METRO CITY MANAGEMENT LTD v. TSUI FEE HUNG VINCENT AND ANOTHER

cacv 328/2005

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 328 of 2005

(on appeal from HCA NO. 4327 of 2003)

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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 Mr Recorder Chan SC given on 13 January 2005.  The matter before the judge was a claim for an injunction to require the defendants to remove four canopies which had been erected in their premises which was the first floor flat and flat roof in a large residential complex.  The judge held that the erection of the canopies had been in breach of one of the clauses of the Deed of Mutual Covenant (“DMC”) but had not been in breach of two other clauses of the DMC.  On this appeal the defendants appealed against the finding that they had been in breach and, by a respondent’s notice, the plaintiff cross-appealed in respect of the other two clauses of the DMC which the judge had held had not been breached.  At the conclusion of the hearing of this appeal judgment was reserved.

Background

2.  By an assignment dated 30 June 2000, the defendants took an assignment of flat G on the first floor and flat roof appertaining thereto, of Tower 4, Metro City, Phase II, Tseung Kwan O.  The conveyance was in the standard form and contained the following exceptions and reservations:

“(i) Except and Reserved as in the Government Lease (as hereinafter mentioned) is excepted and reserved; and

(ii) Except and Reserved unto the Vendor its successors in title and assigns other than the Purchaser the right to the exclusive use occupation and enjoyment of the whole of the Estate SAVE AND EXCEPT

(a) the Property; and

(b) such areas and facilities (if any) as defined and designated as Common Areas in the Deed of Mutual Covenant and Management Agreement or are intended for common use and

(iii) Except and Reserved unto the Vendor its successors in title and assigns other than the Purchaser all such exclusive rights and privileges expressly reserved unto the Vendor under the Deed of Mutual Covenant and Management Agreement and, in particular, the exclusive rights specified in Section III thereof.”

3.  Shortly after the defendants purchased the property they erected three retractable canopies and one fixed canopy which extended over part of the flat roof area.  As found by the judge, initially the management company indicated that it would prefer the colour of the fabric to be pink and white and, hence, the defendants changed the colour of the first canopy from green and blue to pink and white.  Thereafter, the remaining canopies all had pink and white fabric.  This entirely sensible arrangement apparently came to an end some two years later when the management company indicated that it was opposed to any canopies regardless of the colour.  At that stage the defendants changed the colours of the canopies to blue and green.

4.  Although the judge indicated to the defendants that they may well have a defence of waiver or estoppel, the defendants did not take the judge’s hint in that respect.  The case was fought on the basis of the plaintiff’s claim that the erection of the canopies, albeit bolted at a level within the height of the defendants’ flat, was in breach of the DMC.  The particular provisions, in section V, said to have been breached were the following:

“B.   Covenants, Provisions and Restrictions to be observed and performed by the Residential Owners:-

No external signs, etc. allowed	1.   No external signs, signboards, notices, advertisements, flags, banners, poles, cages, shades, sculptures, or other projections or structures whatsoever extending outside the exterior of any of the Towers shall be erected, installed or otherwise affixed to or projected from any part of the Towers.
No alteration of external appearance	2.   Air-conditioning units shall only be placed at the spaces provided and no Residential owner shall do or permit to be done any act or thing which may or will alter the external appearance of the Towers.
…
Restrictions regarding Residential Common Areas	9.   No part of the Residential Common Areas shall be obstructed or incumbered nor shall any refuse be placed thereon.  No part of the Residential Common Areas can be converted to one’s own use Provided such conversion is sanctioned by the Owners’ Committee and no Residential Owner shall do or permit or suffer to be done anything in the Residential Common Areas as may be or become a nuisance or cause annoyance to any other Residential Owners.”

5.  The judge held that there had been a breach of clause B1 but not of clauses B2 and B9.

Clause B1

6.  There can be no doubt that the fixed canopy and, indeed the other canopies, when extended would constitute a shade or other projection or structure.  The judge held that they were affixed to Tower 4 and that they extended outside the exterior of Tower 4.  The defendants raised a number of points the first of which was that the first floor level of the Tower blocks was part of the podium and was, therefore, not part of the Tower which was erected on top of the podium.  This argument was based upon the meaning of podium as defined in the DMC which was as follows:

“ “Podium” – The 8-level podium complex in the Estate comprising basement levels 1 and 2, ground floor level, mezzanine floor level, levels 1 and 2, deck level and first floor level as shown on the Approved Plans.”

7.  The defendants’ argument was that flat G on the first floor was part of the first floor level as shown on the Approved Plans.  Such of the Approved Plans as this court was shown do appear to show that the Club House was located on the deck level and first floor levels.  Relying on the definition of Towers:

“ “Towers” – The eleven residential towers erected on top of the Podium and known as Towers 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 and 11 of Metro City, Phase II and in the singular means one of the Towers,”

Mr Tsui argued that that since Tower 4 was erected on top of the podium, the podium extended to the first floor level, therefore, the Tower only started on the second floor.

8.  Had the DMC ended there I would have considered that there was a certain amount of force in that argument, albeit without having sight of all the Approved Plans.  One plan, of which this court has only been shown part, identified as First Floor plan (Part A), only shows part of the Club House.  However, plan reference B.D. 2/9210/93; Drawing No. 2-26 PT.C (d) in the papers in the court below does show a level above the podium deck level but below the first floor level of the flats.  Moreover, it seems to me that the defendants’ argument is not sustainable in view of the first schedule of the DMC which relates to the allocation of undivided shares.  This makes quite clear that flat G and, indeed, all the other flats on the first floor and the flat roofs appertaining thereto are part of the respective Towers.

9.  The other argument raised by Mr Tsui in respect of clause B1, unfortunately, also fails in my view.  In essence it is that the canopies, even when extended did not extend outside the area of the Tower because the area of the Tower includes the flat roof.  In my view the defendants argument cannot be sustained.  Although the flat roof has been treated (whether it be in the first schedule or the second schedule or in any of the floor plans of the first floor attached to the assignment) as being part area assigned with the flat on the first floor of the Tower, it is the roof of the podium and not the roof of the Tower.  In my view, the canopies, at least when extended, extend outside the exterior of the Tower, because the Tower is just that and curtilage of the flat roof constitutes the boundary of the podium.

10.  In arguing the case, Mr Tsui treated the canopies as extending into the air space to which he and his wife were entitled.  That is another way of looking at the same point, but care must be taken that what has to be considered is where that air space is.  It is not an air space inside the Tower, it is clearly an air space outside the Tower.  In the course of argument by both sides, the canopies were said to extend into the air space to which the defendants were entitled.  That is, for these purposes, irrelevant.

B2

11.  The question here is as to whether the erection of the canopies may alter or has altered the external appearance of the Towers.  The judge held, as a fact, that they did not.  That is a question of fact about which the judge is entitled to form his own view.  Mr Leong SC, who appeared on behalf of the plaintiff on this appeal, argued that if all the owners of the ground floor flats were to erect canopies they would collectively alter the external appearance of the Towers.  That is however not what has happened.  The defendants have only erected canopies on their own flat.  If the judge found that did not affect the external appearance of the Towers that, short of showing that that was an unsustainable finding, concludes the matter.

12.  I would, however, mention that the plaintiff’s letter to the defendants of 11 October 2001 requiring the removal of the canopies gave as the first reason for asking for the removal:

“In addition to the accumulation of litters, which leads to pests and mosquitoes breeding and hygienic problems, the movable canopy will cause inconvenience to the residence of flats above when they put the clothes under the sun for drying.”

13.  As, clearly, the management permitted washing to be hung outside the building it can hardly be said that a sunshade would alter the external appearance of the Tower.

B9

14.  Clause B9 has a number of different restrictions.  The first part is a restriction on obstructing or encumbering or placing refuse in any part of the Residential Common Areas.  That restriction appears to me to relate to a restriction as to movement.  Mr Leong argued that the canopies obstructed the management because they would be unable to paint the exterior walls of the Towers.  Quite apart from the fact that that appears to be a new argument, it is hardly convincing.  The photographs clearly show that the exterior walls of the Towers are tiled and not painted.

15.  The next part of the restriction is that no part of the Residential Common Areas can be converted to “one’s own use”.  The best sense one can make of the opening clause to second sentence of clause B9 is that the Owners’ Committee can sanction the conversion of the Residential Common Area to the use of one of the residential owners.  The term Residential Common Areas is defined as being:

“Those parts of the Residential Development (as hereinafter defined) not otherwise specifically assigned to or for the exclusive use of any one or more Residential Owners, including but not limited to the 11 lorry parking spaces and ….entrances and staircases serving exclusively the Towers and flat roofs (unless specifically assigned), roofs (unless specifically assigned), the architectural features and associated lighting attached or affixed to the parapet walls of the roof of each Tower, residential shuttle lift lobby, open space, external walls of the Towers and lobbies in the Towers ….”

16.  In my view the opening words of that clause are clear.  The whole of the flat and the flat roof which appertain thereto has been assigned for the exclusive use of the defendants.  Whereas the other external walls of the Tower no doubt come within the term Residential Common Areas the clause should be read as excluding that for the purpose of considering the common areas.  As the judge pointed out, it would almost be absurd to consider that any of the other owners should have a right to access to that part of the wall which was otherwise clearly bounded by the defendants’ property.

17.  In so far as it was suggested that the management would not have a duty to keep that part of the wall and good maintenance and repair I fail to see that that is correct.  Under D. 1(b) of section VI of the DMC the Residential Management budget has to include an estimate of the expenditure for the maintenance of the Residential Development.  The definition of Residential Development is

“The Towers and the Residential Common Areas and Facilities as more particularly indicated on the Approved Plans.”

18.  There is thus the distinction between the Residential Common Areas and the Towers.  Clearly the management has a duty to maintain the Towers and include the costs of that as part of the Residential Management budget.

19.  If I had reached the conclusion that the erection of canopies did fall within the restriction of converting part of the Residential Common Area, I would have been disposed to accord the defendants an opportunity of obtaining the sanction of the Owners’ Committee, prior to imposing an injunction.

Conclusion

20.  In conclusion, therefore, I do not consider that there are grounds for differing from the conclusion reached by the judge.  This conclusion does not give me much satisfaction.  The defendants purchased the flat and the roof.  Clearly it was intended that the roof should be used.  Realistically if the roof were to be used for sitting out it would be inevitable that those doing so would need shade.  When it was put to Mr Leong that the plaintiff would have no grounds for objecting to the use of large sun umbrellas, whether standing independently or as part of an outdoor table, he did not seek to argue otherwise.  The court was shown a brochure produced when the flats in the development were sold.  Naturally, the document was excluded from having any contractual force, nevertheless, it clearly shows large plants on the relevant roofs and in one instance possibly some other form of shading.  If the plaintiff were to attempt to prevent the defendants from erecting any type of sun shade questions of derogation from grant would arise.  As it is, the present objection to the canopies demonstrates a vacillation on the part of the plaintiff. 

Further evidence

21.  The defendants sought to introduce further evidence on the appeal.  This court considered it de bene esse.  However, since it was neither evidence which could not have been adduced before, nor would it have affected the outcome of this appeal or cross-appeal, I consider that the new evidence was inadmissible.

22.  I would therefore dismiss the appeal by the defendants and the cross-appeal by the plaintiff.  I would make an order nisi that the costs of the appeal should be to the plaintiff and the costs of the cross-appeal by way of respondent’s notice should be to the defendants.

Hon Woo VP:

23.  I have had the advantage of reading in draft the judgment of Rogers VP, and I respectfully agree with it and the orders he proposes.

24.  I only wish to add a few observations of mine in answer to the defendants’ argument that there was no breach of clause B1 under Section V of the DMC (“clause B1”).  Their argument is that the canopies, even when extended, do not extend outside the area of the Tower because the area of the Tower includes the flat roof.

25.  Clause B1 provides:

“1. No external signs, signboards, notices, advertisements, flags, banners, poles, cages, shades, sculptures, or other projections or structure whatsoever extending outside the exterior of any of the Towers shall be erected, installed or otherwise affixed to or projected from any part of the Towers.” (Emphasis added)

26.  What is crucial is what “the exterior of any the Towers” is, and in this case, we are concerned with the exterior of Tower 4 of which the defendants’ property forms part.  “Towers” is defined in the DMC as

“The eleven residential towers erected on top of the Podium and known as Towers 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 and 11 of Metro City, Phase II and in the singular means any of the Towers.”

27.  While there is no definition of “exterior” in the DMC, what in my view can be used to aid the understanding of “exterior” are the terms “external walls” and “exterior walls”, which can reasonably be understood as delineating the exterior from the interior, bearing in mind that clause B1 prohibits “external” “shades” and “projections”.  The terms can be found in the following relevant parts of the DMC:

        (a) Under Section I: Definitions, “Residential Common Areas” is defined as:

“Those parts of the Residential Development … not otherwise specifically assigned to or for the exclusive use of any one or more Residential Owners, including but not limited to … external walls of the Towers …”

(b) Under Section VI, Part B: Powers and Duties of Manager, clause 1(4) provides:

“(4)  to paint or repaint at reasonable intervals as appropriate the exterior walls of all the buildings and structures in the Estate …”

28.  The 11 Towers of the Estate stand on the podium.  The podium covers a surface area larger than the area on which all the 11 Towers stand.  The 11 Towers include the defendants’ property on the 1^st floor together with its appertaining flat roof, and all other 1^st floor flats with their respective flat roofs.  However, the fact that such 1^st floor flats include all the flat roofs cannot reasonably be said to extend the exterior of the Towers to the boundary of the podium, although the podium encloses all the flat roofs.  The exterior of the Towers and each of the Towers, as opposed to the podium or the Estate, in my view, is delineated by the external walls of the Towers as buildings or structures; the fact that the Towers stand on the podium covering the areas of the flat roofs does not render the external walls of the podium to become the external walls, and thus the exterior, of the Towers. 

29.  Although the area of the flat roof had been sold and assigned to the defendants for their exclusive use, that does not in my judgment extend the exterior of the Towers to the boundary of the podium.

30.  Moreover, clause B1 prohibits external shades “projected from any part of the Towers”.  The canopies of the defendants were installed on the external walls of Tower 4, within the 1^st floor level and below the 2^nd floor level.  The canopies cannot, in any view, be said as not being projected from any part of the Tower.

31.  The Recorder dealt with the matter and related arguments in the following manner:

“24.      … However the Plaintiff contends that area or space so owned by the Defendants could still be an exterior part of Tower 4.

25.       In Hong Yip Service Company Ltd. v Ng Wai Man (CACV 159 of 1988), the management company sought an injunction against the owner of the top floor and the roof of a building, requiring the owner to remove three external radio aerials which were affixed to poles which extended about 6 feet above the parapet walls of the roof, on the ground that the erection of the aerial was in breach of the terms of the deed of mutual covenants of the building.  One of the clauses relied upon by the management company was to the effect that no post or other projections or structures whatsoever extending outside the exterior of the building shall be erected, installed or otherwise affixed to or projected from the building or any part thereof except with the written consent of the Manager.  The Court of Appeal held that the aerial in question was in breach of this clause.  Power JA said:

‘[Counsel for the owner submitted that] when a building such as this is constructed with a flat usable roof by developers who intend to transfer that roof as usable space, the transfer must be taken to include not only the roof but also a limited portion of air space above it. He argues that, when Clause 16 speaks of “the exterior of the building”, the exterior must be taken to mean and include the limited portion of air space.  He submits that these aerials were within that limited portion of air space and do not, therefore, extend beyond the exterior of the building and are not caught by the covenant.

We accept that the defendant a right to the use of limited air space above the roof.  However the exterior of the building referred to in Covenant 16 is, in our view, defined by the boundaries delineated by the external walls and not by any right to use of air space.  The aerials do, we are satisfied, extend beyond those boundaries and do, therefore, extend outside the exterior of the building and are caught by the covenant.’

26. I am bound by the decision of the Court of Appeal.  Although the canopies were erected within a space where the Defendants had the exclusive right to use and possess, they had nevertheless extended to the exterior of the Tower.  As a matter of logic, there is nothing to prevent a co-owner of a building to be given the exclusive right to use and occupy an exterior part of a building.  Thus the mere fact that the canopies are within the space where the Defendants have the exclusive right to use and occupy does not mean that the canopies could not be extending outside the building.  I would therefore hold that the canopies are ‘projections or structures extending outside the exterior of’ Tower 4 and they are ‘erected, installed or otherwise affixed to or projected from’ Tower 4.  In the circumstances, I am of the view that there was a breach of clause B1 of the DMC.”

32.  I entirely agree.

33.  The fact that even if the assignment of the property by which the defendants obtained title to and exclusive enjoyment of it includes the flat roof, that has no bearing on whether the canopies were external to Tower 4 or projected from the Tower.   Even if the flat roof of the defendants’ property is treated as part of the Tower in the assignment, that does not alter the fact that the canopies were outside the exterior of the Tower and “projected from any part of the Towers”.

34.  In the result, the Recorder’s holding that there was a breach of clause B1 of the DMC by the defendants ought to be affirmed.

Hon Yuen JA:

35.  I agree with Rogers V-P for the reasons that he has given that the Defendants should not be allowed to adduce fresh evidence on appeal.  As for the appeal itself, I would dismiss the Defendants’ appeal and I would also affirm the learned Recorder’s order on ground 2 of the Respondent’s Notice (regarding clause B9).  My reasons are as follows.

The Defendants’ Appeal

36.  It is well-established that the construction of a document is

“an attempt to discover what a reasonable person would have understood the parties to mean.  And this involves having regard, not merely to the individual words they have used, but to the agreement as a whole, the factual and legal background against which it was concluded and the practical objects which it was intended to achieve”

(Jumbo King Ltd v Faithful Properties Ltd [1999] 2 HKCFAR 279, 296).

Language of clause clear

37.  In respect of the Defendants’ appeal, the relevant clause is B1 (which has been reproduced in para. 4 of Rogers V-P’s judgment).  This clause in effect prohibits the installation of projections outside the exterior of the tower blocks.  It is a little surprising that shades are included, together with ‘signs, signboards, notices, advertisements, flags, banners, poles, cages, sculpture, or other projections or structures whatsoever’, and it is unfortunate that the clause does not give the management any discretion in the matter, but it cannot be doubted that the language of the clause is clear, and it has the effect of prohibiting shades of all kinds, whether aesthetically pleasing or otherwise.

Practical object of the clause

38.  One can however understand the reason for the absolute nature of this clause.  One of the practical objects of a deed of mutual covenant is to keep a building looking tidy and to avoid time-consuming and potentially costly disputes over whether additions to a building made by one occupant or another may or may not be in good taste, or may or may not affect its structure.  In this development there are 11 tower blocks, each block containing more than 300 units.  That is a total of more than 3,300 units.  The mischief that is addressed by clauses such as Clause B1 is obvious - it is to prevent the exterior of the tower blocks from being cluttered by all manner of ‘signs, signboards, notices, advertisements, flags, banners, poles, cages, shades, sculpture, or other projections or structures whatsoever’.

Defendants’ argument based on definition of “Towers” and “Podium”

39.  The Defendants’ argument is that clause B1 does not apply to their premises.  Their first argument was that their premises on the first floor were not part of the ‘Towers’ because in the definitions appearing in the DMC, ‘Towers’ are defined as ‘the eleven residential towers erected on top of the Podium’, and the definition of ‘Podium’ in the DMC includes the first floor level.

Context of clause B1

40.  With respect to Mr Tsui who has obviously prepared his case with great diligence but who appeared without legal representation, his argument in my view illustrates the danger of applying definitions without regard to the opening words of the Definition section:

“in this Deed, the following expressions shall have the following meanings ascribed to them whenever the context so permits”.  (Emphasis added).

41.  Clause B1 is contained in Section V B.  Section V B sets out the ‘Covenants, Provisions and Restrictions to be observed and performed by the Residential Owners’.

42.  A ‘Residential Owner’ is defined as ‘an Owner entitled to the sole and exclusive right and privilege to hold use occupy and enjoy a Residential Unit’.  A ‘Residential Unit’ is in turn defined as ‘a Unit situated in the Residential Development’.  Pausing there, it cannot be doubted that the Defendants occupy a residential unit.

43.  However what follows illustrates the fallacy of the Defendants’ argument that the first floor premises are not part of the ‘Towers’ –  ‘Residential Development’ is defined as ‘the Towers and the Residential Common Areas and Facilities ...’.  In other words, if the Defendants are right, then their premises are not even situated in the Residential Development and their unit is not even a Residential Unit.  Since their premises obviously are not a ‘Commercial Unit’, they would not even form part of the ‘Estate’ as defined.  That is an absurd result.

44.  It is therefore clear that in the context of clause B1, the incorporation of the full definition of ‘Podium’ into the word where it appears in the definition of ‘Towers’ would make no sense.

45.  In my view, it is clear that the Defendants’ first floor premises are part of the ‘Towers’.  They are located within the ‘eleven residential towers erected on top of the podium’.  A tower is a physical structure, as is a podium.  Tower 4 is erected on top of the podium as the base of the tower meets the top of the podium – at the baseline of the level designated as the first floor.  When so understood, the definition of ‘Towers’ as ‘the eleven residential towers erected on top of the Podium ...’, and indeed the definition of ‘Podium’ as ‘ ... comprising … first floor level’,would present no contradictions or difficulties.  It would be consistent with the Defendants’ first floor premises being in a Tower of the Residential Development.

Reason for definition of “Podium” in another context

46.  As for the question why the definition of‘Podium’ in the DMC would include the first floor, the answer is provided by the design of this development.  The development has been designed to contain:

-     at basement levels 1 and 2: – car parks;

-     at ground floor level, mezzanine level, levels 1 and 2:–  commercial premises;

-     at deck level and first floor level:– a Club House with an open-air swimming pool, sun deck and children’s swimming pool.

The commercial development and communal recreational areas are not designed for residential occupation, in contrast to the tower blocks.  That explains why the definition of ‘Podium’ refers to ‘the 8-level podium complex’.  In other words, in this context, the definition of ‘Podium’ is not intended to refer to the physical structure, but to distinguish those parts of the development (spread over the 8 levels) not designed for residential occupation from those parts of the development which are so designed i.e. the Towers.

Defendants’ argument based on area and curtilage of flat roof

47.  The Defendants’ second argument was that they are not in breach of clause B1 because the canopies did not extend outside the area of the Towers as the area of the Towers includes the flat roof.

48.  I have earlier explained why in my view the word ‘Towers’ in the context of clause B1 means the physical structure of the tower block, and I have also referred to the clear language of the clause and discussed its practical object.  One need only imagine how the development would look and how management would be made more difficult if the walls in question (and other similar places on the first floor) were bestrewn with ‘signs, signboards, notices, advertisements, flags, banners, poles, cages, shades, sculpture, or other projections or structures’.  I do not see how it could have been intended that for a 38-storey tower block, there should be one rule for 37 storeys and none for one.

49.  As for the Defendants’ argument that the flat roof is included within the area of the ‘Towers’, I do not see how this would assist them.  In my view, ‘exterior’ of the Towers simply means ‘external surface’ of the tower blocks.  On the Defendants’ argument extending the ‘Tower’ to the flat roof, clause B1 would apply both to the external wall of the tower block to which the canopies have been affixed and extend to the flat roof.

50.  For the reasons set out above, I would dismiss the Defendants’ appeal.

Respondent’s Notice

- Clause B2

51.  As for the Respondent’s Notice in respect of clause B2 (reproduced at para. 4), the Recorder found that there was only a de minimis breach of this clause because the canopies did not prominently alter the appearance of Tower 4 (para. 41).  That is a finding of fact.  It is well-established that an appellate court would be slow to interfere with a trial judge’s finding of fact unless there were no materials which could support his finding.  The matter here is one of impression and I would be hesitant to gainsay the Recorder’s view.

52.   As the Recorder found that the canopies did not alter the external appearance of Tower 4, it followed that the canopies did not ‘alter the external appearance of the Towers’ (clause B2).  However I would have to add one comment.

53.  In his judgment the Recorder noted the use of the word ‘Towers’ in the plural in clause B2 and said:

“Thus I am of the view that when clause B2 speaks of any act which may alter the external [appearance] of the Towers, what is contemplated is any act or acts which may alter the external appearance of all the 11 towers when viewed as a whole and not just acts which may alter the appearance of a single tower when viewed in isolation.  Had it been the intention of the draftsman that the position of any single tower should be looked at, the draftsman would have used the phrase ‘any of the Towers’ ” (para. 37).

With respect to the learned Recorder, I would have thought that an alteration of the external appearance of one tower (assuming that to have been found as a fact) would inevitably result in the alteration of the external appearance of the towers as a whole, for the simple reason that they would no longer be uniform in appearance.

- Clause B9

54.  I then come to the Respondent’s Notice in respect of clause B9 (reproduced at para. 4).  The issue is whether the external walls to which the canopies are attached are ‘Residential Common Areas’.

55.  The definition of ‘Residential Common Areas’ in the DMC is:

“Those parts of the Residential Development (as hereinafter defined) not otherwise specifically assigned to or for the exclusive use of any one or more Residential Owners, including but not limited to ... external walls of the Towers ...”.

Prima facie, external walls are residential common areas

56.  Prima facie therefore, the external walls of the towers are residential common areas unless they have been ‘otherwise specifically assigned to or for the exclusive use of any one or more Residential Owners’.  So the issue is: has it been shown that the external walls in question had been  ‘specifically assigned to or for the exclusive use of’ the Defendants?

‘Saleable area’ formulation not reliable guide 

57.  The Recorder first referred to the Sale and Purchase Agreement for the saleable area of the property agreed to be sold to the Defendants, and he deduced from calculations from the measurements that the external walls in question were “included as part of the saleable area of the unit sold to the Defendants” (para. 45).  For my part, I have to say it appears unlikely that the draftsman of the DMC would have expected that sort of exercise to have to be undertaken before an owner or manager could determine whether a wall was for exclusive use or was common area.

58.  Further, the Sale and Purchase Agreement appears to be a standard document and so the method of taking measurements from the exterior of the enclosing walls of a unit (Recital 1(n), Sale and Purchase Agreement) would apply to all units in the tower blocks.  If (as the Recorder seems to have held) this ‘saleable area’ formulation shows that the external walls in question had been specifically assigned to or were for exclusive use of the purchasers, then that would mean that all the external walls in the tower blocks would have been so specifically assigned to or were for the exclusive use of all purchasers.

59.  Yet the DMC prima facie includes the external walls as ‘Residential Common Areas’.  That would be an anomalous way of drafting if the ‘saleable area’ formulation shows that the external walls of the towers were generally not common areas.  I am therefore not persuaded that the use of ‘saleable area’ is a reliable guide in the determination of the issue whether the external walls in question had been  ‘specifically assigned to or for the exclusive use of’ the Defendants.

External walls of the Property mean walls exposed to outdoors

60.  The Recorder rightly held that:

“the description of the Defendants’ property in the Agreement would show that if the wall in question is an external wall of the Defendants’ property, then it would not be part of the property agreed to be sold to the Defendants” (para. 49).

However, the Recorder held that since the Defendants’ property included both the flat and the flat roof as one unit, the external walls in question were not “external walls of the Property” although they may be external walls of the towers.  The Recorder supported this view by referring to the fact that it would be unattractive to have a commonly-owned wall between the flat and the flat roof which are enjoyed exclusively by the Defendants (para. 50).

61.  In theory I would agree with the learned Recorder that it would be an unattractive proposition to have a commonly-owned wall between areas exclusively occupied by the same owner as one unit.   However the unattractiveness in this case is more theoretical than real.  As the Recorder noted, it is difficult to see how any other owners could enjoy and make use of the walls in question (para. 50).  In contrast, the Defendants would stand to benefit from maintenance of the external walls as a common area at the cost of the co-owners.

62.  So, having got the perceived unattractiveness of the point out of the way, the issue is simply whether the walls in question are ‘external walls of the Property’.  The Recorder held that they were not because the ‘Property’ comprised the flat and the flat roof as one unit.

63.  With respect to the learned Recorder, that is to read the words ‘external walls of the Property’ as if they were ‘the walls marking the boundary of the Property’.  Whilst with most flats that may be true, it is not necessarily the case.  In my view, all that the words ‘external walls of the Property’ mean are those walls of the Property which are exposed to the outdoors (in contrast to internal walls).  Take the example of a house standing in a walled garden.  I would be very surprised if it were to be said that the walls of the house facing the garden are not ‘external walls’.  They are as exposed to the elements as the walls of the garden itself.  Those walls of the house, as well as the walls of the garden, would in my view be external walls of the owner’s property.

64.  Assuming this construction of clause B9, the Recorder would have held that the Defendants had breached the clause by converting the external walls in question to their own use (para. 51).

Order

65.  Accordingly, the order that I would make is that the Defendants’ appeal be dismissed and that the Recorder’s order be also affirmed on ground 2 of the Respondent’s Notice.

66.  As for the costs of the appeal, the order I would make is that the Defendants (Appellants) bear two-thirds of the Plaintiff’s (Respondent’s) costs of the appeal.

Hon Rogers VP:

67.  There will therefore be an order in terms of paragraph 22 above.