蔡建平 v. LEUNG PO LING AND OTHERS

LDBM 250/2018

[2021] HKLdT 18

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 250 OF 2018

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J U D G M E N T

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Background

1.  The applicant is the owner of Flat 11, 7/F, Block E, Sui Wo Court (“the Estate”), No 17 Sui Wo Road, Shatin, New Territories, Hong Kong.

2.  The 10^th respondent is the owners’ corporation of the Estate, incorporated under the Building Management Ordinance, Cap 344 (“the BMO”).

3.  The 1^st to 9^th respondents are the owners of various units in the Estate and members of the 9^th management committee of the 10^th respondent.

4.  There are altogether 3501 owners in the Estate.  The 1st management committee of the 10^th respondent consisting of 15 members was elected at the owners’ meeting on 28 May 2000.  At that meeting, it was resolved that the number of management committee members was to be fixed at 15.

5.  Thereafter, for the 2^nd to 8^th management committees, there were always 15 members of the management committee.

6.  Since the election of the 8^th management committee on 16 July 2016 and at all material times, the 10^th respondent appointed Urban Property Management Limited as the manager (“the Manager”) to manage the Estate.

7.  The 8^th management committee consisted of, inter alia, the 1^st, 2^nd, 4^th, 6^th and 8^th respondents.  A Madam Ho Sin Yee Lorna (“Madam Ho”) was appointed as chairman, the 1^st respondent as treasurer, the 2^nd respondent as vice-chairman, the 4^th respondent as secretary, and the 6^th and 8^th respondents as members of the 8^th management committee.

8.  The 1^st, 2^nd, 4^th, 6^th and 8^th respondents resigned from the 8^th management committee on 3 August 2018.

9.  On or about 31 August 2018, Mr Chui Wai Lan, Waillen (“Mr Chui”), an employee of the Manager drafted a draft AGM notice for Madam Ho’s approval, which contained the following draft resolutions in Chinese (“Draft Resolutions 4 and 5”):-

“（四）議決第九屆管理委員會委員人數

（五）投票選出及委任第九屆管理委員會委員”

10.  Draft Resolution 4 was to resolve the number of members of the 9^th management committee; and Draft Resolution 5 was to elect and appoint the members of the 9^th management committee.

11.  On or about 1 September 2018, Mr Chui was transferred out of the Estate by the Manager, and Mr Yu Ka Wo (“Mr Yu”) took over Mr Chui’s duties.

12.  On or about 12 September 2018, Madam Ho crossed out Draft Resolution 4 previously proposed by Mr Chui, and instructed Mr Yu to amend the draft AGM notice as per her correction.  Mr Yu thought that Draft Resolution 4 should not be deleted but eventually did so as requested by Madam Ho.

13.  By a notice dated 18 September 2018 (“the AGM Notice”) and signed by Madam Ho as chairman of the 8^th management committee, the owners of the Estate were given notice that the 2^nd AGM of the 8^th management committee would be held on 13 October 2018 (“the AGM”).

14.  The AGM Notice set out, inter alia, the following resolutions in Chinese (“Resolutions 4 to 8”) to be passed at the AGM:-

“(四) 投票選出及委任第九屆管理委員會委員；

(五) 投票選出及委任第九屆管理委員會主席；

(六) 投票選出及委任第九屆管理委員會副主席；

(七) 投票選出及委任第九屆管理委員會秘書；

(八) 投票選出及委任第九屆管理委員會司庫；”  

15.  Resolution 4 was to elect and appoint the members of the 9^th management committee; and Resolutions 5 to 8 were to elect and appoint the chairman, the vice-chairman, the secretary and the treasurer respectively.  Thus, there was no resolution mentioned in the AGM Notice to resolve the number of members of the 9^th management committee.

16.  Another notice also dated 18 September 2018 (“the IO Notice”) and signed by Madam Ho as chairman of the 8^th management committee was issued to all the owners of the Estate informing them how to obtain and submit the form for participating as candidate in the coming election of committee members as well as the qualification for being a candidate.

17.  In the IO Notice, it was mentioned that 15 members would be elected and appointed for the 9^th management committee.  The exact wordings are as follows:-

“法團第八屆管理委員會第二次業主週年大會已訂於2018年10月13日(星期六)召開，當日第八屆管理委員會之委員職務將會卸任，隨即選舉委任第九屆管理委員會委員15位，並在當中選出主席、副主席、秘書及司庫，大會議程亦已公佈。

各位有興趣參選第九屆管理委員會委員之業主，可於2018年9月18日至2018年9月28日期間親臨穗禾苑盛年閣(C座)穗禾苑管業處登記及索取“參選表格” …”

18.  Mr Yu despatched the AGM Notice to the owners of the Estate in accordance with Madam Ho’s instructions on 20 September 2018.

19.  There were 15 owners running for the election of members of the 9^th management committee, including the applicant and the 1^st to 9^th respondents.

20.  When Resolution 4 was raised at the AGM, an owner raised an ad hoc resolution for the owners to decide the number of members to be voted and appointed for the 9^th management committee first.  Madam Ho consulted the 10^th respondent’s legal advisor and Shatin Home Affairs representative on whether the ad hoc resolution could be raised, and she was advised that this could be decided by the owners present at the AGM.  Madam Ho as chairman presiding over the AGM put the ad hoc resolution to vote, which was phrased in Chinese as “投票選出及委任第九屆管理委員會委員人數名額” in the draft minutes of the AGM (Exhibit “AR-3”), meaning to elect and appoint the number of members of the 9^th management committee (“the Ad Hoc Resolution”).  The owners were given 3 choices for the number of members, namely 9, 11 or 15.

21.  The owners present at the AGM passed the Ad Hoc Resolution and resolved that the 9^th management committee was to consist of 9 members (51.85% of those present voted for this option).

22.  Subsequently, Resolutions 4 to 8 were passed at the AGM as follows:-

(1)  The 1^st to 9^th respondents were elected and appointed as members;

(2)  The 1^st respondent was elected and appointed as chairman;

(3)  The 2^nd respondent was elected and appointed as vice-chairman;

(4)  The 3^rd respondent was elected and appointed as treasurer; and

(5)  The 4^th respondent was elected and appointed as secretary.

23.  The applicant was not elected as member of the 9^th management committee and was dissatisfied that the number of members was reduced from 15 to 9.  He commenced a collection of signatures for 5% of the owners to request the 1^st respondent as chairman to convene an EGM for a resolution to re-elect the 9^th management committee pursuant to Schedule 3 Paragraph 1(2) of the BMO.

24.  On top of that, the applicant commenced the present proceedings on 3 December 2018.

25.  On 5 December 2018, the applicant delivered the request for an EGM to the 1^st respondent as chairman of the 9^th management committee (through the management office) requesting her to convene an EGM at the request of not less than 5% of the owners for the re-election of the new management committee.

26.  An EGM was held on 5 January 2019, but no subsequent request was made for the dissolution of the 9^th management committee.

27.  In the present proceedings, the applicant seeks for an order declaring that according to Schedule 3 Paragraph 3(7) of the BMO, the Ad Hoc Resolution passed at the AGM was invalid and an order for re-election of the management committee.

28.  On 2 November 2020, the applicant discontinued the application against the 8^th respondent.  Thus, only the 1^st to 7^th, 9^th and 10^th respondents are involved at the trial.  For the sake of convenience, the remaining respondents are still referred to as the respondents collectively.

29.  The parties have agreed that there is no factual dispute in this case, and hence produced the trial bundle as Exhibit “AR-1” (which includes all the witness statements) without calling any witness to give oral evidence.

30.  At my request, the parties have produced a Joint Agreed Facts as Exhibit “AR-2” which states all the agreed facts as background for the case.  The parties have also agreed that the draft minutes for the AGM (as mentioned above) can be produced as Exhibit “AR-3”.

31.  Thus, this case concerns only the legal issues raised by the parties.

The Issues

32.  The parties had previously filed a Joint Agreed Issues in Dispute on 24 December 2020.  However, the parties agreed at the trial that the issues can be refined as follows:-

(1)  Whether the resolution to vary the number of committee members from 15 to 9 for the 9^th management committee (ie the Ad Hoc Resolution) passed at the AGM was ancillary or incidental to Resolution 4 in the AGM Notice? (“Issue (1)”)

(2)  Whether the lack of prior notice of the Ad Hoc Resolution to owners of the Estate who did not attend the AGM rendered the voting on the number of committee members unfair? (“Issue (2)”)

(3)  If the Ad Hoc Resolution is found to be invalid, or the lack of notice of the Ad Hoc Resolution is found to be unfair, whether Resolutions 4 to 8 passed at the AGM which relate specifically to the election and appointment of the members of the 9^th management committee and its office holders are void or voidable? (“Issue (3)”)

Schedule 3 of the BMO

33.  The main issue in this case is Issue (1) and it concerns the interpretation of Schedule 3 of the BMO which provides as follows:-

“2.

(1) The secretary of the management committee shall, at least 14 days before the date of the meeting of the corporation, give notice of the meeting to each owner and the tenants’ representative (if any).

(1AA) The notice of meeting shall specify—

(a) the date, time and place of the meeting; and

(b) the resolutions (if any) that are to be proposed at the meeting or other matters that are to be discussed
at the meeting.

…

3. …

(7) No resolution passed at any meeting of the corporation shall have effect unless the same was set forth in the notice given in accordance with paragraph 2 or is ancillary or incidental to a resolution or other matter so set forth.” (Emphasis added)

34.  In sum, for a resolution passed at an owners’ meeting to be valid, the resolution must be set forth in the notice of meeting, or it is ancillary or incidental to a resolution or other matter so set forth.

35.  Thus, if the Ad Hoc Resolution was “ancillary or incidental” to Resolution 4 in the AGM Notice, then it would be a valid resolution; and if not, by virtue of Schedule 3 Paragraph 3(7) of the BMO, the Ad Hoc Resolution would be invalid because it was not stated in the AGM Notice.

36.  While the ultimate issue in this application is whether the Ad Hoc Resolution is ancillary or incidental to a resolution set forth in the AGM Notice, the applicant submits that the issue of fairness comes into play in the determination of “ancillary or incidental”.

Issue (1)

37.  There is no dispute that the Ad Hoc Resolution was not set out in the AGM Notice, but Resolution 4 was.  The respondents rely on the “ancillary or incidental” limb under Schedule 3 Paragraph 3(7) of the BMO to say that the Ad Hoc Resolution is covered by Resolution 4 in the AGM Notice.

38.  However, the applicant submits that the number of management committee members on the one hand and election and appointment of management committee members on the other are entirely two different matters governed by different provisions in the Schedules of the BMO.  The changing of the number of management committee members is not ancillary or incidental to the election and appointment of members as set forth in the AGM Notice. 

39.  On the composition and procedure of management committee, Schedule 2 of the BMO provides as follows:-

“1. (3) Subject to subparagraph (1), the number of members of a management committee as decided under paragraph 2(1)(a) may be changed from time to time by a resolution of the owners passed at a general meeting of the corporation (except a general meeting of the corporation convened under paragraph 6A(1)).

…

2. (1) At a meeting of owners convened under section 3, 3A, 4 or 40C, after a management committee is appointed— (a)the owners shall, by a resolution passed by a majority of the votes of the owners, decide the number of members of the management committee;

…

5. (2B) For the purposes of appointing the members of the new management committee under subparagraph (2)(a)—

(a) where the number of candidates is not more than the number of members of the new management committee to be appointed, the candidates shall be deemed to be appointed as members of the new management committee, and a resolution to that effect shall be deemed to be passed under subparagraph (2)(a) accordingly;

(b) where there are more candidates than the number of members of the new management committee to be appointed—

(i) the votes shall be given and counted in accordance with the simple or relative majority system of voting (otherwise known as the “first past the post” system of voting), under which— … ”

40.  The applicant submits that the above provisions when read together show that the “number” of members and its “election and appointment” are independent matters, in that:-

(a)  to change the number of members, Schedule 3 Paragraph 2(1AA)(b) applies; the same should be set forth in a notice of meeting;

(b)  to change the number of members, it requires a resolution to be passed at a general meeting:  Schedule 2 Paragraph 1(3);

(c)  upon the passing (or veto) of a resolution, the meeting shall either appoint new members of the management committee (where the number of candidates is not more than the number of the new members of management committee) or elect and appoint new members of the management committee (where there are more candidates than the number of new members of the management committee) in accordance with Schedule 2 Paragraph 5(2B).

41.  As such, what has to be decided at a meeting first is the number of members of the new management committee and whether or not there is a change thereto.  If there was a change, it must be resolved pursuant to Schedule 2 Paragraph 1(3).  Once the same has been decided, the election and/or appointment could be proceeded with.  By this reason, the resolution to change the number of members of the management committee cannot be ancillary or incidental to the elections and appointment of the new management committee.

42.  Thus, the applicant submits that the Ad Hoc Resolution was not ancillary or incidental to Resolution 4 of the AGM Notice, and it fell short of the 14-day notice requirement under Schedule 3 Paragraph 2(1). 

43.  The Ad Hoc Resolution also did not comply with Schedule 3 Paragraph 2(1AA)(b) as it was not specified in the AGM Notice. According to Schedule 3 Paragraph 7, the Ad Hoc Resolution passed was of no effect or void ab initio (see蘇振文對置安大廈業主立案法團, CACV 302/1999).

44.  The applicant further submits that Yeung JA (as he then was) in The Incorporated Owners of the Colonnades v Gordon Tso & Co Ltd, CACV 131/2005, held that a resolution ancillary or incidental to a resolution set forth in the notice given in accordance with Schedule 3 Paragraph 2 cannot exist independently and rely on the main resolution and that it has to bear a sub-ordinate (subsidiary) or causal relationship with the main resolution (“附加或附帶決議不能獨自存在而需依附在主要決議上，並和主要決議有從屬或因果關係”).

45.  Antonym of ancillary is primary or principle; whereas incidental is essential, necessary or crucial.  Thus, the applicant submits that the Ad Hoc Resolution, which is capable of changing the number of members of the management committee, is not ancillary or incidental but primary and necessary to the election and appointment of the members of the 9^th management committee.

46.  Schedule 3 Paragraph 3(7) provides for an exception to the validity of a resolution not set forth in the notice of meeting which only applies to a resolution ancillary or incidental to a resolution set forth in the notice but not “the main purpose of the meeting” as the respondents contend.  Paragraph 3(7) does not import a concept of “main purpose of meeting” and to do so is inconsistent with the provisions of the paragraph.  Indeed, the respondents’ proposition is not supported by any authority.

47.  To examine whether the Ad Hoc Resolution was ancillary or incidental to the resolution set forth in the AGM Notice (specifically Resolution 4), the starting point must be Schedule 2 Paragraph 1(3).  The number of members of a management committee as decided under paragraph 2(1)(a) (ie as decided at the first meeting when a management committee was appointed) may be changed from time to time by a resolution of the owners passed at a general meeting.

48.  The undisputed evidence is that at the first meeting, it was decided that the management committee should consist of 15 members.  At the subsequent meetings (until the election and appointment of the 9^th management committee), the decision on the number of members was set out in the agenda and remained to be 15.  The resolutions at these previous meetings did not entail a change in the numbers though the way the resolutions drafted varied over the years.

49.  In Chan Yip Keung and Leung Shiu Kuen v IO of Belvedere Garden Phase II, LDBM 54/2002, the Tribunal found that the number of members of a management committee remains unchanged until the same was changed by resolution at another meeting (“當業主大會通過委出一個管理委員會的決議，該決議的有效性會維持，直至它給另一個業主大會通過的決議改變為止。這亦即是說前述業主大會委出的管理委員會的人數會維持不變，直至另一個業主大會通過更改其人數的決議為止”).

50.  Thus, the applicant submits that a resolution to determine the number of members of a management committee at an AGM, by virtue of Schedule 2 Paragraph 1(3), is given an independent existence and distinct to the election and appointment of members which is separately governed by Schedule 2 Paragraph 5(2).  When one looks at Schedule 2 Paragraph 5(2) on the appointment of members of the new management committee and the appointment of other office bearers, there could be no reliance of the determination of the number of members (the Ad Hoc Resolution) on the appointment of new management committee (Resolution 4); rather it was the appointment of a new management committee that is reliant on the Ad Hoc Resolution.

51.  The applicant submits that by reason of this analysis, while the number of members and appointment of the management committee bear causal relationship (“因果關係”), it is important not to lose sight of the element of subordination in “ancillary or incidental” to the main resolution.  The Ad Hoc Resolution must be the cause (“因”) and comes before the actual election and appointment of members. 

52.  The applicant submits that Mr Yu and Mr Chui’s Draft Resolution 4 and their understanding of the election accorded with the proper interpretation of Schedule 3 Paragraph 3(7).  Thus, the resolution on the number of members of the management committee must not be ancillary or incidental to Resolution 4 in the AGM Notice.

53.  The applicant further submits that the case of Million Stars Technologies Ltd v IO of Century Industrial Centre, [2017] 4HKC 557,where Judge K W Wong found that the number of members in any management committee is either ancillary or incidental to the resolution of appointing a new management committee, should not be followed, as Judge K W Wong’s determination on this issue was a short answer and without any consideration of the relevant provisions and rules of the Schedules.

54.  However, I share the same view as Judge K W Wong and find that the number of members in any management committee is either ancillary or incidental to the resolution of appointing a new management committee.  In other words, the Ad Hoc Resolution passed at the AGM was ancillary or incidental to Resolution 4 in the AGM Notice.  I will provide my reasons as mentioned below.

55.  First of all, the applicant is not challenging that the AGM Notice was defective or irregular in not including the number of management committee members or that the AGM itself was irregularly convened.  The applicant’s contention is that a resolution setting out the number of members to be elected for the purpose of forming a new management committee is a matter that is independent and separate from a resolution to elect and appoint new members to form a new management committee, and hence the Ad Hoc Resolution is not ancillary or incidental to Resolution 4.

56.  The applicant’s arguments are premised on the separate provision in Schedule 2 Paragraph 1(3) governing the change of the number of members of a management committee and the judgment of Yeung JA in The Incorporated Owners of the Colonnades as aforesaid.

57.  However, I do not accept that the mere fact that there is a separate provision for the requirement of a resolution for the changing of the numbers of management committee members can make it independent and not ancillary or incidental to the resolution for election and appointment of a new management committee.  On the contrary, to elect and appoint a management committee, the numbers of such members must be known and such a resolution for the fixing of the numbers must be linked together with the election and appointment of such members.

58.  Of course, ideally there should be a resolution in the AGM Notice for the change of the numbers of management committee members.  However, it is taking an extreme view of procedural propriety to suggest that such a resolution cannot be ancillary or incidental to a resolution for the election and appointment of a new management committee.  As HHJ Lam (as he then was) stated in曾婉玲v兆隆苑業主立案法團, LDBM199/2001:-

“it is understandable that errors would be made from time to time with regard to the affairs of a corporation. So long as the errors was made without any fraudulent or dishonest intent, although one needs to learn from mistakes, it is more important to rectify or remedy the situation in a positive manner.”

59.  It is clear to me that the wordings of “ancillary or incidental” in Schedule 3 Paragraph 3(7) are indeed to provide such a leeway for such an omission of a resolution in the notice of meeting.  At the AGM, the owners did pass a resolution for the change of the numbers of management committee members and in fact they were given 3 choices for the numbers, including the original number of 15.  There is nothing fraudulent or dishonest about it at all.  To provide an avenue by which mistakes or omissions in a notice can be rectified, Schedule 3 Paragraph 3(7) maintains the balance between fairness and convenience and to ensure proper management and regulation of the affairs of a building.

60.  I also do not agree with the applicant’s interpretation of Yeung JA’s judgment in The Incorporated Owners of the Colonnades, supra.  What Yeung JA held is that:-

“52. “附”有依傍、依從的意義（語文出版社）《現代漢語規範字典》第150頁，亦表示從屬《朗文中文高級新辭典》第485頁或依靠（商務印書館）《通用新字典》第126頁，如附件、附筆。因此附加或附帶決議不能獨自存在而需依附在主要決議上，並和主要決議有從屬或因果關係。”

61.  In other words, when the court considers whether a resolution raised at a meeting falls within Schedule 3 Paragraph 3(7), it is pertinent to consider whether the resolution cannot exist independently and must be attached to the main resolution and it has a subordinate or causal relationship with the main resolution in question.

62.  However, the applicant seems to suggest that it was the appointment of a new management committee that is reliant on the Ad Hoc Resolution and hence the Ad Hoc Resolution must be the cause (“因”) for the main resolution.  Since the Ad Hoc Resolution was the cause, it cannot be regarded as subordinate to the resolution for election and appointment of management committee members.

63.  I think the applicant is mixing the concepts of “subordinate” and “causal” together.  Yeung JA did not expressly say that the resolution raised at the meeting must not be the cause for the main resolution.  On the contrary, the Chinese words “因果” can be interpreted as the reverse of “從屬”.  That means the Ad Hoc Resolution can be the cause for the main resolution.  Since it can be either “subordinate” or “causal”, even if the Ad Hoc Resolution was the cause, it does not really matter as it can be covered by the latter.

64.  Moreover, I do not agree with the applicant that the number of members must come first as the cause and the election and appointment come later as the consequence.  In my view, it can in fact be the other way round, ie because a new management committee needs to be elected and appointed, then the number of such members has to be decided.  Thus, the Ad Hoc Resolution should in fact be considered as subordinate to the resolution for election and appointment of the new management committee.

65.  In any event, it is just common sense that the number of persons to be appointed for a new management committee is a matter that is ancillary or incidental to a resolution to appoint a new management committee.  To say that they are not so related is just devoid of common sense.  On this, I can see why Judge K W Wong gave such a short answer in the case of Million Stars Technologies Ltd v Incorporated Owners of Century Industrial Centre as follows:-

“88. It is the As’ allegation that the notice of 2016 EGM only specified a new MC was to be elected. It did not state that the number of MC members required re-determination. Accordingly, submitted by Mr Chiu on As’ behalf, the resolution to change the number of MC members from 9 to 10 was void pursuant to paragraph 3(7) of Sch 3 to the BMO. The number of MC members should remain 9 which was fixed at the 2015 AGM.

89. The short answer of the Tribunal is that the number of members in any MC is either ancillary or incidental to the resolution of appointing a new MC.” (emphasis added)

66.  Not only is this common sense, it is also the same approach taken by the Common Law in relation to company meetings.  The Common law imposes restrictions on resolutions proposed at meetings, it permits amendments to existing resolutions or even new resolutions raised at the general meeting itself as long as such amendments and proposals are within the scope of the notice (ie ancillary or incidental).  The Common Law test as set out in Henderson v Bank of Australasia (1890) 45 Ch. D. 330 by Chitty J at p.337 is this:

“In cases of this kind it is settled that the notice which specifies the business to be done, or the objects of the meeting, is to be a fair notice, intelligible to the minds of ordinary men, the class of men who are shareholders in the company, and to whom it is addressed. The Court does not scrutinise these notices with a view to exercise criticism, or to find out defects, but it looks at them fairly. I think the question may be put in this form: What is the meaning which this notice would fairly carry to ordinary minds? That, I think, is a reasonable test. Another matter of very considerable importance in dealing with this as a practical question, is, how did the meeting itself understand the notice?” (emphasis added)

67.  Adopting this Common Law approach, I am of the view that a notice stating a new management committee will be elected and appointed must be reasonably understood by any ordinary man to mean that the number of such members will be decided as well.

68.  Thus, I have no doubt that the Ad Hoc Resolution is ancillary or incidental to Resolution 4.  My answer to Issue (1) is affirmative.

Issue (2) 

69.  The applicant is seeking to introduce the concept of fairness in the determination of “ancillary or incidental”.  The applicant’s argument is based on the requirement for the10^th respondent to give sufficient notice, not shorter than 14 days, of the Ad Hoc Resolution to the owners.

70.  The applicant argues that the purpose of giving sufficient notice of the Ad Hoc Resolution was not to protect those who object to such resolution but to protect owners who had been given notice of the AGM but decided not to attend the AGM.  As provided by Schedule 3 Paragraph 2(1AA)(b), a notice of meeting shall specify the resolutions (if any) that are to be proposed at the meeting or other matters that are to be discussed at the meeting.  Once an owner received the notice of the meeting, he would be informed of the matters to be proposed or discussed at the meeting; he could decide to attend the meeting or not to attend personally but to follow the decision of the majority attending the meeting.

71.  However, in the present case, if the owners were informed of the proposed change of number of members of the new management committee set forth in the AGM Notice, they may change their mind and attend the AGM personally instead.  Since these owners did not attend the AGM personally, they were not informed of and unable to consider or participate in deciding the Ad Hoc Resolution as well as to participate in the election of members of the management committee pursuant to Schedule 2 Paragraph 6(7)(b) after the Ad Hoc Resolution had been passed. 

72.  The applicant submits that the Ad Hoc Resolution raised only at a meeting clearly deprived the right to vote of absent owners who had received no notice thereof (see To Kin Wah v Tuen Mun District Officer [2006] 1 HKC 407 and Tiessen v Henderson [1899] 1 Ch 861).

73.  Thus, the applicant submits that the Ad Hoc Resolution was not binding on him.

74.  The applicant further submits that Yeung JA in the case of The Incorporated Owners of the Colonnades held that in construing the provisions in the BMO, the court should adopt an overall, comprehensive and reasonable approach in order to ensure the operation of such provisions to be fair to all the owners.

75.  Also, in Chartpack Machinery Company Limited v 達之路32, 32A, 34及34A 號業主立案法團, LDBM 249/2014, an application specifically concerning a resolution not being set out in a notice of meeting, the judge adopted the approach in The Incorporated Owners of the Colonnades to ensure that the operation of Schedule 3 Paragraph 3(7) would be fair to all the owners, not deciding the issue on mere technicality.  The judge in the context of Schedule 3 Paragraph 3(7) further considered the doctrine of Estoppel by Convention (慣例不容反悔) in determining the validity of a resolution, and the resolution being incidental and ancillary was passed without being set out in the notice. On this, the judge referred to The Incorporated Owners of Beauty Court v Hon Ping-kay, LDBM 29/2001 where Lam J (as he then was) considered the doctrine of estoppel by conduct in a matter concerning whether or not the resolution was validly passed. 

76.  Thus, by reason of The Incorporated Owners of the Colonnades and The Incorporated Owners of Beauty Court, the applicant submits that fairness must be a factor in the court’s finding under Schedule 3 Paragraph 3(7).  Fairness is not dictated by a resolution being incident and ancillary.  Rather, it is a separate and independent ingredient in the determination of paragraph 3(7).  Just as the judge did in Chartpack Machinery Company Limited, in finding the resolution not being set out in the notice and not ancillary and incidental, he adopted an approach which would be fair to both other co-owners and the applicant therein and ordered the Incorporated Owners to re-calculate management fees for the next financial year.

77.  The evidence shows that a Mr Tang alleges that with all the previous management committees, the number of members was stated to be 15 on the notice of meeting, and for the 9^th management committee election, the number of candidates was also 15, he was contented not to give his proxy to another owner or attend the AGM, thinking that the candidates would be ‘automatically’ elected. 

78.  Fairness denotes that the owners should be aware of the real facts of the meeting (see To Kin Wah, supra).  The possible reduction in the number of members is in fact a radical departure from the resolutions of previous AGM and if reduced would deprive other owners the opportunity to vote. 

79.  The Ad Hoc Resolution raised and passed operated to reduce the number of elected members of the 9^th management committee, and it is unfair to the owners in that they could not have expected such a matter to be raised by reading the AGM Notice (as well as the IO Notice), decided not to attend the AGM and were not informed of or allowed to vote on such an important matter, ie the number of members and the voting of members of the 9^th management committee.

80.  Thus, the applicant argues that the Ad Hoc Resolution being non-compliant of Schedule 3 Paragraph 3(7) is of no effect, ie void.

81.  However, I agree with the respondents that the concept of fairness in relation to a notice of general meeting is built into the BMO by virtue of the proviso “ancillary or incidental”.

82.  First, as set out above in the case of Henderson, supra, the role of the court is not to assess whether the outcome (ie change from 15 to 9 members) is unfair to owners who did not attend and to scrutinise each and every detail of the 10^th respondent’s previous practice.  Instead, the approach is one of procedural fairness – the court simply has to ask: what is the scope of the original resolution as understood by an ordinary owner, and whether the new proposed resolution falls within the scope of the original resolution (ie ancillary or incidental) so that it cannot be said that those who did not attend did not receive sufficient notice.

83.  “Fairness” as mentioned by Yeung JA in The Incorporated Owners of the Colonnades is not to be confused with the general principle of fairness. The test for fairness is to be viewed through the narrow lens of the purpose of the meeting and the connection with the resolution in question.  It is an objective test of the reasonable owner, namely, whether a reasonable owner would anticipate that the number of members to be elected and appointed into a new management committee would be an issue arising at a general meeting convened for the purpose of electing and appointing a new management committee.

84.  As in To Kin Wah, supra, a case concerning the appointment of managers to a Tso Tong and whether sufficient notice was given to change the number of managers from 6 to 3, Cheung JA held that when one considers whether sufficient notice was given and drawn to the attention of the members of the relevant group, the court would look towards the purpose of the meeting.

85.  In that case, the purpose of the meeting was to ensure the appointment of equal representation from each fong, and the decision to vote for 3 instead of the original 6 representatives was held not “to be so radical a departure from the notice which required a fresh notice to be given … The idea of having representatives from each of the three fongs to be managers was clearly to protect the interest of the members of the three fongs.”

86.  By the same token, I agree with the respondent that I have to consider the purpose of the AGM (namely, forming a new management committee) and whether the Ad Hoc Resolution achieved the purpose of the AGM, ie electing and appointing a new management committee.

87.  On the facts of this case, I agree that the purpose was achieved in that the required number of members were duly appointed, and the office holders were likewise duly appointed.  For all purposes, and by operation of the law, the 8^th management committee was lawfully disbanded and the 9^th management committee appointed in its place.

88.  Thus, there was no unfairness in this case.  Issue (2) must be answered in the negative.

Issue 3

89.  Since I held that the Ad Hoc Resolution is ancillary or incidental to Resolution 4, the Ad Hoc Resolution is therefore a valid resolution and the determination of Issue (3) is unnecessary.  In other words, Resolutions 5 to 8 are also valid resolutions.

90.  However, for the sake of completeness, if the Ad Hoc Resolution is invalid (which is not what I ruled), I agree with the applicant that the other resolutions would be invalid too.

91.  The appointment or election and appointment of the chairman, the vice-chairman, the secretary and the treasurer are not alienable.  Schedule 2 Paragraphs 5(2)(b) & (c) provide that:-

“5. …

(2) …

(b) the corporation shall, by a resolution passed at the general meeting—

(i) appoint a person, from amongst the members of the new management committee, as the chairman of the new management committee;

(ii) appoint a person, whether or not he is a member of the new management committee, as the secretary of the new management committee; and

(iii) appoint a person, whether or not he is a member of the new management committee, as the treasurer of the new management committee; and

(c) the corporation may, by a resolution passed at the general meeting, appoint a person, from amongst the members of the new management committee, as the vice-chairman of the new management committee.

92.  The above provisions provide that the chairman, the vice-chairman, the secretary and the treasurer of the new management committee are to be appointed from the new members.  If the number of new members could not be 9 and should be 15 instead, then there would be more candidates for all these different posts. The results of the voting and election would be different too.

93.  However, the applicant submits that in the circumstances, Resolutions 5 to 8 are voidable from the date of the Tribunal’s order, as the intention of the BMO is not to leave a lacuna in the management of the building.  This is a wrong reading of the case of Leung Ho Sing and Sum Yiu Tung CACV108/2006.  When there is no valid new management committee appointed, the old management committee will remain in office and not compulsorily retired (see The Incorporated Owners of Finance Building v Bright Hill Management Consultants Co Ltd, CACV 386/2000).

94.  Thus, Resolutions 4 to 8 would be void and not voidable if the Ad Hoc Resolution is invalid.

95.  On the other hand, the respondents submit that if the Ad Hoc Resolution was invalid and when only 9 members were appointed instead of 15, it would be just a case of some vacancies left for the management committee.  I do not accept this argument, as it is not a case of someone being appointed and then left the office.  It is a case of insufficient members being appointed.  Thus, the management committee is still not a valid management committee.

Conclusion

96.  By reasons aforesaid, the applicant is not entitled to the reliefs claimed and the application must be dismissed.

97.  I therefore order as follows:-

(1)  The applicant’s application herein be dismissed; and

(2)  Costs order nisi: The applicant do pay the 1^st to 7^th and 9^th to 10^th respondents costs of the application herein with certificate for counsel to be taxed on District Court Scale if not agreed, and the costs order nisi shall become absolute if there is no further application on costs within the next 14 days.