THE INCORPORATED OWNERS OF WORLD FAIR COURT v. CHOI KAM LAN KAREN

[English Translation – 英譯本]

HCSA 15/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

SMALL CLAIMS TRIBUNAL APPEAL NO 15 OF 2014

(ON APPEAL FROM SMALL CLAIMS TRIBUNAL CLAIM

NO 802 OF 2012)

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REASONS FOR DECISION

Introduction

1.  The applicant (“the incorporated owners”) filed a claim in the Small Claims Tribunal (“the Tribunal”) to sue the respondent (“Ms Choi”) for management fees and repair and maintenance fees in respect of the building concerned.  After trial, the adjudicator Mr Jason Wan gave judgment against the claimant.  The incorporated owners appealed against the adjudicator’s decision under section 28 of the Small Claims Tribunal Ordinance, Cap 338, Laws of Hong Kong.

2.  On 23 May 2014 I granted the incorporated owners’ application for leave to appeal and after the substantive appeal hearing I allowed the appeal, set aside the adjudicator’s order and remitted the case to the Tribunal for a new hearing.  I now hand down my reasons in writing.

3.  In the Statement of Findings the adjudicator stated that the only issue in this case was whether there was a quorum present at the two general meetings of the owners convened for the purposes of increasing the management fee and collecting contributions to the repair and maintenance fund in respect of the building concerned.  The adjudicator took the view that since the deed of mutual covenant provided that the quorum for a general meeting of the owners was to be 75% of all the owners, a quorum was not present at either of the two general meetings, and that therefore the resolution was invalid.

4.  The adjudicator further stated that although in Schedule 8 to the Building Management Ordinance, Cap 344, Laws of Hong Kong (“the Ordinance”) there was a provision which stipulated that the quorum at a general meeting of owners was 10% [of the owners], according to section 34F of the Ordinance the provisions in Schedule 8 was to be incorporated into a deed of mutual covenant only if they were consistent with the deed of mutual covenant; and that since it was expressly provided in the deed of mutual covenant of the building that the quorum was to be 75%, the provision in Schedule 8 concerning the quorum for a general meeting of the owners was not applicable.  By reason that the people who attended the meetings in question were over 10% but less than 75%, the adjudicator found against the incorporated owners.

5.  During the appeal hearing.  I pointed out to the parties that the relevant provisions which should be referred to in the present case should be section 34C of the Ordinance and Schedule 3, and not Schedule 8.

6.  Section 34C of the Ordinance provides that in the event of any inconsistency between that part of the Ordinance relating to deeds of mutual covenant (Part VIA) and the terms of a deed of mutual covenant or any other agreement, that part of the Ordinance shall prevail; and within that part of the Ordinance a definition of “a resolution of the owners” is provided in section 34D(3):

“(3) In this Part and Schedule 7, a reference to a resolution of the owners is ——

(a) if there is a corporation, a reference to a resolution passed at a general meeting of the corporation convened and conducted in accordance with Schedule 3; or

(b) if there is no corporation, a reference to a resolution passed by a majority of the votes of the owners voting either personally or by proxy at a general meeting convened and conducted in accordance with the deed of mutual covenant.”

7.  Set out in Schedule 7 to the Ordinance are various provisions which govern how a manager and a corporation are to manage a building, including how to determine the amount of the management fee and how to establish a special fund.  According to section 34E of the Ordinance, these provisions shall be mandatorily incorporated into a deed of mutual covenant. There is a difference between section 34E and Section 34F, namely the provisions mandatorily incorporated into a deed of mutual covenant pursuant to section 34E need not be consistent with the provisions of the deed of mutual covenant.

8.  As far as this case is concerned, since an owners’ corporation had been formed, by virtue of subsection (3)(a) of section 34D of the Ordinance, a resolution of the owners should be proposed and passed according to the procedures set out in Schedule 3, and not in accordance with a deed of mutual covenant.  Under section 5[(1)](b) of Schedule 3, the quorum at a meeting of a corporation shall be 10% of the owners.

9.  In my judgment, in making his findings the adjudicator did not consider or correctly consider Schedule 3 or the definition of “a resolution of the owners” provided in subsection (3) of section 34D of the Ordinance, therefore he committed an error in law.

10.  Mr Chow of counsel, who represented the incorporated owners, and Ms Choi both submitted during the hearing that the matters at issue during the trial at the Tribunal were not limited to whether a quorum was present at the general meetings of the owners and whether Schedule 8 to the Ordinance was applicable, therefore it was necessary that there be a retrial of this case.

11.  As regards costs, Mr Chow agreed that since neither of the two parties raised the point during the trial that the applicability of Schedule 3 should be considered, and since the applicability of Schedule 3 was not one of the grounds of appeal relied on by the incorporated owners, the fair approach in this situation was to have each party bear its or her own costs.

12.  For the above reasons, I allowed the appeal of the incorporated owners, set aside the adjudicator’s order and remitted the case to the Tribunal for a new hearing before another adjudicator.  I made no order as to costs in respect of this appeal.