Hong Kong Housing Authority v. The Incorporated Owners of Tung Yan Court
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HCA1368/2010 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 1368 OF 2010 ------------------------- BETWEEN
------------------------- Before : Hon Yam J in Chambers Date of Hearing : 14 September 2011 Date of Handing Down Judgment : 14 December 2011 -------------------------- JUDGMENT -------------------------- The background 1.The plaintiff is the Government Lessee of “the Land” known as Shau Kei Wan Inland Lot No. 844 under the Government Lease dated 13 March 1997. Thereafter the plaintiff developed one Tung Yan Court (東欣苑) on the Land which was completed in January 1999. The plaintiff is still the owner of certain parts thereof as will be explained herein below. 2.Under the Government Lease it was provided in Clause 4(24) that the plaintiff, being the Lessee, has the obligation at its own expense to build, and also to keep, maintain, and repair in good condition, the Footbridge and the Lift Tower for pedestrian traffic by members of the public without any payment. It was also expressly provided that for the purpose of that Clause, the word “Lessee” does not include the Lessee’s assigns. 3.The development of Tung Yan Court primarily consists of :
4.This Lift Tower is situated at the eastern side of the Estate within the boundary of the Land. The Lift Tower consists of two lifts going up two floors to a footbridge which crosses Yiu Hing Road to the other side outside the Land called Tung Lam Court (東霖苑), which in turn would connect to a podium at Tung Lam Court which would enable pedestrians to go into one Hing Tung Estate Shopping Centre on the north side thereof. 5.When the flats were sold under the Home Ownership Scheme to various purchasers since January 1999, the Footbridge and the Lift Tower had already come into operation. By that time the Shopping Centre at Hing Tung Estate had already been completed and opened for business. All handicapped persons on wheelchair can go from Tung Yan Court to the said Shopping Centre without obstacles or staircase. This would also enable shoppers with or without a trolley to shop in the Shopping Centre within which there is a Supermarket. There are also two kindergartens situated just north of the Shopping Centre. Thus children and toddlers can reach them without crossing Yiu Hing Road. 6.However all these convenient arrangements have been disturbed by the defendant upon its decision to suspend the lift service in the Lift Tower since 31 March 2010 as explained herein below. I shall consider the legal position of the Lift Tower and the Footbridge first. The Lift Tower and the Footbridge 7.The Deed of Mutual Covenant of Tung Yan Court was dated 12 January 1999 (“DMC”). It was actually prepared by the Land and Conveyancing Office of the Lands Department. In pursuance thereof, the plaintiff retained 23 of the carparking spaces and three empty bays under Blocks A and B. The 23 spaces reserved by the plaintiff are for the use of those residents of Tung Lam Court and Hing Tung Estate on the other side of the road. 8.The maintenance and running expenses for the Lift Tower and the carparking spaces were shared between the owners of Tung Yan Court generally and the plaintiff at the ratio of 72:28. The split ratio of the costs was based on the ratio of the remaining 59 carparking spaces not owned by the plaintiff but reserved for the residents of Tung Yan Court, and 23 carparking spaces owned by the plaintiff for the residents of Tung Lam Court and Hing Tung Estate (i.e. 59/82:23/82 = 72:28). 9.The Lift Tower and the covered Footbridge would also enable car owners in Hing Tung Estate renting any of the 23 carparking spaces to go through them to their carparking spaces on the other side of the road in rain or shine weather. It would of course also enable residents of Tung Yan Court to go over the road to the other side and, in particular, the Shopping Centre at Hing Tung Estate. This is particularly important for wheelchair-bound persons and children. 10.In this case, it has been suggested by the defendant that a more convenient way to reach the Shopping Centre is not through the Lift Tower and Footbridge but by going down along Yiu Hing Road and crossing at the northern side near the junction with Shing On Street through a pedestrian traffic light crossing. However in order to reach the Shopping Centre, one has to climb up a flight of staircase with no provision for wheelchair-bound person. Apart from the fact that that route would not be covered, the return trip is actually up-hill along Yiu Hing Road which would be quite laborous for its residents after buying groceries at the supermarket in the Shopping Centre, even with a trolley. In any event, it is debatable whether that would be a shorter route but such a dispute would not affect the legal decision herein. This is just highlight of the defendant’s superfluous argument to bolster up its case herein. 11.The plaintiff had been the manager of the Estate under the DMC. The defendant was incorporated in 2000. The plaintiff ceased to be the manager as from 1 April 2002. Pursuant to Clause 25(b) of the DMC, the defendant became the manager of Tung Yan Court. 12.As aforesaid, since day one, pedestrians including residents of Tung Yan Court had been enjoying the lift service and the footbridge as a convenient means of passing over the road in both directions. However starting from 31 March 2010, the service of the lifts in the Lift Tower has been suspended by the defendant when the maintenance contract for the lifts expired on 31 March 2010. The defendant, by way of a notice affixed to a chain outside the lifts, announced that the service of the lifts has been suspended. Is the defendant entitled to suspend the lift service? This is the issue before the court. The plaintiff’s action and application herein 13.Since suspension of the lift service, the Lands Department complained to the plaintiff that it was in breach of Clause 4(24) of the Government Lease. The plaintiff in turn repeatedly demanded the defendant to reinstate service of the lifts and threatened to commence enforcement action against the defendant for breaches of the DMC provisions. But the defendant refused to do so on the ground that the Owners’ Meeting of the defendant did not approve the maintenance contract for the lifts. 14.The plaintiff commenced the present action and by a summons under Order 14 and Order 14A, applied for summary judgment against the defendant. The issue before the court is whether the plaintiff has successfully passed on its obligation to maintain the lift service under the Government Lease to the defendant, being the manager under the DMC, with no defence at all available to the defendant. There are a number of defences raised by the defendant and I shall deal with them in turn herein below. Does the defendant have legal obligation to maintain the lift service? 15.It is provided in the DMC that there are 82 carparking spaces comprising 71 spaces for private motor vehicles and 11 for light goods vehicles. Of the 71 private motor vehicle spaces, 48 spaces are to be used for residents of the Estate whereas 23 spaces owned by the plaintiff as aforesaid, shall be used for residents of the adjoining Tung Lam Court and Hing Tung Estate. 16.The Lease was defined as the aforesaid Shau Kei Wan Inland Lot No. 844 on which the Estate was developed and the Estate is known as Tung Yan Court (東欣苑). 17.The said Land has been notionally divided into 44,693 equal undivided shares which have been allocated to each of the flats and other portions of the buildings in the Estate and the carparking spaces as provided in the First Schedule thereto with the management unit allocated as set out thereto. Thus all the owners (including the plaintiff) altogether would own the whole of the said Land where the Estate is located. 18.Under Recital (9)(e) in the DMC, the “Common Parts” means those parts of the Estate which are not for the use and benefit of a particular owner and shall exclude the empty bays and carparking spaces to which equal undivided shares have been allocated. Under 9(g) the “Common Areas” mean collectively :
Each of the aforesaid three areas are specifically defined as :
19.It can be seen from the aforesaid description that there would be lifts in the Estate Common Areas, which are not in the Residential Common Areas, whereas there are also lifts just for the residents in the Residential Common Areas. The latter must be those lifts installed for residents in Blocks A and B of the residential blocks. Then what are those former “lifts” referred to in the Estate Common Areas? They must be lifts in the Lift Tower for the pedestrian footbridge leading to Tung Lam Court on the other side of the road. It is not capable of any other meaning as there are no other lifts at all. 20.Further, under Clause 5(c)(11) and (12), it is provided that the defendant has the following responsibilities or liabilities, as follows :
21.The defendant submitted that its duty was just “to uphold, maintain, repair and keep in good repair and condition the Footbridge and the Lift Tower… and to permit members of the public to pass and repass on foot thereon…” Thus it submitted that when members of the public can pass and repass on foot through the staircase of the Lift Tower to the Footbridge or vice versa, it has already fulfilled its duties as provided under the DMC. There is no duty for the defendant to maintain, repair and keep in good repair and condition of the lifts inside the Lift Tower. 22.However sub-paragraph (12) imposed a duty on the defendant to keep the lifts in all buildings within the Estate in good repair and operating condition... As aforesaid, there are lifts in the Residential Common Areas and also other lifts in the Estate Common Areas. Therefore the latter must mean those two lifts in the Lift Tower since there are no other lifts in the Estate Common Areas apart from those lifts in the Residential Common Areas. 23.Further the Lift Tower must be a kind of building (建築物) within the meaning of the DMC. If the Lift Tower is not a building (建築物), then what is it? It cannot be a natural object or structure. It is provided in Clause 5(c)(12) that the defendant is under a responsibility to keep the lifts in all buildings within the Estate in good repair and operating condition... 24.To my mind, by combining sub-paragraphs (11) and (12), it is the only possible interpretation of the DMC and that is : the defendant is under a contractual duty to maintain the two lifts in the Lift Tower in addition to those lifts in the Residential Common Area. In fact, under sub-paragraph (11) the duty to maintain the Lift Tower was said to be “in accordance with the provisions of the said Lease”. The clear intention of the DMC was to pass on the plaintiff’s duty to maintain the Footbridge and the Lift Tower including the lifts inside under the said Lease, by the DMC to the defendant, as a matter of contractual obligations, though such an original duty under the Lease is personal to the plaintiff. In the end, the Hong Kong Government can pursue after the plaintiff under the Lease, but the plaintiff itself can in turn pursue after the defendant under the DMC. The Defence of unconscionable bargain 25.The defendant further submitted that if the defendant is under an obligation to maintain the lifts at the Lift Tower, this term is obtained through unconscionable bargain and is therefore void and unenforceable. 26.First of all, the defendant has not pleaded its reliance on the Unconscionable Contract Ordinance, Cap. 458 (“UCO”) or raised it in the affirmation filed and served on behalf of the defendant. Of course there is no need to plead law in the defence as long as all the factual matrix to support a legal contention is enough. However the UCO was enacted for consumers’ sale of goods or services (section 5(1)). The sale of HOS flats to a certain class of citizens in Hong Kong cannot be said to be a kind of sale of goods or services. Thus the UCO has no application here. 27.That left us with the common law provision of unconscionable bargain. From the authorities cited from the both sides, it is apparent that for the plea of unconscionable bargain to be successful, it would require that the transaction would “shock the conscience of the court” (The Bank of China (Hong Kong) Ltd v Fung Chin Kan [2003] 1 HKLRD 181, at para. 50) per Litton NPJ quoting Lord Brightman in Hart v O’Connor [1985] AC 1000 at p. 1024 :
28.The first reason why the obligation to maintain the lifts and allow public access to them are not unconscionable is that the owners had been informed of this obligation, first in a Chinese brochure and then in the DMC itself. The Chinese brochure issued to all prospective purchasers has clearly been stated that :
29.The defendant submitted that the use of the words “升降機塔” meaning the Lift Tower does not include the lifts. This is stretching or to be exact, diminishing the meaning and the usage of those words. The defendant cannot, in my view, say that the Lift Tower could only mean the Lift Tower together with the staircase built alongside with it but not the lifts inside as there should be no distinction between the lifts and the staircase. If the staircase is part of the Lift Tower, which the defendant has admitted, the lifts should be more a part of the Lift Tower than the staircase because the Tower was basically built for the lifts but not the staircase. Otherwise the Lift Tower is not required if it is just for the support of a flight of staircase! In other words, if the provision of staircase is the only purpose for building the Lift Tower, as the Chinese Brochure only mentioned the “Lift Tower”, there would be no need to build the Lift Tower at all. 30.It is common general knowledge, as submitted by the defendant, that HOS flats are not sold to the affluent sector of our community. However there is nothing unconscionable that they are required under the DMC to maintain the lifts. From the evidence produced by the defendant itself, the costs for operation of the two lifts in question, including electricity, maintenance and cleaning expenses, are only around $8,000 per month, of which only 72% would be borne by over 1,000 co-owners of Tung Yan Court and the balance of 28% would be borne solely by the plaintiff. It will work out to be about $5 per co-owner per month only. 31.It may be submitted further by the defendant that apart from the maintenance charges, there would be liability for negligence and occupiers liability. However the defendant would in any event have to be insured for the whole Common Parts of the Estate anyway. There is no evidence from the defendant that the premium would be significantly and/or unconscionably higher because of the lifts. This case is far from my case in Hang Seng Card Ltd & Others v Tsang Nga Lee & Others [2000] 2 HKLRD 33. 32.As explained in the previous section, the provisions of the DMC are clear enough to include the obligation to maintain the lifts at the Lift Tower. There is nothing which would “shock the conscience of the court” when the owners are required to maintain the lifts. It actually shocked the conscience of the court when the owners have suspended the lift service from the Lift Tower, which are within the boundary of the Land and the Estate and said it is not under any obligation to maintain the lifts. It is, putting it directly, a selfish action without regards to the young, the elderly, the sick and those handicapped people, some of whom are also residents of the Estate. 33.All in all, there is no factual basis presented by the defendant which would compell the court to say that it is an unconscionable bargain at common law. The court would not be wiser by being robed in open court in order to decide whether the DMC was entered into by way of unconscionable bargain. It is quite to the contrary (although I do not have to find as high as that) that it is quite unconscionable for the owners to escape from its responsibility, when for a long period in the past years, they had been responsible for the maintenance and operation of the two lifts to the benefit of all, including its residents. Other defences 34.The defendant also contended, for what is worth, that the management committee has already done its utmost efforts to maintain the lift service in operation. The decision to stop the provision of the lift service was passed at the general meeting of the defendant. Therefore the management committee could not do anything otherwise. 35.However, the defendant is the incorporated owners of Tung Yan Court. The owners of Tung Yan Court, in passing the resolution to stop providing the lift service, is in breach of the DMC. Accordingly it is not open to the defendant to say that the wishes of the owners (though I doubt whether, at least the weaker members of the Estate, would have the same wish) was such that the lift service should not be provided to anyone including members of the public. Whether it was a decision of the management committee or the majority owners by a resolution of the defendant would, in any event, be in breach of the DMC. One thing is sure : it could not have been an unanimous decision of the owners, since the plaintiff is also one of the owners! The DMC cannot be simply changed by a majority vote in a general meeting. 36.It is also not open to the defendant to contend that the Lift Tower is not part and parcel of Tung Yan Court. The Estate was built on the said Land. Although there is a man-made boundary structure erected to enclose the private parts of the Estate with an entrance gate (probably for security reasons), it cannot be said that the Lift Tower is not part of the Land and the Estate. The Lift Tower is clearly within the boundary of the Land and the Estate as shown in various maps and diagrams. 37.The defendant also relied on the reply from the District Lands Office dated 2 December 2010 as follows :
(As a minor point, the defendant in reciting this letter in its submissions, made the slip of saying該地契instead of該地段and thus it would have no responsibility as it is not a party to 該地契.) 38.It is accepted by both sides that the Government Lease did not state the ownership of the Footbridge and the Lift Tower. But as analysed above, all the fixed structures within Lot No. 844 belonged to all the owners of the Lot comprising the various owners of the flats and the plaintiff. Thus under the DMC the plaintiff and the defendant are under the obligation to maintain the lifts regardless of the ownership of the Lift Tower. I would venture to say that since the Lift Tower is a building within the boundary of the Land and the Estate, all the owners of Tung Yan Court, i.e. the plaintiff and all the owners of the flats in the residential blocks, jointly own the Lift Tower together with the lifts as a kind of building or fixed structure built within and on the said Land. In any event, the question of ownership is not the issue in this case. The issue is only this : who is responsible for the maintenance of the lifts and the provision of such a service, as an obligation under the DMC. The answer must be : “YES!” 39.Further there is also no conflict of allowing the public to use the Lift Tower and the lifts according to section 34I(b) of the Building Management Ordinance, Cap. 344. The obligation of the defendant to allow the public to use the Footbridge and the Lift Tower in accordance with the DMC does not mean that it would “unreasonably interfere with the use and enjoyment” of the same by other owners of Tung Yan Court in the Estate, or would “cause nuisance or hazard to any persons lawfully in” Tung Yan Court. After all, the defendant also said in the same breath that, with the service of the lifts suspended, the public can still use the staircase in the Lift Tower (which would also be Common Parts or Common Areas of Tung Yan Court). In such a contention, the defendant does not find that to be “unreasonably interfering with the use and enjoyment of the same by other owners of the Estate” or would “cause nuisance or hazard to any persons lawfully in” the Estate. Conclusion 40.It is clear that the Lift Tower and the lifts are within Common Areas of the Land and the Estate. I find that the obligation to provide the lift service and to maintain the operation of the two lifts are quite clear in the DMC. It is not open to any other construction of the provisions thereof. There is no discretion on the part of the defendant to provide or not to provide the lift service. 41.The obligation to provide the lift service, and as such, to maintain the two lifts in the Lift Tower, cannot be vitiated by “unconscionable bargain”. On the contrary, the defendant’s decision to suspend the lift service is a selfish action which would also be inconvenient to its own residents in going between the Estate and the Shopping Centre or other places on the other side including the kindergartens, etc. 42.In allowing the public to use the lifts and the Lift Tower, it would not infringe section 34I(b) of the BMO. 43.In the end I find that the defendant has no defence to the plaintiff’s claim in this action. The questions posed in paragraph 2 of the Summons should be answered in favour of the plaintiff. The defendant’s Re-Amended Defence should be struck out and final judgment should be entered for the plaintiff. 44.I therefore order in terms of paragraph 1(a) to (d) of the plaintiff’s Summons herein, except that the Order for costs in paragraph 1(d) is only an Order Nisi for costs. 45.The aforesaid paragraph 1(c) is :
I implore the defendant to be responsive to my Order and resume the service of the Lifts as quickly as possible for the convenience of all and in particular for their shopping before the coming Christmas and New Year. 46.There are several questions of law and construction of documents in paragraph 2 of the summons asked by the plaintiff to be determined by the court and the Answers to them are as follows :
Mr Lee Tung Ming, instructed by Messrs Li, Kwok & Law, for the Plaintiff Mr Hectar H. Pun and Miss Rachel S.Y. Wong, instructed by Messrs JCC Cheung & Co., for the Defendant | |||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment