Li Bark Shing and Another v. The Incorporated Owners of Hong Yuen Court

LDBM 149/2013

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 149 OF 2013

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BETWEEN

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D E C I S I O N
( Costs )

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1.This decision deals with the costs between the parties after the Application was discontinued pursuant to a consent order dated 7^th November 2013 made by H.H. Judge Ko with agreed directions that the tribunal shall decide on costs after the parties exchanged written submissions within 14 days of the order.

Brief background

2.The applicants are the registered owners of two units situated at Hong Yuen Court and the respondent the incorporated owners of the said Hong Yuen Court duly incorporated on 26^th October 1994 under the Building Management Ordinance, Cap 344 (“BMO’).

3.Under the BMO, the management committee of any incorporated owners has a statutory duty to keep certified minutes of the management committee meetings[1] and general meetings of the corporation[2] for such period as the incorporated owners may determine but such period should not be less than six years.

4.On 1^st October 2012, the applicants wrote to the respondent asking for, inter alia, “... copy or sight of ... Official Minutes all meetings”[3]. After several chasers, the respondent, through a firm of solicitors, wrote back on 26^th November 2012 asking for “the period and nature and the dates of minutes” which the applicants would like to have, and expressed that the request is too wide and general.

5.The applicants then instructed the present firm of solicitors and replied on 17^th December 2012 that the request was for all minutes of meetings of the management committee and those of the general meetings pursuant to paragraphs 10A(2) of Schedule 2 and 6A(2) of Schedule 3 of the BMO.

6.By two letters respectively of 22^nd January 2013 and 30^th January 2013, the relevant copy minutes as from 2007 were sent to the solicitors for the applicant. It is noted that in the said second letter, solicitors for the respondent has this to say:

“Inclusive the attachment of this letter, our client has sent you six years meetings’ minutes starting from the year 2007 to the year 2012 which meets the requirement of Schedule 3 Clause 6A(1) of the BMO.[4]”

7.Apparently dissatisfied with the respondent’s answer, the applicants’ solicitors wrote back. The gist of the applicants’ position was that the relevant Schedules of the BMO require the corporation to keep minutes for as long a period as they had resolved to keep, subject to a minimum period of 6 years. Accordingly, the corporation was under a legal obligation to disclose all minutes unless they had resolved otherwise. In that event the corporation had to provide evidence of its determination.

8.The last reply of the corporation’s solicitors came on 15^th April 2013. It is fair to summarize the reply as follows:

(i) “many years ago” the corporation passed resolution to keep relevant minutes for six years only. No evidence, however, is provided; and

(ii) the corporation said it cannot produce the particular resolution which was “discarded” pursuant to the practice after the said resolution.   

9.Presumably the particular resolution was passed prior to 2007.

10.It was pointed out by the applicants through a letter of their solicitors dated 23^rd April 2013 that the minimum six years provisions in the two Schedules only came into effect on 1^st August 2007. This is in fact not disputed by the solicitors of the incorporated owners[5]. Prior to that date there was no legal minimum provided in the Schedules. Accordingly, they doubted whether such resolution has ever been passed at all and requested production of the said resolution. They stated, and this is not challenged, that according to the disclosed minutes for meetings since 2007, no such resolution was recorded.  Alternatively they challenged that such resolution, if really passed, should be invalid as the then BMO (prior to 1^st August 2013) required keeping of all minutes.   

11.The applicants’ aforesaid letter met with no reply. The applicants therefore issued the present proceedings. It is explained in the submission filed on behalf of the corporation that since the incorporated owners considered that they have sufficiently answered the applicants’ query, they did not see fit to respond to the applicants’ letter of 23^rd April 2013.

The application and the discontinuance

12.On 28^th May 2013, the applicants through their solicitors applied for an order against the respondent for supply of all minutes since its incorporation up to and exclusive of 2007.

13.The grounds of oppositions, so far as can be discerned from the corporation’s Notice of Opposition dated 14^th June 2013, can be summarized as follows:

(i) prior to 1^st August 2008 [presumably a typo error as it was accepted that the current version of the paragraphs 10A of the Second Schedule and 6A of the Third Schedule came into effect on 1^st August 2007], the corporation has no duty to keep minutes prior to 2007;

(ii) the BMO does not say that the two relevant provisions in the two Schedules are with retrospective effects; and

(iii) all minutes prior to 2007 have been discarded.

14.It is noted that while the letter of the incorporated owners has stated that the particular resolution has been discarded, the Notice of Opposition stated for the first time that the minutes kept prior to 2007 have been discarded.

15.In paragraph 6 of the witness statement of one Madam Lam filed on behalf of the incorporated owners, she confirmed all minutes prior to 2007 have been discarded.  It is stated by the applicants’ solicitors that in view of fact that such statement was duly verified by a statement of truth, the applicants decided not to pursue the matters further.

Discussion

16.Section 12(1) of the Lands Tribunal Ordinance Cap 17 stipulates that:

“ The costs of and incidental to all proceedings in the Tribunal are in the discretion of the Tribunal, and the Tribunal has power to determine by whom and to what extent the costs are to be paid.”

17.It is a settled principle that when the question of costs arises, the court is entitled to look at all circumstances including the conduct of the parties in the proceedings. In the present case, in order to assess the parties’ conduct, necessarily the statutory requirements and the manners in which they have conducted themselves are crucial.

18.Prior to the amendment to the two Schedules in 2007,

(i) paragraph 10(4) of the 2^nd Schedule stipulated:

“The secretary shall keep minutes of the proceedings at every meeting of a management meeting.”

and

(ii) paragraph 6(1) of the 3^rd Schedule provided that:

“The secretary of the management committee shall keep minutes of the proceedings at every general meeting of the corporation.”

19.The statutory provisions prior to the amendment required the secretary of the corporation to keep minutes of both the general meetings and the management committee. The mandatory word “shall” is deployed. Since there is no minimum period for the records to be kept, in my judgment, the duty on the secretary is to keep minutes of each and every meeting. After the amendment, the statute relaxes the onerous duty previously imposed and leaves it to a corporation to decide for how long such records should be kept, provided that such period should at least be six years. The six-year period is therefore only a legal minimum, and subject to an express election by the corporation by way of resolution. As such, I consider that the then solicitors for the corporation have totally misconceived the statutory requirement when they said the incorporation met the requirement of the Schedule 3 by providing six years’ minutes. Obviously whether the corporation has complied with the request depends on whether the alleged resolution has been passed by the corporation.

20.Further, I do not consider the corporation has by its solicitors’ letter of 15^th April 2013 made the corporation’s position clear. As I have stated above, what they said in the said letter was the relevant “resolution” had been discarded, not all minutes prior to 2007 having been discarded.  Apart from that, there is nothing substantial in the said letter addressing the issues between them. The applicants were justified to issue a further letter to challenge that the corporation’s duty might not have been discharged, particularly in light of:

(i) the corporation’s misconception about the legal provisions  manifested in correspondence;

(ii) that no such resolution has ever been recorded in any post-2007 minutes; and

(iii) that prior to the coming into effect of the latest version of the Second and Third Schedules, any resolution to the effect of limiting the keeping of records to 6 years appears incompatible with then statutory provisions and will be odd with doubtful legal effect.

21.It is most unfortunate that the corporation did not make use of the opportunity to reply to the applicants’ pre-action letter, confirming clearly that all pre-2007 minutes have been discarded, be it rightly or wrongly. It also fails to make use of the opportunity to state its position when the proceedings were first issued. Instead, a defence was filed. The legal propositions stated therein regarding the six-year requirement is simply incorrect. Further from the undisputed correspondence disclosed, it did not support the assertion in the defence that “... the respondent had informed the applicants ... that the minutes prior to 2007 had been discarded”. Factually it is incorrect. I am afraid by reading the letter one cannot come to the conclusion that all pre-2007 minutes have been discarded without some speculation or doing violence to the said letter. It is not until the filing of the duly verified witness statement of the corporation’s secretary that the corporation has confirmed all pre-2007 minutes have been discarded. As the Court cannot compel a party to provide something which is no longer in existence, it is reasonable for the proceedings to be discontinued.

Conclusion and orders

22.By reasons of the above, I consider it justifiable for the applicants to issue the present proceedings asking for the requested minutes and drop the same once there has been express confirmation that the requested documents no longer exist. As seen from above, the respondent’s conduct both prior to and after the proceedings is far from satisfactory. In the circumstances, I consider it reasonable for costs of the application to be paid by the corporation, and I now make the order. Such costs are to be taxed on a district court scale, if not agreed.

Represented by Lui & Law, for the applicant

Represented by Lau & Chan, for the respondent