SECRETARY FOR JUSTICE v. TIMES SQUARE LTD

HCA 1095/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1095 OF 2008

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D E C I S I O N

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1.  There are three summonses. The plaintiff issued a summons on 10 June 2010 seeking specific discovery of three categories of documents from the defendant.

2.  The defendant issued a summons on 14 June 2010 under O.33 r.3 of the Rules of High Court seeking an order for determination of two preliminary issues.  The defendant has issued another summons on 26 January 2011 for leave to file evidence out of time to oppose the plaintiff’s summons as the time has expired on 9 July 2010.

Background

3.  The defendant is the owner of the land in Causeway Bay upon which the Time Square is built.  By a deed of dedication dated 30 July 1992, the defendant irrevocably dedicates 3,107.708 sq. meters of the land on the street level of Time Square for the public purpose of pedestrian passage and passive recreation.  The deed states that the dedication is in return for the grant of excess site coverage and plot ratio for the land under Regulation 22(1) of the Building (Planning) Regulations, Cap.123.

4.  The relevant parts of the deed are:

“THIS DEED OF DEDICATIONis made the 30^th day of July 1992 by the Owner (which term shall include its successors and assigns) described in the First Schedule hereto.

WHEREAS:

…

2. The Owner desires to construct on the said Lots … a multi-storey building …and further desires to dedicate to the public for the purposes of pedestrian passage and passive recreation upon the terms and conditions hereinafter contained the portion of the said Lots … (hereinafter referred to as ‘the said Dedicated Area’) to which dedication the Government of Hong Kong (hereinafter referred to as ‘the Government’) has consented; and

3. The Owner further desires to and the Government has agreed that upon registration of these presents in the Land office the Owner shall secure in respect of the said Lots the benefit of excess site coverage and plot ratio under Regulation 22(1) of the Building (Planning) Regulations (Cap.123 of the Laws of Hong Kong) (hereinafter referred to as ‘the Benefit’).

NOW THIS DEED WITNESSETH as follows :-

(1) In consideration of the Benefit and in pursuance of the agreement recited in 3 above, the Owner HEREBY DEDICATES from the date hereof ALL THAT the said Dedicated Area UNTO the public for the purposes of pedestrian passage and passive recreation for the period during which the said Building shall be situated on the said Lots and subject to the terms and conditions herein contained.

(2) This Dedication is made subject to and with the benefit of the following terms and conditions:-

…

(j)    Subject to the prior written approval of the Director, the Owner reserves the full right to place or permit the placing of temporary structures on the said Dedicated Area from time to time for the purpose of temporary exhibitions and displays provided that the same shall not impede the general right of pedestrian passage and use of the said Dedicated Area as a passive recreation ground as aforesaid.  Any provision in this respect shall be exclusive to the Owner provided however that any such exhibitions and displays may be organized by organizations as approved by the Owner and the Owner may charge such organizations for their use of electricity/water or related facilities and other services of the Owner in respect of such exhibitions and displays.”

Following the execution page of the deed is a confirmation signed by the Director of Buildings and Lands for and on behalf of the government as follows:

“IT IS HEREBY CONFIRMED that the before written Deed of Dedication has been made with the consent of the Government of Hong Kong and that subject to all the conditions and provisions in the said Deed of Dedication contained and the Owner’s observance of them and every one of them the dedication of the area described in the Third Schedule hereto is accepted in consideration of the grant of the Benefit.”

5.  It is the plaintiff’s case that the defendant had repeatedly breached clause 2(j) of the deed in levying charges for exhibitions and displays held by third parties in the dedicated area in excess of the charges permitted under that clause between 1993 and 2008. 

6.  The defendant in a letter to the Director of Lands dated 28 February 2008 admitted that it had charged fees for some exhibitions and displays that might well have exceeded its facilitation expenses.  The letter enclosed different rates of charge for exhibition/display by different categories of customers.  

7.  The director by a letter of 5 March 2008 asked the defendant for a detailed breakdown of the rates of charge.  The director followed up the request by reminders dated 12 March, 20 March and 8 April but received no reply.  

8.  The Secretary for Justice then issued a letter to the defendant’s solicitors dated 9 May 2008 to repeat the request for the breakdown of the rates of charge and to ask the defendant to admit liability to pay damages for breach of clause 2(j).  There was a reminder dated 28 May 2008.  But the defendant did not give the information requested for or admit the liability. 

9.  The Secretary then issued the writ of summons in this action against the defendant on 16 June 2008 seeking damages from the defendant for breach of clause 2(j) of the deed.  The Secretary instituted these proceedings in his representative capacity on behalf of the director as agent of the Government of the HKSAR.  The Secretary clarified the nature of the claim for damages in the further and better particulars as follows:

“The Plaintiff’s claim is for damages based on the principle enunciated in Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798 and Attorney General v Blake (Jonathan Cape Ltd Third Party) [2001] 1 AC 268. Pending discovery and/or interrogatories, the Plaintiff is unable to give particulars of the amount claimed.”

10.  Both parties filed their respective lists of documents on 11 May 2009.  However, despite the requests made since March 2008, the defendant did not make discovery of any document relating to the breakdown of the rates of charge.  Such documents are relevant to the issues in the action.  The defendant has thus breached its discovery obligations.

11.  The plaintiff by a letter dated 3 November 2009 demanded the defendant to make discovery of the documents relating to the charges and documents relating to the defendant’s grant of licence or permission for third party exhibitions and displays and the payments thereof. The further documents requested for are also relevant to the issues in the action.

12.  The defendant’s solicitors replied by a letter of 20 January 2010 and said that it was oppressive to require the defendant to make discovery as sought when the defendant’s liability has not been established.  They suggested applying under O.33 r.3 for the determination of two preliminary issues on the defendant’s liability.  These two issues with some slight amendments are referred to below. 

13.  The defendant is obviously trying not to comply with its discovery obligations.  The documents sought by the plaintiff are clearly relevant and the defendant should have disclosed them in its list of documents.  It failed to do so.  When the plaintiff asked for them, it declined the request and instead suggested an order for preliminary issues.  It did not suggest preliminary issues until the plaintiff asked for discovery of the documents in question.

14.  The plaintiff replied on 13 May 2010 and disagreed to have determination of preliminary issues. 

The plaintiff’s application for specific discovery

15.  The plaintiff then issued a summons on 10 June 2010 for specific discovery of the following documents:

(1)    All documents relating to the grant by the Defendant of licences or permission to third parties for holding of temporary exhibitions and/or displays in the Dedicated Area from 1 January 1993 to 16 June 2008 (i.e. the date of our Writ of Summons) including but not limited to applications, approvals, agreements, memoranda or notes;

(2)    All documents relating to the charges the Defendant had levied against the organizers of the exhibitions and/or displays referred to in (1) above (including the breakdown of such charges (if any)); and

(3)    All documents relating to the breakdown of the ‘facilitation expenses’ referred to by the Defendant in its letter to the Buildings Department of 28 February 2009, (‘the Letter’), which according to the said letter include:- costs of providing overall crowd control and management, costs of technical support, costs of operational support, costs of venue maintenance, costs of technical support, costs of operational support, costs of venue maintenance, costs of amortisation and maintenance for basic infrastructure and E&M services for exhibitors’ use, the related third party insurance to cover the event/exhibition, costs of cleaning services, and costs of vetting administration and coordination services.

The Defendant’s application for determination of preliminary issues

16.  The defendant on 14 June 2010 also issued a summons for an order that the following questions (as amended on 18 June 2010) be determined as preliminary issues, namely upon the true and proper construction of the Deed of Dedication:

(a)     Whether failure on the part of the Defendant to observe the terms of the Deed of Dedication can ever give rise to a claim for damages at the suit of the Plaintiff in his representative capacity on behalf of the Director of Buildings (‘the Director’) as agent of the Government of the Hong Kong Special Administrative Region.

(b)    Whether (assuming that the Plaintiff has a cause of action as alleged in the Statement of Claim) the Plaintiff is entitled to claim for damages (other than nominal damages) or an account for profits.

The defendant also seeks to have the preliminary issues determined before the plaintiff’s summons for specific discovery is considered.

Directions by consent

17.  There was a directions hearing for the two summonses before Master De Souza on 18 June 2010.  By consent of the parties, the Master ordered the two summonses to be heard together and directed the defendant to file its affirmation in opposition to discovery on or before 9 July 2010.  The defendant did not comply with the direction for filing of affirmation. 

The defendant’s summons to file affirmation out of time

18.  On 26 January 2011 the defendant issued the third summons for leave to file an affirmation by its Promotions and Marketing Manager, Mr Ma despite the time for so doing has expired. 

19.  Mr Ma said in his affirmation that it will be oppressive to require the defendant to make discovery as sought by the plaintiff as there is no central custodian or indexing or filing system for all the documents sought.  It would also be laborious and time consuming to locate all these documents which are kept by different departments of the defendant in some 500 to 1,000 box files.

Decision on the defendant’s summons to file affirmation out of time

20.  The plaintiff opposes to the application for indulgence by the defendant as there is no explanation on why the defendant had failed to comply with the direction of the Master and why it could not have prepared Mr Ma’s affirmation earlier.  Despite the objection, which is reasonable and proper, I would reluctantly accede to this application as it does not cause any prejudice to the plaintiff’s position save the question of costs.  I therefore make an order in terms of this summons and a costs order nisi that the defendant do pay the plaintiff the costs of this summons.

Decision on the defendant’s summons for preliminary issues

21.  Mr Yu, leading counsel for the plaintiff reminds me of the judicial statements that an order under O.33 r.3 for trial of preliminary issues should only be made in special circumstances or on special grounds (paras.33/3/1 and 33/4/9 of Hong Kong Civil Procedure 2011). The court should be extremely cautious before acceding to pleas for such orders (Mai Gou v Mak Chik Lun [2001] 3 HKLRD 248 at 251B to 252A). 

22.  Lord Wilberforce has also said in Tilling v Whiteman [1980] AC 1 at 17H to 18A:

“… I, with others of your Lordships, have often protested against the practice of allowing preliminary points to be taken, since this course frequently adds to the difficulties of courts of appeal and tends to increase the cost and time of legal proceedings. If this practice cannot be confined to cases where the facts are complicated and the legal issue short and easily decided, cases outside this guiding principle should at least be exceptional.”

23.  Lord Scarman also said in the same case at p.25C:

“Preliminary points of law are too often treacherous short cuts. Their price can be, as here, delay, anxiety, and expense.”

24.  Mr Ho, leading Counsel for the defendant however submitted that the two issues proposed are suitable for determination as preliminary issues and their determination may dispose of the plaintiff’s claim.

25.  For the first issue, Mr Ho submitted that this raises a simple and non-fact sensitive question of “capacity” only.  The question is whether the government as represented by the director and suing through the Secretary for Justice had been conferred any rights by clause 2(j) of the deed as opposed to the public.  But Mr Ho accepts that the Secretary for Justice in the capacity of the guardian of public interest or parens patriae can enforce the deed.

26.  However, the terms of the deed prima facie say that it is made in consideration of benefit of excess site coverage and plot ratio under Regulation 22(1) of the Building (Planning) Regulations.  The confirmation by the director appended to the end of the deed also states that it is subject to the conditions and provisions in the deed and the defendant’s observance of them that the dedication is accepted in consideration of the grant of the said benefits. 

27.  Mr Ho, in order to advance the point that the government has not been given any right by the deed, referred to Regulation 22(1) and submitted that the defendant, as a government lessee, was entitled as of right to excess site coverage and plot ratio when the construction of Time Square was set back from the boundary of the lot.  He said there was no bargain between the director and the defendant and the deed was a unilateral act of dedication.  It was just like a deed poll.  The government’s role was merely to consent to the dedication under Regulation 22(1).  The consent was required because the defendant is only a government lessee and does not own the land as a freeholder. 

28.  Mr Ho made elaborate submissions on the law of dedication and construction of the deed in conjunction with the interpretation of Regulation 22.  The argument then goes on to say that the government has not been given any right by the deed.  If the public at large, having been conferred with the rights by the deed, should suffer any wrongful interference of such rights by the defendant’s breach of clause 2(j), the Secretary for Justice can bring proceedings as parens patriae against the defendant for nuisance.

29.  Mr Ho further submitted that because the deed is only a unilateral dedication to the public, the government cannot enforce the provisions of the deed as covenants.  Then the government has no legal basis to claim against the defendant.  The plaintiff in the capacity as presently framed therefore has no locus standi to sue the defendant.  Furthermore, the director is also not a party to the deed and thus has no locus.

30.  Mr Ho also submitted that even if the Secretary should bring the action as parens patriae, he in the normal case can only claim an injunction against the defendant and not for damages.  The right to claim damages for public nuisance belongs to private individuals who can prove particular damage.  But in the present case, the Secretary at present cannot even claim an injunction against the defendant as the defendant has made it clear that it will not repeat the conduct complained of.  The Secretary therefore has no locus standi to institute this action.  Mr Ho further submitted that this issue on capacity is suitable for determination as a preliminary issue.  Its determination may put an end to this action.

31.  Regarding the second issue on Wrotham Park damages or account of profit as in AG v Blake, Mr Ho submitted that this is a mere jurisdictional issue.  Wrotham Park damages are only ordered under Lord Cairns’s Act in lieu of an injunction.  The plaintiff is not claiming for injunction and (as submitted under the first issue) no injunction can be granted on the facts of this case.  The court therefore cannot award any Wrotham Park damages. 

32.  For the relief of account of profit under AG v Blake, Mr Ho submitted that it is an exceptional remedy and is only awarded in the exceptional case where the normal remedies are inadequate as they are unworkable.  He further submitted that the Secretary as parens patriae could have previously applied for an injunction against the defendant and sought Wrotham Park damages in lieu of the injunction. But the Secretary cannot do so now because he has failed to act in time. Hence, the normal remedy of Wrotham Park damages is not available.  But this is only because the Secretary has not acted in time.  In such circumstances, there is no basis to order account of profit as in AG v Blake.

33.  Mr Yu for the plaintiff emphasised that question of locus standi must be raised early.  The action was started on 16 June 2008.  The defendant only seeks to determine locus as a preliminary issue by its summons of 18 June 2010.  Mr Yu therefore submitted that the discretion of whether to order a trial of preliminary issues should be exercised against the defendant.

34.  Furthermore, Mr Yu submitted that the challenge that the Secretary for Justice can only sue as parens patriae, if valid, can be defeated by an order under O.15 r.6 of the RHC by adding the Secretary as parens partriae.  The determination of the Secretary’s locus will therefore not put an end to the action. 

35.  Mr Yu also referred to recital (2) of the deed which clearly says that the dedication required the consent of the government. I also take the view that the resolution of the issue of whether the deed is a unilateral act will involve some very elaborate legal arguments.  It is not a legal issue that is “short and easily decided”.  Prima facie, the deed refers to the dedication with the consent of the government and it is “in return” for the benefits of excess site coverage and plot ratio under Regulation 22.  The arguments on the first issue will not be simple or straightforward.

36.  Mr Yu also submitted that the law of Wrotham Park damages is still developing.  Whether such damages are available in this action is also fact sensitive.  The defendant’s case is nowhere near an exception that is suitable for an order for trial of preliminary issue.

37.  Mr Yu also referred to the lack of any estimate by the defendant on the length of the trial as a whole and the length of the trial of the preliminary issues and hence the savings that may be produced by trying the preliminary issues (see Telford Development Ltd v Shui On Construction Co. Ltd [1990] HKC 110 at 117 per Bokhary J (as he then was)).

38.  I agree with Mr Yu’s arguments as summarised above.  I doubt if it is suitable to order a trial of the two preliminary issues as framed by the defendant.  The issue on locus requires elaborate legal arguments and is not short or simple.  It may also be fact sensitive apart from the construction of the deed.  Since the law of Wrotham Park damages is still developing, this issue may embody the question of whether the government is entitled to claim Wrotham Park damages in the circumstances of this action.  The resolution of this issue may therefore require the canvassing of the facts of this case at the trial. 

39.  The second issue is also fact sensitive for the same reason that the law of Wrotham Park damages is developing.  It may also not be a mere jurisdictional issue that depends on the Lord Cairns’s Act. Chadwick LJ has stated in WWF-World Wide Fund for Nature & Anor v World Wrestling Federation Entertainment Inc [2008] 1 All ER 74 at para.54, all be it as obiter, that the power to award damages on the Wrotham Park basis does not depend on Lord Cairns’s Act.

40.  In the premises, I dismiss the defendant’s summons for an order for trial of preliminary issues.  I also make a costs order nisi that the defendant do pay the plaintiff the costs of this summons.

Decision on the plaintiff’s summons for specific discovery

41.  I note what Mr Ma of the defendant has said in his affirmation on the difficulties to make discovery of what the plaintiff seeks.  However, I also note that the defendant has annexed to the Re-Amended Defence a table of exhibition events undertaken by various government departments and charities since 15 January 1994 to 29 April 2007.  The table provides the names of the departments and organisations, the start and end dates and the names of the exhibitions. 

42.  If the defendant can produce such a table for the exhibitions of government departments and charities, I see no reason why it cannot produce similar tables for exhibitions by its tenants as well as other parties.  The information in these tables can certainly act as pointers for locating the documents referred to in paras.1 and 2 of the plaintiff’s summons.  Para.3 of the summons refers to documents relating to the breakdown of the facilitation expenses referred to in the defendant’s letter dated 28 February 2008.  The efforts to locate the documents under this paragraph should prove to be less difficult than those under paras.1 and 2.  The defendant must have documents relating to the expenses in question.  It should also have calculated and estimated the various expenses attributable to the exhibitions before deciding on the different rates of charge.  I think Mr Ma has overstated the difficulties of making discovery.

43.  In the premises, I make an order in terms of the plaintiff’s summons and give the defendant 30 days to make the discovery sought.  I also make a costs order nisi that the defendant do pay the plaintiff the costs of this summons. 

44.  For the three costs orders nisi above, I also certify that they are fit for leading and junior counsel.  I also order that the amounts payable be assessed by me summarily at a 9:30 a.m. hearing which should be fixed outside the next 21 days, unless the parties can agree on them.