WHOLE GRAND LTD v. THE INCORPORATED OWNERS OF BO FUNG BUILDING

LDBM 57/2019

[2021] HKLdT 50

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 57 OF 2019

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BETWEEN

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J U D G M E N T

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BACKGROUND

1.  This is an application by the applicant for declarations of its right to use a lift in Bo Fung Building (“the Building”).  The applicant is represented by Mr Tommy Ho.  The respondent is represented by Ms Becky Wong.

2.  The Building, erected in 1992, is a commercial-cum-residential complex situated at No.5, Horse Shoe Lane, Kwun Tong, Kowloon. The Deed of Mutual Covenant was executed on 21 July 1992 and registered under memorial number UB5390381 (“DMC”).  The Occupation Permit dated 26 June 1992 stipulates the following usages:

Ground Floor:	shops (non-domestic use)
Cockloft:	storage (non-domestic use)
1st Floor:	shop (non-domestic use)
2nd Floor:	day nursery& transformer room (non-domestic use)
Podium:	roof garden, generator room and service rooms (non-domestic use)
3rd to 25th Floors:	4 flats per floor for domestic use
	(no 4th, 14th and 24th Floors)

3.  The Building is divided into three different portions namely, day nursery, commercial development and residential development.  This application concerns the commercial development and the residential development.

4.  The applicant is the registered owner of Shops 4 and 5 on the ground floor, the cockloft and the whole of 1/F[1] (“the Property”) since about February 2010 which forms part of the commercial development.  Before the applicant acquired the Property, alteration works had been carried out by the applicant’s predecessor in title to, among other charges, divide Shops 4 and 5 into the front portion and the rear portion, paragraph 54 below sets out the details of the works.

5.  The present proceedings do not involve the Property in its entirety but only concern the rear portions of Shops 4 and 5 on the ground floor, the cockloft and the whole of 1/F (“the Subject Property”).  The applicant’s valuation expert describes the Subject Property to be composed of:-

(a)	The ground floor of the Subject Property only consists of the rear portion of Shops 4 and 5;
(b)	There are two separate staircases connecting the ground floor level of the Building and the cockloft;
(c)	There is also a one-way escalator going from the ground floor to the cockloft (“the Escalator”); and
(d)	The cockloft and 1/F are connected by an internal staircase.

6.  The Building has three lifts in total. One lift is for the exclusive use by the day nursery.  There are two passenger lifts, one serves G/F, 1/F, 3/F, 7/F, 9/F, 11/F, 13/F, 16/F, 18/F, 20/F, 21/F and 25/F (“Lift A”) and the other one serves 3/F, 5/F, 8/F, 10/F, 12/F, 15/F, 17/F, 19/F, 21/F and 23/F.

7.  To gain access to the three lifts, one has to enter the password outside the entrance to the residential block of the Building, open the gate and then walk through a corridor in order to reach the lobby where the lifts are situated.

8.  As at the date when the applicant acquired the Property, Lift A had been serving 1/F so that the applicant, its servants, agents, tenants and licensees etc. could make use of Lift A to go between the ground floor and 1/F of the Building.  Back then, 1/F was occupied by the then tenant which operated a Chinese restaurant there in the trade name of “Fu Lin Wah Seafood Restaurant” (“Fu Lin Wah”).

9.  Since about late 2009, the Escalator broke down and could not be repaired due to lack of suitable parts. It is the respondent’s case, which is not disputed by the applicant, that Fu Lin Wah’s staff disclosed the security code of the Building’s main entrance to their customers so that they could take Lift A to visit Fu Lin Wah on 1/F. The frequent use of Lift A by Fu Lin Wah’s customers resulted in complaints from the residents living in the residential development of the Building.

10.  On 16 July 2010, a resolution was passed by the owners’ committee[2] resolving, inter alia, that the customers of Fu Lin Wah shall not be allowed to use the lifts of the Building and that lawyer shall be instructed to execute the arrangement in accordance with the DMC.  During the meeting, the authorized representative of the then registered owner of the Property was in attendance but did not raise any objection. The service of Lift A to 1/F was terminated since about October 2010 which is the crux of the dispute leading to these proceedings.

11.  The respondent was incorporated in August 2018 and has since continued the previous lift arrangement (i.e. no provision of lift service to 1/F) and subsequently adopted the resolution formally.  

APPLICANT’S CASE

12.  The applicant contends that the respondent’s decision to terminate lift service to the applicant was in contravention of the DMC and “the relevant law of Hong Kong” and have caused rental income loss to the applicant. The applicant’s arguments could be summarized as follows.

13.  First, Lift A falls within the definition of the “Common Facilities” in the DMC (see below) because it goes through both the Commercial Development and Residential Development, provides lift service to both the Commercial Units and Residential Units and is intended for the common use and benefit of all the owners and occupiers of the Building:-

“Common Facilities

means and includes all those installations apparatus plant equipment appliances and facilities whether within or without the Common Areas used in common by or installed for the common benefit of all of the Owners and occupiers of the Land and the Building and which are not for the exclusive use or benefit of any particular Owner or occupier and, without limiting the generality of the foregoing, include drains, channels, water mains, sewers, gutters, watercourse, wires, cables, wells, portable water tanks, pipes, salt and fresh water intakes and mains, fire warning and fighting equipment, transformers switches, meters, lights, pumps and other service facilities and apparatus whether ducted or otherwise, which are or at any time may be in, under, over or passing through the Land and the Building and which are installed for the use and benefit of the Building as a whole.”

(emphasis added)

14.  Lift A also falls within the definition of “Common Areas” in the DMC (see below) which specifically includes “lifts”.

“Common Areas

means and includes all those areas and spaces of the Land and the Building other than the Retained Areas which are intended for the common use and benefit of all of the Owners and occupiers of the Land and the Building and which are not granted and/or reserved by this Deed or otherwise to any particular Owner or occupier and without limiting the generality of the foregoing, include the Lifts, entrances, lobbies, staircases, landings, hallways, management office, the switch room, the transformer room, the lift motor room, the fire services control room, the flushing water tanks, the pump rooms, the refuse collection room, the Loading and Unloading Spaces, the garden and Landscaped area of the roof above the Commercial Development and the Day Nursery, and other areas and spaces of the Land and the Building.”

(emphasis added)

15.  The applicant notes that the combined effect of Clauses 3.2.1(a) and 3.2.2 of the DMC (see below) appear to put the applicant in a disadvantageous position as it is specifically provided that owners of commercial units shall have no right to enter any area if it at the same time forms part of the Residential Development, notwithstanding that such area (such as lift) may fall within the meaning of “Common Areas”.

“3.2 Commercial Units
	3.2.1	The Owner of a Commercial Unit shall have the benefit of the following easements, rights and privileges subject to the provisions and restrictions contained in this Deed, the House Rules and subject to the rights of the Manager as hereinafter provided and to the payment by the Owner of his due proportion of the Manager’s Remuneration and management expenditure:-
		(a)	Full right and liberty (but subject always to the right of the Manager and the Assignor hereunder) for the Owner for the time being, his tenants, servants, agents, lawful occupants and Licensees (in common with all persons having the like right) to go pass or repass, over and along and to use such of the Common Areas forming part of the Commercial Development and not those forming part of the Residential Development for all purposes connected with the proper use and enjoyment of such Commercial Unit. …
	3.2.2	The Owners of the Commercial Units shall have no right to enter upon any part of the Land and the Building save as expressly herein provided. …” (emphasis added)

16.  It is submitted that the superficial way of interpretation in paragraph 15 shall not be adoped.  Clauses 3.2.1(a) and 3.2.2 shall instead be construed in accordance with the physical set up and the design of Lift A as well as the definitions of “Common Areas”, “Common Facilities” and “Residential Development” so that the applicant, its tenants and licensees etc shall be entitled to use the lift.

17.  In any event, even if Clause 3.2 was actually drafted to exclude the right of owners and occupiers of the commercial units to use Lift A, to construe Clause 3.2 this way will lead to violations of the Disability Discrimination Ordinance, Cap.487 (“DDO”), the Building (Planning) Regulations, Cap.123F (“BOR”) concerning fire safety and the Building Management Ordinance, Cap.344 (“BMO”) such as section 34I and would, therefore, render Clause 3.2 illegal and unenforceable.

18.  Furthermore, there is no express power in the DMC to allow anyone including the respondent, the owners’ committee or the manager to re-write the DMC.  Changing the use of the lift is a revision of the term of the DMC which requires the consent of all the owners of the Building.

19.  The respondent further submits that the 17^th owners’ committee did not have the power under the DMC to pass any resolution beyond the scope of those listed in Clause 8.1.3.  Therefore, there had been no effective and valid resolution passed by the 17^th owners’ committee to approve the closure of Lift A.  The purported resolution passed by the 17^th owners’ committee was confined to stopping tea customers of Fu Lin Wah to use the lift but not about closure of the lift.  If the respondent says that the closure of Lift A is an implementation of the resolution, the implementation is ultra vires, unlawful and not binding on the applicant.

20.  After the incorporation of the owners in 2018, the owners’ incorporation may have wider power and authority than the owners’ committees or the manager. That notwithstanding, the respondent similarly cannot unilaterally rewrite the terms of the DMC and any rules made by the respondent also have to be consistent with the laws of Hong Kong.  The mere adoption of the closure of Lift A by the respondent would not make the unlawful closure of the lift lawful.

21.  To conclude in one sentence, the applicant’s position is that they, as an owner of the commercial units, together with their tenants, servants, agents, lawful occupants and licensees, shall have the right to go pass or repass, over and along main entrance, the hallway and the lift lobby etc on the ground floor of the Building and to use Lift A. The applicant seeks the following reliefs:-

(a)	A declaration that the applicant, its tenants, servants, agents, lawful occupants shall have the right to use and enjoy Lift A as part of the common areas and common parts of the Building (“Relief 1”);
(b)	A declaration that the respondent has no power to deny the applicant and their authorized persons the access to and use and enjoyment of Lift A (“Relief 2”);
(c)	A declaration that the respondent has no power to close the access to Lift A (as disabled lift and fireman lift) from the first floor (“Relief 3”);
(d)	An order that the respondent do forthwith reinstate the lift service between the ground floor and 1/F by re-opening the access to Lift A on 1/F for use by the applicant and their authorized persons (“Relief 4”);
(e)	Damages to compensate the loss of rental income allegedly suffered by the applicant (“Relief 5”);
(f)	Interest; and
(g)	Costs.

RESPONDENT’S CASE

22.  The respondent deals with the applicant’s arguments by reference to the reliefs sought.  Their submissions could be summarized as follows.  

Relief 1

23.  For Relief 1, Ms Becky Wong for the respondent refers to Clause 3.2 of the DMC which stipulates that:-

“3.2 Commercial Units
	3.2.1	The Owner of a Commercial Unit shall have the benefit of the following easements, rights and privileges subject to the provisions and restrictions contained in this Deed, the House Rules and subject to the right of the Manager as hereinafter provided and to the payment by the Owner of his due proportion of the Manager’s Remuneration and management expenditure:-
		(a)	Full right and liberty (but subject always to the right of the Manager and the Assignor hereunder) for the Owner for the time being, his tenants, servants, agents, lawful occupants and Licensees (in common with all persons having the like right) to go pass or repass, over and along and to use such of the Common Areas forming part of the Commercial Development and not those forming part of the Residential Development for all purposes connected with the proper use and enjoyment of such Commercial Unit. …
	3.2.2	The Owners of the Commercial Units shall have no right to enter upon any part of the Land and the Building save as expressly herein provided …” (emphasis added)

24.  Ms Wong takes Clause 3.2.2 as the starting point – owners of commercial units can only enter areas which are expressly provided in the DMC.

25.  The next question she observes is – what areas owners of commercial units can enter the answer to which, in her view, can be found in Clause 3.2.1 stipulating that the easement right of the owners of the commercial units is “to go pass or repass, over and along and to use such of the Common Areas forming part of the Commercial Development and not those forming part of the Residential Development for all purposes connected with the proper use and enjoyment of such Commercial Unit.”.

26.  Therefore, owners of commercial unit can enter the common areas forming part of the Commercial Development but not those common areas which form part of the Residential Development.

27.  Ms Wong points out that:-

(a)	“Commercial Development” is defined as “Commercial Units included in the Building and/or any other parts of the Land intended for commercial use but excluding the Day Nursery”.
(b)	“Residential Development” is defined to mean “the Units on the Floors above the Second Floor Level of the Building and/or any other parts of the Land and the Building intended for residential use”.

28.  It is submitted that the gist of these two definitions is the word “intended”. The lift hall and the two lifts must be intended for residential use (i.e. for residential owners to gain access to the two lifts and then to their own units) but not intended for commercial use in light of the physical layout of the Building.

29.  More importantly, even if Lift A and the lift hall are intended for commercial use also, because Clause 3.1 expressly prohibits owners of commercial units from passing or using the common areas which form part of the Residential Development Lift A and since the lift hall obviously form part of the common area of the Residential Development, the net outcome must be that commercial owners shall be prohibited from entering the lift hall or using the lift.

30.  Following this line of reasoning, the respondent submits that the DMC does not confer any right on the owners of the commercial unit on 1/F or any commercial unit to use Lift A.  Once such conclusion is reached, it is not necessary to consider whether the requirement of “proper use and enjoyment” in Clause 3.2.1(a) of the DMC can be fulfilled.

31.  The respondent also challenges other aspects of the applicant’s case and arguments.  For instance, the respondent points out that the DMC never differentiates between the two residential lifts, therefore, the question of whether Lift A forms part of the Residential Development or the Commercial Development should be considered in the context of “lifts” as a whole instead “Lift A” of in a compartmentalized manner.

32.  As regards section 34I of the BMO, the respondent submits that section 34I is completely irrelevant.  The issue in dispute is not whether the respondent or any individual owner has converted any common part to his own use.

33.  Another problem of Relief 1 as observed by the respondent is that this relief is framed as an unqualified right.  The respondent emphasizes that even if the applicant has a right to use the lift under the DMC, this is not absolute but is qualified by the following clauses:-

“Clause 6.2.1The Manager will manage the Land and the Building in a proper manner and in accordance with this Deed and except as otherwise herein expressly provided the Manager shall be responsible for and shall have 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.  Without in any way limiting the generality of the foregoing the Manager shall have the following duties and powers namely: - …
(ab)	To make revoke or amend such House Rules as are not inconsistent with the provisions of this Deed and with the prior approval of the Owners’ Committee after it has been appointed for the better management of the Building and to enforce the due observance and performance thereof. …
(ae)	To take all reasonable actions to abate any nuisance affecting the Owners and occupiers of the Building or any Unit of the Building and for such purpose to enter into any part or Unit excepting the Day Nursery of the Building for the purpose of abating such nuisance. …
(ai)	To allocate and/or assign any lift for the exclusive use of particular floors and/or Units where the circumstances so warrant. …
Clause 6.2.2The Manager shall have power (subject to the prior approval of the Owners’ Committee after it has been appointed) from time to time to make revoke and amend House Rules as are not inconsistent with the provisions of this Deed regulating the use operation and maintenance of the Building and any of the structures facilities services or amenities thereof and the conduct of persons occupying using or visiting the same and such House Rules shall be binding on all of the Owners.  A copy of the House Rules from time to time in force shall be posted on the public notice board in the Building and a copy thereof shall be supplied to each Owner or occupier on request free of charge.
Clause 6.2.3All acts and decisions of the Manager arrived at in accordance with the provisions of this Deed in respect of any of the matters aforesaid shall be binding in all respects on all Owners for the time being.” (emphasis added)

34.  It is the respondent’s case that the decision of terminating the lift service to 1/F was mainly due to security and nuisance concerns.  The chairman of the respondent explained in his oral testimony that the normal registration procedure and the installation of CCTV could not solve the security problem as visitors can go to the upper floor via the lift and from a practical point of view the security guard cannot spend all time monitoring the CCTV.  The chairman also confirmed that the closure of the lift is subject to the following exempted persons and situations:- (a) occurrence of fire or personal injury; (b) the handicapped who are wheel-chaired bound; (c) persons with mobility problem; and (d) situation in which ordinary people would consider necessary.

35.  It is submitted that since the applicant themselves say that they could not control how its tenants shall operate their businesses, the respondent’s measure of forbidding 1/F visitors from using Lift A, save and except some categories of customers and in some specific situations, has struck a right balance between the applicant’s right to use Lift A (if the tribunal finds such right to exist at all) and the need to address security and nuisance concerns.  Hence as a matter of discretion, Relief 1 shall not be granted.

Relief 2

36.  The respondent submits that Relief 2, which is just the other side of the same coin of Relief 1, shall not be granted if the tribunal finds that the applicant does not have unrestricted right to use the lift.

Relief 3

37.  In Relief 3, the applicant seeks a declaration that “the IO has no power either under the DMC or otherwise to close the access to Lift A as disabled lift and fireman’s lift of the Building on the first floor” in reliance of the DDO and fire regulation(s).

38.  Ms Wong submits that the Lands Tribunal does not have the jurisdiction to determine whether there is any breach of the DDO.  Further, section 28 of the DDO as pleaded only concerns premises which a person has power to dispose. “Power to dispose” has been specifically defined as those including “the power to sell, rent, let, sub-let or otherwise part with possession of those premises.”.  Therefore, this section does not assist the applicant in any event.

39.  As regards the argument that the closure of a firemen lift to a particular floor is a violation of fire regulation(s), the respondent submits that there is no evidence as to what a firemen lift is and such proposition is contrary to the express provision of the DMC regarding the allocation of lift by the manager.  The declaration sought is unnecessary and the Lands Tribunal should not step into the shoes of other authorities to adjudicate on whether there is a breach of the DDO or fire regulation. 

Relief 4

40.  Ms Wong submits that Relief 4, which prays for reinstatement of the lift service, must fail as it hinges on the determination of Relief 1 which shall be determined in the respondent’s favour.

DISCUSSION

DMC

41.  I first set out below the DMC provisions that are relevant to the present case for easy reference.

42.  Clause 1.1 of the DMC is the definition clause. “Commercial Development”, “Residential Development”, “Common Areas” and “Common Facilities” are respectively defined therein as:-

“Commercial Development

shall mean the Commercial Units included in the Building and/or any other parts of the Land intended for commercial use but excluding the Day Nursery.

Residential Development

shall mean the Units on the Floors above the Second Floor Level of the Building and/or any other parts of the Land and the Building intended for residential use.

Common Areas

means and includes all those areas and spaces of the Land and the Building other than the Retained Areas which are intended for the common use and benefit of all of the Owners and occupiers of the Land and the Building and which are not granted and/or reserved by this Deed or otherwise to any particular Owner or occupier and without limiting the generality of the foregoing, include the Lifts, entrances, lobbies, staircases, landings, passages, hallways, management office, the switch room, the transformer room, the lift motor room, the fire services control room, the flushing water tanks, the pump rooms, the refuse collection room, the Loading and Unloading Spaces, the garden and Landscaped area of the roof above the Commercial Development and the Day Nursery, and other areas and spaces of the Land and the Building.

Common Facilities

means and includes all those installations apparatus plant equipment appliances and facilities whether within or without the Common Areas used in common by or installed for the common benefit of all of the Owners and occupiers of the Land and the Building and which are not for the exclusive use or benefit of any particular Owner or occupier and, without limiting the generality of the foregoing, include drains, channels, water mains, sewers, gutters, watercourse, wires, cables, wells, portable water tanks, pipes, salt and fresh water intakes and mains, fire warning and fighting equipment, transformers switches, meters, lights, pumps and other service facilities and apparatus whether ducted or otherwise, which are or at any time may be in, under, over or passing through the Land and the Building and which are installed for the use and benefit of the Building as a whole.”

(emphasis added)

43.  Section 2 deals with the rights of the assignor and assignee (i.e. owners) in the DMC. Clauses 2.3 and 2.4 stipulate that:-

“Clause 2.3

Each equal undivided share in the Land and the Building and the full and exclusive right and privilege to hold use, occupy and enjoy any part of the Building shall be held by the person or persons from time to time entitled thereto subject to and with the benefit of the easements rights privileges and obligations herein contained.”

Clause 2.4

The Owners shall during the residue of the term of years granted by the Crown Lease be bound by and shall observe and perform the covenants provisions stipulations and restrictions herein contained and the benefit and burden thereof shall be annexed to every part of the Land and the Building and the undivided share or shares held therewith.”

44.  Section 3 concerns “Easements Held with Each Unit”.

“3.1 Residential Units
	3.1.1	The Owner of a Residential Unit shall have the benefit of the following easements, rights and privileges subject to the provisions and restriction contained in this Deed, the House rules and subject to the rights of the Manager as hereinafter provided and to the payment by the Owner of his due proportion of the Manager’s Remuneration and management expenditure:-
		(a)	Full right and liberty (but subject always to the right of the Manager and the Assignor hereunder) for the Owner for the time being, his tenants, servants, agents, occupants and licensees (In common with all persons having the like right) to go pass and repass, over and along and to use such of the Common Areas as are intended for the common use and benefit of the Owners and occupiers of the Residential Development and are not reserved to the Owner or occupier of any Residential Unit for all purposes connected with the proper use and enjoyment of such Residential Unit.
			…
	3.1.2	The Owners of the Residential Units shall have no right to enter upon any part of the Land and the Building save as expressly herein provided…
3.2 Commercial Units
	3.2.1	The Owner of a Commercial Unit shall have the benefit of the following easements, rights and privileges subject to the provisions and restrictions contained in this Deed, the House Rules and subject to the right of the Manager as hereinafter provided and to the payment by the Owner of his due proportion of the Manager’s Remuneration and management expenditure:-
		(a)	Full right and liberty (but subject always to the right of the Manager and the Assignor hereunder) for the Owner for the time being, his tenants, servants, agents, lawful occupants and Licensees (in common with all persons having the like right) to go pass or repass, over and along and to use such of the Common Areas forming part of the Commercial Development and not those forming part of the Residential Development for all purposes connected with the proper use and enjoyment of such Commercial Unit. …
	3.2.2	The Owners of the Commercial Units shall have no right to enter upon any part of the Land and the Building save as expressly herein provided. …
3.3 The Day Nursery
	3.3.1	The Assignee shall have the benefit of the following easements, rights and privileges subject to the provisions and restrictions contained in this Deed and subject to the rights of the Manager as hereinafter provided:-
		(a)	Full right and liberty (but subject always to the right of the Manager and the Assignor hereunder) for the Assignee his tenants, servants, agents, lawful occupants and licensees (in common with all persons having the like right) to go pass or repass, over and along and to use such of the Common Areas serving the Day Nursery for all purposes connected with the proper use and enjoyment of the Day Nursery. …
	3.3.2	The Assignee shall have no right to enter upon any part of the Land and the Building save as expressly provided hereof …” (emphasis added)

45.  Section 4 of the DMC concerns the “Easements to which Each Unit is Subject” :-

“4.4 Provisions applicable to all Owners

4.4.1 The Manager shall have full right and authority to control and manage the Common Areas and Common Facilities or any part thereof.

4.5 The Manager shall, subject to the terms and conditions in the Crown Lease and the restrictions in the Occupation Permit, also have full right and authority to set aside any part of the Common Areas or Common Facilities for specific use provided that such specific use shall be for the benefit of the Building and the Owners (prior consent from the Assignee is required if the Common Areas or Common Facilities concerned will affect the enjoyment of the Day Nursery).”

46.  Section 5 concerns the “Covenants and Restrictions to be Observed and Performed by the Owners” :-

“5. Covenants and Restrictions to be Observed and Performed by the Owners

5.1 All Owners

…

5.1.4 No Owner save and except the Assignee shall make any structural alterations or additions which will interfere with or affect the rights of other Owners to any part of the Building owned by him nor shall any Owner use cut injure damage alter or interfere with any part or parts of the Common Areas or any of the Common Facilities or any equipment or apparatus on in or upon the Land or the Building not being equipment or apparatus for the exclusive use and benefit of any individual Owner.

…

5.1.9 No Owner shall do or permit or suffer to be done and each Owner shall take all possible steps to prevent his tenants occupiers or licensees from doing any act deed matter or thing which in any way interferes with or affects or which is likely to interfere with or affect the proper management and maintenance of the Building.

…

5.2 Owners of Residential Units

…

5.2.7 No Owner shall be allowed to bring any bicycles, baby carriages or similar vehicles in the lifts unless the greatest care against damage to the lifts is exercised, and the same shall not be allowed to stand in any passageways or the Common Areas.

…

5.3 Owners of Commercial Units

…

5.3.2 All Commercial Units shall be used for commercial purposes only and no industrial machines shall be installed therein and no person shall be permitted to reside therein.”

(emphasis added)

47.  Section 6 concerns the duties and power of the Manager. Clause 6.2.1 provides that:-

“The Manager will manage the Land and the Building in a proper manner and in accordance with this Deed and except as otherwise herein expressly provided the Manager shall be responsible for and shall have 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.  Without in any way limiting the generality of the foregoing the Manager shall have the following duties and power namely:- …
(i)	To prevent the obstruction of all the Common Areas and to remove any article or thing causing obstruction … …
(o)	To do all things which the Manager shall in his absolute discretion deem necessary or desirable for the purposes of maintaining renewing and improving all facilities and services in or on the Building for the better enjoyment or use of the Building by its Owner occupiers and their licensees. …
(q)	To prevent any person from occupying or using otherwise than in accordance with the written permission of the Manager or the provisions of this Deed any of the Common Areas. …
(ai)	To allocate and/or assign any lift for the exclusive use of particular floors and/or Units where the circumstances so warrant.” (emphasis added)

48.  Section 8 concerns owners’ committee. Clause 8.1.2(i) provides that:-

“All resolutions passed at a meeting of the Owners’ Committee shall be binding on all the Owners”.

Use of Lift under DMC

49.  The respondent focuses on Clause 3.2.1(a) which expressly prohibits owners of commercial units from passing or using the common areas which form part of the Residential Development.  Based on the definition of “Residential Development”, the respondent submits that since the lift hall and the two lifts must be intended for residential use, by definition they shall form part of the common area of the Residential Development access to which by the commercial owners including the applicant must be excluded.

50.  I am not persuaded by this argument. The simple and direct answer to this argument is that Lift A and the lift lobby, strictly speaking, should not be regarded as intended for residential use.  To describe it more accurately, they are intended for the mixed or common use by the residential units and the commercial unit on 1/F.

51.  When considering the original design and layout of the Building, before the alteration to Shops 4 and 5 in about or after December 1992, there was not an entrance on the ground floor leading to 1/F.  Under the original design, 1/F was only[3] accessible by entering the main gate to the residential block and then walking through the corridor towards the lift lobby to either take the lift or climb up the stairs.  If the respondent’s interpretation is adopted, it literally means that the draftsman of the DMC did not intend to give any means of access for people to commute between ground floor and 1/F at all.  That does not make sense and cannot be right.

52.  I am inclined to the view that when the DMC was drawn up and executed back in 21 July 1992, it was intended that Lift A should serve 1/F.  The owners of and those who visit 1/F should be allowed to use the lift and, for this purpose, they should also be permitted to enter or walk pass the main gate, the corridor and the lift lobby where the lift was situated.  Such an interpretation of Clause 3.2.1(a) is reasonable and logical and would not produce the absurd result of depriving people of any means of access to 1/F unit.

53.  But that should not be the end of the analysis because the conspicuousness and accessibility of 1/F had since been substantially changed by the structural alterations to the Property undertaken by the applicant’s predecessor in title.

Structural Alterations

54.  Within the premises of Shops 4 and 5, there were once no access to the cockloft. Following the approval of the Alterations and Additions Building Plans (Ref.2-3/4069/89) dated 15 December 1992 by the government authority, Shops 4 and 5 were divided into the front portion and the rear portion.  The front portion remains as shop whilst the rear portion was turned into an entrance/reception hall on the ground floor.  Possibly with the demolition of the floor slab between the cockloft and the rear portion of Shops 4 and 5, an internal one-way escalator[4] together with a staircase in parallel were installed to connect between the ground floor and the cockloft.  There is another staircase connecting between the cockloft and 1/F. People can then make use of that staircase to have access to the restaurant on 1/F (“the Alterations”).  

55.  Such additions and alterations had obviously enhanced the conspicuousness and accessibility to 1/F as a main lobby entrance had been created on the ground floor along the main street.  The Alterations were approved by the government authority in December 1992, five months after the DMC was executed in July 1992.  

56.  The Applicant did not plead the Alterations nor have they mentioned about it in their witness statements or expert report.  However, when the applicant’s counsel, Mr Tommy Ho, cross-examined the respondent’s factual witness Mr Chui, Mr Ho took the initiative to ask the witness if he knew that the current Shops 4 and 5 was not the same as the original plan.  Mr Chui answered that it seemed to look a bit different without elaborating further.  I asked Mr Chui to clarify whether he actually knew about the situation or details of the Alterations to the original plans and he answered in the negative.

57.  In these proceedings, there is no information as to why Shops 4 and 5 had been changed that way to provide an entrance on the main road leading to 1/F direct.  Upon the tribunal’s enquiry, no information could be provided as to whether the Alterations were done with the consent of the manager and/or other owners of the Building.

58.  It could be that consent had not been obtained.  It could also be that consent had been given on the understanding that after the Alterations 1/F owner and visitors shall take the Escalator (and the staircase parallel thereto) as their primary means of access rather than continuing to use the lift in competition with the residential owners.  Unfortunately, there is completely no evidence or information about the situation pertaining to the Alterations.  

59.  In my view, even if the DMC originally intended, upon its drafting and execution, that Lift A should serve 1/F, that intention was obviously based on the original design of the Building with a correspondingly smaller number of visitors to 1/F which could be reasonably absorbed by the capacity of the lift lobby and the lift without causing much problems to the residential owners.  But since the Alterations have virtually changed what I would describe metaphorically as “the ecology” of the Building by substantially increasing the conspicuousness and accessibility to 1/F and the potential number of visitors thereto, in my view it is no longer meaningful for the parties to place their entire focus on whether the applicant’s use of the lift was permitted or not permitted under the DMC.

60.  Turning to the question of security, as per the original design of the Building before the Alterations, any outsiders or customers who wished to visit 1/F had to enter the Building from the main gate entrance on the ground floor passing through two security measures.  The first security measure being the entering of password on the device mounted on the wall outside the gate or by pressing a button to call upon the security guard to open the gate.  The second measure is the provision of personal data to the security guard in the lift lobby for registration.

61.  It could be visualized that after the Alterations, any outsiders or customers could easily gain access to 1/F through the ground floor reception hall at the rear of Shops 4 and 5 without having to go through any security measure.  Upon reaching the restaurant/shop on 1/F, such outsiders or customers could, via another door in the restaurant/shop, gain access to the lift or the staircase situated at the back.  By taking the lift or climbing the stairs, such outsiders or customers could actually go to whichever floors of the residential area as they please.

62.  Clearly, the Alterations have opened up a major loophole in the security system of the Building. With or without the lift service, the loophole is still there because the outsiders could walk to the residential area via the staircase even without the lift, the difference is just a matter of degree.

Clause 5.1.4 – No Structural Alteration

63.  Section 5 of the DMC entitled “Covenants and Restrictions to be Observed and Performed by the Owners”.  Clause 5.1.4 stipulates that:

“No Owner save and except the Assignee shall make any structural alterations or additions which will interfere with or affect the rights of other Owners to any part of the Building owned by him nor shall any Owner use cut injure damage alter or interfere with any part or parts of the Common Areas or any of the Common Facilities or any equipment or apparatus on in or upon the Land or the Building not being equipment or apparatus for the exclusive use and benefit of any individual Owner.”

(emphasis added)

64.  Under Clause 5.1.4, no owner shall make any structural alterations if the rights of other owners of the Building are affected thereby.  It appears to me that the Alterations did (and do) interfere with or affect the rights of the residential owners by substantially compromising the security system of the Building and/or overloading the capacity of the lift and the lift lobby, arguably constituting a breach of Clause 5.1.4.  

65.  Having said that, I have no intention to elaborate the question of breach or make any ruling thereon because this is not the subject matter in issue and the respondent is not counterclaiming against the applicant for a breach of the said DMC provision in these proceedings.

Clause 5.1.9 – Duty To Prevent Tenant From Interfering

66.  Clause 5.1.9 under Section 5 “Covenants and Restrictions to be Observed and Performed by the Owners” is also relevant, it provides that:

“No Owner shall do or permit or suffer to be done and each Owner shall take all possible steps to prevent his tenants occupiers or licensees from doing any act deed matter or thing which in any way interferes with or affects or which is likely to interfere with or affect the proper management and maintenance of the Building.”

(emphasis added)

67.  According to the respondent’s factual witness, Mr. Chui, in about late 2009, the Escalator remained in a state of disrepair and could not be used for a long period of time.  The waitress(es) of Fu Lin Wah, the then tenant of 1/F, wrote down the password of the main gate to the residential block on pieces of papers and passed them to their customers so that they could enter the residential block to take lift to commute between the ground floor and 1/F.  

68.  The fact that outsiders could easily obtain the security password to the main gate and could freely enter the Building no doubt caused security concern. As a matter of fact, the influx of large number of outsiders did result in overcrowding of the lift lobby and some sort of competition of lift service and actual conflicts between the outsiders and the residents.  Such factual evidence of the respondent is not disputed by the applicant.

69.  The applicant was arguably in breach of Clause 5.1.9 of the DMC by failing to take all possible or any steps to prevent their tenants[5] from doing acts which would interfere with or affect the proper management of the Building. But again, I would not elaborate or make any ruling on the question of breach since there is no counterclaim for such breach before me.

Clause 3.2.1 – Not Absolute Right

70.  Clause 3.2.1 provides that:-

“The Owner of a Commercial Unit shall have the benefit of the following easements, rights and privileges subject to the provisions and restrictions contained in this Deed, the House Rules and subject to the rights of the Manager as hereinafter provided and to the payment by the Owner of his due proportion of the Manager’s Remuneration and management expenditure:-

(a)

Full right and liberty (but subject always to the right of the Manager and the Assignor hereunder) for the Owner for the time being, his tenants, servants, agents, lawful occupants and Licensees (in common with all persons having the like right) to go pass or repass, over and along and to use such of the Common Areas forming part of the Commercial Development and not those forming part of the Residential Development for all purposes connected with the proper use and enjoyment of such Commercial Unit. …” (emphasis added)

71.  Clause 3.2.1 explicitly provides that owners’ rights, easements and benefits are “subject to the provisions and restrictions contained in this Deed, the House rules and subject to the rights of the Manager”.

72.  Clause 4.4.1 provides that:-

“The Manager shall have full right and authority to control and manage the Common Areas and Common Facilities or any part thereof.”

73.  Clause 6.2.1 provides that:

“The Manager will manage the Land and the Building in a proper manner and in accordance with this Deed and except as otherwise herein expressly provided the Manager shall be responsible for and shall have 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.  Without in any way limiting the generality of the foregoing the Manager shall have the following duties and powers namely:- …
(i)	To prevent the obstruction of all the Common Areas and to remove any article or thing causing obstruction …
(o)	To do all things which the Manager shall in his absolute discretion deem necessary or desirable for the purposes of maintaining renewing and improving all facilities and services in or on the Building for the better enjoyment or use of the Building by its Owner occupiers and their licensees. …
(ai)	To allocate and/or assign any lift for the exclusive use of particular floors and/or Units where the circumstances so warrant.” (emphasis added)

74.  One can see that Clause 6.2.1 gives the manager a wide power to do all such things as may be in their opinion necessary to improve all facilities and services and to prevent obstructions of the common areas, including the power over the use of lift.

75.  In my view, even assuming in the applicant’s favour that its that right to use the lift is wholly unaffected by the Alterations both as a matter of law and fact, such right by their true nature should never be an absolute and unqualified one.  The applicant could not assert the use of lift as an absolute right without any regard the potential breach of the DMC provisions[6] on their part, without any regard to the inconvenience and interference caused by them or their tenants to other owners of the Building and without any regard to the manager’s obligation and power to properly manage the Building and protect the interests of other owners.  

Reasonableness

76.  It is trite that in building management contents, the exercise of rights be it by the owners or the manager must be subject to an element of reasonableness. 

77.  In Music Advance Ltd. v The Incorporated Owners of Argyle Centre [7], the plaintiffs there carried out karaoke business on the 4^th and 5^th floors of the commercial building.  Following a number of incidents in the early hours of the morning, the incorporated owners passed a resolution to the effect that all passenger lifts would not be in operation from 11 p.m. to 7 p.m. which means in practice the main entrance of the building would be closed by a metal roller gate and all persons wishing to enter would have to register their identities.  The plaintiffs complained that this caused serious loss of business.

78.  In refusing the plaintiffs’ application for an interlocutory injunction, Hon Ma J (as he then was) laid down the following principles:-

“(a)	The right set out in clause 8B(b) 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.  The right set out in the Third Schedule is expressly made subject to the other provisions of the DMC.
(b)	The plaintiffs’ right under the DMC is only to reasonable access.  That said, correspondingly, any restrictions on a tenant’s right of access must be reasonable.
(c)	The measures taken (closing the main entrance, restricting lift access and registering the identities of visitors) were obviously to increase the security and safety of the Building.  There is no allegation that the defendant had somehow acted in bad faith or in a bizarre or illogical way.
(d)	The aspects of safety and security weigh heavily in my mind. Any steps taken to curb violent and illegal activity must be sympathetically regarded.”

79.  Here in the present case, it does not appear (at least not clearly) that the applicant is challenging the reasonableness of the closure of the lift as a measure to tackle the security and overcrowding concerns.  The applicant’s case is premised on there being a right, an absolute right, for the applicant to use the lift on the true and proper construction of the DMC provisions.

80.  But even assuming that the reasonableness of the respondent’s measure is in issue, I do not think the measure taken by the respondent was unreasonable.

81.  The respondent restricted the applicant’s use of the lift[8] mainly out of security and nuisance concerns.  I find such concerns to be real and valid. Giving a blanket permission for all people to use the lift to commute between the ground floor and 1/F without any remedial measures will only set the owners up for inconvenience and security issues.

82.  I agree with the respondent that the old measure of security guard’s registering the ID card of those who enter the Building may not be the cure because considering the size of 1/F unit and the quantity of people it could hold, allowing outsiders to take the lift to 1/F will necessarily result in more strangers being able to enter the Building.  The security guard would need to pay extra time and efforts to record the personal information of each and every customer which could take up much of the time resources available for his other duties.  Practicality also suggests that when doing identity registration, the security guard could hardly keep his eyes fixated on the CCTV monitor to see if any outsiders who have registered for visiting 1/F would commute to the residential floors.

83.  I also take into account the following salient features and designs of the Building to assess the reasonableness of the respondent’s measure :-

(a)	1/F is 4,244 sq.ft in size, it is not a small area and can accommodate a lot of customers or people;
(b)	The size of the lift hall is very small and can easily become congested;
(c)	There are only two lifts for use by the residential owners.  Once Lift A is opened to the visitors of 1/F, the residential owners’ waiting time for lift services , especially for Lift A, will be increased;
(d)	Lift A is not the only access to 1/F which is more directly accessible by the Escalator and the staircase parallel thereto;
(e)	The relatively small size of the lift lobby means that the guard post can accommodate only one security guard; and
(f)	The day nursery Lift is just next to the other two lifts and it is the only access by the pupils and their parents to the day nursery. If visitors of 1/F unit could make use of the lift, the lift hall would be very congested at the time when parents pick up their children from the day nursery.

84.  It is also worth noting that the cessation of the lift service had not been objected to by the then owner of the Property, i.e. the applicant’s successor in title.  It appears that ever since the applicant acquired the Property in early 2010, they by and large have been able to rent out the Property without difficulty and have not taken the lift matter seriously.  It was only until 2018 the applicant started to pay more concern when their potential tenant(s) desired the provision of lift service for their business.

85.  In my view, it was incumbent upon the applicant to take a more proactive approach to positively deal with the problems that had been caused by the Alterations. For instances, they could have obtained information from their tenant or potential tenant on the estimated number of visitors who might use the lift by reference to particular nature of their business.  With such information, assessment could have been made as to whether the capacity of the facility as well as the available security manpower could cope with the volume of visitors.  Additionally, thoughts could have been given on the feasible ways to prevent visitors from entering the residential areas or other parts of the Building via 1/F.  Regrettably, there is no evidence suggesting that the applicant has done any of the above or has ever openly and sincerely discussed with the manager or the respondent with an intention to take positive steps to resolve problems.

86.  From the oral testimony of the applicant’s factual witness, Madam Wong Fan Antenor, it is crystal clear that the applicant actually has no awareness of the obligation on their part to comply with the DMC or to reasonably see to it that their tenants would comply with it.  Madam Wong said with a “none-of-my-business” attitude that she would not know how their tenant was going to use the lift, would not know the operation of the tenant’s business and it would be the tenant’s own responsibility, instead of the applicant’s responsibility, to comply with the rules.

87.  Under cross-examination, Madam Wong repeatedly said that the applicant had the right to use Lift A.  At some point of her oral evidence, she criticized the respondent for not proposing reasonable measures for their consideration.  But Madam Wong could not answer when the respondent’s counsel pointed out to her that in none of the pre-action correspondences had the applicant ever expressed its willingness to comply with the reasonable measures to be proposed by the respondent.

88.  The chairman of the respondent, Mr Chui, confirmed during oral evidence that in all the meetings[9] which Madam Wong had attended on behalf of the applicant, she was requesting full and unrestricted right to use Lift A and did not manifest any willingness to negotiate or compromise.

89.  I believe Mr Chui to be telling the truth and believe that the applicant’s attitude in this matter has always been – to assert an absolute right to use the lift with no obligation on their part to concede, reconable or resolve.  That sort of assertion and attitude certainly would not meet with the tribunal’s approval on the simple and basic rationale that one cannot claim full rights from others without performing obligations of their own.

90.  To sum up on the question of the reasonableness of the measure taken (assuming it is in issue), I do not consider it unreasonable for the manager and the respondent not to provide lift service to 1/F in light of the circumstances of the present case.  The circumstances include, inter alia, their valid concerns over security and nuisance, the features in the physical layout of the Building, the applicant’s attitude and behavior as well as the lack of means of access for the residential owners to commute between the ground floor and their units as compared to the better accessibility of 1/F (which justified the giving of priority to the residential owners over 1/F visitors on the use of lifts).  

Other Arguments

91.  Mr Ho cited Silver Triumph Holdings Ltd v Guardian Property Management Ltd [10] and Grace International Ltd v The Incorporated Owners of Fontana Gardens and Others [11] in support of the contention that the manager’s power to control the common areas are subject to the laws of Hong Kong and must be construed consistently with other provisions in the DMC and should not conflict with or affect the right of any owner to enjoy his own unit and the common areas.

92.  First of all, I do not understand why Silver Triumph can be cited as an authority for the proposition that the manager’s power to control the common areas are “subject to the laws of Hong Kong”.

93.  In Silver Triumph, the applicant was the manager of a Kowloon City estate and the respondent was the registered owner of the public and private car parks in the estate, which used a mechanical parking system.  To gain access to the machine room for maintenance and repairs to the car-lifting machines, it was necessary for the owner to pass through the refuse storage chamber which was part of the common area and was always locked for security reasons by the manager.  The owner was provided with a key when access to the machine room was required and would return it after use. Unsatisfied with this arrangement, the owner commenced proceedings in the Lands Tribunal.  The trial judge found that the respective rights of the owner and the manager were subject to each other and further found that the manager in refusing to provide a duplicate key to the owner had interfered with the owner’s right to use its own premises.

94.  The manager sought leave to appeal arguing that owner’s right should be rendered inoperative whenever it came into conflict with the rights of the manager.  The Court of Appeal, in dismissing the application for leave to appeal, held that the manager’s right of control over the common areas and facilities must be construed consistently with other provisions in the DMC.  The construction of the trial judge arrived at struck the right balance between the owner’s right and the manager’s right and was plain good sense.  In providing a duplicate key to the owner, the owner’s right to access to the machine room via the refuse storage chamber would not be interfered with and at the same time the manager’s control over the common areas and facilities would not be affected as security would not be promised.

95.  Kwan JA further said in paragraph 17 of the judgment 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 co-exist with other provisions in the DMC unless specifically excluded.[12]”

96.  As for the applicant’s contention that the manager’s powers are subject to other provisions of the DMC, it does not appear to be a matter in dispute but, as said by the Court of Appeal in Silver Triumph, the same principle should equally apply to the owner’s rights under the DMC.  Hence, the applicant’s “right” to use the lift is also not absolute and must be subject to an element of reasonableness and must co-exist with other DMC provisions, such as Clauses 5.1.4, 5.1.9, 3.2.1, 4.4.1, and 6.2.1 etc as discussed above.

97.  Furthermore, one should not lose sight of two important pieces of information. First, the DMC in the present case gives the manager specific power to assign and allocate the use of the lifts as opposed to a general power to control the common areas and facilities.

98.  Secondly, the trial judge in Silver Triumph found as a matter of fact that providing the owner with a spare key to the refuse storage chambers would not affect the manager’s right over the common areas nor compromise the security but the situation of the present case is quite different.  Here in this case, the Alterations would likely attract more visitors to 1/F which coupled with the provision of lift services to that floor would likely interfere with the residential owners’ use of the lift and compromise the security system of the Building.

99.  I therefore do not think Silver Triumph would be of assistance to the applicant.

100.  I am not persuaded by the applicant’s arguments about the alleged violations of the BPR and the DDO.  This tribunal has no jurisdiction to try cases about discrimination or whether certain regulation concerning fire safety has been violated.  Should the applicant consider that the respondent is in breach of the DDO or has attracted criminal liability for having breached certain regulations concerning fire safety, they certainly are at liberty to and could by all means pursue the same in the proper venues.  I do not think I should grant declaratory relief on the basis that the DDO or some regulations with criminal liability have been violated for doing so would be both premature (because whether there were breaches of DDO and BPR has yet to be tried and determined) and inappropriate (in usurping the functions of the courts with proper jurisdictions).

101.  As for other arguments about the resolution being ultra vires of the power under the DMC, the closure of the lift being ultra vires of the contents of the resolution, the passing of the subject resolution being equivalent to a rewriting of the DMC etc., I have no intention to discuss each and every one of them separately because these arguments are unconvincing and peripheral and could be disposed of by the above analysis in any event.

CONCLUSION

102.  In this application, the applicant seeks declaratory reliefs and damages for loss of rental due to unavailability of lift service.  It is trite that the granting of declaratory relief is a discretionary matter.  The relief being sought must not be something that would be unlawful, unconstitutional or  inequitable for the court to grant or contrary to the accepted principles upon which the court would exercise its discretion[13].

103.  This is not a case of an owner, having taken reasonable steps to resolve problems but still have their needs persistently ignored, seeks help from the court for fair protection of their rights.  What we have is an owner, having taken no step to try resolving the problems they created,  asserts an unfettered right to use the lift at the expenses of others in an wholly uncompromising and uncaring attitude[14].

104.  For all the reasons discussed above, I shall refuse to grant the declarations sought.  In my view, to grant so is unjust and is no different from my endorsing the applicant’s assertion of an absolute and unrestricted right to use the lift under the DMC which is something that I fundamentally disagree. Should the applicant wish to reinstate the lift service, they shall interact with the respondent reasonably with a view to addressing the valid concerns of other owners before prematurely seeking redress from the court .  As I do not find breach of the DMC on the respondent’s part, it follows that no damages would be awarded to the applicant.

105.  I order that the application be dismissed.  There be a costs order nisi that the applicant do pay the respondent’s costs in these proceeding to be taxed on the District Court scale (with certificate for Counsel) if not agreed.  This order nisi shall become absolute absent any application for variation within 14 days from the date of judgment.

106.  Lastly, I thank counsel for their assistance.