THE CAPITAL MARKETS CO LTD v. CHONG LAI SHAN

HCSA 23/2018 and
HCSA 24/2018
(Heard Together)
[2018] HKCFI 2669

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

SMALL CLAIMS TRIBUNAL APPEAL NOS 23 AND 24 OF 2018

(ON APPEAL FROM SMALL CLAIMS TRIBUNAL
CLAIM NOS 27887 AND 27888 OF 2017)

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(Heard Together)

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DECISION

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The applications for leave

1.  These are the applications of the defendant for leave pursuant to section 28 of the Small Claims Tribunal Ordinance, Cap 338 (the “Ordinance”) to appeal against the decisions of the Deputy Adjudicator (“the Deputy Adjudicator”) made on 28 May 2018 (the “Decisions”) allowing the claimant’s claims for the return of certain rental deposits.

Relevant background

2.  The full facts of the claims have been set out by the Deputy Adjudicator in his written Reasons for Judgment (“Reasons”) dated 13 August 2018.  I summarize them as follows.

3.  By two tenancy agreements dated 9 May 2016 (“TA/B1”) and 24 May 2016 (“TA/B2”), the defendant as landlord leased to the claimant as tenant Flats B1 and B2, 17/F, Sun Hey Mansion, 68 – 76 Hennessy Road respectively (“Flat B1” and “Flat B2”).  Under both agreements, the claimant had to pay the defendant rental deposits (HK$36,000 under TA/B1 and HK$32,000 under TA/B2, hence HK$68,000 in total), which the claimant did.

4.  There was no dispute between the parties that (1) the claimant had given proper notice to the defendant to terminate the two tenancy agreements with effect from 31 October 2016; and (2) on or about 5 October2016, the occupant of Flat B1 (“the Deceased”), who was a staff member of the claimant, committed suicide by jumping off Flat B1 (“the Suicide”).

5.  Ultimately, having made from the total rental deposits some deductions which the defendant claimed she was entitled to make, the defendant only returned to the claimant the balance in the sum of HK$23,200.

6.  The claimant regarded that sum of HK$23,200 as part-repayment of the rental deposit repayable under TA/B2.  It hence claimed:

(a)   under Claim no 27887, return of the rental deposit repayable under TA/B1, in the sum of HK$36,000, together with interest; and

(b)   under Claim no 27888, return of the balance of the rental deposit repayable under TA/B2, in the sum of HK$8,800 (HK$32,000 less HK$23,200), together with interest.

The trial, and the Deputy Adjudicator’s reasoning

7.  The trial took place before the Deputy Adjudicator on 9 May 2018.  The claimant called one witness (Ms Kung Wing Han).  The defendant and her husband (“Mr Ho”) gave evidence for the defence.

8.  The defendant’s defence, as set out by the Deputy Adjudicator at paragraphs 3 and 4 of the Reasons, were as follows:

“ For case 27887, the defence is as follows:-

(1) There was no formal delivery of possession;

(2) There were personal belongings of the occupant of Flat B1 left inside the premises. The defendant’s side only removed them about half a month later when it was ascertained from the police that no further investigation about the 5 October 2016 Incident was needed; and

(3) The interior of Flat B1 was not in a good and tenantable repair and condition. Hence, the claimant is responsible for repair costs and rental loss for the time needed to do the repairs.

For case 27888, the defence is as follows:-

(1) There was no formal delivery of possession; and

(2) As Flat B2 is located next to Flat B1, Flat B2 could not be rented out during the period when repair works were undergoing at Flat B1.  This was so because of the noise of the repair works.”

9.  On the question of absence of any formal delivery of possession:

(a)   the Deputy Adjudicator was of the view that whilst preferable,there is in law no requirement for a formal face-to-face delivery;

(b)   he noted that there was no dispute that the defendant and Mr Ho were able to enter both Flats on 31 October 2016;

(c)   the defendant was not under any impression that the claimant or any other staff members of the claimant would get back to occupy the Flats;

(d)   he found that the claimant had failed to prove that (§11):

(i)   the key to Flat B1 was returned to the domestic helper of the defendant on or about 6 October 2016; and

(ii)   the defendant took back possession of Flat B1 on that day;

(e)   he made the finding that possession of the two Flats was therefore returned to the defendant on 31 October 2016 (§10).

10.  On the presence of the Deceased’s personal belongings inside Flat B1:

(a)   the Deputy Adjudicator found as a fact that on 31 October 2016, personal belongings of the Deceased were left inside Flat B1;

(b)   he cited Toho Ltd v Ng Sik Yu [2004] 4 HKC 424 on the law relating to vacant possession;

(c)   he noted Mr Ho’s evidence, that there were not many items left inside Flat B1;

(d)   he found that despite there being personal items left inside Flat B1, the substantial enjoyment of Flat B1 was not affected, and vacant possession was delivered on 31 October 2016 (at §14)[1];

(e)   I note paragraphs 15 and 16 of the Reasons, where the Deputy Adjudicator considered the alternative issue of mitigation on the basis of certain assumptions.  He observed therein that:

“ 15. On this matter the defendant also says she and Mr Ho did not know whether the personal belongings left inside Flat B1 would be police evidence and they had not been informed by the claimant whether police investigation was still ongoing. For these reasons the defendant’s side did not enter into Flat B1 again until after about two weeks. She says she could not have been able to rent out Flat B1 during these two weeks.

16.   I do not agree the claimant should be responsible for the loss of rent for this period.  Even assuming the claimant’s side was in the wrong by leaving the personal belongings of the deceased inside Flat B1 and in the wrong by not telling the defendant whether police investigation had been completed, the defendant also had a duty as a matter of law to take reasonable steps to mitigate her loss.  She could have made a police call herself to the police on 31 October or shortly afterwards to ascertain the progress of police investigation.  In my opinion, the defendant did not take reasonable steps to mitigate her loss by contacting the police only in mid-November.”

I will come back to these two paragraphs later.

11.  On the question as to “whether Flat B1 was in good and tenantable repair and condition, and if not, the quantum of damage”:

(a)   the Deputy Adjudicator made the factual findings that there was indeed certain damage inside Flat B1 which was neither fair wear and tear nor caused by inherent defect.  He found that the claimant should be responsible for some of the repair costs;

(b)   on the alleged repair costs, the Deputy Adjudicator, having considered the factual evidence, accepted some and rejected some.  He assessed the quantum accordingly, in the sum of HK$4,650;

(c)   the Deputy Adjudicator also found that the relevant damage could reasonably be fixed within three days.  He therefore awarded to the defendant rental loss of three days, in the sum of $1,800.

12.  On the issue of alleged rental loss for Flat B2, the Deputy Adjudicator found that “There is simply no objective evidence from the defendant to the effect that the noise of the repair works was so unbearable that it made Flat B2 inhabitable.”  He as a result rejected this head of deduction by the defendant.

13.  Having heard the evidence and the parties, the Deputy Adjudicator ultimately:

(a)   under SCTC 27887/2017, entered judgment in favor of the claimant in the sum of HK$29,550 (HK$36,000 less HK$4,650 less HK$1,800) together with interest and costs; and

(b)   under SCTC 27888/2017, entered judgment in favor of the claimant in the sum of HK$8,800 together with interest and costs. 

The Deputy Adjudicator gave his brief reasons orally on 28 May 2018.  He handed down his written Reasons on 13 August 2018.

The defendant’s proposed grounds of appeal

14.  On 3 July 2018, the defendant lodged two Forms 9, one in each claim.  She sought thereby leave to appeal pursuant to section 28 of the Ordinance.  The written grounds the defendant set out were however extremely vague, they being:

(a)   “appeal to ‘questions of law’”; and

(b)   “wrong in legal capacity”.

The hearing

15.  The defendant appeared before me on 28 August 2018.  She acted in person.  She elaborated upon her written grounds.  The thrust of her submissions was that she leased the two Flats to the claimant, but not the Deceased or any of the claimant’s staff members.  After the Suicide, the claimant should be responsible for taking care of the aftermath, but not her. 

Section 28 of the Ordinance

16.  Section 28 of the Ordinance provides that:

“ (1) Any party who is aggrieved by a decision of the tribunal—

(a) on any ground involving a question of law alone; or

(b) on the ground that the claim was outside the jurisdiction of the tribunal,

may apply to the Court of First Instance for leave to appeal and the Court of First Instance may grant such leave if it thinks fit.”

The jurisdiction of this Court in granting leave is therefore confined to question of law alone or that the claim was outside the jurisdiction of the tribunal.

Discussion

17.  I have considered the Reasons.  I have also considered the defendant’s submissions. 

18.  On the issue of formal delivery of possession, the Deputy Adjudicator did not accept the claimant’s evidence that the key to Flat B1 was returned to the domestic helper of the defendant on or about 6 October 2016.  He made the factual finding that possession was delivered on 31 October 2016.  He was entitled to make those findings on the evidence.  No issue of law was involved.

19.  On the presence of the Deceased’s personal belongings inside Flat B1, the Deputy Adjudication has correctly reminded himself of the decision of the Court of Appeal in Toho. He considered Mr Ho’s evidence and found that despite the presence of those personal belongings, the substantial enjoyment of Flat B1 would not be affected.  It was again a factual finding which he was entitled to make on the evidence before him.

20.  Having made the factual finding that the existence of the Deceased’s personal belongings inside Flat B1 did not affect its substantial enjoyment, the Deputy Adjudicator in fact did not need to consider the alternative issue of mitigation.  He decided to do so (at §16), but on the assumptions that “the claimant’s side was in the wrong by leaving the personal belongings of the deceased inside Flat B1 and in the wrong by not telling the defendant whether police investigation had been completed”.  Whatever the Deputy Adjudicator’s alternative view was on the basis of thoseassumptions would not affect the validity of his earlier factual finding relating to the delivery of vacant possession.  I therefore do not find it necessary to consider the alternative issue of mitigation.  This is particularly so when, for the purpose of these applications for leave, this Court has no jurisdiction toreverse but has to accept the finding of facts made by the Deputy Adjudicator on the delivery of vacant possession (which I regard as correct any way).

21.  I add in any event this.  The defendant might at one stage have been operating upon certain unilateral and unverified belief that she could not regain possession of the Flats because police investigation relating to the Suicide might still be ongoing.  I see however no legal basis to hold the claimant responsible or liable for any resulting loss of rental.  No issue of law arose therefrom.

22.  No issue of law arose in respect of any “legal capacity” of the claimant, as was alleged in the Forms 9 lodged by the claimant.

23.  Overall, I am not satisfied that the defendant has raised any arguable point of law.  Nor has any arguable jurisdictional issue been raised. 

Conclusion and disposal

24.  In the circumstances, I dismiss the defendant’s applications for leave. I make no order as to costs.