HOP WOO CHEUNG ENTERPRISES LTD. v. EAST WELL FOOD AND DRINKS CO. LTD.

HCA 1108/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1108 OF 2000

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J U D G M E N T

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1. By a Tenancy Agreement dated 11 May 1999, the Plaintiff company agreed to rent the premises at Shop B, Ground Floor, Penta House, 190-192B Tai Po Road, Kowloon to the Defendant company for a period of 2 years commencing on 1 July 1999 at a monthly rental of HK$26,000.00. Under the terms of the Agreement, the Defendant company would bear all Government rates.

2. The Defendant company failed to pay rent and rate since 1 October 1999 and by letter dated 28 October 1999 terminated the Agreement and vacated the premises.

3. The Plaintiff successfully re-let the premises to new tenant commencing on 14 March 2000. The Plaintiff claims the rent from 1 October 1999 to 31 October 1999, rate from 1 October to 31 December 1999 and rent from 1 November 1999 to 14 March 2000; and rate for the period covering 1 January 2000 to 31 January 2000.

4. The Defence filed a Defence and counterclaim whereby they alleged that:

1. the Plaintiff had breached the implied term of the Tenancy Agreement by failing to keep toilet in good working order; and

2. that the Plaintiff through a Mr Chan had misrepresented that the premises were suitable for retail of frozen foods.

5. So the Defendant company claimed that there were entitled to rescind the Tenancy Agreement and sought for damages from misrepresentation.

6. But they did not dispute that the Defendant company had failed to pay the rent and rate since 1 October 1999 as stipulated under the Tenancy Agreement.

7. The Defendant company had failed to appear at this trial despite ample notices sent to them by the Plaintiff's solicitors so therefore upon application of Plaintiff, I allow the Plaintiff to continue to prove its claim.

8. The Plaintiff called a witness, Mr Chan Chung Yin, who was a shareholder and director of the Plaintiff company. Mr Chan signed the Tenancy Agreement with the Defendant company.

9. It is also Mr Chan's evidence that the Plaintiff company did receive a letter from the Defendant company on 6 October 1999, asking for a rent reduction because of financial difficulty which the Plaintiff company rejected.

10. Then on 25 October 1999, the Defendant company sent a letter to the Plaintiff complaining for the first time about the drainage problem in the toilet and on 31 October, the Defendant company vacated the premises.

11. So Mr Chan said that the Plaintiff had suffered loss of rental from 1 November 1999 to 14 March 2000, rate for 1 January to 31 January 2000 and rent of 1 October to 31 October 1999 and rate for 1 October 1999 to 31 December 1999.

12. And also it was produced or rather this court was referred to a letter written by the Defendant company on 28 October to the Plaintiff terminating the Tenancy Agreement.

13. It is clear therefore from the evidence of the Plaintiff that the allegation of the sewage problem of the toilet was made only some 3 weeks after the Defendant company had unsuccessfully sought for a rental reduction from the Plaintiff company. It appears from the evidence that there was a desperate attempt to try this claim that the toilet drainage problem appeared seems to be a desperate attempt to relieve itself of the liability under the terms of the Tenancy Agreement.

14. Also I find that there is no implied term as alleged by the Defence because it is clear from clause 2(5) of the Tenancy Agreement that the tenant was responsible for all the pipe and there is no evidence before me that the sewage pipe forms part of the exterior or main structure of the building.

15. After listening the Plaintiff, I find that the Plaintiff had proved its case again the Defendant company for wrongful termination of the Tenancy Agreement and is entitled to damages as said so in the case of Annie Chan v. Lau Wai Kwong [1984] HKC 231, and so judgment is given to the Plaintiff in that first, rent and rate were claimed under paragraph 7 of Amended Statement of Claim in the sum of $29,187.00 and damages for wrongful repudiation of the Tenancy Agreement of a total of $116,835.58 under paragraph 12.

16. As far as the evidence goes, the Defendant had made the deposit of $52,000.00 with the Plaintiff company at the time when the Tenancy Agreement was signed, so this amount should be off set against the total damages awarded and so the total, therefore, after deducting this $52,000.00 will bring the amount down to $94,022.58.

17. Interest on that total sum will be calculated at 12% from the due date to the date of judgment and thereafter at the judgment rate pursuant to sections 48 and 49 of High Court Ordinance, Cap. 4.

18. As far as costs are concerned, costs to Plaintiff, nisi. Counterclaim of the Defence is dismissed.