Archive for the ‘common areas’ Category

Developer’s informal allocation of private parking space in the common area

May 20, 2017

In Faraday House (IO) v Shine Wheel Ltd ([2017] HKEC 957, LT) P was the purchaser of a flat in Faraday House in 1992. The estate was then a new development and she bought from the developer. She wanted three car parking spaces. Two of the spaces she was offered were allocated as private car parking spaces. The third space (‘the Adjacent Space’) was next to these spaces but was in the common area of the development.

The selling agent assured P that he would arrange for the developer to expressly acknowledge her right to use the Adjacent Space as a private car parking space (‘the Assurance’). P paid HK$250,000 for the two ‘official’ spaces and HK$50,000 for the Adjacent Space.

The Adjacent Space was never re-designated as an area for P’s exclusive use but P was issued with a Permission Letter allowing her to use the space. She was given three car parking permits. The owners incorporated in 1996 and a new manager was appointed at that time.

P used the three spaces for sixteen years until 2014. The owners’ corporation then demanded that she cease using the Adjacent Space. When P refused to comply, the corporation brought proceedings seeking an injunction preventing P from parking in the Adjacent Space. Parking in the common areas was a breach of the DMC.

The Lands Tribunal (Judge Kot) started from the proposition that the Permission Letter to use the Adjacent Space was a licence. The developer could not have granted a licence over the Adjacent Space since it had already been designated as a common area; the licence was invalid. Even if it were valid, it would be revocable; there were no equitable grounds for restraining this revocation. Even if it were irrevocable, it would not bind the IO which took over control of the common parts in 1996.

Promissory estoppel, the principles of which were most recently articulated in Hong Kong in Luo Xing Juan v Estate of Hui Shui See ((2009) 12 HKCFAR 1) could not help. The IO were not bound by an assurance given by the developer. The act of allowing P to park in the Adjacent Space for many years could be seen as an assurance. P had not, however, incurred any detriment in reliance on this (the HK$50,000 having already been paid).

Acquiescence was a possible defence given the nature of the covenants that had been broken. There had been an assurance or lying by on the part of the owners. It was not, however, unjust in all the circumstances to grant the injunction sought. P had had the benefit of the Adjacent Space over many years and would not be caused any hardship.

Michael Lower

Adverse possession of a common part by a stranger to the DMC: BMO s.34I does not defeat the adverse possession claim

July 4, 2013

In Wong King Lim v Peony House (IO) ([2013] HKEC 828, CA) W had been in adverse possession of a lane behind Peony House since 1987. The lane was a common part of Peony House. W was not an owner of Peony House and so not subject to the terms of the DMC. W brought an adverse possession claim in respect of the lane. The incorporated owners argued that any title thus acquired was subject to the covenant implied by section 34I of the Buildings Management Ordinance (a covenant not to convert common parts to private use). The argument was that this restrictive covenant had priority over W’s possessory title (relying on Re Nisbet and Pott’s Contract).

This argument failed. One reason given by the Court of Appeal looked at the purpose of the covenant:

‘The owners of the Building had covenanted only with one another to possess the Lane in common and not exclusively.’ ([34] Yuen JA)

Once the title of all the owners to the lane had been extinguished then there was (so to speak) no covenantee with an interest in land who could enforce the covenant. ([34]) (see also [43] Lam JA). It seems to make no difference that the owners still had title to the rest of the Building and, in that capacity, still had an interest in the enforcement of the implied covenant.

A second reason is given for the proposition that W was not subject to the implied covenant. This is that the right to enforce the covenant had also been defeated by the Limitation Ordinance:

‘[I]n contrast with the position of the covenantee in that case, the Defendant IO’s right under the DMC (and the deemed obligation under the DMC created by Section 34I) has been infringed from the very beginning of the dispossession by the Plaintiff over the portion of the land in question. Thus, the basis of the judgment of Collins MR in that case (viz time should not start to run until the right of the covenantee is affected) has no application to our case. The extinguishment of the title to the land under section 17 of the Limitation Ordinance Cap 347 encompasses the title to enforce the DMC in respect of that portion of the land.’ ([44] Lam JA)

Michael Lower

‘Common parts’ where the DMC does not expressly identify them

September 6, 2012

Chung Yuen Mansion (IO) v Fully King Trading Ltd ([2012] HKEC 1228, LT) concerned the ownership of open areas to the side of the flat owned by the respondent. The incorporated owners sought a declaration that they were common parts. The DMC did not expressly identify the common parts and the Tribunal applied the definition in section 2 of the Building Management Ordinance (all areas other than those designated for exclusive use in an instrument registered at the Land Registry). The Tribunal reminded itself of the principles to emerge from the CFA decision in Jumbo King. It looked at the DMC and the first assignment. Only ‘floors’ were identified as being for exclusive use and open areas were not ([54] – [57]). So the open areas remained in common ownership ([59]). This conclusion was supported by the fact that the DMC made the repair and maintenance of external areas the responsibility of all of the owners while internal areas were the responsibility of individual owners ([60]). The DMC and first assignment were the crucial documents.

Owner refusing to allow access for repair works

October 5, 2011

In The Incorporated Owners of Tak Wing Industrial Building v Poon Chi Hung William ([2011] HKEC 1300, LT) the incorporated owners needed access to the flat roof of the building. PCH was the owner of the flat roof. He did not deny that the incorporated owners had a right to access the flat roof to carry out the repair works. The parties could not, however, agree as to the times of day and the number of days during which access should be available. The incorporated owners put forward their proposals in this regard and they were accepted by the court. The respondent had been supplied with copies of the quotation for the works and the relevant employee and third party liability insurance policies. He also sought to comment in detail on the works and the way they were to be carried out. This attempt almost to supervise the work was going too far and the Lands Tribunal decided that PCH was not entitled to this level of detailed information and involvement. The incorporated owners were granted a mandatory injunction allowing them access for the number of days and the times of day they had proposed for the purpose of carrying out the repair works.

Another case on partition walls

July 25, 2011

Whether a wall between, for example, two apartments is owned by either of the owners (or by both) is to be determined by searching for the intention of the parties to the DMC and the first assignment. An express provision in the deed is obviously the best way of spelling out that intention. The colouring on a plan or a legend to a plan are unlikely to have been intended as an explanation of their intention in this regard.

In Tam Sze Man v Shan Tsui Court (IO) ([2011] HKEC 111) the owners of two adjoining apartments wanted to remove the partition wall between them so as to create a single apartment. They argued that they owned the wall.  They relied on the fact that the wall was coloured on the plan showing the area of their exclusive occupation. This failed. Colouring on a plan was not a valid basis from which to infer the parties’ intention in this regard. The DMC and first transfer did not deal with ownership. Thus, the neighbours owned the floor and ceiling surfaces and the air space in between. They did not share the ownership of the wall and could not remove it.

Ownership of partition walls dividing apartments

February 24, 2011

Whether the partition wall dividing two apartments is a common area or belongs to the owners is to be determined by a search for the intention of the parties to the first sale and purchase and the Deed of Mutual Covenant. This intention is to be found in the instruments which can be interpreted in the light of the factual matrix at the time that they were entered into.

In The Incorporated Owners of Westlands Garden v Oey Chiou Ling and Wong Fung Ling ([2011] HKEC 254) the appellants were two sisters who owned adjoining apartments.  They  wanted to remove the partition wall between their flats so as to create a single larger unit. The Court of Appeal noted that this is not uncommon (para. 54). At first instance (see the blog entry below) it was held that the partition wall was a common area and so the sisters did not have the right to remove it. They brought this appeal. Ownership of the partition wall is significant because, as the sisters argued, it confers control over what is to happen to the wall. It also has implications as to whether repair and maintenance are the responsibility of the incorporated owners or of the neighbours who share the partition wall.

Whether internal partition walls are common areas depends on the intention of the developer and the first purchaser of a unit in the development as expressed in the assignment and DMC construed in the light of the factual matrix at that time.  The intention should be clearly expressed in the Deed of Mutual Covenant and the first assignment  of unit.  If this is not done then the court has to try and make a guess as to what they intended. This is difficult because the parties may well not have thought about the matter at all. The Court of Appeal made the powerful point that it was unlikely that the developer intended, at the time of the first sale, to turn all of the partition walls into common areas. To do have done so would have made it unlawful for it later to redraw the size of units or itself to turn smaller units into larger ones.

This case takes a different line from other Hong Kong judgments that have found an intention in circumstances such as this that the owner of an apartment would only have exclusive use of the air space within an apartment. The Court of Appeal felt that it could distinguish the facts in the earlier case from those in the present case.