GOOD CHOICE INDUSTRIAL LTD v. A.S. WATSON GROUP (HK) LTD

HCA 1861/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1861 OF 2013

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DECISION

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1.  The Plaintiff (Good Choice) in these proceedings was the Defendant in HCMP 1187/2013.

2.  In that case the Plaintiffs being the incorporated owners of the building (the incorporated owners) in which the suit premises are comprised obtained judgment against Good Choice following an Award in Arbitration proceedings.

3.  That judgment related to several breaches of the Deed of Mutual Covenant which regulated the said building.

4.  The incorporated owners obtained an injunction which required Good Choice to make good breaches of the terms and conditions of the Deed of Mutual Covenant.

5.  The main breaches complained of were the improper installation of air conditioners and the installation of a signboard.

6.  Good Choice entered into a Tenancy Agreement with the Defendant in these proceedings.

7.  The terms and conditions of the Tenancy were reduced to writing and contained in a letter dated 4 February, 2010 :

“Our Ref.: LH/Caine Road/10/0061

Date: February 4, 2010

Good Choice Industrial Limited Subject to Contract and

c/o Citiland Surveyors Limited Hutchison Group Approval

Room 904, 9/F, Capitol Centre By Fax & By Post

Nos. 5-19 Jardine’s Bazaar Fax: 2111-5636

Causeway Bay

Hong Kong

Attention: Mr. David Yu

Dear Mr. Yu,

Re: Car Port (Garage), Long Mansion, Nos 24 & 24A Caine Road, Hong Kong

We refer to the new letting of the captioned premises and write to offer the following terms and conditions:-

1. Premises

Car Port (Garage), Long Mansion, Nos 24 & 24A Caine Road, Hong Kong.

2. Area

4,000 s.f. ‘Gross/ 2,628 s.f.’Net and subject to actual site measurement. (as coloured pink on the attached floor plan for identification purpose only).

3. Usage

For Commercial Use.

4. Term

Three (3) years fixed plus a Tenant’s option to renew for further three (3) years.

5. Commencement Date

To be mutually agreed.

6. Monthly Rental

(exclusive of Government Rates and Management Fee but inclusive of Government Rent)

Year 1 to 3 : HK$112,000 per month

Year 4 to 6 : HK$134,400 per month

(if option exercised)

7. Management Fee

HK$2,200 per month to be borne by the Tenant.

8. Government Rates

To be borne by the Tenant.

9. Government Rent & Property Tax

The Landlord shall be responsible for Government Rent and Property Tax in respect of the captioned premises.

10. Deposit

a) One (1) month’s of Rental and Management Fee in the amount of HK$114,200 by cash within 30 days after signing the binding offer; and

b) Two (2) months’ of Rental and Management Fee in the amount of HK$228,400 by bank guarantee upon signing the formal Tenancy Agreement.

11. Rent-free Period

One (1) month.

12. Legal Cost & Stamp Duty

Each party shall bear its own solicitor’s cost. Stamp duty, registration charges and other disbursement shall be shared equally by both parties.

13. Assignment

Tenant may assign any or all of its rights under the lease or sublet or part with possession of the premises or any parts thereof to any subsidiary or associated company of A.S. Watson & Co. Ltd.

14. Handover condition

Please refer to Appendix.

15. Signage

Landlord has to provide space for the Tenant to install signages for PARKnSHOP during the term and any renewal term of the tenancy without any extra cost.

16. Qualifying Terms

(a) Other term and conditions of the tenancy are subject to the signing of a formal Tenancy Agreement in a format to be mutually agreed.

(b) Sale and redevelopment conditions will not be included in the Tenancy Agreement. (The Tenancy Agreement is effective in case of sale condition).

(c) In the event the intending tenant cannot obtain all necessary licences and approvals for operation of a Supermarket at the captioned premises, the intending tenant shall have the absolute right to rescind this offer and any payment made by the intending tenant would be refunded by the Landlord to the intending tenant without any interest whereupon this offer shall become null and void. Neither party shall have any claim against the other party for the costs, losses, damages or compensation arising therefrom.

(d) This proposal is valid until February 12, 2010.

As usual, the above offer is made subject to contract and the ultimate approval from our parent company, the Hutchison Group, of which we shall pursue once your confirmation is available. If our parent company, Hutchison Group, disapproves this proposed transaction, this offer letter shall automatically become null and void and have no further effect. Neither party shall have any right to take out any action for damages or specific performance of this offer letter.

Looking forward to receiving your favourable reply.

Yours sincerely, The above are confirmed and

A.S. Watson Group (HK) Limited accepted by the intending

Landlord:

Lawrence Heung Good Choice Industrial Ltd.

(Property Director)

Encl.

LH/CC/Ikb/iy

Appendix

Handover Condition

1. Electrical Power Supply

Landlord provides 200A 3-phase power supply with power cable and switch inside our premises.

2. Air-Conditioning

We shall install our own Air-conditioning system. Location for placement of condensers to be confirmed on-site.

3. Space for Refrigeration Condenser Unit

3.1) Size of air-cooled condensers (side discharge):

10 nos.of 1000mm x 1000mm x 850mm (H) condenser units.

3.2) The condensers shall be located at outdoor open space to the premises provided by the Landlord without any extra cost during the term and any renewal term of the tenancy.

3.3.) In order to avoid the noise nuisance, the location shall not nearby residential building.

3.4) The location of the condenser space shall be to the absolute satisfaction of the prospective tenant. Otherwise, this offer shall become null and void.

4. Fresh Water Supply

Lanlord provides 1 x Ø22mm fresh water pipes and terminated inside the premises.

5. Drainage

Landlord provides 2 x Ø100mm floor drain outlet inside the premises. Location to be confirmed by us.

6. Fire Services

Landlord provides standard fire services installation in the premises, which comply with current Fire Services Department regulation and requirement for supermarket use. The installation may include fire sprinkler system, smoke detection system, fire hose reel, fire shutter, etc.

Landlord also required to provide a break glass alarm which connect to building fire alarm system for each fire exit door or mean of escape.

7. Floor Loading

Average floor loading shall not less than 5kpa.

8. Floor Level

Floor level shall be consistent.

9. Toilet Facility

Landlord provides 1 set toilet facilities inside the premises.

10. Delivery of Refrigerator routing

Landlord provides a proper delivery routing for us to delivery refrigerators and equipments.

11. Handover condition

Landlord shall provide a bare shell condition including but not limited to:

i) remove all wall and floor finishing;

ii) remove false ceiling;

iii) remove all internal partition (non-structural); and

iv) remove all fixture and furniture. ”

8.  Good Choice requested the Defendant to permit them to enter the suit premises and make good the breaches of the terms of the Deed of Mutual Covenant.

9.  The Defendant refused to comply with this request.  In passing it is perhaps not altogether surprising that they should adopt this stance.  They are operating a supermarket at the suit premises trading under the name or style of “ParknShop”.

10.  If they were to comply with the request being made by Good Choice they would in all probability be unable to continue to operate their business at the suit premises.

11.  It is their contention that there is nothing in the Tenancy Agreement preventing them from installing the air conditioning or installing the signboard. 

12.  Indeed when the installation of the air conditioners was undertaken, Good Choice, specifically instructed them upon where they should be installed which was at the location which is now complained of.

13.  It is trite law that an injunction can only be granted if the Plaintiff is able to demonstrate that there is a triable issue.

14.  Here the documents which have to be considered are the Tenancy Agreement, the terms of which are contained in the letter earlier cited, which was countersigned by the parties and the Statement of Claim.

15.  Unfortunately when the Tenancy was entered into, Good Choice omitted to get the permission of the incorporated owners of the building for the installation of the air conditioners or for the prominent display of the ParknShop signboard.

16.  It is manifest that if the issue of the air conditioners and the display of the signboard had been addressed at the time when the Tenancy was entered into, either the consent of the incorporated owner would have been applied for and obtained or more likely the Defendant would not have further pursued the negotiations. 

17.  The consequence of this is that it is not possible to impute or infer a term in the Tenancy that the Defendant has to comply with the Arbitration Award which the incorporated owners obtained.    

18.  Put very simply, Good Choice has failed to demonstrate that the Defendant has in any way been in breach of the terms of the Tenancy and accordingly no arguable case can be made out against them.

19.  The injunction which has been issued must be discharged and I so order. I further order that costs will be to the Defendant with a certificate for two counsels.  The costs will also be payable forthwith.

(Simon Mayo) Deputy High Court Judge