CREST BEST LTD v. CHEUNG CHIU CHUN

HCA 1504/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1504 OF 2004

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JUDGEMENT

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1.  The plaintiff, (Crest Best), sues the defendant, (Ms Cheung), for possession of certain land in the New Territories, and arrears of rent, and mesne profits.  On 27 September 2004, the Master made an order pursuant to Order 14, giving Crest Best judgement on the claim for possession, and ordered Ms Cheung to pay a sum of $101,998 being part of the claim, and finally, ordering that the balance of the claim be adjourned for assessment. 

2.  There is now no issue as to possession.  Ms Cheung purported to give possession to Crest Best on 15 October 2004, by delivering to their solicitors the key of the property, and inviting Crest Best to take up responsibility for sub-tenancies granted by her.  Crest Best, as they were entitled, declined to take up the sub-tenancies, and insisted upon vacant possession.  It is common ground that that was achieved by the bailiff on 28 January 2005.

3.  Crest Best now appeals the decision of the Master asserting that they are entitled to judgement for both arrears of rent and for mesne profits, and that the Master was wrong to adjourn the balance of the claim for assessment.  Ms Cheung asserts that the only sum for which she is liable is the rental sum admitted by her before the Master, and for which judgement was entered.

4.  Two schedules have been put before me, each purporting to assert the position in respect of arrears of rent.  The schedule prepared by Crest Best covers the entire period of the tenancy from August 1996, to April 2003.  It sets out not only the amount of rent due each month, but the amounts received on each month, and the precise dates on which they were received.  It also records when payments were made by cheques which were dishonoured, and subsequently honoured.  The schedule prepared by Ms Cheung on the other hand, begins in March 2003, and proceeds on the wrong assumption that at that time there were no arrears. 

5.  It is clear that in Order 14 proceedings the onus is on Ms Cheung to put before me evidence establishing at least an arguable case that the schedule prepared by Crest Best contains errors.  Ms Cheung has put no evidence before me to suggest that there is any error in that schedule.  I am satisfied that, as at 30 April 2003, there were arrears of rent in the sum of $4,856 then owing.  That sum had arisen because from time to time Ms Cheung had not paid the rent in one lump sum but by various sums on various dates during a particular month, the result being a small amount of arrears.

6.  It is common ground that during the course of the tenancy and rental deposit had been paid in the sum of $102,000.  Ms Cheung in affidavits filed, when she was represented by solicitors, acknowledges that that sum is available to be credited by Crest Best against any arrears of rent.  In its schedule of rental payments Crest Best acknowledges that in July 2001, it deducted a sum of $12,000, which was applied to arrears of rent then outstanding.  Crest Best acknowledges that at the end of the day it must give a credit for the balance of the deposit of $90,000.  Crest Best further acknowledges a further sum of $2 was paid for which credit must be given.

7.  There can be no argument as to the amount of the mesne profits.  The period is 1 May 2003, to 28 January 2005, at a rate of $30,000 per month, 20 ²⁸/₃₁ months, a total sum of $627,096.77.

8.  Because the schedule prepared by Ms Cheung fails to reflect the state of arrears as at March 2003, and purports to credit all payments made after that date to current rental, and fails to recognise that mesne profits were due to 28 January 2005, it fails to accurately reflect the extent of arrears due.

9.  Further, Ms Cheung’s argument proceeds on the basis that possession of the property was delivered to Crest Best on 15 October 2004, and that her liability for rent ceased on that day.  That is a wrong basis.  Not only is it demonstrably wrong in law, as vacant possession was not given, Ms Cheung herself acknowledges, in an affidavit made on 9 November 2004, that if Crest Best did not step into her shoes and take over the sub-tenancies, she must pay rental until vacant possession was delivered.

10.  The next argument mounted by Ms Cheung was that she had paid an additional $10,000 by way of rental deposit because of a rent rise.  There was simply no evidence at all to substantiate that assertion.

11.  Ms Cheung’s final argument was that from time to time she made rental payments in cash and that no receipt was issued to her.  Other than making such an assertion there was no evidence to substantiate such payments.  If a tenant chooses to make rental payments in cash and does not get a receipt, then the tenant must take the consequence that they may subsequently be unable to establish that the rental payment was made.  In the present case the meticulous record-keeping by Crest Best, unchallenged by Ms Cheung, going to the extent of recording rental payments of $131 on 22 April 2002, $200 on 18 September 2002, $163 on 18 December 2002, $83 on 17 April 2003, and $21 on 19 May 2003, all indicate that any rental payment made by Ms Cheung was properly recorded.

12.  The law in Order 14 proceedings is clear.  The obligation is on Ms Cheung to establish that there is a believable or arguable defence.  In the circumstances none of the matters raised by Ms Cheung provide a believable or arguable defence to Crest Best’s claimed.

13.  There will be judgement for Crest Best against Ms Cheung in the sum of $541,950.77.  That sum is made up as follows:

Arrears At 30 April 2003	4,856.00
Mesne Profits	627,096.77
Sub total	631,952.77
Less Rental Deposit	90,000.00
Less overpayment	2.00
Balance due	541,950.77

14.  Crest Best, in the writ, sought interest and costs.  Ms Cheung must pay interest on the amount of the judgement, at judgement rate, from the date of vacant possession, that is 28 January 2005, to the date of payment.  Crest Best is entitled to its costs on a party and party basis, to be taxed if not agreed.