WU CHIEH YUN v. HIDEICHI NAKAMURA

DCCJ 4379/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4379 OF 2012

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DECISION

1. This summons was taken out by the Plaintiff on 16 January 2013 asking for summary judgment on her claim as set out in the Statement of Claim issued on 18 December 2012. The Plaintiff is seeking for

(1)  Vacant possession of a property situated at Unit A on the 3^rd Floor of Block 11, and Car Parking Space 166 on Upper Carpark Floor, Richwood Park, No. 33 Lo Fai Road, Tai Po, New Territories, Hong Kong (“the Property”).

(2)  The sum of HK$96,533 being the sum of rent in arrears together with interest upto 29 November 2012;  and

(3)  Mesne profits at the rate of HK$23,000 per month from 30 November 2012 to the date of delivery of vacant possession of the Property.

2. The Plaintiff case is that the Property had been on lease to a company known as KBK Company Limited who was the employer of the Defendant herein. The term of the lease was for 2 years from 15 October 2009 to 14 October 2011 (“the Company Tenancy”). During the currencyof the Company Tenancy, the Property was occupied by the Defendant and his family. The Defendant and his wife were also guarantors to the Company Tenancy. 

3. At around October 2011, just before the expiry of the Company Tenancy, there was discussion on the possibility of the Defendant entering into a new 2-year tenancy agreement in his personal capacity with the Plaintiff. To facilitate negotiation, the parties reached an agreement on temporary arrangement. It had been agreed that the Defendant and his family could still occupy the Property at a price for HK$23,000 per month on a monthly basis until further notice. Therefore from 15 October 2011 onwards, the Defendant and his family stayed in the Property on a Monthly Tenancy.

4. Negotiation went on for a long time over various areas of concern. The negotiation eventually broke down on disagreement as to whether and how the floor was to be repaired. At the same time, the Defendant had defaulted payment of rent since 14 December 2011.

5. A Notice of Termination of the Monthly Tenancy was served on the Defendant on 16 October 2012 putting him on notice the Plaintiff’s intention to terminate the Monthly Tenancy and the Defendant was given a period of time for over one month, by virtue of the Monthly Tenancy, to deliver vacant possession on 29 November 2012.  As at the time the Notice of  Termination the accrued rental in arrears amounted to HK$96,533.

6. It is also said that the accrued mesne profit is now in the sum of HK$115,000 from 30 November 2012.

7. The Defendant’s defence as pleaded is this. There was no Monthly Tenancy but a 2-year tenancy entered between the Plaintiff and the wife of the Defendant. Relying on this the Defendant say that he was no party to the 2-year tenancy and the Plaintiff had no right to serve the Notice of Termination during the currency of the 2-year tenancy. Further his wife had in during the Company Tenancy paid to the Plaintiff a sum of HK$140,000 as security deposit, and such security deposit should have covered the rent from September 2012 to November 2012.  Finally, the Plaintiff had agreed to repair the Property but had failed to honour the agreement. All in all, the claim is denied and a counterclaim is pleaded to claim for damages for loss of expected benefit arising from the 2-year tenancy due to the ill maintenance and lack of repair of the Property. 

The law

8. Ms Leung, Counsel for the Plaintiff submits that the legal principals are settled. First it is for the Defendant to prove that there are triable issues or an arguable defence and secondly the test at this summary stage is whether the Defendant’s case is believable. It is submitted that there is no triable issue in the Plaintiff’s claim  and the assertions of the Defendant are not believable. 

New 2-year Tenancy or Monthly Tenancy

9. The Defendant said that there was a new 2-year Tenancy commencing on 5th November 2011. Ms Leung referred me to an email dated 20 November 2011 in which the Defendant wrote and said that :

“ …..in order to enable us to continue to stay in the premises, please let us propose you the followings:…..”

“But in order to open an new contract by ourselves, we would like you to pre-set the condition of the premises to the ordinary levels which, we believe, even another new tenant may request you to repair when they move in with the rent level of $23K………”

“With your acceptance of above arrangement, we would like to accept your offer of the monthly contract under the condition that there is no increasing of the rent amount during 24 months. We will be waiting for your opinion on above.”

10. From the content of the email, I am of the view that it is unlikely that a 2-year tenancy had been created on 5 November 2011. In such circumstances, by operation of law, the arrangement between the parties would have been a tenancy on a monthly basis with license fees of HK$23,000 per month.  I prefer the Plaintiff’s case that there was a Monthly Tenancy.

Whether the Defendant was not a party to the Monthly tenancy

11. As I have made my findings above that there was no 2-year tenancy, the Defendant’s assertion that the party to the tenancy was his wife and not him could not stand either. Further, as I could see, all discussion was carried out between the Defendant and the Husband of the Plaintiff.

12. Further, the Defendant had written on 5 October 2011 that he would try to perused his wife to sign a new contract after he returned to Hong Kong and “Just in case, if I failed to persuade my family, then I would guarantee the rent payment from 15 October till the date when we move out, at the verbally agreed rate of HK23K/ month”.

13. From the correspondences, it is clear that the Defendant was the party to the agreed Monthly Tenancy.

14. Further, I agree with Ms Leung that even if he was the agent of his Wife during the negotiation, as an undisclosed agent, he can be sued in his personal capacity.

Whether HK$140,000 being held by the Plaintiff as security deposit

15. It is not disputed that a total sum of HK$140,000 had been received from the Defendant during the Company Tenancy. The Plaintiff’s case was that the Defendant and his wife were both guarantors to the Company Tenancy and it was when the KBK Company Ltd failed to pay the dues, such dues would be settled by the Defendant/ his wife.  The total amount paid represented payment of 7 months’ of rental at the rate of HK$20,000 per month under the Company Tenancy. 

16. Further, my attention was drawn to an email dated 9 October 2011 when the Defendant wrote and said that :

“As you know, this is a company quarter by my previous company even after I was transferred to Guangzhoou. Since it should be their duty to be responsible for the rent payment even for this month, we need to wait for the result if they have paid or not first, and only in case not, we can issue our check for guarantee to the landlord as we have been doing so in the past.

As a result, landlord has been secured in the past 2 years by our effort and already received the amount from us which is equal to the full payment before the contract matured, eventhough we are not sure at present if such can be a reimbursement. This is the way we complete our guarantee…”

17. From the above, I am of the view that the HK$140,000 was rental payment in situation when KBK defaulted. In my judgment such amount could not be used to pay the arrears now outstanding. 

Set-off

18. The Defendant also seeks to set-ff the Plaintiff’s claim of the outstanding rent and mesne profit by his loss of expected benefit arising caused by the defects of the Property.

19. Ms Leung submits that in law there is in general no implied covenant by the landlord to carry out repairs. In the absence of express stipulation, the landlord is generally under no liability towards the tenant to put the demised premises into repair at the commencement of the tenancy, or to do repairs during the continuance of the tenancy.

20. She further submits that under the Monthly Tenancy the Plaintiff was under no obligation to carry out repairs.

21. I was again referred to correspondences. From a email dated 6 November 2011, the Defendant said:

“But in order to open an new contract by ourselves, we would like you to pre-set the condition of the premises to the ordinary levels which, we believe, even another new tenant may request you to repair when they move in with the rent level of $23K………”

22. Clearly there was no express agreement made by the parties that the Plaintiff would carry out repairs on a 2-year Tenancy Agreement. In the circumstances, I agree with Ms Leung that set-off is not arguable. I am also of the view it is not appropriate for the judgment to be stayed in view of the nature of the Counterclaim.

Conclusion

23. After hearing submissions and viewing the correspondences, it is my judgment that summary judgment should be granted in favour of the Plaintiff as the Defendant has failed to prove on balance that there exists an arguable defence or triable issues. 

Order

24. For the reason set out from above, Judgment is entered in favour of  the Plaintiff against the Defendant on the following:

a)  Vacant possession of the Property;

b)  A sum of HK$96,533, and the interest of the said sum at the rate of 8% per annum from the date of Writ until day of judgment and thereafter at judgment rate until full payment;

c)  Mesne profits at the rate of HK$23,000 per month from 30 November 2012 until the date of delivery of vacant possession of the Premises to the Plaintiff; and

d)  The Defendant do within 21 days obtain a date for CMS hearing before Master for his Counterclaim.

Costs

25. Costs should follow the event. I order the Defendant to pay the cost of the Plaintiff to be taxed if not agreed. This is an order nisi to become absolute within 14 days if no application is taken out to vary the same.