BEST SHARP DEVELOPMENT LTD v. LUCKY SHOE REPAIRING AND KEY DUPLICATION CENTRE

IN THE COURT OF APPEAL

No 139 of 1987

(Civil)

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J U D G M E N T

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Kempster J.A.

1. This is a defendant's appeal, by leave, from a judgment of Judge Sanders given in the Hong Kong, District Court on 21st August 1987 granting to the plaintiffs an order for possession of part of Shop 4, Windsor Mansion 17 Austin Avenue, Kowloon.

2. At all material times the plaintiffs, Best Sharp Development Ltd, were the tenants of the shop and the defendant effectively Mr. K.F. Tsuen occupied that very small part of it in which he carried on business as "Lucky Shoe Repairing, & Key Duplicating Centre" pursuant to an undated agreement in writing which apparently had been signed on 30th July 1986. The parties to that agreement are the parties to the present proceedings.

3. Two issues arose at the hearing in the District Court. The first was whether the agreement signed on 30th July 1987 was effective to grant the defendant a tenancy of his part of Shop 4 or only a licence to carry on his business there. The second, on analysis, was whether the plaintiffs were estopped from denying that the defendant was their tenant by reason of representation made to him prior to signature by Mr Cheng Pui Kit on their behalf. The trial judge treating the latter issue as a plea of "non est factum" on the part of the defendant, determined both issues in the plaintiffs' favour; holding that the agreement constituted no more than a licence and that its true nature and effect had fully been explained to the defendant by Mr. Cheng The admitted one month's written notice of termination was, accordingly, lawful and the plaintiffs claim to possession established.

4. Before us it is contended that the judge was in error in relation to his construction of the agreement. There is no appeal in relation to his finding on representation.

5. Insofar as the judge relied upon the terms of the lease Riving rise to the plaintiffs' interest in the shop, which precluded the grant either of a sub-lease or of a licence, he was wrong As between the plaintiffs and the defendant a tenancy could have arisen by way of estoppel. However, while clauses 4, 12 and 17 of the undated agreement, to which I shall refer, suggest that the defendant enjoys possession of "his" part of the shop and provision is certainly made for periodical payments other clauses show that any such possession was not exclusive which, if I am right, is fatal to the appeal. If there is no exclusive possession there is no grant of an interest in the land and no tenancy.

6. The agreement recites that the plaintiffs are the tenants and currently.in Possession of the whole of shop 4 which comprises the diminutive Premises in which the defendant carries on his business. Clause 1 provides that the defendant can enter upon and use these premises for the purpose of carrying on the business defined in clause 10 namely "for .... a shoes repairing known as LUCKY SHOES REPAIRING & KEY DUPLICATING CENTRE".Clause 2 makes provision for the periodical payments and clause 4 precludes the defendant from parting with the possession or occupation of the premises or any part of them to anyone else and from allowing any other person to use them without the plaintiffs consent. Clause 5 gives the plaintiffs the right to enter the premises and to remove anything which has been brought there by the defendant without their consent. In clause 6 the defendant is inhibited from leaving rubbish, debris or any other waste material in the premises. The term "incumber" used in that clause is to be construed eiusdem generis with the terms "rubbish" and "debris". Clause 7 warrants citation in its entirety:

"The possession of the said portion shall remain with the Grantor (the plaintiffs) who and whose servants or agents and all persons duly authorised by it shall have the right at all times to enter into the said portion for any purpose and carry on and maintain any operation or operations carried on by the Grantor on the said portion".

I now jump to paragraph 9 :

"The Licensee (the defendant) shall not alter or change or cause to be altered or changed the main door lock of the said portion without the prior consent in writing of the Grantor who shall in such event he entitled to one of the keys to the lock or locks substituted for that so altered or changed by the Licensee and to retain the same".

That provision is added to facilitate the exercise by the plaintiffs of the rights reserved to them by clauses 5 and 7. Turning back to clause 8 it reads

"The Grantor shall deposit to (sic) the Licensee the keys to the main door lock of the said portion until the expiration of this licence or sooner determination thereof in accordance with the terms and conditions herein contained, when the Licensee shall return and deliver up the said keys to the Grantor".

7. If the grant of a tenancy had heen intended keys would have been provided as a matter of course. Specific mention of such entitlement suggests a different intention and is required to make effective the leave given to enter upon the premises and to carry on business there. Harking back to my opinion as to the reason for clause 9 the term "the keys" in clause Y is not, in context', to be construed as meaning, "all the keys to the main door lock of the said portion ....". It is implicit that the plaintiffs would themselves retain a key or keys for the purposes of exercising, their rights under clauses 5 and 7. Accordingly the provisions of clause 8 do not assist the defendant in the submission, persuasively put forward on his behalf by Mr. Wong that the agreement is effective to grant him an interest in the premises in which he is carrying on business.

8. Of the remaining, clauses, 10 to 18, only three are of any significance. Clause 12 provides:

"The Grantor shall upon delivery of vacant possession of the said portion from the Licensee return the said deposit ...

and clause 17 :

" .... the Licensee shall immediately deliver up vacant possession of the said portion to the Grantor",

Clause 16 provides that :

"Nothing.herein contained shall be construed as creating the relationship of the (sic) landlord and tenant".

As has properly been submitted to us the intentions of the parties arise as a matter of law from the terms of the agreement and it is not significant that they have purported to put their own construction upon it.

9. Considering the document as whole I am satisfied that the judge was right in construing it as apt to grant the defendant no more than a license. In so concluding I am comforted to observe that his findings of fact show that it was throughout the intention of the parties to come to an agreement which would permit the plaintiffs to give one rather than six months' notice of termination.

10. I would dismiss the appeal.

Fuad, J.A.:

11. I agree that the appeal should be dismissed for the reason given by my Lord.

Hunter, J.A. :

12. I agree. The creation of an estate in land or tenancy postulates exclusive possession by the tenant. This document in my view created at most joint possession of these premises in the two parties and not exclusive possession.