Winning Enterprises Ltd v. Peking Restaurant Ltd
Read the full judgment text of HCA 359/1971 on BabelCite. This High Court CFI judgment.
1. I gave judgment for the Plaintiff in this case orally in Court on June 8th, 1971.
Cited by 3 cases
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HCA000359/1971 IN THE SUPREME COURT OF HONG KONG ORIGINAL JURISDICTION ACTION NO.359 OF 1971 -----------------
Coram: Briggs J. in Court. Date of Judgment: 10th June, 1971 ----------------- JUDGMENT ----------------- 1. I gave judgment for the Plaintiff in this case orally in Court on June 8th, 1971. 2. On February 1st, 1966 the Plaintiff and the Defendant entered into a Tenancy Agreement for certain premises at No. 1 Great George Street, Hong Kong where the Defendant carries on a Restaurant and Night Club business. 3. The term of the lease was for five years certain commencing on February 1st, 1966 and terminating on 31st January, 1971. The rent was $18,000 per month payable in advance monthly. 4. It is agreed by the parties that the provisions of the landlord and Tenant Ordinance do not apply to the premises. 5. On March 5th, 1970 the Plaintiff sent a solicitor's letter to the Defendant reminding them that the lease would terminate on 31st January, 1971 and stating that the Plaintiff wished to have possession of the premises delivered up to them on that date. I shall have to refer to the actual wording of this letter later in this judgment. 6. The Defendant have held over. They did not hand over the premises to the Plaintiff, hence these proceedings. The Plaintiff claim possession of the premises and mesne profits at the rate of $18,000 per month as from February 1st, 1971 until possession is given. 7. The Defendant admits receiving the letter referred to above and also admits that the lease terminated on January 31st, 1971. However the Defendant says that their continued possession of the premises is not unlawful by virtue of the provision of the Tenancy (Notice of Termination) Ordinance (Cap. 335). They claim that that Ordinance applied and that as no notice of determination of the tenancy has been given under that Ordinance they are entitled to remain in possession at least until this is remedied. 8. There are two issues and two issues only in this case. Both parties were represented and I would like to say how much I appreciate the help I received is a matter which is singularly free from authority. Counsel wasted no time and their arguments were crisp and to the point. 9. The first issue is does the Tenancy (Notice of Termination) Ordinance apply? I shall refer to this Ordinance as "The Ordinance". The Plaintiff says that it does not apply: the defendant says it does. The second issue is only of importance if the Ordinance does apply. 10. This issue may be stated thus. Is the letter sent by the Plaintiff to the Defendant a proper notice of determination of the tenancy under the Ordinance? The Plaintiff says that it is: the Defendant asks the Court to hold the opposite view. I will say at once that in my judgment the Ordinance does not apply: but that if I am wrong, and the Ordinance does apply, the letter in question properly determined the Tenancy. 11. The first issue as I have said is whether the Ordinance applies or not. The Tenancy Agreement is in a form not uncommon in Hong Kong. Clause 2 contains various covenants by the Tenant. These include covenants to pay the rent, to keep the premises in repair, not to sub-let etc. In all there are twelve such covenants, none of them unusual in a lease of premises to be used as a restaurant. 12. Clause 3 contains two covenants by the landlord, a covenant for peaceful enjoyment for the period of the tenancy and a covenant that the landlords will pay the Crown rent and property tax in respect of the premises. 13. Clause 4(a) of the lease is what chiefly concerned us here. This reads thus:-
14. Section 2(2)(a) of the Ordinance states as follows.
15. The Defendant's case simply, is that Clause 4(a) of the Tenancy Agreement falls within the latter part of this paragraph. The argument is that since that Clause gives a right to the landlord to re-enter if the tenant, a limited company, is wound-up or suffers its goods to be levied in execution, it falls within the provisions of section 2(2)(a) of the Ordinance which I have quoted above: i.e. the words of Clause 4(a) constitute a "provision for earlier determination" of the lease within the words of that sub-section. 16. Mr. Swaine for the Defendant said that the expression "provision" of the agreement as used in that sub-section must refer to the express covenants entered into by the tenant, i.e. to those contained in Clause 2 of the lease. 17. He pointed out that the first part of Clause 4(a) is redundant. It refers to the breach of the tenant's covenants which is covered so far as the Ordinance is concerned by Clause 2 of the agreement. And he said the introduction in Clause 4(a) of provisions for the landlord's re-entry for matters not included in the Clause which is ostensibly concerned with the express covenants of the tenant, means that he can take advantage of the protection afforded by the Ordinance. 18. He also pointed out that section 8 of the Ordinance expressly saved the landlord's rights arising from any breach of a condition providing for a right of re-entry in the event of the business of the tenant being wound-up. This, he argued, showed that such rights of the landlord were to be differently regarded from his rights to re-enter for breach by the tenant of a specific covenant in the tenancy agreement itself. 19. If Mr. Swaine is right it would mean that if Clause 4(a) of the tenancy agreement has been included in suitable words as part of Clause 2 of the agreement, his argument would fail. But the tenancy agreement must be looked at as a whole. It is an agreement containing various provisions. It does not matter in which clause any particular provision appears. 20. A "provision" written in Clause 4(a) is as more or less a "provision" as one written in Clause 2. The Ordinance does not refer to "express covenants made by the tenant." It is an Ordinance which only gives a limited protection to tenants. It does not interfere with the ordinary rights of landlords arising out of the breach of a tenancy agreed to by a tenant. 21. In my view Clause 4(a) of the tenancy agreement is as much a "provision" of that agreement as anything contained in Clause 2. And it is stated to be expressly made. 22. Mr. Gittins for the Plaintiff relied on three points. 23. First he quoted the unreported case of Fu Hop Investment Co. Ltd. v. Chen Hung Man and others (O.J.680 of 1969). This was a matter decided in chambers, not in open court: and is one of the only cases when the point at issue before me has been decided. 24. The learned Judge in that case decided that the existence of a term in a lease which was very similar to Clause 4(a) in this case was insufficient to give the protection of the Ordinance to the Plaintiff in that case. Mr. Swaine drew my attention to another case. Triple Top Reality Ltd. v. China Handcraft Co. (O.J. 731 of 1970) in which the former case was distinguished. He said that the present facts were distinugishable on the same grounds. The latter case was also heard in chambers, the proceedings were brought under Order 14 R.S.C. and unreported. Leave to defend was given. I do not think with respect that these two chamber matters are of much assistance except that it appears that in the former case the learned Judge took much the same view as I have taken of the interpretation of the relevant sub-section of the Ordinance. So far as the latter case is concerned the matter was settled before the case came on for trial: so the point was not decided. 25. The second point made by Mr. Gittins was that the mischief at which section 2(2)(a) of the Ordinance is aimed is to prevent parties side stepping section 3 of the Ordinance, (which deals with the minimum length of notice) by the inclusion in the lease of an option to determine. For example a lease for 5 years with an option to determine at the end of any one year. Such a lease would of course be caught by the Ordinance. 26. I think that this is correct. As I have said the Ordinance is of limited scope it only gives protection to a tenant by forcing a landlord to give 6 months notice before determinating a tenancy in certain circumstances. 27. Mr. Gittins also pointed out the provisions of section 8 of the Ordinance. I have already referred to this section, it reads as follows:-
This section expressly preserves the right of the landlord to recover in the events there mentioned, including the winding-up of the tenant's business. A tenant of a lease for less than 3 years may be protected by the Ordinance and entitled to six months notice of determination. But a tenancy containing a provision such as is mentioned in this section of the Ordinance would not be protected for that reason. Why then should be a tenant of a lease for more than 3 years be so protected? 28. I am clearly of the opinion that the Ordinance does not apply to the tenancy agreement in this case. 29. The second issue is, assuming for the sale of argument that the Ordinance does apply, was the letter sent by the Plaintiff to the Defendant a valid notice of determination of the agreement. The letter reads as follows:-
Peking Restaurant Ltd., Ground and 1st floors, No. 1, Great George Street, Hong Kong. Dear Sirs, 30. We act for Winning Enterprises Ltd. 31. We are instructed by our clients to inform you that they will require possession of the above premises for themselves for redevelopment on the expiration of the lease held by you from our clients on the 31st January, 1971.
c.c. client. It is settled law that the form of a notice to quit is immaterial. 32. In Paragraph 385 of Hill and Redman's "Law of Landlord and Tenant" (13 edition), the learned editors state the law thus.
33. Lord Coleridge expressed the same view in an often quoted passage in Gardner v. Ingram 1889 61 L.J. 729 at 730. He used these words:-
Now it is true that when the Plaintiff sent the letter in question it was only intended to remind the Defendant that the lease would expire on January 31st, 1971. The Plaintiff did not consider that the Ordinance applied. So he did not head the letter "Notice of Determination" or "Notice to Quit." However I do not think that this matters. 34. The Ordinance does not lay down any particular form which the notice to determine the lease is to take. 35. The Defendant was given more than six indeed, nearly ten, months warning that the Plaintiff would resume possession on January 31st, 1971: the lease was then in existence at the time and the words of the letter are unequivocal. In fact the letter, in the words of Coleridge L. J. was couched in "plain and unambiguous words" and claimed "to determine the existing tenancy at a certain time." namely on January 31st, 1971, on the last day of the lease. 36. I hold therefore that if the Ordinance applies, the letter of March 5th, 1970 sent to the Defendant by the Plaintiff validly determined the lease. 37. Judgment for the Plaintiff for possession of the premises and mesne profits at the rate of $18,000 per month from February 1st, 1971 until possession is given up. There will be a stay of execution until June 30th, 1971 with liberty to either party to apply. 38. Costs against the Defendant.
Representation: Gittins Q.C. & M. Lee (C.C. Lee & Co.) for Plaintiff. Swaine (Philip Remedios & Co.) for Defendant. Oral judgment of 8.6.71 reduced to writing. |
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