LING TAT MING and Another v. LI YUK SANG

1994, No. A10024

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. The 1st plaintiff is the registered owner of the mezzanine floor of Shing Hing Building situated at 78-84 Lai Chi Kok Road, Kowloon. The 2nd plaintiff is the holder of a light refreshment restaurant licence thereof. By an agreement in writing dated 10 October 1989, the 1st plaintiff let the premises to the defendant for a term of five years for business purpose from 1 October 1989 to 30 September 1994. At the same time, the 2nd plaintiff permitted the defendant to use his light refreshment restaurant licence during the duration of the tenancy at a monthly licence fee of $2,000. Clause 7(g) of the tenancy agreement stipulates :

"It is hereby expressly agreed and declared that notwithstanding any statutory provision to the contrary the Tenant will promptly and punctually quit and deliver up possession of the said premises at the end or sooner determination of the tenancy hereby created."

2. It is not in dispute that Parts I, II, IV and V of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7 do not apply. The 1st plaintiff posted a notice of termination on the main entrance to the premises on three successive days since 12 March 1994 notifying the defendant to quit and deliver up vacant possession of the premises on 30 September 1994 or the next day after the end of six months from the service of the notice. There is no dispute of the posting of the notice.

3. Counsel informed me at the outset of the hearing that the claims for mesne profits, management fees, rates and licence fee could be the subject of agreement between the parties. The only outstanding issue is possession.

4. The defence is that after the first 3 years into the 5-year tenancy had passed, the 1st plaintiff orally agreed to renew the tenancy for a further 2 years after 30 September 1994 at the market rent available in September/October 1994. Relying on the oral agreement, the defendant spent $1,000,000 in renovating the premises which was used as a karaoke nightclub. The defendant produced an invoice from Hung Tat Engineering Company for the sum of $158,000 and a quotation from Lee Kai Construction Engineering for $686,000. The total amount of adding these two figures together is $844,000, $156,000 short of the $1,000,000 pleaded in the Defence. Even so, $844,000 is a substantial amount and one would expect receipts from these two companies. None were produced. The receipts are not only important for the purpose of these proceedings but are necessary documentary proof for tax return. I find it difficult to understand why the defendant had not asked for the receipts. If the renovation and redecoration had been carried out, there should be photographs showing the improvement. The truth of the matter, I conclude, is that no such renovation and redecoration were carried out.

5. Such an oral agreement, even if it existed, is not enforceable by virtue of section 3(1) of the Conveyancing and Property Ordinance which provides that :

"... no action shall be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person lawfully authorized by him for that purpose."

If there had been such an arrangement, it would be more probable than not that the parties would have consulted their lawyers and had the terms reduced to writing. The evidence and the circumstances are therefore consistent with the account of the 1st plaintiff that he never made such a promise and I accept his evidence on a balance of probabilities. The issue of estoppel does not arise.

6. The question of an oral agreement was first raised in a letter from solicitors for the defendant to the 1st plaintiff on 2 July 1994, nearly three months after the posting of the notice of termination on 12 March. I accept the evidence of the 1st plaintiff that by then he had no objection to continue letting the premises to the defendant or indeed letting it to anyone else who could pay the rent he demanded, i.e. $190,000 a month. The letter dated 1 September 1994 from Yam & Company, then acting for the 1st plaintiff, to Paul Kwong & Company was nothing more than an answer to enquiries for the monthly rental of a new tenancy. Subsequent correspondence between solicitors coupled with the issue of writ on 6 October 1994 made this demonstrably clear.

7. There would be judgment for the plaintiff for possession with costs.