THE INCORPORATED OWNERS OF SOUTH SEAS CENTRE, MODY ROAD v. GREAT TREASURE DEVELOPMENT LIMITED

HCA 8191 of 1993

_________________

H E A D N O T E

_________________

Interlocutory prohibitory injunction - allegations of breaches of DMC - whether the breaches are clear and the Defendant should not be given "a holiday from the enforcement of his obligations until the trial" as per Megarry, J. in Hampstead & Suburban Properties Ltd. v. Diomedous [1969] 1 Ch. 248 - or there are just serious issues to be tried and the court should consider the balance of convenience as in the Cyanamid case [1975] AC 396 - obiter: equating the decision in the Hampstead case with one of the principles in the Cyanamid as "where apparent upon the facts disclosed by evidence as to which there is no credible dispute that the strength of one party's case is disproportionate to that of the other party".

Breach of DMC - acquiescence and estoppel of Manager or 1st Owner of the building - consent of Manager - conditions imposed by Manager - reasonableness of those conditions - The Incorporated Owners of Mai On Industrial Building v. Hedit Limited (HCA No.6529/1987, 18th December 1987 per Godfrey J. unreported) distinguished.

Costs in interlocutory injunction proceedings - whether the successful Defendant in discharging the injunction should have his costs in the cause as in Steepleglade Ltd. v. Stratford Investment Ltd. [1976] F.S.R. 3 or costs to be taxed and paid forthwith as in Kickers International SA v. Paul Kettle Agencies Ltd. [1990] F.S.R. 436.

HCA 8191 of 1993

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

_________________

_________________

D E C I S I O N

_________________

The Parties

1. This is an interlocutory application for injunction. The Plaintiff was represented by JLW Management Services Ltd. as manager of its building, South Seas Centre, situated at Mody Road, Tsirnshatsui East. The Defendant is the owner of the 1st floor of the building. After purchasing the same from the previous owner which was operating a restaurant thereat, the Defendant's intention was to renovate and convert the 1st floor into a permanent exhibition hall for local toy industry to display their products to overseas buyers. Accordingly, they sub-divided and partitioned the 1st floor into 109 shop units. They contracted the works to JLW Building Consultancy which is a sister company of JLW Management Services. These two sister companies both contended that although they are sister companies, that would in no way affect their responsibility to their respective clients. In fact, from the papers before me, not only they would not collude in any way because of their close relationship, they instead exhibited an adamant attitude and insisted on every single issue on behalf of their clients and would not be prepared to budge an inch in the dispute between the two parties which, in the words of counsel for the Defendant, involved only a storm in a tea cup.

The Disputes

2. There are two areas of dispute in the course of the construction works of the Defendant. First, there was originally a wooden ceiling above a void area leading from the ground floor to the ceiling of the 1st floor. The Defendant as assisted by JLW Building Consultancy changed the wooden ceiling and replaced the same with a new stainless steel one. The Plaintiff complained that it was done in breach of the Deed of Mutual Covenant of the building.

3. Secondly, the Defendant intended to replace the old signs (of 9 horizontal boxes) of the restaurant on the external wall of the 1st floor of the building with their own signs, namely, "Toy Centre", in English and Chinese with an underneath description in smaller size letters, "1st floor, South Seas Centre . The Plaintiff complained that this is in breach of another part of the Deed of Mutual Covenant as it is a place not designated for trade or business notices and advertisement and the sign cannot be erected without the prior consent of the Plaintiff's manager.

Chronology

4. On the 14th September 1993, the Plaintiff obtained ex-parte injunction from Woo J. restraining the Defendants from continuing with the works on this false ceiling and the signage. On 22nd September 1993, Stock J. continued the ex-parte injunction until the return date of the Plaintiff's inter partes summons which was later on fixed to 20th October 1993. I heard the summons on that date and by consent paragraph 1 of the ex-part injunction order of Woo J. was discharged. Both parties agreed that the false ceiling works had by then been completed and thus there was no point in continuing the injunction. (Exactly when it was completed, was another bone of contention between the parties.) Both parties were also desirous to file further affidavit in respect of the signage. Accordingly, directions were given therefor and the summons was further adjourned to 22nd November 1993 before me.

5. Although the first part of the injunction in respect of the false ceiling was discharged, yet both parties were (and still are) asking for costs from the other side. Thus it is incumbent to consider whether the Plaintiff was entitled or proper to obtain an ex-parte injunction, and/or whether the Defendants had arguable grounds to resist the claim of the Plaintiff and if so what would be the balance of convenience arising therefrom in order to determine what costs order should be made on the discharge of the injunction. Since the question of costs would also arise in respect of the

any trade, profession or business notice or advertisement whatsoever except in the space nominated for such purpose by the First Owner and the Manager.

(d) By clause 4(m) thereof not to install any fixture upon, inter alia of the external wall of the Building without the prior written consent of the Manager of the said Building to any such installations having been first obtained."

"8. Further also on or about 7th September 1993 the Defendant started to erect or cause or suffer to be erected, without the prior consent of the 1st Plaintiff on the Manager, light box signs on the external wall of the 1st floor of the Building, a place not designated for trade or business notices and advertisements, in breach of clauses 4(g), (1) and (m) of the Deed of Mutual Covenant as referred to in paragraph 4 hereof."

6. By the time the ex-parte order was obtained the Defendant had just completed in removing the old restaurant signs and was about to put up their own signs as designed by JLW Building Consultancy. The Plaintiff submitted that it is a clear breach of the DMC as no prior written consent had ever been given by JLW Management Services, the manager. In giving their consent the manager can impose conditions which have to be complied with by the Defendant, but such conditions have never been complied with by the Defendant or the Defendant have not agreed to those conditions as specified by the manager.

7. As I understand from the papers before me, the real reasons for not giving the consent of the manager were twofold:

(a) the content of the signage; and

(b) the fund for maintenance of a signage in view of the Defendant divesting his interests to some over a hundred units and the manager was worried how to enforce the maintenance charges should an occasion arise in future when it has to face a number of sub-owners to collect the money therefor.

8. In respect of the first point of objection, the Plaintiff objected to the name: "Toy Centre". It contended that by putting such a sign above the name of the Plaintiff's building, South Seas Centre, it would lead to confusion that the building has already changed its name to Toy Centre. It gratuitously suggested other names like "Toy Land", "Toy World", "Toy Paradise", "Toy Haven", "Toy Only" etc. etc.

9. The question before me is whether there are arguable or triable issues between the parties or whether as suggested and submitted by the Plaintiff it is a clear breach of the DMC where the Court would not give the Defendant a holiday from the enforcement of such a breach and the balance of convenience should not come into play at all. The Plaintiff relied on the case of Hampstead & Suburban Properties Ltd. v. Diomedous [1969] 1 Ch. 248. In that case Megarry J. (as he then was) was concerned with a licenced restaurant of a tenant against whom complaints were made to the landlords from the occupiers that the licenced restaurant had been playing music to the extent of causing a nuisance or annoyance. The Defendant covenanted to pay additional rent not to permit music or musical instrument to be played within the premises in such a manner as to be audible to the extent of causing a nuisance or annoyance to neighbours including occupiers of the landlords' flats above the premises and, if any complaints were received by the landlords from the occupiers. forthwith to discontinue the playing at the landlords' request until such time as "effective sound proofing" was completed. It was held that since nuisance or annoyance was to be determined according to robust and common sense standards, and "effective sound proofing" or sound proofing which was effective in preventing a nuisance or annoyance to neighbours, the contention that the covenants were too certain was without substance. Secondly, it was held that where a covenantor was in clear breach of an expressed prohibition, the Court, in the absence of special circumstances, would grant an interlocutory injunction enjoining him from breaking his negative bargain or there was no reason why he should be free from his obligation until the trial of the action. In the judgment of Megarry J., he said at p.259 thereof :-

" Thirdly, there is Doherty v. Allman. I accept, of course, that Lord Cairns' words were uttered in a case where what was in issue was a perpetual injunction and not an interlocutory injunction. Indeed, the words seem to be obiter, for no negative covenant was present in that case. But these considerations do not preclude the words from having any weight or cogency in relation to an interlocutory injunction. Where there is a plain and uncontested breach of a clear covenant not to do a particular thing, and the covenantor promptly begins to do what he has promised not to do, then in the absence of special circumstances it seems to me that the sooner he is compelled to keep his promise the better. In such a case I do not think that the enforceability of the defendant's obligation falls into two stages, so that between the issue of the writ and the trial the defendant will be enjoined only if that is dictated by the balance of convenience and so on, and not until the trial will Lord Cairns' statement come into its own. Indeed, Lord Cairns' express reference to "the balance of convenience or inconvenience" suggests that he had not forgotten interlocutory injunctions. I see no reason for allowing a covenantor who stands in clear breach of an express prohibition to have a holiday from the enforcement of his obligations until the trial. It may be that there is no direct authority on this point; certainly none has been cited. If so, it is high time that there was such authority; and now there is."

10. It should be noted that in this case Megarry J. decided that it was a clear breach of the covenant with no arguable defence.

11. The Defendant contended that the location of the signage was the old restaurant signage. The Plaintiff themselves could not find any written consent given to the old restaurant for putting up their signage at that particular location. Accordingly, either consent had already been given quite some years ago for that location designated for the signage of the owner of the 1st floor or the manager had already acquiesced for quite a number of years in the restaurant signage at that very location. The present manager is therefore, so submitted by the Defendant, estopped from withholding their consent to owner of the 1st floor to put up signage at that particular location.

12. From the photographs exhibited at pp.214 and 248 of the second bundle of document, that particular location is on the exterior wall of the 1st floor in between two glass windows (on the top and the bottom of the signs) and these windows are going horizontally through the entire western side of the building with four windows on the left, four windows on the right and one bigger window in the middle. Previously, it was put up by the predecessor in the name of "Tsimshatsui Palace Restaurant", in English and Chinese.

13. The Defendant relied on the case of Cheung Yuet v. The incorporated Owners of Oriental Gardens [1979] HKLR 536. In that case the Appellants is one of the owners who had extended their sitting room beyond the authorised building line. Other owners in the same building had committed similar breaches of Covenant by adding slightly less noticeable rooms to their flats. It was held by the Court of Appeal that it was necessary to consider the whole nature of the breaches committed by the Appellants and by the other owners. The breaches of Covenant committed by other owners in adding rooms were no less grave than the breaches committed by the Appellants and could reasonably have been considered by the Appellants as a representation that the addition of a room of equivalent size would be tolerated. The Respondent had acquiesced in the particular kinds of breach which the Appellants had committed and it would be inequitable to compel the Appellants to remove their extensions at the instance of the Respondent.

14. In our case I consider that it is also arguable that a manager cannot explain why previously the Restaurant owner was allowed to put up their sign whereas the present owner would not be allowed to do so. There is no evidence available from the Plaintiff that this particular location was not one of the spaces nominated by the First Owner and the then Manager for the purpose of Clause 4(1) of the DMC. Apparently as aforesaid two reasons were given for refusing their consent. The first one is their objection to the use of the word "center". It said it will give rise to confusion. The photograph clearly showed the words 'South Seas Centre' in yellow just underneath the location proposed by the Defendant in Chinese and English which is much larger in size. Any person standing at the near or far distance could catch the name of the building, South Seas Centre immediately much more than the smaller size signage of the Defendant, "Toy Centre" with the underneath qualifying words, "1st floor South Seas Centre". It is arguable that such a confusion is illusory.

15. However, I think a more important consideration is whether the manger has any right (under the DMC) to vet the contents of a sign, which is neither illegal in any sense nor infringing any proprietary right of the Plaintiff. In other words, could the Plaintiff object to any establishment or owner putting up a sign simply because he used the word 'Centre' at that location and in its own opinion would cause confusion? Is it arguable that the Plaintiff has no proprietary right whatsoever in the word 'Centre' and therefore could not object to other owners using the same word? Just imagine, for instance, by way of example and argument that if The Hong Keng Book Centre moved to the 1st floor of the Building, would it be reasonable for the Plaintiff to say that the Hong Kong Book Centre must change its name to "Book World", "Book Paradise", "Book Land" etc., otherwise they would not be allowed to put up their name at that very location?

16. In considering the Manager's rejection of the word 'Centre', I have used the word 'reasonable. Counsel for the Defendant, Mr. Cheung has accepted that it may be difficult to argue on a proper construction of this clause in that it must be read as a reference to a consent which is not unreasonably withheld in light of the case of Incorporated Owners of Mai On Industrial Building v. Hedit Limited (HCA No. A6529/1987,18th December 1987 per Godfrey J. unreported.) The Defendant therein intended to build a chimney on the external wall of the building, the Plaintiff objected to that and no consent was given. At p.5 of the Judgment, Godfrey J. said :-

" I turn to the "construction" point.

As it seems to me, there can be no argument but that the proposed chimney will add to the facade or exterior wall; so it will alter the appearance of the exterior of the building. This being so, it follows in my judgment that what is proposed by the Defendant here must be a breach of the provisions of paragraph 12 of the Second Schedule. The installation of the plant which the chimney is intended to serve must, in my judgment, be a breach of paragraph 13 of the Second Schedule. The Defendant has not obtained the consent in writing of the Manager to the installation of the necessary plant.

It was argued that the reference to consent in paragraph 13 must be read as a reference to a consent which is not unreasonably withheld. In my judgment there is no warrant for that construction. If it were necessary to imply it to give efficacy to the covenant, it would be another matter; but it is not. Just as paragraph 12 contains an absolute covenant, so it seems to me, paragraph 13 contains a qualified one; but not so much qualified as the Defendant contends.

For these reasons, it seems to me there is nothing in the "construction" point either."

17. However, in the case of Mai On, the issue is whether the Defendant should be allowed to construct a chimney outside the exterior wall of the building and The Incorporated Owners objected and did not give its consent. It is not a case where The Incorporated Owners imposed certain conditions for erecting the chimney but the Defendant refused or failed to comply with those conditions. I consider that in the event on a true construction of the DMC after considering all the circumstances of our case, the trial court accepted that the Manager can impose conditions, then the question of reasonableness would arguably come into play i.e. whether the conditions imposed are reasonable or not. For example, if a manager imposed a large sum of premium on an owner as a condition for putting up a sign, would it be the intention of the Deed of Mutual Covenant? By the same token. would it be the intention of the very Deed of Mutual Covenant before me that the manager has a right to object to a certain word used in which The Incorporated Owners have no proprietary right?

18. The 2nd condition was that the manager wanted the Defendant to set up a fund for the management of the sign instead of collecting money from more than one hundred sub-owners. However, each of these sub- owners, ex hypothesi, owns a shop. Should anyone be in default, the Manager can always peruse its claim in the District Court under the Multi- Storeyed Building (Owners Incorporated) Ordinance or otherwise in the Small Claim Tribunal. If necessary, a Changing Order and an Order for Sale of the property can be made should the sub-owner still fail to pay the judgment sum with costs. This is just one of the usual cases in the District Court from which the sub-owner cannot escape. It is, in my view, also arguable such a condition may not be necessary.

19. However, the more basic question is whether the Manager can impose conditions under the DMC. The Deed has not provided that the manager can impose any conditions. Apparently, the manager can either consent or not consent. In refusing its consent the Manager would have to explain why previously the Restaurant was allowed to put up its sign at that location for a number of years. It has never been pleaded in the Statement of Claim that the manager was prepared to give its consent on certain conditions but the Defendant either failed or refused to comply with such conditions.

20. In the end, I think the Defendant has an arguable case and there are serious issues to be tried. It is not a case as in Hampstead & Suburban Properties Ltd. v. Diomedous where the court had already decided there was a clear breach of the covenant and the construction point put forward by the Defence was unarguable. In other words in that case it was "apparent upon the facts disclosed by evidence as to which there is no credible dispute that the strength of one party's case is disproportionate to that of the other party."

21. I shall set out herein this often cited passage in American Cyanamid Co. v. Ethicon Ltd. [1975] AC 396 more fully herein below. Lord Diplock said in his speech at p. 407H to p. 408B and at p.408H to p.409D (which is the basis of my consideration in the case before me) as follows :-

" It is no part of the court's function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial. One of the reasons for the introduction of the practice of requiring an undertaking as to damages upon the grant of an interlocutory injunction was that "it aided the court in doing that which was its great object, viz. abstaining from expressing any opinion upon the merits of the case until the hearing" : Wakefield v. Duke of Buccleugh (1865) 12 L.T. 628, 629. So unless the material available to the court at the hearing of the application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought.

Save in the simplest cases, the decision to grant or to refuse an interlocutory injunction will cause to whichever party is unsuccessful on the application some disadvantages which his ultimate success at the trial may show he ought to have been spared and the disadvantages may be such that the recovery of damages to which he would the be entitled either in the action or under the plaintiff's undertaking would not be sufficient to compensate him fully for all of them. The extent to which the disadvantages to each party would be incapable of being compensated in damages in the event of his succeeding at the trial is always a significant factor in assessing where the balance of convenience lies; and if the extent of the uncompensatable disadvantage to each party would not differ widely, it may not be improper to take into account in tipping the balance the relative strength of each party's case as revealed by the affidavit evidence adduced on the hearing of the application. This, however, should be done only where it is apparent upon the facts disclosed by evidence as to which there is no credible dispute that the strength of one party's case is disproportionate to that of the other party. The court is not justified in embarking upon anything resembling a trial of the action upon conflicting affidavits in order to evaluate the strength of either party's case.

I would reiterate that, in addition to those to which I have referred, there may be many other special factors to be taken into consideration in the particular circumstances of individual cases. The instant appeal affords one example of this."

22. Now, what would be the inconvenience caused to each party. For the Plaintiff they basically put forward two points. First, as I have said earlier they said the signage would cause confusion to outsider. I have already considered that this kind of worry is quite remote from the evidence before me.

23. Secondly, the Plaintiff submitted that if the injunction is discharged, other owners of the building would start to erect signs or other structures on the external walls of the said building in promotion of their respective trade or business without the prior consent of the Plaintiff or its manager. By other owners, the Plaintiff must mean owners above the 1st floor. It has been pointed out by counsel for the Defendant that owners or tenants of the ground floor and mezzanine floor have already been putting up sign boards or other signage in promotion of their own trade. This apparently has been allowed by the Plaintiff or its then and present manger or has been accepted by them as the space nominated for such purpose. In putting up the defence of acquiescence by estoppel the Defendant is not saying that the 1st floor owner or any sub-owners can put up any sign on any part of the external wall of the 1st floor. Its submission is only restricted to the very location where the previous restaurant owner had put up the restaurant sign. First, in my view other owners of the upper floors, knowing the discharge of the injunction or upon seeing the putting up of the sign at the very location where there used to be restaurant signs, would not possibly come to the conclusion that they would be allowed to put up signs or structures on their external wall. Indeed, the two situations are quite different from the case of The Oriental Garden. No one, I presume, would in his right frame of mind, inferred by the sign put up by the Defendant that owners of the upper floor are now allowed to put up sign on the external wall of the building. After all the restaurant signs were there for many years and no upper floor owners had done that.

24. On the other hand, if the injunction is allowed to continue, what inconvenience would cause to the Defendant. In my view, the inconvenience caused to the Defendant would be real and incalculable in terms of damages. The Defendant should be allowed to promote its own name : "Toy Centre" without any hindrance from the Plaintiff who, as I have said earlier, has no proprietary right in the word "centre". The Defendant together with other sub-owners whose interests also run with the land should be allowed to promote their own toy centre to the outside world. This very location is the most convenient place to notify the whole world of their existence in order to attract their prospective customers or buyers of goods or premises. Accordingly, I consider that the balance of convenience is on the side of the Defendant, and the injunction should be discharged.

Costs

25. The question of costs has to be considered in respect of the discharge of the injunction concerning the false ceiling. It is inevitable that one would have to consider the merit of the application and subsequent discharge of the injunction. I shall therefore deal with the 1st cause of action concerning the false ceiling.

(1) The false ceiling

It is convenient to set out herein below how the Plaintiff pleaded its case concerning the false ceiling. Para. 3(a) of the Statement of Claim has already been set out herein before. The Plaintiff further pleaded in pare. 7 as follows :

"7. In or about August 1993, the Defendant in breach of clause 4(a) of the Deed of Mutual Covenant altered the structure of the Building and damaged the main beams thereof by commencing alterations to the ceiling situated on the 1st Floor of the said Building above the void area therein.

PARTICULARS

(a) Removal of some of the metal hangers and supports to the thick wooden beams

(b) Installation of stainless steel and wooden boards

(c) Installation of additional lights"

26. It can be seen that the Plaintiff's complaint was that the Defendant has removed some of the metal hangers and support to the thick wooden beams. Further, the Defendant had installed stainless steel and wooden boards. The Plaintiff's counsel, during the course of the hearing, conceded that Particular (c) in respect of the installation of additional lights is irrelevant.

27. The Defendant conceded that certain hangers were removed and a stainless steel structure was installed as shown in the photographs. They, however, denied that they have removed any support to the thick wooden beams or any installation of wooden boards. In the correspondences between the parties and in the affidavits, the Defendant explained that the original false ceiling extended into the area over and above a protruding part of the 1st floor. In the past, the restaurant had no direct use of the space above the protruding part. However, in the present toy centre the owner partitioned all available floor area into separate units, save, of course the corridor. The protruding part became part and partial of those units they intended to use. Accordingly, the false ceiling above that protruding part would be trespassing into the space above that part. The false ceiling over that part was therefore removed together with the metal hangers supporting it. The original old ceiling was replaced by a new stainless steel one, using the original steel hangers to support the new false ceiling.

28. The Plaintiff alleged that there are new metal hangers installed in addition to those old original hangers (which fact was not specifically denied by the Defendant.) Thus, so said the Plaintiff, the installation of the new hangers involving bolts and screws into the beam would amount to cutting or damaging the main beams. It should be noted here that this allegation of damaging the beams by installing new metal hangers was not specifically pleaded or particularised. There was also a dispute as to the construction of the clause, "the main walls or beams or floors of the said building". The Plaintiff suggested that it means the main walls or any beams. The Defendant suggested that it only means the main walls or main beams and there is no evidence the additional bolts and screws are attaching to the main beams. But in my decision, the interlocutory matter before me cannot be resolved on the fine construction of these wordings.

29. The Defendant contended that the cutting of the metal hangers over and above the protruding area would not be in breach of the DMC as it did not cut or damage any of the wall, beams, main or otherwise or floor of the building. Further the same did not amount to altering the structure of the building. The Defendant's consultants, JL W Building Consultancy confirmed that the false ceiling structure would not amount to a structural alteration to the building which would require the consent of the Building Ordinance Office. Accordingly, it is proper as well as legal for the Defendant to cut the same - "legal" because it was encroaching onto the-property of the Defendant and "proper" because it did not amount to any structural alteration of the building.

30. By the same token, the Defendant also contended that the restructuring of the false ceiling and the replacement of the old one by the new one is not a structural change which required the consent of the Building Authority. Further they contended that even assuming there were additional hangers put up for the new structure with bolts and screw on to the beams, this would not amount to cutting or damaging the beam.

31. On 25th November 1993, I recalled parties to address me on further points. One of the points I raised was this : if the Plaintiff contended that the erection of the new hangers by bolts and screw onto the beam amounted to a breach of the DMC in that it would be equivalent to cutting or damaging the beams or main beams, how on earth the original ceiling could be erected with such metal hangers by the same kind of fixation by bolts and screws onto the beams? Para. 4(a) of the DMC in this respect is an absolute prohibition. It is not a case where the manager or anyone could give his consent for such an act to be done. Mr. Yu, counsel for the Plaintiff submitted that they did not know who put up the old hangers there. It was possible that, notwithstanding absolute prohibition, the 1st owner did it with the consent of the previous manager. There was absolutely no record of the detailed works previously done by the previous owner.

32. Mr. Cheung for the Defendant pointed out that from the affidavit of Mr. Simon Chu for the Plaintiff, pare. 6 said that the false ceiling and all its supporting frame work had been in place since the building was constructed back in 1982.

33. From the affidavit of Mr. Ng Yik Hei, a building surveyor of JLW Building Consultancy, pare. 5, he pointed out that he had seen the latest approved plan of South Seas Centre at the Building Ordinance Office and confirmed that notwithstanding that a ceiling void area is shown on the plan, no provision is made for the construction of a false ceiling. It is his view therefore that the old false ceiling must have been installed some time after government inspection of the building and the issuance of the occupation permit and not as early as the date of the building's construction.

34. Mr. Cheung further submitted that the erection or installation of further metal hangers would not amount to altering the structure of the building or damaging the main beams as pleaded by in pare. 7 of the Statement of Claim. If such a conduct would amount to the same, he would rely on the acquiescence of the previous owner and manager giving rise to an estoppel. He further pointed out that at the time of obtaining the ex-parte injunction, it was never disclosed and pointed out by the Plaintiff to Woo, J. that those hangers removed as alleged to be unauthorised were in fact in the space above the Defendant's protruding area. Instead, the Plaintiff based its case on the premises that the removal of hangers was already a breach of the DMC. Mr. Cheung therefore submitted that there was material non- disclosure to the learned judge at the time when the ex-parte injunction was obtained.

35. By keeping the observation of Lord Diplock in the case of American Cyanamid, I would say there are serious issues to be tried in this case and it is not a case where the Plaintiff has satisfied me that is a clear breach of the DMC on the part of the Defendant in respect of the erection of the new false ceiling together with removal of certain old hangers. I also accept that there was material non-disclosure to the ex-parte Judge as submitted by the Defendant. This fact had already been pointed out by JLW Building Consultancy in the correspondence although they had deliberately avoided the word 'trespass' at that time in order to keep the amicable relationship.

36. By the time the Defendant was served with the ex-parte injunction order, it said that the false ceiling work had already been completed. The parties have a minor dispute as to when exactly the works were completed.

37. Event leading up to the completion of the false ceiling started in early July 1993 when the Defendant first discovered that the mild steel frame and the fixing hangers for the old ceilings protruded and therefore trespassed into the air space above the front part of the Defendant's protruding area. It was then decided that those parts would have to be removed and a new false ceiling over the void would be erected. JLW Building then designed the new false ceiling. On-12th July 1993 JLW Management was informed of JLW Building's proposal together with preliminary designs of the new false ceiling. Removal of certain steel hangers was made known to JLW Management for those parts above the protruding area of the 1st floor. Upon the request of JLW Management, JLW Building submitted a colour perspective of the ceiling design.

38. In mid July 1993, Defendant learned that JLW Management had allowed a preliminary budget of HK$300,000.00 for the refurbishment of the false ceiling over the void. Accordingly, negotiations between the parties took place as to the contribution of the Plaintiff to the new false ceiling to be erected. On 6th August 1993, JLW Building informed JLW Management that the Defendant's preliminary budget for their said erection was HK$600,000.00. They also requested that the original design be presented to members of the Plaintiff's committee for their initial comments in order to expedite the matter. On the 7th August 1993, the Defendant's contractor was instructed to and did proceed to erect bamboo scaffolding in the void area for the commencement of the demolition and construction work.

39. Earlier, at the end of July 1993, the Defendant was informed that the manager would seek the committee's approval or the upgrading of the false ceiling at committee meeting scheduled to be held on 13th September 1993. The Defendant requested an earlier approval because the contractor had to complete all renovation work on the 1st floor by the 18th September 1993, in order to give vacant possession of the shop units to sub-purchasers on the 23rd September 1993, the Completion Date. However, the Defendant was informed by the manager that a written approval would only be issued after they obtained the committee's approval at that very meeting, and that if the Defendant was to bear all the costs for the upgrading of the ceiling over the void, a committee would most likely to approve the design and the work. On the 14th August 1993, JLW Building wrote to JLW Management, enclosing the latest design for the false ceiling and outlining the scope of the work. In anticipation of approval from the manager and in view of the Defendant's tight schedule, the Defendant therefore instructed its contractor in mid August to proceed with the false ceiling works. It said that it was under the impression that the manager was only concerned with the Plaintiff's contribution costs for the ceiling works.

40. It is evident from the correspondences between the parties that JLW Management had by numerous letters demanded stoppage of the works and had enquired as to the safety of the ceiling works. However, the Defendant in continuing its works stands or falls by taking its own view of the provisions in the DMC. Further, the Defendant contended that due to the urgency of the matter in respect of the false ceiling and the signage, the Plaintiff should not delay the matter by insisting that these matters could only be discussed and considered at its usual meeting scheduled on the 13th September 1993. This is particularly so when they were informed of the schedule of the Defendant's works and completion. I must say there is, as submitted by the Defendant, some delay on the part of the Plaintiff by Hong Kong Commercial standard and concept of time and it had not treated the matter on urgent basis. After all, refurbishing a false ceiling and putting up a new signage on the 1st floor of the building is not an every day matter. Should they have adverted their minds on those matters earlier, the matter could or should have been resolved in mid or at the latest end of August. The same should not be delayed to mid-September, near the end of the Defendant's Completion Date.

41. I also accept the Defendant's submission that the balance of convenience might well be in their favour even if on the date of hearing of the inter-partes summons, the false ceiling works had not been completed. A lot of inconvenience would be caused to users of the building if the false ceiling was left half completed with all its supporting bamboo scaffolding structures. There would have been no prejudice to the Plaintiff to have a brand new ceiling pending trial. On the other hand, the inconvenience and damages caused to the Defendant and other sub-owners of the 1st floor would be difficult to assess, should the work be left half completed.

42. It is true after about a few weeks of the commencement of the ceiling works, the Defendant or its manager had enquired as to the safety of the new structure. However, apparently they paid no regard to the fact that the works were designed and supervised by professional architects, JLW Building Consultancy, a firm which is at least equally reputable as its sister company, the manager. I do accept that if the Plaintiff really wanted to know the safety of the new structure, they could have found it out easily. In the end, I would consider that should the ceiling works be not completed at the time of hearing the inter partes summons, the injunction would have been discharged any way on the balance of convenience.

(2) The question of cost in respect of the discharge of the two injunction orders.

I shall start with the White Book at p.515 para. 29/1/9 :-

" Costs on an application for an interlocutory injunction - It has for many years, been the normal practice in the Chancery Division for a successful plaintiff granted an interlocutory injunction to be granted his costs in the cause and for a successful defendant to be granted his costs in the cause. But the rationale of that practice is perhaps not clear and the Courts are showing a greater willingness to depart from it, see, e.g. the discussions as to costs reported in [1976] F.S.R. 3 in the cases of Steepleglade Ltd. v. Stratford Investments Ltd. and the other case there mentioned. Where a plaintiff seeks an interlocutory injunction but decides, after seeing the defendant's evidence, not to proceed with the application for interlocutory relief, it may be a proper exercise of the court's discretion to award the defendant his costs of the application in any event and, in appropriate circumstances, to order taxation of the costs forthwith (Kickers International SA v. Paul Kettle Agencies Ltd. [1990] F.S.R. 436)."

43. In the first case cited i.e. Steepleglade, there are in fact two cases. In the first case, the plaintiffs obtained the interlocutory injunction they sought, but the plaintiffs in the second case failed to obtain interlocutory relief. In the first case, Whitford J. ordered costs be in the cause whereas in the second case, Oliver J. ordered Defendant's costs be in the cause. It was reported at p.5 that Oliver J. said:-

"Yes; I see the force of that; but the practice is a very well-established one. I am not myself convinced that the Cyanamid case produced a totally different approach in practice to the granting or withholding of interlocutory injunctions. Of course, there is not any rule which binds this court to deal with costs in any particular way. The matter is one of discretion. I can readily conceive that there may well be cases where the consideration is not only on balance of convenience but possibly, also, the merits may be such that the court might think the matter so finely balanced that costs in the cause was the right order. That is not the view I take about the present case and, in my view, the order which I have indicated is the right order and is the one which I propose to make."

44. The order of costs he proposed was Defendant's costs in the cause.

45. In the second case, Kickers, Hoffmann J. ordered that the Defendant shall have their costs with immediate taxation.

46. That case involved the Plaintiff, a French company, which makes fashionable boots and shoes. It commenced three separate actions alleging infringement of its designs and copyrights in certain drawings in November 1989. On 22nd February 1990, the Defendants served their evidence, five days later the Plaintiff wrote to each of the Defendants to say that it would not proceed with the motion for interlocutory relief and offered to submit to an order that the Defendants' costs should be costs in the cause. One of the Defendants, the British Shoe Corporation Plc., accepted these terms. But the other Defendants did not, they want their costs in any event, to be taxed and paid at once.

47. Hoffmann J. said this in his judgment :-

" This is a dispute over costs. At one time it might have been said that it was only about costs. But litigation has become so expensive that there is no "only" about costs any more. The ruling on costs can easily be the most important decision in the case. .....

The plaintiff says that after seeing the defendant's evidence in the Paul Kettle action it decided that its motions were likely to fail on the balance of convenience. It therefore filed no affidavits in answer and abandoned its motions. Mr. Wyand submits that if he had fought and lost, the most likely orders for costs would have been that the defendants' costs should be costs in their respective causes. Such an order is frequently made in this Division. He submits that the plaintiff should not be penalised because it has saved costs and court time by not filing affidavits in answer and not arguing the motions. This should be encouraged, in the interests of saving both court time and money.

The defendants in the Paul Kettle action served a good deal of evidence. Mr. Kettle said that the allegedly infringing boots and shoes made up half his trade. Furthermore, 90 per cent. of his business came from the Spanish manufacturers who had made them. He and the local agent in Spain said that an injunction would so damage his goodwill that the manufacturers might well cease doing business through him altogether. His commercial livelihood was at stake and he therefore went to some trouble preparing his evidence in answer. It dealt with the origins of the plaintiff's design, to show that there was no originality in the features he was alleged to have copied. Evidence from the trade showed that similar boots and shoes had been sold or were being sold without complaint. It showed that the plaintiff's footwear was expensive and sold to young people who valued a brand label. The defendants' footwear was cheap and without any distinctive label. Furthermore, the plaintiff's products were at the moment so fashionable that it could not satisfy the demand. Sales of the allegedly infringing footwear during the remaining few months of the life of the copyrights and designs were therefore unlikely to cause the plaintiff substantial loss. The preparation of all this evidence was expensive. .The solicitor for the Kettle defendants has produced a skeleton bill which estimates their costs of the injunction proceedings at ?55,000.

Mr. Wyand accepts that although defendant's costs in the cause is an order commonly made in cases like this, there is no general practice. The court has a complete discretion. There are many factors which may influence the exercise of that discretion. No doubt it is desirable to encourage litigants to give up when they realise that a motion is hopeless. But it may be even more desirable to encourage them not to launch such motions in the first place. The plaintiff says that only on reading the Kettle defendants' evidence did it realise that the balance of convenience was probably against it. It had not known that the Spanish manufacturers might cease dealing with him or that their business amounted to about 90 per cent. of his trade. On the other hand, although it may not have known the exact figures, the plaintiff needed little imagination to realise that the Spanish manufacturers would not be pleased if the boots and shoes which they had been encouraged by Mr. Kettle to consign to the U.K. market turned out to be unsaleable. Likewise, anyone familiar with the boot and shoe business (and the plaintiff was given full inspection of Mr. Kettle's products) would have known that a substantial part of his business came from Spain.

An order for a party's costs to be "in the cause" is made because the court has not investigated the merits and considers that it would not be fair for him to recover those costs unless he succeeded at the trial. But the fact that the merits have not been investigated, or not fully cannot dispose finally of interlocutory costs. The question cannot be settled simply by reference to practice: it must be answered on the facts of the individual case. Would it be unfair in this case for the defendants to have the costs of the motion even if they lost at the trial? On balance I do not think that it would. Although I cannot decide the merits, I can form a view on whether the plaintiff, on the material it has produced and what it must have known about the defendants, was justified in launching the motion. I do not think it was. Therefore whatever the outcome of the trial, the motion which has now been abandoned has put the defendants to a great deal of unnecessary expense.

Thus it seems to me that in making a costs order at the interlocutory stage, there are two risks of injustice which have to be balanced against each other. On the one hand, a final order might award a party costs which, upon fuller consideration at the trial, he would not have been given. On the other hand, failure to make a final order might have the practical effect of depriving a party of some or all of the costs which he should in fairness have recovered. I think it is possible that in the past the courts may have been more impressed by the first risk than by the second.

The plaintiff says that it is not abandoning the action and that it intends to pursue a claim for damages to trial. Nevertheless, I think I should take into account first, the possibility that it may change its mind and secondly, the effect that a contingent order for costs would have upon any settlement negotiations. Having regard to all these matters, I think that the proper exercise of the discretion is to deal finally with the costs now. I shall therefore order the plaintiff to pay the defendants' costs in any event."

48. Hoffmann J. then considered whether costs should be taxed and paid at once or after the conclusion of the trial, he decided the former course to be taken.

49. In the present case before me, I do not consider it is similar to the case of the Kickers in which Hoffmann J. decided that the plaintiff was not justified in launching the motion on the material it had produced and what it must have known about the defendants. I have decided that in respect of both causes of action, there are serious issues to be tried and the balance of convenience is in favour of the Defendant. In answering the questions of: "Would it be unfair in this case for the Defendant to have the costs of the summons even if they lost at the trial?" - I would, on my part, say it would be unfair if the Plaintiff eventually succeeded at the trial in spite of all these defences put forward by the Defendant. For that reason, I would not follow the course taken by Hoffmann J. in the Kickers on a different matrix of facts. I would consider the fairer order for costs in the circumstances should be Defendant's costs in the cause. In other words, the Defendant should only have its costs if it eventually succeeded at the trial. Since the injunction was discharged, the Defendant should not bear the costs of the interlocutory proceedings before me even if in the eventuality it failed at the trial. Accordingly, the order for costs in the whole interlocutory proceedings shall be Defendant's costs in the cause.