THE INCORPORATED OWNERS OF WESTLANDS GARDEN v. OEY CHIOU LING AND ANOTHER

[English Translation]
LDBM 159 of 2009

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 159 OF 2009

_________________

BETWEEN

_________________

_________________

J U D G M E N T

_________________

BACKGROUND

1.  The Applicant is the owners’ corporation of Westlands Garden (“the Building”) which is located at No. 4, Westlands Road, Quarry Bay, Hong Kong. The two Respondents, who are blood sisters, bought Flat E1803 (“Flat E1803”) on the 18^thFloor ofBlock E of the Building on 3 November 1977 as their residence. On 19 May 2008 the two Respondents bought an adjoining flat at Flat E1801 on 18^th Floor of Block E of the Building (“Flat E1801”). They turned the two flats into a bigger single unit by connecting them together.

2.  In early August 2008, many residents in Block E of the Building complained to the management office about the loud noises coming from the two flats of the Respondents where renovation was underway. The management staff went to inspect the premises and found that a partition wall between Flat E1801 and Flat E1803 (“the partition wall”) was removed.

3.  The Applicant took the view that the structural part of the partition wall was within the meaning of “common parts” as defined in the Building’s Deed of Mutual Covenant (the “DMC”) and/or the Building Management Ordinance (the “Ordinance”), and that the removal of the partition wall by the Respondents without the consent of the Applicant amounted to a breach of the relevant provisions in the DMC and the Ordinance.

4.  Despite repeated warnings to the Respondents, the situation was not been remedied. The Applicant then made an application to the Lands Tribunal for the following order: -

“(a) An injunction to restrain the Respondents, their employee or agent from continuing to allow the removal of the partition wall;

(b) Further or alternatively, the Respondents, their employee or agent be ordered to reinstate the partition wall;

(c) Further or alternatively, the Applicant be given permission to enter the two flats to reinstate the partition wall and the Respondents be ordered to bear the expenses incurred;

(d) Damages;

(e) Interest at a rate to be determined by the Lands Tribunal in accordance with the High Court Ordinance; and

(f) Costs.”

5.  The Respondents admitted that they made arrangements in August 2008 to remove the partition wall but considered that the partition wall was not a load-bearing one and also that it was not within the meaning of common parts as defined in the DMC and / or the Ordinance. They said that its removal would not result in any damage to the Building. Nor would its removal affect or hinder the use and enjoyment of other units in the Building or of the common areas.

6.  The Respondents also considered that should the removal of the partition wall amount to a breach of the DMC or the Ordinance, by reason of the following acts, the Applicant had waived its right to sue the Respondents , and/or the Applicant could no longer take any action against the Respondents: -

(1)             The Applicant set out in a detailed list in the Owners’ Manual of the Building the shear walls, columns and beams that could not be removed / converted. But the partition wall was not included in the list.

(2)             A number of owners of other units in the Building had removed or converted the non-load-bearing walls, but the Applicant did not take any action against them.

7.  I shall make findings on each of the grounds of defence of the Respondents.

Whether the partition wall is a load-bearing wall or not

8.  The Applicant originally took the view that the partition wall was a load-bearing wall. The Respondents’ expert proved that it was not. Yet, when the Applicant’s expert gave evidence, he agreed that the partition wall was not a load-bearing wall. Therefore, the Applicant no longer raises any issue on this matter.

9.  In view of the opinion given by the Respondents’ expert and the present stance of the Applicant, I find that the partition wall is not a load-bearing wall. However the two parties still have disputes as to whether the a non-load-bearing wall forms part of the common parts.

Whether the partition wall forms part of the common parts

10.  Pursuant to section 2 of the Ordinance, the definition of “common parts” (公用部分) is: -

“(a) the whole of a building, except such parts as have been specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner; and

(b) unless so specified or designated, those parts specified in Schedule 1”.

11.  It is provided in paragraph 1 of Schedule 1 that “common parts” include “external walls and load bearing walls, foundations, columns, beams and other structural supports.”

12.  The Respondents took the view that the above definition of “common parts” provided in paragraphs (a) and (b) of the Ordinance should be read conjunctively. The pre-requisite was to prove that it was not such a part as has been specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner before it could be considered whether that part was within the common parts as specified in Schedule 1. If a certain part was not specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner, one should first consider whether that part under the common law or statutory presumption belonged to the owner. If it could be so presumed, one also needed to consider whether that part was within the common parts specified in Schedule 1. If so, the contrary intention was found and that the part should be regarded as within the common parts.

13.  The Respondents also regarded the word “and” between the abovementioned paragraphs (a) and (b) to be a conjunctive. In other words, the requirements in both paragraphs (a) and (b) had to be fulfilled before a part could qualify as “common parts”. The Respondents cited the following passage in Suffiad J’s judgment in Lily Tse Lai Yin and others v. The Incorporated Owners of Albert House and others, HCPI 828/97 to support their argument:

“The flaw in this argument is that Part (a) of the definition of “common parts” under the Building Management Ordinance is worded such that the common part of any building can only be determined by a process of elimination – eliminating all those parts of the building specified or designated in an instrument registered in the Land Registry as being for the exclusive use, enjoyment or occupation by an owner. Moreover, Part (b) of the definition must be read in conjunction with Part (a) and nothing in the Ordinance suggests that those parts listed in the First Schedule of the Building Management Ordinance is an exhaustive list, otherwise Part (a) becomes unnecessary. Therefore the fact that “canopy” is not mentioned in the DMC or in the First Schedule does not, in my view, determine the issue.”

14.  I do not agree with the Respondents’ argument at all. The Respondents misunderstood the judgment of Suffiad J, who never said that both the above paragraphs (a) and (b) must be satisfied before a part could qualify as common parts. What Suffiad J said was merely that when one read paragraph (b), he must at the same time read paragraph (a) as well.

15.  Assuming what the Respondents said was correct, it would mean that all common parts must fulfill paragraph (b), which were those parts specified in Schedule 1. That would render paragraph (a) completely useless. Suffiad J also mentioned in the above judgment that the list in Schedule 1 could not be an exhaustive list of all the common parts. The Respondents’ argument did not reflect in the slightest what Suffiad J said and was utterly unreasonable. I do not accept the argument that common parts can only be those parts listed in Schedule 1. Nor do I accept that both paragraphs (a) and (b) must be fulfilled to qualify a part as common parts.

16.  I understand the abovementioned paragraphs (a) and (b) to mean that the whole of a building are common parts, and those parts specified in Schedule 1 are common parts as well. However if certain parts have been specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner, those parts are not common parts.

17.  The word “and”, the conjunctive according to the Respondents, should be understood as the whole of a building being common parts, as well as those parts specified in Schedule 1. This word “and” has the meaning of “or”, so it is not meant to be a conjunctive as submitted by the Respondents.

18.  The common law or statutory presumption referred to by the Respondents is nowhere mentioned in the above paragraphs (a) and (b). I cannot see why the court should consider whether a part belongs to the owner under the common law or statutory presumption before determining whether it is within the meaning of common parts.

19.  It thus follows that to determine whether the partition wall is within the meaning of common parts, it should first be ascertained whether the partition wall is part of the building or of the common parts specified in Schedule 1 before it can be decided whether the partition wall is a part that has been specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner.

20.  As the partition wall does not fall within the meaning of “external walls and load bearing walls, foundations, columns, beams and other structural supports”, and is not part of the common parts specified in Schedule 1, it does not fulfill the definition in paragraph (b). However the partition wall is certainly part of a building because it is included in the building plan of the Building. Provided that the partition wall is not specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner, it is within the common parts described in paragraph (a).

21.  But the two parties disputed over whether the partition wall was specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of its owner.

22.  Firstly, it is not specified or designated in the DMC that the partition wall is for the exclusive use, occupation or enjoyment of its owner. The Respondents cited the following clauses from the Assignment Deeds of Flat E1801 and Flat E1803, which were instruments registered in the Land Registry: -

Flat E1801

“the Vendor at the request and by the direction (hereby testified) of the Confirmor DOTH hereby assign and confirm unto the Purchaser ALL THOSE … TOGETHER with the sole and exclusive right and privilege to hold use occupy and enjoy FIRST ALL THAT FLAT NO. E1801 … as shown colored Pink on the Floor Plan annexed hereto … and all privileges easements and appurtenances thereto belonging or appertaining And all the estate right title interest property claim and demand whatsoever of the Vendor and the Confirmor therein and thereto …”

Flat E1803

“the Vendor DOTH hereby assign unto the Purchaser ALL THOSE … TOGETHER with the sole and exclusive right and privilege to hold use occupy and enjoy FIRST ALL THAT FLAT NO. E1803 … as shown colored Pink on the Floor Plan annexed hereto … and all privileges easements and appurtenances thereto belonging or appertaining And all the estate right title interest property claim and demand whatsoever of the Vendor and the Confirmor therein and thereto …”

23.  The Respondents took the view that the developer in the first Assignment Deed retained the right to use the outer walls of the Building and the structural parts, but did not retain specifically the right to use the non-load-bearing walls within individual flats. On the contrary, it was clearly stated that the developer assigned with the land all rights and interests belonging or appertaining to that land or occupied or enjoyed with that land.

24.  The Respondents cited the definition of “land” in section 2 of the Conveyancing & Property Ordinance which provides that it includes “the whole or part of an undivided share in land and any estate, right, interest or easement in or over the whole or part of an undivided share in land” and “things attached to land or permanently fastened to anything attached to land”.

25.  The Respondents also cited section 16 of the Conveyancing & Property Ordinance which provided that “unless the contrary intention is expressed in the assignment, an assignment shall operate to assign, with the land, all rights, interests, privileges, easements or appurtenances in, over, belonging or appertaining to that land or at the time of the assignment used, held, occupied or enjoyed with that land and things attached to the land or permanently fastened to anything attached to the land”.

26.  The Respondents submitted that the partition wall was attached to Flat E1801 and Flat E1803 or permanently fastened to the property to be used, held, occupied or enjoyed with the property. Therefore the partition wall should be deemed as part of an undivided share of the property. The Respondents considered that this interpretation was consistent with the views in some precedents (including Cubitt v. Porter 108 E.R. 1039, Hope Brothers Ltd. v. Cowan [1913] 2 Ch 312, Wealthy China Trade Ltd. v. Huie Man Kit & others [1999] 3 HKC 832 and Goldfoot v. Welch [1914] 1 Ch 213) and in some texts (including Barnsley’s Conveyancing Law and Practice by DG Barnsley, 3^rd Edition, and The Law of Real Property by Robert Megarry and Sir William Wade, 7^th edition).

27.  The Respondents were of the view that if Flat E1801 and Flat E1803 were owned by different owners, the two owners of the partition wall would become tenants in common. When the two flats were owned by the same owner, they would have the absolute right to remove or convert the partition wall.

28.  I do not agree with the Respondents’ views. Flat E1801 and Flat E1803 are not included in the pink-colored portion of the Deed of Assignments. The partition wall cannot be regarded as a wall inside Flat E1801 or Flat E1803, so the developer has not assigned that partition wall to the next buyer.

29.  The Respondents may perhaps use the surfaces on both sides of the partition wall, but they do not have the exclusive use of the location where the partition wall is situated. Nor do they own the structural part of the partition wall.

30.  All the provisions and precedents cited by the Respondents were in relation to an issue on land, but that was different from the right to use units in a multi-storey building. The individual owners of units in a multi-storey building do not own the whole of the land, but only undivided shares in the land. As Le Pichon JA pointed out in the Court of Appeal’s case of Incorporated Owners of Elite Garden v. Profit More Co. Ltd. [2002] 2 HKLRD 518: -

“That decision is of no assistance when one is here dealing with the system of landholding in multi-storey buildings, which is peculiar to Hong Kong. When analyzed, what is owned are undivided share in the land with exclusive possession to a particular unit. True it is that the Respondent is the owner of the surface of the exterior walls, but that is not to be equated to the exterior walls themselves.”

31.  In the case of Nation Group Development Ltd. v. New Pacific Properties Ltd. [2001] 1 HKLRD 375, the Court of Final Appeal delivered the following judgment: -

‘The same is true of exclusive use of the “entire first floor” which is the purchaser contracted to acquire in the present case. As Godfrey JA pointed out in the Court of Appeal, the parties must be taken to have intended that the purchaser was to be given “the right to the exclusive use of the floor and ceiling surfaces of the First Floor and of the air space between them,” in other words, of the entire volume of the first floor space, but not use of the underside of the concrete slab.’

32.  Although the pink-colored portions referred to in the Deeds of Assignment are for identification purpose only (see Alan Wibberley Building Ltd. v. Insley [1999] 2 All ER 897), the above precedents also clearly show that save the right to use the surfaces of the partition wall, the Respondents do not own the structural part of the partition wall. The Respondents only own that partition wall jointly with other owners in the Building who own undivided shares in the Building.

33.  I accordingly find that the partition wall has not been specified or designated in the Deeds of Assignment of Flat E1801 and Flat E1803 as being for the exclusive use, occupation or enjoyment of the Respondents. The partition wall is therefore not excluded from the common areas by any instrument registered in the Land Registry, and is definitely part of the common parts of the Building.

Whether the Respondents have breached the DMC/the Ordinance

34.  The Applicant did not indicate clearly which clause(s) in the DMC the Respondents had breached. But the Applicant submitted in the final submission that the Respondents had clearly contravened section 34I(1)(a) of the Ordinance because they removed on their own volition the partition wall without obtaining the Applicant’s permission. He went on to submit that section 34I(2) of the Ordinance provided that any person who contravened subsection (1) shall be deemed to be in breach of an obligation imposed on him by the DMC in respect of the Building.

35.  It therefore follows that I only need to make a finding regarding whether the Respondents have breached section 34I(a) of the Ordinance. If so, the Respondents would be deemed to be in breach of an obligation imposed on him by the DMC in respect of the Building.

36.  It is provided in section 34I(1)(a) that “No person may convert any part of the common parts of a building to his own use unless such conversion is approved by a resolution of the owners' committee (if any)”.

37.  As aforesaid, I find that the partition wall is part of the “common parts” of the Building. Apparently when the Respondents removed the partition wall on their own volition, they converted part of the common parts to their own use. As the Respondents had not obtained the consent of the Applicant before they removed the partition wall, the Respondents definitely contravened the stipulations in section 34I(1)(a) and would be deemed to be in breach of an obligation imposed on them by the DMC in respect of the Building.

38.  Moreover, the Applicant also alleged that the Respondents had breached clause 4 of Schedule 2 of the DMC because the removal of the partition wall constituted a structural alteration. It is provided in clause 4 of Schedule 2 of the DMC that: -

“Not to make any structural alteration to any shop, roof, flat or car parking space of which he is the owner which may damage, or affect or interfere with the use and enjoyment of any other part of any building on the said land whether in separate or common occupation or use, nor cut, injure, damage, alter or interfere with any part or part of any building in common use …”

39.  As a matter of fact, whether the removal of the partition wall constituted a structural alteration bears no relevance to the Applicant’s application. Provisions in the first half of clause 4 of Schedule 2 of the DMC are only relevant to the structural alteration of those parts of a property owned by an individual owner. As the partition wall is not owned by the Respondents but is part of the common parts, the provisions in the first half of clause 4 of Schedule 2 are not applicable at all.

40.  As for the latter half of the provisions in clause 4 of Schedule 2, the Applicant did not need to prove any structural alteration because the Respondents could not “cut, injure, damage, alter or interfere with” any of the common parts. Since the removal of the partition wall was definitely an act to “cut, injure, damage, alter or interfere with” the common parts, the Respondents must have contravened the stipulations in the latter half of clause 4 of Schedule 2.

41.  Accordingly, I find that the Respondents did contravene section 34I(1)(a) of the Ordinance and clause (4) in Schedule 2 of the DMC.

Whether the Building was damaged, affected or interfered with

42.  I agree with the evidence of the Respondents that the removal of the partition wall would neither damage the Building nor affect or interfere with the enjoyment of other flats or the common parts of the Building, but the partition wall is not owned by the Respondents as it is part of the common parts. The Respondents have no right whatsoever to remove the partition wall. Therefore regardless whether the Building has been damaged, affected or interfered with or not, the Respondent does not have a defense in this regard.

The Applicant’s acts

43.  Although the Applicant listed in the Owners’ Manual of the Building that only the shear walls, columns and beams could not be removed or converted and did not include the partition wall in that list, I do not agree that the Applicant has thereby waived its right to take action against the Respondents or that the Applicant is thereby estopped from claiming against the Respondents. The Respondents are under an obligation to act in accordance with the DMC and the Ordinance. The Owners’ Manual of the Building only serves as a reminder and is not an exclusive set of the rules that the Applicant requires the Respondents to abide by. The Respondents’ defense in this regard is utterly unreasonable and therefore cannot stand.

44.  I also accept the evidence of the Applicant that they were not aware of any removal or conversion of the non-load-bearing walls in other flats alleged by the Respondents. Therefore the lack of action on their part cannot be a basis for arguing that they have waived their right or that they are estopped to lodge a claim.

Conclusion

45.  By the aforesaid reasons, I allow the Applicant’s application. But as the Applicant has not adduced any evidence on the loss they suffered, no order is made in respect of damages or interest. As the partition wall has been removed, item (a) in the Applicant’s application is no longer necessary.

46.  By the aforesaid reasons, I hereby grant the following order:

(1)             The Respondents, their employee or agent do within 28 days reinstate the partition wall;

(2)             If the Respondents fail to comply with the order in paragraph (1) above, the Applicant shall be entitled to enter Flat E1801 and Flat E1803 to reinstate the partition wall, and the expenses incurred shall be borne by the Respondents; and

(3)             Costs order nisi: The Respondent do pay the Applicant costs of the proceedings herein, with certificate for counsel, to be taxed on District Court Scale if not agreed. If there is no further application on costs within the next 14 days, the costs order nisi herein shall become absolute.