Archive for the ‘Common parts’ 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.

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.

Owner placing advertising hoardings on a common part

November 4, 2011

Hollywood Shopping Centre Owners Committee Ltd v Wing Wah Building Mongkok Kowloon (IO) ([2011] 4 HKLRD 623, CA) concerned a mixed commercial / residential building. There was a DMC for the entire building and an owners corporation (‘the Incorporated Owners’) had been established. Two shops on the ground floor and all of the shops on the mezzanine and first floors were assigned to Gladford Ltd which organised these properties into the Hollywood Shopping Centre (‘the Shopping Centre’). A sub-DMC was set up for the Shopping Centre and Hollywood Shopping Centre Owners’ Committee Ltd was incorporated (not under the Building Management Ordinance) to manage the Shopping Centre (‘the Hollywood Corporation’).

The dispute centred on the use of a canopy which was on the external wall of the building between the ground and mezzanine floors. For some time, owners in the Shopping Centre placed box lights on the canopy. From 2000, the air space between the canopy and the underside of the second floor was used to display huge advertising boards fixed to the external walls of the Shopping Centre. In 2007, the Incorporated Owners objected to this and sought to recover the profits made by the Hollywood Corporation from these boards since they were attached to a common part. At first instance, it was held that the Hollywood Corporation had made use of a common part for the private benefit of itself. This use could not continue. It was also held, though, that the Incorporated Owners had acquiesced in the use of the boards from 2000 to 2007 and so could not recover the profits up to the end of the extant agreement which expired in 2008. There was an appeal by the Hollywood Corporation and a cross-appeal by the Incorporated Owners.

On appeal, the Hollywood Owners claimed to be able to rely on adverse possession in respect of the wall. This failed because there had not been exclusive possession for the full twelve years. They argued that the canopy and walls in question were not a common part. This failed; they had not been included in any assignment to an owner.

They sought to rely on a quasi-easement under Wheeldon v Burrows. This failed because the Hollywood Corporation was not an owner nor (unlike perhaps a corporation incorporated under the Building Management Ordinance) would it be possible to lift the corporate veil between the owners of units in the Shopping Centre and the Hollywood Corporation; hence the Hollywood Corporation had no locus standi.  In any event, there had been no evidence at the trial as to how the canopy was being used at the time of the first assignment of the various units. Without this evidence, the question could not be considered. In any event, as part of its adverse possession claim, the Hollywood Corporation had pleaded that it had not had the benefit of any easement in respect of the canopy. This pleading contradicted the claim to any type of easement or quasi-easement.

The Hollywood Corporation argued that it had an easement on the basis of the doctrine of lost modern grant (after China Field). The Court of Appeal does not seem to have been concerned at the invocation of the doctrine but pointed out that it must be the owners of units in the Shopping Centre who were claiming the easement. The doctrine applies to ‘real’ easements. Since they were also owners of the entire building, there could be no easement.

There could be no question of a permanent waiver (applying Attorney-General of Hong Kong v Fairfax) of the right to enforce the covenant not to convert common parts to private use since the Incorporated Owners did not have the power to do this. Inany event, the acquiescence had been for too short a period. They had, however, acquiesced in the breach until 2007 and could not recover the profits before 2008 when the relevant agreement expired.

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.

Ownership of internal partition walls

September 28, 2011

In Tam Sze Man v Incorporated Owners of Shan Tsui Court ([2011] HKEC 1259, CA) the Court of Appeal considered the question as to whether non-structural partition walls between adjoining flats were common parts or were in the shared ownership of neighbouring flat owners. Here the appellants owned two adjoining flats and wanted to demolish the partition wall between them. The walls were not structural: as the Court of Appeal put it, alteration would have no structural impact on the building. At first instance, it had been decided that the removal of the wall would be a breach of a provision in the DMC prohibiting structural alterations and also a provision prohibiting interference or damage to common parts. The judge at first instance had decided that the walls were a common part. After the first instance decision had been handed down, the Court of Appeal decided in a similar case Incorporated Owners of Westlands Garden v Oey Chiou Ling that non-structural internal partition walls were not common parts. Was Tam Sze Man different in any relevant respect from Westlands Garden? If not, the conclusion in the latter should be followed. The Court of Appeal decided that Westlands Garden was applicable and the internal partition walls were the property of the flat owners and were not common parts. The Court of Appeal also decided that these walls were not structural. The owners had the right to demolish them. It was relevant to note that; the partition walls were not specified as common parts, other owners had no right of access to them and no reason to use them and that the colouring on the first assignment included the partition wall. It would create strange anomalies if such internal partition walls were regarded as common parts to be repaired at the common expense of all of the owners.

Incorporated owners can be liable in public nuisance

September 21, 2011

Incorporated owners can be liable in public nuisance where they know (or can be presumed to know) that the common parts (or an element of the common parts) are in such a state as to endanger the lives, safety, health, property or comfort of the public or as to obstruct the exercise or enjoyment of rights common to members of the public. They are liable for any foreseeable loss or damage arising from a failure to take such steps to neutralise any such hazard as are within their power. Individual owners and tenants (but not the owners as a collective body) can also be liable in respect of the same hazard if they had sufficient knowledge, control and resources.

In Leung Tsang Hung v Incorporated Owners of Kwok Wing House ([2007] 4 HKLRD 654, CFA) an unauthorised canopy above a balcony protruted from the external wall of a building. The canopy had been poorly constructed and had deteriorated over time. A corner of it fell off and killed a hawker in the street below. The owner accepted liability and the tenant was found to be liable. The question was whether the incorporated owners were also liable. The Court of Final Appeal held that they were. It reviewed the law of public nuisance in general and as it applied to incorporated owners. It held that Incorporated owners can be liable in public nuisance where they know (or can be presumed to know) that the common parts (or an element of the common parts) are in such a state as to endanger the lives, safety, health, property or comfort of the public or as to obstruct the exercise or enjoyment of rights common to members of the public. They are liable for any foreseeable loss arising from a failure to take such steps to neutralise any such hazard as are within their power. Individual owners and tenants (but not the owners as a collective body) can also be liable in respect of the same hazard if they had sufficient knowledge, control and resources.

The external walls were common parts. The owners had duties under the DMC not to convert common parts to private use, not to place things on common parts and to keep the structure and exterior in repair. The incorporated owners had the control needed for public nuisance since they had the power to monitor and enforce these duties. They could be presumed to know of the hazard and the danger it posed to the public. They had access to the resources needed to neutralise the hazard. They were therefore liable.

Section 16 of the Building Management ordinance does not preclude incorporated owners from being liable alongside individual owners and tenants. It only prevents a simultaneous action against the incorporated owners and the owners as a collective body.

Canopy as a common part

September 7, 2011

Hollywood Shopping Centre Owners’ Committee Ltd v Incorporated Owners of Wing Wah Building  ([2011] HKEC 1063, CA) concerned a mixed commercial / residential development. There was an owners corporation for the development as a whole. There was a sub-DMC for the shops at ground, mezzanine and first floor levels (Hollywood Shopping Centre). There was a separate owners’ corporation for the shopping centre. The dispute between the two corporations centred on a canopy attached to the outside wall of the building between the ground and mezzanine floors. The plaintiff (the Hollywood Shopping Centre Owners) had allowed the canopy to be used for advertisements. The defendants claimed that this was a breach of section 34I since it meant that the shopping centre owners had converted a common part to their private use. The Court of Appeal agreed and Hollywood Shopping Centre was ordered to account for the sums received for advertising in respect of the advertising agreement entered into after the Incorporated Owners of the building had voiced their opposition to the use of the canopy for the exclusive benefit of the shopping centre.

Can incorporated owners bring proceedings where the duty was owed only to some owners?

September 6, 2011

Incorporated Owners of One Beacon Hill v Match Power Investment Ltd ([2011] HKEC 1156) (reversed by the Court of Appeal) concerned proceedings brought by incorporated owners against the developer of the building. The proceedings alleged that sub-standard materials had been used and poor workmanship allowed in the construction process. The developer, Match Power, sought to strike out the action on the basis that the incorporated owners had no locus standi. The relevant duty concerned the common parts but it was a contractual duty owed to only some of the original purchasers: different forms of sale contract were used at different stages of development and only some incorporated the relevant duty. Match Power argued that incorporated owners could only bring proceedings where the relevant duty was owed to all of the owners. The court rejected this; it was enough that the duty was owed to one or more owners and concerned the common parts. The incorporated owners could bring proceedings even though the duty was contractual.

Incorporated owners’ right to sue

August 15, 2011

Section 16 of the Building Management Ordinance vests the right to bring proceedings in relation to the common parts in the incorporated owners where the loss or damage is suffered in common by the owners. The individual owners retain the right to bring proceedings (even in respect of the common parts) in relation to loss or damage to their person or property.

In Grenville House v The Incorporated Owners of Grenville House ([1978] HKLR 235, CA) the incorporated owners brought proceedings in negligence against (among other parties) the developers, architects and building contractors responsible for the design and construction of a residential development. Soon after the building was completed and days after the incorporation of the incorporated owners, the common parts of the development were affected by a series of landslips. It cost several million dollars to carry out the necessary remedial works and the incorporated owners sought to recover these damages. They relied on their rights under the predecessor of section 16 of the Building Management Ordinance. This vests rights, powers, privileges and duties in relation to the common parts in the incorporated owners. Where the loss or damage in question is suffered in common by all of the owners, the corporation has the exclusive right to bring proceedings. Individual owners retain the right to bring proceedings for other (‘private’) loss or damage even if it is caused by some matter connected to (eg a defect in) the common parts.

Liability for damage caused by faulty waterproof roof membrane

March 4, 2011

Whether a waterproof roof membrane is a common part is a question of fact.

In Kimberley Assets Management Ltd v Golden Star Overseas Ltd ([2011] HKEC 238) the Lands Tribunal found as a fact that the waterproof membrane underneath the surface of the roof was a common part. The Incorporated Owners were responsible for its repair and maintenance and had failed to discharge this responsibility. The poor state of the membrane had resulted in extensive damage to the flat beneath the roof and the Incorporated Owners were liable accordingly.