GUARDIAN PROPERTY MANAGEMENT LTD v. GOLDEN CHEER (HK) CO LTD

DCMP1572/2003

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 1572 OF 2003

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D E C I S I O N

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1.  This is a hearing of an Order 88 application where the Plaintiff seeks an order for sale of the property and the money judgment.

2.  The only issue between the parties is whether the Plaintiff is entitled to the full amount of the money judgment for arrears of outstanding management and air-conditioning charges and interest due and payable by the Defendant to the Plaintiff on the property up to date of judgment, or whether the money judgment is limited to the sum of $54,120, which was the amount due and payable as at the date of the memorandum of outstanding management charge registered against the Defendant’s property.

3.  The issue turns on the construction of Clause 11(e) of the Deed of Mutual Covenant and of the memorandum.  The Defendant’s solicitor refers to Clause 11(e) of the Deed of Mutual Covenant which states:

“In the event of any owner failing to pay any sum due and payable by him in accordance with the provisions of this deed within 30 days of the date on which the same became payable, the amount thereof, together with interest as aforesaid and the said collection charge and all costs and expenses which may be incurred in recovering or attempting to recover the same, including the legal expenses referred to in paragraph D above, and in registering the charge, hereinafter referred to, shall stand charged on the share or shares of the defaulting owner and the manager shall be entitled, without prejudice to any other remedy, hereunder to register a memorial of such charge in the Land Office against his share or shares of the defaulting owner.”

4.  The Defendant solicitor submits that it could be seen from the above that the Plaintiff’s power to register the charge only arises when there is a sum due and payable by an owner who fails to pay within 30 days after the sum became payable.  The relevant date for determining whether there is any sum due and payable by the defaulting owner must be the date of registration of the charge.  And so if at the time of the registration there is no sum to be due and payable, the Plaintiff could not charge the property.

5.  Therefore if there is any further sum due and payable by the defaulting owner after the registration of the charge, what the Plaintiff should do is to register another memorandum of charge and not rely on the existing memorandum of charge.

6.  The Plaintiff solicitor referred to Halsbury’s Laws of England, Volume 13, page 109.  In the first paragraph of that page, under the heading “Instrument Construed as a Whole”, under that heading it states:

“It is a rule of construction applicable to all written instruments that the instrument must be construed as a whole in order to ascertain the true meaning of its several clauses and the words of each clause must be so interpreted as to bring them into harmony with the other provisions of the instrument.

If that interpretation does not do violence to the meaning of which they are naturally susceptible, the best construction of deeds is to make one part of the deed expound the other and so to make all the parts agree.  Effect must, as far as possible, be given to every word and every clause.”

7.  She also refers to Chitty on Contracts, Volume 1, page 618 and submits that if the words used in an agreement are susceptible of two meanings, one of which would validate the particular clause in the instrument and the other render it void, ineffective or meaningless, the former sense is to be adopted.

8.  In my view, from the reading of Clause 11(e) of a DMC, it is clear that this clause is the charging clause.  This clause states, in effect, that when any sum payable by an owner in accordance with the provisions of the DMC falls due beyond 30 days of the date when it shall become payable, the amount of such sum, together with interest as aforesaid and the said collection charge, and all costs and expenses which may be incurred in recovering or attempting to recover the same, including the legal expenses referred to in paragraph D above and in registering the charge hereinafter referred to, shall stand charged on the share or shares of the defaulting owner.

9.  So what stands charged against the property is, as already referred to, all sums payable in accordance with the provisions of the DMC which have not been paid.  The moment it has not been paid beyond 30 days, then such sum automatically is charged on the shares of the defaulting owner.

10.  What the manager then is empowered to do by Clause 11(e) is to register, without prejudice to any other remedy, a memorial of this charge in the Land Office against the share or shares of a defaulting owner.  But the charge arises by virtue of Clause 11(e) of the DMC.  The memorial is merely to bring about a notification of the charge of certain sums due and outstanding at a certain period.

11.  I believe the construction of Clause 11(e) is basic to understanding the content of the memorandum and both have to be construed together, and the memorandum has to be construed in its entirety, and the purpose of the memorandum is construed from Clause 11(e).

12.  A memorandum gives notice that the sum amounting to $54,120 calculated up to and including June 2000, together with all the relevant charges, are outstanding and unpaid up to the date of the memorandum by the registered owner to the said manager.

13.  It gives notice that this sum stands charged on the property but also that any third party dealing with the said premises should ascertain from the manager the exact amount of outstanding management charges due and payable by the registered owner to the manager in connection with the said premises as at the date of discharge of the memorandum and that such outstanding sum should be satisfied before the time of completion of such dealing.

14.  The meaning of this should be read together with Clause 11(e) of the recited DMC in the memorandum.  This provides that at a certain point when management and air-conditioning charges become due and payable beyond 30 days, all such arrears are automatically charged on the premises. 

15.  The last clause of the memorandum serve as notice that no discharge of the memorandum can be made unless all outstanding arrears charged by virtue of Clause 11(e) of the DMC is paid.  All outstanding arrears must be paid before completion of any dealing with the premises or the property.  As the DMC is registered in the Land Registry, Clause 11(e) thereof, recited in the memorandum is also registered against the title of the premises or the property.

16.       From my reading of both clause 11(e) of the DMC and also the memorandum, it is clear that the Plaintiff is entitled to money judgment of all sums outstanding because such sums, immediately upon it having first becoming due beyond 30 days, will thereafter together with all further arrears become charged on the property.

17.  I therefore find in favour of the Plaintiff in this issue.  I grant an order in terms of the amended draft order submitted by the Plaintiff’s solicitor.