TIME RICH 08 LTD v. DBE (HK) LTD AND OTHERS

HCA 566/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 566 OF 2017

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J U D G M E N T

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Introduction

1.  This is an action issued by the plaintiff to claim possession of a property and arrears of rent, mesne profits, damages, interests and costs.  The plaintiff now applies for summary judgment under Order 14 rules 1 & 2 of Rules of the High Court.

The defendants’ proposed striking out summons

2.  On the day of the hearing, the defendants (collectively “Ds”) indicated their wish to seek leave to file a summons to strike out one paragraph in the 2^nd affirmation of Ms Sha Man Chun, the manageress of the plaintiff company/P who filed two affirmations on behalf of P to support P’s present application.  The summons had not even been filed at the commencement of the hearing (although subsequent filed) nor was there any supporting affirmation or evidence as to why the disputed paragraph ought to be struck out and/or why the application was made so late.

3.  The disputed paragraph referred to a letter dated 18 July 2017 which the 1^st defendant/D1 had sent to P and signed by the 3^rd defendant/D3 (“18.07.17 Letter”)[1]. From what was stated in the proposed summons, it appeared that Ds claimed that the 18.07.17 Letter was a letter which disclosed privileged without prejudice communication.  However, the disputed paragraph in fact also referred to a paragraph in Ms Sha’s 1^st affirmation in which she had produced an earlier letter dated 20 January 2017, also sent by D1 to P making various proposals (“20.01.17 Letter”)[2], to which P’s solicitors replied on 20 February 2017, simply stating that D1’s proposals in the 20.01.17 Letter were not acceptable to P.

4.  In fact, there was an even earlier letter dated 22 April 2016 in which D3 acknowledged that he had not been paying rent punctually due to D1’s falling business and made two proposals for P to consider (“22.04.16 Letter”). This was met by a letter of demand dated 4 May 2016 from P’s solicitors.

5.  Ds did not object or apply to strike out the references to the 22.04.16 Letter or the 20.01.17 Letter.  What D1/D3 said in the 18.07.17 Letter was similar to the earlier two letters, namely acknowledging D1 owed rent to P and that D1 was facing financial difficulties and proposing ways to pay the rent.  None of those letters were marked “without prejudice”, and there was no evidence of any ongoing negotiation between the parties at the time of the 18.07.17 Letter nor any evidence that the 18.07.17 Letter was sent by D1/D3 as part and parcel of any without prejudice negotiation.

6.  In particular, Ds had already instructed their present solicitors to act for them at the time when the 18.07.17 Letter was sent, which was sent the day before D2’s affirmation was filed to oppose the present application.

7.  There was no sufficient evidence that D1/D3 was making any “without prejudice” communication, and in fact, similarly with the 22.04.16 Letter and the 20.01.17 Letter, he was simply making open proposals.  As from P’s side, the only letters one can see were letters of demand from P’s solicitors, and the letter in February 2017 rejecting D1’s proposals in the 20.01.17 Letter. 

8.  Having considered the above, I am not prepared to strike out the disputed paragraph or to order the 18.07.17 Letter be expunged.

9.  Having said this, even if the 18.07.17 Letter were to be expunged and the disputed paragraph struck out, this would not affect my decision in this matter, in particular in light of there being those two earlier letters which Ds had not sought to strike out.

Background

10.  The background to P’s claim is relatively simple.  P is and was at all material times the registered owner of shop premises on the ground floor of a building in Sai Yeung Choi Street South and Soy Street (“Premises”).

11.  P as landlord entered into a tenancy agreement dated 13 October 2015 with D1 as tenant (Tenancy Agreement”) and the Premises were let to D1 for business purpose for 3 years commencing from 15 October 2015 until 14 October 2018, at a monthly rent of HK$680,000, exclusive of rates, government rent and management fees and payable in advance on the 1^st day of each calendar month.

12.  Prior to entering into the Tenancy Agreement, D2 and D3 who are husband and wife, jointly executed a deed of guarantee on 9 October 2015 in favour of P, that they will jointly and severally guarantee the due performance of the Tenancy Agreement throughout the term of the tenancy (“Guarantee”).

13.  There was a rent free period from 15 October to 13 November 2016, and apart from two part payments, one on 17 January 2017 for HK$685,800 and one on 9 February 2017 for HK$73,100, D1 had failed to pay rent, management fees and government rent, and rates from 1 July 2016 to 31 March 2017, and an amount of HK$4,965,030.10 was outstanding as of 31 March 2017.

14.  P issued the writ herein with endorsed statement of claim on 10 March 2017.  P claims against Ds under the Tenancy Agreement and the Guarantee the outstanding amount and as of 31 March 2017 and further mesne profits at the rate of HK$680,000 from 1 April 2017 until vacant possession and damages, plus interest and costs.

15.  On 17 March 2017, D1 delivered vacant possession of the Premises to P.

Ds’ defence and D1’s counterclaim 

16.  Ds filed their defence and D1’s counterclaim on 11 May 2017 (“D&C”).  Essentially, they pleaded that there was breach of express and implied terms of the Tenancy Agreement on the part of P, in that there was water leakage from the ceiling of the Premises from around 17 May 2016 to 4 July 2016 and then recurring periodically between 18 August 2016 and 19 October 2016, which led to flooding in the back part of the Premises used for storage of stock, and that D1 suffered loss and damage as a result thereof.

17.  It was also Ds’ case that under Clause 8 of the Tenancy Agreement that D1 had the right to suspend rent, or alternatively, if rent was not suspended, then P had failed to take reasonable steps to mitigate its loss.  Further or alternatively, if D1 is found liable to P, D1 is entitled to set off the sums counterclaimed against P, namely damages suffered by D1 as a result of the water leakage, plus interest and costs.

The legal principles

18.  Ma J (as he then was) had said in Schindler Lifts (Hong Kong) Ltd v Ocean Joy Investments Ltd [2003] 1 HKC 438, of the standard approach in application for summary judgment: -

“(1) Factually, it has to be determined whether what the defendant says is believable, rather whether its version of events is to be believed….

(2) As a matter of law, even if what the defendant says is believable, does it amount to an arguable defence in law[3]?”

19.  As further said by Cheung JA in Paul Y Management Ltd v Eternal Unity Development Ltd CACV16/2008 (unrep) 12.8.2008:

“In deciding whether a plaintiff is entitled to summary judgment the relevant test is whether the defendant has raised credible triable issues. If there are, the matter should go to trial. If not, judgment should be entered against the defendants. In considering whether there are triable issues, the Court will not take the alleged defence on its face value but test it against the evidence disclosed in the affidavit including matters such as contemporaneous documents, whether the alleged defence is inconsistent with the defence previously put forward or whether the defence is only recently raised despite opportunity being given to the defendant to respond earlier. The Court will also consider the inherent probability of the defence but what the Court should not do is to conduct a mini-trial on complicated factual issues[4].”

20.  Ms Lee also referred to the Hong Kong Civil Procedure /HKCP Volume 1, 2018 Ed at paragraph 14/4/14B, where it is stated that the mere fact that a defendant has a counterclaim does not necessarily entitle him to leave to defend.  It is further stated that if, however, the counterclaim arises out of quite a separate and distinct transaction or it is wholly foreign to the claim or there is no connection between the claim and the counterclaim, the proper order should be for judgment for the plaintiff with costs without a stay pending the trial of the counterclaim, and further, if the counterclaim is frivolous or untenable, it will be disregarded.

21.  Mr Chan on the other hand referred this court to Banks v Jarvis [1903] 1 KB 549 where it was said that in Order 14 applications involving set-off and counterclaims , they generally amount to a defence in their right[5]. Further, in HKCP Volume 1, 18 Edition, it is stated that to the extent of his set-off, a defendant is entitled to unconditional leave to defend[6], and it is for the Court to determine whether the defendant’s claim to set-off is arguable or not.  Further, where the defendant’s counterclaim is bona fide and arises out of the same subject-matter as the plaintiff’s claim the Court should grant unconditional leave to defend, whether or not the defendant admits the whole or part of the claim[7].

22.  There was no real dispute as to the above general principles.

Disputes on facts

23.  Mr Chan submitted that there were material disputes on facts which the Court would have to resolve at trial concerning the extent of the effect of the recurring water leakage and flooding in the Premises, namely:

(i) The effect on the Premises; and

(ii) The effect on the business of D1.

24.  According to what was pleaded in the D&C, the water leakage took place during two periods, (i) some 1.5 months during the 1^st period from May to July 2016, and then (ii) recurring periodically over 2 months during the 2^nd period between August 2016 and October 2016, totalling only about 3.5 months.

25.  As mentioned earlier, D1 sent the 22.04.16 Letter to P which was signed by D3.  D1 acknowledge that it had not been paying rent punctually due to D1’s falling business and made two proposals for P to consider (“22.04.16 Letter”). 

26.  The 22.04.16 Letter clearly showed that D1 was in financial difficulties and had already by then not been paying rent, management fees, Government Rent and Rates punctually.  The letter was sent prior to the alleged water leakage over the 1^st period, and it was met by a letter of demand dated 4 May 2016 from P’s solicitors indicating that the various arrears from 1 February 2016 to 31 May 2016 had by then accrued to some HK$2.8m.  

27.  Thereafter, on 18 May 2016, D1 sent a letter to P to complain about the water leakage which allegedly seriously affected the sales of the shop and further notifying P that D1 had arranged for a contractor to check and who opined the leakage was from the unit above the Premises (“18.05.16 Letter”).  In this letter, there were 3 photographs attached.  One showed a bucket in the middle which appeared to be catching dripping water, and two appeared to show the ceiling and/or shelves.  There were no goods or stock seen in the photographs.

28.  It was not clear what happened afterwards, but according to D2’s 1^st affirmation, in around mid 2016, D1 had moved out of the Premises and verbally informed P and that P did not object and proceeded to seek new potential tenants for the Premises.  Further according to D2, P then informed D1 a new potential tenant had been found at a lower rent, and D1 agreed to bear the deficiency in rent throughout the remainder of the tenancy term.

29.  This was not contradicted by P, and it appeared that there were oral discussions between the parties at that time.

30.  It would also appear that the rent, management fees, Government Rent and Rates for February and March 2016 were paid after P’s solicitors’ 1^st demand letter.  

31.  Then, on 1 September 2016, P’s solicitors sent their 2^nd letter of demand, demanding from D1 arrears of rent, management fees, Government Rent and Rates from 1 April to 31 August 2016 which by then had accrued to about HK$3.575m.

32.  Again, it was not clear what happened thereafter, save that it would appear that there were further discussions between the parties.  Anyway, it would appear that there had been payment of arrears for April, May and June, and there was about one month’s rent free period from about mid October to mid November 2016 as below mentioned.  The rent free period appeared to follow from the 2^nd period of water leakage.

33.  P had produced some emails which D1’s staff sent to P on 4 November 2016, and also on 6 & 7 December 2016.  There were photographs attached in the emails showing the water leakage.  In the email of 4 November 2016, there were 5 photographs showing what appeared to be the floor of the Premises.  In the December emails, there were 3 photographs, one with goods seemingly inside the Premises, one appeared to be taken from the flat roof above the Premises, and it was not clear from where the other one it was taken.

34.  Anyway, on 17 January 2017, P’s solicitors sent a 3^rd letter of demand, demanding arrears of rent and unpaid management fees, Government Rent and Rates from 1 July 2016 to 31 January 2017, and after allowing a rent free period from 15 October 2016 to 13 November 2016 and further part payment from D1, the net balance outstanding in January 2017 was HK$3.67m.

35.  D1 then sent the 20.01.17 Letter mentioned earlier.  The letter was signed by D3 on behalf of D1.  There was no mention of any damages suffered by D1 due to the water leakage, and all he did was, among other things, to say that due to the falling retail market, D1 was not able to continue running the business at the Premises and offered to deliver up vacant possession on 31 January 2017 and to pay the arrears by 10 post dated cheques.  Further, D3 indicated in the letter that D1 understood that what was proposed would result in loss and damage to P, and that D1 was willing to pay compensation in the sum of HK$680,000 being one month of the rental deposit.

36.  D1’s proposal was later rejected by P through their solicitors’ letter dated 20 February 2017.

37.  As mentioned earlier, P issued the writ herein. Thereafter, P received a cheque for HK$200,000 dated 8 March 2017 from D1, and then on 17 March 2017, a letter from D1 signed by D2 together with the keys to the Premises (“17.03.17 Letter”).  In this letter, D1 stated that due to the external circumstances and also the interior problems of the Premises, which were different from those at the time of signing of the Tenancy Agreement, D1 was not able conduct business normally, and had to vacate the Premises.

38.  It seemed clear that, even without the 18.07.17 Letter, the water leakage did not cause any serious effect to the Premises nor to D1’s business, since in the 20.01.17 Letter, D1 was talking about paying compensation to P, and not seeking compensation from P.

39.  In the 3^rd affirmation filed by D2, she had produced 7 more photographs alleging that the seepage soaked the ceiling of the Premises badly and that the ceiling cracked and fell apart, and that during and after rainy days, the leakage was so serious that water kept dripping continuously from the ceiling, resulting in a lot of goods being damaged by water seepage and were no longer in a sellable condition.  First of all, it was not clear when the photographs were taken, and it was not clear whether they had been sent to P.  Secondly, in the photographs, one could see most of the goods were contained in plastic bags and there was only one photograph of one handbag allegedly damaged.

40.  There was no other supporting evidence produced by D1 for his alleged claim of HK$3,300,000 such as management accounts showing fall of business during those 3.5 months of water leakage.  What was clear was that notwithstanding the water leakage, D1 stayed on occupying the Premises until March 2017.

41.  Having considered the evidence, what Ds alleged about the serious effect of the water leakage, whether on the Premises or on D1’s business is in my view not supported and not believable.

Disputes on law

Implied Terms

42.  Mr Chan submitted that the main alleged dispute on law concerned the construction of the Tenancy Agreement, as to whether there was a breach by P of 3 implied terms, and that the Court would have to determine at trial whether in law the 3 implied terms had been breached and the Tenancy Agreement rescinded.  The 3 implied terms were said to be as follows:

(i) The Premises were to be fit for business purpose (“Implied Term (1)”)

(ii) The Premises were to be in tenantable condition (“Implied Term (2)”)

(iii) The right to quiet enjoyment of the Premises (“Implied Term (3)”)

43.  As pointed out by Mr Chan, the law of implied terms is trite. As their Lordships in the Privy Council had set out in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, in their view, for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that “it goes without saying”; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract[8].

44.  Mr Chan submitted that the question of necessity of implied terms is not to be determined by merely asking whether the contract would work at all without the implied term, but would it work the way the parties might reasonably have expected it to without the implied term?  Mr Chan also referred to In Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988 where Lord Hoffman said the following[9]:

“The danger lies, however, in detaching the phrase ‘necessary to give business efficacy’ from the basic process of construction of the instrument. It is frequently the case that a contract may work perfectly well in the sense that both parties can perform their express obligations, but the consequences would contradict what a reasonable person would understand the contract to mean. Lord Steyn made this point in the Equitable Life case (at p 459) when he said that in that case an implication was necessary ‘to give effect to the reasonable expectations of the parties.’”

45.  Mr Chan thus argued that a reasonable man would understand the Tenancy Agreement between P and D1 to mean leasing the Premises for the purpose of conducting retail business of leather goods, and that anything which prevented this core purpose would hence be contradicting the reasonable expectations of the parties.

46.  Ms Lee on the other hand submitted that the law is clear.  There were no implied terms.  The Tenancy Agreement was a standard tenancy agreement.

Implied Terms (1) and (2)

47.  Ms Lee had referred the court to Hong Kong Tenancy Law, 6^th Ed by Malcolm Merry, where it is stated that the law implies a covenant or condition that the premises are fit for human habitation but traditionally this covenant is limited to furnished lettings at the beginning of the tenancy, and does not extend to unfurnished premises and does not last throughout the life of the lease.  Further, as stated by the author, this restricted implicit promise aside, it may be that the landlord has given an express warranty, prior to or at the time of the contract, that the premises will be fit for habitation or will be in good condition, but if there is no such warranty or any express covenant as to the condition of the premises, the courts (in England at least and presumably Hong Kong too) will refuse to imply one[10].

48.  Mr Chan contended what was cited above concerned the implied term of habitability and that it did not concern a commercial lease for business purpose.

49.  However, the author went on in the paragraph to state that on the letting of an unfurnished flat or house there is no implied covenant that the house is fit for human habitation, or for the purpose for which it has been let, nor is there an implied covenant that the property is free from dangerous defects or can lawfully be used for the tenant’s intended purposes.  It is up to the tenant to satisfy himself before taking the lease that the premises are fit for the purpose for which he wants to use them.  According to the author, this has been confirmed at the highest level in England.

50.  What is emphasised in the above paragraph seems to suggest that there is no implied covenant that unfurnished premises are fit for the purpose for which it has been let, whether for habitation or for the tenant’s intended purposes (which in my view would seem to include business purpose).  In any event, whether what is stated above is to be confined to an implied term of habitability and not to apply in relation to commercial leases for business purposes, in the present case, as pointed out by Ms Lee, there were in fact clear express terms in the Tenancy Agreement.

51.  Clause 1.1 set out the tenancy the term, rent and user.  The user was stated “To use the Premises for handbags and accessories retails purposes only” (sic).

52.  Clause 1.2 that states: “For the avoidance of doubt, the Premises shall include…, and the Landlord does not represent or warrant that the Premises are suitable for the User as permitted herein and the Tenant shall satisfy itself or shall be deemed to have satisfied itself that they are suitable for the purpose for which they are to be used.”

53.  The Tenancy Agreement was duly signed by D1, and D1 had accepted the express terms.  The Implied Terms (1) and (2), which Mr Chan argued should be read into the agreement, in my view contradicted the above express provisions of the Tenancy Agreement.

Implied Term (3)

54.  Mr Chan further submitted that quiet enjoyment was a covenant which should be implied into the Tenancy Agreement by necessary business efficacy, and that the Premises could not be so enjoyed when approximately one third of the usable area in the Premises had recurring water leakage.   

55.  As Parker J held in Browne v Flower [1911] 1 Ch 219: “to constitute a breach of such a covenant [for quiet enjoyment] there must be some physical interference with the enjoyment of the demised premises”[11]

56.  Mr Chan argued that P and D1 must have had the reasonable expectation, when entering into the Tenancy Agreement, of having no physical interference with D1’s occupation of the Premises, whether by water or anything at all.

57.  The covenant of quiet enjoyment of leasehold premises was considered in Connaught Restaurants Ltd v Indoor Leisure Ltd [1994] 1 WLR 501.  The case concerned demised premises which suffered severe damage caused by flooding.  The damage caused major disruption to the tenants’ business and it was accepted in that case the flooding amounted to a breach of the landlords’ covenants (including that of quiet enjoyment).  However, in that case, the flooding was from the landlords retained portion of the building.  This is not the situation in the present case.

58.  Ms Lee submitted that there was an express term in the Tenancy Agreement for quiet enjoyment, namely Clause 3.1, and there could be no implied covenant.  Clause 3.1 states that the Landlord agrees with the Tenant as follows:

“that the Tenant paying the Rent, rates, Government rent, management fees and maintenance and/or air-conditioning charges and all other payments and outgoings … and observing and performing the terms and conditions herein contained and on the Tenant’s part to be observed and performed shall peacefully hold and enjoy the Premises during the Term without any interruption by the Landlord or any person lawfully claiming under or in trust for the Landlord.”

59.  Mr Chan referred to the case of Miller v Emcer Products [1956] Ch 304 in which Romer LJ held that “… an express covenant will operate only to displace an implied covenant only if they cover the same grounds- or in other words if they are in pari materia”[12].  It was Mr Chan’s submission that Ms Lee had mistakenly confused the express covenant to peacefully hold and enjoy the Premises under Clause 3.1 with the implied covenant of quiet enjoyment, and that these two terms are pleaded as two separate terms and are not in pari materia, and that the former concerned enjoyment without interruption by P, ie a suspension of possession of the Premises and the latter concerned enjoyment of the Premises free from any disturbance ie a qualitative measure of enjoyment.

60.  Ms Lee had also referred to Cheong Nin Investment Co Ltd and anor v Tokyo Shop Ltd, HCA 309 of 2004, (unrep) Reasons for Judgment dated 9 December 2004 where a similar clause 3.1, which contained the words of “may peaceably hold and enjoy the said premises without any interruption by the Lessor or any person lawfully claiming through or under the Lessor” was clearly referred to as the “Quiet Enjoyment Clause” by Waung J.  

61.  It was also held in Miller v Emcer Products Ltd [1956] Ch 304 that the grant contained a covenant for quiet enjoyment of the demised premises without interruption from the landlords “or the superior landlords” or any person rightfully claiming under or in trust for them and that that qualified covenant displaced any covenant for title or quiet enjoyment implicit in the demise[13].

My view on the Implied Terms

62.  The Tenancy Agreement is a standard tenancy agreement with standard clauses.  Having considered the express provisions of the Tenancy Agreement, I am of the view that the Tenancy Agreement is clear and effective without the Implied Terms.   There are no implied terms nor is it necessary to imply terms.  The argument that the 3 Implied Terms should be read into the Tenancy Agreement is moonshine.

63.  Even if there were the 3 Implied Terms, the water leakage was not caused by P or any other person” lawfully claiming under or in trust for P”.  There was no breach on the part of P and P cannot be held responsible for the leakage cause by an unrelated third party, the landlord or owner above the Premises.  Further, D1 also failed to meet the condition for the quiet enjoyment of the Premises in that it failed to pay rent and performed the obligations of a tenant, as said in the Cheong Nin case, even prior to the 1^st period of water leakage. Further, as pointed out by Ms Lee, D1’s claim of HK$3,300,000 being disruption and decline in business was a bare assertion with no particulars and/or any evidence to support.

Right of set-off

64.  The right of set-off was expressly excluded under clause 2.1 of the Tenancy Agreement which provided that D1 was “to pay to the Landlord the Rent hereby stipulated on the days and in the manner set out above without any deduction or se-off whatsoever”. D1 cannot therefore rely on any right of set off or any cross-claims, even if there was actionable breach on the part of P by reason of the leakage.

Right of suspension 

65.  Mr Chan argued that even if this Court were to find that the Implied Terms were not to be read into the Tenancy Agreement or there was no breach on part of P, Clause 8.1 conferred upon D1 a right to suspend rent in times of the Premises being inaccessible due to among other things the water leakage so as to render it unfit for occupation and use.

66.  Clause 8 provided that payment of rent could be suspended when the Premises became damaged or inaccessible by reason of inter alia calamity beyond the control of the parties.  The relevant provisions of Clause 8.1 were:

“8.1 If the Premises shall at any time during the Term be:

8.1.1. destroyed or damaged of become inaccessible or become subject to a Close Order or Demolition Order due or owing to fire, water, storm, wind, typhoon, defective construction … or any calamity beyond the control of the Landlord and not attributable to any failure of the Tenant to observe and carry out any of the terms of conditions of this Agreement so as to render the Premises unfit for occupation and use, or

8.1.2. condemned as a dangerous structure or part thereof …

Then the Rent hereby reserved or a fair proportion of the Rent according to the nature and extent of the damage sustained or order made shall …. Be suspended …

8.2. The Landlord’s determination of the fair proportion of the Rent to be suspended shall be final and binding on the Tenant.

8.3. …

8.3.1. …

8.3.2. …

8.3.3. the Landlord shall not in any event be liable to pay compensation or damages to the Tenant in respect of any period during which the occupation or use of the Premises shall be interrupted or in respect of the determination of the tenancy under this Clause.

8.3.4. …”

67.  As stated in Hong Kong Tenancy Law under “Suspension of rent”, it is not unusual to find a clause in the lease suspending or abating payment of rent in the case of destruction of or damage to the premises by a variety of calamities including, fire, landslide, flood and typhoon, but if the premises are damaged rather than destroyed, they must be so severely damaged as to be rendered unfit for use, not merely dilapidated and in need of repair[14].

68.  As seen earlier, the water leakage which led to the alleged flooding was in the back part of the Premises used for storage of the goods.  The photographs did not show that the Premises being severely damaged or unusable or inaccessible.  In fact, D1 had been using and occupying the Premises until it delivered up vacant possession and returned the keys to P on 17 March 2017.  The water leakage was from 17 May 2016 to 4 July 2016 and then recurring periodically between 18 August 2016 to 19 October 2016.  Thus Ds stayed on the Premises for some 5 months even after the 2^nd period.

69.  I accept Ms Lee’s submissions that clause 8 of the Tenancy Agreement would not assist Ds.

Duty to mitigate loss

70.  Although this was pleaded in the D&C, Mr Chan did not really make any submissions on this point.

71.  As seen stated in paragraph 7.023.1 of Woodfall’s Law of Landlord and Tenant, Volume 1, 2017 Ed, a landlord is under no duty to mitigate his loss when seeking to recover arrears of rent.

Conclusion

72.  Having regard to all the above, I have come to the conclusion that what Ds said is not believable and further what Ds said does not amount to an arguable defence in law.  In my view, Ds have no bona fide defence to P’s claim.  Further, the counterclaim is frivolous.

73.  I therefore grant an order in terms of paragraph 1 of P’s summons issued on 5 July 2017.  I order Ds to pay P costs of this action including costs of and incidental to this application to be taxed if not agreed.