Fantastic State Ltd v. Tien's Organic Farm and Others
Read the full judgment text of HCA 99/2018 on BabelCite. This High Court CFI judgment was delivered on 6 June 2018.
1. This is a dispute in respect of the right of way over an access road in the New Territories (“ the Access Road ”) which connects Fung Yuen Road and Lot 813 in Demarcation District 11 of Tai Po (“ Lot 813 ”). Fung Yuen Road ends at the back of a valley called Fung Yuen which has been designated by the Government as a “Site of Special Scientific Interest” whereas the front part of the road joins with Ting Kok Road which leads out to the town centre of Tai Po and other areas.
Cites 5 cases
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HCA 99/2018 [2018] HKCFI 1241 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 99 OF 2018 ________________
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_____________________ D E C I S I O N _____________________ I. BACKGROUND 1.This is a dispute in respect of the right of way over an access road in the New Territories (“the Access Road”) which connects Fung Yuen Road and Lot 813 in Demarcation District 11 of Tai Po (“Lot 813”). Fung Yuen Road ends at the back of a valley called Fung Yuen which has been designated by the Government as a “Site of Special Scientific Interest” whereas the front part of the road joins with Ting Kok Road which leads out to the town centre of Tai Po and other areas. 2.The Access Road runs through Section A of Tai Po Town Lot No 183 (“Section A of 183”) which is owned by the Plaintiff. Over the past few decades, many lots of land around Fung Yuen have been purchased by (or on behalf of) Cheung Kong (Holdings) Limited for development. Lot 183 was a new lot granted by the Government in exchange for the surrender of more than 300 old lots. A New Grant No 20412 with Conditions of Exchange was approved by the Government on 9 August 2007 (“the New Grant”). 3.The Defendants are the occupiers of Lot 813 and according to their case, Lot 813 was, from 1980 to 2016, occupied by one Granny Wu, from whom the Defendants subsequently acquired the land. In about mid-October 2017, the Defendants started carrying on the businesses of running car parking lots, an organic farm and also small eateries on Lot 813. 4.On 15 January 2018, the Plaintiff issued a Writ of Summons together with a General Indorsement of Claim whereby the Plaintiff alleged that on or about 1 December 2017, it came to its attention that the Defendants had trespassed on Section A of 183 and also caused an area of the Access Road near the car parking area to be paved through unauthorised construction works. The Plaintiff also complained that, without its licence or permission, the Defendants and their visitors had used or caused to be used various parts of Section A of 183. 5.On 8 February 2018, the Plaintiff’s contractors informed the Defendants that they were going to erect a permanent barrier (“the barrier”) at the entrance of the Access Road so as to prevent them and other visitors from using the Access Road to enter Lot 813. 6.On 27 February 2018, upon learning that the Plaintiff was in the process of constructing the barrier, the Defendants instructed their solicitors to write to the Plaintiff’s solicitors on an urgent basis. In the letter, the Plaintiff’s solicitors stated that the Access Road formed the only means by which the Defendants (who were running a business on Lot 813) were able to have access to Lot 813 from Fung Yuen Road and that “[blockage of the Access Road would therefore gravely affect not just the Defendants but … third party users as well”. The letter went on to say, amongst others things:-
7.The Defendants’ request for further discussions was rejected by the Plaintiff’s solicitors who, by a letter dated 7 March 2018, replied as follows:-
8.On 22 March 2018, a chain was put in place connecting the two posts installed on the two sides of the entrance of the Access Road. 9.On 27 March 2018, a security guard was stationed at the entrance of the Access Road and he told the Defendants that he had received instructions from his superior that no vehicular entrance would be allowed. On the same day, the Defendants made an urgent ex parte application (on notice) for an injunction, which, according to the Defendants’ Skeleton Submission provided for that application, was based on the following grounds:-
10.Upon hearing the Defendants’ submissions, L Chan J granted an injunction order (“the Injunction Order”) which restrained the Plaintiff until 13 April 2018 or until further order from interfering with the reasonable use of the right of way (vehicular or otherwise) by the Defendants, their servants, agents, licensees, or visitors, over the Access Road, including but not limited to:-
II. THE APPLICATIONS 11.There are two summonses for determination:-
12.Since the fate of the Defendants’ Continuation Application will largely hinge upon the outcome of the Plaintiff’s Discharge Application, I will deal with the latter first. III. DISCUSSION III(A): Material non-disclosure & serious issues to be tried 13.Whilst the Plaintiff, according to its Summons and Skeleton Submissions for its Discharge Application, sought to discharge the Injunction Order in its entirety without any qualification, Mr Benjamin Yu SC (appearing for the Plaintiff) stated at the hearing that the main dispute centred upon the part of the Injunction Order relating to vehicular access (as opposed to access on foot). The reasons for the Plaintiff’s Discharge Application can be summarised as follows:
14.As mentioned earlier, the Defendants’ Continuation Application and the Plaintiff’s Discharge Application are, to a large extent, intertwined. Hence, the issues outlined above are relevant to both applications. 15.It is trite that a party who applies for an ex parte injunction order is under a duty to give full and frank disclosure of all facts, evidence, issues or any other relevant information to its application (see Hong Kong Civil Procedure 2018, Vol 1, 29/1/51). The duty of disclosure applies not only to material facts known to the applicant but also to the additional facts which he would have known if he had made proper inquiries (see Tiong King Sing v Sam Boon Peng Yee [2011] 5 HKLRD 651, §14). 16.It must also be borne in mind that the key question is not whether the ex parte Judge would still have made the ex parte order had he been informed of the non-disclosed matters, but whether such matters ought to be taken into account in the court’s “weighing operation”. The question of materiality involves an objective test to be decided by the court, not by the assessment of the applicant or his legal advisors. 17.The Plaintiff complains that the Defendants, at the ex parte hearing, provided an incomplete quotation of Special Condition 30(a) of the New Grant which reads as follows:-
18.As contended by the Plaintiff, paragraph 7 of the Defendants’ Skeleton Submissions, which referred to and quoted Special Condition 30(a), omitted the sentence above (which has been underlined in bold) (“the sentence in emphasis”). The Plaintiff submits that in omitting the sentence in emphasis, the Defendants provided a misleading impression that Special Condition 30(a) provided an unequivocal right of way in favour of all private land adjacent to the Plaintiff’s land. The Plaintiff argues that in view of the sentence in emphasis, the Plaintiff was only required to provide such access roads and footpaths “as required and approved by the Director of Lands”. The Plaintiff goes on to say that the approved plans show that there were no access roads or footpaths required to be constructed by the Plaintiff to facilitate access to Lot 813. 19.I do not think there is any sufficient basis to find that there has been any material non-disclosure in this respect for the following reasons:-
20.In respect of the Defendants’ case that there has been a right of way by prescription providing access to Lot 813 on foot and by vehicle, the Plaintiff alleges that the Defendants at the ex parte hearing failed to inform the Court of the following matters:-
21.At the ex parte hearing, the Defendants referred to the Plaintiff’s allegation on the unauthorised construction work on the Plaintiff’s land and denied the same. Paragraph 38 of the Defendants’ Skeleton Submissions for the ex parte application read:-
22.However, the Defendants’ evidence on the circumstances as to when and how the alleged vehicular access was provided has been rather scant. For the purpose of the ex parte application, the Defendants adduced evidence on Granny Wu’s activities of growing vegetables. It has been stated in the Affirmation of Wong Chi Pan dated 27 March 2018 (“Wong’s Affirmation”) filed on behalf of the Defendants that “[t]here were lorries driving in and out of the Access Road to deliver agricultural materials to Granny Wu, and to take delivery of her produce.” At the hearing of the present applications, Mr Hugh Kam for the Defendants (who did not appear at the ex parte hearing) fairly accepted that this particular statement in Wong’s Affirmation (which did not mention any time frame) referred to what happened in or after 2015. There was no further evidence placed before the Judge at the ex parte hearing on the alleged vehicular access. Further, I note that the Defendants have never made any substantial response to the Plaintiff’s case that there had never been any vehicular access to Lot 813. Mr Kam’s submission in this regard is simply that “the weight of the evidence indicates [the Plaintiff’s allegation] is not true.” 23.Obviously, the circumstances in which the alleged vehicular access was created (and continued to exist) are relevant to the Court’s consideration of the Defendants’ case on the right of way by prescription. I therefore accept the Plaintiff’s contention that there has been material non-disclosure in this respect. 24.By the same token, since the Defendants’ own evidence fails to sufficiently demonstrate how a vehicular access road came into existence and their case on Granny Wu’s use of Lot 813 was limited to her activities in growing vegetables, I also agree with the Plaintiff that the Defendants failed to, at the ex parte hearing, draw the Court’s attention to the potential arguments on the scope and extent of the user concerning the alleged right of way by prescription, which ought to have been placed on the weighing scales for the consideration of the ex parte application. The Plaintiff’s reference to Wisename Ltd v The Secretary for Justice [1998] 1 HKLRD 71 before the ex parte Judge plainly did not provide any answer to this issue. III(B): Serious issues to be tried 25.Having said the above, apart from the Defendants’ case based on Special Condition 30(a), I cannot completely rule out the Defendants’ case on the alleged right of way by prescription providing access to Lot 813 on foot and by vehicle for the following reasons:-
III(C): Balance of Convenience 26.Given the above findings on material non-disclosure, I am required to consider what should be the consequences arising from such non-disclosure. Before I do so, I would like to provide my views on the issue of balance of convenience because it is relevant to whether the Injunction Order ought to have been granted in any event. 27.As stated in paragraphs 19(2) and 25 above, I have found, contrary to the Plaintiff’s submissions, that the Defendants have demonstrated that there are serious issues to be tried. Obviously, given the chain put in place across the entrance of the Access Road and the fact that a security guard was stationed there to prevent vehicles from entering the Access Road, there will inevitably be loss to the Defendants’ business in terms of not only its income but also to its reputation and goodwill. I cannot agree with the Plaintiff that this is something which can be sufficiently compensated by damages. Further, as submitted by the Defendants, the court should be more inclined to grant an injunction if a claimant can establish a cause of action to protect a property right recognised by the law (see Smithkline Beecham Plc v Apotex Eurpoe Ltd [2003] EWCA Civ 137 §§13 and 18, per Aldous LJ; and The Principles of Equitable Remedies, Spry, 9th ed, 397-399). There is, of course, no hard and fast rule and it cannot be said that once an infringement of some property rights is involved, an injunction should, as a matter of course, be granted. Each case depends on its individual circumstances. 28.Here, I wish to add that in view of the sudden implementation of a system with the barrier placed by the Plaintiff coupled with the security guard who was stationed at the entrance of the Access Road, which would prevent vehicular access to Lot 813, there was an element of urgency which could justify the Defendants’ ex parte application (which was made a few days before the Easter Holidays when there would be more visitors seeking to use the Access Road, either on foot or by car). I do not think that the Plaintiff’s complaint about the use of the ex parte procedure in this regard is well-founded. 29.According to the Plaintiff, if the injunction is in place to the effect that the Defendants and their visitors will continue to be allowed to use the Access Road (on foot and by vehicle), this will increase the risk of trespassing, vandalism, illegal parking and even illegal dumping. The Plaintiff claims that, as a result of such increased risks, it will be required (1) to erect additional fencing in order to prohibit the Defendants and/or their visitors from trespassing upon the other areas of the Plaintiff’s land, the estimated expenditure of which will amount to the sum of HK$7,400,000; and (2) to undertake further measures to regulate the use of the EVA, for example, by employing more staff and installing CCTV to ensure that there shall be no illegal parking on the EVA etc, the estimated expenditure of which will be approximately HK$4,680,000. 30.However, according to the Plaintiff’s own case, there was no vehicular access until 2017. Further, the Defendants’ business on Lot 813 commenced in about October 2017. Given the Plaintiff’s fear of unlawful activities on its land (should the Defendants and their visitors be allowed to use the Access Road), it should have taken steps to implement some kind of system to guard against the alleged risks. No good reasons have been provided to explain why no steps have been taken since October 2017 save and except that the Plaintiff, through counsel’s submissions at the hearing of the present applications, sought to justify their inaction by saying that the need to take further measures arose as the state of affairs was in the course of progressing. But, what remains undisputed is that there is insufficient evidence to indicate that there have been any signs showing such increased risks or that the alleged risks have been caused by the commencement of the Defendants’ business. I note that the Plaintiff’s evidence has referred to a security report which apparently recorded certain incidents of alleged vandalism but such evidence does not indicate that the Defendants or their visitors were involved in such incidents. In the circumstances, I take the view that the Plaintiff’s argument on the alleged increased risks is not supported by any cogent evidence. Alternatively, even assuming that such risks existed, the Plaintiff failed to take any measures to alleviate such risks and it is not entitled to say that the need to take such measures has been (or will be) caused by the grant of an injunction. 31.In the circumstances, I am of the view that the balance of convenience lies in favour of the grant of the Injunction Order. III(D): Consequences of material non-disclosure 32.Finally, I will deal with the consequences of the material non-disclosure. 33.It is not every omission that will cause an injunction to be automatically discharged. The court has a discretion, notwithstanding proof of material non-disclosure, to continue the order or to make a new order on terms. Ultimately, the question boils down to whether the merits of the case and justice warrant the injunction (see Velatel Global Communications Inc & Another v Chinacomm Ltd & Ors, HCA 1978/2011, unrep, 26 October 2012, §§99 & 104, per Deputy High Court Judge Au-Yeung (as she then was)). 34.In the present case, I do not think there is any sufficient basis for me to come to any view that the omission was intentional or deliberate. I note that the Defendants’ Skeleton Submissions for the ex parte application did not shy away from mentioning the Plaintiff’s allegations as contained in the Statement of Claim. In particular, the Defendants highlighted the Plaintiff’s complaints of trespass and also of the Defendants’ unauthorised construction works which allegedly created a vehicular entrance to Lot 813. I tend to think that the non-disclosure was caused by the Defendants’ failure to conduct adequate inquiries before they took out the ex parte application. 35.Further, in the above discussion, I have provided my reasons for my rulings on serious issues to be tried and also balance of convenience. In the circumstances, the Injunction Order ought to have been granted in any event even if all relevant matters had been brought to the Court’s attention. IV. ORDER 36.In the circumstances, I have come to the view that the non-disclosure should not render the Injunction Order liable to be discharged. If I am wrong on this, I am prepared to re-grant such an order, in view of all the materials now available. I therefore make an order that the Injunction Order be continued. 37.On the question of costs, I bear in mind the following factors:-
38.In view of the above, I make the following costs order nisi:-
Mr Benjamin Yu SC and Mr Justin Lam, instructed by Kao, Lee & Yip, for the Plaintiff Mr Hugh Kam, instructed by Khoo & Co, for the 1st, 2nd and 3rd Defendants. | ||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under HCA 99/2018