OSCAR TOYS MANUFACTORY LTD v. INCORPORATED OWNERS OF GRANVILLE HOUSE

[English Translation – 英譯本]

LDBM 192/2002

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

(BUILDING MANAGEMENT APPLICATION
 NO. 192 OF 2002)

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BETWEEN

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JUDGMENT

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1. The Applicant is the owner of Flat B, 10^th Floor, Granville House, 41C-D Granville Road, Tsimshatsui, Kowloon (“the Premises”).  The Respondent is the owners incorporation of the said building.

2. The Applicant is applying to this Tribunal for an order setting aside a rule laid down by the Respondent which prohibits ingress into and egress from Granville House by any person between 11 p.m. every day and 7 a.m. of the following day (“the Rule”).

3.  Mr Wong Yau Tak, the Applicant’s representative, is a director of the Applicant company.  The Applicant purchased the Premises some time in 1998/1999, i.e. about 3 years ago.  Mr Wong also owns another company called Tak Bong Development Co. Ltd. (transliteration) (德邦發展有限公司) (“Tak Bong”).  Tak Bong is the owner of Flats A and B on the 5^th Floor, Flat A on the 4^th Floor and Flat B on the 2^nd Floor of the said building.  It let out some of these units, and one of the tenants carried on a business of designing wedding gowns at the unit he rented.  That tenant returned to his unit in Granville House following the wedding banquet of a customer who rented a wedding gown from him, but he was not allowed to enter the building, the reason being that it was already past 11 p.m.   There are some other tenants of Mr Wong’s who have intended to leave the building during the time governed by the Rule, but the watchman refused to let them leave, and they had to call the police in order to be able to leave the building.

4. Mr Wong Yau Tak is a businessman who trades in toys.  In mid January 2001, he participated in a toys exhibition in Hong Kong, but due to the Rule, he was unable to take his customers to his toy samples room in Granville House for visits and, instead, had to incur the inconvenience of going to the customers’ hotel rooms to conduct business negotiations.  He has applied to the Hong Kong Trade Development Council for participation in the Hong Kong Toys and Games Fair which is to be held in Hong Kong from 7 to 10 January 2003.

5. Mr Hui Sing Lok, a witness for the Applicant, is a manager at Apexon Enterprises Ltd (“Apexon”).  Apexon is a company that trades in accessories for clocks and watches, and is the owner of Flat A on the 15^th Floor of Granville House.  Mr Hui has tried to enter Granville House after 11 p.m. in order to fetch some documents but has not been allowed to enter the building.  This occurred 3 to 4 times between 2000 and the date on which Mr Hui testified at the hearing (i.e. 11 October 2002).

6. I hold that Mr Wong Yau Tak and Mr Hui Sing Lok are veracious witnesses, and I accept their evidence.

7. Mr Yu Tit Wun, the present chairman of the management committee of the owners incorporation, testified that the Rule has been in force August 1990.  Prior to the implementation of the Rule, there had been numerous complaints from owners about the door locks of their units being prized and damaged.  In mid 1990 or so, Mr Yu’s unit on the 13^th Floor was burgled, and this caused concern among the owners at that time.  For the sake of security of the building and in order to save expenses in maintaining security, a resolution to implement the Rule was passed at the owners’ general meeting on 15 August 1990.  Since then, it had only been necessary for the building to employ two watchmen, one working on day shift and the other on night shift, to keep records (including records of identity) of persons who enter and leave the building and to patrol the building at regular intervals.  And the building had since been kept at peace, with no further incidents of burglary.  Subsequently, the owners incorporation reviewed the Rule at owners’ general meetings on 24 July 1998 and 29 June 2001 respectively, and most of the owners who attended the meetings resolved to continue implementing the Rule.

8. Mr Yu Tit Wun pointed out that, were the Applicant’s application to be allowed, the owners incorporation would have to employ another watchman working on night shift so that one watchman would record particulars of persons entering and leaving the building and the other watchman would be in charge of patrolling the building.  This, Mr Yu said, would substantially increase the management expenses, to which the other owners and tenants would have to contribute, and it might also bring back security problems.

9. Mr Yu admitted that the watchman has told him that there have been people who wished to leave the building after 11 p.m. but the watchman refused to allow them to do so for the reason that it was already past 11 p.m., and in the end the watchman had to call the police.  However, this has occurred less than 10 times.

10. One of the duties of an owners incorporation is to enforce the provisions of the deed of mutual covenant.  In this respect, section 18(1)(c) of the Ordinance provides that:

(1)        The corporation shall ―

(a)     …

(b)     …

(c)     do all things reasonably necessary for the enforcement of the obligations contained in the deed of mutual covenant (if any) for the control, management and administration of the building.

11. In the present case, did the resolutions passed at the owners’ general meetings comply with the provisions of the deed of mutual covenant of the building (“DMC”)?  Clauses 1 and 2(a) of the DMC provide, respectively, for the use and enjoyment by the owners of the units that they own and for the use of the common parts of the building:

NOW THIS INDENTURE WITNESSETH that the parties hereto for themselves and their respective executors administrators and assigns or the survivors or survivor of them and the executors and administrators of such survivor his or their assigns or their successors and assigns as the case may be to the intent that the covenants herein contained shall bind them and each and every party of them and the owner or owners for the time being of the said premises and every part thereof and all persons claiming through under or in trust for them respectively and each and every party of them respectively DO and each of them DOTH hereby covenant with the other party or parties of them as follows:-

1.         Each of the parties hereto shall for the residue of the said term of years for which the said premises are held from the Crown have the sole and exclusive possession and right and privilege to the use occupation and enjoyment of the whole of that portion of the said building which is more particularly described and set out in the Second Column of the First Schedule hereto opposite to the name of such party set out in the First Column of the First Schedule hereto with the appurtenances thereto and the entire rents and profits of such portion.

2.         (a)     Each of the parties hereto and his tenants and licensees shall in common with his co-owners of the whole of the said premises and their tenants and licensees have access to and be entitled to use the entrance-hall common staircases and landings lifts and common passages and corridors in the said building for all purposes connected with the proper use and enjoyment of the portion of the said building of which he is entitled to the exclusive use occupation and enjoyment and for the purpose of ingress to and egress from such portion of the said building.

12. Clause 1 guarantees the right of each of the owners of the building to use and enjoy his property and does not subject such right to any qualification.  Under Clause 2(a), where the use of the common parts of the building by an owner or his tenant or licensee is connected to the proper use and enjoyment of the relevant unit, that owner or tenant or licensee is entitled to have access to and use the common areas of the building in common with the other owners or their tenants.

13. As a result of the Rule, the owners of certain portions of Granville House are unable to use and enjoy their premises between 11 p.m. and 7 a.m. of each day.  This contravenes Clause 1 of the DMC.

14. As is apparent from their evidence, Mr Wong Yau Tak and Mr Hui Sing Lok are bound by the Rule and hence unable to enter the building after 11 p.m. to work for their respective companies.  The Rule, therefore, contravenes Clause 2(a) of the DMC.

15. Clauses 1 and 2(a) of the DMC form two of the covenants in respect of the building.  These covenants are binding on all the owners.  Section 14 of the Ordinance provides that: “Subject to this Ordinance, at a meeting of a corporation any resolution may be passed with respect to the control, management and administration of the common parts or the renovation, improvement or decoration of those parts and any such resolution shall be binding on the management committee and all the owners.” (underlining added).  This provision is subject to Section 18, and therefore the owners incorporation has no power to pass resolutions which contravene provisions of the DMC.

16. The Respondent contends that those resolutions had neither deprived the owners of their right of ingress to and egress from the building nor altered the provisions of the DMC, and that the Rule merely seeks to restrict the time within which each owner, tenant and user can enter and leave the premises and the building.  In my judgment, this contention must fail.  As stated above, the owners incorporation was not entitled to impose such a restriction.

17. The Respondent also contends that, even if an owner’s business is affected or his use of the premises is restricted by the implementation of the Rule, it is still the security of the building and the owners’ safety that form the paramount considerations in determining whether the Rule is reasonable.  In my judgment, this contention must also fail.  The key issue in the present case is whether the resolutions passed by the general meetings in respect of the Rule were in accord with the provisions of the DMC, not whether the Rule is reasonable.

18. The Respondent relies on the case of Music Advance Limited & Another v. The Incorporated Owners of Argyle Centre Phase I (2002) HCA 2574 of 2002 in an attempt to prove that it is necessary for the Respondent to implement the Rule in order to prevent further crime from being committed inside the building and ensure the safety of the owners, tenants and occupiers of the building.  There is nothing wrong for an owners incorporation to protect the aforesaid classes of persons, but this is on the premise that the incorporation must enforce the provisions of the DMC rather than acting in contravention thereof.

19. I do not accept the Respondent’s contention that the non-revocation of the Rule is not unfair to the owners, tenants and occupiers.  Where staff members of the owners or tenants are not allowed to leave the building after 11 p.m., they can only leave the building when the police are called.  This in effect constitutes imprisonment and can hardly be described as fair to those being affected.  Mr Wong Yau Tak and Mr Hui Sing Lok intended to, but could not, return to their respective premises to carry out their normal work.  In other words, they were deprived of the right that the DMC conferred upon them.  This was in breach of the relevant covenant.

20. The Respondent contends that the Rule serves to save management expenses that the owners have to bear.  This does not constitute a valid defence.

21. For the above reasons, I hold that the general meetings convened by the owners incorporation were not entitled to pass resolutions approving the Rule, and therefore the Rule is invalid.  I allow the Applicant’s application and set aside the Rule.

22. Costs

 I make an order nisi that the Respondent is to pay costs of the Applicant in the present case, such costs to be taxed if not agreed. 

22.1 If no application is made by any party within 21 days, this costs order nisi will become absolute.