Ford Crown Investments Ltd v. Aaron Patrick Nattrass t/a Acj International Recruitment Services

DCCJ 5638/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5638 OF 2004

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BETWEEN

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Coram  :  Deputy District J. Ko in Chambers

Date of Hearing  :  30^th November 2005

Date of Handing Down Judgment  :  16^th December 2005

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J U D G M E N T

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1.This is the Plaintiff’s application for summary judgment in this action against the Defendant.

2.The Plaintiff is the registered owner of the commercial premises known as Suite 2204, 22^nd Floor, Chinachem Johnston Plaza, 178-186 Johnston Road, Wanchai, Hong Kong (“the Property”).

3.By a tenancy agreement dated 1^st November 2001 made between the Plaintiff on the one hand and Christopher Curtis and Marilyn Onia on the other hand, the Property had been rented to the latter party for their partnership business under the name of ACJ International Recruitment Services (“ACJ”) for a term of 2 years from 15^th October 2001 to 14^th October 2003 (“the Previous Tenancy”).

4.The Defendant joined ACJ as a partner on 1^st June 2002.

5.By a letter dated 16^th October 2003, the Defendant informed the Plaintiff that he was the managing partner of ACJ and he would sign a new lease in respect of the Property.

6.By an offer letter dated 29^th January 2004 (“the Offer Letter”), the Plaintiff offered to let the Property to the Defendant on the terms stated therein.  The following terms of the Offer Letter are material for the purpose of the present application:

“We refer to your interest in renewing the tenancy of the above property and are pleased to set out herewith the terms and conditions which the Landlord would be willing to offer :-

1.	Landlord:	[the Plaintiff]
2.	Tenant:	[the Defendant]
3.	Premises:	[the Property]
…
5.	Term of Tenancy:	2 years
6.	Commencement Date:	15th October 2003
7.	Monthly Rent:	HK$6,410.00 per month
8.	Rent free period:	No rent will be charged for the 1st, 2nd and 24th months of the terms mentioned above.  However, the rent free period will not be free of any other outgoing that Tenant covenant to pay under the Lease.
9.	Management Fee:	The initial charge for management fee will be HK$2.50 per square foot gross per month which sum shall be subject to review based upon increase in the costs of service provided.
…
11.	Government Rates:	Government rates will be charged to the Tenant’s account quarterly in advance, and prior to formal assessment by Rating and Valuation Department will be charged at 5% on rental payable per month, any adjustment necessary will be made upon such formal assessment.
…
13.	Advance Charges:	All payments of rent and management fee shall be payable monthly in advance, and the rates shall be quarterly in advance.
…
21.	Stamp Duty                  :	To be shared equally between the parties.
…
Upon acceptance of this offer, you shall be required to sign the Tenancy Agreement in respect of the Property on or before 6th January 2004...
Please confirm your acceptance as set out above by signing and returning the duplicate of this letter.
…”

7.The Defendant amended the Offer Letter in the following respect, signed it and then returned it to the Plaintiff:

“…

Upon acceptance of this offer, you shall be required to sign the Tenancy Agreement in respect of the Property on or before 6^th January February 2004 failing which …”

8.Subsequently, the Defendant refused to sign any tenancy agreement as envisaged in the Offer Letter but continued to occupy the Property.  The Defendant also paid rent, management fee and rates for the following periods:

(a)  15^th December 2003 to 31^st December 2003;

(b)  1^st January 2004 to 31^st January 2004; and

(c)  1^st February 2004 to 28^th February 2004.

9.It is the Plaintiff’s case that the Defendant repudiated the agreement by failing to pay his share of stamp duty as well as rent, management fees and rates.  The Plaintiff has accepted the Defendant’s repudiation and, by this action, claims against the Defendant for the Defendant’s share of stamp duty, vacant possession of the Property, arrears of rent and mesne profits, management fee, rates and other loss and damage.

10.It is common ground that the Defendant has subsequently delivered vacant possession of the Property to the Plaintiff on 21^st August 2005.

11.At the hearing of this summary judgment application, Miss Po (counsel for the Plaintiff) only applies for the following reliefs, waiving all other claims of the Plaintiff:

(a)  the sum of $668.50 being the Defendant’s unpaid share of stamp duty;

(b)  the sum of $59,220 being arrears of rent, management fees and rates from 1^st March 2004 to 30^th September 2004; and

(c)  mesne profits, management fees and rates from 1^st October 2004 to 21^st August 2005.

The Defence

12.The Defendant has only filed a Defence in this action.  He has not filed any affidavit in opposition to the summary judgment application notwithstanding the direction given on 14^th March 2005 for him to do so.  Significantly, the Defendant has not filed any evidence to deny or challenge the evidence filed by the Plaintiff in the form of the affirmation of Yung Shing Cheung.

13.At the hearing, the Defendant relies on the Plaintiff’s evidence and submits that there was no tenancy between the parties.  He argues that his amendment to the Offer Letter constituted a counter-offer.  The Plaintiff was unwilling to transfer the deposit under the Previous Tenancy to the new tenancy and so the Defendant withdrew his counter-offer by a letter dated 6^th February 2004 before the same was accepted by the Plaintiff.

14.The Defendant further complaints at the hearing that the Plaintiff’s affirmation has not made a full and frank disclosure regarding the circumstances of the Plaintiff’s claim.  He submits that there should be a trial in this action so that the deponent of the Plaintiff’s affirmation can be cross-examined on why the Plaintiff refused to transfer the deposit from the Previous Tenancy to the new tenancy and on how the Plaintiffhas disposed of the deposit under the Previous Tenancy.

Discussion

15.It is trite law that in the context of an application for summary judgment, unless the defendant satisfies the Court with respect to the claim that there is an issue or question in dispute which ought to be tried or that there ought for some other reason to be a trial of that claim, the Court may give judgment for the plaintiff (see Rules of the District Court, Order 14, rule 3).

16.The Defence and the Defendant’s submission disclose thefollowing lines of defence:

(a)  There was no binding tenancy between the parties.  In particular, the Defendant’s amendment to the Offer Letter constituted a counter-offer.

(b)  The issue of the deposit under the Previous Tenancy.

(c)  ACJ was a partnership at all material times.

(A)    Whether there was any binding tenancy between the parties? 

17.According to the deponent of the Plaintiff’s affirmation, the reference to the date of “6^th January 2004” in the Offer Letter was a typographical error or careless mistake on the part of the Plaintiff.  The date the Plaintiff had in mind was “6^th February 2004” and the same was understood by the Defendant.  The Defendant has not filed affidavit evidence to deny this contention of the Plaintiff.

18.It is stated in Chitty on Contracts, 29^th Edition (2004), Volume 1, para.2-030 that:

“Correspondence between acceptance and offer.  A communication may fail to take effect as an acceptance because it attempts to vary the terms of the offer … On the other hand, statements which are not intended to vary the terms of the offer, or to add new terms, do not vitiate the acceptance, even where they do not precise match the words of the offer.  It is, moreover, submitted that, if the new term merely makes express what would otherwise be implied, it does not destroy the effectiveness of the acceptance … The test in each case is whether the offeror reasonably regarded the purported acceptance ‘as introducing a new term into the bargain and not as a clear acceptance of the offer.’…”

19.Having regard to the fact that the Offer Letter was dated 29^th January 2004, I accept that the reference therein to signing a tenancy agreement on or before “6^th January 2004” must have been a typographical error or careless mistake on the part of the Plaintiff.  Based on the unchallenged evidence of the Plaintiff, I accept that the common intention of the parties was to sign a tenancy agreement on or before “6^th February 2004”.

20.It must be remembered that the Defendant did not just amend the date from “6^th January 2004” to “6^th February 2004” but went on to sign the letter.  The Defendant’s amendment must be looked at in the context of the whole letter. 

21.The paragraph which Defendant amended begins with:

“Upon acceptance of this offer, you shall be required to sign the Tenancy Agreement in respect of the Property on or before 6^th January February 2004…” (emphasis added)

And the Defendant did sign on the last page of the letter under the following statement:

“Accepted By:

(Defendant’s signature) (Chop of ACJ)

Company Chop &

Authorized Signature”

22.In my view, what the Defendant did on the whole was to rectify an obvious error in the Offer Letter in order to reflect the common intention of the parties.  He then unequivocally accepted the terms of the Offer Letter as amended.  No offeror would reasonable regard the Defendant’s amendment as introducing a new term into the bargain.  I therefore accept that an agreement in terms of the Offer Letter as amended was concluded by the Defendant’s acceptance.

23.In any event, even if the Defendant’s amendment did constitute a counter-offer, the Plaintiff must have accepted such counter-offer by conduct in allowing the Defendant to occupy the Property and accepting rent from him. 

24.Furthermore, the fact that the Plaintiff did not demand and the Defendant did not pay rent for the period from 15^th October 2003 to 14^th December (i.e. the first 2 months of the tenancy) must be referable to the “Rent free period” term in the Offer Letter as amended.

25.I agree with Miss Po that the Offer Letter as amended is capable of constituting and does constitute a valid tenancy between the Plaintiff and the Defendant.  The terms stated therein contain all the essential elements of a lease and are certain: the parties were identified; the premises named; the commencement and the duration of the term of the lease stipulated; and the rent and other consideration stated.   This is so notwithstanding it further provides for a formal tenancy agreement to be subsequently executed.

26.It is stated in Halsbury’s Laws of England, 4^th Edition Reissue (1994), Volume 27(1), para.53 that:

“Enforcement of agreements for lease.  If a question as to the rights and liabilities of the parties to an agreement for a lease … arises in a court which has jurisdiction to order specific performance, and if the agreement between the parties is one of which specific performance will be ordered, then the parties are treated as having the same rights and as being subject to the same liabilities as if a valid lease had been granted.”

27.For the above reasons, I find the Defendant’s contention that there was no binding tenancy between the parties untenable.

(B)    The issue of the deposit under the Previous Tenancy

28.To start with, the Defendant has not mentionedanything about the deposit under the Previous Tenancy in his Defence.  He has also filed no affidavit to depose to the factual background of this issue, such as the term(s) of the Previous Tenancy in relation to such deposit, and the amount of such deposit, and any arrangement between the old partnership between Christopher Curtis and Marilyn Onia and the new partnership involving the Defendant concerning such deposit.

29.In any event, I agree with Ms. Po that the Defendant does not have the locus standi to pursue this issue.  A change in the composition of a partnership results in a dissolution of the existing firm and the creation of a new firm as a matter of law (see Lindley & Banks on Partnership, 8^th Edition (2002), para.24-02).  The Defendant, on his own admission, has only joined the Partnership on 1^st June 2002 during the term of the Previous Tenancy.  In the circumstances, it would be up to Clive Curtis and Marilyn Onia as the partners of the old partnership to pursue such claim (if any).

(C)    ACJ was a partnership?

30.The fact that ACJ was a partnership is, in my view, of no concern.  It is clearly stated in the Offer Letter that the tenancy was offered to the Defendant personally as the tenant and it was accepted on that basis.  In any event, every partner in a partnership is liable jointly with the other partners for all the debts and obligations of the partnership incurred while he is a partner (see Partnership Ordinance, s.11).

Some other reason for trial?

31.Under Order 14, rule 2(1) of the Rules of the District Court, the Plaintiff needs only to support its summons by an affidavit verifying the facts on which the claim to which the application relates is based and stating that in the deponent’s belief there is no defence to that claim.  The Defendant is unable to show me any authority to support his contention that there is a duty of full and frank disclosure on the part of the Plaintiff in the context of an application for summary judgment.

32.The fact that the Defendant may want to cross-examine the deponent of the Plaintiff’s affirmation on the Plaintiff’s refusal to transfer the deposit from the Previous Tenancy to the new tenancy and on the disposal of the said deposit, per se, does not earn him his day in court.  These issues are simply not relevant to this action.

33.Looking at matters in the round, the Defendant has in fact occupied the Property and there is no reason why he should not pay for his occupation!

Conclusion

34.By reason of the above, the Defendant has not satisfied me with respect to the Plaintiff’s claim that there is an issue or question in dispute which ought to be tried or that there ought for some other reason to be a trial of that claim.  I grant judgment for the plaintiff as follows:

(a)  the sum of $668.50 together with interest thereon at judgment rate from the date of writ until payment;

(b)  the sum of $59,220 together with interest thereon at judgment rate from the date of writ until payment; and

(c)  mesne profits, management fees and rates from 1^st October 2004 to 21^st August 2005 to be assessed.

35.I further make an order nisi that the Defendant do pay the Plaintiff’s costs of this action including this application and all costs reserved to be taxed if not agreed with certificate for counsel.  Unless an application has been made to vary such order, such order shall become absolute 14 days after this written decision is handed down.

Miss Po Wing Kay instructed by Messrs Ford, Kwan & Co. for the Plaintiff.

Defendant in person.