CHOU KOU PIM AND ANOTHER v. THE PRUDENTIAL MALL LTD

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JUDGMENT

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Penlington, J.A.:

1. This is the judgment of the Court.

2. On the 12th March 1987 the respondents herein took shop premises in Nathan Road on lease from the appellant, these being Shop UG/2-3, Prudential Centre, 216-228A Nathan Road ("the shop"). The lease was for a period of two years and vacant possession was duly returned to the appellants on the 14th March 1989. On signing the lease agreement a deposit had been paid by the respondents to the appellant of $197,500. However, when the respondents requested the return of the deposit to them this was refused by the appellant on the grounds that there was still a dispute outstanding between them regarding the cost of necessary repairs to the premises upon vacant possession being given. The respondents then issued proceedings claiming the amount of that deposit less the sum of $2,000 which they agreed was payable as the architect's inspection fee for the premises. This inspection had been carried out and an architect's certificate issued on the 20th April 1989.   This certificate, which under the terms of the lease was binding on both parties, set out some four alleged defects in the premises which required to be rectified. It is common ground, however, that these defects were in fact not remedied and that the premises was immediately re-let to other tenants who completely re-decorated the shop and then proceeded to carry on their own different retail business.

3. On the 20th December an application for summary judgment was heard by Master Perrior which he gave in favour of the respondents for $195,500. The appellant appealed against that decision which appeal was refused by Kempster, J.A., sitting as an additional judge of the High Court, on the 10th April 1990.

4. As is set out in the judgment of Kempster, J.A., there are two clauses in the lease which call for construction. Clause 3 of Section XI of the lease provides that the deposit

Kempster, J.A., considered that the words "last outstanding claim" must be construed as "last outstanding valid claim". We agree and this point has not been argued. There was again no doubt that when the proceedings were commenced the 30 days referred to in the lease had elapsed.

5. The question of the condition of the premises and the rights of the parties in relation to any repairs which were required on the termination of the lease is covered by Clause 32 of Part III of the lease. This provides that on termination the landlord's architect should inspect the premises and issue a certificate recording the repairs he considered were required. The section then goes on in Clause 32 (b) (iv) to provide that:

6. Kempster, J.A., found in relation to this clause that:

7. Before us Mr. Anthony Chan, who argued a difficult case ably, conceded that those assumptions made by Kempster, J.A., were correct. The new tenants had come in and had carried out a complete re-decoration. He relies, however, on authorities, and in particular Joyner v. Weeks [1891] 2 QB 31, for the proposition that even if restitution of the building to its former state was impossible or impractical because of new incoming tenants or for any other reason, this did not extinguish the landlord's claim for damages. We accept those authorities but in this case clearly that does not affect the clear terms of the lease. If there had been reinstatement effected by the landlord, even if a totally worthless and a useless exercise because of the new incoming tenants, it may well be that the landlord would have had a claim. It would have been totally unmeritorious but nevertheless it may have been legally well founded. Here however the landlord has simply failed to comply with the clear terms of the lease and that being so he can have no claim for a deduction of any amount from the deposit, apart from the costs of the architect's certificate.

8. We entirely agree with the reasoning of Kempster, J.A., in dismissing the appeal from the order of Master Perrior. The appellant has failed to carry but the terms of the lease. That was not the position in Joyner v. Weeks on which the appellant relies.

9. At the conclusion of the hearing we dismissed the appeal and indicated that we would give our reasons later in writing.  We also heard argument then as to costs and in particular as to the basis upon which they should be awarded.  Having considered the arguments put before us by counsel on both sides we concluded that this was an appropriate case where costs should be awarded on a common fund basis.