HANDY INVESTMENT CO. LTD. v. HO HSIN HWA

1984, No. 3828

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. The Plaintiff's claim is for damages for repudiatory breach of a tenancy agreement, half the amount of stamp duty and penalty in respect of the agreement, unpaid rates and the cost of repainting and repairing the damages and dilapidations caused by the Defendant to the said premises.

2. The Defendant by his pleadings disputes the claim. He says first the agreement was not valid because the Plaintiff was not the owner of the two upper floors of the Spanish type villa comprising the suit premises and also because the agreement was not stamped. Second he says the premises were not suitable for occupation and that dispite repeated demands the Plaintiff failed to remedy the premises, thereby repudiating the agreement, which repudiation the Defendant says he accepted. And third that he did not agree to pay stamp duty and in addition that it is the Plaintiff who is to blame for incurring the penalty. The Defendant also counterclaims in reect of the said repudiation by the Plaintiff, and for the value of improvements he says he carried out.

3. The Defendant did not appear at the trial. I am satisfied that he was properly notified that the case had been placed on the warned list. Two notices in separate weeks were sent in December 1985 to the office address of the factory of which he is a director. The office is still in operation thugh the lady who answers the telephone as his secretary says he is overseas.

4. The chronology of events shows little desire on the Defendant's part to proceed expeditiously to trial; on the contrary it manifests an inclination to defer it. No less than three firms of solicitors have ceased to act for him for lack of instructions. Again no less than four applications for the case not to be warned have been granted or consented to, because the Defendant was off on a training course or visiting overseas or instructions could not be secured from him. Clearly the Defendant is not to be encouraged in the lack of importance he seems to attach to these proceedings, and indeed in the substantial delay he has so far been able to achieve. The trial accordingly proceeded in his absence.

5. Coming then to the issues between the parties, the 1st is the validity of the agreement. It is not disputed that the Plaintiff was owner of only the ground floor of the villa, the 1st and 2nd floors being owned by two other associated companies. Those companies duly authorised the Plaintiff to act for them. It was accordingly, in my view, entitled to execute the lease. As to the failure to stamp the the lease, under the proviso to section 15(1) of the Stamp Duty Ordinance (Cap. 117) an instrument which is not duly stamped may be received in evidence in civil proceedings before a court if a court so orders upon the personal undertaking of a solicitor to cause such instrument to be stamped of and any penalty payable under section 9 in respect thereof to be paid. Upon such an undertaking being given to me by the Plaintiff's solicitors, I ordered the agreement to be received in evidence. The Defendant's 1st ground therefore fails

6. The next issue relates to stamp duty and the penalty. I am satisfied that there was an oral agreement about the time the lease was signed, that the Defendant would pay half the stamp duty. However although the Defendant might have been dilatory in returning his copy of the agreement I am not satisfied that this prevented the Plaintiff from having its copy stamped. I therefore consider that the Plaintiff is only entitled to reimbursement of half the stamp duty and not to any part of the penaltyS

7. Proceeding to the main issue, this is whether the Defendant was in repudiatory breach of the agreement, as claimed by the Plaintiff, in prematurely terminating the agreement. The agreement was for a term of two years from 15th August 1982 at a monthly rent of $10,000 payable in advance on the 1st of each month. The Defendant, it is not disputed, paid his rent until July 1983. On 18th August 1983 his solicitors wrote to the Plaintiff claiming that the agreement was not valid for the reasons already considered, and purporting to confirm the verbal notice to terminate the lease on 14th September 1983, which notice they claimed the Defendant had given on the 14th of August. They also suggested that the $20,000 deposit that the Defendant had paid the Plaintiff should be appropriated to the rent for the two months preceding termination, which as I have said had not been paid. The Defendant vacated the villa early in September.

8. As the agreement was validly executed and does not provide for termination by notice, the Defendant was clearly in repudiatory breach, which the Plaintiff in my finding accepted. The Plaintiff is accordingly entitled to damages.

9. I am satisfied that the Plaintiff took reasonable steps to find a new tenant but only succeeded in reletting the villa from 15th November 1983, and only at the lower rent of $7,000 per month as the market had by then dropped.

10. The Plaintiff is therefore entitled to $10,000 per month for each of the two months from 15th September to 14th November 1983, and $3,000 per month for each of the following nine months, before the villa was relet.

11. I proceed then to the rates. Under Clause 6 of the agreement these are to be paid by the Defendant. I am satisfied on the evidence that the Plaintiff should accordingly be reimbursed for the rates from 31st October 1983 to 14th November 1983 which amounted to $706.38.

12. As to the cost of repainting the villa, there is nothing in the agreement that provides that the Defendant was to do this. Nor is there any evidence that painting was necessary or indeed that it was necessary because of the actions of the Defendant. On the contrary the evidence is that the Defendant's wife complained of the mildew. The claim for repainting in my finding accordingly fails.

13. As to the cost of repairs, when the villa was inspected on 16th September 1983, a written list of defects was agreed between a representative of the Plaintiff and a representative of the Defendant's solicitors, and signed by both. The nature of those defects, which consist mostly of damage and not of fair wear and tear, satisfies me that the Defendant is liable for them. Although $9,200 seems rather a large sum for the repairs listed, from the receipt produced I am satisfied that the cost was $9,200.

14. The Defendant also seeks by his pleadings to set off against the foregoing claims any amounts found due to him under his counterclaim. I will only say at this stage that on the Plaintiff's evidence, which is not countered by any evidence from the Defendant, the probabilities are clearly that the suit premises were suitable for occupation. In any case the minor faults listed by the Defendant in his particulars (which particulars, as I have said, the evidence tends to disprove) were hardly of a nature to constitute a repudiatory breach.

15. Proceeding to the counterclaim, there is no evidence in support and it is dismissed with costs.

16. Subject to any submissions on the mathematical accuracy of the following figures and any submissions on costs and interests, there will be accordingly be judgment for the Plaintiff in the following sums:-

17. There will also be judgment for interest thereon at the prime rate plus 1% from the 1st Noveer 1983 (i.e. commencing immediately after the end of the month in which the repudiatory breach was accepted) until judgment, together with the costs of both the claim and counterclaim.