KEENFORD REALTY LTD v. JAM DEI TRADING LTD

DCCJ 2688/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION No. 2688 OF 2012

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BETWEEN

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J U D G M E N T

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Introduction

1.  I am seized of two summonses issued by the plaintiff. The first is an Order 14 summons taken out on 17 September 2012 and the second is a striking out summons taken out on 12 November 2012.

2.  The defendant has acted in person throughout and is absent this morning. By way of a Chinese letter dated 8 January 2013, one Ms Min Yu Xiu (“Min”), who is one of the two shareholders and directors of the defendant, applied for an order that the present hearing be refixed to 21 March 2013 on the ground that her two-way permit would expire on 25 January 2013 and hence she was unable to deal with any follow-up matters arising from the present hearing. I rejected her application by way of a written notice dated 9 January 2013 issued to the defendant. Against this background there is no doubt that the defendant is aware of the present hearing and I proceed to consider the two applications in its absence.

Background Facts

3.  The action concerns a tenancy dispute. The following matters are not controversial. The plaintiff is the registered owner of the premises known as Unit No.6, 15/F., Yuen Long Trading Centre, 33 Wang Yip Street, Yuen Long (“the Premises”). By a tenancy agreement dated 20 October 2006 (“the Tenancy Agreement”), the Premises were let by the plaintiff as landlord to the defendant as tenant for a term of two years from 1 May 2006 to 30 April 2008 (both days inclusive) at a monthly rent of HK$6,900.00 exclusive of rates but inclusive of management fee at the rate of HK$1,953.00 per month.

4.  The following provisions of the Tenancy Agreement are relevant for the purposes of these applications:

Clause 4 (Section B) – the plaintiff shall have the right without prejudice to any right or remedy under the Tenancy Agreement to charge interest at 2% per month in respect of any payment to be made to the plaintiff which shall be more than fourteen days in arrears and such interest shall be payable from the date upon which such payment in arrears fell due and not fourteen days thereafter.

Clause 1 (Section H) – If the rent or any part thereof shall be unpaid for fifteen days after the same shall become payable (whether legally or formally demanded or not), it shall be lawful for the plaintiff at any time thereafter to re-enter on the Premises or any part thereof in the name of the whole whereupon the Tenancy Agreement shall absolutely cease and determine but without prejudice to the right of action of the plaintiff in respect of any outstanding breach, non-observance or non-performance of any of the agreements, stipulations and conditions contained in the Tenancy Agreement and on the defendant’s part to be observed and performed and to the plaintiff’s right to deduct all loss and damage thereby incurred from the deposit paid by the defendant.

Clause 3 (Section I) – In no event shall the defendant be entitled to treat payment of the rental deposit as payment of the rent thereby reserved.

Clause 2 (Section K) – Any notice required to be served under the Tenancy Agreement shall if to be served on the defendant be sufficiently served if addressed to the defendant and sent by prepaid post to or delivered at the Premises or the defendant’s last known place of business or registered address or residence in Hong Kong.

5.  Despite the expiry of the Tenancy Agreement and the lack of a new written tenancy agreement, the defendant remained in occupation of the Premises with the consent and licence of the plaintiff (up to 30 June 2012). The defendant continued to pay the plaintiff rent on a monthly basis and as from 1 July 2011, the monthly rent of the Premises was adjusted to HK$7,681.60, HK$2,083 of which being management fee.

6.  The defendant has failed to make any payment to the plaintiff since 1 February 2012.

7.  On 29 May 2012, the plaintiff served a notice of quit (“the NTQ”) on the defendant by way of prepaid ordinary post and registered post to the defendant. They were sent to the Premises demanding that the defendant should deliver vacant possession on or before 30 June 2012.  Whilst the registered post was returned to the plaintiff on 19 June 2012, the ordinary post was not returned.

8.  On or about 5 June 2012, the defendant sent the plaintiff two cheques dated 28 June 2012 and 11 July 2012 respectively (“the 1^st and 2^nd Cheques”) for the purpose of settling the outstanding rents for March 2012 and April 2012. 

9.  By a letter dated 29 June 2012 (“the 1^st Letter”), the defendant informed the plaintiff, among other matters, that the defendant was in search of a new place for relocation.  The defendant also referred to the 1^st and 2^nd Cheques and further notified the plaintiff that on the date of the 1^st Letter, two cheques would be dispatched to the plaintiff to settle the outstanding rents for May 2012 and June 2012. The plaintiff eventually received the said two cheques respectively dated 26 July 2012 and 31 July 2012 (“the 3^rd and 4^th Cheques”).

10.  By a letter dated 4 July 2012, the plaintiff insisted on the legal effect of the NTQ and highlighted that the tenancy would expire on 30 June 2012.

11.  The defendant responded by way of a letter dated 12 July 2012 (“the 2^nd Letter”). There the defendant indicated that it respected the position of the plaintiff and made suggestions about handover matters.

12.  The writ endorsed with the statement of claim was issued on 6 August 2012.  On 9 August 2012, the plaintiff presented the 1^st, 2^nd, 3^rd and 4^th Cheques to the Bank of East Asia Limited for payment. None of the said cheques was honoured. The plaintiff does not sue on the said cheques in this action.

13.  In response to the statement of claim filed herein, the defendant filed a Chinese document entitled [抗辯書]. The document is divided into two parts. The subtitle of the first part is [抗議] and that of the second part is [申訴]. In the second part, the defendant made 3 claims. The plaintiff’s striking out summons is targeted at the second part of the document on the ground that it discloses no reasonable cause of action.

14.  The legal principles relating to summary judgment applications and striking out applications are well-established.  For the former, the defendant has to show a reasonable and bona fide defence and raise triable issues calling for resolution at trial. For the latter, I bear in mind that a claim can be struck out only in plain and obvious cases.

Discussion

15.  Mr Lau, appearing for the plaintiff, submitted that if a tenant holds over after the expiry of a tenancy of his lease, he becomes a tenant on sufferance; but when he pays, or expressly agrees to pay, any subsequent rent, at the previous periodical rate, a new periodical tenancy may thereby be created upon the same terms and conditions as those contained in the expired lease, so far as applicable to and not inconsistent with a periodical tenancy: Woodfall’s Law on Landlord and Tenant, 25^th edition p.6/20 §6.040.  I agree.

16.  In the present case, after the Tenancy Agreement expired on 30 April 2008, the defendant held over the Premises and continued to pay rent to the plaintiff on a monthly basis. A monthly tenancy upon the same applicable terms and conditions in the Tenancy Agreement was thereby created and the monthly tenancy was determinable by one month’s notice. Thus, those provisions in the Tenancy Agreement set out in paragraph 4 above should still be binding on the parties.

17.  On the undisputed evidence, I accept that the NTQ was effectively served on the defendant, pursuant to both Clause 2 (Section K) of the Tenancy Agreement and section 356 of the Companies Ordinance, Cap. 32. The Premises were the defendant’s then registered address. The monthly tenancy was therefore terminated on 30 June 2012.

18.  It was asserted in the affirmation of Min that the parties should perform the Tenancy Agreement after 30 April 2008 for a further term of 4 years and the plaintiff should give reasonable notice to terminate the tenancy. Min further complained that the plaintiff sent the defendant the NTQ when, to its knowledge, the officer-in-charge of the defendant was not present in the Premises. As a result, the NTQ only came to the notice of the defendant on 9 July 2012 and by that time the tenancy had already been terminated.

19.  This complaint has no merit at all, particularly given the 1^st Letter. In any event, it cannot invalidate the NTQ, which was served in a lawful manner.

20.  As regards the rent in arrears, the defendant does not appear to dispute its liability to pay the same. In the defence, it accepts that the rent before June 2012 should be set off against the rental deposit (in the sum of HK$20,950) and a sum of HK$8,000 being an alleged transfer fee.

21.  It is clear that the defendant is not entitled to treat the rental deposit paid as payment of the rents in arrears: Clause 3 (Section I) of the Tenancy Agreement applicable to the extended tenancy.

22.  In the 1^st Letter, the defendant notified the plaintiff that during the tenancy the defendant had paid for the installation of a glass door and so the plaintiff should pay the defendant a transfer fee of HK$8,000 upon termination of the tenancy. Or else the glass door had to be removed. The affirmation of Min even made no mention about the alleged transfer fee.  I do not accept that the alleged transfer fee was agreed upon between the parties. There is simply no evidence of such an agreement. I reject the claim for the alleged transfer fee accordingly.

23.  The defendant further claims that the plaintiff should compensate for its loss of business resulting from certain threats administered to the defendant by the management staff of Yuen Long Trading Centre. It alleges that from November 2011 to April 2012 the management staff often entered the Premises and threatened its business partners that bailiffs might be instructed one day to recover possession of the Premises. Consequently the business partners were scared away and the defendant has suffered financial loss.

24.  This allegation is not supported by credible evidence condescending upon particulars. Even assuming that such threats were made for the purpose of the striking out application, there is no suggestion let alone evidence that the unidentified management staff made such threats on behalf of the plaintiff or that the plaintiff caused, procured and intended such threats to be made. Such threats in any event could not be said to be trade libel either. The defendant’s claim for damages for business loss is utterly unfounded and must be struck out.

25.  Lastly the defendant asserts that the plaintiff, after saying that it did not accept the 3^rd and 4^th Cheques in its letter dated 4 July 2012, presented the 1^st, 2^nd, 3^rd and 4^th Cheques for payment without prior notice given to the defendant in August 2012. The said cheques were then dishonoured in the absence of the knowledge of the defendant. The defendant claims that it has suffered damage in the form of cheque cancellation fees and trade credit damage and asks for damages in the sum of HK$1 million.

26.  I fail to see why as a matter of law the plaintiff was not entitled to present the 1^st, 2^nd, 3^rd and 4^th Cheques for payment without giving prior notice to the defendant. The defendant’s claim has no legal and evidential basis at all.

Conclusion and Order

27.  In the circumstances, it appears to me that it is an appropriate case for summary judgment and it is plain and obvious that the defendant’s counterclaim should be struck out.  I therefore accede to the plaintiff’s applications and enter judgment against the defendant with the following orders:

(1)  An order for vacant possession of the Premises;

(2)  The defendant do pay the sum of HK$32,991.23 together with interest on the sum of HK$30,728.20 at the rate of 2% per month from 7 August 2012 to the date hereof and thereafter at judgment rate until payment;

(3)  The defendant do pay the plaintiff mense profit of the Premises at the rate of HK$7,681.06 per month from 1 July 2012 to the date of actual delivery up of vacant possession of the Premises;

(4)  The defendant’s counterclaim be struck out; and

(5)  The defendant do pay the plaintiff costs in the sum of HK$53,630.00 being summarily assessed costs of and occasioned by the plaintiff’s summonses respectively dated 17 September 2012 and 12 November 2012 (including all costs previously reserved) and costs of this action.

28.  Lastly, interpretation service in relation to this Judgment can be arranged for the defendant if so applied for.