LUI SUK LING, CINDY v. PROVIDE COURIER SERVICE CO. LTD.

DCCJ 3512/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3512 OF 2001

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JUDGMENT

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BACKGROUND

1. In this action the Plaintiff claims against the Defendant for vacant possession of the premises at Flat A, 4th Floor, Good Year Industrial Building, Nos.119-121 How Ming Street, Kwun Tong, Kowloon ("the Premises") and for arrears of rental, mesne profits, damages, interests and costs.

2. The Plaintiff claims that under the terms of a written tenancy agreement in Chinese signed between the Plaintiff and the Defendant on 31st May 2000 the Premises were let by the Plaintiff to the Defendant for a term of 2 years commencing 4th May 2000 for a monthly rent of HK$11,000 (exclusive of rates and management fees) and that the rent is payable on the 1st day of each calendar month. The Plaintiff claims that the Defendant failed to pay rent and other outgoing charges to her since December 2000. The Plaintiff seeks to forfeit the Defendant's tenancy by the issuance of proceedings on 19th February 2001.

3. The Defendant filed a Defence and Counterclaim on 31st May 2001 denying the Plaintiff's claim. It is alleged in the Defence that in mid-November 2000 there was a Settlement Agreement reached between the Plaintiff and the Defendant orally under which it was agreed that both the Premises and Unit 5C at Good Year Industrial Building ("Unit 5C"), of which the Defendant's associate company was the tenant and the Plaintiff's family members were the landlord, would be surrendered to the Plaintiff. And that the Premises were to be surrendered by the Defendant to the Plaintiff on 1st January 2001 and upon that being done, the Plaintiff was to refund the rental deposit of HK$24,000 ("the Deposit") to the Defendant and Unit 5C would be surrendered on 15th January 2001. The Defendant alleged in the Defence that possession of the Premises was surrendered back to the Plaintiff on 1st January 2001 and that the Plaintiff failed to follow the terms of the Surrender Agreement to refund the Deposit to the Defendant. The Defendant therefore counterclaims against the Plaintiff for the refund of the Deposit.

4. In the Plaintiff's Reply, the Plaintiff admits that there was a surrender agreement reached between the Plaintiff and the Defendant over Unit 5C. The Plaintiff however denied that there was any Surrender Agreement reached between the parties over the Premises. The Plaintiff says that there were oral negotiations held between the parties over the way in which how the Premises were to be surrendered but at the end it is the Plaintiff's case that no agreement had been reached between the Plaintiff and the Defendant over the surrendering of the Premises.

5. On 26th August 2002 the Plaintiff obtained leave to amend her Statement of Claim so that the Plaintiff's amended claim includes the following:-

(i) In addition to arrears of rental in the sum of HK$33,000, the Plaintiff also claims a sum of HK$6,168 being the rates and other outgoings which have not been paid by the Defendant.

(ii) Possession of the Premises already recovered by the Plaintiff at the end of July 2001 and that the same could only be let out to another tenant from 10th November 2001 onwards at a reduced rental of HK$9,200 inclusive of rates and management fee.

(iii) Because of the above the Plaintiff particularised her losses in the sum of HK$114,708, which represented the amount of mesne profits that the Plaintiff failed to recover for the period 4th March 2001 to 10th November 2001 ("the Mesne Profits") plus the difference in rental between the rent that the Plaintiff would have been entitled to pay under the terms of the original tenancy agreement and the subsequent rental payments that the Plaintiff received from the new tenant ("the Consequential Loss").

6. At the trial, the Plaintiff was represented by Mr Paul Wong from Messrs Maurice Lee, Tsang, Ng-Quinn and Tang and the Defendant was absent.

7. The Defendant was previously represented by Messrs Gallant Y.T. Ho & Co. On 22nd November 2002 Messrs. Gallant Y.T. Ho & Co obtained an Order under Order 67 Rule 6 of the Rules of the District Court ceasing to act for the Defendant. Mr Wong confirmed that the trial bundles were served on the Defendant at its registered office address and that the trial date was also notified to the Defendant. I am satisfied that the Defendant must have notice of the date of trial. I therefore proceeded with the trial in the Defendant's absence under Order 35 Rule 1(2) of the Rules.

PLAINTIFF'S EVIDENCE

8. The Plaintiff gave evidence that there were telephone discussions between herself and the Defendant's Miss Chan sometime in November 2000. During these telephone discussions they discussed the possibility of the Defendant surrendering possession of both the Premises and Unit 5C to the Plaintiff. Initially the Defendant wished to surrender both properties to the Plaintiff at the end of December 2000 but for the sake of easy calculation of rental the Plaintiff counter-suggested that she would prefer both properties to be surrendered on 15th January 2001. For Unit 5C the Plaintiff accepted Miss Chan's proposal that it would be handed back to her on 15th January 2001. However on the Premises the Plaintiff advised Miss Chan that because its term would only expire in May 2002 she would like to have the Premises let out first. If it could be let out within a month, then the Plaintiff would seek to deduct one month rental from the Deposit as compensation for the Plaintiff. If it takes 2 months or more to have the Premises let out, the Plaintiff would seek to forfeit the Deposit. On this counter-proposal the Plaintiff said Miss Chan at the time did not say whether such was acceptable but only said that she would take instructions from her boss.

9. The Plaintiff did not hear anything further until sometime in early December 2000 when she received a telephone call from Miss Chan who said that the draft agreements evidencing the surrender were ready and the Plaintiff was invited to go to the Defendant's office to sign them.

10. Then on 23rd December 2000 the Plaintiff went to the Defendant's office. She was first met by Miss Chan. The Plaintiff was shown 2 drafts entitled 'Termination of tenancy agreements', which were in page 16 and 17 of the Documents Bundle. For the one on Unit 5C (i.e. page 16 of the Bundle), the Plaintiff accepted the terms and signed it. As for the one on the Premises (page 17 of the Bundle), she noticed that the terms do not reflect the terms she discussed with Miss Chan so she refused to sign. Then Miss Chan asked her boss, Mr Lo to attend the meeting at which the Plaintiff advised both Mr Lo and Miss Chan again the reasons why she did not sign the agreement on the Premises. At that time the Plaintiff also suggested to use part of the rental deposit under Unit 5C to offset against the outstanding rental under Unit 5C and the remaining part to offset against the then outstanding rental under the Premises. Both Mr Lo and Miss Chan did not have objection to that.

11. Subsequent to that meeting there was no follow up by the Defendant on the status of the Premises. Then on about 12th or 13th January 2001 the Plaintiff called the Defendant's Miss Chan to check on the status because she thought that they were approaching 15th January 2001 so she wanted to check on the surrender arrangement. At that time she was told by Miss Chan that the Defendant would be surrendering both the Premises and Unit 5C to the Plaintiff despite that there was no written agreement signed on the Premises. According to the Plaintiff she said that Miss Chan over the phone said that the Plaintiff had promised to accept surrender of both properties.

12. The Plaintiff therefore instructed her solicitors, Messrs Maurice Lee, Tsang, Ng-Quinn & Tang to follow up on this matter. Thereafter, according to the Plaintiff, the Defendant failed to surrender Unit 5C as well on 15th January 2001 as a result of which a separate proceedings was issued against the Defendant's associate company but that proceedings were subsequently settled and possession of Unit 5C was recovered by the Plaintiff in or about July 2001.

LIABILITY

13. I am satisfied with the Plaintiff's evidence that there was no such Surrender Agreement in so far as it concerns the Premises as allged in the Defence. If there were it would have been more consistent with the contemporaneous evidence existed at the time for there to be a written surrender agreement signed by the Plaintiff. On the Plaintiff's evidence it is clear that the suggested Surrender Agreement on the Premises proposed by the Defendant was not accepted by the Plaintiff hence she refused to sign it.

14. The evidence is clear that the Defendant failed to pay rent since December 2000 and the Plaintiff was entitled to forfeit the tenancy as the Plaintiff did by issuance of the present proceedings. I therefore find for the Plaintiff and dismiss the counterclaim.

QUANTUM

15. The next question I need to decide is the amount that the Plaintiff is entitled to recover from the Defendant.

16. On the amount of outstanding rental, Mr Wong advised that the amount of the Plaintiff's claim should now be HK$22,000 instead of HK$33,000 as appeared in the Statement of Claim because the Plaintiff had made use of a sum of HK$11,000 from the rental deposit under Unit 5C to offset against part of the outstanding rental under the Premises thus reducing it from HK$33,000 to HK$22,000. As for outstanding rates and management fees as outgoings, the Plaintiff's evidence show that rates was for HK$1,560 and management fees was for HK$3,072.40 making it a total of HK$4,632.40.

17. As to the Plaintiff's claim for mesne profit for the period from 4th March 2001 till 31st July 2001 i.e. the date when possession of the Premises were obtained by the Plaintiff, based on Mr Wong's submission, that should be calculated at a monthly rate of HK$11,000, which work out at HK$53,935.50, i.e. HK$11,000 x (28/31 + 4).

18. As for the Plaintiff's claim for Consequential Loss, Mr Wong's attention was drawn to Sakhrani J's decision in Profitex Development Ltd v. Tarxen Promotion Co Ltd, (1999) 3 HKC p.257. Having considered that decision he agreed not to pursue it any further.

19. In so far as the Deposit is concerned, Mr Wong confirmed that the Plaintiff had no intention to forfeit this but would agree to have it offset against any sum which the Court might award to the Plaintiff in this action.

JUDGMENT

20. Based on the above, I grant judgment in favour of the Plaintiff against the Defendant in the sum of HK$56,567.90, the calculation of which are set out below.

		HK$
(i)	Outstanding rental, rates and outgoings as set out in paragraph 16 above	26,632.40
(ii)	Mesne profits for the period 4th March 2001	53,935.50
	- 31st July 2001 at HK$11,000 per month as set out in paragraph 17 above	80,567.90
	Less: Deposit	24,000.00
		56,567.90
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21. I also award costs of this action to the Plaintiff, to be borne by the Defendant, to be taxed, if not agreed.