LEE KWOK YING v. TSE KAM HO

LDPD 1854/2018

[2018] HKLdT 98

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO. LDPD 1854 OF 2018

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JUDGMENT

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Background

1.  This is an application filed by the applicant on 5 October 2018 in which the applicant is applying for:

(i)   recovery of possession of 1/F, 211 Tseung Kwan O Village, Sai Kung, New Territories (“the Premises”); and

(ii)   order for rent/mesne profits from 4 August 2018 to the date of vacant possession.

2.  By a tenancy agreement both in English and in Chinese dated 28 August 2017 (“the Tenancy”), the Premises were let by the applicant to the respondent for a term of 2 years from 4 September 2017 to 3 September 2019 at a monthly rent of $14,000 inclusive of management fee, Government rates and rent.

3.  Clause 1 of the Tenancy states that:

“The Tenant shall pay to the Landlord the Rent in advance on the first day of each and every calendar month during the Term. If the Tenant shall fail to pay the Rent within 7 days from the due date, the Landlord shall have the right to institute appropriate action to recover the Rent and all costs, expenses and other outgoings so incurred by the Landlord …”

4.  At paragraph 4 of Schedule 2 to the Tenancy, however, there is a break clause whereby either party shall be entitled to terminate the Tenancy earlier by serving not less than 1 month’s written notice provided that the said written notice shall not be served before the expiration of the 11 months of the Term of the Tenancy (“the Break Clause”). The applicant did serve such a notice to the respondent on 13 July 2018, ie only after 10 months of the Term of the Tenancy:

「致租客謝錦浩先生：

本人業主李國營現通知閣下死約已到期到2018年9月3日， 本人決定不續約， 因為本人兒子在外租住物業也剛剛9月到期， 所以本人決定收回上述單位給兒子住, 再加上閣下之欠租紀錄欠佳經常找機會欠租， 所以不得已， 本人決定收回單位， 不便之處請諒。

業主
李國營
2018年7月13日

地址：
將軍澳村211号1/F」

5.  As this notice does not comply with the minimum time frame as required by the Break Clause, it is invalid.

6.  However, this is not the first time that the respondent has allowed his rental payable to fall into arrears. In LDPD 1117/2018, the applicant had applied for recovery of possession of the Premises on the ground that the respondent had allowed his rental payable to fall into arrears. Pursuant to section 21F(3)(b) of the High Court Ordinance, this Tribunal allowed a relief period until 27 July 2018 for the respondent to pay back all the arrears in rental and the respondent did so on 26 July 2018.

7.  For the present case, on 22 October 2018, the respondent filed his Notice of Opposition. Inter alia, the respondent alleged that the applicant, on learning that his daughter is studying in a primary school which is 4 bus-stop away from the Premises, induced the respondent to rent the Premises by representing that:

(1)   the Premises are only 3 minutes’ walk away from the bus stop of 98A and 98C which could reach the primary school; and

(2)   there is direct green bus to Po Lam MTR station leading to Hang Hau MTR station where the primary school is.

so that it would be very convenient for the respondent’s daughter to go to school (“the Representation”).

8.  The respondent also alleges that the applicant and the estate agent (who is the applicant’s wife[1]) represented that Break Clause is just a make-up and the respondent may disregard it.

Respondent’s Witness Statement

9.  Whereas I directed the parties to file witness statements, the respondent put in his witness statement dated 3 December 2018 complaining about the electricity supply of the Premises. The respondent complains that the electric power inside the bathroom was tripped off two or three times a week since the commencement of the Tenancy perhaps owing to the connection to the bathroom water heater and the washing machine at the same time. When the applicant tried to admonish the respondent not to use the bathroom water heater and the washing machine at the same time, the respondent considered it unreasonable. The applicant did by himself installed new sockets and plugs inside the kitchen for separate electrical appliances but the circuit breaker was still tripped from time to time before December 2017 rendering damages to his light wave stove, adapter for computer etc. Then the applicant did instruct an electrician to re-adjust the topology of wires by separating the electricity supply between the kitchen and bathroom. In any event the master circuit breaker outside the Premises exploded with fire on 6 January 2018.

10.  The respondent states that once the applicant hinted that the electricity supply problem can be made good by for instance installing 3-phase electricity supply. However, the applicant refused to carry on with the 3-phase electricity installation when he found out it would be expensive. The respondent complained that as a landlord, the applicant had a duty to provide a safe environment to the tenant.

11.  The respondent further alleges that the applicant’s neighbour, a Mr Chan, once told him that when Mr Chan was having telephone conversation with the applicant in or about August 2018, the applicant remained silence when he was confronted with the question why he acted unreasonably in driving out the respondent by not providing normal electricity. The respondent alleges that if the applicant considers himself is right in asserting his contractual right in exercising the Break Clause, he could simply say so to Mr Chan[2].

12.  Notwithstanding the above, the respondent says he is entitled to the option to renew the Tenancy on the same terms up until September 2019. He also seeks compensation or loss and damages for the enjoyment of tenancy.

Applicant’s Witness Statement

13.  The applicant also filed his witness statement on 3 December 2018. His witness statement is short and emphasises that the respondent should honour the Tenancy and particularly the Break Clause. The applicant also repeats that the respondent has consistently failed to pay rent on time and therefore he cannot but applies for recovery of possession of the Premises.

Discussion

14.  Although I had at the beginning of the trial informed the parties that the notice of termination dated 13 July 2018 was invalid, the respondent spent much time on trying to discredit the applicant for the sake that there should not be a Break Clause in the Tenancy or the Break Clause should be superseded by the promise of a two-year tenancy by the applicant.

15.  The respondent also suggests, for instance, the applicant did not attend to the electricity supply problem within a short time. The applicant rebutted by producing three receipts issued by Sung Fat Elect Works. Although the respondent suggests with support of WhatsApp messages to the applicant that the electricity supply went off on more than 3 occasions, I consider this piece of evidence is not relevant to the Break Clause as the respondent finally conceded that the Tenancy was for 1 year certain and 1 year flexible (一生一死); what the respondent disagrees is that he thinks that he has the option to exercise his right to continue the tenancy during the flexible term. While a tenancy for 1 year certain and 1year flexible may convey different understandings to different persons, the respondent should be bound by the Tenancy he signed.

16.  Turning to the “electricity supply problem”, by Clause 9 of the Tenancy, “(t)he Landlord shall keep and maintain the structural parts of the Premises including the main drains, pipes and cables in proper state of repair….” However, it is trite that in the absence of express agreement, the common law does not imply into a lease or tenancy a condition or term that the demised premises are fit for the purpose for which they are taken; and, therefore, on the letting of an unfurnished dwelling house or flat there is no implied warranty on the part of the landlord that it is in a reasonably fit state for habitation, or that it may be lawfully used for the purpose for which it was let. Accordingly, the intending tenant is presumed to make his own inquiries as to its condition, and, in the absence of a special stipulation, he takes the property subject to any defects existing at the time of the letting, and to any events that subsequently affect its value.; see Halsbury’s Laws of Hong Kong, 2^nd Edition, 2018, Volume 36, para 235.220 and 235.300.

17.  In light of the above, the respondent should take the Premises subject to the electricity supply system at the time when the Tenancy was signed. He is not entitled to ask the applicant to make improvement or upgrade the electricity supply to 3-phase electricity. The obligation to repair does not arise unless the electricity supply in respect of which it is imposed is really out of repair instead of being overloaded by connecting to many electrical appliances by the applicant. On hearing the evidence of the applicant, I am satisfied that the applicant did from time to time attend to the problem either by himself or through a “Ah Chung （亞忠）” of Sung Fat Elect Works.  In any event, the respondent concedes that insofar when he refrains from connecting the bathroom water heater and the washing machine at the same time, the short-circuiting has not occurred again at least since April 2018.

18.  In Alker v Collingwood Housing Association [2007] EWCA Civ 343, [2007] 1 WLR 2230, Laws LJ put it at para 14:

"There is … much learning on this dichotomy between maintain and repair. It is not necessary to go into it in this case. No doubt the two concepts overlap. Neither of them, however, can in my judgment possibly be said to encompass or to include a duty or obligation to make safe. Moreover, a duty to keep "in good condition", the words used here, even if it encompasses a duty to put into good condition, again cannot encompass a duty to put in safe condition. A house may offer many hazards: a very steep stairway with no railings; a hidden step; some other hazard inside or outside the house of the kind often found perhaps in particular older properties. I do not think it can be said that the Act requires a landlord on proof only of the conditions I have described for the application of section 4 (of the Defective Premises Act 1972) to make safe any such dangerous feature."

19.  It is particularly interesting to note that notwithstanding the numerous complaints by the respondent, the latter insists that he is willing to continue the Tenancy until September 2019. This contradicts his assertion that the Premises are unsafe or uninhabitable.

20.  When I asked the respondent whether he considers the Representation untrue, he says no. He is now affirming the Tenancy. Accordingly, in the absence of express agreement to the contrary, the covenant to pay rent has been regarded as independent of the other covenant or obligations under a lease or tenancy, including, for example, the covenant for quiet enjoyment: Charmway Development Ltd v Long China Engineering Ltd [2001] 3 HKC 515 at 519G per Chu J and Ridge Limited v Golden Castle Limited [2005] 5 HKC 592. Accordingly, even where the property has become useless to the tenant by reason of the landlord’s neglect or an obligation to repair, the rent continues to be payable but the respondent allowed the rent to fall into arrears. In Ramadour industries Limited v Bullen Christian Anthony, CACV 19/2016 (unreported, dated 15 May 2017) the Court of Appeal affirmed that 21F(1A) of the High Court Ordinance was enacted to deal with the abuse of relief against forfeiture by subsequent (or even serial defaulters of rent). At para 17 & 18.2 of the judgment, the Court of Appeal remarked that:

“17. … On the first exercise, s 21F(3)(b) stipulates that the court shall grant relief against forfeiture. On any subsequent exercise(s), s21F(1A) stipulates that it is for the lessee to satisfy the court of good cause why it should exercise its discretion in his favour….

18.1 …

18.2 … It does not mean that when the court exercises its discretion under s21F(1A), it cannot or should not take into account the fact that this was a second (or subsequent) default in payment of rent within the same term of tenancy, which has led the lessor to exercise his right of forfeiture. Applications for forfeiture and relief should not be considered in a historical vacuum. That would negate the legislature’s clear intention to draw a distinction (in the availability to a tenant of relief against forfeiture) between the first and the subsequent exercise(s) by a lessor of the right of forfeiture for non-payment of rent…”

21.  Although the parties cannot remember the date when the respondent paid his rent for August 2018, it is undisputed that the respondent only paid the rental for September and October 2018 on 17 October 2018, the rental for November 2018 on 27 November 2018 and the rental for December 2018 on 17 December 2018 (ie one day before trial). The respondent has failed to satisfy me that there is a good cause in allowing a second relief against forfeiture for the delay or default in payment of rent.

22.  Thus where the tenancy agreements contemplate that the obligation to pay rent is independent of all other covenants, and the tenant’s counterclaim is unliquidated, there is no legal set-off. As regards any intended counterclaim by the respondent, it has been held in 黃英對譚炳新, HCMP 2049/2000 (unreported, dated 1 August 2000), 陳燕群對黃金海, CACV 223/2007 (reported as [2008] 1 HKCLRT 27) and Ngai Ngok Pang & Another v Lee Syn Yuk, Michelle, LDPD 3030/2012 (unreported, dated 10 May 2013) that the Lands Tribunal does not have jurisdiction to entertain such counterclaim by the respondent.

23.  Even when section 8 of the Lands Tribunal Ordinance was amended in 2008 to award damages solely, as well as in addition to rent and mesne profits, it was explained to the Legislative Council that the amendment did not seek to empower the Lands Tribunal to award damages that may go beyond its jurisdictional limit on the types of cases it can entertain.[3]

Orders

24.  Having heard the submissions by the parties, I make the Orders as follows:   

(1)   The respondent do deliver vacant possession of the Premises to the applicant;

(2)   The respondent do pay the applicant mesne profits at the rate of $14,000 per month from 4 January 2019 until delivery up of vacant possession.

Costs

25.  As the applicant does not apply for costs, I make no order as to costs.