HOM MEE YIN AND ANOTHER v. MR WARREN CHEUNG VEI LUN

DCCJ2788/2003

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2788 OF 2003

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J U D G M E N T

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1. This is a claim for possession, arrears of rent and mesne profits by the Plaintiffs, who are the owners and landlords of Flat A, 5/F, Victoria Park Mansions, 15 Kingston Street, Causeway Bay ("the premises") which were let to the Defendant under a Tenancy Agreement dated 16 August 1999 for a term of 2 years from 6 September 1999 to 5 September 2001 at a monthly rent of $20,000.

2. On the expiry of that tenancy, the Defendant applied to the Lands Tribunal for a new tenancy on the terms of the original agreement. The only issue then was the rent. The Plaintiffs wished to maintain the existing rent and the Defendant had sought to argue for a lesser amount. It is not absolutely clear what he was inviting the Tribunal to do on the amount of the rent, but judging from his Notice of Appeal and a supplementary Notice of Appeal against the Tribunal's award, it would appear that he was looking for a reduction to something like $15,000 or $16,000.

3. On 13 September 2001, the Tribunal fixed the rent at $17,200. On 21 November 2001, the Defendant filed a Notice of Appeal against the Tribunal's judgment which he has taken no steps to prosecute.

4. The Amended Statement of Claim, which is dated 17 May this year, claims possession based on the Defendant's failure to pay rent since 6 November 2002, together with rates and management fees. This comes to a total of $134,401.06. Thereafter, there is a claim for rent and/or mesne profits; the current rent of $17,200, together with rates of $779 a month, and management fees of $900, from 6 June 2003 and 1 June 2003 respectively, until the giving up of possession.

5. There is also a claim for damages for the Plaintiffs' costs incurred in distraint proceedings, to which I must make further reference. There is also a claim for damages in respect of monthly rental income for the unexpired term of the Tenancy Agreement, the costs incurred in reinstating the premises, and any outstanding utility charges.

6. Against that, the Defendant has pleaded an extensive amended-Defence and Counterclaim dated 12 June which, whilst not denying these arrears, seeks to set off a counterclaim which raises a number of matters which I will be required to consider in a little detail in due course.

7. These pleadings have produced three summons' which I am required to decide. The first in time, dated 13 June, is the Plaintiffs' summons under Order 14 to enter judgment in terms of the prayer of the amended-Statement of Claim principally for an order of possession and a money judgment for the arrears of rent, rates and management charges, together with payment of mesne profits. The rest of the prayer for damages would need to be adjourned so that these might be assessed. The next summons, in time, is that of the Defendant dated 4 July to enter judgment, on the counterclaim, in default of a defence to the counterclaim, presumably with damages to be assessed. Lastly, there is the Plaintiffs' summons taken out the following day - that is to say on 5 July - to strike out the Defence and Counterclaim on the basis of all four grounds which appear in Order 18 Rule 19 of the Rules of the District Court.

8. Whilst each of these summons' must, of course, receive separate consideration, a number of the issues that I need to consider are common to all three of them. The Plaintiffs' summons under Order 14 will have the most far-reaching consequences, especially if the Plaintiffs are successful on all of the aspects of their case, for which they seek immediate orders, as opposed to an order for judgment with damages to be assessed. It is, in any event, the first summons in time, and I will therefore take it first.

9. As I have indicated, the defence takes no issue on the fact of the arrears which now, with accumulating mesne profits following the expiry of the tenancy on 5 September, amount to $223,600, excluding management fees and rates. This being the case, it becomes necessary to consider the merits of the amended-Defence and Counterclaim. It divides itself into three. Firstly, and most importantly, it questions the validity of a distress warrant dated 13 December 2002, [Distraint Case No. 906/2003], at page 130 of the bundle. The distress warrant seeks to levy execution in the sum of $70,506, which relates to 4 months' arrears of rent from 6 October 2002 to 5 February 2003 and for 2 months' arrears of rates from 6 October 2002 to 5 December 2002.

10. The Defendant's points on this appear at paragraphs 15 to 18 of his pleading, pages 44 to 46 of the bundle. I take these separately. The first is that the warrant was bad on its face because it referred to, inter alia, rent for the period 6 October 2002 to 5 November 2002, which the Defendant had in fact paid, on 24 April 2003, before the warrant had been executed.

11. Mr Kwan, who appears for the Plaintiffs, accepts that this is so; but he submits that at the time when the warrant was applied for and issued by the court, the arrears were as stated in the affirmation in support of the application for the warrant to be issued (see Mr Wong Chan-tong's affirmation at pages 131 and 132). Once the Defendant paid the arrears of the rent for the 6 October to 5 November, the Plaintiffs' solicitors wrote to the bailiffs on 25 March 2003, making plain that this part of the arrears had been paid and that they were seeking to have execution levied for the lesser sum of $52,453 (see page 136). Apart from bringing the position of the arrears up to date, the Plaintiffs were also ensuring that they would be paying the bailiffs a smaller commission, having regard to the smaller sum on which execution was being sought.

12. This being the case, I am in no doubt that this part of the Defendant's submission must fail. The warrant of distress was a perfectly good one when it was issued. The application for the warrant was supported by an accurate and truthful affirmation. The position was subsequently brought up to date by the letter of 25 March.

13. This is an important finding, because part of the Defendant's case is that by virtue of entry having been made on the basis of an invalid warrant, the Plaintiffs would have been guilty of a serious act of trespass giving rise to a claim for damages.

14. I am satisfied that once execution was levied, it was done perfectly lawfully, with the consequence that this part of the Defence and Counterclaim must fail.

15. The defence then raises further, more general matters concerning these distraint proceedings which are said to give rise to claims for damages which the Defendant now seeks to limit to $150,000. I can summarise these points briefly. The detail appears in the Counterclaim at pages 44 and 45 of the bundle. The Defendant pleads, and this is also supported by his affidavit of 17 July 2003 which provides the evidence to support the pleading, starting at page 121, that he had engaged in negotiations with the Plaintiffs' agent, Mr Lui, offering to pay the arrears by instalments provided the warrant of distress was withdrawn. These proposals apparently did not appeal to Mr Lui, the Defendant having been a bad payer in the past, when another distraint warrant had to be issued which resulted in those arrears being paid.

16. For my part, I can discover nothing in Mr Lui's refusal to accept the Defendant's offer to pay the arrears by instalments as giving rise to a claim for damages. Mr Lui was merely exercising the Plaintiffs' right to proceed with the distraint warrant which had been validly obtained.

17. The next point taken is that distress had been levied not for the authentic purpose of enabling the landlord to obtain what was due and owing to him, but with the avowed and improper purpose of harassing the Defendant. The Defendant starts with his letter to the Plaintiffs dated 7 November 2002, in which he made clear that distress proceedings would serve no useful purpose because there were no goods there which would produce any meaningful amount of money. Knowing this, the Plaintiffs still proceeded, with the result that the whole exercise produced a little over $1,000. This, says the Defendant, serves to show that the Plaintiffs have acted maliciously.

18. I disagree. The Plaintiffs were perfectly entitled to see what they could get from the bailiffs' auction. Distress is, after all, one of a range of remedies at the disposal of a landlord to be used, singly or in combination, to secure payment of arrears of rent. The Defendant has complained that the bailiffs levied on items which they should have left alone, like the Defendant's law books that are the tools of his trade. He is a qualified solicitor; but not currently, nor then, practising. The bailiffs also removed a gas water heater which in fact belonged to the Plaintiffs' themselves. They stripped the place bare for no meaningful return. They stigmatised the Defendant as a debtor by stationing a security guard.

19. Nevertheless, no matter how much sympathy one might have for the Defendant, who, in common with so many people, has been adversely affected by the economic downturn, I can see nothing in his evidence which could give rise to any claim for damages based on the motive or the manner of the distress.

20. The Defendant went before a judge on 30 April to set aside the warrant or at least to obtain a stay of its execution on the basis of, inter alia, the grounds that I have just described. The Judge refused his application, and the auction proceeded on 2 May. The Defendant has made several complaints about the judge's conduct of the hearing, which can be summarised as "discourteous and summary in the extreme". He says he did not get a fair hearing, but this is not something that I can or am prepared to comment about.

21. Mr Kwan has submitted that all these points as to the validity of the distress warrant and the proceedings under the warrant are res judicata; the Defendant cannot now take these again before me. The only course available to him is to appeal the judge's refusal to set the warrant aside.

22. I have dealt with these points on their merits and dismissed them. As to whether these are res judicata; the Defendant says that a ruling by a judge in an interlocutory procedural hearing cannot give rise to a finding that will subsequently be considered res judicata. He relies on Pocklington Foods Incorporated v Alberta Provincial Treasurer [1995] 123 DLR (4th) 141 as applied in Hong Kong by the Court of Appeal in Chu v Chan [2001] HKC 396.

23. In my judgment, the judge, on a proper analysis, was not involved in an interlocutory procedural hearing. This was a substantive hearing in the distraint action where he was confronted with the issue of the validity of the writ. Although he gave no reasoned judgment, it is implicit in his dismissal of the Defendant's application to set aside the warrant that he had held the warrant to be valid and that execution under it had been lawful. Accordingly, the point cannot now be taken before me but only on appeal from the judge's refusal to set the warrant aside.

24. If I am wrong about that, then I have already given reasons of my own as to why the warrant and the execution was valid. The Defendant has also complained that he was subjected to "triad-like tactics" by the successful bidder at the bailiffs' auction, who tried to persuade him to rent from him what had been, before the auction, the Defendant's furniture. I cannot see, once the distress has been held to be lawful, how this "offer" can be the subject of a legitimate complaint against the Plaintiffs.

25. This therefore disposes of all the points raised on the warrant of distress. I find against the Defendant on all of these matters.

26. As to the non-payment of the management fees, the Defendant says that this was justified because on a number of days each month, the flushing water supply to the toilet was suspended by the management company not only in respect of his own flat but in respect of the whole block where the flat was situated. This is apt to happen, from time to time, in any well-managed building. I cannot see how this can be a valid reason for non-payment of management charges, which are, in any event, paid for a wide range of services. I am against the Defendant on this issue as well.

27. The final subject matter of complaint said to give rise to a set-off as a claim for damages is the nuisance caused by the occupants of the flat immediately above the Defendant's, who are said to have engaged in thoroughly uncivilised behaviour by throwing refuse, including human and animal excrement, from their windows down onto the top of the Defendant's air-conditioners, thereby causing an awful smell. Mr Kwan submits that this conduct, even if true (it is not accepted by the Plaintiffs) cannot be laid at their door. These are acts by third parties for whom the Plaintiffs are not responsible. The Defendant says that he has made repeated complaints to the management company's employees. Once he did that, the Plaintiffs should have learnt of it, and it was their duty to see to it, by court proceedings if necessary, that this behaviour stopped. He says that these activities affected the "attributes of the building" for which the Plaintiffs, as landlords, bear a responsibility and obligation to their tenant.

28. Quite apart from the obvious evidential contest as to whether the occupants of the flat above have done the things that the Defendant complains of, or whether the Defendant made the reports, that he claims to have made, to the caretakers, which I cannot resolve on affidavit evidence, it does seem to me that as a matter of law, these would be acts of third parties for which the Plaintiffs cannot be held responsible. The tenant must take his own course and obtain such remedies as he wishes by going against those persons himself. So much is clear from the passages in Meggary v Wade, pages 676 and 677, to which Mr Kwan has made reference.

29. In view of all of these findings, I am satisfied that the Defendant has not shown any triable issues. Accordingly, there must be judgment to the Plaintiffs in the following way:

The lease will be forfeited.

An order of possession will now go to secure the Defendant's removal from the premises.

There will be judgment in the total amount of the claim to date, being $223,600.

The Defendant will secure relief from forfeiture by paying the amount of the money judgment, together with the current rent.

30. As to the other claims for damages, it seems to me that these must remain unsatisfied by any judgment from me today. The claims for dilapidations and unpaid utilities have simply not been proved. They are, in fact, premature. As to the claim for the loss of rental income, I will leave it to the Plaintiffs to pursue this at trial if they are so advised. This has simply not been proved as a matter of evidence at this stage, where the Plaintiffs' real remedy must be through arrears of rent, and subsequently for mesne profits.

31. This then brings me to the Plaintiffs' summons to strike out the Defendant's counterclaim. It seems to me that the effect of the orders now sought have been disposed of by virtue of my orders in the Order 14 summons. The Defence and Counterclaim have been shown to be devoid of merit as a matter of the evidence led in support of the pleading and the points of law which have been taken against the Defendant's case and which I have upheld. It seems to me that once judgment has been entered, as it has, then this summons becomes otiose. I propose to make no order on it.

32. As to the Defendant's summons to enter judgment in default of defence to the counterclaim, this, having regard to the outcome of the Order 14 summons, must stand dismissed.