趙宜美 v. OSIPOV DMITRY

DCCJ 167/2020

[2023] HKDC 668

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 167 OF 2020

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BETWEEN

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JUDGMENT

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1.  This is a relatively straightforward claim by the plaintiff landlady against the ex-tenant for breach of a tenancy agreement.

2.  The parties have been acting in person, save the plaintiff was once legally represented for a brief period between 12 August 2020 to 2 February 2021.

3.  Though the defendant has filed his Defence and the witness statements of himself and his wife, he has not attended the Pre-trial Review or the trial. A female friend of his appeared at trial and informed the court that the defendant currently was in Russia and she on his behalf applied for an adjournment of the trial. That was refused with brief reasons given orally. The court then proceeded with the trial in the defendant’s absence as the defendant clearly had full notice of the trial dates some time ago.

4.  At trial, I allowed the plaintiff’s application to adduce print-outs of the WhatsApp messages exchanged between her and the defendant from 17 March 2020 until 13 August 2020^[1], which are in fact the continuation of the WhatsApp messages exchanged between the parties up to late February 2020^[2] which have already produced. The new messages throw light on what transpired between March to August 2020 and are clearly relevant to issues relating to quantum.

5.  Having discussed with the plaintiff who indicated no objection, this court now writes this judgment in English rather than Chinese as it would be the language that better affords both parties similar access.

The facts

6.  From the documentary evidence before the court and based on the plaintiff’s evidence, which is unchallenged, I find for the facts stated in the following narrative, unless otherwise indicated.

7.  On 15 May 2018, the plaintiff and the defendant signed a tenancy agreement in standard form (“the TA”) by which the defendant would rent the flat known as Villa 2C, 2^nd Floor (including the flat roof), Block 33, Park Island, 8 Pak Lai Road, Ma Wan, New Territories (“the Flat”) for a fixed term of 3 years from 20 May 2018 to 19 May 2021 at the monthly rent of HK$38,000 payable in advance on the 20^th day of each calendar month^[3]. The TA contained the usual term that the defendant would keep the interior of the Flat in good and tenantable repair and condition, fair wear and tear and inherent defects excepted. The defendant paid the plaintiff a security deposit of HK$76,000.

8.  The saleable area of the Flat is over 1,200 square feet and the flat roof is about 300 square feet in area. The Flat can be described as a very nice apartment situated in a quiet and scenic neighbourhood in the island of Ma Wan.

9.  On 16 May 2019, the defendant’s daughter sent a WhatsApp message to the plaintiff’s son saying that the defendant and his wife planned to leave Hong Kong and asked the plaintiff to release the defendant from the TA and return the deposit upon the defendant finding for the plaintiff a replacement tenant. The plaintiff refused.

10.  Between May and early October 2019, the defendant from time to time informed the plaintiff that appliances in the Flat were not working and asked the plaintiff to replace them at her costs. The plaintiff, duly as requested, replaced the microwave oven, the washing machine and the refrigerator and repaired the air-conditioner.

11.  In mid-September 2019 and upon the defendant renewing his request to terminate the TA early, the plaintiff agreed to release the defendant only if he was able to find a replacement tenant through an estate agent and who would pay no less than the current monthly rent under the TA of HK$38,000 and who would rent the Flat at least up to the expiry of the TA (ie 19 May 2021).

12.  The defendant could not find such a replacement tenant.

13.  By a WhatsApp message sent on 17 October 2019, the defendant said that because of the prevailing turmoil in Hong Kong, they would leave Hong Kong on 21 October 2019 and asked for the return of half the deposit. The plaintiff refused and insisted on the performance of the TA and repeated her stance that she would release the defendant only if he found a replacement tenant as aforesaid. On 20 October 2019, the defendant requested to return the Flat to the plaintiff the next day, but again was refused by the plaintiff.

14.  From then until 18 March 2020, there were a lot of unfocused text messages exchanged between the parties consisting of discussions, disputes and sometimes mutual accusations. Regarding the communications in this period, firstly, I find that the plaintiff continued to maintain her stance as set out in paragraph 11 above. Secondly and in gist, what happened was that (a) the defendant moved out (though there were still some sundry items left in the Flat) sometime in late October 2019 and himself repainted some areas of the Flat and made some minor fixes to the Flat, (b) as discussed between the parties, the plaintiff gave her authorization to the estate agent(s) to find a replacement tenant, (c) the defendant gave a set of keys to the Flat to the estate agent(s). Though there were 2 potential tenants who indicated interest and who respectively said they might rent the Flat for HK$32,000 and HK$35,000 a month, and there were discussions between the parties that the defendant was to compensate the plaintiff the shortfall in rent, the 2 potential tenants ultimately did not rent the Flat.

15.  From the pictures produced by the plaintiff, I accept the plaintiff’s contention and find that the defendant’s so-called repainting was substandard - showing many patches that were different in colour than that of the walls and the holes on the walls, though filled or patched, have not been made flush and were still clearly visible.

16.  The plaintiff claims herein, among others, the rent for the month of November 2019. However, based on (a) the WhatsApp messages exchanged between 22 to 25 October 2019 by which the plaintiff chased the defendant for payment of rent due on 22 October 2019 according to the TA, to which the defendant said on 25 October 2019 that the rent was banked in and to which the plaintiff answered on the same day “好的”^[4] and (b) the fact that the monthly rent was payable in advance under the TA, I find that the defendant has on 25 October 2019 already paid the rent for the month from 20 October to 19 November 2019.

17.  The plaintiff disputes whether the defendant has actually left Hong Kong in late October 2019 as he said. I make no finding on this matter.

18.  On 10 January 2020, the plaintiff commenced this action. In the Statement of Claim endorsed with the Writ, the plaintiff claimed that because the defendant has unilaterally breached the TA (“在被告單方面毀約的情況下”), she claimed the payment of all the rent from November 2019 up to the expiry of the TA on 19 May 2021, as well as repair costs. In the Defence filed on 23 January 2020, the defendant claimed, among others, that he had effectively terminated the TA when he handed the keys to the estate agent.

19.  On 18 March 2020, there were rather heated arguments and accusations exchanged between the parties by WhatsApp that ended with both parties indicating that they would no longer converse with each other^[5].

20.  Between 18 March 2020 to 27 July 2020, there was little communication between the parties. The Flat was left unoccupied and unattended to.

21.  After receiving some legal advice and on 27 July 2020, the plaintiff by a WhatsApp message^[6] to the defendant asked the latter to remove the sundry items left in one of the bedrooms and the large crystal object placed on the flat roof, failing which she would throw them away. As the plaintiff did not receive a positive reply from the defendant, she proceeded to engage contractors to renovate the Flat.

22.  Having renovated the Flat and shortly after on 20 August 2020, the plaintiff successfully signed a tenancy agreement with a new tenant renting the Flat out at a monthly rent of HK$34,000 for a fixed term of 2 years commencing on 1 September 2020.

Breach of the TA

23.  Those being the facts I find, I do not accept the defendant’case that the TA had been effectively terminated by him handing the keys to the estate agent. I find that the plaintiff has never agreed in October 2019 that she would release the defendant from the TA. I find that the defendant so handed the keys to the estate agent for the purpose of getting himself released by finding a new replacement tenant pursuant to the plaintiff’s stance set out in paragraph 11 above, and that he has been unsuccessful in finding such a replacement tenant. I thus find that the defendant was in breach of the TA in that he terminated it unilaterally before the expiry of its fixed term.

24.  I will discuss and assess the quantum of damages head by head.

Loss of rental

25.  The plaintiff claims loss of 10 months’ rental at HK$38,000 a month from 20 October 2019 to 19 August 2020 (HK$380,000) and 9 months’ shortfall of rental at HK$4,000 a month from 20 August 2020 to 19 May 2021 (HK$36,000). These total to HK$416,000^[7].

26.  As set out in paragraph 16 above, I find that the defendant has on 25 October 2019 already paid the rent for the month beginning 20 October and ending 19 November 2019.

27.  As explained to the plaintiff at trial, a claimant has a duty in law to mitigate his damage. The relevant principle of mitigation was stated in §29-096 of Chitty on Contracts 34^th Ed Vol 1 General Principles thus

“… the claimant cannot recover damages for any part of his loss consequent upon the defendant’s breach of contract that the claimant could have avoided by taking reasonable steps.”

28.  In my view, by making her claim herein on 10 January 2020 per her Statement of Claim in which (a) she averred that the defendant has unilaterally breached the TA, (b) claimed all the monthly rental payments up to 19 May 2021 (which on 10 January 2020 would not have been due under the TA if the TA was not yet terminated by breach), and (c) claimed the repair costs (which would not have been due until the TA was terminated, the Flat returned to the plaintiff and damage to it been discovered to have been caused), the plaintiff has effectively accepted on 10 January 2020 that the TA has been terminated by the defendant’s breach. If the plaintiff has not so accepted, she would only be entitled to sue for the payment of the monthly rent then due under the terms of the TA but remained unpaid.

29.  In my view therefore, the duty to mitigate arose since 10 January 2020.

30.  As seen from the WhatsApp messages^[8], there were active discussions (albeit amidst various disputes) and in a way cooperation between the parties to find a replacement tenant in early 2020 up to 18 March 2020, which if successful would greatly mitigate the loss. I thus find that the plaintiff has fulfilled her duty to mitigate in this period.

31.  However, after late March 2020, those discussions and cooperation have clearly terminated and the parties clearly indicated that they would sort their rights and liabilities out through litigation. In my view, then after and in her duty to mitigate by taking reasonable steps, the plaintiff ought to have done what she later did in late July 2020, namely formally demanding the defendant to remove all remaining items in the Flat and then proceeding to repair and renovate the Flat to let it out. Unfortunately, the plaintiff only found out that those were the steps she could have taken (and I find ought to have been taken) when in July 2020 she sought proper legal advice.

32.  I thus come to the view that the plaintiff has failed to mitigate her loss for 4 months from late March to late July 2020, and I find on balance of probabilities that had she so mitigated, she would have found a new tenant renting the Flat at HK$34,000 a month 4 months earlier than she did in August 2020.

33.  I would thus reduce her claim for monthly rental of HK$38,000 a month from 9 months to 5 months, which would be HK$190,000; and increase her claim of shortfall of rental income of HK$4,000 a month from 9 months to 13 months, which would be HK$52,000. I thus assess her loss of rental income at the total sum of HK$242,000, and so award.

Repair costs

34.  The plaintiff claims repair costs totalling HK$40,000 as per the quotation of the contractor 新威工程裝飾設計 dated 25 July 2020^[9] and the receipt acknowledging payment of the sum dated 29 August 2020^[10]. The items of work were listed out in the said quotation. The 2 main items were the repainting of all the walls and the ceiling of the storage room (HK$15,000) and the repair and treatment of the wooden flooring (HK$15,000). As mentioned in paragraph 15, the repainting by the defendant himself was substandard, and I find the repainting of the walls and the said ceiling reasonable as an item and in quantum. The defendant in his Defence and witness statement said that the condition of the flooring was not caused by him and such. However, as he did not appear to give evidence to contest, and I have accepted the plaintiff’s evidence that the flooring did not exhibit the current problem when the Flat was rented to the defendant, I would also award the costs for this item. I also find in favour of the other sundry items. In the result, I would award in full these repair costs totalling HK$40,000.

35.  The plaintiff also claims the replacement costs of (a) 3 chandeliers which were originally hanged on the ceiling of the 3 bedrooms and were found to be missing in the Flat, and (b) 2 lamps originally mounted on the wall by the bedside in the master bedroom which were missing and were replaced by the defendant’s lamps. The fact that they were missing, and the wall mounted lamps were replaced, was seen from the photos produced by the plaintiff. Their costs and labour charge total to HK$6,325 and was evidence by the purchase order of one New Lighting Design Co^[11]. As they are uncontested and appear reasonable, I also award this sum of HK$6,325.

36.  I thus award the total repair costs at HK$46,325.

Estate agency fee and interest

37.  The estate agency fee and stamp duty of respectively HK$17,000 and HK$1,022.50 were not pleaded in the Statement of Claim and was only spoken to in the plaintiff’s witness statement. I thus would not award them. In any case, the term of the new tenancy agreement ran beyond that of the TA to late August 2022, and therefore estate agency fee and stamp duty would need to be paid anyway by the plaintiff in securing the rental of the Flat for this further period. I would for this reason also not award them.

38.  Pre-trial interest, likewise, was not claimed in the Statement of Claim and as such I do not award it.

Disposal

39.  In the premises, the plaintiff is successful in her claim. I assess her damages in the total amount of HK$288,325.

40.  As the plaintiff is entitled under the TA to set off such damages against the security deposit of HK$76,000, I would do so and thus give judgment to the plaintiff of the balance in the sum of HK$212,325, with interest at the judgment rate from today until its full payment.

41.  I also order on nisi basis that the defendant do pay the plaintiff her costs of this action, including all costs reserved, to be taxed if not agreed, which order nisi will become absolute after 14 days unless any party applies to vary by letter within that time.