XCHRX XIPHO DEVELOPMENT CO. LTD. v. ST. CHARE CORPORATION LTD. and Others

1996 No.A1849

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE OF THE HIGH COURT

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D E C I S I O N

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1. On 7th April 1997, Master Jones granted an application by the Plaintiff for summary judgment against D1-D7 in two actions pursuant to Order 14 RSC. D2-D7 appeal against the judgment. The issues in both actions are the same which relate to the non-payment of rent.

2. The Plaintiff is and was at the material times the registered owner of Unit Nos.1202-06 on the 12th Floor, Harbour Centre, No.25, Harbour Road Wanchai. These units were let to D1 for business purpose under a tenancy agreement dated 14th October 1994 for a period of 3 years from 15th September 1994 to 14th September 1997. Clauses 4(bb) strictly prohibits transfer, assignment, subletting, lending, sharing or parting with possession in any way.

3. D2-D7 were allowed into occupation of the premises as licensees under two Guarantees and Indemnities, both dated 18th October 1994 and in identical terms. D2-D7 moved out of the premises on 16th October 1995 and a letter of their removal was sent to the Plaintiff on or about 7th November 1995. The arrears of rent, rates and service charges were incurred from 1st November 1995 and according to the D2-D7 after they had moved out.

4. The issue is whether D2-D7 were responsible for the defaults of D1 to pay rent and other charges and if so whether the liability was limited to the period while they were in use and occupation or for the entire duration of the tenancy agreement. It is necessary to look at some of the clauses.

1. The Landlord hereby consents to the use and occupation of the said Premises by the Licensee(s) whether alone or jointly with the Tenant and declares that the Licensee(s) shall while in such use or occupation enjoy all rights and privileges granted to the Tenant by the said Tenancy Agreement.

2. The Tenant and the Licensee(s) agree and confirm that they will jointly and severally observe and perform all the terms and conditions of the said Tenancy Agreement and that if there shall be any breach thereof by the Licensee(s), then without prejudice to any rights which may have accrued to the Landlord by reason of any antecedent breach, the Licensee(s) shall forthwith vacate the said Premises and the Tenant shall no longer allow or permit the Licensee(s) to remain in the said Premises or any part thereof.

3. The Tenant and the Licensee(s) jointly and severally warrant and guarantee that the Tenant shall pay all the rent and perform and observe all the terms and conditions of the said Tenancy Agreement.

4. The Tenant and the Licensee(s) do hereby expressly acknowledge declare and confirm that all the chattels furniture machines plants equipment and any other articles in on or at the said Premises belonging to the Tenant or to the Licensee(s) or any of them can be distressed or distrained by the Landlord for non-payment of rent or other charges payable by the Tenant under the said Tenancy Agreement and execution can be levied upon the same.

6. The Tenant and the Licensee(s) do hereby jointly and severally indemnify the Landlord and keep the Landlord indemnified against any loss damages demands suits actions proceedings reasonable costs and expenses arising out of or directly or indirectly connected with the use and occupation of the said Premises by the Licensee(s) or any of them.

5. Reading these clauses together, it is arguable whether D2-D7 were responsible for D1's failure to pay rent and whether they were so liable even after they had ceased use and occupation of the premises. There are, in my view, issues of fact as to the intention of the parties to be determined in a trial.

6. Accordingly, the appeal is allowed and D2-D7 would be granted unconditional leave to defend. I make an Order Nisi for costs to D2 to D7 both here and before the Master.