Pacific Base Services Ltd. and Another v. Silver Gain Development Ltd and Others

IN THE COURT OF APPEAL

1995, No. 185
(Civil)

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Coram: Hon Nazareth, V.-P., Bokhary and Liu, JJ.A.

Date of Hearing: 4 and 5 January 1996

Date of handing down Judgment: 16 January 1996

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J U D G M E NT

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Liu, J.A.:

1. For the commotion said to have been created in the offices of the 2nd and 3rd respondents/plaintiffs by the visits of a group acting for the 1st appellant/defendant and under the instructions of both appellants/defendants on 30 and 31 May 1995, the respondents/plaintiffs sought and obtained on 1 June 1995 an ex parte injunction from Keith, J restraining the defendants from visiting the respective offices and homes of the 2nd and the 3rd plaintiffs and further from communicating with or threatening the 2nd and the 3rd plaintiffs or members of their respective families.

2. The parties to this action are involved in proposed developments in Tung Hui and Zhongshan, and payment of commission was demanded on these visits. The judge was fed the background information that the group in the company of the 2nd defendant had visited the office of the 3rd plaintiff some eight months before i.e. on 27 September 1994. These defendants were further ordered to desist from keeping or attempting to keep members of the public from the place of business of the 2nd and the 3rd plaintiffs. It is part of the plaintiffs' substantive case that in the afternoon of 30 May 1995 the 2nd defendant telephoned the 3rd plaintiff, threatening to "send his associates again to (his) office" unless his demand was satisfied and warning that he would not "be responsible for any actions which his associates (might) take" and that on 31 May 1995 one Madam Chan Ngun, a member of the group who had been to the offices of the 2nd and the 3rd plaintiffs, telephoned the 2nd plaintiff at his home and intimidated him. The defendants themselves were clearly responsible. Even judged solely in his capacity of a director of the 1st defendant, the 2nd defendant would be just as liable. He was a joint tort feasor. See Winfield and Jolowicz on Tort, 13th edn pp. 676-677.

3. The ex parte injunction granted was made returnable before Rogers, J on 9 June 1995. It was served on the defendants on 3 June. On an undertaking given by the defendants in the same terms, the injunction was discharged on 9 June. The defendants were aware of the very restriction against every form of communication in the ex parte order, and it is worthy of note that an undertaking of this nature is "voluntary rather than imposed". See 1995 White Book Vol. 1, p. 752, marginal reference 75/5/4. On 22 August 1995, the plaintiffs' inter partes summons for sustaining the injunction obtained ex parte and the defendants' summons for discharge both came before Findlay, J who continued the injunction save for the term whereby the defendants were prohibited from communicating with the 2nd and the 3rd plaintiffs. The judge gave a relatively free hand to the parties to abate the effect of the absolute restriction against communication. The parties have jointly submitted for the approval of the judge a draft order with a relief proviso to the effect that the defendants may communicate "with the 2nd and 3rd defendants by post, fax, telephone or any other means of communication from a distance." Mr Chong, counsel for the defendants, maintains that some direct communication is desirable, and he must be misconceived in his belief that the judge would permit only impersonal contact. In this scenario, it would seem that further terms need be negotiated to enable the parties to all relevant contractual documents to communicate freely and properly. The order as approved has now been perfected, filed and lodged. From this order of Findlay, J, the defendants appeal. No further point is taken on any other procedural irregularity.

4. The defendants complained before Findlay, J that the plaintiffs failed to observe fully the Practice Directions for interlocutory injunctions, but in essence the ex parte injunction order was resisted on the grounds that there was material non-disclosure as there were mis-statements in the grounding affidavits. Circumstances leading to the 1st defendant's claim for the balance of the commission were not wholly disclosed. It is charged that the plaintiffs failed to brief the ex parte judge on all the details of the contractual relationships between the plaintiffs and the defendants, particularly those relating to the requisite permit upon the issuance of which the balance of commission would become payable to the 2nd defendant's company, the 1st defendant. The defendants complain that the plaintiffs led the ex parte judge to believe that unwarranted demands were being made with menaces on the said occasions. The plaintiffs are also said to have given the impression that the 1st defendant would not be entitled to the balance commission payment until "Title Deeds" had been issued by the Chinese authority whilst in fact only a "Permit for Construction Works on Land" or its former version "Permit for the Use of Land" was required. The defendants further feel aggrieved by the mis-statements made to the ex parte judge to the effect (1) that the final commission payment to the 1st defendant would be dependent upon the issuance of "Title Deeds" by the Chinese authority, (2) that the 1st defendant paid the 1st plaintiff an additional $20 m. as part commission after pressure to bear had been brought upon the plaintiffs on 27 September 1994; and (3) that the stipulated permit under the Commission Agreement had not been issued. The defendants claim to have been further prejudiced by the plaintiffs' failure to disclose their needs to liaise with the plaintiffs in the Tung Hui Gardens project and the Zhongshan project.

5. There were various signed contractual documents whereby the defendants were obliged to contact the plaintiffs with reference to the Tung Hui Gardens Project in Guangzhou. The plaintiffs also signed a document with the 2nd defendant with respect to the Zhongshan project. In the Tung Hui Gardens project, the 2nd defendant's architect firm, Messrs Wong Pun & Partners Limited, had signed a Co-ordination Service Agreement dated 27 September 1993 with the 1st plaintiff. As between the 1st plaintiff and the 1st defendant, a Commission Agreement dated 4 October 1993 was also signed for the same project, under which $47.056m. was payable by two instalments. On 14 October 1993, the 1st instalment of $9m. was paid. A dispute arose as to whether the "Permit for Construction Works on Land" issued under the new regulations was the same as the stipulated "Permit for the Use of Land". When the plaintiffs later accepted the "Permit for the Construction Works on Land" as a valid document, they continued to query its slightly reduced site area coverage and drastically shortened use period. For the less favourable site area and use period given in the "Permit for the Construction of Works on Land", the plaintiffs declined to accept it as the qualifying permit stipulated in the Commission Agreement for the payment of the second instalment. However, having satisfied themselves of the validity of the "Permit for Construction Works on Land", the plaintiffs were prepared to and did pay their Chinese partner $16m. under the Joint Venture Agreement dated 30 April 1992 for the Tung Hui Gardens project. The plaintiffs' understanding is that the "Permit for the Use of Land" would now be issued only at the end of the proposed development, hence the balance commission would not fall due before the project is completed. The plaintiffs explain that the 1st defendant is not entitled to any more payment and that these problems had given rise to a need for the parties to re-negotiate the payment terms under the Commission Agreement. The parties did further negotiate.

6. On 11 July 1994, a meeting was held between the plaintiffs and the 2nd defendant and on the following day, 12 July 1994, $20m. more was released. Thereafter the parties were still unable to resolve all their differences. On 12 October 1994, conditional upon the defendants accepting a variation of the payment terms under the Commission Agreement, a further $6m. was paid over. These varied payment terms were endorsed on the receipt dated 12 October 1994, whereby the plaintiffs were henceforth obliged to pay the balance commission only upon the issuance of the "Planning Permit" and the "Construction Works Permit". Whatever the turn of events was, the defendants through the 2nd defendant now concede that they had no alternative but to accept the varied payment terms at the time. In the words of the 2nd defendant: "I was given no choice but to sign it". The defendants maintain that the Planning Permit would be available upon tender of fees which the plaintiffs had allegedly failed to pay. This is disputed by the plaintiffs. The plaintiffs would not agree to take the "Permit for Construction Works on Land" issued on 13 June 1994 as the "Construction Works Permit" stipulated in the varied payment terms. It is the plaintiffs' stance that the "Construction Works Permit" has not been issued and that therefore no part of the balance commission is due. The defendants argue otherwise. It is common ground that another permit, the "Permit for Commencement of Works" issued on 31 December 1994 is not a requisite permit for the varied payment terms.

7. The plaintiffs regard the permits as title documents and they are arguably right in that description. But in the translation of the Commission Agreement of 4 October 1993, the 2nd instalment of the commission was payable two months after the 1st instalment or upon the issuance of the "State-owned Land Use Right Contract (Title Deeds)", whichever should occur later. There is no dispute that the word "Contract" should be read "Certificate". The criticism levelled at the words "Title Deeds" within brackets as an inapt qualification is not without justification. However, it would seem legitimately arguable that the "State-owned Land Use Right Certificate" or "Permit for the Use of Land" would form part of the title documents and as such part of what may be regarded as the equivalent of our title deeds. Conversely, to describe the certificate or permit without more as "title deeds" could be misleading. But the whole literal translation was placed before the ex parte judge. The reference to " Title Deeds" within brackets in the context of the literal translation could not have, in my view, misled him.

8. The ex parte judge was well aware that there was a disputed trade debt. It is incorrect to aver that the $20m was paid after the visit of the 2nd defendant and his group to the 3rd plaintiff's office on 27 September 1994. Before the ex parte judge, no real point was taken by the plaintiffs on any payments made to the 1st defendant, including the $20m and the $6m. To begin with, the plaintiffs made no specific allegation that they were induced by the visit on 27 September 1994 to pay or negotiate for the $20m and the ex parte judge was not invited to seize or conserve these $20m and $6m in the interim. Further, the incident on 27 September 1994 was not even included in the writ to found the plaintiffs' claim for damages. The plaintiffs rely on the visits on 30 & 31 May 1995. Lastly, the conduct of the visiting group some 8 months later on 30 May 1995 and 31 May 1995 was clearly such as would by itself warrant the granting of the injunction order without more, even if the subsequent payments might be claimed or understood to have been pressurised. The matters central to the plaintiffs' ex parte application were the commotion and anxiety generated on 30 May 1995 and 31 May 1995. Abuses and threats were allegedly made also against members of the families of the 2nd plaintiff and the 3rd plaintiff. The sanctity of their homes was feared. The background incident more than 8 months earlier on 27 September 1994 was described, but Mr Chong, counsel for the defendants himself appreciates that when the 3rd plaintiff wrote to the 2nd defendant 3 days later on 30 September 1994, no mention was even made of this incident on 27 September. If anything had been meant to be made of as much as $20m, the plaintiffs would have been expected to set out their accusations. Moreover, it would hardly be consistent that subsequent to 27 September 1994, the varied payment terms agreed after negotiation militated against the interests of the alleged intimidators. The 2nd instalment was originally to be paid latest upon the issue of the requisite permit which was, as envisaged by the contract with the Guangzhou Municipality Town & Villages Construction Committee dated 29 September 1991, to be 30 days after that date. The varied payment terms allowed the balance commission to be paid at a later time when the two specified permits were issued. Mr Chong, counsel for the defendants, seeks to argue that the varied payment terms were in fact consistently in favour of his clients as alleged intimidators. That cannot be right: the plaintiffs' initial contention was that the defendants would not be entitled to be paid until completion; the varied payment terms only brought the defendants forward to a settlement date which would still be less favourable than what they had bargained for. Consequently the mis-statement with regard to the payment of this $20m must have been the result of a sheer confusion as to time. It cannot be read, in the proper context, as a misrepresentation material to the central issues to be decided for granting the injunction.

9. The facts remain that demands were made personally on the 2nd plaintiff and the 3rd plaintiff and at their respective offices. Police was summoned three times, including the earlier incident on 27 September 1994. Madam Chan Ngun who has since been released without being charged, was at one time thought proper to be put under arrest with police bail. It is admitted that the group demanding payment did refuse to leave the 2nd plaintiff's office in the afternoon of 30 May 1995 and returned again to make another demand for payment on the following day, 31 May. In the light of such conduct on admitted and common facts, it would appear that an injunction of some kind should be granted. The plaintiffs have a good arguable case for the injunction, and the balance of convenience clearly leans much in favour of the court granting it.

10. The ex parte injunction obtained on 1 June 1995 was returnable on 9 June 1995 before Rogers, J. The order was served on the defendants on 3 June. By the time the Skeleton Argument of the plaintiffs was tendered to the defendants for the hearing of the inter partes summons before Rogers, J on 9 June, the position of the plaintiffs was made perfectly clear. The core complaints of the plaintiffs focused on the alleged intimidating visits caused to be paid by the 1st and the 2nd defendants to the 2nd plaintiff and the 3rd plaintiff at their respective offices as well as the defendants' alleged evinced intention to send the demanding party back and to their homes. The 2nd plaintiff and the 3rd plaintiff feared disruption of their business and danger for themselves and their family members. In the plaintiffs' ex parte application, counsel's Skeleton Argument of 8 June 1995 confirmed these fears of the threatening manner in which the disputed contract debt was sought to be collected on the instructions of the defendants. There was nothing else in the Skeleton Argument. In this case, the circumstances from which the disputed claim was said to have arisen did not call for any unusual mode for collection. These repeated visits after the one some 8 months earlier on 27 September 1994 were matters of serious concern to the plaintiffs. It is not suggested that the alleged strong arm tactic can be justified by the nature of contractual relationships or the liability incurred therein. The defendants were sought to be restrained from resorting to self help which was most disagreeable to these plaintiffs. Whatever the nature of the disputed claim is and however unreasonably its prompt settlement was resisted, the conduct of the group involved in demanding for its payment had simply to be censured and put an end to.

11. The plaintiffs are said to have created an impression that they had succumbed to the alleged intimidation in effecting, inter alia, a subsequent payment of $20m. I need not repeat the factual analysis I have attempted. In my view, a valid point was made by Findlay, J who found it incongruous that the negotiation following brought about instead a change of payment terms against the interest of the alleged intimidators. The harshness of the intimidating conduct at the time of the demand on these occasions under complaint may be measured by its effect on the plaintiffs as alleged victims, but with or without any adverse consequence the very conduct on 30 and 31 May 1995 would, on its own, inevitably call for the court's intervention, and it would be wrong not to stop the threatened repetition of such conduct in the compelling circumstances.

12. Therefore, the issue in the plaintiffs' application was and has throughout been the crude manner in which a disputed debt was, on the defendants' instructions, sought to be collected. Materiality of matters undisclosed or mis-stated would, if relevant, depend "on the importance of the fact(s) to the issues which were to be decided by the judge on the application". (Emphasis added). See Brink's Mat Ltd. v. Elcome and Others, [1988] 1WLR 1350 at p. 1357D per Ralph Gibson L.J.; Citibank N.A. v. Express Ship Management Services Ltd. And Austher, [1987] 1HKLR 1184 at p. 1190D. These undisclosed and mis-stated matters were quite immaterial to the "weighing operation" which the court had to undertake in deciding whether or not to halt the defendants' alleged conduct. They cannot said to be pertinent to the complaints made by the plaintiffs against these defendants, on which the applied for injunction was grounded.

13. The ex parte order granted and thereafter in effect continued by the undertaking offered by the defendants includes a prohibition against any attempt by these defendants to communicate with the 2nd and the 3rd plaintiffs or members of their families. Insofar as communication with the 2nd and the 3rd plaintiffs is concerned, because of the contractual relationships between the plaintiffs and the defendants, it is evidently too wide. But the plaintiffs' aim has always been palpable as it was categorically spelt out in the writ and their counsel's Skeleton Argument dated 8 June 1995. This total restriction against communication was as uncalled for as it was evidently unintended for. From the conduct of these proceedings, it is reasonably clear that it was inadvertently sought and granted. The draft ex parte order was inelegantly formulated. I do not accept that the term which we all see as being too sweeping was sought in bad faith or motivated by a desire for avoiding or delaying paying the defendants. The plaintiffs' refusal to pay was prima facie justified, particularly after the varied payment terms indorsed on the receipt dated 12 October 1994. The payment terms as varied stipulated that the balance was to be payable only on the issue of "the Planning Permit" and "the Construction Works Permit". It is the plaintiffs' case that "the Construction Works Permit" has still not been obtained. The plaintiffs have a legitimate defence to the defendants' demand for more commission and there was no compelling reason why they should stoop to mala fide maneuver calculated to defer payment to the 1st defendant. Moreover, no point was taken by the defendants on this wide term on the return date of the inter partes summons on 9 June 1996 when they volunteered an undertaking to Rogers, J. No attempt was then made to deflect the allegedly harmful effect of the communication restraint. The defendants did not voice their objection to this wide term until the 2nd defendant's affirmation filed on 30 June 1995. Yet they took no steps to remove it from the injunction order or undertaking before the hearing of Findlay, J on 22 August. The defendants have since been less than enthusiastic in seeking an earlier modification to such a wide restraint against communication. The draft order in terms broached by the judge was only agreed to for his approval on the first day of hearing of this appeal. It is also claimed that Mr Joe Chan of the plaintiffs in Guangtung who is said to be available has not been involved with the Zhongshan project, but in view of the defendants' indifference it is incredibly hard to believe that the prohibition against communication in the ex parte order has truly caused any damage. In my view, this aspect has been demonstrated to be, at best, peripheral.

14. There is no substance in the submissions made on behalf of the defendants. None of the issues raised in this appeal would oblige this court to consider whether or not to discharge the ex parte injunction. The inclusion of this wide term and the failure to honour every Practice Direction are not in any case matters weighty enough to dissuade the court from doing what is obviously just in the circumstances. Breaches of the Practice Directions were in fact condoned by the judge, and no more need be said. With or without the injunction the defendants must not resort to such strong arm collection tactic. It would indeed be futile to deprive, for these marginal complaints, the plaintiffs of the protection afforded by the injunction order in circumstances which cry out, if necessary, for a regrant. No improper advantage has been gained. This is a case in which the court's discretion as to whether or not to discharge the injunction for cause, if it need be invoked, should clearly be exercised in favour of continuing with the ex parte order. See Behbehani And Others v. Salem And Others, [1989] 1WLR 723 at p. 727 C-D, per Woolf L.J. as he then was.

15. I must not leave these proceedings without sounding a reminder that the making of an ex parte application for an interlocutory injunction can only be justified on strong grounds. There was no good cause for the plaintiffs' injunction application to be made ex parte on 1 June 1995. In a case of alleged simple trespass and intimidation such as this, there was no excuse for not serving the papers on the defendants. But this shortfall has lost much of its impact after the many stages of the proceedings, including an inter partes hearing, up to this appeal. Further, even in the 2nd defendant's affirmation filed on the 30 June 1995 after the hearing of the inter partes summons by Rogers, J on 9 June, no point was taken on the lack of justification for making an ex parte application. In the Skeleton Argument of the defendants' counsel dated 21 August 1995 for the hearing before Findlay, J the next day, there again no submission was made on the plaintiffs' application having been made ex parte without good cause. This matter was not brought to the attention of Findlay, J, and the judge did not deal with it. It is not even made a ground of appeal. The ex parte nature of the order has now been exclusively called in aid in support of allegations of mala fides and improper motivation. For the first time before us, as encapsulated in paragraphs 35 and 36 of their counsel's Skeleton Argument dated 28 December 1995, the defendants seek to make capital of the plaintiffs' application made ex parte without good cause to Keith, J on 1 June 1995. In these circumstances, I would not permit the defendants to take a new point on appeal.

16. I have considered the question as to whether there is a good cause of action against the defendants and the submissions made on non-disclosure, mis-statements, the wide term in the order against communication, the lack of strong grounds for making an ex parte application and non-compliance with some Practice Directions. It is not necessary to deal with the Grounds of Appeal seriatim. As to the defendants' proposed new ground of appeal, Ground 5A, leave should not be denied, although it would appear to be inconsistent with the stance of the defendants with respect to the 1st defendant. In view of the conclusions I have reached, it is unnecessary to proceed to consider the respondents' notice for maintaining the ex parte order without a discharge or regranting the same. I would uphold the decision of Findlay, J and dismiss this appeal.

17. As to costs, I would order the defendants to pay costs of the appeal and make an order nisi accordingly. It is the consensus that the costs reserved by Keith and Rogers, JJ are to be left to the trial judge. We have also recorded the plaintiffs' undertaking given through counsel that they would not be seeking costs for the proceedings before Keith and Rogers, JJ.

Bokhary JA

18. A glaring misstatement had been made to the ex parte judge (Keith J) as to a matter which he had to weigh.

19. When a matter comes before a judge ex parte, he must do his best to protect both sides. To protect the absent party against whom his order is sought, the judge relies on his own experience and on what he is told by the party appearing before him to seek such order. The duty on an ex parte applicant is necessarily, therefore, to exercise a high degree of care in putting the picture before the ex parte judge fully and accurately.

20. It is vital to our system of justice that that duty be maintained at as high a level as is practicable. Thus, the courts recognize that the urgency inherent to ex parte applications can sometimes lead to things being left unsaid or even wrongly said. And trawling for minor matters on which to set aside ex parte orders is not looked upon at all favourably by the courts.

21. Subject to those dictates of reality, however, a high standard of full and accurate disclosure is required.

22. And if the required standard is not met, then the proper course in the normal way is to set aside the ex parte order. But that of course is not the end of the matter. There is jurisdiction to grant fresh relief inter partes if that appears to be the appropriate course in all the circumstances.

23. I have described the misstatement in the present case as "glaring". When was the $20 million paid: before the incident on September 27, 1994, or after the same? Parting with $20 million after an incident in which you say you were threatened makes it more likely that you were indeed threatened. The plaintiffs told the ex parte judge that the $20 million payment had been made after the incident in question. In truth, however, it had been paid before that incident. It had been paid more then two months earlier on July 12, 1994.

24. That the misstatement was free from dishonesty is a view which Findlay J was certainly free to take. And I happen confidently to share that view.

25. But his view that the misstatement did not matter cannot be supported. Neither he nor this Court can read the ex parte judge's mind. The matter has to be viewed objectively. And objectively the misstatement was as to a matter which should have gone into the scales on the question of whether any, and if so what, relief was properly to be granted ex parte.

26. Mr Edward Chan QC (who leads for the plaintiffs before us but did not appear below) concedes that an application ex parte but on notice was an option. But that, he says, emerges only with hindsight. I think otherwise. As I see it, the ex parte judge might, for all we know, have been minded to direct notice to the defendants if he had not been wrongly told that the $20 million payment was made after the incident of September 27, 1994. And that illustrates why the matter has been viewed objectively.

27. In my view, the proper course for Findlay J was not to continue the ex parte injunction in a modified form. Rather it was to discharge the ex parte order for material misstatement and to make a fresh injunction in a modified form.

28. Unless there was some real question as to damages suffered by the defendants as a result of the ex parte injunction, the only difference between those two courses is this. What Findlay J did leaves the defendants at risk of having to pay the costs before the ex parte judge and the "summons" judge (Rogers J) to whom the matter went as a matter of course following the ex parte order. Recognizing that the misstatement is material would free the defendants from that risk.

29. In my view, there is no real question as to any such damages. Being prevented from threatening the plaintiffs cannot cause the defendants any loss recoverable in law. And as far as other communications are concerned, the defendants have not even given their legal advisers any instructions as to what they suggest is the first time that they would have communicated with the plaintiffs but for the fact that they had been enjoined from doing so.

30. So the only question is as to the costs before Keith J and Rogers J. And, with his usual wisdom, Mr Edward Chan QC has sought his clients' instructions to give an undertaking on their behalf not to seek to recover their costs before Keith J or Rogers J whatever happens. That undertaking has been given.

31. It having been given, I see no practical need to interfere with the Order appealed against. So I too would simply dismiss the appeal.

32. The bulk of the defendants efforts in the appeal was directed to an unsuccessful attack on the plaintiffs' good faith.

33. In all the circumstances, I too would make an order nisi that the defendants pay the plaintiffs their costs of the appeal.

Nazareth V-P:

34. Ex parte interlocutory orders, particularly injunctions, are invaluable weapons in the courts' armoury of remedies, most of all in cases of urgency or where evasive action may otherwise be taken to frustrate the judicial process. But such orders carry the risk of harm and injustice to those injuncted to whom it may not be possible to first give an opportunity to be heard. It is this fact -

"that the court is asked to grant relief without the person against whom the relief is sought having the opportunity to be heard [that] makes it imperative that the applicant should make full and frank disclosure of all facts known to him or which should have been known to him had he made all such enquiries as were reasonable and proper in the circumstances."

per Balcombe LJ in Brink's Mat Ltd v Elcombe (C.A.) [1988]1 WLR 1350 at 1358B-C. In that regard we were referred on behalf of the plaintiffs to Slade LJ's observations on the following page at D-E that the application of the principle should not be carried to extreme length given the signs of a growing tendency on the part of some litigants against whom ex parte injunctions have been granted or of their legal advisers to rush to allegations of material non-disclosure on sometimes rather slender grounds, as representing the only hope of obtaining the discharge of injunctions in cases where there is little hope of doing so on the substantial merits of the case or on the balance of convenience. That is a sentiment that has been expressed in this Court also. These justifiable concerns do not, of course, in any way diminish the duty of disclosure.

35. The defendants say that the plaintiffs breached that duty in two material respects. First, by the misstatement that the $20m was paid after the two episodes of disruptive and intimidatory conduct on the part of the defendants or their representatives. The plaintiffs accept that the statement was wrong but contend that it was made innocently and is not material. Second, the defendants claim that the plaintiffs breached the duty by not disclosing the general background in omitting reference to associated contracts, the injection of large amounts of capital by the 1st defendant and the continuing duties of the 2nd defendant, who is an architect, under contracts through associated companies to provide coordinating services which plainly required personal communications and conferences. The plaintiffs do not deny the existence of such contracts and the injection of substantial sums, but deny these were material.

36. The plaintiffs' contention that the foregoing matters were not material founds upon their contention that they had a good arguable case of trespass in circumstances which clearly demanded and warranted an injunction to restrain unacceptable conduct. That appears to be a view that was accepted by the judge.

37. However, it does not seem to me that the question of materiality can be isolated and properly addressed in that narrow way. Turning first to the misstatement, although in fact not directly related to the two intimidatory incidents, the misstatement that the payment of $20m followed the two incidents plainly projected the plaintiff ex parte case in a more plausible light and at the same time distinctly accentuated the unfavourable light in which the defendants' representatives' conduct was cast, unfairly strengthening their claim for the injunction sought.

38. In regard to the omission of the background material, the terms in which the ex parte injunction was sought and granted expressly prohibited communication between the parties and their representatives. Disclosure of the background material, particularly the coordination service and other contracts, would readily have revealed that the order was framed much too widely. That is in any case implicit in the judgment of Findlay J. In Brink's Mat Ralph Gibson LJ at p.1357 formulated the fourth of his principles relevant to failure to make full and frank disclosure in the following way:

"(4) The extent of the inquiries which will be held to be proper, and therefore necessary, must depend on all the circumstances of the case including (a) the nature of the case which the applicant is making when he makes the application; and (b) the order for which application is made and the probable effect of the order on the defendant ..."

Here, having expressly sought a non-communication order, the plaintiffs should have directed their minds to the probable effect upon the defendants. Indeed, it should have been perfectly obvious to them that the 2nd defendant particularly would be prevented from performing his contractual service obligations. I have no hesitation in concluding that in that way, the contractual background was material. It follows, in my judgment, that the judge was wrong in regarding the misstatement and non-disclosure as not being material.

39. That situation is aggravated by the plaintiffs having, quite unnecessarily, made their application ex parte, without even notifying the defendants.

40. In the ordinary way, therefore, the injunction would have to be discharged but for the considerations Liu and Bokhary JJA have referred to. In the latter regard I agree that there is no evidence of mala fides on the part of the plaintiffs, that they do not appear to have gained any advantage (of which, of course, they would have had to be stripped) and, as I have already indicated, the injunction is clearly warranted. Having regard to all those matters, and not least the neutralisation of any prejudice in costs as Bokhary JA has explained, I also would, rather than discharging and regranting the injunction, simply continue it upon the terms proposed by my Lords.

41. The appeal is accordingly dismissed with an order nisi that the defendants pay the costs of the appeal.

Representation:

Mr K M Chong inst'd by M/s Charles S.C. Yeung & Co. for Appellants/Defendants

Mr E Chan Q.C. & Miss J Chow inst'd by M/s Terry Yeung & Lai for Respondents/Plaintiffs