WONG KAI TUNG v. LUK KAM FUNG PATRICIA

DCCJ 4650/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4650 OF 2006

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JUDGMENT

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1.  On 19^th September 2006, the Plaintiff (“Mr. Wong”) took out proceedings against the Defendant (“Miss Luk”) for the repossession of a property known as Flat A, 19^th Floor, Grandview Building, 59 Fa Yuen Street, Kowloon, Hong Kong (“the property”) and for mesne profits at $5,400 per month until the delivery of vacant possession.

2.  On 29^th November 2006, the Defendant (“Miss Luk”) filed a defence and counterclaim alleging an oral agreement between Mr. Wong and herself to deduct the rental for July and August from the rental deposit.  She denied she was in arrears of rental.  She further alleged that due to a defective gas water heater in the property, which Mr. Wong agreed to replace in July 2006.  She claimed she spent 6 days away from work waiting for the Towngas technician to install the new gas water heater at the property.  It caused her to lose her job.  She further alleged that there were two defective windows in the property which could not be closed properly that had resulted in damages to her properties during a rainstorm.  She counterclaims against the Plaintiff for the loss and damages suffered.

Background

3.  The parties entered into a tenancy agreement in writing on 4^th June 2006 for a term of 2 years commencing on 4^th June 2006 up to 3^rd June 2008 at a monthly rental of $5,400 (“the Tenancy Agreement”).  Under Clause 1 of the Tenancy Agreement, at the expiry of 12 months, the tenancy is terminable by either party upon one month’s written notice.  Under Clause 5 of the Tenancy Agreement, the tenant was required to pay a rental deposit equivalent to 2 months’ rental, i.e. $10,800, to the landlord which will be returned upon repossession after deducting outstanding rental, utility charges and other expenses payable by the tenant.

4.  Miss Luk took possession of the property on 4^th June 2006.  She moved in to the property with her daughter on 5^th June 2006.  As Miss Luk failed to pay any rental, Mr. Wong took up proceedings against her after a letter before action was issued by his solicitors on 6^th September 2006.

5.  It is not disputed that Miss Luk deposited into Mr. Wong’s bank account a sum of $5,400 on 12^th September 2006.  She further deposited a cheque for the same amount on 12^th October 2006 which was dishonoured.  On 14^th November and 14^th December 2006, she deposited a similar amount of $5,400 into Mr. Wong’s bank account.  In the following months of January to September 2007, she deposited a total of $540,000 into Mr. Wong’s account.  There was no further payments in October, November and December 2007 until 24^th and 31^st January 2008 when she deposited two sums of $10,800 into Mr. Wong’s bank account.  It is the Plaintiff’s case that a cheque deposited by Miss Luk on 12^th April 2007 of $5,400 was dishonoured, and therefore not taken into account by the Plaintiff.

6.  Miss Luk claimed that she did not know her cheque issued on 12^th October 2006 was dishonoured by the bank.

7.  Miss Luk and her daughter moved out of the property on 31^st January 2008, but the keys to the property was not returned to Mr. Wong until 31^st March 2008.

8.  At the trial, the Plaintiff is no longer asking for repossession of the property.  He accepted Miss Luk’s surrender of the premises on 31^st March 2008.  He claims for the payment of outstanding mesne profit in the sum of $10,103.23, which represents mesne profit from 1^st February to 31^st March 2008.

9.  Miss Luk counterclaims for the sum of $220,576.77.  She asks for damages due to the loss of her job in the sum of a basic 12 months salary of $120,000 and a commission of an equal amount for the same period.  She further claims the cost of computer repair at $1,200; cost of moving into new accommodations at $1,500; installation of telephone and internet services at $300; cost of house cleaning at $80 and the difference in rental between her present accommodations and the lease with Mr. Wong at $31,600.   She agrees to set this amount off against the $10,103.23 mesne profits and the deduction of the salary she received in the 12 months since she lost her job at AIA at $44,000.

The Plaintiff’s case

10.  The Plaintiff’s case is strict-forward.  After taking into account of the above-mentioned deposits plus the 2 months rental deposit, he agreed he had received a total of $102,600 in rental and mesne profits.  Miss Luk does not dispute the Plaintiff’s record and agrees that those were the amounts she had paid by bank deposits into Mr. Wong’s account.  At the trial, Miss Luk expressed that she would not dispute the outstanding mesne profit of $10,103.23.

The Defendant’s case

11.  Miss Luk’s pleaded case is that Mr. Wong had agreed at a telephone conversation in late June 2006 that he would deduct the rental for July and August 2006 from the rental deposit of $10,800.  She claimed she lost her job because she had taken 6 days leave of absence from work to attend to the installation of the new gas water heater.  She further counterclaimed for the repair cost to the laptop computer keyboard which was damaged by rain coming through the window with a faulty handle.

12.  Miss Luk further claimed she was forced to sign the tenancy agreement on 4^th June 2006 before she was taken for a final inspection of the property.  Consequently, she had no choice but to take possession of the property on 4 June 2006.  She discovered the property was not cleaned after the contractor completed the renovation at the property.  Consequently, she incurred cleaning expenses of $80 before she moved in on 5^th June 2006.  She claimed she had difficulties in finding alternative accommodations until 31^st January 2008.  She moved to her present accommodations which is a service apartment paying a monthly rental of $12,000 on 31^st January 2008.  She claimed the difference in rental for the balance of the tenancy term because there were paint stains on the pacquet floor of the property which Mr. Wong’s contractor had failed to remove and the two faulty windows at the property.

The Issues

13.  The issues in dispute are:

1.   Was there an oral agreement between the parties at the end of June 2006 that the rental for July and August 2006 would be deducted from the rental deposit?

2.   Was Mr. Wong responsible for Miss Luk’s loss of her AIA job because of her 6 days absence from work?

3.   Was Mr. Wong responsible for the damage to the computer keyboard due to the faulty handle of the bedroom window?

4.   Was Mr. Wong liable to pay for Miss Luk’s removal expenses to her new accommodations on 31^st January 2008 and the telephone and internet connections?

5.   Was Mr. Wong liable for the difference in rental between the property and Miss Luk’s new accommodations for the remainder of the lease?

6.   Was Mr. Wong responsible for the $80 cleaning charge before Miss Luk moved into the property?

1.   Was there an oral agreement between the parties at the end of June 2006 that the rental for July and August 2006 would be deducted from the rental deposit?

14.  Miss Luk alleged that she did not need to pay the rental of July and August 2006 because during a telephone conversation with Mr. Wong at the end of June 2006, Mr. Wong had agreed to deduct the rental for July and August from the rental deposit.  Mr. Wong denied he had ever agreed to such an arrangement with Miss Luk.  He further claimed that because of her outstanding rental, he decided to issue a letter before action and a writ against her for recovery of the premises and mesne profits in September 2006.

15.  It is not disputed that Miss Luk paid only the sum of $10,800 rental deposit after she signed the lease on 4^th June 2006.  Mr. Wong claimed Miss Luk did not pay any rental since she took possession of the property until 12^th September 2006.  He had instructed solicitors to write to her on 6^th September 2006 informing her he would take up legal action against her for outstanding rental.  He claimed that the only conversation he had with her after the signing of the lease was on the matter of the stains on the floor of the property on 5^th June 2006.  She had requested Mr. Wong to repaint the floor of the whole flat which he had rejected.  He claimed he had only agreed to pay the sum of $300 for the paint stains to be removed.  The next contact Mr. Wong claimed he had with Miss Luk was a telephone call from Miss Luk to complain about the gas water heater in the property not working well on 3^rd July 2006.  Mr. Wong said he eventually agreed to purchase a new gas water heater.  After he picked out and paid for a new gas water heater, he asked Miss Luk to arrange with Towngas to have it installed.  He claimed Miss Luk had never informed him about the arrangements she made with Towngas.

16.  Mr. Wong said he had contacted Miss Luk on 4^th July 2006 to demand payment of outstanding rental.  In the following months he made repeated demands on Miss Luk for the outstanding rental.  Miss Luk ignored his demands and informed him she would be quitting the property on 18^th August 2006.  She agreed to sign a surrender agreement to be prepared by the estate agent, Wai Hing Real Estate Company (“Wai Hing”).  However, after Mr. Wong attended Wai Hing and signed a surrender agreement on 20^th August 2006, Miss Luk failed to sign the agreement.  Mr. Wong further claimed that on 26^th August 2006 he telephoned Miss Luk and demanded payment of outstanding rental when Miss Luk informed him that she would not pay the outstanding rental and challenged him to issue legal proceedings against her for the recovery of rental and possession.  That was why Mr. Wong instructed his solicitors to write to Miss Luk demanding payment of outstanding rental in early September 2006.  Mr. Wong claimed that was why Miss Luk paid into his bank account a cheque for $5,400 on 12^th September 2006 without first informing him.

17.  Mr. Wong further claimed he had never received any complaints about faulty windows in the property.  There was further no complaints that rain had damaged Miss Luk’s computer due to the faulty handle on the window.  He denied there were any pressure on Miss Luk to sign the lease before she was allowed to inspect the property on 4^th June 2006.  Mr. Wong admitted, however, at the time of delivery of possession on 4^th June 2006, Miss Luk had complained about the paint stains on a certain part of the floor at the property.  Mr. Wong then asked the contractor to clean the stains twice in Miss Luk’s presence.  However, Miss Luk was still not happy with the state of the floor.  On the next day, she telephoned him to complain and demand the repainting of the whole floor of the property.  He refused and agreed only to a payment of $300 for the removal of the stains.  He claimed he had never agreed to pay any cleaning expenses of the property before she moved into the property because the renovation contractor had included cleaning charges in the renovation contract and had completed the work.  Therefore there was no need to clean the property again.

18.  Miss Luk, on the other hand, claimed the property was not in a clean state when she took possession on 4^th June 2006.  She claimed she had to ask the buildings management staff at the building to do the cleaning for her before she moved in on 5^th June 2006.  She admitted she had all the windows and the doors and floors of the property cleaned before she moved in on 5^th June 1006.

Analysis

19.  It is against common sense for any landlord to agree to deduct the second and third months’ rental from the rental deposit.  The purpose for the payment of rental deposit at the signing of the lease is set out at clause 5 of the tenancy agreement (pages 5 to 6 of the trial bundle).  It provided that the two months rental deposit would be returned to the tenant upon the tenant vacating the premises and upon deduction of outstanding rental and unpaid expenses.  Unless the tenant informed the landlord that she was going to quit the premises within two months of the lease and unless the landlord consented to an early surrender within 2 months of occupation, no landlord in his right mind would agree to deduct outstanding rental from the rental deposit; otherwise, the rental guarantee under Clause 5 would be rendered incorporative.  Miss Luk’s allegation of Mr. Wong’s agreement to deduct the two months rental in arrears from the deposit was clearly contrary to Clause 5 of the tenancy agreement.  This allegation seemed to support Mr. Wong’s evidence that Miss Luk had told him at the end of July she would be quitting the property on or about 18^th August 2006.  Unfortunately, Miss Luk did not sign the surrender agreement in August 2006.  In fact, she had continued to occupy the property for another 17 months or so until the end of January 2008.  Furthermore, even after she moved to new accommodations on 31^st January 2008, she failed to surrender the keys to Mr. Wong or to his legal representative knowing full well these proceedings were still continuing against her.  She finally surrendered the keys to the property on 31^st March 2008 and this was accepted by Mr. Wong as the surrender of the property.

20.  I do not find it plausible that Miss Luk was in any way pressurized into signing the Tenancy Agreement on 4^th June 2006.  She claimed when she was taken by the estate agent to the property the first time, the renovation work was still underway.  Furthermore, she signed the provisional Tenancy Agreement at the estate agent’s office.  Though she claimed she was asked to sign the formal Tenancy Agreement in Chinese on 4^th June 2006 and she was not given an opportunity to view the property before she signed, it is unlikely she was under any pressure from either the estate agent or Mr. Wong.  It is out of character of someone who 2½ months after Miss Luk moved into the property, agreed to allow Miss Luk to move out by entering into a surrender agreement even though she had only occupied 2½ months of the 2 year lease in August 2006.  If Miss Luk had such an objection to the state of the property she would not have remained in it for over 19 months.

21.  I am satisfied that Miss Luk is liable to pay $10,103.23 outstanding mesne profits to Mr. Wong.

The Defendant’s Counterclaim

Was Mr. Wong liable for Miss Luk’s losing her job at AIA because of her 6 days absence from work?

22.  Miss Luk claims against Mr. Wong for her job loss at AIA because she was absent for 6 days.  She claimed it was during the period she was taking an insurance agent training course at AIA that the gas water heater at the property failed to work properly.  Eventually Mr. Wong agreed to purchase a new water heater.  She had to liaise with Towngas for the installation of the new water heater and that resulted in her 6 days absence from work.

23.  I find Miss Luk’s claim too remote.  There was no evidence in support from Towngas that it took the technician 6 visits for the gas water heater to be installed.  Miss Luk claimed that the Towngas technician was either late or failed to turn up at the appointed time.  She failed to give any details in support her claim for the 6 days’ leave of absence such as the time and dates of the Towngas appointments and records of the actual visits.  More importantly, there is no support for her allegation that she lost her job because of her absence from work.  Even if her claim should be supported by records from Towngas, Mr. Wong is still not liable to her for her losing her job if she was not able to make proper arrangements to have the new gas water heater installed at a convenient time to her.  The landlord simply did not owe his tenant any duty under the contact if she could not arrange for repair or work done at the property at a time suitable to her.

Other claims

Repair of the laptop computer

24.  Miss Luk claimed that during a rainstorm because of the faulty handle on a window in the bedroom, her laptop computer was damaged by rain because it was placed under the window.  She claimed she was not able to close the window and the keyboard of the laptop computer was damaged.  Miss Luk produced (on page 12 of her first list of documents) a debit note for the supply of a keyboard unit at $1,200.  The date of the debit note was 18^th September 2006.

25.  Mr. Wong claimed he had never received any complaint from Miss Luk about any faulty window handles.  Miss Luk produced a quotation from a company called Man Chong Engineering Co. Ltd. at page 7 of her list of documents dated 2^nd September 2006, it is a quotation for replacement of two window handles at $1,000.  Miss Luk admitted that the two handles were never replaced but she did have her computer keyboard repaired. 

26.  It seems strange that Miss Luk did not remove the laptop computer from under the window to avoid it getting wet.  Miss Luk claimed she was busy closing the window during the rainstorm, but she failed to explain why she did not close the lid of the laptop to keep it dry.  There is no computer repair report produced, there was only her evidence that the laptop computer was damaged by rain on that occasion.  There was no mention in the debit note from the repairer as to what had caused the laptop computer keyboard to be disabled.  I am not satisfied Miss Luk has proved on a balance of probabilities that the laptop computer keyboard was damaged by rain because of a faulty handle in one of the windows.  She should have moved the computer to a safe place or close the lid instead of allowing rain water to get into the computer.  If the two windows were in such a bad state, it is illogical for her to leave them unrepair with no complaints to Mr. Wong for over 17 months.

Cost of removal to new premises and installation of telephone and internet

27.  I am not persuaded that Mr. Wong is liable for the cost of Miss Luk’s moving to her present accommodations.  She would have to pay these charges even if she stayed the full term until 3^rd June 2008 before moving to new premises.  It would be part of the costs of quitting the property even though she had moved out 3 months before the end of the lease.  Her claim is dismissed.

Differences in the new rental and rental under the tenancy

28.  On 31^st January 2008, Miss Luk had chosen to move to a service apartment at the cost of $12,000 a month.  Compared to the rental at the property of $5,400 per month, there is a large gap.  The reason Miss Luk gave was she could not find an estate agent who was willing to find her a new flat to rent.  She blamed that on the complaint she had lodged againt Wai Hing Estate Agency because of the difficulties relating to her lease with Mr. Wong.  The documents produced by Miss Luk showed evidence that Miss Luk had laid a complaint against Wai Hung at the Estate Agents Authority.  Miss Luk claimed she was put on the black-list by estate agents in Hong Kong because of it.  In spite of that, I am not satisfied that she was not able to find comparable or reasonable accommodations until January 2008.  It is her choice to stay at a two bedroom service apartment which cost $6,600 more in rental than Mr. Wong’s property on a short month to month rental basis.  It is not a consequence of her tenancy with Mr. Wong.  I reject her claim completely.

House cleaning charge

29.  Miss Luk further claimed $80 for the cleaning of the property before moving in on 5^th June 2006.  It is again her own choice to have the flat thoroughly cleaned including the windows, floors and walls etc. before moving into the property.  It was not the responsibility of Mr. Wong for he had already paid the contractors to clean up the property before the tenant moved in.  I disallow this claim.

Conclusion

30.  I am satisfied Mr. Wong has shown Miss Luk did not surrender the property until 31^st March 2008, therefore, Miss Luk is liable to pay mesne profits up to 31^st March 2008.  The outstanding amount of mesne profits is $10,103.23.

31.  I find Miss Luk’s counterclaim not proved.  Mr. Wong is not liable for Miss Luk’s losing her job at AIA.  There is no reason given for AIA’s termination of Miss Luk’s contract in its letter of August 2006 to Miss Luk.  Miss Luk claimed that the reason for AIA’s termination of their contract was her absence from work for 6 days, and the reason for her 6 days absence was due to Towngas’s installation of the new gas water heater.  The arrangement to install the new water heater is a matter entirely up to Miss Luk.  It is unreasonable that such an arrangement would cost 6 days of work.  She should have made sensible arrangements rather than spending 6 days sitting at home waiting for the technician to show up.  Further, the letter produced by Miss Luk from AIA dated 13^th October 2006 did not prohibit Miss Luk from continuing or pursuing a career in the insurance business with another insurance company.  The letter merely prohibited her from contacting existing policy-holders of AIA.  As she was only a trainee at the time when her contract was terminated, she could not have had any contacts or possess any knowledge of the details of any of the policy-holders of AIA.  Consequently, I find this claim not substantiated.

32.  As to the repair of the computer, it was a laptop computer which Miss Luk could have easily removed from under the window which she claimed could not be closed.  As to the cost of removal to the service apartment together with the expenses of installation of telephone and internet, she would have to pay for such expenses in any event at the expiry of the lease.  The difference in rental between her present accommodations and the property is a large one.  Miss Luk could have stayed in the property until the expiry of the lease on 3^rd June 2008.  Since she had chosen to stay for over 19 months, it showed she was happy to stay at the property in spite of her complaints about the paint stains on the floor and the two windows with faulty handles.  These items were never repaired, yet she was happy to stay in the property for over 19 months.  Her counterclaim is dismissed.

Interest

33.  Interest at half judgment rate from date of writ to date of judgment and thereafter at judgment rate.

Costs

34.  Costs to follow the event.  The Defendant shall pay to the Plaintiff the costs of these proceedings, to be taxed if not agreed.