ARTCO PROPERTIES LTD. v. YAU CHUN WING

HCA 20703/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. A20703 OF 1998

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J U D G M E N T

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1. In this action, the plaintiff claims against the defendant injunctive relief and damages for activities carried out by the defendant at a property promotional sale exhibition hosted by the plaintiff.

The Background

2. The plaintiff is a company registered in Hong Kong and has been involved in the development project of a property known as "Monte Carlo Villas" ("the Villas") in Fa Do City, Guangzhou. By 2 sales and purchase contracts signed in May 1995, the defendant contracted to purchase 2 units in the Villas.

3. The vendor named under these contracts was one 花都市佳業房地産開發有限公司 (Fa Do City Kai Yip Real Estate Development Company Limited). Prior to the execution of these contracts, the defendant had signed 2 provisional sales and purchase contracts under which the plaintiff and Fa Do City Kai Yip Real Estate Development Company Limited were named as the joint vendors. It is the plaintiff's pleaded case that it is one of the developers of this housing project.

4. The purchase price had been fully paid by the defendant. Under the 2 contracts, the vendor was to deliver possession of the units to the defendant on or before 30 June 1996. It is common ground that possession was not delivered on the contracted day and was still not delivered at the material time of this action.

5. Between 28 and 30 November 1998, the plaintiff hosted a sale exhibition in respect of the Villas at the main lobby of Guangdong Hotel, Tsimshatsui. It is not in dispute that in the afternoon at around 3 p.m. on 29 November 1998, the defendant turned up at the exhibition hall. He was together with a Mr Leung Yip Ming ("Leung") and a Miss Ko ("Ko"), who were also purchasers of the Villas. There the three of them met with Mr Koo Loong Chuen, the plaintiff's director. The precise behaviour and activities of the defendant that afternoon are in issue. But it is common ground that the defendant subsequently made a report to the police and police attended the scene at about 4:15 p.m. Not long afterwards, the defendant, Leung and Ko left.

6. The plaintiff alleged that the defendant had acted in such a way that afternoon that it is calculated to cause disruption to the exhibition and interference with the sale activities. On this basis, the plaintiff commenced these proceedings on 3 December 1998, claiming damages to be assessed and an injunction restraining the defendant from "causing similar nuisance or disturbance or interference to the plaintiff" at similar promotional sales to be conducted in the future.

The Evidence

7. The plaintiff's director, Mr Koo Loong Chuen, and the defendant are the only witnesses called at the trial. Mr Leung Yip Ming, who was with the defendant at the material time, had made a witness statement, but was not available at the trial. The defendant testified that, shortly before the trial came on, Leung declined to attend to be a witness and gave an explanation which, if proved, might reflect adversely on the plaintiff. However, as Leung did not give evidence, the explanation he offered to the defendant is hearsay and no consideration can be given to it in assessing the evidence and issues in this trial.

8. The evidence of Mr Koo is briefly this. When he was having lunch in the afternoon of 29 November 1998, he received a telephone message, as a result of which he returned to the exhibition hall. On arrival, he saw the defendant, Leung and Ko sitting at a table at the centre of the hall. The defendant was shouting loudly : "The developer does not have the property to deliver to me, I request a refund." The defendant also shouted words to the effect of do not buy the unit(s). Mr Koo approached them and asked them to go to a conference room upstairs to view some photographs and video tape relating to the progress of the work on site. The three did not respond to the request and insisted to talk on the spot. Mr Koo then went upstairs to fetch the photographs. On returning to the hall, the defendant, Leung and Ko were outside the exhibition hall but near the entrance. The defendant waved his contract and said that the developer could not deliver possession and was cheating people. He also said not to buy the unit(s). Mr Koo then showed him some photographs of the project and explained the reason for the delay in the work progress. The defendant insisted on cancelling the contracts and having a refund. Eventually, the defendant, Leung and Ko agreed to and did go with Mr Koo upstairs to the conference room. Further discussions ensued there. Then a Mr Shum of the plaintiff came in and showed 2 leaflets to Mr Koo and the other three. The leaflets, purported to be issued by "a group of helpless Monte Carlo Villas owners", complained that the developers failed to deliver possession by the contracted date and also refused to refund the purchase price. Mr Koo said that upon seeing the leaflets, the defendant became excited and admitted having distributed them.

9. As for the defendant, his evidence is that after the three of them entered the exhibition hall, they asked to see Mr Koo. He had previously spoken to Mr Koo on the phone. He had also tried to meet Mr Koo at the plaintiff's office but without success, so he went to the exhibition in the belief that Mr Koo might be there. They sat waiting for a while, then Mr Koo came. The defendant requested for a reply as to when he could take delivery of his units. Leung and Ko joined in the request. Mr Koo offered to show them some photographs and said that he would inform him about the delivery date after the Chinese New Year. The defendant requested for a written reply. After some arguments, the three of them agreed to go to the conference room to look at the photographs. At the conference room, the defendant found that the photographs were unrelated to his units, so he renewed his request for a written reply on the delivery date. There were further arguments on this. Then Mr Shum entered the room with the leaflets referred to above and accused the defendant, Leung and Ko of distributing the leaflets in the street and causing disruption. He said he had already called the police and told Mr Koo not to let the three go. They all remained for about 10 minutes, but no police came. They became apprehensive and on Leung's suggestion, the defendant called the police. After the police came and took down the particulars, police escorted the three to leave the hotel.

10. Having listened to the evidence and observed them in the witness box, I am of the view that the defendant' evidence is to be preferred to that of Mr Koo's. I find the account given by Mr Koo inherently implausible and unnatural.

11. According to him, the plaintiff had about 15 staff on duty at the exhibition that day. While it may be that some had gone out for lunch or temporarily outside the exhibition hall, the majority would be present inside the exhibition hall to meet and receive the viewers. If indeed the defendant had shouted loudly the remark that developer was cheating and had told others not to make purchase, it is most unlikely that none of the plaintiff's staff would approach him or try to calm him down. There were only about 20 viewers inside the exhibition hall and the plaintiff's staff would therefore not be very busy. But on Mr Koo's evidence, the plaintiff's staff were contented not to be involved at all, and Mr Koo was the only person dealing with the three. This is even so before Mr Koo returned to the exhibition hall, for it is Mr Koo's evidence that when he entered the hall, the defendant, Leung and Ko were sitting by themselves at the table with the defendant shouting aloud. When the defendant persisted with such behaviour, it did not occur to either the staff or Mr Koo to seek assistance from the security officers of the hotel. Had the defendant shouted so loudly and acted so unpleasantly as to scare away the viewers, as suggested by Mr Koo, one would expect the security officers or the management of the hotel to be alerted and to come to render assistance or at least to make enquiries. Yet none of the kind happened.

12. Further Mr Koo was contented to leave this disruptive group of three at the exhibition hall while he went away to get the photographs. It is his evidence that he did not ask any of his colleagues to watch over or to oversee the situation. Although it was only for a few minutes, it was most unwise and risky to leave the defendant who had hitherto behaved unruly and his 2 companions unattended at the exhibition hall. Mr Koo impressed me as a careful, clever and sophisticated businessman. When being questioned in the witness box, he would not readily give or commit to an answer until he was sure of the question and the meaning of the words employed by counsel. I do not believe that an alert man like him would behave so casually or recklessly as to leave the unruly defendant and his friends unattended at the hall for any moment. It is to be remembered that Mr Koo repeatedly said in evidence that he was convinced that the defendant's visit to the exhibition hall was premeditated and a calculated move to attain his objective of a refund.

13. In my judgment, the fact that the defendant and his 2 companions had admittedly spent some 30 minutes or so at the exhibition hall and the conference room with Mr Koo alone, without the latter having to seek aid from the plaintiff's staff or the security officers of the hotel suggests that Mr Koo and his colleagues did not find the defendant's conduct and the activities of the three in any way unacceptable, unpleasant or intimidating. It is indicative of the defendant not having shouted any scandalous remark loudly nor behaved in the way described by Mr Koo.

14. Mr Koo said in evidence that the defendant was the only one shouting and causing disturbance. This is different from the pleaded case. In paragraph 6 of the Statement of Claim, it was pleaded that "the defendant in conjunction with 2 companions" caused disturbance and interference to the exhibition. One cannot help feeling that Mr Koo was trying to single out the defendant as the trouble maker so as to add flavour and lend weight to the plaintiff's claim against him.

15. As for the defendant, I find him a calm and straightforward witness. He was not agitated nor excited despite the repeated questioning and some stern remarks made by plaintiff's counsel during cross-examinations. He does not strike me as an insistent and aggressive person. He was cross-examined by plaintiff's counsel on one omission in his witness statement and on the content of the Defence he prepared while acting in person. He readily gave in and admitted he could not explain how the omission came about, without attempting to prevaricate or cover up the problem. He does not appear to be the sort of excited or unruly person as will put up the kind of behaviour mentioned in the evidence of Mr Koo.

16. In my view, the defendant was candid and fair in describing the events that afternoon. In examination-in-chief, he stated on both occasions that there were some arguments when Mr Koo would not commit himself on when possession could be delivered. He also did not shy away from the fact that he did object to looking at the photographs as he found that "unreal".

17. I do not find the defendant's disagreeing to the plaintiff not being the vendor named on the sale contract to be demonstrative of any evasiveness on his part. It cannot be overlooked that the plaintiff was indeed named as a vendor in the provisional sale and purchase contract, but that it was not named as a vendor in the formal sale and purchase contract. It is therefore not surprising if the defendant was confused over this.

18. It is submitted that the defendant had been untruthful over what Mr Shum had allegedly said inside the conference room on the basis that the defendant had not mentioned this in his Defence. It is true that the defendant had not stated in his Defence that Mr Shum mentioned he had called the police, but he had pleaded that Mr Shum asked not to let them go. I do not consider the omission to be fatal. If Mr Shum had not said the words mentioned by the defendant, it will be strange that the defendant had to call the police before leaving the hotel. On Mr Koo's account, the defendant was the one who was excited and there was nothing or no one to stop him and his group from leaving, had they wanted to. There is plainly no need to call the police, bearing in mind the defendant was allegedly the very one who was causing troubles.

19. All in all, I accept the defendant's account of the events that happened in the afternoon of 29 November 1998. I find as a fact that the defendant had not shouted words to the effect that the developer was cheating and that people should not make purchase.

20. I also find there is no evidence of the defendant having distributed the leaflets outside the hotel. Counsel for the plaintiff submitted that a reasonable inference can be drawn that these leaflets were distributed by the defendant. Although I accept that it is reasonable to say that the defendant might have the motive to do so and that there is no evidence of other dissatisfied purchasers present at the exhibition, I do not consider it justifiable to conclude that the only reasonable inference is that the defendant was responsible for these leaflets. It has to be remembered that Mr Koo accepted that there were several tens of dissatisfied purchasers by late 1998, a large proportion of them were supposed to take delivery in 1996.

21. The plaintiff has therefore failed to make out a case on the facts that the defendant had caused disturbance to the sale exhibition and/or had incited people not to purchase units of the Villas as alleged.

22. That would have been sufficient to dispose of the action. However, as there had been extensive submissions on the law and also for completeness sake, I wish also to comment on the legal aspect of this case.

The Law

23. The plaintiff's case on law is clearly fraught with many difficulties right from the outset

(1) The Pleadings

24. The plaintiff's cause of action appears at paragraph 7 of the Statement of Claim. It reads :

"The said acts of the Defendant referred to in paragraphs 5 and 6 of the statement of claim are interference by the Defendant with the Plaintiff's legitimate use and enjoyment of the hotel lobby for the said promotion sale maliciously intending to cause discomfort, disturbance, inconvenience, loss and damage to the Plaintiff.

Particulars of loss and damage

a) loss of business generally.

b) shortly before the disruption by the Defendant on 29th November 1998, the plaintiff was closed to signing a sales contract with one Mr. Chan Ka Wai over the sale of house no.8 of Mei Cui Jing for HK$2,120,600.00 and one Mr. Lai Yiu Fai over the sale of house no.3 at Ya Lan Jing for HK$568,600.00. As a direct result of the said nuisance/ disturbance/ interference, both the said Mr. Chan and Mr. Lai refused to sign the contract and left the said lobby without returning either subsequently or at all."

25. It is not easy to say from this paragraph and indeed the whole of the Statement of Claim as to what in fact is the cause of action relied upon by the plaintiff. The closest one can get is the tort of private nuisance, but even that is not without difficulties, as we shall see later.

26. In both his written opening and closing submissions, counsel for the plaintiff stated that the plaintiff's claim is for damages arising from nuisance and unlawful interference with the business of the plaintiff, and referred to paragraphs 6 and 7 of the Statement of Claim. Paragraph 7 had been set out above. Paragraph 6 is pleading the factual allegations that the defendant and his 2 companions created a nuisance by shouting scandalous remarks and disrupting negotiations and frustrating sales efforts taking place at the exhibition. It is evident that a cause of action in unlawful interference with business had not been pleaded nor borne out by the Statement of Claim. There is for instance no plea as to the unlawful act(s) relied upon.

27. Counsel for the plaintiff argued that there are sufficient background or material facts in the pleading for the court to base a judgment on unlawful interference with business, if the evidence so warrants. It is also said that a party is entitled to raise a point of law, even though it is not pleaded. I do not consider these submissions can assist the plaintiff.

28. It is trite law that a party cannot travel beyond the scope of its pleaded case. It is also the duty of a party to plead all the salient facts and to identify with clarity the cause(s) of action relied upon. This is to enable his opponent to know what case to meet and for the court to identify the issues to be adjudicated upon. While a point of law needs not be pleaded, a cause of action known to the law has to be pleaded with clarity. It will be frustrating the purposes of pleadings if a party can freely rely at trial on a cause of action which has not been pleaded in the statement of claim.

29. The plaintiff, although keen to rely on unlawful interference of business as a cause of action, has not sought to amend its Statement of Claim. That I suspect is in recognition of the difficulties surrounding an application to introduce a new cause of action at such late stage and the costs consequences, even if the application is to succeed. However, without amending the Statement of Claim, I am of the view that this plaintiff is not entitled to ask the Court to base a judgment on unlawful interference with business.

(2) Nuisance

30. The first hurdle which the plaintiff has to overcome is the right to sue. The long line of authorities running from Malone v. Laskey [1907] 2KB 141 establishes that in order to maintain an action in nuisance, the plaintiff must have a right or interest in the land.

31. In this case, the plaintiff pleaded in paragraph 4 of the Statement of Claim that between 28 and 30 November 1998, it was the licensee to use and possess that part of the hotel lobby for holding the exhibition. As counsel for the defendant pointed out, it is not good enough to be a mere licensee. The plaintiff to an action of nuisance, if it is a licensee, has to have exclusive possession : see Hunter & Others v. Canary Wharf Ltd [1997] 2 All ER 426, 438g.

32. Counsel for the plaintiff sought to rely on the English Court of Appeal case of Khorasandjian v. Bush [1993] 3 All ER 669 in contending that a mere licensee or an occupier can also have a right to sue. The Khorasandjian case had been expressly overruled by the House of Lords in Canary Wharf Ltd, for the reason that the decision was based on a misunderstanding of the rationale in an earlier case of Foster v. Warblington UDC [1906] 1 KB 648. In the judgment of the House of Lord (pp. 438b-c, 443g-j ), Foster v. Warblington UDC was decided on the basis that the plaintiff's occupation was such that he had exclusive right to possession and the Court of Appeal in the Khorasandjian case was therefore wrong to rely on it as authority for saying that "substantial occupation" is enough to found an action in private nuisance. Although the decision of the House of Lord is not binding on this Court, it is of high persuasive authority. For my part, I see no reason to depart from the decision of the House of Lord. I hold that it is incumbent upon the plaintiff to show that it enjoyed exclusive possession of the exhibition hall.

33. The evidence in this regard is extremely scanty. There is first of all the contract made between the plaintiff and the hotel for the use of, inter alia, the hotel lobby. It is silent on whether the plaintiff was given exclusive possession of the lobby by the hotel. The other relevant evidence comes from Mr Koo's evidence of the layout of the exhibition hall. According to him, part of the hotel lobby was partitioned by the exhibition boards to form an exhibition hall and the area of the hall was about 2000 feet. There was an entrance to the exhibition hall. It is however unclear from his description whether that was the only entrance and whether the exhibition hall was an enclosed area. It is also unclear as to whether the plaintiff had the use of that part of the lobby to the exclusion of the hotel. As the burden of proof is on the plaintiff to prove that it has exclusive possession, hence the right to sue, it must follow that the plaintiff has failed to discharge its burden, given the loose and vague evidence set out above.

34. Another essential element for the tort of nuisance is that the acts complained of must involve the defendant's use of his land : see Hussain & Another v. Lancaster City Council [1999] 4 All ER 125, 144d-g. In this case, even accepting the evidence of Mr Koo, the interference with the plaintiff's enjoyment of the hotel lobby is not occasioned by the defendant's use of his land. The case is thus outside the scope of the tort of private nuisance.

35. It follows from the above analysis that independent of the factual issue, the plaintiff's claim in nuisance is bound to fail in law.

(3) Relief

36. Even if the plaintiff can establish a right to sue and that this is a proper case for the tort of nuisance, there is serious problem with the relief which the plaintiff is seeking.

37. On the relief of injunction, the Statement of Claim had not pleaded that the defendant, unless restrained by an order of the court, would repeat the acts complained of. This is critical because there is no basis for granting an injunction if there is no likelihood of the defendant doing the offending act in future. Indeed the evidence shows that subsequent to 29 November 1998, the plaintiff had held similar sale promotion exhibition for the Villas. There is no evidence that the defendant had turned up at that exhibition and/or repeated the acts complained of. There is therefore no basis for granting an injunction whether in terms of the prayer in the Statement of Claim, part of which has been overtaken by events, or whether in some other modified form.

38. As for the remedy of damages, the evidence adduced at trial does not establish that the plaintiff had suffered loss and damages as a result of the acts complained of. Although Mr Koo said that some viewers left when the defendant shouted loudly and acted unpleasantly, there is no evidence that these viewers would have made purchases had they remained or remained longer. In respect of the 2 potential purchasers identified in paragraph 7(b) of the Statement of Claim, Mr Koo's evidence is that they were close to signing the sales contracts when he left for lunch, and he knew subsequently that the two of them ultimately had not signed any contract. I pause to say that it is strange that Mr Koo, as a director and person in charge of sales matter, would leave for lunch at a point when 2 potential customers he was personally dealing with were close to signing the contracts. But I need not dwell further on the point for the purpose of the present discussion. The plaintiff had pleaded that the 2 potential purchasers did not make any purchase as a result of the defendant's acts, but there is no admissible evidence to that effect at the trial. There is simply no evidence to link the fact that they did not sign any contract with what the defendant had allegedly done and said.

39. The plaintiff has plainly failed to make out the evidential basis for the claim of damages. Hence, even if the plaintiff were permitted to rely on unlawful interference with business as a cause of action in this trial, the plaintiff would still have failed to make out its claim because the tort of unlawful interference with business is only actionable upon proof of damages : Clerk & Lindsell on Torts (17th edition) para. 23-56.

40. Further, even if the plaintiff is able to establish that the loss of business or sales is due to the defendant's acts complained of, such loss is not properly recoverable as damages for the tort of nuisance. In the Canary Wharf Ltd case, supra, Lord Lloyd observed (at p.442b-e) that damages for nuisance are measured by the diminution in value of the land, or in the case of interference with quiet enjoyment, by loss of amenity value. The kind of loss complained by the plaintiff is economic loss in nature and in no way touches upon the value of the land or the enjoyment thereof.

Conclusion

41. For all the reasons set out above, the plaintiff's claim must be dismissed and I so order. I also make an order nisi that the plaintiff pays the defendant the costs of the action, to be taxed if not agreed; the order nisi to be made absolute after the expiration of 14 days from the date of this judgment.