Posts Tagged ‘common areas’

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

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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