WE SHARP LTD v. SAMTANI ANAND P.

LDPD 1548/2016

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO. LDPD 1548 OF 2016

__________________________

__________________________

________________

J U D G M E N T

________________

1.  The Applicant is the landlord of a property (“the suit premises”) situated at Room 3, 3/F, No. 163 Queen’s Road West, Hong Kong. The Respondent is the tenant. The parties had executed on 31 December 2015 a tenancy agreement which was entitled as Leasing Agreement. The expiry of the lease was not expressly stated thereon. The Applicant said that it would continue on same terms until the Respondent gives a notice to quit.

2.  It is not disputed that the monthly rental was $9,800 per month when the Leasing Agreement was first signed.  It was not disputed that the rent had been reduced from $9,800 to $9,000 per month but the commencement for such renewal of rent could not be agreed.  The Applicant said that it started on 9 June 2016 where the Respondent said that it started as from 9 May 2016.

3.  The Applicant said that the Respondent had failed to pay rent since June 2016 and there was only partial payment of $8,000 for the month from 9 May 2016 to 8 June 2016.  The unpaid balance for May 2016 was $1,800 according to the Applicant.  The Respondent said it should be $1,000 as the new rent at $8,000 took effect on 9 May 2016.  The Applicant relied on a whatsapp message dated 25 May 2016 saying that parties had agreed on the reduction.  Mr Kwan for the Applicant agreed that the message did not clearly say in which month the reduction would commence but since at that time it had past 9 May 2016 already, parties must have meant to commence new rent from 9 June 2016.  

4.  As to the arrears since June 2016, the Respondent said that he did not pay because of serious termite problem in the suit premises.  He asked that there should be deduction of rental for 1 month to reflect the service rendered by him to deal with the problem he had faced.  He also said that there should be a discount of 50% in the rent for July and August 2016 because the suit premises had became inhabitable because of the termite problem.

5.  Under cross examination, Mr Kwan for the Applicant agreed that there was termite problem but he did not know how it had come about as the suit premises had been rented out to the Respondent since December 2015.  He said he first learned about termites in the evening 25 June 2016.  Staff of the Applicant’s maintenance team was sent to the suit premises on 27 June 2016 to treat the problem with spay.  It took two days for the Applicant to handle the problem because it was a Sunday on 26 June 2016.  On 30 June 2016 the cleaning lady went there to undertake usual cleaning duties.  When put to him by the Respondent that the cleaning lady did not properly cleaned the aftermath of the termite treatment he said he had learned from the cleaning lady that she could not thoroughly clean the place because the Respondent did not move the stuff in there for her to clean.

6.  There was no counterclaim filed by the Respondent.  As defence, the Respondent’s case is mainly built on value for service rendered by him.  He had produced a quotation dated 19 August 2016 made by a pest-control company saying that the company would charge $3,500 to cure the problem.  The Respondent said he had done more than what had been stated on the quotation and therefore his service was worth $9,000.

7.  I do not think that there was inordinate delay on the part of the Applicant.  The notice was given out in the evening of 25 June 2016 which was a Saturday.  Maintenance staff was sent on 27 June 2016.  There were messages through whatsapp dated 27 June 2016:

	9:37am:	the Applicant wrote “will come to check”
	9:48am:	the Respondent wrote “I messaged you 2 days ago that it was urgent and only now you decide to reply me...”
	9:49am:	the Respondent wrote “I’m still in bed so you can come later when it’s convenient for me”

8.  According to Mr Kwan, the maintenance staff went there in the afternoon of 27 June 2016.  I do not agree that the Respondent could get paid for work done by himself to deal with the problem between 25 and 27 June 2016.  First because there was no inordinate delay on the part of the Applicant and secondly there was no reason or evidence to support the assessment on the value of “service rendered” by the Respondent.  I do not agree a quotation from a professional pest-control would assist the Respondent.  I refuse the assertion of the Respondent that the “service rendered” was worth one month’s rent, i.e. $9,000.

9.  The Respondent asserted that there should be deduction of rent by 50% for the months in July and August up to 8 September 2016.  His reason for this was that the suit premises were inhabitable.  Despite of the complaint of the Respondent, he is still staying in the suit premises until the date of trial.  The assertion that the suit premises were not habitable must fail.  Further there were no evidence on damages suffered except for some discomfort caused by the termite.  The Applicant had agreed to give 7 days’ rent free to reflect such discomfort.  I find this good gesture of a landlord.  

10.  For the sake of discussion as to whether the suit premises were habitable, I am of the view that the aftermath of the termite treatment should have been cleaned by the cleaning lady who would go there on every Thursday, the first visit after the termite treatment was 30 June 2016.  After looking at the photographs, especially those in page 3 showing the condition of a desk and the Respondent admitted that the termite bodies became obvious on the desk after he moved the stuff away, I accept that had the Respondent helped to move about his belongings the cleaning lady could have cleaned the place more thoroughly.  Moreover, it was the evidence of the Respondent that he did not ask the cleaning lady to clean the aftermath of the treatment because he was of the view that it had to be done by professional cleaners.  The point is there was no evidence that he had asked for help to clean the treatment aftermath “professionally”.  I accept the Applicant’s evidence that there were no telephone calls nor messages sent to Mr Kwan to complain about the insufficient cleaning or ask for cleaning to be stepped up.  I do not accept the Respondent’s saying that there were messages deleted after 27 June 2016 as he himself could not remember the time and the content of the messages.  I do not accept that he had spoken to the maintenance team direct.  It was Mr Kwan whom he had spoken to all the time.  He had once said that the communication broke down after he had to call the police.  But that only happened on 14 July 2016, two weeks after the termite treatment and the first visit of the cleaning lady.

11.  More importantly it is trite that the obligation to pay rent is independent of other terms and conditions in the lease or tenancy agreement.  In Charmway Development Ltd v Long China Engineering Limited HCA 54/2001, Chu J as she then was had discussed this issue and held that:

“18. Under the common law, the convenant to pay rent has been regarded as independent of the other convenants or obligations under a lease, including, for example, the convenant for quiet enjoyment : Edge v. Boileau and Others [1885] 16 QB 117, see also Taylor v. Webb. [1937] 2 KB 283.  A tenant’s obligation to pay rent is not dependent upon the compliance by the landlord of its obligations under the lease.   19.  There is therefore no room for the defence asserted by the plaintiff to the counterclaim, namely, it is not obliged to pay rent or the defendant is not entitled to rent by reason of the alleged breaches of the Tenancy Agreement on the defendant’s part.   ... 22.  As previously observed, the convenant to pay rent is independent of the other convenants and obligations under the Tenancy Agreement.  The Tenancy Agreement also does not permit any set-off on the rent.  Secondly, the present claim of the plaintiff is for unliquidated damages.  There is therefore no right to a legal set-off.   23. As to equitable set-off, the relevant principles are set out in para. 14/4/14 of Hong Kong Civil Procedure 2001.  Generally speaking, where the claim and counterclaim are sufficiently closely connected so that it would be manifestly unjust to enforce one without regard to the other, a right to an equitable set-off may arise : Esso Petroleum Co. Ltd v. Milton [1997] 1 WLR 938, at 950D and Dole Dried Fruit & Nut Company v. Trustin Kerwood Ltd [1990] 2 Lloyd’s Rep.309, 311.”

12.  Further Member Pang has in paragraph 16 of his Judgment in隋玉珍及姚志豪與另一人LDPD 40/2016 cited a passage from the Halisbury’s Laws of Hong Kong Vol 36 Landlord and Tenant paragraph[235.358]:

“The covenant (for quiet enjoyment) is not broken ...; nor by an invasion of vermin where the landlord has done nothing which might attract them or let them escape onto the demised premises; nor by impediments to access or use which cause merely temporary or limited inconvenience. The covenant is not a warranty of fitness or habitability or a covenant to repair so does not oblige the landlord to alter or improve inadequate soundproofing fitted at the premises, nor to remedy design defects in refuse facilities where the defects existed at the date of the grant of the tenancy.”

13.  For reason set out above including the legal principles the defence of the Respondent could not stand.

14.  It is doubtful whether the Respondent could raise a counterclaim in the Tribunal.  In paragraph 26 in 隋玉珍, Member Pang had also dealt with same issue on whether a tenant could file a counterclaim:

“此外, 審裁處法官高勁修 (當時官階) 在Ngai Ngok Pang 及其他對 Lee Syn Yuk, Michelle, LDPD 3030/2012 (無彙報的案例，日期為 2003年5月10日) 的判案書第15段指出：   “The Lands Tribunal may only, in an application for possession or ejectment, make an order for the payment of damages in respect of breach of a condition of the tenancy (see section 8(8) of the Lands Tribunal Ordinance, Cap 17). A counterclaim is generally treated as an independent action (see Hong Kong Civil Procedure 2013, paragraph 15/2/4). Since the respondent is not also counterclaiming for possession or ejection, the Lands Tribunal does not have jurisdiction to entertain her claim for damages.” ”

15.  Even if the Respondent had the right to raise a counterclaim and even if I take what he had said in the Notice of Opposition to have amounted to a counterclaim, I do not think he could succeed in establishing an equitable set-off on the grounds set out by him for reasons I have stated in paragraphs 8-10 above.  In fact the Respondent had produced no evidence to show that the termite problem existed before he moved in or that it was the Applicant who had caused the same to exist.  The fact that there were termites in a flat next door also owned by the Applicant could not be proof that the termites were caused by the Applicant.  But this is not the most important issue after my findings in the above.

16.  As to how much the Respondent was liable to pay as rent for the month of 9 May to 8 June 2016, I find that since the Applicant had not made it clear as to the commencement date at the time of discussion, he could not insist that reduction would only start from 9 June 2016.  He was the one who wrote the messages.  I was given to know and it was not disputed that the Respondent had not paid the May rent at the time of discussion.  I find from the record of whatsapp messages that the parties were talking about arrears of rent for March, April and May 2016 on 24 May 2016.  Mr Kwan said he would only start conversation on deduction of rent after a sum was paid to settle all the arrears for March and April 2016.  The Respondent paid and then on 25 May 2016 Mr Kwan asked whether the Respondent wanted a deduction of rent.  At that time, it was common ground that the May rent was still outstanding.  After some discussion, Mr Kwan wrote at 3:16 “$9,000”.  A further discussion ensued.  At 3:24, Mr Kwan wrote “Finally price $9,000 per month, if you do not accept please move out on tomorrow.”

17.  Further on 30 May 2016 Mr Kwan wrote and asked the Respondent to pay rent for May 2016 which was supposed to be due on 9 May 2016.  After some discussions the Respondent said that he would move out at the date the rental period for May expired, i.e. 9 June 2016 (in fact it should be 8 June 2016).  He said further that he would pay $4,000 and with the deposit of $5,000 that would make up the rental payment for May 2016 (that represented a total payment of $9,000).  Then in reply Mr Kwan asked him to pay $4,000 first.

18.  From the context of the messages as shown above, I find that it was agreed between parties that the rent would be deducted as from 9 May 2016.  The unpaid balance is therefore $1,000 as claimed by the Respondent.

19.  I enter judgment for the Applicant as I find that the Respondent’s reason to withhold rental failed.  The arrears are in the sum specified below. 

20.  I note that the Respondent said that he had planned to move away by end of the present rental period, that is on 8 September 2016.  In my view, that should not however deprive of his right to be granted relief from forfeiture under section 58 of the Conveyancing and Property Ordinance.

21.  My order is as follows:-

	(1)	Subject to paragraph (5) below, the Respondent do deliver vacant possession of the suit premises to the Applicant;
	(2)	The Respondent do pay the Applicant arrears of rent/mesne profits at the rate of $1,000 for arrears upto 8 June 2016 and $9,000 per month from 9 June 2016 until delivery up of vacant possession;
	(3)	There should be a deduction of $2,100 from paragraph (2) above as allowed by the Applicant;
	(4)	The Respondent do pay the Applicant the costs of this Application which is summarily assessed at $400;
	(5)	If the Respondent should on or before 8 September 2016 (“Relief Expiration Date”) pay into the Tribunal all the arrears of rent/mesne profits as stated in paragraph (2) above (including all arrears of rent/mesne profits due on or before the date of payment and taking into account the deduction stated in paragraph (3) together with the costs referred to in paragraph (4) above, the Respondent be relieved from the forfeiture incurred herein, and the lease of the suit premises be reinstated; and
	(5)	Such sums shall be paid into the Tribunal in cash, by cashier orders issued by banks in Hong Kong and such sums received by the Tribunal shall be released to the Applicant.