LAU WING KWAI AND ANOTHER v. CHAN TUNG

1988, No.A4956

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

-------------------

------------------

JUDGMENT

-----------------

1. Mr and Mrs Lau are the co-owners of Flat B7 on the 2nd Floor, Fook On Building, Nos.90-98 Ma Tau Chung Road, Kowloon, including the flat roof.

2. The premises were at one time self-occupied. In 1986, the defendant came to be the tenant of Mr and Mrs Lau of Flat B7 including its flat roof. The defendant held under the plaintiffs' Chinese Tenancy Agreement dated 30th December 1986. Rent at $2,300 per month was allowed to have fallen in arrear as from 9th April 1988. The plaintiffs seek possession by reason of the defendant's default. Arrears of rent and mesne profits are claimed by the plaintiffs from 9th April to the date of vacant possession. The plaintiffs' claims are so embodied in a writ issued on 13th July 1988.

3. On or about 14th October 1988, vacant possession of Flat B7 including its flat roof was surrendered to the plaintiffs by the defendant through his solicitors." Arrears and mesne profits" is their remaining claim for my determination.

4. The plaintiffs' claims against the defendant for as well possession as arrears, were based on tenancy legislation. The plaintiffs' right to possession under the law was not contested by counsel for the defendant as a matter of expediency. At the inception, counsel made the following concession :-

"I do not dispute that the plaintiffs are entitled to possession as claimed in default of payment of rent by reason of the tenancy provisions and the pleaded tenancy legislation:" (Emphasis supplied)

5. The defendant's stand as taken in these proceedings is that apart from arrears of rent for a minimal period, the plaintiffs are liable to the defendant in damages for fraudulent misrepresentations and for breach of the implied covenant of quiet possession. What it means, in layman's language for the benefit of the plaintiffs, is that the defendant has claimed to have sustained loss as a result of the plaintiffs' lies and as a result of the interruption of his peaceful occupation under the Chinese Tenancy Agreement.

6. I should first set the scene for the events which unfolded after 1986. Prior to November 1986, the husband plaintiff was landlord of the defendant in respect to a flat in Mok Cheong Street. The wife plaintiff is an able businesswoman. She had run apparently a successful hair saloon business at two locations. During the 1967 riot, she had the foresight of acquiring the Mok Cheong Street flat in her husband's name for a meager $16,500.

7. By 1986, the Mok Cheong Street flat had reached the matured building age of 20 years. The husband plaintiff as owner on the record, in conjunction with the wife plaintiff, was desirous of disposing of this Mok Cheong Street flat and it was subsequently sold with vacant possession for $215,000 in 1986.

8. The defendant then enjoyed security of tenure in and of the Mok Cheong Street flat. It was hotly disputed as to how vacant possession of that flat was procured. It bears little relevance, but it was also alleged that the defendant was given first option to purchase. The plaintiffs' version is that the defendant was reminded of the expiry of his tenancy and was told of the plaintiffs' intention to dispose of the ageing property. Relation was then, and had been amicable. The defendant had applied for public housing. According to the plaintiffs, the defendant readily agreed to the suggestion that he should vacate the flat at the expiry of his letting.

9. As far as the defendant is concerned, his version is that he was conscious of his right to security of tenure but when the plaintiffs represented to him and his wife that the Mok Cheong Street flat would be required for use of the plaintiffs' son on his marriage, he accepted the information so fed to him and was agreeable to vacate the premises for avoiding the formality of court proceedings and unnecessary costs.

10. Thereupon, the defendant assured the plaintiffs that he would seek alternative accommodation. Discussions between the plaintiffs and the defendant commenced sometime in June 1986. By November 1986, the defendant was still unable to secure for himself and his family substitute accommodation.

11. B7 including the flat roof on the 2nd floor in Fook On Building had been self-occupied by the plaintiffs and his family. New premises had been taken in Shatin by the plaintiffs who had by then vacated B7 for the newly acquired Shatin property. Initially, the plaintiffs offered the defendant B7, including its flat roof, at a slightly higher rental of $2,700. It was subsequently reduced to $2,300 per month.

12. On a site visit before the defendant's acceptance of the plaintiffs' offer, the defendant made specific reference to the iron bars on the flat roof. The defendant sought information as to whether these bars were illegal structures. Mrs Lau assured the defendant that the bars were covered by "title deeds". The necessary implication was that they were lawful structures. On that assurance and at a lower rent of $2,300 per month, and on the understanding that the plaintiffs were recovering and were entitled to recover possession of B7 for the occupation of their son upon his marriage, the defendant took his family from the Mok Cheong Street flat to B7 and the flat roof.

13. The offer by the plaintiffs, through Mrs Lau, of B7 and its flat roof was made in November. It was within about a month that the defendant finally took a decision and accepted the offered alternative accommodation. The parties to this action entered into a Tenancy Agreement in the Chinese language dated 30th December 1986. The defendant was to pay rent at the rate of $2,300 per month on the 9th day of each and every month commencing from the 9th December 1986. The tenancy was for a term of two years expiring on 8th December 1988.

14. As I have said, the defendant made default in payment of rent on 9th April 1988. No rent has been paid hence. By this writ issued on 13th July 1988, the plaintiffs seek inter alia, possession in the exercise of their right to re-entry.

15. The wife plaintiff gave evidence. She maintained that the plaintiffs had no knowledge whatsoever that the structure on the flat roof of Flat B7 was an illegal structure. The plaintiffs claimed, through the wife plaintiff in court, that they had not been served any Demolition Notices or Closure Order by the appropriate authority in respect to the structure on the flat roof. The wife plaintiff strenuously denied that she had misled the defendant and his wife into abandoning their right to security of tenure. The wife plaintiff told the Court that self-occupation by their son had never been advanced as a ground for resuming possession of the Mok Cheong Street flat. It was pressed upon this Court, by the wife plaintiff, that their son upon marriage would have been given a flat more recent than the one of 20 years old, i.e. the one in Fook On Building rather than the one in Mok Cheong Street. The wife plaintiff put the blame on the defendant for not giving notice to the plaintiffs of Government's demand to demolish the structure on the flat roof. The defendant's alleged shortfall was said to have prevented the plaintiffs from liaising with the Government or resisting its move.

16. It was further complained by the wife plaintiff that the defendant, through his wife, admitted the authority into the suit premises for demolition of the structure on the flat roof without consent or permission of the plaintiffs. If such permission or consent had been sought by the defendant, with notice of Government's decision, the plaintiffs would have contested the Government action.

17. Mr Chan and his wife both recalled that the wife plaintiff, in the presence of the husband plaintiff, categorically used the intented self-occupation of their son on his marriage as an excuse to relieve the defendant of his tenancy right to the Mok Cheong Street flat.

18. The other fraudulent misrepresentation was that the structure on the roof, including the bars, was held out by the wife plaintiff to be a lawful structure. The defendant and his wife discovered to their horror that the structure on the roof was imminently to be demolished by Government. Indeed, they were given such information by their neighbours who were to endure the same fate.

19. In distress and panic, Mrs Chan approached various official agencies for the truth. She had been briefed by Government agencies that the illegal structure on the flat roof had been destined for clearance even before the Chans' occupation. The news was received in anguish. Thereupon, Mrs Chan liaised with Mrs Lau. Mr Lau communicated with the landlord through his wife. According to Mrs Chan, she was reassured by Mrs Lau that the structure on the flat roof was not to be dismantled.

20. On 2nd May, the Government agency came with a view to demolishing the structure. The Chans were unprepared. They were instructed by Government agency to remove and transport all their belongings from the illegal erection to the permitted area of B7. Mrs Lau was there early in the morning on 2nd May, but Mrs Lau denied that she was present.

21. According to Mrs Chan, on 7th May, after having given the Chans a period of grace, Government agency had scarfoldings erected. There was every sign that demolition of the structure was imminent. The wife plaintiff attended at the illegal structure on the flat roof with a view to obstructing demolition works on 3rd August. Demolition had commenced and was still in progress. Police was summoned by the Government agency and demolition continued without further difficulties.

22. The plaintiffs have approached every source for citizens' grievances. The Court was told that even the Governor had not been spared. From one of the files in a blue cover folder tendered by the wife plaintiff, a letter from the Director of Buildings and Lands dated 18th September 1990 addressed to the plaintiffs was singled out by counsel for his critical observation. It is a photostat copy in which Government referred to a Demolition Order dated 23rd October 1986, served on the premises, B7.

23. The defendant, Mr Chan, and his family were not in occupation of B7 and its flat roof until December. The offer made to the defendant of Flat B7 and the flat roof was in November 1986. Mr Ng, the Principal Survey Officer of the Buildings Ordinance Office, gave evidence that he, in the presence of another officer, personally posted this Demolition Order of 23rd October 1986 on the entrance to B7 and its flat roof. Posting was done on 23rd October. Returning to the letter of the Director of Buildings and Lands dated 18th September 1990 to the plaintiffs, this Demolition Order of 23rd October 1986 was therein made reference to. In addition, mention was made of the plaintiffs' own letter to Government dated 2nd January 1979 seeking an extension of time to demolish the illegal structure on the flat roof.

24. None of the plaintiffs reads, presumably writes, Chinese or English. Maybe that they are less than conversant with the subtlety and intricacy sometimes involved in governmental communications. But the lady plaintiff told the Court that B7 including its flat roof was acquired as new premises. They themselves caused the structure to be erected. It is inconceivable that being a businesswoman, Mrs Lau would not have been aware that the structure so erected on the flat roof to B7, on instructions of herself and her husband, had not received any or any proper consent or permission from the Authority.

25. The Court has had no sight of the plaintiffs' letter dated 2nd January 1979. There is no evidence to suggest that the synopsis given of the contents in that letter by the Director of Buildings and Lands of 18th September 1990 is in anyway inaccurate. It was monstrous of these plaintiffs to advance a claim that they had no knowledge whatsoever of the structure on the flat roof in question being against the law.

26. Decoration and fixtures are not expected to be matters beyond the general comprehension of a hair saloon operator. I find that the plaintiffs, with full knowledge of the illegal nature of the structure on the flat roof at least since 1979, deliberately misled the defendant Mr Chan into accepting a tenancy of B7. I also find that Mrs Lau was at the entrance of B7 on 2nd May.

27. The enthusiasm with which these proceedings were prosecuted runs counter to any suggestion that the plaintiffs had offered these defendant alternative accomodation out of kindness. There was no explanation given as to why the plaintiffs themselves had decided to move to Shatin.

28. Between the wife plaintiff and Mr and Mrs Chan, I have no hesitation in preferring the evidence of the latter insofar as it is at variance. Mr and Mrs Chan struck me as straight-forward and honest witnesses. The wife plaintiff cut a poor figure in the witness stand. Her court performance leaves much to be desired. She seemed to be determined to fabricate evidence on aspects in favour of the plaintiffs. I find as a fact that the plaintiffs, through Mrs Lau, did, with full knowledge, mislead the defendant and Mrs Chan as claimed.

29. Damages for fraudulent misrepresentations have to be specifically proved. Apart from some of the items set out in the list supplied by Mrs Chan, the defendant has produced no evidence to substantiate any claim in damages on that score. The defendant enjoyed an implied covenant for quiet possession under the Chinese Tenancy Agreement. Their occupation and enjoyment of the premises were miserably interfered with. The Chans could not function as a family; they were left with no modern conveniences. They were not even left with decent cooking facilities after the demolition of the structure. The two young daughters of the Chans had to be taken to their maternal grandmother. Mrs Chan had to take upon herself the extra chores of taking one daughter to school and back from school in the morning and do the same with the other daughter in the afternoon.

30. The Chans had to pay the mother of Mrs Chan $100 per day for her out of pocket expenses and for food provisions for Mrs Chan and her two daughters. The $100 a day payment must have included normal provisions for Mrs Chan and her two daughters. It would not be unreasonable, therefore, which was accepted by counsel, to reduce the claim of $100 per day by half as an additional extra expenditure. The travelling expenses claimed by Mrs Chan for the schools of the two daughters at $20 per day for 75 days are clearly justified.

31. The defendant himself had to use restaurant lavatories and had himself showered or bathed in a friend's home at an extra travelling expense of $4 per day for a period from the 7th May, the erection of the scarfoldings, to the 22nd September, presumably the time when public housing was allotted to the Chans. $4 for a period of 90 days totalling $360 is an item which has also been established. Breakfast, presumably, was still being served to Mr Chan by Mrs Chan in what remained of a home after the demolition of the structure. For the same period of 90 days, Mr Chan had to endure dining alone in the evening at, I was told, an extra outlay of $20. The extra expenditure of $20 for 90 days is, I find, reasonable and proved, totalling $1,800. Mr Chan did not work for two days : on the 2nd May, assisting his wife to remove the articles from the illegal structure to the permitted area and on another day when what remained of a comfortable home for the Chans, became flooded as a result of openings, leakage, orifices left by the demolition works. Only one day's loss of wages is being claimed by the Chans at $250. I accept it. I also accept the claim of damage of $500 to the furniture as a result of the demolition and the removal from the flat roof to the permitted area in anguish.

32. When the Chans moved from the Mok Cheong Street flat to B7 and its flat roof at the end of 1986, transportation and removal expenses were $800 and reinstallation of the telephone came to $600. These are damages flowing from disruption of quiet enjoyment and/or damages caused by fraudulent misrepresentations.

33. In sum, the plaintiffs' outstanding claim against the defendant is for arrears. The defendant stopped paying rent upon the discovery of the illegality of the structure and Government's intention to demolish it in April. The defendant should pay rent up to actual interference i.e. for a period from 9th April to a day before 2nd May. That is about 1 week less of a month, calculated at $575. For April, from 9th April to 8th May at $2,300 less $575 would yield a balance of $1,725. This sum the plaintiffs are entitled as against the defendant.

34. Without further evidence, no more damages, if any, for the said misrepresentations can be recovered. Of the total sum in the list supplied by Mr Chan, D10, it has to be deducted half of the daily expenses claimed in the amount of $6,850, that would leave $12,660. From that take away $1,725 as balance of rent due to the plaintiffs by the defendant, and the net sum to be awarded against the plaintiffs in favour of the defendant would be $10,935. This sum, I am afraid, the plaintiffs have to pay the defendant and for which judgment is given against the plaintiffs in favour of the defendant.

35. I am not impressed by the performance of the plaintiff. I am distressed by the evidence given by Mrs Lau against the overwhelming documentation such as the letter of the Director of Buildings and Lands dated 18th September 1990, and the Demolition Order dated 23rd December 1986 posted personally by Mr Ng. Subject to what the plaintiffs have to say, to reflect the utmost displeasure of this Court, costs for the defendant against the plaintiffs be taxed on a common fund basis.