ROBERT W.H. WANG & CO. (a firm) v. HOGN KONG PING JENG LAU CO. LTD.

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JUDGMENT

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Sir Derek Cons, V. P.:

1. This is an appeal from the decision of Judge Sharwood, sitting as a deputy judge of the High Court, who on the 14th of December last year granted an injunction that:

2. Suite 602 is on the 6th floor of the building. In May last year, when the plaintiff, Robert W. H. Wang & Co., a firm of solicitors, took out a lease on Suite 601, the other half of that floor, Suite 602 was untenanted. Evidence put before the judge below was that the plaintiff entered into the lease for Suite 601 because it had been assured by or on behalf of the defendant that Suite 602 would not be let as a restaurant, but only as office space. It was expected then to be taken as such by the company which operates the well known Seibu Department Stores.

3. In the event the proposed lease to Seibu fell through and not being able to find other tenants the defendant, which is in the restaurant business as well as that of real property, decided to use the premises themselves and wrote accordingly on the 2nd of November offering to lease Suite 602 to the plaintiff or "otherwise we have to operate a club for eating purposes" themselves. The plaintiff was unwilling to take any further lease, even though it would have been allowed to sub-let, and accordingly on the 30th of November issued the writ and summons which led to the injunction granted below.

4. Not surprisingly there were conflicting versions of the pre-contractual negotiations, but the judge, having noted that the plaintiff's claim depended on its being able to establish a "collateral contract" concluded that there was "strong evidence" of such an agreement. He was satisfied that an exclusion clause in the lease, to which I shall come in a moment, was not necessarily conclusive, was not applicable in the circumstances, or if so, was repugnant to the oral contract. He found the balance of convenience in favour of an injunction.

Serious question to be tried

5. Mr. Tang, who now appears for the defendant, has, with reference to the juridical concepts of offer, acceptance and consideration in the formation of a contract, taken us through a comprehensive analysis of the affirmations and affidavits filed below with a view to persuading us that there was no evidence whatsoever before the judge to support the suggestion of a collateral contract. He concedes, I think, that acceptance and consideration provide no difficulties for the plaintiff. It is to the area of offer that he directs his arguments, which have considerable force. Nevertheless, for my part I am not persuaded that the circumstances recounted by Robert Wang, the senior partner of the plaintiff, and Celina Wong, who was then their general manager, will, when fully explored at the trial, inevitably fail to establish a promise on the lines I understand to be suggested. But with respect to the judge below, I would hesitate to describe the evidence so far, as strong.

6. Two other factors have to be considered under this head. The first is that clause 8 of the lease presents a formidable stumbling block in the path of the plaintiff, it is in these terms:

In McGrath v. Shah Times Newspaper 22nd October 1987 a somewhat similar clause proved conclusive. On the other hand, in other cases, including J. Evans & Son (Portsmouth) Ltd. v Andrea Merzario Ltd. [1976] 1 WLR 1078 and Brikom Investments Ltd. v. Carr [1979] 1 QB 467 on which Mr. Maxwell-Lewis for the plaintiff particularly relies, the court has taken a different view. It seems to me that in those other cases the decision of the court, that is to say the construction and effect of the clause in question, has been much influenced by the particular circumstances and nature of the oral undertaking. Those, of course, are matters that can only be fully discovered at a trial.

7. The second factor, which was not argued before the judge below, is the authority, or rather the lack of authority, of Dominic Leung, the director of Richard Ellis Ltd., who spoke to Robert Wang. Richard Ellis Ltd. were the agents who appeared to be acting for both the plaintiff and the defendant with regard to the lease. As such they had no ostensible authority to contract on their principals' behalf: see Diplock, L. J. in Hill v. Harris [1965] 2 Q B 601 at 616; nor in my view would they have such authority even as, which possibly they are, managers of the building itself. There is no evidence at the moment of direct authority, although Mr. Maxwell-Lewis has hopes that discovery may reveal something favourable to the plaintiff.

8. However the plaintiff's case does not rest on Mr. Leung alone. Mr. Cheong Peng Vong, the general manager of the defendant and who would therefore exhibit sufficient authority, spoke with Celina Wong. Whether what he said in fact influenced the partners of the plaintiff to their decision, a query now raised by Mr. Tang, is a question that again must await resolution at a trial.

9. Before exercising its discretionary power to grant an interlocutory injunction the court must, as Lord Diplock observed in American Cyanamid Co. v. Ethicon Ltd. (1975) AC 396 at 407, be satisfied that the claim is not frivolous or vexatious. Those words were not used there in their pejorative sense, but in the sense, as his Lordship said, that there is a serious question to be tried. That is very much a matter for the judge at first instance, who has to do the best he can in what is of necessity an unsatisfactory situation, and usually, as in the present instance, without a full knowledge of the facts. The reluctance of this court to interfere with his discretion is well established. It would only do so, in circumstances like the present, if it were satisfied that he was plainly wrong in his conclusion. Having regard to the observations I have earlier made, I have come to my conclusion, albeit not without hesitation, that I cannot go that far.

Balance of convenience

10. As to this it seems to me that the judge was principally influenced by three factors:

11. As to the last mentioned, the judge was perhaps somewhat mistaken, in that several bookings had already been made, one in as early as September, of private parties for the early parts of the present year. Other than that I see no reason to think that the judge did not consider all the matters put to him in this respect or that he ignored, as is now suggested, the probability that if the defendant should recover damages on the plaintiff's undertaking, they are likely to be substantial. In any event it seems to me a matter of no importance, provided the plaintiff is good for them, as to which the judge was well satisfied. Mr. Tang mounted a sustained attack upon the adequacy of damages to the defendant, but it seems to me, unless I misunderstand him, that the burden of his argument is not so much directed to the difficulty of assessing the damages as such, but rather to his client's difficulties in establishing that it will have in fact suffered damage. Be that as it may it seems to me, as it did to the judge below, who had the added advantage of being taken to inspect the premises, that the balance of convenience is indeed all one way.

12. This section provides:

By subs. (2) land includes "any ... interest ... in or over any land".

13. To support the suggestion that the collateral contract proposed by the plaintiff, being in the nature of a restrictive covenant, is caught by this section, Mr. Tang draws our attention to the fifth edition of Megarry and wade, the Law of Real Property, where restrictive covenants are referred to as "a new kind of property right" (p. 122), "a new interest in land, purely equitable in nature"(p. 772) and as belonging "to the category of interests in land as well as to the Law of Contract" (p. 739).

14. This point was also not raised below. For my part I have grave doubts that the learned authors are in those instances using the phrase "interests in land" in the strict conveyancing sense in which it must be taken in the Ordinance, and it is to be noted, as Mr. Tang frankly and properly brought to our attention, that they do not include restrictive covenants at p. 575 where they list other interests which have been accepted by the courts as being "interests in land". Furthermore, even if the disposition, if it be one, fails by reason of the Ordinance, the plaintiff may for the moment fall back upon the concurrent and personal contract with the defendant.

15. Finally I should add that a ground of appeal that the whole proceedings were improperly constituted because of irregularity in the endorsement of the writ was not pursued   before us.

16. For the reasons I have attempted to explain I would for my part dismiss the appeal.

Power, J. A.:

17. I agree with my Lord the Vice President and I too would dismiss the appeal.

Penlington, J. A.:

18. I agree that this appeal should be dismissed but also not without hesitation as to the question of a serious issue to be tried. It seems to me that, particularly as the respondent is a firm of solicitors, it will not be easy for them to overcome the provisions of clause 8(1) of the tenancy agreement, even if they can show there is a collateral oral contract, which on their own evidence as it stands is clearly arguable. In Brikom Investments Ltd. v. Carr there was a pre-existing written contract that the landlords would not be liable for certain repairs and the Court or Appeal held that they could not rely on it because of subsequent oral assurances on which the tenants acted. That is not the case here. However as Lord Roskill said the court was applying an equitable doctrine which will depend on the circumstances of each case and we do not at this stage know exactly what they were. As Cons, V. P. has said we should only interfere if the judge was clearly wrong in the way he exercised his discretion and I also am not so convinced. I have no doubt that the balance of convenience lies with the respondent,

Sir Derek Cons, V. P.:

19. The appeal is therefore dismissed, and in handing down this judgment we make an order nisi that the respondent is to have its costs.