LEUNG NIE CHUNG, CHARLES v. HO CHI-KEUNG, DANNY

IN THE COURT OF APPEAL

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JUDGMENT

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Roberts, C.J. -

1. The plaintiff, who was head lessee of a car parking space at Nam Fung Sun Chuen, Quarry Bay, sub-let it by written agreement to the defendant on 1st December, 1982, for a period of two years at a monthly rental of $450.

2. The agreement provided that, if the defendant delayed in the payment of rent, this would be regarded as a breach of the agreement. The plaintiff could then re-possess the parking space and rent it to someone else and the deposit paid by the defendant, which amounted to $900, would be forfeited.

3. The defendant occupied the car parking space until May 1983 and paid the rent in accordance with the terms of the agreement. Sometime in May, he got in touch with the plaintiff and sought a release from the agreement from the end of August, to which the plaintiff did not agree. On 1st June, therefore, the defendant told the plaintiff that he would pay him for June and July, but that he wanted to be released thereafter.

4. The plaintiff took proceedings in the Small Claims Tribunal, claiming rent for the months of August and September, which had not been paid by the defendant. The claim came before the Small Claims Tribunal on 19th October, 1983.

5. The record of what occurred in front of the Adjudicator is a very short one. It recites that the defendant said "I will offer two months in return for termination of agreement".

6. The plaintiff is recorded as having said "I agree to the termination of the agreement". The Adjudicator then wrote in the record "Judgment for the claimant in the sum of $900".

7. Subsequently, the plaintiff, taking the view that, as he had been paid only till the end of September, 1983, he was entitled to pursue the recovery of additional rent for the period thereafter, issued proceedings in the District Court.

8. On 25th June, a District Court Judge, after hearing the evidence of both parties, dismissed the plaintiff's claim, which was for fourteen months' rent for the car parking space, from 1st October, 1983 to the end of November 1984 at a rate of $450 per month. However, during the hearing, the plaintiff conceded that, as he had re-let the parking space from 19th November, 1983 at a monthly rent of $300, he should reduce his claim from $6,300 to the difference between that figure and the rent which he had in fact received. This reduced his claim to $2,550, plus the $900 deposit.

9. The judge dismissed the claim on the basis that the agreement for the lease of the car parking space had provided that, if rent fell into arrears, this constituted a breach entitling the plaintiff to re-possess and re-let, upon which event the deposit of $900 became forfeited. The judge thought that the deposit was the measure of damages for the breach and that the plaintiff could recover nothing more.

10. In the course of his judgment, the judge considered the question of what had taken place in front of the Small Claims Tribunal and accepted that, after discussion at the Small Claims Tribunal, the defendant had believed the matter to have been settled, although the Tribunal order referred only to the payment of $900 to the plaintiff.

11. The judge said that he believed the defendant's account of events of the Small Claims Tribunal but, nevertheless, came to the conclusion that, as it was for the defendant to show that a compromise had been reached, he had not been able to demonstrate that the plaintiff had released him from all further claims under the contract. This is, perhaps, not a surprising conclusion since the evidence given by neither party before the judge is as clear as might have been wished with regard to this aspect of the matter.

12. However, the judge does not appear to have had the advantage, which we had, of being able to look at the record of the Adjudicator.

13. The plaintiff himself admits that there was discussion before the Small Claims Tribunal as to the terms upon which a settlement would be acceptable to him. He told us that he had informed the Adjudicator that he would be prepared to regard the matter as at an end if he received three months' rent, as opposed to the two months' which he had claimed and that the deposit would also be forfeited to him.

14. According to the plaintiff, he never agreed to regard the agreement as at an end if he was paid two months' rent.

15. The defendant's recollection, on the other hand, accords with the brief record made by the Adjudicator.

16. It would surely have been very odd for the Adjudicator to have made a mistake in recording what was agreed if the plaintiff had originally offered to settle for three months' rent and maintained his position throughout the discussions, refusing to lower his claim to one of two months' rent.

17. We are satisfied that we must follow the record as it has been completed by the Adjudicator. We have no reason to suppose that there was any misunderstanding about what was intended except, perhaps, in the mind of the plaintiff. The judgment which was given by the Adjudicator was effectively a consent order, based on her understanding of an agreement which had been reached between the parties. We are satisfied that had the record been available to the District Judge his remaining doubt as to whether or not the defendant had established a compromise would have been satisfied.

18. We therefore think, though for very different reasons from those adopted by the judge, that his conclusion was correct. Therefore the appeal must be dismissed.

19. We should, perhaps observe in passing, though this is not necessary to our decision, that had it been necessary for us to consider the terms of the agreement itself and the remedies available to the plaintiff under it, we should have taken leave to doubt the judge's conclusion that the forfeiture of the deposit would have fully satisfied the claim for damages of the plaintiff. A deposit under an agreement of this kind is a security to the lessor for the payment of rent. Unless its forfeiture is expressed to be in full satisfaction of any claims of the lessor, it will be taken into account in assessing the overall damages suffered by the lessor, but cannot be regarded as being in full satisfaction of them.