MEMORAN CO LTD v. THE INCORPORATED OWNERS OF MEI HING MANSION

HCCT 18/2020

[2021] HKCFI 154

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO. 18 OF 2020

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REASONS FOR DECISION

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1.  By a summons dated 30^th November 2020 the plaintiff applies for the summary determination of a question of law or construction, namely:

 “Whether on a true construction of the Deed of Mutual Covenant and/or the Building Management Ordinance (Cap.344) the RC steel bars and the surrounding concrete in the floor slab between the 3rd and 4th Floors of Mei Hing Mansion (“the Structural Concrete Slab”) constitute a common part of the building.”

2.  The summons also seeks associated relief by way of orders that the defendant carry out repairs to the (allegedly) spalled concrete and damaged reinforcement in the relevant floor slab.

3.  The background to the application is as follows.  The plaintiff company is the owner of premises on the 3^rd floor of Mei Hing Mansions in Tai Po, while the defendant is the Incorporated Owners of that building.  The plaintiff’s premises are operated as a residential care home for elderly people.

4.  Above the 3^rd floor (which is a large unit in the podium of the building) are both residential units (in the building tower), and some separate roof areas.  It is this slab which is at the centre of the disputes in this action.

5.  Since 2016, or thereabouts, the tenant of the 3^rd floor unit has experienced water seepage problems, and complaints about this have been relayed to both the plaintiff and, later, the defendant.  It is the plaintiff’s evidence that inspection has revealed damage to areas of the slab structure comprising the ‘roof’ of the 3^rd floor premises.  Specifically it is said, the concrete is suffering from spalling in places, and the reinforcement in the slab is thus exposed, seriously oxidized, and rusted.

6.  There are factual issues as to the causes of this damage, but for present purposes, the focus is as to whether the defendant is the party responsible for arranging repair or rectification of such spalling and rusting as may exist.

7.  The plaintiff’s pleaded case is that the structural concrete slab which divides the 3^rd floor property from the flats and roofs above is a “common part” of the building for the purposes of the deed of mutual covenant (“DMC”) and/or the Building Management Ordinance (“BMO”).

8.  The plaintiff relies on the following provisions of the DMC and BMO Section 18 of the BMO states:-

“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;

(b)  carry out such work as may be ordered or required in respect of the common parts by any public officer or public body in exercise of the powers conferred by any Ordinance;

(c)  do all things reasonably necessary for the enforcement of the obligations contained in the deed of mutual covenant (if any) for the control, management and administration of the building.”

9.  Section 2 of the BMO, “common parts”:-

“(a)  the whole of a building, except such parts as having 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.”

10.  Schedule 1 of the BMO further defines common parts including:-

“5.1  External walls and load bearing walls, foundations, columns, beams and other structural supports.

5.2  Walls enclosing passageways, corridors and staircases.

5.3  The roofs, chimneys, gables, gutters, lightning conductors, satellite dishes and ancillary equipment, aerials and aerial cables.

…...”

11.  Further, section 3(u) of the DMC defines common areas as follows:

“(u)  the common areas and common services and facilities referred to in this deed shall include the following:-

(i)   The lobbies, lifts lobbies, entrances, staircases, landings, passages corridors and lifts which are not included in any part of the said Building exclusively owned by one owner or several co-owners.

(ii)   The sewer, gutter, drains, watercourses, cables, walls, pipes, pumps, tanks, wires, sanitary fittings, fire lighting and refuse disposal equipment and other apparatus and equipment used or installed for the benefit of the said Building as part of the amenities thereof and not by any individual owner for his own use or purposes.”

12.  For its part, the defendant admits that it is under a maintenance obligation pursuant to the BMO, and agrees that the relevant provisions are those quoted above.  The defendant does not however agree in its pleaded defence that the relevant concrete slab is a common part of the building.

13.  In its first submission in opposition to the plaintiff’s summons (dated 5 January 2021), the defendant’s primary position was that the true issue was the cause of damage to the slab, and that the plaintiff’s summons was unnecessary.  The determination of the issue in paragraph 2 of the summons would not be determinative of the whole dispute, nor was it appropriate for determination under O.14 or O.14A.  That the summons was “unnecessary” was, perhaps, because it was further submitted that should the court consider the O.14A application to be appropriate, then the defendant proposed not to contest the issue as to whether the slab was part of the common parts, and would amend its defence accordingly. 

14.  In a supplemental submission (7 January 2021), the defendant took a semantic point, contending that the “definition” of the slab adopted by the plaintiff in the Statement of Claim was not in precisely the same terms as that used in the Summons.  It was submitted therefore that there was some confusion, and a need for factual and expert evidence in order to decide whether the slab in question was a “common part”.

15.  It seemed to me that this afterthought by the defendant sought to draw a spurious distinction, where there was no real room for doubt as to what was under discussion namely a reinforced concrete slab. The defendant sought to sow confusion (by reference to these “definitions”) as to whether the plaintiff’s application related to the concrete, the reinforcement, or the whole slab, when a modicum of common sense showed clearly that it was the whole of the slab that was the subject of the dispute and the summons.

16.  I rejected the submission that evidence would be required to assist with the interpretation exercise.  In my view the terms by which obligations are imposed by the BMO and the DMC are matters of ordinary language, and are readily understood, and both may be and should be construed without the “assistance” of expert evidence.  There may be circumstances in which the language used in a contract is not readily understood without an understanding of the factual matrix in which the contract was made.  No such consideration applies to the interpretation of the BMO, and nor, in the ordinary case, will it apply to an agreement such as the DMC.  In the present case, all that is required is a simple understanding of the words used.  

Was the O.14A Procedure Appropriate?

17.  The fundamental purpose of O.14A is the determination, usually at an early stage, of a question of law, or of construction of a written instrument, without the time and expense of a trial. It is appropriate where there is an issue which is of sufficient importance as to either resolve the dispute, or at least considerably narrow the ambit of issues between the parties.  See Rockwin Enterprises Ltd v Shui Yee Ltd [2003] 3 HKC 174.  Where the issue is solely an exercise in construction, it is ordinarily an available procedure because, ordinarily, there is not only no need for evidence in aid of construction, such evidence is impermissible.  See generally Hong Kong Civil Procedure 14A/2/4.

18.  In exercising the discretion as to whether an application under O.14A is an appropriate course of action, the parties and the Court will ordinarily, find it appropriate to consider whether the issue or question of construction in question will significantly clarify the respective rights and obligations of the parties in the context of their wider dispute, if it does not by itself resolve such disputes.  In my judgment, clarification of the party bearing legal responsibility for the maintenance of the concrete slab in question provides such assistance to the parties in the present case.

The Ambit of the Summons

19.  Paragraph 3 of the summons sought orders that the defendant should act on its responsibility to make good defective and damaged concrete in the relevant slabs.  This was a more problematic request since the extent of such damage was indeterminate, as was its cause (albeit that some expert evidence has been provided by the plaintiff).  This was not a question of interpretation or construction, and was factually sensitive, so the paragraph sought a judgment under O.14 in effect.

20.  Since it was clear that the cause and extent of damage required factual evidence (at least), this paragraph as framed was not amenable to final determination at this stage. Accordingly, through discussion at the hearing, the form of relief sought by these paragraphs was modified, so as to become a “simple” declaration of responsibility on the part of the defendant for such repairs as may be required.

21.  I record, in light of a submission made on behalf of the defendant at the hearing that such applications to amend a summons under O.14A may be made otherwise than by summons, and may, indeed, be initiated by the Court itself. See Order 14A r. 1(1). 

Conclusion on Construction

22.  I am satisfied that the slab in question falls within the definition of a “common part” in part as a “structural support” (see Schedule item 1) and in part as a roof (Schedule item 3) under the BMO.

23.  I accept, as the defendant submits that the term “slab” is not itself used in the BMO definitions, but the formulation in the Schedule is clearly to be read inclusively, in such a way as to encompass matters of a similar nature and function.

24.  As regards the DMC, this is formulated largely by reference to the usage of spaces rather than their structural, or otherwise, construction.  The demarcation between common areas and others in the DMC turns on whether the part in question has been allocated as being “exclusively owned” by one or other owner.  The slab in question functions both as the “ceiling” of the plaintiff’s premises and also as a roof, or in part a floor of other premises.  It has not been allocated to the exclusive occupation of the plaintiff, or indeed anyone else.

25.  Even if this were incorrect however, the defendant would not be relieved of its obligations under the BMO, by reason of BMO s.2.

26.  In those circumstances, I concluded that the plaintiff was correct in its construction, and accepted that an order should be made in terms of paragraphs 1, 2 and 3 (as amended) of the summons.

27.  The costs of the summons are to be to the plaintiff.