Ranex Investments Ltd v. Hero Sky Ltd

LDPE 1280/2015

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO LDPE 1280 OF 2015

________________

________________

_______________

REASONS FOR DECISION

_______________

1.This is an interlocutory application filed by the respondent for (1) leave to appeal of the order made on 18 April 2016; and (2) extension of time to pay rent, management fee and rates for April and May 2016.

2.Since the tribunal shall not exercise its power of review in respect of a decision if this decision has already been the subject of appeal or otherwise unless such proceedings have been abandoned, I asked the respondent at the hearing to clarify whether the respondent actually applied for leave to appeal only, or review of the time for payment, or both.  The respondent confirmed that the respondent applied for leave to appeal only.

3.At the conclusion of the hearing on 11 May 2016, I ordered that (1) the interlocutory application filed by the respondent on 3 May 2016 be dismissed; and (2) the respondent do pay the applicant the costs of this interlocutory application which is summarily assessed at $7,800, with reasons to be handed down in writing.  I now do so.

Background

4.Before the hearing on 11 May 2016, there were hearings on 13 January 2016, 15 February 2016, 25 February 2016, 18 March 2016 and 18 April 2016.

5.The applicant is the landlord and the respondent is the tenant of a shop in Hung Hom with restriction to use for the purpose of operating kindergarten and/or nursery.  On 14 December 2015, the applicant filed a Notice of Application to the tribunal for recovery of possession and contended that the respondent has failed to pay rent for about 2 months, management fee and air-conditioning charge for over 1 year and licence fee in respect of a signage for about 4 months.  The applicant also claimed for interest on the amounts in arrears and deposit of the tenancy agreement in the sum of $1,535,625 that had already been deducted by the applicant in payment of other outstanding sum.

6.The respondent filed a Notice of Opposition on 23 December 2015 and contended that the amount of claims including the deposit was unclear and did not match with the records of the respondent.  The respondent further submitted that there was a verbal agreement with an ex-General Manager of the applicant that “rental payment is not necessary paid on the first day (of the)[1] month, and rather it can either be met by one lump sum or in portions at any time of the month.”

7.At the call over hearing on 13 January 2016 when the parties were not legally represented, the representative of the applicant admitted that some of the figures as claimed might be wrong and the representative of the respondent, Mr Wong Shuai Fun (“Mr Wong”), also said that the respondent would need time to check the bank accounts and all the payments since lease commencement, but Mr Wong admitted that the respondent have not paid rent since 1 November 2015.  After hearing the submissions of the parties, I ordered to adjourn the hearing to 15 February 2016, and at the same time directed the parties to file on or before 4 February 2016 (i) further particulars of the claims and defenses; and (ii) amended and up-to-date records of receipt and payment.  I have also made an unless order for interim payment of the rent/mesne profits from 1 November 2015 to 31 January 2016 in the sum of $540,000 payable by the respondent on or before 22 January 2016, otherwise the tribunal would not accept the respondent’s grounds and evidence for the defenses and applicant could then apply for judgment by an interlocutory application. 

8.The respondent has subsequently made the interim payment and the parties have also submitted further particulars on time.  In the respondent’s written submission dated 4 February 2016, the respondent alleged that there was a discrepancy of $205,246.70 between the applicant’s claims and the respondent’s records.  The respondent further submitted that the ex-General Manager of the applicant had verbally indicated to the respondent that “it is more important for the defendant (respondent) to meet the rental payment.  If the defendant (respondent) was unable to make the management fee payment, they (the applicant) can give indulgence on the arrear payments and schedule later for the defendant (respondent) to make good of the arrear management payments.”

9.At the further call-over hearing on 15 February 2016, the respondent was absent but has sent a general staff member to attend the hearing and submitted a letter of Mr Wong alleging that Mr Wong was unwell and asking for an adjournment.  In the circumstances, I agreed to adjourn the hearing to 25 February 2016.  I also directed the applicant to file a written response to the respondent’s written submission dated 4 February 2016 and made a further unless order for interim payment of the rent/mense profits from 1 February 2016 to 29 February 2016 in the sum of $180,000 payable by the respondent on or before 23 February 2016.  The respondent has subsequent made the interim payment and the applicant has also filed the written response on time.

10.At the further call-over hearing on 25 February 2016, the respondent was legally represented by Ms Daphne Wong instructed by Kong & Tang Solicitors, which was appointed by the respondent on the same date.  Ms Daphne Wong asked for further adjournment of the hearing and time to file where necessary an amended Notice of Opposition.  After hearing the submissions of the parties, I agreed to adjourn the hearing to 18 March 2016 but at the same time made an unless order that the respondent should (i) on or before 4 March 21016 make an interim payment of the rent/mense profits from 1 March 2016 to 31 March 2016 in the sum of $180,000 and management and air-conditioning charges for the same period in the sum of $118,125; and (ii) on or before 10 March 2016 file written response to the applicant’s written submissions dated 3 February 2016 and 19 February 2016 and where necessary an amended Notice of Opposition.  It is not disputed that the respondent has subsequently paid $300,000 on 3 March 2016 and there was an excess of $1,875.

11.At the further call-over hearing on 18 March 2016, the respondent was still legally represented by Ms Daphne Wong and the applicant was firstly represented by W.K. To & Co.  After the discussions at the hearing, the respondent agreed to re-amend the Notice of Opposition.  I have then ordered to adjourn the hearing to 18 April 2016 and that the respondent do make an interim payment by 1 April 2016 the rent/mesne profits and management and air-conditioning charges from 1 April 2016 to 30 April 2016 in the sum of $298,125 and the rates from 1 January 2016 to 31 March 2016 in the sum of $25,050 with credit of the excess payment of $1,875.

12.The respondent filed a Notice to Act in Person on 2 April 2016.  At the further call-over hearing on 18 April 2016, the respondent was represented by Mr Wong again.  Before the hearing, the respondent filed an interlocutory application on 14 April 2016 for an extension of time to file the re-amended Notice of Opposition.  Since the respondent failed to file the re-amended Notice of Opposition and comply with the interim payment order, the applicant also filed an interlocutory application on 11 April 2016 for final judgment against the respondent or alternatively interim payment of the management and air-conditioning charges from 1 February 2015 to 29 February 2016 in the sum of $1,535,626 and periodical payment of rent/mesne profits, management and air-conditioning charges and rates from 1 April 2016.  It is not disputed that the respondent has once sent a cheque to W.K. To & Co., instead of the tribunal as ordered, and made the interim payment, but in any event this cheque was dishonored because of insufficient funding.

13.Mr Wong asked for an extension of time to make the interim payment by end of May 2016 and file the re-amended Notice of Opposition within 21 days and time to file written response to the applicant’s interlocutory application dated 11 April 2016 within 35 days.  Mr Wong said that Kong & Tang Solicitors has just returned the documents to him on 10 April 2016 and he received the applicant’s interlocutory application on 12 April 2016 only, and he without the assistance of legal adviser would need time to study the documents in person or might employ new legal adviser and then reply.

14.Since the respondent has made interim payments on time in the past and has just acted in person, I consider that it is reasonable to grant the respondent a second chance to make the interim payment and file the documents.  After hearing the submissions of the parties and considering the available dates for further call-over hearing, I agreed to adjourn the hearing to 18 May 2016, allowed the respondent to file the re-amended Notice of Opposition and the written response to the applicant’s interlocutory application dated 11 April 2016 by 9 May 2016, and made an unless order for interim payment payable by the respondent of (i) the rent/mense profits and management and air-conditioning charges for April 2016 (with deduction of excess payment of $1,875) and rates for the 1^st quarter 2016 on or before 20 April 2016; and (ii) the rent/mense profits and management and air-conditioning charges for May 2016 on or before 3 May 2016.  I further ordered that if there is any default in complying with any of the payment conditions, the tribunal will not accept the re-amended Notice of Opposition and further submission and evidence of the respondent.

15.Close to the end of the hearing, Mr Wong requested to extend the time for interim payment of the rent/mense profits and management and air-conditioning charges for April 2016 to a later date again and said that he would have worry over arrangement of funding in such short period of time, but this was refused by me.  The respondent should have already made the interim payment on 1 April 2016, but the respondent failed to comply with this order when the respondent was legally represented.  In fact, the respondent has tried to make the interim payment to the applicant directly but finally failed. Although I accepted the adjournment and would allow a second chance for payment, the grant of indulgence would not be unlimited, particularly when the next hearing would be held in May 2016 only after the respondent would have already occupied the suit premises in April 2016.  This is a balancing exercise that I should consider the backgrounds and positions of both parties.  I consider that the respondent which requested for adjournment should have prepared for the funding for the rent/mense profits and charges for the adjournment period and further extension of time for interim payment would not be fair and equitable.

Grounds of Appeal

16.The respondent applied for leave to appeal the “unless order” for interim payment only.  In support of the interlocutory application, the respondent set out 2 reasons, which are summarized as follows: -

(1) The tribunal has failed to take into account the assurances of indulgence previously given by the ex-General Manager of the applicant in the rental and management fee payment ; and

(2) The parties are yet to come to an agreement on the outstanding amounts due to the applicant.

17.The applicant objected to the grant of leave to appeal because the respondent has not provided any ground of appeal on point of law and the appeal does not has a reasonable prospect of success too.  Whilst, Mr Wong considered that the appeal has a reasonable prospect of success but he agreed that he could not provide any erroneous point of law.

18.The respondent has been amending in the various submissions particulars of the assurances. This is a matter of fact and has not been brought to trial yet.  Anyhow, in considering the grant of the unless order, I have taken into consideration the dispute in this regard, but the presence of this dispute in the case would not affect the decision on the unless order.  It was the respondent which asked for extension of time for interim payment and adjournment, and the interim payment as ordered was limited to the rent/mense profits and charges for mostly the adjournment period only.  Before the next further call-over hearing on 18 May 2016, the respondent would have already benefited from the occupation for whole April 2016 and over half of May 2016.  In any event, the respondent was arguing about assurance of indulgence in payment of periodic rent and charges only and not the waiver of payment. While I accepted extension of time for interim payment and adjournment at the request of the respondent, I consider that it is reasonable for the respondent to make an interim payment for the adjournment period and at the same time there should also have conditions for non-compliance, otherwise the damage of the applicant if any might increase over the adjournment period.   

19.Further, I consider that the disagreement on the outstanding amounts in the past would have no bearing on the interim payment of the rent/mense profits and charges for mostly the adjournment period.  The interim payment order has not covered the disputed amount at all.

Conclusion

20.According to section 11(2) of the Lands Tribunal Ordinance (“the Ordinance”), any party to proceedings before the Tribunal may appeal to the Court of Appeal against a judgment, order or decision of the Tribunal on the ground that such judgment, order or decision is erroneous in point of law. 

21.Section 11AA(6) of the Ordinance stipulates that leave to appeal shall not be granted unless the Tribunal, the Court of Appeal or the registrar hearing the application for leave is satisfied that (a) the appeal has a reasonable prospect of success; or (b) there is some other reason in the interests of justice why the appeal should be heard.

22.I consider that the appeal has neither a reasonable prospect of success nor any reason in the interests of justice, and refused to grant leave to appeal the order.

Costs

23.There is no reason why costs should not follow the event.  The applicant asked for costs of legal services for 3 hours.  Having considered the time for preparing the written submissions and the hearing and the time of the hearing, I made a costs order that the respondent do pay the applicant the costs of this interlocutory application which is summarily assessed at $7,800.

Mr But Sun Wai of W K To & Co., for the applicant

The respondent, represented by Mr Wong Shuai Fun