THE INCORPORATED OWNERS OF GRENVILLE HOUSE v. WONG TAK KEUNG STANLEY AND ANOTHER

LDBM 199/2020

[2024] HKLdT 40

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO.199 OF 2020

__________________

BETWEEN

_________________

_____________________

J U D G M E N T

_____________________

A. Introduction

1.  This is the third of three trials concerning Mandatory Building Inspection Scheme (MBIS) that this Tribunal heard from June to November 2023. All three trials focused, one way or another, on alleged breaches of Code of Conduct for Procurement of Supplies, Goods and Services (COP) issued by the Authority pursuant to s.44(1) of Building Management Ordinance[1] (BMO) (all references to sections below are to those of BMO), their enforcement and/or consequences of their breaches, if any. Questions arose whether they have force of law, and whether their compliance is mandatory.

2.  The 1^st named respondent i.e. Stanley Wong (Stanley) has served as the chairman of the management committee (MC) of the applicant i.e. the Incorporated Owners (IO) of Grenville House (GH) from September 2011 to June 2017. The 2^nd named respondent i.e. Claudia Canepa Wong (Claudia) is Stanley’s wife (they are collectively called the Couple).

3.  As shall be seen, on the legal front, Stanley effectively continues in this application his battle to rely on COP to make claims against IO that he started 20 years ago (though now on alleged different factual breaches). His then Lands Tribunal case of LDBM 76/2003 found its way to the Court of Appeal and ended up as Wong Tak Keung Stanley v Management Committee of The Incorporated Owners of Grenville House [2004] 2 HKC 194 (17 December 2003) (GH Case). He afterwards discontinued the said case.

4.  Ms Carol Wong (Ms Wong), counsel for the Couple, submitted on their behalf that this Tribunal should in this application follow and apply GH Case today in dealing with IO’s alleged breaches of COP published by the Authority on 17 August 2018[2] (2018 COP)[3] over alleged non-disclosure of MBIS information and documents. Mr Warren Suen (Mr Suen), counsel for IO, disagreed and submitted that GH Case is no longer good law today.

B. Witnesses, documents & authorities at trial

5.  In terms of witnesses, IO called 1) Chan Man Foon Derek (Derek), the chairman of its MC from 29 February 2020 onwards, and 2) Kwok Man Shan Stephenie (Stephenie), GH’s Head of Operations, as its factual witnesses. Stanley elected to give evidence while Claudia elected not to.

6.  In terms of documents, parties saw fit to produce as many as 18 trial bundles with over 4,400 pages.

7.  In addition, parties’ counsels saw fit to produce as many as 40 authorities. The authorities produced include several Legislative Council papers and report for 2006 and 2007 when its committees held meetings to consider draft amendments to BMO[4], which later took effect as Building Management (Amendment) Ordinance 2007[5], whose main provisions, including its amendments to s.20A, took effect as from 1^st August 2007 (the 2007 Amendments)[6].

C. Main background facts

8.  The facts in this section are largely based on admissions in Amended Notice of Opposition and Counterclaim, undisputed or indisputable documentary evidence, unopposed factual evidence and admissions given by witnesses at trial.

9.  IO was incorporated as an owners’ corporation pursuant to the predecessor of BMO in 1972. At all material times, IO managed GH on its own assisted by one management company.

10.  The registered deed of mutual covenant of GH is dated 31 March 1971 (the DMC). According to the DMC, GH consists of five blocks, known as Blocks AB, CD, EF, GH and IJ. Each block is 12-storey high. GH contains 120 apartments in total. The land over which GH is built (the Land) is notionally divided in the DMC into 120 undivided shares with one share allocated to the purchaser thereof with exclusive use of one of the said apartments and one car parking space.

11.  The Couple have since July 1988 been the registered owners[7] (and, shortly afterwards, occupants) of Apartment No.C on 12/F and roof of Block CD and car parking space No.102 (Apartment C12) allocated with one undivided share of the Land in the DMC.

12.  On its provision[8], pursuant to s.34D, and pursuant to s.41 of Conveyancing and Property Ordinance[9], the benefits and burdens of the provisions of the DMC run with the Land and are binding on its registered owners and the manager defined therein. Its provisions were thus at all material times, and are, binding on the Couple and MC (as the manager of GH defined therein).

2016 Events

13.  This litigation began, I find, with IO (Stanley then serving as the chairman of its MC) receiving in July 2016 notice issued by the Building Authority (BA) under Buildings Ordinance (BO)[10] pursuant to MBIS requiring it to complete prescribed inspection, and, if necessary, prescribed repair to “common parts” of GH within 6 months and 12 months respectively (MBIS Notice).

14.  At that time, IO had an on-going litigation against Michael Chiang Hong Man (Michael Chiang) and MCAA Ltd (MCAA) for their default in handling major renovation of GH in 2009 i.e. HCA 100/2015. IO had terminated Michael Chiang’s appointment as the project architect, ceased making further payment to the main contractor (Hanison Interior & Decoration Ltd (Hanison)) and later terminated its appointment. IO had to enlist others to complete the said renovation.

2017 Events

15.  In January 2017, MC (under the chairmanship of Stanley) resolved to appoint Albert Liu & Associates Ltd (AL&A) as MBIS consultant.

16.  However, at an extraordinary general meeting (EGM) held on 10 June 2017 (10/6/2017 EGM), owners of GH (10 attended in person and 79 attended by proxy totaling 74% of GH’s owners) resolved by 89.8% to remove Stanley from his chairmanship (and membership) of MC effective immediately. David Stannard (Stannard) was appointed MC member and appointed as chairman of MC.

17.  The minutes of 10/6/2017 EGM gave no clue of the reason(s), or accusation(s), leading to Stanley’s removal. Derek gave no evidence either. Stanley believed that he might have offended certain of his MC peers[11] with his manner of handling alleged improprieties of them in 2016 and 2017.

18.  In 2017, the Couple also started complaining to IO and manager of GH about alleged water leakage to Apartment C12, culminating to become HCA 192/2021, in which the Couple sued IO for failing to remedy the said seepage.

19.  In October 2017, Mr Albert Liu (AL), registered inspector under MBIS, completed prescribed inspection of GH, prepared a survey report as required by MBIS (the Survey Report) and later submitted it to Buildings Department (BD).

2018 Events

20.  At a MC meeting held on 13 March 2018, IO resolved to terminate AL&A’s engagement as MBIS consultant for GH.

21.  In the meantime, as from 1 September 2018, 2018 COP took effect.

22.  On 13 November 2018, MC resolved in its meeting to appoint David S.K. Au & Associates Ltd (DSKA) as replacement MBIS consultant (on 27 February 2019, MC in another meeting re-affirmed the said replacement).

2019 Events

23.  Between March 2019 and February 2020, DSKA as MBIS consultant conducted on behalf of IO tendering process for the contractor to carry out prescribed works as required by MBIS (the Prescribed Works).

2020 Events

Notice of 29/2/2020 AGM

24.  On 14 February 2020, IO gave notice to all GH owners that an annual general meeting (AGM) would be held on G/F lobby of Block EF of GH on Saturday, 29 February 2020 (29/2/2020 AGM) from 10 am to 11:30 am to deal with a total of 9 agenda items.

(1) Agenda item 6 is presentation by DSKA on tendering process for the contractor for the Prescribed Works.

(2) Agenda item 7 is “to consider the tenders of the contractors for MBIS, to approve the appointment of the contractor for MBIS, and to approve a contribution of a total amount of $26,400,000 ($220,000 per Apartment) (the Contribution) to be made by Owners in order to settle the progress payments for the works of MBIS”.

25.  The annual budget of GH for the financial year 2020 consists of total expenses in sum of $22,794,957[12]. The Contribution amounts to 115% of the said budget and substantially exceeds the sum of $200,000 set out at s.20A(2)(a) (see [69] below).

29/2/2020 AGM

26.  Owners comprising 47.5% of GH owners, I find, attended 29/2/2020 AGM either in person (17 owners) or by proxy (40 owners). Stanley also attended the same holding five proxies from other GH owners. Sufficient quorum was, I find, present throughout. It was, I hold, lawful meeting and it lasted from 10 am to 11:40 am, when its chairman announced it closed.

27.  At its beginning of 29/2/2020 AGM, Derek was appointed new chairman of MC (as Stannard had resigned)

28.  During agenda item 6 of 29/2/2020 AGM, DSKA made a presentation to GH owners present. DSKA explained that:-

1) tender was prepared using the Survey Report submitted to BD;

2) 16 contractors submitted pre-qualification documents responding to advertisement and 8 of them passed the pre-qualification exercise;

3) 5 tenders were returned by closing date; and

4) the 3 lowest tenderers were interviewed and 3 best offers were replied by 5 February 2020[13]

(This Tribunal would accept that DSKA had carried out tendering for the contractor for the Prescribed Works in the manners presented above notwithstanding not a single document was produced as proof).

29.  The minute of 29/2/2020 AGM recorded no prices submitted by the tenderers except that of $23,973,065 given by Well Engineering Development Ltd (the Contractor). IO had also not produced Power Point slides openly played at 29/2/2020 AGM.

30.  Nevertheless, I am still prepared to find that DSKA had “shown” GH owners present “the original tender sums of the 5 returned tenderers” and “the best offers from the 3 lowest tenderers (italics supplied)”, and “recommended” the Contractor “by reference to its tender analysis, in both contractual and technical aspects, and job reference”. Such showing of the above sums or figures was expressly recorded in the minutes of the meeting. It is, however, unclear if the said “tender analysis” of DSKA[14] was shown or explained to GH owners during the meeting.

31.  When it came to agenda item 7 of 29/2/2020 AGM, resolutions were, I find, validly passed 1) by 81.48% of GH owners present to appoint the Contractor to carry out the Prescribed Works, and 2) by 84.91% of GH owners present to approve the Contribution to fund the Prescribed Works (collectively 29/2/2020 GM Resolutions).

Demand of the Contribution

32.  MC had, I find, validly resolved at its subsequent meeting lawfully held on 18 March 2020 (18/3/2020 MC Meeting) that the Contribution shall be collected from all GH owners in one instalment in April 2020 (18/3/2020 MC Resolution).

33.  On 25 March 2020, GH’s then management company gave written notice of 29/2/2020 GM Resolutions to all GH owners requiring payment from them by 30 April 2020.

34.  Despite debit note and two lawyer’s demand letters sent to (and received by) the Couple in April, July & August 2020, the Couple had, I find, failed to pay their share of the Contribution in sum of $220,000 before IO commenced these proceedings against them.

35.  In May 2020, IO began HCA 621/2020 suing the Couple for redrawing boundary lines of their carpark space.

36.  In May 2020, IO also took Stanley to Small Claims Tribunal for a dog-biting incident and unpaid motorcycle parking charges. That is STC 5538/2020.

37.  In June 2020, the Contractor began the Prescribed Works.

38.  From August to December 2020, solicitors for the Couple had engaged in protracted open correspondences and negotiation with IO’s solicitors regarding various disputes and litigations between their clients, including the said sum of $220,000, but, regrettably, no settlement could be reached.

39.  In the meantime, on 5 October 2020, Stephenie joined then management company of GH to work for GH.

40.  On 4 December 2020, the Couple took out DCCJ 6539/2020 at District Court, naming IO as 1^st defendant and GH’s then manager as 2^nd defendant. They sued them for, inter alia, alleged water leakage to Apartment C12, alleged non-compliance with BMO and COP over MBIS tender documents, and alleged mishandling of their affairs by certain MC members in a hostile and vindictive manner due to past incidents causing animosity among them. Among other relief, dissolution of MC, and appointment of administrator, was sought pursuant to s.31.

41.  On 23 December 2020, IO took the Couple to Lands Tribunal. In its Notice of Application, IO sought to recover from them 1) the said sum of $220,000, 2) interest on the said sum pursuant to the DMC, 3) collection charge of $150 pursuant to the DMC, and 3) costs pursuant to the DMC.

2021 Events

42.  Due to forthcoming expiry of management contract of GH’s then manager on 31 March 2021, an EGM was held on 3 February 2021 (3/2/2021 EGM) and a new manager was appointed for GH by owners’ resolution at 3/2/2021 EGM.

43.  On 22 April 2021, Stanley and 6 other GH owners forming altogether 5% of GH’s owners jointly requested Derek in writing (5% Owners’ Request) to:

1) hold an EGM[15] (with 29 May 2021 as proposed meeting date) to deal with a total of 5 agenda; and

2) allow inspection latest by 10 May 2021 of various accounting records and documents relating to proposed agenda items[16] with Stanley as their authorized representative.

(1) Agenda item 1 of the said EGM to be held reads: “MC and [GH manager] to provide an explanation as to their reason(s) for their on-going refusal to comply with BMO and COP (underline, italics & bold supplied)”.

(2) Records and documents for which inspection was sought are of 3 groups: A) legal fee/procurement of legal services; B) $3M payment to Hanison; and C) settlement of $19M claim against MCAA and Michael Chiang (I disbelieve Stanley’s evidence in the box that MBIS tender documents were included in 5% Owners’ Request. He admittedly said at paragraph 52 of his witness statement that they were not included).

44.  The said EGM called by 5% Owners’ Request was held on 4 June 2021 (4/6/2021 EGM). 12 owners attended in person and 54 owners were present by proxies, making up 55% of all GH owners. The said EGM lasted from 6 pm to 7 pm only. For IO’s explanation given therein, they will be addressed separately below.

45.  Regarding inspection sought by 5% Owners’ Request, it was only after Stanley sent an email dated 18 June 2021 to chase Derek that IO instructed Stephenie to follow up. She did not complete making arrangement for Stanley’s inspection to take place until 27 October 2021 (27/10/2021 Inspection). Many documents were made available for Stanley to inspect at 27/12/2021 Inspection. But returned MBIS tenders for the Prescribed Works[17] were not (indeed, they had so far not been supplied or disclosed to the Couple; thus the 1^st Order was sought by way of the counterclaim: see [53(1)] below).

46.  On 14 December 2021, on a non-admission basis, the Couple through their solicitors tendered to IO their cheque in sum of $220,000. On 28 December 2021, IO accepted another cheque of the same amount issued by them as replacement.

47.  Nonetheless, IO had pressed on with this application against the Couple until trial to pursue its claims of interest, collection charge and costs pursuant to the DMC.

D. IO’s claim vs the Couple

48.  Hence, IO now seeks to recover from the Couple: 1) interest on the said sum of $220,000 at 1% for each period of 30 days from 1 May 2020 to 14 December 2021; 2) collection charge of $150; and 3) costs on solicitors and own client basis.

E. Counterclaim by the Couple

49.  In their Amended Notice of Opposition & Counterclaim, the Couple said that, as early as 15 February 2020, Stanley had, in response to 29/2/2020 AGM notice, already demanded IO by relying on 2018 COP to require inspection of returned tenders in response to IO’s invitations for tenders for (and to take copies of relevant documents of) the Prescribed Works (the Requests). He repeated the Requests at 29/2/2020 AGM and persisted thereafter, but was rejected or refused repeatedly by IO, its manager and lawyers until today.

50.  The Couple claimed that IO had by its refusal of the Requests and its failure to provide MBIS Notice to all GH owners been in breach of s.20A(1), and paragraphs 3.6, 7.1 and 7.2 of 2018 COP[18].

51.  Because of the above breaches, the Couple could not, it was said, make an informed decision on the scope of the Prescribed Works or have sufficient information to calculate their future financial liability under 29/2/2020 GM Resolutions.

52.  Had the above breaches of 2018 COP not have occurred, it is unclear, said the respondents, whether owners present at 29/2/2020 AGM would have passed 29/2/2020 GM Resolutions.

53.  Based on above, pursuant to s.20A(7), the Couple seek orders from this Tribunal that:

(1) the Requests be forthwith complied with by IO (1^st Order);

(2) after compliance of 1^st Order, a general meeting of GH owners (GM) be held to decide whether or not to avoid IO’s contract with the Contractor and whether or not 18/3/2020 MC Resolution should be affirmed (2^nd Order); and

(3) IO be not entitled to any of its claimed reliefs including interest on the said sum of $220,000 until after its compliance of 1^st and 2^nd Orders above (3^rd Order).

54.  In contending for the grant of the 1^st to 3^rd Orders above by way of exercise of discretion possessed by this Tribunal pursuant to s.20A(7) above, the Couple referred to, and relied on, the following matters, namely: -

(1) Since around early 2019, IO had repeatedly failed to disclose to owners of GH material information vis-à-vis the affairs of GH (some of them pertaining to MBIS);

(2) There had been many other instances in the last 3 years of denial of access to, or withholding of, material information from GH owners by IO;

(3) Since around early 2019, IO had regressed substantially from its previous transparent practice under Stanley’s chairmanship (the MC under Derek’s chairmanship had, it was said, managed GH’s affairs without any transparency); and

(4) IO’s refusal of the Requests was but one of the most serious examples of IO’s systematic and blatant disrespect for BMO and 2018 COP (and, if such IO’s misconducts goes unchallenged, IO would be emboldened to continue the same).

F. IO’s response

55.  IO had responded to say in its Reply that the tender documents of the Prescribed Works had been uploaded to web portal of GH (Web Portal) on 15 October 2019 (and made available to GH owners since then) and that IO had never declined the Requests.

56.  MBIS Notice, it was said by Mr Suen in his opening and closing submissions, had been posted on a conspicuous part of GH and copies had also been delivered to the mailboxes of every GH owner. IO had, it was said, taken steps thereafter to ensure that GH owners understood the MBIS Notice and the Prescribed Works thereunder. IO denies being in breach of paragraphs 3.6, 7.1 and 7.2 of 2018 COP (or s.20A(1)).

57.  Mr Suen further submitted that 2018 COP are merely directory or for guidance. They do not demand mandatory compliance and they do not have any force of law. They do not provide any basis of the Requests in any event.

58.  In his closing submissions, Mr Suen further submitted that tender invitation documents have been uploaded to Web Portal on or about 15 October 2019. Stanley, he argued, had access to the Web Portal since then, had downloaded them and read the same. By so doing, Stanley could understand the scope of the Prescribed Works. During item 6 of 29/2/2020 AGM, DSKA had also presented the tenders by reference to their prices. Stanley should therefore have known about IO’s financial liability on 29/2/2020 GM Resolutions. IO was thus not in breach of paragraphs 7.1 & 7.2 of 2018 COP.

59.  In further response, Mr Suen submitted that IO had also acted reasonably in response to the Requests.

60.  Even if IO had breached the said paragraphs of 2018 COP, discretion under s.20A(7) should, Mr Suen submitted, be exercised in all the circumstances of this case by refusing the 1^st to 3^rd Orders sought in the counterclaim.

G. IO’s claim proven subject to respondents’ counterclaim

61.  Subject to proof of respondents’ counterclaim and granting of relief, if any, sought thereof, I find that IO has proven the following, namely that: -

(1) the subject matters of 29/2/2020 GM Resolutions are within power and duties of IO under s.18(1)(a) & (b) of BMO and also within power and authority of MC as manager of the DMC pursuant to such of its provisions[19] IO relies upon in its Notice of Application; and

(2) the apportionment of the Contribution among all GH owners in accordance with their respective share of the Land was properly made in line with the DMC[20] (and s.22 of BMO).

62.  On IO’s proof of the above, subject to their counterclaim, the Couple are, I conclude, liable to pay IO its share of the Contribution in sum of $220,000 by 30 April 2020 pursuant to the DMC and 29/2/2020 GM Resolutions^[21]. They are further, I think, liable under the DMC^[22] to pay IO interest on the said sum at 1% for every 30 days it is unpaid after 1 May 2020 and collection charge in sum of $150.

H. Legal dispute on COP in respondent’s counterclaim

63.  Moving to respondents’ counterclaim, I deal first with parties’ legal dispute on status and legal effect, if any, of COP i.e. the continuation of Stanley’s legal battle he began 20 years ago.

64.  It is helpful to set out below pertinent current provisions of BMO prevailing at the material times and pertinent paragraphs of 2018 COP relied by the respondents.

65.  S.20A(1) reads:

“The procurement of all supplies, goods or services required by a corporation in the exercise of its powers and the performance of its duties under the deed of mutual covenant (if any) or this Ordinance shall comply with such standards and guidelines as may be specified in a Code of Practice relating to such procurement (bold and italics supplied)”.

66.  Paragraph 3.6 of 2018 COP reads:

“If the tendering exercises involve mandatory works as stipulated in relevant statutory notice(s), order(s) or direction(s) issued by relevant government department(s) or authority(ies) (collectively referred to as government repair orders), such information should be made available to the owners-

(a) before the invitation to tender is prepared (e.g. posting the government repair orders in a conspicuous place of the building when received; making available a copy of the government repair orders at the management office for inspection by the owners); and

(b) before the resolution concerned is put to vote (e.g. attaching a copy of the government repair orders to the notice of meeting at which the tender is to be approved) ,

so as to facilitate the MC members/owners in understanding and making well informed decision on the scope of the procurement (underline, bold and italics supplied)”.

67.  Material parts of paragraphs 7.1 & 7.2 of 2018 COP reads:

“7.1 The MC shall permit the Authority, the tenants’ representative, an owner, a registered mortgagee or any other person authorised in writing by an owner or a registered mortgagee to inspect all tender documents, copies of contracts, accounts and invoices and any other documents in the possession of the OC and relating to the procurement of supplies, goods and services at any reasonable time. The MC shall on the payment of a reasonable charge, supply copies of the relevant documents (bold and italics supplied).”

“7.2 The documents referred to in paragraph 7.1 shall contain sufficient information to enable the person doing inspection to calculate the financial liability (including any future financial liability) of the OC at the time of inspection (underline, bold and italics supplied)”.

68.  S.18(2A) should also be noted:

“…the corporation in the performance of its duties and the exercise of its powers under this section shall have regard to and be guided by Codes of Practice issued from time to time under section 44(1) (bold and italics supplied)”.

69.  Other subsections of s.20A below are also important for our present purpose: -

“(2) Subject to subsection (2A), any supplies, goods or services referred to in subsection (1) the value of which exceeds or is likely to exceed— (a) the sum of $200,000 …; or (b) a sum which is equivalent to 20% of the annual budget of the corporation …, whichever is the lesser, shall be procured by invitation to tender.

…

(2B) Where any supplies, goods or services are required under subsection (2)(b) to be procured by invitation to tender, whether a tender submitted for the purpose is accepted or not shall be decided by a resolution of the owners passed at a general meeting of the corporation.

…

(4) All tender documents, copies of contracts, accounts and invoices and any other documents in the possession of a corporation and relating to the procurement of supplies, goods and services shall be kept by the corporation for such period, being not less than 6 years, as the corporation may determine.

(5) A contract for the procurement of any supplies, goods or services shall not be void by reason only that it does not comply with subsection (1).

(6) Where any supplies, goods or services are required under subsection (2) to be procured by invitation to tender, a contract for the procurement of the supplies, goods or services which does not comply with subsection (2) or (2B)—

(a) subject to any resolution passed by the corporation under paragraph (b) or any order made by the court under subsection (7), shall not be void by reason only that it does not comply with subsection (2) or (2B);

(b) subject to any order made by the court under subsection (7), may be avoided by the corporation by a resolution of the owners passed at a general meeting of the corporation but only for the reason that it does not comply with subsection (2) or (2B).

(7) In any legal proceedings in relation to a contract for the procurement of any supplies, goods or services to which subsection (2) or (2B) applies, the court may make such orders (including whether the contract is void or voidable) and give such directions in respect of the rights and obligations of the contractual parties as the court thinks fit having regard to all the circumstances of the case, including (but not limited to) the following factors—

(a) whether the supplies, goods or services have been procured by invitation to tender;

(b) whether a general meeting of the corporation has been convened to consider the procurement of the supplies, goods or services;

(c) whether the Code of Practice referred to in subsection (1) has been complied with;

(d)…

(e) whether the supplies, goods or services were urgently required;

(f) the progress of any activities or works in relation to the supplies, goods or services;

(g) whether the owners have benefited from the contract;

(h) whether the owners have incurred any financial loss due to the contract and the extent thereof;

(i) whether the supplier of the supplies, goods or services under the contract has acted in good faith;

(j) whether the supplier of the supplies, goods or services under the contract has benefited from the contract; and

(k) whether the supplier of the supplies, goods or services under the contract has incurred any financial loss due to the contract and the extent thereof.

(8) For the purposes of subsection (7), where the court makes an order that the contract is voidable at the instance of the corporation, it shall also make an order that a general meeting of the corporation be convened and held in such manner as the court thinks fit, so as to decide whether the contract is to be avoided.

(9)… (bold and italics supplied with)”.

70.  COP have, one notes, their origin in s.44(1), which allows the Authority to prepare, revise and issue from time to time Codes of Practice that gives

“guidance and direction as to –

(a) the procurement of supplies, goods and services required by a corporation including such procurement by invitation to tender and the tender procedure in respect thereof;

(b) the standards and practices of management and safety that are to be observed and followed by a corporation including standards and practices relating to - (i) building management; (ii) … and (vi) … (bold and italics supplied)”.

71.  It should be noted that, as and when the 2018 COP became effective, another Code of Practice on Building Management and Safety issued by the Authority also became effective.

72.  Last, but not least, s.44(2) is also material. It reads:

“A failure on the part of any person to observe any Code of Practice issued under subsection (1) shall not of itself render that person liable to criminal proceedings of any kind but any such failure may, in any proceedings whether civil or criminal including proceedings for an offence under this Ordinance, be relied upon as tending to establish or to negative any liability which is in question in those proceedings. (bold and italics supplied)”

73.  Finally, the “Introduction” section of 2018 COP provides as follow:-

“1.1 …This Code of Practice shall be read in conjunction with the relevant provisions in the BMO.

1.2 All owners’ corporations (OCs) shall comply with this Code of Practice.

…

1.4 All OCs shall comply with section 20A of the BMO in relation to the procurement of supplies, goods and services. For the avoidance of doubt, all OCs shall comply with the requirements relating to tendering in this Code of Practice if invitation to tender is required for the procurement of the supplies, goods or services under section 20A of and paragraph 5 of Schedule 7 to the BMO (bold and italics supplied with).”

I. Status & consequence of breaches of 2018 COP

74.  Bearing in mind the aforesaid pertinent provisions, I propose to resolve this hotly disputed legal issue by first analyzing the key authorities submitted by Ms Wong and Mr Suen.

75.  We start, of course, with GH Case decided 2 decades ago.

GH Case

76.  Relying on GH Case, Ms Wong submitted that paragraphs 3.6, 7.1 and 7.2 (read together with s.20A(1)) do have force of law. Though they are directory, their compliance is mandatory[23].

77.  For reasons below, I think GH case is of very limited assistance to the respondents today on their counterclaim.

(1) It dealt, I note, with alleged breach of s.20A(2) and of paragraph 1 of 1997 version of COP published by the Authority on 28 July 2020[24] (1997 COP) (both are provision about tenders by invitation). Its facts involved retainer of solicitors without going through tender. It did not involve s.20A(1) or paragraph 3.6, 7.1 and 7.2 of 2018 COP (provision of MBIS notice and of tender documents) that the respondents now rely.

(2) At paragraph 44 of the judgment of GH Case, Yuen JA (with which Cheung JA agreed) expressly said that it was not necessary for the purposes of the appeal to consider the question whether s.20A(1) is mandatory or directory.

(3) GH Case was Stanley’s appeal against decision of striking out his application made by Lands Tribunal below. It therefore suffices for Stanley to succeed on appeal to raise merely an “arguable” case on paragraph 1 of 1997 COP read together with s.20A(2). As Stanley discontinued the case afterwards, the case never went to trial for Lands Tribunal below to reach a conclusion on the merits of the COP issue raised by Stanley on appeal. In other words, GH Case is not a definitive answer on the said COP issue by the nature of the said appeal.

(4) Yuen JA in GH Case never found it arguable on appeal that all paragraphs of 1997 COP are mandatory or have force of law (her ladyship said that the 1997 Code or its other paragraphs may be merely directory). As s.20A(2) was identical to paragraph 1 of 1997 COP (thus the latter had been incorporated into primary legislation i.e. BMO), her ladyship thus found it arguable that the said paragraph 1 acquires (or was intended to have) force of law by such incorporation into s.20A(2) (see paragraphs 27, 28 & 31 of the judgment). Otherwise, this repetitive s.20A(2) would, in her ladyship’s views, be superfluous.

(5) For (1) to (4) above, Yuen JA never, I think, as submitted by Ms Wong, disapproved with, let alone “overruled”, such pre-existing views of first instance authorities that s.20A(1) (other paragraphs of 1997 COP, or 1997 COP itself) is merely directory and does not have force of law (see paragraphs 14 - 17, 29, 30 & 32 of GH Case judgment). Examples of such pre-existing first instance authorities include:

1) Pokfulam Development Company Limited & Others v The Incorporated Owners of Scenic Villas, unreported, LDBM 70/2000, 1 February 2001 (pp.3 to 10) & 15 May 2001 (pp. 2 to 4), HHJ Chow;

2) Jikan Development Limited v The Incorporated Owners of Million Fortune Industrial Centre & Others [2001-2003] HKCLRT 37, 12 September 2001, HHJ Chow; and

3) The Incorporated Owners of Million Fortune Industrial Centre v Jikan Development Limited & Anor [2001] 3 HKLRD 588, 13 October 2001, paragraphs 2 to 4, per Deputy Judge To (as he then was).

(This pre-existing state of the law was also recognized, and accepted, by the administration before the 2007 Amendments were introduced[25]).

(6) Notwithstanding GH Case, subsequent first instance courts and tribunals continued to take the same view of the pre-existing authorities that COP is merely directory and does not have force of law. Examples include:

1) Imax Investments Ltd and Others v The Incorporated Owners of Yue Shing Commercial Building, unreported, LDBM 316/2004, 29 April 2005, paragraphs 33 to 42, per Deputy Judge Wong (as he then was) (it was a case on breach of s.20A(1) and paragraph 6 of 1997 COP, with tenders of fire safety improvement works not opened at the same time. Nonetheless, following Beauty Court Case at [79] below, owners’ resolution appointing fire services contractor was held not void or voidable);

2) Re Ho Ho Wa ex parte The Incorporated Owners of Hoi Fu Court [2008] 1 HKCLRT 436, 26 May 2008, paragraphs 34 to 40, per Chu J (as she then was) (another case of retainer of solicitors without going through tendering);

3) The Incorporated Owners of Vincent Commercial Centre v Wing Sheung Land Investment Company Limited, unreported, LDBM 334 of 2007, 30 June 2008, paragraphs 15 to 24, per HHJ M. Wong (following Beauty Court Case at [79] below, breach of paragraphs 6, 7, 9 & 12 of 1997 COP was held no ground not to enforce owners’ resolution approving funding to solicitors to take out legal proceeding); and

4) The Incorporated Owners of Yue Tin Court v Liu Hua and Zhou Limin, unreported, DCCJ 6155 of 2006, 21 December 2009, paragraphs 62 to 68, per Deputy District Judge Raymond Tsui.

(7) Subsequent cases that applied GH Case continued, one notes, to be cases about failure to hold invitation to tenders as required by s.20A(2). They are:

1) The Incorporated Owners of Hip Wo House v Gallant King Development Ltd [2007] 2 HKLRD 831, 30 May 2007, Court of Appeal (Hip Wo House Case), paragraphs 10 & 11, per Le Pichon JA (this is another case of retainer of solicitors without tendering (i.e. s.20A(2)[26]) and her ladyship believed that contract in breach of COP is more probably voidable than void); and

2) The Incorporated Owners of Kadoorie Avenue Mansion v Rising Dragon International Limited, unreported, LDBM 201 of 2013, 1 November 2013 (Kadooire Avenue Manson Case), paragraphs 10, 13 to 15, per HHJ Ko (as he then was) (this is another case of retainer of solicitors without tendering).

(Reading legislative materials before me on the 2007 Amendments, it appears that tendering requirement (current s.20A(2)) and GM resolution requirements (current s.20A(2B)) were considered as the only 2 “mandatory” requirements by the administration and therefore only the two of them remained, and was introduced, as primary legislation after the amendment exercise)[27].

(8) In 2007 version of COP that next became effective as from 1 August 2007[28] (2007 COP), paragraph 1 of 1997 COP was removed by the Authority such that there was no longer any incorporation of that paragraph into BMO to become s.20A(2) as was stressed and relied upon in GH Case by Yuen JA.

(9) As a result, the basis for Yuen JA to decide s.20A(2) in GH Case the way she did no longer existed in 2007 COP (or in 2018 COP). On the legislative materials before me, this was intentionally done to clear, it was said, the anomaly that, by virtue of reproduction of the said paragraph in BMO as s.20A(2), the said paragraph is not intended to have legal effect[29].

(10) As to paragraphs 3.6, 7.1 and 7.2 of 2018 COP that the respondents rely for this case, none of them have been repeated in (or incorporated into) BMO so far[30]. With respect to Ms Wong, the said incorporation argument run by Stanley in GH Case that Yuen JA then found favour is thus, I think, not open today to the respondents on the 3 subject paragraphs of 2018 COP.

78.  What GH Case might, one thinks, still assist the respondents today, if at all, are limited to the followings:

(1) Yuen JA’s observation that where “a statute declares that a thing ‘shall’ be done, the natural and proper meaning is that a peremptory mandate is enjoined” (paragraph 36 of the judgment) (this point was stressed to have survived the 2007 Amendments by HHJ Ko (as he then was) at paragraph 35 (footnote 5) of Kadoorie Avenue Mansion Case) and that the material word of “shall” appears, and remains, in paragraphs 7.1 & 7.2 of 2018 COP (but not in paragraph 3.6).

(2) Yuen JA’s view that, at common law, it is arguable that, where the intended consequence of the failure to comply is not stated in the legislation, the thing done under the statute is invalidated. Whether the thing done is wholly void or merely voidable depends on the circumstances (paragraph 40 of the judgment). Notwithstanding the 2007 Amendments, this common law view of consequences of non-compliance of COP also, I think, survives after GH Case.

(3) As an example, the above common law discretion to declare contract void or voidable was recognized and applied in Chow Sin Yee, Theresa and Others v Tang Chi Tak & Others, unreported, HCA 3689/2003, HCA 3986/2003 & HCA 855/2004, 22 May 2009, paragraph 51, per Chung J where it was accepted that the 2007 Amendments are not retrospective. The Court of Appeal expressed no view on this point when the case went on appeal: CACV 145/2009, 26 May 2010, paragraph 59, per Tang VP.

(4) After introduction of 2007 Amendments, breach of s.20A(1) causing procurement contract to become void automatically has been ruled out by s.20A(5) but the amendments also introduced a discretion to the court to declare procurement contract void or voidable by way of s.20A(7). The latter, on the legislative materials before me, had its genesis in GH Case[31].

Beauty Court Case

79.  Moving to Court of Appeal judgment on 1997 COP in麗苑業主立案法團 v韓炳基 & Anor, unreported, CACV 1716/2001, 6 August 2002 (Beauty Court Case), it is true that, as Ms Wong pointed out, the Court of Appeal did not address therein the issue whether or not the 1997 COP had the force of law. However, at the same time, other pertinent aspects of this case should be noted.

(1) The Court of Appeal, referring to s.44(1), pointed out the purpose or aim of COP is to provide “guidance and directions” to owners’ corporations. The said same s.44(1) remains in BMO today unaltered, notwithstanding the 2007 Amendments. This remains today supportive of Mr Suen’s submissions that the 2018 COP are merely directory or for guidance.

(2) On the facts of this pre-2007 Amendments appeal, owners in general meeting had resolved to enter into lift replacement contract by 70% votes. Even if 1997 COP was not followed in terms of number of tenders invited for the contract, said the Court of Appeal, the appellant “remains liable” to pay its share of contribution for the same. s.44(2) never says, the Court of Appeal stressed, that breach of COP caused such owners’ resolution to become invalid and the Court of Appeal so concluded (this ratio has, as noted above, been followed in subsequent first-instance judgments).

(3) The said ratio of Beauty Court Case is, I think, binding on me by way of precedent.

(4) Hence, any alleged breach of 2018 COP relied upon by the respondent would not, I think, cause 29/2/2020 GM Resolutions to become invalid or relieve respondents’ liability therein to pay their share of the Contribution[32].

(5) Even after the 2007 Amendments were made, S.20A(7) today only gives, I think, a discretion to declare the procurement contract void or voidable and/or give directions in respect of the rights and obligations of its contractual parties.

(6) Such discretion under s.20A(7) given to the court by the legislature does not, I think, extend to 29/2/2020 GM Resolution or 18/3/2020 MC Resolution referred to in 2^nd Order sought in the counterclaim.

Tai On Building Case

80.  Contrary to Ms Wong’s submissions, I agree with Mr Suen’s submissions that the Court of Appeal judgment in Chen Kun Ming v The Incorporated Owners of Tai On Building, Shau Kei Wan (Tai On Building Case) [2008] 2 HKCLRT 43 is applicable to our case and is also, as a matter of precedent, binding on this Tribunal.

81.  My reasons are as follows: -

(1) It is true that, as Ms Wong pointed out, the appellant in Lands Tribunal below did not rely on s.20A or COP but on provisions in Schedule 6 and Schedule 7 of BMO (dealing with financial documents like accounts) to seek disclosure of, inter alia, tender proposals from owners’ corporation.

(2) The appellant put forward, and relied, for the first time on appeal paragraph 9 of 1997 COP, whose second half is similar to paragraph 7.1 of 2018 COP (and paragraph 10 of 1997 COP is also, I note, similar to paragraph 7.2 of 2018 COP), to support his position or his entitlement for disclosure.

(3) Yeung JA (as he then was), in giving the judgment of the Court of Appeal, expressly dealt with 1997 COP at paragraph 34 as follows: “We do not agree with this submission. The Code of Practice is merely a document issued under section 44 of the Building Management Ordinance in respect of the procurement of supplies, goods and services. The scope of the Code of Practice cannot exceed that of the Ordinance itself (italics supplied)”.

(4) In so ruling above, the Court of Appeal was, I agree with Mr Suen, pointing out that the scope of BMO does not allow discovery of the disputed items sought by the appellant, who therefore cannot avail himself directly discovery by way of COP, whose scope (if extended to disputed items[33]) cannot exceed that of BMO i.e. its primary legislation.

(5) The disputed item 6 sought by the appellant in this case contains not only itemized invoices issued by contractors of each tender project, cheque counterfoils issued by corporation for expenses in each project, but also written proposal for the tenders prior to tender-calling. But the Court of Appeal decided on appeal that he is not directly entitled the same from the corporation (see paragraphs 2, 3, 25, 27, 32, 33 & 40 of the judgment).

(6) The above ruling by the Court of Appeal is, I think, one of its two ratios for dismissing the appeal, the other being that the appellant is not entitled to take a fresh point on appeal when the factual application of COP to the case had not been determined by Lands Tribunal below (see paragraphs 37 & 38 of the judgment).

(7) The above ratio of Tai On Building Case has recently been applied in January 2021 by HHJ M. Wong to reject a counterclaim to be supplied copies of returned tender pursuant to paragraphs 7.1 & 7.2 of 2018 COP and, also, Schedule 6 and Schedule 7. The case is樂年花園業主立案法團 v庾國強及胡美芳 [2021] HKLdT 4 (paragraphs 13 to 37 of the judgment) also relied upon by Mr Suen for IO.

(8) As such, as against IO, the respondents are not, I think, entitled to the 1^st Order purportedly pursuant to s.20A(7) on their counterclaim. On Tai On Building Case, they have no legal right to obtain tender documents from MC by virtue of paragraphs 7.1 and 7.2 of 2018 COP that could be directly enforced against IO.

(9) As was explained above, S.20A(7) deals with the external relationship of IO (as opposed to internal relationship within it). It relates only to validity of procurement contract IO had entered with contractor and rights and obligations of its contractual parties i.e. IO and the contractor. Non-compliance of paragraphs 7.1 & 7.2 of 2018 COP could only be a factor to be considered when this Tribunal considers to exercise its discretion under s.20A(7) regarding such procurement contract as between IO and the contractor.

I. Legislative intent of BMO and COP

82.  Ms Wong in her submissions pointed to s.20A(2B), which requires all received tenders for procurement exceeding 20% of annual budget to be accepted by GM resolutions. In view of that, she submitted that it is necessary to give paragraphs 7.1 and 7.2 of 2018 COP force of law (provision of tender documents to owners etc.) so as to allow owners to have sufficient information on financial liability of corporation to decide on how to cast their votes at GM. To construe otherwise would, she stressed, be contrary to procedural justice.

83.  In support thereto, Ms Wong pointed to paragraphs 21 to 24 of the judgment of Court of Appeal in景發工業中心業主立案法團v 何振聲及張月華, unreported, CACV 47/2006, 2 April 2007, where Tang VP (in giving judgment of the Court of Appeal), construed paragraph 8 of 1997 COP[34] to mean that all returned tenders (i.e. not limited to shortlisted ones) should be left for owners’ voting at GM.

84.  If the 2018 COP has no legal force and cannot be enforced by law, then the absurd consequences would, Ms Wong stressed, be that the owners will be left with no legal protection or means to know about tenders information before they could make up their mind how to vote on all returned tenders pursuant to s.20A(2B). This effectively, she argued, deprives them of their right to make informed decisions at GM but binds them at the same time to be personally liable to make contributions to owners corporations. This cannot, she submitted, be the intention of the legislature in enacting the BMO.

85.  I do not accept the above submissions of Ms Wong for the following reasons:

(1) From 1993 when s.44 was first enacted by the legislature to provide for COP[35], it has been made clear by s.44(2) thereof that breach of COP by itself does not amount to criminal offence but could only be used to prove or disprove liability in issue in legal proceedings. When it was first enacted in 1993, s.44(1) thereof has started using the words “guidance and directions”.

(2) S.20A was introduced by the same amendment ordinance in 1993[36]. On enactment, s.20A(1) & (3) thereof have already started using the words “standards and guidance”.

(3) S.44(1) was later amended in 2000 to provide further for the issue by the Authority of Code of Practice on standards and practices of management and safety (COMS)[37].

(4) Paragraph 1.2 of the 1997 version of Code of Practice on Building Management and Maintenance issued by the Authority plainly reads: “The Code itself will have no direct enforcement effect (italics supplied)”. Paragraph 3.7 of the said code says “The procurement of all supplies, goods and services shall comply with [COP] issued by the Authority under s.44 of [BMO] at Appendix B (i.e. 1997 COP)”.

(5) With respects to Ms Wong, the legislative intent (and the intent of the Authority) could not, I think, be clearer than the wordings they had employed in (1) to (4) above.

(6) Reading COPs and COMSs published over the years, the wordings employed in some particular paragraphs thereof could, one thinks, be directory only. Paragraph 3.6 of 2018 COP relied by the respondents is, I think, a good example.

1) In both its sub-paragraphs (a) & (b), the word “e.g.” was used within brackets, suggesting that the particular method(s) put down is/are mere example(s) or suggestion(s) and not the sole choice(s) to be mandatorily adopted; and

2) This paragraph does not use the peremptory word of “shall” but uses instead, I think, the advisory word of “should”[38] regarding provision to owners of “information” about mandatory works as stipulated in “government repair orders”.

(7) Though direct criminal enforcement (e.g. criminal sanction) for breach of COP, or COMS, was not intended[39], indirect legal enforcement of COP, or COMS, has, from day one, been available under s.44(2) at law.

(8) Breach or otherwise of particular paragraph(s) of COP, or COMS, would be explored and could be indirectly[40] enforced when in legal proceedings, for example, in Lands Tribunal it was in issue whether or not an owners’ corporation has discharged its duties under s.18(1). We would then need to look at pertinent provisions of COP or COMS to decide whether or not the said corporation had breached s.18(1) and, if breached, decide on the appropriate relief.

(9) After the making of the 2007 Amendments, though procurement contract would not become void for breach of s.20A(1) only, s.20A(7) gives a discretion to the court to declare such contract void or voidable and s.20A(7)(c) requires breach of COP to be a factor to be considered in the exercise of such discretion.

(10) In building management context, it is the policy of the law that management fee payable by owners is not conditional, or dependent, upon provision of service (or provision of satisfactory service) by manager/corporation. The respective obligations owed by owners to pay and by manager/corporation to supply service are separate and distinct. Owners dissatisfied about service rendered must pay up first but could take separate proceedings, if any, for the breach at the same time or later.

(11) Had the legislature and/or the Authority desired otherwise, they could have, one thinks, drafted BMO and/or COP to the effect that contribution from owners passed by resolutions at GM could only be enforced after provision of tender documents by MC to owners. However, that is not in fact the case.

(12) In practice, if a majority of owners at GM is not satisfied with MC’s non-disclosure of tender documents and/or information in breach of 2018 COP, they could, one thinks, cast their votes to reject the agenda concerned, resolve to adjourn the meeting to another date, resolve to demand their provision from MC[41] and/or even resolve to remove the entire MC if they see fit[42].

(13) In light of the possibilities of (8), (9) and/or (12) above, MC should still have, one thinks, incentive to comply with guidance of 2018 COP about disclosure of tender documents and/or information.

(14) Be that as it may, in drafting 2018 COP the way it now appears, the Authority must, I think, encourage every owners’ corporation to follow 2018 COP to make provision of tender documents/information to their owners before GM are held to decide on acceptance of tenders received.

J. Imperative/mandatory vs directory

86.  At paragraph 32 of her closing submissions, Ms Wong further referred to Howard v Bodington (1877) 2 PD 203 and adverted to common law differences between “imperative” provisions in a statute as opposed to “directory” provisions. Lord Penzance explained at page 210 of the report as follows:

“Now the distinction between matters that are directory and matters that are imperative is well known to us all in the common language of the courts at Westminster ... The real question in all these cases is this: A thing has been ordered by the legislature to be done. What is the consequence if it is not done? In the case of statutes that are said to be imperative, the Courts have decided that if it is not done the whole thing fails, and the proceedings that follow upon it are all void. On the other hand, when the Courts hold a provision to be mandatory or directory, they say that, although such provision may not have been complied with, the subsequent proceedings do not fail… (bold and italics supplied)”

87.  Even if COP is, by its nature, “directory” in the above sense at common law (i.e. the subsequent proceedings that follow upon are not void if not strictly complied with), COP, Ms Wong submitted, still “has force of law” and they must still be complied with. Their compliance is, she argued, nonetheless “mandatory” even though they are directory in nature[43].

88.  Nevertheless, in Hong Kong, the principles in Howard v Bodington quoted above have been overtaken by principles of statutory interpretation set out in, inter alia, Secretary for Justice v Chau Wan Ying & ors [2016] 2 HKLRD 434: see FH & Anor v WB & Others [2019] HKCFI 1748, paragraph 82, per Au-Yeung J.

89.  The conventional approach when there has been non-compliance with a requirement laid down by a statute is to seek to ascertain whether the requirement that was not complied with should be categorized as “directory” or “mandatory”. The modern approach for determining the consequence of non-compliance with such a requirement is to treat the matter as one of statutory construction, and the court’s task is to ascertain what the legislature intends to be the consequence of the non-compliance: Secretary for Justice v Chau Wan Ying & ors, paragraphs 22 & 23, per Chow J. (as he then was).

90.  As HHJ Yung observed in the case of Tsoi Kam & Anor v The Incorporated Owners of Choi Fung Court & Anor, unreported, LDBM 290/2005, 14 September 2005, whether COP is labelled as “mandatory” or “directory” is neither here nor there. What matters most is whether it is appropriate in any particular case to grant the remedy sought for their breaches.

91.  I cannot help but agree with the above views of his Honour Judge Yung. As a matter of statutory construction, one needs, I think, to look no further than ss.44(2), 20A(5), 20A(6), 20A(7) and 20A(8) for consequences of breaches of 2018 COP provisions, if any.

K. 2018 COP directory in nature

92.  Had it been necessary for me to rule on status of 2018 COP, given my analysis of the authorities above, the wordings of s.18(2A) and s.44, the changes in s.20A and COP over the years, the current structure of s.20A, and the current wordings of 2018 COP, I would have followed first-instance authorities referred above and ruled that COP 2018 are directory in nature. Nonetheless, the Authority must, I have stressed above, have issued 2018 COP as directions or guidance with a view of them to be followed by all owners’ corporations.

L. Circumstances to apply s.20A(7) discretion

93.  After referring to GH Case and Hip Woo House Case, HHJ Simon Leung had helpfully summed up consequences of the 2007 Amendments, and explained his construction of s.20A, at paragraphs 24 & 25 of his judgment in The Incorporated Owners of Jet Foil Mansion v Ying Kong Co Ltd, unreported, LDBM 371/2007, 22 January 2009, as follow:

“24. The current subsection (5) made clear that a contract shall not be void by reason only that it does not comply with subsection (1). The current subsection (6) made clear that a contract shall not be void by reason only that it does not comply with subsection (2) or (2B), unless the owners resolve at a general meeting to avoid it for that reason or the court orders otherwise under subsection (7).

25. Under subsection (7), the court retains the discretion to still order whether the contract is void or voidable. The court is expressly required to have regard to all the circumstances of the case including but not limited to the factors listed thereunder… (bold supplied)”

94.  However, this discretion under s.20A(7) is, I would point out, available only in legal proceedings taken out to enforce procurement contract said not to have followed tendering requirement under s.20A(2) and/or GM owners’ resolution requirement under s.20A(2B).

95.  Paragraphs 149 of Report of the Bills Committee on Building Management (Amendment) Bill 2005[44] quoted by Ms Wong[45] made the point as follow:

“149. After consideration of members' views, the Administration has agreed to move CSAs to provide for the following arrangements and procedures for OCs and owners to deal with contracts that are procured without following the amended section 20A(2) and the new section 20A(2B) –

(a) subject to (b) and (c) below, a contract for the procurement of any supplies, goods or services shall not be rendered void by reason only of non-compliance with section 20A(2) and (2B);

(b) a contract for the procurement of any supplies, goods or services may be avoided by a resolution passed by the majority votes of the owners at a general meeting of the corporation convened under Schedule 3 to the BMO by reason only of non-compliance with section 20A(2) and (2B);

(c) where proceedings are taken for the enforcement of any procurement contract to which section 20A(2) and (2B) applies, the court may make such orders and give such directions in respect of the rights and obligations of the contractual parties, including whether the procurement contract is void or voidable, as the court may deem fit having regard to all the circumstances of the case and in particular (but not limited to) a number of factors listed under the new section 20A(7);

(d) where the court makes an order that the procurement contract is voidable at the option of the OC, the court should also make an order that a general meeting of the corporation be convened and held in such manner as the court thinks fit, so as to determine whether the contract is to be avoided; and

(e) a contract for the procurement of any supplies, goods or services shall not be void by reason only of non-compliance with section 20A(1). (bold, underline and italics supplied)”

96.  The next paragraph of the said committee report is also, I think, worthy to be noted:

“150. The Administration has also explained that both sections 20A(1) and (3) refer to the need to comply with the Code of Practice on the Procurement of Supplies, Goods and Services. The Administration will therefore move a CSA to repeal section 20A(3) which is redundant. (bold, underline and italics supplied)”

Hence, it was intention of the administration that s.20A(1) was to remain in (or not removed from) BMO during the 2007 Amendments exercise to stress the need to comply with COP.

97.  Returning to s.20A(7) discretion, as the respondents have not complained of the procurement contract with the Contractor not following the tendering requirement of s.20A(2) or that of GM owners’ resolution requirement in s.20A(2B) (and legal proceedings have not been taken out to enforce such contract), the said discretion is, I am afraid, not available to this Tribunal in this case.

98.  So, even assuming that the respondents are able to prove alleged breach of paragraphs 3.6, 7.1 and 7.2 of 2018 COP against IO, the entirety of the respondents’ counterclaim ought, I think, still be dismissed as s.20A(7) discretion simply does not apply to this case (if not for the directory nature of 2018 COP).

M. Other issues on respondents’ counterclaim

99.  Were I wrong with the law in sections H to L above, I also discuss below 1) whether the 3 paragraphs of 2018 COP relied upon by the respondents have been breached by IO in this case, and, if so, 2) whether s.20A(7) discretion ought to be exercised by way of granting of the 1^st to 3^rd Orders sought.

N. Assessment of witnesses

100.  Derek (and the MC he led) and Stanley are the two key protagonists of this trial. Neither of them is, I am afraid, entirely satisfactory witnesses.

101.  On the limited materials before me, on the background facts I found above and reading correspondences of parties’ lawyers in late 2020 below, Derek and some of his fellow MC members were, I believe, likely to have some past disputes with Stanley causing at least strained relationship between them, if not leading to the removal of the latter in mid-2017. Confidence between the two groups broke down such that disputes arose more easily between them.

102.  Relationship between the two groups, I believe, likely worsened, and mutual mistrust likely increased, when the Couple and IO had more, or other, litigations or disputes over the course of time. This is likely a vicious cycle.

103.  On the issue of IO’s disclosure or transparency before me, perspectives of both sides had, I believe, likely turned narrower and restricted over time. Each had seen fit to adopt different (and focused on own) viewpoint or approach but both believed that they were doing for the overall good or best interest of all GH owners.

104.  As such, I do not think it likely I have entirely objective or unbiased evidence from either Derek or Stanley.

105.  On my observation, Stanley was more vocal in the box (at times, he was long-winded). He had worked in the construction field in the States. He had much confidence in himself and his ability. He likely has an assertive character. Derek, in contrast, came from the financial sector. He was more reserved in the box. If practicable, I think he would like not to answer questions in the stand.

106.  Indeed, Derek often said he “could not recall” or said that the matters “had been left to manager” such that he could not answer. This Tribunal has the distinct impression that some of these answers are excuses that he put forward to evade answering embarrassing questions. For example, when asked about Directors and Officers Insurance (D&O Insurance) previously purchased by IO under Stanley’s chairmanship, Derek said he left it to the manager to handle. Stephenie, the most senior of GH’s management staff, upon being asked the same topic, said, however, that it was not manager’s responsibility.

Derek

107.  Derek was, I believe, economical with the truth. I do not think he had told this Tribunal the whole truth. I will give a few examples below.

(1) Derek claimed in his witness statement that “the Prescribed Works were completed in August 2021 (italics supplied)”. After seeing Stanley’s statement, Derek had no choice but to clarify at his supplemental statement that, inter alia, further works had, at BD’s request, been carried out by the Contractor in October 2022 and that BD had required further rectification works in December 2022. As it turned out, BA did not issue to IO letter of compliance with MBIS Notice until as late as on 12 July 2023 i.e. about 2 years later.

(2) Derek claimed at his witness statement that IO had all along compiled with COP. Speaking for MC on agenda item 1 of 4/6/2021 EGM called at 5% Owners’ Request, Derek also purported to confirm to all GH owners present “that there was no refusal to comply with… COP (italics supplied)”. Both statements cannot, I think, be true or the whole truth: see section P below.

(3) Notwithstanding paragraph 11 of respondents’ counterclaim makes it clear that Stanley sought inspection of 5 submitted tenders in vain, Derek saw fit to claim in his witness statement: “… [IO] did not decline [Stanley]’s requests to inspect the MBIS tender documents as alleged. In fact, [they] were uploaded to [Web Portal] on 15 October 2019”.

(4) After seeing Stanley’s witness statement, Derek had no choice but tell the truth at his supplemental statement that the uploaded documents were “tender invitation forms sent to the interested contractors (italics supplied)”.

(5) In addition, the said date of “15 October 2019” given by Derek was misleading. While IO might have uploaded the documents on that date, IO did not launch Web Portal until 29 November 2019 or provide occupants of Apartment C12 with login account and passwords until 26 November 2019.

(6) Derek also claimed that “tender submissions from tenderers” are “of confidential nature” such that they were not uploaded to Web Portal. I reject this claim of confidentiality by Derek. This is no more than bare assertion on his part. It is not supported by any document. It was a belated claim, made for the first time in his supplemental witness statement dated 24 February 2023. IO had never asserted confidentiality beforehand despite Stanley had repeatedly made the Requests since February 2020. Furthermore, Stephenie contradicted Derek to have answered under cross-examination that confidential tender submissions could be inspected so long as BMO requirements are met (in any event, assuming they have legal force and their compliance are mandatory, paragraphs 7.1 and 7.2 of 2018 COP provide no exception to disclosure on ground of confidentiality).

108.  I have therefore exercised great caution before accepting any disputed or controversial evidence from Derek.

Stanley

109.  Stanley is, I think, neither reliable nor truthful entirely.

110.  I repeat my warning at [104] above about possibly biased and/or subjective evidence from Stanley.

111.  Indeed, Stanley’s lawyers had written to IO in the year 2020 complaining of a “campaign” of intimidating the Couple and demanding such campaign to stop.

112.  I am concerned that Stanley might be so obsessed, or frustrated, with his “perceived” treatments on other disputes or litigations the Couple had with IO that his evidence in this trial could have been “tainted”, or adversely affected.

113.  Due to breakdown of confidence, I do not rule out that Stanley could have made unfounded or vexatious complaints to IO on disputes or litigations other than those in dispute before me (like the Requests) as solicitors for IO had asserted in correspondences (for the sake of record, there is no complaint before me of the Requests being vexatious).

114.  Due to, likely I think, his lack of trust on MC and GH’s manager, and also MC’s malpractice of preparing incomplete and/or inaccurate meeting minutes (see below), Stanley had, I note, turned very skeptical of what MC had put down in minutes of meetings. For example, he was not prepared to accept at trial at face value what MC meeting minutes say about IO’s procurement of legal services without the sight of supporting documents.

115.  In terms of evidence, Stanley had contradicted himself on material points in the box when one compares them against the contents of his witness statement. For examples, I refer to [43(2)] above and [148] below herein.

116.  For the above reasons, I have also warned myself to watch out for, and to consider carefully, any disputed or controversial evidence from Stanley.

Stephenie

117.  Regarding Stephenie’s evidence as a whole, there are three limitations or reservations about it.

118.  First, she had no personal knowledge of material events that happened before her joining GH in October 2020. She could only rely on documentary records left behind by others.

119.  Secondly, Stephenie had managed to serve GH under the employment of 3 consecutive management companies[46]. Her loyalty to GH is without doubt. The consequence is that it is doubtful whether her testimony would be affected by such undoubted loyalty. I do not consider her an independent witness.

120.  Reading her witness statement, Stephenie saw fit to copy wholesale contents of Derek’s statement as her statements though they happened prior to her joining GH.

121.  Not surprisingly, in line with Derek’s statement, Stephenie also made no reference to “tender submissions from tenderers” in her statement but claimed that “the tender documents of the contractor for the Prescribed Works in respect of [MBIS Notice] were uploaded to [Web Portal] on 15 October 2019 (italics supplied)”.

122.  Again, like Derek, Stephenie did not see fit to explain in her statement that, after alleged completion of the Prescribed Works by the Contractor in August 2021, GH had to wait for BD’s inspection and issue of certificate of compliance with MBIS Notice.

123.  Thirdly, though she was an employee of GH’s manager supposed to follow, and carry out, instructions of MC, Stanley had seen fit to complain her to the newly established Property Management Services Authority.

124.  Hence, I have also approached and scrutinized disputed parts of Stephenie’s evidence with great care.

O. MBIS Notice

125.  In arguing against IO being in breach of paragraph 3.6 of 2018 COP, Mr Suen had submitted along [56] above (i.e. MBIS Notice was posted up in GH’s lobby, and that its copies had been directly sent to mailboxes of every GH owners etc.) at paragraphs 105 to 107 of his closing submissions. I am prepared to accept such factual evidence he has summarized at the said 3 paragraphs.

126.  But the flaw of Mr Suen’s submissions above are, I think, the followings: -

(1) It was BD that posted up the notice at GH’s lobby. It was also BD that sent the notice by mail to every owner of GH. Again, it was BD that held briefing sessions of MBIS Notice. Such actions by BD do not absolve, I think, IO’s own mandatory duty under paragraph 3.6 of 2018 COP to bring MBIS Notice to attention of GH owners (on the assumption it has force of law and requires compliance).

(2) It is also true that management company did, as Mr Suen submitted, by circular remind GH owners of issue of MBIS notice and briefing session of the same. But, as was submitted by Ms Wong, all these actions in (1) & (2) were carried out only once in or about July 2016 (and also when MC was under Stanley’s chairmanship). Paragraph 3.6 of 2018 COP requires (I agree with Ms Wong’s construction at paragraphs 8 to 10 of her closing submissions[47]) information concerned to be made available to owners twice i.e. once before invitation of tender is prepared and again before the resolution concerned is put to vote. On both occasions, decisions are, I think, required to be made on scope of the procurement so that two (instead of one) disclosure of the same information are, I agree with Ms Wong, required.

(3) As Ms Wong has also rightly submitted at paragraph 5 of her closing submissions, MBIS Notice was not, I accept, attached to Notice of 29/2/2020 AGM. There was no evidence that MBIS Notice posted up in July 2016 remained so posted up in February 2020 and also no record in 29/2/2020 AGM minutes that contents of MBIS Notice were presented or discussed in the said AGM.

127.  Nonetheless, I am prepared to accept Mr Suen’s submissions at paragraphs 109 and 111 of his closing submissions. The thrust of paragraph 3.6 of 2018 COP is, I agree with him, to ensure that sufficient information of the mandatory works required in government orders or notices is made known to owners to enable them to make well-informed decision on scope of procurement. So long that aim is achieved, whether the suggested steps in paragraph 3.6 are adopted or not, there could not be, I agree, any breach of the said paragraph.

128.  Nevertheless, I am not satisfied on the evidence before me that the above aim has been achieved in this case. Unlike orders issued by BA under, say, s.24 of BO which normally describe in words or by way of sketch such unauthorized structure required to be demolished, MBIS notice does not do so. The remedial proposals to “common parts” defects (forming the subject matter of the Prescribed Works) are to be proposed by registered inspector (i.e. AL) after his inspection and set out in report prepared by him, submitted and approved by BD[48] (i.e. the Survey Report).

129.  Ms Wong has submitted at paragraph 12 of her closing submission that there is no evidence that the contents of Survey Report[49] had been disclosed or made known to GH owners prior to invitation of tender or prior to 29/2/2020 AGM.

(1) I could note only one equivocal email from Stannard to Stanley dated 6 March 2018[50] saying that “a copy of the second ALA report will be made available to Owners in the Management Office (italics supplied)”.

(2) Derek and Stephenie did not give evidence that the Survey Report had been made available to GH owners for inspection.

(3) Stanley claimed that he had not seen the final report prepared by AL. He said he had read a draft report by AL only.

In my views, the sum total of the above evidence is insufficient for prove that the Survey Report had been disclosed to GH owners.

130.  For reasons in this section, if required, I find IO in breach of paragraph 3.6 of 2018 COP. Sufficient information about MBIS Notice had, I find, not been supplied to GH’s owners twice as required by the said paragraph.

P. “Returned” MBIS tenders for the Prescribed Works

131.  On this 2^nd factual issue, MC under chairmanship of Stanley had taken, I note, great care to report to GH owners details of MBIS consultant tendering process, including the prices provided by different tenderers in their returned tenders. This is self-evident from minutes of MC meetings disclosed by IO and relied upon at paragraph 13 of witness statement of Derek.

132.  In a draft circular dated 20 January 2017 issued by GH manager to all GH owners referred to by Stanley at paragraph 34 of his witness statement, tender analysis was attached to the circular and “tender documents for all the tender submissions” were also “[made] available for inspection [at] the management office”[51].

133.  In contrast, the Requests (for returned tender documents of the Prescribed Works) repeatedly made and followed up by Stanley over the years since February 2020 were, I find, met with outright rejections of MC and/or requirements (or obstacles) set by IO, its manager and/or lawyers.

134.  I accept Ms Wong had accurately recounted at paragraph 15 of her opening submissions quite a number of material and significant correspondences exchanged between, on one side, Stanley and, on the other side, manager and IO’s lawyers over the Requests.

135.  Among others, I find from the evidence before me that:

(1) Stanley had quoted COP and made the Requests on 15 February 2020 by way of email to GH’s manager (and required it to be copied to MC) in view of agenda 6 and 7 of the forthcoming 29/2/2020 AGM which he had received notice.

(2) GH’s manager replied Stanley (copied MC) only a week later on 22 February 2020 referring to agenda 6 and 7 but still asked him to “specify” the tender documents that “he wanted to inspect” so that they may “work on them”.

(3) On 27 February 2020, Stanley emailed to GH’s manager (copied to Home Affairs Department (HAD)) and repeated the Requests by reference to agenda item 7. He also attached 2018 COP and quoted paragraphs 7.1 & 7.2 of the same. He requested voting at 29/2/2020 AGM on agenda item 7 i.e. the Contribution be deferred after IO had compiled with the Requests.

(4) By letter dated 28 February 2020 (but reached Stanley only sometime after 8:25 am on 29 February 2020), GH’s manager at last replied him: “… relevant documents in connection with … projects going on at GH have been posted on [Web Portal], including the Power Point slides presented by GPS, legal advisors on MCAA case at AGM held in December 2018. As to your request to inspect documents and contracts etc, you are reminded to follow the provisions contained in [BMO] regarding such right of the owners (italics and bold supplied)” and copied it to MC and HAD.

(5) After receipt of (4) above, Stanley, I accept, immediately checked the Web Portal and found out by downloading at about 8:45 am that it contained only blank MBIS tender invitation documents (they are made up of 3 files online, called Parts 1 to 3, containing, according to Stephenie, about 500 pages in total). Submitted/returned tenders were, I accept from Stanley and Stephenie, not found on the Web Portal. Stanley soon thereafter emailed GH manager at about 8:58 am on 29 February 2020 pointing out the same, requiring MC to be notified of the said breach of COP and for voting on the Contribution to be deferred.

(6) By 10 am when 29/2/2020 AGM opened, Stanley, I took his words, could only have read “selectively” these blank MBIS tender invitation documents[52]. While they contained items of works to be carried out by contractor to be appointed for the Prescribed Works, they gave no indications of the prices quoted by the 5 returned tenderers.

(7) While DSKA had made presentation of the returned tenders at agenda item 6 of 29/2/2020 AGM, I repeat [29] and [30] above and accept Stanley’s evidence that the pace of the said presentation was fast and it finished within a short period.

(8) I also accept Stanley’s evidence that he had orally repeated the Requests during 29/2/2020 AGM[53]. But IO’s lawyer present had answered him that tender documents would not be made available for inspection. The said request and refusal was, however, not recorded in 29/2/2020 AGM minutes. But it was corroborated by contents of reply email sent by MC’s secretary to Stanley on 3 April 2020[54]. By the said email, MC also rejected Stanley’s request for copy of Power Point slides openly played for all owners to view during 29/2/2020 AGM. Under cross-examination by Ms Wong, Derek also confirmed such rejection by IO’s lawyer at 29/2/2020 AGM.

(9) On 15 April 2020, IO’s lawyer wrote to Stanley (copied IO) referring to legal authorities, s.20A and s.44, and disagreed with him entitled as an owner as of right to inspect tender documents under COP. They claimed that BMO contains no stipulation of legal consequences that IO may face in not complying with COP, which is “advisory or directory in nature”. IO’s position, said its lawyer, is that it is “not mandatorily compelled” by COP to make available MBIS tender documents for owners’ inspection. “…should the circumstances are such that an inspection … is obligatory under the BMO”, IO, said its lawyer, “would be happy to accommodate… (italics supplied)”.

(10) During parties’ negotiations through lawyers from August to December 2020, the Couple openly offered on 2 September 2020 to pay $220,000 provided IO made MBIS tender documents available for inspection and undertake to comply with BMO and COP for future procurement. IO’s lawyer replied disagreeing with any precondition for payment or IO giving any undertaking.

(11) On 19 October 2020, lawyers for the Couple wrote to IO’s lawyers, urging for global settlement to save unnecessary wastage of IO fund for several litigations. They contended that IO had “persistently and systematically” refused to comply with BMO and COP “in bad faith”. Certain MC members, it was said, “motivated by personal vendetta”, had “embarked on a campaign of intimidation” against the Couple. They demanded IO to confirm by 23 October 2020 whether to allow inspection of tender documents etc[55].

(12) IO’s solicitors replied (and copied IO) only as late as on 1 December 2020[56]. Stanley was described by them as an “unprofessional and unbecoming” former MC chairman and was accused to have made “vexatious complaints” over a “prolonged” period that his former MC peers could not continue to endure. In order to deal with “no less than 4 concurrent disputes instigated” by Stanley, IO, it was claimed, had instructed “no less than 3 law firms” to advise and follow up. IO’s lawyers stressed there is no need of any global settlement, and repeated their earlier view of COP, and citing, inter alia, Tai On Building Case in support thereof. At its 2^nd last paragraph, they confirmed that “[our client] would not agree to Stanley’s request to inspect” MBIS tender documents “as it anticipates that it would fuel Mr. Wong’s continue further complaints which our client neither has the time nor energy to entertain (bold and italics supplied)”.

(13) During 3/2/2021 EGM, Stanley repeated the Requests. IO’s then lawyer answered him “based on information given by IO” that COP allowed an owner “to inspect tender document”. That right has, said the lawyer, “had never been denied” and [IO] had “never concealed anything from him”. Owners, said IO’s lawyer, could always approach MC to inspect tender document. MC could, he said, “provide tender document to Stanley instantly if he wished”. Stanley said the Request had been refused in the past and the lawyer said Stanley’s statement was “incorrect”. The above account[57] are all recorded in minutes of 3/2/2021 EGM signed by, inter alia, Derek as MC chairman.

(14) I find the above minutes of 3/2/2021 EGM an accurate record of what transpired by way of exchange between IO’s lawyer and Stanley. However, I think it likely the said lawyer had received untruthful or inaccurate instructions and his reply to Stanley did not truly accord with the events I found above.

(15) I refer to [43(1)] above and [107(2)] above and repeat that Derek had made, I think, false claim at 4/6/2021 EGM called at 5% Owners’ Request that there was “no refusal to comply with COP (italics supplied)” in response to agenda item 1 thereof calling for “explanation” for such “on-going refusal to comply with COP”.

(16) Finally, I find it necessary to repeat that returned MBIS tenders had not been disclosed to Stanley for his inspection in 27/10/2021 Inspection or otherwise until trial.

136.  Mr Suen tried his best to defend IO’s disclosure stance by relying on IO’s provisions of tender invitation documents at Web Portal since 15 October 2019 (if not, from 29 November 2019 and, if not, after 8 am on 29 February 2020). Stanley, he argued, had sufficient chance and time to read these uploaded documents to know the scope of the Prescribed Works. Couple with DSKA’s presentation of the 5 returned tenders at 29/2/2020 AGM, in particular the showing of the revised total contract sum quoted by the Contractor recommended by DSKA, Stanley would have known how much IO’s financial liability would be if the Contractor be engaged.

137.  Relying on above submissions, Mr Suen argued against IO in breach of paragraphs 7.1 and 7.2 of 2018 COP. He submitted that the purpose or aim of these 2 paragraphs have been achieved in all the circumstances of this case.

138.  I cannot agree. My reasons are:

(1) Paragraph 7.1 of 2018 COP, on its proper construction and according to its Chinese authentic version, I agree with Ms Wong, includes returned/submitted tenders (投標文件)[58]. Blank tender invitation documents, I agree, give one no clue to (future) financial liability of IO at the time of the inspection. Hence, Stanley is entitled against IO to inspect returned MBIS tenders (which IO has failed to provide so far).

(2) There was no evidence before me that Stanley had actually accessed Web Portal and downloaded blank tender invitation documents to read prior to 8:45 am on 29 February 2020. One odd hour since then was by no means, in my views, sufficient time even for a veteran like Stanley (whose evidence in the box I accept) to consider carefully, and digest, 500-page documents to understand the scope of the Prescribed Works for all the many common parts of GH. In any event, scope of works by itself gives one insufficient indication or information of the financial liability concerned.

(3) I have found above that DSKA had taken a short time to finish its presentation at a fast pace. On the limited evidence put before me by IO (see [29] and [30] above)[59], I find it unlikely that DSKA had, at agenda item 6 of 29/2/2020 AGM, gone into price details, or breakdown, of different items of the Prescribed Works of the 5 returned tenderers at sufficient depth to give the audience sufficient understanding of the differences among their 5 different financial proposals.

(4) In any event, paragraph 7.2 of 2018 COP expressly requires the inspected tender documents to “contain sufficient information to enable the person doing inspection to calculate” the (future) financial liability of owners’ corporation “at the time of inspection (italics supplied)”. It does not cover occasions like AGM or EGM only, let alone envisage assistance available to the person making inspection. Sufficient information is to be found inside the tender document themselves to enable one to make the necessary calculations. Mr Suen’s submissions above by reference to circumstances that happened during agenda 6 of 29/2/2020 AGM were, with respects, made out of context of the said paragraph 7.2 and inappropriate.

139.  If necessary, I would have also found IO in breach of paragraphs 7.1 and 7.2 of 2018 COP in not allowing Stanley to inspect returned MBIS tender submissions.

Q. Other matters to be considered for s.20A(7) discretion

140.  Were it open at law for me to exercise s.20A(7) discretion for breach of s.20A(1) and paragraphs 3.6, 7.1 and 7.2 of 2018 COP, apart from those factors listed in s.20A(7) as sub-paragraphs (a) to (k), the respondents also asks this Tribunal to take into account those disclosure or transparency matters at [54] above in the exercise of my discretion whether to grant the 1^st to 3^rd Orders sought.

141.  I would first address below these other matters said to be pertinent to my discretion and addressed in respondents’ closing submissions. The factors listed to subparagraphs (a) to (k) of s.20A(7) would next be considered. Lastly, I would consider how I would have exercised my discretion under s.20A(7) if it is open to me at law.

Settlement with Hanison, Michael Chang & MCAA without record of MC resolution

142.  First, having considered all minutes produced before me, I agree with Ms Wong that there was an absence of record of MC having “resolved” at any MC meeting to withdraw $19M claim against Michael Chiang and MCAA in HCA 100/2015, which settlement was said to have been reached in July 2019, and to make $3M payment to Hanison, which payment was said to have been made on 4 September 2019[60].

143.  While I agree with Mr Suen that MC had authority from IO[61] to settle the above claim and make the above payment, MC must still follow the procedure prescribed by BMO to exercise such authority. Under paragraph 10(2) of Schedule 2, all acts authorized or required to be done by MC may be decided by a “resolution” passed by a majority of the votes of MC members present at a MC meeting. In other words, a MC resolution is required for such exercise.

144.  As the respondents do not seek any relief on this topic as such in their counterclaim, I express no further view of the possible factual reasons for, and/or possible legal consequences of, the above lack of MC resolution in minutes.

145.  However, given that over $20M was at stake, irrespective whether or not the settlement in HCA 100/2015 allegedly involved defective renovation works which formed part of the Prescribed Works as Stanley had claimed, the fact that MC had entered into such settlement and made such payment without a proper MC resolution recorded in the minutes of MC meetings explaining such actions to GH owners does, I agree, reflect badly on MC’s internal transparency or accountability to GH owners.

146.  Some credit should, however, be given to MC to have arranged lawyer concerned to present to GH owners, after the settlement and payment was entered and made, the explanation of such actions during agenda item 5 of 29/2/2020 AGM.

Termination of AL&A without disclosing reason

147.  With respect, Ms Wong’s complaint of “defective notice” at paragraphs 50 to 52 of her closing submissions was not raised in respondents’ counterclaim nor in Stanley’s witness statement. The same is thus, I think, not open to Ms Wong to run. In any event, the respondents sought no relief in counterclaim against MC resolution made on 13 March 2018 to terminate appointment of AL&A.

148.  The initial complaint of Stanley in his witness statement[62] (and Ms Wong[63]) was that MC had terminated appointment of AL&A without giving the reasons thereof. Such complaint against IO is, I agree with Mr Suen, completely unfounded. Stanley had also no choice but to retract this incorrect claim under cross-examination.

149.  Reading minutes of MC meeting held on 13 March 2018, MC had full discussion at agenda 4 “A.O.B 1” on the matter and it was noted that “the project had reached a natural break, with the MBIS Report having been submitted … and that a new phase would commence with the carrying out of remedial works… it would be preferable to terminate their services at this stage and appoint a new firm and new Registered Inspector to supervise the works to be carried out…”[64]. It was then resolved to terminate the engagement of AL&A. As such, the reasons of termination of AL&A are there for all readers of the said minute including Stanley to read.

Dropping of hammer tapping test by DSKA

150.  While I accept from Stanley that it is likely that hammer tapping test originally formed part of the Prescribed Works and that Diploma Construction Limited (Diploma) had been awarded this tender, I take the view that it was open to MC not to award such test to another tenderer after Diploma had decided to withdraw.

151.  As the minutes of MC meeting held on 9 July 2019 disclosed, IO had apparently sought further opinion from DSKA on the need of such test. And the need for such test on external wall titles was discussed within MC again. It was reported in the minute that the test was “extra and not compulsory”. It was resolved that the MBIS project would “keep the basic requirements only”. DSKA was therefore asked to amend the contract (presumably to delete such test).

152.  While I appreciate that Stanley was concerned about possible de-bonding of wall tiles of GH (and there was no expert evidence of the degree of such risk before me), this Tribunal is not established to interfere in internal decision making of MC. Having the benefit of expert opinion from its registered inspector i.e. DSKA on the matter, MC was, I think, free to decide for itself what to do in this unfortunate event of withdrawal by Diploma, subject to any contrary GM resolution overriding MC resolution on the matter[65].

No inspection of tender documents of slope remedial works

153.  I refer to paragraphs 60 and 61 of Ms Wong’s closing submissions. This complaint has, I think, not been mentioned in Amended Notice of Opposition and Counterclaim. I therefore will also not entertain this in this Judgment.

Refusal of entry by government officials

154.  To the disappointment of parties, I have decided not to resolve this factual dispute as I do not think it have any bearing on my exercise of s.20A(7) discretion.

155.  Assuming for the sake of argument that MC had indeed obstructed, as alleged by the Couple, officers of different departments from accessing GH to investigate different matters, it was not, I note, an internal disclosure affairs of GH which shed light on internal transparency of MC towards their fellow co-owners.

156.  If obstructed at all, the authorities could, I think, decide for themselves whether they should exercise their statutory powers to gain access and/or to inflict punishment on those responsible for such alleged obstructions. I therefore think that I should not decide this issue, especially when the authorities are not before me as party or witnesses to complain of the same.

Procuring legal services

157.  I refer to paragraphs 62 and 63 of respondents’ closing submissions. IO did, I find, by “The Newsletter – April 2021” advise GH owners total legal expenses spent by it on all (and individual) case(s) relating to any particular unit as at 31 march 2021 (and most were in fact incurred by IO in dealing with 3 cases relating to Apartment C12).

158.  Regarding resolutions made in MC meetings to procure legal services, Mr Suen did find a few brief records of the same and had helpfully set them out at paragraphs 128 and 129 of his closing submissions. I accept such evidence as accurate records. I therefore cannot accept Ms Wong’s submissions that there was no record of such resolution at all.

159.  Given the above records and newsletter (and annual budget of GH), it cannot be said that GH owners were kept in the dark about legal expenses incurred by IO in various litigations with different GH owners (though such legal expenses might have turned out to exceed the budgeted figures).

160.  In addition, pursuant to 5% Owners’ Request, Stanley had, I note, managed to inspect tender invitation and tender submissions for providing legal retainer service to GH for the past several years[66] in 27/10/2021 Inspection.

161.  Regarding Ms Wong’s submissions at paragraph 64 of her closing submissions about D&O Insurance, the same was, as Mr Suen rightly pointed out, not mentioned in Amended Notice of Opposition and Counterclaim. The said point is therefore, I agree with him, not open for the respondents to take.

R. MC’s disclosure[67] limited to legal minimum

162.  Overall, I think it likely that, due to their mistrust of Stanley, in response to outspoken criticisms of Stanley and in view of IO’s disputes and litigations with the Couple, MC led by Derek had decided with legal advice, in their dealings with the Couple since early 2019, to comply only with such minimum disclosure as BMO[68] and the case law prescribed. They decided not to comply with 2018 COP as lawyers advised them that IO was not mandatorily compelled to follow such advisory guidelines. However, they were not prepared to admit such practice towards Stanley (and/or their change from previous more open disclosure practice under previous MC) openly to their fellow co-owners in IO’s meetings and their minutes.

163.  With repeated challenges from Stanley & other owners, like the Requests and 5% Owners’ Request, MC under Derek had, I think, no choice but to open up as BMO required. For example, they had reluctantly arranged 27/10/2021 Inspection. They also made some other improvement over the course of time. For instance, they now give formal replies to owners’ complaints in minutes of MC meetings.

164.  I have no doubt that the Couple felt very strongly about this change of disclosure practice. Stanley would no doubt have hoped that MC manages GH as openly as he did as chairman in the past.

165.  But the openness of MC under Derek is, I would say, no small business or easy task. Derek and his fellow peers are volunteer. They gave up their precious time to do hard works for their fellow co-owners. Though they are assisted by management company, it took them further time (and also IO’s resources) to report their works to fellow co-owners. In many other cases that come before this Tribunal, many MCs concerned have fallen far short of the legal minimum requirements for lack of resources, time or otherwise.

166.  Moreover, no two MCs are, I think, alike. Each MC (or each estate or building) might have its own management style. Even for same management style, different owners might have reacted differently. Stanley may want more disclosure and information. His fellow co-owners might not take the same view like him.

167.  Owners’ corporation is a self-governing body or association formed by owners themselves. While the DMC and BMO provide them with some basic fair rules to protect individual owner(s) and internal mechanism for resolving their internal disputes, the law also respects (and requires minority owner to respect) the majority wishes and allows them to decide how to govern themselves.

168.  Save to ensure that such minimum legal disclosure requirements are met (and internal dispute-resolution mechanism are followed), this Tribunal would not dictate, let alone interfere with, how owners run their own community in terms of management style.

169.  At Tai On Building Case, Yeung JA (as he then was) also explained in his judgment how the legislature had, in the context of Schedule 6 of BMO, struck the balance between IO’s duty to manage the building and its duty to properly account to the owners as follows:

“15. The owners’ incorporation and the manager have the duty to manage the building and the duty to properly account to the owners and other relevant persons in respect of the management of the building.

16. In order to monitor the owners’ incorporation and the manager effectively to ensure that they discharge their duties impartially and properly, the legislation confers on the owners and other relevant persons the right to inspect basic documents relating to the management of the building and the right to request the incorporation to supply them with such documents as and when necessary.

17. However, the legislation is not there to encourage or allow any individual with an ulterior motive to deliberately and unreasonably stir up trouble and interfere with or obstruct the normal operation of the incorporation and the manager under the pretext of monitoring them. Nor does the legislation empower the owners or other relevant persons to freely inspect all documents relating to the management of the building or obtain copies of all such documents.

…

21. An owner does not have the right to inspect “all bills, invoices, vouchers, receipts and other documents” or obtain copies thereof, even though the incorporation has the duty to keep these documents for at least 6 years.

22. It is not difficult to appreciate the rationale behind the statutory provisions. Property management may well involve tens of thousands of bills, invoices, vouchers, receipts and other documents. To allow individual owners to inspect such an enormous quantity of documents and obtain copies thereof at will is, it goes without saying, to impose a tremendous burden on the incorporation, and such a burden is also unnecessary.

23. Generally speaking, in order to sufficiently monitor the operation of the incorporation, an owner needs to inspect nothing other than the books, records of account, income and expenditure account, balance sheet or summary of the income and expenditure. The law should not and will not presume any corrupt practices or false accounting on the part of the incorporation. If such illegal activities do take place, they should be dealt with by law enforcement agencies. An owner should not and is not in a position to assume that the incorporation will act against the law (bold and italics supplied)”.

170.  Finally, MC membership changes over time. By trial, Derek had, I note, already stepped down as chairman of MC after re-election. It might well be that MC under new chairmanship might approach this issue of disclosure differently in future.

S. Factors listed in s.20A(7) to be considered

171.  With the aforesaid additional findings in mind, I now proceed to consider those factors listed as sub-paragraphs (a) to (k) to s.20A(7), if such of them are applicable to this case.

172.  For factor (a), the service of the Contractor had been procured by invitation to tender. 5 returned tenders had been received and considered by IO, with consultant advice and analysis from DSKA.

173.  For factor (b), 29/2/2020 AGM had been held to appoint the Contractor to carry out the Prescribed Works. The 29/2/2020 AGM Resolutions had been passed by over 80% majority votes of those GH owners (47.5%) present.

174.  For factor (c), I have found paragraph 3.6, 7.1 and 7.2 of 2018 COP not having been complied with by IO. I of course bear in mind all my findings on the Requests and other disclosures above. At the same time, there is no suggestion of other paragraphs of 2018 COP being breached. Stanley had brought such breaches to the attention of all GH owners by way of agenda 1 of 4/6/2021 EGM. Save for the Couple, no other owner(s) saw fit to take any follow-up action. But minutes of 4/6/2021 EGM and of 29/2/2020 AGM do not accurately record, and report, what transpired in those meetings to those owners who did not attend. Returned tenders of the Prescribed Works had also not been inspected by Stanley by trial.

175.  Factor (d) is not applicable to our case.

176.  The Prescribed Works are required to be carried out by IO on “common parts” of GH in order to comply with MBIS Notice issued on it by BA in July 2016. The original 12-month deadline had long expired. IO had applied and been granted a few time extension. This is factor (e).

177.  Regarding factor (f), it was not until July 2023 that BA certified compliance of MBIS Notice i.e. 7 years after issue of MBIS Notice. Despite there might be some minor problems of carpark re-flooring as Stanley had complained, I take it from BA’s certification that all the Prescribed Works identified in the Survey Report had been carried out to such standards to the satisfaction of BA.

178.  On factor (g), on top of prescribed repairs to “common parts” of GH which ensured to safety of all GH residents, it is not in dispute (and I accept) that a balance as much as $6,273,278.22 was left in MBIS Maintenance Fund as on 30 June 2023. I take it as a favourable factor as Mr Suen submitted and reject the contrary contention (or speculation) of Ms Wong.

179.  Factor (h) does not apply to this case.

180.  There is nothing before me to suggest that the Contractor was not acting in good faith in providing its service to IO. It was a stranger to IO’s internal dispute about disclosure. Such internal dispute among GH owners had nothing to do with the Contractor. One assumes the Contractor got paid as per its contract for services it had rendered to IO. These are factors (i) and (j). It does not seem that factor (k) occurred in our case. The Contractor would, I think, likely be prejudiced if it is to face the prospect of its contract avoided even after its completion of the Prescribed Works (though the remedy of quantum meruit may offer some relief to it).

T. 1^st to 3^rd Orders sought

181.  The respondents sought 1^st to 3^rd Orders all pursuant to s.20A(7).

182.  I have concluded at [79(5)] above that s.20A(7) discretion operates only on the procurement contract between the Contractor and IO, and their contractual rights inter se. The 1^st and 3^rd Orders sought do not relate to such procurement contract. The latter part of 2^nd Order sought involving 18/3/2020 MC Resolution also does not relate to such procurement contract.

183.  Hence, I do not have s.20A(7) discretion to grant 1^st Order, 3^rd Order and the latter part of 2^nd Order.

184.  More importantly, I have also concluded at [94] and [97] above that such s.20A(7) discretion exists only when the said contract was entered without invitation to tender in breach of s.20A(2) or without GM resolution in breach of s.20A(2B). But both s.20A(2) and s.20A(2B) had been complied with in IO’s engagement of the Contractor for the Prescribed Works.

185.  Hence, I do not enjoy s.20A(7) discretion to grant 1^st Order, 2^nd Order and 3^rd Order in this case.

U. 1^st Order sought

186.  I repeat section T above herein.

187.  On Tai On Building Case, I further find that Stanley does not enjoy any legal right to inspect and/or obtain returned MBIS tender documents pursuant to paragraphs 7.1 and 7.2 of 2018 COP (or at BMO) at [81(8)] above. As such, I also decline to grant 1^st Order for this additional reason.

188.  Furthermore, I find for IO’s contention that 2018 COP are directory in nature at [92] above. Consequences, if any, of their non-compliance are limited to those set out in ss.44(2), 20A(5) to 20A(8): see [90] and [91] above.

189.  Had s.20A(7) discretion been applicable to this case contrary to my legal conclusions, in view of the respondents having no legal right to the same under 2018 COP (or BMO), I would have also exercised my discretion refusing 1^st Order.

V. 2^nd Order sought

190.  I repeat section T above herein.

191.  Were I to have a discretion under s.20A(7) to consider 2^nd Order, having regarding to all my findings on disclosure in this Judgment and those matters listed in subparagraphs (a) to (k) to s.20A(7) applicable to this case, I would have also declined granting the same to the respondents.

W. 3^rd Order sought

192.  I repeat section T above herein.

193.  The 3^rd Order sought is consequential (or based) on the granting of 1^st and 2^nd Orders sought. As I have decided against the respondents on both 1^st and 2^nd Orders sought, I would also decide against them on 3^rd Order as well.

194.  In any event, on the authority of Beauty Court Case, breach of 2018 COP could not affect 29/2/2020 GM Resolutions which (once they are found to have been lawfully passed) are binding on the Couple under s.14 so far as payment of due share of the Contribution is required from them: see [79(4)] and [79(6)] above. For this legal reason, I also refuse the 3^rd Order sought.

X. Disposition

195.  On IO’s application against the respondents, I therefore enter judgment in IO’s favour as follows:

(1) The respondents do pay IO interest on the sum of $220,000 at the rate of $1 for each $100 or part thereof unpaid for each period of 30 days or part thereof for the period from 1 May 2020 to 14 December 2021; and

(2) The respondents do pay IO collection charge in sum of $150.

196.  And I dismiss the entirety of the counterclaim raised by the respondents against IO.

Y. First costs order nisi on application

197.  Costs normally follow the event after trial. IO has succeeded on both application and counterclaim.

198.  I make my first costs order nisi that the costs of the application, including all reserved costs and its costs of trial, be paid on solicitors and own client basis by the respondents to IO, to be taxed on District Court scale if not agreed.

199.  While I am grateful for Mr Suen’s assistance on the trial of the application, I do not certify his attendance on the trial of the application, considering the small amount at stake and the relatively simple nature of this recovery exercise.

200.  I reject Ms Wong’s invitation to order costs on Small Claims Tribunal scale on the application. First, the liability of the respondents towards the sum of $220,000 remains to be tried though it was paid before trial. Secondly, the respondents are bound by the costs provision of the DMC IO relies upon. Thirdly, under s.12(5) of Lands Tribunal Ordinance[69], this Tribunal can only order taxation of costs either on High Court scale or on District Court scale. This is no third choice of Small Claims Tribunal scale.

Z. Second costs order nisi on counterclaim

201.  Moving to the costs of the counterclaim, while IO had acted in accordance with the minimum requirements of the law (and the case law), I think I could have regard to its disclosure conducts before and during these proceedings in exercising my costs discretion.

202.  Contrary to Mr Suen submissions at [59] above, I do not agree that IO had acted reasonably towards the Requests.

(1) Be that 2018 COP does not expressly provide for it, IO ought, I think, to have voluntarily made available the Survey Report, soon after it was ready, for inspection by owners, including Stanley, to inform them about the scope of procurement. On the evidence before it, there could not be any claim of confidentiality about its contents or any objection to its disclosure.

(2) IO ought also, in my views, to have replied Stanley as early as he first made the Requests on 15 February 2020 that it insisted on him complying with, I think, the legal requirements stipulated at Schedule 6 of BMO. IO likely, I believe, delayed revealing their stance or position until 28 February 2020 to avoid Stanley causing trouble (or more trouble) during 29/2/2020 AGM.

(3) In my views, IO had unreasonably hid from non-attending GH owners its objection to disclose tender documents to Stanley in minutes of 29/2/2020 AGM.

(4) IO also unreasonably hid from attending owners its objection to disclosure tender documents to Stanley during 3/2/2021 EGM by giving untruthful or inaccurate instructions to its lawyers.

(5) And it had unreasonably hid from non-attending owners in its minutes of 4/6/2021 EGM its on-going refusal to comply with 2018 COP issued by the Authority as guidance and standard.

(6) I believe IO likely hid as it did in (3) to (5) above to avoid Stanley getting support from other GH owners and/or to avoid GH owners knowing their change of previous disclosure practice and/or their on-going refusal to comply with 2018 COP issued by the Authority as guidance and standard.

(7) Had IO made voluntary disclosure of MBIS returned tenders to Stanley before this trial, I think it likely that the Couple’s counterclaim may no longer be pursued and/or this entire trial avoided to the benefit of all GH owners in terms of legal costs (I have taken into account previous warning of unnecessary legal costs to be incurred by IO raised by solicitors for the Couple to solicitors of IO in the year 2020 and recent open offer dated 4 July 2023 made by the respondents’ solicitors to IO’s solicitors shortly before trial).

(8) I have already rejected the late bare assertion of confidentiality advanced by Derek. Save for Stanley’s failure to comply with BMO requirements under Schedule 6, IO had advanced no other reasonable or legal ground for not disclosing returned MBIS tender documents to Stanley.

(9) Is it worthwhile for IO to maintain its strict legal objection to the Requests by incurring substantial costs to defend the counterclaim to its very end? Having regard to (8) above, the costs to be incurred by IO seem to me to be out of proportion.

(10) Had (3) to (5) above not been hidden from GH owners and had GM been held for them to decide on continuation of these proceedings or otherwise, it is, in my views, most questionable whether they would have resolved to continue defending the counterclaim to its very end (as opposed to making voluntary disclosure of MBIS returned tenders to Stanley).

(11) In my views, the best weapon in the long term to counter mistrust is transparency or openness. Fear on the part of MC of giving more materials, or adding more fuel, to fellow co-owner (i.e. Stanley) to complain is, I fear, not a long-term, or an effective, solution to parties’ vicious cycle before me.

203.  Having regard to IO’s conducts above, I find it appropriate to deprive IO 50% of its costs of defending the counterclaim.

204.  I therefore make my 2^nd costs order nisi that 50% of the costs of the respondents’ counterclaim, including 50% of all its reserved costs and 50% of the costs of the trial of the said counterclaim, together with certificate for counsel, be paid by the respondents to IO to be taxed on District Court scale if not agreed.

205.  In both application and counterclaim, I further direct taxing master in any taxation to disallow all costs of and incidental to 2,200 pages of trial bundles. These pages are, in my views, redundant, unnecessary and/or repetitive. Parties’ solicitors have plainly failed to give their proper consideration to what should be put before trial judge. Unnecessary trial bundles are not only environmentally unfriendly, but also not conducive to proper administration of justice. Their costs of reproduction and all related costs should be disallowed.

206.  The above two costs order nisi shall become absolute if none applies to vary any of them within 14 days of the handing down of this Judgment.

207.  IO’s solicitors and respondents’ solicitors do draft, file and serve judgments and orders made on the application and on the counterclaim respectively.

208.  Finally, I thank both Ms Wong and Mr Suen for their able and meticulous submissions.