XCHRX AMBRIDGE INVESTMENTS LTD. v. LEXCON INVESTMENT LTD. AND ANOTHER

HCA 9743/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 9743 OF 2000

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D E C I S I O N

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1. Although a document headed "Notice of Appeal" dated 21 July 2001 is before me today, this is in fact (and admitted to be so by the 1st defendant) the 1st defendant's application for leave to appeal out of time. The application is related to the order of the Registrar dated 4 July 2001 whereby he ordered the 1st defendant to make interim payment of $4,085,243.80 in respect of the 1st defendant's use and occupation of the suit property from 1 September 2000 to 31 July 2001. The plaintiff indicates that it would at this hearing cross-appeal against the said order on the ground that the learned Registrar ought to have ordered interim payment for the 1st defendant's said use and occupation from 1 August 2001 until the delivery up of vacant possession.

2. The plaintiff commenced this action for forfeiture of the tenancy agreement of the suit property by reason of the 1st defendant's alleged non-payment of rent. According to the Statement of Claim,

(a) the tenancy agreement dated 6 January 2000 was for a term of 31/2 years commencing from 1 January 2000;

(b) the rent payable was $197,196.00 per month;

(c) the service charges payable were $164,330.00 per month;

(d) rates, promotional charges and solicitor's fees were also payable under the tenancy agreement.

The 2nd defendant is the 1st defendant's sub-tenant and the plaintiff claims that the sub-tenancy was terminated when the principal tenancy was forfeited.

3. In the Defence and Counterclaim dated 17 July 2001 of the 1st defendant,

(1) the tenancy agreement is admitted;

(2) the amounts claimed in the Statement of Claim are not admitted;

(3) the 1st defendant complains that the plaintiff breached the tenancy agreement by failing to (a) promote the defendants' business and (b) maintain the air-conditioning system resulting in water leakage and seepage;

(4) the 1st defendant also complains that the plaintiff wrongfully posted notices alleging that the plaintiff had obtained judgment against the 1st defendant;

(5) as a result of (3) and (4) above, the 1st defendant's sub-tenants have refused to pay rents to the 1st defendant;

(6) the 1st defendant's rental loss amounts to $1,916,224.59 up to July 2001.

4. On 28 June 2001, the plaintiff applied for interim payment from the 1st defendant which resulted in the Registrar's order dated 4 July 2001. The sum of $4,085,243.80 consists of:-

(1) rent at $197,196.00 per month;

(2) service charges at $164,330.00 per month;

(3) rates at $9,859.80 per month

(total $371,385.80 per month).

5. The matters important to the exercise of discretion in an application of this kind are usually (1) the reason for and the length of the delay and (2) the merits of the proposed appeal. I consider these 2 matters to be important and ought to be taken into account in the present application.

6. The delay in question is only about 3 days. However, not only is there no affirmation evidence to explain the reason for the delay, the reasons advanced at the hearing are inadequate. Specifically, there is no valid explanation for the delay on the part of the 1st defendant from 4 July 2001 to about 16 July 2001 or for the delay by the solicitors from about 16 July 2001 to at least 18 July 2001.

7. There is also no merit in the 1st defendant's proposed appeal for the following reasons.

8. The 1st defendant opposed the plaintiff's application at the hearing before the Registrar on 3 July 2001 on the following grounds:-

(a) the return day of the plaintiff's summons contravenes O.29 r.10(4) which requires at least 10 clear days between the date of the summons and the return day;

(b) the learned Registrar erred in not giving the 1st defendant a proper opportunity to be heard on the plaintiff's summons;

(c) the plaintiff's claim for $371,385.80 per month is made without proper proof in support;

(d) the 1st defendant relies on its counterclaim of rental loss.

9. By the time of this application (as the 1st defendant fairly accepts) the 1st defendant's points (a) and (b) above are no longer relevant to the proposed appeal (save as regards the question of costs of the hearing on 3 July 2001). I consider that there is no substance in the 1st defendant's said points (c) and (d) above for the following reasons.

10. As regards the 1st defendant's point (c) above:-

(1) the 1st defendant has not put forward a positive case regarding the plaintiff's claim for $371,385.80 per month;

(2) in the correspondence between the plaintiff's and the 1st defendant's respective solicitors, the 1st defendant accepted the said monthly sum but indicated that it would only pay such sum if it was permitted by the plaintiff to obtain payment from its sub-tenants;

(3) the plaintiff has by now adduced undisputed evidence by way of the tenancy agreement and rate demand note in support of such claims.

11. As regards the 1st defendant's point (d) above, the alleged loss is:-

(1) unparticularised in the Defence and Counterclaim;

(2) not supported by proper evidence or admitted by the plaintiff.

12. Further to (1) and (2) above, and more importantly, although it is not apparent from the Defence and Counterclaim (or the affirmation filed on the 1st defendant's behalf), the 1st defendant indicates at this hearing that it has treated and is still treating the tenancy agreement as subsisting. In such case, there is no valid reason why the 1st defendant should not perform its obligation thereunder by paying the sums due under the agreement.

13. The alleged loss stated in para. 16 of the Defence and Counterclaim is said to be "rental default" in the region of $1.9 million. I understand from the 1st defendant that this refers to the refusal of the sub-tenants to pay rent to the 1st defendant from above February or March 2001. The 1st defendant accepts that it is entitled to commence (and has in fact recently commenced) legal action against its sub-tenants for the payment of rent under the sub-tenancy. Such being the case, I do not consider the 1st defendant has established that it will not be held liable at the trial of this action to pay to the plaintiff a sum in respect of its use and occupation of the suit property, even if a final judgment or order were given or made in the 1st defendant's favour (within the terms of O.29 r.12(b)).

14. For the above reasons, the application is dismissed.

15. The plaintiff informs me that it did not earlier realise that this application is in fact an application for leave to appeal out of time and not the appeal itself. Having now realised the correct position, the plaintiff will not at present pursue its cross-appeal but will do so at an appropriate stage later.