HOI CHENG PAN v. HEADSTART EDUCATIONAL GROUP LTD

DCCJ4028/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4028 OF 2006

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DECISION

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Introduction

1.  The plaintiff is the registered owner of premises known as Unit 2 on the 14th Floor, Eastern Harbour Centre, No. 28 Hoi Chak Street, Hong Kong, (hereinafter called “the premises”).

2.  The defendant is a limited company whose principal business was and is the provision of education services.

3.  The plaintiff as landlord and the defendant as tenant entered into a tenancy agreement dated 26 May 2006, (hereinafter called “the tenancy agreement”) whereby the plaintiff agreed to let and the defendant agreed to rent the premises for a period of two years from 16 June 2006 to 15 June 2008 (hereinafter called “the term”) at the monthly rent of HK$13,500, inclusive of management fee, air-conditioning charges, government rates, government rent and electricity charges in respect of the premises.

4.  Clause 1 provides that the defendant shall pay the plaintiff the aforesaid rent in advance on the 1st day of each and every calendar month during the term, but clause 5(4) of schedule II provides that the defendant shall pay the monthly rent on the 16th day of each month by automatic debit.  Nothing, however, turns on such discrepancy.

5.  Clause 7 and schedule I provide, inter alia, that the defendant shall pay the plaintiff a security deposit in the sum of HK$27,000 for the due observance and performance of the terms and conditions therein contained and on his part to be observed and performed (hereinafter called “deposit”).  Provided that there is no antecedent breach of any of the terms and conditions therein contained, the plaintiff shall refund the deposit to the defendant without interest within 30 days from the date of delivery of vacant possession of the premises to the plaintiff or settlement of any payment owed by the defendant to the plaintiff, whichever is later.

6.  Clause 7 goes on to provide, inter alia, that the rent and/or any charges payable by the defendant thereunder or any part thereof shall be unpaid for seven days after the same shall become payable (whether legally demanded or not) or the defendant shall commit a breach of any of the terms and conditions therein contained, it shall be lawful for the plaintiff at any time thereafter to re-enter the premises upon the tenancy agreement, whereupon the tenancy agreement shall absolutely determine, and the plaintiff may deduct any loss or damage suffered by the plaintiff as a result of the defendant’s breach upon the deposit, without prejudice to any other right of action or any remedy of the plaintiff in respect of such breach by the defendant.

7.  The defendant paid the deposit and the monthly rent of HK$13,500 for the period from 16 June to 15 July 2006 (hereinafter called “advance rent”) to the plaintiff.  The defendant did not pay rent for the premises since 16 July 2006 or take up possession of the premises.

8.  On 9 June 2006 Midland Realty (Com & Ind) Limited (hereinafter called “Midland”) issued an official receipt to the plaintiff for the sum of HK$6,750 in payment of agency fee on the letting of the premises (hereinafter called “estate agent commission”).

9.  The tenancy agreement was stamped on 12 June 2006 and the stamp duty in the total sum of HK$815 (hereinafter called “stamp duty”) was paid by the plaintiff.

10.  By a letter dated 20 July 2006 to the defendant (hereinafter called “20/7/06 letter”) the plaintiff’s solicitors referred to the tenancy agreement and claimed that, by reason of the defendant’s failure to pay rent and to take possession of the premises, the defendant evinced an intention no longer to be bound by and he repudiated the tenancy agreement, so the plaintiff accepted such repudiation, whereupon vacant possession of the premises would be recovered.

11.  By a letter dated 7 August 2006 to the defendant’s solicitors (hereinafter called “the 7/8/06 letter”), the plaintiff’s solicitors “put on record that upon recovery of the [premises] as mentioned in [the 20/7/06 letter], [the plaintiff] is in the course of re-listing it for a replacement tenant whilst reserving his rights and claims mentioned therein.”

12.  The plaintiff issued the writ of summons in the present proceedings on 16 August 2006 and served the same on the defendant the following day.  In the statement of claim endorsed on the writ of summons, the plaintiff pleads that he has recovered possession of the premises on or about 15 August 2006. 

13.  The defendant filed his defence and counterclaim on 11 September 2006, inter alia, denying the plaintiff’s claim.  The defendant claims it was entitled to rescind the tenancy agreement, which it did, due to (a) misrepresentation by Midland, which at all material times acted and/or was held out as the plaintiff’s agent; and/or (b) the plaintiff’s breach of express or implied terms of the tenancy agreement.  The defendant further claims that on or about 8 June 2006 its staff notified Midland and/or the plaintiff that it decided to cancel the tenancy agreement.  The defendant also claims that the plaintiff has failed to mitigate his loss. 

14.  The defendant counterclaims for the refund of the advance rent and deposit in the total sum of HK$40,500 and for damages suffered as a result of the plaintiff’s misrepresentation or breach of contract in the sum of HK$58,136 comprising extra agency commission for renting alternative premises (being HK$7,064), the difference between the rental of the premises and that of the alternative premises over two years (being (HK$14,128 - HK$13,500) x 24 months) and extra electricity charges not included in the rental of the alternative premises (being HK$1,500 x 24 months).

15.  On 18 September 2006, Eastern Realty Company confirmed by two faxes to the plaintiff that the clients, Worldwide Sourcing Limited, Woodsland Timber Co and Mr Chan, visited the premises on (a) 1 September 2006, (b) 4 September 2006, and (c) 15 and 18 September 2006 respectively.

16.  The plaintiff as landlord and NMG Digital Limited (hereinafter called “NMG”) as tenant entered into a tenancy agreement dated 1 October 2006 (hereinafter called “replacement tenancy agreement”) whereby the plaintiff agreed to let and NMG agreed to rent the premises for a period of two years from 1 November 2006 to 31 October 2008 at a monthly rent of HK$14,500, together with a rent-free period from 1 to 31 October 2006.  NMG took delivery of the keys to the premises on 30 September 2006.

17.  By a letter dated 3 April 2007 to the defendant’s solicitors (hereinafter called “3/4/07 letter”), the plaintiff’s solicitors quantified the plaintiff’s claim in the sum of HK$27,815, being (a) arrears of rent/loss and damages for the period from 16 July to 31 October 2006 at HK$13,500 per month; (b) stamp duty in the sum of HK$815; and (c) estate agent commission in the sum of HK$6,750, less the deposit in the sum of HK$27,000.

18.  On 16 April 2007 the plaintiff filed and served voluntary further and better particulars of paragraph 5 of the statement of claim (hereinafter called “voluntary FBP”) by referring to the 7/8/06 letter and the replacement tenancy agreement and quantifying its claim as referred to in the above paragraph.

The Summonses

19.  The defendant issued a summons on 17 April 2007 returnable on the first day of trial for directions, inter alia, that:

(a)	the present proceedings be transferred to the Small Claims Tribunal;
(b)	leave be granted to the plaintiff to file and serve the voluntary FBP;
(c)	the defendant’s counterclaim be reduced to HK$50,000; and
(d)	costs of the whole of the present proceedings, including such application, be to the defendant on District Court scale and on an indemnity basis to be taxed if not agreed,

(hereinafter called “the defendant’s first summons”).

20.  On 19 April 2006, the defendant’s solicitors wrote to inform the court that the defendant would apply to withdraw the defendant’s first summons.  On the return day of the defendant’s first summons, i.e. the first day of trial, without objection from the plaintiff, the defendant applied to withdraw such summons and agreed to pay the costs of such summons to the plaintiff.

21.  On 20 April 2006, the defendant issued a summons under section 5 of the Small Claims Ordinance, Cap. 338, and under this court’s inherent jurisdiction for striking out the plaintiff’s claim for want of jurisdiction (hereinafter called “the defendant’s second summons”).

22.  On the same day, the plaintiff issued  a summons to apply to amend the voluntary FBP by removing the deduction of the deposit from the plaintiff’s claim for loss and damages, resulting in an increase of the quantified loss and damages to HK$54,815 (hereinafter called “the plaintiff’s summons”).

The defendant’s first summons

23.  There is no dispute between the parties as to the disposal of the defendant’s first summons.

24.  I have granted leave to the defendant to withdraw such summons and further ordered the defendant to pay costs of such summons to the plaintiff assessed at HK$800 by way of gross sum assessment.

25.  In my view, the defendant ought not to have issued the defendant’s first summons in the first place.  Quite simply, the District Court does not have any power to transfer any case before it to the Small Claims Tribunal.  There is no statutory provision granting such power to the District Court and as an inferior court the District Court does not have inherent jurisdiction to do so.  I draw support from the decision by His Honour Judge Carlson in Sit Ka Yee v Lai Wai Ho, DCPI271/2000, unreported, 22 October 2001, a case which I have referred to both parties.

26.  Mr Suen, counsel for the plaintiff, accepts that the costs involved are not substantial.  They relate to the perusal of the defendant’s first summons, consideration of the court’s written directions of 19 April 2007, and the brief appearance before me on the first day of trial to withdraw such summons.  The defendant’s solicitors have already intimated an intention to withdraw such summons on 19 April 2007.  Mr Suen submits that an appropriate award of costs is HK$1,000.  Mr Chu, counsel for the defendant, says that the appropriate quantum is HK$500.

27.  Looking at the matter globally but without conducting mini taxation, I have assessed the relevant costs to be HK$800. 

The plaintiff’s summons

28.  It is easier to deal with the plaintiff’s summons first, although it is necessary in any event for me to deal with the defendant’s second summons.  If I do grant leave to the plaintiff to amend the voluntary FBP as applied for, the plaintiff’s claim as prayed for will exceed the jurisdiction of the Small Claims Tribunal, but Mr Chu says I still have to consider the defendant’s second summons because the defendant contends that, even under that scenario, this court does not have jurisdiction.  On the other hand, if I refuse leave for the plaintiff to amend the voluntary FBP, then I will necessarily have to go on and consider the defendant’s second summons.

29.  Mr Chu informs me that the defendant’s sole objection to the proposed amendments is that the plaintiff must, as a matter of law or interpretation of the tenancy agreement, take into account the deposit in quantifying his loss and damages.  He fairly agrees that the defendant will not be relying on any complaint of lateness of the plaintiff’s application or any prejudice that may be suffered by the defendant.

30.  In such circumstances, the question here is whether there are arguable merits to the proposed amendments so that the new averment should be left for trial or whether the proposed amendments are so immaterial or useless or unarguable that they should not be allowed.  The court will always look at the materiality of the proposed amendments to pleadings and will not allow amendments that are unarguable bad.

31.  Mr Suen submits that it is clear from clause 7 of the tenancy agreement that, even if there is no antecedent breach of any of the terms and conditions of the tenancy agreement, which is denied, the plaintiff need only refund the deposit to the defendant without interest within 30 days from the date of delivery of vacant possession of the premises to the plaintiff or settlement of any outstanding payment owed by the defendant to the plaintiff, whichever is later.

32.  Mr Suen argues that the defendant shall be in no better position if there an antecedent breach of the tenancy agreement since it is trite that a person cannot benefit from his own wrong, “Hence, the same time limit shall apply, i.e. the plaintiff need only refund the [deposit] to the [defendant] without interest within 30 days from the date of delivery of vacant possession of the [premises] to the plaintiff or settlement of any outstanding payment owed by the defendant to the plaintiff, whichever is later.”

33.  It is said that, since the defendant has failed to pay the arrears of rent and damages suffered by the plaintiff, the plaintiff is not required as yet to refund the deposit and need not take into account the same in quantifying its loss in the present claim.  It is only if the plaintiff succeeds in its claim that the deposit is required to be refunded without interest to the defendant within 30 days after it has settled all outstanding payment owed to the plaintiff.

34.  Mr Suen points out that, although clause 7 of the tenancy agreement provides that where there is an antecedent breach of the tenancy agreement, the plaintiff may (but not must) deduct any loss or damage suffered by him as a result of the defendant’s breach from the deposit.  Further, clause 7 specifically preserves the plaintiff’s right but not duty to make deduction without prejudice to any other right of action or any remedy of the plaintiff, so the plaintiff’s independent and separate cause of action in recovering loss and damages (which cause of action is adopted in the present proceedings) as distinct from his right to make deduction from the deposit (which right the plaintiff says he will not exercise) is preserved in full.

35.  Mr Suen says that, since an award of damages may attract interest, if the plaintiff exercises the right to deduct damages from the deposit which is refundable without interest within 30 days of settlement of the outstanding amount by the defendant, the plaintiff will lose out on his entitlement to interest on or after the date of deduction in respect of the damages claimed.

36.  Further, Mr Suen argues that there is no time limit in respect of the plaintiff’s right to make such deduction whilst his claim for damages will be time barred after six years.  Given the differences between the right to deduction and the right to claim for damages, Mr Suen submits that the plaintiff’s right to deduct any loss or damages suffered by him as a result of the defendant’s breach of the tenancy agreement is an “additional” right, but he is not obliged to (and will not) exercise such right.

37.  Mr Chu submits that, since it is not in dispute that the plaintiff has received the deposit, Mr Suen’s above submissions on the interpretation of clause 7 of the tenancy agreement, which denies any need on the part of the plaintiff to give credit for the deposit in its claim for damages, is an ouster of the jurisdiction of the District Court to grant any relief(s) it may consider appropriate in the present proceeding which is not permitted.  When I ask Mr Chu for legal authority in support of such a proposition, he submits that it is trite law that litigants cannot dictate what reliefs the court may grant. 

38.  Whilst I accept that the District Court is the adjudicating tribunal in respect of the cases brought before it, I do not understand Mr Chu’s proposition as trite.  A claimant’s pleading sets out his cause(s) of action, the material facts in support of such cause(s) of action and the reliefs he seeks.  To limit the reliefs claimed in one’s pleading is not an ouster of the jurisdiction of the court to grant reliefs.  Indeed, as I see it, the issue here is the court’s power to determine the award of damages at trial and not a question the court’s jurisdiction to grant reliefs.

39.  If the proposed amendment is allowed and if the plaintiff succeeds on liability at trial, the court will proceed to assess the quantum of damages.  In deciding on the quantum of damages to be awarded in favour of the plaintiff, the court will have to determine whether notwithstanding the amendment the plaintiff should give credit for the deposit or not.  If the court concludes that such credit should be given, it will reduce the amount of damages by the sum of the deposit and the plaintiff will have failed in its pleaded averment that such deduction ought not to be made.  In short, there is no ouster of jurisdiction and no merit in Mr Chu’s submission in this respect.

40.  The true question in respect of the plaintiff’s summons is whether it is clear that the proposed amendments are bad and therefore should not be allowed.  It is essential to return to basic contractual and landlord and tenant principles.

41.  An aggrieved landlord’s entitlement to damages for wrongful repudiation follows general contractual principles (see Hop Woo Cheung Limited v Intergroup Industries Limited [1982] HKC436), and Sano Screen Manufacturers v J & R Bossini [2000] 3HKC216).  The normal measure of damages is the difference between the total amount the landlord would have received had the lease been duly performed, i.e. the amount payable were the lease to be permitted to run its full course, less the actual amount which the landlord received from the tenant.  Account must also be taken of the landlord’s duty to mitigate loss if such is put in issue by the tenant.

42.  Mr Suen in his submissions does not disagree with the above statement of the normal measure of damages (see also the succinct summary in paragraph 49 of the judgment of Reyes J in Goldon Investment Limited v NPH International Holdings Limited formerly known as Nam Pei Hong International Holdings Limited, HCA5457/1999, unreported, 10 August 2004). 

43.  It is not hard to understand why the normal measure of damages for repudiation of a lease requires that credit be given for the amount received by the landlord.  Once repudiation is accepted, those parties are discharged from performance of the lease, but the party accepting the repudiation must sue for the accrued loss (for example, arrears of rent) and damages occasioned by the repudiation (for example, loss of rental income over the unexpired term of the lease), subject to a duty to minimise loss.  Since this covers the actual loss that may be suffered by the landlord, if the party accepting the repudiation fails to give credit for any amount received from the repudiator, there is a risk of duplicated recovery.  This situation is quite different from forfeiture of a lease where no damages can be claimed by the landlord in respect of that unexpired portion of the lease (see Chan, Annie v Lau Wai Kwong and Others [1984]  HKC231).

44.  Mr Suen has cited the case of Orient Bright International Limited v Hiang Kie Hong Kong Limited, CACV220/2004, unreported, 11 May 2005.  At the hearing before me, there was some doubt as to the cause of action relied on by the plaintiff landlord in that case.  A perusal of the judgment of the lower court by Suffiad J, HCA10411/2000, 10 June 2004, reveals that pursuant to a supplemental agreement varying the monthly rent payable under the lease, the monthly rent payable for a defined period of the tenancy term was reduced.  After the rental reduction period, the monthly rent was increased but the defendant failed to pay rent since 1 November 2000 and the balance of the rental deposit due to the increase in rent.  The plaintiff issued a writ for two months’ arrears of rent and the balance of the rental deposit.

45.  The statement of claim was subsequently amended to include a claim for possession of the premises on the basis that, by issuing the writ, the plaintiff accepted repudiation of the defendant by its breach of the lease.  About 10 months later on 16 October 2001, the defendant vacated and delivered up vacant possession of the premises.  The plaintiff re-amended the amended statement of claim to limit his claim to forfeiture of the rental and management fee deposits and quantified his damages as being the outstanding rent and mesne profits for the period from 1 November 2000 to 16 October 2001.  But for the repudiation by the defendant, the term of the lease was due to expire much later on 31 October 2002.

46.  It is, therefore, plain that, although the plaintiff’s claim was for repudiation of damages, it did not claim for loss of rental income for the unexpired term, but limited its claim to arrears of rent and mesne profits up to the delivery of vacant possession of the premises.  The Court of Appeal held that the plaintiff was entitled to forfeit the deposit pursuant to the forfeiture clause in the lease.

47.  I pause here to say that in the present case we are not concerned with forfeiture of the deposit.

48.  To return to the case under discussion, the express provision of the lease did not require the plaintiff to give credit for the deposit in respect of the damages otherwise recoverable, but more importantly the Court of Appeal’s decision was affected by the fact that “[in] any event, regardless of the position with common law damages, the plaintiff’s claim here is essentially for mesne profits, which is measured by the value of the accommodation to the trespasser, rather than the actual loss of the landlord.  There is no question of giving credit for the forfeited deposit.”

49.  Here, the position is entirely different for the plaintiff’s claim is for actual loss of the whole of the unexpired term as a result of the defendant’s repudiation.  There is no justification for not bringing the deposit into account.  Mr Suen accepts that there is no further loss that the plaintiff can claim beyond what has been pleaded in the voluntary FBP.  It is difficult to understand why, as a matter of law, in the assessment of damages the court should not take into account the deposit but must leave the plaintiff, if he succeeds in the claim, to receive payment of the assessment of the damages assessed and then refund the deposit 30 days later to the defendant, and if the plaintiff fails to do so the defendant would be obliged to pursue another claim for recovery of the deposit.

50.  Mr Suen next argues that his contentions rest on the true meaning of clause 7 of the tenancy agreement.  He fairly acknowledges that, on the face of clause 7, insofar as it is relevant to the present situation, it only deals with (a)      refund of the deposit where there is no antecedent breach; and (b) the plaintiff’s right to deduct loss and damages from the deposit when the defendant fails to pay rent or when the defendant is in breach of the tenancy agreement.

51.  He accepts that clause 7 does not expressly empower the plaintiff to retain the deposit in case of acceptance of repudiation by the defendant.  Scenario (a) is inapplicable here.  In respect of scenario (b), Mr Suen says that clause 7 preserves “any other right or action or any remedy of the Landlord in respect of such breach by the Tenant.”  But, if the plaintiff chooses not to exercise the right to make a deduction from the deposit under clause 7, which Mr Suen says is an additional right, what other right of action or remedy does the plaintiff have or, to put it in another way, what other right of action or remedy is preserved by clause 7?

52.  Essentially, it is the plaintiff’s claim for common law damages as a result of the defendant’s repudiation, i.e. accrued loss and actual loss of rental income for the unexpired term, and Mr Suen accepts that, under the normal measure of damages, payments received by the plaintiff should be taken into account.  I also refer to my analysis above to say that there is a real difference between a claim for mense profits and a claim for actual loss.  The suggestion that the defendant cannot benefit from its own wrong does not come into play. 

53.  Mr Suen asked me to bear in mind the nature of a security deposit which is to ensure due performance of the terms of the lease.  He argues that such purpose cannot be served if the deposit is to be refunded immediately. 

54.  In the present case the issue is not whether and when the deposit is to be refunded.  The relevant question is the extent of damages to which the plaintiff is entitled to claim and whether the plaintiff can withhold taking the deposit taking the deposit into account in assessing damages.  Whilst I accept that appropriately wording contractual provision may possibly allow for the situation contended by Mr Suen, clause 7 falls far short of what is required for such purpose.

55.  As regards Mr Suen’s submission that the plaintiff will be prejudiced by losing out on the accrual of interest on damages to which he is entitled if credit is given for the deposit, I reject such argument.  The general rule is that damages for breach of contract should be assessed as at the date when the cause of action arose, i.e. at the date of the breach or the date of the acceptance of repudiation, subject to mitigation of loss.  Since the assessment of the plaintiff’s damages under the normal measure of damages, subject to mitigation of loss, requires the deposit to be taken into account, the argument that the plaintiff loses out on interest that may subsequently accrue on the damages that should be set off and/or deducted from monies received by the plaintiff, falls away.

56.  In these circumstances, I am not with Mr Suen on his interpretation of clause 7 or of the tenancy agreement which asks the court to read more into the provision than is permitted on its terms.

57.  I, therefore, dismiss the plaintiff’s summons.

The defendant’s second summons

58.  I now turn to the defendant’s second summons.  Section 5 of the Small Claims Tribunal Ordinance, Cap. 338, provides, inter alia, that:

“	(1)	The tribunal shall have jurisdiction to hear and determine the claims specified in the Schedule.
	(2)	Save as provided in this Ordinance, no claim within the jurisdiction of the tribunal shall be actionable in any other court in Hong Kong.
	(3)	A claim within the jurisdiction of the tribunal may be brought in another court if there is included in such claim a claim for some other relief, redress, remedy, other than a claim for costs......”

59.  The Schedule of the Small Claims Tribunal Ordinance, Cap. 338, provides, inter alia, that the jurisdiction of the Tribunal includes any monetary claim founded in contract, quasi contract or tort where the amount claimed is not more than HK$50,000, whether on balance of account or otherwise, the provisos not being applicable.

60.  The starting point in considering the defendant’s second summons is that it is an application to strike out the plaintiff’s claim for want of jurisdiction.  Mr Chu accepts that such a striking out application can only be made if the absence of jurisdiction is plain and obvious.  He also agrees that the defendant, in making the application, carries the burden of establishing it is plain and obvious that this court has no jurisdiction over the plaintiff’s claim, but submits that the defendant has discharged such burden.

61.  The hearing before me is, in fact, the first day of the trial.  Mr Suen complains that the defendant’s application to contest jurisdiction is plainly late.  He refers to Hong Kong Civil Procedure 2007, Volume 1, paragraph 18/8/16 at page 310, to say that the defence of want of jurisdiction should be specifically pleaded and that the defendant in practice should not wait to plead this defence but should, after giving notice of intention to defend and within the time limit for serving the defence, apply to stay or dismiss the action.  Mr Chu argues that, since the plaintiff only quantified his claim by the 3/4/07 letter and filed the voluntary FBP on 16 April 2007, it does not lies in the plaintiff’s mouth to complain of lateness.

62.  In my view, irrespective of whether the application is late or not, the court should deal with such a fundamental challenge raised in the defendant’s second summons.  As stated in Hong Kong Civil Procedure 2007, supra, the court, if it considers appropriate, may allow an objection to jurisdiction to be raised even at  trial.  More importantly, the learned text further says that where the court lacks jurisdiction by statute, as what is contended here, it is its duty to disclaim jurisdiction irrespective of whether or not the defendant pleads the defence.

63.  I agree with such statement which is an important one, as will be seen below.  Whether the court has jurisdiction is a fundamental matter.  The court cannot be seized of any matter before it unless it has jurisdiction.  This is so whether any of the parties raises the issue of jurisdiction with the court or not.  Jurisdiction cannot be conferred by agreement of the parties or by their inactivity or silence where there is actually no jurisdiction.

64.  At first blush, it seems that Mr Chu’s written submissions that the plaintiff’s complaint on jurisdiction stems from a consideration of the plaintiff’s statement of claim endorsed on the writ of summons.  However, on finer reading of his written submissions and as I have tried to elicit from Mr Chu at the hearing, it appears that the defendant holds the view that the plaintiff’s quantification of his claim and/or the voluntary FBP, both of April 2007, do have a bearing on the jurisdiction issue.

65.  In respect of the plaintiff’s pleaded claim at the commencement of the action, paragraph 4 and 5 of the statement of claim are relevant and are summarised as follows:

(a)	the plaintiff has accepted the defendant’s repudiation on or about 20 July 2006;
(b)	the plaintiff has recovered vacant possession of the premises on or about 15 August 2006;
(c)	the plaintiff claims for arrears of rent for the period from 16 July to 15 August 2006 in the sum of HK$13,500;
(d)	the plaintiff claims for damages, being loss of benefit of the tenancy agreement and loss of rental income he would otherwise have receivedthereunder, “the exact details of which the plaintiff can only provide upon quantification and discovery”.

66.  Mr Chu’s stance has evolved in the course of his submissions before me.  At first he submits that, in considering whether the court has jurisdiction over the plaintiff’s claim, the court should consider the plaintiff’s claim at the commencement of the action and is not obliged to determine whether it has jurisdiction from time to time as the case progresses.

67.  Mr Chu then argues that if the plaintiff’s monetary claim is not quantified at the commencement of the claim but it is quantified subsequently in the course of the proceedings, such quantification can “relate back” to the commencement of the claim, so the court is required to consider and determine whether it has jurisdiction over the plaintiff’s claim.  If the subsequent quantification that “relates back” to the original claim is under HK$50,000, then the District Court has no jurisdiction over the plaintiff’s claim.

68.  In his submissions in reply, Mr Chu submits that the plaintiff’s unquantified claim at the commencement of the action becomes irrelevant when it is replaced by a subsequent quantification of his claim made in the course of the proceedings and that the courts, in determining jurisdiction, should not fettered by the plaintiff’s claim at the commencement of the action.  This is because, he says, the court is concerned or should be astute to consider at any and all times whether it has jurisdiction over any claim brought before it.

69.  Mr Chu also submits that, in the present case, even at the commencement of the action, there is a “high probability” that the normal measure of repudiation damages as claimed by the plaintiff is less than HK$50,000, but in any event once the plaintiff has quantified his claim, the normal measure of repudiation damages becomes irrelevant.

70.  Mr Chu goes on to say that the defendant can pray in aid the provisions in section 41 of the District Court Ordinance, Cap. 336, to support the contention that the District Court is, by analogy, empowered to strike out a claim which is within the exclusive jurisdiction of the Small Claims Tribunal, provided that it can be shown that the plaintiff knew or ought to have known that the District Court has no jurisdiction.

71.  Mr Chu has not explained how all these propositions sit together, but I will consider them all.

72.  I agree that the appropriate time to consider whether the Plaintiff’s claim is within the jurisdiction of the Small Claims Tribunal is at the commencement of the action (see Chow Wai Fun Amy v McKeon, Brendan Hugh, DCCJ5684/2000, unreported, 28 February 2001).

73.  There is no dispute that the plaintiff’s claim is a monetary claim founded on contract.  As explained above, it is now trite that where the breach is repudiatory the landlord can invoke common law remedies, such as damages for repudiation including loss suffered for the unexpired term (see Well Century Holdings Limited v Leung Kung Yue [2003] 2 HKLRD 653).  In essence, this is what the plaintiff claims as his loss in damages in his statement of claim at the commencement of the action, i.e. special loss being particularised arrears of rent and general damages which have not been particularised.

74.  There is no obligation on the plaintiff to particularise his claim for general damages so long as he has pleaded his cause of action and the material facts in support of a claim for general damages.  It is where a claimant claims that he has suffered damages of a kind which is not the necessary and needed consequence of the wrongful act that he has the duty to plead full particulars to show the nature and extent of damages (see Hong Kong Civil Procedure 2007, supra, at paragraph 18/12/10, at page 315). But here the general damages claimed by the plaintiff in the statement of claim are merely the normal measure for repudiatory damages.  This the plaintiff has done and has made abundantly clear by an express plea that the damages claimed are the loss of benefit of the tenancy agreement and loss of rental income he would otherwise have received thereunder.  The plaintiff has also pleaded the monthly rent of HK$13,500 and the term of two years to show the rental income he would have received under the tenancy agreement.  In the circumstances, the measure of general damages claimed by the plaintiff at the commencement of the present proceedings well exceeds the limit of HK$50,000, even if credit is given for the deposit.

75.  Mr Chu places strong emphasis on the phrase “amount claimed” in the Schedule of the Small Claims Tribunal Ordinance, Cap. 338.  He argues that the plaintiff must have an “amount claimed” when he commenced the present proceedings and that failure to particularise the general damages claimed does not alter the fact that such general damages must still represent an “amount claimed”.

76.  I am not persuaded that this is how the matter should be approached.  When one reads section 5(2) and the Schedule of the Small Claims Tribunal Ordinance, Cap. 338, together, they essentially provide, inter alia, that any monetary claim in contract or quasi contract, where the amount claimed is not more than $50,000, shall not be actionable in any other court in Hong Kong.  So if it cannot be plainly established that the “amount claimed” under a monetary claim in contract or quasi contract is not more than $50,000, such claim does not fall within the exclusive jurisdiction of the Small Claims Tribunal.

77.  In my view, and explained above, the plaintiff’s claim at the commencement of the action exceeds HK$50,000.  At the very least, the defendant has failed to show that it is plain and obvious that the plaintiff’s claim was outside the jurisdiction of the District Court at the commencement of the action.  I will deal with the issue of mitigation of loss below.

78.  Further, the plaintiff is entitled not to particularise the general damages he claims in his statement of claim.  It is incumbent upon the defendant to show at the commencement of action the “amount claimed” under the plaintiff’s claim is not more than HK$50,000.

79.  Mr Chu says that this is a “high probability”.  He points out that the plaintiff has failed to give credit for the deposit in the statement of claim dated 16 August 2006 but, as I have explained above, even taking into account the deposit, the plaintiff’s claim at the commencement of the action as pleaded is above HK$50,000.  Mr Chu goes on to say that “[on] that day the deposit made by the defendant had not been used up (or most likely so) after the deduction of $13,500 for July to August 2006.  Had trial taken place on that day, the Plaintiff may not be able to recover any damages or he might even be liable to pay back the Defendant 1 month of deposits.”

80.  Mr Chu also says that the plaintiff should not be allowed to wait and hope his damages might accumulate to exceed the jurisdiction of the Small Claims Tribunal one day, since it is trite that the plaintiff has to mitigate his damages in any event.

81.  This is a plain misreading of the plaintiff’s claim.  The plaintiff’s claim is not limited to accrued loss, i.e. arrears of rent, when he issued the claim.  He has a claim for general damages which I have explained above and shall not repeat here again.  There is no need for the plaintiff to wait for his claim to accumulate.  His claim subsisted at the time of the issuance of the writ of summons.

82.  The fallacy of Mr Chu’s argument is that he requires the plaintiff to quantify or particularise the amount that is being claimed right at the commencement of the claim.  The short answer is that the plaintiff is not required to do so.  But, even if Mr Chu is right in saying that there is a “high probability” that the plaintiff’s claim was less than HK$50,000 at the commencement of the action, it is not good enough for striking out for want of jurisdiction, for the lack of jurisdiction must be plain and obvious.  The defendant has to show that the “amount claimed” is not more than HK$50,000.  As explained above, the measure of general damages open under the plaintiff’s claim on his pleadings far exceeds the jurisdictional limit of the Small Claims Tribunal. 

83.  On such analysis the defendant has no hope of establishing that at the commencement of action the plaintiff’s claim must be exclusively within the jurisdiction of the Small Claims Tribunal.

84.  This leads obviously to Mr Chu’s submission that I should not be bogged down by consideration of the situation at the commencement of the action.  He argues that proper account must be  taken of the plaintiff’s duty to mitigate his loss and of the plaintiff’s subsequent quantification of his claim in determining whether the court has jurisdiction and that, if the plaintiff fails to quantify his loss and damages in the statement of claim, he must bear the consequences.

85.  In fact, it was only in the course of the present proceedings, i.e. after the commencement of the action, and even after the finding of the defence and counterclaim, that the plaintiff re-let the premises on 1 October 2006 to NMG. 

86.  Mr Chu fairly accepts that, on a striking out application, it is not an appropriate stage for the court to consider whether there has been proper mitigation of loss or whether reasonable mitigation could have taken place at an earlier time.

87.  Mr Chu argues that, even though the plaintiff’s claim for general damages is unquantified at the time of the issuance of the writ of summons, once the plaintiff realises that his claim is reduced below HK$50,000 as a result of mitigation of loss, the plaintiff should quantify his loss, which he eventually did, by way of the voluntary FBP.   Such quantification then “relates back” to the original claim to become the plaintiff’s claim as acknowledged by him or, alternatively, the original claim becomes irrelevant as having been replaced by the quantified claim, again as acknowledged by the plaintiff.  By reason thereof, it is argued, the court has no jurisdiction over the plaintiff’s claim.

88.  The nature and purpose of voluntary further and better particulars have been succinctly set out in Hong Kong Civil Procedure 2007, supra, at paragraph 18/12/65, at page 325.  Since the defendant has not objected to the voluntary FBP, it stands as part of the pleadings.  Order 18 rule 9 of the Rules of the District Court allows any matter arising at any time, including events which happened since the writ of summons, to be pleaded.

89.  The pleas in the voluntary FBP relating to the plaintiff’s mitigation of loss and to the quantification of the plaintiff’s claim for general damages following such mitigation plainly relate to events which have happened after the commencement of the present proceedings.  In my view they are nothing more than what His Honour Judge Lok described in Chow Wai Fun Amy’s case, supra, as “events which occurred after the commencement of the action [that] would not deprive this court of the jurisdiction to deal with the matter”.

90.  Given Mr Chu’s strong reliance on the plaintiff’s mitigation of loss in October 2006 and the plaintiff’s quantification in April 2007 that followed from such mitigation, it is necessary to look more closely at such grounds which he has put forward in support of his contentions.  His main argument turns on what he describes as the proper reading of section 5(2) and the Schedule of the Small Claims Tribunal Ordinance, Cap. 338.  He submits that, since there is no express reference to the commencement of legal proceedings in the statutory provisions, there is no justification for determining jurisdiction on the basis of the “amount claimed” at that time.  Rather the “amount claimed” refers to the plaintiff’s monetary claim in contract at any time so that, once the plaintiff quantifies his claim to be below HK$50,000, the District Court ceases to have jurisdiction either at that time or as a result of “relation back” to the original claim.  Mr Chu says such quantification is an acknowledgement of the “amount claimed” which discharges the defendant’s burden in establishing lack of jurisdiction.  It is, however, difficult to fathom why the “relation back” argument is necessary or even relevant at all if, as Mr Chu submits, the court is required to consider jurisdiction at any and all times. 

91.  The interpretation suggested by Mr Suen is that jurisdiction should be determined at the commencement of the action.  This approach is supported by the learned views of His Honour Judge Lok.  On the other hand, Mr Chu’s suggestion of a floating obligation throughout the course of the legal proceedings whereby the court and the parties are required to vigilantly consider the issue of jurisdiction whenever quantification is made or revised following the occurrence of subsequent events raises an onerous duty that is not expressly provided for in the legislative provisions.

92.  I agree with Mr Suen that, concerning the crucial and fundamental issue of jurisdiction of the court, such onerous obligation, if viable and applicable, would have attracted express provision.

93.  There is fallacy in Mr Chu’s contention that an ouster of the jurisdiction of the District Court may be caused by a subsequent event, such as the reduced quantification of the claim as a result of successful mitigation of loss after the commencement of proceedings.  Although a claimant landlord is expected to act reasonably and to take such steps as are necessary to re-let vacant premises at a market rent, it falls on the errant former tenant and not on the claimant landlord to establish that mitigation has not taken place (see Hong Kong Civil Procedure 2007 supra, at paragraph 18/8/7A, at page 310).

94.  The “amount claimed” by the claimant landlord should not turn on defence arguments that may or may not be raised or on the fortuity of whether successful mitigation can be achieved.  The “amount claimed” at the commencement of the action prior to successful mitigation is not what Mr Chu describes merely as “possible amount which can be big or small” that only crystallises on quantification.  The accrued loss and repudiatory damages so claimed is a genuine claim since there is no mitigation as yet.  It would be different if there has been mitigation prior to the commencement of the action.

95.  This can be simply illustrated.  If the claimant issues a claim for damages for breach of contract and assuming that he quantifies his loss as exceeding the jurisdiction of the Small Claims Tribunal at the commencement of the action, there is an “amount claimed” within the District Court jurisdiction and the claimant cannot issue his claim in the Small Claims Tribunal.

96.  Further assuming that the claimant has all along taken proper steps to mitigate but because of the exigencies of the circumstances, say, low interest in the market for a unique item made to the wrongdoer’s specification, he can only successfully mitigate loss some time after the commencement of the claim.  If the claimant chooses to amend his pleadings to reduce his claim to below HK$50,000 to reflect such mitigation of loss properly achieved during the course of the proceedings, according to Mr Chu’s submissions the District Court will have no jurisdiction and the claim is liable to be struck out.  The harshness of such a proposition is made even more stark if the limitation period has expired.  The plaintiff then faces the further jeopardy of a striking out application again if he attempts to reissue his claim in the Small Claims Tribunal.

97.  I make a few observations.  First, if the reduced quantification relates back to the original claim, as Mr Chu at one stage submits, to oust the jurisdiction of the District Court, then all steps taken in the course of the proceedings in the District Court become null and void.  But this does not sit well with the fact that the original claim in the above illustration at the commencement of the claim cannot be issued out of the Small Claims Tribunal because of the “amount claimed” exceeds its jurisdiction.

98.  Secondly, if the reduced quantification ousts the jurisdiction of the District Court as at the date of such quantification so that the original claim becomes irrelevant, what then is the effect of the prior steps taken by the parties or the court orders granted in the course of the legal proceedings prior to the reduced quantification?  Do they still bind the parties or the Small Claims Tribunal if the claimant successfully reissues the claim there?  The provisions in relation to jurisdiction in the Small Claims Tribunal Ordinance, Cap. 338, do not envisage such jurisdictional quagmire. 

99.  Thirdly, as Mr Suen points out, the defence contentions discourage mitigation and/or quantification of loss which cannot have been the intended sequelae of the legislation.  Mr Chu’s answer is that it is incumbent upon the claimant to think carefully about his choice of venue right from the start.

100.  I do not agree with Mr Chu’s submission that it is a hard fact of life for the claimant that he has to bear the consequences of any “misjudgment” on the litigation venue as a result not of his own error, but because of developments by subsequent events.  In the above illustration, the plaintiff is not at fault at all for he could not have issued his initial claim in the Small Claims Tribunal and he could not have properly mitigated prior to commencement of the action.  Mitigation of loss is not entirely in the hands of a claimant for it usually depends on whether there is a willing party in the market.  The claimant cannot gaze into a crystal ball and predict what the future will bring.  His obligation is merely to take reasonable steps and the threshold obligation is not high.  It will cause untold hardship if the claimant is bound by the consequences of his choice of litigation venue, the correctness of which depends on some event that cannot be predicted when he makes the choice.

101.  Fourthly, Mr Chu is, therefore, constrained to argue that in such circumstances, i.e. where the full circumstances relating to the mitigation of loss have not fully unfolded, the claimant should make his claim at an appropriate time.  This is reflected in his arguments in relation to the present case, i.e. that it was improper for the plaintiff to have issued his claim on 16 August 2006 “......[Had] the plaintiff waited until all the [deposit] had been used up, i.e. 15 September 2006, one would have note that he had already some potential tenants visiting the [premises], at least on 1 September 2006, 4 September 2006 and 15 September 2006...... just around 2 weeks before the Plaintiff actually enter into another tenancy agreement on 1 October 2006...... (keys delivered on 30 September 2006)”.

102.  There is no merit in such argument, which only serves to reflect the desperation of the defendant’s case on the jurisdiction issue.  A claimant is entitled to issue his claim at any time within the limitation period.  There is no obligation for him to wait until he has successfully mitigated loss or until he is able to form the view that mitigation is not possible in the ordinary course of business.  Mr Chu has not cited any authority for his proposition.

103.  In any event, in considering whether a claim ought to be struck out for want of jurisdiction, the relevant consideration is not whether the plaintiff has issued the claim unreasonably which, according to the authorities, may affect the court’s exercise of discretion on costs, but rather the consideration is whether it is plain and obvious that the plaintiff’s claim is within the jurisdiction of the Small Claims Tribunal or not.

104.  Fifthly, the sensible approach, which I accept, is that in the above illustration it is still within the jurisdiction of the District Court to deal with a reduced claim, but the claimant may be visited with a reduced level of cost should the court consider it is appropriate to exercise its discretion accordingly.

105.  There can be other illustrations of unreasonable situations contemplated under the defence contentions.  Mr Suen asks what if there is to be a split trial so that consideration of the issues relating to damages is to be deferred.  It would be strange indeed if, after judgment on liability is granted, it is discovered that court had and/or has no jurisdiction upon quantification of damages in the course of preparation for the hearing of the assessment of damages under Order 37 of the Rules of the District Court. 

106.  It is also difficult to appreciate why, in the case of a personal injuries claim in court, the court has no jurisdiction where the claimant’s claim, as initially quantified in his statement of damages upon commencement of the action, is drastically reduced to below District Court level due to substantial physical or mental recovery that exceeds the expectation of reasonable medical opinion.  In such situation, the claimant cannot be faulted for exceptional recovery or for not anticipating such recovery, yet according to Mr Chu’s submissions, he will be placed in an invidious position of not being able to issue his original claim in the Small Claims Tribunal in the first place and to have his claim struck out when he files and serves the revised statement of damages to reflect his acknowledged reduced quantification.  He will be triply unfortunate if his claim is by that time time barred. 

107.  The above serves to underline the fallacy of the defence contentions.  I am not persuaded by Mr Chu’s interpretation of the jurisdiction provisions of the Small Claims Tribunal Ordinance, Cap. 338 that does not reflect the plain meaning of the provisions and that create unreasonable and unjustified hardship.  The claim need only be a proper one, i.e. a monetary claim in contract where the amount claimed exceeds HK$50,000, at the time of the commencement of the action, and that is what is plainly claimed by the plaintiff here.

108.  Subsequent events do not affect jurisdiction but may affect the ultimate award and the question of costs.  It is not right to require the “amount claimed” to be a liquidated and quantified sum for the law permits a claim for general damages to be assessed.  If the claim for general damages as pleaded can exceed HK$50,000, then it is simply not a claim where the amount claimed is not more than HK$50,000.  I have explained why subsequent events do not affect jurisdiction.

109.  Mr Chu has cited a number of cases and I propose to deal with them briefly below.  Sit Ka Yee’s case is a personal injuries claim.  In that case the statement of damages itself valued damages for pain, suffering and loss of amenities at HK$30,000 and special damages of HK$12,085, which were collectively lower than the jurisdictional limit of the Small Claims Tribunal.  The learned judge held that the claim belonged to the Small Claims Tribunal, “It can only be issued in that tribunal which has sole jurisdiction to hear it.  The action must therefore be struck out......”

110.  Mr Chu says that Sit Ka Yee’s case, supra, is similar to the present case in that the plaintiff has acknowledged the claim to be under HK$50,000.  I disagree.  I have read the judgment carefully, including the learned judge’s summary of arguments by the plaintiff’s solicitors.  It has not been suggested that the plaintiff in that case ever claimed for damages beyond HK$50,000.  Indeed, the statement of damages valued the claim to be under HK$50,000.  Plainly the Small Claims Tribunal is the appropriate venue if, all along, the monetary claim in contract or tort is under HK$50,000.

111.  In the present case, at the commencement of the claim, the general damages claimed were well in excess of such jurisdictional limit, and it was only after the issuance of the writ that the plaintiff mitigated loss by re-letting the premises, thereby reducing his claim.

112.  Mr Chu also relies on Chow Wai Fun, Amy’s case, supra, which dealt with a tenancy situation.  In that case the plaintiff applied for summary judgment for unpaid rent and mense profits for the period from May to October 2000 which was limited to HK$40,000 after credit was given in respect of the rental deposit.  The learned judge accepted that at the commencement of the action, the case and claim properly fell within the jurisdiction of the District Court.  At that time the plaintiff had a claim for possession of the premises, but the defendant subsequently on 30 October 1990 surrendered possession of the premises, so the claim for possession was no longer necessary.

113.  As Mr Chu points out, the date of 30 October 1990 is likely to be a typographical error.  I do not wish to speculate whether it refers to 30 October 2000 although it is not unlikely since the claim for mesne profits was up to October 2000.  The learned judge considered, but rejected, the defendant’s challenge to jurisdiction and granted summary judgment. 

114.  Mr Chu seizes on the words of His Honour Judge Lok as follows, “It is only because of the subsequent conduct of the Defendant in surrendering the premises that the claim for possession is no longer necessary”, to support his contentions.  He tries to distinguish this case by saying that the learned judge referred to the fact of the defendant’s surrender of possession of the premises as the only event that brought the plaintiff’s out of the jurisdiction of the Small Claims Tribunal, but the learned judge did not say whether the monetary claim of HK$40,000 alone would fall within such exclusive jurisdiction.

115.  Mr Chu further says that, since the claim for mesne profits was up to October 2000, it is evident that the exact amount of mesne profits claimed was unknown at the time of the commencement of the action.  “HH Judge Lok did not comment on whether this was proper.  In particular, HH Judge Lok did not say whether the plaintiff knew or should have known that the Court had/did not have jurisdiction (see  below) if that situation was considered alone.”

116.  I do not see any advantage in analysing in minute detail the factual matrix that is stated or not stated in the judgment of His Honour Judge Lok.  The relevant consideration is not a comparison of the facts of that case with those of the present one. Instead, the useful task is to elicit the ratio of the case which offers guidance. 

117.  I agree with Mr Chu that, at the time of the commencement of the action in Chow Wai Fun, Amy’s case, supra, the precise dollars and cents of the monetary claim were known.  At that stage the defendant had not yet delivered vacant possession of the premises, so the amount of mesne profits calculable up to the delivery of possession could not have been know at that stage.  In those circumstances it cannot be said that at that time there was an “amount claimed” that was under HK$50,000, in which case the District Court had jurisdiction.  But if Mr Chu is right in his contentions, once possession was recovered and mesne profits payable up to the surrender of the possession was, to adopt Mr Chu’s words, acknowledged to be under HK$50,000 at the latest at the hearing before His Honour Judge Lok, the learned judge should have found that such quantification or acknowledgement “related back” to the original claim and/or that such quantification or acknowledgement replaced the original claim with the result that the District Court had no jurisdiction.  But, instead of disclaiming jurisdiction which the learned judge should have done if the court lacked jurisdiction, the learned judge held that the District Court had jurisdiction to deal with the quantified claim of HK$40,000 without the possession claim.

118.  Mr Chu next refers to Yu Yiu Kong Samuel v Kobylanski, Stephen André, DCCJ5371/2000, unreported, 11 July 2001.  In that case the plaintiff claimed for possession of premises (which were subsequently surrendered by the defendant), arrears of rent/mesne profits, and various items of claim.  Mr Chu refers to paragraph 7 of the judgment of His Honour A Cheung, as he then was, in which he discussed costs.  The learned judge said that:

“[the] normal rule is that costs should follow event.  But the net amount recovered by the Plaintiff is small.  It would have followed within the exclusive jurisdiction of the Small Claims Tribunal but for that fact that originally there was a claim for vacant possession.  However two days after the Writ was issued, possession was delivered back to the Plaintiff......  In relation to the Writ and Statement of Claim, they were prepared at a time when possession was still in use.  The plaintiff should be entitled to the legal costs expended on it, but once possession was delivered up, the matter within dispute would really be within the jurisdiction of the Small Claims Tribunal.”

119.  Mr Chu distinguished Yu Yiu Kong Samuel’s case, supra, by saying that, apart from the claim for possession which was not pursued, the amount claimed by the plaintiff in that case exceeds HK$50,000 and it is only held by the learned judge after trial that the amount of damages awarded was less than HK$50,000.  Since Mr Chu cites this case for the purpose of distinguishing it, I need say no further, except that I am unable to draw assistance from this case.

120.  Mr Chu also distinguishes M Beraha & Co. Ltd v Ng Wai Lun, CACV256/2003, unreported, 18 April 2004, on a similar basis.  In that case, the plaintiff claimed for refund of the rental deposit in the sum of HK$52,000 and the defendant sought to offset two sums of HK$10,400 and HK$5,000 respectively.  At the trial hearing, the parties agreed that a sum of HK$4,870 should be deducted from the deposit so the learned judge entered judgment for the sum of HK$47,130 without the trial.  Mr Chu says that since the amount claimed by the plaintiff in that case is HK$52,000, the case is distinguishable.

121.  I find that this does not sit well with his other submissions that the issue of jurisdiction can be considered at any and all times even after the commencement of the action.  Plainly at the trial hearing in that case, the plaintiff, to adopt Mr Chu’s words, “acknowledged” that HK$4,870 should be deducted from the deposit.  Once the plaintiff acknowledged such deduction and agreed to a reduction of his claim from HK$52,000 to HK$47,130, such revised quantification emanating from the plaintiff’s acknowledgment and not from determination after trial should, on Mr Chu’s submissions, show that the District Court had or no longer had jurisdiction.

122.  But in that case, without any demur from the Court of Appeal and despite the Court of Appeal’s endorsement of the learned judge’s view that “had the plaintiff properly taken into account the amount of $4,870 for distress of rent in its consideration of the proper venue to bring its claim against the defendant, the claim would and should have been brought before the Tribunal, as opposed to the District Court”, and notwithstanding the duty of the court to disclaim jurisdiction where it lacks jurisdiction by statute, the learned judge entered judgment against the defendant for the sum of HK$47,130 and adjudicated on costs.  This flies in the face of the defence’s contentions that there is no jurisdiction where there is clear acknowledgment of a monetary claim below HK$50,000.

123.  In discussing the above cases, Mr Chu lays emphasis on the fact that the plaintiff has only a monetary claim and does not claim for possession of the premises in the present case.  This is irrelevant.  The relevant consideration is whether the plaintiff’s claim at the commencement of the action was within the exclusive jurisdiction of the Small Claims Tribunal or not.  One may easily come to a negative answer if there is a possession claim but jurisdiction does not necessarily turn on whether there is or is not a possession claim.

124.  Next, Mr Chu draws an analogy from the provisions in section 41(1) and (2) of the District Court Ordinance, Cap. 336, which provides as follows:

“	(1)	The court shall, either of its own motion or on the application of any party, order than an action or proceeding be transferred to the Court of First Instance where an action or proceeding commenced in the Court, not being a counterclaim, is outside the jurisdiction of the Court but within the jurisdiction of the Court of First Instance.
	(2)	The court may, if it thinks fit, instead of ordering that the action or proceeding be transferred, order that it be struck out where, on the application of a defendant, it appears to the Court that the plaintiff or, if more than one, one of the plaintiffs knew or ought to have known that the Court had no jurisdiction.”

125.  Mr Chu in his written submissions argues that, although section 41(1) refers to transfer in cases from the District Court to the Court of First Instance without any mention of the Small Claims Tribunal, the heading of section 41, i.e. “Procedure where proceedings beyond the jurisdiction of the court are commenced in the Court”, which is submitted to be including the situation where the District Court has no jurisdiction because the claim falls within the exclusive jurisdiction of the Small Claims Tribunal”.  In his oral submissions before me, Mr Chu submits that he refers to section 41 for analogy only.

126.  Mr Chu argues that by analogy to section 41(2), the District Court may strike out a claim before it that is within the exclusive jurisdiction of the Small Claims Tribunal if the plaintiff “knew or ought to have known that the court had no jurisdiction”.  Mr Chu submits that, since the plaintiff knows or ought to have known this court has no jurisdiction, the plaintiff’s claim ought to be struck out.

127.  Such argument is without merit.  Section 18(3) of the Interpretation and General Clauses Ordinance, Cap. 1, provides that “[a] marginal note to section heading to any provision of any Ordinance shall not have any legislative effect and shall not in any way vary, limit or extend the interpretation of any Ordinance.”

128.  It is difficult to see how the heading of section 41 will assist in “including” within section 41 a power to strike out a claim exclusively within the jurisdiction of the Small Claims Tribunal or in giving a power to so strike out by way of analogy.

129.  Apart from abuse of process which this court has inherent jurisdiction to deal with but which is not the basis of Mr Chu’s submissions, striking out a claim is a draconian power that should be exercised when such power is clearly provided and where the case for striking out is plain and obvious.  

130.  When one reads section 41(1) and (2) together, it is plain that the statute is dealing with proceedings beyond the jurisdiction of the District Court as meaning outside the jurisdiction of the District Court but within the jurisdiction of the Court of First Instance.  I cannot see how such statutory provision can apply to a situation where the claim falls within the jurisdiction of the Small Claims Tribunal.  Mr Chu says there is no express reference to the Court of First Instance in section 41(2), but one must read the section in its entirety to give meaning to its provisions.  Further, section 41(2) contemplates striking out a claim where the court decides not to exercise its discretion to transfer the action or proceeding.  Such discretion to transfer is provided for in section 41(1) which refers to a transfer to the Court of First Instance.  In any event, section 41(2) cannot apply to an action or proceeding that is within the jurisdiction of the Small Claims Tribunal because the District Court simply has no power to transfer cases to the Tribunal.  There is no merit to this argument at all.

131.  There is also no need to go further to consider whether the defendant has shown that the plaintiff knew or ought to have known that the District Court has no jurisdiction since section 41(2) cannot be prayed in aid by way of analogy.

132.  Since Mr Suen abandons reliance on the matters raised in paragraph 38 of his written submissions or on the case of Ramos Mirazul A. v Pro Search (Asia) Limited, DCCJ5878/2002, His Honour Judge L Chan, unreported, 10 June 2005, I need not deal with the same.

133.  In the shortness of time I have not been able to set out the fullness of counsel’s arguments and submissions.  Suffice to say that I have considered their submissions most carefully.  Having considered their submissions and the above matters, I am not satisfied that the District Court lacks jurisdiction such that the plaintiff’s claim ought to be struck out.

134.  I find the defendant’s contentions untenable and reject them.  There is no merit to the application, which regrettably only serves to delay the trial and add a further layer of costs to what can only be termed as a modest claim on either side of the fence.  The defendant’s second summons is dismissed.

(Discussion on further conduct of the case and costs)

135.  So, by consent, judgment be granted in favour of the plaintiff against the defendant for the sum of HK$27,815, together with interest thereon at 10.75 per cent per annum from the date of the writ, which is 16 August 2006, to the date of judgment, which is today, and thereafter at judgment rate until payment.

136.  By consent the defendant’s counterclaim is dismissed.

(Discussion on costs)

137.  So the plaintiff’s summons dated 20 April 2007 is dismissed.  The plaintiff do pay the defendant costs of the plaintiff’s summons dated 20 April 2007, to be taxed if not agreed on District Court scale with certificate for counsel.

138.  The defendant’s summons dated 20 April 2007 is dismissed.  The defendant do pay the plaintiff costs of the defendant’s summons dated 20 April 2007, to be taxed if not agreed on District Court scale with certificate for counsel.

139.  The whole day of the hearing on 23 April 2007 and two hours’ hearing time on 24 April 2007 be apportioned as to one-third for the plaintiff’s summons of 20 April 2007 and two-thirds for the defendant’s summons of 20 April 2007 in order to assist the taxing master.

140.  I make the aforesaid apportionment on a broad basis to assist the taxing master.  Mr Chu says that the appropriate apportionment is 50/50, while Mr Suen says that the apportionment should be one-third to two-thirds, or one-quarter to three-quarters.  My impression of the hearing yesterday is that more time was spent on the defendant’s summons.  This is reflected by the more confined issues of the plaintiff’s summons.  After all, only one authority is cited in relation to the same.  This is also reflected in the scope of discussions in my decision delivered today.  On a broad basis and with my impression of the hearing yesterday still fresh in my mind, the aforesaid apportionment is considered appropriate.

(Discussion on costs)

141.  I reserve the ruling of costs of the action to be handed down.