NG YIN NEI v. LEE CHICK CHOI

DCCJ 563/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 563 OF 2010

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DECISION

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1.  This is the plaintiff’s application for leave to appeal against the judgment (“the Judgment”) handed down by this Court on 10.10.2012. The plaintiff’s counsel, Mr Lester Lee, relies on three grounds to support this application.

2.  The first ground relates to paragraph 6 of the Judgment, which reads :-

‘The video taken by the plaintiff secretly on that day shows what was said by Mr Frankie Yeung :

“睇吓租客、業主有冇辦法解決個問題＂

(See if the tenant, landlady have any way to solve the problem)

“我睇而家個情況唔算係太嚴重＂

(I see that the present situation is not too serious)

When Mr Frankie Yeung was speaking, he was referring to the problem with the flooring. The floor had undulation. When he said that the situation was not serious, it must be a serious situation, although it did reach the extent of being “too serious”. It is a problem to be solved. The undulation, therefore, cannot be said to be de minimis.’

Mr Lee said that this Court did not also consider Mr Frankie Yeung’s two other statements :-

“又無凹又無乘＂

(there is no dent or etcetera); and

“我以前都見過＂

( I have seen it before)

He submits that this is consistent with the plaintiff’s case that the first complaint was the de minimus undulation near the patio door which was already present at the time when the premises was leased.  The problem with the flooring is not the presence of any “dent” as referred to in the first statement.  The problem is that the floor had undulation. Mr Frankie Yeung said that the situation was not too serious.   The implication is that the situation was serious.  This was inconsistent with a description of the undulation being de minimus.  Regarding the second statement “I have seen it before”, it is not clear what the word “it” in the statement refers to. These two statements made by Mr Frankie Yeung simply do not assist the plaintiff’s case at all.

3.  The second ground raised by Mr Lee that this Court erred in law in seeking a finding that the defendant’s refusal of letting the plaintiff’s contractors into the Premises was reasonable.  The defendant wrote to the plaintiff on 16.12.2009, saying that all work suggested to be done on 21.12.2009 was to be ceased pending the survey report from the contractor Kays International Property Consultants Co Ltd (“Kays”), covering the affected areas in the master bedroom and the sitting room near the patio.  The suggestion of work to be carried out by the plaintiff’s contractor on 21.12.2009, without finding out the reasons for the defect, could not solve the problems in the long run.  But the survey report from Kays would probably throw light on the causes of the flooring undulation.  Then it would be meaningful to carry out the necessary repair work, to pinpoint the causes of the floor undulation and solve the problem once and for all.  The defendant’s suggestion is reasonable and should have been accepted.  The cases cited by the plaintiff’s counsel simply do not assist the plaintiff at all.

4.  The third ground put up by Mr Lee is that implicit in the summary judgment of Master Pang that the defendant’s failure to pay rent constituted a repudiatory breach of the Tenancy Agreement of the subject Premises.  This repudiation was accepted by the plaintiff in her Statement of Claim on 12.2.2010.  Hence the defendant was no longer a “tenant” after 12.2.2010 and could not pray in aid of any repairing obligations derived from the said agreement. 

5.  The issue is whether, based on his counterclaim, the defendant can rely on equitable set-off.  In British Anzani (Felixstove) Ltd v International Marine Management (UK) Ltd [1980] QB137, the Court stated :

“While I am satisfied that it is proper in principle to allow that a cross-claim could be effective as an equitable set-off against a claim for rent, it by no means follows that such a defence is available in all circumstances. The important qualification is that the equity must impeach the title to the legal demand, or in other words go to the very foundation of the landlord’s claim. This seems to me to involve consideration of the proposition that the tenant’s cross-claim must at least arise under the lease itself, or directly from the relationship of landlord and tenant created by lease. The landlord’s covenant to repair contained in the lease, if broken, might found, as has been seen earlier, the ancient common law defence to a claim for rent if the tenant had been forced to pay for repairs to maintain the premises in a state fit for the purpose for which they were let. If instead of paying for the repairs, the tenant cross-claims for damages for breach of the covenant, there is no common law defence, but there must in my view, be an equitable right to set off the unliquidated damages. ……It would in my view be manifestly unjust to allow the landlord to recover the rent without taking into account the damages which it is alleged the tenant has suffered through failure by the landlord to perform their part of the agreement. Not only is there in my view an adequate connection between the transactions giving rise to claim and cross-claim, there is also the fact that the breach by the landlord is said to render the premises unfit at least in part for the purpose for which they were let. For both these reasons, it seems to me that the defendant’s cross-claim can be said to impeach the title to the plaintiff’s legal demand.”

6.  Under paragraph 26 of the Judgment, this Court made the following finding :-

“Even until 2.12.2009, 4 months after the notice of complaint had been issued to her. The plaintiff did not rectify the defects in the Premises, and was therefore clearly in breach of clause of the Tenancy Agreement.”

7.  The water leakage and undulations caused the doors of the subject Premises uncloseable, and a lot of the areas of the subject Premises to be unusable.  Because of the undulations, it was not safe to walk on them.  The defendant and his family members, during the period of tenancy, suffered nuisance, annoyance and inconvenience.  In the defendant’s counter-claim, under the head of “damages for distress inconvenience and loss of enjoyment of the Premises”, I made an award of $40,000, and under the head of “loss of use of rental areas” I made an award of $16,676.74.

8.  By 2.12.2009, the plaintiff clearly had been in breach of Clause 9 of the Tenancy Agreement of the subject Premises, by not repairing the defects in the Premises.  It is manifestly unjust to allow the plaintiff to recover the rent without taking into account the damages the defendant suffered due to her failure to repair the defects in the subject Premises.  The breach rendered the subject Premises partially unfit for the purpose for which they were let.  Hence, the counterclaim arose under the tenancy of the subject Premises; it went to the foundation of the plaintiff’s claim.  There is a very close connection between the claim and the counterclaim.  Therefore, the defendant should have an equitable right to set off the plaintiff’s claim.  After such set-off the balance is the rent he has to pay.  Unfortunately, the summary judgment made by Master Pang on 15.6.2010 was upheld on appeal in favour of the plaintiff for arrears of rent on 15.6.2010 when Deputy District Judge Kwan on 25.6.2010 ruled that there was no close connection between the claim and counterclaim that would make it manifestly unjust to allow the covenant for rent to be enforced without taking into account the counterclaim to the defendant.  The summary judgment was reached without a trial.  It did not contain a finding of fact regarding the forfeiture, if any, of the subject Premises.  In assessing the damages suffered by the defendant I had to make a finding regarding the length of the period in respect of which he was entitled to the be award of damages.  If the tenancy of the subject Premises had been forfeited then he was not entitled to any award of damages from the date of forfeiture of the tenancy.  The defendant is entitled to set off his claim for breach of covenant against the plaintiff’s claim for arrears of rent.  After the set-off has been done, then the rent he owes the plaintiff can be calculated.  Before this time, the issue of forfeiture simply does not arise.

9.  Summary judgment was entered on 15.6.2010 in favour of the plaintiff for vacant possession of the Premises.  Before 15.6.2010, there was no such court order.  So the defendant was entitled to reside in the Premises lawfully as a tenant until 31.5.2010 when he delivered back vacant possession of the subject Premises to the Plaintiff.  The plaintiff’s third ground cannot stand.  I dismiss this application for leave to appeal.

10.  The plaintiff also applies for leave to appeal against the order for costs.  I find that there is simply no merit in this application.  I dismiss this application.

11.  The defendant also applies for leave to appeal against the Judgment. He submits that this Court erred in dismissing his counterclaims for extra rental, removal costs, estate agent’s fee and stamp duty.  In the Judgment, I made a finding that he did not move out due to of the conditions of the premises. This Court relied on the following part of the  Judgment delivered by Deputy District Judge Kwan on 25.6.2010, which stated :

“In fact, the defendant accepted that he decided to move when he learned that the plaintiff had commenced the present proceedings against for, amongst other things, vacant possession of the premises.”

12.  The part of the judgment shows the reasons why the defendant moved out of the Premises.  The implication of this part of the judgment is that if the plaintiff had not commenced the present proceedings, he would not have decided to move out, despite the defects of the Premises.  It is of high probative value.  There is simply no ground to exclude this piece of evidence.

13.  The defendant argues that this part of the judgment should not be accepted by this Court.  The defendant referred to “Exhibit 1” for his letter addressed to the plaintiff on 20.12.2009.  He submitted that the contents of “Exhibit 1” proved that he moved out of the Premises, purely and mainly because of the poor conditions of the premises but nothing else.  If that really was the case, then this part of the judgment made by Deputy District Judge Kwan as referred to above should not be there.

14.  The defendant moved out of the Premises not because of the conditions of the Premises.  The defendant was only entitled to damages for inconvenience and loss of enjoyment of the Premises.  He is not entitled to damages relating to extra rental incurred, removal expenses, agent fees, stamp duty, because all these items are related to removal.  His moving out of the subject premises is a matter of his own choice.  So the plaintiff cannot be held responsible for the expenses incurred thereof.

15.  The defendant also referred to the counterclaim for “gas oven top”. This Court set out the reasons under paragraph 30 of the Judgment for rejecting his claim under this item.  There is no merit in his arguments at all.  The gas bill was registered in his wife’s name.  It is his wife, and not the defendant, who has the locus standi to sue.

16.  For the reasons stated above, I dismiss the defendant’s application for leave to appeal.

Costs

17.  The plaintiff is to pay the defendant the costs of her application for leave to appeal against the Judgment and her application for leave to appeal against the costs order, to be taxed, if not agreed.

18.  The defendant is to pay the plaintiff the costs of his application for leave to appeal, to be taxed, if not agreed.