A18 LTD v. THE FIRST TELEPHONE MOTEL CO LTD

LDPD 79 & 80/2016 (Heard together)

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO. LDPD 79 of 2016

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APPLICATION NO. LDPD 80 of 2016

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REASONS FOR DECISION

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Background

1.  The applicants are the owners of two adjoining units, namely Flat 18 (No 8 Man Wui Street) and Flat 20 (No 6 Man Wui Street) on 1^st Floor, Man Wah Building, Nos 1-23 Man Ying Street and Nos 2-24 Man Wui Street, Kowloon (which are hereinafter referred to individually as Flat 18 and Flat 20 as the case may be or collectively as “the Premises”). They will be identified individually as the 1^st applicant and the 2^nd applicant respectively:

Action No	Name of Applicant	Premises
LDPD 79/2016	A18 Limited	Flat 18
LDPD 80/2016	Star China Investment Limited	Flat 20

2.  The applicants filed the captioned applications to the Lands Tribunal all on 11 January 2016 for recovery of possession of the Premises on the ground that under the respective tenancy agreements with the respondent, the tenant of the Premises, the latter had failed to pay rent since 1 December 2015.  The applicants also applied for order for mesne profits till the date of delivery of vacant possession of the Premises and costs.

3.  In the respective Notices of Application, the applicants stated that these had already been the 4^th time that the applicants made the similar applications, the previous applications being:

Flat 18	Flat 20
LDPD 1561/2014	LDPD 1558/2014
LDPD 2343/2014	LDPD 2342/2014
LDPD 164/2015	LDPD 166/2015

4.  On 19 January 2016, the respondent filed its Notices of Opposition which included two grounds:

(1) The applicants did not provide correct accounting information for rent payment and further they agreed to let the respondent to pay the rent by instalments;

(2) The respondent is going to commence a related action in the District Court for off-setting the rent and damages.

5.  Following a hearing on 18 February 2016, I made the following orders:

In respect of LDPD 79/2016

(1) The respondent do deliver vacant possession of Flat 18 to the 1^st applicant;

(2) The respondent do pay the 1^stapplicant arrears of rent/ mesne profits at the rate of $15,000 per month from 1 February 2016 until delivery up of vacant possession;

(3) The respondent do pay the 1^stapplicant the costs of this application which is summarily assessed at $365, and

In respect of LDPD 80/2016

(1) The respondent do deliver vacant possession of Flat 20 to the 2^nd applicant;

(2) The respondent do pay the 2^nd applicant arrears of rent/ mesne profits at the rate of $15,000 per month from 1 February 2016 until delivery up of vacant possession;

(3) The respondent do pay the 2^ndapplicant the costs of this application which is summarily assessed at $365, and

6.  Pursuant to Section 11A of the Lands Tribunal Ordinance, the respondent applies to review the above orders

Grounds for Review

7.  In its affidavit in support of the application for review (“the affidavit”), the respondent suggests that its General Manager, the person who knows this case very well, Mr Sze Ching Lok (“Mr Sze”), was sick but the Tribunal erred in not adjourning the hearing despite a note requesting a adjournment was presented to the Tribunal on that day by his friend, Mr Sung Baidai (“Mr Sung”).

8.  Further, the respondent alleges that Mr Sung did not receive any exhibits, evidence or any information from the applicants during the hearing.

9.  Once again, the respondent alleges that it had a dispute on the amount of rent payable to the applicants and a Ms Yu from the applicants agreed that the respondent “can further discuss the amount and deposit any amount the respondent thought was correct for settling the case.”

Absence of Mr Sze

10.  At the beginning of the hearing on 18 February 2016 at 10.00 am, Mr Sung appeared on behalf of the respondent and produced a medical certificate of even date stating that Mr Sze was suffering from pharyngitis and recommending a rest of one day.  On the other hand, Mr Sung also produced a hand-written note (“the Note”) supposed to be written by Mr Sze that the latter was suffering from abdomen pain and asking for adjournment of the hearing.

11.  Notwithstanding the inconsistency of the reason for sickness as stated in the medical certificate and the Note, sickness per se does not entitle the respondent to an automatic right for adjournment of a hearing.

12.  Ever since the Civil Justice Reform, the Court shall seek to give effect to the underlying objectives of, for instance, ensuring that a case is dealt with as expeditiously as is reasonably practicable, bearing in mind of course fairness between the parties.  In the present applications, the applicants were suggesting that the respondent was default in rental payments.  The simplest thing that the respondent needs to defend its case is to produce evidence to show that it has made the respective payments accordingly and punctually.  It does not matter whether Mr Sze or any person on his behalf can attend the hearing and produce the evidence.  This is particularly the case when the respondent in this case has a corporate identity and somebody from the corporation should be able to be authorised to attend the hearing instead of asking for an adjournment.

13.  Indeed, attached to the Note were four annexes which, according to Mr Sze, explained the reasons for the default in rental payment. I did not see there is a good reason to adjourn the hearing.

Related Action in District Court

14.  It is trite that a tenant’s obligation to pay rent as reserved in a tenancy agreement is independent of the other covenants or obligations under the tenancy agreement, including the landlord’s covenant for quiet enjoyment.  Similarly a tenant’s obligation to pay rent is not dependent upon compliance by the landlord with his obligations under the tenancy agreement.  See Charmway Development Limited v Long China Engineering Limited [2001] 5 HKC 515 at 519G per Chu J and Ridge Limited v Golden Castle Limited [2005] 5 HKC 592.

15.  Thus where the tenancy agreement contemplates that the obligation to pay rent is independent of all other covenants, and the tenant’s counterclaim is unliquidated, there is no legal set-off. As regards any related counterclaim by the respondent, 黃英對譚炳新, HCMP 2049/2000 (unreported, dated 1 August 2000), it has been held in 陳燕群對黃金海, CACV 223/2007 (reported as [2008] 1 HKCLRT 27) and Ngai Ngok Pang & Another v Lee Syn Yuk, Michelle, LDPD 3030/2012 (unreported, dated 10 May 2013) that the Lands Tribunal does not have jurisdiction to entertain such counterclaim by the respondent. I agree with the authorities as cited that the Lands Tribunal does not have jurisdiction to entertain its claim for damages or in the terms of the respondent, the set-off in monthly rent payable.

16.  More particularly in陳燕群對黃金海, supra, at §36:

“Regarding the Respondent’s counterclaim in DCCJ 809/2004, he is claiming for damages arising from the alleged breach of the tenancy agreement by the Applicant. If the counterclaim succeeds, the Applicant is of course liable to pay compensation, but it does not mean that the Respondent can continue to reside in or occupy the Property without having to pay any rent or outgoings. Therefore, in relation to the Applicant’s action for recovery of rent in arrears and repossession of the Property, the Respondent has failed to raise a defence recognized by the law. For this reason, on 8 June 2007, having dismissed the Respondent’s interlocutory application, the Lands Tribunal should have proceeded with the trial of the Applicant’s application as scheduled.”

17.  Therefore, I consider that the existence of “a related action in the District Court for off-setting the rent and damages” as alleged by the respondent could not prevent the Tribunal to proceed with the hearing on 18 February 2016.

Applicants Having Proved Their Cases

18.  As said, even the absence of the respondent does not mean the cases have to be adjourned. But the applicants have to prove their cases.

19.  Mr Wong Ming (“Mr Wong”) appeared on behalf of the applicants and testified to give evidence. Mr Wong stated that the applicants had kept accounting record and issued statements to the respondent every month regarding the latter’s rental payment situation. He produced in particular a copy of the prevailing statements showing that the respondent had fallen in arrears for rental since 1 December 2015 and for the month commencing on 1 January 2016. The amounts due from the respondent are as follows:

	Flat 18	Flat 20
Amount Due:	$30,000	$29,000*

* After deduction of $1,000 for the overpayment by the respondent on 9

  January 2016 in settling the rental for 1 November 2015 to 30 November   

  2015[1].

20.  More particularly the statements have taken into account the alleged payments made by the respondent as stated in the annexes to the Note produced by Mr Sung.  The total amount of $59,000 due from the respondent also matched one of the WhatsApp messages by Mr Sze which were also produced by Mr Sung: “After many discussion & dispute, there are only $59,000 due you as the landlord”.  Evidence from the annexes and WhatsApp message showed that a cheque in the sum of $59,000 was deposited into 1^st applicant bank account on 17 February 2016, ie one day before the hearing at 4.53 pm.

21.  After a short break to allow Mr Wong to verify with the applicants, Mr Wong reported that practically the applicants would only be able to confirm receipt no sooner than sometime after 3.00 pm on that day.  Mr Wong continued that even if it be confirmed, the rental for the Premises since 1 February 2016 remained outstanding and unpaid by the respondent[2]. Mr Wong further submitted that the respondent had been persistently late in paying rental and this could be evidenced by the many similar applications prior to the present ones though in those earlier cases the Tribunal saw fit to grant relief to the respondent. The applicants would like to resume vacant possession of the Premises although the corresponding tenancies would only expire on 28 February 2018.

22.  Mr Sung responded that according to the WhatsApp messages, the applicants had agreed to allow the respondent to make the payment by instalments.  Mr Wong denied.

23.  In this regard, the burden of proof is on the respondent to show that such a promise allowing payment of rental by instalments had been made by the applicants instead of basing on respondent’s mere assertion.  I had directed Mr Sung to highlight which message as produced by him could show this but he failed.

24.  Thus after hearing the submissions and evidences from the parties, on the basis that the respondent had paid the $59,000 due, I made the order as stated in §5 above.

Decision on Application for Review

25.  In support of the captioned application for review, the respondent has attached to the affidavit various exhibits which are however nothing new and contain only the materials which were produced by Mr Sung during the hearing on 18 February 2016.

26.  In view of the above, I decide not to entertain the application for review by the application though the applicants have filed no reply to this application.

Costs

27.  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 shall make no order as to the costs.

[1] The rental for Flat 18 in respect of the same period was only settled on 4 January 2016.

[2] In the affidavit, the respondent admitted that the cheque for $50,000 “was returned due to court decision and erroneous cheque writing.”