2005

METRO CITY MANAGEMENT LTD v. TSUI FEE HUNG VINCENT AND ANOTHER

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HCA4327/2003METRO CITY MANAGEMENT LTD v. TSUI FEE HUNG VINCENT AND ANOTHER

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61322-EN-2008-06-06

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CACV 328/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CIVIL APPEAL NO. 328 OF 2005

(ON APPEAL FROM HCA NO. 4327 OF 2003)

________________________

BETWEEN

	METRO CITY MANAGEMENT LIMITED	Plaintiff
	And
	TSUI FEE HUNG VINCENT and LAM WAI FAN	Defendants

_________________________

HCMP 1893/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1893 OF 2005

(ON APPEAL FROM HCA NO. 4327 OF 2003)

_________________________

BETWEEN

	METRO CITY MANAGEMENT LIMITED	Plaintiff
	And
	TSUI FEE HUNG VINCENT and LAM WAI FAN	Defendants

_________________________

Coram : Before Master J. Wong in Chambers

Date of Hearing : 5 May 2008

Date of Decision : 6 June 2008

_______________________

REVIEWS OF TAXATION

_______________________

Applications

1. There are 2 reviews of taxation before me under 2 related proceedings.

Background

2. Briefly, in 2000, Mr. and Mrs. Tsui purchased a property at Metro City. The property enjoyed a flat roof and they erected a few retractable canopies (“the Canopies”) on the exterior wall of the property, covering part of the flat roof.

3. By HCA 4327/2003, the Management Company sought to remove the Canopies. It was said that Mr. And Mrs. Tsui had been in breach of clauses B1, B2 and B9 of the relevant Deed of Mutual Covenant (the “DMC”).

4. In 2005, the trial judge ruled that there had been breach of B1, but not B2 and B9. He gave judgment for the Management Company with costs.

5. Mr. Tsui took up B1 to appeal. He was late and had to issue HCMP 1893/2005 to apply for leave out of time. The Hon. Rogers VP granted him the leave and ordered that costs in the appeal. CACV 328/2005 then began. The Management Company opposed the appeal and further cross-appealed on B2 and B9. In 2006, the Court of Appeal dismissed both the appeal and the cross-appeal.

(a) “IT IS ORDERED that:-
1.      the Defendants’ appeal be dismissed;
2.      the Plaintiff’s cross-appeal be dismissed; and
3.      there be an order nisi that the costs of the appeal be to the Plaintiff and the costs of the cross-appeal by way of Respondent’s Notice be to the Defendants.”
(b) The Hon. Rogers VP further commented:

“ 20. In conclusion, therefore, I do not consider that there are grounds for differing from the conclusion reached by the judge. This conclusion does not give me much satisfaction. The defendants purchased the flat and the roof. Clearly it was intended that the roof should be used. Realistically if the roof were to be used for sitting out it would be inevitable that those doing so would need shade. When it was put to Mr Leong that the plaintiff would have no grounds for objecting to the use of large sun umbrellas, whether standing independently or as part of an outdoor table, he did not seek to argue otherwise. The court was shown a brochure produced when the flats in the development were sold. Naturally, the document was excluded from having any contractual force, nevertheless, it clearly shows large plants on the relevant roofs and in one instance possibly some other form of shading. If the plaintiff were to attempt to prevent the defendants from erecting any type of sun shade questions of derogation from grant would arise. As it is, the present objection to the canopies demonstrate a vacillation on the part of the plaintiff.”

6. Mr. Tsui was not happy about the above costs order nisi and sought to vary it. On 11 August 2006, the Court of Appeal ruled that:

“ 2. Having considered the written submissions and taking into account the issues involved and argued on the appeal and the success and failure of each party in respect of those issues, we consider that the fair order to make in the circumstances is that the plaintiff should have two thirds of its costs on this appeal.”

7. Later, upon receiving further enquiries from Mr. Tsui, it was replied that:

“Your various letters have been placed before their Lordships. I have been asked to draw your attention to the fact that when the court considers orders as to costs it considers all the costs in relation to the matter in question. As such, when reviewing the order nisi, the court considered the effect of the order in relation to the costs of the appeal and cross-appeal, which were heard together.

On taxation a litigant who is not legally represented is only able to recover a fraction of the amount in costs which would be allowed to a legally represented litigant. Because of this difference in the amount allowed on taxation, the effect of the order absolute made on 11 August 2006 was in all likelihood to reduce the net amount which the appellant would have to pay the respondent.

Since order absolute in relation to costs has been made, the court will not entertain any further correspondence in the matter.”

8. The matter ended there leaving the 3 taxations between the parties. Costs of the Management Company under HCA 4327/2003 were settled and paid. As to the remaining 2 bills, I sum up their position in the followings.

HCMP 1983/2005

9. The bill under HCMP 1983/2005 is a small one concerning a sum less than $50,000 because it only touches on Mr. Tsui’s leave to appeal out of time. I taxed it on 12 October 2007 and directed that:

(a) Mr. Tsui will be required to pay two thirds only in line with the costs order absolute.

(b) No allocatur shall be issued unless the Management Company will satisfy this Court that the indemnity principle has not been breached.

(c) Costs of taxation made nisi.

Mr. Tsui applied to review the same. In essence, he told this Court that the Management Company and its solicitors were unreasonable during the negotiation of the appeal bills. As such, I should deprive them from interest and award him costs of the review.

CACV328/2005

10. The Bill covering CACV 328/2005 is a much larger bill for over $0.6 m. I dealt with it on 2 days, 12 October 2007 and 24 January 2008. On the 1^st hearing day, I ruled a preliminary question regarding the scope of the costs order in CACV 328/2005. The ruling was against the Management Company because I took the view that it was not entitled to the costs of the cross-appeal. I explained that:

(a) In the costs order absolute, costs of cross-appeal were no longer mentioned. As a matter of usual rule, there was no order relating to the costs of cross-appeal. Probably, that was why Mr. Tsui, after the making of the costs absolute, kept writing to the Court complaining about the same.

(b) The Court of Appeal varied the costs order nisi because both sides succeeded party and failed partly. A “set-off” was inevitable. To relieve the job of the taxing master, the costs order made previously in favour of Mr. Tsui, i.e. costs of the cross-appeal to Mr. Tsui, was used to “exchange” for one third of the costs against him.

Taxation of the CACV 328/2005 bill went on upon such basis. Further, since the bill was prepared on the basis that the Management Company was entitled to the whole costs of appeal (i.e. the appeal as well as the cross-appeal) I made an appointment that costs of the cross-appeal took about 40% of the time and effort spent by the Court, the solicitors and Counsel for items charged for both the appeal and the cross-appeal.

11. Upon conclusion of the taxation on 24 January 2008, I further directed, inter alia, that:

(a) The Management Company shall submit evidence in relation to the indemnity principle within 28 days.

(b) Costs of taxation made nisi, and to become absolute within 28 days after the decision of this Court regarding whether the indemnity principle has or has not been breached.

(c) Unless otherwise ordered by this Court, allocatur will be issued within 28 days thereafter.

12. Anyway, the Management Company also applied to review the taxation. To sum up, it disagreed with my said interpretation on the costs order absolute of the Court of Appeal. My apportionment of 40% effort spent by the parties on the cross-appeal was also challenged. Finally, it was said that I should not have taxed off so much of the counsel fees.

Decisions

13. I heard the substantive reviews of taxation on 5 May 2008. Mr. Tsui appeared in person and Mr. W. Wong of Counsel represented the Management Company. Having considered all the evidence authorities and submission from the parties, I decline to review any of my decisions made at the taxation of the two bills. My reasons appear in below.

Reasons

14. With respect, I am not persuaded to change my ruling on the preliminary issue made. My views on paragraphs 10(a) and (b) are maintained. I should further add the followings.

(a) In upholding the decision down below, the Court of Appeal demonstrated certain “sympathy” over Mr. Tsui’s position.

(b) Costs usually follow the event. It was what the costs nisi stated. Therefore, the Management Company would have costs in defending Mr. Tsui’s appeal, and Mr. Tsui would have costs in defending the Management Company’s cross-appeal.

(c) Mr. Tsui applied to vary the costs order nisi. The Management Company opposed it but did not ask to vary the order nisi in its favour. Apparently, the Court of Appeal agreed with Mr. Tsui to the extent of taking into account the fact that he was not legally represented.

(d) The costs order nisi was varied to become that Mr. Tsui do pay the Management Company two thirds of its costs of appeal. By referring to costs of “appeal”, it is Mr. Tsui’s appeal only, but not the whole appeal proceedings, i.e. appeal + cross-appeal.

(e) In fact, subsequent to the order absolute, Mr. Tsui wrote further to the Court asking for confirmation that he still could recover in costs in defending the cross-appeal. It then triggered the Court’s clarification as per paragraph 7 hereinabove.

15. HCMP 1983/2005 touches on Mr. Tsui’s appeal only. Cross-appeal is not relevant at all. So, parties in principle agree that Mr. Tsui should pay 2/3 of the amount taxed.

16. However, concerning CACV 328/2005, the solicitors took the view that the Management Company was entitled to 2/3 of the whole appeal (appeal + cross-appeal) and prepared the bill accordingly, I had to make an appointment. Upon considering the parties’ documents filed in pursuing the appeal and the cross-appeal (including those voluminous ones of Mr. Tsui), the hearing notes of the Court on 27 April 2006, the Judgment dated 6 June 2006, the parties’ subsequent correspondence and written submissions as well as the Ruling on Costs on 11 August 2006, I found that 60% of effort was spent on the appeal and 40%, on the cross-appeal. Although I appreciate that the appeal touched on B1 only and cross-appeal, B2 and B9, the way that Mr. Tsui has been conducting the proceedings, in my view, justify more time and effort to be allocated on his appeal.

17. As to Counsel’s fee, I agree with Mr. Wong to the extent that every Counsel’s fee shall be allowed unless this Court is satisfied that the same is excessive and unreasonable. However, it is of course subject to the rider that such fee should have come under the proper or necessary test in party-and-party taxation. With respect, other than repeating the above general principle, Mr. Wong has not explained to me how Counsel’s fee has been deducted excessively or unreasonably. I therefore will not make any revision of Counsel’s fee allowed or taxed off in the original taxation.

18. Finally, as to Mr. Tsui’s review, I do not consider it appropriate to deprive the Management Company of any interest. As a matter of law, I see no jurisdiction to do so. Upon facts of the case, on balance, I am not satisfied that there has been any undue delay. As to whether the Management Company has beaten the offer of Mr. Tsui and the reasonableness of the parties’ conduct in negotiation for settlement, it is to be considered after the solicitor will clarify the issue of indemnity principle. The costs of taxation for HCMP 1893/2005 and CACV 328/2005 were made nisi only. The parties should see how the matter is to be dealt with in due course.

Conclusion

19. In the end, I order that:

(a) Both reviews are dismissed.

(b) Time for the Management Company to adduce evidence before this Court on the issue of indemnity principle under HCMP 1893/2005 and CACV 328/2005 is extended for 28 days from today.

Costs

20. There will be an order nisi that each party shall bear its own costs on both of the reviews for taxation.

(Jack Wong)
Master of the High Court

Mr. William Wong instructed by Messrs. Pang & Associates for Plaintiff.

Mr. Tsui Fee Hung Vincent, Defendant appearing in person.

Mdm. Lam Wai Fan, Defendant, absent.

53611-EN-2006-08-11

METRO CITY MANAGEMENT LTD v. TSUI FEE HUNG VINCENT AND ANOTHER

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CACV328/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 328 OF 2005

(ON APPEAL FROM HCA NO. 4327 OF 2003)

------------------------

BETWEEN

	METRO CITY MANAGEMENT LIMITED	Plaintiff
	and
	TSUI FEE HUNG VINCENT and LAM WAI FUN	Defendants

------------------------

Before : Hon Rogers, Woo VPP and Yuen JA

Date of Handing Down Ruling : 11 August 2006

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RULING ON COSTS

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1. Following the delivery of judgment in this matter on 6 June 2006, the defendants submitted two letters indicating an intention to apply to vary the costs order nisi. This court then indicated that in order to save time and costs, it would be prepared consider the application to vary the costs order on the basis of written submissions. Both parties agreed to that and following a letter from the plaintiff’s solicitors dated 13 July 2006 directions were given that submissions should be filed by 31 July 2006.

2. Having considered the written submissions and taking into account the issues involved and argued on the appeal and the success and failure of each party in respect of those issues, we consider that the fair order to make in the circumstances is that the plaintiff should have two thirds of its costs on this appeal.

(Anthony Rogers)
Vice-President

(K.H. Woo)
Vice-President

(Maria Yuen)
Justice of Appeal

Written submissions on costs by Messrs Pang & Associates, for the Plaintiff/Respondent

Written submissions on costs by the Defendants/Appellants

52700-EN-2006-06-06

METRO CITY MANAGEMENT LTD v. TSUI FEE HUNG VINCENT AND ANOTHER

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cacv 328/2005

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 328 of 2005

(on appeal from HCA NO. 4327 of 2003)

BETWEEN

	METRO CITY MANAGEMENT LIMITED	Plaintiff
	and
	TSUI FEE HUNG VINCENT and LAM WAI FUN	Defendants

Before: Hon Rogers, Woo VPP and Yuen JA in Court

Date of Hearing: 27 April 2006

Date of Handing Down Judgment: 6 June 2006

______________________

J U D G M E N T

______________________

Hon Rogers VP:

1. This was an appeal from a judgment of Mr Recorder Chan SC given on 13 January 2005. The matter before the judge was a claim for an injunction to require the defendants to remove four canopies which had been erected in their premises which was the first floor flat and flat roof in a large residential complex. The judge held that the erection of the canopies had been in breach of one of the clauses of the Deed of Mutual Covenant (“DMC”) but had not been in breach of two other clauses of the DMC. On this appeal the defendants appealed against the finding that they had been in breach and, by a respondent’s notice, the plaintiff cross-appealed in respect of the other two clauses of the DMC which the judge had held had not been breached. At the conclusion of the hearing of this appeal judgment was reserved.

Background

2. By an assignment dated 30 June 2000, the defendants took an assignment of flat G on the first floor and flat roof appertaining thereto, of Tower 4, Metro City, Phase II, Tseung Kwan O. The conveyance was in the standard form and contained the following exceptions and reservations:

“(i) Except and Reserved as in the Government Lease (as hereinafter mentioned) is excepted and reserved; and

(ii) Except and Reserved unto the Vendor its successors in title and assigns other than the Purchaser the right to the exclusive use occupation and enjoyment of the whole of the Estate SAVE AND EXCEPT
(a) the Property; and
(b) such areas and facilities (if any) as defined and designated as Common Areas in the Deed of Mutual Covenant and Management Agreement or are intended for common use and
(iii) Except and Reserved unto the Vendor its successors in title and assigns other than the Purchaser all such exclusive rights and privileges expressly reserved unto the Vendor under the Deed of Mutual Covenant and Management Agreement and, in particular, the exclusive rights specified in Section III thereof.”

3. Shortly after the defendants purchased the property they erected three retractable canopies and one fixed canopy which extended over part of the flat roof area. As found by the judge, initially the management company indicated that it would prefer the colour of the fabric to be pink and white and, hence, the defendants changed the colour of the first canopy from green and blue to pink and white. Thereafter, the remaining canopies all had pink and white fabric. This entirely sensible arrangement apparently came to an end some two years later when the management company indicated that it was opposed to any canopies regardless of the colour. At that stage the defendants changed the colours of the canopies to blue and green.

4. Although the judge indicated to the defendants that they may well have a defence of waiver or estoppel, the defendants did not take the judge’s hint in that respect. The case was fought on the basis of the plaintiff’s claim that the erection of the canopies, albeit bolted at a level within the height of the defendants’ flat, was in breach of the DMC. The particular provisions, in section V, said to have been breached were the following:

“B. Covenants, Provisions and Restrictions to be observed and performed by the Residential Owners:-

No external signs, etc. allowed
1.   No external signs, signboards, notices, advertisements, flags, banners, poles, cages, shades, sculptures, or other projections or structures whatsoever extending outside the exterior of any of the Towers shall be erected, installed or otherwise affixed to or projected from any part of the Towers.
No alteration of external appearance
2.   Air-conditioning units shall only be placed at the spaces provided and no Residential owner shall do or permit to be done any act or thing which may or will alter the external appearance of the Towers.
…
Restrictions regarding Residential Common Areas
9.   No part of the Residential Common Areas shall be obstructed or incumbered nor shall any refuse be placed thereon. No part of the Residential Common Areas can be converted to one’s own use Provided such conversion is sanctioned by the Owners’ Committee and no Residential Owner shall do or permit or suffer to be done anything in the Residential Common Areas as may be or become a nuisance or cause annoyance to any other Residential Owners.”

5. The judge held that there had been a breach of clause B1 but not of clauses B2 and B9.

Clause B1

6. There can be no doubt that the fixed canopy and, indeed the other canopies, when extended would constitute a shade or other projection or structure. The judge held that they were affixed to Tower 4 and that they extended outside the exterior of Tower 4. The defendants raised a number of points the first of which was that the first floor level of the Tower blocks was part of the podium and was, therefore, not part of the Tower which was erected on top of the podium. This argument was based upon the meaning of podium as defined in the DMC which was as follows:

“ “Podium” – The 8-level podium complex in the Estate comprising basement levels 1 and 2, ground floor level, mezzanine floor level, levels 1 and 2, deck level and first floor level as shown on the Approved Plans.”

7. The defendants’ argument was that flat G on the first floor was part of the first floor level as shown on the Approved Plans. Such of the Approved Plans as this court was shown do appear to show that the Club House was located on the deck level and first floor levels. Relying on the definition of Towers:

“ “Towers” – The eleven residential towers erected on top of the Podium and known as Towers 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 and 11 of Metro City, Phase II and in the singular means one of the Towers,”

Mr Tsui argued that that since Tower 4 was erected on top of the podium, the podium extended to the first floor level, therefore, the Tower only started on the second floor.

8. Had the DMC ended there I would have considered that there was a certain amount of force in that argument, albeit without having sight of all the Approved Plans. One plan, of which this court has only been shown part, identified as First Floor plan (Part A), only shows part of the Club House. However, plan reference B.D. 2/9210/93; Drawing No. 2-26 PT.C (d) in the papers in the court below does show a level above the podium deck level but below the first floor level of the flats. Moreover, it seems to me that the defendants’ argument is not sustainable in view of the first schedule of the DMC which relates to the allocation of undivided shares. This makes quite clear that flat G and, indeed, all the other flats on the first floor and the flat roofs appertaining thereto are part of the respective Towers.

9. The other argument raised by Mr Tsui in respect of clause B1, unfortunately, also fails in my view. In essence it is that the canopies, even when extended did not extend outside the area of the Tower because the area of the Tower includes the flat roof. In my view the defendants argument cannot be sustained. Although the flat roof has been treated (whether it be in the first schedule or the second schedule or in any of the floor plans of the first floor attached to the assignment) as being part area assigned with the flat on the first floor of the Tower, it is the roof of the podium and not the roof of the Tower. In my view, the canopies, at least when extended, extend outside the exterior of the Tower, because the Tower is just that and curtilage of the flat roof constitutes the boundary of the podium.

10. In arguing the case, Mr Tsui treated the canopies as extending into the air space to which he and his wife were entitled. That is another way of looking at the same point, but care must be taken that what has to be considered is where that air space is. It is not an air space inside the Tower, it is clearly an air space outside the Tower. In the course of argument by both sides, the canopies were said to extend into the air space to which the defendants were entitled. That is, for these purposes, irrelevant.

11. The question here is as to whether the erection of the canopies may alter or has altered the external appearance of the Towers. The judge held, as a fact, that they did not. That is a question of fact about which the judge is entitled to form his own view. Mr Leong SC, who appeared on behalf of the plaintiff on this appeal, argued that if all the owners of the ground floor flats were to erect canopies they would collectively alter the external appearance of the Towers. That is however not what has happened. The defendants have only erected canopies on their own flat. If the judge found that did not affect the external appearance of the Towers that, short of showing that that was an unsustainable finding, concludes the matter.

12. I would, however, mention that the plaintiff’s letter to the defendants of 11 October 2001 requiring the removal of the canopies gave as the first reason for asking for the removal:

“In addition to the accumulation of litters, which leads to pests and mosquitoes breeding and hygienic problems, the movable canopy will cause inconvenience to the residence of flats above when they put the clothes under the sun for drying.”

13. As, clearly, the management permitted washing to be hung outside the building it can hardly be said that a sunshade would alter the external appearance of the Tower.

14. Clause B9 has a number of different restrictions. The first part is a restriction on obstructing or encumbering or placing refuse in any part of the Residential Common Areas. That restriction appears to me to relate to a restriction as to movement. Mr Leong argued that the canopies obstructed the management because they would be unable to paint the exterior walls of the Towers. Quite apart from the fact that that appears to be a new argument, it is hardly convincing. The photographs clearly show that the exterior walls of the Towers are tiled and not painted.

15. The next part of the restriction is that no part of the Residential Common Areas can be converted to “one’s own use”. The best sense one can make of the opening clause to second sentence of clause B9 is that the Owners’ Committee can sanction the conversion of the Residential Common Area to the use of one of the residential owners. The term Residential Common Areas is defined as being:

“Those parts of the Residential Development (as hereinafter defined) not otherwise specifically assigned to or for the exclusive use of any one or more Residential Owners, including but not limited to the 11 lorry parking spaces and ….entrances and staircases serving exclusively the Towers and flat roofs (unless specifically assigned), roofs (unless specifically assigned), the architectural features and associated lighting attached or affixed to the parapet walls of the roof of each Tower, residential shuttle lift lobby, open space, external walls of the Towers and lobbies in the Towers ….”

16. In my view the opening words of that clause are clear. The whole of the flat and the flat roof which appertain thereto has been assigned for the exclusive use of the defendants. Whereas the other external walls of the Tower no doubt come within the term Residential Common Areas the clause should be read as excluding that for the purpose of considering the common areas. As the judge pointed out, it would almost be absurd to consider that any of the other owners should have a right to access to that part of the wall which was otherwise clearly bounded by the defendants’ property.

17. In so far as it was suggested that the management would not have a duty to keep that part of the wall and good maintenance and repair I fail to see that that is correct. Under D. 1(b) of section VI of the DMC the Residential Management budget has to include an estimate of the expenditure for the maintenance of the Residential Development. The definition of Residential Development is

“The Towers and the Residential Common Areas and Facilities as more particularly indicated on the Approved Plans.”

18. There is thus the distinction between the Residential Common Areas and the Towers. Clearly the management has a duty to maintain the Towers and include the costs of that as part of the Residential Management budget.

19. If I had reached the conclusion that the erection of canopies did fall within the restriction of converting part of the Residential Common Area, I would have been disposed to accord the defendants an opportunity of obtaining the sanction of the Owners’ Committee, prior to imposing an injunction.

Conclusion

20. In conclusion, therefore, I do not consider that there are grounds for differing from the conclusion reached by the judge. This conclusion does not give me much satisfaction. The defendants purchased the flat and the roof. Clearly it was intended that the roof should be used. Realistically if the roof were to be used for sitting out it would be inevitable that those doing so would need shade. When it was put to Mr Leong that the plaintiff would have no grounds for objecting to the use of large sun umbrellas, whether standing independently or as part of an outdoor table, he did not seek to argue otherwise. The court was shown a brochure produced when the flats in the development were sold. Naturally, the document was excluded from having any contractual force, nevertheless, it clearly shows large plants on the relevant roofs and in one instance possibly some other form of shading. If the plaintiff were to attempt to prevent the defendants from erecting any type of sun shade questions of derogation from grant would arise. As it is, the present objection to the canopies demonstrates a vacillation on the part of the plaintiff.

Further evidence

21. The defendants sought to introduce further evidence on the appeal. This court considered it de bene esse. However, since it was neither evidence which could not have been adduced before, nor would it have affected the outcome of this appeal or cross-appeal, I consider that the new evidence was inadmissible.

22. I would therefore dismiss the appeal by the defendants and the cross-appeal by the plaintiff. I would make an order nisi that the costs of the appeal should be to the plaintiff and the costs of the cross-appeal by way of respondent’s notice should be to the defendants.

Hon Woo VP:

23. I have had the advantage of reading in draft the judgment of Rogers VP, and I respectfully agree with it and the orders he proposes.

24. I only wish to add a few observations of mine in answer to the defendants’ argument that there was no breach of clause B1 under Section V of the DMC (“clause B1”). Their argument is that the canopies, even when extended, do not extend outside the area of the Tower because the area of the Tower includes the flat roof.

25. Clause B1 provides:

“1. No external signs, signboards, notices, advertisements, flags, banners, poles, cages, shades, sculptures, or other projections or structure whatsoever extending outside the exterior of any of the Towers shall be erected, installed or otherwise affixed to or projected from any part of the Towers.” (Emphasis added)

26. What is crucial is what “the exterior of any the Towers” is, and in this case, we are concerned with the exterior of Tower 4 of which the defendants’ property forms part. “Towers” is defined in the DMC as

“The eleven residential towers erected on top of the Podium and known as Towers 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 and 11 of Metro City, Phase II and in the singular means any of the Towers.”

27. While there is no definition of “exterior” in the DMC, what in my view can be used to aid the understanding of “exterior” are the terms “external walls” and “exterior walls”, which can reasonably be understood as delineating the exterior from the interior, bearing in mind that clause B1 prohibits “external” “shades” and “projections”. The terms can be found in the following relevant parts of the DMC:

(a) Under Section I: Definitions, “Residential Common Areas” is defined as:

“Those parts of the Residential Development … not otherwise specifically assigned to or for the exclusive use of any one or more Residential Owners, including but not limited to … external walls of the Towers …”
(b) Under Section VI, Part B: Powers and Duties of Manager, clause 1(4) provides:
“(4) to paint or repaint at reasonable intervals as appropriate the exterior walls of all the buildings and structures in the Estate …”

28. The 11 Towers of the Estate stand on the podium. The podium covers a surface area larger than the area on which all the 11 Towers stand. The 11 Towers include the defendants’ property on the 1^st floor together with its appertaining flat roof, and all other 1^st floor flats with their respective flat roofs. However, the fact that such 1^st floor flats include all the flat roofs cannot reasonably be said to extend the exterior of the Towers to the boundary of the podium, although the podium encloses all the flat roofs. The exterior of the Towers and each of the Towers, as opposed to the podium or the Estate, in my view, is delineated by the external walls of the Towers as buildings or structures; the fact that the Towers stand on the podium covering the areas of the flat roofs does not render the external walls of the podium to become the external walls, and thus the exterior, of the Towers.

29. Although the area of the flat roof had been sold and assigned to the defendants for their exclusive use, that does not in my judgment extend the exterior of the Towers to the boundary of the podium.

30. Moreover, clause B1 prohibits external shades “projected from any part of the Towers”. The canopies of the defendants were installed on the external walls of Tower 4, within the 1^st floor level and below the 2^nd floor level. The canopies cannot, in any view, be said as not being projected from any part of the Tower.

31. The Recorder dealt with the matter and related arguments in the following manner:

“24. … However the Plaintiff contends that area or space so owned by the Defendants could still be an exterior part of Tower 4.

25. In Hong Yip Service Company Ltd. v Ng Wai Man (CACV 159 of 1988), the management company sought an injunction against the owner of the top floor and the roof of a building, requiring the owner to remove three external radio aerials which were affixed to poles which extended about 6 feet above the parapet walls of the roof, on the ground that the erection of the aerial was in breach of the terms of the deed of mutual covenants of the building. One of the clauses relied upon by the management company was to the effect that no post or other projections or structures whatsoever extending outside the exterior of the building shall be erected, installed or otherwise affixed to or projected from the building or any part thereof except with the written consent of the Manager. The Court of Appeal held that the aerial in question was in breach of this clause. Power JA said:

‘[Counsel for the owner submitted that] when a building such as this is constructed with a flat usable roof by developers who intend to transfer that roof as usable space, the transfer must be taken to include not only the roof but also a limited portion of air space above it. He argues that, when Clause 16 speaks of “the exterior of the building”, the exterior must be taken to mean and include the limited portion of air space. He submits that these aerials were within that limited portion of air space and do not, therefore, extend beyond the exterior of the building and are not caught by the covenant.

We accept that the defendant a right to the use of limited air space above the roof. However the exterior of the building referred to in Covenant 16 is, in our view, defined by the boundaries delineated by the external walls and not by any right to use of air space. The aerials do, we are satisfied, extend beyond those boundaries and do, therefore, extend outside the exterior of the building and are caught by the covenant.’

26. I am bound by the decision of the Court of Appeal. Although the canopies were erected within a space where the Defendants had the exclusive right to use and possess, they had nevertheless extended to the exterior of the Tower. As a matter of logic, there is nothing to prevent a co-owner of a building to be given the exclusive right to use and occupy an exterior part of a building. Thus the mere fact that the canopies are within the space where the Defendants have the exclusive right to use and occupy does not mean that the canopies could not be extending outside the building. I would therefore hold that the canopies are ‘projections or structures extending outside the exterior of’ Tower 4 and they are ‘erected, installed or otherwise affixed to or projected from’ Tower 4. In the circumstances, I am of the view that there was a breach of clause B1 of the DMC.”

32. I entirely agree.

33. The fact that even if the assignment of the property by which the defendants obtained title to and exclusive enjoyment of it includes the flat roof, that has no bearing on whether the canopies were external to Tower 4 or projected from the Tower. Even if the flat roof of the defendants’ property is treated as part of the Tower in the assignment, that does not alter the fact that the canopies were outside the exterior of the Tower and “projected from any part of the Towers”.

34. In the result, the Recorder’s holding that there was a breach of clause B1 of the DMC by the defendants ought to be affirmed.

Hon Yuen JA:

35. I agree with Rogers V-P for the reasons that he has given that the Defendants should not be allowed to adduce fresh evidence on appeal. As for the appeal itself, I would dismiss the Defendants’ appeal and I would also affirm the learned Recorder’s order on ground 2 of the Respondent’s Notice (regarding clause B9). My reasons are as follows.

The Defendants’ Appeal

36. It is well-established that the construction of a document is

“an attempt to discover what a reasonable person would have understood the parties to mean. And this involves having regard, not merely to the individual words they have used, but to the agreement as a whole, the factual and legal background against which it was concluded and the practical objects which it was intended to achieve”

(Jumbo King Ltd v Faithful Properties Ltd [1999] 2 HKCFAR 279, 296).

Language of clause clear

37. In respect of the Defendants’ appeal, the relevant clause is B1 (which has been reproduced in para. 4 of Rogers V-P’s judgment). This clause in effect prohibits the installation of projections outside the exterior of the tower blocks. It is a little surprising that shades are included, together with ‘signs, signboards, notices, advertisements, flags, banners, poles, cages, sculpture, or other projections or structures whatsoever’, and it is unfortunate that the clause does not give the management any discretion in the matter, but it cannot be doubted that the language of the clause is clear, and it has the effect of prohibiting shades of all kinds, whether aesthetically pleasing or otherwise.

Practical object of the clause

38. One can however understand the reason for the absolute nature of this clause. One of the practical objects of a deed of mutual covenant is to keep a building looking tidy and to avoid time-consuming and potentially costly disputes over whether additions to a building made by one occupant or another may or may not be in good taste, or may or may not affect its structure. In this development there are 11 tower blocks, each block containing more than 300 units. That is a total of more than 3,300 units. The mischief that is addressed by clauses such as Clause B1 is obvious - it is to prevent the exterior of the tower blocks from being cluttered by all manner of ‘signs, signboards, notices, advertisements, flags, banners, poles, cages, shades, sculpture, or other projections or structures whatsoever’.

Defendants’ argument based on definition of “Towers” and “Podium”

39. The Defendants’ argument is that clause B1 does not apply to their premises. Their first argument was that their premises on the first floor were not part of the ‘Towers’ because in the definitions appearing in the DMC, ‘Towers’ are defined as ‘the eleven residential towers erected on top of the Podium’, and the definition of ‘Podium’ in the DMC includes the first floor level.

Context of clause B1

40. With respect to Mr Tsui who has obviously prepared his case with great diligence but who appeared without legal representation, his argument in my view illustrates the danger of applying definitions without regard to the opening words of the Definition section:

“in this Deed, the following expressions shall have the following meanings ascribed to them whenever the context so permits”. (Emphasis added).

41. Clause B1 is contained in Section V B. Section V B sets out the ‘Covenants, Provisions and Restrictions to be observed and performed by the Residential Owners’.

42. A ‘Residential Owner’ is defined as ‘an Owner entitled to the sole and exclusive right and privilege to hold use occupy and enjoy a Residential Unit’. A ‘Residential Unit’ is in turn defined as ‘a Unit situated in the Residential Development’. Pausing there, it cannot be doubted that the Defendants occupy a residential unit.

43. However what follows illustrates the fallacy of the Defendants’ argument that the first floor premises are not part of the ‘Towers’ – ‘Residential Development’ is defined as ‘the Towers and the Residential Common Areas and Facilities ...’. In other words, if the Defendants are right, then their premises are not even situated in the Residential Development and their unit is not even a Residential Unit. Since their premises obviously are not a ‘Commercial Unit’, they would not even form part of the ‘Estate’ as defined. That is an absurd result.

44. It is therefore clear that in the context of clause B1, the incorporation of the full definition of ‘Podium’ into the word where it appears in the definition of ‘Towers’ would make no sense.

45. In my view, it is clear that the Defendants’ first floor premises are part of the ‘Towers’. They are located within the ‘eleven residential towers erected on top of the podium’. A tower is a physical structure, as is a podium. Tower 4 is erected on top of the podium as the base of the tower meets the top of the podium – at the baseline of the level designated as the first floor. When so understood, the definition of ‘Towers’ as ‘the eleven residential towers erected on top of the Podium ...’, and indeed the definition of ‘Podium’ as ‘ ... comprising… first floor level’,would present no contradictions or difficulties. It would be consistent with the Defendants’ first floor premises being in a Tower of the Residential Development.

Reason for definition of “Podium” in another context

46. As for the question why the definition of‘Podium’ in the DMC would include the first floor, the answer is provided by the design of this development. The development has been designed to contain:

- at basement levels 1 and 2: – car parks;

- at ground floor level, mezzanine level, levels 1 and 2:– commercial premises;

- at deck level and first floor level:– a Club House with an open-air swimming pool, sun deck and children’s swimming pool.

The commercial development and communal recreational areas are not designed for residential occupation, in contrast to the tower blocks. That explains why the definition of ‘Podium’ refers to ‘the 8-level podium complex’. In other words, in this context, the definition of ‘Podium’ is not intended to refer to the physical structure, but to distinguish those parts of the development (spread over the 8 levels) not designed for residential occupation from those parts of the development which are so designed i.e. the Towers.

Defendants’ argument based on area and curtilage of flat roof

47. The Defendants’ second argument was that they are not in breach of clause B1 because the canopies did not extend outside the area of the Towers as the area of the Towers includes the flat roof.

48. I have earlier explained why in my view the word ‘Towers’ in the context of clause B1 means the physical structure of the tower block, and I have also referred to the clear language of the clause and discussed its practical object. One need only imagine how the development would look and how management would be made more difficult if the walls in question (and other similar places on the first floor) were bestrewn with ‘signs, signboards, notices, advertisements, flags, banners, poles, cages, shades, sculpture, or other projections or structures’. I do not see how it could have been intended that for a 38-storey tower block, there should be one rule for 37 storeys and none for one.

49. As for the Defendants’ argument that the flat roof is included within the area of the ‘Towers’, I do not see how this would assist them. In my view, ‘exterior’ of the Towers simply means ‘external surface’ of the tower blocks. On the Defendants’ argument extending the ‘Tower’ to the flat roof, clause B1 would apply both to the external wall of the tower block to which the canopies have been affixed and extend to the flat roof.

50. For the reasons set out above, I would dismiss the Defendants’ appeal.

Respondent’s Notice

- Clause B2

51. As for the Respondent’s Notice in respect of clause B2 (reproduced at para. 4), the Recorder found that there was only a de minimis breach of this clause because the canopies did not prominently alter the appearance of Tower 4 (para. 41). That is a finding of fact. It is well-established that an appellate court would be slow to interfere with a trial judge’s finding of fact unless there were no materials which could support his finding. The matter here is one of impression and I would be hesitant to gainsay the Recorder’s view.

52. As the Recorder found that the canopies did not alter the external appearance of Tower 4, it followed that the canopies did not ‘alter the external appearance of the Towers’ (clause B2). However I would have to add one comment.

53. In his judgment the Recorder noted the use of the word ‘Towers’ in the plural in clause B2 and said:

“Thus I am of the view that when clause B2 speaks of any act which may alter the external [appearance] of the Towers, what is contemplated is any act or acts which may alter the external appearance of all the 11 towers when viewed as a whole and not just acts which may alter the appearance of a single tower when viewed in isolation. Had it been the intention of the draftsman that the position of any single tower should be looked at, the draftsman would have used the phrase ‘any of the Towers’ ” (para. 37).

With respect to the learned Recorder, I would have thought that an alteration of the external appearance of one tower (assuming that to have been found as a fact) would inevitably result in the alteration of the external appearance of the towers as a whole, for the simple reason that they would no longer be uniform in appearance.

- Clause B9

54. I then come to the Respondent’s Notice in respect of clause B9 (reproduced at para. 4). The issue is whether the external walls to which the canopies are attached are ‘Residential Common Areas’.

55. The definition of ‘Residential Common Areas’ in the DMC is:

“Those parts of the Residential Development (as hereinafter defined) not otherwise specifically assigned to or for the exclusive use of any one or more Residential Owners, including but not limited to ... external walls of the Towers ...”.

Prima facie, external walls are residential common areas

56. Prima facie therefore, the external walls of the towers are residential common areas unless they have been ‘otherwise specifically assigned to or for the exclusive use of any one or more Residential Owners’. So the issue is: has it been shown that the external walls in question had been ‘specifically assigned to or for the exclusive use of’ the Defendants?

‘Saleable area’ formulation not reliable guide

57. The Recorder first referred to the Sale and Purchase Agreement for the saleable area of the property agreed to be sold to the Defendants, and he deduced from calculations from the measurements that the external walls in question were “included as part of the saleable area of the unit sold to the Defendants” (para. 45). For my part, I have to say it appears unlikely that the draftsman of the DMC would have expected that sort of exercise to have to be undertaken before an owner or manager could determine whether a wall was for exclusive use or was common area.

58. Further, the Sale and Purchase Agreement appears to be a standard document and so the method of taking measurements from the exterior of the enclosing walls of a unit (Recital 1(n), Sale and Purchase Agreement) would apply to all units in the tower blocks. If (as the Recorder seems to have held) this ‘saleable area’ formulation shows that the external walls in question had been specifically assigned to or were for exclusive use of the purchasers, then that would mean that all the external walls in the tower blocks would have been so specifically assigned to or were for the exclusive use of all purchasers.

59. Yet the DMC prima facie includes the external walls as ‘Residential Common Areas’. That would be an anomalous way of drafting if the ‘saleable area’ formulation shows that the external walls of the towers were generally not common areas. I am therefore not persuaded that the use of ‘saleable area’ is a reliable guide in the determination of the issue whether the external walls in question had been ‘specifically assigned to or for the exclusive use of’ the Defendants.

External walls of the Property mean walls exposed to outdoors

60. The Recorder rightly held that:

“the description of the Defendants’ property in the Agreement would show that if the wall in question is an external wall of the Defendants’ property, then it would not be part of the property agreed to be sold to the Defendants” (para. 49).

However, the Recorder held that since the Defendants’ property included both the flat and the flat roof as one unit, the external walls in question were not “external walls of the Property” although they may be external walls of the towers. The Recorder supported this view by referring to the fact that it would be unattractive to have a commonly-owned wall between the flat and the flat roof which are enjoyed exclusively by the Defendants (para. 50).

61. In theory I would agree with the learned Recorder that it would be an unattractive proposition to have a commonly-owned wall between areas exclusively occupied by the same owner as one unit. However the unattractiveness in this case is more theoretical than real. As the Recorder noted, it is difficult to see how any other owners could enjoy and make use of the walls in question (para. 50). In contrast, the Defendants would stand to benefit from maintenance of the external walls as a common area at the cost of the co-owners.

62. So, having got the perceived unattractiveness of the point out of the way, the issue is simply whether the walls in question are ‘external walls of the Property’. The Recorder held that they were not because the ‘Property’ comprised the flat and the flat roof as one unit.

63. With respect to the learned Recorder, that is to read the words ‘external walls of the Property’ as if they were ‘the walls marking the boundary of the Property’. Whilst with most flats that may be true, it is not necessarily the case. In my view, all that the words ‘external walls of the Property’ mean are those walls of the Property which are exposed to the outdoors (in contrast to internal walls). Take the example of a house standing in a walled garden. I would be very surprised if it were to be said that the walls of the house facing the garden are not ‘external walls’. They are as exposed to the elements as the walls of the garden itself. Those walls of the house, as well as the walls of the garden, would in my view be external walls of the owner’s property.

64. Assuming this construction of clause B9, the Recorder would have held that the Defendants had breached the clause by converting the external walls in question to their own use (para. 51).

Order

65. Accordingly, the order that I would make is that the Defendants’ appeal be dismissed and that the Recorder’s order be also affirmed on ground 2 of the Respondent’s Notice.

66. As for the costs of the appeal, the order I would make is that the Defendants (Appellants) bear two-thirds of the Plaintiff’s (Respondent’s) costs of the appeal.

Hon Rogers VP:

67. There will therefore be an order in terms of paragraph 22 above.

(Anthony Rogers)
Vice-President

(K H Woo)
Vice-President

(Maria Yuen)
Justice of Appeal

Mr Alan Leong SC & Mr William Wong, instructed by Messrs Pang & Associates, for the Plaintiff/Respondent

The 1^st-named Defendant/Appellant in person (present)

The 2^nd-named Defendant/Appellant in person (absent)

No external signs, etc. allowed	1. No external signs, signboards, notices, advertisements, flags, banners, poles, cages, shades, sculptures, or other projections or structures whatsoever extending outside the exterior of any of the Towers shall be erected, installed or otherwise affixed to or projected from any part of the Towers.
No alteration of external appearance	2. Air-conditioning units shall only be placed at the spaces provided and no Residential owner shall do or permit to be done any act or thing which may or will alter the external appearance of the Towers.
…
Restrictions regarding Residential Common Areas	9. No part of the Residential Common Areas shall be obstructed or incumbered nor shall any refuse be placed thereon. No part of the Residential Common Areas can be converted to one’s own use Provided such conversion is sanctioned by the Owners’ Committee and no Residential Owner shall do or permit or suffer to be done anything in the Residential Common Areas as may be or become a nuisance or cause annoyance to any other Residential Owners.”