The Incorporated Owners of Tung on Building v. Kam Wah Investment Co Ltd

LDBM 73 OF 2006

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT Application No. 73 of 2006

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Between

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Before: H. H. Judge Yung, Presiding Officer of the Lands Tribunal

Date of Hearing: 24 July 2006 and 25 July 2006

Date of Judgment: 19 September 2006

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J U D G M E N T

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1.The Applicant is the owners  incorporation of the building and the Respondent is the developer of the building. The Respondent still owns a number of units in the building.  The present proceedings result from the dispute of the parties over the right to use certain parts of the building and the allocation of management expenses to shop H owned by the Respondent.

2.The Applicant seeks various declarations and the Respondent deals with them point by point.  Counsels for the parties rightly pointed out that the present dispute involves only legal issues. However I am of the view that the issues should have been framed and argued in a much simpler way.

3.There were 8 shop units on the ground floor and above them, 135 flats. Two of these flats at the roof level. To say the very least, the Applicant made a glaring mistake in correlating structural details of building plans to the actual structural features of the building.  It was clarified only during the course of trial that there are no, and never have been any, structures  above the roof level, i.e. 18^th floor.

The Roof

4.The Applicant contends that the roof is common area. Clause 12 of the Deed of Mutual Covenant provides that:

“ None of the parties hereto other than the First Owner shall have the use and enjoyment of the roof --”

Mr. Kam, counsel for the Applicant,  argues that the words “ exclusive” is not used and therefore the definition of common part in the Building Management Ordinance applies. There is no magic in the word “exclusive”. The provisions in Clause 12 clearly reserves the right to exclusive use of the roof to the First Owner (the Respondent). I accept the submission of Mr. Fung, counsel for the Respondent, that there is no ambiguity and there is no need to look beyond this clear provision.

The space under the staircase/shop H

5.The Deed of Mutual Covenants provides that:

“---the said premises and said building henceforth be divided into 147 equal undivided parts or shares---one to be allocated to each of the eight shops on the ground floor and one to each of the 136 flats ---and three to be allocated to the roof---”

The ambiguity is evident in that there are only 135 flats. The total number of shares taken up by the flats, shops and roof amounts to 146 only. One share is not specifically allotted to any parts of the building. The control card of the Land Registry shows that two shares are allotted to shop H. These two factors form the basis of the Applicant’s contention that 2 shares are allotted to shop H.

6.The nature of the control card can be seen from the letter to the Applicant’s solicitors. It is not the official land record. It was opened according to the schedule provided by the solicitors or information in the Deed of Mutual Covenant. It was created to facilitate searches of the records.  The primary source of evidence of allocation of shares would be the schedule. The schedule has not been produced for reasons unknown to me. Shop H has not yet been assigned by the Respondent developer. 

7.Under these circumstances, the control card cannot be relied upon. Furthermore by the express provisions of Clause 12 of the Deed of Mutual Covenant the Respondent reserves to itself the right to the use and enjoyment of the space behind the staircase. To exercise this right the developer must retain a share of land or the building. Both parties do not dispute that the building are in effect divided into 147 shares or parts. The missing share which has not been specifically assigned must be taken to have retained by the Respondent. Of course the Respondent is free to assign this share together with shop H when it chooses to do. On the other hand it might assign this share together with the right to the use and enjoyment of the space behind the staircase.

8.It is my ruling that the shop H as the matter stands now has only one share allocated to it.   The liability for management fees or other contributions to funds under the DMC or under the Building Management Ordinance must be determined according to the provisions thereunder, taking into account that the Respondent owns the missing share.  The Respondent’s liability for management expenses or similar expenses should not be determined on the basis that shop H has 2 shares allotted to it.

Conclusion

9.In the premises, the Applicant is not entitled to any of the declarations sought. There be an order nisi for costs in favour of the Respondent on High Court Scale to be taxed if not agreed. The order nisi be made absolute in 6 weeks.

Representation:

The Applicant: represented by Mr. C. Kam of M/S Edward C.T. Wong & Co.

The Respondent: represented by Mr. R.Fung of M/S W.I. Cheung & Co.