Orchid Blossom Restaurant Ltd v. Hotel Fortuna Ltd

HCA000903/1968

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 903 OF 1968

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Coram: Pickering, J. in chambers.

Date of Judgment: 18 JULY 1968

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DECISION

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1. This is an application for an interlocutory mandatory in- junction.

2. The defendant company owns and operates the Hotel Fortuna in Nathan Road, Kowloon and by arrangement with the defendant company the plaintiff company runs the restaurant and bar which are situated on opposite side of the third floor hallway of the hotel. This arrangement began in or about March 1964, and on the 8th of July 1965 a lease was executed between the parties by which the restaurant and bar were demised to the plaintiff company for the term of 14 years from the 1st day of March 1964 at a rental which represented a sliding scale percentage of the monthly gross takings of the plaintiff company. Under the lease the plaintiff company covenanted to serve Chinese and European food and drinks and to provide room service. At the time of entry into possession the facade of the restaurant consisted of plate-glass windows with aluminium frames and two doors also of plate-glass with similar frames. The bar was bounded by walls on two sides and by wooden partitions about 10 feet in height on the other two sides; these partitions incorporated decorative grilles through which could be seen the open lounge between the bar and the restaurant; on the side adjacent to the open lounge there were two doors to the bar.

3. It is the plaintiff company's complaint that in or about the middle of June 1968 the defendant company without either giving notice to, or obtaining the consent of the plaintiffs, partitioned off the lounge from floor to ceiling in a manner which reduced access to the restaurant and bar and which largely obstructed the view from either. It was part of the original complaint that the partitioning blocked one door to the restaurant and one door to the bar but at the hearing in chambers it was agreed that the defendant company has, since the date of the issue of the writ, set back the partitioning in front of the restaurant so that access can be obtained to the restaurant through both doors. The plaintiffs further allege that the air-conditioning in the bar is now inadequate and that the partitioning represents a gross physical and direct interference with the enjoyment of the demised premises and constitutes a derogation of their grant.

4. In an affidavit of the 17th of July filed by the Chairman and Managing Director of the defendant company it is stated that the partitioning has been erected in the hotel lounge which is not part of the premises leased to the plaintiff. It had become necessary, the affidavit continues, to partition off the space always intended for use as a hotel lounge because that space had virtually ceased to be capable of being utilised as a lounge and had been taken over by the plaintiffs in that the restaurant and bar staff had acquired the habit of lounging all over this space with their feet up on the tables creating a very bad impression to hotel guests; children of restaurant customers had been running all over the hotel lounge, playing hide-and-seek and whistling and shouting; the plaintiff company had been in the habit of dumping furniture from the bar into the hotel lounge whilst holding Chinese dinners in the bar - a location not licensed for serving food. The situation, it is said, had deteriorated to such an extent that the defendants were receiving repeated complaints from their guests to the effect that there was no hotel lounge and they could get no peace in the area supposedly set aside for a lounge. Repeated complaints to the plaintiffs were ineffective and it became apparent that the only way to preserve the area as a lounge and prevent its use as a play and storage area was to erect a partition.

5. The affidavit admitted that access to one of the doors of the restaurant had been blocked but said that this had been a mistake on the part of the decorators erecting the partitioning and had been rectified. The mistake had been a natural one because that particular door had always been kept closed to give more space for tables inside the restaurant; the plaintiffs now had two access doors to their restaurant although in practice in the past they had only ever used one.

6. The affidavit further stated that the partitioning, which had been tastefully completed at a cost of more than $10,000, left ample access to the restaurant by means of a passage six feet wide and more than 24 feet long, whilst entry to the bar had in no way been impeded since only one door had ever been used the second door having always had a writing desk against it on the outside and a settee and table against it inside the bar. The suggestion in the affidavit of the plaintiff company's manager that to leave only one door into the restaurant would prove dangerous in an emergency was not in accordance with the real situation since apart from the fact that the partitioning had been set back to uncover the second door into the newly-formed corridor, there were altogether six doors into the restaurant including those from kitchens and balconies. It was not for the plaintiffs to complain that the defendants' partitioning would create danger in an emergency since the plaintiffs had stored goods and blocked up rear kitchen doors with equipment in such a manner as in some places to block, and in other areas to reduce, the means of egress in an emergency; further the plaintiffs, without any consent from the defendants, had installed an iron grille along the passage leading from the main lobby to the main fuse-room of the hotel which grille they lock at night. The grille did not stand within the area leased to the plaintiffs and its presence would make it impossible to reach the fuses in the event of a fire at night.

7. By reason of the disclosures of daily takings necessarily made by the plaintiffs to the defendants in connection with the calculations of rent, it was possible to exhibit to this affidavit figures showing that the plaintiffs' takings in the restaurant and bar had increased slightly rather than decreased since the erection of the partitioning.

8. Demands for the demolition and removal of the partitioning having been ignored, the plaintiffs now seek an order that the defendants forthwith pull down and remove the partitions and be restrained from re-erecting them.

9. Mr. Zimmern for the plaintiffs, the applicants, referred to the landlord's covenant for quiet enjoyment contained in paragraph 4(b) of the lease and said that there must be implied, in addition, a covenant that the landlords would not derogate from the grant. The plaintiff company had covenanted to operate the restaurant and bar and to provide room service; moreover the standard required was that of a first-class restaurant as was apparent from the fact that the plaintiffs had been required to covenant to provide all accessories "for the proper running of a first-class restaurant". It had been the custom to serve drinks to patrons in the restaurant from the bar across the lounge and the plaintiffs were now able to do this only with the greatest difficulty; a door to the bar had been blocked and although there were two air-conditioning vents above the bar itself, the room had formerly shared the air-conditioning supply of the whole lounge; again, whereas entry to both restaurant and bar had formerly been from the open lounge, access was now by means of what the plaintiffs would describe as narrow passages. These matters constituted a breach of the covenant for quiet enjoyment and amounted to a derogation from the grant to the plaintiff company.

10. In support of this proposition counsel referred to the cases of Aldin v. Latimer Clark,⁽¹⁾ Browne v. Flower⁽²⁾ and Owen v. Gadd⁽³⁾ and contended that on the basis of those authorities as applied to the facts of this case, the partition constituted a physical and direct interruption to the plaintiffs' business and rendered the premises materially less fit for the purpose for which the lease was granted. There was a breach of covenant express and implied and therefore the plaintiffs were entitled to a mandatory order and an injunction.

11. Mr. Mills-Owens, for the defendant company, referred to the well-known and restrictive principles governing the grant of an interlocutory injunction especially where the relief sought was of a mandatory nature. The plaintiffs had failed to show a prima facie case for interlocutory relief and it could not be said that the balance of convenience favoured the grant since if an injunction was to issue the partitions would have to be pulled down, possibly to be re-erected again after the trial with all the expenditure and loss of goodwill attendant upon these operations; there was no likehood of irreparable injury to the plaintiff company pending the trial of the action and indeed there was no evidence of any damage, because the accounts revealed that the plaintiffs' takings were marginally higher after the erection of the partitions than before; certainly there was nothing to suggest that damages (if damage could in fact be eventually proved) would not be an adequate remedy; no urgency had been demonstrated and moreover the plaintiff company was in breach of the lease so that it ill-became them to seek an equitable remedy in the nature of an interlocutory mandatory injunction. There was evidence on the affidavits and in the photographs exhibited thereto that the plaintiffs had broken their covenant to comply with all the laws and bye-laws of the Colony by consistently overcrowding the restaurant beyond its permitted capacity of 161 persons, by serving dinner to parties in the bar, a place not licensed for the service of food and by blocking various exits from the restaurant. The plaintiffs had further trespassed on the defendants' property both by erecting a grille and by storing goods thereon; moreover their failure to heed the defendants' protests as to the manner of user of the hotel lounge was a breach of the plaintiffs' covenant to co-operate with the Landlord and be subservient to all the just and reasonable orders of the Landlord and to refrain from doing anything which might be detrimental to the goodwill of the Landlord.

12. Whatever view be taken of the equitable conscience of the plaintiffs - and in my opinion that conscience cannot be said to be wholly clear - it is necessary only to consider the restrictions referred to above, hedging about the grant of an interlocutory injunction to even the most innocent, to realise that the plaintiffs have utterly failed to make out their case for this form of relief. We are dealing here with the third floor of an hotel, a place to which restaurant patrons deliberately make their way in order to visit the restaurant patrons deliberately make their way in order to visit the restaurant. The situation is entirely different from that in Owen v. Gadd⁽³⁾ which concerned the obstruction by scaffolding of a shop-front at street level. Once on the third floor patrons still have, as can be seen from the photographs, an adequate view of both restaurant and bar. The partitioning, moreover, is not erected on any area demised to the plaintiffs who never had a right of way across the whole of the lounge. The takings of the restaurant and bar have remained stable since the partitioning was installed and there is nothing to suggest damage still less irreparable damage to the plaintiffs' business.

13. Whether eventually some derogation from the grant or some breach of the covenant for quiet enjoyment can be established and if so what remedy will then be considered appropriate to compensate the plaintiffs, is not a matter with which I am concerned at this stage. I am asked to grant an interlocutory mandatory injunction, a remedy jealously guarded, on evidence far too flimsy to warrant such a course.

14. The summons is dismissed with costs to the defendant company.

18 JUL 1968

Representation:

A. Zimmern (Lo & Lo) for the Plaintiff.

R. Mills-Owens (M. K. Lam & Co.) for the Defendant.

Oral judgment reduced into writing.

(1) (1894) 2 Ch. 437

(2) (1908/1910) A.E. Rep. 545.

(3) (1956) 2 W.L.R. 945.