GOOD CASTLE HOLDING LTD v. THE INCORPORATED OWNERS OF HOI LUEN INDUSTRIAL CENTRE AND ANOTHER

LDBM289/ 2010

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION No. 289 OF 2010

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BETWEEN

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JUDGMENT

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Introduction

1.  This case concerns about the validity of certain voting at meetings of management committee, the validity of resolution of the management committee meetings, the accuracy of the minutes of the management committee meeting and whether mandatory injunction should be granted against the 1^st Respondent.

Background

2.  The building in question here is Hoi Luen Industrial Centre, No. 55 Hoi Yuen Road, Kowloon, Hong Kong (“the Building”). Its Chinese name is 開聯工業中心.

3.  The Applicant is the registered owner of Workshop Unit No. 15, 13/F, Block A, of the Building and the vice-chairman of the 1^st Respondent.

4.  The 1^st Respondent is the Owners Incorporation of the Building.

5.  The 2^nd Respondent is the chairperson of the 1^st Respondent.

6.  The Deed of Mutual Covenant of the Building is dated 9 September 1985 and registered at the Land Registry by Memorial No. UB 2891304 (“the DMC”).

7.  The Applicant called 2 witnesses. They are Mr. Cheng Li Hung and Madam Chan Lai Chun.

8.  The Respondents called Madam Huang Hui Qiong (“Madam Huang”), the authorized representative of the 2^nd Respondent, as their only witness.

(1)    Validity of the voting by Star Light Hot Stamping & Screen Printing Company Limited (“Star Light”) in the 3^rd meeting of the management committee

9.  The Applicant’s case is that Star Light ceased to be an owner of the Building and thus ceased to be a member of the management committee (see paragraph 4(2)(e), Schedule 2, Cap 344) since 25 January 2010 and thus is not eligible to vote at the 3^rd meeting of the management committee (“the 3^rd MC Meeting”) held on 16March 2010.

10.  It is not disputed that Mr. Fu Hong (“Mr. Fu”), the representative of Star Light, was present at the 3^rd MC Meeting and voted for the purpose of the resolutions passed. The 1^st Respondent however submitted that they did not know that Star Light ceased to be an owner of the Building and thus ceased to be a member of the management committee until after the 3^rd MC Meeting. After that, Mr. Fu’s vote was excluded for the purpose of the resolutions passed and that had been reflected in the minutes of the 3^rd MC Meeting.

11.  While there is no dispute that Star Light is not eligible to vote at the 3^rd MC Meeting, I am of the view that it is not necessary for this Tribunal to grant the declaration to state the obvious.

(2)    Validity of the voting by Mr. Chung Keung (“Mr. Chung”) at various meetings of the management committee

12.  The Applicant complained that the 1^st Respondent allowed  Mr. Chung, the husband of Madam Huang, to represent different corporate members of the management committee at different meetings of the management committee and to vote thereat.

13.  It should be noted that the Respondents did not clearly state their case as to whether Mr. Chung attended the 8^th MC Meeting in their Re-Amended Grounds and Particulars of Objection and Counterclaim (“the Objection”). At trial, Mr. Chan, who appears for the Respondents, informs this Tribunal that Mr. Chung did attend the 8^th MC Meeting. However, his vote was excluded after the meeting and that was reflected in the minutes of the 8^th MC Meeting (p272, Bundle B). Further, the references of 3^rd MC Meeting in paragraph 3(vii) of the Objection actually mean 8^th MC Meeting. 

14.  There is no dispute that Mr. Chung did not vote in the 2^nd MC Meeting, the 4^th MC Meeting and the 5^th MC Meeting.

15.  In other words, the Respondents admitted that Mr. Chung attended the 1^st to 8^th meetings of the management committee.

16.  On 16 March 2010, Mr. Chung was appointed as the authorized representative of Cheeson International (Holdings) Limited (“CIH”), a member of the management committee, to attend the 3^rd MC Meeting held on 16 March 2010. The Chinese name of CIH is 志成國際(集團)有限公司. 

17.  On 15 January 2010, Mr. Chung was appointed as the authorized representative of GOF International Limited (“GOF”), a member of the management committee, to attend the 1^st MC Meeting held on 19 January 2010. On 29 June 2010, he was again appointed as the authorized representative of GOF to attend the 6^th MC Meeting held on 7 July 2010. On 15 November 2010, he was appointed as the authorized representative of GOF again to attend the 8^th MC Meeting held on 17 November 2010.

18.  On 4 October 2010, Mr. Chung was appointed by Most Great Limited (“MG”) to attend the 7^th MC Meeting. MG is a member of the management committee.

19.  Under paragraph 4(3), Schedule 2, Building Management Ordinance, Cap 344 (“BMO”), “[e]very member of the management committee appointed under section 14(2) or paragraph 2(1)(b), 5(2)(a), 6 or 6A shall, within 21 days after the appointment, lodge with the secretary of the management committee a declaration, in such form as the Land Registrar may specify, stating that he does not fall within the description of subparagraph (1)(a) or (b)”. Further, the authorized representative of a corporate committee member is regarded as if he were a member of the management committee in his own right and has to comply with paragraph 4(3) (see paragraph 11(1), Schedule 2).

20.  There is no dispute that Mr. Chung had failed to make the necessary declaration within the 21 day period after each and every of his appointment aforesaid.

21.  As a result, he ceased to be a member of the management committee under the respective appointments aforesaid by reason of paragraph 4(4), Schedule 2 which provides that “[a] member of the management committee who fails to comply with subparagraph (3) shall cease to be such member”.     

22.  Mr. Poon, Counsel for the Applicant, complained that Madam Huang, the authorized representative of the 2^nd Respondent and the wife of Mr. Chung, deliberately allowed Mr. Chung to act as he did and allowed him to vote in various MC Meetings notwithstanding the fact that he had failed to make the necessary declaration in previous occasions.

23.  It is so obvious that Mr. Chung is doing all these deliberately. If it happens once, one can accept that is a pure slip. However, he failed to make declaration for 5 times.

24.  Counsel submitted that the failure to make the declaration renders the representation of Mr. Chung null and void from the beginning of his appointment and thus his voting is invalid. Mr. Poon submitted that if “cease to be such member” means “cease to be a member on the 22^nd day after the appointment”, it will be a big loophole. An authorized representative of a corporate member can simply ignore the statutory requirement of making declaration. While the representative ceases to be a member on the 22^nd day after the appointment, the corporate member can re-appoint the same representative and this can be repeated again and again.   

25.  While I can understand the grievances of the Applicant, the law is not on his side. The wording and meaning of paragraph 4(3) and (4) are clear. If anyone fails to make the declaration, he ceases to be a member. It means that if one fails to make the declaration within 21 days, he ceases to be a member of the management committee on the 22^nd day after his appointment. The legislation does not say that any failure to make the declaration will render the appointment null and void ab initio.

26.  It should be noted that paragraph 4(2), Schedule 2 provides that “a member of a management committee shall cease to be a member of the committee” on the happening of certain events. Under this sub-paragraph, the specified event may happen months after the appointment and during this period the member involved may have voted for a number of resolutions some of which may also have been carried into effect. If Counsel’s submission is right, I see no reason why his interpretation should not apply to this sub-paragraph using words similar to paragraph 4(4). If so, there will be chaotic situations as resolutions passed may become invalid. It will have serious impact on the running of the management committee and in turn affect the management and administration of the building concerned.

27.  The current position is not satisfactory as there may be abuse like what Mr. Chung did here. The legislation should be amended to remove this loophole.

28.  On this, my ruling is that the representation and votes of Mr. Chung at the 1^st, 3^rd, 6^th and 7^th MC Meetings are valid as they are all made within the 21 day period.  

29.  Since Mr. Chung’s vote in the 8^th MC Meeting is not counted and he is described as “owner” in the minutes of the said meeting, there is no need for me to make any particular ruling in relation to this meeting.      

(3)    Validity of the resolution to appoint Messrs. W.K. To & Co, Solicitors, to act for all the 7 Respondents in LDBM 91/2010 in the 6th meeting of the management committee

30.  In the 6^th MC Meeting, it was resolved to appoint Messrs. W.K. To & Co., solicitors, to act for all 7 respondents in LDBM 91/2010 (“the Action”) taken out on 13 April 2010 (“the Resolution”). Six of these respondents are members of the management committee and the other one is the employee of the Manager of the Building under the DMC.

31.  The Applicant in this case is also the applicant in the Action.

32.  Mr. Poon submitted that the Action is against the respondents in their personal capacity and thus the 1^st Respondent has no authority to pass this resolution. Since the 1^st Respondent has paid the legal expenses for these respondents, the 1^st Respondent should be ordered to demand these respondents to account for the legal expenses paid. Further, since Mr. Chung was not a member of the management committee and thus even if the management committee has the authority to appoint lawyer to act for the respondents, that should not include Mr. Chung.

33.  Mr. Poon further argued that the 7^th respondent is only an employee of the Manager of the Building and thus the 1^st respondent has no authority to pass the Resolution.

34.  Mr. Chan submitted that the 1^st Respondent is entitled to pass this resolution. He told this Tribunal that he only relied on ss14(1), 18(2)(g) and 29 of the BMO but not the DMC.

35.  Section 14(1) provides that:-

“Subject to this Ordinance, at a meeting of a corporation any resolution may be passed with respect to the control, management and administration of the common parts or the renovation, improvement or decoration of those parts and any such resolution shall be binding on the management committee and all the owners.”

36.  Section 18(2)(g) states that:-

“A corporation may, in its discretion-

(g) act on behalf of the owners in respect of any other matter in which the owners have a common interest.”  

37.  Section 29 stipulates that:-

“Subject to this Ordinance, the powers and duties conferred or imposed by this Ordinance on a corporation shall be exercised and performed on behalf of the corporation by the management committee.”

38.  Mr. Chan submitted that pursuant to s29, the management committee is entitled to exercise and perform the powers and duties of the 1^st Respondent. That must be correct so far such powers and duties are conferred or imposed by the BMO.

39.  Mr. Chan further submitted that the Action is not against the respondents in their personal capacity but against them in their capacity as a member of the management committee.

(i) Respondents (other than Mr. Chung) who are members of the management committee

40.  In the Notice of Application of the Action, the Applicant is claiming against the respondents, inter alia, for an order that the respondents “不能繼續擔任開聯工業中心第十屆管理委員會的委員” (against 1^st and 3^rd respondents) and “並保證以後作為委員, 須公正處理法團事務” (against 4^th to 6^th respondents). It clearly shows that the respondents are being sued in their capacity as a member of the management committee (or to be more exact as the authorized representative of the corporate member of the management committee).

41.  In order to invoke s18, the resolution must be in respect of “the control, management and administration of the common parts or the renovation, improvement or decoration of those parts”. The said Notice of Application only touched upon, in general, the way the respondents handle the business and affairs of the management committee. There is however no clear and specific reference to any matters that is related to “the control, management and administration of the common parts”. For this reason, I am of the view that s18 has no application here.

42.  Section 18(2)(g) covers a wider ambit. The management committee may act on behalf of the owners in respect of any other matter in which the owners have a common interest. What is the common interest here? One of the common interests of the owners of a building is the proper management of the building. That must involve having someone, whether corporate members or not, willing to serve on the management committee and to ensure the members (including the authorized representatives of the corporate members and retired members) of the same acting in good faith and in a reasonable manner shall not be personally liable for any act done or default made by or on behalf of the corporation in the exercise or performance of the duties and powers of the corporation. There is in fact statutory protection for the latter (s29A of BMO).

43.  To borrow the example used by Tang VP in Yeung Chung Lau v Incorporated Owners of Century Industrial Centre and Others [2007] 4 HKLRD 25, “where unfortunately one or more of its owner are known to be litigious and who have sued members of its management committee on their personal capacity, so much so that no owner was willing to serve on the management committee. In such circumstances, could the owners resolve that any owner who was prepared to serve on the management committee should be indemnified for costs if he should be sued in connection with the performance or purported performance of his duties as a member of the management committee not being an action involving criminal liability or dishonestly or willful negligence”? The answer must be in the affirmative. While this example is not dealing exactly the same situation here, I am of the view that the underlying rationale is of no difference and thus the same reasoning should apply to this case.

44.  I am therefore of the view that as a matter of principle the management committee, by virtue of s29A and s18(2)(g), has authority to pass the Resolution in relation to the respondents under this heading. I will discuss whether the Resolution is valid hereinbelow.

(ii) Mr. Chung’s Position    

45.  The 2^nd respondent in the Action is described as “志成國際(集團)有限公司的鍾強”. I am of the view that it is absolutely clear that it means Mr. Chung and the reference of 志成國際(集團)有限公司 is for the purpose of identifying which Mr. Chung the Applicant is suing though such reference is, in the light of the background of this case, clearly superfluous.  

46.  In the Notice of Application of the Action, the Applicant is claiming against Mr. Chung, as 2^nd respondent of the Action, inter alia, for an order that Mr. Chung “不能繼續擔任開聯工業中心第十屆管理委員會的委員”.

47.  Mr. Chung is clearly being involved by reason of his being or has been a member of the management committee. In the light of my ruling hereinabove, Mr. Chung was a member of the management committee (through the appointment as the authorized representative of CIH) from 16 March 2010 and ceased to be a member on 6 April 2010 by virtue of paragraph 4(4) of Schedule 2 since he failed to lodge the declaration within the 21 day period.

48.  While Mr. Chung was no longer a member of the management committee on 13 April 2010, it does not affect the authority to pass the Resolution in relation to Mr. Chung since the principles and reasoning discussed in the last heading should equally apply to a retired member or someone who ceased to be a member of the management committee.

49.  For the reasons aforesaid, it is my ruling that as a matter of principle the 1^st Respondent has the authority to pass the Resolution in relation to Mr. Chung. I will deal with its validity later.

(iii) Mr. Mak of the Manager (高衛物業管理有限公司)

50.  On this, Mr. Poon relied on s34L of BMO which provides that:-

“No provision in a deed of mutual covenant or other agreement shall operate to entitle the manager of any building to be indemnified by a corporation or by the owners of the flats in that building in respect of any legal costs, charges, expenses or fees relating to any civil or criminal proceedings (whether successful or otherwise) between or in respect of that manager and that corporation or those owners and any such provision shall be void and of no effect.”

51.  Mr. Poon submitted that this provision prevents the 1^st Respondent from passing the Resolution in relation to the manager.

52.  I do not accept Counsel’s submission. While s34L clearly renders any agreement to indemnify the manger as void and of no effect, it only means that the manager cannot enforce any indemnity agreement against an incorporated owner. It does not however prevent the incorporated owner from indemnifying the manager on its own accord. 

53.  One of the common interests under s18(2)(g) is, as I said, the proper management of the building. Apart from having someone willing to serve on the management committee, it also involves having a manager willing to take up the management tasks.

54.  The principles and reasoning that apply to the members of the management committee equally apply to the manager and its staff members. If otherwise, who will act as a manager?

55.  Therefore, as a matter of principle, the 1^st Respondent has the authority to pass the Resolution in relation to the staff member of the manager.

(iv) Validity of the Resolution

56.  The fact that the 1^st Respondent has the authority to pass the Resolution does not necessarily mean that the Resolution must be a valid one.

57.  If someone is being sued in his capacity as a member of the management committee for the reasons that he acted dishonestly or in bad faith thereby causing harm and damage to the owners, is the resolution to appoint a lawyer to act for him or to indemnify him for legal expenses incurred by him in defending the case without any qualification a valid one? If so, what would happen if the Court finds against such member and rules that he acted dishonestly or in bad faith thereby causing harm and damage to the owners? Does the incorporated owners still have to pay for the legal expenses for such member who acted against the interests of and caused harm and damage to the owners?

58.  I am of the view that while an incorporated owners has the authority to pass resolution to indemnify the members of the management committee for legal expenses or to pay legal expenses for such members, it must be very careful in defining the scope and extent of the same. It should not pass any resolution in this regard without any qualification as otherwise it may lead to the absurd scenario above. Owners may then challenge the validity of the resolution after learning that the Court has found against the member who acted dishonestly or in bad faith. No matter how the Court rules, the situation would not be satisfactory. If the Court upholds the resolution, it means the absurd situation remains. If the Court declares the resolution invalid, that may lead to more problems and in particular in those cases where the incorporated owners has paid for the legal expenses or reached agreement with the solicitors for paying the legal expenses for such member.

59.  What qualification is appropriate depends entirely on the backgrounds and circumstances of the case, e.g. the indemnity or payment of the legal expenses may depend on the outcome of the proceeding in question.

60.  While the resolution here is an unqualified one, the situation above does not arise because the Applicant withdrew his case in the Action. Therefore, from the result of the Action, it cannot be said that the respondents of the Action had acted wrongly. Further, there is also no evidence from the Applicant in these proceedings to show that the respondents of the Action acted improperly. 

61.  The Applicant complained that if the respondents of the Action are entitled to be represented by solicitors appointed by the management committee, the Applicant should also be entitled to such benefit as it is also a member of the management committee. It is obvious that the logic does not apply in such way. At least, the Resolution would not be invalidated by the reason that the Applicant is being left out.

62.  For the reasons aforesaid, it is my ruling that the Applicant has failed to prove that the Resolution is an invalid one.

(4)    The 1^st Respondent be ordered to demand all 7 Respondents of LDBM 91/2010 to account for the legal expenses incurred by the 1^st Respondent

63.  In the light of my ruling hereinabove, this claim must be dismissed.     

(5)    Validity of adding one more vice-chairman in the 7^th meeting of the management committee

64.  The Applicant’s case is that there can only be one vice-chairman. Since the Applicant is the vice-chairman of the management committee, the resolution passed by the management committee in its meeting to have one more vice-chairman is invalid.

65.  Mr. Poon relied on paragraph 5(2)(c), Schedule 2, BMO which provides that “at an annual general meeting of a corporation at which the members of the management committee retire under subparagraph (1) … the corporation may, by a resolution passed at the general meeting, appoint a person, from amongst the members of the new management committee, as the vice-chairman of the new management committee”. He submitted that the vice-chairman can only be appointed at the general meeting but not at the meeting of the management committee. Further, there can only be one vice-chairman by reason of the wording of the subsection. I tend to agree with Mr. Poon notwithstanding the submission of Mr. Chan to the otherwise.

66.  The word “may” here means it is not a must to have a vice-chairman and it is a matter for the individual management committee to decide if it would like to have one. It cannot be read as meaning the management committee may have more than one vice-chairman.

67.  However, there is a fatal omission by the Applicant here. Mr. 鄭錦貴 (“Mr. Cheng”), the gentleman being purportedly appointed as the other vice-chairman in the 7^th MC meeting is not named as a party herein. Mr. Chan submitted that since my decision would affect Mr. Cheng, the Court should decline ruling on this matter in the absence of Mr. Cheng. I am of the view that it is a valid point.

68.  While I am of the view that the legislation only permits one vice-chairman to be appointed in the general meeting, I decline to grant the declaration as sought as Mr. Cheng is not made a party herein.

(6)    Whether the minutes of the 2^nd, 3^rd and 6^th meeting of the management committee are true record of the proceedings of the meetings

(i)        The minutes of the 2^nd MC Meeting

69.  The 2^nd MC Meeting was held on 5 February 2010. The minutes of this meeting is dated 6 March 2010 (“the 2^nd MC Meeting Minutes”).

70.  In this meeting, there were some discussions about remission of the management fee of the Building. Different views were expressed. A Mr. Wong proposed that the matter be adjourned pending the availability of the new budget of the Building. The Applicant complained that the sentence “是次討論有七人贊成, 二人反對, 故此留待下次會議議决” (at line 10, page 6 of the 2^nd MC Meeting Minutes, Bundle C p83) (“the 1^st Disputed Sentence”) is misleading and inaccurate because the reason, or at least another reason, of the adjournment, namely waiting for the budget of the Building, has not been spelt out in the minutes. The Applicant wrote to the manager on 10 March 2010 raising general objection that the 2^nd MC Meeting Minutes is not a true record. The letter was also copied to all members of the management committee. However, the Applicant did not give any particulars or raise specific complaint in this letter. 

71.  In the draft order submitted by the Applicant after the conclusion of the hearing as per my direction, the Applicant raised other issues including certain  contents of page 2 and page 6 of the 2^nd MC Meeting Minutes. These matters are not raised in the Notice of Application or in the final submission. I will not deal with them.

72.  Mr. Chan submitted that what Mr. Wong said is extraneous to the passing of the resolutions in the 2^nd MC meeting and thus there is no need to record the same.

73.  There is no dispute that the secretary of the management committee has the duty to keep minutes of the proceedings at every meeting of a management committee (paragraph 10(4), Schedule 2, BMO). Since the 2^nd Respondent is the chairperson of the management committee, it has the duty to certify the minutes as containing a true record of the proceedings of the meeting of the management committee to which they relate (paragraph 10(4A), Schedule 2, BMO).

74.  The legislation does not stipulate what should be recorded or included in the minutes and I do not think that there is any hard and fast rule as to what should be contained in the minutes.

75.  Minutes serve as records of what had happened during the meeting and in particular what agreement has been reached, what decision has been made and what action had been taken. Sometimes, it also serves as a reminder as to what had been discussed and can be used as reference for future meetings.

76.  I am of the view that a proper minute must include title, date, day, venue, start and end time, names of attendees and absentees with their proper titles/positions/descriptions of the meeting and whether there is a quorum.

77.  Exact wordings of the motions, the person who proposed the motion, the results of the vote including who voted for and against the motion and the abstainer must be recorded. The same apply to any agreement reached and decision made if they are not concluded by way of motion.

78.  The above are the basics that each and every proper minute must include. The secretary may decide what else are to be included in the minute as there is a wide range of spectrum from these basics to the extreme of having a verbatim record of the meeting.

79.  The minute must be a true and accurate record of the meeting. “True” here means all the truth. If there are two or more reasons for an agreement or decision, all the reasons must be recorded if the secretary opted to record the reasons.

80.  From the transcript of the 2^nd MC Meeting (Bundle C, p71B-8), it is clear that one of the reasons of the adjournment of the motion is to wait for the budget of the Building. As the other reason of the adjournment (namely the motion is opposed by 2 members) is recorded, all the reasons should be stated.

81.  In曾婉玲v兆隆苑業主立案法團[2001] HKLT 70; LDBM199/2001 (18 September 2001), Mr. Justice Lam (as he then was) said:-

“18. In the exercise of its jurisdiction to grant equitable relief (and declaratory relief is one of them), the Tribunal is exercising a discretion. As in the case of the exercise of other judicial discretion, the Tribunal must have regard to all relevant circumstances in deciding whether declaratory relief should be granted in a particular case.

19. In the context of building management cases, one must bear in mind the following factors,

(a) the members of the corporation are co-owners of a building and they are neighbours. Most of them would live or work in the vicinity of one another. They would inevitably meet and have interaction with each other. Harmonious relationships between them are important to the well being of the community.

(b) the purpose of incorporation is to facilitate and foster owners co-operation with each other in the management of the building. Whilst there would inevitably be differences in opinion amongst members, in the interest of the whole, such differences should be resolved if possible by the quickest and most cost-effective means. Otherwise, the energy and resources of the corporation could be spent on needless litigation with substantial legal costs being incurred. That would also seriously undermine the trust and goodwill amongst members which is essential to the successful operation of the corporation.

(c) as stated in Paragraph 17 above, it is understandable that errors would be made from time to time with regard to the affairs of a corporation. So long as the errors was made without any fraudulent or dishonest intent, although one needs to learn from mistakes, it is more important to rectify or remedy the situation in a positive manner.

(d) personal vendetta has no proper place in dealing with the affairs of a corporation. It would only destroy the overall well being of the corporation. It would be inconsistent with the overall objective of the BMO.

(e) although Section 45 of the BMO enables an owner of a building to bring proceedings in the Tribunal regarding matters specified in the Tenth Schedule, the main purpose of the ordinance, as set out in the preamble is to facilitate the incorporation of owners of flats in buildings or groups of buildings, to provide for the management of buildings or groups of buildings and for matters incidental thereto or connected therewith. Hence, in the exercise of its jurisdiction, the Tribunal should primarily be concerned with the proper management of the building instead of any personal conflicts between individuals. In deciding a case, the Tribunal should consider what would be the course in the best interest of the owners as a whole.

(f) In line with the underlying spirit of the BMO, subject to compliance with the provisions in the relevant Deed of Mutual Covenant and the BMO, the management of the building is placed in the hands of the management committee (see Section 29 of the BMO). The management committee is obliged to follow the resolution passed by owners in general meeting (see Section 14(1) of the BMO) and is subject to the supervision of the owners through the general meeting at which a member could be removed from office (see Section 14(2) of the BMO). In an extreme case, the owners at a general meeting can resolve to appoint an administrator and dissolve the management committee (see Section 30 of the BMO). It is for the owners, either acting through a management committee appointed by them or through resolutions passed in general meeting, to decide on matters relating to the management of the building. The Tribunal should only intervene to ensure that the statutory mechanism and the provisions in the Deed of Mutual Covenant are observed. If the Tribunal is satisfied that the management committee or general meeting is acting in accordance with the provisions in the statutory and contractual framework in handling the affairs of the building, the Tribunal should leave it to the owners to decide for themselves on what is the best course to adopt in the management of the building.

20. Order 15 rule 16 of the Rules of the High Court provides, no action or other proceeding shall be open to objection on the ground that a merely declaratory judgment or order is sought thereby, and the Court may make binding declarations of right whether or not any consequential relief is or could be claimed. This applies to proceedings in the Lands Tribunal by reason of Section 8(9) and Section 10(1) of the Lands Tribunal Ordinance, Cap 17.

21. Hence, it is possible for the Tribunal to grant a declaration without any consequential relief if the Tribunal is satisfied that it should exercise its discretion to do so.

22. A well established reason for a court to refuse to grant declaratory relief is a situation where the exercise does not serve any useful purpose. The principle is summarized in Zamir & Woolf, The Declaratory Judgment, 2nd Edn., at Para.4.087,

"If it can be shown that a declaration would not serve any practical purpose, this will weigh heavily in the scales against the grant of declaratory relief. If, on the other hand the grant of declaratory relief will be likely to achieve a useful objective, the court will be favourably disposed to granting relief. The question of whether or not any useful purpose would be served by granting declaratory relief is therefore of prime importance in determining how discretion should be exercised." ”

82.  Does the declaration as sought by the Applicant serve any practical purpose? The motion was adjourned. The failure to record all the reasons of the adjournment does not affect any interest of the Applicant or the owners of the Building.

83.  For the reasons aforesaid, while it is my finding that the 1^st Disputed Sentence lacks accuracy, I decline to grant the declaratory relief since it serves no practical purpose.

(ii)     The minutes of the 3rd MC Meeting

84.  The 3^rd MC Meeting was held on 16 March 2010. The minutes of this meeting is dated 13 April 2010 (“the 3^rd MC Meeting Minutes”) (see Bundle D1 p158). The Applicant wrote to all the members of the management committee on 12 April 2010 after having read the draft of the 2^nd MC Meeting Minutes and complained that it is not a true and accurate record. The Applicant however did not give any particulars or raise specific complaint in this letter. 

85.  The Applicant complained 2 matters here. First, the 3^rd MC Meeting Minutes failed to record the fact that Mr. Fu did vote in the meeting. Further, it also failed to record the agreement to have a broadcasting of the whole process of the 2^nd MC Meeting in the lobby of each block of the Building.

(a)      Voting of Mr. Fu

86.  In the 3^rd MC Meeting Minutes, Mr. Fu was described as an owner. The fact that he did vote for various resolutions in the meeting was not mentioned.

87.  Mr. Chan submitted that since Mr. Fu ceased to be a member of the management committee, his votes were excluded and all these were reflected in the 3^rd MC Meeting Minutes.

88.  In my view, the 3^rd MC Meeting Minutes only reflects the results of the rectification done after the meeting. Someone who does not attend the meeting will not be able to know from the minutes that Mr. Fu did attend as a member of the management committee and also voted for various resolutions. He will not know that the management committee had done rectification works and excluded the votes of Mr. Fu. Common sense can tell all these are important facts that should be included in the minutes.

89.  It would only be proper to record the fact that Mr. Fu did attend as a member of the management committee and also voted for various resolutions with remarks that his votes were subsequently not counted together with supporting facts and reasons. 

90.  I am satisfied that the Applicant has proved its case here.

(b)       Broadcasting of the process of the 2^nd MC Meeting

91.  There cannot be any dispute that a Madam To (杜菊芳) proposed to broadcast the process of the management committee meeting and this motion is supported by 7 members including Mr. Fu. Since his vote should not be counted, there are 6 valid supporters out of the 11 attending members. It means that this motion is passed (see the transcript at Bundle C p88B-12).

92.  Mr. Chan submitted that the proposal to broadcast was not an agenda of the 3^rd MC Meeting and thus it was a matter extraneous to the passing of the resolutions of the meeting.

93.  It should be noted that under paragraph 3(7), Schedule 3, BMO, no resolution passed at any meeting of the corporation shall have effect unless the same was set forth in the notice given in accordance with paragraph 2, Schedule 3 of the BMO or is ancillary or incidental to a resolution or other matter so set forth. However, this provision only governs the meeting of an incorporated owners. Further there is no similar provision under Schedule 2, BMO, which governs the meeting of the management committee.

94.  Even if Mr. Chan is right that the motion in question is not an agenda of the meeting, it does not change the fact that the management committee had reached a decision to broadcast the process of the meeting of the management committee. This decision touched upon the interests of all the owners. With this decision, the owners can view the process of the meetings and know more about what had been transpired in the meeting including the way members handled the business during the meetings. This decision should be recorded in the 3^rd MC Meeting Minutes.

95.  For the reasons aforesaid, I am satisfied that the Applicant has proved its case here and I should grant the declaratory relief.   

(iii)   The minutes of the 6^th MC Meeting

96.  The 6^th MC Meeting was held on 7 July 2010. The minutes of this meeting is dated 23 July 2010 (“the 6^th MC Meeting Minutes”) (see Bundle D1 p202).

97.  Mr. Cheng Li Hung of the Applicant attempted to take video recording of the meeting but that was opposed by some management committee members. As a result, the matter was reported to the Police.

98.  The complaint of the Applicant concerns these words “ …警員到場了解情况, 警方並勸諭鄭利雄需停止錄影…” ( “the 2^nd Disputed Sentence” , see Bundle C, p182). Mr. Poon submitted that the Police did not say these words. Instead, the Police said “ …香港法例唔容許我地禁止佢錄影架 …” (see the transcript at Bundle C, p177B-6).

99.  In his submission, Mr. Chan said that while the transcript is a true and accurate record of what had been said by the respective parties, the words in dispute were not recorded and thus did not appear in the transcript. However, this is not mentioned in the Notice of Opposition which has been amended twice and the last amendment was made on 13 December 2011, less than a week before this trial. The Respondents should not be allowed to raise this at the submission and I do not take this into account when arriving at my decision.

100.  I accept that this incident is something extraneous to the passing of the resolutions in the meeting. No one can make a valid complaint if this incident does not appear in the minutes. However, if the comments of the Police are to be recorded and indeed purportedly recorded, it should reflect the whole truth.

101.  It is more than obvious that the 2^nd Disputed Sentence not merely fails to record what the Police had said but states something which is the opposite of the view of the Police.

102.  The 6^th MC Meeting Minutes gave the reader an impression that Mr. Cheng Li Hung insisted to record the process of the meeting notwithstanding the advice of the Police which, I think, more likely than not, will be accepted by an ordinary reader as correct. This may affect the interest of Mr. Cheng Li Hung as the reader may have the impression that Mr. Cheng Li Hung is not a law abiding person. 

103.  For these reasons, I am satisfied that the Applicant has proved its case here and I should grant the declaratory relief.   

(7)    Whether the 2^nd Respondent was in breach of its duty to certify a true record of the minutes of the 2^nd, 3^rd and 6^th MC Meeting

104.  This is related to the last item.

105.  The Applicant is saying that the minutes of these meeting are not true record but the 2^nd Respondent still certified the same. Being the chairperson of the management committee, it is therefore in breach of its duty under paragraph 10(4A), Schedule 2 which provides that the minutes of the management committee meetings “shall be certified by the person presiding over the meeting as containing a true record of the proceedings of the meeting of the management committee to which they relate”.

106.  I accept that the chairperson must take the responsibility to ensure that the minutes are true record before certifying the same. However, one must appreciate that it is not a simple task. Much effort and time has to be spent in order to prepare the minutes of a meeting which is conducted in an orderly manner. Much more for those which are not. Notwithstanding the effort and time spent, there could still be errors.

107.  In the light of my rulings hereinabove, the minutes involved contained erroneous statements. Yet, I do not think there is sufficient evidence to show that these are the results of the fraudulent or deliberate act of 2^nd Respondent.  Further, I am of the view that it serves no practicable purpose to grant the declaration sought under this item as I am prepared to grant declaratory relief concerning the minutes.

Counterclaim

108.  The Respondents counterclaim against the Applicant for an order that the appointment of the Applicant as the vice-chairman of the management committee is invalid.

109.  The Respondents complained that Mr. Cheng Li Hung had tempered with 2 instruments of proxy issued by 寶迪發展有限公司 by adding the references of Unit 702, 703, 703A, 711, 712, 713, 1204, 1304, 1305 of Block B and Car Parking Space No. L36 of the Building (“the said Units”). The said Units carried a total of 38 undivided shares.

110.  A Madam 陳麗卿 and a Mr. 莊子興 are appointed to vote on behalf of寶迪發展有限公司 under these 2 instruments of proxy.

111.  There is no dispute that such references were either added by or caused to be added under the permission and in the presence of Mr. Cheng Li Hung less than 48 hours before the meeting of the owners held on 8 January 2010 (“the Meeting”) in which the Applicant was appointed as the vice-chairman of the management committee. 

112.  It is the Applicant’s case that such addition was made out of good faith as Mr. Cheng Li Hung was well aware of the fact that寶迪發展有限公司was the owners of the said Units and he believed that寶迪發展有限公司 might have inadvertently omitted to state the said Units in the instruments of proxy thereby depriving itself of its rights to cast all its votes in the Meeting. The Applicant had produced a letter dated 18 March 2010 from寶迪發展有限公司 confirming that the addition of the said Units was consistent with their intention. 

113.  Paragraph 4(3), Schedule 3 of the BMO provides that “the instrument appointing a proxy shall be lodged with the secretary of the management committee at least 48 hours before the time for the holding of the meeting”.

114.  Even if the letter from 寶迪發展有限公司 dated 18 March 2010 can rectify the conduct on the part of Mr. Cheng Li Hung and thus rendered his conduct legitimate, it cannot alter the fact that the addition was made less than 48 hours before the Meeting and thus such addition is invalid by virtue of paragraph 4(4), Schedule 3 which provides that “the instrument appointing a proxy is valid only if it is made and lodged in accordance with subparagraphs (2) and (3)”.

115.  Mr. Chan submitted that if the 38 votes involved are excluded, the votes for the Applicant to be appointed as vice-chairman will be reduced from 173 to 133. Since Mr. 鄭錦貴 has 146 votes, he should be the one elected.

116.  For the purpose of calculation, that must be right. However, there is no evidence that these 38 votes are casted and, if so, whether they are casted in favour of the Applicant. I do not think that I draw an inference, as submitted by Mr. Chan, that these votes must have been casted in favour of the Applicant in the light of the conduct on the part of Mr. Cheng Li Hung. There is no evidence to show that Madam 陳麗卿 and/or Mr. 莊子興 is related to the Applicant.

117.  In order to prove their case, the Respondents should have adduced evidence from 寶迪發展有限公司 by calling their responsible person or even summonsing Madam 陳麗卿and Mr. 莊子興 to tell this Tribunal whether they did vote and, if so, in whose favour.

118.  For these reasons, it is my ruling that the Respondents have failed to prove their counterclaim.

Conclusion

119.  I make the following order:

(a) A Declaration that the minutes of the 3^rd MC Meeting is not a true record of the proceedings of the meeting in that it fails to record the fact that Mr. Fu did vote for various resolutions in the purported capacity as a member of the management committee.

(b) A Declaration that the minutes of the 3^rd MC Meeting is not a true record of the proceedings of the meeting in that it fails to record the decision to broadcast the process of the management committee meeting.

(c) A Declaration that the minutes of the 6^th MC Meeting is not a true record of the proceedings of the meeting in that it fails to record the view of the Police correctly.

120.  Apart from the above, I dismiss the rest of the Applicant’s claim. I also dismiss the Counterclaim.

Costs

121.  The Applicant can only establish part of its case. On the other hand, the Respondents also fail to prove its Counterclaim. I am of the view that, in this circumstance, I should make no order as to costs. This is an order nisi and will become absolute upon expiry of 14 days after handing down of this judgment unless there is application to vary it.