FAR EAST LAND (CHINA) LTD v. CAMLEIGH INVESTMENT LTD AND OTHERS

HCA 1178/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1178 OF 2009

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BETWEEN

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J U D G M E N T

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1.  Far East leased the Defendants’ premises under a 2 year Tenancy Agreement dated 15 August 2007. The Tenancy expired on 30 June 2009. Far East asserts that, by a “collateral agreement”, the Defendants undertook to extend the Tenancy for a further 2 years. The collateral agreement is said to arise from an oral statement by Ms Joyce Lai (the Defendants’ estate agent) made at the time when the August 2007 Tenancy Agreement was being negotiated between Far East and the Defendants. Ms Lai is alleged to have told Mr Liu of Far East that, Far East having been a tenant of the premises since 1999, “the Defendants would have no problem to extend the tenancy for two more years from the expiry of the Tenancy Agreement”.

2.  The Defendants applied to strike out Far East’s claim on the basis that it was frivolous and vexatious and disclosed no viable cause of action. The Defendants succeeded before the Master. Far East now appeals against that decision to this Court.

3.  Like the Master, I am unable to see how Ms Lai’s alleged words (on the assumption that they were actually stated as pleaded) could give rise to any agreement, collateral or otherwise.

4.  First, by themselves, the words are far too vague and uncertain to constitute a lease. For instance, they say nothing about the rent for which the Tenancy would be renewed.

5.  Second, the words without more would not even constitute an actionable misrepresentation. They give Ms Lai’s view with regard to a future state of affairs (as opposed to present fact). Far East (Ms Lai was in effect saying) should have no problem extending (or negotiating for an extension of) the lease in light of its having been a tenant since 1999. On the face of it, such remark would not have been an unreasonable belief for Ms Lai to hold at the time given Far East’s actual past history as a tenant. But I do not see how the statement can be construed as any guarantee or promise that the Tenancy Agreement would definitely be extended.

6.  Third, I do not understand in what sense the statement can be “collateral”. Presumably (although this is not specifically pleaded) the allegation is that, but for Ms Lai’s remark, Far East would not have entered into the August 2007 Tenancy Agreement. Thus (the argument might run), in consideration for the promise to extend for 2 years at an unspecified rent, Far East entered into the August 2007 Tenancy Agreement. But a difficulty with such argument is that the August 2007 Tenancy Agreement contains 2 clauses (cls. 5.13 and 5.19) expressly stating that the Agreement supersedes all previous parol or written representations. The August 2007 Tenancy Agreement is expressly said to be “the whole of the agreement between the Landlord and Tenant”. It is therefore not possible to rely on Ms Lai’s statement as a binding representation inducing entry into the August 2007 Tenancy Agreement.

7.  Mr Liu belatedly deposes that he signed the August 2007 Tenancy Agreement despite his lack of familiarity with English. He complains that the Tenancy Agreement was not interpreted to him before his signature. He claims to have thought that the Tenancy Agreement contained an option to renew similar to a Confirmation of Tenancy dated 29 June 2007. But the law on this is clear. In the absence of a vitiating factor such as undue influence or duress, one is bound by one’s signature to the terms of a contract. One cannot rely on ignorance of English to evade, much less re-write, the terms of a contract. There is (as far as I can see) no evidence of any vitiating factor here.

8.  For those reasons, Far East’s appeal is dismissed.