LAM KAM CHUNG v. FUNG SAU WAN

CACV2/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 2 OF 1999

(ON APPEAL FROM DCCJ NO. 22003 OF 1997)

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J U D G M E N T

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Chan, CJHC :

1. This is an appeal by the plaintiff against the decision of a Deputy Judge in the District Court. After the trial, the judge dismissed the plaintiff's claim and granted a declaration in favour of the defendant upon his counterclaim. The plaintiff was also ordered to pay the costs of the defendant on the claim and the counterclaim, such costs to be taxed if not agreed.

Claim and counterclaim

2. The plaintiff was the tenant and the defendant the landlord in respect of the premises known as Flat R on 1st Floor, No. 40-78, Kam Ping Street, North Point under a tenancy agreement for a period of two years from 2 March 1997 to 1 March 1999 at $6,600.00 per month, exclusive of rates and other out-goings.

3. The plaintiff alleged that there was a surrender agreement between the parties which was subsequently varied whereby he had agreed to an early termination of the tenancy by vacating the premises on or before 1 November 1997 in consideration of the payment by the defendant of a compensation in the sum of $66,000.00 and the return of the rental deposit in the sum of $13,200.00. Pursuant to this surrender agreement, he vacated the premises on or about 29 October 1997 and returned the keys to the defendant. In breach of the surrender agreement, the defendant had failed to pay him the compensation or return the deposit to him. The plaintiff claimed against the defendant for the payment of these two sums together with interest.

4. The defendant denied that there was such a surrender agreement. He alleged that in breach of the tenancy agreement, the plaintiff had terminated the tenancy without giving notice to him and that he had accepted the plaintiff's repudiation. The defendant thus counterclaimed a declaration that he was entitled to forfeit the deposit of $13,200.00 or alternatively damages for wrongful repudiation and breach of the tenancy agreement.

The evidence

5. It was common ground that it was the defendant through his son, Mr Donale Mong who had indicated to the plaintiff that he wished to have an early termination of the tenancy because the defendant's own house in Shatin had become dangerous and unfit for occupation and that he had intended to move back to the suit premises. Apart from this, almost every allegation of fact was in dispute at the trial. The judge made certain findings of fact which are being challenged in this appeal by the plaintiff (who is now unrepresented). The defendant argued that the trial judge was entitled on the evidence to make those findings and that an appellate court should be slow to interfere with such findings of fact. In order to see whether the plaintiff's complaints are justified, it is necessary to examine the evidence placed before the trial judge.

6. The plaintiff alleged that prior to 11 July 1997, there were negotiations between the parties on the possibility of an early termination of the tenancy. They reached an agreement on or about 11 July 1997 whereby (1) the plaintiff would deliver vacant possession of the premises to the defendant on or before 1 November 1997 in consideration of the defendant paying him a compensation of $66,000.00; (2) the rental deposit paid under the tenancy agreement was to be returned to the plaintiff; (3) a surrender agreement was to be prepared by the defendant and to be signed by both parties; and (4) the compensation of $66,000.00 was to be paid immediately after signing the surrender agreement. The plaintiff also alleged that Mr Mong on behalf of the defendant had prepared a written Chinese document which was dated 12 July 1997 and sent to the plaintiff in duplicate. The document stated that the defendant agreed to pay 10 months rent as compensation to the plaintiff for an early termination of the tenancy and that the plaintiff was to move out before 1 November 1997.

7. The plaintiff said that upon receipt of this document, he rang up Mr Mong on 14 July 1997 pointing out to Mr Mong that the document had failed to mention how the compensation of $66,000.00 was to be paid and how the rental deposit was to be returned and that the date of delivery of vacant possession should be before 2 November instead of 1 November since the tenancy was to end on 1 March 1999. His discussions with Mr Mong resulted in a heated argument. The plaintiff then sent a letter dated 14 July 1997 to Mr Mong raising the queries which he had raised on the phone and urged Mr Mong to put the correct details into writing. However, Mr Mong was reluctant to do so and replied by a letter dated 15 July 1997. In that letter, Mr Mong indicated that he could pay either 50% or 100% of the compensation money at any time if the plaintiff could give him a "100% valid protection". It also stated that the deposit would be returned upon delivery of vacant possession.

8. The plaintiff received a second copy of that letter on or about 21 July 1997 which was accompanied by the name card of Mr Huen of Messrs. Richard Tai & Co. At the end of this copy, the following appeared to have been added:

"Mr Lam, If there is any matter related to the payment of the ten months' rent compensation in the sum of HK$66,000.00 by the solicitors firm, you can contact Mr Huen, solicitor. The legal fees for the preparation of the agreement is paid by the landlord.

As to the above agreement, it will be of no effect after 25th July 1997.

(Note by Lam: I received this letter at noon 21st July)

9. Upon receipt of the second copy of that letter, the plaintiff rang up Mr Mong. He said that as a result of a discussion, it was then agreed that the formal surrender agreement was to be signed at the office of the defendant's solicitors on 24 July 1997. However, on the following day, Mr Mong rang up the plaintiff and informed the plaintiff that the formal surrender agreement would only be prepared by his solicitors in English and not in Chinese. In another phone call, Mr Mong told the plaintiff that he could give the plaintiff 30% of the compensation on the signing of the agreement. On 24 July 1997, the plaintiff went to Mr Mong's office together with his wife and a copy of the document dated 12 July 1997. There was a discussion which ended in a heated argument between the parties. The plaintiff left and the matter was then pursued through correspondence. There was no result. He held the defendant to his agreement and vacated the premises on 29 October 1997.

10. The defendant's case was understandably quite different. Mr Mong said that there was no agreement on or before 11 July 1997 or at any time. There were only negotiations in which the defendant offered to pay ten months rental as compensation if the plaintiff could move out of premises in two months time. But the plaintiff said that he had to consider this proposal. Mr Mong said that on or about 12 July 1997, he sent the plaintiff a Chinese document which he had signed. He said that this document was not meant or intended to be an agreement but was only an offer. However, on or about 14 July 1997, the plaintiff rang him up and rejected this offer saying that it lacked details and requested Mr Mong to prepare a more detailed agreement in Chinese. An argument broke out between the parties and the matter remained unresolved.

11. Mr Mong said that on the morning of 15 July, he received a letter dated 14 July from the plaintiff which alleged that the document dated 12 July 1997 had failed to deal with various matters. The plaintiff also required him to prepare a Chinese document in duplicate for execution and to issue a cheque for payment of compensation in advance. Mr Mong said that this amounted to a rejection of his offer by the plaintiff. Hence he wrote back on 15 July and made another offer. This second offer, he alleged, had effectively withdrawn the first one which the plaintiff had failed to accept. Following this second offer, the plaintiff rang up Mr Mong on 21 July to re-negotiate the terms. The plaintiff had insisted on an agreement to be prepared in Chinese but he informed the plaintiff that he would try to arrange for that but no promise was made.

12. On 22 July 1997, the parties discussed the terms over 3 telephone conversations but could not come to any agreement. Mr Mong then informed the plaintiff expressly that he was no longer interested in taking back the premises prematurely. This second offer had effectively been withdrawn which was in any event not accepted by the plaintiff. Mr Mong said that on 24 July 1997, the plaintiff went to his office and waved around a copy of the first offer alleging that it was signed by the parties and constituted a binding agreement. Mr Mong said that the plaintiff also demanded for the payment of $66,000.00 and the return of the rental deposit. By reason of what happened, Mr Mong alleged that there was no agreement between the parties to an early termination of the tenancy. However, the plaintiff had wrongfully and in repudiation of the tenancy agreement vacated the premises at the end of October. The defendant was therefore entitled to forfeit the deposit.

The trial judge's findings

13. The trial judge considered the evidence and held that there was an agreement for the payment of compensation in the sum of $66,000.00 and an agreement for the plaintiff to move out in four months time. But he found that there was no agreement as to the date of payment of the agreed compensation. He also said that the question concerning the return of the rental deposit was not expressly mentioned. Overall, the trial judge held that there was no valid surrender agreement made between the plaintiff and Mr Mong during the conversation on 11 July 1997.

14. The judge said that that was sufficient for the disposal of the plaintiff's claim but he went on to deal with the question of whether there was any sufficient memorandum of the oral agreement, assuming that there was such an agreement containing the terms as alleged by the plaintiff. He found that the memorandum did not record the alleged terms of the oral agreement because there were two differences. First, the memorandum provided for the delivery of vacant possession before 1 November whereas the oral agreement alleged that the plaintiff should vacate on or before 1 November 1997. Second, the memorandum did not contain the alleged oral term that the compensation would be paid upon the signing of the surrender agreement. The judge held that because of these differences, there was no sufficient memorandum under s.3 of Cap 219.

Approach of appellate court on findings of fact

15. The principles upon which an appellate court acts are set out in Halsbury's Laws of Hong Kong, Vol. 5, para. 90.1107. Generally speaking, an appellate court would be slow to interfere with any finding of fact. It should not usurp the function of a trial judge. A trial judge has the advantage of seeing the live witnesses and observe their demeanour. He is in a better position to evaluate the evidence of the witnesses than an appellate court. On the other hand, that does not mean that an appellate court cannot and would not set aside or reverse any finding of fact of the lower court. There are circumstances where the appellate court should do so. Some of those circumstances were discussed by Godfrey JA in Tang Kwok-ming v. Daxprofit Scaffolding Limited [1999] 1 HKC 657 at 663:

"It (an appellate court) will certainly not disturb his (the trial judge's) findings of primary fact where these are based on the credibility of the witnesses or the preference of the evidence of one witness for that of another (although of course it may be willing to disturb inferences of fact drawn from the primary facts, because an appellate court is in as good a position as a trial judge to draw such inferences).

If it is necessary to disturb an adverse finding of primary fact, the appellant has to demonstrate either (1) that there is no evidence to support it; or (2) that it is contrary to documentary or other incontrovertible evidence which the judge overlooked. It is not enough to show there is little evidence to support the judge's finding, or that it was 'contrary to the weight of the evidence'."

16. There is a heavy burden on an appellant to show that the trial judge has made a wrong finding of fact. As Nazareth VP in the same case said at page 663:

"In order to succeed on fact, the appellant would have to cross the very high threshold that applied to challenges of fact that an appellate tribunal had to meet before findings of fact could be set aside."

17. Where, however, the trial judge has misunderstood a party's case or has adopted the wrong approach to the evidence, there is every risk that he may not have correctly evaluated the evidence and hence may have come to the wrong conclusion on the facts.

The trial judge's approach

18. Having examined the plaintiff's case as pleaded and the evidence presented by him to the court, I do not think that the trial judge had adopted the correct approach to the evidence.

19. The plaintiff's case, as pleaded in the Particulars of Claim, was that there was an agreement for the surrender of the tenancy agreement reached between the parties. This agreement was made partly orally and partly in writing. The plaintiff relied on various documents, including the document sent by the defendant dated 12 July 1997. The plaintiff also alleged that there was a variation agreement. It was pleaded that the defendant was in breach of both the surrender agreement and the variation agreement.

20. In my view, the correct approach which the trial judge should have adopted was to consider all the evidence presented to him to see whether there was such a surrender agreement or variation agreement. He should have looked at all the evidence in the round to decide whether there was any agreement between the parties, taking into consideration not only the plaintiff's oral evidence but also the documentary evidence he had produced. In particular, he should have considered whether the document sent by Mr Mong on behalf of the defendant which was dated 12 July 1997 would support or supplement the plaintiff's oral evidence instead of looking for differences between the oral allegations and the documentary evidence.

21. In the present case, what the trial judge did was this. He first considered the oral evidence to see whether there was any oral agreement made between the parties. He then considered whether such oral agreement was evidenced in writing by a memorandum. In adopting this approach, he might have placed the wrong emphasis on certain parts of the evidence and overlooked other parts of the evidence before he came to the conclusion that both the plaintiff and the defendant were not telling the whole truth. Furthermore, his two-stage approach necessitated a comparison between the alleged oral agreement and the written documents produced before him.

22. The fault in his approach can be demonstrated from a passage in his judgment appearing on page 15 of the appeal bundle:

"The plaintiff dominated most of the talking during that telephone conversation and the two bargained. In the end, there was an agreement for the payment of a sum equivalent to 10 months' rent (i.e. $6,600 x 10 = $66,000) to the plaintiff by way of compensation. There was agreement for the plaintiff to move out in 4 month's time. There was no agreement as to the date of payment of the agreed compensation. The question concerning the return of the plaintiff's rental deposit was not expressly mentioned. Overall, I do not find that there was a valid Surrender Agreement reached between the plaintiff and Mr Mong during that telephone conversation.

This would suffice for the disposal of the plaintiff's claim but as there was much argument on the question of whether there was a sufficient memorandum, I would add my observations here for the sake of completeness. For this purpose, it would be assumed that there were an oral Surrender Agreement containing the several terms as the plaintiff has testified to, taking the plaintiff's case as its highest."

23. It would seem that he had focused his mind mainly (if not solely) on the telephone conversations between the parties on or before 11 July 1997 to see whether there was any agreement between the parties. It was after he had held that there was no such agreement that he went on to consider whether there was any sufficient memorandum, assuming that there was an oral agreement. He did this by comparing the alleged oral agreement with the documents. He adopted the principles regarding the sufficiency of memorandum discussed in Barnsley's Conveyancing Law and Practice, 4th ed., page 112 and Farrand's Contract & Conveyance, 4th ed., page 38 and observed: "The point here is that the recorded terms should correspond to the oral terms". The judge then went on to discuss the differences between the oral terms and the recorded terms. He had this to say at page 18 of the appeal bundle:

"Now, the oral Surrender Agreement, according to the plaintiff, provides for the delivery up of vacant possession of the suit property on or before 1 November 1998 by the plaintiff. The memorandum in question on the other hand provides for the plaintiff's moving out before 1 November 1997. That makes a difference of one day between the orally agreed term and the term recorded in writing. Can it be said that the oral term corresponds to the written term? I think not. If they do not correspond, then the oral term is omitted. Can it be said that the omitted oral term is to the exclusive benefit of the plaintiff or the exclusive benefit of the defendant, so that the plaintiff may waive it or submit to it, as the case may be, and be entitled to enforce the oral Surrender Agreement accordingly. I think not.

The same can be said about the omission of the oral term providing for the payment of the agreed compensation to the plaintiff after the signing of a Surrender Agreement by both parties. The omitted term is not exclusively to either party's benefit. It is a condition precedent for payment to the mutual benefit of both parties.

There is therefore in my view no sufficient memorandum to satisfy Section 3, Cap.219."

24. According to his approach, the recorded term regarding the date for the delivery of vacant possession was different by one day from that agreed orally between the parties and he considered that to be significant.

25. In my view, if he had adopted the correct approach, the position would be this. The plaintiff said that the parties had orally agreed that the plaintiff would deliver vacant possession on or before 1 November 1997. But the document dated 12 July 1997 stated that to be before 1 November 1997. However the last day of the tenancy was 1 March 1999. Hence the plaintiff raised it (among other things) with Mr Mong. If the plaintiff's evidence had been looked at in this light, this difference of one day would not have been considered significant. It would in fact support the plaintiff's case that the document simply did not reflect the correct position.

26. On the second difference, according to the judge's approach, there was no agreement as to the time when the agreed compensation should be paid whereas in the written agreement, it should be after the parties had signed a surrender agreement. If the correct approach was adopted, the position would be, as the judge had found, that the parties had agreed that a compensation of $66,000 was to be paid. This would have to be paid either upon the signing of the written surrender agreement as the plaintiff alleged, or at the latest upon delivery of vacant possession. If the date of payment had not been discussed, or as the plaintiff said, the document dated 12 July had failed to state this clearly, that was all the more reason why the plaintiff spoke to Mr Mong on 14 July and urged him to put that in the document. In any event, it would seem that even if the parties might not have expressly mentioned or even agreed as to the time of the payment of the compensation, that was to be supplemented by the subsequent documents and discussions. There was no question of any "significant difference".

27. It would seem that if the trial judge had adopted the correct approach, this would have a different prospective with regard to the plaintiff's evidence. The finding of fact on the existence of a surrender agreement would have been different.

The document dated 12 July 1997

28. The trial judge also found that the document dated 12 July 1997 was only an offer by the defendant to the plaintiff and that both in the telephone conversations between the plaintiff and Mr Mong on 14 July 1997 and in his letter of 14 July 1997, the plaintiff had evinced an intention to reject that offer.

29. Putting aside the approach which the trial judge should have adopted, it would seem that his conclusion that this document was only an offer was inconsistent with its contents and the circumstances under which it was sent. The parties had obviously discussed the matter of an early surrender on several occasions prior to 11 July 1997. It would seem that this document was unlikely to be the first offer coming from the defendant. It is more likely that it was the product of some previous negotiations. If it had been an offer coming from the defendant, there was no reason why Mr Mong would have signed it and dated it. He could have waited until the plaintiff had responded. If it was meant to be accepted, this document clearly lacked details regarding how the agreement was to be carried out. Furthermore, there are several interesting points to note from this document. First, the heading of the document was "Agreement". Second, there was a reference to the parties having agreed to a surrender. Third, there was a statement at the end saying : "Both parties made this document as proof. It is made in duplicate and each party holds one copy as proof". Fourth, this document was sent in duplicate.

30. The contents of this document were also consistent with and supported the plaintiff's case. In the second paragraph, it referred to his "promise" to co-operate with the defendant. In the third paragraph, it pointed out that there were some omissions in the document dated 12 July 1997, namely, how the 10 months' rental compensation and the 2 months' rental deposit were to be paid, the correct date on which delivery of vacant possession should be made. In the fourth paragraph, it said that the plaintiff had trusted what Mr Mong had said about the condition of his father's house in Shatin and that the plaintiff had "agreed to enter into a private agreement" with the defendant to solve the problem. In the fifth paragraph, the plaintiff urged the defendant to prepare a Chinese agreement in duplicate so that the two parties can keep it after they have signed.

31. Upon a proper analysis of this document in the light of the evidence, it would seem that the sending of this document by the defendant to the plaintiff was consistent with the plaintiff's evidence that there was already an agreement between the parties on the main terms and that this was to be followed by a document which was intended to reflect the agreement and to set out details as to how the agreement was to be carried out. However, according to the plaintiff, it failed to record or set out certain matters. Hence, he found it necessary to follow that up not only by a telephone conversation but also by the document dated 14 July 1997. This document appeared on page 112 of the appeal bundle.

32. Incidentally if, as the trial judge had found, the defendant's document dated 12 July 1997 was an offer, it also failed to mention when the compensation was to be paid and when the deposit was to be returned. On the judge's reasoning when he found against the plaintiff on the existence of an oral agreement, this offer even if it was accepted would not result in a binding agreement. That being the case, there is a lot to be said in favour of the submission that the parties had agreed on the main points regarding an early termination of the tenancy leaving the details of how it was to be performed to be sorted out later.

33. In the light of all the evidence considered in the proper way, it is difficult to see how the defendant's document dated 12 July 1997 can be regarded as an offer. With respect, I do not think the judge had correctly evaluated the evidence or come to the correct conclusion with regard to this document.

The defendant's letter dated 15 July 1997

34. It was also suggested by the defendant and apparently accepted by the trial judge that the defendant's document dated 15 July was a second offer.

35. In my view, looking at the contents of this document, I do not think it can be regarded as an offer either. In the first place, it was not clear or unequivocal. It said:

"The compensation money can be paid 50% or 100% at any time, but the tenant must give the landlord a 100% valid protection. A mere personal acknowledgement of receipt is absolutely not a viable protection not to mention legal protection."

36. It is not clear whether the defendant was offering to pay 50% or 100%. It is also strange that the defendant should have asked for what was described as 100% valid protection when there was no mention as to what that meant, how the plaintiff could have complied with it and what the defendant wanted. Further, this document contained three sentences couched in question form. At the end of the document, it stated that the deposit "certainly will be returned at the completion of the aforesaid valid termination of the tenancy agreement and the delivery of vacant possession." It also referred to the payment of the compensation to be made through the solicitors. The last 2 matters were details which do not affect the existence or validity of any previous agreement.

37. The second copy of this document which was sent to the plaintiff contained the additional sentence : "If there is any matter related to the payment of the ten months' rent compensation in the sum of $66,000 by the solicitors firm, you can contact Mr Huen, solicitor." This reinforces the view that the parties had already agreed to the main terms of the surrender agreement but intended to work out the details as to how the agreement was to be carried out. This would not affect the existence or validity of any agreement which the parties had already reached.

38. It would appear that from this document, the defendant would not mind paying the compensation at any time. It gives the impression that the defendant was trying to solicit for a guarantee from the plaintiff before the defendant would make payment of the compensation. The defendant wanted some sort of assurance that after the compensation had been paid, the plaintiff would definitely move out on or before 1 November 1997.

39. In my view, this document could not constitute an offer. Its contents were consistent with the plaintiff's evidence that the parties having entered into agreement on an early termination of the tenancy, the parties were left to work out the details on how it was to be performed. It may be that the defendant then had second thoughts about it and having asked the solicitors to look at the document and to prepare a formal agreement, Mr Mong was advised that there might be some risk that the plaintiff after having received the compensation would not vacate on 1 November 1997. But this is mere speculation.

Conclusion

40. It would seem that because the trial judge had adopted the wrong approach to the plaintiff's case, he had wrongly evaluated the evidence. He had also drawn the wrong conclusion with regard to the contents of the documents before him. Had he adopted the correct approach, he would, in my view, have found that the documentary evidence was not only consistent with but also strongly supported the existence of an agreement made between the parties, which was partly made orally on or before 11 July 1997 and partly evidenced in writing by the document dated 12 July 1997 which was signed by Mr Mong on behalf of the defendant. That being the case, I am satisfied that the plaintiff had crossed the threshold in showing that the judge's findings of fact were erroneous. The evidence had supported the finding of a surrender agreement. This is also consistent with the broad overall view of the matter, that is, it was the defendant who approached the plaintiff first for an early surrender and it is unlikely that the plaintiff would have moved out on a frolic of his own without having reached an agreement with the defendant. The plaintiff had in pursuance of such agreement as aforesaid, vacated the premises on 29 October 1997. It was the defendant who was in breach.

The judge's order on the counterclaim

41. I cannot leave this appeal without mentioning one final matter. The judge's dealing with the counterclaim and the order which he had made have left serious doubts as to what he had intended to achieve by his order. On page 21of the appeal bundle, when the judge was dealing with the counterclaim and the relief sought by the plaintiff, he said:

"No evidence was led by the Defence as to for (sic) how long the suit property was left vacant and unlet after the plaintiff's moving out. Defence counsel submitted that the suit property was let out in January 1998 and that the defendant was contented (sic) to ask for only Item 1 in the prayer for relief in the Counterclaim i.e. 'an order that the defendant is entitled to forfeit the sum of $13,200 being the deposit paid by the plaintiff to the defendant for the wrongful repudiation and the breach of the Tenancy Agreement.' "

42. It is quite clear that there the trial judge was considering the question of damages (item 2 of the prayer in the counterclaim) which might have been caused to the defendant by the plaintiff's wrongful termination of the tenancy. He did not make any order for damages since there was no evidence of any damages. He then had to deal with item 1 of the prayer in which the defendant sought a declaration that he was entitled to forfeit the rental deposit. However, the judge continued:

"I do not consider that the defendant is entitled to the declaration as claimed, notwithstanding the provision in the letter of 8 January 1997 for 2 month's prior notice. The plaintiff was in breach of the subject Tenancy Agreement, and the defendant would be granted such a declaration accordingly.

My order would be as follows :-

1. The plaintiff's original claim be dismissed.

2. On the defendant's counterclaim, it is hereby declared that the plaintiff had been in repudiatory breach of the Tenancy Agreement dated 8 January 1997, which repudiatory breach was accepted by the defendant.

3. Order Nisi for the plaintiff to pay the defendant's costs of both the original claim and the counterclaim to be taxed if not agreed to be made Absolute within 14 days, with liberty to apply during that period."

43. It is therefore quite clear that the judge had deliberately refused to make a declaration that the defendant was entitled to forfeit the rental deposit. He only declared that the plaintiff had been in repudiatory breach of the tenancy agreement and that the defendant had accepted it.

44. Counsel for the defendant argued that this order meant that the defendant was entitled to the remedies which flow from the plaintiff's repudiation. The possible remedies which may arise from such a repudiation of a tenancy agreement would be a claim for damages and/or for a forfeiture of the rental deposit. The judge had expressly refused to award damages. The purpose of a deposit is to secure a tenant's performance of the covenants of a tenancy agreement. If he fails to do so, the landlord is usually, under the terms of the tenancy agreement if there is such a provision, entitled to forfeit the deposit. However, in the present case, the trial judge had expressly refused to declare that the defendant was so entitled. In my view, this is rather unusual and unsatisfactory. Doing the best I can to ascertain the intention of the judge, I should think that the effect of his declaration as stated in his order would be that the defendant would then be able to keep the deposit. If the plaintiff wishes to ask for a return of the deposit, he would be faced with the defence that he himself was in breach of the tenancy agreement and therefore cannot succeed in getting his deposit back. But in that event, it is difficult to understand why the trial judge refused to make the declaration that the landlord was entitled to forfeit the deposit. However, in view of the result of the appeal, whatever the intention of the trial judge, this has become irrelevant.

Result

45. For the reasons given above, I take the view that the appeal should be allowed. The trial judge's order should be set aside. There shall be judgment in favour of the plaintiff against the defendant for a sum of $79,200 which would carry interest as from 29 October 1997 at 10% p.a. until judgment. The defendant's counterclaim for a declaration that he was entitled to forfeit the deposit shall be dismissed. I would also make an order nisi that the plaintiff do have his costs in this appeal and in the court below.

Leong, JA :

46. I agree.

Yam, J. :

47. I agree.