SHAM TSENG CHAN KEE ROASTED GOOSE CO LTD v. GARWIN INTERNATIONAL LTD

DCCJ4496/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4496 OF 2007

D E C I S I O N

1.  This is an appeal against an order for summary judgment made by Master C Lee on 18 March 2008.

2.  The Defendant has been a tenant of the Plaintiff of a shop in Chan Kee Plaza, 42 Castle Peak Road, Sham Tseng, New Territories, Hong Kong (“the Shop”) since 1995.  In the past, the parties would renew the tenancy after the expiry of the previous term by written agreements.  The last written tenancy agreement was signed by the parties on 16 February 2006, with the term of the tenancy for 1 year from 1 March 2006 to 28 February 2007 with an option to the Defendant to extend the term of the lease until 31 August 2007.  The Defendant exercised the option to renew.  As the term of the extended lease expired on 31 August 2007, the Plaintiff commenced the present proceedings to claim for possession of the Shop.  On 16 March 2008, Master C Lee made an order granting summary judgment in favour of the Plaintiff for possession of the Shop and recovery of mesne profits for the Defendant’s use of the Shop after 31 August 2007.

3.  To oppose the Plaintiff’s application, the Defendant claims that there had been negotiation for a new tenancy between the parties in May 2007.  After the negotiation, the parties made an oral agreement for a new lease.  Under the new lease, all the other terms remained the same as those in the previous agreement save and except that the car-parking space let to the Defendant under the previous agreement be immediately surrendered to the Plaintiff so that the Plaintiff could sell the car-parking space in one lot.  In return for this, the Plaintiff allowed the Defendant to install an advertisement board on top of Chan Kee Plaza.  As there was a new lease for the Shop, the Defendant claims that the Plaintiff is not entitled to claim for possession of the Shop at this stage.

4.  Obviously, there is a triable issue as  to whether such an oral agreement did exist.  However, Mr So, counsel for the Plaintiff, argues that the Defendant has not managed to establish an arguable defence in this regard.  Firstly, such allegation by the Defendant, as he submits, is only a bare allegation without the support of other documentary evidence.  Secondly, it had always been the practice between the parties to make new lease by way of written agreements, and hence there should have been no binding agreement between the parties unless and until the parties signed a new written lease, which the Plaintiff did prepare one for the Defendant to sign after the oral negotiation.  Thirdly, clause 4 of the previous written tenancy agreement provided that the Defendant had to vacate the Shop after the term of that tenancy unless the parties signed a new written tenancy agreement.  Such clause, as Mr So submits, required the parties to make the new tenancy agreement only in writing.  Fourthly, the Plaintiff’s solicitors did send a letter to the Defendant on 9 June 2007 demanding the latter to vacate the Shop on 31 August 2007.  If there had been a new tenancy as a result of an oral agreement, the Defendant should have made a protest against such letter by the Plaintiff’s solicitors, and yet the Defendant had not done so in the present case.

5.  It is trite law that an agreement for a lease for a term not exceeding 3 years needs not be in writing.  Hence in my judgment, there is certainly a triable issue as to whether a new lease had been created by an oral agreement between the parties.  Further, according to the Defendant’s allegation, the Defendant surrendered the car-parking space to the Plaintiff immediately after the making of the oral agreement.  As this is a fact not disputed by the Plaintiff, this certainly adds weight to the defence.  Obviously, the Defendant’s case is only a bare allegation.  However by reason of its nature, such defence, if it were indeed the truth, can only be proved by way of oral testimony.   To require the Defendant to provide documentary proof at this stage is simply an impossible task for the Defendant.  In respect of clause 4 of the previous tenancy agreement, I do not take the view that it restricted the parties’ option to create a new lease only by way of written agreement.  Even if I were wrong on such issue, and there had all along been the practice for the parties to create new tenancy by way of written agreements, there was nothing to prevent the parties to adopt a different way to make a new tenancy agreement between the parties.  Lastly, regarding Mr So’s argument relating to the lack of protest, such allegation was only raised by the Plaintiff in the affirmation in reply.  As the Defendant had no opportunity to deal with such allegation, the lack of protest might be caused by a number of different factors.  Considering the deteriorating relationship between the parties by that time, I do not think that such argument adds very much weight to the Plaintiff’s application for summary judgment.

6.  At one stage, Mr So submits that if the court were to grant the Defendant leave to defend, such leave should be given with the condition that the Defendant should pay into court all the mesne profits for the use of the Shop after the expiry of the previous tenancy.  However, such kind of order should only be made if there is a proper application for interim payment, and yet there is none in the present case.  I therefore allow the appeal and grant the Defendant unconditional leave to defend the Plaintiff’s claim.

7.  Lastly, the dispute between the parties is a simple one.  As the term under the alleged new tenancy agreement is a relatively short one, the present case should be tried as soon as possible.  I therefore make an order for a speedy trial in the present case.