GOLDEN BRICK INVESTMENT CO LTD v. CHENG MEI KUEN

LDBM 55 to 69/2004
(Consolidated)

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 55 OF 2004

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J U D G M E N T

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1. These claims were first brought by the Applicant against the Respondents in the Small Claims Tribunal on 22nd August, 2003. The first hearing before that Tribunal took place on 10th October, 2003. By consent of the parties, they were transferred to this Tribunal on 3rd March, 2004 pursuant to Section 7 of the Small Claims Tribunal Ordinance.

2. The first hearing before this Tribunal took place on 13th April, 2004 and directions were given for the Applicant to file and serve its Notices of Application within 21 days and the Respondents to file their Notices of Opposition within 21 days thereafter. The hearing was then adjourned to 25th May, 2004 for further directions.

3. The Applicant filed and served its Notices of Application on 4th May, 2004. The Applicant pleaded in the Notices that it was the manager of the Respondents' building Nan Shing Court and its term lasted from November, 1995 to 16th September, 2000. It was also the manager named in the DMC of the building and was a party thereto in such capacity. The Applicant further pleaded that by reason of the default of a certain owner in paying the management fees, it had to advance its own funds to defray the management and maintenance costs and expenses. When its appointment was terminated on 16th September, 2004, it had advanced H$156,010.58 to cover the deficit. Since the Incorporated Owners of Nan Shing Court ("the IO") was only incorporated on 11th January, 2001 after the Applicant's appointment had been determined, the Applicant therefore apportioned the said sum in accordance with the management shares of the individual units and claimed the individual owners the apportioned sums.

4. On 25th May, 2004, the Solicitors for the Respondents filed a summons seeking to strike out the Notices of Application. The grounds of the applications are that the claims disclose no reasonable cause of action; the Applicant has in its Notices of Application admitted that its appointment as the manager had been terminated before the claims were made in the Small Claims Tribunal and the Applicant has no right of action against the Respondents.

5. Since the IO was only incorporated on 11th January, 2001 whilst the Applicant's appointment had been terminated on 16th September, 2000, the advancement was thus made to all the owners and not to the IO and the liability to repay came into existence before the IO had come into being. It was thus right that the Applicant should claim repayment against the individual owners and not the IO (see Hang Yick Properties Management Ltd v Incorporated Owners of Winner Building [1999] 3 HKC 574 and Jikan Development Ltd & Another v Incorporated Owners Of Million Fortune Industrial Centre [2004] 1 HKLRD 181.)

6. Despite that, the Respondents submit that the Applicant is not one of the entities named in section 45(4) of the Building Management Ordinance, Cap. 344 and thus is not competent to make the applications before this Tribunal. Section 45 reads:

"(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).

(3) Subject to the provisions of this Ordinance, nothing in this section or the Tenth Schedule shall be construed to vest in the tribunal any jurisdiction other than civil jurisdiction or any jurisdiction to make any order which would, if made, have the effect of rendering void, negativing or substantially varying in whole or in part any contractual or proprietory right enjoyed by any owner or occupier or otherwise referred to in the terms and provisions of an instrument which is registered in the Land Registry including a deed of mutual covenant (if any). (Amended 69 of 2000 s. 22)

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

(a) an owner;

(aa) the Authority; (Added 69 of 2000 s. 22)

(b) a person referred to in section 3(1)(a) or (b);

(c) a management committee;

(d) a corporation;

(e) a manager within the meaning of Part VIA;

(f) an owners' committee within the meaning of that Part;

(g) a registered mortgagee;

(h) an administrator;

(i) with leave of the tribunal, the tenants' representative; or

(j) with leave of the tribunal, any other person specified in an instrument which is registered in the Land Registry including a deed of mutual covenant (if any).

(5) In this section and the Tenth Schedule, "proprietory right" (所有權權利) includes any such right express or implied whether specified in an easement, licence, permission or otherwise.

(Added 27 of 1993 s. 37)"

7. For the definition of manager in section 45(4)(e), the Respondents also refer to section 34D(1) of the said Ordinance the relevant part of which reads:

"(1) In this Part and the Seventh and Eighth Schedules, unless the context otherwise require-

"manager" (經理人) in respect of a building, means the person who for the time being is, for the purposes of the deed of mutual covenant in respect of the building, managing that building;"

(emphasis added)

8. The Respondents thus say that the manager, being an ex-manager, falls outside section 45(4)(e). The Respondents further refer to Universal Property Management Services Ltd v Incorporated Owners of Ying Ga Garden [1997] 4 HKC 349 where H. H. the late Judge LI said in paragraph 4:

"4. The Applicant assumes that having provided management service at the Building it is the manager within the meaning of the Ordinance and therefore entitled to apply to the Tribunal for relief. I have no doubt that the Applicant cannot be regarded as for the time being managing the Building. Once the Applicant for whatever reason, due to fault or no fault of its own, has ceased managing the Building it is no longer entitled to apply to the Tribunal under the Ordinance for relief. It would be different if, for instance, the words at the material time were used instead in the definition of "manager". There is a very simple reason for the definition as it is. The Ordinance deals solely with on-going building management problems. Once a party has ceased to be the manager, right of action pertaining to the service contract cannot be based on the Ordinance, but on general law relating to, say, breach of covenant, breach of contract, amount due or tort and action should lie in a conventional court instead of the Tribunal. In LUK Chi-wing v. Incorporated Owners of Mandarin Building, BM137 of 1996, the Tribunal has already held that, by the same token and on the true construction of s. 45(4) of the Ordinance, once a party has ceased to be an owner of property in the building in question, proceedings by that party that would otherwise fall within the jurisdiction of the Tribunal would have to be brought under general law to a conventional forum instead of the Tribunal. In the premises, this application herein is misconceived. For want of jurisdiction, I may dismiss this application without further ado."

9. The Applicant responded with several points. The Applicant firstly relies on sections 45(4)(b) and 3(1)(a) of the said Ordinance. Section 45(4)(b) allows "a person referred to in Section 3(1)(a) or (b)" to make a claim in this Tribunal. Section 3(1) reads:

"3.(1) A meeting of the owners to appoint a management committee may be convened by-

(a) any person managing the building in accordance with the deed of mutual covenant (if any); or

(b) any other person authorized to convene such a meeting by the deed of mutual covenant (if any); or

(c) the owners of not less than 5% of the shares."

10. However, I agree with the Respondents that the person managing the building must mean the person currently managing the building and not a person who has sometime in the past managed the building.

11. The Applicant then relies on The Incorporated Owners of Blocks F1 to F7 of Pearl Island Holiday Flats v. Fullwin Property Management Ltd. LDBM 273 of 2000. H. H. Judge Lam (as he then was) said in paragraphs 20 to 22 of the Judgment as follows:

"20. Miss Fong accepted that her client was obliged to perform the duties under Paragraph 8 of the Seventh Schedule. The Seventh Schedule sets out the mandatory terms in a deed of mutual covenant. They were incorporated into the Deed of Mutual Covenant in the present case by reason of Section 34E(1) of the Building Management Ordinance. Section 34E(2)(a) further provides that the provisions so incorporated shall bind the owners and manager of the building.

21. Section 34D(1) defines manager as the person who for the time being is, for the purposes of the deed of mutual covenant in respect of the building, managing that building. As such, it has been held in Universal Property Management Services Ltd. v. Incorporated Owners of Ying Ga Garden [1997] 4 HKC 349 that it did not include an ex manager.

22. However, the definition in Section 34D(1) only applies unless the context otherwise required (see the wording of that section). Clearly, the context of Paragraph 8 of the Seventh Schedule is dealing with an ex-manager. I am therefore satisfied that such definition should not be applied to the construction of paragraph 8 of the Seventh Schedule and Section 34E(2)(a) insofar as duty under paragraph 8 is concerned."

12. The learned Judge was of the correct view that paragraph 8 of the Seventh Schedule applies to an ex-manager and thus the definition of manager in section 34D(1), though applies for Part VIA of the Ordinance, would not apply to paragraph 8. However, the Applicant cannot point to any reason which would exclude this definition of manager from Section 45(4)(e) and thus allow the Applicant as the ex-manager to make the claim in this Tribunal.

13. The Applicant then asks me to exercise my discretion under section 45(4)(j) in its favour as the Applicant is a party to the DMC of the building. However, no reason has been advanced on why the discretion should be so exercised or why this Tribunal in the present claims is the more appropriate tribunal than the District Court.

14. The Applicant then argued that it was the Respondents who had first suggested the transfer of these claims from the Small Claims Tribunal to this Tribunal and thus it should not be allowed to make this application to strike out. The simple answer to this point is that if this Tribunal did not have the jurisdiction, it would still not have the jurisdiction regardless of who had instigated the transfer.

15. The Applicant's best point is the last one which relies on section 8(8A) of the Lands Tribunal Ordinance. Section 8(8A) reads as follows:

"(8A) The Tribunal shall have jurisdiction to determine any claim or counterclaim or set-off and counterclaim transferred to it under section 7 or 10 of the Small Claims Tribunal Ordinance (Cap 338). (Added 28 of 1999 s. 18)"

16. Since these claims were transferred by the Small Claims Tribunal to this Tribunal under Section 7 of the Small Claims Tribunal Ordinance, this Tribunal would have jurisdiction to determine these claims. The Respondents argue that section 8(8A) of the Lands Tribunal Ordinance should be subject to section 45 and the Tenth Schedule of the Building Management Ordinance so that the Applicant would still have to fit into one of the entities in section 45(4) before the claim can be entertained by this Tribunal. Miss Hui for the Respondents submits that if it were otherwise, all sorts of claims would be transferred to this Tribunal. I do not think I can subscribe to Miss Hui's view. Section 7 of the Small Claims Tribunal Ordinance provides:

"7. The tribunal may at any stage of proceedings in the tribunal, either of its own motion or upon the application of any party, transfer the proceedings to the Board, the Labour Tribunal, the Lands Tribunal, the District Court or the Court of First Instance, whereupon the practice and procedure of the Board, the Labour Tribunal, the Lands Tribunal, the District Court or the Court of First Instance, as the case may be, shall apply.

(Amended 92 of 1975 s. 59; 25 of 1998 s. 2; 28 of 1999 s. 3)"

17. It is thus clear that if the Small Claims Tribunal should come across a claim that merits an order of transfer, it would scrutinize the nature of the claim and then transfer it to the most appropriate venue. With that screening process, there is little risk, if any, that inappropriate claims would be transferred to this Tribunal.

18. Furthermore, if I should accept Miss Hui's submission, I would have to transfer these claims to the District Court under section 8A of the Lands Tribunal Ordinance. Given the nature of these claims, which is commonly dealt with by this Tribunal, if I should transfer them to the District Court after they have been transferred here from the Small Claims Tribunal, I would only create delay for their resolution. I think section 8(8A) of the Lands Tribunal Ordinance is just to avoid this kind of absurdity.

19. Miss Hui for the Respondents also refers me to a number of previous decisions of this Tribunal. In Barnes and Noble Property Management Ltd. and Anor v. Hodson Ltd. LDBM 355 of 1999, it was a claim by an ex-manager for accumulated deficit of management fees. It had been transferred from the Small Claims Tribunal. H. H. Judge Chow dismissed it on the ground that the manager was an ex-manager and thus not within section 45(4). However, section 8(8A) was not referred to the learned Judge in that case. In LDBM 458 of 2000, the IO of a development sued the ex-manager in this Tribunal for payment of surplus of management fees collected. H. H. Judge Chow dismissed the claim on the basis that the respondent was only an ex-manager and thus the claim was not within paragraph 5(c) of the Tenth Schedule of the Building Management Ordinance. That was a direct claim lodged with this Tribunal and thus did not enjoy the extra jurisdiction conferred by Section 8(8A). In Valiant Management Services Ltd. v Ho Kwai Yee LDBM 123 of 2000, it was a claim lodged directly with this Tribunal by an ex-manager for payment of management. It therefore also could not enjoy the extra jurisdiction conferred by section 8(8A). In Incorporated Owners of Kingsford Industrial Centre v Austria Property Management BM 28 of 1997, an ex-manager registered charges against flats of owners who had defaulted in payment of management fees. The Incorporated Owners sued the ex-manager for order to remove the charges. H. H. the late Judge Li ordered the removal on the ground that the ex-manager could no longer collect management fees on behalf of the Incorporated Owners as there was no more agency between them. I cannot see how this case is relevant to this application. Finally, Miss Hui also relies on Universal Property Management Services Ltd. That case again was brought directly in the Tribunal and it was before the enactment of section 8(8A).

20. After I have heard submissions from both parties, Miss Hui furnished me with a further set of written submissions. However, they did not change my conclusion. In the further submissions, Miss Hui tries to make a distinction between section 8(8A) of the Lands Tribunal Ordinance on the one hand and section 45(1) of the Building Management Ordinance and paragraph 1 of the Schedule of the Small Claims Tribunal Ordinance on the other. She argues that Section 8(8A) of the Lands Tribunal Ordinance only empowered this Tribunal to "determine" a claim while section 45(1) of the Building Management Ordinance and paragraph 1 of the Schedule of the Small Claims Tribunal Ordinance empower the Tribunals to "hear and determine" a claim. She goes on to argue that the Tribunal under section 8(8A) can only determine whether it has jurisdiction to hear the claim and not to hear it. Thus, section 8(8A) is subject to section 45 and the Tenth Schedule. This is a novel submission but I remain unswayed. I cannot read such difference into these sections. I see no difference between them by reason of the omission of the word "hear".

21. The next point in the further submissions is that the Applicant remains an Applicant before this Tribunal. Hence, it must qualify as an Applicant as per section 45(4). This is another way of relegating section 8(8A) to insignificance. If Section 8(8A) is not to confer extra jurisdiction, I wonder why it was enacted at all. On Miss Hui's case, we do not need section 8(8A), section 7 of the Small Claims Tribunal Ordinance would be sufficient. If a claim transferred from the Small Claims Tribunal under section 7 should fail to meet the requirements of section 45 and the Tenth Schedule, it should then be transferred to another tribunal. We do not need section 8(8A) for this Tribunal to determine if it has jurisdiction to hear the claim.

22. For the above reasons, I dismiss the Respondents' application to strike out with costs of the application to the Applicant to be taxed.