CITYABILITY LTD v. TREASURE SPOT INVESTMENTS LTD AND ANOTHER

HCA 2574/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2574 OF 2007

----------------------

----------------------

----------------------

J U D G M E N T

----------------------

1.  This is an application inter partes for an interlocutory injunction brought by the plaintiff in exercise of its rights as owner of the dominant tenement to have reinstated and preserved a pedestrian right of way that the licensee (the 2^nd defendant) of the owner of the servient tenement (the 1^st defendant) had, with its landlord’s leave, obstructed.  The application is opposed, though the obstruction, a jeep, was removed following a mandatory order made ex parte, which runs until determination of this application.  There is also before me an application by both defendants to set aside the ex parte order upon the grounds of material non-disclosure.

History

2.  The plaintiff (Cityability) is the owner of a building situated at 88 Yee Wo Street Causeway Bay which are the premises comprising the Regal Hong Kong Hotel.  The 1^st defendant (Treasure Spot) is the owner of the building next door, at 68 Yee Wo Street.  That is known as Paliburg Plaza.

3.  The adjoining buildings are on the South side of Yee Wo Street which runs more or less East and West.  They back on to and are on the North side of Irving Street. 

4.  At one stage both buildings were under common ownership; a legacy of that is that they are connected at ground and first floor levels and there are common walkways and passages on these levels in both buildings, with mutual rights of way granted by each in favour of the other, whose terms I shall deal with in more detail presently.

5.  The main entrance to the Hotel is by means of a slip road from Irving Street.  However, there is more convenient alternative access for pedestrians from both Yee Wo and Irving Streets, through entrances at ground floor level into Paliburg Plaza, thence by means of a shared right of way to the Hotel.

6.  Of particular moment to this action is the entrance from Yee Wo Street.  To gain access to the Hotel from this point one enters from the street by double doors which lead into a forecourt of generous dimensions.  After a few metres one turns left 90^o into a passageway 3.7 metres wide.  This takes one directly towards double doors, into the Hotel, thence to the Hotel’s lobby.

7.  On 6 December 2007 (which hereafter I shall call for convenience “the material date”) the 2^nd defendant (G.O.D. Retail) was in possession of part of the ground, and the 1^st and 2^nd floors of Paliburg Plaza, by virtue of a licence from Treasure Spot for the period 1 July 2007 to 30 April 2008. 

8.  The licence records that possession was subject to the rights of way in favour of Cityability’s invitees. 

9.  The premises were handed over in a “bare shell” condition.  The licence also anticipates on its expiry a lease or tenancy of the same areas between the parties. 

10.  It is apparent that G.O.D. Retail intended and has used the 10 months of licence period to fit out the premises into shops within a mall, and this in a particular upmarket, trendy and otherwise distinctive fashion. 

11.  I gather this much from an affidavit filed in this application by one Benjamin Lau who is the chief operating officer of G.O.D. Retail.  He deposed:

“5. The business operation of the 2^nd Defendant at the subject premises is a life-style retail mall on the Ground, 1^st and 2^nd Floors.  Fashion, leisure and catering services will be available.  The tone of the mall will be young and trendy.  The concept for the ground floor was to make it a focal point of Causeway Bay with a view to attracting more pedestrian traffic from the neighbouring streets.”

12.  No doubt it was this avant-garde approach to the proposed theatre of the mall that gave rise to what for those managing the affairs on site of Cityability was a startling and surprising development on the material date, a Thursday, and the application ex parte by Cityability for a mandatory injunction.

13.  I come to that next.

The Jeep Arrives

14.  There had been no discussion with, much less any forewarning to, those representing the interests of Cityability.

15.  Sometime during the evening of that day, which was a Thursday, there appeared on the ground floor of Paliburg Plaza a jeep, placed there by representatives of G.O.D. Retail.

16.  Its precise location is material and I shall do my best to describe that.  It straddled the corner between the forecourt inside the entrance from Yee Wo Street and the passageway leading off to the left and towards the hotel’s internal entrance.  Thus it was occupying that part of Paliburg Plaza over which Cityability and its invitees (in particular guests of the Hotel) have a right of way.  Placed thus, the front half of the jeep imposed itself over about a third of the forecourt, and the back half took up about a half of the entrance to the passage to the Hotel.

17.  The practical effect of this was that Hotel guests and others wanting to make their way to the Hotel lobby would on entry from Yee Wo Street have had to walk around the front and then rear end of the jeep along a route restricted in width by its presence.

18.  Photographs taken whilst it was in situ show it to have been brightly decorated and promoting G.O.D. Retail’s logo “Goods of Desire”.  It has the look about it of a jeepney, a colourful, common means of public transport in Manila.

19.  It was cordoned off by ropes, thus taking up a bit more space than just the jeep itself.  As it turned out, the cordon was to allow the decorative painting to be completed and was a temporary restriction.  It is pertinent to note from the photographs that G.O.D. Retail had also constructed girders hanging from the ceiling of the mall immediately above where the jeep was parked, prospectively to carry theatrical lights; an aspect to which I shall return.

20.  Those representing the interests of Cityability were immediately concerned about this unexpected intrusion.  They included one Donald Tung, a director of an affiliated company which is the agent of Cityability in these proceedings.

21.  Noting at once that the jeep was partially blocking the common passageways, and that it remained overnight, he first ascertained that the intention was that it was to be a permanent fixture, and then caused Cityability’s solicitors to write to both defendants and the building’s managers, complaining that the jeep was an obstruction and in breach of the grant of right of way over the passageways.  The letters were dated 7 December, the Friday, calling for its removal by 5 p.m. on Saturday 8 December.  A reminder was sent on 10 December to G.O.D. Retail.  By 12 December there had been no response from anybody, and the jeep remained where it had been parked six days before.

The Ex Parte Application

22.  With no response to the letters of complaint forthcoming, and Cityability none the wiser as to why the jeep had arrived and what if any further activity, temporary or permanent, was envisaged, Cityability’s solicitors on 12 December issued an ex parte application on notice calling for the removal forthwith of the jeep which was said to be substantially restricting the right of way granted to Cityability.

23.  Mr Tung made an affidavit in support of the application, exhibiting the Deed of Covenant and Grant of Right of Way and Easement and Management Agreement (the DCMA) which provided for the rights of way allegedly interrupted.

24.  He complained that Hotel guests using the right of way to enter or depart from the Hotel at the Yee Wo entrance had their way partially blocked by the jeep, and that this had continued to the date of the application despite letters of complaint, which were ignored.

25.  Cityability gave the usual undertaking in damages and the order was made the same day (12 December 2007) to run pending determination of the inter partes summons.

26.  The jeep was removed following service of the order on 13 December 2007.

The Case for the Lifting of the Injunction

27.  That came in the form of an affidavit made by Benjamin Lau, of G.O.D. Retail. 

28.  He deposed that the colourful jeep was an important piece of artwork having a high appeal to young shoppers in the mall and was to be an integral feature of the young and trendy tone of the mall.  It was intended that the flat top of the jeep would accommodate a disc jockey playing music from time to time as part of the attraction.  It is easy to assume that the theatrical lights above would be used for visual effect at the time.

29.  Mr Lau deposed that the interests of Hotel guests and others using the passages affected were considered and that much thought was put into just where the jeep should be placed to allow pedestrians to walk around it.  He deposed:

“I verily believe none of the visitors who use the passages to the hotel via the mall with our new design and layout would have suffered any inconvenience; on the contrary I believe they would enjoy the experience more than they would have done prior to the works by the 2^nd Defendant.  Before that, the mall was essentially a deserted shopping mall with no decoration but empty shop spaces.”

30.  Also deposing in opposition to the injunction was Allan Lee, a Senior Manager of the authorised representative of Treasure Spot.  He focused on the terms of the DCMA and the particular clauses therein by which the mutual rights of way over parts of both buildings in favour of the respective dominant tenements were created.

31.  He noted that these terms are open to an interpretation to the effect that the defendants in placing the jeep within the affected area had not breached the DCMA and that the jeep should be allowed to return to the mall.

32.  He also noted that the parties are already involved in litigation in which each complains of the others breach of the respective rights of the parties concerning passages on the first floor of 68, Yee Wo Street and access to the carpark at 68 Yee Wo Street. 

33.  He noted that the kernel of the litigation is that the parties are at odds in the interpretation of the relevant DCMA terms.

The Response

34.  This came from an affidavit in reply by Donald Tung. 

35.  He deposed that the breach of the relevant DCMA terms was obvious; there was a jeep placed on the right of way which amounted to a significant obstruction.  It was intended to be permanent.  Now it is known that it is to function as a music playing platform to accommodate a disc jockey.  If as G.O.D. Retail predicts it will become a focal point and a popular attraction, inevitably there will be crowds which will exacerbate the blocking of the right of way.

36.  The terms of the DCMA do not permit of this conduct.  The dispute is not about the interpretation of those terms.

37.  Reference to the other pending litigation is interesting, but irrelevant.

A Proposed Amendment

38.  Before dealing with the dispute, it is appropriate to mention that by application lately filed, Cityability applied to amend the inter partes summons.

39.  In original form it was as per the ex parte application which became an order calling for the removal of the jeep; thus a mandatory order.  The proposed amendment is to recognize that the jeep has been removed; that a more appropriate order for the court’s consideration should be to restrain the return of the jeep; thus a prohibitory order.

40.  An objection has been raised that this will have the effect of making Cityability’s task of establishing the need for an injunction easier because the burden of proving the need for a prohibitory injunction is generally less onerous than that required for a mandatory injunction.

41.  I shall return to deal with this.  In the meatime, pertinent terms of the DCMA demand scrutiny.

The DCMA

42.  Clause 3 is headed “Easements Rights and Privileges”.

43.  Pertinent to this action is clause 3(4), by which Treasure Spot grants to Cityability the following rights of way:

“(4) full right and liberty for Cityability, its successors, assigns, agents, servants, visitors, customers, tenants and licensees (in common with all other persons having the like right) to go, pass and repass over and along the passages as shown coloured pink hatched black on the Floor Plans annexed to this Deed for all purposes connected with the proper use and enjoyment of Regal HongKong Hotel subject to the right of [Treasure Spot] to change, modify or otherwise re-arrange such passages provided that in the exercise of this right [Treasure Spot] shall not materially interfere with the proper use and enjoyment of Regal HongKong Hotel.”

44.  The pink hatched black areas include the passageways and forecourt leading from the pedestrian entrances at Yee Wo and Irving Streets into Paliburg Plaza that lead towards and into the Hotel.

45.  Clause 5 is headed “Common Areas and Common Facilities”.  Clauses 5(1) and (3) are apposite:

“5. Each of [Treasure Spot] and Cityability covenants with the other party that :-

(1)   The Common Areas and the Common Facilities shall be jointly used and enjoyed by the parties hereto and their respective successors, assigns, agents, servants, visitors, customers, tenants and licensees for all purposes connected with the proper use and enjoyment of such part of the Building owned by such party.

…

(3)   For the purpose of sub-clause (1) above, it is hereby agreed as follows :-

(a)   [Treasure Spot] shall at all material times keep and maintain such of the passages (which for identification purposes only) as shown coloured pink hatched black on the Floor Plans annexed hereto as reasonably free and unobstructed access to and from the Common Areas and the Common Facilities.

…

(c)   Subject always as aforesaid, each party hereto shall have the right to change, modify or otherwise re-arrange any of the said passages which are on or at such part or the Building owned by it.

The Issues

46.  These are for trial. 

47.  Given the dimensions of the jeep, its prospective location and the use to which it will be put, will that amount to an obstruction and be in breach of clauses 3(4) and 5(1) and (3)(a) of the DCMA?

48.  Alternatively, is Treasure Spot entitled to authorize the existence and location of the jeep under a re-arrangement of the passages over which it has granted the right of way, in terms of clause 3(4) and 5(3)(c) of the DCMA?

The Legal Principles

49.  There is a distinction between the rights of an owner of land who complains of trespass over that land and the grantee of a right of way who complains of interference with his enjoyment of that right of way.

50.  In Lea Tai Properties v Inc Owners of Leapoint [1996] 1 HKC 193, a Court of Appeal case, Godfrey JA noted that in the ordinary case an owner of property who complains of a trespass is entitled almost as a matter of course to an injunction to restrain the continuance of the trespass.  Then he said at p.198:

“However, where the case is one of interference with an easement, the position is somewhat different.  There, the owner of the dominant tenement has no absolute right to use each and every portion of the right of way.  He is entitled to complain only of substantial interference with that right by the owner of the servient tenement.  The owner of the servient tenement is the owner of the land and is accordingly entitled to use it for whatever purposes he likes, so long as he does not substantially interfere with the use of the way by the owner of the dominant tenement.”

51.  In West & Sharp 79 P&CR 327, an English Court of Appeal case resolved in 1999, Mummery LJ said at p.332:

“The principles governing infringement of easements

Not every interference with an easement, such as a right of way, is actionable.  There must be a substantial interference with the enjoyment of it.  There is no actionable interference with a right of way if it can be substantially and practically exercised as conveniently after as before the occurrence of the alleged obstruction.  Thus, the grant of a right of way in law in respect of every part of a defined area does not involve the proposition that the grantee can in fact object to anything done on any part of the area which would obstruct passage over that part.  He can only object to such activities, including obstruction, as substantially interfere with the exercise of the defined right as for the time being is reasonably required by him.  Authority for that is to be found in the judgment of Russell L.J. in Keefe v. Amor [1965] 1 Q.B.334 at 347.  As Scott J. held in Celsteel Ltd v. Alton House Ltd [1985] 1 W.L.R. 204 at 217:

‘There emerge from the three cases I have cited two criteria relevant to the question whether a particular interference with a right of way is actionable.  The interference will be actionable if it is substantial.  And it will not be substantial if it does not interfere with the reasonable use of the right of way.”

52.  B&Q v Liverpool and Lanshire Props 81 P&CR 246 was also a case on point.  Suffice for me to quote from the headnote:

“… The authorities established that (i) the test of an actionable interference was not whether what the grantee was left with was reasonable, but whether his insistence on being able to continue the use of the whole of what he contracted for was reasonable; (ii) it was not open to the grantor to deprive the grantee of his preferred modus operandi and then argue that someone else would prefer to do things differently, unless the grantee’s preference was unreasonable or perverse; and (iii) if the grantee had contracted for the ‘relative luxury’ of an ample right, he was not to be deprived of that right in the absence of an explicit reservation of a right to build on it merely because it was a relative luxury and the reduced, non-ample right would be all that was reasonably required.  The test was one of convenience and not necessity or reasonable necessity.  Provided that what the grantee was insisting on was not unreasonable, the question was: can the right of way be substantially and practically exercised as conveniently as before?”

The Argument Opposing the Grant

53.  Ms Ismail submitted that by application of the legal principles, the presence of the jeep having regard to its size and the overall circumstances would not materially impose on the right of access by invitees to the hotel.  The dimensions and the overall size of the location having been measured and recorded prior to its removal, at the narrowest point the access is still two metres wide.  This is no less than the width of other rights of way elsewhere in the building, and no less than the width of the internal entrance into the Hotel by means of the double doors constructed by the Hotel.  At worst, the guests coming in from Yee Wo Street would have to walk a few extra steps to negotiate their way around the jeep.  There would be thus no breach of Treasure Spot’s obligation to keep the passageway “reasonably free and unobstructed”. 

54.  In any event, Treasure Spot is free to change, modify and rearrange the passages in question.  The placement of the jeep is in effect a rearrangement of the dimensions of the passage; again there would be no breach by its reappearance because it would not “materially interfere with the proper use and enjoyment of Regal Hong Kong Hotel”.

55.  Ms Ismail concluded that there is no real prospect of Cityability establishing substantial interference with its right of way and the application should fail.

Matters for Consideration

56.  It behoves me to set about the steps to be taken by a court giving consideration to the merits of an interim  injunction as set out in the case American Cyanamid Co. v Ethicon [1975] AC 396.

57.  First, is there a serious question to be tried? 

58.  The answer is ‘Yes’.  I say that without hesitation, whilst paying heed to the arguments mounted by Ms Ismail that Cityability’s protest is defeated by a proper interpretation of the construction of the DCMA and the issue of reasonableness.

59.  It seems to me there is scope for the proposition that the partial blocking of a throughway which disturbs the natural pathway from A through B to C may be enough to amount to an obstruction.  That there is at the narrowest point still a width of 2 metres is a factor for consideration, but it is not determinative.  That the jeep is intended to be the focal point of a “light and sound” show from time to time thus to attract onlookers surrounding it is also a material factor, for that may have the effect of aggravating the obstruction.

60.  That Treasure Spot has the right to modify the passageways over which there is the grant of right of way does not change things.

61.  There is nothing to prevent the defence from running this proposition at trial.  But to my mind it does violence to the ordinary language of the DCMA to promote the proposition that the placement of a jeep on a passageway inside a building intended for pedestrians to pass and repass along it, is other than to put something of significant size into that passageway.  That prima facie is an obstruction; I do not see how it can constitute a rearrangement of the passageway.

62.  That there is a history of disputes between the primary parties to this litigation is not something I need to be concerned with.  The other proceedings must stand and fall on their own facts and circumstances.  How they are argued, what is the evidence put forward and whatever is the outcome are quite irrelevant to these proceedings.

63.  Depending upon the outcome after trial, could the successful party be compensated in damages, if the interim injunction is granted, or not, as the case may be?

64.  It seems to me that if Cityability achieves a permanent injunction after trial but is denied the protection of an interim injunction meantime, the harm associated with the presence of the jeep for the purpose intended, whilst significant, would be almost impossible to quantify.  Would a reduction in Hotel takings signify a downturn in popularity, occasioned by the obstruction outside the entrance?  Perhaps so; but it would be very difficult to prove.

65.  Similarly, if the defence is successful, the financial loss incurred by there being no jeep and no show in the interim would be hard to establish.

66.  So, where does the balance of convenience lie?

67.  It seems to me and I so find that the answer is straightforward.  The status quo, as it presently is, should prevail.

68.  G.O.D. Retail’s plans to liven up the mall, making it trendy and noisy and a focal point for the young, must be secondary to their main aim which is to have the shops completed and rented out and trading.  There is really no disadvantage to a delay in implementing what is essentially a subsidiary feature.  On the other hand, one could foresee immediate difficulties emerging for Cityability and its invitees if in the meantime the jeep is returned, particularly if the theatre proposed proves to be as successful as is hoped for.

Mandatory or Prohibitory?

69.  In the circumstances of this case it makes no difference to the outcome.  The concern of the defence that converting the application to one for a prohibitory injunction will lessen the burden on Cityability to prove its case is really illusory.  There are cases where it may be necessary for the plaintiff to make out its case to a higher standard of proof for a mandatory injunction.  That was so in the Court of Appeal case TKI Limited v New Happy Limited [1995] 1 HKC 551.

70.  But that must depend upon the circumstances prevailing.  Mandatory denotes positive activity, the erection or destruction of something, the passing over of property, or such other conduct which may make a reversal to the status quo difficult or more expensive or inconvenient or whatever.

71.  In this case the jeep has been taken away already.  It is as I understand parked somewhere, ready to re-emerge if and when the outcome allows.  The sensible course is to allow the amendment so that Cityability can seek an order prohibiting this from happening.

Material Non-Disclosure

72.  Ms Ismail listed ten matters which she says the judge dealing with the application ex parte did not have drawn to his attention, which amounted to material non-disclosure.

73.  Five of these relate to ongoing, unresolved disputes between the protagonists, including details of other proceedings on foot.  The judge should have been apprised of these and of Cityability’s conduct which has been to obstruct passageways even as it complains about what has given rise to this action.

74.  I have already stated that these have no bearing on the issues that are alive in this action.  There was no need to bring these to the attention of the judge.

75.  Three more go to the minimum width of available space being 2 metres, no less than the width of the Hotel’s entrance, greater than other rights of way elsewhere in the building, and misrepresented as being less than that at the hearing.

76.  I do not find this non-disclosure to be material.  That there may be narrower passages elsewhere is neither here nor there.  Nor is the width of the Hotel entrance.  And the dimensions disclosed at the ex parte hearing were less because there was at the time a rope cordon around the jeep.  Those representing Cityability received no response to the correspondence that preceded the hearing, and had not been told that the cordon was temporary.

77.  One concerned the qualifications to an unfettered right of way as set out in the DMCA.  In respect of this the judge had the DMCA before him.  And the written submissions he would have read spelt out clause 3(4).  I do not believe it is an omission not to point out that the presence of the jeep might conceivably be permitted as a rearrangement of the relevant passageways.

78.  Finally was that the judge had not been referred to Treasure Spot’s proprietary right in submissions as to the adequacy of damages.

79.  There is, as I find nothing to this point; further, no material non-disclosure in the pursuit of the ex parte order that came to be granted.

The Result

80.  The plaintiff has leave to amend its summons with costs to the defendants in any event.  I make the orders at 2A and 4A therein.

81.  Costs are nisi.

82.  The plaintiff’s costs including those reserved shall be in the cause.