Owner placing advertising hoardings on a common part

Hollywood Shopping Centre Owners Committee Ltd v Wing Wah Building Mongkok Kowloon (IO) ([2011] 4 HKLRD 623, CA) concerned a mixed commercial / residential building. There was a DMC for the entire building and an owners corporation (‘the Incorporated Owners’) had been established. Two shops on the ground floor and all of the shops on the mezzanine and first floors were assigned to Gladford Ltd which organised these properties into the Hollywood Shopping Centre (‘the Shopping Centre’). A sub-DMC was set up for the Shopping Centre and Hollywood Shopping Centre Owners’ Committee Ltd was incorporated (not under the Building Management Ordinance) to manage the Shopping Centre (‘the Hollywood Corporation’).

The dispute centred on the use of a canopy which was on the external wall of the building between the ground and mezzanine floors. For some time, owners in the Shopping Centre placed box lights on the canopy. From 2000, the air space between the canopy and the underside of the second floor was used to display huge advertising boards fixed to the external walls of the Shopping Centre. In 2007, the Incorporated Owners objected to this and sought to recover the profits made by the Hollywood Corporation from these boards since they were attached to a common part. At first instance, it was held that the Hollywood Corporation had made use of a common part for the private benefit of itself. This use could not continue. It was also held, though, that the Incorporated Owners had acquiesced in the use of the boards from 2000 to 2007 and so could not recover the profits up to the end of the extant agreement which expired in 2008. There was an appeal by the Hollywood Corporation and a cross-appeal by the Incorporated Owners.

On appeal, the Hollywood Owners claimed to be able to rely on adverse possession in respect of the wall. This failed because there had not been exclusive possession for the full twelve years. They argued that the canopy and walls in question were not a common part. This failed; they had not been included in any assignment to an owner.

They sought to rely on a quasi-easement under Wheeldon v Burrows. This failed because the Hollywood Corporation was not an owner nor (unlike perhaps a corporation incorporated under the Building Management Ordinance) would it be possible to lift the corporate veil between the owners of units in the Shopping Centre and the Hollywood Corporation; hence the Hollywood Corporation had no locus standi.  In any event, there had been no evidence at the trial as to how the canopy was being used at the time of the first assignment of the various units. Without this evidence, the question could not be considered. In any event, as part of its adverse possession claim, the Hollywood Corporation had pleaded that it had not had the benefit of any easement in respect of the canopy. This pleading contradicted the claim to any type of easement or quasi-easement.

The Hollywood Corporation argued that it had an easement on the basis of the doctrine of lost modern grant (after China Field). The Court of Appeal does not seem to have been concerned at the invocation of the doctrine but pointed out that it must be the owners of units in the Shopping Centre who were claiming the easement. The doctrine applies to ‘real’ easements. Since they were also owners of the entire building, there could be no easement.

There could be no question of a permanent waiver (applying Attorney-General of Hong Kong v Fairfax) of the right to enforce the covenant not to convert common parts to private use since the Incorporated Owners did not have the power to do this. Inany event, the acquiescence had been for too short a period. They had, however, acquiesced in the breach until 2007 and could not recover the profits before 2008 when the relevant agreement expired.

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