CHAN ALEX and CHAN ARRON v. TAKE CARE LOGISTICS LTD

DCCJ 5024/ 2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5024 OF 2013

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D E C I S I O N

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1.  In the judgment handed down on 5 June 2017 (“Judgment”), I awarded the plaintiffs damages in the sum of $7,952.50 with interest and for the plaintiffs to repay the deposit paid by the defendant in the sum of $45,000 with interest.  This is the application by the defendant for leave to appeal against the Judgment and a stay of execution.

2.  In this Decision, I will adopt the same abbreviations used in the Judgment.

Leave to Appeal

3.  By a summons dated 21 June 2017 (“the Summons”), the defendant seek leave to appeal on a number of grounds. 

4.  Under Section 63A(2) of the District Court Ordinance Cap 336, leave to appeal shall not be granted unless the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard.  This has now been clearly established by the authorities to mean more than just an arguable case, but an appeal that has merits, the prospects of succeeding must be “reasonable” and therefore more than “fanciful”, without having to be “probable” ：Ho Yuen Ki Winnie & Anor v Ho Hung Sun Stanley & Others  HCMP 1009/2009，24 August 2009.

5.  It is trite law that the appeal court should not disturb the findings of fact by the trial judge unless of the view that such findings are plainly wrong.  In the absence of palpable errors in the judge’s consideration of the evidence, the appeal court would not interfere with the assessment of evidence and the weight attached by the trial judge to a particular piece of evidence: see Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336; China Gold Finance Ltd v CIL Holdings Ltd CACV 11 of 2015, 27 November 2015; Hoptai Sharkfins Co Ltd v Productos Pesqueros Gallegos SL CACV 240 of 2014, 7 December 2015.

6.  Bearing these principles in mind, I shall turn to the grounds of appeal in seriatim.  Unless otherwise stated, the quoted paragraphs (§) are that in the Judgment.

Ground 1 – erred in finding certain facts undisputed or undisputable

7.  The first ground is that this court erred in the findings that the telephone conversation between Chin and KY (§5) and Carmen had told Chin the tenant threatened to sue the plaintiffs for breach if they failed to sign the T/A (§6) are undisputed or undisputable whereas they are matters in serious dispute at trial. 

8.  Yet, there was no evidence to the contrary adduced at trial over these 2 factual issues and I fail to see how can the description that these facts are undisputed or undisputable be faulted.  In any event, this is a finding of fact and the defendant failed to show such findings are plainly wrong. 

9.  Ground 1 is not substantiated.

Ground 2 – erred in holding that the PTA had nothing to do with the defendant (Issue 1)

10.  At §24, it is the findings of this court that it was never mentioned at the signing of the PTA that Wong was only signing as an agent for a company limited.  It is submitted that the disclosure or non-disclosure of a principal-agent relationship does not affect the factual existence of the principal-agent relationship and the court should consider the fall-back position of the defendant on undisclosed principal.  The court should hold that the defendant was the disclosed principal or unnamed principal of Wong in entering into the subject tenancy/lease with the plaintiffs.

11.  At trial, the defendant’s case is that the defendant was a disclosed principal and the issue of undisclosed principal was never raised.  This can be reflected from the Joint Statement of Issues in Dispute (§17).  I fail to see how can the defendant now argued that this court had erred in failing to consider the live subsumed issue of undisclosed principal. 

12.  As for the findings on disclosed principal, this is a finding of fact and I find the defendant had failed to show that such finding is plainly wrong.

13.  Ground 2 is not substantiated.

Ground 3 – erred in holding that the T/A could not be a continuation of the PTA (Issue 2)

14.  The defendant submitted that since the holding in §24 is an error (as stated in Ground 2 above), the finding in §26 based on §24 that “the subsequent use of the defendant’s name on the T/A could not be a continuation of the PTA but rather a new agreement between the plaintiffs and the defendant” is also faulted.  The court had failed to take into consideration the evidence of Mr Chan who “did not deny the T/A is a continuation of the PTA but excused that he never thought of it at the material time” and the court had also “mistook or restricted the meaning of validity of the PTA itself as binding effect of the PTA on the plaintiffs and the defendant” (§4(b) & (c) of D’s Submissions).  The court should hold that the T/A was a continuation of the PTA and all parties agreed to the defendant being the tenant under both the PTA and the T/A.

15.  Given the findings on Ground 2 above, the reliance on the findings at §24 in support of this ground cannot be established.  The evidence of Mr Chan had been mis-quoted.  Court record showed that, when asked if he considered the T/A is a continuation of the PTA, Mr Chan’s reply is he never thought it was a continuation.  As for the validity of the PTA, I fail to see how can the validity of the PTA between the plaintiffs and Wong be relevant when it was found that the PTA had nothing to do with the defendant due to privity of contract (§27). 

16.  Ground 3 is not substantiated.

Ground 4 – erred in holding the defendant is not entitled to the rent free period in the PTA (Issue 3)

17.  Relying on Ground 2 and 3 above, it is submitted that “it is implicit in this holding of the learned Judge that the PTA was still legally valid after the signing of the T/A (despite not being a continuation of the T/A).  If this were correct, the co-existence of both the PTA and the T/A for the overlapping term of years from 10 January 2013 to 9 January 2015 would be inherently improbable and absurd contrary to the presumption of regularity and the plaintiffs would be in breach of the PTA, upon signing the T/A, for failing, or not being ready, willing or able to deliver vacant possession and give quiet enjoyment of the Property to the defendant under the T/A, given the existence of the encumbrance of the PTA” (§5(b) of D’s Submissions).  The court should hold that the defendant was entitled to the rent free period in the PTA. 

18.  As for the validity of the PTA, I shall adopt my ruling at §15 above and it is specifically found at §26 “the PTA … must be invalid as far as the plaintiffs and the defendant are concerned after the signing of the T/A”.  Given the findings that the defendant was not a disclosed principal in the PTA and not a party to it, this court fail to see how can the defendant take the benefit of the terms of the PTA.

19.  Ground 4 must fail.

Ground 5 – erred in finding the defendant had never taken possession or control of the Premises (Issue 4)

20.  It is contended that this court erred in finding that “the keys to the Premises had never been passed to the defendant or Wong and the defendant had never taken possession or control of the Premises on 1 January 2013” (§35) and wrong in the findings on the credibility of Carmen.

21.  This is a findings of fact and I find the defendant had not shown that such findings are plainly wrong. 

22.  Ground 5 must fail.

Ground 6 – erred in finding that the defendant decided not to rent the Premises and even if this is the case, such “renunciation” by the defendant was not accepted and waived by the plaintiffs (Issue 5 & 6)

23.  It is contended that this court erred in finding at §43 that “Chin had never indicated to Carmen that the plaintiffs would not rent the Premises to the defendant and it was the defendant who had, through Carmen, told Chin that the defendant decided not to rent the Premises and asked for the refund of the deposit and the rent on 3 January 2013”.  In fact, the Court should find Chin’s re-entry amounted to a “renunciation” or “cross-renunciation” on the part of the plaintiffs and such was accepted by the defendant’s subsequent refusal to re-take possession of the Premises and issuing letters of demand to the plaintiffs, hence the T/A was terminated.

24.  I stand by my findings at §§40-42.  The challenge by the defendant is mainly on the findings of fact but the defendant had failed to show that the findings are plainly wrong.  Upon the defendant expressing the intention not to fulfil his part of the T/A, this constitutes an anticipatory breach and the plaintiffs are entitled to treat it as discharging them from further performance.  So the action of Chin to go up to the Premises and asked for the keys back is just an exercise of the plaintiffs’ right on accepting the renunciation by the defendant.  It was never the findings of this court that parties had agreed on a surrender of the lease.  The refusal to bear the agency fee and the subsequent attempt of Chin to hand over the keys of the Premises on legal advice is neither here nor there since by the act of re-entry, the plaintiffs had already accepted the breach on the part of the defendant and put the T/A to an end.  The fact that the defendant had paid one month rental in advance cannot salvage the renunciation on the part of the defendant.

25.  Ground 6 must fail.

Ground 7 – erred in finding the defendant was in breach and s.58 not applicable (Issue 7)

26.  It is submitted that this court erred in finding at §47 that Chin’s act of re-entry of the Premises and change of lock is an acceptance of the repudiation instead of a repudiation on the part of the plaintiffs.  And even if this court found no vacant possession had been handed over to the defendant (§46), Wong was still entitled to the rent free period by virtue of the PTA.  And without a finding that the plaintiffs were ready, willing and able to deliver vacant possession free from the encumbrance of the PTA, the plaintiffs were thus in anticipatory breach or in renunciation of the T/A and the verbal communication of the defendant indicating an intention not to perform the T/A would only amount to an acceptance of the said anticipatory breach or renunciation.  The court also erred in finding that s.58(1) notice does not apply in a case of acceptance of a breach in non-performance of the T/A (§48).

27.  I shall adopt the reasoning at §24 above on the issue as to the conduct of Chin after being told of the defendant’s intention of not to rent the Premises.  And I shall adopt the reasoning at §18 as to the argument on the defendant’s entitlement to the rent free period under the PTA. As for s.58(1), I shall stand by my findings at §48 of the Judgment.  The defendant’s communication had indicated not to rent the Premises and this amounted to a repudiation of the T/A and not a breach of any covenant or condition in a lease canvased by s.58(1), hence s.58(1) cannot be applicable.

28.  Ground 7 must fail.

Ground 8 – erred in the findings that the plaintiffs were entitled to damages

29.  It is submitted that since it was the plaintiffs who were in breach of the T/A and/or PTA, this court erred in awarding damages to the plaintiffs; rather the defendant should be awarded damages as claimed.  In any event, the plaintiffs did not produce any documentary proof to verify their claim for stamp duty.

30.  Given my findings above on the other grounds of appeal, the defendant’s insistence that the plaintiffs were the one in breach cannot sustain.  As for the award of damages, there was no issue taken as to the payment of stamp duty by the plaintiffs at trial and no question was put to the plaintiffs’ witnesses at trial.  I fail to see how can the defendant take issue of the same on appeal.

31.  Ground 8 must fail.

Conclusion

32.  Having considered each and every ground of appeal raised by the defendant, I find the defendant had failed to establish that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard.

Stay of Execution

33.  It is in the court’s discretion whether or not to grant a stay.  A stay of execution will not be ordered unless the defendant can justify a stay, and the practice is that justification can be demonstrated only if good reasons exist.  Merits of the appeal and whether the appeal will be rendered nugatory are matters which may go to whether good reasons exist, however exceptional the circumstances may be otherwise justifying a stay of execution, if the court is not convinced that there exist an arguable grounds of appeal, no stay will be granted.  So the existence of an arguable appeal is the pre-requisite for the grant of stay.  If the order appealed against is a money judgment, the court will require evidence as to why the levying of execution will result in the appeal being rendered nugatory, such as, for example, an appreciable risk that the respondent to the appeal would not be able to repay in the event of a successful appeal: see Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84 at §§6-10.

34.  The defendant is only relying on the ground that the intended appeal has at least a reasonable prospect of success, it thus follows that execution of the Judgment should be stayed pending appeal.  Given the findings that the defendant had failed to substantiate any of the grounds raised in support of the appeal, I am not satisfied that there is a reasonable prospect of success in the appeal.  Hence, there is nothing to justify a stay of execution.

Order

35.  By reasons of the above, the application for leave to appeal and stay of execution in the Summons is dismissed.  There is no reason why costs should not follow the event.  I grant an order nisi that costs of the Summons be to the plaintiffs to be taxed if not agreed on party-to-party basis, with certificate for counsel.