Leung Ho Sing and Others v. Shum Yiu Tung and Others
Read the full judgment text of CACV 108/2006 on BabelCite. This Court of Appeal judgment was delivered on 18 July 2006 before Yeung JA, Yuen JA, Tang JA.
Civil appeal – building management – Building Management Ordinance – Lands Tribunal application – appointment of administrator under s.31 – whether Incorporated Owners and other members of the Management Committee were necessary parties – whether para. 5(1) of the Second Schedule of the BMO compulsorily retires a management committee where no new committee is appointed – whether chairman was obliged to convene a general meeting under para. 1(2) of the Third Schedule – 11th Management Committee appointed 20 November 2002 – AGM on 14 April 2005 adjourned after 2-hour discussion on building repairs without a vote on new committee – applicant filed Tribunal application on 10 June 2005 seeking administrator, new 12th Management Committee, and injunction restraining Respondents from re-appointment – Incorporated Owners and other MC members not joined as parties – Presiding Officer held application should have been joined – whether appeal competent in absence of IO and other MC members – Wong Wai Chun v Shing Sau Wan CACV 173/2004 followed – IO and other MC members are necessary parties because relief sought would affect them – absence is matter of substantive rights not mere procedural irregularity – IO is separate legal entity from MC members whose position must be independently considered – appeal not competent – first argument of law on para. 5(1) of Second Schedule – whether MC retires even if no successor appointed – Incorporated Owners of Finance Building v Bright Hill Management Consultants Co Ltd CACV 386/2000 followed – paragraph must be read in context with para. 5(2) and para. 5A contemplating immediate succession with no interregnum or 'anarchy' – argument that paragraph distinguishes between adjournments sine die and adjournments to specific date has no basis in law or logic – Management Committee resolved on 6 June 2005 to hold meeting on 18 July 2005 – finding of no deliberate delay is finding of fact not open to appeal – first argument fails – second argument on para. 1(2) of Third Schedule – whether chairman required to convene meeting within 14 days – request to MC chairman adequate without personal delivery though prudent to deliver personally – pending application for injunction made convening of meeting futile as Respondents' eligibility for re-appointment under para. 5(3) was contingent on Tribunal decision – no relief would have been granted for any breach – second argument fails – no merits in appeal – leave to join IO and other MC members refused – appeal dismissed – costs ordered on indemnity basis as appeal should never have been prosecuted in absence of necessary parties – 6th Applicant pays costs of appeal on an indemnity basis.
Legal issues: Whether appeal was competent in absence of necessary parties · Construction of para. 5(1) of Second Schedule of BMO - retirement of management committee · Whether chairman was required to convene general meeting under para. 1(2) of Third Schedule of BMO
Outcome: Appeal dismissed; the 6th Applicant's appeal was held to be incompetent due to the absence of necessary parties (the Incorporated Owners and other members of the Management Committee), and in any event the appeal had no merits.
Cited by 13 cases · Cites 2 cases
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CACV 108/2006 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO.108 OF 2006 (ON APPEAL FROM LDBM 153 OF 2005) ______________________ BETWEEN:
Before: Hon. Yeung, Yuen and Tang JJA in Court Date of hearing and judgment: 18 July 2006 Date of Reasons for Judgment: 21 July 2006 ------------------------------------ REASONS FOR JUDGMENT ------------------------------------ Hon. Yeung JA: 1.I agree with the reasons for judgment of Yuen JA. Hon Yuen JA: 2.On 18 July 2005 we heard an appeal from a judgment of Deputy Judge Michael Y.M. Wong (sitting as a Presiding Officer of the Lands Tribunal) given on 15 February 2006. At the conclusion of the hearing, the appeal was dismissed with an order that the 6th Applicant pay the costs of the appeal on an indemnity basis. My reasons appear below. 3.Before the Tribunal, the 6th Applicant (who was the only applicant still pursuing the application by that time) was not legally represented and the judgment was given in Chinese. All parties are now legally represented and counsel asked to conduct the appeal in English; these reasons for judgment are accordingly written in English. Background 4.The 6th Applicant is an owner of a unit in a building. The Respondents are respectively the chairman, vice-chairmen, treasurer and secretaries of the 11th Management Committee of the building. 5.The 11th Management Committee comprises a total of 9 members, including the Respondents, but the other members were not made parties to the application before the Tribunal. Nor was the Incorporated Owners made a party. This has a significant bearing on the conduct of the case and this appeal, as I shall discuss later. 6.To return to the disputes before the Tribunal, the 11th Management Committee was appointed on 20 November 2002 but remained in place at the time when proceedings in the Tribunal were commenced on 10 June 2005. This was because at an AGM held on 14 April 2005 there was a lengthy discussion about building repairs, and after a 2-hour session the AGM was adjourned without a vote being taken for appointing a new Management Committee. This was one of various complaints made by the 6th Applicant in the application. Proceedings in the Lands Tribunal 7.The 6th Applicant sought orders (amongst others) that an administrator be appointed by the Tribunal under s.31 Building Management Ordinance ("BMO"), that a new Management Committee, the 12th Management Committee, be appointed and for an injunction restraining the Respondents from being re-appointed to the 12th Management Committee. 8.The Respondents denied the 6th Applicant’s allegations but more importantly took up the Presiding Officer’s point, raised at the hearing, that necessary parties had not been joined, viz. the other members of the Management Committee and the Incorporated Owners ("IO"). Failure to join parties 9.In Wong Wai Chun v Shing Sau Wan CACV 173/2004, unrep., this court(Cheung, Yuen JJA and A. Cheung J) had held that the nature of the relief sought in that case required the IO to be made a party because it would obviously be affected by the relief sought. 10.In the present case the Presiding Officer held that similarly the IO (and the other members of the Management Committee) would be affected by the relief sought in the application and should have been joined. In my view, that holding was clearly right and it was not challenged in the grounds of appeal. 11.However the 6th Applicant made no attempt before the hearing of the appeal to join the other members of the Management Committee or the IO as parties. The absence of a proper party is not a mere procedural irregularity - it is a matter of substantive rights. The purpose of having the right parties before the court is so that they can all be heard and their positions taken into account before a decision and order affecting them is made. Whilst it might be assumed that the other members of the Management Committee might share the same stand as the Respondent members, the IO is a separate party from the members of the Management Committee, and a solicitor instructed for it is obliged to consider its rights and interests separately from those of the Management Committee. 12.Accordingly in the absence of the other members of the Management Committee and the IO, the appeal was not competent. 13.When Counsel for the 6th Applicant was faced with that point at the commencement of the appeal, he argued that he no longer sought an order for the appointment of an administrator and that therefore it was not necessary for the IO to be a party. However he later accepted that the IO would nevertheless be affected by the orders he sought on appeal. He then asked for the appeal to be adjourned so that he could join the IO (and presumably the other members of the Management Committee) as parties. Are there merits in this appeal? 14.In considering whether to take that course, we needed to consider whether there were any merits in the appeal. We concluded that there were clearly none. 15.The 2 arguments of law raised by the 6th Applicant were:
Construction of para. 5(1) 16.As for the 1st argument, as the meeting of 14 April 2005 ended without a vote appointing a new Management Committee, it is clear that the members of the 11th Management Committee could not retire until new members of an incoming Management Committee were appointed to take their place. For the members of a management committee to retire without new members being appointed would be to leave a lacuna in the management of the building. This court (Leong CJHC and Woo JA, Cheung JA dissenting) has held in The Incorporated Owners of Finance Building v Bright Hill Management Consultants Co Ltd CACV 386/2000 that that could not possibly be the intention of the legislature and that decision is binding on us. 17.I am also of the view that the decision of the majority in Bright Hill is clearly right. Whilst it is true that para. 5(1) says that the members “shall retire”, that paragraph should be read in context. The context is that it is followed by para. 5(2) which provides:
18.In other words, what is envisaged is an immediate succession of the retiring management committee by the incoming management committee – with no ‘interregnum’. This is confirmed by para. 5A of the same Schedule which provides for retiring members to physically hand over documents to the incoming management committee within a short period of time. The intention of the legislation is that there would be no period where the building would lapse into a state of ‘anarchy’. 19.The 6th Applicant argued that para. 5(1) should be construed as having the effect of compulsorily retiring a management committee at the end of the meeting on 14 April 2005 if the meeting was adjourned sine die, but not if the meeting was adjourned to a specific date. That argument has no basis in law or in logic. 20.Of course if a management committee which is due to retire deliberately delays the procedure for voting in a new committee, the owners have certain remedies under the BMO. But until a new management committee is voted in, there is nothing in the BMO that has the effect of compulsorily retiring the incumbent management committee, thereby leaving a void. 21.In his judgment, the Presiding Officer found that the 11th Managing Committee had in fact resolved on 6 June 2005 to hold another general meeting on 18 July 2005 and that it did not deliberately delay the procedure for voting in a new committee (para. 17). That is a finding of fact from which there can be no appeal. The 6th Applicant’s argument in this court that the Respondents acted in bad faith is out of order. 22.In fact, the reason why a meeting was not held on 18 July 2005 was because of the relief sought in the 6th Applicant’s application to the Tribunal filed on 10 June 2005. Effect of application to Tribunal on meeting 23.This leads me to the 2nd argument which Counsel for the 6th Applicant said would stand or fall with his 1st argument. If that is the case, then the 2nd argument would fail in any event. 24.Be that as it may, with respect to the Presiding Officer, I do not think that a request for the convening of a general meeting must be addressed and delivered personally to the chairman. It would be adequate if it is addressed to the Management Committee of which the chairman is a member, and delivered where it can reasonably be expected to reach him. Having said that, the prudent practice must be to deliver the request to the chairman personally, as para.1(2) of the Third Schedule provides for the time frame to convene a meeting to be calculated from the date when he "receives" the request, and personal delivery would enable precise calculation of the deadline. In the present case the 1st request was dated 19 May 2005 and the Management Committee met on 6 June 2005 (18 days later) and resolved to call a general meeting to be held on 18 July 2005. 25.There might have been some validity in the 6th Applicant’s argument that the chairman had failed to convene a meeting within 14 days of receipt of the 1st request if not for the fact that in its application to the Tribunal lodged on 10 June 2005, it had asked for an injunction restraining the Respondents from standing as candidates for the 12th Management Committee. 26.Counsel for the 6th Applicant argued that the injunction had not been sought as a remedy. This argument was advanced notwithstanding the clear wording of the Notice of Application and the understanding of the parties and the Presiding Officer. The argument was, I regret to have to say, at best misguided and at worst disingenuous. 27.The effect of the application for an injunction was significant. The Respondents have a prima facie right in law to be eligible for re-appointment. Paragraph 5(3) of the Third Schedule of the BMO provides:
28.In those circumstances, even if there had been a breach of para. 1(2) of the Third Schedule, a tribunal would not have granted any relief. 29.Accordingly there were no merits in the appeal in any event and there was no purpose in granting leave to join the other members of the Management Committee and the IO as parties. The appeal was accordingly dismissed. Scale of costs 30.As for the scale of costs, this appeal should never have been prosecuted in the absence of the IO and the other members of the Management Committee. It was incompetent from the start and I am sorry to have to say that the arguments advanced on behalf of the 6th Applicant during the hearing only served to reinforce the Respondents’ application that this was an appropriate case for costs to be ordered on the indemnity basis. Hon Tang JA: 31.I agree.
Mr George Chu and Mr Lawrence Cheung instructed by Michael Pang & Co for the 6th Applicant (Appellant) Mr Paul Wu instructed by Chung & Kwan for the Respondents (Respondents) Application by 6th Applicant to Court of Final Appeal dismissed by Court of Appeal. Please refer to CACV108/2006 dated 18 May 2007 |
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