TSUI YIN FONG v. EDWARD JOHNSON

DCCJ 4726/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4726 OF 2011

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BETWEEN

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D E C I S I O N

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1.  The present tenancy dispute concerns the property known as No.4 Old Village, Mui Wo, Lantau. The 1^st and the 2^nd plaintiffs have obtained from the master summary judgment against the defendant for vacant possession of the property and partial judgment on rent in arrears. Writ of possession has been issued. This is the defendant’s appeal and application for stay of execution.

BACKGROUND

2.  Tsui Koon Bo, the deceased, was the registered owner of the property.  By a written tenancy agreement between the deceased and the defendant dated 15 June 2009, the property was let to the defendant for a term of 2 years until 14 June 2011 at the monthly rent of HK$4,600.  The deceased passed away during the term of that tenancy.  Hence the 1^st plaintiff representing his estate now.

3.  The 2^nd plaintiff is the deceased’s son.  By a written tenancy agreement dated 15 June 2011, the 2^nd plaintiff agreed to let to the defendant the property for a further term of 6 months until 14 December 2011 at the monthly rent of HK$5,100.

4.  The plaintiffs complained that the defendant has failed to pay rent.  Letter of demand was sent by the plaintiffs’ solicitors to the defendant in November 2011.  Eventually the 2^nd plaintiff exercised the right to forfeit the tenancy by commencing the present action on 9 December 2011.

5.  Together with his acknowledgement of service of the writ, the defendant enclosed his defence in January 2012.

6.  By summons filed on 12 January 2012, the plaintiffs applied for summary judgment.

7.  The proceedings were once stayed due to the defendant’s application for legal aid.  On the day when the defendant was notified of the refusal of his application, he applied again.  The master, and I think rightly, decided to hear the application for summary judgment as scheduled without further delay.

8.  At the end of the hearing on 16 March 2012, the master gave the following order:

(1) The defendant do deliver vacant possession of the property to the plaintiffs but execution shall be stayed for 3 months until 15 June 2012.

(2) The defendant do pay the rent in arrears for the period between 15 October 2011 (rather than 15 May 2011 as claimed) and 14 December 2011 in the sum of HK$10,200.

(3) The defendant do pay mesne profits at the rate of HK$5,100 per month from 15 December 2011 up to the date of delivery of vacant possession of the property.

(4) The defendant do pay the plaintiffs’ costs of the application fixed at HK$5,000.

(5) The costs of the action shall be reserved.

9.  The defendant failed to comply with the above order after the stay of execution has lapsed.  On 4 July 2012, the plaintiffs first applied to execute the judgment. Writ of possession (and Fi Fa Combined) was eventually issued on 6 September 2012.

10.  The defendant took out a summons on 19 September 2012, whereby he seeks to appeal against the master’s decision dated 16 March 2012; and to have the execution of the writ of possession stayed.  As far as the intended appeal is concerned, it was not taken out by way of notice of appeal within 14 days of the master’s order pursuant to O.58, r.1(3) of the Rules of the District Court.  The appeal is over 5 ½ months out of time.

THE APPEAL

11.  In exercising the discretion whether to entertain the appeal out of time, the court would consider the length of the delay, the reason for the delay, the merits of the appeal and the degree of prejudice to the opponent.  An acceptable explanation of the delay is expected: see Hong Kong Civil Procedure 2012 (Vol.1) at 58/1/9.

12.  The affidavit of the defendant filed together with his summons does not explain his delay in taking out the appeal.  Yet even assuming that the defendant manages to explain his delay, I see no reasonable chance of success in his defence.  I shall explain below.

13.  It is trite that for the purpose of the summary judgment, the defendant has the evidential burden to demonstrate that his allegations constitute a valid and credible defence to the claim.  From the defendant, there was before the master only the defence which was not verified by way of affidavit.

14.  The defendant apparently did not dispute having let the rent into arrears by October 2011.  However he raised the following defence:

(1) On 10 October (2011), the landlord orally released him from payment of the rent in arrears up to that day; and he agreed to move out of the property as soon as possible.

(2) He has a counterclaim for damages in the sum of HK$2,000,000 for harassment, battery as well as trespass and destruction of property caused by the landlord on 18 October.

15.  Whether there was the alleged waiver of rent in arrears in October 2011 is a factual dispute.  It seems the master was not prepared to reject the defendant’s assertion.  Hence only partial judgment on the rent in arrears since 15 October 2011 was entered.

16.  Yet according to the defence, properly understood, the 2^nd plaintiff allegedly agreed to waive the rent in arrears provided that the defendant would move out as soon as possible.  The defendant asked for 30 days, but the 2^nd plaintiff gave 10 days instead.  In any event, one wonders how the defendant could on the one hand hold the 2^nd plaintiff onto the agreement to waive the rent in arrears whilst on the other hand never fulfils the pre-condition of moving out (whether in 10 days or 30 days).  Having said that, I do not venture to disturb the decision of the master in this respect as there is no appeal by the plaintiffs.

17.  The law is trite that the tenant’s covenant to pay rent is independent of the other covenants under a lease.  Here the defendant did not actually allege breach of the tenancy agreement on the part of the 2^nd plaintiff.  In any event, no such allegation would have sufficed to excuse the defendant from his obligation to pay rent, so long as he was not deprived of his occupation of the property. Further, the alleged waiver of rent in arrears up to October 2011 by the landlord did not justify the defendant’s non-payment of rent since then.

18.  As to the counterclaim, it would not assist the defendant unless it could form the basis of a defence.  The only defence conceivable out of the counterclaim is that of set-off.  However, the tenancy agreement does not provide that the rent payable would be subject to any set-off.  Being a claim for unliquidated damages, the counterclaim gives the defendant no right of legal set-off either.  A right of equitable set-off may arise, but only if the claim and the counterclaim are sufficiently closely connected so that it would be manifestly unjust to enforce one without regard to the other: see Hong Kong Civil Procedure 2012 (above) at 14/4/14.

19.  The defendant claims damages for personal injuries and property damage as a result of the alleged criminal conduct of assault and trespass by the 2^nd plaintiff and his agents.  It was said to arise out of the tenancy dispute; but such claim for damages lacks sufficiently close connection with the 2^nd plaintiff’s claim for rent and mesne profits, which the 2^nd plaintiff is entitled to, so long as the defendant still occupies the property.  The fact was and still is that the defendant has never moved out of the property.

20.  Based on the materials before the master, I would not have disturbed the master’s decision if I am now to consider the defendant’s appeal out of time.

21.  For the purpose of this hearing, the defendant filed an affidavit in support.  As far as the appeal is concerned, no further evidence may be received except on special grounds: see O.58, r.1(5).  Evidence as to matters which have occurred after the date of the master’s decision may be received.  In his affidavit, the defendant alleged that the parties have come to a settlement subsequent to the master’s decision.

22.  The defendant cannot rely on the alleged subsequent settlement to impeach the decision of the master, which was made in the circumstances as at the date of the decision.  The alleged settlement could only be relevant to the defendant’s application for stay of execution.

STAY OF EXECUTION

23.  Specifically the defendant alleges that he has appointed a “personal representative” to talk to the 2^nd plaintiff’s representative; and it was agreed on 14 July 2012 that he could stay at the property for as long as he wants.

24.  What the defendant alleges relate to the possession of the property.  His affidavit is silent as to the other parts of the judgment such as that on the rent in arrears and mesne profits.  It is also silent as to the terms on which he claims to be entitled to carry on occupying the property.  On the face of it, the suggestion seems to be that the plaintiffs somehow agreed to give up possession of the property until they may recover the same effectively at the mercy of the defendant.

25.  The consideration for plaintiffs’ such agreement, according to the defendant, is his agreeing to drop the civil claim and criminal charges against the 2^nd plaintiff for the alleged assault and property damage mentioned above.  Specifically the defendant refers to High Court Action No. 706 of 2012 (“HCA 706/2012”).

26.  What happened was that the defendant commenced HCA 706/2012 in May 2012 after the master decided against him in March 2012.  The claim in that action is essentially repetition of his counterclaim set out in his defence here.  Only that the defendant is claiming damages in the sum of HK$7,000,000 to HK$10,000,000 in the high court action as opposed to the sum of HK$2,000,000 stated in the defence here.

27.  Obviously the defendant’s claim for damages in terms of millions has not caused the plaintiffs to hesitate in proceeding with the present action.  They indeed pressed ahead with their application for judgment.  2 months after the plaintiffs has succeeded in obtaining the judgment for possession and partial judgment on the rent in arrears, the defendant commenced HCA 706/2012.  As essentially a repetition of the counterclaim here, the claim in HCA 706/2012 could be nothing new to the plaintiffs.  Likewise the defendant’s same claim, now even for substantially bigger sum than before, did not then cause the plaintiffs to hesitate in seeking enforcement of the order of the master.  After the lapse of the stay of execution in mid-June 2012, the plaintiffs did apply for writ of possession on 4 July 2012.

28.  What the defendant now suggests for the purpose of the present application is this: on 14 July 2012 (i.e., just 10 days after the plaintiffs applied for the writ of possession), the plaintiffs suddenly became so concerned about the defendant’s claim that with a view to securing the defendant’s discontinuance of such claim, they agrees to abandon what they have so far achieved in these proceedings and to let the defendant stay at the property for as long as he wants without terms.  That defies common sense.  Contrary to the defendant’s suggestion, the plaintiffs in fact never withheld execution but obtained the writ of possession in September 2012.

29.  As to the criminal aspect, the police would have been conducting investigation into the alleged assault incident since October 2011.  5 months had elapsed by the time when the plaintiffs commenced the present action.  Again nothing about that has caused the plaintiffs to hesitate in proceeding with the present action.  If (as it is unknown) charges have ever been laid, how the defendant is in a position to cause the dropping of the charges against the 2^nd plaintiff in July 2012, as he alleges, is also far from clear.

30.  The defendant explained that he had sought but failed to get the parties to record the alleged oral agreement in writing.  But if the plaintiffs were so concerned about securing the defendant’s agreement to drop his allegations and claim against the 2^nd plaintiff, one would have expected the 2^nd plaintiff to not only welcome but also insist on formalising the agreement.  He would have had to see that the defendant withdraws or discontinues the claim in HCA 706/2012.  The 2^nd plaintiff, who is legally represented, could and in fact would have done so.  The fact is that the high court action is intact.

31.  The defendant was adamant that he has acted on the belief that the plaintiffs have agreed to let him stay at the property for as long as he wants.  However, according to his affidavit, it was his so-called personal representative who gave him such understanding and thus belief.  The identity of that person is not disclosed in the affidavit.  Being representative of him instead of the plaintiffs, what that person might have said to the defendant could not be words representing the plaintiffs.

32.  In my view, the master’s order to stay the execution of the order for possession for 3 months was generous.  Staying the execution now would further delay the plaintiffs in reaping the fruit of his litigation.  Doing so on the basis of the allegations of the defendant discussed above, in my judgment, would not be proper exercise of the discretion of the court.

CONCLUSION AND ORDER

33.  Irrespective of the defendant’s right against the 2^nd plaintiff for the matters alleged in his counterclaim here or the claim in HCA 706/2012, his present application (appeal out of time and stay of execution) by way of summons filed on 19 September 2012 must be dismissed.  I so order.

34.  I already heard the parties on costs subject to the outcome of the present application.  Following the above event, the plaintiffs’ costs occasioned by his summons should be borne by him.  I so order.  I also direct that unless otherwise agreed between the parties, the plaintiffs shall submit to this court and serve on the defendant within 14 days from today a statement of costs for summary assessment on paper.  Within 7 days after the receipt of the statement, the defendant may submit to the court his objection to the statement, if any.