Keith Hon Keung Lam and Others v. Jade Light Village Sea Food Restaurant Ltd

HCA000918/1984

IN THE HIGH COURT OF JUSTICE

BETWEEN

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Coram: Hon. Power, J.

Date of Hearing: 22nd May 1984.

Date of Delivery of Judgment: 11th June 1984.

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JUDGMENT

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1. The Plaintiffs, who are the registered owners and lessors of premises situated on the ground floor of Lakeside Building 258-262, Gloucester Road, brought an action against the lessees of those premises Jade Light Village Sea Food Restaurant Ltd., the Defendant, alleging that it had failed to pay the rent for two months and had thereby breached the terms of the lease and asking for an order for possession of the premises for arrears of rent and mesne profits. The writ was issued on the 10th February 1984 and was served on the Defendant company on the 11th February.

2. On the 2nd March 1984 the Plaintiffs took out an inter - partes summons asking for judgment under 0.14. A supporting affidavit was filed which stated that in the belief of the deponent the Defendant had no defence to the action.

3. On the 23rd February 1984, David K.W. Tsang & Co. filed an acknowledgment of service stating that the Defendant intended to contest the proceedings. The Defendant took out two inter -  partes summonses; one, on  the 2nd March, seeking final judgment for the amount claimed and one, on the 3rd March, seeking final judgment for possession. Both of these were set down for hearing on the 20th March.

4. On the 20th March, the Plaintiffs' solicitors filed a consent order which read as follows: -

"(1)     Judgment be entered in favour of the Plaintiffs against the Defendant for:-

(2)     The Defendant undertakes to discharge all outgoings including water, electricity, telephone and management charges in respect of the suit premises up to the date of the delivery up vacant possession of the suit premises.

(3)    (deleted).

(4)     There be no order as to costs."

5. This consent summons bore the notation, "We, the undersigned, hereby consent to the above terms being made an Order of the Court" and was signed thereunder by the solicitors for the parties. The Master ordered in terms of that summons. On the 21st Match, his order was filed by the solicitors for the Plaintiffs.

6. The order filed contains the word "forthwith" which does not appear in the consent summons and was, it seems clear, placed in the order filed by mistake. The order filed also contained the Clause 3 which the parties had struck out from their consent summons. This was also, it seems clear, placed in the order filed by mistake.

7. On the 21st March, Robert W.H. Wang & Co. filed a notice saying that they had been appointed to act in place of David K.W. Tsang & Co.

8. On the 23rd March the Defendant made an application for relief from forfeiture. This was supported by an affirmation from a Madam Chan, a Director of the company, in which she said that although she had given David K.W. Tsang & Co. a written authority to act on behalf of the company in the action, she had never given any instructions to consent to judgment.

9. Mr. Alan Au, an assistant solicitor in M.K. Lam & Co., the Plaintiffs' solicitors, says, in paragraph 5 of an affidavit filed by the Plaintiffs, opposing the application for relief, that

"in the morning of 19th March 1984, Mr. David Tsang phoned me up and inquired on the possibility of a settlement. The result was that I was to take instructions whether the Plaintiffs were prepared to accept no order as to cost in return for regaining possession of the premises and giving 7 days for the Defendant to pay arrears and/or mesne profits. I was certain the Defendant's then solicitous was (sic) suggesting to return possession of the suit premises to the Plaintiffs for the following reasons. Firstly, in the telephone conversation when I mentioned cost (sic), Mr. David Tsang said words to the effect that since they were returning the suit premises, the Plaintiffs should not ask for costs. Secondly, if not for the chance of regaining possession, I would certainly not be inclined to advise the Plaintiffs to forego costs for the reason that in a standard relief situation, the Defendant would have to pay, inter alia, all costs. After obtaining the Plaintiffs' necessary instructions, the consent summons was settled after consultation with Mr. David Tsang and was placed before the learned Master on 20th March 1984 during the hearing of the Order 14 summons when Messrs. David Tsang & Co., pursuant to their letter dated 19th March 1984, were absent."

10. The Master granted the application for relief against forfeiture and it is from that order that the Plaintiff now appeals .

11. In this application Mr. Mok who appears for the Plaintiff/ Appellant argues that the agreement between the parties involved a clear undertaking that vacant possession would be given by the Defendant to the Plaintiffs and a tacit, but clear, undertaking that there would be no application for any relief from forfeiture. He concedes that there was no express tern that the Defendant would not make such an application but says that it was implicit in the agreement that it would not be made.

12. Mr. Mok also argued that, where a Defendant has consistently and wilfully been in breach of its legal obligation to pay rent, the Court has power to refuse to grant relief against forfeiture. He submitted that the Defendant in this case had been guilty of such conduct and that the Court should refuse to grant relief.

13. Mr. Mok referred to Howard and Another v. Central Board of the Church of England (1977) Estates Gazette 50. In that case a consent order was made whereby, the landlords having agreed to purchase a dwelling house for the tenants and to make no claim for repairs and improvement to the subject property and to make no claim for dilapidations, a judgment by consent was given for possession together with judgment for arrears of rent and mesne profits.

14. Goulding J. said at 52 :-

"First of all, Mr. Blum relies on the fact that the order was made by consent in compromise of the action by which the board, the landlords, sought to enforce forfeiture of the lease. He submits that in the circumstances which the first plaintiff and Mr. Presland have described in their affidavit it can plainly be inferred that the agreement was made on the footing that it was a final disposal of the litigation between the parties and that by necessary implication the tenant would not subsequently seek relief from forfeiture.

He went on to say: -

15. Mr. Mok relies upon the passage from paragraph 5 of Mr. Alan Au's affidavit, set out above, as evidencing the agreement that was entered into between the parties. He relies particularly upon Mr. Au's statement that he was

"to take instructions whether the plaintiffs were prepared to accept no order as to cost (sic) in return for regaining possession of the premises ...."

and upon his statement that

"Mr. David Tsang said words to the effect that since they were returning the suit premises, the Plaintiffs should not ask for costs."

He submits that, given that it was agreed that the Plaintiffs would not ask for any order for costs and would in return be allowed to "regain possession" of the premises, an agreement to surrender the right to relief must necessarily be implied. It is his submission that properly construed the agreement was that in consideration for the Plaintiffs not asking for any costs, to which they would in the normal course of events have been entitled, the Defendants agreed not only that the Plaintiffs would be given an order for possession but that also that they would be given possession of the premises.

16. Miss Eu, who appeared for the Defendant, did not seek to place any argument before the Court suggesting that, because the Defendant's then solicitor was acting without authority, it was not bound by any binding agreement entered into by him. It was her submission that the binding agreement between the parties was not the oral agreement arrived at between the solicitors but was the written agreement embodied in the consent summons. She submitted that the Court could not look at an oral agreement which in anyway varied or added to the terms of that consent summons.

17. There is no evidence before me to suggest that it was ever the intention of the parties to set out their agreement in full in the consent summons. I am satisfied that the application by consent summons, whereby the parties invoked the aid of the Court, was done pursuant to and as part of the agreement. It would, of course, have been open to the parties to set out all of the terms agreed in the consent summons. I am satisfied, however, that, is circumstances such as this, where the parties have given no indication that they had any such intention, it cannot be inferred, form the fact that they signed a consent summons, that it was their intention to embody the full terms of the their agreement therein. One must to ascertain the full terms of the agreement, look at the oral agreement.

18. Miss Eu argued further that even if the oral agreement could be considered there was nothing therein giving rise to the necessary implication that the lessee would not seek relief from forfeiture. She referred to Nance v. Naylor (1928) 1 K.B. 263 in which the Court held that an undertaking signed by a tenant to give vacant possession in consideration of the landlord withholding the writ of possession did not preclude the Court front granting relief against forfeiture. Scrutton L.J. at 265 said:-

"The Court has power to grant relief from forfeiture subject to the same terms and conditions as could formerly have been imposed in the Court of Chancery. It is clear that relief could have been given by that Court after the tenant had been turned out of possession, and the effect of granting relief would be to reinstate him. What we have to consider is whether an agreement to give up possession on or before September 29 by virtue of which the respondent escaped being immediately ejected is so inconsistent with the right to grant relief from forfeiture that it must be taken that the right to relief is gone. I have felt some doubt upon this point, because it seems to me to be possible to say that an agreement to go out by September 29 is not consistent with the right to stay in after that date; but the right to grant relief is one which the Courts have always jealously preserved in favour of tenants, and after some hesitation and consideration I have come to the conclusion that I cannot say that Clauson J. was wrong in holding that he had power to grant relief from the forfeiture notwithstanding the terms of the agreement."

19. Atkin L.J. said at 267: -

"I can quite understand the an agreement might be entered into on the terms that if time were given the respondent would surrender his right to claim relief against forfeiture; or that an agreement might be made upon such terms that an agreement to surrender the right to relief must necessarily be implied; but it is a question of inference in each case whether such a term should be implied. For my part I find great difficulty in implying such a term in a case where there is no evidence that the respondent knew anything about his right to relief against forfeiture. That may not be conclusive, but it does not seem to me that an agreement to allow further time is inconsistent with the right to relief being still subsisting."

20. The important words in this passage are in my view "that an agreement might be made upon such terms that an agreement to surrender the right to relief must necessarily be implied". These words were echoed 50 years later in Howard and Another v. Central Board of Finance of the Church of England, the case referred to by Mr. Mok, when Goulding J. said at 52 that he agreed with Mr. Blum's contention "that the terms embodied in the consent order do constitute an agreement upon such terms the an agreement to surrender the right to relief must necessarily be implied." The Court must now ask itself whether it can plainly be inferred that the agreement was made on the footing that it was a final disposal of the litigation and that, by necessary implication, the lessee would not subsequently seek relief from forfeiture.

21. It must be borne in mind that we are dealing here with an agreement arrived at between two solicitors. There can be no question that either party was not fully aware of its legal rights. I am satisfied that it was agreed that the Plaintiffs would forego their right to costs and would, in return, be entitled to "regain possession''.  I am satisfied that the agreement was not simply that the Defendant would submit to the making of an order for possession. If no action for possession had been commenced there could be no argument that the words "regain possession" would mean only one thing i.e. get possession back. I am satisfied that they must mean exactly the same thing even though an action for possession is afoot. The action being afoot it is natural that the parties, within the context of their agreement, should make provision for the disposal thereof. This could be done either by withdrawal or by judgment. That it was done by judgment in no way, I am satisfied, detracts from what was agreed i.e. that the plaintiffs were entitled to regain possession.

22. I am satisfied that the pain and necessary inference to be drawn from the agreement is that it was made on the footing that it was a final disposal of the litigation between she parties and that by necessary implication the tenant would not subsequently seek relief from forfeiture. 

23. Having arrived at that decision, I do not need to consider the second ground urged by Mr. Mok. I am satisfied that the order of the Master must be set aside.

24. Parties are to appear to be heard as to the form of order and costs.

Representation:

Mr. Y.C. Mok (M.K. Lam & Co.) for Plaintiffs.

Miss Audrey Eu (Gallant Y.T. Ho & Co.) for Defendant.