THE INCORPORATED OWNERS OF NAM SHING COURT v. GOLDEN BRICK INVESTMENT CO LTD

HCMP645/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.645 OF 2005

(ON AN INTENDED APPEAL FROM LDBM NO.279 OF 2003)

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J U D G M E N T

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1. The respondent, Golden Brick Investment Co. Ltd, was the property manager of Nam Shing Court until 15 September 2000.

2. On 2 October 2003, the applicant, the Incorporated Owners of Nam Shing Court, commenced proceedings against the respondent.  As appeared from the Amended Grounds of Application dated 24 January 2004, the applicant was seeking production of documents pursuant to paragraph 8(b) of the Seventh Schedule to the Building Management Ordinance (“the Ordinance”) Cap. 344, which had been incorporated into the Deed of Mutual Convenant of Nam Shing Court under Part VIA of the Ordinance.

3. On 11 June 2004, District Judge Chow sitting as presiding officer in the Lands Tribunal dismissed the applicant’s claim on the basis that the applicant had no standing to sue and that the claim could only be pursued by the management committee.  The judge arrived at his conclusion on a construction of sections 29 and 41(5) of the Ordinance.

4. The judge also made an order for costs against the applicant.

5. On 2 March 2005, the management committee received a copy of the sealed allocatur dated 31 January 2005.  The amount of costs payable by the applicant to the respondent is $325,453.50.

6. On 31 March 2005, the applicant applied for leave to appeal out of time against the judgment of the judge made on 11 June 2004.

7. In considering whether leave to appeal out of time should be granted I have to take into account first, the length of the delay; secondly, the reasons for the delay; thirdly, the chances of the appeal succeeding if the application is granted; and fourthly, the degree of prejudice to the respondent if the application is granted.

8. Mr Andrew Mak, who appeared on behalf of the applicant submitted that the period of delay is only about seven months.  I believe the period of delay is closer to nine months.  However, I am prepared to proceed on the basis that I am only concerned with seven months’ delay.

9. I will deal with chances of success first.  I agree with Mr Mak that the chances of success are high.  It is clear that under section 45 of the Ordinance an incorporated owner is competent : “to commence any proceedings specified in the Tenth Schedule.”

10. The appellant’s claim was covered by paragraph 2 of the Tenth Schedule, which provides as follows :

“Proceedings relating to the interpretation and enforcement of the terms and provisions of a deed of mutual convenant, including such terms or provisions impliedly incorporated into a deed of mutual convenant under Part VIA.”

11. The applicant sought enforcement of paragraph 8(b) of the Seventh Schedule which has been impliedly incorporated into Nam Shing Court’s Deed of Mutual Convenant under Part VIA.

12. It is quite clear from section 45(4)(d) that an owner’s incorporation is competent to commence proceedings specified in the Tenth Schedule.  In so far as Judge Chow decided differently, he was wrong. 

13. Reasons for the delay are more complicated.

14. First, Mr Mak submitted that there has been a change in the law in that in subsequent cases the court have held that a management committee is not a legal entity.  Alternatively, there are conflicting decisions on the question whether a management committee and/or an owner’s committee is/are not a legal entity and the matter should be resolved by the Court of Appeal.

15. He relied in particular on a decision of Madam Justice Chu in LDBM208, 209, 210, 212, 222, 226 and 20/2002 (consolidated) delivered on 17 February 2005.  He has also referred me to a judgment of District Judge Chan sitting as presiding officer of the Lands Tribunal given on 26 January 2005 in LDBM331/2004.  In both those decisions the court held that a management committee was not a legal person.

16. I do not believe those decisions are relevant.  The point in The Incorporated Owners of Kwai Wan Industrial Building v. Kwai Fung Industrial Ltd and Others was whether a management committee (there could be different ones for different years) is a legal entity distinct from the incorporated owners.  It was held by Madam Justice Chu that it was not.

17. With respect, that must be right.  However, the decisions of Madam Justice Chu and District Judge Chan do not affect the right of a management committee or an owner’s committee to commence any proceedings specified in the Tenth Schedule.  That they may do so is clear from the language of section 45.  Here, the judge was wrong in deciding that the management committee had the exclusive right to sue under section 45.

18. So I do not agree with Mr Mak’s submission that there has been a change in the law or that the change in the law provides an explanation for the delay. 

19. The other reasons for the delay are more complicated.  As is perhaps not uncommon in Hong Kong, the owners of Nam Shing Court have not been able to live together harmoniously.  On the same day of the judgment sought to appeal against, in an action brought by some owners against the then management committee, an order was made on 11 June 2004 ordering a general meeting to be convened.  The general meeting was held on 25 June 2004 and a new management committee was elected.

20. Then HCA1535/2004 was commenced on 19 August 2004 by the new management committee in the name of the incorporated owners against the old management committee.  On 27 August 2004, certain injunction orders were granted against the old management committee.

21. In HCA1535/2004, however, the incorporated owners were also suing the old committee for documents.  The action is still pending.

22. There were also other proceedings which I don’t need to go into.

23. The solicitors on the record for the applicant in LDBM279/2003 were Wilber Ho & Co.  They remained on record until 2 April 2005.

24. It is the applicant’s case that the new management committee was not aware of the judgment of 11 June 2004 until after the service of the allocatur on them in March 2005.  I am afraid the evidence on this is not entirely satisfactory.  But Mr Cheung Man Tung, chairman of the new management committee, produced a notice dated 3 March 2005 to the owners of Nam Shing Court as exhibit CMT—20 to his affirmation of 1 April 2005.  It is quite clear that from that notice, that as long ago as 4 November 2003, he had on several occasions requested the old management committee to supply documents relating to the claim brought by the incorporated owners against the respondent.

25. I accept that the new management committee was put into a difficult position because it continued to be in litigation with the old management committee and I was told that the validity of the election of the new management committee was disputed by the old management committee.  It is also the applicant’s case that Wilber Ho & Co., whilst ostensibly acting for the applicant until 2 April 2005, had not communicated to the new management committee any information relating to, for example, the application for taxation by the respondent.  Be that as it may, I am of the opinion that the new management committee was in a position to find out about the judgment of 11 June 2004.  As part of Exhibit CMT—20 was a notice dated 6 November 2003 by the old management committee explaining why it had refused to supply information relating to the proceedings between the incorporated owners and the respondent.  So quite obviously, the new management committee must have been aware of the proceedings.  Yet the new management committee made no effort until March 2005 to do anything about the proceedings.  In all the circumstances, I do not regard the delay as excusable. 

26. Mr Mak also submitted that having regard to the judgment and because of res judicata, the applicant is not in the position to pursue the respondent for the documents.  In Property and Reversionary Investment Corporation Ltd v. Templar [1977] 1 WLR 1223, leave to appeal out of time was permitted because as Roskill LJ as said at page 1225C—D :

“The real point here, ... is whether it is right that these parties should have these continuing contractual relationship governed by a lease the terms of which have assumedly been erroneously construed in the court below.”

It is argued that here the applicant would be left without remedy whilst the relationship with the respondent would continue to be governed by the DMC.

27. I do not believe that to be correct because under section 45, such proceedings could be brought in the name of the management committee.  Indeed, both the judgments of Madam Justice Chu and District Judge Chan acknowledged the right of management committees to bring proceedings under section 45.  So this is not a case where the applicant would be left with no remedy.  There is nothing to stop the applicant from starting new proceedings against the respondent in the name of the management committee.  The management committee is in a position to do so today as it was able to do so immediately after the judgment of 11 June 2004.  

28. Lastly on prejudice, the respondent’s case is that the existence of such claims would affect their ability to obtain employment as property manager from other incorporated owners.  However since the respondent is liable to be used by the applicant though in the name of the management committee, I do not believe such prejudice has been made out.

29. For the above reasons, I would refuse leave to appeal out of time.  The application is therefore dismissed and the respondent is to have the costs of this application to be taxed if not agree.