Centre Chase Investment Ltd v The Incorporated Owners of Castle Peak Road International Industrial Building & Another 

[2024] HKCA 1179 addressed an important question in Hong Kong’s dense urban context: the extent to which a building’s incorporated owners (IO) can waive or acquiesce to an owner’s breach of provisions within a Deed of Mutual Covenant (DMC).

The owner of a unit in an industrial building brought proceedings to compel the IO to take action against another unit owner who installed window frames on the building’s external wall for feng shui purposes. The IO’s management committee by resolution approved the existing non-structural installations, including the window frames, until the external walls were repaired in the future. A key issue in the later legal dispute was whether the IO actually had power to approve breaches of the restrictive covenants in the DMC precluding the erection of signboards etc on the building exterior as well as alterations to the same.

Upholding the Lands Tribunal’s decision below, the Court of Appeal found that neither the IO’s statutory duty to enforce the DMC nor the appellant’s characterisation of the relevant DMC covenants as “total preclusions” prevented the IO from approving breaches of those covenants. The Court held that the questions of waiver and acquiescence should not depend on whether there are consent provisions in the DMC or whether the relevant covenant is qualified or unqualified. The Court affirmed what it described as the “new” approach laid down in 

Hollywood Shopping Centre Owners Committee Limited v IO of Wing Wah Building Mongkok Kowloon

 [2016] 2 HKLRD 190, which contrasts with the approach in cases such as 

IO of Hoi Luen Industrial Centre & Anor v Ohashi Chemical Industries (Hong Kong) Ltd

 [1995] 2 HKC 11. The “new” approach in 

 emphasises that under s.34I(1)(a) of the Building Management Ordinance (BMO), the IO may give approval to owners who have converted common parts to their own use.

The Court of Appeal’s judgment may give rise to further questions for the courts as to whether, as the law now stands, an IO always has the power to waive or acquiesce to a breach of DMC not involving illegality, or whether (and if so when) the IO’s power to waive and acquiesce is constrained by the specific provisions in the DMC.

, instructed by C.W. Chan & Co., acted for the applicant.

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