CHIYU BANKING CORPORATION LTD v. CHAMPION HARVEST ENTERPRISES LTD t/a KOON WAN MOTORS CO

HCA1449/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.1449 OF 2004

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J U D G M E N T

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1.  The defendant is appealing against the order of the Master entering final judgment under Order 14 of the Rules of the High Court (Cap.4A). 

2.  The plaintiff as mortgagee bank is suing for mesne profit against the defendant as tenant under a tenancy agreement with the mortgagor without the prior written consent of the plaintiff as stipulated in the deed of legal charge.

3.  Mr Ching for the appellant agreed with the principle that: (1) the lease was void as against the mortgagee bank (see Typhoon 8 Research Ltd. v. Seapower Resources International Ltd. & Another [2002] 2 HKLRD 660); and (2) that the tenant should cease to pay rent to the landlord, and for the continued occupation, they are liable to pay mesne profit to the mortgagee as from the date of the notice of the mortgagee’s claim to possession (see Yeung Lam & Another v. Lam Po Chong [2000] HKLRD 223).

4.  The appeal turns on two points. Mr Ching complained that (1) the Master has entered final judgment and awarded mesne profit without assessment as to damages instead of merely entering interlocutory judgment; (2) the mesne profit awarded was excessive as per pleadings in the Amended Statement of Claim. 

5.  As to the first point, the Master can award damages for mesne profit if the evidence is before her to make the assessment conclusively.  She used the figure of $20,000 per month for assessment.  $20,000 was the rent payable by the appellant to the landlord under the tenancy agreement.  They have also tendered $20,000 to the respondent for continuation or renewal of the tenancy agreement, but the respondent has refused to accept and at some stage demanded $40,000 per month. 

6.  There is no other evidence as to what the mesne profit should be.  The respondent has not claimed any high amount and thereby must be deemed to have waived any higher amount.  The appellant has not adduced any evidence to any lesser amount.  Mr Ching submitted that there is no evidence of how the mesne profit should be assessed.  On the contrary, the tender by the appellant to the respondent is the best evidence and it is conclusive in the absence of any evidence to the contrary.  Hence, I cannot see that the Master has erred in her assessment.

7.  As to the second point, Mr Ching submitted that the amended statement of claim only pleaded that the mortgagee bank asserted the right of possession against the appellant by a letter dated 16 January 2004.  But it is noted in the affidavit in support for the Order 14 application it was stated that the writ of summons claiming possession against the mortgagor dated 5 February 2003 was posted on the premises occupied by the appellant and the appellant should have come to the notice of the same.  No evidence to the contrary was included in the affidavit resisting the Order 14 application.  Mr Ching submitted that the Amended Statement of Claim was defective and there should be amendment first before they should be allowed to assert the evidence of posting of the writ of summons. 

8.  The essence of an Order 14 application is to see whether there is any bona fide defence.  If not, then the court is not to waste costs and time on the matter.  Clearly, there is no bona fide defence by the appellant.  Hence, the appeal is dismissed and it should be dismissed with costs unless there is any submission to the contrary. 

(Submission on costs)

9.  Costs of today be to the respondent, including the costs reserved.