中紀投資有限公司 v. 青山道國際工業大廈業主立案法團
Read the full judgment text of LDBM 118/2017 on BabelCite. This Lands Tribunal judgment was delivered on 24 January 2020.
1. The applicant is the registered owner of Flat 2A of an industrial building located on Castle Peak Road known as International Industrial Building (青山道國際工業大廈) (“the Building”).
Cites 10 cases
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LDBM 118/2017 [2020] HKLdT 5 IN THE LANDS TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION BUILDING MANAGEMENT APPLICATION NO 118 OF 2017 _______________
_______________ Before: His Honour Judge S LO, Presiding Officer of the Lands Tribunal Dates of Trial: 8, 9 and 25 October 2019 Date of Judgment: 24 January 2020 _______________ JUDGMENT _______________ Introduction 1.The applicant is the registered owner of Flat 2A of an industrial building located on Castle Peak Road known as International Industrial Building (青山道國際工業大廈) (“the Building”). 2.The respondent is the incorporated owners of the Building. 3.There are 2 window frame structures (“the Window Frames[1]”) installed at the external wall of the Building by the owner of Flat 9A of the Building (“Flat 9A”). The applicant’s case is that the Window Frames are installed in breach of the deed of mutual covenant of the Building (“DMC”) and the Building Management Ordinance (“BMO”). 4.The applicant commenced the claims against the respondent in the Tribunal on 22 June 2017 seeking for, inter alia, an order that the respondent do take such actions, including legal actions, to enforce the DMC and the BMO against the owner of Flat 9A, for the removal of the Window Frames and the reinstatement of the external wall, and to restrain the owner of Flat 9A from installing further similar structures. 5.It is not in dispute that the Tribunal has the jurisdiction to compel the respondent to take necessary actions as sought[2]. Background 6.The Window Frames are made of aluminium and the dimensions were 1.33 metres tall and 1.5 metres wide. Photographs of the Window Frames as they appear on the external wall can be found at the appendices of the Re-amended Reply and several reports as mentioned below. 7.There is no dispute that the external wall of the Building is the common part of the Building[3]. 8.On 20 July 2015, the Building Authority issued 2 Notices under sections 30B(3) and 30C(3) of the Buildings Ordinance in respect of the Building (“the BA Notices”) to the respondent, under which the respondent were required to:-
9.Pursuant to the BA Notices, 2 inspections of the Building have been carried out. On 14 April 2016, the 1st inspection was carried out by the 1st appointed inspector, AHL Contract Management Co Ltd (藝建工程顧問有限公司), and in its report (“the 1st Inspection Report”), the Window Frames were identified as “UBW” or “unauthorized building works”. 10.On 19 April 2017 and 2 May 2017, the applicant wrote to the respondent regarding the Window Frames and requested the respondent to take action to require the owner of Flat 9A to reinstate the same. 11.In response to the applicant’s letters, the management committee (“MC”) of the respondent passed a resolution on 27 July 2017 (“the 2017 Resolution”) pursuant to section 34I of the BMO – common parts, approving the non-structural affixations on the external wall of the Building such as the Window Frames affixed outside Flat 9A etc until the repair of the external wall of the Building in the future and then be resolved by the respondent in respect of the external appearance of the Building and its effects. It was specifically resolved if the affixations affect the structure of the Building, they must be reinstated, furthermore, the respondent might seek to homogenize the appearance of the Building’s exterior walls in the said future renovation. 12.The relevant extract of the 2017 Resolution[4]is as follows:-
13.Subsequently, in August 2017, a 2nd inspection was carried out by the 2nd appointed inspector, Kwok, Hauser and Partners Limited (“KHP”). It was acknowledged by KHP that the prescribed inspection was completed on 29 August 2017. At the request of the respondent, KHP was also tasked with providing professional opinion in relation to the Window Frames affixed by the owner of Flat 9A. The Window Frames existing on the wall outside Flat 9A before early March 2018 will be referred to as the “Pre-Window Frames”. 14.On 22 December 2017, it was opined by KHP that the Pre-Window Frames (i) were non-structural; (ii) did not cause immediate danger; and (iii) could be regularized, eg by the “Signboard Validation Scheme” (違例招牌檢核計劃)[5]. 15.In early March 2018, the owner of Flat 9A removed the Pre-Window Frames. On 9 March 2018, the owner of Flat 9A appointed Tiff Group Limited (天阜 (香港) 設計製作有限公司) (“Tiff”) as prescribed registered contractor to file Notice of Commencement of Minor Works with the Buildings Department (“BD”) for its application to affix the Window Frames (Submission No.: MW180301185). The Window Frames existing on the wall outside Flat 9A on and after 18 March 2018 will be referred to as “Post-Window Frames”. 16.Upon affixation of the Post-Window Frames on 18 March 2018, Tiff filed Certificate of Completion of Minor Works on 22 March 2018 for the owner of Flat 9A. On the same day, BD issued to Tiff an acknowledgment letter in respect of the Certificate of Completion (“the said Certificate of Completion”). 17.According to the inspection report dated 13 July 2018 (“the 2nd Inspection Report”) prepared by KHP under section 12(2) of the Building (Inspection and Repair) Regulation, it was said that the external wall outside 9th floor facing Castle Peak Road was altered[6]. Relevant clauses of the DMC and provisions of BMO 18.Under Clause 10 of the DMC, each owner of the Building entered into various covenants with the other owners of the Building. The relevant clauses are set out as follows:-
19.In addition to the aforesaid clauses of the DMC, section 34I of the BMO further provides that:-
Applicant’s case 20.Apart from the above mentionedclauses of the DMC and provisions of BMO, the applicant further referred the Tribunal to the insurance policies of the Building issued by China Ping An Insurance (Hong Kong) Co Ltd (“Ping An Insurance”) for the periods of 2018-2019[7]and 2019-2020[8](the terms of which are largely identical). The following are the pertinent terms of the policies:-
21.Mr Cheng for the applicant submitted that the respondent has continuously failed to comply with the BA Notices by failing to take action for the removal and reinstatement of the Window Frames, which amounts to a breach of Clause (b) of the “General Conditions”. There is a real risk that the insurance of the Building may be rendered void or voidable, or that the premium may be liable to be increased (see: Incorporated Owners of Hong Yuen Court v Dugar Shishir and Dugar Saroj & Ors (unrep LDBM 89 & 90/2012, 30 Jun 2015) at paras 102-111). 22.Mr Cheng further submitted that the MC simply cannot by the 2017 Resolution approve the breaches of the DMC and the BMO in this case and that the 2017 Resolution should also not be valid on the ground that:
Respondent’s case 23.Mr Law leading Mr Ho for the respondent submitted that the affixation of the Window Frames was not an act in breach of different provisions of the DMC and the BMO relied on by the applicant; and in any event, the MC has passed a valid and reasonable resolution under BMO section 34I(1)(a), namely the 2017 Resolution to temporarily approve the existence of the Window Frames after careful consideration of the prevailing situation of the Building. Witnesses 24.The applicant has one factual witness, 伍顯中 (“Mr Ng”) who is the director of the applicant, gave oral evidence at the trial apart from filing his 2 witness statements. 25.The respondent also has one factual witness, who was the chairman of the respondent at the material time, 莫泮光 (“Mr Mok”) who also filed his 2 witness statements and gave oral evidence at the trial. Issues in dispute 26.There are the following issues for the Tribunal’s determination:-
Alleged unreasonableness and invalidity of the 2017 Resolution 27.I shall deal with the question of the reasonableness of the 2017 Resolution first. It was held in 383HK Limited v the Incorporated Owners of Tak Bo Building [2018] HKCA 164 at paras 34-36 that in terms of the exercise of discretion by the management committee to grant or refuse consent by resolution in relation to the use of a common part of a building, whether as a matter of the construction of the DMC or the interpretation of BMO section 34I(1)(a), there is no place to imply and/or import any requirement of reasonableness. Such a proposition is followed in 有利工業貨倉大廈業主立案法團 v 怡豐興業有限公司 [2019] HKLdT 10 at paras 66-67. Relying on these authorities, I am of the view that the applicant’s contention of the reasonableness requirement is entirely misconceived. 28.Another complaint of the applicant against the procedure of the MC meeting on 27 July 2017 is that while Mr Ng was asked to excuse from the meeting, the owner’s representative of Flat 9A 孔玉貞 (“Ms Kung”) did not declare her interest in the meeting and was allowed to vote. 29.The Building has 25 units only. There were 9 members in the MC at the material time, 8 of which attended the meeting on 27 July 2017 and 6 voted in favour of the agenda item 9 for approving the non-structural affixations on the external wall of the Building including the Window Frames. That is to say, even if Ms Kung was not allowed to vote on the ground that the owner of Flat 9A has private interest in the matter, the outcome is 5 votes in favour of the said agenda item 9 and the same resolution would still be passed. Hence, I find that the applicant’s complaint has no merit. 30.Further, when Mr Ng was asked to excuse from the meeting, he never raised that Ms Kung should also be excused. Indeed, I find that all 8 MC members who attended the meeting must know very well or ought to know that Ms Kung was representing the owner of Flat 9A and that the said agenda item 9 was expressly to approve the Window Frames affixed by the owner of Flat 9A. Indeed, nowhere in the witness statements of Mr Ng complained that Ms Kung did not declare her interest in the meeting. Again, Mr Cheng for the applicant was making some legal submissions without the support of the evidence of his client. I am of the view that the applicant’s complaint has no merit. 31.Mr Cheng for the applicant refers to Tam Lai King v Incorporated Owners of Malahon Apartments [2010] 5 HKLRD 63, which concerns an action by an owner against the IO and its chairman, the owner claimed that a resolution passed by the IO without the chairman making full and frank disclosure was invalid. At paras 85-88 of the judgment, Thomas Au J (as he then was) held that the resolution was not obtained properly and fairly and was therefore invalid. In view of the specific findings of facts in the present case, it is unnecessary for me to discuss Tam Lai King’s case. Just for the sake of completion, I would disagree with Mr Cheng’s submission. This case shall be distinguished on its own facts, in that it was the chairman who asked for the consent under the owners’ resolution failed to discharge his duty to make full and frank disclosure. Nonetheless, Ms Kung was not the chairman of the MC and there is no evidence before me that she or the owner of Flat 9A had ever asked for approval of the Window Frames bearing in mind that the resolution also approved other non-structural affixations on the external wall of the Building by other owners who may be and very likely are one or some of the 8 MC members attending the meeting on 27 July 2017. 32.To sum up, I conclude that the 2017 Resolution is valid. Whether the installation of the Post-Window Frames was in breach of Clause 10 (c) of the DMC? 33.The affixation of the Pre-Window Frames is no longer in issue as it has been uninstalled and immediately thereafter, the Post-Window Frames were affixed and the said Certificate of Completion from the BD was obtained on the same day. Mr Cheng for the applicant contended that the 2nd Inspection Report by KHP still identified the Post-Window Frames as “unauthorized building works”. With respect, I do not entirely agree. The 2nd Inspection Report did not explained why they were described as “unauthorized building works” but only suggested that the external wall outside 9th floor facing Castle Peak Road was altered[9]. In any event, based on the said Certificate of Completion, I fail to see how the Post-Window Frames can be described by KHP as “unauthorized building works” at least under the Buildings Ordinance. 34.As to whether the Post-Window Frames can be treated as “unauthorized building works” under any clauses of the DMC, I doubt very much that KHP is in the position to make any comments even though KHP is regarded as a building expert engaged by the respondent. Eventually, it must be a legal question for the Tribunal to determine. 35.For the interpretation of Clause 10 (c) of the DMC, Mr Cheng for the applicant indeed made no submission as to the important words “insurance …against fire” and “in the event of the said building or any part or parts thereof being damaged or destroyed by fire at any time and the insurance money under any insurance against fire…”. 36.In my view, Clause 10(c) was plainly drafted to protect an insurance against a specific type of risk, namely fire, made available to the Building and to prevent the relevant premium from escalating by reason of an individual owner’s act. In both opening and closing, Mr Cheng for the applicant has just presented the argument and evidence concerning structural safety (ie the risk of falling down) and legal compliance of the Window Frames (whether Pre- and/or Post-Window Frames). There is not a scintilla of evidence on how the Window Frames (whether Pre- and/or Post-Window Frames) are going to increase the risk of fire or how likely the Building or any part thereof will be damaged by fire due to the affixation of the Window Frames. 37.For the insurance policies of the Building issued by Ping An Insurance, I consider that it is a comprehensive insurance covering almost all kinds of risks but not just an insurance against fire. Although I accept that this comprehensive insurance should also cover the risk of fire, the burden remains on the applicant to prove that by affixing the Post-Window Frames, either the relevant part that against fire in this comprehensive insurance may be rendered void or voidable, or the premium for such insurance in respect of the part that against fire may be liable to be increased. In my view, it is a matter of evidence or a question of fact instead of a pure legal question. Hence, the reliance by Mr Cheng for the applicant on the Incorporated Owners of Hong Yuen Court’s case is of very little assistance. Indeed, I consider that Ping An Insurance is the most suitable party to give evidence in this regard or that at least, the applicant should try to obtain some written comments or response from Ping An Insurance. Unfortunately, no evidence in this regard is given although the witness of the applicant, Mr Ng, did mention in his witness statement that some other experienced insurance brokers generally advised that the unauthorised structures would not be covered by the insurance. That is certainly not sufficient. In the circumstances, I am not satisfied that the applicant is able to discharge the burden to prove that the respondent is in breach of Clause 10(c). Any breach of Clause 10 (e) of the DMC and section 34I(1)(a) of the BMO? 38.The respondent accepts that the installation of the Post-Window Frames may be in breach of Clause 10(e) of the DMC and section 34I(1)(a) of the BMO. However, Mr Law for the respondent argued that the MC (on behalf of the respondent) has approved to waive, temporarily and until the large-scale renovation, the relevant breach(es) of the DMC and the BMO under the 2017 Resolution. The MC’s power is derived from an implied power under the DMC and express power under the BMO. 39.To start with, I accept the submission of Mr Law for the respondent that the proper approach to reconcile the inconsistencies between the DMC and BMO is set out in 383HK Limited v The Incorporated Owners of Tak Bo Building [2018] HKCA 164 at para 19:
40.It is further provided under section 34C(2) of the BMO that where there is any inconsistency between provisions contained in Part VIA of the BMO and a DMC, that part shall prevail. 41.As to the question of whether the MC or the respondent is legally capable of granting approval or waiver of the breach(es) of the DMC or the BMO in this case, the most relevant authority is Hollywood Shopping Centre Owners Committee Limited v Incorporated Owners of Wing Wah Building Mongkok Kowloon (unrep HCA 1582/2007, 16 Aug 2010). In the context of acquiescence, waiver and laches by IOs of breaches of DMC and after going through two lines of authorities, as well as other authorities relating to estoppel, Recorder Rimsky Yuen SC (at para 65) summarised the position as follows:-
42.In the present case, the issue whether the respondent is in a position to approve the installation of the Window Frames would depend on the nature or type of the breach. First, the size of the Window Frames is not huge, only 1.33 metres tall and 1.5 metres wide. Secondly, the affixation of the same cannot be regarded as illegal upon issuance of the said Certificate of Completion and there is no evidence that it contravenes any other rules and regulations. In Freder Centre (IO) v Gringo Ltd [2016] 2 HKLRD 190, the Court of Appeal held that IO could approve and acquiesce to the trade names affixed to the external wall of the building. 43.Accordingly, I am of the view that it is within the power of the respondent to approve the affixation of the Window Frames (whether the Pre- and/or Post-Window Frames) under the DMC and under section 34I(1)(a) of the BMO. 44.Mr Cheng for the applicant relied on my recent judgment Incorporated Owners of Shatin 33 v Lee Wong Tim & Pang Chui Kuen [2018] HKLdT 91 (unrep LDBM 107/2017, 3 Dec 2018), in which I considered that upon proper construction of the relevant clause (i.e. Clause 38) in the subject DMC, it contains a prohibition which the Manager would have no power to grant to owners the right to keep dogs in contravention of the clause since it is the duty of the Manager under such clause to ensure no dog to be kept except for security only[11]. However, in my view, as there is no similar prohibition or express duty on the part of the manager in the DMC in the present case and the Incorporated Owners of Shatin 33’s case concerns dog keeping but not structure erected on the external wall, this case is distinguished. 45.Based on the reasons above, I find that the installation of the Post-Window Frames was not in breach of Clause 10 (e) of the DMC and section 34I(1)(a) of the BMO. Any breach of Clause 10 (g) of the DMC? 46.Similarly, I find that the installation of the Post-Window Frames was not in breach of Clause 10 (g) of the DMC as MC has passed the 2017 Resolution which is wide enough to approve and cover the breach of Clause 10 (g). 47.Mr Cheng for the applicant referred me to a recent District Court case, Incorporated Owners of Hong Sing Garden v Cheung Chan Kau & Anor [2019] HKDC 342 (unrep DCCJ 161/2016, 13 Mar 2019), which concerns the issue of alteration of external appearance by an owner’s installation of window frames and window guards[12]and the court held that the IO had no authority to approve of or acquiesce in the breach of the relevant clause of the DMC[13]. With due respect, this case is not binding on me, especially it is noteworthy that the defendants in that case were unrepresented and that the learned judge may not have the sufficient opportunity to hear the legal arguments from the defendants. 48.If I am wrong, I am of the view that the de minimus principle has application to the present case which was not considered in the Incorporated Owners of Hong Sing Garden’s case. In Metro City Management Limited v Tsui Fee Hung Vincent and Lam Wai Fun (unrep HCA 4327/2003, 13 Jan 2005) at paras 39-40, Recorder Edward Chan SC said that a “reasonable latitude” should be allowed when considering whether the external appearance may be altered namely, the de minimus rule. 49.Judging from the photos produced[14]and the size of the Post-Window Frames, I accept that the Post-Window Frames could easily be observed by neighbouring buildings at about the same level, but not so obviously noticed by the ordinary man at the street level. Thus, I find as a matter of fact that they were so not prominent that a reasonable man would conclude that the external appearance of the Building has been altered. Hence, applying the de minimus principle, I find that the installation of the Post-Window Frames was not in breach of Clause 10 (g) of the DMC. Any breach of section 34I(1)(b) of the BMO? 50.This subsection consists of 2 limbs and imposes a separate and distinct prohibition as to the common parts of a building, ie the prohibition of any person’s use or permission to use the common parts in such manner as:
51.Mr Cheng for the applicant submitted that the installation of the Post-Window Frames should be in breach of both “unreasonably interference” and “nuisance” limbs. Mr Cheng said that the only reason provided by the respondent for the installation of the Window Frames was for “feng shui”. In my view, the reason for affixing the Window Frames is irrelevant to the issue as to breach of section 34I(1)(b) of the BMO. That is to say, even if the reason given is good, it does not mean no breach of the said section. 52.The burden remains on the applicant to prove his allegation. In this connection, as stated by Mr Ng in his witness statement, there is a risk of the Window Frames falling off from the external wall, thereby causing injury to pedestrians or owners of the Building, and the compensation for which would not be covered by the insurance of the Building. 53.For the alleged risk of falling off, I consider that it is a bare assertion made by the applicant without support of any expert opinion. On the other hand, since the Post-Window Frames were installed by a prescribed registered contractor, Tiff under the “Signboard Validation Scheme” (違例招牌檢核計劃) subsequently and the said Certificate of Completion was issued by the BD, I am not satisfied that the applicant has proved the alleged risk. I also consider that Mr Cheng is not entitled to make legal submissions without support of the direct evidence from the applicant, in particular the alleged disturbance of the peace of mind of the owners and occupiers etc. 54.Hence, I find that the installation of the Post-Window Frames was not in breach of both limbs of section 34I(1)(b) of the BMO. Conclusion 55.Based on my findings that the installation of the Post-Window Frames was not in breach of Clauses 10(c), 10(e) and/or 10(g) of the DMC, section 34I(1)(a) and/or section 34I(1)(b) of the BMO and that even if any of the aforesaid breach or breaches of the DMC and/or the BMO is/are proved, the 2017 Resolution is effective in approving them (except section 34I(1)(b) of the BMO), all the applicant’s claims must be dismissed. 56.As costs shall follow event, I therefore make an order nisi that the applicant shall pay costs of these proceedings including all costs reserved, if any, with certificate for one Counsel on the District Court scale, to be taxed if not agreed, which shall become absolute unless any of the parties apply to vary the same by summons within 28 days. 57.Lastly, it remains for me to thank all Counsel for their very helpful assistance to the Tribunal.
Mr Henry Cheng, instructed by S K Lam, Alfred Chan & Co, for the applicant Mr Lewis Law leading Mr Lok Ho, instructed by Leung, Tam & Wong, for the respondent [1] the Window Frames are further classified as “Post-Window Frames’ and “Pre-Window Frames” in paras 13 and 15 below [2] See paras 22-24 of the Court of Appeal judgment in See Wah Fan v Incorporated Owners of Ki Tat Garden (Phase I) [2003] 3 HKLRD 1 [3] see section 2 and para 1 of Schedule 1 of the BMO [4] Trial bundle B, p 415 [5] Trial bundle B, p 431 [6] Trial bundle A, pp 335 and 343 [7] Trial Bundle A, pp356-366 [8] Trial Bundle B, pp 544-556 [9] Trial Bundle A, pp 335, 343 and 354 [10] This summary was upheld by the Court of Appeal [2011] 4 HKLRD 623 at para 21 [11] See para 26 of the judgment [12] See paras 5, 12-15 of the judgment [13] See paras 26 of the judgment [14] Trial Bundle A, pp 13-14, 39-43, Bundle B, pp 423, 431, 525-526 |
Cases cited in this judgment
Further hearings and rulings under LDBM 118/2017