Hong Kong Housing Society v. The Incorporated Owners of Heya Star
Read the full judgment text of HCA 874/2019 on BabelCite. This High Court CFI judgment was delivered on 22 August 2023.
1. In this action, the Plaintiff as the owner of the commercial units and carparking spaces in the estate known as Heya Star (“ Development ”) claims against the Incorporated Owners of the Development various declarations with regard to the budgets for the management expenses of the Development (“ Budgets ”) dated 30 November 2018, for the financial year from 1 January 2019 to 31 December 2019 (“ 2019 Financial Year ”). The Plaintiff claims in its pleading that the management expenses provided f
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HCA 874/2019 [2023] HKCFI 2142 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 874 OF 2019 _____________
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_______________ J U D G M E N T _______________ Background 1.In this action, the Plaintiff as the owner of the commercial units and carparking spaces in the estate known as Heya Star (“Development”) claims against the Incorporated Owners of the Development various declarations with regard to the budgets for the management expenses of the Development (“Budgets”) dated 30 November 2018, for the financial year from 1 January 2019 to 31 December 2019 (“2019 Financial Year”). The Plaintiff claims in its pleading that the management expenses provided for in the Budgets, in respect of firstly the security staff costs (“Security Staff Costs”) and secondly the repair and maintenance costs of the fire services installations and equipment (“FS Costs”), should be properly apportioned amongst the different types of owners of the Development, as opposed to their being all shared amongst all the owners, as provided for in the Budgets. It claims in particular that the costs and expenses of 4 security guards who worked exclusively in the residential areas of the Development should be borne solely by the residential owners, and that the repair and replacement expenses for the firefighting installations should be apportioned by reference to the location within the Development in which the installations were kept, such that, by way of example, the costs of repairing and replacing any defective fire safety equipment placed in the residential common areas should be borne solely by the residential owners. 2.The Defendant’s case is that the security staff have been serving the Development as a whole, for the purpose of maintaining the security of the entire Development, and not for the security of the residential areas only; and further, that the fire service system comprising the fire service/fire-fighting installations and equipment are physical units of a whole and inseparable fire alarm system penetrating the whole Development, including the residential, commercial, carpark and estate common areas, the residential accommodation and the commercial accommodation; such that both the Security Staff Costs and the FS Costs should be shared by all owners of the Development. 3.The Plaintiff was the developer of the relevant property, which was constructed in 2015 and is located in Cheung Sha Wan. The Development is divided into 11,189 undivided shares under the Deed of Mutual Covenant governing the Development (“DMC”). It comprises: (1) 2 towers of 175 flats for private residential use (“Flats”), which under the DMC carry 9,133 undivided shares in the Development (“Residences”); (2) commercial units situated on the ground to the 2nd floors, carrying a total of 1,688 undivided shares in the Development (“Commercial Units”); (3) residential and commercial carparking and motorcycle parking spaces, making up 367 undivided shares in total of the Development (“Carparking Spaces”); and (4) common areas and common facilities which comprise one undivided share in the Development. 4.Each of the 2 residential towers has its own entrances, lobbies and escalators, all of which are part of the Residential Common Areas as defined in the DMC, through which the Flats may be accessed by the residents. The Commercial Units are separated from the residential towers and are on the ground, 1st and 2nd floors of the Development. The Commercial Common Areas as defined in the DMC consist of 2 loading and unloading bays on the ground floor and the “TBE Room” on the 1st floor of the Development. The Club is situated on the 5th floor of the Development, with other common areas and facilities on the same floor. The 6th floor is the podium. The 7th floor to the roof of the estate, consisting of 28 floors, comprise the Flats and are mostly for the use of the residents of the Development. 5.Having sold all the residential Flats, the Plaintiff only retained ownership of all of the Commercial Units and the Carparking Spaces. It accordingly owned at all material times 2,055 or approximately 18.37% of the undivided or management shares of the Development. 6.The Plaintiff was also the manager of the Development until 31 January 2018, when it resigned. It had prepared the management budgets of the Development prior to 2019. The Plaintiff’s role as manager was taken over by Easy Living Consultant Ltd (“Easy”) as from 1 February 2018. 7.The Defendant was incorporated as the owners of the Development on 20 October 2017. The DMC 8.The DMC sets out various definitions of the terms used. The more pertinent terms defined in clause 1 of the DMC are set out below:
9.The Plaintiff relies on the manner in which management expenses for the Development should be apportioned, as set out in clause 6.4.2 of the DMC:
10.The Plaintiff claims that the manager of the Development is under a duty to prepare the annual budget in the manner set out in clause 6.6.1 (a) of the DMC:
Claims made by the Plaintiff in these proceedings 11.The Plaintiff claims that the Defendant is under the duty set out in section 18 of the Building Management Ordinance, to do all things reasonably necessary for the enforcement of the obligations contained in the DMC for the management of the Development. It also pleads (in paragraph 16 of the Amended Statement of Claim (“SOC”)) that it was an implied term of the DMC, that in exercising its power and discretion under clause 6.4.2 (f) of the DMC, the Defendant shall have to do so in a reasonable manner. 12.The Plaintiff claims that the Budgets prepared by Easy for the 2019 Financial Year required all the owners of the Development to share the Security Staff Costs, as well as the FS Costs in all parts of the Estate comprising the Development. The Defendant also passed a resolution on 15 December 2018, which approved the upward adjustment, and 160% increment, of the management fees for the Development, in an amount assessed according to the Budgets. The Plaintiff claims that by adopting the Budgets, the Defendant had acted in breach of its duties under the DMC, which required it to ascertain and apportion management expenses attributable to each of the Residential Common Areas (“RCA”) and Residential Common Facilities (“RCF”), the Commercial Common Areas (“CCA”) and Commercial Common Facilities (“CCF”), the Carpark Common Areas (“CPCA”) and Carpark Common Facilities (“CPCF”), and the Estate Common Areas (“ECA”) and Estate Common Facilities (“ECF”), and to prepare the Budgets accordingly. Instead, the approval of the management fees assessed according to the Budgets meant that the Security Staff Costs and the FS Costs were incorrectly attributed to all the owners of the Development and shared amongst all the owners, without regard to the proper apportionment required under clause 6.4.2. 13.The Plaintiff claims declarations to the following effect:
14.It also seeks orders that:
15.By the time of trial, the dispute between the parties was marginally narrowed. 16.There is no dispute that as of 2019, there were 6 full-time security staff employed for the Development, 3 of whom worked on the day shift, and 3 for the night shift, and for each shift, there were 2 security guards (“Guards”) and one security supervisor (“Supervisor”). 17.The SOC pleads (at paragraph 23 (ii)) that the management expenses for “security guards/staff” should be borne solely by the owners of the residential flats, but not the owners of other kinds of premises; and that in the alternative, the management expenses for “security guards/staff deployed to carry out work relating to and/or for the Residential Accommodation” should be borne solely by the owners of the Flats. No clear distinction was made in the SOC between Guards and Supervisors of the staff who comprised the security team. 18.In the Plaintiff’s Opening, it was clarified that the costs of the Supervisors, who were assigned to look after the whole Development and handled various ad hoc tasks related to the ECA and ECF (as defined in the DMC), should be shared by all the owners of the Property. The issue in dispute is only whether the salaries of the Guards related to the ECA/ECF of the Estate, and therefore should also be shared by all the owners of the Development, as the Plaintiff claims. 19.In relation to the FS Costs, the Plaintiff’s submission at trial is that specifically, the “repair and replacement expenses for firefighting installations” should be apportioned amongst the owners, by reference to the location within the Development in which the installation was kept. According to paragraph 23 (iii) of the SOC, the Plaintiff’s pleaded case was more general, that the “management expenses relating to fire services installations and facilities in the Residential Common Areas, being the Residential Common Facilities,” should be borne solely by owners of the Flats, but not owners of the Commercial Units and Carparking Spaces. What the Plaintiff disputed in the SOC, in relation to the Budgets, was that both the repair and maintenance of the fire service system had been improperly attributed to be shared by all the owners of the Development. 20.According to the Defendant, FS Costs for the Development consist of expenses for (1) repair and replacement and (2) maintenance of the fire service equipment and system. Maintenance expenses consisted of the costs of the annual inspection of the fire service system and equipment, whereas repair and replacement costs cover the actual repair and replacement of fire service equipment, or any part of the fire service system and equipment. It pleads, under paragraph 21 of the Amended Defence, that the fire service system is an inseparable system penetrating the whole Development for the purpose of alarming all users and occupiers of the Development for evacuation and for extinguishing fires when they occur. The Defendant further pleads (paragraph 21(i) of the Amended Defence) that the fire service system of the Development consists of individual physical parts such as sensors and detectors, fire hydrants, fire hose reel, sand bucket and sand, water tanks, and fire extinguishers (defined in the Defence as “Physical Parts”). It also pleads that apart from these Physical Parts, the fire service system also consists of control panels which co-ordinate the fire alarm services spanning the Development. The control units are located in the ECA and the CPCA, and there are fire alarms which are located in the Commercial Accommodation. 21.On the Defendant’s case, the Physical Parts themselves may be located in various locations of the Development, but each and every piece forms part of the entire fire service system, under which the Physical Parts function together to operate the fire alarm system in the event of any emergency. Obviously, there are fire alarm units throughout the Development. 22.On the Defendant’s case, the FS System and the Security Staff Costs are correctly categorized as expenditure to be apportioned under clause 6.4.2 (d), as relating to “Estate Common Facilities” which are defined in clause 1.1 to mean equipment, facilities and systems designated as being “for the use, benefit or service of the ECA or the Estate generally”, and expressly includes “firefighting installations and equipment”. Applicable legal principles 23.The Building Management Ordinance (“BMO”) provides in section 22(1) that the amount to be contributed by an owner to the management funds shall be fixed by the management committee in accordance with the provisions of the DMC. The parties do not dispute the relevant legal principles as to construction of the DMC. They are as summarized in Sino Channel Holdings Ltd v Vast Faith Investment Ltd [2020] HKCA 311:
24.The approach to construction is also set out in the judgment of the Court of Appeal in that case of Lai Wai Hung v Sino Estates Management Ltd [2020] HKCA 448, at para 26:
25.On behalf of the Plaintiff, Counsel has emphasized the presumption against surplusage which applies in the construction of a contract. This was explained by Kwan VP in Achieve Goal Holdings Ltd v Zhong Xin Ore-Material Holding Co Ltd [2020] HKCA 51, at para 16 (6):
26.Counsel for the Plaintiff pointed out that the DMC in this case is a bespoke contract drafted for the Development. 27.The fact that the court has found, in any particular case, that a particular item of expense should be borne by all the owners of a building, or by an individual owner or individual class of owners of the building, cannot be treated as binding authority as to the nature of the expenditure, and how it should be apportioned under a DMC. Construction of a clause in the DMC depends not only on the language of the particular provision being construed, but on the entirety of the contract which has to be considered to ascertain the meaning to be attached to the language used in a particular clause. Materially, construction depends on the context in which the contract was entered into and the language agreed upon, the facts of the case, and the factual evidence adduced. Security Guard Expenses 28.Determination of the dispute as to the Security Staff Costs (confined to the salaries of the Guards only) turns, firstly, on the factual question of the work assigned to and carried out by the Guards; and then, as a matter of law, on how such expenses should be apportioned upon the proper construction of the DMC in this case. 29.There is no dispute that the Guards were stationed at the entrance lobby of the Residences/residential towers, which indisputably form part of the RCA. The residential towers can be accessed at street level, and as can be expected, the Guards were stationed there round‑the‑clock for security reasons. Mr Kong, the supervisor of the security team who gave evidence at trial, agreed that it was necessary and important for the Guards to be stationed at the lobby, not only to monitor and control access to the Residences, but also to assist visitors and residents in accessing and using the lifts which can only be operated by Octopus cards/access cards of the residents themselves, or by the Guards to assist any visitors. 30.For each day shift (from 7:30 am to 7:30 pm) and night shift (from 7:30 pm to 7:30 am), there were 2 Guards. According to the duty roster prepared by the managers, Easy (“2019 Roster”), in addition to their duties of manning the lobby, each Guard was to spend one hour per shift on patrolling the residential towers. 31.The Plaintiff has highlighted the fact that the Guards did not normally patrol outside the RCA. The patrol route of the Guards starts from the Security Control Room on the ground floor, which was designated as part of the ECA, and each route also ends at the Security Control Room. However, the Security Control Room itself did not require any patrolling. According to Mr Pang of the Plaintiff, the Guards performed their patrolling duties exclusively in the RCA. His evidence of course only covered the time when the Plaintiff was the manager of the Development, namely, before its resignation in 2018. 32.The Defendant’s evidence on the patrolling duties of the Guards is not entirely clear as to whether such patrolling included areas outside the RCA. Initially, Mr Kong stated in his witness statement that his duty as a Supervisor included his patrolling the commercial units and the carparks. The 2019 Roster he produced clearly shows that as opposed to the Supervisor’s work of patrolling “outside areas and facilities room”, the work of the Guards only involved “patrolling the building”, reasonably understood as patrolling each of the residential blocks. 33.In his supplemental witness statement, Mr Kong referred to the witness statement of Mr Pang and his evidence on the patrol routes, and pointed out that the Guards had (since Mr Kong joined the management in May 2018) been patrolling different areas, and not just the Residences or the RCA. It is true, however, that (as Counsel for the Plaintiff pointed out) Mr Kong never gave details of when and where the Guards would be patrolling the areas outside the RCA, and what areas they patrolled. 34.Mr Kong claimed in his statement that at times when the Supervisor is on annual or sick leave, or in cases where the Supervisor has to deal with an emergency or is otherwise unavailable, one of the Guards would act in place of the Supervisor and would patrol different parts of the Development. In the course of cross-examination, however, Mr Kong accepted that in the usual situation, patrolling areas outside the RCA would be carried out by the Supervisors on the day or night shifts, and that most of the time, such patrolling of areas outside the RCA was carried out by the Supervisors. He also accepted that if the Supervisor was absent from work on leave, Easy would sometimes hire a part-time security staff, such that the patrolling duties of the Supervisor would not have to be carried out by the Guards. Even if the Supervisor was unavailable and no part-time staff could be hired, Mr Kong accepted that the Guards would still fulfill their duties as per the 2019 Roster, which meant that they would be stationed at the lobbies of the residential towers round‑the‑clock. He confirmed that it was essential that there should be a security guard stationed at the lobby of the residential towers, at all times. 35.In his witness statement, it was also Mr Kong’s claim that the “security staff” had to handle various ad hoc tasks outside the RCA. 36.The first of these related to the carpark. The Plaintiff pointed out that for these incidents, they were, even on Kong’s evidence, few and far between (Mr Kong only identified 5 instances over a period of 3.5 years). According to the Plaintiff, a separate contractor (“Synergis”, and subsequently replaced by Amano) had been appointed to manage and operate the carpark, and their work included regular patrolling of the carpark to prevent unauthorized parking and trespass there (although Synergis’ staff were not stationed in the Development). There was a notice in the carpark which directed users to contact Synergis for assistance or on matters relating to the carpark and carpark management. The Plaintiff’s evidence is that if any security staff of the Development, including any Guard, was approached on carpark related matters, the matter would be dealt with by, or passed to, the Supervisor, and the Guards did not have to handle these matters personally as part of their work. The Plaintiff’s claim is evidenced and supported by the instructions contained in the Whatsapp communications sent by the Defendant, to the effect that management staff should simply ask residents/users of the carpark to contact the Plaintiff or Synergis for all carpark matters. 37.Although the Defendants had referred to other duties of the “security staff” outside the RCA (such as the opening and closing of Lift No 6 which is within the DMC definition of “ECA”, and the HKCT gate which comes within the definition of Commercial Unit A), the Plaintiff’s evidence is that these were tasks carried out by, and were duties of the Supervisors, and not the Guards. All tasks carried out in the Guard Room were carried out by the Supervisors, who were stationed in the Guard Room. On their part, the Guards were stationed at the Caretaker’s Counter in the lobbies of the residential towers. These matters were not disputed by Mr Kong in his testimony in Court. 38.On the entirety of the evidence, I find that the Guards’ work duties related only to the Residences and their contractual services were exclusively for the owners of the Flats. 39.The Defendant’s argument is that it is not permissible under clause 6.4.2 of the DMC to apportion any expenditure item (such as the salaries of the Guards) before attribution to the different owners under the DMC. Counsel relies on the decision in Century Globe Limited v Incorporated Owners of Fu Loy Garden, LDBM 24/2015 unreported, 30 August 2016, to argue that the splitting of an expenditure item in order to come up with what is the fair share of a co-owner, in accordance with the “owner-to-pay” principle, is not permissible. Counsel further relies on the judgment in 宏德居業主立案法團 v 人人汽車有限公司 [2023] HKLDT 27, LDBM 167/2019 unreported, 31 March 2023 to argue that the process of apportionment before attribution is arbitrary, inconsistent, irregular and irrational so as to result in serious unfairness. 40.I cannot accept the Defendant’s arguments. I can understand the Defendant’s submission, that the fact that a particular item of expense has to be apportioned might suggest that such expense is not exclusively for the benefit of a particular owner or class of owner (as the Court alluded to at paragraph 59 of the judgment in Century Globe), but I do not agree that apportionment of expenses is not permissible under clause 6.4.2. as Counsel contended. As Counsel for the Plaintiff sought to explain, the Defendant’s argument is illogical and inherently contradictory. There is no reason why expenditure under “Security Staff Costs” cannot be divided into “Supervisors salaries” and “Security Guard salaries”, and why it would be arbitrary to apportion security staff costs in such a manner. As Counsel argued, the bigger and more generalized the expenditure item, the more likely and natural for it to be apportioned into more specific items. Clause 6.4.2 only refers to “Management Expenses” being apportioned between the owners of the Estate, depending on whether the expenditure relates to RCA/RCF, CCA/CCF, CPCA/CPCF or ECA/ECF. “Management Expenses” are simply defined in the DMC as “the costs, charges and expenses necessarily and reasonably incurred in the management and maintenance of the Land and the Estate”, as more particularly provided in clause 6.4.1. “Guards salaries/expenses” and “Supervisors’ salaries/expenses” can both and equally be categorized as “costs, charges and expenses” incurred in the management of the Property, and either can properly be apportioned in the manner set out in clause 6.4.2. 41.I accordingly reject the Defendant’s contention, that it is “logically wrong” for the Plaintiff to apportion or subdivide the Security Expense into Security Supervisor expense and Security Guards expense. Nor do I see how it can be said to be arbitrary, or an unreasonable exercise of the powers under the DMC. 42.The real question therefore is whether the disputed expenses of the security guards fall within clause 6.4.2 (a), as the Plaintiff contends, or clause 6.4.2 (d), as the Defendant contends. That depends on whether the expenditure relates to RCA/RCF, or if it relates to ECA/ECF, as defined in the DMC. 43.First, the location of the particular facility or in this case, the staff in question, does not dictate the issue of whether the facility or service is a RCF or ECF. “ECF” refers to “all equipment, facilities and services designated as being for the use, benefit or service of the ECA and the Estate generally”, and include specific items set out. Similarly, RCF refers to “all those facilities, equipment, machines, apparatus and installations in, under or above the Land and the Estate for the general benefit and service of the Residential Accommodation only”, including specific items but “excluding those facilities being part of the ECF, CCF or CPCF”. For RCF, so long as the facility in question is “about the Land and the Estate”, it may come within the definition, if the other requirements specified in the definition are satisfied. 44.On the evidence, I accept the Plaintiff’s case that the duties undertaken by the security staff outside the RCA were undertaken by the Supervisors. For patrolling, and as evidenced by the 2019 Roster, the Guards were responsible only for patrolling the residential towers, and for manning the lobby of the residential towers from the caretaker’s counter(s). I accept that the Guards may be the first point of contact if there were any complaints from residents about the carpark or the commercial areas, but even if they were, the evidence is that they would pass on such complaints, or enquiries, to the Supervisor to deal with, and the Supervisor would in turn pass on the complaints or enquiries to Synergis, if the matter is one concerning the carparks. It was not the duty of the Guards to handle such complaints relating to the carpark or areas outside the Residences or the RCA. On the evidence, the work of managing the lobby of the residential towers sufficiently and necessarily kept them occupied. 45.Since the service of the Guards, of patrolling the residential towers and manning the lobby, were for the general benefit and service of the Residences only, my finding is that the Security Staff Costs consisting of the costs of the Guards are expenditure which relate to the RCA or RCF, specifically for the provision of security and general services to the owners of the Flats, and such expenditure should be borne by the owners of the Flats under clause 6.4.2 (a) of the DMC. FS Costs 46.In the Plaintiff’s Opening and as maintained in its Closing, the Plaintiff only argued that the “Fire Equipment Repair Costs”, defined to mean the “repairs and replacement costs of the firefighting installations and equipment” located within the RCA should be borne by the owners of the Flats, pursuant to clause 6.4.2 (a) of the DMC. The claim as to “maintenance costs” for the fire services installations and equipment in the RCA (referred to in paragraph 23 (iv) of the SOC) was not pursued. 47.On behalf of the Plaintiff, it was argued that whilst there may be difficulties in apportioning firefighting-related expenses, such as the annual fire service inspection fees, since the contract for annual inspection of the fire service equipment or system was on a lump sum basis, there should be no difficulty in apportioning the costs for repairing or replacing any defective firefighting equipment, which costs can be readily broken down. The Plaintiff referred in its evidence to invoices for the repair and replacement of firefighting equipment in 2018, which sets out the location and repair cost of the relevant defective equipment. The Plaintiff further pointed out that a separate fire safety certificate was issued for each portion of the Development, which certificate identifies the defective firefighting equipment which had to be repaired, and the location of the equipment within the Development. In the same way, quotations issued by registered contractors for repairing and replacing any firefighting equipment identify the cost of repairing each defective equipment. 48.As pointed out above, I do not accept that a general head of fire service related expenditure cannot be broken down or apportioned into different items of expenditure. Particularly for firefighting installations, or the Physical Parts as the Defendant has referred to, they can be conveniently and separately identified according to their location. 49.In context, the Development is relatively confined in its layout. There is one block, comprising different floors from the ground entrances to the roof. The commercial units are on the ground to 2nd floors, the carparks are on the 2nd and 3rd floors, the 5th floor is essentially the RCA, the CPCA, and the ECA, the 6th floor is the podium for the Residences, and the residential towers form part of the same block, which block extends from the ground floor to the roof. 50.I accept the Defendant’s main argument that the fire service system of the Development is generally for the security of the Development as a whole, penetrating the entire Development, for fire prevention and safety of all the occupants and users of the Development. The costs of the annual inspection required for the maintenance of the fire service system of the Development may be apportioned as expenditure which relates to the ECF under clause 6.4.2 (d), being expenditure relating to “equipment, facilities and systems designated as being for the use benefit or service of the ECA and the Estate generally”. 51.I cannot agree with the Defendant that it is not possible, or that there would be any practical difficulty in apportioning the costs required or budgeted for repairing and replacing any defective firefighting equipment, or that it would be arbitrary or unfair to do so. The apportionment can easily be done by reference to the location of the relevant equipment or Physical Parts. 52.Counsel for the Plaintiff highlighted the fact that “fire service installation system” is included in all the definitions of “Common Facilities”, be it CCF, or CPCF or ECF, or RCF. This shows that it was intended that the firefighting related expenses can and should be apportioned, as otherwise these words in the definitions would be superfluous and otiose. 53.On behalf of the Defendant, Counsel pointed out that the definitions of “Common Facilities” as used in RCA, CCF and CPCF only apply when they are excluded as part of the ECF. By way of illustration, RCF extends to all facilities, equipment, installations etc for the general benefit and service of the residential accommodation only, including security system and fire service installation system, but “EXCLUDING those facilities being part of the ECF, CCF or CPCF”. If the relevant fire service installation system comes within the definition of ECF, then it is excluded from the definition of RCF. I agree with Miss Ip, and the test in this respect (for whether there is exclusion from RCF) is whether the relevant facilities can properly fall within the definition of “ECF”: of being facilities “for the use, benefit or service of the ECA and the Estate generally”. There is nothing otiose or superfluous. If, as contended for the Plaintiff, the drafting of the DMC shows that some firefighting facilities were intended to form part of the ECA/ECF and to be paid for by all owners, and some firefighting facilities were meant to be part of the RCA/ECA/CPCA and to be apportioned to different owners, the clauses on the meaning of the different facilities demonstrate that the test and determining factor provided is whether the facilities are for the use, benefit or service of the ECA and the Estate generally, or if they are for the general benefit and service of the RCA only, or the Commercial Accommodation only, or the CPCF only. There may be fire service installation systems in each of the CCF, CPCF and RCF, but if they are part of the ECF, then they are excluded from the other common facilities. 54.For the Plaintiff to succeed in its contention, that the costs of repairing the fire-fighting equipment located in the Residences or the RCF should be borne by the owners of the Flats, and not by the owners of the Commercial Units and Carparks, it has to be shown that these expenses should be apportioned under clause 6.4.2 (a), as expenditure relating to the RCA or RCF, providing services to the owners of the Flats. Facilities and installations fall within the definition of RCA if: (1) they are in the Estate; (2) are for the general benefit and service of the Residential Accommodation only; (3) include fire service installation system or such other installations which are for the common use and benefit of the owners of the Flats; but (4) those facilities which are part of the ECF are excluded. 55.I have reservations in concluding that any firefighting installation and equipment can be said to be for the general benefit and service of the Residences only, and that the proper repair, maintenance and functioning of any part of the fire services installations, equipment and system for the Development is not for the “use, benefit or service of the Estate generally”. As explained in the earlier part of this Judgment, the Development is relatively compact. It cannot be said that the fire service equipment or installation on, say, the 7th floor of one of the residential towers, cannot be used for other parts of the Development and is not for the benefit of the ECA, or of the floors below the 7th floor which form part of the carparks or the commercial areas. If a fire service installation or equipment on the 7th floor does not function, for lack of repairs, and a fire spreads to other parts of the Development, the safety of the entire Development and all the owners is affected. Nor can it be said that any part of the fire service equipment or installation within the RCA cannot be used for other parts of the Development or Estate, and must be used only for the Residences including the RCA. The repair and proper functioning of any part of the fire services installation and equipment is for the benefit of the Estate generally. 56.Unless it can be shown that there is any part of the fire service installations or equipment which operates and services the Residences/Flats specifically and only, to the exclusion of other owners of the Development, in which case it comes within the definition of RCF, the expenditure of repairing and replacing them properly falls under clause 6.4.2(d). 57.In conclusion, on my construction, the maintenance and repair costs for the fire services installations and equipment in the RCA were correctly apportioned to all the owners of the Development, under clause 6.4.2 (d) of the DMC. It also follows that as the expenditure does not relate solely to or is solely for the benefit of a particular group of owners, and not for the benefit of the other owners, I do not consider that clause 6.4.2 (e) relied on by the Plaintiff is applicable. Disposition 58.The Plaintiff’s claims for relief have not been established, save for the claim as to the apportionment of the Security Staff Expenses which relate to the costs of the Guards. The only order made is that the Budgets and the sharing or apportionment of the expenses should be modified to reflect my finding on the Security Staff Expenses for the Guards, and for such to be paid by the owners of the Flats. The remainder of the claims made by the Plaintiff in this action are dismissed. 59.The Counterclaim is allowed for the Plaintiff’s payment only of the outstanding management fees, with interest, and administrative costs (as claimed in paragraph 32 of the Amended Defence and Counterclaim), after adjustment is made to provide for the proper apportionment of the Staff Expenses of the Guards only. 60.The Plaintiff abandoned at trial its claims for the Security Supervisor costs, and for the maintenance costs of the fire services installations and equipment. Of the remainder of the disputed costs, it only succeeded in one claim. In view of the orders made, I consider that the Plaintiff is only entitled to 30% of the costs of and incidental to these proceedings, and an order is made to such effect.
Mr Thomas Wong, instructed by Li, Kwok & Law, for the plaintiff Ms Lilian Ip, instructed by Huen & Partners, for the defendant | ||||||||||||||||||||
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