Read the full judgment text of HCA 004089/1996 on BabelCite. This High Court CFI judgment was delivered on 4 August 1999 before Beeson J.
Civil law – Building management – Incorporated owners – Liability for pre-incorporation expenses – Deed of Mutual Covenant – Manager appointed under DMC – Owners' corporation subsequently incorporated under s.8 Building Management Ordinance (Cap.344) – Manager claims reimbursement for management expenses deficit – Whether s.16 BMO renders corporation liable for liabilities accruing before incorporation – Plaintiff managed Winner Building from 1978 under DMC dated 20-3-78 – Plaintiff not named as party to DMC – Defendant incorporated on 29-11-94 – Defendant gave three months' notice to terminate Plaintiff's management appointment – Plaintiff claimed deficit of $315,666.40 in management expenses – Whether Defendant liable to reimburse expenses incurred prior to its incorporation – Preliminary issue ordered by Sakhrani J – Court followed Cheung J's reasoning in Koo Sun Yiu v. Victorison Delivery Ltd & Others 1996 4 HKC – Section 16 BMO does not expressly extend to pre-incorporation liabilities – Corporation is a creature of statute and distinct legal entity under s.8(2)(a) BMO – Grenville House Ltd v. Incorporated Owners of Grenville House [1978] HKLR 235 distinguished as concerning post-incorporation liabilities – Common law principle that a company is not bound by contracts purportedly entered into on its behalf before incorporation – No contractual or agency relationship between Plaintiff and Defendant in respect of pre-incorporation expenses – Plaintiff's reliance on s.18(1)(c) BMO and s.26 Conveyancing and Property Ordinance (Cap.219) rejected – Held: Defendant not liable to reimburse Plaintiff for expenses incurred prior to incorporation – Costs of preliminary issue application to be costs in the action (order nisi).
Legal issues: Whether owners' corporation liable for pre-incorporation management expenses under s.16 BMO
Outcome: Preliminary issue determined in favour of the Defendant; the Incorporated Owners of Winner Building is not liable to reimburse the Plaintiff for management expenses incurred prior to its incorporation.