Servicemen's Guides Association Fenwick Pier, Wanchai, Hong Kong v. Christine N Ltd

DCCJ 203/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 203 OF 2008

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Coram: H.H. Judge Chow

Hearing date: 30^th April 2010

Date of handing down Decision : 9^th June 2010

Decision

1.This is the Plaintiff’s application for an order that Miss Christine Nigam Kim Tee (“Miss Nigam”, the sole director of the Defendant) be joined as a party for the purposes of costs only, and that costs of the Plaintiff in the sum of $104,200 already adjudged under the judgment of this case be paid by her personally to the Plaintiff.

2.On 16.1.2008 the Plaintiff instituted the present action against the Defendant (“CNL”), seeking an order for possession of the premises known as Shop No. 3, Ground Floor, Fenwick Pier, Wanchai, Hong Kong (“the Premises”) and for damages for the Defendant’s wrongful use and occupation of the Premises.  The Defendant filed its Defence and Counterclaim on 25.2.2008.

3.On 9.4.2009, the Plaintiff took out a summons to strike out parts of the Defence.  On 6.8.2009, Judge Leung ordered, inter alias, that specified parts of the Defence and Counterclaim, namely, the sentence “and (b) it is denied that the Plaintiff is entitled to possession of the premises.  Consequently, the Plaintiff is put to proof as to its title to sue herein” in paragraph 1, and the last sentence of each of paragraphs 3, 4 and 9 be struck out.  Judge Leung also ordered that costs summarily assessed at $86,200 be paid by the Defendant to the Plaintiff forthwith.

4.The Defendant failed to pay the sum of $86,200.  On 5.12.2009, the Plaintiff took out a summons for an order that:-

(1) The Defendant within 14 days pay into Court the assessed lump sum costs of HK$86,200.00.

(2) Unless the Defendant pays into Court the said assessed lump sum costs, the Defence and Counterclaim be struck out and judgment be entered against the Defendant for the Defendant’s wrongful use and occupation of the Premises known as Shop No. GF3, Ground Floor, Fenwick Pier, Wanchai, Hong Kong from the 1^st day of November 2007 to the date when vacant possession of the Premises is delivered up to the Plaintiff, such damages to be assessed.   

5.On 7.1.2010, upon the Plaintiff’s application, I ordered that (1) the Defendant pay this sum of $86,200 within 14 days into court; (2) unless the Defendant pays into Court the sum of $86,200, the Defence and Counterclaim be struck out and that judgment be entered against the Defendant for the Defendant’s wrongful use and occupation of the Premises with damages to be assessed.  The Defendant did not pay the sum of $86,200 into court.  On 22.1.2010 I ordered that the Defence and Counterclaim be struck out and judgment be entered against the Defendant for the Defendant’s wrongful use and occupation of the Premises from 1.11.2007 to the date when vacant possession of the Premises was delivered to the Plaintiff, with damages to be assessed.

6.On 11.2.2010 the Plaintiff took out the present summons.

7.Under Paragraph 15 of her written submission, the Plaintiff’s counsel made the following submission:-

“15. On 22^nd January 2010, it was adjudged by His Honourable Court that the Defence and Counterclaim be struck out; judgment was entered on the basis that the Defendant was in wrongful use and occupation of the Premises of the Plaintiff. Accordingly, Miss Nigam has throughout this Action put forward a sham Defence and Counterclaim on behalf of the Defendant.”

8.From the following “Reasons for Decision” handed down by Judge Leung on 6.8.2009, it is quite clear that specified parts of the defence were struck out, not because they were parts of a sham defence, but because the Defendant put up inconsistent pleas in its defence.  There is no application to strike out the counterclaim:-

‘1. The dispute concerns a shop on the Ground Floor of what is known as Fleet Arcade at Fenwick Pier, Wanchai, Hong Kong. CNL, the Defendant, is the vendor occupying the shop premises. SGA, the Plaintiff, is claiming possession of the shop premises. CNL resists and counterclaims for specific performance of an alleged agreement between the parties in respect of CNL’s continued occupation of the shop premises.

2.  There were 2 summonses.  …..  By its summons dated 9 April 2009, SGA applied to strike out parts of the Defence of CNL.

5.  The parts in the Defence, which SGA objected to, appear as follows:

1.    As to paragraph 1:

(a)      it is denied that the Plaintiff is the registered owner of the premises; and

(b)     it is denied that the Plaintiff is entitled to possession of the premises;

2.  ….. The terms pursuant to which she occupied the same included those set out in a document entitled “Fleet Arcade Salesroom Agreement between Ship Support Office (SSO) Hong Kong and Fleet Arcade Salesroom Association (FARSA) member, Christine N Refined Designs” dated 1 July 2004.

6.  According to its summons, ….. SGA contended that the above pleading failed to constitute reasonable defence and/or was frivolous and vexatious under o. 18, r. 19(1)(a) and (b) of the Rules of the District Court.

9.  SGA chose to plead the alleged registered ownership of the premises.  In view of the capacity of SGA as tenant under the Head Lease and in the absence of evidence of actual registration of ownership of the premises in SGA’s name, I do not think that CNL’s denial of that in its pleading is at this stage wholly without basis.

10.  Whether the alleged registered ownership is relevant in the present case, and I doubt that it is, I see no reason for striking out Paragraph 1(a) of the Defence and Counterclaim.

13.  There is no dispute that it was the Fleet Arcade Salesroom Association (“FASRA”) that let CNL into possession of the various shop premises in the Arcade first on the 2nd Floor and then in 2006 the current shop premises on the Ground Floor.  SGA claimed that FASRA was its agent in doing that.

14.  If it was SGA, through FASRA, which allowed CNL into possession of the shop premises, CNL would indeed be estopped from disputing CNL’s title……………………….. 

15.  CNL denied that FASRA was SGA’s agent.

28.  It is CNL’s pleaded case that Miss Nigam countersigned SGA’s written offers of tenancy in November 2007 and thus confirming CNL’s agreement to them.  This, according to CNL, contributed a specifically enforceable agreement.  SGA was said to be in breach of such agreement by subsequently sending the agreement containing terms allegedly at variance with such agreement.  On the basis of such agreement between SGA and CNL in November 2007, CNL denied SGA’s right to rescind the offer of tenancy or to demand CNL to vacant from the shop premises.  This also forms the basis of CNL’s counterclaim.

29.  In line with such pleased case, CNL effectively acknowledges that whatever tenancy or licence CNL used to have over the shop premises had expired and its continued occupation of the shop premises was based on the alleged agreement between SGA and CNL in November 2007.  Seeking to enforce such agreement whilst denying SGA’s title and interest in the shop premises would be self-contradictory.  Paragraph 1(b) was still liable to be struck out.

30.  During the hearing, Mr Shum for SGA did not press on with the application to strike out the part of Paragraph 2 of the Defence stated above.  I also do not find this part of the Defence to be objectionble.

32.  ….. by these parts of paragraphs 3, 4 and 9 of the same pleading, CNL questioned SGA’s capacity to offer tenancy to and to enter into the agreement with SGA that it is seeking to enforce.

34.  The inconsistent pleas by these paragraphs were liable to be struck out.’

9.The Defence and Counterclaim were struck out and judgment was entered against the Defendant merely because the Defendant had failed to comply with the “unless” order made by this Court on 7.1.2010.  In essence, judgment was entered in terms of the Plaintiff’s claim as set out in the Plaintiff’s summons dated 5.12.2009, not because there was a finding of facts in favour of the Plaintiff, but because the Defendant had failed to comply with the “unless” order.  There is a fundamental difference between a judgment entered in favour of a party after a trial where the facts of the case are tried, and judgment entered upon the merits of the case, and a judgment entered because a party has failed to comply with a court order, where the merits of a case are never tested at all.

10.In the present case, the allegation of a sham defence was only raised after the Defendant had failed to comply with the “unless” order.  If it were a sham defence, it must have been put up at the time it was made; it would not only emerge upon the non-compliance of the “unless” order.  If the Defendant had satisfied the “unless” order, this Court would not have entered judgment in terms of the Plaintiff’s summons dated 5.12.2009; the case would have proceeded to trial, and the allegation of a sham defence put up by the Defendant would not have been made at that stage.  The fact that the Defendant failed to comply with the “unless order” does not change the defence into a sham defence.  There is simply no evidence to show that at the time the defence was made, Miss Nigam was putting up a sham defence.

12.By reason of the matters aforesaid, I dismiss the application.

13.I make an order nisi, to be made absolute in 14 days’ time, that the Plaintiff do pay to the Defendant and Miss Nigam costs of this application, to be taxed, if not agreed.