covenant by the defendant of a unit in an industrial building.  Cheung J (as he then was) held that the defendant was in breach of the DMC and granted a permanent injunction restraining such defendant from removing the external wall of the relevant building in breach of the terms of the DMC.  Thus, there can be no question that the issue in the present case can be properly determined by way of an originating summons.

32.  The defendant tries to suggest that the aforesaid 3 cases are distinguishable from the present case.  However, I do not think that the defendant can really suggest that interpretation of the DMC and the OP is not a question of law for the court to decide.

33.  Even if the defendant wishes to rely on all the aforesaid factual matters to substantiate its defence, such factual matters are not going to be disputed by the plaintiff.  Despite what were stated in Chau’s 1^st affirmation and Chau’s 2^nd affirmation, the plaintiff has already made it very clear that assuming all these factual matters are relevant, the plaintiff will accept the defendant’s case on all these factual matters and will not challenge the same.  Thus, there are no genuine or substantial issues of fact as contended by the defendant and there is no need for any of the witnesses to be examined or cross-examined at the trial.

Expert evidence and pleadings

34.  The defendant relies on Memorial Park Hong Kong Ltd v Secretary for Justice, supra, to suggest that expert evidence and hence pleadings are required in the present case.  However, I agree with the plaintiff that Memorial Park Hong Kong Ltd is completely distinguishable from the present case in that the plaintiff there sought to rely on custom, “background knowledge” and a “matrix of facts”, which are not present here.

35.  The sole issue in the present case is whether there is a breach of the DMC and/or the OP.  This is a question for the court to determine upon making a proper construction of the terms of the DMC and the OP, and is not a matter which calls for determination by expert opinion.  In Tuen Mun Hung Cheung Industrial Centre, supra, Cheung J (as he then was) rejected the defendant’s argument that the opinion of an architect must first be obtained before the court could construe the terms of the DMC, and said this:-

“In my view, in construing the terms of the DMC, one should take the ordinary literal meaning of the words. After all, the incorporated owners are required to enforce the terms of the DMC. It would be imposing an impossible burden on their task if every time when they see alterations to the building, they have to consult an architect first to ascertain whether the altered part forms part of the structure of a building before they could commence proceedings which very often have to be made on an urgent basis.”

36.  The defendant’s suggestion that expert opinion in the areas of land surveying and town planning is required to determine whether the Building Authority could make any legitimate complaint or take any enforcement action and whether this would affect the interests and rights of the plaintiff and the other co-owners is a red herring.  The question of whether or not the terms of the DMC and the OP have been breached does not depend on the presence of any complaint or enforcement action by the Building Authority.  Instead, the plaintiff has a clear legal duty to ensure compliance with the DMC and take action to enforce the same.  As held by Cheung J (as he then was) in Tuen Mun Hung Cheung Industrial Centre, supra:-

“The principles regarding the duties of incorporated owners are clear:

(1) Under the Ordinance, incorporated owners are required, under statutory duty, to enforce the DMC.

(2) When the incorporated owners found that there is a breach of covenants by one of the owners, it is not only their right but the duty to seek to enforce the covenant …”

37.  Even assuming expert evidence is necessary in the present case as contended by the defendant, I am of the view that this application is pre-mature as the defendant has not yet even applied for leave to adduce expert evidence. Without such an application for leave to adduce expert evidence and the determination thereof, one simply does not know what expert evidence or what extent of it would be allowed by the court.  It is also not clear whether such expert evidence so allowed or any part thereof will be disputed by the plaintiff.  It may well be the case that the plaintiff would not dispute any of such expert evidence so allowed and hence there is no dispute that requires the Originating Summons to be turned into a writ.  In applying for the Originating Summons to be turned into a writ before expert directions are sought, the defendant is in fact putting the cart before the horse.

38.  It does not make sense to me that the defendant would require pleadings to properly plead the expert evidence.  It is the defendant’s own case that it requires expert evidence.  So the defendant should know what expert evidence is required even without pleadings.  In any event, even for an Origination Summons, the court can ask the parties to frame the issues in dispute, and hence one does not really require pleadings to know what the issues are concerning the expert evidence.  In fact, as far as I can see from the information before me, there is only one issue in this case, namely whether the undisputed use of the Property by the defendant is a breach of the DMC and/or the OP.  I do not see any real need for pleadings as the issue is just a simple one.  

39.  It is incorrect for the defendant to suggest that converting the present proceedings into a writ action would not prejudice the plaintiff.  On the contrary, the order sought by the plaintiff would prolong the proceedings and waste the parties’ costs and time.

40.  As to the defendant’s contention that the plaintiff has made new allegations falling outside the scope of the Originating Summons, namely by alleging the defendant’s breaches of the Place of Public Entertainment Ordinance and of the Code of Practice for Fire Safety in Buildings 2011, and hence it is necessary to have pleadings to avoid the plaintiff making piecemeal allegations, the plaintiff is in fact confined by what are stated in Chau’s 1st affirmation and Chau’s 2^nd affirmation.  Unless the plaintiff obtains leave to file further affirmations, its case has already been defined by the affirmations. Thus, there is no question of the plaintiff making further new allegations as it likes when the proceedings remain one of Originating Summons.  In fact, even if the Originating Summons is to be turned into a writ, these affirmations can be ordered to be treated as the plaintiff’s pleadings.  There is no need to have new pleadings filed.  If the issues are not clear from the affirmations filed by the parties, it is also possible to frame the issues for the court to decide instead of turning it into a writ action.

Conclusion

41.  For all the above reasons, I find that there is no genuine or substantial issue of fact that requires the present proceedings to be turned into a writ action.  The sole issue in dispute is whether the defendant’s use of the Property is in breach of the DMC and/or the OP.  The lack of pleadings in the present case will not cause any difficulties for the court to determine this question of law.

42.  Accordingly, there is no reason to prolong the proceedings by converting it into a writ action, and the defendant’s application must be dismissed.

43.  I therefore order as follows:-

(a) The Summons dated 7 October 2014 be dismissed;

(b) Costs order nisi: The defendant do pay the plaintiff its costs of the said Summons with certificate for one counsel to be assessed summarily on papers;

(c) The plaintiff do submit and serve its Statement of Costs within 14 days from the date of this order; and

(d) The defendant do submit and serve its Summary of Objections within 14 days thereafter.