KING CROWN DEVELOPMENT LTD v. BARON TUXEDO LTD AND ANOTHER

DCCJ 5254/2021

[2023] HKDC 634

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5254 OF 2021

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DECISION

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Introduction

1.  This is the Plaintiff’s application by Summons dated 17 August 2022 seeking summary judgment (the “Summons”) against the 1^st and 2^nd Defendants (collectively known as the “Defendants”) in the sum of HK$1,325,978.03, pursuant to Order 14 and Order 18 rule 19 of the Rules of the District Court.

2.  The 2^nd Defendant is a director of the 1^st Defendant, which is a limited company runs the retail business of formal wear. It is not in dispute that the Plaintiff as a landlord and the 1^st Defendant as a tenant entered into a tenancy agreement dated 6 November 2019 (the “TA 2019”) in respect of Shops 025, 035 & 036 at the Basement of Beverley Commercial Centre (“BZone”) in Tsim Sha Tsui (the “Premises”) for a period of 3 years commencing from 1 September 2019 to 31 August 2022 at the rent of HK$26,000 per calendar month. By a Guarantee entered between the 2^nd Defendant and the Plaintiff on the even date, the 2^nd Defendant agreed to act as a guarantor of the 1^st Defendant and to pay and indemnify the Plaintiff for any loss, damages, costs and expenses that the Plaintiff may suffer or incur as a result of any breach or non-observance of any of the terms and conditions of the TA 2019.

3.  The following facts were not disputed by the parties:-

(i)  Prior to the TA 2019, a 3-year tenancy agreement dated 11 October 2016 together with a personal guarantee were entered between the parties (the “TA 2016”);

(ii)  The monthly rent stipulated under the TA 2019 was HK$26,000 (the “Rent”) excluding all outgoing expenses e.g. management fee, air conditioning charge, promotional fee, government rates and rent, etc. (the “Expenses”);

(iii)  A total sum of deposit at HK$97,395 including deposits for Expenses (the “Deposits”) was paid to the Plaintiff by the 1^st Defendant;

(iv)  The 1^st Defendant did not pay Rent to the Plaintiff since August 2020;

(v)  The 1^st Defendant was entitled to a 15-month rent free period which was set out under Schedule 3 of the TA 2019 (the “Rent Free Period”);

(vi)  Five of the 15-month Rent Free Period were enjoyed by the 1^st Defendant before it defaulted in Rent payment;

(vii)  The Plaintiff offered the 1^st Defendant a rent concession of HK$3,990 per month for March, May and June 2020 (the “Concession”);

(viii)  The Plaintiff’s solicitors issued a demand letter dated 15 October 2021 (the “Demand Letter”) alleging that the 1^st Defendant has breached various clauses under the TA 2019 and demanding for a total sum of HK$750,140.64;

(ix)  The Plaintiff commenced the current proceedings by way of Writ of Summons on 16 November 2021; and

(x)  The 1^st Defendant delivered up possession of the Premises to the Plaintiff on 1 September 2022.

The Plaintiff’s case

4.  The Plaintiff’s case is straightforward. It claimed that invoices of Rent and Expenses were issued to the 1^st Defendant on a monthly basis. Between January 2021 and September 2021, the Plaintiff sent out monthly demand letters (besides April 2021) in the form of electronic mails to the 1^st Defendant for repayment of Rent and Expenses. Upon the termination of the TA 2019, the 1^st Defendant delivered up possession of the Premises to the Plaintiff on 1 September 2022 but without reinstating it to a ‘bare shell’ condition, the Plaintiff therefore claimed against the Defendants a sum of HK$55,550 as the expenses incurred for reinstatement.

5.  Despite five of the 15-month Rent Free Period had been enjoyed by the 1^st Defendant, the Plaintiff claimed that it is entitled to recover the Rent otherwise payable for such period as the 1^st Defendant acted in breach of clause 2.1(a)–(e) and 12.1 of the TA 2019. Thus, the total outstanding amount of Rent and Expenses claimed by the Plaintiff is HK$945,757 with a total interest of HK$380,221.03 at the rate of 2% per month.

The Defendants’ Case

6.  The general manager of the 1^st Defendant Lai Fu Yin, who was known as Leo (“Leo”) and the 2^nd Defendant filed their respective affirmations to oppose the summary judgment application. In gist, the Defendants averred the following and suggested that the TA 2019 was varied by a new agreement and counterclaimed for loss of profits based on fraud/misrepresentation made by the Plaintiff:-

(a)  The 1^st Defendant forwent opportunities to rent other premises to continue their lease with the Plaintiff by entering into the TA 2019;

(b)  The reason for the 1^st Defendant to ‘stay’ in BZone was based on the two fraudulent/negligent representations made by Chan who is the general manager of the Plaintiff, namely:-

(i)  The 1^st Defendant would enjoy an unconditional rent free period of 15 months during which the 1^st Defendant is exempted from the obligation to pay rent (the “Rent Free Representation”); and

(ii)  Advertisement and promotion of BZone by the Plaintiff so as to attract more tenants and visitors (the “Advertising Representation”);

(c)  Chan and Leo entered into an oral agreement in or around August 2020 that the 1^st Defendant would not terminate the TA 2019 whereas the Plaintiff would not demand payment of Rent due under the TA 2019 until the rate of rental reduction was agreed between parties (the “Withholding Payment Agreement”); and

(d)  It is unconscionable for the Plaintiff to revoke the Rent Free Period Representation and the Concession that were offered and accepted by the 1^st Defendant.

7.  Accordingly, the core issues for the Court to determine are:-

(i)  Whether the existence of the Withholding Payment Agreement is believable;

(ii)  If yes, whether the Defendants may raise any arguable defence;

(iii)  Whether the Plaintiff was entitled to retrospectively claim Concession and Rent for the Rent Free Period; and

(iv)  Whether there is any reasonable cause of action for the Defendants’ counterclaim.

Applicable Legal Principles on Summary Judgment

8.  The principles on summary judgment are well established and not in dispute. The burden is on the Defendants to show that there are triable issues. It has to satisfy the Court that it has a real or bona fide defence. Unless a difficult question of law is raised, the Court may determine points of law under the summary judgment procedure. See§14/4/12 of Hong Kong Civil Procedure 2023.

9.  In considering whether there are triable issues, the Court will not take the alleged defence on its face value but will test it against the evidence disclosed in the affidavit including matters such as contemporaneous documents and inherent probability of the defence. In Menfond Electronic Art & Computer Design Co Ltd v Wong Wang Tat Victor, DHCJ Lisa Wong SC (as she then was) referred to Paul Y Management Ltd v Eternal Unity Development Ltd & Others and said at §61: “… the defendant must condescend to particulars. The mere assertion in an affidavit of a given situation by the defendant does not, ipso facto, ground leave to defend. The defendant must satisfy the court that his evidence is capable of being believed and that on the basis of such evidence, there is a fair or reasonable probability of the defendant having a real or bona fide defence…”.

10.  With respect to a collateral agreement, the sole effect of which is to vary or add to terms of written documents, the Court would always view the same with some suspicion. In Huang Mucai v Cheng Zhen Shu HCA 1237/2011, DHCJ Lok (as he then was) said:-

“19. The defendant here is actually trying to establish a collateral contract the sole effect of which is to vary or add to the terms of the written documents, ie the Loan Agreement and the Repayment Agreement. The courts will always view such kind of collateral contracts with some suspicion, as any laxity would enable parties to escape from the full performance of the obligations of contracts unquestionable entered into by them. More especially, it would have the effect of lessening the authority of written contracts by making it possible to vary them by suggesting the existence of verbal collateral agreements relating to the same subject matter (see: Universal Dockyard Ltd v Trinity General Insurance Co Ltd [1989] 2 HKLR 160 (PC), per Lord Goff at 164H-165A)

20. If the defence in a summary judgment application rests upon a collateral oral agreement, the sole effect of which is to vary the terms of a written existing document, the threshold onus on the defendant is compounded by the onus to strictly prove such an agreement (see: Bank of India v Surtani Murlidhar Parmanand [1994] 1 HKC 7 (CA), per Nazareth JA at 11I-12C) Although the modern approach is that the courts are more willing to accept pre-contractual assurance giving rise to a collateral contract, the burden remains on the party alleging such a collateral contract to adduce credible evidence to prove its existence (see: Bank of China (Hong Kong) Ltd Fung Chin Kan (2002) 5 HKCFAR 515, per Litton NPJ at §§57).

21. Further, in a summary judgment application, the court is entitled to find that the terms of the alleged collateral contract are too vague and uncertain so as to render it (even if such exists) to be enforceable. The court can also find that the alleged collateral contract does not exist with reference to documentary evidence and conduct of the parties (see: Wing Siu Co Ltd v Goldquest International Ltd (No 2) [2002] 4 HKC 420, per Ma J ( as he then was) at §19).”

Whether the existence of the Withholding Payment Agreement is believable

11.  The principal defence relied on was the alleged existence of a Withholding Payment Agreement which was said to have arisen over a series of telephone conference between Chan and Leo in or around August 2020 when the 1^st Defendant started to default on payment of Rent. The Defendants averred that the Plaintiff agreed not to demand payment of the Rent due under the TA 2019 during the negotiation on the rate of rental concession between the Plaintiff and the 1^st Defendant until an agreement has been reached, and that the consideration for such Withholding Payment Agreement was that the 1^st Defendant agreed not to terminate the TA 2019.

12.  In considering the question of whether the defence of such agreement is believable, I take into account of the covenants, terms and conditions of the TA 2019 and all the contemporaneous documents including the rent invoices, WhatsApp chat records submitted by the Plaintiff and the Defendants. I also bear in mind that the Covid-19 pandemic rendered not only the 1^st Defendant’s but all business operations in BZone more onerous and unprofitable.

13.  The Court is of the view that it is striking from the perusal of the correspondence, including mails, emails and WhatsApp records, that there is not even a single piece of evidence submitted by the Defendants could support their allegation. Not only was the alleged Withholding Payment Agreement never mentioned in any of these correspondence, the Defendants’ allegations were contradicted by contemporaneous documents:-

(i)  In a letter that the 1^st Defendant allegedly issued in early September 2020 (the “Sept 2020 Letter”), the 1^st Defendant asked the Plaintiff for a 50% rent reduction (the “1^st Rent Reduction Request”). The Court bears in mind that Chan affirmed that he had never seen a copy of the Sept 2020 Letter;

(ii)  A letter was attached in a WhatsApp message from Leo to Chan dated 6 August 2021 where the 1^st Defendant admitted that they had no choice but to default in rent payment from August 2020 as the pandemic had caused their business financially untenable. As such the 1^st Defendant plead for an overall 70% rent reduction for the defaulted period (the “2^nd Rent Reduction Request”);

(iii)  The 1^st Defendant sent an email to the Plaintiff on 10 August 2021 making a similar request as the 2^nd Rent Reduction Request (the “3^rd Rent Reduction Request”); and

(iv)  The 1^st Defendant sent a WhatsApp message to Chan upon receipt of the Demand Letter and asked if the Plaintiff could continue to uphold the Rent Free Period provision.

14.  In addition to all these correspondence submitted by the Defendants, the Plaintiff had also consistently sent reminders and monthly invoices to the 1^st Defendant demanding rent payment at a rate consistent with the TA 2019.

15.  As the alleged Withholding Payment Agreement is obviously contradicted by the clear terms of the TA 2019, the Court finds it wholly extraordinary and unusual the 1^st Defendant never purported to put this agreement in writing. There is absolutely nothing in the correspondence emanating from the 1^st Defendant suggesting that an alleged oral agreement was reached or the 1^st Defendant’s obligation to pay rent was suspended until further agreement. It defies belief that if such a collateral agreement existed, it would not have been brought up in the forefront of the 1^st Defendant’s communications with the Plaintiff.

16.  Further, the effect of such collateral agreement would be an indefinite and open-ended loan where the 1^st Defendant would have no obligation to pay Rent and all the rent in arrear would be irrecoverable so long as the Plaintiff and the 1^st Defendant were in the course of negotiation on the rate of rental concession that would be acceptable to all parties. It is difficult to conceive of a rational business reason for the Plaintiff to agree to such a term.

17.  The 1^st Defendant further argued that the ‘consideration’ it provided under this Withholding Payment Agreement was its agreement on not to terminate the TA 2019 and to not move out from BZone. I cannot see how the Defendants could have any prospect of defeating the claim by this point as this so-called consideration is plainly not a sufficient consideration. The Court bears in mind that there was no break clause under the TA 2019 and the Plaintiff would have to enforce the TA 2019 in its entirety if the 1^st Defendant opted to terminate the agreement prematurely. In this connection, I find the authority submitted by Ms Yu, Counsel for the Plaintiff useful where Hon Tang, Acting CJHC in §49 of Chong Cheng Lin Courtney v Cathay Pacific Airways Ltd CACV 7/2010 stated that, “It is trite law that past consideration is no consideration. in particular, a contracting party cannot use his promise to perform, or his actual performance of, a pre-existing contractual obligation as consideration for a new promise in his favour by his opposing contracting party. Some fresh consideration is required.”

18.  In the context of consideration, the Court therefore simply does not see what the Plaintiff could gain from agreeing to this collateral agreement and thus the Defendants’ defence on this point must fail.

19.  It is true that in the present case there is no evidence to contradict the Defendants’ allegations because the allegation of such oral collateral agreement is nothing more than a bare assertion which is wholly unsupported by evidence.

20.  The irresistible inference from the absence of any mention of the existence of the collateral agreement in the correspondence elicited above together with matters aforementioned in §§16-18 lead to the inevitable conclusion that the defence of there being a Withholding Payment Agreement is pure “moonshine” and not believable.

Is the Withholding Payment Agreement an arguable defence

21.  Even if I am wrong and the existence of the Withholding Payment Agreement should be regarded as a believable factual allegation, the Defendants still could not rely upon this collateral agreement to raise any arguable defence to the Plaintiff’s claim because the nature of the alleged Withholding Payment Agreement is no more than an agreement to agree and thus uncertain and unenforceable as a contract.

Concession and Rent for the Rent Free Period

22.  The Defendants claimed that the Plaintiff is estopped from claiming Rent for the Rent Free Period because it is unconscionable for the Plaintiff to resile from the Rent Free Representation. The Defendants’ lawyers argued that the 1^st Defendant was only willing to enter into the TA 2019 in reliance on the unconditional Rent Free Representation due to the substantial amount of rental reduction. The doctrine of promissory estoppel should operate to extinct the Plaintiff’s rights in pursuing such claim.

23.  A promissory estoppel may be said to arise where (a) the parties are in a relationship involving enforceable or exercisable rights, duties or powers; (b) one party (the promisor), by words or conduct, conveys or is reasonably understood to convey a clear and unequivocal promise or assurance to the other (the promisee) that the promisor will not enforce or exercise some of those rights, duties or powers; and (c) the promisee reasonably relies upon that promise and is induced to alter his or her position on the faith of it, so that it would be inequitable or unconscionable for the promisor to act inconsistently with the promise.

24.  To establish an equity under the estoppels, there must be an underpinning element of unconscionability. A claimant has to establish that it is unconscionable for the promisor or owner of the land to act in such a way as to defeat the expectation that the promisee or claimant has been encouraged to believe that he had. Indeed, the requirement of unconscionability is now regarded as an essential element of any form of estoppel. A relevant factor for determining whether the promisor’s or owner’s conduct has been unconscionable is whether the detriment is sufficiently substantial, and this is to be tested by whether it will be unjust or inequitable to allow the assurance to be disregarded. Further, this is to be considered as at the time at which the promisor or owner (ie the person who has given the assurance) seeks to go back on it. The above matters have to be approached as part of a broad inquiry as to whether it is unconscionable in all the circumstances for the promisor or owner to resile from the promise or assurance, and in approaching such broad inquiry the judge has to stand back and look at the matter in the round.

25.  In addressing this point, the Court is to take into account the representations made by the Plaintiff before the parties entered into the TA 2019 and the alleged ‘detriment’ suffered by the 1^st Defendant.

26.  In my view, the arguments based on promissory estoppel is bound to fail because first, owing to the maxim of equity follows the law, the Plaintiff is entitled to claim the Rent during the Rent Free Period based on the Defendant’s failure to observe and/or perform certain terms of the TA 2019. Secondly, the ‘detriment’ allegedly suffered by the 1^st Defendant is not something which the Court would accept for the purpose of establishing promissory estoppel.

27.  It is not disputed that the 1^st Defendant has failed to meet its payment obligations including the Rent and Expenses for the period from August 2020 to August 2022. The Plaintiff’s case is that these failures triggered the operation of clause 11.1 of the TA 2019 which provides that the Plaintiff would be entitled to retrospectively claim an amount equivalent to the Rent for the Rent Free Period. For the sake of clarity, I quote the terms of the said clause 11.1 herein below:-

“The Tenant shall be entitled to such rent free period (if any) as set out in The Third Schedule, hereto PROVIDED that during such rent free period the Tenant shall be responsible for payment of the management fee, government rates and rent, air-conditioning fee, promotional fee and all other outgoings in respect of the said premises and shall perform and observe all terms and conditions/ contained in this Agreement save and except the obligation to pay rent.

In the event the Tenant shall fail to comply with, observe or perform any terms or conditions of this Agreement, the Tenant’s right to such rent free period shall/immediately become null and void and the rent otherwise payable for such period shall, even if having been utilized, be recoverable for such period thereafter without prejudice to the Landlord’s other rights or remedies reserved hereunder or otherwise under the laws.”

28.  The Defendants’ lawyers argued that such Rent Free Representation is ‘unconditional’ as if it is a promise independent from the 1^st Defendant’s obligation to pay Rent. I do not agree. The Rent Free Period in the present proceedings was introduced as an inducement to the 1^st Defendant to perform the TA 2019 in accordance with its terms. On a proper and prudent legal analysis, the 1^st Defendant had the use and occupation of the Premises during the Rent Free Period. The obligation to pay, whether with retrospective or prospective effect, was just deferred performance of its primary obligation to pay rent, though it would have been waived at the end of the term if the 1^st Defendant had fully observed the terms of the TA 2019. Since the Court is not persuaded that there could be other collateral agreements or secondary obligation under the TA 2019, the only obligation of the 1^st Defendant is to pay rent per month throughout the entire term of the tenancy.

29.  Since the 1^st Defendant failed to prove this threshold requirement, it would be futile and unrealistic to consider the detriment to the Defendants, weighed against the Plaintiff’s legitimate interest and proportionality. The breaches of not paying rent were substantial and fundamental, and despite the Plaintiff having given the 1^st Defendant numerous notices to rectify the breaches, the 1^st Defendant not only did not rectify the breaches, but instead continued committing further breaches until the end of the TA 2019. The Court finds that there is no valid defence to the Plaintiff’s claim for Rent during the Rent Free Period.

30.  As to the refund of the Concession, the Defendants’ argument was simply all over the place. On one hand they argued that the 1^st Defendant and the Plaintiff had agreed to such a Concession thus the Plaintiff is estopped from claiming the sum from the Defendants, but on another hand it was Leo’s evidence that it was an unconditional offer that the 1^st Defendant did not accept. See §§26-27 of Leo’s affirmation. In light of such confusing evidence given by the Defendants, the Court takes the view that the parties’ obligations must be bound by the terms and rationales of the TA 2019 as analysed in the foregoing paragraphs, and the Plaintiff is entitled to make such claim against the Defendants.

Cessation of Business

31.  The Plaintiff further averred that the 1^st Defendant committed a breach of clause 12.1 of the TA 2019 by ceasing business operations since May 2021. The Defendants denied such breach as it remained in business in BZone by keeping inventory at the shop and employees would return to the shop few days a week.

32.  The inconsistent evidence given by the Plaintiff and the 1^st Defendant could only be resolved at the trial with witnesses giving evidence. However, the Court views that it is unnecessary to determine this issue as it is already decided, as matters set out above, that the 1^st Defendant has defaulted in Rent payment, which is a more substantial breach comparing to the business operation clause. As such, further finding on whether or not the 1^st Defendant did operate business according to the TA 2019 during the pandemic would not change the outcome.

Counterclaim

33.  Turning to the Defendants’ counterclaim for misrepresentation, the pleaded representations of both Rent Free Representation and Advertising Representation are classic examples of words which simply cannot support any claim for misrepresentation. The first problem strikes me is that the Defendant pleaded these two representations were made fraudulently and/or negligently. It is trite that claims for fraudulent misrepresentation would have to include elements of dishonesty. The relevant principles can be found from §§184-186 in the dissenting judgment of Lord Millet in Three Rivers DC v Bank of England (No 3) [2003] 2 AC 1 where he said:-

“184. It is well established that fraud or dishonesty (and the same must go for the present tort) must be distinctly alleged and as distinctly proved; that it must be sufficiently particularised; and that it is not sufficiently particularised if the facts pleaded are consistent with innocence… This means that a plaintiff who alleges dishonestly must plead the facts, matters and circumstances relied on to show that the defendant was dishonest and not merely negligent, and that facts, matters and circumstances which are consistent with negligence do not do so.

186. … particulars of facts which are consistent with honesty are not sufficient… It is not open to the court to infer dishonestly from facts which have not been pleaded, or from facts which have been pleaded but are consistent with honesty. There must be some fact which tilts the balance and justifies an inference of dishonesty, and this fact must be both pleaded and proved.”

34.  The Defendants’ pleadings on the fraudulent element must fail as the particulars on falsity are illogical. Extracts of some of the particulars were pleaded as follows:-

“Rent Free Representation

(c) The Plaintiff made the Rent Free Representation to induce the 1^st Defendant to enter into the TA 2019 without genuine commitment to waive the Rent for the Rent Free Period.

(d) The Plaintiff therefore made the Rent Free Representation knowing that it was false, or did not have an honest belief that it was true, or was reckless, not caring whether it was true or false.

Advertising Representation

(e) The Plaintiff has the capability to arrange advertisements to promote the BZone as a specialized area in wedding business.

(f) The Plaintiff however took no step to advertise or promote the BZone and never had any genuine intention to do so.

(g) The Plaintiff therefore made the Advertising Representation knowing that it was false, or did not have an honest belief that it was true, or was reckless, not caring whether it was true or false.”

35.  In the Defendants’ submission, their lawyers even went so far to suggest that the 1^st Defendant was induced by fraud to entering into the TA 2019. The Court bears in mind that covenants, terms and conditions of the TA 2016 and TA 2019 were very similar in which both contained a clause in relation to a rent free period. The 1^st Defendant should be no stranger to the concept of rent free period, which formed part of the tenancy agreement, rather than what the Defendant suggested a standalone unconditional obligation from the Plaintiff. The Court is not in the slightest convinced that the Rent Free Representation was made inconsistent with the written term of the TA 2019.

36.  As discussed in §28, the Court finds that the Rent Free Period was introduced as, unequivocally, an inducement to the 1^st Defendant to perform the TA 2019 in accordance with its terms. It is beyond dispute that the Plaintiff upheld its obligation to waive Rent for the Rent Free Period as stipulated in TA 2016. There is no basis to suggest that the Plaintiff never had the intention to provide the Rent Free Period to the 1^st Defendant and there is simply no room for an argument of fraud or misrepresentation. In fact, this is a very straightforward case where a landlord tries to enforce his rights under the tenancy agreement when his tenant defaults in payment.

37.  In connection with the alleged fraudulent Advertising Representation, it was tenuous and contradicted by evidence. First, there was no evidence to show how, when and where such representation was made, and even if it was made, the Court would view it as a mere proposal, forecast or opinion rather than a promise from the Plaintiff. In any event, the Plaintiff was able to provide evidence of their compliance, showing that the BZone has set up an account on social media with some posts advertising the 1^st Defendant’s business.

38.  For reasons discussed above, the counterclaim based on misrepresentation and proprietary estoppel is unmeritorious.

Damages for reinstating and restoring the Premises

39.  Ms Yu asked the Court to consider the further breaches of clauses 2.1(ar) and 2.1(as) of the TA 2019 committed by the 1^st Defendant as it did not reinstate and restore the Premises to a ‘bare shell’ condition before delivering up possession to the Plaintiff at the end of the tenancy. The Defendants’ lawyers pointed out that this relief was not pleaded in the Plaintiff’s Statement of Claim or the Summons. Ms Yu argued that the Statement of Claim did seek ‘vacant possession’ and ‘damages to be assessed’.

40.  The Court noted that such allegation and thus claim for costs of reinstatement and restoration were only raised in the 2^nd Affirmation of Chan. It also came to my attention that the Writ was taken out on 16 November 2021 and the Summons was taken out on 17 August 2022, which are before the 1^st Defendant delivered up possession of the Premises to the Plaintiff.

41.  It would certainly not be possible for the Plaintiff to plead a case in respect of an event which has not yet arisen at the time of pleading but the Plaintiff did not subsequently make any application to amend its Statement of Claim. Deputy High Court Judge Marlene Ng (as her ladyship then was) in Tso Yuk Yin v Wan Wai Hung [2018] HKCFI 2798 stated in §39 that once a plaintiff invokes the summary judgment procedure and as far as the plaintiff’s claim is concerned, “(a) the statement of claim must be good and complete in itself, any defect or omission therein cannot be corrected or supplemented by affidavit, and the summary judgment will be dismissed if the defect is of substance, (b) the summary judgment application has to proceed on the case as pleaded, which facts have to be verified on affidavit, and (c) where the plaintiff’s assertions were materially different and/or inherently inconsistent with his pleaded case, he will have failed to verify his claim as pleaded and summary judgment should not be granted.”

42.  I am of the view that the assertion in relation to reinstatement was not disclosed in the Statement of Claim sufficiently to allow the Defendants to appreciate the case they have to meet. I therefore consider it is inappropriate to grant summary judgment for this relief. Having said that, the matter of the Defendants’ duty to reinstate the Premises cannot be seen as a new cause of action, but essentially an alleged breach of some particular clauses of the TA 2019 that the Plaintiff did not plead. The Court has already concluded that the Defendants’ defence and counterclaim raise no triable issues, and I envisage very little factual disputes can arise from the 1^st Defendant in this respect, save from the mitigation on damages.

Conclusion and Orders

43.  The 2^nd Defendant being the 1^st Defendant’s guarantor will be liable for all the outstanding payments under the TA 2019, mesne profits and damages from the 1^st Defendant. For the reasons given, summary judgment is granted for the Plaintiff against the 1^st and 2^nd Defendants in matters contained in §1(b) of the Summons, being the total sum of Rent, Expenses and relevant interests owing to the Plaintiff since the 1^st Defendant defaulted in rent payment from August 2020. As the calculations therein were done prior to the 1^st Defendant moving out from the Premises, the Court perused and accepted the calculations exhibited in Chan’s 2^nd affirmation and adopt the latest calculations as shown in Schedule A of Ms Yu’s submissions, which took into account of the interest incurred up to 7 February 2023. As such, I would make order in terms of §§31 (a) – (c) per Ms Yu’s speaking note submitted at the hearing.

44.  I also make an order that the Counterclaim of the 1^st and 2^nd Defendants must be struck out.

45.  As regards the matters contained in §3 of the Summons, I dismiss the Plaintiff’s application for further relief with unconditional leave to the Defendants to defend this part of the case. Hopefully, this Ruling has dealt with the contentious matters and the parties can now devote their energies to resolving this outstanding matter amongst themselves. There should not be much to argue about as all affirmations will stand as part of the parties’ evidence should this issue have to proceed to trial. As such I order the parties to file joint proposed directions (agreed or otherwise) for the disposal of the outstanding issue between them within 35 days from the date hereof.

46.  Costs should follow the event. I have taken into account that the Plaintiff has substantially succeeded in its application, and thus I make an order nisi that the 1^st and 2^nd Defendant do pay 90% of the Plaintiff’s costs of and incidental to this application with certificate for counsel. Both parties have already submitted their Statement of Costs for summary assessment, and the Defendants’ solicitors are invited to submit their opposition in relation to the Plaintiff’s costs within 14 days from the date hereof. I also order that the costs order nisi shall be made absolute if no application to vary the same is made within 14 days hereof.