Past Examination Paper 2016/17 Semester A

Section D

The proposed alterations:

(i) remove the partition wall between the two flats
(ii) replace the existing bathtub with a new shower unit in one of the bathrooms
(iii) enclose the balconies at both flats

(D1) How will the provisions of the Building Ordinance, the Building Management
Ordinance, the relevant Deed of Mutual Covenant, the relevant Government Grant and the
proposed Mortgage in favour of Dragon Bank affect Jolly’s implementation of the
proposed alterations. (19 marks)

Building Ordinance

● Starting point: s.2 – define building works

○ Widely defined
○ Any kind of building construction
○ All three proposed alterations would be building works
● Three types of building works
○ (1) s.14 – all building works that require approval of the building plans by the
authorised person (“A.P.”) AND consent for the commencement of the building
works
■ Failure to get prior approval → Breach of section 14 → enforcement
action by Building Authority (s24(1), (3) & (4) + s33 BO)
● Need prior consent → must be approved before starting
construction
● No power to give retrospective approval
● AA Plan: Alteration and Amendment Plan (not a general plan
which is for the whole development)
○ (2) s.14AA - minor works
■ NO need to seek approval under s.14, for works minor in nature
■ Does not mean there is no control
■ Minor Works Regulations
■ 3 types of minor works:
● (i) Seek assistance of professional (still need to engage a building
surveyor or engineer to supervise the work → that AP doesn’t need
approval under s.14 BO for that kind of work)
 ● (ii) Don’t need to engage a professional, but still need to engage a
foreman / technical staff (who has undergone certain training)
● (iii) Only need to engage registered contractor (who has general
knowledge of the works)
■ If fail to do this, BA can issue order compelling you to remove this sort of
works done that is not authorised under Minor Works Regulations
○ (3) Exempted Building Works (s.41(3) BO)
■ Usually non-structural alterations
■ Does not include drainage work and site formation
■ s.41(3C) BO → relates to drainage works
● Permitted drainage work includes those do not involve the
structure of the building
● Alteration to bathroom may involve drainage work, s.41(3C) may
apply if it does not involve the structure of the building

● Even if in breach of s.14 (that alteration is unlawful), does not automatically mean title is
defective
● ‘Real risk test’ to be applied to determine outcome (Spark Rich v Valrose Ltd)
○ “Can a prudent and experienced solicitor properly advise that the purchaser can
safely disregard the risk?”
○ If removal of structural wall → prudent solicitor will not

● s.24(3) – If you don’t do it, the Building Authority will carry out the remedial work and
recover the cost from the owner
● s.33(1) – if BA done the work and you don’t pay –
● s.33(9) give the right to BA to register a certificate that register a charge on the premise
● Exceptions
○ s.41(3) – Non-structural alteration
○ s.41(3C) – drainage work
○ s.14AA – minor work
● Whether there is a real risk of enforcement action title may be defective Spark Rich
(China) v Valrose Ltd (1999)
○ “Can a prudent and experienced solicitor properly advise that the purchaser can
safely disregard the risk?”

DMC

● Given title doc in exam

● Need to consider:
○ Power of the Manager (enforcement agent to make sure DMC complied with)
■ Appointment of Manager: cl.5(a) → Hang Seng Bank Limited appointed
as manager
○ Prior consent of the Manager
■ Alteration (i): Partition wall (assuming the owner owns the wall)
 ● Cl.3: co-owners’ rights
○ Para 2, Part 1 of Sch. 3: right to subjacent and lateral
support → cannot demolish wall (unless you purchase the
two units adjacent)
● Cl.4: restrictions to which the co-owners are subject
○ Para 7, Sch. 4: definition of common parts
■ Does not say whether the partition wall falls within
the definition of common area (if say it IS common
area then shall not remove it)
■ DMC is unclear whether the partition wall is a
common part
● Need to bring this to the attention of your
client
● Cl.11: Prohibitions (MOST RELEVANT)
○ Cl.11(a): covenants restricting structural alterations…
■ “May not damage other parts...or cause
inconvenience to other occupiers”
○ Partition wall may be a structural wall → if so, alteration
may violate cl.11(a)
● Q: who owns these partition walls? Is the partition wall a common
area? → go to BMO
■ Alterations (ii)-(iii): Bathroom + Balconies
● Cl.11(a): “not to make any alteration to the water or gas pipes…”
○ Alteration (ii) may involve water and/or gas pipes
● Sch 4 Para 4(i): “no owner shall without the consent in writing of
the Manager… alter the appearance of the exterior of the said
building…”
○ Enclosing the balconies (eg. replace glass window) =
altering appearance of the building → need prior consent
from Manager
● Cl.5(f): Power to manager “to remove any structure or
installation… which is illegal or which contravene the terms of this
deed and to demand and receive from the owner… the costs and
expenses of such removal”

● To refer to the Schedules to the DMC, need to first mention the sections which refer to
that schedule
● Need to mention the Manager’s power to remove the illegal part
● Cl. 5 (c)
● Cl. 3 3rd sch, part 1 para 2 + part 2 para 3
● Cl. 4 4th sch, para 7 – common part => partition wall wasn’t mentioned here
○ Refer to BMO
● Cl 11(a) no structural alteration
● Cl 11(a) cannot alter water and gas pipe
 ● Cl 4 4th Sch, para 4(1) balcony
● Cl 5(f) – manager’s power to remove

Building Management Ordinance

● Who owns the partition wall? Is the partition wall part of the common area?
○ DMC does not help (see above)
■ Para 7, Sch 4: “The common parts… shall include” → not exhaustive (as
opposed to “The common parts… are”)
○ s.2 + Sch 1 BMO: definition of “common parts”
■ There is no assistance as to the definition
■ Sch 1 does not include “partition wall,” but does include “load bearing
wall” and “boundary wall”
○ Refer to 3 important cases (All deal with 2 adjoining units with partition wall):
■ Central Management (load bearing wall)
● 2 adjoining units (luxury flats)
● Plan attached to the assignment: partition wall consists of two parts
○ one part made of concrete: structural portion
○ remaining part made of brick: non-structural portion
○ Can remove portion of brick wall to make an opening to
connect these 2 units
○ But owner wanted to remove part of the portion of the
structural wall too → applied to BA for approval to
remove
● BA did approve the removal of the structural portion
● Manager then applied for injunction
○ Ground: Not allowed to use common parts under both
DMC and s.34I BMO
● Issue: whether the structural wall is common area
● Held: Sch 1 also provide structural part, it is common area
○ Owner tried to argue wall belongs to the 2 flat owners, but
court rejected the argument
○ Load bearing walls are always common areas
● Look at the DMC first in relation to common areas
○ In the absence of a clear definition in the DMC, look at
BMO for assistance
■ Westlands Garden (boundary wall)
● Wall is non-structural
● Being non-structural does not mean you can demolish it, still
depends on whether the wall is common part or not
● DMC does not help
● Counsel tried to argue that the wall is “boundary wall” under Sch 1
BMO
● Held: a partition wall could not be a boundary wall
 ● If DMC and BMO do not help → Look at the first assignments of
the whole building and the two adjacent units
○ Does exclusive use cover the partition wall?
○ Look at:
■ the exact wording of the assignment
■ the plan attached (Is it coloured pink? If yes, co-
owned by the owners of the adjacent units; if not,
common area)
■ The exceptions and reservations made by the
developer (does the developer reserve the exclusive
use of the wall?)
● Held: developer reserved partition wall to itself during the first
assignment, i.e. belong to developer
○ Must be intention of parties that when the developer
assigned units to first unit owners, the unit owners would
also enjoy the partition wall;
○ no point for developer to keep partition wall (otherwise
developer has to pay for maintenance of wall)
○ s.17 CPO (Assignment passes the whole estate)
■ “Unless the contrary intention is expressed in the
assignment, an assignment shall operate to assign
all the estate, right and interest in the land assigned
which the assignor has in that land and which he has
the power to assign.”
■ ***Shan Tsui Court (latest case))
● Very similar to Westland
● Court adopted Westland
● On plan attached to the first assignments, party wall also coloured
pink
● Manager in Shan Tsui also ask for injunction, but partition wall is
not common area, is co-owned by the unit owners
○ **Look at exact wording, look at exceptions & reservation by developer
○ Central Management and Westlands Garden cannot be applied interchangeable
because they are based on different facts

● The Partition wall is shown as the party wall in the plan

● s.2 BMO – common parts = whole of the building except those parts specified in an
instrument, e.g. plan
○ Unless so specified sch 1
● Sch 1 – external wall and load bearing wall
○ Not boundary wall
○ If load bearing wall,[ and if ] it is a structural wall common part can’t demolish it
 ○ Central Management Case
● s.34I – can’t convert common part for own use unless approved by the community
○ Breach of it would be deemed to be a breach of DMC
● If it’s not structural wall need to look at the 1st assignment to see if there is any
reservation
○ No express reservation in 1st assignment on the wall (wall not talked about in the
assignment)
○ Incorporated owners of Westlands Garden Case
○ Tam Sze Man Case
○ => it’s an exclusive use part

Government Grant

● Special condition 1 (D2) and 3 (D1)

● Special Condition (3): any alteration shall comply with the provisions of the BO
● General Condition (13)(a): failure to observe or comply with any conditions → re-entry
● Scenario: one unit owner breached → instead of re-entry, they take the vesting action
(refer to F.S.I.)
○ Government Rights (Re-entry and Vesting Remedies Ordinance)
○ Re-enter: whole piece of land
○ Vesting: undivided shares, individual ownership?

Mortgage

Form 5, Sch 3, CPO

● Clause 6: mortgagor’s covenants
○ “There are incorporated herein as if they were herein written the covenants on the
part of the Borrower set out in Part C of the Second Schedule to the
Conveyancing and Property Ordinance.”
○ Part C, Sch 2, CPO:
■ “(a) That the borrower shall during the continuance of the legal charge …
perform and observe the covenants terms and conditions by and in the
Government lease reserved and contained … and shall at all times keep
the lender indemnified therefrom and from and against all actions suits
expenses and claims which may be incurred or sustained on account of …
the breach or non-performance or non-observance of the said covenants
terms and conditions or any of them.”
● Comply with govt lease
■ (c) That the borrower shall at all times during the continuance of the legal
charge …
 ● (ii) comply with all Government or other legal requirements and
notices whether statutory or otherwise in respect of the property…
● (iv) …observe and perform the covenants terms and conditions
contained in the deed of mutual covenant (if any)”
■ (f) Without bank’s consent, will not ... in any manner otherwise deal with
or dispose property”
● Now you are turning 2 units into 1 units through demolition of wall
→ need bank’s consent
● Failure to obtain consent:
○ s.51(1) + Sch 4 CPO: Powers of mortgagee
■ Para 2, Sch 4 (power to take possession)
■ Para 4, Sch 4 (power to lease, surrender or accept
the surrender of leases)
■ Para 8, Sch 4 (power to sell and assign)
■ Para 11(c), Sch 4: “The powers mentioned in
paragraphs 2 to 9 shall not be exercisable unless…
there has been a breach of a provision… of the
mortgage…”
○ s.51(4): “The powers implied by subsection (1), and the
provisions of the Fourth Schedule relating to the exercise of
those powers may be varied or extended by the mortgage
deed and, as so varied or extended, shall have effect as if
contained in this Ordinance.”

(D2) How will the provisions of the relevant Government Grant and the Deed of Mutual
Covenant affect Jolly’s proposed use of the two flats?

Government Grant
● As to the use:
○ Specific Condition 1: “The lot and any building or buildings erected or to be
erected thereon shall be used for private residential purposes only.”
■ Intended use (as office) → Prima facie seems not ok, but turn to Donald
Shield case (depends on degree of misuse)

DMC
● Office use
○ Para 5, Sch 4: “The said building shall be used for private residential purposes
only…”
○ Say sth about Donald Shields v Mary Chan
○ Consequence if misuse is found: vesting action
● Keeping of the dogs
○ Old DMC, so no dogs provision
○ BUT have nuisance clause (p.6)
 ■ Cl. 11(c): “not to use… for any illegal or immoral purposes… which may
create unnecessary noise or may be a nuisance or annoyance to or may
cause damage or inconvenience to the other occupiers…”

● Dogs: Cl 11(c) of DMC

○ But No specific prohibition of keeping of pet
● Private residential purpose
○ Cl 4 of DMC à 4th sch para 5
○ Donald W Shields (No 2) v Mary Chan, according to the relevant Government
Grant, the premises were to be used as private and domestic premises only. The
court held that use of one room for conducting Oxfam business did not breach the
covenant. Degree too low.