THE INCORPORATED OWNERS OF NAN FUNG INDUSTRIAL CITY v. LI FEI

DCMP 2578/2022

[2024] HKDC 1425

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 2578 OF 2022

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BETWEEN

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REASONS FOR JUDGMENT

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Introduction

1.  In this case, the plaintiff (“P”) claims against the defendant (“D”) for outstanding management fees and air conditioning charges under the Deed of Mutual Covenant (“DMC”) and an order for sale against D’s property at Shop 303D on 3/F, Central Service Building, Nan Fung Industrial City, No 18 Tin Hau Road, Tuen Mun, New Territories (the “Premises”).

2.  This was the first hearing of P’s Originating Summons filed on 18 July 2022. D was absent at the hearing. Having been satisfied with the service of the relevant documents, I allowed the hearing to proceed in the absence of D.

3.  In the premises, P sought summary disposal of these proceedings on the basis that there were no triable issues: see Hong Kong Civil Procedures 2024 §28/3/1 and 28/4/2.

Factual background

4.  P relied on the following provisions in the DMC: -

4.1. Clause 3 of Section V provides that management fees are payable in advance on the first day of each month;

4.2. Clause 2(a) of Part E of Section VI provides that interest is recoverable from the defaulting owner from ‘due date to date of payment calculated on the unpaid amount at the rate of 2% over and above the Best Lending Rate quoted by The Hongkong and Shanghai Banking Corporation from time to time’;

4.3. Clause 5 of Part E of Section VI provides that if the owner fails to pay any amount due within 30 days, the amount (together with interest and costs) shall stand charged on Shop 303D; and

4.4. Clause 6 of Part E of Section VI provides that the charge may be enforced by an order for sale.

5.  D has defaulted on the payment of the outstanding management fees and air-conditioning fees since 1 August 2012. As a result, a charge was registered against the Premises pursuant to Clause 6 of Part E of Section VI of the DMC on 29 September 2014 (“Charge”).

6.  The updated outstanding indebtedness as at 8 May 2024 (the date of the Supplemental Affirmation of Mr Lau Kin Sun filed in support of the present application) was HK$307,156.74. At the hearing, Mr Brian Lo, counsel for P confirmed that P would adopt the said figure of HK$307,156.74 as the outstanding indebtedness as at the date of the order to be made.

Discussion

7.  I am satisfied that P is entitled to the monetary judgment in the aforesaid sum as claimed.

8.  To order a sale is a discretion which should be exercised judicially. After considering all the circumstances, I am of the view that P is entitled to seek the relief of an order for sale of the Premises.

9.  The legal principles are well-established: see The Incorporated Owners of Hertford Mansion (Un Chau Street) v Wong Shing Kwan, DCMP 2924/2016 (unrep., 5 June 2017); Incorporated Owners of So Tao Centre v Lam Kong Wan, DCMP 4250/2004 (unrep., 20 Dec 2006).

10.  P is prima facie entitled to enforce the Charge unless D establishes some good reason to the contrary. The arrears have accumulated over time to HK$307,156.74. It seems that P has no alternative recourse against D for recovery of the same which has been long overdue. There also appears to be no evidence that any prejudice to third parties will result if an order of sale is granted.

11.  In the premises, I will make an order in terms of Mr Lo’s proposed draft order save the amendments directed at the hearing.

12.  I thank Mr Lo for his assistance.