Grand Power International Ltd v. Chan Sing Hoi Enterprises Ltd

CACV 116/2019

[2020] HKCA 704

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 116 OF 2019

(ON APPEAL FROM LDBM NO 329 OF 2014)

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BETWEEN

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Before: Hon Kwan VP, Chu JA and Au JA in Court

Dates of Written Submissions: 17 April, 15 and 29 May 2020

Date of Judgment: 27 August 2020

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J U D G M E N T

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Hon Kwan VP (giving the Judgment of the Court):

1.On 21 January 2020, we gave judgment at the conclusion of the hearing allowing the appeal of the applicant, Grand Power International Ltd, against the judgment of the Lands Tribunal given on 1 November 2018. Our reasons for judgment were handed down on 11 March 2020 (“CA Reasons”).

2.The time for the 1^st respondent to file a notice of motion for leave to appeal to the Court of Final Appeal would have expired on 18 February 2020.  Under section 24(2) of the Hong Kong Court of Final Appeal Ordinance, Cap 484, a notice of motion for this purpose is required to be filed within 28 days from the date of the judgment to be appealed from.  As a result of the closure of the High Court registries between 29 January and 8 March 2020 due to the public health risks caused by COVID-19, and section 71(1A) of the General Clauses and Interpretation Ordinance, Cap 1, the time for the 1^st applicant to file a notice of motion only expired on 9 March 2020 when the High Court registries re-opened.

3.According to an affirmation made by the 1^st respondent’s director on 27 March 2020, the 1^st respondent, Chan Sing Hoi Enterprises Ltd, decided to seek leave to appeal on 20 March, after taking advice on the CA Reasons of 11 March.  It issued a notice of motion on 6 April for leave to appeal and served it on the applicant the same day.  The notice of motion was filed on 6 May 2020 when the registries of the High Court re-opened after the second general adjournment of court proceedings for public health reasons.

4.The 1^st respondent seeks an extension of time to file the notice of motion pursuant to sections 24(5) and (6) of Cap 484.

5.We would grant an extension of time for the 1^st respondent to file its notice of motion. 

6.The question formulated in the notice of motion as revised in the reply submission of the 1^st respondent said to be of great general or public importance reads as follows:

“What are the correct principles governing the grant of equitable remedies (in particular, mandatory injunctions and declarations) for breach of a negative covenant in a contract (in particular, where a co-owner claims against another co-owner in a multi-storey building for breach of the implied obligation under s 34I(1)(a) of the BMO [Building Management Ordinance, Cap 344]) or trespass^[1]? Without prejudice to the generality of the foregoing:

(a) Whether the claimant has a prima facie entitlement to any equitable relief, in particular, a mandatory injunction?

(b) Whether to vindicate the claimant constitutes a sufficient practical purpose justifying the grant of a declaration?”

7.The subject matter of this litigation concerned a glass wall and three signages of a building in Causeway Bay, which does not have incorporated owners and no agent has ever been appointed under the deed of mutual covenant to undertake the management.  It was held that the glass wall and the three signages amounted to trespass and a breach of section 34I(1)(a) in that they involved unauthorised conversion of parts of the common parts of the building^[2]. We further held that the Lands Tribunal had erred in holding that the defences of acquiescence and waiver are established.  The subject of challenge in the intended appeal relates not to these holdings but to the exercise of our discretion in granting the mandatory injunctions to demolish the glass wall and signages, the related prohibitory injunction and in making the declarations sought^[3]. It is the 1^st respondent’s position that the application for mandatory and prohibitory injunctions should have been refused and no declarations should have been made.

8.We are inclined to agree with Mr Bernard Man, SC for the applicant^[4] that the wider question (ie the part before “without prejudice to the foregoing”) is hopelessly broad.  It does not arise in the proposed appeal, nor does this call for an examination by the Court of Final Appeal of all the principles governing the grant of equitable remedies for breach of a negative covenant or for trespass.

9.As for the narrower questions in the latter part (“whether the claimant has a prima facie entitlement to any equitable relief, in particular, a mandatory injunction” and “whether to vindicate the claimant constitutes a sufficient practical purpose justifying the grant of a declaration”), it seems to us that these considerations are to be taken into account with regard to the context of a particular fact situation, and the same goes to the proper weight to be attached to them in particular circumstances so as to produce a fair result.  They are not legal principles to be applied in a rigid manner without careful consideration in the balancing exercise to be carried out for the discretion in granting equitable remedies, as have been repeatedly emphasised by the courts (Charrington v Simons & Co [1970] 1 WLR 725 at 730D to F; Shepherd Homes Ltd v Sandham [1971] Ch 340 at 351A to G; Incorporated Owners of Dragon View v Nalpak Ltd [1989] 1 HKC 549 at 552A to C; Chiu Hung Shun Paul & Anr v So Ka Tai & Anr, CACV 136/2005, 5 December 2002, at §16(5); Singh v Rainbow Court Townhouses Ltd [2019] 1 P. & C.R. 9 at §§29 to 30).  Nor have we done so in deciding that it would be appropriate to grant the injunctions and declarations sought.

10.As pointed out by Mr Man, in holding that the Lands Tribunal has taken into account irrelevant and speculative matters and that we should exercise the discretion afresh, we have addressed the arguments then raised on behalf of the 1^st respondent^[5] including disproportionate hardship, arbitrary enforcement and sufficiency of declaratory relief.  It was upon rejecting all of the 1^st respondent’s arguments that we concluded it was appropriate to grant the reliefs sought with the alterations we indicated to the parties^[6]. In short, we have not approached the exercise of discretion on the basis that the principles referred to in Billion Star Development Ltd v Wong Tak Chuen at §§38(3) and (4) were tantamount to a “rebuttable legal presumption that such remedies will be given”, as contended by the 1^st respondent. 

11.It does not appear to us there is any question of great general or public importance arising out of the application of well-established propositions of law to a particular fact situation in the exercise of judicial discretion in granting injunctions and declarations.  Nor was any significant issue of general law or policy raised in the proposed appeal.  For this reason alone, we are not inclined to grant leave to appeal to the Court of Final Appeal on the question as revised.

12.Mr Paul Lam, SC, who appeared for the 1^st respondent in this application^[7], advanced these contentions:

(1) The proposition that there is prima facie entitlement to an injunction to restrain trespass even in the proved absence of injury in the plaintiff is “arguably wrong”, citing Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5^th ed) at [21-110] p 718.  The authorities to the contrary Patel v W H Smith (Eziot) Ltd [1987] 1 WLR 853, followed by the Hong Kong Court of Appeal in Lea Tai Property Development Ltd v Incorporated Owners of Leapoint Industrial Building [1996] 1 HKC 193 at 197G to 198B, should be departed from.

(2) The proposition that there is prima facie entitlement to an injunction to restrain the breach of a negative covenant in a deed of mutual covenant is in “serious dispute and has not yet been settled in Hong Kong”, as the well-known statements of Lord Cairns in Doherty v Allman (1878) 3 App Cas 709 at 720 were obiter, as pointed out in Spry on The Principles of Equitable Remedies (9^th ed) at p 17; Fairview Park Property Management Ltd v Wong Shu Ho, CACV 141/1984, 16 November 1984, at §13; Chiu Hung Shun Paul & Anr v So Ka Tai & Anr at §16(5).

13.The propositions under challenge go to the prima facie entitlement of a plaintiff to injunctive relief.  So long as it is borne in mind they are not rebuttable presumptions of law that equitable remedies will be granted and should not be applied mechanically but tempered by judicial discretion consonant with the basic concept of producing a fair result, it does not seem to be a fruitful exercise to attempt to reconcile statements of guidance given over the years in a rather different context (Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287 at 322 to 323; Lawrence v Fen Tigers Ltd [2014] AC 822 at §§119, 121 to 123, 159 to 161, 170 to 171, 239; both are concerned with nuisance in respect of noise and the power to award damages in lieu of an injunction under Lord Cairns’ Act).  Further, the doubts expressed as to Lord Cairns’ statements in Doherty v Allman only go to the court having no discretion at all to exercise and caution against applying those statements in too absolute and inflexible a manner. And there can be a clear case for an injunction without the need to show substantial damage (Singh v Rainbow Court Townhouses Ltd at §32).

14.We doubt if it would be feasible to lay down precise legal principles for the exercise of judicial discretion in this context to address the queries raised by Mr Lam on the burden of proof and exceptional circumstances to “rebut” the prima facie entitlement to injunctive relief. How the discretion is to be exercised must be decided on a case by case basis and needless to say each case depends on its own facts.

15.Lastly, Mr Lam submitted that in granting the declarations sought, the court has overlooked a crucial factor in that this action was not brought by the incorporated owners and the applicant has no exclusive right to take proceedings in respect of the common parts of the building under section 16 of the BMO.  This seeks to challenge the application of well-established principles in the present situation.  We are not persuaded that this gives rise to a question of great general or public importance or that our exercise of discretion was in error.

16.For all the above reasons, we refuse to give leave to appeal to the Court of Final Appeal.  We order the 1^st respondent to pay the applicant’s costs of this application, which we assess on a summary basis at $262,850.

Mr Bernard Man SC and Mr Jason Lee, instructed by H Y Leung & Co LLP, for the Applicant (Respondent)

Mr Paul Lam SC and Mr Alex Fan, instructed by Hon & Co, for the 1^st Respondent (Applicant)