Storrap Investment Ltd v. The Incorporated Owners of San Po Kong Mansion

LDBM 68/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 68 OF 2014

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J U D G M E N T

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1.This trial concerns whether or not the applicant, who is a unit owner of a building subject to both a deed of mutual covenant and a sub-deed of mutual covenant, is entitled to connect to a particular switch room of the building for electricity supply. The respondent, being the incorporated owners, opposes the application on grounds, inter alia, that on a proper construction of the sub-DMC the applicant has to make the application through the first owner of the sub-DMC.

Brief Background

2.At the junction of Choi Hung Road, Tseuk Luk Street and Yin Hing Street stands a composite building known as the San Po Kong Mansion (“Building”). When constructed, it comprised a theatre, shops and residential units. It is not in dispute that the Building was notionally divided into 800 equal undivided shares. All co-owners are subject to a DMC dated 15 May 1968 registered in the Lands Registry by memorial no.626378 (“the DMC”). Shops of the Building then constituted a shopping centre known as the Rainbow Shopping Arcade (“Rainbow”). It is not in dispute that the theatre, its roof and certain parts used in connection thereof as a theatre (“Theatre”) were allocated 80 undivided shares. The Theatre was used as a cinema and was assigned to a company which was a signatory to the DMC.

3.The respondent is the owners’ incorporation of the Building incorporated pursuant to the Building Management Ordinance, Cap 344 (“BMO”) on 13 October 1972 (“IO”)[1].

4.In or about 2008, the successor-in-title of the Theatre, namely, one On Rich (HK) Investment Limited (“On Rich”) converted the Theatre into a shopping centre by sub-dividing it into a number of shops. Each shop is allocated undivided share(s) of and in the Building. A Sub-Deed of Mutual Covenant (“Sub-DMC”) dated 3 March 2008 was executed. The shopping centre constituted by shops converted from the Theatre is now known as the On Rich Shopping Centre. It is referred to as “the Mall” in the said Sub-DMC (“Mall”). It is not in dispute that all assignments of units of the Mall are subject to and with the benefit of both the DMC and Sub-DMC.  

5.The applicant became the registered owner of a Mall unit, namely, shop 6 on the ground floor of the Mall (“the applicant’s shop”) holding 1 out of 800 undivided shares of the entire Building by an assignment dated 30 November 2012.

6.It is the applicant’s case that in or about January 2014 they applied to the respondent for access to a switch room (clarified by the applicant at trial as電錶房, i.e. the “meter room”) next to a transformer room, later identified by the parties as the “Choi Hung Road 96 Substation” (“CHR transformer room” and the switch room next to it the “CHR switch room”) for obtaining electricity supply to the applicant’s shop. It is now not in dispute that both rooms are next to each other and are within the boundary of one single room marked “transformer room” according to the approved plans. On a date unknown to the parties the transformer room marked on the approved plan was sub-divided into the aforesaid CHR transformer room and CHR switch room. Two representatives of the applicant attended a meeting with certain management committee members of the IO on 27 January 2014 to state its request. The applicant said that connection of electricity as proposed was refused by the IO on 14 February 2014. On 17 February 2014, when the applicant’s attempts to connect electricity to the said room were refused, it even reported the matter to the Police.

7.It is the applicant’s case that both the CHR transformer room and CHR switch room are common parts of the Building. The applicant should therefore have a free and uninterrupted right of access to the CHR switch room for electricity connection. An application was subsequently made to this tribunal on 17 March 2014 for basically:

i) a number of declarative reliefs including that the applicant has a right to obtain electricity by connecting to the CHR switch room pursuant to the DMC and the BMO; that the said CHR switch room is a common part of the Building; and that the IO should permit the applicant to connect to the CHR switch room for electricity; and

ii) loss and damages suffered by the applicant as a result of the said refusal of the IO.

8.It is most unfortunate that up to the date of trial, the applicant was still unable to connect to any switch room or transformer room of the Building for electricity supply. Accordingly, the applicant’s shop has been left vacant until the date hereof. The IO adduces no evidence to show otherwise.

9.As can be discerned from what has been pleaded in the Amended Notice of Opposition dated 24 June 2014, it appears that IO’s broad grounds of opposition are:

i) According to the applicant’s pleadings before amendment made on 30 March 2015, its application was basically for access to the CHR’s transformer room. However, the CHR transformer room and the CHR switch room are 2 different rooms. The former is under the control of the China Light and Power (“CLP”) whereas the latter that of the IO. As the switch room is not part of the transformer room, the applicant’s request to access to the CHR transformer room was inappropriate. The IO is unable to entertain a request for access to a room not under its control;

ii) by virtue of clauses 8, 9, 10 and 47 of the Sub-DMC, the applicant has irrevocably appointed On Rich for as long as On Rich remains a Mall owner, to be their attorney to enforce the provisions of the Sub-DMC and DMC. More specifically, pursuant to clause 47 of the Sub-DMC, only the first owner of the Sub-DMC, namely On Rich or its appoint contractor shall perform any installation of electrical wiring from the switch rooms or the transformer rooms for the purposes of connecting electricity to a Mall unit. The applicant therefore, according to the IO’s pleading[2], has wrongfully sued the IO; and

iii) at trial, Mr Law, counsel for the IO elaborated that by reasons of, inter alia, the aforesaid provisions of the Sub-DMC, the applicant should have made its connection application through On Rich before any such application can be entertained. Since the present application is made in breach of clause 47 of the Sub-DMC, the IO is entitled to decline the applicant’s application for obtaining electricity from the CHR switch room. 

10.It is therefore apparent that the application hinges on the proper construction of the relevant provisions of the DMC and Sub-DMC, and in particular Clause 47 of the Sub-DMC.

Location of the CHR Transformer Room and CHR Switch Room

11.When the application was at its interlocutory stage and before the application was amended[3], issue arose as to the exact transformer room the applicant would like to connect to. According to the IO’s legal representative, there were 3 transformer rooms. Apart from transformer rooms, there were also switch rooms. It was then the IO’s case that by merely pleading a transformer room in the application, the IO was unable to know exactly which room the applicant would like to have access to. It also appeared from submission of the parties’ legal representatives (then using English) that the parties might have confused the different rooms because they use the descriptions “transformer room”, “switch room” and the “meter room” loosely and inter-changeably. Expert directions were given with a view to finding out the number of transformer rooms on-site and to identify exactly their respective location with reference to plans annexed to assignments, DMC/Sub-DMC and/or those approved by the Buildings Authority.

12.A single joint expert Dr. Dickie Lau Kam Sing was appointed. After 4 reports[4], it is fair to say that the followings are now not in dispute, and are accepted by the tribunal as facts:

i) There are 2 transformer rooms in the Building,

a) one is designated by the CLP as the “Choi Hung Road 96 Substation No. 03404-6” which is the CHR transformer room aforementioned;

b) The other one is designated by CLP as the “Rainbow Shopping Arcade Substation No. 15850-8, 104 Choi Hung Road” (“Rainbow transformer room”);

ii) The CHR transformer room is part of a bigger room which has been sub-divided by a partition wall  into 2 with the other one a switch room, i.e. the CHR switch room referred to above;

iii) Both the CHR transformer room and the CHR switch room are within the boundary of a place identified as “transformer room” on the building plan [BOO ref. No. 2/4710/61] approved by the Building Authority on 28 January 1967[5];

iv) Both the CHR transformer room and CHR switch room as well as the Rainbow transformer room are outside the boundary of the Mall[6];

v) The CHR switch room has its access through doors adjacent to the lift hall of a residential block while the CHR transformer room has its access from Choi Hung Road;

vi) There is a space marked “transformer room” on the ground floor plan attached to the Sub-DMC. This is where the CHR transformer room and CHR switch room are located; and

vii) The applicant’s shop is closer to the CHR transformer/switch rooms than the Rainbow transformer room.

13.It is only after the first 3 reports by Dr Lau that the applicant made application to amend its pleading to state more specifically which room it would like to have access to when they first applied to the IO.

Evidence of CLP’s Engineer

14.Mr Tsang Tai Po, an engineer of CLP was summonsed to give evidence. His evidence is basically unchallenged by the parties. This tribunal accepts it in its entirety.

15.Mr Tsang explained that in a typical power supply situation, high voltage electricity power will be supplied to a transformer owned by the CLP. Power will then be stepped down and transmitted to the switchboards for distribution through the rising mains (上升總線) and the main switches to individual units of the building. The rising mains together with the main switches are normally owned by the the incorporated owners or management company. As such, consent of these owners needs be obtained before CLP will supply electricity to an applicant, who may be a tenant or owner of a unit[7]. It is one of the electricity supply conditions that the CLP transformer and related equipment should be housed in a room managed and controlled exclusively by the CLP, though it may not be owned by it. The switchboards and rising main switches are to be housed separately. The latter is normally called the switch room and is under the control of the owners’ incorporations or management company. CLP is responsible for costs of installing the transformer and the owners’ incorporation responsible for costs of the equipment in the switch room. In the present case, he agreed both the transformer rooms and the switch rooms are within the Building. The CHR transformer room is controlled by CLP whereas the CHR switch room next to it is controlled by the IO. 

16.It is Mr Tsang’s evidence that normally if there is a request for supply or increase of power to a unit, the request maker needs to first of all obtain rising main owner’s consent for safety and overall loading consideration before CLP will accede to such request. Of course as a separate consideration, CLP would consider whether the transformer at its end can accommodate the increase in loading.

17.He confirmed that before conversion into the Mall, the Theatre’s electricity supply system was part and parcel of the Building’s supply system. There was then only one transformer room, namely the CHR transformer room. Since the electricity loading of the Building has increased recently, an additional transformer station, namely the Rainbow transformer room was set up. Each transformer has a maximum capacity of 1500 KVA.  He confirmed that as at now, the level of use of the CHR transformer room does not exceed 1100KVA whereas that for Rainbow was only about 500-600KVA. The applicant only applied for supply of loading not exceeding 60A (single phrase) for his shop. It is the usage of a normal household and can be regarded as a low user. He confirmed no matter which transformer room the applicant’s unit was to connect to, there should be no problem on the CLP side. CLP, he said, did not mind which switch room, i.e. the CHR switch room or the Rainbow switch room the applicant’s unit is to connect to. The issue is whether the IO is willing to give consent, and if so, to which room.

18.He confirmed that apart from the 2 transformer rooms, there was also one switch room situated within the Mall supplying a maximum of 400A low voltage power supply (“400A switch room”). He marked on Exhibit A-1 (a part Ground Floor plan) the location of this switch room. It is situated on ground Floor within the boundary of Shop 1 of the Mall. According to the plans attached to the Sub-DMC, Shop 1 is not designated a common area of the Mall. According to Mr Tsang, the 400A switch room supplied electricity to an elderly home and some shops on the 1^st and 2^nd floor. He confirmed that since it was a low voltage supply, there is no need for a corresponding transformer room. Both CLP and its customers can have access to this switch room.

19.Although there is no dispute that this 400A switch room is situated within the Mall’s boundary, CLP does not advise power to the applicant’s unit be obtained from this 400A switch room. It is because this low voltage switch room has almost been fully loaded. The capacity of this low voltage switch room cannot be increased without the installation of a corresponding transformer room.

20.Mr Tsang confirmed that some Mall owners obtain electricity from the CHR transformer room, though this transformer room was mainly for supply of electricity to residential units of the Building. The Rainbow transformer room is mainly for supply to shops of Rainbow. He considered the applicant’s shop was more close to the CHR transformer room than the Rainbow transformer room.

Construction of Clause 47 of the Sub-DMC and other Provisions

21.Clause 47 of the Sub-DMC provides:

“No Mall Owner (save and except the First Owner [i.e. On Rich]) shall perform any installation of or repair work to the electrical wiring from the switch rooms (if any) or the transformer rooms (if any) for the purposes of connecting or re-connecting electricity to any Unit or any part or parts of the Mall save with the prior written approval of the First Owner and such work shall be carried out by the First Owner or any contractor appointed by the First Owner at the expense of the Mall Owner thereof and in such manner as the First Owner shall in its absolute discretion think fit.”

The IO’s Submission

22.The IO’s argument is simple and straightforward. It is submitted by Mr Law that the plain wording of the sub-DMC states unequivocally that for the purposes of connecting or re-connecting electricity to the applicant’s shop (i.e.  a Unit as defined in the sub-DMC) from the switch rooms or transformer rooms, which mean any such rooms no matter inside or outside the Mall, the applicant must:

i) obtain the prior written approval of On Rich; and

ii) such work shall be carried out by On Rich or any contractor appointed by On Rich and in such manner as On Rich shall in its absolute discretion think fit.

23.Mr Law’s basis is basically this: the combined effect of Clause 47 aforesaid, together with Clauses 8(t), 9 and 10 of the sub-DMC[8] is that the applicant has to make its application through the IO, failing which it amounts to a breach of the sub-DMC. In other words the applicant cannot make direct application to the IO, but has to do so via On Rich. It will be inequitable for the tribunal to grant any reliefs as now sought by the applicant in breach of the sub-DMC, though the IO is not a party to the said sub-deed.       

The Applicant’s Submission    

24.The primary position of the applicant submitted by Mr Yu is this. Under the BMO and common law, the IO simply has no locus to deploy, rely and/or enforce clauses of the sub-DMC as a defence against the applicant: §18-003 of Chitty on Contract (31^st ed) and Scruttons Ltd v Midland Silicones Ltd[9] are relied on. It is submitted that in Rightop Investment & Another v Yu Tsui Sheung & Other[10] and Incorporated Owner of Po Lok Building v Leung Koon[11], the IO has no statutory duties and powers to deploy, rely or enforce the sub-deed since it falls outside the meaning of the DMC as defined under the BMO.

25.Mr Yu’s second ground is that Clause 6 of Section IX of the sub-DMC provides that no provision in the Sub-DMC shall prejudice or in any way be construed to prejudice or exclude the operation and/or effect of the provisions of the DMC. It is Mr Yu’s submission that this is a “trump provision”. It trumps Clauses 8, 9, 10 and 47 of the Sub-DMC which cannot prevent the operation of the DMC permitting the applicant, who is also an undivided share holder of the Building and a party of the DMC, to enjoy its rights thereunder.

26.Mr Yu’s fall-back is that on a proper construction of Clause 47 of the Sub-DMC, there is simply no breach of this provision. Clause 47, according to Mr Yu, only applies to transformer room and/or switch room to be constructed within the boundary of the Mall, not those already in existence when the Sub-DMC was in force.

Discussion

27.This tribunal would like to deal with direct whether on a proper construction of Clause 47 of the Sub-DMC, there is any breach on the part of the applicant as alleged.

28.Unit owners in a multi-storeyed building are in the relationship of co-owners of a piece of land together with the buildings thereon each holding undivided share(s) of the said land and buildings. By the principle of the unity of possession, each co-owner is, prima facie, entitled to assert rights of possession, use and enjoyment to every part of the land and buildings in common with other co-owners. However, in order for multi-storeyed buildings to be enjoyed by multiple co-owners, each co-owner covenanted with each other in a DMC that he would only be entitled to the exclusive use occupation and enjoyment of a specified part of the land and/or building, i.e. his own unit. Further, the DMC also sets out the respective rights and obligations of these co-owners over the use and enjoyment of the land and the buildings thereon as between themselves, e.g. designation of common areas, and as between third parties, e.g. the Government as the grantor of the land.

29.When a co-owner of a part of the building of which he has an exclusive right of use and enjoyment subdivides that part and sells the sub-divided parts to various owners, a sub-DMC will very often be executed by owners of that part if there is no provision in the main DMC prohibiting the sub-division. Similar to a DMC, the sub-DMC serves to regulate the rights interest and obligations of co-owners of that part as between themselves on their use and enjoyment of that part and vis-à-vis third parties. Since each owner of a sub-divided part derives its title from the original owner to the DMC, it is also a co-owner of the entire land and building. He is therefore equally bound by the DMC. So long as there is no conflict between the terms of the sub-DMC and the DMC, the sub-DMC may contain whatever terms which the owners of the sub-deed may agree to.

30.In Jumbo King Ltd v Faithful Properties Ltd & Others[12], Lord Hoffmann NPJ set out some principles in construing a DMC, and the tribunal considers they are also applicable to Sub-DMC:

“The construction of a document is not a game with words. It is an attempt to discover what a reasonable person would have understood the parties to mean. And this involves having regards, not merely to the individual words they have used, but to the agreement as a whole, the factual and legal background against which it was concluded and the practical objects which it was intended to achieve. Quite often this exercise will lead to the conclusion that although there is no reasonable doubt about what the parties meant, they have not expressed themselves very well. Their language may sometimes be careless and they may have said things which, if taken literally, mean something different from what they obviously intended. In ordinary life people often express themselves infelicitously without leaving any doubt about what they meant. Of course in serous utterance such as legal documents, in which people may be supposed to have chosen their words with care, one does not readily accept that they have used the wrong words. If the ordinary meaning of the words makes sense in relation to the rest of the documents and the factual background, then the court will give effect to that language, even though the consequences may appear hard for one side or the other. … But the overriding objective in construction is to give effect to what a reasonable person rather than a pedantic lawyer would have understood the parties to mean. Therefore, if in spite of linguistic problems the meaning is clear, it is that meaning which must prevail.

31.So construction of the DMC within its context is important. Further, a common sense and purposive approach should be adopted. The factual background of this case is that originally the Building comprised a Theatre for cinema purpose. From the drafting of the DMC, it is perhaps its intention that the Theatre and other part of the Building should be managed separately, and therefore the Theatre owner is excluded from using many of the common facilities of the Building, e.g. entrance hall staircase, landing and corridors, open yards[13], lifts installed in the Building connecting to upper floors[14]. It is also not required to engage a manager and therefore not required to contribute to its remuneration[15]. That, however, does not mean that the Theatre and the rest of the Building are 2 separate autonomous buildings with a result that Theatre owner or its assigns are excluded from enjoying the common facilities of the Building totally. It is exactly the purpose of the DMC to define the scope of the respective rights and responsibilities of co-owners. Under clause 12(d) of the DMC, it has been expressly provided that the Theatre owner shall contribute to the expenses enumerated in clause 9 of the DMC, namely Government Rents, water charges, insurance premium against loss for damage by fire and costs of rebuilding of the Building in case the Building is destroyed, and, in particular, the following:

“… cost of maintaining the transformer room such contribution to be 80 equal 800^th part of the said cost;”

32.This provision is clear and unequivocal. It is now the parties’ common ground a transformer room is a common part of the Building. It is now also not in dispute that the only transformer room in existence when the Building was first completed was the space now designated the CHR transformer room and the associated CHR switch room. According to the unchallenged evidence of Mr Tsang which this tribunal accepts, the power supply system of the Theatre was in fact part of that of the entire Building. Accordingly, the DMC contemplates the Theatre would be obtaining electricity supply from the CHR transformer room, and thus it is required expressly to contribute to its maintenance according to the undivided share ratio.

33.Under clause 29 of the DMC, it is provided that the grants and covenants of every party thereto (necessarily including the owner of the Theatre) shall be binding on its successor-in-tile and assigns. It is further provided in clause 30 of the DMC as follows:

“The parties hereto and each of them their respective successors and assigns while they may be shown on the register at the Land Office or may otherwise prove themselves to be the owner or owners of any undivided shares or interest of the premises shall be deemed to be the owner of some part of the building or premises to which the benefit of the forgoing covenants and agreements have been annexed and shall be deemed to have the benefit thereof within the meaning of the Law of Property (enforcement of covenants) Ordinance 1956.”

34.By the provisions set out in the preceding paragraph, the benefits of the DMC are available to each co-owner deriving title from the original owner of the Theatre. Further, after perusal of the DMC, there is no provision in the DMC prohibiting the estate and interest held by the Theatre Owner to be co-owned or sub-divided. Neither is there any provision stipulating that the benefits enjoyed and responsibilities held by the Theatre owner or its successor in title or assigns should be enjoyed or held by them as a whole. There is simply no prohibition in the DMC against a co-owner of the Theatre (now the Mall) from connecting to the CHR transformer room as the Theatre owner used to do before. It has been suggested by Mr Law that the rights of the Theatre Owner to the transformer room has been extinguished by the Sub-DMC. By reasons of what have been discussed, this tribunal disagrees.

35.Now that the Theatre owner converted the Theatre into a commercial plaza. Ownership of that particular part, instead of being under one owner, was sub-divided and vested in several co-owners. This group of co-owners now regulated their own rights and obligations against each other by entering into the Sub-DMC. Their purpose was stated in paragraph 6 of the preamble of the Sub-DMC which stipulates:

“The parties hereto have agreed to enter into this Sub-Deed [i.e. Sub-DMC] for the purpose of making further provisions for the management operation servicing maintenance repair promotion and insurance of the Mall and for the purposes of further defining and regulating the rights interest and obligations of owners thereof and all subsequent owners in respect of the Mall so far as the same relate thereto between owners for the time being of the Mall.” (emphasis added)

36.The description “Mall” used in the Sub-DMC referred to the On Rich Shopping Centre, i.e. the Theatre[16]. So from the preamble, the main purpose of the Sub-DMC is to regulate the rights and obligations in using the Mall by the Mall’s co-owners as between themselves.

37.Clause 6, Section IX of the Sub-DMC further provides that:

“No provision in this Sub-Deed shall prejudice or in any way be construed to prejudice or exclude the operation of the provisions of the [DMC]”

38.This is referred to as the “trump provision” by Mr Yu. This tribunal shares Mr Yu’s submission that this provision manifests the intention of the parties to the Sub-DMC that by entering into the Sub-deed, they do not mean to limit or take away any rights or interest of a Mall co-owner under the DMC. The right to use the common facilities of the Building, including the CHR switch room, is obviously one of such rights.

39.The above should be borne in mind in construing the Sub-DMC. The said sub-deed does not intend to put restriction or remove the rights of a Mall co-owner on the use of the common facilities of the Building afforded to them by the DMC. In any event, there is no provision in the DMC restricting that the transformer room can only be enjoyed by all co-owners of the Theatre (i.e. the Mall) as a group. In case of ambiguity in the meaning of a provision in the Sub-DMC, it should not be construed in such a manner as to offend the purpose of the Sub-DMC in its preamble as well as the manifest intention in clause 6 of Section IX of the same Sub-deed.

40.Attached to the Sub-DMC there is a Ground Floor plan with a space marked thereon the “Transformer Room”. It is not in dispute that this area is where the CHR switch and transformer rooms are situated. This was the very first transformer room serving the entire Building and the Theatre. They should have been there as at the date of the Sub-DMC. However, the drafter of clause 47[17] of the Sub-DMC saw fit to include the phrase “(if any)” after respectively “switch rooms” and “transformer rooms”. Accordingly the switch rooms and transformer rooms should, submitted by Mr Yu, be construed to refer to those rooms to be constructed after the Sub-DMC, not the said room already in existence otherwise they should have simply to refer to it or identify them on the plan.

41.It is noted that in clause 8 of the Sub-DMC, when “Mall common Areas” were referred to, the words “if any” in bracket were also used. However, the common areas of the Mall have already been defined and shown in the attached plan by yellow colour and marked thereon “Y”. Mr Law therefore contended that even if the words “if any” were used, it cannot be inferred that the drafter intended to mean something that is to exist in future. It can also refer to something already in existence as in the case of Mall common areas. So it is Mr Law’s submission the natural and straight forward construction should be adopted, i.e. they refer to any existing or future transformer/switch rooms, including the CHR transformer/switch rooms.

42.Mr Law’s argument in this respect appears attractive. In the tribunal’s judgment, the drafter may have use the phrase “if any’ in a loose sense to denote something in existence or not yet in existence. It may perhaps be a lazy way of drafting with a view to catch all. However, as stated above, the purpose of the Sub-DMC is mainly to regular the use of the Mall (as against use of the entire Building) by the Mall co-oweners. At the same time such regulation should not prejudice Mall owners’ rights to use the common facilities of the Building, contrary to clause 6 Section IX of the Sub-DMC.

43.Applying the principles of construction aforesaid, it would appear to a reasonable person that by clause 47 of the Sub-DMC, the Mall co-owners intend to impose restriction when connection is made to “switch rooms and transformer rooms which are within the Mall”. Accordingly, the CHR transformer/switch rooms and Rainbow transformer/switch rooms, no matter when coming into existence, are not intended to be caught.

44.There is no evidence from Mr Tsang of CLP as to when the 400A switch room was constructed. On a balance it was the finding of this tribunal it was constructed after the occupation of the Mall when the elderly home was in business, and therefore after the date of the Sub-DMC. Counsel for the 2 parties did not consider it necessary to re-call Mr Tsang to clarify this issue. Even if the tribunal were wrong on this, it will be immaterial to the construction of this tribunal reached in the preceding paragraph. Further, there is no provision in the Sub-DMC restricting that if and when electricity supply is to be obtained, a Mall unit owner should make connection to the switch/transformer rooms situated within the Mall.

45.It will be unnecessary for the tribunal to rule whether, and if so, to what extent the applicant is bound by clause 47 of the Sub-DMC if it wants to obtain electricity from the 400A switch room. It is because the said 400A low voltage switch room is situated within an area apparently exclusively owned by owner of shop 1, and not a common part of the Mall within the definition of the Sub-DMC. The effect of clause 47, in light of other provision of the Sub-DMC, has not been fully argued, and in particular, by the interested party, namely, owner of the said shop 1. In any event, suffice it to say that it is the construction of this tribunal that clause 47 does not prohibit a Mall owner from connecting to switch/transformer rooms outside the Mall. It only purports to impose limitation if a Mall co-owner wants to connect to a switch room or transformer room within the boundary of the Mall.

46.The contention of the IO is, in the tribunal’s judgment, apparently based on a misconceived view that since the Theatre owner is a single entity in the DMC, they should have enjoyed their right under the DMC as a whole. They consider Clauses 8(t), 9 and 10 of the sub-DMC are particularly drawn up to give effect to the co-owners to act as a whole. Clauses 8(t), 9 and 10 of the sub-DMC respectively stipulate:

“8. Notwithstanding any provision to the contrary herein contained the First Owner (for so long as it remains as a Mall Owner) reserves the following full and unrestricted rights at any time from time to time:-

…

(t) the right,(sic) to represent all Mall Owners in all matters and dealings with the Government or any statutory body or any utility company or other competent authority, the Owner’s Committee of the Building (where an Incorporated Owners has been formed, the management committee of the Incorporated Owners) or any other person in any way touching or concerning the Mall as a whole in accordance with the provision of this-Deed with powers to bind all Mall Owners as to any policy and adopted or decision reached or action taken in relation to any such dealings.

…

9. The Mall Owners hereby jointly and severally and irrevocably appoint the First Owner as their attorney and grant unto the First Owner the full right power and authority to do all acts deeds matters and things and to execute and sign seal and as their act and deed deliver such deed or deeds and to sign such documents or instruments as may be necessary for the exercise of or incidental to the First Owner’s rights mentioned in Clause 8 above AND the Mall Owners hereby further jointly and severally undertakes to do all acts deeds matters and things and to execute sign seal and deliver such deeds and to sign such documents or instruments as may be necessary to give effect to the abovementioned grant and to covenant in the assignments of the relevant undivided shares to the Mall Owners and subsequent assignments thereof to acknowledge the rights reserved to the First Owner in Clause 8 above and to appoint the First Owner as their attorney as aforesaid.

10. Each Mall Owner hereby appoints the First Owner irrevocably as their attorney to enforce the provisions of this Sub-Deed and the Deed of Mutual Covenants so far as the same relates to or affect the Mall and each Mall Owner hereby covenants to ratify and confirm and promises at all times to allow ratify and confirm all and whatsoever the First Owner (as the attorney aforesaid) shall lawfully do or cause to be done in and about the matters aforesaid by virtue of this Sub-DMC.” (Underline added by the tribunal)

47.By clause 9 of the Sub-DMC the co-owners (including the applicant) grant an irrevocable power of attorney to On Rich to carry out and do all acts mentioned in clause 8. By clause 8, On Rich reserves to it several rights and powers, such as the rights to effect repair and maintenance to the Mall or any part thereof[18], to name and re-name the Mall[19], alter the plan and do the conversion work of the Mall without concurrence of the Mall owner[20], alter the user of the Mall[21], remove illegal structures and signboard within the Mall[22], maintain the common areas and facilities of the Mall[23], install structures in the Mall[24], put up advertisements or signboard on the external wall of the Mall or within the Mall[25], declare common areas of the Mall and make house rules or dedicates certain parts to the public[26], further subdivide the Mall and make sub-sub-deeds[27], and to deal with the Government, other authorities and the IO, or commencing/defending litigation on matters touching or concerning the Mall as a whole[28]. It is obvious the rights and powers reserved to On Rich are either necessary required to enable it to manage the Mall or touch and concern the Mall as a whole. Without grant of a power of attorney On Rich cannot enjoy such express reservation. The power of attorney given in clause 10 is given to On Rich to enforce the provisions of the Sub-DMC and DMC for matters affecting the Mall, not in the sense of individual Mall units but as a whole.

48.Accordingly, it was for the limited purpose set out in clause 9 and 10 of the Sub-DMC that On Rich was granted a power of attorney. It is given for a purpose unrelated to that of clause 47.

49.It has been argued by Mr Law for the IO that by clauses 10, 12 and 25 of the DMC the Theatre owner has the sole responsibility and power to maintain the Theatre (including the applicant’s shop). The IO is merely observing these clauses in the DMC to ask for written approval of On Rich[29]. With due respect this is misconceived and the argument flaw. The DMC sets out the rights and obligations of the Theatre owner and the remaining owners of the Building to maintain their respective parts. It does not follow, as a matter of logic and construction of the DMC, that the Theatre owner’s right to use the common parts of the Building will, by reasons of these clauses, be excluded. As set out above[30], clause 12 spells out obligations of the Theatre owner to contribute toward the maintenance of the transformer room (meaning the CHR transformer room and switch room). The transformer room referred to is exactly a common part of the Building. The regime designed by the DMC is therefore not the sort of a total autonomy for the Theatre and parts other than the Theatre. The transformer room is a facility, and may perhaps be one of the many facilities, that have to be shared by the Theatre and the rest of the Building. 

50.The above should have sufficiently disposed of the parties’ dispute. The main thrust of the IO’s defence is that in order to connect to the CHR switch/transformer rooms, they have to apply through the first Mall owner On Rich. It stems from, according to the IO, its misconceived construction of clause 47 of the Sub-DMC, and the tribunal has now ruled against it. It is unnecessary for the applicant to apply through On Rich. Further, no matter whether it is the CHR switch/transformer rooms or the Rainbow switch/transformer rooms, they are common areas to which the applicant is entitled have access, subject to reasonable control of the IO.

51.As regards the first broad ground[31] of the IO’s defence, the tribunal considers it artificial. It is now common ground that although the CHR transformer room is under the control of CLP, it is nevertheless a place falling within the common area of the Building, though it has been dedicated to CLP for the purpose of satisfying CLP’s power supply conditions. Being the common area of the Building, this CHR transformer room should be under the power and control of the IO by virtue of section 16(1) of the BMO which provides:

“When the owners of a building have been incorporated under section 8, the rights, power, privileges and duties of the owners in relation to the common parts of the building shall be exercised and performed by, and the liabilities of the owners in relation to the common parts of the building shall, subject to the provisions of the Ordinance, be enforceable against, the corporation to the exclusion of owners, and …”

52.The tribunal believes that had the IO asked CLP for entry on reasonable ground(s), CLP should have entertained its request. In any event, this tribunal believes the room which the applicant had requested to have access to was the switch room. As a finding of fact the applicant identified the place as 電錶房i.e. meter room, not transformer room, when making the request[32]. Though the pleadings before amendment could have been better drafted, the tribunal does not believe the IO had mistaken the meter room as the transformer room as alleged.

53.It is to be remembered that we are here not to play with semantics. The IO should have known that the applicant simply wanted power supply by connecting to a place which he thought would help him obtain power supply. Even if (assuming without accepting and only for the purpose of discussion) the applicant might have used the wrong description, or that he was unable to tell the IO precisely the name of the room, the IO should not have taken such an uncooperative attitude. The IO should have known that electricity can only obtained by connecting to a switch room but not a transformer room. The defence alleging that the applicant has asked for access to a room over which it has no control is, in the tribunal’s judgment, high-handed, arrogant and totally unhelpful. It is not acceptable.

Some Factual Dispute

54.The following 3 factual witnesses attended trial to testify:

i) Ms HONG Tak Po, the treasurer of management committee the IO who made a witness statement dated 29 September 2015;

ii) Mr YIM Ka Wah, the chairman of management committee the IO who made 2 statements respectively dated 24 July 2014 and 29 September 2015; and

iii) Ms NG Chun Ping, a director of the applicant company who made 2 statements respectively dated 23 June 2014 and 24 September 2015.

55.They all confirmed and adopted their respective statements as their evidence in chief. In light of the tribunal’s decision on the construction issue, it will be unnecessary for this tribunal to resolve each and every dispute of facts. The tribunal will only resolve those material facts necessary for disposal of the cause.

56.After hearing and observing the witnesses giving evidence in the box, this tribunal would like to set out its observations as follows.

57.Ms Hong was observed to be a careful, tactful and sophisticated witness. However, she was never able (or perhaps she was unwilling) to be specific in her answers despite repeated clarifications and even pressing by the tribunal. Very often she seemed to have deliberately avoided questions. Her answers always appeared to be too loose, imprecise and ambivalent with much room for shifting. She is no doubt evasive and only care to repeat answers which are generally true. She does not appear to the tribunal a truthful and helpful witness.  

58.Mr Yim is also observed to be a very careful witness as well. His answers were not always straight forward. He is in fact non-committal particularly on whether, and if so, when the IO had received legal advice on the applicant’s application for connecting to a transformer room for electricity. Despite his confirmation in his written statement[33] that Ms Ng of the applicant attended a meeting with them on 27 January 2014, at trial he even said he was uncertain as to whether she was actually present. He admitted when the applicant first applied to obtain power from the Building’s facilities he was then a newly elected chairman, and did not know much about the IO’s business, particularly on matters touching and concerning legal aspects. He said Ms Hong and the then vice chairman were in charge of the legal matters.

59.It appears to the tribunal Mr Yim was not very sure whether and when the IO had rejected the applicant’s said application. He thought that the IO’s solicitors should have issued letters of rejections on ground that connection should be made through On Rich. He knew some Mall units had connected to CHR transformer room for electricity subject to conditions. However, he could not tell the tribunal what these conditions were. In view of the above, this tribunal does not believe he knew much about the factual matters about this case. Further, a large part of his statements are submission points. Accordingly, his evidence on what has actually happened will not be relied upon unless it is also supported by or is not inconsistent with uncontroversial documents or evidence of a third party.

60.Ms Ng appears to the tribunal to be a simple, unsophisticated and straight forward witness. Although her witness statements are written in English she in fact did not know the language. Her statements had to be interpreted to her before she signed them. The IO raised issues as to the identity of room(s) to which the applicant wanted to have access. The use of English in her 2 statements did not help clarify this issue. At trial, Ms Ng was asked to repeat in Punti the exact description of the room when she made her request to the IO. She was able to identify the room precisely and explain unequivocally the matters to the tribunal.

61.The problem with her evidence is that she adopted a “cut and paste” approach regarding an event allegedly took place on 14 February 2014. It was stated by her in her statement of 23 June 2014 that it was Ms Hong who notified her on 14 February 2014 of the IO’s refusal. This was denied by Ms Hong. At trial, Ms Ng admitted it was not her, but her husband Mr Ku, who had received the said phone call from Ms Hong on the relevant date. She said she was next to her husband when he received the said call. She overheard the entire exchange and her husband told her everything immediately thereafter.

62.Ms Ng explained that she thought it was alright as she was a director of the company who represented the company to give evidence. This is most undesirable and totally unacceptable. How can one utter under oath that something has been done by her but in fact it is by somebody else. It is simply not the truth, or not the whole truth. Her solicitors should have advised her when they prepared the proof of evidence. However, the fact that “something” is not observed by her to have been done does not necessarily mean that “something” has never been done. The tribunal will obviously approach her evidence with scepticism. It will, in any event, be a matter of weight to be attached to her now clarified hearsay evidence after the tribunal has undergone its fact-finding exercise.

63.After hearing the witnesses’ evidence, it is the finding of this tribunal that:

i) In or about end of 2013 the applicant applied electricity supply from CLP with loading of 60A (1-phase). The application was approved in December 2013 and the deposit of HK$1,900 paid. The applicant then engaged its own contractor to wire the shop, and to connect the shop to the proper place for electricity.

ii) One Mr Lui, an engineer assistant of the CLP showed to Ms Ng and her husband Mr Ku that electricity could be obtained from the “電錶房” i.e. meter room”. Ms Ng identified the position of the meter room on Exhibit A-2 by reference to the access door of the room. It is in fact the CHR switch room where the uprising mains, the switchboards and also the individual meters for consumers are housed[34];

iii) The applicant’s contractor then lay cables from the applicant’s shop towards the CHR switch room;

iv) When the applicant found the CHR meter room was locked, Mr Ku approached the management office of the Building. Mr Ku was given the phone number of Mr Yim. He then called Mr Yim, expressing that the applicant would like to connect to the CHR switch room for electricity. The applicant was asked to attend the management committee of the IO held on 27 January 2014 to state their application and answers queries that might be raised by other members;

v) Both Ms Ng and Mr Ku did attend and make the applicant’s request for connecting to the meter room, i.e. the CHR switch room for electricity at the meeting held at or about 8 pm on 27 January 2014. They met some 10 people there including Mr Yim and Ms Hong there.

vi) Although it was disputed whether they had sent any documents to the IO, the tribunal accepts it as fact the applicant did bring with them a copy land search of the applicant from the Lands Registry and the “Confirmation Notice of Application for Electricity Supply” issued by CLP. They handed over the same to Mr Yim who then asked the IO’s secretary to make photocopies of them for record purpose.

vii) There and then Ms Hong had indicated that the CHR meter room was for use of those residential units on the upper floors of the Buildings and declined their application. However Mr Yim said the IO would consult its lawyers before giving them a definite reply. They asked when would the reply be forthcoming, and were told it would be available on or about the 4^th or the 5^th days of the forthcoming Lunar New Year i.e. 4^th or 5^th of February 2014[35];

viii) On 5 February 2014, i.e. the 5^th day of the Lunar year, Mr Ku made a phone call to Mr Yim who replied they had not received any advice from their lawyers;

ix) On 14 February, Ms Hong made a phone call to Mr Ku. She said to the effect that according to advice from the IO’s lawyers, the applicant was not entitled to obtain electricity by connecting to the CHR meter room[36].

x) Since the applicant was advised by their contractor that the power supply connection had to be completed as soon as possible otherwise they might have problem with CLP approval, the applicant demanded the management office to open the door of the CHR switch room on 17 February 2014. Mr Ku reported the matter to the Police. After police had arrived, Mr Ku was able to talk to Mr Yim over the phone who said the IO had instructed lawyers to deal with them.

xi) On 20 February 2014 the applicant instructed its present firm of solicitors. A letter of the same date was issued by its solicitors, demanding, inter alia, access to the “transformer room and Main Power Circuit Board Room (provided by CLP)”[37] in 3 days.

xii) On 21 February 2014, the IO issued a letter of reply through its present firm of solicitors stating it would be unreasonable giving only a 3-day notice for anyone to respond and for a lawyer firm to take instruction from client;

xiii) There was a committee meeting of the IO held on 22 February 2014. It was recorded in paragraph 7.6 of the board meeting minutes that they had received a letter from the applicant’s solicitors. It was further recorded that there was request from the applicant for electricity by connecting to the Building’s electricity switch room. It was stated that the IO had instructed its legal advisors with a view to reply. They would then study the feasibility of power supply and the necessary arrangement.

xiv) On 27 February 2014 the applicant issued an application in this tribunal on similar cause. It was discontinued in March 2014. Soon thereafter the present application issued.  

64.It is the tribunal’s view the application to the tribunal constitutes a demand, though not the first demand on the IO. The IO’s rejection comes through its defence.

65.On a balance this tribunal believes the applicant had identified clearly that they wanted to connect to the “電錶房”, i.e. the meter room next to the CHR transformer room, when they explained the request to the IO at the meeting on 27 January 2014. The tribunal believes it is the room which the applicant was told by Mr Lui of CLP. In fact this tribunal believes this is the only room known to the applicant where the applicant could obtain electricity for its shop. Although the applicant’s request to the IO was made orally, it was made at an IO’s committee meeting at the invitation of Mr Yim for the sole and specific purpose of addressing board members on access to a particular switch room for electricity. Therefore the request cannot be regarded as informal or not valid simply because not being made in writing.

66.Ms Hong said that the request was made before the meeting formally started. The tribunal does not accept her said view. This tribunal believes that the applicant was invited to state its request, brief the meeting and answer questions that might be raised by members. Both Ms Ng and Mr Ku did attend as invited. The fact that some members were late for the meeting would not alter the fact that Ms Ng and Mr Ku were attending the management committee of the IO.

67.It is true that when the solicitors acting for the applicant wrote to the IO on 20 February 2014, they said the applicant wanted to have access to the “transformer room and Main Power Circuit Board Room (provided by CLP)”.The same was pleaded in the Application before amendment. It has been suggested the solicitor’s said description has caused confusion. Given the tribunal’s finding above, we do not believe the IO would have any confusion as alleged or at all. Further, from paragraph 7.6 of the IO’s meeting minutes, it does not appear that the IO has any confusion because the IO did not see it necessary to seek clarification.

68.The issue of confusion has not been pleaded in the Notice of Opposition dated 24 June 2014 until the applicant’s amendment. Before the amendment, the IO simply put the applicant to strict proof. By the amendment, the applicant now said it wanted to connect to a “switch room within the parameters of the area designated as ‘PROPOSED TRANSORMER ROOM’…”. It is only after the said amendment that the IO raised issue that it was unable to entertain a request to access to the transformer room.

69.As said above, the tribunal believes that irrespective of all the descriptions in the pleadings and in solicitors’ letter, the IO should have known that the applicant wanted to connect to電錶房, i.e. the meter room next to the CHR transformer room. The tribunal cannot help coming to the view that the aforesaid ground of defence an after-thought of the IO or perhaps its legal advisors.  

70.This tribunal believes on a balance, despite being hearsay, Ms Hong did call Mr Ku declining the applicant’s request for access to the CHR switch room for electricity on ground it was not entitled to use it. In fact by the pleadings of the IO, it has all along been the IO’s case that the applicant is not entitled to use any of the switch rooms unless and until they connect through the first owner of the Sub-DMC.

71.It has been suggested by Mr Yim in his supplemental witness statement dated 29 September 2015[38] that the applicant has not given sufficient information, documents or opportunity to the IO to consider its application. The tribunal’s views are simple, and are these. The raising of this issue is unfair and unreasonable. This issue is inconsistent with the grounds of opposition raised. The IO’s opposition has all along been premised on the ground that the application needs be made through the first owner of the Sub-DMC. As such, whether or not a copy of CLP’s receipt of the applicant’s application setting out the electricity loading applied for was given to the IO, the IO would do nothing to assess the feasibility of the proposed connection on technical side. At least the IO put in no evidence supporting that they have attempted to do an assessment, but was prevented to do so because of lack of information. Neither is there any evidence suggesting they have requested the applicant for such information but was refused.   

Loss and Damages

72.By reasons of the above, the refusal to allow connection of electricity from the CHR switch room to the applicant’s shop wrongful and unreasonable and is in breach of the DMC. As a result, the applicant is deprived of its reasonable use and enjoyment of its shop.

73.This tribunal accepts that the applicant purchased the shop for investment purpose. The tribunal believes no tenant will be willing to rent any preemies for business if there is no electricity supply. Accordingly, the proper measure of damage is loss of rental for as long as the applicant is deprived the use of any of the switch rooms from which it could obtain electricity.

74.The parties do not rely on expert evidence. The applicant relies on the rateable value assessed by the Ratings and Valuation Department and the respondent does not raise any issue. For the year of assessment 2015 – 2016, the annual rateable value is $187,200, i.e. $15,600 per month.

75.It is fair to say that according to the IO’s case, if damage is to be payable to the IO, it should be from the date when the applicant had made clear its position by amending its pleadings[39]. Given the findings of the tribunal set out above that the IO should not have been confused about the specific request of the applicant, the IO’s contention is rejected.

76.In the judgment of the tribunal, it will be fair and reasonable for the damage to be payable as from 17 March 2014, the date of the application, until the date when the applicant is permitted to have access to a transformer of the IO for obtaining electricity supply, subject to reasonable conditions which should only be imposed by the IO for the proper and reasonable management and control of the said switch room.

Disposal

77.By reasons set out in the preceding paragraphs, the following orders are made:

i) A declaration that the CHR switch room, CHR transformer room, Rainbow switch room and Rainbow transformer room are common areas of the Building;

ii) A declaration that the Applicant is entitled to obtain electricity supply to the applicant’s shop by making connection to either the CHR switch room or Rainbow switch room which are in the vicinity of respectively the CHR transformer room and Rainbow transformer room;

iii) An order that the IO should allow the applicant to have access to the CHR switch room or the Rainbow switch room (as the applicant may select) for the purpose of obtaining electricity supply subject to reasonable conditions which should only be imposed by the IO for the proper management and control of the said switch room;

iv) The IO do pay the applicant damages at the rate of $15,600 per month commencing 17 March 2014 until judgment and thereafter at the same rate until it complies with sub-paragraph (iii) above; and

v) There be liberty to apply.

78.This tribunal does not see why costs should not follow the event. Accordingly, this tribunal makes an costs order nisi that the IO pays the applicant costs of the application, including all costs reserved, together with counsel certificate, such order be made absolute if there is no application to vary the same within 14 days from today.

Mr Tim CH Yu instructed by Edward C.T. Wong & Co. for the applicant

Mr Ryan Law instructed by Joseph Leung & Associates for the respondent