KUNG MING TAK TONG CO LTD v. PARK SOLID ENTERPRISES LTD AND ANOTHER

HCA 1926/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1926 OF 2001

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DECISION

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1.  The Plaintiff claims a right of way over the 2^nd Defendant’s land, the entrance lobby of the first floor of commercial premises (“the EEL”).  The Plaintiff’s premises in respect of which such claims are made are Shop 2B on the First Floor, the whole of the Second Floor and the whole of the Third Floor of Fou Wah Centre in Tsuen Wan.  The 2^nd Defendant is the holder in due course of the EEL following the sale of the same by the 1^st Defendant to the 2^nd Defendant.

2.  At the trial the Plaintiff argued, first, that an easement or quasi-easement existed in respect of the EEL, and secondly, that even if such a right could not be founded in law, that the right could also arise from the presumed intention of the parties derived from their conduct and usage of the EEL i.e. the so-called “rule of common honesty”.

3.  I found against the Plaintiff that no easement, implied easement or quasi-easement had been or could be created in favour of the Plaintiff.

4.  The Plaintiff has lodged a Notice of Appeal against the judgment and now applies for a stay of execution of the Order made on 5 May 2005 pending appeal or further order.

5.  The law in relation to stay of execution pending appeal is well settled.  Both parties rely on Star Play Development Limited v. Bess Fashion Management Company Limited (HCA 4726/2001).

(a)  RSC Order 59 rule 13(1) provides that :

“Except so far as the court below or the Court of Appeal or a single judge may otherwise direct –

(i)  an appeal shall not operate as a stay of execution or of proceedings under the decision of the court below;

(ii)  no intermediate act or proceedings shall be invalidated by an appeal.”

(b)  The power of the Court whether to grant a stay is discretionary.

(c)  A stay will only be granted for good reason which must be demonstrated by the appellant upon whom the onus lies.

6.  The Plaintiff claims that unless a stay is granted it will suffer serious prejudice rendering the appeal nugatory in that :-

(a)  The 2^nd Defendant’s action in boarding up the opening of Shop 2B-B that opens onto the EEL and its intention to erect a shop in the EEL immediately adjacent to Shop 2B-B will obstruct access to all the Plaintiff’s properties with serious detrimental effects on the businesses of its tenants.

(b)  The Plaintiff is at risk of losing its well established tenants and faces possible legal proceedings by them.

(c)  Reasonable enjoyment of the properties will be lost.

(d)  The 2^nd Defendant has demanded an exorbitant price for the proposed new shop to be erected.

(e)  Unless a stay is granted, the potential damage to the Plaintiff will be difficult if not impossible to quantify and damages will in any event be an ineffective remedy.

(f)  The Plaintiff offers the usual undertaking in damages and has substantial assets from which to meet such damages.

7.  The 2^nd Defendant submits that there is no merit in the appeal and accordingly no stay should be granted.  In answer to the Plaintiff’s assertion that the appeal would be rendered nugatory without a stay, the 2^nd Defendant offers undertakings on a without-prejudice and without-admission basis to the effect that in the event of any sale or letting of any such new shop it will inform the purchaser or tenant of the appeal, it will obtain from the purchaser or tenant a covenant to comply with the outcome of the appeal and it will enforce that covenant.

8.  The Plaintiff bases its intended appeal on the following basis –

(a)  The 1^st Defendant could and did confer upon the Plaintiff a quasi-easement or right in respect of the use and right of way over the EEL; and

(b)  In the alternative, quasi-easements can arise by operation of law arising out of non derogation of grant and the presumed intent of the parties.

(c)  That in hearing this matter, I dealt with and decided the matter under (a) above but failed to consider the alternative of (b) above.

9.  In my view the intent of the parties is valid to the appeal.  The judgment does not make clear that I considered the matter, although I believe that I did so, since the decision as expressed had made further consideration unnecessary.  In my view the Plaintiff has raised an issue of merit and there is therefore an arguable case for appeal.

10.  Once satisfied that there is an arguable case for appeal, I turn to the question of whether any appeal might be rendered nugatory without a stay.  The 2^nd Defendant has pursued the fruits of the litigation with some vigour, boarding up the only side of Shop 2B-B by which it can conduct the business that it has been operating there for several years, and proceeding to build and erect a shop in the EEL which could well have the effect of destroying the trading environment of Shop 2B-B and reducing the approach to the staircase leading from the EEL to the Second and Third Floor premises owned by the Plaintiff.  The evidence of Yiu Kwan Hang Donna in this regard is troubling.

11.  Unless a stay is granted, the intended actions of the 2^nd Defendant will have a severe effect upon the Plaintiff and its properties.  The undertaking offered by the 2^nd Defendant, although providing some possible relief, does not take the matter much beyond its obligations as a potential vendor or landlord, and does nothing to relieve the potential damage to the existing tenants.

12.  Having regard to the existence of what is, in my view, an arguable appeal and the effect of the course of action both taken and contemplated by the 2^nd Defendant, I believe there is a real risk that by the time the appeal is dealt with its effect, if successful, could well be rendered nugatory.  In all the circumstances, I am satisfied that there should be a stay in the terms of the application.

13.  There will therefore be an Order in terms of paragraphs 1 and 2 of the Summons dated 2^nd August 2005.

Dated this 30^th day of August 2005.