LAM CHEUK TING AND OTHERS v. LAI KWOK LEUNG AND ANOTHER

LDBM 297/2015

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 297 OF 2015

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DECISION

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Background

1.  There is an argument on costs before me between the applicants and the respondents. The applicants are owners of some domestic flats in a residential estate known as Garden Vista.  The 1^st and 2^nd respondents are the chairman of the management committee of the incorporated owners of the estate and the incorporated owners itself respectively. 

2.  As a matter of background, the issues of this Application were about certain unhappy owners, namely the applicants, applied to this Tribunal for an order compelling the 1^st respondent to convene a general meeting of the 2^nd respondent pursuant to paragraph 1(2) of Schedule 3 of the Building Management Ordinance, Cap. 344 (“the Ordinance”) or alternatively, to dissolve the management committee of the 2^nd respondent and to appoint an administrator pursuant to section 31 of the Ordinance.

3.  On the other hand, according to the Notice of Opposition filed by the respondents dated 17 November 2015, the stance of the 2 respondents was identical that they both opposed the Application and asked the Tribunal to reject the same.

4.  Originally, pursuant to the directions of this Tribunal, a hearing was to be held on 11 December 2015 for dealing with the Application. One day before the said hearing, namely on 10 December 2015, the 1^st respondent, who was also authorised by the 2^nd respondent to do so, filed an affirmation and indicated that he was willing to give an undertaking to this Tribunal for convening a general meeting of the 2^nd respondent as requested.  Consequently, because of this dramatic change of stance of the respondents at the 11^th hour, this Tribunal adjourned the hearing on 11 December 2015 sine die with liberty to restore and, at request of the parties, reserved the decision on costs.

5.  This Tribunal was of the view that the adjournment would give time for the 1^st respondent to comply with the undertaking by having the general meeting as soon as practicable and further hoped that the parties could sensibly come to an amicable settlement on the entire matter, including costs issue.

6.  Events subsequent to the 11 December 2015 hearing were rather straightforward. In compliance with the undertaking, a general meeting was held on 14 January 2016.  In late February 2016 after the general meeting was held, the applicants indicated that they would no longer wish to pursue the matter further and started the discussion with the respondents on the issue of costs.  After a lengthy discussion by written correspondence between the respective solicitors, they only managed to agree that the Application will be discontinued but were unable to agree on the liability of costs. And consequently, a joint application by the parties dated 21 November 2016 to discontinue the present proceedings, with proposed directions for argument on costs, was accepted by this Tribunal.

Argument on Costs

7.  Both parties agree that this Tribunal has a discretion on costs and further agree that the general principles on costs applicable to general civil proceedings also apply to the proceedings in the Lands Tribunal.

8.  The argument for the applicants is quite straight forward. They argue that the applicants emerged as “the winners” of the Application because the undertaking given by the 1^st respondent corresponded exactly to the primary relief sought by them.  Upon the compliance of the undertaking, the applicants were of the view that it was no longer necessary for them to proceed with the alternatively relief, namely for a dissolution of the management committee of the 2^nd respondent.  And they therefore discontinued the Application.

9.  Miss Ng, counsel for the applicants, therefore argues that but for the undertaking given by the 1^st respondent, the applicants would not have discontinued the Application against the respondents.  The applicants were of the view that, it was then unnecessary for them to proceed with the alternative relief, namely to ask for the dissolution of the 2^nd respondent.  There is no dispute that the 1^st respondent has fully complied with the said undertaking and Miss Ng submits that for this reason, and this reason alone, the applicants decided not to proceed with the Application.  The applicants therefore ask for costs of the Application as if they were “the winners”.

10.  Mr Lau, counsel for the respondents, suggests that I should look at the matter in a different way.  He argues that there is no winner in the present proceeding.  He submits that the general principles, is that the parties, who discontinue an application, namely the applicants in the present case, should, under the normal circumstances, bear the costs of the Application unless they can show that their cases were so strong that they were bound to win, had it gone on to trial.  (Kwan Pui Sin v The Incorporated Owners of Mandarin Court (Shanghai Street) LDBM 253/2014 (unreported, 14 March 2016) applying the judgment of Recorder Shieh in Anmol Kumar Sawlani v Yeshma Gobindram Sawlani HCA 2231/2011 (unreported, 9 May 2013)).

11.  In further support of his argument, Mr Lau tells this Tribunal that the burden is on the applicants to satisfy this test and the applicants have failed to do so.  He says that the facts before this Tribunal simply do not support that the applicants had a strong case against the respondents, which was bound to win.

12.  Mr Lau further argues that, in fact, this Tribunal should not treat the application for convening a general meeting and the application for dissolving the management committee of the 2^nd respondent as primary and alternative reliefs.  He suggests that the applicants were in fact perusing the 2 different reliefs with the same force.  They are not true alternatives at all. Mr Lau relies on the applicants’ written skeleton argument prepared for the hearing on the 11 December 2015 to show that they actually asked the Tribunal to order a dissolution of the management committee “at the same time” in granting the order to convene a general meeting of the 2^nd respondent.

13.  Mr Lau therefore suggests that even if this Tribunal accepts Miss Ng’s argument that the applicants are “the winners” (which he disagrees), they are just winners against the 1^st respondent only and not the 2^nd respondent.  This Tribunal should treat the 1^st and the 2^nd respondents separately.

14.  For the application against the 2^nd respondent, Mr Lau further argues that the relief for dissolving the management committee was doomed to fail because the applicants failed to join each individual member of the management committee of the 2^nd respondent (梁豪聖及另六人訴岑耀東及另五人LDBM 153/2005 (unreported, 15 February 2006) and its appeal decision in Leung Ho Sing & Ors v Shum Yiu Tung & Ors CACV 108/2006 (unreported, 21 July 2006)).  And it was held that if anyone intends to apply for a dissolution of a management committee, the applicant must join all the individual members of the management committee.  Failing which, the omission was not a mere procedural irregularity but was a matter of substantive rights.  Mr Lau therefore submits that the applicants should be liable to pay costs of the 2^nd respondent as they were hopeless in winning this relief.

Discussion

15.  First of all, I shall deal with the “winners” argument advanced by the applicants.

16.  Both respondents filed a Notice of Opposition and rejected the request for convening and holding a general meeting of the 2^nd respondent. Although the 1^st respondent purported to explain the difficulties in doing so in his affirmations, such meeting was successfully convened by the 1^st respondent after the hearing on 11 December 2015.

17.  After reading the explanation, although I appreciate the difficulties encountered by the respondents, I do not accept the reasons provided in his affirmations.  Even accepting all the facts put forward by the respondents, in my judgment, the 1^st respondent could have convened the general meeting much earlier so that much of the costs could be saved.  The evidence, particularly the facts stated in the affirmation of the 1^st respondent filed on 10 December 2015, strongly suggests to me that the intention of giving such an undertaking was an obvious concession and change of stance.  It was therefore sensible and reasonable for the applicants to accept this and to discontinue the Application after the undertaking was fully complied with.

18.  Furthermore, as the undertaking corresponded exactly with the primary relief sought by the applicants in letters and spirit, I have absolutely no doubt that it was a concession of the 1^st respondent.

19.  Given my analysis above, I disagree with Mr Lau’s argument that there were no winners at all.  In my judgment, Mr Lau’s reliance on Kwan Pui Sin v The Incorporated Owners of Mandarin Court (Shanghai Street) LDBM 253/2014 (unreported, 14 March 2016) and Anmol Kumar Sawlani v Yeshma Gobindram Sawlani HCA 2231/2011 (unreported, 9 May 2013) is somewhat misplaced on a wrongly understood context. In these authorities, there were no real winners.  Unlike the present case, the issues in these authorities became academic not because of the concession of a defendants/respondents.  The courts were given the question that whether or not the plaintiffs/applicants were right to commence the actions against the defendants/respondents in these authorities.  In resolving this question, it was therefore proper to ask whether or not the plaintiffs/applicants could show that their cases were so strong that they were bound to win, had it gone on to trial.

20.  However, the facts before me are entirely different.  Insofar as the primary relief for convening and holding a general meeting is concerned, the applicants are obviously the successful parties because of the concession made by the 1^st respondent by way of giving an undertaking to this Tribunal at the hearing.  It is unnecessary to apply the test as suggested by Mr Lau at all because we all know who are the winners.  It must be the applicants.

21.  Even if I were wrong that the test as suggested by Mr Lau does apply in the present case, I would have no difficulty to find in favour of the applicants. In my judgment, this primary relief for convening and holding a general meeting was bound to win, had it gone on to trial.  The explanation for the difficulties as suggested by the respondents were obviously unacceptable.  The respondents did have the ability to do so, despite the difficulties.  They were just unwilling.

22.  I therefore accept the argument of Miss Ng that the applicants are winners and therefore are entitled to costs.

23.  Now I turn to the issue of whether or not the reliefs are primary and alternative.

24.  In my judgment, Mr Lau’s observation is entirely out of context.  I found it difficult to understand why the 2 reliefs sought by the applicants, namely :-

(1) for an order compelling the 1^st respondent to convene a general meeting of the 2^nd respondent pursuant to paragraph 1(2) of Schedule 3 of the Ordinance; and

(2) for an order to dissolve the management committee of the 2^nd respondent and to appoint an administrator pursuant to section 31 of the Ordinance,

are not true alternatives, namely a primary relief and an alternative relief.

25.  The 2 reliefs appear on the Notice of Application as primary and alternative in a very simple and straightforward manner leaving no doubt of any uncertainty.  I do not believe that any reasonable person reading it would come up with such an “out of context” understanding.

26.  Furthermore, I fully appreciate the practicality of the Application and why the applicants would ask for the alternative relief in the event that the applicants fail to convene and hold a general meeting of the 2^nd respondent.  This alternative relief would in fact become an automatic sanction against the respondents when they fail to comply with the order of this Tribunal, without the need for any further enforcement application.  This is certainly a sensible way of dealing with the matter.

27.  And it is not in dispute that once the undertaking was duly complied with by the 1^st respondent, the applicants asked for a discontinuation of the Application as soon as practicable.  In my view, this further supports the argument of the applicants that the relief for the dissolution of the management committee is always only a true alternative.

28.  By reasons of the above, I do not accept the argument of the respondents that I should consider the 2 reliefs sought by the applicants are not primary and alternative ones.  I agree with Miss Ng that once a general meeting of the 2^nd respondent was held on 14 January 2016 as per the applicants’ request, it was no longer necessary for the applicants to proceed with the alternative relief.

29.  Mr Lau further argues that the primary relief is not an application against the 2^nd respondent and the applicants cannot possibly claim victory.  Again, I found Mr Lau’s argument misconceived.  It was quite right that the 1^st respondent gave the undertaking, not the 2^nd respondent, and the 1^st respondent also, as the chairman, convened the meeting.  But one should not forget that this was a general meeting of the 2^nd respondent and it was reasonable to ask for an order against the 2^nd respondent to arrange and hold the meeting, had it gone on to trial.  It is therefore sensible that the 2^nd respondent was joined as a party in the present case so that, at the end of the day, if the applicants were successful in the application, the 2^nd respondent would then be bound by the order of this Tribunal. 

30.  Mr Lau shows me an example (蔣世昌及另一百九十人訴潘增華LDBM 336/2007 (unreported, 2 October 2007)) that joining the incorporated owners was not necessary.  In my view, the example provided by Mr Lau is simply unhelpful as the issue of whether or not the incorporated owners should be joined as a party was never argued.

31.  And furthermore, as both respondents have the same stance in the Notice of Opposition and share the same legal team, I do not see why at the end of the day when the 1^st respondent gave such concession by way of undertaking, the 2^nd respondent who supported the 1^st respondent in opposing the Application, should not similarly be responsible for the costs of the Application as well.

32.  By reasons of the above, it is more than sufficient for me to dispose of this costs argument between the applicants and the respondents.  However, for completeness, I would continue to deal with the submissions of the 2^nd respondent in relation to the merits of the alternative relief, namely the application for dissolution of the management committee of the 2^nd respondent.

33.  Mr Lau argues that the alternative relief for dissolution of the management committee was doomed to fail.  I however fail to see the logic of his argument.  Although I entirely agree with (and bound by) the legal principles set out by the Court of Appeal in the authority, Leung Ho Sing & Ors v Shum Yiu Tung & Ors CACV 108/2006 (unreported, 21 July 2006), that as a matter of law, members of the management committee should be joined as parties of the proceeding for dissolution of management committee and failing which is fatal, Mr Lau seems to have disregarded the important introductory remarks of Hon Yuen JA at paragraph 11 that:-

“However the 6^th Applicant made no attempt before the hearing of the appeal to join the other members of the Management Committee or the IO as parties. …… ” (emphasis added)

34.  In other words, an amendment application to join the members of the management committee just before the appeal could have saved the error.

35.  If this issue were raised at the hearing of the present case, there is a reasonable prospect that this Tribunal might accept an adjournment application by the applicants for making a late amendment of the Notice of Application so as to join all the individual members of the management committee as parties.  Mr Lau seems to suggest that this could never happened.  I appreciate that this will not be easy and the applicants might even have to show “exceptional circumstances” when asking for an adjournment but, in my view, it is wrong to disregard it entirely.  Taking this into consideration, I therefore disagree with Mr Lau that the alternative relief for dissolution of the management committee of the 2^nd respondent is doomed to fail.

36.  Miss Ng relies on Kannix Limited v the Incorporated Owners of On Hing Building, LDBM 57/2014 (unreported, 30 May 2014) and 周春燕另一百四十五人對富嘉花園業主立案法團LDBM 300/2013 (unreported, 22 August 2014) as examples and purport to show me that it is not necessary in all the applications for dissolution of the management committee to join all the members.  But unfortunately both cases are not helpful to me as the parties concerned never raised and argued this issue. Furthermore, the fact of Kannix Limited is quite unique as there was no valid members of the management committee to join and it was an uncontested case.

37.  All in all, even if I were wrong in rejecting the 2^nd respondent’s “doomed to fail” argument, it will not affect my overall decision on costs. 

38.  I, therefore, order that the 1^st and 2^nd respondents do pay costs of, and incidental to, the Application (including this interlocutory application for argument on costs) with certificate for counsel, to be taxed if not agreed.

39.  Finally, I thank counsel for their thorough research and submissions.