Wong Kwok Chiang and Others v. Longo Construction Ltd and Another

CACV000110/1986

BETWEEN

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Coram: Silke & Clough, JJ.A.

Dates of Hearing: 16 & 17 October 1986

Date of Judgment: 31 October 1986

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JUDGMENT

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Silke, J.A.:

1. In 1952 there stood two houses, one abutting upon the other, in Waterloo Road - No. 73D and No. 73C. The Plaintiffs in this action are the successors-in-title to the owners of 73D. The 2nd Defendant is the successor-in-title to the owners of 73C. The 1st Defendant is the contractor of the 2nd Defendant. I shall refer to the parties for ease of reference as "73D" and "73C" respectively.

2. 73C by a Deed of Grant registered in the Land Office covenanted to give to 73D an easement. The date of the Deed was the 17th of May 1952. It entitled 73D to use, for its flushing system, a connecting pipe and a septic tank both situated on 73C's land. There was a requirement upon 73C to keep and maintain the septic tank and the connecting pipe in good repair and condition; not to do anything to impede the use by 73D of the septic tank nor the free running of sewage, water and soil along the connecting pipe from their flushing system into the septic tank. There was a further covenant that 73D would pay 73C, on demand, a contribution of one-half of the expenses of such repair and maintenance of the septic tank and the connecting pipe as from time to time was necessary. The covenant was to expire in the year 2072. The consideration was $5,000.

3. In 1981, 73C decided to re-develop. There were negotiations with 73D which came to nothing. 73C went on on its own.

4. There re-development was to consist of a 24-storey building. Preparatory work commenced in 1983 and in the course of it, the septic tank was destroyed.

5. On the 14th June 1983 an architect, in the employ of 73D, wrote to the architects employed by 73C making reference to the excavation works being carried out on "their site"; requesting information as to how they proposed to safeguard the stability of 73D; asking for shoring details, foundation details and excavation details; and bringing to 73C's attention the fact that the drainage system of 73D should be maintained in proper operation during the construction time. A further letter was sent on the 4th July 1983. That made reference to telephone conversations between the two architects, a site inspection on 3rd July and to the non-receipt of the plans asked for. This letter concerned the general stability of 73D.

6. On the 3rd August 1983, 73C's architect made reply, commenting on the allegation of damage and sending certain drawings to the architect for 73D. On the 17th August 1983, 73D's architect sent another letter. This contained a specific objection to 73C's drainage diversion plans and expressed the concern of 73D that the existing drainage system should not be interfered with. It noted that a site inspection had shown all common underground drains to have been destroyed and that the existing soil drain on 73C had been connected to the terminal storm water drain manhole. It went on to make reference to the necessity for maintaining structural stability of 73D. A similar letter in stronger terms was sent on the 20th September. That contained specific reference to the Deed of Grant. The only reply to it was a somewhat ambiguous letter dated the 30th November 1983 which reads:

Of course, at that time, the septic tank had been demolished. The knowledge of this demolition came to 73D, it is said, in June of 1984.

7. In a letter before action dated the 25th July 1984, solicitors for 73D, having made references to the damage to the building from failure to support, then went on to deal with the removal of the septic tank and the re-direction of the drainage system. It required 73C, inter alia, first to maintain the drainage system of 73D in proper operation at all times during construction on 73C and second, that 73C do reinstate the septic tank and the drainage system of 73D.

8. On the 27th July 1984, 73D applied for an ex parte injunction directed to the stability issue. On the 28th July, they issued their writ. They filed an inter parte summons on the 31st July paragraphs 2 and 3 of which related to the septic tank issue and sought first of all a restraining order on its destruction and second an order to reinstate it.

9. That inter parte summons came on for hearing on the 3rd August 1984 when it was adjourned to a date to be fixed. It was agreed that the ex parte order, which of course related only to the stability issue, was to run until the hearing or the determination of the inter parte summons. The inter parte summons was never further proceeded with apart from obtaining an order to file affirmations and a time summons in relation to one of them.

10. In an affirmation from 73D of the 30th July 1984, the affirmor in its paragraph 9, in reference to the septic tank issue, stated:

11. The next relevant step was the filing of the Statement of Claim on the 16th February 1985. This in its paragraph 21 made reference to the breach by 73C of the express covenant to keep the septic tank in good repair. It made further reference to the diversion of the flushing system and to 73C's assertion that the new system was more superior and efficient than the septic tank. By reason of the breach and diversion 73D averred that it had lost its right to use the septic tank for the period of the Deed of Grant and its right to compel 73C, and their successors-in-title, to keep the new system in good repair and order and to refrain from impeding its use by 73D. The paragraph went on:

12. In paragraph 4 of the prayer 73D claimed a declaration that they were entitled to an easement: the use of the septic tank and the drainage pipe; in paragraph 5 claimed damages for the loss of use of the septic tank to be assessed; and, in paragraph 6, alternatively, an order that 73C do forthwith grant to 73D the right to use the new system on the same terms and conditions as the Deed of Grant.

13. Nothing about reinstatement of the septic tank.

14. On the 4th April 1985 there commenced a hearing of a summons for committal of 73C but in relation only to the lack of support ex parte injunction, which still subsisted. The result of the hearing was that the committal proceedings were adjourned to the trial of the action and an order, without directions attached to it, was made for a speedy trial.

15. In an affirmation filed in those proceedings on behalf of 73C, it was stated (in paragraph 4) that:

So all the piling, caisson, caisson capping and concreting had been finished by the middle of March of 1985.

16. The Defence was filed on the 1st April 1985. There was an admission of the right of support enjoyed by 73D and of the breach of covenant.

17. Paragraph 14 of that Defence contended for an implied term in the Deed of Grant: that 73C was at liberty to remove the septic tank and to replace it by a drainage system no less efficient on condition that the use of such alternative system should be freely available for serving the Plaintiffs' premises on terms no less favourable to the Plaintiffs than those contained in the Deed of Grant. It went on that 73C was ready able and willing to abide by the conditions of such alleged implied term and to execute a formal grant in favour of 73D on such terms as 73D might reasonably require.

18. Next came the filing of an amended Statement of Claim on the 18th June 1986. This amended paragraph 4 of the prayer by seeking a declaration that 73D were entitled to the use of the septic tank and drainage pipe and, consequentially, sought an order that 73C:

19. On the 19th June 1986, there was filed the summons which led to the Order of the trial judge from which this appeal stems. That summons sought first: an order under O.18 r.19 to strike out paragraph 14 of the Defence; second: an order pursuant to O.27 r.3 for judgment to be entered against 73C for a declaration that 73D were entitled to the use of the septic tank and, further, for an order that 73C do forthwith reinstate the septic tank and the connecting pipe. It also sought an assessment of the damages for the loss of the use of the septic tank.

20. The application was heard by Jones J., in Chambers, and the judge granted the orders asked for, striking out the paragraph 14, entering judgment, making the declaration and issuing the mandatory injunction. From those orders, 73C now appeal.

21. Mr. Oswald Cheung, with him Mr. Y.C. Mok, who appears for 73C in this Court, has not pressed the appeal in respect of the striking out. He does, however, press the appeal against both the other orders, but is not unduly concerned about the order that damages be assessed.

22. Mr. Charles Ching, with him Mr. Sammy Lee, who appears for 73D at this hearing, has emphasized, and I accept his emphasis, that substantially this is an appeal against the exercise of his discretion by the trial judge. The general principles upon which an appellate court should act are clearly set out by Lord Diplock in Hadmor Production v. Hamilton^(l) , a decision which was not quoted to us directly but the principles of which were recited by Kempster J.A. in Woomera Co. Ltd. & another. v. Provident Centre Development Ltd⁽²⁾.  For myself, I would add to them the observations of Griffiths L.J. in Eagil Trust v. Pigott-Brown⁽³⁾. He said, at page 121:

and again:

I appreciate that, when Griffiths L.J. referred to "principles", he was there directly speaking of the development by the courts of a new discretionary jurisdiction and the guidelines to be obtained from the first appeals brought against the exercise of it. But this does not alter the fact that there is a heavy burden upon an appellant to persuade us to reverse a discretionary decision.

23. Mr. Cheung has laid emphasis upon that which he terms "the acquiescence" by 73D in the destruction of the septic tank. He also emphasizes the nature of the work done on the site and the replacement, by a far more efficient, and environmentally acceptable form of drainage, for the pre-existing one. He emphasized the hardship which would be caused to 73C were they now to disrupt their completed works, and the superstructure of the 24-storey building has proceeded apace, and the delay to construction which would result from any attempt now to go back and restore the septic tank.

24. From the various plans which we have seen, that tank occupied a minute area of the total site of 73C. This is not a case analogous to a Right to Light covenant where the obstruction of that right destroys the whole.

25. Mr. Ching, on the other hand, has forcibly reminded us that 73D had a right and that right has been taken away from them without their consent or knowledge and, apparently, without caring by 73C. They are, says he, entitled to their right. What will be the position in the future if there is a failure to maintain the new system? Against whom, given a sub-division of the 24-storey building into its component flats and shops, and how should, they proceed to enforce any right granted to them under any new Deed of Grant? Why should 73D have to put itself in that position when the situation has been caused solely by the wrongful and unreasonable act of 73C?

26. This was also the view taken by Jones J..  He concluded his judgment by saying:

27. Jones J. had been aware of the two-year delay before the fresh summons which before him was filed, but he took the view that 73C had always been aware that at some time they would be faced with the responsibility of restoring the status quo. It was his view that 73D's conduct was in no way unconscionable and that their right to the mandatory relief which he granted them should not be refused on the ground that they did not apply for an interlocutory injunction. He thought it wrong and ill becoming of 73C to impugn the conduct of 73D when their own conduct was, as he put it, "inexcusable".

28. It is Mr. Ching's further contention that on the papers before him the trial judge was perfectly entitled to come to the conclusions which he did and that the exercise of his discretion should, in no way, be interfered with by this Court.

29. It is accepted by Mr. Cheung that no concrete proposals for a new grant, such as a draft of terms, had been sent to 73D. He relies in this aspect on that which he describes as "the offer" which is contained in the now struck out paragraph 14 of the Defence.

30. In Wrotham Park Estate Co. Ltd. v. Parkside Homes Ltd. & others⁽⁴⁾, Brightman J. (as he then was) considered in detail matters pertaining to the issue of a mandatory injunction. The relevant passage was fully set out, and considered, by Jones J. in the course of his judgment.

31. Brightman J. had referred to Isenberg v. East India House Estate Co. Ltd.⁽⁵⁾ and the words of Lord Westbury L.C. at page 271 where the Lord Chancellor had emphasized that every one of this class of case must depend upon its own peculiar circumstances. Mr. Ching accepts that, as indeed he must.

32. Of a mandatory injunction compelling a person to restore things to the condition in which they were at the time complaint was made to him Lord Westbury said:

a statement echoed by Lord Upjohn in Morris v. Redland Bricks Ltd. ⁽⁶⁾ when he said, at page 665:

Lord Upjohn then went on to set out certain general principles:

Lord Upjohn then set out, in two sub-paragraphs to his third principle, matters applicable to hardship. The first, not so far remote from 73C's action in this case, was where the defendant had acted without regard to his neighbour's rights or, to sum up his views, where the party has acted "wantonly and quite unreasonably in relation to his neighbour". In those cases, he may be ordered to repair his wanton and unreasonable acts by doing positive work to restore the status quo even if the expense to him is out of all proportion to the advantage accruing to the injured party.

33. The second sub-paragraph concerns reasonable acts of the party impugned and does not apply here.

34. Hardship is a factor, it is not the overriding factor. Delay - and in this case, in my judgment, the failure to proceed with the inter parte summons, the contents of the Statement of Claim in 1985, its amendment some one year and four months later and the attitude of 73D generally in its conditional acceptance of the new drainage system amounted to no more than a lulling to sleep of 73C - is also a factor.

35. In the course of argument before the trial judge, delay played a great part, it even being submitted by counsel that 73D's failure to apply for an interlocutory injunction created a delay which was "unconscionable". This, with respect, was putting the matter far too high.

36. There was evidence before Jones J. that for 73C now to reinstate the septic tank would cost them in the region of half a million dollars. There was also evidence at the hearing that the mortgagees were pressing for the completion of the building and that finances could be strained. A minor mystery is that, for some reason, the mortgagees' letter was copied to each of the named plaintiffs individually. It seems commonsense that if the ordered works were to be carried out then the building of the superstructure would be hindered and this in turn would entail monetary penalties being levied against 73C. How great these penalties might be we do not know.

37. From start to finish in these proceedings, there has been no hint of any actual inconvenience occasioned by the destruction of the septic tank and the connecting pipe nor by the attachment of 73D's flushing system to the storm drain nor that the proposed attachment to the public sewers will, of itself, by anything but an improvement from outdated flushing methods. 73D were not even aware of the destruction of the septic tank for over a year after this had taken place. There is a suggestion that its condition prior to destruction was such as to suggest that it had not been in actual use for some time. Again is only commonsense that, however dear to 73D their septic tank was, they are now being provided with a far more hygienic and efficient system in its place. There has been no attempt to formulate a claim in damages other than the nominal damages to which they would be clearly entitled for the wrongful act of 73C. It is clear that 73D steamed on regardless and paid no attention at all to the rights which they were violating. The provision of a proper flushing system was essential to their new building and to this extent they would profit from their conduct. They would also profit from avoiding the delay that any protracted negotiations about the septic tank would have occasioned.

38. It does not appear that the better system aspect weighed heavily or at all, with the trial judge. Nor does he seem to have weighed in the balance the amount of money which it would be necessary, both directly and consequentially, for 73C to expend were they now to be asked to reinstate the septic tank. In this connection, the size of the general work on the 73C site as compared with the very minor size of the area of the septic tank is relevant. He was clearly outraged by the behaviour of 73C. He was entitled to consider their behaviour to have been bad but, with the utmost respect, he should not have viewed that as an overriding consideration. A major consideration, and indeed the only one which gives me concern, was the future protection for 73D of its flushing system. But, I think, given a modicum of good sense, that this can, before a sub-division takes place and the matter becomes diffused, be properly dealt with.

39. The judge laid great emphasis on 73D's loss of "amenity", he distinguished that complaint from matters relating to breaches of a restrictive covenant or of an easement of a right of way. It may be that the overemphasis upon delay and the trial judge's own view as to the loss of "amenity" overlaid the exercise of his discretion.

40. The function of this Court is one of review. It should and it must defer to a judge's exercise of his discretion and it is not for this Court to substitute its own view. It should not interfere merely on the grounds that the members of this Court would have exercised the discretion differently.

41. This was a situation where mandatory injunction could issue. It was necessary however that full consideration be given to whether, in lieu of an injunetion, damages would suffice.

42. Bearing in mind all the aspects of this matter to which I have made reference, I am, respectfully but firmly, of the opinion that the judge placed too great an emphasis on 73C's behaviour and insufficient on the effect of that behaviour. I do not think that the evidence warrants a finding that grave damage will result to 73D's interests.

43. I therefore part company with him where he said that 73D could not "be sufficiently compensated by a pecuniary sum". I accept that the assessment of quantum may not be the easiest thing but I cannot see, on the papers as they now stand, how it can be much more than nominal.

44. On the granting of a binding declaration of right in an application under O.27 r.3 it is worth bearing in mind the words of Buckley L.J. in Wallersteiner v. Moir⁽⁷⁾

45. I would allow this appeal in part by setting aside the judgment entered for 73D, the declaration granted and the mandatory injunction.

46. I will hear counsel as to the form of order.

Clough, J.A.:

47. I agree with what Silke J.A. has said in his judgment. As we are allowing an appeal against an order made in the exercise of the judge 's discretion to grant a mandatory injunction and a declaration, I add the following observations.

48. Mr. Ching, for the respondents, has rightly reminded us that on appeal the function of this court is a limited review of the exercise of the discretion of the judge below in granting the mandatory injunction against the appellants. We may not interfere with that discretion merely because we would have exercised it differently.

49. When granting a mandatory injunction against the appellants requiring them to reinstate the septic tank and its connecting pipe to its original state in accordance with the Deed of Grant, the judge rightly had regard for and gave weight to the inexcusable conduct of the appellants. They had removed the drainage system available to the respondents in breach of the Deed of Grant and without obtaining the prior agreement of the respondents. The appellants had also continued with their works of demolition and subsequent new construction work in disregard of the respondents objections and even after the respondents had begun their action by a writ which included a claim for the reinstatement of the former drainage system. These matters were highly material to the question whether or not a mandatory injunction should be granted.

50. However the judge's decision to grant the injunction was clearly influenced by the fact that he regarded the case as one in which the dominant owners' complaint related to the loss of the amenity of their easement of drainage of sewage effluent into the servient owner's land. Thus he observed - "  ................ the plaintiffs complain of a loss of amenity." Later in his judgment he had this to say:-

51. In the part of his judgment dealing with the question whether mandatory relief should be granted the judge does not advert to the fact that the appellants were not depriving the respondents of their drainage facilities permanently but were removing the septic tank system and substituting a direct link over the appellant's property to the main sewerage system in accordance with plans approved by the Building Authority. Furthermore there was no evidence that the flushing system of the respondents had at any time been adversely affected. Clearly the appellants had substituted a more efficient and modern drainage system for the old one. In this sense there was no loss of amenity.

52. The judge, in holding that the respondents could not be sufficiently compensated in damages for the injury they had suffered was influenced by his acceptance of their leading counsel's submission that they were at the mercy of the appellants upon whom they were dependent for their flushing system and who had not presented any proposals for a new grant.

53. However, until paragraph 14 of the Defence was struck out on the day the mandatory injunction was granted it contained an offer by the appellants to execute an appropriate grant, albeit on the footing that the removal of the septic tank system was permitted by an allegedly implied term in the Deed of Grant. That offer has never been with drawn by the appellants and, notwithstanding Mr. Ching's references to the difficulties involved, it must be within the powers of a competent conveyancing draftsman to draft an appropriate grant.

54. Furthermore, even if such a grant had not been offered or were not to be made in the future, there was no evidence to suggest that the respondents could not, as a last resort, connect their property to the main sewer. The cost of such a connection would provide at least a part of the measure of their recoverable damages. Accordingly, on the evidence before him the judge erred in concluding that the injury done to the respondents could not be sufficiently compensated by a pecuniary sum.

55. Then there is the question of delay. An application was made by a summons issued on the 31st July 1984 for an interlocutory mandatory injunction at the time when the writ, which had been issued on the 28th July 1984, contained a prayer for reinstatement. This application was allowed to lapse and when the Statement of Claim was filed on the 16th February 1985 claims were made, in paragraph 22 of that pleading, for damages representing the cost of reinstating the septic tank and for an order that the appellants make an appropriate grant to the respondents in respect of the new drainage system. There was no claim for reinstatement of the septic tank system. It was not until the Statement of Claim was amended on the 9th June 1986 that a claim for a mandatory injunction for reinstatement was introduced. In the meantime the building work of the appellants had continued at a time when the claim in the writ for reinstatement gave all the appearance of having been abandoned.

56. The failure to prosecute the application for interlocutory relief and the apparant abandonment of the claim for restitution of the septic tank system between the 16th February 1985 and the 9th June 1986 were material factors to be considered in relation to the continuation of their construction works by the appellants after the action had begun. However the judge does not appear to have given weight to them. As to the contention that the appellants had believed the reinstatement claim to have been abandoned when it did not appear in the Statement of Claim, he observed that the subsequent amendment of that pleading related back to the original Statement of Claim so that, with the amendment, it was clear that the espondents had not abandoned their right. He gave no weight to the period of time when in reality there was no claim for reinstatement.

57. In the part of his judgment dealing with the question of delay the judge observed:

58. This observation, with respect, cannot be sustained in relation to the period between the 16th February 1985 and the 9th June 1986 when the reality was that there was no claim in the action by the respondents for reinstatement and the appellants were continuing with their construction works and incurring substantial expenditure on that understanding. Mr. Ching was understandably unable to support the judge's observation.

59. It follows that the appellants have been able to demonstrate that there was not a proper application of well settled principles when the mandatory injunction was granted. The conduct of the appellants was rightly held against them as a weighty factor but the factors mentioned above, and militating in their favour, were not given the weight they merited when the judge was deciding whether or not for the purposes of section 19(1) of the Courts Ordinance (Cap. 4) it was just and convenient to grant a mandatory injunction.

60. The form of the order to be made on the appeal will, as Silke, J.A. has indicated, have to be determined when the judgment of the court is delivered.

(1)    [1983] 1 A.C. 191 at p.220
(2)    [1985] H.K.L.R. 263 at p.265
(3)    [1985] 3 All E.R. 119 at p.121
(4)    [1974] 1 W.L.A. 798
(5)    (1863) 3 De G.J. & Sm. 263
(6)    [1970] A.C. 652 at p.665
(7)    [1974] 1 W.L.R. 991 at p.1029

Representation:

Oswald Cheung, Esq., Q.C. and Y. C. Mok, Esq. (Wong, Hui & Co.) for Appellant/Defendant.

Charles Ching, Esq., Q.C. and Sammy Lee, Esq. (Y. L. Yeung & Co.) for Respondents/Plaintiffs.