The Incorporated Owners of Helena Garden v. Tso Man Tsun Gordon and Another
Read the full judgment text of LDBM 107/2004 on BabelCite. This Lands Tribunal judgment was delivered on 12 November 2004.
1. The Applicant is the Incorporated Owners of Helena Garden, an apartment building located at 263 Prince Edward Road West, Kowloon, Hong Kong (“Helena Garden”). On 16 December 2003, the Applicant commenced an action (i.e. action No. SCTC110904/03) against the 1 st Respondent in the Small Claims Tribunal for the recovery of the 2 nd installment of the fee in the sum of $5,006 for the renovation project in Helena Garden and the land search charges in the sum of $15. Pursuant to the Order of the
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LDBM 107 of 2004 IN THE LANDS TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION BUILDING MANAGEMENT APPLICATION NO. 107 OF 2004 BETWEEN
Coram: Member W K LO Dates of hearing: 15 September 2004 and 28 September 2004 Date of judgment: 12 November 2004 ____________ JUDGMENT ____________ Background 1.The Applicant is the Incorporated Owners of Helena Garden, an apartment building located at 263 Prince Edward Road West, Kowloon, Hong Kong (“Helena Garden”). On 16 December 2003, the Applicant commenced an action (i.e. action No. SCTC110904/03) against the 1st Respondent in the Small Claims Tribunal for the recovery of the 2nd installment of the fee in the sum of $5,006 for the renovation project in Helena Garden and the land search charges in the sum of $15. Pursuant to the Order of the Small Claims Tribunal’s adjudicator, the action was transferred to the Lands Tribunal (“the Tribunal”) for trial. Subsequently, the Applicant filed on 19 May 2004, an application as amended on 6 July 2004 and 7 September 2004, in the Lands Tribunal applying for an order against the 1st and 2nd Respondents relating to contribution fee for the renovation project in Helena Garden at $5,006 plus land search fee of $15, plus interests and costs, as well as the costs in the action in the Small Claims Tribunal against the 1stRespondent. 2.The 1st and 2nd Respondents are the registered co-owners / tenants-in-common of Flat B on 2nd Floor and Carparking Space No. 34 on Basement Floor of Helena Garden (hereinafter described collectively as “the Premises”). The 1st Respondent holds 1/4 of the interest in the Premises whilst the 2nd Respondent holds 3/4 of the interest. At the material time, the 1st Respondent was and is a director of the 2nd Respondent, residing and occupying the Premises. The 1st and 2nd Respondents acquired ownership of the Premises subject to and with the benefit of the Deed of Mutual Covenant and Management Agreement dated 12 September 1991 and registered in the Land Registry by Memorial No. 5021980 (“the DMC”). 3.It was not disputed by the 1st and 2nd Respondents that under the DMC of Helena Garden, the Applicant had the power to collect contribution for the renovation project from all the ownersprovided that the Applicant properly obtained the necessary resolutions from the owners’ meeting(s). In fact, paragraph 10(c) of the DMC provides that “All Owners for the time being of the Building shall bear and pay for all expenses incurred or to be incurred by the Manager as the Manager in their absolute discretion deem fit or determine for the proper management of the Building…” whilst paragraph 10(e) of the DMC also provides that “Each Owner… shall bear and pay for a proportion (hereinafter called “the management fee”) of the total sum budgeted by the Manager to cover the Management Expenses. Such proportion shall be calculated by reference to the Management Share(s) allocated to the portion(s) of the Building…” 4.It was common ground that on 28 June 2001, it was resolved, inter alia, at a duly convened Annual General Meeting of the owners of Helena Garden (“AGM of 28 June 2001”) that the drainage pipes of Helena Garden should be replaced and the external walls of Helena Garden should be renovated/cleaned (“the Renovation Project”). 5.Also, it was common ground that it was resolved, inter alia, at an Extra-ordinary General Meeting of the owners of Helena Garden (“EGM of 24 January 2002”) duly convened on 24 January 2002 that each owner therein should pay the fees for the Renovation Project by 3 equal installments. The 1st installment was required to be paid in February 2002, the 2nd installment was required to be paid in April 2002 and the 3rd installment, in June 2002. It was further resolved by the EGM of 24 January 2002 that the amount of each installment should be equal to two months’ management fees of each flat, including that of the car parking space where applicable. Any surplus of the fund collected for the Renovation Project would be retained in the maintenance fund of Helena Garden for maintenance works in the future. There was no dispute between the parties that each said installment of the Premises payable by the 1st and 2nd Respondents amounted to $5,006. 6.The Applicant pleaded that although the 1st and 2nd Applicants had paid the 1st installment for the Renovation Project, they had failed and / or refused to pay the 2nd installment of the fees for the Renovation Project despite repeated demands by the Applicant and / or China Overseas Property Services Ltd. (formerly known as Gold Court Property Management Ltd.), the Manager of Helena Garden. The Applicant claimed that this was in breach of the resolutions of the AGM of 28 June 2001, the EGM 24 January 2002 and the DMC. Hence, the Applicant instituted action in the Small Claims Tribunal and then, the present proceedings in the Lands Tribunal in May 2004. Crux of the parties’ disputes 7.On 5 June 2002, the owners of Helena Garden held another EGM (“EGM of 5 June 2002”), during which several resolutions were passed. According to the 2 Respondents, the crux of this Application was: what were passed during this EGM, the true meaning of the resolutions and whether the Applicant had subsequently complied with the owners’ resolutions reached in this EGM. 8.The Applicant pleaded that the two resolutions for the two items of the Renovation Project reached during the EGM of 5 June 2002 were the same. These resolution, in Chinese, namely, “大部份業主決定將上述工程容後再議” meant only the postponement of the passing of the resolution for the Renovation Project. As a result, the resolutions of AGM of 28 June 2001 and EGM of 24 January 2002, so far as they related to the contribution for the 1st and 2nd installments, should not be affected by the said resolutions of the EGM of 5 June 2002. However, the Applicant also pleaded that the contribution for the 3rd installment of the fees for the Renovation Project was withheld pending further instructions/resolution of the owners of Helena Garden. On the other hand, the 1stRespondent denied the meaning of these resolutions as constructed by the Applicant. Instead, he averred in the Notice of Opposition that the true meaning of the resolutions was that everything in connection with the Renovation Works, including all the contribution to funds which had been validly resolved by the two previous owners’ meetings of 28 June 2001 and 24 January 2002, should be completely withheld, or suspended, or postponed or adjourned pending further discussion and / or resolution by the owners of Helena Garden. 9.The Applicant also pleaded that by a further EGM of the owners of Helena Garden held on 18 October 2002 (“EGM of 18 October 2002”), it was resolved, inter alia, to proceed again with the Renovation Project, which was later practically completed by the end of December 2002. On the other hand, the 1stRespondent submitted that the said resolution of EGM of 18 October 2002 was simply not valid because there was no proper agenda for the resolution, which was only discussed as an “A.O.B.” item. 10.The Applicant further pleaded that by a meeting of the Management Committee dated 7 March 2003 (“the MC of 7 March 2003”), it was resolved that it was no longer necessary to request the owners of Helena Garden to pay the 3rd installment as the Renovation Project was completed in or about December 2002 and that the funds received from the 1st and 2nd installments were already sufficient to cover the expenses of the Renovation Project. On the other hand, the 1stRespondent alleged that the said resolution of the MC of 7 March 2003 was not binding on the owners of Helena Garden because it was not passed by any owners’ meeting and it contradicted the previous resolutions of the owners in the EGM of 5 June 2002. Ground of opposition of the 2nd Respondent 11.The 2nd Respondent was represented by another firm of solicitors. No witness was called by the 2nd Respondent, which obviously relied on the evidence of Mr. Gordon Cho. The 2nd Respondent filed a notice of opposition on 10 August 2002, along a similar line to that of the 1st Respondent. In summary, the case put up by the 2nd Respondent was clearly summed up in the final written submission, as follows: -
AGM of 28 June 2001 and EGM of 24 January 2002 12.Although the parties did not have any dispute on what were resolved in the AGM of 28 June 2001 and EGM of 24 January 2002, it is necessary for the Tribunal to note the exact wordings of the agenda and the resolutions of these 2 owners’ meetings in order to find out what were resolved and the sequence of the resolutions. The Tribunal finds that the extents and the exact meanings of the resolutions passed in these 2 meetings may have a bearing on whether they have been superseded or complemented by resolutions in subsequent owners’ meetings (particularly the EGM of 18 October 2002) and the MC of 7 March 2003. 13.For the AGM of 28 June 2001, it was clearly stated in the agenda (page 235 of the Bundle Exhibit AR-1) and the minutes of the meeting (page 102, AR-1) that the owners were to resolve the contribution to funds for the Renovation Project. In the agenda which was all written in Chinese, the words“商討及議決通過安裝下列工程項目進行集資” (underline added), which stand for “to discuss and to resolve the contribution to funds for the works items”, were used. The meeting resolved that the drainage pipes of Helena Garden should be replaced and that consultant be employed to provide professional opinion to the Applicant and to handle the tender matters. Also, the meeting resolved that the external walls of Helena Garden should be renovated / cleaned and that the Management Committee would in due course convene another owners’ meeting to decide on the details of the renovation and cleaning works for the external walls. In short, it was resolved by the owners that, in principle, the Renovation Project comprising the two works items should proceed. In particular, the owners’ meeting approved to go ahead with the collection of contribution to funds. 14.Similarly, for the EGM of 24 January 2002, it was clearly stated in the agenda (page 236, AR-1) that the details of the contribution to funds for both of the works of replacement of drainage pipes and the renovation & cleaning of the external walls of Helena Garden (in Chinese, “商討及議決通過下列工程項目集資細則” (underline added)) was to be resolved. Although the agenda of both the EGM of 24 January 2002 and the earlier AGM of 28 June 2001 covered the contribution to funds (in Chinese, 集資), the agenda of the EGM of 24 January 2002 centred on the details of the contribution (in Chinese, 細則). Again, in the minute of the meeting (page 105, AR-1), it was clearly recorded that the meeting overwhelmingly approved the resolutions on the contribution to funds for both of the above said 2 items of works. In particular, it was clearly recorded that the tenders were not yet called. However, the owners already resolved to start contributing to the funds, in the total sum of about $900,000, which had been estimated by the Manager to be required for the above said 2 items of works. 15.In the minute of the EGM of 24 January 2002 (page 105, AR-1), it was further resolved that the contributions from the owners should be made in 3 installments, with each installment to be equivalent to the sum of two months’ management fee of the premises in question. The Manager of Helena Garden computed that the total contribution of all 3 installments from all the owners would amount to a sum of $904,962, which exceeded the estimated amount of $900,000 required for the works. Finally, it was resolved by the owners that any surplus from the contribution from all the owners would be transferred to the management fund of Helena Garden (the minutes, in Chinese were “餘額將撥入海倫苑營運基金內”) (page 105，AR-1). 16.The Tribunal finds that it is quite normal for any incorporated owners of any building to consider and resolve any resolution concerning renovation of the common parts of the said building under 3 stages: firstly, to decide whether the building requires the renovation project in principle; secondly, to have an estimate of the extent of the renovation works and the necessary expenditure as well as resolving on the amount of contribution to funds for the renovation project, including the manner of apportionment among the owners; and thirdly, to resolve on the details of the renovation works including the award of tenders to the chosen contractors. This was a reasonable approach because before the incorporated owners was certain of the total amount of contribution and before collecting the contribution to funds it would usually be premature to consider and resolve the details of the renovation works. 17.In the present case, it is obvious from the chronology of events, the agenda and the minutes of the AGM of 28 June 2001 and the EGM of 24 January 2002 that the Applicant chose the above said staged approach. The two meetings resolved the matters in the first 2 stages of the 3-stage approach leaving the third stage to be decided and to be resolved later. These include the exact details of the renovation project including the choice of materials, the choice of contractors and the award of tenders. Needless to say, before the tenders were received and awarded, it would not be possible to know the exact details and expenditure of any renovation project too. 18.Summing up, the Tribunal finds that the resolutions of the 2 owners’ meetings of 28 June 2001 and 24 January 2002 were valid and binding on all the owners of Helena Garden, including the 1st and 2nd Respondents, being the joint owners of the Premises. Also, these meetings covered both (i) the extents of the renovation works, i.e., both the replacement of the drainage pipes, and the renovation and cleaning works for the external walls and (ii) the amounts of contribution to funds by all the owners including the method of apportionment among the owners as well as the due dates for payment of each installment. The question is, whether and how the resolutions of these 2 meetings were to be superseded by the resolutions of EGM of 5 June 2002. EGM of 5 June 2002 19.The Applicant pleaded that it was resolved in the EGM of 5 June 2002, inter alia, “to postpone the passing of the resolution for the Renovation Project and therefore, the contribution for 3rd installment of the fees for the Renovation Project was withheld pending further instructions/resolution of the Owners of Helena Garden”. 20.On the other hand, the 1st Respondent stated in his Notice of Opposition that during the EGM of 5 June 2002, the owners had resolved that: -
21.Because of the importance of resolutions of the EGM of 5 June 2002, the Tribunal sets out below the agenda of the meeting (page 237, AR-1), in Chinese, as follows: -
Also, the same resolutions shown in the minute of the meeting (page 117, AR-1) relating to the two items of works of the Renovation Project, also in Chinese, are extracted and reproduced below: -
EGM of 18 October 2002 22.It was the Applicant’s case that after the Renovation Project was postponed by the resolutions of the owners in the EGM held on 5 June 2002, the owners resolved in a further EGM of 18 October 2002, inter alia, to proceed with the Renovation Project, which was practically completed by the end of December 2002. 23.The 1st Respondent submitted that the purported resolution of EGM of 18 October 2002 on the Renovation Project was invalid for the simple reason that the notice of meeting dated 3 October 2002 “did not contain any agenda in relation to the revival or re-activation of the contribution to the Renovation Works by the owners of the Building including the 1st Respondent…”. As a result, the 1st Respondent submitted that the previous resolutions of the EGM of 5 June 2002 were still valid and binding on the owners of Helena Garden including the 1st Respondent and the Applicant. 24.Also, it was submitted by the 2nd Respondent that the scope of works mentioned in the EGM of 18 October 2002 differed from the scope of works as stated in the resolutions passed at the EGM of 24 January 2002. Also, the amount of the total contribution conceived at the EGM of 24 January 2002 was $904,962 while the actual amount for the new plan for contribution alleged to have been approved in the EGM of 18 October 2002 was $519,085.80. Management Committee meeting of 7 March 2003 25.It was also the Applicant’s case that in a meeting of the Management Committee held on 7 March 2003, it was resolved that it was no longer necessary to request the owners of Helena Garden to pay the 3rd installment as the Renovation Project was completed in or about the end of December 2002 and the funds received from the 1st and 2nd installments were sufficient to cover the expenses of the Renovation Project. 26.The 1st Respondent submitted that the alleged resolution of the Management Committee meeting of 7 March 2003 was not a valid resolution of the owners’ meeting of Helena Garden because firstly, it was not an owners’ meeting and secondly, the notice of the Management Committee meeting, which was dated 27 February 2003, did not contain “any agenda in relation to the payment of the 1st and 2nd installments of the contribution or any liability to the contribution.” Again, as a result, the 1st Respondent submitted that the previous resolutions of the EGM of 5 June 2002 were still valid and binding on the owners of Helena Garden including the 1st Respondent and the Applicant. Evidence of witnesses 27.Ms. Eva Wong, the Chairman of the Applicant since July 2002 gave evidence. Mr. Gordon Tso, the 1st Respondent, who was the Chairman at the time of holding the EGM of 5 June 2002, also gave evidence. However, the two witnesses gave very conflicting evidence. There is no other factual witness from both the Applicant and the 2 Respondents. However, one thing was very clear from the evidence of both witnesses. The atmosphere of the meeting was not good. This was due to the disputes among the owners over the Renovation Project prior to the EGM of 5 June 2002. 28.The following is an account of what happened before the meeting, extracted from the written submission of the counsel for the 1st Respondent: “Before the Meeting dated 5.6.02
29.The EGM of 5 June 2002, which was called by over 5% of all the owners of Helena Garden (including Ms. Eva Wong), was well attended by a very high turnout of owners. According to Mr. Gordon Tso, the meeting was very chaotic as owners representing the 5% owners calling for the EGM spoke out in support of their causes. 30.Ms. Eva Wong said that before the meeting ended, it was resolved that the 2 items of works of the Renovation Project previously approved by the 2 earlier owners’ meetings (i.e. AGM of 28 June 2001 and EGM of 24 January 2002), were to be postponed, and therefore, the contribution for the 3rd installment of fee was withheld pending further instructions/resolution of the owners of Helena Garden. 31.On the other hand, Mr. Gordon Tso said the following contradictory evidence in his written statement.
32.It was Mr. Gordon Tso’s evidence that the key words used in the minute of the EGM of 5 June 2002; “容後再議” were actually suggested by a Mr. Jim, a member of the Management Committee at the time of the EGM. The phrase, if translated literally, means “pending further resolution”. When being questioned why the minute of the EGM of 5 June 2002 was so short, and not in such details as what he had stated in his written Statement, he explained that although he agreed to sign on the Minutes sometime later, it was all prepared by the Manager of Helena Garden, which also provided secretarial service to all the owners’ meetings. 33.The Applicant submitted that Mr. Tso’s and the 1st& 2ndRespondent’s interpretation of the meaning of the minutes of the EGM of 5 June 2002 were both wrong. They were not recorded in the minute. On the contrary, the minute (page 116-117, AR-1) suggested otherwise as it only said that pending further resolution, the works would be deferred. The minute in Chinese read as follows:“由於根據投票結果大部份業主決定將上述工程容後再議，管理公司將應各業主決定延遲有關工程”。 34.The Applicant submitted that the 2 Respondents’ interpretation of the term “容後再議” was certainly different to all other owners as all of them, except the 2 Respondents, had paid the 2nd installment. And, even the person (Mr. Jim) who said to be the person proposing the said term in the minutes of the meeting had paid for the 2nd installment. 35.In addition, the Applicant drew the Tribunal’s attention that the 1st Respondent’s contention as contained in the notice of opposition had never been mentioned by him at any time before the Lands Tribunal proceedings, neither in his open letters to the owners of Helena Garden (page 215, 216 and 219 of AR-1),nor in the defence filed by him in the similar action taken out by the Applicant in the Small Claims Tribunal (page 212, AR-1). Findings of the Tribunal 36.The Tribunal, after taking into consideration the totality of evidence adduced by the parties and on the balance of probabilities, finds that the resolutions of the EGM of 5 June 2002 could not have the effects as suggested by the 1st Respondent. 37.The Tribunal finds that although the agenda for the EGM of 5 June 2002 was, inter alia, to revive the discussion and resolution for the two items of works (page 237, AR-1), it was clear in the agenda that it related only to works matters. There was no mention in the agenda of the contribution to funds. 38.There was also no clear minute in the resolutions of 5 June 002 as to whether the funds (which were already being collected by installments) should be refunded and whether the contribution should cease, and if so, whether the 2nd installment should cease to be collected, or whether both the 2nd and 3rd installments should cease to be collected. Therefore, if it was the resolution of the EGM of 5 June 2002 “to start everything afresh and consider whether to continue the works”, there was no reason whatsoever that the minute of the meeting was so worded. 39.The 1st Respondent submitted that according to the historical sequence of resolutions of the Applicant, the resolution for works preceded the resolution for contribution. Therefore, if the owners resolved on 5 June 2002 to postpone the renovation works and to cease the works immediately pending further resolution, it must follow that both the renovation works and the payments ceased. This argument was not accepted by the Tribunal because as shown earlier in this Judgment, the Applicant, like most other incorporated owners had decided long time ago, well before they employed consultants and called for tenders, and before the details of the renovation project was finalized, to approve the Renovation Project in principle, and to start collecting the contribution to funds. So, it is not correct to say that if the owners’ meeting decided on 5 June 2002 to postpone the Renovation Project (which could include to postpone the decision on the choice of materials, the choice of contractors, etc.), the owners’ meeting meant also to cease to continue collecting the contribution to funds from the owners. 40.Moreover, if we look at the options opened to the owners before they voted on the 5 June 2002, it was clear that, in the case of the drainage works, the owners had the choice of opposing the works. If the Tribunal agrees with the view of the Respondents, the resolutions so reached in the EGM of 5 June 2002 meant both the cessation of renovation works as well as the cessation of collection of installments of contribution to funds, the owners’ resolution would then have the same effects of opposing the works. And this could not be right. 41.As analyzed earlier in this Judgment, it is quite normal for any incorporated owners to resolve matters relating to renovation works in stages and the evidence adduced by the parties relating to the AGM of 28 June 2001 and EGM of 24 January 2002 satisfied the Tribunal that this approach was indeed adopted by the Applicant prior to the EGM of 5 June 2002. Also, it was the evidence of the 1st Respondent that the major dispute raised by the 5% owners who called for the EGM of 5 June 2002 was on the issue of tenders. This, we recall, was the last stage of the usual 3-stage approach in resolving mattes relating to renovation works. So, the owners’ decision on 5 June 2002 to postpone the Renovation Project should only cover the matters in this last stage (i.e. the choice of materials, the choice of contractors, etc.) 42.The Tribunal agrees with the 1st and the 2nd Respondents that the purported resolutions of the EGM of 18 October 2002 and the MC of 7 March 2003 were both invalid for reasons stated in the notices of opposition filed by the 2 Respondents. However, in the present proceedings, the Tribunal finds that this is irrelevant as the Applicant could rely on the valid resolutions of the two owners’ meetings (i.e., AGM of 28 June 2001 and EGM of 24 June 2002) to continue to demand under the provisions of the DMC, the payment from the 1st and the 2nd Respondents, in their capacities as the joint owners of the Premises, the 2nd installment of contribution to the funds for the Renovation Project. 43.For the above reasons, the Tribunal decides that the opposition to the Applicant’s application by both the 1st and the 2nd Respondents fail, and decides to grant the following order: Order
The Applicant, represented by Mr. Patrick CHOY, instructed by Messrs. Robert Wang, Solicitors The 1st Respondent, represented by Mr. CHAN, Chi Wah of Messrs. Chung & Kwan, Solicitors The 2nd Respondent, represented by Mr. KWAN, Cheuk Kui of Messsrs. Tsang & Wong, Solicitors | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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