SUM LUNG INVESTMENT CO LTD AND ANOTHER v. CIRRUS VIEW MANAGEMENT CO LTD

DCCJ 2918/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2918 OF 2010

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BETWEEN

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R U L I N G

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1.  The 1^st Plaintiff is and was at all material times the landlord and registered owner of Unit G17, Ground Floor, Tuen Mun Central Square, 22 Hoi Wing Road, Tuen Mun, Hong Kong (“the said premises”).

2.  The 2^nd Plaintiff is and was at all material times the manager of Tuen Mun Central Square appointed under a DMC dated 9 June 1999, which DMC regulates the rights and liability of owners in the building. 

3.  By a tenancy agreement (“the agreement”) dated 15 March 2010, the said premises were let by the 1^st Plaintiff to the Defendant for a term of two years, and subjected to terms and conditions set out in the agreement.  It is provided in the agreement that the said premises should be used for the purpose of an office.   The terms of the agreement provides that the Defendant should comply with ordinance, regulation, laws, rules and requirement of any government or other competent authority relating to the use and occupation of the said premises. 

4.  The Defendant further agreed not to erect, install or alter any fixture, partition or other erection or installation in the said premises without the prior written consent of the 1^st Plaintiff. 

5.  The Defendant also agreed not to use the said premises for any illegal, immoral or improper purpose or in any way so as to cause nuisance, annoyance, inconvenience or damage to the 1^st Plaintiff or the tenants or occupiers of adjacent and neighbouring premises. 

6.  The agreement also provides that the Defendant should not change its trade name of “Tsing Wan Kun Management Co. Limited” without the prior written consent of the 1^st Plaintiff.

7.  The Defendant also agreed to comply with the Deed of Mutual Covenant. Clause 5 of the 3^rd Schedule of the DMC provides that:

“No owners or occupiers should use or permit to be used any part of the unit in Tuen Mun Central Square for the purpose of a funeral parlour, coffin shop, temple or Buddhist hall for the performance of the ceremony of “Tai Chai(打齋)” or for any similar ceremony, or for any noisy or offensive trade or business.”

8.  Clause 6 of the 3^rd Schedule provides that:

“No owner nor occupier shall make or permit any disturbing noise in his unit or do or permit anything to be done which will interfere with the rights, comfort and convenience of other owners or occupiers”.

9.  After taking possession of the said premises, the Defendant carried out declaration work.  The Plaintiffs discovered that the Defendant had erected a penthouse of about 100 square feet, which amounted to an unauthorised work within the meaning of the Building Ordinance.  It is in breach of the law and in breach of the covenant under the agreement. 

10.  The Plaintiffs also complained that the Defendant carried out some business relating to death and after death arrangement, including funeral and burial of the death in the said premises.  

11.  The 1^st Plaintiff argues that this is an offensive business and or a nuisance, annoyance to the owners, tenants, and occupiers of Tuen Mun Central Square, and the Defendant’s business is interfering with the right, comfort and convenience of owners, tenants and occupiers of Tuen Mun Central Square. 

12.  Further, the Defendant’s business amounts to an undertaking of burials within the meaning of the Public Health and Municipal Services Ordinance.  No one may carry on such business without a licence, and the Defendant has no licence and is carrying on illegal business.

13.  Further, the Defendant had without the prior written consent of the 1^st Plaintiff, changed its trade name from Tsing Wan Kun Management Co. Limited, to Cirrus View Management Co. Limited on or about 19 July 2010. 

14.  The Defendant has been in breach of the agreement.  By reason of the above aforesaid breaches, the 1^st Plaintiff claimed it is entitled to and has exercised its right to re-enter the said premises and to determine the agreement by letter dated 20 August 2010 issued by its solicitor to the Defendant. 

15.  The 1^st Plaintiff claims there is no defence to the claim and now seeks summary judgment for possession of the said premises, and interlocutory judgment for damages.

16.  The 2^nd Plaintiff also claims damages. 

17.  In support of their case, the Plaintiffs filed two affirmations of Yeung King-wah, dated 8 September 2010, and 13 October 201 respectively.  The Defendant relies on the first and second affirmation of Ng Wing-hang filed in a related High Court action HCA 1202/2010.

18.  I will first deal with the case of the 1^st Plaintiff.

19.  The Defendant says they have reasonable defence and opposes the application.  It is not disputed that the burden rests on the Defendant to satisfy the court that there is a reasonable defence.

20.  On the issue of the unauthorised building work, the 1^st Plaintiff relies on a letter from the Building Department that on their inspection of the said premises on 19 August and 30 August 2010, a metal frame at the said premises was found, which was an unauthorized building work.  The answer to this by the Defendant is that they have removed the building work. 

21.  The Defendant also claims that they should have one month to make good all defects and wants of repair in the said premises according to clause 16 of section II of the agreement.  They have removed the building work within the time, and the 1^st Plaintiff is not entitled to rely on this as a ground of re-entry. 

22.  Mr. Wong, counsel for the Plaintiff, submits that there is a question as to whether the building work has, in fact, been removed.  But he agrees with me that further investigation as to whether the building work has been removed would be a matter of evidence.  It could not be determined at interlocutory stage.

23.  It may be a convenient time to make reference to section 58(1) of the Conveyancing and Property Ordinance which provides that:

“(1) A right of re-entry or forfeiture under any proviso or stipulation in a lease for a breach of any covenant or condition in the lease shall not be enforceable, by action or otherwise, unless and until the lessor serves on the lessee a notice-

(a) specifying the particular breach complained of; and

(b) if the breach is capable of remedy, requiring the lessee to remedy the breach; and

(c) specifying the compensation, if any, which the lessor requires in respect of the breach, and the lessee fails, within a reasonable time thereafter, to remedy the breach, if it is capable of remedy, and to make reasonable compensation in money, to the satisfaction of the lessor, for the breach.”

24.  Accordingly, the 1^st Plaintiff has to serve notice on the Defendant requiring it to remedy the breach.  This should be applicable to all the complaints. 

25.  The next argument is the nature of the business of the Defendant.  Mr. Yeung of the Plaintiff said in his affirmation that the Plaintiff did not know the nature of Defendant’s business until about July 2010 when the interior condition and design of the said premises came into light. The said premises was decorated as if a temple for storing ashes, tombs and sepultures.  The casket model stated in the floor plan was, in fact a shelf with many partitions that each partition has a door as if a real shelf was built in the said premises for keeping a real size urn.

26.  Mr. Yeung said the said premises was a shop soliciting for business whereby funeral and after-death services would be provided for in the said premises.  But there is no other evidence apart from some photographs as to the business of the Defendant.

27.  It is the Defendant’s case that they have not even started their business.  The original scheduled promotion party was to be held on 26 July 2010.  But the Plaintiffs had put up scaffolding outside the said premises blocking the entrance.  As a result, the party has been cancelled and Miss Lau, counsel for the Defendant, informed me this morning that the Defendant has not commenced business.

28.  Miss Lau, counsel for the Defendant, presents some photographs which are much clearer than the photocopies of photographs in the trial bundle. 

29.  From these photographs, I do not see that the said premises looked like a temple.  There is a model of the Tsing Wan Kun.  There is a wall structure with some shelves. The colour of the wall is bright and colourful.  The said photographs cannot give me a complete vision of the layout of the said premises. The Plaintiff has not produced photograph of the layout and declaration that they claim to be offensive. 

30.  I believe the better source of evidence on the business of the Defendant is from the affirmation of Ng Wing-hang.  He said that the Defendant has been authorised by Tsing Wan Kun to promote provisions of funeral services like selling of urns, providing of columbium spaces and related services.  They have agents who introduced their customers to subscribe funeral service from the Defendant.  There would be some walk-in customers.  They decide to set up an information centre with a professional and well-decorated display area showing the line of services, and they rented the said premises for such purpose. 

31.  In short, the Defendant used the said premises as a show room.  There is no evidence at this stage that they had or would use the said premises as a temple for “Tai Chai”. It is not an easy issue to say that it would create discomfort or nuisance.

32.  Mr. Wong seeks to argue that the words “nuisance, annoyance or inconvenient” use in the DMC would not be confined to the meaning use in common law tort.  He submits that it would cover a situation when a business of another tenant occupier is affected.  While there are complaint letters from other neighbours. The Defendant is entitled to query the truthfulness of the complaint, and this is a matter of both facts and law.  It could not be determined at interlocutory stage.

33.  Mr. Wong also argues that the business of the Defendant is the business of an undertaker of burial.  Section 92AB of the Public Health and Municipal Services Ordinance provides that:

“No person shall conduct, or open or keep open, any place for the purpose of any activity specified in Schedule 11A [ i.e. undertakers of burials] except under and in accordance with a licence issued by the Authority.”

34.  Mr. Wong refers to the case of Chan Yung Singv. Choi Chung Ching HCA4830/2002.  Deputy Judge Ho noted that there is no definition of undertakers of burials in the Ordinance, and referred to the meaning given in the Undertakers of Burials Regulation that, “a person whose trade or business it is to undertake all or any duties connected with the burial of human cadavers and includes a funeral director” would be an undertaker of burial.

35.  Deputy Judge Ho also ruled that:

“... the requirement of Section 92AB is satisfied where a person holds himself out to be undertaking or carrying on the business of an undertaker (as defined).”

36.  Mr. Wong argues that the Defendant was an undertaker of a burial and had been trading for a licence.  They were in breach of the agreement and the 1^st Plaintiff would be entitled on this ground alone to terminate the tenancy. 

37.  Miss Lau draws my attention to paragraph 30 of the judgment when the Honourable Deputy Judge first ruled that the defendant (in that case) is not carrying on an agency business to promote the sales of burial plot.  There should be a distinction between agent and undertaker of burial.

38.  I agree there should be a distinction between agent to a burial service, and an undertaker.  As in this case a lot would turn on the relationship between the Defendant and Tsing Wan Kun.  If the Defendant is just a sales arm of Tsing Wan Kun, I think there is a strong argument that a show room is part of the business of an undertaker of burial.  But an agent would not undertake a burial activity, but arrange a customer to receive the service from a burial undertaker.  The true nature of the business of the Defendant would appear upon hearing evidence. 

39.  But the most difficult point here is the Plaintiff had not served any notice under section 58 of the Conveyancing and Property Ordinance to the Defendant for them to stop the “illegal” business.  In the Chan Yung Sing’scase, prior notice has been given, and action was issued after the Defendant ignored the notice.  There is no notice issued under section 58 for the Defendant to purge the breach, either for breach of the DMC or the Public Health and Municipal Services Ordinance.  Mr. Wong referred to the notice given by the Plaintiff’s solicitor on 20 August 2010.  There is no allowance given to the Defendant to purge the breach.  It cannot be in accordance with section 58.  Mr. Wong also refers to a letter issued by the 2^nd Plaintiff as manager of the building to the Defendant, but this is not a notice given by the 1^st Plaintiff.  So, technically, the Plaintiff may not be able to enforce the forfeiture clause. 

40.  The last point of complaint is on the change of name.  I do not need to go into details, except to echo Mr. Justice Suffiad’s comment given in the related action HCA1202/2010 that it is arguable that the consent should not be unreasonably withheld. 

41.  I do not think this is an appropriate case for summary judgment.  The determination would turn on fact-finding.  I therefore refuse the application by the 1^st Plaintiff.

42.  As for the 2^nd Plaintiff, they only ask for damages.  There is only one paragraph on damages.  The Plaintiffs are contemplating claims of nearby owners or occupiers.  There is no evidence of any claim and no suggestion as to why the 2^nd Plaintiff would be liable.  I fail to see any basis of the claim and his application for summary judgment should fail. 

(Discussion re costs)

43.  Unconditional leave to the Defendant to file and serve a defence within 21 days.  Leave to the Plaintiff to file and serve a reply within 21 days thereafter, if necessary.  On close of pleadings, the parties should comply with the rules and practice direction on case management.

44.  Costs of the application be Defendant’s costs in the cause.