WINNAPAL TRADING LIMITED v. CHENG YING KEUNG t/a YEE CHEUNG COMPANY

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BETWEEN

Appearances (B.) Yu for the Plaintiff.

                    Merry for the Defendant.

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APPENDIX

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1.    Doe ex dim. Cheny v. Batten (1775) 1 Cowp. 243, at p. 245 and p. 247

2.    Maconochie Bros. Ltd. v. Brand & Ors. [1946] 2 All E.R. 778 at p. 779

3.    Clarke v. Graht & Anor. [1950] 1 K.B. 104 at pp. 105/6 & p. 107

4.    Woodward v. Earl of Dudley [1954] Ch. 283 at pp. 288/9

5.    Wilfred Isaac v. Hotel de Paris Ltd. [1960] 1 W.L.R. 239 at p. 244, pp. 255/6

8.    Longrigg, Burrough & Trounson v. Smith (1979) 251 E.G. 847 at pp. 849 & 851

9.    The Lady Anne Tennant v. Associated Newspapers Group Ltd.[1979] F.S.R. 298 at p. 299

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BETWEEN

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Coram: The Hon. Mr. Justice Jackson-Lipkin in Chambers

Dates of Hearing: 8th & 9th January, 1987

Date of Delivery of Reasons: 9th January, 1987 at 11:12 a.m.

Appearances (B.) Yu for the Plaintiff.

                    Merry for the Defendant.

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REASONS

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1. This is an appeal against a decision of Master Woolly of 29th December, 1986, whereby, under Order 14, he gave possession of the Ground Floor at 82, Canton Road, Kowloon to the Plaintiff.

2. Briefly the facts are as follows: In October 1968, the Defendant took a five-year lease of the Ground Floor and the front portion of the cockloft of 82, Canton Road. That is to be found in the final page of Exhibit WSC-1 to the affidavit of Miss Wong Shui-Chu sworn on 11th December 1986. What happened in the intervening years I know not, and it does not matter; but, on 30th July 1981, the Defendant took a 2-year term of premises as described as the Ground Floor and the Mezzanine Floor of 82, Canton Road. That is noticeably different from the entry that I have just read from the Crown Lease Register, which was the Ground Floor and front portion of the cockloft. The deposit of $23,000 was paid, and the rent for both floors was $11,500.

3. On 8th December, 1983, the Defendant took over a 1-year term of the Ground Floor and the Mezzanine Floor of 82, Canton Road at a rent of $10,000, and paid a deposit of $20,000.

4. On 12th November, 1984 the Defendant took a 2-year term of the Ground Floor of 82, Canton Road at a rent of $10,000 and the deposit was accepted in these terms:

"RECEIVED the day and year first above written of and from the Tenant the sum of DOLLARS TWENTY THOUSAND (which said sum of $20,000 has been transferred from the Tenancy Agreement dated 8.12.83) only being the deposit money above expressed to be paid by the Tenant to the landlord.".

5. On 10th April, 1986 the Plaintiff, the lawful successor in title to the previous landlord of the Defendant, wrote to the Defendant, by reason of the provisions of s.122(1) (a) of the Landlord and Tenant (Consolidation) Ordinance, as follows:

6. On 13th August, the Plaintiff's solicitors wrote to the Defendant, referring to the letter of 10th April, and asking for written confirmation that vacant possession would be delivered up. They said, "To facilitate forward planning by our client, we would like you to provide us with a written confirmation that you would deliver up vacant possession of the captioned premises to our client on 31st October 1986.". The letter recited four occasions when the solicitors had endeavoured to serve a letter personally on the Defendant.

7. On 31st October, the Plaintiff's solicitors wrote again for the Defendant, and, after having referred to the letter of 10th April, said that on recent inspection of the premises they could find no signs that the Defendant was going to move out. The solicitors therefore reminded the Defendant of the Notice to Quit and required him to deliver up vacant possession within three days that otherwise legal proceedings would be commenced.

8. As so often happens on such occasions, the left hand does not know what the right hand is doing. On 1st November 1986, Exhibit C.Y.K.2 was sent to the Defendant directly from the offices of the Plaintiff. It was addressed to the Defendant at "Flat B, G/F & Mezz. Floor, No. 82 Canton Road, Kln", and was in respect of premises described as "CANTON ROAD, 82B, G/F & Mezz. Floor", and it was for "Monthly Rent" for November 1986 and "Management Fee" for $40.

9. Not surprisingly, the Defendant promptly made payment. That payment, by cheque 946614, in respect of premises described therein in the same way as on the Debit Note. Both the Debit Note and the Receipt are the only Debit Notes and Receipts put before me: No Debit Note or Official Receipt relating to the period of the tenancy in question was produced by either party.

10. On 10th November, the Plaintiff's solicitors wrote to the Defendant referring to the payment I have mentioned, and saying that the Plaintiff regarded that total sum as mesne profits, and informing him that their instructions were to issue a writ.

11. The next day, 11th November, a writ was issued, and the Statement of Claim set out the lease of the Ground Floor (which is to be found as Exhibit LKL-1 to the affirmation of Lee Kai-lam affirmed on 28th November 1986), and claimed possession of the Ground Floor at 82 Canton Road.

12. One week later, the Defendant's solicitors wrote to the Plaintiff's solicitors denying the expiry of the tenancy, and averring that the payment of $10,000 made by the Defendant was rent for the premises, and asserting that the Plaintiff's acceptance of that payment amounted to a waiver of any right to claim possession of the Ground Floor of 82 Canton Road: I stress that last point, because the heading of the letter refers to the Ground Floor referred to, and the second paragraph relates to "the above premises".

13. On 22nd November, the Plaintiff's solicitors answered, and denied that their client had made any demand for payment of rent after the expiration of the tenancy on 31st October. Clearly they did not then know of the Debit Note to which I have referred. They went on to say that the acceptance of payment was qua mesne profits only and referred to the issue of the writ.

14. Notwithstanding that, the Defendant's solicitors wrote on 4th December to tender a cheque for $10,100 for Rent and Management Fee for December 1986.

15. On 5th December, the Plaintiff's solicitors wrote to deal with that point, and said that they would accept on condition that it be part payment for mesne profits and damages, and also without prejudice to the Plaintiff's rights.

16. Apparently no answer was received to that, because the Plaintiff's solicitors wrote again on 9th December to reinforce what they had previously said, and asking whether the Defendant was then prepared to deliver up vacant possession, or if he wanted the return of his cheque. The letter also referred to an offer made by a prospective tenant to the Plaintiff to take the suit premises at $41,000 a month. That is something to which I will revert in due course.

17. The correspondence to which I have referred is exhibited as WSC-2 to the affidavit of Miss Wong.

18. On those facts, Master Woolley refused leave to defend, and gave judgment under Order 14.

19. The appeal comes before me on two points: the first relating to the notice that was given on 10th April 1986, and the second relating to the acceptance by the Plaintiff of the cheque sent by the Defendant for Rent and Management Fee for November 1986.

20. The complaint concerning the notice is two-fold: First that the notice was ambiguous in that the premises, possession of which was required, were not stipulated; second, and faintly, that there was an ambiguity as to the date which vacant possession was to be given. There is nothing in that latter point, and it was not pressed.

21. The former point relies on ambiguity as to the "premises", vacant possession of which is to be delivered up. "Is it one part or two parts?" asked Mr. Merry.

22. I know of no requirement in commercial premises to the effect that a definition of the premises must be spelt out. There is a wealth of authority to the effect that the notice must refer to the whole of the demised premises, and not part of it, and some of that authority has been put before me.

23. But the letter of 10th April is clear. It relates to the tenancy agreement between the former landlord and this tenant; it expresses the expiry date; and it informs the Defendant to deliver up vacant possession on that date; in my judgment, that is quite sufficient.

24. It does not relate to part of the demised premises - LKL-3 is quite clear in referring to the agreement, and the agreement LKL-1 is equally clear in referring to the Ground Floor, and to the Ground Floor only. It is possession of that that is required on 31st October.

25. LKL-3 does not refer to part of the demised premises: There is no mention of the cockloft; the mezzanine floor; the front part of the cockloft; or the front part of the mezzanine floor. In my judgment, there is nothing in that point either.

26. Mr. Merry says that the other aspect to the point is this.

27. If you go back to 1968, the tenancy was of the Ground Floor and the front part of the cockloft; in 1983, the tenancy was of the Ground Floor and the Mezzanine Floor; the tenancy here, he says, is of the Ground Floor and the Mezzanine Floor.

28. He invites me to look at the rent demand, CYK-2. That, he says, refers to the Ground Floor and the Mezzanine Floor. He asked me to look at the official receipt CYK-3, which refers to the Ground Floor and the Mezzanine Floor.

29. He says that, consequently, there is some ambiguity as to the subject premises of LKL-3, particularly as the Defendant conceded itself to be the tenant of the Ground Floor and the front portion of the Mezzanine Floor and at  82 Canton Road: That last wording I obtained from the opening part of the affirmation of the sole proprietor of the Defendant firm, CHENG Ying-keung.

30. It is an ingenious argument, but, in my judgment, it is without substance. It seems true that Mr. Cheung trades as Yee Cheung Company at the Ground Floor and at the front portion of the Mezzanine Floor, and, indeed, the documents issued after the expiry of the lease, CYK-2 and CYK-3, referred to the Ground Floor and the Mezzanine Floor.

31. But the notice, required under s.122, is quite clear, as I have held. It refers to the Tenancy Agreement, LKL-1, which refers to the Ground Floor and only to the Ground Floor. And the claim in this case is for possession of the Ground Floor.

32. But Mr. Merry has a point of greater substance. In Miss Wong's affidavit, she says, in the first paragraph, that she is an accounts clerk in the employ of the Plaintiff. She says that the contents of her affidavit are true to the best of her knowledge save where the contrary appears, in which case she says that the same are true to the best of her information and belief. It is not a particularly well-drawn affidavit, but it is perfectly clear, in the end, which parts of it are within her own knowledge, and which parts of it are true to the best of her information and belief. And, in this respect, I must observe that it was open at all times to the Defendant to call upon the Plaintiff to say which parts of the affidavit were alleged to be true to her knowledge, and which parts were alleged to be true only "within" her information and belief.

33. Miss Wong goes on to say, as appears from the correspondence which I have already read, WSC-2, that she had recently made thorugh enquiries with all the personnel of the Plaintiff firm, and could confirm that neither she nor any person on behalf of the Plaintiff since the giving of the Notice of Termination, had negotiated or promised a new tenancy of the suit premises whether "verably" or in writing or otherwise. She says that, in early October 1986, she was assigned to handle the accounts of 82 Canton Road. She says that, at the same time, she took on three companies, which let out some fifty properties, the flats in which were let to different tenants, and that she had to type out and to render Debit Notes. She says on 1st November she sent out 29 Debit Notes, to be issued to 29 tenants of the Plaintiff in this building in Canton Road. Those Debit Notes are Exhibit WSC-3, and they are identical in form to the one I have already read relating to the Defendant, save that they bear no date. No challenge has been made to that, and that is why, when I referred to the Debit Note in this action (CYK-2), I referred to it as having been sent after the expiry of the lease under the notice of 10th April.

34. She then says on her oath, as follows:-

"That Debit Note was issued purely by mistake. At the time it was issued, I was new on the job and owing to the many tenancies involved, I did not yet have time to go through the previous correspondence and documents relating to the tenancy of the suit premises. I did not then realize that the Plaintiff had already issued a 6 month's Notice of Termination of the tenancy of the suit premises, and I was not then aware that the tenancy thereof had terminated on 31st October.".

35. And then she goes on to refer to the present market rent for the premises, which she says should be $40,000, "which is an offer made to the Plaintiff's leasing agent" in Exhibit WSC-4: In fact, it is $41,000, but that is neither here nor there. But, she continues, "In any event, I did not have the authority of the Plaintiff to negotiate, offer or agree new tenancies.".

36. She says that the acceptance of the Defendant's cheque, which was sent on or about 3rd November, and cleared on the same day, was as a matter of routine. But shortly afterwards, her supervisor became aware of the situation, and, as the Defendant had not moved out or demonstrated any intention of moving out, the Plaintiff went to its solicitors. So far as the payment was concerned, they, ex post facto, purported to apply that payments as mesne profits. She does not put it quite that way, but that was the fact.

37. What Mr. Merry says is this: You have a number of separate things, which, taken cumulatively, should put the Court into some doubt as to whether or not there was an offer of a new tenancy made by the notes sent out by Miss Wong, which facts are as follows:-

38. On 1st November, the issue of the Debit Note

39. The alleged conversion into mesne profits a week later.

40. He urges on me that, thus, there is a disputed question of fact. He says that the solicitors were saying one thing while the Plaintiff was doing another. What he says is that, if I decided to dismiss the appeal, I would be trying an issue between the parties on affidavit evidence untested by cross-examination; and he puts it as high as this, that the Plaintiff must shew that it is impossible to infer a new grant. He goes on to point out that, in his submission, I "need to know much more about Miss Wong's job and her authority.".

41. I am not trying a dispute on facts on affidavit. I am seeing whether or not the Defendant has demonstrated to me that there is an arguable defence.

42. Even in 1775, the acceptance of rent was not as a matter of law to be held against the landlord. In Doe ex dim. Cheny v. Batten ¹, Lord Mansfield said, at p.245,

"The question therefore is, quo animo the rent was received and what the real intention of both parties was.".

43. With that judgment,. Aston, J. and Willes, J. agreed, and Ashurst, J. also said that it was a matter of fact.

44. Note: In order to save time, and with the concurrence of counsel, I shall set out the authorities that have guided me in an Appendix to this judgment.

45. So what I have to deal with here is whether or not, on the facts that I have recited, there is an arguable defence.

46. Those facts which have weighed most heavily with me are these: From April to August, right up to the last day of October, the correspondence, which goes only one way - that is, from Plaintiff to Defendant - shews a contrary intention to the grant of a new lease. Furthermore, there is a total absence of evidence from the Defendant that, at any time, had there ever been any communication of any kind, oral, verbal or written, any kind of communication between the Plaintiff and the Defendant on the question of renewal of the tenancy. Like the dog in the case of Silver Blaze², it is the silence which is significant.

47. As I said to Mr. Merry at an earlier stage in the proceedings, to find that what Miss Wong had done was to offer a new tenancy, would be flying in the face of common sense - flying in the face of reality. He said that I was putting that situation too high: Her evidence had not been tested. So I am now looking at it at a more lowly level. The two points which I have just mentioned are formidable and not easy to overcome; and, in my judgment, in this case, they have not been overcome. But I can add to that, putting it at its lowest level, there is on oath, and uncontradicted, evidence by an accounts clerk that she made a mistake, and that she had no authority to grant a lease on behalf of the Plaintiff: And, furthermore, she had gone further, and that she thought to herself, "Oh dear: Perhaps somebody else wanted to grant a tenancy, and I had better find out", and she took steps herself to make inquiries, and that she found that nobody had ever suggested a grant of a new lease - and that appears from the passage I have already read from her affidavit.

48. This really goes back to reinforce the point I have made about silence, and that there had been nothing passing between the Plaintiff and the Defendant on the question of renewal or a new grant.

49. Mr. Merry said that that should be investigated. My attention has been drawn to a passage in the judgment of Megarry, V-C., in The Lady Anne Tenant v. Associated Newspapers Group³ where he said, at p.299,

"A desire to investigate alleged obscurities and a hope that something will turn up on the investigation can not, separately or together, amount to sufficient reason for refusing to enter judgment for the Plaintiff. You do not get leave to defend by putting forward a case that is all surmise and Micawberism.".

50. Mr. Merry says: That is all very well, but what about the bona fides of this plea of mistake? As I have said, I have weighed up all the factors here, and I can not see anything on the contrary side. I can see nothing other than what is on the face of the correspondence, on the part of a person of a lowly position in the employ of the Plaintiff. I can see nothing that would enable me to say that I could properly - not fancifully, but properly - imply an offer of a new tenancy.

51. In all the circumstances, this appeal must fail, and the Master's Order must stand: But, as I have said, the Master's and my Decisions relate only to the Ground floor, and, in saying that, I am not adhering merely to the technical truth of this Action, but I am saying that for the future - in case anything should be said hereafter about my judgment in relation to the Mezzanine Floor, I have made no finding whatever as to the rights of either party whatsoever in relation to the Mezzanine Floor, or to any part thereof.

52. The appeal, therefore, will be dismissed with costs.

1 (1775) 1 Cowp. 243

2 Memoirs of Sherlock Holmes: Doyle

3 [1979] F.S.R. 298