THE INCORPORATED OWNERS OF SINO CENTRE v. MANCHU TRADING LIMITED AND OTHERS

1994, No.A9508

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. This is an application by the plaintiff, who are the incorporated owners of Sino Centre, a commercial 21-storey building in Nathan Road, for payment towards repairs which the incorporated owners, through their manager, had carried out to renovate this building. There is also a 2nd defendant who is the third party as well, and the chronology has been kindly supplied to me.

2. I have decided, with the consent of parties, that I should first decide the issue as between the plaintiff and the 1st defendant.

3. There is no doubt at all that the plaintiff has carried out the works for the renovation of the building. There is no dispute that the contribution that the 1st defendant should pay is the sum claimed. The only issue is that the 1st defendant said it did not receive notice of the general meeting that passed the resolution to carry out repairs to the building. The 1st defendant occupied the whole of the 21st Floor of the building which contains some 310 units. It carried out general trading there and had a front desk and a number of persons working therein.

4. The evidence given by the plaintiff comes from a gentleman, Mr Li Hok Fan, who is employed by the Sino Estate Management Ltd. ("the manager") as the Senior Building Attendant and he has been working there for some years. He told me that in 1994 he was asked to serve a document, which was the notice convening the meeting in March. He said what he did was he photocopied the notice - made some 310 copies - and starting at 21st Floor, worked downwards to serve the notices.

5. There was a meeting held and a minute book has been produced on which were 25 signatures and there were representatives of 2,090 shares out of 3,935. There is no doubt at all that a number of people knew about this. Quite frankly, I would have thought it would be common knowledge in a building where substantial renovation works are to be carried out and that everyone would know about it. I would have thought it was a matter of ordinary office gossip. The method that he used, he said, was he went to the front desk on the 21st Floor and handed in the notice and other notices were served similarly.

6. There is no dispute at all because I have heard from Miss Pang Yuk Ping, an Executive Secretary, (no directors being called by the defendants) who said that that was the method by which notices were served. It would be left at the front desk and therefore the method of service, in my judgment, is perfectly proper. The Building Management Ordinance, Cap.344 states that general meetings are carried out in accordance with the Third Schedule of provisions and under para. 2 which stated -

"2. (1) Notice of a meeting convened under paragraph 1 (a general meeting of the corporation at any time for such purposes as the management committee thinks fit) shall be served by the secretary of the management committee upon each owner and upon the tenants' representative (if any) at least 14 days before the date of the meeting.

(1A) Service of a notice ... may be effected -

(a) personally upon the owner or tenants' representative (if any); or

(b) by post ... or

(c) by leaving the notice at his flat."

In my judgment, these are perfectly valid notices. The only issue is whether or not they had been served.

7. I have no reason to think that Mr Li Hok Fan is not a perfectly honest man. He is a senior building attendant, I would have thought everyone probably knew him in the building and I have no doubt that the notice was given to the people on the 21st Floor. Miss Fan Yuk Ping said she did not know anything about it. She said she is an Executive Secretary, and I am not quite sure what that is, but presumably there were senior people working there, she talked about "my boss", but I have not heard from anybody else at all. Whether the notice was mislaid or not, I do not know. But the plaintiff did serve the notice of the meeting and I can find nothing invalid about the resolutions that were subsequently passed. In my judgment, therefore, on this first issue, I have no doubt that the 1st defendant would be liable to pay their respective share for the repair work to the building which had been carried out.

8. The second part of this judgment deals with a potential dispute between the 1st defendant and 2nd defendant. The 1st defendant having been served with notice, prima facie, one would have thought that there was clear liability. However, as being submitted by Miss Rattigan, very ably, that the minutes of the meeting referred to 1st March were merely just, she said, to consider matters.

9. It is important to look at the minutes themselves to see what the resolutions were, the resolutions in my judgment are clear. There was a ceiling placed on the amount of money that the co-owners would pay. There were other methods by which the repair and renovation should go out to public tender. Resolution No.6 is that the costs shall be collected by the incorporated owners in three installments and manners aforesaid in paragraph 5 be adopted to recover unpaid sums. And Resolution No.7 stated that the sharing method be calculated at $172.35/sq.ft. In my judgment this resolution created a liability. It was a valid resolution which I have held, validly served on the owners. It created at that moment in time a liability on the owners to pay for a sum of money that would not exceed $23 million as a whole or $13.5 million for any part; and that it would be shared at so much per square foot. As there is no dispute to the actual amount and, that is the correct share, I can see no defence at all to the claim made against the 1st defendant as far as liability on it.

10. The 1st defendant subsequently sold the premises by a sale and purchase agreement on 4 May and completed on 15 June with a declaration that they have not received any notices. The whole object of this is to allow the purchaser to know precisely what its future liability or obligations might be. For example, if the 2nd defendant had known that it was going to have to pay a million dollar in repair cost, it no doubt would have bid a million dollar less. I can see no liability on the 2nd defendant at all. The obligation has always been on the 1st defendant. The 1st defendant did not bring it to the attention of the 2nd defendant quite simply because for some inadvertence somebody forgot about the notice that had been served in their office. It may have been caused by the fact that they were actively seeking to sell the property at that time - whether the notice just got put aside, is not for me to speculate apart from the fact that in my judgment it is validly served.

11. There has never been any defence in this case. I am only surprised that the plaintiff did not issue an Order 14 proceedings. This case has taken over two years to come to court which is a very long time for such a simple case. There will be judgment for the plaintiff.