The Incorporated Owners of Block F1-F7 Pearl Island Holiday Flats v. The Incorporated Owners of Pearl Island Garden and Another

IN THE COURT OF APPEAL

1996, No. 78
(Civil)

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J U D G M E N T

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Godfrey, J.A. :

Introduction

1. This is an appeal from Burrell, J., who, on 10 April 1996, refused to strike out the plaintiffs' statement of claim in their action against the defendants. The dispute between the parties concerns the road which, as the judge described it:

"..... runs across Pearl Island - an island near Tuen Mun which has enjoyed considerable development in the last decade or so. The road runs east-west across the island and joins a causeway at its eastern end which links the island to the mainland."

This road serves a number of developments on the island, including Pearl Garden, Pearl Island Garden, and Pearl Island Holiday Flats. The defendants, the incorporated owners of Block F1-F7, Pearl Island Holiday Flats, apparently claim to be entitled to permit cars to park in designated spaces marked out on the road. The question presently before us is not whether this ought, or ought not, to be allowed; it is whether the plaintiffs have the necessary locus standi to maintain the action. The plaintiffs claim that they do have the necessary locus standi; while the defendants say that they do not, and that any such action can be brought only by one who is the owner of an undivided share in one of the developments to which the right to use the road is appurtenant. Such an action, say the defendants, cannot be brought by the plaintiffs, who, although the incorporated owners of developments served by the road, do not themselves own any such undivided share. The defendants take other objections to the statement of claim; but this present judgment is concerned solely with that issue.

The rights of way over the road

2. Such rights of way as are enjoyed for the benefit of the two developments of which the plaintiffs are the incorporated owners are those which were created by a deed dated 14 February 1971. It may be taken for present purposes that the deed created rights of way over the road which enure for the benefit of these two developments.

The plaintiffs' claim to the necessary locus standi

3. The plaintiffs are corporate bodies, capable of suing and being sued: see s.8(2)(a) of the Building Management Ordinance, Cap.344. The rights of the owners in relation to the common parts of the developments are exercised by the plaintiffs to the exclusion of the owners : see s.16 (but the road is not part of "the common parts"). The plaintiffs may act on behalf of the owners in respect of any matter in which the owners have a common interest : see s.18(2)(g). This last, say the plaintiffs, is sufficient to give them the necessary locus standi to maintain the action.

The defendants' objection

4. The defendants disagree. The plaintiffs, say the defendants, are not the grantees of the rights of way created by the 1971 deed; nor are they the successors in title to any such grantee. The road is not part of "the common parts" of the plaintiffs' developments. The plaintiffs may have statutory authority to sue "on behalf of the owners". But such an action, being an action brought by agents on behalf of their principals, must in accordance with the ordinary common law rule be brought in the principals' names.

The judgment below

5. The judge, in a clear and refreshingly concise judgment, rejected the defendants' arguments. The judge said he was persuaded that s.18(2)(g) gives the plaintiffs as incorporated owners "the authority and right to sue in their own name". He held that :

"The expression 'on behalf of' in the section should be construed as enabling the corporation to represent the owners in litigation in their interests and for their benefit."

The true construction of s.18(2)(g)

6. This question as to the true construction of s.18(2)(g) is the central question; and upon it I agree with the judge. The point does not admit of much elaboration. I am of the opinion that s.18(2)(g) was properly construed by the judge as enabling the plaintiffs to maintain this action against the defendants in the plaintiffs' own names. We are not in the realm of the common law rule as to actions brought by an agent on behalf of his principal. We are concerned with the statutory regime for building management prescribed by the Ordinance. The statutory language is quite general enough to admit of the construction placed upon it by the judge and I see no reason whatever to strain to give s.18(2)(g) a narrower construction. The judge's construction is entirely consistent with the purpose of the Ordinance whereas, in my opinion, the defendants' suggested construction, requiring the action to be brought in the names of all owners of undivided shares in the two developments, is not. The defendants' concern that individual owners of undivided shares in the two developments of which the plaintiffs are the incorporated owners should be liable for the defendants' costs if the plaintiffs' action fails is, in my judgment, sufficiently met by s.17 of the Ordinance, which enables the Lands Tribunal to give leave to execute against individual owners any order for such costs made against the plaintiffs.

The result

7. I would therefore dismiss this appeal, so far as the point on the plaintiffs' locus standi is concerned. Before the judge, the defendants, unsuccessfully, took other objections to the plaintiffs' statement of claim. The defendants indicated that they would wish to renew those objections in this court if their point on the plaintiffs' locus standi failed. We have not heard any argument on those other objections and, since the defendants have failed on their point as to the plaintiffs' locus standi, the appeal will have to be restored to the list for further argument, on a date to be fixed through the usual channels, assuming that the defendants remain desirous of prosecuting those other objections at this stage rather than leaving them to be raised at the trial of the action, a course which they might, on reflection, consider to be the better (and wiser) course.

Liu, J.A. :

8. I agree with my Lord Godfrey J.A.'s conclusion on Locus Standi on a purposive construction of s. 18(2)(g). It would seem to be an interpretation endorsed by common sense for avoiding the joinder of a great many flats owners in litigation and other matters.

9. S. 18(2)(g) of the Building Management Ordinance, Cap. 344 reads:

"A Corporation may, in its discretion - act on behalf of the owners in respect of any other matter in which the owners have a common interest."

10. In the other paragraphs of sub-section (2), the corporation may act on its own to "pay", "retain and remunerate", "retain and remunerate", "insure and keep insured", "purchase, hire or otherwise acquire" and "establish and maintain". There is little to be said for the proposition that the corporation must not sue in its own name in the last paragraph. S. 18(2)(g) has not sought to introduce the relationship of agency which would necessitate the observance of the robust common law rule for suing in the names of the principals. After all, the phrase "on behalf of" has no strict legal meaning and may be used in conjunction with a wide range of relationships. If support for the plain meaning of this phrase should at all be necessary, it may be found in the observation of Latham C.J. in R v. Portus, ex parte Federated Clerks' Union of Australia, (1949) 79 CLR 428 at p. 435 and Re Ross, ex parte A.G. for Northern Territory, (1980) 54 ACJR 145 at p. 149, per Stephen, Mason, Murphy and Aickin J.J.

11. In the long title of the Building Management Ordinance, Cap. 344, its purpose is given as facilitating "the incorporation of owners of flats in buildings or groups of buildings, to provide ...... for matters incidental thereto or connected therewith". In this way, a multitude of flat owners may simply be represented by the body corporate. When introducing this legislation in the Legislative Council, Sir Denys Roberts, the then Attorney General stated its object as enabling "the owners of multi-storey buildings to form themselves into a corporation which would have the power to deal on their behalf with matters of common interest to them as co-owners". See p. 77 Multi-storey Building Management, Sarah Nicer & Judith Sihombing.

12. On weighing these interpretative factors, like my Lord Godfrey J.A. I am driven to the conclusion that s. 18(2)(g) should be so construed.

Nazareth, V.-P. :

13. I also agree with Godfrey, J.A.