GLORIGATE LTD v. POON SIU WO AND ANOTHER

HCA 1176/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1176 OF 2014

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J U D G M E N T

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Introduction

1. The present appeal before the court was lodged by the defendant against Master Simon Lo’s order of 2 December 2014 (“02.12.14 Order”).

Background

2. The plaintiff (“P”) is the registered owner of Shop A, Ground Floor and Cockloft, Teen Wo Building, Nos 146-148 Queen’s Road West, Hong Kong (“Premises”).

3. The defendants Poon Siu Wo (“Poon”) and Chen Xiongying (“Chen”) were trading in partnership as May Land Co (“Ds”).  Poon and Chen are husband and wife.  It was Ds’ case that Chen ceased to be a partner on 31 January 2014. 

4. According to P, by a letter of offer dated 14 February 2014 (“Offer Letter”) from P to Ds and duly countersigned by Poon on behalf of Ds, there was a valid tenancy agreement whereby the Premises were leased by P to Ds for a term of 3 years commencing on 15 February 2014 and expiring on 14 February 2017, with an option to renew for a further term of 2 years, at a rental of HK$38,000 per month exclusive of government rates and management fees.

5. Ds, however, alleged that the Offer Letter did not constitute any valid or enforceable agreement.

6. What was not disputed was that Ds paid a security deposit in the sum of HK$76,000 (“Deposit”) and took possession of the Premises on 14 February 2014, the same day Poon signed the Offer Letter.

7. P alleged that Ds were in breach of the tenancy agreement, namely they had been in default of payment of rent, government rates, management fees, and also failed to sign the formal tenancy agreement with P despite repeated requests and demands.

8. P issued the writ on 24 June 2014 with statement of claim endorsed (“SOC”), seeking arrears of rent, government rates, management fees in the total sum of HK$195,172.50, and sought forfeiture of the tenancy agreement, and loss and damage by reason of Ds’ breach.  P claimed, among other things, vacant possession of the Premises and mesne profits pending the determination of this action.

9. Both Ds acted in person.  Poon initially filed a defence simply denying all the allegations and the claims in the SOC.  This was later amended to include, among other things, an allegation that there were serious illegal structures and Poon pleaded “ex turpi causa non oritur actio”, namely no action can validly arise out of an immoral/illegal cause, and alternatively “in pari delicto potior est conditio defendentis”, or equal criminality/both equally at fault can be a condition for defence.

10. Chen also filed a defence, and apart from similarly denying all the allegations in the SOC, she denied there existed any letter of offer or valid written document binding on Ds.  Chen further counterclaimed that she had never been a party to any valid written instrument regarding the Premises in the SOC and asked her name to be removed from the SOC, and that the action against her to be struck out.

11. P issued a summons on 25 July 2014, for summary judgment under Order 14 rule 1 of Rules of the High Court (RHC), further or in the alternative, an order under Order 29 rule 12(b) for interim payment of HK$195,172.50 and for interim payment of HK$38,080 per month during pendency of this action until final judgment, and an order under Order 18 rule 19 and under inherent jurisdiction that D2’s counterclaim be struck out and be dismissed (“25.07.14 Summons”).

12. In the 02.12.14 Order, Master Lo ordered, among other things, that:

(i)  Vacant possession of the Premises be delivered by Ds to P on or before 14 December 2014;

(ii)  Ds to pay P forthwith the sum of HK$41,622.50 by way of interim payment and on account of Ds’ liability for the use and occupation by Ds of the Premises up to 14 July 2014;

(iii)  Ds do pay P periodical payment of HK$38,080 per month[1] from 15 July 2014 by way of interim payment until final judgment, or delivery of vacant possession or further order;

(iv)  Ds be granted unconditional leave to defend;

(v)  Costs be in the cause with certificate for counsel.

13. Ds lodged their notice of appeal on 15 December 2014 (“Notice”).  There had been no proper application by Ds for any stay of execution of the 02.12.14 Order.

14. As Ds failed to deliver vacant possession or made any interim payments pursuant to the 02.12.14 Order, P issued writ of possession and fieri facias combined on 12 January 2015 (“Writ of Possession”).

15. At the hearing before this court, Poon was present and represented himself.  Chen was absent, but she had submitted written skeleton submissions dated 20 January 2015.  P was represented by Counsel Mr Vincent Lung.

16. Mr Lung had in his skeleton submissions lodged on 16 January 2015 sought summary judgment against Ds on the ground that there were no triable issues, and to strike out Chen’s counterclaim as ought in the 25.07.14 Summons, or alternatively, P should be entitled to vacant possession of the Premises and mesne profits which should be payable as interim payments during the pendency of the action, with a costs order of the hearing before the Master in P’s favour, instead of costs be in the cause (“Cross Appeal”).

General Legal Principles

17. The present appeal was brought under Order 58 rule 1 of RHC.  The appeal is dealt with by way of an actual rehearing of the application which led to the order, and the judge treats the matter as though it came before him for the first time, and this court is at liberty to exercise its discretion afresh[2].

18. The principles applicable to Order 14 applications are well-established.  To resist an Order 14 application, Ds must show that there are triable issues.  As submitted by Mr Lung, this court has to determine two questions: firstly, whether what Ds said was believable as opposed to whether its version of events was to be believed; and secondly, if it was, whether what Ds say would amount to an arguable defence in law.  In determining the first question, the court should not embark on a mini trial of the action on affidavit evidence.  The burden of proof is not a heavy one.  It is not the function of the Court at this stage to assess if a defence will succeed at trial.  Insofar as the second question is concerned, summary judgment will not be granted if there are arguable defences or serious disputes of law[3]. 

19. Mr Lung also submitted that the burden was on Ds to condescend into particulars, and obscure allegations are insufficient[4].

20. It is clear from Paul Y Management Ltd v Eternal Unity Development Ltd,unreported, CACV 16/2008, 12.08.2008 that in deciding whether Ds would have a bona fide defence, this court is not obliged to take the alleged defence on its face value, and must test it against the evidence including contemporaneous documents and the inherent probabilities[5].

21. As to striking out, it is trite that striking out is only available in plain and obvious cases[6].

22. Concerning interim payments, P specifically relies on Order 29 rule 12(b) of RHC.  The relevant principles are summarised by Chu J (as she then was) in Maxon Investment Ltd v Sino Leader (Asia) Ltd unreported, HCA 2332/2003, 6.7.2004. As submitted by Mr Lung, in a nutshell, this court has to be satisfied that:

(i)  P’s claim includes a claim for possession of land; and

(ii)  If the action proceeds to trial, Ds would be held liable to pay to P a sum of money in respect of Ds’ 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 Ds.

23. With the above general legal principles in mind, I turn to the parties’ respective case herein.

Ds’ Grounds for Appeal

24. Although the present appeal was by way of a rehearing and there was no separate or proper application by Ds for stay, Ds had attached to the Notice a document headed “Grounds for Appeal and Stay” (“Grounds”)[7].

25. So far as I could understand, the Grounds included, among other things, the following:

(i)  The Offer Letter bore the words “subject to contract and availability” and therefore was not a valid or enforceable  tenancy agreement;

(ii)  Ds decided not to proceed with the tenancy agreement due to illegal structures and conveyed this to P in about July 2014 (sic), but such was not accepted by P;

(iii)  Master Lo was wrong in making the 02.12.14 Order and there should be a stay until final order;

(iv)  There had been fraudulent misrepresentation on the part of P which led Poon into signing the Offer Letter;

(v)  Chen had ceased to be a partner of May Land Co on 31 January 2014, and thereafter any matters in relation to May Land Co had nothing to do with her, and further she did not sign the Offer Letter.

The Evidence

26. Mr Chan Kam Hon (“Chan”), P’s Deputy Chief Executive Officer, had made his 1^st affirmation in support of P’s 25.07.14 Summons.  Poon filed his 1^st affirmation in opposition. Chan then filed a 2^nd affirmation in reply, together with an affirmation of one Ms Anny Liu (“Liu”), who was a clerk employed by P and responsible for handling administrative affairs for P and its associated companies.  Both Chan and Liu each further filed an affirmation to clarify their respective earlier affirmations.

27. Poon had also filed a 2^nd affirmation in support of the Notice.

Discussion

Whether Ds were properly named as defendants in the writ

28. The Offer Letter was prepared by P and it was marked “Subject to Contract & Availability” and was addressed to Poon.  The letter started off referring to previous contact & conversation, and went on to say that P would like to offer to Poon the lease of the Premises on the terms and conditions set out. The essential terms of the tenancy were then set out and the Offer Letter was counter signed by Poon with the name of the company May Land typed underneath and chopped with the company chop of May Land Co. 

29. Poon had said in his 1^st affirmation of 1 September 2014 that P was fully aware that he should be the contracting party rather than May Land Co and that he was hurried into countersigning the Offer Letter and that in doing so, he had affixed the company chop of May Land by mistake.

30. As submitted by Mr Lung, in determining who was the contracting party to a contract, the court should adopt an objective approach, and he had referred the court to Shogun Finance Ltd v Hudson [2004] 1 AC 919.  It has been said that where there is a written agreement, the identity of the parties must be found in the terms of the document as a matter of construction[8].

31. Thus, although the Offer Letter was addressed to Poon, the tenant as stated in the Offer Letter was May Land Co, and Poon had chopped with the company chop of May Land Co, which he had brought with him.  On the face of the Offer Letter, and the tenant was clearly May Land Co, and not Poon personally.  This was also consistent with various letters after the signing of the Offer Letter[9], notwithstanding Poon had given a personal cheque for the security deposit. 

32. According to the search conducted by P on 7 March 2014 at the Business Registration Office, May Land Co was a partnership with 2 partners, namely (1) Poon with “Incoming Date” of 17 January 2014 and “Outgoing Date” of 00/00/0000, and (2) Chen, with “Incoming Date” of 22 March 2010 and “Outgoing Date” of 00/00/0000.

33. At the hearing before this court, Poon had produced a copy of the search record as at 5 December 2014, which indicated that as May Land Co was updated to “individual” from “partnership” on 26 June 2014, and that the “Outgoing Date” of Chen was stated to be 31 January 2014, but this was only updated on 26 June 2014, the date after the issue of the writ herein.

34. Section 8(1) of the Business Registration Ordinance, Cap 310, states that any change in particulars of a business as set out in the form of application for registration, any person carrying on such business shall within 1 month of such change notify the Commissioner.

35. Poon, nor any of Ds had failed to comply with the above provision, and thus under s 38(1) of the Partnership Ordinance, Cap 38, P was entitled to treat all apparent partners of the “old partnership” as being current partners until it had notice of the change.

36. At the date of the Offer Letter, and also at the date of the writ, Chen was still on the record of the Business Registration Office as being a partner of May Land Co. 

37. Mr Lung submitted, which I accept, the partnership was the proper defendant named in the writ, and Chen was properly named with Poon trading in partnership as May Land Co.  I thus reject Chen’s submissions and also Poon’s submissions in this respect.

Whether there was a binding and enforceable tenancy agreement between P and Ds

38. Ds had relied heavily on the words “Subject to Contract & Availability” on the Offer Letter.

39. As submitted by Mr Lung, these words would not automatically invalidate any agreement reached by the parties.

40. Clause 5 of the Offer Letter referred to the payment of the security deposit of HK$76,000, namely of 2 months’ rental, upon signing the Provisional Tenancy Agreement.  Clause 6 stated that the tenant was to pay one month rental HK$38,000 to the landlord upon signing the Provisional Agreement.  Clause 7 then went on to provide for payment of legal cost and stamp duty equally by the tenant and the landlord if they were using the same solicitor, otherwise each was to bear its own cost. Clause 8 provided that the Premises were to be delivered to the tenant in an “as is” condition.

41. Although there was reference to a Provisional Agreement, or what the parties had referred to as a “formal agreement” which was to be signed, as I had mentioned earlier, Poon had signed the Offer Letter with the name of the company May Land Co typed thereunder and chopped it with the company chop of May Land Co.  Further above Poon’s signature and the company chop, there were the words “Accepted by the Tenant”.

42. Without waiting for the signing of the Provisional Agreement, Poon had handed to P a cheque for the security deposit of HK$76,000, although the first month’s rental of HK$38,000 was agreed to be deferred, upon which P handed to Poon on behalf of May Land Co two sets of roller gate keys for the Premises.  Poon had further signed a letter of receipt dated 14 February 2014 (“Receipt Letter”) on behalf of May Land Co acknowledging receipt of the keys.  The Receipt Letter was also chopped with the company chop of May Land Co. 

43. Thus, on the same day of the handing over of the keys, vacant possession of the Premises was delivered to Ds.  The Receipt Letter stated that the keys should be returned to the landlord “upon expiry of the tenancy”. 

44. The execution of a Provisional Agreement or formal agreement was never stated to be a condition precedent, or was there any provision to the effect that the terms of the Offer Letter were not binding until the parties had signed the Provisional Agreement, or any formal agreement. 

45. As submitted by Mr Lung, it would be against commercial sense that Ds were allowed to enter and occupy the Premises if negotiations on the terms of any intended formal agreement were still being finalized, with no legal rights and obligations in the interim.

46. The Offer Letter was also subsequently arranged to be stamped by P, albeit only on 6 October 2014.

47. Looking at the present evidence before this court, the Offer Letter had contained all the essential terms of the tenancy which were agreed and signed by both P as landlord and Ds as tenant indicating acceptance of those terms, and with the handing over of the possession and the payment of the security deposit, in my view the tenancy had commenced from 15 February 2014.

48. In any event, Mr Lung had also submitted that it was beyond question that  at the very least  the tenancy was implied by conduct, namely:

(i)  P had handed over the keys to the Premises to Ds on the same day;

(ii)  Ds had paid HK$76,000 to P in compliance with Clause 5 of the Offer Letter;

(iii)  Ds never denied that they came into possession of the Premises, and at one stage between about mid March 2014 to mid July 2014, they were sub-letting the Premises to one Yeung Chung Kong trading as Kit and Tina[10];

(iv)  Ds had settled some of the outgoings relating to the Premises, including various electricity bills, water bills and rates.

49. Notwithstanding Ds denying denied there was any valid/enforceable written agreement, Poon clearly accepted the terms and  admitted having taken possession of the Premises on behalf of Ds.

50. Chan had said that on 14 February 2014, the date of signing of the Offer Letter, the keys to the Premises were delivered to Poon so that Ds could carry out renovation at the Premises, and further, at Poon’s request, P agreed that the payment of the first month’s rent could be deferred to the signing of the formal tenancy agreement.

51. Chan further said that he then repeatedly called Poon in early April 2014 to request him to attend P’s solicitors’ office to sign the formal tenancy agreement, but Poon kept changing or cancelling the appointment and delaying by requesting changes in various agreed terms of the tenancy. 

52. Chan said on about 8 April 2014 Poon had called him and requested P to agree to Yung Chung Kong trading as Kit and Tina (“K&T”) to take up the tenancy agreement in place of May Land Co.  Chan had produced a faxed note from Ds dated 11 April 2014, stating that due to changes in the circumstances of May Land Co, they requested a shorter term for the tenancy, and that they should discuss the details later.  This note was signed by Poon on behalf of May Land Co and chopped with the company chop of May Land.

53. Chan said P did consider accommodating to such request from Ds, but neither Ds not K&T turned up to sign the formal tenancy agreement, nor made any payment of the outstanding arrears.

54. P eventually agreed to reduce the rent from HK$38,000 per month to HK$35,000 per month, and that rent was payable as from 14 April 2014 but only upon certain conditions as set out in the paragraph below.  As a result thereof, the rent from 14 April 2014 to 31 May 2014 was adjusted to HK$52,500, and after adjusting the security deposit of HK$76,000 to HK$70,000, the balance of rent payable from 14 April 2014 to 31 May 2014 was HK$46,500.

55. Poon had given a cheque to P on 25 April 2014 post-dated to 29 April 2014 for the amount of HK$46,500 (“Cheque”). This was subsequently dishonoured upon presentation on 29 April 2014.  P had made it clear in a letter dated 2 May 2014 to Ds that P’s agreement to reduce the rent and the security deposit was conditional upon the Cheque being honoured and upon Ds signing the formal agreement on 30 April 2014 (“02.05.14 Letter”)[11].  As the Cheque was dishonoured, P further gave notice in the 02.05.14 Letter to terminate the tenancy as of 14 June 2014, and demanded all arrears of rent from 15 February 2014, plus rates, plus management fees, totaling HK$155,124.40.

56. Ds never denied that P’s allegation in the 02.05.14 Letter, namely P’s agreement to reduce the rent and the security deposit as from 14 April 2014 was conditional upon the Cheque being honoured and Ds signing the formal agreement on 30 April 2014.

57. The first letter sent by Ds to P after the 02.05.14 Letter was  a letter dated 9 May 2014[12] (“09.05.14 Letter”), which stated that due to illegal structures, Poon and partner/s were not able to reach agreement, and was thus not able to sign the formal agreement before the due date, and thus the Cheque was dishonoured, and that Ds were sincere and had spent HK$30,000 odd on renovations and electric appliances, and had also paid for rates, water and electricity charges, and they agreed to deliver possession of the Premises to P before end of July 2014, and requested that all “ rental” was to be deducted from the security deposit.

58. On 12 May 2014 P sent a letter to Ds[13] pointing out, among other things, that Ds wanted to back out of the tenancy, and asked to substitute the tenant, or to sign a shorter lease, and that the alleged discovery of illegal structure was only an excuse.  P indicated that it would accept Ds returning possession of the Premises before end of July 2014 subject to 4 conditions (“12.05.14 Letter”), including payment within 7 days of all arrears of rent from 15 February 2014 to 31 July 2014, amounting to HK$133,000, after deducting the security deposit, plus all outstanding rates, management fees, and utilities bills.

59. In Ds’ reply letter of 19 May 2014, all Ds said was they hoped that they could resolve all matters with P, and that the discovery of illegal structures had made Ds changed their minds.  It would transpire from P’s letter of the following day (“20.05.14 Letter”) that in fact prior to Ds sending their reply, Poon had telephoned Chan offering to move out in June, and yet this was not mentioned in Ds’ reply letter.  P had stressed in the 20.05.14 Letter that the problem could be easily solved, since Ds no longer wished to rent the Premises, all they needed to do was to return the Premises to P and to pay all rental during Ds’ use and occupation[14].

60. Ds responded on 27 May 2014, indicating the terms in P’s 20.05.14 Letter were not acceptable[15].

61. P sent a reply letter on 28 May 2014, demanding possession of the Premises prior to 31 May 2014, and thereafter they would discuss with Ds over the amount of the arrears of rental[16].

62. The letters from Ds clearly indicated that they accepted there was a tenancy and, in particular in their 09.05.14 Letter they had requested an indulgence from P in relation to the hand back date and requested that all “rental” was to be deducted from the security deposit.  They only alleged existence of illegal structures, so far as I can see, for the first time in their 09.05.14 Letter, but only as a reason as to why Poon and partner/s were not able to reach agreement and was thus not able to sign the formal agreement.  The alleged discovery of illegal structures was not even pleaded or relied on in Poon’s defence initially filed on 17 July 2014, and was only added in his amended defence and counterclaim filed about a week later in denying that there was any breach of the tenancy agreement.

63. As submitted by Mr Lung, which I accept, the parties’ conduct, including both of them signing the Offer letter, P handing over the keys and vacant possession to Ds, Ds paying the security deposit to P, and all conduct thereafter, all indicated that there had been a binding and enforceable tenancy agreement between the parties.

64. Indeed, as pointed out by Mr Lung, if Ds’ argument was correct, that there had never been any valid tenancy, there was all the more reason for them to immediately return vacant possession of the Premises to P.

The alleged illegal structures

65. Poon had produced a ground floor plan and the cockloft plan of the Premises together with calculations of total area (“Plans”) said to be including unauthorized additions and allegedly signed by a Ho Yun Kun, John on 29 August 2014, and Poon had also produced a name card of “Sr John Y.K. Ho” of RHL Surveyors Limited[17].  Poon had alleged in his 1^st affirmation that Mr John Ho had inspected the Premises and after inspection and checking the building plans, the existence of the unauthorized structures was confirmed to Poon by Mr Ho.  Poon further alleged that a “better presentation” was being prepared by Mr Ho and would be provided to Poon to produce to the court in future[18].

66. The Plans contained actual area of the ground floor and the cockloft typed in, and then there were words “including unauthorized additions” handwritten in.  The aggregate of the “total area including unauthorized additions” were all hand written.  So far as I can see, the “better presentation” had never been produced by Ds, nor had there been any supporting affirmation from Mr John Ho.

67. In any event, there were no clear particulars or descriptions of the alleged illegal structures or “unauthorized additions” on the Plans.  There were further no reasons given by Mr Ho as to why the additions, if any, were “unauthorized additions”.

68. Ds had agreed to take possession of the Premises in the “as is” condition as stated in Clause 8 of the Offer Letter.  In fact, Liu had stated in her 2^nd affirmation that Poon on behalf of Ds had inspected the Premises 4 times accompanied by her, including once on the actual day of the signing of the Offer Letter, and prior to Poon signing of the Offer Letter on behalf of Ds.  This was not really denied by Poon.

69. Finally, even if Ds’ allegations were true, as submitted by Mr Lung, the covenant to pay rent was independent of the other covenants or obligations under a lease[19], and that it was not open for Ds to say that they were entitled not to pay rent because of P’s supposed breach.

70. Further, as submitted by Mr Lung, it is also not possible for Ds to rely on the doctrine of equitable set-off.  For equitable set-off to operate, the claim and counterclaim must be sufficiently closely connected so that it would be manifestly unjust to enforce one without regard to the other[20].  As said by the then Chu J in Charmway Development Limited and Long China Engineering Limited, unreported, HCA 54 of 2001, 16.7.2001, the first issue to be resolved in that case was whether the plaintiff’s obligation to pay rent was conditional upon the defendant’s compliance with certain clauses of the tenancy agreement[21].

71. Here, in the Offer Letter, there were no provisions that Ds’ obligation to pay rent was conditional upon there being no illegal structures or no unauthorized additions in the Premises.

72. Having considered the above, I have come to the view that on the present evidence it is not possible for Ds to rely on the doctrine of equitable set-off.

Alleged rent-free period

73. As submitted by Mr Lung, taken to the highest, this would be no more than a partial defence to quantum on past losses.  Chan had said in his 2^nd affirmation that he had verbally agreed to give 2 months’ rent free period to Ds, as P was agreeable to let the Premises to Ds for a term of 3 years, and that this would be set out in the formal agreement[22].  In any event, Master Lo deducted 2 months’ rent from the interim payment to be made by Ds upon concluding that the issue was triable.  I agree whether there was an agreement for 2 months’ rent free period is a triable issue.

Alleged Fraudulent Misrepresentation

74. In summary, Poon alleged that P induced him to sign the Offer Letter by misrepresentations and wrongful design:

(i)  P tricked him into signing the Offer Letter under the pretext that it was only temporary agreement and not yet final;

(ii)  P did not give him a tenancy agreement in Chinese so that he did not know what was written in the Offer Letter;

(iii)  P said there would be 2 months’ rent free period under the proposed tenancy, without telling him that it was not being expressly written down in the Offer Letter;

(iv)  P urged him to pay HK$76,000 as the intended rental deposit on account, with the inducement that he could have the keys of the Premises for decoration immediately;

(v)  P must be aware of the existence of unauthorized structures, and intentionally added in the Offer Letter that the Premises to be leased were delivered to him on an “as is” condition.

75. P had relied on the judgment of Li J in another tenancy matter The Wah On Exporters & Importants Association v Poon Shing trading as May Land Glass and Mirror, DCCJ 912/2002, 17 January 2014.  Poon Shing is Poon’s father, and it was stated therein that Poon had been involved in tenancy matters of another property.  In fact, Mr Lung had submitted that there were some factual similarities in the underlying dispute of that judgment and the present action.

76. Poon had objected to the reference to the above judgment being relied on.  As the judgment had been published on legal reference, I do not see why Chan could not have exhibited a copy of that judgment in his 2^nd affirmation, and indeed this was placed before Master Lo who had read it before arriving at the 02.12.14 Order. 

77. Liu had in her 1^st affirmation confirmed that she had explained the contents of the Offer Letter to Poon.  Even though Poon claimed he did not understand English, his acknowledgment of service, his defence, his amended defence and counterclaim was in English, and indeed contained legal principles in Latin, with no interpretation clause.  Similarly, Chen’s acknowledgment of service, defence and counterclaim was in English, with no interpretation clause.

78. I am of the view that on the present evidence, what Poon had alleged about fraudulent misrepresentation was not really believable.

Cross Appeal

79. Although P had not lodged any formal notice for cross appeal, it is stated under paragraph 58/1/4 of the HKCP that although Order 50 contains no provision for a formal notice of cross appeal, the judge’s discretion on hearing an appeal from a master is in no way hindered by the previous exercise of the master’s discretion; hence, where a defendant appeals against a master’s order under Order 14 giving conditional leave to defend, and the judge is satisfied that there is no defence to the action, he may properly give summary judgment for the plaintiff notwithstanding that no formal notice of cross appeal has been given by the plaintiff.

80. It has been said that such a notice, whilst not strictly required by the rules, would be of assistance to the opposing advocate and to the court and would reduce the risk of any one being taken by surprise or being embarrassed, and that good practice requires that such notice be given. 

81. P’s intention to cross appeal was clearly reflected in Mr Lung’s skeleton submissions, the Chinese translation of which had been served on Ds.  Ds should not be taken by surprise.

Summary Judgment

82. The burden is on Ds to show that there are triable issues, or that they had an arguable defence in that the Offer Letter did not constitute a valid enforceable tenancy agreement. 

83. Having considered Poon’s amended defence and Chen’s defence, I have come to the view that Ds have not been able to discharge the burden on them, save for the issue as to whether there had been an agreement for two months’ free rental period.

84. I am thus prepared to grant summary judgment for P, as sought by P in paragraph 1 of the 25.07.14 Summons, save for the issue of the two months rent free period from 15 February 2014 to 14 April 2014 , which should go to trial.

The Counterclaims

85. Poon’s counterclaim for damages had no particulars, but as P did not apply to strike out Poon’s counterclaim in the 25.07.14 Summons, this matter should go to trial.

86. Chen’s counterclaim was not a stand-alone claim, in that it would rise and fall with her defence.  In light of what I have said earlier that Ds were rightly named as defendants, and rejected Chen’s and Poon’s submissions in this regard, it is plan and obvious that Chen’s claim is frivolous and unnecessary, and in my view should be struck out. I will thus grant an order in terms of paragraph 3(a)

Conclusion

87. In light of the above, I will dismiss Ds’ Appeal and will allow P’s Cross Appeal in part, as set out above. 

88. As P is the successful party, I order that Ds shall pay P’s costs of this appeal, and of the 25.07.14 Summons including the hearing before Master Lo, such costs to be taxed, if not agreed, with certificate for Counsel.  This is an order nisi, which shall be made final after 21 days.

89. An interpreter will be available for interpreting the contents of this judgment to Ds at the time of handing down.  A copy of the Chinese translation of this judgment will be forwarded to Ds as soon as practicable.