GOLDEX MANAGEMENT LTD v. FAR EAST LAND (CHINA) LTD

   HCA1834/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1834 OF 2009

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BETWEEN

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REASONS  FOR  DECISION

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1.  This is an appeal against an order of Master Ho dated 21 December 2009.

2.  The plaintiff is the owner of a commercial property. It became the new owner of the property in June 2009.

3.  The defendant was the tenant of the previous owner. The new owner, the plaintiff, did not renew the tenancy to the defendant when he acquired the property. However the defendant did not vacate the premises and did not pay any money for the occupation of the premises.

4.  The plaintiff filed a writ for possession. The defendant filed a defence on the basis of an oral contract it had claimed with the previous owners that their tenancy would be renewed.

5.  The plaintiff issued a summons, which was heard by Master Ho, on 21 December 2009. The summons sought (i) summary judgment pursuant to Order 14 (ii) interim payments and (iii) a strike out of the defendant’s defence as it disclosed no reasonable defence.

6.  The Master’s order, against which this appeal is launched, was to adjourn the Order 14 application for further argument and, pending that hearing, he ordered the defendant to pay a sum equivalent to the rent due into count as interim payments, namely the sum due as at 21 December, $930,000, plus $155,000 a month thereafter. Failure to pay within 14 days would result in the defence being struck out.

7.  Counsel for the defendant, Mr William Allan, argued a single ground of appeal namely that “the learned Master erred in law by imposing a condition on the Order 14 hearing by interim payment”. Mr Allan submits this is contrary to the Court of Appeal decisions in Law Shek Po v Team Ease Ltd [1998] 1 HKC 81.

8.  At the conclusion of the hearing I dismissed the appeal with costs to the plaintiff. The reasons are :

1) The Master did not “impose a condition on the Order 14”. He adjourned the Order 14.

2) He did not “err in law” by imposing any condition.

3) He acceded to the interim payments application presumably because the defendant had been in occupation of the premises since July 2009 and had not paid anything.

4) It was proper and appropriate of him to order that the defence be struck out in the event that the defendant ignored the court’s order to pay money into court by way of interim payments.

5) The master did not hear the strike out application on its merits. The striking out would only arise in the future if triggered by the defendant’s failure to comply with the interim payments order.

6) The case of Law Shek Po seems to have no relevance to the facts of this case at all.

9.  The facts of Law Shek Po were briefly as follows. The plaintiff landlord sued his tenant seeking possession for, inter alia, arrears of rent. The plaintiff applied under Order 14 but was unsuccessful. Unconditional leave to defend was granted. The case proceeded to close of pleadings. Still no rent had been paid and so the plaintiff successfully applied for interim payments. The defendant appealed against the interim payments order, unsuccessfully.

10.  The defendant defaulted on the interim payments. The plaintiff then (and this was his mistake) applied for the defence to be struck out because of the default in payment. He should have applied under Order 45 for execution on the interim payments.

11.  Not surprisingly the judge refused to strike out the defence. It being the very defence upon which unconditional leave to defend had been granted. However the judge allowed the plaintiff its costs.

12.  It was against the costs order that the defendant successfully appealed to the Court of Appeal.

13.  Neither this court nor Mr Jasper Kwan, counsel for the plaintiff, can find anything in the Law Shek Po case which suggest that Master Ho was wrong to grant the order of interim payments on the terms as set out in paragraph 1 of his order. It is plainly not authority for the proposition that it is an error of law to “impose a condition on Order 14 hearing by interim payment”. In short (a) that is not what the master did (b) it does not make sense and (c) the proposition does not appear in either the holdings or the judgment in Law Shek Po.

14.  I will merely bring the Master’s order up to date. The defence shall be struck out if the defendant fails to pay interim payments in the sum of $1,240,000 by noon on 24 February 2010 and $155,000 per month thereafter commencing 17 March 2010.