Golden Chance (Hang Cheong) Properties Ltd v. The Incorporated Owners of Gold Mine Building and Another
Read the full judgment text of HCA 6749/1983 on BabelCite. This High Court CFI judgment was delivered on 17 January 1984.
1. In this matter Golden Chance (Hang Cheong) Properties Ltd., the Plaintiff, sued The Incorporated Owners of Gold Mine Building, the Defendant, for the sum of $45,278.62 being the balance of: -
Cited by 1 case
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HCA006749/1983
BETWEEN
_____ Coram: Hon. Power, J. Date of Hearing: 20 December 1983 Date of Delivery of Judgment: 17 January 1984 _____________ J U D G M E N T _____________ 1. In this matter Golden Chance (Hang Cheong) Properties Ltd., the Plaintiff, sued The Incorporated Owners of Gold Mine Building, the Defendant, for the sum of $45,278.62 being the balance of: -
No notice of intention to defend was given by the Defendant and judgment was given to the Plaintiff in the sum claimed together with interest. 2. An application was made to the Master under S.17 of the Multi-Storey Buildings (Owners Incorporation) Ordinance Cap. 344 (the Ordinance). This section reads as follows:-
3. In support of this application the solicitor for the Plaintiff filed an affidavit in which he stated that he had been informed that the Defendant did not possess any real or personal property and that "it appears that the only way that Plaintiff can have the judgment debt satisfied is by applying to this Honourable Court for leave to enforce the judgment against any owner of the said Gold Mine Building pursuant to Section 17(1)(b)." There was no issue made of the fact that the appellant, Chan Yiu Kai, was an owner being one of the joint tenants of Shop No.10 on the ground floor of the said building. 4. Chan Yiu Kai now appeals to this Court against the order of the Master giving leave to enforce the judgment against him. Mr. Woo who appeared for the appellant submitted that the Court should refuse to give leave because:- (1) it was against the scheme of the ordinance to punish an owner such as the appellant when through no fault of that owner, the corporation had failed to satisfy a judgment debt. 5. Mr. Woo made three main points under this heading. They were:-
6. It seems to me that only point (a) can be properly said to relate to the scheme of the Ordinance. With regard to that point, Mr. Woo referred particularly to Section 19 of the Ordinance saying that this section made it plain that the corporation could only proceed against defaulting owners and that the legislature could never have had it in contemplation that where the corporation itself was in default the person who had sued the corporation would be entitled to proceed against all owners including those who were not in default. Mr. Woo pointed out that Sections 21 and 22 of the Ordinance made it clear that owners would only be liable for the amount fixed in accordance with the deed of mutual covenant or, if there was no deed, for an amount fixed by the management committee in accordance with the respective shares of the owners. It was submitted in short that, as the Ordinance set out that the corporation could only recover against a defaulting owner in a limited amount, it could never have been the intention of the legislature to allow a third party who was owed money by the corporation to recover an unlimited amount against an owner who was in no way in default. Against this submission stand the clear words of Section 17. It provides that where a judgment is given against the corporation it can with the leave of the Court be enforced against any owner. If the legislature had intended to ensure that no such action was taken against any owner not in default then it could easily have said so. I do not consider that the scheme of the Ordinance requires Section 17 to be read as though the words "any owner" read "any defaulting owner." It does however seem to me clear that one of the matters that the Court can take into consideration when determining whether it should give leave is whether the person against whom it is sought to enforce the judgment was in default as regards his payments to the corporation. 7. As regards point (b), Mr. Woo referred to Section 16 and Section 17. S.16 reads as follows :-
He pointed out that only the liabilities of the owners in relation to the common parts of the building were enforceable against the corporation and that the section authorized the bringing of proceedings against the corporation only in respect of any of the common parts of the building. He submitted that the judgments referred to in s.17 were judgments in the proceedings referred to in s.16 and that unless it was clearly shown that the judgment referred to some work undertaken as regards the common parts of the building, it was not a judgment that fell within the ambit of Section 17. The argument broadly stated was that an individual owner should not be made liable for the debt of the corporation unless it was shown that it was a proper case in which to make him liable and that it was not a proper case unless it was established that the corporation had incurred the liability in accordance with the provisions of the Ordinance. He submitted that, in the present case, the Plaintiff had failed to show that the claim which it had brought related to the common parts of the building and that it was not, therefore, entitled to have leave to proceed against an individual owner. Indeed it seems to me that no attempt was ever made to show that the claim related to the common parts of the building. 8. As regards point (c), Mr. Woo submitted that if leave was granted in circumstances such as the present ones, then the rights of purchasers who had made all proper searches before entering into their contracts to purchase would be effected and that it would be a grave injustice if a purchaser, shortly after becoming owner, was required to satisfy a judgment given against the corporation. Mr. Woo seemed to be arguing from this that the Court should hold that leave should never be given against any owner who was not in default. Clearly the Court cannot so hold as the words of Section 17 indicate that, in the proper circumstances, leave can be given against any owner. In circumstances where an owner had recently purchased the premises, it may well be that the Court would refuse to give leave to enforce any judgment against him.This would be one of the factors that would be taken into account in determining whether or not the discretion to give leave should be exercised. As there was no question of the appellant having recently purchased his premises, this was not a factor to be weighed by the Court in the present case. (2) it would leave the appellant without any remedy against the corporation. Mr. Woo did not press this point being content to submit that there might be some doubt as to whether an owner, a judgment having been recovered from him because leave had been given under s.17, had any cause of action against the corporation. As I have said the matter was not pressed and I am, by no means, persuaded that he would have no right to sue and recover from the corporation. (3) it would be to involve the corporation and the owners in a multiplicity of actions. Mr. Woo submitted that it was clearly against the public interest that parties should be involved in a multiplicity of actions. He submitted that this would be the case in the present circumstances because, if he was wrong in his submission under (2) above and the appellant did have a right to recover from the corporation the amount of the judgment he had been ordered to pay, the appellant, having taken such action and obtained a judgment, and the corporation, having failed to satisfy that judgment, could then ask for leave to enforce it against a fellow owner,Mr.Woo submitted that if it was proper to give the Plaintiff leave to enforce its judgment against the appellant, it would be equally proper for the Court to give leave to the Appellant to enforce his judgment against a fellow owner. He submitted that this would lead to a situation where, one after another, each successive owner would pursue his unsatisfied judgment against a fellow owner. 9. While it may be that no great weight can be placed upon this argument, it is proper for the Court to bear in mind the Gilbertian situation which could arise if leave were to be lightly given. (4) to do so would be to approve a breach of duty by the manager of the building towards an owner who was in no way default with regard to his obligations as an owner. The duty which Mr. Woo submitted was being breached was the duty of the corporation to recover contributions from defaulting owners. He submitted that the manager was a creature of the corporation as it was appointed by the management committee which itself was answerable to the corporation. He submitted that in such circumstances allowing the manager to recover against a non-defaulting owner was condoning the breach of the corporation in failing to recover against defaulting owners. He submitted that the effect of giving leave in such circumstances would be to lift from the corporation its, duty to pursue defaulting owners in accordance with the Ordinance and to throw the burden wrongly and unfairly on a non-defaulting owner. Given the clear wording of s.17 I am not persuaded that any weight can be given to this argument. (5) of the possibility of collusion between a manager and a managing in committee. Mr. Woo appears to have had in mind a situation where the manager and the managing committee agree, for some reason of their own to allow the burden of a debt due from the committee, i.e. from the owners as a whole, to fall upon an individual owner.The Court would undoubtedly refuse to grant leave if any such collusion was established. Indeed the Court might well be reluctant to grant leave where circumstances tended to suggest the possibility of such collusion. However, I do not consider that this consideration can be given any weight in circumstances such as the present ones where nothing has been advanced which would suggest the existence of any such collusion. (6) It is proper for the Court to grant leave only in a clear case and this, for the reasons set out above, is not such a case. In this regard Mr.Woo relied upon a Grech v. Board of Trade(l). Section 12 of the Arbitration Act 1889 provided that "an award on a submission may, by leave of the Court or a judge, be enforced in the same manner as a judgment or order to the same effect''. The Court of Appeal when considering that section held that "execution under Section 12 of the Arbitration Act, 1889, could only issue by leave of the Court, and that leave would only be given in a clear case, which this was not." Mr. Woo said this was the only case that he could discover where a Court had dealt with words 'by leave of the Court' in a context similar to that used in Section 17. 10. Miss Wong who appeared for the Plaintiff was not able to refer me to any case that might assist me in the approach to be adopted in Section 17. She submitted that the word " judgment" in Section 17 was unqualified and that it referred to any judgment that might be given against the corporation. 11. Miss Wong submitted that Section 17 does not distinguish between a defaulting owner and a non defaulting owner and that when the Court came to determine whether or not it would give leave, the first thing it should look to see, bearing in mind the words of the section, was whether the judgment could be enforced "against any property of the corporation". She submitted that, it being shown that it could not, it was proper for the Court to consider giving leave to enforce the judgment "against any owner". She seemed to be arguing that the Court must exercise its discretion in favour of the applicant once it was shown that there was no corporation property and that the person being proceeded against was an owner. She did, however, appear to concede that whether or not leave was given was a matter of discretion and that the Court, when making its determination, was entitled to look at the justice of the situation. However, having said this, she contended that in circumstances where the corporation had no property, the justice of the situation fell heavily on the side of the Plaintiff with an unsatisfied judgment. She said that while it may be that the owner was not in default in anyway with his payments to the managing committee he was, nonetheless, a member of the corporation and as such was liable for its defaults. She submitted that the Plaintiff would have no remedy if he was not allowed to enforce his judgment against an owner. She submitted that if there was an incompetent management committee, then the owners had the remedy in their hands to organize to replace that committed. 12. It is certainly true that owners have a right to vote at meetings called for the purpose of appointing a management committee (Section 5) and that owners have the right to apply to the Court to dissolve a management committee and appoint an administrator (Section 31). It is also true that third party such as the Plaintiff has no such rights. It is not, however, true to say that the Plaintiff will have no remedy if he is not allowed to enforce his judgment against an owner. Section 33 provides that a corporation can be wound up under Part x of the Companies Ordinance as if it was an unregistered company. Section 34 provides that in the winding-up of a corporation:-
Section 39 provides that:- "An owner's share shall be determined -
It is not, therefore, true to say that the Plaintiff will have no remedy if he is refused leave. He can proceed to have the corporation wound up and in such winding-up, all of the owners will be required to contribute in accordance with their shares in the building. 13. The basic problem faced by this Court is the ascertainment of the criteria to be applied in the exercise of its discretion when deciding whether or not to grant leave. I am satisfied that the discretion is not so fettered that all the Plaintiff has to do to obtain a decision in his favour is to show that the corporation has no property and that the person against whom he is proceeding is an owner. Indeed if this interpretation is correct, it would mean that a new owner, the day after his purchase, could be made liable for a crippling debt as the Court would have no power to refuse the grant of leave. If the legislature had wished to fetter the discretion in that way it could simply have said that in circumstances where the corporation has no property then the judgment may be enforced against any owner. 14. I am satisfied -
15. If the refusal of leave were to put the Plaintiff in the position where he was without any remedy this would be a powerful factor in his favour in the application. This, however, is not the case. If leave is refused, the Plaintiff, as I have pointed out above, has a remedy under s. 34 which,in the outcome, will be enforced equitably against each of the owners.
Although it does not so state in the letter-head, it appears that it also undertakes the management of buildings. In that capacity, it contracted with the Defendant to manage the building in question. It was content in the ordinary course of business to accept the Defendant as a contractual partner and would, but for Section 17, have had no recourse but to look to the Defendant for payment of any debts owing. 16. By virtue of Sections 33 and 34 of the Ordinance, it is in a better position as regards the recovery of its debt against the Defendant, then it would be, if it was a debt owed by an ordinary company. Those provisions virtually ensure that in the final outcome, it cannot be deprived of any amount due and owing to it. Should it, nonetheless, be allowed to take advantage of the provisions of Section 17(2) and to enforce its judgment against an individual non-defaulting owner. Miss Wong points out that the individual owners are members of the corporation and cannot escape some degree of liability as regards any debts owed by it but I am nonetheless satisfied that it would be manifestly unjust to give leave to enforce a judgment, in a case such as the present one, against an individual owner who is not only in default but who will also, if leave is given, have met a judgment against the corporation which is entirely disproportionate to his statutory liability. 17. I am satisfied that any injustice that it is suggested will be caused to the Plaintiff by the refusing of leave is far outweighed by the injustice that would be caused to the appellant by the granting of leave. I am satisfied upon this broad ground that leave should be refused. 18. I am also satisfied that the Plaintiff is not entitled to leave upon the ground put forward by Mr. Woo in his submission 1(b). I am satisfied that Sections 16 and 17 must be read together and that the judgments and orders referred to in Sections 16 and 17 are judgments and orders arising out of proceedings in Court referred to in Section 16(b). It is, therefore, in my view, incumbent upon any person seeking leave to enforce a judgment against an owner under Section 17 to show that that judgment arose out of proceedings in respect of some of the common parts of the building. As this was never shown in the present case the appeal is entitled to succeed upon this ground also. The appeal is allowed. Leave is refused. The Respondent/Plaintiff is ordered to pay the appellant's costs to be taxed.
(1) (1923) W.N.235 Representation: Mr. K.H. Woo (instructed by Peter Kimpton Wong & Co.) for appellant, Mr. Chan Yiu Kai. Miss C. Wong (instructed by Johnny T.K. Cheng & Co.) for Plaintiff. |
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