Golden Star Video Berhad v. Asia Television Ltd
Read the full judgment text of HCA 8255/1983 on BabelCite. This High Court CFI judgment.
1. In the case, the plaintiff seeks a declaration of its rights under a licence agreement, specific performance of the terms and an injunction restraining breach.
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HCA008255/1983
Construction of licence agreement. Option to renew. Whether the option rested with the licensor or the licensee. Construction decided as a preliminary point. Leave to amend Counterclaim to seek rectification of the agreement refused.
BETWEEN
________ Coram: Hon. Mantell J. Date: 5th September, 1983. ___________ JUDGMENT ___________ Friday, 2nd September, 1983. 2:30 p.m. Direction that construction of agreement be tried as a preliminary issue. Court's ruling - reasons reserved. Monday, 5th September, 1983. 10:00 a.m. Judgment on preliminary issue. 1. In the case, the plaintiff seeks a declaration of its rights under a licence agreement, specific performance of the terms and an injunction restraining breach. 2. The agreement, entered into with the defendant on 27th July 1982, confers upon the plaintiff an exclusive licence to distribute the defendant's recorded video programmes in Malaysia and Brunei and to reproduce copies of the programmes for distribution in the same territory. 3. The first question is whether the agreement was granted for one year only, in which case it would expire on 14th September 1983, or whether, under the agreement, the plaintiff has an option to extend the term for a second year. The rival contentions are set out fully in the pleadings, but put shortly, they are as follows. The plaintiff says that the agreement is clear and unambiguous in its terms. It does confer an option to renew and further that at the end of the licence period the agreement requires the defendant not to grant a licence to anyone else without first offering to the plaintiff a further opportunity to extend. The defendant contends that the only option conferred by the agreement is upon the defendant. It is the option to grant an extension of the licence. 4. Each party has other points to make. For example, Mr. Ching will seek rectification, if I am against him on the matter of construction, and the defendant says through Mr. Fung that if it is wrong, then the plaintiff has forfeited its right to exercise the option. In those circumstances, it seemed to me convenient and just to decide the matter of construction as a preliminary point and I so directed. Mr.Fung for the defendant supported that course and in the end made it his application. Mr. Ching for the plaintiff did not. 5. The relevant clauses of the agreement are:
Clause 6A reads:
and then set out in the Clause is a schedule of amounts, and dates by which those payments are to be made. There is a proviso to paragraph 6A which I read now for completeness sake.
Clause 18 is in the following terms:
RTV is the name formerly adopted by the defendant in this case. 6. Now, in my judgment, the agreement on the point is clear and unambiguous, even though the draftsmanship leaves something to be desired, and the defendant's contentions just cannot be sustained. In fact, Mr. Fung did not urge his argument upon me with any great enthusiasm but it is right to say for the avoidance of doubt that he has preserved his position should he contemplate an appeal. To summarise, he says that Clause 1 does not identify the party on whom the option is conferred. The only help, he says, is to be found in Clause 18 and the words "subject to such further and/or revised terms and conditions (if any) RTV may (emphasis is mine) extend the term of this agreement for a further period of one year" indicate that the option rests with the defendant. I do not agree. Clause 18 is dealing with the position at the end of the term of this agreement. The term of the agreement is the licence period as defined in Clause 1 and used as the basis of the agreement throughout. It includes the option period of one year if taken up. What Clause 18 does is to confer upon the plaintiff a further right of first refusal after the period contracted for. It so to speak imposes a curb or restraint upon the grantor or, to borrow a phrase, it is a clog upon the otherwise unfettered right to dispose of its property as it wishes. It is a misuse of language to refer to it as being an option either in right of the defendant or the plaintiff. In the nature of things, an option must be granted. The only party capable of granting an option here was the defendant. That is what it does under Clause 1.
The grantor and the grantee of the option are clearly indicated. 7. It is true that there is no provision as to the manner in which the option is to be exercised but as to which party was to have it, there is, in my judgment, no doubt.
Court's ruling:- 8. Having decided as I have the true construction of the agreement as I find it to be, Mr. Fung on reflection and, of course, having been made aware on Friday of my decision, has given consideration to his position and has taken, I presume, full instructions from his professional and lay clients. In consequence of which, he now abandons any further Defence which may have been open to him on his Defence and Counterclaim as it originally stood but seeks instead to amend his Counterclaim to ask for rectification of the agreement so as to give it the force that on the construction he contended for it would have had. He says that little prejudice would accrue, because, insofar as it was necessary, an appropriate order as to costs would prevent the plaintiff from suffering financial loss and the factual issues were always plain upon the pleadings no matter how the claim for relief was framed. And, indeed, if amendment be allowed and should he succeed on the ground of rectification, it would be the case that at the end of the day or even now, the plaintiff could be protected by an order for costs up to the time of amendment. There is force in what Mr. Fung says but what concerns me is this. The question of construction was determined by me as a preliminary issue. Mr. Fung asked for that to be done. Mr. Ching had reservations about it and in the end, the position was that Mr. Fung made the application and Mr. Ching objected to it. I did decide the construction issue as a preliminary point. It was not contemplated at that time, I think, by either counsel and certainly not by me that one consequence of my finding in favour of the plaintiff would be to give an opportunity to the defendant at that late stage and having tested the water, so to speak, to completely revise his approach from the way I understood the case was being put on Friday. Then the position of the defendant was made abundantly point and it was on that basis that I approached the question of whether or not to treat the matter of construction as a preliminary point. Mr. Fung's case was that the true construction is as Contended for but if he was wrong about that, then the plaintiff has forfeited its right to exercise the option by virtue of late payment of the fees under the terms of the agreement. Mr. Fung has lost on the first point and has abandoned the second. Now, in my view, it would be quite unfair to the plaintiff at this stage to allow the defendant an opportunity to cast its case in an entirely different manner, in a manner that should have been apparent to it, as Mr. Ching is right to say, in my judgment, a month ago. Therefore, in the exercise of my discretion, I refuse the application. 11:30 a.m. Court adjourned. 2:00 noon Hearing resumed. Judgment:- 9. Having given my decision with regard to Mr. Fung's application to amend his Counterclaim, the court adjourned for a short while so that Mr. Fung might consider on instructions from his professional and lay clients whether or not he would seek an immediate opportunity to take that decision before the Court of Appeal and he now has indicated to me that he has no wish to appeal that particular point, thus indicating that he preserves whatever other rights he may have to appeal my decision in this case. 10. It follows that he is unable to resist judgment, having abandoned the alternative line of defence pleaded in his Defence and Counterclaim. There remains a Counterclaim for HK$120,000. It is unnecessary for me to say any more than that I give judgment for the plaintiff in the form of a declaration that the plaintiff has properly and validly exercised its option to renew the exclusive licence agreement and that the defendant is bound by that agreement and secondly, an order for specific performance of that agreement dated the 27th of July 1982. No further relief is now sought by the plaintiff under its claim save for an order for costs which must follow. I give judgment for the defendant on the Counterclaim in the sum of HK$120,000 and an order for payment out forthwith to the defendants solicitor of that sum presently in court with any interest which may have accrued thereon. I make no further order for interest in relation to that Counterclaim. I note that the sum expressed in Malaysian currency had been tendered prior to 5th May 1983 and that subsequently a cheque tendered by solicitors for the plaintiff expressed in Hong Kong currency was rejected. The payment into court was made so soon as might recently gave been expected after service of the Counterclaim in which the HK$120,000 was Claimed. With regard to the Counterclaim for which judgment has been given, I think it is right order to make no order as to costs.
Representation: C. China, Q.C. & Miss C. Bridges (Deacons) for plaintiff. D. Fung (K.K. & Winston Chu & Co.) for defendant. |