THE INCORPORATED OWNERS OF HELENA GARDEN v. TSO MAN TSUN GORDON AND ANOTHER

Date of Hearing : 6 December 2005

Date of Judgment : 6 December 2005

Date of Reasons for Judgment and Decision on Costs : 13 December 2005

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REASONS FOR JUDGMENT
and
DECISION ON COSTS

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Hon Cheung JA :

Reasons for Judgment

1. We dismissed the 1^st and 2^nd respondents’ appeal at the conclusion of the hearing.  We now give our reasons.

Facts

2. The applicant obtained a judgment from the Lands Tribunal requiring the 1^st and 2^nd respondents to pay, among other things, $5,006 which was the 2^nd instalment of the contribution to the fees for the renovation work of a building known as Helena Garden.

3. The 1^st and 2^nd respondents appealed against the judgment.

4. The applicant was the incorporated owners of Helena Garden, which is a high rise building situated at 263 Prince Edward Road West, Kowloon, Hong Kong.  The respondents were the owners of Flat B on the second floor and car parking space no. 34 on the basement floor of Helena Garden.

5. It was common ground that the owners of Helena Garden were required under the Deed of Mutual Government governing the building to make contributions for the renovation work.

6. On 28 June 2001, at the Annual General Meeting of the owners of Helena Garden, the owners resolved that the drainage pipes of the building should be replaced and the external walls of the building should be renovated and cleaned.

7. Following this meeting, the owners resolved at an Extraordinary General Meeting held on 24 January 2002 that they should pay fees for the renovation work by three equal instalments to be paid as follows :

Instalment	Time of payment
First	February 2002
Second	April 2002
Third	June 2002

They further resolved that the amount of each instalment should be equivalent to two months’ management fees payable by the owners and any surplus for this fund would be retained in the maintenance fund of Helena Garden for future maintenance work.

8. The amount payable by the respondents for each of the instalments was $5,006.  The applicant contended that they had only paid the first instalment but had failed to pay the second instalment which was the subject matter of the claim.  The third instalment was not the subject matter of any claim. 

The dispute

9. The dispute between the parties at the Lands Tribunal was about the effect of a resolution of the owners at the Extraordinary General Meeting held on 5 June 2002 on the payment of the second instalment.  According to the applicant, that resolution merely suspended the renovation work but the second instalment was still payable by the respondents.

10. According to the respondents, the resolution, apart from suspending the renovation work, also postponed the payment of all instalments namely the second and third instalments by the owners.

11. The Lands Tribunal, after hearing evidence from the parties, found for the applicant and held that the resolution of 5 June 2002 did not have the effect as contended by the respondents and they had to pay the second instalment. 

The new ground of appeal

12. To that finding there was no appeal.  Instead the appeal was focused on a very narrow point raised in the Amended Notice of Appeal which was admitted on a provisional basis.  The point was that the applicant had made a radical departure from its pleaded case in paragraph 12 of the Amended Further and Better Particulars of Notice of Application (‘Amended Application’) namely, the resolution of the owners in the meeting of 5 June 2002 was to withhold or had the effect of withholding the third instalment payable by the owners.  Instead it had formulated a new and unpleaded case, namely, that the resolution was only to postpone the renovation and it did not withhold or had the effect of withholding any instalment payable by the owners.

13. This point is devoid of merits.  The claim as formulated by the applicant was for the payment of the second instalment of $5,006.00.  This was clearly borne out by Paragraph 11 of the Amended Application in which it was pleaded that the respondents had paid the first instalment leaving the second instalment unpaid.  The prayer asked for the payment of this sum.  The applicant’s case on the resolution of 5 June 2002 was that it had no effect on the payment of second instalment which was payable in April 2002 as decided by the owners by the earlier resolution of 24 January 2002. 

14. Paragraph 12 of the Amended Application pleaded that the resolution was ‘to postpone the passing of the resolution for the Renovation Project and therefore the contribution for third instalment of the fees for the Renovation Project was withheld pending further instruction/resolution of the Owners of Helena Garden’.  The relevance of this paragraph was only to show that the third instalment had been suspended as a result of the resolution of 5 June 2002.  After all the owners had resolved earlier that the payment should be made by three instalments. The applicant had also pleaded that on 18 October 2002, the owners at another Extraordinary General Meeting resolved to proceed with the renovation which was later practically completed by the end of December 2002; and the Management Committee of Helena Garden had at its meeting held on 7 March 2003 resolved that the owners were no longer required to pay the third instalment.  These were matters concerning the third instalment and they had no effect at all on the subject matter of the claim. 

15. I do not see any departure at all of the applicant’s pleaded case.  The respondents by their own pleadings and by their defence at the hearing clearly showed that they had fully understood the nature of the applicant’s claim.  If there was any departure at all it was only in respect of the third instalment which was admitted by the applicant in the Amended Application to have been suspended but in the applicant’s evidence at the trial it was said that the resolution had no effect on the payment of the outstanding instalments.  But this had no effect at all on the issue of the second instalment which the applicant had always maintained to be payable by the respondents. At worst this was a matter that went to the question of credibility of the parties which the Lands Tribunal had decided against the respondents. 

16. Further the respondents had not at the hearing applied for any adjournment or sought leave to adduce further evidence if they were indeed taken by surprise by the so-called departure of pleaded case.

17. The appeal was accordingly dismissed.

Decision on Costs

18. The appeal was brought not on the merits of the determination but on a new matter which was totally devoid of merits.  The appeal should not have been continued when the respondents decided not to proceed with the original grounds of appeal.  This is a frivolous appeal and justifies an indemnity costs order to be made against the respondents.  Accordingly the applicant is entitled to the costs of the appeal including the costs related to the Amended Notice of Appeal to be taxed on an indemnity basis.

Hon Yeung JA :

19. I agree.

Hon Chung J :

20. I agree.