The Incorporated Owners of Wo Ming Court v. Wong Chi Wah and Another
Read the full judgment text of DCCJ 4503/2017 on BabelCite. This District Court judgment was delivered on 26 March 2025.
1. The Incorporated Owners of Wo Ming Court, Ground Floor, Wo Fai House, Wo Ming Court, No.8 Ngan O Road, Tseung Kwan O, Hong Kong ( “the plaintiff” ) commenced the present action against Mr Wong Chi Wah ( “the 1 st defendant” ) and Mr Wong Hau Yung ( “the 2 nd defendant” ) for misappropriation of funds, breach of fiduciary duties and/or breach of trust when acting as committee member of the management committee of the plaintiff.
Cites 11 cases
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DCCJ 4503/2017 [2025] HKDC 526 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 4503 OF 2017 ------------------------------------ BETWEEN
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------------------------------ JUDGMENT ------------------------------ Background 1.The Incorporated Owners of Wo Ming Court, Ground Floor, Wo Fai House, Wo Ming Court, No.8 Ngan O Road, Tseung Kwan O, Hong Kong (“the plaintiff”) commenced the present action against Mr Wong Chi Wah (“the 1st defendant”) and Mr Wong Hau Yung (“the 2nd defendant”) for misappropriation of funds, breach of fiduciary duties and/or breach of trust when acting as committee member of the management committee of the plaintiff. 2.The present action applies to the defendants at different periods of time, respectively:
3.Wo Ming Court is a residential complex located in the Sai Kung area of New Territories consisting of multi-storey buildings under the Home Ownership Scheme and over 1,600 residential units thereof. The incorporated owners of Wo Ming Court, namely the plaintiff, began operations on 5 January 2001. 4.The amended statement of claim dated 19 August 2019 (“the ASOC”) pleads against both defendants that they misappropriated funds, breached their fiduciary duties and/or committed breach of trust against the plaintiff pursuant to s.18 of the BMO by wrongfully making several claims of expenses. 5.The said alleged wrongful acts of the 1st defendant as pleaded in the ASOC totals HK$189,369.51 which consists of 4 categories, namely:
6.The said alleged wrongful acts of the 2nd defendant as pleaded in the ASOC totals HK$121,227.10 which are broken down into 2 categories, namely:
7.Despite the similar wording that was used in the ASOC, the allegedly wrongfully claimed expenses of the 2nd defendant do not overlap with those of the 1st defendant and vice versa as will be explained later in this judgment. Preliminary and general principles of law and their contested views 8.Mr Jackson Poon, counsel for the plaintiff, summarized the plaintiff’s preliminary and general legal position by citing s.18(2)(g) of the Building Management Ordinance, Cap.344 (“the BMO”) whereby:
9.Mr Poon adopts the meaning of “common interest” from The Incorporated Owners of Swiss Towers v Chow Yum Wah, CACV 122/2006, 20 October 2006, where Cheung JA held that:
10.The plaintiff’s position is further developed by Mr Poon citing The Incorporated Owners of San Po Kong Mansion 對 Wong Bit Tat 及另三人 (unreported, DCCJ1180/2012、1229、1230 and 1270/2012, 19 January 2017, where DDJ Mr. Tam Lee-cheung (as he then was) held that management committee members incurring expenditures were bound to have been acting bona fide in the best interest of the incorporated owners within the ordinary scope of the incorporated owners’ business. The incurred expenditures needed to be reasonably incidental to the incorporated owners’ business and for their benefit by examining the substantial purpose of the incurred expenditures. 11.As per The Incorporated Owners of San Po Kong Mansion (ibid) with underlined emphasis:
12.The foregoing was challenged by counsel for the defendants, Mr Patrick Chong, by first submitting that The Incorporated Owners of Swiss Towers (supra) is distinguishable and inapplicable in the present case since there was a distinct difference in the factual matrices between them. 13.It was further submitted by Mr Chong that the following dicta of the Court of Appeal in The Incorporated Owners of Swiss Towers (supra) left open the application of s.18(2)(g) of the BMO as to whether a management committee could rightfully incur expenses for donations for local communities and/or locally related social activities to which Mr Chong submitted was what happened in the present case on several occasions and thus permissible:
14.It is noteworthy to observe that the Court of Appeal framed its decision by first defining under s.18(2)(g) of the BMO that a “common interest” is “referable to the management and maintenance of the buildings and matters relating to such purposes”. Although the Court of Appeal made the comment that “activities which may concern the community” with various broad examples may be permissible in an appropriate case, each instance of incurred expenditure would still need to be considered individually. 15.As such, this trial was conducted by the parties by considering each instance of the defendants’ incurred expenditure and their surrounding factual context. Given the foregoing, despite Mr Chong’s position that the plaintiff has adopted the “wrong approach” in construing that the defendants’ incurred expenditures were impermissible per se, nonetheless the trial and this judgment has dealt with the factual background and related matters as attaching to each instance of incurred expenditure by the Defendants, thus providing the parties an opportunity to argue whether each instance of incurred expenditure of the defendants was reasonable. 16.Mr Chong also distinguishes the application of The Incorporated Owners of San Po Kong Mansion (ibid) from the present case and submitted that the plaintiff’s citation was too narrow and in any event there was support in that same judgment that incorporated owners would be allowed to incur expenses for community organizations that would promote good relationships that ultimately help with the work of building management:
17.It must be noted that in The Incorporated Owners of San Po Kong Mansion (ibid), the court also considered each instance of incurred expenditure and whether they were reasonable. As such, even on Mr Chong’s case, this court is still required to consider each instance of the defendants’ incurred expenditure individually and is not inconsistent with the overall approach of how this trial was conducted and this judgment reflecting those findings on each “occasion”. 18.For the avoidance of doubt, I disagree with Mr Chong that the defendants’ incurred expenditures were not properly pleaded since the ASOC at Schedule 1 (as relating to the 1st defendant) and Schedule 2 (as relating to the 2nd defendant) there are fully particularized sets of tables that highlight the defendants’ respectively incurred expenditure and the nature of the claim(s) against them as already discussed hereinabove. The defendants in their amended defence also plead directly against, inter alia, the ASOC and Schedule 1 and Schedule 2 respectively. 19.The law does not expressly require that the defendants’ respectively incurred expenditure be for their personal use or benefit per se, but rather whether, inter alia, their incurred expenditure was reasonable. The authorities certainly show that where management committee members incurred expenditure for their own personal use or benefit without the incorporated owners having any such benefit will tend to show that such activities were found to be wrongful as found in Incorporated Owners of San Po Kong Mansion §101 (supra) and the same will be considered in the analysis of each instance of the defendants’ incurred expenditure. 20.Having said that, Mr Chong additionally mounts the argument that this court should not step into the position of a management committee after a decision has been made by them since this would be tantamount to the court managing the affairs of building(s) by substituting its own decisions on what were reasonable management measures and the cases of Whole Grand Limited v The Incorporated Owners of Bo Fung Building [2024] HKCA 626 at §68 and The Incorporated Owners of Beauty Court v Hon Ping Kay & Anor., LDBM 29/2001, 16 July 2001 at §12 were cited. 21.Although not directly addressed by the parties, it is notable that both Whole Grand Limited and The Incorporated Owners of Bo Fung Building (ibid) were Lands Tribunal cases and thus proceeded under the provisions of the Lands Tribunal Ordinance, Cap.17 (“the LTO”). As such, the plaintiff’s case being based on provisions of the BMO and common law are not bound (or at least not directly) by the principles as referred to by Mr Chong which are binding on cases conducted under the LTO and in the Lands Tribunal. 22.In any event, Whole Grand Limited (ibid) was not a case about unreasonable expenses incurred by committee members but more on the issue of use of common areas and the effect of the deed of mutual covenant would have on them. The case of The Incorporated Owners of Bo Fung Building (ibid) was a case about whether certain expenses should or should not be paid by owners and not about unreasonable expenses incurred by management committee members. 23.Again for the sake of completeness, the amended defence does not make a complaint that the plaintiff’s case is somehow wrongly constituted being an action in the District Court as opposed to the Lands Tribunal and under the LTO. 24.Mr Chong made another point that in the factual matrix of the present case and to be applied as a matter of law per The Incorporated Owners of Bo Fung Building where, inter alia, a management committee and its members made a resolution approving payments for incurred expenditure and where parties such as the defendants who have not taken under those payments or continued to make payments on behalf of the incorporated owners, it would be unfair for there to be a claim arising thereafter since it would be unfair and prejudicial to them thus resulting in a defence via estoppel. 25.As already mentioned, The Incorporated Owners of Bo Fung Building does not appear applicable in the present case since this is not a case in the Lands Tribunal under the LTO. 26.In any event, Mr Poon’s position is that estoppel does not arise in the present case. Mr Poon firstly refers to the case of Tam Lai King v. The Incorporated Owners of Malahon Apartments and Others [2010] 5 HKLRD 63 where an owner sued various defendants that included the incorporated owners of a building, the chairman of the management committee and other members of the management committee based on, inter alia, a cause of action in trespass and also for invalidation of an owners rectification resolution. On the particular facts of the case, the trespass action was dismissed but the invalidation action was effectively successful. On the invalidation action, it was held that members of a management committee owe a fiduciary duty to the incorporated owners and it was held that:
27.Secondly, Shun Pong Ltd v Chan Koo Fai Felix and Anor., [2018] HKCFI 2628 §54-55 refers to the principles of promissory estoppel whereby estoppel requires an element of unconscionability which would be part of a broad inquiry whether in all the circumstances a promisor or owner can resile from a promise or assurance which itself entails a broad inquiry by the court looking at the matter in the round. Mr Chong initially pursued the defendants’ defence by way of the doctrine of promissory estoppel but this was not pursued in closing and narrowed down to estoppel by conduct and or estoppel by convention. 28.Given the plaintiff has a cause of action based on breach of fiduciary duties and both defendants were members of the 6th Management Committee, prima facie the defendants owe a fiduciary duty to the plaintiff as per Tam Lai King. The point of estoppel is factually sensitive and to be dealt with later in this judgment when considering the relevant instances of the defendants’ incurred expenditure and related matters. 29.Furthermore on the point of estoppel, later in this judgment there will be reference to the management company known as Synergis Management Services Limited (“Synergis”) but there are significant limitations on the impact of the evidence which relates to Synergis and this too is later explained. 30.There are parts of this judgment where there is reference to the staff of the plaintiff and in fact this means the staff of the Synergis since Synergis was the management company managing the affairs of the plaintiff. 31.Mr Chong has rightly reminded this court that the burden is on the plaintiff to prove its case which is a position that is not contested and in any event is a point that is certainly agreed with. The 6th management committee of Wo Ming Court and witnesses at trial 32.The relevant management committee of Wo Ming Court, namely the one including the defendants, was the 6th management committee of Wo Ming Court which was from 20 March 2011 until 21 May 2013 (“the 6th Management Committee”). The 6th Management Committee had 11 members in total at the relevant time. Mr Chong raised certain matters regarding the fact that there were 11 members of the 6th Management Committee but not all of those said members were subject to this action, a matter that will be dealt with later in this judgment. 33.During the period when the defendants were part of the 6th Management Committee, a number of events were hosted at Wo Ming Court as well as some alleged amenities offered to its residents that were allegedly appreciated by them at that time although some of those events give rise to the subject matter of this action. By the evidence of the defendants, those said events at Wo Ming Court allegedly increased a positive sense of community there. 34.It will also be noted that certain events organized by the 6th Management Committee were not claimed by the plaintiff in this action, such as a certain table tennis competition, a Mid-Autumn Festival gathering and an Easter trip, those events were not considered in this judgment. 35.Albeit certain events organized by the 6th Management Committee were allegedly appreciated by the residents of Wo Ming Court, this would not necessarily in itself provide a defence to the plaintiff’s causes of action. Even if those said events were allegedly done with an altruistic intent by the defendants, that again might not avail them of a defence to the plaintiff’s causes of action. 36.The operations of the 6th Management Committee were carried out whilst at the same time there was a manager that was engaged and/or employed by the plaintiff, namely Synergis. The documents provided in this case confirmed certain acts of the 6th Management Committee by, inter alia, sending various receipts to Synergis after incurred expenditure took place and then Synergis issuing notices of acknowledgement back to the 6th Management Committee and or sometimes confirmed in various minutes of the 6th Management Committee. 37.The Voluntary Particulars of the Amended Defence goes on to plead, inter alia, that Synergis made representations to the 1st defendant that the expenses in the ASOC at Schedule 1 were “legitimate and acceptable, and they were involved in effectuating the payments and/or reimbursements that were being made to the 1st Defendant” and so “the 1st Defendant had continuously incurred expenses of [a] similar nature for the Plaintiff” which would therefore make it “unconscionable and/or inequitable for the Plaintiff to bring the claims against the 1st Defendant in the present Action.” Likewise, a similar plea is made for and on behalf of the 2nd defendant as well. 38.Throughout these proceedings, there has been the inclusion of various documentary evidence though discovery showing the activities of Synergis but Synergis itself has not been included in these proceedings nor has Synergis provided any input or explanations on their actions. Synergis throughout these proceedings has not provided any witness statement(s) for either party nor has either party called for Synergis’ appearance. 39.The absence of any explanation or elaboration by Synergis leaves this court with evidence from only 3 factual witnesses. 40.The first factual witness was Mr Lam Heung Wa (“Mr Lam”) on behalf of the plaintiff who was, inter alia, the chairman of the 8th management committee (starting on 19 October 2015) (“the 8th Management Committee”) up to the 10th (from 2018 to 2021) management committees. It is notable that Mr Lam was previously involved with various oversight activities of the management committee in 2013 but not the management committee itself, until he headed the chairmanship of the 8th Management Committee. 41.The second and third factual witnesses were the 1st and 2nd defendants themselves. Plaintiff’s overall case and evidence on the defendants’ incurred expenditure 42.As previously stated, Mr Lam was not directly involved in the affairs of the 6th Management Committee and was never a direct witness to the actions of the defendants. 43.It was submitted by Mr Chong on behalf of the defendants that the 7th management committee was through an election and the same members of the 6th Management Committee were re-elected but they resigned due to allegations being made against them on how the 6th Management Committee was spending the funds of the plaintiff. 44.In any event, Mr Lam explained in his witness statement that after the tenure of the 6th Management Committee ended, there was an investigation of the actions of the 6th Management Committee and it was found that there was general misuse of the Plaintiff’s funds. As such, the plaintiff through the 8th Management Committee came to realize that the various incurred expenditures of the 6th Management Committee were potentially wrongful. 45.When it came to the 8th Management Committee, Mr Lam investigated further into the previous actions of the 6th Management Committee which then eventually led to the present action. As such, the case put forward by the plaintiff is extensively based on documentary evidence that was kept by the plaintiff and not by direct witness accounts. 46.In the process of investigations by the plaintiff as reflected in the ASOC, then the discovery provided in this action and then the witness statements of Mr Lam, it appears that there is little dispute that the defendants’ incurred expenditures in this action did take place save for where in certain instances the defendants do not recall that such incurred expenditure did arise due to the passage of time and or that certain sums were of such a small amount that they could not recall the same. 47.For the purposes of this case, unless otherwise denied by the defendants due to their incurred expenditures being forgotten over time or that such incurred expenditures being such a small amount it could not be recalled, the defendants do not dispute that the various contested instances of incurred expenditures did occur but that they contest the fact that the incurred expenditures were reasonable in the circumstances and or permissible since the incurred expenditure was usually (but not universally) confirmed by the 6th Management Committee and or Synergis. 48.As will be seen in the various instances of incurred expenditures to be considered, the defendants also often remarked that it was an overall belief of theirs (particularly the 1st defendant) that the incurred expenditure was for encouragement or motivation “鼓勵” and to improve cohesion “凝聚力” amongst members of the 6th Management Committee and the various sub-groups that carried out particular tasks for the plaintiff. 49.It will be noted that for both defendants, Mr Poon in cross-examination, inter alia, put to them questioning on each of the various items of incurred expenditure specifically whether they were unreasonable, unnecessary and not in the common interest of the plaintiff. This was fairly conducted at trial and gave the defendants an opportunity to answer such questions fully. Specific instances of the defendants’ incurred expenditure 1st defendant Purchase of Buddha Statue(s) 50.The pleaded amount of HK$21,492 is based on 9 transactions which include the purchase of the Buddha Statue(s) itself and also talismans and incense. The underlying reason given by the 1st defendant for the said purchases was because there were various instances of misfortune that took place at Wo Ming Court such as an accident to a worker, the health of one of the committee members of the 6th Management Committee became poor, so to counteract such untoward events the said purchases were made upon the recommendation of a certain Mr Lai (possibly the treasurer of the 6th Management Committee). It is notable that the said purchases were made with the unanimous approval of all committee members of the 6th Management Committee. 51.There were several photos apparently taken by Synergis’ staff during the tenure of the 7th management committee but on dates unknown, showing not just 1 but over a dozen buddhas or what appears to be religious idols in the office of the plaintiff. 52.At trial, the 1st defendant denied the said Buddha Statue(s) purchases were unreasonable, unnecessary and not in the common interest of the plaintiff. 53.The 1st defendant in his witness statement stated that the timing of the various instances of misfortune took place in early 2012 but at trial the 1st defendant inconsistently stated they took place in early 2011. When asked why the Buddha Statue(s) purchases took place in August 2012, the 1st defendant replied that it was because the various instances of misfortune were ongoing and since Mr Lai advised about purchasing a buddha statue to counteract such untoward events over several meetings that the 6th Management Committee after consideration and over time that the Buddha Statue(s) purchases were eventually made in August 2012. Representatives of Synergis were in attendance at the relevant meeting of the 6th Management Committee when approval was given for purchase of a buddha statue. It is notable that the said Mr Lai was never called as a witness in this case. 54.In a copy of the minutes of the recreation sub-group of Wo Ming Court dated 30 June 2012 stated that a (apparently singular) buddha statue for a cost of about HK$38,000 was expected (“the 30 June 2012 Minutes”) but the minutes of the 17th meeting of the 6th Management Committee dated 23 July 2012 show that purchase of a (apparently singular) buddha statue was expected to be carried out but not the actual cost (“the 23 July 2012 Minutes”). In neither of the said minutes was there mention of how the cost of the buddha statue would be paid for although Synergis was in attendance on both occasions. 55.During the tenure of the 1st defendant as chairman of the 6th Management Committee, an open letter dated 13 March 2013 by the plaintiff was issued to the residents of Wo Ming Court showing that a (singular) buddha statue was purchased for a non-specified amount using the monthly allowance of HK$1,200 to the 1st defendant as chairman, secretary and treasurer and not through the use of management fees (“the 13 March 2013 Letter”). This differs from the fact that the 1st defendant admitted that he received reimbursement directly from the plaintiff for the Buddha Statue(s) purchases. For completeness sake, as per the BMO at Schedule 4, the maximum allowance of HK$1,200 is payable to the chairman, vice-chairman, secretary and treasurer of a management committee, if the number of flats at an estate exceeds more than 100 flats. 56.In answering the discrepancy given in the 13 March 2013 Letter on how the Buddha Statue(s) purchases were dealt with, the 1st defendant surprisingly admitted that it was the letter that misdescribed what had happened regarding his reimbursement and what actually took place. The 1st defendant also admitted that not all owners of Wo Ming Court would share the Buddhist faith and that he was not a Buddhist himself. 57.I did not find that the 1st defendant gave a satisfactory answer for the Buddha Statue(s) purchases since the discrepancies between the 13 March 2013 Letter which was issued by the 6th Management Committee while the 1st defendant was chairman himself are too significantly different with the explanation of what actually happened, namely, direct reimbursement to the 1st defendant of HK$21,492 and not via the monthly allowance method of HK$1,200 as already explained in the 13 March 2013 Letter. 58.The 30 June 2012 Minutes appears to be an internal record of the proceedings from the recreation sub-group indicating a projected amount for a buddha statue but the subsequent 23 July 2012 Minutes do not show such projected cost. The 13 March 2013 Letter does not expressly state the amount of HK$21,492 was used for purchase of a buddha statue, a significant sum based on 9 transactions for multiple buddha statues and related items. Such matters were unknown to the Plaintiff (or until fully investigated) nor residents of Wo Ming Court until later via the 13 March 2013 Letter which the 1st defendant admittedly accepts there is a discrepancy with the wording of the said letter as against his own explanation which I find reflects on the 1st defendant being untruthful on this issue. 59.It does not appear on the evidence that any steps were taken to canvass owners of Wo Ming Court on purchasing a buddha statue (or multiples). It is unnecessary for a management committee to canvass owners on all matters of incurred expenditure but as admitted by the 1st defendant there was no uniformly based religious or locally held belief system by the 6th Management Committee or the owners at Wo Ming Court and therefore at least some canvassing would have been beneficial, to say the least. 60.In the present case, the amount of the Buddha Statue(s) purchases were significant and unknown to the plaintiff and owners of Wo Ming Court (save for the recreation sub-group who had earlier expected a cost of HK$38,000) so there was no objection to their purchases nor could there have been objections thereafter to such incurred expenditure and the costs involved. 61.Furthermore, the Buddha Statue(s) purchases were made in an admittedly inconsistent way with what has been explained to the plaintiff and owners of Wo Ming Court in the 13 March 2013 Letter which stated that the Buddha Statue(s) expenses would be paid out of the HK$1,200 monthly allowance of the chairman, secretary and treasurer versus the reality that direct payment was made to the 1st defendant, which again there was no objection to nor could have been thereafter to such incurred expenditure and the costs involved. The 1st defendant stated at trial that he did not recall the 13 March 2013 Letter and then claimed that the said letter was only a draft version. 62.This is not to say that incurred expenditures towards religious or locally held beliefs are in themselves unreasonable, unnecessary and not in the common interest of the incorporated owners of a building or estate. However, matters of religion or locally held beliefs are indirect in nature towards the carrying on of an incorporated owners’ business so an incurred expenditure based on religion or locally held beliefs would need to have some reasons for its purchase, consideration of the nature of the items to be purchased and their cost. Such aforesaid considerations would be taken into account before such incurred expenditure takes place, whether as a starting point or at some stage such as when views are being canvassed or considered. As a result of the foregoing, there can be some justification for the incurred expenditure to be deemed necessary and in the common interest of the incorporated owners. 63.I find that the matters relating to the Buddha Statue(s) purchases were unreasonable, unnecessary and not in the common interest of the plaintiff for the foregoing reasons. There was no way for the plaintiff or owners of Wo Ming Court to have known of the significant cost of the multiple Buddha Statue(s) purchases to be acceptable particularly where the incurred expenditure was based on a religion or locally held belief system that was not shared by the plaintiff or the owners at Wo Ming Court. Additionally, I do not accept the 1st defendant being truthful on this issue. Food and beverage expenses 64.The food and beverage claimed by the plaintiff is from several areas of expense incurred by the 1st defendant, namely (a) meal expenses at restaurants in the amount of HK$99,264.40; (b) purchase of goods from supermarkets in the amount of HK$19,433.11; and (c) purchase of “tiny shrimp” and fish in the amount of HK$2,830 (not a food and beverage expense but rather it is linked to the purchase of the Red Arowana fish, explained later in this judgment). (a) Meal expenses at restaurants 65.A recurring response and way in which the 1st defendant expressed himself on why these types of incurred expenses occurred was because he believed that members of the 6th Management Committee and members of the various sub-groups were freely volunteering their own time from their busy schedules to better the living conditions at Wo Ming Court and therefore these individuals should have their morale boosted or for them to be motivated (“鼓勵”) by having their meals reimbursed when the affairs of Wo Ming Court were being dealt with. 66.The 1st defendant expressed himself in the foregoing manner regarding motivation on several occasions at trial regarding these aforesaid expenditures which were not closely (or at all, on various occasions) monitored but that he trusted those members were meeting for dealing with the affairs of Wo Ming Court and truthful about the amount of monies being spent at such meetings. The 1st defendant expressed his thankfulness and sympathy for all persons doing voluntary work for Wo Ming Court on various occasions during the giving of his evidence at trial. 67.As an overall point, it must be noted that members of the 6th Management Committee were volunteers using their own time to assist Wo Ming Court which was commendable due to such persons having their own busy daily routines which much of the time included long work hours and family commitments. But this does not change the fact that their participation was voluntary and that by nature entails there is no assumption of any form of reward or compensatory benefit for such voluntary participation. 68.A submission was made by Mr Chong for the defendants that when it came to paying for meals of the staff of Synergis, this would be allowed since under the BMO at s.18(2)(c) that:
69.With respect and after consideration, despite a dialogue with Mr Chong, I cannot accept the words “remunerate” would mean payment for meals beyond the salary of paid staff of Synergis since in the context of the BMO generally and even within s.18(2)(c) that “remunerate” simply means that they are paid a salary only since it relates to the “duties or powers of the corporation” and paid meals beyond a Synergis staff’s salary would sensibly fall outside that definition. 70.A further submission was made by Mr Chong for the defendants that paying for meals of the staff of Synergis would also be allowed under the BMO at s.18(2)(g). With respect again and after consideration, paying for the meals of the staff of Synergis would not extend to s.18(2)(g) since paying for the meals of staff could not nearly be considered in the “common interest” of the plaintiff. I refer to the earlier discussion in this judgment regarding the definition of “common interest”. 71.It was agreed as a fact that the chairman, secretary and treasurer of the management committee of Wo Ming Court were each given a HK$1,200 allowance per month. But this HK$1,200 allowance per month was limited to these persons only and this amount was not subject to qualification, such as allowing those said persons to recover any of their incurred expenditure such as for food and or related expenses beyond the HK$1,200 monthly allowance. 72.It is noted that in Incorporated Owners of San Po Kong Mansions §86 (supra) it was held in that case that meals for committee members were disallowed but nonetheless this case is considered on its own facts. 73.There was incurred expenditure for several dinners at 稻香超級漁港 (“Tao Heung Restaurant”) in the amounts of HK$740 on 17 February 2012, HK$4,250 on 18 March 2012, HK$750 on 11 March 2012 which the 1st defendant explained were spent for sub-group(s) but he was not sure which exact sub-group(s) they were or for what those meetings were about. 74.The 1st defendant said that some meetings of the 6th Management Committee and sub-groups took place at restaurants and not at the conference room of the plaintiff. This was because members of the 6th Management Committee and sub-groups were busy with their own lives which usually included full time employment so the meetings taking place in a restaurant with their meals paid by the plaintiff boosted their morale. The 1st defendant also said that he did not consider that members of the 6th Management Committee and sub-groups having their meals paid for them while dealing with the affairs of Wo Ming Court to be considered a form of monetary incentive. 75.I find that the matters relating to the Tao Heung Restaurant dinner expenses were unreasonable, unnecessary and not in the common interest of the plaintiff since the voluntary nature of the 6th Management Committee and sub-groups were not subject to being repaid on the justification that motivating volunteers was a legitimate reason for paying for their meals despite the altruistic nature of the members donating their time to the betterment of Wo Ming Court. The lack of supporting documentary evidence showing who attended, or even being able to recall which sub-groups, or the nature of the sub-groups’ meetings rendered such incurred expenditure essentially untraceable and unaccountable to the plaintiff with any credibility. 76.The purpose of having a conference room at the plaintiff’s office premises would entail its general usage for the affairs of Wo Ming Court and there was no explanation for not using it to conduct the business and affairs of Wo Ming Court. This is particularly so given that the members of the 6th Management Committee and sub-groups were in fact residents of Wo Ming Court. This is not to say that every conference or matter dealing with the affairs of Wo Ming Court would necessarily be conducted in the conference room of the plaintiff. But to go elsewhere would generally require some justification or at least some basic details for why this was the case such as if the conference room was somehow unavailable or unsuitable. 77.For the Tao Heung Restaurant dinner expenses, no justification or any details whatsoever for not using the conference room of the plaintiff were provided. 78.There was incurred expenditure for dinner expenses at a seafood restaurant in Lau Fau Shan in the amount of HK$3,000 on 24 March 2012 which the 1st defendant explained was for a meeting by the 6th Management Committee regarding a trip to visit Tin Fu Yuen Estate to learn from them how to use the vacant spaces which was a beneficial experience for Wo Ming Court. There was a site visit and dinner thereafter that included persons from Tin Fu Yuen Estate and Synergis. There was such a visit recorded in the minutes of the 13th meeting of the 6th Management Committee dated 26 March 2012. 79.The requirement of a site visit is understandable but the 1st defendant then explaining that a dinner thereafter was justified since the persons attending had to “sacrifice” their time during the site visit is unacceptable. 80.I find that the matters relating to the Lau Fau Shan seafood dinner expenses were unreasonable, unnecessary and not in the common interest of the plaintiff since site visit costs would certainly be reasonable, arguably necessary and in the common interest of the plaintiff. However, the seafood dinner thereafter for various unidentified persons from Tin Fu Yuen, members of the 6th Management Committee and Synergis being taken to dinner for their “sacrifice” for their voluntary participation is unjustified nor should staff of Synergis who had paid positions be given such a benefit. 81.There was incurred expenditure for dinner expenses at Victoria Harbour Restaurant in the amount of HK$3,000 on 24 March 2012 which the 1st defendant explained was for a meeting of the 6th Management Committee with lawyers regarding easement issues about a road in Wo Ming Court. The 1st defendant further explained that the lawyers involved were giving pro bono advice and thus treating them to dinner was reasonable which was organized by Synergis. The minutes of the 15th meeting of the 6th Management Committee dated 21 May 2012 confirmed that there was such a meeting with lawyers. The payment slip from Victoria Harbour Restaurant was somewhat unclear but a letter from Synergis on 6 June 2012 confirmed the amount being HK$3,000. 82.I find that the matters relating to the Victoria Harbour Restaurant dinner expenses were reasonable, necessary and in the common interest of the plaintiff since legal issues directly related to the road of Wo Ming Court was accounted for (albeit the paucity of the documentary evidence in support was very limited) and explained to a satisfactory level to this Court at trial. 83.There was incurred expenditure for a meal at Golden Dynasty Seafood Restaurant in the amount of HK$851 on 27 September 2012 located in North Point which the 1st defendant explained was for a meeting with lawyers and the 1st defendant recalled that the lawyers involved were unavailable to go to the conference room of the plaintiff. 84.I find that the matters relating to the Golden Dynasty Seafood Restaurant meal expenses were reasonable, necessary and in the common interest of the plaintiff since legal issues relating to Wo Ming Court were accounted for (albeit the paucity of the documentary evidence in support was very limited) and explained to a satisfactory level to this Court at trial. 85.There was incurred expenditure for a meal at Victoria Harbour Restaurant in the amount of HK$1,000 on 12 June 2012 apparently located in Tseung Kwan O which the 1st defendant explained was a “work related” dinner attended by members of the 6th Management Committee and security and cleaning staff of Wo Ming Court. When asked why the meeting did not take place in the conference room of the plaintiff, the 1st defendant explained that the 6th Management Committee needed to keep good people and to also keep them content and motivated. This sentiment extended to security and cleaning staff of Wo Ming Court since they were all like family and who attended the said dinner. 86.The 1st defendant also remarked at trial that motivating staff of Wo Ming Court (again, including security and cleaning staff) was a general concept that the 6th Management Committee encouraged and that if their salaries could not be increased they would instead receive other benefits. This was despite the fact that 1st defendant acknowledged that the security and cleaning staff of Wo Ming Court were paid employees. The 1st defendant accepted at trial that he could not recall any particular instances where residents of Wo Ming Court actually wrote in letters to the plaintiff that acknowledged the efforts and good conduct of the security and cleaning staff working at Wo Ming Court per se. 87.I find that the matters relating to the Victoria Harbour Restaurant on 12 June 2012 were unreasonable, unnecessary and not in the common interest of the plaintiff since the voluntary nature of the members of the 6th Management Committee were not subject to being repaid on the justification that motivating volunteers was a legitimate reason for paying for their dinner despite the altruistic nature of their work which was for the betterment of Wo Ming Court. The lack of supporting documentary evidence showing who attended said dinner was essentially untraceable and unaccountable to the plaintiff with any credibility. Furthermore, there was no explained justification or at least some basic details for having the said dinner. Furthermore, the security and cleaning staff of Wo Ming Court were paid employees and any further benefits such as free meals paid by the plaintiff was unjustified. 88.There was incurred expenditure for a meal for multiple persons at Tai Hing (太興) in the amount of HK$141 on 8 June 2012. The 1st Defendant explained that for meals generally, he again explained that due to the busy schedules of sub-group members and persons carrying out duties generally for Wo Ming Court, sometimes meetings took place at restaurants and at times of the day that were convenient to them so as to give them motivation to carry on their voluntary work for Wo Ming Court, whomever they might be. 89.The 1st Defendant remarked generally that Synergis informed the 6th Management Committee that such meal expenses could be compensated to sub-group members and persons carrying out duties for Wo Ming Court. However, the 1st defendant agreed that if Synergis was incorrect about such compensation being available, ultimately and equivalently the 1st defendant would also be incorrect. 90.I find that the matters relating to the Tai Hing meal on 8 June 2012 were unreasonable, unnecessary and not in the common interest of the plaintiff since the voluntary nature of the members of the 6th Management Committee or sub-group(s) were not subject to being repaid on the justification that motivating volunteers was a legitimate reason for paying for meals despite the altruistic nature of their work which was for the betterment of Wo Ming Court. The lack of supporting documentary evidence showing who attended the meal at Tai Hing rendered the incurred expenditure essentially untraceable and unaccountable to the plaintiff with any credibility. Furthermore, there was no explained justification or at least some basic details for having the said meal. As an additional matter, there appeared to be no written confirmation from Synergis allowing for this meal. 91.The 1st defendant was shown a letter from Synergis dated 7 March 2013 specifically addressed to him regarding past monthly expenditure being excessive and various examples of how expenditure should be controlled and accounted for but was not followed by the 1st defendant (“the 7 March 2013 Synergis Letter”). The 7 March 2013 Synergis Letter also stated that since certain members of the management committee of Wo Ming Court already had a HK$1,200 monthly allowance and any other expenses required resolutions at the general meeting to permit the same.
92.The 1st defendant claimed that after receiving the 7 March 2013 Synergis Letter, documentation showing various incurred expenditure was brought to the general meeting of Wo Ming Court but he admitted that no resolution was made approving the same. 93.The 1st defendant acknowledged the existence of the 7 March 2013 Synergis Letter but complained that prior to the said letter’s issue a certain Mr Chow who was apparently in the management of Synergis asked the 1st Defendant to sign a 10-year service contract between the Plaintiff and Synergis. The 1st defendant refused the proposed said terms and therefore the 7 March 2013 Synergis Letter was issued in retaliation against the 1st defendant. 94.The 1st defendant also complained about the lateness of the 7 March 2013 Synergis Letter and therefore it had no relevance to his conduct but then he acknowledged that the said letter was about complaints of past conduct of the 1st defendant and thus lateness of the said letter was irrelevant per se. 95.After the tenure of the 6th Management Committee, another letter issued by the plaintiff dated 23 December 2013 (“the 23 December 2013 Letter”) stated, inter alia, that there was improper handling of funds by the 1st defendant and certain members of the 6th Management Committee:
96.For the avoidance of doubt, I do find the 7 March 2013 Letter to be of relevance to this case and I do not believe that the 7 March 2013 Synergis Letter was somehow written in retaliation against the 1st Defendant for not signing a 10 year contract with Synergis. At closing, it was admitted by the parties that Synergis continues to be the manager of the plaintiff but the terms or duration of their contract was not further stated. 97.The matters relating to the 7 March 2013 Synergis Letter will be revisited later in this judgment. 98.There was incurred expenditure for a breakfast meal for multiple persons at Tai Hing in the amount of HK$293 on 24 June 2012. The 1st defendant explained that for the said breakfast, he again explained that due to the busy schedules of sub-group members and persons carrying out duties generally for Wo Ming Court, apparently on this occasion did meet prior to work and was considered reasonable in order to give them motivation to carry on their voluntary work for Wo Ming Court. The 1st defendant also said that the timing was convenient for all who attended the breakfast meeting, whomever they might be. The 1st defendant remarked that looking at the cost of the said breakfast there was probably several persons in attendance for what was likely a sub-group meeting. 99.I find that the matters relating to the Tai Hing meal on 24 June 2012 were unreasonable, unnecessary and not in the common interest of the plaintiff since the voluntary nature of the sub-group members were not subject to being repaid on the justification that motivating volunteers was a legitimate reason for paying for meals despite the altruistic nature of their work which was for the betterment of Wo Ming Court. Furthermore, there was no explained justification or at least some basic details for having the said meal or who attended. Additionally, there appeared to be no written confirmation from Synergis allowing for this breakfast meal. 100.There was incurred expenditure for meals again at Tai Hing in the amount of HK$56 on 22 August 2012 for breakfast as well as another breakfast in the amount of HK$56 on 2 November 2012. The 1st defendant explained that there were two persons attending a sub-group meeting but he could not recall who or for what reason, but in any event he recalled the conference room at the plaintiff was not used since it probably clashed with another meeting being held there. 101.I find that the matters relating to the breakfast meals at Tai Hing on 22 August 2012 and 2 November 2012 were unreasonable, unnecessary and not in the common interest of the plaintiff since the voluntary nature of the members of the sub-groups were not subject to being repaid on the justification that motivating volunteers was a legitimate reason for paying for meals despite the altruistic nature of their work which was for the betterment of Wo Ming Court. There was a lack of supporting documentary evidence showing who attended the alleged breakfast meetings and the 1st defendant claiming that the conference room of the plaintiff was probably being used had no foundation other than his general surmise. No attempts were made to find any documentary proof to confirm the 1st defendant’s position on the availability of the conference room of the plaintiff. 102.There was incurred expenditure for a meal at Tung Kee Restaurant located in Sai Kung in the amount of HK$7,300 on 27 August 2012. The 1st defendant explained it was a seafood dinner where a meeting was organised by Synergis (and supposedly attended by members of the 6th Management Committee) regarding easement issues relating to a road in Wo Ming Court so it did not appear appropriate to go to only a local style casual eatery (茶餐廳). The 1st defendant stated that this meal was accounted for in a letter confirming the incurred expenditure dated 6 September 2012. The 1st defendant then agreed that having a seafood dinner in Sai Kung, in other words the quality of the meal or where the location of such a meeting was held, was irrelevant to getting work done. The 1st defendant agreed the said meal was expensive but it depended on how many persons were in attendance but the 1st defendant was silent on how many persons did actually attend. 103.I find that the matters relating to the meal at Tung Kee Restaurant located in Sai Kung in the amount of HK$7,300 on 27 August 2012 was unreasonable, unnecessary and not in the common interest of the plaintiff since the voluntary nature of the members of the 6th Management Committee were not subject to being repaid on the justification that motivating volunteers was a legitimate reason for paying for meals despite the altruistic nature of their work which was for the betterment of Wo Ming Court. There was a lack of supporting documentary evidence showing who attended the Sai Kung meal and the 1st defendant claiming that a meeting organised by Synergis required a better venue had no foundation other than his general opinion of somehow needing to upgrade the meal and location for the meeting, where in particular the meal itself being one of notable cost and distance away from Wo Ming Court, was unjustified. 104.There was incurred expenditure for a meal at Chiu Yan Fan Tong in the amount of HK$855 on 3 November 2012 which the 1st Defendant explained was for a meeting of the members of the 6th Management Committee that was not held in the conference room of the plaintiff since it was under renovation. 105.I find that the matters relating to the Chiu Yan Fan Tong meal expenses were reasonable, necessary and in the common interest of the plaintiff since members of the 6th Management Committee were in attendance (although the 1st defendant did not attend himself) and matters relating to Wo Ming Court was apparently discussed. Furthermore, having a meeting outside of Wo Ming Court on this occasion was generally understandable since the conference room of the plaintiff was apparently unavailable on the express verbal evidence of the 1st defendant. Despite the documentary evidence in support of this incurred expenditure was very limited, nonetheless the explanation given by the 1st defendant was to a satisfactory level to this Court at trial. 106.There was incurred expenditure for a lunch meal at Genki Sushi in the amount of HK$392.70 on 15 August 2012 which the 1st defendant explained was for a meal and meeting with members of the 6th Management Committee. 107.I find that the matters relating to the Genki Sushi meal on 15 August 2012 were reasonable, necessary and in the common interest of the plaintiff since members of the 6th Management Committee were apparently in attendance and matters relating to Wo Ming Court was apparently discussed despite it only being an hour-long combination lunch and meeting. Despite the documentary evidence in support was very limited, and I had to have serious thought about this expense, nonetheless the explanation given by the 1st defendant was to a satisfactory level to this Court at trial by the narrowest of margins. 108.There was incurred expenditure for a meal at McDonalds in the amount of HK$88.70 on what appears to be 11 June 2012 shortly after midnight which the 1st defendant gave little explanation for. The aforesaid McDonalds meal was plainly unreasonable, unnecessary and not in the common interest of the plaintiff since there could not have been a meeting relating to Wo Ming Court operations at such a late hour. 109.There was incurred expenditure for a lunch meal at Genki Sushi in the amount of HK$606 on what appears to be 10 December 2012 which the 1st Defendant explained was for a meal and meeting between 2 members of the 6th Management Committee. The 1st defendant remarked that those 2 members should be encouraged or motivated to attend such meetings. 110.I find that the matters relating to the Genki Sushi meal on 15 August 2012 were unreasonable, unnecessary and not in the common interest of the plaintiff since the alleged 2 members of the 6th Management Committee that apparently were in attendance being an hour long combination lunch and meeting with substantial expense incurred on that occasion. Again, due to the voluntary nature of the members of the 6th Management Committee were not subject to being repaid on the justification that motivating volunteers was a legitimate reason for paying for meals despite the altruistic nature of their work which was for the betterment of Wo Ming Court. There was a lack of supporting documentary evidence showing who attended and with only 2 members, not even their names or roles to whatever may be in relation to Wo Ming Court, were not recalled nor what exactly was discussed. 111.There was incurred expenditure for 2 meals at or from Pizza Box in the amount of HK$728 at 5:44 pm and Tao Heung in the amount of HK$960 at a time unknown also on 31 December 2012. The 1st defendant explained the said 2 meals were for a meeting between sub-group members and which was later recorded in a letter of the plaintiff dated 7 January 2013 as being for Christmas dinners “法團委員聖誕聚膳食費用”. The 1st Defendant remarked that those 2 meals between sub-group members should be encouraged or motivated to attend such meetings. The 1st defendant was asked why the said 2 meals were recorded as being Christmas dinners of the management committee (as an aside, notably not for a sub-group which would normally be stated as being “法團委員小組”) but in the same said letter of 7 January 2013 there were other entries as being for meeting related meals “會議膳食”. The 1st defendant remarked that it was his impression that the alleged Christmas dinners were for meetings related to Wo Ming Court and whomever prepared the said letter of 7 January 2013 incorrectly named the entry as being Christmas dinners instead of “meeting” related meals. 112.I find that the matters relating to the 2 meals on 31 December 2012 were unreasonable, unnecessary and not in the common interest of the plaintiff since the entries suggest they were of a “festive nature” only and I do not accept their entry into the said letter of 7 January 2013 was incorrect. It was put to the 1st defendant and I agreed that the timing of the 2 meals were also suspect as relating to works done in relation to Wo Ming Court and in any event the 1st defendant’s recollection was unreliable on this matter generally. There was a lack of supporting documentary evidence showing who attended such alleged sub-group meeting and not even their names or roles to whatever may be in relation to Wo Ming Court were recalled nor what exactly was discussed. 113.There was incurred expenditure for a meal at Tai Hing on 1 January 2013 in the amount of HK$450 which the 1st defendant explained was for a sub-group meeting and that the sub-group members were essentially working on whatever dates at whatever times of the day was convenient to them, inclusive of the meeting taking place on New Year’s Day. 114.I find that the matters relating to the meal on New Year’s Day was unreasonable, unnecessary and not in the common interest of the plaintiff since I find it unlikely that there was a sub-group meeting held on New Year’s Day. There was a lack of supporting documentary evidence showing who attended the alleged meeting and not even their names or roles to whatever may be in relation to Wo Ming Court were recalled nor what exactly was discussed. 115.For the avoidance of doubt, I do not find it reasonable or likely that meetings of sub-groups would or did take place on whatever dates and at whatever times of the day without restriction despite members of the 6th Management Committee and sub-groups by and large did apparently have full time employment and busy personal lives. There would need to be an assessment of the factual basis of who, when and where a meeting took place and best with some supporting documentary evidence or at least a verbal explanation with some details given. Another example of such an unlikely meeting taking place would be the incurred expenditure at McDonalds on 11 June 2012 shortly after midnight of that day as aforementioned. 116.There was incurred expenditure for 3 meals at Tao Heung in the amount of HK$980 on 14 January 2013, HK$880 on 15 January 2013 and HK$920 on 18 January 2013. The 1st defendant explained the 3 meals were for meetings and, although not entirely clear, apparently held by the 6th Management Committee which he believed was permissible since the receipts were given to Synergis who were a large management company that approved the way they were carrying out their activities. 117.The 1st defendant went on to state that the reimbursement of their meals was to improve “cohesion” amongst colleagues (meaning 6th Management Committee members) “我哋為咗即係提高同事之間嗰個凝聚力” but it was accepted that there was no mention of such an explanation in the amended defence nor his witness statements. The 1st defendant further explained that the conference room of the plaintiff could not be used due to storage of goods which required them to be moved before conferences could be held but again the 1st defendant accepted the same was not mentioned in the amended defence or his witness statements. 118.I find that the matters relating to the Tao Heung meals on 14, 15 and 18 January 2013 were unreasonable, unnecessary and not in the common interest of the plaintiff since, unlike the meal at Chiu Yan Fan Tong on 3 November 2012, were not due to renovation of the conference room of the plaintiff but simply an inconvenience due to overcrowding of the conference room with too many supplies and items located there. The overcrowding of the conference room should not have been allowed in any event due to the nature of the conference room of the plaintiff needing to be available to hold conferences. The said meals were unnecessarily substantial in the expense incurred, the number of the actual attendees and who they were was unknown by the 1st defendant. 119.Again, due to the voluntary nature of the 6th Management Committee and sub-group members were not subject to being repaid on the justification that motivating volunteers or improving their “cohesion” was a legitimate reason for paying for their meals despite the altruistic nature of their work which was for the betterment of Wo Ming Court. For the said meals, the 1st defendant’s reasoning hereof lacked supporting documentary evidence showing who attended and not even their names or roles to whatever may be in relation to the 6th Management Committee or otherwise even to the operations of Wo Ming Court were recalled nor what exactly was discussed. 120.There was incurred expenditure for lunch at Tao Heung in the amount of HK$4,380 on 29 January 2013 which the 1st Defendant gave little explanation (in fact he had no impression at all) for its reason for having incurred such an expenditure nor for its high cost. The said lunch was plainly unreasonable, unnecessary and not in the common interest of the plaintiff since there were no supporting reasons such as there being a meeting by a sub-group or the 6th Management Committee, nor any reason for the distinctly high cost of the said lunch. 121.There was incurred expenditure for 2 sets of a traditional Chinese dishes / meals which is various layers of ingredients, namely “盤菜” (but written as “盤才” in the coordinate receipt) at or from Tao Heung in the amounts of HK$4,000 and HK$6,000 on 29 January 2013. The 1st defendant gave little explanation for the incurred expenditure other than it was recorded in a letter of the plaintiff dated 30 January 2013. However, the said letter dated 30 January 2013 recorded the expense as being the management committee purchased the dishes / meals “by itself” but there was no indication who it was exactly for “法團委員自行購買-盆菜” 122.I find that the matters relating to the Tao Heung traditional Chinese dishes / meals were unreasonable, unnecessary and not in the common interest of the plaintiff since there were no supporting reasons or documentation that there was a meeting by a sub-group or the 6th Management Committee that took place at that same time, nor any reason for their distinctly high cost. Again, due to the voluntary nature of the 6th Management Committee and sub-group members were not subject to being repaid on the justification that motivating volunteers was a legitimate reason for paying for their meals despite the altruistic nature of their work which was for the betterment of Wo Ming Court. 123.There was incurred expenditure for 5 Pizza Hut coupons totalling HK$500 which the 1st defendant gave little explanation for other than they were for lucky draws held at the Spring Festival of Wo Ming Court. The 5 Pizza Hut coupons were given away to residents of Wo Ming Court which is unrelated to the work of a sub-group or the 6th Management Committee but I still find arguably reasonable, arguably necessary and in the common interest of the plaintiff since whichever resident of Wo Ming Court might have been in attendance and acquired such a Pizza Hut coupon can be said to have at least had some direct benefit to such incurred expenditure. I make these comments about the aforesaid incurred expenditure based purely on the facts of this case and note that it was of limited cost and some direct benefit to certain lucky residents of Wo Ming Court. 124.There was incurred expenditure for dinner at Tao Heung on 12 and 13 February 2013 (which happened to be the 3rd and 4th day of Chinese New Year 2013) respectively in the amounts of HK$1,200 and HK$2,666 which the 1st defendant explained was for group meetings and recorded in the minutes of the 24th meeting of the 6th Management Committee dated 25 February 2013 which stated at section 4 regarding management reported item 8 the following was stated:
125.In summary, the events explained were for various performances, events held for residents of Wo Ming Court, photo taking events, some food items given to residents of Wo Ming Court and the residents were grateful for the activities taking place that day. Notably absent from the said description of the day’s events was any reference to the expenditure of dinner which was simply an event and dinner for the 6th Management Committee themselves. 126.I take judicial notice that as found in the Hong Kong Government press release dated 27 April 2012 that 12 and 13 February 2013 were public holidays and distinctly the 3rd and 4th day of Lunar New Year. 127.I find that the matters relating to the dinner at Tao Heung on the 3rd and 4th Day of Chinese New Year 2013 were unreasonable, unnecessary and not in the common interest of the plaintiff since I find it unlikely that there was a work-related meeting by the 6th Management Committee during the public holidays of Chinese New Year 2013 and on a balance of probabilities it was for the personal enjoyment of the 6th Management Committee only. I also find that those said events explained in the letter of the Plaintiff dated 25 February 2013 were indicative that such incurred expenditure was enjoyed only by the 6th Management Committee and not by residents of Wo Ming Court per se. 128.By virtue of the voluntary nature of the members of the 6th Management Committee were not subject to being repaid despite the altruistic nature of their work which was for the betterment of Wo Ming Court and therefore the 1st defendant’s reasoning hereof was unsupported. 129.There was incurred expenditure for dinner at Lei Garden Restaurant in the amount of HK$4,105 on 16 February 2013, shortly after Chinese New Year 2013, which the 1st defendant explained was for a meeting of the 6th Management Committee and later recorded in a letter of the plaintiff dated 21 February 2013. The 1st defendant remarked that the said dinner encouraged or motivated members of the 6th Management Committee to attend such meetings but gave no direct answer for why it was held at a relatively high cost. 130.I find that the matters relating to the dinner at Lei Garden Restaurant on 16 February 2013 was unreasonable, unnecessary and not in the common interest of the plaintiff since although attended by members of the 6th Management Committee, the actual number of members was forgotten, their purpose of meeting also forgotten and more importantly the high cost of the dinner was unreasonable for the purposes of dealing with the affairs of the plaintiff. 131.Again, due to the voluntary nature of the members of the 6th Management Committee were not subject to being repaid on the justification that motivating volunteers was a legitimate reason for paying for meals despite the altruistic nature of their work which was for the betterment of Wo Ming Court and the 1st defendant’s reasoning hereof was unsupported. 132.There was incurred expenditure for cakes “蛋糕” in the amount of HK$337.50 and a lunch at Tao Heung in the amount of HK$2,380 on 27 February 2013 in which a letter of the plaintiff dated 28 February 2013 confirmed both for the cakes and lunch that they were “法團委員與管業處同事fallwell [farewell] 蛋糕費用” and “法團委員與管業處同事fallwell [farewell] 膳食費用”. Both the cakes and the lunch were consumed at the same time which Mr Lam did not oppose to the expenditure of cake as to its reasonableness but stated it was unnecessary nor in the common interest of the plaintiff. 133.The 1st defendant gave little explanation for the said cake and lunch expenses other than they were for the 6th Management Committee and management staff at a farewell lunch which is unrelated to the work of the 6th Management Committee or a sub-group but which I find arguably reasonable, arguably necessary and in the common interest of the plaintiff since at least the management staff were in attendance and it can be said to have at least had some peripheral purpose to Wo Ming Court to incur such expenditure. I make these comments about the aforesaid incurred expenditure based purely on the facts of this case and note that it was of limited cost for the cakes (but very nearly not finding for the 1st defendant on the lunch expense) and some peripheral benefit to the management staff. 134.The sub-total for incurred expenditure of the 1st defendant which I have found was unreasonable, unnecessary and not in the common interest of the plaintiff for meal expenses at restaurants and similar items is HK$45,549.70. (b) Purchase of goods from supermarkets 135.A recurring response and or way in which the 1st defendant expressed himself on what, why and how these types of incurred expenses occurred was because since the plaintiff was open every day of the week to residents of Wo Ming Court and the staff of the plaintiff were working overtime, therefore the staff should be rewarded for their hard work by having food items available to them as a form of reward “奬勵”. 136.The staff of the plaintiff held paid positions of employment and unless their contracts of employment stated there was some form of expected benefits or reward (whether in the form of food items or otherwise), any food items and related expenses would not be recoverable from the plaintiff. Neither of the parties throughout these proceedings have disclosed any contracts of employment for the staff of the plaintiff. 137.The 1st defendant agreed that none of the food (or sundry) items have been agreed at the general meeting of the owners at Wo Ming Court. 138.This court finds that food (or sundry) items that were limited in cost with some general explanation for what, when and why such food (or sundry) items were purchased and then consumed (or used) by staff of the Plaintiff, may be permissible if it was on limited occasions and done at the office of the plaintiff. Incurred expenditure for food (or sundry items) might align with the general concept that such consumption (or use) would relate to the management and maintenance of Wo Ming Court since it could be seen as a form of basic or de minimis support of staff and thus related to the management of Wo Ming Court in the general sense but such items should not be seen as a form of reward per se nor excessive in cost. 139.The aforesaid food (or sundry) items if given to residents of Wo Ming Court would be more limited in their acceptability since a resident’s consumption (or use) of food (but unlikely sundry) items would be less likely to relate to management and maintenance of Wo Ming Court save where there is express approval by the management committee for a resident’s consumption as a starting point to begin with. In any event, the purpose of the plaintiff is not to “feed” its residents. 140.There was incurred expenditure for food and sundry items at Taste supermarket in the amount of HK$3,777.41 on 25 July 2012, which the 1st defendant explained that a large quantity of food and sundry items (a total of 188 items) were essentially bought in bulk and thus several items were excessively duplicated in their purchase. 141.I find that the matters relating to the purchases at Taste supermarket on 25 July 2012 were unreasonable, unnecessary and not in the common interest of the plaintiff since there was a very significant number of items that were highly perishable (i.e. multiple packs of salmon sushi, dairy products, fresh foods etc) that could not have been used by the staff of the plaintiff at the office of the plaintiff or for any length of time. Many of those items could be characterized as “premium” grade food items that were of an unnecessarily higher grade of quality for staff working at the office of the plaintiff. Furthermore, there was excessive duplication of food items (i.e. 4 cans of fried dace, 4 cans of chopped preserved pork, 36 packs of cans of Nescafe coffee, multiple boxes of Dreyer’s and Haagen Dazs ice cream, etc). 142.Given none of the foregoing purchases from Taste supermarket on 25 July 2012 were approved at a general meeting and there being excessive purchasing of duplicated food items and some of those items were of an unnecessarily “premium” grade and sometimes of a highly perishable nature, the high incurred expenditure hereof was unreasonable. In any event, food items, in particular when duplicated, should be properly obtained by the paid staff of the plaintiff themselves. 143.There was incurred expenditure for food from “三寶” Sanpo Food Shop in the amount of HK$600 on 30 July [2012] and $688 on 6 August [2012] which the 1st defendant agreed that the said food items were of the nature that needed to be cooked for them to be consumed. The receipts of the said food items have no indication whatsoever what exactly was purchased but it was put to the 1st defendant that the nature of those items described do appear to be food normally found in a typical Hong Kong style “hot pot” meal and thus for personal consumption off-site to which the 1st defendant disagreed. 144.I find that the matters relating to the purchases at Sanpo Food Shop on 30 July [2012] and 6 August [2012] were unreasonable, unnecessary and not in the common interest of the plaintiff since these were all perishable items, unnecessarily bought in bulk and the nature of what was actually bought is totally unknown since there was no description or itemization of the items purchased. There was a disagreement as to whether there were cooking facilities at the office of the plaintiff, but in any event, this was an ancillary factor that does not change my findings as stated hereinabove. 145.There was incurred expenditure for food at Taste supermarket in the amount of HK$62.8 on 9 August 2012 which although were food items of a very perishable nature, the amount is of such a reasonable amount and explained by the 1st defendant to be for serving residents of Wo Ming Court. I find such incurred expenditure to be arguably reasonable, arguably necessary and in the common interest of the plaintiff since at least the staff of the plaintiff were using the said food items on site and it can be said to have at least had some peripheral purpose to Wo Ming Court to incur such expenditure. I have come to this conclusion at the narrowest of margins in favour of the 1st defendant. 146.There was incurred expenditure for food and sundry items at Taste supermarket in the amount of HK$7,213.40 on 18 September 2012, which the 1st defendant explained that a large quantity of food and sundry items (a total of 332 items) were essentially bought in bulk and thus several items were excessively duplicated in their purchase. 147.I find that the matters relating to the purchases at Taste supermarket on 18 September 2012 were unreasonable, unnecessary and not in the common interest of the plaintiff since there was a very significant number of items that were not in the nature to be used by staff of the plaintiff on site at the office of the plaintiff or excessively duplicated (i.e. 2 packs of 6 cans of Chang Beer, 1 pack of 6 bottles of Corona Extra Beer, 1 pack of 8 bottles of Erdinger Dark Beer, 1 pack of Tsing Tao Dark Beer, 1 case of 20 bottles of Blue Girl Beer, 3 cases of different types of Bundaberg Ale, 6 cans of Del Monte Sardines etc). Again, food items in particular when duplicated, should be properly obtained by the paid staff of the plaintiff themselves. 148.There was incurred expenditure for food and sundry items at Taste supermarket in the amount of HK$3,389.90 on a date that was unclear on the documentary evidence but consistent with the 1st defendant explaining that a large quantity of snack foods was said to have been purchased (a total of 89 items) for Chinese New Year celebrations. The 1st defendant explained that the documentary evidence shows that roasted pork, hot drinks and Vitasoy drinks that were distributed to residents of Wo Ming Court on the 3rd Day of Chinese New Year 2012 as recorded in the minutes of the plaintiff dated 26 November 2012. 149.Roasted pork, hot drinks and Vitasoy drinks being the incurred expenditure for residents of Wo Ming Court on the 3rd Day of Chinese New Year 2012 would be reasonable, arguably necessary and for the common interest of the plaintiff. However, the vast majority of the items found in the receipt from the Taste supermarket shows that several of the items were not for those said items distributed to residents of Wo Ming Court on the 3rd Day of Chinese New Year 2012 (i.e. 2 packs of Best Buy Salted Beans, 4 bottles of Blue Girl Beer, 4 bottles of Tsing Tao Dark Beer, a bottle of Longevity Shaoshing [wine], etc). 150.I find that the matters relating to the purchases at Taste supermarket for the residents of Wo Ming Court for the 3rd Day of Chinese New Year 2012 were unreasonable, unnecessary and not in the common interest of the plaintiff since there was a very significant number of items that were not for the residents of Wo Ming Court and not in accordance with recorded minutes of the plaintiff on 26 November 2012 save for certain items that totalled $391 thus an incurred expenditure of HK$2,998.90 was unreasonable. Again, in any event, food items, in particular when duplicated, should be properly obtained by the paid staff of the plaintiff themselves. 151.There was incurred expenditure for food and sundry items at Taste supermarket in the amount of HK$2,710 (namely per HK$519.10, HK$598, HK$53.50, HK$1,539.30 amounting to HK$2,709.90) on 30 December 2012 (and 1 January 2013) for a large quantity of food and sundry items (a total of 33, 20, 1, 98 items respectively), which the 1st defendant explained that the incurred expenditure was recorded in a letter of the 6th Management Committee dated 7 January 2013. The 1st defendant stated that the said items were for use by both staff of the plaintiff and residents of Wo Ming Court. This allegation was challenged on various items such as body wash (i.e. 2 bottles of Dove shower gel) and multiple cans of coffee (i.e. 5 packs of Nescafe coffee, 20 packs of Nescafe coffee) could not have been for staff of the plaintiff or residents of Wo Ming Court which the 1st defendant in any event denied it being excessive or unnecessary. 152.I find that the matters relating to the purchases at Taste supermarket 30 December 2012 (and 1 January 2013) were unreasonable, unnecessary and not in the common interest of the plaintiff since there was a significant number of items that were not in the nature to be used by staff of the plaintiff at the office of the plaintiff or were excessively duplicated (i.e. in addition to the foregoing, also 17 packs of instant (cups and packs) noodles, 10 packs of Wah Yuen Curry Slice [snack packs]) etc). Again food items (or personal hygiene use items), in particular when duplicated, should be properly obtained by the paid staff of the plaintiff themselves. 153.The sub-total for incurred expenditure of the 1st defendant which I have found was unreasonable, unnecessary and not in the common interest of the plaintiff for purchase of goods from supermarkets is HK$17,987.71. (c) Purchase of “tiny shrimp” and fish 154.The expenses mentioned herein are directly related to the purchase of the Red Arowana fish (described at trial as the “風水魚”) to be discussed later in this judgment given that the “tiny shrimp” and fish were for feeding the Red Arowana fish. The incurred expenditure was from Lam Kee Aquarium on 16 October 2012 at the cost of HK$1,400 and then from an unclearly stamped shop in Mongkok but which is also apparently an aquarium goods shop on 10 December [2012] at the cost of HK$1,430 where both “fish, shrimp” were purchased. 155.In any event, the 1st defendant accepted that he did not check the receipt from Lam Kee Aquarium but was paid in any event for “4 packs” costing HK$350 each with the general description of “tiny shrimp” where the purchased items themselves were also not checked. The 1st defendant could not explain why the cost amounted to HK$1,400 but the matter was recorded in a letter of the plaintiff dated 17 October 2012. 156.The 1st defendant explained that the purchase on 10 December [2012] was for the “plaintiff’s office” which meant that it was for the Red Arowana fish. The 1st defendant could not recall whether he checked the receipt or the purchased items themselves. In fact, the 1st defendant himself was not sure where the said Mongkok shop was, nor the shop’s name even after closely looking at the receipt. 157.The 1st defendant had a role to confirm whether incurred expenditures were reasonable, necessary and in the common interest of the plaintiff but for these expenses he simply did not check or could not remember if he checked either the receipts or the goods purchased as described. 158.Again, given that the purchase of the Red Arowana fish was based on religion or locally held beliefs, I repeat my considerations as applying to the Buddha Statue(s) hereof. 159.Where in particular the incurred expenditure was ancillary to religious or locally held beliefs, namely to purchase very particular sustenance (i.e. “tiny shrimp” and fish) for the maintenance of a live animal (i.e. the Red Arowana fish) placed in the office of the plaintiff for allegedly maintaining the general good fortune for Wo Ming Court, the 1st defendant’s failure to check the receipts and the goods themselves was unreasonable. 160.In any event, the 1st defendant failed to properly ensure the incurred expenditure was properly made and thus the aforesaid payments of 17 October 2012 and 10 December [2012] were in themselves unreasonable, unnecessary and not in the common interest of the plaintiff. 161.The sub-total for incurred expenditure of the 1st defendant which I have found was unreasonable, unnecessary and not in the common interest of the plaintiff for purchase of the “tiny shrimp” and fish is HK$2,380. Purchase of Wine 162.The amount claimed by the plaintiff of HK$34,928 against the 1st defendant is based on 5 payments for wine, namely on 22 November 2012 twice for HK$8,580 and HK$3,848, 30 November 2012 for HK$3,720, 9 January 2013 for HK$2,880 and 6 February 2013 for JL$15,900. 163.There are several photos apparently taken by Synergis during the tenure of the 7th management committee but on dates unknown, showing various opened boxes of wine and wine refrigerators apparently stored in the office of the plaintiff. There is also an invoice from Good Wine Cellar showing the purchase of 12 bottles of Unmeneta Reserve, Cabernet Sauvignon 2010 at a price of HK$2,622. Judicial notice is taken that Cabernet Sauvignon is a red wine that originates from Bordeaux and is often blended. 164.Mr Chong pointed out that a purchase of wine was confirmed in the minutes of the 8th meeting of the 6th Management Committee, but that letter was dated 24 October 2011 and thus apparently unrelated to the present purchases of wine which began on 22 November 2012. In any event, the comments made in the said minutes of the 8th meeting of the 6th Management Committee does not refer to the cost of the wine but only that wines would be added to various events such as lucky draw type scenarios and to be used at celebrations generally. 165.There are differing explanations by both Mr Lam and the 1st defendant on the reasons why the said wines were purchased. The 1st defendant explained generally that the said wine purchases were meant to be given away as gifts from the 6th Management Committee, inclusive of giving them as gifts to neighbouring estates. 166.A letter from the management committee of Hin Ming Court “顯明苑”, the neighbouring estate of Wo Ming Court, dated 8 February 2013 was addressed to the 1st defendant. The letter stated that they received 2 bottles of wine from the plaintiff but that these were unnecessary gifts. The reply letter from the plaintiff dated 15 February 2013, the 1st defendant as chairman of the 6th Management Committee replied that the said 2 bottles of wine were from the private ownership of a member of their management committee. 167.The 1st Defendant denied ever seeing the said reply letter dated 15 February 2013 from the plaintiff and remarked that it was an unsigned letter that only had his Chinese name chop stamp and thus its provenance was questioned. The 1st defendant’s evidence was that if this was an official letter, it would be signed by him. The 1st defendant also stated that his Chinese name chop itself was placed in the office of the plaintiff for members of the 6th Management Committee or Synergis to use on invitations of the plaintiff and other similar purposes. 168.For completeness sake, the 1st defendant alleged that he himself does not drink (alcoholic beverages) and that he only received invoices for the said wine purchases from various members of the 6th Management Committee who he then reimbursed and was thereafter repaid by the plaintiff. 169.I find that the matters relating to the wine purchases as aforesaid were unreasonable, unnecessary and not in the common interest of the plaintiff. 170.This court finds that on a balance of probabilities that the 1st defendant did at the very least endorse the letter of 15 February 2013 despite the said letter did not have his signature on it. I find it unlikely that a person from a member of the 6th Management Committee or Synergis would simply take his name chop and use it on formal correspondence. 171.This court also finds that on a balance of probabilities that an audio recording from 26 November 2012 was accurate to the extent that it recorded someone saying that 2 bottles of wine were given to a woman at the said meeting but whether she was the daughter of a member of the 6th Management Committee is unknown. 172.What is more important is that significant incurred expenditure occurred due to the excessive purchase of the said wines. The purchases were excessive, in large duplicated amounts of which there is little supporting documentation to show their provenance, where and how they were used, or supporting reasons for their purchase other than as previously explained. An example of a cash memo for 6 bottles of a particular type of wine or cognac at a cost of HK$1,430 each was not explained by the 1st defendant on why such an incurred expense arose, to whom exactly it was given to as a gift, or where they actually went. 173.There is mention in the minutes of the 19th meeting of the 6th Management Committee dated 17 September 2012 stating that there was a dinner party (歡聚餐) at Hin Ming Court. The 1st defendant stated that red wine was used thereof to make friends with Hin Ming Court but that said letter made no mention that it was red wine from the plaintiff or that the red wine was actually consumed, or to be consumed thereof but that only a gift would be sent to Hin Ming Court. 174.Furthermore, even if the said wines were purchased for the purpose of giving as gifts to other estates, this in itself was shown to be inappropriate as per the letter from Hin Ming Court dated 8 February 2013. 175.Gift giving to other estates is indirect in nature towards the carrying on of an incorporated owners’ business. Where there is an attempt to improve relationships between estates that incurs expenditure, scrutiny should be applied in considering whether the gifts would be justified as per the nature and cost of gifts which would need to be approved, recorded and of a nature that would make such gifts suitable to be received by other estates. 176.The sub-total for incurred expenditure of the 1st defendant which I have found was unreasonable, unnecessary and not in the common interest of the Plaintiff for purchase of the said wines is HK$34,928. Purchase of the Red Arowana fish 177.As previously mentioned, the Red Arowana fish cost HK$8,800 and was described as being a fish that was for good fortune “風水魚” for Wo Ming Court and improving the feng shui which is a matter raised by the 1st defendant in his witness statement. The idea of buying the Buddha Statue(s) and the Red Arowana fish arose at about the same time due to the reasons already stated as relating to the Buddha Statue(s). 178.The Red Arowana fish was also for beautifying “美化” the office of the plaintiff as recorded in the minutes of the 7th meeting of the 6th Management Committed dated 26 September 2011. 179.At odds with the aforesaid minutes was the 13 March 2013 Letter that subsequently stated that the “風水魚” was donated by Mr Shek who was the secretary of the 6th Management Committee and that it was only the Red Arowana’s food and related equipment that were purchased by the 6th Management Committee. The 1st defendant questioned the content and provenance of the 13 March 2013 Letter but had no further detailed opinions or observations on the said letter. 180.The 1st defendant had no opinion on whether the Red Arowana fish was purchased based on “superstitious” beliefs but he did agree its purchase was to improve the fortunes of Wo Ming Court since it was a “風水魚”. The 1st Defendant also did not have any opinion on whether the Red Arowana fish was too expensive or not. 181.I did not find that the 1st defendant gave a satisfactory answer for the incurred expense of the Red Arowana fish purchase since the discrepancies between the 13 March 2013 Letter which was issued by the 6th Management Committee while the 1st defendant was chairman himself explaining that the said fish was donated as versus there was an actual purchase of the said fish at HK$8,800 are irreconcilable. 182.Furthermore, the purpose of the purchase of the Red Arowana fish bringing good fortune “風水魚” versus simply purchasing it to beautify “美化” the plaintiff’s office again are different in the reason why the said fish was purchased to begin with. However, I find that on balance, even if both of the aforesaid reasons for purchasing the Red Arowana fish were consistent with one another, it would seem the more predominant reason would be for it being for bringing good fortune “風水魚” since this aligned together timing-wise with the purchase of the Buddha Statue(s). 183.Much like the purchase of the Buddha Statue(s), this is not to say that incurred expenditure towards religious or locally held beliefs are in themselves unreasonable, unnecessary and not in the common interest of an incorporated owners of a building or estate. Again, incurred expenditure based on religion or locally held beliefs are indirect in nature towards the carrying on of an incorporated owners’ business so such an incurred expenditure would need to be shown as reasonably incidental to the incorporated owners as a starting point to consider the reasons, nature and cost of such incurred expenditure. Additionally, such related expenditure requires some justification in order for the incurred expenditure to be necessary and also in the common interest of the incorporated owners. 184.I find that the matters relating to the Red Arowana fish purchases were unreasonable, unnecessary and not in the common interest of the plaintiff for there being a lack of proper documentary support for such incurred expenditure and direct conflicts of fact emanating from the evidence of the 1st defendant as compared to the contemporaneous documentary evidence. 185.Furthermore, much like the Buddha Statue(s), there was no way for the plaintiff or owners of Wo Ming Court to have known of the significant cost of the Red Arowana fish for an admittedly religious or locally held belief system such as feng shui that might not be shared by the plaintiff or the owners at Wo Ming Court. 186.If the reason for the purchase of the Red Arowana fish was in fact for beautifying the office of the plaintiff only, then such a significant cost could not be justified without full disclosure and confirmation. 187.For the avoidance of doubt, given that I have found that the purchase of the Red Arowana fish was unreasonable, unnecessary and not in the common interest of the plaintiff, equally the purchase of the “tiny shrimp” and fish would have been unnecessary since that incurred expenditure exists only because of the Red Arowana fish. In any event, based on those facts relating to the “tiny shrimp” and fish, as previously explained, were independently found to be unreasonable, unnecessary and not in the common interest of the plaintiff. 188.Additionally, I do not accept the 1st defendant being truthful on this issue. 189.The sub-total for incurred expenditure of the 1st defendant which I have found was unreasonable, unnecessary and not in the common interest of the Plaintiff for purchase of the Red Arowana fish is HK$8,800. 1st defendant’s liability 190.The 1st defendant is liable for the total amount of incurred expenditure as follows:
2nd defendant Purchase of Buddha Statue(s) 191.Both as pleaded and on the evidence, there is a difference between the Buddha Statue(s) incurred expenses of the 1st defendant from those of the 2nd defendant (cheque numbers, dates and costs are all separate, different and accounted for). 192.It is notable that there is a general overlap of the period where both the 1st defendant (from 2 August 2012 to 27 February 2013) and the 2nd defendant (from 14 August 2012 to 11 January 2013) respectively incurred expenditure in relation to Buddha Statue(s) and related talismans. 193.The 2nd defendant’s reasons for the Buddha Statue(s) purchase was stated in his witness statement and in line with the 1st defendant’s reasons as already explained. 194.Much of what was already detailed in the foregoing parts of this judgment relating to the Buddha Statue(s) incurred expenditure relating to the 1st defendant and the various issues arising thereof applies to the 2nd defendant regarding his own Buddha Statue(s) incurred expenditure. 195.At trial, the 2nd defendant accepted that several buddha statues, related talismans and items were purchased over a period of time which by and large were confirmed by various letters of the 6th Management Committee and Synergis through related receipts that confirmed their incurred expenditure. The evidence shows that sometimes the related repayment back to the 2nd defendant were the cost of various Buddha Statue(s) related purchases in an aggregated sum. 196.The 2nd defendant explained that the 6th Management Committee made the decision that “they” wanted everyone at Wo Ming Court to have peace of mind, namely “咁呢啲--咁你管委會嗰陣時佢哋咁開--去決定咗，誒，我哋係--佢哋都係求大家心安，即係我係知道佢哋係大家都係個理念係為個屋苑.” The 2nd defendant also remarked that several other estates were doing similar actions, namely “好多屋苑都係咁做㗎喇”. 197.The 2nd defendant was asked whether he recalled when such alleged misfortunes befell Wo Ming Court and whether it was before March 2013, he said that he was unsure of exactly when such matters took place. When asked to consider why the 13 March 2013 Letter, of which the 2nd Defendant was a member of the 6th Management Committee, stated that a (singular) buddha statue was purchased for a non-specified amount using the monthly allowance of HK$1,200 to the 1st defendant as chairman, secretary and treasurer and not through the use of management fees, he said that he did not draft the 13 March 2013 Letter and was not sure of its content. 198.The 2nd defendant’s ignorance of the 13 March 2013 Letter is not believable and in any event was not disputed in any serious way about the contents therein stating that a (singular) buddha statue was purchased for a non-specified amount using the monthly allowance of HK$1,200 to the 1st defendant as chairman, secretary and treasurer and not through the use of management fees. The 13 March 2013 Letter is contrary to the fact that he himself bought multiple buddha statues over half a year and never questioned his HK$96,007 incurred expenditure after the issue of the 13 March 2013 Letter. 199.I did not find the 2nd defendant gave a satisfactory answer for the multiple Buddha Statue(s) purchases over an extended period of half a year for HK$96,007 which were significant incurred expenditures and unknown to the plaintiff and owners of Wo Ming Court (save for the recreation sub-group expecting a cost of HK$38,000). 200.I find that the matters relating to the Buddha Statue(s) purchases were unreasonable, unnecessary and not in the common interest of the plaintiff for the foregoing reasons. There was no way for the plaintiff or owners of Wo Ming Court to have known of the significant cost of the Buddha Statue(s) purchases to be acceptable based on a religious or locally held belief system that was not shared by the Plaintiff or the owners at Wo Ming Court. Additionally, I do not accept the 2nd defendant being truthful on this issue, particularly when he himself was a member of the 6th Management Committee and must have been aware of the recreation sub-group’s projected cost of only HK$38,000 for a buddha statue. 201.The sub-total for incurred expenditure of the 2nd defendant which I have found was unreasonable, unnecessary and not in the common interest of the Plaintiff for purchase of the Buddha Statue(s) is HK$96,007. Food and beverage expenses 202.The food and beverage claim of the plaintiff is from several areas of expense incurred by the 2nd defendant, namely (a) meal expenses at restaurants in the amount of HK$19,433.60; (b) purchase of goods from supermarkets in the amount of HK$5,718.50; and (c) purchase of “tiny shrimp” and fish in the amount of HK$68 (not a food and beverage expense per se but rather linked to the purchase of the Red Arowana fish, explained later in this judgment). (a) Meal expenses at restaurants 203.There was incurred expenditure for an evening event on a takeaway basis from Genki Sushi in the amount of HK$2,532 on 5 February 2012. The 2nd defendant explained at trial that the food from Genki Sushi was for celebrating the Lantern Festival with residents of Wo Ming Court to promote friendship and to make them happy. 204.The 2nd defendant’s explanation was different from the letters issued by the 6th Management Committee and Synergis both dated 6 February 2012 showing that the food from Genki Sushi was for the 6th Management Committee itself and staff of the plaintiff with no reference to the residents of Wo Ming Court as marked “元宵節晚會法團委員及管業處職員晚膳費用” in the same amount of HK$2,532. The 2nd defendant acknowledged that the said letters were not mentioned in either the amended defence or his witness statements but this was due to him being too busy and not informing his legal team of the same. 205.I find that the matters relating to the Genki Sushi evening event costs on 5 February 2012 were unreasonable, unnecessary and not in the common interest of the plaintiff since the voluntary nature of the members of the 6th Management Committee and the staff of the plaintiff were not subject to being repaid on the justification that motivating volunteers or paid staff was a legitimate reason for paying for their meals despite the altruistic nature of the 6th Management Committee’s work which was for the betterment of Wo Ming Court or for the paid staff of the plaintiff where it was their duty to serve without any additional benefit per se. 206.I did not believe the 2nd Defendant that the said Genki Sushi evening event costs were for the benefit of the residents. Furthermore, there was a lack of supporting documentary evidence showing that the said Genki Sushi evening event incurred expenditure was for the residents of Wo Ming Court and the coordinate documentary evidence showed the contrary. 207.There was incurred expenditure for an evening event from Genki Sushi in the amount of HK$2,787 on 22 September 2012. The 2nd defendant explained at trial that the food from Genki Sushi was to give thanks to the security guards at Wo Ming Court and the staff of the plaintiff after conducting a lighting ceremony at the Mid-Autumn Festival. 208.The 2nd defendant’s explanation was different from the handwritten remark on the relevant receipt that only said that the food was purchased by the management committee after the Mid-Autumn lighting ceremony but there was no reference for whom the food was purchased “中秋亮燈儀式後管委會購買的食品”. There were no letters issued by the 6th Management Committee or Synergis confirming these costs or that it was for the security guards at Wo Ming Court or the staff of the plaintiff. 209.I find that the matters relating to the Genki Sushi evening event costs on 22 September 2012 were unreasonable, unnecessary and not in the common interest of the plaintiff since the security guards of Wo Ming Court and the staff of the plaintiff were not subject to being thanked by way of the plaintiff paying for their meals. 210.There was incurred expenditure for an evening event from Genki Sushi in the amount of HK$2,209 on 29 [September] 2012. The 2nd defendant explained at trial that the food from Genki Sushi was to be served to residents at Wo Ming Court for the Mid-Autumn Festival. 211.The 2nd defendant’s explanation was different from the letter from the 6th Management Committee confirming the incurred expenditure was for the dinner of the 6th Management Committee only “法團委員中秋晚會晚膳食費用” and there was no other documentary evidence showing otherwise. 212.I find that the matters relating to the Genki Sushi evening event costs on 29 [September] 2012 were unreasonable, unnecessary and not in the common interest of the plaintiff since the voluntary nature of the members of the 6th Management Committee were not subject to being repaid on the justification that motivating volunteers was a legitimate reason for paying for their meals despite the altruistic nature of the 6th Management Committee’s work which was for the betterment of Wo Ming Court. 213.I did not believe the 2nd defendant when he said that the said Genki Sushi evening event costs were for the benefit of the residents of Wo Ming Court since there was a lack of supporting documentary evidence for the same and in fact the coordinate documentary evidence showed the contrary. 214.There was incurred expenditure for dinner at Spaghetti House in the amount of HK$425.70 on 24 November 2012. The 2nd defendant explained that the dinner at Spaghetti House was for encouragement of members participating in the security sub-group of the plaintiff since a meeting took place that evening. In any event, the cost was approved in a letter by the 6th Management Committee on 4 February 2012 which recorded the matter as being “法團保安小組會議膳食費用”. 215.The 2nd defendant admitted that his explanation that payment of the Spaghetti House dinner was for encouragement of the security sub-group was not mentioned in either the amended defence or his witness statement. The 2nd defendant denied that encouragement of the security sub-group by way of payment for the Spaghetti House dinner was wrong. 216.I find that the matters relating to the Spaghetti House dinner on 24 November 2012 were unreasonable, unnecessary and not in the common interest of the plaintiff since the voluntary nature of the security sub-group operations were not subject to being repaid on the justification that motivating volunteers was a legitimate reason for paying for their dinner despite its altruistic nature. 217.There was incurred expenditure from Genki Sushi in the amount of HK$2,722 on 31 December 2012 (namely, New Year’s Eve). 2nd defendant explained at trial that the food from Genki Sushi was for a gathering with residents of Wo Ming Court and “staff” “職員” but he did not elaborate clearly precisely what staff but presumably it was staff of the Plaintiff. 218.The 2nd defendant’s explanation was different from the letter issued by the 6th Management Committee dated 7 January 2013 showing that the food from Genki Sushi was for the 6th Management Committee itself with no reference to the residents of Wo Ming Court (or “staff” “職員”) as it was marked “法團委員聖誕聚餐膳食費用” in the same amount of HK$2,722. The 2nd defendant thought that the letter dated 7 January 2013 might have been inaccurately recorded by Synergis on the matter as he understood it and that it was just a “short form” way of describing what had happened “誒，咁我諗佢都應該清楚裡面個內容囉，但係字面上嘅嘢，我諗佢簡短啲打囉，我個人認為啫，Okay，唔該晒.” 219.I find that the matters relating to the Genki Sushi on 31 December 2012 were unreasonable, unnecessary and not in the common interest of the plaintiff since the “staff” “職員” were not subject to being thanked by way of the plaintiff paying for their meals since they were paid staff of the plaintiff or Synergis. 220.I did not believe the 2nd defendant when he said that the said Genki Sushi evening event costs were for the benefit of the residents. Furthermore, there was a lack of supporting documentary evidence showing that the said Genki Sushi incurred expenditure was for the residents of Wo Ming Court and the coordinate documentary evidence showed the contrary. 221.There was a series of incurred expenditures from various eateries, namely (a) Dondonya at Taikoo Shing in the amount of HK$182.50 on 4 January 2013; (b) Dondoya at Taikoo Shing in the amount of HK$171 on 16 January 2013; (c) Dondoya at Taikoo Shing in the amount of HK$171.60 on 29 January 2013; (d) California Kitchen in the amount of HK$482.90 on 3 February 2013; (e) Dondoya at Taikoo Shing in the amount of HK$181.50 on 4 February 2013; (f) Misocoo in the amount of HK$327 on 9 February 2013; (g) Genki Sushi in the amount of HK$402.60 on 17 February 2013. 222.The 2nd defendant explained in his witness statement that the said eateries expenses were due to meetings being held by members of either the 6th Management Committee or sub-groups with much of the said incurred expenditure confirmed in various letters by the 6th Management Committee. The 2nd defendant at trial could not recall for what exact purposes there were these meetings, who in fact attended those meetings, or for which members of the 6th Management Committee or sub-groups attended those meetings held at the said eateries. 223.The 2nd defendant was asked to look at the various related receipts issued by the said eateries and the average time for each meal was only about half an hour (i.e. items (a), (b), (c), (f), (h)) or close to an hour (i.e. (d), (e), (g – with that meal being expressly recorded for 1-person only and thus not a “meeting”)). It was put to the 2nd defendant that such quick meals meant that no “meetings” could have taken place and the 2nd defendant answered that members of the 6th Management Committee or sub-groups were all working people and had limited time so it would not be surprising to have short meetings as a consequence. The 2nd defendant also mentioned that it was possible that for some of the said eateries expenses were a result of “take out” and thus the receipts would record the times staying at the eateries would be limited. 224.I find that the matters relating to the various incurred expenditures at the said eateries were unreasonable, unnecessary and not in the common interest of the plaintiff since the voluntary nature of the members of the 6th Management Committee or sub-groups were not subject to being repaid on the justification that motivating volunteers was a legitimate reason for paying for their meals despite the altruistic nature of the 6th Management Committee’s or the sub-groups works which was for the betterment of Wo Ming Court. 225.The timing of the meals being such a short period of time had an adverse impact on how this court viewed the truthfulness of the 2nd defendant on this issue of the incurred expenditure at the said eateries. 226.The sub-total for incurred expenditure of the 2nd defendant which I have found was unreasonable, unnecessary and not in the common interest of the plaintiff for the meal expenses at restaurants is HK$12,594.80. (b) Purchase of goods from supermarkets 227.Many of the general observations on the purchase of goods (or sundry items) from supermarkets as already explained in relation to the 1st defendant are applicable to the 2nd defendant. 228.There was incurred expenditure for food items at Wellcome supermarket in the amount of HK$738.90 on [1] April 2012, which the 2nd defendant explained that a large quantity of food items (a total of 48 items) were essentially bought in bulk and thus several items (i.e. 8 packs of spaghetti, 8 packs of xiaolongbao “小籠包”, 8 packs of Nescafe coffee in cans etc) were duplicated in their purchase. The 2nd defendant remarked at trial that such food items may not be for meetings of the 6th Management Committee or sub-groups but rather for consumption as late-night snacks for the staff of Synergis but he also accepted that such matters were not mentioned in the amended defence or his witness statements. 229.I find that the matters relating to the purchases at Wellcome supermarket on [1] April 2012 were unreasonable, unnecessary and not in the common interest of the plaintiff since there was a very significant number of items that were excessively duplicated. 230.The foregoing purchases at Wellcome supermarket on [1] April 2012 were approved in a letter of the 6th Management Committee on 5 April 2012 but there was excessive purchasing of duplicated food items that should be properly obtained by the paid staff of the plaintiff themselves. Furthermore, the paid staff of the plaintiff were not subject to being given any additional benefits by the plaintiff such as late-night snacks. 231.There was incurred expenditure for food items at Wellcome supermarket in the amount of HK$2,072 on [1] May 2012 that was later recorded in a letter of the 6th Management Committee dated 2 May 2012. The 2nd defendant explained that a large quantity of food items (a total of 118 items) were essentially bought in bulk and thus several items (i.e. 22 cans of Blue Girl Beer, 8 packs of processed cheese slices, 12 packs of Doll Brand noodles in 8-10 individual packet servings etc) were duplicated in their purchase. The 2nd defendant remarked at trial that such food items were for residents of Wo Ming Court, particularly those with children, where the food items would be made available to them at the conference room of the plaintiff. 232.I find that the matters relating to the purchases at Wellcome supermarket on [1] May 2012 were unreasonable, unnecessary and not in the common interest of the plaintiff since there was a very significant number of items that were excessively duplicated and the scenario explained by the 2nd defendant was unlikely. 233.The foregoing purchases at Wellcome supermarket on [1] April 2013 were approved in a letter of the 6th Management Committee on 5 April 2013 but there was no evidence of the residents of Wo Ming Court going to the conference room of the plaintiff to enjoy food items. This part of the evidence of the 2nd defendant was not believed also because of the inherent likelihood that food items were available to random persons simply being at Wo Ming Court and such an alleged practice being carried out in an undocumented manner. 234.There was incurred expenditure for food items at Jusco supermarket in the amount of HK$2,907.60 on 7 February 2013 and were recorded in a letter of the plaintiff dated 8 February 2013. The 2nd defendant explained that a large quantity of food items (a total of 46 items) were essentially bought in bulk. The 2nd defendant remarked at trial that such food items were purchased by Synergis as gifts to others during Chinese New Year. 235.The foregoing purchases at Jusco supermarket on 7 February 2013 were approved in a letter of the 6th Management Committee on 8 April 2013 (but mistyped the date of purchase as being 29 January 2013) but the letter stated that the members of the incorporated owners purchased miscellaneous supplies personally “法團委員自行購買- 雜項用品” but never mentioned that the “supplies” were for use by the residents of Wo Ming Court. Throughout this case, there has not been any direct documentary evidence of exactly how the office of the plaintiff or the conference room of the plaintiff was used specifically by residents of Wo Ming Court, let alone that residents would somehow stop by for free food being offered there. 236.I find that the matters relating to the purchases at Jusco supermarket on 7 February 2013 were unreasonable, unnecessary and not in the common interest of the plaintiff since there was a significantly different explanation for the said purchases seen in the documentary evidence which I believed their written description over that of the evidence of the 2nd defendant. Furthermore, I did not believe the evidence of the 2nd defendant on this issue. 237.The sub-total for incurred expenditure of the 2nd defendant which I have found was unreasonable, unnecessary and not in the common interest of the plaintiff for the purchase of goods from supermarkets is HK$5,718.50. (c) Purchase of “tiny shrimp” and fish 238.This incurred expenditure is found recorded together in a cheque that was also for payment of the (a)(ii) Genki Sushi in the amount of HK$2,787 on 22 September 2012 for the “tiny shrimp” at HK$50 and fish at HK$18. 239.For the same reasons I have previously given relating to the incurred expenditure of the 1st defendant relating to both the Red Arowana fish and the “tiny shrimp” and fish thereof, I find that this incurred expenditure was unreasonable, unnecessary and not in the common interest of the plaintiff. 240.The sub-total for incurred expenditure of the 2nd defendant which I have found was unreasonable, unnecessary and not in the common interest of the Plaintiff for purchase of the “tiny shrimp” and fish is HK$68. 2nd defendant’s liability 241.The 2nd defendant is liable for the total amount of incurred expenditure as follows:
Additional matters 242.In the defendants’ closing, Mr Chong revised his complaints on the pleadings and witness statements filed in this action, those issues are somewhat interrelated. 243.On the ASOC, the complaint was that the plaintiff’s case merely pleaded various itemized incurred expenditures but not how the defendants were specifically liable for such alleged losses. As previously mentioned in this judgment, I found that the ASOC with its corresponding schedules were of sufficient particularity to make the plaintiff’s case on the pleadings to which the amended defence did deal with each of the Plaintiff’s claims also with sufficient particularity. For the avoidance of doubt, there were also Voluntary Particulars of the Amended Defence as well as Answers to Request for Further and Better Particulars under paragraphs 6 and 7 of the Amended Defence by the Plaintiff by way of Letter filed as pleadings in this case. 244.The essence of the defence pleaded in the body of the amended defence and its corresponding schedules was that the incurred expenditures were duly approved by the 6th Management Committee and thus the defendants were not liable. As such, significant reliance was made on the various letters and minutes of the 6th Management Committee or Synergis confirming the incurred expenditure as a defence maintained by the defendants at trial. 245.It will then be noted that the plaintiff filed 600 pages of discovery and the defendants filed nearly the equivalent amount of discovery as well. As such, this court did not find that there was unfairness to the parties on being unable to properly present their documentary evidence in support of their respective positions at trial. 246.The said complaint against the pleadings was then mirrored in complaints against the witness statements of Mr Lam whereby his descriptions of the alleged wrongfully incurred expenditures were too short for the defendants to meaningfully “address their minds” in opposition to such alleged incurred expenditure. It will be noted that all 3 witnesses in this action filed a witness statement and a supplemental witness statement in what was substantial testamentary evidence in support of their respective positions at trial. 247.If there were any realistic complaints about the pleadings, discovery or witness statements leading up to trial, those matters would and or should have been resolved in such a way so that this trial would not have been able to proceed in the manner it has before this court. In any event, considering the totality of the papers used at trial and the way in which the trial was conducted, I did not find any unfairness towards either of the parties, save for the issue of the newly developed closing submissions regarding s.29A of the BMO to be discussed later in this judgment. 248.Another complaint that Mr Chong raised in closing was that due to the passage of time, the case was unfair to the defendants since at trial they could not always remember with clarity (or sometimes at all) what were the related facts to each of the incurred expenditures. It is unfortunate that this case took nearly 7 years since the issue of the writ to finally reach the stage of trial regarding complaints that took place about some 11 to 12 years ago. 249.But the witness statements in this case were filed roughly 4 years after the commencement of this case and the witness statements did not appear to be particularly lacking in detail for a case of this nature. In any event, all witnesses had an opportunity to file supplemental witness statements to further clarify their position. 250.I do note that the passage of time might cloud a witness’ memory, nonetheless this court has tried its best to ensure that a fair hearing was conducted, this including the fact that sufficient time and opportunity was given to each witness to refresh their memories where necessary and to ensure that questioning was not unnecessarily excessive on the minutiae of testing a witness’ memory only. I have come to the conclusions in this judgment after residing over a 6-day trial with 5 of those days involved taking evidence at a measured pace. 251.Mr Chong advanced a new argument in his closing submissions to which Mr Poon objected to due to its obvious lateness and the matter never appearing in either the amended defence or even in the written opening submissions of the defendants. 252.Mr Chong now makes reliance on s.29A of the BMO which he submits is relevant to the present case and is as follows:
253.Mr Chong submitted that s.29A of the BMO reinforces the defendants’ position since it affords a form of statutory protection to the defendants given that the resolutions of the plaintiff relieves any liability of the defendants where they were acting in good faith and acting reasonably. 254.However, upon querying Mr Chong on the application of s.29A of the BMO, he agreed that in order for the said section to be applicable that it was essentially a 2-step approach that required considering the particular facts of this case showing that the defendants were “acting in good faith and in a reasonable manner”. 255.Mr Chong relies on the case of The Incorporated Owners of Fook On Building, Tai Po v Chan Sung Ming & Anor., LDBM 67/2008, HH Judge Leung (as he then was), 24 June 2009, dealt with a Lands Tribunal case about a failed attempt by incorporated owners to settle a claim with a construction company for the outstanding cost of work done. The incorporated owners then blamed 2 members of the management committee (i.e. Chan and Lo) for failing to properly carry out the settlement related tasks. The claim against the 2 members of the management committee was based on their alleged breach of their contractual, fiduciary and statutory duties under Schedule 7 of the BMO for damages in the amount of HK$128,000 and an order to compel them to comply with a particular resolution of the management committee was also sought. The court found that on the particular facts of that case that:
256.Fook On Building (ibid) indeed confirms that a 2-step approach is required in order to apply s.29A of the BMO. 257.What is also interesting in Fook On Building (ibid) was that the incorporated owners based their claim against the 2 members of the management committee for breaches of contractual, fiduciary and statutory duties under Schedule 7 of the BMO of which Schedule 7 relates to ss.34D, 34E, 34J, 40D and 42 of the BMO. Schedule 7 of the BMO in itself is for actions based on Mandatory Terms in Deeds of Mutual Covenant and provides for various tasks and duties required to be carried out by different persons in the management of a building. 258.For the sake of completeness, the plaintiff’s case is not based on breaches of contractual, fiduciary and statutory duties of Schedule 7 of the BMO but rather breach of s.18 of the BMO. 259.In a follow-up to Fook On Building (ibid), Mr Chong referred to the well-known textbook Building Management in Hong Kong, 3rd edn where the learned author commented on the rationale behind s.29A of the BMO at 6.179:
260.The foregoing excerpt is a useful general overview of the purpose of s.29A of the BMO which is to be used to protect management committee members. It will be noted that the foregoing excerpt has a critical mistake made by the learned author, namely, that s.29A uses the words “acting in good faith and in a reasonable manner” whereas the learned author wrongly wrote “acting in good faith or in a reasonable manner” which would negate the necessity of having a 2-step approach if and when applying s.29A. 261.Given the aforesaid commentary in Building Management in Hong Kong at 6.179, striking out of the plaintiff’s case could have been attempted by the defendants in this case but they obviously chose not to do so given, as previously mentioned in this judgment, the ASOC appears sufficient for pleading purposes. 262.This judgment has already determined on each instance of the plaintiff’s claims for incurred expenditure whether they were unreasonable, unnecessary and not in the common interest of the plaintiff. If the BMO at s.29A is applied as a shield by the defendants in this case, it appears that there is no need for this court to determine whether those parts which I have already ruled to be unreasonable, unnecessary and not in the common interest of the plaintiff would require further proof that those incurred expenditures were made with “good faith” since the s.29A defence is only engaged when the defendants act in both “good faith” and “in a reasonable manner”. 263.Mr Chong advances his case that the BMO at s.29A is not used as a defence but rather it puts a positive burden on the plaintiff to establish that the defendants were not acting in “good faith” and “reasonably”. Whether used to put a positive burden on the plaintiff or if used as a form of statutory defence, s.29A of the BMO must be properly pleaded, given in particular that the Plaintiff was never aware that the defendants are now putting the burden on the plaintiff to also prove “good faith” based on their interpretation of the BMO at s.29A in order for the plaintiff to make good their claims against the defendants. 264.If the plaintiff was aware of needing to possibly take such a step to discharge the additional burden of proving that the defendants were not acting in “good faith”, the pleadings, discovery, witness statements and approach at trial would necessarily have been fundamentally different from the present way in which this trial has proceeded. 265.Mr Chong referred to the case of 王君銘 v 韓翠雲 & 嘉福閣業主立案法團 [2022] HKLdT 58, a Lands Tribunal case where in the context of applying s.29A of the BMO there was a 2-step approach supported by evidence on the matter and a direct finding by the court on whether there was “good faith” and “reasonableness” applied by the 1st respondent in that case.
266.Mr Chong also referred to 吳錫偉 v 嘉景臺業主立案法團 及 王秋江, LDBM35/2014, another Lands Tribunal case where an application of s.29A was engaged and a positive burden was placed on the applicant to prove that the chairman of the management committee was not acting in good faith and not acting unreasonably.
267.With regards to pleadings, in Kwok Chin Wing v 21 Holdings Ltd and Anor (2013) 16 HKCFAR 663 where Chief Justice Ma held at paragraph 21 of the Reasons for Judgment:
268.As a matter of evidence and relating to s.29A of the BMO, the general approach of the defendants’ relying on resolutions of the 6th Management Committee permitting the defendants’ incurred expenditure is not without limits. 269.During the tenure of the 6th Management Committee which was chaired by the 1st Defendant, the 6th Management Committee received the 7 March 2013 Synergis Letter that was directly addressed to the 1st defendant on past monthly expenditure being excessive and various examples of how expenditure should be controlled and accounted for but was not followed by the 1st defendant. The 7 March 2013 Synergis Letter went on state that certain members of the management committee of Wo Ming Court already had a HK$1,200 monthly allowance and any other expenses required resolutions at the general meeting. As such, Synergis had also become suspect of, inter alia, the 6th Management Committee’s past incurred expenditure and at the general meeting of Wo Ming Court there was no resolution made approving their incurred expenditure. 270.The defendants relying on the resolutions of the 6th Management Committee, at least from 7 March 2013, were put on notice of their potentially past wrongful incurred expenditure which was then not approved at the general meeting. Further complaints against the 6th Management Committee continued until at least the 23 December 2013 Letter. 271.For the defendants at closing submissions placing an additional requirement on the plaintiff to also prove “good faith” in addition to “unreasonableness” is unfair and was known to the Defendants during the entirety of this case. 272.If I am wrong and should allow Mr Chong to argue his position on s.29A of the BMO and to have it applied in the present case, as much as this court would want to determine on each instance whether or not the defendants were not acting in “good faith” per se, nonetheless it would be unsafe to do so on the limitations of not having the element of “good faith” being a part of these proceedings until the closing submissions of the defendants. At the very least, presumably the plaintiff would need to cross-examine the defendants on aspects of “good faith” and to also have the question put to them regarding the various instances of incurred expenditure. 273.Pleading good faith would normally be a necessary requirement as found in the decision of Registrar K.W. Lung in West Coast International Trading Ltd t/a Dandelion Fine Arts v Chelsea Art Company Ltd, HCA 1636/2010, 10 January 2014, albeit that case considered the issue in a different factual context. Furthermore, the application of “good faith” in relation to fiduciaries requires proper pleading and evidential context as per Tao Soh Ngun v HSBC International Trustee Ltd, [2019] HKCFI 1268. In Tam Lai King (supra), Au J (as he then was) refused an unpleaded claim that was only raised in the applicant’s written closing submissions. 274.If I am also wrong and am required to give my reasons on s.29A of the BMO, I find that on the particular facts of Fook On Building, 王君銘 v 韓翠雲 & 嘉福閣業主立案法團 and 吳錫偉 v 嘉景臺業主立案法團 及 王秋江 (supra) the applicant incorporated owners thereof invoked s.29A in those particular cases based on the action being premised as Lands Tribunal cases whereas the present case is based on, inter alia, s.18 of the BMO in the District Court. When considering the wording of s.29A of the BMO and the commentary (as corrected) in Building Management in Hong Kong at 6.179, s.29A of the BMO may act as a shield for defendants to invoke where they are being sued as (or having been) management committee members but they would need to establish that they were acting in good faith and in a reasonable manner. 275.If the defence afforded by BMO at s.29A is applied as a shield, the defendants would still be liable for the incurred expenditure that I have determined to be unreasonable, unnecessary and not in the common interest of the Plaintiff. Since if s.29A is engaged as a defence when the Defendants act in both “good faith” and “in a reasonable manner”, where I have found those incurred expenditures of the defendants to be “unreasonable”, the plaintiff would still be successful on their claims as advanced in this case irrespective of whether “good faith” existed on the behalf of the defendants or not since the burden is on the defendants to prove both elements of “good faith” and acting “in a reasonable manner”. 276.As aforementioned, my observations on s.29A of the BMO are limited due to the lateness of this matter but I have also considered the additional following 3 cases. 277.輝振有限公司 v 何耀與 & Anor, [2024] HKLdT 34, a Lands Tribunal case, it appears that s.29A was engaged primarily as a “safeguard” in disputes regarding the duties to be carried out by members of the management committee. 278.So Kwok Wan Richard & Ors v The Incorporated Owners of Hoi Tao Building & Ors, [2024] HKLdT 96, it appears that s.29A was used as a defence by the 2nd, 6th and 7th respondents in that Lands Tribunal case. 279.Upon re-reading Building Management in Hong Kong further along at 6.182, Tam Lai King (supra) was referred to but also Wing Hong Investment Co Ltd v Fung Sok Han [2016] 1 HKLRD 1, HCA 2075/2009, 25 September 2015, where before L Chan J. the 1st defendant in that action invoked s.29A of the BMO in her defence in a case regarding, inter alia, the common area of a building and its usage rights. 280.Wing Hong Investment Co Ltd (ibid) it was the 1st defendant who relied on s.29A of the BMO but ultimately was unsuccessful since she acted wrongfully given that she did not have an understanding of the legal position regarding a particular gate that was demolished and in blatant violation of the owner’s right which was clearly asserted, her instructions to remove an air-conditioning stand when the plaintiff’s assertion on ownership was already made, her complaints to the Buildings Department and the Chief Executive’s Office which resulted in wastage of public resources. The aforesaid acts of the 1st defendant led the court to find that she was not acting in good faith or in a reasonable manner and thus her actions were not protected by s.29A of the BMO. 281.This court cannot somehow infer that “good faith” was or was not present when the defendants’ incurred expenditures took place since “good faith” engages a certain legal standard, legal procedural requirements and supporting evidence that need to be dealt with by the parties at all stages and then for the court to determine after presiding over such a trial with such clear requirements complied with. 282.Given the foregoing, I reject Mr Chong’s attempt to argue his position on s.29A of the BMO given the lateness of his position as presented only at closing submissions and the associated difficulties. Furthermore, my observations on s.29A of the BMO are limited since I have not had the full assistance of counsel on this matter given it was only introduced at the closing submissions of the defendants. But were I required to comment on the applicability of s.29A of the BMO in the present case, on the facts of this case and my understanding of the authorities, I would hold that on the present case, s.29A of the BMO would require the burden to be on the defendants to establish that their incurred expenditures were made on “good faith” and that they were “reasonable”. 283.Returning to Mr Chong’s other submissions at closing, he amplified his submissions for the defendants that they were not saying that the plaintiff’s suing the defendants in itself was somehow impermissible or that past resolutions of the 6th Management Committee could later be found to be wrong and subject to action by the plaintiff. Mr Chong submitted that it was necessary for the plaintiff to challenge the resolutions of the 6th Management Committee and this needed to be pleaded as such given in particular that there were other members of the 6th Management Committee who were not being sued by the plaintiff. Mr Chong emphasized there was unfairness in suing only some of the members of the 6th Management Committee (namely the defendants) and not others. 284.As already discussed in this judgment, in gist the plaintiff frames its case on the conduct of the defendants, namely that the incurred expenditures were unreasonable, unnecessary and not in the common interest of the plaintiff. The defendants admitted they were the ones who received the compensation from the plaintiff for the incurred expenditure. 285.The plaintiff is permitted to elect against whom they make a claim against and not suing particular members of the 6th Management Committee is an unfounded argument. There was no limitation on who the defendants could have attempted to add in these proceedings as co-defendants or otherwise to seek indemnity or compensation from, inclusive of other members of the 6th Management Committee or Synergis. A complaint was made against Mr Lam that he held a bias against the defendants but that was an evidential matter which this court did not find to have occurred or had an effect on who was to be sued from the 6th Management Committee. 286.Mr Chong confirmed at closing that the defendants were still relying on the defences of estoppel by conduct and or estoppel by convention with an emphasis on the latter since the resolutions of the 6th Management Committee are binding on the plaintiff. 287.Tam Lai King (supra) held that where a chairman of a management committee proposes a resolution which would benefit himself, (and others within that same management committee) that would exonerate their wrongdoing, there is no prohibition on suing for their wrongdoing in making such a self-serving resolution. In Tam Lai King (supra) the plaintiff was effectively successful in her action regarding invalidation of an owners rectification resolution. 288.Referring to Tam Lai King (supra) as applied to the particular facts of this case where the 1st defendant was the chairman of the 6th Management Committee and the 2nd defendant as one of its members who were also in a position to effectively exonerate themselves, I do not find that the defences of estoppel by conduct or convention arise in the present case, in particular to prevent the plaintiff from pursuing its present claims against the defendants. 289.Additionally, it was admitted that after the 7 March 2013 Synergis Letter there was a general meeting of Wo Ming Court but it was admitted that no resolution was made approving the incurred expenditure of the 6th Management Committee. It is not known whether the 1st defendant made full and frank disclosure at that general meeting, but the complaints about the 6th Management Committee did not end. As such, this court finds that the plaintiff did not accept the resolutions of the 6th Management Committee in relation to their incurred expenses and at the very least were not bound under the doctrine of estoppel by conduct or convention to prohibit the plaintiff from bringing this action. Conclusion 290.Had the defendants been more attentive to what would have been reasonable, necessary and in the common interest of the plaintiff, much of these incurred expenditures could have been avoided. 291.To support the defendants and or any persons volunteering their valuable time towards the betterment of residents in any particular building or building estate, it would obviously be best if there were greater contemporaneous documentary support describing their activities, aside from just receipts and confirmatory letters. Information regarding, inter alia, what exactly were the actions taken, who were in attendance and their purpose of the meeting would assist all involved and would require only marginally more work to record the same in writing. 292.This is not to say there would be required detailed minutiae of such meetings by a management committee or related persons, but with virtually no documentary details being given in a timely and contemporaneous manner simply does no justice to the hard work of volunteers of a management committee or related persons in defending their incurred expenditure or conversely to the incorporated owners since the incurred expenditure comes from the collective funds of the owners of a building or estate which must be accounted for. 293.This court has found the defendants liable to the Plaintiff in the total amount of incurred expenditure as against the 1st defendant for HK$131,137.41 and against the 2nd defendant for HK$114,388.30. 294.It would also be correct to say that this case has consumed much time, effort and expense to all parties involved. Where disputes arise over the incurred expenditure of a management committee or related sub-groups, the sooner there is immediate resolution or perhaps at least a breakdown of specific instances of potential overspending would be helpful. The present case and many like them, would best be resolved by any various means of alternative dispute resolution at an early stage albeit this is not to say that all such situations can be so resolved and a trial might ultimately be inevitable as a last resort. 295.Mr Chong has submitted that it was unreasonable for the plaintiff to commence the present proceedings and that even upon the plaintiff’s success, the legal costs incurred will far exceed the amounts recoverable from the defendants. It was also submitted that since the defendants are receiving legal aid, the plaintiff will be unable to recover costs from the Director of Legal Aid or the defendants, which would render the plaintiff out of pocket even if successful. 296.The Civil Justice Reform has introduced several costs control measures and active case management features which has served the community well since its introduction. However, the primary role of the court remains to ensure the just resolution of disputes in accordance with the substantive rights of the parties. Unless there are special features to a case or there is an obvious abuse of proceedings, it is the opinion of this court that there should not be any premature intervention by the court based on an attempt to reduce or control costs if that may jeopardize the more important role of determining the substantive rights of the parties. 297.Given the foregoing, this court is not in a position to make any comments on whether costs will or will not be recoverable from the defendants or the Director of Legal Aid although Mr Poon has referred to the Legal Aid Ordinance, Cap.91 at s.16C(1)(b)(i) where he has submitted that costs are recoverable from the Director of Legal Aid. 298.In any event, I am confident that the plaintiff’s legal team has fully advised the plaintiff on the issue of costs regarding this case. 299.I make an order in terms of the relief sought in the ASOC save that the sums claimed against the 1st defendant be HK$131,137.41 and as against the 2nd defendant be HK$114,388.30 at paragraphs (1) to (5) thereof. 300.I make an order nisi that the 1st and 2nd defendants do pay the plaintiff the costs of this action to be taxed if not agreed with certificate for counsel. The 1st and 2nd defendants’ own costs should be taxed in accordance with the Legal Aid Regulations. Unless any of the parties apply by way of summons to vary it, the costs order nisi shall be made absolute 14 days from today. 301.I thank both counsel for their helpful assistance.
Mr Jackson Poon, instructed by Chung & Kwan for the plaintiff Mr Patrick Chong, instructed by L & L Lawyers, assigned by the Director of Legal Aid, for the 1st and 2nd defendants | ||||||||||||||||||||||
Cases cited in this judgment