WIN GLORIES LTD v. MAJORLUCK LTD

CAMP 45/2018

[2018] HKCA 637

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 45 OF 2018 and

(ON AN INTENDED APPEAL FROM LDPE 824 OF 2017)

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J U D G M E N T

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Hon Yuen JA (giving the Judgment of the Court):

1.  In LDPE824/2017, the applicant (“the Landlord”), which was the landlord of a market (“the Premises”) which occupied part of a shopping centre in Sha Tin, sought vacant possession from the respondent (“the Tenant”) on the ground that the Tenant had failed or refused to pay a sum charged by the Landlord as “joint charges”.

2.1.   Section II Clause 3 of the Tenancy Agreement dated 9 March 2016¹ provided that the Tenant agreed with the Landlord:

“To pay all existing and future water, rates, electricity, telephone, gas and other utility charges payable in respect of the Premises² and all charges for meters and all standing charges and deposits, and a fair proportion of any joint charges as determined by the Landlord or the manager for the time being of the Building³ or such part thereof as shall be owned by the Landlord (‘the Manager’).” (Emphasis added)

2.2.   The term “joint charges” was not defined in the Tenancy Agreement.

3.  The Premises was previously owned by Link REIT.  In May 2016 the Landlord acquired it from Link REIT and appointed a manager. 

4.  The manager demanded a sum of money⁴ from the Tenant as “joint charges”, comprising management charges which included the manager’s staff costs, cleaning charges, maintenance and repair costs, gardening and decoration costs⁵.

5.  The Tenant refused to pay the “joint charges” on the ground that they comprised management charges for which the Tenant had no obligation to pay under the Tenancy Agreement.  The Tenant argued that the “joint charges” in Clause 3 should be read ejusdem generis with utility charges referred to in the same clause, and management charges were not utility charges.  The Tenant also argued that as the Tenancy Agreement had been drafted by the Landlord’s predecessor, the contra proferentum rule should be applied.  In support of its arguments, the Tenant pointed to the fact that its Tenancy Agreement did not refer to management charges, whereas tenancy agreements for other premises in the same shopping centre contained explicit obligations to pay “management charges”.

6.  After a trial in the Lands Tribunal on 8 November 2017, Member Lawrence Pang gave Judgment on 17 November 2017 for the Landlord.  In gist, the Tribunal took the view that:

-   as the Tenant was entitled to “the use in common with the Landlord and ... others ... of the entrances, staircases, landings, passages and lavatories in the Building in so far as the same are necessary for the proper use and enjoyment of the Premises”, “joint charges” would necessarily be incurred⁶;

-   therefore it was not necessary to apply the contra proferentum rule as there was no ambiguity⁷, and the term “joint charges” was not confined by the ejusdem generis rule of construction to utility charges referred to in Clause 3⁸; 

-   as for the explicit inclusion of “management charges” in other tenancy agreements in the same shopping centre, the management charges payable for those tenancies could be more readily calculated or apportioned, which was not the case with the Premises the use of which was confined to that of a market⁹.

7.  The Tenant applied for leave to appeal which was refused by the Tribunal for reasons set out in a Decision dated 29 March 2018. 

8.  The Tenant applied to this court for leave to appeal by summons filed on 12 April 2018.  Essentially, it was argued that the factual matrix was that the Premises had its own internal toilets and corridors with direct access to the streets and was segregated from the common parts referred to by the Tribunal, that the ejusdem generis and contra proferentum rules of construction should have been applied, and that in any event the onus was on the manager to establish that the sum demanded was a “fair proportion” as stipulated in the Tenancy Agreement.  Written submissions were provided by both parties. 

9.  We have read the Judgment, the Decision, the parties’ respective submissions and the documents in the application bundle.  Suffice it to say at this stage that we are satisfied that there is a reasonable prospect of success.  Accordingly we would give leave to appeal.  The costs of the application will be costs in the cause of the appeal.

10.  Finally we have to add regrettably that parts¹⁰ of the submissions provided on behalf of the Tenant were expressed in apparently sarcastic language unworthy of counsel.  We trust that in future, use of that type of language will not be repeated and counsel will adopt a more professional and respectful approach to his submissions.