Homechant Ltd v. The Incorporated Owners of Rich Building

DCCJ 1992/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1992 OF 2007

____________

BETWEEN

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Coram: His Hon Judge Leung in court

Date of hearing: 28-29 October; 14 December 2009

Date of judgment: 12 February 2010

J U D G M E N T

1.Rich Building is a residential building in Tuen Mun, New Territories.  The Defendant is the Incorporated Owners of the building (“IO”).  In late October 2006, the then management committee of the IO apparently entered into a management agreement with the Plaintiff (“Homechant”).  5 months later, on 1 April 2007, Homechant withdrew from the management of the building and commenced this action against the IO for the remuneration for its service until then.  This case first came to trial in May 2009 when it was adjourned to this court.

Background

2.The IO was established in 1993.  In fact, Homechant has once served as the management company of the building back in 1998-1999.  On 23 October 2006, the management company then serving the building, Harmony Property Management Ltd (“Harmony”), had to withdraw from the management of the building due to sudden corporate difficulties.  Lee, the Chairman of the then management committee, approached Homechant with a view to engaging it to take over the management temporarily.  In short notice, a management committee meeting was convened.  Homechant was also asked to attend the meeting.

3.On 24 October 2006, the representatives of Homechant including its manager, Leung, attended the meeting.  However, of the 8 members of the then management committee, only Lee and the Secretary, Mak, turned up together with a few other owners or their representatives.  Nevertheless, a management agreement was concluded and signed by the persons present during that meeting (“the Management Agreement”).

4.The Management Agreement contained, among others, the following terms:

“由二OO六年十月二十五日起〔臨時合約試用期三個月〕”

Clause〔二〕甲

“……

4.1   委托人同意每月支付經理人下列費用：

……”

Clause 〔三〕

“1.   新合約試用期三個月，試用期滿後雙方將再另行商討新合約，任何一方如欲終止此合約，必須在合約期滿前兩個月給予對方不少於兩個月書面通知終止合約。“                  [emphasis added]

5.Briefly, the Management Agreement was a temporary agreement for a period of 3 months with effect from 25 October 2006.  Upon its expiry, the parties should negotiate for a new agreement.  The agreement contained the breakdown of the service fee payable to Homechant monthly in a total sum in excess of HK$35,000.

6.On the following day, 25 October 2006, the treasurer, Yu, and the other 5 members of the management committee, who were absent from the meeting the day before, jointly signed a declaration (“the Declaration”).  The declaration was addressed to all the owners, Lee and Mak.  Copies were also sent to, among others, the District Office and Homechant.

7.The Declaration reads as follows:

“             公開聲明

不承認好發大廈新管理合約

基於法團主席在未有正式通知委員召開會議，以及從未表明議決內容涉及簽署新管理公司簽署合約，眾業主〔包括委員〕毫不知情，且合約條款無人知曉。

就主席此等個人獨權決定，我等好發大廈業主立案法團委員〔下簽署者〕不予認同，而事件亦有違《建築物及管理條例第344章》規定程序，故我等現在特此聲明，對李海強主席及麥啟康秘書，於2006年10月24日晚與「港置物業管理顧問有限公司」所簽署之好發大廈新任管理合約，表示概不承認。

        敬請各好發大廈業主關注。“

8.Essentially, the majority of the management committee complained that the meeting on 24 October 2006 was not properly convened.  The agreement was also concluded in contravention of the Building Management Ordinance, Cap.344 (“the Ordinance”).  These 6 members of the management committee made it clear that they did not recognise the validity of the Management Agreement.

9.Notwithstanding the above, the Management Agreement was varied days later.  The confirmation of variation dated 30 October 2006 was issued by Homechant and signed by Lee on behalf of the IO.  Upon such variation, Homechant agreed to provide one more caretaker at the extra cost of HK$6,000 with effect from 1 November. 

10.During the period between November 2006 and March 2007, the owners sought to and did meet both formally and informally.  Details of these meetings would be referred to in detail below.  But it was on 25 March 2007 when the general meeting finally resolved to appoint an administrator of the building and to dissolve the then management committee pursuant to section 30 of the Ordinance.

Dispute

12.According to the pleading, it is alleged that the IO was in repudiatory breach of the Management Agreement.  Homechant accepted the repudiation and terminated the agreement with effect from 1 April 2007.  Alternatively, Homechant claims reasonable remuneration for its services rendered on a quantum meruit basis.  The amount claimed under either basis is the same sum of HK$231,473.80.

13.By pleading, the IO raises the following issues:

(1)  whether the Management Agreement was illegal or void;

(2)  whether Homechant is entitled to claim on a quantum meruit basis; and

(3)  if liability is established, the amount of reasonable remuneration Homechant should be entitled to.

The Management Agreement

14.The basis of the IO’s objection is as follows:

(1)  The management committee meeting on 24 October 2006 was convened without notice to all the management committee members and was held without a quorum.  The Management Agreement was therefore entered into without authorisation by a valid resolution.

(2)  The Management Agreement was entered into in contravention of section 20A(2) of the Ordinance (applicable at the time) which stipulated that tender was required in the present case.

15.Regarding notice of the urgent management committee meeting on 24 October 2006, Homechant argued that verbal notice was given through Harmony to the members of the management committee on the day.  It was Yu and the other 5 management committee members who chose to be absent deliberately so as to defeat the quorum.

16.Even if given, a verbal notice of the management committee meeting hardly sufficed: see Schedule 2, para.8 of the Ordinance.  A resolution passed at any meeting shall not be invalid by reason only of the omission to give notice of the meeting to any person entitled to such notice: see section 37 of the Ordinance.  However no valid resolution could be passed at all in the absence of a quorum: see Schedule 3, paras.9 and 10(2) of the Ordinance.  This is clear and it matters not whether the majority of the management committee membership might have teamed up to be absent from the meeting deliberately or not.

17.The procurement of all supplies, goods or services required by an owners’ corporation shall comply with the standards and guidelines as may be specified in the Code of Practice relating to such procurement: see section 20A(1) of the Ordinance.  At the material time, any services the value of which exceeded or was likely to exceed the sum of HK$100,000 should be procured by invitation to tender: see section 20A(2) applicable at the time.

18.The service fees charged by Homechant for the contractual period of 3 months indeed exceeded the amount that should trigger the tender requirement.  Yet no tender was invited.  Further, according to the minutes of that meeting, the terms of the agreement were actually supplied to those owners attending the meeting only during the meeting.  Clearly section 20A has not been complied with.

19.Submissions were made as to whether the Management Agreement was void or voidable as a result of non-compliance with section 20A.  This will be discussed further below.  But in view of the undeniable fact that there was not even a valid resolution authorising the IO to enter into the agreement, the agreement was clearly void and unenforceable for that reason alone.

20.As mentioned above, the Management Agreement was expressed to be for a temporary term of 3 months.  Parties should negotiate for a new agreement upon the expiry of the term, i.e., in late January 2007.  There is no evidence of any negotiation or more importantly resolution of the IO to enter into a new management agreement.

21.In the absence of any valid and enforceable agreement from the outset, there can be no doubt that the contractual claim of Homechant is bound to fail.  Homechant did concede that but only when this case first came to trial in May 2009.

Quantum meruit

22.Quantum meruit became the only basis on which Homechant pursued its claim during the trial.  Homechant contends that even though the Management Agreement was void, the fact was that the IO has incontrovertibly benefited from its services rendered at Homechant’s expenses, with full knowledge that such services were provided in the expectation of payment.  This entitles Homechant to claim a reasonable remuneration for its services on a quantum meruit basis or else the IO would be unjustly enriched.

23.The IO’s answer is that the claim on quantum meruit basis is restitution in nature.  Homechant did not come to equity with clean hands and therefore should not be assisted by the court in its claim.  Further, the IO has not accepted or freely accepted the services so rendered.  In the circumstances, the IO should not be made liable to pay for such services.

How Homechant came to provide its services

24.Homechant professes in the provision of property management and consultancy services.  In its own sample introduction letters, Homechant represented that since its establishment in 1988, it has been providing professional services including advice to property owners on the interpretation of the relevant statute or deed of mutual covenants.

25.Leung admitted in court that he was familiar with the legal formalities for convening meetings and passing resolutions as well as the requirements under section 20A.  I would be surprised if he was not.  But according to him in court, he somehow took the view that the Management Agreement was validly entered into during the meeting on 24 October 2006.

26.According to Leung, it did not occur to him at the meeting that there was no quorum, as he saw a few owners present.  But I do not believe that no introduction whatsoever was made at the meeting.  The fact was that only Lee and Mak of the management committee were present.  Even assuming that Leung then did not know the composition of the management committee membership, those present in any event fell short of the statutory minimum quorum of 3: see Schedule 2, para.9 of the Ordinance.

27.Even assuming that he was not aware of the lack of quorum, Leung must know that no tender procedure has been carried out at all pursuant to section 20A.  Homechant actually came prepared with the draft agreement for a 3-month term and must know the value of their service involved necessitated the tender procedure.

28.In any event, a copy of the Declaration was sent to Homechant.  Homechant was therefore put on enquiry of the position of the majority of the management committee on the grounds as stated there.  At the very latest, the lack of quorum must be apparent when one reads the minutes of that meeting.  A copy of that minutes was sent to Homechant on 2 November 2006.

29.To borrow what the court said in Equal Property Management Limited v The IO of San Po Kong Mansion DCCJ 14835/2000 (17 September 2001), I think that it is self-deceiving for Homechant, in its peculiar position, to suggest a belief that the Management Agreement was duly authorised and validly concluded.

30.Homechant sought to justify by describing the situation as urgent.  Indeed the minutes of the meeting on 24 October 2006 recorded that the idea then was to prevent a so-called vacuum period without management service upon the withdrawal of Harmony.  While I can understand such possible concern at the material time, this could not be the complete answer.  The provisions under the Ordinance are there to guide the owners’ corporation and to prevent abuse of authority for the benefit of all the owners.  Whether the situation in the present case was as urgent as alleged, the Ordinance does not permit the management committee to cut corners in the compliance.

31.Homechant also sought to justify by saying that the District Office had been consulted.  The minutes of the meeting on 24 October 2006 recorded that it was also the District Office’s advice to appoint a temporary manager.  But I think it is wrong to suggest that the District Office endorsed the non-compliance with the Ordinance.  This should be apparent from the letter from the District Office to Lee dated 8 November 2006 which pointed out the meeting and quorum requirements for a properly convened management committee meeting for the purpose of appointing a temporary manager.

32.Even assuming that this had been one of those situations that warranted expedient measures devoid of formalities, it would have been the duty of the IO to seek ratification or subsequent formal authorisation.  Yet Lee and Homechant somehow saw no need to do so.

33.In reply to the Declaration, Homechant wrote to Yu and the other 5 management committee members on 4 November 2006.  Apart from maintaining that the management agreement was valid, Homechant stated that the alleged lack of notice of the meeting to these management committee members was only their excuse for their absence.  Homechant described the declaration as defamatory.  The IO was said to be planning a general meeting to explain the convening of the urgent management committee meeting and the appointment of Homechant.

34.In the above reply, Homechant was silent about the objection with regard to section 20A of the Ordinance.  Homechant also did not indicate that ratification or formal authorisation of its appointment would be sought from the owners in the general meeting being planned.

35.In his reply dated 11 November 2006 to the District Office’s letter mentioned above, Lee stated that notice of the meeting on 24 October 2006 was given to the members of the management committee, presumably verbally, on that day.  In unequivocal terms, Lee stated that those management committee members who were absent from that meeting were treated as having waived their rights and there was no need to convene another management committee.

36.In my view, Lee and Homechant acted in knowing disregard of the lack of valid authorisation for the conclusion of the Management Agreement.  This was basically how Homechant came to provide its services to the owners of the building. 

37.It was alleged that the Management Agreement was illegal and void.  Mr Leung for the IO referred to numerous authorities that discussed the claim on a quantum meruit effectively for the benefits of illegal contracts: see Taylor v Bhail (1996) CLC 377; Boissevain v Weil [1950] AC 327; and Mohamed v Alaga & Co [2000] 1 WLR 1815.

38.In my view, the Management Agreement, though void for the lack of proper authorising resolution of the IO, was not illegal.  Likewise, non-compliance with section 20A of the Ordinance may render a contract void or voidable, depending on the circumstances, but this is not equivalent to illegality: see Wong Tak Keung, Stanley v The Management Committee of the Incorporated Owners of Grenville House CACV 244/2003 (17 December 2003) at paras.40-41; Incorporated Owners of Hip Wo House v Gallant King Development Ltd [2007] 2 HKLRD 831 at 834E-F.  For this reason, I do not find these authorities cited by Mr Leung to be of particular assistance.

39.The IO emphasized that Homechant came to court with clean hands.  Mr Leung referred to Birmingham City Council v Rose Forde (2009) WL 6082; [2009] EWHC 12 which involved a conditional fee agreement for solicitors’ costs.  Whilst accepting that the agreement was no longer illegal, merely unenforceable if certain statutory conditions were not met, the English court considered that to give effect to a claim for solicitors’ costs, irrecoverable under the agreement, but relabelled as a claim on a quantum meruit, would be contrary to public policy.  The court also made the point that the solicitor was not blameless as he knew or ought to know the rules but had failed to comply with them.  Therefore to allow his claim on a quantum meruit would defeat the statutory purpose.  If such a claim would be available in every case where there was non-compliance with the rules, the statutory prohibition on enforcement would become illusory.

40.Mr Leung submitted that likewise, allowing Homechant to claim for its service fees on a quantum meruit basis, notwithstanding its knowing disregard of the statutory requirements and the void nature of the Management Agreement, would defeat the intent of the legislature behind the Ordinance.

41.It was not suggested that the public policy considerations in the context of the prohibition against conditional legal fee agreement in the Birmingham City Council case are necessarily similar to those in the context of the statutory protection of the owners from abuse of authority by the management committee of the IO in the present case.

42.If Mr Leung’s submission is accepted, this may mean that a manager which knew that its contractual appointment was void must be prohibited from having a claim on quantum meruit basis irrespective of whether the owners have benefited from its services knowing that such services were not for free and they would have had to pay some other agents to provide such services in any event.  I do not think that such a wholesale approach should be adopted in the proper consideration of what equity requires in a particular case.  In my view, each case still has to be decided on its own facts.

43.The fact was that Homechant did provide management services, including the arrangement of caretakers and cleanings services, to the building.  Homechant argued that notwithstanding the position of the owners regarding the validity of the Management Agreement, they have been incontrovertibly benefited by Homechant’s services at its expenses for months.  However, the IO argued that the owners have not freely accepted Homechant’s services.

Whether the owners have freely accepted Homechant’s services thereafter

44.Goff & Jone, The Law of Restitution (7^th ed) has this to say:

“……  From their very nature services cannot be restored; and the defendant may never have wished to receive them or, at least, to receive them if he had to pay for them……But a defendant, who is not contractually bound, may have benefited from services rendered in circumstances in which the court holds him liable to pay for them.  Such will be the case if he freely accepts the services.  In our view, he will be held to have benefited from the services rendered if he, as a reasonable man, should have known that the claimant who rendered the services expected to be paid for them, and yet he did not take a reasonable opportunity open to him to reject the proffered services.  Moreover, in such a case, he cannot deny that he has been unjustly enriched.”

(at 1-019)

“…… Judges now appear to be more ready to recognise the principle of free acceptance.  Indeed the principle enshrined in that concept is the most satisfactory explanation of those decisions which recognised the claimant’s claim that this services, which had not been requested, had benefited the defendant.  Many of the successful claims have arisen in the context of ineffective contracts.  A claimant who rendered services under a contract which was void because the parties had not agreed on essential terms was award a sum which was “what the services were worth”……”

(at 1-020)

“…… Indeed, this may be the only satisfactory explanation of the leading decision of Craven-Ellis v Canons Ltd.  In that case the claimant, whose contract of employment with the defendant company was void, was allowed a quantum meruit claim, even though there was “nobody for want of authority, at any material time, who could act for the company …… who could make requests for the company, or who could enter into any contract express or implied.”  The company had benefited because it had received services which it “would have had to get some other agent to carry out.””

(at 1-024)

“……English courts have now accepted the principle of incontrovertible benefit.  This acknowledges a limited and, in our view, desirable exception to the counter-principle of free choice.  The burden will always be on the claimant to show that he did not act officiously, that the particular defendant has gained a realisable financial benefit or has been saved an inevitable expense.  Furthermore, it should be open to the defendant to demonstrate that it would be a hardship in the circumstances of the case to require him to make restitution or restitution in full.”

(at 1-026)

See also Chitty on Contracts (Vol.1) at 29-076.

45.Objectively, it cannot be denied that the owners have benefited from the services provided by Homechant in the sense that they probably would have paid other agent or agents to provide similar services, had Homechant not done so.  The IO must know that the services were not for free, as Homechant has demanded settlement of their debit notes every month.

46.The IO’s case is effectively that the services were forced upon the owners who have not willingly accepted them.  Whether this was the case is a question of fact.  The question is whether the owners have taken any reasonable opportunity open to them to reject the services proffered by Homechant since it has been invalidly appointed.

47.Since the appointment of Homechant was void by operation of law rather than voidable at the owners’ option, it was not the owners’ burden to have to pass a formal resolution to terminate Homechant’s appointment or to declare its appointment void.  Nevertheless, seeing that Homechant continued to provide its services, the owners would be expected to make known their stance that the services had to stop, if they considered that the services were forced upon them.

48.It was argued on behalf of the IO that Yu, the Treasurer, has all along refused to settle the debit notes of Homechant.  This was consistent with his stance of denial of the validity of the Management Agreement.  Whilst this was a manifestation of denial of liability to pay, this alone was not a manifestation of rejection of the benefits of the services.

49.The owners act through the IO.  The IO acts through its management committee and its general meeting.  The reality was that the management committee was divided with the Chairman and the Secretary in one camp and the Treasurer and other members in the other camp.  The evidence suggests that the differences between the two camps had to do with the major renovation of the building and the financial situation of the IO. The evidence also suggests that in September and October 2006, the owners had already signed requisitions for a general meeting to be convened to discuss those matters.  These differences had already existed before Homechant entered the picture.

50.On the same day when Yu and the other 5 members of the management committee issued the Declaration, they also wrote to the Mak, as the Secretary of the IO, requesting for a general meeting to be held on 17 November 2006.  The requisition also contained a proposed agenda for the meeting.  Among other things, the agenda proposed the appointment of an administrator, dissolution of the existing management committee and the election of a new management committee (pursuant to section 30 of the Ordinance).  On 13 November 2006, the 6 management committee members sent to Mak another requisition for a general meeting.

51.No general meeting was held on 17 November 2006 as requested.  Instead, the owners had an informal meeting.  The owners resolved to demand Lee to issue a notice within 14 days to convene a general meeting to discuss the topics contained in the proposed agenda contained in the letter dated 25 October 2006 to Mak mentioned above.  To signify their agreement, the owners present signed the requisition for the general meeting.  Sie, who gave evidence for the IO at the trial, was one of those who signed the requisition.

52.Homechant did issue a notice dated 12 December 2006 for a general meeting to be held on 28 December 2006.  But the agenda did not accord with the agenda proposed by the majority of the management committee on 25 October 2006 and endorsed by the owners in their requisition on 17 November 2006.  The agenda called for resolutions to remove and to replace Yu as the Treasurer as well as to appoint a new one as the authorised signatory to the bank account of the IO.

53.At the general meeting on 28 December 2006, there was argument about the agenda.  Eventually Lee and Mak left the meeting.  Another owner was elected to chair the rest of the meeting.  According to the minutes, the owners present proposed another general meeting to be held on 18 January 2007.  The proposed agenda remained that to resolve to dissolve the existing management committee and to appoint a new management committee.

54.Homechant was aware of the owners’ intention to have another general meeting held on 18 January 2007.  Its letter to Yu dated 15 January 2007 evidences that.  As mentioned above, the 3-month term of the management agreement expired in late January 2007.  Apart from issuing a letter of demand to Yu, it also issued another notice of general meeting at the instruction of Lee.  The notice was dated 13 February 2007 for the meeting to be held on 8 March 2007.  The agenda proposed, among other things, to discuss and to resolve to authorise the IO to enter into a new management agreement with Homechant.

55.According to the minutes, the meeting on 8 March 2007 was again not a success and had to be aborted.  However, the owners present jointly signed a requisition to Lee to convene a general meeting on 25 March 2007 again for the appointment of an administrator and the dissolution of the existing management committee.

56.Finally Lee issued a notice of general meeting dated 10 March 2007. The meeting would be held on 25 March 2007.  The agenda was to for resolutions to appoint an administrator and to dissolve the existing management committee. At the meeting on 25 March 2007, the owners finally resolved to appoint an administrator of the building and to dissolve the management committee.

57.Before the general meeting on 25 March 2007 was held, Homechant, through its then solicitors, gave notice to the IO that it would cease providing services to the building with effect from 1 April 2007.

58.The above documents show that the majority of the management committee and some of the owners have made repeated attempts to convene a general meeting.  Requisitions have been signed and agendum proposed for such purpose.  However, the focus and demand of the owners have consistently been for an account of the financial situation of the IO, the major renovation matters and the ultimately dissolution of the existing management committee.

59.There was no mention in any of these documents about complaint by the owners or demand by the owners that Homechant’s services had to stop and it should vacate from the building.  In the agenda for the informal meeting on 17 November 2006, the owners only proposed to discuss the new management arrangement for the building (or “討論大廈最新管理安排” as per the agenda).  That meeting held at the lobby of the building ended up with serious argument between the owners and the caretakers.  Police was involved.  Notwithstanding that, what the owners resolved in that meeting was to requisition for a general meeting to be held in accordance with the agenda proposed on 25 October 2006.  Still nothing was said about demanding Homechant to stop its services and to vacate from the building.

60.The meeting held on 28 December 2006 was also not a success so much so that Lee and Mak left soon after the meeting began.  According to the minutes of that meeting, one Ms Hung (also known as Mrs Chung) was elected to take over and to chair the rest of the meeting.  The owners present then drew up a proposed agenda for the next general meeting to be held on 18 January 2007.  As mentioned above, this proposed agenda also made no mention of any complaint about Homechant’s services or demand that Homechant stopped its services and vacated from the building.  On the contrary, this chairperson expressed her wish that Homechant would continue to provide services to the building until the new management committee was elected to discuss the issue of the management agreement.  Whilst this was a one-line record in the minutes, there was no record of any objection to the suggestion.  According to his statement and the minutes of that meeting, Sie (who lives at Flat 1F) was present in that meeting.

61.The agenda of the meeting held on 8 March 2007 did not accord with the previous demand of the owners.  The meeting again ended up in argument and was aborted.  According to the minutes of that meeting, the owners again decided to demand Lee to convene another general meeting to be held on 25 March 2007.  No mention was made about whether Homechant’s services had to stop, notwithstanding the fact that the agenda of that meeting originally proposed to sign a new management agreement with Homechant.

62.Sie explained in court that it was upon the advice of the District Office that the owners should take one step at a time before achieving the eviction of Homechant.  That was why the owners focused on the dissolution of the existing management committee first.  I am not convinced there was such alleged need.  After all, Homechant could not claim any right to insist on providing its services.  A letter jointly signed by the owners to demand Homechant to stop would have sufficed to reject their services.  If the owners have indeed opted to defer dealing with Homechant until after a new management committee has been elected, they would have had to pay the price for continuing to benefit from Homechant’s services.

63.Sie suggested that the owners have attempted to evict Homechant even physically.  However what he was referring to happened in a particular context, namely, the argument between the caretakers and the owners over the latter’s attempt to hold the informal meeting at the lobby of the building on 17 November 2006 mentioned.  For this, Homechant issued its notice dated 20 November 2006.  As mentioned above, notwithstanding such argument, what the owners did at the end of that episode was to sign a requisition for a general meeting to be held in accordance with the agenda proposed by the 6 management committee members on 25 October 2006 mentioned above.  Still no proposal to evict Homechant was made.

64.Mr Wong for Homechant referred to Yee Tai Cleaning Co Ltd v IO of Tai On Building, DCCJ 2645/2005 (27 October 2006).  That case is distinguishable from the present case to the extent that the plaintiff there was not an outside cleaning contractor.  There was no finding of the cleaning contract being void for the lack of proper authorising resolution of the IO but mainly the issue of non-compliance with section 20A of the Ordinance.  But the court did find that the owners had apparently accepted the cleaning services rendered without complaint.  The court accepted that this was the basis of the claim of unjust enrichment and quantum meruit.

65.Whilst Homechant set out to provide its services to the owners knowing that its appointment was void, the owners nevertheless stood by that and inevitably benefited from such services month after month, whether consciously or by default.  In my view, it cannot be said that the owners had no reasonable opportunity to manifest their rejection of the services proffered by Homechant, if such services were indeed unwanted.

66.I do not mean to say that the burden is cast on the owners.  As discussed above, each case has to be decided on its own facts.  I accept that even if the owners had made such demand, Homechant could still have chosen to ignore it.  But in that event, the conclusion would have been that there was nothing more the owners could reasonably and legitimately do to prevent Homechant from forcing its services upon them.  It also cannot be said that the owners have freely accepted the services or that there was unjust enrichment.

67.I am to a certain extent disturbed by the approach of Homechant in allowing itself to become the manager of this building.  Much could be said about its professionalism.  Nevertheless, considering all the circumstances, I find as a matter of principle and fact that Homechant is entitled to reasonable remuneration for its services rendered to the owners.

Quantum

68.On a quantum meruit basis, Homechant claims for reasonable remuneration for the services it has rendered to the IO.  This was allegedly equivalent to the amount of its claim on a contractual basis.

69.No serious dispute was raised as to the major items, i.e., caretaker services (HK$25,000 per month) and cleaning services provided (HK$9,800 per month).  They are evidenced by the documents and the amounts involved appear to be reasonably incurred.

70.Regarding the monthly water pump and electrical maintenance fee of HK$2,000, Homechant produced the records of the work done.  First, there is no record of such work done during the last week of October 2005 immediately after Homechant was appointed.  This was apparently a pro-rata claim of the HK$2,000 fee.  This also appeared to be the basis of the claim for the drainage work charges for this period.  In my view, these should not be allowed as if such work has in fact been done.

71.The records of water pump and electrical maintenance in the following months only suggest standard inspection has been carried out.  The defects noted in these records apparently remained throughout the entire period without any other maintenance or repair.  The amount claimed should be discounted and I will allow half of the contractual charges.  Reasonable remuneration allowed for such inspection is therefore HK$1,000.

72.The contractual charges for drainage clearing work was HK$2,000 per month.  But according to Sie, the drainage of the building was new replacement during the major renovation.  There was a 1-year warranty and therefore he saw no real need for drainage clearance during the period of Homechant’s service.  There is no document evidencing that such work has in fact been carried out.  Homechant’s witnesses also could not tell.  I am not satisfied that such charges should be allowed.

73.There are other miscellaneous items such as repair to lavatory pipes and fluorescent tubes, the cost of which are evidenced by receipts.

74.Homechant charged HK$5,000 as its own service.  Though tempted by the consideration of how Homechant came to provide its services, I do not think it is in principle justifiable that Homechant should be deprived of reasonable remuneration for its own service including that to arrange the other services to the building.  It does not appear to me that the monthly sum of HK$5,000 was unreasonable.

75.In conclusion, the amounts stated in Homechant’s debit notes are allowed as follows:

76.The contractual claim of Homechant is bound to fail but Homechant’s concession in this regard was not made until this case first came to trial in May 2009.  I am of the view that while costs should follow the event, part of Homechant’s costs of this action up to May 2009 should be disallowed.

Order

77.Judgment is entered against the IO in the sum of HK$215,570.60 together with interest thereon at the judgment rate from the date of writ until payment.  I make a nisi order that the IO shall pay Homechant’s costs of this action including 2/3 of such costs up to 13 May 2009.  Costs shall be taxed if not agreed with certificate for counsel.  In the absence of any application in 14 days to argue costs, this nisi order shall become absolute.

Mr Paul WONG instructed by Messrs Bernard Wong & Co for the Plaintiff

Mr Kelvin LEUNG instructed by Messrs Pansy Leung Tang & Chua for the Defendant