Can a developer retain exclusive use of the external walls of a building and pass repair costs onto the other owners?

In Green & Grace Ltd v Wang Lung Industrial Building ([2015] HKEC 1935, LT) the incorporated owners resolved to repair the external walls of the building. A later general meeting specified the contribution of each owner to the works that had been carried out, including the cost of repairing the external wall.

The DMC of the building retained the exclusive use of the external walls for the developer but provided that the developer would not be required to repair them. The question was whether the resolution to repair the external walls was void in the light of section 34H(1) of the Building Management Ordinance:

‘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 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.’

The incorporated owners responded by pointing out, among other things, that the DMC gave the Manager some limited control rights over the external walls and that, therefore, the developer’s rights were not ‘exclusive’. This contention failed as did the argument that the limited repairing and maintenance obligations imposed on the developer by the DMC meant that section 34H did not apply. The external wall, being for the developer’s exclusive use, was clearly not a common part.

Kot DJ found the reasoning in Uniland Investment Enterprises Ltd v IO of Sea View Estate ([1999] 4 HKC 141) especially helpful. This looked at the combined effect of sections 34H and 34C(2) of the Building Management Ordinance. The latter provision stipulates that section 34H takes priority over the terms of the DMC in the event of inconsistency. The conclusion was that the DMC provision purporting to relieve the developer from any obligation to maintain the common walls was inconsistent with section 34H and was void. It was for the developer, and not the incorporated owners, to repair the external walls or bear the costs of doing so.

Interestingly, Kot DJ commented on the Court of Appeal decision in 鄭惠娟 對 永利中心業主立案法團及另一人 . He found this unhelpful since the Court of Appeal’s attention had not been drawn to Uniland.

Michael Lower

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4 Responses to “Can a developer retain exclusive use of the external walls of a building and pass repair costs onto the other owners?”

  1. Geoff Rowley Says:

    I thought only negative covenants could ‘run with the land’ . Purchases of apartments would negative the positive covenant, or is my land law knowledge rusty?

    Geoff Rowley

    • Michael Lower Says:

      The common law position is modified in Hong Kong by section 41 of the Conveyancing and Property Ordinance so that the benefit and burden of positive covenants run too.
      Michael Lower

      • Geoff Rowley Says:

        Thanks for the clarification.
        Your blog is a great resource for we students of land law!

        Geoff Rowley

  2. Geoff Rowley Says:

    Thanks,
    This will help with my LLB finals.
    Your blog makes property law intetesting!

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