THE "STAR" FERRY CO LTD v. CHUEN WAH TRADING CO LTD

1992, No. MP647

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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J U D G M E N T

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1. This is an application for an order for possession, made under the provisions of Order 113 of the Rules of the Supreme Court. This order provides a summary procedure which enables the court, in a proper case, to deal more quickly with a claim for possession than it would otherwise be able to do.

2. The present case is a claim against a licensee holding over after determination of its licence and is on the face of it just the sort of case for which Order 113 is designed.

3. The plaintiff is the Star Ferry Co Ltd. It has a number of shop units in the Star Ferry Pier and Concourse in Tsimshatsui, Kowloon. It allows these shop units to be occupied by licensees under licences for various terms.

4. The defendant is Chuen Wah Trading Company Limited. It has for many years enjoyed the benefit of a succession of licences of one of these shop units. The last was granted in early 1989, when the plaintiff agreed to a three year licence to expire (as it did) in February 1992.

5. During the currency of that licence, the defendant became concerned about incurring expenditure on certain improvements which it had in mind. It had in mind to spend over half a million dollars on the works; but by now its licence had only 1½ years to run. It would plainly be uneconomic to spend this sort of money unless it had some sort of security of tenure. A director of the defendant, Chan Wai Yee, spoke about this to the plaintiff's manager, a Mr Carey. She deposes that she had two meetings with Mr Carey in July and August 1990. At those meetings, she was accompanied by her manager, a Mr Wong (who confirms her evidence). Her evidence about these meetings is as follows :-

"In those two meetings, I raised the question of whether the plaintiff would be prepared to grant a new licence upon the expiry of the term of the Licence [then in force]. Mr Cagey assured me that the plaintiff would definitely do so not only because of the long history of good business relationship between the plaintiff and the defendant and also because he was aware that the defendant had been operating at a loss and he would make sure that the defendant be given the opportunity to recuperate their losses. I enquired whether a fresh licence could be signed to effectively extend the term of the Licence but Mr Carey informed me that it was premature to do so since there was still a period of some 18 months left before the term of the Licence would expire and it was the plaintiff's policy not to negotiate and grant a new licence until a few months before the expiry of the existing licence. In the last meeting, Mr Carey further discussed with me about the terms of the new licence and promised me that they would be similar to those of the Licence. According to Mr Carey, the terms of the new licence would similarly be for 3 years and the annual licence fee for the first year would be increased by not more than 15% of that payable during the preceding year and the annual licence fee of the next 2 years would increase by a further 10% of that in the preceding year.

In reliance on such oral assurance of Mr Carey, on or about 14th August 1990, I accepted the written quotation of Wah Tat on the defendant's behalf and instructed them to proceed to carry out the renovation work at the Shop. The actual costs eventually paid by the defendant to Wah Tat amounted to $593,550.00 ..."

I do not think I need to read anything more of her evidence.

6. There is no doubt, in a case like this, that if you are promised an extension of your licence in clear, unequivocal and unambiguous terms (although the precise details of the extension are not worked out), and you spend money on the premises on the faith of that promise, you are entitled to pray in aid, when the promisor seeks to throw you out, the equitable doctrine of proprietary estoppel, under which the court will grant you such relief as will meet the justice of the case. But in order to rely upon that doctrine you must first prove the promise which you say was made to you. If the alleged "promise" was equivocal or ambiguous, you will not be entitled to rely on it.

7. In the present case, the alleged "promise", on the evidence to which I have referred, may well be said to border on the equivocal. On the one hand,. Madam Chan says that Mr Carey "assured" her that the plaintiff would definitely grant her a new licence and that he "promised" that its terms would be similar to those of the existing licence. On the other hand, she says that Mr Carey had told her that it was the plaintiff's policy "not to negotiate" and grant a new licence until a few months before the expiry of the existing licence. (The negotiations may of course never have come to fruition; in which case it seems difficult to see how the defendant would have had any cause for complaint.) But I cannot decide at this stage whether the defendant will in the end make out a case. It is enough that I am satisfied it ought not to be driven from the judgment seat altogether in summary proceedings such as these.

8. In my judgment, the defendant narrowly squeaks home. I think it has made out sufficient of a case to warrant the court deciding that its claim to an equity ought to go to a proper trial.

9. I do not fault the plaintiff in the present case for instituting these proceedings under the provisions of Order 113. It just happens that the case is one of those cases described by Sir John Donaldson, M.R., in Henderson v. Law (1984) 17 Housing Law Reports 237 at p.241, as cases in which "although proceedings are started by way of a summary procedure, it quickly becomes apparent that a substantial issue has to be tried".

10. The issue whether or not the defendant here is entitled to raise a proprietary estoppel is plainly a substantial issue.

11. For these reasons, I propose to take a course which will, I hope, enable these proceedings to come on for trial at an early stage; for, if the plaintiff is right, it is quite unjust that it should be deprived of the enjoyment of its own premises by a former licensee who has no right to continue to remain there. What, then, is the course I should now take?

12. The case has previously come before the court. Deputy Judge J. Chan has directed that the proceedings should continue as originating summons proceedings with witnesses. He adjourned them for substantive hearing on a date to be fixed. The date fixed accordingly was today, and it is in this way that it comes on today before me. I think, with respect, that the Deputy Judge was wrong to direct as he did that these proceedings should continue as originating summons proceedings. He apparently thought the issue fit to be tried on affidavit evidence with cross-examination. But I propose to recall his order (which has not been entered) because I think both sides are entitled to the protection usually open, under our procedure, to litigants who are embroiled in a dispute of fact, that it is to say, the protection of proper pleadings, and the discovery and inspection of documents, which enable both sides to assess their position and to present their respective cases properly to the judge. All this may be unnecessary where the dispute is "perfectly clear and straightforward and narrowly confined" (cp. Shah v. Givert, 7th July 1980, per Bridge L.J., unreported save at 121 SJ 513). But here I find some 10 deponents tendered for cross-examination; and plainly this is not a "perfectly clear and straightforward" case. (I should add that I have taken the words quoted from the LEXIS transcript of the case.)

13. I do not know at this stage whether the plaintiff wants to claim any relief in the action other than possession. Of course, if the defendant is to be allowed to remain in the premises, it must in any event undertake to pay mesne profits to the plaintiff for its occupation of the premises until after judgment in the action.

14. If the plaintiff is prepared to limit its claim in the action to a claim for possession, the action can proceed as an action under 0.113. I will then direct points of claim, points of defence and counterclaim and points of reply to be served, and discovery and inspection to take place, all of which I have power to direct under the provisions of 0.28, r.4. If, however, the plaintiff wants to claim anything other than possession, I shall have to take a different course; because under 0.113 the plaintiff is limited to making a claim for possession only. In those circumstances, the plaintiff would have to undertake to issue a writ claiming both possession and whatever other relief the plaintiff wanted. I could then give directions, on the footing that an undertaking to issue that writ was forthcoming, for pleadings, discovery and so on in that now action.

15. I will now hear counsel on the directions that I ought to give having regard to my decision that the issue in this case is one which is fit for a proper trial and cannot justify or conveniently be disposed of without one. (The judge gave directions for pleadings, etc. under 0.28, r.4.)