Read the full judgment text of CACV 282/2017 on BabelCite. This Court of Appeal judgment was delivered on 13 July 2018 before Lam VP, Cheung JA, Kwan JA.
Civil law – summary judgment – tenancy – quiet enjoyment – implied terms – suspension of rent – water leakage – set-off – appeal – indemnity costs – Tenancy Agreement dated 13 October 2015 between plaintiff as landlord and 1st defendant as tenant for shop premises on ground floor of building in Sai Yeung Choi Street South and Soy Street, Kowloon, for three years from 15 October 2015 to 14 October 2018 at monthly rent of $680,000 exclusive of rates, government rent and management fees – 2nd and 3rd defendants, who are husband and wife, jointly executed deed of guarantee on 9 October 2015 in favour of plaintiff guaranteeing due performance of Tenancy Agreement – plaintiff claimed arrears of rent, management fees, government rent and rates from 1 July 2016 to 31 March 2017 totalling $4,965,030.10 plus mesne profits at rate of $680,000 per month from 1 April 2017 until delivery of vacant possession – 1st defendant delivered vacant possession on 17 March 2017 – defendants alleged ceiling of premises began to leak from 17 May 2016 to 4 July 2016 and then recurred periodically between 18 August 2016 and 19 October 2016, causing flooding at back storage area and business loss of $3,300,000 – defendants pleaded implied terms of fitness for business purposes, tenantable condition, and quiet enjoyment – whether three implied terms should be implied in tenancy containing express quiet enjoyment clause under clause 3.1 – court held no implied terms necessary where express clause exists, and in any event condition for quiet enjoyment not met as 1st defendant failed to pay rent before first leakage – whether clause 8 of Tenancy Agreement entitled defendants to suspend rent for water damage – court held clause 8 inapplicable as premises not severely damaged or rendered unfit for use, only back storage area affected, and 1st defendant continued occupation for approximately 5 months after second leakage period – whether defendants raised credible triable issue on water leakage defence and set-off claim – court applied test from Paul Y Management Ltd v Eternal Unity Development Ltd (CACV 16/2008) that summary judgment appropriate where no credible triable issue raised, testing defence against contemporaneous documents – court held no triable issue as 1st defendant's letter of 20 January 2017 did not mention water leakage damages but offered to pay arrears in full by ten post-dated cheques plus $680,000 compensation from rental deposit, and letter of 18 July 2017 admitted owing $2,329,459.59 without referencing water damage – claim of $3.3 million in business loss unsupported by management accounts or any other evidence – appeal dismissed – summary judgment to plaintiff for $2,329,459.59 with interest at judgment rate from 10 March 2017 – damages to be assessed for repudiation of Tenancy Agreement – plaintiff entitled to costs of appeal – indemnity costs summarily assessed at $132,350
Legal issues: Implied terms of tenancy agreement · Suspension of rent under clause 8 · Whether triable issue on water leakage defence
Outcome: Appeal dismissed; summary judgment for plaintiff affirmed for $2,329,459.59 with interest at judgment rate from 10 March 2017; damages to be assessed for repudiation
Cited by 31 cases · Cites 1 case