Sam Woo Marine Works Ltd v. The Incorporated Owners of Po Hang Building
Read the full judgment text of CACV 368/2008 on BabelCite. This Court of Appeal judgment was delivered on 5 November 2009 before Tang VP, Cheung JA, Yuen JA.
Civil law – construction of Deed of Mutual Covenant (DMC) – liability to contribute to repair and maintenance costs – whether governed by fixed monthly contribution clauses or by proportionate shares in the land – DMC clause 3(f) as charging provision requiring payment 'in accordance with the provisions of these presents' – clauses 3(h) and (i) setting fixed monthly sums and further contribution ratio for Shop 1 of $1,000 per month – clause 5 providing for contributions in proportion to undivided shares of land, applying only 'save and except as herein provided' – shop unit on ground floor allocated 963/14,992 land shares – 1994 and 2007 repair and maintenance projects – whether inconsistency between clauses 3(f), (h)/(i) and clause 5 – held that clauses 3(f), (h) and (i) otherwise provide, displacing clause 5 – reliance on The Incorporated Owners of Yee On Court v Li Zee Zing Hai, CACV 181/2000, where Keith JA held that the words 'in the shares as above provided' referred to the breakdown in the monthly-payment clause rather than undivided land shares, and that the DMC uses express language for share-based apportionment when intended (clause 4(w)) – distinguished The Incorporated Owners of Hang Shun Building, Tonkin Street v Lee Chi Ming, CACV 321/2003, where the charging clause itself expressly tied liability to shares – clause 19(e) using express 'in proportion to the respective shares in the said land' language supports interpretation that clause 3(f) would have done so if intended – applicant liable to contribute only 1,000/57,990 of the costs – appeal allowed with costs.
Legal issues: Construction of DMC clauses governing owner's liability to contribute to repair and maintenance costs
Outcome: Appeal allowed with costs; the applicant is liable to contribute to the costs in accordance with clauses 3(f), (h) and (i) of the DMC.
Cited by 13 cases · Cites 2 cases
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CACV 368/2008 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 368 OF 2008 (ON APPEAL FROM LDBM NO. 179 OF 2008) ----------------------
---------------------- Before: Hon Tang VP, Cheung JA and Yuen JA in Court Date of Hearing: 5 November 2009 Date of Judgment: 5 November 2009 Date of Reasons for Judgment: 11 November 2009 ------------------------------------ REASONS FOR JUDGMENT ----------------------------------- Hon Tang VP: 1.The applicant is the owner of a shop unit on the ground floor of Po Hang Building. The respondent is the incorporated owners of Po Hang Building. Po Hang Building is a multi-storey building which is erected on Nos. 2-8 Dundas Street and Nos. 43-49, Tung On Street, Kowloon. It has shops on the ground and 1st floors and residential flats on the 2nd to the 25th floor. The land on which the building was erected was notionally divided into 14,922 shares. Shop 1 has been allocated 963/ 14,992 shares. 2.The only issue in this appeal concerns the applicant’s liability to contribute to the costs and expenses in the repair and maintenance projects carried out in 1994 and 2007 (“the costs”). The applicant’s case is that its liability to contribute is governed by clauses 3(h) and 3(i) of the Deed of Mutual Covenant dated 18 January 1983 (“the DMC”) and not according to its 963/14,992 shares in the land. 3.The answer depends on the construction of the following provisions in the DMC. Clause 3(f) of the DMC provides:
It is accepted that the costs are covered by clause 3(f). As may be noted each owner is required to pay those costs and expenses:
4.The other provisions are clauses 3(h) and (i) which provide:
On this basis the applicant is liable to pay 1,000/57,990 of the costs.
5.The respondent contends that the applicant is liable to contribute as provided under clause 5 of the DMC which provides:
6.Mr Kelvin Leung, counsel for the respondent, relied on The Incorporated Owners of Hang Shun Building, Tonkin Street v Lee Chi Ming, CACV 321/2003, unreported, dated 3 September 2004. In The Incorporated Owners of Hang Shun Building, Tonkin Street, clause 4(e) in the DMC provided that the relevant charges and expenses:
7.However, the DMC went on to provide in clause 4(g) that each owner should pay certain sums on account of the share of such costs monthly, calculated in the way therein set out. Then clause 4(h) provided as follows:
8.In the Hang Shun Building case, there was a conflict between clauses 4(e) of the one part and (g) and (h) of the other part, and the decision in that case turned on the resolution of that conflict. The court resolved the conflict in favour of clause 4(e). With respect, quite rightly so, since clause 4(e) was the charging provision and it stated clearly that the contributions were to be made in:
Clauses 4(g) and (h) which dealt with the mechanics of payment must be read subject to the charging provision. 9.In the present case, clause 3(f) is the charging provision and it provided that the costs should be paid:
which I believe refers to clauses 3(h) and (i). In any event, there is no inconsistency between clauses 3(f), (h) and (i). 10.Furthermore, I note that in clause 19 which deals with the expenses of central air-conditioning system for the ground and 1st floor, clause 19(e) expressly provided that the contribution by the relevant owners should be:
I believe clause 3(f) would have adopted the same language, if that had been the intention. 11.Mr Leung relied on clause 5. But clause 5 applies unless otherwise provided. Clauses 3(f), (h) and (i) have provided otherwise. 12.Ms Queenie W. S. Ng, for the applicant, relied on the judgment of Keith JA in The Incorporated Owners of Yee On Court v Li Zee Zing Hai, CACV 181/2000, unreported, 14 November 2000. There the relevant clauses of DMC were:
13.Keith JA said that the effect of clause 4(d) was that:
Thus, the owners were not required to contribute according to their undivided share in the land. 14.Then Keith JA made the following observations regarding clauses 4(f) and (g).
15.Keith JA’s judgment in The Incorporated Owners of Yee On Court supports Ms Ng’s submission. In any event, I believe, as a matter of construction, Ms Ng is correct that the applicant’s liability to contribute is governed by clauses 3(f), (h) and (j), in other words, the applicant is liable to contribute only 1000/57990 of the costs. 16.For the above reasons, I have allowed the appeal with costs. Hon Cheung JA: 17.I agree. Hon Yuen JA: 18.I agree with the Vice-President’s reasons.
Ms Queenie W. S. Ng, instructed by Messrs K. H. Lam & Co., for the Applicant Mr Kelvin Leung, instructed by Messrs Pansy Leung Tang & Chua, for the Respondent |
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