Chui Fat Lim v. The Incorporated Owners of Aegean Terrace

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Building Management Application No. LDBM 78 of 1999

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J U D G M E N T

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1. The Applicant is the owner of 1/F, Unit C, Aegean Terrace, 60 Sassoon Road, Pokfulam, Hong Kong.

2. The Respondent is the Incorporated Owners of Aegean Terrace, 60 Sassoon Road, Pokfulam, Hong Kong.

3. A Deed of Mutual Covenant dated 1st February, 1991 (DMC) was applicable to Aegean Terrace (the Development).

4. There is no dispute that renovation charges were payable by the owners. The quantum is not in dispute. The legality of the decision to spend the amount on renovation is not in question.

5. The only dispute is on the method of apportionment of the renovation charges, whether the amount should be apportioned in accordance with the management shares under the third schedule of the DMC, or in accordance with the undivided shares under the second schedule of the DMC.

6. The Respondent referred to the Building Management Ordinance Cap. 344 (BMO) to say that the apportionment should be according to the undivided shares.

7. The Applicant relied on the DMC to say that the apportionment should be in accordance with the management shares.

8. Under section 14 of the BMO, a meeting of the owners corporation may pass any resolution with respect to the control, management and administration of the common parts or the renovation, improvement or decoration of those parts and such resolution shall be binding on the management committee and all the owners.

9. On 23rd September, 1997, at an Extraordinary General Meeting, the Respondent passed a resolution to renovate the common parts of the Development. It also resolved that " the estimated cost of the renovation work should be shared by all owners in accordance with the DMC of Aegean Terrace." There was no record in the minutes of the Extraordinary General Meeting that the sharing of the renovation charges was to be according to the undivided shares.

10. By a notice dated 16th December, 1997, the owners were informed that the "contribution amount of renovation will be shared by all owners according to their undivided shares." There was no documentary evidence as to how this decision came about.

11. The Respondent's representative gave evidence that the management committee was concerned that since there was no management shares allotted to the car parks, should the management shares be adopted as a basis of sharing the renovation expenses, the owners of car parks would not have to contribute. While daily management expenses were governed by the management shares, the renovation project involved repairs and improvement, and was outside the scope of normal management expenses. It was contended that the DMC did not mention collection of fees for improvement or renovation, and so Section 22(2) of BMO should apply. The undivided shares was used as a basis for sharing the renovation charges.

12. The Applicant relied on the definition of "maintain", "management", and "Management Shares" to say that such renovation charges should be apportioned according to the management shares, under the third schedule of the DMC, and not the undivided shares under the second schedule of the DMC.

13. The DMC defined "maintain" as "repair, uphold, support, rebuild, overhaul, pave, purge, scour, cleanse, employ, amend, keep, replace, decorate and paint or such of the foregoing as may be applicable in the circumstances and in the interest of good estate management and "maintain" shall be construed accordingly; ".

14. The term "management" was defined as "the management, operation, servicing, maintenance, repair, renovation, decoration, replacement, insurance, security and service of the Lot and the Development and the Development Common Areas and Facilities therein and their equipment, services and apparatus and all duties and obligations to be performed and observed by the Manager pursuant to the provisions of this Deed;".

15. "Management Shares" was defined to mean "those notional shares allocated to the Residential Units and the Parking Spaces as provided in the THIRD SCHEDULE hereto and subject to adjustment as therein provided for the purposes of calculating the contributions payable by their respective Owners towards the management expenditure of the Development; ".

16. The manager's powers and obligations were defined in Section III of the DMC, and included powers to repair, maintain, and provide additional facilities to the common areas.

17. Taking these definitions together, the renovation charges must fall within the ambit of management expenditure.

18. Section 22(2) of the BMO is not applicable to the situation, as the DMC had provided for the fixing of contribution.

19. In the circumstances, the apportionment must be in accordance with the Management Shares under the third schedule of the DMC.