International Property Management Ltd v. Lee Yung Sang
Read the full judgment text of DCCJ 8688/1975 on BabelCite. This District Court judgment.
1. The Plaintiff company (hereinafter called "the Management Company") was appointed under a document describing itself as a Deed of Mutual Covenant and Agreement (hereinafter referred to as "the Deed of Mutual Covenant") to manage and maintain a multi-storey block of shops and flats known as I-Feng Mansions at To Kwa Wan, Kowloon. According to the express terms of that Deed the owner for the time being of any shop or flat in that building is required to pay a maintenance contribution and manage
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DCCJ008688/1975 IN THE DISTRICT COURT OF HONG KONG HOLDEN AT KOWLOON CIVIL JURISDICTION ACTION NO. 8688 OF 1975 -----------------
Coram: Judge Rhind in Court. Date of Judgment: ----------------- JUDGMENT ----------------- 1. The Plaintiff company (hereinafter called "the Management Company") was appointed under a document describing itself as a Deed of Mutual Covenant and Agreement (hereinafter referred to as "the Deed of Mutual Covenant") to manage and maintain a multi-storey block of shops and flats known as I-Feng Mansions at To Kwa Wan, Kowloon. According to the express terms of that Deed the owner for the time being of any shop or flat in that building is required to pay a maintenance contribution and management fee of $35.00 per month to the Management Company, irrespective of whether that owner occupies his unit or not. The Defendant is the registered owner of a flat in that building, having purchased under an Assignment which stated explieitly that it was subject to and with the benefit of the Deed of Mutual Covenant. 2. By the present action the Management Company sues the Defendant for $630.00, being eighteen months' arrears of maintenance and management contribution at the aforementioned rate of $35.00 per month. The Defendant denies liability to pay any part of this amount, giving as his reason the fact that throughout that period he was not in occupation, having either rented the flat out or left it vacant. By choosing not to observe the express provision of the Deed of Mutual Covenant purporting to impose an obligation on an owner to continue paying the monthly maintenance and management contribution, irrespective of occupation, the Defendant in effect calls in question the enforceability of the whole Deed of Mutual Covenant against himself. If the requirement to pay the maintenance contribution, irrespective of occupation were unenforceable, there would be no reason in principle why the other provisions of the Deed of Mutual Covenant would not likewise be equally unenforceable. 3. To determine whether the Deed of Mutual Covenant is enforceable against the Defendant it is necessary to examine in more detail the nature of that document as well as the Deed of Assignment which conferred owner-ship of his flat on the Defendant. 4. Originally, the piece of land on which I-Feng Mansions now stands was owned by Fook Loy Enterprises Company Limited (hereinafter referred to as "the Development Company") for the residue of a term of 75 years with a right of renewal. Having erected the building, which is fifteen storeys high and comprises several hundred flat units and shops, the Development Company firstly sold a shop on the ground floor to a buyer who can be called X and then a flat on the fourteenth floor to another buyer who can be called Y. 5. For conveyancing purposes, the land and buildings known as I-Feng Mansions were notionally divided into 7432 equal undivided shares, and to X the Development Company assigned 18 such equal undivided shares together with the right to exclusive use of his shop on the ground floor, while 15 such shares were assigned to Y together with the right to exclusive use of his fourteenth floor flat. In both instances the assignments were for the residue of the aforementioned term of 75 years with the right of renewal. 6. Next, the Development Company, which at that stage still owned 7401 of the equal undivided shares, X, and Y entered into the Deed of Mutual Covenant together. By Clause 3 of that document, each of the parties thereto agreed inter alia to pay his due proportion of the cost of cleaning and maintaining the common parts and common amenities of the building. One next has to look at Clause 10(c) and (d) to ascertain what was the due proportion of that cost a party was called on to pay. The answer provided by Clause 10(c) and (d) is that for each flat owned the contribution is $35.00 per month, payable in advance. This is the rate at which the Defendant in the present case is being asked to pay. 7. Regarding the point on which the Defendant seeks to be excused payment, Clause 10(f) provides.
8. By Clause 10(a) the parties appointed the Management Company to manage and maintain the building on their behalf. Also the Management Company was empowered to collect maintenance and management fees from the parties to that Deed and from the owners of shops and flats in the building. This appointment by deed conferred a power of attorney on the Management Company: Hong Yip Service Co. Ltd. v. David Wong O.J. Action 2610/73. Of course, the Defendant was not a party to the Deed of Mutual Covenant so the question naturally arises, how can its provisions be enforceable against him? Without the enactment of the Law of Property (Enforcement of Covenants) Ordinance, Cap. 297, the common law rule that the the burden of positive covenants does not run with the land would have obstructed the enforcement of the provisions of this Deed of Mutual Covenant against the Defendant, but the legislation has facilitated much enforcement. 9. The Defendant became owner of his flat subsequent to the execution of the Deed of Mutual Covenant. The Defendant bought directly from the Development Company, the Assignment vesting in him 15 equal undivided 7432nd shares for the residue of the term of 75 years with the right of renewal together with exclusive use of his flat. The Assignment was expressed to be "Subject to and with the benefit of (the) Deed of Mutual Covenant." 10. In so far as the draftsman of the Deed of Mutual Covenant was concerned, it is clear that he intended the burden of its provisions to run with the land. An indication that the Deed was intended to extend beyond its immediate parties was afforded by defining the parties thereto to include, wherever the context permitted, their respective executors, administrators, successors in title and assigns. However, the really unmistakable intention in this regard is to be gathered from Clause 19 of the Deed of Mutual Covenant which provides,
11. At this point it is now convenient to convenient to consider the effect of the Law of Property (Enforcement of Covenants) Ordinance, Cap. 297. 12. There can be no doubt that the Defendant is an "owner" and that what he owns is a "flat" within the definition of those words in Section 2 of the Ordinance. 13. Section 3(1) contains the kernel of this legislation and merits quotation in full:-
14. The Defendant's situation squarely falls within the ambit of Section 3(1) so that clearly the provisions of the Deed of Mutual Covenant with regard to payment of maintenance charges and management fees are enforceable against him. However, is it the Management Company which is entitled to enforce such payment? 15. In the words of Section 3(1), such payment can be enforced against the Defendant
16. Counsel for the Management Company, out of fairness to the Defendant who was unrepresented, pointed out that, at least on a superficial reading, the part of Section 3(1) just cited might mean that the Management Company could only enforce the covenants against the Defendant if it could show itself to represent the owners of the whole of the building, except for the part Defendant owned. This interpretation might flow, he stated, from the use of the words, The problem relates to the meaning of "each and every". Depending on whether one chooses to place the emphasis on the "each" or on the "every", the two words together might mean either "any" or "all" other part or parts of such building. However, he went on to submit that by virtue of the final words of Section 3(1), the Management Company would be entitled to succeed even if it could only show it represented the owner of any share or interest in the building. Counsel thought he might face practical difficulties if he had to prove that the Management Company represented the owners for the time being of the whole of the rest of the building, but he would have no difficulty showing that it represented at least the owner of a share in the building because X, one of the parties to the Deed of Mutual Covenant under which the Management Company was appointed, was still registered as the owner of his shop. 17. In my opinion even the words in their context mean no more than "the owner for the time being of any other part of such building". Thus, even if the Management Company represented X alone, it would still come within that limb of Section 3(1). 18. This is clearly legislation to which the "Mischief Rule" of interpretation should be applied. The preamble shows that the purpose of the Ordinance is "To provide for the enforcement of covenants and agreements relating to buildings divided into separately occupied premises" and the courts should interpret this legislation in such a way as to facilitate the admirable social purpose of seeking to ensure that multi-storey buildings are properly managed and maintained. If all of the owners, save the defaulter, had to be joined in an action to enforce a covenant such as the one in the present case, the legislation might in practice become unworkable and I would be loth to adopt a construction which might lead to that result. Without doing violence to the language of the part of Section 3(1) now under consideration, I consider those words "each and every other part" can be interpreted to mean "any other part", with the result that the owner of any flat in a building could on his own enforce such a covenant against any other owner. 19. Even if I were wrong in interpreting the words "each and every other part" in that way, I am nonetheless satisfied that the owner of one flat only would still be able to enforce such a covenant because he would be the owner "of any share or interest" within the meaning of Section 3(1). 20. Counsel for the Management Company chose to argue his case on the basis that the Management Company might represent the owner of one flat only, and even on that basis I was prepared to interpret Section 3(1) in such a way that the Management Company would succeed in the present action. It might well be, though, that by virtue of the provisions of the Deed of Mutual Covenant the Management Company does actually represent all the owners for the time being, other than Defendant, so that, a fortiori, the Management Company is entitled to bring the present proceedings. 21. In any event I regard Defendant as estopped from denying the Management Company's right to sue him because of the following provision in Clause 10(j) of the Deed of Mutual Covenant
22. The Management Company thus need not have called any evidence to show that one of the parties to the Deed of Mutual Covenant was still an owner of part of the building. There will be judgment for the Plaintiff in the sum of $630.00. Representation: |
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