Tian Chen Ltd v The Tower Ltd (No 2) [2003] PGNC 151; N2319 (20 January 2003)

N2319

PAPUA NEW GUINEA

[IN THE NATIONAL COURT JUSTICE]

OS. 629 OF 2002

BETWEEN:

TIAN CHEN LIMITED

Plaintiff

AND:

THE TOWER LIMITED (No. 2)

Defendant

WAIGANI: KANDAKASI, J.
2002: 5th & 6th December
2003: 20th January

CONTRACTS – Lease agreement – Construction of – It is the duty of the Court to uphold the agreement of the parties regardless of whatever difficulties there might be in the construction of their contract. - In the exercise of that duty, the Courts must endeavour to uphold the agreement of the parties, particularly in commercial arrangements because the Courts are not there to destroy the agreement of parties – Courts can readily do that, where the parties have proceeded to implement their agreement resulting expenses being incurred by either or both of the parties - In the exercise of that duty, the Courts can also ignore meaningless words or clause in contracts and supply reasonable terms to uphold agreement of parties - Date of possession left blank – Nothing in contract to indicate parties agreement on date of possession – Extrinsic evidence called by parties to establish agreement of parties – Evidence establish parties agreed to insert date of possession upon ascertaining date of grant of required approvals of tenant fit outs – Notorious fact for public authorities taking much longer than required to grant approvals – Reasonable to allow for blank provisions for date of possession to be inserted once date of approval of tenants fit out ascertained - Reference to year "2001" found meaningless in view of the parties agreement.

JUDGEMENT & ORDERS – Effects of findings of fact in interim judgement – Binding on the parties unless credible evidence rebutting previous findings is produced – Interim judgement found against defendant on the principle of usual and apparent agent – Real estate agent of landlord in lease agreement giving tenant no choice but to engage a architect of the agents choice – Landlord failed to disclose at the earliest opportunity to the tenant of any lack of authority in its real estate agent to engage architects as the landlords agent – Architect found agent of the landlord.

EQUITY – Real estate agent with apparent authority to bind the landlord caused tenant to engage an architect to do architectural drawings for its fit out – Delay in drawings and fit out – Tenant not in arrears – No invoice or demand for rents due served on tenant – No evidence of any serious default in payment of rents – Duty to pay rents made conditional on architectural drawings and fit out – Landlord’s apparent architectural agent cause of delay in drawings and fit out – Contract part performed – Landlord suing under contract - Tenant incurred substantial expenses in importing of equipment and material required for the intended purpose of its lease – Equity and fairness dictate a finding in favour of a contract between the parties.

LANDLORDS & TENANTS – Real estate agent having apparent authority to bind the landlord caused tenant to engage architect to do architectural drawings for its fit out – Delay in drawings and fit out – Tenant not in arrears – No invoice or demand for rents due served on tenant – No evidence of any serious default in payment of rents – Duty to pay rents made conditional on architectural drawings and fit out – Landlord’s apparent architectural agent cause of delay in drawings and fit out – Tenant incurred substantial expenses in importing of equipment and material required for the intended purpose of its lease – Equity and fairness dictate against termination of lease.

Notwithstanding lack of an physical possession, whether tenant in legal possession – Without agreement on date of possession tenant cannot be in possession – Failing to hand over keys and or allow the tenant to have unlimited and free access subject to security requirements to the leased premises amounts to possession not being given to tenant - Lack of any invoice for rents and or serving of notice of default under the lease support a finding that no possession was given to tenant – Found tenant not in possession either in fact or in law.

Cases Cited:
Hillas (W.N.) and Co. Ltd v. Arcos Ltd [1932] UKHL 2; (1932) 38 Com. Cas 23.
York Air Conditioning and Refrigeration (A/asia) Pty Ltd v. Commonwealth [1949] HCA 23; (1949) 80 CLR 11.
Upper Hunter County District Council v. Australian Chilling and Freezing Co. Ltd [1968] HCA 8; (1968) 118 CLR 429.
Sykes v. Fine Fare (1967) 1 Lloyd’s LLR 53.
Nicolene v. Simmonds (1953) 1 QB 543.
British Guinea Credit Corporation v. Da Silva (1965) 1 WLR 248.
Walsh v. Alexander [1913] HCA 24; (1913) 16 CLR 293.
Boyer v. Warbey [1953] 1 QB 234.

Texts Cited:
Chitty on Contracts 24th Ed, at pp. 700-701.
Voumard ‘The Sale of Land’ 2nd Ed., pp. 235, 238.
Pollock and Wright on Possession, p. 46.

Counsel:
Mr. G. Poole for Plaintiff
Mr. S. Nutley for the Defendant

20th January 2003

KANDAKASI, J: By an originating summons filed on 14th October 2002, the plaintiff (TCL) claims three orders. First it seeks an interim injunction against the defendant (TTL) from terminating a lease agreement (the agreement) between the parties in respect of part of Allotment 16 Section 5 Granville otherwise known as the library building, Deloitte Tower (leased premises) until further order. The second order TCL seeks is a declaration that on a true construction of the lease between the parties, the possession date is the date that the plaintiff, its architects, workers or any other of its agents physically takes possession of the leased premises. The third and final order it seeks is that the TTL be enjoined from demanding rent or taking any steps to terminate the lease on the basis that rent has not been paid prior to the possession date or otherwise than in accordance with the terms of the lease.

The first order was granted following an ex parte application by TCL. Subsequently TTL applied for a lifting of the injunction while TCL argued for a continuity of the injunction until a determination of the substantive proceedings. In a written judgment I delivered on 8th November 2002 (now N2313), I refused the application for a lifting of the injunction and ordered it to continue until a determination of the substantive proceedings. At that time, I suggested to both parties to take all steps necessary to expedite the hearing to dispose off the substantive proceedings. The parties took up that suggestion resulting in my hearing the substantive matter on 5th and 6th of December 2002. After receipt of both oral and written submissions for the parties, I reserved a judgement to a date before Christmas. I was ready to deliver judgement on 24th December 2002 and failing that on 3rd January 2003. However, the offices of the lawyers for both parties were closed for the Christmas New Year period. I was therefore, not able to deliver judgement on any of those dates. I then went on circuit to Mt. Hagen. What follows is the judgement of the Court.

Arguments

TCL argues that there exists a valid agreement between itself and TTL over the leased premises. It also argues that the whole purpose of the agreement was to enable it to operate an authentic Chinese Restaurant. This required modifications and a fit out of the rented premises. It further argues that it was required by the then real estate agents of TTL namely Century 21 Siule, Real Estate (Century 21) to engage Pacific Architects Consortium (PNG) Limited (PAC) to do the drawings required for the modifications and fit out for the leased premises. It was not given any choice to engage the services of an architect of its choice. It thus, took PAC to be TTL’s architectural agent.

PAC was able to produce an estimate of the time frame required for the drawings and approvals from the various authorities. That included the authority responsible for national heritages since the leased premises were listed as a national heritage. Given this, PAC was not able to guarantee approval time and hence the completion of the fit out. TCL therefore, argues that the actual date of possession was left open to be agreed upon by the parties later once the drawings were completed and all the approvals required were granted and it was certain as to when the fit out would be completed.

TTL on the other hand argues that, the date of possession was an essential term of the lease. Hence, if the date of possession is not known, or cannot be ascertain by reference to the contract, then the contract is void for uncertainty. Further it argues that, if the agreement is valid, then the central issue is whether the date of possession is the day of executing the agreement, 22nd November 2001, as is asserted by TTL or was it some later date to be determined at TCL’s convenience as asserted by it. It than argues that, all factors being considered, point to parties having agreed to the date of possession to be the date of the execution of the lease. TCL therefore, had legal possession of the leased premises since November 2001 and has failed to meet its rental obligations once the 9 months grace period had expired. TTL should thus be given the right to proceed with his rights under the agreement as lessor on account of TCL not paying its rental dues when due.

Issues

The above arguments give rise to three main issues. These are:

1. Is there a valid agreement between the parties?
   
2. Whether there is certainty in ascertaining the agreement of the parties in relation to the date of possession?
   
3. What was the parties’ agreement on the date of possession?
   
4. Whether TCL is in legal possession of the leased premises and when did that commence?
   

The second and third issues are one and part of the main question of what was the parties’ agreement in relation to the date of possession? This is a factual question. I will address that question first in the context of finding the relevant facts. This will be followed by a look at the second, first and fourth issues in that order.

In the interim judgement I delivered on 8th November 2002, in this matter, I addressed part of these issues and decided in favour of TCL. I found that PAC was the architectural agent for TTL and they were responsible for the delay in the parties agreeing on the date of possession. I also found that the parties were to agree on the date of possession as soon as the architectural drawings were completed and all the necessary approvals were obtained. Further, I found that TCL was not in breach of its obligation to pay rent in the absence of the parties agreeing on the actual date of possession owing to the delay in PAC finalizing the drawings for a fit out. Furthermore, I found that the insertion of the date "22nd ... November" 2001 in hand in clause 1.5 of the agreement was by TTL without any agreement, endorsement or approval of TCL. That was evidenced by a lack of endorsement or agreement or consent being given by TCL and was inserted by a person who was not a party to the negotiations leading up to the agreement between the parties.

When the substantive matter returned before me for determination, I expected TTL to come with evidence that would clearly rebut my findings in the interlocutory judgement so as to enable a judgement in its favour. It is now therefore appropriate to go to the evidence that is before me to find whether or not they have done that before considering the legal issues that are being presented. This will depend on the evidence before me. I therefore first go into the evidence to be followed by the facts disclosed by those evidence.

Called for the plaintiff was Meng Leihong who is the Chairperson of TCL and Mr. Kevin Chen also known as Chen Huang who is the Manager of TCL. In addition to their oral evidence, the affidavit of Kevin Chen sworn on 14th October 2002 was admitted into evidence as exhibit "A" for TCL.

TTL called a Mr. Yamyam Giere who was then with the National Provident Fund (NPF) and was responsible or involved in the negotiations leading up to the agreement in this case. In addition to his oral evidence, a letter dated 5th September 2001 from PAC to TCL was admitted into evidence for the defendant as "D1" followed by a minute of one of the meetings dated 29th August 2001 between the parties. This was admitted into evidence as exhibit "D2". An affidavit by Mr. Rod Mitchell sworn on 18th October 2002 and filed on 21st October 2002 was also admitted into evidence as exhibit "D3" for TTL. Further an affidavit sworn by Mrs. Winfred Kamit on 24th October 2002 and filed the same day was admitted into evidence for TTL.

As I noted in the interim judgement delivered on 8th November 2002, most of what Mr. Rod Mitchell says in his affidavit are hearsay as he was not a party to any of the negotiations leading up to the agreement. I therefore, decided not to act on his evidence and that will continue in this instance. The only exceptions to that will be his evidence on matters not the subject of any dispute or argument between parties and those that are based on his own knowledge and involvement.

Findings of Fact:

What was the Parties Agreement on the Date of Commencement?

There is no dispute and I find that the parties entered into a lease agreement in November 2001. The premises to be leased was the old library building in down town Port Moresby, which was improved and incorporated into the now modern and new building called "The Deloitte Tower" (TDT) by the NPF, which is mainly behind TTL. The negotiations leading to the agreement was between TTL’s real estate agents, Century 21 and a Mr. Yamyam Giere, for TTL and Mr. Kevin Chen and Madam Leihong for TCL. Mr. Giere was not present and hence, did not participate in all of the meetings including the one in which the final terms of the lease were settled and agreed upon. The agreement that was signed between the parties on 22nd November 2001 had a blank provision for the date of possession. Mrs. Winfred Kamit, a lawyer for TTL on the instructions of Mr. Rod Mitchell subsequently inserted this date. Neither Mr. Mitchell nor Mrs. Kamit were involved and parties to any of the meetings leading up to the signing of the agreement with blanks in the date of possession.

What is in dispute is what was the agreement of the parties in relation to the blank provision concerning the date of possession? The relevant provision in the agreement is clause 1.5. That provision is in these terms:

"Date of Possession means the day of 2001 being the date on which the Lessee takes possession or occupation of the Demised Premises which date shall include the date on which the Lessee or Lessee’s contractors and/architect commences works, fit out and partitioning of the Demised Premises of the Building in accordance with the Lessee’s plans and specifications as approved by the Lessor"

Apart from the inclusion of the year "2001" there is nothing else in this clause or else where in the agreement that could assist in determine what was the agreement of the parties on the date of possession. The matter therefore proceeded to trial for the parties to call extrinsic evidence to determine that issue. Thus, it is not an issue between the parties that the evidence they call should not be considered. So the principles on the governing the admission and consideration of extrinsic evidence is not in issue between the parties in this case.

In his evidence, Mr. Chen for TCL said the date of possession was left blank, as it was uncertain as to when approvals for TCL’s fit out of the lease premises would be obtained from the municipal authorities. He says the date was to be agreed and inserted as soon as the approvals were obtained. This was discussed at the last meeting of the parties consisting of Mr. Graham Hull of Century 21, a representative of PAC, Madam Meng Leihong, Alfred Daniel and himself. At that meeting, it was agreed that possession would depend on the approvals and TCL getting the keys to the leased premises. The keys to the leased premises were not yet given to TCL and they were not allowed any free excess to the rented premises except on one or two occasions when a visit was organised with PAC for the purposes of taking the measurements for the fit out drawings.

When asked as to whether he has been asking anyone about the approvals, he said he had spoken to PAC but PAC seem to be continuously delaying a finalization of the drawings due to delays in obtaining the required approvals for the fit out. He maintained consistently that PAC is TTL’s agent as TTL and not TCL engaged PAC. He also confirmed TCL’s readiness to commence business out of the leased premises as soon as the required approvals are given and the fit out is done.

Mr. Nutely of counsel for TTL produced exhibit "D1" and tried to get Mr. Chen to say that PAC provided an estimate of the time frame it would take to do the drawings and fit out. Then based on that estimate, he suggested that parties agreed to a 9 months grace period commencing from the date of possession. However, Mr. Chen consistently maintained that PAC was not able to guarantee approval time. It was thus, not possible for the parties to agree to the grace period running from the date of execution of the contract. Therefore, the parties agreed to leave that open to be inserted as soon as there was certainty in the date of approvals of the drawings and fit out by the relevant authorities.

Counsel also tried to get this witness to say that PAC was chosen to do the drawings from a field of others, but the witness maintained that, TTL who required through Century 21 for TCL to use PAC gave them no choice. He clearly stated that, if TCL chose not to use PAC, they would not have secured the agreement, so therefore they were given no choice but to use PAC. When again asked further about the time required for the approval for the fit outs, the witness stated that according to PAC even smaller projects took a year or more to get approvals. It was therefore unsafe to agree to a specific time period without knowing when approval was to be given.

Under re-examination, this witness indicated that there were about 4 to 5 meetings. The first was only an introductory one and the rest were more specific and the last was the final agreement of the parties settling all for the terms of the lease including the blank in the date of possession clause. The last meeting was held between October and November 2001.

The next witness for TCL Meng Leihong, is its principal. She comes from an accounting and project management background from her country, China. She first came into Papua New Guinea on a business trip on 6th November 2000. As a result of that, trip she decided to undertake some investment in the food industry in the country. She settled for a restaurant business and started looking for space in town and came upon an advertisement for tenants at The Deloitte Tower. She then spoke to Century 21 who were the appointed agents for that property.

Kevin Chen accompanied her in all of the discussions with Century 21 and the eventual signing of the lease agreement as she is not fluent in the English language. Her evidence confirms Mr. Chen’s evidence as to the blank provision in the date of possession and the reasons for that. She added by giving evidence of returning to China to order the equipment, furniture and other items needed for her intended business. She eventually returned to PNG on 28th June 2002 with all the equipment, furniture’s and other items required for her business. These are now held in storage costing her more money in storage charges. When asked about whether there was any discussion on the blank provision as to the date of possession, she spoke of an agreement being reached in terms of that starting after the approvals were given.

Under cross-examination, it was established that this witness was not fluent in the English language so she was depending on Kevin Chen to do the translation both to and from Chinese. Counsel then suggested to the witnesses that it was possible that parties did not agree on what they wanted in terms of the date of possession. The witness clearly indicated to the contrary and brushed aside suggestions for there being no agreement in this area. She added by saying that the lawyers prepared the agreement and after having read and understood what it was, all the parties signed.

Mr. Yamyam Giere called for TTL testified that, at the relevant time, he was the investment officer for the NPF. That included investments and management of properties. He spoke of being involved in some of the meetings leading to the agreement. But he was not a party to the last of the meetings or a meeting subsequent to the meeting of 29th August 2001. He did not take any similar minutes for the other meetings he may have attended. Exhibit "D2" does not indicate a definite agreement on the date of possession and the total number of grace period to run from the date of possession. The witness was not present at the final meeting that resolved those issues. He said however, that the normal position on all lease agreements with NPF, is a provision for a 9 months grace period.

He also indicated that Century 21 and not NPF engaged PAC. In exhibit "D2" in paragraph 4.0 there is reference to "BH" meaning Brian Hull, recommending PAC to the tenant (TCL) to do fit out designs and for TCL to discuss with PAC. TTL or NPF for that matter did not take any issue on Brian Hull’s recommendation. They did not even make it clear to TCL at that stage any time later that PAC was not their agent and that, TCL was at total freedom to engage any other architect of its choice. He also stated that most of the tenant fit outs in "The Deloitte Tower" was drawn by PAC.

Under cross-examination, this witness stated that, one of the approvals required was from the National Heritage Commission as the building was listed as a National Heritage and that was one of the main areas causing a delay in the drawings and fit out for the rented premises. He also admitted that the keys to the leased premises were requested by TCL, but they were not given to either PAC or the plaintiff except on one or two occasions when the premises had to be visited by TCL and PAC for the purpose of taking the measurements for the fit out drawings.

He also admitted under cross-examination that he was not present at the signing and did not witness the entry of the date, "22nd ... November" 2001 in clause 1.5. Also, he does not know when that was entered and who did. He does however, recall hearing Rod Mitchell talking about it possibly over the telephone to someone, but he did not know who the person was on the other end of the telephone. He also said it is a standard clause in every lease agreement for the date of possession to commence from the date of execution of a contract. He therefore assumed that the 9 months grace period was to run from the date of the execution of the lease.

I find this witness is of no assistance on the point of issue for trial, which is the date of possession. He was not at the crucial meeting which resolved that point. Also, if he was careful enough to take notes of the meeting of 29th of August 2001, he could have done like wise for the others. Nevertheless, for reasons only known to him, he did not do that. Unfortunately the minutes of the other meetings are not before me and more critically the final meeting which resolve the issue of the date of possession.

This witness’ evidence is only an assumption based on what he claims to be standard provisions in other lease agreements. If there were any truth in this, it was incumbent upon TTL to either get this witness or any other person to place before me samples of the standard contracts with such provisions but was not done.

In these circumstances, I find this witness and his evidence to be of no help on the issue at hand.

The Affidavit of Mr. Rod Mitchell and Mrs. Winfred Kamit do not assist in anyway as they too were not parties to the negotiations leading the lease agreement and the final form it was in when the parties signed it. Nevertheless, the affidavit of Winfred Kamit makes it clear that, on or about July 2002, she received a telephone query from Mr. Rod Mitchell as to why the date of possession was left blank in the lease. Upon checking with the relevant officer in her firm and having confirmed that, that part of the contract was not completed, she ask Mr. Mitchell as to when possession was actually given to the client. Mr. Mitchell instructed her that, that was to be the date of the execution by TTL as is NPF’s usual practice. She therefore, inserted the date "22nd ... November" 2001 in the blank space in the lease.

These ultimately mean that the only direct evidence on the issue at hand is that of Mr. Chen and Ms. Meng Leihong. The evidence of Mr. Geire supports them tacitly on the appointment of PAC and the fact that there were discussions on the date of possession. Mr. Mitchell and Mrs. Kamits affidavits show that Mrs. Kamit filled the blank in clause 1.5 on Mr. Mitchell’s instructions without the endorsement of TCL.

When I consider all of all the evidence before me, what appears to have happened is this. PAC was appointed as the preferred architect for doing fit out drawings for tenants of "The Deloitte Tower". They were appointed to do TCL’s drawings in this case on the recommendation and the direction of Century 21 with the approval or if not the acquiescence of TTL. PAC was able to give an estimate of the time it would take to do the drawings and obtain the required approvals for the fit out. They were however, not able to guarantee the approval time as in their experience, even a small job would take over a year to obtain the required approval. The approvals in this case required more than the usual approvals as the leased premises was listed as a National Heritage and the relevant authority and the other approving authorities had to approve the drawings for the fit out. Neither of the parties was able to ascertain when exactly all of the approvals would be obtained. It was therefore, agreed that the actual date of possession should be left open to be completed as soon as the approval dates were certain or obtained.

This finding is strengthened by the fact that specific provision was made in clause 1.5 of the lease agreement. If indeed it were standard for date of possessions to commence on the date of execution of lease agreements with TTL or NPF as is argued for by TTL, it would not have been necessary to create such a specific provision requiring specific dates to be inserted. Instead the relevant clause could have been stated in terms of the date of possession being the date of the execution of the contract. I asked TTL’s counsel in the cause of his submissions as to why was it necessary to specifically provide for the date of possession in those terms if indeed it was the case that it is a standard requirement for all lease agreements with TTL or NPF. Counsel for TTL was not able to assist me on that question, as he did not know why his client chose to have clause 1.5 in the form it is in.

In my view, clause 1.5 was agreed to be in that form to accommodate the particular circumstances of this case. The circumstances are such that, it could have been practically impossible for TCL to be expected to be in position to pay rents when it was difficult to ascertain when the necessary and required approvals for its fit out drawings would be granted and ultimately commence its business. The tendency of approving authorities in the country is to take even in a small or straightforward case, more than a year to grant approvals. Exhibit "D1" confirms this and I could even take judicial notice of this fact because it is so notorious that all required government or public authorities approvals of the kind in this case and others take much more time than they really should. It makes a lot of economic sense therefore, to make some provision in the lease to accommodate the possibility of a lengthy time period passing before the required approvals could be secured. For as Mr. Chen says, if TTL were not prepared to allow such provisions to be made in the agreement, TCL would have declined to sign it.

The arguments and the suggestions contrary to the above finding is from people who were not directly involved in the final stages of the negotiations and agreements on the terms of lease. They were not even present at the time of the execution of the lease. There is no credible evidence supporting them in their contention. I therefore reject these suggestions and or arguments.

In view of the above and the evidence, I also find that the existence of the year "2001" in clause 1.5 is meaningless, contrary to Mr. Nutley’s submissions. His submission is that, the parties made a deliberate choice to insert that year. This means the commencement of the date of possession had to be a date in that year and that is the date inserted by Mrs. Kamit, "22nd ... November". The argument here goes into the construction of the agreement of the parties.

A classic statement on the construction of the terms of a contract is in Chitty on Contracts 24th edition at pages 700-701, in the following terms:

"The object of all construction of the terms of a written agreement is to discover there from the intention of the parties to the agreement...[T]he cardinal presumption is that the parties have intended what they have in fact said, so that their words must be construed as they stand. That is to say, the meaning of the document or of a particular part of it is to be sought in the document itself: "One must consider the meaning of the words used, not what one may guess to be the intention of the parties."

The House of Lords put the position in a slightly different language in this way in Hillas (W.N.) and Co. Ltd v. Arcos Ltd [1932] UKHL 2; (1932) 38 Com. Cas 23, by Lord Tomlin with whom Lords Warrington and Macmillan agreed at page 29:

"...the problem of a court of construction must always be so to balance matters, that without violation of essential principles the dealings of men may as far as possible be treated as effective, and that the law may not incur the reproach of being the destroyer of bargains."

Nearer to home, in Australia, the courts have adopted a similar approach. An example of this is the case of York Air Conditioning and Refrigeration (A/asia) Pty Ltd v. Commonwealth [1949] HCA 23; (1949) 80 CLR. 11. That case reviewed nearly all of the authorities on point and said at page 26 of the judgement per Williams J., that if the Court:

"... comes to the conclusion the parties intended to make a contract, it will if possible give effect to their intention no matter what difficulties of construction arise."

A similar approach was adopted by Barwick C.J, in the Australian High Court case of Upper Hunter County District Council v. Australian Chilling and Freezing Co. Ltd [1968] HCA 8; (1968) 118 CLR. 429. His Honour held at 437 that:

"... no narrow or pedantic approach is warranted, particularly in the case of commercial arrangements."

In cases where, the parties have part performed or taken steps in pursuance of the contract, the Courts have shown a readiness in upholding a contract more than not. A case on point is Sykes v. Fine Fare (1967) 1 Lloyd’s LLR 53 (English Court of Appeal). Lord Denning MR stated clearly the reasons for that after going through all of the authorities including some of the above in these terms:

"In commercial agreement the further the parties have gone on with their contract, the more ready are the Courts to imply any reasonable term so as to give effect to their intentions. When much has been done, the Courts will do their best not to destroy the bargain. When nothing has been done, it is easier to say there is no agreement between the parties because the essential terms have not been agreed. But when agreement has been acted upon and the parties, as here, have been put to great expense in implementing it, we ought to imply all reasonable terms so as to avoid any uncertainties."

It is clear from these authorities that, it is the duty of the Court to uphold the agreement of the parties regardless of whatever difficulties there might be in the construction of their contract. In the exercise of that duty, the Courts must endeavour to uphold the agreement of the parties, particularly in commercial arrangements. This is because the Courts are not there to destroy the agreement of parties but to uphold them. This should readily be the case where the parties have not only agreed but have gone further into implementing their agreement resulting expenses being incurred by either or both of the parties. In so doing the Courts can and have ignored words or clause that are meaningless or superfluous (Nicolene v. Simmonds (1953) 1 QB 543) and supply terms or words as appear reasonable and necessary in the circumstances to give effect to the parties agreement.

At the same time I note that, there is ample authority for the proposition that, where in a contract a clause is yet to be agreed, it may mean that there is no contract at all, because the parties may have not agreed on all the essential terms: Nicolene v. Simmonds (supra). I also note that, this principle is not expressed or stated in determinative terms. Instead it seems each case must be seen in its particular context and circumstances. That is why Lord Tomlin in the Hillas case (supra) said:

"It is in the application of them [the principles of construction of contracts] to the facts of a particular case that the difficulty arises; and difficulty is of such a kind as often to afford room for much legitimate difference of opinion and to present a problem the solution of which is not as a rule to be found by examining authorities."

A case which I find to be of some assist in the absence of any submission to the contrary is the case of British Guinea Credit Corporation v. Da Silva (1965) 1 WLR 248 (Privy Council). That was in a case of an employment contract. Following the advertisement of a vacancy in the general manager’s position with the appellant corporation, the respondent applied for the position. His application was accepted. There was however no definite agreement as to when he would commence. But it was clear that, that would be adjusted to suite the respondents’ circumstances. The corporation argued amongst others that there was no contract because there was no agreement on the date of commencement. The Court rejected that argument and said per Lord Donovan:

"Their Lordships have no hesitation in rejecting the first of these contentions. As regards the date of commencing service, it is commonplace that such a matter is often left to be arranged between the parties to a service contract according to their mutual convenience after they have agreed upon their bargain. This omission does not preclude the formation of a contract, for the law will imply that the duties must be begun within a reasonable time. What is reasonable time naturally depend upon the circumstances."

Although this case concerned an employment contract, the principles enunciated there are relevant and appropriate and should apply with the necessary modification to any other contract such as the one in the case presently before me. This is because, depending on the nature of each contract, the date of possession in most lease agreements could either be fixed or are left for adjustment and fixing at a later time. In the case of a straightforward lease agreement where there is no maintenance or tenant fit out required, it would be reasonable to fix the date of possession at the time of its execution. But, if it were depended upon something happening, then it would be necessary to allow for those things to happen before possession could be allowed to commence. It is also not unusual for parties to a lease agreement to leave the date of possession to be agreed, if it is uncertain as to when what is expected to happen is likely to happen.

In this case, there is no dispute that the parties have executed a lease agreement on 22nd November 2001. It was for a term of 4 years 11 months. There is no argument between them that they agreed on all of the other essential terms of the lease, such as rentals, use of the leased premises, the need for a fit out to meet TCL’s intended and authorise purpose of the lease. There is also no doubt that the parties have taken steps to implement the agreement.

TTL has by its acquiescence allowed its agent, Century 21 to ensure that PAC was appoint as the architects to draw the fit out for TCL. In the interim judgement, I found that PAC was TTL’s agent. No credible evidence has been produced in Court by TTL that rebuts the factual basis for that finding. Also, there is no argument by TTL that the principles of law I applied in that judgement are wrong. I have therefore been provided with no reason to depart from my earlier findings and judgement. Instead the evidence of Mr. Giere, that PAC has been the firm that has done most of the architectural drawings for the tenants of the "The Deloitte Tower" strengthens the fact that PAC was the usual and or apparent agent of TTL. These in my view, nullify TTL’s argument as against PAC being its agent. In any case these submissions do not however, change what has in fact has occurred as previously found. I therefore affirm my earlier findings for the purpose of this judgement. This is important because, it necessarily follows that, to the extent that PAC is TTL’s agent, it is responsible for the drawings and it has done the required drawings for the TCL in pursuance of the agreement. The relevant approving authorities have not promptly dealt with the approval. This is the only reason why the agreement has not been fully implemented.

Further, apart from giving the necessary instructions to PAC for its fit out, TCL has gone ahead and incurred substantial expenses in procuring equipment and material required for its intended purpose and business out of the leased premises. These material and equipment have come into the country from China and are in storage at a cost to TCL. In the absence of any evidence to the contrary, I find that these material and equipment could not be secured locally. TCL remains anxious and committed to further implementing the agreement. It has done nothing to frustrate its implementation.

In these circumstances, it is both reasonable and equitable to supply any lack of agreement in the date of commencement as was suggest in British Guinea Credit Corporation v. Da Silva (supra) going by the principles stated in Sykes v. Fine Fare (supra). But in this case the evidence clearly establishes the agreement of the parties that the commencement date would be agreed upon and would be filled in as soon as the date for the approval for the fit out drawings and a fit out pursuant to that are firmed up. Given that such approvals from public authorities as in this case are notoriously delayed, it is not reasonable to expect the parties to come to an agreement on the commencement date within one month or a little after that as is argue for by TTL. Instead it is reasonable to expect that to go beyond 2001. Indeed the fact that, the required approvals have not yet been obtained as at the date of the hearing, confirms this. I am therefore of the view that, the inclusion of the year "2001" is meaningless and as such it should be ignored as that could be over-ridden by any subsequent agreement of the parties.

The question then is where does this lead to on the question of certainty on the date of possession being raised by TTL?

Certainty on Date of Possession

The answer to that question just raised is simple. Base on the foregoing reasons, I would also dismiss TTL’s suggestion that, if I find in terms of TCL’s argument, than that inevitably, means uncertainty in the date of possession as the relevant date was left blank. This argument was premised on the provisions of the agreement itself.

The other basis for that suggestion was, though not in its written submissions, is that there were difficulties in translation between the English and Chinese languages. So therefore, the parties were not at consensus ad idem on the date of possession at the negotiations and the eventual signing of the agreement. This is premised on a claim that Mr. Chen who did the interpretation between the two languages had great difficulty understanding English. That argument is in turn based on Mr. Geire’s evidence that it took about two or three intervals for communication with TCL’s representatives.

Mr. Chen appeared before me in the interlocutory hearing and gave his evidence in English. But during the hearing of the substantive matter on 5th and 6th of December 2002, he gave his evidence through an interpreter. On both occasions I did not get any clear impression that Mr. Chen had great difficult understanding the English language. His only problem appeared in certain instances where something was said quickly in the English language, which made it difficult for him to keep pace with what was being said. I note this is a problem that affects most people, whether or not one is competent in any one language, though it would have to take much more time for one to understand in a case where there is a very limited knowledge of another language. But that does not necessarily mean that there is a complete lack of understanding anything that is being said.

Further, the fact that the parties have gone ahead and part performed the lease agreement operates in favour of there being a contract. Indeed I note that TTL tried to enforce its right to rents under the agreement, thereby accepting that there is a valid agreement. The argument that there is no valid contract is something TTL seized upon in the course of the hearing of this case.

This leaves only the issue of whether TCL has been in legal possession from 22nd November 2001. I therefore turn to it just for the sake of dealing with it specifically. Otherwise the answer to the main issue of, what was the parties agreement on the date of possession would make it unnecessarily for me to address this issue.

Whether TCL is in Legal Possession

In its submissions TTL submits that, according to clause 1.5, TCL takes possession from the date of possession. That includes but not defined by "the date on which the Lessee or lessee’s contractors and/or architect commences works, fit out and partitioning of the Demised Premises of the Building in accordance with the Lessee’s plans and specifications as approved by the Lessor". Therefore it has to be a date other than and prior to the date when the TCL’s works on the leased premises commence. Consequently, it argues that TCL’s argument on this issue is untenable.

TCL’s argument is that, the date of commencement is the date when all the approvals had been obtained and on which its architects, workers and other agents take physical possession of the demised premises.

In most cases, possession of rented or leased premises takes place when the keys to the premises leased or rented are delivered to the tenant. That is when it is considered that a tenant has taken occupation and or physical occupation. It is argued for TTL that occupation does not conclude the matter. The Court must consider whether TCL has been in legal possession. It submits that TCL has been in possession since 22nd November 2001, which is confirmed by TCL and its architect visiting the leased premises for the purpose of drawing up the necessary plans for its fit out.

In support of its arguments, TTL refers to Voumard ‘The Sale of Land’ 2nd Ed., P. 235, 238 adopting a passage from Pollock and Wright on Possess, p. 46; Walsh v. Alexander [1913] HCA 24; (1913) 16 CLR 293, p. 308 which states:

"Possession is not a word of unvarying meaning. It means ‘possession of that character of which the thing is capable."

TTL’s argument runs contrary to the finding that the parties agreed to agree on the date of possession once the date for the obtaining of the various but necessary approvals from the various authorities was certain or granted. That being the case, it makes no sense to find that TCL was in possession, when the parties were yet to agree on the date of possession. Further as the authority relied on by TTL says, the character of possession in this case is that possession was dependent on the purpose of the intended business out of the leased premises. Without an approved fit out, TCL could not be reasonably expected to be in possession for its intended purpose both factually and legally. Furthermore, the conduct of TTL even confirms that TCL was not given possession because even up to this date, it has still not given TCL the keys to the premises. TCL is not free to go in an out of the leased premises, subject of course to meeting security requirements for "The Deloitte Tower"because it has not been given the keys to enable that to happen. It is most unfair for the TTL to argue on the one hand that TCL is in legal possession and so therefore pay the agreed rentals, when on the other hand it has not facilitated a full possession of the premises. It has denied TCL a free and full possession of the lease premises by not giving TCL the keys to the premises and contributing to a delaying in obtaining the required approvals as I had found in the interim judgement.

Furthermore, TTL has not rendered any invoice for rents due under the lease. It has also not served on TCL, any notice of default in rentals under the agreement. If indeed, TCL were in possession this would have been inevitable. The only exception to that is the invoice and letter of demand I mentioned and covered in the interim judgement.

Still further, the facts in this case are not the same as in a case where a tenant temporarily parts with possession as spoken of in Boyer v. Warbey [1953] 1 QB 234, at 241, an authority which is cited in TTL’s submissions. In this case, possession has not been given legally. The parties are yet to agree on the date of possession for the reasons already stated. Also no possession has been given in fact in that the keys have not been given and that TCL is not free to go in and out of the leased premises at its own convenience. In these circumstances, I find that TCL is not and has not been in possession either legally or in fact.

Ultimately therefore, I find for TCL. I therefore order judgement for the plaintiff and make orders in terms of the remaining terms of the orders sought in the originating summons.
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Lawyers for the Plaintiff: White Young & Williams.
Lawyers for the Defendant: Gadens.