Montgomery Enterprises Ltd. v. United Finance & Exports Ltd.

HCA002654/1995

1995 No. A2654

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Coram: Deputy Judge W. Wong in Court

Date of Hearing: 8 November 1996

Date of Handing Down of Judgment: 18 November 1996

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J U D G M E N T

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FACTS

1. There is no dispute as to facts in this case.

2. The Plaintiff is the owner of the suit premises known as Offices B and C on the 3rd Floor of Sheung Wan Tai Sang Commercial Building (also known as Hollywood Centre), Nos. 77-91 Queen's Road West, Hong Kong. ("the said premises")

3. By a tenancy agreement dated 26th August 1994 the Plaintiff let the said premises to the Defendant for a term of 2 years commencing on 1st August 1994 at $32,500.00 per month. ("the tenancy agreement"). Clause 2(k) of the tenancy agreement provides,

"To use the Premises for office use under the name of the Tenant only and not to permit the same to be used for any other trade or business whatsoever without the prior written consent of the Landlord but no warranty as to fitness of the Premises for any specific use is given or deemed to be given by the Landlord."

4. After the Defendant occupied the said premises the Tai Sang Estate Agency Limited which was responsible for management of the building reported that the Defendant moved cartons, boxes and cases in and out of the said premises.

5. Tai Sang Estate Agency Limited on behalf of the owner by letter dated 14th October 1994 reminded the Defendant of Clause 2(k) of the said tenancy agreement and went on as follows:-

"We would like to inform you that you have, wrongfully and in breach of the Tenancy Agreement, used the premises for godown purposes and would demand you to cease using the premises for godown and other unauthorized purposes within ten days from date of this letter, failing which legal proceedings will be instituted against you."

6. The Defendant replied on the 17th October 1994 and stated,

"Further to your letter dated 14th October received vide fax this morning. Please note as explained to you on phone, we are not using the premises as storage or any other unauthorized purpose. We have explained and trust you have understood our use of the premises and reasons for same. As agreed we shall be allowed to a limited Nos. of cartons to be transported provided they do not interfer with the timing and structure of the building. Your confirmation by return fax shall be highly appreciated."

7. On 21st March 1995 the Plaintiff initiated the present proceedings for forfeiture of the said tenancy and claimed for possession, mesne profits and all unpaid management fees, rates, electricity charges and damages.

8. The Defendant delivered vacant possession on 31st July 1996 upon explanation of the said tenancy.

ISSUE

9. The only issue is whether the moving of carton, boxes and cases by the Defendant into and out of its premises has turned the premises into a godown or warehouse and hence in breach of the tenancy agreement.

EVIDENCE

10. The Plaintiff relied on the reports of Tai Sang Estate Agency Limited which were not disputed by the Defendant.

11. The 1st report relied on by the Plaintiff was dated 17th January 1995. The report stated that the Defendant had since the commencement of the tenancy on 1st August 1994, "continuously moving in and out goods nearly every day, the quantities of which vary from tensome to some tens of cases" and that some 45 cases measuring 141/2" x 101/2" x 101/2" were "moved into Offices B and C."

12. Report dated 22nd February 1995 stated that 100 cases measuring 12" x 12" x 18" were moved into the said premises.

13. Report dated 8th March 1995 stated that from 22 February 1995 onwards, goods were sent to the said premises once, twice or several times each day and quantity varies from tensome cases to some tens of cases. The biggest cases measured 19" x 21" x 37".

14. Reported dated 15th March 1995 stated that on 13th March 1995, 25 cases the biggest cases measured 22" x 30" x 37" were moved into the said premises and 6 big wooden boxes (with no measurement) were moved out from the said premises on 15th March 1995 at different times.

15. Report dated 22nd April 1995 stated that 3 boxes measuring 21" x 24" x 37" were delivered to the said premises and 30 cases measuring 12" x 12" x 18" were moved out of the said premises.

16. Finally, report dated 26th May 1995 stated that 71 cases measuring 14" x 17" x 18" were taken to the suit premises and 17 cases measuring 14" x 24" x 14" were taken out of the suit premises.

17. There was no evidence as to how the said premises was used, there was no evidence as to the layout of the said premises or the position the Defendant used to store these boxes.

18. The allegation by the Plaintiff as pleaded was that "the Defendant had during the term of the tenancy agreement used the premises as a godown or warehouse."

19. From the evidence I do not find that there is evidence to show the Defendant had converted the office premises into a godown or warehouse. The boxes taken into and out of the said premises were relatively small in size. They would occupy only a relatively small portion of the premises. There was no allegation that the Defendant had ceased to use the premises as an office.

20. Clause 2(k) allowed the Defendant to use the premises for office use under the name of the tenant only and not to permit the same to be used for any other trade or business whatsoever without the written approval of the landlord. There is no evidence that the said premises had been used for any other trade or business.

21. Clause 2(m) permitted the tenant to store goods in such quantities consistent with the nature of the tenant's trade or business. The Defendant was engaged in export business. There is no evidence to suggest that the boxes stored were not consistent with the nature of the Defendant's business.

22. By reasons aforesaid I do not find the Plaintiff had proved from the evidence before me that the Defendant had converted the office premises into a warehouse or godown. In the premises the Plaintiff had failed to prove its case and the Plaintiff's claim is therefore dismissed with costs.

(Wesley Wong)

Deputy Judge of the High Court

Representation:

Iu, Lai and Li, solicitors for the Plaintiff.

Mr. Dadlani Anilkuman in person representing the Defendant.