TANG LEUNG AND ANOTHER v. HARRY ALSO KNOWN AS STAUDT, GERHARDUS MARTINUS

LDPD 754/2013

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO. LDPD 754 OF 2013

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J U D G M E N T

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1.  By an assignment dated 8 February 2006, the 2^nd Applicant became the registered owner of a premises known as 18B Siu Han San Tsuen, Lung Yeuk Tau, Fanling, (“the Suit Premises”) situated at Lot No. 325 R.P in D.D. 83. The 1^st Applicant, the husband of the 2^nd Applicant, was the manager of Tang Kwok Hing Tso (“the Tso”) and was empowered to rent out the Suit Premises to the Respondent before it was assigned to the 2^nd Respondent. This is an application where the Applicants ask for recovery of possession, arrears of rent and mense profit.

2.  The Respondent’s grounds of opposition are as follows:

	(i)	There was no new tenancy agreement to take effect in June 2012 as the Applicant had agreed but failed to do repair on the Suit Premises;
	(ii)	There were no receipts for rent;
	(iii)	The 2009-2012 tenancy agreement was not stamped; and
	(iv)	The premises are illegal structures.

3.  The Applicants rely on a verbal agreement made in May 2012 that there would be a one-year tenancy to commence on 1 June 2012 for $3,000 as rent per month.  The Applicants say that the Respondent has failed to pay the agreed rent since commencement and failed to pay any rent at all as from 1 August 2012.  They ask for recovery of possession, arrears of rent and mense profit until delivery of vacant possession.

4.  The Respondent says that the new tenancy has not commenced because the Applicants had failed to repair the Suit Premises as agreed.  He continued to pay the old rent for 2 months.  He did not pay any rent since 1 August 2012 because there was no repair work done as agreed.

Evidence

The 2^nd Applicant

5.  The 2^nd Applicant gave evidence.  She adopted her witness statement filed on 12 August 2013.  She is now 84 years old and is the registered owner of the Suit Premises.  Due to her age and frailness, the leasing of the Suit Premises had been handled by a property agent before closure of business in early 2012.  This explained why although the Respondent had been renting the Suit Premises since or about 2000, the 2^nd Applicant was not involved in much direct communication with the Respondent.  The last written tenancy agreement was signed to take effect on 1 May 2009 for 2 years to expire on 31 May 2011 (“the 2009 Tenancy Agreement”).  There was negotiation on the new tenancy agreement with the help of their son in May 2012.  She said that she did not want to rent the Suit Premises to the Respondent but her son had agreed to do so.  She understood that the Respondent had agreed to pay $3,000 per month as rent.

The Respondent

6.  He said that in fact he started renting the Suit Premises in 1999.  The condition of it had since deteriorated and he had asked the Applicants to repair certain problems including a leaking roof, cracks all over the place including the walls, the glass penal of the windows and the floor.  So when a new tenancy agreement was negotiated in May 2012, he made a point that repair had to be done to fix the problems mentioned.  He said that the son of the Applicants had agreed that repair works would be carried out.  He reiterated that he refused to sign the new tenancy agreement prepared by the son of the Applicants before he could see that such repair works were to be done.  He continued to pay the old rent at $2,300 per month for June and July 2012.  As he did not see any repair works done or even to start, he stopped paying rent thereafter.

7.  Further the Respondent denied having agreed to a term of 12 months for the intended new tenancy agreement.  He said that this had not yet been discussed.  To him, it should be 2 years as provided in the past tenancy agreements.  He said he would not agree to a 12 months lease if this had been discussed.

8.  He confirmed there had been contractors coming to the Suit Premises two times for inspection but no works had been carried out.

Discussion

9.  The Applicants did not call Mr Tang, their son, who helped to negotiate the terms to give evidence.  It is said that he is now in the United Kingdom.  There is dispute as to what had been agreed.  What the 2^nd Applicant could tell is very little.  After hearing the evidence of the Respondent, I find his case more probable.  I find that there was an agreement that repair works would be done for the new tenancy agreement to take effect.  Mr Tang did not deal with this in his witness statement although this has been set out in the Notice of Opposition.  The conduct of the Respondent was consistent with his case; he did not sign the new tenancy agreement prepared by Mr Tang and he continued to pay rent according to the 2009 Tenancy Agreement for the following 2 months.

10.  For these reasons, I find that there was no new tenancy agreement reached, the Respondent was in a holding over situation and therefore the terms in the 2009 Tenancy Agreement continued.  The tenancy became a periodic one; in the present case since rent had been paid on a monthly basis, a monthly tenancy was created at the old rent, i.e., $2,300 per month.

11.  I notice that a CR 109 Form dated 9 August 2013 had been filed for and on behalf of the Applicants but obviously that was done only for the purpose of this Application.  I give no weight to it as proof of the existence of a new tenancy agreement.

12.  It is the Respondent’s case that since there was no repair works done, he did not pay the rent.  It is trite law that the duty to pay rent is independent of other terms in a tenancy agreement unless it is expressly provided.  Chu J as she then was stated clearly in Charmway Development Ltd v. Long China Engineering Ltd. [2001] 3 HKC 515 ) that:

“22. As previously observed, the covenant to pay rent is independent of the other covenants and obligations under the Tenancy Agreement. The Tenancy Agreement also does not permit any set-off on the rent. …”

13.  There was no such evidence in the 2009 Tenancy Agreement nor in the negotiation of the new tenancy agreement.

14.  It is my judgment that the Respondent has to pay rent or mense profit for his occupation during the holding over period until he delivers vacant possession of the Suit Premises.

15.  The Respondent has also made a few other points which in my view are not relevant.  One of them was that the 2009 Tenancy Agreement was not stamped.  I advised him that unless he had other points to make, the consequence would be that the 2009 Tenancy Agreement could not be produced to court as evidence.  He however asked to put it in as evidence and this was not opposed by the Applicants.

16.  He also mentioned that he was not given any rental receipts, but he also admitted that this was not the main reason for his not paying rent.

17.  At the hearing he confirmed that he would not pursue the point of the Suit Premises being illegal structures and I do not think I have to make any ruling on this.

Value of Mean Profit

18.  As I have found that there was no new tenancy agreement reached, the value of mense profit upon forfeiture of the monthly tenancy should be $2,300 per month.

Conclusion

19.  I find that there was no new tenancy agreement concluded in May 2012.  In fact, the Respondent has been in a holding over situation since 1 June 2011 upon the expiry of the 2009 Tenancy Agreement by paying the same rent.  The value of mense profit is to be assessed at the rate of the old rent, i.e., $2,300, as there is no other evidence I could rely on to make assessment otherwise.  It is not disputed by the Respondent that he had not been paying rent since 1 August 2012, I find that the Applicants are entitled to recover possession of the Suit Premises subject to the relief granted under s 21F of the High Court Ordinance.

Costs

20.  Costs normally follow the event, I do not see any reason why the Respondent should not be ordered to pay costs of the Applicants.  Having read the Statement For Costs, Isummarily assessed the Applicants’ costs at $20,000.

Order

	1.	Subject to Paragraph 4 below, the Respondent do deliver vacant possession of the Suit Premises to the Applicants;
	2.	The Respondent do pay arrears of rent/mense profit from 1 August 2012 until delivery up of vacant possession of the Suit Premises at the rate of $2,300 per month;
	3.	The Respondent do pay the Applicant’s costs of this application which is summarily assessed at $20,000;
	4.	If the Respondent should on or before 25 October 2013 (“Relief Expiration Date”) pay into the Tribunal all the arrears of rent/mesne profits as stated in paragraph 2 above (including all arrears of rent/mesne profits due on or before the date of payment) together with the costs referred to in paragraph 3 above, the Respondent be relieved from the forfeiture incurred herein, and the lease of the suit premises be reinstated; and
	5.	Unless otherwise ordered, all sums ordered to be paid under this judgment shall be paid into the Tribunal in cash, by cashier orders issued by banks in Hong Kong or by cheques drawn by firms of solicitors in Hong Kong, and such sums received by the Tribunal shall be released to the Applicants.