Olympian City 1 Management Co Ltd v. Billion Win Management Ltd
Read the full judgment text of HCA 51/2003 on BabelCite. This High Court CFI judgment was delivered on 23 July 2003.
1. This is an application for an Order 14 RHC summary judgment or, in the alternative, for interim payment under Order 29 rule 12.
|
HCA000051/2003 HCA 51/2003 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 51 OF 2003 ____________
____________ Coram: Deputy High Court Judge Gill in Chambers Dates of Hearing: 16 May and 17 July 2003 Date of Judgment: 23 July 2003 ______________ J U D G M E N T ______________ 1.This is an application for an Order 14 RHC summary judgment or, in the alternative, for interim payment under Order 29 rule 12. 2.First, a background. 3.By a condition of grant no. 12375 (the Grant) Lot 11704 was granted by the Hong Kong Government to the MTRC for a term to expire on 30 June 2047. Lot 11074 is on the West Kowloon reclamation. The MTRC is in the process of developing the lot under the name Olympian City. Phase I is completed. That comprises residential blocks, an office tower and a shopping arcade. Incorporated in the development is a car park building to provide parking for occupants and authorized invitees, in compliance with a term of the Grant to provide adequate parking. Clause 36(a) deals with this. 36(a)(i) and (ii) concern residential and commercial parking and are not relevant to this matter. 36(a)(iii) is and I repeat it verbatim. "Director" is the Director of Lands:-
4.When the car park was built the plaintiff was appointed the sub-letting sub-agent of, inter alia, the car parks under 36(a)(iii) reserved for the retail sector. 5.A property agent called Sino Base Development Consultant Limited (Sino Base) wrote to the plaintiff by letter of 22 March 2002. This amounted to an offer made on behalf of a named principal to lease 167 car parks which was all the available space on one floor. The letter was sent for the attention of Mr John Lam, whose designated post is described as Senior Property Manager of Olympian City 1. The proposed use was described in the offer as "Proposed Car Show and Bulk Parking" and elsewhere as "Motor Show and Bulk Parking". It is not disputed that this is a use not permitted by 36(a)(iii) of the Grant. The proposed tenant was named Best Top Investment Limited (Best Top). The response from the plaintiff was to prepare a draft form of licence which was sent to Best Top for the attention of the contact person, a Mr So Ping Fai (Mr So). The designated user clause (clause 13) stated:-
6.Sino Base faxed the same back to the plaintiff on 4 April with handwritten amendments. Against licensee - Best Top, was written "(to be confirmed)". There were other amendments. Clause 13 remained undisturbed. 7.On the same date the plaintiff over the signature of its General Manager Wyatt Choy wrote to Best Top, for the attention of Mr So. I repeat the letter in full:- " OLYMPIAN CITY
8.The letter is important because it records:-
9.Under separate cover, on the same date, Mr Lam of the plaintiff faxed a copy of the page of the Grant which includes clause 36(a)(iii). 10.Meanwhile the defendant was incorporated, with Mr So one of two shareholders and directors, and gave notice that it was to be the designated licensee. 11.On 12 April 2002 Mr So, as authorized signatory for the defendant, signed a document called an "offer to licence," directed to the plaintiff. Clause 13, the user clause, was as before - "Restricted for private vehicle parking only." This was followed by the preparation by the plaintiff of a document called "Licence Agreement" which was dated 28 May 2002 and signed by the parties. Of its many clauses, clauses 1 and 3 recorded, by reference to the schedule, the premises, the term and the monthly fee, and clause 7 that the Government rates were to be shared. Clause 15 stated:-
Part V stated:-
I repeat clause 28 verbatim:-
And clause 36:
12.It is the plaintiff's case that "such user" means "actual user" and that "the licensee shall cease immediately, surrender ..." is shorthand for "the licence shall cease immediately and the licensee shall surrender ...". It concedes the drafting is not elegant but the meaning beyond doubt. 13.It is not disputed that the defendant as from 1 June 2002 began operating a motor vehicle showroom and office within the premises. It is not disputed that the plaintiff and its manager were aware of this user. 14.But soon after, that unauthorized use under the Grant came to the attention of the Lands Department of the Government. Its officers carried out a site inspection on 5 June. By letter of 19 June, over the signature of the Chief Estate Surveyor, MTRC was informed that the space in the car park designated to provide parking for the shopping arcade was being used "for display of cars for sale storage and temporary offices" and was contrary to the terms of the Grant, and that this amounted to a breach requiring rectification within a month. This was communicated to the defendant. The parties engaged in negotiations. It is not disputed that both were keen to continue the licence on such terms as would suit the parties and would be within the terms of the Grant. But there was no agreement achieved. 15.The plaintiff then sent a letter to the defendant dated 11 September 2002 that I repeat verbatim:- " OLYMPIAN CITY
16.The defendant declined to vacate and continue to operate as before. There was correspondence between the parties and, subsequently, their solicitors. Then the defendant stopped paying the licence fee, and share of rates. 17.A further letter was sent by the Director of Lands to the MTRC on 27 December 2002. The letter recorded that there was continued unauthorized use of the car park and gave notice that unless there was compliance within 28 days, or within 3 months upon payment of a premium of $847,838, the Government would be entitled to re-enter and take possession of lot 11074. 18.Faced with this threat of repossession, the plaintiff through its solicitors wrote to the defendant by letter of 4 January 2003 again giving notice of termination under clause 36, without prejudice to the notice of 11 September 2002. When the defendant remained steadfast, the plaintiff issued a writ on 7 January 2003. In the statement of claim, the plaintiff pursues three causes of actions, namely:-
19.The plaintiff made immediate application, on notice, for an injunction to restrain the use by the defendant of the premises for "the storage, display or exhibition of motor vehicles for sale or otherwise or as a showroom or show area for motor vehicles or as an office until after the trial of this action or further order ...". 20.In the event the application was unopposed and an order was made on 10 January 2003. 21.By summons of 21 January 2003 the plaintiff made application for summary judgment, the first of the matters before me. By that summons the plaintiff seeks judgment for:-
22.Then by way of alternative relief by summons of 7 February 2003 it made application for interim payment of the licence fees and rates in arrears and thereafter monthly to the date of final disposal of the action. 23.During the hearing I was informed that in the meantime the defendant has paid the licence fees for the months February to May and for July 2003. (Payment for June has been withheld because under the licence agreement that was waived). A payment on account of rates has also been made. What therefore is now pursued under the Order 14 application or in the alternative Order 29 rule 12 application are the licence fees and rates or their equivalent as mesne profits up to the date vacant possession is delivered up less the amounts paid. 24.Directions for evidence were made in February 2003. There are affidavits filed for the plaintiff in support, one by Mr So of the defendant in opposition and several more from the plaintiff in response to that. 25.What emerges from the evidence is the history of events which in broad terms I have attempted to summarize. There is also evidence, as adduced by Mr So, that the senior management of the plaintiff all along was aware of the use the defendant intended for the premises, stood by to let that happen, and in fact provided active assistance when called upon. 26.Whilst there is a general denial that conduct by those in the plaintiff's camp gave rise to a waiver of its right to pursue its remedies for breach of the licence, Mr Chow for the plaintiff conceded that there are disputes of fact which might weigh against the granting of summary judgment under the second and third causes of action pleaded, that is termination for breach of contract. But, he submits, there can be no defence to the plaintiff's case that the licence terminated upon receipt of the notice referred to in clause 36. 27.The only opposition to that is by Mr So, who said in evidence that clause 36 was incorporated into the contract without his prior knowledge; that relying on an assurance by Mr Lam that the licence agreement "basically incorporated the terms in the offer to licence only" he caused the defendant to sign the licence agreement without seeking legal advice. 28.Mr Chow was able to demonstrate through exhibited correspondence and incontrovertible evidence that a Miss Amy Chow of the defendant's solicitors had conduct of the transaction and possession of a draft prior to the signing. Certain amendments were made to the draft before a fair copy was made and signed. Clause 36 was not disturbed. Thus the parties expressly agreed that the licence agreement was terminable upon the Government giving notice that the defendant's user of the premises was not allowed, as a condition subsequent. The condition was satisfied and the agreement terminated accordingly. 29.Mr Ho for the defendant submitted that undeniably the parties negotiated and then contracted in the licence on the premise that the car park was to be used for showing-off cars for sale; that considerable expenditure was incurred by the defendant in set-up costs; that the plaintiff actively promoted the proposed use in its shopping complex; that it assisted the defendant in hiding the use from Government officers; that even after the so-called termination it accepted payment for rent and rates; that regardless of what clause 36 states, the conduct of the plaintiff throughout gives the defendant at least arguable defences under the heads of collateral agreement, waiver, forbearance and/or equitable estoppel. 30.Mr Ho began his submissions by stating:-
But the crucial aspect of the relationship is that at all times leading up to the signing of the licence both parties were alive to the fact that the display of cars for sale was contrary to the provisions of the Grant. When the parties contracted they did so on the basis that the contract would terminate if notice of re-entry was given or threatened. I reject Mr So's complaint that clause 36 was slipped into the document without warning. Mr Ho's submissions that the defendant has at least arguable grounds of defence are defences to the plaintiff's pleaded case for termination on the grounds of breach of contract. They are no defence, as I find, to termination by virtue of clause 36. 31.In the circumstances, I order in favour of the prayer set out in the Order 14 application for summary judgment. I calculate the mesne profits based on a table produced by Mr Chow showing the amount of licence fees and rates outstanding to 27 July 2003. I calculate the licence fees to be $709,750.00 and the rates $4,813.71, that is a total of $714,563.71 (I am factoring in the rent "holiday" for June 2003); thereafter at $4,727.57 per day pending vacant possession. 32.There shall be no interest save that it shall run from today at the judgment rate. The application for interim payment falls to be dismissed. Costs, nisi at first instance, are to the plaintiff taxed if not agreed, including any reserved.
Representation: Mr Anderson Chow, instructed by Messrs Woo, Kwan, Lee & Lo, for the Plaintiff Mr Peter Ho, instructed by Messrs Au Yeung, Cheng, Ho & Tin on 16 May 2003 and Messrs Yu & Associates on 17 July 2003, for the Defendant |