LI SANG EDWARD v. TANG WING MING JIM AND ANOTHER

LDBM 144/2008

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 144 OF 2008

____________

____________

JUDGMENT

1.  Li, the Applicant, is the owner of one of the residential units in Sun Yuen Long Centre, 8 Long Yat Road, Yuen Long, New Territories (the Centre).  Tang and Li are respectively the Chairman and the Vice-Chairman of the Incorporated Owners of the Centre, the 2^nd Respondent (the IO).  This application relates to 2 sets of regulations resolved in the management committee meeting of the IO on 19 May 2008.  Li seeks declaration from this Tribunal that these regulations are invalid.  Tang is sued personally as 1^st Respondent.

THE BACKGROUND

2.  Li is a solicitor.  Prior to the IO’s incorporation, both Tang and Li have also participated in the then owners’ committee of the Centre.  The IO was formed in January 2008.  At the material time, the IO was in its early stage of operation.  The 19 May 2008 meeting was only the second management committee meeting of the IO.

3.  The 2 sets of regulations resolved in the 19 May 2008 meeting were:

(1)  新元朗中心業主立案法團運作法則 or the IO Operation Regulations (the OR) and

(2)  新元朗中心業主立案法團電郵議決規則 or the IO Email Resolution Regulations (the ERR).

4.  In the meeting, the resolutions for these 2 sets of regulations were passed by an overwhelming majority.  Li was the only dissenting member.

5.  According to the Notice of Application, there are 3 major issues:

(1)  Whether paragraphs 3, 4 and 5 of the OR are invalid.

(2)  Whether the ERR in their entirety are invalid.

(3)  Whether Tang is personally liable.

6.  Regarding the last issue, the only allegation is that Tang ignored Li’s suggestions and put the relevant resolutions to vote in the 19 May 2008 meeting.  But there is in fact no claim and no relief sought against Tang personally in the Notice of Application.

7.  Both Li and Tang gave evidence.  Man, the Secretary of the management committee, has filed his statement that was basically similar to that of Tang.  Man was eventually not called and his statement is accordingly disregarded.

THE REGULATIONS

8.  The terms of the OR are as follows:

“1.   主席可授權副主席或司庫或秘書代表法團對外出信及處理屋苑事宜。

2.   以業主立案法團名義發出的信件為正式公文，所有正式公文均須由主席簽署及蓋印方才有效。

(以上已於第一次會議通過)

3.   未經法團主席批准而私自發送/轉送法團內部文件給不合資格的人即屬盜竊。(所謂不合資格的人是指未有記錄於iosylc@yahoo.com.hk 及在帳號內已被列入限制接收電郵人士，各委員可要求法團帳號管理員提供合資人仕名單或限制接收電郵人士)

凡違反規例者，法團有權向犯規者終止傳送所有電郵或選擇性傳送電郵，但仍會使用傳統方式將正式文件交入犯規者信箱(如合資格收件)，犯規者電郵郵址會即時列入限制接收電郵人士。

4.   所有經主席與秘書同意公開張貼的通告/書信文件等(下稱文件)，由交予各委員起計48小時後(方式可以電郵或入信箱)，服務處必須於其後一天內公開張貼。但各委員可於收到文件的48小時提出反對張貼或修訂，若反對張貼或同一修訂意見沒有超過半數委員聯署確認，該些意見則視作無效，公開張貼文件程序仍可繼續執行。

5.        除非有超過半數的委員發出反對意見，否則所有經 iosylc@yahoo.com.hk 或法團認可的電郵帳號發出的電郵均視作為法團的集體意見。”

9.  The terms of the ERR are as follows:

“1.   議決事項必須由 iosylc@yahoo.com.hk 或法團認可的電郵帳號依照電郵帳號使用守則發出。沒有電郵帳號的委員會由服務處將議決事項交入其信箱內。

2.   議決事項發出後，各委員並沒有回覆時間限制。

3.   沒有電郵帳號的委員可以書面形式將意見回覆給電郵帳號管理員。當接獲足夠決定性的回覆(包括電郵與書面回覆)，並由電郵帳號管理員宣佈結果後，該項議決事項結果便即時生效，亦不再接受回覆電郵。

例如：

a)     當有過半數委員透過電郵或書面回覆《贊成》後，該議決事項便即時通過生效。

b)   當有過半數委員透過電郵或書面回覆《不贊成》後，該議決事項便即時否決。

4.        如已回覆的意見於下次舉行會議時間前仍未能產生決定性結果時，已回覆的意見一律視作無效，而該次電郵議決事項則自動列為下次會議議程，依照會議常規表決。”

10.  Parties did not provide certified translations of the 2 sets of regulations at the trial.  I do not mean to provide such translations save that I will refer to the meaning of the relevant parts of these regulations in the discussion below.

11.  It is important to know what happened in the 19 May 2008 meeting.  Besides the minutes of the meeting, a transcript of part of the audio recording of the proceeding in that meeting was also produced.

THE OR

12.  Li contends that paragraphs 3, 4 and 5 of the OR are invalid for the grounds stated in the Notice of Application.

Paragraph 3

13.  This paragraph stipulates that sending or forwarding the IO’s internal documents to unqualified persons (recipients) without the authorisation of the Chairman amounts to theft.  A person is unqualified if his or her name is not amongst those in the IO’s email account iosylc@yahoo.com.hk or is listed as restricted recipients.  The IO has the authority to terminate sending or sending selectively email to anyone violating this paragraph.    The email address of such person shall also be listed as a restricted recipient forthwith.  However, such person shall still receive the documents in the conventional way, namely, through the letterbox.

14.  The ground of complaint is that the reference to “theft” is not in line with the legal definition of “theft” in the Theft Ordinance, Cap.210.  In my view, whether the IO is right or wrong in its understanding of the definition of theft is immaterial.  It is obvious that this paragraph is nothing more than a statement of the IO’s position towards unauthorised divulging of internal documents of the IO.  Notwithstanding the use of the word “theft”, such statement cannot have any legal consequence in terms of whether the person violating the paragraph is liable for or guilty of theft.  This is simply not for the IO to say.

15.  In court, Mr Lee for Li added that the labelling of the person said to have violated the paragraph might expose the IO to action for defamation.  Such labelling would also lead to resentment among the members of the management committee.  In fact these are not grounds of complaint stated in the Notice of Application.  But in any event, I do not see that this paragraph’s operation must entail the publication of the IO’s statement that the person violating the paragraph has committed theft.  The suggestion of potential resentment among the members of the management committee is also not shared by the members’ actual overwhelming support for these regulations.

16.  The other ground of complaint about this paragraph is that this paragraph divides the management committee members into 2 classes being entitled to different means of service of documents without justifiable ground.  Mr Lee for Li added in court that this amounted to additional authority to restrict the circulation or transfer of documents.

17.  Properly construed, nothing in this paragraph suggests that either means of service of documents is mandatory and that the members of the management committee have no right of preference.  A member who has an email account is not bound to accept this means of service.  Termination or restriction on the service of documents by email comes into play only upon violation.  But nothing in this paragraph deprives the person subject to such accusation of his right to defend.  More importantly, the right to receive the same document is never compromised.

18.  Lastly, Mr Lee also submitted in court that there are no clear criteria as to what belong to internal documents.  Again this is not a ground of complaint stated in the application.  But in any event, I fail to see how the members of the management committee would have understood them to mean anything other than documents to be circulated among them.

19.  My conclusion is that this paragraph is not objectionable as alleged.

Paragraph 4

20.  This paragraph relates to posting up of documents such as notices and letters.  Such notices and letters that the Chairman and the Secretary agree to post up will first be sent to the members of the management committee for comment.  Members have 48 hours to raise objection or to propose amendment.  Objection or proposal to amend requires the signified endorsement of more than half of the membership of the committee to be effective.  Otherwise, the management office shall post up the notices and letters on the day following the 48-hour period.

21.  Li first complains that this paragraph gives the Chairman and the Secretary veto right on any notice or letter to be posted up by the IO.  I do not agree.  Nothing in this paragraph prevents the members of the management committee besides the Chairman and the Secretary to propose any notice or letter to be posted up.  If the members do so, nothing in this paragraph provides that the Chairman or the Secretary may veto any consensus among the members in respect of whether or not to post up a notice or letter.

22.  Li also complains that 48 hours are insufficient time for the members of the management committee to comment on the proposed posting up of notices and letters.  But by resolving in favour of this set of regulations, the overwhelming majority of the management committee membership clearly held a different view from Li’s as to the reasonableness of such consultation time.  It should also be borne in mind that management of the building is carried out on a daily basis whereas management committee meeting is not convened and held in the like frequency.  There are bound to be occasions when it is necessary to attend to matters relating to management expediently, for instance, by way of posting up notices for the benefit or information of the owners.

23.  Li also complains that this paragraph holds all members of the management committee liable without the right to abstain from voting.  I do not agree this has anything to do with the members’ personal liability as such.  But this complaint does reflect where the problem with this effectively negative voting system lies.  While nothing in this paragraph takes away the right of any member of the management committee to abstain or even not to respond at all, it effectively equates such stance to no objection and thus agreement to what the Chairman and the Secretary proposes.  Mr Lee for Li also gave an example of that in his submissions.

24.  In my view, this fundamentally differs from how matters should be resolved by a majority of the members present at the management committee meeting under paragraph 10 of Schedule 2 of the Ordinance.  For this reason, I find that this paragraph may not stand.

Paragraph 5

25.  This paragraph provides that in the absence of contrary view or objection held by over half of the membership of the management committee, any email of the IO through its email account mentioned above or any other email account approved by the IO represents the collective view of the IO.

26.  Regarding this paragraph, Li raises complaint similar to that in respect of paragraph 4 of the OR above.  I do not repeat my discussion above.  Li also complains that this paragraph defeats the spirit of sections 8, 9 and 10 of Schedule 2 of the Ordinance regarding how a management committee meeting is convened and held.  Though assembling the majority view of the management committee does not necessarily take the form of a resolution, I am of the view that this paragraph still suffers from the same problem as in the negative voting system under paragraph 4 of the OR.

THE ERR

27.  Li argues that the ERR in their entirety are invalid.  Though the OR are again referred to in the Notice of Application (paragraph 15), parties have common understanding that Li is referring to the ERR.

28.  Essentially, the ERR are in the following terms:

(1)  Notice of any proposed resolution must be sent through iosylc@yahoo.com.hk or any other email account approved by the IO.  Members who do not have any email account will receive the notice through their letterboxes.

(2)  There is no time limit for the members to respond to the notice.

(3)  When the email account control officer receives sufficient decisive responses, whether by email or in writing, he will announce the result and no more response will be entertained.  If more than half of the membership of the management committee replies in favour of the resolution, the resolution is passed with immediate effect.  If more than half of the membership of the management committee replies against the resolution, the resolution is dismissed.

(4)  If the responses do not amount to a decision, the responses will be of not effect.  The proposed resolution will automatically be listed in the agenda for discussion in the next management committee meeting.

29.  Undoubtedly, the ERR provide a mechanism whereby the management committee may pass resolutions by way of email rather than in meetings.  Mr Chan for Tang and the IO acknowledged that this makes the ERR controversial.  Mr Chan also fairly acknowledged that the regulations might not comply with paragraph 10(2) of Schedule 2 of the Ordinance.  The paragraph provides:

“(2)        All acts, matters or things authorised or required to be done by the management committee may be decided by a resolution passed by a majority of the votes of members of the management committee present at a meeting of the management committee.”

30.  However Mr Chan submitted that there is no definition of “meeting” in the Ordinance.  He submitted that the ERR tally with the spirit of statue because though there may be no meeting of faces, there is meeting of minds.  He invited me to accept this as speedy communication and decision making of people facilitated by technology nowadays.

31.  Considering the minutes and the transcript of the discussion of these regulations in the 19 May 2008 meeting, I do not doubt the good intention of the management committee for greater efficiency.  I commend them for the initiative.  Unfortunately, it is clear to me that the ERR are contradictory to the statue.

32.  Section 34K(b) of the Ordinance provides that the members of the management committee shall in relation to their functions, powers and duties be subject to Schedule 2, even if that Schedule is inconsistent with the deed of mutual covenant.  Paragraph 8(2AA) provides that the management committee meeting needs to take place on the date, time and place as specified in the notice of meeting.  The notice of meeting shall also contain any resolution that is to be proposed at the meeting.  According to paragraph 8(2A), such notice may be given in one of those 3 ways stipulated.  Notice by email has no place among them.

33.  However Mr Chan submitted that the management committee had in mind the use of this mechanism to resolve only minor matters.  Again, from the minutes and the transcript of the 19 May 2008 meeting, I do see the clarification of such intention.  However, the ERR, as they are worded, do not distinguish the matters that can or cannot be resolved by email without a meeting.  I can only foresee potential dispute as to whether certain matters are minor or not so as to fall within the ERR.

34.  As fall back, Mr Chan submitted that paragraph 4 of the ERR provides the safeguard against abuse in that if no majority view can be attained by members before the following management committee meeting, all views collected up to that point would be treated as invalid and the proposed resolution would be listed in the agenda of the management committee meeting.  I do not see how this helps so long as a resolution may be proposed, notified and resolved by email pursuant to paragraph 3(a) of the ERR without a meeting contemplated by the Ordinance.

35.  I find that the ERR are contrary to Schedule 2 of the Ordinance.

DECLARATION

36.  Mr Chan submitted that the Tribunal in exercising its discretion to grant a declaratory relief must have regard to all the relevant circumstances of the case.  He referred to the case of 曾婉玲and兆隆苑業主立案法團, LDBM 199/2001, 18 September 2001 where the Tribunal spelt out the considerations peculiar to the context of building management.  I embrace the principles discussed there.  But the circumstances of that case and the present one are different.

37.  The deciding factor for the Tribunal’s decision in the case of 曾婉玲was that the stance of the applicant in that case (as to the deficiency in the notice for the meeting in question) had already been vindicated by the amendment of the notice of opposition whereby the respondent incorporated owners indicated that they would not contest the applicant’s allegation.  The chairman there even expressed regret about the mishap and thanked the applicant for her guidance on the matter.  As such, the original issue in the action had been overtaken by subsequent events.  In the best interest of the owners as a whole and considering that the declaratory relief sought would serve no practical value or utility, the Tribunal refused to grant it.

38.  Mr Chan submitted that it was due to Li’s absolute refusal to elaborate his statement in the 19 May 2008 meeting that deprived the members of the management committee of the chance of considering and discussing the objection before deciding.  That might be true.  But it is also true that since the commencement of this application until today, and notwithstanding the resolution of the management committee dated 28 June 2008 to stay the regulations, the stance of the IO as at the date of trial remains that the regulations are valid.  It is unlike the situation where the IO concedes that Li is right; and that had Li done what the IO said he should have done, the IO would have conceded even earlier so that this application would have been prevented.

39.  In the circumstances, it is necessary for the Tribunal to intervene and to grant a declaration as to the validity of the contentious parts of these regulations.

CLAIM AGAINST TANG

40.  As mentioned at the beginning, there is actually no claim or order sought against Tang personally in the Notice of Application.  The claim against Tang personally does not have any pleaded footing.

41.  In any event, the resolutions in question were passed by an overwhelming majority of the management committee.  Li was apparently the only dissenting one.  Section 29A of the Ordinance provides:

“(1)       No member of a management committee, acting in good faith and in a reasonable manner, shall be personally liable for any act done or default made by or on behalf of the corporation –

(a)    in the exercise or purported exercise of the powers conferred by this Ordinance on the corporation; or

(b)   in the performance or purported performance of the duties imposed by this Ordinance on the corporation.

(2)  The protection conferred by subsection (1) on a member of a management committee shall not in any way affect the liability of the corporation for that act or default.”

(emphasis added)

42.  According to the Notice of Application, the only allegation against Tang is that Tang allegedly ignored Li’s suggestion in the 19 May 2008 meeting and put the resolutions to pass the 2 sets of regulations to vote.  Was it in fact the case and does it deprive Tang of the section 29A protection?

Putting the resolutions to vote

43.  According to the minutes and the transcript of the 19 May 2008 meeting, there was extensive discussion among Tang, the Secretary, Man, and the District Councillor, Wong, of various aspects of the OR.  Amendments to the wordings were also made.  Prior to the resolution was put to vote, the following conversation took place:

“……

李：主席，係你要表決之前，我希望會議上有一個記錄，就係“副主席表示，《新元朗中心業主立案法團運作法則》多處不符合法例的規定，因此〔李〕副主席建議〔鄧〕主席押後表決，同時索取法律意見給各委員參考，之後再進行表決。否則，假如有任何法律訴訟，主席同各位委員必須負上有關嘅個人責任。”

文：    這個係你 嘅動議？

李：    這是我講嘅statement，我的説話，不必你去同意或不同意。亦不必去表決。我只係要求落一個會議記錄。

黄：    李先生你話違反法例，可否講岀邊度違反法例？

李：    這個法團運作法則應該如何符合法律要求，我想信你要去索取法律意見，我提供唔到法律意見，亦不打算在這裡提供法律意見。

黄：    主席，你每一個議案你都可以講你個statement，你講完無責任啦。

李：    我認為你想知有無問題最好拿取法律意見。

黄：    問題係你嘅statement都要有嘢支持先得架。如果唔係每一段你都可以用這段說話係違反法例既，但最後如果法團找了法律意見話這般規則無違反法律嘅，但係你就無法律責任。你就講得好輕鬆，佢地就做餐死。某個委員講完一句説話，你就話我認為你違反法例，點點，你責任自負。這樣落去，無人夠膽講嘢啦。個個你都可以challenge佢，但係你唔使指出佢違反甚麼法例。

鄧：    好啦，如果你的不是動議的話，我地會議決通過架啦。4.1通過修改後嘅法團運作法則，讚成請舉手。

……”

44.  Briefly, Li read out his statement and asked the same to be put on record in the minutes of the meeting.  Essentially Li stated that many aspects of the OR were contrary to the Ordinance.  He suggested to adjourning the voting until after the management committee has obtained legal advice.  Otherwise, Tang and the management committee members would be personally liable in case of any litigation.  According to Li in court, the litigation that he referred to would include legal action that he might commence.

45.  Li made clear that this was his statement and not a motion.  When asked by Wong, the District Councillor, to elaborate which aspects of the OR might be contrary to the Ordinance, Li said that it would be for the management committee to seek legal advice and he could not and did not intend to provide any legal advice.  Wong apparently disagreed with Li’s approach and resented Li’s making use of personal liability of the members as a threat to hinder free exchange of views during the meeting.  At the end, Tang put the proposed resolution to vote.

46.  In the meeting, there was also extensive discussion of various aspects of the ERR among Tang, Man and Wong prior to the proposed resolution to pass the regulations was put to vote,.  Again, just before the resolution was put to vote, Li made an almost identical statement as mentioned above regarding the ERR and asked the same to be put on record:

“……

李：當你要做下一個議決之前，我希望講一講，我希望這個放在會議記錄裡面，就係“副主席表示，《新元朗中心業主立案法團電郵決議規則》多處不符合法例的規定，因此〔李〕副主席建議〔鄧〕主席押後表決，同時索取法律意見給各委員参考，之後再進行表決。否則，假如有任何法律訴訟，主席你要負上個人責任，各位讚成這項決議的委員亦必須負上個人嘅責任。”

……”

47.  According to Li in court, his statements in the meeting were sufficient that Tang and the other members of the management committee should have followed.

48.  In my view, Li’s making of such a statement but despite request, absolutely refusing to explain the basis of his concern defies understanding.  In court, Li explained that he was not familiar with the relevant part of the Ordinance.  But this hardly explains his refusal to even elaborate which aspects of the proposed regulations he then had in mind that caused him to make such a statement.  Blurring a fair request for elaboration somehow with a request for legal advice, as Li did, was in my view unexpected from Li with his background.

49.  Li seemed to suggest that Tang discriminated against his views or suggestions.  In my view, this is not a fair suggestion.  According to the minutes of the same meeting (whether it is the version of the IO or Li), the management committee also discussed the issue of the controversial electricity installation, the so-called WR2, inspection work.  During the discussion, Li also queried that the tender exercise was not carried out in accordance with the Ordinance.  Unlike his approach in respect of the proposed resolutions to pass the OR and the ERR, Li actually explained his views with reference to the requirements under the Code of Practice on the procurement of supplies, goods and services (under section 20A of the Ordinance).  Tang then acknowledged his deficiency in understanding the provisions of the Code of Practice and accepted that the matter needed to be followed up in accordance with Li’s explanation.

50.  In the meeting, it was also not Tang but Wong, the District Councillor, who engaged in the debate with Li about his statement.  Tang cared to ask if Li was actually moving to adjourn the voting on the proposed resolution.  Obviously he heard no one in the meeting speak in support of Li.  Only upon that did Tang put the proposed resolutions to vote.  How the members would vote, as Mr Chan put it, was up to the members, not Tang.  In court, Li also confirmed that Tang did nothing to prevent the other members to express their views in the meeting.

51.  In court, Li also suggested since there were no such regulations before, there was no reason for the urgency of passing them unless they were passed for some other purposes or motives.  I am not satisfied that the so-called ulterior motive on the part of Tang or any member is substantiated by the evidence and I reject the suggestion.

52.  In the circumstances, I am not satisfied that the fact that Li’s suggestion at the meeting was not followed amounted to default on the part of Tang or any member of the management committee.  I do not find it fair to accuse Tang of pressing to put the proposed resolutions to pass the regulations to vote.  I am not satisfied that Tang acted in an unreasonable manner or in lack of good faith in proceeding with the voting on the proposed resolutions.

Other allegations

53.  By his statement, Li made series of allegations against Tang as if all the matters of management that he complained about were the fault and personal liability of Tang.  Besides the issue of Tang putting the resolutions to vote in the 19 May 2008 meeting, Li also complained about the following matters against Tang:

(1)  the intended posting up of a notice potentially defamatory in nature which was eventually prevented by Li through his solicitors;

(2)  failure to sign notice posted up pursuant to the OR;

(3)  unjustifiably altered the minutes of the management committee meeting;

(4)  divulging internal document to unidentified persons or non-management committee members; and

(5)  deciding to change the usual time of the electrical installations inspection without justification or management committee meeting.

54.  In his submissions, Mr Lee for Li mainly dealt with (1) and (5) above.  To begin with, they were not mentioned in the Notice of Application at all.  These matters are also extraneous to the passing of the resolutions in the 19 May 2008 meeting.  They are strictly irrelevant and do not call for any finding.

55.  Even if I were to consider these allegations, I heard Tang’s evidence and explanations in respect of these allegations and Mr Chan’s submissions in the same regard, which I accept.  I am not satisfied on the evidence relating to these other complaints that Tang has acted in an unreasonable manner or in lack of good faith so as to warrant the finding of liability against him personally.

COSTS

56.  I am satisfied a declaration ought to be granted in respect of the contentious parts of the regulations.  Though these regulations were “stayed” by the management committee subsequent to the 19 May 2008 meeting, the stance of the IO remains in opposition of Li’s stance in this application.  The documents also reveal that the IO has refused to resolve the dispute by way of mediation.  Now Li has succeeded in substantiating his stance in respect of most of the contentious parts of the regulations.  I do not see any reason why Li should not have substantial part of his costs of this application.  The application against Tang personally must fail and be dismissed with costs.

ORDER

57.  I order as follows:

(1)  declaration that the paragraphs 4 and 5 of the OR as well as the ERR passed by the resolutions in the management committee meeting of the IO on 19 May 2008 are invalid for being contrary to Schedule 2 of the Ordinance;

(2)  application against Tang be dismissed;

(3)  Li shall pay Tang’s costs of defending this application;

(4)  the IO shall pay Li 80% of his costs of this application;

(5)  costs shall be taxed in the District Court scale, if not agreed, with certificate for counsel;

(6)  in the absence of any appointment in 14 days to argue costs, the above costs order, i.e., (3), (4) and (5) above, shall become absolute.