CIITYBASE PROPERTY MANAGEMENT LTD v. CRYSTAL ARM LTD

LDBM 370/2005

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Building Management Application No. 370 of 2005

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JUDGMENT

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Background

1. The Applicant is the property manager of Kenswood Court, Kingswood Villas, Tin Shui Wai, New Territories, Hong Kong (“the Estate”).  The Estate has 14 residential blocks of 3968 units.  The Respondent is the owner of Flat A, 36/F., and Roof of Block 11 of the Estate (“the Premises”).

2. By a contract dated 7 January 2005, the Applicant engaged Lo’s Cleaning Services Ltd. (“the Contractor”) to clean and maintain the external wall and public areas of Phase 7 of the Estate.  The works were scheduled to commence in March 2005 and expected to finish by November 2005.  According to the Applicant, the Contractor and its agents/contractors have to enter the roofs of each of the blocks of the Estate, including the roof of the Premises, to clamp gondolas against the external walls of the blocks in order to carry out the works.  In or about May 2005, the Applicant requested the Respondent to allow the workers of the Contractors and/or its agents/contractors to enter the roof of the Premises to clamp such a gondola.

3. However, the Respondent refused to allow the workers to enter the roof of the Premises to clamp a gondola unless the Applicant:-

(1)      proved to the satisfaction of the Respondent that the parapet wall has the necessary structural strength to support the gondola without causing permanent and/or structural damage;

(2)      paid the Respondent $60,000 to $70,000 in employing a registered structural engineer to conduct inspections of the parapet wall before, during and after the works; and

(3)      indemnified the Respondent against all actions and liabilities arising in whatever manner from the use of the roof due to whatever reasons and howsoever arising.

4. In response to the Respondent’s request, the Applicant:-

(1)     provided two stability reports, one prepared by a registered person, and one prepared by a registered structural engineer, showing that the parapet wall is sustainable for securing the wall clamp for the gondola and suspension load;

(2)     agreed to contribute $4,000 for the Respondent to engage its own registered structural engineer; and

(3)     agreed to assist the Respondent to claim against the Contractor for any loss and damage arising out of the Contractor’s or its servants, agents or contractor’s use of the roof of the Premises.

5. However, the Respondent still refuses to allow the workers to enter the roof of the Premises for clamping a gondola.  The Applicant contends that the refusal is a breach of the Deed of Mutual Covenant of the Estate (“the DMC”) and hence seeks for an injunction in these proceedings to enter the roof of the Premises to clamp a gondola and carry out all necessary works.  The Applicant also claims for damages and costs on solicitor and own client basis.

6. The Respondent denies any breach of the DMC by insisting on the aforesaid 3 conditions and alleges that the Applicant has no right to enter, occupy and use the Respondent’s roof for the intended operation under the DMC.  Alternatively, the Respondent alleges that under the implied term of the DMC and/or the fiduciary duty of the Applicant, the Respondent is entitled to insist on the conditions and the Applicant has failed to comply with the conditions.

7. In both the opening and closing submissions, the Applicant places great emphasis on the practical needs in gaining access to the roof of the Premises so as to clamp a gondola and carry out the necessary works.  However, the crux of the matter is whether the Applicant has such right to do so under the DMC.  If the Applicant does not have the right to do so under the DMC, that will be the end of the matter, no matter how reasonable it is for the Applicant to make the request.  On the other hand, if the Applicant has the right to do so under the DMC, then the next question will be whether the Respondent has the right to impose the 3 conditions and whether the Applicant has complied with them.

The DMC

8. The Applicant relies on Clause B1 of Section III, 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 of the DMC to make the present application.

9. Clause B1 of Section III provides 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;”

10. I have no doubt that by virtue of this clause the Applicant has the exclusive and unrestricted right and privilege to enter any part of the Estate, including the interior of any unit such as the Respondent’s roof, to carry out maintenance works or perform the Applicant’s obligations under the DMC.  Cleaning and maintaining the external wall is obviously the Applicant’s obligations.  In fact under Clause B1(3) of Section VI of the DMC, the Applicant is given the power and authority to carry out all works necessary to maintain the Estate and the common areas and every part thereof in a good, clean, satisfactory and safe manner.  The setting up of the gondola at the Respondent’s roof is purely to facilitate the Applicant to fulfill these obligations.

11. However, the Respondent relying on the case of The Incorporated Owners of Wah Yuen Chuen v. Leung Ching Kong Norman, LDBM 189/2004 argues that in interpreting this clause, the proprietary right of the owner must be respected to the highest degree and the right to enter the interior of any unit is qualified and confined to “where necessary”.  I do not accept the Respondent’s argument in this respect.  From the evidence of the Applicant, it is necessary to clean the external walls and the gondola system is the best method available to clean the external walls.  Even though the actual operation of the gondola system may occupy the roof for a period of time, it is just temporary.  I do not think that such temporary occupation would in any way deprive the Respondent’s interest in the roof.  After all, the roof is supposed to be kept vacant and not occupied by the Respondent as such.  So there should not be too much inconvenience to the Respondent.  It cannot be said that the Respondent’s proprietary right has not been respected.  On the contrary, cleaning and maintaining the external walls are in fact works to protect the integrity of the building which will safeguard the Respondent’s interest in the Premises.

12. The Respondent also argues that this clause is confined to a right of access.  I do not accept this argument either.  The clause states clearly that the manager can enter the interior of any unit for the purpose of carrying out the maintenance of the Estate.  Maintenance must involve staying at the place to do some work.  The clause does not say that the manager can only access and then pass through the unit.  It is not a clause that just gives an easement to the manager to use the roof as a passageway.

13. The Respondent then argues that this clause confines the entry to the Respondent’s roof “for the purposes of inspecting and maintaining any part or parts thereof” (i.e. the roof or the structural beams), and it does not permit the operation to be carried out on the Respondent’s roof, the clamping of the clamps at the internal face of the enclosing walls nor the fixing of anchorages for the back-ties on building elements of the roof.  However, the Applicant is not relying on this part of the clause concerning “inspecting and maintaining any part or parts thereof”.  The Applicant is relying on the latter part of the clause “or otherwise carrying out the management and maintenance of the Estate or performing the Manager’s obligations”.  This latter part of the clause is in my view wide enough to allow the Applicant to perform the clamping operation at the roof, as it is necessary for the maintenance of the Estate.

14. As to this latter part of the clause, the Respondent relies on Clause C(b) of Section III of the DMC to say that the rights and privileges reserved by the manager shall not in any way contravene the provisions of the DMC.  The Respondent then refers to Clauses 11(a), 11(b), B1 and B6 of Section V to suggest that no fixture or fitting should be installed at the roof and hence the clamping system should not be installed too.  However, Clauses 11(a), 11(b), B1 and B6 of Section V are concerning residential owners, they do not prohibit the manager to do such acts.  Thus, the above interpretation of the latter part of Clause B1 of Section III will not contravene these provisions.  When an owner is not allowed to do certain things under the DMC, it does not follow that the manager is also not allowed to do the same things.  The manager has to maintain the building and cannot be restrained in the same way as an owner.  If the Respondent’s argument is correct, it means that the manager cannot even install scaffoldings at the external wall to repair the building.  That must be wrong.

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.

The Respondent’s 3 conditions

17. The Respondent argues that it has the right to impose the 3 conditions as aforesaid.  The Respondent submits that the manager in the performance of its powers and obligations under the DMC acts as the attorney of each and every owner.  There lies the fundamental duty that the manager has to act fairly and in an evenhanded manner and should not act in the interest of some owners at the expense and risk of the Respondent (see Great Source Enterprise Ltd. v. Sino Estates Management Ltd., CACV 253/2003).  This fundamental duty to be evenhanded forms the foundation of the implied term of the DMC and the fiduciary duty of a manager as pleaded in paragraphs 17 and 18 of the Re-Re-Amended Notice of Opposition.  In short, the Respondent is saying that the Applicant has to take all reasonable steps to satisfy itself that the use and occupation of the Respondent’s roof is absolutely necessary, will not impede the Respondent’s use of the roof or expose the Respondent to any risk of liability to any third party, has offered the Respondent to take reasonable steps at the costs of the management fund and is willing to arrange for an appropriate indemnity to indemnify the Respondent.  Based on the alleged implied term and fiduciary duty, the Respondent contends that it is entitled to impose the 3 conditions.

18. Although I accept that the Applicant, as the manager, owes a duty to all the owners to act properly and fairly in the discharge of its obligations under the DMC, I think it is too far-fetched to suggest that there is any implied term in the DMC to the effect that the Respondent can impose the 3 conditions.  Clause B1 of Section III clearly and expressly states that the manager shall have “unrestricted right and privilege” to enter any part of the Estate.  The alleged implied term would have restricted the manager to exercise such a right under an express provision, as an owner would be able to impose such conditions as he thinks fit.  An implied term cannot contradict an express term.  When there is such a contradiction, the so-called implied term cannot stand against an express term.  Thus, I do not agree that the Respondent can impose the 3 conditions.  By insisting that the Applicant must comply with the 3 conditions, the Respondent is in fact denying entry to the Applicant, which in turn is a breach of Clause A8 of Section V as aforesaid.

19. The Applicant, of course, has to take reasonable care in carrying out the maintenance works, including the setting up of the gondola and clamping system.  If it fails to do the works with reasonable care and causes loss and damage to the Respondent, then the Applicant will be liable to compensate the Respondent.  However, such a duty to take reasonable care is different from the alleged right of the Respondent to impose conditions for the entry.  The parties have spent a lot of time at the trial in arguing whether the proposed clamping system is safe.  This is just a matter of whether the Applicant has taken reasonable care, but it does not give rise to a right to impose conditions.  As said, the Applicant’s right to enter the Respondent’s roof under the DMC is “unrestricted”.

Injunction

20. Since it is my finding that the Applicant has a right to enter the Respondent’s roof and do the works there, and that the Respondent has no right to impose the 3 conditions, I do find that the Respondent is in breach of Clause 8A of Section V of the DMC in that it has interfered with the maintenance of the Estate.  I am satisfied that the Respondent intends to continue with the breach as it has insisted that the Applicant must comply with the 3 conditions.  Thus, the granting of the injunction is necessary in the circumstances.

Damages

21. The Applicant claims damages in the sum of $130,500 as per the quotation issued by the Contractor (page 70 of Exhibit “A1”).  These are the additional costs and expenses incurred or to be incurred as a result of the delay in carrying out the works.  The Respondent argues that since the Applicant’s witness, Mr. Chu, admitted under cross-examination that the Applicant has a power under the contract to postpone the time for completion of work and the Applicant had given notice to postpone the time, the Applicant is not liable to pay such costs and expenses.

22. However, I agree with the Applicant that the power to extend the time for completion is different from the liability to pay extra costs.  All the items claimed are additional to the original contract.  There is no reason to expect the Contractor to pay these sums when it was not at fault.  It is caused solely by the Respondent’s refusal to allow the Applicant to proceed with the work.  Thus, the Contractor is entitled to claim these sums against the Applicant and the Applicant should be entitled to be reimbursed by the Respondent.

23. In the circumstances, I find that the Respondent has to pay the sum of $130,500 to the Applicant as damages for breach of the DMC.

Costs

24. Clause E8 of Section V of the DMC empowers the Applicant to bring the present proceedings and states that Clause E5 of Section V shall apply to these proceedings.  Clause E5 of Section V stipulates that the manager may include a claim for the solicitor and own client costs.  Thus, the Applicant is entitled to claim costs on the solicitor and own client basis.

Orders

25. By reasons aforesaid, I order as follows:-

(1)  An injunction that the Respondent do forthwith allow the Contractor and/or its servants, agents or authorized persons or contractors to enter the roof of the Premises 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;

(2)  The Respondent do pay the Applicant damages in the sum of $130,500; and

(3)  Costs order nisi: The Respondent do pay the Applicant costs of this application on solicitor and own client basis with certificate for counsel to be taxed on District Court Scale if not agreed.  If there is no application for costs within the next 14 days, this costs order nisi shall become absolute.