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DCMP 1289/2023
DCMP 1290/2023
DCMP 1291/2023
DCMP 1292/2023
DCMP 1293/2023
[2025] HKDC 1572
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MISCELLANEOUS PROCEEDINGS NO 1289 OF 2023
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IN THE MATTER of ALL THOSE 4/608th parts or shares of and in ALL THAT piece or parcel of ground registered in the Land Registry at LOT NO.178 IN DEMARCATION DISTRICT NO.337 AND THE EXTENSION THERETO And of an in the messuages, erections and buildings thereon known as THE SEA RANCH TOGETHER with sole and exclusive right and privilege to hold use occupy and enjoy the property in ALL THAT APARTMENT A ON BEACH LEVEL OF BEACH CHALET NO.5 AND PORTION OF GARDEN THERETO OF THE SEA RANCH DD337 LOT NO.178 & EXTENSION, LANTAU ISLAND, NEW TERRITORIES (hereinafter called “the said Premises”)
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and |
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IN THE MATTER OF Order 88 Rules 1 and 5A of the Rules of the District Court (Cap.336H) |
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and |
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IN THE MATTER of Section 19 of Building Management Ordinance (Cap.344) |
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and |
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IN THE MATTER of Section 38A of District Court Ordinance (Cap.336) |
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BETWEEN
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THE INCORPORATED OWNERS OF THE SEA RANCH |
Plaintiff |
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and
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HOLIDAY RESORTS (H.K.) LIMITED |
Defendant |
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IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MISCELLANEOUS PROCEEDINGS NO 1290 OF 2023
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IN THE MATTER of ALL THOSE 4/608th parts or shares of and in ALL THAT piece or parcel of ground registered in the Land Registry at LOT NO.178 IN DEMARCATION DISTRICT NO.337 AND THE EXTENSION THERETO And of an in the messuages, erections and buildings thereon known as THE SEA RANCH TOGETHER with sole and exclusive right and privilege to hold use occupy and enjoy the property in ALL THAT APARTMENT B ON BEACH LEVEL OF BEACH CHALET NO.5 OF THE SEA RANCH DD337 LOT NO.178 & EXTENSION, LANTAU ISLAND, NEW TERRITORIES (hereinafter called “the said Premises”)
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and |
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IN THE MATTER OF Order 88 Rules 1 and 5A of the Rules of the District Court (Cap.336H) |
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and |
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IN THE MATTER of Section 19 of Building Management Ordinance (Cap.344) |
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and |
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IN THE MATTER of Section 38A of District Court Ordinance (Cap.336) |
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BETWEEN
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THE INCORPORATED OWNERS OF THE SEA RANCH |
Plaintiff |
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and
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HOLIDAY RESORTS (H.K.) LIMITED |
Defendant |
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IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MISCELLANEOUS PROCEEDINGS NO 1291 OF 2023
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IN THE MATTER of ALL THOSE 4/608th parts or shares of and in ALL THAT piece or parcel of ground registered in the Land Registry at LOT NO.178 IN DEMARCATION DISTRICT NO.337 AND THE EXTENSION THERETO And of an in the messuages, erections and buildings thereon known as THE SEA RANCH TOGETHER with sole and exclusive right and privilege to hold use occupy and enjoy the property in ALL THAT APARTMENT B ON FIRST LEVEL OF BEACH CHALET NO.5 OF THE SEA RANCH DD337 LOT NO.178 & EXTENSION, LANTAU ISLAND, NEW TERRITORIES (hereinafter called “the said Premises”)
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and |
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IN THE MATTER OF Order 88 Rules 1 and 5A of the Rules of the District Court (Cap.336H) |
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and |
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IN THE MATTER of Section 19 of Building Management Ordinance (Cap.344) |
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and |
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IN THE MATTER of Section 38A of District Court Ordinance (Cap.336) |
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BETWEEN
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THE INCORPORATED OWNERS OF THE SEA RANCH |
Plaintiff |
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and
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HOLIDAY RESORTS (H.K.) LIMITED |
Defendant |
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IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MISCELLANEOUS PROCEEDINGS NO 1292 OF 2023
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IN THE MATTER of ALL THOSE 4/608th parts or shares of and in ALL THAT piece or parcel of ground registered in the Land Registry at LOT NO.178 IN DEMARCATION DISTRICT NO.337 AND THE EXTENSION THERETO And of an in the messuages, erections and buildings thereon known as THE SEA RANCH TOGETHER with sole and exclusive right and privilege to hold use occupy and enjoy the property in ALL THAT APARTMENT A ON STUDIO LEVEL OF BEACH CHALET NO.5 OF THE SEA RANCH DD337 LOT NO.178 & EXTENSION, LANTAU ISLAND, NEW TERRITORIES (hereinafter called “the said Premises”)
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and |
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IN THE MATTER OF Order 88 Rules 1 and 5A of the Rules of the District Court (Cap.336H) |
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and |
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IN THE MATTER of Section 19 of Building Management Ordinance (Cap.344) |
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and |
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IN THE MATTER of Section 38A of District Court Ordinance (Cap.336) |
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BETWEEN
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THE INCORPORATED OWNERS OF THE SEA RANCH |
Plaintiff |
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and
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HOLIDAY RESORTS (H.K.) LIMITED |
Defendant |
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IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MISCELLANEOUS PROCEEDINGS NO 1293 OF 2023
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IN THE MATTER of ALL THOSE 4/608th parts or shares of and in ALL THAT piece or parcel of ground registered in the Land Registry at LOT NO.178 IN DEMARCATION DISTRICT NO.337 AND THE EXTENSION THERETO And of an in the messuages, erections and buildings thereon known as THE SEA RANCH TOGETHER with sole and exclusive right and privilege to hold use occupy and enjoy the property in ALL THAT APARTMENT B ON STUDIO LEVEL OF BEACH CHALET NO.5 OF THE SEA RANCH DD337 LOT NO.178 & EXTENSION, LANTAU ISLAND, NEW TERRITORIES (hereinafter called “the said Premises”)
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and |
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IN THE MATTER OF Order 88 Rules 1 and 5A of the Rules of the District Court (Cap.336H) |
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and |
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IN THE MATTER of Section 19 of Building Management Ordinance (Cap.344) |
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and |
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IN THE MATTER of Section 38A of District Court Ordinance (Cap.336) |
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BETWEEN
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THE INCORPORATED OWNERS OF THE SEA RANCH |
Plaintiff |
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and
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HOLIDAY RESORTS (H.K.) LIMITED |
Defendant |
| Before: |
Deputy District Judge Alfred Cheng in Court |
| Date of Hearing: |
13 March 2025 |
| Date of Judgment: |
15 September 2025 |
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JUDGMENT
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1. The Sea Ranch consists of apartment blocks on the southern side of Lantau Island facing Cheung Chau and Shek Kwu Chau.
2. The Incorporated Owners of the Sea Ranch (“the IO”) is the common plaintiff in these 5 actions.
3. Holiday Resorts (HK) Limited (“Holiday Resorts”) is the common defendant in these 5 actions; the IO claims that Holiday Resorts is the owner of 5 apartments in the Sea Ranch. The 5 apartments are in the same block of building known as Beach Chalet No 5:-
3.1. Apartment A on Beach Level, for DCMP 1289/2023;
3.2. Apartment B on Beach Level, for DCMP 1290/2023;
3.3. Apartment B on First Level, for DCMP 1291/2023;
3.4. Apartment A on Studio Level, for DCMP 1292/2023; and
3.5. Apartment B on Studio Level, for DCMP 1293/2023.
4. I shall collectively refer to these apartments as “the 5 Apartments” in this Judgment.
5. The relief sought by the IO in these 5 actions is the same: it seeks to enforce the charges for outstanding management fees and contributions, registered against each of the 5 Apartments owned by Holiday Resorts, by an order for sale of these apartments.
6. The basis of the IO’s claim in these 5 actions are identical. The defence relied by Holiday Resorts is also identical across the 5 actions. I will take DCMP 1289/2023 as an example to set out the background relevant to the issues I am asked to resolve.
DCMP 1289/2023
7. Holiday Resorts is the government lessee of Lot No 178 in Demarcation District 337, on which the Sea Ranch now sits.
8. As the developer, Holiday Resorts erected 20 apartment blocks, each of 4 storeys high, known as Chalets. Chalet No 1-9 are known as to the Beach Chalet. The other apartment blocks are known as the Mount Chalets or the Park Chalets. A clubhouse and other utility facilities were also constructed.
9. On each storey of a Beach Chalet there are 2 apartments, viz Apartment A and Apartment B.
10. A Deed of Mutual Covenant was executed on 31 July 1979 (“the DMC”) between Holiday Resorts, the management company, and the first owner. Under the DMC, the Sea Ranch was notionally divided into 608 equal undivided shares. For the purpose of disposing of the 5 actions before me, only the following allocation of shares are relevant:-
10.1. Each of the apartments in Beach Chalet No 5 was allocated 4 out of 608 shares;
10.2. Each of the apartments in Park Chalet No 11 was allocated 2 out of 608 shares; and
10.3. The utility facilities were allocated 1 out of 608 shares, and that share was defined as “the Developer’s share”.
11. As common in deeds of mutual covenant in Hong Kong, the DMC set out the responsibilities of the owners of undivided shares in the Sea Ranch to pay management fees and other upkeep. For example, clause 6(c)(i) set out the remuneration payable to the management company: inter alia, HK$150.00 per month for each apartment in a Beach Chalet; and HK$75.00 per month by each of the apartments in a Park Chalet.
12. Clause 8(a)(i) set out the owners’ duty to pay for the management expenses of the Sea Ranch, the interpretation of which is a core dispute between the parties. I reproduce the full text as follows:-
“The owner of each 1/608th undivided shares or any portion(s) thereof (other than the Developer’s share and the portion(s) of the Share attached to the Developer’s Term) shall pay 1/607th share or portion(s) thereof of the Estate Management account referred to in Clause 7(b)(1)(i) of this Deed in respect of each of such undivided share or portion(s) of which he is the owner, such payment to be made by equal monthly payments in advance on the first day of each calendar month. In addition thereto, each such owner shall pay on demand, the like proportion of any further management expenses which may be incurred or become payable in accordance with the provisions of this sub-paragraph over and above the amounts of the said monthly payments. For the purpose of determining the contribution hereto mentioned, the owner of the Developer’s share shall be exempted from any contribution.”
13. Since the Developer’s share was excluded from the liability to pay contributions, the owner of each of the other subdivided shares had to pay 1/607 of the management expenses of the Sea Ranch.
14. I note that the term “the Developer’s Term” used in clause 8(a)(i) was not defined in the DMC itself.
15. Clause 8(d)(1) further set out that any management expenses or other contributions overdue for more than 7 days shall attract interest at the rate of HK$1 for each HK$100 (or part thereof) for each period of 30 days (or part thereof) that the same remained unpaid. Clause 8(d)(2) imposed a collection charge of HK$300.00 to cover the cost of the management company for the extra work occasioned by the default.
16. A Supplemental Deed of Mutual Covenant was executed on the same day as the DMC (“the SDMC”) between Holiday Resorts, the management company, and a Mr Cheung Ming as the first “Term Owner”:-
16.1. The 1st recital to the SDMC stated that the SDMC was supplemental to the DMC.
16.2. The 7th recital, together with the Schedule, stated that Holiday Resorts set aside (i) all apartments except Apartment A of the First Level of Beach Chalet No 5[1]; and (ii) Apartments C & D on all storeys of Park Chalet No 11 for sale to Term Owners. I will refer these apartments as “the Term Apartments”.
16.3. The 9th recital referred to the notional division of a calendar year into 26 terms, each lasting for 2 weeks. The 1st term was stated to commence at 5:00pm on the 1st Friday in January and ends at 12:00 noon on the Friday 14 days thereafter; this term was defined as “the Developer’s Term”.
16.4. Under the 8th recital, each term was allocated 1 of 26 notional undivided shares of either the 4/608th undivided shares of an apartment in a Beach Chalet, or the 2/608th undivided shares of an apartment in a Park Chalet, as the case might be.
16.5. The 10th recital referred to the assignment of 1/26th undivided shares in 4/608th undivided shares in the Sea Ranch by Holiday Resorts to Mr Cheung Ming, together with the exclusive right to use and occupy the 16th term in a year of Apartment B on the Second Level of Beach Chalet No 5.
16.6. Clause 8(a) set out the responsibility of each Term Owner to pay the additional management expenses to be incurred for the internal management of the Term Apartments amongst the Term Owners. In short, each Term Owner (except the owner of the Developer’s Term) had to contribute 1/25 of the additional management expenses. The owner of the Developer’s Term was expressly exempted from any contribution.
17. I think there is no serious dispute that, as described by Mr Wong Tak Wing (“Mr Wong”), the treasurer of the IO’s management committee and who deposed 2 affirmations in support of the IO’s case, that Holiday Resorts as the developer intended to operate the Term Apartments as vacation homes for individuals or corporations. Based on land search records, Holiday Resorts indeed managed to sell some terms to various individual or corporate entities. Mr Walter Lau, counsel for Holiday Resorts, has kindly prepared a table which shows that, for Apartment A on Beach Level of Beach Chalet No 5, Holiday Resorts owned 10 of the 26 terms, plus the half-share of another 3 terms[2].
18. I should also mention that there was a Second Supplemental Deed of Mutual Covenant executed on 19 March 1980 (“the SSDMC”) between Holiday Resorts, the management company, and a Mr Christian Helmut Thomsen as a Term Owner. The SSDMC was said to be supplemental to both the DMC and the SDMC. In essence, the SSDMC imported a “floating term scheme”, by which the management company was authorized to issue licences to term owners who joined the scheme to occupy the Term Apartments for terms (including those owned by Holiday Resorts) which owners had joined the scheme. Hence, a Term Owner who joined the scheme would not be limited to the particular term they owned, but could enjoy any of the Term Apartments across the available terms.
19. The IO was incorporated on 2 July 1980.
20. The IO claims that Holiday Resorts has been in default of paying management fees and other contributions for the 5 Apartments since 1999, coinciding with the time Holidays Resorts stopped operating the Term Apartments as vacation homes. From a reading of the affirmation evidence Holiday Resorts has filed, there is no serious challenge on how the managements fees and contributions were calculated, and the fact that Holiday Resorts did not pay them. For Apartment A on Beach Level of Beach Chalet No 5 to which DCMP 1289/2023 relates, 2 charges were registered by the IO for outstanding management fees, contributions, and interest:-
20.1. A Memorandum of Charge dated 13 September 2005 for HK$230,634.00 plus interest was registered at the Land Registry under Memorial No.059170015XXXX; and
20.2. A Memorandum of Charge dated 30 December 2022 for HK$679,898.00 plus interest was registered at the Land Registry under Memorial No.2301170127XXXX.
21. In both Memoranda, it was stipulated that Holiday Resorts was the registered owner of 4/608th undivided shares in the Sea Ranch, and was entitled to the exclusive use and occupation of Apartment A on Beach Level of Beach Chalet No 5.
22. The IO argues that, unless Holiday Resorts pays the outstanding management fees, contributions and interest covered by the 2 charges, the apartment should be sold to realize proceeds to redeem the charges. The IO puts forward evidence showing that there is no objection from the encumbrancer ranking in priority to a proposed sale of the apartment, and the sale proceeds should be sufficient to discharge both the prior encumbrances and the 2 charges.
23. Holiday Resorts denies that it has the legal liability to pay the outstanding management fees and contributions as stipulated in the 2 charges. I think Mr Henry Cheng, counsel for the IO, has correctly summarized the defence in §7 of his written submissions, which I gratefully repeat below with minor stylistic amendments:-
23.1. By the SDMC, Holiday Resorts notionally sub-divided each Term Apartment into 26 terms, with each term being allocated a 1/26th of 4/608th undivided shares in the Sea Ranch, or of 2/608th divided shares in the same, as the case may be.
23.2. Terms were then sold and the undivided shares assigned by Holiday Resorts to various owners, with the exclusive right to use and occupy a Term Apartment during the period covered by the assigned terms. As a result of such assignments, Holiday Resorts was no longer the sole registered owner of the Term Apartments.
23.3. Based on clause 8(a)(i) of the DMC, Holiday Resorts was thus not liable to pay the management fees and contributions payable by other Term Owners, as the liability to pay management fees and contributions fell on each Term Owner as “the owner of each 1/608th undivided shares or any portion(s) thereof”. The IO was not entitled to register the Memoranda of Charge against the 5 Apartments nor to enforce them, as they were invalid.
DCMP 1290-1293/2023
24. Against each of the remaining 4 of the 5 Apartments, the IO has registered 2 charges for outstanding management fees, contributions, and interest on the same days as those relating to DCMP 1289/2023. The sums charged are also the same: for the Memoranda of Charge respectively dated 13 September 2005, each stipulated that Holiday Resorts failed to pay HK$230,634.00 plus interest; for the Memoranda of Charge respectively dated 30 December 2022, each stipulated that Holiday Resorts failed to pay HK$679,898.00 plus interest.
Interpretation of the DMC
25. Mr Cheng set out the IO’s arguments as to why Holiday Resorts remains liable to pay the management fees and contributions covered by the various charges in §8 of his written submissions:-
25.1. The SDMC only created rights for the Term Owners to exclusively use and occupy the Term Apartments during specific times of the year. These were not rights subsisting as a legal estate in land and binding on the other co-owners of the Sea Ranch. As such, Holiday Resorts remained as the sole owner of the 5 Apartments at all times.
25.2. In any event, Holiday Resorts owned at least 1 term in each of the 5 Apartments at all times. Thus, it remained liable to pay the management fees and contributions under the DMC with respect to the 5 Apartments; such liability was not affected by its assignment of some of the terms to other term owners.
26. Mr Cheng refers me to The Incorporated Owners of Po Lok Mansion v Richards Company Limited CACV 282/2004 (Cheung, Yeung JJA & Yam HJ; 5 May 2005). Yam J, giving judgment for the Court of Appeal, said the following at §11:-
“… The Sub-DMC does not bind all the owners of the building. It is just an agreement entered into by a deed among nearly all of the owners of the commercial centre. The binding deed for all the owners is the DMC from which the Incorporated Owners of the whole building received their power. Thus the Incorporated Owners should collect its charges according to the DMC and not the Sub-DMC. In other words, section 22(2) would have an effect of empowering the Incorporated Owners to pursue its claim for the due proportion of each owner’s share according to the share of the owner or the proportion of the undivided shares of the owners as provided under the DMC.”
27. Further, at §13:-
“It may well be a matter for all the owners of the commercial units who are bound by the Sub-DMC to collect all the charges according to their agreed proportions and hand it up to the Incorporated Owners. If that is the case the Incorporated Owners could accept one lump sum from all the owners who were bound by the Sub-DMC. Even then the Incorporated Owners are not accepting the proportion provided under the Sub-DMC. They are only accepting the total lump sum provided under the DMC …”
28. Mr Cheng submits that, following the reasoning of the Court of Appeal in Po Lok Mansion, the IO shall not be bound by the SDMC. Since Holiday Resorts was the owner of the 4/608th undivided shares allocated to each of the 5 Apartments in the DMC prior to the notional sub-division in the SDMC, it remained liable to pay the management fees and contributions for the 5 Apartments.
29. In my judgment, the correct interpretation of Clause 8(a)(i) of the DMC makes the present case distinguishable from Po Lok Mansion. I disagree with Mr Cheng that Holiday Resorts remained liable to pay the management fees and contributions in relation to the whole of the 5 Apartments.
30. I find it significant to first bear in mind that the DMC and the SDMC were executed at the same time. In my judgment, these 2 documents contemplated the existence of the other, and this should inform the court how to approach the interpretation of clause 8(a)(i) of the DMC. The SDMC obviously contemplated the existence of the DMC executed on the same day, as it was expressly executed to supplement the DMC. There were also provisions in the DMC that could only make sense by the contemporaneous execution of the SDMC:-
30.1. The 5th Schedule to the DMC set out rules concerning the clubhouse. Paragraph 7 stated that the clubhouse shall have a class of members called Term Members, separate and distinct from another class of members known as Owner Members. Whilst an Owner Member had to be the registered owner of any undivided shares in the Sea Ranch, a Term Member had to be a registered owner of “any portion of any undivided share” in the Sea Ranch, who was entitled to the exclusive use and occupation of any apartment for a fixed term which was less than a whole year. Paragraph 8(g) went on to provide that only 1 membership account shall be available to each apartment or “Apartment Term”.
30.2. In my judgment, the references in the 5th Schedule to a “term” must be understood to be that introduced by the SDMC. Otherwise, it is difficult to ascertain the meaning the phrase bore, as it was not defined in the DMC itself.
30.3. And as I set out above, clause 8(a)(i) of the DMC referred to “the Developer’s Term”, which was only defined in the SDMC. In my view, this suggests that the provisions of the DMC must be read together with the creation of Term Owners for the Term Apartments. Otherwise, the wordings used in the DMC seem to me to be superfluous at various junctures and carrying unknown meaning.
31. In light of the above, I agree with Mr Lau that “any portion thereof” following “the owner of each 1/608th undivided shares” in clause 8(a)(i) of the DMC[3] must have been intended to cover an owner of each 1/26th of 2/608th or 4/608th undivided shares as described by the SDMC. Since clause 8(a)(i) imposed the liability to pay management fee and other contributions on owners of the whole 1/608th undivided share and owners of a portion of such share in the alternative, I find that the DMC imposed a direct liability on a Term Owner to pay management fees and contributions due under it.
32. As a result of the above analysis, I do not agree with Mr Cheng that the present case is similar to Po Lok Mansion. The Court of Appeal’s decision is distinguishable because the DMC in that case was executed years before the Supplemental DMC regulating the commercial areas of the building only. Therefore, the DMC in that case could not be understood to be imposing a direct liability on the owner of a portion of the undivided share, the notional sub-division of which was done later by way of the Supplemental DMC.
33. With respect, Mr Cheng’s reliance on Godfrey J’s judgment in Lai Wing-ho and Anor v Chan Siu-fong [1993] 1 HKLR 319 at 324 is misplaced. All Godfrey J stated was the trite principle that an owner of any undivided shares in land cannot simply assign the exclusive possession of a part of the land without also assigning to the purchaser at least some undivided shares. Any such purported assignment of the exclusive possession of a part of the land alone would at best be a licence giving a personal right to the grantee enforceable against the grantor, but not against the other co-owners of the land. Godfrey J was plainly not discussing the effect for a case in which an undivided share in land was further subdivided notionally, which was the case for the SDMC here.
34. I also reject the other submissions made by Mr Cheng in support of the IO’s case.
35. Mr Cheng invites me to look at Clause 19(d), which provided that:-
“No portion of any apartment shall be sold, assigned, mortgaged, charged, leased or otherwise disposed of separately from the whole to the intent that each apartment shall be owned and occupied as single residence.”
36. Mr Cheng submits that since clause 19 mandated each apartment to be owned and occupied as single residence, it must mean that ownership of the same Term Apartment by different Term Owners was plainly not allowed by the DMC, and thus clause 8(a)(i) could not have imposed a direct liability of a Term Owner to pay management fees and contributions.
37. I disagree with Mr Cheng’s interpretation of clause 19. Clause 5 allowed the owner of any undivided share or a part thereof to sell, assign, mortgage, lease, licence or otherwise dispose of or deal with the share without reference to other owners. If Mr Cheng’s interpretation were right, clause 19 would be in apparent conflict with clause 5 as to the possibility of dealing with part of an undivided share. In my judgment, clause 19 only required owners to preserve the physical unity of an apartment, in that there should not be any physical partitioning into different parts.
38. That conveniently brings me to Mr Cheng’s submissions that the SDMC did not create any legal estate in land in the further divisions of an undivided share in the Sea Ranch. I cannot accept his submissions for the following reasons:-
38.1. First, clause 5 of the DMC does not appear to support Mr Cheng’s submissions. Clause 5 of the SDMC also contained a similar provision.
38.2. In addition, clause 15(b) of the SDMC stated that the reference to a Term Owner shall, unless the context otherwise required, include each person in whom the legal estate in 1/26th of 2/608th or 4/608th undivided shares in the Sea Ranch was vested. The clause continued to make provisions for a mortgagee or a lessee for a long lease. Therefore, the express provisions of the SDMC were in contrary to Mr Cheng’s proposition.
39. In my judgment, Mr Lau is correct to submit that the IO had no recourse against Holiday Resorts for all outstanding management fees and contributions with respect to the 5 Apartments. I find that the Memoranda of Charge registered against each of the 5 Apartments were invalid in that they purported to charge the interest of Holiday Resorts as the sole owner of the 5 Apartments. Hence, an order for sale should not be granted to the IO.
Alleged admission by Holiday Resorts
40. The IO claims that it is entitled to the relief sought in these 5 actions, because Holiday Resorts previously admitted to be the sole owner of the 5 Apartments, and dealt with them as such.
41. Mr Wong refers to 2 District Court actions that the IO commenced against Holiday Resorts in 2016, viz DCMP 2868/2016 and DCMP 2869/2016 (“the 2016 Actions”). In those actions, the IO’s claim against Holiday Resorts was basically identical as the present 5 actions; but the 2 apartments in question were 2 other Term Apartments in Beach Chalet No 5.
42. The IO obtained orders for sale in the 2016 Actions as Holiday Resorts did not object to the IO’s application.
43. Back then, a Mr Ng Chi Ping (“Mr Ng”), a then director of Holiday Resorts, filed an affirmation dated 17 January 2017 confirming that Holiday Resorts would not oppose to the IO’s application. In paragraph 5 of that affirmation, Mr Ng Chi Ping stated that Holiday Resorts needed to pay off the outstanding fees and interest. Therefore, Holiday Resorts decided to sell all of the Term Apartments, and would use the proceeds to pay the outstanding fees and interest sought by the IO in the 2016 Actions. Mr Ng then exhibited the board minutes of Holiday Resorts dated 2 December 2016. The minutes referred to the 2016 Actions relating to 2 of the Term Apartments. The board then resolved unanimously that:-
“由於共[sic]契已定明物業的業主有責任向法團繳付管理費及其他相關的雜費,但以公司目前的財政狀況並沒有能力清繳竹所欠法團的費用及政府的稅務,而利息亦每天在增加,故董事局一致同意法團把物業拍賣,並授權董事伍志平先生全權處理上述的案件及跟進拍賣的事宜。”
44. In short, the board recognized that the DMC stated that an owner had the duty to pay management fees and other contributions. But given the dire financial condition of Holiday Resorts, the board agreed to the IO’s sale of the properties by auction.
45. Mr Wong further refers to a letter signed off by Mr Chong Lap Fu George (“Mr Chong”), then a director of Holiday Resorts, on 17 August 2022. In this letter, Holiday Resorts acknowledged that the sale of the 2 Term Apartments relating to the 2016 Actions yielded proceeds of around HK$2.6 million. It agreed and authorized IO’s solicitors to apply the proceeds to partially repay the outstanding management fees owed by Holiday Resorts for the other 13 Term Apartments.
46. Thirdly, Mr Wong referred to some tenancy agreements signed by Holiday Resorts to rent out the 5 Apartments on a continuous basis in 2023 and 2024. The IO argues that this shows Holiday Resorts dealt with the 5 Apartments as the sole owner.
47. I am unable to accept that the IO is entitled to the relief sought in the present 5 actions based on the alleged admissions made by Holiday Resorts:-
47.1. It is not clear what legal effect Mr Cheng invites me to give to these alleged admissions: should they be considered to be promises made by Holiday Resorts, which are enforceable by the IO? Or they showed that Holiday Resorts should be estopped from denying its sole ownership of the 5 Apartments? In the absence of any submission from the IO on the legal effect I should give to the alleged admissions, I fail to see how they can assist the IO.
47.2. I find the alleged admissions far from a clear acceptance of liability by Holiday Resorts to pay all outstanding management fees and contributions in relation to the 5 Apartments. It was not wrong to say that Holiday Resorts had the liability to pay management fees and contributions for the 5 Apartments with reference to the number of terms that it owns for each of those apartments. The words and expressions the IO relies on were all made in the context of the 2016 Actions, in relation to the 2 Term Apartments they related to. In my view, without clearer words to the effect, I do not find it sufficiently clear that Holiday Resorts did unequivocally accept its liability to pay all outstanding management fees and contributions for the 5 Apartments.
47.3. Further, Madam Hung Lai Ping (“Madam Hung”), a director of Holiday Resorts who was also present at the board meeting on 2 December 2016, denies in her affirmations that Holiday Resorts admitted the liability to pay the IO in full. She claims that the board resolution was obtained by fraud; Mr Ng allegedly colluded with the IO to force the sale of the 2 Term Apartments. She denies the board ever authorizing Mr Chong to issue the letter in August 2022. She has also made various factual allegations surrounding the tenancy agreements the IO refers to.
47.4. Neither party applies for cross examination of the deponents. Mr Ng, Mr Chong and other persons mentioned by Madam Hung allegedly having a part to play for the tenancy agreements have not provided evidence to this court. Hence, I do not think the court is able to come to any definite finding regarding the disputes on the factual matters. I find it inept to give reliance to the alleged admissions relied on by the IO.
48. In summary, I do not find the alleged admissions relied on by the IO sufficient to affect the outcome based on the interpretation of the DMC.
Conclusion
49. I dismiss these 5 actions with costs to the defendant (with certificate for counsel).
50. On the court’s own motion, the IO is ordered to remove the Memoranda of Charge it registered against each of the 5 Apartments from the Land Registry forthwith at its own costs.
51. The defendant submitted its statement of costs for summary assessment at the end of the hearing. It claims HK$417,320.00 as the total costs for the 5 actions. I think some reduction is called for, in that (i) the hourly rate adopted by the handling solicitor is HK$4,000.00 rather than HK$3,860.00 as usually allowed in party-and-party taxation at the District Court; (ii) item C1 for attendance on client is, in my judgment, on the high side; (iii) item D for the professional work done by the handling solicitor looks excessive to me when there is significant duplication amongst the 5 actions. Together with other minor deductions I think reasonable, the defendant’s costs are summarily assessed at HK$320,000.00 (inclusive of counsel fees), to be shared equally amongst the 5 actions.
52. The above costs order (including the summary assessment) is nisi. Unless there is any application to vary it within 14 days of this Judgment, the costs order nisi shall become absolute. Any application for variation shall be disposed on paper.
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( Alfred C P Cheng ) |
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Deputy District Judge |
Mr Henry Cheng, instructed by C W Chan & Co, for the plaintiff
Mr Walter Lau, instructed by K B Chau & Co, for the defendant
[1] Of which the 5 Apartments formed part.
[2] Similar tables Mr Lau has prepared for the other 4 apartments in relation to DCMP 1290-1293/2023 also show that Holiday Resorts does not own all 26 terms for each of them.
[3] The wording can also be found in Clauses 3, 4 and 5 of the DMC.
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