THE GRANDE PROPERTIES MANAGEMENT LTD v. SUN WAH ORNAMENT MANUFACTORY LTD

HCA 4741/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4741 OF 2001

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(HCA 4741/2001 to be consolidated with HCA 5207/2001 pursuant
to the Order made by Mr. Registrar C Chan on 5 December 2002)

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J U D G M E N T

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Introduction

1. This is an action for recovery of the owner's contribution to the costs of renovation works executed pursuant to two sets of resolutions passed by the owners of the Grande Building in April 1997 (the "1997 Resolution") and September 2001 (the "2001 Resolution"). The Grande Building is a twenty year old industrial building in Kwun Tong. It was formerly known as Lucky (Kwun Tong) Industrial Building. It adopted its current name when the Grande Group became the major owners of the building. The Grande Group became the majority owner of the building on 20 August 2000 holding altogether 367 of the 622 shares in the building. Members of the Grande Group include Grande Properties Limited ("GPL") which holds 298 shares, Batts Far East Limited ("Batts") which holds 67 shares, Feedback Limited ("Feedback") which holds 2 shares, Lafe Computer Magnetics Limited ("Lafe Computer") and Lafe Holdings Limited ("Lafe Holdings") each of which holds 1 share. The Defendant is the owner of the 2nd to 5th floors and the flat roof of the building and holds 197 shares in the building. The other owners are Bolex Investment Company Limited ("Bolex"), Siegont Limited ("Siegont") and Chung Ming which holds 37 shares, 20 shares and 1 share respectively.

2. No owners incorporation has been formed under the Building Management Ordinance. Management of the building are therefore governed by the deed of mutual covenant (the "DMC") and the Building Management Ordinance. The Plaintiff is the management service company employed by the owners of Grande Building to provide management services for the building. It is also a member of the Grande Group, but does not hold any shares in the building.

3. The Plaintiff convened and held an owners' meeting on 28 April 1997. The meeting was attended by GPL, Feedback, Lafe Holding and Lafe Computer, all of which are members of the Grande Group representing 302 shares (the "1997 Meeting"). The owners present resolved to proceed with a $4.5 million renovation programme tabled by the Plaintiff (the "1997 Resolution"). In the event, the Plaintiff paid a total sum of $4,151,339 for the renovation works (the "1997/98 Renovation Works"). The Defendant's share of the contribution was $1,548,099. The Defendant disputes that this meeting had been properly convened and that the 1997 Resolution was valid. The Plaintiff issued proceedings in the High Court, Action No HCA 9794 of 1997, to recover the Defendant's contribution to the costs of the 1997/98 Renovation Works. These proceedings were discontinued in favour of the present proceedings.

4. Throughout 1999 and 2000, the Plaintiff spent a further amount of $2,315,976 in renovation works (the "1999/2000 Renovation Works") and in 2001 a sum of $453,521 in purported urgent repairs (the "2001 Repair Works"). No owners meetings had been held to approve these expenditures. As a result a deficit of $2.8 million was accumulated in the building fund. On 26 September 2001, an owners meeting was held (the "2001 Meeting") and a number of resolutions were passed including, inter alia (a) that the Defendant shall pay $2,581,481.67 in respect of the 1997/98 Renovation Works inclusive of interest, (b) that the Plaintiff shall demand contributions from the owners of the building to cover the deficit of about $2.8 million, in respect of which the Defendant's contribution was $886,817.17 (the "2001 Resolutions"). The Defendant and three other owners attended the meeting and voted against the resolution. But they were out-voted by the Grande Group.

5. On 2 November 2001, the Plaintiff issued proceedings in the High Court, Action No 4741 of 2001, against the Defendant for recovery of its contributions to the costs of the 1997/98 Renovation Works in the amount of $2,581,481.67 or in the alternative $1,548,099 with interest. The Defendant's defences are (1) that the 1997 Resolution purportedly passed at the meeting was invalid because (a) the notice of the 1997 Meeting had not been properly served on all the owners of the building and (b) the notice calling the meeting was not a proper notice in that it failed to specify the intention to pass the resolution and (2) without the authorisation of a properly convened owners meeting, the Plaintiff had no authority to undertake the 1997/98 Renovation Works.

6. On 4 December 2001, the Plaintiff issued a second set of proceedings in High Court Action No HCA 5207 of 2001 to recover contributions from the Defendant in respect of the deficit of about $2.8 million in the building fund in the amount of $886,817.17. The Defendant's defences are (1) the Plaintiff had no power to undertake the 1999/2000 Renovation Works without the authorisation of a properly convened owners meeting and (2) the 2001 Resolution was retrospective and ineffective.

Service of the notice of the 1997 Meeting

7. The Plaintiff's case is that the notice calling for the 1997 Meeting had been posted on the notice board on the ground floor lobby of the building in accordance with Clause 17 of the DMC.

8. Clause 17 of the DMC provides:

"All notices required to be served hereunder on an owner shall be sufficiently served if a copy is posted up on some conspicuous part of the part of the said premises the exclusive use and enjoyment of which has been granted to the owner to be served notwithstanding that such owner does not personally occupy such part or if a copy is sent by registered post to the last known address in Hong Kong of the owner to be served. In respect of notices to be given by the Manager to the owners such notice shall be deemed to have been properly given if a copy thereof is posted on the notice board on the ground floor of the said building."

9. Clause 8 of the Eighth Schedule of the Building Management Ordinance gives power to the manager to convene a meeting of owners. This provision, not being inconsistent with the DMC, is incorporated into the DMC by section 34F(1) of the Building Management Ordinance. Hence, in accordance with Clause 17 of the DMC, posting of the notice of meeting on the notice board on the ground floor of the building shall be deemed good service.

10. The Plaintiff's evidence in support of the evidence of posting came from the property manager of the Plaintiff, Miss Sham. Sham was not the property manager at the material time and had no actual knowledge of posting of the notice. She made enquiries from a security guard who had been working in the building for a long time by the name of Wu On-wo who said that such notice had been posted on the notice board on the ground floor. Under cross-examination, she fortified her evidence by saying that she had seen the notice which had been retrieved from the notice board and filed in a box file kept in the Plaintiff's archive. In due course, she was able to recover the notice with four pin holes from the box file. Mr Kenneth Chan submits that little weight should be given to Sham's evidence as it was based on multiple hearsay and the answer she obtained from Wu was ambiguous. He also criticised Sham for not being able to produce other notices that had been retrieved from the notice board throughout the years and that her discovery was late for no good reasons. I think otherwise. Sham impressed me as a responsible witness. She did not exaggerate. Though the discovery was late, it is not without reason. Judicial experience tells that very often the officer of the company who gave instructions to the solicitors and prepared the case did not have a full idea of the evidence available to the witness in the field. Sham's answer was spontaneous and supported by the 'holed' document. I accept her evidence that there was a practice for such notices to be posted in the notice board and to be retrieved and filed in the box file when the purpose of the notice was spent.

11. On the other hand, the Defendant's witness, Mr Ho, is equally honest. Though he said the Defendant had not received the notice of the 1997 Meeting, he admitted frankly that he did not frequent the part of the lobby where the notice board was as it was unnecessary for him to take the lift from that lobby. The question is not whether the Defendant had received the notice but whether the notice had been posted on the notice board. I resolve in favour of the Plaintiff.

Whether the notice was ineffective for failing to specify the intention to pass the resolution

12. It is common ground that the notice of the 1997 Meeting did not specify the intention to propose and pass the resolution. The dispute between counsel is whether that failure was fatal and rendered the resolution ineffective under Clause 10 of the DMC. Mr Maurice Chan argues that it is not and that the validity of the 1997 Resolution is also saved by Clause 12. Clauses 10 and 12 of the Fifth Schedule to the DMC provide as follows:

"10. Any resolution on any matter concerning the said premises and the said building passed by a majority of the owners present in person or by proxy and voting at a duly convened meeting shall be binding on all the owners provided as follows :-

(i)	The notice convening the meeting shall have specified the intention to propose a resolution concerning such matter.
(ii)	Any resolution purported to be passed at such meeting concerning any other matters shall not be invalid.
(iii)	No resolution shall be valid if it is contrary to the provisions of this Deed.

11. .....

12. The accidental omission to give notice as aforesaid to any owner shall not invalidate the proceedings at any meeting or any resolution passed thereat."

13. Mr Maurice Chan relies heavily on HH Judge Marlene Ng's judgment in The Grande Properties Management Limited v Siegont Limited DCCJ 21516 of 2001 and The Grande Properties Management Limited v Bolex Investment Company Limited DCCJ 21517 of 2001. Those two cases involved similar disputes between the Plaintiff and two other owners of Grande Building in which Mr Maurice Chan also represented the Plaintiff while Siegont and Bolex were represented by Mr Chow Hung Fat who now appears with Mr Kenneth Chan for the Defendant. In those cases, Mr Chow took the same point that the 1997 Resolution was defective due to failure to specify the intention to propose and pass the resolution. HH Judge Marlene Ng decided against Seigont and Bolex on the basis that the point has not been pleaded and Mr Chow did not apply to amend the pleadings. She nevertheless went on to deal with Mr Chow's argument and in the end dismissed it. That was of course obiter. HH Judge Marlene Ng held at page 28:

"111. Unfortunately, this argument or the material facts in relation to this argument were not pleaded for the only pleaded material fact of impropriety of the 1997 Notice was that it had not been properly served. That was the basis of Mr chow's opening on D1 and D2's case and it was consistent with Leung's evidence that his sole complaint in respect of the 1997 Owners' Meeting was the non-service of the 1997 Notice. Although Sham and/or Lai had been cross-examined on the contents of the 1997 Notice, this argument was first raised in closing submissions. Mr Chow did not apply to amend the pleadings. In the circumstances, D1 and D2 should not be allowed to rely on this contention without pleading the same (Hong Kong Civil Procedure 2001, Vol 1, para 18/7/7 at pp. 267-277). Nevertheless, I shall deal with it for completeness.

112. Mr Chow relied on Clause 10(i) of the 5th Schedule of the DMC which provides inter alia that any resolution on any matter concerning the Building passed by a majority of the owners present in person or by proxy and voting at a duly convened meeting shall be binding on all the owners provided that the notice convening the meeting shall have specified the intention to propose a resolution concerning the same. Hence the 1997 Notice was said to be defective and void in the absence of reference to the 1997 Resolution.

113. Mr Chow also relied on paragraph 9 of the 8th Schedule which provides inter alia that a notice of meeting of owners shall specify the resolutions (if any) that are to be proposed. However, it should be noted that the applicability of the provisions in the 8th Schedule is governed by section 34F(1) of BMO which provides that such provisions shall 'to the extent that they are consistent with the deed of mutual covenant, be impliedly incorporated (a) into every deed of mutual covenant made on or after the date; and (b) as from the material date, into every deed of mutual covenant made before that date'.

114. I drew Mr Chow's attention to Clause 10(ii) of the 5th Schedule of the DMC which provides that 'any resolution purported to be passed at such meeting concerning any other matters shall not be invalid' (my emphasis). It is clear from section 34F of BMO that paragraph 9 of its 8th Schedule does not override or extinguish the said Clause 10(ii). Mr Chow did not dispute this but sought to argue that Clause 10(ii) only applies to matters following from a properly notified resolution and given the substantial amount of the 97/98 Contribution, strict compliance with Clause 10(i) of the 5th Schedule of the DMC was necessary.

115. I find that I cannot ascribe to Mr Chow's interpretation. It is plain on reading Clauses 10(i) and (ii) of the 5th Schedule of the DMC that Clause 10(ii) dealt with resolutions passed at meetings which were other than as prescribed in Clause 10(i). The adoption of the phrase 'purported to be passed' in Clause 10(ii) clearly referred to resolutions which had not been properly notified to the owners or where Clause 10(i) had not been complied with. Obviously, Clause 10(ii) was included in the DMC as a saving provision. Further, on reading Clauses 10(i) and (ii) together, the subject matter of any resolution covered by Clause 10(ii) should be other than the subject matter of resolution referred to in Clause 10(i), otherwise the words 'any other matters' will have no useful meaning. I see no basis for reading into the plain words of this provision Mr Chow's qualification that the 'other matters' must be restricted to matters following from resolutions passed under Clause 10(i) or matters not involving substantial sums. Had it been the intention, it would have been expressly stated in the DMC. In the circumstances, I find Clause 10(ii) of the 5th Schedule of the DMC sufficient to uphold the 1997 Resolution. In any event, even if Mr Chow's qualification were right, the 1997 Resolution clearly was a follow up to the discussion and confirmation of the carrying out of the 97/98 Renovation Works of about HK$4,720,000.00 referred to in the 1997 Notice and endorsed at the 1997 Meeting."

14. Mr Chow's argument in essence was that Clause 10(ii) only applies to matters following from a properly notified resolution. This argument was rejected by HH Judge Marlene Ng on two grounds. Firstly, she felt the words "purported to be passed" in Clause 10(ii) clearly referred to resolutions which had not been properly notified to the owners or where Clause 10(i) had not been complied with and Clause 10(ii) was a saving provision. Secondly, she gave a wide interpretation to the words "any other matters" in Clause 10(ii) and declined to subject them to matters which follow or flow from "such matters" notified in Clause 10(i) because otherwise the words "any other matters" in Clause 10(ii) would have no useful meaning.

15. I respectfully differ from those views. According to the Shorter Oxford English Dictionary, 5th edition, Vol 2 at 2409, the word "purport" means "that which is expressed or stated, especially by a formal document or speech". Thus, I think the words "purported to be passed" according to their ordinary meaning mean "appeared to be passed" or "claimed to be passed". Clause 10(ii) does not necessarily refer to resolutions which had not been properly notified to the owners or where Clause 10(i) had not been complied with. The clause, in my view, simply refer to resolutions which on the face appeared to have been validly passed in an owners meeting properly convened. It is of course wide enough to cover the meaning attributed to them by HH Judge Marlene Ng. In this respect, the difference between her interpretation and mine is not significant.

16. However, I respectfully differ from the very wide meaning she gave to the words "other matters". On the face, "other matters" in Clause 10(ii) mean matters other "such matter" referred to in Clause 10(i), otherwise these words have no meaning at all. I have no quarrel on that with the learned judge but I think those words are not without any qualification. Without any qualification, Clause 10(ii) would have the effect that any resolution passed at an owners meeting are valid, irrespective whether the intention to pass any such resolution at the meeting has been notified to the owners. If so, there was no point for the draftsman to include Clause 10(i) by requiring the proposed resolution to be notified and to buttress that by inserting Clause 10(iii) to the effect that any resolution contrary to the provision of the DMC shall be invalid. I do not agree with the learned judge that these words have no useful meaning if they are qualified to mean matters which flow or follow from or incidental to such matters notified under Clause 10(i). At the meeting, the proposed resolution will be debated and views exchanged. The meeting may agree to pass the resolution as proposed or as amended. It is in respect of the latter situation that Clause 10(ii) may serve a useful purpose. Such amendment may be as to degree, such as the amount of funds to be voted for a certain transaction. It may even be of substance as to how certain transactions are to be effected and by whom which are outside the original terms of the proposed resolution. It is in respect of such amendments that Clause 10(ii) serves a very useful purpose as a saving provision. In my view, it could not be right to give the words "other matters" an unqualified meaning such that a resolution to dismiss the manager or a member of the management committee or to dispose of common parts of the building shall be valid if purported to be passed in a meeting called to pass a proposed resolution to increase management fees. Owners may be prepared not to attend the meeting to vote for a proposed resolution and be happy to be bound by whatever would be decided in his absence. Even if he attended, he may not be prepared or equipped with the information to enable him to debate or to vote for something very much different from the proposed resolution which he was called upon to consider at the meeting. It is a cardinal principle in the law of meetings that the notice of meeting must be sufficiently detailed to enable a member who knows nothing of the matter to decide whether he needs to attend the meeting, or whether he can safely let the resolution be passed without further enquiry. For these reasons, I hold that the words "other matters" in Clause 10(ii) in the context of Clause 10 has a qualified meaning to mean those matters which flow or follow from or incidental to such matters notified under Clause 10(i).

17. Mr Maurice Chan argues that the validity of the 1997 Resolution is also saved by Clause 12. In my view, this clause operates within a very narrow ambit, otherwise it would render Clause 10 nugatory. It does not automatically save a resolution passed at a meeting in respect of which no proper notice had been given. The effect of this clause is that accidental omission to give notice does not as a rule invalidate the proceedings at any meeting or any resolution passed thereat. In order to rely on this clause, the Plaintiff must show that the omission to give notice was accidental and there would be no prejudice to any owner who failed to attend due to lack of notice. An example is that a resolution passed to increase the management fee for upper floors of a building without the owners of the lower floors being notified due to an accidental omission. The burden must be on the party seeking to rely on the resolution to prove omission. There is simply no evidence in support of accidental omission.

18. The notice given by the Plaintiff was in the following term:

"To improve and maintain the condition of our building, we cordially invite all owners to attend the Owners Meeting at 9:00 am on Monday, April 28, 1997 at 10/F, The Grande Building, 398 Kwun Tong Road, Kwun Tong, Kowloon to discuss issues concerning improvement work for "The Grande Building".

19. The notice did not specify the intention to propose and pass any resolution to authorise the Plaintiff to carry out any renovation works. It only invited the owners to attend the meeting to discuss issues concerning improvement works. There was not the slightest indication about the nature and extent of the improvement works or the costs involved, let alone the decision to commission the works to be done. The content of the notice is defective. The proceedings in the meeting were inconsistent with the agenda proposed in the notice. As a result, the 1997 Resolution passed is ineffective. The Plaintiff's action founded on that resolution must fail.

20. The above would be sufficient to dispose of HCA 4741 of 2001. However, I have two observations to make. Firstly, what happened at the meeting, according to the minutes were as follows. Ms Crosthwaite of GPL took the chair and announced that the building was getting old. The Plaintiff suggested certain improvement projects to be carried out and tabled a budget. Ms Crosthwaite suggested the works should be done. The Plaintiff suggested to call for contributions in the amount of $2.5 million for the year 1997 and $2 million for the year 1998 from the owners. The 1997 Resolution was passed. My observation is that the meeting was attended by GPL, Feedback, Lafe Computer and Lafe Holding, all are members of the Grande Group. The Plaintiff had prepared a renovation programme including an estimate of the renovation costs which it tabled at the meeting. The renovation costs was very substantial, being of the order of $4.5 million. One would expect, if the Plaintiff and Grande Group were to conduct the affairs in a fair and open manner, the information should have been disclosed or made available to all the other owners of the building well before the meeting. It is also apparent that the intention of the Plaintiff and those members of the Grande Group who attended the meeting was to proceed with the renovation works. Yet, they chose to conceal their intention to propose and pass a resolution to that effect in the notice. They also took advantage of the DMC by serving the notice by posting it on the notice board, which failed to draw the attention of the Defendant and presumably the other owners as well. That resulted in the meeting being a meeting of the Grande Group. My second observation is that as subsequently disclosed in the course of discovery, Grande Group Hong Kong Limited, another member of the Grande Group was to receive a supervision fee of 5% of the works. While the fees in respect of most of the works were probably justifiable because of the Plaintiff's lack of supervisory personnel, this benefit should have been disclosed to the owners. Further, it is trite law that a person being a member of a body to deliberate on a matter in which that person has a private interest must disclose his interest to the body. This interest should also have been disclosed in the notice of the meeting: see Young v Ladies Imperial Club [1920] 2 KB 523. These observations show the Plaintiff's and Grande Group's lack of bona fide in the conduct of the management of the building.

Whether the 1997 Resolutions were void as being retrospective in effect

21. I now turn to the Defendant's alternative submission. In view of my finding above, this is not necessary. However, as the legal issue raised in this alternative submission is relevant for the determination of subsequent issues, it would be convenient to deal with it here. Mr Kenneth Chan further submits that even if the notice of the meeting was adequate, the 1997 Resolution was also void as being retrospective in effect. It is common ground that neither the Building Management Ordinance nor the DMC authorised the passing of resolutions having retrospective effect. The 1997/98 renovation programme commenced six months before the date of the meeting on 28 April 1997. By that date, the Plaintiff had committed itself on no less than 12 job orders in the total amount of $546,876. It is common ground that as at 31 December 1996 the owners had surplus funds of $204,288 for their disposal. The Plaintiff would be short of $342,588 to meet the commitment. Mr Maurice Chan submits that the 1997 Resolutions only legitimised an earlier project commenced before the meeting but have no retrospective effect in that the payment obligation did not arise until after the resolutions were passed. He draws support for his proposition from para 134 to 136 of The Siegont Case and The Bolex Case (supra) where HH Judge Marlene Ng held:

"134. The 1997 Resolution called for funds to be paid after the 1997 Owners' Meeting to cover the then existing (if any) and prospective deficit. The 1997 Resolution took effect on 28th April 1987 when passed by the owners in meeting, not retrospectively. Indeed, with the 1996 Surplus, it was highly doubtful whether on 28th April 1997 there was any deficit since the invoices issued by that date were for limited amounts. Mr Chow's submissions ignored the existence of the 1996 Surplus and I cannot accept his contention.

135. This is to be contrasted with the resolution in So Chun Man Paul's case (supra) where the management committee of the incorporated owners of the building convened an annual general meeting in which a resolution proposing to increase management fees was passed. The respondents being owners of the building subsequently wrote to the management committee pointing out that the resolution was of no effect. The management committee therefore convened an extraordinary general meeting in which a resolution was passed to ratify the earlier resolution. It was held that as the earlier resolution was by virtue of the provisions of BMO of no effect and hence invalid, it could not be "revived" by another resolution nor could it be relied upon to support the second resolution. This is because the second resolution would have retrospective effect and there is no power under BMO to pass resolutions with retrospective effect.

As I understand the judgment and the reasoning of the learned Presiding Officer as upheld by the Court of Appeal in So Chun Man Paul's case (supra), the second resolution was retrospective in nature because it purported to validate and "revive" the earlier resolution (which had no effect) so that once revived it would take effect from the earlier annual general meeting. Here, there was no "backdating" of the 1997 Resolution; it called for the 97/98 Contribution to cover the then existing (ie even if the 1996 Surplus was not enough to cover the pre-28th April 1997 commitments and there is no sufficient evidence of this) and future deficit to be paid after the meeting. I cannot accept Mr Chow's arguments in this regard. In any event, D1 and D2 could not complain of any retrospective disturbance of accrued rights and liabilities because they had been owners of Factories A and B at all material times."

22. It is obvious from para 134 that HH Judge Marlene Ng did not accept Mr Chow's contention that the surplus funds from 1996 were insufficient to meet the invoices issued by 28 April 1997. Then assuming, again this was obiter, that the 1996 surplus was insufficient, she held there was no "backdating" of the 1997 Resolutions for the resolutions were called to cover existing and future deficits. With respect, I think whether a resolution authorising something to be done is retrospective or not does not depend on whether the liability to pay for the work done has accrued or not but whether the work which formed the basis of that liability to pay had been properly authorised by the person on whose behalf the work was to be performed and at the time when the work was ordered. It cannot depend on the fortuitous event when the work was finished and when the person executing the work chose to demand payment. Here, there was a surplus funds of $204,288 available to the Plaintiff to carry out renovation works. The Plaintiff had the authority of the owners to carry out works which could be paid by those funds. But if the Plaintiff wished to execute works not covered by the funds, it has to seek prior authority from the owners if the owners are to be liable for the costs incurred. Clearly, the renovation works undertaken by the Plaintiff were beyond those which could be met by the 1996 funds. There is no dispute prior authority has not been sought by way of any resolution passed in a properly convened owners meeting before the works were ordered. The authority sought in the 1997 Resolution were clearly retrospective. The 1997 Resolutions purport to impose retrospective liability on the owners, which was not permitted by the DMC or the Building Management Ordinance. The resolution must be ineffective.

Whether the 2001 Resolutions that the Defendant to pay the 1997/98 renovation works was void and ineffective

23. The Plaintiff also makes an alternative claim for the contribution to the 1997/98 Renovation Works based on the 2001 Resolutions. For similar reasons, the 2001 Resolutions that the Defendant shall pay its contribution are also retrospective and has no effect. This claim is on all fours with So Chun Man Paul v Incorporated Owners of Chee On Building [2000] 1 HKC 732. In that case, the incorporated owners passed a resolution to increase management fee which was void for want of adequate notice. The incorporated owners tried to make good that resolution by passing a second resolution at a meeting duly convened to ratify the first resolution. The Court of Appeal upheld the Lands Tribunal's decision that the second resolution was retrospective and has no effect. For the same reason, I find that the 2001 Resolutions that the Defendant shall pay contributions to the 1997/98 Renovation Works has no effect. The Plaintiff's alternative claim in respect of the contribution to the 1997/98 Renovation Works based on the 2001 Resolutions must also fail.

24. A third observation is that the Plaintiff and for that matter, the Grande Group, are trying to paper over the retrospective nature of the 1997 Resolutions by describing the on-going renovation works as "projects to be carried out". A fourth observation is that the Plaintiff is oppressive in seeking to ratify a defective resolution against the Defendant.

Whether the Plaintiff had power to undertake the 1999/2000 Renovation Works

25. In the second action, HCA 5207 of 2001, the Plaintiff claims contribution from the Defendant to cover a deficit of $2.8 million created as a result of the 1999/2000 Renovation Works and the 2001 Repair Works which had never been duly approved by the owners. On 31 August 2001, the Plaintiff convened a meeting of the owners to be held on 26 September 2001. Two of the items on the agenda were to approve the building renovation and improvement works set out in Appendix E and to approve raising of funds of $7.4 million to recoup deficit and to pay for the proposed renovation works. At the meeting, as a result of objections raised by the Defendant and other minority owners, the scale of the renovation works was trimmed down to $1.3 million. The Plaintiff then proposed to raise $4.1 million to meet the deficit of $2.8 million and to make provision for the $1.3 million renovation works. The resolution was passed by the majority vote of the Grande Group. The Plaintiff now seeks to recover Defendant's share of the $2.8 million deficit. That deficit was made up of two sums, i.e. $2,315,976 in respect of the 1999/2000 Renovation Works and $453,521 in respect of 2001 Repair Works.

26. There is no dispute that the 1999/2000 Renovation Works had not been properly authorised by any owners meeting. For similar reasons as I have found in respect of the 1997 Resolution, the 2001 Resolution to call for contribution to cover the deficit which arose as a result of unauthorised works is retrospective in nature and has no effect.

27. As for the 2001 Works, I am satisfied that all except one item were repair and maintenance work for which no express authorisation from owners meeting was required. The exceptional item was in respect of an amount of $183,865 for covering the pillars of the ground floor with aluminium checker plates because some ceramic tiles were loose and needed to be replaced. The reason offered by the Plaintiff for using the checker plates was that they were more durable. I agree with the Defendant that these checker plates were not functional but cosmetic and the works did not fall within the category of repair and maintenance. Authorisation by owners meeting is required. The Defendant also challenges the propriety of erecting a second management office to house the staff of the Plaintiff which cost $187,610. I consider it the owners' duty to provide accommodation for the Plaintiff's staff who work in the building. The owners were only required to contribute $51,681 to the construction costs, presumably with the balance financed by the Grande Group. I would not query the propriety of this item of work.

28. Despite these findings, I do not think it appropriate to order contribution from the Defendant in respect of part of the 2001 Repair Works. The Plaintiff has made one claim in the Statement of Claim pursuant to the 2001 Resolution. It either gets the amount as claimed or it does not. It is not for the Court to re-write the resolution for the owners. In any event, the Plaintiff is entitled to recover from the owners the costs of such works which are within the power given to the Plaintiff as manager under the DMC to incur on behalf of the owners.

29. The parties also spent much time arguing whether some of the renovation works were necessary or excessive. I do not think I need to rule on those matters. The Plaintiff's claims are based on the 1997 Resolution and 2001 Resolution. If the resolutions are ineffective, the Plaintiff's claim must fail, even if the works were necessary. Indeed, the evidence shows, and it also conceded by the Defendant, that some of the renovation works were in effect maintenance works in nature which the Plaintiff had power under the DMC to execute without seeking prior authorisation. For the same reason as given above, it is not necessary for me to identify those works and assess the contribution to be paid by the Defendant. The owners are obliged to pay for those works and the Defendant to contribute its fair share. The Plaintiff's claims having been dismissed, it shall be for the owners to agree among themselves which items of works were within the manager's power under the DMC to incur on behalf of the owners and to call for contributions from the owners to meet that liability. If the renovation works were not within the power of the Plaintiff under the DMC to execute on behalf of the owners, such as works for the purpose of improving the aesthetic appearance of the building, none of the owners who have not authorised the works are liable to contribute to the costs of those works.

Other observations

30. During the deliberations above, I have passed some comments critical of the way the Plaintiff and the Grande Group conducted the management of the building. In addition, Mr Kenneth Chan made other complaints of the Plaintiff's conduct. These include breach of the house rules of the building in that the tendering procedures were not adopted, paying excessive rental to the Grande Group for renting parking spaces as paid parking for use by visitors and incurring heavy losses, taking loans from and paying interest to another related company of the Grande Group without disclosure, conversion of cargo lifts into passenger lifts for Grande Group's purposes at the inconvenience of the other industrial users and obstructing non-Grande Group owners from attending the owners meeting on 17 January 2001. Mr Kenneth Chan submits that these give an overall view of the way the Plaintiff and the Grande Group controlled the management of the building, their lack of impartiality and even integrity, and their oppressive conduct towards the minority owners. Mr Kenneth Chan submits that this is a classical and extreme case of majority owners imposing their will upon the minority owners through the vehicle of a property management company, which is their own subsidiary. The evidence strongly suggests that the Grande Group was causing excessive renovation works to improve the aesthetic appearance of the building which carries its name at the expense of all the owners, including the minority owners who have not agreed. There is probably some substance in the above complaints, but there is no need for me to rule on those matters as I consider them irrelevant and that I should not allow myself to be influenced by them. As shown in the judgment above, I reached my conclusion without having to take those matters into account.

Conclusion

31. For the reasons given above, both of the Plaintiff's actions are dismissed.

32. Much time has been spent by the defence in airing its grievance caused by the oppressive conduct of the majority owners trying to impose their will on the minority owners. While I believe most of the complaints are justified, they are not necessary for the defence. Unfortunately much time has been wasted. Time has also been wasted in challenging the Plaintiff's evidence about the 'holed' document. That issue was resolved in favour of the Plaintiff. Though sympathy lies with the Defendant, it has to be penalised for the costs wasted on these irrelevant matters and for its unsuccessful challenge of the Plaintiff's evidence, despite its success in its defence. Having regard to the conduct of the Grande Group and the Plaintiff as well as the Plaintiff's responsibility for the late discovery of the 'holed' document, I consider a reduction of 20% of the costs to be awarded to the Defendant appropriate. Accordingly, I make a costs order nisi that the Plaintiff shall pay 80% of the Defendant's costs.