Kwan Toi Ming v. Man Kit Construction Co Ltd and Another

HCA003959/2002

HCA3959/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.3959 OF 2002

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Coram: Deputy High Court Judge Carlson in Chambers

Dates of Hearing: 30 January and 6 February 2003

Date of Judgment (Handed Down): 20 March 2003

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J U D G M E N T

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Introduction

1.The plaintiff occupies a plot of land on the outskirts of Tuen Mun on which there is a house where he lives. The property is designated DD131, Lot No.756, No.156A, B and C, Tsing Shan Tsuen, Tuen Mun, New Territories. He says that he has lived there for twenty years under an oral tenancy agreement with the owner Mr Wun Ye Tong ("Mr Wun") to whom he pays no formal rent as such. Mr Wun is content for the plaintiff to live on terms that he discharges all the Government fees and charges levied by it on the land.

2.Immediately adjoining the plaintiff's land, as I shall call it, is what has now became a building site. Initially, in bringing this action the plaintiff's solicitors had misread the Ordinance Survey Map and pleaded the wrong plot reference as well as wrongly attributing ownership of the land to the original 2nd defendant. This has now been put right by appropriate amendments to the Writ and amendments to the original order which had been based on those errors. The adjoining land is designated Tuen Mun Town Lot 456, area 31, Tsing Shan Tsuen. That land is owned by the 2nd defendant. The 1st defendant is a Registered Contractor of good standing and is a company specialising in site formation and foundation works which it has done since 1998.

3.The 1st defendant has been awarded a contract to carry out site formation works on the 2nd defendant's land in preparation for the construction of a number of dwelling houses. These works started on about 22 May 2002. The plaintiff's claim, as appears from the Generally Indorsed Writ (see pages 93-94, bundle A), claims an injunction restraining the 1st and 2nd defendants from carrying out construction works on the 2nd defendant's land which have the effect of discharging muddy water, silt, and mud from the 2nd defendant's land onto the plaintiff's land until an agreement is reached and implemented between the plaintiff, the defendants and the relevant Government departments as to the manner in which these works are carried out. As I understand the plaintiff's case, an injunction in that form would not have the effect of a total embargo on the continuation of the building works provided no nuisance is created in relation to the plaintiff's enjoyment of his property. There is also a claim for a further injunction of a mandatory type requiring the removal of a gravity wall and the performance of what is described as necessary cleaning works caused by the escape of mud, silt and so forth as a result of the construction works from the 2nd defendant's land onto the plaintiff's. And then, as part of the application for the mandatory injunction, a further order is asked for for the performance of other (unspecified) works which may be necessary to eradicate any immediate danger to the plaintiff's land.

Previous orders

4.The plaintiff's solicitors originally came ex parte before Waung J on 18 October 2002 for an order in the terms that I have just described. The learned judge decided, having regard to the nature of the application and no doubt its subject matter, that it was inappropriate for him to hear the matter ex parte. Accordingly, he ordered an inter partes hearing four days later on 22 October 2002. It should be remembered that at this time the 2nd defendant had not been joined, the plaintiff having erroneously sued another company which had no interest in this land. The matter then came on inter partes when neither the 1st defendant nor the incorrectly-sued 2nd defendant appeared. Complaint has been made that service had been effected short, thereby not giving the defendants a sufficient opportunity to prepare themselves for the hearing. Woolley DJ who, in the event, heard the matter unopposed granted the orders sought by the plaintiff his order being at pages 38 and 39 of bundle A. The next significant matter was that on 16 December 2002 the 1st defendant, now being in receipt of an order which in effect required the termination of all its building works on the site, took out a summons on 16 December returnable on 20 December for an order discharging the injunction of 22 October and for an inquiry as to damages by virtue of the granting of the injunction. Woolley DJ then made an order discharging paragraph 2 of his previous order (the mandatory injunction) without prejudice to the plaintiff's right to re-apply for such an injunction. He took that course because the plaintiff had indicated that he was not in a position to give a cross-undertaking as to damages nor, a fortiori, to fortify any cross-undertaking. The deputy judge then adjourned the matter to an early hearing date when proper time could be provided for a thorough consideration of the parties' evidence. Thereafter further orders were made to enable the plaintiff to amend the Writ to plead the correct plot reference in respect of the defendants' land, to join the correct 2nd defendant, those now before me, as the owners of the land and to file a Statement of Claim. It is by this route that I have, over two days, heard the argument, with the plaintiff seeking the continuation of the injunction and the defendants applying for its discharge. Before me, the plaintiff has again restated his position that he is unable to provide any cross-undertaking in damages in the event of my granting him the injunction.

The issues

5.This is a matter that has embraced almost the full range of issues that can possibly arise when a court has before it an application for an interlocutory injunction. Firstly, the evidence is the subject of the sharpest dispute. Even at this stage the parties have been able to call two experts each who have felt able to produce diametrically opposed opinions. This in turn has resulted in an argument as to whether the plaintiff's evidence can be said to give rise to a "serious issue to be tried" showing that the defendants have been the cause of the nuisance alleged in the Writ. Where a mandatory injunction is also asked for there has been argument as to whether the plaintiff needs to show that his evidence is such that the court would have 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] 340@351.) I am also required to consider the balance of convenience assuming the plaintiff's evidence passes the threshold test required of it. In this regard, the plaintiff's inability to provide any sort of cross-undertaking in damages assumes importance as well as the question of whether damages would be an adequate remedy should the plaintiff ultimately succeed, in which case an injunction should not be granted. Other issues which have also been addressed to me concern what is said to be serious delay in the application for the injunction, which would also sound in the discretion, as well as the contention which is vigorously advanced on behalf of the defendants that the plaintiff has failed to make full disclosure in his ex parte application for an injunction with the result that I shall now set the injunction aside and refuse to exercise my discretion to grant one afresh. These are all matters which I shall have to refer to in the course of this judgment.

The evidence

6.The plaintiff's case is that since the 1st defendant started the site formation works, mud and silt has invaded his property and to such an extent that it has caused an ingress of mud and water into his home. He has produced photographs of the inside of the house to show what has happened. Much of his complaint relates to the aftermath of the construction by the 1st defendant of a substantial retaining wall close to his house which is designed to stabilise the natural slope of the 2nd defendant's land as it drops towards the plaintiff's land and home. Complaint is made that this wall fails to perform its purpose in that following rainfall, water and mud leaks through the holes in the retaining wall that are there to alleviate the pressure of water that might build up behind the wall, in particular following periods of heavy rainfall. Further complaint is made that the foot of the wall has been constructed defectively so that mud, silt and other derbris finds its way onto the alleyway between the retaining wall and the plaintiff's house. This view is supported by the two experts who have filed reports on the plaintiff's behalf. There is no doubt that if that view were to be accepted by the court at the trial of the action, a case in nuisance would succeed. The plaintiff has also drawn attention to the fact that in the 20 years of his residence there, nothing of this sort has occurred. It is only since the 1st defendant started its site formation work that he has had to put up with this misfortune which, if it is allowed to continue, will cause serious damage to his property and to him and his family who reside there. It is sufficient for me to observe that taken at face value this evidence appears to be compelling and persuasive, supported as it is by the expert opinion of two witnesses.

7.Against that the 1st defendants' in particular, whose evidence is adopted by the 2nd defendant, have put up a case that is at least as impressive, as one might perhaps expect, given the fact that they are experienced building contractors whose evidence is supported by impressive expert evidence.

8.Their evidence falls into two parts. Firstly, attention is drawn to the highly professional way in which the site formation work has been carried out, entirely in accordance with the Government regulations and requirements. This is said to be manifestly obvious from the various photographs that have been put in evidence showing the good construction of the wall and the drainage channels that run along its entire course. This work has been inspected by Building Department officials and no criticism has been made of it to suggest that it fails to achieve what is expected of it in terms of stabilising the site. Neither has there been any criticism nor or suggestion that the wall should have been constructed differently.

9.The second part of the evidence seeks to provide reasons for the damage that the plaintiff has complained of. Particular attention is drawn to work carried out on the slope immediately below the plaintiff's land which has required workmen to excavate part of the land to such a degree that it has destabilised some of the soil particularly that which is slightly above the plaintiff's home. These workmen have also dug deep holes which have been left unfilled. It is said that these holes result in "ponding" following periods of heavy rain and the accumulation of water in such quantities would, at least in part, explain some of the flooding that has been experienced by the plaintiff. Much more serious though is the fact that a shed has been constructed immediately adjacent to the plaintiff's house. That shed has very basic guttering and the down pipe from the gutters do not extend into the ground and from there into an adequate drainage system, from which the water might run off safely. Photographs taken during a day of heavy rain amply demonstrate that. From the photographs, it is clear that water pours into the land close to the plaintiff's house in great quantities and force. In view of the fact that no proper drainage existed in the lane this water, falling in great volume, which turned into mud has caused flooding in the vicinity of the house and that mud and water has got into the drain pipes of the house and in that way into parts of the plaintiff's home. The 1st defendant has put in a temporary drain in the alleyway and since this was done the lane has remained dry even following periods of rainfall.

10.This evidence provides a very credible scenario to support the view that the plaintiff has been entirely the author of his own misfortune. Everything that is said on the defendants' behalf has been cogently supported by their experts. The plaintiff for his part has replied by denying that the works that were carried out on the land close to his home were done by a workman employed by him or done on his behalf.

11.This being the case, and at this stage, the evidence is well-balanced although perhaps slightly suggesting that the defendants' case is more logical and therefore more persuasive and credible. Nevertheless, I am of the view that the plaintiff has just about demonstrated that there are serious issues to be tried as to whether the damage that he has suffered is the result of the 1st defendant's site formation works. Although his evidence may be slightly less impressive than that of the defendants, it does support a properly arguable case and as such it cannot be dismissed as being without merit. How should I therefore address the current state of the evidence?

The mandatory injunction

12.Part of the plaintiff's application requires a limited amount of work to be done to the foot of the retaining wall and the carrying out of some necessary cleaning work on the plaintiff's land caused by the alleged nuisance. As I indicated earlier, the court's approach to an application for a mandatory injunction is that it 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 correctly granted or, put another way, that 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. In Music Advanced Ltd & Another v. The Incorporated Owners of Argyle Centre, HCA2574/2002 (unreported), Ma J (as he then was) has summarised the principles which should be applied in the exercise of the court's discretion as follows :

"......

(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 Lord Diplock."

13.That analysis of the relevant principles brings into focus, not only the balance of convenience which Ma J has referred to, but in this case the respective merits of the parties' cases as they are on paper and untested by cross-examination. It may well be that the mandatory parts of the order do not of themselves require vast expenditure of time, manpower and indeed money but the whole of the application itself, requiring as it does, the site formation work to continue only in a way that does not cause further nuisance is such that I ought to be apprehensive about making any order which has the effect of disrupting these works unless I have confidence that these orders will prove to have been correctly granted. I have already observed that, if anything, the defendants' case at this paper stage is the more compelling. I am also mindful of the fact that they may well suffer substantial financial losses as a result of either being prevented from carrying out further work or having the manner of that work so restricted that they may find themselves in breach of their contract with their employer. Such concerns may well have been considerably alleviated had the plaintiff been able to or prepared to give, what is after all the usual cross-undertaking in damages, let alone had he been prepared to fortify his undertaking by offering security. None of these safeguards are present in this case. That having been said, Miss Ho, who appears for the plaintiff submits, I should not concern myself with such considerations. She relies the case of Oxy-Electric Ltd v. Zainuddin & Another [1991] 1 WLR 115. That case did not concern an application for an interlocutory mandatory injunction although such a claim was included in the writ which was to be pursued at the trial. The matter came before Hoffmann J (as he then was) by means of an application by the defendants to strike out the claim on the basis that the plaintiff should be obliged to give a cross-undertaking in damages as a condition for being allowed to pursue the claim for a mandatory injunction at the trial. The judge rejected that submission which he characterised as a wholly unjustified attempt to stifle the claim. She has also drawn attention to the case of Allen v. Jambo Holdings Ltd [1980] 1 WLR 1252. This related to a personal injury action brought against a Nigerian company which owned an aircraft which stood at an aerodrome near London. The company had no other assets within the jurisdiction and the application was for a Mareva injunction to restrain the Nigerian company from removing the aircraft from the jurisdiction. The ratio deciendi of the case is that such an injunction was available, even in a personal injury action. Nevertheless, consideration has been given in the judgments to the fact that the plaintiff, who was a widow and who was legally aided, could not give any meaningful undertaking. The Master of the Rolls observed at 1256H-1257B as follows :

"There is one other point that I must mention. It is said that whenever a Mareva injunction is granted the plaintiff has to give the cross-undertaking in damages. Suppose the widow should lose this case altogether. She is legally aided. Her undertaking is worth nothing. I would not assent to that argument. As Shaw LJ said in the course of the argument, a legally aided plaintiff is by our statues not to be any worse position by reasons of being legally aided then any other plaintiff would be. I do not see why a poor plaintiff should be denied a Mareva injunction just because he is poor, whereas a rich plaintiff would get it. One has to look at these matters broadly. As a matter of convenience, balancing one side against the other it seems to me that an injunction should go to restrain the removal of this aircraft."

14.These cases clearly demonstrate that the court retains the discretion to grant an injunction even if a cross-undertaking would either be worth nothing or is not forthcoming. Nevertheless, the fact that no such undertaking is available must be a weighty consideration which I must have regard to in the balancing exercise which I am required to undertake. In looking at the matter broadly, I need to consider a range of relevant factors. I apprehend that the respective merits of the parties' cases as they appear on affidavit is the most significant. But in this case, a number of other factors have been drawn to my attention which I need to refer to.

The adequacy of damages

15.This consideration relates very much to the balancing exercise which the court is required to undertake. On behalf of the defendants it is said that given the state of the evidence and where at present there does not appear to be any overwhelming danger to the fabric of the plaintiff's house or to the other parts of his property, that damages would be an adequate remedy. At worst he may need to leave his home and rent elsewhere, that, it is said, could be adequately compensated in monetary terms. Against that Miss Ho submits that there is no reason why the plaintiff should be driven from his house where the plaintiff's evidence has sufficient merit to raise issues that ought to be tried. It is right to observe that at present given that this is still the dry season the risk of any further incidents of flooding are greatly reduced. There is no doubt that when all is said and done the plaintiff could be largely compensated in monetary terms if he were to have to leave his home. That having been said, I would have thought that a court would be slow to impose upon a plaintiff a situation where he might be obliged to leave his property if building operations were creating an intolerable hazard. It seems to me that much would turn on the weight of the evidence against the defendant. If there was a very clear-cut case on paper at the interlocutory stage that there was a strong likelihood that the plaintiff would succeed at trial, there must be every prospect that an injunction would be granted. The less compelling the evidence, the more likely a court might be persuaded to leave the matter until trial and, if necessary, compensate the plaintiff in damages, whilst also retaining the power to grant an injunction if that was thought proper following the court's findings on the evidence at the trial. I must return to whether damages would be an adequate remedy in the circumstances of this case in due course.

Delay by the plaintiff

16.This point is taken on behalf of both defendants. It is said and I think with some considerable force that the plaintiff has allowed the situation to develop far too much whereby the 1st defendants' have gone a long way down the road of site formation and have constructed this wall only to be met with this tardy application for an injunction. Particular reliance is placed on this consideration by the 2nd defendants' who, of course, not having been served until after the injunction had been made and indeed not having been sued at the outset, when they should have been, are now left in a position of having to oppose the application for the injunction well after the start of this dispute, which goes back to the summer of last year. It is rightly submitted that delay is clearly a factor which the court must bear in mind in the exercise of its discretionary jurisdiction.

Non-disclosure at the ex parte stage by the plaintiff?

17.Particular emphasis is placed on this factor by Miss Chan who appears for the 1st defendants'. She has drawn attention to the works that had been carried out at the site immediately below the plaintiff's land which her experts found to be the cause of any flooding on the plaintiff's land. Even if this work had not been carried out by the plaintiff, she submits that it should still have been drawn to the court's attention at the ex parte stage because, given the nature of those works, the court should have been aware of them when deciding whether to grant the injunction at this initial stage. This ground is of itself sufficient to justify the discharge of the injunction and the court's refusal to grant a further one. The fact of non-disclosure is also a matter which would sound very heavily in the discretion in the court's broad appreciation of the circumstances of the case. But notwithstanding the detailed way in which this ground has been argued, I have come to the view that Miss Chan's complaints really amount to the wisdom of hindsight. Looking at the matter broadly, it seems to me that the plaintiff, who had largely relied on expert evidence at the ex parte stage cannot properly be accused of not having given the court full disclosure. The matter was, in my judgment, left fairly for the judge reading the evidence at the ex parte hearing. It would be demanding a counsel of perfection to expect the plaintiff in these circumstances to also draw to the court's attention the other matters which Miss Chan's suggests he should have done.

My conclusions

18.I have decided that a proper exercise of my discretion requires me to discharge the injunctions. The nature of the order sought, which I am satisfied would have the effect of greatly hampering what would otherwise be perfectly lawful construction work and indeed requiring certain amount of work to be done at the foot of the retaining wall and on the plaintiff's property would not be right on the present state of the evidence notwithstanding the fact that the plaintiff's evidence can properly be said to have passed the threshold required of it in American Cyanmid v. Ethicon [1975] AC 396. I take the view that in all the circumstances I should be looking for evidence put in on the plaintiff's behalf which leaves me with a high degree of assurance that the injunction will be found to have been rightly granted at this interlocutory stage. The plaintiff's evidence does not go that far. I say this not only because of the nature of the orders involved but also because of the consequences for the defendants where such an order might be held to have been unjustified. I am quite satisfied that the wrongful grant of an injunction runs the risk of causing them great injustice due to the likelihood of contractual claims being made against them of a substantial nature. This feature is exacerbated by the inability of the plaintiff to offer them any cross-undertaking in damages. I have balanced those factors against the injustice that might be done to the plaintiff and his family by a refusal to grant them the injunction. I appreciate that on a worst case basis he and his family may have to leave their home and rent elsewhere. That is not a matter which I treat lightly but such loss and damage is capable of being quantified and compensated for in monetary terms.

19.It seems to me that this is a matter that should be tried at the earliest opportunity. Accordingly, I will certify this case as fit for a speedy trial. In such circumstances the parties must conduct their interlocutory work, such as the filing of pleadings and the completion of discovery, in order to achieve that. I have also drawn attention to the fact that at present, given the fact that the rainy season is not yet upon us, the risk of further flooding for whatever reason is diminished. My order discharging the present injunctions does not prevent a further application for an injunction pending trial being made, provided of course, it is made on the basis of fresh evidence which is of a compelling kind indicating that such flooding is being caused by the defendants' present construction work. It would not be sufficient to re-run what has been placed before the court in this present application, although this evidence might form part of the background to any fresh application for an injunction. That having been said such an application would largely turn on the persuasiveness of any fresh evidence but I would hope that the order for a speedy trial would obviate the need for any further application to be made.

Costs

20.Although the defendants have now succeeded on a broad appraisal of all the circumstances in this case, I do not think it would be right to make an order for costs between the parties at this stage where all will be revealed at the trial. The jury is still clearly out so far as the evidence is concerned, although on a summary appraisal of it at this stage it slightly favours the defendants. I would have thought of the correct order for costs is one of costs in the cause. As this judgment is being handed down, I will make that order for costs an order nisi in the usual way.

Representation:

Miss Ho Wai Yang, instructed by Messrs Ho & Partners, for the Plaintiff

Miss Terry Chan, instructed by Messrs C.C. Lee & Co., for the 1st Defendant

Mr Oliver Davies, instructed by Messrs Patrick K.H. Lam & Co., for the 2nd Defendant