REALRAY INVESTMENTS LTD v. TENG HUNG PING

HCMP 3190/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 3190 OF 2013

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J U D G M E N T

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1. This is an application by the applicant for committal of the respondent for alleged breach of an injunction by the respondent.

Background

2. The applicant used to own various lots of land in Tong Yan Sun Tsuen, Yuen Long.  These lots included section B of Lot 1833 in DD 121 (“Lot 1833B”).  By a deed of surrender dated 25 November 2010 the applicant surrendered these lots to the government in exchange for a newly created lot No. 2139 in DD 121 (“Lot 2139”).  The new lot as granted by a new grant was created in situ of the surrendered lots and some adjacent government lands.

3. The applicant then commenced to construct a development on Lot 2139 pursuant to and as required by the terms of the new grant.

4. The respondent claimed that he had a possessory title over Lot 1833B which was superior to the applicant’s title to the same as conferred by the surrender and re-grant.  The respondent then instituted HCA 2283 of 2012 (“HCA 2283”) against the applicant seeking a declaration that he had a possessory title to that part of Lot 2139 which corresponded to the location of the former Lot 1833B.  He used a plan and coloured the relevant part in yellow for identification purposes in that action. 

5. He also sought an injunction against the applicant from interfering with his use of the yellow area and some other relief.  The applicant contested the action.  The respondent at some stage amended the yellow area by excluding from it some former government land.

6. Under the new grant for Lot 2139, the applicant had to construct on the yellow area a new road for vehicular and pedestrian use.  This new road will replace an existing road which serves as an access from one part of Tong Yan Sun Tsuen to another.  The existing road in fact cuts Lot 2139 into to two halves whilst the new road to be constructed on the yellow area will run at the edge of the lot.  With a new road on the yellow area replacing the existing road, Lot 2139 will not then be divided into two halves and can be developed as a whole.

7. When the applicant was developing Lot 2139, the respondent made an application for an interlocutory injunction on 7 January 2013 to restrain the applicant from interfering with the respondent’s occupation of and to remove all obstructions that hinder the respondent’s access to the yellow area.  The application was settled by an undertaking of the applicant not to do any work above ground level in the yellow area pending the trial of HCA 2283.

8. HCA 2283 was, however, settled by agreement on 19 September 2013.  The terms of settlement were made a consent order of the court.  The essential terms of the order are the dismissal of the respondent’s claim for the yellow area, a permanent injunction be granted against the respondent in terms as referred to below, and that the applicant should pay the respondent’s costs of the action on a party-and-party basis.

The injunction order

9. The terms of the injunction are in paragraph 2 of the order which states:

“2. There be a permanent injunction restraining the Plaintiff whether by himself, his servants, nominees or agents or otherwise howsoever from doing, procuring, causing, authorising or permitting any of the following acts:

(a) entering, remaining at, using or in any way trespassing on to Lot No 2139 in D.D. No. 121 (including the Land as defined in the Amended Statement of Claim filed on 2^nd January 2013) and the Yellow Area (as defined in the Amended Defence and Counter-claim filed on 6^th June 2013) or any part thereof;

(b) directly or indirectly interfering with the Defendant’s use, occupation and enjoyment of Lot No 2139 in D.D. No. 121 (including the Land) and the Yellow Area or any part thereof; and

(c) directly or indirectly obstructing or interfering with the construction works carried out by the Defendants and/or its contractors, servants or agents at Lot No 2139 in D.D. No. 121 (including the Land) and the Yellow Area or any part thereof.”

The alleged breach of injunction

10. There is, however, a term of the settlement which was not embodied in the order.  This term required the applicant to pay the respondent HK$900,000 as ex-gratia payment within 14 days from the date of the said order. 

11. Before HCA 2283 was settled, the respondent had in July 2013 engaged a contractor to construct a metal gate and some wire fences to guard the access to a path that faces the entrance to the yellow area but outside that area.

12. The respondent in a separate action in the District Court, DCCJ 3772/2013 (“DCCJ 3772”), which was taken out by him against the District Land Officer (“DLO”), claimed that the gate and wire fences were on a path leading to his home and were on Lot 637 of DD 121 which was owned by him.  He took out DCCJ 3772 in the District Court on 27 September 2013 to oppose a notice by the DLO dated 26 September 2013 that required him to demolish the gate and wire fences.

13. The DLO in his defence and counter-claim in DCCJ 3772 disagreed that the gate and metal fences were on Lot 637 of DD 121 but took the stance that they were on government land.  Hence, the DLO counter-claimed for their removal.  DCCJ 3772 is still going on.

14. After HCA 2283 was settled by the consent order dated 18 September 2013, the applicant’s solicitors, by a letter dated 27 September 2013 to the solicitors for the respondent, complained that the respondent had erected the gate and wire fences.  They alleged that the gate and wire fences were erected on 21 September, but they did not provided the source of the information or ground of belief of this allegation. 

15. The respondent in his affirmation in opposition in these proceedings said that he had engaged a contractor to construct the gate and wire fences in July 2013.  He also produced some photographs of the same bearing the date of 1 August 2013.  The affirmation was filed on 20 March 2014 but without leave.  Leave was granted for its admission this morning.  The applicant made it clear that it did not wish to respond to this affirmation and wanted to proceed with the hearing this morning.

16. The applicant’s solicitors further alleged in their letter of 27 September that the existence of the gate and wire fences constituted a breach of the injunction.  They threatened not to pay the HK$900,000 ex-gratia payment.  However, they were willing to pay the sum to the respondent’s solicitors to hold as stakeholders pending removal of the gate and wire fences.

17. The respondent’s solicitors replied on 2 October 2013 and asserted on instructions that the gate and wire fences were erected on land unrelated to HCA 2283 and were for the protection of the respondent’s properties.  The applicant’s solicitors then paid the HK$900,000 as per the terms of settlement but reserved the right to take instructions regarding the respondent’s alleged purpose for erecting the gate and wire fences.

18. On 16 October 2013, the applicant’s solicitors wrote to the DLO and complained against the existence of the gate and wire fences.  They said that if the state of affairs should persist, the applicant would not be able to close the existing road in due course pursuant to the requirements of the new grant for Lot 2139.  They also alleged to the DLO that the existence of the gate and wire fences constituted a breach of the injunction granted in HCA 2283.

19. The DLO replied on 23 October 2013 and pointed out that the gate and wire fences were outside Lot 2139, hence the formation of the yellow area into a road should not be affected by them.  The DLO further pointed out that since the gate and wire fences were outside Lot 2139, they could not constitute a breach of the said injunction order.

Legal arguments and decisions

20. Mr Suen, counsel for the applicant, submitted that when the road on the yellow area shall be completed, it will replace the existing the road.  Lot 2139 can then be developed as a whole.  But with the gate and wire fences in existence, the existing road cannot be closed and the applicant will then be unable to develop Lot 2139 as a whole.  The applicant will then be in grave difficulty as it might not be able to comply with the development obligations in the new grant.  The consequence may be extremely serious.

21. I am sympathetic to the applicant’s position. But the first thing for me to consider is the meaning and effect of the injunction and, secondly, whether the respondent has infringed it.

22. Mr Suen does not assert that the current progress of works on the yellow area or the rest of Lot 2139 has been affected by the existence of the gate and metal fences.  The DLO’s letter of 23 October is also clear on this.  There is therefore no interference or obstruction by the respondent with the applicant’s occupation and enjoyment of Lot 2139 including the yellow area, or with the defendant’s construction works carried out thereon.

23. What the applicant worries about is that there will come a time when the new road on the yellow area will be completed.  If the gate and metal fences shall remain as they are, then the existing road cannot be closed by then and the defendant’s construction works on Lot 2139 as a whole will be obstructed and delayed.

24. The applicant’s allegation is therefore not that the respondent has breached the injunction but that, given his current stance in the matter, he will.  The applicant therefore instituted these committal proceedings quia timet so as to punish the respondent for what he may very likely commit in future.

25. I will not conceal my sympathy for the applicant, but the fact is that there is at present no obstruction by the respondent to the applicant’s occupation of Lot 2139 or the applicant’s construction works thereon.  On this ground alone, I dismiss these proceedings. 

26. The applicant also has other problems that he cannot overcome in these proceedings.  The injunction in HCA 2283 is couched in terms of restraints and the respondent is restrained from doing anything that may have the consequence as contemplated in the injunction.  But the injunction does not require the respondent to carry out any action or to demolish or take away anything so as to comply with the injunction.  In short, it is not a mandatory injunction.  If the gate and metal fences were constructed after the granting of the injunction, the applicant would have a stronger argument.  But the applicant is not disputing the respondent’s case in this case that the gate and wire fences were already there by 1 August which was more than a month before the settlement of HCA 2283 and the granting of the injunction.

27. Mr Suen submitted that I should construe the injunction on the basis that the parties had contemplated the terms of the injunction to include an obligation on the respondent to remove the gate and wire fences.  But I responded by asking why this was not written in the injunction if that was the contemplation.  On the ground that the injunction is not a mandatory one, I also dismiss these proceedings.

28. Finally, as pointed out by Mr Shum, counsel for the respondent, that the applicant, in seeking to commit the respondent, is trying to assert that it has some easement and right of way appurtenant to the use of the yellow area which it can exercise over the land where there are the gate and metal fences.  The applicant then further argued that the injunction is wide enough to protect such rights.  However, such rights had never been adumbrated by the applicant in HCA 2283 and the injunction cannot be read to provide such protection.

29. I agree with Mr Shum and I also dismiss these proceedings on this ground.

30. Finally, I make a costs order nisi that the applicant do pay the respondent the costs of these proceedings to be taxed on the indemnity scale.  I order this basis of taxation as it would also apply to the respondent if the respondent should have been the loser.