KWAN SAU SIM v. LI LAI KUEN AND OTHERS

HCA 2419/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2419 OF 2013

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D E C I S I O N

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1.  This is the hearing of an inter partes summons dated 28 March 2014 for summary judgment for vacant possession or, alternatively, for an order for interim payment under Order 29, rule 12(b) of the Rules of the High Court.

2.  The Order 14 application has been adjourned to another date to be fixed in consultation with counsel’s diaries, the reason being that HCA 2307/2009 which decided that the plaintiff is the legal and beneficial owner of the premises at the centre of the present application is under appeal.  While the appeal has been heard, judgment has yet to be handed down. 

3.  Be that as it may, until the decision at first instance is reversed by a higher court it stands, so the court for today’s purposes has to proceed on the basis that the plaintiff is the rightful owner of the property.

4.  The case is a simple one.  The 1^st  named and 2^nd named defendants are the administratrices of the estate of one Chan Wai Ki who passed away in June 2012.  The 2^nd defendant is his widow, Madam Li Lai Kuen trading as DeLorean (a firm) and Boutique DeLorean (a firm).  Madam Li is the first named of the 1^st defendant, she being one of the administratrices of the deceased’s estate. 

5.  The deceased had entered into a tenancy agreement a long time ago to rent the premises.  He operated a tailoring shop from those premises.  After the lease expired he continued to hold over. 

6.  The plaintiff acquired the premises a number of years ago after the death of the owner who was one of her aunts.  Several years later, there was a claim made by one Mr Law to the property and that dispute was the subject matter of HCA 2307/2009.  What had happened was that in the course of that litigation it came to the plaintiff’s notice that Mr Chan had actually passed away, so a Notice of Termination was served but the widow continued to operate the business and refused to vacate the premises.  In any event, rent was no longer paid after the deceased’s death and, as a result, the premises have been occupied and used by the defendants without any payment being made during this period. 

7.  After obtaining judgment in her favour, the plaintiff commenced the present action seeking vacant possession and mesne profits.  A defence was filed as well as a counterclaim.  The 2^nd defendant counterclaimed for a declaration that it be allowed to continue to rent the premises at a rent of $20,000 per month.  There was no other claim.

8.  Today’s application is made under Order 29, rule 12(b) which provides as follows:

“that the plaintiff’s action includes a claim for possession of land and, if the action proceeded to trial, the defendant would be held liable to pay to the plaintiff a sum of money in respect of the defendant’s use and occupation of the land during the pendency of the action, even if a final judgment or order were given or made in favour of the defendant; or”

9.  It appears to me that there are two pre‑conditions to be satisfied:

(1) That the plaintiff’s action includes a claim for possession of land which the present action certainly does.

(2) That if the action proceeds to trial, the defendants would be held liable to pay the plaintiff a sum of money in respect of the defendants’ use and occupation of the land during the pendency of the action, even if at the end of the day final judgment were given in the defendants’ favour.

10.  Assuming the scenario that the 2^nd defendant prevails and is entitled to a declaration that it is entitled to a tenancy at $20,000 per month, it remains the fact that no payment has been made for its use and occupation of the property for a long period of time.

11.  Mr Chan who appeared for the defendants sought to submit that because summary judgment is not being sought at this stage, that the claim to mesne profits would stand or fall with that claim.  I confess that I have some difficulty in appreciating Mr Chan’s submission.  It was then said that because the focus had been on the Order 14 for vacant possession no evidence had been filed, and had they focused on that, the evidence would have been that payment had actually been made but to Mr Law instead.  Unfortunately the defendants chose not only not to put this on affirmation, they also failed to plead it in their defence when they could have done so. 

12.  In those circumstances, I simply do not see that there is any answer to the application.  For these reasons I would order that a one‑off interim payment for $540,000 be made to reflect the defendants’ use and occupation of the property without payment since 1 July 2012, and the defendants are also ordered to make a periodical payment of $20,000 per month on the 1^st of each month commencing 1 October 2014 unless and until such time as the decision in HCA 2307/2009 is reversed.  In that eventuality, no doubt there will be some accounting to do between the plaintiff and whoever eventually is held to the true owner but that is a matter for the future and I will not speculate as to what would happen then.  Costs are to follow the event.