KAU CHUN WING v. MAIN SHINE DEVELOPMENT LTD AND OTHERS

CACV 47/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 47 OF 2010

(ON APPEAL FROM HCA NO. 2525 OF 2007)

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Hon Rogers VP:

1.  I agree with the reasons for judgment of Le Pichon JA.

Hon Le Pichon JA:

2.  This was an appeal from an order of Saunders J of 11 February 2010 dismissing the plaintiff’s claims against the first defendant, the plaintiff having settled his claims against the second and third defendants prior to the trial.  At the conclusion of the hearing, the appeal was dismissed with written reasons to be handed down which we now do.

Background

3.  The plaintiff is the owner of units 11 and 12 on the 16^th floor and the flat roof immediately above those units in an industrial building in Tsuen Wan.  The first defendant is the manager appointed under the Deed of Mutual Covenant (“DMC”) to manage the building.

4.  The proceedings related to the installation of wires on the parapet walls of the flat roof abutting the plaintiff’s units without the plaintiff’s consent.  It is common ground that the wires complained of had been removed, at the very latest, by mid-November 2007.  The proceedings concerned alleged past breaches.

5.  The building is oblong in shape.  Units 7-12 which occupy one half of the building have a frontage on the main road while units 1-6 occupy the other half at the rear.  Above units 1-6 on the 16^th floor is the maintenance floor, forming a 17^th floor.  Within the maintenance floor immediately adjoining the flat roof of the 16^th floor is a corridor with doors which open out to the flat roof of units 7-12 of the 16^th floor.

6.  By letter dated 15 November 2005 addressed to the owner of unit 1611 of the building, Sunday, a subsidiary of the third defendant, indicated its interest in renting the flat roof of that unit for the installation of signal transmitters for mobile phones.  It gave contact details.  §9 of the judgment records the plaintiff’s evidence to the effect that he had asked Sunday’s representative to contact the first defendant “so that arrangements could be made for them to launch the installation at my Flat Roof.”  When he heard nothing further, the plaintiff assumed that Sunday had abandoned its proposal.  The plaintiff accepts that he did not follow up Sunday’s inquiry with the first defendant.

7.  In September 2007, the plaintiff’s wife went to the premises and noticed that wires had been installed on the inner surface of the parapet wall adjoining the flat roof of units 11 and 12.  A solicitor’s letter to the first defendant followed.  It is dated 20 September 2007 and complained about the installation of the wires which, it was alleged, constituted a trespass.

8.  Following the complaint, the first defendant caused the wires to be removed and the inner surface of the parapet walls made good.  By the time the plaintiff’s wife carried out an inspection in mid-November 2007, this work had already been carried out.

9.  In its substantive reply to the September letter, the first defendant’s solicitors disclosed that licences had been granted to Peoples and Sunday.  In fact, licences had been granted to Sunday, Peoples and Hutchison commencing 1 June 2006, 1 November 2006 and 1 January 2007 respectively.

10.  The licence fees received were accounted for as income of the building and used by the first defendant to offset the monthly expenditure for the building.  The July 2007 accounts show antenna income of $72,756 against total expenses incurred of approximately $240,000 for that month for running the building.  The licence fees benefited all the owners of units in the building including the plaintiff since it had the effect of reducing their contribution to management fees.

11.  The plaintiff sued the first defendant in trespass, nuisance and negligence and sought, inter alia, an inquiry into damages and an account of profits.  The judge dismissed the plaintiff’s claims.

The appeal

12.  After initial confusion, it eventually became clear that the plaintiff’s complaint was confined to the installation of wires and did not involve antennae.  The court was shown a photograph (taken at an unknown date but prior to mid-November 2007) of the allegedly offending wires running horizontally along the inner surface of the parapet walls abutting the flat roof of the plaintiff’s units.  The wires ran parallel to various pipes servicing the building before being affixed to two upright pipes which appear to be flue pipes for the emission of fumes from the floor(s) below.

13.  The plaintiff’s case is that he is the owner of the inner surface of the parapet walls in question so that the installation of the wires constituted a trespass.  He also complains that (irrespective of the ownership of the parapet walls) the installation of the wires could not have been carried out without workmen walking across the flat roof owned by the plaintiff in order to access the parapet walls, that they did so without the plaintiff’s knowledge or consent and that the wires themselves would have interfered with or intruded into what was said to be the plaintiff’s airspace.  It was also said that the first defendant had breached its fiduciary duty to the plaintiff.  Ms Lau who appeared for the plaintiff submitted that it was wrong for the first defendant to have entered into a licence agreement with Sunday in that that agreement should have been a tripartite agreement under which the plaintiff should have been given part of the licence fees on the basis that the licence affected his property.

Ownership of the inner surface of the parapet walls

14.  Ms Lau submitted that the first defendant had no power to license a third party to install wires on the inner surface of the parapet walls.  The plaintiff’s case is premised on his being their owner.  The court’s attention was drawn to clause 1 under ‘Special Reservations’ in Section I C (“the reservations clause”) which provides:

“C. SPECIAL RESERVATIONS

1.         The First Owner and its successors and assigns (which expression for the purpose of this Clause shall exclude the Second Owner) shall have the exclusive right and privilege to, and to permit its or their licensees to install, erect, affix, attach, dismantle, remove, repair, service and maintain to, in, on or from the external walls (including the parapet walls, if any) of the Building or any part or parts thereof one or more flue pipes smokestacks, chimneys and cables Provided always that the First Owner and its successors shall not be required to repair and maintain the external walls (including the parapet walls, if any) of the Building (save as provided in Clause 2(c) and 2(d) of this Subsection) and the Manager shall be responsible for maintaining and repair such external walls (including the parapet walls, if any).”

15.  It is difficult to see how that provision assists the plaintiff.  Whether it had the effect of conferring ownership of the external walls (including the parapet walls) on the first owner, it certainly did not confer ownership of the inner surface of the parapet walls on the plaintiff.  As a matter of construction, I consider that it had the effect of reserving to the first owner the ability to licence others to install etc flue pipes, smokestacks, chimneys and cables to, in, on or from the external walls (including the parapet walls) as distinct from ownership of such walls.

16.  In my view, the parapet walls form part of the common areas or common parts of the building.  First, the duty to maintain and repair the parapet walls rested with the manager and not the first owner.  That is consistent with parapet walls being part of the “common areas” as defined in the DMC.  Second, while the definition of “common areas” in the DMC does not mention “parapet walls” as such, it mentions “external walls” and the phrase “external walls” in the reservations clause expressly encompasses “parapet walls”.  Third, the effect of section 2 of the Buildings Management Ordinance has to be considered.  Under that provision, parapet walls, to the extent that they have not been specified or designated as being for the exclusive use, occupation or enjoyment of an owner (which is the present case), are to be treated as “common parts”.

17.  Ms Lau then submitted that the only right the reservations clause conferred on the first defendant was the right “to maintain and repair” the parapet walls, and given the definition of “maintain” in the definitions clause, the first defendant had no right to authorise or licence any third party to install wires which do not serve the building as such.  In my view, that argument is flawed.

18.  The DMC conferred on the manager

“full and unrestricted authority to do all such acts and things as may in its opinion be necessary or requisite for the proper management of the Land and the Building.”

The right to ‘manage’ is different and distinct from a right to ‘maintain’.  That is evident from the terms “maintain”, “management” and “management expenses” as defined in the DMC:

“ “maintain”	shall mean and include inspection and testing by the Manager or experts appointed by the Manager, repair, uphold, support, rebuild, overhaul, pave, purge, scour, cleanse, empty, amend, keep, replace and decorate improve and provide for such of the foregoing as may be applicable in the circumstances and in the interest of good estate management and the expression “maintenance” shall be construed accordingly.
…
“Management”	shall mean all duties and obligations to be performed and observed by the Manager as provided herein.
“Management Expenses”	shall mean the costs charges and expenses for the management and maintenance of the Building as provided in this Deed.”

19.  These definitions make it clear that “management” and “maintenance” do not have the same meaning.  The former is much broader and it cannot be gainsaid that the grant of a license to a third party to affix installations to common areas which the manager considers to be in the interest of the owners as a whole does fall within the meaning of proper management.  In short, the first defendant had the power to grant licences for the installation of the wires on the inner surface of the parapet walls and the plaintiff’s complaint in that regard is misconceived.

Trespassing on the plaintiff’s flat roof

20.  Irrespective of the ownership of the parapet walls, the plaintiff maintains that as the wires could not have been installed and thereafter maintained and/or repaired without workmen trespassing on the plaintiff’s flat roof, the judge should have found for the plaintiff on trespass and directed an inquiry as to damages.  I disagree.

21.  The consent of owners of the flat roof (who are bound by the DMC) to allow access reasonably necessary and incidental for the implementation of any valid exercise by the manager of its powers must be implied.  For otherwise the powers conferred by the DMC would be rendered meaningless. Further, even assuming the plaintiff were correct that a few workmen must have crossed his flat roof to gain access to the parapet wall without consent , clause 4 of Section VB of the DMC would be a bar to any recovery of damages.  That clause reads:

“Neither the Manager nor any servant agent or other person employed by the Manager shall be liable to the Owners or any of them or to any person or persons whomsoever whether claiming through under or in trust for any Owner or otherwise, for or in respect of any act, deed, matter or thing done or omitted in pursuance or purported pursuance of the provisions of this Deed not being an act or omission involving criminal liability or dishonesty or wilful negligence and the Owners shall fully and effectually indemnify all such person from and against all actions proceedings, claims and demands whatsoever arising directly or indirectly out of or in connection with the management of the Building any act, deed, matter or thing done or omitted as aforesaid and all costs”

22.  The complaint regarding interference with the plaintiff’s airspace is misconceived for the same reasons.

Breach of fiduciary duty

23.  The nature of the ‘fiduciary’ duly allegedly breached is far from clear.  Be that is it may, it was submitted that there should have been a tripartite agreement between Sunday, the first defendant and the plaintiff because the first defendant was aware of an earlier agreement between Hutchison and the plaintiff under which the plaintiff had received and/or was still receiving payment for a licence.  No such agreement was before the court.  Although the appeal bundles include two earlier licence agreements, these were made between the first defendant and Hutchison and the plaintiff was not a party to either of them.  I would add that in my view it would have been quite wrong for the first defendant as manager to promote the interests of the plaintiff to the detriment of the interests of the other owners of the building.

Hon Lunn J:

24.  I agree with the reasons given by Le Pichon JA.