Kannix Ltd v. The Incorporated Owners of on Hing Building

LDBM 57/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 57 OF 2014

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BETWEEN

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J U D G M E N T

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1.This is the application of the applicant, being owner of 7 units comprising about 13% of the undivided shares of On Hing Building, for dissolution of the management committee of the respondent and for appointment of Mr. Sham Kwok Choi Delon (岑國材) (“Mr. Sham”), an employee of the applicant, an administrator pursuant to section 31 of the Building Management Ordinance, Cap 344 (“BMO”).

2.No one from the respondent appeared. Neither is there any Notice of Opposition filed by the respondent. Only Mr. Sham testified on behalf of the applicant.

Brief background and Evidence

3.On Inland Lots Nos. 5286 and 5287 stands the On Hing Building, which is a nine-storey building with ground floor comprising 8 units for commercial purposes and 8 upper floors each comprising 7 units for residual purpose. The Building was assigned street numbers 326, 328, 330 & 332 Des Voeux Road West and 11A, 11B, 11C & 11D Sai On Lane.  By a Deed of Mutual Covenant dated 26^th October 1960, the Building was notionally divided into 64 undivided shares with each unit/shop assigned one undivided share. According to the Certificate of Registration filed by the applicant, the respondent was registered as a corporation on 19^th April 1988 pursuant to the Multi-storey Buildings (Owners Incorporation) Ordinance 1970.

4.It is the unchallenged evidence of Mr Sham that the chairman, the secretary and the treasurer of the latest management committee of the respondent, namely, one Miss Chow, Miss Ho and Miss Yung respectively, had sold their units after they had been elected to office. Pursuant to paragraph 4(2)(e) of Schedule 2 of the BMO, they ceased to be members of the management committee by operation of law[1]. Their offices have since then left vacant.

5.Mr. Sham testified that owners of the On Hing Building have been served with orders from the Fire Services Department under the Fire Safety (Buildings) Ordinance, Cap 572, requiring them to improve the fire services facilities of the Building. The improvement works include installation of sprinklers system for the ground floor shops, hose reel system, manual fire alarm system contained in smash glass boxes for upper floors, pumps, water tanks for the whole Building, etc. As the management committee of the incorporated owners is defunct, no action can be taken by the defendant in order to comply with the orders issued by the Directors of Fire Services. All co-owners may face criminal prosecution for their failure to comply with these statutory requirements.

6.On 8^th August 2013, a meeting was convened between co-owners holding 50% of the undivided shares of the Building. The meeting seemed to be made possible with the assistance of the relevant government departments including the Fire Services Department. It was agreed unanimously between the co-owners attending the meeting, inter alia, that Mr. Sham be nominated to apply to this Tribunal to be appointed under section 31 of the BMO as administrator to convene an owners’ meeting for the purpose of electing a new management committee to the incorporated owners.

7.Section 31 and 32 of the BMO stipulate:

“31. Appointment of administrator by the tribunal

(1) The tribunal may, upon application made to it by –

(a) An owner;

…

dissolve the management committee and appoint an administrator, or remove and replace an administrator, as the case may be.

(2) The tribunal may direct that the administrator appointed under subsection (1) shall hold office for an indefinite period or for a fixed period on such terms and conditions as to remuneration or otherwise as it thinks fit, and the remuneration and expenses of the administrator shall be deemed to be part of the expenses of management of the building under this Ordinance.

32. Powers and duties of an administrator

(1) An administrator shall have all the powers and duties of a management committee and of the chairman, secretary and treasurer thereof.

(2) An administrator shall, within 7 days of the date of his appointment or the termination of his appointment, give notice thereof to the Land Registrar in such form as the Land Registrar may specify.

(3) Any person who contravenes subsection (2) shall be guilty of an offence and shall be liable on conviction to a fine of $100 for each day during which the contravention continues.”

8.Apparently there is an urgent need for all co-owners of the Building to act together with a view to comply with the statutory requirements. An operative owners’ incorporation is essential as water pipes, pump rooms and large water tanks have to be installed in public areas of the Building. Needless to say, owners have to contribute to the expenses for these installations. Obviously without an operative management committee, the aforesaid works cannot be done. Currently, no general meeting can be convened for any purposes as Schedule 3 requires the meeting to be initiated by the chairman of the owners’ incorporation and there is none for the time being.  Appointment of an administrator helps deal with the problems. The administrator, being vested with the powers of chairmen and secretary pursuant to section 32 of the BMO, can invoke paragraph 1 of Schedule 3 of the BMO to hold a general meeting, or makes appropriate response to any request for such meeting.

9.In the present case, Mr. Sham is the director of the Applicant which owns 13% of the undivided shares of the Building. His application was supported by owners representing 50% of ownership of the Building. Although he is an employee of the applicant, he is also the Operation Director (not a company director within meaning of the Companies Ordinance) of the applicant’s holding company which is a property investor owning over 2,000 residential units and 20 blocks of building in Hong Kong. He is the one in charge of property management of these properties of the group. According to his evidence which this Tribunal accepts, he is now committee member of 11 owners’ incorporations and chairman of 6 of them.  He proposes to charge no fee for his service if appointed by this Tribunal. He also does not ask for costs of this application on behalf of the applicant.

Conclusion and Orders

10.In the circumstances, I am satisfied Mr. Sham a fit and proper person to be appointed as administrator for the present purposes and accordingly make the following orders:

(i) The management committee of the respondent be dissolved;

(ii) Mr. Sham be appointed the administrator of the respondent pursuant to section 31 of the BMO;

(iii) The aforesaid appointment is for a term of 1 year or until a new management committee of the respondent is elected, whichever is the shorter;

(iv) The order made herein be served in the following manners:

(a) Displaying a sealed copy order at the notice board of the Building; and

(b) Sending a sealed copy order made herein to the respondent at its registered office. and

(v) There be no order as to costs of the application.

Mr. Sham Kwok Choi, Delon, the applicant’s director, appearing in person

The respondent was not represented and did not appear