Archive for the ‘Common parts’ Category

Car parking spaces: common parts?

July 14, 2017

Tai Fat Development (Holding) Co Ltd v Gold King Industrial Building (IO) ([2017] HKEC 1366, CFA) concerned a dispute as to whether or not thirteen car parking spaces in the building were common parts. The first owner of the building claimed to be entitled to their exclusive use.

As always, this was a question of interpretation of the words used in the light of the DMC as a whole, other relevant documents and the factual matrix. The CFA agreed with the courts below that these factors all pointed to the conclusion that the car parking spaces were common parts.

The DMC referred to the spaces as ‘loading and unloading areas’. If the spaces were not common parts there would be a breach of the terms of the Government Grant. There would also be severe practical difficulties.

The first owners also relied on estoppel by convention. The incorporated owners had taken leases of the spaces from them. The necessary common understanding that the first owners owned the spaces was lacking, however; the incorporated owners disputed this claim even as they accepted the leases. Nor could the first owners point to any detriment.

Michael Lower

 

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Liability of Incorporated owners selling items left by residents in common areas

January 27, 2015

In Desir Anthony C v Knight Frank (Services) Ltd ([2015] HKEC 44) a resident in a building (‘D’) left bicycles in a common area of the building. The building’s DMC allowed the Owners’ Corporation to appoint an agent with a duty, among other things, to prevent people from occupying common areas. The DMC did not authorise the sale of items unlawfully left in common areas. The Management Company issued a series of circulars, followed up by ‘Final Notices’ requiring D to remove the bicycles or accept that the management company would remove and dispose of them. The bicycles were removed and, after a series of further exchanges, sold. The main question was whether this sale was lawful.

It was not lawful. The Incorporated Owners were involuntary bailees of the bicycles ([80]). An involuntary bailee who sells the bailor’s goods is liable in conversion unless the sale is carried out in good faith and with reasonable care ([82]). Further, the bailee was not entitled to dispose of the bicycles merely because they had become a nuisance and the bailor had rejected the opportunity to collect them. A disposal was only lawful where there was an actual commercial necessity, the bailee acts prudently and in good faith and has been unable to communicate with the bailor before the disposal (a sale on these grounds is lawful in the case of goods that are deteriorating or depreciating in value but is unavailable where the disposal is solely for the bailee’s benefit) ([83]). In the absence of a provision in the DMC authorising the disposal, the sale was prima facie an act of conversion for which the Incorporated Owners were liable ([88]). The bicycles could only have been sold if this were in the bailor’s interests but this was not the case here. The sale was motivated by the desire to be rid of the nuisance of storing D’s bicycles. There were no legal grounds for the sale. ([97]). The Incorporated Owners were liable in conversion and were ordered to pay D the value of the bicycles at the time of the sale ([106]).

Michael Lower

Adverse possession of a common part by a non-owner

September 10, 2013

In Yeung Mau Cheung v Ka Ming Court ([2013] HKEC 1271, CFI) the plaintiffs and their predecessors had used two portions of the common parts of a building as a refreshment store and associated storage area since 1965. The DMC for the building was created in 1970. The question was whether the plaintiffs were entitled to declarations that they had a possessory title and that the defendant’s title had been extinguished by the Limitation Ordinance. The court was satisfied that the plaintiffs had been in adverse possession for the necessary length of time ([29] – [30]).

The next question was whether the adverse possession claim was defeated by the covenant not to convert common parts to private use implied into the DMC by section 34I of the Building Management Ordinance. This defence failed. The court relied on, and regarded itself as being bound by the Court of Appeal decision in Wong Kim Lin v Peony House (IO).

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

IO asked to reimburse owner the cost of replacing an unauthorised structure that it had removed

June 20, 2013

In Lee Din Chun v Beverly Heights (IO) ([2013] HKEC 924, LT) L owned a parking space at the property. There was a canopy above the parking space. This was an unauthorised structure. The incorporated owners had it removed because it was impeding the progress of works on the sewers and drains beneath the parking space. L replaced the old canopy with a new canopy. The erection of the new canopy amounted to a breach of the DMC. Further, the Building Authority issued a notice requiring the demolition of the new canopy as it was in breach of the Buildings Ordinance. Nevertheless, L now sought compensation from the IO for the cost of erecting the new canopy. L failed. There was no basis on which the IO could be liable for the cost of the new canopy. Further, it was unreasonable to require it to pay for the cost of erecting an unlawful structure; this might expose it to the risk of having committed a criminal offence.

Michael Lower

Breach of DMC: landlord’s liability for tenant’s use of common areas

April 11, 2013

In 海怡閣(成和道) 業主立案法團v 泓璟集團有限公司 ([2013] HKEC 345, LT) L was the registered owner of shops forming part of a building. It permitted its tenant to use the adjoining common parts (though it did not purport to include them in the lease). The landlord and the tenant were each liable to the incorporated owners in trespass ([109] – [111]). The tenant was ordered to pay damages in respect of its use of the common parts assessed by reference to the market value for the rights that it exercised.

Duty of managers and incorporated owners to take proper steps

November 22, 2012

In Lee Ming Yueh v Broadway-Nassau Investments Ltd ([2012] 5 HKLRD 208, CA) water leaked through the walls and roof of a top floor flat. The managers asked contractors to look at the problem. Initial remedial efforts were not effective but eventually the problem was identified and resolved. The water seepage damaged the walls and floor of the flat. The owner of the flat claimed damages against the managers and the incorporated owners alleging breach of the Deed of Mutual Covenant and section 18 of the Building Management Ordinance (imposing duties on the Manager and the incorporated owners to keep common parts in repair). The claim failed both in the Lands Tribunal and in the Court of Appeal. The duty was one of ‘proper management’. The managers had promptly engaged contractors to investigate and remedy the problems when they received complaints. They could not delegate their duty to contractors but there was nothing to suggest that they had been negligent in their choice of contractor.

‘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.

Roof voids: common parts or penthouses?

August 6, 2012

Hong Kong Mansion, Causeway Bay (IO) v Bothlink Ltd ([2012] HKEC 1086, CFI) (later upheld by the Court of Appeal) concerned the ownership of roof voids. The incorporated owners argued that they were common parts and sought to recover them from the defendant who argued that they had been assigned to his predecessor in title. The voids were in the roof space and were the lower portion of a space, the upper portion of which housed the maintenance platform for the lifts. The CFI applied the well-known principles of construction from Jumbo King and found in favour of the incorporated owners.  First, the voids clearly served a functional purpose as part of the lift machine room. They were not penthouses as the defendant argued. Second, on the proper construction of the first assignment of a flat in the building they were common parts; the developer had not reserved the exclusive use of the voids to himself. Nothing in the later DMC qualified or contradicted this. The only arguments that favoured the defendant were that in the first assignment of the flat roofs and external walls to his predecessor, the area being assigned was identified by pink colouring and the contested voids were coloured pink and they were labelled P.H. (an abbreviation of penthouse the defendant suggested). The court found that the colouring and label were mistakes.

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.