LOO LEE SUNG v. THE ROYAL DESIGNER LTD

   HCA680/2008

   IN THE HIGH COURT OF THE

   HONG KONG SPECIAL ADMINISTRATIVE REGION

   COURT OF FIRST INSTANCE

   ACTION NO. 680 OF 2008

-----------------------

BETWEEN

-----------------------

------------------------------------------------------

REASONS  FOR  JUDGMENT

------------------------------------------------------

1.  This is a tenancy dispute between the plaintiff as landlord and the defendant as tenant in which the plaintiff claims for :

(1)  delivery up of vacant possession of the suit premises;

(2)  payment of mesne profits from 7 December 2007;

(3)  interests; and

(4)  costs.

2.  At the start of the trial, the plaintiff appeared by counsel but the defendant was absent, there being two earlier orders by two different Masters refusing to grant leave to a director of the defendant to represent the defendant in these proceedings, after the former solicitors for the defendant had ceased to act for it on 17 July 2009.

3.  In the course of the trial, but after the evidence had been completed by the plaintiff, a director of the defendant came into the court, but having acknowledged that he was aware of the two earlier refusals by the Masters to grant leave for a director of the defendant to appear for the defendant, indicated that he only attended the court as a spectator, and not as a representative of the defendant in these proceedings. He further indicated to the court that his purpose in attending court was to learn of what order the court would make.

4.  The plaintiff called two witnesses, Paray Li Fong Chuen (PW1) and Lo Sai Mat (PW2) whose witness statements had been filed and served in these proceedings.

5.  Upon the plaintiff proving its case herein, judgment was given to the plaintiff in respect of the following :

(a)  vacant possession of the suit premises was to be delivered up by the defendant forthwith;

(b)  mesne profits at $35,000 per month to be paid by the defendant as from 7 December 2007 until the actual date of delivery up of vacant possession;

(c)  interests on such mesne profits as ordered at 2% p.a. from 7 December 2007 until judgment and thereafter at judgment rate; and

(d)  costs of the action be to the plaintiff to be taxed if not agreed.

6.  I indicated that I will give my reasons for judgment in written form which I now do.

Background

7.  By a lease dated 2 May 2006, (“the Lease”) the plaintiff as lessor leased to the defendant as lessee the premises known as Ground Floor of No. 224 Ma Tau Wai Road, Kowloon, Hong Kong (“the Premises”) for a period of 5 years commencing 1 May 2006 at a monthly rent of $35,000 from 1 May 2006 until 30 April 2009 and thereafter at an increased monthly rent of $42,000 from 1 May 2009 until 30 April 2011.

8.  The Premises, which was used by the defendant to carry on a furniture trading business, formed part of a building erected at Nos. 222, 224, 226 and 228 of Ma Tau Wai Road, Kowloon, Hong Kong (“the Building”).

9.  On or about 10 August 2007, during the period of the Lease, a common drainage pipe of the Building installed in a light well outside the Premises choked or became blocked, thereby causing the Premises to be flooded with foul water. This may have been caused by the heavy rain as the No. 8 typhoon signal was hoisted that day.

10.  The pipe which choked or became blocked was a common facility of the Building and was situated in a common area. The duty to repair and maintain that pipe which choked therefore fell onto the Incorporated Owners of the Building.

11.  The defendant complained of the flooding to the Premises to the plaintiff as lessee who in turn redirected such complaints to the Incorporated Owners since the drainage pipe in question was a common facility and the duty to repair or maintain same fell upon the Incorporated Owners. The defendant also made similar complaints to various government departments.

12.  As a result of such complaints raised by the defendant, a number of meetings and inspections at the Premises took place between the plaintiff’s representative, the defendant’s representative as well as representatives from the Incorporated Owners of the Building during September and October 2007.

13.  By the 7 November 2007, when the flooding caused by the choked or blocked drainage pipe had not been rectified by the Incorporated Owners, and taking the view that the Premises have been rendered unfit for occupation or use due to such flooding, the plaintiff decided to exercise its rights under Clause 6 of the Lease and thereby gave written Notice of Termination of the Lease to the defendant.

14.  The written Notice of Termination was sent in the form of a letter dated 7 November 2007 from the plaintiff’s solicitors to the defendant’s solicitors with a copy being sent on the following day to the defendant at the address of the Premises as well as to the registered address of the defendant. Such Notice of Termination purported to terminate the Lease and requested the defendant to deliver up vacant possession of the Premises by 7 December 2007.

15.  Clause 6 of the Lease is worded as follows:

“6.  In the event of the said premises or any part thereof at any time during the said term being rendered or become inaccessible or unfit for occupation or use for any reason whatsoever (not attributable to the act or default of the Lessee) then the rent hereby reserved or a fair proportion thereof according to the nature and extent of the damage sustained shall abate and ceased to be payable as from the date of occurrence of such damage until the said premises shall again be rendered accessible or fit for occupation or use.  Provided that (a) the date of expiration of the term hereby granted shall not be postponed; (b) the Lessor may but is not obliged to repair or reinstate the said premises; and (c) if the said premises is not reinstated and rendered accessible or fit for occupation and use in the meantime, either the Lessor or Lessee may at any time after 1 month form the occurrence of such event rendering the said premises inaccessible or unfit for occupation or use, give to the other of them notice in writing to determine the Lease and thereupon the same and everything herein contained shall cease and be void as from the date of the occurrence of such event rendering the said premises inaccessible or unfit for occupation but without prejudice to the rights and remedies of either party against the other in respect of any antecedent claim or breach of the Lease stipulations terms and conditions herein contained or of the Lessor in respect of the rent payable hereunder prior to the coming into effect of the cessation to pay rent.”

16.  Despite the Notice of Termination, the defendant failed to deliver vacant possession of the Premises back to the plaintiff nor has the defendant paid the monthly rent since 10 August 2007.

17.  The Writ herein was issued by the plaintiff on 18 April 2008.

18.  A Defence and Counterclaim was filed by the defendant on 4 June 2008 when the defendant was represented by solicitors.

19.  On 6 February 2009 the Master ordered the parties to exchange signed witness statements within 60 days.

20.  The defendant having failed to file or exchange witness statements, by an order of the Master made on 6 July 2009, it was ordered that unless the defendant exchanged its witness statements on or before 20 July 2009, it be debarred from adducing evidence without the leave of the court at the trial.

21.  On 17 July 2009, the former solicitors acting for the defendant sought and was granted leave to cease to act for the defendant in these proceedings.

22.  Thereafter on two separate occasions, namely, on 22 July and 3 August 2009, a director of the defendant applied to the Masters to be allowed to represent the defendant in these proceedings. Both applications were refused by the Masters.

23.  By another order of the Master made on 8 October 2009, the counterclaim of the defendant was provisionally struck out pursuant to Order 25, rule 2 of the RHC.

24.  There were no appeals by the defendant to any of the orders made by the Masters referred to above.

The plaintiff’s case and evidence

25.  The evidence called by the plaintiff came from PW1 and PW2.

26.  PW1 is the son-in-law of the late Loo Yuen Fong who had entrusted him with all the dealings and letting out of the Premises some 10 years ago. However, because PW1 was for most of the time in Macau due to his work, he delegated such duties to his brother in law, PW2.

27.  It was both their evidence that in early August 2007, the Premises became flooded with drainage water due to a choked or blocked drainage pipe which was situated outside the Premises in the vicinity of a light well. This had resulted in a complaint from the defendant.

28.  After the complaint was received from the defendant, the plaintiff had contacted the Incorporated Owners of the Building with a view for the Incorporated Owners to remedy or repair the blocked drainage pipe.

29.  The matter had dragged on throughout September and October 2007 with no quick solution or resolution to the problem due to the inaction of the Incorporated Owners of the Building.

30.  In early November when the matter still could not be resolved, the plaintiff decided to exercise its rights as Lessee under Clause 6 of the Lease. Accordingly through the plaintiff’s solicitors, a written notice of termination was given to the defendant on 7 November 2007. The notice of termination was sent to the defendant’s solicitors acting for the defendant at the time in respect of this problem which has arisen in respect of the Lease, and a copy of same was also sent to the defendant at the Premises as well as to the registered office of the defendant on the following day.

31.  The notice of termination gave one months notice of determination of the Lease and required the defendant to deliver up vacant possession of the Premises on or before 6 December 2007.

32.  It is the plaintiff’s case that the flooding caused to the Premises was such that it has made the Premises unfit for occupation since on or about 10 August 2007.

33.  It is the plaintiff’s evidence that despite the notice of termination given by the plaintiff to the defendant, the defendant has failed to deliver up vacant possession of the Premises to the plaintiff but has remained in occupation thereof up to the trial of this matter.

34.  It is also the evidence of the plaintiff that rent has not been paid by the defendant in respect of the Premises since the flooding of it on or about 10 August 2007 right up to the trial herein.

35.  It is also the evidence of the plaintiff that on or about 17 January 2008, workmen sent in to repair the choked drain at the back yard and light well finally managed to clear the choked drains and to stop the water seepage from the drainage pipes.

36.  Thereafter there were no more complaints of flooding or water seepage from the choked drains.

37.  Despite the successful repair to the choked drains, the defendant has remained in occupation of the Premises but without paying any rent to the plaintiff throughout the time right up to the trial of this matter.

Reasons for Decision

38.  The plaintiff’s case is a straightforward one, namely that the plaintiff was entitled to give a valid notice of termination as provided for by Clause 6 of the Lease due to the flooding caused to the Premises from the blocked or choked drains which had made the Premises unfit for occupation. However, despite such valid notice of termination, the defendant failed to quit the Premises and to deliver vacant possession of same back to the plaintiff on or before 6 December 2007.

39.  By way of pleadings, the defendant had admitted in paragraph 5 of the Defence and Counterclaim that since 10 August 2007, the Premises have been rendered unfit for occupation or use.

40.  However, the defence pleaded in the Defence and Counterclaim is one of estoppel. The estoppel relied on in the pleading is based on representations alleged to have been made by the plaintiff to the defendant on 8 August and 16 September 2007.

41.  The plaintiff has denied any such alleged representations pleaded by the defendant and in the absence of any evidence called by the defendant the plea of estoppel must fail.

42.  As for the counterclaim of the defendant, that has provisionally been struck out by the Master. In the absence of any other order reinstating the counterclaim and in the absence of any evidence called to substantiate the matters upon which that counterclaim is based, the counterclaim of the defendant stands dismissed.