QUICK SWITCH LTD v. SING DRAGON (CHINA) LTD

DCCJ 833/2024

[2024] HKDC 2063

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 833 OF 2024

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REASONS FOR JUDGMENT

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THE APPLICATION

1.  By the summons dated 8 April 2024, the Plaintiff applies for default judgment against the Defendant under Order 19 rule 7 of Rules of District Court for the following orders:-

(1)  Interlocutory judgment be entered against the Defendant ordering that the Defendant do pay the Plaintiff damages including, but not limited to, expenses to be incurred by the Plaintiff in removing the air conditioning facilities for Shop nos Al 13-118 for renovating and/or reinstating the affected areas of the External Walls and the loss of licence fees when the Defendant failed to seek the Plaintiff's permission for the installation of the air-conditioning facilities for Shop nos A113-118 at least since August 2021 until the air-conditioning facilities for Shop nos Al 13-118 are removed along with interest, to be assessed;

(2)  The action shall proceed to trial before a Master as respects the damages;

(3)  A permanent injunction be granted restraining the Defendant (whether by itself, its tenants, licensees, servants or agents or otherwise howsoever) from:-

(i)   causing, authorising, allowing, permitting and/or continuing to install or erect and/or suffering to have installed or erected the air conditioning facilities for Shop nos Al 13-118 on the External Wall; and

(ii)  repeating or continuing and/or suffering to have the breach of the of Mutual Covenant dated 15 April 1989 in respect of the East Asia Gardens in any manner whatsoever.

(4)  The Defendant whether by itself, its tenants, its licensees, servants or agents or otherwise howsoever do within 30 days of the order to be made carry out all works for the removal of the air-conditioning facilities for Shop nos Al 13-118 on the External Walls and reinstate the damaged condition of the affected areas of the External Walls caused by such breach to its original condition;

(5)  If the Defendant fails to carry out the works as ordered in paragraph 4 above within the said deadline, the Plaintiff do carry out such works immediately without further notice to the Defendant, whereupon any such costs and expenses incurred by the Plaintiff in the carrying out of such works shall be fully indemnified by the Defendant;

(6)  The Defendant do pay to the Plaintiff the costs of this application and this Action (including all costs in this Action previously reserved, if any), to be taxed if not agreed (“Application”).

BACKGROUND

2.  The Plaintiff is the owner of the Remaining Portion of the Podium of East Asia Gardens, comprising the Basement, portions of the Ground Floor, portions of the First Floor, the Second Floor, the Reserved Podium Roof and the external walls (save and except portions of the external walls of Shop No A101 on the Ground Floor of East Asia Gardens) (“External Walls”).  The Defendant is the owner of Shop nos A113-118 of East Asia Gardens.

3.  It is the Plaintiff’s case that, on or about 19 August 2021, the Plaintiff discovered that the Defendant had installed air-conditioning facilities for Shop nos A113-118 (“Air-Conditioning Facilities”) on the External Walls without its permission thereby breaching the Deed of Mutual Covenant of East Asia Gardens (“DMC”) and committing trespassing.  Repeated demands were made from August 2021 to January 2022 requesting the Defendant to remove the Air-Conditioning Facilities and reinstate affected areas of the External Walls but the Defendant ignored the demands.

4.  On 8 February 2024, the Plaintiff commenced the present action against the Defendant and sought various relief, including injunction, damages, interest, costs etc. 

5.  On 29 February 2024, the Defendant filed an Acknowledgment of Service of Writ of Summons indicating its intention to contest the proceedings.  The Address for Service stated in the said Acknowledgment is “Room 601, Nathan Centre, 580G-K Nathan Road, Kowloon” which, according to the Annual Return (NAR1) dated 22 May 2023, is the address of the registered office of the Defendant.

6.  As the Defendant failed to file the Defence, on 26 March 2024, the Plaintiff served on the Defendant the Notice of Intention to Enter Judgment and took out the Application on 8 April 2024.

7.  At the hearing of the Application on 11 July 2024 (which the Defendant attended by Counsel), Deputy District Judge Clark Wang ordered the Defendant to file and serve (a) a summons for time extension to file and serve its Defence and Counterclaim, and (b) an affirmation in support of the time summons and in opposition to the Application, both within 21 days of the order.

8.  At another hearing of the Application on 27 August 2024, Deputy District Judge Patrick Siu made an order that, unless the Defendant file and serve the summons for time extension and affirmation in opposition referred to in the Order of Deputy District Judge Clark Wang dated 11 July 2024 within 7 days of the order, the Defendant would be barred from filing and serving the said summons and affirmation (“Unless Order”).  At that time, the Defendant was still legally represented but his solicitors were absent at the hearing. 

9.  The Defendant has not complied with the Unless Order to file its Defence and Counterclaim or any affirmation in opposition. 

10.  By the letter dated 16 September 2024, the Plaintiff’s solicitors informed the Defendant of today’s hearing.  According to the Affirmation of Chong Fu Kit, the said letter was sent to the Defendant’s registered office by ordinary post and it has not been returned.  By the letter dated 30 November 2024, the Defendant’s former solicitors inform the Court that they have informed the Defendant’s representative of today’s hearing by WhatsApp.

11.  Based on the evidence available, I am satisfied that notice of today’s hearing has been duly served on the Defendant and I consider that it is expedient to proceed in the Defendant’s absence pursuant to Order 35 rule 5(1) of Rules of District Court. 

12.  At the end of the hearing of the Application, I gave judgment in favour of the Plaintiff and made an order in terms of paragraph 22 below.  These are my reasons.

PRINCIPLES ON DEFAULT JUDGMENT

13.  The principles on granting default judgment under Order 19 rule 7 are well-established and have been helpfully summarized by Deputy High Court Judge William Wong SC in Times Square Limited v Lee Kwun Kit trading as JL Music and Others [2020] HKCFI 438 as follows:-

(1)  The default judgment procedure under Order 19 rule 7 is available in cases where the defendant is in default of notice of intention to defend, as well as in default of defence;

(2)  In determining whether to grant default judgment, the Court must consider the application according to the pleadings alone, and decide whether the plaintiff appears to be entitled to judgment on its statement of claim;

(3)  The court cannot receive any evidence, and it is thus not necessary for the plaintiff to prove its case by evidence;

(4)  Notwithstanding the wording in Order 19 rule 7(1), the court’s power to grant default judgment is discretionary and not mandatory;

(5)  With regards to the Plaintiff’s claim for injunctive relief, it is well-established that the court has jurisdiction to grant permanent injunctions in default judgments.

DISCUSSIONS

14.  Having considered the Statement of Claim, I am satisfied that the Plaintiff has proved its case against the Defendant for breach of DMC and trespassing by reason of the latter’s erecting the Air-Conditioning Facilities on the External Walls without the Plaintiff’s permission.  What I need to consider is whether I should exercise the discretion to grant the injunction as sought by the Plaintiff.

15.  In the Summons, the Plaintiff does not only seek an order compelling the Defendant to remove the Air-Conditioning Facilities and reinstate the External Walls, it also seeks a permanent injunction restraining the Defendant from, inter alia, repeating the breach in the future.  Mr Chong for the Plaintiff refers me to the cases of Horn King Limited v Wong Chor Cheung [2024] HKDC 773 and The Incorporated Owners of Sun Ho House v So Wing Leung [2019] HKLdT 12, where injunction was granted by the Court to restraining the defendant from trespassing the plaintiff’s premises (in Horn King Limited) or prohibiting the defendant from erecting any structures in the plaintiff’s premises (in The Incorporated Owners of Sun Ho House).

16.  In Chiu Hung Shun Paul v So Ka Tai, CACV 136/2005, 5 December 2005, which is water leakage case, the judge below refused to grant a permanent injunction restraining the defendants “from doing the following acts or any of them that is say, causing, permitting, allowing or suffering water to be leaked, seeped and discharged from the defendants’ premises into the plaintiffs’ premises” and the plaintiffs appealed.  Ma CJHC (as he then was) said at §16 that:-

“(1)  Injunctions are an equitable remedy and as such therefore subject to equitable principles. They are to be granted only where necessary, appropriate and just. For example, where damages provide an adequate remedy, an injunction will not generally be granted. Where one is to be granted, the same principles also dictate that an injunction should not be made any wider than necessary; otherwise, for example, the party subject to the injunction may find himself in contempt of court (for this is in many ways the prime remedy for a breach) of an order that goes beyond what the party benefiting from the injunction could realistically have expected or have been entitled in the first place.

(2)  In the present case, the Plaintiffs’ complaint was that of a leakage from the Defendants’ premises. The obvious remedy, in the absence of any special circumstances, was simply a mandatory injunction to effect due repairs, no more.  This was precisely what the Judge ordered.”

17.  In my view, the scope of injunction sought by the Plaintiff is too wide.  As held by Ma CJHC (as he then was) in Ching Hung Shun Paul, an injunction should not be wider than necessary.  In the present case, the Plaintiff’s complaint is unlawful or wrongful erection of the Air-Conditioning Facilities on the External Walls and, in my view, an order compelling the Defendant to remove the said Facilities is sufficient. 

18.  As for the cases of Horn King Limited and The Incorporated Owners of Sun Ho House, Mr Chong rightly observes that the injunction was granted in both cases after trial and the court’s discretion was exercised in light of the factual evidence adduced in those cases.  Mr Chong also agrees that the fact that similar injunction were granted in those cases does not necessarily mean that it should likewise be granted in all other cases.  For instance, in the recent case of Wong Wah On Edward v Lok Shor Bing [2024] HKDC 16 which is also a water seepage case, Deputy District Judge Thomas Wong referred to Ching Hung Shun Paul and considered that a mandatory injunction ordering the defendant to carry out repair works to rectify the defects in the water proofing layer, concealed fresh and flush water supply and drainage pipes immediately for the purpose of stopping and preventing water leakage was sufficient and no further injunctive relief was granted (§§69-71). 

19.  Mr Chong submits that the injunction restraining the Defendant from repeating the breach is necessary because of the fact that the Defendant is still the owner of the Shop Nos A113-118 and the Plaintiff is concerned that the Defendant may install air-conditioning facilities for their shops in future even after the Court grants an injunction compelling it to remove the Air-Conditioning Facilities.  Mr Chong further submits that the Plaintiff’s concern is reinforced by the Defendant’s conducts in the proceedings, ie failing to comply with the Unless Order and ceasing to participate in the proceedings. 

20.  There is no evidence before the Court why the Defendant fails to comply with the Unless Order or why it ceases to participate in the proceedings. Thus, I do not consider that I should take the Defendant’s conduct into account when considering the scope of injunction.  As for the Plaintiff’s concern that the Defendant may commit the same breach again in the future, it is important to bear in mind that this is an application for default judgment and the Court can only consider the Statement of Claim.  Despite Mr Chong’s effort, the fact remains that the Plaintiff’s such concern is not pleaded in the Statement of Claim. 

21.  Based on the Plaintiff’s pleaded case in the Statement of Claim, I am of the view that it is sufficient to grant an order to compel the Defendant to remove the Air-Conditioning Facilities.  I do not consider any further injunctive relief to be necessary or appropriate.  For avoidance of doubt, I am not suggesting that an injunction restraining the defendant from repeating the breach or other further injunctive relief can never be granted in an application for default judgment or other interlocutory applications.  I am just not satisfied that this is necessary in the present case.

22.  Thus, I would allow the Plaintiff’s application and make the following order:-

(1)  A mandatory injunction that the Defendant do, within 30 days from the date of the order, remove the air-conditioning facilities for Shop nos Al13-118 on the External Walls and reinstate the affected parts of the External Walls to its original condition;

(2)  In the event that the Defendant fails to carry out the removal and/or reinstatement works as ordered in paragraph 1 above, the Plaintiff be at liberty to remove the said air-conditioning facilities and to reinstate the affected parts of the External Walls without further notice to the Defendant, and the expenses incurred by the Plaintiff in carrying out such works shall be borne by the Defendant;

(3)  Interlocutory judgment be entered against the Defendant for breach of DMC and trespassing with damages, and mesne profit for occupying that part of the External Walls by the said air-conditioning facilities from 19 August 2021 to the date on which the said air-conditioning facilities are removed, to be assessed;

(4)  The Defendant do pay the Plaintiff’s costs on liability and the Plaintiff’s costs of the Application summarily assessed at $46,400.

23.  Lastly, I thank Mr Chong for his assistance to the Court.