The Incorporated Owners of Estoril Court v. Cheer Rich Enterprises Ltd
Read the full judgment text of LDBM 41/2010 on BabelCite. This Lands Tribunal judgment was delivered on 17 May 2012.
1. This application concerns a residential building known as “Estoril Court” (“the Estate”). The applicant is the incorporated owner of the Estate. The respondent is the owner of Flat 44D, Block 2 and a part of the Roof of Block 2 of the Estate.
Cited by 2 cases · Cites 5 cases
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LDBM 41/2010 IN THE LANDS TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION BUILDING MANAGEMENT APPLICATION NO. 41 OF 2010 _______________ BETWEEN
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_______________ JUDGMENT _______________ Background 1.This application concerns a residential building known as “Estoril Court” (“the Estate”). The applicant is the incorporated owner of the Estate. The respondent is the owner of Flat 44D, Block 2 and a part of the Roof of Block 2 of the Estate. 2.This application is taken out by the applicant for various reliefs, including an injunction against the respondent compelling the respondent to close an opening constructed at the floor slab of the roof of Flat 44D, and to remove a swimming pool constructed or installed at the roof. The details of the reliefs have been set out in paragraphs 1 and 2 of the prayers of the amended grounds of application. I do not have to deal with the application, as when I start the trial, I am informed that parties have reached an amicable settlement upon the respondent giving an undertaking to the applicant. I granted an order by consent, when the applicant discontinues the application against the respondent with costs to be determined by this Tribunal. And I would deal with the costs issue later. 3.The respondent has filed its ground of opposition. As an alternate defence, the respondent complains that a number of owners of the Estate have also acted in breach of the DMC (as hereinafter defined) and the applicant has not taken any enforcement action. The applicant has unfairly and unjustly selected or singled out the respondent as a target of its enforcement action. The Respondent filed a counterclaim seeking, inter alia, an injunction compelling the applicant to take action against various owners. 4.The respondent also complains that the applicant has breached the DMC in trespassing the respondent’s roof area, and has been using some of the common area and/or permitted other owners to use some Reserved Space (as hereinafter defined) in a manner not permitted by law and in breach of the DMC (as hereinafter defined). Part of these complaints has been settled between the parties. The following issues are before me for adjudication. Remaining Issues in Dispute 5.As set out in the final submission of Mr. Lo, counsel for the respondent, the remainder of the counterclaim comprises of 3 Issues, namely:-
Some Undisputed Facts 6.I first set out some undisputed facts which would assist me in determining the counterclaim. 7.The applicant is an incorporated owner duly established under the Building Management Ordinance Cap.344. 8.The Estate is built in 1983 on Inland Lot No. 5533 and the Remaining Portion of Inland Lot No. 1416 by Wah Koon Investment Company Limited (“Wah Koon”). The relevant Crown Leases and occupation permit have been produced by consent in the trial bundle. And a Deed of Mutual Covenant registered in the Land Registry by Memorial No. 2490244 (“DMC”) was executed by Wah Koon in or about 30 September 1983 setting out the mutual rights and obligations between co-owners of the Estate. 9.According to the building plans approved by the Building Department, the Estate comprises of 3 blocks of residential apartments built on top of a podium (“the Podium”) which includes 5-storeys of carparking spaces. The total number of designated carparking spaces stated in the approved building plans is 270. 10.Under the DMC, common area (“common area”) is defined as –
11.By the Third Schedule of the DMC, Wah Koon reserved to itself 1 undivided share in the Estate with exclusive possession of the “Reserved Space” which is coloured indigo on the Plans attached to the DMC (“Reserved Space”). The Parties’ Case and Evidence on Issue (1) 12.Paragraph 12 (a) of the amended grounds of opposition and counterclaim filed by the respondent (“the counterclaim”) states that the applicant “has for a very long period of time, permitted allowed and/or taken no action against other owners of the Estate who have caused alternations to their own parts of the Estate and/or the common parts and/or common facilities and/or converted the common areas and/or common facilities to their own use.” In the said paragraph, the respondent also set out the particulars of the wrongful act of the applicant in allowing –
13.In reply, the applicant states in the amended reply to the respondent’s amended grounds of opposition and the applicant’s amended grounds of opposition to the respondent’s amended counterclaim (“the reply”) that in respect of Flat 33C and D, and Flat 44A and B, the partition wall is not load bearing and not structural. And the applicant claims that the extent of unauthorized acts is not as extensive as complained of by the respondent. It is not clear if the applicant agrees that the wall has been demolished. In the closing, Mr. Yeung, counsel for the applicant submits that there is no evidence to prove that the partition walls have been taken down as alleged. He also relies on 2 Court of Appeal decisions and submits that even if the walls have been demolished, the applicant cannot prevent owners of joint units from taking down the partition wall to form one unit. Hence they are reasonable in not taking action. 14.On the renovation of the lift lobby of 44th floor of Block 1, the applicant claims that the renovation work has been approved by the applicant in or about April 2004, strictly on the basis that the owner of the flats at 44th floor has agreed to comply with the conditions imposed by the applicant which I would come to in the evidence. 15.And in the reply, it is admitted that more than 1 car is parked at car parking space 46A leading to some common area being encroached upon. The applicant said it has taken action by given warning notice which is affixed once a week to the car, which is reasonable and sufficient. The Pleaded Case on the Duties of the Applicant to enforce the DMC 16.Before I move on to consider the evidence on Issue (1), I should deal with one legal issue first. There is complaint that the applicant is in breach of the DMC in converting some common area to unauthorized use. But the main complaint against the respondent (after the partial settlement hereinabove mentioned) is that they have failed to discharge their duties to enforce the DMC against owners-in-breach. I have to consider the duties of the applicant, as the incorporated owner of the Estate, and to determine under what circumstance this Court would compel an incorporated owner to take action. Both counsel agree, the application is not for a conclusive determination if any individual owners have been in breach of the DMC, but only to determine if there is prima facie evidence to show that they are in breach and it calls upon a reasonable incorporated owner to exercise its power and duty to take enforcement action, including legal proceedings. Hence my ruling one way or the other should not affect the determination of the action between the applicant and the owner-in-breach in future, as owner-in-breach does not have a chance to raise his defence. 17.It is the case of the respondent that the applicant as the incorporated owner of the Estate is obliged under section 18 of the Building Management Ordinance (“BMO”) to enforce the DMC. The section reads –
18.Mr. Lo submits that the power and duty of an incorporated owner (“IO”) to enforce the terms of the DMC is both mandatory and unqualified. He also refers to the judgment of Court of Appeal given in See Wah Fan v. The IO of Ki Tat Garden (Phase I) [2003] 3 HKLRD 1, when the Court of Appeal found that an individual owner has the right to bring legal proceedings directly against the IO to compel it to take action on matters relating to the common parts of the building. He also refers to the judgment of HH Judge Wong given in Sunbeam Investments Ltd. v. The IO of Villa Veneto (unreported), LDBM 370/2007 and submits that this Tribunal may grant an order against the IO to enforce the terms of a deed of mutual covenant even when the breach occurs inside the premises of an owner. 19.The respondent also refers to a number of provisions in the DMC in support of his case. According to the counterclaim, the respondent relies on clause 6 of the DMC which provides that the manager of the Estate shall have the right and power to manage the Estate and is provided with a number of powers. It is not disputed that the right to manage and the powers as set out in the DMC are now vested with the applicant. 20.The respondent refers in particular to the following power in clause 6 –
21.It is not disputed that the applicant shall enforce the terms of the DMC. I believe there is no dispute that this Tribunal may in appropriate cases order the incorporated owners to take action against co-owner(s) to enforce the terms of a deed of mutual covenant. The question is when this Tribunal should exercise the discretion to grant the injunction to compel the IO to take action against an owner-in-breach. In the said Court of Appeal judgment, it is mentioned that the Court of Court is satisfied that there is a breach, and is still continuing. 22.Mr. Yeung submits that I should only grant the injunction if I am satisfied with all the following 5 matters –
23.Mr. Yeung further submits that the alleged breach of the co-owner must be an extremely clear one beyond any potential dispute as between the IO and the co-owners AND any doubts as to the breach must be resolved in favour of the IO. 24.Mr. Yeung has set out his argument in his written closing submission why these matters should be proved by the respondent before I should grant the injunction. I do not intend to repeat. 25.I can understand the difficulty facing the applicant and any IO in similar situation. But I do not agree with Mr. Yeung on his suggested consideration on when this Court should exercise its discretion to give the injunction. 26.In many cases, a co-owner would take action directly against another co-owner who acts in breach of the DMC. For example, a co-owner has in breach of the DMC created nuisance to another co-owner by allowing water seepage. The suffering co-owner would claim loss and damage from the owner-in-breach direct. The Court could rule if there is a breach of the DMC without involving the IO. 27.Problem arises when the complaining co-owner does not suffer any loss himself. As in See Wah Fan’s case, the owner-in-breach trespassed onto common areas, which according to BMO would be in the control and management of the IO. A co-owner lacks the locus to enforce the DMC against the owner-in-breach and hence the only remedy would be for him to ask the IO to enforce the DMC. 28.And in all these cases, the first matter to be considered by the Court is whether there is evidence suggesting that a co-owner has acted in breach of the DMC. I agree that the burden rest on the complaining co-owner and the question before this Court is, on the proven evidence, “whether a reasonable incorporated owner should take enforcement action, or if action has been taken, whether reasonably necessary action has not been taken.” And if the answer is yes, I would move on to consider whether the injunction should be given. The burden rests with the IO to show why the injunction should not be given. 29.The jurisdiction to grant an injunction is discretionary. All discretion must of course be exercised judicially. And each case must depend on its own fact. One factor that affects my determination is whether there is alternative relief open to the complaining co-owner. 30.Using the seepage case again, if he is going to take legal action against the breaching co-owner, or action has already been taken out, in the correct exercise of discretion, this Court would not create a second set of proceedings by granting the injunction. The concern and complain of the co-owner can be resolved in the action taken out against theowner-in-breach. 31.Another consideration is the mode of the relief sought. The relief directed against the IO must be sufficient, but not excessive, to compel the owner-in-breach to purge the breach. In some cases, all that I should direct the IO is to issue a warning letter. In other cases, litigation would be directed. 32.With these analyses, I would consider if there is evidence in the complaints listed in the Issue (1) to show that the co-owners have been in breach of the DMC, and if so, whether the applicant should take enforcement action, or has taken sufficient enforcement action. Evidence on Issue (1) 33.The respondent has one witness, Mr. James Lau (“Mr. Lau”). He has produced some photographs showing the renovation to the lift lobby of 44th floor of Block 1, which is not disputed. He also produced a plan and marked thereon the position of the car parked near reserved space no. 46A. There is no dispute on the parking, but whether the car occupied common area is in issue. 34.Mr. Lau also said the owners of Flat 33C and D, and Flat 44A and B have removed the partition walls. He has not explained in his witness statement how he came to know after the demolition of partition wall. Mr. Lo submits that his evidence has not been challenged at cross examination. 35.Mr. Alexander Ng gave evidence for the applicant. In his witness statement dated 13 August 2010, he only mentions that the wall should not be load bearing wall, which is no longer in dispute. He said that the demolition of the partition wall would not affect the safety of the Estate. 36.When cross examined, Mr. Ng said he knew that the wall between Flat 44A and B has been demolished, and he heard that the wall between Flat 33C and D has been demolished. 37.On the renovation to the lift lobby of 44th Floor, Mr. Ng said the owner has requested for permission from the applicant to carry out the renovation as appears in the photographs produced by Mr. Lau. No admission is made as to whether the decoration is structural in nature. Mr. Ng also said the permission is given against written promise to reinstate the original decoration if the owner is to assign the unit to others. And if the applicant has new design for the lift lobby renovation in the future, the owner is required to comply with the new design at his own expenses. The owner is required to and has given a personal guarantee for the said promise. At a meeting of the management committee of the applicant on 26 September 2002, it is resolved that a bank guarantee of $200,000 is required as security that the owner would comply with the undertaking, and this is not to be treated as a precedent case. 38.Mr. Ng produced a letter of promise/undertaking signed by the sole owner of both Units A and B of 44th Floor, and a personal guarantee in support. 39.And on the car parked next to car parking space 46A, Mr. Ng said in Court that the car is parked inside the car parking space. He said what in fact happened is that 4 vehicles are parked inside car parking spaces 46A, 47A and 48A, which are adjacent to each other. Discussion and Ruling on Issue (1) 40.While Mr. Yeung argues that there is no evidence to support the contention of the respondent that the party walls have been demolished, I agree with Mr. Lo that the evidence of Mr. Lau has not been challenged. It appears from the reply that the allegation of the respondent that the party walls between these 4 units have been demolished is not really challenged. And Mr. Ng also agree that he knows personally that the party wall between Flat 44A and B has been demolished and he heard that the wall between Flat 33 C and D has been demolished. 41.Mr. Ng is a senior management officer of Estoril Court Management Company, which is the manager of the Estate. I would be surprised that the manager does not have record of any demolition work carried out in the Estate. That must be part of its duty. Balancing all evidence before me, I accept the evidence of Mr. Lau that the party walls have been demolished. 42.Mr. Lau also says in his witness statement that the party wall being demolished is made of cement concrete. Strictly speaking, this must be expert evidence. Mr. Lo again submits that the evidence of Mr. Lau has not been challenged, which I agree. 43.If we consider the evidence of Mr. Lau as the comment of an ordinary person looking at the wall in his premises for comparison, he could comment that it is made of cement concrete. Since his evidence is not challenged, and for the purpose of this ruling, I am prepared to accept this is the case. 44.The first matter for ruling is whether there is evidence that the owners of these Flats are in breach of the DMC in removing the partition wall, and with such evidence, a reasonable and responsible IO would take enforcement action. Mr. Lo in his closing submits that the owner have been in breach of clause 25(a) of the DMC, which reads –
45.Mr. Lo submits that since the walls are made of cement concrete, the owners have been in breach by demolishing them. They are not allowed to cut or injure the cement concrete. 46.Mr. Yeung submits that there is no evidence that the walls were made of cement concrete. I have ruled against him on this point. Mr. Yeung further submits that the walls cannot be classified as “beams, columns or girders”. What he is arguing is that the term “cement concrete” used in clause 25(a) is a description of the flooring beams columns and girders which the owners are not entitled to cut or injure. 47.I agree with the view of Mr. Yeung. When an owner wishes to put on a picture, or a cupboard onto the wall, he has to put nails into the wall, and hence cutting or injuring the cement. If the intention of clause 25(a) is to give a complete limitation to any cut into any cement structure, which is not a structural wall, it has to be clearly defined. And if any structure made of cement concrete shall not be cut or injured, there is no need to refer to descriptions such as flooring, beams columns and others in clause 25(a). I do not agree with the submission of Mr. Lo that the demolition of any cement wall itself is in breach of clause 25(a), and the clause only restrict cut and injury to columns or beams made of cement concrete. And for this case, it is agreed that the wall demolished are not load bearing, and there is no evidence that they are columns or beams or girders, the demolition is not in breach of clause 25(a). 48.Mr. Lo does not argue that the wall is part of the common area. I believe the matter has been fuller considered by the Court of Appeal in IO of Westlands Garden v. Oey Chiou Ling & Another [2011]2 HKLRD 421 and Tam Sze Man & Another v. the IO of Shan Tsui Court [2011] 5 HKLRD 421. It is established by the Court of Appeal that the partition wall between 2 adjoining units serves only the owner and occupier of these 2 units and not common area. It is not in the control of the IO. These are the 2 Court of Appeal decisions relied on by Mr. Yeung to submit that the owners of 2 adjoining units may remove the partition wall to form one single unit from the 2. The demolition of the wall is not in breach of the DMC. 49.In conclusion, the respondent failed to prove prima facie evidence that the owners of Flat 44 A & B and Flat 33 C & D are in breach of clause 25(a) when they removed the partition wall to make 2 units into one. This head of the complaint is dismissed. 50.I shall now move on to consider the renovation of the lift lobby of Flat 44A & B. 51.Mr. Lo submits that according to evidence of Mr. Lau in Court, the renovation involve the removal of the original false ceiling, the floor landings and the original walls and the installation of lightings and the placement of a long bench in the lobby. This is in breach of clause 25(a), (p), & (w) of the DMC and section 34I of the BMO. 52.I have set out clause 25(a) above. Clause 25(p) provides that the owners shall not obstruct or incumbrance any part of the common areas nor place any refuse or other matters or things at the common areas. Clause 25(w) provides the owner shall not cause damage to or interfere in any way with the common areas and common facilities. 53.Mr. Lo also submits that the applicant has no power to condone, approve or acquiesce any breach of the DMC. 54.Mr. Yeung submits that there is no evidence on whether the decoration is structural in nature. By looking at the photograph, they appear to be decorative in nature. As explained by Mr. Ng in his witness statement, the Estate is to upgrade the lift lobbies of various floors, but it would take some time before finalization. The work done by the owner of 44th Floor is decoration in nature and permission is therefore given. 55.Mr. Yeung also raised the argument that there are 2 conflicting lines of cases on whether an IO may consent/waive/acquiesce a breach. He refers me to the judgment given by the Honorable Recorder Yuen in Hollywood v. IO of Wing Wah Building HCA1582 of 2007. While Recorder Yuen note in the judgment that there appears to be 2 conflicting lines of authority, in a careful reading of the judgment, he analysed that they relate to different kind of breaches of the deed of mutual covenant. There are some matters that the IO cannot condone or acquiesce, such as when common part is being transgressed upon. But there are matters within the discretion of the IO. Recorder Yeun has referred to the judgment of Yuen JA given in The IO of Champion Court v. Pang Ping Fan Peter CACV 317 of 2006 –
56.In Court, I have asked Mr. Lo the question, is the applicant permitted to agree to some owners to change the colour of his lift lobby. I believe the answer must be yes following the comment of Yuen JA. The IO has the power to decide the decoration and outlook of the common area, subject always to the decision of the owners made in general meetings. I believe the IO is entitled to approve the decoration suggested by an individual owner. 57.From the evidence of Mr. Lau, it appears that the decoration made by the owner of 44th Floor is change of colour, the tiles, and some lightings. I have no evidence that they are structural in nature. And as explained by Mr. Ng, the applicant would be upgrading the lift lobby. It must be within the power of the applicant to upgrade the common area of the Estate. And it must be within they authority to permit the owner of 44th Floor to have some new renovation. And the applicant has acted reasonably and obtained sufficient security to ensure that the decoration would be redone to be in line with their instruction, if some required. 58.I note that the false ceiling has been taken down. But in most cases, false ceiling is just part of the decoration and not structural in nature. Anyway, I have no evidence that it is structural. 59.In conclusion I found that this is within the power of the applicant to decide how to decorate the lift lobby, and it must be within their discretion to approve decoration format suggested by individual owners. There is no suggestion that in so approving, the applicant has acted unreasonably. I cannot agree with Mr. Lo that the owner has been in breach of the DMC and the applicant has failed to take action. All that I need to add is, if any owner is not satisfied with the decision of the applicant, they could bring the matter to the general meeting and the owners could then decide themselves on the uniformity of the decoration of all lift lobbies. 60.I shall now move on to the vehicle parked next to or at car parking space 46A. Initially, I thought the applicant accepts that some part of the vehicle is located outside space 46A and hence transgressing on common area. This is so stated in the reply. Mr. Ng in giving evidence explains that the vehicle is parked inside space 46A. Or more specify, the vehicle is parked with 3 other vehicles at car park spaces 46A, 47A & 48A. But it is the evidence of Mr. Ng that they have issued notice to the car owner for the past few years saying that the vehicle is parked on common area or non-parking area. If the vehicle is entirely parked inside spaces 46A to 48A with other 3 vehicles, one would expect a different warning notice, such as “you are not allowed to park 4 vehicles in 3 spaces”, would be given. 61.Mr. Lau has identified the position of the vehicle. Mr. Yeung submits that the space identified by Mr. Lau in the plan produced in Court is utterly insufficient to park any vehicles. That tally with the pleaded case of the applicant that part of the vehicle protrudes into common area. 62.Mr. Ng is not sure of the common area. I am surprised that the applicant does not know which part of the Estate is common area. But by the definition of the DMC, unless it is on Reserved Space, it would be common area as no owner has exclusive possession. There is no suggestion that the space next to Space 46A is Reserved Space. 63.I found that at least part of the vehicle is stationed in common area and the owner is not entitled to do so. Accordingly, there is prima facie evidence of a breach of the DMC by the car owner. 64.Is the action taken by the applicant sufficient? For the last 5 years, the applicant has posted warning notice on the vehicle, weekly. More than 1,500 notices have been issued and the car is still there. Such action must be insufficient to discharge its duty. I accept the submission of Mr. Yeung that self-abatement by towing away the vehicle may not be advisable. Their legal advisor should be in a position to advise them the appropriate step to enforce the DMC, including applying for injunction. I would therefore grant an injunction as claimed. I shall come to the exact terms of the order at the end of this judgment. Reserved Space 65.Both Issues (2) and (3) would touch upon the Reserved Space. Before I move on to analyse the case of the parties, this may be an appropriate juncture to deal with the history how various owners in the Estate come to own some spaces in the Reserved Space. This has been set out in the third witness statement of Mr. Alexander Ng dated 17 August 2011 which has been adopted as part of his evidence in chief. His evidence is not disputed. 66.I refer to paragraphs 6 to 11 of the said third witness statement. Wah Koon has reserved to itself all the Reserved Space shown and coloured indigo on the plans attached to the DMC (located at lower ground floor, 1st floor, 2nd floor and 3rd floor of the Podium). And according to the DMC, 1 undivided share is allotted to all the Reserved Spaces. 67.By a Memorandum dated 31 January 1991 and registered in the Lands Office by memorial number 4713195, Wah Koon sub-divided the Reserved Space into smaller spaces, namely, 72 A spaces and 191 S spaces. Wah Koon sub-divided the 1 undivided share in the Estate into 1,150 parts, of which 1,127 were allocated to 263 A & S spaces. Each A space is allotted with 6 parts and each S space is allotted 3 or 4 parts. S spaces are situate mostly at the back of the 270 car parking spaces defined in the DMC. It may or may not be big enough to accommodate a vehicle. An A space is usually large enough to accommodate a vehicle and has direct access to the driveway. 68.From mid-1980s, Wah Koon sold some spaces in the Reserved Space to individual owners and leased the rest to other owners/residents of the Estate. According to Mr. Ng, the Reserved Space have been used as additional parking spaces. 69.Mr. Ng mentioned in his witness statement that there is no provision in the Crown Leases and title document with the government that restrict the number of car parks in the Estate. He also mentions that the occupation permits or DMC has no restriction that only one vehicle should be parked in one space. There is no restriction on the total number of car parks in the Estate. It is sufficient for me to mention at this stage that the respondent has not referred to any restriction in the title document that in any way limit the number of car parks in the Estate. 70.By end of 1999, there were some disputes between Wah Koon and the applicant, and I do not have to go into the details as they are not relevant to this case. Around December 1999, Wah Koon offered to sell a number of spaces in the Reserved Space and the Club House (as defined in the DMC and has been reserved to Wah Koon) at the total price of HK$26,000,000. 71.At a meeting of the applicant’s management committee on 22 December 1999, it was resolved to nominate Jason Enterprises Limited (“Jason”) to accept the offer and to take up the assignment of the title to the reserved spaces and the Club House. 72.Jason was formed by members of the management committee specifically for the purpose of holding the spaces and the Club House on behalf of the flat owners of the Estate. And initially, the management committee planned to finance the purchase by having Jason to issue debentures to each of the flat owners of the Estate for subscription. But before the completion date, only 71 units of debenture were subscribed. 73.On 21 February 2000, at a special committee meeting, it was resolved that the management committee should undertake the subscription of the remaining 169 units of debenture to make up the total consideration of $26,000,000. 74.By an assignment dated 29 February 2000, Wah Koon sold and assigned 182 spaces to Jason, together with the Club House. It is not disputed that Jason is effectively controlled by the applicant. 75.After acquiring the said spaces from Wah Koon, Jason sold and assigned a lot of the spaces to owners in the Estate at market value. In all the sales, it is mentioned in the sale and purchase agreements that no warranty is given for the permitted user of the spaces. The remaining unsold spaces are offered by Jason for lease to owners and resident of the Estate. 76.Currently, Jason holds 66 S spaces. All the other A and S spaces are owned by owners of the Estate. 77.Mr. Ng said the planning is when Jason sold all the reserved spaces, it would assign the Club House to the applicant at a nominal price. Jason is a device used by the applicant for the common interest and benefit of all the owners of the Estate. And Jason never offers for sale or lease of any space in the Reserved Space to non-owners of the Estate. 78.The respondent also own one S space. 79.I also note that not all the Reserved Space are used or converted to A spaces and S space. I have no evidence whether the balance of the parts and space has been assigned to Jason or some other owners. For the purpose of this judgment, I have to assume that the remaining parts of the 1 undivided share is retained by Wah Koon. The Pleaded case on Issue (3) 80.For convenience, I would deal with Issue (3) first. According to the counterclaim, the respondent avers that, in breach of clause 25(h) of the DMC, the applicant has wrongfully converted and/or allowed to be converted the A spaces and S spaces into car parking spaces. Mr. Lo is referring to the occupation permit and the approved building plans. There are specific calculations on the plans with reference to building coverage and plot ratio, and reference to 270 car parks previous approved. He submits that the A and S spaces has not been approved by the Building Authority for carparking purpose. This is in breach of the prescription on the total number of car parking spaces as approved by the Building Authority. 81.Mr. Lo submits that it is admitted by Mr. Ng that no approval has been sought from relevant government authority to use the spaces for parking. He submits that the applicant by converting or allowing the Reserved Space be converted into 263 additional unapproved spaces for car parking purpose acted in flagrant breach of the Building Ordinance, and hence a breach of Clause 25(h) of the DMC. 82.The issue before me is whether Jason or the owners holding the A or S spaces are in breach of the Building Ordinance or any Law and hence in breach of clause 25(h) of the DMC for using the A or S spaces for parking purpose. And if so, should the applicant be compelled to bring enforcement action. The burden rests on the respondent to show a prima facie case that the owners are in breach of a particular law. 83.Mr. Lo submits that the requirement for submission of Building Plans for approval is laid down in Section 14 of the Building Ordinance and Regulation 8 of Buildings (Administration) Regulations. In particularly, he refers to Regulation 8(1)(a) which requires the intended use of every part of the building be prescribed, the drawing must comply with fire safety requirement, and town planning (section 16 of Building Ordinance). Plot ratio calculation and loading bearing capacity of the floors are also relevant. In the absence of approval from the Building Authority, the addition of 263 A and S Spaces for car parking would amount to an unlawful use of the spaces and in breach of the Building Ordinance. 84.I have enquired with Mr. Lo the particular section in the Building Ordinance that prohibits the owners from using a space with unidentified user in the approved building plans for parking purpose. Mr. Lo could only refer me to section 25 of the Building Ordinance. I note in particular, there is no user attached to the Reserved Space as marked on the approved building plans or from the evidence before me. 85.Mr. Yeung submits that the change of user of the A and S spaces itself is not sufficient proof that the owner in breach of clause 25(h) of the DMC because the clause has no reference to the approved building plans. 86.Mr. Yeung submits that the Building Plans and the Plot Ratio Calculations only showed that 270 parking spaces were previously approved. However, these car parking spaces are not taken into account in the building coverage and plot ratio calculations. Discussion and Ruling on Issue (3) 87.I would go to the DMC first. It has set out the shares to be allotted to the car parking spaces. But there is no express provision that other than these parking spaces, the owners are not entitled to park their car. And there is no restriction on the user of the Reserved Space. 88.Mr. Lo relies on clause 25(h) and it reads – “Each of the owners covenants with the others as follows:-
89.To invoke this clause, the respondent has to show that using the Reserved Space for parking is in contravention of the occupation permit, or the Building Ordinance, or has been in breach of some building, fire or other regulations. 90.In using the Reserved Spaces for parking, is that in contravention of the occupation permit? I would come to further discussion on the occupation permit hereinafter. But for the present purpose, it is sufficient for me to note that the occupation permit allows the relevant floors in the Podium where the A & S spaces are situate to be used for carparking purpose and there is no specified number of car parks. Prima facie, the use of the Reserved Space for parking is not in breach of the occupation permit. 91.Mr. Lo relies on the approved building plans and submits that the additional cars park from the Reserved Space is in breach of the building plans. The Building Ordinance is concerned with building works. As provided by section 14, no building work shall commence without the approval of the Building Authority. And the approved building plans are submitted for the purpose of facilitating such approval. Mr. Lo fails to submit the basis for saying that the plans so submitted would at the same time limit the usage of a particular part of the Estate to the specified user on the plans. And taking his argument to the highest, if an area on the building plan is marked for a special purpose, I can understand the argument of Mr. Lo. But it must be remembered that there is no specific user attached to the Reserved Space in the building plans. Using it as a car park is not a change of the user. 92.On breach of the Building Ordinance, Mr. Lo can only refer specifically to section 25. He says that there is a breach of section 25 and hence triggers an offence under section 40 of the Building Ordinance. Section 25 reads –
93.It is questionable if the section is applicable. It covers the situation of “material change in the use of a building”. And material change is deemed to exist in the 2 situations as set out in sub-paragraph (3), which covers building works. That tally with the purpose of the Ordinance which cover building work. Even if the deeming section does not set out all the material changes, in interpreting material changes, I should be looking at some act similar to those act set out in sub-paragraph (3), namely changes involving building works or works that require approval of the Building Authority. 94.Mr. Lo has not referred me to any case that explains what a material change is. As Mr. Yeung submits, the change is by way of zoning and demarcation of new carparking spaces. No building work is involved. 95.And more, what amount to material change is again a matter for expert opinion. In Marine International Hotels Ltd. v. Atlas Ltd. and others HCA 10714 of 1998, in determining whether there is material change in user, Burrell J. relies on the expert evidence adduced. The respondent has failed to prove that there is a material change in user. 96.Further and in the alternative, Mr. Yeung also refers me to the case of Chan Sing Hoi Enterprises v. Vykon Media Technology Ltd. CACV 327 of 2007. In that case, the defendant tenant claims that the plaintiff has failed to serve a notice with the Building Authority when they changed the user of the premises from residential to non-residential. The defendant said this is illegal and relied on the failure of the plaintiff to give a notice under section 25(1) of the Building Ordinance. On appeal, Tang V.P. rejects the argument and said “Under section 40(1B) (b), the failure without reasonable excuse to comply with an order served under section 25(2) is an offence but not failure to give notice under section 25(1).” I agree with the ruling. At the highest of Mr. Lo’s argument, it is a failure to notify the Building Authority which is not an offence under section 40. 97.And assuming Mr. Lo has a point, and we are to consider the building plans, and to look into matter like plot ratio, floor loading, and the other matters he complained of, I cannot determine the issue without expert evidence. I do not understand the plot ratio calculation, and I do not believe either counsel could submit thereon. What is it meant by 270 car parks previously approved (as stated on the plans)? I do not know when it is approved and what is the meaning of this statement on the plan? That has to be explanation from professional who understands the plans. Hence, while Mr. Lo could easily said that the additional car parks do not appears on the approved building plans, there is no evidence to support his claim that the plot ratio has been affected, or the floor loading may not be sufficient to carry the additional cars. 98.The respondent also refers to other clauses in the DMC-
99.It is true that only 270 car parking spaces are mentioned in the Third Schedule of the DMC. But there is no restriction in the DMC on the use to be given the Reserved Space. 100.Mr. Lo has referred to clause 6(p) of the DMC which provides that the manager, and now the applicant, has the power “to manage, control and maintain the parking of cars and other vehicles and the loading and unloading of goods within the [Estate] and the flow of vehicular traffic within the [Estate].” 101.He submits that it is reasonable for the applicant to stop the owner from parking their vehicles in the reserved spaces. He refers to the case of Lantangan Co. Ltd. v. Chu Yip Sing DCCJ3373 of 2008 when a truck is not allowed to be parked in a space designated for parking private vehicle. This is in breach of the house rule of the building in issue. And in Radford Portfolio Management Ltd. v. The Secretary for Justice CACV 257 of 2009, the creation of 2 car parking space by using a stacking device, even when the owner does not use the additional space is not allowed, as the Court of Appeal rules that it is in breach of the Government Lease. 102.In both cases, owner is in breach of either the house rule or the Government Lease. Here the respondent fails to prove any breach of the DMC or the Crown Leases. These cases can be distinguished. In exercise of the power under clause 6(p), the applicant must control in accordance with the terms of the DMC. 103.As analysed above, the burden rests on the respondent to show at least a prima facie case that there is prohibition against the use of the Reserved Spaces as car park. In summary, there is no evidence to prove some restriction in the Crown Leases or the DMC. I have no expert evidence if the parking of additional vehicles would in some way be in breach of the Building Ordinance or the Regulation or there is a material change of user. The respondent fails to prove a prima facie case of breach of some law or regulation, or terms of the DMC. 104.I am not ruling if the A and S Spaces could be used for parking. But the respondent fails to should a prima facie case that Jason or other owners have been in breach of the DMC as analysed above. I see no basis for ordering the applicant to take enforcement action against the owners (including Jason) on the evidence before me. In conclusion, I found against the respondent on Issue (3). The Pleaded case on Issue (2) 105.The applicant also complains that the respondent has converted and/or allowed to be converted various parts of the common areas or Reserved Space in the carparking floors of the Podium to be used other than for parking. In the particulars of paragraph 12 (d) of the counterclaim, the respondent claims that the applicant has been –
106.The following facts are agreed. There are 3 drivers’ waiting rooms in the Podium, and marked in blue and indicated by the arrows V1 V9 and V13 on Exhibit R-2. All these rooms situate at the Reserved Space of the Estate. There are 8 storerooms (or storage area) in the Podium, marked in green and indicated by arrows, V2, V4, V10, V8/11. V14, V12/16, V16/18 and V19 on Exhibit R2. V2 and V4 are Reserved Space, and the rest situate at common area. Further there are 3 café areas marked in purple and indicated by the arrows V7, V17, and V20 on Exhibit R2. V7 is Reserved Space and V17 and V20 are common area. I would first consider if there is a breach of the Building Ordinance or the DMC in maintaining the waiting rooms, storage rooms and café in the Podium. The Respondent’s case on Issue (2) 107.It is the evidence of Mr. Lau that some of the common area and/or other areas at the carparking floors of the Podium are encroached and converted into 3 drivers’ waiting rooms and numerous storerooms. Drivers, staffs and workers of the management company are allowed and permitted to stay and/or remain in the waiting rooms and storerooms and carry out various activities therein including dining, sleeping, watching television and playing mahjong. 108.Structural alterations, including toilets in the waiting rooms and air-conditioners are built or installed and holes have to be made on the walls. Appliances such as televisions, microwave ovens and refrigerator, and furniture and working equipments are placed or stored at the waiting rooms and storerooms. 109.Mr. Lau also showed with photographs some café areas where appliances such as television, ovens and furniture are placed. The café are used as a resting place, dining, and playing mahjong. His evidence is not in great dispute. 110.Mr. Lo refers to Clause 25(t) of the DMC which provides that each owner is “not to use the car parks for any purpose other than for parking vehicles and not to erect any structure or place or store goods or things thereon.” And the use of common areas or Reserved Space as waiting room and storage would also be in breach of Clause 25(t). 111.He again refers to clause 25(h) of the DMC which provides that each owner is “not to use his part of the said Building for any illegal … purposes or for any purpose which is in contravention of … the Occupation Permit in respect of the said Building, or any applicable building fire and other regulations.” 112.Mr. Lo again submits that none of the users of the said areas as drivers’ waiting rooms, storerooms, and café areas has been approved in the occupation permit dated 26 August 1983. And Mr. Ng admits in cross examination that the applicant has never applied for prior or subsequent government approval for change in use of such area under the requirement of section 25 of Building Ordinance. Mr. Lo relies on the approved building plans for the Estate, and submits that it has not been provided that the Reserved Area or common area could be used for waiting room and storeroom. Such use is therefore in breach of the Building Ordinance and hence in breach of clause 25(h) of the DMC. The Applicant’s case on Issue (2) 113.The Applicant avers in the reply that the drivers’ waiting rooms, storerooms and the café areas are located at the common areas and not within any car parking space. This has to be read with the agreement at the closing that the drivers’ waiting rooms and some storage areas situate in the Reserved Space as aforesaid, while the rest situate at common areas. 114.It is pleaded that the provisions of these facilities are within the power of the applicant under the DMC and the Building Management Ordinance for proper management of the Estate. Measures have been implemented from time to time to regulate the use of the drivers’ waiting rooms and the café areas. And the storerooms are used for storing materials required for the routine maintenance of the Estate. 115.Mr. Ng confirms in his evidence that by a resolution of the management committee passed on 27 May 2011, the management committee has approved the conversion of part of the common area of the Estate as drivers’ waiting room, storage areas for the management office of the Estate and storage area for outside contractors and security measures. 116.It is the evidence of Mr. Ng as set out in his witness statement dated 13 August 2010 that many owners of the Estate have employed drivers. Before allotting the common areas for these drivers, the applicant received many complaints about the loitering of these drivers in the Estate. Some of them even gamble openly in the Estate. The applicant decided that it would benefit the Estate as a whole if those areas in the carparking floors which were not used by anyone could be allocated for the drivers to stand by. In fact, the provision of driver waiting rooms has improved the loitering problem and has been in place for over 20 years for the mutual benefits of all owners, and no owner has lodged any complaint, other than the respondent. In giving evidence, Mr. Ng said these are driver standby rooms and are there since the Estate was occupied. 117.Mr. Ng also produced a copy of the regulation for use of the drivers’ waiting rooms which is posted inside each waiting room. According to the regulation, the drivers/user at the room is not allowed to gamble or carry out any illegal or immoral conduct. They are not allowed to change clothing at the room. In fact, they are standby room. When giving evidence, he also said the applicant has arranged for regular patrol in the carparking floors to prevent gambling and loitering. 118.As to the construction of toilet and air-conditioner, Mr. Ng said installation of the air-conditioner is necessary to provide fresh air to the rooms. The installation of split type conditioner does not involve making holes in the load bearing wall. He agrees that there are toilets inside the standby rooms. But no construction work involving demolition of structural wall is involved. 119.Mr. Ng also confirms that some of the storage rooms are empty after these proceedings are issued. Some are used by the management office, or their contractor for keeping their tools and to change clothing. Some spaces are used for keeping the transmitter of tele-communication companies. And some spaces are locked up purely for security reason. 120.Mr. Yeung submits that the 3 drivers’ waiting rooms (or standby rooms) and some storage area are part of the Reserved Space and has not been assigned to Jason. They form part of the remaining 23 parts of the 1 undivided shares and is in the sole and exclusive control of Wah Koon. This is not disputed. 121.The latest search shows that Wah Koon has been dissolved in 2002 under s. 291AA of the Companies Ordinance. That posted the complicated issue on how to sue Wah Koon; or that the remaining parts are bona vacantia and belong to the Government of the HKSAR. Mr. Yeung submits that there is great difficulty to enforce on the use of the Reserved Space by Wah Koon, even if there is a breach. 122.Mr. Yeung further submits that the Reserved Spaces are private areas owned by Wah Koon or the Government, as hereinbefore discussed. It is doubtful if the applicant as the incorporated owner is obliged to take reasonable and necessary steps to enforce the DMC as set out in Section 18(1) of the BMO. 123.And assuming that the rooms belong to Wah Koon, Mr. Yeung submits that Wah Koon is not in breach of the occupation permit by converting part of the Reserved Space to drivers’ waiting room. He quoted the permitted users for lower ground floor and ground floor as an example for discussion. The occupation permits read –
124.Mr. Yeung invited me to look at the Approved Building Plans. There are other facilities, such as driveways and passageway between the carparking spaces, the transformer room, the M.V. switch room, the entrance hall, the service lobby, the fire services pump tank, the generator room, the pump room, the refuge disposal room, the flush water tank, the city water tank, the sprinker water tank and the lift shaft on ground floor and the sprinker control valve room, and the A.C. Room on lower ground floor. While all these facilities and/or rooms are mentioned in the approved plan, they are not specified in the user permitted by the occupation permit. 125.Mr. Yeung invited me to adopt a purposive approach in interpreting the DMC. A more sensible interpretation of Clause 25(h) would that the specified users in the occupation permit must only be limited to the designated areas which were expressly mentioned therein. The occupation permit leaves it open for the owners of the Estate or the applicant to freely use the other areas so long if the use meets the specified use of “non-domestic” in the case of the carparking floors. 126.Mr. Yeung repeats that a mere change in the specified user of the approved building plans does not trigger any violation of any provision of the Building Ordinance. Discussion and Ruling on Issue (2) 127.I do not think that Clause 25(t) assist the respondent. I appreciate that in setting out the shares of domestic units and car parks, the term “car parking space” is used in the DMC. And “car parks” appears at Clause 25(t). By the natural meaning of “car parks”, it must be referring to the individual carparking spaces and not other areas in the carparking floor. We are now concerned with the common area, and the Reserved Space which are not the car parks in the DMC. 128.The main complaint of the respondent is that the uses as drivers’ waiting room and storeroom are in breach of in breach of the occupation permit and/or is not allowed under the approved building plan. Mr. Lo submits that would be in breach of clause 25(h) of the DMC. The questions are again whether the said uses are in contravention of the occupation permit, or any law or regulation. There is no provision in the occupation permit for using the carparking floors of the Podium as drivers’ waiting rooms, or storeroom. 129.The café areas are some space where the drivers have place some sofa or chairs, and in some cases, with refrigerator or micro-wave oven. These are very informal set up. 130.Mr. Yeung invited me to use a purposive approach in interpreting the DMC. I agree this is the correct approach. But I have to consider the provision in the Building Ordinance in respect of occupation permit first. A convenient starting point must be section 21(1) of the Building Ordinance which reads –
131.It appears that the occupation permit is the permit for occupation. It is clear that the occupation permit could set limitation for the use of the building. For example, a particular floor may be used for non-domestic purpose only. The use as waiting room storerooms storerooms and café area (which is a form of waiting area for drivers) is not prohibited by the occupation permits. 132.Forareas other than the designated areas in the occupation permit with a specific user, Mr. Lo has not shown, by reference to law and evidence, that the owners of the Estate may not freely use such other areas as long as the use is not in breach of the DMC, the Crown Lease or Government Lease, or any other law or regulation. Or put it in another way, I see no reason why the Building Authority would not put a limitation by specifying the approved user, if that is intended. 133.The main argument of Mr. Lo is there is a change of user and hence application or notice should be given to the Building Authority under section 25(1) of the Building Ordinance. I need not repeat my earlier finding that the change of user may not be a material change and not in breach of section 25(1) of the Building Ordinance as Mr. Lo has not referred me to any authority on whether this is a material change and there is no expert evidence to support his contention. There is the installation of toilets, which is admitted, and the doors in the waiting room. Mr. Lo has not addressed me if these acts amount to building work that requires approval of the Building Authority. I am not convinced that this is a breach of section 25(1). It has not been proved that the applicant or the user of these rooms are in breach of clause 25(h) of the DMC. And as I analysed above, such breach would not be an offence under section 40 of the Building Ordinance. 134.While Mr. Lo also relies on the approved building plans, he has not provided me with any authority that the occupiers are not entitled to use any part of the Estate for purpose other than the user on the approved building plans. And when there is no user specified for the Reserved Area, I agree with the submission of Mr. Yeung that there is no restriction on user being imposed by the approved building plans and the Building Ordinance. And there is no specific user attached to the Reserved Space and the common area. Mr. Lo has not referred to any clause in the Crown Lease or DMC that restrict the user. 135.And it is not disputed that the common areas are in the control of the applicant under the BMO. By section 29 of the BMO, the power and duties of the applicant is to be exercised by the management committee. And reading the resolution that approves the use of common areas for waiting rooms, café and storerooms, I agree that the resolution has been passed in the common goods and interest of the Estate. I agree it is within their authority to use the common areas as waiting rooms and storeroom for the various purposes as mentioned about (although the waiting rooms do not situate at common area which I would deal with separately). 136.Mr. Lo in his closing submission suggests that the placement of a large number of electric appliances and other flammable material in the carparking floor poses serious fire risk hazards to the users and property in the car park. I can only assume he refer to the machine placed at the carparking floor by the telecommunication company, or may be the micro-wave oven and refrigerator in the café. In fact, I have no details of these machines and Mr. Lo has not cross-examined Mr. Ng in details. And again, if this is the case of the respondent that the placing of the machine, and some other machine of the sub-contractor poses fire risk, Mr. Lo has not referred me to the relevant Fire Services Regulations to support his claim that this may be in breach of the law. 137.In summary, I am not satisfied with the evidence before me that there is a prima facie case of contravention of the occupation permit or breach of any law or regulation. Therefore I found against the respondent that there is any breach of clause 25(h) of the DMC in maintaining the waiting rooms and the storerooms, as the respondent fails to prove prima facie evidence of the breach of the DMC or some law or regulation. 138.There are also complaints by Mr. Lau that there are activities of drivers gambling in the carparking floors. And Mr. Ng agrees that there are instances when the drivers invited outsiders to come to play mahjong in the waiting room. Mr. Lo submits that it creates unnecessary noise in the car parks and poses security risk to the users of the car parks and the Estate. 139.I believe Mr. Yeung agrees that enforcement action has to be taken. According to Mr. Ng’s evidence, there are regulations posted in all the waiting rooms and the drivers are expected to comply with the regulations. And there are regular patrols in the car park to monitor the position. That appears to be a form of enforcement action taken by IO to prevent such nuisance. 140.Mr. Lo submits that notwithstanding the above action, the problem remains. He therefore submits that an order should be granted against the applicant for an injunction compelling the applicant to take legal action. 141.Even if the applicant takes enforcement action by more frequent patrol, it is always possible that some drivers would avoid the patrol and gamble secretly. The question is whether the measure is reasonable and sufficient. That has to be answer in light of how frequent is gambling activity found in the Podium. I have no evidence from the respondent on how frequent are these gambling still going on. And with the evidence before me, I found that the applicant has taken the reasonably necessary steps to prevent gambling in the Podium. 142.I am not minded in such situation to grant any injunction, particularly, when it cannot be certain as against whom the applicant should take action. It would put the applicant is an impossible situation. 143.But as a gentle reminder, the applicant should increase the patrol. It is advisable for the applicant to keep a record of the number of complaint and incidence of gambling discovered and to report to the next general meeting when the owners could be made aware of the problem and decide the addition enforcement action required. Individual owner could then assist by restraining their drivers and employees for gambling in any area in the Estate. The Reserved Area of Wah Koon 144.It is not dispute that the drivers’ waiting rooms and some storerooms and 1 café are part of the Reserved Space of Wah Koon. Would there be any difference in my finding? 145.Mr. Yeung submits that the applicant should not be required to take action against any arguable breach in private area. But it is the evidence of Mr. Ng that the design of the drivers’ waiting rooms came from the applicant. They permitted or directed the drivers to stay in the rooms. 146.Technically, the above mentioned resolution of the management committee of the applicant only authorized the conversion of some common areas to be used as waiting room and storeroom, and café. The act of the applicant in grouping the drivers at the drivers’ waiting rooms is transgressing onto the land of Wah Koon. It is for Wah Koon to take action to evict them, which is not my concern. 147.The applicant is not entitled to use the Reserved Space of Wah Koon. Hence in encroaching areas of the Reserved Space as drivers’ waiting room and storeroom,the applicant is liable to be sued and hence all owners may be liable for damages. It looks odd for an IO to be a trespasser in the private areas of an owner, who may be dissolved, and the property may now be vested in the Government of the HKSAR. 148.But this is not a ground relied on by the respondent to ask for the injunction. In fact, the point has not been argued. The complaint by the respondent, is as aforesaid, on breach of the permitted user and the DMC. And of course, it might be argued that the applicant may claim adverse possession which could be in the interest of the Estate, and the respondent. And hence, I am not prepared to rely on this ground, on my own initiation, to give a remedy to the respondent. But even if I do not give such relief, this may be a matter that either the applicant and the respondent should take up at a general meeting or a meeting of the management committee on how to resolve the problem. I believe Mr. Yeung would be in a position to give the necessary advice, if he is so instructed. 149.In conclusion, the fact that some Reserved Area of Wah Koon having been used by the applicant would not affect my decision in this case, as the ground has not been relied on by the respondent. Relief 150.Summing up the above findings, I found that the respondent is entitled only to the following relief, and I use the draft terms prepared by Mr. Lo :
151.Finally, on question of cost, the applicant should be entitled to the costs of the application. The respondent is only successful with one head of counterclaim. I see no reason why the applicant should not have costs of the counterclaim. I therefore give an order nisi that the applicant shall have costs of the action to be taxed on District Court scale if not agreed with certificate for counsel, the order nisi to become absolute within 14 days. 152.Finally, I must thanks both counsel for their able assistance.
Mr. M.T. YEUNG and Mr. Andrian BUT instructed by Messrs Lo & Lo, for the applicant Mr. Benny K.C. LO, instructed by Messrs Liu, Chan & Lam, for the respondent |
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