K.S. PROPERTIES LTD. v. CHU CHOR HO MICHAEL

HCA 1623/97

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.1623 OF 1997

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J U D G M E N T

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1. The Plaintiff as landlord claims damages (mesne profits) from the Defendant as tenant of a shop, arising from the Defendant's continuation in occupation following termination of the tenancy. By agreement of the parties, the trial is split and this judgment deals with liability only.

2. The Defendant leased Shop No. 3 on the ground floor of Sentact Building, King's Road, North Point, from the Plaintiff's predecessor in title, for a term of two years from 1st February 1995 at a rent of $153,000 per month. The tenancy expired at common law on 31st January 1997, but Part V of the Landlord and Tenant (Consolidation) Ordinance required that at least 6 months' notice of termination be given. Without such notice the lease would continue after 31st January 1997 by operation of law.

3. It is the Plaintiff's case that such notice was given by means of a notice of termination of tenancy dated 22nd July 1996, issued by the Plaintiff's solicitor, which was on that day sent to the Defendant's shop address by registered post, and which was also posted up by the solicitor's clerk at the shop on the 23rd, 24th and 25th July 1996. It is the Defendant's case that no such notice of termination was ever received by him, whether by post or by being posted up at his shop. Alternatively, if the notice was posted up, the Defendant says, through counsel, that this was not good service. If there was no good service of the statutory notice, then the Defendant cannot be liable for damages for continuing in occupation, because the tenancy did not terminate.

Postal Service

4. I will deal first with the question of whether service was effected by registered post. The only evidence for the Plaintiff comes from Mr Lam, a clerk in the employ of Anthony Hann & Co., Solicitors. He says that he prepared the notice of termination on 22nd July 1996. He arranged for its signature by the handling solicitor and then put it out for colleagues to send off by registered post. It was for these lady colleagues to give the outgoing letter a number, and send it off with a messenger to the post. Later Mr Lam got back the Post Office registration certificate.

5. According to the Defendant himself and his manager Mr Chan, a registered letter was indeed received at the Defendant's shop, but what it contained was a letter also dated 22nd July, from Messrs Anthony Hann & Co. to the Defendant's solicitors Messrs Alexander Tsang & Co. dealing with an apportionment account relating to the Defendant's shop. The Defendant says that he thought that this was a copy sent to him for information. In fact the Defendant has been able to produce this original letter; it is Exhibit D2.

6. The obvious inference from these facts is that someone in the office of Messrs Anthony Hann & Co. put the wrong letter in the envelope sent to the Defendant. Mr Merry for the Plaintiff has accepted this. It seems very strange that the Defendant and his manager should have thought that this original letter, asking for the settlement of an apportionment, was sent to him for information. One would expect them to draw the obvious conclusion that a mistake had been made, and the wrong letter put in the envelope. It is also strange, if the wrong letter was put in the envelope, that the notice of termination did not end up in the hands of Messrs Alexander Tsang & Co., who would no doubt have returned it if they had received it.

7. However, there is no evidence from the other staff of Messrs Anthony Hann & Co. as to what they put into the envelope. There is nothing to contradict the evidence of the Defendant and his manager that the apportionment letter was what was received. The original is produced from the Defendant's possession, and there is no suggestion that it could have come there by any other route. It seems to me therefore that the only reasonable inference I can draw is that there was a mistake in the solicitor's office, and that the apportionment letter was the only document that the Defendant received. Service was not, therefore, effected by post.

Service by "Posting up"

8. Again the only evidence for the Plaintiff comes from Mr Lam. He says that he took the name and address of the tenant from the tenancy agreement, and typed them into the notice form himself. On the night of the 22nd July he took a copy of the notice of termination home with him. The next morning he took the No.102 tunnel bus from his home in Kowloon to North Point. He got off near the Wong Do Cinema, at a bus stop "off the bank". Then he walked back one or two shops and found the Lilly Fashion Shop. He stuck the notice onto one of the iron bars of the closed grille outside the shop with one piece of adhesive tape. This was done at about 9 a.m. on the morning of Tuesday 23rd July. He did the same thing on the next two consecutive mornings. On each morning the shop was shut and he saw no one inside.

9. Mr Lam then identified the shop where he posted up the notices as the shop shown in the agreed photographs. This came after he had mentioned the Lilly Fashion Shop. In the photograph the shop has a neon sign inside saying "LEES" and above the grille the characters "Lai Ming", apparently in metal. Mr Lam said that he posted up the notice on three consecutive days because the law requires it, under the Landlord and Tenant (Consolidation) Ordinance. He had done this before.

10. Mr Lam was cross-examined at length about the identity of the shop where he said he had posted up the notices because, as appears from the evidence of the Defendant and his witnesses, the Defendant's company also operates a shop called "Lilly" at No.383 King's Road. The Defendant says that it shows the name "Lilly" in English and the characters "Lai Loi". Mr Lam said that having passed the Wong Do Cinema he got off the bus "off the bank". He walked back about two shops. He said that he knew that the shop he found there was the Defendant's shop because one of the Plaintiff's shareholders had told him that it was operated as a fashion shop. Asked if he had been told it was "Lilly Fashion Shop", he said that it was. Asked if he had been given the name in English or Chinese, he said that it was similar pronunciation, maybe in English or maybe in Chinese, but the pronunciation was similar to that. Asked if he had found "Lilly Fashion", he said that he had not found it in Chinese, but he had found something in English beginning with "L". He had not found a shop number, and he had not checked the street number; the name was the same and it must be the one. He did not know if there was a "Lilly Fashion" at 383. He was not sure that the Defendant's shop was at No. 347 but it was in this location. He was asked if the Defendant's business was called "Lai Ming" in Chinese; and he agreed that it was; he had seen two Chinese characters, "Lai Ming". He did not agree that he had seen no Chinese characters; or that he had served the notice at the wrong shop.

11. Mr Lam said that the shop had on one side a jeweller's shop and on the other a security exchange shop.

12. Evidence for the Defendant came from the Defendant himself, his business manager Mr Chan Tat Yin, the shop manager Mr Kwok Wai Kai, and the cleaner Mr Chu. In brief the evidence is that the firm of Lilly & Co, of which the Defendant was the general manager, was at the relevant time running a chain of eight fashion shops, including the two in King's Road, i.e. the suit premises and the shop at No.383. The latter has a sign saying "Lilly" in English and "Lai Loi" in Chinese, and it has a similar grille to the grille outside the suit premises. If any correspondence came into the shops the managers had to send it to head office. The registered letter to the Defendant, containing the apportionment letter addressed to the solicitors, had been sent to the head office in this way. No notice of termination had ever been found stuck to the grille of the Lees shop, either by Mr Kwok, its manager, or by the cleaner Mr Chu who came in to clean every Wednesday at about 9 a.m. and for whom Mr Kwok always opened up the shop, to let him in. Nor had any such notice been sent to the head office, in accordance with the usual system, from any of the shops.

13. Mr Kwok was asked about the locations of the bus stops and the banks, by reference to an agreed location plan. It appears from his evidence that there was a bank at the Hang Seng Bank building, No.355-341. There was another one at No.351-353, and another at No.355-361. There is a Hang Lung Bank Eastern Branch Building at No. 391. The No.102 bus now stops outside No.375-377; the bus stop may have moved since July 1996, but in any event there was never any bus stop outside the Hang Lung bank at No.391.

14. Mr Kwok said that while there is no shop or street number displayed at the shop itself, the street No.347 is at the residents' entrance to the building. The number 349 is sometimes used for the shop. There is evidence from the Defendant himself that this entrance is next to the suit premises on the left side; contrary to what Mr Lam says, this entrance and another stair entrance lie between the suit premises and the jeweller's shop on the left side, though there is indeed a securities exchange shop on the right.

15. The issue for decision here is whether Mr Lam served the notices at all; and if he did, whether he served them at the suit premises or at the "Lilly" shop further up the road.

16. Mr Lam at first referred to the "Lilly Fashion Shop". Curiously enough this is what Mr Chu, the Defendant, first called it also; though on the evidence from both sides the words "Fashion Shop" are nowhere to be seen on either shop, whether in English or in Chinese. Mr Merry for the Plaintiff argues that this must be a slip of the tongue, arising from the fact that the Defendant's main business is called "Lilly" and it is a fashion business, operating fashion shops.

17. Mr Spicer says that I must look first at the inherent probabilities in the case rather than at demeanour. This is of course correct and there are various authorities in support of it. The difficulty is that there are inherent probabilities and improbabilities on both sides.

18. It is of course inherently improbable that an experienced litigation clerk who goes out to serve a document at street No.349 will serve it at No.383, even if there is no actual number displayed at the former. There was a number displayed at 347 and one would naturally assume 349 to be the next entrance. At the same time, however, there is no evidence from Mr Lam that he saw the number 347; and when asked whether he had checked the street number, he said that he had not; the name was the same and it must be the one. This does suggest that he was relying on a name rather than any street or shop number.

19. It is also inherently improbable that if someone posts up a notice at about 9 a.m. outside a shop, with adhesive tape placed over the bar of a security grille, the staff who comes on duty at 10 a.m. will not find it. It should be able to remain stuck to the grille for an hour. If this is done on three consecutive days it is even more improbable. It is further improbable that if a cleaner is let in at or just after 9 a.m. on one of those days, he will not find the notice.

20. It is, however, also inherently improbable that if the notice was posted up at No.383 on three consecutive days, it would not have found its way to the Defendant's head office, given the system described by him and his employers. After all, it had Mr Chu's name on it; it would not be something the staff at No.383 could prudently disregard.

21. Mr Lam is a litigation clerk of long experience. He did not appear to be untrustworthy in his demeanour. I do not accept that the form of his affirmation, made for the Order 14 application, shows that he is untrustworthy. I do accept that he is perhaps at risk, if the case goes against the Plaintiff, of blame for being the cause of the professional indemnity claim which the Plaintiff may raise against his employers; but he is not the first and will not be the last solicitor's clerk to be in this situation.

22. Having said that, the demeanour of the Defence witnesses did not seem untrustworthy either. At the same time Mr Chu has good commercial reasons to say that he did not receive the notice and his staff, being still employed by him, have their reasons to support him.

23. One piece of defence evidence which supports Mr Lam is that of Mr Kwok. The only way that Mr Lam could have walked back, i.e. back the way from which he had come, from a bus stop outside a bank to shop No.383 was if the bus stop was outside the bank at No.391; which, according to Mr Kwok, it never was. If it was at Nos.375-377 Mr Lam would have had to walk back towards No.349, though it was further than one or two shop spaces. If the bus stop was somewhere else on the block at that time, this could explain the distance he describes; but the point is that he could not have walked back to No.383.

24. Really the question is whether Mr Lam can be believed, given that he called the suit premises the "Lilly Fashion Shop". Could this be a slip of the tongue or does it indicate that Mr Lam either found the wrong shop or did not go there at all?

25. Mr Lam gave his evidence in Cantonese. I have listened again to the recording thereof. In examination-in-chief his first mention of the name of the shop came out partly in Chinese and partly in English as "Lee-lee-ge Fashion Shop". He did not say "Lees" which is what the sign says in English; he did not say the characters "Lai Ming"; nor did he say the characters "Lai Loi", which is rather surprising, because although he is obviously literate in English, one would expect him as a native Chinese speaker naturally to have more regard to the Chinese characters than to what might have been written in English. He said under cross-examination that the name was of similar pronunciation, maybe in English or maybe in Chinese, but this is obviously not so. Further, his further explanation that he had found something in English beginning with "L" seems lame, because, as I have said, he is obviously literate in English; he must know the difference between "Lees" and "Lilly". One is left wondering if Mr Lam saw this shopfront at all.

26. I am in effect left with the use of a wrong name which has not been adequately explained. Mr Lam's evidence can only be regarded as suspect. There is, as I have said, some support for his evidence in what Mr Kwok says about the bus stop and the banks; but again, if the bus did stop outside Nos.355-357, which is the next building but one to No.383, the stop was very close to the shop at No.383.

27. In the circumstances, I am not satisfied on the balance of probabilities that Mr Lam did post up the notice, at the suit premises.

28. It follows that the Plaintiff's claim must fail. The Plaintiff's claim is dismissed with costs to the Defendant, to be taxed if not agreed.