YEE TAI CLEANING CO LTD v. THE INCORPORATED OWNERS OF TAI ON BUILDING, SHAU KEI WAN

DCCJ2645/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2645 OF 2005

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D E C I S I O N

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1.  The defendant applies for leave to appeal against my judgment of  27 October 2006 giving judgment to the plaintiff.

2.  Mr Lam, counsel for the defendant, submitted the following grounds of appeal for the defendant:

(1)	that quantum meruit should not be given to the plaintiff because it would allow the plaintiff to bypass and circumvent the compulsory statutory tendering procedure under section 20A(2) of the Buildings Management Ordinance.  To allow the plaintiff to recover under quantum meruit would amount to the plaintiff recovering payment for work done “through the back door” in the name of unjust enrichment, and, in Mr Lam’s opinion, would frustrate the legislature and undermine public policy;
(2)	secondly, I have failed to consider the BMO and the Code of Practice on procurement of supplies, goods and services issued under section 44 of the BMO and the judgment of the late District Judge Z E Li  in the case of Equal Property Management Limited v The Incorporated Owners Association of San Po Kong Mansion.  It is an unreported decision in the District Court DCCJ14825/2000, the judgment was delivered on 17 September 2001;
(3)	that the plaintiff should have made inquiries and to ensure that the IOC or the Management Committee had complied with the BMO and the Code of Practice issued under section 44 of the BMO.

3.  I do not wish to repeat the details of my judgment here, nor is it necessary for me to do so, save that Mr Yip, counsel for the plaintiff, had pointed out that I did, in my judgment in paragraphs 26 to 29, address section 20A and Appendix B of the Code of Practice issued under section 44 of the BMO point, and I did refer to the judgments of Yuen JA in Wong Tak Keung v The Management Committee of the IOC of Granville House CACV244/2003 (17 December 2003), and the Court of Appeal judgment of Cheung JA in 麗苑業主立案法團 對 韓炳基及柳愛華 CACV1716/2001.

4.  In para. 14 of Madam Justice Yuen’s judgment in the case of Wong Tak Keung v The Management Committee of the IOC of Granville House, CACV2442/2003, she held in paras 40 and 41:

“	40.	It is at least arguable that at common law, where the intended consequence of the failure to comply is not stated in this legislation, the thing done under the statute is invalidated.  Whether the thing done is wholly void or merely voidable depends on the circumstances.”
“	41.	It would be for the Tribunal to decide whether the appointment was void or voidable, and depending on the facts found, on what terms, for example, on the basis of quantum meruit.”

5.  As to the reference in paragraph 28 of my judgment to Mr Justice Cheung’s judgment in the 麗苑case, he held that section 44(1) provided that the Code of Practice is to give the IOC guidance and direction, that section  44(2) did not specify that failure to comply with the code would render the resolution in the IOC null and void.

6.  In paragraph 30 of Mr Justice Cheung’s judgment, he held:

“	The failure to obtain five tenders for the lift replacement contract did not give the IOC the right not to pay the lift replacement expenses in that case.”

7.  So far as the issue on section 20A and section 44’s Code of Practice is concerned, I have fully considered them in my judgment of 27 October 2006.  What I did not go into was the judgment of the late District Judge Z E Li in his unreported judgment in the District Court case of Equal Property Management v The IOC of San Po Kong Mansion.  However, as Mr Yip pointed out, it was a decision based on a dispute between the management company and the IOC.  It is quite different from the present case, where it is a dispute between a cleaning contractor and the IOC.

8.  Following Madam Justice Yuen’s judgment in Wong Tak Keung, it is for the Tribunal to decide on the facts whether the appointment was void or voidable and the quantum.  The judgment in this case followed the decisions of the Court of Appeal.

9.  Contrary to what Mr Lam suggested, that granting the judgment on quantum meruit basis to the plaintiff would be against public policy, I find that it would be very much against public policy not to grant judgment to the plaintiff for services rendered to the defendant.  After all, it was abundantly clear that the defendant had settled payments for previous monthly cleaning services supplied by the plaintiff without any complaint.

10.  I do not agree with Mr Lam’s submission that all contractors have a duty to see to it that the party who awarded them the contracts have complied with the law or legislation.  There will be a huge problem if all companies in Hong Kong are required to show their contractors the board resolutions and minutes of meeting or for the IOC and management committees to show to their contractors the documents of meetings and resolutions to prove that they have complied with the statute.  In fact, it is an impossible task, because the point raised at the trial in this case was that the Management Committee was not properly constituted.  How would the contractor in this case have any means to find out whether the management committee was properly elected before this precise issue was litigated in court?

11.  I accepted Mr Yip’s submission that the BMO is intended to regulate the management of buildings in Hong Kong by regulating the owners of the building, the management committees and their office bearers.  But BMO does not and cannot be expected to regulate outsiders who are not privy to the decisions and the resolutions of the IOC or the management committees, and were not allowed to participate at the meetings, minutes or resolutions.

12.  It is right that they should not be entitled to such information  and they have no right to take part in the decisions.  These resolutions and rules of procedures are intended for the owners and IOC, the management committee and the management companies.  It has nothing to do with the contractors who have been awarded the contract for cleaning services, for building services etc.

13.  The defendant’s grounds of appeal I find to be without merit.  I do not consider the defendant would have any prospect of success in the appeal.  The defendant’s application for leave is refused with costs to the Plaintiff with Certificate for counsel.