EDMUND CHAN v. HONGKONG BANK TRUSTEE LTD

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J U D G M E N T

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Sir Alan Huggins, V.-P.:

1. This is an appeal against a judgment of His Honour Judge Scriven given at the trial of the action on 7th December 1984, whereby he adjudged that the Defendant pay to the Plaintiff the sum of $55,930.50. The action was for repayment of deposits made by the Plaintiff in respect of two tenancies taken from the Defendant.

2. The only question which we have to decide today relates to quantification, because (for reasons which I need not go into now) we have declined to hear arguments on points which were not taken at the trial. On one point counsel for the Respondent has conceded the appeal, namely whether or not there was, as a result of the extension of the tenancy for a period of six weeks after the expiration of the second term of three years, waiver of claims by the Landlord to damages for dilapidations. In my view she was entirely correct to concede this matter: not only was the grant and taking of a new tenancy not per se a waiver of rights under the old tenancy but there was an express term in the contract that the rights of the Landlord should be preserved. That appears from Clause 3 of the Agreement dated 27th October 1983, where it said:

"The landlords and the tenant hereby mutually agree and covenant that they will respectively perform and observe the several covenents agreements provisos and stipulations in the said tenancy agreement expressed."

and "the said tenancy agreement" was the previous agreement for a term of three years. As I say, what we are left with is the quantification of any deductions which may properly be made by the Landlord from the deposit before repayment. Certain deductions were agreed. The only matters which remain relate to alleged damage to ceilings and to some PVC tiles on the floor.

3. It seems to me that the learned judge, having decided that the Landlord had waived any right to make a deduction in respect of these matters, did not fully consider what was the position if he was wrong. He said that there was a diametric conflict of evidence as to what extent, if at all, the floor tiles were damaged. He said further that he

"would not have held that the evidence showed the PVC floor tiles to have been damaged to any or any material extent by the Plaintiff."

That second citation raises a point of law namely whether it is material that the damage should have been caused by the Plaintiff. I think, with respect, that the judge was wrong and that it was immaterial. The sole question which had to be considered was what was the state of the premises at the time the premises were given up, and, if there were material dilapidations, then it mattered not whether they were caused by the Plaintiff or by somebody else.

4. There was considerable evidence, which I shall not repeat, showing that there was in fact damage both to the floor and to the ceiling. The learned judge never at any time said that he disbelieved the witnesses who gave this evidence and he did not in fact refer to the evidence: all he said was that, had the Plaintiff's obligations extended to these dilapidations, he would have held that the same would have extended only to the cost of touching up and painting to a uniform colour. Whether by that he intended to say that he thought the damage was so slight that only touching up was necessary and that there was in fact not the damage which was alleged by the Plaintiff is far from clear. It seems to me that the evidence was so strong on behalf of the Landlord to the effect that it not only found the premises in a dilapidated state but actually had to pay money to have that damage repaired that I think that the Landlord has established its right to deduct a further sum of $8,160 in respect of these two items.

5. I would therefore allow the appeal to that extent.

Fuad, J.A.:

6. I agree that the appeal should be allowed to the extent proposed by my Lord.

Kempster, J.A.:

7. I too agree.

8. When finding waiver, an issue which was neither pleaded nor argued, Judge Scriven relied upon the terms of a letter from the Defendant to the Plaintiff dated 5th October 1983, which read:

"we hereby confirm that on a without prejudice basis and subject to contract we are prepared to accept your request for entering a short term lease for one month and fifteen days."

I construe the words "without prejudice" in this context as calculated to preserve the respective rights of the parties under the earlier lease.

27th February 1985