Archive for the ‘Building Management Ordinance’ Category

Owner claiming to have acquired a common part by adverse possession

August 2, 2012

In Man Hong Apartments (IO) v Kwong Yuk Ching ([2001] HKEC 470 (CA)) the owner of a ground floor shop built on the common area next to his shop. The incorporated owners sought the removal of the unauthorised structure on the basis that it amounted to a breach of the predecessor of section 34I(1) of the Building Management Ordinance (this prohibits the conversion of common parts to private use). Section 34I(2) provides that a breach of section 34I(1) is deemed to amount to a breach of the deed of mutual covenant.

At first instance, the defence of adverse possession succeeded. The Court of Appeal left open the interesting question as to whether it is possible in principle for an owner to succeed in an adverse possession claim. Reversing the decision of the Lands Tribunal it ordered the defendant to remove the unauthorised structure. The plaintiff’s claim was not for possession; rather it sought to enforce the restriction on converting common parts to private use. Even if (which was not decided) an adverse possession claim by an owner is possible, the squatter’s title would still be subject to the restriction.

Nor was delay in bringing the claim a bar to the plaintiff’s claim. Section 4(7) of the Limitation Ordinance specifically excludes actions for injunctions and claims for equitable relief from the limitation rules in section 4. The defendants could not successfully invoke the doctrine of laches.

Owner seeking to enforce DMC covenants must come with clean hands

July 24, 2012

In Perfect China International Ltd v Chan Yat Siu ([2012] HKEC 1025, Lands Tribunal) P and C were neighbours. There were structures on each of their properties that were in breach of the DMC. Each sought equitable remedies in the form of declarations and injunctions. Each failed on the basis that they did not come with clean hands since each of them had unlawful structures on their own property ([46] and [67]). In the case of P, there was also the fact that he had encouraged C to commit the breach. This gave rise to a successful defence based on acquiescence so that he was estopped from seeking relief in respect of the works that he had encouraged. It may also have been an aspect of the finding that he did not come to equity with clean hands ([46]).

Even if the unlawful structures existed before the owner bought his property, this fact would afford no defence. Nor would the fact that the Estate was full of unlawful structures (appalling though this would be if true) afford any defence.

Installing shrine and garland outside flat: human rights dimension?

July 23, 2012

In Goodwell Property Management Ltd v Garg Lalit Kumar ([2012] HKEC 1014, Lands Tribunal) a flat owner installed a shrine with a garland above the front door outside his flat. The Lands Tribunal found that the shrine fell within the meaning of ‘sign’ so that the shrine was a breach of the DMC prohibition on erecting signs. There was also a breach of the House Rules. The court decided that there was no evidence of acquiescence in the breach (and in any event managers have no authority to authorise a breach of the DMC).  Nor was there evidence of any representation that the shrine could be installed that could be the basis of an estoppel. Since the manager was not a public body, the argument that the decision not to allow the shrine was an infringement of the right to freedom of religion contained in the Bill of Rights Ordinance could not be entertained (section 7 of the Bill of Rights Ordinance).

Incorporated owners replacing dangerous grille against owner’s wishes

July 16, 2012

In Grenville House (IO) v Wong Tak Keung Stanley ([2011] HKEC 1519 (District Court) an EGM of the owners resolved to replace the air grilles on the external walls of the estate due to safety concerns. The defendant, one of the owners, refused to allow entry to his flat to carry out the works. A warrant to enter the flat was obtained and the works were carried out. The owners now sought to recover the cost of the work from the defendant. They succeeded. The owners were entitled to enter the flat and carry out the work (section 40(1) (a) and (b) of the Building Management Ordinance). They were also entitled to recover the cost from the owner (section 40(1)(3) of the BMO).

The fact that the membership of the Management Committee had at times fallen below the number required by Schedule 2 to the BMO did not invalidate any of the decisions they may have taken. The fact that the management committee took decisions outside the confines of a formally convened meeting did not matter. They could rely on the Duomatic principle.

Incorporated owners must allocate liability in accordance with the terms of the DMC

June 1, 2012

Greenwood Terrace (IO) v U-Teck Limited ([2012] HKEC 765) concerned an estate with 7 blocks. One of the blocks comprised commercial units with car parking spaces below. The roof of this commercial block had to be repaired. The managers divided the cost among the owners of the shops in the commercial block. The respondent, one of the owners, argued that the owners of the car parking spaces should be made to contribute to the cost of the repair work. The Lands Tribunal analysed the terms of the Deed of Mutual Covenant and concluded that it supported the approach of the management and did not require the owners of the car parking spaces to contribute. The Tribunal emphasised that in performing its task, the management had to observe the terms of the Deed of Mutual Covenant properly interpreted. They had done so in this case. Their contention that their interpretation was conclusive provided that it was honestly reached was rejected.

When can incorporated owners be made to bring proceedings?

May 22, 2012

In Estoril Court (IO) v Cheer Rich Enterprises Ltd ([2012] HKEC 694) C, an owner of undivided shares in a development, complained that the incorporated owners had failed to enforce the Deed of Mutual Covenant against owners who had committed breaches of it. C referred to the obligation in section 18(c) of the Building Management Ordinance to ‘do all things reasonably necessary for the enforcement of the obligations contained in the deed of mutual covenant’. The Lands Tribunal held that the burden was on C to show that there is evidence suggesting a breach of the DMC (this seems not to be the same as proof that there has been such a breach). The question here was whether a reasonable incorporated owner would take action (or further action). If C could meet this burden then it would be for the incorporated owner to show why there should not be an injunction requiring it to take action. One relevant factor here would be the possibility of proceedings brought by the complaining co-owner personally ([29] – [30]). Further, it may be that the injunction sought would be excessive (eg requiring court proceedings when a warning letter would do) ([31]).

In this case, the Lands Tribunal rejected most of C’s complaints but did require it to take action against the owner of an illegally parked car. Hundreds of warnings letters had gone unheeded and the incorporated owners had to take more forceful action.

Can a management committee disqualify owners from participating in elections for the committee?

May 17, 2012

In Wong Kam Tong v Tin Shing Court, Yuen Long (IO) (No 1) ([2012] 2 HKLRD 614, CA) a management committee adopted rules governing the process of electing new committee members. Would-be candidates were required by the rules to sign a copy of certain rules regulating the conduct of candidates and home visits. The applicant had refused to sign the rules but contended that we was entitled to be treated as a candidate. The Court of Appeal held that it was arguably lawful to make rules such as those in the present case but refused to settle the point since the applicant no longer sought to contest the question.

Don’t pay first and object later!

May 10, 2012

Where owners of a unit covered by a DMC make a greater payment than was due of them they will be unable to recover the overpayment (because it amounts to an acquiescence) where it would be unconscionable for them to demand it of the recipient. Para. 4 of Schedule 7 to the Building Management Ordinance empowers the manager to set up a sinking fund and the incorporated owners are to decide on the amount required. This paragraph, however, does not deal with how the liability to contribute to the fund is to be divided between the individual owners.

Young Kwok Siu v Fontana Gardens (IO) ([2012] 2 HKLRD 203) concerned the costs of repair works carried out at a residential estate in Causeway Bay. Repair works were carried out in 2006. The applicants were owners of units in the estate. The incorporated owners agreed in a meeting that the works would be carried out and the cost divided equally among the owners. The applicants paid the amount due from them pursuant to this resolution. Four years later they discovered that the DMC and sub-DMC required them to make payments calculated according to a ratio specified in the sub-DMC. They had each contributed around $58,000 too much and they now sought to recover the overpayment from the incorporated owners. They failed because they had made the payments with constructive notice of the terms of the DMC and sub-DMC. It would be unconscionable for them now to be able to recover the overpayment ([32]).

Had it not been for this, they would have been entitled to recover. The incorporated owners claimed that the contributions had passed through a sinking fund established to meet the requirements of para. 4 of Schedule 7 to the Building Management Ordinance. The incorporated owners claimed that this entitled them not only to set the level of the fund but also to specify the contributions to be made by individual owners. The Lands Tribunal disagreed. The paragraph empowers the manager to set up a sinking fund and the incorporated owners are to decide on the amount required. This paragraph, however, does not deal with how the liability to contribute to the fund is to be divided between the individual owners. The terms of the sub-DMC dealt with the liability of individual owners.

Are external walls common parts?

April 17, 2012

In Mei Foo Sun Chuen Stage VI v Grand Yield Knitters Ltd ([2012] HKEC 504) a flat owner had installed the exhaust unit for an air conditioner on the external wall of a building. The Incorporated Owners sought an injunction ordering its removal. They contended that the external wall was a common part and that the flat owner’s action amounted to the conversion of a common part to the flat-owner’s private use. The Lands Tribunal agreed. Reading the assignments together with the DMC it did not seem that there was an intention that the wall should be privately-owned by either the flat-owner or the developer. It made sense to think that the parties’ intention would usually be that the external walls would be a common part. Deputy Judge Roy Yu said that the exclusive use area included in an assignment must be:

‘the space surrounded by the external walls and the ceiling and floor slab, with the surfaces of the ceiling, the floor and the inner surfaces of the walls. The enjoyment does not extend to the structure, namely the concrete walls and the floor slab.’

This approach is confirmed by the terms of the Building Management Ordinance.

The Tribunal also held that maintaining the exhaust units on the external wall amounted to a nuisance.

Incorporated owners must do everything reasonably necessary to enforce the DMC

March 2, 2012

In Bealieu Peninsula (IO) v Perfect China International Ltd ([2012] HKEC 294) PC owned house 31 in a development. For about a year, PC complained to the management of the incorporated owners about extensive alterations and additions being made by the neighbour at number 30. These were visible from number 31. The management tried (in vain) to gain access to number 30 to inspect the works, organised meetings between the neighbours and procured the involvement of the Government’s Buildings Department. The parties accepted that the DMC and section 18(1)(c) of the Building Management Ordinance required the incorporated owners to do everything reasonably necessary to enforce the DMC obligations. The Lands Tribunal had no hesitation in deciding that this duty had not been discharged by the actions taken and ordered the incorporated owners to do everything reasonably necessary; this included bringing proceedings against the owner of number 30 in respect of the works done in breach of covenant.

The management could not pass this burden onto the Buildings Department. The incorporated owners had their own duty to perform.