THE INCORPORATED OWNERS OF FLORA GARDEN v. LI DO WAI AND OTHERS

LDBM 283/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 283 OF 2014

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LDBM 285/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 285 OF 2014

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LDBM 286/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 286 OF 2014

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LDBM 287/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 287 OF 2014

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LDBM 288/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 288 OF 2014

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LDBM 289/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 289 OF 2014

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D E C I S I O N

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1.  This is the application by all the respondents for leave to appeal against the judgment handed down on 25 August 2016 (“the Judgment”).  The background and findings of this case had been set out in the Judgment and I shall not repeat here.  For convenience, I shall adopt the same abbreviations used in the Judgment.

Leave to Appeal

2.  Section 11 (2) of the Lands Tribunal Ordinance (“LTO”) provides that :

“Subject to section 11AA and the provisions of any Ordinance relating to appeals from the Tribunal, any party to proceedings before the Tribunal may appeal to the Court of Appeal against a judgment, order or decision of the Tribunal on the ground that such judgment, order or decision is erroneous in point of law.”

3.  Section 11AA(6) of the LTO provides that :

“(6) Leave to appeal shall not be granted unless the Tribunal, the Court of Appeal or the registrar hearing the application for leave is satisfied that –

(a) the appeal has a reasonable prospect of success; or

(b) there is some other reason in the interests of justice why the appeal should be heard.”

4.  The respondents had filed a draft Notice of Appeal together with the summons for leave to appeal filed on 22 September 2016. 

5.  There are 7 grounds raised in support of this leave to appeal application.  I shall deal with the same in seriatim.

Ground 1

6.  The respondents contend that this Tribunal has erred in law in holding or finding that the DMC of the Building did provide the power and/or authority to the IO to install a new (additional) lift and carry out improvement works of the Ground Floor lobby.  This turns on the findings by this Tribunal as to whether the Works are renovation works in nature or improvement works.  This issue is being dealt with at §§14-20 of the Judgment. 

7.  In support of this leave application, the respondents contend that this Tribunal was wrong to interpret the words “renew” and “renovate” in the DMC to cover “to improve or to build a new lift” (§18 of the Judgment).  And also erred in finding the amendment of the BMO in 1998 overrides the common law position stated in the case of Bayview Mansion (§19 of the Judgment) without basis.

8.  In the Judgment, it is the findings of this Tribunal that Clause 4(f) of the DMC did allow for improvement work to be performed by the IO including “renewing the lifts”.  In fact the opening words of Clause 4(f) stated that “(A)ll costs charges and expenses incurred in managing and providing services to the said building and the common parts services and facilities shall be borne and paid by the owners … such costs charges and expenses to include but not limited to the following, namely …”.  So what stated in Clause 4(f) (1) to (9) are not exhaustive and from the framing of the opening words in Clause 4(f), an additional lift must be providing services to the Building and such costs and expenses shall be borne by the owners of the Building (§12 of Judgment).

9.  The addition of a lift is an improvement work is not arguable.  The gist of the Judgment on this issue is s.18(2)(fa) of the BMO did allow the IO to carry out any improvement work to the common parts of the Building.  With such a provision in the BMO, the IO is entitled to carry out any improvement work including the addition of a new lift.

10.  It is the findings of this Tribunal that the differentiation between renovation work and improvement work as found in the case of Bayview Mansion had become otiose given the amendment of the BMO by adding s.18(2)(fa) in 1998 (§19 of the Judgment) and it is never the findings of this Tribunal that the case of Bayview Mansion had become null and void.  Since s.18(2)(fa) was not in existence hence not considered by the court in Bayview Mansion, this Tribunal failed to see how the findings in it can be of any relevance or assistance to the respondents in this case and this is what “otiose” means.  Given the fact that there is a new provision resulted from the amendment of the BMO which turns on the same issue, Bayview Mansion, which is a judgment before the time of the enactment of the amendment, can no longer be applicable.

11.  This ground of appeal must fail.

Ground 2

12.  It is the contention of the respondents that this Tribunal erred in holding that the IO was empowered or authorised to carry out the renovation of the Ground Floor lobby or the retiling of the external wall of the car park since these were never approved at the 215 EGM or at all. 

13.  This issue had been dealt with at §§26-31 of the Judgment and this Tribunal had relied on the List attached to the minutes of the 215 EGM to find that the renovation work of the Ground Floor lobby and the retiling of the external wall of the car park were approved at the meeting.  The respondents contend that this Tribunal had been misled by the IO and the List was only shown to those present at the meeting.

14.  It is the findings of this Tribunal at §29 of the Judgment that the works alleged were included in item (A) under agenda 1 of the 215 EGM.  The List which was shown to those present at the meeting is apparently for the purpose of discussion for Agenda 1.  Under such circumstances, I failed to see how the respondents can argue that renovation work of the Ground Floor lobby and the retiling of the external wall of the car park were not on the agenda or not approved at the meeting.

15.  This ground of appeal must fail.

Ground 3

16.  It is the respondents’ case that this Tribunal erred in law in failing to give credit or deduct the HK$10,000 each being paid by the respondents prior to the commencement of this Application when it was not in dispute that such payment had been paid and still remained in the IO’s bank account.

17.  It is not in dispute that the HK$10,000 was paid by the respondents into the IO’s bank account purportedly to settle their contributions towards the Works but such had been rejected by the IO and refunded to the respondents by way of cheque (§10 of Judgment) which was not cash by the respondents.  Even though Mr Yeung (1^st respondent in LDBM 286/2014) told this court during this leave application hearing that he had in fact not received the cheque, such piece of evidence was not before this Tribunal at trial.  

18.  This Tribunal must admit that there was an oversight not to give credit or deduct this $10,000 from the judgment sum when the respondents had only raised this in their opening submissions that “the respective amounts being claimed against the respective respondents in each case which being disputed, will have to be reduced by at least $10,000 or even more in any event on grounds or for reasons given below” (§3 of the Submission of the Respondents filed on 13 May 2015). But this point had never been raised in the pleadings or in the witness statements or at trial, nor had the IO indicated its stance towards such a request.

19.  At this leave application hearing, Ms Lee confirmed on behalf of the IO that the IO is prepared to set off this $10,000 from the judgment sum and the actual arrangement of such set off could be dealt with by the parties upon payment made by the respondents.

20.  With such an indication, even though such sum had not been reflected in the judgment sum, the interests of the respondents will not be prejudiced.  I see no reason granting leave to appeal on this ground.

Ground 4

21.  The respondents contend that this Tribunal erred in failing to consider or determine whether and/or how the IO could seek to enforce the respective demand made to the respondents when the demands were wrong and such amounts were not those authorised by the owners at the owners’ meeting.     

22.  This ground turns on the findings as to whether the Works were authorised in Ground 2.  Given my findings on Ground 2 above, ie the Works were properly authorised at the 215 EGM, this ground of appeal must fail.

Ground 5

23.  The respondents contend that this Tribunal erred in holding that the IO was entitled to claim surcharge and collection charges under the DMC which provided for a levying of these items for repair works only and not for renovation works.  And the sum of $150 for collection fee was fixed by the DMC some 30 years ago, it must be extravagant and a penalty.

24.  This ground of appeal hinges on the findings of renovation or improvement work in Ground 1.  In view of my findings on Ground 1 above, this ground of appeal must also fail.  As to whether the collection fee is a penalty clause, I stand by my findings at §§47-48 in the Judgment and found that the amount stipulated for is not extravagant compared with the greatest loss that could conceivably be proved to flow from the breach of the terms of the DMC in failing to make payment.  Since the DMC will be binding on all subsequent owners for many years and the consequences of a breach cannot be foreseen with precision, some allowance must be given to allow the parties to stipulate a sum which will provide adequate compensation in the event of breach.

25.  This ground of appeal must fail.

Ground 6

26.  The respondents contend that this Tribunal erred in finding that there was no evidence from the respondents on the increased premium as a result of the addition of 1 lift.  Judicial notice should have taken for such a conclusion and the IO had failed to produce any evidence otherwise to rebut.

27.  I shall repeat and adopt my findings at §§41-42 of the Judgment and I shall stand by my findings of fact therein.  Whether the insurance premium will be increased may turn on the facts of each case and I do not agree with the respondents that this is something judicial notice has any part to play.  And based on the principle that he who asserts must prove, it is wrong for the respondents to suggest a shifting of the burden of proof to the IO when the respondents failed to adduce any evidence to support their contention.

28.  This ground of appeal must fail.

Ground 7

29.  The respondents contend that this Tribunal erred in law in holding that the judgment of Bayview Mansion was rendered otiose or otherwise null or void by reason of the 1998 amendment to the BMO.  Such amendment should have no retrospective effect on the DMC of the Building in this case which was made almost two decades before the amendment.

30.  I shall repeat my findings for Ground 1 above on the validity of the judgment of Bayview Mansion on the amendment of the BMO in 1998. And it is never the findings of this Tribunal in the Judgment that the amendment of the BMO would have any effect on the DMC.

31.  This ground of appeal must fail.

Conclusion

32.  Having considered all the argument and submissions, I find the grounds raised by the respondents in this application for leave to appeal cannot stand.  The respondents had failed to demonstrate that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard.  Application for leave to appeal be dismissed.

33.  Costs should follow the event.   Costs order nisi that costs of this leave to appeal application be to the applicant, to be taxed if not agreed on party and party basis at District Court scale.  Unless any of the parties applies by summons to vary it, the costs order nisi shall be made absolute upon expiry of 14 days.