SUN CROWN TRADING LTD v. HOLYROOD LTD

FAMV No 27 of 2014

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 27 OF 2014 (CIVIL)

(ON APPLICATION FOR LEAVE TO APPEAL

FROM CACV NO 64 OF 2012)

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REASONS FOR DETERMINATION

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Mr Justice Tang PJ (Delivering the reasons of the Appeal Committee):

1.  At the conclusion of the submissions of Mr Yu, who appeared for the   applicant, we dismissed the application for leave to appeal.  These are our reasons.

2.  We will state the facts, stripped down to the bare essentials necessary for the purpose of this determination.

3.  The respondents were the purchasers, each of one flat in the residential development called “The Oasis” at 8-12 Peak Road.  Under their respective sale and purchase agreement with the applicant, who was the developer, the respondents were obliged to complete their purchase within a stated time after the issue of the Certificate of Compliance. However, as was found by the learned trial judge, the late Deputy High Court Judge Carlson, because the applicant was in financial difficulties during the construction of the Oasis, it procured the builders to finish enough of the building works to secure the issue of the Certificate of Compliance, and to defer other works until after completion by the purchasers so that the applicant could use the purchase money received to finish the outstanding works.  The outstanding works were extensive and they were carried out after the respondents were given vacant possession of their flats.  They then brought proceedings against the applicant, inter alia, for damages for nuisance arising from such works claiming that the works constituted nuisance.  They also claimed that they were unable to let the flats during the works period.  The judge found in their favour and awarded damages which included loss of the full rental income for the respective period during which they claimed they were unable to let their flats.  The applicant’s appeal, where relevant to this application, to the Court of Appeal was dismissed.  Leave to appeal was refused by the Court of Appeal.

4.  Before us, leave to appeal was sought first on the basis that questions of great general or public importance were involved in the intended appeals.  Secondly, on the “or otherwise” ground, because there was a miscarriage of justice.

5.  The questions stated in the Application for Leave to Appeal are:

(a) whether in determining whether there is actionable nuisance and in assessing damages for nuisance allegedly caused by building and construction works, the Court must distinguish between operations which the Defendant was legitimately entitled to carry out (and the loss caused thereby), and operations which amounted to actionable nuisance (and the loss caused thereby) by reference to the manner of carrying out the works;

(b) whether damages for nuisance by interference with a neighbour’s quiet enjoyment of land should be assessed by diminution in rental value or total loss of rental income where the property has not been let during the period of interference despite the exercise of reasonable endeavours by the Plaintiffs.

6.  The first question raised a well settled point, namely that in assessing damages for nuisance allegedly caused by building and construction works, the court must distinguish between works which the defendant was legitimately entitled to carry out (permissible works) and works which amounted to actionable nuisance (impermissible works) and award damages in respect of the impermissible works only.  Andreae v Selfridge & Co Ltd [1938] Ch 1 provides a clear exposition of this principle in the judgment of Sir Wilfred Greene MR.

7.  The applicant’s real complaint was not one of law or principle but of the decision on the facts.  But here, the point does not assist the applicant.  The pleadings showed that the defence at trial was that all the works complained were permissible works, whereas the respondents’ claimed that they were impermissible.  It was not the defence that some of the works complained of were permissible and some not or that the learned judge had failed to distinguished between them.  Moreover, the trial judge held, and his finding was confirmed by the Court of Appeal, that the works complained of constituted actionable nuisance.  In other words, they were all impermissible and damages were awarded on that basis.  So the applicant is also faced with concurrent findings of fact. 

8.  The second question is not arguable given the learned judge’s clear finding that it was the works complained of “45 … that made it impossible for the plaintiffs to find a tenant for their flats”. This was again a complaint on the facts rather than any principle of law or some other point of great, general or public importance.  It was submitted at the hearing that the essential complaint is that the trial judge had not taken into account the state of the rental market.

9.  Mr Yu submitted that since the evidence of the parties’ valuers assessed loss of amenity at between 10% and 20% of the rental value, damages should be limited to that range accordingly.  However, Mr Yu accepted, as he must, that the learned judge was not bound to accept the valuation.  The learned judge concluded that because of the nuisance the flats were unlettable during the relevant periods, so there were a total loss of rental income during the relevant periods.  This conclusion was reached after an extensive analysis of the facts.

10.  Leave was sought on the “or otherwise’ ground on the basis there was a miscarriage of justice. Apart from relying on the submissions dealt with above, we were told that there are two pending actions against the applicant and the applicant’s conduct complained in these proceedings are common place in Hong Kong.  These are not reasons for leave to appeal, and there is no miscarriage of justice.

11.  For the above reasons, we dismissed the applications for leave to appeal.

Costs

12.  Mr Edward Chan SC for the respondents asked for costs on an indemnity basis.  We make an order nisi that the applicant pays the respondents’ costs on an indemnity basis.  Subject to further submissions, our present view is that the application was so obviously hopeless that it should not have been made at all.  If the applicant wishes to contend for a different order it should do so in writing within 14 days of today, in which event, the respondents may reply in writing within 7 days thereafter.  Otherwise, the order will become absolute.