Colliers Jardine Management Ltd. v. Natural Way Development Ltd. and Others

CACV001067/2000

CACV 1067/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 1067 OF 2000

(ON APPEAL FROM THE LANDS TRIBUNAL
LDBM NO 108 OF 2000)

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Coram: Hon Rogers VP, Woo and Le Pichon JJA in Court

Date of hearing: 27 March 2001

Date of handing down of judgment: 4 April 2001

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J U D G M E N T

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Hon Woo JA:

Background

1. This is an appeal by the applicant from the determination of Deputy Judge M Tong in the Lands Tribunal made on 27 November 2000 whereby it was ordered that paragraphs 1(a), 2(a) and 2(e) of the Amended Notice of Application be struck out with costs to the respondents.

2. The applicant is the managing agent of Melody Garden, an estate consisting of 10 high-rise residential blocks and 3 low-rise commercial blocks erected on Tuen Mun Town Lot No 210.

3. The 1st respondent is and was at all material times the owner of Shops Nos 7 to 23 on the Ground Floor of the Commercial Complex of Melody Garden and a half-share co-owner of Shops Nos 28 to 34 of the same complex. The 2nd respondent is and was at the time of the application the other half-share co-owner of those Shops Nos 28 to 34. The 3rd respondent is described in the Amended Notice of Application as the tenant or occupier of all of the Shops Nos 7 to 23 and 28 to 34, and running a restaurant business thereat.

4. By the Amended Notice of Application, the applicant complained of the following acts of the respondents, namely,

(a) the building and erection of chimneys or exhaust air ducts ("chimneys") on the external walls outside Shops Nos 12 and 32 of the Commercial Complex (the evidence produced by the applicant shows that there were 3 new chimneys);

(b) the installation of spot lights and ancillary fittings on the ceilings in the common area surrounding Shops Nos 17 to 23 and Shops Nos 33 to 34 of the Commercial Complex; and

(c) the connection to and/or use of the sewage system of the estate.

5. The dispute about the spot lights and ancillary fittings was resolved by way of a consent order made by the Judge on the same date of 27 November 2000. Paragraphs 1(a) and 2(a) of the Amended Notice of Application related to the chimneys and paragraph 2(e) related to the use of the sewage system and these paragraphs were struck out by the Judge.

6. The reasons for the Judge's striking out arose out of a consent order made in High Court Action No. A8901 ("the HC action") dated 16 August 1993 ("the Consent Order"). In the HC action, which was instituted on 31 December 1990, the plaintiff was JLW Management Services Limited, the then manager of the estate. There were three defendants. The 1st respondent herein was the 1st defendant, and it was sued as the owner of Shops Nos 7 to 23, not as co-owner of Shops Nos 28 to 34. The 2nd defendant in the HC action was one Golden South Investment Limited, who and the 3rd defendant therein were respectively sued as the tenant and occupier of Shops Nos 7 to 23. The claim in the HC action was against all the three defendants for breach of the Deed of Mutual Covenant ("DMC") for having "without the prior knowledge or consent of the Plaintiff, since 31 October 1990," "opened a hole measuring about 3 feet x 3 feet on the roof of the commercial complex opposite to Blocks 5 & 6 of Melody Garden" "and intend to erect an exhaust air duct and other structures thereon." The plaintiff claimed injunctive relief against all three defendants. The present applicant, after becoming manager of the estate, stepped into the shoes of JLW Management Services Limited and continued the action as the plaintiff against the three defendants.

The Consent Order

7. The HC action was compromised by the parties thereto by the Consent Order. In the formal parts of the Consent Order, the applicant's name appeared as the plaintiff. The Consent Order was in the form of what is usually known as a Tomlin Order. It is necessary to set out quite a large portion of the Consent Order in order to appreciate fully the arguments involved in this appeal. The relevant parts read:

"BY CONSENT IT IS ORDERED THAT all further proceedings in this action be stayed upon the following terms of settlement agreed between the parties herein save and except for the purpose of carrying the said terms into effect, namely :-

1. (i) The Plaintiff as management agent of Melody Garden, subject to paragraph 1(iv) herein below, grants and shall procure its successor (as management agent of Melody Garden) and the Owners Committee of Melody Garden to grant the Defendants and their successors in title for the purpose of operating a restaurant ("the Successor") the right privilege and liberty to erect construct and install exhaust pipes/air ducts running along the external wall and roof of the Commercial Complex of Melody Garden ("the Exhaust Pipes") for operation of restaurant business by the Defendants and the Successor at the premises known as shops No. 7-23 and 28-34 on Ground Floor of Commercial Complex of Melody Garden ("the Shop") or any part thereof. The design measurement and specification of the Exhaust Pipes shall be in accordance with the specification and the plans as agreed by the Plaintiff and the Defendant and signed by an authorised person as defined under the Building Ordinance, Cap. 123, which plans are annexed hereto and marked "A".

(ii) The Defendants shall be responsible to apply and use its best endeavour to obtain the consent or approval of Gold Queen Limited, the developer of Melody Garden, and the relevant government authorities in respect of the erection or installation of the Exhaust Pipes within 6 months from the date of the order herein prior to the commencement of such works. The Plaintiff shall not object to any reasonable modification of the plans as annexed hereto and marked "A" by Golden Queen Limited and/or the relevant government authorities so long such modifications are not in breach of the Deed of Mutual Covenant ...

(iii) The Defendants shall be at the Defendants' own costs and expenses fully responsible to upkeep and maintain the Exhaust Pipes to good and proper repair and conditions from time to time and shall procure the Successor to agree to maintain the Exhaust Pipes in such repair and conditions.

(iv) Upon completion of the installation of the Exhaust Pipes in accordance with the plans as approved by the Plaintiff and the relevant government authorities, the Defendants shall at their own costs and in any event within two (2) months from the date of such government approval demolish the existing pipes/air ducts serving the Shop and fill up the hole on the roof of the commercial complex of Melody Garden through which the existing pipes/air ducts run.

2. (i) The Plaintiff permits and allows and shall procure its successor as management agent of Melody Garden or the Owners Committee of Melody Garden to permit and allow the Defendants and the Successor to install a sewage system serving the Shop ("the Sewage System") in accordance with the plan and specification as agreed by the Plaintiff and the Defendants, which plan and specification are annexed hereto and marked "B".

The Plaintiff permits and allows the Defendants to link up the Sewage System with the main discharge pipes of Melody Garden.

5. (i) The Defendants shall upon completion of the erection and installation of Exhaust Pipes and in any event not later than 6 months from the date of this Order deposit with the Plaintiff a sum of HK$50,000.00 to secure the due observance and performance by the Defendants of the obligations herein contained under Clauses 1(iii), 2(ii) and 2(iii), and 4 hereinabove [mainly obligations for maintenance, repairs and keeping clean] which deposit shall be held free of any interest to the Defendants with the power of the Plaintiff to deduct therefrom the amount of any costs incurred by the Plaintiff as a result of any non-observance or non-performance by the Defendants of the obligations stipulated herein.

(ii) Subject as aforesaid, the said deposit or any balance thereof shall be refunded to the Defendants by the Plaintiff or its successor without interest within 14 days after settlement of the outstanding claim by the Plaintiff against the Defendants for costs incurred by the Plaintiff hereinabove.

7. The Defendants shall pay an aggregate sum of HK$200,000.00 to the Plaintiff within 14 days upon signing of this Consent Order in full and final settlement of all the claim and right of the Plaintiff herein.

8. In the event of the Plaintiff applying for leave to lift the stay herein above mentioned, it is the precedent condition imposed on the Plaintiff to refund to the Defendants forthwith any sum of money so received without interest under clauses 5 & 7 herein.

9. In the Consent Order, unless the context otherwise requires, the expression "the Plaintiff" shall include its successors and assigns."

8. It is to be noted that while Shops Nos 28 to 34 were not mentioned in the statement of claim in the HC action, they were mentioned and included expressly as the affected premises in clause 1(i) of the Consent Order. Shops Nos 28 to 34 are now owned by the 1st and 2nd respondents as co-owners and these also form part of the premises of which the 3rd respondent had become tenant or occupier. The 3rd defendant stated in the statement of claim of the HC action as the occupier of Shops Nos 7 to 23 operating a restaurant thereat had moved out in December 1999 and the 3rd respondent has since been the tenant or occupier of Shops Nos 7 to 23 and Shops Nos 28 to 34, also running a restaurant business at all those shops.

The Judge's determination

9. The Judge held that the Consent Order was binding in respect of the relevant matters in the future. The relevant matters were the chimneys and the sewage system, but not the spot lights. The Judge also held that the subject matter of the application as contained in the Amended Notice of Application was based not on the infringement of the DMC, but instead on the breach of the relevant Consent Order by the respondents. While there was no dispute that the 2nd respondent was a successor in title covered by the terms of the Consent Order, the applicant disputed that the 3rd respondent was a successor within the ambit of the Consent Order. The Judge held that the 3rd respondent, albeit not a successor in title under the Consent Order, was nonetheless entitled to rely on it.

The grounds of appeal

10. Various grounds on law have been put forward, and rightly so because appeals to this Court lie from the Lands Tribunal only on points of law or mixed law and fact. The grounds have been reduced to 4 questions of law posed to be decided by this Court. The 4 questions are as follows:

(1) Whether on its proper construction the Consent Order was intended to govern all future disputes relating to Melody Garden between the parties in the HC action and their successors, or whether it was intended only to resolve the dispute which gave rise to the HC action.

(2) Whether the Consent Order was intended to apply, or could apply, to erection of additional chimneys or sewage systems other than those shown on Plan A and Plan B annexed to that Order.

(3) Whether the erection by the 3rd respondent in 1999/2000 of new chimneys additional to the one erected in 1993 pursuant to the Consent Order is a new cause of action which has not been merged into the Consent Order.

(4) Whether the 3rd respondent herein is in law a "successor" or "successor in title" of the defendants and in particular the 3rd defendant the HC action by reason of the mere fact that it has taken up the tenancy of the same premises after the 3rd defendant had ceased business in 1999.

11. Question (4) will become academic if the first three questions are decided in favour of the applicant. However, what are important are questions (2) and (3), because as will be seen later, question (1) is not framed in such terms as would be determinative of this appeal.

Answer to question (1)

12. The genesis and the contents of the Consent Order must be examined in some detail for dealing with all four questions. The HC action was brought by the plaintiff (later the applicant substituted to be the plaintiff) against the owners of the premises (be it all the aforementioned shops or only Shops Nos 7 to 23) in which a restaurant business was being run. The exhaust air ducts and the sewage system mentioned in the Consent Order were installed to serve the purposes of the restaurant. However, only the hole on the roof of the Commercial Complex was the subject matter of complaint by the plaintiff in the HC action. The Consent Order was in the form of a Tomlin Order and could go outside the ambit of the original dispute between the parties (see Foskett: The Law of Practice of Compromise, 4th Ed, para 15-14). Indeed, the express provisions including "successors" or "successors in title" of both the plaintiff and the defendants must have been intended to apply to the future. Although the cause of action was in respect of a hole measuring about 3 feet by 3 feet dug through the roof of the Commercial Complex, the statement of claim in the HC action also expressly stated that the hole related to the erection of exhaust pipes as intended by the defendants. While the installation of the sewage system formed no part of the cause of action, it was expressly included in the Consent Order. The provisions relating to the repair and maintenance of both of the facilities and the cleaning of the sewage system must also relate to the future. Things like spot lights, an item complained of in the application, were not, however, included. It is also doubtful whether the chimneys included in the Consent Order were the same as those complained of in the claim of the HC action because of the requirement in clause 1(iv) that the defendants should "demolish the existing pipes/air ducts serving the Shop and fill up the hole on the roof of the commercial complex". The answer to question (1) is therefore that the Consent Order, properly construed, was intended not only to resolve the disputes giving rise to the HC action, nor was it intended to govern all, as opposed to some, future disputes relating to Melody Garden between the parties to the HC action.

13. Relating to this topic, the Judge said, and in my judgment correctly:

"(19) At the end, I think that the relevant Consent Order, on the basis of the structure of the entire Consent Order and the wording, the matters described in the relevant Consent Order also include the future use of the premises for purpose of the restaurant, how to erect its chimney, how to erect its exhaust pipe, and how to erect the sewage system, because there are detail drawings stating the relevant requirements, I therefore believe that the relevant Consent Order is binding in respect of the relevant matters in the future."

Answers to questions (2) and (3)

14. Question (2) is more to the point. Was the Consent Order intended to apply, or can it be applied, to erection of additional chimneys or sewage systems other than those respectively shown on plans A and plan B annexed to the Order? The grant of a right to the defendants and their "successors in title" to erect and install chimneys was provided for in clause 1(i) of the Consent Order. There was a restriction as to the chimneys to be installed since clause 1(i) provides that "The design measurement and specification of the Exhaust Pipes shall be in accordance with the specification and the plans as agreed by the Plaintiff and the Defendant and signed by an authorised person as defined under the Building Ordinance, Cap. 123, which plans are annexed hereto and marked 'A'". The plans "as agreed" may mean those that "have already been agreed" or "are to be agreed". The existence of the plans annexed to the Consent Order and marked "A" supports the first meaning. However, this restriction was subject to "reasonable modification" because clause 1(ii) expressly provides that "The Plaintiff shall not object to any reasonable modification of the plans as annexed hereto and marked 'A' by Gold Queen Limited and/or the relevant government authorities so long such modifications are not in breach of" the DMC. Pausing here, no point is taken that the plans marked "A" annexed to the Consent Order do not satisfy both of the descriptions of it in sub-clauses (i) and (ii) of clause 1, rendering it unnecessary to attach any significance to whether they were those approved by Gold Queen Limited. Thus, it is clear that the applicant, who was the plaintiff in the HC action when the Consent Order was made, should permit the defendants and their "successors in title" (I shall deal with this later), to erect and install chimneys according to the plans marked A annexed to the Consent Order, and the applicant should not object to any reasonable modification of such plans. The question in respect of the coverage or ambit of the Consent Order regarding chimneys is whether the chimneys complained of in the Amended Notice of Application are those that were constructed in accordance with the design, measurement and specification of the plans marked "A" annexed to the Consent Order, with any reasonable modification as provided for in clause 1(ii) of the Consent order. If so, they are covered, and vice versa. From the facts of this case, it is quite clear that the 3 chimneys now complained of in the application are not the same as those with the design, measurement and specification in accordance with the plans marked A. They could not have been the same chimneys being the subject matter of complaint in the HC action, or that included or intended to be included in clause 1(i) the Consent Order. It is plain that question (2) regarding additional chimneys must be answered in the negative.

15. However, it is the respondents' case that the 3 chimneys now complained of are in accordance with a reasonable modification of the plans marked A in the Consent Order. Even if such a contention were arguable in the face of the Consent Order, it would have to be supported by evidence.

16. On this subject, the Judge said:

"(20) (Let me) take an example, (let me) make an assumption. Assuming that the 3rd Defendant at the time continued to operate the relevant restaurant until today, and it had altered the position of the kitchen, erected a new chimney, as well as erected a new pipe or separately made some pipes to connect its sewage system, the 3rd Defendant at the time, the 3rd Defendant in the previous case, had naturally breached the relevant Consent Order. Because the Defendant had carried out the relevant alterations, which are not in compliance with the relevant plans. (It) had carried works outside the relevant plans.

(21) In those circumstances, the Applicant had two choices. (1), it can apply to lift the stay imposed by the agreement, that is to lift the order to stay, in order to allow him to continue the litigation, relying as a cause of action the breach of the DMC, until the result has been obtained.

(22) But if the Applicant does that, it has to, according to paragraph 8 of the Order, make refund to the Defendant at the time the sum of HK$50,000 and HK$200,000 paid under clauses 5 and 7.

(23) Of course, the Applicant has a second choice, which is not to continue with the relevant action with No. HCA 8901/90, but to raise a new litigation. It can say that the Respondent had breached the contents of the relevant Consent Order, failed to erect the chimney, exhaust pipe as well as the sewage system in the building without complying with the relevant plans. In such event, the Applicant does not have to refund the sum of HK$50,000 and HK$200,000 previously paid.

(24) The reason being that the second cause of action of the Applicant, 'cause of action', is not based on the infringement of the Deed of Mutual Covenants, but instead is based on the breach of the relevant Consent Order of the Respondent. This is because the cause of action relied on by the previous Applicant (meaning the plaintiff in the HC action) in respect of the erection of chimney, exhaust pipe and sewage system for use of the restaurant had been replaced by the relevant Consent Order.

(25) Having gone through the above analysis, I think that the Applicant cannot without refunding the money, bring a new action again for erecting the chimney, exhaust pipe and sewage system, relying on a breach of the Deed of Mutual Covenants as a cause of action."

17. I am of the view that the Judge was wrong. The right to sue in both the HC action and in the application before him was indisputably derived from the DMC (and s 34I of the Ordinance that has come into force on 8 May 1993 shortly before the making of the Consent Order, in respect of the application), but it does not follow that the cause of action of the application, being a breach of the DMC in the erection and installation of the 3 new chimneys, was the same cause of action as in the HC action or covered by the Consent Order. Nor was the example given by the Judge correct, for the alleged new breach of the DMC in 2000 may not necessarily amount to a breach of the Consent Order. This is so even though the basis for the HC action claim was also for a breach, or even the same breach, of the DMC. The work for installing the chimneys complained of in the HC action commenced in October 1990, and may well have finished in 1993 or early 1994, shortly after the date of the Consent Order. Any modifications of the plans A may also have been completed by then. The new chimneys are alleged to have been installed in March 2000, only after the 3rd respondent had become the tenant or occupier and was doing decoration works for its restaurant business. The necessity of the new chimneys seemed to have arisen because of the relocation of the kitchen inside the restaurant. The striking out of paragraphs 1(a) and 2(a) of the prayer for relief regarding the new chimneys was wrong. They must be restored and the matter be remitted back to the Tribunal for trial.

18. Mr Dykes argues that the applicant has to repay the $50,000 and $200,000 that it had received under the Consent Order in order to bring the application against the respondents, in accordance with clause 8 of the Consent Order. As pointed out by Le Pichon JA during argument, the "stay" referred to in clause 8 is the stay of the proceedings in the HC action. The application is not an attempt to uplift the stay. Indeed, the uplifting of the stay of the HC action will revive the action which complained about a hole 3 feet by 3 feet on the roof of the Commercial Complex. The application now brought is not to compel the respondents to make good the hole, and the requirement of uplifting the stay pursuant to clause 8 simply does not arise.

19. One has to look at the purpose for which the sums of $50,000 and $200,000 were paid by the defendants to the plaintiff in the HC action. The $50,000 payable under clause 5 was for security regarding the discharge of the defendants' obligations to maintain, repair and clean the facilities that they were permitted by the plaintiff to install. The $200,000 was paid for full and final settlement of "all the claim and right of the Plaintiff herein". Permission had by the Consent Order been given by the plaintiff to the defendants to install the exhaust pipes and sewage system, and the plaintiff's claim and right that were settled were those given rise by the defendants or one of them making the hole, amounting to a breach of the DMC whereby the plaintiff raised the claim and sought injunctive relief. It is too far-fetched to say that installing new chimneys is a breach of the Consent Order, rather than a new breach of the DMC, requiring the plaintiff to uplift the stay provided for in the Consent Order in order to revive its claim in the HC action that has fully been overtaken by events.

20. The $200,000 was consideration for settling the claim and cannot reasonably be construed as for buying out all the rights of the plaintiff in enforcing the terms of the DMC for all future breaches. It would be most unreasonable to construe the Consent Order to have the effect of debarring the plaintiff from enforcing the DMC relating to all new breaches thereof insofar as they relate to chimneys or the sewage system.

21. Mr Dykes also argues that clause 1(i) confers "right privilege and liberty" to the defendants and their successors to install chimneys and such chimneys can be modified by them pursuant to clause 1(ii). It is implicit in this argument that the payment of $200,000 under clause 7 was for full and final settlement of all the claims and rights of the plaintiff (now the applicant) under the DMC. I do not agree. The "right privilege and liberty" cannot be reasonably construed as the right, privilege and liberty to install chimneys in derogation of the DMC; and anyway, the plaintiff would have had no power to make such an agreement.

22. Now I turn to the sewage system. The Amended Notice of Application appears to focus on the chimneys. Apart from the relief sought as set out in paragraph 2(e), only a paragraph is devoted to the sewage system. The complaint is that in breach of the DMC and section 34I of the Building Management Ordinance, "and without approval from the Applicant and/or the Owners' Committee of Melody Garden, the Respondents or either one of them, wrongfully connected and used the Sewage System (see Plan I attached for location of the sewage system)." The sewage system was not a matter of complaint in the HC action, but was included in the Consent Order. The plaintiff in the HC action, by clause 2(i) of the Consent Order permitted and approved "the Defendants and the Successor to install a sewage system serving the Shop ('the Sewage System') in accordance with the plan and specification as agreed by the Plaintiff and the Defendants, which plan and specification are annexed hereto and marked 'B'. The Plaintiff permits and allows the Defendants to link up the Sewage System with the main discharge pipes of Melody Garden." Insofar as the sewage system complained of in the application is the same as that referred to in the Consent Order and in the plan marked B annexed to it, then it is covered by the Consent Order and, subject to the resolution of the arguments on the ambit of "successors", the applicant cannot raise the issue again in this application. Further, if the sewage system complained of in the application is the same sewage system as identified in clause 2(i) of the Consent Order, then, it would seem that there could be no objection to it being linked up with the main discharge pipes of the estate referred to in clause 2(i). It is a matter that can only be decided on the facts. It cannot be a proper subject of striking out and must be remitted to the Tribunal for trial.

23. The above partially answers questions (2) and (3).

Question (4)

24. Question (4) and part of question (3) relate to the construction of the word "successors in title" or "successor" in the Consent Order vis-à-vis the 3rd respondent.

25. Mr Jat, for the applicant, argues that even if the 3rd respondent was a new tenant of all the aforementioned shops, it cannot be a successor in title of the 3rd defendant in the HC action so as to be entitled to the benefit under the Consent Order. It will be noticed that the term "successor" was used in respect of the plaintiff in clause 1(i), but "successors in title" was used in respect of the defendants in the same sub-clause. In fact, clause 1(i) provides for the meaning of the latter term and abbreviates it to be "the Successor". This term means the defendants' "successors in title for the purpose of operating a restaurant". The reasonable inference that can be drawn when compared with the term "successor" used in respect of the plaintiff in the same sub-clause is that the defendants' successors must be (1) their successors in title, and (2) such successors are restricted to those for the purpose of operating a restaurant. In clause 2(i) of the Consent Order, the term "the Successor" was also used with the defendants relating to the installation of "a sewage system serving the Shop". The term was used again in clauses 1(iii) and 4 providing for the obligation of the defendants and "the Successor" to upkeep and maintain the exhaust pipes and to demolish the exhaust pipes and the sewage system when the "shop" shall cease to be used as a restaurant. In all other provisions, "the Successor" was not mentioned.

26. Mr Jat refers us to Pasmore v Whitbread & Co Ltd [1953] 2 QB 226, where the Court of Appeal in England considered the meaning of "predecessor in title" in section 4 of the Landlord and Tenant Act 1927, which provides that a tenant on quitting a holding shall be entitled to be paid compensation by his landlord for goodwill if he proves "that by reason of the carrying on by him or his predecessors in title at the premises of a trade or business for a period of not less than five years goodwill has become attached to the premises". Both Denning LJ and Morris LJ, with whom Roxburgh J agreed, followed Williams v Portman [1951] 2 KB 948 and accepted the plain meaning of the term in the context as the predecessors in title to the interest of the tenant in the premises. As the former tenant's tenancy had not been assigned to the appellant who had only bought the goodwill of his business and obtained a new tenancy from the landlord, the appellant was not entitled to compensation under the Act.

27. However, the term "successors in title for the purpose of operating a restaurant" is more than a mere "successor in title" in the usual sense. Obviously, this term was intended to have connection with the business of a restaurant being operated at the related premises, ie, Shops Nos 7-23 and 28-34 (see clause 1(i)). While the Judge agreed that the 3rd respondent was not strictly a successor in title of the 3rd defendant in the HC action, he held that the 3rd defendant could rely on the Consent Order. He said:

"(12) ... The 3rd Respondent in this case as matter of fact has not through any transfer obtained the benefit and burden prescribed by the relevant Consent Order from the 3rd Defendant in the previous case. However, since the wording of the relevant Consent Order has clearly included all the three Defendants and their successors, it is not necessary for the 3rd Respondent in this case to obtain the relevant benefit from the 3rd Defendant of the previous case through this executed transferable right, this assignment, through an executed assignment.

(13) According to my judgment, so far as the 3rd Respondent is concerned (it) ought to have two other methods by which it could obtain the benefit and burden of the relevant Consent Order. The first method is because the 3rd Defendant in the previous action had terminated the relevant tenancy agreement, be the termination of the tenancy agreement in whatever form, upon the expiry of the term of the tenancy, or upon surrendering the relevant tenancy to the landlord, i.e. 'surrender', or may be because of its failure to pay rent, which rendered the landlord to terminate the tenancy agreement and evicted it (from the premises); whatever the relationship, it had already terminated the tenancy agreement.

(14) Therefore the 3rd Defendant in the previous case in so far as the right to use the relevant land as a restaurant is concerned, this right also includes the benefit of the Consent Order made in the previous case, which were altogether reverted to the two owners, accordingly the 1st and 2nd Respondents in this case can naturally deliver the relevant benefit through leasing (the premises) to the 3rd Respondent to operate a restaurant.

(15) And it can be said that the second method is this. Since the 1st Respondent in this case is also the 1st Defendant in the previous case, it naturally could lease the benefit under the relevant Consent Order, by way of leasing to the 3rd Respondent to allow it to operate the restaurant.

(16) The 2nd Respondent, after replacing the 2nd Defendant to become an owner of the property, can also by the same method through the form of lease deliver the right it had acquired under the Consent Order in the previous case to the 3rd Respondent.

(17) It is therefore not necessary for the 3rd Respondent in this case to obtain the benefit and burden under the relevant Consent Order directly from the 3rd Defendant of the previous case by assignment."

28. It seems to me that the Judge was not saying that the term "successors in title for the purpose of operating a restaurant" in clause 1(i) of the Consent Order did not mean an assignee. What he was saying was that looking at the term being used together with "the Defendants", even though the 3rd respondent was not an assignee of the 3rd defendant in the HC action, the 3rd respondent could rely on the benefit granted by the Consent Order as the tenant of the 1st respondent (ie, the 1st defendant in the HC action) and the 2nd respondent (an assignee of the 2nd defendant in the HC action).

29. I agree that the 3rd respondent cannot, on the proper interpretation of the term "successor in title", be within its ambit vis-à-vis the 3rd defendant in the HC action. I do not think that the addition of the words "for the purpose of operating a restaurant" relaxes the application of this interpretation. As to how the 1st and 2nd respondents could have conferred the benefit of the Consent Order on the 3rd respondent, the Judge had proceeded on the basis of certain assumptions of facts. I do not think that that is right, for the issue cannot and should not be dealt with in the vacuum of facts but by assumptions. There is no evidence in the documents before us as to the exact legal position of the 3rd respondent in the shops save that the Amended Notice of Application described it as the tenant or occupier and running a restaurant business thereat. Before us, however, there is a tenancy agreement dated 10 December 1999 between the 1st and 2nd respondents of the one part and one Lee Kim Sing ("Lee") of the other part, and an agreement for the sale and purchase of the restaurant business dated 18 December 1999 between the 3rd defendant and Lee, which were before the Judge. There is an almost identical provision in both that if Lee renovates or makes any change to the premises, he must have the approval of the relevant government authorities and the management company before commencing work and that if he commences work without the approvals, he shall be responsible for all liabilities and expenses. In both agreements, there is no mention of the Consent Order at all. There is no evidence as to the relationship between this Lee and the 3rd respondent, or as to how the 3rd respondent became the tenant or occupier of the premises. One can only say that such a provision in the two agreements made by Lee seems to preclude Lee from alleging that he has been given the benefits of the Consent Order by the 1st and 2nd respondents. If the 3rd respondent derived its right to occupy the premises from Lee, the provision would contradict the assumptions of facts made by the Judge.

Conclusion

30. For all the above reasons, especially in view of my answers to questions (2) and (3), I would allow the appeal, set aside the determination of the Judge in striking out paragraphs 1(a), 2(a) and 2(e) of the Amended Notice of Application, dismiss the respondents' summons dated 22 November 2000 seeking the striking out, and remit the case back to the Lands Tribunal for trial of the relevant issues. I would also make an order for costs of the said summons and this appeal to be borne by the respondents, to be taxed if not agreed.

Hon Le Pichon JA:

31. I agree.

Hon Rogers VP:

32. I agree and have nothing further to add.

33. In the circumstances the appeal will be allowed and there will be an order nisi as to costs as set out in the judgment of Woo JA.

Representation:

Mr Jat Sew Tong, instructed Messrs Dibb Lupton Alsop, for the applicant (appellant).

Mr Philip J Dykes SC and Mr Victor W T So, instructed by Messrs K C Ho & Fong, for the 1st, 2nd and 3rd respondents (respondents).