WANG SIAU (or HSIAO) YU v. WU CHO MEI (or MAY) t/a MUI FAR CHUNG RESTAURANT

1992, No. A7830

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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The Claim and the Defence

1. The plaintiff is, with the defendant's elder brother Mr Wu Cho Ching (Mr Wu), the registered owner of a property in King's road, Hong Kong. He owns seven of the ten shares and Mr Wu owns the other three shares. The Landlord and Tenant (Consolidation) Ordinance (Cap. 7) does not apply to the property.

2. The defendant leased the property for business purposes for a period of four years from 1 August 1988 at a rental of $25,000 a month. The lease, therefore, terminated on 31 July 1992. The defendant, however, refused to vacate.

3. The plaintiff claims an order for vacant possession, mesne profits or damages from 1 August 1992 and costs.

4. The defendant says that, by a tenancy agreement dated 1 May 1992, the property was let to the defendant by the plaintiff and Mr Wu for a term of four years commencing on 1 August 1992 at a monthly rent of $28,500. Therefore, the defendant says, he is in lawful possession of the property. The defendant pleads that "In signing the said tenancy agreement [Mr Wu] was acting for on his own behalf as well as the agent for the Plaintiff with his actual or implied authority.". The defendant also alleges that Mr Wu had apparent authority from the plaintiff to enter into the tenancy agreement. It is also alleged by the defendant that the plaintiff is estopped from denying the validity of the tenancy agreement. This estoppel is based on allegations that Mr Wu was the plaintiff's agent and he had assured the defendant that the tenancy would be renewed for a further four years. Relying on this assurance, the defendant had expended a considerable sum of money in renovating the property. There is also a plea that the defendant is entitled to remain on the property under the tenancy agreement granted by Mr Wu alone, with or without the consent of the plaintiff.

The Evidence

5. At the end of the day, the defendant has established nothing of his defence. It was perfectly clear from the evidence of the defendant and Mr Wu, who gave evidence for the defendant, that it could not be argued that Mr Wu was the plaintiff's agent with authority to bind him for any kind of legal obligation. Mr Cheung, who appeared for the defendant, entirely properly, made no attempt to do so. The most that Mr Cheung could do was to suggest - and I hope I do him no injustice by saying that he advanced the argument without the appearance of any great confidence in it - that the defendant had some kind of case that, in 1988, the plaintiff had promised to renew the lease in 1992 for a proportionately increased rent and the defendant had refurbished the property relying on this. Even on the defendant's case, this alleged promise, which the plaintiff denies, was vague. According to Mr Wu, a friend of the plaintiff's, in the presence of the plaintiff, said that such an arrangement should be made to avoid "giving so much trouble to our friends" in future. This statement was made, not to the defendant, but to Mr Wu, who later conveyed it to the defendant. Certainly, when the defendant was considering expending money of refurbishing the property, he did not rely on this statement at all, but sought an assurance from Mr Wu that the lease would be renewed, and when he and Mr Wu signed the lease agreement, assuming that this document was signed before the dispute arose, the defendant asked Mr Wu about the plaintiff signing it. Mr Wu also wanted the plaintiff to sign the lease. He told the defendant this. He says that, in Taiwan, he sent a message to the plaintiff about signing the lease and received a message that the plaintiff refused to do so. Mr Wu said in evidence that he did not regard this "promise" as binding. Of course, his attitude does not determine the matter, but he was present and heard the discussion about the arrangement, and if the promise was made and was made seriously, there seems no reason why he should not regard it as binding. All in all, there is nothing in the evidence before me on which one could begin to construct a case that the plaintiff is bound to a new lease. And all this assumes that I accept the evidence of the defendant and Mr Wu. I do not. They were poor witnesses, contradicting each other and their own evidence. It was impossible to rely on what they said. Even if, on their evidence, the defendant had advanced some kind of case, I would not have accepted it.

The Mesne Profits

6. There was argument about the basis upon which mesne profits should be assessed. The plaintiff consulted two firms of surveyors about the rental value of the property. One of these, dated 10 July 1992, concluded that the rental value of the property at that time was $70,000 a month. This report made no reference to comparables. The report by the other firm of surveyors, dated 30 October 1992, assessed the rental value at $80,000 a month. In this report reference was made to certain comparables as the basis on which the rental assessment was made. These reports were mentioned in a hearsay notice by the plaintiff dated 26 May 1994. The defendant did not respond to this notice. Mr Cheung asked for leave to respond to it during the trial, but I refused that request. This failure to respond obviated the need to call the makers of the reports, but, as Mr Cheung rightly points out, it does not make admissible hearsay evidence contained in the reports. In other words, if the maker of the report could not give evidence about a fact because his evidence would be hearsay, the same applies to that fact contained in the written report.

7. Mr Miu called an expert surveyor, Mr Paul Brown, from the firm that prepared the second report, although he told me that he had conveyed to Mr Cheung earlier that his client was prepared to accept the rental value of $70,000 a month mentioned in the first report. Mr Brown had not prepared the report by his firm, and he had no personal knowledge of the property concerned in this case or comparables mentioned in the report. He did, at my request, go to the location of the property. After having done this, using the comparables, he assessed a fair market rent at the time as $73,000 a month. Mr Cheung says that Mr Paul Brown's evidence went outside the expert's report and I should not pay attention to it. He says I should assess the rent as that mentioned in the first report; that is, $70,000 a month. There is much in what Mr Cheung says about accepting the evidence assessing the fair market rent at an amount exceeding $70,000. The basis for these assessments are the comparables and the details of these are hearsay. Accordingly, I assess the fair rental value of the property in August 1992 at $70,000 a month. The plaintiff is entitled to seven tenths of this, being $49,000 a month.

The Result

8. I order that the defendant vacate the property no later than 31 March 1995. The plaintiff is entitled to mesne profits at the rate of $49,000 a month from 1 August 1992 until the property is vacated.

The Costs

9. There seems no reason why the plaintiff should not have his costs. I made an order nisi to this effect.