LAU CHI LUN JIMMY v. JACOBSEN, WILLIAM KEITH AND ANOTHER

DCCJ1609/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1609 OF 2012

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JUDGMENT

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1.  The plaintiff is and was at all material times the registered owner of the premises known as Flat C3 on 8^th Floor, Flora Garden, No 50 Cloud View Road and Carparking Flora Garden No C18, Hong Kong (“the Premises”). By a tenancy agreement (the “Tenancy Agreement”) dated 21.1.2012 made between the plaintiff as the landlord of the one part and the defendants as the tenant of the other part, it is agreed that the plaintiff shall let and the defendants shall take the Premises for a term from 1.2.2012 to 31.1.2014 at the rent of HK$19,000 per month. It is stipulated in Clause 7 of the Tenancy Agreement that the defendants shall pay to the plaintiff a security deposit in the sum of HK$38,000 for the due observance and performance of the terms and conditions therein contained and on their part to be observed and performed and that if the defendants shall commit a breach of any of the terms and conditions therein contained, the Tenancy Agreement shall absolutely determine and the security deposit paid under this clause shall be absolutely forfeited to the plaintiff.

2.  On 21.1.2012 the defendants delivered to the plaintiff a cheque dated 21.6.2012 in the sum of $38,000, being payment of the security deposit.  On or about 27.1.2012, the said cheque was dishonoured upon presentation for payment.

3.  The defendants failed to take the Premises on 22.1.2012, as they did not collect the keys to the Premises from the property agent.

4.  On 2.2.2012, the plaintiff’s solicitors sent a letter to the defendants, stating that they had breached Clause 7 of the Tenancy Agreement as they had failed to deposit $38,000 on or before 1.2.2012.  In reply by a letter dated 15.2.2012 the defendants alleged that:-

“The Tenancy Agreement was null and void or voidable as we have indicated clearly through our agents that we will not take up any tenancy where renovation is contemplated. It came to our knowledge that the subject property will undergo renovation during Ms Tam’s inspection of the property on 21^st January and the keys were accordingly returned on 22nd January to the landlord’s agent. This is a material non-disclosure or misrepresentation on the Landlord’s part.”

5.  On 22.2.2012, the plaintiff’s solicitors wrote back to the defendants, stating:-

‘…… On client is at a total loss why you have averred “This is a material non-disclosure or misrepresentation on the landlord’s part.” …… please …… clarify how did our client misrepresent the matter with particulars and how did our client conceal any material when you signed the tenancy agreement.’

There is no response from the defendants to this letter. 

6.  In her witness statement, the 2^nd defendant stated that on or about 15.1.2012, she and property agent Lau Yan Yan (“Lau”) and property agent Mr Hui Man Tik (“Hui”) inspected the Premises.  Lau confirmed to Hui and the landlord (“the plaintiff”) that the Estate where the Premises was located would not undergo any repair work of the external walls.  She deeply believed that Lau’s representation comply with her request made to Lau.  So on 16.1.2011 she signed a Preliminary Tenancy Agreement and made a cash deposit in the sum of $19,000.  After negotiation for 1 day between Lau and Hui, the plaintiff signed the Tenancy Agreement and received deposits for another two months.  On 21.1.2012, her friend (a Mr Kwok) found in the lift of the Estate a newly posted up notice to the effect that in April or May, there would be repair work to be done to the external walls of the Estate.  On that night she told Lau that she would not move in to the Premises.

7.  According to her witness statement, it is clear that the plaintiff did not make any representation to the defendants to the effect that the external walls of the Estate would not undergo repair work to the external walls of the Estate. It is Lau who made the representation to the plaintiff, and Lau is not the property agent of the plaintiff.

8.  The notice was dated 16.1.2012.  The Preliminary Tenancy Agreement was signed on 17.1.2012.  The plaintiff did not meet the defendants at the time the Preliminary Tenancy Agreement was signed.  He had moved out of the Premises and resided at Lautau Island since the middle of 2011.  There is no evidence to show that he had had knowledge of the existence of the notice before the Preliminary Tenancy Agreement was signed.  The defendants’ allegation that there is a material non-disclosure or misrepresentation on the plaintiff’s part is simply not supported by any evidence.  Accordingly their defence in this regard cannot stand.  Furthermore Clause 20 of the Preliminary Tenancy Agreement provides “This Agreement supersedes all prior negotiations, representation, understanding and agreements of the parties hereto.”  Even if there had been representations in this rregard made by the plaintiff to the defendants, such representations would have been superseded by the Preliminary Tenancy Agreement. 

9.  In any event, there are two additional terms written in Chinese (not being related to repair work to the external walls of the Estate) under clause 19 of the Preliminary Tenancy Agreement.  If the defendants had intended that the Preliminary Tenancy Agreement was to include a clause relating to the effect of any repair work to be done to the external walls of the Estate, they should have included such a clause under Clause 19.  But that was not done. 

10.  The defendants were in breach of Clause 7 of the Tenancy Agreement. Therefore enter judgment in favour of the plaintiff for damages and losses occasioned by the breach of the Tenancy Agreement on the part of the defendants.

Mitigation of loss

11.  As soon as the plaintiff came to know that the defendants did not intend to fulfil the terms of the Tenancy Agreement, he entrusted Centaline to look for new tenants for the Premises.  He also entrusted in the middle of February three other property agents to do the same.  He did not fix the amount of rents to be received by him for the Premises; it is to be decided by the property agents, and after fixing the amount, they asked him if he agreed to the amount so fixed.  I accept the plaintiff’s evidence.  He entrusted property agents to book for tenants as soon as possible.  The defendants have not adduced evidence to show that he failed to mitigate the loss. On 1.6.2012, the new tenant commence to pay rent.  Therefore he lost 4 months’ rental in the sum of $76,000 ($19,000 x 4).  After deducting one month’s rental deposit, the net loss is $57,000.

12.  The plaintiff paid a stamp duty of $1,140 on the Tenancy Agreement with the defendants.  He paid a stamp duty of $1,140 on the Tenancy Agreement with the new tenant.  Because of the breach of the Tenancy Agreement on the part of the defendants, he had to pay an extra stamp duty of $1,140.  Because the defendants did not pay the stamp duty due for the Tenancy Agreement, the plaintiff had to pay a fine of $500, for the late payment of the stamp duty.

13.  The plaintiff has to pay commission to Centaline in the sum of $9,500, being commission for the renting out of the Premises.  He has not received any demand from Centaline for this sum yet.

14.  I order that the defendants do pay, within 14 days from today, the sum of $58,640 ($57,000 + $1,140 + $500) with interest thereon, commencing from 16.5.2012 until satisfaction, at judgment rate.

15.  I also order that the defendants do indemnify the plaintiff in the sum of $9,500 upon demand by Centaline for payment of the commission for the renting out of the Premises to Centaline.

Costs

16.  I make an order nisi, to be made absolute in 14 days’ time, that the defendants do pay costs of these proceedings to the plaintiff, to be taxed, if not agreed, with no certificate for counsel.