SPOKESMAN ENTERPRISES LTD v. CHEUNG YUK SHING t/a KAM SHING MOTOR TRADING CO

cacv 398/2004

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 398 of 2004

(on appeal from HCA NO. 3764 of 2003)

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1.  This is an appeal from a judgment of Deputy High Court Judge To given on 30 November 2004.  The matter before the judge was an appeal from a judgment of the master giving vacant possession of land in Demarcation District 114 in the New Territories and ordering mesne profits of $150,000 per month until vacant possession is given.  The judge affirmed the order of the master.  At the conclusion of the hearing, this appeal was dismissed with costs.  The cross appeal was not pursued.

Background

2.  The matter before the master was an application for summary judgment based upon the non-payment of rent for a period of 7 months from 1 April 2003 to 31 October 2003.  The plaintiff’s claim was simple.  It was said that there was a lease for two years which commenced on 1 January 2002 at the monthly rental of $150,000 per month.  The defence as filed admitted the lease between the plaintiff and the defendant but pleaded a “representation and/or warranty” that the defendant had been told that the rent would be $200,000 per month and apparently that there were some aspects of the lease which were void and unenforceable since they were against public policy. 

3.  It is unnecessary to examine that defence in any detail because it was, in effect, abandoned in the courts below and Mr Chong, who appeared on behalf of the defendant in this court, confirmed that the matters relied upon in defence to the application for summary judgment were those contained in the affirmations filed by the defendant.  I would say at once that that is a wholly unsatisfactory way of proceeding.  The master gave the defendant unconditional leave to defend the rest of the claim other than the claim for possession and mesne profits and, in doing so, gave the defendant leave to file and serve an amended defence and counterclaim.  It is surprising that the defendant should have been given leave to make amendments which were not shown and approved by the court.  In my view, it is undesirable that any party should be given leave to amend its pleading without the draft pleading being produced.  Despite that, the defendant has not seen fit to make any amendments.  The order permitting amendments thus has lapsed under the provisions of Order 20 r. 9.

4.  It is not disputed by Mr Chong that before the master the defendant indicated that it had no objection to giving up vacant possession of the land in question.  In those circumstances I would query whether it is now open, or even before the judge below was open, to the defendant to resile from that concession which no doubt confirmed to the master the appropriateness of making the order for vacant possession. 

5.  Be that as it may, it would appear that the defence now put forward is that the full rent during those seven months has indeed been paid because the defendant paid not only the rent of $150,000 in the period up to 1 April 2003 but also paid an amount of $50,000 per month.

6.  The difficulty with that submission is that whilst the receipts for the $150,000 were indeed chopped with the plaintiff’s chop, the receipts for the payments of $50,000 each month were signed by Mr Tang Man Wai who is the son of the owner of the land in question.  As such, there is, on the face of the matter, no ground for saying that that was an advance payment of part of the future rent.  What is said by the defendant is that Mr Tang is the son of the owner of the land in question and handled matters relating to the lease of the land on behalf of his father and the plaintiff.  It is said, furthermore, that the receipts for the payments of $50,000 contained the words “rent” or “advancement of rent”.

7.  In answer, Mr Tang has produced a copy of what was headed “Appointment of Agency”.  The document is by no means a well drafted document.  However, there is the defendant’s chop and the signature of the defendant’s son, who also signed the lease.  The agency agreement bears the defendant’s name at the top inserted in typescript.  Mr Chong argued that that indicated that the defendant was appointed as the defendant’s own agent.  That seems not to be necessarily so.  The document can be read perfectly well by understanding that the agent is not in fact named in that document.  That at least makes the document sensible.  It refers to “agency fees of FIFTY THOUSAND DOLLARS (HK$50,000)” and it is clear on reading the document that that was intended to be $50,000 per month for a period of two years.  The document is undated.  Mr Tang avers that he was appointed the agent and, as such, had a number of functions to perform in respect of the premises and, furthermore, he produced some documents tending to show that he performed some services on behalf of the tenant, namely the defendant, which justified his appointment as agent with the corresponding fees.

8.  With regard to the receipts, Mr Tang’s secretary has filed an affirmation explaining that the reference to rent was a mistake on her part.  Furthermore the receipt which was issued for the initial payment of $150,000 is expressed to be “in payment of 1/02 Agency fee and 2 months deposit” with the lot numbers of the land in question set out.

9.  In those circumstances it seems to me that the defendant has not established a defence to the claim that the rent was in arrears.  At best it could be said that the defendant has an argument that it has paid Mr Tang Man Wai $50,000 per month which should be accounted for.  If that is so the claim can be made against Mr Tang directly.

10.  One further matter raised by Mr Chong was that there had been a payment of $150,000 on 6 November 2003.  The receipt, however, does not specify that the payment was received in respect of rent.  The payment was made after the letter before action claiming the arrears of rent.  Quite apart from the assertion made on behalf of the plaintiff that it was a payment which was received together with the promise to pay the balance of the arrears, I do not see that this payment should be regarded as a payment of rent when there was so much back rent owing.

11.  By the cross appeal the plaintiff sought to raise the question as to whether it was right that unconditional leave should have been given to defend in respect of the monetary claim.  In view of the fact that it had been the plaintiff’s case before the judge that it did not contest that order Mr Li, on behalf of the plaintiff, did not pursue the cross appeal.

Hon Sakhrani J:

12.  I agree.