曾婉玲 v. 兆隆苑業主立案法團

LDBM000199/2001

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Building Management Application No. LDBM 199 of 2001

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Coram: H.H. Judge LAM

Dates of Hearing: 26 June 2001 & 29 August 2001

Date of Judgment: 18 September 2001

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J U D G M E N T

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Factual background

1.The Applicant in this case had been the chairman of the Respondent. She ceased to hold such position since 18th February 2001. A new management committee was elected by the owners of Siu Lung Court on the same day.

2.By a notice dated 8th April 2001, the new chairman convened another general meeting of the owners on 22nd April 2001. The Applicants husband attended that meeting. At the outset, he challenged the regularity of the meeting on the ground that insufficient notice of the meeting had been given.

3.A District Officer and a District Councillor were present at that meeting. They were of the view that there was sufficient notice and the new chairman decided to proceed with that meeting.

4.At that meeting, apart from report given by the new chairman on the affairs of the Respondent, the question as to the appointment of a management company was put to vote.

5.On 25th April 2001, the Applicant issued the present application. She sought a declaration from the Tribunal that the meeting of 22nd April 2001 was null and void. From the evidence filed by the Applicant and the submission made on her behalf by Mr.P.M.Ho, I understand that the case of the Applicant is that the notice was insufficient because it was sent or posted one day less than that required by the law.

The stance and subsequent actions of the Respondent

6.On 2nd May 2001, the Respondent filed a Notice of Opposition contesting the application. It was asserted in that Notice of Opposition that the meeting of 22nd April 2001 was held with sufficient notice.

7.At some stage, the Respondent received legal advice and on 10th May 2001, a notice was issued for the convening of another general meeting to deal with, inter alia, the matters discussed at the meeting of 22nd April 2001.

8.That meeting was held on 25th May 2001. The agenda of 22nd April 2001 was put to vote again and it was duly passed.

9.On 26th June 2001, the case came before me. Mr. Albert Ho appeared for the Respondent. He indicated to the Tribunal that the Respondent would not contest the allegation that notice for the meeting of 22nd April 2001 was insufficient. However, Mr. Albert Ho submitted that in view of the subsequent meeting held on 25th May 2001, the Tribunal should exercise its discretion to decline to grant any declaratory relief because it has no practical value or utility and it was inappropriate to grant such relief in the circumstances of this case.

10.Since this position of the Respondent was not reflected in the Notice of Opposition, Mr. Albert Ho applied for leave to amend the same. I granted him leave to amend on 26th June 2001. The Amended Notice of Opposition was filed on 3rd July 2001. The Applicant sought an adjournment to deal with the matter in view of the amendment and the case was adjourned to 29th August 2001.

The law on notice

11.Since this is not disputed by the Respondent, I would only deal with it briefly. The Applicant relied on Paragraphs 2 and 3 of the Third Schedule of the Building Management Ordinance Cap.344 [BMO]. Those paragraphs read as follows,

2.(1) Notice of a meeting convened under paragraph 1 [i.e. a general meeting] shall be served by the secretary of the management committee upon each owner and upon the tenants' representative (if any) at least 14 days before the date of the meeting.

(1A) Service of a notice required to be served under subparagraph (1) may be effected-

(a) personally upon the owner or tenants' representative (if any); or

(b) by post addressed to the owner or tenants' representative (if any) at his last known address; or

(c) by leaving the notice at his flat or depositing the notice in his letter box.

(2) Every notice referred to in sub-paragraph (1) shall specify-

(a) the place, date and time of the meeting;

(b) every resolution to be proposed or other matter to be discussed at the meeting.

3. (7) No resolution passed at any meeting of the corporation shall have effect unless the same was set forth in the notice served in accordance with paragraph 2 or is ancillary or incidental to a resolution or other matter so set forth."

12.The Third Schedule was applicable to all the meetings of an incorporated owners, see Section 8(5) of the BMO.

13.The effect of Paragraph 2(1) of the Third Schedule is to require 14 clear days notice prior to the meeting. It has been held in the case of 談漢華訴惠安苑業主立案法團 LDBM 212 of 1999, 14.3.2000 that in the calculation of time for the purpose of this paragraph, Section 71(1)(a) of the Interpretation and General Clauses Ordinance Cap.1 is relevant.

Section 71(1)(a) reads as follow,

"(1) In computing time for the purposes of any Ordinance-

a period of days from the happening of any event or the doing of any act or thing shall be deemed to be exclusive of the day on which the event happens or the act or thing is done."

14.Since the 14 days are the minimal requirement, the safest course, to avoid any problems as to the reckoning of time in the light of these sections, is to have at least 15 days between the date of notice and the date of meeting.

15.In the present case, according to the evidence filed by the Applicant, the notice was only served on 9th April 2001. That was less than 14 clear days.

16.Failure to comply with the requirement as to notice deprived a resolution passed at the meeting of any effect by virtue of Paragraph 3(7) of the Third Schedule of the BMO, see 蘇振文、鄧平與盧永佳對置安大廈業主立案法團（高院民事上訴1999年第302號）10.3.2000.

17.Whilst people may be aware of the 14 days requirement, many fail to take note of the effect of Section 71(1)(a) of Cap.1. This is indeed a trap for many unwary management committee members, most of them act on a voluntary basis and do not have sufficient legal background to appreciate the significance of these legal niceties. In the Lands Tribunal, when dealing with building management cases, one often encounters committee members inadvertently fail to comply precisely with some requirements in the BMO. This often leads to regrettable consequences. Resources and energy of a corporation are spent on unfruitful litigation instead of the furtherance of day to day management of the building.

Declaratory relief in the context of building management disputes

18.In the exercise of its jurisdiction to grant equitable relief (and declaratory relief is one of them), the Tribunal is exercising a discretion. As in the case of the exercise of other judicial discretion, the Tribunal must have regard to all relevant circumstances in deciding whether declaratory relief should be granted in a particular case.

19.In the context of building management cases, one must bear in mind the following factors,

(a) the members of the corporation are co-owners of a building and they are neighbours. Most of them would live or work in the vicinity of one another. They would inevitably meet and have interaction with each other. Harmonious relationships between them are important to the well being of the community.

(b) the purpose of incorporation is to facilitate and foster owners co-operation with each other in the management of the building. Whilst there would inevitably be differences in opinion amongst members, in the interest of the whole, such differences should be resolved if possible by the quickest and most cost-effective means. Otherwise, the energy and resources of the corporation could be spent on needless litigation with substantial legal costs being incurred. That would also seriously undermine the trust and goodwill amongst members which is essential to the successful operation of the corporation.

(c) as stated in Paragraph 17 above, it is understandable that errors would be made from time to time with regard to the affairs of a corporation. So long as the errors was made without any fraudulent or dishonest intent, although one needs to learn from mistakes, it is more important to rectify or remedy the situation in a positive manner.

(d) personal vendetta has no proper place in dealing with the affairs of a corporation. It would only destroy the overall well being of the corporation. It would be inconsistent with the overall objective of the BMO.

(e) although Section 45 of the BMO enables an owner of a building to bring proceedings in the Tribunal regarding matters specified in the Tenth Schedule, the main purpose of the ordinance, as set out in the preamble is to facilitate the incorporation of owners of flats in buildings or groups of buildings, to provide for the management of buildings or groups of buildings and for matters incidental thereto or connected therewith. Hence, in the exercise of its jurisdiction, the Tribunal should primarily be concerned with the proper management of the building instead of any personal conflicts between individuals. In deciding a case, the Tribunal should consider what would be the course in the best interest of the owners as a whole.

(f) In line with the underlying spirit of the BMO, subject to compliance with the provisions in the relevant Deed of Mutual Covenant and the BMO, the management of the building is placed in the hands of the management committee (see Section 29 of the BMO). The management committee is obliged to follow the resolution passed by owners in general meeting (see Section 14(1) of the BMO) and is subject to the supervision of the owners through the general meeting at which a member could be removed from office (see Section 14(2) of the BMO). In an extreme case, the owners at a general meeting can resolve to appoint an administrator and dissolve the management committee (see Section 30 of the BMO). It is for the owners, either acting through a management committee appointed by them or through resolutions passed in general meeting, to decide on matters relating to the management of the building. The Tribunal should only intervene to ensure that the statutory mechanism and the provisions in the Deed of Mutual Covenant are observed. If the Tribunal is satisfied that the management committee or general meeting is acting in accordance with the provisions in the statutory and contractual framework in handling the affairs of the building, the Tribunal should leave it to the owners to decide for themselves on what is the best course to adopt in the management of the building.

20.Order 15 rule 16 of the Rules of the High Court provides, no action or other proceeding shall be open to objection on the ground that a merely declaratory judgment or order is sought thereby, and the Court may make binding declarations of right whether or not any consequential relief is or could be claimed. This applies to proceedings in the Lands Tribunal by reason of Section 8(9) and Section 10(1) of the Lands Tribunal Ordinance Cap.17.

21.Hence, it is possible for the Tribunal to grant a declaration without any consequential relief if the Tribunal is satisfied that it should exercise its discretion to do so.

22.A well established reason for a court to refuse to grant declaratory relief is a situation where the exercise does not serve any useful purpose. The principle is summarized in Zamir & Woolf, The Declaratory Judgment, 2nd Edn., at Para.4.087,

"If it can be shown that a declaration would not serve any practical purpose, this will weigh heavily in the scales against the grant of declaratory relief. If, on the other hand the grant of declaratory relief will be likely to achieve a useful objective, the court will be favourably disposed to granting relief. The question of whether or not any useful purpose would be served by granting declaratory relief is therefore of prime importance in determining how discretion should be exercised."

Application of the principles to the facts of the case

23.There is no disagreement between the parties as to this principle of law. However, the parties advanced different submissions as to the utility of the present proceedings.

24.Mr.Albert Ho argued for the Respondent that in view of the meeting of 25th May 2001 where the resolution passed in the meeting of 22nd April 2001 was put to vote and was passed again, there was no point to go back to examine the procedure regularity as to the earlier meeting. Further, Mr.Albert Ho said that the Respondent had learnt a lesson from this incident and would pay attention to the proper reckoning of time in giving notice for meeting in the future. In the light of these, he submitted that the Tribunal should regard the meeting held on 25th May 2001 as a proper solution to the matter and decline to interfere further by granting declaratory relief.

25.On the other hand, Mr.P.M.Ho for the Applicant argued that the proceedings did have practical utility. He said that the meeting of 25th May 2001 might not be valid. Initially, he sought to challenge that meeting in his written submissions by arguing that the appointment of the current management committee was invalid because the meeting of 18th February 2001 (at which they were appointed) was not properly convened again due to insufficient notice. He said it followed that the meeting of 25th May 2001 could be valid because it could only be convened by a proper management committee.

26.However, the meeting of 18th February 2001, according to the evidence before me, was convened by the Applicant with the other management committee when she was still chairman of the Respondent. Further, if this point was actually pursued, it would open a new front to the case and the Tribunal would be obliged to adjudicate on the validity of the appointment of the current management committee and may have to grant appropriate orders pertaining thereto. This could have serious ramifications for the Respondent.

27.To the credit of the Applicant, when I pointed out these implications, she decided not to pursue that line of argument. The parties therefore proceeded on the basis that there was no challenge to the appointment of the current management committee and the validity of the meeting of 18th February 2001.

28.Mr.P.M. Ho however still argued that there was insufficient evidence to prove that the meeting of 25th May 2001 was properly convened. I do not agree. The notice for that meeting dated 10th May 2001 was included in the bundle. It was more than 14 days prior to the meeting. In view of the adjournment of this case in June, the Applicant had ample opportunity to adduce evidence to challenge the validity of that meeting. She chose not to do so. In view of the challenge to the adequacy of notice for the meeting of 22nd April 2001, the Respondent would be vigilant in attending to the proper service of notice. I infer in the absence of evidence to the contrary that the notice was served on the date it was issued. On the evidence before me, I find as a fact that the meeting of 25th May 2001 was properly convened.

29.Mr.P.M.Ho also submitted that it would be unfair to the Applicant if she could not obtain any relief from the Tribunal. He said that the current management committee had not openly admitted to other owners that they made a mistake with regard to the notice for the meeting of 22nd April 2001. If the Tribunal refuses to grant a declaration, the other owners would not understand why and they would probably brand the Applicant as a trouble-maker. This would, according to Mr.P.M.Ho, damage the reputation of the Applicant. He cited the case of Patten v. Burke Publishing Co. Ltd. [1991] 2 All ER 821 as an example where the court would grant a declaration to ensure that fullest justice is done to a party.

30.In that case, Millett J. (as he then was) granted a declaration in an undefended case because the omission of a declaration could seriously inhibit the plaintiff in any attempt to negotiate terms for the publication of his works. That was a commercial case where there was good commercial reason to justify the need for a declaratory relief.

31.I do not accept that a parallel could be drawn between that case and the present case. The nature of the two cases are completely different. Millett J. was not dealing with a situation where the original issue in the action had been overtaken by subsequent events. Further, Millett J. did not have to take into account of the factors listed out by me in Paragraph 19 which are only applicable to building management disputes.

32.Moreover, I do not agree that it is necessary for a declaration to be granted to do justice to the Applicant. The Applicants stance as to the deficiency in the notice for the meeting of 22nd April 2001 has already been vindicated by the Amended Notice of Opposition in which the Respondent indicated that they would not contest the allegation of the Applicant. In a letter dated 15th June 2001 (at p.15 of the Applicant's bundle), the Respondent and the current chairman expressed regret about the mishap and thanked the Applicant for her guidance on the matter. Since a copy of that letter was included in the Applicant's bundle, she must have read it before the trial of this case. In the light of that letter and the Amended Notice of Opposition, I do not think the current management committee would continue to suggest that Applicant was wrong in challenging the notice. If necessary, she could also circulate a copy of this judgment to other owners.

33.In any event, I do not regard vindication of the Applicant as the prime consideration in the exercise of my discretion. By reason of the matters set out in Paragraph 19 above, the main concern should be which course is most appropriate and in the best interest of the owners as a whole. Bearing those matters in mind, I hold that the meeting of 25th May 2001 was a proper solution to the defect with regard to the meeting of 22nd April 2001. The only outstanding issue is the question of costs.

34.Mr.P.M. Ho also referred to certain remarks made in the meeting of 22nd April 2001. If the Applicant finds such remarks defamatory about her, she could have commenced a civil claim against the person who made or published such remarks. However, I do not consider this as a reason why declaratory relief unrelated to those remarks should be granted in the present case.

35.Mr.P.M. Ho said that the committee members did not admit the mistake. He referred to the original Notice of Opposition and the statement by the chairman at the meeting of 25th May 2001 that they were confident in successfully resisting the Applicant's claim. That was correct, but only in regard to the position up to 15th June 2001 and that would have a bearing on the question of costs. As I have already mentioned in Paragraph 32 above, by a letter of that date, the Respondent had accepted that the Applicant was correct. This was put beyond doubt by the submissions of Mr. Albert Ho on 26th June 2001 and the filing of the Amended Notice of Opposition.

36.I therefore see no basis for Mr. P.M.Ho's submission that the Respondent is trying to conceal its mistake by taking technical points to urge the Tribunal not to grant declaratory relief. With the delivery and publication of this judgment, there cannot be any concealment. I see nothing sinister in the stance currently taken by the Respondent.

37.In my judgment, apart from the question of costs, there was no legitimate practical reason to justify the continuation of these proceedings after the meeting of 25th May 2001. For the purpose of the management of the building, the issue has become academic.

38.There is no need for a declaration to be granted in order to enable the Applicant to get her costs. With the concession in the Amended Notice of Opposition, I see no reason why she should not have her costs for the commencement of this application even when no declaratory relief is granted as a result of subsequent events.

39.I therefore exercise my discretion by refusing to grant any declaration in this case as no useful purpose would be served by doing so.

40.On the question of costs, I have already said that the Applicant should have her costs in the commencement of the proceedings. Up to the meeting of 25th May 2001, there was no reason why the proceedings should not be continued. Between 25th May 2001 and the hearing of 26th June 2001, the Applicant was justified in proceeding with the application with a view to get back the costs of the proceedings. On pleadings, the Respondents stance up to 26th June 2001 was a denial that there was any defect with regard to the notice for the meeting of 22nd April 2001. In view of the concession of the Respondent on 26th June 2001 as put forward by Mr.Albert Ho, if the Applicant confined herself to seek costs up to that day, I cannot see any valid justification to deny her cost up to that date. The proceedings would end there and then.

41.However, the Applicant was not content with that and she wished to obtain declaratory relief. As a result, the Tribunal heard submissions relating to that on 29th August 2001. On this point, for the reasons given above, the Tribunal decided against her.

42.Hence, the Applicant should not get the costs of 29th August 2001. Should I order the Applicant to bear the costs of the Respondent for the hearing on 29th August 2001? For two reasons, I decide not to do so. Firstly, it would only be academic because Mr.Albert Ho told me that he was acting for the Respondent on a pro bono basis. Secondly, as far as I am aware, the Respondent did not make any offer as to costs up to 26th June 2001. I therefore propose to make no order as to costs with regard to the hearing of 29th August 2001. I would however make a cost order nisi that the Respondent bears the applicants costs up to and including the hearing on 26th June 2001.

Representation:

Mr. P.M. HO of M/S Ho & Tam, for the applicant

Mr. Albert HO of M/S Ho, Tse, Wai & Partners, for the respondent