NG YUI TONG v. TAIKOO SHING (MANAGEMENT) LTD

CAMP 133/2024, [2024] HKCA 963

On Appeal From [2024] HKLdT 35

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 133 OF 2024

(ON AN INTENDED APPEAL FROM LDBM NO 1 OF 2023)

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D E C I S I O N

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Hon Au JA (giving the Decision of the Court):

A.  INTRODUCTION

1.  This is the applicant’s summons dated 22 July 2024 (“the Summons”)  seeking leave to appeal to the Court of Appeal out of time against the order (“the Order”)  of Deputy District Judge M Lam (“the Judge”)  dated 30 April 2024.  By the Order, the Judge dismissed the applicant’s claim commenced in the Lands Tribunal (ie, LDBM 1/2023).  Her reasons were contained in the written Judgment handed down on 30 April 2024 (“the Judgment”): [2024] HKLdT 35.

2.  The applicant first sought leave to appeal from the Judge.  That was refused on 24 June 2024 after a hearing.[1]  Pursuant to Order 59, rule 2B(3)  of the Rules of the High Court (Cap 4A)  (“RHC”), the applicant had until 8 July 2024[2] to further apply to this court for leave to appeal.  However, the Summons was only taken out on 22 July 2024.  The leave application was therefore made 14 days out of time.

3.  This court has directed[3] for the application for leave to appeal out of time be dealt with on paper[4].  The parties have since filed their respective written submissions.

B.  BACKGROUND

B1.  The dispute in LDBM 1/2023

4.  The applicant is the owner of a flat in Fu Shan Mansion of Taikoo Shing Estate (“the Estate”).[5]  The Estate was developed in 12 stages, and each stage has its own deed of mutual covenant (“DMC”).[6]  Fu Shan Mansion was a part of Stage III.[7]  The respondent is the management company of the entire Estate.[8]

5.  On 3 January 2023, the applicant commenced proceedings against the respondent in the Lands Tribunal (ie, LDBM 1/2023).[9]  The applicant’s primary claim was that the respondent had no power under the DMC of Stage III of the Estate (“DMC III”)  to install and operate the following new security appliances (“New Security Appliances”):[10]

(1)  Smart card devices in relation to the doors at the entrances of the tower blocks of Stage III of the Estate in place of the combination padlock;[11]

(2)  Tags on each floor of the tower blocks of Stage III of the Estate to record the security guard patrols in place of handwritten visiting logbooks;[12]

(3)  A surveillance camera, together with digital monitor, wires, etc, on the ground floor of Stage III of the Estate in place of the analog monitor and video machine;[13] and

(4)  Sensors for door opening at the entrance of the ground floor of Stage III of the Estate in place of “open-button devices”.[14]

6.  As a corollary to the applicant’s primary claim, the applicant claimed, inter alia, that the expenses incurred in relation to the New Security Appliances did not fall within the annual budget of Stage III of the Estate (as prescribed by Clause 8(a)  of the DMC III)  and the respondent was not entitled to withdraw, use, or seek reimbursement from the management fund of Stage III of the Estate in respect of such expenses.[15]  Similarly, the applicant also claimed that the respondent was not entitled to receive the remuneration charges under Clause 8(a)A(iv)  of the DMC III which are attributable to the installation and operation of the New Security Appliances (“Charges”).[16]

7.  There was no dispute by the respondent as to the installation and operation of the New Security Appliances; nor any dispute that it had received the Charges.[17] However, the respondent contended that the installation and operation of the New Security Appliances were within the ambit of what it is empowered to do under the DMC III.  Accordingly, the expenses incurred in relation to the New Security Appliances and the Charges received, were legitimate expenses associated with its management of Stage III of the Estate and to be paid out of the management fund under the DMC III.[18]

B2.  The Judgment

8.  As set out in [3] of the Judgment, the dispute between the parties is essentially one of construction of the DMC III.

9.  In this connection, the Judge had regard to the construction of the DMC III given by the Court of Appeal (Chu VP, Au and Chow JJA)  in Ng Yui Tong v Taikoo Shing (Management)  Limited [2023] HKCA 297 (“the CA Judgment”).[19]  Notably, the parties there and the parties in these proceedings are identical.  While the activities complained of were different, the applicant had, in the other proceedings, also challenged the scope of the respondent’s management powers under the DMC III.  Importantly, the Court of Appeal had, in this context, considered the construction of the DMC III referred to by the parties herein (including Recital (5), Clauses 7(a)  and 7(a)(24)).[20]

10.  Bearing in mind the factual context of the Estate, the purpose of the DMC III and the precise language used,[21] the Judge held that it is the clear intention of the DMC III to give the respondent wide powers of management by granting to it “full and unrestricted authority” to do the acts and things referred to in Clauses 7(a)  and 7(a)(1)-(28)  of the DMC III.[22]  The powers given are not limited only to acts or things “necessary” or “requisite for” the management of Stage III of the Estate, but extend to those “in connection with” or “reasonably incidental” to its management.[23]

11.  The Judge held that Recital (5)  of the DMC III expressly provides the word “management” with a wide meaning to cover many aspects as “the management, operation, servicing, maintenance, repair, renovation, replacement, security, and insurance of” the land in relation to Stage III of the Estate and the buildings thereon and their equipment services and apparatus.[24] Moreover, the word “management” is not defined exhaustively in Recital (5), but is an inclusive one which includes all or any of the aforementioned activities.[25]  The applicant’s narrow interpretation of Recital (5)  that the respondent’s management powers are limited only to acts or things “necessary” or “requisite for” the management of Stage III of the Estate was expressly rejected.[26]

12.  In view of the above, the Judge held that the installation and operation of the New Security Appliances were clearly works that are “in connection with” or “reasonably incidental” to the management of Stage III of the Estate, and thus fell within the scope of the “management” power of the respondent under Clause 7(a), including Clauses 7(a)(11)  and 7(a)(24)  of the DMC III.[27] Her reasoning was as follows:

(1)  The New Security Appliances have a functional use (and are used for access control, identification, duty-reporting, privacy-protection, data-processing, and record-keeping); and would enhance the efficiency and effectiveness of the security system of Stage III of the Estate, as well as improve the standard of hygiene.[28]

(2)  While the New Security Appliances are not strictly “necessary or requisite for” the management of Stage III of the Estate (in the sense that without them, management can still continue with the original appliances), the New Security Appliances are technologically advanced security appliances widely used for enhancing security and efficiency in modern society. Their adoption significantly enhances the effectiveness of the security system, improves convenience, and raises the standard of hygiene –and are for the benefit of the owners and users of Stage III of the Estate.  The adoption of non-costly up-to-date technology for this purpose was the essence of good and proper management of a large estate.[29]

(3)  The word “management” in Recital (5)  and Clause 7(a)  of the DMC III specifically covers the “management”, “security”, “servicing”, and “replacement” of the land in relation to Stage III of the Estate and the buildings thereon, together with “their equipment, services and apparatus.”[30]

B3.    The Judge’s refusal to grant leave to appeal

13.  On 27 May 2024, the applicant applied to the Judge for leave to appeal.[31]

14.  The Judge dismissed the applicant’s leave to appeal application on the basis that, pursuant to section 11(2)  of the Lands Tribunal Ordinance (Cap 17)  (“the LTO”), the applicant had failed to satisfy the Tribunal that the Judgment was erroneous in law.  Further, in accordance with section 11AA(6)  of the LTO, the Judge did not consider the applicant’s intended appeal to have a reasonable prospect of success, or that there was some other reason in the interests of justice why it should be heard[32].

C.  THE PRESENT APPLICATION

C1.  Applicable principles

15.  The relevant approach to determining an application for extension of time to appeal is well established and has been conveniently summarized by Kwan JA (as Kwan VP then was)  in Lee Chick Choi v Best Spirits Co Ltd (HCMP 371/2015, unreported, 21 May 2015)[33] at paragraph 19:

“The legal principles regarding an application to extend time for an appeal are well established. In the exercise of its discretion, the court will take into account the length of the delay, the reasons for the delay, the chances of the appeal succeeding if an extension of time is granted, and the degree of prejudice to the other party if the application is granted…”

16.  Further, where a delay is inexcusable even if insubstantial, a party seeking an extension of time must show a real prospect of success on the merits of the intended appeal: Secretary for Justice v Hong Kong & Yaumatei Ferry Co Ltd [2001] 1 HKC 125 at 129I applying Chiu Sin Chung v Yu Yan Yan Angela [1993] 1 HKLR 225 at p.229.

17.  Bearing these principles in mind, we will now proceed to consider the applicant’s present application for an extension of time for leave to appeal.

C2.  Length and reasons for delay

18.  As mentioned above, the present leave application was made 14 days out of time.  In his supporting affirmation, the applicant explained that he was late in filing his application with this court as he was not legally represented, and thus, needed time to understand the Judgment and to prepare the application documents.[34]

19.  We do not accept this as an excusable explanation for the 14-day delay: the mere fact that the applicant is not legally represented does not constitute a valid excuse for failing to comply with the court’s procedural rules.  Furthermore, the applicant had already previously applied to the Judge for leave for appeal, there was no excuse to take out this reapplication before this court out of time.

20.  Given the inexcusable delay, we now turn to consider whether the proposed grounds of appeal have a real prospect of success.

C3.  Merits of the intended appeal

21.  The applicant has set out his proposed grounds of appeal in the Summons.  In particular, the applicant contends that the Judge had erred in her construction of the DMC III by failing to have regard to the following matters[35]:

(1)  The installation and operation of the New Security Appliances contravened Recital (5)  of the DMC III;

(2)  The installation and operation of the New Security Appliances were not, in accordance with Clause 7(a)  of the DMC III, acts and things necessary or requisite for or in connection with the management of the land in relation to Stage III of the Estate and any buildings thereon, and therefore outside the scope of the respondent’s authority;

(3)  The installation and operation of the New Security Appliances were not, in accordance with Clause 7(a)(24)  of the DMC III, reasonably incidental to the management of the land in relation to Stage III of the Estate and the buildings thereon, and therefore outside the scope of the respondent’s authority; and

(4)  The expenses and charges in relation to the installation and operation of the New Security Appliances did not fall within the scope of the annual budget as prescribed by Clause 8(a), 8(a)A, and 8(a)C of the DMC III.

22.  In elaboration of the above, the applicant’s written submissions state that the Judgment did not provide any legal analysis in relation to the installation and operation of the New Security Appliances, and why the clauses of the DMC III set out in the proposed grounds of appeal did not apply.[36]  He contends that the Judge’s interpretation of the word “management” was without legal support and a result of the Judge’s failure to apply authorities which supported the applicant’s interpretation (ie, the word “management” in Recital (5)  of the DMC III should be given a restrictive interpretation).[37]  Lastly, the applicant submits that the Judge had erred in holding that the Control of Exemption Clauses Ordinance (Cap 71)  (“the CECO”)  did not apply in the present case.[38]

23.  It is apparent that the applicant is merely repeating the arguments advanced before the Judge at trial in support of his construction of the DMC III.  These arguments have already been considered, and for the reasons set out in the Judgment, rejected by the Judge.  Having considered the proposed grounds of appeal set out in the Summons and the submissions advanced by the applicant, we are of the view that the applicant’s intended appeal has no real prospect of success.

24.  Firstly, the Judge’s analysis of the DMC III (and the clauses thereof set out in the proposed grounds of appeal to the Summons)  and its application to the installation and operation of the New Security Appliances have been set out in detail in [24] - [46] of the Judgment.  The applicant’s allegation that the Judgment did not provide any legal analysis of the matter or that there had been a failure to have regard to such clauses in the DMC III is baseless and without merit.

25.  Secondly, the Judge’s construction of the DMC III and the word “management” was guided by and in line with the CA Judgment, which concerns not only the same DMC III, but also the same clauses material to the determination of the scope of the respondent’s management powers. Construction of the DMC and its relevant clauses is a question of law, and hence, the CA Judgment as to the approach to their proper construction is applicable to the present case and binding on the Lands Tribunal.  The applicant’s contended narrow construction of the word “management” was rejected by the Judge at [36] - [38] of the Judgment applying the CA Judgment.  There is therefore no merit in the applicant’s submission[39] that the Judge erred in applying the CA Judgment and the Court of Appeal’s construction of Clauses 7(a)  and 7(a)(24)  of the DMC III for the reason that the activity complained of there was different.

26.  In this respect, it is clear from [31] of the Judgment that the Judge was fully aware of the extent to which the two proceedings were similar, as well as different, in relation to the factual complaints to which the material clauses of the DMC III are to apply:

“31. I accept the submission of Mr Hunsworth, solicitor for the Respondent, that although a distinction may be made in the sense that the CA Judgment primarily concerned recreational or social activities and the present proceedings concern technological security upgrades and improvements, the determination in the CA Judgment unquestionably addresses substantially the present issues as to the construction of the DMC III, in particular, the ambit of the management power of the Respondent. The construction of the scope of the Respondent’s management power has a direct impact on the present argument on the Respondent’s power of using technological updates to improve the security system in the Stage III.”

We also agree with the Judge’s above observations.

27.  Thirdly, the applicant submits that these two authorities support his contended interpretation of the word “management”: The IO of Bayview Mansion v Chan Cheung Kit Mui Margaret (HCSA 32/1994, unreported, 23 June 1995)  and Grace International Ltd v Incorporated Owners of Fontana Gardens & Ors [1996] 4 HKC 635).  However, the Judge considered these two authorities and did not find them to be of assistance to the applicant’s contentions as they are distinguishable: [47] - [51] of the Judgment.  The Judge is plainly right as these authorities were decided on the basis of the specific language used in the relevant deed of mutual covenants in those cases[40], and do not stand for the general legal proposition contended[41] by the applicant that there was no power or authority for the manager of a building to improve its amenities or upgrade its condition.

28.  Fourthly, the applicant’s contention that the Judge had incorrectly held that the CECO did not apply in the present case is misconceived.  As set out in [64] - [65] of the Judgment, all of the applicant’s complaints relating to the installation and operation of the New Security Appliances fell away as the Judge held that they were within the respondent’s powers under the DMC III.  Hence, there was neither a need for the respondent to rely upon the exemption clause in Clause 7(c)  of the DMC III, nor a need for the consideration of the CECO’s applicability.  In any event, as recorded in [65] of the Judgment, no particulars or concrete evidence have been provided by the applicant to substantiate the existence of any alleged dishonesty on the part of the respondent.

29.  For completeness, we have also considered the applicant’s contention in its written submissions that the Judgment contained various factual errors.  There is no merit in any of these contentions:

(1)  In relation to [1] of the Judgment, while the applicant accepts that the respondent is the estate manager of the entire Estate, he alleges that the Judgment incorrectly states the management powers in the present case were concerned with the entire Estate when it was only concerned with the DMC III and Stage III of the Estate.[42]  However, it is apparent from a plain reading of [2] - [3] which followed that there was no such factual error as alleged.

(2)  In relation to [4] of the Judgment, the applicant contends that the Judgment incorrectly states the area covered by the Estate as “some 53 acres” and alleges that it instead covers “52.5 acres”.[43] Plainly, no material factual error exists in the present case from the use of a round figure.

(3)  In relation to [2] of the Judgment, the applicant contends that use of the word “estate manager” is incorrect when Recital  (5)  of the DMC III purportedly describes the respondent as manager and the Building Management Ordinance (Cap 344)  uses the term “DMC manager” and “manager”in section 34D thereof.[44]  There is plainly no factual error which arises simply from the use of different terminology.

30.  In the premises, it is clear to us that the applicant’s intended appeal has no prospect of success.

D.  DISPOSITION

31.  For the reasons set out above, the intended appeal plainly has no merits at all and it will be futile to extend time and grant leave to the applicant to appeal.  We therefore dismiss the Summons.

32.  There is no reason why costs should not follow the event.  Further, we are of the view that the applicant’s present application is an abuse of process.  Given that he has already had the benefit of the CA Judgment, the Judgment and the Decision re Leave, it must be obvious to the applicant that his intended appeal is plainly of no merit.  The costs should be taxed summarily on an indemnity basis.

33.  In this respect, the respondent in its statement of costs dated 23 August 2024 seeks the sum of $73,900[45]. We find it not excessive and will allow them in full.

34.  In the premises, we order that costs of this application be to the respondent, and is taxed summarily on an indemnity basis to be $73,900.

35.  As this application is entirely without merit, pursuant to Order 59, rule 2A(8)  of the RHC, we further order that no party may under rule 2A(7)  request the determination to be reconsidered at an oral hearing inter partes.

36.  This judgment is written in English in view of the fact that the judgments below and the CA Judgment are all written in English.  If required, the applicant may make an appointment with the clerk to this court for this judgment to be orally interpreted to him in Punti in the court’s premises.