THE INCORPORATED OWNERS OF GRENVILLE HOUSE v. KEEN JOY ENTERPRISES LTD

LDBM 200/2020

[2024] HKLdT 57

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO.200 OF 2020

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D E C I S I O N

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1.  On 14 May 2024, I handed down Judgment of this application and counterclaim (the Judgment)[1] after trial. For this Decision, I adopt the same expressions and abbreviations in the Judgment. In the Judgment, I dismissed the entirety of the counterclaim raised by Keen Joy against IO[2]. Keen Joy has raised two counterclaims[3]. By its second one, Keen Joy sought specific performance of IO’s obligations under the DMC and BMO regarding Fire Alarm Problem with a view to ensure an effective fire alarm system for Apartment F12 owned by it, and/or damages in lieu of, or in addition to, specific performance[4].

2.  By Form 1 filed on 11 June 2024, Keen Joy sought leave to appeal against the Judgment only on my dismissal of its second counterclaim relating to Fire Alarm Problem (the Leave Application). Two proposed grounds of appeal are annexed to the said Form 1. A fourth affirmation of Nora together with exhibit “FLLN-1” was filed on 11 June 2024 in support of the said application.

3.  On the two dates stated above, Keen Joy has lodged and served its skeleton submissions (R’s Skeleton) and skeleton submissions in reply (R’s Reply Skeleton), annexed with Keen Joy’s opening submissions[5], in support of the Leave Application.

4.  On the date stated above, counsel for IO, Mr Iverson Wong (Mr Wong), who had not appeared for IO at trial, has also lodged and served IO’s skeleton submissions (A’s Skeleton) in opposition to the Leave Application.

5.  At the hearing of the Leave Application on 28 June 2024, both Nora and Mr Wong appearing respectively for Keen Joy and IO made no substantive submission on the Leave Application and agreed for it to be disposed on papers after Keen Joy files and serves R’s Reply Skeleton.

6.  In arriving at this Decision, this Tribunal has carefully considered the Judgment and all proposed grounds of appeal in light of, among others, all submissions advanced by parties in the above 3 skeletons, all pertinent contents of 4^th affirmation of Nora and exhibit thereof, and all pertinent evidence adduced by parties at trial regarding the second counterclaim of the Fire Alarm Problem.

Legal principles for leave to appeal

7.  Under s.11(2) of Lands Tribunal Ordinance (LTO)[6], any party to proceedings before the Tribunal may appeal to the Court of Appeal against a judgment of the Tribunal on the ground that such judgment is erroneous in point of law.

8.  S.11AA(1) of the LTO requires leave to be granted by the Tribunal or the Court of Appeal before an appeal under s.11(2) can be made. S.11AA(5)(a) of LTO provides that leave to appeal may be granted in respect of a particular issue arising out of the judgment. S.11AA(6) of LTO further provides that leave to appeal shall not be granted unless the Tribunal is satisfied that:

(a)  the appeal has a reasonable prospect of success; or

(b)  there is some other reason in the interests of justice why the appeal should be heard.

9.  For the principles on s.11AA(6) on LTO above, I adopts the authorities cited at paragraphs 6 to 8 of R’s Skeleton. The threshold for meeting limb (a) above requires the prospect of succeeding in the appeal “reasonable” and therefore more than “fanciful”, without having to be “probable”. One is required to show more than just an arguable case, but an appeal that has merits and ought to be heard, although one does not have to demonstrate that the appeal will probably succeed.

10.  As to the circumstances limb (b) above could be met, leave to appeal may be granted if the question is one of general principle, decided for the first time or a question of importance upon which further argument and a decision of the Court of Appeal would be to the public advantage.

Grounds of proposed appeal

Ground One

11.  It is first complained by Keen Joy that this Tribunal had erred in law in finding that Existing Fire Alarm was in “good working order” such that it did not require any replacement: Judgment at §§73 to 74.

(1)  In light of the pertinent findings at §§64 to 67 of the Judgment, this Tribunal, it was said, erred in law in holding that the Existing Fire Alarm was in good order purely because (i) the warning sound level likely conformed with the minimum legal requirements set by FSD by way of code of practice and that (ii) IO had complied with the law and arranged for registered fire service installation contractor to inspect, inter alia, the Existing Fire Alarm every 12 months resulting in the certification of conformity with the legal minimum requirements set down by the 2012 version of Code of Practice for Minimum Fire Service Installations and Equipment and Inspection, Testing and Maintenance of Installations and Equipment (COP MFSI), when the Fire Alarm Problem was found to have existed: Judgment at §64. This, it was said, is inconsistent with this Tribunal’s own ruling (which is correct) at §§68 to 70 of the Judgment.

(2)  Whilst it is correct that in discharging its duty under s.18(1)(a) of BMO[7], IO shall have regard to and be guided by code of practice issued by the Authority under s.44, it is complained that it is legally wrong for this Tribunal to rule, in the absence of any legal authority or guidance, that compliance with such bare legal minimum requirements in blatant disregard to the actual context of Apartment F12 and GH as well as inaudibility entailed by the Fire Alarm Problem would discharge IO’s mandatory duty under s.18(1)(a) of BMO: Judgment at §§75 to 76.

(3)  This Tribunal, it was suggested, thereby also erred in adopting a literal and narrow meaning of “good working order” and/or “good working conditions” under Clause 9(b)(8) and (10) of DMC and s.18(1)(a) of BMO: Judgment at §74. This Tribunal failed, it was said, to apply or otherwise give effect to the well-established approach in construing the relevant provisions of DMC and BMO which is “a unitary exercise involving an iterative process”: Lai Wai Hung v. Sino Estates Management Ltd[2020] HKCA 448 at §26.

Ground Two

12.  It follows, Keen Joy argued, that this Tribunal had erred in law in holding that IO was not in breach of the relevant provisions of DMC and s.18 of BMO: Judgment at §71:-

(1)  Given the Fire Alarm Problem existed and the Existing Fire Alarm forms part of the “common parts” of GH (see Judgment at §68), it is complained that it is legally wrong for this Tribunal to hold that resolving the Fire Alarm Problem would be an “upgrade” or “improvement” to the common parts of GH which is something that IO “may (not must), at its discretion, decide to do, or decide not to do under s.18(2)(fa) of BMO”: Judgment at §§77-79.

(2)  Even if resolving the Fire Alarm Problem could be described as an “upgrade” or “improvement” as opposed to “replacement” of the common parts of GH, this Tribunal, it was said, had completely overlooked IO had a mandatory duty under s.18(1)(c) of BMO “to do all things reasonably necessary for the enforcement of the obligations contained in the deed of mutual covenant (if any) for the control, management and administration of the building”. This Tribunal ought, it was said, to have but did not consider and rule that such mandatory duty on the part of IO under s.18(1)(c) of BMO included carrying out such an “upgrade” or “improvement”.

(3)  At the very least, this Tribunal ought, Keen Joy argued, to have but did not consider and rule that IO is and was under a mandatory duty as per s.18(1)(c) of BMO to seriously look into the Fire Alarm Problem and investigate or consult the owners on whether (i) such problem existed and affected GH estate-wide and (ii) a “replacement” or even “upgrade” and “improvement” ought to be carried out in GH in view of the following pertinent factual findings: -

(a)  IO was well aware of Fire Alarm Problem but had taken no concrete action on and sought to downplay the problem or keep it at a low profile: Judgment at §§65-67; and

(b)  There is every reason to believe that the same problem could happen to other equally large apartments of GH as opposed to it being a matter of “individual concern”: Judgment at §§4 & 73(1).

(4)  In all circumstances and in reaching the conclusion that there was no breach of DMC and BMO on the part of IO pertaining to the Fire Alarm Problem, this Tribunal, Keen Joy argued, had misconstrued the intentions and objectives of DMC and BMO, contrary to the well-established principles for a purposive construction and common sense application of the relevant provisions of DMC and BMO: The Grande Properties Management Ltd v Sun Wah Ornament Manufactory Limited (2006) 9 HKCFAR 462 at §2.

Discussion

New grounds in proposed grounds of appeal

13.  Contrary to Keen Joy’s denials at paragraphs 20 to 23 of R’s Reply Skeleton, it had, I think, never relied for the purpose of its second counterclaim at trial s.18(1)(c) of BMO and, if I may add, clause 9(b)(8) of DMC.

14.  I agree with Mr Wong that Keen Joy has raised s.18(1)(c) of BMO and clause 9(b)(8) of DMC for the first time in its proposed grounds of appeal. It is plain from the followings: -

(1)  Unlike s.18(1)(a) &(b) of BMO and clause 9(b)(10) of DMC which were specifically recited in its Notice of Opposition, s.18(1)(c) of BMO and clause 9(b)(8) of DMC were not: see paragraphs 4, 5, 7(a)-(c), 10(a)(ii) & 10(d), 10(e), 19, 20, 21 and prayers (2) & (3) thereof.

(2)  At paragraphs 18 and 19 of its opening submissions, Keen Joy also saw fit to recite only s.18(1)(a)&(b) of BMO and clause 9(b)(10) of DMC. Nowhere in entire opening was s.18(1)(c) of BMO or clause 9(b)(8) of DMC referred to.

(3)  Nora never in her witness statement refer to s.18(1)(c) of BMO or clause 9(b)(8) of DMC.

(4)  Neither did Keen Joy refer to s.18(1)(c) of BMO or clause 9(b)(8) of DMC in its oral closing submissions.

15.  I wholly agree with IO’s submissions at paragraphs 21 and 22 of A’s Skeleton that Keen Joy had elected at trial not to rely on s.18(1)(c) of BMO (and, I would add, clause 9(b)(8) of DMC).

16.  Secondly, Keen Joy had, I think, never made submissions for its second counterclaim at trial that clause 9(b)(10) of DMC and s.18(1)(a) & (b) of BMO it solely relied upon ought to be construed in any alleged “purposive”, “liberal” or “wide” manner as it now complains this Tribunal had failed to do so in its proposed grounds.

17.  Keen Joy never cited the two authorities at [11(3)] and [12(4)] above at trial.

18.  Thirdly, Keen Joy had never relied on 2018 COBMS at trial as it now does for the first time at paragraphs 16(2) & 16(3) of R’s Skeleton.

Keen Joy’s limited evidence at trial

19.  At trial, Keen Joy solely called Nora (and mainly produced many complaint letters written by it to the Manager of GH, IO and FSD) to prove that Fire Alarm Problem had existed but that, save for the Proposal, IO (and others) took no concrete action on the same despite her repeated complaints.

20.  As IO noticed in section E1 of its written opening[8], Keen Joy had not adduced any expert evidence at trial[9]. Neither did Keen Joy call i) FSD officer Chin Ka Ho (whom it had invited to attend to Apartment F12 to observe the Fire Alarm Problem)[10]or ii) staffs of registered fire service installation contractor (who signed 3 FS Certificates after annual fire alarm testing in 2019, 2020 and 2021)[11] to give evidence at trial.

Keen Joy’s construction of IO’s pleaded duties

21.  Keen Joy had, we observe, submitted at paragraph 29 of its written opening: “[IO] has not otherwise sought to explain … whether it is [IO]’s case that a fire alarm system which could not properly carry out its function is nonetheless in “good repair and condition” or in “a state of good and serviceable repair”. Notably, the test for whether [IO] has complied with its duties under DMC and BMO is not whether it has complied with the statutory minimums (italics and underline original, bold supplied)”.

22.  Two points should be noted from the above submissions from Keen Joy.

(1)  First, the original italic words within quotation marks are sourced from, one thinks, clause 9(b)(10) of the DMC and s.18(1)(a) of BMO and nowhere else.

(2)  Secondly, judging the words in bold, Keen Joy apparently submitted that, to answer whether or not IO’s pleaded duties at clause 9(b)(10) of the DMC or s.18(1)(a) of BMO was complied with, one asks whether or not the Existing Fire Alarms could properly carry out its function.

23.  As shall be demonstrated below, this Tribunal had applied exactly Keen Joy’s own construction (and not any alleged wrong test or assumption) in arriving at its factual findings in the Judgment on the evidence adduced at trial.

Limited inaudibility entailed by the Fire Alarm Problem

24.  The Fire Alarm Problem proven by Keen Joy after trial is not, one must point out, that “warning sound” emitted by Existing Fire Alarms could not be heard inside Apartment F12 at all. I also refer to paragraph 7 of R’s Reply Skeleton.

25.  While such “warning sound” could not be heard in the bedrooms, kitchen and staff quarter (i.e. inner parts) of Apartment F12, on the findings of this Tribunal, it could be heard in the living and dining room of Apartment F12[12]to serve as fire warning to occupants of Apartment F12 in its living and dining room.

All relevant matters considered to construe IO’s duties

26.  Contrary to paragraph 16(1) of R’s Skeleton and as Mr Wong rightly recognized at paragraph 13.2 of A’s Skeleton, the aforesaid limited inaudibility entailed by the Fire Alarm Problem was in the forefront of this Tribunal’s consideration in the Judgment.

27.  Neither did this Tribunal lose sight in the Judgment that the cause of such limited inaudibility is the large size of Apartment F12[13] and not, say, mechanical failure or defects of the Existing Fire Alarms[14].

28.  When this Tribunal used the words “warning sound” in the Judgment, it was fully aware that the purpose of Existing Fire Alarms was to give fire alert in the event of fire.

29.  At the same time, any alleged “purposive” construction of clause 9(b)(10) of the DMC executed in 1971 now raised by Keen Joy cannot, one thinks, overlook the undeniable background fact that all apartments of GH, including Apartment F12, were built as large apartment exceeding 3,300 square feet in saleable area from day one[15].

30.  However, reading the said clause 9(b)(10) of the DMC, one does not find word of “improvement” or “upgrade”. Only words of “repair”, “keep in good repair and condition” and “replace” are found in the said clause[16].

31.  In addition, any alleged “purposive” construction of s.18 of DMC now raised by Keen Joy cannot ignore also, one thinks, the separation of (mandatory) duties of IO in s.18(1) thereof from its different (discretionary) powers in s.18(2) thereof.

32.  The word “improvement” is only found in s.18(2)(fa) of BMO[17] but not in its s.18(1)(a) (which uses the words “maintain” and “good and serviceable repair and clean condition”)[18].

33.  With respects, any complaint in the proposed grounds of this Tribunal having wrongly adopted any alleged “literal” and “narrow” meaning of the pleaded DMC clause and pleaded BMO section at [11(3)] above, and to have allegedly failed to have adopted any alleged “purposive” construction and “common sense” application of, DMC and BMO to the second counterclaim at [12(4)] above is, I agree with Mr Wong, completely without merit.

Mere Fire Alarm Problem not enough

34.  Contrary to paragraph 16(1) of R’s Skeleton, it simply does not follow, I must point out, from mere presence of Fire Alarm Problem (i.e. the limited inaudibility of the Existing Fire Alarms) as proven by Keen Joy that the Existing Fire Alarms were not “in good working order” and/or required “repair/replacement”. Keen Joy was, I am afraid, totally mistaken to equate the two.

35.  Absent expert or like evidence, putting aside for the moment contrary evidence to be discussed below, the Fire Alarm Problem per se is, I think, no proof that Existing Fire Alarms were not functioning properly as Keen Joy posed, and answered, at paragraph 29 of its written opening at [21] above.

36.  To borrow paragraph 14.3 of A’s Skeleton, it is, I agree with Mr Wong, a “quantum leap” for Keen Joy to argue that the Existing Fire Alarms were (or are) not functioning properly and demand repair or replacement by the mere proof of Fire Alarm Problem.

Contrary evidence that Existing Fire Alarm functioning properly

37.  There are also adduced at trial other evidence (adduced by IO and Keen Joy) that was accepted by this Tribunal pointing to the contrary direction asserted by Keen Joy.

38.  With respect, the Judgment, including the many findings made by this Tribunal pertinent to the Fire Alarm issue at its different paragraphs, must be read as a whole.

39.  The fact that “extra” fire alarms at owner’s own costs were proposed to be “installed” by the Manager of GH[19] suggests that the Existing Fire Alarms were “in good working order” or did not require “repair/replacement” (or else the Manager could have repaired or replaced them using funds out of, say, annual maintenance budget).

40.  Nora’s own admission in the box of “upgrading” (i.e. not repairing) Existing Fire Alarms[20] point also to the contrary direction.

41.  The compliance of Existing Fire Alarms with minimum legal requirements set by FSD in 2012 version of COP MFSI[21] as certified in the 3 FS Certificates issued by registered fire service installation contractor for the material years of 2019, 2020 and 2021 after annual fire alarm testing[22] is also one of these contrary evidence/findings.

42.  If one reads the 3 FS Certificates, one can find Part 3 box for “Defects” discovered in the annual testing, and “Comment” thereon, to be filled in by the contractor.

43.  Reading certificate for the year 2020, while “FH/HR system” was certified in Part 1 of the said certificate to “conform with FSD requirements”, it was also marked in the same part to have “defects” listed in Part 3 of the same certificate i.e. “missing” instruction plate that requires “replacement”.

44.  Had the Existing Fire Alarms not functioned properly or at all during the said three annual tests above, they plainly would not have been certified by the registered fire service installation contractor in the 3 FS Certificates “in efficient working order” in accordance with COP MFSI as they now appear on the face of them.

45.  Mr Wong was right at paragraph 13 of A’s Skeleton. Contrary to paragraph 12 of R’s Skeleton and paragraphs 5 and 7 of R’s Reply Skeleton, this Tribunal did not simply assume from mere compliance of legal minimum requirements per se that the Existing Fire Alarms were “in good working order”, or had applied any alleged wrong test or assumption to that effect.

46.  To the contrary, Keen Joy had, I am afraid, misread the Judgment in this material respect.

47.  The fact that FSD officer Chin Ka Ho took no follow-up action on Exiting Fire Alarms after Nora’s repeated complaints of Fire Alarm Problem to FSD[23] is another piece of contrary evidence (or else FSD would have followed up on Nora’s repeated complaints with IO, the Manager and/or the registered fire service installation contractors that signed 3 FS Certificates).

Consistent factual findings open on evidence

48.  On the totality of trial evidence and findings in the Judgment, notwithstanding the Fire Alarm Problem, it is certainly, I think, open to this Tribunal to arrive at the factual finding that the Existing Fire Alarms were in good working order, and did not require repair or replacement, at all material times[24] (and that Keen Joy had, as I find, failed to prove to the contrary i.e. the Existing Fire Alarms were not functioning properly or at all during the material times due to IO’s breach of clause 9(b)(10) of DMC or s.18(1)(a) of BMO).

49.  On the same totality of trial evidence and findings, it would, I agree with Mr Wong, be absurd for this Tribunal to find the Existing Fire Alarms not functioning properly or at all when occupants of Apartment F12 in its living and dining room could hear warning sounds emitted by them, which had been tested by registered fire service installation contractor in 3 past annual tests and certified to be “in efficient working order” in line with COP MFSI.

50.  There is, one should point out, simply no factual or expert evidence of malfunctioning or non-functioning of the Existing Fire Alarms at trial.

51.  Reading the Judgment as a whole properly, there is absolutely, I think, no alleged inconsistency complained by Keen Joy at [11(1)] above between this Tribunal’s finding of Fire Alarm Problem and this Tribunal’s finding at paragraph 74 of the Judgment that the Existing Fire Alarms were in good working order that did not require repair or replacement. I reject the contrary submission at paragraph 6 of R’s Reply Skeleton.

First ground to challenge facts unarguable

52.  Hence, the first ground of appeal at [11] above that this Tribunal had erred in law in making the above factual finding at paragraph 74 of the Judgment is, I think, unarguable. This is not to mention that Keen Joy can only appeal on points of law as was stressed at paragraphs 10 and 11 of A’s Skeleton.

Additional proof of discharge of s.18(1)(a) of BMO

53.  At paragraph 74 of the Judgment, this Tribunal had already found that there was no breach of both clause 9(b)(10) of DMC and s.18(1)(a) of BMO.

54.  Reference to paragraphs 7.2.7 and 7.2.8 of 2018 COBMS and s.44(2) of BMO in paragraph 75 and 76 of the Judgment complained of by Keen Joy in R's Skeleton is, I would point out, only an additional reason to “support” the factual finding and “conclusion” of no breach of s.18(1)(a) of BMO already reached by this Tribunal on other evidence and findings in the preceding paragraph 74.

55.  So, unless Keen Joy makes good its challenge to my factual finding and conclusion at paragraph 74 of the Judgment (which, I think, it fails completely), any alleged error of law at paragraphs 75 and 76 of the Judgment that it makes good, if at all, would not suffice to persuade the Court of Appeal to allow the proposed appeal.

56.  To put the record straight, this Tribunal has not, as Keen Joy complained, simply assumed from mere compliance with 2018 COBMS per se that the Existing Fire Alarms were in good working conditions that did not require repair or replacement.

s.44(2) of BMO applies also to compliance of 2018 COBMS

57.  Notwithstanding Keen Joy’s submissions at paragraphs 14 and 15 of R’s Skeleton, this Tribunal remains of the view in the Judgment (and agree with paragraph 14.2.3 of A’s Skeleton) that, while “failure” to comply with Code of Practice may, on s.44(2) of BMO, be relied upon to “establish” liability in civil proceedings, it makes, I think, no sense that “compliance” with Code of Practice like 2018 COBMS in this case cannot be used to “negative” such liability when the said section expressly includes the word “negative” and when s.18(2A) of BMO requires IO “have regard to and be guided by” Code of Practice. S.44(2) of BMO should, I think, be construed to apply as well to the “compliance” scenario.

58.  This is, I would stress, all the more so when the factual evidence of “compliance” of paragraphs 7.2.7 and 7.2.8 of 2018 COBMS by IO is otherwise admissible evidence adduced at trial that this Tribunal has already considered together with other evidences or findings to reach its factual finding at paragraph 74 of the Judgment: see [41] to [44] above and paragraph 14.2.4 of A’s Skeleton.

59.  Moreover, as this Tribunal held in the Judgment[25], while Code of Practice issued by the Authority does not have force of law on the case law, it is still directory in the sense that the Authority had issued 2018 COBMS as “standard and practice” to be “observed and followed” by owners’ corporations in terms of, inter alia, “fire safety”: see s.44(1)(b) of BMO.

60.  Furthermore, as Keen Joy admitted at [11(2)] above and at paragraph 8 of R’s Reply Skeleton, under s.18(2A) of BMO[26], IO “shall have regard and be guided by”, also, 2018 COBMS issued by the Authority “in the performance of its duties”.

61.  Hence, the complaint by Keen Joy at [11(2)] above that it is legally wrong for this Tribunal to have ruled, in absence of legal authority or guidance, that compliance with bare legal minimum requirements in blatant disregard to the actual context of Apartment F12 and GH as well as the inaudibility entailed by the Fire Alarm Problem would discharge IO’s mandatory duty under s.18(1)(a) of BMO under paragraph 75 and paragraph 76 of the Judgment cannot, I think, be arguable.

(1)  This Tribunal had plainly paid full regard in the Judgment to the size problem posed by large apartments built at GH from day one and what the Fire Alarm Problem entailed.

(2)  S.44(1)(b) and s.18(2A) of BMO (if not also s.44(2) of BMO) afford proper legal foundation and authority for this Tribunal to find from “compliance” of paragraphs 7.2.7 and 7.2.8 of 2018 COBMS additional support for factual finding and conclusion already reached at paragraph 74 of the Judgment.

Factual finding of improvement open on evidence

62.  For the same totality of evidence and findings in the Judgment, including Nora’s own admissions[27], contrary to Keen Joy’s complaint at [12(1)] above, it is also, I think, perfectly open and correct for this Tribunal to have found that resolving the Fire Alarm Problem requires “upgrade” to the Existing Fire Alarms[28].

No omission to consider s.18(1)(c) of BMO

63.  As Keen Joy has not relied for its second counterclaim at trial s.18(1)(c) of BMO, it is, I think, incorrect for it to complain at [12(2)] above that this Tribunal had “overlooked” IO’s mandatory duty under the said section and/or “failed to rule” on such mandatory duty in the Judgment.

No fair notice of s.18(1)(c) of BMO at trial

64.  Due to contents of Keen Joy’s Notice of Opposition, Nora’s evidence, its written opening and closing submissions, this Tribunal had been led by Keen Joy to believe at trial that it onlyrelied on s.18(1)(a) & (b) of BMO and clause 9(b)(10) of DMC for its second counterclaim: see paragraphs 22, 38, 39 (including heading & corrigendum), 41 (including heading), 69, 70 and 71 of the Judgment.

65.  In similar vein, I think it likely that Mr Suen appearing for IO at trial was also led by Keen Joy to believe likewise such that he only cited authorities on s.18(1)(a) of BMO (and not that on s.18(1)(c) of BMO) in his closing submissions[29].

66.  While Keen Joy saw fit to cite paragraph 42 of Whole Grand Limited v The Incorporated Owners of Bo Fung Building[2024] HKCA 626 and s.10(5)(a) of LTO at paragraph 18 of R’s Reply Skeleton to stress that its Notice of Opposition is not pleadings but serves as “indication of the issues” “likely to be raised”, G. Lam JA in same paragraph 42 also said:

“Nevertheless, basic fairness requires that there should be advance notice of the points taken and issues raised and that no party should be prejudiced by being taken by surprise and having to deal with issues raised without a proper opportunity of preparing for them: see Grand Power v Chan Sing Hoi [2020] 2 HKLRD 142, §§27-42; Great Source Enterprise Ltd v Sino Estates Management Ltd (CACV 253/2003, 7 May 2004), §§14-17. The application of this principle – and the rigour with which ordinary rules of pleading may be applied by analogy – will of course depend on the facts and the procedures adopted in the particular case (bold supplied).”

67.  Fair notice of s.18(1)(c) of BMO issue has, I am afraid, not been given to this Tribunal, if it has been given to IO at all (which I think likely not) at trial. Had it been given, this Tribunal would have invited submissions on it and expressly ruled on it in the Judgment as I did with s.18(1)(a) & (b) of BMO.

s.18(1)(c) of BMO not arguable either

68.  Moreover, s.18(1)(c) of BMO provides that IO shall “do all things reasonably necessary for the enforcement of the obligations contained in the deed of mutual covenant (if any) for the control, management and administration of the building (bold and italics supplied)”.

69.  Having read R’s Skeleton and R’s Reply Skeleton, this Tribunal is still in the dark against whom and for which alleged obligation(s) in the DMC (or BMO) that Keen Joy complained IO to have, in breach of s.18(1)(c) of BMO, failed to do all things reasonably necessary to enforce.

70.  In See Wah Fan v The Incorporated Owners of Kit Tak Garden (Phase I) [2003] 3 HKLRD 1 cited by Keen Joy at paragraph 24 of R’s Reply Skeleton, it is at least clear from paragraphs 13 and 14 of the said judgment that the corporation therein had “resolved not to take action” against Mr Tam for breach of s.34I of BMO and clause 2 of the deed of mutual covenant therein.

71.  Had Keen Joy had in its mind of IO failing to do all things reasonably necessary to enforce against IO itselfs.18(1)(a) of BMO and clause 9(b)(10) of the DMC, it adds, I think, nothing on top of its existing grounds against IO.

72.  Properly construed above, IO is, as held in the Judgment, under no duty under s.18(1)(a) of BMO or clause 9(b)(10) of the DMC to “upgrade” the Existing Fire Alarms. IO has, as held in the Judgment, a discretion to decide whether or not to make “improvement” to common parts under s.18(2)(fa) of BMO. Or owners may so resolve at general meetings pursuant to s.14(1) of BMO[30].

Evidence pertinent to s.18(1)(c) of BMO not fully explored

73.  Regarding the “state of evidence” bar Bokhary PJ stated in Flywin Co Ltd v Strong & Associates Ltd (2002) 5 HKCFAR 356 referred at paragraph 18 of See Wah Fan, supra, this Tribunal disagrees with paragraph 24 of R’s Reply Skeleton that the application of s.18(1)(c) of BMO to this case is not fact sensitive.

74.  The contrary is, I think, true and that the evidence had not been fully explored at trial due to lack of proper notice from Keen Joy to IO and this Tribunal. In other words, Keen Joy could not get over the above “state of evidence” bar.

75.  IO’s obligation under s.18(1)(c) of BMO is not absolute – it is only required to do all things reasonably necessary for the enforcement of DMC (or BMO) obligations concerned.

76.  On my findings in the Judgment, IO had arranged for the Manager to attend to Apartment F12 to investigate the Fire Alarm Problem and that subsequently the Manager had put forward the Proposal that was, however, rejected by Nora: see paragraph 64(3), (4), (5) and 67 of the Judgment.

77.  On the factual issues whether further investigation and/or consultation with GH owners was warranted or not, Derek had maintained in the box that IO had received no similar complaint of Fire Alarm Problem from other owners than Keen Joy, that IO was satisfied with the investigation done by, and the Proposal suggested by, the Manager and with the annual testing results of the Existing Fire Alarms in line with FSD requirements as was evidenced by the 3 FS Certificates.

78.  Keen Joy (and parties) had not explored, I think, the above answers further or fully at trial.

79.  The followings said by Lam V-P (as he then was) at paragraph 10 of the Court of Appeal judgment in Lehmanbrown Ltd v Union Trade Holdings Inc & Others, unreported, HCMP 977/2015, 17 June 2015, cited by Mr Wong are, I think, also pertinent to our case: -

“Whilst the Court of Appeal obviously has power to entertain new points in an appeal, it is also clearly and firmly established that new points which are fact sensitive or otherwise affect the course of evidence or conduct of the case at the hearing belowshould not be allowed. Though this principle is usually applied in situations where the new points necessitate further evidence to be adduced, it is not confined to such scenarios. Very often, the raising of new point by one party may lead to the other party raising counter arguments and the consideration of such counter arguments may involve factual assessment in a different light from that undertaken by the court below. Sometimes, it may involve a different weighing of factors in the exercise of discretion. Alternatively, the other party may embark on a different course of forensic conduct if the new point were taken earlier. The appellate court, in considering whether the new point would be entertained, is entitled to take these matters into account in order to avoid unfairness to the other party (bold supplied).”

The possibilities of different factual evidence and/or different trial development regarding Fire Alarm issue cannot, I think, be excluded had proper notice of s.18(1)(c) BMO issue been given by Keen Joy at trial to IO.

New point of s.18(1)(c) of BMO not open to Keen Joy

80.  Hence, the said new point of s.18(1)(c) of BMO is, I think, not open to Keen Joy on appeal on the state of evidence bar. To allow Keen Joy to raise it on appeal is also unfair to IO. It is, I think, not arguable either.

81.  In any event, it is up to the Court of Appeal vested with power to allow new point on appeal to decide for itself whether to entertain such new point.

Second ground not arguable

82.  Therefore, the proposed second ground of appeal is, in my view, not arguable either.

No public interest involved

83.  It is, I think, wholly speculative for Keen Joy to assert at paragraph 26 of R’s Skeleton that similar problem like the Fire Alarm Problem “may well exist in other equally large apartments in Hong Kong”. There is no such evidence before me. Nora at best deposed in her fourth affirmation that GH as a whole suffers, she thought, from the Fire Alarm Problem.

84.  For same lack of evidence, I disagree with paragraphs 3 and 4 of R’s Reply Skeleton that the alleged legal question posed at paragraph 3 thereof requires clarification from higher court for the first time in the public interest. In any event, the said legal question was posed on a wrong reading of the Judgment.

85.  As such, it is not, I think, a matter of “public interest” for leave to appeal to be given on the Fire Alarm Problem as per the proposed grounds of appeal.

Conclusion

86.  All grounds proposed by Keen Joy to appeal against dismissal of its second counterclaim in the Judgment carry, I think, no reasonable prospect of success on appeal.

87.  Neither is it, I think, in the interest of justice for leave to appeal to be given on the issue of Fire Alarm Problem as per the proposed grounds of appeal.

Disposition

88.  I therefore dismiss the Leave Application filed by Keen Joy on 11 June 2024. I refuse leave to Keen Joy to appeal against dismissal in the Judgment of its second counterclaim relating to the Fire Alarm Problem.

89.  Under r.30B(4) of Lands Tribunal Rules[31], where this Tribunal refuses an application for leave to appeal, a further application for leave to appeal may be made to the Court of Appeal within 14 days from the date of refusal.

Costs order nisi

90.  As IO has prevailed on the Leave Application, I make a costs order nisi to follow the result of this application that Keen Joy do pay IO costs of this application, including all reserved costs and the costs of hearing on 28 June 2024, to be taxed on District Court scale if not agreed. The said order nisi shall automatically become effective and binding on both parties without further order if no party applies to vary it within 14 days of this Decision.

Mr Iverson Wong, instructed by King & Co., for the Applicant

Ms Fok Lai Lor Nora, the representative of the Respondent

LDBM 200/2020

[2024] HKLdT 39

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO.200 OF 2020

__________________

BETWEEN

_________________

_____________________

J U D G M E N T

_____________________

Introduction

1.  This is the second of three trials concerning Mandatory Building Inspection Scheme (MBIS) that I held from June to November 2023. All of them focused, one way or another, on alleged breaches of Code of Conduct for Procurement of Supplies, Goods and Services (COP) issued by the Authority pursuant to s.44 of Buildings Management Ordinance[1] (BMO), enforcement of COP and/or consequences of their breaches, if any.

Parties to this application

2.  The applicant is the incorporated owners (IO) of Grenville House (GH). It was incorporated as an owners’ corporation pursuant to the predecessor of BMO in 1972. At all material times, IO managed GH on its own assisted by a management company. Mr Warren Suen of counsel (Mr Suen) appeared for IO at trial.

3.  The registered deed of mutual covenant of GH is dated 31 March 1971 (the DMC). According to the DMC, GH consists of 5 blocks, known as Blocks AB, CD, EF, GH and IJ. Each block is 12-storey high. GH contains 120 apartments in total. The land over which GH is built (the Land) is notionally divided in the DMC into 120 undivided shares with one share allocated to the purchaser thereof with exclusive use of one of the said apartments and one car parking space.

4.  The respondent (Keen Joy) has since January 2000 been the registered owner of apartment No.F on 12/F of Block EF (including a portion of roof thereof) and car parking space No.156 of GH (Apartment F12), holding one undivided share of the Land. The saleable area of Apartment F12 exceeds 3,300 square feet, so do the remaining apartments of GH. Ms Fok Lai Lor Nora (Nora), the authorized representative of Keen Joy at this trial, was at all material times, and is, the sole director of Keen Joy.

5.  On the provision of the DMC[2], pursuant to s.34D of BMO, and pursuant to s.41 of Conveyancing and Property Ordinance[3], the benefits and burdens of the provisions of the DMC run with the Land and are binding on its registered owners and the manager of GH defined therein. Hence, the provisions of the DMC were at all material times, and are, binding on Keen Joy and MC (as the manager of GH defined therein).

Background facts

6.  This litigation began with, I find, IO receiving in July 2016 notice issued by the Building Authority (BA) under Buildings Ordinance[4] (BO) pursuant to MBIS requiring it to complete prescribed inspection, and, if necessary, prescribed repair, to common parts of GH within 6 months and 12 months respectively (MBIS Notice).

7.  In January 2017, management committee of IO (MC) resolved to appoint Albert Liu & Associates Ltd (AL&A) as MBIS consultant.

8.  In October 2017, Mr Albert Liu (AL), registered inspector under MBIS, completed prescribed inspection, prepared a survey report as required by MBIS (the Survey Report) and later submitted it to Buildings Department (BD).

9.  Later, MC terminated AL&A’s appointment as MBIS consultant for GH. In a meeting held in November 2018, MC resolved to appoint David S.K. Au & Associates Ltd (DSKA) as replacement MBIS consultant (in February 2019, MC in another meeting re-affirmed the said replacement).

10.  On 8 December 2018, IO resolved in AGM to collect contribution from all GH owners $100,000 per apartment for in-house building fund (2019 Contribution). Keen Joy had paid its share of 2019 Contribution in sum of $100,000.

11.  Between March 2019 and February 2020, DSKA as MBIS consultant for GH conducted tendering process for the contractor to carry out prescribed repairs as required by MBIS (the Prescribed Works).

12.  On 14 February 2020, IO gave notice to all owners of GH of an annual general meeting (AGM) to be held on 29 February 2020. Agenda item 6 thereof is presentation by DKSA on tendering process of the contractor for the Prescribed Works. Agenda item 7 thereof is consideration of such tenders, appointment of a contractor and approval of contribution totaling $26,400,000 for the same.

13.  Owners comprising 47.5% of GH owners, I find, attended AGM on 29 February 2020 (29/2/2020 AGM) either in person (17 owners) or by proxy (40 owners), including Nora as proxy for Keen Joy until agenda item 6 (see below).

14.  During agenda item 6 of 29/2/2020 AGM, DKSA presented to GH owners present by explaining that 1) tender was prepared using the Survey Report submitted to BD; 2) 16 contractors submitted pre-qualification documents responding to advertisement and 8 of them passed the pre-qualification exercise; 3) 5 tenders were returned by closing date; and 4) the 3 lowest tenderers were interviewed and 3 best offers were replied by 5 February 2020.

15.  This Tribunal would accept that tendering for the contractor for the Prescribed Works had indeed been carried out in the manners as presented by DKSA above.

16.  During agenda item 6 of 29/2/2020 AGM, DKSA, I find, had also shown GH owners present the original tender sums of 5 returned tenderers and best offers from the 3 lowest tenderers, and recommended Well Engineering Development Ltd (the Contractor) be appointed contractor for the Prescribed Works by reference to tender analysis.

17.  When it came to agenda item 7 of 29/2/2020 AGM, resolutions were, I find, finally passed 1) by 81.48% of GH owners present to appoint the Contractor to carry out the Prescribed Works, and 2) by 84.91% of GH owners present to approve a total contribution of $26,400,000 from all owners of GH (i.e. $220,000 per apartment) to fund the Prescribed Works (the Contribution) (collectively 29/2/2020 GM Resolutions).

18.  Afterwards, MC, I find, resolved at its meeting held on 18 March 2020 (18/3/2020 MC Meeting) that the Contribution shall be collected from all GH owners in one instalment in April 2020 (18/3/2020 MC Resolution). On 25 March 2020, management company gave notice of 29/2/2020 GM resolutions to all GH owners requiring payment from them by 30 April 2020.

19.  Despite debit note and two lawyer’s demand letters were sent to (and received by) Keen Joy in April, July & August 2020, Keen Joy has, I find, failed to pay its share of the Contribution in sum of $220,000 to IO by today.

IO’s claim vs Keen Joy

20.  IO took Keen Joy to this Tribunal to recover from it 1) the said contribution of $220,000, 2) interest on the said sum pursuant to the DMC, 3) collection charge of $150 under the DMC, and 4) costs on solicitors and own client basis pursuant to the DMC.

Keen Joy’s opposition & counterclaim

21.  In essence, Keen Joy did not admit IO’s claim and filed a counterclaim against IO.

22.  Keen Joy first complains that IO had, in alleged breach of the DMC and s.18(1)(a) & (b) of BMO, failed to take concrete actions on an fire alarm problem said to be common to all apartments of GH i.e. the existing fire alarm at Apartment F12 located at common parts of GH would be inaudible in its bedroom, kitchen and staff quarter (Fire Alarm Problem). Keen Joy says it has raised the Fire Alarm Problem with MC since October 2018.

23.  Nora had, it was said, also tabled a letter regarding the Fire Alarm Problem to MC immediately before 29/2/2020 AGM began. When it came to agenda item 6, she also pointed out the Fire Alarm Problem. She was, however, demanded by management staff to leave the meeting such that she left and was deprived of chances to raise questions on agenda items 6 and 7 leading to 29/2/2020 GM Resolutions

24.  Since about January 2020, IO had, in further alleged breach of the DMC, s.20A of BMO and 2018 COP, denied Keen Joy access to information and/or documents relating to:

1) the 2019 Contribution;

2) the scope of the Prescribed Works;

3) the manner the Contribution was spent;

4) tender documents in respect of MBIS; and

5) relevant contracts of MBIS

(collectively the Disclosure).

25.  Nora had, it was said, repeatedly followed up the Disclosure with MC, including at AGM held on 11 May 2021 (11/5/2021 AGM) and another extraordinary general meeting (EGM) held on 4 June 2021 (4/6/2021 EGM), but the said wrongful denial has, said the respondent, persisted until today.

26.  Wrongful denial of the Disclosure by IO was, the respondent stresses, contrary to the spirit of BMO and constituted breach of IO’s duties under the DMC, BMO and 2018 COP.

27.  IO had, the respondent complains, on one hand demanded the Contribution from GH owners but did not on the other hand provide them with the necessary supporting documents and justifications for them to assess their financial liability on the Prescribed Works.

28.  IO had further, in breach of the DMC and s.18(1)(a) & (b) of BMO, acted on an outdated and incomplete Survey Report and failed to ensure that necessary safety works over Block EF motor room located directly above Apartment F12 (which is common parts of GH) (the Motor Room) formed part of the Prescribed Works that were carried out by the Contractor so as to ensure safety of GH residents i.e. occupants of Apartment F12, leading to a sizable block of cement falling off from staircase of the Motor Room onto penthouse roof terrace of Apartment F12 in March 2021.

29.  Keen Joy counterclaimed IO for specific performance of IO’s obligations under the DMC, BMO and 2018 COP with respect to:

(1) its request for information and/or documents regarding the Prescribed Works and/or MBIS; and

(2) Firm Alarm Problem with a view to ensure an effective fire alarm system with respect to Apartment F12. Further or alternatively, damages were sought in lieu of or in addition to specific performance with respect to Fire Alarm Problem.

IO’s Reply & Defence to Counterclaim

30.  IO first claimed in reply that it had made MBIS Notice known to all GH owners by various means in 2016 to 2018 including posting circulars, notices and minutes of MC meetings on noticeboard and uploading them, since October 2019, to GH Web Portal (Web Portal).

31.  Fire alarm installation at GH, IO stresses, conforms with the requirements of Fire Services Department (FSD), as evidenced by Certificates of Fire Service Installation Equipment issued for 3 consecutive years. As there was no Fire Alarm Problem in GH, neither it nor Nora’s letter dated 29 February 2020 addressed to MC, was included as agenda in 29/2/2020 AGM.

32.  During 29/2/2020 AGM, MBIS consultant had presented to GH owners present, inter alia, the tendering process of the Prescribed Works, the number of returned tenders, the interviews of the 3 lowest tenderers and their tender sums, before 29/02/2020 GM Resolutions was passed by majority of GH owners present.

33.  Nora was only asked to be seated during agenda item 6 of 29/2/2020 AGM, as she had persistently insisted on pursuing the Fire Alarm Problem displaying an extremely disruptive behavior causing inordinate interruption to the due process of the AGM.

34.  Regarding the Disclosure, IO replied that it “did not decline” the respondent’s request as alleged. GH used to circulate all notices, minutes and information by posting on noticeboard and, since October 2019, uploading them to Web Portal. The tender documents of the Prescribed Works were also uploaded to Web Portal on 15 October 2019. The respondent’s request for MBIS related documents was not made in compliance with the requirement of BMO and therefore it is not entitled to inspection thereof.

IO’s claim proven on facts and law

35.  Having considered background facts above, and the undisputed oral and documentary evidence adduced before me, I am satisfied that IO has proven (indeed, Keen Joy at trial took no issue on) the followings:

(1) 29/2/2020 AGM and 18/3/2020 MC Meeting had been lawfully called and held;

(2) 29/2/2020 GM Resolutions and 18/3/2020 MC Resolution had been duly passed[5];

(3) the subject matters of 29/2/2020 GM Resolutions are within power and duties of IO under s.18(1)(a) & (b) of BMO and also within power and authority of MC as manager of the DMC pursuant to such of its provisions[6] IO relies upon in its Notice of Application; and

(4) the apportionment of the Contribution among all owners of GH in accordance with their respective share of the Land was properly made in line with the DMC[7] (and s.22 of BMO).

36.  On proof of the above, Keen Joy is, I conclude, liable to pay IO its share of the Contribution in sum of $220,000 by 30 April 2020 pursuant to the DMC binding on Keen Joy and 29/2/2020 GM Resolutions[8]. It is also liable under the DMC[9] to pay IO interest on the said sum at 1% for each 30 days it is unpaid after 1 May 2020 and collection charge in sum of $150.

37.  Notwithstanding alleged modus operandi of IO complained in [27] above, Keen Joy’s counterclaims are, in my views, separate and distinct cross-action it has against IO for breach of IO’s alleged duties under the DMC, BMO and/or COP. In other words, Keen Joy’s 2 specific performance counterclaims (even if proven and relief granted on them) afford it no defence to IO’s claim. They do not release Keen Joy from its legal liability above to pay its due share of the Contribution to IO. Nora had not been able to point to any provision of the DMC, BMO or produce any case authority to support the contrary view.

Respondent’s counterclaim

38.  Moving on to consider Keen Joy’s counterclaim, one starts with the provisions of the DMC, sections of BMO and paragraphs of COP it relies upon in Notice of Opposition & Counterclaim.

DMC provisions relied upon by respondent

39.  Clause 9 of the DMC reads as follows:

“(b)… the Managers shall have the following powers and duties, namely: -

(1) For the purpose of financing the management of the said premises and building, to prepare and submit to the owners an annual budget showing the estimated expenditure for the ensuing year including suitable provision for periodical renovations and replacements…

(10) …

(21) To keep proper accounts of all expenditure incurred by … the Managers in respect of carrying out their duties hereunder and to permit each owner at any time during office hours to inspect such accounts and to take extracts therefrom (bold, underline and italics supplied).”

40.  Clause 11 also reads:

“(a) All monies collected by the Managers in the exercise of their powers and duties hereunder (save and except sufficient petty cash for day to day requirement) shall be paid into a separate bank account and the Managers shall keep true and proper accounts of all such monies and the expenditures thereof and shall send to each owner a summary of such accounts together with a copy of the Annual budget for the ensuing year with the notice convening each Annual General Meeting. The Managers shall further produce all such accounts and the vouchers supporting the same for the inspection of any owneron reasonable notice being given (bold, underline and italics supplied).”

BMO provisions relied upon by respondent

41.  S.18(1) of BMO should first be noted:

“(1) The corporation shall –

(a) maintain the common parts and the property of the corporation in a state of good and serviceable repair and clean condition;

(b) carry out such work as may be ordered or required in respect of the common partsby any public officer or public body in exercise of the powers conferred by any Ordinance; (bold and italics supplied)”

42.  S.18(2A) of BMO should also be noted:

“…the corporation in the performance of its duties and the exercise of its powers under this section shall have regard to and be guided byCodes of Practice issued from time to time under section 44(1) (bold and italics supplied)”.

43.  S.20A(1) of BMO relating to procurement reads as follow:

“The procurement of all supplies, goods or services required by a corporation in the exercise of its powers and the performance of its duties under the deed of mutual covenant (if any) or this Ordinance shall comply with such standards and guidelines as may be specified in a Code of Practice relating to such procurement (bold and italics supplied)”.

44.  S.20A(4) of BMO on tender documents reads:

“All tender documents, copies of contracts, accounts and invoices and any other documents in the possession of a corporation and relating to the procurement of supplies, goods and services shall be kept by the corporation for such period, being not less than 6 years, as the corporation may determine (italics & bold supplied)”.

COP paragraphs relied upon by respondent

45.  Material parts of paragraphs 7.1 & 7.2 of COP published by the Authority on 17 August 2018[10] (2018 COP), which are relied upon by the respondent, reads:

“7.1 The MC shall permit … an owner… to inspectall tender documents, copies of contracts, accounts and invoices and any other documents in the possession of the OC and relating to the procurement of supplies, goods and services at any reasonable time. The MC shall on the payment of a reasonable charge, supply copies of the relevant documents.”

“7.2 Thedocuments referred to in paragraph 7.1shallcontain sufficient information to enable the person doing inspection to calculate the financial liability (including any future financial liability) of the OCat the time of inspection (bold, underline and italics supplied)”.

Assessment of witnesses’ evidence

46.  Having considered their evidence in the round, the evidence of all 3 witnesses who gave evidence at trial is not, I think, entirely satisfactory.

Derek

47.  Mr Chan Man Foon Derek (Derek), the chairman of MC of IO from 29/2/2020 AGM[11] onwards, gave evidence for IO.

48.  I do not think Derek has told the whole truth with this tribunal. In his witness statement and in the stand (and in MC’s dealing with GH’s owners under his leadership), he was, I believe, economical with the truth. I am afraid he had tried his best to evade answering embarrassing questions of Nora in the box by giving, from time to time, excuses of “not recall” or “delegate to the manager” despite the questions concerned involved policy to be decided upon by MC and not enforcement matters to be handled by manager.

49.  One must therefore, I think, watch out (and have reservation) about what (and how) Derek said as well as what he did not say (and what MC or IO had not done).

Stephenie

50.  Ms Kwok Man Shan Stephenie (Stephenie), the current Head of Operations of GH, also testified for IO.

51.  In one aspect, Stephenie’s evidence is of limited assistance to this Tribunal. She joined GH only in October 2020. She thus had no personal knowledge of material events (including those of the Fire Alarm Problem) prior to October 2020.

52.  Moreover, Stephenie has surprisingly managed to serve GH under three different management companies. She must, one thinks, be very loyal to IO (or its MCs in charge at the material times). One must therefore not lose sight of her undoubted loyalty to GH in assessing her evidence (and exercise caution) in deciding whether to accept her evidence given for IO in this application.

Nora

53.  Nora gave evidence for Keen Joy. She is not, I am afraid, entirely reliable or credible either.

54.  Under cross-examination of Mr Suen, Nora gave evidence inconsistent with contents of the documents in trial bundle or that of her own witness statement. She contradicted herself in the box even on simple answer of sending emails or not. As Mr Suen has rightfully observed, she had also a tendency of filibustering on other topics she was not asked but she was concerned (and thus not answering the questions she was asked).

55.  Moreover, Nora had a number of misunderstandings about MBIS. She was also, I have no doubt, so worried about innocent lives of GH being put at risk by the Fire Alarm Problem that she became obsessed with the thought of MC determined to “cover up” the Fire Alarm Problem. As a result, she had lost, I am afraid, her objectivity and judgment.

Concrete defects of Motor Room

No relief sought in counterclaim

56.  This allegation raised by Keen Joy is, I think, a non-starter. Even if it is proven by Keen Joy, no relief was sought for the same by way of counterclaim.

Failed to prove Survey Report incomplete or outdated

57.  In any event, considering the merits of this allegation, I do not think the respondent could prove that AL had failed to cover alleged defects of Motor Room in the Survey Report.

(1) Mr Suen did not dispute that Motor Room was, and is, common parts of GH as alleged by Nora and I would so find. If so, the Survey Report ought, by reason of MBIS Notice, to have covered it and AL, the registered inspector, must notify BA of any unauthorized building works at, inter alia, common parts of GH pursuant to s.30D(5)(b)(i)(A) of BO.

(2) Secondly, the Survey Report that Nora had produced in her witness statement consists of only a few pages. It could not, I think, be the full report as it should have photos and reports (e.g. infra-red report and photos of, say, external walls of GH) annexed but they are nowhere to be found.

58.  Neither do I not accept Nora’s claim that the Survey Report was “outdated”. The “expiry date” at page 1 thereof she focused on was, I agree with Mr Suen, that of the registration of the registered inspector who compiled it i.e. AL.

59.  There is, I would point out, nothing suspicious (as Nora might suggest) of IO’s terminating AL’s consultant appointment after its completion of the Survey Report and DKSA being appointed thereafter to supervise the Prescribed Works, including its tendering process. The 2 stages of consultant works are separate and distinct. Under s.30D(2) of BO, the registered inspector responsible for carrying out prescribed inspection “may” (not “must”) be the same inspector responsible for supervising prescribed repair under MBIS.

60.  Notwithstanding AL&A and DKSA were appointed by IO for 2 different stages of consultant service in this case, prescribed repair to be supervised by DKSA must cover all items identified as being defective or having deficiencies in the prescribed inspection[12] i.e. those identified in the Survey Report compiled by AL and submitted to BD: see reg.5(1)(b) & (c), reg.7 and reg.12(2)(a) of Building (Inspection and Repair) Regulations[13].

Cement had once fallen off

61.  However, I accept Nora’s evidence that a sizable block of cement had fallen off from staircase of the Motor Room onto penthouse roof terrace of Apartment F12 in March 2021. Such evidence given by Nora, supported by photos and previous correspondences before me, is not disputed by Mr Suen.

Motor Room defects fixed

62.  What divided the parties before me is whether such concrete defect of Motor Room was fixed (or rectified) by the Contractor by June 2021 as part of the Prescribed Works as Stephenie had testified or not fixed (but only had paint put on them as “cover-up” without prior examination) as Nora had asserted under cross-examination. I prefer, and accept, the former for the following reasons:

(1) Nora had admitted to repair works to Motor Room having been arranged by GH’s manager in April and June 2021 at paragraphs 38 & 39 of her witness statement.

(2) The aforesaid repairs to Motor Room carried out by the Contractor were evidenced by a few correspondences adduced before me, including on issue of access to Apartment F12 for the same.

(3) That no relief was sought in Keen Joy’s counterclaim about Motor Room is, I think, telling that the said problem has already been fixed as alleged by IO.

63.  For the reasons given in this section, Keen Joy has, I conclude, failed to prove its allegations against IO regarding the Motor Room.

Fire Alarm Problem

Problem existed due to size of apartment

64.  I accept Nora’s evidence that the Fire Alarm Problem existed. As early in October 2018, during fire alarm testing, she discovered that, due to the size of Apartment F12, the warning sound emitted by the existing fire alarm located outside Apartment F12 at common area (the Existing Fire Alarm) could only be heard in the living and dining room, but not in the bedrooms, kitchen and staff quarter, of Apartment F12. My reasons are as follows.

(1) Mr Suen never see fit to challenge such material factual evidence given by Nora as a factual witness.

(2) The then chairman of MC (Mr David Stannard) had replied Nora by letter in October 2018 that her question about “fire alarm testing” will be “looked into”.

(3) A few members of MC, including Derek and staff of management company, had once had a meeting with Nora to discuss the Fire Alarm Problem on 20 September 2019 (20/9/2019 Meeting).

(4) On documents before me, in subsequent testing of the Existing Fire Alarm with staff of manager attending Apartment F12, they also observed the Fire Alarm Problem. The manager once wrote, “the fire alarm sound might not be audible everywhere at your home”[14].

(5) Manager of GH had suggested to Nora in November 2019 (and again in February 2021) remedial proposal of installing extra fire alarms at front staircase outside Apartment F12 at her own costs and provided Keen Joy with fire services installation contractor’s quotation at the sum of $3,000 (the Proposal) (which proposal Keen Joy had not accepted).

MC took no action despite Nora’s repeated complaints

65.  I further find on Nora’s evidence and documents adduced before me that Nora had repeatedly written to MC demanding IO’s action on the Fire Alarm Problem in March, July, September, November and December 2019, January 2020, May, June and July 2021.

66.  Shortly before 29/2/2020 AGM opened, Nora had also, I find, handed in a letter to MC about the Fire Alarm Problem. During agenda item 6 thereof, considering the manner of her making submissions in front of me, I find it likely that Nora stood up to raise the Fire Alarm Problem but found the convener of the meeting disagreed with her and dismissed the said problem. She likely persisted in expressing her strong views on the Fire Alarm Problem. As she disrupted orderly progress of 29/2/2020 AGM, staff of the management company came over to demand to her to sit down. She likely, I think, walked out the venue on her own in protest of her views being ignored.

67.  Except for suggesting the Proposal, IO had, I find, taken no concrete action on the Fire Alarm Problem. Though MC did not “cover” it “up” as Nora had sought to portray (they did meet Nora on 20/9/2019 Meeting, arrange staff to investigate Apartment F12 and offered her the Proposal), MC sought, I think, to downplay it or keep it at a low profile. MC characterized it as a matter of “individual concern” (in minutes of 29/2/2020 AGM and of 18/3/2020 MC Meeting) that required “no further discussion”.

IO’s mandatory duty re the Existing Fire Alarm as common parts

68.  Looking at the DMC, and s.2 and Schedule 1 of BMO (item 10), I find the Existing Fire Alarm “common parts” of GH, for which IO is responsible to the exclusion of individual owner of GH under s.16 of BMO.

69.  I also agree that IO has a mandatory duty under s.18(1)(a) of BMO to maintain the Existing Fire Alarm in a state of good and serviceable repair and clean conditions (s.18(1)(b) of BMO does not, however, apply as there is no evidence of any public officer exercising any statutory power to order or require any works to be done on the Exiting Fire Alarm).

70.  Also, pursuant to clause 9(b)(10) of the DMC, IO is, I agree, under a mandatory duty to repair and keep in good repair and condition the Existing Fire Alarm and when necessary to replace any part or parts thereof which require replacement.

Breach of IO’s mandatory duty not proven

71.  However, I do not think that IO was in breach of clause 9(b)(10) of the DMC, or s.18(1)(a) of BMO (and Keen Joy has not proven either).

72.  I give the following reasons.

73.  First, the Existing Firm Alarm were, I find, in good working order at all material times. Its warning sound level likely conforms, I think, with minimum legal requirements set by Fire Services Department (FSD) by way of code of practice.

(1) It is not the case that the Existing Firm Alarm did not emit warning sound at all. The Fire Alarm Problem is that such warning sound emitted by the Existing Firm Alarm did not reach the inner parts of Apartment F12 because of its large size (as such, there is, I think, every reason to believe that the same problem could happen to other equally large apartments of GH[15] and it may be prudent to investigate if other apartments also suffer from it. It could well turn out not be a matter of “individual concern” as MC had characterized it).

(2) IO has apparently complied with the law and arranged for a registered fire service installation contractor to inspect, inter alia, the Existing Fire Alarm every 12 months. As proof thereof, after annual fire alarm testing in the years of 2000, 2021 and 2022, IO was issued with 3 certificates of fire service installation and equipment dated 18 July 2019, 19 June 2020 and 18 June 2021 (the 3 FS Certificates) by such registered contractor.

(3) The Exiting Fire Alarm, said to conform” with FSD requirements”, was certified in all 3 FS Certificates “to be in efficient workingorder in accordance with the Codes of Practice for Minimum Fire Service Installations and Equipment and Inspection, Testing and Maintenance of Installations and Equipment… (COP MFSI) (Italics supplied)”[16].

(4) Management company staff had, I find, explained to Nora that the warning sound level of the Existing Fire Alarm conforms to legal minimum requirements set down by 2012 version of COP MFSI[17] and supplied Nora with extract thereof. Had the Existing Fire Alarm not conformed to the said legal minimum requirements, FSD officer Chin Ka Ho (with whom Nora had invited to attend to Apartment F12 on 27 September 2021 to observe the Fire Alarm Problem after writing a series of complaint letters to FSD) would, I think, likely have followed up on her complaint (but in fact he did not but had referred Nora again to COP MFSI for legal minimum requirements).

(5) Even if the Fire Alarm Problem was known to registered inspector i.e. AL prior to completion of the Survey Report as alleged by Nora, it would not, I think, likely be required to be covered in the said report as, according to reg.5(2)(c) of Building (Inspection and Repair) Regulations, one standard of prescribed inspection is fire safety improvement works to be completed in accordance with Fire Safety (Buildings) Ordinance[18], whose Schedule 2 provides for specifications of installation of, inter alia, manual fire alarm to be in line with 1994 version of COP MFSI.

74.  Hence, I find the Existing Firm Alarm did not require any repair or replacement at all material times. It has been kept in good working conditions. Accordingly, there has been no breach of s.18(1)(a) of BMO, or clause 9(b)(10) of the DMC.

75.  Indeed, compliance of the Existing Fire Alarm with code of practice issued by the Authority supports my conclusion that IO was not in breach of its duty under s.18(1)(a) of BMO.

76.  My reasoning is as follows.

(1) In discharging its duty under s.18(1)(a) of BMO, IO shall have regard to and be guided by code of practice issued by the Authority issued under s.44: s.18(2A) of BMO.

(2) Pursuant to s.44(1), the Authority had issued 2018 version of Code of Practice on Building Management and Safety effective as from 1 September 2018 (2018 COBMS) .

(3) s.44(2) of BMO provides that failure to observe any Code of Practice issued under s.44(1) may, in any proceedings, be relied upon as tending to establish or to negative any liability which is in question in those proceedings.

(4) Paragraph 7.2.7 of 2018 COBMS provides that fire service installations or equipment shall be maintained in efficient order at all times. And paragraph 7.2.8 thereof requires that fire service installations or equipment shall be inspected by a registered fire service installation contractor every 12 months.

(5) IO had, I think, complied with paragraphs 7.2.7 and 7.2.8 of 2018 COBMS. Such compliance could, I think, be relied up by IO in these proceedings pursuant to s.44(2) of BMO. It tends, I think, to negate such claim of Keen Joy that IO had failed its duty under s.18(1)(a) of BMO as alleged.

Upgrade of the Existing Fire Alarm at discretion of IO

77.  To solve the Fire Alarm Problem, in line with the Proposal, as Nora had more than once articulated in the box, what the Existing Firm Alarm requires is, I agree, its “upgrade”.

78.  “Upgrade” of the Existing Firm Alarm or, to put it in legal terms, “improvement” to the “common parts” of GH is something that IO may (not must), at its discretion, decide to do, or decide not to do, under s.18(2)(fa) of BMO. This remains, I think, the position notwithstanding the Fire Alarm Problem may turn out to be more than “individual concern” after investigation.

79.  With respect, this Tribunal rarely, if ever, interferes with internal management of owners’ corporation if such legal minimum limit or requirements, if any, set down by BMO and the DMC have not been exceeded or breached. Improvement to common parts should better be carried out by way of internal lobbying within GH and requisitioning the chairman of MC to convene an EGM to turn consensus into concrete action by passing the necessary resolutions.

80.  For above reasons, I cannot but conclude that Keen Joy’s counterclaim in respect of the Fire Alarm Problem fails.

The Disclosure

81.  To recap, Keen Joy relied on 3 legal sources to seek the Disclosure i.e. DMC, BMO and 2018 COP.

82.  According to paragraph 11 of Court of Appeal (CA) judgment in Speed Gainer Limited v The Incorporated Owners of Malahon Apartments & Another, unreported, CACV 336/2004, 22 July 2005, “there could be no breach of the manager’s obligation to permit inspection without a valid request or demand for inspection followed by a wrongful failure to permit inspection (italic supplied)”, per Tang JA (as he then was). As such, Keen Joy has, I think, to make out both of these two elements in order to make good its counterclaim for the Disclosure.

Keen Joy’s requests for the Disclosure

83.  I accept from Nora’s evidence and documents disclosed by her that she had, as early as in January 2020, written to MC to seek the Disclosure and followed them up with MC in April, May, June, August, September 2020, March, May and June 2021. The matters that were sought are summed up at paragraph 44 of respondent’s opening submissions. Mr Suen had also helpfully reproduced, and grouped, them at paragraphs 82 to 84 of his closing submissions.

84.  Basically, the matters sought in the Disclosure are the following: -

(1) Questions regarding the 2020 operating budget;

(2) Breakdown of the 2019 Contribution (or an account how it was spent);

(3) Breakdown of how $628,900 building fund was spent on building and structure repaired in 2019;

(4) Breakdown of the 2019 usage of fund;

(5) 2019 audited accounts;

(6) Minute of 20/9/2019 Meeting; and

(7) MBIS documents (including scope of MBIS tender works, scope of defects and contracts entered with MBIS consultants and contractor).

Web Portal channel etc. not assist IO

85.  I agree with Nora (and Mr Suen cannot, I think, dispute) that no provision is found in either DMC or BMO to oblige GH owners to inspect or download the requested documents by accessing Web Portal or to make it the sole obligatory access route[19]. I further agree with Nora that DSKA’s presentation at 29/2/2020 AGM does not detract Keen Joy’s rights, if any, under the DMC and/or BMO to seek the Disclosure as an owner of GH.

MC’s de facto refusal of the Disclosure

86.  As a matter of facts, except for 2019 audited accounts to be discussed below, IO had, I find, so far not replied Keen Joy’s request for the Disclosure at all.

(1) Effectively, MC ignored Keen Joy (one of many GH owners for which it was supposed to be accountable) and declined its request, though it did not formally say so to decline as it claimed to.

(2) As a matter of courtesy, MC did not, I find, even bother to take the slightest effort to have replied Keen Joy (one owner of GH) to say, that the information sought could be found elsewhere at so and so, or to say that your request did not comply with so and so requirements set down by BMO.

(3) Reading minute of 2021 EGM, vice chairman of MC was recorded to have agreed that there was “nothing to hide” in the MC and Derek was recorded to have “assigned the property manager to respond” to Nora’s letters. Regrettably, what MC had done (or omitted to do) gave this Tribunal the contrary impression.

(4) At the last paragraph of his witness statement, Derek dismissed the Disclosure as “irrelevant” to respondent’s obligation to pay its share of the Contribution. That is true as far as I held at [37] above. But what about IO (or MC)’s duty to account to all owners of GH, including Keen Joy? With respects, Derek seemed to have avoided or overlooked that in his witness statement.

(5) Consistent with MC’s refusal of the Disclosure, except for MBIS Notice, IO disclosed no other MBIS documents (be it tender documents or MBIS contracts) in these proceedings or included them into the trial bundles.

(6) Instead of providing the Disclosure to Keen Joy on a voluntary basis to resolve Keen Joy’s counterclaim amicably, IO (or MC) was determined to spend, likely I think, disproportionately great amount of legal costs (out of IO funds) defending Keen Joy’s counterclaim to the very end to avoid making disclosure.

Disclosure counterclaim not made out at law

87.  Nevertheless, this Tribunal, as a court of law, can only decide Keen Joy’s counterclaim for the Disclosure on its merits at law. And my conclusion at law is that Keen Joy has failed to make out its 2^nd counterclaim.

No valid requests for information or new documents

88.  First, no provision that Nora is now relying on supports, I think, her getting “answers” for her “questions”. In most of the request forming the Disclosure, Keen Joy was in substance putting forward “questions” seeking “answers” or “information” from MC. For example, Keen Joy asked MC how the 2019 Contribution was spent.

89.  However, MC was not, I think, obliged at law by those provisions Keen Joy now rely upon to answer Keen Joy’s questions (it is, of course, a different question whether, as an accountable corporation, or, as MC is delegated with the power of management by IO, MC should have answered questions raised by owners, like Keen Joy, which form the IO in the first place).

90.  Second, no provision that Nora is now relying on supports her, I think, to demand IO taking actionscreatingnew documents for Keen Joy (as opposed to Keen Joy’s inspection or being supplied with copies of existing documents in IO’s possession). For example, Keen Joy had requested “a legally valid copy of 20/9/2019 Meeting minute with relevant approval ratification”. I do not think MC was obliged to create one as requested.

Inspection not sought & DMC not assist

91.  Regarding existing documents in IO’s possession that Keen Joy sought copies from IO in the Disclosure, as Nora had confirmed with Mr Suen in the box, Keen Joy did not seek inspection. As such, clauses 9(b)(21) and 11 of the DMC allowing inspection do not assist Keen Joy in its counterclaim.

Copy of 2019 audited accounts given

92.  Regarding 2019 audited account that Keen Joy sought copies, I agree with paragraph 91 of Mr Suen’s closing submissions. They were laid before GH owners at 2021 AGM held on 11 May 2021 after they were ready and, after the said AGM was over, copy of them were given to Nora on the same day.

DMC provisions overridden by different BMO provisions

93.  Should DMC provisions that allow an owner to inspect and/or take extract quoted above be applicable to this case, pursuant to s.27(5) of BMO, the provisions of Schedule 6 of BMO shall prevail to the extent its provisions are inconsistent with those of the DMC. Hence, what matters at the end of the day are BMO provisions.

BMO disclosure provision not relied upon

94.  Keen Joy sought to rely in its opening submissions Schedule 6 of BMO to support the Disclosure. But it is, I am afraid, not open for Keen Joy to rely. Schedule 6 was nowhere mentioned in its Notice of Opposition and Counterclaim.

BMO disclosure requirements not met anyway

95.  In any event, material parts of Schedule 6 read as follows:

“1. All bills, invoices, vouchers, receipts and other documents referred to in the books or records of account and other records maintained under section 27(1) shall be kept by the management committee for such period, being not less than 6 years, as the corporation may determine.

1A. The management committee shall—

(a) at the request of not less than 5% of the owners, permit those owners or any person appointed by those owners to inspect any bills, invoices, vouchers, receipts or other documents referred to in paragraph 1 at any reasonable time; and

(b) permit any person authorized by the court to inspect any bills, invoices, vouchers, receipts or other documents referred to in paragraph 1 at any reasonable time.

1B. For the purposes of paragraph 1A(b), an owner may apply to the court for an order authorizing the owner… to inspect any bills, invoices, vouchers, receipts or other documents referred to in paragraph 1.

1C. The court may make an order under paragraph 1B only if it is

satisfied that—

(a) the application is made in good faith; and

(b) the inspection applied for is for a proper purpose (bold and italics supplied).”

96.  Keen Joy had not, prior to these proceedings, gathered 5% of GH’s owners as required by paragraph 1A(a) of Schedule 6 to make out a valid request for inspection of documents. Neither was Keen Joy authorized by the court under paragraph 1B thereof to inspect pursuant to paragraph 1A(b) thereof. Prior to these proceedings, Keen Joy never wrote to IO to seek inspection as an authorized person under the said paragraph 1B thereof.

No legal right under BMO to seek tender documents

97.  Regarding MBIS documents including tender documents and MBIS consultant and/or contractor contracts that Keen Joy sought copies pursuant to paragraphs 7.1 and 7.2 of 2018 COP, I agree with Mr Suen that this Tribunal is bound by CA judgment in Chen Kun Ming v The Incorporated Owners of Tai On Building, Shau Kei Wan (Tai On Building Case) [2008] 2 HKCLRT 43 to give a negative answer to Keen Joy’s request for this group of documents.

(1) The appellant in this case put forward, and relied, for the first time on appeal paragraph 9 of 1997 COP, whose second half is similar to paragraph 7.1 of 2018 COP (and paragraph 10 of 1997 COP is also, I note, similar to paragraph 7.2 of 2018 COP), to seek disclosure of, inter alia, tender proposals from owners’ corporation.

(2) Yeung JA (as he then was), in giving the judgment of the CA, expressly disagreed with this reliance on 1997 COP and said at paragraph 34: “The Code of Practice is merely a document issued under section 44 of [BMO] in respect of the procurement of supplies, goods and services. The scope of the Code of Practice cannot exceed that of the Ordinance itself (bold and italics supplied).”

(3) In so ruling above, the CA was, I think, pointing out that the scope of BMO does not allow discovery of tender documents sought by the appellant, who therefore cannot avail himself same discovery by way of COP, whose scope (if applicable as alleged[20]) cannotexceed that of BMO i.e. its primary legislation.

(4) The above ratio of Tai On Building Case has recently been applied in January 2021 by HHJ M. Wong in his judgement of 樂年花園業主立案法團v庾國強及胡美芳[2021] HKLdT 4 (paragraphs 13 to 37) to reject a counterclaim by an owner to be supplied with copies of returned tender pursuant to, inter alia, paragraphs 7.1 & 7.2 of 2018 COP.

(5) In passing, Yeung JA (as he then was) also explained in his judgment how the legislature struck the balance between IO’s duty to manage the building and its duty to properly account to the owners as follows:

“The owners’ incorporation and the manager have the duty to manage the building and the duty to properly account to the owners and other relevant persons in respect of the management of the building.

In order to monitor the owners’ incorporation and the manager effectively to ensure that they discharge their duties impartially and properly, the legislation confers on the owners and other relevant persons the right to inspect basic documents relating to the management of the building and the right to request the incorporation to supply them with such documents as and when necessary.

However, the legislation is not there to encourage or allow any individual with an ulterior motive to deliberately and unreasonably stir up trouble and interfere with or obstruct the normal operation of the incorporation and the manager under the pretext of monitoring them. Nor does the legislation empower the owners or other relevant persons to freely inspect all documents relating to the management of the building or obtain copies of all such documents.

…

An owner does not have the right to inspect “all bills, invoices, vouchers, receipts and other documents” or obtain copies thereof, even though the incorporation has the duty to keep these documents for at least 6 years.

It is not difficult to appreciate the rationale behind the statutory provisions. Property management may well involve tens of thousands of bills, invoices, vouchers, receipts and other documents. To allow individual owners to inspect such an enormous quantity of documents and obtain copies thereof at will is, it goes without saying, to impose a tremendous burden on the incorporation, and such a burden is also unnecessary.

Generally speaking, in order to sufficiently monitor the operation of the incorporation, an owner needs to inspect nothing other than the books, records of account, income and expenditure account, balance sheet or summary of the income and expenditure. The law should not and will not presume any corrupt practices or false accounting on the part of the incorporation. If such illegal activities do take place, they should be dealt with by law enforcement agencies. An owner should not and is not in a position to assume that the incorporation will act against the law (bold and italics supplied)”.

GH Case distinguishable

98.  Regarding CA judgment of Wong Tak Keung Stanley v Management Committee of The Incorporated Owners of Grenville House [2004] 2 HKC 194 (17 December 2003) (GH Case) cited by Nora, this case could, I think, no longer be relied upon by Keen Joy to support its request for the Disclosure against IO.

99.  My reasons are as follows.

(1) GH Case did not involve s.20A(1) of BMO or paragraphs 7.1 and 7.2 of 2018 COP that the respondent now relies on. It dealt with alleged breach of s.20A(2) of BMO and of paragraph 1 of 1997 COP (both involve tenders by invitation).

(2) At paragraph 44 of the judgment of GH Case, Yuen JA (with which Cheung JA agreed) expressly said that it was not necessary for the purposes of the appeal to consider the question whether s.20A(1) is mandatory or directory.

(3) GH Case was a striking-out appeal. It therefore suffices for the appellant to succeed on appeal to raise merely an “arguable” case on paragraph 1 of 1997 COP read together with s.20A(2) of BMO. As the case was discontinued afterwards, the Lands Tribunal never tried the case to reach a conclusion on the merits of the COP issue raised on appeal.

(4) Yuen JA in GH Case never found it arguable on appeal that all paragraphs of 1997 COP are mandatory or have force of law[21]. As s.20A(2) of BMO was identical to paragraph 1 of 1997 COP[22], her ladyship thus found it arguable that the said paragraph 1 acquires (or was intended to have) force of law by such incorporation into s.20A(2) of BMO.

(5) For (1) to (4) above, Yuen JA never disapproved with or “overruled” such pre-existing views of first instance authorities[23] that s.20A(1) of BMO (other paragraphs of 1997 COP, or 1997 COP itself) is merely directory and does not have force of law.

(6) Notwithstanding GH Case, subsequent first instance courts and tribunals[24]continued to take the same view of the pre-existing authorities that COP is merely directory and does not have force of law.

(7) In 2007 version of COP, paragraph 1 of 1997 COP was removed such that there was no longer any incorporation of that paragraph into BMO to become s.20A(2) as was relied upon in GH Case by Yuen JA.

(8) As to paragraphs 7.1 and 7.2 of 2018 COP that the respondent relies, none of them have been repeated in (or incorporated into) BMO so far[25]. The said incorporation argument run in GH Case that Yuen JA then found favour is thus, I think, not open today to the respondent on the said 2 paragraphs of 2018 COP.

2018 COP merely directory for guidance and has no force of law

100.  S.44 of BMO reads:

“(1) The Authority may from time to time prepare, revise and issue Codes of Practice giving guidance and direction as to—

(a) the procurement of supplies, goods and services required by a corporation including such procurement by invitation to tender and the tender procedure in respect thereof

(b) …

(2) A failure on the part of any person to observe any Code of Practice issued under subsection (1) shall not of itself render that person liable to criminal proceedings of any kind but any such failure may, in any proceedings whether civil or criminal including proceedings for an offence under this Ordinance, be relied upon as tending to establish or to negative any liability which is in question in those proceedings (bold and italics supplied)”.

101.  Considering wordings of s.44 of BMO above and the current state of the authorities, notwithstanding GH Case, I take the view that 2018 COP are merely directory and for guidance only. It does not have the force of law and compliance of its provisions, including paragraphs 7.1 and 7.2 Keen Joy seeks to rely upon, are not mandatory (though the Authority issued COP with the objective of them being followed by, at least, owners’ corporations).

102.  In all the circumstances of this case, for one or more than one of the reasons given above, Keen Joy has, I think, failed to make out each request of the Disclosure against IO. I therefore have no choice but to also dismiss Keen Joy’s 2^nd counterclaim for specific performance of the Disclosure.

Disposition

103.   On IO’s application against Keen Joy, I therefore enter judgment in IO’s favour as follows: -

(1) Keen Joy do pay IO the sum of $220,000, together with interest thereon at 1% for every 30 days it is unpaid after 1 May 2020 until judgment;

(2) Keen Joy do pay IO collection charge in sum of $150; and

(3) The aforesaid 2 judgment sums of $220,000 and of $150 shall carry interest from judgment until full payment at judgment rate(s) from time to time published by the Chief Justice of the Court of Final Appeal.

And I order that the entire counterclaim raised by Keen Joy against IO be dismissed.

Costs order nisi

104.  Costs normally follow the event after trial. IO has succeeded on both its claim and counterclaim. Clause 10(e) of the DMC further provides for costs to be paid on solicitor and own client basis on any proceedings to recover sums due under the DMC.

105.  However, in exercising my costs discretion, I have also have regard to IO’s conducts before and during these proceedings. I do not think IO had responded reasonably to Nora’s repeated complaints of the Fire Alarm Problem (e.g. [67] & [73](1) above) and repeated requests of the Disclosure (e.g. [86] & [89] above), or had pressed on defending the counterclaim to the very end reasonably. For example, had MC prudently investigated other apartments of GH to prove that the Fire Alarm Problem was really a matter of “individual concern” as it claimed, and had MC voluntarily provided the Disclosure to Keen Joy as requested, Keen Joy most likely would not feel the need to raise, or continue to the end, its 2 counterclaims against IO. To reflect IO’s unreasonable conducts above, I propose to deprive IO 50% of its costs in defending Keen Joy’s counterclaim.

106.  Accordingly, I make 1^st costs order nisi that Keen Joy do pay on solicitor and own client basis IO costs of the application, including all its reserved costs and the costs of its trial, to be taxed on District Court scale if not agreed.

107.  I further make 2^nd costs order nisi that Keen Joy do pay IO 50% costs of the counterclaim, including 50% of its reserved costs and 50% of the trial of the counterclaim, to be taxed on District Court scale if not agreed.

108.  While this Tribunal is most grateful for Mr Suen’s assistance at trial, I do not see fit to certify his attendance at trial in all the circumstances of this case.

109.  The 2 orders nisi in [106] and [107] above shall become absolute if none applies to vary them within 14 days of the handing down of this Judgment.

110.  Finally, IO’s solicitors do draft, file and serve this Judgment on Keen Joy.

Mr Warren Suen, instructed by King & Co., for the Applicant

Ms Fok Lai Lor Nora, representative of the Respondent, present