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Yuzhen Yang v Manoa [2017] TOCA 2; AC 15 of 2016 (16 March 2017)

IN THE COURT OF APPEAL OF TONGA

CIVIL JURISDICTION

NUKU’ALOFA REGISTRY

AC 15 of 2016
[CV 39 of 2014]

BETWEEN: YUZHEN YANG

- Appellant

AND : 1. ‘OLIONI MANOA

2. MATELITA MANOA

- Respondents

Coram : Moore J

Blanchard J

Hansen J

Counsel: Mr. L. M. Niu SC for the Appellant

Mr. S. Fonua for the First Respondent

Mrs. P. Taufaeteau for the Second Respondent

Date of Hearing : 9 March 2017

Date of Judgment : 16 March 2017

JUDGMENT OF THE COURT

The Facts

[1] Mrs. Yang appeals against a decision of Scott J in the Supreme Court refusing her claim for specific performance of a tenancy agreement dated 20 October 2007 relating to a commercial building at Haveluloto. Although executed in 2007, the agreement was for a term of 10 years commencing on 9 June 2013. The rental was to be TOP $35,000 payable in a lump sum in advance (in October 2007).

(a) The 1999 Agreement

[2] This unusual arrangement reflected prior dealings which it is necessary to describe. The respondent, ‘Olioni Manoa, had a town allotment at Haveluloto on which he had erected a retail store and, behind it, his residence. On 29 June 1999 ‘Olioni as landlord rented to Meng Sen Tsay his “retail store” opposite Vaiola Hospital. The term of that 1999 tenancy was 9 years from 2 June 1999 until 1 June 2008. The rent for the first 5 years was set at $400 per month but it appears to have been decreased by subsequent informal agreement as there were in evidence receipts of rent at the rate of $3000 for the years 2001 and 2003. The tenancy was for a “retail store” only. There was a provision preventing the tenant, without the landlord’s permission, from removing any fixture attached by the tenant. Importantly, there was no provision that prevented the tenant from assigning or sub-letting the tenancy. The 1999 agreement was personally signed by ‘Olioni Manoa. He had the benefit of legal advice before signing.

(b) The 2005 agreement

[3] By 2005 ‘Olioni was living in Hawaii and Mrs. Yang had become Mr. Tsay’s sub-tenant and was running the store. She approached ‘Olioni by telephone with a proposal that she should build an upper storey above the store but she wanted to have a new tenancy to take effect from when Tsay’s tenancy expired in 2008. A brief tenancy agreement was prepared and signed on 9 June 2005 by Mrs. Yang and by ‘Olioni’s wife Matelita Manoa. It was expressed to be with ‘Olioni and Matelita, who had been given general authority from ‘Olioni to sign any document for him while he was out of Tonga. (Despite the introduction of Matelita as a party, in all the agreements the landlord continues to be referred to as “he”). There was no clearly expressed mention in the 2005 agreement of the proposed upper storey. The subject-matter was ambiguously described as “the premises at his [‘Olioni’s] residential place at Haveluloto, Tongatapu”. But it has never been in dispute that Mrs. Yang was authorised by ‘Olioni to construct the upper storey.

[4] The 2005 agreement was for 5 years starting on 9 June 2008 at a rental of TOP$16,500 payable in advance. There was again no prohibition on assignment or sub-letting by Mrs. Yang. In fact there was an express agreement by the landlord that the tenant had “the right and freedom to transfer [the] tenancy to a third party during the term of the tenancy”. She could have done that anyway in the absence of a prohibition. There was no longer a restriction on the use that might be made of the premises, probably because it was known to both parties that Mrs. Yang was proposing to use the upper floor as a restaurant. There was also an agreement by the landlord that he would not terminate the agreement during the tenancy without paying “the losses of the tenant, such as the expenses of the improvement and repair of the building”. That must have been directed to the upper storey works that had been agreed upon. There was also a clumsily worded clause (later repeated in the 2007 agreement) saying that “the landlord agrees to attach any fixture or renovated, alter or add to the premises to 230 square metres” (sic). It is likely that was supposed to mean that the landlord agreed to the attachment etc. of an extra area (the upper storey) to bring the total area of the premises to 230 square metres.

[5] By 2007 Mrs. Yang had constructed an upper floor above the retail store. It seems never to have been used as a restaurant. It was in fact used for residential proposes and latterly only for storage.

(c) The 2007 agreement

[6] We can move now to the 2007 agreement. There were actually two versions of this, one signed on 20 October and a replacement, identical in all respects except for the correction of a mistake in a figure, signed on 29 October. However, it bears the original date of 20 October 2007. It is the latter agreement of which specific performance is sought. The 2007 agreement provides for a further advance rent of TOP $35,000, payment of which was to be made “right away immediately after the agreement is signed”. The respondents say that in fact Mrs. Yang paid Matelita only TOP$19,000, purporting to deduct (by way of a claimed set-off) TOP$16,000 which Mrs. Yang said Matelita owed her for goods supplied on credit. Scott J dismissed a counterclaim for the TOP$16,000 by the respondents because it was statute barred.

[7] The term of the 2007 agreement is 10 years from 9 June 2013, ie, from when the 2005 agreement would expire. There was again no restriction on user or prohibition of assignment or subletting.

[8] There was, however, a new covenant by the landlord that “he will not terminate this agreement during the period of the tenancy otherwise he will pay the Tenant the amount of $170,000” (which sum had been misstated as TOP$117,000 in the agreement signed on 20 October). The TOP$170,000 was intended to reflect the amount spent by Mrs. Yang in constructing the upper storey. (She now says it cost much more than that but has not provided any proof of actual expenditure).

[9] The 2007 agreement was again signed for ‘Olioni and Matelita by Matelita. There is in the evidence a document of some significance to which Scott J made no reference. It is in Tongan (so plainly not drafted by Mrs. Yang) but we were supplied with a translation to which no objection was taken. It is from a Californian address and is addressed to the Registrar of the “Nuku’alofa Court” and is signed by ‘Olioni. He asks for the Registrar to “legalise this letter” and says: