Gallium Development Ltd and Others v. Winning Properties Management Ltd and Another
Read the full judgment text of CACV 186/2003 on BabelCite. This Court of Appeal judgment was delivered on 17 September 2004.
1. This is a matter that mainly relates to the construction and decoration works (“the works”) done in the common parts or otherwise of a building known as Island Beverly formerly known as Island Centre (“the Building”) in the heart of Causeway Bay. The Building comprises a shopping arcade on the two basement floors, ground floor and the 1 st , 2 nd and 3 rd floors (“the shopping arcade”), the 4 th to 8 th floors used for various restaurants and offices on the 9 th to 26 th floors. The applica
Cites 2 cases
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CACV 186/2003 CACV 400/2003 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 186 OF 2003 AND CIVIL APPEAL NO. 400 OF 2003 (ON APPEAL FROM BUILDING MANAGEMENT APPLICATION NO. LDBM 121 OF 2000) --------------------- BETWEEN
--------------------- Before : Hon Woo VP, Le Pichon and Yuen JJA in Court Dates of Hearing : 8 and 9 June 2004 Date of Judgment : 17 September 2004 ----------------------- J U D G M E N T ----------------------- Hon Woo VP: Background 1.This is a matter that mainly relates to the construction and decoration works (“the works”) done in the common parts or otherwise of a building known as Island Beverly formerly known as Island Centre (“the Building”) in the heart of Causeway Bay. The Building comprises a shopping arcade on the two basement floors, ground floor and the 1st, 2nd and 3rd floors (“the shopping arcade”), the 4th to 8th floors used for various restaurants and offices on the 9th to 26th floors. The applicants were owners of some but not all of the office units. The 2nd respondent (“R2”) was the owner of the shopping arcade, ie the basement to the 3rd floor. The 1st respondent (“R1”) was the building manager of the Building. 2.The dispute between the parties arose out of the works done in the shopping arcade. The applicants alleged that the works were done for the benefit of R2 alone and had nothing to do with the office premises or the Building as a whole. As a result, they made the following allegations and claims and sought damages against both of the respondents in the Lands Tribunal:
3.After about 30 days of hearing, the Presiding Officer of the Lands Tribunal, District Judge Yung (“the Judge”), held that R1 was not liable to pay any damages to the applicants. He dismissed all the claims against R1. He ordered that R2 do pay damages to the applicants in the proportion of their respective contributions towards the Sinking Fund which had been set up for “major overhauls of replacement of facilities of a capital nature” that had been used to pay for the works for the shopping arcade. The Judge handed down his judgment on 24 June 2003 and after a further hearing of the parties on the question of damages to be paid by R2, he assessed the damages so ordered to be payable by R2. However, he did not make an award of damages against R2 for its occupation and use of the common parts in the shopping arcade that had been converted to its own use. 4.Against the judgment and the assessment of damages, both the applicants and R2 have appealed and cross-appealed. The appeal by R2 is against the judgment on liability and the applicants’ cross-appeal is mainly against the dismissal of their claims against R1, and they are the subject matter of CACV 186/2003. R2 also appeals the order of damages and the assessment, and that is the subject matter of CACV 400/2003. Matters not in dispute 5.Despite the various grounds raised by the parties before us, there are a few matters over which they have no dispute and do not challenge the Judge’s findings, namely, that R2 did convert portions of the common parts of the shopping arcade for its own use, that the expenses for the works for the shopping arcade were taken out of the Sinking Fund established for the Building, and that R1 did apply a portion of that fund towards paying those expenses. Authority or justification for the conversion 6.The applicants had identified the following two items that were included in the works carried out in the shopping arcade to illustrate that their lawful rights of access to and use and enjoyment of the related common areas had been limited or restricted, namely, the conversion of the air handling unit room on the 2nd floor of the Building into a shop, and the installation of a large vending machine on the corridor of the common area of the 3rd floor of the Building. 7.The defence raised by the respondents or their legal representatives on their behalf was that the works had been authorised and approved by four written resolutions signed by or on behalf of R2 who was the registered owner of 77.09% of the equal and undivided shares of the Building, and such resolutions were valid and effective in authorising the works and the drawings from the Sinking Fund to pay for the expenses, in accordance with the Deed of Mutual Covenant made in respect of the Building (“the DMC”). 8.The relevant terms of the resolutions are set out below:
9.S 34I of the Building Management Ordinance, Cap 344 (“the BMO”) provides that:
10.It is common ground that no owners’ committee was ever formed in respect of the Building, nor for that matter, had the owners of the Building formed an incorporation of the owners or appointed a management committee. However, it was contended before the Judge and it is raised before us by the respondents that the four resolutions approving the works in the shopping arcade and the payment of the expenses for the works out of the Sinking Fund were valid and effective for those purposes, since the four resolutions were made pursuant to clause 27(j) of the DMC. 11.Clause 27 is under the heading of “MEETING OF THE OWNERS OF THE COMMERCIAL DEVELOPMENT”. For the purposes of these proceedings, the term “the Commercial Development” means the Building, because it is used in the DMC to distinguish all the other parts of the Building from the portion under the basement level of the Building housing an MTR station. Clause 27 provides as follows:
12.S 34I is under Part VIA of the BMO that deals with deeds of mutual covenant. S 34D is the interpretation section under that Part. It provides:
13.In respect of this issue, the Judge said:
14.In a later part of his judgment, the Judge said:
15.The main ground of appeal raised by Mr Warren Chan SC on behalf of the respondents is against the Judge’s rulings that the four written resolutions did not qualify as approvals by the owners’ committee within the meaning of s 34I of the BMO and that as there was no owners’ committee in the Building, the conversion of the common areas to private use must be by way of re-designation, with the approval of all the owners. Mr Chan’s contention can be briefly stated as follows. There was no owners’ committee that can satisfy the requirement of s 34I(1)(a) of the BMO, but because of the words “(if any)” in that provision, a proper construction of the provision does not mean that the conversion of the common parts of a building to private use can only be authorised by a resolution of an owners’ committee. In the absence of an owners’ committee, reliance could and should be placed on the DMC, which was the agreement between the owners of the Building. He supports his arguments by submitting that as the statutory mechanism (ie s 34I(1)(a)) does not say what is to happen when there is no owners’ committee, the obvious answer is that that is to be left to be decided by the owners in accordance with the contractual mechanism, ie their agreement as contained in the DMC or any other agreement. He further submits that otherwise, the construction of s 34I(1)(a) as held by the Judge would lead to an absurd result because the intention of the BMO is to facilitate the management of the common parts of multi-storey buildings even in the absence of unanimous consent of all the owners. If he is correct, his argument is to rely on the Judge’s ruling that “the written resolutions are valid in so far as the provisions of the DMC are concerned”. 16.Mr Chan’s above arguments are interesting and persuasive. I think, save for his reliance on the Judge’s ruling, at least some of the arguments may probably be correct. I will return to them later. But even if they are correct, he has to satisfy us that the four resolutions were valid in approving or authorising the works of converting the common areas in the shopping arcade for R2’s private use. I do not think he has done so. Clause 27(j) provides that any resolution on any matter concerning the Building passed at a duly convened meeting by a simple majority shall be binding on all the owners of the Building. However it is subject to three provisos, namely, the requirements of a notice setting out the proposed resolution and the holding of a meeting as stated in paragraphs (i) and (ii), and that “no resolution shall be valid if it is contrary to the provisions of this Deed” as stated in paragraph (iii). Clause 27(l) deems a resolution in writing signed by owners of more than 75% of the shares in the Building “as valid and effectual as if it had been passed at a duly convened meeting of the owners.” The deeming effect, in my judgment, only affects the question of notice or the absence of it and the holding of a meeting or the absence of it. It has no effect if the resolution is contrary to the provisions of DMC as provided in Clause 27(j)(iii). This is clear because the deeming effect only relates to or deems the resolution as being valid and effectual “as if it had been passed at a duly convened meeting of the owners”. It does not relate to whether the resolution so passed is or is not contrary to the provisions of the DMC. 17.There are many provisions of the DMC that provide for the common use, occupation and enjoyment of the common areas or common parts of the Building which are not subject to the exclusive occupation, use and enjoyment of an individual owner. Clause 1(b) defines “Common Areas” as those for the use in common of the owners for the time being of the Building. Clause 10 also provides for the duty of the Manager to prevent the obstruction of any of the common areas (sub-clause (n)), to prevent any person from occupying or using otherwise than in accordance with the written permission of the Manager or the provisions of the DMC any of the common areas (sub-clause (q)), and to take possession of and to control the common areas (sub-clause (bb)). Para A1(a) of the First Schedule to the DMC provides that owners of units in the Building share the rights and privileges of using the common areas with each other. In particular, Clause 24(c) provides as follows:
18.It is therefore clear that any conversion of any part of the common parts of the Building for any person’s private use and enjoyment to the exclusion of the occupation, use and enjoyment of the owners or other owners of the Building is contrary to the provisions of the DMC. In my judgment, the deeming provision of clause 27(l) does not have the power or effect of making resolutions coming within the ambit of clause 27(l) valid to convert any portion of the common areas of the Building to a person’s own private use. Inconsistency between Clause 24(c) and s 34I(1)(a) 19.The matter, however, does not end here. Mr Chan argues that Clause 24(c) is inconsistent with s 34I(1)(a) of the BMO and as such the statutory provision prevails, pursuant to s 34C of the BMO, which provides:
Thus, so the argument continues, Clause 24(c) has been struck down for being contrary to s 34I(1)(a), and the paper resolutions effected pursuant to Clause 27(l) were not invalidated by Clause 27(j)(iii) because they were no longer contrary to any of the provisions of the DMC. 20.Mr Chan identifies the inconsistency between Clause 24(c) and s 34I(1)(a) of the BMO: Clause 24(c) does not allow any interference with the right of co-owners to use and enjoy the common areas of a building, whereas s 34I(1)(a) does allow such interference, and even to the extent of allowing converting the common areas to private use. Insofar as this is concerned, it relates to, as Mr Chan submits, an inconsistency as to the power of interference. As to the person or body exercising such power, Clause 24(c) is silent and so unaffected by s 34I(1)(a) and there can be no inconsistency between the two. Mr Chan’s argument proceeds to say that a liberal and purposive interpretation ought to be given to s 34I(1)(a), since as an owners’ committee (just a representative organ of the owners) can by simple majority convert the common parts to private use, there is no reason why owners of over 75% of the shares in the building cannot be allowed to do so. If they can do so, there is no reason why they cannot act by a written resolution, which they are entitled to do by virtue of Clause 27(l). 21.He relies on the words “(if any)” in s 34I(1)(a) to argue that a resolution by an owners’ committee is not the only method prescribed by the BMO, which supports his contention that Clause 27(l) is one of the available ways under the DMC, which encapsulates the agreement between all the owners of the building. 22.S 34I(1)(a) is the statutory avenue open to R2, but apparently it had not chosen to use it. It relies on Clause 27(l) which it argues is doing more than s 34I(1)(a) requires, but it is the contractual mechanism. On the other hand, it relies on the statutory mechanism by using s 34I(1)(a) to enervate or avoid the contractual protection given by the DMC to the owners of the building but at the same time fails to follow the statutory mechanism. I do not think it should be allowed to do so. If R2 wishes to get rid of the protection provided by Clause 24(c) to the other owners, he should comply with the strict requirement of the statutory mechanism, because it is attempting to take away a right by which it had, as party to the DMC, agreed to be bound. Theoretically, a meeting of all the owners has greater power or authority to deal with the affairs of the building than an owners’ committee. But the fact remains that the statutory mechanism has not been employed, and it is not right to interpret s 34I(1)(a) in such a way as to give efficacy and power to Clause 27(l) which was a matter of contractual agreement that does not have the power to take away the protection given by Clause 24(c). 23.Mr Chan accepts that there is no written resolution (as allowed by Clause 27(l) of the DMC) provided for in the BMO, as opposed to meetings. Paper resolutions do not appear to have been envisaged as an alternative to meetings of owners required in various provisions of the BMO, and I doubt if under the statutory scheme of proceedings for meetings, it allows Clause 27(l) to override the requirement of meetings to authorise acts permissible under the BMO. 24.Moreover, R2 should not be allowed to pick and choose part of the contractual mechanism and part of the statutory mechanism to justify its action. Where it exercises its right or power under Clause 27(l) of the DMC, which is subject to not being contrary to the provisions of the DMC, and when the resolution passed by the exercise of the right was clearly in breach of Clause 24(c), I do not consider that R2 can use the statutory provision of s 34I(1)(a) to avoid Clause 24(c) or to make it invalid for being inconsistent with s 34I(1)(a), especially when at the same time, R2 did not comply with the terms of s 34I(1)(a) and could have established an owners’ committee in order to comply with s 34I(1)(a) but had failed to do so. For the effectiveness and validity of the four resolutions, R2 then says Clause 27(l) is even better than s 34I(1)(a) in the extent of power and authority. I do not consider that praying in aid the purposive construction of statutes will save the argument in the circumstances of this case. 25.It is to be noted that s 34I(1)(b) prohibits unreasonable interference with the use and enjoyment of the common parts of a building by any owner or occupier of the building or the causing of a nuisance or hazard to any person lawfully in the building. This provision is quite similar to Clause 24(c) and seems quite inconsistent with s 34I(1)(a) but comes right after it. The two provisions in s 34I(1)(a) and s 34I(1)(b) can co-exist. Clause 24(c) is to a large extent in line with s 34I(1)(b) and therefore it can co-exist with s 34I(1)(a) or at least such inconsistency as there may be is that recognised by s 34I(1)(b). As such, I am not persuaded that Clause 24(c) is liable to be struck down for being inconsistent with s 34I(1)(b), as Mr Chan argues. 26.Moreover, looking at the wording of the four resolutions, in particular those that mentioned the word “conversion” in their contents, I note that none had specified that the “conversion” was for converting a portion of the common areas of the Building to R2’s private use and enjoyment. The wording adopted does not give the reader any idea that the “conversion” was other than changing the layout of the common areas of the shopping arcade, rather than converting a portion of such common areas to an individual owner’s private use. That might have been done on purpose, but regardless, I consider that the written resolutions were not valid insofar as they purported to approve the conversion of the common parts of the Building to R2’s private use. Majority rule 27.Mr Chan places great reliance on the majority rule. He describes an owners’ committee as in a similar position to a board of directors whereas the owners as a whole of a building are similar to shareholders in general meeting, who have the final say and have power to dismiss the board. The shareholders in general meeting can by simple majority or by a special resolution approve or ratify what the board has done. If it is not satisfied with what the board does, the shareholders in general meeting can dismiss the board. He likens those to the respective positions of an owners’ committee and owners of the building in general meeting. If the owners’ committee can approve conversion of common parts of a building to private use, as provided for in s 34I(1)(a), not less than 75% of the owners signing a written resolution pursuant to Clause 27(l) of the DMC would be more powerful and authoritative than an owners’ committee in giving the same approval. Mr Chan argues that the larger includes and must be better than the lesser. Thus a resolution of owners of 77.09% of the shares in the Building in the present case must be sufficient to cover the requirement of a resolution by a simple majority of an owners’ committee consisting of seven or a slightly larger number of owners representing other owners in the Building. While the owners’ committee may owe a duty to act for the interests of the owners of a building generally, the owners in general meeting would owe no such duty, and insofar as they pass a resolution by the required majority, the court should not allow itself to take a view as to whether the resolution is for the interests of the owners of the building, let alone displace the majority view. 28.Mr Chan also draws assistance from various provisions of the BMO, namely, para 4 of the 8th Schedule and s 34J(3), to support his submission that the BMO recognises and gives effect to the majority rule. What is good and what is bad for the owners of a building as a whole must therefore give way to the majority rule, albeit subject to certain minority protection measures, just like the situation recognised by the law relating to companies. 29.Mr Chan has frankly informed us that the four resolutions had never been served on the other owners of the Building. But he says that is irrelevant, as the DMC does not impose such a requirement. He also stresses that no issue was ever raised before the Judge that the resolutions were not valid in terms for conversion of the common areas to R2’s private use. 30.The submissions of Mr Alan Leong SC, for the applicants, counter those of Mr Chan. Mr Leong submits that the whole idea of the BMO is to move away from the corporate scenario or scheme, in order to redress the unfairness that formerly concluded deeds of mutual covenant had caused to multi-storeyed buildings, to avoid developers dictating to small owners as to how the building is to be managed, and to give the owners the authority and power to decide what is best for the building. The owners’ committee (because of the number of persons required to form the committee and the quorum) is to give individual owners the equal opportunity to vote according to the number of owners and not the number of shares in the building. The BMO prefers an owners’ committee or an incorporated owners to a meeting of owners that most deeds of mutual covenant provide for. He relies on a number of provisions, eg, ss 34G, 34H and 34I, to show the legislative intent to move away from the corporate scenario, especially s 34I(2) which, according to him deems non-compliance with s 34I(1) a breach of a deed of mutual covenant. 31.Mr Leong points out that there is no difficulty for R2, as a 77.09% owner of the Building, to form an owners’ committee, by simply giving 14 days’ notice, but it had chosen not to do so. He suggests the possible reason to be that R2 might find it difficult to get four persons out of the seven persons required for an owners’ committee of the Building, who must be owners, to agree with it for business to be transacted in owners’ committee meetings. This also demonstrates, according to Mr Leong, that it is more difficult for a majority owner of a building to assert control than in a corporate scenario. He also points out that one single owner can apply to the Tribunal to dissolve the management committee (s 31), and the aim, so he submits, is to take the management of multi-storeyed buildings away from the corporate scenario. Moreover, there is no provision in the BMO for an incorporated owners to override the decision of an owners’ committee. All these point to the idea that the BMO’s intent is to no longer allow the majority rule of the corporate scenario to control the management of buildings. 32.I consider that counsel for both sides are partly, but not entirely, correct. I accept that the majority rule is recognised by the BMO, but not necessarily in the corporate sense. I also accept that one of the purposes of the BMO is to strike at the undesirable effect created by the old style deeds of mutual covenant, which used to govern the real estate sphere, that contained provisions that allowed the developer to retain control over the common parts of the building even long after he had sold most of the units of the building, and even allowed him to retain the management of the building and charge an unreasonable sum for managing the building. 33.The BMO provides for owners’ committees, incorporated owners and management committees to be formed and the management and control of the common parts of multi-owned buildings to be reposed in these organs. In order to avoid the strict common law rule of a complete consensus being required for dealing with commonly owned landed properties, the BMO allows majority rule in decisions concerning such matters, but such decisions are to be made in meetings of owners in such organs. There seems to be a certain significance placed by the BMO on meetings amongst the owners, so that there would be discussion amongst them for a decision to be reached. The scheme of the BMO appears to provide for acts relating to the building to be done through meetings of owners, of the owners’ committee, of the incorporated owners or of the management committee. Mr Chan accepts that there is no provision in the whole of the BMO for paper resolutions being used. This, to a certain extent, supports my view that decisions are to be made through these organs and no statutory provision allows paper resolutions signed by the owners owning the majority of shares in a building to replace decisions taken at meetings. 34.However, since I have come to a conclusion on the proper construction of the relevant sections of the BMO and the relevant clauses of the DMC as applicable to this case, no decision on these interesting questions of the majority rule or the corporate context is necessary. “(if any)” 35.S 34I(1)(a) is expressed in prohibitive terms with a let out by way of a resolution of approval by “the owners’ committee (if any)”. Without such a resolution, it is clear that the prohibition stands. Mr Chan argues that because of the existence of the words “(if any)”, the approval by the owners’ committee cannot be the only step provided by the provision for avoiding the prohibition. He submits that the two words allow approval by any other way open in the DMC or by any other form of agreement amongst all the owners, as alluded to in s 34D(4) of the BMO. He draws our attention to the similar wording in para 4(5) of the 7th Schedule to the BMO, which makes it unlawful for using the money in the “special fund” (similar to the Sinking Fund) save in an emergency unless it is approved by a resolution passed by “the owners’ committee (if any)”. He argues, therefore, the term “(if any)” shows that there must be ways other than a resolution by the owners’ committee allowed by s 34I(1)(a) where such a committee does not exist in a building, and that justifies his reliance on the four paper resolutions issued by R2 pursuant to Clause 27(l). 36.Mr Leong submits that the similar requirement of approval by an owners’ committee in s 34I(1)(a) and para 4(5) of the 7th Schedule of the BMO is a strict requirement that is only operable where there is an owners’ committee. If such a committee does not exist, the only way, which is not a difficult thing to do nor would it take much time (namely 14 days) is to form one. He argues that converting common parts to private use is not an ordinary daily occurrence, nor is the need to use the special fund (other than in case of emergency) frequent, and if the need arises, an owners’ committee that is required to give approval can be formed in a fortnight. He suggests that the words “(if any)” in the two provisions do not replace the requirement of a resolution by an owners’ committee. If the building does not have an owners’ committee, just form one. 37.Mr Leong has very helpfully drawn our attention to the many places where the same term is used in the BMO, such as “management committee (if any)”, “deed of mutual covenant (if any)” and “owners’ committee (if any)”, and in particular, s 22 of the BMO which deals with the contribution by owners towards expenses for the management of a building. S 22(1)(a) provides that the amount of contribution to be paid by owners should be in accordance with the deed of mutual covenant (if any), and s 22(2) states that where there is no deed of mutual covenant, then the amount should be fixed in accordance with the respective shares of the owners. Mr Leong argues that the term “(if any)” shows that the legislation merely states that if the building concerned has that organ or document, the act prescribed can be done by that organ or in accordance with that document. Otherwise, either another way is prescribed as in s 22(2), and if no other way is prescribed, one has to follow the only one way provided or nothing else. I am persuaded that this must be right. 38.When applied to the interpretation of s 34I(1)(a), which imposes a prohibition against conversion of the common parts for private use, unless a resolution of an owners’ committee approves to the contrary, in the absence of an owners’ committee, then the prohibition becomes absolute. I consider this is the correct interpretation. R2’s liability 39.It follows, therefore, that R2 had converted portions of the common parts in the shopping arcade to its own use and it is liable for such a conversion to the applicants who have thereby been deprived of the use, occupation and enjoyment of the area so converted. Another consequence is that the works that had been done for effecting the conversion should be considered as having been exclusively incurred for R2’s private use and the expenses therefor should not have been borne by the funds to which the applicants and other owners of the Building had made contribution. 40.A question of a claim for accounting of profits on the part of R2 who had converted the common parts in the shopping arcade to its own use was raised by Mr Leong during the hearing. After hearing argument, we decided against allowing him to make the claim. That was mainly because the claim was not made in the Notice of Application of the applicants before the Tribunal, nor was it mentioned by counsel for them even in his final submissions before the Judge. It was for the first time raised in the Notice of Appeal. Moreover, the Judge’s finding in this respect was that while he found that there was conversion of the common areas in the shopping arcade to the private use of R2 he was not able to quantify the area that had been taken in excess of the area that had been made available as common area in the shopping arcade after the works had been performed. 41.What is left under this head is the question of damages. Since the Judge’s finding was that he was not able to quantify the area taken away from the use and enjoyment of the owners other than R2, including the applicants, the fairest thing we can do on this score is to order nominal damages of $100 against R2. These nominal damages would also apply to R1 for failing his duty as Manager in allowing the conversion, unless it is exempt from liability by Clause 12 of the DMC. However, for the reasons that will be apparent under the next heading, I consider that the proper order is for these nominal damages to be paid by R2 and R1 respectively into the Sinking Fund. Damages or repayment 42.Another question is whether it is proper to order the respondents, and in particular R2, who had wrongly withdrawn the moneys from the funds, to repay the same amount to the respective funds. Counsel for the respondents does not challenge the propriety of this step, and accepts that insofar as this Court affirms the ruling that it was wrongful for R2 to have converted portions of the common parts in the shopping arcade to its own use, the inevitable result would be that R2 be ordered to repay the expenses for such conversion back to the Sinking Fund. 43.In R2’s Notice of Appeal, three grounds have been raised to challenge the propriety of the order for damages made by the Judge, namely,
44.I will examine these points to see if an order for repayment may be appropriate. 45.It is true that this is not a representative action. However, according to the duties of the Manager under Clauses 10, which generally were to do any acts and things as may be “necessary or requisite for the management” of the Building and other provisions of the DMC, such as Clause 13(d) and Clause 15(a), etc, the funds were to be applied for the benefit of the Building as a whole. Where moneys had been wrongfully withdrawn from the funds, the wrongdoer has to reimburse the funds with the amounts so withdrawn. That will keep the funds intact to be applied for the benefit of the Building, whosoever the owners are or will be. The applicants have an obvious interest to protect the funds. They are interested in the contributions made by owners not parties to this action, because the larger the funds, the less they would be required to contribute in the future. In case the annual budget prepared by the Manager is found by him to be insufficient to cover all expenditure, he shall prepare a revised budget and may determine additional contributions payable by each owner (Clause 13(g)). If the funds have been depleted without justification, insofar as the applicants remain owners of units in the Building, they will need to contribute further or more to the funds when it is necessary to use the money in them and when the funds are insufficient for the proper purposes. Having the moneys wrongfully withdrawn repaid into the funds will benefit the applicants’ pocket for the future. Their interest in the funds not being unjustifiably used is a sufficient basis for the court to order repayment back into the funds of the sums wrongfully withdrawn. 46.Points (b) and (c) in para 43 above now taken by the respondents were not pleaded before the Lands Tribunal. But the rules of pleadings are not applied strictly to the relatively informal nature of the proceedings in the Tribunal. Be that as it may, the applicants who have become owners after the completion of the works and after the moneys had been wrongfully withdrawn from the funds have an interest in having the moneys repaid back into the funds for the same reason stated above, because the contribution as may be required of them in the future would be reduced. Moreover, by virtue of Clause 16(c) of the DMC, they are entitled to have the repayment into the funds as successors-in-title of those owners who had made the contributions. 47.Those applicants who have ceased to be owners after the commencement of the action had an interest in such repayment because that would enure to the benefit of their successors-in-title. And anyway, when the action commenced they had a legitimate interest in making the claim. Even if their interest in the funds had been taken away by Clause 16(c) of the DMC after they sold their units, what they should only be precluded from doing is to recover damages by sharing in the amount wrongfully withdrawn. Other applicants who do not fall within this category have sufficient interest in seeking the repayment into the funds. 48.Mr Leong does not oppose an order for repayment in place of the order for damages in this regard made by the Judge. Obviously, in the circumstances of this case, he cannot possibly justify the order for damages. 49.Since the works were performed to improve the common areas in the shopping arcade that R2 had exclusive occupation, use and enjoyment under clause 4(a)(iii) of the DMC, there can be no justification for R2, as only 77.09% of the shares in the Building, to urge R1 to apply the funds contributed by all the owners or portions thereof to pay for the works. R2 must be liable to repay such moneys wrongfully drawn from the funds. The Judge had adopted a sum admitted by the respondents to be the amount so paid out of the Sinking Fund, namely $10,309,981.98, as the basis for the damages ordered to be payable by R2 to the applicants. The Judge ordered 20.50% of this sum to be paid to the 23 applicants in proportion to their respective shares in their contributions towards the funds. This, in my view, is clearly wrong, and the parties before us now share a common ground that each of the applicants should not be entitled to recover his own share in the sum as damages. This is because that according to the provisions of Clause 16(c) the DMC, the funds should only be divided proportionately between the owners of undivided shares upon the Building reverting to the government. 50.The applicants’ claim in the Lands Tribunal was not in the nature of a representative action. It was made by them for their personal interest. However, what the respondents have done wrongly was to use moneys in the Management Fund and/or the Sinking Fund to pay for the works which were not for the benefit of the applicants and owners of flats other than those on the basement to the 3rd floor owned by R2 exclusively. Under the DMC, the Management Fund and the Sinking Fund were to be applied for their respective particular purposes, and there cannot be a distribution of those funds amongst the owners of the Building, save in exceptional circumstances such as the Building reverting to the government. Ordering the respondents to pay damages to each of the applicants in the proportion of his contribution towards the funds as against the total amount wrongfully withdrawn from the funds by the respondents would be tantamount to allowing a breach of the DMC. This, the court should not do. 51.I am of the view that R2 is liable to repay the full sum into the relevant fund of the Building. The Judge found that the sum of $10,309,981.98 was taken out of the Sinking Fund. Therefore R2 should repay that sum together with interest back into the Sinking Fund. R1’s liability 52.The Judge refused all relief sought against R1. On R1’s liability, Mr Leong cites two paragraphs of the Judge’s judgment, as follows:
53.It is necessary to set out Clause 12 of the DMC for closer examination:
54.Mr Leong submits, and I think correctly, that a person is not guilty of wilful negligence unless he knows that he is committing, or intends to commit, a breach of his duty, or is recklessly careless in the sense of not caring whether his act or omission is or is not a breach of duty (see Hoi Kong Container Services Company Limited v Bewise Motors Company Limited [1997] 2 HKC 615, pp 626F-627A). Mr Leong further submits that the Judge had obviously overlooked the evidence and admission of the respondents that R1 and R2 shared the same office, common shareholders and common directors; it follows that R1 and R2 shared common knowledge that the works were to be done for the shopping arcade and for the exclusive benefit of R2 alone. 55.However, Mr Leong is faced with a finding of fact by the Judge that there was not wilful negligence on the part of R1, which wilful negligence would be the only basis for disapplying the exemption from liability provided by Clause 12 of the DMC to R1 as the Manager of the Building. Mr Leong submits that he is not challenging the Judge’s finding of fact, but rather seeks this Court’s decision on a matter of law. 56.Mr Leong submits that there was an inconsistency or incoherence in the Judge’s thinking process in that in para 18, he said he did not believe R1 had exercised any independent judgement while in para 19 he examined how R1 would and should have acted in the circumstances in considering whether it was covered by the exemption in Clause 12 of the DMC on the ground of lack of wilful negligence. I do not agree. What the Judge expressed in the two paragraphs of his judgment related to two different matters. First, he found that R1 had not exercised its independent judgement on the matter, and secondly, if it had, it would have been exempted from liability because there was no wilful negligence in its involvement in the conversion that was done in purported pursuance of the DMC. The Judge’s comments on R1 being negligent were in the context of its not having taken legal advice. 57.Mr Leong argues that since R1 as Manager owed a fiduciary duty towards all the owners of the Building including the applicants regarding the moneys in the two funds, and it owed a duty to all the owners that there should be no conversion of common parts to private use, it should have exercised an independent judgement on the things proposed to be done by R2. Such duties of R1 were heavier or it should have taken greater care in view of the fact that R2 was the majority owner and all the other owners formed only a minority and R2 was sharing common shareholders, directors and offices with it. Not exercising independent judgement in the matter was turning a blind eye to the blatant conflict of interest between R2 on the one part and the other owners on the other. R1 should have considered the interests of the other owners when it did not serve on the other owners the four resolutions signed by R2 or give any notice of them to the other owners. R1’s inaction in the thought process was therefore tantamount to a wilful and reckless disregard of its duties and the interests of the other owners. Either the Clause 12 exemption does not cover a breach of a fiduciary duty or even if it so covers, R1 was still wilfully negligent. 58.On the other hand, Mr Chan submits that Clause 12 covers the situation whenever R1 was acting or omitting to act in relation to his duties under the DMC, and thus the exemption is wide enough to cover both his contractual as well as fiduciary duties (ie the contractual duty to manage the Building as well as the fiduciary duty over the funds). I consider this a proper interpretation of the clause. 59.Mr Chan further argues that for R1 to be deprived of the exemption under Clause 12, it had to be found to be wilfully negligent. The Judge did not make such a finding. Moreover, “wilful negligence” could only be established if R1’s acts or omissions were blatantly wrong or it was blatantly negligent. The trial before the Judge took 30 days, at the end of which the Judge found that the resolutions were valid according to the provisions of the DMC. Regarding the finding of R1’s not having exercised any independent judgement, Mr Chan argues that it should depend on the particular circumstances of the case to see if there was wilful negligence. It is necessary to consider whether the resolutions were on the face of them clearly in breach of the DMC. If the answer was in the negative, then there could not be an intentional or wilful breach of R1’s duties under the DMC. R1’s failure to exercise independent judgement over the matter might be negligent, but not reckless, because the resolutions were not on the face of them unauthorised by the DMC or in breach of any law. 60.Due to the Judge’s failure to make any finding on the question of wilful negligence that obviously arose out of his finding that R1 did not exercise any independent judgement as building manager but merely followed the resolutions of R2, it has become a matter of law for us to decide. In my view, as the Manager of the Building, R1 by looking at the resolutions must have known that they involved the interference with the common parts of the shopping arcade and that the instructions to it by the last two resolutions were to withdraw moneys from the Sinking Fund of the Building to defray the expenses for the works regarding the shopping arcade that was owned by R2 alone. The conflict of interest between the individual owner R2 and all other owners of the Building must be crystal clear. Had R1 exercised its independent judgement, I do not think it would be guilty of wilful negligence in reaching a conclusion that the resolutions might have been justified by Clause 27(l) of the DMC as the Judge concluded. But R1 did not exercise any independent judgement of its own, and merely followed the instructions of R2. R1 clearly paid no regard to his contractual duty and fiduciary duty towards the other owners, and did not care whether or not this would be a breach of its duties to them. R1 was thus acting in reckless disregard of such duties. In this sense, I consider that R1 was wilfully negligent. It should therefore be found to be guilty of wilful negligence in breach of such duties in allowing the conversion to be carried out and the funds to be drawn upon to pay for the works. It should not be entitled to hide behind the exemption provided by Clause 12 of the DMC. Further sums to be repaid 61.Apart from the sum of $10,309,981.98 that R2 should be ordered to repay to the Sinking Fund, the applicants have raised three other groups of sums that should have been dealt with by the Judge. But they complain that the Judge had failed to deal with any of them. 62.Before one goes into these sums, a short explanation is due on the two funds established and kept by R1 under the provisions of the DMC, namely, the Management Fund and the Sinking Fund. The Sinking Fund was for defraying expenses on works in the nature of “major overhaul or replacement of facilities” (under Clause 15(a) of the DMC). The Management Fund was for management expenses and expenses of a recurrent nature incurred for the Building. Each of the owner’s contribution towards these two funds was in accordance with his share of contribution as provided for in the DMC. There was in fact no separate contribution towards the two funds. Contributions were made by the owners, and R1 as the Manager allocated such contributions at its discretion to either one or the other of the funds. The only relevance of the difference between the two funds in the circumstances of the present case is that R1 as the Manager charged 15% of the expenditure incurred for the management of the Building, which means the expenditure drawn out of the Management Fund, but not that drawn out of the Sinking Fund. R1 also drew out his 15% management fees from the Management Fund. Annexes A, B and C 63.Annex A, Annex B and Annex C have been prepared by those representing the applicants for the purposes of their cross-appeal. In respect of the Annex A items, totalling $256,139.46, Mr Leong alleges that they were items of expenses incurred purely for the benefit of R2 but had nothing to do with the applicants or other owners. These items may or may not relate to the works for the shopping arcade. Annex B sets out the items totalling $270,974.00 that had been allegedly expended for the works (ie for the shopping arcade) which had not been taken into account in the $10,309,981.98 admitted by R2 and taken by the Judge as the basis for calculating the damages he ordered to be paid to the applicants. Annex C contains items totalling $986,120.00 which the applicants say were sums taken out of the Management Fund which should have been taken out of the Sinking Fund. 64.Mr Leong urges that the sums in Annexes A and B should be repaid by R2 into the Management Fund because they had been spent for its own benefit and not for the benefit of the Building as a whole. Regarding the $986,120 in Annex C, the applicants’ case is that when the wrong booking to the fund is reversed, this sum should be used as the basis for calculating the 15% that R1 had overcharged, because R1 could only have been entitled to charge, and it had in fact charged, its 15% management fees where this sum was charged to the Management Fund but not if it had been properly charged to the Sinking Fund (see Clause 18(a) of the DMC). Apart from the sums in Annexes A and B which have to be repaid by R2 into the Management Fund, R1 had also overcharged the 15% on the sums in these two annexes. The overcharge by R1 can only be established when these various sums in the three annexes or parts of them are ascertained. 65.However, Mr Leong is faced with an argument advanced by Mr Chan on this score because Mr Leong needs to challenge the Judge’s findings of fact, which is not allowed. S 11(2) of the Lands Tribunal Ordinance provides:
66.Mr Leong submits that his appeal on these sums is based on a point of law which is against the Judge’s refusal to make any factual finding in respect of them. 67.The dealing by the Judge in his judgment of these and similar items was economical. He said:
68.While the Judge accepted the audited report, one has to examine whether that report dealt with the disputes between the parties. 69.The audited report had not specifically dealt with these items because it only purported to report on the audit of the accounts provided by the Manager to Price Waterhouse. There was no mention in the audit report that the auditor had examined the accounts against the disputes between the parties, eg, no differentiation was made in the report between expenditure that should have been drawn from the Sinking Fund (capital expenditure) although the opinion of the auditor was stated to be based on the budget prepared by R1 and in accordance with the provisions of the DMC. In my judgment, the Judge’s acceptance of the audit report did not actually concern the sums now set out in Annexes A, B and C. 70.The Judge did not rely on the applicants’ accountant’s evidence, which had been “totally discredited”. He also felt that the classification of the items as capital items or otherwise was within the purview of experts. Obviously he did not consider that he should come to any conclusion about the disputed items. In my judgment, this is where he went wrong. The Judge could certainly have been well assisted by experts given evidence on the items, but he would eventually have to reach his own conclusions, after considering the expert evidence. Without expert evidence, he should have still endeavoured to reach a conclusion on these items. He could well be justified to say that he was not satisfied with the applicants’ allegations as to certain items or he was satisfied with other items, bearing in mind that the onus of proof on such allegations was on the applicants. But the Judge was wrong not to have arrived at any conclusion, unless there was no evidence one way or another before him. 71.It does not seem to me that there was no evidence before the Judge; rather there was an abundance. There were certain items in Annex C, eg, amounts spent on an air-conditioning or chilling system, which were clearly items of capital expenditure, while other items were less clear. But that would not have entitled the Judge not to reach a conclusion, one way or another. Mr Chan informs us that 20 days had been spent on various items before the Tribunal and four witnesses gave detailed evidence on them, namely, the accountant called by the applicants, whose evidence the Judge said was thoroughly discredited, Mr William Lee of R2, R2’s building expert as well as R2’s building manager. I feel sympathetic with the Judge for having to go through the tedium of having to listen to evidence on and examining numerous items of sums and voluminous invoices and bills for such a long period, and he did not have the assistance from the legal representatives of both parties in the form of a Scott Schedule to lessen his burden. Yet, all these are not reasons for him not to reach a conclusion on any of the items. 72.The proper thing for this Court to do, I should think, is to remit the figures in these three Annexes to the Judge so that he would make a finding in respect of each and every item, according to the evidence that had been adduced before him, including all the relevant documents. The parties’ legal representatives should jointly prepare a Scott Schedule for the purpose. The parties should be allowed to address the Judge, but their submissions must be limited to the items contained in the three annexes. If and when the Judge decides there were items in Annexes A and B that should have not been booked to the Building but should have been booked to R2 instead, such sums as found should be repaid by R2 to the Sinking Fund or the Management Fund of the Building, as appropriate. When the Judge decides on any sums in Annex C which should have been properly booked to the Sinking Fund and not the Management Fund, such sums should be added to the sums in Annexes A and B found due as aforesaid, and the sum total should be used as the basis for 15% thereof to be repaid by R1 as overcharge of its management fees back into the Management Fund. 73.I will briefly explain the basis for R1’s liability in this respect. R1’s remuneration is, according to clause 18(a) of the DMC, charged at 15% of the expenses incurred for the management of the Building, including the expenses incurred for the works. As I hold that the expenses incurred for the works had been for the benefit of R2 alone and not for the common parts of the Building for general enjoyment, R1 had no right or justification to charge the 15% for its management fees. R1 is therefore obliged to repay the involved amount, ie 15% of the sum total found as aforesaid back into the Management Fund. This is not a matter within the ambit of Clause 12 of the DMC because this was R1 overcharging for its management fees. R1 had no authority or justification for making such a charge. It must repay the overcharged amount into the fund from which it was taken. R1 has to repay the overcharged amount with interest in the same terms as R2’s repayment. Conclusion 74.For the above reasons, I would make the orders in the following paragraphs. 75.Albeit partially successful in getting this Court to set aside the Judge’s order for damages, R2’s appeals in both CACV 186/2003 and CACV 400/2003 be dismissed with costs. The reason for the costs order can be seen below. 76.The applicants’ cross-appeal in CACV 186/2003 is allowed. The Judge’s order for damages to be paid to the applicants is set aside, and R1 and R2 are ordered, jointly and severally, to pay the sum of $10,309,981 into the Sinking Fund of the Building forthwith together with interest from the date of the notice of application until the date of payment at the judgment rate. 77.R2 is to pay $100 as nominal damages for the conversion of the common parts in the shopping arcade to its own private use. R2 is to pay this sum into the Sinking Fund forthwith. 78.R1 is to pay $100 as nominal damages for allowing the conversion of the common parts in the shopping arcade to R2’s private use and for its withdrawing out of the funds of the Building for paying the expenses for the works involved. R1 is to pay this sum into the Sinking Fund forthwith. 79.The figures in Annexes A, B and C above are remitted back to the Judge for a finding to be made in respect of each and every item, according to the evidence that had been adduced before him, including all the relevant documents. No further evidence is to be adduced by any party. The parties’ legal representatives should jointly prepare a Scott Schedule for the purpose. The parties be allowed to address the Judge, but their submissions are limited to the items contained in the three annexes. If and when the Judge decides there were items in Annexes A and B that should have not been booked to the Building but should have been booked to R2 instead, such sums as found should be repaid by R2 to the Management Fund of the Building. When the Judge decides on any sums in Annex C which should have been properly booked to the Sinking Fund and not the Management Fund, such sums should be added to the sums in Annexes A and B found due as aforesaid, and the sum total should be used as the basis for 15% thereof to be repaid by R1 as overcharge of its management fees back into the Management Fund. The repayment by R1 and R2, as the case may be, should bear interest on the amount found due from the date of the notice of application until the date of repayment at the judgment rate. There be liberty to apply before the Judge. The costs of the remitted matter are to be decided by the Judge. 80.As to the costs of the applicants’ cross-appeal in CACV 186/2003, although the Judge’s order for damages is set aside, that order was a consequence of the applicants’ claim for damages, instead of their seeking an order for repayment of the said sums into the respective funds. Moreover, the applicants have sought indulgence of this Court by a summons dated 1st June 2004 to amend their notice of appeal in order to make clear the three sums mentioned in Annexes A, B and C. And yet, until they made the concession at a late stage during argument before us, they had still relied on their claims for damages to be paid to the applicants instead of the repayment by R2 and R1 of the sums back into the respective funds. The repayment order was made as a consequence of R2’s appeal. In my view, the appropriate costs order would be no order as to costs on the applicants’ appeal and their summons. This has taken into account the costs aspect of R2’s appeals being dismissed with costs, referred to above. 81.For the costs in the Tribunal, the Judge had ordered the applicants to pay the costs of R1, the applicants to pay 30% of the costs to R2, and R2 to pay 70% of the costs to the applicants. In view of the results of these appeals, I would set aside the Judge’s order for costs of the proceedings in the Tribunal, while maintaining the certificate he granted for counsel’s appearance. The order of costs in the proceedings below that I would make is as follows:
82.As we have not heard the parties on costs, the above orders for costs both here and below are necessarily orders nisi. Hon Le Pichon JA: 83.I agree with the judgments of Woo VP and Yuen JA. Hon Yuen JA: 84.I have had the benefit of reading in draft the detailed judgment of the Vice-President and I agree with the orders proposed. I would only briefly set out my own views on some of the submissions advanced by Mr Warren Chan SC for the Respondents. Conversion of common parts for 2nd Respondent’s private use 85.The question at the heart of the appeal on “liability” is this: what right or power does the 2nd Respondent have to private use of the common parts? 2nd Respondent has no power under s.34I(1)(a) BMO 86.Section 34I(1)(a) of the Building Management Ordinance provides:
87.As I read it, the first part of this subsection ("no person may convert any part of the common parts of a building to his own us"), as a general rule, prohibits conversion of common parts to private use. However if there is an owners’ committee, then the prohibition may be lifted by the owners’ committee. If there is no owners’ committee, then the general rule applies and the prohibition is absolute. In my view, that is all that the words "if any" mean in this subsection and it is not necessary to consider what the words might mean in any other part of the Ordinance. 88.The 2nd Respondent cannot take advantage of s.34I(1)(a) because it is not an "owner’s committee". 89.Mr Chan SC submitted that if an owners’ committee can lift the prohibition, a 77% majority owner should also be entitled to do so. 90.With respect, first, that is not what the legislature has provided. The legislature has stipulated that it is only the owners’ committee (as defined in the BMO) which has this power. 91.Secondly, the owners’ committee has duties as well as powers. The decisions of the owners’ committee must be taken for the benefit of the management of the building as a whole. Mr Chan SC did not challenge this. He agreed that as an owners’ committee is a representative body, it would owe a duty to act in good faith and for the purposes of advancing the proper management of the building. This must be so even though a member of the committee may, qua owner, have interests which may be incompatible with other owners. 92.By reason of the above, even if the 2nd Respondent were, by means of diffusing its holdings, to "flood" the owners’ committee (if one is to be formed) and thereby to procure a resolution to convert common parts for the exclusive use of the 2nd Respondent, that resolution might still be open to challenge by minority owners. 93.Therefore, it does not follow that simply because the 2nd Respondent owns 77% of the shares of the Building, it can exercise the powers given by statute to the owners’ committee under s.34I(1)(a). 2nd Respondent has no power under Clause 27(1) 94.As for Mr Chan SC’s submission based on Clause 27(l) of the DMC, this provides simply that a written resolution of an owner who owns more than 75% "shall be as valid and effectual as if it had been passed at a duly convened meeting of the owners". 95.This is a purely procedural provision obviating the need to convene a meeting. It confers no substantive rights. A resolution of the same majority – even if passed at a duly convened meeting of the owners – cannot override the substantive provision in Clause 24(c) that no common parts may be used for private purposes. A written resolution cannot do better. Clause 24(c) not overridden 96.Mr Chan SC submitted that Clause 24(c) could be overridden because it has been “struck down” by s.34C of the BMO. He relied on s.34C(2) which provides “in the event of any inconsistency between this Part and the terms of a deed of mutual covenant or any other agreement, this Part shall prevail”. Mr Chan SC submitted that since Clause 24(c) prohibits conversion altogether but s.34I(1)(a) permits it (albeit with the approval of the owners’ committee), Clause 24(c) no longer stands. 97.With respect, I do not agree. Section 34C(2) should not be construed as if it renders covenants in a DMC automatically null and void, just because the BMO contains a provision that would deal with the same matter differently in a particular situation. 98.Section 34C(2) provides simply that in the event of an inconsistency, then the statute should prevail. In considering whether there is any inconsistency, one must consider how the relevant covenant and statutory provision would respectively function in the present "real-life" situation, rather than their possible dysfunction in a theoretical situation. 99.As discussed above, s.34I(1)(a) provides that common parts are not to be converted (unless the owners’ committee permits it). The general prohibition is perfectly consistent with Clause 24(c) which also prohibits private use of common parts. 100.Of course if an owners’ committee is formed and if it validly resolves to approve the conversion of common parts for private use, the section would prevail over the general prohibition in Clause 24(c). That however is not the case here. In the absence of an owners’ committee, both Clause 24(c) and s.34I(1)(a) have the same function and they both result in the same effect - they both prohibit private use of common parts. I therefore see no inconsistency. 101.The 2nd Respondent therefore has no right or power, whether under statute or under the DMC, to convert common parts for its private use. 1st Respondent’s liability 102.As for the 1st Respondent’s liability, I would respectfully agree with the Vice-President that it was wilfully negligent in acting directly upon the 2nd Respondent’s resolutions without having even considered taking steps to ascertain the validity of the resolutions and the propriety of acting on them. 103.As manager, the 1st Respondent must have been aware of Clause 24(c) of the DMC, which prohibits what the 2nd Respondent was proposing to do. Section 34I(1)(a) is also clear and unambiguous, and the 1st Respondent would also have known that there was no owners’ committee. 104.When the 1st Respondent received the 2nd Respondent’s resolutions, the conflict between the 2nd Respondent of the one part and the other owners of the other part (a conflict involving considerable construction works and substantial sums to be taken from the funds) could not have been clearer or more obvious. 105.One would expect any manager of a development and custodian of funds to have sought legal advice on the 2nd Respondent’s resolutions. The 1st Respondent never did so. Indeed, the judge found as a fact that the 1st Respondent never even considered taking steps to exercise an independent judgment of its own, as a corporate entity separate from the 2nd Respondent. In my view, this amounts to a complete negation of its obligations as a manager and custodian of funds, and as such, the 1st Respondent was wilfully negligent in the performance of its duties. Relief 106.As for the appropriate relief, it is clear that this court cannot award substantial damages for breach of contract to the individual Applicants. In my view, one need not go beyond Clause 16(c) which stipulates that the funds “shall be held and applied” for the overhaul and management of the Commercial Development irrespective of changes in ownership of the undivided shares. There can be no question of payment to the Applicants as individual owners as they are not entitled to distributions from the funds. As to the rights (if any) of previous owners who may have been made to make further contributions to the funds on the assumption that money had been validly taken from the funds for the conversion, that is not in issue before us. 107.Mr Chan SC has conceded that if he is wrong on the validity of the resolutions, the Respondents are liable to repay the sums into the funds. It is therefore not necessary for this court to consider whether the order to reinstate the funds should be founded on the basis of a mandatory injunction or some other equitable or proprietary basis.
Mr Alan Leong SC and Mr Walter Lau, on the instructions of Messrs M K Lam & Co, for the Applicants Mr Warren Chan SC and Mr Law Man-chung, on the instructions of Messrs Deacons, for the 1st Respondent and the 2nd Respondent |
Cases cited in this judgment
Further hearings and rulings under CACV 186/2003