News
News //
Property and Building Management Law Alert - April 2017
Submitted by // K Bowers, Partner / Solicitor Advocate
24 April 2017


An unreasonable decision or an understandable degree of caution?

Introduction

This case concerned the supply of fresh water and drainage facilities to the ground floor of Tak Bo Building (''Building''). The Plaintiff was the registered owner of a shop unit on the ground floor of the Building, and the Defendants were the incorporated owners of the Building (''IO'').

The Plaintiff claimed that the IO had breached the Deed of Mutual Covenant (''DMC'') by its refusal to consent to the Plaintiff's proposed works to install water pipes to its premise.

Background

When the Building was designed and built in the late 1970s, no fresh water or drainage facilities were provided to the 35 individual shop premises on the ground floor. If the owners of the shops on the ground floor required water, they used the toilets on the ground floor which were connected to the Building's main fresh water and drainage system.

The Plaintiff became the registered owner of a unit on the ground floor of the Building in 2009 and applied to the IO for permission to connect water pipes to its premises. The IO considered the request, but refused it.

Regardless, the Plaintiff proceeded with the work. The Plaintiff engaged a licensed plumber to carry out works involving the drilling of 2 holes through the concrete canopy which ran around the outside of the Building at the ceiling level of the ground floor shops. The plan was to run the pipes along the surface of the canopy across the common areas of the Building. The Plaintiff conceded that these works commenced without the consent of the IO, the Water Supplies Department (''WSD'') or the Buildings Department (''BD''). The works came to a stop when the plumber unintentionally shut down all of the water supply to the commercial premises on the upper floors of the Building, resulting in complaints and police involvement. Nevertheless, the Plaintiff asked the IO to reconsider its application, which the IO refused for a second time.

Construction of the DMC / Right to Access Main Pipes for Water and Drainage

The Plaintiff applied for a declaration that on a proper construction of the DMC, it had a right to access the main pipes of the Building for water and drainage, so long as there was no damage done to the Building, or inconvenience, nuisance or annoyance caused to other occupiers. The Plaintiff also claimed that it was an implied term of the DMC that consent could not be withheld unreasonably by the IO, and that the IO had breached the DMC by doing so.

The IO argued that the DMC did not give the Plaintiff any right to connect up to the Building's main pipes for water and drainage and that even if it did, consent for the Plaintiff to do so was not unreasonably withheld by the IO. The works carried out by the Plaintiff were illegal as they contravened the Building Management Ordinance (''BMO'') and the DMC and they did cause damage to the Building.

The Court examined clause 3(c) of the Building's DMC in this regard, which states as follows:

"3. Each owner shall hold his part of the said building and the said premises subject to and with the benefit of the following rights privileges and obligations namely:-...

(c) The free and uninterrupted passage and running of water sewage … to his part of the said building through the … pipes … which now are or may at any time hereinafter be in under or passing through the said premises and building or any part or parts thereof.
"

The Court ruled in the IO's favour that in interpreting clause 3(c) of the DMC, the phrase ''may at any time hereinafter'' only refers to the possibility that the IO decides in the future to put in new piping. Only then would the owners of the shops on the ground floor have the ''benefit of running water'' through pipes. The Court also ruled that access to running water could not be seen as essential given the fact that over 90% of the shops on the ground floor had functioned perfectly well without water for 37 years. On a proper construction of the DMC, there was no right as contended by the Plaintiff as the Building plans specifically excluded water supply to shop units. The BMO does not contemplate a situation where a plaintiff acquires a right to encroach on the common parts of a building.

Was the IO's refusal to consent unreasonable?

Both parties agreed that the burden was on the Plaintiff to prove the unreasonableness of the IO's decision not to consent to the Plaintiff's request. The court considered the following factors in finding that the IO's refusal was a reasonable one:-

(i) the only plan submitted by the Plaintiff in support of its request was a plan prepared by a licensed plumber showing the proposed pipes joining the main pipes. Contrary to the plans, the pipes went directly and independently into the gutter next to the main drainage pipe;
(ii) the Plaintiff's application stated that an application to the WSD had been made and approval had been given when it had neither applied to the WSD nor been given approval;
(iii) the IO's concern for the safety of the Building if holes were drilled in the concrete cantilevered canopy on the first floor of the Building;
(iv) the lack of detail of the intended works in the Plaintiff's requests prior to the commencement of the works;
(v) the legality of the proposal pursuant to the DMC; and
(vi) the proposal lacked detail and was not ''in keeping'' with the established rule of the arcade's business, which was a ''one off'' application and involved a plumber drilling holes in the canopy.

Accordingly, the Court ruled that it was ''…not persuaded that it [the IO's decision] has been proved to be unreasonable. On the contrary, an understandable degree of caution would be a better description.''

Consent of the BD under the current regime

The Court also considered whether the works, if carried out now, still required the BD's consent given the exemptions provided to ''designated exempted works'' and ''minor works'' from the necessity of the BD's consent under the Building (Minor Works) Regulations (''Regulations'') (Cap 123N) which came into effect in 2011. Upon considering expert evidence, the Court held that the drilling of holes in the canopy did not fall under the List of Designated Exempted Works under the Regulations in that it would reduce the structural strength of the canopy and increase the ''stress'' or ''load'' on the canopy.

The Court further held that the installation of drainage pipes which ran from the opening in the canopy along the surface of the canopy to the main drainage pipe at the rear of the Building did not fall under Class III Minor Work of the Regulations as it would involve connection to the main pipes.

The Court also examined whether the installation works already carried out by the Plaintiff caused damage to the Building as a result of the IO's expert's observation that there was a crack in the concrete running from near the drilled holes to the outer edge of the canopy. Although the Plaintiff's expert's opinion was that it was likely to be a thermal crack unrelated to the installation works, the IO's expert's view was that the likely cause of the crack was the installation works. The Court held that it was not possible to rule on this issue but considered that given the location of the crack it would be risky to exclude the IO's expert's opinion.

More importantly, the Court commented that ''Should the same or a similar situation arise again any prudent applicant would be well advised to submit detailed plans to the BD and ask the question "do we need your consent for these works or do they fall within the 'minor works' regime or 'designated exempted works'".''

Conclusion

This case shows that the Court places a lot of weight on whether details of proposed works are provided to the IO, the accuracy of the applicant's proposal, and the proposed works on the Building's safety in determining whether the IO's decision was a reasonable one. A cautious approach should always be taken by incorporated owners of a building when considering applications which might pose any kind of threat to a building's safety.

 

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