XCHRX CHAN YAT MAN v. POON SHIU HUNG

HCA 3420/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.3420 OF 2000

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DECISION

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1. By a summons filed on 5 September 2000, the Defendant applied for leave to appeal out of time against the summary judgment entered by a Master on 3 July 2000. By another summons filed on the same day, the Defendant applied to set aside the charging order absolute made against his property based on the said judgment. After hearing the parties, I dismissed both summonses and gave oral reasons for the decision. I now reduce them into writing.

Background

2. The Plaintiff is the owner of the premises known as Flat G 34/F. and Roof G, Block 3, Sceneway Garden, No. 9 Sceneway Road, Lam Tin, Kowloon ("the Suit Property"). By a Chinese tenancy agreement dated 28 June 1999 ("the Tenancy Agreement"), the Plaintiff let the Suit Property to the Defendant for a term of 2 years commencing on 1 July 1999 at the monthly rent of $14,700.

3. By the Writ issued herein on 31 March 2000, the Plaintiff claimed against the Defendant for vacant possession, arrears of rent, mesne profits and damages for breach of agreement. The Plaintiff's pleaded case is that the Defendant was in wrongful repudation of the Tenancy Agreement by non-payment of rent since January 2000 and by deserting the Suit Property in March 2000.

4. The Defendant filed a Defence on 2 May 2000 stating, inter alia, that the non-payment of rent was occasioned by his deterioriating financial condition, that the Plaintiff was holding a rental deposit of $29,400, that he had returned the keys to the Suit Property to an estate agent and that the legal costs could be avoided had the Plaintiff not chosen to bring the suit.

5. The Plaintiff then applied for summary judgment by summons. At the hearing on 3 July 2000, the Defendant was absent. Master Kwan entered final judgment for vacant possession, arrears of rent for January to March 2000 in the sum of $44,100 and mesne profits at the monthly rate of $14,700 from April 2000 until delivery up of vacant possession, together with interlocutory judgment for damages to be assessed ("the Judgment").

6. On the strength of the final judgment entered, the Plaintiff applied for and on 10 August 2000 was granted a charging order nisi on the Defendant's property at Flat C 1/F. Block 37, No. 9 South Laguna Street, Laguna City, Lam Tin, Kowloon ("the Defendant's Property"). On 22 August 2000, the Defendant applied by summons to set aside the Judgment. The summons and the order nisi were both returnable on 31 August 2000. At that hearing, the Defendant was present. Master Poon dismissed the Defendant's application to set aside and also ordered that the charging order be made absolute.

7. Then on 5 September 2000, the Defendant took out the 2 summonses seeking leave to appeal out of time against the Judgment and also to set aside the charging order absolute. On 21 September 2000, Master Lung orderded that the latter summons be heard after the summons for time to appeal.

Application for Leave to Appeal Out of Time

8. Although it was not specified in the Defendant's summons the procedural basis for this application, I take it as an application under Order 58 rule 1(3), Rules of the High Court. It is a matter of discretion when deciding whether to extend the time for appealing against a master's decision. The relevant considerations in exercising the discretion include the reasons for the delay and the potential merits of the intended appeal.

9. The affirmation filed by the Defendant in support of the application is extremely brief. It only stated: "I had not received any notice to appear on 3.7.00". The Defendant's submissions at the hearing, however, went much beyond this. Strictly speaking, the factual matters that the Defendant raised is not evidence for this Court since they were not stated under oath. However, as the Defendant is acting in person and as he had gone into great lengths about these matters, I shall deal with them as if they had been verified under oath.

10. The first matter that the Defendant raised is that he did not receive the papers for the summary judgment application and he was not aware of the hearing on 3 July 2000. The Plaintiff's summons and affirmation together with a covering letter had been sent by ordinary post to 3 addresses, namely, the Suit Property, the Defendant's Property and also the estate agent's office at which the Defendant had left the keys to the Suit Property for onward transmission to the Plaintiff. The documents sent to the Defendant's Property was returned to the Plaintiff's solicitors by the Post Office marked "Refused acceptance" (拒收) on 17 July 2000, 1 month after the documents were sent by post. The documents sent to the other 2 addresses had not been returned.

11. It is to be noted that the Writ herein was also served on the Suit Property by insertion in the letter box and by posting up. It was further sent to the address of the estate agent by registered post, but was returned to the Plaintiff's solicitors marked "Addressee unknown" 5 days after being posted. Admittedly, the Defendant had received the Writ, although it is his case that he had already moved out of the Suit Property. The Defendant explained in Court that he had inserted his hand into the letter box to "fish out" (拈) the documents. He said he had not, however, received from the letter box of the Suit Property the documents for the summary judgment application as he did not return there.

12. As to the Defendant's Property, the Defendant said he did not live there and that it was his mother who lived there. He further claimed that between June and September 2000, his mother was away in Canada. Documents sent there were therefore not received by him. When it was pointed out to him that the documents on the charging order nisi were also sent to this address on 11 August 2000 by ordinary post and had not been returned, the Defendant then retracted and said his mother was away until some time in August 2000, not September 2000. Even then, it does not explain why the Judgment which was sent by ordinary post to the Defendant's Property on 17 July 2000 was returned by the Post Office on 4 August 2000 marked "Refused Acceptance". The fact that acceptance of the letter accompanying the papers for summary judgment application and the Judgment had been refused during July and August 2000 indicates that there was someone attending to the correspondence sent to the Defendant's Property. The Defendant's account that documents sent to the Defendant's Property did not reach him because his mother was away is, in my view, highly doubtful. It is also too much of a coincidence that he would have received the Writ and the charing order nisi but not the papers on summary judgment application.

13. Irrespective of whether they had come to the attention of the Defendant, the documents relating to the summary judgment application had been properly served. Clearly, the 3 addresses are the Defendant's last known addresses and the Plaintiff is entitled to effect service on those addresses. This is particularly so when the Defendant had chosen not to file the Acknowlegdement of Service and also not to give any address for service in the Defence he filed. The Defendant complained that the Plaintiff knew of his pager number, which was stated on the Tenancy Agreement, and should have contacted him through that number. I cannot see why the Plaintiff should be put to such burden when the Plaintiff has no reason to suspect that documents sent to the 3 last known addresses would not be received by the Defendant. In short, I do not believe that the Defendant was not aware of the hearing on 3 July 2000. I also do not accept that he has any legitimate ground for attacking the validity of the service of the summons and affirmation for summary judgment.

14. I turn now to deal with the grounds of the intended appeal, hence the merits of the Defendant's case. In this regard, it has to be borne in mind that the Judgment is not obtained by default, but is a summary judgment. The Master would have considered the merits of the Plaintiff's case as pleaded and the supporting affirmation before proceeding to give judgment.

15. The Defendant's case as stated in his Defence and mentioned at the hearing before this Court is that he had contacted the Plaintiff about terminating the Tenancy Agreement and had returned the keys by depositing them with the estate agent. The Defendant further mentioned that he had requested for a reduction in the rental, but was refused by the Plaintiff. The Defendant complained that the Plaintiff was escalating the matter and acting oppressively by instituting legal proceedings instead of re-possessing the Suit Property and re-letting it to minimize the loss.

16. Plainly, the Defendant is not disputing that the Plaintiff is entitled to vacant possession of the Suit Property. The Defendant also does not deny that he had not paid rent since January 2000, though he claims to have a set-off on the rental deposit held by the Plaintiff. It is trite law that rental deposit cannot be unilaterally used by a tenant to set-off against rent in arrears. In any event, the amount of the rental deposit is insufficent to cover the rent in arrears.

17. As to mesne profits from April 2000 and damages for breach of agreement, the Defendant is clearly misconceived in thinking that he could unilaterally terminate the tenancy before the fixed term expired. The Tenancy Agreement is a legal document binding on the parties. The rights and obligations of the parties are governed by its terms. The tenancy is for a term of 2 years. Clause 19 of the Tenancy Agreement provides that the Defendant cannot terminate the tenancy during the first 12 months, though he may do so in the second 12 months by serving 2 months' written notice or payment of rent in lieu. It is therefore clear that the Defendant has no right to unilaterally terminate the tenancy by returning the keys to the estate agent, and the Plaintiff is quite entitled to refuse to accept any surrender of the tenancy.

18. The Defendant stated in Court that he was not aware of the part of clause 19 prohibiting early termination in the first 12 months, and that this part might not even be there when he signed the Tenancy Agreement. This part of his case has never been pleaded in the Defence nor stated in the affirmation. Even if it were to be accepted in its entirety, it cannot advance the Defendant's case. Without this part of clause 19, the Tenancy Agreement only confers a right to early termination in the second 12 months. The common law position is applicable to the first 12 months. The Defendant is still not entitled to unilaterally surrender or terminate the tenancy in the first 12 months. The Plaintiff, in refusing to accept the surrender, is merely exercising his legal rights in insisting on the terms of the Tenancy Agreement. The criticism levelled by the Defendant against him is entirely groundless.

19. There is plainly no merits in the Defence and the intended appeal. In the cicumstances and having rejected the Defendant's account that he did not have notice of the hearing, the application for time to appeal against the Judgment is refused.

Application to Set Aside the Charging Order Absolute

20. Given that the charging order absolute is premised on a valid and subsisting judgment and that the application to appeal against the Judgment out of time has been refused, there is simply no basis for disturbing the charging order absolute. This application is therefore also refused.

Conclusion

21. Both summonses of the Defendant filed on 5 September 2000 are dismissed with costs, including costs reserved, to the Plaintiff to be taxed if not agreed.