XCHRX LOK HO SERVICES LTD. and Others v. UNION CREDIT MANAGEMENT and Others

1995, No. A3197

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. On 1 April, the plaintiff companies obtained an ex parte injunction against the defendants enjoining them from

(1) entering the plaintiff's premises at Suite 709-710, Silvercord, Tower 1, 30 Canton Road, Tsimshatsui, Kowloon, Hong Kong ("the Premises") or anywhere else on 7th floor of Silvercord, Tower 1;

(2) abusing the employee of the plaintiffs and disturbing the occupants of the offices on the 7th floor of Silvercord, Tower 1;

(3) preventing or attempting to prevent members of the public from visiting the Premises for the purposes of doing business with the plaintiffs' therein;

(4) interfering in combination with each other or otherwise with the businesses of the plaintiffs by inducing or attempting to induce members of the public not to

(i) enter the Premises, or

(ii) purchase or engage the plaintiffs' product or services; and

(5) in combination with each other or otherwise parading walking or standing in or at the entrance to Silvercord, Tower 1 so as to cause a nuisance or injury to the plaintiffs' by interfering with the reasonable occupation or enjoyment by the plaintiffs of the Premises and the common part of Silvercord, Tower 1 for or incidental to the purpose of the plaintiffs' businesses.

2. Pursuant to the terms of the undertaking given, the plaintiffs served an inter partes summons seeking the continuation of the injunctions granted until further order, the adjourned hearing of which came before me on 13 April 1995. In support of the summons, there is an affirmation of Kam Tak Yuen, Peter and two affirmations of Stella Chu Sook Chun, his wife ("Mrs Kam"), both of whom are directors of the plaintiff companies. The defendants opposed the application. There are affirmations from Fung Kam Sun, a director of the 1st defendant, each of the 2nd and 3rd defendants, Lee Kei Chong ("K.C. Lee"), who is a former client of the 2nd plaintiff and Sherai Thalwinder Kaur, an employee of the plaintiffs, filed in opposition. The 3rd defendant is a former employee of the plaintiffs and left their employ a few weeks prior to the incidents described below.

3. In addition to the inter partes summons, the plaintiffs have issued a summons returnable at the same time for liberty to cross-examine the deponents of the affirmations filed in opposition. In response to those affirmations, both Kam Tak Yuen Peter, and his wife have filed further affirmations (being respectively their second and third affirmations) and five employees of the plaintiffs' group of companies have also filed affirmations. At the hearing, Mr Allman Brown for the plaintiffs informed me that cross-examination was not being pursued.

4. In brief, the plaintiffs operate their businesses from office premises at the address described above. The total area they occupy is some 3,500 sq.ft. including an exhibition room of 600 sq.ft. and a seminar room of 800 sq.ft. and 21 staff are employed. The 1st plaintiff is a holding company. The 2nd plaintiff markets Australian properties in Hong Kong. The 3rd plaintiff advises and represents customers in lodging immigration applications to Australia and Canada and the 4th plaintiff is a travel agent. Seminars and exhibitions are held at the premises and it is in the nature of those businesses that numerous customers and potential customers attend the plaintiffs' offices.

5. The injunctions granted on 1 April arose out of events that the plaintiffs alleged occurred on 30 and 31 March 1995 at the premises. On 27 March, the 2nd plaintiff received a letter from K.C. Lee, a previous customer, demanding payment of A$26,500 and HK$20,000. K.C. Lee who apparently cancelled the purchase of certain properties in Australia sought the refund of reservation fees and the deposit and notified the 2nd plaintiff that he proposed to collect the refund on 2 April. On 30 March at about 10 a.m., the 2nd defendant arrived at the Premises to collect those sums on behalf of Lee. It is not disputed that he did so attend but what is hotly denied is what allegedly occurred at the Premises. The plaintiffs say that he identified himself with a background called "Kowloon Son" and shouted loudly : "You better pay up since you are operating a business in the open". It is alleged that the 2nd plaintiff started to intimidate the plaintiffs' employees in an aggressive manner and declared that their boss should pay up. Two of the plaintiffs' customers apparently left the Premises looking perturbed after conversing with the 2nd defendant. When Mrs Kam asked him to leave, he ignored the request and allegedly intimidated the receptionist. It is alleged that he then sat down at the reception area banging the ashtray onto the coffee table and made a lot of grumbling noises and did not leave till 11:30 a.m.

6. On the following day at 11:15 a.m., Mr Kam said he was informed by the plaintiffs' receptionist that she had received threatening phone calls from an unidentified male. Earlier that morning Mrs Kam had visited K.C. Lee at his office, what was discussed and agreed between Mrs Kam and K.C. Lee is a matter of dispute. In any event, the parties are agreed that at 3:30 p.m. that day, the 2nd defendant went to the Premises with the 3rd defendant. Beyond the fact of the visit, what transpired is again contentious. It is alleged that they caused disturbance in the reception area; that they refused an invitation to go to the seminar room for a discussion; that they refused to produced any authorisation letter from K.C. Lee; that the 2nd defendant refused to produce his identity card and business card; and that both the 2nd and 3rd defendants refused to leave. The plaintiffs called the police who arrived at about 4 p.m. and checked the identity cards and business cards of the 2nd and 3rd defendants. The 2nd defendant's business card showed that he was a representative of the 1st defendant, a fact allegedly confirmed by the 2nd defendant. The 2nd and 3rd defendants and the police left the Premises at 4:50 p.m. It is alleged that the 3rd defendant returned shortly thereafter, banging the doors of the adjourning offices on the 7th floor, declaring loudly that the 2nd defendant could not pay its debt. Half an hour later, the 2nd defendant returned to the Premises causing further disturbance. Not only is he alleged to have shouted obscenities, he threatened to return the next day.

7. The 1st defendant's business is euphemistically described as "credit management" in its business registration certificate. It specialises in the collection of credit card debts. It claims not to have anything to do with the incidents described above, other than the fact that the 2nd defendant is its employee whom it says it has never authorised nor instructed to go to the Premises.

8. The 2nd and 3rd defendants admit that the visits occurred on 30 and 31 March but vehemently deny that they behaved in the manner alleged or that they caused any disturbance or commotion whatsoever at the Premises. K.C. Lee had apparently sought the assistance of the 3rd defendant whose client he had been in getting refunds from the 2nd plaintiff in relation to the cancellation of the proposed purchases of various Australian properties as his previous requests were to no avail. There are hints of impropriety about the 2nd plaintiff's business and suggestions that the 2nd plaintiff is experiencing financial difficulties in its business. In any event, the 3rd defendant thought it more appropriate for some independent third party to represent K.C. Lee as he was no longer in the plaintiffs' employ and obtained the assistance of his friend, the 2nd defendant, whom Lee had never met. According to the 2nd and 3rd defendants, the second visit, i.e. the one on 31 March was pursuant to an arrangement with the 2nd plaintiff who had agreed to repay Lee an agreed amount.

9. The defendants submit that the injunction ought not to be continued because the plaintiffs failed to make a full and fair disclosure when they applied for ex parte relief. It is said that Mr Kam's first affirmation failed to make a full and fair disclosure about the financial dispute between the 2nd plaintiff and K.C. Lee which would have explained the visits of the 2nd and 3rd defendants. As I see it, the question is not whether the 2nd and 3rd defendants had good reason to attend the Premises or whether the 2nd plaintiff is indebted to Lee. Rather, for present purposes, the question is : have the plaintiffs succeeded in establishing that there is a serious issue to be tried? In any event, the defendants have not convinced me that the alleged non-disclosure was material in the balancing exercise.

10. The next point taken by the defendants is that the plaintiffs have not adduced evidence to prove that they are able to satisfy their cross-undertaking as to damages, e.g. by exhibiting the annual auditor's report. I was referred to Intercontex v. Schmidt [1988] FSR 575. In that case substantial sums had been intercepted by the plaintiffs following an Anton Piller order and a request had been made by the defendants for financial details of the plaintiffs whose accounts were hopelessly out of date and who had been in flagrant breach of its statutory obligations by not filing any accounts. On those facts, the absence of proper evidence that the plaintiffs would be able to satisfy their cross-undertaking as to damages was one of several grounds for refusing injunctive relief. The present case is distinguishable fromIntercontex on the facts. It is not in every case of a cross-undertaking as to damages by a company that its audited accounts must be exhibited. What is required is information as to its financial ability to meet the undertaking and that would depend on the facts of each particular case. Here, the plaintiffs have given information regarding their gross weekly profit. Although there is no information regarding their net profits, that alone is not sufficient for me to exercise my discretion in refusing to grant an injunction should such a case be made out. It would be another matter if the companies were not trading at all or had no operating profit. Further, it is open to the defendants to apply for fortification and they have not done so.

11. The plaintiffs seek damages for nuisance, trespass and interference with the plaintiffs' trade and business by unlawful means. The question is whether disturbances had been caused on 30 and 31 March and there was a threat of future disturbances so as to justify the continuation of the injunctions.

12. Dealing first with the position vis-à-vis the 2nd and 3rd defendants, there is undoubtedly a serious issue to be tried. It was contended that as against the 2nd defendant there is no serious issue to be tried because there is no cause of action in tort for damages for interference with the plaintiffs' trade and business by unlawful means, that the facts of this case does not suit a cause of action in nuisance and in any event damages for that as for trespass would be minimal. I confess I have some difficulty in following the argument. It cannot be seriously suggested that no cause of action in tort exists for interference with contractual relations by unlawful means.

13. Vis-à-vis the 1st defendant, admittedly the 1st defendant's involvement is more tenuous. However, the 2nd defendant's two visits were made on consecutive weekdays during normal working hours. The first lasted one and a half hours, the second two hours without reckoning travelling time. There is no explanation from the 1st defendant about this. It is also noteworthy that the 1st defendant is represented by the same firm of solicitors as the 2nd and 3rd defendants. In view of these matters, at this stage, I cannot say that there is no serious issue to be tried vis-à-vis the 1st defendant.

14. Are damages an adequate remedy? The defendants submit that at most only two customers were scared away. Therefore, it is said, the plaintiffs' loss and damage is limited and capped. I do not agree. The quantification of that loss is not obvious. Moreover, damage to business reputation and the potential loss of customers were the alleged conduct to recur must also be considered. Damages are clearly not an adequate remedy.

15. The balance of convenience in this case is plainly in the plaintiffs' favour. The defendants have not shown that the injunctions sought, if granted, would cause irreparable injury to their reputation and goodwill so that on the balance of convenience such injunctions should not issue.

16. The defendants argue that the injunctions are in any event too wide. The relief sought is in fact identical to that granted on the ex parte application, but due to a misreading of the order made on 1 April, the inter partes summons referred to the 2nd floor rather than the 7th floor of the Premises in Head 1. On that basis, I am satisfied that the relief sought is not too wide and I therefore grant the injunctions sought. Costs reserved.

(Doreen Le Pichon)

Deputy Judge of the High Court