XCHRX HINQUAND ENTERPRISE LTD. v. EDEX ENTERPRISES LTD.

HCA 17831/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 17831 OF 1999

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D E C I S I O N

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1. This is the Defendant's appeal against the order of Master Lung dated 9 May 2000 whereby he entered judgment in the Plaintiff's favour:

(a) for the delivery up of vacant possession of the suit properties to the Plaintiff;

(b) in relation to the monetary claims for arrears of rent, rates and management fee and for mesne profits.

2. The Plaintiff is the landlord of the suit properties and brought this action against the Defendant for breach of a tenancy agreement made between them in that the Defendant has failed to pay rent and other sums since February 1998 up to now.

3. It is common ground that:-

(a) a tenancy agreement was made between the Plaintiff and the Defendant in respect of the suit properties being 2 shops on the ground floor of a building;

(b) under the tenancy agreement, the Defendant was liable to pay rent and other sums but the Defendant has not done so since February 1998;

(c) building works were performed on the external wall of the said building in order to comply with a building order made earlier by the Building Authority.

4. The learned Master agreed with the Plaintiff that there is no valid defence to the Plaintiff's claim and entered the said judgment pursuant to RHC O. 14 r. 1. The Defendant submits in this appeal that he was wrong in so concluding.

5. The Defendant's defence is that it was the Plaintiff which breached the tenancy agreement. Loss was thus caused to the Defendant the amount of which far exceeds the amount of rent (and other sums) claimed by the Plaintiff. The Defendant's allegations regarding the Plaintiff's breach of the tenancy agreement can be summarized as follows:

(a) a concealment (whether deliberate, negligent or otherwise) by the Plaintiff (or its staff) that the building in which the suit properties are located is subject to the said building order. This was done by way of either:

(1) a failure to expressly inform the Defendant of the existence of the said building order before the execution of the agreement; or

(2) a failure to include a term in the tenancy agreement expressly referring to the said order;

(b) the Plaintiff breached clause 3(a) of the tenancy agreement in commencing repair works to the external wall of the said building.

6. Ground (a) above relied on by the Defendant presupposes that in law there is a duty on the Plaintiff's part (as the landlord) to make disclosure to the Defendant (as the tenant). That such a duty does not exist has been set out in Hill & Redman's Law of Landlord & Tenant (2000) Vol. 1, para. 6903 which reads:

"At common law there is no implied warranty that the premises will be available for any purpose that the tenant may have in view. Thus, there is no implied warranty on the part of a landlord that the premises are free from restrictive covenants or that they may legally be used for any specific purposes even though let for such use. Nor is there any implied promise to do any act necessary to render the premises available for the purposes for which they were known to be taken. And there is, at common law, no implied warranty on the letting of an unfurnished house or land that as to its physical condition it is or shall be reasonably fit for habitation, occupation or cultivation; nor is there any implied contract that it is physically fit for the purposes for which it is let; and this is so even where the premises are so defective as to constitute a danger to the tenant and his family and the landlord has himself put them into that condition and knows of the danger ...."

In short, the letting of an unfurnished house or land is similar to the case of a sale of goods at common law: caveat emptor (that is, "let the buyer beware").

7. I consider the above-quoted passage is a correct statement of the law and it applies to the present case. For this reason, I find that there is no substance in the Defendant's ground (a).

8. The validity of the Defendant's ground (b) turns on the ambit of Clause 3(a) of the tenancy agreement. Clause 3(a) provides:

"The landlords hereby agree with the tenant as follows:

(a) that the tenant paying the rent hereby stipulated and observing and performing the several stipulations herein contained and on the tenant's part to be observed and performed shall peacefully hold and enjoy the said premises during the said terms of tenancy without any interruption by the landlords or any person lawfully claiming under or in trust for them."

9. Two matters are important:

(a) the tenant must comply with the conditions therein to pay rent and observe the stipulations of the tenancy agreement before it can rely on Clause 3(a);

(b) Clause 3(a) only requires the landlord to provide peaceful enjoyment of "the said premises" to the tenant.

10. The words "the said premises" were defined by Clause 1 and Part II, First Schedule of the tenancy agreement. In essence, these words mean the suit properties (that is, the 2 shops) and do not include the external wall of the building. The Defendant argues that the repair works nevertheless affected the shop front. After having perused the evidence filed herein (including the photographs exhibited to the affirmations), I do not find that this argument is substantiated. For the above reasons, I also do not consider that ground (b) above justifies leave to defend to be given.

11. The appeal is therefore dismissed.

12. Before leaving the matter, I ought to mention that the judgment giving vacant possession of the suit properties to the Plaintiff was not made in accordance with the provisions of section 21F of the High Court Ordinance Cap. 4. It appears that that provision is applicable to this action and Mr Chung for the Plaintiff does not dispute its applicability. However, he drew my attention to the fact that the tenancy agreement would in any event expire by 15 August 2000. Taking that into account, I will vary that part of the learned Master's judgment by ordering that:

"Vacant possession of the suit properties be given to the Plaintiff at the expiration of 9 August 2000 [being not less than 4 weeks from the date of the learned Master's judgment] unless within that period the Defendant pays into Court all sums in arrears and the sum of $100,000.00 on account of the costs of this action."