CHINA GLOBAL (ASIA) LTD v. SLATE GLOBAL LTD

LDPD 2890/2010

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATIONNUMBER LDPD 2890 OF 2010

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BETWEEN

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JUDGMENT

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Introduction

1.  There are 2 matters before me.  The Applicant sued the Respondent for non-payment of rent, recovery of possession, and so forth.  The Respondent denied the claim and said that it was not the tenant.  It further took out the third party proceedings against its ex-employee for indemnity of loss.

Background

2.  On 19 November 2010, the Applicant commenced the present proceedings.

3.  It said that, by a tenancy agreement (“the Tenancy Agreement”) dated 14 December 2009, the Respondent agreed to lease from it the premises known as Flat B, 2^nd Floor, Vienna Mansion, No. 55 Paterson Street, Hong Kong (“the Premises”) for residential purpose of 2 years from 14 December 2009 to 13 December 2011 at the monthly rent of $33,000.

4.  However, the Respondent failed to pay rent as from 14 October 2010.  The Applicant therefore asked for, inter alia, vacant possession of the Premises, payment of outstanding rent, interests and costs.

5.  On 31 December 2010, as no Notice of Opposition was filed, the Applicant obtained a default judgment against the Respondent.

6.  The Respondent took out an application of setting aside on 9 March 2011. Later, H.H.Judge M. Wong allowed the same and further gave directions as to the conduct of the proceedings, including filing and serving its Notice of Opposition by the Respondent as well as its issuance of the third party proceedings by a deadline, if it was to be done so.

7.  The Respondent did so.

(a) In its Notice of Opposition, it pleaded, inter alia, that :

(i) The Tenancy Agreement was signed by the Third Party, Ms. Katrina Wang Leigh (“Ms. Wang”), for the Respondent.

(ii) Although Ms. Wang was the group manager of the Respondent, she did not have the authority to enter into the Tenancy Agreement. She only told Mr. Ryan David Marshall (“Mr. Marshall”), one of the 3 directors of the Respondent, that she intended to rent the Premises in late November or early December 2009.

(iii) In any event, the Applicant waived its right because it accepted late payment of rent from Ms. Wang.

(iv) The Respondent did not oppose the Applicant to recover possession of the Premises. It was made known to the Applicant on 2 February 2011, and as such, no mesne profits should be recovered after 7 February 2011, i.e. 3 business days after 2 February 2011.

(b) On the other hand, in its Third Party Notice, the Respondent sought an indemnity from Ms. Wang because she rented the Premises for her own domestic purposes only and she was not authorized by the Respondent to enter into the Tenancy Agreement.

8.  Ms. Wang disagreed.

(a) She said that she was duly authorized by Mr. Marshall to sign the Tenancy Agreement. She also provided some details of her Notice of Opposition filed on 21 April 2011.

“(5) …

Particulars

(1) …

(2) Marshall kept the company chop of the Respondent personally and he was the only person who had access to the company chop;

(3) Marshall orally agreed with Wang, prior to the signing of the preliminary agreement, that the Respondent should enter into the Tenancy Agreement and Wang should sign the Tenancy Agreement for and on behalf of the Respondent;

(4) On or around early December 2009, Wang signed a document prepared by Marshall confirming that Wang would make all payments under the Tenancy Agreement;

(5) Marshall sent a copy of the business registration certificate to the estate agent in charge of the Tenancy Agreement by an email dated 5 December 2009;

(6) On or around 11 December 2009, Wang requested the company chop from Marshall and informed him that the specific purpose for borrowing the company chop was to affix it on the preliminary tenancy agreement. Marshall authorised this and gave the company chop to Wang. Wang and the estate agent then attended the Premises and Wang signed a preliminary tenancy agreement in the presence of the estate agent. Wang affixed the company chop of the Respondent on the preliminary agreement in the presence of the estate agent. Wang then returned the company chop back to Marshall;

(7) On or around 14 December 2009, Wang sent a copy of the Tenancy Agreement by email to Marshall who was then overseas. A few days later, Marshall sent the Tenancy Agreement back to Wang by courier after affixing the company chop on it; and

(8) In proceedings number LPDP 1735/2010, Wang was authorised by the Respondent to attend the hearing on 30 August 2010 at the Lands Tribunal. Marshall prepared the authorisation letter and affixed the company chop of the Respondent on the letter.

…”

(b) It was further averred that Mr. Marshall had in any event ratified the signing of the Tenancy Agreement by Ms. Wang, particulars of which were :

“6 …

Particulars

(1) Marshall, as COO and director of the Respondent, had the power to ratify the contract, i.e. the Tenancy Agreement;

(2) In addition to Wang and Marshall’s oral agreement to perform the Act, Marshall gave the company chop to Wang and specifically authorised her that she could affix the chop on the preliminary tenancy agreement. Marshall also affixed the company chop on the Tenancy Agreement. Therefore, Marshall had full knowledge of all the material circumstances in which the Act was completed;

(3) The letter of authorization signed by Marshall authorizing Wang to attend the Land Tribunal hearing in proceedings LDPD 1735/2010 clearly showed conduct implying ratification of the Act; and

(4) Notwithstanding our claims that the Respondent had knowledge of the Act on or around December 2009, the Respondent definitely had knowledge of the Act on or around mid-August 2010 due to the letter of authorisation signed by Marshall. However, despite its knowledge, the Respondent did not take any action until 9 March 2011. The acquiescence on the part of the Respondent constitutes ratification of the Act;

…”

9.  Parties thereafter went before H. H. Judge M. Wong again on 23 May 2011.  Apart from giving a number of directions as to the filing and serving of witness statements, the Learned Judge adjourned the proceedings for a trial.

10.  The trial took place before me on 4 July 2011.  All parties were represented.

(a) The Applicant by Mr. T. Wong of Counsel.

(b) The Respondent by Mr. P. Hanusch of Messrs. Deacons.

(c) Ms. Wang, i.e. the Third Party, by Mr. E. Alder of Counsel.

11.  Having heard all the evidence of the parties, they told me that they wanted to submit their written closing submissions within14 days later.  All of them did so later.

Decision

12.  Now, upon consideration of all the evidence authorities and submissions before the Court, I have decided to grant judgment for the Applicant and dismiss the third party proceedings.  My reasons appear in below.

Authority?

13.  The major dispute in the proceedings is whether Ms. Wang was authorized by the Respondent to enter into the Tenancy Agreement.  On balance, I find that Ms. Wang did have the actual authority.

(a) To answer on the question, one needs to decide on whose case is to be preferred to.

(b) The Applicant called its property Manager, Mr. Chong, to give oral testimony. It also adduced a number of documents, including the Tenancy Agreement. However, the Applicant’s case is not controversial. Ms. Wang signed the Tenancy Agreement for the Respondent. On 21 July 2010, the Applicant commenced LDPD 1735/2010 in this Tribunal for non-payment of rent. Outstanding rent and costs were settled. However, rent became outstanding again and the present proceedings were therefore instituted.

(c) As between the case of the Respondent (Mr. Marshall) and that of Ms. Wang, which is better?

(d) Upon thought, with respect, although there were some inaccuracies in the evidence of Ms. Wang, her case is much better than that of Mr. Marshall. His case is far from believable.

14.  Both Mr. Wong and Mr. Hanusch made quite some comments on Ms. Wang.

(a) Mr. Wong said in his closing submission that:

“5. …

6. Wang made many and substantiate corrections in court to her earlier written Witness Statement and other representations made on her behalf by her solicitors. The Witness Statement was previously signed with a Statement of Truth.

7. Wang attributed her changes because of misunderstanding or mistakes.

8. The Applicant submits that Wang had to change her story in the face of documents and other evidence contradicting her.

9. Wang is not a creditable witness, even though her evidence may assist the Applicant…”

(b) Mr. Hanusch also commented in his Closing Submissions:

“12. During Wang’s XM, she accepted the Landlord’s payment schedule… as correct and admitted her following statements were untrue:

(a) her statements, made though her solicitors by letters of 21.4…and 3.5.11…, that the Rent for 14.10 to 13.11.10 was received on 29.10.10…, whereas that rent was only received on 30.11.10…

(b) her statements, made though her solicitors by letters of 21.4…and 3.5.11…, that the Rent for 14.11 to 13.12.10 was received on 30.11.10…, whereas that rent was only received on 31.13.10…

(c) her statements of 9.3.11 towards Chong that she was up to date on the rent …, whereas the rent for 14.2 to 13.3.11 was only received on 23.3.11…

(d) Wang’s grounds of opposition of 21.4.11…, stating that as at 21.4.11, there was no outstanding rent due under the Agreement, whereas the rent for 14.4 to 13.5.11 was only received on 30.4.11….

13. Further, Wang admitted her following statements were untrue:

(a) her e-mail to Chong of 9.3.011…, claiming she paid $16,500 to the Landlord’s lawyers, as she never made such payment …

(b) her witness statement that she met Marshall at Inn Side Out a few days after she had moved into the Apartment (i.e. a few days after 14.12.10) …and that she signed the PnL Document on that occasion, whereas she signed that document on 4.12.10 and no meeting took place at all shortly after she signed the Agreement…

(c) her statements, made through her solicitors by letter of 23.3.11…, that on or around 11.12.09, she attended the Apartment with Marshall and Ho, they signed the preliminary tenancy agreement and Marshall affixed the Chop to that agreement in Wang’s and Ho’s presence. It was however Wang who affixed the Chop and Marshall never met Ho or visited the Apartment…

(d) her statement that the authorisation letter to the Lands Tribunal of 26.7.10, was prepared by Marshall…, whereas it was Wang who prepared the letter.”

15.  I agree with the above comment but would go on to say that :

(a) If there were only 2 cases before this Court, namely, these of the Applicant and Ms. Wang, the former should be preferred to.

(b) The problems of the case of Ms. Wang only go to details and particulars.

(c) However, with respect, Mr. Marshall has not been telling the Court the whole truth.

(d) In the alternative, I also agree to adopt the approach suggested by Mr. Wong. One simply needs not bother the evidence of Ms. Wang. The case of the Respondent has been, on its own, far below the standard of balance of probabilities.

16.  As to Mr. Marshall, there is almost no doubt that he has allowed Ms. Wang to enter into the Tenancy Agreement for the Respondent, although she should be held responsible for everything.

(a) On 4 December 2009, Mr. Marshall prepared a statement of account between the Respondent and Ms. Wang. The document stated, inter alia, that :

“ …

Any housing contracts that are made with SGL and any external body for Katrina Wang will be paid directly by her and the SGL has no liability …”

(b) After the signing of the provisional tenancy agreement, Ms. Wang needed the chop of the Respondent on the Tenancy Agreement. On 9 December 2009, she sent an e-mail to Mr. Marshall.

“ Sorry for all the trouble.

Please see attached the page of the Tenancy Agreement that needs my signature and company chop. Can you please print out 2 copies and stamp it with the company chop next to where the tenant (me) have to sign on both copies. Then can you please send it back by express post ASAP as I need to have this done at the latest by this weekend.

Thanks again! You are the best. Have a great time there.”

Mr. Marshall then did so accordingly.

(c) Ms. Wang appeared not to be a very good tenant. For whatever reasons, she failed to pay rent on time. It triggered the said LDPD 1735/2010 proceedings. Mr. Marshall did apply the chop of Respondent twice on documents therein authorizing Ms. Wang to handle the litigation, including the letter of authorization dated 26 July 2010.

(d) Although Mr. Marshall tried to defend for himself by suggesting that there were blanks left in the said letter of authorization when he applied the company chop thereof. I regret to say that such assertion is not to be believed. Further, even if it were true, one could simply know the nature of the document by reading the printed words thereon.

(e) On 9 August 2010, Ms. Wang wrote to this Tribunal in LTPD 1735/2010, requested for interpretation arrangement to be made at the call-over hearing.

“ Re: Application No. LDPD 1735/2010

Attention: Court No. 1

I, Katrina Leigh Wang, wish to testify in English, therefore request the arrangement of an English Court Interpreter to attend the hearing before the Lands Tribunal on 16 August, 2010 at 9:30 am at Court No. 1, 1^st Floor, Lands Tribunal Building, 38 Gascoigne Road, Kowloon. If you require additional information, please do not hesitate to contact me on 6976 xxxx.

Yours sincerely,

[Signature of Ms. Wang] [Chop of the Respondent]

Signature of Respondent/the Authorised representative of Respondent.”

(f) Ms. Wang later did attend the call-over hearing in LDPD 1735/2010. The Tribunal accepted that she had been duly authorized to appear for the Respondent in the proceedings. Judgment was granted for the Applicant with costs agreed at $16,000. Ms Wang eventually paid all the outstanding rent as well as the said costs by the deadline, as directed by the Judge. Relief against forfeiture was therefore granted to the Respondent.

17.  I further agree with the observation made by Mr. Alder in his closing submission.

“ Mr. Marshall’s case

68. The Company through Mr. Marshall denies that it authorized Ms. Wang to enter into a lease of the Premises on its behalf. Mr. Marshall’s position is that the purpose of the long train of acts above, including executing the TA itself, was just to provide a “reference” to the Landlord. The Tribunal will have to consider whether this is credible.

69. Typically, an employer company wishing to support an employee by confirming his or her status as an employee would write a short “To whom it may concern” type letter as a reference... Crucially, there is no such letter in this case. Mr. Marshall agreed in cross examination that if the Company had wanted to provide a reference, it would have been better to write an ordinary reference letter.

70. There would be no need to engage in any other acts. There is no such common practice in Hong Kong of temporarily lending a chop to an

employee to produce to a third party as some form of “reference”. Mr. Marshall accepted as such in cross examination.

71. Mr. Marshall sent the Company’s BR certificate to the landlord by email on 5 December 2009...stating “This is〔in〕reference to Katrina Wang’s rental”.

72. It is respectfully submitted that Mr. Marshall has invented the whole concept of a “reference” after the event in an attempt to avoid liability in this matter.

73. It may well be that when reviewing the files with the Company’s solicitors he spotted the word “reference” in the 5 December 2010 email, where the word is used in quite a different sense, and recreated the whole reference concept based upon it. There never was any question of a reference in background facts of this case.

74. Mr. Marshall’s case, with respect, becomes more unsustainable and absurd as time moves forward. He cannot seriously expect this Tribunal to believe that he believed that everything he did in this matter, including affixing the chop to the execution page of TA and affixing the chop to the three documents for the earlier proceedings, was all part of “giving a reference” for Ms. Wang to be a lessee of the Premises.”

18.  Hence, on balance, I find the following facts.

(a) Upon the request of Ms. Wang, Mr. Marshall did agree that she could enter into the provisional tenancy agreement as well as the Tenancy Agreement in the name of the Respondent.

(b) In order to protect the position of the Respondent and to allow Ms. Wang to “use” its name, on 4 December 2009, Mr. Marshall asked her to acknowledge a statement that she would pay everything under the Tenancy Agreement and the Respondent was not responsible for it.

(c) Things went well until July 2010 even when LDPD 1735/2010 was instituted. All that time, Ms. Wang was still working with Respondent and hence, Mr.Marshall simply “authorized” her to take care of the proceedings herself. She did so.

(d) Ms. Wang later left the Respondent in August/September 2010. Apparently, parties’ relationship was not the same as before.

(e) The proceedings herein were commenced in November 2010, and the Applicant obtained the default judgment in December 2010. Upon being aware of the same, Mr. Marshall was extremely concerned. He tried to protect the Respondent. He defended for the main action and issued the third party proceedings against Ms. Wang. However, he went to the extent of telling that he had not authorized Ms. Wang to enter into the Tenancy Agreement. It is not true.

19.  Having decided that the Respondent is the “tenant”, I now move to deal with other defenses raised by it.

(a) Has the Applicant waived its right by allowing and accepting late payments? With respect, such argument is a non-starter. I cannot be satisfied that it has been established as a matter of law and/or by way of fact finding.

(i) Chitty on Contracts, Vol. 1, states at p.1469 that waiver (or forbearance) means:

“Where one party voluntarily accedes to a request by the other that he should forbear to insist on the mode of performance fixed by the contract, the court may hold that he has waived his right to require that the contract be performed in this respect according to its original tenor … Waiver (in the sense of “waiver by estoppel” rather than “waiver by election …”) may also be held to have occurred if, without any request, one party represents to the other that he will forbear to enforce or rely on a term of the contract to be performed or observed by the other party, and the other party acts in reliance on that representation.”

I do not consider that the Respondent has satisfied me with the above.

(ii) As a matter of fact, the Applicant has kept on chasing for outstanding rent, including taking out 2 proceedings in the Lands Tribunal. There is nothing showing that it has waived any of its right under the Tenancy Agreement.

(b) The Respondent also said that it had at all times agreed that the Applicant could get back possession of the Premises. It was Ms. Wang who was in possession of the Premises and held the keys thereof. The Respondent should not be liable. However, such argument does not hold any water, once I have found that the Respondent itself is the tenant. It allowed/authorized Ms. Wang to enter into the Tenancy Agreement in the Respondent’s name. As far as the Applicant is concerned, it will and has to look to the Respondent to observe all the tenant’s obligations under the Tenancy Agreement.

Third Party Proceedings

20.  At the outset of the trial, I discussed with the parties some procedural matters.

(a) There were 2 separate proceedings before me (i) the main action, and (ii) the third party proceedings.

(b) The Applicant only sued the Respondent. I would not be able to enter any Judgment for the Applicant against the Third Party, Ms. Wang, because the former has not sued her.

(c) Parties were in the Lands Tribunal. It was a special tribunal established with limited jurisdiction only. Section 8 of the Lands Tribunal Ordinance (Cap. 17) set out the same. It appeared to me that the jurisdiction did not cover the indemnity sought by the Respondent against the Third Party. I therefore asked for assistance from the parties.

21.  As the matter has developed, the Applicant is going to get judgment against the Respondent. Should Ms. Wang be held liable to indemnify the Respondent?

22.  Upon consideration, I simply do not have the necessary jurisdiction to deal with the argument. None of the parties has able to point to any legislation or to produce any cases to answer the question on lack of jurisdiction.

23.  Should I then transfer the Third Party Proceedings to the District Court, as suggested by Mr. Hanusch?  After consideration, I have decided to decline the same.

(a) Section 8A of the Lands Tribunal Ordinance (Cap. 7) gives this Tribunal the discretion to transfer.

“8A. Transfer of proceedings to the Court of First Instance or the District Court

(1) The Tribunal may transfer to the Court of First Instance or the District Court any proceedings instituted before the Tribunal which are within the jurisdiction of the Court of First Instance or the District Court, but which –

(a) are not within the jurisdiction of the Tribunal; or

(b) the Tribunal considers should in the interests of justice be so transferred.

(2) Proceedings may be transferred under subsection (1) at any stage.

(3) Where the Tribunal transfers proceedings under subsection (1) the practice and procedure of the Court of First Instance or, as the case may be, the District Court shall thereafter apply.”

(b) In my view, a transfer is not appropriate in the circumstances.

(i) As suggested by Mr. Alder, the Third Party Notice herein did not disclose or disclose clearly the basis of the indemnity sought.

(ii) I do not forget that Ms. Wang did depose that she should be responsible for all matters under the Tenancy Agreement.

(iii) However, how far does it go?

(iv) Probably, it should not be extended to cover costs spent by the Respondent who has run a case which is not true.

(v) It must be a good idea for both the Respondent and Ms. Wang to have a careful thought over the matter before anything is to be taken further, if necessary.

24.  I therefore will dismiss the Third Party Proceedings for lack of jurisdiction.

25.  As to the exact terms of the judgment to be entered for the Applicant against the Respondent, I need further assistance from the parties because it is not entirely clear, as of the date hereof, if there is still any outstanding rent. Parties informed me at the trial that Ms. Wang had paid up all the outstanding rent.

(a) As of the date hereof, if there is nothing due, no judgment on rent can be entered. There will only be an order for costs only.

(b)On the other hand, if there is indeed overdue rent, usual judgment for possession, payment of rent and relief against for forfeiture, as well as costs will be granted.

I will leave the matter in the good hands of the parties to agree with a draft, to be approved by this Tribunal, within 7 days, failing which the Applicant shall fix a hearing of 0.5 hour before me to resolve it.

26.  As to costs, I will make an order nisi in the followings.

(a) The Respondent do pay costs of the Applicant, including Certificate for Counsel for the hearing on 4 July 2011, to be summarily assessed by me, failing agreement by the parties within 35 days.

(b)There is no order as to costs between the Respondent and the Third Party in the Third Party proceedings.