Owners corporation liable under BMO s.16 even in respect of pre-incorporation debts

Hang Yick Properties Management Ltd v Tuen Mun Kar Wah Building ([2005] 2 HKLRD 499, CA) concerned a claim by the managers of a building against an owners corporation for reimbursement of management expenses alleged to have been incurred by them. Such expenses could be recovered by the managers against individual owners under the terms of the Deed of Mutual Covenant. The liability to pay ran with the owners’ undivided shares by virtue of section 41 of the Conveyancing and Property Ordinance. The owners corporation argued that it could not be liable since this was a pre-incorporation debt. The Court of Appeal held that if the alleged liability was a liability of all of the owners  in relation to the common parts of the building then it was enforceable against the owners corporation even though the liability was incurred before incorporation (Building Management Ordinance, s.16 and [40] of the judgment).

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