Landlord and tenant — tenancy agreement — terms — commercial premises — liability to pay “joint charges” — whether, on proper construction, “joint charges” included management charges which were absent under tenancy
[2017] HKEC 2476 Lands Tribunal
Part V Possession Application No 824 of 2017
Member Lawrence Pang
8, 17 November 2017

L owned a market in premises (the Premises) in a retail and car park development (the Building). L leased the Premises together with the use of common areas to T under a tenancy agreement (the Agreement), which permitted licences to third parties who were required to pay it inter alia “management fees”. A clause (the Clause) in the Agreement required T to pay “all existing and future” utility charges “in respect of the Premises” and meter charges and “a fair proportion of any joint charges as determined by the Landlord or the manager” of the Building. L sought recovery of possession of the Premises on the ground that T had failed to pay its share of “joint charges” for a specified period of $543,839.23 (the Joint Charges). T objected, arguing that the “joint charges” in the Clause were confined to utility and meter charges but the Joint Charges here were in fact “management charges” which were not payable under the Agreement.

Held, granting the application, that:

  • T was liable to pay the Joint Charges. On a proper construction of the Clause, “joint charges” were not confined to utility charges since these were “payable in respect of the Premises” only, but included charges other than meter charges which could be “determined by the Landlord or the manager” of the Building. The Premises were let together with common areas for which “joint charges” would necessarily be incurred by the manager of the Building (the Manager), whose services would benefit T. (See paras. 18–22, 26, 44, 46.)
  • As for T’s reliance on the facts existing and known or assumed by the parties when the Agreement was made , although “joint charges” had not yet been incurred and calculated, this did not mean they were not envisaged by L and T or chargeable. Further, the parties could be supposed to have chosen their words with care. T’s licensees paid “management fees” for their stall, whereas tenants of shops in the Building paid “management charges” which was consistent with “joint charges” and more readily apportioned. Accordingly, the natural meaning of “joint charges” included management charges, eg the Manager’s staff costs, cleaning and maintenance etc (Jumbo King Ltd v Faithful Properties Ltd (1999) 2 HKCFAR 279, Arnold v Britton[2015] AC 1619, Smart Essence Development Ltd v Hong Kong Housing Authority (unrep., HCA 450/2016, [2016] HKEC 951) applied). (See paras. 30, 33–36, 39.)
  • On the evidence, the Joint Charges were a fair proportion of the joint charges “as determined by the Landlord or the manager.” (See para. 42–43.)

Application

This was an application by the applicant-landlord of premises against the respondent-tenant for recovery of premises for failure to pay joint charges under the tenancy agreement. The facts are set out in the judgment.

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