NEW EASTERN INVESTMENT CO. LTD. v. CHI HING (a firm)

IN THE LANDS TRIBUNAL OF HONG KONG

Application No. L.T. 853 of 1984

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JUDGMENT

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1. In this case it is admitted that on July 26th, 1984, the parties entered into an oral agreement for a new two years' tenancy of the premises in suit, which are ground floor premises, with effect from October 1st, 1984, at a rent of $7,000 a month payable "in advance". Yet two days later, on July 28th, 1984, the applicant gave the respondent notice to quit (exhibit R3). Although it has not been pleaded by the applicant, Mr. Paul Kwong, a solicitor in the employ of Messrs. Hastings and Co., solicitors for the applicant, has sought to say in evidence that the agreement was subject to a condition precedent that it should take effect only in the event that applications for possession of the upper floors of the building on the ground that the same was required for the purpose of re-development failed. However, his evidence as to this is that he merely told Mr. Anthony Lo, a solicitor in the employ of Messrs. Wong, Hui and Souza, who were then acting for the respondent, in sum, as follows:

"I did not expressly tell Mr. Lo that it was conditional, but I did tell him that the applicant was seeking possession of both upper floors."

For his part, Mr. Lo said this:

"It was not conditional upon anything. I asked Mr. Kwong to have the terms made an order of the court. He said he wasn't prepared to do so because that would affect and prejudice his other applications for possession on the grounds of proposed re-development of the upper floors."

And later, in answer to the court, he said:

"Mr. Kwong only mentioned the other applications re the upper floors after the terms had been agreed."

That statement was not challenged in cross-examination, and there is no evidence to the contrary. Suffice it to say that, if the question arises at all, in my judgment the mere mention by Mr. Kwong after the terms had been agreed that applications for possession for re-development of the upper floors were pending did not constitute a condition precedent that the agreement was to take effect only in the event that those applications failed. Why Mr. Kwong should have agreed to a new tenancy of the ground floor if it was sought to redevelop the building must remain a matter of surmise.

2. On December 10th, 1984, an application for possession of the premises in suit arising from the old tenancy, which expired on September 30th, 1984 (L. T. 250/84), came on for hearing, but was withdrawn by the applicant, which nevertheless sought orders for the payment of arrears of rent at the rate of $1,215 a month under the old tenancy and arrears of rent at the rate of $7,000 a month under the agreement for the new tenancy. On that occasion the applicant was represented by Mr. Jerome Chan and the respondent was represented by Mr. Shane Cunningham, both of Counsel. It is common case, so far as it goes (and I emphasize those words), that Mr. Cunningham refused to consent to an order for payment of arrears of rent at the rate of $7,000 a month under the agreement for the new tenancy. In this connexion various documents have been put in evidence upon this trial. I do not propose to deal with them in extenso. The applicant, however, with conspicuous celerity saw fit to treat that refusal as a repudiation of the agreement for the new tenancy, which it purported to accept, whereupon it made the instant application. At this stage it is perhaps appropriate to note that the applications for possession of the upper floors were granted in August, 1984 - according to Hastings' letter dated September 12th, 1984, to Wong, Hui and Souza (enclosure 14 in exhibit R4) on the 3rd. Also, that on August 22nd, 1984, Hastings and Co. wrote to Wong, Hui and Souza (Of, exhibit R2) saying (inter alia)

"Our client has no intention to renew the expired tenancy on whatever terms."

One cannot but wonder whether Hastings and Co. were having somewhat belated second thoughts about the wisdom of agreeing, as they admittedly agreed, to grant the respondent a new tenancy. But, however that may be, it is, I think, clear from the documents which I have just mentioned that Mr. Cunningham and Hong, Hui and Souza were quick to contend that no such thing as repudiation had been contemplated by Mr. Cunningham's refusal to consent to an order for payment of arrears of rent at the rate of $7,000 a month under the agreement for the new tenancy in L.T. 250/84 - see particularly exhibits R5, 6 and 7. At this juncture it is perhaps pertinent to observe that undisputed evidence has been led that rent at the rate of $7,000 a month under the agreement for the new tenancy has been tendered on behalf of the applicant with effect from October 1st, 1984, to date, and that the cheques have been retained by Hastings and Co., who have issued receipts bearing some such legend as "accepted as mesne profits or interim payments", and in particular that Mr. Wong for the applicant expressly states that he takes no point regarding the dates upon which the cheques were tendered, the memorandum of agreement for the new tenancy being silent as to the day of the month on which rent was to be paid.

3. The crux of the matter, therefore, is whether Mr. Cunningham, by refusing to consent in L. T. 250/84 to an order for payment of arrears of rent at the rate of $7,000 a month under the agreement for the new tenancy repudiated that agreement. While I confess that I find neither his endorsement on his instructions, nor his draft letter to Hastings and Co. nor the draft postscript thereto (exhibits R4, 5 and 6) any too easy to follow, it seems to me to be clear enough that what he was probably really saying was that he was refusing to consent to an order for payment of arrears of rent at the rate of $7,000 a month under the agreement for the new tenancy because the application in L. T. 250/84 was brought upon the old tenancy agreement, not the agreement for the new tenancy, and that the court therefore had no jurisdiction in L. T. 250/84 to make any order arising from the latter agreement, even by consent, and that inasmuch as the memorandum of the latter agreement had not been duly signed that agreement was unenforceable. Save that he was plainly wrong in the matter of the memorandum, which, the agreement being for a term not exceeding 3 years, was unnecessary anyway (of. sub-section (2) of section 6 of the Conveyancing and Property Ordinance), I do not propose to express any opinion whether his submissions were well or ill-founded, or wisely or unwisely made. But I am certainly not persuaded that he was saying that the respondent refused to pay the rent under the agreement for the new tenancy then or at all, and was therefore repudiating the agreement, especially when one considers that the respondent has tendered that rent ab initio and is resisting the instant application with all its might and main. Indeed, in my view, it would be contrary to common sense to hold otherwise, and I may say that I find the applicant's suggestion that the respondent has changed his mind particularly lame. On the contrary, in my view this case bears all the hallmarks of an applicant anxious to wriggle out of an agreement unwisely made on the slightest of pretexts and none of the hallmarks of a respondent anxious to repudiate it.

4. Finally, I will just say that I agree with Mr. Li for the respondent that, the respondent having continued in possession after the expiration of the old tenancy on September 30th, 1984, the agreement for the new tenancy to commence on October 1st, 1984, took effect in Equity as a lease, and that in order to amount to repudiation there must be conduct showing clearly an intention not to fulfil the contract when the time comes. And, as I have said, in my judgment Mr. Cunningham's conduct on December 10th, 1984, fell far short of that.

5. The application is dismissed, with costs to be taxed on the upper District Court Scale.

6. Dated this twenty-fifth day of April, 1985.