XCHRX WELL PACIFIC DEVELOPMENT LTD. AND OTHERS v. YUEN CHAK CONSTRUCTION CO. LTD.

1999, No. CT 70

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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JUDGMENT

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1. I have before me an application by the plaintiffs for an interim mandatory injunction ordering the defendant to vacate the plaintiffs' land.

2. The plaintiffs are the owners of land in Causeway Bay. They are, or were, in the process of developing this land. Po Sun Construction & Engineering Limited (Po Sun) was employed by the plaintiffs to demolish the existing buildings on the land. The plaintiffs then contracted with Po Sun to carry out the piling, substructure and superstructure works. Po Sun subcontracted the piling, piling cap and excavation works to the defendant. There is some confusion here because, in subcontracting the piling work to the defendant, Po Sun described itself as the "employer" and the defendant as the "main contractor". But this matters little because it must have been clear to the defendant that Po Sun was the main contractor for the whole development, although it might be said that the defendant was the main contractor, in relation to Po Sun, for the piling works. It is certainly clear that the defendant had no contractual relationship with the plaintiffs, and so cannot assert any right against the plaintiffs to remain on the land.

3. The plaintiffs and Po Sun were all wholly subsidiaries of a listed company, but there is nothing sinister in this. An arrangement by which the owners of land in a group of companies contract with another company in the same group to develop buildings on the land is commonplace.

4. The defendant had completed the piling works, but not the piling cap works, when, the plaintiffs allege, Po Sun ceased work on the sites. The plaintiffs then, I find, followed the proper procedure to terminate the contract with Po Sun under clause 25 of the contract, and this was effectively terminated on 27 May 1999. From that date, Po Sun was not entitled to occupy the land. Po Sun did not terminate its contract with the defendant, but, in the ordinary course, if Po Sun no longer had any right to occupy the land, neither did its licensees, including the defendant. Nevertheless, the defendant has continued to occupy the land, and asserts a right to continue to do so. Why does it do so in the light of what I have said?

5. The first argument advanced by Mr Westbrook is that, very recently, evidence came to light that, in respect of some of the land, receivers have been appointed "with power to enter upon and take possession" of the land. Mr Westbrook says that, because of this, the plaintiffs no longer have any right to evict the defendant. I am not sure that this is right. The plaintiffs remain the owners of the land, and are entitled to protect it. In any event, I now have evidence before me that the receivers are happy that the plaintiffs should continue to seek this order against the defendant. On this basis, it seems to me, all those having an interest in the land want to see the defendant give up possession.

6. The second argument raised by Mr Westbrook is that there is no satisfactory evidence that the contract between the plaintiffs and Po Sun was lawfully determined. I do not accept this. The evidence is overwhelming that the proper steps were taken, and the contract is now at an end.

7. Thirdly, the defendant says, the notice to terminate the contract was, contrary to the terms of clause 25, given "unreasonably or vexatiously". Mr Westbrook argues that it is clear that the plaintiffs and Po Sun simply picked a convenient moment "to try to kick the defendant off the site without paying him.". It may well be that, the plaintiffs and Po Sun being companies in the same group, co-operated in terminating the contract between the plaintiffs and Po Sun, and they may well have had in mind that this would have the consequence of terminating the defendant's right to occupy the land, but this does not make the termination of the contract between the plaintiffs and Po Sun unreasonable or vexatious. In fact, if it is so that Po Sun co-operated, it would be difficult for that company to say that the termination was unreasonable or vexatious. And, of course, what I am concerned with is whether the termination was unreasonable or vexatious vis-à-vis Po Sun, not someone else who was not a party to that contract.

8. Were it so that the parties to the main contract has not gone through the process terminating the main contract under clause 25, but had terminated it by mutual consent, this would not change the position; this would not give the defendant any right to continue to occupy the land once Po Sun ceased to have any such right.

9. Even if it were so, to put the case in the best possible light for the defendant, that the plaintiffs and Po Sun had sat down together and worked out a way of removing the defendant from the land, whatever other remedies the defendant might have had against the plaintiffs and Po Sun, this could not possibly have included the right to remain on the land.

10. The fact of this matter is that, if the defendant has a right to remain on the land now, it must have that right to remain there for ever. That cannot possibly be the case. It would be a ridiculous conclusion to reach.

11. The next argument advanced on behalf of the defendant is that it is the registered contractor on the land, and it has statutory duties to perform. Mr Westbrook says that the defendant "has a statutory duty to remain on the site". I do not accept that this is so. It may be so that, for so long as the defendant decides to remain on site, it is obliged to do things to ensure the safety of the land, but once it vacates the site, because it no longer has any right to remain there, especially if the court orders it to vacate, those duties must cease. It just cannot be so that, where a contractor no longer has any lawful right to remain on land, it is entitled to assert such a right because, being there, it has duties to perform. That argument is circular.

12. The defendant produces evidence that Po Sun is still involved in this project. It produces a fax dated 26 August 1999 by which Po Sun requests the defendant to submit some documents regarding safety features of the site, and another fax dated September 1999 by Po Sun to the defendant in which Po Sun asks the defendant to submit a quotation for some work on the site. It is, of course, not surprising that the defendant was asked to submit records regarding safety measures. The defendant has sole occupation of the site so no one else could do this. What is more significant is the fact that Po Sun is still taking an interest in what is happening on the land. Mr Westbrook says I should drawn the inference from this that Po Sun still regards its contract with the plaintiffs as binding. The plaintiffs had sight of this evidence only on the morning of the hearing, and have not had the opportunity of responding to it. But I do not think it is a necessary or reasonable inference to draw from these documents that the contract said to have been terminated still exists. As we all know, Po Sun is a member of the same group of companies as the plaintiffs. It would be natural for the plaintiffs to use Po Sun to do work connected with the maintenance of the site. This does not indicate that this work must be connected with the contract that was said to have been terminated.

13. Lastly, Mr Westbrook argues that the balance of convenience is against granting the injunction. I do not accept this. The defendant's claim, if any, is against Po Sun for damages. Those damages flow from any breach of contract already committed by Po Sun. They would not flow from the grant of the injunction. They would only flow from the injunction if the defendant could assert some arguable right to remain on the site. It cannot do that. The defendant says that, if it is required to move from the site, it will lose the value of the temporary works that it has erected. I do not think this is the case. If the defendant is entitled to remove those temporary works, it will be able to remove them in due course when it is safe to do so. There is no evidence that the defendant is suffering any damage by delay.

14. In the result, I can see no basis at all for the defendant asserting any right to remain on the land. Accordingly, there will be an order in terms of the plaintiffs' summons of 6 July 1999.

15. I see no obvious reason why costs should not follow the event. I make an order nisi that the defendant pay the costs of this application.