LEUNG WAI LING ISEWESG v. SUCCESS BASE ENGINEERING LTD

HCA 2/2019

[2020] HKCFI 202

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2 OF 2019

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D E C I S I O N

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1.  These are short supplementary reasons following discussions between the parties as to the form of the order. These did not produce agreement and so I come back into court to conclude the hearing and decide the precise nature of the relief which the claimant is entitled to consequent upon the judgment which I have given.

2.  I have to say, with respect, that it is slightly unsatisfactory that the claimant’s position changed between the giving of judgment and the resumption of the hearing later in the afternoon.  It changed because after giving judgment I was told clearly that the claimant was not seeking both the forfeiture of the rental deposit in the sum of $133,500 together with arrears of rent in the same sum, those arrears being referable to rent for October, November and December.

3.  The mesne profits are not in dispute and are in a relatively small sum of $8,400.  Mr Chan for the defendant has objected to the relief in any event on the basis that the summons dated 14 March 2019 sought possession and then mesne profits at the rate of $70,000 a month from 27 December 2018 to the date of the order for possession. But that has been overtaken by the notice of appeal which followed the hearing in front of the master.  The notice of appeal is dated 19 September 2019 and in it the plaintiff seeks judgment for arrears of rent and the relief as prayed in the amended statement of claim together with costs.

4.  When one goes to the amended statement of claim, the claim is for an order for possession which no longer arises because the possession has already been recovered as I explained in the judgment.  Arrears of rent in the sum of $133,500 are claimed and mesne profits which, as I have said, is agreed at $8,400. There is nothing there about forfeiture of the rental deposit and Mr Chan is correct to that extent. 

5.  Mr Ismail applies for permission now to amend the statement of claim to include that particular claim.  He points to the relevant passage of the tenancy agreement which says as follows:

“Upon signing of this tenancy agreement, the tenant shall pay to the landlord a sum of HK$133,500, equivalent to three-month rent... The rental deposit shall be returned to the tenant... by the landlord at the expiration of the term of this tenancy... The tenant should be fully aware that the deposit shall not be used for payment of rent. If the tenant desires to terminate the term of the tenancy before its expiry, the tenant should be fully aware that such act shall be treated as a breach of the terms of this tenancy agreement and the (tenant’s) right to claim for the return of the deposit shall be treated as voluntarily abandoned. The landlord may at the same time demand and claim from the tenant the balance of the rent for the unexpired term.”

6.  It seems to me to be reasonably clear that the tenant does not have the right to have the deposit applied to rental and, in particular, if the term is terminated before its expiry (as it was here), the tenant’s right for the return of the deposit goes.

7.  In those circumstances, it seems to me the question is whether allowing an amendment now would unfairly prejudice the defendant.  Of course it goes without saying that it is a very late application for an amendment but not unprecedented by any means, particularly where the parties are at odds as to what the appropriate order to be made actually is.  I cannot see any prejudice to the defendant.  All these matters are in dispute before the court.  The dispute that the court is seized with is a dispute between landlord and tenant as to the position as regards the lease and the consequences that flow from that.

8.  I will grant permission to add a paragraph to the amended statement of claim claiming forfeiture of the rental deposit.  That means that the judgment for the plaintiff against the defendant will include that forfeiture of the rental deposit in the sum of $133,500 as the first item, arrears of rental deposit in the sum of $133,500 as the second item, mesne profits in the sum of $8,400 as the third item.  Mr Chan quite correctly, if I may say so, drew my attention to the position of the defence and counterclaim.  He maintained that the defence and counterclaim actually remain in existence. 

9.  I am afraid that I do not accept that this is the case at all.  The position is set out in paragraphs 36 and 41, and it does not matter whether the court looks at what would have been an amended defence and counterclaim had the defendant succeeded in relation to this matter or the defence and counterclaim in its original unamended form.  They are both for these circumstances the same.  The counterclaim, which is also prayed in aid as a set-off, depends upon the court accepting the defendant’s case that it was the plaintiff that repudiated the tenancy agreement which was accepted by the defendant in returning the keys, and the court made it plain in its judgment that that is not accepted, and that this agreement continued until it was brought to an end by the plaintiff accepting the defendant’s repudiation by issuing proceedings.

10.  As the master rightly pointed out, there is no such thing as a unilateral termination of a tenancy and that was effectively what happened here.  It would be right therefore, in view of the defendant’s apparent doubt on the subject, that the order should contain something to the effect that the counterclaim including set-off is dismissed.