WONG SIU MING AND ANOTHER v. YAU SUK YEE

DCCJ 2491/2017

[2018] HKDC 74

IN THE DSTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2491 OF 2017

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DECISION

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The application

1.  This case concerns a tenancy dispute.   At all material times, the plaintiffs were the landlord of the subject property and the defendant was the tenant.   By way of their summons filed on 22^nd September 2017, the plaintiffs applied for summary judgment against the defendant for delivery up of vacant possession and mesne profit from 15^th May 2017 until the delivery up.

The background

2.  The tenancy was for a term of 2 years commencing on 1^st April 2016 up to 31^st March 2018 at a monthly rental of HK$14,000.  There is a break clause entitling each party to early terminate the tenancy by paying one-month rental in lieu of notice provided that such notice shall not be served within the first 12 months of the tenancy.

3.  On 11^th April 2017, the plaintiffs served a notice to terminate the tenancy purportedly pursuant to the break clause, and requested the defendant to deliver up vacant possession of the subject property on 1^st May 2017.

4.  The defendant refused to deliver up because according to their contention, prior to the receipt of the notice of termination and on 7^th April 2017, her husband (“Mr Leung”) on her behalf had already entered into a new tenancy agreement with one of the plaintiffs, i.e. Mr Wong Siu Ming (“Mr Wong”) on behalf of himself and her wife, Madam Chan Man Ching, i.e. the other plaintiff.

5.  On the other hand, the plaintiff in gist submits that such contention of the defendant is unbelievable and she had in truth raised no bona defence to the plaintiff’s claim.  Thus, this brought about the present application.

Analysis

6.  The essential principles on Order 14 are encapsulated in Hong Kong Civil Procedure 2018, vol 1, paras 14/4/8 to 14/4/10, which are too well known that need no repetition here.  

7.  Bearing the relevant legal principles in mind and having carefully considered both parties’ counsel’s submissions and all the evidence, I am satisfied there are indeed triable issues as contended by the defendant for the following reasons.

8.  First, it is common ground that there was indeed a telephone conversation between Mr. Wong and Mr. Leung on 6^th April 2017 in relation to the negotiation of the terms of a new lease.  What the parties differ only lies in its content. According to Mr. Leung, he has counter-proposed some terms which are in variance with those as stated in a draft tenancy agreement (“the draft TA”) sent by Mr. Wong to him earlier through Whatsapp messages on 5^th May 2017:

(1)   The new rent of HK$18,500 be implemented on 1^st August 2017 as opposed to 1^st May 2017 as stated in the draft TA.

(2)   The new tenancy agreement would be a fixed term from 1^st May 2017 to 30^th April 2019 without any break clause as so stated in the draft TA.

(3)   The security deposit of HK$28,000 paid pursuant to the old tenancy agreement would be transferred to the new tenancy agreement.

9.  According to the defendant’s case, Mr Wong called Mr Leung back on 7^th April 2017 and accepted his counter-proposal.  But unfortunately, Mr Wong changed his mind on the following day (i.e. 8^th April 2017) and requested a further increase of rent to HK19,500 per month which was rejected by Mr. Leung as the new tenancy had already come into place.

10.  In my view, the defendant’s version of events is believable in light of the undisputed factual matrix for this hearing that the defendant rented the subject property because the schools of their three children are in the vicinity.  Further, at about the time when they were negotiating a new lease with the landlord, their 2^nd eldest son and the eldest daughter were busy in preparing for their examinations.  It is thus inherently plausible that they would aim to maintain the status quo if the rent increase is acceptable to them.  Though, whether an agreement was ultimately reached on 7^th April 2017 between the parties as further contended by the defendant would be a matter for the trial judge, and should not be resolved by mini-trial by affidavits in an Order 14 application. 

11.  Pausing here, one can fairly observe that the difference in rent as counter-proposed by Mr Leung is about HK$3,500 less for 3 months when compared to that as offered by the landlord in the draft TA.  This can be translated to HK$437.5 per month less than that the monthly rent of HK$18,500 as proposed by the landlord within a span of 24 months.  It is not unbelievable that the landlord may accept the same.  The proposed removal of the break clause would make sense from the defendant’s point of view especially given the stability of the residential accommodation they desired to achieve at the time given the children’s need. In my view, there is no sufficient evidence before this court to suggest the removal of the break clause in the circumstances of this would be so detrimental to the landlord as to render the defendant’s account to be unbelievable.

12.  Second, this court do have legitimate doubts in Mr Wong’s version about the conversation between himself and Mr Leung over the negotiation of a new lease.   It is the unchallenged evidence of the defendant that after learning about their landlord’s intention to increase rent in March 2017, it was Mr Leung who took the initiative to call Mr. Wong on phone to request for their landlord’s proposed terms of new tenancy for their consideration.  In such a context, it sounds strange that after seeing the proposed increase of monthly rent by HK$4,500 by the landlord, Mr Leung would all of sudden simply demand for a compensation of one-month rent for moving out instead, and without making any attempt to counter-offer.  It looks even more incongruent with the underlying picture if one recalls that the defendant entered into the tenancy of the subject property mainly for the sake of their children as identified above.

13.  The aforesaid aside, Mr. Wong’s evidence about his telephone conversation with Mr. Leung on 6^th April 2017 is in my view shifty and sounds dubious.  At para 15 of his first affirmation filed on 22^nd September 2017, Mr Wong did not just deny the alleged counter-proposal made by Mr. Leung, he went on to say that Mr Leung requested the plaintiffs to compensate a sum of HK$14,000 for the landlord’s early termination of tenancy.  However, Mr Wong significantly add to this evidence in his 2^nd affirmation by saying that Mr Leung requested for such compensation “before he would agree to the term of draft TA”.  Yet Mr Wong offered no explanation in his 2^nd affirmation why he would omit this latter material piece of information in his first affirmation.

14.  According to Mr. Wong’s version as stated in the 1^st affirmation, it would make no good sense for him to counter-offer HK$19,500 per month as the new rent when Mr Leung already demanded HK$14,000 as compensation from the plaintiffs for their early termination of the tenancy.   This gives one an impression that the additional piece of material information was introduced in Mr Wong’s 2^nd affirmation on purpose to patch up the earlier loophole.  But by doing so, this would also adversely reflect on the credibility of Mr. Wong’s evidence about the contents of the material conversation on 6^th April 2017, which could only be properly resolved by the trial judge after hearing all the evidence of all witnesses after cross-examination to decide which party’s version to believe.

15.  Third, Mr Anson YY Wong (counsel appearing for the plaintiffs) submits that the defendant’s omission to mention the oral new tenancy reached between the parties on different occasions before she filed her Defence when she and Mr. Leung had the opportunity to do so points to the defendant’s contention being incredible.  Mr Wong also resorted to the case of Convenient Ltd v Great Day International Ltd & Anor (HCA 1353 of 2008, 21 January 2009) to support his submission.  It suffices for this court to point out that although this kind of omission may sometimes be fatal to a defendant’s defence under some particular circumstances, each case has to be decided on its own merits.    What is important to bear in mind in the Order 14 context is that the court would need to look at the undisputed or indisputable facts and evidence as a whole, rather than over-emphasizing on one aspect of the case but neglecting the others before reaching its conclusion as to whether the defence in question is capable of belief or not. 

16.  I agree with the submission of Miss Vivian Lam (counsel appearing for the defendant) that Mr Leung’s response to Mr Wong’s Whatspp messages on 2 May 2017 (which included photos of two earlier notices of termination) that he had to seek legal advice and the subsequent acts of the defendant paying rent of HK$14,000 per month up to 31^st July 2017 and thereafter at HK$18,500 per month can be consistent with the existence of the oral agreement when one steps back and looks at the whole situation. 

17.  In this light, it can be readily seen that the case of Convenient Ltd v Great Day International is distinguishable from the present case.  In that case, after the entering into of the alleged oral tenancy agreement, the defendant nonetheless wrote a letter to the plaintiff requesting for a short-term extension of tenancy, which the court finds to be totally inconsistent with the earlier alleged oral agreement.  In other words, apart from the omission of mentioning of the alleged oral agreement prior to the filing of the defence, the court was also heavily influenced by the fact of such seriously incredible inconsistency.   But there is no such kind of inconsistency in this case.

18.  Fourth, Mr. Wong also criticized the defence by saying that the new tenancy agreement as contended for was not put in writing and this does not sit well with the past dealings of the parties.

19.  With respect, I do not accept such argument.  To begin with, one should be mindful of the defendant’s case that after Mr. Wong of the landlord has agreed to Mr. Leung’s counter-proposed terms as aforesaid on 7 April 2017, Mr. Wong reneged the agreement the following day and insisted for a higher monthly rental of HK$19,500 which was not acceded to by Mr Leung since he took the view that an agreement had been reached.  The plaintiffs then issued the notice of termination on 11^th April 2017. 

20.  Against such a background, one should appreciate why the new oral tenancy agreement as contended would not be reduced into writing subsequently. 

21.  It is further observed that, in the case of Auto Plaza Ltd v Duckcrown Investments Ltd (HCA 761 of 2008, 29 August 2008) as cited by Mr. Wong, the court there did not accept the alleged oral tenancy agreement because it did not sit well with the past dealings of the parties which came with the basis that the normal practice of written offers were entered into consistently between 2001 to 2007 at every renewal.  While, in the present case, it is the first time the parties entered into a renewal of tenancy and no prior pattern can be discerned as in the case of Auto Plaza.  Prima facie, there is nothing particular about entering into a new tenancy by way of an oral agreement by adopting the terms of the old tenancy with modification of some terms.   The legitimate doubt only came with the absence of putting on record of such renewed terms afterwards.  But such doubt should in my view only be resolved at trial as being justified or not for reasons as explained above, and such doubt per se is inconclusive in pointing to an unbelievable defence under the overall circumstances of this case. 

22.  As for Yuenfield Ltd v Cuming Development Company Ltd (HCA 13726 of 1996, 14 November 1997), it is another case cited by Mr. Wong. Its facts are also very much different from the present one.  Miss Lam has rightly pointed out that both parties in that case were legally represented all along for the negotiation of a new lease, and the negotiation had been put in writing.  The negotiation eventually failed because the tenant, which is a company, cannot provide a personal guarantee for the substantial arrears of rent already due to the landlord at the time.  The landlord’s solicitors requested for the return of the draft agreement after the negotiation broke down.  As such, Mr. Justice Cheung (as he then was) found that it is incredible and does not make commercial sense for the landlord to agree within a week after the breakdown of the negotiation that the tenant could remain as a monthly tenant at half of the rent that it was required to pay.

Disposition

23.  Due to the above reasons, this court is satisfied that there are triable issues raised in respect of the plaintiff’s claim, and an arguable and bona fide defence is made out. 

24.  Before the plaintiffs took out their present application, the Defence had already been filed on 25^th August 2017 setting out clearly the oral tenancy agreement as contended by the defendant.  In other words, the plaintiffs being fully aware of such arguable defence could not properly invoke the Order 14 jurisdiction to give them summary judgment in the first place.    The application is clearly misconceived.  In the circumstances, the present Summons is dismissed. 

Costs

[Discussion on costs]

25.  After hearing both parties’ counsel’s submissions on costs, I see no reason why the plaintiffs should not pay the costs of the Summons to the defendant. Accordingly, I order that the plaintiffs do pay the costs of their Summons to the defendant forthwith with certificate for counsel to be taxed if not agreed.