The Link Properties Ltd v. Ng Sung Cheung
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DCCJ 2944/2007 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 2944 OF 2007 ----------------------
---------------------- Coram: Deputy District Judge J. Ko in Chambers (open to public) Date of Hearing: 19th May 2008 Date of Handing down of Judgment: 23rd May 2008 ---------------------- J U D G M E N T ---------------------- 1.This is the Plaintiff’s application for summary judgment. Background 2.This action is concerned with the lease of the commercial premises at No.7, G/F., Multi-Storey Carpark Building, Ap Lei Chau Estate (“the premises”). According to the tenancy agreement dated 28th November 2003 entered into between Hong Kong Housing Authority (“HKHA”) and the Defendant, the Defendant was granted a lease of the premises for a term of 3 years until 31st October 2006 at the monthly rent of $17,500. Pursuant to the agreements made between HKHA and the Plaintiff, the beneficial interest of the premises was vested to the Plaintiff subject to the said tenancy agreement. The Plaintiff therefore became the landlord of the Defendant. 3.It is common ground that by a letter dated 21st August 2006 issued by the Plaintiff’s agent, the Plaintiff offered to renew the Defendant’s lease for another 3 years from 1st November 2006 at a monthly rent of $19,200. The Defendant was asked to complete and return a confirmation slip to the management office at the estate on or before 30th September 2006 if he chose to accept the offer. By a subsequent letter dated 21st September 2006 issued by the Plaintiff’s agent, the Plaintiff sought to withdraw its offer. This withdrawal letter was delivered to the Defendant’s wife at the premises on 22nd September 2006. 4.It is the Plaintiff’s case that the offer was withdrawn before it was accepted by the Defendant and the lease expired on 31st October 2006. The Defendant continued to use and occupy the premises notwithstanding the expiration of the lease. Subsequent negotiation between the parties for the grant of a license was not fruitful. By a letter dated 18th May 2007 issued by the Plaintiff’s solicitors, the Plaintiff demanded vacant possession of the premises. 5.On the other hand, it is the Defendant’s case that he had accepted the Plaintiff’s offer before it was withdrawn. The Defendant says his wife delivered the completed confirmation slip and the cheques for payment of the additional rental deposits to the management office at about noon on 21st September 2006. The staff at the management office accepted the confirmation slip but returned the cheques to his wife. His wife was told that the cheques would only be required at a later stage when the parties entered into a formal tenancy agreement. On the next day (i.e. 22nd September 2006), the staff of the management office came to the premises and returned the confirmation slip to him and he was asked to contact the Plaintiff directly. The Defendant exhibited copy of the confirmation slip and the cheques in his affirmation to oppose the Plaintiff’s application. 6.The Plaintiff is claiming against the Defendant in this action vacant possession of the premises and mesne profits at $17,500 per month from May 2007. In the Defence and Counterclaim drafted by the Defendant himself, the Defendant contends that the lease has been renewed and counterclaims for damages to be assessed. Partial-judgment 7.It is common ground that the Defendant has not paid for his use and occupation of the premises since May 2007. According to the Plaintiff, the outstanding balance of mesne profits for May 2007 is $14,828.40 and the Defendant has not paid mesne profits for the subsequent months. The Defendant says he tendered payment to the Plaintiff through the management office but the Plaintiff refused to accept such payment. 8.The defence counsel fairly concedes at the hearing that whatever the outcome of this action, the Defendant should pay for his use and occupation of the premises. The Defendant is therefore agreeable to partial judgment being entered. 9.As such, the Defendant should be liable for $224,828.40 (i.e. $14,828.40 + $17,500 x 12) calculated up to and including May 2008. The Plaintiff’s present application therefore relates to the remainder of its claim only. Summary judgment on the remaining claim? 10.The law relevant to an application for summary judgment is well settled. It is for the defendant to satisfy the court 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: see O.14, r.3(1) of the Rules of the District Court (“RDC”). The test at this summary stage is as simple as whether the defendant’s assertions are believable. Mere assertion in an affidavit of a given situation does not, ipso facto, provide leave to defend. On the other hand, summary judgment should not be granted when any serious conflict as to matter of fact arises. See Hong Kong Civil Procedure 2008, para.14/4/1 & 14/4/9. 11.The following propositions of law are also not disputed:
See Chitty on Contracts, 29th Edition (2004), para.2-043, 2-086 and 2-087. 12.It is apparent from the respective case of the parties highlighted above that there are at least the following disputes of fact in this case:
13.The Plaintiff’s counsel submits that the Defendant’s assertions are self-serving, incredible, illogical, unparticularised, and directly contradicts contemporaneous documents and unchallenged evidence produced by the Plaintiff. 14.First, she observes that the withdrawal letter specifically mentioned the fact that the Defendant had not returned the confirmation slip. She submits that it is non-sensical to suggest that the Plaintiff’s agent would issue such a letter if the Defendant had returned the confirmation slip. 15.The defence counsel argues that it took time for the Plaintiff’s agent to draft and prepare the withdrawal letter. Given the fact that the letter was dated the same date as the Defendant’s wife delivered the confirmation slip to the management office, it is entirely possible that the withdrawal letter was drafted and prepared before the confirmation slip was received by the management office. 16.In my view, the Defendant’s argument is reasonable and there is presently nothing to dispel it. 17.Secondly, the Plaintiff’s counsel observes that the Defendant’s wife signed for the receipt of the withdrawal letter on 22nd September 2006. She submits that it is incredible for her to do so without protest if she had only returned the confirmation slip to the Plaintiff the day before. 18.According to the Defendant, his wife is illiterate and did not appreciate the content of the withdrawal letter. That was why his wife did not immediately pass the letter to him after it was received on 22nd September 2006. 19.In my view, whether the Defendant’s wife did appreciate the content of the withdrawal letter cannot be determined on affirmation. For the time being, I cannot safely discard the Defendant’s argument. 20.Thirdly, the Plaintiff’s counsel observes that subsequent correspondence only recorded the parties’ discussion on license arrangement. There is no evidence that the Defendant has ever complained about the withdrawal letter. 21.The defence counsel invites me to consider the Defendant’s conduct in the context of the Defendant’s circumstances. The Defendant studied up to the Form 6 level and is not highly educated. He has been running a humble eatery at the premises since 1982. She submits that it is entirely probable that the Defendant did not appreciate the legal implication of the events that happened on 21st and 22nd September 2006 before taking legal advice. 22.The existence of some contemporaneous written complaint from the Defendant would have strengthened the Defendant’s case. However, the absence of such evidence is not necessarily fatal to the defence. The defence has provided a probable explanation which cannot be discarded summarily. 23.In any event, I note from the evidence that the Defendant has sought assistance from a district councilor. In a letter dated 27th September 2006, the district councilor wrote to the Plaintiff’s agent in these terms:
Although the letter did not expressly mention the return of the confirmation slip, it suggested that the Defendant might have accepted the offer before he received the withdrawal letter. I am of the view that this letter goes some way to support the Defendant’s case. 24.Fourthly, the Plaintiff’s counsel submits that it is a suspicious and unbelievable coincidence for the Defendant to allege that the confirmation slip was delivered to the management office the day before the letter of withdrawal was received by his wife. It is submitted that if the Defendant had been so keen to renew the lease, he would not have waited a month! 25.In my view, whether the timing is due to coincidence or not is neither here nor there. After all, the Defendant had been given until 30th September 2006 to return the confirmation slip. I do not think this argument shows that the defence is incredible. 26.Fifthly, it is submitted that the assertions that the staff at the management office returned the confirmation slip and asked the Defendant to give it to the Plaintiff directly are illogical and incredible as the management office was specifically engaged by the Plaintiff to deal with matters relating to the premises. 27.Presumably, the staff at the management office would only act in accordance with the Plaintiff’s instructions. There was in fact a complete change of stance on the part of the Plaintiff in relation to the renewal of the Defendant’s lease. In those circumstances, I do not think it illogical or incredible for the staff to return the confirmation slip to the Defendant asking the Defendant to contact the Plaintiff. 28.Sixthly, the Plaintiff’s counsel observes that the Defendant has failed to identify the staff who dealt with his wife on 21st September 2006. She further relies on the affirmation of Law Ho Kan, who deposed to the fact that he was one of the two staffs working at the management office on 21st September 2006 and that they did not receive any confirmation slip from the Defendant’s wife, to rebut the Defendant’s case. 29.In my view, the Defendant has provided some particulars by identifying the date and the approximate time when his wife delivered the confirmation slip to the management office. He (and his wife) may have genuine difficulty in naming the staff who attended his wife at the management office. Furthermore, whether Mr. Law’s evidence is to be preferred to that of the Defendant and his wife can only be determined after cross-examination. 30.Seventhly, it is the Defendant’s case that he spoke to Kwong Tat Man of the Plaintiff’s agent on 25th September 2006 and Mr. Kwong told him the lease would not be renewed because of the Plaintiff’s new policy. This is denied by Mr. Kwong on affirmation. The Plaintiff’s counsel relies on a reference letter which stated that Mr. Kwong had been employed by the Plaintiff’s agent since 5th October 2006 and submits that the Defendant’s case is an obvious fabrication. 31.The Defendant’s counsel accepts that the Defendant might have made a mistake. She submits that that is understandable given the subsequent negotiation between the Defendant and Mr. Kwong concerning the grant of a license. 32.In my view, this inconsistency alone is not sufficient to show that the defence incredible. 33.Eighthly, it is submitted that if the Defendant had really returned the confirmation slip on 21st September 2006, he would have mentioned that fact to the district councilor and such fact would have been mentioned in the letter dated 27th September 2006. I have already dealt with this argument in paragraph 23 above. 34.Ninthly, the Plaintiff’s counsel observes that the Defendant only paid $17,500 a month (i.e. same as the rent payable under the expired tenancy agreement) for his use and occupation of the premises between November 2006 and April 2007. She submits that the Defendant should have paid $19,200 a month (i.e. the rent payable under the terms of the Plaintiff’s offer) if he had indeed considered there to be a new tenancy. 35.The defence counsel counters this argument by pointing to the fact that the Plaintiff subsequently offered to grant a license to the Defendant at $17,500 a month although such offer was eventually rejected by the Defendant as a matter of principle. In those circumstances, it is not surprising that the Defendant paid and the Plaintiff accepted $17,500 a month for the use and occupation of the premises until such payment was refused by the Plaintiff. 36.Whether the Defendant’s explanation is to be accepted can only be decided after cross-examination. 37.Lastly, the Plaintiff’s counsel submits that there is no evidence of any negotiation between the parties concerning the grant of a new tenancy. The correspondence from the Plaintiff’s agent subsequent to the withdrawal letter only recorded the discussion on the terms of the licence to be granted. 38.This is similar to the third point taken by the Plaintiff’s counsel. I do not think this is necessarily fatal to the defence. 39.All in all, I am not convinced by the Plaintiff’s arguments, whether considered individually or collectively, that the Defendant’s case is incredible. The defence case is, to a certain extent, evidenced by copy of the completed confirmation slip and the cheques and supported by the letter issued by the district councilor. 40.The Plaintiff’s counsel invites me to consider ordering the Defendant to pay a sum of money into court in the event that I consider there is merit in the defence. 41.There is nothing to show that the defence is a sham. In my view, there is no basis to impose condition. Conclusion 42.For the above reasons, I enter partial judgment against the Defendant in the sum of $224,828.40 and grant unconditional leave to the Defendant to defend the remaining claim. 43.On the question of whether the Defendant should be ordered to pay pre-judgment interest on the partial judgment of $224,828.40, the defence counsel relies on the general principle that interest should be awarded to a plaintiff for being kept out of money which ought to have been paid to him. She submits that the Plaintiff has been kept out of the money by its own deeds and the Defendant should not be ordered to pay pre-judgment interest. The Plaintiff’s counsel informs me at the hearing that she has no instructions on whether the Plaintiff did refuse payments from the Defendant. She nevertheless submits that the Defendant has had the use of the money and should therefore pay pre-judgment interest to the Plaintiff. In my view, whether the Plaintiff has refused payment from the Defendant is a relevant consideration and this cannot be resolved on affirmation. As such, I shall confine myself to entering judgment in the sum of $224,828.40 at this stage leaving the issue of whether the Defendant should also be liable for pre-judgment interest to be dealt with at trial. 44.Although I have entered partial judgment against the Defendant, the costs involved is minimal. I make a costs order nisi that the costs of the whole application for summary judgment (including all reserved costs) be costs in the cause with certificate for counsel. The Defendant’s own costs is to be taxed in accordance with the Legal Aid Regulations. Unless an application has been made to vary the costs order nisi, the order shall become absolute 14 days after the judgment is handed down.
Representation: Ms. Sara Tong, instructed by Messrs. Baker & McKenzie, for the Plaintiff Miss Janine Cheung, instructed by Messrs. Oldham, Li & Nie (assigned by D.L.A.), for the Defendant |