LONG WHOLE INVESTMENTS LTD v. HO CHING YEE AND OTHERS

DCMP 3446/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 3446 OF 2015

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DECISION

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APPLICATION

1.  This is the plaintiff’s application by way of Originating Summons dated 31 December 2015 under Order 113 of the Rules of District Court (Cap 336H) for an order of possession of an apartment known as Apartment D2, 2^nd Floor, Hillwood Vista, Nos 114-116 Austin Road, Kowloon, Hong Kong (the “Property”).

BACKGROUND

2.  The plaintiff carries on a business of operating serviced apartments.  It has since 28 February 2008 been the registered owner of Nos 114-116 Austin Road, Kowloon, Hong Kong.  The Property is one of the many serviced apartments in the building erected thereon (the “Building”).

3.  By a Licence Agreement dated 16 October 2014 made between the plaintiff and the 1^st defendant (the “Licence Agreement”), the 1^st defendant was granted “the right to use” the Property on the terms and conditions therein for a term of 12 months commencing from 16 October 2014 and expiring at 12 noon on 15 October 2015 (both days inclusive) for a monthly licence fee of HK$15,400.00 (the “Licence Fee”).  Separately from the Licence Fee, the Licence Agreement also provided that “Water & electricity charges will be payable by the Licensee to the Licensor monthly within 7 days upon presentation of the billing by the Licensor.”

4.  On 2 July 2015, the plaintiff commenced DCCJ No 3014 of 2015 against the 1^st defendant (the “Action”) based on the 1^st defendant’s failure to pay the Licence Fee from 16 April to 15 June 2015, claiming (1) that the Licence Agreement had been terminated by a plaintiff’s letter of 15 June 2015; (2) the Licence Fee in arrear and mesne profit for the 1^st defendant’s use and occupation after 15 June 2015; and (3) possession of the Property.  The Action, still on-going, has reached the stage of close of pleadings only.

5.  On 31 December 2015, the plaintiff issued the Originating Summons herein.

Plaintiff’s claim

6.  The claim of the plaintiff, represented by Mr Chan Hei Ching, is simply based on the fact that despite the Action, the Licence Agreement has expired in any event and it is thus entitled to recover possession of the Property.

1^st defendant’s defence

7.  The defence of the 1^st defendant, acting in person, absent at the hearing but having filed a skeleton submissions, is three-fold:-

(1)  The Licence Agreement was actually a tenancy agreement and thus by virtue of Order 113 rule 1, the Order 113 procedure does not apply.

(2)  Each month, the 1^st defendant has continued to pay to the property management company of the Building, and the property management company has continued to accept, the water and electricity charges.  At the hearing, Mr Chan confirmed to me that it is still the case.  Such acceptance, according to the 1^st defendant,  constitutes a renewal of the licence or in the 1^st defendant’s term, “tenancy”.

(3)  Prior to the issuance of the Originating Summons herein, on 2 July 2015, the plaintiff issued a Writ of Summons in the Action against the 1^st defendant for, inter alia, vacant possession of the Property.  Thus, the present proceeding overlaps with the Action and thus should not have been commenced.  Granting an order of possession as sought by the Originating Summons would prejudice the 1^st defendant’s right to defend in the Action.

2^nd defendant’s defence

8.  The defence of the 2^nd defendant, also acting in person and also absent at the hearing but also having filed a skeleton submissions, is not entirely clear.  He alleges that he is an “invited guest” in the Property.  He acknowledges that his status as an invited guest should not affect how the present Originating Summons should be determined.  That said, he supports the 1^st defendant’s defence.  Inherent in his defence must be his acceptance, and it must, in my view, be the case, that if the 1^st defendant has to return possession to the plaintiff, he also has to quit the Property.

Issues

9.  In a proceeding begun by an Originating Summons, where the plaintiff satisfies the court that the defence raises no triable issues, the court may determine the matter summarily without hearing any oral evidence: see Hong Kong Civil Procedure 2016 Vol 1 §§28/4/1 and 113/8/10.  In the present proceeding, the plaintiff asks me to determine the matter summarily.

10.  Thus, the issues before me are:-

(1)  Whether there is any triable issue that the Licence Agreement was a tenancy agreement;

(2)  Whether there is any triable issue that the acceptance by the property management company of the water and electricity charges constitutes any renewal of the licence or “tenancy”; and

(3)  Whether there is any triable issue that the Action should be a ground for not proceeding with the present Originating Summons.

Nature of the Licence Agreement

11.  I have no doubt finding that the Licence Agreement was a licence and not a tenancy agreement.

(1)  It is well-established that the material difference between the two is that no exclusive possession is granted under a licence but a tenancy.  The label given to the agreement, though a relevant factor, is not conclusive.  The court has to look at the substance of the agreement.

(2)  There was no exclusive possession granted under the Licence Agreement.

(3)  On the contrary, (a) consistent with the nature of a serviced apartment, Clause (4) expressly reserved the right of the Licensor to enter the Property with prior notice to the Licensee but without any need to seek the latter’s consent; and (b) Clause (16) expressly stipulated that no tenancy was created.

(4)  There is no evidence before me suggesting that the aforesaid provisions were sham.

12.  Thus, Order 113 procedure applies.

Acceptance of water and electricity charges

13.  I reject the defence that the acceptance by the property management company of the water and electricity charges constitutes any renewal of the licence.

(1)  “Water and electricity charges” is a separate item of charges under the Licence Agreement.  This can only mean that the “water and electricity charges” is regarded not related to the occupation of the Property.  Indeed, the water and electricity charges were incurred by the 1^st defendant herself.  Mr Chan, for the plaintiff, confirmed to me that not a single penny of the payments of the billing of the water and electricity charges goes to the plaintiff.  The true nature of these payments to the plaintiff is, more accurately, disbursements incurred by the 1^st defendant herself.  The acceptance of such payments has nothing to do with acceptance of the 1^st defendant as a licensee, let alone renewal of the Licence Agreement.  Put another way, the 1^st defendant remains a trespasser, and since she has incurred charges in the trespass payable to a third party who demands the plaintiff to pay, the plaintiff is entitled to demand the trespasser for the payment of those charges.  As these charges are not any licence fee and are unrelated to the occupation of the Property itself, demanding for payment of these charges is not inconsistent with the plaintiff’s stance that the 1^st defendant is a trespasser.

(2)  Further and in any event, the “Term” of the Licence Agreement provided that:-

“The Licensee shall give not less than 15 days’ advance written notice of any request for renewal/extension of the Term, and subject to availability or otherwise, such request may be accepted… or refused by the Licensor in its absolute discretion. Upon acceptance of the request by the Licensee, the Licensor shall enter into a new Licence Agreement for the renewed/extended Term with the then agreed Licence Fee.”

There is no dispute that there was no such written notice or any new Licence Agreement entered into, let alone any agreed Licence Fee.

The Action

14.  I also reject the defence that the Action should be a ground for not proceeding with the present Originating Summons and not granting an order sought herein.

(1)  Although one of the relief it seeks is also possession of the Property, the Action is based on the cause of action of the 1^st defendant’s breach of the Licence Agreement in having failed to pay the Licence Fee from 16 April to 15 June 2015.  The cause of action is totally different from the one underlying the present proceeding – namely, the expiry of the Licence Agreement on 15 October 2015, an event taking place after the commencement of the Action.  Any defence run by the 1^st defendant in the Action cannot affect the present proceeding and the converse is also true.

(2)  A grant of the possession order herein is in fact premised on an alternative run by the plaintiff, namely, that even if the Licence Agreement had not been terminated early as claimed in the Action, it would have in any event expired on 15 October 2015.

(3)  In other words, putting the 1^st defendant’s case to the highest in the Action, even if the 1^st defendant succeeded in defending herself therein for whatever reason, the incontrovertible fact is that the Licence Agreement expired on 15 October 2015, absent any renewal or extension (a point which I have already disposed of in favour of the plaintiff above).  Worse for her, if the 1^st defendant fails her defence in the Action, the Licence Agreement would have been terminated on 15 June 2015, as a result of which the plaintiff would still be entitled to possession of the Property.

(4)  Thus, I cannot see how the 1^st defendant would be prejudiced by a grant of a possession order herein, as alleged by the 1^st defendant.   On the contrary, the plaintiff would be highly prejudiced if a grant is refused despite the incontrovertible fact that the Licence Agreement expired on 15 October 2015 in any event.

Conclusion

15.  As the 1^st defendant’s defence fails, the 2^nd defendant’s defence (contingent upon the 1^st defendant’s) also fails.

16.  In the circumstances, I allow the plaintiff’s application.

Costs

17.  I see no reason why the costs should not follow the event.

18.  Mr Chan, for the plaintiff, asked for costs on an indemnity basis.  He submitted that the defence mounted by the 1^st and 2^nd defendants was unmeritorious, vexatious, frivolous and scandalous.  Mr Chan also pointed out that the 1^st defendant in the Action pleaded that she would leave the Property upon the expiry of the Licence Agreement.

19.  I understand the plaintiff’s sentiment.  However, having considered that the 1^st and 2^nd defendants are not legally represented, and having considered that the management company is still demanding the 1^st defendant to pay the water and electricity charges, I do not think it appropriate to order the costs on an indemnity basis.

Order

20.  I thus make the following order:-

(1)  The plaintiff do recover possession of the Property; and

(2)  The 1^st and 2^nd defendants do jointly and severally pay the costs of this application to the plaintiff in the sum to be summarily assessed, with certificate for counsel.