THE INCORPORATED OWNERS OF LEE HANG INDUSTRIAL BUILDING v. BILLION DEVELOPMENT & PROJECT MANAGEMENT LTD

HCMP 2243/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2243 OF 2007

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J U D G M E N T

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1.  The Incorporated Owners own property in the Lee Hang Building.  Such property consists of undivided shares in the Building together with the exclusive right to use and occupy certain parts (including a portion of the exterior wall of the Building).

2.  There is no doubt that the Incorporated Owners have the power to own property in the Building.  See Building Management Ordinance (Cap. 344) (BMO) s. 8(2)(aa) introduced in 1975.  The question is whether the Incorporated Owners have the power to sell the property which they own.

3.  Ownership of property is constituted by a bundle of rights which includes the power to sell or dispose of the property owned.  Unless there is some express provision to the contrary, the power to sell one’s property must be implicit in the power to own.  There being no statutory or contractual provision limiting the Incorporated Owners’ right to sell, it must follow that they have the right to sell the property which they own in the Building.

4.  I am fortified in my conclusion by BMO s. 43.  That states that nothing in the BMO “shall prevent an owner from selling, assigning, mortgaging, charging, leasing or otherwise disposing of or dealing with his share.”  The provision thus recognises that the power to own undivided shares in a building acknowledged in s. 8(2)(aa) brings along with it the power to sell. 

5.  I add that the Incorporated Owners are “owners” for the purposes of the BMO.  That is because, in keeping with the definition of “owner” in BMO s. 2, the Incorporated Owners appear from records at the Land Registry to be the owner of undivided shares in the Building.

6.  The Incorporated Owners have agreed to sell their property to Champion.  Both parties are ready and willing to proceed with the transaction subject to clarification in these proceedings as to whether the Incorporated Owners have the power to sell.

7.  Ms. Sara Tong (appearing for Champion) has drawn my attention to a number of provisions which she submits cast “doubt” on the reasoning just set out.  Her argument is basically that, in the absence of express provision in the BMO conferring a power of sale, it is “doubtful” that the Incorporated Owners may sell.

8.  I am not persuaded.  It goes without saying that the power to sell is implicit in the power to own.  I am unable to infer anything from any absence of an express provision conferring a power to sell. 

9.  All owners in the Building (including the Incorporated Owners) have agreed to sell their undivided shares and interests in the Building to Champion for the purposes of re-development. 

10.  The members of the Incorporated Owners unanimously voted to sell the Incorporated Owners’ property at a price which (on the evidence) represents the current market value of the same.  The sale proceeds will be dealt with according to the BMO and the Building’s deed of mutual covenant.

11.  As Mr. Johnny Mok SC (appearing for the Incorporated Owners) points out, in the face of the Building’s re-development, no further management expenses are to be incurred.  In all circumstances then, it makes perfect sense for the Incorporated Owners to dispose of their property in the Building in anticipation of such eventuality.  It cannot be said (as Ms. Tong suggests) that the proposed sale by the Incorporated Owners is somehow ultra vires their duty to manage the Building on behalf of individual owners.

12.  Consequently, I would make a Declaration to the effect that the Incorporated Owners had the power to acquire and have the power to sell the properties in the Building registered in their name in the Land Registry.

13.  I shall hear the parties on costs and any other matters.