Re The Incorporated Owners of Wah Kai Industrial Centre, Texaco Road

LDBM 572/2001

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Building Management Application No. LDBM 572 of 2001

_________________

___________________

_________________

D E C I S I O N

_________________

Background

1. This is a Petition presented in the Lands Tribunal by the Secretary for Home Affairs ("the Petitioner") for the winding up of The Incorporated Owners of Wah Kai Industrial Centre ("the Corporation") pursuant to section 33 of the Building Management Ordinance, Cap. 344 ("the BMO") and section 327 of the Companies Ordinance, Cap. 32.

2. The Petitioner is the "Authority" as defined in section 2 of the BMO.

3. The Corporation is an Owners' Corporation registered on 21 November 1984 under the Multi-Storey Buildings (Owners Incorporation) Ordinance, Cap. 344, which is now the BMO.

4. Wah Kai Industrial Centre ("the Building") was situate at No. 221 Texaco Road, Tsuen Wan, New Territories, Hong Kong, and was erected on the piece or parcel of land known as The Remaining Portion of Tsuen Wan Inland Lot No. 53 ("the Land").

5. By Government Notice No. 3673 dated 30 June 1999 published in Gazette No. 26/1999, the Land was resumed by the Government under section 18 of the Railways Ordinance, Cap. 519 for the construction of the West Rail (Phase I). The date of reversion was 2 October 1999.

6. The Government took possession of the Land and the Building on or about 26 September 2000. The Building has since then been demolished and the West Rail (Phase I) is currently under construction by the Kowloon Canton Railway Corporation.

7. By virtue of section 18(2)(b) of the Railways Ordinance, the effect of the resumption was to vest the Land and the Building in the Government. The consequence is that the owners of the Building ceased to have any interest in the Land or the Building. Compensation was payable by the Government to the former owners of the Building under Part III of the Railways Ordinance.

8. Some of the former owners owed management fees and other charges to the Corporation prior to the resumption, and charging orders/memoranda of charges were registered against the defaulting owners' units in the Land Registry. These monies are still outstanding. The solicitors acting for the Kowloon Canton Railway Corporation have therefore withheld certain amounts (approximately $339,000 in total) out of the compensation monies paid by the Government on account of the outstanding management fees or charges.

9. There is however no person to give valid receipt or discharge on behalf of the Corporation in respect of the outstanding management fees or charges. Therefore, the Petitioner presents this Petition for the winding up of the Corporation in order that a liquidator can be appointed to act on behalf of the Corporation and wind up its affairs.

10. The Official Receiver has raised a number of concerns regarding the present Petition and would like this Tribunal to rule on the following matters:-

(1)Whether the Lands Tribunal has jurisdiction to wind up the Corporation;

(2)Whether the Petitioner has locus to present this Petition; and

(3)Who should act as the provisional liquidator or liquidator of the Corporation.

Jurisdiction of the Lands Tribunal to wind up the Corporation

11. The jurisdiction of the Lands Tribunal is set out in section 8 of the Lands Tribunal Ordinance ("the LTO"). Section 8(5) of the LTO provides that:-

"The Tribunal shall have such other jurisdiction as may be vested in it under any Ordinance including any Ordinance specified in the Schedule."

12. The Schedule to the LTO specifically refers to the BMO. Thus, it is clear that the Lands Tribunal has such jurisdiction as may be vested in it under the BMO.

13. Section 45(1) of the BMO provides that -

"The tribunal shall have jurisdiction to hear and determine any proceedings specified in the Tenth Schedule."

14. Paragraph 1 of the Tenth Schedule to the BMO states as follows -

"Proceedings relating to the interpretation and enforcement of the provisions of this Ordinance."

15. The Lands Tribunal has therefore jurisdiction to hear and determine proceedings relating to the interpretation and enforcement of the provisions of the BMO. The provisions that require consideration are sections 33, 34A and 34B of the BMO.

16. Section 33 of the BMO stipulates that:-

"(1) A corporation may be wound up under the provisions of Part X of the Companies Ordinance (Cap. 32) as if it were an unregistered company within the meaning of that Ordinance and the provisions of that Ordinance relating to the winding up of an unregistered company shall, in so far as they are applicable, apply to the winding up of a corporation.

(2) In applying the provisions of the Companies Ordinance (Cap. 32) under subsection (1)-

(a) a reference to a director of a company shall be deemed to be a reference to a member of a management committee; and

(b) a reference to a member of a company shall be deemed to be a reference to an owner."

17. Section 34A of the BMO provides that:-

"(1) Where-

(a) a winding-up petition in respect of a corporation is presented to the tribunal by a petitioner; or

(b) a winding-up order in respect of a corporation is made by the tribunal,the petitioner shall, as soon as is reasonably practicable, deliver a copy of the winding-up petition or the winding-up order, as the case may be, to the Land Registry.

(2) The Land Registrar shall, on receipt of the copy of the winding-up petition or winding-up order, as the case may be, referred to in subsection (1)-

(a) enter particulars of that petition or order in the register; and

(b) endorse particulars of that petition or order on any record at the Land Registry in respect of a relevant owner.

(3) If the petitioner referred to in subsection (1) fails to comply with that subsection no action or proceeding under the Companies Ordinance (Cap. 32) shall be commenced or proceeded with until such time as he complies with that subsection, and any action or proceeding which has been commenced in respect of the corporation shall be stayed by the tribunal or otherwise cease and be of no effect until such time as that petitioner complies with that subsection."

18. Section 34B of the BMO defines "commencement of the winding up" to mean "the time of the presentation of the petition to the tribunal for the winding up of the corporation".

19. For the purposes of the BMO, the "tribunal" is defined to mean the Lands Tribunal established under section 3 of the LTO: see section 2 of the BMO.

20. Mr. Chow, Counsel for the Petitioner, submits that section 33 of the BMO contemplates that winding-up petition of a corporation established under the BMO can be presented to the Lands Tribunal, and section 34A of the BMO further contemplates that the Lands Tribunal can make a winding-up order. To hold that the Lands Tribunal has no jurisdiction to entertain a winding up petition or make a winding up order in respect of the Corporation would mean that the aforesaid provisions of sections 34A and 34B of the BMO are completely otiose or repugnant.

21. Mr. Chow further submits that a petition to wind up a corporation is a proceeding relating to the enforcement of the provisions of the BMO, and hence falls within paragraph 1 of the Tenth Schedule thereto. It relates to the enforcement of the provisions of the BMO, because it seeks to carry out or carry into effect the provisions of section 33 for the winding up of a corporation registered under the BMO.

22. I agree with Mr. Chow. I find that the phase "a winding-up petition in respect of a corporation is presented to the tribunal by a petitioner" in section 34A(1)(a) of the BMO clearly indicates that a winding-up petition of a corporation can be presented to the Lands Tribunal. The phase "a winding-up order in respect of a corporation is made by the tribunal" in section 34A(1)(b) of the BMO also makes it clear that the Lands Tribunal can make a winding-up order in respect of a corporation registered under the BMO.

23. Further support for the above conclusion is provided by the legislative history of the BMO. The original version of sections 34A and 34B of the BMO, contained in the Multi-Storey Buildings (Owners Incorporation) (Amendment) Bill 1992, referred to the winding-up of a corporation by the "court". The word "court" was defined in the Multi-Storey Buildings (Owners Incorporation) Ordinance to mean "the District Court", but the word "court" was eventually replaced by the word "tribunal" in the current legislation. By replacing the word "court" with the word "tribunal", it is clear that the legislature must have intended that the Lands Tribunal is to be empowered to make winging-up orders in respect of corporations established under the BMO.

24. Mr. Glen of the Official Receiver, however, submits that section 33 of the BMO only means that the members of a management committee or an owner can petition to the Court of First Instance under Part X of the Companies Ordinance as if a corporation were an unregistered company. The provisions of the Companies Ordinance would then apply. Specifically, section 327 of the Companies Ordinance provides that an unregistered company may be wound up under "this" Ordinance, i.e. the Companies Ordinance, and it in turn means that it may be wound up by the Court of First Instance. In practice, therefore, an application under section 33 would have the petitioner filing the petition with the Court of First Instance and obtaining a HCCW number with all the consequences that would follow. The reference in section 33 to "insofar as the (winding-up provisions) are applicable" is a coverall reference to any peculiarities of a corporation as against a normal company.

25. I do not agree with Mr. Glen. The wordings in section 33 of the BMO do not suggest that a winding-up petition of a corporation must be presented to the Court of First Instance. In fact, to make such an interpretation, it would mean that sections 34A and 34B of the BMO are completely out of place. Mr. Glen suggests that it is probably a mistake in the drafting. I do not accept such a contention. Looking at the legislative history as aforesaid, I think the word "tribunal" was intentionally inserted to replace the word "court". Even if the word "court" had not been replaced, it would mean that the petition is to be presented to the District Court, not the Court of First Instance.

26. Mr. Glen suggests that there are many practical difficulties to present a winding-up petition in the Lands Tribunal, such as obtaining a winding-up number and paying the deposit for the winding-up. There are also difficulties in involving the Lands Tribunal in all the subsequent matters after the winding-up order is made. I do not think that these practical difficulties should prevent the Lands Tribunal from having the jurisdiction. The procedures in the Lands Tribunal are informal and if necessary they can be changed to adapt the situation. I do not think that the matters raised by Mr. Glen should pose any problem for the Lands Tribunal.

27. In fact, section 10(1) of the LTO permits the Lands Tribunal, so far as it thinks fit, to follow the practice and procedure of the Court of First Instance in the exercise of its civil jurisdiction. Section 10(1) reads as follows:-

"The Tribunal shall have the powers which are vested in the Court of First Instance in the exercise of its civil jurisdiction in respect of the following matters-

(a) the attendance, examination and payment of witnesses;

(b) the hearing of any matter with the assistance of an assessor or assessors;

(c) the consolidation or hearing of any matters;

(d) the punishment of persons guilty of contempt;

(e) the ordering of inspection of any premises or place;

(f) the entering and viewing of any premises or place;

(g) the enforcement of decisions, judgments and orders;

(h) the making of orders as to interim payments;

(i) the making of orders in default of any action by a party,

and, so far as it thinks fit, may follow the practice and procedure of the Court of First Instance in the exercise of its civil jurisdiction."

28. Mr. Glen submits that section 10(1) provides specific powers that are vested in the Court of First Instance in the exercise of its civil jurisdiction to the Lands Tribunal, but they do not include the powers of the Court of First Instance in its winding-up jurisdiction. Thus, it is less open to conclude that there is an implied authority.

29. I do not agree with Mr. Glen. The jurisdiction of the Lands Tribunal in winding-up matters comes from the interpretation of sections 33, 34A and 34B of the BMO as aforesaid. However, as far as practice and procedure are concerned, I am of the view that the Lands Tribunal can adopt those in the Court of First Instance in respect of winding-up matters. The second part of section 10(1), i.e. "and, so far as it thinks fit, may follow the practice and procedure of the Court of First Instance in the exercise of its civil jurisdiction", should be read separately from the first part. The first part is referring to the powers in those matters listed in sub-paragraphs (a) to (i), whereas the second part is concerning the practice and procedure that the Land Tribunal can adopt. From the reading of the wordings, I do not think that the second part is also confined to those matters mentioned in sub-paragraphs (a) to (i).

30. By reasons of the matters aforesaid, I find that the Lands Tribunal does have jurisdiction to wind up a corporation registered under the BMO.

Whether the Petitioner has locus to present the Petition

31. Section 45 of the BMO provides as follows-

"(1)The tribunal shall have jurisdiction to hear and determine any proceedings specified in the Tenth Schedule.

(2)No person other than a person to whom this section applies shall be competent to commence any proceedings referred to in subsection (1).

...

(4)This section applies to the following persons, namely-

...

(aa) the Authority;"

32. Since the Petitioner is the "Authority" as defined in section 2 of the BMO, it is clear that the Petitioner has the locus to present the Petition.

33. Mr. Glen submits that the Petitioner would not be able to present a winding-up petition in the Court of First Instance by virtue of section 179 of the Companies Ordinance. However, that section relates to a normal winding-up petition of a company, not a corporation registered under the BMO. The Petitioner would not be an interested party to a winding-up petition of a company. So it is not necessary to include the Petitioner as a party that can present a winding-up petition of a company in section 179 of the Companies Ordinance. For a corporation registered under the BMO, the Petitioner is an interested party, and hence it is necessary that the Petitioner is able to present a winding-up petition of a corporation.

34. I therefore find that the Petitioner does have the locus to present the Petition herein.

Who shall be the Provisional Liquidator or Liquidator?

35. By virtue of section 33 of the BMO, the provisions of the Companies Ordinance relating to the winding-up of an unregistered company shall, in so far as they are applicable, apply to the winding up of a corporation. Section 327(1) of the Companies Ordinance provides that-

"Subject to the provisions of this Part, any unregistered company may be wound up under this Ordinance, and all the provisions of this Ordinance with respect to winding up shall apply to an unregistered company, with the exceptions and additions mentioned in this section."

36. Section 194(1)(a) of the Companies Ordinance provides as follows-

"subject to paragraph (aa) and subsection (1A), the Official Receiver shall by virtue of his office become the provisional liquidator and shall continue to act as such until he or another person becomes liquidator and is capable of acting as such;"

37. Neither section 194(1)(aa) nor section 194(1A) has any application to the present case. It follows that, upon the making of a winding-up order in respect of the Corporation, the Official Receiver automatically becomes the provisional liquidator of the Corporation without the need for any further order to be made by the Lands Tribunal. The Official Receiver remains in office as provisional liquidator until a liquidator is appointed.

38. Mr. Glen raises the concerns that, as liquidator, the Official Receiver's actions would be open to challenge by any party with an interest in the matter. The actions could also leave the Official Receiver vulnerable to claims for damages, as the Official Receiver would not have the protections accorded by the Companies Ordinance.

39. I do not see any grounds in the concerns raised. The Official Receiver is commissioned to carry out such duties as required by law. Unless he is negligent, in breach of any legal obligations or acting beyond his powers, he should not be held liable for any claims. He should have the same protection under the Companies Ordinance as if he was doing a normal company winding-up case, because his appointment is also made pursuant to the Companies Ordinance.

40. In the circumstances, I find that if a winding-up order is made, the Official Receiver shall be the provisional liquidator or liquidator until such other person is appointed as liquidator.

Conclusion

41. In sum, my decisions on the issues raised are as follows:-

(1) The Lands Tribunal does have jurisdiction to wind up the Corporation;

(2) The Petitioner does have the locus to present the Petition herein; and

(3) If a winding-up order is made in respect of the Corporation, the Official Receiver shall be the provisional liquidator and liquidator until such other person is so appointed in his place.