Posts Tagged ‘acquiesence’

Developer’s informal allocation of private parking space in the common area

May 20, 2017

In Faraday House (IO) v Shine Wheel Ltd ([2017] HKEC 957, LT) P was the purchaser of a flat in Faraday House in 1992. The estate was then a new development and she bought from the developer. She wanted three car parking spaces. Two of the spaces she was offered were allocated as private car parking spaces. The third space (‘the Adjacent Space’) was next to these spaces but was in the common area of the development.

The selling agent assured P that he would arrange for the developer to expressly acknowledge her right to use the Adjacent Space as a private car parking space (‘the Assurance’). P paid HK$250,000 for the two ‘official’ spaces and HK$50,000 for the Adjacent Space.

The Adjacent Space was never re-designated as an area for P’s exclusive use but P was issued with a Permission Letter allowing her to use the space. She was given three car parking permits. The owners incorporated in 1996 and a new manager was appointed at that time.

P used the three spaces for sixteen years until 2014. The owners’ corporation then demanded that she cease using the Adjacent Space. When P refused to comply, the corporation brought proceedings seeking an injunction preventing P from parking in the Adjacent Space. Parking in the common areas was a breach of the DMC.

The Lands Tribunal (Judge Kot) started from the proposition that the Permission Letter to use the Adjacent Space was a licence. The developer could not have granted a licence over the Adjacent Space since it had already been designated as a common area; the licence was invalid. Even if it were valid, it would be revocable; there were no equitable grounds for restraining this revocation. Even if it were irrevocable, it would not bind the IO which took over control of the common parts in 1996.

Promissory estoppel, the principles of which were most recently articulated in Hong Kong in Luo Xing Juan v Estate of Hui Shui See ((2009) 12 HKCFAR 1) could not help. The IO were not bound by an assurance given by the developer. The act of allowing P to park in the Adjacent Space for many years could be seen as an assurance. P had not, however, incurred any detriment in reliance on this (the HK$50,000 having already been paid).

Acquiescence was a possible defence given the nature of the covenants that had been broken. There had been an assurance or lying by on the part of the owners. It was not, however, unjust in all the circumstances to grant the injunction sought. P had had the benefit of the Adjacent Space over many years and would not be caused any hardship.

Michael Lower

Allegation that directors lacked authority to commit corporate landlord

June 18, 2013

In Hong Kong Hai Zhou Tong Xiang Association Ltd v Ngai Shun Wah ([2013] HKEC 739, LT) T’s tenancy expired in 2012. L sought possession on the basis that the fixed term had expired and that T had sub-divided the property in breach of covenant. T’s defences were that he had been granted a new lease until July 2016 and that L had known all along of the sub-division and had acquiesced. L responded that the directors who had countersigned the company seal lacked authority and that the seal that had been used was a fake. T succeeded on both counts.

First, even if the countersignatories lacked actual authority (the Tribunal thought they probably had actual authority) they had apparent authority ([15]). As for the seal, even if it were a fake (and the Tribunal was not persuaded of this) T could rely on the rule in Turquand ([21]). Further, L had cured any possible procedural irregularity: its acceptance of rent amounted to a ratification of the lease  ([23]).

L had known of and acquiesced in the sub-division and could not complain of it. In any event, it had not served the notice required by section 58 of the Conveyancing and Property Ordinance.

Michael Lower