BARNES & NOBLE PROPERTY MANAGEMENT LTD. AND ANOTHER v. THE INCORPORATED OWNERS OF KWAN YICK BUILDING PHASE III

LDBM 104/2001

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Building Management Application No. LDBM 104 of 2001

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J U D G M E N T

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The Claim

1. The first named Applicant is the Manager of the Basement Car Park ("the Basement") in Kwan Yick Building, Phase III, Nos. 271-285 Des Voeux Road West, Hong Kong ("the Building"). The second named Applicant is the owner of the Car Parking Space No. 27 in the Basement. The Applicants are authorized by all the car park owners of the Basement to bring the present proceedings against the Respondent.

2. The Respondent is the Incorporated Owners of the Building incorporated under and pursuant to the Building Management Ordinance, Cap. 344 ("the BMO"). The Respondent is also the Manager of the Building.

3. The structural columns at the Basement are in serious dilapidated and defective conditions. The Applicants contend that the damages were caused by severe rising damp from the foundation to the structural columns. A Building Authority Order No. INVO34/HK/98 dated 25th May 1998 was issued in respect of the same.

4. The Applicants further contend that under the Deed of Mutual Covenant of the Building ("the DMC") and the BMO, it is the duty and obligation of the Respondent to repair these structural columns, and hence seek for the following orders:-

"(1) A declaration that:

(a) The structural columns with dilapidations/defects at the Basement of the Building as identified in a Water Leakage Inspection Report dated 25th January 1999 prepared by L C Surveyors Ltd. form part of the common parts and/or main structure of the Building;

(b) It is the duty and obligation of the Respondent as the Incorporated Owners of the Building under the Deed of Mutual Covenant Memorial No. 1539602 in respect of the Building and the Building Management Ordinance Cap. 344 to repair the said defects in the said structural columns as required by a Building Authority Order No. INVO34/HK/98 dated 25th May 1998.

(2) An order that the Respondent do indemnify all the owners of all Car Parks at Basement of the Building against all costs and expenses for repairing the said defects in the said structural columns as required by the said Building Authority Order No. INVO34/HK/98."

The Defence

5. The Respondent, however, contends that:-

(1) The owners of the Basement have exclusive use of the Basement and the Basement does not form part of the common parts of the Building;

(2) Some parts of the damages are exclusively inside or directly above the car parking spaces inside the Basement and the first named Applicant shall have responsibility for the repair and maintenance of those parts of the damages;

(3) The damages were not solely caused by the rising damp, but were caused or contributed to by:-

(a) The rusting of the steel corner guards installed at the structural columns by the first named Applicant;

(b) The unsatisfactory work of raising the foundation level of the Basement by the first named Applicant, which has led to the accumulation of water inside the Basement; and

(c) The failure of the first named Applicant to install sufficient ventilation system for the Basement; and

(4) The steel corner guards were installed for the benefit of the owners of the car parking spaces of the Basement and therefore the owners of the Basement shall have the responsibility to repair and maintain the columns.

The Issues

6. According to the Water Leakage Inspection Report dated 25th January 1999 prepared by LC Surveyors Ltd., there are various defects located at the structural columns, beams and walls of the Basement, consisting of spalling, detachment of plastering, rusting and detachment of steel corner guards. Most of the defects, however, are located at the lower parts of the structural columns. The orders sought by the Applicants concern only the structural columns, but not the beams and walls of the Basement. Thus, I shall confine my judgment to the structural columns only.

7. On the other hand, the Respondent has raised the issues about whether the owners of the Basement have exclusive use of the Basement and whether the Basement forms part of the common parts of the Building. The crux of the matters, however, should be whether the owners of the Basement have exclusive use of the structural columns, not the Basement, and whether the structural columns, not the Basement, form part of the common parts of the Building.

8. The issues before me are therefore as follows:-

(1) Whether the Applicants and the owners of the car parking spaces in the Basement own or have exclusive use of the structural columns;

(2) Whether the structural columns are common parts of the Buildings;

(3) The cause or causes for the damages of the structural columns; and

(4) Whose responsibility to repair and maintain the structural columns.

Exclusive use

9. According to the report of the Applicants' expert (exhibit "A3"), the structural columns in the Basement extend up through the entire building and are integral parts of the structural frame. The Respondent does not seem to dispute this. In fact, in the report of the Respondent's expert (exhibit "R2"), the Respondent's expert referred these structural columns as concrete load bearing structures, and he also concluded that if the conditions of these damaged concrete structural columns supporting the weight of the residential units on top deteriorated, they could affect the structural safety of the two blocks of residential units on top of the podium.

10. I therefore accept the evidence of the Applicants' expert and find that the structural columns in question are integral parts of the structural frame for the whole building.

11. As integral parts of the structural frame for the whole building, the structural columns cannot be for the exclusive use and enjoyment of the Applicants or the owners of the Basement. They should be for the use of all the owners of the Building. It is misconceived for the Respondent to argue that because the Applicants have exclusive possession of the Basement and the structural columns are inside the Basement, the Applicants also have exclusive possession of the structural columns. If the Respondent's contention were correct, it would mean that the Applicants could remove or damage these structural columns as they wished without having any responsibility towards the other owners of the residential flats above the podium. This simply cannot be right.

12. Thus, even assuming that the Applicants have exclusive possession of the Basement, it does not mean that they have exclusive possession of the structural columns inside the Basement.

13. Moreover, I do not accept the Respondent's contention that the Applicants or the owners of car parking spaces in the Basement have exclusive possession of the Basement as a whole. In the Assignment dated 19th December 1980 (Memorial No. 2024872), the developer of the Building, China Provident Development Company Limited, assigned to the first purchaser, Hail Yonge Limited, "ALL THAT the BASEMENT FOR CAR PARKING of the said building as shown coloured pink and pink hatched blue on the Basement Floor Plan...EXCEPTING AND RESERVING unto the Vendor and the other co-owners...the exclusive right to the use occupation rents and profits of...all other parts of the said building not intended for common use...SUBJECT to and with the Deeds of Mutual Covenant".

14. There is no specific mentioning that the structural columns were assigned to the first purchaser. The structural columns were not coloured pink or pink hatched blue, but marked as solid black lines on the Basement Floor Plan. The developer has also reserved to his own use those parts of the Building not intended for common use. I do not accept that by the said Assignment, the developer has assigned to the first purchaser the Basement together with those parts of the structural columns in the Basement. By the same token, the subsequent assignments would not have transferred the ownership of the structural columns to subsequent owners. Thus, I do not find that the Applicants or the owners of the car parking spaces in the Basement own or have exclusive possession of the structural columns.

15. The Respondent also argues that the owners of the car parking spaces in the Basement have treated the whole area inside the basement as their own property by relying on the following matters:-

(1) The predecessor-in-title of the owners of the Basement redesigned and subdivided the Basement into more car parks;

(2) The owners of the Basement have their own management company;

(3) The owners of the Basement or their agent raised the floor level of the Basement without informing the Respondent;

(4) The owner of the Basement or their agent mounted the corner guards on the columns;

(5) The owners of the Basement or their agent erected a tool bar and a toll-house at the entrance of the Basement;

(6) The owners of the Basement of their agent put a plate marking 'Private Road' in Chinese characters at the entrance of the Basement; and

(7) Only the vehicles permitted by the agent of the owners of the Basement can enter the Basement.

16. However, save for point (4) above, all these matters do not refer to the possession of the structural columns, but to the possession of the Basement. As aforesaid, the crux of the matters is not whether the Applicants or the owners of the car parking spaces have possessed the Basement but whether they have possessed the structural columns. It is therefore not necessary for me to deal with these matters save for point (4).

17. From the evidence of the Applicants' expert, it is clear that there are 2 types of corner guards inside the Basement, Type A and Type B. Type A, about 360 in number, were most likely to have been installed at the time when the Building was constructed. Type B, about 80 in number, were installed by the previous owner of the Basement when additional car parking spaces were created. I accept the evidence of the Applicants' expert and find that Type A corner guards are part and parcel of the original columns and hence they have nothing to do with the Applicants. As to Type B corner guards, although they were installed by the Applicants' predecessor-in-title, it is clear and I do accept that they were installed simply to protect the structural columns from being damaged by cars. I do not accept that they were installed for the benefit of the owners of the car parking spaces in the Basement as suggested by the Respondent. I do not find that by putting up the corner guards to prevent the structural columns from being damaged, it would amount to possession of the structural columns, or that the Applicants and the car park owners have used the structural columns in any other ways. They remain as structural elements supporting the entire Building.

18. It is therefore my finding that the Applicants or the owner of the car parking spaces in the Basement do not have exclusive possession of the structural columns.

Common parts

19. Section 2 of the BMO defines "common parts" as:-

"(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 the First Schedule;"

20. The First Schedule of the BMO stipulates that the following parts, inter alia, are common parts:-

"1. External walls and load bearing walls, foundations, columns, beam and other structural supports."

21. It is clear that the structural columns in question are included in the First Schedule of the BMO. Since there is no specific mentioning in any of the instruments registered in the Land Registry that the structural columns were for the exclusive use, occupation or enjoyment of an owner, the structural columns fall within the definition of "common parts" in Section 2 of the BMO.

22. Since it is also my finding that the Applicants or the owners of the car parking spaces in the Basement do not have exclusive possession of the structural columns, the structural columns remain as common parts of the Building.

Cause or causes for the damages

23. The Respondent's expert gave evidence that it was highly possible that the fish lugs or wall plugs of the corner guards contacted the reinforcement bars inside the structural columns which led to the rusting of the reinforcement bars and that while the corner guards were installed, some air were trapped inside the structural columns and caused the rusting of the reinforcement bars. The Respondent's expert opined that if there were no such corner guards, there would be no such serious damages inside the Basement.

24. I do not accept this contention. From the evidence of the Applicants' expert, the damages were not confined to the structural columns. They covered the beams and walls of the Basement as well. Most of the corner guards, i.e. Type A, were not installed by the Applicants, but were probably installed at the time when the Building was built. The explanations offered by the Respondent's expert fail to explain the damages caused to these corner guards, the beams or the walls at all.

25. The Applicants' expert, on the other hand, gave very convincing evidence that the defects in the structural columns and the rusting of corner guards were both caused by the rising damp. In fact, the Respondent's expert under cross-examination agreed that the defects in the structural columns were most serious at the bottom and then lessening upwards. This confirms with the explanation of the Applicants' expert that the damages were caused by rising damp, which went up to the structural columns through capillary action.

26. The Respondent's expert also admitted under cross-examination that he did not actually see the lugs touching the reinforcement bars and there was no need for the lugs to be joined to the reinforcement bars. Moreover, if the rusting were passed from the corner guards through the lugs to the reinforcement bars, the defects of the structural columns would be most serious at the location of the lugs, but this is not the case here.

27. In the premises, the Respondent cannot prove at all that the damages at the structural columns were caused or contributed to by the rusting of the corner guards.

28. As to the raising of foundation level, I accept the evidence of the Applicants' expert that the laying of the new concrete floor was successfully done. The granular layer between the old floor slab and the new floor slab has in fact the function of stopping or greatly reducing the capillary action of the rising damp. The Respondent's expert agreed to this under cross-examination. Thus, there is absolutely no basis or evidence to support the Respondent's contention that the raising of the floor level had caused damages to the structural columns.

29. The Respondent also contends that there is insufficient ventilation system in the Basement, but again there is no evidence to support this contention. The Applicants have shown that there are 4 ventilation fans in the Basement, which I accept. The Respondent's expert was not aware of these fans but simply opined that they could not be sufficient for the Basement. I do not think that the opinion of the Respondent's expert on this point has any value when he has not actually seen the real fans in question. Moreover, the evidence that there was no mould growth on the walls inside the Basement and the peeling off of the paint only confined to the base portions of the walls and columns clearly indicate that there is no problem with the ventilation system. Otherwise, there should be moulds and peeling off of paints all over the walls and columns, rather than just confining to the base portion.

30. In the circumstances, I find that the cause of damages to the structural columns were due to the rising damp rather than the rusting of corner guards, raising of the floor level or insufficiency of ventilation system as alleged by the Respondent.

Whose responsibility

31. Section 18(1)(a) of the BMO stipulate that:-

"(1) The corporation shall-

(a) maintain the common parts and the property of the corporation in a state of good and serviceable repair and clean condition;"

32. Clause 9(d)(4) and (5) of the DMC stipulate that the Manager shall have the following duties:-

"(4) To keep the common parts of the said building reasonably clean and in good sanitary state and condition.

(5) To repair and keep in good repair and condition the main structure, the Main Roof and the Flat roofs and fabric of the said building its equipment, apparatus and services intended for common use and the rooms or places allocated for the installation or affixing of such equipment apparatus, and services and common areas and when necessary to replace any part or parts thereof which require replacement."

33. It is clear that the Respondent, as Incorporated Owners and Manager of the Building, has a duty under Section 18(1)(a) of the BMO and Clause 9(d)(4) and (5) of the DMC to maintain and repair the common parts. As it is my finding that the structural columns are common parts of the Building and the damages were not caused by the Applicants or the owners of the car parking spaces as alleged by the Respondent, the Respondent is clearly under a duty to repair the structural columns.

34. The Respondent, however, relies on the case of Uniland Investment Enterprises Ltd. v. Incorporated Owners of Sea View Estate & Anor [1999] 33 CPR 33 to say that Section 34H of the BMO confers on a person who owns any part of the Building or has the right to exclusive possession of any part of the Building, or has exclusive right to the use, occupation or enjoyment of that part, the duty to maintain that part in good repair and condition.

35. In the Uniland's case, there was no dispute that the plaintiff owned the outer wall and flat roof in question. As aforesaid, I do not find that the Applicants or the car park owners own the structural columns, or have exclusive possession of them or have any exclusive right to use, occupation or enjoyment of them. Thus, Section 34H or the case of Uniland has no relevance in my present situation.

36. The Respondent also relies on the case of Wong Lai Kai v. Incorporated Owners of Luk Fu Building, Yuen Long [2000] 3 HKC 633, but that case stands on the same principal, i.e. who has the use or benefit of a facility bears the responsibility to maintain and repair. The Structural columns in question, unlike the awning in Wong Lai Kai's case, are for the benefit and use of all the owners of the Building because they support the whole building as parts of the structural frame. Thus, again, I do not think that the case of Wong Lai Kai can assist the Respondent at all.

37. Although some of the damages are inside or directly above the car parking spaces, as my finding is that the car park owners do not own or possess the structural columns, the Respondent is liable to maintain and repair those structural columns inside or above the car parking spaces.

38. Since it is my finding that the corner guards were for protecting the structural columns rather than for the benefit of the car park owners and the cause of the damages was due to the rising damp, the installation of some of the corner guards by the car park owners or their predecessor-in-title would not impose any responsibility to repair and maintain the structural columns as alleged by the Respondent.

Conclusion

39. By reason of the matters aforesaid, I conclude that:-

(1) The Applicants or the owners of the car parking spaces of the Basement do not own or have exclusive possession of the structural columns;

(2) The structural columns are common parts of the Building;

(3) The damages to the structural columns were caused by the rising damp and not the rusting of the corner guards, raising of the floor level or insufficient ventilation as alleged by the Respondent; and

(4) The Respondent is liable to maintain and repair the structural columns.

Orders

40. In the circumstances, I grant the orders as sought by the Applicants in this Application.

41. I also make an order nisi that the Respondent shall pay the Applicants their costs of this Application, to be taxed, if not agreed. If there is no further application in relation to costs within 14 days from the date hereof, the costs order nisi shall become absolute.