ROSERIC LTD. v. WEST RIVER DEVELOPMENT LTD.

1993, No. A2740

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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Litton, J.A. :

1. This is an application for summary judgment under Order 14 of the Rules of the Supreme Court. The facts of the case are plain and beyond dispute. The plaintiff is the registered owner of shop premises on the ground floor of 26 King Kwong Street, Happy Valley. By a Sale and Purchase Agreement dated 19 March 1991 the plaintiff agreed to sell and the defendant agreed to buy the shop premises for $3.02m, completion to take place on 18 April 1991. One complication arose.

2. The plaintiff had previously entered into a provisional sale and purchase agreement in respect of the same shop premises with a Mr. Au who on the 12 March 1991 had instituted legal proceedings in High Court Action A1803 of 1991 against the plaintiff seeking an order for specific performance of that agreement. Completion of the sale to the defendant therefore did not take place on 18 April 1991. However in April 1991 the plaintiff let the defendant into occupation of the shop premises as a licensee under an oral arrangement. It is common ground that the terms of that arrangement are set out in a letter dated 27 August 1991 from the defendant's former solicitors. The entire case turns upon a proper construction of the arrangement embodied in that letter.

3. Paragraph 2 of the letter says:

"2. The Purchaser shall be allowed to occupy the Property up to the actual date of Completion as a licensee. The said licence shall be irrevocable unless agreed by both parties."

The "actual date of completion" in paragraph 2 refers to paragraph 1 of the letter whereby completion of the sale was postponed to one month after the plaintiff had served a written notice confirming that the plaintiff had obtained judgment in his favour in High Court Action No. 1803 of 1991. But completion must in any case take place not later than 30 September 1992.

4. Paragraph 3 of the letter requires the defendant to pay a licence fee of $25,000 per month from 18 May 1991 to the actual date of completion.

5. In my judgment what the parties clearly contemplated by the arrangement made in April 1991 and embodied in that letter was that not later than 30 September 1992 the legal estate in relation to the shop premises would be conveyed to the defendant pursuant to the Sale and Purchase Agreement of 19 March 1991. It must follow by necessary implication that the contractual licence to occupy the shop must end not later than 30 September 1992. Before that date it was irrevocable: except of course in the event of an earlier completion of the sale to the defendant.

6. What in fact happened between April 1991, when the license to occupy the shop began, and 30 September 1992, the last date for completion of the sale, was this: Mr. Au obtained an order for specific performance against the plaintiff and judgment in his favour was confirmed by the Court of Appeal, with the result that the plaintiff was unable to complete the sale to the defendant.

7. What is the significance of this as far as the present litigation before me is concerned? In my judgment it has no significance at all. It cannot alter the arrangement between the parties regarding the defendant's right to occupy the shop as a licensee. Up to 30 December 1992 the defendant was a contractual licensee; after 30 September 1992 it became a bare licensee. On 14 December 1992 the plaintiff's solicitors gave notice to the defendant terminating the licence on 31 December 1992. This was, in the circumstances, ample notice. The defendant by remaining thereafter on the premises became a trespasser.

8. As regards the licence fee it is common ground that since 18 July 1992 the defendant has ceased payment. What the plaintiff is entitled to therefor is the following: Five months' licence fee at $25,000 per month up to 17 December 1992, that is $125,000, plus an amount for the residue of the month of December 1992, that is $11,290, making a total of $136,290. Thereafter the damages for trespass will have to be assessed.

9. Mr Kwong argues that as regards the amount of licence fee owing to the plaintiff I should order a stay of execution on the sum awarded because the plaintiff has in separate proceedings, High Court Action No. A9220 of 1992, been adjudged liable to pay damages to the defendant for failing to complete the sale. Those damages are to be assessed. The effect of such a stay contended for by Mr. Kwong would be to require the plaintiff to give security for the damages which the plaintiff might, upon the assessment in High Court Action No. 9220/92, be ordered to pay to the defendant. I can see no principle on which such a stay can be ordered. It is not suggested that the plaintiff might, with the judgment sum in hand, dissipate its assets and put it out of the defendant's reach.

10. There must therefore be judgment for the plaintiff as follows. (1) An order for possession of the shop premises. (2) Payment by the defendant of the sum of $136,290 by way of arrears of licence fee. (3) Interest on the amount outstanding since 18 July 1992 at the prevailing judgment rate. (4) An inquiry as to damages for the defendant's unlawful occupation of the premises as from 1 January 1993 until possession is delivered up and payment by the defendant of the sum found due. (5) Costs of the action.

11. After hearing counsel further, there will be a stay of execution on the order for possession until 30 June 1993.