MVO MANAGEMENT LTD v. THE INCORPORATED OWNERS OF TAK SHING MANSION

HCA 2121 / 2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2121 OF 2009

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J U D G M E N T

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A. Introduction

1.  This is the hearing of the Plaintiff’s application for summary judgment against the Defendant for the sum of HK$1,279,747.10 as service charges rendered under two service contracts for the period between July 1999 and September 2009.

2.  The Plaintiff is a company providing building management services in Hong Kong.

3.  The Defendant is the incorporated owners of Tak Shing Mansion. 

4.  There is no dispute that the Plaintiff had provided management services to Tak Shing Mansion for the relevant period under two service contracts respectively dated 1 July 1999 and 1 December 2002.  For the present purposes, these two service contracts could be regarded as of almost identical terms. 

5.  During the relevant period of services, there has been a running account maintained by the Plaintiff as to what sums were still owed to it for its service charges and disbursements.

6.  When the Plaintiff’s services came to an end in September 2009, it is the Plaintiff’s case that under the running account, it was still owed the sum of HK$1,279,747.10 for its services.

7.  Despite demands and having failed to have the Defendant pay for the sum, the Plaintiff brought the present claim against the Defendant on the basis that the Defendant was a party to the service contracts.  

8.  The Plaintiff now seeks summary judgment, which is opposed by the Defendant.

9.  As I will explain below, the core issue before me for the present purpose is a narrow one.  That is whether on a proper construction of the service contracts, the Defendant Incorporated Owners was a party to them, or whether it entered into the contracts as agents for the owners of Tak Shing Mansion.

B.      The present application

B1.    Applicable principles

10.  The principles applicable to summary judgment are well established.   It is for the Defendant to show a triable defence which is not frivolous or moonshine.  See: Hong Kong White Book 2010, paras14/4/2 – 14/4/9.

B1.    The Plaintiff’s claim

11.  Reading from the pleadings, I am satisfied that the Plaintiff’s claim against the Defendant rests on the following alternative bases:

(1)  The Defendant’s breach (as a contracting party) of the contracts in failing to pay for the service fees and disbursements.

(2)  An implied term of the contracts that the Defendant should reimburse the Plaintiff’s expenses incurred for carrying out services under the contracts for a profit.

(3)  The Defendant was estopped from denying liability to pay given the various admissions made by it on various occasions.

(4)  The Defendant was unjustly enriched to the value of the services rendered by the Plaintiff under the contracts.

(5)  Even if the Defendant acted as an agent as alleged for all the owners of Tak Shing Mansion in entering into the contracts, it is still liable for the service fees and disbursement under s. 16 of the Building Management Ordinance (Cap 344) (“BMO”)^[1].

B3.    The defences raised

12.  At the hearing, Mr Zimmern for the Defendant pursues the main defence that the Defendant was not a party to the contracts but only signed them as agents for the owners of Tak Shing Mansion.  His submissions run as follows:

(1)  Clause 1 of the contracts specifically defines the word “owners” in the contracts to mean persons who from time to time owns an undivided share in the building.

(2)  Clause 2 states that the “owners” agree to employ the Plaintiff and the Plaintiff agrees to serve “the owners” as manager of the building.

(3)  The clear effect of clauses 1 and 2 of the contracts are such that any right, duties, and liabilities thereunder are between the “owners” and the Plaintiff, not the Plaintiff and the Defendant.

(4)  It is therefore at least arguable, if not clear, that the Defendant signed the contracts as agents for the “owners”.  The Defendant is a body corporate and enjoys separate legal personality.

13.  Although the Defendant also raises in the pleading a partial defence that any parts of the claim for the sum incurred prior to 6 March 2003 are time barred, Mr Zimmern confirms (fairly so I think) that he is not pursuing this given that there is no evidence to challenge that there was a running account maintained.

B4.    Discussion

14.  I am not persuaded that the defence raises any triable issues.  I will explain below my reasons.

15.  In relation to the Defendant’s main defence on not being a party to the contracts, it is of course necessary to look at the relevant parts of the contracts, which I quote as below:

“THIS AGREEMENT is made the first day of December, Two thousand and Two.

BETWEEN The Incorporated Owners of TAK SHING MANSION, on behalf of TAK SHING MANSION at 48-50 TAM KUNG ROAD, KOWLOON. (hereinafter called “the Owner”) of the one part and MVO MANAGEMENT LTD, Whose registered office is situate RM 1801 & 1804, 18/F, Beverley Commercial Centre, 87-105, Chatham Road South, T.S.T., Hong Kong (hereinafter called “the Manager”) of the other part.

HEREBY IT IS AGREED as follows:

1. In this Agreement, the following expressions shall have the following meanings ascribed to them whenever the context so permits:

…

‘OWNERS’ shall included [sic] each person in whom for the time being the legal estate in any undivided share in the said land and the Building is vested and every joint tenant or tenant in common of any such share, and where the said legal estate in any such undivided share has been assigned or changed by way of mortgage or charge the word “owner” shall include both mortgage and mortgagee or charger and chargee who is in possession or in receipt of the rents and profits of such share or who has foreclosed.

2. The owners hereby agree to employ the Manager and the Manager hereby agrees to serve the owners as the manager of the Building known as TAK SHING MANSION, 48-50 TAM KUNG ROAD, KOWLOON.

….

8. The Owners of the said Building hereof have to pay the management deposit equivalent to 3 quarters of a month’s management fee, i.e. HK$65,910.00 the Manager upon signing the contract of this Agreement.

  …

IN WITNESS whereof the duly authorized representative of the Owners and Manager have hereunto set their respective hands the day and year first above written.

The Incorporated Owners Of TAK SHING MANSION

SIGNED by

in the presence of: -  [signed]

MVO Management Limited

SIGNED by

in the presence of: -”

16.  Looking at the contracts as quoted above, it is important to note that:

(1)  The Defendant itself was expressly identified in the contracts as the contracting party.

(2)  The Defendant itself through its representative signed the contracts together with its own corporate chop, without any reference to or qualification as signing as an agent.

17.  In the premises, it looks objectively clear that the Defendant was identified as and intended to be the contracting party to the contracts.

18.  However, it is noted that there are two definitions of the words “owners” in the contracts:

(1)  The Defendant being itself defined as “the Owners” in the contracting clause, and

(2)  There is a separate definition of the word “OWNERS” in clause 1.

19.  Seizing on these two different definitions, Mr Zimmern seeks to contend that when clause 2 says it was “the owners” who employ the Plaintiff, it was referring to those owners defined under clause 1 but not the Defendant itself.

20.  With respect, I do not accept Mr Zimmern’s contentions on construction as arguable:

(1)   As I mentioned above, the contracting clause of the contracts and the signature part of the contracts are clear to show that the Defendant itself was the contracting party.

(2)   Further, in my view, on a proper construction, there is in fact no conflicting meaning of the words “owners” as set out in the contracts:

(a)  In the contracting clause, the Defendant is defined as the “Owners”.

(b) In clause 1, the “Owners” being the Defendant, is further defined as to be constituted by whom.  I am fortified in this construction in that this definition starts by saying the “owners” “shall include…”.

(3)   On the other hand, the construction advanced by Mr Zimmern completely ignores the contracting party clause defining the Defendant as the “Owners”, and would result in inconsistency in the use of the same term in the same contract. 

(4)   I therefore reject the Defendant’s construction as to who was the contracting party to the contracts as unarguable. 

21.  As a result, on the above point of construction alone, it is clear and I conclude that the Defendant entered into the contracts as principal but not as agent, and this defence does not raise any triable issues.

C.      The alternative bases of the claim

22.  Given my above views on the primary basis of the claim and that the defence raised thereto, I do not find it necessary to deal with these alternative bases of the claim.

23.  Suffice for me to say that I would not have given summary judgment under these alternative bases of the Plaintiff’s claim as their success should in my view depend on a trial of the facts said to be in support of these claims or involve complicated legal arguments. 

D.      Conclusion

24.  For the above reasons, the Defendant has failed to show any triable defence to the Plaintiff’s claim. 

25.  Although the Defendant does not admit the quantum of the claim in its pleading, it has not filed any evidence to challenge the claimed sum, which arises from the running account affirmed under the Plaintiff’s supporting affirmation.

26.  I accept the Plaintiff’s evidence on quantum.

27.  I therefore give summary judgment for the Plaintiff in the sum of HK$1,279,747.10.  The Plaintiff is further entitled to interest on the judgment sum at the rate of 1% above the prime rate as from time to time quoted by HSBC from the date of the writ to today, and thereafter at judgment rate until full payment.

28.  I further order that costs of the action and this application be to the Plaintiff to be taxed if not agreed.

[1] This is raised in the Plaintiff’s Reply, of which I have given leave to file at the hearing.