Archive for the ‘Management Committee’ Category

Appointment of an administrator where the management committee had ceased to exist

January 4, 2014

In Smart Wealth Asia Pacific Ltd v Kelly Court (IO) ([2013] HKEC 2056, LT) Smart Wealth had acquired 92.5% of the shares in a building. All the members of the management committee had sold their shares and so ceased to be office-holders by operation of law. The owners meeting had resolved to dissolve the management committee and appoint an administrator but there was a serious doubt as to the validity of the resolution since the Building Management Ordinance required the management committee to call the owners meeting to consider such a resolution. This was an application by an owner for the dissolution of the management committee and the appointment of an administrator by the Tribunal under section 31 of the Building Management Ordinance.

The court made the orders sought. It was appropriate to dissolve the management committee to avoid doubts arising in the future as to whether or not one was in existence ([14]). It was also appropriate to appoint an administrator: there had to be a body capable of performing the duties and exercising the powers of the management committee under the terms of the Deed of Mutual Covenant and the Building Management Ordinance ([16]).

Michael Lower

The duty to convene and participate in management committee meetings

August 15, 2013

In Tzeng Li Wen Judy v Tam Lup Wai Franky ([2013] 2 HKLRD 790, LT) one member of a management committee brought proceedings against the chairman complaining that meetings had not been held every three months as required by schedule 2 of the Building Management Ordinance. The chairman sought to have the proceedings struck out on the grounds that the proceedings should have been brought against the management committee as a whole, that there was no business to discuss and there had been an agreement that no meeting was necessary. This striking out application failed. The management committee was not a separate legal entity capable of being sued ([19]). The chairman had a duty to convene a meeting every three months (though of course he could not compel anyone to attend) ([24]) and on the face of it he was in breach of this duty.

The action against the secretary was struck out. The secretary only had a duty to convene a meeting if requested to do so by two committee members and the secretary had received no such request ([27]).

The action against the corporation was struck out since it had no power to convene a meeting of the committee ([28]).

The members of a management committee are under a duty to participate so far as reasonable in the operation of the corporation and part of this duty is to attend management committee meetings ([24]).

Incorporated owners can be compelled to take action to enforce the DMC

November 19, 2012

In See Wah Fan v Ki Tat Garden (Phase I) (IO) ([2003] 3 HKLRD 1, CA) W owned the ground floor and cock loft in a building covered by a DMC. T owned the first floor and roof and the stairs and landings above (but not at) the cock loft level. In breach of the DMC, T had enclosed the landing at cockloft level and prevented W from obtaining access to the roof for repair purposes or as a means of escape in emergency. The owners corporation had not taken any action. W brought proceedings. Could he do so given that section 16 of the Building Management Ordinance makes the corporation the proper plaintiff? The Court of Appeal held that the Lands Tribunal can compel the corporation to enforce the terms of the DMC.

‘To take an extreme case, if the majority of the owners had decided to act in bad faith in a matter concerning the management of the common parts, is the minority owner precluded from seeking redress in the court? The answer must be no. This cannot be the intention of the legislation. This being the case, if a minority owner can show he has a legitimate complaint regarding the common parts of the building and yet the management committee had chosen to ignore him, we see no reason why he cannot seek relief from the court. This must be one of the means to ensure that the corporation will observe the intention and requirement of the Ordinance in the proper management of a multi-owner building.’ ([25] per Cheung JA).

IO’s duty to repair

September 4, 2012

In 顏小明v 多福大厦業主立案法團 ([2012] HKEC 1202, LT) the applicant owned a flat in Tsim Sha Tsui. Water was leaking from the roof into the flat causing damage to it. This was due to a failure to keep the water tanks on the roof, the water proof roof membrane and the external walls in repair. This was the responsibility of the IO under section 18 of the Building Management Ordinance. This repairing obligation is one of proper management and requires the incorporated owners to do all that is reasonably required in the circumstances ([48]). In this case the incorporated owners had to take adequate steps to discover the cause of the water leakage and the steps needed to deal with it ([54]). Although they had taken some steps, they had not done enough to properly perform this duty ([55]). Although dealing with the problem involved some work that was the flat owner’s responsibility, there was no point in carrying this work out until the incorporated owners had dealt with the problems affecting the common parts. Nor did the appointment of a manager absolve the incorporated owners from their duties under section 18 of the Building Management Ordinance since the manager would be the agent of the incorporated owners. The incorporated owners were ordered to carry out the necessary repair works to the common parts and to pay damages to reflect the cost of repairing the flat and the loss of rental income.

Incorporated owners replacing dangerous grille against owner’s wishes

July 16, 2012

In Grenville House (IO) v Wong Tak Keung Stanley ([2011] HKEC 1519 (District Court) an EGM of the owners resolved to replace the air grilles on the external walls of the estate due to safety concerns. The defendant, one of the owners, refused to allow entry to his flat to carry out the works. A warrant to enter the flat was obtained and the works were carried out. The owners now sought to recover the cost of the work from the defendant. They succeeded. The owners were entitled to enter the flat and carry out the work (section 40(1) (a) and (b) of the Building Management Ordinance). They were also entitled to recover the cost from the owner (section 40(1)(3) of the BMO).

The fact that the membership of the Management Committee had at times fallen below the number required by Schedule 2 to the BMO did not invalidate any of the decisions they may have taken. The fact that the management committee took decisions outside the confines of a formally convened meeting did not matter. They could rely on the Duomatic principle.

Can a management committee disqualify owners from participating in elections for the committee?

May 17, 2012

In Wong Kam Tong v Tin Shing Court, Yuen Long (IO) (No 1) ([2012] 2 HKLRD 614, CA) a management committee adopted rules governing the process of electing new committee members. Would-be candidates were required by the rules to sign a copy of certain rules regulating the conduct of candidates and home visits. The applicant had refused to sign the rules but contended that we was entitled to be treated as a candidate. The Court of Appeal held that it was arguably lawful to make rules such as those in the present case but refused to settle the point since the applicant no longer sought to contest the question.

BMO, s.20A(2): the duty to put bids out to tender is mandatory.

September 13, 2011

The duty in section 20A (2) of the Building Management Ordinance to require bidders to tender for the supply of goods or services the value of which exceeds the threshold specified in the section is mandatory and not merely for guidance. The Secretary for Home Affairs can only appoint a building management agent under s.40B when all 3 conditions in s.40B (1) are satisfied. Even when s.40B might apply, the court still has the power to award other remedies.

In Wong Tak Keung v Management Committee of the Incorporated Owners of Grenville House ([2003] HKEC 1495, CA) W owned an apartment in Grenville House. The management committee had appointed a firm of solicitors on retainer. The monthly fee had been HK$11,500 though this was later reduced to HK$8,300. On an annual basis, the original retainer was over HK$100,000. W argued that the management committee should therefore have put the contract out to tender in accordance with s. 20A(2) of the Building Management Ordinance (BMO). The management committee sought to strike out the application and argued that this section was for guidance and not mandatory. The Court of Appeal held that it was mandatory. W sought an order that the retainer was void as a result of the failure to put the contract out to tender. The management committee argued that the Secretary for Home Affairs’ power under s. 40B of the BMO to appoint a building management committee meant that no other remedies were available. The Court of Appeal held that the Secretary for Home Affairs can only appoint a building management agent under s.40B when all 3 conditions in s.40B (1) are satisfied. Even when s.40B might apply, the court still has the power to award other remedies.

Management Committee’s failure to step down does not leave a power vacuum

September 7, 2011

Even though a Management Committee has not stood down as required by the Building Management Ordinance, it does not cease to be the Management Committee of the Incorporated Owners with the rights and duties that that entails.

In Incorporated Owners of Finance Building v Bright Hill Management Consultants Ltd ([2001] HKEC 1431, CA) the plaintiffs were the incorporated owners of Finance Building in Des Voeux Road Central. Bright Hill was one of the owners. In 1997, a dispute arose concerning the management charge and Bright Hill refused to pay. The DMC allowed unpaid management charges to be secured by a charge over the property of the defaulting owner. Two charges were registered at the Land Registry. The Incorporated Owners applied to the court seeking the sale of the property. Bright Hill counterclaimed seeking among other things, a declaration that the registered charges were invalid and their removal from the register. The Lands Tribunal stopped the proceedings and dismissed both the application and the counterclaim. It did so because the original Management Committee had not stepped down to be re-elected or replaced as required by the terms of the Second Schedule to the Building Management Ordinance. As a result, the Land Tribunal decided, it was not empowered to bring or defend proceedings on behalf of the company.

By a majority, the Court of Appeal overturned this decision and returned both the application and the counterclaim to the Land Tribunal. A management committee’s failure to step down did not mean that it ceased to be the lawful management committee of the corporation.