CHAU TZE ON v. WONG SHING BIU AND ANOTHER

CACV 352/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 352 OF 2005

(ON APPEAL FROM LDBM 171 OF 2005)

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REASONS FOR JUDGMENT
AND
DECISION ON COSTS

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Hon Woo VP :

1. I agree with the reasons given by Cheung JA and his decision on costs.

Hon Cheung JA :

Reasons for Judgment

2. These are my reasons of our judgment of 26 April 2006.

Facts

3. The applicant is the owner of a flat in Sha Tin Heights Garden, 8003 Tai Po Road, Sha Tin, New Territories, Hong Kong (‘the Building').  The 1^st respondent was the Chairman of the Management Committee of the Incorporated Owners of the Building.  The 2^nd respondent was the Incorporated Owners.

4. The applicant had pursuant to paragraph 1(2) of the Third Schedule to the Building Management Ordinance, Cap. 344 (‘the Ordinance') requested the 1^st respondent to convene a general meeting of the incorporated owners for the purpose of

1) appointing an administrator of the Incorporated Owners until a new management committee has been elected; and

2) dissolving the 8^th Management Committee of the Incorporated Owners.

5. Under paragraph 1(2) of the Third Schedule to the Ordinance the chairman of the management committee shall convene a general meeting of the corporation at the request of not less than 5% of the owners for the purposes as specified by such owners within 14 days of receiving such request. 

6. The request was refused by the 1^st respondent.  The applicant commenced proceedings in the Lands Tribunal and asked for an order for the general meeting to be convened.  The application was opposed by the respondents.

The Orders

7. The applicant was represented by lawyers at the hearing before H H Judge Yung.  The judge, while recognising that the applicant was entitled to ask for the meeting to be convened, did not, however, grant the order.  Instead he ordered the management committee of the 2^nd respondent to be dissolved and an administrator to be appointed. 

The appeal

8. The 1^st respondent appealed against the decision.

The judge's approach

9. It is clear from the transcript of the proceedings below that the applicant had at the commencement of the proceedings simply asked for the general meeting to be convened.  This remained to be the stand until the closing submission of the applicant, when counsel for the applicant asked for the two orders which were eventually granted by the judge.  This was prompted by the judge's suggestion that he would dissolve the management committee of the 2^nd respondent.  The judge was obviously concerned with whether a general meeting would resolve the disputes between the various factions of the owners and he was taking what he regarded to be a practical approach to the matter.  He thought that the 1^st respondent would have ignored the order requiring him to convene the meeting by resigning as the chairman of the management committee.  However, in so doing, he had erred. 

The proper approach

10. While I recognise that some degree of informality will be expected in proceedings in the Lands Tribunal, what is important is for the parties to know at the time of the proceedings what issues are being dealt with and what relief is being sought. 

11. The relief that was originally sought by the applicant in this case was simply for a general meeting of the 2^nd respondent for the specified purposes to be held.  This was the only issue raised in the notice of application and contested in the notice of opposition. 

12. Faced with such a stand, the judge should not have granted relief which was drastically different from the ones that were sought by the applicant.  Although the matters to be discussed in the general meeting were precisely the same as the orders made by the judge, clearly this has a different impact on the way in which the respondents would prepare or respond to the case if they knew of the new relief sought by the applicant.  After all the applicant was simply asking for a meeting and chose to let the owners at the general meeting decide whether the management committee should be dissolved and whether an administrator should be appointed.  The respondents were not concerned with substantial arguments on these specific issues.  The approach adopted by the judge constituted a procedural unfairness to the respondents.

Opportunity to consult lawyer

13. Even if for the purpose of argument the judge could invite the parties to litigate on the issues as framed by him, clearly, he ought to have allowed the 1^st respondent an opportunity to consult and seek legal advice on the change of stand by the applicant before making a final decision on the matter.  The 1^st respondent in the hearing below was not legally represented.  When he realized that the applicant was seeking a different relief he applied for an adjournment to seek legal advice.  The judge, however, was only prepared to grant him a short adjournment until the afternoon of the hearing and was not prepared to grant a longer adjournment to give the 1^st respondent sufficient time to obtain legal advice.

14. In my view, the new orders sought by the applicant were so fundamental in nature that the only fair way of dealing with the matter was to adjourn the matter for a substantial period so that the 1^st respondent could seek proper legal advice on the matter.  The right of the 1^st respondent to be given time to consult lawyers is too plain and obvious to be stated.  There was no justification to restrict the adjournment only to the afternoon.  There certainly was no evidence that haste was required. 

Drastic actions

15. It goes without saying that the action of removing the management committee of an owners' corporation and appointing an administrator in its place are drastic ones affecting not only the operation of the corporation but also individual rights of the management committee members.  Although two of the members of the management committee were present at the hearing, there clearly was a vast difference between their presence in the tribunal and their involvement as parties to the proceedings.  In my view as a matter of procedural requirement, before an order can be made dissolving the management committee, its members must be joined as parties so that they could be heard about the relief that was sought against them.  Certainly the judge had not asked whether these two members were prepared to join as parties to the proceedings.  Ultimately it is a matter of fairness.  This had not happened in the present case and in my view this provides a further reason why the orders made by the judge could not be supported. 

Subsequent steps

16. It was submitted on behalf of the applicant that the administrator appointed by the judge had since convened an extraordinary general meeting, an annual general meeting had also been held in 2006 and a new management committee (the 9^th management committee) had been appointed.  It was submitted that no practical purpose would be achieved by quashing the decision of the judge.

17. In my view if the subsequent steps that were taken proceeded from a wrong legal position then the matter has to be addressed on that basis.  The error was too great to be brushed aside by a reference to practical considerations.

Administrators

18. The 1^st respondent had also challenged the appointment of a Mr. Lai Yuen Wing (‘Mr. Lai') as the administrator on the ground of conflict of interest.  Mr. Lai was one of the co-owners who had asked for the meeting to be convened.  It is not necessary for me to resolve whether conflict of interest exists in this case because if the order of the judge on the appointment of the administrator was vitiated by procedural irregularities then the appointment of Mr. Lai would be invalid as well.

Conclusion

19. Accordingly, the appeal was allowed and the orders made by the judge (as amended) were quashed.  We further ordered the 1^st respondent to give notice within 7 days from the date of our order for a meeting of the owners of the Building to be held within 28 days from the date of our order, to consider and, if thought fit, resolve the following :

(a) to dissolve the 8^th Management Committee;

(b) to ratify all or some of the acts done and decisions made by Mr. Lai Yuen Wing in his purported capacity as the administrator of the Building pursuant to the order of Judge Yung dated 10 October 2005 as amended on 24 October 2005;

(c) to ratify the purported appointment of the members of the purported 9^th Management Committee made at the Extraordinary General Meeting held on 18 November 2005; or alternatively,

(d) to elect a new management committee;

(e) to ratify all or some of the acts done and decisions made by the purported 9^th Management Committee.

There will be liberty to apply.

Decision on Costs

20. In respect of the costs below, the judge had before making the orders which we quashed recognized that the applicant was entitled to an order to convene the meeting.  On that basis, the costs order will be that the applicant be entitled to the costs of the application below save for one half of the hearing before the judge for which there is no order as to costs.  The costs are to be taxed on a party and party basis on the District Court scale with no certificate for counsel.  The 1^st respondent is entitled to the costs of the appeal to be taxed on a party to party basis.

Hon Yuen JA :

21. I agree.