PROSPEROUS TONE LTD. v. PEARL FAME DEVELOPMENT LTD.

CACV 1128/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 1128 OF 2001

(ON APPEAL FROM HCA NO. 2196 OF 2000)

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REASONS FOR JUDGMENT

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Hon Le Pichon JA:

1. This is an application by the defendant Pearl Fame Development Limited for leave to appeal to the Court of Final Appeal from the judgment and order of this Court dated 6 March 2002. At the conclusion of the hearing, this court refused leave and indicated that written reasons would be given later. This we now do.

2. The action concerned a right of way over a single lane private road, part of which ("the access ramp") falls within land owned by the plaintiff known as No. 7 Pollock's Path. The defendant is the owner of the dominant tenement known as No. 10 Pollock's Path situated at the end of the private road. This court held that the plaintiff was entitled to restrain the defendant from passing and re-passing in vehicles with a gross weight in excess of 5.5 tonnes along the access ramp, that the defendant was in breach of a Deed of Undertaking dated 9 July 1999 and reimposed the injunction granted ex parte on 1 March 2000.

3. The defendant's application is made under two separate grounds, both of which arise under section 22(1)(b) of the Court of Final Appeal Ordinance, Cap. 484.

Damages exceeding $1 million

4. The defendant submitted that leave should be granted under the "or otherwise limb" under the principle laid down by the Appeal Committee of the Court of Final Appeal in Cheng Lai Kwan v Nan Fung Textiles Limited [1998] 4 HKC 1, namely, that where it can be said as a matter of the utmost probability, or even of virtual certainty, that the damages ultimately awarded will be in excess of $1 million should the defendant succeed in the appeal, it is right, as a general rule, to grant leave in the exercise of the discretion contained in section 22(1)(b) unless the appeal is so lacking in merit that the court would refuse leave. Cheng Lai Kwan concerned a personal injuries claim involving unliquidated damages.

5. The evidence filed by the defendant was directed principally at establishing the quantum of damages arising on the plaintiff's cross undertaking given on the grant of the ex parte injunction. Mr Scott SC for the plaintiff submitted that a claim under the plaintiff's undertaking in damages involves the resolution of satellite proceedings, having no bearing on the "property" or "civil right" in question i.e. the right of way over the access ramp. That submission has much force. An undertaking in damages does not found any cause of action. It is not given to the enjoined but to the court. See Cheltenham & Gloucester Building Society v Ricketts [1993] 1 WLR 1545 at 1551E. All the party enjoined can do is to apply to the court for compensation if it is subsequently established that the interlocutory injunction should not have been granted. The enforcement is done under procedural machinery set up in the original order granting the injunction. As stated in Gee, on Mareva Injunctions and Anton Piller Relief, 4th edition at 162:

"The decision of the court on the application does not decide substantive rights as between the parties - the defendant has none. The application is not in the nature of a trial. It is part of the procedure for working out the consequences under the order granting the injunction."

On that analysis, evidence as to the quantum of damages on the plaintiff's cross undertaking (as distinct from the value of the right of way over the access ramp to the defendant) is irrelevant for the purposes of section 22(1).

6. In any event, the evidence adduced as to the quantum of damages was unreliable and unsatisfactory. Exhibited to the second affirmation of Pat Chun Wing is a fax dated 8 June 2001 from MDA Hong Kong Limited, the defendant's quantity surveyor in the redevelopment of No. 10 Pollock's Path, estimating that the costs then incurred by the defendant due to the injunction amounted to $40.9 million made up as follows:

"	Particulars
		Estimated Cost Incurred (HK$)
(a)	Contractor's Loss and Expense Claim	8,000,000
(b)	Additional Professional Fees	1,500,000
(c)	Finance Charges	31,400,000
		Total: 40,900,000
		========	"

The evidence filed did not reveal the basis of liability on the part of the defendant to its contractor. The existence of that liability was challenged by the plaintiff on the basis that difficulties with access are typically at the contractor's risk. Further, the basis for calculating each of the three heads of costs was entirely unclear. It is common ground that due to the defendant's financial difficulties, work at the site had to stop for a prolonged period. Whether or not this factor had been taken into account and to what extent in MDA's estimate are questions to which there are no clear answers.

7. The defendant also filed evidence to establish additional cost and expense to it, said to be at least $13.5 million, of using 5.5 tonne vehicles to complete the whole site formation work from the date of the ex parte injunction instead of applying for an alternative access. The evidence consisted of a claim set out in a single page by the defendant's contractor as 'assessed' by the defendant's quantity surveyor. The assessment took the form of manuscript amendments mainly to the unit rates. Whilst this evidence might appear to have some bearing on the value of the defendant's right to use vehicles in excess of 5.5 tonnes for the redevelopment, that is not in fact the case. As Mr Scott SC put it, the assessment exercise was theoretical. First, the site had always been planned to have two accesses, one via the access ramp in question and the other via Pollock's Path which is a public road. The contractual documents specifically referred to this dual access and since March 2000, vehicular access via the public road has been possible. Second, the validity of the contractor's computation has been put in doubt by the apparent flaws in the methodology used identified by the plaintiff's quantum expert in its report. For example, the assessment made by the contractor was premised upon an assumption that 5.5 tonne vehicles would make the same number of trips per day as 24 tonne vehicles. This was inherently unreasonable. In short, the evidence adduced is unreliable and falls far short of what is required to satisfy the 'utmost probability' or 'virtual certainty' requirement laid down in Cheng Lai Kwan.

8. For all these reasons, no sufficient case has been made out for leave to be granted under the "or otherwise" limb of section 22(1)(b).

Matters of great general or public importance

9. The questions said to be of great general or public importance as reformulated by the defendant for the purposes of this application reads as follows:

Question 1: "Whether, at least prior to 1 July 1997, the common law and Prescription Act 1832 had been modified so that in Hong Kong a leaseholder may acquire a right of way under the Prescription Act or by way of lost modern grant over another leaseholder's land."

Question 2: "Whether in determining the nature and extent of a right of way acquired by prescription the existing physical characteristics of the relevant portion of the servient tenement over which the right of way has in fact been exercised are determinative of the right of way acquired and if not what is the true test and measure of the right of way?"

10. The relevance of the two questions to the present case escapes me. It was never part of the defendant's case that its right of way was acquired by prescription. Nor was acquisition of the right of way by prescription the basis of this court's decision. What was in issue was the extent and content of such a right of way acquired by grant, actual or presumed. But as leading counsel for the defendant acknowledged in his written submissions, in relation to a right of way acquired by grant, the second question "[does] not come under the rubric of questions of great general or public importance". I am not satisfied therefore that any question of general or public importance arises.

11. There is a further consideration pertinent to the exercise of the court's discretion. The judgment in favour of the plaintiff was given in respect of its claim for trespass as well as its claim in respect of a breach by the defendant of its undertaking. As there is no appeal in respect of the claim for breach of the undertaking, that part of the judgment is presumably intended to remain undisturbed in any event.

Hon Waung J:

12. I agree.

Hon Rogers VP:

13. I agree.