Sam Hei Tai Hing Foods Co Ltd and Another v. The Incorporated Owners of Waford Industrial Building

HCA 1417/2019

[2020] HKCFI 871

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1417 OF 2019

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BETWEEN

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D E C I S I O N

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Introduction

1.This is the determination of the plaintiffs’ application for interim injunction pursuant to Order 29 rule 1 of the Rules of the High Court by way of written submissions without a hearing.  The plaintiffs took out an inter partes summons seeking an interim injunction against the defendant.  The parties first appeared before Poon J on 9 August 2019. Upon the parties’ cross undertaking, Poon J gave directions for filing of evidence.  On 16 September 2019, the plaintiffs filed a statement of claim seeking, inter alia, permanent prohibitory and mandatory injunctions. The inter partes summons was subsequently set down for argument before Keith Yeung J on 18 March 2020.  However, as result of the Covid-19 pandemic, Keith Yeung J directed that the summons be disposed of on paper.

The law

2.The parties have no dispute about the principles applicable to interlocutory injunctions.  These principles were laid down in the seminal case of American Cyanamid Co v Ethicon Ltd[1]. In deciding whether to grant an interim injunction, the key considerations are (i) whether there is a serious question to be tried; (ii) whether damages to the applicant is adequate in the event that the injunction is refused and he succeeds at trial and whether damages to the respondent is adequate in the contrary scenario that the injunction should not have been granted and the respondent succeeds at trial; and (iii) the balance of the risk of doing injustice to the parties.

3.In Music Advance Ltd v Incorporated Owners of Argyle Centre Phase I[2], Ma J (as the Chief Justice then was) held that the test is the same whether in the context of an application for mandatory injunction as opposed to prohibitory injunction.  He said:

“(1)  In the case of interlocutory mandatory injunctions, it is often said or assumed that a court will not grant one unless it feels a high degree of assurance that at the trial of the action, it will be shown that the injunction was rightly granted: see Shepherd Homes Ltd v Sandham [1971] Ch 340 at 351. This has been explained and sometimes understood as meaning that in the case of an interlocutory mandatory injunction, the applicant's case on the merits has to be made out to a higher standard of proof than in the case of prohibitory injunction: see the Court of Appeal’s observations in TKI Limited v New Happy Limited [1995] 1 HKC 551 at 554 B-D.

(2)  Broad statements such as the above must, however, be properly put in context.

(3)  The basic approach to interlocutory injunctions, whether mandatory or prohibitory, is the same. Section 21L of the High Court Ordinance, Chapter 4 makes no distinction between these two types of injunctions and simply states that interlocutory injunctions may be granted if it appears to be just or convenient to do so.

(4)  At the interlocutory injunction stage, the principal concern of the court is that it might make a wrong decision in the sense that after trial, the party to whom an interlocutory injunction has been granted may lose or the party who has been refused one, may win. The court will therefore take whichever course appears to carry the lower risk of injustice if it should turn out that it is wrong. This "fundamental " principle is the source of the guidelines that have evolved for the determination of interlocutory injunctions (included are, of course, the American Cyanamid guidelines) and therefore, in the application of any guidelines, sight must not be lost of this principle. See here : Films Rover International Ltd v Cannon Films Sales Ltd [1987] 1 WLR 670 at 680 D-G, in a passage from the judgment of Hoffman J which was approved by the House of Lords in R v Secretary of State for Transport ex parte Factortame Limited (No.2) [1991] 1 AC 603 and recently reiterated in the English Court of Appeal decision of Zockoll Group Ltd v Mercury Communications Ltd [1998] FSR 354 (which Mr Au was kind enough to place before me).

(5)  Two common guidelines are of course the consideration of the merits of the plaintiffs' claim and the balance of convenience. Here, it is of course easy to see at once how they are linked to the fundamental principle : there must be a risk of injustice if the plaintiff cannot even establish a serious question to be tried or that one or the other party will be put to substantial inconvenience or prejudice if an interlocutory injunction were or were not granted.

(6)  In the case of interlocutory mandatory injunctions, the risk of injustice (being wrong in the sense referred to above) can be quite acute. In Films Rover International Limited, it was put thus by Hoffman J at 681 B-E :

‘In Shepherd Homes Ltd. v Sandham, Megarry J. spelled out some of the reasons why mandatory injunctions generally carry a higher risk of injustice if granted at the interlocutory stage : they usually go further than the preservation of the status quo by requiring a party to take some new positive step or undo what he has done in the past; an order requiring a party to take positive steps usually causes more waste of time and money if it turns out to have been wrongly granted than an order which merely causes delay by restraining him from doing something which it appears at the trial he was entitled to do; a mandatory order usually gives a party the whole of the relief which he claims in the writ and makes it unlikely that there will be a trial. One could add other reasons, such as that mandatory injunctions (whether interlocutory or final) are often difficult to formulate with sufficient precision to be enforceable. In addition to all these practical considerations, there is also what might be loosely called a 'due process' question. An order requiring someone to do something is usually perceived as a more intrusive exercise of the coercive power of the state than an order requiring him temporarily to refrain from action. The court is therefore more reluctant to make such an order against a party who has not had the protection of a full hearing at trial.’

(7) This passage in my view explains just why it is that generally a court will have to feel a high degree of assurance that at the trial of an action it will be shown that the interlocutory injunction was rightly granted before an interlocutory mandatory injunction will be given; all this being an exercise in assessing the strength of the plaintiffs’ case : see sub-paragraph (1) above. However, I emphasize that this is only generally the court's approach. Where it is shown, as an exception to this general approach, that the case is one in which the withholding of on interlocutory mandatory injunction would in fact carry a greater risk of injustice than granting it even though the court does not feel the ‘high degree of assurance’ as aforesaid, it would be right to grant an interlocutory mandatory injunction: see Films Rover International Limited at 681 A-B.”

4.This case demonstrates that in applying the American Cyanamid principles, the court makes no distinction between whether the case is one for prohibitory or mandatory, in additional to prohibitory, interim injunction.  The basic approach is to determine which course carries the lower risk of injustice if it should turn out to be wrong.  This is achieved by testing the scenario first one way and then the other.  Where a mandatory injunction is sought, the court would generally require a high degree of assurance that at the end of the trial of the action, the injunction was rightly granted.  But, as an exception to this general rule, where the case is one in which withholding an interlocutory mandatory injunction would in fact carry a greater risk of injustice than granting one, an interlocutory mandatory injunction would be granted even though the court does not feel that high degree of assurance.

5.In practice, the parties very often reach some interim arrangements by way of undertaking by one party or cross-undertakings by both parties to keep some mutually acceptable status quo pending the final determination of their rights and obligations.  That will do away with the need of an intermediate determination.  Such arrangements must reflect what in the parties’ mind are to their best mutual advantage having regard to the factual circumstances and issues in dispute.  An order of the court made on the basis of such undertaking has the effect of a consent order binding on the parties during the interim period before a final determination.  Prior to final determination, such undertaking may only be discharged by an order of the court on good cause shown or by consent.  The party making the undertaking has to apply to court for leave to be relieved of its undertaking.  Usually, leave will not be granted unless there are good reasons, such as changes in circumstances making the undertaking unduly onerous or impossible of performance or that it was obtained by vitiating factors sufficient to avoid a contract, such as fraud, misrepresentation and duress.

The background facts

6.There are no serious material disputes between the parties.  The 1^st plaintiff is the owner of a number of units in Waford Industrial Building (the “Building”).  It is a company incorporated in Hong Kong carrying on business as a distributor of rice, oil and other food products.  The 2^nd plaintiff is the owner of car parking spaces number P3 and P4 in the Building.  He is responsible for the general management of the 1^st plaintiff.  Together, the plaintiffs hold about 33% interest in the Building.  The 2^nd plaintiff’s father (“Yau Senior”) was the vice-chairman of the management committee of the incorporated owners of the Building (the “IO”) from May 2001 to January 2017.  

7.There was a change in the membership of the management committee in January 2017.  Yau Senior refused to pass control of the management to the new committee.  That resulted in legal proceedings in the Lands Tribunal in which Yau Senior was ordered by consent to pay costs.  The relations between the plaintiffs and the IO deteriorated since.  The IO accused Yau Senior of abuse of power and causing breaches of the deed of mutual covenant (“DMC”) during his term of office as vice-chairman.  The plaintiffs accused the present management committee of obstructing and preventing them from lawfully accessing and using the driveway (“Driveway”) which is part of the common area of the Building.        

8.The Building is an industrial building erected on a plot of land between Kwai Hei Street and Kwai Lok Street.  The Driveway runs all the way from the entrance on the ground level in Kwai Hei Street to the exit in Kwai Lok Street.  The width of the Driveway was about 5 metres.  There is no pavement for pedestrians.  As the photographs show, a container truck could drive comfortably on the Driveway from the entrance to the exit with adequate clearance for forklifts and pedestrians. On one side of the Driveway at about its midway is the loading area where goods are to be unloaded from lorries onto an elevated loading platform served by three cargo lifts.  The goods are then delivered to the various floors of the Building using the lifts. 

9.There are seven lorry parking spaces and four car parking spaces along the side of the loading platform, four car parking spaces along the other side of the Driveway and one container parking space near the entrance.  Eleven of these sixteen parking spaces were owned by Acerich Investment Limited (“Acerich”).  These spaces were all rented to the defendant.  The 2^nd plaintiff owns two car parking spaces but no lorry parking spaces inside the Building.

10.There is a factual dispute between the parties as to the parking arrangement between them.  According to the plaintiffs, they had an unspecified parking space arrangement with the defendant since 2004 (when Yau Senior was the vice-chairman) under which the 1^st plaintiff pays the defendant $2,600 per month for the use of any two lorry parking spaces for the sole purpose of loading and unloading goods.  According to the defendant, the 1^st plaintiff only rented lorry parking space L2 from January 2001 to March 2019 for the purpose of parking its lorries at a monthly rent of $4,300.  For the purpose of this determination, there is no need to resolve this factual dispute.

11.Before considering the parties’ dispute, it has to be noted that the Building is a small industrial building with poor loading and unloading facilities because of its size and design.  Ideal loading and unloading facilities include a loading area located in a recessed parking bay for lorries off the driveway and an elevated loading platform served by lifts to the various floors of the building.  A lorry can be park with its back against the elevated loading platform.  The loading platform of the lorry could be lowered onto the loading platform of the building to provide a gangway so that goods can be unloaded from the lorry onto the loading platform by forklifts or trolleys to the lifts for onward delivery to the various floors.  The unloading lorry would not cause any obstruction to the traffic on the driveway and there would be no need for forklifts to be used on the driveway.  Loading is carried out by a reverse process. 

12.In this Building, there is no recessed loading area.  The loading area is in fact part of the Driveway.  The unloading lorry cannot be parked with its back against the elevated loading platform as it would wholly obstruct the traffic on the Driveway.  It has to be parked alongside the loading platform or better still in one of the lorry parking spaces.  Goods have to be unloaded from the lorry at the lorry parking space, transported by forklifts or trolleys to the loading area, lifted up to the loading platform and then transferred to trolleys etc. Use of forklifts is an efficient and beneficial means of loading and unloading from point of view of the deliverer as well as other users of the Building.  Unlike a building with proper loading and unloading facilities as described above, any loading and unloading in this Building must be an obstruction to other users of the Driveway.

The hostility  

13.Prior to commencement of hostility, the 1^st plaintiff used to park their lorries near the entrance or exit of the Building, unload its goods and convey them to its units inside the Building.  By this mode of operation, the plaintiffs do not have to pay parking fees for entering the Building.  The plaintiffs’ case is that they have been operating in this manner using the two unspecified lorry parking spaces for the past twenty years.  The defendant says that the 1^st plaintiff only rented one specified lorry parking space for parking its lorries.  The defendant had commenced proceedings in the Small Claims Tribunal against the 1^st plaintiff in early 2019 claiming overdue parking fees of $21,060.  However, that claim was dismissed for want of prosecution on 14 March 2019.  For the purpose of the determination, I do not find it necessary to resolve the parties’ disputes on this issue save to bear their differences in mind.

14.Hostility commenced on 19 April 2019 when the defendant put up a notice on the Building prohibiting forklifts from accessing or using the Driveway.  Without the forklifts, the 1^st plaintiff could not load the goods onto the loading platform.  As it was raining, the 1^st plaintiff had to move the goods consisting of about 1,000 packs of rice, each weighing 25 kilograms, from the entrance to the lorry parking spaces L4, L5 and L6 to prevent damage by rain.  The defendant also chained one of the 1^st plaintiff’s forklifts to a fence and demanded a sum of $12,000 for its release and for the use of the lorry parking spaces.  After some negotiation, the forklift was released upon payment of $3,000.  Subsequently, the 1^st plaintiff commenced proceedings in the Small Claims Tribunal to recover the said payment.  That claim is still pending.

15.On 20 April 2019, the defendant’s security guard refused to allow the 2^nd plaintiff’s private car access to his car parking spaces P3 and P4.

16.On 17 May 2019, one of the 1^st plaintiff’s forklifts hit a pedestrian on the Driveway.  There was nothing to suggest that the accident resulted in serious injury to the pedestrian.  In her 2^nd affirmation filed by the defendant’s secretary, Ms Law Pik Wan (“Law”), on behalf of the defendant, Law mentioned a similar earlier incident in April 2019, but gave no particulars or supporting evidence.

17.On 14 July 2019, the defendant installed two speed bumps at the entrance and exit of the Driveway. These made access by the plaintiff’s forklift difficult.  Nevertheless, the 1^st plaintiff was still able to transport its goods using forklifts and trolleys.

18.On 31 July 2019, the defendant installed an additional bar (the “additional bar”) at the entrance to the Driveway such that this additional bar together with the existing bar wholly block the entrance to the Driveway.  The defendant’s agents who manned the entrance refused to lift up either of the bars when the 1^st plaintiff’s staff intimated their intention to access the Driveway by forklifts.

19.As result, the 1^st plaintiff resorted to using the exit at Kwai Lok Street to access the Driveway.  On 1 August 2019, the plaintiffs placed a pile of wooden pallets and/or their vehicles under the gate after it was opened to prevent it from closing so as to enable the forklifts to enter and exit the Driveway.  Up till then, the 1^st plaintiff’s forklifts could still access the Driveway.

20.Then on 2 August 2019, the defendant’s staff pulled down the gate at the exit making the 1^st plaintiff’s ingress impossible.  The defendant also parked a private car in the immediate vicinity of the loading platform and put chains and fences around it, which completely blocked the 1^st plaintiff’s access to the loading platform.

21.On 3 August 2019, the defendant caused Law and her husband to park their vehicles at the entrance and exit of the Driveway and put up fences between the two speed bumps.  The 1^st plaintiff’s container truck was thus trapped within the Driveway.  Law demanded $21,060 to allow the container truck egress from the Building.  Later that day, the 2^nd plaintiff and his brother were also denied egress by the defendant’s security guard.

22.The above facts are not in serious dispute.  The status quo was that the 1^st plaintiff’ was allowed to use its forklifts in the Driveway for loading and unloading goods since early 2019, if not for the past 20 years.  The defendant’s stance is that it has the duty to manage the Building and the power to charge parking fees for using the common area under the DMC and its parking spaces rented from Acerich.  The hostility arose because the defendant considered the use of forklifts by 1^st plaintiff offending.  It considered the 1^st plaintiff’s high frequency of loading and unloading operations, the parking of the forklifts immediately next to the loading platform for substantial period of time, the use of the Driveway for loading and unloading obstructive to other users of the Driveway.  It also complained about the manner and speed of driving of the forklifts which caused an accident on 17 May 2019.  Hence, speed bumps were installed for safety purposes on 14 July 2019.  It should be noted that the speed bumps were installed at the entrance and exit but not on the Driveway near the loading area where the accidents occurred.  The bumps had no effect of slowing down the forklifts during the loading and unloading operations.  It appears that the purpose of installing the bumps is to prevent their entry or exit or make it difficult for the 1^st plaintiff to use the forklifts in the Driveway.

23.As for the additional bar installed at the entrance, the defendant explained that it was to facilitate collection of parking fees.  It also argued that the installation was necessary as previously the plaintiffs, not being owners of the container parking space, had stored goods thereon in breach of the DMC.  This is a lame excuse as the bar could prevent persons from storing goods or other articles in that parking space.  The real reason is, as Law said in paragraph 24 of her 2^nd affirmation, to enforce payment of parking fees each time a forklift enters and exits the Building.

The parties’ cross-undertaking

24.On the return date of the inter parties summons, the parties gave cross-undertakings. The plaintiffs undertook:

(1)  to pay a monthly fee of $3,000 to the defendant on the 15^th day of each calendar month, the first payment shall be made on 15^th August 2019, until the determination of this summons; and

(2)  not to block or cause to block the entrance of the Driveway or any part thereof or place or cause to be placed any goods, vehicles, chattels or other things under the bar marked blue in the layout plan until the determination of this summons.

The defendants undertook:

(1)  to remove the fences placed at the entrance of the Building;

(2)  not to block or cause to block the entrance or exit of the Driveway or any part thereof and not to refuse the plaintiffs’ ingress or egress either on foot or by way of forklifts, trolleys, or any other means of conveyances until determination of this summons;

(3)  to allow the plaintiffs to place wooden, plastic, or metal planks in between the speed bumps to facilitate the 1^st plaintiff’s transportation of goods until determination of this summons; and

(4)  to allow the 1^st plaintiff to park its forklifts at a parking space between P6 and P7.

The defendant’s breach of undertaking

25.Law alleged in her 1^st and 2^nd affirmations filed on behalf of the defendant, inter alia, that the 1^st plaintiff breached its undertaking at 9:24 am on 3 September 2019.  In his 2^nd affirmation filed on 4 October 2019 in response, Yau explained that the 1^st plaintiff’s breach was caused by the defendant’s breach which took place 34 minutes earlier.  He then made further allegation of events which substantially occurred after Law’s 2^nd affirmation was filed.  The defendant did not seek leave to file evidence in response to the allegation about those later events.  Yau’s allegation about those later events must be taken to undisputed.

26.Before hostility commenced, there is no dispute that at least since January 2019 the defendant used to unload its goods from lorries parked outside either Kwai Hei Street or Kwai Lok Street using forklifts which entered or exited the Building from the same entrance or exit.  That was the status quo.  Hostility began in August 2019 when the defendant implemented a new policy requiring all vehicles, including the 1^st plaintiff’s forklifts, to enter from the entrance at Kwai Hei Street and exit through the exit at Kwai Lok Street and to pay parking fees for each entry.  Once exited, the forklifts had to drive on the public road round the block of buildings, cross intersections until they return back to the entrance at Kwai Hei Street.  That is an impossibility as forklifts are not permitted to be used on the public road.  Only licenced vehicles may be used on the public road.  Forklifts do not fall within any class of vehicle under Schedule 1 of the Road Traffic Ordinance (Cap 374) to which a vehicle licence may be issued.  That basically was the hostility. 

27.The defendant’s undertaking was to restore the status quo before hostility or to cease the hostility on the plaintiffs’ undertaking to pay monthly fees and not to obstruct the entrance and not to jam the bar at the entrance.  There is nothing to suggest that the 1^st plaintiff has agreed or undertaken not use forklifts to exit from Kwai Hei Street.  All indications and inferences are that the 1^st plaintiff may continue its operation as before on the basis of the plaintiffs’ undertaking and the defendant’s cross-undertaking to facilitate the plaintiffs’ use of the Driveway by allowing the plaintiffs to cover up the speed bumps with planks.  This is also the impression given by the defendant’s skeleton submission when arguing that the interlocutory injunction is unnecessary because of the defendant’s undertaking.

28.The undisputed facts asserted in Yau’s 2^nd affirmation is that the defendant resumed hostility on 3 September 2019.  It began with the defendant’s security guard refusing to allow the 1^st plaintiff’s forklifts ingress or egress from Kwai Hei Street at about 8:50 am.  About 34 minutes later, as a self-help and in breach of its undertaking, the 1^st plaintiff blocked the exit at Kwai Lok Street and jammed the bar at about 9:24 am to secure ingress and egress for its forklifts so as to transport its goods to its units inside the Building.  Then, at 9:45 am, the defendant’s security guard also refused the 2^nd plaintiff’s brother entering from Kwai Hei Street with an electric pallet jack.  But throughout the day, the defendant’s security guard allowed vehicles belonging to other users to enter and exit from Kwai Hei Street.  On 29 September 2019, in further breach of its undertaking, the defendant removed the planks covering the speed bumps. 

29.In terms of causation, the defendant was responsible for resumption of hostility and the 1^st plaintiff’s breach of undertaking was induced by the defendant and ought reasonably be excused.  The defendant has not been discharged or relieved of its undertaking.  Its complaint that the 1^st plaintiff’s breach interfered with the normal operation of the entrance or exit bar and affected its collection of car parking fees was also self-induced.  The conclusion is that had it not been for the defendant’s breach, the cross-undertakings would have been adequate to maintain the status quo until trial.

Serious issue to be tried

30.The plaintiff’s case mainly rests on two interrelated causes of action, namely, breach of deed of mutual covenant and private nuisance on the part of the defendant as the incorporated owners of the Building.  The parties have no dispute that breach of deed of mutual covenant gives rise to a serious question to be tried for the purpose of seeking an interlocutory injunction against the incorporated owners: Sunterly Ltd v Incorporated Owners of Far East Mansion[3]. There is also no dispute that continuing breach of deed of mutual covenant by the incorporated owners against the owner of an individual unit in the building gives rise to a close nexus with private nuisance which justifies the grant of an interlocutory mandatory injunction unless there are good reasons to the contrary: Sin Chan Kam v Incorporated Owners of Wai Sun Building[4]. The dispute between the parties is whether the acts of the defendant complained of constitute breach of the DMC.

31.The parties rely on clauses 2, 3, 4, 14(f), 14(h) and 14(k) of the DMC which provide as follow:

“2.  That each of the owners for the time being thereof shall have the right in common with the others of such owners and all others having the like right to use for the purpose of access to and egress from the Units so allotted to each of them the common parts of the said Building and the said premises.

3.  That the owners for the time being thereof shall not be entitled to use any common area or driveway on of or in the said Building or the said premises for the purpose of loading and unloading goods vehicles or for any other purpose except in such space as may be designated from time to time as loading and unloading area by the Manager for the time being of the said Building in such manner as such Manager shall direct.

4.  That the owners for the time being thereof and every owner shall not obstruct or interfere with the said common parts, services and facilities, loading and unloading spaces and shall use the same in a proper and careful manner so as not to cause any damage thereto or any obstruction or inconvenience to any of the other owners and further shall not use the same or any of them for any other purpose than those for which they are respectively intended. The Manager for the time being of the said Building shall have full power to take away or cause to take away any goods articles or vehicles of any owner or occupier which obstructs or interferes such common parts, services, facilities or areas at the sole expenses of such defaulting owner or occupier and the Manager shall not be liable for any loss or damage whatsoever for such removal. The Manager for the time being of the said Building is hereby empowered to make any rules or regulations from time to time regulating the use of the common areas including imposing fines or storage charges against any party in breach of such regulations.

14(f)  Not to use the driveway … or the other common parts of and in the said Building or the said premises for the purpose of … placing or storing of any … goods or chattels or other things thereon or therein.

14(h)  Not to permit or suffer or permit anything to be done in the said Building or on the said premises or any parts or part thereof or thereupon which may be or become a nuisance or annoyance or cause damage or inconvenience to the owners or occupiers of any unit of the said Building or of adjoining or neighbouring buildings.

14(k)  Not to use any Car Parking Space for any other purpose other than for parking a motor vehicle for which the same has been designated.”

32.The plaintiffs’ case is very simple.  As co-owners of the Building they are entitled to access their units and the Driveway under clause 2 of the DMC and to load and unload its goods on the Driveway without obstruction or interference from other owners, including the defendants, under clause 4.  But, in breach of the DMC, the defendant denied them access to the Driveway, whether by private car or forklifts since 3 September 2019 and continues to do so.  The defendant has no dispute with the general proposition that the plaintiffs are entitled to use the Driveway.  In essence, its case is that the 1^st plaintiff may not use any part of the Driveway other than the designated loading area for loading and unloading goods but in serious breach of clause 4 of the DMC the 1^st plaintiff obstructed the Driveway by using forklifts during their operation, improper manner of using the forklifts and parking the forklifts on the Driveway.  In the proper discharge of its power of management and duty to ensure safety of other users of the Driveway, the defendant cannot “permit any loading and unloading of goods on the Driveway insofar as the plaintiffs’ activities obstruct the owners’ use of the common parts”.  Hence, the defendant has power to regulate the use of the Driveway and chain up the 1^st plaintiff’s forklifts parked on the Driveway.  The defendant argues that the plaintiffs have failed to even establish a prima facie case that there is a serious issue to be tried.

33.The thrust of the defendant’s case is that the 1^st plaintiff obstructed the Driveway by loading and unloading goods on the Driveway.  The Building is an industrial building.  Loading and unloading of goods is a regular and ordinary activity in such a building.  The plaintiffs identified a section of the Driveway immediately in front of the loading platform as the loading area designated by the defendant.  The defendant did not challenge that allegation.  Presumably, it is from that area that the forklifts lift stacks of goods to the level of the loading platform where the stacks are transferred to trolleys and manually pushed into the lifts for delivery to the various floors.  The defendant cannot complain of obstruction or breach of the DMC by the 1^st plaintiff’s loading and unloading activities conducted within the loading area. 

34.The defendant’s complaint seems to be directed at the 1^st plaintiff’s unloading goods on the Driveway.  As explained in paragraphs 11 and 12, given the design and size of the Building, the lorries cannot be parked with their backs against the loading platform for unloading goods.  Goods have to be unloaded from lorries parked in the lorry parking spaces onto forklifts or trolleys on the Driveway before they could be delivered to the loading area for unloading onto the loading platform.  Strictly construed, such loading of goods onto the forklifts or trolleys which takes place on the Driveway outside the designated parking area may be in breach of clause 3 and may amount to obstruction in breach of clause 4. 

35.On the other hand, the 1^st plaintiff is entitled to park its lorries in two lorry parking spaces under the unspecified parking space arrangement according to the plaintiffs or in lorry parking space L2 under the single parking space rental arrangement according to the defendant.  As a co-owner of the Building, the 1^st plaintiff has a right in common with the other co-owners to use the common area, including the undesignated part of the Driveway, for the purpose of access to and egress from its units.  The conflict between clauses 3 and 4 on the one part and clause 2 on the other has to be resolved on the basis of necessity and reasonableness.  The use of part of the Driveway for loading and unloading of goods near the lorry parking spaces is necessary.  The 1^st plaintiff is entitled under clause 2 to such reasonable use of the Driveway for the purpose of access to its units from the lorry parking spaces and the defendant is obliged under clause 4 not to interfere or obstruct such use by the 1^st plaintiff of the Driveway.  Other than some photographs showing huge volumes of goods were being transported, there is no objective evidence that the 1^st plaintiff’s use of the Driveway was unreasonable and unnecessary.  Having regard to the undisputed fact that the plaintiffs own about one-third of the Building, it is debatable if the frequency and volume of use is unreasonable.  Further, as stated in its skeleton submission, the defendant accepts that transportation of goods using forklifts or trolleys from lorries parked on the rented parking spaces to the loading area is not in breach of the DMC.  Thus, the defendant’s complaint of breach of DMC may only be directed at the manner with which the 1^st plaintiff uses its forklifts on the Driveway.

36.The defendant complains that the 1^st plaintiff used forklifts to transport goods from the entrance or exit of the Building to the loading area without paying parking fees constituted obstruction and unlawful use of the Driveway.  It appears from Law’s affirmations that had the 1^st plaintiff paid parking fees each time a forklift enters the Building, the defendant would have no complaint and the use of the Driveway would not be regarded as obstructive.  If the 1^st plaintiff is entitled to use the forklifts to transport goods from the parking spaces inside the Building as accepted in the defendant’s skeleton submission or on payment of parking fee as asserted by Law, I fail to see how the use of the Driveway in could be obstructive.

37.As for payment of parking fees, the defendant is entitled to collect parking fees for use of parking spaces leased by the defendant.  But there is no justification to charge a fee for entry or exit by the 1^st plaintiff’s forklifts as it is entitled as a co-owner of the Building to access and use the Driveway under clause 2 of the DMC and the defendant is also obliged under clause 4 not to interfere with or obstruct the use of the common area by the plaintiffs as co-owners of the Building.  Insofar as the forklifts are not parked in any of the parking spaces leased to the defendant or in the common area, the defendant is not entitled to charge parking fees.  That, in fact, is the position accepted by both parties.  Hence, the defendant gave an undertaking to allow the 1^st plaintiff to park its forklifts at the common area between P6 and P7 and the 1^st plaintiff undertake to pay a monthly sum of $3,000.

38.Another reason for refusing the 1^st plaintiff’s use of the Driveway is that two accidents involving forklifts driving at high speed occurred in April and May 2019. Accidents are neutral events.  It is not entirely clear whether the forklifts were driven at high speed and whether the drivers of the forklifts or the pedestrians were negligent.  Even if the drivers were, it is not a sufficient reason for denying the 1^st plaintiff’s right under the DMC to access its units using the Driveway.

39.The defendant argues that under clause 14(k) of the DMC parking of forklifts at the 2^nd plaintiff’s parking spaces P3 and P4 is prohibited.  Under clause 14(k), each co-owner has covenanted with the other co-owners “[not] to use any car parking space for any other purpose other than for parking a motor vehicle for which the same has been designed”.  The defendant’s argument is premised on the 2^nd plaintiff parking spaces being designed for parking private cars, i.e. sedans and forklifts are not private cars which an owner is entitled to park in its own parking space.  Under the Third Schedule to the DMC which allocates shares in the units and car parking spaces in the Building, there are three types of car parking spaces, namely, container truck parking space, lorry parking spaces and private car parking spaces.  Though the defendant did not refer to the above three types of car parking spaces mentioned in the Third Schedule, it seemingly assumed that there are three distinct and separate purposes for which the car parking spaces were designed, i.e. for parking container truck, lorries or sedans and a parking space may not be used other than for that one particular purpose for which it was designed.  Thus, the owner of the container parking space may not park his lorry or sedan in that parking space; the owner of a lorry parking space may not park his private car in that parking space; and nothing other than a private car may be parked in a private car parking space.

40.In my view, the term “car parking space” is a general term and the description of the various types of car parking spaces in the Third Schedule is used to identify the car parking space by its size for the purpose of allotting shares in the interest in the Building rather than to restrict its use to a particular type of vehicle. It is strongly arguable that the word “design” as used in clause 14(k) only restricts the purpose for which the space may be used, i.e. as a car parking space and not as space to be used for any other purposes, such as an office, workshop or stall for which it was not so designed.  It is not intended to have the effect of limiting the use to the particular type of vehicle as mentioned in the Third Schedule which is for the purpose of allotting shares in the Building only. The construction contended by the defendant would yield the ridiculous result as described in the last sentence of the preceding paragraph.  

41.There is no definition under the DMC as to the meaning of a “motor vehicle” and whether a forklift is a motor vehicle within the meaning of the DMC.  Common sense suggests the term “motor vehicle” has the same meaning as defined in the Road Traffic Ordinance (Cap 374).  The following definition under section 2 of that Ordinance is pertinent:

“road includes every highway, thoroughfare, street, lane, alley, court, square, car park, passage, path …

vehicle means any vehicle whether or not mechanically propelled which is constructed or adapted for use on roads …

motor vehicle means any mechanically propelled vehicle”

A forklift is a vehicle which is constructed or adapted for use in a car park or passage, including the Driveway, which are all within the meaning of the word “road”.  As the forklifts are mechanically propelled, they are motor vehicles.  The only covenant under clause 14(k) is not to use the car parking space for other purpose other than parking “motor vehicle”.  Hence, parking a forklift falls fairly and squarely within the permitted purpose for which a private car parking space, such as P3 and P4 is designed.

42.Further, insofar as any reliance is sought to be placed on the three different classes of parking space is concerned, such reliance is misconceived.  The bigger must necessarily include the smaller.  The covenant is therefore not to park a container truck in a lorry parking space and not to park a lorry in a private car parking space.  It would be monstrous to suggest that the covenant includes not to park a private sedan in a lorry parking space or a lorry in a container parking space or a forklift in a private car parking space.     

43.The defendant’s act in refusing the plaintiffs’ right to enter and use the Driveway for the purpose of good and proper management of the Building is prima facie a serious breach of the clauses 2 and 4 of the DMC.  It is also an interference with and causes disturbance of or annoyance to the plaintiffs in the exercise or enjoyment of their ownership or occupation of land as to amount to an actionable private nuisance.  I am well satisfied that the plaintiffs have demonstrated a good prima facie case of the defendant’s breach of the DMC and private nuisance.  There is clearly a serious issue to be tried.

Adequacy of damages to the parties  

44.According to the 1^st plaintiff, its business requires high frequency of loading and unloading works for distributing its edible goods of perishable nature to customers in Hong Kong.  By reason of the defendant’s continual denial of the 1^st plaintiff’s access to and egress from the Driveway, it has been unable to transport its goods to and from its warehouses, i.e. the units in the Building, to its customers and suffered substantial loss of revenue, customers and reputation.  It may face potential contractual claims from its customers.  The defendant argues that there is a complete lack of documentary evidence that the plaintiffs have suffered loss of business and goodwill.  There is no dispute that the volume of goods to be transported is large.  That is one of the complaints of the defendant. The defendant produced photographs showing some of the goods being transported.  Though there is no documentary evidence of actual loss, such loss may be readily presumed.  I consider the evidence adequate for the purpose of this interlocutory determination.  The 1^st plaintiff also argues that its loss of business opportunities, reputation and goodwill as a result of the 1^st plaintiff’s business being stifled between the time of determination of the summons and the actual trial are irreparable harm.  I consider the risk of such loss is high and not quantifiable.  I am satisfied that such loss could not be adequately compensated by damages.

45.The defendant argues that the plaintiffs could have avoided the loss or the risk by paying parking fees for access to the Building for unloading of goods, just like what they did pursuant to the undertaking.  It also argues that the 1^st plaintiff could also have rented a lorry parking space for the purpose of loading and unloading goods.  If the plaintiffs succeed at trial, the rent paid is recoverable as damages.  Such loss is only pecuniary.  Such argument is doomed to be rejected.  Despite the plaintiffs having complied with their undertaking to make payments, the defendant is in breach of its undertaking by refusing the plaintiffs’ entry into the Driveway and removing the planks between the speed bumps which made it difficult for the forklifts enter or exit the Driveway. 

46.The defendant argues that the measures (presumably meaning the speed bumps) were introduced for the safety of pedestrians using the Driveway.  It incurred much expenses in installing the bumps.  The defendant will be at risk as occupier of the Driveway should accident occurs.  As already mentioned above, the speed bumps installed at the entrance and exit do not have the effect of reducing the speed of the forklifts.  Furthermore, any loss suffered by the defendant may be recoverable against the plaintiffs.  There is nothing to suggest that the plaintiffs being owners of one third of the units in the Building will not be good for damages and for re-installing the bumps if they were removed when they should not have been removed.

47.The defendant also argues that its loss cannot be quantified if the additional bar is removed as it will result in a breakdown of the fee collection system using Octopus card. This may be the case, if both the original and the additional bars are removed, but not if only the additional bar is removed.  Forklifts and motor-cycles may pass the entrance or exit without payment.  If these vehicles are parked within parking spaces of their respective owners, parking fees are not chargeable.  If they are not, the defendant may chain up or impound them only to be released on payment of a penalty.  The defendant may also cause its security guards to maintain a log of such unlawful entries and durations of stay.  There may be minor difficulties in enforcement but the loss of revenue may not be significant, even if unquantifiable.

48.All in all, the evidence suggests that damages are not adequate from point of view of the plaintiffs, but adequate from point of the defendant.

Balance of convenience

49.In applying the American Cyanamid principles, the court adopts a holistic approach in determining where the balance lies.  In N.W.l. Ltd v Woods[5], Lord Diplock held that the crucial factor is the adequacy of damages to redress the parties’ respective harm and inconvenience that are likely to be sustained in the alternative scenarios, i.e. the adequacy of damages to the plaintiff when the injunction is wrongly refused against the adequacy of damages to the defendant when the injunction is wrongly granted.  His Lordship said:

“In assessing whether what is compendiously called the balance of convenience lies in granting or refusing interlocutory injunctions in actions between parties of undoubted solvency the judge is engaged in weighing the respective risks that injustice may result from his deciding one way rather than the other at a stage when the evidence is incomplete. On the one hand there is the risk that if the interlocutory injunction is refused but the plaintiff succeeds in establishing at the trial his legal right for the protection of which the injunction had been sought he may in the meantime have suffered harm and inconvenience for which an award of money can provide no adequate recompense. On the other hand there is the risk that if the interlocutory injunction is granted but the plaintiff fails at the trial, the defendant may in the meantime have suffered harm and inconvenience which is similarly irrecompensable. The nature and degree of harm and inconvenience that are likely to be sustained in these two events by the defendant and the plaintiff respectively in consequence of the grant or the refusal of the injunction are generally sufficiently dis-proportionate to bring down, by themselves, the balance on one side or the other; and this is what I understand to be the thrust of the decision of this House in American Cyanamid Co v Ethicon Ltd. Where, however, the grant or refusal of the interlocutory injunction will have the practical effect of putting an end to the action because the harm that will have been already caused to the losing party by its grant or its refusal is complete and of a kind for which money cannot constitute any worthwhile recompense, the degree of likelihood that the plaintiff would have succeeded in establishing his right to an injunction if the action had gone to trial, is a factor to be brought into the balance by the judge in weighing the risks that injustice may result from his deciding the application one way rather than the other.”

Where damages are unquantifiable, it is a factor which points to inadequacy of damages.  If damages are quantifiable, whether the party liable is good for damages is also a factor for deciding if damages are inadequate.

50.The plaintiffs have shown a strong prima facie case of a serious question to be tried. There is nothing to suggest that they are not good for damages of the kind which are foreseeable in this case.  If the injunction is wrongly refused, the magnitude of direct loss to be suffered by the 1^st plaintiff may be high.  In addition, there may be risk of claims from its clients.  The loss may be huge and unquantifiable.  As against the defendant, the loss to be suffered if the injunction is wrongly granted is pecuniary and largely quantifiable.  Applying the American Cyanamid test, the balance weighs heavily in favour of grant of an interlocutory injunction.  The terms of the injunction may be fine-tuned to minimize possible harm and to reduce any possible impact of injustice in the event that the injunction should not have been granted.

Conclusion

51.An interlocutory injunction to be ordered is solely for the purpose of holding the ring during the interim period pending trial.  It should be no wider than necessary to keep the status quo for the purpose of enforcing or protecting what in essence is the applicant’s rights or interest.  The terms of the injunction should be the least onerous as the circumstances permit so that the party enjoined will suffer the least harm possible if it turns out that the injunction should not have been granted. 

52.The essence of the protection or remedy sought by the plaintiffs is to secure ingress or egress into the Driveway for its forklifts, trolleys and vehicles.  For that purpose, it would be adequate to grant the plaintiffs an injunction in terms of paragraph 1(a), (c) and (f) of the draft order prepared by the plaintiffs, i.e. restraining the defendant from blocking the entrance and exit of the Building; requiring the defendant to demolish the additional bar installed at the entrance of the Driveway; and restraining the defendant from accessing and using the 2^nd plaintiff’s car parking spaces P3 and P4.  Paragraph 1(a) and (f) are absolutely necessary for the protection of the plaintiffs’ right of access and use of its parking space under the DMC.  Paragraph 1(c) is a mandatory injunction to remove an obstruction to Driveway.  It is necessary for facilitating the plaintiffs’ use of the Driveway.  Its removal would not cause much expense to the defendant.

53.In paragraph 1(b), the plaintiffs sought to restrain the defendant from chaining up the 1^st plaintiff’s forklifts.  Chaining up or impounding vehicles using the Driveway unlawfully is within the defendant’s power as the manager of the Building and the Driveway.  The defendant has every right to chain up or impound any vehicle using the Driveway unlawfully, including entering without payment and unauthorized parking in the common area or parking spaces without authority from their owners.  While the 1^st plaintiff may use its forklifts on the Driveway, the forklifts may not be parked in any part of the common area when not in use without authorization from the defendant.  There is no reason to restrain the defendant from exercising its rights in managing the common area of the Building.  The forklifts may be parked in any of the parking spaces belonging to or rented by the plaintiffs.  Under the cross-undertakings, the 1^st plaintiff is permitted to park its forklifts at a space between parking space P6 and P7 on payment of a monthly rent of $3,000.  If the parties are released of these undertakings upon granting of these injunctions, it is foreseeable that hostility will resume.  I shall therefore hold the parties to these undertakings until conclusion of this action.  These undertakings will continue despite the grant of the interlocutory injunction.  The parties are advised to reach agreements on the parking arrangement for the forklifts.

54.In paragraph 1(d) and (e), the plaintiffs sought mandatory injunction order to require the defendant to remove the fence and the speed bumps at the entrance of the Driveway.  The defendant, as manager of the Building, has the power to install such fence and bumps for the proper management of the Building.  The order under paragraph 1(a) would secure the plaintiffs’ right to enter the Driveway. Removal of the fence is unnecessary.  The defendant incurred $177,500 installing the bumps.  Removal of the additional bar would facilitate the ingress and egress of the forklifts, particularly if the planks are in place. If the bumps were removed and the defendant turns out to be successful at trial, the plaintiffs would have to pay for the costs of removal and reinstatement. Making that part of the defendant’s undertaking a term of this injunction order would serve the best interest of all parties.

55.In paragraph 1(g), the plaintiffs seek an order restraining the defendant from harassing, causing nuisance or demanding unwarranted sums of money from the plaintiffs. These orders sought are vague and unnecessary.  The orders to be made above will effectively abate the nuisance complained of. 

56.Accordingly, I make the following interlocutory injunction order:

(1)  requiring the defendant to remove the additional bar installed at the entrance of the Driveway;

(2)  restraining the defendant from blocking the entrance and exit of the Driveway;

(3)  restraining the defendant from obstructing or interfering with plaintiff accessing and using car parking spaces P3 and P4;

(4)  restraining the defendant from interfering with the plaintiffs’ placing wooden, plastic or metal planks on the speed bumps to facilitate entry of their forklifts into the Driveway and from interfering with the same; and

(5)  there be liberty to apply.

I also make a costs order nisi that the defendant shall pay the plaintiffs’ costs of this application.  Such costs are to be taxed if not agreed. 

57.For avoidance of doubt, the defendant’s undertaking to permit the 1^st plaintiff’s use of the space between parking space P6 and P7 for parking forklifts and the plaintiffs’ undertaking to pay the defendant monthly rent of $3,000 shall continue until conclusion of this action.  I strongly advise the parties to promptly reach agreement for the rental of parking spaces for the 1^st plaintiff’s forklifts.  If such agreement could be reached, a permanent injunction may not even be necessary.  The will be concluded with substantial savings in legal costs.  The agreement may also include provision for removal of the speed bumps, the costs of such works and costs of the action.

Mr. Oscar Sin instructed by Huen & Partners for the plaintiffs

Ms. Allison Wong instructed by S.K. Lam, Alfred Chan & Co. for the defendant