THE INCORPORATED OWNERS OF BAYVIEW MANSION v. CHAN CHEUNG KIT MUI MARGARET

IN THE SUPREME COURT OF HONG KONG

SMALL CLAIMS TRIBUNAL APPEAL NO. 32/94

(CLAIM NO. 1463/94)

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REASONS FOR JUDGMENT

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1. This is an appeal from an award made by the learned adjudicator, Mr T.C. Hon, against the appellant in the sum of $4,000 and costs $500 for his share of the contribution towards the costs of "decorating" the common parts of the building known as Bayview Mansion. The appellant is one of the owners, and the respondents the management committee of the owners corporation, of the said building.

2. The appellant relies on the following grounds of appeal :

(1) That the learned adjudicator erred in law in failing to consider or sufficiently consider the defence raised by the appellant in paragraphs 1(A), (B) and (C) of his defence.

(2) That the learned adjudicator erred in law in failing to determine the issues raised by the appellant in the aforementioned grounds of defence.

(3) That the learned adjudicator failed to consider the procedures applicable to the passing of resolution in the owners' meeting as prescribed by the Deed of Covenant and the provisions of Building Management Ordinance, Cap.344.

(4) That the learned adjudicator erred in law in failing to determine the validity of the resolution allegedly passed at the owners' meeting held on 13 December 1992 in that there was no determination on the authority to redecorate the common parts of the building under the Deed of Covenant or the Building Management Ordinance.

Validity of the Resolution under the Deed of Covenant

3. At a general meeting of owners held on 13 December 1992, a resolution was purportedly passed, by a count of vote of 108 against 79, that various parts of the common areas (e.g. entrance hall) and common facilities (e.g. lifts and main iron gate) were to be renovated at a cost of $1.5 millions. It was further resolved that each owner was to contribute $4,000 to the costs of such works. The appellant was one of the owners who objected to the renovation works. It is the contention of the appellant that the renovation works were not authorised by the Deed of Covenant and thus the respondents had no authority to require the owners to contribute towards the cost of such works.

4. The authority of the respondents to require contribution from the owners towards costs incurred in respect of works carried out on the building is founded in clauses 4, 8, and 10 of the Deed of Covenant. Clause 4 provides for "cost of cleansing the said Building and keeping in good and tenantable repair of" various common parts of the building. Clause 8 stipulates for the monthly contributions from owners "towards the cost of servicing maintaining and repairing the lifts" and various common parts and amenities of the building. Clause 10 requires the owners to contribute towards the "expenses of repairing" the staircases and landings. It is not controversial that renovation works were carried out on the common parts and lifts of the building covered by the said clauses. However, was the scope of works authorised by the said clauses?

5. To determine the issue, evidence relating to the nature and scope of the renovation works must be examined. In his written judgment, the learned adjudicator said : "His main ground is simply that the money contributed by the owners were not properly applied and that the meetings was not valid for passing the resolution. He did not call any other witness nor any other evidence to support his allegations in the written defence which is partly in Chinese and partly in English. It appears that he denied the claim because in his personal opinion the defendant would not be liable to pay the amount claimed." In the light of his said observation of the appellant's opinion, he ruled : "Having considered all the evidence available and in all the circumstances of the present case, the Tribunal is inclined to accept that the Claimant had proved the case and that the defence was not sufficient to disprove the claim."

6. It is for the respondents to prove their case against the appellant and his alleged liability to contribute towards the renovation works. It is thus for the respondents to adduce evidence to satisfy the tribunal that the cost for the renovation works was covered by the said clauses. The learned adjudicator set out the evidence of the respondents as : "The Claimant produced 19 pages of papers to support the claim. The papers consist of an outline of the sequence of the events (pages 1& 2), a summary of the account (page 3), Mr Chow's statement (pages 5 - 8), a record of meeting on 13th December, 1994 (pages 13 & 15) and a further explanation of the facts (pages 17 - 19)." In none of the said 19 pages of documents did the respondents make any reference to clauses 8 or 10. Neither did any of the said documents seek to verify that the renovation works were authorised by any of the said clauses; and if so in what way did any of the said works come within the description of maintenance or repair works particularised in those clauses. The papers relied on by the respondents merely quoted the whole text of clause 4 and alleged that it was wrong for the appellant to allege that the renovation works were not repair works. The acute scantiness of evidence to support the respondents' case appeared to be matched by the bare allegations of the appellant in his written submissions. However, it transpired during the appeal that it was not really the case. In fact, the appellant had submitted to the tribunal a bundle of 8 pages of photographs comparing the condition of the relevant parts of the building before and after the renovation works. The photographs depicting the pre-renovation condition of the building are of substantial evidential value to the determination of the issue of whether the renovation works were necessitated or authorised by the said clause or otherwise. The appellant submitted that the learned adjudicator returned the said bundle of photographs to him during the trial refusing to evaluate them as relevant evidence. This is not disputed by the respondents. The learned adjudicator must, with respect, be wholly wrong in this respect. The photographs were the only independent evidence showing the condition of the relevant parts of the building prior to renovation. Furthermore, the failure of the learned adjudicator to record in his notes of proceedings the submission of the evidence, his ruling on the matter and his return of the evidence to the appellant renders his record of trial defective and incomplete. There is simply no record of such an occurrence at all. Despite the deficiency in the tribunal record, both parties consented to treat the photographs as being tendered as evidence at the trial. The learned adjudicator was wrong in his rejection of the evidence and an order was made in the appeal to reverse the ruling of the learned adjudicator on this matter. The evidence ought to have been admitted and, with agreement of both parties, an order was made to have them treated as evidence before the tribunal at the trial.

7. It was also revealed that the appellant also tendered a copy of the Deed of Covenant before the learned adjudicator at the trial which was also returned by the learned adjudicator. No copy of the Deed of Covenant can be found in the tribunal file at all. The respondents said they could not recall if any copy was tendered to the tribunal at the trial, but agreed that a copy ought to be made available in the appeal. Even assuming no copy of the deed was ever tendered to the learned adjudicator at all, it would appear to me that the learned adjudicator would have failed to discharge his statutory duty to investigate the claim properly in not calling for a copy of such document before adjudicating on the claim. It is difficult, in view of the issues in dispute, to understand how the learned adjudicator can determine the claim without considering, or even knowing, the contents of the Deed of Covenant. No mention was ever made in his judgment to the contents of the deed. An order was also made to treat the Deed of Covenant as part of the evidence before the tribunal.

8. By reason of matters aforesaid, the learned adjudicator had erred in rejecting the photographs and Deed of Covenant as relevant evidence at the trial thereby failing to properly consider all relevant available evidence before him prior to a determination of the respondents' claim. In so far as necessary, leave is given to the appellant to appeal on this ground. The appeal is allowed and the awards made by the learned adjudicator is set aside in its entirety.

9. I note with regret that the unfortunate error of the learned adjudicator was not corrected at the appellant's review that took place shortly after the award was made. In a letter dated 29 November 1994, one day after the review, the appellant complained that at the review, which lasted for 3 minutes, her husband (who had represented her for the entire proceedings) was not allowed to adduce further evidence or to make any further submission. In the notes of proceedings, no note was kept of a submission of the appellant or of anything said by him at the hearing. The appellant's complaint was dismissed by a letter written on behalf of the Registrar of the tribunal stating he was "directed" to inform the appellant that no evidence was ever adduced by the appellant at the hearing apart from a seven-page written defence.

10. Should there be a retrial before a different adjudicator or could the appellate court proceed to make a determination on the claim without a retrial? I had the benefit of the photographs and the Deed of Covenant before me. There is no other fresh evidence that could be made available to the tribunal on a new trial. I was in as good a position as a tribunal at a retrial to determine the true merits of the case. I was not hampered by any technical prohibitions against reversing findings of facts by the tribunal as the learned adjudicator had not made any findings of facts at all in his judgment. In the premises, no order for a retrial was made and I proceeded to consider the validity of the resolution.

11. Were the renovation works necessitated by a need to keep the said parts of the building in good and tenantable repair; or for servicing, maintaining or repairing the same? Upon a careful examination of the pre-renovation condition of the relevant parts of the building as depicted in the photographs, it is beyond a peradventure that the question must be answered in the negative. The relevant parts of the building appeared to be very well maintained and serviced. They were clean and in good condition. I was not able to detect any cracks on the walls or floor, nor could I see any other form of defects. Far and apart, parts of the wall or floor tiles might have suffered a slight degree of insignificant discoloration at the edges and corners due to ageing. However, it is a far cry from alleging that they were in need of replacement by new tiles. All that was justified was a thorough cleaning, with the aid of chemical agents perhaps if necessary. No replacement would be required at all.

12. Furthermore, the nature and scope of the renovation works as particularised in the notice of general meetings provided insight on the true nature of the works. The notice spoke of "decoration works" to be carried out. Details of the works set out in the notice were of a decorative nature. Nowhere was it ever alleged in the notice (or in the resolution) that such parts of the building were in need of any repair. Nor was it ever alleged in any documents that such parts of the building were in anyway defective or damaged. After examining the pre-renovation and post-renovation condition of the building as shown by the photographs, the description of "decoration works" is in my view a most apt choice of words. The works were partly truly of a cosmetic nature to enhance the appearance of the building, and partly to improve the amenities of the building. No doubt the building now looks a lot more attractive and "classy". The main iron gate was replaced by a grand-looking electrically operated aluminium gate. An electronic communication system was installed at the entrance. Close-circuit television monitoring was installed. The management office was provided with a magnificent counter.

13. The building was provided with a facelift that gives it a modern look and enhanced amenities. No doubt all owners would benefit from such improvements, and the value of their flats would probably benefit as well. These, however, could not provide the legal foundation for the respondents' conduct. There is no power or authority in the Deed of Covenant for the respondents to improve the amenities or up-grade the condition of the building. There is only power to maintain and keep the existing amenities and condition of the building in a good and tenantable condition. Any attempt to improve the amenities or to up-grade the building must be blessed with the consent of all owners. No unwilling owner can be forced to contribute to any such improvement or up-grading against his wishes. The resolution purporting to authorise the renovation works was without lawful foundation and the acts of the respondents in carrying out the said works void of any legal authority. The resolution was thus not binding on the appellant and the respondents' claim for contribution against the appellant was without lawful authority.

Building Management Ordinance Cap.344

14. Can the respondents rely on any overriding statutory authority to impose the resolution upon the appellant. Section 14 of Building Management Ordinance, Cap 344, provides that a resolution "passed with respect to the control, management and administration of the common parts" shall be binding on all owners. The duties and powers of the respondents under s.18(1)(a) of the Ordinance are to "maintain the common parts and the property of the corporation in a state of good and serviceable repair and clean condition". It will be a wholly unreasonably stretch of one's imagination to describe the renovation works as works for the "control, management or administration" of the common parts; or as necessitated by putting the said parts "in a state of good and serviceable repair and clean condition". I am satisfy that no assistance can be found in the Ordinance to justify the conduct of the respondents or to afford them any lawful basis for their resolution.

15. For the reasons given, the claim of the respondents for a contribution of $4,000 against the appellant towards the renovation works must fail. The respondents' claim was thus dismissed. The appellant indicated that he had no wish to claim any costs against the respondents, and thus no order as to costs was made.

(J. Chan)

Judge of the High Court