WINNER MANAGEMENT LTD v. LEUNG LAI LING

HCSA 50/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

SMALL CLAIMS TRIBUNAL APPEAL NO 50 OF 2013

(ON APPEAL FROM SMALL CLAIMS TRIBUNAL CLAIM

NO 46901 OF 2012)

____________

________________________________

R E A S O N S  F O R  D E C I S I O N

________________________________

Introduction

1.  These are applications for leave to appeal against the decisions of the Small Claims Tribunal (“the tribunal”) dated 23 September and 4 November 2013 respectively.  The applicant was the claimant in the 4 related claims lodged with the tribunal.  The issues involved are common among the said claims (and hence these applications).

2.  The tribunal dismissed the said claims in the September 2013 decision, and refused to review its dismissal in the November 2013 decision.

3.  Feeling aggrieved by the said decisions, the applicant made these applications pursuant to s 28(1)(a), Small Claims Tribunal Ordinance (Cap 338) (leave to appeal involving a question of law alone).

4.  At the end of the hearing before me, I refused these applications, and indicated that written reasons for doing so would be given later.  They are as follows.

Background

5.  The applicant was the provider of central air-conditioning service (“a/c service”) to shops located at the podium of a commercial-residential development in Ma On Shan (“the said development”).  The applicant’s claims were for air-conditioning charges (“a/c charges”) against 4 of the shops of the said development (the defendants being the respective shop owners).

6.  The background facts below are undisputed.  The said development consists of, among other things, a podium where shops are located, and residential units (which are located in multi-storey building blocks erected above the podium).

7.  The applicant has provided a/c service to the said shops since about 1992.  However, in March and April 2012 the defendants sent letters to the applicant making complaints against the service quality, and notifying the applicant its a/c service would be terminated from 1 May 2012 if the applicant did not reply.  No reply was given by the applicant.  The defendants refused to pay a/c charges for the period from May 2012 to July 2013.

Issues before the tribunal

8.  The main dispute was whether the defendants were entitled to terminate the applicant’s a/c service.  The applicant contended that they were not, because it was an air-conditioning contractor appointed by the manager (and not the shop occupiers including the defendants) pursuant to the said development’s deed of mutual covenants (“the said DMC”) and/or sub-Deed of Mutual Covenants (“the sub DMC”).  On the other hand, the defendants argued that they were because the applicant was never so appointed.

9.  The defendants’ argument was premised on:

(a) there was no appointment of the applicant by the manager;

(b) alternatively, even if the applicant had been so appointed, it was beyond the manager’s powers to do so.

10.  In dismissing the said claims, the tribunal in essence agreed with the defendants and disagreed with the applicant.

These applications for leave to appeal

11.  Before considering the grounds put forth in support of these applications, the factual matters which the tribunal took into account should be set out.  They included:

(1) the original manager appointed pursuant to the DMC (clause 7(a)(ii) thereof) was one Everlasting Properties Management Ltd (“Everlasting”);

(2) in 1997, an incorporated owners (“the IO”) was set up pursuant to the Building Management Ordinance (Cap 344);

(3) the following documents (collectively “the said documents”):

(a) a Chinese letter dated 5 August 1992 addressed to the applicant and signed by Everlasting;

(b) a Chinese agreement dated 8 September 1992 between the applicant and Everlasting;

(c) a Chinese agreement dated 10 September 1998 between the applicant and one Memfus Wong Surveyors Ltd (“the new manager”);

(d) a Chinese agreement dated 16 December 2002 between the applicant and the new manager;

(4) the applicant purchased a shop on the first floor and used it as the central air-conditioning plant room (and used its own funds to install air-conditioning equipment).

12.  Further, at the hearing before me, the applicant indicated that:

(a) the manager contract of Everlasting was terminated by the IO sometime before December 2002;

(b) the new manager was appointed by the IO sometime before December 2002 pursuant to the DMC (clause 7(a)(ii) thereof);

(c) there was a period of overlap between the termination of Everlasting’s manager contract and the appointment of the new manager sometime between 1997 and December 2002.

As will become clear from the discussion below, these matters are not crucial to the outcome of these applications (or the said claims), and are only given by way of background.  They are not part of the evidence adduced at the tribunal hearing either.

13.  What the tribunal considered to be the first point against the said claims is: the respective managers were the applicant’s agents (instead of the applicant being the manager’s agent).

14.  The principal provisions of the DMC which the applicant relies on in these applications (and relied on before the tribunal) are those which conferred powers on the manager’s part to:

(1) delegate acts and things necessary or requisite for the proper management of the said development (clause 8(a) thereof);

(2) engage (among others) contractors or agents in relation to the manager’s duties (clause 8(d)(19) thereof).

15.  The express language of the documents set out in para 11(3)(c) and (d) above militates against such inference (there being no direct evidence of any appointment save the applicant’s testimony that there was a verbal appointment by Everlasting in 1992).  In the said documents, the applicant was invariably described as “the principal” (委托人) and the managers “the agent” (代理人).

16.  The general tenor of the said documents is that the respective managers were to collect a/c charges for the applicant.  The respective managers were to be paid a percentage of the a/c charges for doing such work (the September 1992 agreement called it “agency fee” (代理費) while the September 1998 and December 2002 agreements both called it “remuneration” (酬金)).  The same can be said of the document set out in para 11(3)(b) although the language is not as explicit.

17.  In view of the above, there is valid and sufficient evidential basis to support the tribunal’s finding that the applicant was not the manager’s delegate or contractor.  It therefore cannot properly be considered a finding which can (at least arguably) be an error in law (and thus a finding which involves a question of law).

18.  The applicant also contended at the hearing before me the proper inference from the arrangements set out in the said documents was that an appointment pursuant to clause 8(a) and/or 8(d)(19), the DMC had been made.

19.  I do not consider the inference contended for to be a proper one.  The applicant could well have been allowed by the managers and/or the co-owners to install the necessary equipment and/or to provide a/c services without necessarily so appointing it as the manager’s delegate or contractor.

20.  In this connection, it should be noted that the September 1998 document and the December 2002 document expressly recited:

(a) the DMC and the sub-DMC;

(b) the appointment of the new manager by the execution of a management contract.

It is therefore obvious that the drafter(s) of those documents must have been well aware of the relevant provisions of the DMC and/or the sub-DMC, especially regarding the appointment of the manager and/or its delegate or contractor.

21.  Yet there is a glaring silence about the appointment of the applicant by the new manager (or by Everlasting) in those documents.  Because of the above recitals, it is unlikely the drafter(s) regarded the applicant’s appointment as not worthy of mention.  The proper inference would thus rather be no such appointment has been made by (at least) the new manager.

22.  As regards the manager’s own powers, the only express provision in the DMC concerning air-conditioning is clause 1(a) (definitions and interpretation) where “the Commercial Common Areas” is defined as including:

“… the air conditioning plant room on the said First Floor … ”.

23.  Assuming there is in fact an air conditioning plant room (which is said to be part of the commercial common area), it cannot be the shop purchased by the applicant for use as the plant room (it is not the applicant’s case that its said shop is part of the commercial common area).

24.  Further, none of the provisions in the DMC delineating the powers and functions of the manager (especially clause 8(d)(1) to (37) thereof) prescribes that it was the manager’s function to provide a/c service.  The applicant’s contention that such service is similar to the manager’s function concerning refuse collection and disposal is inapt.

25.  In such circumstances, I also agree with the tribunal’s conclusion that there is no valid reason for concluding that the provision of a/c service is a power and function which the manager could properly exercise (or delegate).