THE INCORPORATED OWNERS OF YUE TIN COURT v. 陳奉蓮 AND ANOTHER

LDBM 403/2004

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Building Management Application No. 403 of 2004

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J U D G M E N T

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Background

1. The Applicant is the owners’ corporation of Yue Tin Court, Shatin, New Territories, Hong Kong.  The 1^st and 2^nd Respondents were respectively the secretary and treasurer of the Third Management Committee of the Applicant from 12 March 2004 to 6 August 2004.

2. The Applicant’s application is for the return of books, information, records, accounts, papers, documents together with movable property belonging to the Applicant including (but not limited to) :-

(1)	The seal and chop of the Applicants;
(2)	Records, accounts and papers of the Applicant of the period between 28 July 2003 and 12 March 2004 during which Madam Chan Wai Ying (“Mdm Chan”) was the Administrator; and
(3)	The code of the Applicant’s safe.

3. The Applicant also claims for the costs and expenses incurred by the Applicant as a result of the Respondents’ failure to hand over the aforesaid articles and information as well as the Respondents’ failure to return the keys to the drawers in the Applicant’s office.

4. The Applicant’s application is based on paragraph 5A of the Second Schedule to the Building Management Ordinance, Cap. 344 (“the BMO”), which stipulates that :-

“A member of a management committee who ceases to be a member of the committee under paragraph 4(2) or retires from office under paragraph 5(1) and does not seek re-appointment to the committee shall, within 14 days of his ceasing to be a member or of his retirement, as the case may be, hand over to the secretary or, if the secretary is not readily available, any other member of the management committee, any books or records of account, papers, documents and other records in respect of the control, management and administration of the building together with any movable property belonging to the corporation that are under his control or in his custody or possession.”

5. The Applicant had also claimed for the return of the Bank of China cheque book belonging to the Applicant bearing numbers 259151 to 259200.  However, at the trial hearing on 15 August 2005, the Applicant informed the Tribunal that this cheque book was found by the Applicant and hence the Applicant did not pursue with this claim.

6. In the Notice of Opposition, the Respondents raise the following grounds of opposition:-

(1)	While the Respondents were still holding the office of secretary and treasurer respectively, on 9 July 2004, the chairman of the Applicant, Mr Ngai Hok Yan (“Mr Ngai”), took away the key of the main door of the Applicant’s office and changed the lock of the door. By such acts, Mr Ngai had taken possession of all the articles inside the Applicant’s office.
(2)	After the Respondents had been removed from their office as secretary and treasurer respectively on 6 August 2004, the Respondents delivered back all the articles in their possession to the management office and the solicitors for the Applicant on 19 August 2004 and 6 September 2004 respectively.
(3)	Since the Respondents no longer have any articles belonging to the Applicant, the Applicant should not make the claim against them at all.

7. The Respondents also mentioned in the Notice of Opposition that the claim should be redirected to Mr Ngai.  However, there is no application to join Mr Ngai as a Third Party and the Respondents did not raise this matter at the trial at all.  Thus, it is not necessary for me to deal with the claim against Mr Ngai.

The issues

8. I think the issues in this case are very clear.  They are:-

(1)	Which are the properties required to be returned;
(2)	Whether such properties are still under the control or in the custody or possession of the Respondents;
(3)	Whether the Respondents have discharged their duties in handing over the properties to the Applicant; and
(4)	Whether the Applicant is entitled to any damages.

Which are the properties required to be returned

9. Although the Applicant has mentioned 3 specific items of the properties claimed, it is not clear what other items are required by the Applicant.  From the evidence of the Applicant’s witnesses, it seems that the Applicant is relying on the list of documents in page A98 of Exhibit “AR-1”, which is the list of documents transferred from Mdm Chan to the 2^nd Respondent in March 2004.  Mr Ngai gave evidence that the documents relating to WR2, roof work and management fee deposits could not be found, whereas Ms Yip Sze Ling gave evidence that all the contracts listed in the list could not be found.

10. Apart from the aforesaid, the Applicant has not given an exhaustive list of properties the Respondents are required to hand over.  Presumably, the Applicant is seeking for a general order that all the properties belonging to the Applicant, which are still under the Respondents’ control, or in their custody and possession, to be returned.

11. The Respondents contend that all the properties belonging to the Applicant had been returned.  However, it is not for the Respondents to prove that they have returned everything.  It is for the Applicant to prove that the Respondents are still having the properties under their control, or in their custody and possession.

12. Thus, the Applicant should specify the exact scope of the properties that are required, rather than seeking for a general order.  Nevertheless, in the Applicant’s closing submission, Mr Lam for the Applicant submitted that the following documents are still missing:-

“	(a)	Corporate Seal and chops;
	(b)	The safe’s opening code;
	(c)	The books and account of the IO for the period from 7.2003 to 3.2004;
	(d)	Various contracts as listed on [A98];
	(e)	Management fees deposit (3 files) [A98];
	(f)	Guarding’s [sic.] Management Contract [see: Exh.A-2];

13. I will therefore deal with only these items as submitted by Mr Lam.

Whether the properties are still under the Respondents’ control, or in their custody or possession

14. It is not disputed that the 1^st and 2^nd Respondents had inherited some documents and properties belonging to the Applicant from Mdm Chan.  The 1^st Respondent admitted in her evidence that she was responsible for keeping the Applicant’s documents concerning the management committee.  The documents were placed inside the cabinets of the management office and of the Applicant’s office, which were two different rooms.  The keys to the cabinets inside the management office were kept by the management office, and the keys to cabinets in the Applicant’s office were placed by the 1^st Respondent on the desk inside the Applicant’s office.  The 1^st Respondent also held the key to the door of the Applicant’s office.  The 2^nd Respondent, on the other hand, admitted that Mdm Chan had transferred 21 documents to him as per the list of documents in page A98 of Exhibit “AR-1”.

15. It is also not disputed that on 9 July 2004, Mr Ngai, through the property manager, obtained the key to the door of the Applicant’s office from the 1^st Respondent, and Mr Ngai caused the lock of that door to be changed on 10 July 2004.  Mr Ngai also admitted in his evidence that when he took over the key, he promised to bear responsibilities for any loss or damages to the Applicant’s properties inside the Applicant’s office.

16. The Respondents therefore contend that from 9 July 2004 onward, the properties inside the Applicant’s office were no longer under their control or in their custody or possession.  The Respondents argue that the changing of the lock was clearly an intention to prevent the 1^st Respondent from entering the Applicant’s office.

17. I do not accept the Respondents’ contention in this regard.  The Respondents were then still the Applicant’s secretary and treasurer respectively, and as such they still had their statutory duties to perform.  They could not simply ignore their duties to keep those documents under their control or in their custody or possession by asserting that someone else had the key to the room.  The evidence does not show that they were actually denied access to the Applicant’s office.  It was just their presumption that they could not go into the Applicant’s office.  In fact if they had made the request to enter the Applicant’s office, it would be wrong for Mr Ngai or anyone else to deny their access.  When Mr Ngai accepted the responsibilities for any loss or damage to the documents inside the Applicant’s office, it still does not mean that Mr Ngai was taking over the Respondents’ statutory duties.  Thus, I do not find that the Respondents had lost the control, custody or possession of the documents inside the Applicant’s office on 9 or 10 July 2004.

18. I should mention here that although Mr Fong for the Respondents seeks to rely on the case of Wrightson v. McArthur and Hutchisons (1919) Limited [1921] 2 KB 807 to say that possession of goods would be passed by the delivery of the keys of the rooms in which the goods were locked up, I do not find the case useful as the decision was also based on the fact that there was a licence to make use of the keys.

19. However, the situation is different after 6 August 2004.  It is not disputed that the Respondents were removed from their offices as committee members of the Applicant and a new management committee was formed.  When they were no longer the secretary and treasurer of the Applicant, the Respondents would not have the right to gain access to the documents inside the Applicant’s office, because there were no more statutory duties for them to perform.  When the Respondents have no right to gain access to the documents and are not in physical possession of the documents, the documents are not under their control or in their custody or possession at all.

20. Thus, I find that the documents inside the Applicant’s office were no longer under the Respondents’ control, or in their custody or possession from 6 August 2004 onward.  The same applies to the keys to the cabinets kept inside the Applicant’s office.  As to the documents inside the management office, likewise, the Respondents lost the control, custody and possession when they vacated the office as secretary and treasurer of the Applicant on 6 August 2004.

21. There is no dispute that the Respondents had returned some of the properties belonging to the Applicant on 19 August 2004 and 6 September 2004.  The Respondents’ case is that the properties returned on those days were all the properties left with them.  The other properties were either kept in the management office or the Applicant’s office.  The list of documents in page A98 of Exhibit “AR-1” also showed the respective documents in the Applicant’s office and the management office.  In other words, they do not possess any more properties that should be returned to the Applicant.  The Applicant’s case, on the other hand, is that it could not locate all the properties from the management office and the Applicant’s office, so the missing properties must still be with the Respondents.  The Applicant has in fact no positive evidence that the Respondents are keeping the missing properties.

22. During the trial, on 17 August 2005, the parties had an opportunity to inspect the Applicant’s present office, which was previously the management office, because the two offices were exchanged.  It is agreed by the parties that one cabinet, which used to be located in the old management office (i.e. the Applicant’s present office) and was used to keep the Applicant’s documents, was not found in the Applicant’s present office.  Another cabinet, which used to be located in the old management office and was used to keep the properties/documents of Guardian Property Management Limited, was not found in the Applicant’s office either.  The parties, however, found the following properties:-

(1)	Documents relating to the income and expenditure for the period February 2003 to January 2005;
(2)	Lift Maintenance Agreement dated 27 December 2002 made between Ryoden Lift Services Limited and the Applicant; and
(3)	Two keys inside drawer 1 of Cabinet No. 1 and two other keys inside drawer 4 of Cabinet No. 1.

23. The parties also agreed that Guardian Property Management Limited left the Applicant on 1 February 2005 and during the search on 17 August 2005, the current manager Mr Eric Chan suggested that he had documents in his office relating to the WR-2 project and produced photocopies of WR-2 Contract (in Chinese) and WR-2A Tender.  There is however no explanation offered as to why Mr Eric Chan had possession of these documents.

24. Based on the evidence and the agreed facts before me, I cannot see how the Applicant can establish that the missing properties are with the Respondents at all.  The taking of the key on 9 July 2004 was a sudden event.  I do not think that the Respondents would have removed the properties before 9 July 2004.  Needless to say, the Respondents would not be able to remove the properties after 9 July 2004 without the Applicant’s knowledge.  As mentioned by the 2^nd Respondent in his evidence, some of the documents were contained in big files.  I see no reason why the Respondents would keep these big files as well as the other properties at their homes.  Although the 2^nd Respondent produced a copy of the Applicant’s bank deposit record at the trial, I accept that it was only a copy kept by him because he was the one preparing the record and the original was not with him.  The fact that some of the allegedly missing properties were found on 17 August 2005 suggests that the Applicant might not have searched thoroughly beforehand.  The missing cabinets, the exchange of the management office and the Applicant’s office and also the subsequent change of management company all suggest that that some of the properties might have been located elsewhere or lost by someone else.

25. As the burden is on the Applicant to establish that the Respondents do have these properties with them, I find that the Applicant has simply failed to discharge the burden when the other possibilities can equally exist.

Whether the Respondents have discharged the duty to hand over documents

26. The duty imposed by paragraph 5A of the Second Schedule of the BMO is only confined to those properties that are under the Respondents’ control or in their custody or possession.  The Applicant must establish that those missing properties submitted by Mr Lam are in fact under the Respondents’ control or in their custody or possession.  As aforesaid, I find that the Applicant has failed to discharge this burden.  So there would not be any properties that are required to be returned by the Respondent.  It is my finding that the Respondents have in fact delivered all the properties they had, which belonged to the Applicant, on 19 August 2004 and 6 September 2004.  In other words, the Respondents have not failed in their duty to hand over.

27. The Applicant seems to suggest that there is a duty on the part of the Respondents to inform or assist the Applicant how it could locate the properties, such as the seal, chop and code for the safe.  However, I do not think that the provision in paragraph 5A of the Second Schedule would give rise to such a duty.  The wording in paragraph 5A is simply to impose a duty to “hand over”, which means to deliver the properties physically.  There is no further requirement to inform or assist anything else.

28. The Applicant also suggests that the order for handing over can be granted even if the Respondents have lost the documents.  I totally reject this suggestion.  It is for the Applicant to prove that the documents are still with the Respondents.  If the Respondents have lost the documents, they do not have the control, custody or possession of the documents.  If they do not have the control, custody or possession of the documents, the criteria in paragraph 5A have not been met.  No order should be made in such circumstances at all.

Whether the Applicant is entitled to any damages

29. The Applicant’s case on damages is that since the Respondents had failed to hand over articles and information as well as the keys to the drawers, it retained a locksmith to open the all the locks of the drawers and cabinets and incurred expenses in the sum of $2,790.00.  There are also claims for future costs and expenses depending on the Tribunal’s finding of whether the Respondents are liable to return the missing items, but it is impossible to adduce evidence on these future damages.  So the Applicant asks for damages to be assessed.

30. In relying on the case of Born Chief Co (t/a Beijing Restaurant) v. Tsai George & Anor [1996] 2 HKC 282, the Respondents submits that the Tribunal should not order damages to be assessed separately.    Nevertheless, since I do not find that the Respondents are liable to hand over the missing documents, there will be no damages awarded to the Applicant in any event.  There is no need for me to discuss this authority at all.

Conclusion

31. In view of my findings aforesaid, the Applicant’s application must be dismissed with costs.  In the closing submission, the Respondents ask for costs to be awarded on an indemnity basis, because the Applicant has pursued some trivial matters which are wholly out of the proportion to the litigation costs.  The Respondents also submits that the lack of particulars and wrongful claim of a cheque book show the intention of the Applicant to cause undue pressure to the Respondents.

32. However, I do not agree that the Applicant should bear the costs on indemnity basis, as I do not see that there is any abuse of process in the present case.

33. In the circumstances, I make the following orders:-

(1)	The Applicant’s application herein be dismissed; and
(2)	Costs order nisi: The Applicant do pay the 1st and 2nd Respondents their costs of the Application with certificate for counsel, to be taxed on party and party basis and on District Court scale if not agreed. If there is no further application on costs within the next 14 days, the costs order nisi shall become absolute.