Manyam Investment Co Ltd v. Tsui Siu Fong

Case No.HCA 2997/1972

Court

High Court CFI

Date—

Judge—

Case Document

100%Judiciary

HCA002997/1972

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 2997 OF 1972

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BETWEEN
	Manyam Investment Company Limited	Plaintiff
	and
	TSUI Siu Fong alias CHUI Siu Fong	Defendant

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Coram: Li, J. in Chambers

Date of Judgment: 12th January, 1973

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JUDGMENT

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1. This is an appeal from the Registrar's decision dated the 30th of December, 1972 on an application for summary judgment under Order 14. In his Statement of Claim, the plaintiff alleged that they are the registered owner and is entitled to possession of the property known as Ground Floor, at 414 Un Chau Street, Kowloon of which the defendant is a tenant, by virtue of a Chinese Tenancy Agreement dated the 25th of October, 1967, for a term of five years, commencing on the 25th of November, 1967, at a rental of eight hundred dollars per month. It is further alleged that the term has expired by effluxion of time and the tenant has failed to quit and deliver possession of the said property to the plaintiff. The plaintiff also alleged that the premises form part of an entirely new building and as such, the Landlord and Tenant Ordinance does not apply. Further, the Tenancy (Prolonged Duration) Ordinance, Cap. 276 does not apply to the said premises by virtue of the fact that the tenancy is for a term for five years. And that the Tenancy (Notice of Termination) Ordinance and the Rent Increases (Domestic Premises ) Control Ordinance have no application to the said term. There is also allegation that the market value of the said premises for letting now would be one thousand eight hundred dollars per month exclusive of rates.

2. For these reasons the plaintiff now claim for possession, mesne profits at the rate of one thousand eight hundred dollars per month, plus rates of the premises commencing from the 25th day of November, 1972, until possession is obtained.

3. The defence filed does not seriously dispute the fact that the plaintiffs are the registered owners of the property, or that the defendant was a tenant at all material times under the said Chinese Agreement dated the 25th of October, 1967. However, the defendant relies on the Tenancy Agreement which was originally written in Chinese and contend that the term of tenancy was unlimited, although there might be a variation in rent. The sole defence of the defendant relies on this point and this point alone.

4. Both parties exhibit by their affidavits the Chinese document and translation. In this context I think I should read the full text of the Tenancy Agreement, which is as follows:

"	Tenancy Agreement
	Received from Tenant Chui Siu Fong one month's deposit of $800.00 for renting the whole flat of No.414 Un Chau Street, G/F for residential purpose. The monthly rent shall be $800.00. It is agreed that (rent) shall be paid in advance for which a receipt will be issued. The term of tenancy shall be five years commencing from 25th November, 1967. Separate negotiation will be made after expiry of the term. The Landlord agrees to construct a cockloft/mezzanine additionally. Should such construction require the Landlord to sign an application to the Public Works Department, the Landlord should sign accordingly so as to comply with (the terms of) the Tenancy Agreement. When approval is given by the Public Works Department (for such construction), all expenses of (construction) shall be borne by the Tenant. This Tenancy Agreement is made in duplicate with each party to keep one copy as evidence."

This agreement was signed between the agent of the landlord and the tenant herself, the defendant in question.

5. Thus, the only point for me to decide is the construction of the sentence "Separate negotiation will be made after expiry of the term". There is exhibited before me the defendant's affidavit who attempts to correct the term "separate negotiation". In her affidavit, she says that the Chinese term "ling-yee" means "another negotiation" and not a "separate negotiation". To me it does not really matter. The issue is the same. Whether it is a "separate negotiation" or "another negotiation", it is the word "negotiation" that matters.

6. The issue before me, therefore, is whether on the interpretation of this sentence, the tenancy can be regarded as for an unlimited term or that the defendant is definitely being given an option to renew subject to varied rentals. On behalf of the plaintiff, Mr. WONG contends that at most, such a sentence gives an illusory contract which is no contract at all and not binding on the party. On the part of the defendant, she now contends before me that originally the tenancy was for a term of ten years, but she was told that certain Government regulations would allow only a tenancy for five years and, therefore, acting on that belief she agreed to a five-year term subject to a renewal. That appears to me to be abandoning her original stand in the Statement of Defence that the lease or tenancy was for an unlimited period. However, that is not the point. The real point before me is whether by virtue of her defence and by virtue of her affidavit, on the interpretation of that sentence in the Chinese document, she has put up a prima facie defence or even a possible defence in law or in fact.

7. Mr. WONG contends that this case falls, in principle, under the authority of Loftus v. Roberts in 1901 (Vol. 18) Times Law Reports, p.532. That was a case when an actress was hired by a manager to go on a tour to the suburban theatres at a certain salary, with a provision that thereafter she would go to the London theatres at the West-end and I quote, "... at a West-end salary, to be mutually arranged between us". It was held that whilst the first part of the contract was a valid one, the second portion was merely an illusory contract because no salary was fixed and there was no certainty. The salary was to be agreed between the parties and that gives either party an option out of the contract and as such, an invalid contract.

8. In the course of his submission, Mr. WONG cites one extract that is pertinent to this case. In the course of argument in that case, Lord Justice Vaughan Williams asked counsel for the appellant a question. The learned Lord Justice said, "A agrees to take a house for one year, and at the end of that year the tenancy is to be continued at a rent to be agreed upon. Is the latter clause a contract?" Counsel's answer, "Clearly not." That, of course, is not part of his Lordship's judgment, but it indicates that such a principle might be applicable to this case. Mr. WONG further, quite properly, cited to me a case in Hong Kong, in the case of MA Ip (or YIP) Hung v. Lai Chuen, in which the landlord was refused an order of possession and a tenancy was renewed by order of the court on the same terms and same rental as the expired tenancy. In that case, the clause to be interpreted was as follows:

"At the expiration of the said term of Five Years the Lessee shall have the option to renew for another term and upon such terms as may be agreed upon by both parties."

9. In the Full Court decision, the learned president of the Court had considered the case of Loftus v. Roberts in some detail. With greatest respect, I find part of it rather difficult for me to understand. I must confess that may be due to my failure to appreciate the finer points in that judgment. I need only quote part of it. Having cited the decision in Loftus v. Roberts, the learned president of the Full Court said as follows:

	"Later he said that in one sense such an arrangement might be regarded as 'illusory', but on the other hand he had no doubt that in the theatre world people were glad to get a statement of intention of this kind because they were very sensitive in matters of honour and considered such an arrangement to be of great advantage although it did not amount to an enforceable contract.
	It is argued in the case before us that the position between tenant and landlord is similar and that the tenant in this case, who was contemplating a substantial capital expenditure on the land in question would have been no less glad to have a mere statement of intention without any binding right to an option.
	The Judge in the Court below has not accepted that approach and it seems difficult to deduce it from the admissible evidence in the present case. I think it right to say that, as a general rule, when parties enter into a lease, they contemplate entering into a binding legal relationship and that, having regard to the principle that a document is to be construed in accordance with the general intention revealed by the document itself, a Court would be right prima facie to regard clauses contained in a lease as intended to create legal relationships between the parties to the lease.
	Had the parties intended in this or in any other clause not to establish a legal relationship between them but merely to insert something which would, at the appropriate time, provide a 'talking point', they could easily have said so in the document. In the absence of some such statement, I think the onus of showing that any particular clause was not intended to create a legal relationship would fall on the party making such assertion and that is an onus which the appellant has not discharged in the present case."

10. Whether I understand this passage correctly or not, it is binding upon me because it is a Full Court decision. I have no option but to follow it. However, in the present case, the facts involved is clearly distinguishable from the case of MA Ip (or Yip) Hung v. Lai Chuen in 1957 Hong Kong Law Reports, p.32. The difference lies in that, whereas in MA Ip Hung's case, the agreement clearly indicated that "the Lessee shall have the option to renew for another term". In the present case the document provides that another or separate negotiation will be made after the expiry of the term. On the difference between the two, I can only repeat again the judgment of the learned President in MA Ip Hung's case in which he said,

"Had the parties intended in this or in any other clause not to establish a legal relationship between them but merely to insert something which would, at the appropriate time, provide a 'talking point', they could easily have said so in the document."

and I am of the opinion that in the present case they have just done precisely that, that upon expiry of the term another negotiation will take place. In other words, they will have another "talking point".

11. Under the circumstances, I find that in fact and in law the defendant has not even provided a prima facie contract before me. Under the circumstances I have no option but to reverse the Registrar's decision and I would give possession to the plaintiff. The mesne profits as from the 25th of November, 1972 will be raised to that of what is found in the plaintiff's architect's evidence as one thousand seven hundred dollars per month, plus rates payable by the defendant, and that the costs of this application will also go to the plaintiff.

12. As I understand that the Chinese New Year is approaching, and with the consent of the plaintiff, I order a stay of execution for possession only for a period of three months commencing from today, on the condition that the defendant shall pay the outstanding mesne profits in, say, ten days, and the subsequent mesne profits up to the date of rendering possession to the plaintiff at the rate of one thousand seven hundred dollars per month, plus Government rates payable from month to month.

	( Simon F.S. Li )
	Puisne Judge

Representation:

Ronald W.H. Wong of Johnson, Stokes & Master for Plaintiff/Appellant

Defendant/Respondent in person

Oral judgment reduced into writing.