DORSHARE LTD v. SHUN PONG LTD

HCA1823/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1823 OF 2012

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JUDGMENT

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1. This is an application by the plaintiff for an interlocutory injunction against the defendant.

Background

2. The dispute between the parties concerns the access to a house in Sai Kung acquired by the plaintiff in September 2007 (“House”). The House is situated on Lot 628 in DD 238. It is said by the plaintiff that the House is surrounded by land belonging to the defendant (“Land”).  In October 2007, shortly after the House was acquired by the plaintiff, a metal mesh fence (“Fence”) was erected along the boundary of the Land thereby obstructing the access to the House.  It is the plaintiff’s case that the obstruction constituted an infringement of its right of way over part of the Land. 

3. It is not entirely accurate to say that the House is surrounded by the Land.  To understand the situation, one needs to consider the history of Lot 628.  Until October 1993, the land which is now Lot 628 was part of a larger piece of agricultural land known as Lot 374 RP in DD 238.  On 14 October 1993, there was a New Grant (“New Grant”) whereby the owner of Lot 374 RP surrendered it to the Government in exchange for a new grant over Lot 628 (which was carved out of Lot 374 RP) on which the owner was permitted to erect a building.  In other words, there was a surrender of Lot 374 RP in exchange for a smaller piece of land and a permission to build on it.  However, one of the consequences of the New Grant is that Lot 628 is surrounded by Government land on all sides. 

4. Further, even before the New Grant, the land to south-east of Lot 374 RP was (and is) Government land, and access over which could lead to a public road.  Hence, prior to the New Grant Lot 374 RP was not entirely surrounded by the Land.  However, the Government land to the south-east of the House is leased out under a short term tenancy, and a wall has been built on that piece of land.  As a result, there is no access over the Government land to the south-east of the House.  By reason of the Fence and the wall to the south-east, the House is completely inaccessible. 

5. Once the topography is understood, one can appreciate the defendant’s position that the access to the House should be a matter resolved by the plaintiff and the Government.  On the other hand, this is not an answer to the plaintiff’s claim for a right of way over part of the Land if that right exists.

Irreparable damage

6. The law on interlocutory injunction is clear and undisputed (see Hong Kong Civil Procedure 2013, vol 1, §29/1/9 & 29/1/11).  The plaintiff is coming to court for relief before establishing its case at a trial.  The court would not normally accede to such an application unless it is demonstrated that damages would be an inadequate compensation for the plaintiff, if it succeeded at the trial, for the loss caused by the refusal to grant an interlocutory injunction. 

7. I have a great deal of difficulty with the plaintiff’s case in this regard.  It appears from the photographs that the House is in fact no more than a superstructure.  It is incomplete and uninhabitable.  However, I have been taken to some aerial photographs by Mr Yim, who appeared for the plaintiff, and was told that the House was in a habitable state when it was acquired by the plaintiff in 2007.  Shortly after the acquisition, renovation work was carried out at the House which included demolition of the windows and it ceased to be habitable.  I am prepared to accept what has been said by Mr Yim, and it appears that the renovation was interrupted by the creation of the Fence in October 2007.  To be fair to the defendant, its uncontradicted evidence is that the Fence was erected because it was discovered that some of the vegetation on the Land had been destroyed and that the construction work at the House had spilled over to part of the Land. 

8. The condition of the House has remained largely static since 2007, ie, it remains uninhabitable. It appears that the plaintiff is a family company whose directors and shareholders are husband and wife.  The plaintiff’s evidence is that it is the wish of the directors that the House be used by their son, Mr S Van Damme.  Mr S Van Damme is now 24 years old and very much wants to have a place of his own.  A contractor has recently been engaged to renovate the House when part of the Fence was destroyed, according to the plaintiff, in the course of a typhoon.  However, the renovation did not get very far because the Fence has been repaired and there is no access to the House. 

9. The predicament of the plaintiff certainly deserves the sympathy of the court but this application must be dealt with according to the law.  Given that the House has been lying idle since 2007, at worst the refusal of an interlocutory injunction would delay the occupation of it by Mr S Van Damme.  I am unable to see how it can be said that damages cannot be an adequate compensation in these circumstances.

10. I am not attracted by Mr Yim’s submission that the House is deteriorating by reason of its exposure to the elements. Quite apart from the fact that there is no evidence to support the argument, the House has been so exposed for 5 years.  Further, I do not agree that damages would be difficult to assess.  Should the plaintiff succeed at the trial, it would be compensated for the delay in being able to occupy the House.  The court is not unfamiliar with such an exercise.  I also reject the submission that the House is unique to Mr S Van Damme.  He has never occupied it and I see no basis for the submission. 

11. The defendant will be in a position to pay damages to the plaintiff should it succeed in this action.  The Land is clearly of significant value. 

Delay

12. The absence of irreparable damage is a sufficient ground for dismissing this application.  However, there is also inordinate delay in the plaintiff’s application.  It is common ground that unexplained inordinate delay can be fatal to an application for interlocutory injunction.  However, Mr Lin, who appeared for the defendant, disagrees with Mr Yim on whether prejudice caused by the delay will have to be shown by the defendant.  I turn to examine the law in this regard.

13. Based on the authorities cited to me, I believe that there are four reasons why delay can be fatal to an application of the present nature.  Firstly, delay reflects the lack of irreparable damage —

In King Fung Vacuum Ltd v Toto Toys Ltd, CA,[2006] 2 HKLRD 785, §20, it was said:

“ There has traditionally been a strong requirement when interlocutory injunctions have been sought, that the plaintiff must show that it has acted promptly and without delay. Promptly in the circumstances of interlocutory injunctions has been commonly understood to be a period of six weeks or so of unexplained delay and three months with an explanation given for the delay in making application for an injunction. Since the American Cyanamid decision the importance of irreparable damage in an application for an interlocutory injunction is paramount. If there is no irreparable damage demonstrated then the need for an interlocutory injunction has not been shown. This is important because of the approach that the courts take to interlocutory injunctions. They are not the trial of the action and the court is concerned with whether irreparable damage will occur before a trial can take place. It stands to reason that if a party is prepared to allow matters to proceed and takes no action with respect to matters which have been extant for lengthy periods, it lies ill in their mouth to say that there is likely to be irreparable damage and that is the case here.”

In Wong Chung Ming Development Fund Co Ltd v Profit Surplus Ltd, CA, [2009] 3 HKC 19, §30, after referring to King Fung Vacuum Ltd, it was said:

“ That statement is a rule of thumb that has been used as a guide for many years. As Oliver J, as he then was, said in Radley Gowns Ltd v Costas Spyrou (1975) FSR 455 at page 469, the court does not countenance a ‘leisurely stroll to the court door’ if a party seeks an interlocutory injunction. The question of delay is relevant when considering the question of irreparable damage because a party seeking an injunction is unlikely to stand by for any period of time if the party against whom the injunction is sought is truly causing serious and irreparable damage. Delay in seeking relief may also cause prejudice to a party against whom the injunction is sought because that party may have altered its position in the intervening period and be prejudiced by reason of the delay.”

14. Secondly, as indicated in the above passage from Wong Chung Ming Development Fund Co Ltd, delay may cause prejudice to the person who will be affected by the injunction. 

15. Thirdly, delay can render it unreasonable or unjust to grant an interlocutory injunction.  In Re Wako Giken (HK) Co Ltd, CFI, [2010] 4 HKLRD 121, §24-5, it was said:

“24.  I of course accept that applications for interlocutory injunctions should be made promptly and that there are authorities that suggest that mere delay can be fatal to an application, but as Spry observes in The Principles of Equitable Remedies (8^th ed., 2010) p. 488, ‘Statements such as these, however, are in several respects misleading and do not reflect the actual practice of the courts of equity.’  In my view, the correct approach is summarised by Eichelbaum J in Monsanto Co v Stauffer Chemical Co (NZ) [1984] FSR 599, 571:

Further, and without wishing to detract from the proposition that equitable relief needs to be sought promptly, it is not sufficient for a defendant to show that the applicant has delayed unreasonably.  It must be shown that because of that delay, it would be unreasonable to grant the remedy; that it has become practically unjust to do so.  As Megarry J said in: Legg v Inner London Education Authority [1972] 1 W.L.R. 1245:

What seems to me important is not so much the length of the delay per se, but whether the delay has in some ways made it unjust to grant the injunction claimed.  (pp. 1259-1260).

   And see Lindsay Petroleum Co v Hurd (1873-1874) LR 5 PC 221, 240 and Spry, Equitable Remedies, (2^nd ed.) pp. 405, 454-455.

25.  I do not think that because of the delay in bringing this application, it would be unreasonable or unjust to grant the order sought by the petitioners.”

16. Finally, in my view a bad case of unexplained inordinate delay can constitute an abuse of process.  It is a basic requirement for an interlocutory injunction application that the applicant must act with due expedition.  It stands to reason that a serious failure in this regard can constitute an abuse of process.  In International Connex Holdings Pte Ltd v Wealth Resources Enterprises Ltd, CFI, [2006] 3 HKC 601, §21-22, it was said:

“21. 4½ years’ delay in an application for interlocutory injunction is unheard of , at least so far as I am concerned. The case could have gone all the way from the Court of First Instance to the Court of Final Appeal in 4½ years. Irreparable damage did not arise simply because the plaintiff had just started proceedings against the defendant in Singapore and had seen fit to make this thoroughly unmeritorious application.

22.  On this ground alone, the plaintiff’s application must be dismissed.”

17. The plaintiff’s cause of action must have arisen by October 2007 when the Fence was erected.  Even if this court ignores the period of inaction between 2007 and 2010 when, on the plaintiff’s evidence, it was trying to negotiate an amicable solution with the defendant, the delay since 2010 is both inordinate and unexplained.  I have not overlooked the plaintiff’s evidence that it was ignorant of its rights.  Ignorance of the law is not an explanation normally accepted by the court. 

18. The delay in this case certainly serves to fortify the lack of irreparable damage.  With respect, the two years of unexplained delay renders this application an abuse of process.  The issue of prejudice to the defendant does not arise.  If it be necessary, I would have no hesitation in rejecting this application on the ground of delay.

19. For these reasons, this application is dismissed with costs to the defendant to be taxed if not agreed.  The circumstances of this case clearly call for a speedy trial and I so order.