On Park Parking Ltd v. The Secretary for Justice

HCA011174/1999

HCA11174/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.11174 OF 1999

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Coram: Deputy High Court Judge Muttrie in Court

Dates of Hearing: 22-26 & 29 March 2004

Date of Judgment: 19 May 2004

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J U D G M E N T

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1.The plaintiff and fourth party, On Park Parking Ltd ("On Park") and the third party, West Coast International (Parking) Ltd ("West Coast") are vehicle park operators; at different times they provided parking for container trucks and goods vehicles at a vehicle park at Container Port Road South, Kwai Chung (the "Site"). The defendant, i.e. the Government was the landlord and West Coast was the tenant of the Site under Short Term Tenancy Agreement No. 3340. That agreement expired on 30 September 1998, but West Coast thereafter occupied the Site as a monthly tenant until 28 February 1999. On Park tendered for and entered into Short Term Tenancy Agreement No. 3412 with the Government for a lease of the Site for two years commencing on 1 March 1999. But, for various reasons, the plaintiff did not obtain possession of the Site until 6 March 1999. Accordingly, On Park now claims against the Government for damages for the latter's failure to deliver vacant possession of the Site on 1 March 1999. In third party proceedings, the Government claims against West Coast, alleging that it was due to the latter's fault that vacant possession could not be given to On Park on that date. In fourth party proceedings West Coast claims against On Park, alleging that it had done all it could to deliver vacant possession to the Government and that if it failed to do so, it was prevented by the wrongful acts of On Park.

The Main Action ― On Park's Case against the Government

2.In brief On Park's case as pleaded is as follows. Before it tendered for the tenancy of the Site, On Park found out that West Coast had covered and paved over drainage channels and culverts (the "drains") on the Site. Because of this and a notice given by West Coast to its parking customers, On Park entered into correspondence with the Government, which represented and warranted that On Park would get vacant possession with the drains cleared and the site reinstated on 1 March 1999. Relying on the Government's representations and warranties, On Park bid for the site and its bid was accepted. The tenancy agreement contained express provisions for the tenancy to commence on 1 March 1999, and for quiet enjoyment. It also contained implied terms that vacant possession would be given on 1 March 1999 and that the drains would be cleared by then. Alternatively, there was a collateral warranty, or a collateral agreement, or an agreement for a lease evidenced by correspondence, all of which provided for vacant possession with the drains cleared, on 1 March 1999. But when 1 March arrived, vacant possession was not given; vehicles and other things remained on the site, which was littered with garbage and debris, and restoration work was being done So the Government was in breach of the terms of the tenancy agreement and/or the various other collateral warranties and agreements pleaded. On Park only took possession of the Site on 6 March 1999 subject to the reservation of its rights. It had to carry out further site clearance, and it lost business because of that and because its customers cancelled their parking agreements and went elsewhere.

3.On Park accordingly now claims:

(a)	Loss of rental of 30% of the site for 17 days required for clearance	$189,161.10
(b)	Loss of income due to cancellation of parking agreements	$143,600.00
(c)	Expenses of site clearance	$66,000.00
(d)	Transportation on redelivery of a guard house	$2,500.00
(e)	Loss of hourly parking income	$9,981.00
(f)	Loss of custom over the two- year lease, in respect of the customers who never returned	$3,446,400.00

4.The Government through Counsel conceded that vacant possession was not given until 6 March 1999. In fact the Government on 15 January 2003 had repaid to On Park $183,940.30 in respect of the rent for the period from 1 to 5 March 1999. The Government puts On Park to strict proof in respect of the rest of its claims.

The Third Party Proceedings

5.The Government's case is that West Coast in breach of the Short Term Tenancy Agreement No. 3340 failed to deliver vacant possession on 1 March 1999 as there were vehicles on the Site which had been customers of West Coast, and rubbish and debris on the Site and in the drains. West Coast was carrying out restoration work in removing the rubbish and debris until 6 March 1999. The Government was, therefore, unable in its turn to give vacant possession to On Park and now claims the loss of rental for the period of delay plus such sum as the Government maybe liable to On Park, whether by way of damages, interest or costs together with the costs of defending the action.

6.West Coast pleads that Short Term Tenancy Agreement No. 3340 contained implied terms that the parties would co-operate to secure its performance, that if one was in breach of that duty the other would be entitled to regard itself and discharged from performance, and the Government would not be entitled to claim against West Coast or to retain or deduct the deposit paid thereunder if it relied on its own breach to establish its claim. West Park gave notice to its customers that all vehicles were required to leave the site by midnight on 28 February 1999, but many of them failed or refused to do so. On Park knew or ought to have known that the customers needed continuous parking and that there was a custom in the car parking trade that the incoming tenant of a car park would take over those customers of the outgoing tenant who wised to remain. On Park had invited West Coast's customers to remain and had entered into numerous parking agreements with them and had in fact let about 329 parking spaces from 1 March 1999. It was an implied term of these agreements that On Park would not require these customers to vacate the Site before it took possession, notwithstanding that West Coast was required to deliver vacant possession to the Government, and the Government was required to deliver vacant possession to On Park, and that the handover would not interrupt the customers' use of the parking facilities.

7.West Coast further pleads that on 1 March 1999 West Coast delivered possession to the Government, and the Government delivered possession to On Park. On Park wrongfully refused to take possession on the ground that the Government had failed to deliver vacant possession, which it was not entitled to do, given that it had agreed to allow the customers to remain. In turn the Government wrongly refused to accept possession from West Coast. The customers, as they were entitled to, refused to vacate on the grounds that they had entered into agreements with On Park.

8.West Coast therefore says that On Park was not entitled to refuse to accept possession on the ground that its own customers had not vacated the Site; they in turn were entitled to remain there. If, which is denied, West Coast had failed to deliver vacant possession to the Government, it had done all it could to deliver vacant possession and was prevented from doing so by the acts of On Park. Accordingly, the Government was in breach of the implied terms in the Short Term Tenancy Agreement and West Coast was entitled to treat itself as discharged from its duty thereunder.

9.Further West Coast counterclaims against the Government for repayment of the deposit of $3,757,000.00 paid under Short Term Tenancy Agreement No. 3340, which it says the Government had wrongfully refused to return, West Coast having duly observed and performed its obligations under that Agreement.

10.The Government by way of reply takes issue with West Coast's allegations and in respect of the counterclaim it denies liability but pleads that without prejudice to the parties' rights, duties and obligations under the tenancy, a partial deposit of $2,957,000.000 was refunded to West Coast on 28 October 2002.

The Fourth Party Proceedings

11.West Coast pleads that it was an implied term of the contracts which it had with its customers that they would vacate on reasonable notice. It gave them notice in writing on 22 and 24 February, to vacate the Site by midnight on 28 February 1999. But many of them failed or refused to leave. It was therefore unable to deliver vacant possession to the Government on 1 March 1999.

12.West Coast says that On Park knew or ought to have known of the requirement of the customers for continuous parking notwithstanding a change of operator, and the custom of the trade for the incoming car park operator to take over the outgoing operator's customers, and repeats the averments relating to On Park's actions in this connection noted above as part of its defence to the Government's third party proceedings. It says that if, which is denied, it failed to deliver vacant possession of the Site to the Government on 1 March 1999, it had done all that it could to do so, and was prevented from doing so by the acts of West Coast.

13.In the alternative, West Coast says that On Park, wrongfully and with intent to injure it, procured and induced existing customers to break their contracts, and refuse to leave the Site in accordance with West Coast's notices, thereby preventing West Coast from delivering vacant possession to the Government.

14.West Coast in turn claims against On Park for the loss of its deposit retained by the Government, for an indemnity against the Government's claim against it, for damages for inducing breach of contract and unlawful interference, and costs.

15.The pleadings are quite lengthy and the above is intended to set out the elements of the parties' cases, rather than to give an extensive paraphrase of the pleadings.

The facts

16.There is not a lot of dispute on the facts. West Coast and On Park are competitors in the business of providing parking for container truck and goods vehicle operators. The man who was effectively in control of On Park's actions at the time of the incidents which gave rise to these proceedings was Mr Wan Chi Hing, who gave evidence for On Park. He was then a consultant, but is now a director of On Park. Many years ago, he became friendly with, and went into the car parking business with a Mr or Professor Stephen Cheung and others. They set up West Coast, or its predecessor. Later, Mr Wan was bought out. He was, however, on his own admission a director and manager of West Coast until December 1997 and he was involved in West Coast's tender for Short Term Tenancy Agreement No. 3340 and with the operation of West Coast at the Site until he left that company. Mr Wan and Mr Cheung had personality clashes. The could not get along peacefully and indeed it seems that at one stage Mr Wan had sued Mr Cheung for libel although the proceedings were settled. So, as well as simple competition between the two companies, there was bad blood between persons at the head of them.

17.There was a practice in the vehicle park operating trade that when a car park was put up for tender by the Government, the new tenant could take over from the old tenant those vehicles which wished to continue parking on the site, so long as the new tenant was willing. The purpose of this was to avoid container vehicles from being parked on nearby roads. The District Lands Office, as landlord of the carpark, would not be a party to this practice but if the new tenant would take over existing vehicles in the carpark, and acknowledge possession of it, the District Lands Office would take a flexible approach and would not insist that the old tenant surrender vacant possession at the end of its lease. This practice was spoken to by the Government's witness, Mr Leung Chun Fai, a Senior Lands Officer in the District Lands Office ("DLO"), Kwai Tsing, in whose area the Site lay. Mr Wan accepted that there was such a practice, so long as it was agreed by both the incoming and outgoing tenants. However, the position taken by On Park was and is that it wanted vacant possession and did not agree simply to take over the existing parking customers.

18.As indicated, West Coast was the tenant of the Site under Short Term Tenancy No. 3340. The Site is a large one, of about 45,000 square metres; according to Mr Wan, it would hold about 500 sets of tractor and trailer. It lies between Container Port Road South and the container terminal No. 8. It is also known as Terminal No. 8 Car Park B. West Coast was also the tenant of the adjacent vehicle park, known as Car Park A, under Short Term Tenancy No. 3334. Mr Wan knew by the end of 1998 that the two carparks would be put up for tender. The plaintiff was interested in tendering.

19.West Coast issued a notice dated 18 December 1998 to its customers to the effect, it would retain the operation of the car parks until they were re-tendered and that the Lands Department did not accede to vacating them in principle; therefore, no matter who succeeded in the tender, the Site would not be vacated.

20.On 22 December 1998, On Park wrote to the DLO in respect of the two carparks and asked for clarification whether the Government would require West Coast to re-instate the drains. On 23 December, On Park issued a notice to the customers at the car parks saying that it had confirmed with the Lands Department that the Site "would have to be evacuated before a fresh tender could be made", as well as soliciting registrations for future parking spaces. The DLO in a letter dated 31 December 1999 said that this statement was not true and did not come from that office. Correspondence continued, and in a letter dated 16 January 1999, the DLO told On Park that its practice was to ensure that vacant possession be given to the successful tenderer. On 4 February, the DLO wrote to On Park that action had been taken to require West Coast to reinstate the drains, and that the DLO would ensure that the drains were clear before possession was given to the successful tenderer.

21.On 21 January 1999, the DLO terminated West Coast's tenancy of the Site with effect from 1 March 1999. It demanded vacant possession be given at 10:30 a.m. on that date and reminded West Coast to vacate the site without leaving rubbish or building debris and to re-erect the boundary fence and reinstate any government structure including highways and drains to the Government's satisfaction.

22.The Site was put up for tender on 14 January 1999. On Park tendered $13,538,000.00 for a term of two years. West Coast tendered $12,056,000.00. On Park's tender was accepted. It paid a deposit along with the tender and at the DLO's request paid rent of $7,872,641.30 being rent for the period from 1 March to 30 September 2000. On Park also tendered for and obtained the adjacent car park, and obtained possession of it without any problem on 1 March 1999. In the course of the trial, a document was produced by agreement which Mr Wan had signed on that date, acknowledging receipt of that site under Short Term Tenancy Agreement No. 3412, "cleared and vacant to my satisfaction".

23.In anticipation of leaving the Site, West Coast issued two notices to its customers, dated 22 and 24 February 1999. The effect of the notices was that the parking lots were to be handed over to the Government on the morning of 1 March 1999. The customers were, therefore, requested to drive their vehicles out by midnight on 28 February to enable the Site to be cleared for the hand-over. In the second notice, West Coast threatened to remove any vehicles remaining to its other sites, at the owners' cost.

24.In anticipation of taking over the Site, On Park entered into agreements with a number of container vehicle operators for spaces on the Site and took from them one month's rent by way of deposit. The agreements were in standard form. They provided, inter alia, that the tenant must pay the equivalent of one month's rental as deposit, and must pay the rent in advance before the first day of each month. The deposit could not be substituted for monthly rent. Termination was provided for, on one month's notice by the customer and 15 days' notice by On Park. No entry date or term was stated. According to On Park's witnesses and, in particular, Mr Wan the sums received represented only deposit and not rent. A large number of deposits was received; Mr Wan's witness statement sets out the details, and the total on my addition comes to $918,000. It appears that On Park was charging $6,400 per month, for a 104 foot space which would take two tractors and trailers.

25.When 1 March 1999 came, the proposed hand-over of the Site was not achieved. Evidence of what happened comes primarily from Mr Wan, and Mr Leung of the DLO, who kept a log of what happened then and over the next few days. Mr Patrick Kan of West Coast, who was present on that company's behalf, has not given evidence. According to Mr Wan, the site was in a mess. There were vehicles present, and a lot of garbage, and work in progress of clearing the drains. Mr Wan produced a series of photographs, as did Mr Leung. In addition to vehicles and garbage, it appears that there were containers, not on trailers but lying on the ground as well as other things such as a lamp standard also lying on the ground. Mr Leung agrees that there were vehicles present belonging to 20 operators. He says that there were 120-150 tractors, trailers and other vehicles then, and on 5 March his log shows that he counted 197 trailers and 88 tractors. From the photographs, it appears that goods vehicles and cars were also present. Mr Leung agrees that the site was littered with garbage and debris; some of the drains were filled with soil and garbage and there was a bulldozer clearing out the drains. By 6 March, according to him, all the debris and garbage should have been removed and the drains were cleared.

26.Mr Leung wanted Mr Wan to take over the site, in accordance with the custom or practice referred to above, but Mr Wan refused; as appears from his evidence, he wanted vacant possession with the Site cleared of vehicles and garbage and all the drains reinstated. Some of the vehicle operators on the site claimed to have booked parking spaces from On Park, but Mr Wan did not accept that he had agreed to rent them spaces. It is not in dispute that Mr Wan refused to talk to the vehicle operators that day.

27.In fact discussions between On Park, West Coast and the DLO in the person of Mr Leung went on over the next few days. Letters were written to the DLO by Messrs Boughton Peterson Yang Anderson on behalf of On Park. Some attempts were made to check if the vehicle operators had indeed paid deposits to On Park, and on the afternoon of 4 March it appears that there was a meeting at the Site. The vehicle operators were asked to attend. Attempts were made to check who had paid deposits. According to Mr Wan, he asked Mr Kan of West Coast to prove that each vehicle belonged to On Park's customers. If the vehicle operator could show that he had paid the vehicle would be allowed to remain. Otherwise he wanted West Coast to remove it the following day. Some owners came, but the parties could not agree and, again according to Mr Wan, the meeting broke up after 20 minutes, with nothing resolved. Mr Kan meanwhile wanted to block the site with a bulldozer; indeed according to Mr Wan it was blocked.

28.The deadlock went on but from Mr Leung's contemporaneous log it appears that attempts were being made to verify whether the vehicle operators had indeed paid deposits to On Park. By 1.30 p.m. on that day there were 197 trailers and 88 tractors of which 21 were unverified. Agreement to take over the site was still not reached, but by the end of that day some 20 vehicles were allowed in by On Park. Ultimately, the Site was handed over to On Park at 10 a.m. on 6 March 1999 and Ms Kan of On Park signed a confirmation to this effect, subject to conditions set out in a letter from On Park's new solicitors, Y.S. Lau & Partners, that this was without prejudice to On Park's right to claim for non-delivery of vacant possession and that On Park was not liable to carry out any work on the drains and would only be liable to return the Site to the Government in the same physical state as at that date.

29.I turn to the claims made against the Government by On Park. The Government was obliged, whether by the terms of the Short Term Tenancy Agreement, or the various other alternatives pleaded, to give vacant possession on 1 March, but did not. It clearly accepts that, having refunded the rent for the five days for which On Park was kept out. So the question remains of what other losses flow from this failure. The lease was amended to run for two years from 6 March 1999 and On Park in fact accepted that, whatever it may plead. Documentary evidence was adduced in the course of the trial by agreement to show that when the Short Term Tenancy Agreement expired, On Park was allowed to hold over and chose to leave on 14 February 2002, i.e. in the middle of a month. So, although Mr Wan claims that there would be losses because the customers wanted parking for a full month at a time, there does not seem to be any substance in that.

30.On Park has to prove its claims on the balance of probabilities. The quantum of those claims depends entirely on the evidence of Mr Wan. I have to say that I did not find him a very satisfactory witness. He was evasive under cross-examination particularly when counsel sought to pin him down to the relative importance to On Park of the vehicles on the Site and the drains. The stance he took at the time, on the vehicles, was unreasonable. Mr Leung of the DLO made that comment and I agree with it. Mr Wan insisted that West Coast should prove that the vehicles on the site belonged to customers who had paid deposits to On Park, but this was something within On Park's knowledge. Mr Wan had all the fax numbers of all the container operators in Hong Kong, according to him. If On Park did not take the numbers of the vehicles when it took the deposits from the customers, it would have been easy enough to contact the customers for this information. In any event it appears that this question was largely settled by about 4 March 1999. Further, he said that he wanted all the vehicles out, even if only for five minutes; which was obviously totally impractical and of no sensible use to anyone including On Park.

Loss of rental of 30% of the site for 17 days required for clearance

31.Mr Wan said that On Park had to hire equipment from Yue Kee Construction Co. to remove the substantial amount of debris left at the site, at a cost of $66,000.00. As a result, about 30% of the site could not be used as a car park for 17 days. Counsel for West Coast tried to exclude the evidence of area as being expert evidence; I did not accept that argument because a layman can make an estimate of space, or the percentage of a space that he can see. However, no basis was given for the estimate. Neither Mr Wan's photographs nor Mr Leung's supported it. Mr Leung says that by 5 March most of the debris in the drains had been cleared and that is what the photographs show. Generally, the photographs show wide areas of open space in the middle of the Site and rubbish and debris round the side. There does not appear to be anything to stop vehicles from parking on any significant area, by the time On Park took over. The contemporaneous photographs do not support Mr Wan and I do not accept his estimate of 30% unusable, or indeed any estimate. It seems to be a figure plucked from the air. So I am not satisfied on the balance of probabilities that there was any significant area of the Site which was unusable for parking after 5 March 1999, and this claim will be dismissed.

Expenses of site clearance

32.As to the expenses charged by Yue Kee, if the drains were mostly clear it is difficult to see why it would be necessary for a bulldozer to work 17 days, and a hoist 10 days, to produce 30 truckloads of debris. There would be no need for serious earth-moving and indeed, the photographs do not show that there was such a need. The light garbage would not have needed bulldozers and hoists to shift it; rather, men with barrows. So, again this evidence is not credible. Further there is no evidence which would enable me to come to any proper assessment of expenses for site clearance so this claim must also be dismissed.

Transportation on redelivery of guardhouse

33.On Park has produced documentary evidence to prove the cost of transportation of its guard house to the site. This is not something caused by the delay in obtaining possession; it had to be done anyway. No evidence is produced to show what it cost to re-deliver the guard house. Nor do we know what the guard house was like, or where it was put, or whether it could have been shifted from there by a few of On Park's own workers. There is nothing to support this claim and it will be dismissed.

Loss of income due to cancellation of parking agreements

34.The customers in respect of whom these losses are claimed are Sam Hing, Cheung Yuet, Cheuk Yuet, Yiu Hing, New Power, Yue Kee and Pik Luen. Details of how the figures are calculated appear in Mr Wan's statement.

35.Sam Hing, Cheuk Yuet and Yiu Hing each cancelled one of its parking spaces, in writing on the ground that there was insufficient parking space at Site B. The first two cancelled on 24 March and the third on 18 March 1999. But, according to On Park's witness Mr Lam Ka Chor, there was ample parking space on these dates. Out of 500 spaces about 300 were taken. Mr Yuen, SC, for the plaintiff and fourth party, characterises these letters as mistakes but there is nothing to support this suggestion. If, as appears from Mr Wan's statement and the receipts, there were cancellations on 6 March, there is still nothing to support the proposition that the cancellations were made because the customers could not get into the car park before that date; each of them had other spaces reserved, which they took up on that date. I cannot find, therefore, that any loss in respect of these customers arose out of the Government's failure to give possession on 1 March 1999.

36.Notes from New Power, Yue Kee and Pik Luen were produced, which indicated that they had cancelled spaces because the spaces were not available on 1 March 1999. In fact each of them cancelled all its reservations. On Park, therefore, claims the loss of rent for the month, in each case. On Park contends that since it was unable to provide the spaces reserved there was a total failure of consideration, and therefore it was required to return the deposits. Alternatively, since the agreements did not state a commencement date they were not enforceable in law. See Harvey v Pratt [1965] 1 WLR 1025. So it could not mitigate its loss.

37.The Government contends that On Park had never represented that parking would be available on 1 March. In any event, it would have been entitled to sue the customers for breach of agreement, because they did not give one month's notice, as required; and it could have forfeited their deposits and thereby mitigated its loss.

38.Mr Wan's evidence was that the customers paid deposits, but rent was not accepted because he did not know when On Park would get vacant possession, i.e. when the rental period could start. On his evidence was no representation or agreement on the part of On Park that the customers would be able to park, or continue parking, from 1 March. They were to be told when parking would commence, depending on when On Park would get vacant possession. From cross-examination of the two customers called by West Coast it appears that this is right.

39.I think it must be right that there was no contract between On Park and the customers that their parking would commence on 1 March. I deal with this further below, in connection with the claim by West Coast. I do not, therefore, see how On Park could have sued the customers for breach of contract in failing to give due notice of termination. At the same time, I do not see how, if there were no contracts between On Park and the customers to commence parking on 1 March, On Park can claim against the Government for losses arising from the customers' failure to do so. So these claims must also fail.

Loss of hourly parking income

40.This is claimed in respect of the period from 1 to 5 March. But this is a double claim. On Park was not in possession on those dates, and therefore could not earn parking income. It cannot on the one hand get back the rent for the period during which it was not in possession, and on the other hand claim profits which it would have earned if it had been in possession. See Cullinane v British Rema Manufacturing Co. Ltd [1954] 1 QB 292. So, this head of claim falls to be dismissed.

Loss of custom over the two-year lease, in respect of the customers who never returned

41.This is claimed in respect of the customers named above, who cancelled their spaces. According to Mr Wan, they never returned. Mr Yuen, SC, calculates the loss at $$3,446,400.00 by extending the loss claimed for one month to a period of two years.

42.No doubt On Park can claim for a general loss of business arising out of Government's failure to give possession on 1 March 1999. But it is very difficult to see why a failure to make spaces available for five days in March 1999 would cause customers to stay away for the next two years. According to one of West Coast's witnesses, Mr Lam King Chi, the considerations for him were location, price and convenience. There is evidence from him as well as the other operator, Mr Cheng that if they could not park at the container terminal, they would have to park somewhere in the New Territories and one can see that this would obviously not be ideal. Parking was arranged at the Site on a monthly or an hourly basis, and one can well see that any operator who might have had to go far away for a month would have good reason to return in the following month.

43.Mr Yuen, SC, argues that since there is no explanation for why the six customers never returned, the court should accept that it was because of the failure to provide spaces at the beginning of March 1999. He relies by way of analogy on Marcus v. Myers (1895) 11 TLR 327. That case involved the breach of a contract to advertise a tailor's shop in a Jewish newspaper in London. For the period of the breach, the tailor got no new Jewish customers. It was held that the evidence of the loss of business, which was not accounted for in any other way, was proper for the consideration of the jury in estimating damages. I do not think the situation is the same here. There is in fact no evidence of a general loss of business. To rely on the particular loss of a number of specific customers it seems to me that On Park would have to show, not only that they never returned, but that it was never able to fill their spaces; or at any rate that there was some extra loss arising from their absence over and above the normal fluctuations of parking income. According to West Coast's witnesses, as I have indicated, if they did not park there, they had to go far away. According to Mr Leung, the number of car parking spaces on the market was very restricted. In the light of this evidence, I cannot accept that On Park, in losing these six customers, necessarily lost business. There would obviously be other customers ready to take over spaces which were available in the following months. This head of claim must also be dismissed.

44.It follows that the Government can only be liable to On Park for the rent for five days, i.e. $183,940.30, which has been repaid. On Park is, therefore, entitled to a judgment against the Government for that sum plus costs of its recovery, i.e. costs up to the date of repayment. I turn to the question of whether this liability can be passed on to West Coast as third party.

The Third Party Proceedings

45.It is a common law obligation for a lessor to deliver vacant possession at the start of a lease and for the lessee to deliver it up to the lessor at the end. See Henderson v. Squire (1869) LR 4 QB 170. West Coast, whether by virtue of explicit terms of the Short Term Tenancy Agreement or by terms to be implied therein, had such a duty. West Coast was required to deliver vacant possession at 10:30 a.m. on 1 March 1999; the Government had required that by its letter of 21 January 1999 and had been reminded in that letter of the need for re-instatement, particularly of the drains.

46.West Coast's argument is that it had done everything it could to give vacant possession to the Government on 1 March 1999 and, indeed, subsequently. It was prevented from doing so by reason of the presence of the vehicles. It is not, therefore, liable to the Government for failure to deliver vacant possession. Counsel relies on Reynolds v. Bannerman [1922] 1 KB 719. In that case, the tenant gave up possession to the landlord but the sub-tenant refused to quit, relying on the provisions of the Rent (Restrictions) Act. It was held that since the tenant had done all he could to give vacant possession to the landlord, the sub-tenant did not continue in occupation as his agent so he was not liable for use and occupation for the period during which the landlord was kept out of possession.

47.This in my view does not assist. In Reynolds the tenant could not get the sub-tenant out because of statutory provisions. Having found that the tenant had "done all he could" Swift LJ went on to find that the case was "different from that of a tenant who, having sublet to another, on the expiration of his tenancy leaves the sub-tenant in possession, either willingly, or as having assented by taking no steps to turn him out." In fact the question of the tenant's liability on his contractual obligation to deliver up possession to the landlord on the termination of his tenancy did not arise.

48.West Coast further argues that the presence of garbage and debris did not prevent the giving of vacant possession to the Government on 1 March. It would follow that the Government's refusal to accept vacant possession was wrongful. Counsel relies on Cumberland Consolidated Holdings Ltd v. Ireland [1946] 1 All ER 284 (CA) as authority for the proposition that the presence of a physical impediment is be equivalent to the presence of a trespasser and so prevents the giving of vacant possession, but not any physical impediment will do; it must be one which substantially prevents or interferes with the enjoyment of the right of possession of a substantial part of the property. It is argued that the garbage and debris was not such an impediment. This may be so but on the evidence both of Mr Wan and Mr Leung, work was going on to clear the drains throughout the five days with which we are concerned. The workers could only have been West Coast's. I do not see how vacant possession could be given up, when the tenant's workers were still in the premises fulfilling the tenant's obligations to the landlord of reinstatement.

49.There was never any question of West Coast giving vacant possession to the Government, except in the context of the Government immediately giving vacant possession to On Park. There is no evidence that vacant possession was offered to the Government except in this context or that the Government refused to accept it. The one who refused to accept it was Mr Wan of On Park. This is quite clear from the evidence of Mr Leung of the DLO. It cannot, therefore, be said that the Government refused to accept possession whether vacant or otherwise. But in any event, I do not see that such refusal would have been wrongful. The Government would have been within its rights to refuse to accept vacant possession so long as West Coast and its workers were still in occupation.

50.West Coast has, therefore, no defence to the Government's claim against it. So far as the counterclaim is concerned West Coast has not duly observed and performed its obligations under its tenancy agreement. The Government is not in breach of Special Condition 4 of the Second Schedule of the Short Term Tenancy Agreement and is entitled in terms thereof "to retain and deduct from the deposit as and for liquidated damages the amount of loss and damage sustained by [West Coast's] default". The Government has returned $2,957,000.00 of the $3,737.000.00 paid by way of deposit under Special Condition 4 and would be entitled to deduct such sum as is awarded by the court from that figure and return the balance.

51.It follows that the Government is entitled to a judgment against West Coast for an indemnity for its liability to On Park and to dismissal of the counterclaim. I turn to the question whether West Coast can pass liability back to On Park.

The Fourth Party Proceedings

52.West Coast's case is that if West Coast was in breach of its tenancy, which is denied, in failing to give vacant possession that was caused by the On Park. The customers had paid deposits to reserve spaces for March 1999, and there were implied terms in their agreements with On Park that On Park would not require them to vacate the Site before it was handed over to On Park; that the handover from West Coast to the Government, and the Government to On Park would not interrupt their use of it; and that any new customer would be entitled to enter on 1 March 1999. In the premises, On Park could not object to the presence of the customer's vehicles, and it was not entitled to refuse to accept possession because of that presence. West Coast's alternative case is that by accepting deposits from West Coast's customers, On Park led them to believe that they would not be required to remove their vehicles from the Site. Knowing that those customers were contractually obliged to vacate the Site on 28 February 1999, On Park from procured and induced them not to do so, and so tortiously procured them to breach their contracts with West Coast.

53.Mr Wan's evidence with regard to the deposits is that they were received only as deposits; no rent was received; and his staff were told to tell the customers that the their rental periods would start only when On Park took over the Site.

54.Mr Lam King Chi, one of the customers, said that he was originally told only to pay a deposit because On Park was not 100% sure of winning the tender. He was told that if it did he would be told, a day or two before 1 March, to pay the parking fees for the month. It was agreed that he could pay the rent after 1 March, on West Coast refunding his deposit. Later, when he received West Coast's notice to quit he contacted On Park to ask why he should have to move, since he had paid a deposit, and On Park had won the tender. He did not get a clear reply but concluded that he had sufficient reason for not vacating, and that On Park would not object to his remaining. From cross-examination, it appears that he might not have had a very clear memory of what happened, by the time he came to make his statement; but in any event he agreed that he had not been directly told, but had rather concluded himself, that he would not have to vacate.

55.The other customer, Mr Cheng Wai Hung said that when he learnt that On Park would be taking over, he went to buy his ticket for March. He was told that On Park would be taking over and was asked to pay the fees for one month. This surprised him because he had expected to pay one month's fees and the equivalent as deposit. But he was told that it might be possible that the deposit he had already paid to West Coast would be transferred. So he had paid one month's parking fees and had got a receipt for it.

56.Mr Cheng's receipt, however, clearly bears to be for a deposit and not for parking fees or rent. Cross-examined, the accepted that he had been told that he could not pay the fee because On Park did not know if the Site would be clear by 1 March. So, although he considered On Park morally responsible to let him park on the Site from 1 March, he knew that this was not guaranteed. Also he had heard that a large customer had reserved many spaces; so he was afraid that, if he left, he would not be able to return. This was at least one of the reasons for his remaining on the Site and not vacating.

Implied Term

57.The requirements for an implied term were set out in B.P. Refinery (Westernport) Pty Ltd v. President, Councillors and Ratepayers of Shire of Hastings [1978] 52 ALJR 20. Lord Simon, delivering the majority opinion in that case at page 26, said :

"Their Lordships do not think it necessary to review exhaustively the authorities on the implication of a term in a contract which the parties have not thought fit to express. In their view, for a term to be implied, the following conditions (which may overlap) must be satisfied : (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract."

58.I do not see how it must necessarily be implied from the terms of the agreement which On Park had its customers sign, that they would have parking guaranteed from 1 March. Even given the custom for a parking operator to take over his predecessor's customers, I cannot see that it would be necessary to give business efficacy to the contract. The customers, given time could move out and move in again once they were told that On Park was in possession. They might suffer inconvenience but that would not make the contract ineffective. So I do not see that West Coast can rely on an implied term. In any event, one of West Coast's witnesses admitted that he had been told that he could not pay fees because On Park did not know exactly when it would take over. The other said that he had not been guaranteed parking from 1 March. Both of them seem to have made up their own minds that if they remained, all would be well. So I have to accept that On Park made the contracts with the customers on the basis that the deposits were received but the exact date of entry would be notified; and that would be an express term, inconsistent with the implied term contended for.

59.It is also argued for On Park that the agreements would not be enforceable by the customers, because no commencement date is stated, and for a valid lease to be constituted, one of the matters which must be stated, is the commencement date. See Harvey v. Pratt [1965] 1 WLR 1025. In fact the parking agreements were licences rather than leases but I accept that the same principle must apply; and if it does not, it is in any event necessary for any contract to be certain.

60.It follows that to the extent that the failure to give possession on 1 March was caused by the presence of parked vehicles, that was the fault of the owners of the vehicles who could not rely on a contract with On Park to allow them to park from that date.

Procuring Breach of Contract

61.In order to establish this, West Coast must prove that On Park knew of the existence of its contracts with its customers and intended to interfere with the performance of those contracts; i.e. that On Park intended that the customers should, in breach of their contracts with West Coast, fail to vacate the Site having been given the requisite notice to do so. See Clerk & Lindsell on Torts, 18th edn, paras. 24-16 and the cases cited therein.

62.There is no doubt that On Park knew that West Coast had customers and that they had been or would be given notice to quit the Site by midnight on 28 February 1999. That can be inferred from On Park's notice to the customers dated 23 December 1998. But the question is, whether it can be inferred that by entering into the agreements with and taking deposits from the customers it necessarily intended them to breach their contracts with West Coast. The latter would have to prove that On Park appreciated or was sufficiently reckless that this would be the result of its actions. Given that the contracts between On Park and the customers did not give the latter either an express or implied right to park with effect from 1 March, it seems to me that the only way that West Coast could establish intention is by showing that On Park must have known that, whatever the customers were told, they would take it as read that they could remain, if they were already there, or come in and park with effect from 1 March; or that On Park must have known that there was a real risk that that would happen, and recklessly disregarded it.

63.It is true that there was bad blood between Mr Wan of On Park and Mr Cheung of West Coast. There had been litigation between them personally. There was rivalry between the two companies. Further, as I have found, Mr Wan's stance between 1 and 5 March was unreasonable. But I do not think that all these things go to infer that, whatever the customers were told, On Park really intended that they should disregard that and stay put after midnight on 28 February. The whole proposition seems too far-fetched and Machiavellian; and while the fact of the customers' remaining would no doubt damage West Coast it would also damage On Park which, on any sensible reckoning and indeed, on its own evidence would want to take vacant possession on 1 March.

64.I cannot, therefore, be satisfied that On Park had the requisite intention to injure West Coast or that it committed the tort of procuring breach of contract.

65.From the above, it follows that West Coast's claims against On Park must fail.

66.The net result is, then, that On Park is entitled to judgment in the main action for the sum of $183,940.30 plus interest at the commercial rate from the date of the Writ to the date of its payment, i.e. in January 2003; and its costs against the Government up to that date. The Government is entitled, in the third party proceedings, to a declaration that it is entitled to deduct such sum, interest and costs from the deposit paid by West Coast under Short Term Tenancy Agreement No. 3340 and to the costs of the third party proceedings. The counterclaim of West Coast against the Government in the third party proceedings is dismissed with costs to the Government to be taxed if not agreed. West Coast's fourth party claims against On Park are dismissed with costs to On Park to be taxed if not agreed.

67.There will be judgment, accordingly. Since judgment is to be handed down the various costs orders are nisi.

Representation:

Mr Rimsky Yuen, SC, and Mr Jin Pao, instructed by Messrs Zimmern & Co., for the Plaintiff and Fourth Party

Mr S.H. Kwok, instructed by Secretary for Justice, for the Defendant

Mr L. Remedios and Mr C.M. Mok, instructed by Messrs Bernard Wong & Co., for the Third Party