THE INCORPORATED OWNERS OF SHATIN NEW TOWN v. YEUNG KUI

CACV 45/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 45 OF 2009

(ON APPEAL FROM LDBM NO. 339 OF 2007)

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BETWEEN

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J U D G M E N T

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Hon Cheung JA :

Ownership of multi-unit development

1.  When someone owns a flat or unit in a multi-unit development in Hong Kong, it means in legal terms that he holds a notional share (the amount of which is specified in the original assignment from the vendor to him or in the Deed of Mutual Covenant (DMC)) in the development as tenants in common with the other owners of the development but he is given ‘exclusive possession’ of his own flat to the exclusion of the other co-owners. In contrast to this specific unit, the common parts of the development such as entrance, passageways, garden, utility rooms and exterior walls are not within the exclusive possession of any of the owners but are to be used and enjoyed by all of them. The ambit of the common parts of the development is usually specified in the DMC. If not, the Building Management Ordinance (‘BMO’) Cap. 344 will apply and defines the common parts.

2.  The issue raised in this appeal is whether the entrances and exterior walls of the residential parts of a mixed commercial/residential development are within the exclusive possession of the original developers, who therefore should be solely responsible for their maintenance, or whether these areas are common parts of the development whose expenses in maintenance should be shared by contribution from the owners of the residential units.

The background

3.  Shatin New Town (‘the development’) was developed by four developers in 1983. The applicant is the owners’ corporation. The development is comprised of a commercial portion which is made up of four levels and a basement. The commercial portion consists of shops and car parks. On top of the commercial portion are eight high-rise blocks of 1,400 residential units (‘the residential blocks’).

4.  At a meeting of the owners held on 19 November 2005 a resolution was passed to carry out maintenance works to the lobbies, entrance halls and exterior walls of the residential blocks (‘the area’). It was further resolved that the monthly management fees of the residential units would be increased for the purpose of carrying out the maintenance by $450 per month from the then monthly sum of $550 to $1,000, for a period of 24 months from 1 December 2005 to November 2007. The total amount to be contributed for the maintenance is $15,120,000.

5.  The respondent is the owner of one of the residential units. He paid the increased management fees from December 2005 to March 2006, but refused to do so from April 2006 onwards. The amount to be paid up to November 2007 was $9,000.

6.  The applicant sued the respondent for the recovery of $9,000. The case was tried in the Lands Tribunal by H H Judge Wong who dismissed the application. The applicant now appeals.

The Judge’s reasoning

7.  The Judge rejected the applicant’s claim because he held that the area was ‘owned’ by the developers and the maintenance thereof should be their sole responsibility and not that of the respondent.

The seven shares

8.  The Judge relied upon two clauses in the DMC in support of the ‘ownership’ point. First, a provision in the First Schedule of the DMC. In this Schedule, the respective shares of the residential units, shops, car parks and other areas as of the development are specified. The total shares are 83186. The description of the part which has 7/83186^th shares (‘the seven shares’) is :

‘

Machine Room, Water Tank, Pump House, Unexcavated Area on Basement; Water Tank, Transformer Room, Meter Room, Schroff, Switch Room, Lavatories, Entrance Hall, Walkway, Arcade, Refuse Container Chamber on Level I; Driveway on Level II; Pedestrian Walkway, Arcades and Lavatories on Level III; Switch Rooms, Pump House, Sum Tank, Flower Beds, Machine Rooms, Platforms, Pools, Planting, Sitting Areas, Children’s Play Areas, Entrance Halls on Level IV; all communal areas of the Estate and of each Block not hereinbefore mentioned including footpaths, roads, gardens, open spaces, Public Parking Spaces, recreational facilities including common entrances, halls passageways, lift machine room, Water Tank, Pump House, and terrace on 22nd floor of the buildings.  (emphasis added)

) ) ) ) ) ) ) ) ) ) ) ) 7/83186th shares’

9.  The Judge held that the part which I have underlined above, namely ‘all communal areas of the Estate and of each Block not hereinbefore mentioned’ covered the area, namely, the lobbies, entrance halls and exterior walls. No issue is taken by Ms Lisa Wong, SC, counsel for the applicant, that the area may come within the ambit of the description of the seven shares, but the real issue in this appeal is whether the area is within the exclusive possession of the developers. In my view it is not.

10.  The area clearly is described by the DMC as the common areas of the ‘Blocks’ meaning the eight residential buildings of the development.

‘“the Block’s Common Areas”  shall mean and include the entrances and halls...and the exterior walls of each Block.’

11.  The rights of the co-owners to use the common areas of the Blocks are spelt out by Clause A1 of Section II of the DMC :

‘Full right and liberty for the Owner for the time being his tenants, servants, agents and licensees (in common with all persons having the like right) to go, pass and repass over and along and use such of the entrance halls, lobbies, staircases, landings, passages, lifts and other common areas as form part of the Residential Block of which the Residential Unit owned by him forms part for all purposes connected with the proper use and enjoyment of such Residential Unit subject to the House Rules (if any) relating to such Common Areas.’  (emphasis added)

12.  The developers may well have reserved the area to themselves under the seven shares, but it does not mean that they have exclusive possession over it.

13.  The consequence of any other interpretation would be unthinkable : it would mean that the owners of the 1,400 residential units would not have the right to use such essential facilities such as the entrance halls and lobbies, and could only do so at the whim and pleasure of the developers. One of the overriding objectives in the construction of a document such as the DMC is to give effect to that which a reasonable man (rather than a pedantic lawyer) would have understood the parties to mean. Therefore, if in spite of linguistic problems the meaning is clear, it is that meaning which must prevail : Jumbo King Ltd v. Faithful Properties Ltd & Others (1999) 2 HKCFAR 279 per Litton PJ at 296.

Clause 7

14.  The second clause relied upon by the Judge is Clause 7 of Section I of the DMC which confers upon the developers :

‘(a)  ... the exclusive right to erect one or more flu pipes or smoke stackes or chimneys at the rear exterior wall or walls of each Block from the ground floor or any other level to the Roof thereof together with the right to maintain, replace or remove the same provided such erection, maintenance, replacement or removal shall not unnecessarily interrupt the enjoyment of the Residential Units in the Residential Block.

(b)  have the exclusive right to use all the external walls of all of the Residential Block for advertising purposes and to display, install, erect, affix or permit to be displayed, installed, erected or affixed thereon and thereto such advertising signboard placards, posters and other advertising signs or structures whatsoever (whether illuminated or not) subject to the approval of the Public Works Department or other Government Authorities concerned and with the right to remove, repair, maintain, service or replace the same provided that the same shall not unnecessarily interrupt the enjoyment of the Residential Units in that Residential Block.’  (emphasis added)

15.  The rights that are given to the developers are to erect pipes on the exterior walls, and also to use the exterior walls for advertising purposes. While these are described as exclusive rights, they are in fact qualified. First, the developers must have the prior approval of the manager of the development before they can exercise these rights. Second, in respect of the advertising right this is subject to two further conditions, namely, the approval of government authorities, and that the exercise of the rights must not unnecessarily interrupt the enjoyment of the residential units.

16.  Considering that the exterior walls are specifically designated as a common area which is to be used by all the owners, the conferring of the so-called ‘exclusive right’ of the exterior walls to the developers for some limited purpose does not in my view provide the developers with exclusive possession of the exterior walls.

17.  In The Incorporated Owners of Goa Building v. Wui Tat Company Limited CACV 349/2002, this Court (Rogers VP, Le Pichon JA and Waung J) construed a similar, although not identical, clause in a DMC which gave the party the exclusive right to use the exterior walls for advertising and to install pipes. There are similar restrictions by way of prior approvals before such rights can be exercised.

18.  This Court then held that such rights ‘did not comprise all the rights which would amount to the exclusive possession or the exclusive right to the use, occupation or enjoyment of a part of the building. The rights were merely part of the rights which might be enjoyed by an owner but were not the full and exclusive rights’.

19.  Although admittedly the exact wording of the clause in Goa Building is different : ‘the external walls of the said Building and of any part of the Building in common use...’, nevertheless the construction nonetheless of its effect is equally clearly applicable to the present case.

Section 34H

20.  The Judge relied on section 34H of the BMO to hold that the developers are responsible for the expenses relating to the maintenance of the area :

‘  (1)  Where a person who owns any part of a building, has the right to the exclusive possession of any part of a building or has the exclusive right to the use, occupation or enjoyment of that part, as the case may be, but the deed of mutual covenant in respect of the building does not impose an obligation on that person to maintain the part in good repair and condition, that person shall maintain that part in good repair and condition.’

21.  Once it can be seen that the relevant clauses in the DMC do not confer exclusive possession of the area to the developers, then section 34H, which mandates that an owner who has exclusive possession to a part of the building to maintain it in good repair and condition in the absence of such an obligation in the DMC, is not applicable to the present case at all.

22.  Mr. Lawrence Cheung, counsel for the respondent, has argued that the first part of section 34H should be read disjunctively, and that exclusive possession is not the only criterion for an owner to be responsible for the maintenance of that part of the building. My view is that even if that part of the section is to be read disjunctively, and the section is to encompass three situations, namely,

(1)  a person who owns any part of a building or

(2)  a person who has the right to the exclusive possession to any part of the building or

(3)  a person who has the exclusive right to the use, occupation or enjoyment of any part of the building,

nevertheless within the context of a multi unit development such as the present one, a person who owns any part of the building must be entitled to exclusive possession thereof, or have an exclusive right thereupon, before Section 34H comes into play.  In the present case the maintenance expenses have to be shared by the residential owners.

23.  It is accepted by Ms Wong that the DMC was badly drafted. There is no apparent correlation between its many parts. There are, for example, matters referred to in the Schedules of the DMC which bear no relationship to the main body of the DMC. The reservation of the area to the developer when the parts therein are already defined as common areas is another example. But as Lord Hoffmann observed in Investors Compensation Scheme Ltd v. West Bromwich Building Society [1998] 1 WLR 896 at 913

‘  (4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words.  The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choosebetween the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] A.C. 749.’

Computation

24.  The Judge also held that if the respondent is required to contribute, then the contribution should be based on his share in the development i.e. 37/83186^th, and not based upon a uniform rate applicable to all the 1,400 residential units (‘the flat rate’). The Judge chose the computation based on shares by reference to section 22(2) of the BMO.

General and contingency funds

25.  Section 22(2) has to be read in conjunction with sections 20 and 21. Section 20 requires the corporation to set up two funds : a general fund and a contingency fund. The purpose of the general fund is :

‘ (a)  to defray the cost of the exercise of its powers and the performance of its duties under the deed of mutual covenant (if any) and this Ordinance; and

(b)  to pay Government rent, premiums, taxes or other outgoings (including any outgoings in relation to any maintenance or repair work) which are payable in respect of the building as a whole.’ (Section 20(1) )

26.  The purpose of the contingency fund is :

‘ (a)  to provide for any expenditure of an unexpected or urgent nature; and

(b)  to meet any payments of the kind specified in subsection (1) if the fund established thereby is insufficient to meet them.’ (Section 20(2) )

27.  Section 21(2) requires a management committee of the corporation to determine the amount to be contributed by the owners to the two funds.

Section 22(2)

28.  Section 22(2) then provides that,

‘ (2)  If there is no deed of mutual covenant, or if the deed of mutual covenant does not provide for the fixing of contributions, the amount to be contributed by an owner towards the amount determined under section 21 shall be fixed by the management committee in accordance with the respective shares of the owners.’

29.  The difficulty with the Judge’s reliance upon section 22(2) is that he did not find that the maintenance of the areacome within the ambit of either of these two funds. Instead he referred to the ‘special fund’ identified by section 4 of the 7^thSchedule of the BMO.

The special fund

30.  The relevant parts of section 4 are as follows :

‘  (1)  The manager shall establish and maintain a special fund to provide for expenditure of a kind not expected by him to be incurred annually.

(2)  If there is a corporation, the corporation shall determine, by a resolution of the owners, the amount to be contributed to the special fund by the owners in any financial year, and the time when those contributions shall be payable.

(3)  The manager shall open and maintain at a bank within the meaning of section 2 of the Banking Ordinance (Cap 155) an interest-bearing account, the title of which shall refer to the special fund for the building, and shall use that account exclusively for the purpose referred to in subparagraph (1).’

31.  One can see that the BMO has identified three types of funds, namely, general, contingency and special.

32.  Based on the events that have happened the corporation did appear to have established a special fund to provide for the maintenance work. The expenditure to the maintenance work is ‘a kind not expected by the manager to be incurred annually’. By a resolution passed at the meeting of the owners held on 19 November 2005 the amount to be contributed by the residential owners was decided. Unlike section 22(2) there is no provision in section 4 that in default of provisions of the DMC on the method of computation, the ‘share rate’ will apply.

33.  There is no Respondent’s Notice that the special fund comes within the ambit of the general or contingency funds. There was no argument before the Judge that a ‘special fund’ bank account has not been established in accordance with section 4(3).

Column 5 of the Second Schedule

34.  It is then necessary to decide whether the decision by the owners to use the ‘flat’ rate contradicted other provisions of the DMC, or whether it is in fact consistent with its provisions.

35.  The respondent contended that the proper method of computation should be based on the 5^th Column of the Second Schedule of the DMC. This has always been his approach, commencing from the time when he filed the notice of opposition in the Lands Tribunal.

36.  The relevant parts of the Second Schedule are as follows :

THE SECOND SCHEDULE ABOVE REFERRED TO

1STCOLUMN		2ND COLUMN		3RD COLUMN		4TH COLUMN		5TH COLUMN
Description of Flats/Units/Parts of the Estate.		-		Monthly Contribution of Advance Payment of Management Expenses.		-		No. of Shares for further contribution of Management Expenses and for expenditure relate to the Estate's Common Facilities and the Estate's Common Areas.
RESIDENTIAL DEVELOPMENT		-		At $200.00 per flat.		-		At 400/668,522 shares per flat.
COMMERCIAL UNIT		-		At $0.50 per square foot.		-		At 1/668,522 share per square foot.
Shops on LEVEL I and LEVEL III
CAR PARKING SPACES ON BASEMENT LEVEL I and LEVEL II		-		At $30.00 per car parking space.		-		At 60/668,522 shares per car parking space.

37.  In my view the method of computation in the 5^th Column is not applicable. The DMC draws a distinction between the estate’s common areas and the estate’s common facilities on the one hand, and the block’s common areas and the block’s common facilities on the other. The last two items referred to the residential areas. Although the estate is defined as the whole of the development, the definition of the estate’s common areas and the estate’s common facilities do not include the common areas and common facilities of the residential part.

The estate

38.  The definition of the estate’s common areas is as follows :

‘ “the Estate’s Common Areas”  shall mean the communal areas of the level and include :-

(a)  The main entrance to and exit from the Estate including the main gate (if any).

(b)  The main access road within the Estate.

(c)  The boundary fences and gates (if any).

(d)  The gardens, lawns, open space flower beds and planter boxes.

(e)  Footpaths, steps and staircases not within each Block.

(f)  Driveways and pavements.

(g)  The visitors’ car parks, Manager’s car parks and Public Light Bus car parks (if any).

(h)  The children’s playgrounds.

(i)  The other open spaces and areas not otherwise designated for any particular purposes.

(j)  The Estate Office or Offices.

(k)  The Central Garbage Disposal area.

(l)  The bridges and the pedestrian walkways.

(m)  Those other parts of the Estate the right to use which is given by this Deed of Mutual Covenant to more than one Owner in accordance with this Deed.’

39.  The definition of the Estate’s Common Facilities is as follows :

‘ “the Estate’s Common Facilities”  shall mean and include :-

(a)  Such of the sewers, drains, water course, pipes, gutters, wells (if any) wires and cables and other service facilities whether ducted or otherwise which are or at any time may be in, under or over or passing through the Land or the Estate, through which water, sewage, gas, electricity and any other service are supplied to the Estate or any part or parts thereof.

(b)  Transformer rooms, main distribution frame rooms (for telephone) pumps house, switch rooms, mechanical rooms, mechanical ventilation rooms and store rooms for use and benefit of the Estate and not for the use or benefit of a particular Block.

(c)  Close circuit television cameras in the car parks and garden areas connecting directly to the Maintenance Office (if any).

(d)  Lamp posts along the said main access road driveways and footpaths.

(e)  Public light buses (if any).

(f)  Any other facilities installed for the use and benefit of the Estate and not for the use and benefit of a particular Block.’

40.  The definition of the Estate’s Common Areas referred to the communal areas of the ‘level’. The reference to the ‘level’ obviously means the commercial part of the development. Further, if the estate’s common parts include both the commercial and residential parts, then there is no need to specify in (e) ‘Footpaths, steps and staircases not within each Block.’. This is another indication that the estate’s common areas do not include the residential blocks.

41.  While item (m) may be construed to include the residential parts as well, considering the whole of the provisions I do not accept that item (m) embraces the residential parts.

42.  In respect of the estate’s common facilities, items (b) and (f) further expressly exclude the residential parts. By contrast, the Block’s common parts and the Block’s common facilities are clearly referable to the residential buildings :

‘ “the Block’s Common Facilities”  shall mean and include :-

(a)  Water pipes, drains, wires, cables, lift machine rooms and other mechanical rooms inside each Block and for the use and benefit of the particular Block.

(b)  Lifts inside each Block.

(c)  Communal television antennae for the use and benefit of each Block.

(d)  Door phone sets linking each Flat in each Block with its Block entrance and the Estate Office (if any).

(e)  Close circuit television cameras in the lifts in each Block connecting directly to the Estate Office (if any).

(f)  Store room in each block (if any).’

43.  I find that the 5^th column is not applicable because it is not referable to further contributions of management expenses relating to the common parts and common facilities of the residential buildings. I would reserve my decision on the question whether the Judge was correct to hold that because the 668,522 shares referred to in the 5^th column is ambiguous and does not match the number of shares that had previously been identified in the DMC, least they therefore should be disregarded even in the event that the 5^th column is to be applied.

The ‘flat’ rate method

44.  If the method of computation is not decided by the 5^th column then one has to see whether the ‘flat’ rate method adopted by the applicant is correct. The 3^rd Column of the Second Schedule specified $200 per month per flat as the contribution of advance statement of management expenses. That amount has since been increased to $550 prior to the resolution of 19 November 2005.

45.  Under clause 1 of sub-section B of Section V of the DMC, the manager was given ‘the full and unrestricted authority to do all such acts and things as may be necessary or requisite for the proper management of the estate’ which includes :

(1)  To paint white-wash or otherwise treat as may be appropriate the exterior and block’s common areas and the estate’s common areas at such intervals as the same may reasonably require to be done; and

(2)  To keep all estate’s and block’s common facilities in good conditions and work order.

46.  Under clause 1 of sub-section D of Section V, the owners of the estate shall pay a due proportion of the management expenses which shall be made up of the following :

‘ (a)  ―

(b)  The costs of carrying out all or any of the duties of the manager set out in clause 1 of sub-section B of Section V hereof.’

47.  In my view, the expenses relating to the maintenance of the area comes within the meaning of ‘management expenses’. Further under clause 2 of sub-section D of section V

‘ (a)  Each owner shall in respect of each Commercial or Residential Unit pay a due proportion of the cost and expenses mentioned in Clause 1 of this Sub-Section D (being the Management Expenses).’

This imposes an obligation on the owners to contribute.

Apportionment

48.  In clause 6 of the same sub-section there is a provision for the apportionment of the management expenses in the event that the expenditure relates solely for the benefit of any residential unit or any commercial unit. In such a case the management expenses shall be paid by either of the owner of the residential unit or commercial unit :

‘ The Management Expenses shall subject to the provisions of Sub-Section F of this Section be apportioned between the Owners in the following manner :-

(a)  Where any expenditure relates solely to or is solely for the benefit of any Residential Unit or any Commercial Unit and no Owner of any other units would receive any material benefit therefrom the full amount of such expenditure shall be paid by the Owner of that Residential or Commercial Unit PROVIDED HOWEVER that in the case of any single item of expenditure not exceeding $5,000.00 the Manager may in its absolute discretion exclude the application of this sub-clause (a) with regard to such expenditure and apportion such expenditure in accordance with sub-clause (c) this Clause.’

49.  The Judge construed ‘unit’ as referring to a single unit, and not the residential buildings as a whole. I do not agree. Quite apart from the fact that under the DMC there is the usual provision that singular shall include the plural, in my view the intention of the DMC is really to draw a distinction between the commercial part and the residential part of the development, and that expenses relating to each part should not be brought upon the owner of the other part. This is a more consistent way of construing the DMC as a whole when there are already provisions drawing a distinction between the common parts and common facilities of the commercial and residential parts. The maintenance work is solely for the benefit of the residential owners. In such a case it would be unfair to adopt a method of contribution based on the shares of the individual owners of the development, the denominator of which is based on both the commercial and residential parts.

Conclusion

50.  In the circumstances the appeal must be allowed. There is to be judgment against the respondent for the sum of $9,000 together with interest, the rate and duration of which are to be agreed by the parties for the Court’s approval.

51.  I wish to express my concern that in many of the Lands Tribunal cases, proceedings are brought or resisted on disputes wherein the monetary value is extremely small, but the costs of the proceedings far exceed the value of the claim. The present case is a paradigm example. Quite apart from the fact that the claim is only $9,000, the difference in value of the various methods of calculation is extremely small indeed. Very often an owner who has lost his case will eventually lose his property because the property is charged and disposed of by the successful party in order to satisfy the costs’ order. Very often such property is the unsuccessful owner’s only asset of substance. In my view solicitors advising owners in such disputes are duty bound to spell out clearly to them, before instituting or contesting the proceedings, the costs’ implications and to give a realistic estimate of the likely costs to be incurred both in respect of the owner’s own costs and the opponent’s costs, together with a warning of the possible consequence of losing one’s flat in the event of losing his case.

Costs

52.  The applicant is entitled to a provisional costs order of the costs of the appeal and below. The costs below shall include the costs in the Small Claim Tribunal where the proceedings were first brought, together with certificate for counsel. Such costs are to be taxed on District Court Scale if not agreed.

Hon Stone J :

53.  I agree with the judgment of Cheung JA.

54.  I wish to add a few words on the issue touched upon by Cheung JA at paragraph 51 above.

55.  As this appeal progressed, it became increasingly clear that, however the arguments were dressed up, the real bone of contention between these parties was whether the respondent owner was to be liable for the maintenance costs calculated on a ‘pro rata basis’ in terms of ‘undivided shares’ – so that, as he insisted, his contribution would be consistent with the relatively small size of his unit within this particular development – or alternatively upon the basis of a calculation founded upon the formula within Column 5 of the Second Schedule, or upon the basis of the straight-line amount of HK$450 per month as voted upon by the meeting of Incorporated Owners.

56.  By a letter dated 23 November 2009, received 4 days after the hearing of this appeal from the solicitors for the respondent, the relevant arithmetical situation was clarified in the following terms:

‘Undivided shares’ method:	HK$6,725.20
‘Column 5, Second Schedule:  calculation	HK$9,046.80
Straight line vote amount:	HK$10,800.00

57.  As Cheung JA has observed (vide paragraph 5 above), the respondent owner in fact paid the increased management fees, as voted upon in owners’ meeting, from December 2005 to March 2006, but declined to do so as from April 2006, leaving the amount outstanding as due and owing up to November 2007 as HK$9,000.

58.  Thus, on any basis the absurd situation as now has arisen is that proceedings which were commenced by the appellant in the Small Claims Tribunal then were transferred – at the direction of the Presiding Officer – to the Lands Tribunal, and thence, on appeal, have found their way to the Court of Appeal, with the result that the ultimately unsuccessful respondent owner now is facing a costs’ order in the order of perhaps several hundred thousand dollars when the gravamen of the original dispute was that the individual owner’s liability should be for the sum of HK$6,725.20, as against the $10,800 which represents the sum as voted upon by the Incorporated Owners – a differential of but HK$4,074.80.

59.  How this gentleman has been permitted to get into this wholly invidious position is beyond me. We are told by his counsel that he was advised as to the potential costs’ ramifications of this appeal, but nevertheless elected to press on. If that is correct, and we have no reason to think that it is not, so be it, but it does strike me as wholly absurd that the full majesty of the law should be invoked over the sum of HK$4,074.80.

60.  The quintessential reasonable man on the Shawkiwan tram is bound to wonder whether a system which permits such a nonsensical situation to develop should remain in place in its present form, and that consideration should be given to devising an alternative method of resolving disputes between individual owners and Incorporated Owners in any residential development which does not contain therein the seeds of commercial disaster.

Hon Lunn J :

61.  I agree with the judgment of Cheung JA. I share the concern expressed by both Cheung JA and Stone J in respect of the wholly disproportionate disparity between the very modest monetary amount in dispute between the parties and the likely consequence of the costs order against the respondent.