SILVER TRIUMPH HOLDINGS LTD v. GUARDIAN PROPERTY MANAGEMENT LTD

HCMP 566/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 566 OF 2012

(ON AN INTENDED APPEAL FROM LDBM NO 72 OF 2011)

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BETWEEN

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DECISION

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Hon Tang VP:

1.  I have had the advantage of reading Kwan JA's judgment in draft. I agree with it and have nothing to add.

Hon Kwan JA:

2.  This is an application for leave to appeal against the judgment of HH Judge M Wong of the Lands Tribunal in LDBM 72 of 2011 handed down on 7 February 2012. The respondent in the proceedings (“the Manager”), being the manager of the estate known as Genius Court situated in Fuk Lo Tsun Road, Kowloon City, sought leave to appeal to the Court of Appeal. Its application for leave was refused by the judge on 16 March 2012. It renewed its application to this court by a summons issued in the present proceedings on 27 March 2012, with a new draft Notice of Appeal.

3.  The Manager filed a submission of its counsel in support of this application. The applicant in the proceedings below, being the registered owner of the public and private car parks in the estate (“the Owner”), filed a submission of its counsel in opposition. I shall treat the submissions as the statements in support and in opposition for the purpose of this application. Pursuant to the powers of this court under Order 59 rule 2A(5)(a) of the Rules of the High Court, this application is determined on the basis of the statements in support and in opposition without an oral hearing.

4.  Section 11(2) of the Lands Tribunal Ordinance, Cap 17 provides that subject to inter alia section 11AA, any party to the proceedings before the Tribunal may appeal to the Court of Appeal against a judgment of the Tribunal on the ground that it is erroneous in point of law. Under section 11AA(6), leave to appeal shall not be granted unless the Court of Appeal is satisfied that the appeal has a reasonable prospect of success, or that there is some other reason in the interests of justice why the appeal should be heard. Reasonable prospect of success involves the notion that the prospect of succeeding must be “reasonable” and therefore more than “fanciful”, without having to be “probable”.

5.  The question raised primarily in the intended appeal is a question of construction of the deed of mutual covenant of the estate (“the DMC”).

6.  The Owner runs a public car park in the estate, with a mechanical parking system. Cars are lifted by automatic car lifters and moved by parking pallets on steel racks. The machines for the parking system are located in a room on the 1^st Floor (“the Machine Room”), which is part of the premises assigned to the Owner. The Owner requires access to the Machine Room from time to time to carry out maintenance and repairs to the car-lifting machines. To gain access, one would need to pass through the Refuse Storage Chamber on the Ground Floor, which is part of the common area, and climb up a cat ladder. Located above the Refuse Storage Chamber is the Flushing and Potable Pump Room and above that is the Machine Room. As the Flushing and Potable Pump Room and the Machine Room are not enclosed by walls, for security reasons the Manager has at all times locked the door to the Refuse Storage Chamber. Whenever the Owner required access to the Machine Room, upon request to a caretaker of the estate, the Owner would be provided with the key to the Refuse Storage Chamber, to be returned after use.

7.  The Owner brought proceedings in the Lands Tribunal for an order that the Manager should provide it with a duplicate key to enable it to have free and direct access to the Refuse Storage Chamber, and a declaration that it should have free and direct access to the Machine Room via the common passageway in the Refuse Storage Chamber and the cat ladder for the purpose of regular maintenance, inspection, testing and emergency repairs. The judge gave judgment in favour of the Owner.

8.  The Owner relied on the following provision in the DMC in support of its case that it should have “full right and liberty” to go pass the Refuse Storage Chamber to have access to the Machine Room:

“ 7. Every Owner shall have the full right and liberty (in common with the Manager and others having like rights) for all purposes connected with the proper use and enjoyment of his part of the Building to go pass and repass over and along and to use the Common Areas and Facilities PROVIDED THAT only the residents/tenants of the Flats and their visitors of the Residential Part shall have the right to use and enjoy the podium garden, clubhouse and recreational area located in the Third Floor of the Building and SUBJECT ALWAYS TO the provisions herein, the rights of the Manager and the House Rules relating thereto.” (Section I clause 7)

9.  The Manager argued that the above right was “subject always to the provisions [of the DMC], the rights of the Manager and the House Rules relating thereto.” Further, it relied on its “full and unrestricted authority” to manage the common areas and facilities under the following provisions:

“31. The management of the Land and the Building shall be undertaken by the Manager and subject to the provisions of the Building Management Ordinance Cap.344 each Owner HEREBY APPOINTS the Manager as agent for and on behalf of all Owners to enforce the provisions of this Deed against other Owner or Owners in respect of any matter concerning the Common Areas and Facilities duly authorized in accordance with the provisions of this Deed. The Manager shall have full and unrestricted authority to do all such acts and things as may be necessary or expedient for or in connection with the management of the Land and the Building. …” (Section VI clause 31)

“33. The Common Areas and Facilities shall be under the control of the Manager who may make rules or regulations or impose conditions regulating the use and management thereof provided no rules or regulations shall conflict with the provisions contained in this Deed.” (Section VI clause 33)

10.  The judge held on the proper construction of the DMC that the respective rights conferred on the Owner and the Manager are not of an absolute or overriding nature, whether in favour of the Owner or the Manager.  Approaching the matter from the perspective of a reasonable person, the judge found no conflict in the respective rights of the Owner and the Manager and they could co-exist with each other and are subject to each other. He held that the Owner’s right to have access to the Machine Room via the Refuse Storage Chamber is subject to the Manager’s right in Section VI clause 31, but in refusing to provide a duplicate key to the Owner, the Manager had exercised its right in such a way that had interfered with the Owner’s use and enjoyment of its own premises.

11.  Mr Chong submitted for the Manager that the judge was wrong in law. He argued that the  judge should have held that the right of the Owner should be rendered inoperative whenever the right of the Manager should come into conflict with the Owner’s right, as it is provided in Section I clause 7 that the Owner’s right is “subject always to” the Manager’s rights. Hence, the Owner’s right to go pass the common area in the Refuse Storage Chamber should be subordinate to the Manager’s right to exercise such control as is required for the security of the estate. In support of his contention, he cited C&J Clark Ltd v Inland Revenue Commissioners [1973] 1 WLR 905, in which Megarry J held, in construing a provision in the Finance Act 1965, that where a statutory provision was expressed to be “subject to” another statutory provision, that made the latter prevail over the former if there was conflict.

12.  I do not accept the above submissions. There is no error in the approach of the judge.

13.  As noted by the judge, the Owner’s right under Section I clause 7 to go pass the common areas and facilities is “in common with the Manager and others having like rights” and the exercise of this right must be “connected with the proper use and enjoyment of his part of the Building”. The Owner’s access via the Refuse Storage Chamber to carry out repairs and maintenance of the equipment in the Machine Room is clearly connected with its proper use and enjoyment of the public car park. Contrary to Mr Chong’s submission, the judge did not hold that the Owner has an unqualified right of access to the Refuse Storage Chamber. As mentioned above, the judge has held that the Owner’s right is subject to the Manager’s right in Section VI clause 31.

14.  As for the Manager’s right of control over the common areas and facilities, Section VI clause 31must be construed consistently with other provisions in the DMC. It is provided in Section VI clause 33 that any rules, regulations or conditions made by the Manager regulating the use of the common areas and facilities shall not conflict with the provisions in the DMC, including provisions relating to the rights of owners. The judge also referred to two other provisions conferring powers and duties on the Manager to the same effect:

“(31) Subject to the prior written approval of the Owners’ Committee or Owners’ Incorporation if formed, to grant such easement, quasi-easements, rights, privileges, licences, and informal arrangements as is necessary to ensure the efficient management of the Land and the Building provided that the right of any Owner to use occupy and enjoy the unit owned by him and to use the Common Areas and Facilities shall not be affected.” (Section VI clause 31(31))

“(35) From time to time with the approval of the Owner’s Committee or the Owners’ Corporation (if formed) to make, revoke or amend the House Rules as it shall deem appropriate which shall not be inconsistent with this Deed.” (Section VI clause 31(35))

15.  On a proper construction of the above provisions, the right of the Manager in regulating the use of the common areas and facilities should not conflict with or affect the right of any owner to use occupy and enjoy his own unit and to use the common areas and facilities.

16.  The construction that the judge arrived at has struck the right balance between the Owner’s right and the Manager’s right and is plain good sense. In providing a duplicate key to the Owner, the Owner’s right to access the Machine Room via the Refuse Storage Chamber and cat ladder would not be interfered with. The Manager’s right of control over the common areas and facilities would not be affected as security would not be compromised, on the findings of fact made by the judge.

17.  I agree with Mr Leung’s submission for the Owner that it is trite, in a building management context, the rights of parties under a deed of mutual covenant are “not absolute and must as a matter of construction be subject to an element of reasonableness and also must coexist with other provisions in the DMC unless specifically excluded” (Music Advance Ltd v Incorporated Owners of Argyle Centre Phase I [2010] 2 HKLRD 1041 at 1048 para 14(a)).

18.  The case of C&J Clark Ltd v Inland Revenue Commissioners cited by Mr Chong was decided in a very different context and does not advance his arguments. Nor is section 16 of the Building Management Ordinance, Cap 344 relevant to the proper construction of the DMC.

19.  I reject also Mr Chong’s submission that the judge should not have considered the element of reasonableness in construing the parties’ rights under the DMC, see Music Advance Ltd para 14(a). On the facts stated by the judge in paras 38 and 39 of the judgment, it is clear that the Owner requires a duplicate key to ensure prompt access to the Machine Room.

20.  The judge is plainly correct to find that the refusal of the Manager to provide a duplicate key to the Owner was unreasonable in the circumstances.

21.  None of the grounds advanced in the intended appeal have any reasonable prospect of success. The threshold requirement for leave to appeal is not met. I would dismiss the application for leave to appeal to the Court of Appeal. As the application is entirely without merit, I would make a further order pursuant to Order 59 rule 2A(8) that no party may under rule 2A(7) request the determination to be reconsidered at an oral hearing inter partes.

22.  I would make an order nisi that the Manager is to pay the Owner’s costs of this application, to be assessed on a gross sum basis. For the purpose of a gross sum assessment, I would direct the Owner to submit a skeleton bill within 14 days hereof and the Manager do have leave to respond within 7 days thereafter.