NEW KONG REAL ESTATE AGENT LTD v. KIMBALL KRISTOPHER BRADFORD

LDPD 2356/2016

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO LDPD 2356 OF 2016

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REASONS FOR DECISION

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1.  This is an interlocutory application filed by the respondent for leave to set aside the order of 28 December 2016. At the conclusion of the hearing on 18 January 2017, I ordered (1) the interlocutory application filed by the respondent on 10 January 2017 be dismissed; and (2) there be no order as to costs of this interlocutory application, with reasons to be handed down in writing. I now do so.

Background

2.  It is not disputed that the applicant as landlord and the respondent as tenant had entered into a written tenancy with lease term from 1 August 2016 to 31 July 2017 at monthly rent of $6,000.

3.  The applicant filed an application for recovery of possession of the suit premises on 17 November 2016, alleging that the respondent had failed to pay rent from 1 November 2016 and there was also balance of arrears of rent from 1 October 2016 to 31 October 2016 in the sum of $3,500.

4.  The respondent filed a notice of opposition to application on 21 November 2016.  His grounds and particulars for opposition could be summarized as follows: -

(1)  The applicant failed to repair the suit premises as agreed between the parties and therefore filed this application to avoid its repair liabilities;

(2)  There were various parties accepting rent from him in the last 4 years but in any event the current representative of the applicant Mr Lai Guolin (“Mr Lai”) and the previous rent collector Mrs Lo Hung Po (“Mrs Lo”) had not provided him with any rental receipt, and until August 2016 they had also refused to give him a written tenancy agreement;

(3)  The disrepair had caused damage and injury, which were the result of unauthorized modifications made by the applicant to the suit premises;

(4)  There was also verbal agreement between the parties that the respondent could withhold rent payment pending for repair to the suit premises by the applicant;

(5)  The respondent agreed to pay rent if the applicant could fulfill the agreements between the parties to repair the suit premises; and

(6)  Since he had given numerous notices to the applicant that he receives salary on the 7^th day of each calendar month and he used to pay rent on the 10^th day in the last 4 years, the rent payment date should be the 10^th day of each calendar month.

5.  At the call-over hearing on 7 December 2016, the parties confirmed that there was no dispute on the amount of claims but they argued whether or not there was a verbal agreement between Mrs Lo and the respondent on withholding of rent payment pending for repair. The parties had also argued over the position of Mrs Lo in the tenancy, but after discussions the applicant admitted that she is the owner of the suit premises.  In addition, the respondent said that he might also rely on disrepair as ground for non-payment of rent.  Finally, the parties agreed two main issues in the present proceedings to be determined by the tribunal: (1) whether or not there was verbal agreement between the parties on withholding of rent payment pending for repair by the applicant; and (2) whether or not the respondent could withhold or stop rent payment because of disrepair (if any) of the suit premises.

6.  Accordingly, I then made an order on 7 December 2016 to fix the case for trial on 11 January 2017 and directed the parties to file and serve to the other side their witness(es) statement(s) by 3 January 2017.  Since the trial would be held at a date more than 1 month later, I had also made an interim payment order that the respondent do pay into the tribunal on or before 15 December 2016 two months’ rent / mesne profits in the sum of $12,000, being part of the claims only, and the sums received by the tribunal shall be kept by the tribunal until the tribunal makes an order for release.  However, if the respondent failed to make the interim payment, the applicant could then apply for judgment by interlocutory application at an earlier date.

7.  On 15 December 2016, the respondent paid $3,000 only, instead of $12,000 as ordered, into the tribunal. The applicant then filed an interlocutory application on 16 December 2016 for leave to enter judgment against the respondent. This interlocutory application was fixed for hearing by the listing officer at 9:30am on 28 December 2016.

8.  After the respondent was informed of the scheduled hearing date of 28 December 2016, the respondent filed a note, instead of a formal application, on 23 December 2016 asking for adjournment of this hearing to 3 January 2017.  He said that he had already informed the tribunal at the hearing on 7 December 2016 that he would go to Japan for 5 days from 28 December 2016 to 2 January 2017.  He also showed his flight schedule that he would depart Hong Kong at 2pm on 28 December 2016. On the same date, the respondent filed his witness statement to support his opposition too.

9.  Given that the respondent made the request for adjournment of hearing informally by a note only, this was not entertained by the tribunal.  In any event, I then considered that the respondent would be able to attend the hearing at 9:30am on 28 December 2016 if he would fly at 2pm only on the same date.

Hearing on and the Order of 28 December 2016

10.  The respondent was absent at the hearing on 28 December 2016.  Whilst, the applicant confirmed at the hearing that other than the payment of $3,000 made by the respondent into the tribunal the applicant had not received any other payment from the respondent since the last hearing on 7 December 2016.  The applicant asked for leave to enter judgment against the respondent because the respondent had failed to make the interim payment as ordered.

11.  Although the respondent had failed to make the interim payment as ordered, I had also reviewed the witness statement of the respondent before I decided whether or not it was then appropriate to make a judgment.  In the witness statement, the respondent (1) queried the position of Mrs Lo in the case; (2) pointed out the disrepair, that there was a building order for removal of unauthorized structure and his complaint to the Buildings Department, and that the applicant had breached the repair clause in the tenancy agreement; and (3) argued that there should have a deposit of $8,000 though this was not stated in the tenancy agreement.

12.  However, the respondent did not address the issues as discussed and agreed at the call-over hearing directly.  There was no evidence of the said verbal agreement that the respondent had mainly relied on. The respondent had described briefly the extent of disrepair but he had not explained why he could withhold or stop rent payment in such circumstances. Further, even if the alleged deposit of $8,000 together with his payment into the tribunal in the sum of $3,000 were taken into consideration, he still failed to comply with the interim payment order for $12,000.

13.  The respondent had questions on the position of Mrs Lo in the tenancy and challenged the right of the applicant to sue, but it is the common law principle that the landlord in a tenancy agreement needs not be the registered owner of the suit premises and the tenant has no right to challenge the authority of the landlord after entering into the tenancy agreement[1]. In addition, even if the applicant had failed to issue rental receipt in the past, this does not bar the applicant to file the present application for recovery of possession of the suit premises because of non-payment of rent.

14.  It is also the common law principle that a tenant’s obligation to pay rent is not dependent upon the compliance by the landlord of its obligations under the lease. Unless it is stated otherwise in the tenancy agreement, a tenant has an independent duty to pay rent and there is no right to a legal set-off of unliquidated damages if any[2]. Even if the respondent relied on equitable set-off as defense, the respondent had described the disrepair only but had not provided particulars of cross-claims if any.  In any event, the respondent had submitted that he agreed to pay rent if the applicant would repair the suit premises.   

15.  Since the respondent failed to comply with the interim payment order, could not provide an acceptable reason why he could be absent at the hearing and based on the evidence available to the tribunal his case had no prospect of success, I decided not to adjourn the hearing.  After hearing the representation of the applicant and reviewing all the evidence before the tribunal, I made a decision to enter judgment and ordered the respondent to (i) deliver vacant possession of the suit premises to the applicant; and (ii) pay the applicant arrears of rent / mesne profits and costs, but subject to a relief expiring on 11 January 2017.

Grounds for Setting Aside the Order

16.  The respondent explained the reason why he could not attend the hearing on 28 December 2016. He said that he had already told the tribunal not to list the hearing at end of December 2016 because of his travel plan, and in any event he could not run the risk of missing the flight at 2pm in the afternoon and therefore he decided not to attend the hearing at 9:30am in the morning.  Nevertheless, he admitted that since he requested for adjournment, he had not received any confirmation from the tribunal to vacate the hearing scheduled on 28 December 2016.  Having noted the time apart between the hearing and the flight and the normal traffic and traffic mode between the tribunal and the airport, I consider that the respondent’s reasons are not persuasive at all.

17.  On the condition that the respondent knew about the hearing but he decided not to attend it, I consider that the order made on 28 December 2016 is regular and should not be set aside unless there are good reasons to support a retrial.

18.  The respondent also argued that he had planned to provide further evidence at the hearing scheduled on 11 January 2017, but after the judgment made on 28 December 2016 he was deprived of such right and this is unfair to him in the present proceedings.  I disagree.  In fact, I had ordered the parties to file their respective witness(es) statement(s) and adduce all documents that may be relevant to the issues by 3 January 2017.  The respondent then filed his witness statement on 23 December 2016 but regrettably this could not support his defense in the case. On the condition that the respondent had already been given the chance to provide evidence, I consider that without any good cause it is not appropriate for the tribunal to accept new evidence at the trial hearing if any.

19.  At the hearing on 18 January 2017, the respondent had no new ground of opposition and had just repeated his previous submissions.  The new evidence that could be submitted by the respondent were those related to ownership record, building order, compliant to the Buildings Department and state of disrepair only.  For the same reasons that had already been considered on 28 December 2016, I am of the view that his then opposition has no prospect of success in retrial if any.

20.  The applicant objected to the interlocutory application and said that further delay would be unfair to the applicant and might lead to greater loss too.  I agree.

Conclusion

21.  This tribunal did not accept the respondent’s grounds for the interlocutory application and therefore dismissed it at the hearing.

Costs

22.  The applicant did not ask for costs and there be no order as to costs of this interlocutory application.