Sunbeam Investments Ltd v. The Incorporated Owners of Villa Veneto
Read the full judgment text of LDBM 370/2007 on BabelCite. This Lands Tribunal judgment was delivered on 30 June 2010.
1. This is the trial of two applications, namely LDBM 370/2007 and LDBM 175/2009, which are consolidated pursuant to my order made on 21 December 2009. In both applications, the parties are the same. The Respondent is the owners’ corporation of a building at the Mid-levels known as Villa Veneto, No. 3 Kotewall Road, Hong Kong (“the Building”). The Applicant is the owner of Flat B on the 33 rd Floor of the Building.
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LDBM 370/2007 IN THE LANDS TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION Building Management Application No. 370 of 2007 ----------------------
---------------------- IN THE LANDS TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION Building Management Application No. 175 of 2009 ----------------------
---------------------- (Consolidated by the Order of H.H. Judge WONG dated 21 December 2009) Before: H. H. Judge WONG, Presiding Officer, Lands Tribunal Dates of Hearing: 10 and 25 May 2010 Date of Handing Down of Judgment: 30 June 2010 ---------------------- JUDGMENT ---------------------- Background 1.This is the trial of two applications, namely LDBM 370/2007 and LDBM 175/2009, which are consolidated pursuant to my order made on 21 December 2009. In both applications, the parties are the same. The Respondent is the owners’ corporation of a building at the Mid-levels known as Villa Veneto, No. 3 Kotewall Road, Hong Kong (“the Building”). The Applicant is the owner of Flat B on the 33rd Floor of the Building. 2.The Building was completed in early 1980s comprising a 35-storey tower of residential units with a podium containing four floors of car parks on Lower Ground Floor, Ground Floor, 2nd Floor and 3rd Floor. There are two flats (Flat A and Flat B) on each floor from the 4th Floor to 33rd Floor with a round balcony for each flat. For the two flats on the 4th Floor, there is a terrace for each of them. There are two duplex units on the 34th Floor of the Building (Flat 34A and Flat 34B), each consisting of 3 levels including the roof top. The lower level is the penthouse containing, inter alia, a kitchen, sitting and dining rooms and a Roof Garden. The upper level is a maisonnette containing bedrooms, a small flat roof facing Kotewall Road and another small flat roof adjoining the bedroom at the rear of the Building. The roof top above the maisonnette is owned by the owner of the duplex unit. 3.When the Building was built, each flat had its own central air-conditioning system with an air-conditioning plant room located by the side of the dining room. Apart from the flats on the 4th Floor of the Building, there were also two compressors for each Flat installed on the rack at the external wall of the rear of the Building outside the kitchen. However, the central air-conditioning system was very energy consuming and not environmentally friendly. Over the years, most of the owners of the Building have abandoned the use of central air-conditioning system in their respective flats and replaced it with window-type or split-type air-conditioners, which could not be installed in the air-conditioning plant room and have been installed at various exterior parts of the Building. Hence there was extensive change to the Building in respect of the installation of air-conditioners, many of which were carried out with the approval of the Manager. 4.The Respondent has been planning for the renovation of the Building (including the external wall) for many years. By the Letter of Intent/Acceptance dated 1 February 2010, CB Richard Ellis Limited has been appointed by the Respondent to act as the Project Manager, Authorized Person and Registered Structural Engineer of the renovation project. CB Richard Ellis has prepared a Building Condition Survey Report in April 2010 for the Respondent’s consideration. 5.The Applicant’s unit is immediately below Flat 34B (a duplex). A lot of complaints have been made by the Applicant against the owner of Flat 34B, Mannitop Investment Company Limited. In April 2006, the Applicant instituted legal proceedings against the owner of Flat 34B in the District Court under Action No. DCCJ 1985 of 2006 (“the DC Action”). The DC Action was subsequently transferred to the High Court under Action No. HCA 1897 of 2007 (“the HC Action”). The owner of Flat 34B subsequently made payment of $200,000.00 into court in satisfaction of all causes of action in respect of the Applicant’s claim in the HC Action. The Applicant accepted such payment and abandoned all the other claims in the HC Action. 6.In LDBM 370 of 2007, the Applicant had made claims against the management committee of the Respondent and for various other matters, but it subsequently made amendments to the Notice of Application to withdraw its claims against the management committee and some of its claims. The present claims appear in the Re-Re-Amended Notice of Application. The subject matters in this application are related to the air-conditioners, roller shutters and balcony enclosures installed at Flat 34B and the water seepage problems at the Applicant’s flat caused by the defects of the external walls of the Building. 7.In LDBM 175 of 2009, the Applicant had made claims against the management committee members or their authorized representatives. It subsequently withdrew its claims against such management committee members and their authorized representatives. The present claims appear in the Re-Amended Notice of Application. The subject matter in this application is related to the air-conditioners installed by the management committee members at the external wall of the Building. 8.The Applicant’s case is that Respondent has failed to discharge its legal duty properly. It is seeking the Tribunal’s assistance to compel the Respondent to take the following actions:-
9.There are not many factual disputes between the parties and they have in fact agreed to produce all the evidence including witness statements and expert reports without calling the witnesses or the experts to give oral evidence at the trial. The disputes are mainly concerned with the extent of the Respondent’s legal duty. The Respondent’s legal duty 10.By virtue of section 18(1) of the Building Management Ordinance, Cap. 344 (“the BMO”), the Respondent has the duty to:-
11.It is not disputed that the owners of the Building are bound by the Deed of Mutual Covenant dated 17 May 1982 and registered in the Land Registry by Memorial No. 2258049 (“the DMC”). Clause 4 of Section I of the DMC provides that:-
12.The owners of the Building are also bound by the House Rules issued by the Manager of the Building pursuant to Clause 20 of Section IV and Clause B.2 of Section V of the DMC, which stipulate as follows:-
13.By virtue of Clause B.1(34) of Section V of the DMC, the Respondent is also under a duty:-
14.The owners of the Building have no power to override the DMC or the House Rules by passing resolutions at the owners’ meetings, which would contradict the provisions of the DMC or the House Rules, as Clause A.14 of Section VII of the DMC stipulates that:-
15.Likewise, the management committee of the Respondent cannot pass resolutions that would override the provisions of the DMC or the House Rules, as Clause B.7 of Section VII of the DMC provides that:-
16.Thus, it is clear that the Respondent has a legal duty both under the BMO and the DMC to enforce the provisions of the DMC and the House Rules, and the Respondent cannot pass resolutions either at the owners’ meetings or the management committee’s meetings to override this duty. Indeed, as held by Godfrey JA in The Incorporated Owners of Hoi Luen Industrial Centre v. Ohashi Chemical Industries (Hong Kong) Ltd [1995] 2 HKC 11, section 18(1)(c) of the BMO imposes a statutory duty on the owners’ corporation as follows:-
17.In See Wah Fan v. Incorporated Owners of Ki Tat Garden (Phase I) [2003] 3 HKLRD 1, the Court of Appeal held that if a minority owner can show he has a legitimate complaint regarding the common parts of the building and yet the management committee had chosen to ignore him, he can seek relief from the court to ensure that the owners’ corporation will observe the intention and requirement of the BMO in the proper management of a multi-owner building. By the same token, if the Applicant can show that the Respondent has breached its duty in failing to enforce the provisions of the DMC, the Applicant is entitled to bring the present proceedings against the Respondent. 18.The Applicant also relies on section 34I of the BMO to say that no person may convert any part of the common parts of a building to his own use, or use or permit to be used the common parts of a building in such manner as to cause a nuisance or hazard to any person lawfully in the building, and such contravention shall be deemed to be a breach of an obligation of the DMC. The Air-Conditioners Issue 19.The Applicant’s case is that a number of owners have installed their air-conditioners in places other than the designated areas. The designed areas are marked in the floor plan attached to the notice issued by the management company, FPDSavills Property Management Limited (“Savills”), to all the owners dated 13 August 2004. From the evidence, 44 units of the Building still have their air-conditioners not installed at the designated areas. Mr. Johnny Wong, the on-site manager of Savills, conducted a survey on 27 April 2009 and identified 68 problematic air-conditioners. Some of the owners of these air-conditioners were the members of the management committee of the Respondent, the particulars are as follows:-
20.The Applicant contends that the installation of these air-conditioners is in breach of the specific provisions in the DMC and the House Rules concerning air-conditioners, and insofar that such air-conditioners are affixed to the exterior of the Building other than the designated area, they violate provisions prohibiting interference with the common parts and external appearance of the Building as follows:-
21.By virtue of Clause B.1(15) of Section V of the DMC, the Respondent has a duty:
22.The Respondent does not seem to have any dispute about the breaches aforesaid, but considers that it would or might have great difficulty in strictly enforcing the provisions of the DMC in relation to the installation of air-conditioners against the owners, that there would be great objections and resistance by the owners if the provisions of the DMC were to be strictly enforced and that it would be more appropriate and reasonable if such provisions of the DMC were to be enforced on a gradual and mild manner and the owners be given a reasonably long time to rectify the breach. Thus, on 3 December 2001, the Respondent decided at an owners’ meeting to give a grace period of 5 years up to 31 May 2009 to the owners concerned. On 16 March 2009, the management committee of the Respondent resolved that the deadline be extended to “not later than the building renovation work”, and on 14 July 2009, the Respondent at an owners’ meeting resolved that the deadline be extended to “31 December 2010 or the renovation of the building be completed, whichever is later”. The Respondent relies on these resolutions and claims that the problem will be rectified by the time the major renovation of the Building is completed. The Respondent submits that the renovation work should be completed in the course of 2011. 23.The Respondent contends that it has absolute discretion to do all things which are deemed necessary or desirable for the proper management of the Building. In this contention, the Respondent relies on Clause B.1 of Section V of the DMC which stipulates that “the Manager shall be responsible for and shall have full and unrestricted authority to do all such acts and things as may be necessary or requisite for the proper management of the Building”. The Respondent also relies on Clause B.1(22) of Section V of the DMC which provides that the Manager shall have a duty “to do all things which the Manager shall in his absolute discretion deem necessary or desirable for the purposes of maintaining and improving all facilities and services in or on the Building for the better enjoyment or use of the Building by its Owners, occupiers and their licensees”. 24.Thus, the Respondent submits that when there is a breach of the DMC, it does not necessarily mean that the Respondent or the Manager should take immediate legal action. They duty imposed on the Respondent is not absolute but simply to take such action as is reasonable in the circumstances. In Lo Yuk Chu v. Hang Yick Properties Management Ltd [1996] 4 HKC 278, it was held by the Court of Appeal that the overall duty imposed by the DMC on the manager was one of ‘proper management’, which meant doing all that was reasonably required of a manager in the circumstances. The Respondent also refers to 李明月v. 秀企業有限公司,LDBM 452 of 2007, in which I said the following after referring to Lo Yuk Chu:
25.The Respondent submits that the Building was originally designed with a central air-conditioning system which has now become obsolete, and there are many units involved in not installing the air-conditioners at the designated areas. The time, costs and difficulty involved in instituting legal action against each and every owner of such units cannot be underestimated. There are also owners who have installed the air-conditioners at the exterior walls of the Building for a long time and with the approval of the Manager. It may give rise to complicated legal issues (see Cheung Yuet & Another v. The Incorporated Owners of Oriental Gardens [1979] HKLR 536). 26.Instead of having piecemeal enforcement actions against the owners and creating hostility among the owners, what the Respondent has resolved to do is to deal with the installation of the air-conditioners in one go at the major renovation of the Building. In so doing, it will save time and costs for the owners and minimize the disturbance or inconvenience to the owners. Further if the relocation of the air-conditioners can be dealt with at the time of the major renovation of the Building, it will provide a better design and appearance for the Building. Thus, the Respondent submits that it has all along acted reasonably in the circumstances in deferring the issue of the relocation of the air-conditioners until the renovation of the Building. The Applicant has also failed to show any urgency for the Respondent to take immediate action against each and every owner for not having their air-conditioners installed at the designated areas. 27.The Respondent further submits that in LDBM 175/2009, the Applicant seeks to enforce the resolution of the owners held on 31 May 2004. However, the resolution has been overtaken by and has to be read subject to the resolution passed by the owners on 14 July 2009 extending the deadline for the relocation of the air-conditioners not installed at the designated areas. In the premises, there cannot be any enforcement action for the resolution of the owners on 31 May 2004 at this stage. 28.As to Flat 34B, the compressors of the air-conditioners are installed at the roof top which is owned by the owner of the flat. The Respondent submits that the relevant provisions in the DMC and House Rules cannot be interpreted literally but have to be construed purposively so as not to produce an absurd result. A split type air-conditioner generally comprises a compressor and an air-conditioning outlet unit. The DMC and the house rules cannot be read to mean literally that all the air-conditioning components including both the compressor and the air-conditioning outlet unit have to be installed at the designated areas. Otherwise, no owner can own any mobile air-conditioners or install any air-conditioning outlet unit at the dining rooms or bedrooms. 29.The Respondent contends that what Clause 10 of the House Rules provides is to preserve the tidy appearance of the Building, and all air-conditioning system shall be installed at the designated areas approved by the Manager. This must mean that if any air-conditioning unit is to be installed at the exterior part of the Building, it has to be installed at the designated areas approved by the Manager. Since the compressors are installed at the roof top within the property of Flat 34B by its owner, there cannot be any breach of the relevant DMC and the House Rules by the owner of Flat 34B for any enforcement action by the Respondent. As to the conduits and piping, all these would be matters to be dealt with at the major renovation so that a proper design can be put forward to house all these conduits and piping in a more uniform way for better appearance. Further, it is unjust and inequitable for the Applicant to complain against the owner of Flat 34B, when it also has the air-conditioning conduits and piping installed at the exterior walls of Flat 33B, and the maxim that he who comes to equity must do equity and come with a clean hand applies. 30.I do not accept the Respondent’s submissions as aforesaid. Even though there has been extensive change to the Building in respect of the installation of air-conditioners, and irrespective of the practical reasons why some of the owners abandoned the central air-conditioning system and their merits, the fact remains that all the owners are bound by the DMC and the House Rules. As held in The Incorporated Owners of Hoi Luen Industrial Centre, supra., the Respondent is duty-bound to take proceedings for the enforcement of the covenants in the DMC, and there is no right to act in contravention of the DMC. The consent given by the Respondent to some of the owners to install air-conditioners at areas other than the designated areas is clearly in breach of the covenants in the DMC. I do not agree that the Respondent has discretion that could go beyond the express prohibitions stipulated in the DMC. 31.The Respondent claims that Clause 17 of Section IV of the DMC does not elaborate on what the spaces for air-conditioners are, but the last sentence of that clause reads “Air-conditioning units may only be installed in the spaces provided in each Flat.” The spaces provided must be those stipulated in the building plans approved by the Building Department. Apart from the air-conditioning plant room and save and except for the flats of 4th Floor, there were 2 compressors for each flat on the rack at the external wall of the rear of the Building. The air-conditioning plant room and the rack must be the spaces provided for each Flat as stipulated in Clause 17. 32.The Respondent refers to Clause 10 of the House Rules which provides that all air-conditioning system shall be installed at the designated areas approved by the Manager; and no window type air-conditioners are allowed to be installed at the window facing Kotewall Road, but the House Rules must be read subject to the DMC. In fact, Clause 3(e) of the House Rules also provides that “all air-conditioning system and its pipings should be installed at the designated areas only”. Hence, I do not agree that the Respondent has absolute discretion to decide on or change the designated areas. 33.The resolution made on 3 December 2001 in fact concerned only air-conditioners facing Kotewall Road, and since all the air-conditioners installed on the external wall facing Kotewall Road have been removed, this resolution is no longer relevant. What is relevant is the resolution passed on 31 May 2004, which required all air-conditioners to be installed at the designated areas. The minutes of the meeting on 31 May 2004 acknowledged that, since remedial works of the air-conditioning racks had been completed, the owners should move the air-conditioners to the designated areas within 5 years. It is clear to me that the air-conditioning racks must refer to the racks in the original building plans, but not including the drying racks along the wall at the rear of the Building. The drying racks are clearly not designed to support compressors of air-conditioning units. 34.The Respondent has misunderstood the judgments of Lo Yuk Chu and 李明月. These two cases did not say that the Respondent can withhold taking action if reasonable, but that the Respondent has to take reasonable steps to fulfil its duty. No doubt, the duty is not “absolute”, but the Respondent has to do what is “reasonably necessary” in the circumstances. In failing to take any action to enforce the covenants of the DMC for more than 5 years, the Respondent cannot be regarded as having taken reasonable steps to fulfil its duty. I also do not find it reasonable for the Respondent to wait for the major renovation of the Building before asking the owners to remove the infringing air-conditioners. These air-conditioners should in fact be removed by their respective owners before the major renovation, as they would otherwise hinder the Respondent in renovating the external walls of the Building. If the owners are allowed to remove these air-conditioners at the time of the major renovation, it just means that the progress of the renovation will be delayed. The removal should actually take place before the major renovation is commenced. Thus, I do not see any reasonable excuse in delaying the enforcement of the DMC until the completion of the major renovation. The Respondent’s claim that it is a question of timing for requiring the owners to remove the air-conditioners to the designated areas at the time of renovation is totally on a wrong footing. 35.The Respondent’s suggestion that it will save time and costs in waiting for the major renovation is also based on the wrong assumption that the infringing owners would definitely remove the air-conditioners at the time of renovation, as it would provide a better design and appearance. As aforesaid, the Respondent cannot change the designated areas for the air-conditioners. The owners have to move the air-conditioners either to the air-conditioning plant rooms or the air-conditioning racks, no matter what design it has for the renovation of the Building. Those who refuse to move the air-conditioners to the designated areas would still resist the removal, in which case, litigation still cannot be avoided. In fact, it would cost more to the Respondent to commence litigation after the renovation is in progress, because part of the renovation work may have to stop or remain unfinished pending the outcome of litigation. Thus, if one has to consider the time, costs and difficulty involved in instituting legal actions against the owners of the infringing air-conditioners, it is in fact more prudent to institute the litigation before the commencement of the major renovation than afterward. 36.On the other hand, for those who would be willing to remove the air-conditioners to the designated areas at the time of renovation, I cannot see why they cannot or should not be asked to do it at this stage. It would not cost much to the Respondent to issue a demand letter at this stage, and if they do not resist and comply with the request, not much costs would be incurred. In any event, it can never be an excuse in not enforcing the DMC because of the time or costs involved, or that there may be complicated legal issues involved. It may be convenient to those owners who have breached the DMC to wait until the major renovation before the removal of the air-conditioners, but it is simply wrong for the Respondent to neglect its duty for such a long period of time. Although the Respondent expects that the renovation will take place in 2011, there is still no certainty that it will definitely happen in the timing expected by the Respondent, bearing in mind that there has already been a long delay in the commencement of the renovation. The Respondent’s decision in waiting for the completion of the major renovation, which may still take a year or even more time to realize, is just unsatisfactory and unreasonable in the circumstances. 37.I do not agree that there is no urgency in the matter. As aforesaid, the removal of the air-conditioners should in fact take place before the major renovation, as it would otherwise hinder the progress of the renovation. If the Respondent really intends to commence the renovation in a short period of time, there is an urgency to make sure that the external walls are clear of the infringing air-conditioners before the renovation is commenced. 38.As to the Respondent’s reliance on the resolutions passed, it is clear that such resolutions will not be valid when they are in conflict with the provisions of the DMC or the House Rules. I am of the view that the delay on the part of the Respondent in enforcing the due observance and performance by the owners for such a long and unreasonable period of time is clearly a neglect and a breach of the Respondent’s duty under Clause B.1(34) of Section V of the DMC mentioned above. The resolutions authorizing such neglect and breach are clearly in conflict with this clause and hence invalid by virtue of Clause A.14 and B.7 of Section VII of the DMC mentioned above. 39.In relation to the compressors of the air-conditioners installed at the roof top of Flat 34B, the Respondent claims that Clause 17 of Section IV of the DMC does not prohibit the installation of air-conditioners inside the individual units of the Building, and that the DMC and the House Rules cannot be interpreted to prohibit the use of “mobile” air-conditioners. First of all, the air-conditioners in question are not “mobile” air-conditioners. The word “installation” in the relevant provisions connotes that they are concerned with air-conditioners attached as fixture to the Building. It may be possible to argue that “mobile” air-conditioners, which are not intended to be attached as fixtures to the Building, are not covered by the relevant provisions. However, the compressors on the roof top are plainly fixtures intended to be installed at the same place on long term basis and are caught by the relevant provisions. 40.The DMC and the House Rules do not draw any distinction between the exterior or interior part of the Building. The only issue is whether they are installed in the designated areas. If not, irrespective of whether they are installed at the exterior or interior part of the Building, there must be a breach. It is wrong for the Respondent to suggest that, since the compressors are installed at the roof top within the property of Flat 34B, there cannot be any breach. The owner of Flat 34B is merely a co-owner of the Building given the right to enjoy the unit subject to the terms and conditions in the DMC. His right is therefore not absolute, but subject to the restrictions in the DMC. As aforesaid, there are designated areas for the air-conditioners in that unit under the DMC. The fact that the owner of Flat 34B decided to use a new air-conditioning system and not to use the original air-conditioning plant room and air-conditioning rack cannot amount to any valid defence. 41.The Respondent contends that there are air-conditioning conduits and piping installed at the exterior walls of the Applicant’s units and hence the Applicant does not come with a clean hand, but this is not pleaded as a defence by the Respondent. It is trite law that any equitable defence must be pleaded with particulars. It is not open to the Respondent to make such allegation just in its closing submission, as the Applicant cannot deal with such an allegation by way of rebuttal evidence. Thus, I will not deal with this equitable defence. 42.In the circumstances, I find that there are owners installing air-conditioners in places other than the designated areas which are in breach of the provisions of the DMC and the House Rules as aforesaid. It is, however, not necessary for me to find which particular owners were in breach of the provisions, as the claim is made against the Respondent for its breach in enforcing the covenants. I also find that the Respondent has failed to enforce the covenants against the owners in not taking any action against them for the removal of the infringing air-conditioners and this is in breach of its duty under section 18(1) of the BMO as well as Clause B.1(34) of Section V of the DMC. 43.Although the Respondent submits that it would be difficult for it to comply with the injunction order proposed by the Applicant as there are so many units involved, I do not agree that it is a factor that I should consider. In fact, I do not see any real difficulty in taking action against all the infringing owners at all. I also do not find that there are other factors justifying the refusal of the injunction. I am therefore prepared to grant the injunction sought by the Applicant. The Water Seepage Issue 44.Section 18(1) of the BMO provides that:-
45.Clause B.1(2) of Section V of the BMC imposes the following specific duty on the respondent:-
46.It is not disputed that the external walls of the Building are part of the Building Common Areas under the DMC, and that there has been water seepage from the external wall of the Building into the Applicant’s flat since about September 2003. The Applicant’s letter to Savills dated 11 September 2003 recorded the following findings made in a site inspection by Savills’s site manager on 9 September 2003:-
47.The Respondent, however, decided to defer the remedial work until the major renovation is carried out as there are similar problems in other units. When the water seepage problem in the Applicant’s flat deteriorated in mid-2007, the Respondent merely agreed to carry out temporary remedial work. The Respondent appointed an architect to conduct a condition survey of the Building in June 2007. Ng Chi Chai Engineers & Architects submitted a Condition Survey Report dated 1 August 2007 in which they identified and confirmed the water seepage problems, and proposed some remedial works. The report was noted in the management committee meetings on 10 September 2007 and 15 October 2007. However, no concrete action was taken. At about the same time, by letters dated 16 August 2007 and 27 August 2007, the Food and Environmental Hygiene Department (“the FEHD”) of the Government stated that, upon inspection on 21 March 2007, it was found that the water seepage into the Applicant’s flat was due to rain water penetration through the external wall and defects in relation to the waterproof facilities of the external wall of the Building. By letter dated 29 April 2008 after another inspection on 8 April 2008, the FEHD reaffirmed that the water seepage into the Applicant’s flat was “due to rain water penetration through the external wall”. 48.The rectification of the problem has been continuously delayed despite that this is a common problem in the Building. In early March 2009, it was confirmed that the water seepage problem led to the damage of the main control switch box in the Applicant’s flat (see the report made in September 2009 by the Applicant’s expert, Mr. Richard Cheung and Savills’ Special Incident Report dated 2 March 2009). Although Mr. Chan Sai Hung, the electrician engaged by the Respondent, is uncertain about the cause of the water seepage problem into the Applicant’s switch box, Patrick Lau, the expert of the Respondent, confirms in his report that some damage to the dining area and the air-conditioning plant room of the Applicant’s flat was caused by water seepage through the external walls. He estimates that the repair costs of the Applicant’s flat would be about $16,000.00. The Applicant has incurred $15,360.00 to repair the damaged electrical switchbox in March 2009. The monetary claim of the Applicant under this head is therefore $31,360.00 ($16,000.00 + $15,360.00). 49.Based on the evidence before me, I have no doubt that the defects in the external walls of the Building are the cause of water seepage problems affecting the Applicant’s flat, as well as many other units. The Respondent is clearly under a duty to rectify the problem as soon as practicable. Notwithstanding that the problem was already apparent at least since 2004, it has not been rectified after more than 5 years. The delay has caused damage to the Applicant’s flat and the Applicant has suffered a loss of $31,360.00 as aforesaid. 50.Nevertheless, the Respondent contends that it did not ignore the complaint of water leakage or seepage made by the Applicant and did look into the matter. In the meeting of the management committee held on 21 May 2007, it was resolved that the Manager would cause temporary rectification works to be carried out to the Applicant’s flat so as to avoid any danger, but the water leakage and seepage problem would be rectified on a permanent basis at the next substantial renovation of the Building. Thus, the Respondent carried out temporary rectification works for the Applicant in May 2007 and in August 2008. It is not practicable and economical to make repairs and rectification of the seepage problem to individual flats by separate rectification work. The once and for all resolution of the problem must lie in the major renovation of the Building. As the Respondent has undertaken to carry out temporary rectification works for the Applicant, it has acted reasonably in the circumstances in dealing with the overall repair of the exterior walls of the Building at the major renovation to be carried out later in the year. Unless and until the carrying out of the major renovation of the Building, there is hardly any reasonable way to deal with the repair of the exterior walls of the Building on a more permanent basis. 51.The Respondent further contends that in the DC Action or HC Action, the Applicant claimed against the owner of Flat 34B for breach of the DMC in causing the water seepage to his flat. The Applicant accepted the payment of $200,000.00 into court by the owner of Flat 34B in settling the action. Since the Applicant has accepted the said payment of $200,000.00 in settling the claim for, inter alia, the water seepage, it is an abuse of process for the Applicant to seek to claim relief and/or damages from the Respondent. In any event, the Applicant has failed to show that it has suffered any loss and damage in addition to the said sum of $200,000.00. It is important to note that according to the Applicant’s expert, Mr. Richard Cheung, the water seepage was caused by a chiller pipe, a vent pipe, a drainage pipe and an unprotected vent which have served Flat 33B exclusively. It is reasonable to infer that all of these were installed by the Applicant and it was the cause of the water leakage from the external wall at the light well to the air-conditioning plant room of Flat 33B. The damaged electricity switch box was indeed a very old one which had been used since the Building was built. The electricity switch box would have be replaced anyway by reason of its age and long use. The Applicant is therefore not entitled to claim for the amount as aforesaid. 52.I do not accept the Respondent’s contentions at all. It is simply unreasonable that the overall rectification work should be done at the time of the major renovation when the water seepage problem has been in existence for over 5 years already. Any further delay will just cause further damage to the Applicant’s flat, particularly when the raining season is approaching. The Respondent’s suggestion that it is reasonable to infer that various pipes serving the Applicant’s unit were installed by the Applicant and was the cause of the water leakage from the external wall at the light well to the air-conditioning plant room is plainly a mis-reading of the Applcant’s expert report. The report in fact states that:-
53.As aforesaid, the FEHD in their letters dated 16 August 2007, 27 August 2007 and 29 April 2008 stated that upon inspection of, inter alia, the meter room, it was believed that the water seepage was due to rain water penetration through the external wall. Mr. Patrick Lau, the Respondent’s expert, also confirmed in his report that the problem at the air-conditioning plant room in the Applicant’s flat was likely due to water seepage through the external wall of lightwell. These are clear evidence rebutting the Respondent’s allegation that the Applicant has caused the water seepage itself. There is simply no evidence that the chiller pipes, the vent pipe and the drainage pipe were installed by the Applicant, rather than being the original structure of the Building. 54.The Respondent’s allegation that Applicant is not entitled to claim any loss and damage is also unfounded. It is correct that the Applicant accepted the payment into court in the sum of $200,000.00 from the owner of Flat 34B, but the claim was in relation the damage caused by various unauthorized structures. In particular, the Applicant’s case was that those structures resulted in cracks leading to water seepage to the master bedroom, guestroom and kitchen (plus pantry). In the present case, the Applicant is concerned with water seepage caused by a different reason. More importantly, the Applicant’s present claim for $16,000.00 is based on the quotation of the Respondent’s expert in his report, which is long after the settlement in the above action and, on the evidence, water seepage through the external wall has continued. Further, the Respondent’s expert observed that the main problems appeared in the dining area and air-conditioning plant room (he did not observe any apparent defect in the master bedroom) and his proposed repair work is mainly related to those areas, which are not the same areas concerning the HC Action. In the circumstances, there is no basis to claim that the Applicant’s present claim amounts to an abuse of process. 55.As to the sum of $15,360.00, it was actually incurred by the Applicant for repairing and replacing the switchbox as evidenced by an invoice dated 28 March 2009. The Applicant’s expert did not say that the switchbox would have to be replaced anyway. He inspected the unit on 30 May 2009 after the switchbox had already been replaced. His point is that to replace the switchbox was not enough and further work should be done. The Applicant has given clear evidence in his witness statement that the switchbox was replaced in March 2009 because of the water seepage. His evidence is corroborated by Lau King Leung, the electrician, who was responsible for replacing the switchbox. In the circumstances, I have no doubt that the Applicant is entitled to the total sum of $31,360.00. 56.It is also no excuse that the Respondent has done temporary remedial work, as the Respondent’s duty is to resolve the water seepage problem on a more permanent basis (see Lung Po Kwan and another v. The Incorporated Owners of Y Y Mansion and another, LDBM 243 & 309/2005). I am therefore of the view that the Respondent has failed its duty to maintain the external walls of the Building pursuant to the aforesaid provisions in the BMO and the DMC, and the Applicant is entitled to the injunction and damages as claimed. The Roller Shutters Issue 57.Clause 4 of Section IV of the DMC provides that:-
58.Clause 17 of Section IV of the DMC provides that:-
59.Clause 18 of Section IV of the DMC provides that:-
60.Clause 28 of Section IV of the DMC provides that:-
61.Clause 4 of the House Rules provides that:-
62.Clause B.1(15) of Section V of the DMC imposes the following specific duty on the Respondent:-
63.The owner of Flat 34B has installed 9 roller shutters (“the Roller Shutters”) to the external walls of its flat. The Applicant contends that the Roller Shutters are unauthorized Building works (“UBWs”) (see the Building Department’s letter dated 17 March 2005 and Savills’ report in the minutes dated 26 June 2006). However, in the management committee meeting held on 26 June 2006, the Respondent merely resolved that the issue would be discussed at forthcoming management committee meetings. More importantly, it was recorded in the minutes of the management committee meeting dated 15 October 2007 that:-
64.Professor C M Tam, the Applicant’s expert, expresses the following opinions in his report dated 17 August 2009:-
65.The Respondent, however, denies that the Roller Shutters are UBWs. It also claims that it has acted reasonably in not taking actions because the Roller Shutters cause no imminent danger and the problem will be dealt with it at the major renovation. The Rollers Shutters were installed by the owner of Flat 34B in about 1986 because it was too windy up at Flat 34B. In fact, there were rollers shutters installed at the balcony of Flat 33B too. According to the building surveyor for the Respondent, such rollers shutters could be regarded as amenities and could be exempted from the Buildings Ordinance, and hence they are not unauthorized structures. The Respondent contends that It is highly speculative for Professor Tam to make any estimation on the weight of the rollers shutters. In any event, there is no claim that the rollers shutters have caused any damage to Flat 33B. 66.The Respondent also contends that as the owner of Flat 34B had agreed to remove the Rollers Shutters at the major renovation of the Building, it is sensible and economical for the Respondent and the owner of Flat 34B to agree on an amicable resolution of the matter and a timetable to remove the Rollers Shutters at the forthcoming renovation of the Building which accords well with the proper management of the Building. The fact that the renovation of the Building has taken some times is no good reason for the Respondent to renege on this agreement bearing in mind that Flat 34B has nothing to do with the progress of the renovation work of the Building. In any event, the Rollers Shutters have since 1986 been installed and has had no history of causing any danger. The Respondent hence submits that it has acted reasonably in the circumstances in deferring the removal of the Rollers Shutters until the forthcoming renovation. 67.I do not accept the Respondent’s contention. Mr. Patrick Lau, the Respondent’s expert, in fact admitted that the Roller Shutters are UBWs in his report dated 21 October 2009 as follows:-
68.Mr. Lau, however, seeks to withdraw such admission and replace the above paragraph as follows in his supplemental report dated 22 April 2010 on the ground that he has made a mistake:-
69.He also states in his first report that:-
70.I am of the view that Mr. Lau’s opinion as changed is misconceived. Aas explained in Professor Tam’s supplemental report, Mr. Lau admits that the Roller Shutters are classified Building works under section 2 of the Building Ordinance. Even assuming that the Roller Shutters can be regarded as amenity features, it is clear from paragraphs 1to 4 of the Practice Note of the Building Department that applications must be made for modification or exemption for the provision of any amenity features. There is no suggestion, let alone evidence, that applications have been made and approval has been obtained for the erection of the Roller Shutters. Further, it appears from the Practice Note that the modification or exemption is related to site coverage and gross floor area calculations, which is irrelevant for the present purpose. The Building Department in its letter dated 17 March 2005, while observing that the Roller Shutters fall within the categories of amenity features, confirmed that they are UBWs as follows:-
71.The Respondent’s inaction is therefore based on the false premises that the Roller Shutters are not UBWs. In any event, it does not matter whether they are indeed UBWs under the Building Ordinance or Regulations. They are plainly alterations to the external appearance, or of the structure and external walls of the Building in contravention of the DMC and the House Rules. In Incorporated Owners of Elite Garden v Profit More Co. Ltd [2002] 2 HKLRD 518, in construing whether creating new windows breached the term prohibiting “structural alteration” in a similar DMC, the Court of Appeal held that the term “alteration” was something which altered the form or structure of a Building; the “form” of a Building concerned its appearance or visual aspect; hence, the opening of the windows was an “alteration” to the Building; and the addition of the word “structural” did not fundamentally change this meanings; nothing in the clause, nor its context, required some special technical meaning to be ascribed to the word “structural” which should be given its natural and ordinary meaning; the opening of the windows undoubtedly pertained to the framework or structure of the Building and affected its visual aspect; that being so, it constituted a structural alteration. 72.Thus, permitting the owner of Flat 34B to keep the Roller Shutters until the major renovation is tantamount to granting permission to it to commit a breach of the DMC and the House Rules. The Respondent does not have the power to do so. Irrespective of whether they pose any imminent danger, they constitute a potential hazard as explained by Professor Tam. Professor Tam’s estimation of the weight of the Roller Shutters is not a speculation, but based on reasonable assumptions deriving from the likely raw materials and their dimensions, etc as explained in details in his report. The Respondent’s expert has not challenged Professor Tam’s estimation. The fact that there is no claim that the Roller Shutters have caused any actual damage to the Applicant’s flat is neither here or there. Whether any actual or potential danger is posed is irrelevant in considering whether there is a breach. The Respondent has not in fact argued that the erection of the Roller Shutters do not constitute a breach of the DMC or the House Rules. 73.The Respondent claims that the owner of Flat 34B has agreed to remove them in the coming renovation and there is no good reason for Respondent to renege on such agreement, but I simply cannot see why the Rollers Shutters cannot be removed forthwith. More importantly, the Respondent’s alleged agreement with the owner of Flat 34B is tantamount to an agreement granting a right to the latter to act in contravention of the DMC for an uncertain or unreasonable period of time. As the Court of Appeal pointed out in the Hoi Luen case, the Respondent does not have the power to enter into such an agreement. 74.I am therefore of the view that the Respondent is in breach of the Clause B.1(15) of Section V of the DMC. The Applicant is entitled to the injunction sought. The Balcony Enclosures Issue 75.The Applicant relies on the aforesaid provisions in the DMC and the House Rules regarding the Roller Shutters Issue in its contention relating to this issue. 76.The owner of Flat 34B enclosed the balconies at the flat roof and the roof garden with wall-like structures (“the Balcony Enclosures”). The Respondent has continuously granted a grace period to the owners for the removal of the Balcony Enclosures, in particular, in the management committee meeting on 14 January 2008, it was resolved that “owners would be requested to remove and reinstate illegal structures during the aforesaid Building renovation works”. The Building Department has confirmed in its letters dated 17 March 2005 and 29May 2009 that, inter alia, the Balcony Enclosures are UBWs. Cracks appear in the Applicant’s flat. Professor Tam, in his report dated 17 August 2009, after considering the Balcony Enclosures, opines that:-
…
77.The Respondent claims that the Balcony Enclosures are not balcony enclosures as such and are not bound by the said resolution, and that the Balcony Enclosures are not UBWs. Mr. Lau opines that:-
…
78.Whether the Balcony Enclosures are in fact caught by the said resolution is irrelevant. However, I agree with the Respondent that the Balcony Enclosures do not constitute any breach of Clause 18 of Section IV of the DMC, which provides that no owner shall alter the external appearance of the Building without the Manager’s written consent. In construing this clause purposively, the provision can only mean that there must be alteration done to the external appearance of the Building as opposed to alteration made within a unit but which can be seen from the outside. It would be absurd to say that no curtain or window blind can be installed at the balcony or window because it alters the external appearance of the Building. Likewise, the appearance of the Balcony Enclosures inside the unit does not alter the external appearance of the Building. I am of the view that this provision cannot be extended to cover any alteration within the internal area of any unit even though it may be seen from the exterior of the Building. 79.Clause 4 of Section IV of the DMC provides that no owner shall make any structural alterations to any part of the Property owned by him which may damage or affect or interfere with the use and enjoyment of any other part or parts of the Building whether in separate or common occupation. According to the Respondent’s case, the Balcony Enclosures are hollow-patterned block walls, which do not amount to any structural alteration, as there is no alteration to the form or structure of the Building (see Incorporated Owners of Elite Garden v. Profit More Co Ltd [2002] 2 HKLRD 518 and Bickmore v Dimmer [1903] 1 Ch 158). 80.Although the Building Department has confirmed in its letters that the Balcony Enclosures are UBMs, it did not give any basis in coming to that conclusion. Professor Tam also confirms that the Balcony Enclosures has added weight to the flat roof, but I also agree with the Respondent that it is highly speculative for Professor Tam to make any estimation on the weight of the hollow-patterned block walls, particularly when he made a guess on their materials. Professor Tam in fact accepts in his report that there were other things affecting the loading which might have caused the cracks and damage, such as the stones, concrete planters and large trees which have been removed. In effect, Professor Tam could not be sure of the cause of the cracks and damage. He did not mention about the dimensions of the cracks or whether they were structural damage or not. 81.Thus, I am not satisfied that the Applicant has proved that the Balcony Enclosures are structural alterations within the meaning laid down in the case of Incorporated Owners of Elite Garden, supra. 82.Clause 4 of Section IV of the DMC only restrains such structural alterations to the Property which may damage or affect or interfere with the use and enjoyment of any other part or parts of the Building whether in separate or common occupation. I am not satisfied that the available evidence can confirm that the hollow-patterned block walls may damage or affect or interfere with the use and enjoyment of any other part or parts of the Building. There is in fact no evidence at all about the loading capacity of the flat roof, and it is recognised in the report of Professor Tam and Dr. Wu that whether or not the combined loading of the enclosure will be significant enough to be harmful to the structural slot could only be determined with information available from an inspection and measurement at Flat 34B which is not available. It is therefore just a bare assertion that any additional load will aggravate the crack propagation. If the Applicant’s claim is accepted, it means that all the fixture, fitting, and articles should be removed from the whole unit of Flat 34B as there must be additional load for them to be placed on Flat 34B. Thus, I do not find that there is any evidence to prove that the hollow-patterned block walls did cause the crack. 83.The Applicant contends that there is no basis for Mr. Lau to say that the block walls are “lightweight”. However, the burden is on the Applicant to show that they were heavy enough to cause the crack, and that they are structural alterations. The Respondent bears no burden to prove otherwise. 84.However, I do not agree with the Respondent’s interpretation of Clause 4 of Section IV of the DMC in that the Respondent contends that the structural alterations should damage the use and enjoyment of the other part or parts of the Building. It is plainly a wrong reading of the provision, as it does not make any sense to say the use and enjoyment of the Building can be “damaged”. The use and enjoyment of the Building must be related only to the words “affect or interfere with”, but this interpretation does not affect my rulings above. 85.I therefore do not find that the Applicant has succeeded in proving any breach on the part of the Respondent in respect of this issue. Conclusion 86.The remedies sought by the Applicant are modeled on the remedies granted by the Court of Appeal in See Wah Fan v Incorporated Owners of Ki Tat Garden (Phase I), supra. They are proper orders to be made. However, as the Applicant fails on the Balcony Enclosures Issue, no order will be made in respect of that issue. Apart from the sum of $31,360.00, I do not see any need to award other damages to the Applicant, and hence there will be no award for general damages as suggested by the Applicant. 87.I therefore order as follows:-
Mr. Paul LAM, instructed by M/S Boase, Cohen & Collins, for the Applicant Mr. Kenny LIN, instructed by M/S Lo, Wong & Tsui, for the Respondent |
Cases cited in this judgment
Further hearings and rulings under LDBM 370/2007