Mailex Ltd v. Grefo Ltd

CACV000165/1980

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Coram: McMullin, Leonard and Cons, JJ.A.

Date of Judgment: 23 December 1980

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JUDGMENT

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Cons, J.A.:

1. The plaintiff is tenant of three floors of a building in Jaffe Road. In April 1978 the plaintiff granted licences to the defendant to use those floors for a period of three years commencing from the 20th June. There were three licences, one for each floor, with different fees for each, but all payable monthly and in advance. In October 1979, by three separate letters, the plaintiff gave notice to determine the three licences, as the plaintiff was entitled to under the terms thereof, on the grounds of misuse and non-payment of licence fees. The notices took effect on 20th December. However, the defendant remains in possession.

2. The plaintiff issued the writ in this action on 4th January this year together with a Statement of Claim. Included in the prayer were claims for possession, mesne profits and arrears of licence and other fees.

3. The defendant filed a Defence and Counterclaim on 27th February. Misuse of the premises was denied. Non-payment of licence fees was not admitted. Further, both kinds of breach were said to have been waived. And finally there was a counterclaim for relief against forfeiture. Further and better particulars of the facts relied upon for waiver were given on 30th April, in response to an order of the court.

4. On 16th June, the plaintiff took out a summons before the Registrar asking

We do not know what order was made in respect of the second request, although we understand the defendant no longer wishes to pursue waiver. The first and third requests must have been dismissed.

5. On 16th September, the plaintiff appealed against the dismissal of its application for summary judgment. The appeal came on before Rhind, J. on 1st October, who dismissed the appeal, making an order that the costs of the appeal should be costs in the cause. This further appeal, by the defendant, is concerned solely with that order for costs.

6. It seems usual, on the dismissal of an Order 14 summons, to order that the costs shall be the defendant's in any event: 1979 Annual Practice Note 14/7/4. Where proceedings are by way of appeal costs normally follow the event: ibid 14/7/10. The learned judge below departed from the norm. He gave his reasons:

"On the question of costs, I think the application was a reasonable one for the Plaintiff to make. It resulted in the issues being narrowed and clarified. I feel that certainly, if at the end of the whole proceedings, the Plaintiffs do succeed in their action, it would be less than fair if they should be made to pay the costs of today. The fair order is for costs to be in the cause, with certificate for two counsel."

7. With every respect to the learned judge and to counsel who argued the point patiently before him, there was no narrowing or clarification of the issues. The issue which they took to be resolved - whether the arrangements entered into in April 1978 created tenancies rather than licences - neither was, nor could have been, raised as an issue as the pleadings then stood and still stand.

8. Paragraphs 3, 4 and 5 of the Statement of Claim relate to the three agreements respectively. Each paragraph alleges that "the defendant as licensee agreed", and each of those paragraphs is expressly admitted in paragraph 3 of the Defence and Counterclaim. We appreciate that on the seven occasions when the word licence is used in other parts of that pleading the draftsman has enclosed it in inverted commas, but we are not prepared to read into that curious punctuation an allegation of tenancy.

9. As we read the judge's decision, the part that we have already quoted sets out the only reason for his departure from the normal practice. It is suggested, however, that there was an additional reason contained in words that appear in an earlier part of the decision:

"I do not want the Defendants to take advantage of delay. I do not want the Court to be seen as lending its approval to delaying tactics, and I shall give directions for this question to come on as quickly as possible, for the issue of whether relief could be given to be determined as early as possible."

10. We are asked to connect these comments with matters pleaded in paragraph 18 of the Statement of Claim, namely that for most of the period from October 1978 to August 1979 the defendant had failed to pay licence fees until action brought and judgment obtained against it.

11. It is not immediately apparently why these matters are included in the Statement of Claim. They would be useful to a landlord claiming possession under section 53(2)(d) and (2A) of the Landlord and Tenant Ordinance, Cap. 7, but we do not see the relevance in this case. In any event they cannot be of assistance to the plaintiff in this particular respect. Past misconduct is no ground for depriving of his costs a respondent who has successfully resisted an appeal.

12. We might add that if there be any question of delay it seems to be more on the part of the plaintiff than the defendant. The application for summary judgment was not brought until several months after the Statement of Claim had been issued and now it is six weeks since Rhind, J. gave his decision and the plaintiff has still not asked for directions to be given for the early determination of the issue.

13. This court is always slow to interfere with the exercise of a judge's discretion, but it will do so when the judge has taken into consideration matters which he should not. For the reasons just given, that is the situation here. We therefore allow the appeal, set aside the order made below and substitute an order that the defendant shall have its costs there in any event; as Appellant, it should have its costs in this court as well.

Representation:

David Yam (Louis Kong & Co.) for appellant.

John Swaine, Q.C., and K.H. Woo (Yung, Yu, Yuen & Co.) for respondent.