Archive for the ‘Incorporated owners’ Category

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.

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.

Locus standi of Incorporated Owners

March 1, 2012

In Incorporated Owners of Block F1 – F7 Pearl Island Holiday Flats v Incorporated Owners of Pearl Island Garden ([1997] 4 HKC 424, CA) the substantive dispute concerned the respondents’ claim to be entitled to permit cars to be parked on the road crossing Pearl Island. The question considered here by the Court of Appeal was whether the appellants had locus standi. The two developments each benefited from a right of way over the road. Would the action need to be brought by owners or could the incorporated owners bring it on their behalf without being appointed as agents? The Court of Appeal had no hesitation in deciding that section 18(2)(g) entitled the incorporated owners to bring this action on behalf of the owners. It was not a question of agency but of giving effect to the intent underlying the Building Management Ordinance (to avoid the need or possibility of individual owners bringing proceedings in matters that concerned owners generally).

Thorogood Estates Ltd v Robinson Heights (IO)

February 17, 2012

Thorogood Estates Ltd v Robinson Heights (IO) ([2012] HKEC 201) (later overturned by the Court of Appeal) concerned the liability of T to contribute to the cost of repairs and renovations at Robinson Heights. T owned the garages on the upper and lower ground floors. It argued that the DMC only required it to contribute to costs attributable to the garage area and not the much larger costs of repairs to the building as a whole. The Lands Tribunal applied the well-known principles of construction of agreements generally and DMCs in particular. The judge saw no sign that the intention of the parties to the DMC had been that the liability of the garage owners should be limited purely to expenses associated with the garage areas. The factual matrix included the layout of the building. There were lifts in each block going directly from the residential areas to the common parts. Preparation of a budget was not a sine qua non for liability to pay.

Incorporated owners caught in the middle of a dispute between neighbours

January 11, 2012

In Kai Hing Metal Products Factory Co Ltd v Incorporated Owners of Sunderland Estate ([2011] HKEC 1580, LT) K parked three cars in a space intended for one car. H, a neighbour, objected since it meant that even pedestrian access to its apartment building was sometimes obstructed. H brought proceedings against the Incorporated Owners seeking an injunction  requiring the Incorporated Owners to take action in respect of the triple parking. This was settled and as part of a settlement railings were erected that ensured pedestrian access but reduced the possibility of using K’s space for parking more than one car. K then brought proceedings against the Incorporated Owners seeking an injunction requiring the railings to be removed and various declarations. The Lands Tribunal ordered the removal of the railings (since K had not had the opportunity to argue her case for triple parking) but refused to grant all of the other orders sought. This was because K did not come with clean hands (it seems that this conclusion was reached because of her triple parking and disregard for the interests of her neighbours).

‘Owner’ for the purposes of section 17(1)(b) of the Building Management Ordinance.

November 22, 2011

Section 17(1)(b) of the Building Management Ordinance empowers the Lands Tribunal to give leave for the execution against any owner of a judgment given or order made against a corporation. In this context, ‘owner’ means any owner for the time being. Very large and unanticipated liabilities of the corporation that have not been disclosed in the contract are encumbrances. They amount to a defect in title and this title cannot be forced on a purchaser in the absence of a clear contractual provision to the contrary.

In Chi Kit Co Ltd v Lucky Health International Enterprise Ltd ([2002] 2 HKLRD 503, CFA) a workman was rendered quadriplegic when he fell from scaffolding on the common parts of a building when acting under the directions of an employee of the incorporated owners. The litigation was pending at the time when R agreed to buy an 11.5% share in the building from A. Judgment was given between the date of the contract and the contractual completion date.  The matter only came to R’s attention after contract and R refused to complete.

The first question was whether R, had it completed, would have faced a real risk of an order being made against it personally under section 17(1)(b) of the Building Management Ordinance in respect of the workman’s claim. A argued that there was no such risk and that ‘owner’ in that section meant an owner at the time that the liability was incurred. This failed. ‘Owner’ means an owner for the time being.

Since this liability ran with the ownership of the relevant shares it was an encumbrance. It amounted to a defect in title since the potential liability was much larger than would be anticipated by a purchaser (as proof of this potential lenders and sub-purchasers had lost interest when they learned of the workman’s claim). In the absence of a clear contractual provision to the contrary, the title, thus encumbered, could not be forced on a purchaser.

Enforcing a DMC covenant not to keep animals in flats

October 11, 2011

Where the Deed of Mutual Covenant gives incorporated owners a discretion it must be exercised reasonably. Where the consent of incorporated owners is needed, it cannot be unreasonably withheld. The incorporated owners are not, however, a public law body and the court’s task is not to supervise their decisions and the exercise of their powers as if they were a public law body whose decisions were subject to judicial review. Rather, they operate in a contractual framework.

In Lee Yin Hong v Serenade Cove (IO) ([2011] HKEC 1309, CA) the Deed of Mutual Covenant prohibited the keeping of animals in flats unless the manager had given its permission. Various flat owners in the development kept dogs. Solicitors acting for the incorporated owners wrote warning letters to them. Some of the affected owners applied for permission to keep a dog in their flat but this was refused. The Court of Appeal held that the incorporated owners, as a matter of contractual interpretation, were subject to an implied duty to exercise their discretion reasonably and not to withhold their consent unreasonably. On the facts of this case, they had acted reasonably: the concerns of the incorporated owners (and of the residents of the estate) about the noise and mess caused by the dogs were well-known. These concerns had been communicated to the dog-owners. There was, after all, a prohibition on keeping pets in the Deed of Mutual Covenant. The incorporated owners were not a public law body whose decisions were amenable to judicial review.

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.