Kingfield Investment Development Ltd v. Pakco Property Services Ltd and Another

HCA 1536/2016

[2023] HKCFI 1105

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1536 OF 2016

________________________

BETWEEN

(by original action)

AND BETWEEN

(by counterclaim)

________________________

DECISION

________________________

THE APPLICATION

1.This is an application for mandatory injunction made by virtue of the summons filed on 6 December 2022 (“the Summons”)  by the 1^st defendant (by original action)  (“Pakco”)  and the 2^nd defendant (by original action)  (“Ng”)  against the plaintiff (by original action)  (“Kingfield”).  The proposed terms are as follows:

“(1)  [Kingfield], its servant(s)  or agent(s)  do give [Pakco], its servant(s), agent(s)  or contractor(s)  unrestricted access to the fourth floor flat roof (‘4/F Flat Roofs’)  of the Kar Shing Arcade (‘Arcade’)  for the purpose of operating, maintaining, repairing and/or replacing the air-conditioning system of the Arcade (‘A/C System’);

(2)  [Kingfield], its servant(s)  or agent(s)  do give [Pakco], its servant(s), agent(s)  or contractor(s)  unrestricted access to the management office of the Arcade (which is shown and identified with the words ‘Management Office’ in the floor plan of the Arcade annexed [to the Summons])  (‘Management Office’)  for the purpose of operating, maintaining, repairing and/or replacing the A/C System in the event of any emergency whereby access to the A/C display panel and/or lift panels in the Management Office becomes necessary;

(3)  Alternative to (2), [Kingfield], its servant(s)  or agent(s)  do provide [Pakco], its servant(s), agent(s)  or contractor(s)  the key to the Management Office to be used by [Pakco], its servant(s), agent(s)  or contractor(s)  solely for the purpose of entering the Management Office in the event that [Kingfield], its servant(s)  or agent(s)  fails to admit [Pakco], its servant(s), agent(s)  or contractor(s)  into the Management Office within 2 hours after [Pakco] had given notice to [Kingfield] by WhatsApp at 9200 3778 of any emergency whereby access to the A/C display panel and/or lift panels in the Management Office becomes necessary; and

(4)  [Kingfield], its servant(s)  or agent(s)  do give [Pakco], its servant(s), agent(s)  or contractor(s)  unrestricted access to the 4/F Flat Roofs and the Management Office for the purpose of inspecting and obtaining quotation of the price of any part(s)  for the repair and/or replacement of the A/C System; and

(5)  In relation to the above sub-paragraphs, [Pakco] should be at liberty to engage other contractor(s)  to provide quotation, repair, maintenance, inspection and replacement services to the A/C System of the Arcade, apart from Hang Ngai Engineering (Hong Kong)  Limited (恆毅工程(香港)有限公司).”[1]

BACKGROUND

2.The background of the present proceedings had been summarised in paragraph 7 of Mr Chan Keung’s 8^th Affirmation (“Chan 8^th”)  which was filed in support of the Summons.  As Kingfield has not filed any affirmation in opposition[2], I take it that Kingfield accepts that the summary is accurate.  The said paragraph 7 reads:

“(1)  The Arcade is part of the building known as Kar Shing Building which is located at 15-19 Kau Yuk Road, Yuen Long, New Territories, Hong Kong (‘Building’). The occupation permit of the Building was issued in 1980. Subject to further investigation, G/F, 1/F, 2/F and 3/F of the Building was converted into a shopping arcade (i.e. the Arcade)  by Kingfield’s predecessor in title, City Noble Developments Limited (‘City Noble’), in 2006. A Sub-Deed of Mutual Covenant of the Arcade dated 23 January 2006 was entered into by City Noble as the registered owner, one Leung Suk Han as the purchaser and Kong Art Limited (‘Kong Art’)  as the Manager (‘Sub-DMC’). […]

(2)  For the essential operation of the Arcade, the A/C System was installed before the sale of shops in the Arcade and the commencement of business there. Part of the A/C System consists of 3 cooling towers and a chiller system located at the 4/F Flat Roofs. The Arcade used to enjoy the supply of air-conditioning from the A/C System all along since 2005.

(3)  In 2014, Kingfield acquired the Arcade and some areas of 4/F Flat Roofs. At all material times since 27 March 2014:-

(a)  One Cheung Lin Chuen (張連尊)  (‘Cheung’)  was and is the sole shareholder of Kingfield and the indirect sole shareholder of Kong Art via Mega Well Construction Engineering Limited (‘Mega Well’)  which was and is also solely owned by Cheung;

(b)  Cheung was and is the sole director of Kingfield, Kong Art and Mega Well;

(c)  Cheung has been in control of all these companies, save and except after Kong Art was wound up and provisional liquidators were appointed on 17 February 2021.

(4)  The trigger of the parties’ dispute can be traced back to 2016 when the co-owners of the Arcade […] passed a resolution on 30 April 2016 (‘Termination Resolution’)  to terminate its engagement with Kong Art and appoint Pakco as the new Manager of the Arcade,

(5)  It subsequently transpired that Kong Art has unreasonably and wrongfully refused to quit its role as Manager.  A number of unhappy incidents occurred since then.  […]

(6)  Legal actions ensued as a result. On one hand, Kingfield sued Pakco and Ng for inter alia orders to restrain them from entering into the 4/F Flat Roofs and certain ‘Reserved Areas’ of the Arcade as well as for damages for the alleged unlawful interference with Kingfield’s occupation, use and enjoyment of such areas. One the other hand, Pakco sought various relief including inter alia a declaration that the Termination Resolution is valid and binding on Kong Art, a declaration that the appointment of Kong Art as the Manager of the Arcade was terminated on 30 Aril 2016 and an injunction against Kong Art restraining it from acting as the Manager of the Arcade from 30 April 2016 onwards.

3.As far as the A/C System in the Arcade is concerned, according to paragraph 8 of Chan 8^th:

“(1)  There are in total 333 shops in the Arcade, all of which have been sold and thus Kingfield is no longer the owner of any of them […]

(2)  The usual opening hours of the Arcade and the shops are from 10:00 am to 10:00 pm daily. Ever since the Arcade was open for business in 2006, it has enjoyed the air-conditioning as supplied by the A/C System. In fact, the A/C System serves only the Arcade. […] I was advised and verily believe that the A/C System is within the definition of ‘Common Facilities’ under the Sub-DMC and hence the owners of the Arcade and their duly appointed Manager would have a right to access and use the A/C System.

(3)  Since the Arcade is enclosed without natural ventilation, fresh and/or chilled air can only be supplied to it by the A/C System. In other words, there is no air supply to the Arcade if no air-conditioning comes from the A/C System. Therefore, with the stoppage of air-conditioning from the A/C System as set out below, the Arcade would become unbearably hot and stuffy. While Pakco and some shop owners have tried to take measures, such as installing split-type air-conditioning units in the corridors of the Arcade as a short-term means to mitigate the problem […], these surely cannot be a long-term solution in lieu of the proper maintenance of the A/C System.

(4)  The key facilities of the Arcade, including an A/C System display panel (‘A/C Panel’), a CCTV monitor panel and a lift panel are located in the Management Office. The A/C Panel enables one to monitor whether the A/C System is in normal operation.  Moreover, the access to the A/C Panel is necessary for the maintenance staff to reset the control valves of the A/C System after its breakdown.  Without access to the A/C Panel (which is akin to a ‘switch’ of the A/C System), the A/C System cannot operate after being repaired following its breakdown.”

4.After the commencement of these proceedings, Kingfield on one hand, and Pakco and Ng on the other hand, have made applications for interlocutory injunction against each other.  Two summonses filed on 16 June 2016 and 19 September 2016 respectively have resulted in Kingfield giving the following undertakings to the Court on 19 December 2016 which were incorporated in a court order made by DHCJ Marlene Ng (as she then was)  (“the 2016 Court Order”).  Those undertakings include:

“(1)  In the event the air-conditioning and cargo lift machinery located on [4/F Flat Roofs] malfunction requiring repairs to be conducted, or require maintenance or inspection work (whether regular or otherwise)  to be carried out, Kingfield shall permit technicians from Hang Ngai Engineering (Hong Kong)  Limited (‘Hang Ngai’)  or another contractor to be mutually agreed between [Pakco] and Kong Art and/or Sigma Elevator (HK)  Limited (‘Sigma’)  to have access to the 4/F Flat Roofs of Kar Shing Building for the limited purpose of accessing the A/C machinery or cargo lift machinery room for the aforementioned purposes, subject to the following:

(a)  In the case of malfunction requiring repairs, Pakco or [Ng] shall give prior reasonable notice to and obtain the prior approval of Kong Art (who is authorized to act for and on behalf of Kingfield)  who shall give such approval within a reasonable time period commensurate with the urgency of the situation, such approval not to be unreasonably withheld;

(b)  Access to the 4/F Flat Roofs shall be limited to the said technician(s)  from Hang Ngai or another contractor to be mutually agreed or another contractor engaged by Pakco (in the case where one is engaged pursuant to subparagraph (3)  below)  and/or one representative from Pakco (either Mr. Patrick Tse or Mr. Chan Keung)  and Sigma who shall be appointed by Pakco; and

(c)  All such visits to be arranged so that the technicians and the representative from Pakco (either Mr. Patrick Tse or Mr. Chan Keung)  (in the circumstances set out at subparagraph 2(d)  and 2(e)  below)  may be accompanied by the staff, agents or licences of Kong Art at all times;

(2)  Kingfield and/or Kong Art shall procure Hang Ngai to enter into an air-conditioning maintenance and repair contract (‘the Contract’)  with Pakco regarding [A/C System] located at inter alia the 4/F Flat Roofs of Kar Shing Building, in the following terms:

(a)  The Contract shall run commencing on 21^st December 2016 until 28 days after final judgment or further order at the price of HKD 27,000.00 per month, wherein the cost of the price of the days in December 2016 is to be calculated on a pro-rata basis;

(b)  The Contract shall cover the same scope of services as set out in Hang Ngai’s existing contract with Pakco dated 5^th October 2016 […];

(c)  Hang Ngai shall conduct a weekly and one monthly inspection of the A/C System;

(d)  Kingfield and Kong Art shall permit one representative from Pakco (either Mr. Patrick Tse or Mr. Chan Keung)  to accompany Hang Ngai’s technicians during the monthly inspection;

(e)  In the event repairs are required and Hang Ngai’s technicians visit the A/C machinery for inspection prior to repairs and upon the completion of repairs, Kingfield and Kong Art shall permit one representative from Pakco (either Mr. Patrick Tse or Mr. Chan Keung)  to accompany Hang Ngai’s technicians during one pre-repair and one post-repair inspection visit with each visit to be limited to 30 minutes; Kingfield or Kong Art shall provide photographs if necessary of the A/C machinery and repairs but Pakco shall not be permitted to take photographs of the repairs or A/C machinery;

(f)  Hang Ngai shall provide a committed response time of 2 hours between 9.00am and 6.00pm;

(g)  The charge for services after 6.00pm shall be HK$800 per visit (for up to 2 hours of service), thereafter at HK$800 per hour until the services are completed;

(h)  If spare part(s)  of the A/C System need to be replaced, Hang Ngai will first obtain a quotation from a supplier and provide the quotation to Pakco:

(i)  If Pakco agrees with the price of the spare part(s), Hang Ngai will purchase the said spare part(s)  from that supplier; and

(ii)  If Pakco disagrees with the price of the spare part(s), Pakco may obtain the said spare part(s)  at a cheaper price and provide it to Hang Ngai;

(i)  If insurance is required […]

(j)  Hang Ngai will submit a monthly report to Pakco on the works done to the A/C System; and

(k)  In case the A/C System malfunctions, Hang Ngai will submit a report to Pakco and provide a quotation within 2 working days of the malfunction;

(3)  Save in the case of emergency repairs (referred to below), in case Hang Ngai fails to work or refuses to work on the conditions set out at (2)  above, Pakco shall be at liberty to engage another air-conditioning contractor to provide repair, maintenance and inspection services to the A/C System if the parties are unable to mutually agree on an alternate contractor within 5 working days; in the event of an emergency malfunction of the A/C System requiring urgent repairs and Hang Ngai fails or refuses to carry out urgent repairs, Kong Art (who shall act on behalf of Kingfield)  and Pakco shall endeavour to reach agreement over the choice of an alternate contractor within 24 hours of Hang Ngai’s refusal, failing which Pakco shall be at liberty to engage another contractor for the limited purpose of carrying out the urgent works in question;

(4)  Pakco be at liberty to contact Hang Ngai directly for the services to be rendered including but not limited to repairs, inspections and maintenance work;

(5)  Kingfield shall allow Hang Ngai’s staff access to the 4/F Flat Roofs for the purposes of providing the services set out at (2), (3)  and (4)  above and shall allow one representative from Pakco (either Mr. Patrick Tse or Mr. Chan Keung)  access to the 4/F Flat Roofs in the circumstances set out at 2(d)  and 2(e)  above;

(6)  Kingfield shall provide access to Hang Ngai’s staff upon its arrival at the 4/F Flat Roofs;

(7)  Kingfield shall provide a key to the structures housing the A/C machinery at the 4/F Flat Roofs to Hang Ngai to allow their staff to access such structures in case Kingfield or Kong Art cannot be contacted; and

(8)  In the event of any emergencies whereby access to the A/C display panel and lift/escalators panels in the Management Office is necessary, Pakco and/or Ng shall give reasonable notice to Kong Art (acting for and on behalf of Kingfield)  by phone at 2476 3100 or 5247 9702 who shall within 2 hours of receiving such notice admit one single staff of Pakco and any technicians from Hang Ngai or the contractor to be mutually agreed and Sigma into the Management Office to assist with the emergency in the presence of Kong Art’s staff” (collectively, “Kingfield’s Undertakings”)

5.It is now alleged by Pakco and Ng that despite the above undertakings, Kong Art has repeatedly ignored Pakco’s notice and refused to give access to the staff engaged by Pakco to the 4/F Flat Roofs and the Management Office for the purpose of operating, maintaining or repairing the A/C System.

6.As a result, it is said that Kingfield’s Undertakings could not attain their intended purposes which had led to serious problems in the daily operation, particularly the air-conditioning supply, of the Arcade.

THE LEGAL PRINCIPLES

7.Counsel for Pakco and Ng accepted that their lay clients are in effect applying for variations of the 2016 Court Order.  In this regard, they have drawn this Court’s attention to paragraph 29/1/34 of Hong Kong Civil Procedure 2023, Vol.1, in which the learned author stated that:

“[…] The court would generally only consider varying or discharging an interim injunction on good grounds or due to a change in circumstances or facts coming to light that could not reasonably have been found out beforehand (Chanel v FW Woolworth & Co Ltd [1981] 1 WLR 485; Dynamic Creations Ltd v Mint Gem & Jewelry Manufacturing Co Ltd (HCA 378/2006, [2006] HKEC 2647)). Further, an application to vary or discharge may be made where the injunction by its terms shows that the application to vary or discharge may be made where the injunction by its terms shows that the application was not substantially disposed of, but adjourned sine die with liberty to apply (Raindrop Data System Ltd v Systemics Ltd [1988] FSR 354; Butt v Butt [1987] 1 WLR 1351)  […]”[3]

8.As this is an application for mandatory injunction, the principles which this Court referred to in HKCOLO.NET Limited v Hong Kong Telecommunications (HKT)  Limited [2023] HKCFI 138 are relevant:

“35. It is trite that the American Cyanamid principles are applicable in an application for interlocutory injunction. Pursuant to those principles, the Court has to consider:

(1)  Whether there are serious issues to be tried;

(2)  Whether damages would be an adequate remedy for either side and where the balance of convenience lies.

36.  In an application where interlocutory mandatory injunction is sought, the court should also bear in mind what Ma J (as his Lordship then was)  said in the case of Music Advance Limited & Another v The Incorporated Owners of Argyle Centre Phase I [2010] 2 HKLRD 1041:

‘11. The applicable principles for interlocutory injunctions are well-known and do not need repetition. Generally, one needs to look no further than American Cyanamid v. Ethicon Ltd [1975] AC 396 and the relevant text in Hong Kong Civil Procedure 2002 Volume 1 at paragraphs 29/1/8-29/1/50.

12.  I would, however, only highlight one aspect.  Where, as in the present case, the plaintiffs seek an interlocutory mandatory injunction (that is, an order requiring the defendant to do something, in contrast to a prohibitory injunction which restrains the defendant from doing something), the following matters should be borne in mind as being the court’s approach : 

(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.

(8)  This of course brings into focus the balance of convenience.  Thus, if a plaintiff in seeking an interlocutory mandatory injunction cannot demonstrate more than a serious question to be tried, it will have to show that the balance of convenience tilts so much in its favour that justice requires such an injunction to be granted, even taking into account those aspects of an interlocutory mandatory injunction expressed by Hoffman J in Films Rover International Limited.

(9)  At no stage, however, in the consideration of the matter does the court lose sight of the practical realities of the situation to which the injunction will apply : see NWL Limited v. Woods [1979] 1 WLR 1294 at 1306C per LordDiplock.’

37.  Cheung JA had also given the following reminder in Lai Hoi Ping (suing on his own behalf and on the behalf of all other members of Hong Kong Taxi Association)  & Another v Persons Occupying Portions of Nathan Road near to and between Argyle Street and Dundas Street to prevent or obstruct normal vehicular traffic from passing and repassing the occupied areas & Others (HCMP 2975/2014, unreported, 15 November 2014):

‘[…] it has to be borne in mind that the court’s jurisdiction to grant an injunction, whether interlocutory or final, is based on section 21L of the High Court Ordinance (Cap 4)  which provides that where it appears to the court to be ‘just or convenient’ to grant an injunction, the court may do so. The cases have given various guidelines on when it is ‘just or convenient’ to grant an interlocutory injunction, which, if granted, is, by definition, granted before the final outcome at trial is known. It is to address this peculiar feature of an interlocutory injunction that considerations such as whether there is a serious question to be tried (so that the plaintiff’s claim is not a ‘frivolous or vexatious’ one), whether damages is an adequate remedy, and where the balance of convenience lies, come into the picture, so that the court may, putting it negatively, choose the course of ‘lesser evil’, or putting it positively, decide whether it is ‘just or convenient’ to grant an interlocutory injunction before the final outcome at trial is known.’ (at paragraph 9)

38.  Hence, it is clear that it is not an inflexible rule that whenever a mandatory injunction is sought, the plaintiff must satisfy the court that there is a high degree of assurance that he shall succeed at the trial.  It all depends on the circumstances.  At the end of the day, the ultimate question is whether the requirement in section 21L of the High Court Ordinance (Cap.4)  is satisfied – whether the court considers it just or convenient to grant the injunction.  The court will take whichever course that carries the lower risk of injustice if it turns out to be wrong.”

DISCUSSION

9.In the deliberation of this application, what counsel for Pakco and Ng stated in their skeleton submission as quoted below must be borne in mind:

“[…] it must be emphasized that the reliefs sought in the Summons merely aim to restore the purposes for which the undertakings given in the [2016 Court Order] intended to achieve, i.e. the arrangement regarding the proper maintenance of the A/C System in the interim pending trial.”[4]

10.Hence, when considering the Summons which admittedly is an application to vary the 2016 Court Order, the focus of this Court should be on the alleged failure to achieve the original purpose of the said order.

11.With the above in mind, I now turn to consider the individual orders sought.

Paragraph 1 of the Summons

12.Under this paragraph, Pakco and Ng asked the Court to order that:

“[Kingfield], its servant(s)  or agent(s)  do give [Pakco], its servant(s), agent(s)  or contractor(s)  unrestricted access to the [4/F Flat Roofs] of the [Arcade] for the purpose of operating, maintaining, repairing and/or replacing the [A/C System]”

13.This part of the application can be dealt with quickly.

14.As accepted by their counsel, Pakco and Ng are not complaining that they could not have access to the 4/F Flat Roofs[5] for the purpose of repairing the A/C System.  They have therefore failed to make out any case for getting a mandatory injunction in replacement of the undertaking given by Kingfield as contained in the 2016 Court Order as far as access to the 4/F Flat Roofs is concerned.

Paragraph 4 of the Summons

15.For reasons which will become apparent in the latter part of this Decision, I will deal with paragraphs 4 and 5 of the Summons before paragraphs 2 and 3 thereof.

16.Paragraph 4 of the Summons reads:

“[Kingfield], its servant(s)  or agent(s)  do give [Pakco], its servant(s), agent(s)  or contractor(s)  unrestricted access to the 4/F Flat Roofs and the Management Office for the purpose of inspecting and obtaining quotation of the price of any part(s)  for the repair and/or replacement of the A/C System;”

17.It was submitted on behalf of Pakco and Ng that pursuant to the mechanism under the 2016 Court Order, Hang Ngai is enjoying a monopoly to the detriment of the interest of the owners of the Arcade because high prices of the replacement part(s)  of the A/C System have been quoted by Hang Ngai.  It was also said that Pakco is not satisfied with the performance of Hang Ngai in that if it had properly repaired the A/C System, the A/C System would not be constantly breaking down.  They therefore want to have some measures to facilitate the process of getting quotations for replacement parts from other suppliers.

18.It appears to this Court that the above are assertions which are not supported by evidence:

(1)  The allegation that Hang Ngai has quoted high price for replacement part(s)  is a bare allegation which is not supported by any quotation given by another supplier.  The basis of this allegation is unexplained;

(2)  It was Pakco’s evidence that the A/C System had been in use for a long time.  Without any further evidence, Pakco’s allegation that Hang Ngai had not been doing its job well is only a speculation, since it could well be because of normal wear-and-tear that the A/C System was not working properly.

19.Further, as pointed out by Ms Cheung, while it has been stipulated under the 2016 Court Order that Hang Ngai has to be approached for a quotation for replacement part first, there is already a mechanism under which Pakco might propose another supplier of spare part(s)  to Kingfield, just that Pakco had never taken advantage of this mechanism in the past (there is no evidence which shows that Pakco had done so).  Moreover, there is no allegation made on the part of Pakco or Ng that Hang Ngai has ever refused to provide repair service.

20.In the above circumstances, I do not agree that paragraph (4)  of the Summons is necessary for the purpose of making the existing mechanism workable.  The parties can still rely on the mechanism under the 2016 Court Order. 

21.The only matter which I think should be clarified by way of a court order is in relation to the facilitation of Pakco to obtain quotation(s)  from other suppliers for the replacement parts needed.  At the moment, there is a constraint imposed by paragraph (2)  of Kingfield’s Undertakings that it shall procure Hang Ngai to enter into a maintenance contract with Pakco pursuant to which Pakco shall not be permitted to take photographs of the repairs or the A/C Machinery.  As proposed by Ms Cheung, I agree that it should be clarified that Pakco is permitted to do so, so that it could obtain quotation(s)  from other suppliers if necessary.

Paragraph 5 of the Summons

22.Pakco and Ng asked for the following order by virtue of paragraph 5 of the Summons:

“In relation to the above sub-paragraphs, [Pakco] should be at liberty to engage other contractor(s)  to provide quotation, repair, maintenance, inspection and replacement services to the A/C System of the Arcade, apart from [Hang Ngai]”

23.Counsel for Pakco and Ng stated that at the time when the 2016 Court Order was made (by consent), there was an unresolved issue between the parties as to whether Pakco had been properly appointed as the Manager of the Arcade. However, it was said, now that the matter had been resolved (Judgment had been entered against Kong Art in favour of Pakco (“the Judgment”)), there is no longer any reasonable justification for Pakco to stick with Hang Ngai, which was a contractor preferred by Kingfield and Kong Art only.  Therefore, this Court was urged to order that Pakco should be at liberty to engage another contractor altogether to maintain and repair the A/C System.

24.I reject this application for the following reasons.

25.Firstly, there was a long delay on the part of Pakco and Ng to make the present application.

26.It is trite that an application for interlocutory injunction has to be made promptly.  In King Fung Vacuum Ltd & Others v Toto Toys Ltd & Others [2006] 2 HKLRD 785, Rogers VP held that:

“20. There has traditionally been a strong requirement when interlocutory injunctions have been sought, that the plaintiff must show that it has acted promptly and without delay. Promptly in the circumstances of interlocutory injunctions has been commonly understood to be a period of six weeks or so of unexplained delay and three months with an explanation given for the delay in making application for an injunction. Since the American Cyanamid decision the importance of irreparable damage in an application for an interlocutory injunction is paramount. If there is no irreparable damage demonstrated then the need for an interlocutory injunction has not been shown. This is important because of the approach that the courts take to interlocutory injunctions. They are not the trial of the action and the court is concerned with whether irreparable damage will occur before a trial can take place. It stands to reason that if a party is prepared to allow matters to proceed and takes no action with respect to matters which have been extant for lengthy periods, it lies ill in their mouth top say that there is likely to be irreparable damage […]”

27.Le Pichon JA further explained in her Judgment in Wong Chung Ming Development Fund Co Ltd v Profit Surplus Ltd [2009] 3 HKLRD 514 that:

“29. Mr Yuen submitted that the defendant had known of the plaintiff’s position as early as March 2007 but did not apply for interlocutory relief until June 2008. He submitted that on that ground alone interim relief should have been refused. He sought to rely on the observations of Rogers VP (at §§20-21)  in King Fung Vacuum Ltd v Toto Toys Ltd [2006] 2 HKLRD 785:

‘Promptly in the circumstances of interlocutory injunctions has been commonly understood to be a period of six weeks or so of unexplained delay and three months with an explanation given for the delay in making application for an injunction.’

30. That statement is a rule of thumb that has been used as a guide for many years. As Oliver J, as he then was, said in Radley Gowns Ltd. v Costas Spyrou (1975)  FSR 455 at page 469, the court does not countenance a ‘leisurely stroll to the court door’ if a party seeks an interlocutory injunction. The question of delay is relevant when considering the question of irreparable damage because a party seeking an injunction is unlikely to stand by for any period of time if the party against whom the injunction is sought is truly causing serious and irreparable damage. Delay in seeking relief may also cause prejudice to a party against whom the injunction is sought because that party may have altered its position in the intervening period and be prejudiced by reason of the delay.

31. The date from which the period runs is the date on which the person seeking an interlocutory injunction knew or ought to have been aware that interlocutory relief would be required in order to prevent what is said to be irreparable damage.” (emphasis added)

28.In Harbour Front Limited v Money Facts Limited & Others [2019] HKCA 916, Kwan VP held that:

“26. The judge is right to find that the delay here was six weeks, from the newspapers advertisements on 2 October 2018. A delay of six weeks, even if unexplained (which we do not think is the case here), in the circumstances of interlocutory injunctions has been commonly regarded as acceptable (King Fung Vacuum Ltd & Ors v Toto Toys Ltd & Ors [2006] 2 HKLRD 785 at §20). Besides, delay is not an absolute bar to the grant of an injunction. The ultimate question is still, after taking into account all the circumstances, including the nature and length of the delay, whether it is just to grant the injunction (Kwoon Chung Motors Co Ltd v Kwok Cheuk Kin & Ors, HCA 2222 & 2223/2014, 1 December 2014, §58).” (emphasis added)

29.It can therefore be seen that even though the Court of Appeal described the time-lines of “6 weeks” and “3 months” as a “guide” and “a rule of thumb”, the ultimate question is whether it would be just to grant the injunction.  In this regard, the court has to consider whether there was any irreparable damage, and whether the delay (if any)  has caused any prejudice to the respondent of the application.

30.In the present case, the application for mandatory injunction was only made on 6 December 2022, which was more than two years after the Judgment was entered into (i.e. the confirmation of Pakco’s valid appointment as Manager)  on 18 November 2020. 

31.If there was really any irreparable damage as alleged, it is difficult to imagine why this application (paragraph (5)  of the Summons)  was not made earlier. In my view, such a long delay must be a weighty factor against the grant of the order sought.

32.Secondly, this part of the application is apparently beyond the scope of “restor[ing] the purposes for which the undertakings given in the [2016 Court Order] intended to achieve, i.e. the arrangement regarding the proper maintenance of the A/C System in the interim pending trial” (see paragraph 9 above).

33.Thirdly, as aforesaid, there is no suggestion on the part of Pakco/Ng that Hang Ngai has been unwilling to provide maintenance service.  Neither is there any evidence in support of the allegation that Hang Ngai is incompetent in its work.  In other words, there is no evidence that the agreed mechanism as provided by the 2016 Court Order cannot work unless another contractor is appointed in the place of Hang Ngai.  In these circumstances, I cannot see why the Court should change such a mechanism in the interim period pending trial.

Paragraphs 2 and 3 of the Summons

34.Paragraphs 2 and 3 of the Summons read:

“2. [Kingfield], its servant(s)  or agent(s)  do give [Pakco], its servant(s), agent(s)  or contractor(s)  unrestricted access to the [Management Office] for the purpose of operating, maintaining, repairing and/or replacing the A/C System in the event of any emergency whereby access to the A/C display panel and/or lift panels in the Management Office becomes necessary;

3.  Alternative to (2), [Kingfield], its servant(s)  or agent(s)  do provide [Pakco], its servant(s), agent(s)  or contractor(s)  the key to the Management Office to be used by [Pakco], its servant(s), agent(s)  or contractor(s)  solely for the purpose of entering the Management Office in the event that [Kingfield], its servant(s)  or agent(s)  fails to admit [Pakco], its servant(s), agent(s)  or contractor(s)  into the Management Office within 2 hours after [Pakco] had given notice to [Kingfield] by WhatsApp at 9200 3778 of any emergency whereby access to the A/C display panel and/or lift panels in the Management Office becomes necessary;”

35.In support of these proposed orders, Pakco and Ng have adduced undisputed evidence that Kingfield’s agent, Kong Art, had repeatedly failed to give access to Pakco’s and/or Hang Ngai’s staff to the Management Office because there was simply no one picking up the phone when Pakco called the telephone numbers stated in paragraph (8)  of Kingfield’s Undertakings.  It was therefore said that the mechanism as provided in the 2016 Court Order was not workable.

36.Kingfield’s position is that it is prepared to give an undertaking to the Court to the effect that it would give a key to the Management Office to the staff of Hang Ngai so that access into the Management Office can be facilitated for repairs to be done by Hang Ngai at any time.

37.Given it is this Court’s ruling that the engagement of Hang Ngai should be retained pending trial of this action, it seems to me that the undertaking as proposed to be given by Kingfield would solve the problem as identified by Pakco and Ng: If Hang Ngai has the key to the Management Office, it can do the repair in the Management Office on a timely basis, and in such a case Pakco does not have to worry any further about not being able to get in touch with Kingfield for the purpose of opening the door to the Management Office and repairing the A/C System therein.

38.I would therefore accept Kingfield’s undertaking.

39.In such a case, I am not going to grant the proposed order under paragraph 2 or 3 of the Summons.  After all, the Management Office is a private premise belonging to Kingfield. The Court is required to balance the rights of the parties.  Having considered all the circumstances, I am of the view that it is more appropriate for the matter to be resolved at this stage by accepting Kingfield’s undertaking.

DISPOSITION

40.By reasons of the aforesaid, upon Kingfield undertaking to give a key to the Management Office to the staff of Hang Ngai so that access into the Management Office can be facilitated for repairs by Hang Ngai:

(1)  Kingfield or Kong Art shall provide photographs of the A/C machinery and repairs upon the request of Pakco;

(2)  Pakco shall be at liberty to take photographs of the repairs or A/C machinery.

COSTS

41.The present application is necessitated by Kingfield’s failure to give access to Pakco to the Management Office pursuant to the mechanism as provided by the 2016 Court Order.  In these circumstances, I am of the preliminary view that, as a matter of principle, Pakco and Ng should be entitled to the costs of the Summons.

42.Having taken into account the fact that Pakco and Ng have only been partly successful, I order that Kingfield shall bear 30% of the costs of Pakco and Ng for the Summons.

43.The above order nisi shall become absolute in the absence of application to vary (which, if any, shall be made by letter, and will be disposed of on paper)  within 14 days hereof.

44.The costs of Pakco and Ng shall be summarily assessed in lieu of taxation.  Unless any application for variation of the aforesaid costs order nisi is made within time:

(1)  Pakco and Ng shall lodge and serve their statement of costs within 7 days after the expiry of the said 14-day period;

(2)  Kingfield shall lodge and serve its statement of objection within 7 days thereafter;

(3)  Summary assessment of the costs of Pakco and Ng will be conducted on paper (no matter whether any statement of objection is lodged by Kingfield within time)  thereafter.  The costs assessed shall be paid by the Kingfield within 14 days after assessment.

Ms Janine Cheung, instructed by T C Wong & Co, for the plaintiff (by original action)  and 1^st and 2^nd defendants (by counterclaim)

Mr Tony Ko and Mr Him Ho, instructed by H. M. Hui & Co, for the 1^st and 2^nd defendants (by original action)  and 1^st and 2^nd plaintiffs (by counterclaim)