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  • The Court of Appeal gives an authoritative interpretation of BMO (Cap. 344)  s.45(3) in Hung Wai Building (IO) v Sunny Elegant Ltd & Others [2022] HKCA 426; [2022] 2 HKLRD 249; [2022] 3 HKC 510

The Court of Appeal gives an authoritative interpretation of BMO (Cap. 344)  s.45(3) in Hung Wai Building (IO) v Sunny Elegant Ltd & Others [2022] HKCA 426; [2022] 2 HKLRD 249; [2022] 3 HKC 510

11 July 2022

Brief Facts   

A was the incorporated owners of a building (the “Building”), which comprised a commercial podium with shops on the ground floor and office units on the first floor (the “Offices”) and two residential blocks. R1-4 were, respectively, the owner, the principal tenant, the sub-tenants/licensees and occupiers of a shop and the Offices. Rs erected structures and objects in certain areas on the ground and first floors (the “disputed areas”) and installed air-conditioners and chimneys on the external walls of the Building. A applied to the Lands Tribunal (“LT”) for a declaration that the disputed areas were common parts of the Building, an injunction requiring Rs to remove all the structures and objects and to reinstate the common parts to their original condition, and damages. Rs contended that the disputed areas were not common parts of the Building, that they had the exclusive rights to use the disputed areas and the external wall; and that R1 had acquired a proprietary interest in the disputed areas by virtue of proprietary estoppel. Rs applied to transfer the case to the High Court pursuant to s.8A of the Lands Tribunal Ordinance (Cap.17) (the “LTO”). Rs contended that since the case did not merely go into the construction and enforcement of the Deed of Mutual Covenant (DMC), but was extended to Rs’ claim on proprietary estoppel, it was outside the jurisdiction of the LT by reason of s.45(3) of the Building Management Ordinance (Cap. 344) (the “BMO”) [1]. The Presiding Officer dismissed Rs’ application. Rs appealed.

 

The Decision                       

In dismissing the appeal, the Court of Appeal held (per Cheung JA, Kwan VP and Au JA concurring) that: -  

  1. (1) A’s claim, which involved an interpretation of the DMC on whether the disputed areas were common parts, and was concerned with the use, occupation and possession of common parts, fell within the LT’s jurisdiction pursuant to paras. 2 and 3 in Sch.10 to the BMO.  The LT was empowered to grant declaration, injunction and damages under s.8(9) of the LTO.
  2. (2) S.45(3) should be narrowly construed and the restriction will only apply where both parties to the proceedings were relying on the terms and provisions contained in the registered instruments such as the assignment and DMC to advance or defend their respective case. If they did, then the LT did not have jurisdiction to make orders that would have the effect of rendering void, negativing or substantially varying those terms and provisions. The restriction was not directed towards any contractual or proprietary right of an owner or occupier but only, as s.45(3) provides, the right “referred to in the terms and provisions in an instrument which is registered in the Land Registry, including a [DMC], if any”. Rs’ alleged proprietary right in the disputed areas did not come within the terms of the above words because it was not based on the terms and provisions of any instrument but on matters extraneous to them.   
  3. (3) The “or otherwise” referred to any person other than “any owner or occupier”, such as an incorporated owner, and the “registered instrument provision” qualified “any contractual or proprietary right enjoyed by any owner or occupier or otherwise”. The contractual or proprietary right of an owner or occupier that was not allowed to be affected by an order of the LT in relation to building management was the right that had been expressly provided for in the first place in the registered instruments, which conferred the rights and obligations to the owners or occupiers of the building. The restriction in s.45(3) had nothing to do with the contractual or proprietary claims acquired by an owner or occupier in respect of the common parts of the building by way of proprietary estoppel or adverse possession. The restriction only applied in situations where both parties asserted a contractual or proprietary right which was provided for in a registered instrument.

 

Key Takeaways    

The Court of Appeal’s construction of s.45(3) of the BMO avoids the “most absurd result” in that, as in the present case, even though A’s claim came squarely within the jurisdictional ambit, as a result of the defence raised by Rs, the matter would fall outside the jurisdiction of the LT.

The decision of the Court of Appeal, in this case, is consistent with the decision of the Court of Appeal in an earlier case Mountain View (IO) v Heart Cuisine [2012] 4 HKLRD 628, in which the Court of Appeal held that the LT had jurisdiction to deal with cases where adverse possession was advanced as a defence to the IO’s claim on the common parts of the building.     

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[1]  S.45(3) of the BMO provides: “Subject to the provisions of this Ordinance, nothing in this section or  Schedule 10 shall be construed to vest in the tribunal any jurisdiction other than civil jurisdiction or any jurisdiction to make any order which would, if made, have the effect of rendering void, negativing or substantially varying in whole or in part any contractual or proprietary right enjoyed by any owner or occupier or otherwise referred to in the terms and provisions of an instrument which is registered in the Land Registry including a deed of mutual covenant (if any)”.    

 

For the full version of the judgment, please see https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=142954&currpage=T

Lawrence KF Ng appeared for the applicant incorporated owners, the respondent to the appeal      

              

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