FUNG PUI YI IRENE AND ANOTHER v. MOTIVICS & CO LTD

LDPE 819/2017

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO. LDPE 819 OF 2017

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J U D G M E N T

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Background

1.  By virtue of a Tenancy Agreement dated 17 December 2014 (“the T/A”), the applicants together with Fung Chi Wah[1] let to the respondent Shop 3, G/F, Yen Fook Mansion, 120-126 Second Street, Hong Kong (“the Premises”) for a term commencing from 1 January 2015 to 31 December 2017.

2.  The monthly rents (inclusive of management fee, Government rates and rent) reserved for the term of the T/A were as follows:

From 1 January 2015 to 31 December 2015:	$24,200
From 1 January 2016 to 31 December 2016:	$28,500
From 1 January 2017 to 31 December 2017:	$32,000

3.  By a witness statement dated 20 October 2017 by Ms Fung Pui Yi Irene (“Ms Fung”), who appears on behalf of the applicants, Ms Fung admits that the monthly rent payable by the respondent has remained at $28,500 inclusive since 1 January 2017. Ms Fung explained that this was resulted the request by the respondent following delinquencies in rental payment by the respondent since the later half of 2016.

4.  The T/A was signed on behalf of the respondent by SAMRANJIT, Narongsak (「韋小東」in Chinese) (hereinafter referred to as “Mr Samranjit”).

5.  On 17 August 2017, the applicants applied to the Tribunal for recovery of possession of the Premises on the ground that the respondent, as tenant, had not paid for the rental for the period since 1 March 2017 (“the Application”).

6.  On 17 August 2017, the respondent filed a Notice of Opposition suggesting that the Application should be addressed to Mr Samranjit instead. In the hearing on 1 September 2017, Mr Tan Simon Sai Man (「陳世敏」in Chinese) (hereinafter referred to as “Mr Tan”) on behalf of the respondent clarified that on 17 December 2014, the respondent has not yet been incorporated and he argued therefore Mr Samranjit should be signing the T/A in his personal capacity.

7.  The case was adjourned for trial and the parties were directed to prepare witness statements, if any, in support of their case.

Evidence of Ms Fung

8.  Although Ms Fung filed in a witness statement dated 20 October 2017 as aforementioned, nothing (save for the WhatsApp messages attached thereto) touched on the issue argued by Mr Tan. Her witness statement, in any event, was not challenged by Mr Tan.

9.  A Ms Dorian Lee, who claimed to the estate agent handling the T/A, also purported to file a witness statement dated 19 October 2017. She was not called to give evidence and her witness statement has been disregarded.

Evidence of Mr Tan

10.  Mr Tan has not filed any witness statement but with leave of the Tribunal, produced the following documents:

(1) a copy of Sale and Purchase Agreement for the restaurant business (餐廳經營權買賣合約) being operated at the Premises dated 19 November 2014 signed by Mr Samranjit as purchaser;

(2) a copy of Certificate of Incorporation of the respondent dated 18 December 2014, ie 1 day prior to signing the T/A;

(3) a copy of business registration certificate of the respondent also dated 18 December 2014;

(4) a copy of Incorporation Form (Company Limited by Shares) (NNC1) of the respondent dated 18 December 2014 with both Mr Tan, a Mr Lam Wai Keung (“Mr Lam”) and Mr Samranjit as Founder Members and Directors;

(5) a copy of Consent to Act as First Director (NNC3) of the respondent dated 18 December 2014 signed by Mr Samranjit;

(6) a copy of Consent to Act as First Director (NNC3) of the respondent dated 18 December 2014 signed by Mr Lam;

(7) a copy of the receipt/Pick up of the respondent’s company document (including the company chop) by Mr Tan dated 5 January 2015;

(8) a Liquor Licence in favour of Mr Samranjit dated 17 May 2016;

(9) a copy of Application for Transfer of Food Business Licence/ Permit dated 8 January 2015 by Mr Samranjit.

11.  Mr Tan conceded at trial that he had been a silent director till the end of 2015; he was however the key person who handled the incorporation of the respondent. While Mr Tan denies that the respondent had been involved in the restaurant business, he does not dispute that the restaurant business is being conducted at the Premises by him as the 3^rd director of the respondent.

12.  Notwithstanding my enquiry, Mr Tan has not proffered any resolution of the respondent in relation to the business operation at the Premises.

Discussion

13.  Having perused the documents produced by Mr Tan, I consider Mr Samranjit a promotor[2] of the respondent. On 19 November 2014 when Mr Samranjit purchased the restaurant business from the former operator at the Premises, the respondent has not been incorporated and it is fair and reasonable that the acquisition was in his own name. The same is also true when he signed the T/A with the applicants. When the applicants filed the Application, the copy of T/A attached thereto was without the company chop; I accept the submission of Mr Tan that as regards Ms Fung production of the T/A with the company chop, the latter would most probably be inserted retrospectively together with the business registration number 64207236 on page 2 of the T/A when the company was incorporated.

14.  It is trite that at common law a company is not bound by contract purporting to be entered into on its behalf by its promoters or other persons before its incorporation.[3] On the other hand, the facts show that a new contract was made with the respondent after its incorporation on the terms of the old contract.

15.  In Natal Land and Colonization Co Ltd v Pauline Colliery and Development Syndicate Ltd [1904] AC 120, the respondents there sued for specific performance of an agreement of lease, and execution of a proper deed of lease. The appellants pleaded that there was no privity of contract between themselves and the respondents as the latter were not registered at the date of the transactions. The Privy Council held in favour of the respondents on the following grounds:

“Allowing that there was no valid agreement between the defendant company and the Pauline Syndicate on December 29, before their registration, we consider that the subsequent occupation and working of the land in question by the syndicate, the expenditure of money on the land in faith of the agreement, the acceptance by the defendant company of the payment of 100l. as a guarantee for prospecting operations, the recognition by the company of the syndicate as working under an agreement to prospect this land with a view to obtaining a lease, and the correspondence which took place after the date of registration with the defendant company, are inconsistent with any other reasonable conclusion than the actual existence of an agreement between the plaintiff syndicate and the defendant company on the basis of the contract contracted with Mrs de Carrey on December 9, 1897. There has been part performance on the faith of an existing agreement, and the acts of both parties are unequivocally referable to the contract sued upon."

16.  Likewise in the present case, the restaurant business has been continuously conducted at the Premises and even Mr Tan has allowed himself to be involved in the payment of rental by cheques[4] as a director of the respondent until 11 April 2017 (in settling the rental for February 2017).

17.  In respect of the latter, Ms Fung received a WhatsApp message[5] from Mr Tan on 30 Dec 2016 introducing himself as a director of the respondent who was running the Thai restaurant at the Premises:

“Hello Irene! 我喺第二街[6]泰國菜另一位股東Simon, 一直沒有機會跟你見面， 可否找個時間見見， 我亦希望討論鋪頭租金。先謝謝你。“

18.  Further, on 28 January 2017, Ms Fung received a WhatsApp message from Mr Tan acknowledging the responsibility for payment of rental by the respondent:

“Hi Irene! I couldn’t get hold of Vicky. Let me verify and put it back on track – i will make sure the company credit your account for the rent on Wednesday. This is just a hiccup on a constructive healthy relationship between you as our landlord and we as your tenant. 祝你一家新春進步，身體健康”

19.  In addition, by section 122 of the Company Ordinance, Cap 622, where the T/A was purported to have been made in the name of the respondent or on its behalf at a time when it was not incorporated, it may, after incorporation, ratify the contract to the same extent as if it had already been incorporated at that time and as if the contract had been entered into on its behalf by an agent (ie Mr Samranjit) acting without its authority. Despite Mr Tan’s reluctance to produce the resolution of the respondent to such effect, based on the facts of this case, I consider alternatively the T/A has been ratified by the respondent.

20.  That the Liquor Licence or the Food Business Licence/ Permit is held in the name of Mr Samranjit is neither here or there. Particularly for the former, it must be held in the name of a natural person instead of a company incorporated.

Conclusion

21.  In conclusion, based on either of the 2 alternatives at common law or by section 122 of the Company Ordinance, I consider the T/A binding on the respondent who should make rental payments according to it.

Order

30.   I make the order as follows:

(1)   Subject to paragraph (3) below, the respondent do deliver vacant possession of the suit premises to the applicant;

(2)   The respondent do pay the applicant arrears of rent/mesne profits at the rate of $28,500 per month from 1 March 2017 until delivery up of vacant possession;

(3)   If the respondent should on or before 17 November 2017 (“Relief Expiration Date”) pay into the Tribunal all the arrears of rent/mesne profits as stated in paragraph 2 above (including all arrears of rent/mesne profits due on or before the date of payment), the respondent be relieved from the forfeiture incurred herein, and the T/A be reinstated;

(4)   Unless otherwise ordered, all sums ordered to be paid under this judgment shall be paid into the Tribunal in cash, by cashier orders issued by banks in Hong Kong or by cheques drawn by firms of solicitors in Hong Kong, and such sums received by the Tribunal shall be released to the Applicant; and

(5)   There be no order as to costs.