NICE EXCEL LTD v. CLUB PRIMO (LKF) LTD, formerly known as PRIMO GROUP LTD

LDPE 7/2024

[2024]HKLdT 22

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO. LDPE 7 OF 2024

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BETWEEN

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DECISION ON REVIEW

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1.  This case concerns the Applicant’s application for recovery of possession of the premises, being the Unit on 7/F, 18 On Lan Street, at No 18 On Lan Street, Central, Hong Kong (“the Premises”), on the ground that the Respondent, as tenant of the Premises, failed to pay rent for the period from 1 October 2023 (“The Application”).

2.  After hearing the submission by the parties, who were both legally represented, on 30 January 2024, I pronounced my judgment (“The Judgment”) as follows:

(1) Subject to paragraph (4) below, the Respondent do deliver vacant possession of the Premises to the applicant;

(2A) The Respondent do pay the Applicant arrears of rent/mesne profits at the rate of $100,000 per month from 1 October 2023 until delivery up of vacant possession;

(2B) The Respondent do pay the Applicant the following sums due under the Tenancy Agreement dated 26 July 2023 (“the Tenancy Agreement”):

(i) Interest at the rate of 1.5% per month on the overdue rent as stated in Clause No 4(a)(ii) of the Tenancy Agreement commencing from the due date to the date of the Judgment;

(ii) Management fees at the rate of $13,760 per month from 1 August 2023 until delivery up of vacant possession;

(iii) Rates at the rate of $20,700 per quarter from 1 October 2023 until delivery up of vacant possession;

(3) The Respondent do pay the Applicant the costs of the Application which is summarily assessed at $3,200;

(4) If the Respondent should on or before 7 February 2024 (“Relief Expiration Date”) pay to the Applicant’s solicitors’ firm all the arrears of rent/mesne profits as stated in paragraph (2A) above (including all arrears of rent/mesne profits due on or before the date of payment) together with the costs referred to in paragraph (3) above, the respondent be relieved from the forfeiture incurred herein, and the tenancy of the Premises be reinstated.

3.  The Respondent then on 15 February 2024 applied for a review of the Judgment pursuant to section 11A of the Lands Tribunal. In support of this application for review (“Application for Review”), the Respondent filed an affirmation as follows:

“2. Member Pang erred in not considering the fact that the Respondent/Tenant had made payment of HK$155,040 on 14^th December 2023 (“the Payment”) pursuant to an oral agreement with the Applicant/Landlord before entering Judgment in court hearing dated 30^th January 2024.

3. Under the Oral Agreement, the Applicant/Landlord agreed to extend for 3 more months for the Respondent/Tenant to settle the outstanding rent in arrears and continue to pay the new rent pursuant to the Tenancy Agreement entered into between the Applicant/Landlord and the Respondent/Tenant.

4. Member Pang erred in not allowing the Respondent/Tenant to file an affirmation in opposition (supported with evidence) to the Applicant/Landlord to claim against the Respondent/Tenant for vacant possession of the Property in dispute and others.

5. Member Pang erred in not allowing the Respondent/Tenant to adduce evident in proving the existence of the Oral Agreement before entering into the Judgment dated 30^th January 2024 in the court hearing.

6. From the hindsight, should the Applicant/Landlord not enter into the Oral Agreement, the Respondent/Tenant would not have paid the Payment to the Applicant/Landlord in exchange for 3 more months to pay the outstanding rent in arrears.

7. Further, the Respondent/Tenant has HK$400,000 deposit kept by the Applicant/Landlord…”

4.  On 21 February 2024, the applicant, through its solicitors, Messrs Cheng, Chan & Co, submitted its opposition to the Application for Review on the following grounds:

“2. During the hearing on 30^th January 2024, the Applicant had already denied there being any oral agreement between the Applicant and the Respondent for time extension for 3 more months for settlement of the outstanding rent in arrears and other outgoings as alleged by the Respondent. The alleged oral agreement was raised for the first time at the hearing and was never pleaded in the Opposition filed by the Respondent on 15^th January 2024.

3. If there were such an agreement, which is denied, the Respondent ought to have pleaded the same in the Opposition filed. Likewise, if there were such an agreement, the Applicant would not have started the subject proceedings at all.

4. Even in the present application for review, the Respondent still had not adduced any evidence to support the existence of such agreement.

5. The partial payment of HK$155,040.00 made by the Respondent on 14^th December 2023 was spelt out in the Application filed on 2^nd January 2024, and the Applicant had confirmed with the Respondent, by way of correspondences between the respective legal representatives of the Applicant and the Respondent, that the Applicant will take the said part payment into account when the Respondent settles all the outstanding sum owed to the Applicant. Therefore, no prejudice will be caused to the Respondent in view of the Order made by Member Lawrence Pang on 30^th January 2024 (“the Order”).

6. The Order was made after hearing the submission by the Applicant’s Solicitors and Counsel for the Respondent on the date of hearing. Further, Counsel for the Respondent did not raise any objection nor make further submission to the Tribunal on the date of hearing in view of the Order. It is further submitted that the Respondent did not make Application for Review at any time before the expiry of Relief Expiration Date nor make any payment before the expiry of the Relief Expiration Date. The Applicant therefore submits that the Application for Review is merely delaying tactics without any genuine grounds for review.

7. The breakdown of the outstanding arrears calculated up to date (ie 21^st February 2024) is as follows:-

	HK$
Outstanding arrears as at the date of Application
(i) Outstanding arrears as at the date of Application	361,700.422
Outstanding arrears accrued after the date of Application
(ii) Interest on outstanding arrears as at the date Application from 3/1/2024 up to 21/2/2024 ($361,700.42 x 1.5% x 50/30 days)	9,042.51
(iii) Arrears of rent for February 2024	100,000.00
(iv) Interest on default in payment of rent for February 2024 ($100,000.00 x 1.5% x 0.72 months)	1,080.00
(v) Arrears of management fee for February 2024	13,760.00
(vi) Interest on default in payment of management fee for February 2024 ($13,760.00 x 1.5% x 0.72 months)	148.61
(vii) Arrears of outstanding rates for the period from 1/1/2024 to 31/3/2024	20,700.00
(vii) Interest on default in payment of rates for the period from 1/1/2024 to 21/2/2024 ($20,700.00 x 1.5% x 0.72 months)	223.56
Total arrears (up to and inclusive of 21/2/2024)	HK$506,655.10

Given the outstanding arrears accrued up to and inclusive of today (ie 21^st February 2024) is HK$506,655.10, the rental deposit in the sum of HK$400,00.00 is insufficient for offsetting all the outstanding sum owed by the Respondent. It will not be fair to the Applicant if the Respondent continues to stay in the Premises without making any payment and the Applicant will be left with no remedy for recovery of the balance of the outstanding arrears.”

5.  With respect to the Counsel acting on behalf of the Respondent, I fully agree with the Applicant’s submission above.

6.  Indeed, the Respondent had never been denied the opportunity to argue on the alleged oral agreement, if it existed at all. Nevertheless, such an agreement, if any, was not alleged in the Respondent’s Notice of Opposition filed to the Tribunal on 15 January 2024. Neither did the Respondent put forward the evidence, if any, of the alleged oral agreement in the hearing on 30 January 2024.

7.  I have no reason to accept the bare assertion of the Respondent.

8.  On the other hand, rule 14(1A)(a) of Lands Tribunal Rules, Cap.17A, reads as follows: -

“In relation to an application for an order for possession of any premises—where a notice of opposition has been filed, the registrar shall as soon as practicable list the application for hearing and give notice to all parties, which shall be not less than 14 clear days, or such other period as may be agreed by the parties.” (bold and italics supplied)

9.  Considering the words “as soon as practicable” in the above rule, the legislative intent is that early hearing date should be set for even contested possession cases. But for relatively simple case, by virtue of the ruling of the Court of Appeal in 永華電子實業有限公司 v 陳樹雄經營三雄行， HCMP No.1951/2012 (unreported, dated 16 November 2012), the Tribunal should be ready to determine the application at the first hearing.

10.  And with respect, the argument that “should the Applicant/Landlord not enter into the Oral Agreement, the Respondent/Tenant would not have paid the Payment to the Applicant/Landlord in exchange for 3 more months to pay the outstanding rent in arrears” is misconceived. Paying rentals (and other outgoings) as reserved in the Tenancy Agreement has been the obligation of the Respondent. The partial payment of HK$155,040.00 made by the Respondent provide no consideration for allowing it 3 more months to pay the outstanding rent in arrears.

11.  As regards the Respondent’s argument on the deposit, thanks to the Court of Appeal’s clarification in New Castle Investments Limited v Foo Wai Lok & Others, CACV 46/2000, CACV 47/2020 and CACV 399/2020 (unreported, date 16 November 2020) that a tenant has no right to have the deposit to be taken into account even upon commencement of proceedings by the landlord to demand for the outstanding rent in arrears. An intended appeal by one of the defendants in that case was also dismissed by the Court of Final Appeal in FAMV 259/2020 (unreported, dated 1 March 2021).

Conclusion

12.  Having considered all the above, I dismiss the Application for Review by the Respondent.

Costs

13.  As this decision is made on papers without a hearing pursuant to the Practice Directions issued by the President of the Tribunal: Review No 1/2009, I make a costs order nisi that there be no order as to costs. Unless any parties apply by summons to vary, the costs order nisi shall be made absolute upon expiry of 14 days from the date of this judgment.