As land is scarce in Hong Kong, the supply of sizable flats is rather limited.  From time to time, we have heard of people buying two adjoining flats and converting them into a larger one by putting down the partition wall between them.  A recent legal dispute concerning an ultra luxury residence known as The Highcliff (曉廬) reveals the legal risks associated with this option.

In Central Management Limited v. Light Field Investment Limited and Another (HCA440/2008), the Defendants owned two adjoining flats in a luxurious building called The Highcliff.  They planned to knock down the partition wall (the “Wall”) between the flats to create a huge flat of 7,000 sq. ft., which can be sold at a much better price.  Save a non-structural part of the Wall which is built of bricks, the rest of the Wall forms part of the structural support of the building.  

The Building Authority had approved the Defendants’ application to remove the Wall.  However, the Plaintiff management company applied to the Court for an order restraining the Defendants from doing so.  To many laymen’s surprise, the Court ruled that the Defendants were not entitled to knock down the entire Wall as its structural part is a common part of the building.  As the legal costs incurred by the management company came from the management fees, the Defendants were ordered to pay costs of the hearing on an indemnity basis.  

What is a Common Part?

A common part of a building is a part which is not for the exclusive use of a single flat owner but the owners of the whole building.  By virtue of Section 34I(1) of the Building Management Ordinance (Cap. 344) (the “BMO”), a flat owner is not entitled to convert a common part to his/ her own use unless such conversion is approved by the Owners’ Committee.  Also, he/ she is not allowed to use the common part in such a manner as unreasonably to interfere with or to cause nuisance or hazard to other owners of the building.  A contravention of Section 34I(1) shall be deemed to be a breach of the Deed of Mutual Covenant in respect of the building (the “DMC”), and may entitle the management company and/ or other owners of the building to take enforcement action against the flat owner.

Is it a Common Part?

Section 2 of the BMO defines “common parts” as “the whole of a building, except such parts as have been specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner” and “unless so specified or designated, those parts specified in Schedule 1 (of the BMO)”.  Generally speaking, common parts in relation to a flat can be identified from the following documents/ statutory provision:

(i)            the Assignments in respect of the flat;

(ii)           the DMC; and

(iii)         Schedule 1 to the BMO.  

In general, if the part concerned is assigned to the flat owner for his/ her exclusive use, it will NOT be a common part.  However, any such stipulation in an Assignment is not conclusive as the Assignment is subject to the DMC.  The DMC normally provides a definition of “common parts”, but it may not be exhaustive; if the Assignment and the DMC provide no answer as to whether a part is a common part, Schedule 1 to the BMO provides guidance as a last resort.  

Load Bearing Wall v.s. Non-Load Bearing Wall

As a load bearing wall is listed in Schedule 1 to the BMO, unless it is expressly assigned to a flat owner for his/ her exclusive use, it will be a common part of the building.  On the other hand, since a non-load bearing wall is not listed in Schedule 1, it will NOT be a common part unless it is expressly stipulated as a common part in the DMC.  An owner may seek the advice from an Authorised Person as to whether a wall is load bearing or not.  

Demolition of Wall May Amount to a Breach of the DMC

The DMC usually repeats the prohibitions against conversion of common parts as well as interference with other flat owners in Section 34I of the BMO.  Also it usually contains a clause forbidding alteration works to be done at the property without the consent of the management company.  Hence, even if the wall concerned is not a common part, the flat owner may not remove it without the consent of the management company.   

Approval of Building Authority May be Required

Even if the wall concerned is not a common part, it may not be demolished without the approval of the Building Authority.  According to Sections 14 and 41 of the Building Ordinance (Cap. 123) (the “BO”), except for certain non-structural works, all building works require the approval of the Building Authority.  Such approval has to be obtained before the commencement of the building works and no retrospective approval can be given.  Where approval has not been given, the Building Authority may take enforcement action against the flat owner and may order the wall to be reinstated.  Moreover, a breach of the BO may constitute a breach of the Government Lease and the DMC as well.  It is therefore very important for the flat owner to appoint an Authorised Person to conduct a site inspection and to ascertain whether approval of the building works by the Building Authority is necessary before the commencement of the building works.  

Risks in Subsequent Sale

Though a conversion of two flats into one may yield a better price, it also increases the risks in subsequent sale.  A breach of the Government Lease, the DMC or the BO may render the title of the property defective.  In addition, even if the purchaser has inspected the property before signing the Provisional Agreement for Sale and Purchase, he/ she may refuse to complete after he/ she has found out the legal consequences of the unauthorized removal of the wall.  As a conversion of two flats into one involves substantial legal risks, owners and purchasers should seek professional advice before they decide to convert two flats into one.