Land Law

On 18 June 2026, the CFA handed down an important judgment (Centre Chase Investment Limited v The Incorporated Owners of Castle Peak Road International Industrial Building & Another [2026] HKCFA 26) addressing the interaction between the duty of an owners’ corporation to “do all things reasonably necessary for the enforcement of the obligations contained in the deed of mutual covenant (if any) for the control, management and administration of the building” under s.18(1)(c) of the Building Management Ordinance (“BMO”) and the defences of waiver and acquiescence.  The CFA unanimously held that, save for breaches involving illegality, waiver or acquiescence apply to proceedings commenced by an IO for the enforcement of DMC obligations.  The judgment overruled earlier appellate authorities which held that s.18(1)(c) would prevent IO from effectively waiving or acquiescing in DMC breaches.

Henry Cheng (led by Mr Abraham Chan SC, with Mr Lawrence K F Ng and Mr John Leung) acted for the appellant.

Background

The dispute arose from the installation of window frames on the external wall of a unit in a multi-storey industrial building (“Building”).  There was no dispute that the installation of the window frames was in breach of the DMC of the Building, but by a resolution passed by the management committee (“Resolution”), the IO of the Building approved the installation of the window frames.  The Appellant, being the owner of another unit, objected to the installation of the window frames and to the passing of the Resolution and sought to compel the IO to take enforcement action in respect of the breach. 

The issue before the CFA was that given s.18(1)(c) provided that the IO shall “do all things reasonably necessary” for the enforcement of DMC, whether the IO has the power to waive or acquiesce in DMC breaches.

The conflicting authorities

The authorities are divergent on this issue.  An older line of authorities (which included the well-known CA case of The Incorporated Owners of Hoi Luen Industrial Centre v Ohashi Chemical Industries (Hong Kong) Ltd [1995] 2 HKC 11) suggested that an IO cannot lawfully waive or acquiesce in any DMC breaches, as to do so would be in breach of the IO’s statutory duty under s.18(1)(c) of the BMO.  However, as the CA noted in the intermediate appeal of this case, the courts have in recent cases adopted a new approach that an IO could waive or acquiesce in breaches so long as the relevant covenant did not totally preclude an owner from doing the prohibited acts. 

The CFA’s analysis

Although the CFA dismissed the appeal (Lam PJ delivering the lead judgment, with Cheung CJ and Gummow NPJ delivering concurrences), their Lordships’ analyses departed from both the older cases and the new approach.

The CFA held that:

• IO’s duty under s.18(1)(c) is purposive, which means the enforcement of the DMC is not an end in itself but rather a means directed to the control, management and administration of the building. Therefore, there may be situations in which it is not reasonably necessary to take actions in respect of a breach. 

• An absolute duty to enforce every DMC breach would be inconsistent with s.34I of the BMO, which expressly permits IO to approve (by a resolution of the management committee) a conversion of a common part to a co-owner’s own use.

• The nature of an IO is a corporate embodiment of the co-owners collectively, but not a public authority. 18(1)(c) aims at regulating the internal management of private buildings, but not protecting the public at large.  Therefore, there was no principled reason why waiver and acquiescence should not apply to claims by IO as they do to claims by individual owners. 

• IO has power under s.18(1)(c) to waive or acquiesce in DMC breaches not involving illegality and there is no need to further inquire whether the breach is one “totally precluded” under the DMC.

Significantly, as obiter dictum, the Chief Justice noted that even if an IO’s inaction amounted to a wrongful failure to perform its statutory duty under s.18(1)(c) (for example, because legal action was reasonably necessary in that case), an owner may still establish waiver or acquiescence in a claim by IO where the facts justify such defences. Other co-owners also may face difficulty compelling the IO to commence enforcement proceedings in those circumstances because they would be met with a successful defence of waiver or acquiescence, and the Lands Tribunal may properly refuse relief (i.e. relief against the IO in accordance with the principles laid out in See Wah Fan v IO of Ki Tat Garden (Phase I) [2003] 3 HKLRD 1) on the ground that any enforcement action would be bound to fail.

Conclusion

This decision clarifies that an owners’ corporation may, in appropriate cases, waive or acquiesce in breaches of a DMC, save where illegality is involved. It is therefore likely to be of practical importance in cases where owners’ corporations, co-owners or management committees are dealing with alleged DMC breaches, particularly where the relevant conduct has been tolerated or regularised over time. For practitioners, the case is a useful reminder that the availability of enforcement relief will depend not only on the terms of the DMC and the BMO, but also on the factual matrix and the way in which the breach has been treated by the parties.

Henry Cheng

Henry obtained his LLB at the University of Hong Kong and was called to the Bar in 2010. Since his admission, Henry has developed a well-regarded practice in commercial and civil litigation, appearing in cases involving land, conveyancing disputes and buildings management.

He has also provided legal opinions on Hong Kong law in a number of listing applications to The Hong Kong Stock Exchange Limited, including on the compliance with the Companies Ordinance and the Competition Ordinance. His practice also includes other areas of civil matters such as personal injuries litigation, insurance disputes, defamation disputes, and disputes involving equity and trusts.

View Henry’s profile for more information. 

This article was first published on 8 July 2026.

Disclaimer: This article does not constitute legal advice and seeks to set out the general principles of the law. Detailed advice should therefore be sought from a legal professional relating to the individual merits and facts of a particular case. The photographs which appear in this article are included for decorative purposes only and should not be taken as a depiction of any matter to which the case is related. The views and opinions expressed in this article/material are solely those of the members authoring it and do not necessarily reflect the official policy or position of Denis Chang’s Chambers, or of any other member or members of Denis Chang’s Chambers.