Discovery Bay Services Management Ltd v. Hannon Ltd

LDBM 301/2012

THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 301 OF 2012

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BETWEEN

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JUDGMENT

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1.This case concerns the validity of a meeting of the owners of Headland Village in Discovery Bay City held on 2 August 2012.

Introduction

2.Discovery Bay City (“the City”) is a development on Lantau Island comprising residential and commercial units, common areas and facilities, schools and hotels.

3.Owners of the residential units in the City are bound by the terms of a deed of mutual covenant dated 30 September 1982 respecting the City (“DMC”) and any applicable sub-deed of mutual covenant (which will be explained below).[1]

4.The applicant (“City Management”) is the manager appointed under the DMC to undertake the management of the entire City.  City Management is a party to and is bound by the DMC and all sub-deeds of mutual covenant.[2]

5.According to the DMC, any part of the City constructed on land separately designated and described by a sub-deed of mutual covenant is called a “village”.  Headland Village is such a village and a sub-deed of mutual covenant dated 7 October 1982 is applicable to it (“Sub-DMC”). 

6.On 11 June 2012, City Management gave notice that a meeting of the owners of Headland Village would be held on 23 July 2012 at Discovery Bay Office Centre to elect the Chairman, the Vice-Chairman and members of the Village Owners’ Committee (“VOC”) for the forthcoming 2012/2013 session (“2012/13 VOC”).

7.The respondent company is the owner of a residential unit in Headland Village.  Its director, Mr Andrew Burns, was the Chairman of 2011/12 VOC.  He had been the Chairman of the VOC for Headland Village since 2007.

8.In anticipation of the meeting and at the invitation of City Management, Mr Burns (as the Chairman of 2011/12 VOC) issued a letter dated 20 June 2012 to all owners encouraging them to attend, the meeting and enclosing, inter alia, a set of guidelines (“Guidelines”) and a form of proxy (“Proxy Form”) for the meeting.[3]

9.The meeting scheduled for 23 July 2012 did not take place due to Typhoon Vicente. By a further notice dated 24 July 2012, City Management informed all owners that the meeting would be held on 2 August 2012 instead.

10.At the beginning of the meeting on 2 August 2012, Mr Burns (in his capacity as the Chairman of the meeting) declared the meeting inquorate and dissolved it.  The parties have referred to the meeting thus far as “the 1^st part of the meeting”.  Mr Burns’ decision was essentially based on two points:

(1)   The letter appointing Mr Wong Fu-Keung as City Management’s representative to attend the meeting was invalid as the letter was not impressed with a company chop.

(2)   The Sub-DMC does not permit individual owners (as opposed to corporate owners) to appoint non-family members to attend the meeting and vote on their behalf.  Thus, all proxies from individual owners who had appointed either City Management or Mr Burns to be their representative were invalid.

11.Ms Jennifer Lee (of City Management who attended the meeting as secretary) and some owners disagreed with Mr Burns and proceeded to hold the meeting in another part of the venue notwithstanding the protest of Mr Burns and other 2011/12 VOC members.  An election was held and the 2012/13 VOC was constituted with Mr Eddy Shen being elected as the Chairman and Mr David Kwok as the Vice-Chairman.  The parties have referred to this part of the meeting as “the 2^nd part of the meeting”.

12.City Management and Mr Burns continued to disagree, and their lawyers exchanged correspondences to articulate their respective position.

13.On 15 October 2012, Mr Burns wrote to City Management enclosing 78 written requests from owners of Headland Village requesting that another owners’ meeting be convened to invalidate the 2^nd part of the meeting and to re-elect the 2012/13 VOC.

14.On 12 November 2012, City Management commenced this action against the respondent seeking a declaration that the decision on 2 August 2012 to dissolve the meeting was wrong and that the 2^nd part of the meeting was valid, as well as an injunction to prevent the holding of another owners’ meeting.

The trial

15.City Management abandoned its application for an injunction at the beginning of the trial.  The remaining application is for a threefold declaration that:

(a) Mr Burns could not dissolve the 1^st part of the meeting;

(b) the 2^nd part of the meeting was valid; and

(c) the voting result was valid. 

The application is opposed.

16.Mr Kenneth Lam (counsel for City Management) and Mr Issac Chan (counsel representing the respondent) have helpfully summarised the broad issues as follows:

(a) Whether Mr Burns was correct in rejecting the letter appointing Mr Wong to represent City Management at the meeting.

(b) Whether Mr Burns was correct in rejecting those proxies given by individual owners who had appointed City Management or Mr Burns to attend the meeting and vote on their behalf.

(c) Whether the 2^nd part of the meeting was valid.

(d) Whether the voting result for the 2012/13 VOC was valid. 

(e) Whether Mr Burns is estopped from disputing the validity of the voting result.

(f) Whether the Tribunal should grant any declaratory relief.

17.At the trial, Mr David Kwok and Mr Wong Fu-Keung testified for City Management.  The respondent called Mr Burns and Mrs Mary-Anne Mihos (an owner in Headland Village and a member of the 2011/12 VOC) to give evidence.  They have all basically adopted their witness statements as evidence.

18.The general factual matrix of this case is well documented and generally not disputed.  The crucial evidence came from Mr Burns who recounted his decision to dismiss the meeting as follows:

“The Meeting commenced at about 8:45 pm … I opened the Meeting by welcoming everyone and apologizing for the delay. I then introduced the members of the VOC … I proceeded to ascertain whether a quorum existed. I highlighted that:

(1) The appointment letter of the representative of [City Management] was invalid, as the appointment letter did not bear the company chop of [City Management]. According to the Proxy Form prepared for the Meeting, all proxies of company representatives were required to bear a company chop.

(2) The proxies given by individual owners to [City Management] and the Chairman were invalid, as neither [City Management] nor the Chairman were family members of such individuals. The Headland Sub-DMC only allowed family members to act as the representatives of individual members.

(3) All proxies given by corporate and individual owners to [City Management], 52 in total, were invalid, as [City Management] is a corporate entity and could not act at the meeting except through a representative. As the appointment letter was invalid, these Owners were not represented at the Meeting.

(4) As a result, only 39 Owners were present or validly represented and therefore the required quorum for the meeting, 52, had not been achieved.

All VOC members at the head table concurred.  I therefore dissolved the meeting at about 8:50 pm for lack of a quorum.”

19.There are minor factual disputes but I do not think they matter. [4] Both counsel accept that this case turns on the construction of the Sub-DMC as opposed to the credibility of witnesses.  In the ensuing discussion, I shall only deal with those disputes that are material to my decision.  On the whole, I accept that all the witnesses are truthful.   

Discussion

(a) The role of City Management in owners’ meetings of Headland Village

20.It would be helpful to begin the discussion by appreciating the role played by City Management in the owners’ meeting of Headland Village.  This involves an examination of the DMC and the Sub-DMC.

21.As I have mentioned, City Management is the manager of the entire City.  The owners have not formed any owners’ corporation under the Building Management Ordinance, Cap 344.  Section IV of the DMC provides that:

“… each Owner hereby appoints the Manager irrevocably as Attorney to enforce the provisions of this Deed and any Sub-Deed of Mutual Covenant and each Owner hereby covenants not to enforce the terms of this Deed and any Sub-Deed of Mutual Covenant otherwise than through the Manager.” (Part A, clause 1)

“The Manager shall be bound by and shall observe and perform all of the conditions, duties and obligations herein and in any Sub-Deed of Mutual Covenant provided and shall have all the rights and privileges herein or therein granted to the Manager.” (Part A, clause 3)

“During the said term the Manager will manage the City in a proper manner and in accordance with the Conditions and this Deed and any Sub-Deed of Mutual Covenant and, except as otherwise herein expressly provided, the Manager shall be responsible for and shall have full and unrestricted authority to do all such acts and things as may be necessary or requisite for the proper management of the City. Without in any way limiting the generality of the foregoing the Manager shall have the following duties :–

…

(31) To commence, conduct, carry on and defend legal and other proceedings touching or concerning the City and each Village or the management thereof all in the name of the Manager.

(32) To enforce the due observance and performance by the Owners … of the terms and conditions of this Deed of Mutual Covenant and any Sub-Deed of Mutual Covenant … and to take action including the commencement and conduct of legal proceedingsto enforce the due observance and performance thereof…

…

(40) To do all such other things as are reasonably incidental to the management of the City … for the common benefit of the Owners.” (Part B, clause 1)

“All acts and decisions of the Manager arrived at in accordance with the provisions of this Deed of Mutual Covenant and any Sub-Deed of Mutual Covenant in respect of any of the matters aforesaid shall be binding in all respect on all the Owners for the time being.” (Part B, clause 3)

“The Manager shall have power to commence proceedings for the purpose of enforcing the observance and performance by any Owner … of the covenants, conditions and provisions of this Deed of Mutual Covenant and any Sub-Deed of Mutual Covenant…” (Part B, clause 5)

22.At the beginning of the trial, Mr Chan mounted a challenge on City Management’s locus standi to seek a declaration.  Sensibly, that has not been pursued in his closing submission probably in view of the fact that City Management (as the manager) is the enforcer of the DMC and the Sub-DMC and that it has the power to commence legal proceedings in its name to enforce the same.

23.The Sub-DMC contains provisions specifically for Headland Village.  Its purpose is expressed to be to make provisions “… for the management … of the Village … and for the purpose of defining and regulating the rights, interests and obligations of the Owners in respect of the Village…”.[5]

24.Section VIII of the Sub-DMC contains the rules for owners’ meetings.  Such meetings are held at least once every calendar year for the purpose of electing the VOC and discussing matters concerning the village. [6] Either the VOC Chairman or 20% of the owners of Headland Village may request a meeting. [7]  It is for City Management to convene a meeting by giving not less than 7 days written notice. [8]  Unlike para 1(2) in Schedule 3 of the Building Management Ordinance, no time frame is provided in the Sub-DMC for convening a meeting requested by the Chairman or 20% owners. [9]

25.Owners’ meetings are chaired by the Chairman of the VOC and, if both the Chairman and Vice Chairman are absent, the owners present may choose one from amongst themselves to chair the meeting.[10] Resolutions passed at an owners’ meeting (which may not contravene the DMC and the Sub-DMC) are binding on all owners but not on City Management.[11]

26.City Management is obliged to send a secretary to the meeting to take the attendance and record the proceedings.[12] It may also send a “duly appointed representative” to the meeting who may vote in respect of any undivided share held by City Management.[13]  The representative is counted towards the quorum. [14]  It is common ground that City Management no longer holds any undivided share and so its representative is not entitled to vote. 

27.It is clear from the above that the role of City Management in an owners’ meeting is limited, in that:

(a) It shall send a secretary to record the attendance and to keep the minutes. 

(b) It may send a representative to the meeting. 

(c) It is not entitled to vote but resolutions duly passed at an owners’ meeting are not binding on it. 

(b) Mr Wong’s appointment letter

28.By a letter dated 2 August 2012 addressed to the secretary of the meeting, City Management appointed Mr Wong Fu-Keung “as our company representative to attend and to vote on our behalf at the Annual General Meeting of Headland Village to be held on Thursday, 2 August 2012 at Discovery Bay Office Centre and at any adjournment thereof.”  The letter was issued in City Management’s letterhead and signed by its director, Mr Vincent Chua.

29.Mr Burns found the letter objectionable as it did not bear City Management’s company chop.  He explained at the trial that he was merely applying to City Management the same standard that was applicable to all corporate owners.  He pointed out that the Guidelines contained this direction:

“3. In the event of an owner entitled to attend and vote being a corporate body, any representative appointed by such owner by completion of the attached authorization letter shall be entitled to attend and vote on behalf of such owner.”

and the Proxy Form carried this remark:

“If this is to be used as a proxy form and the owner is a company, the form shall be impressed with the seal or chop of the company and signed by a person authorised by the company in that behalf.”

30.In my view, Mr Burns was wrong in rejecting the appointment letter having regard to the terms of the Sub-DMC.

31.The principles upon which I should construe the Sub-DMC are well-known and need not be repeated. For the present purpose, the following may be noted:

“19. These principles are set out by Lord Hoffmann in Investors Compensation Scheme Ltd v. West Bromwich Building Society [1998] 1 WLR 896 (HL) at 912F - 913F and in BCCI v. Ali [2002] 1 AC 251 where at para 8 Lord Bingham succinctly summarised them:

“To ascertain the intention of the parties the court reads the terms of the contract as a whole, giving the words used their natural and ordinary meaning in the context of the agreement, the parties’ relationship and all the relevant facts surrounding the transaction so far as known to the parties.  To ascertain the parties’ intentions the court does not of course inquire into the parties’ subjective states of mind but makes an objective judgment based on the materials already identified.”

20. If the words used are free of ambiguity and devoid of commercial absurdity their natural and ordinary meaning will apply unless the relevant surrounding circumstances demonstrate otherwise.”[15]

“If the ordinary meaning of the words makes sense in relation to the rest of the document and the factual background, then the court will give effect to that language, even though the consequences may appear hard for one side or the other. The court is not privy to the negotiation of the agreement – evidence of such negotiation is inadmissible – and has no way of knowing whether a clause which appears to have an onerous effect was a quid pro quo for some other concession. Or one of the parties may simply have made a bad bargain … But the only objective in construction is to give effect to what a reasonable person rather than a pedantic lawyer would have understood the parties to mean. Therefore, if in spite of linguistic problems the meaning is clear, it is that meaning which must prevail.”[16]

32.The provision in the Sub-DMC entitling City Management to attend an owners’ meeting is in these terms:

“6(d) The Manager may be represented at the Meetings by a duly appointed representative who shall be entitled to vote in respect of any Undivided Share held by the Manager.” (emphasis added)

33.The Sub-DMC does not otherwise prescribe how City Management should appoint its representative. This may be contrasted with the provisions governing how an owner may appoint a representative to attend the meeting:

“6(b) In the event of an Owner entitled to attend and vote being a corporate body, any representative appointed by such Owner shall be entitled to attend and vote on behalf of such Owner. Such appointment shall be in writing addressed to the Manager and may be revoked at any time on notice in writing being given to the Manager.

6(c) The husband or wife of an Owner entitled to attend and vote or any adult member of the family of such Owner duly authorised in writing by such Owner shall be entitled to attend and vote on such Owner’s behalf.” (emphasis added)

So, the Sub-DMC does not even require City Management to appoint its representative by a written instrument.

34.In my view, the laxity of clause 6(d) is understandable.  As we have observed, it is the secretary who would take attendance.  The secretary is sent by City Management and should have no difficulties in recognising the authorised representative of his/her company.  On the other hand, it would be difficult for the secretary to determine if an owner has sent a representative without something in writing.

35.Both parties agree that the relationship between City Management and Mr Wong vis-à-vis the meeting on 2 August 2012 is one of principal and agent.  As a matter of general law, no formalities are required for the creation of agency.[17]  A corporation may make contracts by means of any person acting under its authority, express or implied, in the same manner as a private person. [18]  Since the Sub-DMC does not prescribe any formality, the general law applies and City Management may appoint its representative to attend an owners’ meeting by whatever means it pleases. 

36.I agree with Mr Lam that the appointment letter may be seen as a form of assurance that Mr Wong was City Management’s representative.  As such, the document merely required authentication, and that can be done by a director. [19]

37.Mr Burns cannot rely on the Proxy Form to insist that the appointment letter must bear City Management’s company chop.

38.First, that requirement is directed at corporate owners and not City Management.

39.Secondly, I do not think such requirement is valid even for corporate owners.

40.Both counsel accept that there is no common law right to vote by proxy. [20]  As Cotton LJ explained in Harben v Phillips in the context of a company:

“In my opinion the right of a shareholder to vote by proxy depends on the contract between himself and his co-shareholders, and where parties have a right depending upon the contract between them and the other parties, there, in my opinion, all the requirements of the contract as to the exercise of that right must be followed.” [21]

41.The other judge in that case, Bowen LJ, held a similar view:

“The first observation which occurs to me is this, that there is no common law right on the part of a member of a corporation to vote by proxy. We know, of course, that in many cases a man may do through another person what he may lawfully do himself. That rule does not carry one very far, because when examined it will be found simply to amount to this, that a man may do for another person all acts such as in their nature can properly be and are intended to be done by a delegate, so that it amounts to very little more than an identical proposition. But when persons agree to act together in the conduct of a business, the way in which that business is to be carried on must depend in each case on the contract, express or implied, which exists between them as to the way of carrying it on. Now, in the first place, at common law a proxy could not be used by a member of a corporation unless there was some specific provision which enabled him to do so. When you come to statutory corporations you must look at the statute itself, and the rules which are created under it, to see whether it is the intention of the statute or the rules that a proxy should be used, and if so, in what form it should be used.” [22]

42.Applying these principles to this case, the owners and City Management have agreed to be bound by the Sub-DMC.  In the case of corporate owners, clause 6(b) of the Sub-DMC merely requires them to appoint their representative by a written instrument addressed to the manager.  There is no requirement that the authorisation must also bear the company chop of the corporate owner.  Both counsel agree that the Guidelines and the Proxy Form are not binding on the owners. 

43.In any event, any doubt as to Mr Wong’s appointment should have been dispelled by the production of the minutes of the board of directors of City Management containing these resolutions:

“(a) THAT Mr Wong was indeed a valid and fully authorised representative of the Company who had full authority of the Company to attend and vote on its behalf at the Annual General Meeting of Headland Village held on 2 August 2012 in Discovery Bay and at any adjourned meeting thereof;

(b)        THAT Mr Chua did have authority of the Company to sign the Authorisation Letter on behalf of the Company;”

44.Mr Chan was concerned that these resolutions were only passed on 30 May 2013 and objected that:

(a)   As a matter of procedure, City Management should not be allowed to rely on any “post-writ” fact to remedy an otherwise bad cause of action.  He cited the following judgment of Recorder Fok SC (as he then was) in Lead Mile Ltd v Sino Peak Finance Ltd[23] in support:

“54. In my judgment, those cases do not assist the plaintiff. Those cases permit the addition of an additional cause of action after the date of the writ but do not permit an amendment to cure a defective claim by the addition of a plea of a necessary factual averment that could not be pleaded as at the date of the writ.

…

58. The rule against allowing an amendment to plead a post-writ fact in order to cure a defective plea is clearly supported by the decision of the Court of Appeal in Wing Siu Co. Ltd v. Goldquest International Ltd [2003] 2 HKC 64. The headnote of the report neatly summarises the position as follows :

“It could not be said that the original rule in Eshelby v Federated European Bank had disappeared.  A distinction should be drawn between a case where the amendment was to allow a real dispute in the case to be determined and one which introduced into the action a cause of action which could be said to be incurably bad because it did not exist at the date of the original claim.  Where courts had been disposed to permit the pleading of subsequent events, it would be made on the basis that the amendment was to clarify why a claim could be made based on a cause of action which existed at the date of the issue of the writ.  It did not go so far as permitting, in the face of opposition, an amendment which would introduce into a writ a cause of action which simply did not exist at the date of issue of the writ.”

(b) As a matter of substance, ratification must be made within a reasonable time or before any change of circumstances. He argued that the latest time that City Management might ratify the appointment was before Mr Burns had dissolved the meeting.

45.With respect, I do not think these objections are valid.

46.To start with, it appears to me that what the board did in terms of the resolutions was to confirm Mr Wong’s authority as at the date of the meeting as opposed to ratifying what he did without authority. 

47.Secondly, Mr Burns’ objection in relation to Mr Wong’s appointment had all along been on want of a company chop on the appointment letter.  Mr Chan only doubted, for the first time in his opening submission, Mr Chua’s authority (as a single director) to appoint Mr Wong.  In an attempt to lay the issue to rest, City Management produced the minutes just days before the trial.   The minutes, together with the explanation of Mr Wong,[24] was admitted in evidence by consent of the parties.  It would not be fair, in my view, to entertain Mr Burns’ new objection without affording City Management an opportunity to answer it. 

48.Thirdly, City Management and Mr Burns are at a deadlock over the construction of the Sub-DMC. City Management, as the manager of Headland Village and enforcer of the Sub-DMC, is entitled to commence this action to invite the court to construe the Sub-DMC.  This action is not dependent on Mr Chua’s authority to appoint Mr Wong in terms of the appointment letter or the validity of Mr Wong’s appointment.  In my view, the production of the minutes will enable the real dispute to be determined.  It has nothing to do with the cause of action of City management.  Even if (as Mr Chan has contended) Mr Chua lacked the authority back then, the effect of the board resolutions would be to confer authority on him which would relate back to the date of the appointment letter. [25]

49.For these reasons, I rule that the letter of City Management appointing Mr Wong to attend the meeting of 2 August 2012 was valid, and it was wrong for Mr Burns to reject it.

(c)      Proxies from individual owners appointing non-family members to attend and vote on their behalf

50.Clause 6(a) of the Sub-DMC entitles an “Owner” to attend and vote at an owners’ meeting.  “Owners” are defined with reference to Headland Village as: “All the Owners having the right to the exclusive use occupation and enjoyment of a Residential Unit in the Village.” [26]

51.Clause 6(c) (quoted in para 33 above) has the effect of expanding the category of people who may attend an owners’ meeting by allowing “husband or wife” of an owner or “any adult member of the family … duly authorised in writing” to attend and vote on behalf of the owner. 

52.Mr Lam makes the point in his closing submission that if the drafter had wanted a restrictive interpretation of clause 6(c), he would have added the word “only” and the clause would read:

“Only the husband or wife of an Owner entitled to attend and vote or any adult member of the family of such Owner duly authorised in writing by such Owner shall be entitled to attend and vote on such Owner’s behalf.”

Mr Wong Fu-Keung also said in evidence that a restrictive interpretation for Headland Village would have repercussions on other villages as there are similar provisions in other sub-deeds of mutual covenant. 

53.With respect, City Management’s contention cannot be accepted.  Again, the starting point is that no one is entitled to vote by proxy unless allowed by the regulations of the body concerned.  Clause 6(c) enables the spouse of an owner or an adult member of his family who has been duly authorised in writing to attend and vote on his behalf.  It does not permit anyone else to do so.  In my view, the natural and ordinary meaning of the words is clear whether or not the word “only” is used.

54.In an attempt to dissuade me from adopting a literal interpretation, Mr Lam referred me to the following comment of Lord Reid in Wickman Tools v Schuler AG:

“The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intention abundantly clear.” [27]

and the comment of Lord Hoffman in Chartbrook Ltd v Persimmon Homes Ltd that:

“… in some cases the context and background drove a court to the conclusion that ‘something must have gone wrong with the language’. In such a case, the law did not require a court to attribute to the parties an intention which a reasonable person would not have understood them to have had.” [28]

55.He submitted that a restrictive interpretation would deprive the following categories of owners the opportunity to attend an owners’ meeting and that would be unreasonable:

(a) Expatriate owners with no relatives in Hong Kong who happen to be out of town for business, sick in bed or on holiday in Bali.

(b) Couples who choose to live together but not legally married.

(c) Homosexual couples who cannot legally married in Hong Kong.

56.In my view, the prejudice perceived on these categories of owners is not real.  If owners are given sufficient advance notice of the meeting, they can rearrange their affairs to facilitate their attendance.  It is true that an owner who has fallen ill on the day of the meeting would not be able to attend, but that has nothing to do with the clause.  The term “family” is not defined in the Sub-DMC, and a sensible interpretation of the clause would permit those whom we generally regard as family members to represent an owner.

57.There is no material before me that a literal interpretation of clause 6(c) would lead to unreasonable result.  And I do not think I should strain the language just to facilitate other villages.

58.On this count, I think Mr Burns was right in rejecting the proxies given by individual owners to appoint non-family members to attend and to vote on their behalf.

(d)     Mr Burns’ decision to dissolve the meeting

59.It is now common ground that the quorum for the meeting on 2 August 2012 should be 53. [29]

60.The parties spent considerable time in closing submission to reconstruct the attendance at different times of the meeting.  In the end, no agreement is reached but I do not think that matters.

61.By City Management’s calculation, there were 106 owners attending in person or by proxy at the 1^st part of the meeting.  Given my ruling that an individual owner cannot authorise a non-family member to attend the meeting, at least 31 proxies should be declared void with 3 uncertainties. [30]  So, the worst case scenario (so to speak) for City Management is to deduct all 34 proxies from 106, leaving 72 owners.  This would have been sufficient for the meeting to proceed. 

62.On the other hand, it is the respondent’s case that there should be 96 owners to begin with.  The respondent would accept a deduction of 31 given my ruling to disallow non-family members to represent individual owners.  That leaves 65, which is still more than sufficient to satisfy the quorum.

63.As a last ditch attempt to justify the decision to dissolve the meeting, Mr Chan quoted my from judgment in a previous case and argued that it was after all not unreasonable for Mr Burns to so decide:

“若果主席考慮了相關因素、沒有考慮一些不相關的因素，而他的決定又並非一個深明主席權責及合理不過的主席所不可能作出的，那麼，法庭一般都會維護他的決定。道理很簡單，主席只是凡人，不可能臻善臻美，尤其是當他要在非常情況履行職責，只要他的決定並非「不合理」，法庭不應（亦不鼓勵其他人）事後吹毛求疵地剖析該等決定，因為這樣做對主席並不公平。” [31]

64.I was there explaining in laymen terms in Chinese the decision of the English Court of Appeal in Byrne v London Life Association Ltd that:

“The chairman’s decision [to adjourn] will not be declared invalid unless on the facts which he knew or ought to have known he failed to take into account all the relevant factors, took into account irrelevant factors or reached a conclusion which no reasonable chairman, properly directed himself as to his duties, could have reached, ie the test is the same as that applicable on judicial review in accordance with the principles of Associated Provisional Picture Houses Ltd v Wednesbury Corp [1947] 1 All ER 680, [1948] 1 KB 223. This was the approach adopted by Uthwatt J in Second Consolidated trust Ltd v Ceylon Amalgamated Tea and rubber Estates Ltd [1943] 2 All ER 567, where he held a chairman’s decision invalid on the grounds that he had failed to take into account a relevant factor.” [32]

Insofar as Mr Chan is suggesting that I was propounding a separate test of “reasonableness” which would trump all other considerations, that is a misreading of my judgment.

65.This case is very different from 何英生or Byrne.  In my view, Mr Burns had, in deciding to dissolve the meeting, failed to take into account a relevant factor, namely, the requirement of clause 6(d) of the Sub-DMC, and took into account an irrelevant factor, namely, the requirement of the Proxy Form.  Furthermore, I take the view that a reasonable chairman would have canvassed the views of those present in the circumstances of this case before dissolving the meeting.  Mr Burns collected his authority from the meeting.  It was his duty to ensure that the meeting was properly conducted in accordance with the applicable law and to give all shades of opinion a fair hearing. [33] It was possible for him to consult the meeting informally even in the absence of a quorum. [34]  In view of the difference in opinion on the interpretation of the rules governing the meeting, Mr Burns should have consulted the meeting as opposed to relying on his own opinion on the view of his committee.

66.Consequently, I rule that it was wrong for Mr Burns to dissolve the meeting.

(e) The 2^nd part of the meeting

67.It is common ground that City Management did not take a roll call (so to speak) at the beginning of the 2^nd part of the meeting.  Initially, City Management relied on the voting results and worked backwards to confirm the existence of a quorum. [35] The respondent took issue with such an approach. [36]

68.Mr Lam adopted a new approach in his closing submission.  Based on the contemporaneous record kept by Ms Jennifer Lee, he worked out that there should be “at least 63 owners” during the 2^nd part of the meeting and so a quorum existed.

69.The record kept by Ms Jennifer Lee was confirmed by Mr Burns. [37] However, Mr Chan argued that Mr Burns and other 2011/12 VOC members (totaling 22) who had stayed on to protest the 2^nd part of the meeting should not be counted towards the quorum.  He confirmed that this is the only objection taken in relation to the validity of the 2^nd part of the meeting and the voting result. [38]

70.I do not think there is any basis for not counting the 2011/12 VOC towards the quorum.

71.It was Mr Burns’ evidence that:

“38. A small number of Owners present then slowly proceeded to this new area. The [2011/12 VOC members] also proceeded to this area … Mrs Mihos and I, and other members of the VOC apart from Mr Shen and Mr Kwok, took up positions at the head table. Over my loud objections stating that the meeting was illegal, [Ms Jennifer Lee] proceeded to run the meeting…

39. [Ms Lee] asked for proposals for a Chair for the meeting from among the Owners present. I strongly objected that the election of an Owner from the floor was illegal when both the Chairman and Vice Chairman of the VOC were present. [Ms Lee] ignored my protest and again called for nominations from the floor. Mr Kwok proposed Mr Shen. [Ms Lee] asked Mr Shen whether he accepted. Mr Shen had to be nudged by Mr Kwok to respond.

40. This occurred at about 10 minutes after the meeting had begun. Mr Shen made some very brief remarks, but did not confirm that a quorum existed. He then handed the meeting over to [Ms Lee] to conduct the election of the Chairman. I again protested that the election was illegal.

41. As I had submitted my intention to run as Chairman to [City Management] several weeks prior to the meeting, my name was on the list of candidates. However, no one present, including members of the outgoing VOC, seconded the nomination. Members of the outgoing VOC joined me to vocally protest the illegal election. Mr Shen said that, if anyone objected, they could go to the Lands Tribunal.

42. [Ms Lee] then closed the nominations and declared Mr Shen the winner by acclamation. Mr Shen then conducted the rest of the meeting. I did not protest further as there was no point to do so.

…

44. When no one present seconded the nominations of Mrs Mihos and Mr Brian King for Vice-Chairman, Mr Kwok was elected Vice Chairman by acclamation.  The election of the members of the VOC members was conducted by poll, and it took some time thereafter for the result to be made available.  The result was announced by [Ms Lee], stating only the names of those who had been elected to the VOC.  The vote counts were not stated by [Ms Lee], nor were the counts written on any board that was visible to the Owners present…”

72.Mrs Mihos also recalled that:

“During that time, the police had apparently arrived at the front of the building. I was approached by an owner to assist him in explaining to the police about the situation occurring inside the hall. I left the building and met with a squad of policemen there … Upon the advice of the Police Officer, I re-entered the hall and explained to all the owners and others present that they needed to cease using abusive language, racial slurs and threats. Otherwise, I would file a police complaint against such an individual. If any owner felt threatened, the Police would immediately respond to a call and enter the hall to provide assistance. The owners then gradually settled down…”

73.In his closing submission, Mr Lam made the point that:

“the issue is simply whether Mr Andrew Burns had, on the evidence, made an informed choice to stay at the 2^nd part of the AGM and run for office (and therefore exercising his right to stand for election at a meeting the validity of which he acknowledged). If on the evidence he had done so (and we do say that on the evidence he had done so – for he could have withdrawn or left but did not do either), he cannot now complain about any alleged irregularity of which he already had notice at the time.”

This is also the point taken based on estoppel.

74.I think Mr Lam is right when he said “present simply means present.  If an owner is physically present but protesting, he is still present for the purpose of forming a quorum.”  Mr Chan had been at pains in his closing submission to explain how Mr Burns and Mrs Mihos could have participated in the 2^nd part of the meeting in the way they said they did without being counted as present.  In the end, I do not think Mr Chan has succeeded in resolving the conundrum.

75.The only objection having failed, I rule the 2^nd part of the meeting (including the voting result for the 2012/13 VOC) valid.

76.However, I do not accept that Mr Burns had done anything at the meeting that can objectively be viewed as exercising his right to stand for election or partake in the election.  His nomination was submitted in advance of the meeting.  He had done nothing at the meeting to affirm or promote his nomination.  No one seconded his nomination and his nomination was not voted upon in view of the requirement that all nominations must be seconded. [39]  The point on estoppel therefore fails.

(f) Whether declaratory relief should be granted?

77.Mr Chan quoted the judgment of HH Judge Lam (as he then was) in 曾婉玲 v兆隆苑業主立案法團[40] and argued that declaratory relief is not suitable in this case because:

(a) The present litigation is not necessitated by any practical concerns.

(b) The present litigation could have been avoided by holding a new owners’ meeting as requested by the 78 owners.

(c) The request for a declaration was merely a step towards the application for an injunction.  Now that the application for an injunction is abandoned, there is no need for a declaration.

78.In response, Mr Lam drew my attention to the recent English Court of Appeal case of Rolls-Royce plc v Unite the Union [41], especially the judgment of Aikens LJ at para 120.

79.I do not think I need to dwell on these authorities.  Suffice for me to observe that in the present case, there is, in my view, a practical need for a declaratory relief.

(a) Even if City Management had acceded to the request to convene another owners’ meeting and assuming it would present an authorisation bearing a company chop this time, there would still be the unresolved issue of whether an individual member could send a non-family member that would plague the meeting.

(b) Even if the above issue was put to a vote, the result, whilst binding on all owners, would not bind City Management.  A judicial decision in a case such as the present one involving City Management will bind it.

(c) The above explains why the prayer for a declaratory relief is not just a prelude to the injunction application.

80.Consequently, I do not accept Mr Chan’s submission.  In my view, a definitive ruling from this court in the form of the declaratory relief sought would enable the immediate parties to move on and would be conducive to good management of Headland Village in the long run.

Conclusion

81.For the above reasons, I find in favour of City Management and grant the declaration sought.

82.As City Management has succeeded in its application, I make an order nisi that the costs of and incidental to this application be to City Management to be taxed on District Court scale if not agreed with certificate for counsel. Unless an application has been made to vary the order, it shall become absolute 14 days after the handing down of this judgment.

83.It remains for me to thank both counsel for their diligence and able assistance.

Mr Kenneth LAM instructed by M/S S.K. Lam, Alfred Chan & Co., for the applicant

Mr Isaac CHAN instructed by M/S Chan, Wong & Lam,for the respondent