郭錦燊 v. 澤安閣業主立案法團
Read the full judgment text of LDBM 357/2011 on BabelCite. This Lands Tribunal judgment.
1. The Applicant is the owner of Shop C on Ground Floor (“Shop C”) of Chester Court, no. 6, 7 & 8 Praya Kennedy Town, no. 1G, 1H, 1J & 1K Belcher’s Street Hong Kong (“Chester Court”). And the Respondent is the incorporated owner of Chester Court.
Cited by 2 cases · Cites 1 case
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LDBM 357/2011 IN THE LANDS TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION BUILDING MANAGEMENT APPLICATION NO. 357 OF 2011 __________________________ BETWEEN
__________________________ Coram: Deputy Judge YU, Presiding Officer of the Lands Tribunal Dates of Hearing: 25th May 2012 Date of Handing Down of Decision: 10th August 2012 ________________ J U D G M E N T ________________ Background 1.The Applicant is the owner of Shop C on Ground Floor (“Shop C”) of Chester Court, no. 6, 7 & 8 Praya Kennedy Town, no. 1G, 1H, 1J & 1K Belcher’s Street Hong Kong (“Chester Court”). And the Respondent is the incorporated owner of Chester Court. 2.Chester Court is subject to a Deed of Mutual Covenant registered in the Land Registry by M/N UB3576528 (“the DMC”). The Respondent is the Manager as defined by the DMC. Further and alternatively, by section 16 of the Building Management Ordinance Cap. 344 (“BMO”), the Respondent is vested with an exclusive power to manage control and administer the common parts of Chester Court and to enforce the terms of the DMC. Some Undisputed Facts leading to the Application 3.At a general meeting of the owners held on 8 February 2010 (“1st EGM”), the Respondent resolved to carry out the renovation works as itemized in paragraph 7 of the Notice of Opposition (“the Works”). I shall come back to these items in details later herein. 4.In the 1st EGM, it was further resolved on the contractor to carry out the Works. The resolution reads as follows –
5.And there is attached to the minutes an estimate of the contribution payable by each owner, drafted with reference to the management shares as hereinafter defined. The meeting further resolved to collect fund for the renovation work from all the co-owners by 4 installments and to retain lawyers to collect the fund. 6.It is in dispute if the estimate does form part of the resolution. 7.In another general meeting of the owners held on 29 March 2010(“2nd EGM”), it has been resolved that part of the Works, namely, the structural works of the external walls as approved in the 1st EGM be revoked and was put to vote again. It was reconfirmed by a new resolution in the 2nd EGM. The Dispute 8.Having taken legal advice, the Respondent avers that in accordance with Clause 9 of the DMC, the contribution payable by each owner shall be in proportion to their undivided shares in Chester Court. The Respondent claims contribution from the owners, including the Applicant in proportion to the undivided shares he holds. 9.The Applicant disagrees with the claim and avers that the contribution should be in proportion to the management shares. He applies to this Tribunal for a determination that, according to the DMC and/or the BMO, whether contribution be made in proportion to the management charges or the undivided shares in Chester Court. 10.The Application is prepared in Chinese and the Notice of Opposition is in English. Evidence has been received in Chinese. And this case turns on interpretation of the DMC which is written in English, and counsels refer to a number of judgments in English. I found it more convenient to give the judgment in English and both counsels agree. Applicant’s case 11.To understand the issues in dispute, I should first set out the relevant terms of the DMC relied on by the parties. Clause 5(f) of the DMC provides that “Each owner shall pay all costs charges and expenses which may be or become payable for or in connection with the management maintenance repair improvement and renovation of the said premises in accordance with the provisions of this deed including but not limiting thereto”, and move on to list out 23 items of chargeable works. 12.Mr. Ng, counsel for the Applicant submits that all the 8 items of works approved in the 1st and 2nd EGM are all expense covered by Clause 5(f) and he has kindly prepared a table:-
13.Mr. Lee, counsel for the Respondent accept the analysis of Mr. Ng subject to the qualification that these items are also covered by Clause 5(g)(iii) which I would come to later. 14.And to complete the picture, I list out Clause 5(f)(xi)(xii)(xiii) & (xiv) –
15.It is the case of the Applicant that the costs and expenses under Clause 5(f) should be apportioned between the co-owners in accordance with Clause 5(g) of the DMC, which reads –
16.There is only one schedule to the DMC with 3 columns. And the following is the row affecting Shop C, the property of the Applicant.
17.While “management charges” is not a term used in the body of the DMC, it is not disputed that the “management charges per month” in the Schedule refers to the payment under Clause 5(g)(ii). Mr. Ng call the management charges the management shares in his submission, and take $1 as one share, and there are a total of 30,951 shares. There is again no reference to “management share” in the DMC, but Mr. Lee has no objection to refer to the proportion set out in 3rd column of the Schedule as management shares, which I would so refer herein. 18.Clause 5(h) further provides that –
19.The reference to sub-clause (h)(ii) in Clause 5(h) appears to be a typing mistake, which should be “sub-clause (g)(ii)”. Hence when the Manager or the Respondent does not have sufficient funding to cover the costs and expenses under Clause 5(f), he could ask for further contribution and such further contribution is to be apportioned according to the management shares. 20.Mr. Ng submits that since all the renovation works are covered by Clause 5(f), the costs and expenses should be apportioned between all owners according to Clause 5(g)(ii) or 5(h), i.e. according to the management shares. The Respondent’s case 21.It is the case of the Respondent that the payment under Clause 5(g)(ii) is payment on account, and not the absolute liability. The liability of all owners towards payment of the costs and expenses under Clause 5(f) is governed by Clause 9, which reads –
22.The Respondent avers that the costs and expenses under Clause 5(f) should be apportioned according to the undivided shares of the owners. 23.As an alternative argument, Mr. Ng also refer to Clause 5(g)(iii) and submits the clause provides that each owner shall pay to the Manager such sum of money as the Manager shall think fit as he shares of the costs charges and expenses for, inter alia, “all decoration alteration addition improvement to the common areas or the common services or any other works as the Manager shall think fit”. Mr. Ng submits that the Works are covered by both Clause 5(f) and 5(g)(iii). For charges under Clause 5(g)(iii), there is no provision on how to apportion the charges among the owners and the Manager may determine the apportionment as he think fit. Hence the Respondent may apportion the contribution according to Clause 9. 24.In reply, Mr. Ng denies that Clause 9(g)(iii) applies. If it applies, than by the estimate attached to the minutes of the 1st EGM, the Respondent has exercised its discretion by using the management shares for apportionment of the contribution. The Issue 25.According to Recital (4) of the DMC, Chester Court is divided into 1809 equal and undivided parts or shares. Shop C has 73 undivided shares. And according to the Schedule, there are 30,951 management shares and Shop C has 172 shares. There is a marked difference in the liability of the Applicant to contribute to the fund depending on which formula of apportionment. 26.The issue before me is whether the costs of renovation approved by the 1st and 2nd EGM shall be apportioned between the owners according the management shares, or the undivided shares. Evidence 27.There are 2 factual witnesses for the cases. The Applicant gave evidence and adopted his witness statement dated 8 March 2012 as his evidence in chief. He produced the relevant documents, including the relevant minutes of the 2 EGMs, and surveyor’s report on the condition of Chester Court and the maintenance required. Mr. Lee does not cross examine him and there should not be any dispute on his evidence. 28.The Respondent has one witness, Mr. Chan Kim Fai. Mr. Chan is a member of the management committee of the Respondent. He adopted his witness statement dated 8 March 2012 as his evidence in chief. 29.Mr. Chan said the works are maintenance for the common parts and common facilities of Chester Court. Mr. Ng examined him on the Surveyor’s report and Mr. Chan agrees that the works resolved to be carried out are with advice from the surveyor. 30.Mr. Chan also explains that item a (as set out in the table above) of the Works involve removing all existing tiles on the external wall and replacing them with new ones. It also includes some maintenance work against leakage. 31.As for item b, the metal parts of common areas are rusty and have to be replaced by new ones. 32.For item f, there are some existing collecting ducts for air-conditioners. But additional duct has to be built. Discussion and Ruling 33.It is not disputed that the works to be done are covered by clause 5(f). It is the case of the Respondent that the works are also covered by clause 5(g)(iii) which I would come back. I would first consider how are the expenses under clause 5(f) are to be apportioned between the owners. 34.The issue turns on the interpretation of Clause 5(f). Clause 5(f) set out the charges and expenses that the owners of Chester Court shall pay and states that each owner shall pay “in accordance with the provision of this deed.” What is the provision of the DMC that Clause 5(f) is referring to? 35.I would first note clause 5(f)(vi) & (vii). On the charges relating to the lift services and sprinkler system respectively, owners of the floors with no such facility are not liable to share. 36.As for clause in the deed with provides for payment or apportionment, parties have referred to 2 different sets of clauses. 37.The first clause regarding payment is clause 5(g) which I have set out above. Clause 5(g)(i) concern payment of deposit which is not relevant. Mr. Lee draw my attention to clause 5(i) of the DMC that if Chester Court is reverted to the Government, the balance of all funds including the deposit would be returned to the owners in proportion to their undivided shares. I do not think that assist as it only cover the position when the owners return Chester Court to the Government. 38.Clause 5(g)(ii) provides that each owner shall pay to the Manager, and now the Respondent, “on account of his share of the said costs charges and expenses such monthly payment as set out in the Schedule” and “shall be payable in advance on the first day of each and every month”. It is not disputed that such payment are for the said costs and expenses referred to in clause 5(f). 39.The main argument by the Respondent is that this is a payment on account provision and not the charging provision or the apportionment provision. Mr. Lee refers to the judgment of the Hon. Yeung JA (as he then was) given in The Incorporated Owners of Hang Shun Building, Tonkin Street v. Lee Chi Ming CACV321 of 2003. There are 2 set of charging provision in the Schedule of the deed of mutual covenant in that case. Clause (f) expressly provides that the costs and charges set out (being usual management expenses) shall be borne and paid by the owners in proportion to their respective shares in the land. This is different from Clause 5(f) of our case. 40.Clause (g) in Hang Sung Building’s case provides that each owner shall pay to the agent “on account” of such owner’s share of the costs charges and expenses aforesaid a sum per calendar month the amount of which is set out in clause (g). And the agent may vary the monthly contribution every 6 months. The Hon. Yeung JA found that clause (g) only provides for the payment on account by each owner. It does not represent the final amount payable by the owners. Accordingly, to determine the ultimate amount payable for the management costs and charges, it is to be calculated in proportion to their respective shares in the land, as stipulated in clause (f). 41.Mr. Lee submits that the same analysis applies. Clause 5(g)(ii) only provides for the monthly payment on account of the charges under Clause 5(f). The charging provision in the DMC is clause 9 and it applies to the expenses payable under clause 5(f). The liability of the owners is to be apportioned according to their shares in the land. As the expenses of the Works are covered by Clause 9(f), they should be apportioned among the owners according to their undivided shares in Chester Court. 42.As for Clause 9(h), Mr. Lee submits that is a provision supplemental to Clause 9(g) and it should equally be considered as a provision for payment on account. 43.I think the Hang Sung Building’s case can be distinguished. I note that in Hang Sung Building’s case, clause (f) has express provision that the costs and expenses therein set out are to be share in proportion to the undivided shares. Clause 5(f) of the DMC in our case in defining the sharing formula only makes reference to the deed. And I have to determine which clause applies. 44.In his closing, Mr. Ng relies on the judgment of the Hon. Tang VP given in Sam Woo Marine Works Ltd v. The Incorporated Owners of Po Hang Building CACV 368 of 2008. In this Court of Appeal case, there are charging provisions in the deed of mutual covenant very similar to the provision in the DMC of our case. They reads :–
45.The judgment in Hang Sung Building’s case is also considered and distinguished by the Hon. Tang VP. His Lordship considers in Hang Sun Building’s case, there are 2 conflicting clauses, namely, clause (f) and Clause (g), and the Court of Appeal find in favour of clause (g). And here, the Hon. Tang VP considers that clause 3(f) is a charging provision and the reference to “…in accordance with the provisions of these presents …”, is a referral to clause 3(h) and (i). His Lordship also found that clause 5 applies unless otherwise provided. It has no application as Clause 3(f), (h) and (i) have provided otherwise. 46.Mr. Ng submits that the drafting of the DMC in our case is exactly the same as the deed in the Sam Woo’s case. I should also find that Clause 9 has no application, and the expenses under Clause 5(f) should be apportioned according to Clause 5(g)(ii) and (h), in proportion to the management shares. 47.I believe the main question is, when in clause 5(f) of the DMC refers to “provision of this deed”, is the clause referring to the clause 5(g) and (h), or to clause 9. I agree with Mr. Ng that it refers to clause 5(g)(ii) and (h). 48.While clause 5(g)(ii) appears to be a payment on account provision, it must be read together with clause 5(h) which is the provision that when the monthly management charges is not sufficient, the owners has to contribution further according to the management shares. And read clause 5(g)(ii) with 5(h), they formed the mechanism and formula of contribution by the owners towards the charges and expenses payable under clause 5(f). 49.To consider what are the provisions in the DMC that Clause 5(f) refers, I believe Clause 9 is the last to be considered. Save and except provided in the DMC, clause 9 applies. It must mean that if the moneys payable by the owners has other provision for payment or apportionment, clause 9 does not apply. 50.As for Clause 5(g)(ii), I appreciate that this is called a payment on account. But this is also a payment in advance. And there is no provision in the DMC for adjustment of the payment. Following the ruling in Sam Woo’s case, I believe this clause should not be read and understand by itself and shall be read together with clause 5(h). 51.Mr. Ng also relies on the judgment of Deputy Judge Wong (as he then was) given in 金冠發展有限公司及其他人對建邦大厦業主立案法團LDBM119 of 2006. Deputy Judge Wong found that there is a clause for payment on account. And there is also a clause of payment when the Manager do not have sufficient fund. Hence the deed has set out how to share the expense and section 22 of the BMO has no application. And in our case, clause 5(g)(ii) may be the payment on account provision. When there is deficiency, clause 5(h) provides for additional funding and clearly set out how the expenses are to be apportioned and collect. Reading Clause 5(g) and (h) together, they set out the provision on how to collect funds and contributions from the owners to cover the expenses under Clause 5(f). Hence they are the provision for payment of the expenses under clause 9(f) and clause 9 has no application. 52.While there is no express formula for the management charges, I note that the charges against each shop differs. There are different charges for different units in the upper floors. There appears to be a formula behind and I do not intend to speculate. I could not say that the management shares are fixed arbitrarily. 53.Further, if the expenses are to be shared between the owners according to their undivided shares in Chester House, this is the easiest thing to state in the relevant clause. And this is the position of the deed of mutual covenant in Hang Sung Building’s case. 54.In conclusion, I found that clause 5(g)(ii) and (h) are the provisions in the Deed for payment of the charges under Clause 5(f). I should now move to consider if the costs and charges are also covered by clause 5(g)(iii), and if so, what would be the effect on the sharing proportion. 55.I remind myself that, in interpreting a Deed of Mutual Covenant, one should make sense out of it, being it common sense or business sense. I do not believe clause 5(g)(iii) is a provision for the general repair and maintenance of the common areas of Chester House and the common facilities, when clause 5(f) has made sufficient and detail provision. Clause 5(g)(iii) provides that “the costs charges and expenses for the erection installation or construction of metal grille shutter or iron gate management office watchman post caretaker room burglar alarm system intercommunication system close circuit television and all decoration alteration addition improvement to the common areas or the common services or any other works as the Manager shall think fit”. While the clause provides for erection installation alteration addition improvement, it is not a clause for general maintenance and repair. In fact, this clause is very wide to cover “any other works as the Manager shall think fit”. This may be a catch all provision to allow the Manager a wide discretion to have some new constructions, alteration or addition or improvement to the common areas or common service. We are now concern with renovation of the Chester House because of its old age and maintenance need, as stated in the surveyors’ report. Some items in the Works may be additions. But generally, they are maintenance and repair works, and as admitted, covered by Clause 5(f). I also refer to the answer given by Mr. Chan in cross examination which shows that the Works are maintenance and repair of the common area and facilities. Clause 5(g)(iii) has no application. 56.And I only add that in the Grounds of Opposition, it has only been mentioned that the apportionment is in accordance with Clause 9. There is no reference to Clause 5(g)(iii). There is no suggestion that the Respondent relies on this clause for apportionment of the costs and expenses of the Works. 57.If I were wrong, and if the Works could come under Clause 5(f) and Clause 5(g)(iii), the charging provision of these 2 clauses are different. As stated, under Clause 5(f), the charges are to be charged according to the provision of the DMC. And under Clause 5(g)(iii), the charges are at the discretion of the Manager. If the Respondent wish to engage Clause 9(g)(iii) for the greater flexibility in determining how the expenses are to be shared, I believe this should be so stated clearly in the Notice of the 1st and/or 2nd EGM. I do not have the notice. What happens is that at the EGM, the owners were given an estimation of their shares in the contribution, which is calculated according to the management shares. 58.Mr. Ng submits that the estimate is part of the resolution and is the election of the Respondent on how to apportion the contribution, if the expenses come under Clause 5(g)(iii). Reading the minutes, I am not too sure if the estimate forms part of the resolution. But that must be a document placed before the general meeting when the owners passed the resolution and it must be an election by the Respondent on how to apportion the contribution if the resolution is passed. As far as the costs and expenses of the Works are concerned, the Respondent would be bound by their election. 59.In any event, clause 5(g)(iii) has provided that the costs are to be fixed as the Manager thinks fit. As there is provision for payment in clause 5(g)(iii), clause 9 has no application (see judgment of Hon. Tang VP in Sam Woo’s case). 60.Accordingly, I am not convinced that Clause 5(g)(iii) applies. And if I were wrong, I found that the Respondent has elected to apportion the costs and expenses according to the management shares. 61.In conclusion I found in favour of the Applicant and grant the declaration as claimed. 62.And I give an order nisi that the Applicant do have the costs of this Application to be taxed at District Court Scale if not agreed with certificate for Counsel for the trial. The order nisi shall become absolute in 14 days. 63.Finally, I have to thank both counsels for their able assistance.
Mr Felix NG instructed by M/S S. K. Lam, Alfred Chan & Co. for the Applicant Mr Victor LEE instructed by M/S Henry Wan & Yeung for the Respondent |
Cases cited in this judgment