CHAN YUEN LING v. SUMIT KUMAR

LDPD 1219/2019

[2019] HKLdT 47

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO. LDPD 1219 OF 2019

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REASONS FOR JUDGMENT

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1.  This is an application for recovery of possession of 2/F, No 80E, Pak Shek Terrace, Sai Kung (ie Lot 80 Section E in DD 253), New Territories (“the Premises”) which includes one parking space.

2.  At the conclusion of the hearing on 5 August 2019, I ordered (1) the respondent do deliver vacant possession of the Premises to the applicant; (2) the respondent do pay the applicant arrears of rent/mesne profits at the rate of $15,000 per month from 1 July 2019 until delivery up of vacant possession; and (3) the respondent do pay the applicant the costs of this application which is summarily assessed at $365, with reasons to be handed down in writing.  I now do so.

Background

3.  By a tenancy agreement dated 13 February 2018, the applicant as the landlord let to the respondent as the tenant the Premises for a term of 2 years from 1 March 2018 to 29 February 2020 at a monthly rent of $15,000 (“the Tenancy”).  The Tenancy is subject to a break clause exercisable by either party serving not less than 1 month’s written notice after the expiry of the 12^th month of the term of the Tenancy.

4.  In the Notice of Application filed to the Tribunal on 8 July 2019, the applicant applied for recovery of possession of the Premises and the arrears of rent as the respondent has failed to pay rent from 1 July 2019, and applied for order for mesne profits to the date of delivery of vacant possession of the Premises and costs. 

5.  The Notice of Application also states that the applicant had issued a termination notice to the respondentwhich is evidenced by the WhatsApp record supplied by the applicant who sent a notice of termination to the respondent on 22 April 2019 requiring the latter to deliver vacant possession of the Premises on 31 May 2019.

6.  It appears on the WhatsApp record that the applicant would like to increase the monthly rental from $15,000 to $18,000 and the respondent challenged the increase was too much.

The Opposition

7.  The respondent filed a Notice of Opposition on 17 July 2019 giving the following grounds:

“I am in dispute with the landlord over Breach of Contract, claiming damages & restitution.

1. I was misinformed and handed illegal and fragile structure on roof putting residents’ life at risk.

2. The illegal fragile structure fell apart and the rented premises has 2 rooms less since Sep 16, 2018 same as this fell on my adjoining neighbours’ case.

3. The event exposed the whole/most of premises to the inclement weather destroying my property comprising furniture, computers and other electrical goods and flooding the premises.

4.  Legal representative advised to remain in property until resolution is achieved.”

8.  At the hearing on 5 August 2019, the respondent elaborated his repairs / safety concerns as follows:

(i)  His dispute with the applicant arose from the serious typhoon last September, destroying the two rooms on the roof[1] which are found to be illegal.

(ii)  Because of this loss of two rooms, the applicant should reduce the monthly rental payable.

(iii)  The applicant should be responsible for damages because these two rooms were illegal.

(iv)  The applicant or the estate agent also failed to disclose at the time of letting that there were illegal structures on the roof.

(v)  As a result, the Tenancy is illegal and he should be relieved from any liability.

Relevant Clauses in Tenancy Agreement

9.  The respondent also refers to the Tenancy by clause 9 of which the applicant shall keep and maintain the structural parts of the Premises including the main drains, pipes and cables in proper state of repair.

10.  The respondent also states that clause 4 of the Tenancy requires him (as tenant) to comply with all ordinance, regulations and rules of Hong Kong but the applicant as landlord failed to comply the same by letting him the Premises with illegal structures.

Respondent’s Liability to Pay Rent

11.  Notwithstanding the above, in paragraphs 18-19 of Charmway Development Limited v Long China Engineering Limited, HCA 54/2001 (reported as [2001] 3 HKC 515) where Hon Chu J (as she then was) stated:

“18. Under the common law, the covenant to pay rent has been regarded as independent of the other covenants or obligations under a lease, including, for example, the covenant for quiet enjoyment: Edge v. Boileau and Others [1885] 16 QB 117, see also Taylor v. Webb [1937] 2 KB 283. A tenant’s obligation to pay rent is not independent upon the compliance by the landlord of its obligation under the lease.

19. There is therefore no room for the defence asserted by the plaintiff to the counterclaim, namely, it is not obliged to pay rent or the defendant is not entitled to rent by reason of the alleged breaches of the Tenancy Agreement on the defendant’s part.”

12.  While the respondent said he understood the above, he submitted that what he alleged were serious breaches by the

13.  I disagreed as there is no reported case where a lease has been ruled to have been rendered void for similar breaches but there are cases in which such argument has been raised unsuccessfully[2]. The general rule is that a party is stuck with its bargain. No matter how unreasonable it might be to carry on abiding by the terms of the contract which the parties have made in face of a change in circumstances, once a contract is made, the parties to it are expected to comply until and unless it is terminated in accordance with its terms. A lease would not be frustrated simply because it becomes more difficult for the tenant to occupy. In any event, I considered the doctrine of frustration could not apply in the captioned case because the respondent and his family still reside at the Premises.

14.  Indeed, at common law, there is no implied covenant against illegal or immoral user, so that an express covenant is needed. More importantly, the letting of Premises which are, or include, an ‘illegal structure’ is not illegal, for the structure is merely the consequence of building work that is unauthorised by the Building Authority. Illegality arises not from the use of the premises or the illegal structure.[3]

15.  Returning to paragraph 17 of the Charmway Development case which states that:

“… The Tenancy Agreement only provides in clause 4.10 for suspension of rent in the event of the Building being destroyed or rendered inaccessible by reason of such events as fire, defective construction or cause or calamity beyond the control of the landlord...”

there exists in the Tenancy no such clause as clause 4.10 in the Charmway Development case. Unfortunately, under common law, there is no implied warranty on the part of a landlord that the premises let are in a reasonably fit state for habitation, or that it may be lawfully used for the purpose for which it was let. See Edler v Auerbach [1950] 1 KB 359 and Fortune Global Development Ltd v Shung Cheong Food Trading Ltd, HCA 1786 of 1999 (unreported, dated 18 March 2002). Such clause on abatement or suspension of rental, if any, must be expressly stated in the tenancy agreement before it can be applicable. The intending tenant is presumed to have made his own inquiries as to its condition on or before he signs a tenancy agreement, and, in the absence of a special stipulation, he takes the premises as its stands. This is so even when the premises demised were, to the landlord’s knowledge, required for immediate occupation. If the premises are, in fact, uninhabitable, then after accepting the tenancy, the tenant is without remedy unless he has obtained a warranty of fitness. The mere omission of the landlord to disclose defects, if any, is not a warranty or misrepresentation.[4] Fraud apart, there is no law against letting a tumble-down house[5]. 'A tenant takes the demised premises subject to any defects existing in them at the time of the letting'.

16.  In the absence of express stipulation, or of an obligation imposed by statute, the landlord is generally under no liability towards the tenant to put the demised premises into repair at the commencement of the tenancy, or to do repairs during the continuance of the tenancy. The fact that the tenant has covenanted to repair, fair wear and tear excepted, or damage by fire and tempest excepted, does not imply a covenant by the landlord to make such fair wear and tear or damage good.  In this regard, I also note that by clause 10 of the Tenancy, the respondent as “Tenant shall himself/herself cover insurance for his/her belongings against Typhoon, Depression, Storm, Floor, Fire, Theft and Accidents in relation to the Tenancy. The Landlord shall not be responsible for any damage or loss under all circumstances”.

17.  Notwithstanding the above, this judgment is not supposed to prevent the respondent from commencing any action for damages if he still considers appropriate after taking legal advice but this would be considered as a counterclaim.

18.  In 黃英對譚炳新, HCMP 2049/2000 (unreported, dated 1 August 2000) and Chan Yin Kwan v Wong Kam Hoi, CACV 223/2007 (reported as [2008] 1 HKCLRT 27) and Ngai Ngok Pang & Another v Lee Syn Yuk, Michelle, LDPD 3030/2012 (unreported, dated 10 May 2013), the courts ruled that the Lands Tribunal does not have jurisdiction to entertain any counterclaim by the respondents.

19.  More particularly, in Ngai Ngok Pang& Another v Lee Syn Yuk, Michelle, supra, His Honour Judge Ko was of the following view:

“15. The Lands Tribunal may only, in an application for possession or ejectment, make an order for the payment of damages in respect of breach of a condition of the tenancy (see section 8(8) of the Lands Tribunal Ordinance, Cap 17). A counterclaim is generally treated as an independent action (see Hong Kong Civil Procedure 2013, paragraph 15/2/4). Since the respondent is not also counterclaiming for possession or ejection, the Lands Tribunal does not have jurisdiction to entertain her claim for damages.”

20.  Even when section 8 of the Lands Tribunal Ordinance was amended in 2008 to award damages solely, as well as in addition to rent and mesne profits, it was explained to the Legislative Council that the amendment did not seek to empower the Lands Tribunal to award damages that may go beyond its jurisdictional limit on the types of cases it can entertain. [6]

21.  Returning to Chan Yin Kwan v Wong Kam Hoi, supra, at §36:

“Regarding the Respondent’s counterclaim in DCCJ 809/2004, he is claiming for damages arising from the alleged breach of the tenancy agreement by the Applicant. If the counterclaim succeeds, the Applicant is of course liable to pay compensation, but it does not mean that the Respondent can continue to reside in or occupy the Property without having to pay any rent or outgoings. Therefore, in relation to the Applicant’s action for recovery of rent in arrears and repossession of the Property, the Respondent has failed to raise a defence recognized by the law. For this reason, on 8 June 2007, having dismissed the Respondent’s interlocutory application, the Lands Tribunal should have proceeded with the trial of the Applicant’s application as scheduled.”

22.  This is what I did on 5 August 2019.

Costs

23.  The general rule is that costs should follow the event and the applicant seeks costs. Accordingly, I order that the respondent should pay the applicant the costs of this Application which is summarily assessed at $365.