Incorporated Owners' Liability

Sometimes, we would hear accidents of collapse of canopy / fallen object of a building causing personal injuries to pedestrians below. No doubt that the owner and/or the tenant who have the control and management duty of the collapsed canopy / fallen object would be responsible for the damages sustained by the victim whether or not the canopy / fallen object is a common part or an unauthorized structure of the building. Nonetheless, the victim may not be able to obtain damages if the owner and/or the tenant are unable to meet the judgment. Incorporated Owners (“IO”) should have got third party insurance against legal liability for personal injuries and therefore, would be able to pay the damages awarded. It is settled law that IO will be liable for negligence resulting in the collapse / fallen object of common part of the building if it has failed to properly manage and maintain the same. This article aims to discuss the liability of the IO if the collapsed canopy / fallen object is an unauthorized structure of which IO is not under a duty to maintain.

Court of Final Appeal’s decision in Leung Tsang Hung
Before the Court of Final Appeal’s (“CFA”) decision in Leung Tsang Hung and Lee Wai Yu, the administrators of the estate of Liu Ngan Fong Sukey, deceased vs The Incorporated Owners of Kwok Wing House FACV No. 4 of 2007, the Courts had held that IOs were not liable for the collapse of unauthorized structures because to impose liability on IO would mean that IO will be under a duty to maintain an illegal structure erected by one of the owners / tenant of the building. Even if IO is under a duty to enforce the Deed of Mutual Covenant by taking action to have the illegal structure removed, they do not have a duty to maintain that illegal structure.

In Leung Tsang Hung, the deceased was a hawker who plied her trade at a fixed pitch in Tung Choi Street. She was struck dead by a piece of concrete which had fallen from the adjacent building. There was no dispute that the subject piece of concrete was fallen from the corner of an extended canopy (“the Extended Canopy”) of a flat of the building. The Extended Canopy was an illegal structure and that it had been in existence for some 35 years by the time of the accident.

In the Court of First Instance, the Court found the tenant liable along with the owner but dismissed the claim against IO because IO’s duty to maintain the external walls could not be extended to cover external parts of an illegal structure attached to the building to which IO had no right of possession, occupation or control. The Plaintiff appealed to the Court of Appeal but the appeal was dismissed on the ground that IO owed the deceased no operative duty. The Plaintiff then appealed to the CFA.

CFA considered that the liability of IO should be determined by applying the law of public nuisance on the basis of its omission. There are three pre-requisites for establishing liability. Firstly, it would only be actionable if the defendant is under a duty to neutralize the nuisance hazard but has failed to do so. Secondly, the defendant can only be liable if he knew or ought reasonably to have known that its omission would result in a nuisance hazard presenting a real risk of harm to the public. Thirdly, the injury caused to the victim is a foreseeable type. 

For the 1st pre-requisite, CFA considered IO’s control over the unauthorized structure:-

1.         The Building Management Ordinance (Cap. 344) (“BMO”) places IO under a duty to “maintain the common parts and the property of the corporation in a state of good and serviceable repair …; and to do all things reasonably necessary for the enforcement of the obligations contained in the Deed of Mutual Covenant … for the control, management and administration of the building.” The Deed of Mutual Covenant provides that the parties should not “make any structural alteration to the said building”. Therefore, IO was duty-bound to enforce a prohibition against any person converting any common part to his own use without its prior approval. 

2.         The BMO authorizes entry of the IO into any flat for the purpose of “inspecting, repairing, maintaining or renewing any common parts or other property in the flat causing concern”, or for the purpose of “abating any hazard or nuisance which does or may adversely affect the common parts or other owners”. If entry is refused, the BMO empowers a magistrate to issue a warrant authorizing a person to break into the flat in the presence of a police officer. Members of the management committee exercising such powers in good faith and in a reasonable manner are given personal immunity. Costs incurred in the exercise of these powers are recoverable from the owner in question, as are the costs of remedial works which the IO may undertake itself where the owner fails to do what is necessary, such costs being a charge upon the defaulting party’s share of the property.

3.         Though IOs were not owners or occupiers who generally came under a duty to remove any nuisance hazard arising from their properties, the said legal attributes, duties and powers of IOs given under the BMO placed the IO in a category closely analogous with owners and occupiers. Therefore, IOs were subject to a duty which was actionable in respect of nuisance hazards arising from the building.

For the 2nd pre-requisite, CFA found that the IO ought to have known that the Extended Canopy was an unauthorized structure. It was because the approved plans of the building were available to the IO and the examination of such plans would certainly reveal that the Extended Canopy was an unauthorized extension. Moreover, the IO ought to have realised the risks arising from the Extended Canopy since it was a structure projecting out over a busy street and had been affixed to the building for some 35 years. The 3rdpre-requisite was also satisfied as the fatal injury sustained by the deceased was foreseeable. The CFA concluded that the IO was liable.

The Court of Appeal had also dismissed the claim against IO on the ground of public policy. CFA was of the view that where the hazard involves the external common parts of a high-rise building, effective inspection and maintenance works can really only be carried out if those parts (and any illegal accretions thereto) are dealt with as a whole, with the erection of scaffolding and with all the owners’ contributing to the cost. Where the nuisance hazard consists of some unauthorized structure encroaching upon or being attached to the common parts, the individual owners who may have erected or adopted the structure and benefit from its existence, may well be unwilling to take any steps to remove it. Compulsion from, or direct action by, IO may well be required if the hazard is to be nullified. In consideration of the powers of enforcement given to IO by BMO, there is nothing harsh or unreasonable about making IO responsible where they know or ought to know of the existence of a nuisance hazard endangering members of the public. 

The CFA’s decision in Leung Tsang Hung represents the authority that where a part of an illegal structure annexed to the common parts of a building falls off as a result of its hazardous state and causes death, injury or damage in the street below, IO are liable in nuisance for the consequences if they knew or ought to have known of the hazard in time to remove it but had unreasonably failed to do so.

The law and procedure on this subject are very specialized and complicated. This article is just a very general outline for reference and cannot be relied upon as legal advice in any individual case. If any advice or assistance is needed, please contact our solicitors.
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Published by ONC Lawyers © 2016