The Incorporated Owners of Arts Mansion v. Lam Hon Man and Another

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION No. LDBM 196/1999

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JUDGMENT

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The parties

1. The applicant is the Incorporated Owners of Arts Mansion. Arts mansion is situated at No. 31 Conduit Road Hong Kong (the building).

2. The first respondent is the owner of carports numbers 15 and 41 at Arts Mansion.

3. The second respondent is the owner of carports numbers 32, 34, 37, 39, 46, 52, 55, 56, 57, 59, 64, 74, and 76 at Arts Mansion.

The Deed of Mutual Covenant

4. There is a Deed of Mutual Covenant dated 15th August 1961, registered in the Lands Registry under Memorial No. 348408 (the DMC).

The application

5. The applicant claims against the first respondent the sum of $3,880. This is:

arrears of carport maintenance fee, from July 1994 to December 1995, at $30 per month for each of his 2 carports; and

arrears of carport maintenance fee, from January 1996 to April 1999, at $35 per month for each of his 2 carports.

6. The applicant claims against the second respondent the sum of $25,010. This is:

arrears of carport maintenance fee, from July 1994 to December 1995, at $30 per month for each of its 12 carports (i.e. excluding carport no. 74;

arrears of carport maintenance fee from February 1995 to December 1995, at $30 per month for carport no. 74; and

arrears of carport maintenance fee, from January 1996 to April 1999, at $35 per month for each of its 13 carports.

The oppositions

7. The first and second respondents admitted that no carport maintenance fee had been paid since July 1994.

8. They sought to strike out the application on the grounds that the Lands Tribunal had no jurisdiction. This particular point was dismissed at a preliminary hearing, and could not be relied upon at the actual hearing.

9. The respondents alleged that the DMC made no provision for the levying of carport maintenance fee.

10. They disputed the fact that the applicant had passed resolutions to collect and increase the carport maintenance fee. It was also alleged that the respondents had never been asked to pay carport maintenance fee.

The applicant's case

11. The applicant's case was that in 1981, when the first respondent was the chairman of the applicant, the management committee held a meeting on 4th December 1981. During that meeting, the committee resolved to impose a maintenance charge of $30 upon non-residential car owners who used the building's carports.

12. On 15th January 1982, the first respondent signed a notice that stated the management committee had resolved to impose a monthly maintenance fee of $30 on each non-residential car owner using/renting Arts Mansion carports.

13. On 4th August 1982, the applicant held its annual general meeting. The first respondent reported to the meeting that a maintenance fee of $30 per month was demanded from known non-residential car owners with effect from 1st February 1982. The minutes stated that one of the resolutions was that, the new management committee should undertake the item of maintenance fee chargeable to car owners, residential and non-residential.

14. The applicant referred to the minutes of the management committee meeting on 30th March 1992. The minutes showed that a member of the committee had moved that a maintenance fee of $30 per month be levied for each car parking space, from June 1992. This was a general levy on all parking spaces, regardless of whether the user was a resident or not.

15. On 30th April 1992, the chairman of the management committee issued a notice to the effect that a maintenance fee of $30 per month would be charged for each car park.

16. At the applicant's annual general meeting on 28th July 1994, the chairman reported that the management fees for each the car parks would remain at $30 per month.

17. On 2nd November 1995, an addendum to the minutes of the applicant's annual general meeting held on 24th August 1995 was published. One of the items was a record that the meeting had resolved to increase the carport management fee to $35 per month.

18. It was the applicant's evidence that, various demand notes and reminders were sent to the first respondent at his last known address, and to the second respondent at its registered office address. They were returned, marked "unclaimed, return to sender".

19. The respondents had paid no maintenance fee for their carports since July 1994.

20. The applicant relied on clauses 3,4,14, 15, and 17 of the DMC, and the Building Management Ordinance Cap.344 in support of its application.

The applicant's first witness

21. The applicant's first witness, Mr. Lau Sze Luen, (AW1) was the secretary in 1981, when the first respondent was the chairman. His evidence was that the resolution to impose a monthly car port maintenance fee on non-residential car owners was passed at the committee meeting on 4th December 1981. He drafted the notice dated 15th January 1982 for the first respondent's approval and signature. The notice was distributed to relevant parties. AW1 confirmed the contents of the minutes of the annual general meeting on 4th August 1982. The new management committee was to take follow up action on the demand and collection of the car port maintenance fees. In 1985, the first respondent resigned as the chairman of the management committee, when he sold his flat in the building.

22. AW1's evidence was that the March 1992 management committee meeting resolved to levy a car port maintenance fee of $30 per month on all carports. At the committee meeting in July 1994, there was a resolution that the carport maintenance fee be increased to $35 per month.

23. On 24th August 1995, the applicant held its annual general meeting. A resolution to raise the carport maintenance fee to $35 per month was passed. It was not on the minutes, issued on 20th September 1995, which AW1 saw some days after it was posted up. AW1 pointed out the omission to the chairman. The chairman sought the members' rectification on the point, in the management committee meeting in October 1995. AW1 acted as the secretary on that occasion. He later saw the addendum to the minutes of the applicant's annual general meeting held on 24th August 1995.

The applicant's second witness

24. The applicant's second witness was the treasurer, Mr. Chow Yuk Ming(AW2). He attended the annual general meetings in 1994 and 1995, and confirmed what had occurred in those meetings. He seconded the motion to increase the carport maintenance fee to $35 per month. AW2 noticed the error in the minutes of the 1995 annual general meeting. He confirmed that AW1 took the minutes of the committee meeting in October 1995, in which the rectification was sought.

25. AW2 had arranged for demand notes, reminders and letters before action to be issued to both respondents, but to no avail. He produced some of the returned envelopes, addressed to the first and second respondents. They were opened in court. The contents were demand notes and reminders addressed to the respondents.

The respondents' case

26. The respondents' case was that the DMC did not allow for the levying of carport maintenance fee. It was the respondents' contention that there was no valid resolution passed for the levy of the carport maintenance fee.

The first respondent

27. The first respondent gave evidence for himself and the second respondent, of which he was one of the directors. He admitted that, as the chairman, he had signed the minutes of the committee meeting on 4th December 1981. He also signed the notice dated 15th January 1982, relating to the imposition of a carport maintenance fee of $30 on non-residential car owners using the carports in the building. The first respondent denied that the matter had been resolved in the committee meeting on 4th December 1981. His evidence was that the motion was raised by a Mr. Lai, and was meant for discussion in the next meeting. Before the meeting was held, the notice dated 15th January 1982 was issued. It was done prematurely, in an attempt by AW1 to start collecting the maintenance fee from non-residential car owners, before the matter was resolved in the following annual general meeting. The first respondent was of the opinion that this was an unlawful demand. His evidence was that, since it was difficult to carry out, the matter was allowed to drop.

28. The first respondent disputed the validity of all relevant subsequent resolutions, in the management committee meetings and the annual general meetings.

29. The first respondent gave evidence that the respondents had never received any demands for the payment of carport maintenance fees, since they became owners. The first respondent accepted that there are 90 carports in the building, with a total of 40 shares. Each carport is assigned with 0.44 undivided shares.

Judgment

30. Clause 3 of the DMC stated clearly that the "following costs and expenses shall be paid by all the co-owners of the said building in proportion to their respective shares and interests of and in the said premises". The clause went on to iterate the relevant items. The flush water system and lifts expenses were payable by the owners of the 1st to 12th floors. All other common management expenses were to be paid by all the co-owners.

31. Clause 15 stated that the Agent (the manager), shall recover all charges and expenses properly incurred from the co-owners of the building "in proportion to their respective shares and interest of and in" the building. The carports were given a total of 40 shares. It was accepted and found as a fact that there are 90 carports in the building, each with 0.44 shares.

32. The Tribunal accepts and finds as a fact that an owner of a carport in the building is one of the "co-owners" under the DMC. The owner of a carport has the duty to pay his share of the common management expenses, with the exception of the expenses for the flush water system and lifts.

33. The respondents would have no grounds of opposition to the application, if the applicant had proved that the amounts now demanded were in proportion to the respondents' respective shares and interest.

34. Where the DMC had provided for the sharing of the contribution to the management expenses, it should be followed. What the applicant should have done, was to provide the budget for the common management expenses for each of the financial years for which the maintenance fee was demanded. The budget amount should be divided by the total number of undivided shares. From this, the allocation for each carport at 0.44 shares could be ascertained.

35. There is no evidence that this had been done in the present application. There is evidence that the amount to be levy and the increase was most likely arbitrarily set. There was neither reference to the total budget amounts, nor the undivided shares, when the amounts were resolved.

36. The application is dismissed.

37. No order as to costs.