WING MING GARMENT FACTORY LTD v. THE INCORPORATED OWNERS OF WING MING INDUSTRIAL CENTRE AND ANOTHER

HCA8805/1993
& CACV27/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 8805 OF 1993

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JUDGMENT

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1.  Before the Court are two appeals from the orders of Master Hui made on 1 September 2011 dismissing the applications by the Plaintiff and the Third Party (for convenience I shall simply refer to both of them as “Appellants”) to strike out the 2^nd Defendant’s (“D2”) two Notices of Commencement of Taxation of Costs (“Notices”) dated 8 June 2011 filed in HCA8805/1993 and CACV27/2008 respectively, and extending time to commence taxation.

2.  In issue on this appeal is the Court’s approach in an application for extension of time to commence taxation proceedings made after the expiry of the 2-year period prescribed under RHC O.62 r.22(7) introduced by amendments made under the Civil Justice Reform .

Material facts

3.  The relevant facts are not in dispute.  The taxation arose from a High Court action (HCA8805/1993) and the ensuing appeal (CACV27/2008).

4.  On 20 December 2007, Reyes J dismissed the action and the Third Party’s counterclaim.  The Appellants were ordered to pay D2’s costs.  That costs order became absolute on 3 January 2008.

5.  The Appellants appealed against Reyes J’s judgment.  The Court of Appeal dismissed the appeal on 2 June 2008 with costs. The costs order in the Court of Appeal became absolute on 11 July 2008. 

6.  On 24 July 2008, the Appellants applied for leave to appeal to the Court of Final Appeal.  The leave application process took more than a year, involving a number of hearings before the Court of Appeal and the Appeal Committee.  It is unnecessary to go into the details.  In short, there were two unsuccessful applications for stay of execution and two

applications for leave to appeal to the Court of Final Appeal.  The last application ended on 16 September 2009, when the Appeal Committee granted the Plaintiff leave to appeal on one issue only.  In the process, a number of costs orders were made against the Appellants in favour of D2.

7.  However, on 3 November 2009, the Appellants abandoned the intended appeal.

8.  In the meantime, D2 did not take steps to have the costs orders in its favour taxed.  On 18 February 2010, D2’s solicitors (“W&C”) wrote to the Appellants’ (then) solicitors proposing a global settlement of all costs orders in favour of D2 in the total sum of $2.5 million.  No reply was given.

9.  The Appellants changed solicitors in March 2010.  The settlement proposal was repeated in W&C’s letter to the Appellants’ new solicitors on 26 March 2010.  Again, no reply was given. 

10.  In August and September 2010, the Appellants changed their solicitors to the firm now representing them (“OHS”).

11.  In November 2010, W&C on behalf of D2 instructed a law costs draftsman to prepare a formal bill of costs.  The formal bill was ready on 12 April 2011.  This was sent to OHS under cover of a letter dated 14 April 2011 from W&C, who stated that if the Appellants did not accept the bill within 14 days, D2 would proceed to taxation without further notice.  OHS replied stating that they were seeking instructions and requested W&C to withhold further action for 7 days.

12.  On 24 May 2011, W&C gave final notice to OHS to provide substantive reply to W&C’s letter dated 14 April 2011.  On 2 June 2011, OHS replied to W&C, raising the point that D2’s entitlement to commence taxation had been time-barred on 2 April 2011 under O. 62 r. 22(7).

13.  On 6 June 2011, D2 filed the Notices, which led to the Appellants issuing the strike out applications on 28 June 2011. 

14.  On 18 July 2011, D2 issued two summonses under O. 62 r. 16(1) seeking extensions of time to commence taxation.

The taxation provisions

15.  RHC O.62 r. 22(7), which was introduced as part of the CJR, provides that:

“A party is not entitled to commence taxation proceedings under rule 21 —

(a) after the expiry of 2 years from the completion date; or

(b) where the Court has extended the period specified in sub-paragraph (a), after the expiry of the period as extended,

whichever is later.”

16.  Since both the costs orders at first instance and in the Court of Appeal were made before the commencement of O. 62 r. 22(7), by virtue of O. 62 r. 22(8) & (9), the “completion date” under r. 22(7)(a) is taken to be the commencement date of the rule, i.e., 2 April 2009. There is no dispute that the 2-year period expired on 1 April 2011.

17.  O. 62 r. 16 gives the taxing master power to extend time to commence taxation proceedings.  Rule 16, in so far as material, provides as follow:

“(1) A taxing master may—(a) extend the period within which a party is require by or under this Order to begin proceedings for taxation or to do anything in or in connection with proceedings before that master …

(3) A taxing master may extend such period as is referred to in the foregoing provisions of this rule although the application for extension is not made until after the expiration of that period.”

18.  Hence, as Mr Paul Lam (appearing with Miss Kay Seto) correctly submitted on behalf of D2, the Court has jurisdiction to extend time to commence taxation.  The real issue is whether the Court should exercise its discretion to extend time in the circumstances of this case.

19.  Moreover, O. 62 r. 22(5) gives the taxing master very wide powers in cases of undue delay:

“On the taxation of a bill of costs, whether or not an order has been made under paragraph (3), the taxing master, if he is satisfied that there has been undue delay in commencing taxation proceedings or in proceeding with the taxation –

(a) may make such order as he thinks fit as to the costs of any application or as to the costs of the taxation;

(b) may disallow any part of the costs to be taxed pursuant to the costs order;

(c) may, in relation to the taxed costs or any part of those costs, disallow interest or reduce the period for which interest is payable or the rate at which interest is payable.”

Reasons for the delay

20.  It is perhaps fair to say that the only reasons advanced for the delay were two-fold.  First, D2 and its solicitors did not want to incur time and costs to proceed to taxation pending the intended appeal. Secondly, D2’s solicitors attempted to interest the Appellants in agreeing to the amount of costs, but did not realise the “time limit” introduced by O. 62 r. 22 (7).

21.  I note, for the record, that Mr Lam very fairly disavowed any suggestion that the Appellants or their solicitors are to blame for the delay.

Grounds of Appeal and Submissions

22.  Mr Barrie Barlow SC, counsel for the Appellants, drew my attention to the “new culture” under the CJR, as exemplified by the underlying objectives enshrined in O. 1A rr. 1-2.  He relied on the well-known judgment of Fok J (as his Lordship then was) in Top One International (China) Property Group Co. Ltd v Top One Property Group Ltd [2011] 1 HKLRD 606 at paras 35, 31 and 55 and submitted that the CJR amendments mandated a more disciplined approach to time extensions.

23.  Mr Barlow impressed upon the Court that O. 62 r. 22(7) imposes a 2-year “limitation period” for commencing taxation, which should be strictly enforced unless there are genuine and compelling mitigating circumstances for non-observance.  Mr Barlow submitted that without more rigorous discipline, the new r.22(7) introduced by the CJR amendment would be no different from the pre-CJR regime and would not be effective to further the underlying objectives provided in O. 1A rr. 1 - 4. 

24.  Mr Barlow contends that on the facts, there is no special or compelling reason justifying extension of time.  In particular, he submitted that D2 has its remedies against W&C, which militates against extension of time.

25.  Mr Lam on his part agreed that the Court must construe O. 62 r. 22(7) in a way that would give effect to the underlying objectives under O. 1A r. 1: see O. 1A r. 2(1).  The Court must strive to give effect to the underlying objectives but must also take into account all relevant circumstances of the case.  He emphasised that in giving effect to the underlying objectives, the primary aim in exercising the power of the Court is to secure the just resolution of disputes in accordance with the substantive rights of the parties: O. 1A r. 2(2).

26.  Mr Lam submitted that the 2-year period is not a “limitation period” which operates in the same way as limitation periods under the Limitation Ordinance. 

27.  On the facts of this case, Mr Lam submitted that the delay was just over 2 months, and not substantial when viewed against the long procedural history of the proceedings. The delay was not due to any default or misconduct on the part of D2.  The forbearance to proceed to taxation in view of the pending appeal, and thereafter applications for leave to appeal, was sensible and understandable. 

28.  Moreover, Mr Lam argued that on the facts, it was not the case that D2 did not intend to give up its rights to costs.  Rather, D2 intended to proceed as demonstrated by its repeated attempts to interest the Appellants in agreeing to an amount without taxation, and then instructing the law costs draftsman to prepare a formal bill.  It is regrettable that the bill was not ready until after 1 April 2011, and W&C did not realise that time limit.  But once D2/W&C realised that time had expired, an application was made quickly for extension of time.

29.  In this connection, Mr Lam referred me to a number of authorities in England and Hong Kong in which the courts have held that lack of an acceptable explanation for delay is not by itself a sufficient reason to refuse to extend time: see Toniello v Top Deck Ski Ltd, The Times 7 December 1998 (CA) per Auld LJ (with whom Judge LJ agreed); London Borough of Southwark v Nejad [1999] 1 Costs LR 62 (CA) at 64 per Waller LJ (with whom Roch LJ agreed); Hong Kong Housing Society v Tang Kar Hung CACV153/1999, 9 November 1999, at p. 6 per Keith JA (extension of time to file affidavit in summary judgment application).

30.  Finally, Mr Lam emphasised that there is no prejudice to the Appellants which could not be properly addressed by an appropriate order under O. 62 r. 22(5).  To disallow the time extension would be to give the Appellants an unjustified windfall, and would be a wholly disproportionate penalty to D2 in the circumstances of this case.

2-Year limitation period?

31.  Mr Barlow’s submission that the 2-year period under O. 62 r. 22(7) is a “limitation period” may have been inspired by the notes in the current edition of Hong Kong Civil Procedure 2012 at para 62/22/6.  However, as Mr Lam quite rightly pointed out, the 2-year period under r.22(7) is not analogous to “limitation periods” as that terms is normally understood in the technical sense.  Here, although the effect of failure to comply with the 2-year period is that the right to tax is “lost”, there are 2 critical differences between r.22(7) and limitations under the Limitation Ordinance:

32.1   First, as a general rule and subject to specific exceptions, limitation periods under the Limitation Ordinance are not capable of being extended.  On the other hand, the period under O. 62 r. 22(7) can be extended under O. 62 r. 16.

32.2   Secondly, under the Limitation Ordinance, once time runs out, the cause of action will be barred.  There is no power to resurrect it.  In contrast, O. 62 r. 16(3) expressly permits retrospective extension of time to commence taxation proceedings.

32.  Thus, although it may be a convenient way to describe the 2-year limit under O. 62 r. 22(7) as a “limitation period”, such usage is potentially misleading.  It is probably better to avoid using the term to describe the time limit under r. 22(7).

No good explanation for default

33.  The gravamen of Mr Barlow’s submission is that absent a good explanation, the Court should not exercise its discretion to extend time under O. 62 r. 22(7).  In my judgment, it is too extreme a position to take.

34.  In my view, the Court must take into account all relevant circumstances of the case, rather than being bound by a strait jacket. The absence of a good reason is a relevant consideration, may be even a compelling reason, why indulgence should be refused.  The Court must also give effect to the underlying objectives.  However, it is wrong in principle for the Court to ignore other relevant circumstances in the exercise of its discretion under O. 62 r. 16.

35.  Mr Barlow submitted that O. 2 r. 5 (application for relief from automatic sanctions) applies in the current situation because the effect of non-compliance with O. 62 r. 22(7) is that a “sanction”—in the form of loss of the right to commence taxation—automatically follows.  Hence, Mr Barlow submitted, O. 2 r. 5 applies in the determination of D2’s application for extension of time.

36.  I have considerable doubt as to whether O. 2 rr. 3-5 have any direct application to this case at all.  But even if those rules apply, O. 2 r. 5(1)(d) makes it clear that whether there is a good explanation for the failure to comply is a factor to be taken into account.  As Fok J pointed out in the Top One case, the Court in considering whether to grant relief from sanction should consider all relevant circumstances including those listed in r. 5(1)(a)-(j).  It is not the case that the absence of a good explanation automatically debars relief.

Exercise of discretion

37.  I therefore proceed to consider whether I should exercise my discretion to extend time in the circumstances of this case.

38.  In my judgment, to refuse the extension of time sought would be a disproportionate penalty to D2’s delay.  I have come to this conclusion taking into account the following factors.

39.  First, in my view, the delay is substantial.  Although the time to commence taxation only expired on 1 April 2011, this was only because of the operation of O. 62 r. 22(8).  On the facts, Reyes J made the costs order in D2’s favour in January 2008.  The appeal to the Court of Appeal was dismissed in June 2008.  The delay in relation to the costs order made by the Judge is over 3 years and that in relation to the Court of Appeal is almost 3 years.

40.  However, I must also take into account the long procedural history of these proceedings.  Although I accept that D2 and W&C did not proceed to tax in order to avoid wasting time and costs should the Appellants succeed in their appeal, D2 could have protected its position on costs by securing their consent to a moratorium.  If no consent were forthcoming, D2 should have proceeded to taxation.  It has not done so and must bear responsibility for the delay. 

41.  On the whole, I would consider the delay to be substantial and this is a factor against D2.

42.  Secondly, I agree with Mr Lam that the delay was not due to any deliberate conduct or fault on the part of D2.  It was caused by W&C’s oversight.  This is a factor to be taken into account. 

43.  That said, W&C’s oversight is not a good reason for the default.  This must be a weighty factor against D2. 

44.  Mr Barlow submits that D2 has a remedy against W&C for negligence, and its claim would probably be amendable to summary judgment.  In my view, although D2 appears to have a good case against W&C for loss of its right to taxation, to force D2 to sue W&C for its loss serves to transfer the burden to pay D2’s costs from the Appellants to W&C.  It would also result in further proceedings and further use of the Court’s and parties’ time and resources.  There is insufficient justification to do so. 

45.  Mr Barlow referred me to the Court of Appeal’s decision in Cheung Yiu Wing v Celestial Asia Securities Holding Ltd CACV254/2005, 22 June 2006, at para. 8 where Le Pichon JA said (with the concurrence of Rogers VP and Stone J):

“… [counsel for the appellant] seemed quite unable to grasp the elementary principle that had there been any fault or blameworthiness on the part of [the appellant’s former solicitors] in failing to call potential witnesses, his client’s remedy lay in proceedings in negligence against [the solicitors] and not in an order for a retrial.”

46.  However, that case concerned an appeal seeking a re-trial on the ground that the solicitors failed to call certain witnesses.  Le Pichon JA continued to say, immediately after the quote cited by Mr Barlow, that:

“The court system would grind to a halt if an unsuccessful litigant could obtain an order for a retrial on the basis that relevant evidence could have been obtained with reasonable diligence but had not been adduced at the trial, not to mention the injustice of depriving the successful party of a judgment in his favour after a full trial.”

47.  The Cheung case is plainly distinguishable and Le Pichon JA’s observations must not be taken out of context.

48.  Thirdly, I take into account the fact that the delay has caused no prejudice to the Appellants.  Indeed, as Mr Lam has pointed out, to deny the extension of time would mean that the Appellants would get a windfall.  This factor was considered to be weighty in the two English Court of Appeal decisions cited above, i.e. Toniello and Southwark LBC, in a relevantly similar context (both cases concerned extension of time to commence taxation under the County Court Rules, which were similar to our scheme under O. 62 r. 22 (7) but the time limit there was 3 months).  In my view, this factor weighs in favour of D2.

49.  Finally, I agree with Mr Lam that there is sufficient flexibility given to the taxing master under O. 62 r. 22(5) to impose whatever “penalty” that the master may consider to be appropriate in the circumstances of this case.  Such power includes depriving the receiving party a portion of the costs so taxed, or to deprive him of all or part of the interest.  Mr Lam submitted, and I accept, that it should be up to the taxing master to deploy this built-in mechanism in light of the circumstances of the case to achieve a just result.

50.  Taking into account the above considerations, in my judgment the Court should exercise its discretion to extend time to commence taxation proceedings.  To refuse the extension would, in my judgment, be a wholly disproportionate penalty.

Result

51.  The appeals are therefore dismissed.  Counsel agreed that costs should follow the event, and I order that D2 shall have its costs of these appeals.

52.  Lastly, I thank counsel for their able assistance.

HCA 8805/1993

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 8805 OF 1993

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HCA 8805/1993

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 8805 OF 1993

______________________

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D E C I S I O N

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1.  I will grant the interlocutory injunction sought by the Incorporated Owners.

2.  Mr. Lee (appearing for Wing Ming) submits that I should not grant such an injunction.  This is because (according to Mr. Lee) all other owners in the Building have been allowing their units to be used in ways contrary to the Occupation Permit or the Conditions of Sale for the Building.

3.  Assume (without accepting) that all other owners are so conducting themselves.  I do not see how that can be any conceivable defence to an interlocutory injunction.

4.  The Incorporated Owners have an obligation to enforce the covenants in the DMC.  I am unable to see how, merely because owners (whether some, a majority, or all of them) in the Building are ignoring covenants in the DMC, the Incorporated Owners cease to have any obligation to enforce such covenants. 

5.  Indeed, I am unable to see how the Court can pierce the corporate veil and look behind the person known as the Incorporated Owners to see how individual owners in a Building have conducted themselves relative to particular covenants.

6.  I do not see how the acts of the individual owners here (whether some, a majority, or all or them) can give rise to any representation, estoppel or waiver in relation to the performance by the Incorporated Owners of its obligations. 

7.  Neither the owners in the Building nor (for that matter) the Incorporated Owners can deliberately or inadvertently authorise something which is illegal.  Neither the owners nor the Incorporated Owners can deliberately or inadvertently grant rights which are not in their power individually or jointly to grant.  None of them can deliberately or inadvertently authorise breaches of the Conditions of Sale imposed by the Government as landlord at the time of granting the land, nor authorise violations of the Occupation Permit.

8.  Mr. Lee says that the Incorporated Owners is being selective in whom it targets to enforce the DMC. The Incorporated Owners (Mr. Lee complains) has selected Wing Ming for reasons of vendetta.  But the Incorporated Owners (Mr. Lee asserts) had done nothing about violations by other owners, some of whom are officers of the Incorporated Owners.  There is therefore (Mr. Lee reasons) bad faith and I should withhold granting an injunction in my discretion.

9.  I do not think that this amounts to any defence. 

10.  If Wing Ming believes that the Incorporated Owners is not performing its proper duty, its remedy is straightforward.  It can apply to the Court for an Order of specific performance requiring the Incorporated Owners to enforce relevant obligations under the DMC.  The remedy to any alleged "potential inequity" alleged by Wing Ming is in its own hands as an individual owner privy to the DMC and entitled to see that the covenants there are properly enforced.  What Wing Ming is not entitled to do is to say, because other owners are flouting the DMC, it can too.

11.  Finally, even if there were any merit in Mr. Lee's arguments, by an undertaking to the Court given by affidavit filed on 2 February 2007, Wing Ming agreed to enforce the covenants in the DMC against any of its tenant in breach thereof. The rigour of that undertaking has not been changed in any way.  

12.  Thus, regardless of the conduct of other owners, Wing Ming has told the Court in no uncertain terms that it will diligently enforce the DMC against its tenants who use the Ground Floor premises in breach of the DMC.

13.  For the purposes of this hearing, Mr. Lee concedes that Wing Ming has allowed its Ground Floor premises to be used otherwise than in accordance with the Land Grant for the Building.

14.  As far as I can see, Wing Ming has failed diligently to enforce the terms of the Occupation Permit and Conditions of Sale against Mantex (Wing Ming’s tenant).  On the contrary, it has applied to set aside a summary judgment which the Incorporated Owners obtained before Chu J on 3 October 2007 for breach of the DMC and Occupation Permit.  Its case is apparently that (because of the conduct of all other owners) the Occupation Permit and Conditions of Sale can be ignored even though the DMC requires them to be observed. 

15.  This is all contrary to Wing Ming's undertaking to the Court.  It is plain that it does not take its undertaking to the Court seriously.  It has even suggested in some correspondence and (tentatively before me) that there never was an undertaking to the Court.  In all the circumstances, an express injunction appears to be called for at a minimum. 

16.  Accordingly, there will be an interim injunction in terms of the 1st paragraph of the Incorporated Owners' Summons dated 12 January 2007.

HCA 8805/1993

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 8805 OF 1993

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Before: Hon A Cheung J in Chambers

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J U D G M E N T

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Facts

1.  This is an appeal by the Plaintiff from the order of the master striking out the Plaintiff’s claim against the 1^st Defendant for want of prosecution.  No application to strike out was made by the 2^nd Defendant before the master and no order was made in relation to the Plaintiff’s claim against the 2^nd Defendant, who is not involved in this appeal. 

2.  The parties are familiar with the facts of this case.  I will not recite them in any detail.  What I say in this judgment should be sufficiently comprehensible to the parties.  Given the conclusion that I have arrived at in this appeal, I would like to be as brief as possible, so as not to delay the proceedings in this action any further. 

3.  The action was commenced in September 1993.  The Plaintiff, a co-owner in an industrial building, sued the incorporated owners of the same building for having installed a water supply pipe which passed at near ceiling height through a void above certain car-parking spaces reserved in the deed of mutual covenant (DMC) to the Plaintiff for the building of a cockloft.  The 2^nd Defendant was the contractor which carried out the work.  The Plaintiff applied for an interlocutory mandatory injunction for the removal of the water pipe from the void.  The application was refused by Barnett J on 26 January 1994.  The Plaintiff appealed, and the appeal was dismissed by the Court of Appeal on 13 July 1994.  Before the appeal was heard, the cockloft had already been constructed by the Plaintiff.  For details, see the written judgments of Barnett J and the Court of Appeal. 

4.  Pleadings were closed in February 1994.  The Plaintiff took out a summons for directions on 4 May 1994, which was heard by Master Jennings on 20 May 1994.  He ordered discovery and inspection of documents as well as mutual service of signed witness statements as to fact within 90 days.  Discovery was duly completed by the parties, but as regards the mutual service of witness statements, by order dated 11 November 1994, Master Woolley extended the time for service by 14 days from the date of the order.

5.  On 25 November 1994, the parties’ solicitors orally reached an agreement, which was recorded in a solicitors’ letter dated 26 November 1994, that there be a general extension of time for the exchange of witness statements, subject to a written notice to be served on the other party 7 days before the exchange of witness statements was to take place.

6.  In the meantime, third party proceedings were commenced by the Defendant against the manager named in the DMC for the management of the building.

7.  In 1995, the parties reached an agreement for the demolition of the allegedly infringing water pipe on the basis that the demolition was without prejudice to the parties’ respective contentions. 

8.  Suffice it to say that thereafter, neither the Plaintiff nor the Defendants took any steps toward the prosecution or defence of the Plaintiff’s claim or the 1^st Defendant’s counterclaim, save and except that in May 1997, October 1999, January 2001, February 2002 and March 2003, the Plaintiff through solicitors served a total of 5 notices of intention to proceed.  With the exception of the last notice, the Plaintiff took no step in the proceedings after the service of the respective notices.

9.  Then after the service of the last notice on 18 March 2003, the Plaintiff by solicitors took out a summons dated 18 July 2003 for various directions, including a direction for the mutual service of signed witness statements as to fact within 42 days and directions relating to expert evidence.

Application to strike out

10.  This prompted the 1^st Defendant to make an application by summons dated 29 August 2003 to strike out the Plaintiff’s claim against it for want of prosecution.  As mentioned above, the application succeeded before the master.  The 1^st Defendant’s application proceeded on two alternative grounds: first, inordinate and inexcusable delay resulting in prejudice; second, abuse of process.  The 1^st Defendant relies on the same two grounds in resisting this appeal.

11.  The first ground is based on the second limb of strike-out for want of prosecution authoritatively explained by Lord Diplock in the celebrated case of Birkett v. James [1978] AC 297.  The second ground is based on the leading case of Grovit v. Doctor [1997] 1 WLR 640 (and other subsequent cases) – the relevant case law has been examined by our Court of Appeal in the recent case of New China Hong Kong Group Ltd v. AIG Asian Infrastructure Fund LP [2005] 1 HKLRD 383 (2 February 2005).  From more angles than one, the abuse of process ground may be regarded as a specific application of the first limb of strike-out (contumelious conduct) explained by Lord Diplock in Birkett v. James (at page 318F).

Inordinate and inexcusable delay

12.  Dealing first with the first ground for strike-out, i.e. inordinate and inexcusable delay resulting in prejudice, there are generally three requirements, i.e. inordinate delay, inexcusable delay and resulting prejudice.  But satisfaction of the general conditions would only mean that the court may exercise its discretion to strike out; it does not follow that the court must do so: Kerry Foodstuffs Co. Ltd v. Phulsawat Navy Co. Ltd [1999] 3 HKC 523, 527G/H, per Godfrey JA.  The court has still a discretion to exercise.

13.  From the chronology, it is plain that there was a lengthy period of inactivity starting from late 1994 or early 1995 until March 2003 (notice of intention to proceed) or 18 July 2003 (summons for various directions).  I have no doubt that the period of delay in question, no matter how it is counted, is inordinate.  It is not saved by the service of the various notices of intention to proceed, which were not followed by any actual step taken in the proceedings, with the exception of the last one.

14.  As to whether the delay is excusable, I can quickly dispose of two factual matters raised by the Plaintiff in opposition to the summons.  First, in my judgment, the alleged difficulties encountered in the preparation of the expert report relating to the quantum of the Plaintiff’s claim for damages, this being the only live relief sought in the Plaintiff’s action after the agreed demolition of the water pipe in 1995 on a without prejudice basis, simply do not justify or excuse the long delay.

15.  Secondly, the Plaintiff says that there have been settlement talks throughout the years.  No doubt, there were such talks in the earlier years, which led eventually to the demolition of the water pipe in 1995.  I see no reason why the parties should not have wanted to have further negotiations amongst themselves so as to settle the whole matter after 1995.  But even on the Plaintiff’s own case (which is denied by the 1^st Defendant which says that there were no such negotiations after 1995), the alleged negotiations were sporadic, general and inconclusive.  As Rix J said in The Finnrose [1994] 1 Lloyd’s Rep. 559, 564,

“Sporadic attempts at a settlement are no excuse for letting an action go to sleep.  Litigants who mislead themselves into thinking that fruitless negotiations are going somewhere have only themselves to blame if they allow time to pass them by.  There is no reason in any event why negotiations cannot be pursued simultaneously with the advancement of the litigation.”

16.  At the hearing, Mr Daniel Fung SC (appearing together with Ms Catrina Lam) for the Plaintiff in this appeal (but not below), understandably chose to place emphasis on the agreement reached in late November 1994 by the parties’ solicitors for a general extension of time for the exchange of witness statements subject to a 7 days notice, in defence of the long period of inaction thereafter.  It should be noted that at that time, in terms of the directions given by Master Jennings hearing the summons for directions, the only outstanding direction to be complied with by the parties was the mutual exchange of witness statements.  Master Jennings had not given any expert directions.  Thus the agreement for a general extension of time for the exchange of witness statements actually dealt with the only outstanding direction in the proceedings at the time.  Thus Mr Fung argued that there was in fact an agreement for a general extension of time for the taking of any steps in the action subject to the 7 days notice.  Leading counsel relied on the judgment of Sakhrani J in Wycombe Investment Ltd v. Leong Siu Hung, HCA 5665/1997 (20 September 2004), where the parties’ solicitors agreed to an extension at large of the time for the exchange of expert reports, in support of his argument. 

17.  Mr Horace Wong SC, appearing for the 1^st Defendant (here and below), countered by challenging the validity of the solicitors’ agreement in writing.  He said that O. 3 r. 5(3) of the Rules of the High Court (formerly Rules of the Supreme Court) (Cap. 4) gives the parties the right to extend time by written consent without an order of the court being made.  But it does not apply to the time for the exchange of witness statements because O. 38 r. 2A(2), para. 3 specifically provides that O. 3 r. 5(3) shall not apply to any period specified by the court for the exchange of witness statements.  He thus argued that Mr Fung’s argument could not take off the ground.

18.  I reject Mr Wong’s argument based on O. 38 r. 2A.  Our present rule 2A relied on by Mr Wong was a replacement rule introduced by L.N. 223 of 1995 on 25 May 1995.  It substituted the former rule 2A – which can be found in the 1988 edition of the Laws of Hong Kong.  The former rule 2A in Hong Kong was the same as the former rule 2A in England prior to the latter’s substitution by a new rule under S.I. 1992 No. 1907 (the new rule 2A in England was the same as our present rule 2A).  The former version of rule 2A in England can still be found in The Supreme Court Practice 1993, vol. 1, para. 38/2A (whereas the new version in England can be found in The Supreme Court Practice 1995, vol. 1, para. 38/2A).  Under the former rule 2A in Hong Kong (as well as in England), there was no provision excluding the application of O. 3 r. 5(3), which is of course, subject to any such exclusion, of general application.

19.  In short, I reject Mr Wong’s argument and conclude that the solicitors’ agreement in writing back in November 1994 constituted a valid general extension of time for the exchange of witness statements. 

20.  But that is not sufficient for Mr Fung’s purpose.  In my judgment, notwithstanding the presence of such a valid general extension of time for the exchange of witness statements, there was still no excuse for the long period of delay between late 1994/early 1995 and 2003.  Wycombe simply does not assist Mr Fung because in that case the time elapsed pursuant to the general extension of time for the exchange of expert reports was expended by the plaintiff on the preparation of the necessary expert reports, which were by no means simple documents.

21.  In the present case, apart from the negotiations which led to the demolition of the water pipe in 1995, I fail to see what purpose the general extension of time for the exchange of witness statements served the Plaintiff, whether in terms of better preparation of its case against the Defendants or defence of the 1^st Defendant’s counterclaim, pursuing further settlement between the parties (beyond the demolition of the water pipe), or otherwise.  As I said, I attach little weight to the alleged sporadic settlement talks between the parties.

22.  Furthermore, whilst the exchange of witness statements was the only outstanding direction at the time, an agreement for a general extension of time for the exchange of witness statements did not mean a general extension of time for the taking of any steps in the proceedings.  The agreement would not prevent the Plaintiff from seeking, for instance, an expert direction in relation to quantum from the court in the meantime for the further prosecution of its case.

23.  For all these reasons, I am of the view that the delay after the demolition of the water pipe in 1995, or maybe a reasonable period (say several months to half a year) thereafter, when it must have been apparent to the Plaintiff that there was no immediate prospect of any overall settlement with the Defendants, is not only inordinate but inexcusable.

Resulting prejudice

24.  Turning to resulting prejudice, I entirely agree that there must be a causal connection between the delay and the alleged prejudice:  See for instance, Rath v. C S Lawrence & Partners [1991] 1 WLR 399, 410E (per Slade LJ).

25.  Mr Wong placed heavy emphasis on the disappearance of the chairman of the management committee of the 1^st Defendant at the time (a Mr Chan) since he and his company moved out of the building in the summer of 2000, and the technicians formerly in the employ of the 2^nd Defendant who actually carried out the water pipe installation work, and the general dimming of the recollection of the remaining witnesses.

26.  The prejudice hardly needs any elaboration.

27.  However, in evaluating the prejudice, one must examine the nature of the dispute and issues involved, and the content and relevance of the witnesses’ or missing witnesses’ potential evidence.

28.  For the purpose of the present application, the only relevant cause of action is one based on a breach of the DMC.  The Plaintiff’s case is that essentially the DMC reserves to the Plaintiff (as developer of the building) the exclusive rights to hold, use, occupy and enjoy the void space.  So far as relief is concerned, the only relief sought is damages.  In my judgment – and I have to form a provisional view on the matter – there can be no arguable defence to the Plaintiff’s claim based on a breach of the provisions in the DMC.

29.  But then Mr Wong argued, as has been pleaded in the defence, that notwithstanding the breach, the 1^st Defendant is immune from liability or payment of damages by reason of a clause in the DMC (paragraph 4 on page 26 of the DMC).  Paragraph 4 is essentially an exemption clause which applies to the “Manager” of the building (i.e. the 3^rd Party in these proceedings or “any other manager for the time being appointed as manager of the Building pursuant to [the DMC]”:  page 4 of the DMC), or “any servant agent or other person employed or delegated by the Manager”, provided that the thing done or omitted in question in pursuance or purported pursuance of the provisions of the DMC was not an act or omission “involving criminal liability or dishonesty or wilful negligence”.

30.  Mr Wong argued that paragraph 4 applied to protect the 1^st Defendant (the incorporated owners) provided that the installation of the water pipe involved no criminal liability, dishonesty or wilful negligence on the part of the incorporated owners.  He therefore argued that the evidence of Mr Chan, the former chairman, who was in charge of handling the installation work and subsequent dispute and who had first-hand knowledge of all relevant matters, would be highly relevant in establishing that there was no criminal liability, dishonesty or wilful negligence involved.

31.  Mr Wong also argued that so far as quantum is concerned, Mr Chan’s evidence would also be highly material because the quantum would be dependent on how exactly the water pipe had been installed and how the construction and use of the cockloft had been hindered, if at all, by the presence of the water pipe.  By the same token, Mr Wong argued that the disappearance of the workmen who actually carried out the work at the material time would also be prejudicial to the 1^st Defendant in its defence of the quantum.

32.  Again, I have to form some provisional views here.  It is plain from a fair reading of the Court of Appeal’s judgment back in 1994 that the court (comprising Mortimer JA, Sears and Rogers JJ – as they then were) took a rather dim view of the merits of the 1^st Defendant’s case based on paragraph 4.  For my part, I must confess to having some difficulties in understanding how paragraph 4, which applies to the “Manager”, could have any application to the incorporated owners.

33.  That being the case, the inquiry into the subjective state of mind of the incorporated owners or the members of the management committee at the time (including that of Mr Chan’s) would likely be academic. 

34.  As for quantum, Mr Fung has referred me to some contemporaneous photographs, drawings and documents relating to the construction and demolition of the water pipe (as well as the construction of the cockloft).  I tend to agree with Mr Fung that so far as quantum is concerned, the case would largely turn on documents and expert evidence, rather than the evidence of Mr Chan or the workmen who carried out the installation or demolition work at the time or the recollection of the available witnesses.

35.  That said, I am not at all saying that there has been or would be no prejudice suffered by the 1^st Defendant’s side in terms of having a fair trial and a fair presentation of the 1^st Defendant’s case.  What I have done above was to evaluate the extent of the prejudice.

36.  Apart from the above prejudice, Mr Wong also drew my attention to the fact that the 1^st Defendant, being the incorporated owners, represents in effect all the owners of the building for the time being.  Given the way liability of the incorporated owners is shared amongst the co-owners for the time being of the building, and given that owners do come and go, the longer the present action is stalled, the greater is the likelihood that the owners at the time when the cause of action accrued would be different from the owners of the building at the time of judgment (assuming that the 1^st Defendant should fail in its defence).  Mr Wong argued that it would be inherently unfair for the new owners to bear the burden of the (wrongful) act of the past owners.

37.  Mr Fung countered that the new owners must have, or must be taken to have, purchased their units in the building with full knowledge of the pending litigation and the risk of the 1^st Defendant’s losing the action.

38.  Despite Mr Fung’s argument, I agree with Mr Wong that there would be some prejudice involved.

39.  I have not lost sight of the general prejudice to a defendant in having an action hanging over his head indefinitely:  Biss v. Lambeth Heath Authority [1978] 1 WLR 382, 389F (per Lord Denning MR). 

40.  In summary, I conclude that there has been or would be prejudice to the 1^st Defendant in terms of having a fair trial and the other matters discussed above, resulting from the inordinate and inexcusable delay.

Discretion

41.  But as mentioned above, that would only mean that the Court has a discretion to exercise whether to strike out the claim; it does not follow that the Court must do so.  Besides the inordinate and inexcusable delay and the resulting prejudice (as analysed above), I must bear in mind all other relevant circumstances and matters.  There are several of them argued by counsel.  It cannot be seriously disputed that none of the circumstances would by and of itself be sufficient in determining how the discretion should be exercised – although naturally some would carry more weight than others, and all the relevant circumstances and considerations must be taken into account. 

Strength of the Plaintiff’s case

42.  Mr Fung argued that his client has a convincing if not overwhelming case against the 1^st Defendant on liability, and quantum is just a matter of assessment.  He submitted that the Court would be reluctant to strike out such a meritorious claim for want of prosecution (in the absence of contumelious default or abuse of process – see below).  Mr Wong did not really dispute the above as a general statement of principle.

43.  I have already dealt with, on a provisional basis, the merits of the Plaintiff’s claim.  I have borne this matter in mind, although I must emphasize that the weight to be attached to this factor is limited.  The law reports are full of cases in which meritorious, convincing or even overwhelming claims were struck out by the court for want of prosecution.  See for instance, Culbert v. Stephen G Westwell & Co. Ltd [1993] PIQR P54 (30 July 1992), where the English Court of Appeal struck out a personal injuries claim even though it recognised that “liability is not seriously in doubt, indeed it may already have been decided in the plaintiff’s favour”, on the ground that there was no real possibility of a fair trial on quantum – the accident having happened in October 1981, almost 10 years before the application to strike out was taken out. 

Co-defendant not applying to strike out

44.  Mr Fung argued that this is not an appropriate case for strike-out because no similar application for strike-out has been made by the 2^nd Defendant.  He relied on the decision of Waung J in Lui Chun Kwong v. Kier Hong Kong Ltd [1995] 1 HKC 695 where it has been said that in an action where there is more than one defendant but only one of them applies to dismiss the plaintiff’s claim against him for want of prosecution, the court has regard to broad justice and it would normally require a strong case to persuade a court to dismiss the action against one defendant and allow the action to proceed against the other defendant.  This is specially so, when the defendants have rights of contribution or indemnity against each other and only in exceptional circumstances would the court allow a split situation of striking out against one defendant because this would defeat the whole purpose of striking out since the struck-out party could be brought back right in by the remaining defendant.  According to the learned judge, the clear principle which the English authorities on this subject established is that only in the most exceptional circumstances would it be right for the court to strike out only one defendant and allow the action to proceed against the other defendant: see p. 715E to H.

45.  Mr Wong in turn referred me to a number of relevant English cases and said that in fact the prima facie rule ought to be the other way round:  in the absence of exceptional circumstances, a defendant’s right to have the claim against him struck out for want of prosecution should not be affected by the inaction of his co-defendant or the compromising acts of the co-defendant which led to a failure in the case of the co-defendant to obtain a similar order for strike-out; each defendant’s case or application should be considered on its own merits. 

46.  The English authorities have been considered by our Court of Appeal in Hymer v. Mass Transit Railway Corp. [2000] 2 HKLRD 589.  Ribeiro JA (as he then was) set out the correct general principle at page 606A/B to C, which is of course binding on this Court (the other two members of the court agreed with the judgment of Ribeiro JA):

“In my view, these authorities plainly indicate that it is necessary, in the exercise of the judicial discretion, to consider, as a possibly important factor, the impact of striking out the action in respect of some, but not all, of the defendants.  Having considered the matter, the court retains a discretion to proceed with such a course although a partial striking out would be exceptional, especially if this is likely to result in re-instatement of the proceedings against the relevant defendants by way of third party proceedings.”

47.  Mr Wong further argued that everything must depend on the facts, and on the facts the possibility of the 2^nd Defendant issuing third party proceedings against the 1^st Defendant after the claim against the 1^st Defendant has been struck out, or commencing a fresh action for contribution against the 1^st Defendant (if it should be found liable in the present action) is merely theoretical.  Moreover, in such proceedings or fresh action, the issue raised would be quite different.  Mr Wong referred to the fact that no contribution proceedings have been issued by the 2^nd Defendant against the 1^st Defendant thus far, and they were for a long period of time represented by the same set of lawyers, who did not perceive the existence of any conflict of interest amongst the two Defendants. 

48.  That may well have been so, but I do not think that the consideration mentioned by Mr Fung is only relevant or significant when the reinstatement of proceedings against the relevant defendant by way of third party proceedings or a subsequent fresh action is “likely”.  That has not been the formulation of Ribeiro JA in Hymer, although it must be right that the more likely a co-defendant would be brought right back in by one means or another, the more reluctant the court would be to exercise the discretion to strike out the claim against the co-defendant.

49.  On the facts, the situation when both Defendants are sued and represented by the same lawyers and that when the claim against the incorporated owners is struck out leaving the contractor as the only remaining defendant in the action may not be the same.  Indeed commercially speaking and as a matter of commonsense, I am inclined to think that if the 2^nd Defendant were to be left alone to face the Plaintiff’s claim – and assuming that the 2^nd Defendant should obtain proper legal advice – the chances of it issuing third party proceedings against the 1^st Defendant for indemnity or contribution would be real.  Here, I reject Mr Wong’s side-point that such a claim would be time-barred: the right to seek contribution or indemnity under the Civil Liability (Contribution) Ordinance (Cap. 377), whether by way of a contribution notice amongst co-defendants, a third party notice against an outsider, or a fresh action after judgment has been entered against the defendant seeking contribution, is 2 years from the date of judgment or settlement, as per section 6 of the Limitation Ordinance (Cap. 347).   

50.  Alternatively, in my view, there would be a real risk of the 2^nd Defendant commencing a fresh action against the incorporated owners for indemnity or contribution, if it should go down in the present action as the only remaining defendant (without taking out third party proceedings).  Waung J has already pointed out the serious problems that such a fresh action for contribution or indemnity would pose, in terms of a risk of inconsistent judgments, in the second scenario painted by me above, in Lui Chung Kwong, at pp. 717C to 719B. 

51.  I do not think it safe to assume that the 2^nd Defendant would not take any of these proper steps to protect its legitimate interest and seek contribution or indemnity from the 1^st Defendant (from which it obtained the contract to carry out the work in question), due to ignorance of the law or lack of legal advice. 

52.  Apparently no such question of contribution or indemnity arose when both parties were represented by the same lawyers and maybe there was some understanding – here I am just speculating – amongst themselves.  But the position may well be different if the 2^nd Defendant should be left as the only defendant in this action. 

53.  To bypass all these concerns, Mr Wong submitted that the Court of Appeal’s decision in Ho Hip Lik v. Kwan Man Ho [1996] 2 HKLR 184 supported his further argument that in a multiple-defendant situation, the court could strike out the action against all defendants even though only some of them were applying for such an order in respect of the claim against them individually.  I am sure that in an appropriate case, the court could and should do that.  But Ho Hip Lik  was a very special case.  It was a probate case and the decision was highly fact-sensitive.  The action was a challenge against a will which named the 1^st defendant as the sole-executor.  The plaintiffs and the other defendants were beneficiaries under the will and/or intestacy.  In those circumstances, when the Court of Appeal decided that it was right to strike out the claim against the 1^st defendant for want of prosecution, it must also be right to strike out the plaintiffs’ claim against all the other defendants/beneficiaries even though some of them did not apply for an order of strike-out or take their case to the Court of Appeal.  The course taken by the Court of Appeal was well explained by the peculiar facts of that case. 

54.  In the present case, it is of course open to this Court, at least in terms of jurisdiction, to strike out the Plaintiff’s claim against the 2^nd Defendant as well even in the absence of such an application by the latter, if the Court is sure that all relevant material has been placed before it and this is the right course to take, provided that a sufficient notice and warning of the Court’s intention to do so and an opportunity to respond to it have been given to the Plaintiff.  But that begs the question as to how that jurisdiction should be exercised in practice.  Waung J considered and rejected such a suggestion in Lui Chung Kwong at p. 716B/C to F.

55.  But as I say, I am not prepared to rule out the possibility of striking out the claim against the 2^nd Defendant as well so as to overcome the difficulty posed by the presence of two Defendants with one only applying for an order to strike out.  The way I see it is that all this is a matter to be considered in the context of the exercise of the Court’s discretion.  I bear in mind carefully all the arguments and possible options in considering how my discretion should be exercised.

56.  As to Mr Wong’s further argument that the 1^st Defendant would be faced with a much more straightforward claim by the 2^nd Defendant in any such (future) third party proceedings or contribution action than in the present claim by the Plaintiff against it, in my judgment, in the third party proceedings or contribution action, the question of whether the 1^st Defendant, if sued to the end, would be found liable to pay damages to the Plaintiff for the loss and damage suffered by the Plaintiff would be in issue, and thus the defence now raised by the 1^st Defendant in the present action would be raised.  The emphasis of the contribution legislation is on the same “damage”, rather than the same cause of action against the various wrongdoers.  I do not accept Mr Wong’s argument.

Limitation period

57.  The next matter is the question of limitation period, the importance of which in the context of a strike-out application based on the inordinate and inexcusable limb hardly needs any explanation (see Birkett v. James at pp. 331E to 334F).

58.  Non-expiry of the limitation period is not an absolute bar to a strike-out but is nonetheless a very important factor to be taken into account.  In a case not involving any contumelious conduct or abuse of process, if there is something really to be gained either by the defendant or by the court in striking out the claim prior to the expiry of the limitation period, the court could, if so justified on the totality of the relevant considerations, order a strike-out:  Tam Chi Kok Gabriel v. Fok Eugina, HCA 1859/1992 (12 June 2003), a decision of mine, paras. 96 to 102. 

59.  Relying on Aiken v. Stewart Wrightson Members Agency Ltd [1995] 1 WLR 1281 and Incorporated Owners of Million Fortune Industry Centre v. Jikan Development Ltd [2003] 1 HKLRD 455, 466H (per Rogers VP), Mr Fung argued that his client’s claim against the 1^st Defendant based on a breach of the DMC has an applicable limitation period of 12 years, which will not expire until August 2005, the DMC being a document under seal and thus a specialty which enjoys a limitation period of 12 years:  section 4(3) of the Limitation Ordinance.

60.  Mr Wong argued otherwise.  He said that the incorporated owners was not an original party to the DMC.  It is only bound by the provisions in the DMC by virtue of section 8(2)(a) of the Building Management Ordinance (Cap. 344), upon the incorporation of the owners as a body corporate pursuant to the provisions of the Ordinance.  Counsel therefore said that the Plaintiff’s claim is one for recovery of a sum recoverable by virtue of an Ordinance, and according to section 4(1)(d) of the Limitation Ordinance, the applicable limitation period is 6 years, which has long expired.  As a fallback position, Mr Wong said that so long as his argument on limitation period was arguable, the Court should not be deterred by the question of limitation from ordering a strike-out.  If and when necessary, the question of limitation may be raised, argued and decided in a future application to strike out in the new claim, if any, that may be brought by the Plaintiff against the 1^st Defendant following the strike-out of the present claim in this action, on the ground that the new claim is time-barred.  Mr Wong relied on Barclays Bank Plc v. Miller [1990] 1 WLR 343, 348A to 349F (per Staughton LJ) and Rath, supra, at pp. 413E to 414D (per Slade LJ) in support of his alternative submission. 

61.  I reject Mr Wong’s primary submission.  Mr Wong accepted that if there had been no incorporation of the co-owners, any claim by an individual owner against the other co-owners in the building for breach of the DMC would be a cause of action based on the DMC itself, even though most of the co-owners in the building would not have been an original party to the DMC, which was, as is typically the case, entered into by the developer and the first purchaser of an unit in the building, together with the manager. The subsequent co-owners were bound by the DMC by virtue of the provisions in section 39 to 41 of the Conveyancing and Property Ordinance (Cap. 219).  Mr Wong specifically conceded, in my view rightly so, that in such a case, the wronged individual owner’s cause of action would be based on the DMC, rather than on the Conveyancing and Property Ordinance, which merely rendered the covenants in the DMC enforceable by and binding on all subsequent owners of the building (amongst themselves).

62.  That being the case and true analysis, I totally fail to see how the incorporation of the owners by the registration procedure provided in the Building Management Ordinance would have the effect of turning an action against the co-owners after incorporation to one based on the Ordinance itself, rather than the DMC.  Section 8(2)(a) of the Building Management Ordinance merely says that with effect from the date of issue of the certificate of registration, the owners for the time being of the building shall be a body corporate with perpetual succession and shall in the name of the corporation be capable of suing and being sued.  In my view, the cause of action, whether before or after incorporation, would be one based on the DMC, instead of under any Ordinance.

63.  Nor do I think Mr Wong’s primary submission can square with what Rogers VP has said in Incorporated Owners of Million Fortune Industrial Centre, supra, at p. 466 F/G to H (para. 28), which is binding on this Court.  In that case, the incorporated owners sued a co-owner and the manager, both being an original party to the deed of mutual covenant, for breach of the same.  Rogers VP held that it was a claim founded on the deed and the limitation period was 12 years.  The limitation defence was therefore rejected.  If Mr Wong’s primary argument is right, the incorporated owners’ cause of action should have been treated as being based on section 8(2)(a) of the Building Management Ordinance rather than the deed.  For there should be no difference between a case where, as here, the incorporated owners is being sued, and one where, as in the Court of Appeal case, the same is suing.

64.  In any event, in my judgment, Mr Fung must be right in his alternative submission that an Ordinance, like an Act of Parliament, being an instrument under the legislative seal, is indeed a specialty within the meaning of section 4(3) of the Limitation Ordinance, and if the Plaintiff’s cause of action were one based on the Building Management Ordinance, the applicable limitation period would nonetheless be 12 years.  He cited the analysis of the situation in McGee, Limitation Actions (4^th ed.) paras. 11.002 to 11.006, in support of his argument. 

65.  That being my view, I need not deal with Mr Wong’s alternative argument.  But even if I am wrong and the matter is debatable (Mr Wong never rated his primary argument higher than that), I still do not think that the facts and circumstances of the present case are such that the Court should proceed on the basis that the matter be left to be decided in a subsequent action (if any) to be commenced by the Plaintiff after its claim against the 1^st Defendant in the present action is struck out. 

66.  Where it is felt by the court that the question of limitation is a difficult one (as has been the case in Barclays Bank Plc. v. Miller relied on by Mr Wong), there is much to be said for making a strike-out order now and leaving the limitation point to be argued and decided in future, if it should ever be required to be decided in a future action (if any).  However, where as here (ex hypothesi as per Mr Wong’s alternative submission), it is only barely arguable that the cause of action is time-barred, the wisdom of ignoring the limitation question and leaving the matter for future adjudication (if required) is doubtful.  First, if the point is merely arguable, there is no reason why the court seised of the application for strike-out should not decide it one way or another.  Secondly, almost by definition, since it is only barely arguable that the cause of action is time-barred, if the action is struck out, there would be a high likelihood of the immediate commencement of a fresh action by the plaintiff.  In such a case, if the defendant raises the limitation defence in a strike-out application, which again would be likely, the court would have no option but to deal with it.  In other words, in that event, nothing would be gained by deferring the question of limitation.  Thirdly, as an alternative to deciding the limitation point there and then, there would be much to be said for the court proceeding on the footing that it is only barely arguable that the cause of action is time-barred (without definitely deciding on it) in considering, together with all the other relevant circumstances and considerations, how best to exercise its discretion.  This approach would have the advantage of doing away with the need, whether by that court or (if no strike-out is ordered) by a subsequent court in a future action, to decide the limitation point.

67.  On the facts of the present case, bearing in mind the entrenched positions of both parties that are apparent from the conduct of and response to the present application to strike out and the current appeal, it is highly likely that if the present action is struck out, the Plaintiff will immediately commence a new action, and sooner or later, the parties will be back in court arguing about the limitation period and abuse of process all over again.

68.  In other words, whether as a matter of principle or on the facts of the present case, Mr Wong’s alternative submission does not appeal to me.

69.  In summary, I have come to the conclusion that the limitation point is not arguable.  But in case I am wrong, I would also proceed on the (alternative) basis that it is only barely arguable that the cause of action is time-barred in considering how I should exercise my discretion.  In other words, I refuse to approach the question of discretion on the simplistic basis that this Court could and should leave the limitation point for future decision – without bearing in mind that it is only barely arguable that the cause of action is time-barred.  In considering how to exercise my discretion, I have alternatively adopted both approaches (i.e. that the limitation period has not expired or alternatively that highly arguably it has not).

70.  Mr Wong has not put forward any further fallback argument to the effect that if the limitation period has not expired, there is something real to be gained either by the 1^st Defendant or by the court in striking out the present claim nonetheless, in the absence of any contumelious conduct or abuse of process.  I need not consider this possibility any further.

General extension of time

71.  Mr Fung heavily relied on the 1994 agreement by the parties to a general extension of time as a factor that the Court should take into account in considering how the discretion should be exercised.  He stressed that the 1^st Defendant agreed to the general and open-ended extension, that the 1^st Defendant never bothered to issue a 7 days notice to make time running again, that the 1^st Defendant was never ready itself to file and exchange the witness statements, and that the 1^st Defendant never took any step either to further defend its case or to prosecute its own counterclaim which to some extent is related to the claim.  Mr Fung relied not only on Wycombe, supra, but also on Kerry Foodstuffs, supra, in support of his argument. 

72.  I have already set out my views on Wycombe.  In Kerry, there were 10 consent applications for extension of time for the filing of witness statements and expert evidence.  The Court of Appeal concluded from the relevant correspondence that the 1^st defendant in that case went along with the plaintiff’s conduct of the action in a desultory way, and refused to disturb the deputy judge’s exercise of discretion in refusing to strike out the claim:  see pp. 528D/E to I and 529C to D and E.  In my view, Kerry is a stronger case in that there were 10 consent applications over a period of time, whereas in the present case there was simply an one-off general agreement for an extension of time back in November 1994.  Thereafter the 1^st Defendant did nothing which could be construed as acquiescence, condonation or active encouragement of the Plaintiff’s prolonged inaction.  What the 1^st defendant did (or did not do), should be considered in the context that the Plaintiff was in the driving seat of its own claim against the 1^st Defendant (leaving aside the 1^st Defendant’s own counterclaim).  I do not think the 1^st Defendant’s inaction regarding the prosecution of its counterclaim could be regarded as any such condonation, acquiescence or active encouragement relating to the Plaintiff’s delay in prosecuting its claim.  In any event, the Court of Appeal’s decision turned more on the general appellate restraint in not interfering with the exercise of discretion by the judge of first instance rather than how the discretion should have been exercised in the first place if it were sitting at first instance.

73.  For all these reasons, whilst I must not ignore the fact that back in November 1994, the 1^st Defendant was agreeable to a general and open-ended extension of time, I attach very limited, if not little, weight to this argument of Mr Fung.

Proofing witnesses

74.  As regards proofing witnesses, and whether the 1^st Defendant should be wholly or partly to blame for its predicament in relation to the missing witnesses, which is relevant to the question of causal prejudice as well as general discretion, regard have had to what has been said by Ribeiro JA in Hymer, supra, at p. 610D to J, as well as what was said in the case of Hunter v. Skingley [1997] 1 WLR 1466, 1472E to 1473C (per Hirst LJ) and 1474D/E to G (per Phillips LJ).  Of course in both cases, the parties or witnesses involved were themselves professional people or experts.  But I think what has been said about proofing witnesses would still be applicable, depending on the facts and subject to appropriate adjustments, to cases involving laymen and ordinary or factual witnesses.  But I only attach very limited weight to this factor because no matter how detailed a witness statement, if promptly taken, could have been, it would be no substitute for the “live” evidence of a witness attending trial.  The absence of such a witness at trial due to an opponent’s inordinate and inexcusable delay must be an important matter to take into account in the balancing exercise.

Conclusion on exercise of discretion

75.  Those were the principal matters argued by counsel on both sides.  Besides, there were peripheral and minor arguments raised, all of which I have borne in mind.  As I said, I must bear in mind all the relevant considerations and factors, in deciding how I should exercise my discretion.  I must resist the temptation to decide the case by merely focusing on the substantial length of delay involved in the present case, although no doubt this is an important factor to take into account, for the length of delay is by and of itself insufficient to justify a strike-out based on the inordinate and inexcusable limb.

76.  Having done so, I have come to the conclusion that my discretion should be exercised against striking out the claim.  On the totality of the relevant considerations and factors, those pointing in favour of striking out are outweighed by those pointing in the other direction.  This is a de novo hearing.  I am not bound by the exercise of discretion by the master below, who has reached the conclusion under appeal after careful consideration.  Having had the benefit of considering the extremely thorough arguments from senior counsel on both sides, I have come to a different view. 

Contumelious conduct and abuse of process

77.  Turning to the alternative limb to strike out based on contumelious conduct or abuse of process, it must be remembered that in Birkett v. James, Lord Diplock explained that the power to strike out should only be exercised where the court is satisfied that the default has been “intentional and contumelious, e.g. disobedience to a peremptory order of the court or conduct amounting to an abuse of the process of the court” or in the case of an inordinate and inexcusable delay (discussed above): p. 318F to G.  Subsequent English cases, and the local cases that followed the former, have expanded on the limb based on abuse of process:  see for instance, Grovit v Doctor, supra;Arbuthnot Latham Bank Ltd v. Trafalgar Holdings Ltd [1998] 1 WLR 1426.  The relevant authorities have been discussed in some detail by our Court of Appeal in New China Hong Kong Group, supra, which is of course binding on this Court.

78.  Mr Wong argued that there was contumelious conduct in the present case in that the Plaintiff failed to follow the timetable for the exchange of witness statements laid down in the respective orders of Master Jennings and Master Woolly back in 1994.  He said that the solicitors’ agreement in writing to generally extend the time for exchange of witness statements was invalid.  As explained above, I am of the view that the general extension was a valid one.  In any event, even if the extension was invalid, and thus there was technically speaking a failure to comply with the orders of the court, the failure was, in that respect, due to a mistake by both parties regarding whether a consent order had to be made to embody the parties’ undoubted agreement to a general extension of time.  I fail to see how those facts could support the conclusion that there has been “intentional and contumelious” conduct or an abuse of the process of the court on the part of the Plaintiff.  The case of Hytec Information Systems Ltd v. Coventry City Council [1997] 1 WLR 1666, cited by Mr Wong, is wholly distinguishable on the footing that it was concerned with the deliberate flouting of an unless order by a party (for which its counsel had much to blame) in most exceptional and peculiar circumstances.

79.  By the same token, I do not accept that the inordinate and inexcusable delay in the present case amounted to a “wholesale disregard of the rules” of the court or that if it did, it was done with “full awareness” of the consequences:  See New China Hong Kong Group, supra,at pp. 397I – 398A and 398F, paras. 32 and 35 (per Woo VP).  There was a valid agreement for a general extension of time.  In any event, if a formal consent order was wanting, the Plaintiff’s conduct was due to a mistake rather than any conscious decision with full awareness of the consequences.

80.  Nor in my view do the 5 notices of intention to proceed take Mr Wong’s case any further.  Mr Wong referred to the 5 notices in support of his argument that the Plaintiff through its solicitors was “fully” aware of the effect of its delay in prosecuting the action (for a year’s inaction in the proceedings would require the service of a fresh notice of intention to proceed).  I do not accept that argument.  In any event, before one could successfully infer from the facts that there was a wholesale disregard of the rules, full knowledge of the consequences did not even come into the picture.

Lack of (definite) intention as abuse of process

81.  Mr Wong was on firmer ground when he argued that whilst delay per se could not amount to an abuse of process, it could, depending on the facts, constitute evidence of a lack of intention (Grovit v. Doctor) or a “definite” intention (Advaita Enterprises v. Seafast Marine Transport Inc., HCCL 241/1995, Chung J, 24 November 2001) to bring the action to trial, thus amounting to an abuse of the process of the court.

82.  That delay per se is not equivalent to an abuse of the process of the court has been firmly affirmed by the Court of Appeal in New China Hong Kong Group, at p. 393E, para. 13 (per Woo VP).

83.  On the facts of the present case, can one infer from the long delay, as well as the other relevant circumstances, the lack of an intention or settled intention to bring this case to trial? 

84.  I have borne in mind all the facts and circumstances, including in particular the solicitors’ agreement to extend time in general subject to a 7 days notice, the alleged settlement talks (which are in dispute on evidence) and the various notices of intention to proceed.  I have also taken into consideration the fact that the Plaintiff did, following its 5^th notice, take out a summons for further directions, thereby evincing an intention to bring the action to trial – the 5^th notice was not served, nor the summons taken out, as a desperate response to a warning or intimation from the 1^st Defendant to apply to strike out the claim for want of prosecution (unlike many typical cases); there was no such warning or intimation.  I am unable to conclude that there was no intention or settled intention on the part of the Plaintiff to bring this action to trial, such as to amount to an abuse of the process of the court.  I have not, of course, lost sight of the fact that there has been a very lengthy delay in the present case.  Whilst that must be an important evidential matter to take into account, as I said, having taken that and everything else into account as well, I am unable to reach the requisite conclusion in favour of this limb of strike-out.

Discretion – abuse of process limb

85.  In any event, even if I am wrong, there is nonetheless a discretion to exercise, and in considering how that discretion should be exercised, the question of the non-expiry of the limitation period must be carefully borne in mind:  see New China Hong Kong Group, at pp. 400H to 404J, paras. 48 to 58, where the Court of Appeal took into account various matters, including the question of limitation, in considering whether the discretion to strike out should be exercised even if there were an abuse of the process of the court.

86.  I have borne in mind all the relevant matters; many of them overlapped with the matters considered above under the limb of inordinate and inexcusable delay.  Amongst others, I have borne in mind the question of prejudice – in this context (of the present limb) the presence of prejudice would incline the court to exercise the power to strike out whereas the absence of prejudice per se would not deter the court from exercising its power in an appropriate case – maybe that is the beauty of this abuse-of-process limb to strike out as compared with the inordinate and inexcusable limb.  I have of course, as mentioned above, borne in mind my views on the limitation period.  Likewise, I have borne in mind the fact that there are two Defendants in the present case, and one of them has not applied for an order to strike out.  I have taken on board the merits of the case, the length of the delay, and the lack of any valid excuses for the delay.  I have borne in mind the agreement to generally extend time (for the exchange of witness statements).  I have borne in mind also (ex hypothesi) the seriousness of the abuse involved.  I have not lost sight of the court’s interest in upholding its own process and due administration of justice, and I have not overlooked the public interest that disputes before the court should be heard and disposed of with reasonable dispatch. 

87.  Having done so, assuming that an abuse of process was involved in the present case, I have no doubt that I should exercise my discretion against a strike-out order.

Conclusion on contumelious conduct and abuse of process

88.  But my conclusion on this limb of strike-out rests primarily on my view that this is not a case of an abuse.  I agree with Stone J who said in New China Hong Kong Group that the Grovit v. Doctor line of argument should best be confined to those instances which are “patently abusive of the process”, lest that the inordinate and inexcusable delay with causal prejudice limb established by Birkett v. James should be “emasculated by the back door”; and that abuse of process is perhaps like “an elephant: difficult to describe, but you know it when you see it”: paras. 66 and 67 (at p. 406A – D/E).  For my part, I do not see any elephant in the present case.

89.  For all these reasons, I have come to a conclusion different from that of the master below.  

Outcome

90.  I have tried to be brief but this has turned out to be a lengthy judgment.  I do not think I would be doing counsel justice if I were to say that I have dealt with specifically in this judgment each and every argument, which has been raised by counsel on both sides.  All I would say is that I have borne all of them in mind and dealt with the major ones in the judgment.  I thank counsel for their assistance.

91.  I order that the appeal be allowed and the order of the master below be set aside.  I also make an order nisi that the costs, here and below, be paid by the 1^st Defendant to the Plaintiff in any event; such costs are to be taxed if not agreed with a certificate for two counsel for the hearing of the appeal.  The same shall become absolute unless either party should apply to vary the same within 14 days after this judgment is handed down.

92.  In order to avoid further delay, I also direct that the Plaintiff’s summons for further directions, taken out on 18 July 2003, be restored for hearing before a master forthwith.  I fully expect the Plaintiff to henceforth prosecute its claim against the Defendants expeditiously.  Any further delay in so doing would be received with little, if any, sympathy or indulgence from the court, which, I would think, would not hesitate to reinforce any orders it may hereafter make that are not complied with timeously by appropriate peremptory orders.  Needless to say, my decision here will not prevent the Defendants from making a fresh application to strike-out that is based on any such further delay or non-compliance with the rules or court orders.

93.  Rather frustratingly, this appeal illustrates how an unsuccessful application to strike out would serve to aggravate the delay that had already been experienced in an action, which prompted the application to be made in the first place.  The last notice of intention to proceed was filed and served on 18 March 2003, more than two years from the date this judgment is handed down, and the summons for further directions taken out in July 2003 has yet to be heard because of the (unsuccessful) application to strike out.  Two further years of delay have thus been experienced.  Without intending to affect anybody’s right to lodge an appeal from this judgment, I would venture to say that if there should be yet another appeal which should turn out to be unsuccessful, the entailing delay would be almost intolerable if not scandalous.

Mr Daniel Fung SC & Ms Catrina Lam, instructed by Messrs Deacons, for the Plaintiff

Mr Horace Wong SC, instructed by Messrs Hampton, Winter & Glynn, for the 1^st Defendant

1993, No. A8805

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. The Plaintiff's claim against the 1st Defendant is for a variety of injunctions, principally mandatory in nature, and for damages for trespass and/or breach of agreement. Its claim against the 2nd Defendant is also for injunctive relief, principally mandatory in nature, and for damages for trespass. The Plaintiff has applied by summons in the action for the injunctive relief. There is really no dispute that, if that relief is granted, it will have the effect of deciding the action between the parties.

2. The Plaintiff was the owner of land in Cheung Yiu Street, Cheung Sha Wan. About 20 years ago, it erected an eleven-storey factory building which it called Wing Ming Industrial Centre on the land. About 3 years ago, the Plaintiff decided to sell off parts of the building. For this purpose, the land and building were divided into 1,323 equal undivided shares. A Deed of Mutual Covenant (DMC) dated 2nd March 1991 was entered into between the Plaintiff, the 1st Purchaser and Essman Construction Company Limited (Essman). Essman was by this DMC made the management company of the building for a period of 6 years. The DMC, as far as I can tell, followed the now customary form. The 1st Purchaser was given the exclusive right to hold use occupy and enjoy two floors of the building. The Plaintiff reserved the right to sell off further undivided shares together with similar exclusive rights of use in relation to other designated parts of the building. The Plaintiff also reserved the right to construct a cockloft over car-parking spaces 2, 3 and 4 on the ground floor of the building.

3. Other parts of the building have since been "sold off". The Plaintiff, however, still retains exclusive rights of occupation in relation to, inter alia, part of the ground floor, including car-parking spaces 3 and 4, and the basement. Car-parking space No. 2 has been disposed of to another purchaser. Although there was some issue about it on the pleadings, it is no longer in dispute, as I understand it, that the Plaintiff has successfully reserved to itself the right to construct the cockloft over all 3 parking places provided there is left a minimum clear head room of at least 7 feet 6 inches. The Plaintiff applied for and obtained from the Building Authority the necessary approval for the construction of the cockloft and other works. The totality of the work involved will provide the Plaintiff with approximately 3,000 sq. ft. of storage space on or over the ground floor of the building which the Plaintiff estimates could produce a monthly rental of about $167,000,00.

4. In the meantime, relations between the Plaintiff and the 1st Defendant have become strained. The degree of such strain and the causes therefor will be matters to be investigated at trial, if trial there be. Suffice it to say, the Plaintiff and Essman are connected. Mr. Yuen Man Hui is managing director of the Plaintiff and a director of Essman. He owns 99 out of 5,000 shares in the Plaintiff and 2,800 out of 3,000 shares in Essman. In 1992, Essman advised the owners committee (now the management committee, following changes in the law in 1993) that an overhaul of the Fire Services installations was necessary. It presented the committee with two quotations for the cost of overhaul and advised the committee that, unless it heard to the contrary, it would assume it was authorised to accept one of the quotations and proceed with the work. There appears to have been no objection from the committee. Equally, it appears Essman took no action.

5. In July 1993, the committee took its own action. It obtained a quotation from the 2nd Defendant, and in early August 1993, had the repair work carried out by the 2nd Defendant. This action by the 1st Defendant was in spite of protests by Essman which maintained that it should be responsible for signing the necessary contract and for supervising the work in its capacity as management company.

6. Crucial to the repair work was the replacement of the main water supply pipe which ran under the ground floor and which had been found to be leaking. It is unclear when the need for such replacement became apparent because there is certainly no mention of it in the quotations obtained by Essman. At all events, the 2nd Defendant, which has become the unwitting and unwilling party to the dispute between the Plaintiff and 1st Defendant, determined that locating, excavating and replacing the buried pipe, would be difficult, costly and inconvenient. It came to the conclusion that a new pipe should be routed along the ceiling of the ground floor and down into the basement to the pump-room. It was concerned amongst other things to ensure a minimum number of bends in the pipe in order to avoid an unacceptable reduction in mains pressure. The pipe was therefore routed straight across the ceiling of the ground floor, through the space above car parks 2, 3 and 4, down one wall of the ground floor, through the floor slab, across a small part of the basement ceiling and through a wall into the pump- room from where water is pumped round the building to sprinklers on the various floors in the case of an emergency.

7. When the Plaintiff discovered what happening, it immediately protested. These protests fell on deaf years. There was a flurry of solicitors' letters. Ultimately, the Plaintiff commenced these proceedings, in which the 1st Defendant is contemplating joining Essman as third party because it maintains Essman in breach of its duties under the DMC failed properly to supervise the carrying out of the work by the 2nd Defendant. At the same time, Essman is threatening action against the 1st Defendant for usurping its functions under the DMC. I have to say that, on the face of it, the 1st Defendant's complaint against Essman is breath-taking.

8. The Plaintiff's claim against both Defendants is in trespass. Against the 1st Defendant, it is also in tort for wrongful interference with its contracts with third persons and in contract for breaches of the DMC. I say at once that the claim for wrongful interference with contract is wholly misconceived. The contracts in question are the assignments to other purchasers of the building. Under those assignments, the purchasers as co- owners have no positive obligations to perform but simply an obligation not to stop the Plaintiff building its cockloft. No individual owner has done anything to prevent the Plaintiff building its cockloft. In my judgment, it is not to the point to say that the 1st Defendant, representing the owners collectively, has somehow interfered with that obligation by constructing or permitting to be constructed a pipe through the space reserved to the Plaintiff.

9. It is not in dispute that the court may grant an interlocutory mandatory injunction in normal cases provided it feels a high degree of assurance that, at trial, it would appear that the injunction was rightly granted. See Lau Wing Mo v. Lo Kong and Another 1991 No. 183 (Civil), an unreported decision of the Court of Appeal dated 9th June 1992. For the Plaintiff, however, Mr. Ismail argued that there is a different approach in cases of trespass to land. He said that, in the absence of exceptional circumstances or an arguable case by a defendant that there was a right to trespass, a land owner is prima facie entitled to an interlocutory injunction to restrain trespass on his land. For this proposition, he relied upon Patel and Others v. W.H. Smith (Eziot) Limited and Another [1987] 1 W.L.R. 835 and On Woollerton and Wilson Limited v. RichardCostain Limited [1970] 1 All E.R. 483. Those cases, however, were predicated upon the land owner having established his title. The question was whether or not the defendant could establish that he had a right to do what would otherwise be a trespass. In those cases, the land owner's title was not in issue. It was for the respective defendants to try and justify their trespass and show an arguable case to that effect. See the judgment of Balcombe L.J. in Patel at P.859.

10. Mr. Ismail further argued that the principle is even further refined in the case of a breach of a DMC. He relied upon the general rule that a court has no option but to grant an injunction to restrain a breach of a negative covenant. See The Incorporated Owners of Mai On IndustrialBuilding and Another v. Hedit Limited 1987 No. A6529, an unreported decision of Godfrey J. (as he then was) dated 18th December 1987. An essential feature of this principle is that a party must be encouraged to keep its contract, not to break it. In The Incorporated Owners of DragonView v. Nalpak Limited 1986 No. A3356, another unreported decision of Godfrey J. dated 18th January 1989, the judge, while not being prepared to grant the injunctive relief sought by the plaintiff, was at pains to spell out and declare that the defendant was in breach of the relevant provisions of a DMC and that the plaintiff was vindicated to the extent that it had established the principle that the provisions of a DMC must be observed.

11. In spite of the submission of Mr. Chan to the contrary, I am satisfied that there was reserved to the Plaintiff by the DMC and various assignments to other purchasers, a sufficiently defined space above the 3 car- parking spaces. I reject the submission that, until the cockloft had been constructed, the space was insufficiently defined to admit of trespass or unlawful entry or other interference. Trespass is the unlawful interference with the right to possession of land or the air space above it. See paragraph 1384, Vol. 45, Halsburys Laws of England, 4th Ed. Therefore, said Mr. Ismail, the offending pipe having unarguably been placed in the space reserved exclusively for the Plaintiff, a trespass has occurred and relief must be granted whether or not the Plaintiff has sustained any damage.

12. The 1st Defendant is sued as agent or representative of the owners of the building. The Plaintiff and the other owners are tenants in common, bound by unity of possession. For the Defendants, Mr. Chan contended that each owner has a right to possession of the whole building subject only to the agreement between owners that each will be given an exclusive right to "use hold and occupy" a defined part of the building. The word 'possession' is carefully avoided in the DMC and assignments, as is the case in respect of all multi-storey buildings. As tenants in common, one owner cannot commit a trespass against another. Mr. Chan referred to paragraph 1399, Vol. 45 Halsburys Laws of England, 4th Ed. which reads :-

"Co-owners. A joint tenant or a person entitled in common under a trust for sale of land can maintain trespass against his co-tenant if the co-tenant expels him from the land or destroys the subject of the co-tenancy without his consent, but not otherwise."

13. Mr. Ismail responded that the court should look at the reality of the situation. Notwithstanding the labels "possession" and "use and occupation", the Plaintiff and the other owners have effective possession in respect of the various defined parts of the building reserved to them. He relied upon two further judgments of Godfrey J. In Goodtex Land Company Limited v. Lung Kwong Emporium Company Limited 1993 No. MP2234 dated 3rd September 1993, the judge concluded that there was an implied reservation that each individual purchaser should obtain exclusive use of a particular floor but should be excluded from the use of the other floors. I can see how that decision points in the direction in which Mr. Ismail invites me to go. In Lai Wing Ho and Another v. Chan Siu Fong 1992 No. MP2835 dated 9th November 1992, the judge said :-

"No doubt in practice, the provisions of the deed of mutual covenant would be construed so as to preclude any co-owner claiming under it to complain of an agreement in respect of the taking of exclusive possession of part of the building by a person expressed to be granted that right. In theory, however, it is impossible for the co-owner's rights to possession of the whole to be limited in any way; for such limitation would be repugnant to the nature of his co-ownership."

14. The judge went on to say that a tenant in common cannot create any right to exclusive possession of part only of the premises, being a right capable of subsisting and binding his co-owners. The only way in which it might be done is by the grant of a licence which would in any event not be enforceable against the other co-owners. With respect to Mr. Ismail, this judgment seems to point in the opposite direction.

15. I do not think the concept of possession can be so conveniently adopted to suit an aggrieved co-owner, or at least not at an interlocutory stage. The matter requires far more detailed examinations. As far as the claim in trespass is concerned, I am satisfied that the Defendants have shown an arguable case that, whatever else they might have done, they have not committed an act of trespass.

16. Further, I take into account the fact that what has been done is in the interests of all owners of the building including the Plaintiff because the maintenance of effective fire fighting equipment is clearly of the highest priority. I have also inspected the premises. The encroachment by the pipe on the Plaintiff's space is little more than technical. I am not persuaded that it in any way inhibits the Plaintiff from constructing its cockloft. Nor do I see that it will have more than the most minimal impact upon the storage space then available to the Plaintiff. Similar considerations apply to the other acts of trespass complained of, namely the piercing of the floor slab and the placement of the pipe in the basement. In all the circumstances, I am quite satisfied that it would be wholly wrong to grant any injunctive relief at this stage. The issue in relation to trespass must go to trial.

17. Given the background to this dispute, I do not think that the allegation that the 1st Defendant is in breach of the DMC provides any more firm ground for the grant of injunctive relief. The essence of the complaint is that the 1st Defendant by the management committee has usurped the function of the management company, Essman. In arranging for the work to be carried out it was acting ultra vires and in a willfully negligent manner because it ignored requests by Essman, the manager, to provide specifications for the work. Even if it was arguably properly assuming and discharging the function of manager, it acted in a wholly unreasonable and arbitrary manner by encroaching upon the Plaintiff's space without any proper notice or consultation. The object, it is suggested, was to further its ends in the dispute with the Plaintiff over the running of the building. It acted, therefore, in a dishonest or at least willfully negligent manner, so that it is not entitled to the immunity which would otherwise be conferred upon it by the DMC.

18. Paragraph A, 1(ii) of section V of the DMC defines the manager. In my judgment, this definition is an unhappy one and destined to cause problems in the management of a multi-storey building. It is at least arguable that either the management committee or the management company may be the manager from time to time. However the provision is construed, the 1st Defendant's case is that Essman had effectively abandoned its management responsibility, so that it fell on the 1st Defendant through its management committee to do something about the state of the building, particularly the Fire Services installation. In replacing the main supply pipe, it acted responsibly by appointing a competent contractor (no complaint is made about the 2nd Defendant in this respect) and provided an efficient fire fighting capability, coupled with minimum expense and inconvenience, to the advantage of all owners including the Plaintiff.

19. I am satisfied that this is a matter which manifestly needs to be investigated at trial.

20. Accordingly, I dismiss the Plaintiff's summons. I make an order nisi that the Defendant should have the costs in any event.

Representation:

Mr. A. Ismail, inst'd by Johnson Stokes & Master for Plaintiff

Mr. A. Chan, inst'd by Hampton Winter & Glynn for 1st and 2nd Defendants