THE INCORPORATED OWNERS OF FINANCE BUILDING v. BRIGHT HILL MANAGEMENT CONSULTANTS CO LTD

CACV184/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO.184 of 2002

(ON APPEAL FROM LDBM153/2000 and LDBM251/2000)

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J U D G M E N T

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Hon Yuen JA:

1.  This is an appeal from certain orders made in 2002 by Judge Yung sitting in the Lands Tribunal. 

(1)   On 22 January 2002 the judge made an order lifting a stay of proceedings in LDBM251/2000 and consolidating it with an earlier Lands Tribunal proceedings, viz. LDBM153/2000.

(2)   On 1 March 2002, the judge made an order refusing to recuse himself and heard an application for review of the 22 January 2002 orders which he confirmed. 

2.      There was also before us a summons for leave to adduce fresh evidence on appeal.  The parties did not object to the court considering the evidence de bene esse. 

3.      The Notice of Appeal was filed on 21 March 2002.  The initial grounds related only to the judge’s refusal to recuse himself.  Supplemental grounds of appeal filed on 15 October 2009 related to the other orders made.  A Respondent’s Notice was issued on 15 April 2002 which contained nothing of substance. 

4.   Seven years had elapsed between the filing of the Notice of Appeal in March 2002 and the filing of a Notice of intention to proceed after a year’s delay in April 2009.  Needless to say, it is unsatisfactory to the performance of the court’s functions that there was such a substantial delay in the prosecution of an appeal.

5.   The appellant sought to explain the delay by reference to the fresh evidence which will be discussed later.  As for the respondent, it was content to proceed with the appeal notwithstanding the delay. Accordingly I intend to say nothing more on the matter of delay in the prosecution of the appeal.

Parties

6.   The appellant Bright Hill Management Consultants Co Ltd (“BH”) has since January 1996 been the owner of a unit (Office C on the 2^nd floor) of Finance Building in Des Voeux Road, Hong Kong.  BH appeared throughout in the legal proceedings by its director Lie Han Ji.  The respondent is the Incorporated Owners of Finance Building (“the IO”) which was incorporated in October 1996.

DMC

7.   There is a Deed of Mutual Covenant for the building dated 14 June 1979 (“the DMC”).

8.   Clause 5(f) of the DMC provides: “The following costs charges and expenses shall be borne and paid by the owners of the said building in proportion to the number of Shop/Office in the said premises for the time being owned by them ... [there follows various categories of charges, such as electricity and water, watchmen’s remuneration, etc]”.  This is subject to a proviso that “the owner or owners for the time being of the Ground floor of the said building shall not be liable to make any payment of contribution for or towards the cost of operating maintaining repairing servicing replacing insuring and renewing of the lifts”. 

9.   Clause 5(h) of the DMC provides: “Each owner shall pay to the Building Manager the monthly sum or sums as specified hereunder on account of his share of the said costs charges and expenses for each flat of which he is the owner and such contribution shall be made and payable monthly in advance”.  For convenience, the monthly contributions towards the said costs charges and expenses will be referred to as “management fees”.

10.   For the Ground Floor, the management fees specified is $350 per month for each of Block A and B.  For BH’s unit, the management fees specified is $225 per month.  Pausing there, it is notable that the management fees for each of the Ground floor units ($350) was 155% that of BH’s unit ($225).

11.   Clause 5(h) also states that “if the total contribution payable to the Building Manager by the Owner of the said building as aforesaid shall be insufficient to cover all or any of the said costs charges and expenses the Building Manager shall have absolute power to increase the amount of the said monthly contributions and the owners shall pay the increased monthly contributions accordingly”.

Notice to increase management fees

12.   On 5 June 1997, the IO issued a notice.  Apart from some specific charges, one of the items in the notice was an increase in the management fees by 20%.  According to the notice, the existing management fees payable for the Ground floor was $1,040 a month whereas that payable for BH’s unit was $960 a month, and the fees were to be increased to $1,248 and $1,152 respectively. 

13.   It is notable that even if the sum specified for the Ground floor was for each of the Ground floor units and not both, the management fees for a Ground floor unit was only 108% of BH’s unit (whether before or after the increase). 

BH’s objection to payment of management fees

14.   BH considered that, whether under the provisions of the DMC set out above or according to the proportion of shares in the building as a whole, the management fees charged for its unit was wrong as they were disproportionately higher than those payable by the owner of the Ground floor (who was also the chairman of the Management Committee of the IO). 

15.   BH paid the specific charges under protest but subsequently refused to pay the monthly management fees at all as it considered that it was being overcharged.

1^st and 2^nd Memoranda of Charge

16.   This led the IO to register a Memorandum of Charge (“the 1^st MC”) against BH’s unit in January 1998 for various charges specified therein totalling $3,538. 

17.   In December 1999, the IO registered another Memorandum of Charge (“the 2^nd MC”) against BH’s unit for arrears of 14 months management fees (November 1998 to December 1999 both months inclusive).

18.   BH says that it was overcharged for management fees, that it did not owe the arrears alleged in the MCs which accordingly were wrongly registered against its property and that it has suffered loss as a result.

Small Claims proceedings - SCT28733/1999

19.   In the meantime, in July 1999, the IO had issued proceedings in the Small Claims Tribunal (SCT28733/1999) against BH for the said sum of $3,538 together with arrears of 9 months management fees (November 1998 to July 1999 both months inclusive). 

20.   In December 1999, the Small Claims Tribunal ruled that it had no jurisdiction to decide the claim as it involved the interpretation of the DMC.

Originating Summons proceedings - HCMP169/2000

21.   This was followed in January 2000 by the IO’s issue of an Originating Summons (HCMP169/2000) for an account from BH of what was due under the 1^st and 2^nd MC, and an order for possession of the unit for the purpose of sale, together with consequent directions.

22.  On 15 March 2000, Deputy Judge To (now To J) ordered by consent that HCMP169/2000 should be transferred to the Lands Tribunal.  He further ordered that BH’s affirmation do stand as “Defence and Counterclaim”.  This affirmation was in support of BH’s application for a declaration that the 2 Charges were invalid, a declaration that the notice of 5 June 1997 increasing the management fees was invalid and for return by the IO of overpayments made by BH.

1^st Lands Tribunal proceedings - LDBM153/2000

23.  The Originating Summons proceedings became LDBM153/2000 (“the 1^st LT proceedings”).  The IO’s solicitors filed a Notice of Application to the Lands Tribunal on 18 May 2000.

24. However at the hearing on 8 June 2000, Deputy Judge H.M. Lee held that on the IO’s own evidence, there was no validly appointed Management Committee on the date of the Application on 18 May 2000, because since the incorporation of the IO in 1996, the Management Committee’s term of office had expired and no annual general meeting had taken place.  The judge explicitly dismissed the Application on that ground.  She also held that for the same reason, “the counterclaim cannot be dealt with”. 

25. In an “Appendix to Reasons for Judgment dated 14 June 2000", apparently provided after BH’s application for review, Deputy Judge Lee also held that the counterclaim could not proceed as the Lands Tribunal had no jurisdiction under the 10^th Schedule of the Building Management Ordinance Cap.344 (“BMO”).  She also held that even if there was jurisdiction, it would have been a futile exercise to deal with the counterclaim as the Management Committee had not been validly appointed.  

Appeal from 1^st LT proceedings - CACV386/2000

26.  BH lodged a Notice of Appeal against Judge Lee’s order (CACV386/2000).  The IO did not cross-appeal.  It is said by the IO that on 10 July 2000 a general meeting of the owners had been held at which a Management Committee was appointed and solicitors authorized to pursue arrears.  This will be discussed later in this judgment.

27. Although the judges in the court hearing CACV286/2000 had differing views on Deputy Judge Lee’s judgment that the Management Committee had no power to carry on after their term of office expired (as to which there was no cross-appeal), they were unanimous in the view that the Lands Tribunal did have jurisdiction to deal with BH’s counterclaim and that it should not have been dismissed. 

2^nd LT proceedings - LDBM251/2000

28. Before that appeal was heard however, on 2 August 2000 the IO had issued an application to the Lands Tribunal LDBM251/2000 (“the 2^nd LT proceedings”) essentially for the same relief sought in the 1^st LT proceedings.

The Stay order

29. On 11 September 2000, Judge Tong made an order on BH’s application staying the 2^nd LT proceedings pending the result of CACV386/2000 (“the Stay order”).

Events after CACV386/2000 -

30. Judgment in CACV386/2000 was given on 29 November 2001.  The Court of Appeal allowed BH’s appeal and ordered BH’s counterclaim in the 1^st LT proceedings be remitted back to the Lands Tribunal for continuation of the trial before another presiding officer.  

(1)  IO’s applications to lift Stay and consolidate 2 LT proceedings

31. Subsequently, the IO issued the following applications on 20 December 2001:

(1)   an application in the 2^nd LT proceedings that the Stay order be lifted;

(2)  an application (in each of the LT proceedings) that the 1^st LT proceedings (for which BH had a counterclaim) and the 2^nd LT proceedings be consolidated. 

(2)  BH’s application for default judgment on counterclaim in 1^st LT proceedings

32. In the 1^st LT proceedings, BH issued an application dated 18 January 2002 for default judgment on its counterclaim. 

33. As for the 2^nd LT proceedings, BH raised a number of points: it challenged the authority of the solicitors to represent the IO as there was no affirmation in support of the Application; it also considered that the IO was abusing the process of the court in issuing the 2^nd LT proceedings for essentially the same relief as the 1^st LT proceedings; and it objected to the IO’s applications to lift the Stay order and to consolidate the 2 sets of proceedings.

34. This then was the “state of play” when the parties appeared before Judge Yung on 22 January 2002. 

Orders of 22 Jan 2002

35. As mentioned earlier, the judge lifted the Stay order and consolidated the 2 LT proceedings.  He gave oral reasons (Appeal Bundle p.493). 

36. BH applied for a review.

Orders of 1 March 2002

37.  At the hearing on 1 March 2002, BH first applied for written reasons for the judgment of 22 January 2002.  The judge refused on the ground that a transcript would be available.  In this connection BH has also complained that this refusal was not included in the sealed order of 1 March 2002.  I do not think it was necessary for the judge’s refusal to provide written reasons to be included in his sealed order.  That was neither a substantive nor procedural order.  BH could see the reasons for the judge’s orders of 22 January 2002 from the transcript.  (I would like to add however that it is of course preferable for a tribunal to provide written reasons, rather than leave the parties and an appellate court to read oral reasons from a transcript, especially when proceedings are conducted in colloquial dialect.  Such written reasons need not and should not be a fresh written judgment.  All that is needed is for the oral record to be edited into the written form of the language).  

38. Coming back to the hearing on 1 March 2002, BH also applied to the judge to recuse himself on the grounds of actual or apparent bias.  The judge refused to do so.

39. The judge then heard the review and confirmed his orders lifting the Stay order and consolidating the 2 LT proceedings. 

Discussion

40. I will first consider the orders to lift the Stay order and to consolidate the 2 sets of LT proceedings.

Challenge to validity of resolution to be determined as a preliminary point

41.  In support of the IO’s applications, there was filed an affirmation made on 20 December 2001 by the IO’s previous solicitor William Lam.  The affirmation was filed under the titles of both sets of proceedings.  In the affirmation the solicitor said that he was conducting the proceedings on behalf of the IO and that “I was informed by the [IO] and verily believe that on 10^th July 2000, a general meeting was held by the [IO], wherein a new management committee was duly appointed” (para. 4). However no resolution appointing the new Management Committee or authorizing his appointment as solicitor was exhibited.

42.  In BH’s Notice of Opposition to the Interlocutory Application filed in the 2^nd LT proceedings on 11 January 2002, it referred to the meeting of 10 July 2000 as the “so called” general meeting and noted that “the said general meeting was only lightly mentioned as indirect evidence unsupported by any relevant document and/or exhibit”.

43. In effect that was a challenge to the authority of the IO’s solicitors who purported to act pursuant to the resolution of the general meeting appointing a new management committee.  Although there was no application to strike out for want of authority, the judge nevertheless had to deal with this point first as a preliminary point.  If the solicitors had not been validly authorized to act on behalf of the IO, it must follow that the applications for lifting the Stay order and to consolidate the proceedings could not be proceeded with.

44.  Counsel for the IO who appeared before us (but not before the Tribunal) conceded that that should have been the correct procedural step.  However it would appear from the transcript that when BH’s representative started raising the point about the meeting of 10 July 2000, the judge interrupted and continued to quiz him instead about whether he had seen him before (p.489P-Q).  Counsel for the IO accepted that the point about the general meeting was not considered by the judge.  Counsel then sought leave to refer to a document which had not been previously exhibited or shown to the judge (now exhibited to the IO’s solicitor’s affirmation filed 31 March 2010).

45.  The document was a minute of the meeting held on 10 July 2000.  It was entitled 金融商業大廈業主立案法團業主大會會議紀錄.  Representatives of at least 12 units were recorded as having attended the meeting.  BH’s unit was not one of them.  BH’s director Mr Lie Han Ji told the court that BH had not been allowed to attend any meetings on the ground that it had not paid management fees.  Whether that allegation is true or not as a matter of fact cannot be determined by an appellate court.  If that allegation is true, then a question of law may arise as to the validity of the general meeting where an owner has been excluded, taking into account the provisions of the BMO and the DMC. 

46.  These were preliminary matters which the judge should have dealt with at the hearing on 22 January 2002 before determining whether the Stay order should be lifted and the 2 sets of proceedings consolidated.  Unfortunately they were not.  In view of the matters set out in the preceding paragraph, we have no alternative but to set aside the orders made on 22 January 2002 and to remit the applications to be heard in the Lands Tribunal before another presiding officer. 

Accusations of bias

47.  This brings us to the other ground of appeal in which BH has alleged actual or apparent bias of the judge.  This ground has been opposed by the IO although it has no objection to the matter being heard by another judge.

48.  Before looking at the evidence in the present case, it may be helpful to state briefly the law on actual and apparent bias. 

Law on actual bias

49.  In In re Medicaments and Related Classes of Goods (No.2) [2001] 1 WLR 700, Lord Phillips MR said (para. [38]):

“The decided cases draw a distinction between ‘actual bias’ and ‘apparent bias’.  The phrase ‘actual bias’ has not been used with great precision and has been applied to the situation (1) where a judge has been influenced by partiality or prejudice in reaching his decision and (2) where it has been demonstrated that a judge is actually prejudiced in favour of or against a party”.

  It was noted by Lord Bingham in Locabail (UK) Ltd v Bayfield Properties Ltd [2000] QB 451 in para. [3] that

“objections and applications based on what, in the case law, is called ‘actual bias’ are very rare, partly (we trust) because the existence of actual bias is very rare, but partly for other reasons also.  The proof of actual bias is very difficult, because the law does not countenance the questioning of a judge about extraneous influences affecting his mind; and the policy of the common law is to protect litigants who can discharge the lesser burden of showing a real danger of bias without requiring them to show that such bias actually exists”, in other words, apparent bias (see also para. [16]).  

Law on apparent bias

50.  For apparent bias, the burden is less - the test is whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased (Magill v Porter [2002] 2 AC 357).

BH’s allegation of actual bias

51.  In the present appeal, BH does not suggest that the judge had a pecuniary or proprietorial or personal interest in the outcome of the issues concerning the management fees of Finance Building.  Rather, BH says that there was actual bias because it had appeared before the judge in a different small claims matter in 1996 (SCTC103695/95).  Afterwards BH had lodged a complaint to the Judiciary Administrator about the judge.  This is the subject matter of BH’s application to adduce fresh evidence.  It includes correspondence recently found about this complaint.  In the last of the correspondence exhibited dated 16 July 1996, the Judiciary Administrator informed BH that the matter was receiving attention and that she would revert to it in due course.  In view of the fact that this evidence could not be found between 22 January 2002 and 1 March 2002 given the passage of time, I consider that this court should in the exercise of its discretion permit the fresh evidence to be adduced on appeal.

52.  It would indeed appear from the transcript that when the judge saw Mr Lie in court on 22 January 2002, he thought he had seen him before and he mentioned this many times in the earlier part of the hearing (Appeal Bundle p.459H-J, 460A-B, 461M-N, 464O-Q, 481I-O, 489Q). 

53.  Mr Lie’s response however was as follows.  At first he agreed that he had appeared before the judge previously (p.459H) and started to refer to a small claim (p.464P).  He denied that he had appeared before the judge “there”, presumably referring to the Lands Tribunal (p.481M).  However, he later claimed that he “did not know” if the judge had seen him before, saying that he was often in court to listen to other people speak (p.481N-O).  When the judge mentioned that he remembered Mr Lie had worked in Singapore for a time, Mr Lie denied that he had done so and also denied that he had either gone to Singapore or was from Singapore (p.489Q-490B).  For convenience I will refer to what Mr Lie said to the judge as “the explanation and denials”. 

54.  It is notable that the explanation and denials concluded with the judge saying that it was possible that the person he had in mind was not Mr Lie after all

官:唔係你嘅? 可能唔係你

答辯人代表:唔係我 (p.490B). 

55.  Thereafter nothing more was said at that hearing about a previous encounter.  In other words, the explanation and denials ended the judge’s enquiries about a previous encounter.

56.  The reasonable inference from this evidence is that after Mr Lie’s explanation for familiarity of appearance and categorical denials about Singapore on 22 January 2002, the judge assumed that it was a case of mistaken identity on his part and continued to hear the matter.  In fact even at the hearing on 1 March 2002, Mr Lie still denied that he had appeared before the judge in previous cases (p.502J-R).  This was indeed how the judge summarized the position in his judgment (para. 7):

“上次合併聆訊開始時, 本席覺得業主代表很面善, 可能參予過經我審理的案件, 所以就此詢問他, 以免引起不便, 他肯定沒有這回事。本席因而放心繼續聆訊。料不到今天聆訊時, 業主以此為由, 應為本席針對其代表, 至令審訊不公。為了穩當起見, 本席再詢問業主代表他有否牽涉本席曾處理的案件, 他也再肯定地証實沒有。既然如此, 本席怎會針對業主代表, 又怎會對業主不公, 也不理解業主或其代表為何有此憂慮。”

57.  Since BH had persuaded the judge that he had not had previous dealings with it, I fail to see how it can now be said that the judge was biased against it because of the previous dealings.  We cannot speculate what might have happened if Mr Lie had not denied his previous encounter with the judge.  It would appear from what the judge said at para. 7 of judgment of 1 March 2002 “以免引起不便”that he would not have continued with the hearing.  But this court should not attempt to speculate.  As we have seen from the cases quoted earlier, a litigant who alleges actual bias faces a high hurdle.  In my view, BH has failed to prove that the judge was actually biased against it because of the previous dealing, as the evidence shows that the judge had accepted its denials of such previous dealings. 

BH’s allegation of apparent bias

58.  However that is not the end of the matter.  There is also the allegation of apparent bias.  It is now well-established law that the test is whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased (Magill v Porter [2002] 2 AC 357). It has been said that the term “bias” is only used as shorthand and that the true essence of the principle lies in the duty of a judge not only to be, but also to be seen to be, impartial.  This duty has always been part of the common law but it is also now mirrored in explicit rights to an impartial tribunal.

59.  In Davidson v Scottish Ministers [2004] UKHL 34, Lord Hope said (para. [46]):

“[46] One might think that the cost and delay of rehearing the case would only be justified if there was a real possibility that the wrong decision had been reached because of the alleged bias.  But that is not the approach that we are required to take by article 6(1) of the European Convention on Human Rights and Fundamental Freedoms [cf article 14 ICCPR, article 10 Hong Kong Bill of Rights] which requires the tribunal to be independent and impartial ... And by long tradition in our own country the rule has been that justice must not only be done, it must be seen to be done”.  

What is at stake is the confidence that the court must inspire in the public and above all in the parties to the proceedings (Morris v United Kingdom quoted in Davidson at para. [50]).

60.  I must first state explicitly that the fact that a judge has dealt with a litigant previously and found against him is not a ground for apparent bias.  In the present case, BH’s allegations of apparent bias stem from the many interruptions from the judge even at a very early stage in the hearing on 22 January 2002 and the manner in which the judge has expressed himself during the hearings which may be described as intemperate.  I regret to have to agree that pejorative words or phrases used in a personal context were used during the hearings (p.461M-O, p.468M-O & p.481O-P), which would have led a fair-minded and informed observer to conclude that there was a real possibility that the judge was not acting impartially.  The judge has also failed to be seen to act impartially when he belittled Mr Lie in sarcastic terms regarding his inability to understand law books (p.464 P-Q) and indicated that the Tribunal did not wish to spend time on trivial sums (p.467 I-K) .   In fact on 1 March 2002 the judge seemed to refer to his subjective feelings at the hearing rather than  deal with the issues objectively (p.522D-E).  

61.  In this connection, it matters not whether the judge so expressed himself when he thought he had had previous dealings with BH or Mr Lie, or after the explanation and denials.  Personal comments were inappropriate whether there were previous dealings or not.  In any event after Mr Lie’s explanation and denials, there was no apology from the judge for his comments.

62.  I am regretfully compelled to find that in this case the judge has expressed himself in such a way that a fair-minded and informed observer   would have concluded that that there was a real possibility that the   tribunal was biased as the judge was not seen to be acting impartially.  I    wish to say with respect just a few words on this subject.  In order that  litigants may have their cases heard as soon as possible, judges have to deal with court proceedings efficiently.  Any judge with experience of   unrepresented litigants knows that it may be taxing if they are unable to answer questions on material considerations, or waste time on   irrelevancies, or are verbose.  It is for the judge to control the     proceedings in court by reasonable means, such as by imposing a  reasonable time limit for oral submissions or a reasonable limit on the   length of written submissions.  When a judge explains relevant  considerations to a litigant in person, he cannot expect the litigant to be readily persuaded, or to agree with him when the litigant considers  that they are against his interests, and it is unconstructive to enter into a     protracted argument.  Just as a judge should not permit those who    appear before him to insult the dignity of his office, so he should also remind himself constantly of the need to maintain that dignity.

Order

63.  For the reasons set out above, I have to allow the appeal, set aside the orders made on 22 January 2002 and confirmed on review on 1 March 2002 and remit the applications to a different presiding officer of the Lands Tribunal.  I will give leave to BH to file and serve an affirmation in the LT proceedings in opposition to the IO’s affirmation filed 31 March 2010 within 14 days of this order.  The IO will have leave to file and serve an affirmation in reply within 14 days thereafter.  As for the costs of the appeal, I would make an order nisi as follows.  The IO is to pay BH’s costs of the appeal to be taxed if not agreed.  The costs of the hearings before the Lands Tribunal on 22 January 2002 and 1 March 2002 will be costs in the cause of the applications.

Hon Kwan JA:

64.  I agree with the judgment of Yuen JA and with the orders in paragraph    63 above. I would like to add a few words of my own.

65.  I wish to state firmly that the allegation of actual bias on the part of the judge is not established. I am satisfied the judge could not be sure if Mr. Lie was the person who had given “much trouble” to him on a previous occasion and the judge had accepted Mr. Lie’s words he was not that person. The attacks of Mr. Lie on the integrity of the judge of taking personal revenge against him are not made out.

66.  The new evidence adduced before this court showed that in a matter concerning BH heard by the judge when he was sitting as an adjudicator in the Small Claims Tribunal in 1996, Mr. Lie had lodged a complaint to the Judiciary Administrator alleging strong bias against BH and complaining that he did not have a fair trial.  Counsel for the IO, Mr. Martin Wong, who did not appear for the IO at the hearings in 2002, fairly accepted there might be a case for apparent bias applying the test of a fair-minded and informed observer, with knowledge that Mr. Lie was the same person who had given much trouble to the judge with his complaints on a previous occasion. Given the intemperate expressions of the judge set out in paragraph 60 above, it seems to me the circumstances were such that a reasonable, fair-minded, and informed observer could be led to conclude there was a real possibility that the judge was biased.

67.  I fully endorse what Yuen JA said at paragraph 62 as to the reasonable measures that might be adopted by a judge to control the proceedings in court in an efficient manner. Unrepresented litigants should also bear in mind they do not have unlimited use of the court’s time and resources. They do not help their cause by making submissions that are verbose and repetitive. In this appeal, Mr. Lie has provided the court with a Supplementary Notice of Appeal of 9 pages, a Chronology of Events of 6 pages with 61 paragraphs, the Appellant’s Skeleton Arguments of 16 pages closely typed, and the Appellant’s Submissions of 18 pages in small print and closely typed which he was going to read to the court. This is plainly over the top.