CIITYBASE PROPERTY MANAGEMENT LTD v. CRYSTAL ARM LTD

cacv 6/2007

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 6 of 2007

(on appeal from LDBM NO. 370 of 2005)

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J U D G M E N T

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Hon Rogers VP:

1.  This was an appeal from a judgment of Deputy Judge Wong, the Presiding Officer of the Lands Tribunal, given on 19 December 2006.  The judge granted an injunction that the respondent should “allow the Contractor and/or its servants, agents or authorised persons or contractors to enter the roof of the Premises (Flat A., 36 Floor and Roof, Block 11, Kenswood Court, Kingswood Villas, No. 2 Tin Lung Road, Tin Shui Wai, Yuen Long, New Territories, Hong Kong) (“the flat”) to clamp a gondola against the external walls and carry out all necessary procedures steps and works for the purposes of cleaning and maintaining the external walls of the building in question.”  The judge also ordered that the respondent should pay the applicant damages in the sum of $130,500 together with costs on a solicitor and own client basis.  At the conclusion of the hearing of this appeal judgment was reserved which we now give.

The Background

2.  The respondent is the owner of the flat, which is a top floor flat in a residential block of flats which is part of a large estate in Tin Shui Wai.  Part of that flat, of course, comprises the roof.

3.  The applicant is the manager of the estate.  In 2005 the estate was some 10 years old and the external walls of the public areas were in need of cleaning and general maintenance.  The applicant scheduled the commencement of the works for March 2005 with an expected finish date of November 2005.  In about May 2005 the applicant requested the respondent to allow the contractor and its workers to enter the roof space of the applicant’s flat to be able to clamp a gondola which was to be used in the course of the cleaning and maintenance.  The respondent, through its director Mr Fong, expressed concern about the way that gondolas were to be secured to the roof and in particular as to whether latent damage might be caused.  It was said that the way that the clamps to support the gondolas would be fixed to the structure of the building might damage the decorative elements.

4.  Eventually solicitors, who by that time had been engaged on behalf of the respondent, wrote to the applicant on 5 October 2005 and said that their client would not consent to the proposed use of the flat and the roof to install the suspended work platform unless:

“	(a)	your company proves to the satisfaction of our client that the existing actual state and condition of the parapet wall has the necessary structural strength to support the suspended work platform without causing permanent and/or structural damage;
	(b)	an undertaking is given by your company to pay our client’s costs incurred in employing a registered structural engineer (“RSE”) to conduct inspections to the parapet wall before, during and after the proposed work.  The estimated time required by the RSE is estimated to be not exceeding 20 working hours; and
	(c)	an indemnity in terms satisfactory to our client is given by your company to indemnify all costs, expenses, damages and losses suffered as a result of damage to our client’s property in using our client’s property for the proposed work.”

5.  The applicant’s solicitors then wrote back assuring the respondent that the contractor that had been engaged took the safety aspects of its work very seriously and was satisfied about the strength of the parapet wall.  It was said that similar apparatus had been used in other blocks and no damage, whether structural or otherwise, had been done to the parapet walls.  The letter then went on to say that as a gesture of goodwill the applicant was prepared to offer a sum of $4,000 towards the employment of a registered structural engineer by the respondent and finally it was said:

“	So far as the indemnity requested under paragraph 5(c) of your said letter is concerned, our client has agreed to provide the same.”

6.  The respondent’s solicitors responded a week later saying that they still required to be satisfied as to the safety of the work.  They rejected the offer of $4,000 and maintained their original request in that respect and, finally, asked that the applicant’s solicitors should provide a draft indemnity for their client’s consideration.  The correspondence then continued and it appears that the respondent’s attitude hardened.  It insisted that the erection of scaffolding was a suitable alternative to the use of gondolas.  Furthermore, questions as to occupier’s liability on the part of the respondent were raised.  Shortly thereafter these proceedings were commenced on 9 December 2005.

The judgment below

7.  The judge recorded the fact that the applicant placed great emphasis on the practical need to gain access to the roof of the flat so as to clamp a gondola and carry out the necessary works.  He considered that the crux of the matter was whether the applicant had the right to do that under the Deed of Mutual Covenant (“the DMC”).  Central to the judge’s decision were the provisions of clause B1 of Section III of the DMC which provide that:-

“

The Manager, its respective contractors, agents, servants, workmen and other persons authorized by it shall have the exclusive and unrestricted right and privilege to enter into and upon any part of the Estate and where necessary, the interior of any unit, upon prior reasonable notice (except in case of emergency) for the purpose of inspecting and maintaining any part or parts thereof including the Common Areas and the Common Service Facilities or any apparatus or equipment used or installed for the benefit of the Estate or otherwise carrying out the management and maintenance of the Estate or performing the Manager’s obligations hereunder or under any relevant Sub-Deed as the case may be;”

8.  The judge took into account the whole of the DMC and specifically Clause B1(1) of Section VI,  Clause B1(3) of Section VI, Clause B1(39) of Section VI, Clause A8 of Section V, Clause B11 of Section V and Clause E8 of Section V.  He held that it was necessary to clean the external walls and that the gondola system was the best method available to facilitate the cleaning of the external walls.  Whilst the gondola system might occupy the roof for a period of time, that occupation was only temporary and it did not deprive the respondent of its interest in the roof.  The judge then went on to consider the extent of the right of access and he held that that right in the applicant must involve staying at a place to do work.  It was not simply a right given to the manager to use the roof as a passageway.  Likewise, since the applicant was relying on the provisions that it could have access for the purpose of carrying out the management and maintenance of the estate and performing its obligations in that respect, that would extend to fixing anchorages for the back-ties necessary for the clamping mechanism.  He accepted that the applicant as the manager owed a duty to all the owners to act properly and fairly in the discharge of its obligations under the DMC.

9.  The judge concluded his assessment of the applicant’s and the respondent’s rights in paragraphs 15 and 16 of the judgment as follows:

“	15.	As to the other clauses relied on by the Applicant, they do not state expressly that the Applicant has right of entry to the Respondent’s roof, but they state clearly the general power of the Applicant.  Clause B1(1) of Section VI gives the Applicant full and unrestricted authority to do all such acts and things as may be necessary for the proper management and maintenance of the Estate.  Clauses B1(39) of Section VI gives the Applicant the power and authority to do all such other things as are reasonably incidental to the proper management and maintenance of the Estate.  I think all these clauses support the Applicant’s contention that it has the power to maintain the Estate in the manner they proposed to do.  I do not find them contravening Clause C(b) of Section III for the same reasons as stated above.
	16.	Clause A8 of Section V stipulates that no owner shall do anything to interfere with the management and maintenance of the Estate.  If the Applicant has the right under Clause B1 of Section III to enter the Respondent’s roof and do the maintenance work as aforesaid, the Respondent will clearly be in breach of this clause by refusing the Applicant to carry out the maintenance work.  Of course, whether there is any breach of Clause A8 of Section V depends on whether the Applicant has any right to enter under Clause B1 of Section III, but as aforesaid, I do find that the Applicant has such a right under Clause B1 of Section III.  Thus, the Respondent is in breach of Clause A8 of Section V in refusing the Applicant’s entry.”

10.  The judge rejected the notion however that the applicant could impose the three conditions which were required by the respondent.  It might be noted that by the time of trial, the amount estimated as being required to pay the RSE was $60-70,000.  In those circumstances he imposed the injunction.

11.  As regards the damages, the judge noted the position that under the contract with the contractor the applicant could postpone the time for the completion of the work.  It had been argued that because the applicant had given notice it was not liable to pay the extra costs and expenses which were claimed by the contractor for carrying out the work using the gondola suspended from the respondent’s premises.  However, the power to extend the time for completion was different from a liability to pay any extra costs incurred as a result of an extension.  It was thus held that all the items claimed were additional to the original contract and that, therefore, the contractor had been entitled to claim those sums against the applicant.  Since the respondent was responsible for this delay in causing the applicant to postpone the completion the respondent had to reimburse the applicant for the extra costs.

This appeal

12.  On this appeal Mr Mok, who appeared on behalf of the respondent, took a number of points.  All of these, save one, appear to have been taken in the court below.  In the first place it was argued that clause B1 only permitted the manager to enter upon the respondent’s flat “where necessary” and it was also said that that power did not extend to turning the roof of the respondent’s flat into a work shop.  It was said that by suspending a gondola from the roof the applicant would be exposing the respondent to risks of liability to third parties and damage to the property.  It was also said that because the erection of the equipment would entail use of back-ties attached to the internal parts of the roof to anchor the clamping mechanism what the applicant proposed to do would interfere with the respondent’s proprietary rights as a unit holder to enjoy the exclusive possession of its unit.  This was quite apart from, and in addition to, the right of the respondent not to have access to its unit unreasonably impeded or obstructed.  In this regard reference was made to clause C(b) of Section III.  It was also said that the provisions of the DMC do not give the manager powers to enter the interior of any flat and to do work thereon.  Although it might be necessary to clean the external walls and to carry out maintenance thereon, it was not necessary to use gondolas for that purpose.

13.  In my view, the judge’s approach to these arguments was correct.  Once it is conceded that it was appropriate for the applicant to clean and maintain the external walls of the building, the applicant was under a duty to carry out that work.  It had to do so in the appropriate and most economical way.  It was clearly for that purpose that it was given the right of access under clause B1.  The evidence established that the use of gondolas was the most appropriate way of working on the outside walls.  Although the respondent had its reservations about the way in which the clamping mechanism for the gondolas would be installed, it was, in my view, wholly unreasonable to expect that there would be detailed diagrams showing exactly where the clamps would be placed.  That would have to be decided at the time of installation.  There was no reason to suppose that the persons who would be erecting the clamps would do so other than in a safe and proper manner.  As the evidence shows, the rules and regulations in relation to the use of gondolas require that there should be a Registered Professional Engineer to supervise the erection of the mechanisms and to vouch for the safety standards.

14.  The respondent has singularly failed to show that the use of scaffolding was either safer or would cause less damage than the use of gondolas.  Indeed, the evidence showed the reverse.  Scaffolding would require anchoring of ties, which would inevitably cause damage to the structure of the building, albeit that might be repairable to a large extent.  Furthermore, the use of gondolas would enable the work to be carried out very much quicker.  The judge’s approach to the minor deprivation of the enjoyment of the roof whilst the clamps were in place was in my view entirely correct.

15.  In argument Mr Mok placed reliance on the need for an indemnity.  There were two reasons for this.  In the first place it was said that the respondent might incur liability to third parties.  However, despite encouragement to do so, no area of potential liability to third parties on the part of the respondent was demonstrated.

16.  As regards potential damage to property, specifically the internal parts of the roof which belong to the respondent, it was argued that clause 4 of Section VI B excluded liability of the applicant in respect of any act which was carried out.  In my view Mr Chan, who appeared on behalf of the applicant, was correct in arguing that that clause did not exempt liability on the part of the applicant to the respondent as an individual owner.  The position must be that the applicant would be under a duty to leave the flat which it entered in the same condition as it found it.  No doubt, as the judge pointed out, the applicant was under a duty to use reasonable care in carrying out any work but its responsibility would extend to making good any damage or defect caused as a result of exercising its right to enter upon the premises.

17.  As was pointed out in the course of argument, the respondent was in no position to request the 3 conditions, which the respondent sought in the letter of 5 October 2005 and persisted in up to trial.  Even though indemnity as sought under the third condition would be unnecessary because it would be implied by law and in any case the applicant confirmed that it gave it, the imposition of the conditions would be an attempt to vary the terms which governed the relation between the applicant of the respondent under the DMC.  That the respondent was not entitled to demand.

18.  Mr Mok sought to argue that the judge should not have awarded damages because the basis upon which the damages were awarded was different from that pleaded.  When the point was raised that this argument had not taken in the court below, it was said that it was part and parcel of the previous argument.  In my view it is difficult to suggest that.  What is important is that the point argued in the court below was clear and no objection was taken to it at the time.  I consider that the judge was correct in his approach.  It is one thing for the applicant to be able to postpone the date of completion.  However if that postponement of part of the contract caused extra expenses to be incurred, the applicant could not expect the contractor to complete the work in respect of the delayed portion without being reimbursed for the extra expenses which were caused by the work having been delayed for a considerable time.  The postponement was due to the respondent’s conduct.  I consider there is no answer to the claim in this respect.

19.  In my view this appeal falls to be dismissed.  I would make an ordernisi of costs in favour of the applicant.

Hon A Cheung J:

20.  I agree.

Hon Barma J:

21.  I agree.