GIOCONDO MARIO MAURIELLO v. ANDREW KWONG AND ANOTHER

DCCJ 4662/ 2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4662 OF 2005

____________________

______________________________________________________

REASONS FOR DECISION
ON DEFENDANTS' APPEAL
AGAINST MASTER'S ORDER FOR SUMMARY JUDGMENT

______________________________________________________

The plaintiff’s case

1.  The plaintiff is the landlord of one of the resort-type suit premises (“the Premises”) known as the Sea Ranch by the waterfront.  The defendants are man and wife.  By a Tenancy Agreement in writing, he rented the Premises to them.  They failed to pay the rent.  He terminated the tenancy and claimed vacant possession, outstanding rent, mesne profit until vacant possession, interest, and costs. 

The defendants’ case

2. They denied any reliefs sought by the plaintiff and counterclaimed $1,500,000.  They alleged that Sea Ranch was only accessible by boat.  So there was a certain term of the Tenancy Agreement requiring him to provide a free boat shuttle service (“Free Shuttle”) to them and their guests.  Mr. C.P. Ng (“Ng”) was a manager of all units in Sea Ranch.  Ng denied permission to their 14 – 18 guests Free Shuttle on 14 May 2005.  Ng said it was because those were Filipinos.    Ng was in breach of Article 25 of the Basic Law, which states that “All Hong Kong residents shall be equal before the laws”.  Moreover, it was in breach of the International Covenant on Civil and Political Rights which applies to Hong Kong.  Ng’s acts have caused them shame, anger, frustration and loss of face.  Their guests will be traumatized by Ng’s acts for many years to come.  As each guest should receive $100,000 in damages, they counterclaimed $1,500,000 in total.   

The master’s decision

3. On 19 December 2005, Master R. Yu made an order in terms of the plaintiff’s summons, under O. 14, r. 1, RDC, for:

(1)	Vacant possession of the Premises to the plaintiff;
(2)	Payment of outstanding rent to the plaintiff;
(3)	Mesne profit until delivery of vacant possession;
(4)	Interest;
(5)	Damages for breach of Tenancy Agreement to be assessed;
(6)	Costs.

The Law

4. The defendants have to satisfy the Court either that there is a preliminary or technical objection, or that they have a real or bona fide defence (HKCP 2006, 14/4/2; 14/4/9).  

The defendant’s appeal

5. The defendants submit [para. i of Notice of Appeal] that the District Court has no jurisdiction to make an order for vacant possession of the Premises.  The plaintiff submits on (sic) section 35 of the District Court Ordinance (Cap. 336), which reads:

The [District] Court has jurisdiction to hear and determine any action for the recovery of land, where the annual rent or the rateable value of the land, determined in accordance with the Rating Ordinance (Cap. 116), or the annual value of the land, whichever is the least, does not exceed $240,000.

There is only evidence of the rent before me.  The annual rent is $108,000 ($9,000 x 12).  I rule that the District Court has the jurisdiction. 

6. The defendants submit [para. ii of Notice of Appeal] that the District Court has no jurisdiction to hear and determine the defendants’ Counterclaim for $1,500,000.  The sum has exceeded the jurisdiction of the District Court.  The plaintiff does not submit on this jurisdiction point.  As I see it, there are 2 issues involved:

(1)	Whether the District Court has the jurisdiction;
(2)	Whether the Counterclaim should be dismissed.

7. I refer to the relevant part of section 41 of the Ordinance:

(3)	If a defendant in an action or proceeding within the jurisdiction of the District Court makes a counterclaim which is not within the jurisdiction of the Court but within the jurisdiction of the Court of First Instance, the District Court may, either of its own motion or on the application of any party, order –
	(a)	that the whole proceedings be transferred to the Court of First Instance;
	(b)	that the proceedings on the counterclaim be transferred to the Court of First Instance; and the proceedings on the plaintiff’s claim, except for a defence of set-off as to the whole or part of the subject matter of the counterclaim, be heard and determined by the District Court;
	(c)	where the District Court considers the whole proceedings should be heard and determined in the District Court, that the matter be reported to the Court of First Instance or a judge thereof.
		…
(6)	If no report is made under subsection (3)(c), or if on any such report it is ordered that the whole proceedings be heard and determined in the District Court, the District Court shall have jurisdiction to hear and determine the whole proceedings notwithstanding any enactment to the contrary.

Since there is no order or application made to transfer the counterclaim to the Court of First Instance, the District Court retains the jurisdiction to hear and determine the counterclaim.

8. It is not correct for the defendants to describe Master R. Yu as:

making a Summary Judgment on the defendant’s Counterclaim

In fact he had not made any order in respect of the Counterclaim.  He had to consider the Counterclaim, as part of the full picture, before he made an appropriate order in respect of the plaintiff’s claim.        

9.  The plaintiff submits that the Counterclaim was not sustainable because the defendants had no right to sue for and on behalf of their 15 guests.  Besides, even in the defendants’ own case, it was Ng, not the plaintiff, who denied them the Free Shuttle.  The defendants should have sued Ng, not the plaintiff.  Besides, as I see it, the defendants never broached the subject of how Ng treated their guests in any of the emails [the last of which dated 1 August 2005] sent to the plaintiff.  I agree with the plaintiff’s submission.    

10. The defendants submit [para. iii of Notice of Appeal] that they have never acknowledged any outstanding rent (for 11 July 2005 – 5 September 2005) to the plaintiff. 

11. The plaintiff stated that the defendants had to pay rent in advance on the 11^th day of each calendar month.  On 23 August 2005, the rent for 3 months, namely 11 June 2005 – 10 September 2005, was still outstanding.  He instructed solicitors to write to the defendants to demand payment by 26 August 2005.  No payment was received.  He instructed solicitors to write to terminate the tenancy and demand vacant possession by 14 September 2005 [para. 8, his affidavit]. 

12. When the plaintiff’s wife demanded the defendants for payment of rent, among others [email sent at 10:43 a.m. on 27 July 2005], the defendants replied that they would pay up [email sent at 4: 27 p.m. on 1 August 2005].  They never disputed the liability for, and the quantum of, the outstanding rent.  I do not find this a real or bona fide defence. 

13. The defendants submit [para. iv, v of Notice of Appeal] that Master R. Yu’s verbal exchange and attitude reflected that they did not have a fair trial before him.  I do not think it necessary to deal with the verbal exchange or attitude.  The matter before me is in the nature of a rehearing as though it came before the Court for the first time (HKCP 2006, 58/1/2). 

14. The defendants submit [handwritten grounds] that they had a right to renew the tenancy at “market rates”.  They had overpaid.  They wanted to stay in the Premises by paying the market rates.  The plaintiff submits that they had never raised it with the plaintiff before.  Besides, the tenancy had already been terminated.  They could not stay in the Premises anymore.  I agree with this submission.

The Conclusion

15. The defendants have failed to satisfy the Court either that there is a preliminary or technical objection, or that they have a real or bona fide defence.  I affirm Master R. Yu’s order.  There is no apparent reason why costs should not follow the event.  I make an order nisi, to be made absolute 14 days from today, for costs to the plaintiff. 

Dated this 20 January 2006