WONG CHEE SHUI ROSSANA v. EATING ESTABLISHMENT EMPLOYEES GENERAL UNION AND OTHERS

LDBM 281/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 281 OF 2014

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REASONS FOR DECISION

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1.  The applicant, now acting in person, filed a notice of discontinuance at the commencement of trial, though she made an open offer to the Rs[1] on 5 November 2015 through her then lawyers proposing, inter alia, the same. The only issue to be disposed of at trial was the costs of the application. The applicant asked for no order as to costs whereas the Rs sought costs against the applicant.

2.  At the conclusion of the hearing, the tribunal ordered the applicant to pay Rs i.e. only those against whom proceedings were discontinued at the commencement of the trial costs of the application, including all costs reserved, at $54,000. The tribunal indicated brief reasons for the decision would be handed down later, and they are as follows.

Brief Background

3.  When the application was issued out of the tribunal on 10 October 2014, the applicant was the chairperson of the management committee of R1[2], i.e. the incorporated owners of Wah Hung House in Tung Choi Street (“IO”, and the building “Building”). It is not in dispute that she received a request from R2 to R6, comprising not less than 5% of the owners of the Building, requesting her to convene an owners’ meeting for consideration of 6 proposed resolutions. It is also not in dispute that the request was made pursuant to paragraph 1(2) of Schedule 3 of the Building Management Ordinance, Cap 344 (“BMO”) which stipulates:

“The 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, and hold the general meeting within 45 days of receiving such request.”

4.  It is also not in dispute that 5 of the 6 proposed resolutions have been dealt with. The outstanding proposed resolution is couched in the following terms:

“1. 我們希望大家在一個和諧環境下安居樂業，不希望主席把「訴訟文化」帶入法團内，因此，如主席於本年十月十四日前仍不撤回「土地審裁處」案件编號LDBM184/2014 及LDBM239/2014對法團、秘書及司庫等人的控訴，即在會内商討及議決：

(a) 即時罷免其委員及主席職位務資格。及

(b) 補選委員及主席職位”

5.  The applicant did not consider she should accede to the request to convene the meeting. By the present application, the applicant, suing as the chairperson of the IO, asked the tribunal for a number of declarative reliefs, including that the proposed resolution null and void; that the applicant as chairperson was not obliged to convene any general meeting for the purpose of the proposed resolution; and that any resolution in the proposed terms, if passed, would be void ab initio. She also sued for damages suffered by her on indemnity basis.

6.  As brief background, by LDBM184/2014 (“1^st case”), the applicant, as chairperson of the IO and claiming being equipped with support from 5% owners of the Building, sued the secretary, treasurer and the IO for inspection of certain documents. By LDBM239/2014 (“2^nd case”), the applicant as chairperson, sued the secretary and IO, claiming that the secretary, upon receipt of request for meeting from a group of not less than 5% of Building’s owners, had wrongfully issued a notice for general meeting without her approval as the IO’s chairperson. The 1^st case has been settled by the parties by consent. The 2^nd case has been set down for trial in January 2016.

7.  It is worth mentioning that the Building comprised a total of 59 units, including shops on the G/F and 1/F, and residential flats from 2/F up to 9/F. The monthly management fee for a typical residential unit is about $500, and the total monthly management fees for the entire Building do not exceed $30,000. It is apparent, and in fact most unfortunate that the owners of the Building are divided and do not appear to enjoy a harmonious relationship. Committee members of the IO are no exception.

8.  The application, as pleaded, are based on 3 broad grounds, namely, the requests for not pursuing the 2 cases aforesaid amounts to (1) duress; (2) undue influence; and (3) the request is falling outside s.14(1) of the BMO.

9.  It is not in dispute that the applicant ceased to be the chairperson of the Building on 25 September 2015. The 1^st named R4 was elected chairperson. It is immaterial to find out whether the applicant has been voted out or she has chosen not to participate in the election. Since ceasing to be the chairperson, the applicant considered it unnecessary for her to pursue the present application and therefore proposed to discontinue it. It is a sensible decision for obvious reasons. According to her, she chose not to stand for election. Even if she will be successful in the present proceedings the Rs have, in effect, achieved what they want. If she will be unsuccessful she then has no capacity to convene any meeting because she is no longer the chairperson of the IO.

10.  The parties are unable to agree on costs on discontinuance.

Discussion

11.  Rule 27(1) of the Lands Tribunal Rules (“LTR”) provides:

“A party may, without leave of the Tribunal, discontinue the proceedings or withdraw any part thereof by serving a notice to that effect on the other party.”

12.  There is no provision in LTR limiting the time for giving the discontinuance notice. In the tribunal’s view, such notice can be given at any time even on or after commencement of a trial, and no leave is required. The question is what should be the costs order that follows.

13.  O.62 r.10, Rules of High Court (“RHC”) provides that the defendant can tax or sign judgment on costs against the plaintiff in “discontinuance without leave” situation. Although there is no similar counterpart in the LTR, the tribunal cannot see any difference between tribunal proceedings and high court proceedings by nature and why the same principles cannot apply. The fact that R27(2) & (3) of LTR provide that the respondent has to apply for costs will not alter the applicable principles. The rules only set out a procedure for the parties to follow in pursuing a claim of costs.

14.  In Anmol Kumar Sawlani v Yeshma Gobindram Sawlani[3], Recorder Shieh SC, was dealing with a dispute on costs on “discontinuance with leave” situation. After reviewing a number of pre and post-CJR cases, the learned Recorder came to a conclusion that if the parties were not to go to trial to resolve a costs dispute in an application for leave to discontinue, the normal rule should apply, namely, a discontinuing plaintiff should pay costs unless it can be demonstrated, without the need to go to trial, that his case is so strong that he is bound to win had it gone on to trial and therefore he was justified in commencing the action in the first place. This tribunal sees no distinction on the applicable principles to costs between discontinuance with leave and without leave situations. The rules enunciated in Anmol Kumar Sawlani should be applicable to proceedings discontinued in the tribunal.

15.  In兆軒苑業主立案法團 v馮志昌 & Anor[4], I have expressed in §§25-26 that upon receipt of a request from not less 5% of the building’s owners, the chairman has little alternative but to convene the meeting as requested. He has no discretion as to whether to hold the meeting. It is because the mandatory word “shall” has been employed. It imposes a strict statutory duty on the chairman once he has received the requests. It is a built-in mechanism of the BMO for protection of owners, particularly minorities, so that issues of concern to them can be addressed. It does not mean that these requests will be automatically approved. It only provides an opportunity for minorities’ concern or perhaps issues of controversy to be considered by all owners or on some occasions, by them again. If a proposed resolution does not received favourable consideration of the majority, it will be voted down. However, if it receives their support, why not giving effect to it. After all the owners should be allowed to determine their own affairs in a democratic way. This is what has been provided for in the BMO.

16.  There is no statutory requirement that a reason should be given for any request from the 5% owners. Under the Schedule 3 scheme the chairman is not given a power of veto or to assess the reasonableness of any proposed resolution. In the tribunal’s view, it makes perfect sense otherwise the democratic protection of minorities will be curtailed. After all it is not a single voice. It is the voice of not less than 5% of owners. As said in 兆軒苑業主立案法團, whether the threshold for a meeting can be raised is debatable. However, unless and until the said trigger-off threshold is revised by the legislature, the applicant should hold the general meeting as requested.  If it should go ahead regardless of whether any reason has been given for a proposed resolution, why then, the setting out of a reason or one’s wishes not statutorily required will operate to remove one’s own statutory right.

17.  Looking at the bases of the applicant’s claim briefly, duress means a coercion of one’s will as to vitiate consent[5]. It is normally used in a contract situation. Here it is not. In any event the applicant gave no consent to comply with the said Schedule 3 procedure and did protest. Undue influence is an equitable doctrine covering cases in which a transaction between 2 parties who are in a relationship of trust and confidence may be set aside if the transaction is the result of an abuse of the relationship[6]. There is no transaction between the parties. Neither had the applicant already entered into any transaction which needed be set aside. The parties are also not in the relationship of trust and confidence.

18.  Apparently the bases of duress and undue influence cannot be substantiated. Perhaps the applicant’s solicitors are using these terms loosely to denote an attempt on the part of the respondents to pervert the course of justice by asking the applicant to stop the 2 cases. It is a serious allegation as it may amount to a criminal offence. The burden is on the applicant to persuade this tribunal that she is justified in pursing the present application which she now abandons. She has not done so. Further, it is also a complicated offence which has been the subject matter of a recent Court of Final Appeal decision[7]. As neither the applicant nor the respondents’ counsel have made submission in this respect, it will not be appropriate for the tribunal to express any views on the matter, save and except 2 observations. Firstly, the means employed in the present case appears lawful though the tribunal appreciates for such an offence to be committed, whether or not the means is lawful may be immaterial. Secondly, there is no apparent or manifest intention to cause a miscarriage of justice or to frustrate or deflect the outcome of any court proceedings. The Rs does not want the IO to be too litigious and embroiled in litigation.

19.  The reliance on section 14(1) of BMO is obviously misconceived. The said provision stipulates:

“Subject to this Ordinance, at a meeting of a corporation any resolution may be passed with respect to the control, management and administration of the common parts or the renovation, improvement or decoration of those parts and any such resolution shall be binding on the management committee and all the owners.”

20.  The provision set out the power of the IO generally and the types of resolution that may be passed at a meeting of the corporation. It is not drafted in such a manner as to limit the types of resolution to only those mentioned in the provision. On a proper construction it permits certain resolutions to be passed but does not restrict the scope of these resolutions so passed. The otherwise cannot be true as it would mean the IO could never be able to elect members of the management committee. Such construction clearly offends common sense.

21.  By reasons aforesaid, it cannot be shown that the applicant’s case is so strong that she is bound to win had it gone on to trial and therefore she was justified in commencing the application in the first place. The applicant has to shoulder the costs of the Rs according to the usual rule.

22.  The gist of what the applicant has said at the hearing is that her instructions to her lawyers were different from what has been pleaded in her application as now explained to her by the tribunal at the hearing. She said she only wanted to seek the tribunal’s direction as to whether she should go ahead with the general meeting. She felt compelled under Schedule 3 of BMO. But on the other hand she hoped to continue with the 2 cases for protection of certain owners of the Building. Certain owners, including her, have been harassed by some respondents. If the general meeting for the purpose of considering the proposed resolution was scheduled as requested, it was likely that she might not be re-elected, not because she had not got sufficient supporters but because her supporters were too scare to come out to vote for fear of further harassment.

23.  In the tribunal’s judgment the above cannot help her. Suffice to say that she has acknowledged the truthfulness of each of the pleading and her statements by a statement of truth. The alleged duress in her pleadings has all along been referred to as the request to stop the 2 tribunal cases and not the alleged harassments to her and her supporters. Further, the alleged interference to other owners has never been mentioned in her pleadings or evidence. Even for the alleged harassment to her personally she alleged at the hearing or mentioned in her statements, they all took place quite some time after her receipt of the request for proposed resolution.

Quantum

24.  The applicant opposed a certificate for counsel. It is noted that after she offered to discontinue the proceedings by her solicitors’ letter of 5 November 2015, her solicitors expressed on 10 November 2015 that they would proceed to prepare the hearing bundle, presumably because the parties cannot agree on the question of costs. As no notice of discontinuance has been filed, no one can be sure that the applicant’s offer would remain valid until trial or that it would be withdrawn any time prior to trial. In the tribunal’s judgment, it will not be unreasonable for the Rs to instruct counsel to appear for them, just in case a full blown trial is necessary if the offer is withdrawn before the hearing.

25.  After a preliminary assessment in a summary way, the aggregate[8] of time costs of the handling solicitors, with hourly rate of $2,600, and the counsel’s brief exceeded Rs’ open offer of $54,000, which according to Mr Yeung remained the Rs’ position as a gesture of goodwill. The tribunal ordered the applicant to pay Rs’ costs in the proceedings at $54,000.