LAW BIK LING, MILLY v. KAI SHING MANAGEMENT SERVICES LTD

LDBM 42/2010

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO. LDBM 42 of 2010

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JUDGMENT

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The Application

1.  The Applicant is the registered owner of Flat A, 14^th Floor (“Flat 14A”) and Flat B, 2^nd Floor (“Flat 2B”), Block 5, Pokfulam Garden (“the Estate”), 180 Pokfulam Road, Pokfulam, Hong Kong. The representative of the Applicant, Mr. Tang Woung Shiu (who is the husband of the Applicant) lives in Flat 14A since 1988 and the Applicant currently resides in Toronto, Canada. The Respondent is the manager of the Estate appointed pursuant to the Deed of Mutual Covenant dated 12 June 2006 (“the DMC”).

2.  The Applicant applies for a mandatory injunction against the Respondent “to take effective and necessary action including the commencement and conduct of legal proceedings to remove the unauthorized building work erected at the exterior wall of Flat H, 14^th Floor (“Flat 14H”), Block 5, Pokfulam Gardens, 180 Pokfulam Road, Pokfulam, Hong Kong, within 14 days.”.

3.  Both parties were not legally represented and the hearing was conducted in Chinese. However, written submissions were made by parties in English and the parties therefore agreed that this Judgment should be written in English.

The Background and the Issues

4.  It is not in dispute that a metal frame supporting a split type air-conditioning unit is erected at the external wall of Flat 14H outside the dinning room area. The Applicant’s flat, Flat 14A is, in fact, adjacent to Flat 14H and according to the floor plans, the metal frame is facing some of the windows of Flat 14A. Over that area where the metal frame is installed, there is a clothes-drying rack. The parties agree that the external walls are common parts of the Estate and are managed by the Respondent on behalf of the Owners’ Corporation of the Estate which was incorporated on 13 August 2007 pursuant to the Building Management Ordinance Cap. 344 (“the Ordinance”).

5.  The Applicant argues that the metal frame is an unauthorized building work and should be demolished. The Applicant further argues that the said installation is in breach of the DMC and the hot exhaust air emitted therefrom causes nuisance.

6.  Since the external wall is common part of the Estate, the Applicant is not entitled to take action against the owner of Flat 14H directly. Only the Owners’ Corporation and the manager, namely the Respondent, are empowered under the Ordinance and the DMC to take action. For this reason, the Applicant and Mr. Tang made a number of complaints to the Respondent and requested the Respondent to take action to remove the metal frame together with the air-conditioning unit from the said location. The Applicant argues that the Respondent was in breach of the DMC in failing to perform its duty to enforce the DMC for the benefit of the owners.

7.  The Respondent admits that it did not take any action against the owner of Flat 14H for the removal of the metal frame in question but denies for the breach. Respondent argues that the metal frame is permissible under the DMC and therefore no enforcement action is required. Further the Respondent argues that the installation is not unauthorized building work and no enforcement action would be taken by the Government.

8.  The Respondent also says that it has power under the DMC to set aside any common parts of the Estate for installation of air-conditioning units if necessary. It is also the contention of the Respondent that it is excluded under the DMC for any liability except for liabilities in relation to criminal, dishonest and willful negligent conduct.

The Evidence

9.  Since there is no dispute as to much of the fact of this case, the parties agree that all the witness statements and the supporting documents are admitted as evidence without calling the makers and the suppliers respectively. It is also agreed that the Respondent would call Mr. Leung Hiu Tat, a Senior Building Surveyor of the Buildings Department to explain the enforcement policy of removing unauthorized building works in Hong Kong.

10.  Mr. Leung duly attended the hearing on 2 August 2010 and confirmed that the subject metal frame for supporting the air-conditioning unit in question was considered by the Buildings Department as “unauthorized building work” because no approval for such installation was obtained from the Building Authority, and therefore is subject to enforcement action. He, however, explained that such installation is described as “amenity feature” and a flexible approach for enforcement is usually adopted in handling these kinds of unauthorized building work, namely no immediate enforcement action would normally be taken against it if certain criteria are met. Mr. Leung seemed to suggest that the metal frame met the said criteria and, therefore despite it was unauthorized, no immediate enforcement action would be taken. In support of his explanation, he also produced an extract of the internal manual used by the Buildings Department’s officials for this Tribunal’s reference. The same was marked exhibit “R1”.

11.  Mr. Leung also said that there is a new “Minor Works Control System” to be implemented in 2010. Briefly, under the new system, when some minor work, such as a metal supporting frame for air-conditioning unit, is being erected, as long as the work is carried out by a registered Minor Works Contractor pursuant to the Building (Minor Works) Regulation, such work would not be considered as unauthorized building work and therefore not subject to any enforcement action. However for the existing minor works, like the metal frame in question, this new scheme does not apply. He added that as a transitional policy, the Buildings Department has a “Household Minor Works Validation Scheme” to deal with the matter. In short, enforcement action for removing the existing minor works will not be taken by the Buildings Department if they are validated by a prescribed building professional or a prescribed registered contractor. But unlike the “Minor Works Control System”, this transitional validation scheme would not turn these minor works from unauthorized to authorized building work.

12.  Mr. Leung’s evidence was not challenged by the Applicant and I therefore accept his evidence in full.

The Applicant’s Submissions

13.  Mr. Tang, for the Applicant, submits that the metal frame in question was an unauthorized building work which was liable to be removed. Although the evidence of the Mr. Leung shows that no immediate enforcement would be taken against the metal frame, it is not disputed that the metal frame would not then become an authorized building work. For this reason, according to the Applicant, such installation is in breach of Section IV, Part A, Paragraph 12 of the DMC.

14.  According to Section IV, Part A, Paragraph 12 of the DMC,  “No Owner shall use or permit or suffer any part of the Estate owned by him to be used except in accordance with any applicable Building Regulations or any Government Ordinances and Regulations or other permit, consent or requirement from time to time applicable thereto.”

15.  Further, it is suggested to this Tribunal that the metal frame in question was built in contravention of Section IV, Part A, Paragraph 17 of the DMC because it is a projection or structure erected or installed extending outside the exterior of Block 5 of the Estate.

16.  Section IV, Part A, Paragraph 17 of the DMC, “Except as herein mentioned no external signs, signboards, notices, advertisements, flags, banners, poles, cages or other projections or structures whatsoever extending outside the exterior of the any building shall be erected, installed or otherwise affixed or projected from any building or any part thereof.”

17.  Further, since the metal frame is erected at the common parts of the Estate and there is an Owners’ Corporation for the Estate, the Applicant has no right to request the owner of Flat 14H to remove the metal frame directly because of Section 16 of the Ordinance, even if such installation is in breach of the DMC.

18.  According to Section 16 of the Ordinance, “When the owners of a building have been incorporated ……, the rights, powers, privileges and duties of the owners in relation to the common parts of the building shall be exercised and performed by, and the liabilities of the owners in relation to the common parts of the building shall, subject to the provisions of this Ordinance, be enforceable against, the corporation to the exclusion of the owners, …”

19.  It is submitted by the Applicant that she is entitled under the DMC to request the Respondent, namely the Manager, to enforce the DMC for the benefit of the owners. The Applicant further submits that pursuant to Section V, Part B, Paragraphs 1 Sub-paragraphs (15), (33) and (34) of the DMC, the Respondent is under a duty to do so and its failure to act constitutes a breach of the DMC. The Applicant therefore requests this Tribunal to make an order compelling the Respondent to take appropriate action.

20.  According to Section V, Part B, Paragraphs 1 Sub-paragraphs (15), (33) and (34) of the DMC, “The Manager will manage the Estate in a proper manner and in accordance with the provision of this Deed of Mutual Covenant and the Sub-Deed of Mutual Covenant, and, except as otherwise therein expressly provided, the Manager shall be responsible for and shall have full unrestricted authority to do all such acts and things as may be necessary or requisite for the proper management of the Estate. Without in any way limiting the generality of the foregoing, the Manager shall have the following duties:-

(15)   To remove any structure, installation, signboard, sunshade, bracket, fitting or other things in or on the buildings or other parts of the Estate which have been erected in contravention of the provisions of this Deed of Mutual Covenant and/or without the written permission of the Manager (or if such permission has been given upon the expiration or withdrawal of the same) and to demand and recover from the person by whom such structure or other thing as aforesaid was erected or installed the costs of such removal and the making good of any damages hereby caused.

(33)   To commence, conduct, carry on and defend legal and other proceedings touching or concerning the Estate, the Residential Development or the Commercial Development or the management thereof all in the name of the Manager.

(34)   To enforce the due observance and performance by the Owners or any person occupying any part of the Estate through, under or with the consent of any such Owner of the terms and conditions of this Deed of Mutual Covenant and the Estate or House Rules made hereunder and to take action including the commencement and conduct of legal proceedings to enforce the due observance and performance thereof and/or to recover damages for any breach, non-observance or non-performance thereof and the registration and enforcement of the charges as hereinafter mentioned.”

21.  The Applicant relies on the authorities See Wah Fan v. Incorporated Owners of Ki Tat Garden (Phase I) [2003] 3 HKLRD 1 and Sunbeam Investments Limited v. The Incorporated Owners of Villa Veneto LDBM 370 of 2007 and LDBM 175 of 2009 (Consolidated) (Unreported) (Date of Judgment: 30 June 2010) that if she could show that she had a legitimate complaint regarding the installation of the metal frame at the common parts of the Estate and yet the Owners’ Incorporation and/or the Respondent, namely the manager chose to ignore her, there is no reason why she could not seek relief from this Tribunal. This was the means to ensure that the Owners Corporation and/or the manager would observe the intention and requirement of the Ordinance and the DMC in the proper management of a multi-owner building.

22.  In support of her argument in favour of granting an injunction, the Applicant also argues that the air-conditioning unit causes nuisance to the Applicant by emitting hot air into the kitchen and the dinning room of Flat 14A. The Applicant’s husband, Mr. Tang says in his witness statements that he felt that very hot after the air-conditioning unit was turned on. He had to close all the windows in the kitchen and dinning room in order to avoid the heat. He, however, admits that the Food and Environmental Hygiene Department had taken no action for it upon his complaint. The Department was of the view that no nuisance was caused as the emitted air from the air-conditioning unit only increased the temperature by 1 degree Celsius and this was not considered sufficient to establish any nuisance. Nevertheless, the Applicant still relies on the above and Section IV, Part A, Paragraph 14 of the DMC and Section 34I(1)(b) of the Ordinance in support of her application.

23.  According to Section IV, Part A, Paragraph 14 of the DMC, “…… no Owner will do or suffer or permit to be done anything in such Common Areas as may be or become a nuisance or cause annoyance to any other Owners or occupiers of the Estate.” Further according to Section 34I (1) (b) of the Ordinance, “(1) No person may ……(b) use or permit to be used the common parts of a building in such a manner as (i) unreasonably to interfere with the use and enjoyment of those parts by any power or occupier of the building; or (ii) to cause a nuisance or hazard to any person lawfully in the building.”

24.  The Applicant therefore submits that, by virtue of the above DMC and statutory provisions, if such air-conditioning unit installed at the external wall outside Flat 14H causes nuisance to the occupier of Flat 14A, the Applicant is also entitled to the injunction requested.

The Respondent’s Submissions

25.  The Respondent argues that it has the right and power under the DMC to set aside any common parts of the Estate for such specific use for the benefit of the Estate. The Respondent relies on Section III, Part C, Paragraph 2 of the DMC.

26.  According to Section III, Part C, Paragraph 2 of the DMC,“The Manager shall also have full right and authority to set aside any Estate’s Common Areas for a specific use provided that such specific use shall be for the benefit of the Estate.”

27.  It is submitted by the Respondent that the external wall outside the dinning room of Flat 14H is “Estate Common Areas” (or common parts of the Estate) and is set aside according to Section III, Part C, Paragraph 2 of the DMC by the Respondent for the specific use for installation of metal supporting frame for air-conditioning unit. For this reason, the owner of Flat 14H is not liable to remove the metal frame and it would not be necessary to take any action. The Respondent further says that the Owners Corporation of the Estate had discussed this issue and resolved that the said common parts in question was suitable for placing air-conditioning unit. The Respondent also relies on photos and floor plans of the Estate to show that the Owners’ Corporation and the Respondent have been acting fairly and reasonably. The House Rules specifically prohibit the installation of air-conditioning units at areas on the external wall covered by the ceramic tiles and this metal frame in question is not installed in the prohibited area.

28.  The Respondent originally argues that the metal frame in question is an “amenity feature” and therefore not an “unauthorized building work”. However in view of the evidence of Mr. Leung of the Buildings Department, it no longer pursues this argument. Rather, Mr. Lo, for the Respondent, has suggested that the owner of Flat 14H is about to engage a prescribed building professional to validate the said metal frame in question. The Respondent therefore argues that once this is duly done, there would be no risk of enforcement by the Buildings Department and the Respondent would have no valid ground to request the owner of Flat 14H to remove it. It is therefore unfair to grant the injunction when there is no breach of the DMC.

29.  The Respondent further submits that there is no breach of Section IV, Part A, Paragraph 17 of the DMC. Mr. Lo, for the Respondent, suggests that this particular clause of the DMC must be construed in a “reasonable manner”. Since the metal frame and the air-conditioning unit are considered as “amenity features” and are installed for the benefit of owners, on the true construction of the DMC, such structures or projections are not prohibited.

30.  The Respondent also invites this Tribunal to construe Section IV, Part A, Paragraph 17 of the DMC together with Section V, Part B, Paragraphs 1 Sub-paragraphs (15) of the DMC. It is submitted that when these 2 clauses of the DMC are taken into consideration, the Respondent is in fact given the power to grant permission for installation of structures or projections extending outside the exterior of the building.

31.  Regarding the nuisance compliant, the Respondent adopts the result of the Food and Environmental Hygiene Department and submits that there is no nuisance at all.

32.  As an alternative argument, if this Tribunal were to find against the Respondent that it is liable to be compelled to enforce the DMC, the Respondent relies on the exclusion clause in the DMC, Section V, Part B, Paragraph 4, which says:- “Neither the Manager nor any servant, agent or other person employed by the Manager shall be liable to the Owners or any of them or to any person or persons whomsoever whether claiming through, under or in trust for any Owner or otherwise, for or in respect of any act, deed, matter or thing done or omitted in pursuance of purported pursuance of the provisions of this Deed of Mutual Covenants or any Sub-Deed of Mutual Covenant not being an act or omission involving criminal liability or dishonesty or wilful negligence …”. It is submitted that the Respondent’s act does not involve any criminal liability, dishonesty or willful negligence. Such exclusion clause excludes the Respondent’s liability from an application for an injunction. In other words, the Respondent could not be compelled to observe the DMC unless its acts involve criminal liability, dishonesty or willful negligence.

33.  The Respondent also submits that, in exercising the discretion for deciding whether or not to grant the injunction, this Tribunal should also take into consideration that there are about 200 similar cases in the Estate. If this Tribunal were to grant the injunction in this application, this would cause tremendous difficulties to the Owners’ Corporation and the Respondent in managing the Estate, and in particular, enforcing the DMC in these 200 odd cases.

34.  In short, the Respondent asks this Tribunal not to grant the requested injunction.

The Alleged Breach of DMC Regarding Unauthorized Building Work

35.  On the true construction of the this clause of the DMC, in my judgment, it only concerns with  “…… any part of the Estate owned by [the Owner]……” , namely areas for exclusive use of owners, but not the common parts of the Estate, such as the external walls. For this reason, I do not accept the Applicant’s submissions that the owner of Flat 14H is in breach of it by installing the metal frame on the external wall outside Flat 14H which is clearly a common part of the Estate.

36.  Further, due to my findings above, it would be unnecessary for me to decide whether or not the metal frame in support of the air-conditioning unit is subject to enforcement action by the Buildings Department. However, evidence of Mr. Leung of Buildings Department clearly shows that the said metal frame in question (but not the air-conditioning unit itself) is an unauthorized building work, no matter which way one looks at it.

The Alleged Breach of DMC Regarding Prohibition of Projection Outside Exterior of Building

37.  For the construction of the DMC and the Ordinance, it is trite law that this Tribunal shall construe the documents as a whole and not those provisions in isolation.

38.  I do not accept the submissions of the Respondent that it has an absolute and unqualified right and power under Section III, Part C, Paragraph 2 of the DMC to “set aside” any common parts of the Estate for any specific use it wishes as long as it is for the benefit of the Estate. This clause must be read in conjunction with Section IV, Part A, Paragraph 17 of the DMC, namely the prohibition of any projections or structures outside the exterior of the building. In my judgment, pursuant to Section III, Part C, Paragraph 2 of the DMC, the Respondent has full right and power to set aside any common parts of the Estate for any specific use for the benefit of the Estate provided that the specific use does not contravene other provisions of the DMC and the Ordinance. However, I find that the metal frame in question is a projection or structure extending outside the exterior of Block 5 of the Estate and the Respondent has no right or power under the DMC or the Ordinance to grant any consent to the owner of Flat 14H for such installation. Further, I am of the view that the reliance on Section V, Part B, Paragraphs 1 Sub-paragraphs (15) of the DMC provides no assistance to the Respondent’s argument. The suggestion of the Respondent is simply misconceived. I also do not see why the metal frame in question being an “amenity feature” is relevant to my judgment nor the Household Minor Works Validation Scheme of the Buildings Department could provide any support to the Respondent’s argument that such projection or structure is allowed under Section IV, Part A, Paragraph 17 of the DMC.

39.  In my judgment, the erection of the metal frame is a clear breach of Section IV, Part A, Paragraph 17 of the DMC and is liable to be removed.

40.  Further, I accept the submissions of the Applicant that the Respondent is under a duty to enforce the DMC and failing to do so is a breach on the Respondent’s part.

The Alleged Breach of DMC and the Ordinance Regarding Nuisance

41.  I accept the undisputed evidence of the Food and Environmental Hygiene Department, and of the view that there is no nuisance caused by the air-conditioning unit outside Flat 14H. I find that there is no breach of Section IV, Part A, Paragraph 14 of the DMC and Section 34I (1) (b) of the Ordinance.

The Injunction and the Exclusion Clause

42.  The Respondent further relies on the exclusion clause, namely Section V, Part B, Paragraph 4 of the DMC to argue that the Respondent, in any event, should have no liability.

43.  In my judgment, the said exclusion clause should be construed in a restrictive manner. Giving a wide interpretation as suggested by the Respondent would defeat the fundamental purpose of having a deed of mutual covenant. The purpose of having a deed of mutual of covenant is to facilitate proper management of a building of multiple ownership. The fundamental duty of a manager is to manage the property in a professional way for the benefit of all the owners according to the deed of mutual covenant. The purpose of such exclusion clause is to give sufficient protect to the manager so that if it manages the Estate in good faith, even though some mistakes are made, no owner could make a claim against the manager. Even if a claim is made against the manager, all the owners would indemnify the damage and loss suffered by the manager. In other words, the manager could carry out his duties without fear or favour. However, the purpose of such exclusion of liability would not, in my view, be extended to exclude owners, through the court of law, compelling the manager to carry out its fundamental duties under a deed of mutual covenant. This fundamental right of the owners should not be deprived of unless expressly provided for in the deed of mutual covenant with clear, unambiguous and unequivocal words. However, no such expression could be found in the DMC in question.

44.  I therefore do not see how this exclusion clause supports the Respondent’s argument against the granting of the injunction.

45.  I also take into account of all the circumstances of this case, including the possible consequence of future difficulties in managing the Estate. I understand the problem it may cause to the management of the Estate but it is plainly wrong and unfair to the Applicant if this injunction is not granted.

46.  All in all, I am persuaded by the Applicant that the erection of the metal frame supporting the air-conditioning unit on the external wall outside the dinning room of Flat 14H is in breach of Section IV, Part A, Paragraph 17 of the DMC and is therefore liable to be removed. The Respondent, being the Manager of the Estate, is under a duty to enforce the DMC including, but not limited to, taking action against the owner of Flat 14H to remove the metal frame.

47.  I also accept the authorities See Wah Fan v. Incorporated Owners of Ki Tat Garden (Phase I) [2003] 3 HKLRD 1 and Sunbeam Investments Limited v. The Incorporated Owners of Villa Veneto LDBM 370 of 2007 and LDBM 175 of 2009 (Consolidated) (Unreported) (Date of Judgment: 30 June 2010) applies in this case and it is appropriate to grant an injunction to compel the Respondent to act.

Costs

48.  Costs should normally follow the event and therefore the Applicant is entitled to costs of this application. I have, in advance, invited parties to file a draft bill of costs for gross sum assessment. After considering the costs submissions by the Applicant, I am of the view that $ 3,000 (including disbursement) is a reasonable sum.

The Orders

49.  By reasons of the above, I grant orders in the following terms (which is slightly different from what the Applicant asks for):-

(1)     The Respondent do take such actions, including legal actions, against the owner of Flat H, 14^th Floor, Block 5, Pokfulam Gardens, 180 Pokfulam Road, Pokfulam, Hong Kong as are necessary for the removal of the metal frame for supporting the split type air-conditioning unit on the external wall outside the dinning room of Flat H, 14^th Floor, Block 5, Pokfulam Gardens, 180 Pokfulam Road, Pokfulam, Hong Kong.

(2)     The Respondent do pay the Applicant costs of this application, summarily assessed at $3,000.