LDBM344/2014 CHAN KAM TONG AND OTHERS v. THE INCORPORATED OWNERS OF GARDEN VISTA - LawHero
LDBM344/2014
勞資審裁處Deputy Judge Tracy Chan, Presiding Officer of the Lands Tribunal21/6/2015
LDBM344/2014
A A
B LDBM 344/2014 B
C C
IN THE LANDS TRIBUNAL OF THE
D D
HONG KONG SPECIAL ADMINISTRATIVE REGION
E BUILDING MANAGEMENT APPLICATION NO. 344 OF 2014 E
__________________________
F F
G BETWEEN G
H Chan Kam Tong & Wong Mei Yee 1st Applicant H
I
Chan Mei Chau 2nd Applicant I
Chi Wong Industrial Company Limited 3rd Applicant
J J
th
Chau Fung & Wai Lung Yee Shirley 4 Applicant
K K
Fung Chi Wai Timmy & Leung Kit Ling 5th Applicant
L L
Fung Yiu Kuen & Shek Siu Fong 6th Applicant
M Hui Kim Mei Benny 7th Applicant M
N Lau Sin 8th Applicant N
Lee Ping Sum & Cheung Man Wai 9th Applicant
O O
th
Wong Ka Leong Johnny & Mak Ka Ni 10 Applicant
P P
Wong Wai Kan & Fan Hoi Yin Doris 11th Applicant
Q Q
Wong Wai Kan 12th Applicant
R To Chi Ming & Wong Man Ching 13th Applicant R
S Wan Ning & Ng May 14th Applicant S
T T
U U
2
A A
B B
Chan Siu Ming & Lau Yim Yu Justine 15th Applicant
C Lo How Wah 16th Applicant C
D
Lo Chi Kin Albert & Lo How Wah 17th Applicant D
Ching Tak Wa & Leung Kit Ping 18th Applicant
E E
F F
and
G G
H The Incorporated Owners of Garden Vista Respondent H
I I
Coram: Deputy Judge Tracy Chan, Presiding Officer of the Lands Tribunal
J J
Date of Hearing: 9 & 10 June 2015
K K
Date of Judgment: 22 June 2015
L L
M M
N ________________ N
O O
J U D G M E N T
P ________________ P
Q Q
R R
S S
T T
U U
3
A A
B 1. There was dispute between some owners and the Incorporated B
Owners of Garden Vista, Nos 11-17 On King Street, Shatin (“the
C C
Respondent”) over the amount to be contributed to a renovation project
D which was at the cost of 29 million (“the Renovation”). Those owners, 18 of D
them (the Applicants), took out this application on 18 November 2014 (“the
E E
Application”) in which 8 questions were posed for the Tribunal to determine.
F These questions in fact boiled down to whether the Renovation was F
governed by the DMC or solely by BMO. That would, according to the
G G
Applicants, affect the amount of contribution to be paid by individual
H owners; whether they are liable to pay interest and whether their properties H
could be charged on late payment or default.
I I
J J
K 2. Mr Hui, counsel for the Respondent, has succinctly summarized K
those facts which are not disputed for purpose of the present hearing.
L L
(a) By a resolution passed by the management committee
M M
during a meeting on 22 May 2013, the management
N committee authorised the chairman and the vice- N
chairman of the management committee to enter into any
O O
renovation contract in accordance to resolution passed at
P a subsequent extraordinary general meeting of the P
Respondent (“Management Committee Resolution”).
Q Q
The Management Committee Resolution was evidenced
R by the minutes of the management committee’s meeting R
dated 28 May 2013 (the “Management Committee
S S
T T
U U
4
A A
B Minutes”) [B/116]; B
(b) By a resolution (the “Special Resolution”) passed at an
C C
extraordinary general meeting of the Respondent held on
D 28 July 2013 (the “EGM”), Hong Dau Construction Co. D
Ltd. (“Hong Dau”) was to be appointed to carry out the
E E
renovation works over the common parts of Garden Vista
F (the “Renovation Works”) at the cost of HK$262,953,235 F
(the “Renovation Cost”) [B/97]);
G G
(c) On 17 September 2013, Lai Kwok Leung, the Chairman
H of the Respondent on behalf of the Respondent, entered H
into the “屋苑整體維修工程合約” (the “Renovation
I I
Contract”) with Hong Dau [B/106-115]; and
J J
(d) The Respondent registered charges against the
K Applicants for arrear of their respective outstanding share K
of contribution to the Renovation Cost together with
L L
accrued interest and legal costs.
M M
N N
3. The Applicants’ case is this. They would not dispute their
O liability to contribute to the Renovation Cost and they would not challenge O
the validity of the EGM where the Special Resolution was passed. They say
P P
that the calculation of the contribution should not be made according to
Q Schedule 2 of the deed of mutual covenant executed on 22 December 1989 Q
(the “DMC”). It is said that since the Special Resolution was passed under
R R
The Building Management Ordinance Cap 344 (the “BMO”), the
S contribution should be made in accordance with BMO and that should be by S
T T
U U
5
A A
B undivided shares. Further they say that the Chairman and vice-chairman B
signed the Renovation Contract without authorization of the owners. For
C C
this reason the Applicants say that the Respondent should not be bound by it.
D D
E E
4. The Respondent opposes to such propositions. It is said that the
F F
Respondent as Manager of the DMC is empowered thereby to undertake
G duties of management of the Building. Such power and duties come from G
the DMC although the BMO also confers similar power to a corporation in
H H
general. Further the Renovation Cost being part of Management Expenses
I under the DMC, should be shared according to Schedule 2 therein, i.e. by I
management shares and not by undivided shares as stipulated in Clause 1 of
J J
Subsection E of Section V [B/31].
K K
L L
5. As mentioned the Applicants have posed 8 questions for the
M Tribunal to determine. Although not all of them are relevant to computation M
of share of contribution, I shall deal with each and every of them below.
N N
O O
Question 1
P P
Q Whether the Renovation was governed by the DMC or solely by the BMO Q
R 6. The Applicants argue that the Renovation was not governed by R
the DMC but solely by the BMO. Reasons in support are as follows:-
S S
T T
U U
6
A A
B (a) Section 18(1) of BMO provides that the corporation shall B
maintain the common parts in a state of good and
C C
serviceable repair and clean condition and that the
D Renovation Works resolved by the Resolution was an act D
of the Respondent exercising its own statutory powers
E E
rather than powers under the DMC; and
F (b) There was no mention of any provisions of DMC at the F
Owners Meeting or that the Renovation was carried out
G G
pursuant to the DMC.
H H
I I
7. The Respondent’s reply is as follows:-
J J
(a) The Respondent after its incorporation is the Manager of
K K
the DMC. At page 6 of the DMC “the Manager” is
L defined as: L
“Hang Yick Properties Management Limited or any other manager
M for the time being appointed as manager of the Estate pursuant to M
this Deed or the Owners’ Committee1 when the Owners’ Committee
is undertaking the management of the said land and the Estate.”
N N
(b) As Manager the Respondent has the power to undertake
O O
such duties as the manager of the said land and Estate
P under Clause 11(iv) of Subsection J of Section V of the P
DMC.
Q Q
R R
1
Note that the Owners’ Committee is replaced by the management committee of the Respondent pursuant
S to section 34K of the BMO. S
T T
U U
7
A A
B 8. Further the DMC provides that the Manager shall be bound by B
and shall observe and perform all of the conditions, duties and obligations,
C C
and shall have full and unrestricted authority to all such acts and things as
D may be necessary or requisite for the proper and efficient management, D
including:-
E E
(a) “To keep all the Common Facilities in good repair and in
F F
working condition and to keep the Common Areas in a
G G
clean and sanitary state and condition and to keep in
H
good order and repair the lighting and ventilation of the H
Common Areas.” (Clause 3 of Subsection B of Section
I I
V of the DMC [B/22]);
J
(b) “To do all things which the manager shall in its absolute J
discretion deem necessary or desirable for the purposes
K K
of maintaining and improving all facilities and services
L
in or on [Garden Vista] and the land for the better L
enjoyment or use of [Garden Vista] and the land by its
M M
Owner occupiers and their licensees.” (Clause 20 of
N Subsection B of Section V of the DMC [B/25]); and N
(c) “To carry out all other duties and perform such other
O O
matters referred to in this Deed and otherwise to do all
P such other things as are reasonably incidental to the P
management of [Garden Vista] and the said land.”
Q Q
(Clause 40 of Subsection B of Section V of the DMC
R [B/30]). R
S S
T T
U U
8
A A
B 9. Mr Hui therefore submitted that the retention of Hong Dau to B
carry out the Renovation falls under the duties and power of the DMC
C C
Manager as set out at paragraphs 7-8 above and was in compliance with
D BMO. D
E E
F F
10. I think I should first point out the difficulty for Mr Kwong to
G argue that the share of contribution should not be made under the DMC G
because DMC was not mentioned at the meeting. This is incorrect. As
H H
could be seen from the minutes of the EGM, it was stated under Agenda 6
I that the share would be made according to the DMC. I do not see how the I
Applicants could now say otherwise.
J J
“議程六：議決通過「議程四之工程費用」集資期數（選
K K
票4）
L …….但未足夠支付有關的工程費用開支。因此，各業主需 L
M 按大廈公契計算來攤分有關工程費用開支。所以有必要商 M
討籌集工程費用安排。”
N N
O O
P
11. For sake of completeness, I shall deal with other arguments P
under Question 1. The Renovation Works were set out in B/111. Mr Hui
Q Q
had identified them, upon request of the Tribunal, being items within the
R
scope under “the Estate’s Common Area”, “the Estate’s Common Facilities” R
and “the Block’s Common Area” expressly set out in the DMC. The table
S S
below shows the corresponding provisions:-
T T
U U
9
A A
B Items of works Corresponding DMC Provisions B
1. 採用方案三 – 內外牆修補及外牆 Para (c), (d) of the Estate’s
C C
重新鋪砌磚工程 Common Area
D D
2. 更換 A 至 F 座喉管工程 Para (a) of the Estate’s Common
E Facilities E
3. A 至 F 座公共內牆油漆翻新工程 The Block’s Common Area
F F
4. A 至 F 座天台防水工程 Para (d) of the Estate’s Common
G Area, the Block’s Common Area G
5. 公共鐵器工程 Para (b) of the Estate’s Common
H H
Facilities
I 6. 二期平台防水工程 Para (d) of the Estate’s Common I
Area
J J
7. 停車場翻新工程 Para (d) of the Estate’s Common
K K
Area
L
8. 更換二期平台有蓋行人通道工程 The Block’s Common Area L
9. 各座平台入口大堂翻新工程 Para (a), (d) of the Estate’s
M M
Common Area
N 10. 各座停車場大堂翻新工程 Para (d) of the Estate’s Common N
Area
O O
11. 裙樓外牆翻新工程 Para (c), (d) of the Estate’s
P Common Area P
Q Q
R 12. I accept the Respondent’s submission that the Renovation R
Works were within the ambit of common area and common facilities. I
S S
T T
U U
10
A A
B accept that as Manager under the DMC, the Respondent shall be responsible B
for and shall have full and unrestricted authority to do all such acts and
C C
things as may be necessary or requisite for the proper and efficient
D management of the Estate under Subsection B of Section V of the DMC. D
Those power and duties for purpose of the present Application include but
E E
not limited to “to keep all Common Facilities in good repair and working
F condition”. For this reason, I see no merit in the suggestion of the F
Applicants that the Renovation was not governed by the DMC.
G G
H H
I 13. Another point taken by the Applicants was that the EGM was I
held pursuant to the BMO and not the DMC. This argument is difficult to
J J
understand. Although the Respondent was empowered by the DMC to
K undertake all duties in relation management as far as the Building is K
concerned, it is bound by procedures set out in section 20A of the BMO
L L
concerning procurement of goods and services exceeding a certain amount
M and Schedule 3 in respect of convention of meetings. I think it wrong to say M
that since the Respondent was observing the procurement and meeting
N N
procedures set out in the BMO, the Renovation was therefore not within the
O scope of the DMC. O
P P
Q 14. For these reasons, I could not agree with the Applicants that the Q
Renovation was not governed by the DMC.
R R
S S
T T
U U
11
A A
B Question 2 B
C Whether Renovation was within meaning of “management” C
D D
15. The Applicants argue that Renovation was not within the
E
meaning of “management” under the DMC on the basis that the term is E
defined as limited to “all duties and obligations to be performed and
F F
observed by the Manager as provided in the DMC” but the appointment of
G Hong Dau was done by the Respondent and not the Manager under the DMC. G
H H
I 16. During his submissions, Mr Kwong conceded that the I
Respondent is and was the Manager of the DMC since its incorporation. I
J J
do not think this point still stands. Further, I am satisfied that the
K Renovation Works fell under the meaning of “management” as submitted by K
Mr Hui. Paragraph 8 above is relevant.
L L
M M
Question 3
N N
O
Whether Synergis had power to collect contribution O
P 17. The Applicants contents that Synergis, the management P
company, has no authority to collect contribution from the owners and asked
Q Q
that payment be paid to it. The Applicants’ main arguments are as follows:-
R R
(a) Under section 29 of BMO, only the Management
S S
T T
U U
12
A A
B Committee, and not the manager appointed under the B
DMC, has the lawful authority to act for the Respondent
C C
in relation to all aspects of the Renovation Contract;
D (b) Neither the Respondent nor its management committee D
had appointed Synergis to collect the contribution from
E E
the individual owners;
F (c) Unless specifically authorised, Synergis has no role to F
play in the Renovation Works;
G G
(d) The Respondent has not engaged or remunerated
H Synergis for the purpose of the Renovation Works H
pursuant to section 18(2)(a) of BMO; and
I I
(e) By a circular dated 13 June 2014 (“the Circular”),
J Synergis had stated that the Renovation Works was not J
within the scope of its management.
K K
L L
M 18. I am of the view that the management company, Synergis, being M
agent of the Respondent does have the authority to collect payments of
N N
contribution. It does have the power to act on behalf of the management
O committee which is the executive arm of the Respondent. The complaint of O
payments being paid to a bank account held in the name of Synergy is
P P
neither here nor there as there is no substance in the complaint. There is no
Q evidence put forth by the Applicants to say that the operation of such Q
account has put the funds of the owners at risk of misappropriation. This
R R
complaint was not raised prior to the hearing and was only added when Mr
S Kwong was making his submissions. S
T T
U U
13
A A
B B
C 19. As to the content of the Circular, it is denied by the Respondent C
that Synergis had ever denied that the Renovation Works was within the
D D
scope of its management. On the contrary, it was expressly stated that
E throughout the preparation process of the Renovation Works, Synergis E
F
assisted in the capacity of manager of Garden Vista, “新昌管理一直以管理 F
人 身 份 ， 協 助 法 團 ”. What Synergis denied in the Circular was the
G G
unsubstantiated accusation against Synergis such as “參與圍標，欺壓反圍
H 標業主，甚至跟蹤滋擾及恐嚇他們”. H
I I
J J
20. More importantly it is said that, contrary to the Applicants’
K contention, paragraph 1 of the Circular stated that “新昌管理自 1997 年起 K
為翠湖花園提供物業管理服務。翠湖花園的大型維修工程並非管理合
L L
約中的服務範圍…”. So Synergis was merely stating that the Renovation
M M
Works are not within the scope of the management contract. It did not say (i)
N the Renovation Works were not within part of its duties and powers pursuant N
to the DMC or (ii) it did not have the power pursuant to the DMC to act as
O O
the manager in collecting contribution from the owners.
P P
Q Q
21. After considering the content of the Circular, I accept the
R submission of Mr Hui and I am satisfied that Synergis has the authority to R
collect contributions of Renovation Cost from individual owners as agent of
S S
T T
U U
14
A A
B the Respondent. B
C C
D D
Question 4
E E
Whether the Renovation Contract is binding on the Respondent
F F
22. The Applicants say that the Renovation Contract is not binding
G on the Respondent because:- G
H (a) Neither the Respondent nor the management committee H
had authorised Lai Kwok Leung, the current chairman of
I I
the Management Committee, to approve and to sign any
J contract in connection with the Renovation Works; and J
(b) The chairman has to have the majority vote of the
K K
management committee members before the chairman
L can lawfully engage the Respondent. L
M M
N N
23. The Respondent’s position on this is that under section 29 of
O
BMO, “the powers and duties conferred or imposed by the BMO on a O
corporation shall be exercised and performed on behalf of the corporation by
P P
the management committee”. Therefore, the issue is whether Lai Kwok
Q Leung was authorised by the Management Committee sign the contract. Q
R R
S 24. Mr Hui submitted that by the Management Committee S
T T
U U
15
A A
B Resolution passed on 22 May 2013, Lai Kwok Leung, as chairman of the B
Management Committee, was so authorised. In particular, Paragraph 2.7 of
C C
the Management Committee Minutes dated 28 May 2013 stated that:-
D D
“如在特別業主大會上通過的所有議決通過之議程，法團
E E
會根據業主議決之投票結果聘用承建商，會議上由委員一
F 致通過由法團主席及副主席簽署維修工程合約。” F
(emphasis added)
G G
H H
I
25. The reply made by Mr Kwong to this was that there was no I
evidence to show that the Management Committee Resolution was passed
J J
by members of Management Committee only because there were staff of
K Synergy present at the meeting, they might also have voted. He said in that K
case the Management Committee Resolution would not be valid. I am of the
L L
view if Mr Kwong seriously takes issue on who had voted on this agenda
M item, he should not have informed the Tribunal at the outset that there would M
not be factual witnesses called and that there would not be factual dispute in
N N
the present hearing. In the circumstances that no evidence was put forward
O to contradict the minutes of meeting, I accept that they reflected correctly as O
to what had transpired at the Management Committee Meeting: that only the
P P
members of the Management Committee did vote. The complaint of Mr
Q Kwong was sheer speculation. Q
R R
S 26. I agree with Mr Hui that the Applicants’ argument under this S
T T
U U
16
A A
B head is unsustainable. B
C C
D D
Question 5
E E
Whether the contribution should be shared by undivided shares and not by
F shares under the Second Schedule of the DMC F
G 27. The main argument of the Applicants appeared to be that since G
the Renovation is not within the scope of the DMC, it should follow the
H H
apportionment set out by the BMO, that is by undivided shares.
I I
J J
28. Since I have already found that the Renovation was within the
K scope of the DMC, this proposition could not stand. Further, section 22(1)(a) K
of the BMO provided that “The amount to be contributed by an owner
L L
towards the amount determined under section 21 shall be fixed by the
M management committee in accordance with the deed of mutual covenant (if M
any). In the present case, there is a DMC. Owners’ duty to pay is set out
N N
under Clause 1 of Subsection E of Section V. It provides that each owner
O shall pay a due proportion of the Management Fees which by definition O
include Management Expenses in accordance with the Second Schedule of
P P
the DMC. By the same provision, Management Expenses have been clearly
Q set out. It is my view and according to Clause 1(b) of Subsection E of Q
Section V, I have already found that Management Expenses cover the
R R
Renovation Cost.
S S
T T
U U
17
A A
B B
C 29. Since the DMC has expressly provided the manner in which C
each owner should contribute to the Management Fees, I agree with Mr Hui
D D
that the statutory default position on the determination of contribution by
E reference to the undivided share of individual owners is not engaged. E
F F
G G
30. Mr Kwong has made an attempt to argue that the contribution
H called for was for setting up of a special fund under paragraph 4 of Schedule H
7 of the BMO. He said that if the contribution was called under a special
I I
fund, the contribution should be determined by the Respondent at an owners’
J meeting and not according to the DMC. Mr Kwong argued this on basis of J
the size of money involved. According to him, it was a huge amount.
K K
L L
31. I agree $29m is a huge amount. But I see no merit in his
M M
argument. As could be seen from Agenda 6 the Minutes of the EGM, there
N was already a special fund set up for the Renovation (“the Estate Renovation N
Fund”) and a resolution was passed for a sum of $10,079,412 to be paid out
O O
of the Estate Renovation Fund to meet part of the Renovation Cost (B/98).
P It is obvious that the contribution called for from individual owners under P
Agenda item 6 was to make up the balance of the Renovation Cost and not
Q Q
to contribute to the Estate Renovation Fund. As mentioned, it has expressly
R stated in Agenda 6 that such contribution should be made in accordance with R
the provisions under the DMC.
S S
T T
U U
18
A A
B B
C 32. Moreover Clause 1 of Subsection E of Section V has also C
provided for how increase of Management Fees should be dealt with. It is
D D
provided that in those circumstances “the amount of the Management Fees
E payable by the Owners shall be in direct proportion to the amount shown in E
the Second Schedule.”
F F
G G
33. Further, Deputy Judge Lee, as she then was, and Member Poon
H H
had dealt with the construction of paragraph 4 of Schedule 7 in IO of Kenbo
I Comm. Bldg. v. Lau Wing Cheung & anr. LDBM 153/1998. The Tribunal I
after hearing the application held that the nature of the special fund was not
J J
for collecting funds to meet expenses of specified items of works.
K K
L L
34. Moreover, HHJ Wong had expressed his view on the true
M M
meaning of “the amount to be contributed by owners” in Paragraph 4(2) in
N Young Kwok Sui and another v. The Incorporated Owners of Fontana N
Gardens (LDBM 76/2011 and LDBM 77/2011 (Consolidated)). It was his
O O
finding that Paragraph 4(2) did not confer power on the corporation to
P determine the contribution of individual owners. Paragraphs 26-28 of the P
judgment are relevant.
Q Q
R R
35. For these reasons I am of the view that the contributions of
S S
T T
U U
19
A A
B individual owners should be shared according to Second Schedule of the B
DMC.
C C
D D
E
Question 6 E
F Whether the Applicants, the defaulting owners, are liable to pay interest for F
their respective shares of contributions to the costs of Renovation pursuant
G G
to the DMC
H H
36. The Applicants suggest that if the Renovation was not governed
I by the DMC but the BMO, they should not be liable to pay interest for late I
payment under the DMC because the DMC does not come into play.
J J
K K
37. Since it is my finding that the Renovation was governed by the
L L
DMC, defaulting owners are therefore liable to pay interest under the DMC.
M Section V Clause F2(1) is relevant. M
N N
O O
Question 7
P P
Whether the Respondent is entitled to register a memorandum of charge
Q against the properties held by the defaulting owners pursuant to the DMC Q
R 38. The Applicants argue that the Respondent could not charge their R
properties on the same basis as set out in Question 6. The answer is the
S S
T T
U U
20
A A
B same. Section V Clause F 4 of the DMC is relevant. B
C C
D D
Question 8
E E
Whether the memoranda of charge against the properties held by the
F defaulting owners pursuant to the DMC should be discharged F
G 39. My answer to this question is: the memoranda should be G
discharged and the registration be vacated upon payment of all amount due.
H H
I I
Costs
J J
K
40. All the questions were answered in favour of the Respondent. K
The Applicants should therefore bear costs of the Respondent with
L L
certificate for counsel. Such costs are to be taxed at District Court Scale if
M
not agreed. This is an order nisi and shall become absolute within 14 days if M
no application is made by parties to vary the same.
N N
O O
Deputy Judge Tracy Chan
P Presiding Officer P
Lands Tribunal
Q Q
Mr Paul Kwong, of Messrs. Paul Kwong & Co., for the 1st to 18th Applicants
R R
Mr John Hui, instructed by Messrs. Cheung & Yip, for the Respondent
S S
T T
U U
CHAN KAM TONG AND OTHERS v. THE INCORPORATED OWNERS OF GARDEN VISTA
A A
B LDBM 344/2014 B
C C
IN THE LANDS TRIBUNAL OF THE
D D
HONG KONG SPECIAL ADMINISTRATIVE REGION
E BUILDING MANAGEMENT APPLICATION NO. 344 OF 2014 E
__________________________
F F
G BETWEEN G
H Chan Kam Tong & Wong Mei Yee 1st Applicant H
I
Chan Mei Chau 2nd Applicant I
Chi Wong Industrial Company Limited 3rd Applicant
J J
th
Chau Fung & Wai Lung Yee Shirley 4 Applicant
K K
Fung Chi Wai Timmy & Leung Kit Ling 5th Applicant
L L
Fung Yiu Kuen & Shek Siu Fong 6th Applicant
M Hui Kim Mei Benny 7th Applicant M
N Lau Sin 8th Applicant N
Lee Ping Sum & Cheung Man Wai 9th Applicant
O O
th
Wong Ka Leong Johnny & Mak Ka Ni 10 Applicant
P P
Wong Wai Kan & Fan Hoi Yin Doris 11th Applicant
Q Q
Wong Wai Kan 12th Applicant
R To Chi Ming & Wong Man Ching 13th Applicant R
S Wan Ning & Ng May 14th Applicant S
T T
U U
2
A A
B B
Chan Siu Ming & Lau Yim Yu Justine 15th Applicant
C Lo How Wah 16th Applicant C
D
Lo Chi Kin Albert & Lo How Wah 17th Applicant D
Ching Tak Wa & Leung Kit Ping 18th Applicant
E E
F F
and
G G
H The Incorporated Owners of Garden Vista Respondent H
I I
Coram: Deputy Judge Tracy Chan, Presiding Officer of the Lands Tribunal
J J
Date of Hearing: 9 & 10 June 2015
K K
Date of Judgment: 22 June 2015
L L
M M
N ________________ N
O O
J U D G M E N T
P ________________ P
Q Q
R R
S S
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3
A A
B 1. There was dispute between some owners and the Incorporated B
Owners of Garden Vista, Nos 11-17 On King Street, Shatin (“the
C C
Respondent”) over the amount to be contributed to a renovation project
D which was at the cost of 29 million (“the Renovation”). Those owners, 18 of D
them (the Applicants), took out this application on 18 November 2014 (“the
E E
Application”) in which 8 questions were posed for the Tribunal to determine.
F These questions in fact boiled down to whether the Renovation was F
governed by the DMC or solely by BMO. That would, according to the
G G
Applicants, affect the amount of contribution to be paid by individual
H owners; whether they are liable to pay interest and whether their properties H
could be charged on late payment or default.
I I
J J
K 2. Mr Hui, counsel for the Respondent, has succinctly summarized K
those facts which are not disputed for purpose of the present hearing.
L L
(a) By a resolution passed by the management committee
M M
during a meeting on 22 May 2013, the management
N committee authorised the chairman and the vice- N
chairman of the management committee to enter into any
O O
renovation contract in accordance to resolution passed at
P a subsequent extraordinary general meeting of the P
Respondent (“Management Committee Resolution”).
Q Q
The Management Committee Resolution was evidenced
R by the minutes of the management committee’s meeting R
dated 28 May 2013 (the “Management Committee
S S
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4
A A
B Minutes”) [B/116]; B
(b) By a resolution (the “Special Resolution”) passed at an
C C
extraordinary general meeting of the Respondent held on
D 28 July 2013 (the “EGM”), Hong Dau Construction Co. D
Ltd. (“Hong Dau”) was to be appointed to carry out the
E E
renovation works over the common parts of Garden Vista
F (the “Renovation Works”) at the cost of HK$262,953,235 F
(the “Renovation Cost”) [B/97]);
G G
(c) On 17 September 2013, Lai Kwok Leung, the Chairman
H of the Respondent on behalf of the Respondent, entered H
into the “屋苑整體維修工程合約” (the “Renovation
I I
Contract”) with Hong Dau [B/106-115]; and
J J
(d) The Respondent registered charges against the
K Applicants for arrear of their respective outstanding share K
of contribution to the Renovation Cost together with
L L
accrued interest and legal costs.
M M
N N
3. The Applicants’ case is this. They would not dispute their
O liability to contribute to the Renovation Cost and they would not challenge O
the validity of the EGM where the Special Resolution was passed. They say
P P
that the calculation of the contribution should not be made according to
Q Schedule 2 of the deed of mutual covenant executed on 22 December 1989 Q
(the “DMC”). It is said that since the Special Resolution was passed under
R R
The Building Management Ordinance Cap 344 (the “BMO”), the
S contribution should be made in accordance with BMO and that should be by S
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5
A A
B undivided shares. Further they say that the Chairman and vice-chairman B
signed the Renovation Contract without authorization of the owners. For
C C
this reason the Applicants say that the Respondent should not be bound by it.
D D
E E
4. The Respondent opposes to such propositions. It is said that the
F F
Respondent as Manager of the DMC is empowered thereby to undertake
G duties of management of the Building. Such power and duties come from G
the DMC although the BMO also confers similar power to a corporation in
H H
general. Further the Renovation Cost being part of Management Expenses
I under the DMC, should be shared according to Schedule 2 therein, i.e. by I
management shares and not by undivided shares as stipulated in Clause 1 of
J J
Subsection E of Section V [B/31].
K K
L L
5. As mentioned the Applicants have posed 8 questions for the
M Tribunal to determine. Although not all of them are relevant to computation M
of share of contribution, I shall deal with each and every of them below.
N N
O O
Question 1
P P
Q Whether the Renovation was governed by the DMC or solely by the BMO Q
R 6. The Applicants argue that the Renovation was not governed by R
the DMC but solely by the BMO. Reasons in support are as follows:-
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6
A A
B (a) Section 18(1) of BMO provides that the corporation shall B
maintain the common parts in a state of good and
C C
serviceable repair and clean condition and that the
D Renovation Works resolved by the Resolution was an act D
of the Respondent exercising its own statutory powers
E E
rather than powers under the DMC; and
F (b) There was no mention of any provisions of DMC at the F
Owners Meeting or that the Renovation was carried out
G G
pursuant to the DMC.
H H
I I
7. The Respondent’s reply is as follows:-
J J
(a) The Respondent after its incorporation is the Manager of
K K
the DMC. At page 6 of the DMC “the Manager” is
L defined as: L
“Hang Yick Properties Management Limited or any other manager
M for the time being appointed as manager of the Estate pursuant to M
this Deed or the Owners’ Committee1 when the Owners’ Committee
is undertaking the management of the said land and the Estate.”
N N
(b) As Manager the Respondent has the power to undertake
O O
such duties as the manager of the said land and Estate
P under Clause 11(iv) of Subsection J of Section V of the P
DMC.
Q Q
R R
1
Note that the Owners’ Committee is replaced by the management committee of the Respondent pursuant
S to section 34K of the BMO. S
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7
A A
B 8. Further the DMC provides that the Manager shall be bound by B
and shall observe and perform all of the conditions, duties and obligations,
C C
and shall have full and unrestricted authority to all such acts and things as
D may be necessary or requisite for the proper and efficient management, D
including:-
E E
(a) “To keep all the Common Facilities in good repair and in
F F
working condition and to keep the Common Areas in a
G G
clean and sanitary state and condition and to keep in
H
good order and repair the lighting and ventilation of the H
Common Areas.” (Clause 3 of Subsection B of Section
I I
V of the DMC [B/22]);
J
(b) “To do all things which the manager shall in its absolute J
discretion deem necessary or desirable for the purposes
K K
of maintaining and improving all facilities and services
L
in or on [Garden Vista] and the land for the better L
enjoyment or use of [Garden Vista] and the land by its
M M
Owner occupiers and their licensees.” (Clause 20 of
N Subsection B of Section V of the DMC [B/25]); and N
(c) “To carry out all other duties and perform such other
O O
matters referred to in this Deed and otherwise to do all
P such other things as are reasonably incidental to the P
management of [Garden Vista] and the said land.”
Q Q
(Clause 40 of Subsection B of Section V of the DMC
R [B/30]). R
S S
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8
A A
B 9. Mr Hui therefore submitted that the retention of Hong Dau to B
carry out the Renovation falls under the duties and power of the DMC
C C
Manager as set out at paragraphs 7-8 above and was in compliance with
D BMO. D
E E
F F
10. I think I should first point out the difficulty for Mr Kwong to
G argue that the share of contribution should not be made under the DMC G
because DMC was not mentioned at the meeting. This is incorrect. As
H H
could be seen from the minutes of the EGM, it was stated under Agenda 6
I that the share would be made according to the DMC. I do not see how the I
Applicants could now say otherwise.
J J
“議程六：議決通過「議程四之工程費用」集資期數（選
K K
票4）
L …….但未足夠支付有關的工程費用開支。因此，各業主需 L
M 按大廈公契計算來攤分有關工程費用開支。所以有必要商 M
討籌集工程費用安排。”
N N
O O
P
11. For sake of completeness, I shall deal with other arguments P
under Question 1. The Renovation Works were set out in B/111. Mr Hui
Q Q
had identified them, upon request of the Tribunal, being items within the
R
scope under “the Estate’s Common Area”, “the Estate’s Common Facilities” R
and “the Block’s Common Area” expressly set out in the DMC. The table
S S
below shows the corresponding provisions:-
T T
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A A
B Items of works Corresponding DMC Provisions B
1. 採用方案三 – 內外牆修補及外牆 Para (c), (d) of the Estate’s
C C
重新鋪砌磚工程 Common Area
D D
2. 更換 A 至 F 座喉管工程 Para (a) of the Estate’s Common
E Facilities E
3. A 至 F 座公共內牆油漆翻新工程 The Block’s Common Area
F F
4. A 至 F 座天台防水工程 Para (d) of the Estate’s Common
G Area, the Block’s Common Area G
5. 公共鐵器工程 Para (b) of the Estate’s Common
H H
Facilities
I 6. 二期平台防水工程 Para (d) of the Estate’s Common I
Area
J J
7. 停車場翻新工程 Para (d) of the Estate’s Common
K K
Area
L
8. 更換二期平台有蓋行人通道工程 The Block’s Common Area L
9. 各座平台入口大堂翻新工程 Para (a), (d) of the Estate’s
M M
Common Area
N 10. 各座停車場大堂翻新工程 Para (d) of the Estate’s Common N
Area
O O
11. 裙樓外牆翻新工程 Para (c), (d) of the Estate’s
P Common Area P
Q Q
R 12. I accept the Respondent’s submission that the Renovation R
Works were within the ambit of common area and common facilities. I
S S
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10
A A
B accept that as Manager under the DMC, the Respondent shall be responsible B
for and shall have full and unrestricted authority to do all such acts and
C C
things as may be necessary or requisite for the proper and efficient
D management of the Estate under Subsection B of Section V of the DMC. D
Those power and duties for purpose of the present Application include but
E E
not limited to “to keep all Common Facilities in good repair and working
F condition”. For this reason, I see no merit in the suggestion of the F
Applicants that the Renovation was not governed by the DMC.
G G
H H
I 13. Another point taken by the Applicants was that the EGM was I
held pursuant to the BMO and not the DMC. This argument is difficult to
J J
understand. Although the Respondent was empowered by the DMC to
K undertake all duties in relation management as far as the Building is K
concerned, it is bound by procedures set out in section 20A of the BMO
L L
concerning procurement of goods and services exceeding a certain amount
M and Schedule 3 in respect of convention of meetings. I think it wrong to say M
that since the Respondent was observing the procurement and meeting
N N
procedures set out in the BMO, the Renovation was therefore not within the
O scope of the DMC. O
P P
Q 14. For these reasons, I could not agree with the Applicants that the Q
Renovation was not governed by the DMC.
R R
S S
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11
A A
B Question 2 B
C Whether Renovation was within meaning of “management” C
D D
15. The Applicants argue that Renovation was not within the
E
meaning of “management” under the DMC on the basis that the term is E
defined as limited to “all duties and obligations to be performed and
F F
observed by the Manager as provided in the DMC” but the appointment of
G Hong Dau was done by the Respondent and not the Manager under the DMC. G
H H
I 16. During his submissions, Mr Kwong conceded that the I
Respondent is and was the Manager of the DMC since its incorporation. I
J J
do not think this point still stands. Further, I am satisfied that the
K Renovation Works fell under the meaning of “management” as submitted by K
Mr Hui. Paragraph 8 above is relevant.
L L
M M
Question 3
N N
O
Whether Synergis had power to collect contribution O
P 17. The Applicants contents that Synergis, the management P
company, has no authority to collect contribution from the owners and asked
Q Q
that payment be paid to it. The Applicants’ main arguments are as follows:-
R R
(a) Under section 29 of BMO, only the Management
S S
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A A
B Committee, and not the manager appointed under the B
DMC, has the lawful authority to act for the Respondent
C C
in relation to all aspects of the Renovation Contract;
D (b) Neither the Respondent nor its management committee D
had appointed Synergis to collect the contribution from
E E
the individual owners;
F (c) Unless specifically authorised, Synergis has no role to F
play in the Renovation Works;
G G
(d) The Respondent has not engaged or remunerated
H Synergis for the purpose of the Renovation Works H
pursuant to section 18(2)(a) of BMO; and
I I
(e) By a circular dated 13 June 2014 (“the Circular”),
J Synergis had stated that the Renovation Works was not J
within the scope of its management.
K K
L L
M 18. I am of the view that the management company, Synergis, being M
agent of the Respondent does have the authority to collect payments of
N N
contribution. It does have the power to act on behalf of the management
O committee which is the executive arm of the Respondent. The complaint of O
payments being paid to a bank account held in the name of Synergy is
P P
neither here nor there as there is no substance in the complaint. There is no
Q evidence put forth by the Applicants to say that the operation of such Q
account has put the funds of the owners at risk of misappropriation. This
R R
complaint was not raised prior to the hearing and was only added when Mr
S Kwong was making his submissions. S
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13
A A
B B
C 19. As to the content of the Circular, it is denied by the Respondent C
that Synergis had ever denied that the Renovation Works was within the
D D
scope of its management. On the contrary, it was expressly stated that
E throughout the preparation process of the Renovation Works, Synergis E
F
assisted in the capacity of manager of Garden Vista, “新昌管理一直以管理 F
人 身 份 ， 協 助 法 團 ”. What Synergis denied in the Circular was the
G G
unsubstantiated accusation against Synergis such as “參與圍標，欺壓反圍
H 標業主，甚至跟蹤滋擾及恐嚇他們”. H
I I
J J
20. More importantly it is said that, contrary to the Applicants’
K contention, paragraph 1 of the Circular stated that “新昌管理自 1997 年起 K
為翠湖花園提供物業管理服務。翠湖花園的大型維修工程並非管理合
L L
約中的服務範圍…”. So Synergis was merely stating that the Renovation
M M
Works are not within the scope of the management contract. It did not say (i)
N the Renovation Works were not within part of its duties and powers pursuant N
to the DMC or (ii) it did not have the power pursuant to the DMC to act as
O O
the manager in collecting contribution from the owners.
P P
Q Q
21. After considering the content of the Circular, I accept the
R submission of Mr Hui and I am satisfied that Synergis has the authority to R
collect contributions of Renovation Cost from individual owners as agent of
S S
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A A
B the Respondent. B
C C
D D
Question 4
E E
Whether the Renovation Contract is binding on the Respondent
F F
22. The Applicants say that the Renovation Contract is not binding
G on the Respondent because:- G
H (a) Neither the Respondent nor the management committee H
had authorised Lai Kwok Leung, the current chairman of
I I
the Management Committee, to approve and to sign any
J contract in connection with the Renovation Works; and J
(b) The chairman has to have the majority vote of the
K K
management committee members before the chairman
L can lawfully engage the Respondent. L
M M
N N
23. The Respondent’s position on this is that under section 29 of
O
BMO, “the powers and duties conferred or imposed by the BMO on a O
corporation shall be exercised and performed on behalf of the corporation by
P P
the management committee”. Therefore, the issue is whether Lai Kwok
Q Leung was authorised by the Management Committee sign the contract. Q
R R
S 24. Mr Hui submitted that by the Management Committee S
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15
A A
B Resolution passed on 22 May 2013, Lai Kwok Leung, as chairman of the B
Management Committee, was so authorised. In particular, Paragraph 2.7 of
C C
the Management Committee Minutes dated 28 May 2013 stated that:-
D D
“如在特別業主大會上通過的所有議決通過之議程，法團
E E
會根據業主議決之投票結果聘用承建商，會議上由委員一
F 致通過由法團主席及副主席簽署維修工程合約。” F
(emphasis added)
G G
H H
I
25. The reply made by Mr Kwong to this was that there was no I
evidence to show that the Management Committee Resolution was passed
J J
by members of Management Committee only because there were staff of
K Synergy present at the meeting, they might also have voted. He said in that K
case the Management Committee Resolution would not be valid. I am of the
L L
view if Mr Kwong seriously takes issue on who had voted on this agenda
M item, he should not have informed the Tribunal at the outset that there would M
not be factual witnesses called and that there would not be factual dispute in
N N
the present hearing. In the circumstances that no evidence was put forward
O to contradict the minutes of meeting, I accept that they reflected correctly as O
to what had transpired at the Management Committee Meeting: that only the
P P
members of the Management Committee did vote. The complaint of Mr
Q Kwong was sheer speculation. Q
R R
S 26. I agree with Mr Hui that the Applicants’ argument under this S
T T
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16
A A
B head is unsustainable. B
C C
D D
Question 5
E E
Whether the contribution should be shared by undivided shares and not by
F shares under the Second Schedule of the DMC F
G 27. The main argument of the Applicants appeared to be that since G
the Renovation is not within the scope of the DMC, it should follow the
H H
apportionment set out by the BMO, that is by undivided shares.
I I
J J
28. Since I have already found that the Renovation was within the
K scope of the DMC, this proposition could not stand. Further, section 22(1)(a) K
of the BMO provided that “The amount to be contributed by an owner
L L
towards the amount determined under section 21 shall be fixed by the
M management committee in accordance with the deed of mutual covenant (if M
any). In the present case, there is a DMC. Owners’ duty to pay is set out
N N
under Clause 1 of Subsection E of Section V. It provides that each owner
O shall pay a due proportion of the Management Fees which by definition O
include Management Expenses in accordance with the Second Schedule of
P P
the DMC. By the same provision, Management Expenses have been clearly
Q set out. It is my view and according to Clause 1(b) of Subsection E of Q
Section V, I have already found that Management Expenses cover the
R R
Renovation Cost.
S S
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17
A A
B B
C 29. Since the DMC has expressly provided the manner in which C
each owner should contribute to the Management Fees, I agree with Mr Hui
D D
that the statutory default position on the determination of contribution by
E reference to the undivided share of individual owners is not engaged. E
F F
G G
30. Mr Kwong has made an attempt to argue that the contribution
H called for was for setting up of a special fund under paragraph 4 of Schedule H
7 of the BMO. He said that if the contribution was called under a special
I I
fund, the contribution should be determined by the Respondent at an owners’
J meeting and not according to the DMC. Mr Kwong argued this on basis of J
the size of money involved. According to him, it was a huge amount.
K K
L L
31. I agree $29m is a huge amount. But I see no merit in his
M M
argument. As could be seen from Agenda 6 the Minutes of the EGM, there
N was already a special fund set up for the Renovation (“the Estate Renovation N
Fund”) and a resolution was passed for a sum of $10,079,412 to be paid out
O O
of the Estate Renovation Fund to meet part of the Renovation Cost (B/98).
P It is obvious that the contribution called for from individual owners under P
Agenda item 6 was to make up the balance of the Renovation Cost and not
Q Q
to contribute to the Estate Renovation Fund. As mentioned, it has expressly
R stated in Agenda 6 that such contribution should be made in accordance with R
the provisions under the DMC.
S S
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18
A A
B B
C 32. Moreover Clause 1 of Subsection E of Section V has also C
provided for how increase of Management Fees should be dealt with. It is
D D
provided that in those circumstances “the amount of the Management Fees
E payable by the Owners shall be in direct proportion to the amount shown in E
the Second Schedule.”
F F
G G
33. Further, Deputy Judge Lee, as she then was, and Member Poon
H H
had dealt with the construction of paragraph 4 of Schedule 7 in IO of Kenbo
I Comm. Bldg. v. Lau Wing Cheung & anr. LDBM 153/1998. The Tribunal I
after hearing the application held that the nature of the special fund was not
J J
for collecting funds to meet expenses of specified items of works.
K K
L L
34. Moreover, HHJ Wong had expressed his view on the true
M M
meaning of “the amount to be contributed by owners” in Paragraph 4(2) in
N Young Kwok Sui and another v. The Incorporated Owners of Fontana N
Gardens (LDBM 76/2011 and LDBM 77/2011 (Consolidated)). It was his
O O
finding that Paragraph 4(2) did not confer power on the corporation to
P determine the contribution of individual owners. Paragraphs 26-28 of the P
judgment are relevant.
Q Q
R R
35. For these reasons I am of the view that the contributions of
S S
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A A
B individual owners should be shared according to Second Schedule of the B
DMC.
C C
D D
E
Question 6 E
F Whether the Applicants, the defaulting owners, are liable to pay interest for F
their respective shares of contributions to the costs of Renovation pursuant
G G
to the DMC
H H
36. The Applicants suggest that if the Renovation was not governed
I by the DMC but the BMO, they should not be liable to pay interest for late I
payment under the DMC because the DMC does not come into play.
J J
K K
37. Since it is my finding that the Renovation was governed by the
L L
DMC, defaulting owners are therefore liable to pay interest under the DMC.
M Section V Clause F2(1) is relevant. M
N N
O O
Question 7
P P
Whether the Respondent is entitled to register a memorandum of charge
Q against the properties held by the defaulting owners pursuant to the DMC Q
R 38. The Applicants argue that the Respondent could not charge their R
properties on the same basis as set out in Question 6. The answer is the
S S
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20
A A
B same. Section V Clause F 4 of the DMC is relevant. B
C C
D D
Question 8
E E
Whether the memoranda of charge against the properties held by the
F defaulting owners pursuant to the DMC should be discharged F
G 39. My answer to this question is: the memoranda should be G
discharged and the registration be vacated upon payment of all amount due.
H H
I I
Costs
J J
K
40. All the questions were answered in favour of the Respondent. K
The Applicants should therefore bear costs of the Respondent with
L L
certificate for counsel. Such costs are to be taxed at District Court Scale if
M
not agreed. This is an order nisi and shall become absolute within 14 days if M
no application is made by parties to vary the same.
N N
O O
Deputy Judge Tracy Chan
P Presiding Officer P
Lands Tribunal
Q Q
Mr Paul Kwong, of Messrs. Paul Kwong & Co., for the 1st to 18th Applicants
R R
Mr John Hui, instructed by Messrs. Cheung & Yip, for the Respondent
S S
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