PRIMA ENTERPRISE CORPORATION v. ANSON CONSTRUCTION CO LTD

HCA 820/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 820 OF 2004

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J U D G M E N T

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1. This is an application for an interim injunction. The plaintiff is the owner and developer of the site at No.42A, MacDonnell Road, Hong Kong, where a residential building is being constructed on the land. The defendant company is constructing the residential building in accordance with a contract between the plaintiff and the defendant.

2. The evidence before me establishes that there have been delays in the progress of the contract. There have been a number of letters addressed by the plaintiff to the defendant company raising concerns about the delays and stating that unless proper progress be made, the plaintiff will terminate the contract pursuant to the provisions of clause 25 of the contract.

3. On 11 March 2004, not being satisfied with progress on the contract, the plaintiff company, by letter from its architect, terminated the contract, expressly requiring the defendant to leave the site by 15 March 2004. The defendant has replied to that letter contending that the termination is wrongful. I am not required in these proceedings to determine whether or not the termination of the contract was wrongful.

4. The defendant has a right of action against the plaintiff if it considers that the termination of the contract is wrongful, and it may sue for damages as a result of the alleged wrongful termination of the contract. At the same time, the plaintiff, if it considers it has suffered any loss as a result of the alleged delays, may sue the defendant for those losses.

5. Since 15 March 2004, the defendant company has stopped work but it continues to occupy the site and has refused to leave thereby preventing the plaintiff from bringing other contractors onto site to carry on the work. The plaintiff now seeks an interim injunction requiring the defendant company to remove itself from the site.

6. This is a classic situation in which I am required to review the balance of convenience. There is no doubt that there is a serious question to be tried, regarding the plaintiff's claims against the defendant for trespass. There is also a serious question to be tried regarding the defendant's claim for unlawful termination of the contract.

7. The plaintiff says that damages are not an adequate remedy for the losses it suffers:

(1) because the defendant company is unlikely to be able to pay damages as it has very little capital and has already stopped work;

(2) that it is difficult to measure the plaintiff's loss by way of damages having regard to rapid fluctuation and property market prices;

(3) because the damages cannot properly compensate for the loss of enjoyment and use of the plaintiff's land.

On the other hand, it is argued that damages will be adequate compensation for the defendant should it ultimately be determined that determination of the contract was wrongful.

8. The plaintiff is the owner of the site which is free from encumbrances and it is a substantial company and is in a position to pay damages. Whether or not the termination of the contract was wrongful, the fact of the matter is that it has been terminated and the defendant no longer has any legitimate interest to remain on the site, thereby preventing the plaintiff from carrying out work on the site, even if there are sums outstanding by the plaintiff to the defendant.

9. Mr Chau, for the defendant company, comes to me today and says he needs an adjournment to instruct solicitor. He said he did not receive the documents until he received the fax at 4.30 pm yesterday afternoon, which I understand to have been a copy of the skeleton argument prepared by the plaintiff's solicitor.

10. The registered office of the defendant company, is a lot of land at Pat Heung, Yuen Long, in the New Territories. In accordance with the rules, a copy of all the papers were served to that address by ordinary post on 7 April 2004. If the defendant company elects to have a property in Pat Heung as its registered address, then it has to make proper arrangements to collect mail on a regular basis from that address.

11. At the same time on the 7 April, a copy of all of the papers were served on an address at Room 1501, Hollywood Plaza in Kowloon, which is the address given in the company annual return as the address of the secretary and both the directors of the company.

12. Mr Chau said that he did not go back to that address prior to the Easter break, and went to Taiwan over Easter, and accordingly has not received those papers. He must have known the litigation in this matter was imminent. There had been an exchange of correspondence between the plaintiff and the defendant companies and which the contract had been formally terminated. There is no doubt that the letter of termination was received because the defendant company has replied to it.

13. Mr Chau chooses to organize the company's affairs in such a way that he does not collect papers for the properly served on the company more than a week ago, then that is his responsibility and he must take consequences for that. I am not prepared to grant an adjournment.

14. The balance of convenience is a favour of an injunction, the injunction will be granted in the terms of the order sought, costs will be in the cause.

15. Mr Chau, an injunction is a formal order by the court, which required you to do what you are instructed to do in the order, or to desist from doing whatever you told to desist from doing. If you are or any of the officers of the company, or the company itself, are in breach of that order by failing to comply fully with its terms you would be in contempt of court.

16. If you are in contempt of to court, you are liable to be brought back before the court and may be committed either to prison or have fines or other penalties imposed on you. Do you understand? (Mr. Chau acknowledged that he understood the explanation of the consequences of breach of the order).

17. Your proper course now is to go and see your solicitors immediately, give them instructions and take whatever steps appropriate. First of all, to defend the proceedings brought against your company because this is only an interim order, and secondly to take whatever steps you need to take to issue a writ or counterclaim in these proceedings for damages for the alleged wrongful termination of the contract.