Simon Patrick Michael Durrant v. Incorporated Owners of Southorn Development
Read the full judgment text of LDBM 230/2013 on BabelCite. This Lands Tribunal judgment was delivered on 14 July 2014.
1. The applicant is the owner of Flat 4204 Southorn Gardens, part of the Southorn Development (“the Development”) and the respondent is the Incorporated Owners of Southorn Development (“IO”).
Cited by 6 cases · Cites 3 cases
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LDBM 230/2013 IN THE LANDS TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION BUILDING MANAGEMENT APPLICATION NO. 230 OF 2013 _________________
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_________________ J U D G M E N T
Background 1.The applicant is the owner of Flat 4204 Southorn Gardens, part of the Southorn Development (“the Development”) and the respondent is the Incorporated Owners of Southorn Development (“IO”). 2.On 10 August 2013, the IO received a letter dated 8 August 2013 from the applicant (“A’s Letter”) (page 65 of Bundle) requesting for an inspection of :
3.In A’s Letter, the applicant asked for the documents requested to be “ready for inspection within 7 days of the date of this letter – i.e. the 15 August 2013”. 4.MTR Corporation Ltd (“MTR”), the management company on the instruction of the IO, sent a reply letter dated 12 August 2013 to the applicant (“R’s reply”) (page 66 of Bundle). Contents of the letter reads :
5.On 12 August 2013, the applicant filed the Notice of Application (“NOA”) in this case with the Lands Tribunal and the NOA was being served on the IO on the same day. In the NOA, the applicant is asking for an order, pursuant to section 27(2) and Paragraph 2(5) Schedule 7 of the Building Management Ordinance (“BMO”), to inspect the books of account including but not limited to all the documents listed in paragraph 2 above as well as the following 2 additional document :
6.By a summons dated 8 October 2013, the respondent asked for the NOA to be struck out. In the decision handed down on 18 November 2013 (“the Decision”) (page 33-48 of Bundle) for the striking out application, this court ruled that :
7.This is the hearing of the applicant’s request for the Itemized Documents and at trial, the applicant confirmed that the period involved is between October 2011 to January 2012. The Itemized Documents can be divided into 3 different types :
Undisputed Facts 8.In late August 2011, painting work was being performed on the lift doors on 42/F of Southern Garden. The applicant complained to the MTR about the different colour painted as well as the quality of workmanship. Photographs were being taken by the applicant to show the condition of the lift doors (page 99-103 of Bundle) (“the Photos”). As a result of repeated complaints from the applicant, the lifts doors were repainted time and again. 9.On 5 January 2012, the applicant filed a claim in the Small Claims Tribunal against MTR and the IO alleging that quiet enjoyment had been interrupted because of the repainting work (SCTC 430/2012 refers) (“the SCT Proceedings”) (page 149-150 of Bundle). The SCT Proceedings was being dismissed on 11 June 2013. In the course of the SCT Proceedings, Mr. Lau of MTR had filed a witness statement dated 13 July 2012 in which the work schedule for the repainting work on 42/F was being disclosed (“Work Schedule”) (page 104-108 of Bundle). 10.The Work Schedule disclosed did not tally with what was being depicted on the Photos, i.e. on the dates shown on the Photos, no work was reported to be done on the lifts in the Work Schedule. And the Work Schedule also showed that contractor as well as technical staff of the IO had been deployed to perform the repainting work. 11.The applicant failed to pay any management fee since March 2010 and the sum is still outstanding as of today. The IO had taken legal actions against the applicant for the arrears of management fees including an application for the enforcement of charging order by sale in the District Court (DCMP 2266/2012 refers) (“DC Proceedings”). The background of the enforcement action leading to the DC Proceedings has been succinctly recorded in the judgment of the DC Proceedings dated 31 December 2013 between the applicant (as the Defendant) and the IO (as the Plaintiff) and I shall gratefully adopt the same :
Relevant Statutory Provisions 12.It is not in dispute that the following provisions in the BMO are relevant in the consideration of this application. 13.Paragraph 1 Schedule 6 required:
14.For the purpose of Paragraph 1A(b), Paragraph 1B Schedule 6 of the BMO provided that:
15.In a gist, under Schedule 6, any owner who seeks to inspect the bills, invoices, vouchers, receipts or other documents must meet one of the following 2 requirements:
16.And in order to be authorized by the court to inspect the documents, the owner has to apply to the court for an order to inspect and the court must be satisfied that the application is made in good faith and for a proper purpose. Party’s Contention 17.The applicant contends in his testimony that the request for inspection of the Itemized Documents is justified because the Photos proved that MTR had falsified records of maintenance works done at the Development. He suspected that the repainting work might not be registered for 42/F but instead registered as general repair work or for some other floors. The Security Videos and the Visitors Log will show who had attended the Building for the maintenance work. The Maintenance Records can assist in finding out the identity of the contractors, and with the job sheets, invoices and receipts issued for each job order, he can keep track of the maintenance occurs at the Development. Without the Itemized Documents, he would not know what is going wrong. Should any criminal element be found after inspection of the Itemized Documents, the applicant may consider further action including reporting to the police. 18.The respondent objects to the application on the ground that the request made by the applicant is not in good faith nor for a proper purpose and the whole action of the applicant is just a counter-action against the IO’s enforcement action against the applicant for non-payment of management fees since 2010. Discussion 19.An incorporated owners has often been thought of as being in some way analogous to a company incorporated under the Companies Ordinance (Cap. 622) (“CO”). The CO has similar provisions empowering the court to allow a member of the company to inspect records or documents. Section 740 of CO (Section 152FA in the repealed version) is a provision which is similar to Para. 1A and 1B of Schedule 6 involved in this case. Section 740 of CO reads :
20.As far as the interpretation of “in good faith” and “proper purpose” in this section of the CO is concerned, Ng J had, in the case of Ho Kwok Keung Tony v Hub Global Freight Solutions (HK) Limited (HCMP 670/2012) 7 June 2013, set out the relevant considerations from 2 previous judgments :
21.As can be seen from the quotation above, the “good faith” and “proper purpose” requirements constitute 2 separate and independent tests, i.e. subjective test to establish “good faith” and objective test to show “proper purpose”. The burden is on the applicant to prove the 2 requirements. “Good faith” means “honestly and with no ulterior motive and a “proper purpose” must be the primary or dominant purpose actuating the inspection. Even if the applicant can show “good faith” and “proper purpose”, the court may, in its discretion, ultimately consider that there is an insufficient prospect of anything useful resulting from the granting of the inspection order. The court has to be satisfied that the applicant actually has a sufficiently reasonable case for investigation by examining what the applicant actually wants to achieve before exercising its discretion to intervene and to grant the inspection order. 22.I found the principles laid down in the case of Ho Kwok Keung Tony summarised above is applicable in this case. 23.The applicant’s request for the Itemized Documents is premised on the fact that the Work Schedule was inaccurate leading to the applicant’s concern that the maintenance records kept are false document, hence the basis for an inspection. The applicant is relying on the Photos to establish that whilst the Work Schedule show the dates repainting work was being done on 42/F, this is inconsistent with the dates shown on the Photos which depicts repainting work was still in progress after the date on which the works was alleged to be completed by the IO. And the applicant also contends that the minutes of the Management Committee held on 1 March 2012 produced by IO in these proceedings also supports his case since the report made by MTR on the maintenance works for October 2011 to January 2012 at the meeting showed nothing related to the repainting works on 42/F (page 152C-152D of Bundle). 24.Mr. Choi, the chairman of the IO testified that the Work Schedule was accurate according to the record kept by MTR. He said in his supplemental witness statement that :
25.I do not agree with the applicant that the Photos show repainting works were still in progress on the dates the Photos were being taken. It is apparent from the caption put on the Photos by the applicant that the purpose of taking the Photos is to show the condition of the lifts and the poor workmanship in the repainting. There is nothing in the Photos for this court to conclude that works are still in progress on the material day when the Photos are being taken. It is also not the evidence of the applicant that he witnessed the work in progress on the date the Photos were being taken. 26.The repainting work may not have been properly carried out and this explains the repeated complaint lodged by the applicant and the repeated work done. Comparing the dates on the Photos with those on the Work Schedule, one can see that the dates on the Photos, except for the one taken on 7 January 2012 (page 103 of Bundle), are just a few days before the work recorded on the Work Schedule. The only inference to be drawn is that upon the complaint of the workmanship by the applicant after taking the respective photos, the IO arranged for repainting work to be done. For example, photo taken on 31 October 2011 (page 99 of Bundle) and work done on 2 and 3 November 2011. Photos taken on 13 and 14 December 2011 (page 100-101 of Bundle) and work done from 20 to 28 December 2011. Photo taken on 29 December 2011 (page 102 of Bundle) and work done on 5 January 2012. The last photo taken on 7 January 2012 and work done from 26 to 28 March 2012. 27.Even though the applicant denied any knowledge of technical staff employed by the IO, it is apparent from the minutes produced in these proceedings that this is the case. And the minutes of the meeting of 1 March 2012 also confirmed the fact that technical staff are being arranged to perform the repainting to save costs and MTR had also arranged repainting works at its own costs (page 152B of Bundle). This corroborates the evidence of Mr. Choi and I accept his evidence in this regard. 28.Since the technical staff is paid on a monthly basis, there is no extra costs incurred for the repainting works. This is consistent with the suggestion at the 7 June 2012 management committee meeting that “lift door painting works were the general maintenance works of the building” (page 156B of Bundle). This also explains why such work was not being included in the maintenance report of the MTR at the meeting on 1 March 2012 because as can be seen from the minutes (page 152C-152D of Bundle), all the maintenance works mentioned involved costs. Since the repainting work on 42/F was being performed by technical staff, it would only be reasonable for this not to be included in the report. I do not agree that the maintenance work report supports the applicant’s case of false maintenance record. 29.I am not satisfied that there is any basis to query the accuracy of the Work Schedule or whatever maintenance records kept by the IO or MTR. Since the applicant failed to establish his basis for this application for inspection, he failed to show that he is acting on good faith. 30.Even if the Photos can be taken to show that work had in fact been carried out on dates which were not shown on the Work Schedule, I still found that the applicant had failed to establish the 2 requirements under Para. 1B of Schedule 6 BMO. 31.In the case of Ho Kwok Keung Tony (supra), the plaintiff being one of the shareholders of the defendant company, is asking for an inspection of the records, books and papers of the company on the ground that some entries in the audited accounts did not accord with his recollection. Hon Ng J found that :
32.I found the same reasoning is also applicable in this case and the applicant has failed to adduce any evidence to show that there is something wrong in the maintenance records which justified an inspection. Even if the Work Schedule didn’t show that repainting work was being carried out on those dates shown on the Photos, this cannot be conclusive evidence that the different documents included in the Itemized Documents must be false or inaccurate. As said by the applicant in his evidence, what he is doing now is to “find out if accounts and the records are false and wrong”, “if you don’t keep track of the maintenance occurs in the building, you don’t know what’s going wrong” and “I am gathering evidence to show how works are listed or recorded”. The applicant is making use of this application to find evidence to show that there is something wrong with the maintenance records instead of adducing evidence to show that something went wrong which justified an inspection. This is just a fishing exercise trying to find fault from the documents. The applicant is putting the cart before the horse and this defeats the legislation intention of the enactment of Para. 1A Schedule 6 BMO in allowing an inspection of documents. 33.The applicant also expressed his concern that the repainting works may have registered as general repair works or works related to other floors. There is no evidence to show that the work for 42/F or for specific floors had all along been credited to a specific account for that particular floor. As pointed out above, members at the meeting on 7 June 2012 also accepted that repainting work on lift door is general maintenance work, the applicant failed to show it is wrong for such to be registered as general repair works. 34.Furthermore, I am not satisfied that the applicant is acting in good faith in taking out this application and I accept the contention of the IO that this is just a retaliation against the IO’s enforcement action for the arrears of management fees. The applicant argued that the IO’s enforcement action is irrelevant to his application for inspection. I beg to differ. If the applicant is acting in retaliation by asking for an inspection, this is relevant to show an ulterior motive. 35.The IO commenced enforcement action against the applicant in 2010. The repainting work took place in October 2011 to January 2012 and the Photos were being taken then. The applicant had the affirmation of Mr. Lau in July 2012 and well aware of the Work Schedule stated therein. So, by August 2012, the applicant should have notice of the discrepancies between the Photos and the Work Schedule. Yet, no action had been taken by the applicant until 8 August 2013 when he sent A’s Letter asking for the Itemized Documents. The applicant had just let the sleeping dog lie until just 2 days after the OS was being taken out by the IO in the DC Proceedings. This is too much of a coincidence. I found this application of the applicant cannot be “honest and with no ulterior motive”. 36.And even if the applicant can show good faith and proper purpose, I am still not satisfied that the applicant has “a sufficiently reasonable case for investigation”. As said above, the applicant had failed to show any wrong in this case to raise a sufficiently reasonable case for investigation. 37.What the applicant actually wants to achieve is to find fault on the IO and/or MTR without any basis. This is not what Para. 1B Schedule 6 is intended to achieve. Should the applicant find suspicion in the maintenance record kept by MTR, what he should do is to raise this with the IO for whom to conduct enquiry and should not take the matter in his own hands by asking for an inspection of the documents. The applicant had said in his evidence that he had tried to raise the same in many management committee meetings but was disallowed by Mr. Lau. There is nothing to support such a contention and this bare assertion of the applicant had never been mentioned in the documents he filed in this case. I did not accept his evidence. 38.To conclude, I found the applicant had failed to discharge the burden of showing the 2 requirements in Para. 1B of Schedule 6 BMO, nor had he been able to convince this court to exercise the discretion in his favour. The Order 39.It is ordered that :
The applicant appeared in person Mr T S Cheung, of Cheung & Yip, for the Respondent |
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