YAU SUK KOK JEAN v. KL PROPERTY MANAGEMENT LTD

LDBM 139/2021

[2023] HKLdT 46

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO.139 OF 2021

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J U D G M E N T

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1.  This litigation arose out of the background of huge deficit of about $18 million said to be have been accumulated as at 31 December 2020 by the subject estate situated in Ap Lei Chau known as “Larvotto” (the Estate). The Estate has 9 towers of residential units and 400 residential car parking spaces. The Deed of Mutual Covenant and Management Agreement governing the Estate was dated 27 April 2011 and it was registered at the Land Registry on 17 May 2011 (the DMC). At all material times, the owners of the Estate have not incorporated themselves into an owners’ corporation.

2.  The applicant is owner of a residential unit, and owner of a residential car parking space, of the Estate at all material times.

3.  By a management agreement dated 26 March 2021 (the Management Agreement), the Owners’ Committee of the Estate formed under the DMC (OC), on behalf of all owners of the Estate, had appointed the respondent as the manager of the Estate (the Manager) for a term of 2 years effective as from 1 June 2021.

4.  At all material times on or before 31 May 2021, Savills Property Management Limited (Savills) managed the Estate as its manager.

5.  In March 2021 and January 2022, the applicant was served with 2 debit notes dated 1 March 2021 (the 1^st DN) and 27 January 2022 (the 2^nd DN) issued in the name of OC and of the respondent respectively (collectively both DN). She was demanded to make payment to the Estate on both occasions.

6.  But no meeting of Owners (OM) has been convened under the DMC to pass any resolution (OM Resolution) to authorize the above demands on her. The applicant declined to pay both DN. The respondent took her to the Small Claims Tribunal (SCT), seeking to recover from her the amount due on the 2^nd DN, and the trial concerned is due to be held in September 2023.

7.  In this Application, the applicant seeks, I think, declarations to the effect that, in the absence of OM Resolution, the respondent in its capacity of the Manager was not entitled under the DMC to request, collect and/or receive the sums demanded from her in both DN at all material times as from 1 June 2021.

8.  Ms Ferrida Chan of counsel (Ms Chan) represented the applicant, who elected to give evidence at this trial.

9.  Ms Tracy Chu of counsel (Ms Chu) appeared for the respondent. The respondent called Mr Chum Chi Kin (Mr Chum), its chief property manager who joined the Estate as from April 2022, as its sole witness at trial.

Material issues to be resolved

10.  The respondent opposed this Application (and the granting of the declaration sought by the applicant). It first says that it had nothing to do with the 1^st DN which was issued by OC prior to its appointment as the Manager. Moreover, after it became the Manager on 1 June 2021, it says it had never requested, collected nor received from the applicant the sum due on the 1^st DN.

11.  If the respondent was held to have anything to do with the 1^st DN on or after 1 June 2021, it next argued at trial that it had power or authority to demand payment from the applicant on the same pursuant to clause 18(e)[1] of the DMC without OM Resolution.

12.  In any event, the respondent further argues that the 1^st DN had been overtaken by the 2^nd DN and that the dispute over the former had been rendered academic. It thus serves no useful purpose for this Tribunal to grant the declaration sought on the 1^st DN.

13.  Regarding the 2^nd DN (which was claimed by the respondent to be a separate or distinct demand from the 1^st DN), the respondent also relies at trial on the same clause 18(e) of the DMC to say that it had power or authority to demand payment on the same from the applicant without OM Resolution.

Assessment of witnesses

14.  Considering the totality of evidence, I believe that the bulk of applicant’s case has been proven by the undisputed[2] contents of contemporaneous documents and Mr Chum’s admissions. I do not think that the applicant’s testimony adds much to her case but the respondent nonetheless saw fit to challenge her on no few aspects of her testimony. I will below deal with only those challenges that are material to the declaration sought.

15.  Due to the late date he joined the Estate, Mr Chum lacked personal knowledge of such material events leading to both DN and of the decisions of their issue. This Tribunal prefers the undisputed contents of the contemporaneous documents to his interpretation of them after litigation had taken place between parties. At the same time, he gave no few admissions useful to the applicant’s case. On material points, I am afraid his testimony in the box differs from respondent’s case and the contents of his written witness statements.

Findings of facts

16.  All evidence and submissions considered, I find the facts in this section proven. I take as my starting point undisputed facts and undisputed contents of contemporaneous documents. As and when I decide on conflict of evidence below, I will give my reasons for the same.

17.  On 31 December 2020, Savills issued a notice to the owners of the Estate advising them of draft 2021 management budget and proposed to increase management fees by about 30% as from March 2021. The reason given was that “the current management fee income is insufficient to cover the expenditure and deficit is observed in the building fund account”.

18.  On the same day, the OC held a meeting attended by Savills’ representatives. The applicant also attended. The OC unanimously resolved to engage consultant to i) invite tenders of new manager of the Estate and ii) convene an Extraordinary General Meeting of the owners of the Estate (EGM).

19.  As was further recorded in minute of the said meeting:

(1)  Savills had reported in the said meeting to the OC of i) an accumulated deficit of 19 million odd by October 2020 and ii) total bank balance of 5.8 million as at 28 December 2020;

(2)  the OC disagreed with Savills’ aforesaid proposal of increasing 2021 management fees by 30%; and

(3)  Savills had recommended to the OC to hold an EGM in future to discuss and resolve on contributions from owners to make good the aforesaid accumulated deficit and to provide for operating fund.

20.  On or about 3 January 2021, the OC issued a letter to all the owners of the Estate, stating that Savills had not prepared the 2021 budget in consultation with the OC, who had never reviewed, consented nor approved the same nor the proposed 30% increase in management fees.

21.  On 13 January 2021, Savills held a meeting with the OC to discuss again a revised draft 2021 budget that proposed an increase of management fees by about 22% “to achieve a breakeven on income and expenditure”. The OC again disagreed with this revised draft 2021 budget and the management fees increase proposal.

22.  By notice to all owners dated 15 January 2021, the management office of the Estate (on behalf of Savills) advised that the management fee in draft 2021 budget would remain unchanged[3] until consensus was reached with the OC. It was said in the said notice that there was an accumulated deficit of 18 million for the Estate as at 31 December 2020 and that the OC had been advised to, inter alia, convene an EGM to discuss and “resolve a practical resolution to deal with the accumulated operating deficit”.

23.  On the same day, the OC issued a notice for EGM to be held on 30 January 2021. In its “Introduction” section, Savills was said to have unilaterally proposed to increase management fee without consultation with the OC and requested the owners to raise additional fund of about 5-6 months of management fee to supplement past operating deficit and financial funds, and the EGM was to be held for all owners to decide whether or not Savills is suitable for continuing to provide property management service.

24.  There are only 3 agenda in the above EGM notice, namely: 1) report of OC; 2) report the analysis of the tender for property management service; and 3) “to resolve the appointment of the Company for Property Management Service (two-year contract)”. It did not include any agenda about collection or contribution of management fees (be it 3 months or 6 months) to make good the accumulated deficit in the accounts of the Estate.

25.  On 22 January 2021, in response of the above EGM notice and its “introduction” thereon, the management office of the Estate (on behalf of Savills) issued a notice explaining why deficit of the Estate had increased by 12 million since Savills took over as manager on 1 May 2017 and adding that, despite Special Fund and Debris Removal Fund had on oral instructions of previous OC been used to settle part of management expenses in 2019 and 2020, Savills had taken the initiative in August 2020 to restore the said 2 funds to their previous levels on 1 May 2017.

26.  On 30 January 2021, the EGM was held (30/1/21 EGM), attended by legal adviser[4] and Savills’ representatives. The applicant also attended. On the 1^st agenda, as recorded in its minute and on applicant’s recollection that I accept, the topic of collection from all owners of 6-month management fees to cover the accumulated deficit had, I find, been briefly discussed but that it had never been put to vote in the meeting nor passed as a resolution. On the 2^nd agenda, only 2 companies had returned tender documents. On the 3^rd agenda, it was resolved by majority vote that the respondent be appointed as the Manager on a 2-year contract.

27.  On 9 February 2021, the management office of the Estate issued another notice to all residents of the Estate clarifying and giving Savills’ explanations again for the accumulated deficit of 18 million of the Estate as at 31 December 2020.

28.  On 20 February 2021, the OC held another meeting (20/2/21 OC meeting) attended by both Savills’ and respondent’s representatives. The applicant also attended. According to its minute, apart from recording that Savills had received on 11 February 2021 its notice of termination effective at 2359 hours on 31 May 2021, it was also recorded that the OC unanimously agreed to “collect first 3 months’ contributions from all owners to put up an operating fund” so that the respondent as the new manager could “clean up the [financial] mess” of the Estate and that the respondent do open trust account on behalf of the Estate as soon as possible and give its details to the OC.

29.  In so far item 3.1 of the minute of 20/2/21 OC meeting also recorded that there had been detailed discussion in 30/1/21 EGM about collection of fees equivalent to 3 months’ management fees, or collection of contributions to put up operating fund for the new manager i.e. the respondent, such record is, I find, inaccurate when one compares the two minutes. In any event, there was no such agenda or resolution to that effect in 30/1/2021 EGM and Mr Chum also agreed.

30.  On 1 March 2021, regarding her residential unit, the OC issued the 1^st DN[5] in sum of $15,510 to the applicant with a due date of 31 March 2021. The particulars of the said amount are “Operating Fund for New Property Manager (equivalent to 3 months’ management fee)”. The applicant was required to issue crossed cheque payable to “the respondent” and to send the payment to the address of “the respondent” at Convention Plaza[6].

31.  I accept applicant’s evidence that the 1^st DN addressed to her and a notice of the OC dated 1 March 2021 addressed to all owners of the Estate[7] were both put inside an envelope of “Kiu Lok Service Management”[8] when they were posted to her.

32.  The title of the said notice of the OC was “Contribution of Six Months’ Management Fee by All Owners to Cover the Accumulated Operating Deficit in the Building Account of Larvotto (bold and italics supplied)”. It reads:

“Based on the resolutions of [30/1/21 EGM] and [20/2/21 OC Meeting] regarding the captioned subject, all owners of Larvotto … are hereby informed that you are required to contribute by 31 March 2021, the first installment of 3 months’ management fee[9] to the newly appointed Property Management Company ([the respondent]) to maintain smooth operation of daily management work and regular maintenance work to be carried out as well as to ensure healthy financial condition of Larvotto accounts. Attached please find a Debit Note dated 1 March 2021 to all owners for 3 months’ management fee of your premises for your settlement.”

On my findings above, the first sentence of this notice regarding OM Resolution at 30/1/21 EGM is, I find, incorrect.

33.  After the 1^st DN were served on her, the applicant raised complaint over it (so did some other owners of the Estate). She never paid $15,510 as demanded by it (though other owners complied and paid up).

34.  On 4 March 2021, the OC issued a special notice to all owners of the Estate saying that any enquiry for “contribution of start-up operating fund” could be made with the OC and enclosed thereto copy minute of 30/1/21 EGM for better understanding of the accumulated operating deficit of the Estate.

35.  On 26 March 2021, the OC and the respondent executed, and entered into, the Management Agreement.

(1)  By clause 2.1 thereof, the respondent is appointed and “accepts its appointment (and assumes all the powers and duties) of the Manager under the DMC, this Agreement and the Tender Document for a term of 2 years with effect from 1 June 2021 … upon and subject to the terms and conditions of the DMC (save as modified by this Agreement[10] or the Tender Document) … until such appointment expires or is terminated … (bold and italics supplied)”;

(2)  Clause 5.1 thereof entitled “Advance payment of Management Fees” reads: “In the absence of reserve funds being left by [Savills] handover to [the respondent] and to enable [the respondent] to meet the operational expense of managing the Property, the OC will require Owners to make an advance payment to the Manager upon trust via the Trust Account of three (3) months management fees before 31 March 2021 (bold and italics supplied)”.

(3)  Clause 5.2 thereof provides for the OC and the Owners to arrange for further contribution from the Owners to cover the deficiency if the amount held in the Trust Account is insufficient.

(4)  Clause 10 thereof requires the respondent to prepare draft budget in line with clause 13(b)(i) of the DMC no later than 30 November each year in consultation with the OC[11].

36.  Mr Chum had admitted in the box (and I find) that the aforesaid Trust Account had been opened by the respondent before 1 June 2021 for the owners of the Estate (including the applicant) to make payment into it as required by the OC.

37.  On my findings in this section, I believe it likely that, in view of dire financial situation of the Estate as reported by Savills and in order to arrange a smooth transition on 1 June 2021, the respondent had, after being awarded its tender at 30/1/21 EGM, requested the OC to require all owners of the Estate to make advance payment of 3 months’ management fee to the respondent by 31 March 2021. In response thereto, the OC had resolved in 20/2/21 OC Meeting that all the owners be first required to make payment of 3 months’ management fee as “operating fund” to the respondent. When the OC did issue the 1^st DN later, it went further aiming to require payment of a total of 6 months’ management fee to make good all the accumulated deficit of the Estate said to be in the tone of 18 million.

38.  Having reached the above “consensus” with the OC, the respondent had, I think, cooperated with the OC on the issue of the 1^st DN by opening its Trust Account, posting the 1^st DN etc. to the applicant in its envelope and arranging for its address and account details to be given to the applicant to enable her to make payment demanded of her in the 1^st DN direct to the respondent.

39.  Mr Chum had once, I note, verified by statement of truth, and admitted at, paragraph 13 of his 1^st witness statement which reads:

“Considering the financial situation of the Estate and for its continued management and operation, the Respondent and the OC reached the consensus that over half of the deficit already incurred could be made good by the collection of a sum equivalent to 3 months of management fees payable in 2021 from the Owners (bold, underline and italics added).”

But Mr Chum saw fit to have corrected the underlined words of “the Respondent” into “Savills” before adopting his statement as his evidence-in-chief.

40.  As submitted by Ms Chan, I entirely agree with her that the above original paragraph 13 was more consistent with parties’ actions before and after the 20/2/21 OC Meeting as described above than that of paragraph 13 as corrected. In particular, on 11 February 2021, Savills had already received its notice of termination from the OC. Its management of the Estate would not continue beyond 31 May 2021. One thinks that there was no motive or interest for Savills to reach any alleged consensus with the OC to collect management fees to make good the accumulated deficit of the Estate. I therefore give full weight to the above original paragraph 13 verified by Mr Chum and reject the corrected version.

41.  All in all, though the decision to issue the 1^st DN was made by the IO, I find that the respondent had been actively involved in its issue and enforcement (I do not agree with Mr Chum saying that the respondent was passive in this respect).

42.  As at 31 May 2021, according to financial statements of building management funds of the Estate for the period from 1 January 2021 to 31 May 2021 prepared by auditors engaged by Savills and dated 15 September 2021,

(1)  there was surplus income of only $9,665 at the end of the said 5-month period after receipt of management fee income amounting to $18.3 million odd (in other words, $3.6 million odd management fee income per month[12]);

(2)  bank and cash balances stood at only $49,125;

(3)  current assets stood at $5.8 million odd ($2.6 million odd being utilities and other deposit and $2.1 million odd being management fee receivable) while current liabilities stood at $3.9 million odd (there had been significant reduction in amount of accruals as compared to that of 31 December 2020);

(4)  accumulated deficit stood at $18.4 million odd;

(5)  Debris Removal Fund and Special Fund stood at $1.5 million odd and $7.3 million odd respectively; and

(6)  net liabilities of the building management funds stood at $9.5 million odd, causing the auditors to express doubt whether they may continue as a “going concern”.

43.  On 1 June 2021, the Respondent formally became the Manager.

44.  “Since 1 June 2021 until before 27 January 2022, the respondent had demanded payment of Contribution to the Operating Fund in the sum of $15,510 from the applicant as a registered owner of [her flat]… the respondent had also demanded payment of $1,800 from the applicant as a registered owner of [her car parking space]. The applicant has never made any payment thereof (bold supplied)”. The aforesaid is what Mr Chum had admitted at paragraph 15 of his first witness statement and confirmed in cross-examination. I give full weight to them.

45.  Under cross-examination, Mr. Chum further admitted to Ms Chan that, during the above period, the respondent had sent monthly statement each month (i.e. a total of 8 statements) to the applicant to chase her to make payment of the said $15,510. I also give full weight to this admission.

46.  Despite Ms Chu’s extensive cross-examination, I accept applicant’s hearsay evidence[13] that, in early July 2021, an unidentified staff of the management office of the Estate (on behalf of the respondent) had also made a phone call to her sister[14] to remind applicant that she had failed to make payment of “Operating Fund”[15] as demanded by the 1^st DN. On this point, applicant’s evidence is, I think, corroborated by an email she sent on 17 August 2021 at 1248 hours to property manager of the respondent at the Estate complaining, inter alia, of nuisance call to her sister[16].

47.  Hence, though the respondent had not, after 1 June 2001, collected or received from the applicant the $15,510 demanded of her in the 1^st DN, it did, I find, request and demand the same from her from 1 June 2001 until 26 January 2022.

48.  On 26 July 2021, the applicant commenced this Application against the respondent in respect of payment demanded from her under the 1^st DN.

49.  On 31 August 2021, respondent’s solicitors[17] wrote letter to the applicant querying whether Lands Tribunal has jurisdiction over the respondent over her then sole complaint of the 1^st DN[18].

50.  On 27 November 2021, Annual General Meeting of the Owners of the Estate for the year 2021 was held. It was attended by legal advisors[19] and representatives of the respondent, which made its report on financial situation of the Estate by reference to audited statements for the 5-month period ended 31 May 2021 above.

(1)  The respondent highlighted that there were accumulated deficits for “Residential Common” and “Commercial Common” sections but accumulated surplus for “Carpark Common” section.

(2)  The respondent claimed to have received $994,603, $49,220 and $220,110 (i.e. a total of $1.2 million odd) from Savills on 29 June, 10 August and 2 November 2021 respectively and that Savills had “almost used up” all Owners’ Retained Fund, Special Fund, Debris Fund, Owner’s Management Deposit and Utility Deposit.

(3)  The respondent reported that it had provided to electricity company its bank guarantee in sum of $2.5 million odd for electricity supply deposit of the Estate after it took office as the Manager (I accept the evidence of Mr Chum to that effect).

51.  On 6 December 2021, the management office of the Estate (on behalf of the respondent) issued notice to all the owners that current management fee income was insufficient to cover the general expenditure and that, pursuant to clause 16 of the DMC, management fee in draft 2022 budget for Residential Accommodation would be increased by 10% while that for Commercial Accommodation and Car Parking Spaces would remain unchanged.

52.  On 10 December 2021, the OC held another meeting (10/12/21 OC Meeting) attended by respondent’s representatives. Under 2^nd agenda of “to discuss and resolve arrangement for making up the large accumulated deficit …”, it was recorded in its minute that:

(1)  “jurisdiction issue about collection of 3 months management fee as “Operating Fund” was proceeding in Lands Tribunal, and it may take a long time”;

(2)  the respondent suggested that a large accumulated deficit stated by Savills ($20 million odd) should be recovered in full to maintain a stable and healthy financial status of the building account, the Manager having the right to offset the same amount by means of collecting management fees according to clause 21[20] of the DMC; and

(3)  it was also suggested that 3 months’ management fees for operating fund previously collected from car parking spaces owners be refunded because of surplus in car park common areas accounts.

53.  As recorded in the minute under the same agenda, “After discussion, all the attended Members agreed and decided to collect three months’ management fees from residential common areas owners and commercial common areas owners for covering part of the accumulated deficit and to refund to relevant car park common areas owners. Such fees could be offset if residential common areas owners and commercial common areas owners have paid three months’ management fees for operating fund before. The respondent will need to issue notices and debit notes before mid-January next year to collect the fees and legal actions will also further be taken against those owners who still default on their payments after thirty days (bold, italics and underline added)”.

54.  Under 3^rd agenda of 10/12/21 OC Meeting (i.e. to discuss and resolve on draft 2022 budget and increase of existing management fee), it was recorded in minute that “the budget included regular expenses only while any non-regular or ad hoc expenses would be deducted from the Operating Fund equivalent to three months’ management fees when necessary or upon agreement of the OC… and that, after discussion, the proposed 10% increase in management fee was approved. Under the same agenda, it was also recorded that “the OC thought that the collection of three months’ management fees was (sic) one-off measure, and it should be avoided in the future. Instead, management fee should be adjusted yearly to reduce the serious financial burden caused by the great accumulated deficit (bold and italics added)”.

55.  At item 8.2 of the minute of the 10/12/21 OC Meeting, all members of the OC agreed to employ respondent’s solicitors as new legal advisor of the Estate.

56.  On 14 January 2022, the respondent by its solicitors[21] took out interlocutory application to strike out this Application on, inter alia, the ground that this Tribunal does not have jurisdiction (Striking-out Application).

57.  On 25 January 2022, the Striking-out Application was heard at Lands Tribunal. The respondent withdrew the same and the applicant was given leave to amend this Application.

58.  On 27 January 2022, regarding applicant’s residential unit, the Respondent issued the 2^nd DN[22] demanding the applicant to pay by the due date of 28 February 2022 a total due amount of $15,510, whose particulars are: “Additional contribution to settle partial accumulated deficit at $15,510 Less: previous payment on operating fund at $0”.

59.  The applicant was served with the 2^nd DN together with a notice of even date addressed to all owners of residential units, commercial accommodation and car parking spaces of the Estate and issued by the management office of the Estate entitled “Additional Contribution to Settle Partial Accumulated Deficit for the Building Accounts … by All Owners of Residential Units & Commercial Accommodations (bold and italics supplied)”[23].

60.  The respondent advised all the above owners in the above notice that, as per attached annexed balance sheet of the Estate as at 31 May 2021 prepared by Savills’ auditors[24], there was $20 million deficit for residential cost center and $261K odd deficit for commercial cost center which “almost used up the whole of the management fees & utilities deposits and special fund” of the Estate.

61.  By the said notice, the respondent further advised all the above owners that: -

(1)  “… the amount of previous contribution to operating fund, which is equivalent to 3 months’ management fee, paid by [residential and commercial owners] will be deducted from the amount billed in the attached debit note;

(2)  “… carpark owners should not bear such accumulated deficit since car park common areas account is in surplus of $2.3 million odd [according to attached balance sheet]. For the carpark owners, we will arrange to refund the aforesaid 3 months’ management fee in due course;

(3)  “…in accordance with Clause 21[25] … of [the DMC] …in order to maintain the necessary stable and healthy condition of the building accounts, all owners of residential units & commercial accmmodations shall make good a due proportion and are therefore requested to make a further contribution. After discussion with OC, partial accumulated deficit should be made good to maintain normal operation of the Estate. Attached please find [2^nd DN] for… settlement..., whose amount is calculated based on three months’ pre-increase management fee for the year of 2021, the total contributions from all owners of Residential Units and Commercial Accommodations are $10 million odd and $67K odd respectively (bold, underline and italics added)”;

62.  On 28 February 2022, the Applicant amended this Application to raise matters that happened on or after 1 June 2021, including issue of the 2^nd DN and alleged waiver to car parking spaces owners[26].

63.  On 8 March & 10 April 2022, the respondent issued 2 reminders to the applicant demanding her to pay $15,510 due on 2^nd DN plus collection charge at 10% thereof, overdue interest (at prime rate + 2%) accruing as from 1 March 2022 and (for the 2^nd reminder) legal charges.

64.  As was said above, the applicant did not settle the amount stated on the 2^nd DN either and was taken by the respondent to SCT with trial pending.

65.  On 10 May 2022, the respondent appointed new solicitors[27] to act for it in this Application.

66.  On 23 May 2022, new solicitors for the respondent filed on its behalf Notice of Opposition and Counterclaim at Lands Tribunal, alleging, among others, that the demand in 1^st DN has “already been cancelled, and the amounts previously collected have already been refunded or used to pay off (italics supplied)” the demand in the 2^nd DN. Hence, “the question of law that the application seeks determination in this Application has ceased to be of practical relevance but is only of theoretical interest (italics supplied)”[28]. Significantly, the respondent then counterclaimed against the applicant a declaration that it is entitled to collect from her the sums demanded under both DN.

67.  On 15 June 2022, new solicitors for the respondent filed notice with this Tribunal to withdraw its entire Counterclaim against the applicant.

68.  For the following reasons, I reject Ms Chu’s submissions that both DN are entirely separate and distinct as the respondent asserted. To the contrary, I accept Ms Chan’s submissions that their issue was inter-related and that the 2^nd DN was issued by the respondent by way of a tactical move attempting to thwart this Application at a time when its main focus was on the 1^st DN.

(1)  I fully bear in mind that, comparing both DN, the 2^nd DN (targeted at two smaller groups for payment[29]) was issued by a different entity[30] with different worded particulars[31].

(2)  But the 2^nd DN was issued on 27 January 2022 by the respondent apparently on OC’s earlier instructions as recorded in minute of 10/12/21 OC Meeting. It was, I think, not much different from that issued by the OC direct as in the case of the 1^st DN.

(3)  Reading the titles and contents of the notices accompanying both DN and the particulars om the face of the 2^nd DN, both DN were, on the face of them, issued with the same purpose of requiring residential owners (including the applicant) and commercial owners to contribute the same amount of money i.e. an amount equivalent to 3 months’ management fee at pre-increased 2021 level[32] to make good in part accumulated operating deficit of the Estate.

(4)  Nonetheless, one notes that respondent’s suggestion or recommendation at 10/12/21 OC Meeting of seeking contributions from owners to make good the entirety of accumulated operating deficit was not acted upon by the OC in the end.

(5)  Despite the word “additional” or “further” before the word “contribution” in the minute or on the face of the 2^nd DN, the payment sought under the 2^nd DN was not in substance a second round of payment by the relevant owners. The Estate did not, one notices, become financially better off after its issue as any payment made on the 1^st DN by residential and commercial owners will be deducted from that billed in the 2^nd DN. They need to pay only one round anyway, according to the minute of 10/12/21 OC Meeting and respondent’s explanations in notice accompanying the 2^nd DN.

(6)  The contribution sought under the 2^nd DN was also, one thinks, not 2^nd instalment of 6 months’ management fee envisaged in 20/2/21 OC Meeting or in the notice accompanying the 1^st DN. The idea of demanding total contributions equivalent to 6 months’ management fee was abandoned by the OC in the end.

(7)  To explain issue of the 2^nd DN, the respondent advanced (and Mr Chum gave evidence to assert) that it was done to give a better “label” to reflect the true nature of the payment sought. Such explanation was, however, nowhere found in the minute of 10/12/21 OC Meeting or in the notice accompanying the 2^nd DN. I do not accept the said purported explanation.

(8)  Indeed, in so far the OC resolved to refund to car parking space owners contribution previously received from them on the 1^st DN (as car park common areas account was in surplus), the Estate became financially worse off after the issue of 2^nd DN.

(9)  Moreover, one thinks the above refund to car parking space owners could have been achieved by dealing with such owners alone. In other words, the 2^nd DN needed not have been issued as well on residential and commercial owners, especially on those who had already paid up 3-month management fee on the 1^st DN.

(10)  At the time of the 10/12/21 OC Meeting and at the time of the issue of the 2^nd DN, the respondent was likely, I think, under legal advice and misapprehension that it was legally entitled to issue the 2^nd DN under clause 21 of the DMC[33] without OM Resolution (I do not believe Mr Chum’s contradictory evidence at paragraph 20 of his supplemental witness statement that the respondent was then, on legal advice received, intending to rely on numerous other clauses of the DMC referred to in this Application).

(11)  Interestingly, it was recorded in minute of 10/12/21 OC Meeting that this Application pending against the respondent had “jurisdiction issue” and that “the OC thought that the collection of three months’ management fees was (sic) one-off measure, and it should be avoided in the future”.

(12)  Considering all the above matters, I think it likely that the OC (and the respondent) was/were then concerned about legality of their actions over the 1^st DN (which was then being challenged by this Application) and had therefore taken extra trouble, expenses and inconvenience to issue the 2^nd DN again on residential and commercial owners to demand same amount already demanded (and, in some cases, already paid) on the 1^st DN with the ulterior purpose of thwarting the applicant’s complaint over the 1^st DN against the respondent in this Application.

(13)  By issuing the 2^nd DN in the amount and manner as it did, the respondent was likely hoping, I think, that the applicant could have no legal cause or ground to complain further in this Application and that this Application could be put to its end earlier.

69.  At the same time, the OC, I must point out, had never formally “cancelled” or “withdrew” the 1^st DN it issued nor had it notified all owners to that effect.

70.  Indeed, the particulars of the 2^nd DN issued by the respondent also worked, I think, on the premises that the 1^st DN remained valid and that any payment of the same amount made under such valid 1^st DN would be deducted from that billed in the 2^nd DN.

71.  Put it another way, if an owner had paid up on the 1^st DN, you need not, according to the respondent, pay the same amount again on the 2^nd DN. But, as the applicant had not paid up on the 1^st DN, it is, one thinks, arguable at law that she may be liable on both DN (as she was indeed once counterclaimed on both DN by the respondent), though the respondent had elected so far not to pursue her on the 1^st DN anymore (as it may not get double compensation for the same loss).

72.  On 20 December 2022, the respondent amended its Notice of Opposition, contending for the first time that clauses 18(a), (b) and (e) of the DMC could authorize it as the Manager to demand payment of contribution from the owners, including the applicant, with or without OM Resolution.

The respondent bound by the DMC

73.  Ms Chan rightly, I think, submitted that the powers and duties of the respondent as the Manager are governed by the DMC and the Management Agreement: Song Ling Investment Co Ltd v Kin Hing Godown Ltd, unreported, CACV 4/1994, 24 May 1994, where Power V-P said at p.7 as follows:

“The relationship between the appellant as designated manager and the owners is, the meetings having been held to have no legal effect, governed by nothing other than the Management Agreement and the Deed of Mutual Covenant. The management is authorized and in some cases required to perform the duties imposed upon it by those documents and is entitled to recover expenditure made in the exercise of those duties. It is essentially a contractual matter.”

74.  Ms Chu did not, I note, argue otherwise. Indeed, clause 2(1) of the Management Agreement quoted at [35(1)] also provides that the respondent be bound by the terms of the DMC, unless the Management Agreement modifies it. Neither counsel had argued that any particular clause of the Management Agreement had prevailed over, say, clause 18 of the DMC in this case.

75.  The applicant’s case, said Ms Chan, is that there is no provision in the DMC that empowered or authorized the respondent in the circumstances of this case to request, collect and/or receive from the applicant the sums demanded under both DN[34].

76.  Ms Chu, however, submitted that, before owners’ corporation is formed, clause 18(e) of the DMC gives discretion to the respondent as the Manager to decide without OM Resolution whether to demand from the applicant both sums in both DN[35]. In reply, Ms Chan submitted that OM Resolution is necessary or required for clause 18(e) of the DMC to apply[36] and it cannot be denied that no OM Resolution was passed for both DN in this case.

DMC budgeting provisions

77.  Before dealing with clause 18 below, one should, I think, first note that, after its appointment took effect on 1 June 2021, the respondent became “Manager” as defined in the DMC and that “Special Fund” is defined therein to mean one or more of the Special Funds maintained by the Manager pursuant to clause 18 thereof.

78.  But not for modification by the Management Agreement[37], clause 12 of the DMC would have provided that the annual remuneration of the Manager shall be 10% of the total annual expenditure (excluding the Manager’s remuneration and any capital expenditure or expenditure drawn out of the Special Fund), provided that, by OM Resolution, any capital expenditure or expenditure drawn out of the Special Fund may be included for calculating the Manager’s remuneration at the rate provided under the said clause, or at such lower rate as the Owners may consider appropriate. And no variation of the said percentage of the annual remuneration of the Manager may be made except with the approval of OM Resolution.

79.  Under clause 13(a), 13(b), 13(c)(ii) and 14 of the DMC, the total amount of management expenditure[38] payable by the Owners during any financial year shall be the total proposed expenditure during that year as specified in a draft budget prepared by the Manager in consultation with the OC and, when the Manager has so complied, the amount that the Owners shall contribute towards the management expenditure shall be calculated and adjusted accordingly (clause 13(d) & (e) of the DMC further provides for preparation of revised budget by the Manager by way of same procedure of draft budget).

80.  Importantly, if there is an Owners’ Corporation, it may by a resolution of the Owners, reject the budget or revised budget: clause 13(f) of the DMC.

81.  Clause 14 of the DMC prescribes that the annual budget shall be in 2 parts[39]

“Provided that expenditure of a capital and/or improvement nature for the improvement of the Development and/or the replacement or improvement of installations, systems, equipment and apparatus within or forming part of the Common Areas and Facilities and/or for the efficient management and maintenance of the Development including the initial capital costs of setting up a Shuttle Bus Service (if any) and the cost of maintaining and repairing any of the Slope Structures or other structures in compliance with the Conditions shall be compiled in a separate heading within the appropriate section of the annual budget and shall be payable out of the Special Fund mentioned in clause 18 of this Deed when the same is established AND THAT the annual budget shall also set out an estimate as to the time of any likely need to draw in the Special Fund (bold, underline and italics supplied)”.

82.  The Manager shall fix the amount to be contributed to the annual budget by each Owners in accordance with the principles in clause 15 of the DMC.

83.  Under clause 16 of the DMC, if the total contributions receivable under annual budget by the Manager shall be insufficient to meet the costs and expenses then each Owner shall make good a due proportion of the estimated deficiency by making a further contribution to the Manager such further contribution being calculated in the same manner as in clause 15 and shall be payable to the Manager monthly in advance from the date specified in the written notices given by the Manager to the Owners.

Clause 18 of the DMC

84.  Coming to clause 18 of the DMC, it reads:

“(a) There shall be established and maintained and prepared by the Manager as trustee for and on behalf of all the Owners at such time as it shall deem appropriate a Special Fund for the purpose of paragraph 4 of Schedule 7[40] to the Building Management Ordinance (Cap. 344) towards payment of expenditure of a capital nature or of a kind not expected to be incurred annually, which includes but is not limited to, expenses for the renovation, improvement and repair of installation, plant and equipment in the Development Common Areas and Facilities and/or for the efficient management and maintenance of the Development Common Areas and Facilities and for the initial set up costs of the estate management office and for the initial capital costs of setting up a Shuttle Bus Service and such fund shall not be refundable or transferrable.

(b) There shall be established and maintained by the Manager as trustee for and on behalf of the Owners of the Residential Units at such time as it shall deem appropriate a Special Fund towards payment of expenditure of a capital nature or of a kind not expected to be incurred annually, which includes but is not limited to, expenses for the purchase, setting up, replacement, addition, renovation, improvement and repair of installation, plant and equipment in the Residential Common Areas and Facilities and/or for the efficient management of the Residential Commons Areas and Facilities and such fund shall not be refundable or transferable.

(c) There shall be established and maintained by the Manager as trustee for and on behalf of the Owners of the Residential Car Parking Spaces at such time as it shall deem appropriate a Special Fund towards payment of expenditure of a capital nature or of a kind not expected to be incurred annually, which includes but is not limited to, expenses for the renovation, improvement and repair of installation, plant and equipment in the Residential Car Park Common Areas and Facilities and/or for the efficient management of the Residential Car Park Common Areas and Facilities and such fund shall not be refundable or transferable.

(d) Following the execution of any Sub-Deed in respect of the Commercial Accommodation or any part thereof designating any Commercial Common Areas and Facilities, there shall be established and maintained by the Manager as trustee for and on behalf of the Owners of the relevant part of the Commercial Accommodation at such time as it shall deem appropriate a Special Fund towards payment of expenditure of a capital nature or of a kind not expected to be incurred annually, which includes but is not limited to, expenses for the purchase, setting up, replacement, addition, renovation, improvement and repair of installation, plant and equipment in the Commercial Common Areas and Facilities and/or for the efficient management of the Commercial Common Areas and Facilities and such fund shall not be refundable or transferrable.

(e) Each Owner shall also on demand pay to the Manager such further sum in each calendar year (as included in the monthly management contribution) payable in respect of the Residential Unit and/or Commercial Accommodation … and/or Car Parking Space of which he is the Owner as may be determined by a resolution of Owners at an Owners’ meeting convened under the Deed upon the recommendations of the Manager.

If there is an Owners’ Corporation, the Owners’ Corporation shall determine, by a resolution of the Owners, the amount to be contributed to the Special Fund by the Owners in any financial year, and the time when those contributions shall be payable PROVIDED THAT such contribution to the further annual sum shall be in proportion to the Management Shares allocated to the relevant Unit.

(f) Each Owner being the first assignee of his part of the Development shall upon the assignment of such part from the First Owner pay to the Manager an initial contribution to the Special Fund in an amount to be decided by the Manager which amount shall not be more than 2/12 of the first year’s budgeted management expenses payable in respect of his Unit ....

Each Owner shall on demand pay to the Manager such annual sum in each calendar year as shall be decided by a resolution passed at the annual meeting of the Owners duly convened in accordance with the provisions of this Deed to maintain the Special Fund at such level as the Manager shall recommend.

The Special Fund shall be held by the Manager on trust for the Owners and the Special Fund shall be placed in an interest bearing account opened and maintained with such .. banks … as the Manager shall think fit… and the Manager shall use that amount exclusively for the purpose specified in this Clause…

Except in a situation considered by the Manager to be an emergency, no money shall be paid out of the Special Fund unless it is for a purpose approved by a resolution of the Owners’ Committee (if any). For the avoidance of doubt, the Manager shall not use the Special Fund or any part or parts thereof for the payment of any outstanding management expenses arising from or in connection with the day-to-day management of the Development…. (bold, underline, italics and shading provided)”

DMC provisions regarding OM

85.  Under clause 60(a) of the DMC, OM may be convened by (i) the OC; (ii) the Manager; or (iii) an Owner appointed to convene such a meeting by the Owners of not less than 5% of the Undivided Shares in aggregate.

86.  Under clause 60(j) of the DMC, OM Resolution on any matter concerning the Development shall be binding on all the Owners of the Development[41] provided that (iv) “A resolution may be passed as to the manner in which the powers hereby conferred on the Manager are to be exercised or carried out but no such resolution shall be valid to the extent that it purports to take away or abrogate or prevent the exercise of any of the powers of the Manager (italics supplied)”.

OM Resolution required if clause 18(e) to apply

87.  In gist, Ms Chu submitted that the 2 sums demanded in both DN are “one-off” payment for the purposes of increasing the cashflow of the Estate and/or making good its accumulated deficit. They therefore fall within the words payment of a kind “not expected to be incurred annually” under clause 18(a) to (d) of the DMC.

88.  As payment demanded under both DN relate to residential unit owned by the applicant, the relevant clause, said Ms Chu, for the Manager to establish a Special Fund for residential unit owners is clause 18(b). The said clause, she stressed, nowhere requires OM Resolution. Ms Chu disclaimed any reliance of clause 18(f). The sums collected under both DN are not, she stressed, to maintain any Special Fund at a certain level but were contributions towards a newly established Special Fund under clause 18(b).

89.  Ms Chu submitted that there is a vital distinction in clause 18(e) between two situations - where there is an owners’ corporation and where there is none. The former uses the word “shall” while the latter uses the word “may”. The word “may” is, she stressed, a permissive or enabling expression, which provides discretion to a party to choose whether they wish to act in a certain way. Such word of “may” in clause 18(e) indicates, Ms Chu submitted, that it is optional to (or discretionary for) the Manager to decide whether OM is convened or not[42] as there is no owners’ corporation for the Estate in our case[43].

90.  To start with, the minute of 20/2/21 OC Meeting, the minute of 10/12/21 OC Meeting, both DN and their accompanying notices did not, I note, refer to “Special Fund” or clause 18 of the DMC at all. In fact, Savills has already established and maintained Special Funds for the Estate on my findings above.

91.  Nonetheless, I agree with Ms Chu that there is nothing to prevent the Manager (not the OC) from establishing new Special Fund if the requirements of clause 18 of the DMC are met. Ms Chan also did not argue otherwise. As said above, the DMC provides for “one or more” Special Funds to be established and maintained by the Manager pursuant to clause 18 thereof.

92.  Clause 18(a) to (d) of the DMC provide, I agree with Ms Chu, for 4 types of non-refundable[44] and non-transferable “Special Fund” to be held by the Manager as trustee for the relevant owners towards payment of capital expenditure or “expenditure of a kind not to be incurred annually” i.e. Special Fund for all owners, Special Fund for residential unit owners, Special Fund for residential car parking space owners, and (after execution of sub-deed) Special Fund for commercial accommodation owners.

93.  I agree with Ms Chu that, for the sum of $15,510 payable by the applicant for her residential unit in both DN, the applicable Special Fund and clause is Special Fund for residential unit owners under clause 18(b) of the DMC and it could have been set up for providing operating fund for new manager and/or making good accumulated operating deficit i.e. making payment towards such kind not expected to be incurred annually. In other words, such expenditures do not recur annually and do not form ordinary items of draft annual budget.

94.  Assuming new Special Fund for residential unit owners was established by the issue of 1^st DN or 2^nd DN as submitted by Ms Chu, clause 18(b) of the DMC itself does not, however, provide for payment or contributions by residential owners concerned. Ms Chu must, I think, still fall back on clause 18(e) of the DMC to make good respondent’s right to their collection or demand from the owners concerned.

95.  Considering the text of the said clause 18(e), I agree with Ms Chu that the word “may” is used in its permissive sense and that it should not be read as “shall” as submitted by Ms Chan[45]. However, the said discretion is, I am afraid, not given to the Manager as suggested by Ms Chu but given to, I think, owners who attended OM. In my views, the said word “may” qualifies the noun “such further sum in each calendar year (as included in the monthly management contribution)” and the person(s) who “determine” such annual sum are the above owners, who “may” or “may not” determine the same by OM Resolution.

96.  In other words, the owners in OM may, by resolution, decide to provide for no such annual sum payable by each owners on demand to the Manager, or may decide, by resolution, to provide for annual sum at such level they see fit to be payable by each owners on demand to the Manager.

97.  The final words “upon the recommendations of the Manager” at the end of clause 18(e) of the DMC suggest, in my view, that the Manager would recommend an annual figure to be determined by owners at OM by way of OM Resolution. This is, one thinks, not surprising as the Manager is supposed to have professional knowledge or experience in such matters.

98.  Had the decision-making power to determine such annual sum in clause 18(e) rest with the Manager as submitted by Ms Chu, the latter part of said clause could, one thinks, easily have been drafted as “as may be determined by the Manager”. Those words “by a resolution of Owners at an Owners’ meeting convened under this Deed upon the recommendations of the Manager” would also have, one thinks, been otiose in such case.

99.  While Ms Chu does not rely on clause 18(f) of the DMC in her submissions, it is trite that context plays an important role in modern day construction exercise. I entirely agree with Ms Chan that one should read clauses 18(d) & (f) together. Indeed, I think we should go further and read the entire DMC as a whole to ascertain the intention of its drafter at the time of its making.

100.  Reading the DMC as a whole, its overall scheme is, I think, as follows: -

(1)  Special Fund to provide for non-recurrent expenditure is segregated from recurrent annual expenses which form subject matter of annual budget prepared by the Manager in consultation with the OC[46] and these non-recurrent expenditure appears in separate section of its own in the annual budget[47] (and the Manager does not obtain prescribed percentage from it as its remuneration, and such percentage shall not be varied, unless all owners by OM Resolution otherwise decide[48]);

(2)  Pending such time when OM could practically be held, each owner upon purchase of his/her unit shall pay the Manager such initial contribution at such sum to be decided by the Manager but not more than 2/12 of first year’s budgeted management expenses in respect of his/her unit to set up Special Fund[49];

(3)  The Manager may after set up demand from each owner annual contributions to maintain such Special Fund(s) at certain level if it so recommend and obtain endorsement of owners by way of resolution passed at annual meetings of the owners convened under the DMC[50]; and

(4)  The Manager may also afterwards demand from each owner further monthly contributions (to be included in monthly management contribution) to Special Fund(s) so set up if it recommend such further sum each calendar year and obtain endorsement of owners by way of OM Resolution[51];

(5)  There is an apparent division of decision-making power between the Manager on recurrent expenses i.e. annual (or revised) budget and owners in OM on non-recurrent or capital expenditure i.e. Special Fund(s), with the OC playing only a consultative role in the former as compared to owners at OM being decision maker themselves in the latter[52].

(6)  In the event of owners’ incorporation, the power to reject annual (or revised) budget[53] and the power to determine the amount of contribution to Special Fund in any financial year and the time when those contributions shall be payable[54] shall also rest with the owners at general meeting of owners by way of resolutions.

101.  Hence, I am in agreement with Ms Chan’s alternative submission that monthly contributions to Special Fund (included in monthly management contribution) provided for by clause 18(e) is an additional route open to the Manager beyond that of annual contributions to Special Fund provided for by clause 18(f) [55].

102.  Save for initial contributions to Special Fund that cannot be decided by owners in OM, the DMC consistently requires, I think, OM Resolution for both annual and monthly contributions to Special Fund, though the initiative could in both cases come from the Manager by way of its recommendations.

103.  Hence, Ms Chan’s construction of OM Resolution being required for contributions in clause 18(e) is, I think, more consistent with the scheme of the DMC as a whole than Ms Chu’s construction dispensing with such resolution.

104.  Adopting Ms Chu’s construction, I further agree with Ms Chan, would give potentially great and unchecked power to the Manager to demand contributions from relevant (or even all) owners towards payment of potentially large non-recurrent (or capital) expenditures. Such power is, one thinks, liable to be abused by a manager easily. Giving such power to the Manager is, one thinks, unlikely what the drafters of the DMC would have intended.

105.  At [2] of The Grande Properties Management Ltd v Sun Wah Ornament Manufactory Ltd (2006) 9 HKCFAR 462, Mr Justice Chan PJ also remarked:

“The provisions of [DMC] and the Ordinance [Cap.344] are usually aimed at facilitating the management of the building by reducing conflicts among co-owners on the one hand and preventing abuse by the manager and the majority owner on the other. It is fair to say that most disputes are resolved by a purposive construction and common sense application of the relevant provisions of the deed and the Ordinance (italics supplied)”.

106.  Adopting a purposive construction of the DMC, I take the view that Ms Chan’s construction of OM Resolution being required for clause 18(e) of the DMC to apply serves better than Ms Chu’s construction dispensing the same to prevent abuse by the Manager and best reflects the intention of the drafters of the DMC.

107.  Overall, on the proper construction of clause 18(e) of the DMC, I would hold that OM Resolution is necessary or required as a pre-condition before the respondent could lawfully request, collect or receive from the applicant as a residential unit owner of the Estate the 2 sums of $15,510 demanded from her under both DN. As OM Resolution was absent in our case, the respondent as the Manager was not entitled under the DMC to request, collect or receive the said sums from the applicant at all material times on or after 1 June 2021.

Declaration granted on the 2^nd DN

108.  Given that proceeding against the applicant on the 2^nd DN is pending to be tried at SCT, it is, I think, appropriate in all the circumstances of this case to exercise my discretion to grant the declaration sought by the applicant against the respondent on the 2^nd DN. Indeed, the respondent took no issue on the exercise of the discretion of this Tribunal on the 2^nd DN.

Declaration also granted on the 1^st DN

109.  As said in [12] and [66], the respondent took issue on the exercise of the discretion of this Tribunal on the 1^st DN only.

110.  Ms Chu, and Ms Chan, have brought to the attention of this Tribunal no small number of authorities on exercise of discretion to grant, and decline, declaration, in particular on cases where it was said to be futile or academic. I am grateful for them bringing the principles concerned to my attention[56].

111.  In particular, I find [19] of judgment of His Honour Judge LAM (as he then was) in曾婉玲v兆隆苑業主立案法團, unreported, LDBM 199/2001, 18 September 2001, most helpful to assist me to decide how I should exercise my discretion in this case on the 1^st DN, despite it is a case where the owners have incorporated themselves into an owners’ corporation.

112.  However, the matter is, I would point out, an exercise of my discretion at the end of the day and it thus depends much on the particular circumstances of each case.

113.  All submissions of both counsels having been considered[57], in all the circumstances of this case, I also find it appropriate to grant the declaration sought by the applicant against the respondent on the 1^st DN for the following reasons:

(1)  I have not found for cancellation or withdrawal of the 1^st DN on or after issue of 2^nd DN as alleged by the respondent.

(2)  On my findings, I find that the applicant may arguably be still liable to be pursued by the respondent on the 1^st DN.

(3)  On my findings, the respondent had, after 1 June 2021 and until 26 January 2022, demanded the applicant to pay the sum of $15,510 demanded on the 1^st DN. The respondent had further, between 23 May 2022 and 15 June 2022, counterclaimed against the applicant for declaration on, inter alia, the 1^st DN.

(4)  Absent OM Resolution for the same, the respondent was, I find, not lawfully entitled under the DMC to demand the applicant to pay the said sum in the 1^st DN after 1 June 2021.

(5)  With legal advice open to the OC and itself, the respondent did not see fit to rectify its mistake above but had persisted in wrongfully issuing the 2^nd DN on instructions of the OC without OM Resolution to make same demand on the applicant.

(6)  On my findings, both DN are inter-related and the respondent had, I find, issued the 2^nd DN by way of a tactical move to thwart applicant’s application against it on the 1^st DN on alleged ground of “jurisdiction”.

(7)  After issue of both DN, there remains today substantial accumulated operating deficit of the Estate for the respondent to tackle during the rest of its term as the Manager (including any renewal thereof).

(8)  It would, in my views, be in the best interest of the management of the Estate as a whole that the above persistent mistakes of the respondent be pointed out so that the binding contractual mechanism laid down in the DMC be strictly followed by the respondent in the future for the benefit of the applicant (if not for the benefit for the rest of the owners of the Estate).

(9)  Hence, it serves, I think, good, practical and useful purposes for declaration to be granted as well on the 1^st DN.

Disposition

114.  I grant in favour of the applicant the following declaration against the respondent: At all material times since 1 June 2021, absent resolution passed by owners in Owners’ Meeting convened under the registered Deed of Mutual Covenant and Management Agreement dated 27 April 2011 governing the subject estate situated in Ap Lei Chau known as “Larvotto”, the respondent in its capacity as the manager of the said estate was, and is, not lawfully entitled under the said Deed of Mutual Covenant to request, collect or receive from the applicant i) the sum of $15,510 demanded in a debit note No.L2021-03-227 dated 1 March 2021; and ii) the sum of $15,510 demanded in a debit note No.2022A10227 dated 27 January 2022 both addressed to the applicant as a residential unit owner of the said estate.

Costs order nisi

115.  Costs normally follow the event after trial. As the applicant is successful in this Application, I make a costs order nisi that the costs of this Application, including all reserved costs and the costs of this trial together with certificate of counsel, be paid by the respondent to the applicant to be taxed on District Court scale if not agreed. This costs order nisi shall become absolute if none applies to vary it within 14 days of this judgment.

116.  Finally, I thank both Ms Chu and Ms Chan for their submissions.