Incorporated owners took over right to require managers to account for fees from common parts

Where money is owed to the owners of a property for the time being and an owners’ corporation is then formed, the right to enforce the obligation passes to the owners corporation under section 16 of the Building Management Ordinance.

In Jikan Development Ltd v Incorporated Owners of Million Fortune Industrial Centre ([2004] 1 HKLRD 181, CFA) the managers of an industrial building wrongly paid the fees derived from car parks that were common parts to be paid to one of the owners. After these sums had been collected by the managers, an owners’ corporation was formed and the corporation brought proceedings to recover the sums (which should have been held on behalf of all of the owners for the time being). The managers contested the corporation’s right to bring these proceedings since the corporation had not been formed when the sums were collected. This failed. Section 16 passed the right to enforce the reimbursement obligation to the corporation). Section 18(2) did not have this same effect since it merely conferred management powers and did not give any rights to the corporation.

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