CHAN ALEX AND ANOTHER v. TAKE CARE LOGISTICS LTD

DCCJ 5024/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5024 OF 2013

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J U D G M E N T

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1.  The plaintiff are siblings and are the registered owners of Flat D 34/F Metropolitan Rise, No. 28 Ma Tau Kok Road, Kowloon ("the Premises").  They claim against the defendant for arrears of rent and damages for the breach of a two-year tenancy agreement dated 31 December 2012 ("the T/A") (A/96-102) by the defendant.  The defendant counter-claimed for breach of the T/A by the plaintiffs.

Undisputed or Undisputable Background

2.  Upon purchase of the Premises on 30 November 2012, the plaintiffs had authorized Madam Chin ("Chin"), their mother, to be responsible for the leasing out of the Premises.  On 2 December 2012, Chin was approached by Ms Leung ("Carmen") an estate agent of Century 21 Culture Center Property Limited ("Century 21") and had agreed to appoint Century 21 as the agent for the letting of the Premises.  A set of keys to the Premises was being handed over to Carmen before 23 December 2012.

3.  On 23 December 2012, the 1^st named plaintiff ("Mr Chan") and Chin, together with Carmen, met Ms Wong Yee Fan Sherriff ("Wong") and Ms Chan Ka Yan ("KY") at the Premises to negotiate on the terms and conditions of a provisional tenancy agreement ("PTA") (A/83-84).  All of them then went to a restaurant near the Premises to sign the PTA naming the plaintiffs as the landlord and Wong as the tenant.  The PTA stipulated that the Premises was being let for residential purposes for a term of 2 years commencing on 10 January 2013 and ending on 9 January 2015 with a rent free period from 1 January 2013 to 9 January 2013 ("Rent Free Clause") at the monthly rental of HK$15,000.  It is also provided in the PTA that the formal tenancy agreement should be signed on or before 31 December 2012.  Prior to the signing of the PTA, Wong had indicated that she worked in a bank and had provided Chin a photocopy of her staff card with the bank (A/81).

4.  On 28 December 2012, Mr Wankel Yu ("Yu") the director of the defendant signed the T/A and the defendant was being named as the tenant instead of Wong.  When Mr Chan attended the office of Carmen to sign on the T/A, the change of the tenant was discovered by Mr Chan after signing the first 2 pages of the T/A.  In any event, Mr Chan eventually signed the T/A.  The fact that the Rent Free Clause on the PTA was missing from the T/A was only discovered by Yu after the signing of the T/A.

5.  On her way home on a taxi, Chin called Carmen asking her to withhold the T/A since she was worried about the actual user of the Premises if the tenant was a company limited. Carmen suggested Chin to talk to the tenant direct.  Shortly after, KY called and told Chin that the defendant company belonged to her father and the Premises would only be used by Wong and KY.  Chin requested to add a term in the T/A to specify that the Premises was only for Wong and KY's use.

6.  In the morning on 1 January 2013, Carmen texted Chin the proposed term to be added being “此單位只供租客 Wong Yee Fan Sherriff & Chan Ka Yan 使用”.  Chin called back and requested to add the term to read “此單位只供租客 Take Care Logistics Ltd 之 Wong Yee Fan Sherriff & Chan Ka Yan 使用”.  By noon, Carmen informed Chin that the tenant did not agree to put the name of Wong and KY in the T/A and threatened to sue the plaintiffs for breach if they refused to sign the T/A.

7.  Chin requested Carmen to inform the defendant that since it refused to add the additional term, the plaintiffs would ask the defendant to provide a guarantor and rental deposit of 6 months and parties should attend a law firm to sign the T/A.  Such further request by Chin was conveyed to Wong on 3 January 2013 who refused to accept. 

8.  After learning from Carmen that the defendant had declined the request, Chin went to the Premises with some friends on 3 January 2013, changed the lock of the main door of the Premises, took 2 bags left inside the Premises by the tenant to Carmen and also took back the keys to the Premises left with Carmen.

9.  On 4 January 2013, Chin was approached by police since the defendant had reported to police about the missing of some properties it left at the Premises.  Chin met Yu and Wong at Century 21 and each accusing the other for being in breach of the T/A.

10.  Unknown to the plaintiffs, the defendant had rented another apartment at Metropolitan Rise on 5 January 2013 at $13,500. The defendant had also arranged for the stamp duty of the T/A to be paid on 7 January 2013 and that for the PTA on 10 January 2013. 

11.  On seeking legal advice, Chin handed the key of the Premises together with photos of the Premises to Ms Shum Sze Wai ("Shum"), another estate agent of Century 21 to be forwarded to the defendant on 9 January 2013 in performance of the T/A.  The defendant declined to accept the same on 10 January 2013 on the ground that the T/A had already been terminated by the breach on the part of the plaintiffs.

12.  On 11 January 2013, the plaintiffs received a letter from the defendant asking for a compensation of $255,500 (A/134-135) for the unilateral termination of the T/A.  The plaintiffs replied by way of a solicitor letter denying the allegation by the defendant and reminded the defendant to comply with the terms of the T/A, failing which, the plaintiffs would treat it as a breach and will claim for loss and damages (A/137-138). The defendant had not responded to this letter.

13.  After leaving the Premises vacant since 11 January 2013, the plaintiffs allowed the daughter of a family friend to reside at the Premises rent free from mid-April 2013 until after the Chinese New Year in 2015 when rent was being collected.

14.  Chin had lodged a complaint against Carmen to the Estate Agent Authority and Carmen had, in answer to the complaint, filed a statement to the Estate Agent Authority dated 9 July 2013 (B/357-369).

15.  On 20 December 2013, the plaintiffs commenced these proceedings asking for a declaration that the PTA and the T/A are repudiated and terminated and for damages as follows:

a)	plaintiffs' share of the estate agent commission paid to Century 21	$7,500
b)	rent under the T/A (13 months' rent totally HK$195,000 minus the deposit and one month's rent already paid at $45,000)	$150,000
c)	stamp duty paid to Century 21	$452.50
d)	legal costs	(to be confirmed)

16.  In the defense filed on 20 January 2014, the defendant also counter-claimed for:

a)	refund of the deposit and one month rental in advance	$45,000
b)	deposit and one month rental in advance as damages	$45,000
c)	defendant's share of the estate agent commission	$7,500
d)	costs of arrangement of utilities services	$1,000
e)	damages for finding subsequent flat	$9,000
f)	cleaning charge of the Premises	$3,000
g)	legal costs	(to be confirmed)

17.  At trial, parties had agreed and filed a Joint Statement of Issues in Dispute and the issues to be determined are:

1) whether the plaintiffs/Chin had been told that Wong was an agent of the defendant in entering the PTA and whether the plaintiffs/Chin knew and agreed that the defendant was the true tenant on or before signing of the PTA on 23 December 2012?

2) whether the PTA was still valid upon the signing of the T/A?

3) whether the defendant was entitled to the rent free period as per the Rent Free Clause in the PTA?

4) whether the defendant in fact, and in law validly took possession of the Premises on 1 January 2013?

5) whether Chin informed Yu through Carmen that the plaintiffs decided not to rent out the Premises on 3 January 2013?  If there was such verbal communication, whether the plaintiffs thereby breached the PTA or T/A with the PTA or T/A terminated?

6) whether Yu informed Chin that the defendant decided not to rent the Premises on 3 January 2013?  If there was such verbal communication, whether the defendants thereby breached the PTA or T/A with the PTA or T/A terminated?

7) whether the plaintiffs repudiated and breached the PTA and/or T/A by entering and changing the door locks of the main entrance of the Premises on 3 January 2013?

8) whether the plaintiffs or defendant is entitled to resultant damages and other relief against the other (including the issue of quantum and mitigating of damages).

18.  Both of the plaintiffs and Chin testified at trial and has also called Madam Wong, a friend of Chin as witness at trial. Yu and Carmen are the 2 witnesses for the defendant.

Issue 1

19.  Mr Chan and Chin both denied Wong and KY had ever mentioned that Wong was signing the PTA as an agent for a company limited nor ever mentioned that the T/A will be signed by the company limited or the company was owned by her uncle.  Mr Chan understood that Wong was signing the PTA as an agent for KY who is the cousin of Wong.   Chin also said that at the restaurant, they had asked Wong and KY about their occupation.  Wong said she was working with a bank and did show Chin her staff card whilst KY said she was a student.  Wong had also mentioned that for the rent paid, they would allow their uncle to claim tax benefit.

20.  Carmen confirmed that before the PTA was being signed, she had told Chin that the tenants were 2 girls, Wong was working in a bank and KY was a university student since no one had ever told her that the tenant would be a company limited.  Wong also showed her staff card to Chin and Carmen and had also made a copy of the staff card to Chin.  Carmen agreed that this was done to assure the landlord that Wong had a proper job and can manage to pay the rent.  However, Carmen also said that Wong asked and Chin agreed to use the name of a company limited as the tenant but Wong could not provide the name of the company limited at the time of the PTA and it was said that the name of the company would be used in the T/A.  After the signing of the PTA, Wong provided Carmen with the name of the company so Carmen put it on the T/A as tenant.

21.  Yu testified that it was intended that the Premises should be rented in the name of the defendant company as residence of Wong and KY and as registered address of a number of company under Yu's control.  Wong was the agent of Yu in the renting of the Premises and there was a company resolution passed on 20 December 2012 (B/276) authorizing Wong and Yu "to represent the Company in all matters concerning the lease of the Premises" with details of the Premises and the terms of the T/A specified in it.  Yu and Wong went to Century 21 on 9 December 2012 asking to see properties for lease and had specifically told Carmen that the tenant would be a limited company set up by him but since it was still undecided as to which company to be named to rent the Premises, Wong was authorized to sign on the PTA.

22.  Having considered all the evidence and on a balance of probabilities, I find the plaintiffs' evidence more credible.  Had it been mentioned and Chin agreed that the tenant would be a company limited, why would Chin still require Wong to show her the staff card and even bothered to make a copy of the same?  And had there been such an agreement, one wonders why no one asked for this to be recorded in the PTA.  As confirmed by Carmen, the showing and copying of the staff card was to ensure that the tenant Wong was in gainful employment and had the ability to pay the rent and such a guarantee was inconsistent with a company limited being named as the tenant. 

23.  The evidence of the defendant is inconsistent. Carmen was adamant that she had never heard of a company limited would be named as the tenant before 23 December 2012 and this was in direct contradiction to the evidence of Yu.  And the board resolution produced by Yu was doubtful in the sense that no discussion had been made between the plaintiffs/Chin and Wong before 23 December 2012, how can the details of the Premises including name of owners, monthly rent and the term of tenancy be recited in the minutes.  Yu tried to explain that what stated in the board resolution was the bottom line of the defendant company but such an explanation is also inconsistent with the evidence of Carmen who had told this court under cross-examination that initially Wong had asked for the tenancy to commence on 20th something in January whilst Chin was minded to have it commenced in mid-January and it was only after some negotiations that parties agreed on the date of 10 January 2013.  If what Yu said about the company resolution was true, Wong would not have asked for a commencement date in late January upon meeting Chin.  Yu said Wong had strike the worst bargain but it was also Yu's evidence that in the negotiation, they had offered to pay 6 months' rental payment in advance in exchange for a commencement date on 20 January (B/258).  So the bottom line of the defendant company could never be 9 January 2013.  And if there was such a board resolution passed on 20 December 2012, why would Yu not inform Wong of the same when he must have known that Wong was going to sign the PTA on 23 December 2012 so that the name of the defendant company would appear on the PTA from the very beginning.

24.  I find as a fact that on 23 December 2012, no one had ever mentioned the fact that Wong was only signing as an agent for a company limited and the tenant to be appeared on the T/A would be a company limited instead, hence the plaintiffs could not have agreed to the same.  The PTA was being signed by the plaintiffs as the landlord and Wong as the tenant and had nothing to do with the defendant company. 

25.  Mr. Luk for the plaintiffs had addressed this court on the principle of “Undisclosed principle” in his final submissions.  Since this is never the case of the defendant, this is not an issue that required any determination.

Issue 2

26.  Given the findings of fact at §24 above, the subsequent use of the defendant's name on the T/A could not be a continuation of the PTA but rather a new agreement between the plaintiffs and the defendant.  The defendant cannot take benefit of the terms in the PTA which must be invalid as far as the plaintiffs and the defendant are concerned after the signing of the T/A.

Issue 3

27.  Since the PTA was a contract signed between the plaintiffs and Wong and had nothing to do with the defendant, by privity of contract, the defendant is not entitled to the benefit under the Rent Free Clause in the PTA.

Issue 4

28.  A set of keys to the Premises was in the possession of Carmen before 23 December 2012 is something not in dispute.  The argument is whether the set of keys kept by Carmen had ever been passed to the defendant on 1 January 2013.

29.  The defendant's evidence is that it was agreed at the time of the PTA that the tenant was entitled to a rent free period from 1 to 9 January 2013 so keys would be passed to the tenant on 1 January 2013. It was also agreed that before 1 January 2013, the tenant could ask Carmen for the keys to enter the Premises for cleaning and taking measurement for the purpose of buying the furniture.  Carmen confirmed that she did allow the tenant to have access to the Premises before 1 January 2013 for cleaning and had allowed Wong to acknowledge receipt of the keys on 1 January 2013.  But since the tenant required Carmen's assistance in opening the door for the delivery of furniture as well as for the connection of gas supply, the keys were still kept by Carmen after 1 January 2013.

30.  Mr Chan and Chin denied ever agreeing to let the tenant have the keys from 1 January 2013.  During discussion on 23 December 2012, it was agreed that the tenant could borrow the keys from Carmen to enter the Premises for cleaning and taking measurement after 31 December 2012 since Mr Chan and Chin had planned to watch the fireworks at the Premises on 31 December 2012.  They had never thought of allowing the tenant to take possession during the rent free period but just allowed them to gain access whenever needed.

31.  Given my findings above that the PTA had no effect on the plaintiffs and the defendant, the defendant was not entitled to enjoy the rent free period from 1 January 2013.  The only evidence that the keys had been passed to Wong came from Carmen.  I found her to be not trustworthy and her oral evidence is inconsistent with her written statement submitted to the Estate Agents Authority dated 9 July 2013 (“the Statement”) (B/357-369). 

32.  In the Statement, Carmen said after the signing of the T/A, with the consent of the plaintiffs, she had passed the keys to the tenant for access to the Premises for cleaning and leaving of personal properties inside the Premises and after use, the tenant would return the keys to her (“本人是經過簽署正式租約後，得到業主同意，才將鎖匙交給租客到單位放置私人(物品)及清潔，租客完成上述事項後亦把鎖匙交回本人”)(B/359 para. 6).  Given the T/A was only signed by Mr Chan and the 2^nd named plaintiff Ms Chan on 28 December 2012 and 1 January 2013 respectively, it is quite unlikely that Carmen could have passed the keys to the tenant on 1 January 2013. 

33.  Carmen also stated in the Statement that the tenant had never taken away the keys to the Premises and the keys were at all times kept in her office ("租客從未攞走過單位鎖匙，只是在免租期間（放）一些清潔用品在單位內，鎖匙一直放於本人公司”) (B/361).  If Carmen had ever passed the keys to the Premises to Wong on 1 January 2013, why would Carmen not mentioned in the Statement but rather tell a totally different story in the Statement. Furthermore, the parties were in argument on 1 January 2013 as to whether to add the term about the use of the Premises by Wong and KY and it was discovered that the Rent Free Clause had been missing in the T/A, it would be most unlikely for Carmen to take it on herself to allow the tenant to have the keys of the Premises on 1 January 2013. 

34.  In the Statement, Carmen had enclosed the document signed by Chin on 3 January 2013 acknowledging return of the keys to her (B/363).  Had Carmen passed the keys to Wong on 1 January 2013, there must also be a record of the same and if so, why would Carmen not enclosed the same in the Statement?  Carmen's evidence is far from convincing.

35.  I find as a fact that the keys to the Premises had never been passed to the defendant or Wong and the defendant had never taken possession or control of the Premises on 1 January 2013.

Issue 5-6

36.  Upon discovery of the change of the tenant after signing the T/A by Mr Chan on 28 December 2012, Chin had requested for 2 additional terms to be inserted in the T/A, namely the rental deposit should not be used to set off any rent and the Premises was only for the use of Wong and KY of the defendant company.  The defendant agreed to the first additional term but not the second. 

37.  So on 1 January 2013, Chin asked Carmen to convey the message to the defendant about 3 additional terms, namely adding a guarantor, 6 months' deposit and the signing of the T/A at a solicitor firm. Chin's evidence is that since Mr Chan had already signed on the T/A, she knew the agreement was already valid so she was only trying her best to strike a better deal if possible.  That’s why she had specifically told Carmen that if the defendant did not agree to the 3 additional terms, never mind; but if the defendant did not agree and did not want to rent the Premises anymore, the plaintiffs were prepared to refund the deposit and the rent paid, giving the defendant the choice of whether to carry on with the T/A.  On 3 January 2013, Carmen told Chin that the defendant said it was so troublesome and they were not going to rent the Premises and asked when would the plaintiffs refund the money.  But Carmen insisted that the plaintiffs should sign a surrender document which was refused by Chin since it was the defendant who had decided not to rent the Premises and it should be the defendant to sign the same. Carmen also asked Chin when would she come to get back the key to the Premises, Chin considered the return of the keys amounts to surrender of the T/A.  In the afternoon, Chin went up to the Premises, changed the lock to the wooden door upon finding it was not working properly and brought the properties left in the Premises by the defendant to Carmen and also got back the keys left with Carmen.  In a gist, Chin denied ever telling Carmen that the plaintiffs had decided not to rent out the Premises to the defendant.

38.  Carmen's evidence is that when Chin suggested the 3 additional terms, Chin had never said if the defendant refused, never mind, and neither did Chin said if the defendant refused, the plaintiffs would not rent the Premises to the defendant and would refund the money to it.  It is also Carmen’s evidence that the defendant refused to add the 3 additional terms into the T/A and had never said that the plaintiffs were troublesome and not minded to rent the Premises anymore.  Carmen told Chin of the defendant's refusal and had never asked Chin to sign any surrender document.  Chin said she would like to have the keys back but Carmen told her since the keys belonged to the defendant, Chin could not ask for them back at her wish.  In any event, Chin came to Carmen's shop that afternoon saying that she had already changed the lock of the Premises and would not lease the Premises to the defendant. Chin got back the keys and dropped 2 bags of properties belonged to the defendant with Carmen and insisted the defendant should sign a surrender document before any refund could be arranged. 

39.  Yu's evidence is that Wong told him she got the message from Carmen about the 3 additional terms and the plaintiffs said if the defendant refused, the plaintiffs would not rent the Premises to the defendant.  Wong told Yu that she had rejected the request since the T/A had already been signed by both parties.  Yu also said that it is impossible for Wong to suggest not to rent the Premises.

40.  On a balance of probabilities, I find Chin's evidence credible and more likely to be true.  Even Carmen’s evidence corroborates with Chin’s evidence that she had never said will not rent the Premises to the defendant on suggesting the 3 additional terms.  I accept Chin’s evidence that she was only trying to negotiate for a better term otherwise why would she arranged for the 2^nd named plaintiff Ms Chan to sign on the T/A on 1 January 2013.  This showed the intention on the part of Chin and the plaintiffs to carry on with the execution and performance of the T/A.  Since Chin had already been reminded by Carmen on 30 December 2012 that if they did not sign the T/A, they would be in breach and the defendant would sue them for damages, it would not be reasonable for Chin to suggest something which would amount to a breach of the T/A.  Rather, it’s more likely that Chin would suggest the defendant to propose a cancellation of the T/A instead.

41.  Mr Chong for the defendant had, in cross-examination, querried Chin as to why such verbal communication of the defendant on 3 January 2013 had not been mentioned in the letters sent to the defendant on 11 January 2013 (B/137-138) and 26 March 2013 (B/342-344).  Chin’s reply is that she had told the lawyer so but could not tell why the solicitor had not mentioned these in the 2 letters.  One must not lose sight of the evidence of Chin that legal advice had been sought on 5 January 2013 from the solicitor whose advice was that the plaintiffs had to perform the contract and this is why Chin had tried to hand over the keys of the Premises to the defendant on 9 January 2013.  Given the solicitor’s advice, it would not be surprising that the conversation on 3 January 2013 was not mentioned in the letter even if Chin had told the solicitor so.  I do not consider this as something to shed any doubt on Chin’s evidence.

42.  On the contrary, I find the evidence of Carmen and Yu unbelievable.  If Carmen had not told Chin that the defendant had decided not to rent the Premises, it would be absurd for Chin to take the keys back when Carmen also confirmed that Chin had never mentioned would not rent the Premises to the defendant even if they refused to accept the 3 additional terms.  And in the letter sent to the plaintiffs by the defendant dated 10 January 2013 (B/496), Yu had never mentioned about anything said by Chin that the plaintiffs would not rent the Premises to the defendant but just relied on the subsequent act of Chin in the afternoon on 3 January 2013 in support of a claim that the plaintiffs had been in breach of the T/A.  Why would Yu miss out such important conversation which showed the clear intention of the plaintiffs in not performing the T/A.  Since Carmen denied Chin had ever said would not rent the Premises to the defendant, it would be unlikely for Carmen to have said the same to Wong.  Yu’s evidence in this regard is inherently improbable.

43.  I find as a fact that Chin had never indicated to Carmen that the plaintiffs would not rent the Premises to the defendant and it was the defendant who had, through Carmen, told Chin that the defendant decided not to rent the Premises and asked for the refund of the deposit and the rent on 3 January 2013.  By such conduct, the defendant had indicated an intention not to perform with the T/A and this amounts to a breach of the T/A by way of renunciation on the part of the defendant.

Issue 7

44.  Upon learning that the defendant had indicated not to rent the Premises, Chin went to the Premises, changed the lock to the wooden door, removed the properties of the defendant left inside the Premises and also got back the set of keys of the Premises left with Carmen.

45.  Chin explained that this was because the defendant had already indicated not to rent the Premises and Carmen asked her to get back the keys, she was entitled to go back to the Premises.  As for the change of lock, Chin and Madam Wong’s evidence is that they found the lock of the wooden door mal-functioning so the husband of Madam Wong who went with them volunteered to change it for Chin.

46.  Given my findings above that no vacant possession had been handed over to the defendant and there was no rent free period applicable to the defendant, Chin’s entering the Premises and change of the lock cannot be considered a breach of the T/A. 

47.  Furthermore, given the findings that it was the defendant who had indicated the intention to repudiate the T/A by the verbal communication on 3 January 2013, Chin’s act of entering the Premises, changing the lock and return of the properties left inside the Premises by the defendant can be taken as an acceptance of the repudiation by Chin instead of a repudiation on the part of the plaintiffs.

48.  Mr Chong raised the issue that even if the communication from the defendant amounted to an anticipatory breach on the part of the defendant and thus entitling the plaintiffs’ forfeiture, Chin’s act of re-entry is still unlawful for non-compliance with the mandatory requirement under section 58(1) of the Conveyancing and Property Ordinance Cap. 219 (“s.58(1)”).  With respect to Mr Chong, I don’t think s.58(1) is applicable to the present case where this is a case of breach in non-performance of the T/A instead of a breach of any covenant or condition in a lease canvassed by s.58(1).  The intention of s.58(1) is for the landlord to allow the tenant an opportunity to remedy the breach before any forfeiture of lease can take place.  On an indication by the tenant not to perform the contract, the landlord is entitled to accept such repudiation as long as such was communicated to the tenant.  S.58(1) is irrelevant in this regard.

Issue 8

49.  Having found that it was the defendant who was in breach of the T/A, the plaintiffs are entitled to claim for damages.

50.  The plaintiffs’ share of the estate agent’s commission and stamp duty paid to Century 21 are damages suffered by the plaintiffs since these were wasted as a result of the defendant’s breach.  The plaintiffs’ claim under these 2 heads are justified.

51.  As for the claim for loss of rent for 13 months (less the deposit and rent paid), the plaintiffs had failed to prove that these are damages caused by the defendant’s breach.  Chin said they didn’t dare to rent out the Premises again after this dealing with the defendant worrying similar things happened again.  And then the plaintiffs had on their own choice elected not to rent out the Premises and allowed a friend’s daughter to live there rent free till after 13 months.  So the loss of rental income for all these months was not caused by the defendant’s breach but by the plaintiffs’ own worry and then their decision to let the friend’s daughter to use the same without the need of paying rent.  Given the fact that the friend’s daughter is prepared to pay the rent after the 13 months’ time, I see no reason why the plaintiffs cannot ask her to pay the rent ever since her occupation of the Premises.  The plaintiffs failed to mitigate their loss as far as rental income is concerned.

52.  Under such circumstances, the plaintiffs should only be entitled to damages in the sum of $7,952.50.

53.  As for the counter-claim by the defendant, since the defendant was the one in breach of the T/A, it should not be entitled to ask for damages except for the refund of the deposit and 1 month rent paid in advance after setting off the damages awarded to the plaintiffs.

Declaration

54.  At trial, the plaintiffs still asked for a declaration that the PTA and the T/A are repudiated and terminated.  A well-established reason for a court to refuse to grant declaratory relief is a situation where the exercise does not serve any useful purpose. The principle is summarized in Zamir & Woolf, The Declaratory Judgment, 2nd ed., at Para.4.087,

“If it can be shown that a declaration would not serve any practical purpose, this will weigh heavily in the scales against the grant of declaratory relief. If, on the other hand the grant of declaratory relief will be likely to achieve a useful objective, the court will be favourably disposed to granting relief. The question of whether or not any useful purpose would be served by granting declaratory relief is therefore of prime importance in determining how discretion should be exercised.”

55.  In the present case, this Court fail to see what useful purpose can be served to grant the declaration sought by the plaintiffs at this stage.  I shall exercise the discretion against the granting of the declaration sought.

Costs

56.  Cost should follow the event.  Given the fact that the plaintiffs are successful in most of the issues but for the amount of damages awarded and the defendant technically had been successful in its claim for the money paid, the plaintiffs should only be entitled to 50% of their costs.

57.  Costs order nisi that the defendant do pay the plaintiffs 50% of the costs of the claim and the counter-claim, to be taxed if not agreed on a party-to-party basis, with certificate for counsel.  Unless any of the parties apply by summons to vary it, the costs order nisi shall be made absolute upon expiry of 14 days.

Order

58.  By reason of the above, this court do make the following orders:

(a) the defendant do pay the plaintiffs damages in the sum of $7,952.50 together with interest at 1% above the HSBC prime rate from the date of the writ until the date of judgment;

(b) the plaintiffs do pay the defendant $37,047.50 together with interest at 1% above the HSBC prime rate from the date of the writ until the date of judgment; and

(c) Costs order nisi that the defendant do pay the plaintiffs 50% of the costs of the claim and the counter-claim, to be taxed if not agreed on a party-to-party basis, with certificate for counsel.  Unless any of the parties apply by summons to vary it, the costs order nisi shall be made absolute upon expiry of 14 days.