The Incorporated Owners of Wah Chun Industrial Centre and Another v. Coca Investment Company Ltd
Read the full judgment text of HCA 2064/2023 on BabelCite. This High Court CFI judgment was delivered on 20 June 2024.
3. The hearings on 29 December 2023 and 7 March 2024
Cites 5 cases
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HCA 2064/2023 [2024] HKCFI 1617 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 2064 OF 2023 _____________
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________________ D E C I S I O N ________________ 1.Introduction 1.1This is my decision on the following applications:
1.2At the hearings on 7 and 20 March 2024, the Plaintiffs were represented by Ms Carol Wong and the Defendant by Mr Jenkin Suen SC (leading Mr Justin Ismail). 2.Background 2.1The 1st Plaintiff is the Incorporated Owners of Wah Chun Industrial Centre (“Building”) and the 2nd Plaintiff the registered owner of Unit 2 on 7th Floor of the Building. 2.2The Defendant is a wholly-owned subsidiary of Chinachem Properties Holding Company Limited and was the developer of the Building. It is, and was at all material times, the registered owner of car park nos 3, 4, 5, and 6 on the Ground Floor (respectively “CP3”, “CP4”, “CP5” and “CP6” and collectively “CPs”). The CPs are the subject matters of the present dispute between the parties. 2.3The Building is a 23-storey industrial building. The Ground Floor is essentially a carpark and the vehicular access to the Building. For ease of understanding, the Ground Floor Plan of the Building is annexed hereto as Attachment 1 (“G/F Plan”). It may be seen from the G/F Plan that access to the upper floors (apart from stairs) is provided by 3 cargo lifts and 1 passenger lift. Right in front of the 3 cargo lifts is an elevated Loading and Unloading Platform. 2.4CP4, CP5 and CP6 are located right in front and across the entire width of an elevated Loading and Unloading Platform (about 3 feet from the ground) and CP3 in front of an opening for occupants or visitors of the Building to pass through and access the elevated Loading and Unloading Platform via a short flight of stairs. Although not shown on the G/F Plan, it is common ground that there is a drainage manhole within the area of CP3. 2.5The occupation permit of the Building was issued on 18 October 1988 and the Building is subject to a Deed of Mutual Covenant dated 25 October 1988. 2.6Since at least 2006 up to 31 March 2017, the CPs were leased by Defendant to the 1st Plaintiff, and the 1st Plaintiff, in turn, would receive income by charging users a parking fee for the use of the CPs for loading and unloading goods. 2.7In early 2017, the Defendant approached the 1st Plaintiff in respect of the renewal of the tenancy of the CPs (at an increased rent) which was then due to expire on 31 March 2017. On the 1st Plaintiff’s part, there were at least two considerations at that time. As shown in the minutes of an annual general meeting of the owners held on 7 April 2017: (1) counsel had been instructed to advise the 1st Plaintiff on whether the CPs were in fact common parts of the Building despite the Defendant being the registered owner; and (2) the income generated from the CPs was insufficient to cover the associated expenses, which included the rental payments paid to the Defendant and the costs of hiring an attendant for the CPs. At the meeting, by an overwhelming majority of those in attendance, a resolution was passed against the renewal of the tenancy of the CPs. 2.8Ever since the expiry of the tenancy agreement with the 1st Plaintiff, the Defendant has not rented any of the CPs to others. Instead:
2.9The elevated Loading and Unloading Platform was plainly designed to allow the back of a lorry to reach the edge of the platform to enable loading or unloading goods directly onto or from the lorry. As a result of the matters stated in the preceding paragraph, during the period between 1 April 2017 and mid-November 2023, there were varying degrees of vehicular access to the Loading and Unloading Platform. Between 13 November and 29 December 2023 (and for divers periods earlier in late 2017 and November 2019/early 2020), the vehicular access to the Loading and Unloading Platform was entirely blocked and access to the manhole at the CP3 area was restricted. 3.The hearings on 29 December 2023 and 7 March 2024 3.1By the Injunction Summons, the Plaintiffs seek an interlocutory injunction in the following terms:
3.2The first hearing of the Injunctions Summons took place on 29 December 2023. At that hearing, I gave directions to bring the Injunctions Summons to a substantive hearing on 7 March 2024. I also granted an interim-interim injunction pending the substantive determination of the Injunction Summons, the effect of which was to “reopen” CP4 and CP5 and allow unrestricted access to that part of CP3 where the drainage manhole is located[1] (“Interim-Interim Injunction”). 3.3At the hearing on 7 March 2024, the position taken by the Defendant was that there should be a speedy trial of the action. The Defendant was prepared to offer in the meantime to keep two of the CPs (either (1) CP3 and CP4 or (2) CP4 and CP5) “open”. 3.4As part of the consideration for a speedy trial canvassed at that hearing, it became apparent that there might be an issue (which was not raised by the parties or spotted by the court before the hearing) as to whether the present action falls within the jurisdiction of the District Court. The substantive hearing of the Injunction Summons was therefore adjourned to 20 March 2024 and the Plaintiffs were directed to file and serve their Statement of Claim (which by then they had not done so) on or before 14 March 2024, the purpose of which was to assess whether the Plaintiffs’ claim falls within the jurisdiction of the District Court. 3.5On 14 March 2024, the Plaintiffs, instead of filing a Statement of Claim, issued the Amendment Summons. The Defendant thereafter issued the Transfer Summons on 18 March 2024. 4.The Amendment Summons 4.1I first deal with the Amendment Summons. The Amendment Summons seeks:
4.2RHC Order 20, rule 1 provides as follows:
4.3The Defendant does not object to the Amendment Summons, save one aspect. Mr Suen contends that the reference made in the proposed amended Writ to draft Statement of Claim §58 should not be allowed (§4(1) above). 4.4Draft Statement of Claim §58 pleads as follows:
4.5Mr Suen’s objection is on the basis that the claims set out at draft Statement of Claim §58 (or parts thereof) are time-barred. 4.6In the present case, pleadings have not been deemed to be closed. As pointed out by Ms Wong, Mr Suen’s objection has overlooked the fact that no leave is required to amend the claim for damages as the proposed amendment in the Writ is not said by the Defendant to involve any addition or substitution of a new cause of action. Even if there was, the Defendant did not object on that basis. 4.7In relation to the draft Statement of Claim, the Amendment Summons only seeks an extension of time from the deadline imposed by my order made on 7 March 2024. RHC Order 20 rule 1(3)(c) does not apply as the draft Statement of Claim was not indorsed on the Writ. The Amendment Summons is therefore not an application to amend the Statement of Claim as none had been filed. In so far as Mr Suen raised any arguments on the merits of the matters pleaded in the Statement of Claim (in particular whether some or all of the claims advanced at draft Statement of Claim §58 is time-barred), it seems to me that the proper occasion for such issues to be ventilated is in the context of a strike-out application (if pursued). 4.8For the above reasons, I accede to paragraphs 1 to 3 of the Amendment Summons. I also make a costs order nisi that the costs of the Amendment Summons be paid by the 1st Plaintiff to the Defendant[2]. 5.The Injunction Summons 5.1As a result of the Transfer Summons, Mr Suen no longer maintained his stance at the hearing on 27 March 2024 that there should be a speedy trial of the action. Notwithstanding the Transfer Summons, both parties were content for the court to determine the Injunction Summons even if, at the end of the day, the court is to transfer the present case elsewhere. 5.2The issues raised by the Plaintiffs in this action, as summarized by Mr Suen, are as follows:
5.3At the hearing, Mr Suen fairly accepted that there are serious issues to be tried on the Plaintiffs’ claims. As submitted by Mr Suen, the question for determination is whether and to what extent the balance of convenience lies in favour of the grant of an interlocutory injunction. 5.4As stated above, the Defendant has offered to keep open 2 CPs pending trial, namely either (1) CP3 and CP4 or (2) CP4 and CP5. In my view, I think CP 3 merits separate consideration due to its location (not being in front of the Loading and Unloading Bay) and characteristics (the existence of a drainage manhole and providing “human” as opposed to vehicular access to the Loading and Unloading Area). 5.5It seems to me therefore what has factually transpired after the granting of the Interim-Interim Injunction is a useful starting point to consider issues relating to balance of convenience. 5.6Disputes between co-owners of a building often generate very entrenched positions. At the time of the issuance of the Injunction Summons, vehicular access to all the CPs and therefore the Loading and Unloading Area was denied. 5.7The position taken by the Defendant at the hearing on 29 December 2023 was that there was space and passageway to “accommodate a trolley/cart or pallet truck to assist the transport of goods onto” the Loading and Unloading Platform. From the photographs then adduced, the Defendant, for example, seemed to have deliberately parked the cars not in the middle but towards the sides of CP3 and CP4 to leave a gap. I do not see how that can be said to be a satisfactory arrangement, not least because it plainly exposed workers to safety considerations attendant to the lifting of heavy goods, and the associated risks would self-evidently be lowered had lorries been able to access the Loading and Unloading Platform directly. 5.8On the other hand, I have some difficulties in understanding why the 1st Plaintiff could not attempt to deal with the situation on a more practical basis. Whilst litigating the underlying disputes, more practical arrangements could have been offered, such as making payments for the use of the CPs under protest or into an escrow account. Instead, the Plaintiffs decided to litigate the interim arrangement of the CPs by mounting an expensive application. Bearing in mind that the rent of the CPs last paid was only in the neighbourhood of HK$23,000 per month, I do not see why a more reasonable and cost-effective proposal was not considered or offered in the light of the legal fees involved. For example, an olive branch was extended by the Defendant prior to the hearing on 29 December 2023 by offering to lease CP5 to the 1st Plaintiff at a nominal rent of HK$ 1 per month until the determination of the action. Whilst I understand that the 1st Plaintiff might have wanted the reopening of more CPs, but on the evidence before me, no counter proposal was made. In addition, for reasons set out below, the 1st Plaintiff also takes a steadfast position that these proceedings should remain in the Court of First Instance. 5.9Be that as it may, I have to decide the Injunction Summons on the material before me. 5.10The competing considerations are as follows. 5.11On the Defendant’s part:
5.12On the Plaintiffs’ part:
5.13In my view, the balance of convenience lies in favour of continuing the Interim-Interim Order until trial, for the following reasons. 5.14I do not regard the position taken by the Defendant to be a very attractive one. The suggestion that it has reached out to estate agent(s) to sell the CPs is a bare assertion. No email or engagement letter has been adduced into evidence. The fencing-off of the CPs and placing a dead car thereat, when plainly CP4 to CP6 are designed for vehicular assess to the Loading and Unloading Area, seem to me to be difficult to justify. The suggestion that an injunction order would strike a blow to the Chinachem group’s reputation, standing and credit is also a very far-fetched proposition. 5.15On the other hand, P’s position that all the CPs should immediately be “reopened” cannot be justified on the present evidence. Since the granting of the Interim-Interim Injunction, even on Ms Wong’s analysis, CP4 and CP5 appear to have provided adequate access to the Loading and Unloading Area. Whilst there were sporadic periods during which both CP4 and CP5 were occupied, it seems to me that such durations would not be considered abnormal. It cannot be said that, in the normal course, industrial buildings should be expected to offer unfettered or guaranteed access to a loading and unloading bay. In my view, it is not uncommon that delivery workers may on occasions have to wait around until a loading bay is cleared. From the Table, it does not appear to me that during those occasions when both CP4 and CP5 were occupied, the consequent waiting time (until one of them was cleared) can be considered to be unreasonable. I note that it is the Plaintiffs’ evidence that reopening of CP6 is sought to be justified only on the basis that there should be spare availability of the loading and unloading area. 5.16The above also leads to the point that I do not agree with Ms Wong’s reading of the Guidelines. The part of the Guidelines which Ms Wong refers to is as follows:
5.17The Gross Floor Area (“GFA”) of the Building is around 25,000m2. Ms Wong reasons that the available carparking spaces for loading and unloading should therefore be 25,000 x 900 x 50% = 13.89 car parking spaces. But the Guideline plainly distinguishes between (1) goods vehicle bay for parking of goods vehicles and (2) container vehicle loading/unloading bay. According to the Guideline, only 1 container vehicle loading/unloading bay is required, regardless of the GFA of a building. 5.18In terms of CP3, I accept that, after the granting of the Interim-Interim Injunction, it cannot be said on the evidence that the drainage manhole required frequent access. However, the drainage manhole is right in front of the opening providing “human” access to the Loading and Unloading Bay. Were the Interim-Interim Injunction lifted in respect of CP3, the Defendant is entitled to park a car in such a way to block that opening. I do not regard it as satisfactory to force workers or users to jump up to or down from the Loading and Unloading Platform (which is about 3 ft in height). In the foregoing regard, the competing evidence as to whether CP3 provided access to the switch room is not my main concern when compared with the access to the Loading and Unloading Platform. 5.19I acknowledge the evidence shows that the 1st Plaintiff is running at a deficit. However, the Building has 23 floors and I do not regard it likely that, should the 1st Plaintiff be called upon its undertaking, it will not be able to raise funds to meet it, given the likely extent of the Defendant’s loss until trial, which is around HK$25,000 (or adjusted upwards given inflation) per month. I think I can take judicial notice that the 1st Plaintiff would have passed a resolution to meet legal expenses incurred or to be incurred in these proceedings. 6.The Transfer Summons 6.1Ms Wong accepts that the Plaintiffs’ claims as formulated in the draft Statement of Claim fall within the jurisdictional limits prescribed by section 35 (annual rent or rateable value of the CPs being below HK$320,000) and section 37 (proceedings involving land for relief against mistake where the 1st Plaintiff’s claim for mistaken payment is below HK$7,000,000) of the District Court Ordinance Cap 336 (“DCO”). 6.2The only basis relied on by Ms Wong to resist a transfer to the District Court is that the 1st Plaintiff’s claim for mesne profits (quantified as follows) is over HK$3 million (provisionally based on rents in fact paid by the 1st Plaintiff and assuming a limitation period of 12 years):
6.3I accept Ms Wong’s submission that the authorities suggest that a plaintiff should be entitled to frame his case in the manner that he wishes and that his case on quantum ought to be viewed at its highest when determining the proper jurisdiction where the case should be brought: Wong Miu Kwan v FPD Savills Property Management Ltd [2006] 1 HKC 575 §§19-21. 6.4However, as pointed out by Mr Suen, the foregoing is subject to a qualification of absence of abuse. The court has in the past carried out an evaluation of the quantification advanced by a plaintiff, bearing in mind the requirement to err on the generous side set out in Wong Miu Kwan: Hung Chor Hung John suing as the administrator of the estate of Chow So Hing, the Deceased v Li Kwok Kin & Anor, HCPI 251 of 2009, 10 November 2009 §§16, 50-60 and 69-70. 6.5Ms Wong’s quantification is on the basis that the 1st Plaintiff can claim mesne profits for all the CPs in the stated periods and even then it is barely over HK$3 million. However, as pointed out by Mr Suen, during December 2011 to March 2017, the Defendant was not in occupation of the CPs as they had been leased to the 1st Plaintiff. The proper basis for that period would be a claim for mistaken payment, which if pursued, is caught by the jurisdiction limit under section 37 of the DCO. During the period identified by Ms Wong, the 1st Plaintiff had various degrees of access to the CPs for divers periods which Ms Wong’s quantification does not take into account. In my view, the 1st Plaintiff’s claim for mesne profits is likely to be within the jurisdiction of the District Court. 6.6Section 43 of the DCO provides:
6.7I have considered the parties’ submissions on the residual factor on importance or complexity of the issues arising in the present case. I do not accept Ms Wong’s submission that the present case is of such importance or complexity that it should remain in the Court of First Instance. That being the case, I transfer the present action to the District Court pursuant to section 43(3) of the DCO. 6.8Given my view that the case should be transferred to the District Court, it is unnecessary for me to deal with the Defendant’s fallback position to have the present case transferred to the Lands Tribunal. 7.Conclusion 7.1For the above reasons:
7.2As to costs (except those of the Amendment Summons)[5]:
7.3All of the above costs orders are nisi. However, I set out my provisional views. 7.4I do not agree with Mr Suen’s submission that the hearing on 7 March 2024 were wasted as a result of the Plaintiffs bringing the action in the wrong court. It was not a point raised by the Defendant at the hearings on 29 December 2023 and 7 March 2024, and it was the Defendant’s proposal to have a speedy trial in the High Court. 7.5It also seems to me that neither party acted entirely reasonably (§§5.6 to 5.8 above) or was entirely successful in the Injunction Summons. The Plaintiffs sought the reopening of all the CPs and the Defendant was prepared to only keep 2 of them open.
Ms Carol WONG instructed by Messrs Li & Partners, for the 1st - 2nd Plaintiffs Mr Jenkin SUEN, SC leading Mr Justin ISMAIL instructed by Messrs Deacons, for the Defendant
[1] But still allowing the Defendant to place objects on or park at CP3 as long as it did not obstruct access to the drainage manhole. [2] The 2nd Plaintiff has separately filed a Notice of Discontinuance on 19 March 2024. [3] There were times no video recording was made because of technical issues. For present purpose I have ignored 11 January 2024 as the video recording was not functioning properly for most of the day. [4] The Defendant is to lodge its Statement of Costs within 3 days and the 1st Plaintiff its Statement of Objection within 3 days thereafter. Summary assessment will then be carried out on the papers. [5] In my view, I do not need to deal the issue of costs arising from the Notice of Discontinuance. No leave is required as the 2nd Plaintiff’s action is discontinued before any defence is filed by the Defendant (RHC Order 21, rule 2). The costs consequences are provided for by RHC 62, rule 10. | |||||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under HCA 2064/2023