LUI WAI LIM WILLIAM v. LEE YIN SHING

DCCJ 4247/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4247 OF 2007

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JUDGMENT

1.  This is a tenancy dispute concerning the Ground Floor of No.41 Pau Chung Street, Kowloon.  Lui, the Plaintiff, is the landlord and Lee, the Defendant, is the tenant.  Lui says that Lee defaulted in paying rent and was in breach of covenants of the tenancy agreement.  He wants his premises back.  Lee alleges that Lui derogated from grant and claims damages for his loss and damage.  Legal proceedings were commenced at the Lands Tribunal which were then transferred to this court.

BACKGROUND

2.  The Ground Floor of No.41 Pau Chung Street consists of a shop which opens to Pau Chung Street and has a backdoor leading to a backyard.  At the backyard, there are partitions forming a number of rooms.

3.  Since 1998, a Mr Yu had been the tenant and operated his Chinese pharmacy at the shop.  In May 2007, Lee agreed to take over the business from Yu.  This entailed Lee becoming the replacement tenant of the shop.

4.  On 28 May 2007, Lee met with Lui and his sister to discuss the tenancy.  It was agreed that the tenancy would be for 1 year commencing on 1 June 2007 with an option to renew for another year.  The rent would be HK$16,000 per month.  On the same day, Lee made out a cheque for the sum of HK$57,400 for the deposit and rent in advance.

5.  On the following day, 29 May 2007, the parties signed a formal tenancy agreement at the office of Lui’s then solicitors.

6.  It did not take long for dispute to arise.  Eventually on 3 July 2007, Lui filed an application with the Lands Tribunal for possession of the premises on the ground of non-payment of rent and breach of covenants of the tenancy agreement (LDPE 593/2007).  Lee opposed and counterclaimed damages.  The case was subsequently transferred to this court.

7.  The parties’ contentions concern the following major issues:

(1)  their agreement as to the rent;

(2)  their agreement as to the subject premises let;

(3)  the alleged breach of covenants;

(4)  the alleged waiver of the right to forfeit;

(5)  the alleged derogation from grant and interference with quiet enjoyment; and

(6)  the loss and damage alleged by Lee.

8.  Notwithstanding the written tenancy agreement, both parties apparently suggest that various terms of the tenancy agreement relevant to the dispute do not reflect the reality.  For the matters discussed below, I am convinced that this is the case.

THE RENT

9.  The amount of rent payable in advance upon the signing of the tenancy agreement was not stipulated in the tenancy agreement.  The fact was that together with the deposit of HK$35,000, Lee paid Lui HK$22,400 rent in advance when they first met to discuss the tenancy on 28 May 2007.  In either party’s case, this was more than 1 month’s rent.

10.  Lui acknowledged in his statement that this was supposed to be the rent for June and July 2007, only that there was a shortfall of HK$9,600.  Lee’s case is that this was not a shortfall but represented the first 18 days in June being an agreed rent-free period.

11.  At the trial, Lui admitted that there was indeed discussion between the parties about an 18-day rent-free period on 28 May 2007.  But he said this was withdrawn on 29 May 2007 when the parties signed the tenancy agreement.  Lui referred to the Third Schedule of the tenancy agreement which provided that rent free period was “Not Applicable”.

12.  I am on guard about receiving parol evidence if it appears to be inconsistent with the terms of a written agreement.  But considering the circumstances surrounding the issue of rent-free period and the fact of payment upon the signing of the tenancy agreement, I have reasons not to ignore such evidence.

13.  Lui explained that the rent-free period was first discussed because there might be renovation work before Lee could move in to start his business.  But when observing that Lee had basically moved in and settled down for the commencement of business, he considered that the rent-free period would no longer be necessary and therefore withdrew it.

14.  I doubt what Lui said in this regard was true.  If Lui somehow changed his mind about the rent-free period when they met on 28 May 2007, Lee would have had no reason to draw the cheque for HK$57,400 on that day and Lui would have had no reason to accept it.

15.  If Lui changed his mind only after receiving the cheque in the evening of 28 May 2007, I wonder when Lui came to observe Lee’s readiness to commence business and to decide to withdraw the rent-free period as they signed the tenancy agreement actually on the following day.

16.  Lui relied on the receipt clause in the tenancy agreement.  Indeed, the parties apparently signed to acknowledge that Lui had received from Lee “the abovementioned rental deposit and advance payment of HK$51,000”.  But this also obviously differed from the reality.

17.  The sum of HK$51,000 would have comprised the deposit (HK$35,000) and one month’ rent in advance (HK$16,000).  But in either party’s case, Lee was supposed to pay the rent for both June and July 2007 in advance upon their agreement.  There is no suggestion or evidence that besides withdrawing the rent-free period, Lui also agreed to reduce the rent payable in advance to one month.

18.  If the rent payable in advance had been reduced to that for one month, Lui would have been keeping part of the rent which should not have become due until 1 July.  I wonder if Lee would be so agreeable to that, particularly if the rent-free period was withdrawn as alleged.

19.  Following the alleged withdrawal of the rent-free period, Lee would have needed and expected to make up the balance of HK$9,600 upon the signing of the tenancy agreement.  He did not.  Lui cannot really explain why he did not require Lee to do so on that day.

20.  Lui had sent letters to Lee in June 2007 complaining about Lee’s breach but not about any unpaid rent or outstanding balance.  The first letter from Lui to Lee demanding for rent for July 2007 was dated 3 July 2007.  Instead of asking for the balance of HK$9,600, Lui demanded Lee to pay rent in advance on the first day of every month by direct credit into his sister’s bank account as stated in the tenancy agreement.

21.  Whatever might have accounted for how the clauses were so drafted by the solicitors, it is clear to me that the rent-free period clause in the Third Schedule or the receipt clause do not reflect what in fact happened.

22.  According to Lee, he was aware of the differences between the above clauses of the tenancy agreement and the reality when the agreement was explained to him.  Being assured by the Lui’s that this would be all right, he just left it at that.

23.  I have no doubt that Lui wants to withdraw the rent-free period.  But I do not believe that this was withdrawn overnight by the time of the agreement as Lui alleges.  As this did not happen upon the signing of the tenancy agreement, it was no longer up to Lui to do so afterwards.

24.  It follows that I do not accept that Lee owes Lui the balance of rent for the month of July 2007.  The claim for non-payment of rent fails.

THE SUBJECT PREMISES LET

25.  The tenancy agreement provides that:

“THE PREMISES

The Landlord shall let and the Tenant shall take ALL THOSE premises (“the Premises”) forming part of all that building (“the building”) which are more particularly described and set out in Part II of the First Schedule ……” (emphasis added)

26.  Part II of the First Schedule describes the premises and the building as follows:

“Premises:  ALL THAT PORTION of the GROUND FLOOR of the building designated as No.41 PAU CHUNG STREET erected on the piece or parcel of ground registered in the Land Registry as THE REMAINING PORTION OF SUBSECTION 2 OF SECTION A OF KOWLOON INLAND LOT NO.1687.”

(emphasis added)

27.  The dispute between the parties is whether the subject premises let was all of the ground floor of the building or (as described as Portion A by Lui for the purpose of this case) the shop premises excluding the backyard and the various partitions there.

28.  The key is the meaning of the expression “ALL THAT PORTION of the GROUND FLOOR of the building”.  This is matter of construction, giving rise to the question of whether extrinsic evidence of the parties’ understanding at the time is admissible.  In respect of that, I also invited parties to make further written submissions after the hearing.

Admissibility of extrinsic evidence

29.  There should be no dispute in respect of the general parol evidence rule.  The intention of the parties is to be ascertained within the four corners of the contractual document.  Extrinsic evidence is nevertheless admissible if there is ambiguity in the contractual wordings.

30.  I do not accept that the expression “all that portion of the Ground Floor” in the tenancy agreement must mean all of the Ground Floor of the building.  “Portion”, properly construed, could refer to a part of a larger property.  An example exists in the same provision describing the lot of land where the building was built as “the Remaining Portion” of the relevant subsection of the section of the Inland Lot.

31.  Further, the quantitative expression “All” relates to “that Portion” instead of “the Ground Floor”.  An example exists in the description “ALL THOSE premises forming part of all that building” in the body of the tenancy agreement cited above.

32.  Mr Lam for Lee sought support from Leung Chiu Lam & Anor v Poon Loi Cheung & Anor [1999] 1 HKLRD A15.  In that case, the court of appeal was construing the phrase “all other self-contained portions of the building” in the context of an exception and reservation clause.  The court held that if a vendor wishes to reserve something in his own favour, he has to do so expressly and clearly, otherwise the grant will be construed against him.

33.  In my view, Leung Chiu Lam is not applicable.  The context here is what the landlord is granting rather than what he is reserving from the grant.  In Leung Chiu Lam, the court actually found the expression “all other self-contained portions” too vague for the purpose of reservation and exception. As Mr Lam acknowledged, the tenancy agreement here also did not qualify or explain what “portion” the landlord was describing.

34.  In my view, extrinsic evidence is admissible to determine what the parties then understood to be “all that portion” of the Ground Floor let.

The backyard

35.  Comparing the original layout plan of the Ground Floor and the photographs of the backyard taken in July 2007, one can see that the original layout of the backyard had undergone some alterations by then.  Structures had been erected and internal partitions had been added to produce numerous rooms with separate doors at the backyard.  Lui confirmed that in court.  Some of the structures had already been demolished by July 2007.  However the various rooms were still there at the backyard at the time.

36.  There was a washroom and a kitchen.  There are 3 other doors to the enclosed partitions or rooms.  2 of the rooms have windows and one of them even has an air-conditioner installed outside.  There are 2 iron gates serving as exits of the building.

Tenancy to Yu

37.  According to Lui, it was his grandmother who granted the tenancy to Yu, Lee’s predecessor, in about 1998.  That tenancy covered what he described as Portion A which was essentially the shop premises.  However Yu also had the key to the backdoor of the shop and had access to and probably use of the backyard.

38.  The photographs taken in January 2007 also show that the condenser of Yu’s air-conditioner for the shop premises used to be installed on a concrete slab erected between the Ground and the Mezzanine Floors in the backyard just above the backdoor of the shop premises.  This was the air-conditioner that Lee took over from Yu.

39.  However there is nothing to suggest that such use of any part of the backyard was exclusive to Yu at the time so as to found the tenancy of the backyard or any part thereof to Yu.  On the contrary, Lui said in court, and I accept, that some of these rooms at the backyard were let to others for storage and even residential purpose at that time.

Tenancy to Lee

40.  According to Lui, it was Yu who handed over 2 keys including the one to the backdoor of the shop.  During their meeting on 28 May 2007, Lui’s sister pointed out that only the so-called Portion A, or effectively the shop premises, was let.  Lui said that Lee also confirmed that he would not require the use of the rooms in the backyard.    However he and his sister agreed to allow Lee to use the storeroom temporarily.  Lui also referred to the need to proceed with the rest of the demolition of the unauthorised additions at the backyard.

41.  Lui said that Lee confirmed that he would not require the use of the rooms at the backyard as there would be no Chinese medical practitioner engaged in his business and no herbal medicine would be boiled on site.  But one week after their meeting on 28 May 2007, there was already a Chinese medical practitioner surnamed Leung seeing patients at the clinic.  The medical chits issued by that practitioner during that period evidence that.

42.  Mr Chan for Lui suggested that Lee might have made use of the convenience of having access to the rooms at the backyard and decided to temporarily engaged Leung to practise at the shop premises.  Effectively, the suggestion was that Lee changed his mind after the tenancy agreement.  But such suggestion was never put to Lee during the trial and first appeared in Mr Chan’s submission.

43.  According to Lui, he allowed Lee to temporarily use the storeroom for Lee’s moving into and renovation of the shop premises.  This does not sit well with his evidence that he observed that Lee did not need to renovate and was quite settled in for the commencement of business.  I have discussed this part of the evidence above.

44.  By comparing the original layout plan and the photographs, one can see that part of the partitions (where Lee’s air-conditioner currently is) was an added structure.  Despite Lui’s explanation of why and when he intended to carry out the rest of the demolition, I am not convinced that he was serious about that at least in the near future.

45.  While I have reservation about the evidence of Lui in this respect, the evidence of Lee is no better.  Lee’s case during trial was that pursuant to the tenancy agreement, the whole Ground Floor was let to him.  In other words, the backyard including all the rooms therein was part of the tenanted area.

46.  According to his pleading, Lee only specifically mentioned a storeroom apart from the washroom and kitchen.  Lui stated that the storeroom Lee was allowed to use was unfurnished without air-conditioning.  This is not in dispute.  No mention has ever been made of the other partitions in the backyard.  There is no evidence that apart from the 2 keys to the shop premises, Lee was ever given any other key to, for instance, the room at the backyard that was locked by a padlock and the iron-gate to Hung Kwong Street, as one can see from the photographs.

47.  Considering both parties’ evidence in respect of how the premises let was understood to include at the time of the agreement, I have to conclude that neither of them is believable to the exclusion of the other.

48.  I do not believe that prior to the tenancy agreement was signed, Lui and Lee actually discussed specific details like whether Lee would engage a Chinese medical practitioner to practise at the shop or whether there would be need to boil medicine in the kitchen at the backyard.

49.  I believe that what Lui let and what Lee rented was the shop premises.  This was effectively what used to be let to Yu or what Lui described as Portion A for the purpose of this case.

50.  I also believe that like Yu, Lee was allowed to have access to and use of the backyard, in particular the washroom, kitchen and one of the rooms for storage as Lee said.  I do not believe that it was made clear whether this was temporary.  But all these did not render any part of the backyard part of the tenanted premises.

BREACH OF COVENANT

51.  This was the split type air-conditioner left behind by Yu and taken over by Lee.  The evidence shows that the condenser of the air-conditioner used to be installed on the concrete slab structure erected above the backdoor of the shop premises in the backyard.  In about mid-February 2007, the structure was demolished.  By the time of the tenancy agreement, the condenser was left on the ground of the backyard.  Lee had to re-install it.

52.  The relevant covenant of the tenancy agreement reads as follows:

“AIR-CONDITIONING OF PREMISES

In the event of the Tenant installing private air-conditioning units in the Premises subject to the written consent of the Landlord and/or the Manager, the Tenant shall ensure such installation is safe in all aspect and shall comply with the directions and instructions of the Landlord and/or the Manager regarding such installation and ……” (emphasis added)

53.  There is no dispute that during the meeting on 28 May 2007, Lui instructed Lee to install the condenser by mounting the same on the exterior wall of the building over the backyard facing Hung Kwong Street.  The photographs of the vicinity of the premises show that other people had by then installed the condensers of their air-conditioners along some part of that street.

54.  According to Lee, on about 3 or 4 June 2007, he engaged a technician to install the condenser who advised him that it would be against the law to mount the condenser to a wall of less than 2.2 metres in height.  Lee reported to Lui’s sister who agreed that the condenser could be installed above the storeroom, i.e., where it is now.  On 5 or 6 June 2007, Lui and his sister came to the premises and requested Lee to add a cover to the condenser to prevent the heat from affecting the 1^st Floor of the building.  Lee agreed but was not able to do so because he was busy.  On about 16 June 2007, Lui and his sister came again.  Discovering the cover was yet to be added, they insisted that Lee installed the cover forthwith.  Later that day, they came with a technician with a view to installing the cover at Lee’s expense.  Lee refused because he considered the quoted cost of HK$600 to be too expensive.  This dispute, Lee apparently believed, led to the alleged sabotage of electricity supply and malfunction of the air-conditioner on the following day, which will be discussed below.

55.  Lui denied having been informed of the installation of the condenser at where it is.  Question was asked as to whether Lui might not know and therefore was not in position to deny what Lee had said to his sister.

56.  That Lui’s sister was Lui’s agent is clear from the tenancy agreement (whereby the rent was payable to her account as agent of Lui) and Lui’s own admission by pleading.  It is at least possible that Lui would not know all the conversation between his sister and Lee.  It is unknown why Lui’s sister is not a witness as she should be in the best position to contradict Lee.  Mr Lam even invited this court to draw adverse inference against Lui in the circumstances.

57.  I can see the force of Mr Lam’s argument.  However, Lee’s case is not that Lui was bound by what his sister had agreed with Lee, of which Lui might not be aware.  Lee’s case is that both Lui and his sister knew and accepted the current location of the condenser, only that a cover was to be added.  The only question is whether this was true.  Lui is in a position to testify as to that.

58.  The contemporaneous documents do not seem to support Lee’s case.  In his letters to Lee dated 5 and 16 June, Lui made clear that the air-conditioner was installed in breach of his instruction and direction so that Lui expected the same to be removed.  There was no mention of the installation of cover alleged by Lee.  More importantly they do not sit well with Lee’s case that Lui accepted the location of the condenser on those dates.

59.  Much was argued about another reason given by Lui for why the current location of the condenser was unacceptable.  The condenser was installed on the part of the structure at the backyard which had been added without authorisation.  Pursuant to the building order and the understanding obtained from a Mr Ng of the Building Authority, that part was supposed to and still has to be demolished.  Therefore it was said that Lui had no reason to accept the condenser being installed there as alleged.

60.  Much was also argued about whether Lui was and is serious about proceeding with the demolition of such unauthorised structure as Lui claimed.  Hearing the evidence of Lui, I do have doubt.  But whether the concern about unauthorised structure was a serious one or not, the undisputed fact was that Lui did decide to instruct Lee to install the condenser on the exterior wall of the building facing Hung Kwong Street in the first place; and I find that Lui never changed that as alleged by Lee.

61.  Mr Lam for Lee also referred to various authorities and submitted that the relevant covenant of the tenancy agreement should be construed strictly against the landlord who drafted and now seeks to rely on it as a ground of forfeiture.  Essentially, he submitted that the clause refers to installation of the air-conditioner in the premises let whereas the condenser that Lee installed was, according to Lui, outside the premises let.

62.  Mr Lam’s argument would mean that the provision fails because the air-conditioner happens to be a split-type one and the tenant happens to need to install the part of the air-conditioner inevitably outside but not the part inside the rented premises.  I cannot accept that.  The condenser is clearly and simply part of the air-conditioner in the premises let and its installation, whether inside or outside the premises, had to be carried out in compliance any directions or instructions of the landlord pursuant to the covenant.

63.  I find that Lee was in breach of the covenant by installing the air-conditioner contrary to Lui’s instruction and direction.

64.  Regarding the unauthorised installation of electricity wiring, the complaint related to what Lui discovered on 20 and 21 June 2007.  Lui recorded his complaint in writing to Lee on 23 June 2007.  Apart from the disconnection and reconnection of electricity to the shop on 17 June 2007, there is in fact not much evidence and debate about this alleged breach.

RIGHT TO FORFEIT AND RE-ENTER

65.  Lee contends that even assuming that Lui was entitled to forfeit the tenancy, the right was waived when Lui demanded for the rent for July 2007.

66.  The default clause under Section VIII provides for the right of forfeiture of the tenancy and re-entry upon breach.  By his letters dated 7, 16 and 23 June 2007, Lui demanded Lee to deliver vacant possession of the premises let.  But it was Lui’s commencement of legal proceedings by filing his claim with the Lands Tribunal which left no doubt as to his exercise of the right of forfeiture and re-entry.  That was 3 July 2007.

67.  The fact was that notwithstanding his 3 letters mentioned above, Lui sent a written demand for the rent for July 2007 on 3 July 2007.  Mr Chan for Lui submitted that this did not constitute waiver of the right of forfeiture.  He has 2 reasons: (1) the term of the tenancy agreement; and (2) the breach was continuing.

68.  Mr Chan relied on the clause under Section VIII of the tenancy agreement that stipulates that:

“The acceptance of any rent by the Landlord shall not be deemed to operate as a waiver by the Landlord of any right to proceed against the Tenant in respect of any breach non-observance or non-performance by the Tenant of any of the agreements stipulations terms and conditions herein contained and on the part of the Tenant to be observed and performed.”

69.  I do not think this clause helps Lui.  The reason is that Lui did not merely accept rent from Lee.  Lui positively demanded Lee to pay rent by his letter dated 3 July 2007 notwithstanding the known breach of the tenancy agreement.  Lui demanded Lee to perform his contractual obligation under the tenancy agreement and to pay the full rent for July 2007, which he considered to be in arrears, in accordance with the agreement.  In my view, this reflected a position which could only be consistent with recognising the subsistence of the tenancy agreement: see Halsbury’s Laws of Hong Kong, Vol.17(1) at [235.428].

70.  Mr Chan submitted that such waiver would not operate in the case of a continuing breach.  He relied on Halsbury’s (above) at [235.429].  The breach that Lui complained about was the installation of the air-conditioner and electrical wiring in breach of the covenants, particularly in failing to comply with his instruction and direction.  Once installed, such breach has occurred and was not continuing in nature as alleged.  In my view, this argument fails.

71.  It is clear that Lui was not entitled to forfeit the tenancy agreement as at the date of commencement of legal proceedings against Lee.

DEROGATION FROM GRANT / QUIET ENJOYMENT

72.  Section IV of the tenancy agreement stipulates the landlord’s obligations including quiet enjoyment:

“The landlord shall permit the tenant to have quiet possession and enjoyment of the premises during the term of the tenancy without any interruption by the landlord or any person lawfully claiming under or through or in trust for the landlord.” (emphasis added)

73.  Lee was allowed access to and uses of the backyard, in particular the washroom, kitchen and one of the rooms for storage.  There is no dispute that Lui caused the backdoor to be chained up on 17 June 2007.  But short of being part of the tenanted area, these areas did not fall within the grant by Lui.  Therefore the withdrawal of the permission cannot be said to be derogation from grant as Lee alleges.  Nor do I think that this amounted to interference with Lee’s quiet enjoyment of the premises let.

74.  I can think of the argument that the permission to use the backyard should not be withdrawn so long as the tenancy subsists.  But in the absence of any such alternative plea and evidence specifically to that effect, I do not think it is open to Lee to run such alternative argument.  Mr Lam for Lee did not really run such argument either.

75.  It is alleged that Lui wrongfully disconnected the electricity supply to the shop premises.  There are 2 aspects: (1) cancellation of the account with the electric company; and (2) alleged sabotage of the electric wires of the shop premises.  This was allegedly the aftermath of the parties’ dispute as to the installation of the condenser of the air-conditioner prior to 17 June 2007 mentioned above.

76.  That Lui cancelled his registration with the electric company on or about 18 June 2007 is not in dispute.  This happened at about the same time when Lui chained up the backdoor of the shop premises.  Understandably, Lee complained that Lui did that deliberately.  But irrespective of that, the fact was that the cancellation of the registration never caused any termination of power supply.  The letters from the electric company in July 2007 and January 2008 confirmed that.  Lee also confirmed that he managed to register for the power supply on his own account in July 2007.

77.  Lee argued that the deposit of HK$35,000 that he had paid consisted of a HK$2,000 deposit for the electricity supply and a HK$1,000 deposit for the water supply.  But Lui denied having ever been paid such deposits.  Lui was questioned as to how the amount of deposit was fixed, presumably on the basis that the rental deposit usually represents 2 months’ rent.  However, there is really no rule about this.  Further, if Lee was forced by circumstances to register for electricity supply on his own account in July 2007 and presumably having to pay the deposit to the electric company, I wonder why there is no claim for this extra payment of deposit necessitated purely by the alleged wrongful cancellation of the account by Lui.

78.  As to the alleged sabotage of the electric wires of the shop premises, Lee produced evidence and relied on the evidence of Leung, the electrical technician who attended the repair in the morning of 17 June 2007.  Leung discovered that the main switch located outside the shop premises was disconnected.  After reconnection, the power supply resumed but the air-conditioner still did not function.

79.  Lee accuses Lui of disconnecting the main switch which Lui strenuously denies.  Lee referred to the telephone conversation on 16 June 2007 between him and Lui as well as that on 17 June 2007 between him with Lui’s sister.  He construed what were allegedly said by the Lui’s as a suggestion, if not threat, that Lui might somehow cause the power supply to terminate so as to prevent Lee from operating his business.  Upon discovering the termination of the power supply on the following day, Lee also filed a report with the police.

80.  There is no direct evidence of how or more importantly who was responsible for the incident.  There is no evidence of how the police followed up with Lee’s report, if at all.  Notwithstanding the suspicion against Lui that Lee projected and Mr Lam’s submission, I am not prepared to draw the inference against Lui or his sister and find that either of them was responsible for the incident.

81.  I hold the same view towards the suggestion that Lui also caused the malfunction of the air-conditioner.  The fact was that the air-conditioner functioned when Lee tried to switch it on at the end of July 2007.  Lee suggested that it was obviously Lui who had disconnected and subsequently reconnected the wires of the air-conditioner.  Leung, the electrical technician, admitted that he was not in the air-conditioning field.  He is not qualified or able to tell what caused the malfunction and resumption of function, I find.

82.  In conclusion, I am not satisfied that the claim of derogation from grant or interference with the quiet enjoyment of the shop premises is proved.

LOSS AND DAMAGE - COUNTERCLAIM

83.  For completeness, I proceed to consider the loss and damage alleged by Lee, assuming that Lui was guilty of derogation from grant.

84.  Lee alleges that the termination of electricity supply on 17 June 2007 and the malfunction of the air-conditioner caused him loss of expensive stock of Chinese medicine.  This was said to be due to the power cut to the refrigerator in which he stored some Chinese medicine and the lack of air-conditioning for one and a half months.  The medicine either rotted or ceased to have medical effect.  The medicine became non-saleable.

85.  In court, Lee said that the power cut lasted from the evening to the following morning.  During that period, the refrigerator was never opened.  I am surprised that Lee, who had been operating Chinese pharmacy even prior to this matter, cared to store in the refrigerator in the first place but did not seem to care about the condition of the medicine when he discovered that the power was cut.  Similarly, there is no evidence that Lee had done anything about the medicine when there was no air-conditioning perhaps apart from getting a fan.  This is especially when he claimed the medicine involved consisted of expensive items such as birds’ nests 燕窩盞, cordyceps sinensis 冬蟲草and 雪蛤膏, all of which were allegedly worth the total sum of HK$178,800.

86.  The invoices produced in support were somehow addressed to Yu’s shop but bearing Lee’s chop.  Other than that, there is no evidence of the condition of any of the medicine allegedly damaged.

87.  Lee also alleges that his inability to use the kitchen and therefore to prepare medicine for customers caused him loss of profits and business.  According to him, the medical practitioner ceased to practise at his shop and no other practitioner was willing to practise there.

88.  Though I find above that Lee had access to the backyard, I doubt whether he had in fact used the kitchen for boiling Chinese medicine as alleged.  According to Lee, he had to boil not less than 10 packets of medicine at the kitchen a day.  Then the backdoor of the shop premises was chained up without warning.  As such, one would have expected that his belongings and kitchen utensils were left there, to which he ceased to have access suddenly.  But the photographs of the kitchen taken in late July 2007 fail to show that place had really been so used by Lee.  It was nothing more than a bare shell and showed no sign of recent use.  In court, Lee said that Lui must have done some tricks (or in his words “做過手腳”) in that regard.  The suggestion must be that Lui had removed his belongings and utensils from the kitchen by then.

89.  I do not think so.  Lee admitted in his evidence that later in June 2007, Lui did allow him to enter the backyard to retrieve his belongings from the room where he stored them.  According to Lui, and I accept, those were bottles of medicine oil only.  It was unlikely that Lee would have left out the kitchen in this process.  There is no complaint about any missing belongings or kitchen utensils from the kitchen.  There is no claim for loss of property from the kitchen either.

90.  Lee also alleges that due to the lack of air-conditioning, fewer customers came to purchase medicine from the shop and therefore he suffered loss of business at the rate of HK$20,000 per month.  Apart from Lee’s assertion, I do not find sufficient evidence of the alleged drop in sales and it being a result of the lack of air-conditioning.

91.  Lee’s claim for general damages for inconvenience and discomfort was withdrawn during the trial.

92.  Considering the evidence including those specifically analysed above, I am not satisfied that the alleged loss and damage is proved even assuming that Lui were responsible for the wrongdoing that Lee alleges.

CONCLUSION

93.  Not being entitled to forfeit the tenancy or owed any rent in arrears as at the commencement of legal proceedings, Lui’s claim in this transferred action fails and must be dismissed.

94.  Failing to prove the alleged derogation from grant and the alleged loss, Lee’s counterclaim must also be dismissed.

95.  There is no winner in this case.  The claim and the counterclaim are not distinct from each other but intertwined in terms of the factual issues in dispute.  In the circumstances, I think it is fair to order that each party should bear his own costs of this action.

ORDER

96.  The claim and the counterclaim are dismissed.  Each party bears his own costs of this action, including any costs reserved.  Costs shall be taxed, if not agreed.  Unless there is appointment in 14 days to argue costs, this nisi order as to costs shall become absolute.