In Centre Chase Investment Limited v The IO of Castle Peak Road International Industrial Building and Another [2026] HKCFA 26, the Court of Final Appeal upheld an owners’ corporation’s power to waive or acquiesce in a breach of the deed of mutual covenant (“DMC”), notwithstanding the wording of Section 18(1)(c) of the Building Management Ordinance (Cap. 344) (“BMO”), which provides that the corporation shall “do all things reasonably necessary for the enforcement of the obligations contained in the [DMC] for the control, management and administration of the building”.
The dispute arose from an owner’s installation of several window frames on the external wall of the Building (“Window Frames”) in question. Apart from the Window Frames, there were other structures, e.g. supporting frames for air conditioning units, erected by other owners of other units of the Building throughout the years. In view of the Appellant’s complaints that the installation of the Window Frames constituted a breach of the DMC, the IO passed a resolution approving the installation pending the renovation of the external wall. The Appellant commenced legal proceedings against the IO, seeking a mandatory order to compel the IO to enforce the DMC.
The CFA unanimously dismissed the appeal. Taking into account the statutory context, purpose and design of the BMO, Lam PJ held that Section 18 BMO must cater for flexibility for the owners’ corporations enforcement of obligations under the DMC, which necessarily involves competing interests and priorities. The management committee should have full managerial discretion in choosing the best way to tackle a breach, including but not limited to waive or acquiesce in a breach. The Court also took this opportunity to address the legal conundrum caused by diverse authorities in Hong Kong throughout the years, stating that reasoning in the earlier cases of Hoi Luen Industrial Centre and Chungking Mansions cannot be sustained and should not be followed.
Chief Justice Cheung and Mr Justice Gummow NPJ delivered separate concurring judgments.
The full judgment can be viewed here: https://lnkd.in/gB3ck6et.
Parkside’s Lok Ho (with Mr Lewis Law), instructed by Vitus Lawyers, appeared for the IO
Lok also appeared for the IO in the proceedings below.
Read more about Lok here
