ONE QUEEN CO LTD v. CHAN SIU LAN AND ANOTHER

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J U D G M E N T

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Hunter, J.A.:

1. We have two appeals, an appeal and a cross-appeal before us, arising from decisions given by Liu J on 28th March. The background in brief is this.

2. The first defendant Madam Chan Siu Lan is the owner of some ground floor premises at 11 Lee Yuen Street East. On 16th December 1985 she let those premises to the second defendant, Ace Win Company Limited, for a period of 3 years expiring on 15th December 1988. Just under a year afterwards on 2nd December 1986, she entered into an agreement with the plaintiffs for the grant of a reversionary lease. It is that agreement which gives rise to this litigation.

3. On 11th October 1988 the first defendant duly gave the second defendant notice to quit at the expiry of the lease on 15th December. It is pleaded and admitted that on 15th December the defendant closed his business. Either on 16th or 18th he re-opened it, and on the evidence the business appears to be running still. So the second defendant continues to trade in the premises. The company has filed a defence in which it does not explain the basis of its present occupation. The first defendant has done nothing to give vacant possession to the plaintiff.

4. The result was that this action was commenced by a writ and statement of claim dated 4th February in which the plaintiff as against the first defendant, is seeking specific performance of the agreement and in particular an order specifically to enforce a particular covenant in clause 6 of that agreement which Bias that the first defendant "shall procure the eviction of the existing tenant from the said premises on or after 16th December 1988".

5. After the issue of that statement of claim, the plaintiff proceeded under a combination of Orders 14 and 29 seeking inter alia an order that "the first defendant take all reasonable steps forthwith, including but not limited to the issuing of all legal proceedings, for evicting the second defendant from the premises" in question.

6. The first defendant counter-attacked by seeking to have the greater part of the Statement of Claim as against her struck out. On 29th March the judge acceded to part of the first defendant's striking out application, in that that he struck out a subsidiary claim for damages for conspiracy. But he granted the plaintiff the mandatory order sought which I have just recited. It is from those two orders that this appeal is brought.

7. I will take first the plaintiff's appeal against the striking out. The statement of claim can be summarised briefly in this way. It recited, the grant of the original lease; the agreement for the reversionary lease; clause (6) of the contract which I have already referred to the giving of notice to quit; the closing and reopening of business; and the fact that no steps have been taken by the first defendant. It then went on in these terms:

"12. Still further and in the alternative, on a date unknown to the plaintiff sometime after 15th December 1988, the 1st and 2nd defendants wrongfully and maliciously conspired and combined amongst themselves to injure the plaintiff.

"13. In pursuance and in furtherance of the said conspiracy, the 1st and 2nd Defendants did the following overt acts:-

(a) the 1st Defendant by allowing the 2nd Defendant to remain in possession of the said premises and taking no steps towards evicting the 2nd Defendant;

(b) the 2nd Defendant by remaining in possession of the said premises well knowing the plaintiff's interest in the said premises under the said Agreement.

The above are the best particulars of overt acts the Plaintiff is able to give until Discovery and/or Interrogatiories.

14. Each of the acts pleaded in the preceding paragraph was done by the 1st and 2nd Defendants in furtherance of the said conspiracy".

8. It is those paragraphs which the judge struck out. The basis of his decision can be summarised in this way. Either of the acts alleged as overt acts could have been innocent and could have been independent of the other. Therefore he said the allegation of allowing the 2nd defendant to remain in possession of the suit premises as alleged "is not necessarily an overt act" in conspiracy; and that the taking of no steps towards evicting the 2nd defendant is also "not necessarily" such an overt act. He therefore concluded that the conspiracy charge must fail.

9. With every, respect to him it seems to me that he has not applied the right test on a striking out application. The conduct on either side could prove to be capable of innocent explanation, or the two acts to be totally independent the one of the other. Equally the converse may be true. Before these allegations are struck out, it seems to me that the question is not whether they will necessarily succeed, but whether they can possibly succeed. In my judgment it is impossible to say just by reading this pleading, that it is not sufficient to make a charge of conspiracy. Whether that charge eventually succeeds at the trial is a totally different matter. In my judgment the judge fell into error in striking out those allegations and the appeal from that should be allowed.

10. I should mention that our attention was directed to some recent authority in this field in the United Kingdom where different views seem to have been expressed by different judges on the construction of the Privy Council decision in Lonrno Limited v Shell Petroleum (No 2) [1982] AC 173. We have not had an opportunity fully to investigate all that authority, but it does not seem to me that there is any justification in the submission which had been made to us that the present plea is linguistically insufficient.

11. I then turn to the defendant's appeal which is against the granting by the judge of the mandatory order I have referred to. In order to understand that it is necessary to consider some of the terms of the agreement for the reversionary lease. In provides in clause (1) for the granting of a lease for a term of 3 years "commencing on a date to be ascertained in the manner as described in Clause 2(b)". Clause 2(a) "The said lease shall be in the form" of a document exhibited, to the agreement

"and the parties heretoshall execute the lease at any time hereafter within 7 days after receipt by the intending tenant of notification in writing by the intending landlord or his solicitor's that all the terms and conditions as set out in Clause 5 hereof have been fulfilled and/or complied with and the lease ready for execution.

(b) The term of tenancy of the lease shall commence on the day vacant possession of the said premises is delivered to the intending tenant by the intending landlord.

4. The indending landlord shall deliver up vacant possession of the said premises unto the intending tenant upon execution of the lease and the intending tenant shall take vacant possession thereof.

5. This agreement shall be conditional upon fulfilment and compliance of the following terms and conditions on or before the 31st day of March, 1989 or on such later date as agreed by the intending tenant under Clause 8 hereof:-

(a) That vacant possession of the said premises being obtained by the intending landlord from the existing tenant provided that the intending landlord's determination of whether vacant possession of the said premises is obtained as aforesaid shall be final and conclusive".

Sufi-clause (b) excepted resumption, and sub-clause(c) excepted rebuilding orders.

"6.(a)It is the mutual understanding of both parties that the existing tenant may continue to hold over the said premises after the expiration of the existing agreement provided however that the intending landlord shall procure the eviction of the existing tenant from the said premises on or after the 16th day of December, 1988".

That covenant is the basis of the judge's present order.

12. Two points are taken on appeal, by way of criticism of the judge. First it is said that there was no valid and enforceable agreement because the whole agreement was conditional. It is the submission of Mr Chua for the defendant, that the whole contract was conditional under clause 5, as to which there can be little doubt. Secondly that that condition is condition precedent to the making of a binding contract and not a condition precedent to performance. In other words until such time as vacant possession is fact recovered there is no binding contract between the parties at all.

13. It is tolerably clear in this case that the convoluted provisions, which I have just read, providing for the commencement of this reversionary lease stem from, what I can perhaps describe as the present ambiguities of the law of landlord and tenant, in that landlords cannot be sure of recovering physical possession of premises on the term sate of leases. It was plainly that contingency against which the parties were seeking to protect themselves. Otherwise they could easily have provided that this agreement was going to take effect from the day after the expiry of the existing lease, 15th December 1988. They were covering themselves against those difficulties, without being able to put a specific date forward when those difficulties would necessary be resolved.

14. If it be right, as Mr Chua submits, that conditions of this nature are pre-conditions to the making of a contract, you can have no enforceable contract for the grant of a reversionary lease. Because ex necessitate that is going to operate in the future. In my judgment this submission cannot succeed. The condition precedent in this case is not precedent to contract, but precedent to performance. In other words in this case there could be no grant of a reversionary lease until such time as vacant possession had been recovered (which might be said to be a self-evident proposition) but there was an oblighation upon this defendant to bring about the granting of vacant possession. So in my judgment this contract binds, and was not conditional in the sense that was urged upon us.

15. Secondly it was suggested that the whole agreement was void for uncertainty, because it was not possible to specify the precise date upon which this reversionary lease would be granted. That was in fact true. What the agreement provides is for a timetable. It provides for the timetable to start at the termination of the existing lease. There is then the obligation of the first defendant to procure eviction if the existing tenant does not give up possession. Once that eviction has been achieved, there is I am minded to think, an obligation upon the first defendant to give notice that vacant possession has been obtained. Within 7 days of that event, the lease has to be executed. Contemporaneously with the execution of the lease, vacant, possession is to be given. Then the terms starts from the giving of vacant possession There is an identifiable event from which the term has to start. But there is no identifiable date.

16. We were concerned as to whether or not that was sufficient to make the agreement certain or left it void for uncertainty. Mr Chain for the plaintiff has pointed out that the authorities to which we have been referred on sufficiency all related to the granting of leases. Here at the present moment he is not seeking specific performance of the grant of a lease, but enforcement of a covenant in an agreement for a lease. If he obtains specific enforcement of the covenant in that agreement, by that means he will acquire a fixed date, ie the recovery of vacant possession, from which the reversionary lease can ultimately run. That in my judgment is the answer to this problem. You cannot directly apply the cases on leases to agreements of this nature. The timetable laid down in this document is I think sufficient where it identifies the event from which the lease is ultimately to run, albeit that that event can only be determined in the future when steps are taken by the first defendant to procure eviction and when she in fact recovers vacant possession.

17. Finally it is suggested that the judge should not in the exercise of his discretion have made any order for specific performance in this case because it is now suggested that damages would be an adequate remedy. It does not appear that this matter was pressed at all before the judge because there is no reference to it in his judgment. For my part, it seems to me when you look at the terms of this agreement that there were ample grounds for the judge saying that this is a contract which was entered into and should be specifically enforced. I can see no grounds for criticising the exercise of his discretion.

18. For my part, I would allow the plaintiffs appeal against the striking out application; and reject the defendant's appeal against the mandatory order the judge made.

Kempster, JA:

19. Agreeing as I do that the document dated 2nd December 1986 binds the parties I also agree that the plaintiffs, when they issued their writ on 4th February 1989, were entitled to enforce the provision appearing in clause (6)(a) requiring the first defendant to take all reasonable steps to evict the second defendant. I also agree that as at that date they were entitled, if they could, to seek damages for conspiracy. We are not presently concerned with the claim for specific performance in relation to which no order has been made. But in that regard I accept the reasoning, of Evershed J (as he then was) in Brilliant v Michaels [1944] Vol 171 Law Times Report 361 to the effect that the agreement to grant the lease would only be enforceable once the contingency, presently uncertain, as to when the lease was to commence had occurred. With that reservation I express my agreement with what has fallen from my Lord Hunter JA, and his conclusion that the appeal by the plaintiff from the order striking out part of the statement of claim should be allowed and the appeal of the first defendant from the order granting an injunction should be dismissed.

Macdougall, JA

20. I agree with what my Lord Hunter has said. I too would allow this appeal and dismiss the cross-appeal.