MEMORAN CO LTD v. THE INCORPORATED OWNERS OF MEI HING MANSION

HCCT 18/2020

[2022] HKCFI 50

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 18 OF 2020

_________________

_________________

_________________

_______________

DECISION

_______________

INTRODUCTION

1.  Before me this morning is the plaintiff’s summons filed on 30 June 2021 seeking (a) final judgment for mandatory injunctive relief pursuant to Order 14 or, alternatively, (b) interlocutory injunction of the same scope pursuant to Order 29. In its written submissions, the plaintiff asks for a direction that in the event that the order in (a) or (b) is granted, that order be stayed pending the determination of the appeal in CACV 48/2021, which will be heard in May next year.

PROCEDURAL BACKGROUND

2.  Briefly, the relevant procedural background is as follows.

3.  The plaintiff commenced the present action in May 2020.

4.  It took out a summons on 30 November 2020 pursuant to Order 14 and Order 14A. It seeks the following reliefs:

“1.  The following question of law or construction (the “Question”) be finally determined without a full trial of the action:

“Whether, on a true consideration of the Deed of Mutual Covenant and/or the Building Management Ordinance (Cap. 344), the RC steel bars and the surrounding concrete in the floor slab between the 3^rd and 4^th Floors of Mei Hing Mansion (the “Structural Concrete Slab”) constitute a common part of the building.”

2.  The Question be answered in the affirmative.

3.  Judgment be entered for the Plaintiff against the Defendant for the following relief:

(1)  An order that the Defendant do forthwith repair, replace, improve and otherwise remedy the spalled concrete in the Structural Concrete Slab;

(2)  An order that the Defendant do forthwith repair, replace, improve and otherwise remedy the steel reinforcement in the Structural Concrete Slab which has been exposed, seriously oxidized and/or damaged by rusting.

…”

5.  I shall refer to this summons as “the previous summons”. The summons which is the subject matter of today’s hearing will be referred to as “the present summons”.

6.  The previous summons came before Mr Recorder Houghton, SC on 8 January 2021. That was a 9:30 hearing. The recorder made an order in terms of paras 1 and 2 of that summons. As regards para 3, he granted the following declarations instead of the mandatory injunctions sought by the plaintiff. The content of the declarations is however in substance the same as the injunctions. Para 3 reads:

“3. Judgment be entered for the Plaintiff against the Defendant for the following relief:

(1)  A declaration that the Defendant is responsible under the DMC and BMO to repair, replace, improve and otherwise remedy the spalled concrete in the Structural Concrete Slab;

(2)  A declaration that the Defendant is responsible under the DMC and the BMO to repair, replace, improve and otherwise remedy the steel reinforcement in the Structural Concrete Slab which has been exposed, seriously oxidized and/or damaged by rusting.”

7.  I shall refer to this order as “the previous order”.

8.  By notice of appeal lodged on 5 February 2021, the defendant appeals against the previous order. That is the appeal in CACV 48/2021.

RULING

9.  Having considered counsel’s submissions, I am satisfied that, in principle, the interlocutory mandatory injunction should be granted without any stay as initially suggested by the plaintiff but subject to additional undertakings offered by the plaintiff in the course of the oral submissions.

10.  In the interest of time, I do not propose to spell out and address counsel’s arguments one by one. Instead I shall go straight to address the questions which I consider to be material for determining the present summons.

11.  I set out these questions below.

(a)  Question 1 – Has the previous order made by the recorder on 8 January 2021 wholly disposed of the present action?

  If yes, it would follow that there is no further room for the plaintiff to take out and pursue the Order 14 and Order 29 applications and the present summons should be dismissed.

(b)  Question 2 – If the answer to Question 1 is no, is the plaintiff nonetheless estopped from pursuing (or should it otherwise be disallowed to pursue) the present Order 14 application, given that it had already made an Order 14 application in the previous summons?

  This primarily depends on whether the recorder has adjudicated on the Order 14 application at the last hearing. If the answer to this question is yes, the present Order 14 application should be dismissed. I should state at this point that in that event, I am not satisfied that there is any change of circumstances subsequent to the January hearing which would justify the plaintiff taking out the present Order 14 application, as submitted by the plaintiff.

(c)  Question 3 – If the answer to Question 2 is no, should the Order 14 application be granted?

(d)  Question 4 – If no, should the interlocutory injunction be granted instead?

DISCUSSION

Question 1

12.  In his written submissions, Mr Tim Wong, counsel for the defendant, takes the stance that the action has been wholly disposed of. In the course of his oral submissions this morning, Mr Wong confirms that he no longer maintains that position and submits that only partial final judgment was entered by the recorder.

13.  Notwithstanding the defendant’s change of stance, I shall still address Question 1 briefly as the scope of the adjudication of the recorder is still potentially relevant to the other questions.

14.  The answer to Question 1 turns on a proper construction of the previous order.

15.  Generally speaking, the construction exercise is an objective one. The express wording of the order should be construed against the proper context. The context comprises the background against which the order is made. The task is to deduce the objective intention of the court, as revealed from the order when it is looked at against the background.

16.  On the face of the sealed order, it does appear to be a final order which has disposed of the entire action. I say this because:

(a)  The Question posed by the plaintiff is ruled to be suitable to be finally determined without a full trial: see para 1 of the sealed copy of the previous order.

(b)  The Question is determined in the affirmative: see para 2. That ruling is in favour of the plaintiff.

(c)  Judgment was entered for two declarations in favour of the plaintiff: see para 3.

(d)  Finally, in para 4 of the sealed order, the recorder not only awarded the costs of the application to the plaintiff, he also gave costs of the action to the plaintiff.

17.  Drawing on point (d), the immediate conclusion would seem to be that the action had been disposed of as otherwise the recorder would not have made an order on the costs of the action itself.

18.  However, as just mentioned, an order is not to be construed by merely looking at the express wording in isolation. Here, the context and background against which the previous order was made is important. They can be found in the transcript of the hearing and also in the written decision handed down by the recorder subsequent to the hearing: see [2021] HKCFI 154.

19.  I reproduce the relevant parts of the written reasons below:

“18 In exercising the discretion as to whether an application under O.14A is an appropriate course of action, the parties and the Court will ordinarily, find it appropriate to consider whether the issue or question of construction in question will significantly clarify the respective rights and obligations of the parties in the context of their wider dispute, if it does not by itself resolve such disputes. In my judgment, clarification of the party bearing legal responsibility for the maintenance of the concrete slab in question provides such assistance to the parties in the present case.

The Ambit of the Summons [ie the previous summons]

19. Paragraph 3 of the summons sought orders that the defendant should act on its responsibility to make good defective and damaged concrete in the relevant slabs. This was a more problematic request since the extent of such damage was indeterminate, as was its cause (albeit that some expert evidence has been provided by the plaintiff). This was not a question of interpretation or construction, and was factually sensitive, so the paragraph sought a judgment under O.14 in effect.

20. Since it was clear that the cause and extent of damage required factual evidence (at least), this paragraph as framed was not amenable to final determination at this stage. Accordingly, through discussion at the hearing, the form of relief sought by these paragraphs was modified, so as to become a “simple” declaration of responsibility on the part of the defendant for such repairs as may be required.” (underline added)

20.  Further, at para 27, the recorder wrote, “The costs of the summons are to be to the plaintiff.” There was no mention of the costs of the action.

21.  I also reproduce the relevant parts of the transcript below:

“MR WONG [the defendant’s solicitor]: Even if that is so, the defendant’s position is that this involves both facts and expert evidence to be heard in a trial. My Lord, may I refer to the Court of Final Appeal’s decision and also I have just handed in a District Court decision. Although it is a lower court decision I respectfully hope that your Lordship can consider the judgment therein which is now I think is on your table.

…

MR WONG: Yes. Yes.

“... it is inappropriate to use the procedure of Order 14A if the issues of the facts are interwoven with the legal issue to be determined.”

COURT: Yes, okay. I have read it, Mr Wong.

MR WONG: Yes.

COURT: The proposition is that if the case is fact-sensitive then Order 14A is not an appropriate avenue to pursue.

MR WONG: Sorry.

COURT: If the case or the matter or the issue is fact-sensitive, then Order 14A is not an appropriate course to pursue.

MR WONG: Yes.

COURT: That’s your proposition.

MR WONG: Yes, because water seepage case involves facts which are not suitable for Order 14 application at all.

COURT: Yes, but this application doesn’t actually involve the water seepage aspects of this dispute, does it?

MR WONG: Sorry. Pardon me because I ...

COURT: I’m sorry, Mr Wong. We are all under some difficulty here. This particular case or the application rather, does not involve the water seepage aspects of this case. The application relates only to the definition in the DMC ...

MR WONG: Yes, and ...

COURT: ... of the concrete slab.

MR WONG: Yes, the term actually does not appear to involve the DMC and the Building Management Ordinance, especially the term “RC steel bar”.

COURT: The question that I am being asked to determine summarily is whether this concrete slab is common parts within the terms of the DMC.

…

MR WONG: …

And -- so this involved a finding of the court as to whether the individual owner is responsible or the incorporated owners are responsible, so such water seepage case is not suitable for summary judgment. There are many cases about this.

COURT: I think we have covered it already, Mr Wong, but this is not, as far as today is concerned, a water seepage case. This is a case or a question as to the construction of the DMC and whether the concrete slab is part of the common parts. …

…

COURT: Yes, thank you, Mr Lee, thank you. So subject to those amendments, I will make an order in terms of paragraphs 1, 2 and 3 of this summons, as amended, and paragraph 4, costs, Mr Wong, do you oppose an application for costs? Mr Wong?” (underline added)

22.  In my view, it is plain from the above extracts that the recorder was of the clear view that there were factual issues that could not be determined in a summary way at an interlocutory stage. These factual issues concerned the extent of the damage to the structural concrete slab and the cause of such damage. He referred to these factual issues as “the water seepage aspects of this case”.

23.  It is clear that he expressly refrained from making any determination or expressing any view on these factual issues. To put it bluntly, he did not want to touch on these factual topics at all at the hearing. In effect, he acknowledged that they would have to be resolved at some stage in the future.

24.  It follows that these factual disputes remain to be live issues in this action.

25.  I would therefore answer Question 1 in the negative. The previous order did not wholly dispose of the present action.

26.  I should add that I am also of the view that para 4 of the sealed copy of the previous order contains a manifest error in that it should not cover the costs of the action. This must also be a logical conclusion flowing from Mr Wong’s concession that the action has not been wholly disposed of by the order.

Question 2

27.  It is clear from the transcript that the recorder did not want to grant the injunction at the hearing. It was out of his own initiative that he proceeded to grant the declarations instead. The relevant exchange with counsel is as follows. (The injunction was sought in para 3 of the previous summons.)

“COURT: … Mr Lee [the plaintiff’s counsel], paragraph 3 of the summons, 3(2) you have asked me to make an order in terms of, I don’t see, firstly, a great difference between 3(1) and 3(2).

MR LEE: I can appreciate that.

COURT: One is related to concrete and one is related to reinforcement.

MR LEE: Yes.

COURT: You can’t really do one without the other, that’s point 1.

MR LEE: Indeed.

COURT: Point 2, I’m slightly troubled by the ambit of the work which is somewhat unclear.

…

COURT: ... It’s a little bit unclear as to the extent of the work and I am slightly troubled by that. I don’t know if you have anything to say on that.

MR LEE: My Lord, if your Lordship is troubled by the wording “spoil”, I mean perhaps a change of wording to simply “The defendant do repair, replace, improve and otherwise maintain the concrete and steel bars”. Would that address ...

COURT: A declaration that the defendant is responsible to?

MR LEE: That would be agreeable as well.

COURT: Mr Wong, I am proposing that paragraph 3 of the summons be slightly amended or in terms of the order I will make so as to represent a declaration that the defendant is responsible for the repair and maintenance. So the wording will be slightly modified and obviously the “forthwith” would have to come out although no doubt the court would expect ...

MR WONG: May I request my learned friend to repeat the whole sentence how -- what is his suggestion?

COURT: Yes. The wording will have to be resolved, Mr Wong, but in essence what I’m suggesting is that the paragraph 3 …

MR WONG: Paragraph 3, yes.

COURT: ... be changed into a declaration rather than an order and it’s a declaration as to the responsibility of your clients for the repair, replacement, etc.” (underline added)

28.  It is plain from this extract and also the previous extracts at para 21 above that the recorder had formally ruled on the plaintiff’s application contained in para 3 of the previous summons. Para 3 asked for injunctions. The recorder said he was unsure about it because the ambit of the work required was not clear. He proceeded to make an order on para 3 by instead granting the declarations. All the time, he was having in mind the injunctions. He did not feel it right to grant them. He did not in fact grant them. In my view, he had dealt with them substantively. I would therefore conclude that the Order 14 application made in the previous summons had been fully dealt with.

29.  I do not accept the submissions of Mr Bernard Man, SC, appearing with Mr Danny Tang for the plaintiff today, to the effect that there was no adjudication by the recorder on the injunction application.

30.  It follows that the plaintiff is now estopped per res judicatum from making yet another Order 14 application seeking essentially the same relief. I answer Question 2 in the affirmative. For that reason, the Order 14 application would be dismissed.

Question 3

31.  In light of my answer to Question 2, Question 3 does not arise. But I will just deal with it briefly in case I am wrong on Question 2.

32.  The special feature regarding the present Order 14 application is that the plaintiff has (initially) tied its execution to the outcome of the appeal.

33.  It is recognised that if the appeal is allowed and the declarations set aside, the summary judgment obtained here (if granted) cannot stand. Hence the plaintiff is content to wait for the outcome of the appeal and in the meantime have the summary judgment stayed. The reason why it is making the application now rather than after the appeal is that it does not want to suffer any further delay after (and in the event) the appeal is decided in its favour. It will straightaway have in place a mandatory injunction against the defendant so that the water seepage problem which has affected its premises for the past five years can be fixed at the earliest opportunity.

34.  I am of the view that summary judgment should not be granted.

35.  The defendant has raised the defence that the damage to the structural concrete slab was in fact caused by the plaintiff when it drilled holes into the slab when installing false ceilings in the premises in the past. This is a factual allegation that cannot be resolved summarily. If made out, it seems that the defendant has an arguable case that it should not be held responsible for repairing the damage. That is the provisional view expressed by the Court of Appeal when it determined a related application in this action recently: see [2021] HKCA 1146 at para 19.

36.  In the circumstances, the defendant has established an arguable defence and that would defeat the summary judgment application.

37.  Mr Man invites me to nonetheless proceed to grant judgment given that there are as of now binding declarations made by the recorder which are to the effect that the defendant is responsible to repair (see para 6above). That is an order presently in force.

38.  Based on that, Mr Man says I should have no difficulty in granting judgment which is merely to give effect to the declarations. And because of the way the summary judgment is bundled up with the outcome of the appeal as devised by the plaintiff, if the declarations turn out to have been wrongly made, my summary judgment would also go. Hence there is nothing wrong in granting summary judgment now. On the other hand, according to Mr Man’s submissions, it would be wrong for me to refuse summary judgment as that is in effect a failure to recognise the binding effect of the declarations now in place.

39.  There may be some merit in this argument.

40.  However, when answering Question 1 just now, I have referred to how the recorder had expressly refrained from dealing with the factual issues arising from “the water seepage aspects of the case”. Nevertheless, he proceeded to make declarations that the defendant is responsible to repair the structural concrete slab: see, in this regard, paras 20 and 21 of the Court of Appeal decision. In the light of these observations, I do not consider that it is right for me to proceed now to make a final determination of the rights and obligations of the parties at this interlocutory stage. These should be left to be dealt with at trial.

41.  I would therefore not grant summary judgment if the plaintiff was not debarred from taking out the present Order 14 application.

Question 4

42.  As noted at the outset, I am satisfied that an interlocutory mandatory injunction should be granted. The short reason is that it is the best course to take to do practical justice in the present circumstances.

43.  We are dealing with a mandatory injunction here. I shall apply the approach explained by Deputy High Court Judge To in Sam Hei Tai Hing Foods Company Limited v The Incorporated Owners Of Waford Industrial Building [2020] HKCFI 871 at para 4:

“This case demonstrates that in applying the American Cyanamid principles, the court makes no distinction between whether the case is one for prohibitory or mandatory, in additional to prohibitory, interim injunction. The basic approach is to determine which course carries the lower risk of injustice if it should turn out to be wrong. This is achieved by testing the scenario first one way and then the other. Where a mandatory injunction is sought, the court would generally require a high degree of assurance that at the end of the trial of the action, the injunction was rightly granted. But, as an exception to this general rule, where the case is one in which withholding an interlocutory mandatory injunction would in fact carry a greater risk of injustice than granting one, an interlocutory mandatory injunction would be granted even though the court does not feel that high degree of assurance.”

44.  There is clearly a serious issue to be tried that the defendant is liable to repair the structural concrete slab. I am indeed further satisfied that there is a high degree of assurance that at the end of the trial of the action, the injunction was rightly granted. Even if that is not the case, it is a clear-cut case where granting the injunction now carries the lower risk of injustice than refusing one.

45.  There is evidence before me that there has been an incident of spalled concrete block falling off from the ceiling. There is further evidence that the concrete was peeling off from the ceiling. It is not in dispute that the slab is damaged. If the damaged slab continues to remain in its current state, this creates a risk of physical danger for those who reside and work in the premises, where an elderly nursing home is operating. Damages are clearly not an adequate remedy when such risk materialises.

46.  On the other hand, if the defendant is compelled to repair now, the only realistic downside is that the defendant will bear the repair costs in the meantime when he is not responsible to do so.

47.  The balance of convenience lies in favour of an injunction being granted now.

48.  I have considered whether there is any delay in the present application. Notwithstanding that the action was commenced in May 2020, no application has been made for an interlocutory injunction up to now.

49.  But in the meantime, it is not the case that the plaintiff has been sitting on the problem. It has taken out the previous summons hoping that a favourable outcome would compel the defendant to take action. In March this year, the plaintiff in fact suggested that it could engage its own contractors to carry out the repairs and asked the defendant to co-operate and to pay its costs. But even that request has been refused by the defendant (on the basis that the evidence should not be tampered with).

50.  In the circumstances, the plaintiff cannot be accused of any delay in applying for the injunctive relief.

51.  On the indication that I am inclined to grant an interlocutory mandatory injunction, the plaintiff has offered to provide a number of undertakings which are to address the defendant’s concern about the tampering of evidence.

52.  On that basis, parties have discussed the forms of those undertakings. Based on the resulting draft of those undertakings, the interim injunction can take effect immediately and there is no need to impose a temporary stay. This way, the repair works can hopefully start soon.

CONCLUSION

53.  For the above reasons, I dismiss para 1 of the present summons. As to para 2, I make the following orders:

Upon the plaintiff’s undertaking that:

(a)  If the court later finds that this order has caused loss to the defendant or any other party and decides that the defendant or that other party should be compensated for that loss, the plaintiff will comply with any order the court may make.

(b)  The plaintiff shall give reasonable access to the defendant’s appointed expert to the premises (as defined in para 1.2 of the statement of claim) upon reasonable notice for the purposes of inspecting and/or conducting water seepage tests on the structural concrete slab (as defined in para 9 of the statement of claim) within 70 days from the date of this order.

(c)  The plaintiff shall use its best endeavours to approve the Quotation (as defined below) or to give comments on it within 14 days after receiving the Quotation.

(d)  The plaintiff shall meet the costs of the Work (as defined below) (as approved by the plaintiff) at first instance and deposit such costs with the defendant within 14 days thereafter (subject to arguments later as to who shall ultimately be responsible for the costs of the Work and whether there shall be reimbursements of such costs by the defendant to the plaintiff).

It is ordered that:

(a)  Within 28 days from the date of this order, the defendant shall provide a quotation (“the Quotation”) for the Work to the plaintiff.

(b)  Within 14 days from the payment of the deposit or the completion of the inspection and/or tests, whichever is later, the defendant shall, either by itself, its agent or servant or otherwise, commence works to remedy the existing defects and damage in respect of the structural concrete slab and carry out all necessary and proper repair, maintenance, remedial measures and improvements (“the Work”), including but not limited to:

(i)  repairing, replacing, improving and/or otherwise remedying the spalled concrete;

(ii)  repairing, replacing, improving and/or otherwise remedying the steel reinforcement which has been exposed and seriously oxidized and damaged by rusting;

(iii)  repairing, replacing, improving and/or otherwise remedying the structural concrete slab which has been affected and damaged by water seepage; and

(iv)  repairing, improving and/or otherwise remedying any cracks, stains, detachments, spalling, corrosion and/or any other damage in respect of the structural concrete slab, with certificate of satisfaction to be issued by an independent authorised person to be appointed by the parties with liberty to apply if the parties could not agree on the candidate

(c)  General liberty to apply.

[Submissions on costs]

54.  I am going to take a broad and pragmatic view of the matter.

55.  It is plain from the history of the case that the plaintiff has been trying to resolve the water seepage problem which has persisted over the past five years in a reasonable and sensible way. As recently as in March this year, it offered to conduct the repair works. But even that was refused.

56.  In this hearing, the plaintiff is the practical winner. It should have costs. But a discount should be applied to reflect the failed Order 14 application.

57.  I order that the plaintiff do have 70% costs of the present summons, to be taxed if not agreed.

58.  I grant certificate for two counsel.