Behind being sentenced to return 40 million yuan: a "grudge" between a super-large residential area and the property for nearly 20 years

  There are 96 buildings with 11,000 residents and a total population of nearly 50,000. This is the largest community in Shanghai’s inner ring, COSCO Bay City. Because the lawsuit against the "predecessor" property won, it once again became the focus.

  The judgment part of the judgment is provided by the interviewee.

  The first-instance judgment made by Shanghai Putuo District People’s Court (hereinafter referred to as "Putuo District Court") on January 31 showed that the plaintiff in this case was the third owners’ committee of the community (hereinafter referred to as "the third industry committee") and the defendant was Shanghai COSCO Property Management Development Co., Ltd. (hereinafter referred to as "COSCO Property"), and the cause of the case was a property service contract dispute. The court ruled that the defendant COSCO Property should return the costs and expenses that should not be borne by the owners, totaling 40 million yuan.

  The Putuo District Court, which heard the case, revealed that the judgment of the first instance has not yet come into effect. If the plaintiff refuses to accept the judgment, he can submit an appeal to the Shanghai No.2 Intermediate People’s Court within 15 days from the date of service of the judgment.

  On the evening of February 7, the reporter called COSCO Property, and the staff of the other party said: The case is currently handled by an entrusted lawyer. There is no answer as to whether an appeal will be filed.

  Cosco Property has served the community for nearly 20 years. Where does the contradiction with the industry committee come from? Why was he sentenced to return 40 million? What did the industry Committee experience in the process of prosecution and proof?

  The Paper reporter interviewed this, looking back on years of disputes between the two sides.

  The third industry Committee "pulled down" the property for 20 years

  As a super-large community, Cosco Bay City, located on the Suzhou River, has a history of more than 20 years.

  In 1998, the renovation of the old area of "two bays and one residence", the largest shanty town in the central city of Shanghai, was started, and the project was named "COSCO Two Bay City". The residential area was officially started in 1999, and it was built in four phases, and was fully completed in 2006. Cosco Property provided services for the community from September 1, 2001 and terminated its services on January 31, 2021.

  Cosco Bay City. Source: Shanghai Putuo WeChat WeChat official account

  Han Deyou still remembers that he moved to the Bay City of COSCO in 2001, which was regarded as the earliest generation of residents. "At first, it felt very good to move here, with a good environment and convenient transportation, but as time went on, the environment of the residential area was getting worse year by year, and there was no problem before 2008. But in the following years, the roads in the residential area were potholes, which were never dealt with. The shrubs in the residential area died and the lights were dim at night, making it easy for the elderly.

  Up to now, three industry committees have been born in COSCO Bay City. Before the birth of the third industry Committee in December 2019, there was once an "empty window period" of nearly two years.

  "The community once held an interim owners’ meeting to express their dissatisfaction with the property, and also removed the second industry Committee, mainly because they felt that their supervision and management of the property was not in place." On February 7th, Han Deyou, director of the third industry committee of COSCO Liangwan City, told the The Paper reporter.

  In the judgment of this case, the third industry committee, as the plaintiff, claimed that there was a kinship between the head of the second industry committee and the head of COSCO Property. The owners lack recognition of the second industry committee. Moreover, the statistical data of the second session of the Industry Committee was not recognized by the third session of the Industry Committee, and the owners tried many times to hire another property without success.

  The reporter looked up China Judgment Document Network and official website of Shanghai Higher People’s Court and found that disputes between the owners of COSCO Bay City and COSCO Property occurred from time to time. Among the public cases, there are property service contract disputes and parking space disputes brought by owners against COSCO Property. In the verdict, some owners won the case and some properties won the case.

  According to the survey data, Shanghai COSCO Property Management Development Co., Ltd. was established in 2000 with a registered capital of 10 million RMB, which is an enterprise mainly engaged in the real estate industry. Among them, the enterprise has 793 pieces of risk information, and it is also found that the enterprise has 228 pieces of legal proceedings; There are 266 litigation relationships, 275 court opening announcements and 67 filing information. In the 275 court opening announcements, the causes of action are mostly contract disputes, property service contract disputes and construction contract disputes.

  On October 15, 2020, the third industry committee decided to re-employ a new property service enterprise at the owners’ meeting, and then sent a notice letter to COSCO Property, informing both parties that the property service contract signed by both parties was terminated on January 15, 2021.

  This move caused opposition from COSCO Property, and brought the industry committee to court. The Putuo District Court filed a case on January 11, 2021 and tried it according to law.

  Cosco Property believes that this behavior of the Cosco Bay City Industry Committee violates the voting procedures stipulated by the laws of the relevant owners’ meeting, infringes on the legitimate rights of Cosco Property, and deprives Cosco Property of the opportunity to continue to serve the majority of owners, and should be revoked.

  On March 4, 2021, the Putuo District Court made a civil ruling: the plaintiff Shanghai COSCO Property Management Development Co., Ltd. was dismissed.

  The court held that after the establishment of the owners’ congress, the owners’ congress may select new property service enterprises or other managers according to the prescribed procedures. The decision made by the owners’ congress to select and employ the realty service enterprise belongs to the internal autonomy of the community owners, and the non-community owners of the realty service enterprise in the early stage have no right to raise objections to the matters belonging to the internal autonomy of the community and confirm them as invalid or request for cancellation.

  Since then, Vanke Property, which was re-selected by the industry committee, began to provide services for the community, and COSCO Property officially left.

  Audit differences between the industry Committee and the property

  Before the departure of COSCO Property, the owner has started the audit.

  "COSCO Property has provided property services for our community for nearly 20 years, and the owners are extremely dissatisfied with its service attitude. The first and second industry committees have audited the property and found that there are many questions." Han Deyou told The Paper that some expenses, such as fire fighting system and equipment, weak current system and equipment, lightning protection facilities, etc., are not included in the property management fees according to the contract, but are included in the property management fees.

  Han Deyou said, is the public revenue sharing of the community clear? How many ground parking lots have been newly planned before, and what are the benefits? What is the advertising revenue? What expenses that do not need to be borne by the owner are included in the property fee? These problems are of great concern to the owners.

  Aerial photography of Cosco Bay City. Vision china diagram

  The court found that during the period from September 28 to October 14, 2020, the owners of the community held a meeting of owners to vote, and one of the voting items was "to conduct a full audit of the public income, the real settlement of property management fees and the use of maintenance funds over the years".

  As a result of voting, the proportion of agreed voting rights is 96.41%, and the proportion of exclusive area is 96.67%. The owners’ meeting made a resolution to pass the authorization accordingly. That is, the Industry Committee is authorized to entrust a qualified audit unit to conduct a special audit on the income and expenditure and use of the special maintenance funds, public income and property management fees of the community from September 2001 to August 2020, and the audit work will be completed through judicial channels if necessary.

  Han Deyou said that at first, the industry committee sent a letter to inform COSCO Property to cooperate with the audit, but after many times of communication, the other party delayed the audit process for various reasons. In order to safeguard the legitimate rights and interests of all owners in the community, on February 22, 2021, the third industry committee submitted a complaint to the Putuo District Court. On March 1 of the same year, the court accepted the case and entrusted a third-party agency to carry out the audit. However, because COSCO Property did not provide relevant information, the progress was slow.

  Han Deyou recalled that the property initially promised to cooperate with the judicial audit, but later refused to provide the necessary information, which led to the failure of the audit. Afterwards, the industry committee withdrew the audit application and added and changed the original application on the basis of the existing evidence.

  What are the differences between the original and the defendant in the audit?

  The judgment revealed that in 2008, 2014 and 2015-2020, other audit institutions had issued relevant reports. The third industry committee believes that only the audit report commissioned by the first industry committee has been approved, and the settlement of residential property management fees, the use of maintenance funds and the income and expenditure of public income should be audited during most of the period from September 2001 to August 2020.

  COSCO Property said that it agreed to cooperate with the industry committee to do the annual audit work during its term of office, but the public income and actual settlement in some periods that have been audited by the second industry committee and approved by the industry committee should not be included in the audit scope again.

  Han Deyou admits that the litigation target of the industry Committee is 60 million, and the whole case is very difficult to prove. On the one hand, computer system management was not used in the past, so it is difficult to trace a lot of data. On the other hand, the property management company said that the industry committee can only audit the data of its term of office, and the property management company conducts audits every year and publicizes the audit reports in the community. The industry committee has never expressed different opinions on these reports, and the two sides have repeatedly communicated without results.

  The court held that since the Industry Committee and COSCO Property failed to reach an agreement on the settlement standard and method of revenue and expenditure, they should provide evidence for their views separately, and a professional third party agency should intervene in the audit when necessary. However, the evidence provided by both parties and the explanation of the evidence at present cannot fully confirm our views on expense settlement. In this case, the court will consider the legal and reasonable part of the case and the evidence provided by the parties, and then consider the balance amount that the defendant should pay with reference to the plaintiff’s calculation method of various expenses.

  The court further pointed out that COSCO Property refused the judicial audit without justifiable reasons and did not put forward targeted defense opinions on the plaintiff’s changed claim, and the adverse consequences and litigation risks arising therefrom should be borne by it. At the same time, it can be seen that the community involved is quite large, and the huge benefits involved in the settlement of property service fees are obvious. Both the plaintiff and the defendant should have foreseen the high risk in settlement once the dispute is formed after years of accumulated contradictions, but failed to correct mistakes, pursue responsibilities and safeguard rights in time during the cooperation period of 20 years until the termination of the contractual relationship, resulting in irrecoverable relevant facts and lack of indirect or direct evidence, which is unfavorable to their own rights and interests in the settlement process, and the parties shall also bear the responsibilities themselves. For this reason, the plaintiff’s claim for compensation for arrears of interest from the defendant is not supported.

  On January 31, 2023, the judgment of the first instance showed that the defendant Shanghai COSCO Property Management Development Co., Ltd. should return 40 million yuan to the plaintiff’s third industry committee.

  This includes: from September 1, 2001 to February 1, 2021, the balance of the real settlement of property management fees and the costs and expenses that should not be borne by the owners without authorization are RMB 15 million; During the period from September 1, 2001 to February 1, 2021, the parking management fee of underground garage was charged to the cost and expenses that should not be borne by the owner according to the balance of the actual settlement. During the period from 2008 to February 1, 2021, the balance of the public income of the community divided by the owners and the costs and expenses that should not be borne by the owners without authorization were RMB 20 million; During the period from September 1, 2001 to February 1, 2021, the balance of the income of newly marked parking spaces in underground garages was RMB 2.5 million.

  In this regard, the reporter interviewed Vanke Property, which currently serves the community. The staff said: it is not convenient to evaluate the original property, and the money that may be returned to the owner in the final judgment in the future will be completely decided by the industry Committee, which has nothing to do with Vanke Property.

  At present, the first-instance judgment has not yet taken effect.

  On the evening of February 7, the reporter called COSCO Property, and the staff of the other party said: The case is currently handled by an entrusted lawyer. There is no answer as to whether an appeal will be filed. The Paper will continue to pay attention to the follow-up development of this case.