WU CHIEH YUN v. HIDEICHI NAKAMURA

DCCJ 4379/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4379 OF 2012

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DECISION

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1.  There are two summonses before this court.  One is taken out by the Defendant for an application for leave to appeal against my decision and the order therein dated 30 April 2013 (“the Decision” and/or “the Order”).  By the Order the Plaintiff (the landlord of the suit premises) was granted summary judgment and the Defendant was ordered to deliver vacant possession of the Property and to pay rent in arrears and mense profit.  The other summons is taken out by the Plaintiff to vary my costs order nisi made on the same day asking that the costs of the summary judgment application be summarily assessed by me and not to be taxed.

Leave to appeal

Background

2.  By a tenancy agreement the suit premises was leased to a company who was the employer of the Defendant for 2 two years (“the Company Tenancy”). At the time when the Company Tenancy was about to expire, parties discussed on the possibility of renewing it with the Defendant in his personal capacity. While the negotiation was going on, the parties agreed in October 2011 that the Defendant and his family could continue to occupy the suit premises at a price of HK$23,000 per month on a monthly basis until further notice (“the Monthly Tenancy”) pending final conclusion on the terms for the 2-year lease. Unfortunately there was no agreement reached at the end and at the same time, the Defendant had defaulted payment of rent since December 2011.  The Plaintiff issued a Notice of Termination of the Monthly Tenancy on 29 November 2012 asking for vacant possession and arrears of rent at the amount of HK$96,533 as at the date of the Notice after taking into account of some agreed deductions arising from repair works paid by the Defendant.  At the time of hearing the accrued arrears /mense profit had accumulated to HK$115,000.

3.  The grounds of the intended appeal as set out by the Defendant in support of the present application are as follows: -

(i)   The interpretation was poorly conducted;

(ii)   A two-year contract had been reached and the contracting party as a tenant was his wife and not him;

(iii)   Any rental or mense profit in arrears should have been set-off by the $140,000 deposit money held by the Plaintiff; and

(iv)   Costs.

4.  It could be seen that the Defendant is only repeating his submissions made in opposition to the Plaintiff’s application for summary judgment except for the first point on interpretation.  The Defendant had set out his complaint in his affirmation in support of his present application.  In court, he elaborated it to say that at one stage the court was communicating to Ms Leung in Punti and therefore he did not know what was going on.  For this reason I allowed him to listen to the recording together with the legal representatives of the Plaintiff.  After hearing the recording, it was confirmed that all discourses between court and counsel was in English and was apparently interpreted into Japanese for the benefit of the Defendant.  After hearing the recording, the Defendant did not pursue this point and focused on his complaint as set out in his affirmation.  He said he suspected that what he had submitted in Japanese might not have been fully translated to this court. He complained that he could not be sure because the translation of his submission was from Japanese to Punti only and he had no idea as to whether his submission had been correctly interpreted.  He pointed out to me 3 points which might not have been interpreted correctly.

5.  The first one is relevant to paragraphs 9 and 10 of my Decision which turned on to the issue of whether there was a two-year contract reached between the wife of the Defendant and the Plaintiff as alleged in the Defence. I said in paragraph 10 that from the context of an email dated 20 November 2011 written by the Defendant (p120), I found it unlikely that a two-year contract had already been concluded 2 weeks prior to that date because in the email the Defendant was still referring to “opening of new contract”.  The Defendant said at the present hearing that at the original hearing, he had clearly submitted that “the open of new contract” meant a new monthly contract but not the two-year contract already concluded by his wife.  He said the two-year contract was already in effect between the Plaintiff and his wife on 5 November 2010, but for no reason the Plaintiff asked to start a monthly contract, so he was talking about the monthly contract raised by the Plaintiff in the email.

6.  The second one is relevant to paragraph 12 in the Decision in which I dealt with the issue on the identity of the tenant in the Monthly Tenancy.  It was the Defendant’s case that he was not the contracting party and had no responsibility of arrears, if any.  I referred again to an email dated 9 October 2011 written by the Defendant in which he said he would “persuade my wife to stay in Hong Kong.  Just in case if I failed to persuade my family, then I would guarantee the rent payment from 15 October till the date when we move out, at the verbally agreed rate of HK$23,000/month” (page 113).  On this basis I find that his saying that he was not a tenant was found not to be believable by me.  At the present hearing he said that by saying “guarantee” he did not mean an offer to guarantee a lease concerning the suit premises, he was referring to the general situation of offering a guarantee for a lease in Japan.  He said that he had made that clear in his submission but suspected that it was not properly translated to me.

7.  The third point is that he said the court might have misunderstood that he had signed an agreement when in fact he had not.  He did not refer to any paragraphs in the Decision supporting his suspicion.

8.  In reply Ms Leung says that the first point on the meaning of “to open new contract” was not made at the hearing of the Plaintiff’s application for summary judgment.  Had it been made, she commented that it could not have been believable because it just did not make sense when there was allegedly a two-year contract between his wife and the Plaintiff there was still this email having discussion on a new contract be it 2-year or 1 month.  Further her submission on how and why “guarantee” at page 113 was mentioned could not make sense if the whole email is read in its context.  He was obviously offering guarantee for the temporary arrangement pending conclusion of a two-year contract when he said “we can issue our check for guarantee to the landlord as we have been doing in the past.  As a result the landlord has been secured in the past 2 years by our effort and already received the amount from us which is equal to the full payment before the contract matured.”

9.  Having heard parties, I agree with Ms Leung.  The interpretation put up at the present hearing could not sit well with the context of the emails or the Defendant’s own case.  As to why “guarantee” was mentioned in his email dated 9 October 2011 his submission in court was different from what he had deposed in his affirmation.  In paragraph 9 of his affirmation in support of the present application, he said the guarantee mentioned in the email applies to his guarantee made during the period from 15 October 2011 to 4 November 2011.  In court he said that was a description on general practice of guarantee in Japan.  To conclude, I am of the view that he only raised this issue of interpretation in an attempt to revisit the issues with a new stance seeing that his case put forward was not accepted to be believable in my Decision.

10.  As to other grounds, he is only repeating the same points he had raised at the original hearing. His asking for arrears of rent and mense profit to be set off by the $140,000 deposit held by the Plaintiff has no chance to succeed.  There was ample evidence in the emails to support that such payment had been made to allow them to continue to occupy the suit premises when KBK, employer of the Defendant, defaulted in paying rent.  There was no question of having this amount setting-off any sums in the claim.  On his other saying that such arrears or mense profit, if any, were to be set off by the damages named in his counter-claim, Chu J as she then was has already stated clearly in Charmway Development Ltd v. Long China Engineering Ltd. [2001] 3 HKC 515 that: -

“22. ……. the covenant to pay rent is independent of the other covenants and obligations under the Tenancy Agreement. The Tenancy Agreement also does not permit any set-off on the rent. Secondly, the present claim of the plaintiff is for unliquidated damages. There is therefore no right to a legal set-off.

23. As to equitable set-off, the relevant principles are set out in para. 14/4/14 of Hong Kong Civil Procedure 2001. Generally speaking, where the claim and counterclaim are sufficiently closely connected so that it would be manifestly unjust to enforce one without regard to the other, a right to an equitable set-off may arise : Esso Petroleum Co. Ltd v. Milton [1997] 1 WLR 938, at 950D and Dole Dried Fruit & Nut Company v. Trustin Kerwood Ltd [1990] 2 Lloyd’s Rep.309, 311.”

11.  In the circumstances, I do not see that he has real prospect to succeed in his intended appeal.  His application for leave is therefore dismissed.

Costs

12.  Costs of this application should follow the event.  The Defendant does not agree with the Plaintiff’s application to have the costs summarily assessed by me.  Having considered the view of the Defendant I find it in the interest of both parties to have the costs assessed summarily.  The Defendant was given a copy of the Statement of Costs, he made no comment as to the quantum.  I order that Defendant to pay costs of the Plaintiff in this application.  I assessed the costs to be $40,000.

Variation of Costs Order

13.  The Defendant also opposed to the application for summary assessment on the costs of the original hearing.  The Defendant said he did not know how to deal with the application and he wanted to have the costs taxed. Having considered the whole of the circumstances, I agree it is costs- and time-effective to have the costs summarily assessed.  I allow the application and vary the costs order; and I now assessed the costs summarily at $80,000.  There be no order as to costs of this application.