Tai Cheung Management Co Ltd v. The Incorporated Owners of Tuen Mun Central Square

LDBM 49/2021

[2022] HKLdT 3

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 49 OF 2021

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Before: His Honour Judge M WONG, Presiding Officer of the Lands Tribunal

Date of Hearing: 30 September 2021

Date of Handing Down of Judgment: 14 January 2022

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J U D G M E N T

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Background

1.The applicant was appointed the Manager of Tuen Mun Central Square erected on Tuen Mun Town Lot No 391 (“the Building”) by virtue of a Deed of Mutual Covenant and Management Agreement dated 9 June 1999 and registered in the Tuen Mun New Territories Land Registry by Memorial No TM910212 on 24 June 1999 (“the DMC”).

2.The respondent is the owners’ corporation of the Building registered under the Building Management Ordinance, Cap 344 (“the BMO”) on 13 September 2017.

3.The background of this case is not in dispute.

4.The applicant was appointed the first manager of the Building and hence the “DMC manager” within the meaning of section 34D(1) of the BMO, which stipulates that “DMC manager, in relation to a building, means the person who is specified in the deed of mutual covenant to manage the building”.

5.The Building was notionally divided into 580,000 equal undivided shares under recital (3) of the DMC which were allocated in the manner set out in the Fourth Schedule of the DMC.

6.On 9 December 2020, the respondent held an Owners’ Extraordinary General Meeting (“the EGM”) which was attended by 79 owners (in person and by proxy) holding all together 227,030 equal undivided shares of the Building.

7.A resolution was passed at the EGM pursuant to clause 12(A)(a) of the DMC for the termination of the applicant’s service as the Manager (“the Resolution”). The Resolution was supported by those attending owners holding all together 206,732 equal undivided shares of the Building, which represents 91.06% of the undivided shares of the attending owners and 35.64% of the total undivided shares of the Building.

8.By a Notice of Termination dated 22 December 2020 issued by the respondent to the applicant pursuant to paragraph 12(A)(a) of the DMC (“the Termination Notice”), the respondent informed the applicant about the Resolution and gave the applicant 3-month’s notice to the effect that the last day of the applicant’s service would be on 21 March 2021.

9.By a letter dated 30 December 2020 issued by the applicant’s solicitors, W. K. To & Co, to the respondent, the applicant contended that the Resolution was invalid as it was passed by less than 50% of the shares in aggregate which did not comply with paragraph 7(1) of Schedule 7 of the BMO, and hence the Termination Notice was also invalid. The applicant demanded the respondent to withdraw the Termination Notice and indicated that it would continue to perform its duty as the Manager of the Building in accordance with the DMC and the BMO.

10.Thus, the applicant commenced the present proceedings on 10 March 2021 to seek for a declaration that the Resolution and the Termination Notice were invalid.

11.On the other hand, the respondent counterclaims in the present proceedings for a declaration that the Resolution and the Termination Notice were valid.

Issue

12.The parties agree that the only issue for me to determine at this trial is as framed in the “Joint Statement of Issues” filed by the parties on 9 September 2021, namely, whether the respondent can rely on the mechanism as contained in clause 12(A)(a) of the DMC or can only rely on the mechanism under paragraph 7(1) of Schedule 7 of the BMO to terminate the applicant’s appointment as the Manager of the Building.

13.This is just a legal issue and the parties have agreed on all the factual evidence.

Discussion

14.It is not disputed that under section 34E(1)(a) of the BMO, the provisions in Schedule 7 shall be impliedly incorporated into the DMC, and under section 34E(2) of the BMO, the provisions incorporated into the DMC shall: (a) bind the owners and manager of the Building; and (b) prevail over any other provision in the DMC which is inconsistent with them.

15.Thus, the provision in paragraph 7(1) of Schedule 7 is impliedly incorporated into the DMC, and it stipulates that at a general meeting convened for the purpose, a corporation may, by a resolution: (a) passed by a majority of the votes of the owners voting either personally or by proxy; and (b) supported by “the owners of not less than 50% of the shares in aggregate”, terminate by notice the DMC manager’s appointment without compensation.

16.Under paragraph 7(5A)(b) of Schedule 7, “the owners of not less than 50% of the shares in aggregate” shall be construed as a reference to “the owners of not less than 50% of the shares in aggregate who are entitled to vote”.

17.In other words, in passing a resolution under paragraph 7(1) of Schedule 7, the resolution has to be supported by “the owners of not less than 50% in aggregate who are entitled to vote”, namely all the owners of the Building instead of just the owners who attended the meeting.

18.The applicant contends that paragraph 7(1) of Schedule 7 is inconsistent with paragraph 12(A)(a) of the DMC, in that the latter allows the respondent to terminate the service of the Manager “by a majority resolution passed at Owners’ meeting” and “by giving the Manager 3 months’ prior written notice”, and by virtue of section 34E(2)(b) of the BMO, paragraph 7(1) of Schedule 7 shall prevail.

19.The applicant refers to paragraph 7(5B) of Schedule 7 which provides that “If a contract for the appointment of a manger other than a DMC manager contains no provision for the termination of the manager’s appointment, subparagraphs (1), (2), (3) and (5A) apply to the termination of the manager’s appointment as they apply to the termination of a DMC manager’s appointment”.

20.The applicant also refers to paragraph 7(5C) of Schedule 7 which provides that “Subparagraph (5B) operates without prejudice to any other power there may be in a contract for the appointment of a manager other than a DMC manager to terminate the appointment of the manager”.

21.The applicant submits that these provisions (ie sections 34D, 34E and Schedule 7) have been materially amended under the Building Management (Amendment) Ordinance 2007, and the amendments introduced:-

(a)  Two separate branches of the termination mechanism for “DMC manager” and other subsequent managers appointed by the owners; and

(b)  A new termination mechanism under paragraph 7(1) of Schedule 7.

22.The applicant submits that under section 34E of the BMO, the provisions in Schedule 7 are mandatory and overriding (comparing to the provisions in Schedule 8 which, under section 34F of the BMO, will only be incorporated into the DMC if they are consistent with it). The provisions in Schedule 7 prevail over any provisions which are inconsistent with them. Moreover, paragraph 34 of the DMC expressly acknowledges that none of the provisions in the DMC shall prejudice the operation of the BMO.

23.The applicant’s contention is that the termination mechanism under paragraph 12(A)(a) of the DMC is inconsistent with the one under paragraph 7(1) of Schedule 7 (more particularly, the second-limb requirement under paragraph 7(1)(b)). The former one is with reference to the total number of equal undivided shares held by the owners present (in person or by proxy) (ie 227,030 shares); where the latter is with reference to the total number of equal undivided shares in aggregate (ie 580,000 shares). There can be no way that these two different concepts can sit well with each other.

24.The applicant also contends that insofar as the termination mechanism under Schedule 7 is concerned, there is a significant difference when operated against: (a) a “manager” and (b) a “DMC manager” in that:-

(a)  In terminating the appointment of a “manager”, Schedule 7 imposes a less onerous threshold on the respondent – paragraph 7(1) of Schedule 7 will not become operative unless the DMC is silent on the termination mechanism (paragraph 7(5B)) – and this does not affect any other power in the DMC to terminate the manager’s appointment (paragraph 7(5C));

(b)  In terminating the appointment of a “DMC manager”, Schedule 7 imposes a more onerous threshold on the respondent – in fact, the language of paragraph 7(1) of Schedule 7 is explicit that the said mechanism is mandatorily applied to “DMC manager”; and

(c)  The difference is a deliberate design by the legislature under the 2007 Amendment (see Brief for the Legislative Council, File Ref: HAD HQ IV 20/5/1, paragraphs 17-18 & 41).

25.Since the applicant was appointed as the manager under the DMC and is a ‘DMC manager’ under section 34D(1) of the BMO, the applicant contends that paragraph 7(1) of Schedule 7 should apply in the termination of the applicant’s appointment.

26.I do not accept the applicant’s aforesaid contentions as they do not have any support from the wordings of the provisions, the legislative intent or the case law. I find the respondent’s interpretation of Schedule 7 of the BMO being more reasonable and logical, and I accept the respondent’s contention that it can rely on the termination mechanism under clause 12A(a) of the DMC for reasons as stated below.

27.Clause 12A(a) of the DMC provides that:-

“The management of the Building shall be undertaken by the Manager for the term of two years from the date of issue of the Occupation Permit in respect of the Building and thereafter the Manager shall continue to manage the Building until its appointment is terminated in accordance with the following provisions of this Clause 12(A). The Committee may by a majority resolution passed at Owners’ meeting terminate the service of the Manager by giving the Manager 3 months’ prior written notice to terminate its service or until the Manager (as the case may be) resigns by giving the Committee 3 months’ prior notice to terminate its service. On resignation or termination of service of the Manager the Committee shall have the right to choose an independent auditor to audit the management accounts prepared by the outgoing Manager who shall hand over to the Committee all documents, records, plans and account relating to the Building.” (emphasis added)

28.There is clearly a mechanism for the termination of the DMC manager’s service under clause 12(A)(a) of the DMC, since the words “the Manager” refers to the applicant as defined in the beginning paragraph of the DMC.

29.No doubt section 34E(1) and (2) of the BMO allows paragraph 7 of Schedule 7 of the BMO to be incorporated into the DMC, as it provides that:-

“(1) Subject to subsection (4), the provisions in Schedule 7 shall be impliedly incorporated—

(a) into every deed of mutual covenant made on or after the material date; and

(b) as from the material date, into every deed of mutual covenant made before that date.

(2) The provisions incorporated into a deed of mutual covenant by virtue of this section shall—

(a) bind the owners and manager of the building; and

(b) prevail over any other provision in the deed that is inconsistent with them.”

30.However, paragraph 7(1) of the Schedule 7 of the BMO states that:-

“(1) Subject to subparagraph (5A), at a general meeting convened for the purpose, a corporation may, by a resolution—

(a) passed by a majority of the votes of the owners voting either personally or by proxy; and

(b) supported by the owners of not less than 50% of the shares in aggregate,

terminate by notice the DMC manager’s appointment without compensation.” (emphasis added)

31.The use of the word “may” in paragraph 7(1) of Schedule 7 shows clearly that it is permissive, as opposed to mandatory.

32.This is to be contrasted with the immediate next subparagraph, ie paragraph 7(2) of Schedule 7, where mandatory language is being used:-

“(2) A resolution under subparagraph (1) shall have effect only if…” (emphasis added)

33.If the legislature intended that paragraph 7(1) of Schedule 7 is to be the only way a DMC manager’s service could be terminated, it could have been drafted with the use of the word “shall” instead of “may”, ie “the DMC manager shall be terminated by a resolution”.

34.A natural and ordinary reading of the word “may” indicates that the legislative intent behind paragraph 7(1) of Schedule 7 is to provide a route for incorporated owners to terminate its manager, but not the only route. Clause 12A(a) of the DMC is clearly another route that the applicant’s service can be terminated.

35.In Japsignal Property Management Company Limited v The Incorporated Owners of Prat Mansion, DCCJ 3245/2003, HH Judge HC Wong said this:-

“35. The pre 2007 version of the BMO Schedule 7 paragraph 7(3) stated:

“(3) Service of the notice and the copy of the resolution required to be served under subparagraph (2)(d) may be effected –

(a) personally upon the manager; or

(b) by post addressed to the DMC manager at his last known address; or

(c) by leaving the notice at the address of the registered office of the corporation.”

36. The applicable word is ‘may’ for notices to be served under 3(2)(a), (b) and (c). Therefore, service may be by other means....”

36.By the same token, the respondent may rely on clause 12A(a) of the DMC as another route apart from paragraph 7(1) of Schedule 7 of the BMO to terminate the applicant’s service.

37.In this context, it is important to distinguish Schedule 7 as being mandatorily incorporated into the DMC, and the effect of the provisions of Schedule 7, some of which are mandatory and some are permissive. Paragraph 7(1) with the use of the word “may” is clearly the latter.

38.The above interpretation is also consistent with the legislative intent behind Schedule 7 of the BMO, which was first introduced in 1992 as an amendment to the predecessor of the BMO, ie the Multi-Storey Buildings (Owners Incorporation) (Amendment) Bill (“the 1992 Bill”).

39.The Secretary for Home Affairs stated the following during the Second Reading of the 1992 Bill in the Legislative Council:-

“The problem of unfair Deeds of Mutual Covenant is another contentious issue picked up by most commentators. Such Deeds frequently provide for perpetual management by the developer himself or by a management company associated with the developer. In such cases, there is little the flat owners can do to rid themselves of the manager.

Under the Amendment Bill a new Seventh Schedule is provided setting out the terms that are to be impliedly incorporated into every Deed of Mutual Covenant. Such terms will prevail over corresponding provisions in existing covenants which are inconsistent with them.

Paragraph 7 of the new Seventh Schedule provides a procedure whereby the flat owners may terminate the appointment of a manager employed by or associated with the developer. Basically, it requires a resolution of the owners of not less than 50% of the undivided shares. The developer may then appoint a replacement manager with the consent of the flat owners. Should they fail to reach any agreement, the flat owners would have the power to appoint their own manager.” (emphasis added)

40.Thus, the objective of the introduction of Schedule 7 is to make it easier for owners to terminate the appointment of the manager of a building as opposed to making it more difficult to remove the manager.

41.Further, the legislative intent of the Schedule 7 was to prevent the situation where there would be a perpetual management by the management company in a building. In other words, it was to facilitate or provide a possible means of removing the manager where the DMC did not provide for a termination mechanism.

42.To interpret Schedule 7 as the only mechanism for terminating a DMC manager from the building would be contrary to the overall spirit behind Schedule 7, which should make it easier for flat owners to terminate the manager and prevent perpetual management.

43.This legislative intent was carried through in the Home Affairs Department’s paper entitled “Mechanism for Terminating the Appointment of Managers” issued in June 2005 for consideration by the Bills Committee on Building Management (Amendment) Bill 2005. The following extracts are relevant to the present application:-

“2. Prior to the adoption of the Lands Department’s Guidelines for Deeds of Mutual Covenant (the DMC Guidelines) on 15 October 1987, a DMC usually provided for perpetual management of a building by the developer or by a manager associated with the developer.

3. The Building Management (Amendment) Ordinance 1993 thus introduced an enabling provision for the termination of the appointment of the DMC manager by owners’ corporation (OC) which should be impliedly incorporated into all DMCs. In accordance with paragraph 7 of Schedule 7 to the BMO, an OC may, by a resolution of owners of not less than 50% of the shares, terminate by notice the manager’s appointment without compensation. The Building Management (Amendment) Ordinance 2000 further specified that only the owners of shares who pay (or are liable to pay) the management expenses relating to those shares shall be entitled to vote.

4. Schedule 7 to the BMO, which contains mandatory terms which should be impliedly incorporated into all DMCs, was introduced in 1993 to deal with the problems of some old DMCs which were drafted prior to the adoption of the DMC Guidelines. The policy intent of providing a termination mechanism for the appointment of manager under paragraph 7 of Schedule 7 is also targeted at DMC managers.

5. In the case of any subsequent manager appointed by an OC, the relevant management contract normally provides for a specified period of management, and in most cases the termination mechanism for the appointment of the manager. We consider that an OC, being a statutorily-formed body representing the interests of owners, should be free to negotiate the terms and agreement with the manager the OC has chosen without statutory interference.

6. We have, however, encountered problems in the application of paragraph 7 of Schedule 7. While the policy intent is that the termination mechanism should be applicable only to DMC managers, there were cases where the subsequent contract manager refused to leave service even after the specified period in the management contract has expired, claiming that the appointment could only be terminated by a resolution of owners of not less than 50% of the shares, i.e. the mechanism under Schedule 7. There were also cases where the manager refused to leave even though a resolution on termination of his appointment has been passed by the OC, alleging that under subparagraph 7(5)(c) of Schedule 7, not more than one manager’s appointment could be terminated within a period of three years. This is unsatisfactory and contradicts the original intent, and has given rise to numerous disputes between OCs and management companies.

7. We therefore propose to specify in the BMO that paragraph 7 of Schedule 7 shall only be used to terminate the appointment of the DMC manager. For any subsequent manager appointed by an OC (including the DMC manager who is re-appointed by the OC), any termination of the manager’s appointment should be done in accordance with the terms of the management contract. This also means that the termination mechanism under paragraph 7 of Schedule 7 which applies only to DMC manager should be exercised once and only once.

8. At the Bills Committee meeting on 17 May 2005, there was suggestion that the mechanism for terminating the appointment of managers provided under paragraph 7 of Schedule 7 should be applicable to all managers, regardless of whether they are DMC managers or contract managers. The reason was that this would create a loophole for the developers to quickly set up an OC or an owners’ committee after selling the first unit of a development and request the OC or the owners’ committee to immediately sign a contract for a long service period with the manager with which the developer has close relations.

9. We have considered the above suggestion. By virtue of the proposed amendment, the termination mechanism under paragraph 7 of Schedule 7 is that owners of not less than 50% of the shares may terminate the DMC manager’s appointment at a general meeting. This is to tackle the problem of many pre-1987 DMCs which did not provide for a termination mechanism at all. However, for most of the management contracts entered into by OCs with a new manager, the contracts usually specify clearly the contract period of the appointment. This means that the contract manager will have to leave service upon expiry of the contract regardless of his performance and has to seek re-appointment from the OCs. In other words, the mechanism for OCs to terminate the appointment of contract manager should be much easier than the one provided for DMC manager under the BMO.” (emphasis added)

44.In a letter dated 14 June 2005 from the Director of Home Affairs to the Bills Committee on Building Management (Amendment) Bill 2005, the following was stated:-

“2. Having considered Members’ views, we propose that the mechanism for termination of the appointment of managers under paragraph 7 of Schedule 7 to the Building Management Ordinance (BMO) shall apply to the first manager (i.e. the manager specified under the deed of mutual covenant (DMC) and subsequent contract managers whose contract with the owners’ corporation (OC) does not specify a termination mechanism at all. In other words, if the contract has already provided for a termination mechanism (regardless of the terms/requirements), then the contractual spirit should be upheld. We will introduce Committee Stage Amendments as appropriate.

3. As to the current threshold of 50% of shares of owners for terminating the appointment of the manager, Members may like to discuss the matter further having regard to the views of the deputations given at the meetings on 25 and 30 June 2005.” (emphasis added)

45.In the Report of the Bills Committee on Building Management (Amendment) Bill 2005, the following was repeated:-

“111. The Administration has explained that the proposal in the Bill is to tackle the problem of many pre-1987 DMCs which do not provide for a termination mechanism at all....” (emphasis added)

46.It is clear that the legislative intent of Schedule 7 was to tackle the problem in cases where the deed of mutual covenants drafted before 1987 did not provide any termination mechanism at all. Yet, in the present case, the DMC was drafted in 1999 and had clearly provided a termination mechanism for the Manager’s service under clause 12A(a) of the DMC.

47.The overall legislative intent behind Schedule 7 was to uphold the contractual spirit and to provide greater protection to flat owners as opposed to protecting the perpetual management by a manager.

48.In Bennion, Bailey and Norbury on Statutory Interpretation, 8^th Ed (2020), paragraph 12.5, the learned authors summarized the principle, which is most apposite to the present case, as follows:-

“12.5 The legislature intends an enactment to remedy a particular mischief. It is presumed therefore that the legislature intends the court, in construing the enactment, to endeavor to apply the remedy provided by it in such a way as to suppress that mischief.”

49.To adopt an interpretation where the manager can only be terminated under Schedule 7 of the BMO would not be giving effect to what the parties (including the applicant) desired and intended when they signed up to the DMC in the first place. It would also neglect the legislative intent of providing greater protection to owners. It would encourage, rather than suppress, the very mischief Schedule 7 was intended to address.

50.Moreover, in The Incorporated Owners of Sea View Estate (Watson Road) v Fortuna Management Limited, HCA 4729/2003, Deputy High Court Judge L Chan (as he then was) held the following when discussing paragraph 7 of Schedule 7 of the BMO:-

“34. Before the introduction of paragraph 7 in the 7th Schedule, there was no way for owners of buildings to terminate the service of those managers who were parties to and appointed by the DMCs if the DMCs did not provide means for termination by the owners. That scenario was very unsatisfactory as the owners of many buildings were saddled with building managers who did not perform properly. The introduction of paragraph 7 in the 7th Schedule of the ordinance solved the problem.

35. However, it is the defendant’s argument that paragraph 7 is a mandatory requirement. If the contract of engagement between the incorporated owners and the building manager does not provide for termination by notice, then the only way to terminate the contract is to follow the procedure in paragraph 7. The defendant says this is so regardless of whether the contract is agreed to be for a fixed term or is an open-ended one.

36. I have no difficulty with an open-ended contract without any provision for termination by notice. Obviously the owners will have to follow paragraph 7 before they can terminate the contract. They must obtain agreement of the owners of at least 50 per cent of the shares of the lot and the building to the termination, otherwise the contract will just continue.

37. However, I have difficulty in accepting that this is also the case for fixed term contracts. If so, paragraph 7 would have taken away the parties’ liberty to agree on the length of their contracts. The wording of paragraph 7 also does not support such a construction. Paragraph 7(1) merely says that the owners of at least 50 per cent of the shares can resolve in a general meeting to terminate the appointment by notice without compensation. It provides a means for the owners to terminate the appointment, but it does not prevent a fixed term appointment to expire at the end of the term. It does not say that fixed term appointments will not expire by effluxion of time but can only be terminated by the owners’ resolution in a general meeting and in accordance with the procedure in it.

38. I also do not see any inconsistency between a fixed term appointment and Part VIA and/or the 7th Schedule of the said ordinance. There is also no ambiguity in the meaning of paragraph 7 of the 7th Schedule. Since I have found that Mr Lee and Mr Kong had agreed that the temporary engagement of the defendant would only last for four months expiring on 26 May 2003, I would also reject the line of defence.” (emphasis added)

51.No doubt Sea View Estate (supra) was concerned with a manager appointed under a fix term management contract. In our present case, clause 12(A)(a) of the DMC provides that after the initial term of 2 years, the applicant shall remain as the Manager until terminated by the mechanism under clause 12(A)(a). It is clear that the applicant’s appointment can be determined by a resolution passed at the owners’ meeting. The applicant knew and consented to clause 12A(a) of the DMC when it placed its signature onto the DMC in 1999, which has contractual force. So the “term” of the applicant’s service ends when such a resolution is passed.

52.In any event, Sea View Estate (supra) supports the respondent’s interpretation in that it makes clear that paragraph 7(1) of Schedule 7 is not the only way by which the service of a DMC manager could be terminated. In that case, the termination came about through the effluxion of time under the terms of the DMC.

53.In the correspondence passing between the parties, it seems that the applicant had relied on Citybase Property Management Ltd v The Incorporated Owners of Heng Ngai Jewelry Centre, DCCJ 5859/2005, in support of its position. In particular, in the applicant’s solicitors’ letter dated 1 February 2021, the following passage is stated in relation to Citybase Property Management (supra):-

“the plaintiff manager argued that since the relevant provisions under the DMC (which provided that the owners “shall determine the [manager’s] appointment by six months’ notice in writing to the Manager”) was not inconsistent with Paragraph 7 of the Seventh Schedule to the BMO, which requires a notice period of “not less than 3 months” to terminate the manager’s appointment, section 34E of the BMO will not cause Paragraph 7 of the Seventh Schedule to prevail over the said provision under the DMC. Such argument was rejected by the Court.”

54.However, considering Citybase Property Management (supra) more carefully, it is in fact a case supporting the respondent’s position. In her judgment, Deputy High Court Judge Marelene Ng (as she then was) said this:-

“25. According to Kent, Merry and Walters, Building Management in Hong Kong (2002) at p.80, the purpose of Part VIA of the BMO is said to be as follows :

“The practical effect of Part VIA is that it limits the developer’s powers to insert unfair terms in the DMC in the future and prevents the developer or manager relying on terms in DMCs executed before 1993, if they are inconsistent with Part VIA.”

If Mr Leong SC were right, a provision in the DMC that requires, say, 2 years’ notice for terminating the manager’s appointment will still be valid and binding as being not inconsistent with the Seventh Schedule that requires not less than three-months’ notice. Such interpretation defeats the purpose of section 34E of the BMO and is, in my view, incorrect. Rather, I am of the view that in a contest between paragraph 7 of the Seventh Schedule and the notice requirement in Section V clause A(2) of the DMC, the former shall prevail.”

55.This is in line with the approach of interpreting what is consistent or inconsistent with Schedule 7 by reference to the legislative intent. As the deed of mutual covenant in Citybase Property Management (supra) made it more difficult for the incorporated owners to terminate a manager than Schedule 7, it is inconsistent with Schedule 7.

56.However, the situation should be the opposite, if the deed of mutual covenant makes it easier for the incorporated owners to terminate a manager than Schedule 7. As mentioned above, the interpretation of Schedule 7 should follow the principle as summarized in Bennion, Bailey and Norbury on Statutory Interpretation, 8^th Ed (2020), paragraph 12.5, namely, it should be construed in such a way so as to suppress the mischief that the legislature intended to remedy.

57.Thus, as clause 12(A)(a) of the DMC makes it easier for the respondent to terminate the applicant’s service than Schedule 7 of the BMO, Schedule 7 should not be construed in such a way so as to override clause 12(A)(a).

Conclusion

58.By reasons aforesaid, I find that the respondent is entitled to terminate the applicant’s appointment as the Manager of the Building by virtue of clause 12(A)(a) of the DMC. Paragraph 7(1) of Schedule 7 of the BMO provides a way for such a termination, but it is not the only way. There is no inconsistency between clause 12(A)(a) and Schedule 7 as clause 12(A)(a) does not defeat the legislative intent of the incorporation of Schedule 7 into the DMC.

59.In the circumstances, a declaration should be granted in favour of the respondent, rather than the applicant.

60.I therefore order as follows:-

(1)  The applicant’s application for a declaration be dismissed;

(2)  A declaration be granted in terms of the respondent’s counterclaim;

(3)  Costs order nisi: The applicant do pay the respondent’s costs of the application herein including the counterclaim to be taxed on District Court Scale and with certificate for one counsel if not agreed; and

(4)  If there is no application for costs by either party within the next 14 days, the costs order nisi shall become absolute.

Mr Mathew HO, instructed by WK To & Co, for the applicant

Mr Tony KO and Mr Kleon Chan instructed by Herman HM Hui & Co, for the respondent