WONG SUI FUNG & ANOTHER v.YIP SIU KEUNG

LDBM 248/2000

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Building Management Application No. LDBM 248 of 2000

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DECISION

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Introduction

1. There are two applications made by the Applicants by way of two summonses dated 5 December 2001 and 17 December 2001 respectively. The first application is for an order that the Respondent be ordered to pay to the Applicants all such costs of this action with certificate for Counsel, instead of just half of the Applicants' costs as stipulated in my costs order nisi on 22 November 2001. The other application is for a review of my Judgment dated 22 November 2001 on the ground that I erred in law in refusing to grant the mandatory injunction in respect of Structures II, IV and V because proof of damage or inconvenience is not necessary in enforcing negative covenants.

2. At the hearing of the two applications, the Respondent raised various other matters in relation to my Judgment such as I had failed to consider the equitable principles of unfairness, acquiescence or clean hands, which are in fact the subject matters of an appeal lodged by the Respondent on 13 December 2001. As I have told the Respondent at the hearing, I will not deal with those matters that are unrelated to the Applicants' applications.

Negative covenants

3. The covenants that the Applicants sought to enforce are contained in Clauses 11(a), 11(d), 11(g) and 11(n) of the Deed of Mutual Covenant ("the DMC"), which read as follows:-

"11.Each Owner hereby covenants with each and every of the other Owners as follows:-

(a) Not to make any structural alterations to the walls or structure or facade of his House which may damage any other House or cause any inconvenience to the other occupiers and not to make any alterations to any installation of facilities likely to affect the supply of water, electricity or gas.

(d) Not to use or permit or suffer his House to be used for any illegal or immoral purpose nor to cause or permit or suffer to be done any act or thing in any such house which may be contrary to any relevant Ordinance, Regulation or by law or to the Conditions or which may be or become a nuisance or annoyance to or cause damage to other Owners and occupiers of the Estate.

(g) Not to alter the appearance and the colour of the exterior or the facade of any House without the consent in writing of the Manager.

(n) Not to build erect or install on or upon the garden areas or other open spaces of his House any structure building or fixture except only those for recreational purposes and which does not contravene the provisions of the Conditions or any legislation."

4. I have no qualms that these Clauses in the DMC are negative covenants.

Whether proof of damage or inconvenience necessary

5. It was in fact the Applicants' case as pleaded in the Amended Notice of Application that by reason of the Respondent's breach of the DMC, the Applicants had suffered considerable inconvenience. The Respondent denied these allegations and put the Applicants to strict proof thereof. Apart from those particulars of inconvenience pleaded in the Amended Notice of Application, the Applicants had tried to adduce evidence on other inconvenience at the trial, but they were objected to by the Respondent and Mr. Lok, on behalf of the Applicants, conceded that he would not rely on those inconvenience not pleaded and the inconvenience pleaded would suffice. Mr. Lok, however, did not submit at the trial that it was not necessary to prove damage or inconvenience for the grant of an injunction in respect of negative covenants.

6. For the present applications, Mr. Lok submits that generally, where express negative covenants are concerned, proof of damage or inconvenience is unnecessary, and in such a case, generally the court has no discretion to exercise and it will grant the injunction because all that it has to do is to say by way of injunction that the thing must not be done. In support of this contention, Mr. Lok refers me to paragraph 904 of Halsbury's Laws of England, Vol. 24, which contains the following passage:-

"Where parties to an agreement contract, with their eyes open, that a particular thing is not to be done, proof of damage is generally not necessary in order to entitle the plaintiff to a perpetual injunction to restrain a breach. The principle applies not only to a breach by the original covenantor, but also to a breach by an assignee with notice of the convenant; but in cases where there is no privity of contract the court is probably bound to exercise its judicial discretion with regard to granting an injunction. If the construction of the contract is clear and the breach is clear, the mere circumstance of the breach affords sufficient ground for the injunction. In such a case the court has no discretion to exercise. All that it has to do is to say by way of injunction that the thing must not be done. The injunction does nothing more than give the sanction of the process of the court to that which is already the contract between the parties. In effect it is the specific performance by the court of that negative bargain which the parties made with their eyes open."

7. Mr. Lok also submits that the court will not take into consideration the question of the balance of convenience unless the circumstances of the case are very special, but there are no special circumstances in this case. He relies on the passage in paragraph 905 of Halsbury's Laws of England, Vol. 24, to support this contention. The passage reads as follows :-

"The fact that the breach has not occasioned the plaintiff any loss or that the act complained of has effected an improvement of his property, is no defence; nor does the fact that the breach has been committed in connection with a matter of great public importance or that compliance with the covenant would involve inconvenience to the public, make any difference. The court will not take into consideration the question of the balance of convenience unless the circumstances of the case are very special."

8. Mr. Lok further submits that the same principles will apply where mandatory injunctions are sought and he relies on the passage in paragraph 909 of Halsbury's Laws of England, Vol. 24, which reads as follows:-

"Where the injunction asked for is a mandatory injunction to enforce a negative contract, principles similar to those previously discussed apply, and the main point is whether or not the contract has been broken. In such cases a mandatory injunction will usually be granted, even though no damage or injury is shown, although in special circumstances the court may refuse the mandatory injunction and award damages instead."

9. Mr. Lok also relies on the cases of Mass Transit Railway Corp. v. Wong Ming Tak Mercedes & Anor. [1997] 4 HKC 396 and Doherty v. Allman (1878) 3 App Cas 709, which essentially apply the same principles as aforesaid.

10. From the authorities cited by Mr. Lok, it is clear to me that what Mr. Lok submits are just the general principles applicable in general situations. It does not mean that the court can never consider whether there is any damage or inconvenience supporting the grant of an injunction or not in respect of negative covenants. The cases referred to, like Mass Transit Railway Corp. v. Wong Ming Tak Mercedes & Anor., supra. and Doherty v. Allman, supra. mainly concern with prohibitory injunctions. For mandatory injunctions, the court always has a wider discretion and should exercise that discretion with more care. In Sharp v. Harrison [1922] 1 Ch. 502, it was held that:-

"Where a defendant commits a breach of a negative legal covenant after warning, the plaintiff is "speaking generally" entitled to a mandatory injunction without proving damage. But if the defendant proves that no damage has been occasioned and offers undertakings that will effectually prevent any future damage by the continuing breach, and the granting of a mandatory injunction would inflict damage on the defendant out of all proportion to the relief given to the plaintiff, the Court ought to refuse it."

11. The facts of the Sharp's case are as follows:-

"The plaintiff's and defendant's houses were separated by a narrow passage belonging to the plaintiff from whom the defendant had purchased her house with two second floor windows overlooking the passage. In defiance of a covenant in her conveyance and notwithstanding the plaintiff's repeated warnings the defendant in converting her house into flats opened a frosted window in the first-floor flat overlooking the passage and immediately opposite the plaintiff's lavatory. The plaintiff claimed a mandatory injunction and damages. Five months after the writ the defendant let the flat on a five years' lease to a tenant, who was not made a party to the action. The plaintiff attempted but failed to prove that his house would be depreciated in value. The defendant, on the other hand, besides proving that no depreciation whatever would be caused, offered at the trial to give any undertakings necessary to prevent the acquisition of an easement, to keep the window frosted, and, subject to her tenant's consent, to fasten up the lower part, and merely keep an internal fanlight at the top. The plaintiff, however, declined to make a new bargain at the trial and pressed for a mandatory injunction."

12. In refusing to grant the mandatory injunction sought by the plaintiff in the Sharp's case, Astbury J. said the following at page 515:-

"Prima facie, where a defendant commits a breach of a negative covenant with his eyes open, and after notice, the Court will grant a mandatory order, but there is, and must be, some limitation to this practice. Supposing that this defendant had taken a brick out of her south wall, and had put in an iron ventilator, that would have been a direct breach of this covenant, as far as breach is concerned, as direct as the particular breach in the present case; but it is idle to suppose that any Court would listen to an action claming a mandatory injunction if those had been the facts. The reason is this, that if there is really no damage of any sort or kind suffered by a plaintiff by reason of the breach of a negative covenant of this character, and if the granting of a mandatory order would inflict damage upon the defendant out of all proportion to the relief which the plaintiff ought to obtain, the Court will, in my opinion, and ought, in my judgment, to refuse it."

13. Astbury J. had in fact examined a number of authorities, including Doherty v. Allman, supra., before reaching the above conclusion. I agree with Astbury J. and adopt his reasoning. I think in cases where mandatory injunctions are sought I have a wider discretion than in cases where prohibitory injunctions are sought. I am therefore of the view that I can and in fact should consider whether there is any damage or inconvenience caused to the Applicants by reason of the Respondent's breach of the DMC before the mandatory injunction is granted or refused.

14. I have already found that there is no actual or threatened injury caused to the Applicants' rights by Structures II, IV and V. From the evidence, it is clear that Structures II, IV and V are substantial structures and the cost of removing them will be high. The granting of mandatory injunction would inflict damage upon the Respondent out of all proportion to the relief sought by the Applicants when they have suffered no damage or inconvenience themselves. Applying the Sharp's case, I am of the view that I ought to refuse the grant of mandatory injunction in respect of Structure II, IV and V.

15. By reason of the matters aforesaid, I do not agree with Mr. Lok that I should vary my Judgment as suggested. The application for review should therefore be dismissed.

Whether the Applicants should be awarded the full costs

16. Mr. Lok submits that even if I were not with him on the review, I should nonetheless award the full costs to the Applicants because all the points they have taken were correct in law and that costs should follow the event. Although the Respondent has not applied to vary the costs order nisi, he submits that the costs should be apportioned according to the number of structures for which the Applicants have succeeded or failed in claiming injunction.

17. I agree with neither Mr. Lok nor the Respondent. Costs should not be awarded to a party simply because the law points taken were correct, but whether the issues were ruled in favour of the party or not. Also, costs should not be awarded in proportion to the number of structures succeeded, but on the time spent in relation to the structures.

18. Although the Applicants succeeded in most of the issues in this case, they also lost on some issues. In fact, most of the issues and time spent at the trial were in relation to Structure III. I estimate that the time spent on the issues won by the Applicants is roughly about three quarters of the total time spent for the trial, whereas the time spent on the issues won by the Respondent is roughly one quarter of the total time. The Applicants are therefore entitled to claim three quarters of the costs whereas the Respondent is entitled to claim one quarter of the costs. After deducting the quarter costs of the Respondent from the three quarters costs of the Applicants, the Applicants are entitled to half of the costs. This is just a rough apportionment of the costs in accordance with the time spent on the issues. It is always within the discretion of the court in awarding costs as it sees fit and I consider it just and appropriate in the circumstances of this case to award just half of the costs to the Applicants.

19. In the circumstances, I also see no reason to vary my costs order nisi as suggested.

Certificate for Counsel

20. The Applicants have also asked for a certificate for Counsel in the Summons dated 5 December 2001. I agree that it is a suitable case for counsel to attend the trial because of the various difficult issues involved. It is, however, not necessary for me to state in my costs order nisi that the costs awarded to the Applicants includes a certificate for Counsel. Section 12(2) of the Lands Tribunal Ordinance, Cap. 17 stipulates that Order 62 of the Rules of the High Court (Cap. 4 sub. Leg.) shall apply to the award, taxation and recovery of costs in the Tribunal. As the trial was conducted in open court, the Applicants do not require a certificate for Counsel to recover Counsel's fees. Nevertheless, for the avoidance of doubt, I would specify in the costs order absolute that the Applicants shall have a certificate for Counsel.

Orders

21. In view of my decisions aforesaid, I make the following orders:-

(1) The Applicants' application for review by way of summons dated 17 December 2001 be dismissed with costs order nisi that the Applicants shall pay the Respondent his costs of this application, to be taxed, if not agreed. If there is no further application in relation to costs within 14 days from the date hereof, the costs order shall become absolute.

(2) The Applicants' application for varying the costs order nisi on 22 November 2001 by way of summons dated 5 December 2001 be dismissed with costs order nisi that the Applicants shall pay the Respondent his costs of this application, to be taxed, if not agreed. If there is no further application in relation to costs within 14 days from the date hereof, the costs order shall become absolute.

(3) The costs order nisi on 22 November 2001 be made absolute as from the date hereof and the costs shall include a certificate for Counsel.