KISSWAY INTERNATIONAL LTD v. MAK CHEE LEUNG

HCA19220/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.19220 OF 1999

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J U D G M E N T

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1. This is the trial of the action by the plaintiff Kissway International Ltd against the defendant Mak Chee Leung, whereby the plaintiff claims against the defendant for non-performance of a Lease signed by the plaintiff and the defendant in relation to the premises stated in the Amended Statement of Claim, namely 3rd floor, Block H, Winner Building, No.36 Man Yue Street, Kowloon ("the premises") whereby the premises were let by the plaintiff to the defendant for a period of five years at the monthly rental of $5,000 per month, starting from 1 February 1999.

2. The defendant did not pay any of the amounts due under the Lease, neither the rental nor the Management fee nor the rates, except for a tiny portion thereof in 1999 and therefore the claim by the plaintiff was for the various sums stated in the Statement of Claim.

3. The defence to the claim was an extraordinary one of reliance on clause 11 of the Lease. The evidence given by Madam Ma Sou Ying, a director of the plaintiff today, has persuaded me that the plaintiff's case is correct. Madam Ma has given very good evidence. She told the court that when she signed the Lease, clause 11 which in the Chinese document, consists of two lines and basically of two sentences. The first sentence is to the effect that the decoration of the premises as a recording studio when the tenant moves out the equipment and furniture are to be moved out by the tenant but otherwise the fixtures and fittings of the decoration shall not be changed. So that is the first sentence of clause 11 and Madam Ma said that she agreed to it and she initialled at the top of that clause 11. However, unknown to Madam Ma or the plaintiff and without the agreement of the plaintiff, unilaterally the defendant had added at the end of that first sentence a second sentence and that second sentence is to the effect that the plaintiff landlord also agrees not to accept any deposit or rental payment until the defendant's business shows a profit. Madam Ma's evidence, which I accept, is that this was something that she did not agree to and had never agreed to and certainly that second sentence was not there on the original Lease when she signed it. She also tells the court that when she discovered this when she was given a copy of it, she objected to it and then immediately made a report to the police and the police report that she made can be seen in the bundle at page 5 onwards.

4. What had happened clearly is that the plaintiff had unfortunately let out the premises to the defendant who was less than honest and straightforward in business dealings.

5. The claim of the plaintiff, therefore, is fully made out and Madam Ma has told the court the make up of the claim in the Amended Statement of Claim. Firstly, there is the sum of $60,969.65 as particularized in paragraph 8. That is in relation to the year 1999 in respect of arrears of rent as well as arrears of rates. I accept her evidence.

6. So far as prayer (c) is concerned, I also accept her evidence that the premises have not yet been recovered, having regard to the fact that the defendant was in occupation and even when the defendant had moved his things out of the premises, he had told the caretaker of the building not to allow the plaintiff possession of the premises until there was a court order. So I am satisfied there was arrears of rent for 25 months, i.e. from 1 January 2000 until possession will be recovered by the plaintiff, let's say, at the end of this month, on the basis that the court today makes an order for vacant possession of the premises. So, the plaintiff is entitled to a judgment for the sum of $125,000 ($5,000 x 25 months) under prayer (c).

7. So far as interest is concerned under prayer (h), I award the plaintiff interest on the sum of $60,969.65 from 1 January 2000 until today at prime + 3%. As for interest on the sum of $125,000, this, of course, covers the period up to today and the award of interest should be on the basis of half of that sum, i.e. $62,500 from the half-way point between 1 January 2000 and now, let's say from 1 January 2001 at again the same rate of interest, i.e. prime + 3%.

8. The plaintiff should also have the costs of the action as well as possession of the premises.

9. So the judgment would be in favour of the plaintiff under prayer (a), (b), (c), (h) and (g).

10. So far as the counterclaim is concerned, having regard to the fact that I accept the evidence of the plaintiff, Madam Ma, and the fact that the defendant is not here today and has not given me any evidence in support of the counterclaim, the counterclaim is dismissed with costs.