Posts Tagged ‘DMC’

Property owner in breach of a covenant not to ‘permit or suffer’ a nuisance to be caused

September 16, 2015

In MTR Corp Ltd v Cheung Ching Kin ([2015] HKEC 1535, LT) MTR Corp (the applicant) was appointed Manager of an estate in Tseung Kwan O. The respondent was the owner of a flat on the estate occupied by his daughter (he had moved out). There were persistent and well-documented complaints of frequent loud hammering noises in the flat in the late night or early hours of the morning. The Tribunal had no hesitation in finding that these noises amounted to a nuisance. The applicant sought an injunction to restrain the nuisance. The relevant provision prohibited owners from doing anything which might be a nuisance or cause damage or annoyance to other owners and occupiers or to the public. There was also a prohibition on producing music or noise that might cause a nuisance to other users of the development. These covenants were extended; owners could not ‘permit or suffer’ a breach of the covenant. Here the noise was produced by the owner’s daughter, not the owner himself, so the question was whether he had permitted or suffered his daughter to cause the noise.

In Realty Harvest Limited & Others v Gold Margin Development Limited ([2001] 1 HKC 234, CA) the Court of Appeal endorsed the proposition that ‘permit’ and ‘suffer’ are synonyms. ‘Permit’:

‘ means one of two things, either to give leave for an act which without that leave could not be legally done, or to abstain from taking reasonable steps to prevent the act where it is within a man’s power to prevent it. Acts which fall short of that, though they be acts of sympathy or assistance, do not amount to permission at any rate in the covenants with which we are dealing.’

(Berton & Others v Alliance Economic Investment Company Limited [1922] 1 KB 742 at 759 per Atkins LJ).

The owner needs to know of the breach before he can be said to have permitted it ([38]). The owner knew of the breach and had taken no steps to prevent the noise problem from continuing. The injunction was granted.

Michael Lower


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

Closure of basement parking area during renovation works

January 12, 2015

In Tung Lo Court (IO) v Leung May Chun Alison Aliance ([2014] HKEC 2104, CA) the basement of the building (which included the car parking spaces) had become dilapidated and the incorporated owners decided to have repair and renovation works carried out. Once the work had begun there was an unanticipated problem when the basement was flooded with underground water. The contractors took advice and they were told that safety demanded that the basement be completely closed for four months. The incorporated owners followed this advice. L contended that this closure amounted to a breach of the DMC and also constituted a nuisance. The Court of Appeal rejected this. Given the strong advice that they had received about the risk to safety, it was reasonable for them to have closed down the basement ([31.1]). It was also legitimate to bear in mind the complicated legal issues that might have arisen if someone had been harmed or suffered damage to their property had the basement remained open; it would not have been clear whether the liability was that of the contractor or of the incorporated owners ([31.2]). It was also legitimate to base the decision on financial considerations; closing down the basement meant that the work could be done more quickly and at a lower cost that would otherwise have been the case ([38.4]).

Michael Lower

Construction of DMC: were parking spaces common parts?

January 5, 2015

In Tai Fat Development (Holding) Co Ltd v Gold King Industrial Building (IO) ([2014] HKEC 2130, CA) the question was whether 13 car parking spaces in a building in multiple ownership were common areas or whether they had been retained by the first owner of the entire building. Barma JA referred to the principles of contractual interpretation in Jumbo King ([15]). Commercial common sense can be an aid to construction where the words used are capable of differing, but equally plausible, meanings ([16]). Here the relevant documents were the first assignment of a unit in the building, the DMC, the Special Conditions of Grant and the Approved Building Plans ([17]). The wording of the first assignment gave primacy to the DMC  when it came to defining the common areas. The DMC identified the car parking spaces in question as common areas ([23]). A number of other factors supported this conclusion. First, the DMC did not attach ownership shares to the spaces in question ([25]). Second, the DMC referred to ‘Parking Spaces’ (which were not common areas) as being spaces to be allocated to individual buyers; that these spaces had never been assigned was telling ([26]). If the spaces were in private ownership there would be no loading or unloading areas available to non-owners and the accessway would have to be used for this purpose ([27]).

Michael Lower

House rules in the DMC

January 12, 2014

In Yuen Long Tin Shing Court (IO) v Wong Mau ([2013] HKEC 2021, LT) a flat owner was alleged to be keeping a dog in the flat in breach of the DMC. This problem was not resolved despite repeated requests to do so. The owners’ corporation sought, and was granted, an injunction to restrain the keeping of the dog. The Tribunal noted that the DMC’s prohibition on keeping dogs was in a schedule of the DMC that constituted the House Rules. This did not deprive it of its normal legal effect.

Michael Lower

Owners’ meeting: validity of decision to dissolve the meeting and of the proceedings of a ‘break-away’ meeting

July 11, 2013

Discovery Bay Services Management Ltd v Hannon Ltd ([2013] HKEC 958, LT) concerned the validity of a decision to dissolve a meeting of the Headland Village Owners’ Committee and of the proceedings of a break-away group of owners who purported to continue the meeting after the chairman had attempted to dissolve it.

There is a DMC for Discovery Bay as a whole and sub-DMCs for the villages within it. There is no owners’ corporation. CM is the manager under the DMC.

CM convened a meeting of the owners of Headland Village to elect the officers of the village owners’ committee for the coming year. The meeting began but was dissolved by the chairman. He dissolved the meeting because he disputed the validity of the appointment of the representative of CM (which was entitled to be present at the meeting and count as part of the quorum  but not to vote). He also contended that the sub-DMC only allowed owners or their spouses or family members to attend and vote. There was no scope to appoint anyone else as a proxy. He contended that the meeting was inquorate if one left ineffective proxies out of account.

A group of owners then went to another room and continued the meeting. They elected new officers. The chairman protested that the meeting was inquorate and its proceedings invalid.

DB sought, and obtained, declarations that the chairman had been wrong to dissolve the first meeting and that the second part of the meeting, and the resolutions passed there, were valid.

The chairman disputed the effectiveness of the letter by which CM appointed an individual to act as its representative at the meeting. The letter had been signed by a director of CM but did not bear CM’s chop or seal. This failed: as a matter of construction, the sub-DMC did not require the company’s chop to be effective. The normal rules for the appointment of an agent were all that mattered and they had been adhered to. In any event, CM had later formally ratified the appointment. This came after the village owners’ meeting but the ratification cured any potential defect in the original appointment.

The chairman contended that the sub-DMC only allowed owners or their spouses or family members to attend and vote. Thus, proxies given to other parties (such as CM) should be ignored. The result was that the meeting was inquorate. The Tribunal confirmed the chairman’s reading of the relevant provisions of the sub-DMC. Even allowing this, however, the meeting was still quorate. (There is an interesting comment at [56] on the idea of a ‘family member’).

Finally, there was the question as to whether the second meeting (or the second stage of the meeting) was quorate. It was. The chairman counted as part of the quorum since he was present even while he vociferously denied the validity of the proceedings. The same was true of the other owners who were of the same view as the chairman.

It was clearly a very lively meeting and there was a police presence nearby for part of it ([72]).

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