SAR DEVELOPMENTS LTD v. WORLDEX STONE CLADDING ENGINEERING LTD

DCCJ 2193/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2193 OF 2007

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REASONS FOR DECISION

Background

1. This is the Plaintiff's application for summary judgment.  It seeks an order for possession of the property let under the terms of a tenancy agreement.  At the end of the hearing, I dismissed the Plaintiff's summons and indicated that the reasons for my decision would be handed down.  These are my reasons.

2.   The Plaintiff claims to be the registered owner of property in the New Territories described in the Statement of Claim as Lot No. 710.   The property is claimed to have been let to the Defendant under a Tenancy Agreement dated 20 August 1998.  The location of the property is described in paragraph 1 of the Statement of Claim as coloured  pink on the plan annexed to the Statement of Claim for identification purpose ("the Statement of Claim Plan").

3.   It is not in dispute between the parties that a Tenancy Agreement dated 20 August 1998 was entered into between the Plaintiff as landlord and the Defendant as tenant for a term of 2 years, and that upon expiration of the term on 31 August 2000, the tenancy has been extended on a month to month basis.  The property was let to the Defendant for industrial use.

4. According to the Tenancy Agreement, the property which was let by the Plaintiff to the Defendant was described as "Lot 710 RP", and of approximately 15,000 square feet. 

5. The Plaintiff claims that in breach of the Tenancy Agreement, the Defendant failed and refused to make payment of rent for certain months between 15 August 2002 to 14 May 2007, in the total sum of HK $184,000, and rates in the total sum of HK $8,060.  By reason of such failure on the part of the Defendant, the Plaintiff claims that it is entitled to forfeit the tenancy and to claim from the Defendant delivery of vacant possession of the property, together with payment of the rent and rates due. 

6. By way of defence, the Defendant disputes the location of the property let by the Plaintiff to the Defendant, as shown in the Statement of Claim Plan.  The Defendant annexes to its Defence filed in court a plan showing the area and location of the property agreed to be let by the Plaintiff to the Defendant for the Defendant's use ("the Defence Plan").  By way of comparison, the area of the property claimed by the Defendant to have been let under the Tenancy Agreement, and as shown in the Defence Plan, is larger than the area of the property colored pink on the Statement of Claim Plan.

7. After the filing of the Defence, the Plaintiff issued a summons under Order 14 of the Rules of the District Court ("Summons").  Under the Summons, the Plaintiff seeks final judgment including delivery of possession of the property let under the tenancy.  The judgment order sought under the Summons is for delivery of possession of the property as coloured pink on the plan annexed to the Summons ("Summons Plan"). 

8. In support of the Plaintiff's application for summary judgment, an affirmation was made by Law Man Nga to verify the facts of the Statement of Claim.  Amongst other things, a plan was exhibited to Law's affirmation ("LMN-2"), to verify the part of the property let to the Defendant under the Tenancy Agreement.  However, as the Defendant has rightly pointed out, the part of the property claimed by Law to have been let to the Defendant under the Tenancy Agreement and as colored pink on LMN-2, is different to the property coloured pink in the Summons Plan.  The area of the property identified in LMN-2 and in the Summons Plan are also different to the area of the property identified in the Defence Plan.

9. The Defendant raised various matters by way of defence to the Plaintiff's claim.  By way of summary, the Defendant relies on the following matters.

10.   First, it is claimed that the monthly rental had been reduced from 1 April 2002, and further reduced from 1 May 2003. 

11. Secondly, it is claimed that Parts IV and V of the Landlord and Tenant (Consolidation) Ordinance apply to the tenancy, and that the Tenancy Agreement had not been effectively terminated. 

12. Third, it is claimed that the Plaintiff had been in breach of the Tenancy Agreement, and had trespassed into the property let to the Defendant, by placing waste material there, damaging a truck on the property, and locking up the property for the period from September 2003 to December 2003, such that the Defendant had been deprived of the right of enjoyment of the property and had suffered loss and damage. 

13. Fourth, the Defendant claims that the property agreed to be let by the Plaintiff to the Defendant was an area of 15,000 square ft. and the Plaintiff had agreed or represented that two additional areas would be delivered to the Defendant for its use and enjoyment under the Tenancy Agreement, to make up the purported area of 15,000 square ft.  The Defendant claims that the Plaintiff was in breach of agreement or was liable for misrepresentation, in that these additional areas were never delivered to the Defendant. 

14. Finally, the Defendant claims that the Tenancy Agreement was subject to a condition that the property could be used as an industrial workshop, and that the Plaintiff would provide all assistance to the Defendant to enable the Defendant to obtain the relevant licence for such purpose.  The Defendant claims that the Plaintiff was in breach of such condition, as it was not in a position to assist or procure the Defendant the relevant licence, in that it was not the registered owner of the property affected.

Legal principles for Order 14

15.   The principles applicable to applications for summary judgment are clear.  Whilst it has been established that the onus is on a defendant to show that there are triable issues, or that he has a real or bona fide defence, it is on the other hand equally clear that Order 14 is for clear cases where there is no serious material factual dispute.  The procedure is entirely inappropriate where the plaintiff's entitlement to judgment is the subject of any serious dispute, whether of law or fact.  The defence set up need only show that there is a triable issue or question or that for some other reason there ought to be a trial.  Where there are unexplained features of both the claim and the defence which are disturbing because they bear the appearance of falsity and disreputable business dealings and questionable conduct, the court should not make tentative assessments of the respective chances of success of the parties or the relevant strengths of their good or bad faith, and should not on such an examination grant the defendant conditional leave to defend, but should give unconditional leave to defend (Billion Silver Development Ltd. v. All Wide Investments Ltd. [2000] 2 H.K.C. 262).

Whether there are triable issues or some other reason for trial

16. The peculiar aspect of the present case is that despite the Tenancy Agreement referring to Lot 710 RP as the property let, the Plaintiff acknowledges that it was not the entirety of Lot 710 RP which was actually let to the Defendant.  In the Reply and Defence to Counterclaim, and in the Law affirmation filed on behalf of the Plaintiff in support of the Summons, the Plaintiff claims that the part of the property let under the Tenancy Agreement was marked on the location plan attached to the Tenancy Agreement.  This plan was exhibited as "LMK-1".  The Plaintiff claims that in negotiating and entering into the Tenancy Agreement, the Defendant had expressly acknowledged and agreed that some part of the property was occupied by other persons for residential use, and that that occupied part would not be delivered to the Defendant.

17. The Plaintiff maintains that the part of the property sought to be delivered up by the final judgment sought in the Summons is the same as the part of the property agreed to be let under the Tenancy Agreement, and as acknowledged by the Defendant.  However, as I have sought to explain in the opening paragraphs of this Decision under "Background", there is great confusion in the evidence and from the documents filed in court as to the location of the property, possession of which is to be delivered up under the Summons.  Even on the Plaintiff's own case, the location of the property as shown in the Summons Plan, the location of the property as shown in LMN-2, and the location of the property as shown in the plan attached to the Tenancy Agreement as LMN-1, are all different.  Even at the end of the hearing on 14 December 2007, the differences have not been reconciled and explained to the satisfaction of the court.

18. The court can only give judgment or make an order the terms and ambit of which are clear and precise, such that a party is not under any doubt as to its rights or uncertainty as to its obligations under the judgment or order.  If the Plaintiff is unclear as to the precise area of the property let under the Tenancy Agreement, such that it cannot establish to the satisfaction of the court, and the Defendant, the exact location and area of the property to be delivered up by the Defendant under the order for possession to which the Plaintiff claims it is entitled, then the court simply cannot make the order.

19. The discrepancies in the Plaintiff's identification of the property claimed to have been let to the Defendant support the Defendant's defence.  By way of illustration, the property colored pink in the copy of the Tenancy Agreement exhibited as "LMN-1", identifying the part of the property let to the Defendant, includes the area claimed by the Defendant as one of the additional areas to be delivered to the Defendant.

20. The agreed reductions in the rent, and the fact that the Plaintiff's claim for rent does not cover the period in which the Defendant claims that the property had been locked and the Defendant had been deprived of access, further adds credibility to the Defendant's assertions.

21. On the face of the pleadings and evidence filed to date, it is clear that there is a serious factual dispute as to the location and area of the property let.  Before the factual matters in dispute can be resolved and judgment is given for the Defendant to deliver up possession of the area let under the Tenancy Agreement, the parties should be properly cross-examined as to the exact location and area of the property agreed to be let. 

22. The evidence also reveals aspects of the case which, albeit not amounting to disreputable business dealings, are nevertheless disturbing and raise questions as to the Plaintiff's good faith.

23. In the circumstances, I and satisfied that there are triable issues and that the matter should proceed to trial so that there can be proper cross-examination of the relevant witnesses to resolve the factual matters in dispute, including the area of the property agreed to be let under the Tenancy Agreement.

24. The Plaintiff's Summons is dismissed, with costs.

25. Although the hearing before me was conducted in Chinese, as the Defendant's affirmations and pleadings were all prepared in English, this Decision is in the English language.  If necessary, the Defendant may apply for a Chinese translation of this Decision.