YUEN WAH SANG VINCENT AND ANOTHER v. CHAN SHUN HANG

DCCJ 1056/ 2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1056 OF 2007

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REASONS  FOR  D E C I S I O N

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1.  The Plaintiffs applied for summary judgment pursuant to Order 14 of the Rules of the District Court, Cap. 336. By the present application, the Plaintiffs are only asking for vacant possession of certain premises situate in Hung Hom (“the Premises”). On the day of hearing, I granted the Defendant unconditional leave to defend and ordered costs of the hearing be costs in the cause. I now give my reasons for that decision.

2. Certain material facts are not in dispute. They are stated in paragraphs 3 to 7 below.

3. By a tenancy agreement dated the 16 July 2006 (“Tenancy Agreement”), the Plaintiffs leased to the Defendant the Premises for domestic purposes. The lease was for 2 years commencing on 1 August 2006 with monthly rent of $20,000 payable on the 1^st day of each and every calendar month.

4. Apart from the month of August, the Defendant had been late in paying rent for the months of September 2006 to April 2007. The rent for September was paid in 2 equal instalments towards the end of that month. The rent for October, November 2006 and February 2007 were paid towards the middle or latter part of that month. The rent for December 2006 and January 2007 were paid towards the end of January 2007. The rent for March and April 2007 were paid respectively on the 6^th and 4^th of the month.

5. The Plaintiffs, through their solicitors, had issued demand letters for rent to the Defendant 4 times i.e. twice in October and twice in November 2006. The Plaintiffs had had to institute distraint proceedings for rent in November 2006 and January 2007.

6. The writ in this case was issued on 3 March 2007. The Plaintiffs prayed for, inter alia, vacant possession of the Premises and mesne profits. By a consent order made on 25 April 2007 (“Consent Order”), the Defendant agreed to make interim payments of $20,000 per month (during the pendency of this action) into the Plaintiff’s designated bank account on the 1^st day of each month starting from May 2007.

7. The Defendant had been paying the interim payments in accordance with the Consent Order (Solicitor for the Plaintiff said the Defendant only made payment for May on 2 May i.e. 1 day late. Defence Counsel pointed out that 1 May was a red-letter date i.e. Labour Day. One can argue, of course, that payment could still have been made using the bank’s automated teller machines. I do not think, however, that anything material turns on this one “late” payment).

8.  The Plaintiffs ask for summary judgment pursuant to Section 117(3)(e), read together with Section 117(5), of the Landlord and Tenant (Consolidation) Ordinance, Cap.7. The effect of those Sections is to imply a covenant that the tenant shall not cause unnecessary annoyance, inconvenience or disturbance to the landlord. Persistent delay of payment of rent is declared to be such “unnecessary annoyance, inconvenience or disturbance”. The Plaintiffs say the Defendant is in breach of this statutory implied covenant entitling the Plaintiffs to forfeit the lease. Further or alternatively, the Plaintiffs say that the delay in payment of rent amounted to repudiation of contract which the Plaintiffs accepted by issuing the present writ.

9. Parties addressed me on such matters as whether there had been “persistent delay” in paying rent, whether the Plaintiffs had waived the right to forfeit the lease or ask for vacant possession and whether there had been repudiation by the Defendant. In any event, the Defendant asked for relief against forfeiture (see Section 58(2) of the Conveyancing and Property Ordinance, Cap. 219). Solicitor for the Plaintiffs accepted that whichever limb the Plaintiffs proceeded on, the Defendant had the right to ask the Court for relief against forfeiture or not to order delivery of vacant possession.

10. On 7 July, I decided that there was a genuine claim by the Defendant for such relief which might succeed. I felt that that was already sufficient for me to grant unconditional leave to defend. I considered that the other matters raised would be ventilated at trial and would be better dealt with by the trial judge. I thus refrained from expressing any view on such other matters argued before me.

11. Regarding the Defendant’s claim for relief, I adopt what was said by Parker LJ when delivering the judgment of the Court of Appeal in Liverpool Properties Ltd. v Oldbridge Investments Ltd. (1985) 2 EGLR 111, namely, “…if the counterclaim for relief is a genuine claim which might succeed, I see no reason why the landlord should have a claim to possession immediately. If the tenant has got an arguable claim for relief which he desires to pursue, and which, if successful, will result in the lease never being truly determined, then I see no reason why a landlord should have judgment under Order 14.”    

12.  I considered that the Defendant’s claim for relief was a “genuine claim which might succeed” or an “arguable claim” after taking into consideration the following:

a)	In his affirmations the Defendant said, inter alia, that he delayed in paying rent in the “hope of pressing Mr. Yuen (of the Plaintiffs) to deal with the problem” (of water seepage/ leakage in the Premises).
	According to the Defendant, he was not aware of such a problem prior to entering into the lease. Shortly after moving in, the Defendant discovered this problem. He considered that the Plaintiffs were bound by Clause 9 of the Tenancy Agreement to remedy the problem. He thus complained to Mr. Yuen of the Plaintiffs. Mr. Yuen said he would get someone to deal with the problem. Later, staff from the Management Office (responsible for the building that housed the Premises) came and did some work. The problem, however, persisted. The Defendant again complained to Mr. Yuen. “Mr. Yuen still refused or failed to take any remedial action to alleviate the problem. He seemed to turn a blind eye and ignored the problem…In the hope of pressing Mr. Yuen to deal with the problem, (the Defendant) had no choice but to delay the rental payments. At that time, (the Defendant) did not intend to deliberately breach any term of the Tenancy Agreement, but was only thinking that it might somehow assist…to press Mr. Yuen to restore the Premises into a habitual (sic) home…(paragraphs 12 and 14 of the Defendant’s affirmation filed on 24 April 2007, “Defendant’s First Affirmation”).
	The Defendant went on to say that he had since received legal advice and fully understood that he had not adopted a proper course in relation to the water seepage/ leakage problem (paragraph 18 of Defendant’s First Affirmation”).
	Affirmations filed on behalf of the Plaintiffs said, inter alia, that the Defendant knew full well before entering into the Tenancy Agreement that there was a water seepage/ leakage problem and that it was the responsibility of the Management Office (not the Plaintiffs) to remedy the problem. Shortly after the Defendant and his family moved in, the Defendant’s wife telephoned Mr. Yuen of the Plaintiffs to say that the problem had recurred.  Mr. Yuen inspected the Premises the next day and filed a complaint with the Management Office. A few days later, Mr. Yuen lodged a formal complaint there. Towards the latter part of August 2006, Mr. Yuen was told by Management Office that remedial work would be done that morning. Mr. Yuen then telephoned the wife of the Defendant who confirmed that work had been done. She agreed to keep Mr. Yuen informed of future developments. There were no other occasions when the Defendant raised the water seepage/ leakage problem with the Plaintiffs (or their legal representatives. See paragraphs 3 to 8 of 2nd Affidavit of Joseph Tsang filed on 15 May 2007).
	One must remember that it is not proper for the Court to conduct a mini trial based on affidavits or affirmations (per P. Chan J. in Mass International Ltd. v Hillis Industries Ltd & Another (1996) 1 HKC 434, 439). One must also bear in mind that summary judgment should only be granted where it is clear that the Plaintiff is entitled to judgment or that there is no defence. Even the Plaintiffs agree that there is a water seepage/ leakage problem in the Premises and the Defendant (or his wife) had complained about it to Mr. Yuen of the Plaintiff. It suffices to say that I find myself unable to regard the Defendant’s version as “frivolous and practically moonshine” (see Lord Lindley in Codd v Delap (1905) 92 LT 510, 511) and
b)	The Defendant consented to the Consent Order and had since been making timely interim payments (each payment equal to the monthly rent) to the Plaintiff (see paragraphs 6 and 7 above). This tends to support the Defendant’s version as to why he delayed in paying rent. It also goes towards showing the Defendant’s resolve to henceforth be punctual in payment.

13.  The Defendant did delay in paying rent (see paragraphs 4 to 5 above). Though the Defendant prayed for, inter alia, relief against forfeiture, I think the Plaintiffs cannot be faulted for persisting in their application for summary judgment. The Plaintiffs are entitled to have the Defendant’s claim scrutinised in court. In the circumstances, I considered it proper to order that costs be in the cause.

14. The Defendant is to file his Defence and Counterclaim (if any) within 14 days of the handing down of these Reasons for Decision.