Hang Hing Land Investment Co Ltd v. Lou Meng Yen

HCA001108/1972

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 1108 OF 1972

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Coram: Cons, J.

Date of Judgment: 26 January 1973

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JUDGMENT

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1. In this case the Defendant was the tenant of certain shop premises in Choi Hung Road, Kowloon. He enjoyed a two year lease which had commenced on the 1st April 1970. In August of the following year the Plaintiff company purchased the reversion from the then landlord, subject of course to the existing lease. From then onwards the Defendant duly paid his rent to the Plaintiff company. Shortly afterwards i. e. on the 7th of October the Plaintiff company instructed solicitors to serve Notice to Quit upon the Defendant in accordance with the Tenancy (Notice of Termination) Ordinance Cap.335. It did so through a lady Wong Ping who, together with her husband, holds the entire equi therein. That Notice was served on the Defendant but not until the 20th of the same month. In the meantime however, on the 15th, a fire occurred in the neighbouring premises. The fire caused damage to the defendant's shop, damage which he estimates at $100,000, although most of this was damage to his stock in trade rather than to the shop itself.

2. This far is common ground. As to what followed there is direct contradiction between Wong Ping, who was the only witness for the Plaintiff Company, and the Defendant. Put briefly the Defendant says there was an almos immediate agreement for a new lease of 3 years to take effect upon the expiration of the pending Notice to Quit in consideration of a monthly rent of more than twice the current amount together with key money in the form of the $20,000 that he expected to spend in restoring the premises. Wong Pang, he says, was reluctant to reduse this agreement to writing or to he proper lease drafted or drawn up for the time being. Then, just before original lease expired, she double crossed the Defendant with a demand for $50,000 tea money and an even further increased rent. He not unnaturally refused.

3. Wong Ping on the other hand claimes that the first mention of a new lease was not until January of the following year. In that month, at the instigation of the Defendant, the two of them had a meeting in which the possibility was discussed but foundered upon an inability to agree the new rent. Later an approach was made by her at the beginning of April, It met with the answer that the Defendant had not yet considered his position. Finally, when she telephoned him some ten days before the expiration of the Notice to Quit, he told her that he would be 4 or 5 days late in vacating. Apparently Wong Ping did not object to this but finding him still in possession on the 5th of May she went straight away to her solicitors.

4. It is clear to my mind that neither Wong Ping nor the defendant have been completely honest with me. Certain matters of evidence bear out the impression I gained from seeing and hearing them in the witness box. Wong Ping claims that it was not until the 5th May that she became aware that the Defendant was holding over and that it then took a few days for her solicitors to settle matters. Yet the writ was issued on the 4th. Again I am satisfied that she was shown the estimate prepared by Mr. Lau Shek Ko a fact which was denied by her. This must have occured not too long after the fire. Mr. Lau was the contractor who carried out most of the work for the Plaintiff. According to his evidence - and I see no reason to disbelieve it - his work was at first undertaken upon a verbal agreement with the Defendant. I can think of no reason why the Defendant should subsequently request a written estimate unless ...(illegible) were for the purpose of showing it to Wong Ping.

5. Yet at the same time the evidence of Mr. Lau gives the lie to the Defendant's claim that he did not commence the work until after the promise ...(illegible) new lease. It seems obvious to me that after the fire the Defendant ...(illegible) immediate steps to restore the premises and resume his business. After ...(illegible) he still had 6 months to go at a rent which may be assumed to be ...(illegible) derably lower than the market rate of that time. It is suggested that ...(illegible) receipts themselves show a large part of the work was ...(illegible) not in restoration but with long term improvement which would not ...(illegible) in these circumstances. I find it impossible to draw any conclusion ...(illegible) the electrical receipt; the decoration receipt does show one item ...(illegible) be thought to support this suggestion, i.e. the installation of a ...(illegible) of plastic board to the main door at a cost of $1800. But I am not ...(illegible) that it does. It seems equally if not more likely to be a sensible ...(illegible) by a man wishing to protect stock of more than $100,000 on which ...(illegible) carried insurance to an extent of only $40,000.

6. The next stage, as it seems to me, is that the landlord arrived on the scene and therein the Defendant saw the possibility of salvaging something from the misfortune that had befallen him. Negotiations must have taken place and must have included reference to the cost of the necessary repairs. Otherwise, as I have just said, there would be no need for a written estimate. But on the evidence that the witnesses have chosen to give me I find it impossible to say what was the result of these negotiations. I incline to think they were inconclusive, for had they tended towards the grant of a new lease I would have expected that lease to be immediate. I am not impressed by the suggestion of having to wait for the Notice to Quit to expire. But it is not necessary to express a decided opinion upon this point. It is sufficient to say that the Defendant has not satisfied me that an agreement for a new lease was in fact made. I need not therefore consider whether the work carried out by the Defendant amounts to part of performance.

7. Counsel for the Defence sought further to rely upon the doctrine of estoppel. He put it in two ways. The first I think was based upon what is commonly known as promissory estoppel and suggested either an express promise that a new lease would be granted or alternatively implied a promise that no steps would be taken to evict. The short answer is that there is no evidence of any express agreement nor of any facts which could be taken to imply a promise of the kind suggested. The argument would also be defeated by the lack of satisfaction I have already expressed that the Defendant expended more upon the restoration of the premises than was necessary to allow him to resume his own business. This factor would again defeat the second proposition which is based upon the case of Inwards v. Baker ⁽¹⁾ namely that where the owner of land requests or allow another to expend money on the land under an expectation created or encouraged by the landlord that he will be able to remain there an equity is raised in that person to entitle him so to stay. More important there is again no evidence of any encouragement on the part of Wong Ping or the Plaintiff company. Negotiations for a lease may well raise hopes in the minds of a prospective tenant. I am not prepared to say that this amounts to encouragement in the sense in which it is used in that authority.

8. For these reasons judgment must be entered for the Plaintiff company for possession and mesne profits from the 1st May 1972 until possession is delivered. It has been agreed between the parties that in this circumstance the rate of mesne profits shall be assessed by the Registrar and I order accordingly. The Plaintiff company is to have its costs of the action.

Representation:

(1) (1965) 2 ...(illegible) . L. R. 213