XCHRX TRADE ADVISERS CO. LTD. AND OTHERS v. SILKART LTD. AND ANOTHER

HCA20671/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CIVIL ACTION NO.20671 OF 1998

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D E C I S I O N

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1. This is an application for an interlocutory injunction. It is a difficult matter because it relates to the grant of mandatory injunctions. I confess when I read the skeleton arguments last night, and looked at some but not all of the affidavits, I was of the preliminary view that courts should be cautious about granting interlocutory mandatory injunctions. Indeed, this morning, I could say that I was seeking to persuade Mr Grossman rather than him seeking to persuade me, that it would be far better for this matter to wait for trial rather than the grant of a mandatory injunction. However, I have given this, over the luncheon and while listening to the submissions, more thought and I have also had brought to my attention some recent authorities with regard to mandatory injunctions, some of which I was not familiar with.

2. The background, I can state quite shortly before I turn to the authorities, is that this is a dispute between land owners in Hang Tau Village in the New Territories. The 1st plaintiff used to be the owner and was the building contractor and the other plaintiffs who were the Liu clan, were the owners of Lots 946 and 561. The 1st defendant was formerly the owner of the adjoining land and the 2nd defendant is a director. Essentially, I call them plaintiff and defendant.

3. The position was that some years ago, in 1992, both the plaintiff and the defendant realised that there was development potential in this village. This was at a time when it was well-known that property prices were substantially increasing in Hong Kong and both the plaintiff and defendant wanted to build village-type houses on their respective lands. The lands are shown coloured yellow for the plaintiff and green for the defendant at page 12, and if necessary, the plan forms part of this judgment. There was an agreement - which the defendant once called an understanding, but the plaintiff called it an "agreement" - that they could develop their land together and a common access road would be built, serving the land which comes off what is called "the existing road" which goes to Sheung Shui.

4. I confess I had thought, wrongly as it turns out, that there was a factual dispute with regard to the terms of what this would be, but it is clear from the affidavit of the defendant (at page 104) when he sets out the meeting and he asserts that the plaintiff only wanted to build five houses, and there were going to be some problems caused with regard to space between certain of the houses which were shown diagrammatically on a plan. He says they reached a mutual understanding in principle that if they were to build village houses within the area, then they would give each other access through their respective lots of land. In order to give adequate access to houses built on Lots 562, 943 and 945, only five houses would be built on Lots 561and 946. The parties were obviously amicable then, off they went, and the development began.

5. The defendant gave access over his land for the position of what is called the "the Access Road" for the purposes of construction, that is, as I take judicial knowledge of and had seen photographs of these very substantial village houses built in what appears to me to be an excellent manner with lorries and the usual construction paraphernalia that goes on with the development of houses.

6. At the end of 1996, the defendant erected some wire mesh along part of his boundary. There was then a meeting, and I accept for the purposes of this application that the defendant asked for $600,000 for what he called a "licence fee" to remove the fence. And the parties appeared to have reached some understanding on this problem and that it would be reduced to $200,000 and the plaintiff would store his building material on the defendant's land. This was really dressed up to make it appear to be a payment for storage on the defendant's land, but the plaintiff decided not to do that and there had been a gate in this wire mesh which had been opened and it was now closed up. The plaintiff started the building works and had certain rectifications to a boundary which is irrelevant for the purposes of this case.

7. At the end of 1997, what had happened was that the plaintiff built six houses. The defendant thought he would only build five, but he actually built six. Physically, there were six houses being built. So, the defendant thought that he would remedy the situation by erecting a number of walls and a lockable sliding gate on his adjoining land. This is shown in the photographs, which also form part of this judgment, which demonstrate that the walls - like a little mini-Berlin wall - was built alongside the property shutting off some of its light, which I do not think is necessarily relevant, it only has a cosmetic disability to the property which I disregard. The important disability was the means of access which was blocked off, and there was a lockable sliding gate at the top of this access way - the southern portion having been built by the plaintiff. Effectively these houses are land locked, they cannot be used at all as houses because no access can be given.

8. The explanation which was given on the affidavit was to protect the defendant's property but it really appears to me nonsensical having looked at the photographs. The position is quite clear, in my judgment, that the object of the defendant building the wall and the gate was in one sense to punish the plaintiff for having departed from what he thought would be the bargain, namely, to build only five houses instead of the six houses that were built. The matter comes before me on an interlocutory application asking for the walls and the access way to be removed.

9. Mr Grossman, to whom I am indebted for having gallantly stood up to some rigorous examination of the quality of his case, has helpfully drawn my attention to some authorities which I was not very familiar with : Nottingham Building Society v. Eurodynamics Systems Plc and Ors. [1993] FSR 468, where the courts have pronounced on the tests to be adopted by courts insofar as interlocutory mandatory injunctions are concerned, and Mr Richard McCombe, QC, sitting as a deputy judge in the Chancery Division in Nikitenko v. Leboeuf Lamb Greene & Macrae & Anor., The Times, 26 January 1999, cited a test adopted by Mr Justice Hoffman (as he then was) said :

".... the overriding concern of the court was as to which course was likely to involve the least risk of injustice if it turns out to be wrong."

10. I had queried, I confess, a problem which I thought would be difficult for Mr Grossman to overcome, namely, that the object of the exercise is for the people who have bought these houses to live in them and it occurred to me that the judge at trial might be adversely and seriously inhibited in a fair determination if I was to permit the access to be given and he was to be of a contrary view that access should be denied, and that the people then living there would have to move out. I think on reflection, my initial reaction is wrong. Putting the other side of the coin, it is obviously contrary to public interest for substantial properties to be unavailable for occupation by Hong Kong citizens but that is not a determining factor in this case.

11. In my judgment, on the evidence that is given, I have no doubt at all that there was an agreement, as accepted by the defendant in his affidavit that each party would be permitted to develop and have access to this common access way. And it is clearly implicit in that that the object of this agreement is for each to have access in a normal manner, either vehicular or pedestrian access, to service the properties.

12. The defendant admits this in his affidavit, but says that because six houses were built and not five, as he thought, he is permitted to take these steps. His explanation does not hold water in that his motives clearly are harassment or nuisance type of motives, deliberately designed - it may be to extract money, I do not know - but deliberately designed to frustrate proper access being given. I can see no injustice caused to him by the removal of the sliding gate, which just has to be opened, and the removal of the wall. It may be, and it is a matter for the parties to decide, that the whole wall does not have to come down. The order I would make would be only such portion of the wall as would give reasonable access to the plaintiff. Whilst motive is not necessarily the determining factor, in my judgment, the motive of the defendant here has always been, because he considers himself in some way justified, to cause as much trouble as possible.

13. I therefore, in the exercise of my discretion and balancing as I do the respective risks of injustice, can find none to the defendant. He seeks to say that the wall is to protect his goods. I do not agree with that. I think the wall was to deter and prevent the plaintiff from enjoying his own property which had been built.

14. Although I approach this matter with some caution as I ought to, I am satisfied that the risks of injustice, if the injunction was refused, outweighs the risks of injustice if it was granted. I also consider that insofar as the admission is concerned, the plaintiff does have a high degree of assurance that he would be successful in this case. It may well be that the defendant himself would be successful in a counterclaim for damages which may have been caused by diminution in value of his property by the plaintiff building, as he says, six instead of five. It has been pointed out to me by Mr Yim, who, if I may say so, has prepared an excellent skeleton argument and taken me through all the relevant aspects of the law, that there has been a diminution in value caused by the six houses. Mr Yim essentially says that the agreement that was entered into is enforceable because of the Ordinance; that it should have been in writing and that this is a grant of an easement.

15. I confess I do not agree with that interesting submission. It seems to me that what was agreed here was by mutual exchange of promises for each to develop and permit the other to give access. In my judgment, on any view of the law, the defendant would be estopped from denying that that was the effect of this agreement. By the construction of the access way, it was indeed to give access.

16. The other point is with regard to an injunction relating to a container. It looks really like a pre-fabricated office that has been placed on the boundary of the land, deliberately stopping the plaintiff from connecting his electricity supply and drainage. I accept on the evidence, for the purposes of this injunction, that the work had started and when the parties fell out because the defendant did not get his $200,000, he deliberately placed this office-type building, which is a moveable one, over the site where construction work had taken place and pipes had been laid, to stop the plaintiff connecting and he puts forward some concern about him stopping the building of a culvert. I do not agree with this. I think this is all a deliberate device that the defendant has put forward to frustrate the plaintiff in any way he possibly can.

17. As I said, and I am not seeking to say otherwise, he may well have a justified grievance, and it may be that at trial on a counterclaim, which has not as yet been formulated, but I am told by Mr Yim that it will be, he has a claim for damages against the plaintiff for the diminution, if there is any, of value caused by this building. I would have thought, quite frankly, that these parties could have put their heads together and solve this unfortunate matter rather than indulge in expensive and prolonged litigation which will be the case when, and if, this matter ever goes to trial.

18. I, therefore, on the aspect of the connection to electricity, see no injustice to the defendant. I think again it is implicit in the agreement that was entered into that they could develop, and although in normal circumstance, as Mr Yim very properly points out, grants of easement are by document, nevertheless, in my judgment, on an interlocutory basis, I am prepared to grant the necessary injunctions to enable the houses to be occupied. They can only be occupied if they have electricity and drainage, and they can only be occupied if they have access.

19. As I said, there is no injustice if I do this. The defendant can obtain sums of money in so far as he can if he succeeds in his counterclaim. Even if the judge at trial were to come to a different conclusion, then it would be a risk which the plaintiff willingly takes upon himself. But cautioning myself as I do, that it is rare to grant mandatory interlocutory injunctions, in my judgment, having regard to all the facts of this case and in the exercise of my discretion, I consider it right to grant some of the injunctions, I will hear Counsel on the scope of them.