THE INCORPORATED OWNERS OF BLOCK NOS. 41, 42, 43 & 44 BAGUIO VILLA v. NG KIN MAN DESI

DCCJ5162/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5162 OF 2005

D E C I S I O N

1.  This is an application to appeal the order of Master Tracy Chan, dated 5 December 2005, wherein she granted summary judgment in favour of the plaintiff in this action in an application by the plaintiff under Order 14 rules 1 and 2 of the District Court Ordinance.

2.  In this action the plaintiff applies for contribution for renovation costs in respect of property known as Block 41, 42, 43 and 44 of Baguio Villa, 550 Victoria Road, Hong Kong.  The defendant is and was the registered owner of the 1st floor, together with a yard and portion of the flat roof adjoining thereto of Block 43 Baguio Villa, together with car park space Nos. 114 and 117 on the UG/Floor of Blocks 41, 42, 43 and 44 Baguio Villa (hereinafter referred to as “the building”).

3.  In this appeal the defendant states the following arguments:

(1)   the defendant states that at the time of the purchase of their property the common areas or facilities of the building were delivered to the management company.  The management company should have ensured that the condition of the common parts and facilities were in an acceptable condition;

(2)   before their purchase of their property, they wrote to the management company on 1 May 1998 requesting them to submit a surveyor’s report relating to the common facilities.  They received no reply; 

(3)   after the incorporation of the plaintiff, that must have been a date after transfer of all the undivided parts of the building to respective owners, the plaintiff is responsible, on behalf of all owners, to manage all the common facilities of the building.  They should have ensured that the management company has received delivery of the common facilities in a good condition and to inform all the landlords of this;

(4)   they say that this appears not to have been done.  Because of that there is a breach of section 20(2) of the Sales of Goods Ordinance.  They say that the property rights of their property has therefore not been transferred to them; any problems related to the common facilities of the property should be the responsibility of the Government who was the vendor of the building;

(5)   the plaintiff neglected to obtain from the management company or the Government a report on the condition of the common facilities at the time of their delivery before embarking on these renovations.  They failed in a very important and necessary procedure;

(6)   as the property in the common facilities have not passed to the defendants, they say they are not liable in this claim.

4.  In my view, the defendant’s arguments are misconceived and have no legal basis, for the following reasons.  The management company does not own the common facilities of the building.  They could not have taken delivery of the common facilities of the building.  They were merely appointed to manage and had no legal right to take delivery of the common facilities on behalf of all the owners of undivided shares.

5.  The defendant sought to refer to paragraph 12 of the Deed of Mutual Covenant relating to the power and duties of the manager.  These rights would only come into effect upon the building after the building has been transferred by the Government and not before.  Their responsibility to manage can only materialise after the building comes into the ownership of the owners of the undivided parts or shares.  Hence paragraph 12 does not apply to the time before their power and duties as manager arises.  Reference to paragraph 12 of the Deed of Mutual Covenant is misconceived. 

(1)   there is no legal basis nor contractual basis to support the defendant’s view that the management company has the responsibility to ensure that the common facilities are in a good or acceptable condition at the time of the transfer of the undivided parts or shares to respective owners;

(2)   the management company is not a party to this action.  Any of their acts or omissions are not relevant to this claim;

(3)   the Sale of Goods Ordinance does not apply to a sale of real property or landed property.  Definition of goods in the Sale of Goods Ordinance make this clear;

(4)   there is no right or liability on the part of the incorporated owners to prepare a report or to obtain a report from the Government related to the condition of the common facilities at the time of transfer of the undivided parts or shares of the building.  There is no legal basis for attaching this responsibility to them nor any contractual basis.  The incorporated owners was not as yet formed before the transfer of the undivided parts or shares of the building.  Prior to their formation they would not be able to do what the defendant says they have to do;

(5)   the common facilities of the building were included in the total number of undivided parts or shares of the building and were not a separate entity apart from that.  The property of the defendant’s undivided parts or shares of the building had been properly transferred to the defendant and the defendant is then owner of such and has the responsibility to contribute to the renovations costs of the common facilities or common parts of the building. 

6.  Therefore, I find that there is no defence to the action.  The judgment of Master Tracy Chan on 5 December 2005 is correct and is upheld.  The appeal is dismissed.