SAM HEI TAI HING FOODS CO LTD AND ANOTHER v. THE INCORPORATED OWNERS OF WAFORD INDUSTRIAL BUILDING

HCA 1417/2019

[2020] HKCFI 2319

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1417 OF 2019

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REASONS FOR DECISION

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Introduction

1.  This is the Defendant’s application for (1) extension of time for making an application for leave to appeal and (2) leave to appeal my decision dated 27 May 2020 granting an interim injunction against the Defendant on certain cross-undertakings by the parties (the “Decision”).  The Plaintiff has no objection to the application for extension of time to appeal.  Extension of time was granted.  At the conclusion of the hearing, I dismissed the application and reserved my reasons for decision.  Hereunder are my reasons.

The background

2.  The background of this case was set out in paragraphs 6 to 12 of the Decision.  The Plaintiffs’ camp was formerly in control of the management committee of the incorporated owners of Waford Industrial Building (the “IO”) from May 2001 to January 2017.  Following a change in the membership of the management committee, hostility developed between the Plaintiffs and the IO.  The hostility was described in paragraphs 13 to 23 of the Decision.  Paragraph 22 which sets out the status quo since early 2019 is pertinent.  For ease or reference, these paragraphs are reproduced hereunder:

“The background facts

6. There are no serious material disputes between the parties. The 1^st plaintiff is the owner of a number of units in Waford Industrial Building (the “Building”). It is a company incorporated in Hong Kong carrying on business as a distributor of rice, oil and other food products. The 2^nd plaintiff is the owner of car parking spaces number P3 and P4 in the Building. He is responsible for the general management of the 1^st plaintiff. Together, the plaintiffs hold about 33% interest in the Building. The 2^nd plaintiff’s father (“Yau Senior”) was the vice-chairman of the management committee of the incorporated owners of the Building (the “IO”) from May 2001 to January 2017.

7. There was a change in the membership of the management committee in January 2017. Yau Senior refused to pass control of the management to the new committee. That resulted in legal proceedings in the Lands Tribunal in which Yau Senior was ordered by consent to pay costs. The relations between the plaintiffs and the IO deteriorated since. The IO accused Yau Senior of abuse of power and causing breaches of the deed of mutual covenant (“DMC”) during his term of office as vice-chairman. The plaintiffs accused the present management committee of obstructing and preventing them from lawfully accessing and using the driveway (“Driveway”) which is part of the common area of the Building.

8. The Building is an industrial building erected on a plot of land between Kwai Hei Street and Kwai Lok Street. The Driveway runs all the way from the entrance on the ground level in Kwai Hei Street to the exit in Kwai Lok Street. The width of the Driveway was about 5 metres. There is no pavement for pedestrians. As the photographs show, a container truck could drive comfortably on the Driveway from the entrance to the exit with adequate clearance for forklifts and pedestrians. On one side of the Driveway at about its midway is the loading area where goods are to be unloaded from lorries onto an elevated loading platform served by three cargo lifts. The goods are then delivered to the various floors of the Building using the lifts.

9. There are seven lorry parking spaces and four car parking spaces along the side of the loading platform, four car parking spaces along the other side of the Driveway and one container parking space near the entrance. Eleven of these sixteen parking spaces were owned by Acerich Investment Limited (“Acerich”). These spaces were all rented to the defendant. The 2^nd plaintiff owns two car parking spaces but no lorry parking spaces inside the Building.

10. There is a factual dispute between the parties as to the parking arrangement between them. According to the plaintiffs, they had an unspecified parking space arrangement with the defendant since 2004 (when Yau Senior was the vice-chairman) under which the 1^st plaintiff pays the defendant $2,600 per month for the use of any two lorry parking spaces for the sole purpose of loading and unloading goods. According to the defendant, the 1^st plaintiff only rented lorry parking space L2 from January 2001 to March 2019 for the purpose of parking its lorries at a monthly rent of $4,300. For the purpose of this determination, there is no need to resolve this factual dispute.

11. Before considering the parties’ dispute, it has to be noted that the Building is a small industrial building with poor loading and unloading facilities because of its size and design. Ideal loading and unloading facilities include a loading area located in a recessed parking bay for lorries off the driveway and an elevated loading platform served by lifts to the various floors of the building. A lorry can be park with its back against the elevated loading platform. The loading platform of the lorry could be lowered onto the loading platform of the building to provide a gangway so that goods can be unloaded from the lorry onto the loading platform by forklifts or trolleys to the lifts for onward delivery to the various floors. The unloading lorry would not cause any obstruction to the traffic on the driveway and there would be no need for forklifts to be used on the driveway. Loading is carried out by a reverse process.

12. In this Building, there is no recessed loading area. The loading area is in fact part of the Driveway. The unloading lorry cannot be parked with its back against the elevated loading platform as it would wholly obstruct the traffic on the Driveway. It has to be parked alongside the loading platform or better still in one of the lorry parking spaces. Goods have to be unloaded from the lorry at the lorry parking space, transported by forklifts or trolleys to the loading area, lifted up to the loading platform and then transferred to trolleys etc. Use of forklifts is an efficient and beneficial means of loading and unloading from point of view of the deliverer as well as other users of the Building. Unlike a building with proper loading and unloading facilities as described above, any loading and unloading in this Building must be an obstruction to other users of the Driveway.

The hostility

13. Prior to commencement of hostility, the 1^st plaintiff used to park their lorries near the entrance or exit of the Building, unload its goods and convey them to its units inside the Building. By this mode of operation, the plaintiffs do not have to pay parking fees for entering the Building. The plaintiffs’ case is that they have been operating in this manner using the two unspecified lorry parking spaces for the past twenty years. The defendant says that the 1^st plaintiff only rented one specified lorry parking space for parking its lorries. The defendant had commenced proceedings in the Small Claims Tribunal against the 1^st plaintiff in early 2019 claiming overdue parking fees of $21,060. However, that claim was dismissed for want of prosecution on 14 March 2019. For the purpose of the determination, I do not find it necessary to resolve the parties’ disputes on this issue save to bear their differences in mind.

14. Hostility commenced on 19 April 2019 when the defendant put up a notice on the Building prohibiting forklifts from accessing or using the Driveway. Without the forklifts, the 1^st plaintiff could not load the goods onto the loading platform. As it was raining, the 1^st plaintiff had to move the goods consisting of about 1,000 packs of rice, each weighing 25 kilograms, from the entrance to the lorry parking spaces L4, L5 and L6 to prevent damage by rain. The defendant also chained one of the 1^st plaintiff’s forklifts to a fence and demanded a sum of $12,000 for its release and for the use of the lorry parking spaces. After some negotiation, the forklift was released upon payment of $3,000. Subsequently, the 1^st plaintiff commenced proceedings in the Small Claims Tribunal to recover the said payment. That claim is still pending.

15. On 20 April 2019, the defendant’s security guard refused to allow the 2^nd plaintiff’s private car access to his car parking spaces P3 and P4.

16. On 17 May 2019, one of the 1^st plaintiff’s forklifts hit a pedestrian on the Driveway. There was nothing to suggest that the accident resulted in serious injury to the pedestrian. In her 2^nd affirmation filed by the defendant’s secretary, Ms Law Pik Wan (“Law”), on behalf of the defendant, Law mentioned a similar earlier incident in April 2019, but gave no particulars or supporting evidence.

17. On 14 July 2019, the defendant installed two speed bumps at the entrance and exit of the Driveway. These made access by the plaintiff’s forklift difficult. Nevertheless, the 1^st plaintiff was still able to transport its goods using forklifts and trolleys.

18. On 31 July 2019, the defendant installed an additional bar (the “additional bar”) at the entrance to the Driveway such that this additional bar together with the existing bar wholly block the entrance to the Driveway. The defendant’s agents who manned the entrance refused to lift up either of the bars when the 1^st plaintiff’s staff intimated their intention to access the Driveway by forklifts.

19. As result, the 1^st plaintiff resorted to using the exit at Kwai Lok Street to access the Driveway. On 1 August 2019, the plaintiffs placed a pile of wooden pallets and/ or their vehicles under the gate after it was opened to prevent it from closing so as to enable the forklifts to enter and exit the Driveway. Up till then, the 1^st plaintiff’s forklifts could still access the Driveway.

20. Then on 2 August 2019, the defendant’s staff pulled down the gate at the exit making the 1^st plaintiff’s ingress impossible. The defendant also parked a private car in the immediate vicinity of the loading platform and put chains and fences around it, which completely blocked the 1^st plaintiff’s access to the loading platform.

21. On 3 August 2019, the defendant caused Law and her husband to park their vehicles at the entrance and exit of the Driveway and put up fences between the two speed bumps. The 1^st plaintiff’s container truck was thus trapped within the Driveway. Law demanded $21,060 to allow the container truck egress from the Building. Later that day, the 2^nd plaintiff and his brother were also denied egress by the defendant’s security guard.

22. The above facts are not in serious dispute. The status quo was that the 1^st plaintiff’ was allowed to use its forklifts in the Driveway for loading and unloading goods since early 2019, if not for the past 20 years. The defendant’s stance is that it has the duty to manage the Building and the power to charge parking fees for using the common area under the DMC and its parking spaces rented from Acerich. The hostility arose because the defendant considered the use of forklifts by 1^st plaintiff offending. It considered the 1^st plaintiff’s high frequency of loading and unloading operations, the parking of the forklifts immediately next to the loading platform for substantial period of time, the use of the Driveway for loading and unloading obstructive to other users of the Driveway. It also complained about the manner and speed of driving of the forklifts which caused an accident on 17 May 2019. Hence, speed bumps were installed for safety purposes on 14 July 2019. It should be noted that the speed bumps were installed at the entrance and exit but not on the Driveway near the loading area where the accidents occurred. The bumps had no effect of slowing down the forklifts during the loading and unloading operations. It appears that the purpose of installing the bumps is to prevent their entry or exit or make it difficult for the 1^st plaintiff to use the forklifts in the Driveway.

23. As for the additional bar installed at the entrance, the defendant explained that it was to facilitate collection of parking fees.  It also argued that the installation was necessary as previously the plaintiffs, not being owners of the container parking space, had stored goods thereon in breach of the DMC.  This is a lame excuse as the bar could prevent persons from storing goods or other articles in that parking space. The real reason is, as Law said in paragraph 24 of her 2^nd affirmation, to enforce payment of parking fees each time a forklift enters and exits the Building.”

3.  In essence, the IO considered the Plaintiffs’ use of forklifts to load and unload goods to and from lorries parked outside the building to and from the loading platform inside the building offensive.  The IO considered it has absolute power under the Deed of Mutual Covenant of the building (the “DMC”) to manage the common area of the building, including to chain up the Plaintiffs’ forklifts and ban the use of forklifts in the building.  The motive behind what the IO did was to collect parking fee each time a forklift entered the building or to compel the Plaintiffs to rent a lorry parking space rented by the IO from a company associated with a member of the management committee for loading and unloading goods therefrom to the loading platform.  The IO’s intention to abusive its power of management, which was less apparent at the original hearing, becomes manifest at the hearing of this application for leave to appeal.

The overall thrust of the application for leave to appeal

4.  In opening his application, Mr Cheng, counsel for the Defendant, submitted that I erred in my finding of fact and construction of documents which led to an erroneous finding of a serious issue to be tried.  These finding of fact and construction are so seriously or plainly wrong that the appellate court must intervene.  The Defendant’s complaints are against my ruling on (i) serious issue to be tried; (ii) adequacy of damages and the balance of convenience; and (iii) the undertaking.  The Defendant advanced nine grounds of appeal.  Ground 1 is on a pleading point.  Grounds 2 to 6 are related to the court’s finding the Plaintiffs had serious issue to be tried on their claim for breach of the DMC.  Grounds 7 and 8 are related to adequacy of damages. Ground 9 is about my order to continue the undertakings.

5.  The overall thrust of the Defendant’s attack on the Decision is that I failed to understand that clause 2 of the DMC only gives the owners a right in common with the other owners to use the common parts for the purpose of accessing to and egressing from their units; that clause 3 is a negative covenant not to use any common area or driveway for the purpose of loading and unloading except in “such space as may be designated from time to time as loading and unloading area by the Manager” (my emphasis highlighted); and that clause 4 is another negative covenant not to obstruct or interfere with the common parts, loading and unloading spaces as not to cause any damage thereto or any obstruction or inconvenience to any of the other owners, etc. With those failures, I erred in failing to take any or any sufficient account of the trite principle of law as stated by Geoffrey Ma J (as he then was) in Music Advance Ltd v Incorporated Owners of Argyle Centre Phase I[1] that, in a building management context, the rights of parties under a DMC are “not absolute and must as a matter of construction be subject to an element of reasonableness and also must coexist with other provisions in the DMC unless specifically excluded.

6.  That is a plainly wrong reading of my Decision.  First, I have quoted extensively from Music Advance Ltd.  I was certainly mindful of the principles stated therein.  Second, in paragraph 35 of the Decision, I said:

“The conflict between clauses 3 and 4 on the one part and clause 2 on the other has to be resolved on the basis of necessity and reasonableness.”

I was clearly conscious of the need to balance necessity against reasonableness.  Third, this theme of balancing is evident throughout the 32-page Decision.

7.  It was on that erroneous premise that Mr Cheng submitted that I failed to take into account whether any of the Defendant’s acts complained of were reasonably necessary for enforcing or to preventing and taking action to remedy breaches of other provisions of the DMC which have not been specifically excluded and came to the wrong conclusion that there was a serious issue to be tried.  Then, he argues it was reasonable for the IO to chain up the Plaintiffs’ forklifts, to ban the use of forklifts in the common area and to take measures to do so.  The sole basis of the IO’s justification was that two accidents had occurred on the Driveway involving the forklifts. In my view, the accidents were neutral events.

8.  Mr Cheng has utterly failed to show that my provisional finding of fact was so plainly and seriously wrong that it falls outside the scope of reasonable disagreement such that the Court of Appeal will take over the role of the trial judge as the primary assessor of the evidence: see Kwong Miles Services Ltd v Commissioner of Inland Revenue[2], per Bokhary PJ.  In Yeung Cheung Chun v Wing Shing Caisson & Foundation Ltd & Anor[3], Kwan JA held:

“35. The starting point must be the proper approach of an appeal court in challenging a finding of fact. It is sufficient to refer to the recent decision of China Gold Finance Limited v CIL Holdings Limited & Ors, CACV 11/2015, 27 November 2015, §§11 to 24 for these pertinent propositions:

(1) It is not appropriate for the Court of Appeal to take over the role of the trial judge as the primary assessor of the evidence. The appeal court does not and should not embark on the role of re-assessment of the evidence in the way Mr Wong has invited us to do.

(2) It is incumbent on the appellant to identify palpable errors in the judge’s assessment of the evidence that are sufficiently material to undermine his conclusions. The assertions that the finding of the judge is against the weight of the evidence or that the judge should have reached another conclusion because of points advanced in the closing submissions below or that the judge had overlooked certain evidence because it was not mentioned in the judgment are not errors that come within that category. Unless there is compelling evidence to the contrary, an appeal court is bound to assume that the trial judge has taken the whole of the evidence into his consideration.

(3) In making findings of fact, judges can reasonably reach different conclusions from one another. The appeal court can only intervene when it is satisfied that the finding of the primary judge is “plainly wrong”. This phrase “plainly wrong” directs the appeal court to consider whether it was permissible for the trial judge to make the findings of fact he did in the face of the evidence as a whole, in the knowledge that the appeal court only has the printed record of the evidence and whose perception may be narrowed or even distorted by the focused challenge to particular parts of the evidence.

These principles apply with greater force in respect of provisional finding of fact in interlocutory proceedings, particularly for interlocutory injunctions.

9.  Importantly, there is no dispute that on 20 April 2019, the IO’s security guards refused to allow the 2^nd Plaintiff’s private car to access its car parking spaces P3 and P4; on 2 August 2019, the IO’s staff pulled down the gate at the exit of the Driveway, parked a private car in the vicinity of the loading platform and put chains and fences around it which completely blocked the 1^st Plaintiff’s access to the loading platform; on 3 August 2019, the IO caused their staff to park their vehicles at the entrance and exit of the Driveway detaining the 1^st Plaintiff’s container truck within the Driveway and demanded $21,060 to be allowed to egress.  These facts are not in dispute.  These are blatant breaches of the DMC.  Howsoever wrong were my finding of fact, the Plaintiffs must have demonstrated a serious issue to be tried.  If these blatant breaches are not sufficient to support a serious issue to be tried, what will?

10.  The interim injunction was ordered to preserve the status quo pending trial when the rights and liabilities of the parties will be properly determined.  Appeals against such interlocutory injunctions are often unnecessary because a full trial is awaiting.  Unless the plaintiff’s claim is so bad as may be struck out by Order 14 proceedings, the result of an appeal against an interlocutory injunction, successful or unsuccessful, is to go to trial.  Such appeals would only add to waste of time and costs.  Hence, Order 59 rule 2B introduced the requirements for leave to appeal against interlocutory decisions to weed out not just unmeritorious but meaningless appeals such as this one.

11.  Having responded to Mr Cheng’s overall thrust of the leave application, I now turn to the individual grounds of appeal.

Ground 1 – No pleaded claim for private nuisance

12.  The Defendant complains that private nuisance was not pleaded in the statement of claim but was made one of the conclusions in paragraph 43 of the Decision.  Private nuisance was not pleaded.  At the hearing counsel for the Plaintiffs made submission on private nuisance.  The Plaintiffs pleaded breaches of the DMC in paragraphs 11 to 14 of the statement of claim which also support an action in private nuisance.  On the basis of the affirmations filed by the parties, I made a finding of breach of the DMC by the IO which also supported a finding of private nuisance.  The breach of the DMC was sufficient to support the grant of an injunction.  That I made at the same time a finding of private nuisance, which may be regarded as gratuitous, cannot render the grant of injunction of the basis of a breach of DMC, an error of law or of fact as to support a ground of appeal.  This ground of appeal is frivolous.  In any event, the Plaintiffs have taken out a summons to amend the statement of claim to include private nuisance as an alternative cause of action.  This would completely remove this ground of appeal altogether.

Ground 2 – No loading and unloading except in designated loading and unloading area

13.  Mr Cheng argues that in paragraph 33 of the Decision I erred in identifying a section of the Driveway immediately in front of the loading platform as the loading area designated by the IO when in fact that section of the Driveway was coloured orange and marked as the purported “forklift pathway” in the plan attached to the statement of claim (the “Plan”). I have not erred.  The two terms I have highlighted above speak for themselves.  This complaint has to be understood by referring back to paragraphs 11 and 12 of the Decision in which I discussed about the design of the ground floor of the building, particularly the loading platform and the loading and unloading arrangements: see paragraph 2 above. 

14.  My use of the two different terms, “loading area” and “loading platform” should be noted.  The “loading platform” is the elevated loading platform coloured green in the Plan.  The “loading area” is the rectangular space in the forklift driveway immediately adjacent to the loading platform coloured orange in the Plan. There was no misunderstanding or misidentification on my part.  I used different terms to refer to different areas. 

15.  There are no runways to enable forklifts to move from the Driveway to the loading platform.  Given the design of the building, the only way a forklift could deliver goods to the loading platform is to drive on the Driveway with its loads, pulls to the side immediately adjacent to the loading platform (that is the “loading area” I referred to), lift the loads to the loading platform for them to be transferred to another forklift or trolley or other device for delivery to the elevators.  That is the only reasonable way for loading and unloading goods, whether from lorries or forklifts. That has been the way the loading platform, the loading area and the Driveway have always been used.  If forklifts are not to be used, lorries would have to be parked alongside the loading platform to load and unload their goods.  That would obstruct all traffic in the Driveway.  Goods could not be loaded to or unloaded from the loading platform without the lorry or forklift staying in the loading area.  Such use of the Driveway is reasonable and necessary.  It could not be in breach of the DMC.  This loading area was distinctly marked on the Plan. It is an indispensable part of the loading and unloading operation.  Its existence was not disputed by the IO.  It must be treated as a loading area designated by the IO by consent or impliedly by usage.  Hence, I find at paragraph 33 of the Decision that the rectangular loading area coloured orange in the Plan is a “loading area designated by the IO” from time to time under clause 3 of the DMC by regular usage.  This is the excepted area where loading and unloading may be performed.  The loading platform should not be treated, as submitted by Mr Cheng, as the only area where loading and unloading may be performed.  At the hearing, there is no dispute that that was the case.  I am unable to see how I could have erred on the facts.  On those facts, I carried out a balancing exercise, balancing on the one hand, the Plaintiffs’ right to access and egress the building against their obligation not to obstruct the use of common area by the other co-owners.  Then I came to the provisional view that there was a breach of the DMC by the IO and hence a serious issue to be tried.

16.  Mr Cheng attacks my finding in paragraphs 33 and 34 of the Decision about the means of loading and unloading goods from the forklifts on the Driveway to the loading platform. For the reasons as set out in the preceding paragraph, I am unable to see how I could have erred.  He then complained that I was wrong to come to that view because the Plaintiffs accepted that they could rent one of the lorry parking spaces to obviate the need to drive the forklifts in and out of the building. With respect, that argument is incomprehensible.  What the Plaintiffs said was directed at the IO charging parking fees for each entry by a forklift.  Even if the Plaintiffs rent a lorry parking space, they would still have to move their goods from the lorry parked in the rented parking space to the loading platform for them to be delivered to the various floors of the building.  They would still have to use the rectangular “loading area designated by the IO” coloured orange in the Plan.

17.  Mr Cheng further submitted that despite my finding correctly at paragraph 34 of the Decision that the loading of goods onto the forklifts which took place on the Driveway was in breach of clause 3 of the DMC, I failed to go on to find that the IO’s act to prevent and remedy such breach pursuant to its powers and duties under, inter alia, section 18(1)(c) of the Building Management Ordinance and clause 8(c)(xvi) of the DMC could not constitute any breach of the DMC and/ or private nuisance.  That is a misunderstanding of my Decision.  I was referring to loading and unloading goods to and from the lorry parked in the parking space.  What I said was “strictly speaking” such activities “may be in breach of clause 3” and “may amount to obstruction in breach of clause 4”.  Then, I went on to analyse this prima facie situation in paragraph 35.  I conducted a balancing exercise and came to a provisional view that the Plaintiffs’ use was not unreasonable and unnecessary.  I further drew support for this view from the IO’s own acceptance that transportation of goods using forklifts or trolleys from lorries parked on the rented parking space to the loading area is not in breach of the DMC.  Though I did not expressly say so, by implication I must be taken to have found that the use of the Driveway by the Plaintiff for such purpose was not in breach of the DMC.  In fact, in the last sentence of that paragraph, I concluded that the IO’s complaint of breach may only be directed at the manner of use, ie the manner of driving of the forklifts.  As I have said in paragraph 7, under the circumstances, the IO’s action in chaining up the Plaintiffs’ forklifts and banning their use of the forklifts was so unreasonable as to amount to abuse of power.  There is no substance in this ground of appeal.

Ground 3 – Ignoring the IO’s power to make rules regulating the use of common areas

18.  The IO complains that I erred in ignoring the fact that the IO is empowered by clause 4 of the DMC to make rules and regulations regulating the use of the common areas, including banning the use of forklifts; erred in failing to consider the un-contradicted evidence relating to two accidents involving forklifts, obstruction of common parts, threats to the safety of pedestrians, etc.

19.  I have never doubted the IO’s power to make rules and regulations regulating the use of the common areas. This power is not absolute nor may it be exercised arbitrarily.  The Plaintiffs have right in common with the other co-owners to use the common areas for accessing to and egressing from their units in the building.  This is a fundamental right of co-ownership.  Where the power which the IO intends to exercise infringes on this right, it may only be exercised reasonably and only if necessary.  It may not be exercised arbitrarily.

20.  Hostility in this case began on 19 April 2019 when the IO put up a notice banning forklifts from accessing or using the Driveway.  What led to this action was, according to the IO, an un-particularised allegation of an accident in April 2019.  Needless to say, that accident was not supported by any video clip, though the IO had CCTV facilities.  On the following day, the IO’s security guard refused to allow the 2^nd Plaintiff’s private car access to his car parking space.

21.  Then, there was an accident involving a forklift and a pedestrian on 17 May 2019. The IO was able to produce a video clip of the CCTV footage of this second accident.  There was nothing to suggest the pedestrian suffered serious injuries.  Mr Cheng said there is no pedestrian walkway.  My reading of the plan suggests otherwise.  There are steps on one side of the ground floor leading to the loading platform which pedestrians could safely use.  The accident occurred on the Driveway to be used in common by forklifts and lorries.  Pedestrians walking on the Driveway do so at their own risks.  They should exercise care and even more care than the forklift drivers as they are using a driveway designated for mechanically propelled vehicles and the circumstances were such that they must know that the views of forklift drivers are obstructed by the loads.  A pedestrian walking on the Driveway is like walking on a highway.  Use of forklifts is very common in industrial buildings.  The IO seemingly assumed that the forklift driver is to blame for any accident.  Looking at the video clips, unassisted by live evidence of the pedestrian and driver, I am unable to determine who was at fault.  In my provisional view, on the facts available, the accident was neutral. 

22.  To chain up the Plaintiffs’ forklifts and to ban the use of forklifts is draconian.  Mr Cheng argues that banning was necessary for the due performance of their duty as manager.  I would rhetorically ask why the IO not ban pedestrians on the Driveway, other than those requiring access to and from their vehicles.  There are less draconian measures to be taken, such as putting up warning notices to pedestrians and instructing security guards to warn pedestrians off the Driveway.  In my view, such draconian measure as banning is evidence of bad faith and abuse of power of the IO.  It is evidence of the IO’s failure to balance necessity against reasonableness.  The Plaintiffs have undoubted right to use the common areas for accessing to and egressing from their units.  It can hardly be argued that there was no serious issue to be tried when the IO restrained the Plaintiffs’ forklifts from using the Driveway which they had been using before hostility broke out.

23.  A series of hostility followed, including installing speed bumps at the entrance and exit of the Driveway on 14 July 2019; installing an additional bar at the entrance of the Driveway on 31 July 2019; blocking the exit of the Driveway on 2 August 2019; and blocking the entrance of the Driveway on 3 August 2019.  These facts are not in dispute and have been set out in paragraphs 14 to 21 of the Decision.

24.  Against a background of disputes about the IO’s attempt to charge parking fees for each entry by the forklift and its attempt to coerce the Plaintiffs to rent a parking space it leased from a company associated with a member of the management committee of the IO, the IO’s conduct cast a serious doubt on its real motive in banning the Plaintiffs’ use of forklifts in the Driveway.  An isolated accident is a neutral event. The pedestrians may also be equally to blame.  But the measure adopted by the IO was draconian.  The status quo was that the 1^st Plaintiff was allowed to use its forklifts in the Driveway for loading and unloading goods.  Having addressed my mind to Music Advance Ltd and balancing the Plaintiffs’ right as co-owner against the IO’s power to make rules regulating the use of the common areas, I consider maintaining the status quo would carry the least risk of injustice.  I have not overlooked the IO’s power and obligation under the DMC. 

Ground 4 – Conflict between clauses 2, 3 and 4 of the DMC

25.  The IO complains that I erred in finding at paragraph 35 of the Decision that there was a “conflict” between clauses 3 and 4 of the DMC on the one part and clause 2 on the other and further erred in resolving such conflict in favour of clause 2.  Mr Cheng argues that the co-owner’s right under clause 2 is not absolute and must be subject to an element of reasonableness and also must co-exist with and be subject to other provisions of the DMC unless specifically excluded.  Those other provisions carry more weight.

26.  This complaint is pedantic.  I said there was a conflict which has to be resolved on the basis of necessity and reasonableness.  Mr Cheng said clause 2 is subject to an element of reasonableness and to other clauses of the DMC.  The decisive test, according to Mr Cheng, is also reasonableness.  The building is an industrial building where use of forklifts for transporting goods is very common.  Having regard to the factual circumstances including the design of the building and the number of units held by the Plaintiffs, I came to the provisional view that the Plaintiffs’ use of the Driveway was not unreasonable and unnecessary.  The weight to be given to other provisions of the DMC is a matter for the trial court.  I am unable to agree with Mr Cheng that my finding is plainly wrong or outside the realm of reasonable disagreement.

Ground 5 – interpretation of clause 14(k) of the DMC

27.  The IO complained that I erred at paragraph 40 of my Decision in my interpretation of clause 14(k) of the DMC about what may be parked in the parking spaces and for failing to have regard to a definition of “private car” under the Road Traffic Ordinance.  The essence of Mr Cheng’s argument is that I erred in adopting the definition of “motor vehicle” in the Road Traffic Ordinance without having regard to the definition for “private car” under that Ordinance.  Hence, he submits, that I fell into the error in holding that the 2^nd Plaintiff’s parking of forklifts at car parking spaces P3 and P4 was not in breach of the DMC.

28.  These two paragraphs and the preceding one speak for themselves and are quoted hereunder:

“39. The defendant argues that under clause 14(k) of the DMC parking of forklifts at the 2^nd plaintiff’s parking spaces P3 and P4 is prohibited. Under clause 14(k), each co-owner has covenanted with the other co-owners “[not] to use any car parking space for any other purpose other than for parking a motor vehicle for which the same has been designed”. The defendant’s argument is premised on the 2^nd plaintiff parking spaces being designed for parking private cars, ie sedans and forklifts are not private cars which an owner is entitled to park in its own parking space. Under the Third Schedule to the DMC which allocates shares in the units and car parking spaces in the Building, there are three types of car parking spaces, namely, container truck parking space, lorry parking spaces and private car parking spaces. Though the defendant did not refer to the above three types of car parking spaces mentioned in the Third Schedule, it seemingly assumed that there are three distinct and separate purposes for which the car parking spaces were designed, ie for parking container truck, lorries or sedans and a parking space may not be used other than for that one particular purpose for which it was designed. Thus, the owner of the container parking space may not park his lorry or sedan in that parking space; the owner of a lorry parking space may not park his private car in that parking space; and nothing other than a private car may be parked in a private car parking space.

40.  In my view, the term “car parking space” is a general term and the description of the various types of car parking spaces in the Third Schedule is used to identify the car parking space by its size for the purpose of allotting shares in the interest in the Building rather than to restrict its use to a particular type of vehicle.  It is strongly arguable that the word “design” as used in clause 14(k) only restricts the purpose for which the space may be used, ie as a car parking space and not as space to be used for any other purposes, such as an office, workshop or stall for which it was not so designed.  It is not intended to have the effect of limiting the use to the particular type of vehicle as mentioned in the Third Schedule which is for the purpose of allotting shares in the Building only.  The construction contended by the defendant would yield the ridiculous result as described in the last sentence of the preceding paragraph.

41.  There is no definition under the DMC as to the meaning of a “motor vehicle” and whether a forklift is a motor vehicle within the meaning of the DMC.  Common sense suggests the term “motor vehicle” has the same meaning as defined in the Road Traffic Ordinance (Cap 374).  The following definition under section 2 of that Ordinance is pertinent:

“road includes every highway, thoroughfare, street, lane, alley, court, square, car park, passage, path …

vehicle means any vehicle whether or not mechanically propelled which is constructed or adapted for use on roads …

motor vehicle means any mechanically propelled vehicle”

A forklift is a vehicle which is constructed or adapted for use in a car park or passage, including the Driveway, which are all within the meaning of the word “road”.  As the forklifts are mechanically propelled, they are motor vehicles.  The only covenant under clause 14(k) is not to use the car parking space for other purpose other than parking “motor vehicle”.  Hence, parking a forklift falls fairly and squarely within the permitted purpose for which a private car parking space, such as P3 and P4 is designed.

29.  I was construing a DMC regarding the rights and obligations of co-owners in an industrial building. In the absence of a definition for “motor vehicle” under the DMC, I borrowed the term under the Road Traffic Ordinance which regulates use of motor vehicles on the road.  That was perfectly reasonable.  That does not oblige me to adopt all the definitions in that Ordinance.  Context is important in construction of document.  In the context of a DMC in an industrial building, I find it strongly arguable that the word “design” as used in clause 14(k) only restricts the purpose for which the car parking space may be used and does not limit the use to the particular type of vehicle mentioned in the Third Schedule which is for the purpose of allotting shares in the building only.

Ground 6 – The additional bar

30.  The IO complains that the additional bar was installed over the car parking space privately owned by an independent third party not forming part of the Driveway.  Hence, the court erred in failing to recognize the Plaintiffs have no locus standi and/or cause of action to claim against the IO in respect of the additional bar.  This point was not raised at the hearing. Anyway, by the same token, the IO has no authority to install the bar.  The bar was installed at middle of the container parking space.  The only purpose was to block the access of the 1^st Plaintiff’s forklifts.  This court might have erred in ordering its removal.  But now that a cause of action in private nuisance has been included and the IO being the tortfeasor of the private nuisance is arguably also a party who breached the DMC.  There is a serious issue to be tried.

Ground 7 – Plaintiffs’ damages and balance of convenience

31.  The IO argues that the Plaintiffs could mitigate its loss by renting a lorry parking space from the IO.  This is precisely what the IO wanted, to compel the Plaintiffs to rent a lorry parking space it leased from a company associated with a member of the management committee.  The IO argues that the loss is entirely self-induced.  While there is a duty to mitigate loss, it lies ill in the wrongdoer’s mouth to say the victim should continue to suffer loss caused by his wrongdoing, although the loss could be mitigated.

32.  The essence of the IO’s complaint is that there is no evidence of substantial loss of revenue, customers and reputation.  I have fully dealt with this in paragraph 44 of the Decision.  The thrust of Mr Cheng’s argument is that despite the breaches started back in April 2019, the Plaintiffs failed to produce particulars or other evidence of loss.  Yet the court still erred in finding at paragraph 44 of the Decision that such loss may be readily presumed.  I am conscious of the lack of documentary evidence in support.  Given the Plaintiffs’ business is to trade in food stuff including perishable goods, the loss can be readily presumed.  Besides, in cases of this nature, it is not actual loss that matter but potential loss that counts.  The Plaintiffs could have mitigated their loss in the short term by making alternative arrangements or taking other steps.  It is the long term potential loss which the injunction seeks to prevent weighs heavily on the scale.  This is a provisional finding of fact which the appellate will seldom intervene.

Ground 8 – IO’s loss and balance of convenience

33.  On this ground, the IO complains that I erred at paragraphs 46 to 48 and 50 in finding that the loss to be suffered by the IO if the injunction were wrongly granted is pecuniary and largely quantifiable and hence come to a finding that damages would be an adequate remedy.

34.  First, Mr Cheng argues that I erred in failing to take into account the fact that what the IO did was to carry out its duty to enforce or to prevent and take action to remedy breaches of the DMC.  While I made no mention of these matters in the paragraphs complained of, the Decision has to be read as a whole.  In the Decision, I have mentioned the IO’s power to install such fences and speed bumps.  I have balanced the Plaintiffs’ rights and covenants under clauses 2 and 3 of the DMC against the IO’s power and duty under clause 4.  Those matters are therefore not repeated in that section which deals specifically with adequacy of damages.

35.  Second, Mr Cheng complains that I erred in finding at paragraphs 22 and 46 of the Decision that the speed bumps had no effect of slowing down the forklifts. A pair of speed bumps was installed at the entrance and exit.  They only had the effect of slowing down the forklifts at the entrance.  Once past the speed bumps, the forklift could accelerate.  The pair of speed bumps at the exit could only slow down the forklifts before they entered the main road.  If the speed bumps were intended to slow down the forklifts inside the building, they should be installed, in singles not in pairs, at regular distance apart along the Driveway.  Having regard to the background of the disputes, obviously they were installed for the purpose of collecting parking fees or obstructing the forklifts to compel the Plaintiffs to hire a lorry parking space.

36.  Third, Mr Cheng complains that despite correctly finding at paragraph 54 of the Decision that the IO has power to “install such fence and bumps” I still erred in restraining the IO from blocking the entrance and exit of the Driveway to maintain security and collect parking fees.  That is a gross and deliberate distortion of the order.  The order was directed at restraining the IO from obstructing the entrance and exit of the Driveway by causing its staff to park vehicles thereat to obstruct entrance and egressing of the Plaintiffs’ vehicles and forklifts.  The order does not require security gates or fences to be removed. The order is not to block the access and egress.

37.  Mr Cheng argues that I erred in restraining the IO from interfering with the planks placed by the Plaintiffs over the speed bumps.  This is an exercise of my discretion based on my provisional finding of fact.  The purpose is to maintain the status quo which is the main purpose of an interim injunction.

38.  Fourth, Mr Cheng complains that I failed to take into account that the loss to be suffered by the IO would be unquantifiable and unlikely to be reparable by damages.  He mentioned about potential claims from pedestrians injured by the forklifts.  I have already mentioned that accidents are just neutral events. The pedestrians may be to blame.  In paragraph 46 of the Decision, I have specifically addressed the question of adequacy of damages.  These are all part of the balancing exercise within my discretion.

Ground 9 – The undertakings

39.  The IO complains that I erred in ordering the undertakings given by the IO to continue until conclusion of this action.  In gist, his argument is that the undertakings or cross-undertakings were given by the parties on 9 August 2019 before Poon J were only interim undertakings which were to be effective only “until the determination” of the Plaintiffs’ summons. This is factually incorrect.  The order of Poon J reads:

“AND UPON the Defendant’s undertaking …

1. To remove the fences …

2. Not to block or cause to block the entrance … until determination of this Summons, and

3. To allow the Plaintiffs to place wooden, plastic, or metal planks in between the speed bumps … until determination of this Summons, …

4. To allow the 1^st Plaintiff to park its forklift at a parking space between P6 and P7 …

Two of the undertakings were expressly stated to continue until determination of this summons and two were not, including to allow the 1^st Plaintiff to park its forklifts at a specified location. The IO’s undertaking to allow the 1^st Plaintiff to park its forklifts is matched by the 1^st Plaintiff’s cross-undertaking to pay mesne profits.

40.  I have considered this problem raised by Mr Cheng in paragraphs 5 and 53 of the Decision.  In essence, an undertaking has the effect as an order of the court and can only be discharged by an order of the court on good cause shown or by consent.  This undertaking in issue is not expressly stated to have effect until determination of the summons.  Neither condition for its discharge is present.  The rationale for continuing this undertaking has been explained in paragraph 53 of the Decision.  If released of the undertaking, the hostility will continue.  If the Plaintiffs succeed after trial, the mesne profits they paid shall be recoverable against the IO as damages.  If the IO succeeds, the mesne profits paid may be revised if inadequate and the inadequacy recoverable as damages.

41.  I could have made the undertaking a term of the order.  I did not do so in the hope of keeping a less antagonistic atmosphere so that the parties could as, I suggested, resolve their dispute by reaching a proper rental agreement for the use of the space.  That suggestion fell on deaf ears. 

42.  At the hearing of this application, I offered to discharge the undertaking under the “liberty to apply” clause and made the obligation a term of the order. Mr Cheng declined.  This ground of appeal is totally misconceived and frivolous in nature.

Conclusion

43.  The grounds of appeal have no substance.  They are just attacks on the judge’s provisional finding of fact which is well within the scope of reasonable disagreement.  The order I granted is just along the lines of what the parties undertook before Poon J at the call-over.  The burden imposed by the order is not onerous.  It is not final and is pending final determination at trial.  The intended appeal is meaningless and would serve no useful purpose.  Accordingly, the Defendant’s application for leave is refused with costs.