Certainty of term

In Tsuen Wan Trade Association Education Foundation Ltd v Chui Kam Ying ([2012] 2 HKLRD 1163) S agreed to sell P the lease of the ground floor of a four-storey 1930s building. The building was held under the terms of a memorandum of agreement made in 1937. A Crown Lease was deemed to have been granted when the conditions of exchange were complied with (New Territories (Renewable Government Leases) Ordinance, s. 3). The term was extended until the expiry of 30 June 2047 by virtue of section 6 of the New Territories Leases (Extension) Ordinance. In 1939, the lease of the building was held by four individuals as tenants in common. Each of them took a lease of one floor of the building from the co-owners for a term that mirrored that in the Crown lease (at that time no-one could have anticipated the statutory extension until June 2047).

The court had to consider, inter alia, whether there was a valid lease of the ground floor after 1997 (when the contractual term expired). This is a problem since the parties clearly had not given any thought as to what would happen after that date. A finding that the parties held over as, for example, periodic tenants or tenants at sufferance or at will would plainly be unsatisfactory. On the other hand, there was no clear expression of intention at the time of the grant as to what should happen. It is not clear whether the tenants of the individual floors were also the successors-in-title of the shares in the tenancy in common of the building as a whole.

The court found that, on a proper construction of the 1939 lease of the ground floor, the parties must have intended that the right to exclusive possession was to subsist as long as the term of the Government lease of the whole building lasted. This imputed intention does seem to raise a certainty of term problem.

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