The Incorporated Owners of Gold Ming Building (Yu Chau Street) v. Concept Investments Ltd.

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. LDBM242 OF 1999

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JUDGMENT

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1. The applicant is the Incorporated Owners of Gold Ming Building (Yu Chau Street).

2. The respondent is the owner of Shop A of Ground Floor of Gold Ming Building. The shop is allocated with 5 out of a total of 68 undivided shares in the building.

3. Gold Ming Building is situated at Nos. 209 - 211 Yu Chau Street, Kowloon (the building). A Deed of Mutual Covenant under Memorial No. 4747069 (DMC) has been registered in relation to the building.

4. The application is for the payment of management fees from 1st November 1998 to 31st August 1999, at $1,328.00 per month, and flush water pump maintenance charge of $610.00 due from the respondent.

5. The respondent admits its liability to pay management fees and the flush water maintenance charge. It disputes the amount of monthly management fees, alleging that the amount had not been validly resolved at the meeting of owners on 26th October 1998. It counterclaims for the overpayment of flush water charges at $140.

6. The applicant refunded the amount of $140 to the respondent on the counterclaim.

7. The flush water pump maintenance charge is no longer an issue.

8. On 26th November 1998, at the applicant held a general meeting.

9. At that meeting, the management company, Hang Way Housing Management Limited, informed the owners that as from 1st November 1998, the management fees would be in accordance with the owners' shares, under the DMC. There was no resolution from the owners on this point.

10. Clause 4(d)(VI) of the DMC provides that each owner should pay a proportion of the total sum budgeted by the Manager to cover the management expenses and the Manager's remuneration. The proportion "shall be calculated by reference to the shares allocated to the unit of" each owner. Under Clause 4(d)(VI), the respondent is not liable for any of the expenses relating to the lifts.

11. The total management fee collected from all owners was $21,060 per month. The lift maintenance was $3,000 per month. The respondent was to pay $1,328. [($21,060 - $3,000) x 5/68]

12. The respondent alleged that since the notice of the meeting on 26th October 1998 was served on 13th November 1998, it was invalid. There was no notice of 14 days, as required under the Third Schedule to the Building Management Ordinance Cap. 344. Any resolution passed in an invalid meeting should have no effect.

13. The respondent disagreed with the applicant on the basis of the calculation of the management fees payable. The respondent's evidence was that there had been several revisions to the amount demanded. It was contended that the amount budgeted for the lift maintenance was $4,400 per month, and that should be deducted from the total management fees of $19730 per month, before the respondent's share of the contribution was calculated. The respondent calculated its share of the management fees to be $1,127. The respondent's position was that it would pay a management fee that had been validly resolved at the owners' meeting. The Tribunal is asked to fix the amount of management fee to be paid by the respondent.

14. There is no dispute that the actual management fees collected for 1998 was 21,060 per month. There was no increase in the total amount of management expenses. The change was in the proportion in which the owners were to contribute. The applicant's evidence was that the lift maintenance charges were $3,000 per month based on the actual expenditure.

Judgment

15. The validity of the meeting, on 26th October 1998, is not relevant, so far as the requirement to apportion the management fees in accordance with the owners' shares in the building is concerned. This was part of the covenant contained in the DMC, and did not require the sanction of the owners' meeting for it to be effective.

16. Under Clause 4(d)(VI), the owners were to "bear and pay a proportion (hereinafter called the "management fee") of the total sum budgeted by the Manager to cover the management expenses".

17. The apportionment should not be based on the actual expenses, but on the budget amount. The budget for the year 1998 to 1999 showed the total budget amount for a month to be $20,856. This was based on a 10% increase on the previous amount of $18,960. The expense for lift maintenance was budgeted at $4,400.

18. The respondent's share of the management expenses is calculated by deducting the amount of $4,400 from $20,856, dividing the result by 68, and multiplying that by 5. [($20,856-$4,400) x5/68] The respondent should pay management fee of $1,210 per month.

Order

19. There is judgment for the applicant against the respondent for management fee of $1,210 per month, from 1st September 1998 until March 2000.

20. There is an order nisi that the respondent shall pay the applicant's costs to be taxed if not agreed. The order nisi shall be made absolute unless application is made to the contrary, within 21 days from the date of the handing down of the judgment.