THE INCORPORATED OWNERS OF CHUNGKING MANSIONS v. SHAMDASANI MURLI PESSUMAL AND OTHERS

LDMB498/2001

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT Application No.
LDBM 498, 500 - 508/2001, LDBM 511 - 516/2001,
LDBM 527 - 529/2001 (CONSOLIDATED)

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J U D G M E N T

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1. The Applicant is the incorporated owners of Chung Hing Mansion and the Respondents are owners of flats or shops in the building. By these proceedings the Applicant is seeking to recover from the Respondents contributions to funds for undertaking renovation work required by Building Orders and for legal costs incurred or to be incurred in enforcing payment by way of registering a charge on their flats or shops under the deed of mutual covenant (the "the DMC").

2. The basis for the claim for contributions is simple enough. On 19th November 2000, a resolution was passed at a owners' meeting that certain maintenance and renovation was to be done, and to establish the funds to defray the costs.

3. Some of the Respondents did not file any Notice of Opposition or appeared at any of the hearings. Those who did, either appeared in person or represented by another respondent. The Notices of Oppositions filed by the Respondents can be grouped into two identical sets, one in English and the other in Chinese.

4. The set of Notices of Opposition in Chinese contain the following points of defence :

1) the solicitors representing the Applicant refused some of the owners access to the proxy forms;

2) only two contractors tendered their bid at the meeting, the tendering process was not open enough and unfair;

The set of Notices of Opposition in English raise the following main points of defence:

1) the meeting on 19th November was not passed by the required majority;

2) contributions the Respondents required to make do not comply with the provisions of the DMC; in particular clauses 4, 5, 6, 8

3) the Applicant failed to apportion the costs of renovation works among different floors as required by the provisions of the DMC;

5. Most of the trial time was in fact was spent on issues not pleaded in the defence. The Respondents appeared to be more concerned with expressing their sense of grievance about the present management committee than addressing their complaints to the points of defence pleaded. Justified or not they expressed their sense of grievance on the unfair or poor management of the building by the present management committee and the way the meeting of 19th November and other meetings were conducted.

6. The performance of the management committee in managing the building is irrelevant. Of this the Respondents were reminded time and again in various different ways and yet they simply could not be desisted from bringing up incidents and examples of bad management which are totally irrelevant.

7. The dissatisfaction of the Respondents of the present management committee is also apparent from their distrust about the integrity of the management committee and its staff. Therefore driving a BMW by the manager (not even a new one) raised the suspicions of corruption. The experience gained by the manager (who was not discharged dishonourably) while serving in the police force was regarded by them not as asset in managing such notorious building but as liability. The effort to ensure the meeting to be held in an orderly manner was not appreciated. The presence of police triad squad to keep order of the meeting was seen as a means of intimidation and of stifling opposition. Improper motive was also imputed to other persons who had a legitimate purpose to attend the meeting. These persons included the legal adviser of the Applicant, community leaders, and officers of the District Office, and all of them were invited to witness the procedure of the meeting.

8. The Respondents relied heavily on the fact that one of the owners was not allowed to see the proxies and practically urged me to infer from this fact that there must be an irregularity of the meeting. However, they declined on my invitation to make an application for an order for the Applicant to disclose the proxies. They did not raised the question of proxies at the meeting. In deed they only raised the question for the first time when the present proceedings were initiated. I accept the evidence of Mr. Leung, the Applicant's witness, and find that the Applicant has taken reasonable precautions to ensure no improperly authorised proxies would attend and vote at the meeting. I find no merit in this point of defence as a matter of fact. Furthermore, due to fact of delay in so challenging the validity of proxies, in particular contractors had been employed, renovation work had substantially if not fully completed, and the majority of owners had made their contribution to the fund, they are estopped from raising this point of defence as a matter of law.

9. The Respondents adduced no evidence to support their assertion that the resolution in question was not passed by a majority. I accept the content of the minutes of the meeting and find no merit at all in this point of defence.

10. As to the choice of contractor, there is no evidence to suggest that the procedure is unfair or not open enough. The Respondents also criticised the standard of work of the contractor. All these are irrelevant. The Respondents' liability to contribute to the fund does not depend on the choice of contractor or its performance.

11. The only point of defence left to be considered is the legal basis on which the shares the Respondents were asked to contribute. The Applicant contended that the Respondents' contributions should be in proportion to the undivided shares of land each of them owned. Apparently this is not in accordance with the Clauses 4, 5, 6 and 8 of the DMC. To this Ms. Mak for the Applicant did not advance any argument apart from simply giving a short answer that the work was done in pursuance of Building Orders and the Applicant did something outside the scope of these clauses. He did not elaborate at all but only said section 22(2) of the Building Management Ordinance should apply. To say the very least, this argument is as bold as it is simple

12. Section 21 provides for the establishment of the fund in question. Section 22(1) provides that the amount of contribution to the fund referred to in Section 21 should be fixed in accordance with the deed of mutual covenant. Looking at the complaints made by the Respondents in the light of the work required to be done by the Building Orders, the work was within the scope of the work stipulated in those clauses. The fact that the work was required to be done under Building Orders does not change the nature of work. Those items of work should have been done voluntarily long before the issue of the Building Orders if the Applicant had been diligently and properly fulfilling its duty. If the argument of the Applicant is correct, it would mean Building Orders would override the provisions of the DMC and this proposition lacks legal basis. At least I have not been drawn to any.

13. In my judgment, as the contributions were not calculated on the correct basis, and the Respondents had objected to the calculations, the Applicant's claim must fail. It follows the Applicant has wrongly charged the amount of contributions on their property. I therefore dismiss the Applicant's claim and order that the charges registered against the Respondents' property be discharged and vacated. In respect of LDBM 500, 502, 504, 508, 513, 514, 527, and 528 where the Respondents were absent for one reason or the other I make no order as to costs. As to other Respondents, I award each of them costs of $1600. All the costs orders are orders nisi to be made absolute in 6 weeks.