The Incorporated Owners of Tak Cheong Building (Battery Street) v. Tong Wai Tak

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Building Management Application No. LDBM41 of 1999

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JUDGMENT

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1. The Applicant is the Incorporated Owners of Tak Cheong Building, at107 - 117 Battery Street Kowloon. (The Applicant)

2. The Respondent is the owner of Flat D, 3rd Floor of Tak Cheong Building. (The Respondent)

3. A Deed of Mutual Covenant dated 24th August 1977 was registered in the Land Registry under Memorial No. 1433388. (DMC)

4. Under the DMC, the Applicant is responsible for the management of the building, and to pay all charges and expenses relating to the building, including those for the lifts. The Respondent is liable to pay his share of the management expenses incurred by the Applicant on a monthly basis. (The management fee) The Respondent must make further contribution, if the total contribution should be insufficient to cover all expenses. These are provided under Clauses 4,5 and 6 of the Third Schedule to the DMC.

5. The Applicant claims against the Respondent for:

arrears of management fee from 3rd December 1997 to 31st December 1997 at $561.29;

arrears of management fee from 1st January 1998 to 28th February 1999 at $600.00 per month, at $8,400;

contribution to the lift renovation at $8,984.00;

and further arrears of the management fee from 1st March 1999 to the date of judgment.

The Applicant also asked for interest and costs.

6. On the Respondent's application and there being no objection from the Applicant, this Application was heard together with LDBM 104/99. In that Application, the parties are the same, except that there is a second Respondent, Sano Engineering Ltd. also represented by the Respondent. The Respondent is the first Respondent there.

The Applicant's first witness

7. The Applicant's first witness, Ms. Fok Sheung Ling(AW1), has been the Applicant's Chairman since 21st May 1997. Her evidence was that the Applicant held an Extraordinary General Meeting (EGM) on 2nd December 1997. During that meeting, the renovation of the lift was authorized by the owners with a show of hands. The Applicant's management committee held a meeting, and sent invitations to 6 major lift companies in Hong Kong to put in tenders. Three declined to tender. Only 3 companies showed an interest. Of these, the price quoted by Otis Elevator Company (H.K.) Ltd. was above the budget and so discarded. Only those of the Kone Elevator (H.K.) Ltd. and the Hong Kong Lifts Ltd. were available to be considered. Representatives of these two companies attended the Applicant's EGM, held on 19th February 1998. An officer from the Independent Commission Against Corruption (ICAC) also attended. This officer explained to the meeting, that the procedure adopted by the Applicant in inviting tender was acceptable. They explained their tenders. The owners voted in favour of the Kone Elevator (H.K.) Ltd. undertaking the lift renovation. There were 340 votes in favour of Kone, 17 votes in favour of Hong Kong Lift, and 9 invalid votes. The Applicant was to transfer an amount of $180,000 to $200,000 of the Building Fund to the lift works fund. The Building Authority later issued a works order in respect of the lift, thereby making it a mandatory item of works.

8. AW1 reported to the Applicant's general meeting, on 17th December 1998, the lift renovation was completed.

9. The previous management company fixed the amount of $600 per month for the management fee.

10. AW1's evidence was that the accounts for one year were posted up at the notice box, in the main hall of the building. The Respondent had asked to check the accounts, but without specifying the period required. AW1 considered that it should be sufficient to satisfy the Respondent, when he was asked to check at the notice box. She gave no specific instructions to the management staff about owners checking the accounts at the notice box. The Treasurer, Ms. Shing Lai Lin, assisted AW1 in the Applicant's accounts.

The Applicant's second witness

11. The Applicant's second witness, Ms. Shing Lai Lin (AW2), is the Applicant's Treasurer. She prepared the Applicant's accounts. Under her direction, the management staff would post up the monthly accounts. These would accumulate for the whole year, with the latest one on top of the previous month's, in the notice box in the main hall. All owners could inspect the accounts. She gave no instructions to the management staff as to whether owners could remove the accounts.

The Respondent's case

12. The Respondent agreed that, as from 3rd December 1997, after he became an owner, he has a duty to pay the management fee and the lift renovation charges. He had paid the management fee for October and November 1997, after the sale and purchase agreement was registered in the Land Registry in his favour. Since 3rd December 1997, the Respondent had refused to pay, as he was not able to check the Applicant's accounts. He agreed that he received letters, dated 2nd February and 28th November 1998, from the Kong Shum Union Property Management Company Ltd. asking for the management fee and the lift renovation contribution. He also received a letter, dated 2nd March 1998, from the Applicant's solicitors, demanding the payment of the management fee.

13. The Respondent made an oral demand to the staff at the management office, for the accounts to be provided for his checking. This was refused. He considered the management fee of $600 per month to be very high. He wanted to understand the accounts, and to know how the building was being managed. He raised the query in one of the Applicant's General Meeting, but was not able to pursue the matter.

14. The Respondent agreed that he could read the top copy of the monthly accounts since November 1997, when he was going in and out of the building. The management staff would not allow him to touch the accounts in the notice box. The Respondent never complained in writing to the Applicant about this. The Respondent alleged that if he had been provided with the accounts in full, he would have paid the management fee in full.

15. The Respondent agreed that the Applicant's management committee has the power and duty to maintain the lift. He disagreed that the management committee has the power to repair the lift. He considered that the "agent" as mentioned in the DMC to be liable to pay for the repairs and renovation. The costs in respect of the lifts should be paid out of the management fee. If the management fee was insufficient to cover the expenses, then it should be increased.

16. The Respondent considered that the procedure in calling for tender on the lift renovation to be in breach of the Code of Practice, issued by the Authority, under Section 44 of the Building Management Ordinance Cap.344. He contended that that there must be at least 5 tenders obtained for works items costing over $100,000, while items costing over $200,000 must be resolved in the owners' general meeting. In the present case, the Applicant only invited tenders from several lift companies, of which only 3 put in tenders. The Respondent alleged that the collection of the contribution for the lift renovation was therefore illegal.

Judgment

17. The Respondent had not denied his duty to pay the management fee or the lift renovation charges.

18. The ground of opposition for the payment of the management fee was that he was not able to check the accounts in details, and that the amount of $600 per month was high. There was evidence, and the Tribunal accepts it as a fact of the case, that the Applicant had invited the Respondent to inspect the monthly accounts posted up in the building's main hall. The Respondent alleged that he was not allowed access to the monthly accounts posted up, but agreed that he made no complaint of this to the Applicant. The Tribunal does not accept this to be a fact of the case.

19. The Respondent adduced no evidence to substantiate his allegation, that the management fee of $600 per month was too high. The quantum is accepted by the Tribunal to be correct.

20. The Respondent opposed the lift renovation charges on the grounds that there was no power to renovate or install a new lift. He also alleged that the lift renovation charges should be paid out of the monthly management fee. He considered that there had been a breach of the Code of Practice in the tendering procedure for the lift.

21. The Respondent had misinterpreted the DMC. He had failed to consider the powers and duties of the Applicant, which can be carried out by the management committee and the owners in the general meetings. There is no suggestion that any of the meetings was invalid.

22. There is no illegality in the tendering procedure, when the Applicant had sought a minimum of 5 tenders for the lift project. Invitations were sent out to 6 lift companies, of which only 3 were interested. The supply of the service had been procured by invitation to tender. There is no breach of the Applicant's statutory duties.

23. The Respondent had raised other grounds that are irrelevant to the application. The Tribunal will not deal with them.

24. Judgment for the Applicant against the Respondent in the sum of $17,945.29; the arrears of management fee at the rate of $600.00 per calendar month from 1st March 1999 to the date of judgment; interest at judgment rate from 28th April 1999 until payment.

25. The Respondent is to pay the Applicant's costs, to be taxed if not agreed.

26. There is certificate for Counsel.