XCHRX MASS OCEAN INTERNATIONAL LTD. v. WYNYARD DEVELOPMENT LTD.

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 223 OF 2001

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REASONS FOR DECISION

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1. This is an application for summary judgment by the Plaintiff as registered owner of the Remaining Portion of Section D of Lot No.372 in Demarcation District No.99 ["the property"]. The Plaintiff acquired the property by an assignment dated 14th September 1999. It asked for possession of the property and mesne profit.

2. The Defendant occupied the property as tenant of the predecessor-in-title of the Plaintiff, Man Shin Kang Tong. There is no dispute that by a tenancy agreement dated 1st June 1995, the Defendant was granted a lease of the property for a term of 5 years from 1st December 1995. The lease expired on 30th November 2000. The Defendant said that the lease has been renewed. In the Defence and Counterclaim filed on 21st February 2001, it was pleaded that the lease was renewed pursuant to Clause 2 of the tenancy agreement and the right of renewal was exercised in or about January 2000. The renewal was, according to a letter dated 23rd February 2001 from Messrs.Eric Lai, Jason Cheung & Co., the Defendant's solicitors to Messrs. Chui & Lau, Plaintiff's solicitors, done orally between Man Cheuk Wai, a manager of Man Shin Kang Tong and Man Whi Chung of the Defendant.

3. Such contention is at variance with what is stated in a letter dated 20th October 2000 from the Defendant's solicitors stating that the right of renewal was exercised in July 2000. Although that letter was headed as "without prejudice", the Defendant did not raise any objection to that being put in evidence. Further, the Defendant's counsel advanced submissions to account for the discrepancy between that letter and the pleaded case of the defence. In these circumstances, I consider that the Defendant has waived any privilege, if any, in respect of the letter. The explanation offered by the Defendant's counsel is that the letter of 20th October 2000 was written as a result of the mistake of Man Whi Chung when he gave instructions for the letter to be written. He was the deponent of the affirmation of 30th March 2001 filed on behalf of the Defendant and he did not offer such explanation in the affirmation.

4. The crucial issue is how did the renewal by Man Cheuk Wai bind the Plaintiff. In the letter dated 20th October 2000, Man Cheuk Wai was said to have renewed the tenancy as manager of the landlord. Hence, apparently, the Defendant was contending that there was a renewal by Man Shin Kang Tong. This allegation is repeated in Paragraph 3 of the Defence filed herein although as mentioned above, the date of the renewal was changed. The difficulty with that proposition is that by the time of the alleged renewal, whether in January or July 2000, the property had been sold to the Plaintiff. The Tong simply could not grant any renewal in its own right. Further, it is agreed that the option to renew (if it can be so characterized though I have reservations about the same as I construe Clause 2 of the tenancy agreement as a right of first refusal if the landlord was to lease out the property again) was not registered under the Land Registration Ordinance Cap.128. Hence, it is absolutely null and void to all intents and purposes as against the Plaintiff whose assignment was registered on 8th October 1999 (see Markfaith Investment Ltd. v. Chiap Hua Flashlights [1990] 2 HKLR 84 and Wellmake Investments Ltd. v. Chan Yiu Tong [1996] 2 HKLR 44).

5. To overcome that difficulty, counsel for the Defendant (Mr.Lee) argued that Man Cheuk Wai was acting as agent for the Plaintiff when he renewed the tenancy. He agreed that the Defence did not plead such a case and it has to be amended in due course. He however submitted that the issue is triable and summary judgment should not be granted. To support his case, he argued that the Plaintiff had appointed Man Cheuk Wai to be its agent for collection of rent. Reliance was placed on a letter dated 29th September 2000 from the Plaintiff's solicitors to the Defendant. That was a letter demanding for arrears of rent from 14th September 1999 to date of the letter. On the face of it, that letter showed that the Plaintiff had not appointed any person to collect rent up to that point in time and a demand was made directly to the Defendant. Mr.Lee submitted that as the Plaintiff was a commercial entity purchasing a piece of land, it was likely that it would ask someone to collect rent on its behalf. He also pointed to the letter in reply dated 7th October 2000 by which the Defendant informed the Plaintiff that the rent had been paid to Man Shin Kang Tong. Since the Plaintiff did not press further for rent, he invited the court to draw an inference that the Plaintiff did appoint Mr.Man Cheuk Wai to collect rent. He further said that as rent collector, the Plaintiff had at least cloaked Mr. Man Cheuk Wai with apparent authority to renew the tenancy on behalf of the Plaintiff.

6. I bear in mind that this is an Order 14 application and I should not conduct a mini-trial. As accepted by Mr.Lee, the sole issue is whether there is a triable issue of

Mr.Man Cheuk Wai acting as agent for the Plaintiff when the lease was allegedly renewed. I hold that there is no credible evidence to lead to such inference. It is important to bear in mind that the defence case is that up to September 2000, the Defendant was not aware of the assignment of the property to the Plaintiff. Hence, they expressed surprise in the letter of 7th October 2000 to the demand by the Plaintiff for arrears of rent. This lack of knowledge is confirmed in Paragraph 3 of the Affirmation of Man Whi Chung of 30th March 2001. Obviously, the Defendant could only have dealt with Man Cheuk Wai as manager of the Tong whom the Defendant believed to be owner of the property. The receipts produced by the Defendant for rent paid to Man Cheuk Wai also clearly showed that the rent was collected by Man Cheuk Wai as agent for the Tong. There is absolutely no evidence of any representation by Man Cheuk Wai or the Plaintiff that he was acting as agent for the Plaintiff. In the light of the clear evidence that Man Cheuk Wai was acting as agent for the Tong, I see no basis for the court to draw the inference as invited by Mr.Lee. There is simply no credible case of Man Cheuk Wai acting as agent for the Plaintiff in granting the purported renewal.

7. For these reasons, I hold that there is no triable defence in this case. I would grant summary judgment to the Plaintiff for possession of the property. Since the mesne profit has been paid up to end of April, I only need to order mesne profit from 1st May 2001 up to date of possession. I shall hear parties on question of costs.