SIA BENG SIN and Another v. CHAN MAY LIN

CACV 243/97

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 243 OF 1997

(ON APPEAL FROM HCA 2022 OF 1997)

-------------------

----------------------

J U D G M E N T

----------------------

Liu, J.A.:

1. This is a case all about fairness in the eyes of a tenant. Emotive submission has been made without any reference to the intricate Landlord and Tenant principles. Suffice it for me to say that under a Chinese Tenancy Agreement dated 9 December 1996 made between the tenant and the landlords, the tenant and her family moved into the suit premises. Rent was to be $18,000 per month exclusive of rates. Rates stood at $1,554. Management fee was $700 per month. In the negotiation, the tenant secured from the landlords a collateral warranty. The collateral warranty was for the landlords to remedy defects in the rented premises as identified by the tenant in occupation within 30 days. It is complained that the identified defects had not been paid attention to. Relationship deteriorated. No rent was paid by the tenant except for the first month, which had been given to the landlords by the tenant in advance together with two months' rental deposit, totalling $54,000. The landlords wasted no time and in February 1997, they commenced proceedings against the tenant on the ground of non-payment of rent, rates and maintenance or management fee. Pursuant to a provision in the Tenancy Agreement, the landlords also sought forfeiture of the tenancy. They came to court and the tenant responded by filing a defence. The tenant, represented by Legal Aid lawyers, did not dispute the non-payment but raised the question of collateral warranty. The tenant caused to be attached to her defence and counter-claim a lists of defects which ran into pages. What was amiss, unfortunately, was the tenant's pleading of special damages with particulars, and without that pleading the court could not award damages. The landlord was, again, quick in attending upon Master Betts under Order 29 Rule 12(b) which reads:

"If on the hearing of an application the court is satisfied that the landlord's action includes a claim for possession of land and, if the action proceeded to trial, the tenant would be held liable to pay to the landlord a sum of money in respect of the tenant's use and occupation of the land during the tenancy of the action, even if a final judgment order were given or made in favour of the tenant, the court may, if it thinks fit and without prejudice or any contentions of the parties' nature or character of the sum to be paid by the tenant, order the tenant to make an interim payment of such amount as it thinks fit, after taking into account any set-off are counter-claim or a cross-claim or counterclaim on which the tenant may be entitled to rely."

2. The matter came before Master Betts on an application by the landlords under this provision of the Rules of the High Court. Master Betts ordered the tenant to pay to the landlords, by way of interim payment, arrears, that is to say, outstanding rental from the second month onwards together with unpaid management fees and rates. The Master specified a short period of time for the tenant to effect interim payment. Apparently feeling aggrieved by the defects in the premises, the tenant did not comply with the order of Master Betts. The landlords, again keen to press on with the application, came before Yam, J. on their application made on 23 August 1997. The summons filed on that day was returned before Yam, J. for an Unless Order, that is to say, unless the tenant complied with the order of Master Betts to pay to the landlords the interim payment within a further period of time, the tenant's defence and counter-claim be struck out and judgment as claimed be entered against her. Yam, J. granted the Unless Order on 25 November 1997, having taken into consideration the arrears and other non-payments that had accrued in the meantime. The tenant had vacated the premises earlier on 11 September 1997. In the Unless Order, the interim payment was calculated up to only 11 September 1997. But there is no evidence that the tenant consented to judgment for possession as claimed, and in law, it is debatable whether the judge should have taken into account the rental deposit which was to be accounted for by the landlords only at the end of the tenancy. At that stage, the rental deposit was arguably unconcerned with interim payment, from which the judge did not deduct the 2-month deposit. The tenant, evidently still feeling much aggrieved when she came before Yam, J., produced this time a long list of defects with particulars, setting out matters that ought to have been put right during the subsistence of the tenancy for the comfort of herself, her husband and her family. After hearing submissions, Yam, J. stayed execution. The tenant is dissatisfied with the Unless Order which was made by reference to the order of Master Betts. From these orders, in effect, she now appeals.

3. As I said, the submission is emotive. Much has been said about fairness in the eyes of an ordinary tenant. At the end, the matter is resolved with the cooperation of Mr Coleman, counsel for the landlords. It is now conceded that the deposit of a two-month rent ought to be, in fairness though not strictly on legal principles, taken into account. It is also conceded as a matter of indulgence that the tenant be permitted further time to pay the interim payment and, if paid in time, to defend the action so that her grievances could be fully ventilated and her claim for damages by way of counter-claim could be duly considered by the trial judge. So conceded, matters may readily be resolved. It remains, therefore, for me to propose that the time in the order of Master Betts and the Unless Order granted by Yam, J. be extended 28 days from to-day for the tenant to make the interim payment. Now that she has vacated the premises since 11 September 1997, the interim payment should, perhaps, take into consideration the two-month deposit. In this appeal, the tenant focuses on damages for the alleged defects, not on quantum. The appeal should be dismissed. But on the accommodation which counsel extends to the tenant, I would order that the order made by Master Betts be modified to the extent that the quantum be reduced by the amount of the two-month deposit and that time for the tenant to pay be extended another 28 days.

4. The special circumstances of this case would seem to give rise to some procedural difficulty. The appeal is, obviously, an appeal from Yam, J's order which is closely linked to Master Betts' order and therefore, perhaps it is Yam, J's order which has to be varied rather than Master Betts'. The appeal should, in my view, be dismissed. For the accommodation so generously extended to the tenant, it really matters not which order or orders should be varied in the technical disposal of the dismissed appeal. Perhaps, Yam, J's order should be varied to the extent I have indicated, bringing about also an implicit variation of Master Betts' order. Sofar as that is understood, I have nothing further to add.

Sears, J.:

5. I agree and with the order proposed.

Mortimer, V.-P.:

6. I also agree that this appeal must be dismissed and for the reasons given that the sum in Mr. Justice Yam's Order of $147,306 should be reduced to $111,306 and that the appellant should in the particular circumstances be given 28 days in order to make this interim payment. The consequence is that the appeal is dismissed, and it is further ordered:

(1) that unless the defendant pays the plaintiffs pursuant to the Order of Mr. Justice Yam dated 25th November 1997, the sum of $111,306 by 4:00 p.m. on 28th August 1998 the Defence and Counterclaim will be struck out and judgment be entered against the defendant for:

(a) the sum of $20,984;

(b) the arrears of rent and/or mesne profits at the rate of $18,000 per month from 25th February 1997 to 11th September 1997;

(c) rates at the rate of $1,903.50 per quarter from 1st April 1997 to 11th September 1997;

(d) management fee at the rate of $700 per month from 1st March 1997 to 11th September 1997;

(e) interest on that sum of $20,984, arrears of rent and or mesne profits, rates and management fee at the judgment rate from the date on which each of the same became due to the date of payment; and

(f) the costs of this action including costs of the applications made prior to this appeal.

(2) if the defendant pays the $111,306 to the plaintiffs within the time limit, then there be no order as to paragraph (1) hereof save the plaintiffs' costs of the said applications will be paid in any event.

7. There is an application here for costs by the plaintiff and there is no reason why costs should not follow the event. The plaintiff should have the costs of this appeal.