CHAN TZE PANG AND OTHERS v. INCORPORATED OWNERS OF HING WONG MANSION AND ANOTHER

[English Translation – 英譯本]

LDBM 187/2002

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

 BUILDING MANAGEMENT APPLICATION
 NO. 187 OF 2002)

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BETWEEN

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JUDGMENT

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1. All the Applicants herein are owners of various units at Hing Wong Mansion, 67-85 Tai Kok Tsui Road (“the Building”).  The 1^st Respondent is the incorporated owners of the Building, and the 2^nd Respondent is the owner of a unit on the 15^th Floor of the Building.

2. The Applicants are applying to this Tribunal for the following orders:

1. The current Management Committee be dissolved and a meeting of owners to appoint a Management Committee be convened.

2. An Administrator be appointed to manage the Building until a Management Committee is elected.

3. Any other relief the Tribunal sees fit to order.

There are four stated grounds for the application: “Adjournment of the AGM”, “Requisition by Owners”, “Proxy Forms” and “Irregularities”.

3. Adjournment of the AGM

The Notice Application states the following in relation to this ground:

1. On 14^th June the Incorporated Owners of Hing Wong Mansion held an Annual General Meeting of Owners (“the Meeting”).  Before all matters of the agenda had been dealt with, the chairman Mr. Lee Ling Kong (2^nd Respondent) announced that the Meeting was indefinitely postponed.  At the time of the adjournment, the distribution of ballots for the election of management committee members had not been completed.  As a result of such adjournment, the Applicants either did not collect the ballot and/or failed to return the ballot into the ballot box.

1.2 A list of candidates and a return of votes, however, were published later and purportedly the chairman, secretary and treasurer were ‘elected’ at the Meeting.

1.3  As the Meeting had been adjourned prior to the election of management committee members and office bearers, the election of Management Committee members could not have completed.

3.1 In his testimony, the 1^st Applicant said that, in the course of the general meeting on 14 June 2002, the 2^nd Respondent did not allow the owners to raise any question and said that he was the chairman and that any owner who was dissatisfied could leave.  This caused a commotion among the owners, and the 2^nd Respondent for the first time announced that the meeting was adjourned indefinitely.  Subsequently, following a private discussion between Ms Lee Wing Yan, a Liaison Officer of the District Office, and the 2^nd Respondent, the meeting continued.  After a while, about 30 owners signed up for a request that a general meeting be re-convened after two weeks.  At this point, the 2^nd Respondent again announced audibly that the meeting that night was dissolved and that the meeting was adjourned indefinitely.  At 10.45 p.m., therefore, the 1^st Applicant and 40 to 50 other owners left the meeting one after another.

3.2  In his witness statement (Exhibit A6), the 2^nd Applicant stated that, in the course of the meeting, he supported the action of about 30 other owners in signing up for a request that an annual general meeting be re-convened after two weeks.  The 2^nd Respondent then immediately announced that the meeting was adjourned indefinitely, and therefore the 2^nd Applicant and the other owners left the meeting one by one.

3.3 The 3^rd Applicant said that, in the course of the meeting, the 2^nd Respondent announced that the meeting was adjourned indefinitely, and the 3^rd Applicant then left the meeting together with other owners.

3.4 The 2^nd Respondent denied having announced during the meeting that the meeting was adjourned indefinitely.

3.5 Ms Lee Wing Yan, a Liaison Officer of the District Office, attended the meeting as representative of that Office.  She said that, shortly after the meeting started, the chairman announced that the meeting was adjourned, but the owners objected to it, and therefore the meeting continued.  At about 10 p.m., a person by the name of Fu Wai Lok handed her a piece of paper which recorded that the “owners” requested a response within two weeks on “re-convening an owners’ meeting”.  Thereafter, tens of owners left the meeting, but between 10 to 20 owners stayed behind.  Then a voting took place, and the person chairing the meeting announced to the attendees the names of the management committee members who had been elected.  Appointment of the chairman, secretary and treasurer of the management committee also took place at the meeting.

3.6 Ms Lee Wing Yan was a veracious witness.  In their written submissions, the Applicants also pointed out that Ms Lee’s evidence was more reliable than that of the other witnesses.  The relevant part of the submissions reads as follows:

It is noted that all witnesses called by both the Applicants and the Respondents are in their advance years whose recollection of events five months ago may be sometimes less than satisfactory.  The evidence given by Ms Lee Wing Yan, the liaison officer from the District Office who attended the AGM, on the other hand, is more reliable and should be accorded more weight not only because of her articulation, but also because of her impartial position in this matter.

I am satisfied that Ms Lee Wing Yan was an impartial witness who saw no need to give evidence in favour of any party.  I hold that her evidence was an accurate depiction of what actually happened during the meeting.  On her evidence, the meeting had not been adjourned at about 10 p.m.; instead, it continued until a management committee was elected.  Accordingly, the Applicants’ ground regarding adjournment of the meeting must fail.

4. Requisition by Owners

In relation to this ground, the Notice of Application states as follows:

2.1 At the meeting, a number of owners requisitioned the holding of another owners meeting.

2.2 Pursuant to the Third Schedule of the Building Management Ordinance (Cap. 344), the committee shall convene a general meeting upon request of no less than 5% of owners within 14 days of receipt of such request, i.e., on or before 28^th June 2002.

2.3 No such meeting of owners has been called, contrary to paragraph 1(1) of the 3^rd Schedule of the Building Management Ordinance.

4.1 The document produced by Fu Wai Lok, which was addressed to the incorporated owners of the Building and the District Office, stated that “we requested a response within two weeks on re-convening an owners’ meeting” (underlining added).  On the face of it, the document was not a request for an owners’ meeting.  If the owners desired to make such a request, they should not have included the word “response”.

4.2  Even assuming that the owners did request an owners’ meeting, the Applicants’ application will not succeed on this ground.  The evidence of the 2^nd Respondent reveals that, before Fu Wai Lok produced the relevant document, the 2^nd Respondent had announced the dissolution of the 13^th Management Committee and the 14^th Management Committee had not yet been elected.  The 10^th Applicant stated in his witness statement that he heard the 2^nd Respondent “mention at the outset the dissolution of the committee and then report on committee affairs”; the document produced by the Applicants (copy Notice to Owners, 22.06.2002) also contains the following record:

(1) The chairman of the general meeting announced the dissolution of the management committee of the incorporated owners and reported on affairs relating to the Building.

(2)        …

(3) There and then, some owners proposed to discharge the management committee, and 30 owners who were present put down their signatures in support.  The document was handed by [a representative of] the District Office who was present to the incorporated owners.

4.3 Paragraph 1(2) of Schedule 3 to the Building Management Ordinance (“BMO”) provides that “[t]he chairman of the management committee shall convene a general meeting of the corporation at the request of not less than 5% of the owners for the purposes specified by such owners within 14 days of receiving such request”.  This provision necessarily assumes that, when the owners make the request, there is a management committee within the owners incorporation and that the chairman of that committee is still in office.  After Fu Wai Lok left the meeting, there were still between 10 and 20 owners at the meeting, which continued until a management committee was elected.  Therefore, when Fu Wai Lok handed the document to Ms Lee Wing Yan, the 14^th Management Committee had not yet been elected and the 13^th Management Committee no longer existed.  I therefore hold that Paragraph 1(2) of Schedule 3 does not apply to the present case.

5. Proxy Forms

The Applicants allege that:

The Chairman (2^nd Respondent) refused to accept proxies written on proxy forms which were photocopies of the proxy form printed by Management Committee.  Such proxies forms printed by the Management Committee, however, were not distributed to all owners.  Some Applicants had to photocopy the proxy form for signing by owners.  The 10^th Applicants therefore were denied to collect votes based on the photocopied form.

5.1 The 10^th Applicant said in his testimony that many owners did not receive proxy forms and had no choice but to make photocopies of the proxy forms, but during the meeting the management committee did not accept the proxies that the owners prepared using the photocopied forms.  At that time the 10^th Applicant held many of those forms, so he left the meeting indignantly and did not vote.  Before he left the meeting, he had an argument with the 2^nd Respondent over the photocopied forms.

5.2 After the 10^th Applicant left the meeting, the 2^nd Respondent, upon the advice of Lee Wing Yan, accepted the photocopied forms as valid proxy forms.

5.3 The 2^nd Respondent said that he had distributed blank proxy forms (e.g. Exhibit R5) to the owners prior to the general meeting.

5.4 In their submissions, the Applicants said:

The Applicant’s case is that the 2^nd Respondent, wanting to retain the control of the Management Committee and getting re-elected, manipulated the election procedures whereby owners seen as hostile to him would not get ‘official’ proxy forms with the blue stamp of the Incorporated Owners.  As the owners were used to voting by proxy, such arrangement would ensure that only those in favour of him would be counted.

Of all the Applicants, only the 3^rd alleged that she did not receive a proxy form.  In her witness statement, she said: “Perhaps because I had had some arguments with Lee Leng Kong before, and he thought that I would not authorize him to vote on my behalf, and therefore he simply did not give me a proxy form.  As I did not have a proxy form, I had to attend the annual general meeting in person.”  Here the 3^rd Applicant was merely conjecturing as to the reasons for not receiving the proxy form, and I attach no weight to this type of evidence.

5.5 The 10^th Applicant was holding a large number of photocopied proxy forms, but none of those who had authorized the 10^th Applicant gave evidence at the hearing, and therefore no evidence was provided to show that those persons had had disagreements with the 2^nd Respondent, with the result that the 2^nd Respondent refused to give them proxy forms.  However, even if those persons had not received proxy forms, they could have attended the meeting and voted in person just like what the 3^rd Applicant had done.

5.6 The Applicants have failed to provide any evidence to show that the 2^nd Respondent intended to manipulate the results of the election.  Accordingly, the Applicants’ allegations in this respect are rejected.

6. Irregularities

          Under this ground, the Applicants put forward 5 allegations.  The first one is “Unclear nominations – only to ‘Mr Lee’ without full name.”  The Applicants argue that 8 of the proxy forms merely purported to authorize “Mr Lee”, and since such content was unclear, these forms should not have been counted in calculating the number of proxy forms.  The Applicants have not pointed out pursuant to which statutory provision(s) this Tribunal can make such a holding.  Paragraph 4 of Schedule 3 to the BMO, which makes provisions regarding proxy instruments, states as follows:

(1) An owner may attend a meeting of the corporation and cast a vote personally or by proxy.

(2) The instrument appointing a proxy shall be signed by the owner; or if the owner is a body corporate, shall be impressed with the seal of the body corporate.

(3) An appointment shall not be valid unless the instrument appointing a proxy is lodged with the secretary of the management committee 24 hours, or such shorter period as the chairman may permit, before the holding of the meeting which the proxy intends to attend and vote at.

6.1 The above provisions, which are the only provisions in the BMO regarding the validity of proxy instruments, do not address the question whether these instruments can be vitiated by their contents.  This question is not within the ambit of Paragraph 4.  It follows that this Tribunal has no jurisdiction to rule on this particular matter, and the Applicants’ allegation in this respect falls to be rejected.

6.2 The Applicants’ second allegation regarding “irregularities” is: “Proxy given not by Registered Owner – contrary to paragraph 4(2) of the 3^rd Schedule of the Building Management Ordinance”.  The Respondents admitted to this, and therefore the instruments fell foul of the requirement under Paragraph 4(2) of Schedule 3.  The Respondents’ explanation on this is: the management committee did not verify with the Land Registry the identity of the owners as stated in the proxy instruments.  The management committee conducted the verification only by referring to a list of owners which was compiled over the years.

6.3               The Applicants’ third allegation is that some of the units cast more than one vote.  A total of 11 units did this.  The Respondents admitted that 7 units did this.  Having carefully considered the relevant evidence, I rule that the Applicants’ allegation here is established.

6.4 The fourth allegation concerns “irregular vote with different format with only 25 candidates listed instead of 27”, with the consequence that “Two Candidates were thus deprived of an opportunity to receive such votes”.  The Respondents have admitted to this.

6.5 The fifth allegation is directed at 3 irregularities:

1^st Floor                       73        Name on vote does not match with attendant list.

Ground Floor               85        Vote also cast in different format.

9^th Floor                       69        Proxy dated 8^th September 2002, i.e. after election on 14^th June 2002.

The Applicants submit that the above votes should not have been counted in calculating the number of votes.  The Respondents have also admitted to this.

6.6 The Applicants contend that “For reasons above, the procedures for electing the Management Committee members were improper which rendered the result invalid and some candidates, including some of the Applicants, have been prejudiced thereby …”, and therefore they made the present applications.  But they have not applied for an order declaring that the resolutions passed at the meeting on 14^th June were invalid.

6.7 In their submissions, the Applicants stated that “The evidence shows overwhelmingly that the election held at the AGM failed to comply with the requirement set out in the Third Schedule of the Ordinance governing meeting and procedures of the corporation.  In particular, paragraph 3(5)(a), paragraph 4(2).  It is the Applicants’ submission that because of these widespread irregularities, the whole election result should be held invalid.  The integrity of the election has been violated by the Respondents to such degree that no result of the election is not tainted by impropriety and unfairness.  To preserve the integrity of an election system, the result should not be allowed to stand.  For this reason, this Honourable Tribunal should exercise its power to dissolve the Management Committee.”

7. The Applicants’ application is based on Section 31 of the BMO.  Section 31(1) provides as follows:

(1) The tribunal may, upon application made to it by ―

(a) an owner;

(b) a registered mortgagee (if any);

(c) an administrator; or

(d) the Authority or an authorized officer,

dissolve the management committee and appoint an administrator, or remove and replace an administrator, as the case may be.

7.1 The “management committee” under Section 31(1) refers, of course, to a management committee which enjoys lawful status; a “management committee” which does not have lawful status, such as a committee which has not been elected by lawful means, is not a lawful management committee at all.  What the Applicants are seeking to dissolve is obviously the 14^th Management Committee.  Paragraph 5(1) of Schedule 2 to the BMO provides that, at every alternate annual general meeting, all members of the management committee shall retire from office.  During the meeting in question, the 2^nd Respondent had dissolved the 13^th Management Committee.

7.2  The first, third and fourth grounds for the present application all occurred prior to the appointment of the 14^th Management Committee, which is therefore not liable for those occurrences.  This Management Committee has not failed to perform its duties, and the Applicants have not provided any sufficient reason for dissolving it.  The above three grounds only seek to challenge the validity of the election procedure and have no causal relationship with whether the management committee is to be dissolved.  If the Applicants wish to challenge the validity of the appointment of the 14^th Management Committee or the relevant resolution, they should make an application accordingly.   If the appointment of a management committee is invalid, that committee will not be in existence.

8. Given the Applicants are making an application against the management committee, that committee and not the incorporated owners should be made the respondent.  Section 29 of the BMO makes it clear that the management committee is only responsible for exercising and performing on behalf of the owners incorporation the powers and duties conferred by the BMO on the corporation.  The management committee is not the corporation itself.  Furthermore, Section 45(2) of the BMO confers on the management committee, the corporation and others the power to commence proceedings specified in Schedule 10.  This shows that the management committee and the corporation are separate entities.  The management committee is entitled to commence proceedings and, of course, can be made a party to proceedings.

8.1 Schedule 10 to the BMO relates to the hearing and determination of specified proceedings by the Lands Tribunal.  Paragraph 5 of the Schedule provides as follows:

5. Proceedings relating to any question of law concerning the powers and duties of ―

(a)  a corporation;

(b) a management committee, and of the chairman, secretary and treasurer thereof;

(c) a manager within the meaning of section 34D(1);

(d) an owners’ committee within the meaning of that section;

(e) the tenants’ representative,

including such powers and duties (if any) of a financial, pecuniary or fiduciary nature.

8.2  Under Section 34D(1) of the BMO, an “owners’ committee”, in relation to a building, means:

(a) where a management committee has been appointed pursuant to Sections 3, 3A, 4 or 40C, the management committee; or

(b) where no management committee has been so appointed, the committee of owners (howsoever named) formed under and in accordance with the deed of mutual covenant in respect of the building.

In relation to Paragraph 5(d) of Schedule 10, a management committee can be made a respondent to proceedings.

8.3 Even if this Tribunal makes an order against the incorporation for the dissolution of the management committee, the order is one which requires the committee to be dissolved instead of requiring the incorporation to dissolve the committee.  In the absence of an order, the incorporation is under no obligation to dissolve the committee.  On the other hand, the order cannot be enforced against the committee, which is not a party to the proceedings.  As the present proceedings are commenced pursuant to Section 31 of the BMO, the “management committee” must be made a respondent thereto.

8.4 As the Applicants have not initiated proceedings against the 14^th Management Committee, their application is bound to fail.

9. The Applicants’ application to “convene” an owners’ general meeting is made on the basis of Paragraph 1(2) of Schedule 3 to the BMO.  The matters specified by the owners were:

②re-elect the management committee of the incorporated owners.

①discharge the current management committee.

9.1 The owners sought to discharge “the current management committee”, but which committee did this refer to?  Page 119 of Exhibit A7 produced by the Applicants sets out the minutes of the meeting in question, as follows:

After the meeting started:

1.  The person presiding over the meeting announced the dissolution of the management committee of the incorporated owners and reported on affairs relating to the building.

2.  That night, the owners raised questions with the person presiding over the meeting relating to the building but did not receive a reasonable explanation.  The chairman even said at once: ‘I am the chairman.  If it doesn’t sound right to you, you can go out.’  It infuriated the owners to hear this.

3.  There and then, some owners proposed to discharge the management committee, and 30 owners who were present put down their signatures in support.  The document was handed by [a representative of] the District Office who was present to the incorporated owners.

4. The person presiding over the meeting then immediately announced that the meeting was postponed indefinitely.

5.   …

9.2 What the owners sought to discharge was either the 13^th Management Committee or a management committee that did not exist.  When the owners made their request, the 13^th Management Committee had been dissolved and the 14^th Management Committee had not yet been appointed, and therefore the “current management committee” referred to by the owners simply did not exist.  It follows that the management committee that the owners sought to discharge in their first request did not exist.  A “re-election” must be preceded by a “discharge”.  If no question of a “discharge” arises, then no question of a “re-election” can arise.  Therefore, even if the 2^nd Respondent convened a general meeting, there would be nothing for the meeting to resolve.  The owners’ request was plainly made to the chairman of the 13^th Management Committee, but since that committee had ceased to exist by that time, Paragraph 1(2) of Schedule 3 is not engaged.  Furthermore, Section 14(1) of the BMO only empowers a meeting of an owners incorporation to pass resolutions with respect to the control, management and administration of the common parts of the building, and Section 18(1) requires the corporation to enforce the obligations contained in the deed of mutual covenant for the control, management and administration of the building.  The matters which the owners sought to have resolved at the meeting did not exist and, as such, were not matters on which the meeting of the corporation was empowered to pass resolutions.  Therefore, the chairman of the management committee was not entitled to convene a general meeting to resolve those matters.

10. The Applicants’ first request is to dissolve the current Management Committee and convene a meeting of owners to appoint a Management Committee.  These two items, however, are contradictory to each other, because upon dissolution of the current management committee, there will be no chairman of a management committee of the incorporated owners, and therefore this Tribunal cannot compel the 2^nd Respondent (being chairman of the 14^th Management Committee) to convene an owners’ meeting.  If this Tribunal is to make a mandatory order against the 2^nd Respondent, then no order should be made to dissolve the management committee.  The above two items cannot co-exist.  Section 31(1) of the BMO does not empower this Tribunal to order that an owners’ meeting be convened, and Paragraph 1(2) of Schedule 3 does not empower this Tribunal to dissolve the management committee.  If the management committee is not to be dissolved, this Tribunal should not make an order appointing an administrator.

11. Even if I accepted the Applicants’ evidence and held that the 2^nd Respondent had in fact announced that the meeting in question was adjourned indefinitely, and at that time the 14^th Management Committee had not yet been elected, the Applicants’ application would still not succeed because there was simply no management committee to be dissolved, nor was there a chairman of a management committee to convene an owners’ meeting.  Even if the meeting on 14^th June were invalid, the result would have been the same.

12. For the above reasons, I dismiss all applications by the Applicants.

13. Costs

I make an order nisi that the Applicants are to pay costs of the two Respondents in the present case (including costs in instructing Counsel), such costs to be taxed if not agreed.  If no application is made by any party within 21 days, this costs order will become absolute.