Lo Kit Man v. Wong Wai Shing Vincent

DCCJ 4208/2017

[2021] HKDC 405

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4208 OF 2017

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Before: Deputy District Judge YW Hew in Court

Dates of Hearing: 3, 4, 13 December 2019

Date of Judgment: 23 April 2021

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JUDGMENT

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INTRODUCTION

1.This is my decision in relation to:-

(1)  the trial of the plaintiff’s claim against the defendant for the return of a rental deposit of HK$83,000 (“the Deposit”) paid over in relation to the premises at Block 35, Park Island, No 8 Pak Lai Road, Ma Wan (“the Premises”); and

(2)  the defendant’s claim against the third party (who had purchased the Premises from the defendant) for an indemnity against the plaintiff’s claim, and for costs on a full indemnity basis, on the basis of a Third Party notice dated 4 January 2018 (“the Third Party Notice”), pursuant to which the defendant had applied before me, by way of a summons dated 6 November 2019, for default judgment against the Third Party (“the Default Judgment Summons”).

2.The plaintiff and the defendant were represented by, respectively, counsel David L K Chan and counsel Mr Billy N P Ma.

3.While the defendant appears to have been served with the Third Party Notice, the Third Party did not file an acknowledgment of service, and has not apparently taken any part in these proceedings.  Nor has he entered any appearance before the court, or appeared at the trial or the hearing of the defendant’s application for default judgment against him.

BACKGROUND

4.By way of a tenancy agreement dated 1 April 2015 (“the Tenancy Agreement”) entered into between the plaintiff and the defendant, as tenant and landlord respectively, the defendant let the Premises to the defendant for residential purposes.

5.Clause 6 of the Tenancy Agreement provided that:-

“The Tenant shall during the Term of Tenancy keep the interior of the premises in good and tenantable repair and condition (fair wear and tear and damage caused by inherent defect excepted) and shall delivery up vacant possession of the Premises in the same repair and condition on the expiration or sooner determination of this tenancy.”

6.Clause 7 of the Tenancy Agreement provided that:-

“The Tenant shall pay to the Landlord the Security Deposit[1] set out in the Schedule I for the due observance and performance of the terms and conditions herein contained and on his part to be observed and performed. Provided that there is no antecedent breach of any of the terms and conditions herein contained, the Landlord shall refund the Security Deposit to the tenant without interest on the date of delivery of vacant possession of the Premises to the Landlord or settlement of any outstanding payment owed by the Tenant to the Landlord. If the Tenant shall commit a breach of any of the terms and conditions herein contained, this Agreement shall absolutely determine and the Security Deposit paid under this clause shall be absolutely forfeited to the Landlord as and for liquidated damages (but not as penalty) and the rights and remedies given to the Landlord by this clause shall not prejudice any other right of action or any remedy of the Landlord in respect of such breach of the Tenant.”

7.Clause 9 of the Tenancy Agreement provided that:-

“The Landlord shall keep and maintain the … structural parts of the Premises and the main drains, pipes and cables in proper state of repair provided that the Landlord’s liability shall not be incurred unless and until written or Email notice of any defect or want of repair ahs been given by the Tenant to the Landlord and the Landlord has confirmed that such defect is not caused by any intentional behaviors or negligence of the Tenant and the Landlord shall have failed to take reasonable steps to repair and remedy the same after the lapse of a reasonable time from the date of service of such notice.”

8.Schedule I of the Tenancy Agreement provided, inter alia, that the term of the tenancy would be from 15 April 2015 until 14 April 2018 (inclusive of both days), that the monthly rent for the Premises be HK$41,500, and the “Security Deposit” (which I have defined as the Deposit in this decision) was HK$83,000.

9.Schedule II, Clause 4 of the Tenancy Agreement was headed “Break Clause” and provided inter alia that:-

“The tenant & The Landlord of this Agreement shall have the right to determine this Agreement on or after the first 24 months of the Term by giving to the other party of this Agreement one month’s written notice of its intention to do so. (The Tenant & The Landlord must complete above tenancy of first 24 months. Any advance termination before the fixed 24 months should be compensated by the tenant & the landlord to the total remaining sum of the rented (sic) to the tenant & the Landlord.)”

10.By way of an assignment dated 21 March 2016 (“Assignment”), the defendant assigned the Premises to Hui George, who is the third party in this action.  However, the plaintiff was not a party to the Agreement for Sale and Purchase (“SPA”) entered into between the defendant and the third party.  There is no dispute that the plaintiff knew about the Assignment from at least early 2016 onward and was told to pay rent to the third party, as the new landlord, which he did.

11.In April 2017 the plaintiff sought to terminate the Tenancy Agreement, and he eventually handed over vacant possession of the premises on 14 April 2017.  It is also said by the plaintiff that there was both delivery and inspection of the Premises on that date, at which point no complaint was received by the plaintiff, and that he was re-assured on several occasions by representatives of the third party that the Deposit would be repaid to him.  However, and despite demands for payment from both parties, neither the third party nor the defendant have paid the Deposit to the plaintiff on or after the date of delivery of vacant possession.

12.The plaintiff therefore claims that the defendant has breached Clause 7 of the Tenancy Agreement by failing to return the Deposit to him, and claims against the defendant on that basis.

13.The defendant says that he is not liable to pay the Deposit to the plaintiff.  He contends that he had informed the plaintiff that the third party, as new landlord, would be responsible to refund the deposit, and that he had also provided a copy of the Deed of Indemnity (defined in paragraph 14(2) below) to the plaintiff[2]. He also contends that the third party had, apparently through an estate agent, attempted to refund the Deposit, minus HK$5,000 for the plaintiff’s alleged failure to keep the interior of the Premises in good and tenantable repair and condition (cf Clause 6 of the Tenancy Agreement), but that the plaintiff had refused to accept that amount.

14.The defendant also issued and served the Third Party Notice on the third party, seeking an indemnity against the plaintiff’s claim and the costs of this action on a full indemnity basis on the basis of Clause 7 and Schedule 1 of the Tenancy Agreement.  In support of such it is said, in summary, that:-

(1)  Pursuant to the relevant SPAs between the defendant and the third party, the Premises were sold subject to and with the benefit of the Tenancy Agreement as attached to the Preliminary SPA, and the defendant would on completion account for and transfer to the third party the Deposit pursuant to the terms of the Tenancy Agreement, provided that as a condition precedent to such payment the third party would provide an undertaking in respect of the defendant’s liability against any loss damage and claim sustained by the defendant as a result of any claim by the plaintiff against the defendant for the refund of the deposit or part thereof.

(2)  A deed of indemnity dated 21 March 2016 (“the Deed of Indemnity”) was accordingly executed by the third party, providing inter alia as follows:-

“IN CONSIDERATION of [the defendant’s] transferring and account to [the third party] the sum of HK$83,000 being the Rental Deposit paid by [the plaintiff] under the [Tenancy Agreement] of [the Premises], [the third party] here undertake(sic) to [the defendant] that [the third party] shall assume all the obligations and liabilities of the landlord under the Tenancy Agreement with effect from the completion date of [the third party’s] purchase of the [Premises]… including [the defendant’s] obligation to refund the said Rental Deposit to [the plaintiff] in accordance with terms and conditions of the Tenancy Agreement as if [the third party] were the landlord named therein and shall in all respect(sic) be bound by the Tenancy Agreement as the landlord therein in [the defendant’s] place and stead and shall indemnify and keep [the defendant] indemnified against all actions suits expenses claims and demands on account of or in respect of non-performance or non-observance by [the third party] of the terms covenants and obligations under the Tenancy Agreement on the part of the landlord to be observed and performed.”

(3)  The sum paid to the third party under apportionment account (as per the usual conveyancing practice) included the Deposit.

15.However, as I have mentioned, the third party did not file an acknowledgment of service and has not participated in the proceedings.  Eventually, at the 2^nd PTR on 23 November 2019, Her Honour Judge Winnie Tsui directed that the defendant apply, if it so wished for default judgment against the third party at the trial, and file an affidavit of service regarding the time of issue of the Third Party Notice and service of its Defence.  Accordingly, the defendant filed the Default Judgment Summons, as well as affirmations of service of Ha Cheuk Man which inter alia confirmed, as per Her Honour’s orders, that the Third Party Notice was issued before service of the Defence.  At the trial, I directed that the Default Judgment Summons, which had been set down for a hearing in Chambers before me on the first day of trial, be heard in open court before me at the trial of the action.

ISSUES BEFORE THE COURT

16.Pursuant to an order of Master B Mak dated 6 December 2018, the parties had filed a Joint Statement of Issues on 25 April 2019.  Those issues can be summarised as follows:-

(1)  Whether the defendant is liable to pay the Deposit to the plaintiff, even if the defendant had assigned the Premises to the third party subject to the existing tenancy (“Issue 1”).

(2)  Whether the third party had attempted to refund the Deposit, less HK$5,000 due to an alleged failure of the plaintiff to keep the interior of the Premises in good and tenantable repair and condition, but the plaintiff had refused to accept the same with such a deduction (“Issue 2”).

(3)  (as raised by the defendant, but which issue was disputed by the plaintiff on the grounds of redundancy as it was said that Issues 2 and 2A were merely both sides of the same coin) Whether the plaintiff should accept any offer to pay HK$78,000, and then dispute the remaining HK$5,000 with the third party (“Issue 2A”).

(1)  Whether the defendant was not liable to pay the Deposit to the plaintiff by reason of the contentions in sub-paragraph (2) above) (and on the plaintiff’s case also that per Issue 2A in sub-paragraph (3) above) (“Issue 3”).

(4)  Whether, in the event that the defendant is liable for the plaintiff’s claim, the Third Party should fully indemnify the defendant for all the claims, interest, and costs thereof (“Issue 4”).

17.Mr Chan summarised the plaintiff’s case as follows:-

(1)  The plaintiff had terminated the Lease and vacated the Premises in accordance with the Break Clause (Clause 4, Schedule II, Tenancy Agreement).  Such delivery of vacant possession had been accepted by the Third Party’s agent, who had inspected the Premises.  The plaintiff had not breached, contrary to what was alleged by the third party (and as also canvassed before me by the defendant), the covenant in Clause 6 of the Tenancy Agreement to keep it in good and tenantable repair and condition.  Accordingly, the plaintiff was entitled to a full refund of the Deposit.

(2)  The plaintiff and the defendant were the only 2 parties to the Tenancy Agreement.  Moreover, as a matter of law and fact, the defendant’s obligation to refund the Deposit to the plaintiff did not pass with the Assignment, notwithstanding that the Deposit had been transferred from the defendant to the third party.  Hence, only the defendant (being the original landlord and party to the Tenancy Agreement) was liable to refund, or pay, the Deposit to the plaintiff.  Also, and despite repeated demands, the third party had refused to fully (plaintiff’s emphasis) refund the Deposit to the plaintiff.  Nor was there any substance in the defendant’s criticisms of the plaintiff’s pleadings or the evidence.

(3)  The plaintiff took a neutral stance as to the defendant’s claim against the Third Party for an indemnity as based on the Deed of Indemnity.

18.For his part, Mr Ma’s summary of the defendant’s case was follows:-

(1)  The plaintiff had failed to prove that he was entitled to be paid the Deposit by the defendant, both as a matter of fact and law.  In relation to the facts, points were taken in relation to the pleadings, as to the underlying condition of the property, and as to the plaintiff’s apparent failure to call the agent of the third party as a witness.

(2)  Default judgment should be granted against the third party.

EVIDENCE ADDUCED BEFORE THE COURT

19.There were only two witnesses at the trial, namely, the plaintiff and the defendant themselves, both of whom were cross-examined in some detail by opposing counsel.  I will set out their evidence, and my findings in relation to such, where such are salient to the issues below (predominantly if not entirely Issues 2A, 2A and 3).  However at this stage, I would see file record that and in my view:-

(1)  The defendant was an honest, fair, and truthful witness.  I consider that when questioned by Mr Chan about the material aspects of the main dispute between the parties (that is, the state and history of the Premises) he made fair admissions and his answers were neither contradicted by the contemporaneous documentation, nor inherently improbable.  I do not think that Mr Chan’s limited criticisms of the defendant’s credibility (as based on the defendant’s answers under cross-examination relating to the Deed of Indemnity) justify a finding that the defendant’s credibility is somehow materially tainted, and/or that I should therefore reject the defendant’s evidence or treat it with caution.

(2)  The plaintiff was more cautious when being cross-examined as to the material aspects of the main dispute between the parties, and at times exhibited some reluctance when pressed to concede matters which were not, apparently, in his favour.  He did seem somewhat less guarded when speaking of matters which might be said to be in his interest.  However, and on the whole, I do not think that I should disbelieve his evidence or consider it incredible or unreliable in any material aspect.  Rather, I would accept it as being generally truthful and accurate.  After all I consider that his testimony (especially as to his not having inspected/dealt with parts of the Premises which are not apparently readily visible from the interior) was not inherently improbable nor directly contradicted by the contemporaneous documents.  His cautious attitude when questioned on matters raised with him after 14 April 2017 in relation to the alleged state of the Premises is also understandable given that he had, by then, vacated the Premises.  Moreover, the plaintiff also made some fair concessions in relation to certain matters when asked about the issues in the Marks Photos (defined below) in relation to his preparation for and inspection of the Premises.

ISSUE 1: WHETHER DEFENDANT LIABLE TO PAY DEPOSIT TO PLAINTIFF NOTWITHSTANDING THE ASSIGNMENT OF PREMISES TO THE THIRD PARTY

20.The plaintiff’s submissions were that:-

(1)  The obligation of a landlord to return a security deposit (such as the Deposit) was a personal one between the original parties to the lease (in this case, the plaintiff and the defendant), per Hua Chiao Commercial Bank Ltd v Chiaphua Industries Ltd [1987] AC 99 at 112F-113C;

(2)  That obligation was a prospective and contingent liability, as it did not arise until the end of the lease and in the event that there was a breach of the tenancy agreement, the Deposit was liable to forfeiture and hence liability to repay might not arise; moreover it was not open to and the defendant could not assign such prospective liability to the third defendant as he could only do so pursuant to the Tenancy Agreement (which made no such provision) or statute (which was not relevant) per Crocodile Garments Ltd v The Prudential Enterprises Ltd [1989] 1 HKC 474 per Godfrey J at 477-488;

(3)  Where, as in this case, an arrangement was entered into such that the seller paid over to the assignee of the property a security deposit in consideration of the latter’s undertaking to refund the deposit to the tenant and an indemnity against all claims in that connection[3], that was testament to lack of assignment of any burden on the assignee to return the tenancy deposit, and that the contractual obligation to return the deposit remained with the assignor, per Kong Lai Restaurant Ltd (in liq) v Swallow Kingdom Properties Ltd [2013] 1 HKLRD 1170 (“the 2013 Kong Lai Decision”) per S Leung DJ at 1179.

Reference was also made to Hong Kong Tenancy Law, 6^th edition at p 232-233 which cited the Hua Chiao case

21.In relation to Issue 1, Mr Ma for the defendant did not seem to dispute the plaintiff’s submissions on the law as summarised in paragraph 20 above, including in particular the lack of privity of contract between the plaintiff and the third party.  Nor did he submit that the plaintiff should not have sued the defendant.  Rather, he sought to distinguish those cases, with reference to a later judgment in the Kong Lai proceedings, namely Kong Lai Restaurant Ltd (in liq) v Swallow Kingdom Properties (23 January 2014, DCCJ 1332/2012), W Chan DJ. (“the 2014 Kong Lai Decision”).  It was said, with reference to paragraphs 30 to 32 thereof, that in this case there was a basis for forfeiture of the Deposit pursuant to the terms of the Tenancy Agreement, namely that as is apparently pleaded in the Defence, the plaintiff had failed to “keep the interior of the Premises in good and tenantable repair and condition” and had hence breached Clause 6 of the Tenancy Agreement.  Accordingly, he contended that the Deposit should hence be absolutely forfeited as and for liquidated damages for breach (Clause 7 Tenancy Agreement), which right to forfeiture constituted a legal right of the third party who was not required to commence proceedings in order to carry out that right. Hence, no liability of the defendant arose to pay the Deposit.

22.Given the aforesaid submissions and matters, I consider that Mr Chan was correct in submitting that pursuant to the Tenancy Agreement the defendant was under a prospective and contingent liability to pay the Deposit to the plaintiff at the end of the lease pursuant to the Tenancy Agreement.  I also consider that this continued notwithstanding the Assignment and the related circumstances such as the Formal S&P, and the draft and executed deeds of indemnity, since the evidence and documents do not suggest, in any way, that the obligation to refund the Deposit could be, or was, transferred from the defendant to the third party.  The main question is whether, in this case and as explored in relation to Issues 2, 2A and 3 below, that liability ever arose. After determining such, I shall, if necessary, deal with the relevance of the lack of forfeiture proceedings.

ISSUES 2 and 2A: CONDITION OF PREMISES ON HAND-OVER, HK$78,000 OFFER FROM THIRD-PARTY, AND RELATED EVENTS

ISSUE 3: WHETHER ISSUES 2 AND 2A ABSOLVE THE DEFENDANT OF LIABILTY

The pleadings, and the parties’ burdens

23.As mentioned, the plaintiff’s case was that he had handed back the Premises and vacant possession of such had been accepted by the representative of the new landlord (that is, the third party) at the time, without complaint.  The plaintiff hence said that it was adequate for him to plead these as material facts in support of his claim for the return of the Deposit, which obligation Mr Chan also emphasised arose “on the date of delivery of vacant possession”.  It was also said that there was insufficient evidence to enable me to conclude (which burden the plaintiff said the defendant bore) that on-balance, the plaintiff had committed any antecedent breach of the Tenancy Agreement (cf Clause 7 Tenancy Agreement), including in particular the obligation under Clause 6 thereof, to keep the interior of the Premises “during the term of the Tenancy” in good and tenantable repair and condition (fair wear and tear and damage caused by inherent defect excepted)”.  Mr Chan also contended that the absence of the third party meant much of the evidence adduced by the defendant was hearsay, and was either liable to be excluded, or should be given little, if any, weight.

24.The defendant took issue with the plaintiff’s case both as a matter of law and fact.  It was said that the plaintiff’s pleadings were problematic as they did not entitle him to claim against the defendant for the Deposit.  It was said that the plaintiff still bore the ultimate burden of proving his right to such claim, and that the pleadings did not (even taking the Reply into account) suggest that the plaintiff had delivered up vacant possession “in the same repair and condition” to the third party (per Clause 6 Tenancy Agreement), or that they had been satisfactorily accepted as being in such condition.  It was also said that in any event, I should conclude that there was no acknowledgment or acceptance by the third party of the Premises being in good and tenantable condition, and apparently also that the evidence as to the condition of the Premises meant that the plaintiff had not complied with Clause 6 Tenancy Agreement, hence disentitling him to claim the Deposit.

25.It is indeed trite that the pleadings are there to define the issues.  However, it is also trite that this is because they are there to inform the parties in advance of the case which they have to meet, enabling them to take steps to deal with it, and that ultimately it is a question of what is fair and just in the circumstances.  In my view, and considering the pleadings and the conduct of the case as a whole, I do not think there was any misunderstanding on the defendant’s part as to the plaintiff’s case, and in particular those portions relating to the condition of the Premises, particularly upon delivery of vacant possession.  Indeed it was even suggested to the plaintiff in the course of cross-examination that “We do know your stance clearly, that you said you had already handed over the property to the new landlord in good condition.”

26.Moreover, and more importantly, the defendant has not identified any specific prejudice which could or would have been caused by the alleged deficiencies in the pleadings, particularly when the defendant had himself also raised the issue of the condition of the Premises (and hence an alleged breach of Clause 6 Tenancy Agreement) in his pleadings, his evidence, and his submissions.

27.I therefore do not think it is practical, or in line with the underlying objectives, for me to delve into such alleged problems with the plaintiff’s pleadings, let alone to dismiss the action on such basis as Mr Ma suggested in his closing submissions.

28.However, given that a major part of the parties’ submissions concerned who bore the burden of proof and whether such was discharged, and given also the nature of the issues and evidence before me, I drew the parties’ attention to, and directed that they make further written submissions (if so advised) on the contents of RDC O 18 r 17, Hong Kong Civil Procedure paragraph 18/7/14, the authorities of Bond Air Services Ltd v Hill [1955] 2 QB 41 and Bank of New South Wales v Laing [1954] AC 135 as cited therein, and to the principles set out in Choi Lisa Mei Yin v Yau Pak Kin [2019] HKCA 812 (see in particular paragraphs 31 to 36 and 46), Jones v Dunkel & anor (1958-1959) 101 CLR 298 (as cited in inter alia Nina Kung v Wong Din Shin [2005] 8 HKCFAR 387, Re Hong Kong Agricultural Special Zone Ltd,HCMP 729/2012, unreported, 28 April 2017, Recorder Linda Chan S C as she was then, and reiterated in Yuan Yuqin v Cheung Hiu Yan [2020] HKCFI 1419), and in Tjang Siu Thu v Profield Construction Engineering Ltd & anor[2015] 5 HKC 22 (as cited in Re Hong Kong Agricultural Special Zone, supra).

29.On behalf of the defendant, Mr Ma submitted (with reference to paragraph 18/7/14 of Hong Kong Civil Procedure and the authorities cited therein, as well as Yuan Yuqin, supra citing Jones v Dunkel, supra) that the issue of the burden of proving due performance of the Tenancy Agreement shifted to the plaintiff, since the defendant had properly pleaded the plaintiff’s non-performance (ie the failure to keep the interior of the Premises in good and tenantable repair and condition) of the Tenancy Agreement, and that the plaintiff had failed to prove his case and/or to discharge the burden or proving the primary facts required for the refund of the Deposit, as it was not demonstrated that the Premises had been accepted by the third party satisfactorily as being in such condition.  It was also submitted that the defendant bore the burden of establishing the facts pleaded in his defence (ie that the third party had attempted to refund the Deposit subject to the HK$5,000 deduction for the plaintiff’s failure to keep the interior of the Premises in such condition but that the plaintiff had refused to accept such amount).

30.Mr Chan submitted, for the plaintiff, that what he considered to be the ratio of Bond Air Services, supra, applied by analogy to establish that the defendant bore the legal and evidential burdens to prove that the plaintiff had breached a condition which would relieve the defendant of his liability to refund the Deposit.  He submitted that Bank of New South Wales, supra, was distinguishable on the basis that the form of denial there went to the root of the contract and/or seemingly gave rise to issues as to its validity, rather than the mere alleged failure to comply with the Tenancy Agreement.  It was hence also submitted that the defendant had not discharged either the legal and/or evidential burden of proof simply based on the HK$5,000 deduction mentioned above, and finally that the defendant had not adduced sufficient evidence to enable me to pass from the realm of conjecture into the realm of inference.  Further submissions were also made based on inferences, which I will deal with further below.

31.Having considered the authorities and the parties’ submissions as a whole, I consider that the position is as follows:-

(1)  On the pleadings, the plaintiff does bear the legal burden, or persuasive burden, of proving that vacant possession of the Premises had been delivered.  However, if and insofar as the defendant has raised the issue of whether the plaintiff had failed to perform the condition precedent (ie delivery up of the Premises in such good and tenantable repair and condition, fair wear and tear and damage caused by inherent defect excepted, per Clause 6 Tenancy Agreement) which is implied in the pleadings by reason of RDC O 18 r 7(4) and Hong Kong Civil Procedure paragraph 18/7/14, the legal burden of proving due performance of the condition precedent in Clause 6 should be borne by the plaintiff.  In the present case, I am prepared to and do accept that the defendant’s pleadings had sufficiently raised such an issue, especially as there was no complaint by the plaintiff as to the lack of particularity thereof.

(2)  However, in my view, the defendant still bears the evidential burden ie to adduce evidence sufficiently cogent and probative to raise the issue before me of whether there was an antecedent breach by the plaintiff of Clause 6 of the Tenancy Agreement, as in the present case it is, as a matter of substance, advanced as a positive defence: see Re Hong Kong Agricultural Special Zone Ltd, supra, at paragraph 26 citing Phipson on Evidence, 18^th ed paragraph 6-06.  He does not have to actually prove such as it is in the nature of an evidential burden that the person discharging that burden does not need to prove anything, but merely has to adduce sufficient evidence to require the court to decide the issue in question (paragraphs 180 and 183 of Nina Kung, supra, see also paragraphs 31 and 34 of Choi Lisa Mei Yin, supra).  Such evidence, when properly assessed, has to be capable of justifying a reasonable inference that, in this case, there is an issue to be tried as to whether Clause 6 was so breached.  It is not enough merely to raise suspicious circumstances.  If a conclusion is to be drawn from circumstantial evidence, any such inference must be properly grounded in the primary facts found.  For the court must guard against indulging in conjecture under the guise of drawing an inference where the primary evidence does not logically and reasonably justify the particular inference in question (Choi Lisa Mei Yin, supra, at paragraph 36 and Re Hong Kong Agricultural Special Zone Ltd, supra, at paragraph 23, citing Nina Wang, supra and Jones v Dunkel, supra).  Indeed, per Nina Wang, supra, at paragraphs 185-186, it is not permissible merely to choose what may be considered to be the more likely of two guesses if neither is properly justified by the primary facts found.  For as per Jones v Dunkel, supra (which portions the Court of Final Appeal cited in Nina Wang, supra):-

“… the law which this passage attempts to explain does not authorise a court to choose between guesses, where the possibilities are not unlimited, on the ground that one guess seems more likely than another or the others. The facts proved must form a reasonable basis for a definite conclusion affirmatively drawn of the truth of which the tribunal of fact may reasonably be satisfied.” (per Dixon CJ at 305)

“One does not pass from the realm of conjecture into the realm of inference until some fact is found which positively suggests, that is to say provides a reason, special to the particular case under consideration, for thinking it likely that in that actual case a specific event happened or a specific state of affairs existed.” (per Kitto J at 305)

In this case, I consider that the question is whether there are facts which justify my inferring that there is an issue as to whether Clause 6 Tenancy Agreement was breached (ie the Premises were not in good and tenantable condition, fair wear and tear and damage caused by inherent defect excepted) as at 14 April 2017.

(3)  If the defendant is able to discharge that evidential burden, then the plaintiff would then have the legal burden of satisfying me that he had, in fact, duly performed his obligations under Clause 6 Tenancy Agreement.

(4)  There must be a reasonable basis for some hypothesis in the evidence or the inherent probabilities before a court can draw useful inferences from a party’s failure to rebut it.  So where the evidence is incomplete and obscure in critical aspects, the silent party’s failure to give evidence may convert that evidence into proof on the matters which are, or are likely to be, within his knowledge and about which he could be expected to give evidence.  However, the mere failure of a party to call a witness does not automatically confer an evidential benefit on the opposing party.  Whether an inference is drawn will depend on the quality of the primary facts on which the inference is based, which is fact-sensitive, and from primary facts the inferences must logically flow.  I have to be persuaded that it is appropriate to draw the inference.  One circumstance where it will not be appropriate to draw an inference (or where the effect of silence in favour of the other party may be reduced/nullified) is where there is a credible explanation for the party’s silence or failure to call the witness (Re Hong Kong Agricultural Special Zone Ltd, supra, at paragraph 24, and see also Prest v Petrodel Resources Ltd. & ors [2013] 2 AC 415 at paragraph 44 as cited therein; see also Hoi Sook Fong & anor v Ismail Halima & anor [2009] 1 HKC 326 at 336 as was cited by Mr Ma in his closing submissions).

32.I do not agree with Mr Chan’s suggested approach in relation to Bond Air Services, supra and Bank of New South Wales, supra.  In that regard:-

(1)  When properly analysed, the former is authority for the general proposition (as reflected in Hong Kong Civil Procedure), that the onus lies on a party, who seeks to contend that a condition precedent has not been duly performed, to state and plead with proper particularity what that condition was, and its non-performance (see 427 of the report).  I do not think the case should be read as supporting the wide-ranging, further conclusion suggested by Mr Chan, namely that once the issue is so raised by a defendant in the pleadings, he would bear the burden of proving a breach of any and all conditions precedent.  The English Court of Appeal’s discussion on the issue of burden was confined to contracts of insurance, and in particular the situation where a defendant insurer/underwriter has sought to rely on an exception or breach of condition.  I do not understand the decision, properly read, to be authority for the proposition that any other defendant in relation to all types of contract would inevitably bear the legal and evidential burden of proving such.

(2)  This is a fortioriwhen one considers Bank of New South Wales, supra, which is in my view rightly cited within Hong Kong Civil Procedure for the wider proposition (which is also contrary to Mr Chan’s reading of Bond Air Services, supra) that “if the defendant properly pleads such non-performance of a condition precedent, the burden of proving its due performance then shifts to the plaintiff.”  That ratiois clear from a fair reading of 151-154 of the report, viz, a plea of “never indebted” by the bank meant that the plaintiff customer therefore bore the onus of proving that the bank was, indeed, so indebted to him.  Or, in their Lordships’ words, the condition precedent put in issue by the defendant bank’s plea was “… the existence in the customer’s account of funds sufficient to meet the demand on them. It is for the customer to establish this sufficiency as subsisting at the time of demand.” In that case, and on the facts, the House of Lords held that the onus had not been discharged. I also do not agree with Mr Chan’s submission that Bank of New South Wales, supra, should be distinguished on the apparent basis, which I am unable to discern from the decision, that such plea went to the root and/or validity of the contract between the parties.

The parties’ evidence

33.Bearing the above in mind, I shall at this juncture set out the parties’ evidence.

34.The plaintiff adopted his witness statement as his evidence-in-chief, in which he spoke as to the Tenancy Agreement and how, as the Assignment had apparently been carried out without notice to him, he had been informed by a letter dated 1 April 2016 from solicitors acting for the third party that he should continue to pay monthly rental to the third party (which he did) as new landlord.  His evidence was that he had prior to such notification been told via Whatsapp in the change in title of the property by Ms Jennifer Ho (“Ms Ho”), who it was not disputed was an estate agent from Centaline, that she would act on behalf of the third party on such matter.  He orally added that she had said that the third party would tell him about it via a letter from a solicitor, and that it was subsequent to the letter on 8 April 2016 that Ms Ho also told him that one Jennifer Hui (“Ms Hui”) would act on behalf of the new third party and be responsible for all matters including the rental.

35.Much of the other evidence before me included printouts of voice and text WhatsApp messages, which the plaintiff confirmed were those exchanged between him and Ms Ho.  I have summarised their salient features below since the plaintiff was the only author of such messages who gave evidence at trial, and as these WhatsApp messages (which included agreed transcriptions of certain voice messages) and their context were the subject of considerable cross-examination and submissions from the parties.

36.On 13 March 2017, the plaintiff had sent a Whatsapp message to Ms Hui informing the third party via her that he would terminate the tenancy of the premises on 14 April 2017, inviting the third party to refund him the Deposit upon delivery of vacant possession.  Ms Hui replied and confirmed such arrangement.

37.On 12 April 2017, Ms Ho sent a Whatsapp to the plaintiff to arrange to meet as to the delivery of premises.  On 13 April, he exchanged further Whatsapp messages with her in which the plaintiff asked her “Do you take care of the handover on behalf of the [third party]?”, to which she replied “I shall get the keys from you and return to the [third party] first, the deposit will be transferred to your bank account after the landlord checks.”

38.On 14 April 2017, the plaintiff said that he and Ms Ho met and that she inspected the premises on behalf of the third party. His evidence on this process, on which he was cross-examined by Mr Ma as I set out below, was as follows:-

(1)  Prior to the handover of the property, he moved out all his belongings, swept the floor of it once, and washed the entire floor of the property with clear water once, including the balcony and the light shaft.

(2)  On 14 April 2017, the plaintiff, his wife, and Ms Ho were present.  The inspection was carried out by Ms Ho going to every room and every toilet of the property, the kitchen, and inspecting the water pipe and flushing of toilets.  She had also tested all of the air-conditioners.  He had walked along with her during the inspection process.

(3)  After the inspection had been carried out, a handwritten document (“the Inspection Document”) was prepared by Ms Ho, who he said was the third party’s representative, which she had written at the scene.  The purpose of the Inspection Document was to prove that Ms Ho had already inspected everything in the Premises, and to show that she had already taken over the Premises, but that the cheque was yet to be issued to him.  At the time, there was no complaint by Ms Ho as to the status of the Premises.

39.The Inspection Document sets out the address, identity and personal details of the tenant and Ms Ho.  It states inter alia in translation that:-

“[Ms Ho], the staff of Centaline Property … on behalf of the landlord of the above premise receives a set of 16 keys, 8 remote controls of the air-conditioners and the original electronic appliances. The staff of Centaline Property has made the initial[4] inspection check and is aware that the deposit amount of $83,000 has not been received from the landlord.

The tenant agrees to the cheque to be issued by the landlord and the rental receipt of January to be handed over to [Ms Ho] for handling.”

Below this it was dated 14 April 2017, and signed by the plaintiff who was described as the “Tenant” and Ms Ho who was described as “Centaline Staff”.

40.Subsequently, the Deposit was not paid over despite various further WhatsApp messages (as detailed below) between himself and Ms Ho demanding it.  Rather, he said that the third party had apparently given various excuses to not refund the Deposit and had apparently eventually even ignored Ms Ho’s messages.  Eventually, he issued proceedings against the defendant to recover the Deposit.  He also claimed, orally, that he had no idea what had happened to the state of the Premises after he had handed over the keys on 14 April 2017.

41.The contents of the WhatsApp messages that were subsequently exchanged can be summarised as follows:-

(1)  On 16 April 2017 there was a discussion between the plaintiff and Ms Ho where she had apologised for not having the account number (which the plaintiff said in his oral evidence related to the payment of the Deposit) and suggested she send “it” to him by post.  The plaintiff had asked if it was convenient to give the rental receipt and cheque (which the plaintiff said in his oral evidence related to the refund of the Deposit) to him at an MTR station tomorrow.  However, the plaintiff eventually provided her with his HSBC account number (orally, he said, for the purposes of the refund of the Deposit), and asked her to send the rental receipt and “document copies” by post together.

(2)  On 18 and 19 April 2017 the plaintiff and Ms Ho exchanged WhatsApp messages as to the intended visit of the petroleum gas contractor to read the meter, which had been set down for 20 April 2017.  Part of this exchange included a voice message sent by Ms Ho to the plaintiff on 18 April 2017 (“the 18 April Voice Message”), where she stated:-

“I have already informed Ms Hui. By the way, she got only the Hang Seng Bank account. In the next 2 days, she will go there to get cash and bring it to HSBC to transfer back to your account. If you receive it, please give me a call. Thank you.”

The plaintiff’s evidence was that he understood from this that Ms Hui had agreed to get cash (for the Deposit) so that it would be transferred to the plaintiff’s HSBC account.

(3)  On 21 April the plaintiff said he had not received the Deposit.  Ms Ho said she would chase “him” (which given the context must have been a reference to the third party).  A similar request was made on 22 April and Ms Ho said she would call the third party.  However, the next day she said that the latter had not returned her call.

(4)  On 24 April Ms Ho asked the plaintiff whether the third party had made the Deposit.  On 25 April the plaintiff said that he had received no deposit in his bank account, the Premises had been delivered up for 10 days, and that there was no reason for the third party to withhold the money.  He urged Ms Ho to follow up quickly.

(5)  After some further messages exchanged between Ms Ho and the plaintiff suggesting a telephone discussion, on 8 May 2017 the plaintiff asked whether the third party had sent out the cheque.  Ms Ho replied that the third party had told her that his domestic helper would give her the cheque, but she had yet to receive it and she would look for him later.  The plaintiff received from Ms Ho a screenshot of a whatsapp message suggesting that “[the third party] said tomorrow he give the cheque”, to which he responded by complaining of delay on the part of the third party, and said in the evening of 9 May 2017 that the third party had failed “to keep his promise again”.  In response Ms Ho claimed that the third party would bring it to him in the afternoon, but she was out working at the time, after which she had tried to contact the third party to no avail.

(6)  On 10 May 2017, the plaintiff received from Ms Ho pictures of a cheque to him in the amount of HK$75,000 (“the Third Party’s Cheque”) and a blank form, as well as voice messages from her where she said that the third party had dropped off such documents with her that day.  The plaintiff in reply refused to accept only a partial return of the Deposit, asked why the third party wanted to deduct HK$8,000 (and whether it was for repair or cleaning) and stated that he was not informed of anything beforehand, but only knew that the landlord was very busy.  He stated that he had “delivered a neat and clean premises” on 14 April, that the Deposit should be refunded immediately after delivery, and that he had given “maximum tolerance”.  He also said he did not know what the third party had done in the premises after delivery, which he thought was unfair, and that there was no reason (and that it was hence unreasonable) to deduct any amount.  He also asked Ms Ho to inform the third party of such matters.

(7)  In the afternoon of 11 May 2017, Ms Ho said she had told the third party of the plaintiff’s request and that the third party apparently wanted to “get back the cheque”.  A telephone discussion between the plaintiff and Ms Ho was then suggested, after which the plaintiff received a message from Ms Ho comprised of a message mentioning and attaching various photos (“the Photos”).  The message and Photos appear to have been sent to her after 3:00 pm in the afternoon of a date which is not clear on the face of the documents, by a Xenia Wong of the Park Island service centre, namely the management of the building within which the Premises was located.

(8)  As much of the plaintiff’s evidence in relation to the Photos was given under cross-examination by Mr Ma, I shall set that out in more detail at paragraph 45 below.  However at this juncture it is convenient to record that the plaintiff responded to Ms Ho by WhatsApp late in the evening of 11 May 2017 by stating that:-

(i)  He was shocked upon seeing the Photos.  He called Park Island service centre immediately “for inquiry”, and they had told him that a rat was found in the ceiling and that they had killed it without asking for a charge.  They also told him “found that the hoardings of the ventilator in the maid’s room was slacked, so there is a hole from where the rat got in and settled in the ceiling.”  He said “This shows that it is the problem of the building’s installation and property management.”  He disclaimed any relation to him and said he was the victim, but that fortunately nothing had happened to his family otherwise he would ask for compensation.

(ii)  He repeated his earlier claim that he had delivered clean Premises and that the appointed representative of the third party and the landlord himself had checked and accepted the Premises with no objection.  However “When the problem was found afterward, I was not informed to have a discussion, but a direct deduction of HK$8,000.00” which he said was not reasonable or fair.

(iii)  He then claimed, based on the above, that it was the problem of Park Island management and if there were any compensation required, it should be submitted to their management office, rather than deducted from the Deposit which he had the right to a full return of.

In response, yet later that evening Ms Ho told the plaintiff that the third party had “taken back the cheque”.

(9)  On 13 May 2017, the plaintiff received from Ms Ho a picture of a document which appeared to be a receipt dated 27 April 2017 for HK$1,000 from one “Yee Fun Engineering Co” for “Addition of wire mesh to ventilation” (“the Mesh Receipt”).  Ms Ho apparently claimed that Ms Hui had asked such to be sent to the plaintiff.  The plaintiff responded by asking what was meant by this, whether the third party was asking him to pay it, and why he had not been notified before “going ahead”.  He said that there may have been others who would charge less, that it was unreasonable and unfair.  He mentioned again it was a building problem, and that it might have been loosened before he moved in, and was not his business.  He questioned why the third party had wanted to deduct the amount of HK$8,000 when the Mesh Receipt was for HK$1,000 and asked for the basis of the proposed deduction, which he felt was arbitrary and baseless.  However he indicated that he wanted to negotiate, hopefully through discussion with the third party or his agent, to solve the problem via mutual agreement, rather than by going to court.

(10)  From around 16 to 19 May, the plaintiff asked Ms Ho to talk to Ms Hui and whether the former had explained his stance to the latter.  Ms Ho’s messages said that she had asked Ms Hui to inform the third party of the issue. On 23 May, Ms Ho sent the plaintiff several messages, apparently from Ms Hui, where she had apparently indicated that she had “no right to manage the business for [the third party]” and did not seem to express any interest in settling the matter with the plaintiff.  Ms Ho also forwarded the plaintiff, in mid to late June 2017, voice messages which appear to have been left by her on a paging service for the third party (or his representative).  The first urged the third party (or his representative) to contact the plaintiff, whose contact number she provided, so that the matter could be settled peacefully.  The second was her communicating the plaintiff’s stance that he would take legal action if he did not receive a refund of the Deposit either within 7 days or via Ms Ho “if it is inconvenient”.

(11)  After that, but also in late June 2017, Ms Ho sent the plaintiff messages containing, apparently, complaints from the third party and/or Ms Hui that the Premises which were only 2-3 years old had been “ruined” by the plaintiff who had allowed rats around/rodent nuisance, which had made the third party very distressed.  In response, the plaintiff indicated that he would accept the Third Party’s Cheque if it was issued to him within 7 days, failing which he would ask the solicitor to follow-up on the matter.

42.Under cross-examination, the plaintiff said that when he moved into the Premises, to his knowledge it (and the development) was not newly built.  He also said that he was not to his knowledge the first person to live in the Premises and that apparently the defendant himself had told him this, but that he had no idea how old they were when he moved out of them (in response to Mr Ma’s suggestion that the they were only 2 to 3 years old at the time).  He stated that he did not recollect the defendant telling him in September/October 2015 that the Premises would be sold to the third party, but accepted that he had been generally informed, without detail, by Ms Ho about the upcoming change of ownership on 21 March 2016.  He also agreed that he was aware, pursuant to the solicitor’s letter form the third party, that the third party would be responsible for returning the Deposit to him.

43.When asked about the hand-over process, the Inspection Document, and matters prior to 10 May 2017:-

(1)  The plaintiff apart from agreeing with the contents of the Whatsapp messages exchanged on 13 April 2017 as mentioned in paragraph 37 above, said that it was “fair to say” that the Deposit would be returned “after the [third party] checks.”  He also accepted that it was not mentioned anywhere within any of the WhatsApp messages before me (including those up to and including 18 April 2017) that the Premises had been accepted by the third party in “good condition”, or that they contained such exact words.

(2)  He disagreed with the defendant’s suggestion that the Inspection Document (which he accepted was written by Ms Ho at his request) did not state that the Premises had been accepted in an “satisfactory state” because it was subject to final checking by the third party.  He emphasised that the Inspection Document did not mention any irregularities in the premises, and claimed that the Inspection Document said there were no irregularities that spotted which he had to be held responsible for[5].

(3)  When cross-examined on the fact that the Inspection Document did not say it was a final inspection, he reiterated that there was no need for such a term since, when the Inspection Document had been created by Ms Ho, there was no mention of any defects or things which were improper.  He was asked whether, if the Premises were accepted in good condition as he had alleged, he could have asked Ms Ho to clearly write that down.  His response was that he had no motive to have any such specific terms or conditions written in the Inspection Document because on this occasion, and unlike his previous rental experiences (ie upon handing back such they would return the money for the security deposit to him on the spot), Ms Ho had been sent by the third-party to deal with the handover without a cheque on the spot, so he had wanted something like a letter of proof that the Premises had been taken over and the handover was complete, which contents would be correct according to the knowledge of each person.  He said that the Inspection Document was “what he could do” in circumstances where he had already returned the keys to the Premises.

(4)  The plaintiff was also cross-examined on the WhatsApp messages dated 16 April 2017 as set out in paragraph 41(1) above.  In the course of such he plaintiff rejected the suggestion that the “cheque” and “account number” mentioned did not therein refer to the Deposit.  His explanation was that they did so, as the initial arrangement was to have the rental receipt and the cheque passed to him at the MTR station, but that as Ms Ho had apparently mailed him the rental receipt, there was no need to go to the MTR station to get such, while he therefore gave her his account number for the Deposit, since she had asked for it.

44.As to the Third Party Cheque, he said that although he found out the cheque was apparently for the purpose of returning the Deposit to him, he had at the time he received it no clue why the third party wanted to deduct HK$8,000 or knowledge of the complaint regarding rodents.  Indeed prior to 10 May 2017 there was no suggestion or complaint (whether from the third party or any agent thereof) that either the third party had not finished checking the Premises, or that the status thereof was unsatisfactory.  It was only after he had asked questions about the apparent deduction that he had on 11 May 2017 received the Photos (which he had looked at) from Ms Ho in the manner described above.  He said he did not know whether the Photos were taken some time around 11 May 2017, or earlier.

45.Upon being questioned in relation to the contents of the Photos themselves, the plaintiff’s evidence was as follows:-

(1)  It was suggested to him that certain of the Photos, some of which apparently contained dark studs/spots that were said to be rodent faeces and one of which showed a live rodent (“the Pellet Photos”)[6], were taken from the ceiling of the Premises.  The plaintiff said however that he had no idea where the Pellet Photos were taken as he would not have climbed up to the ceiling to look at the particular part of it.  He also said that he was not in a position to tell me whether the studs/spots were indeed rodent faeces as he had not seen rodent faeces before.  He therefore said he did not know whether the Pellet Photos depicted the ceiling of the Premises.  Given the objective contents of the Pellet Photos and the context of the evidence, I consider that the effect of the plaintiff’s evidence was that he had never seen the areas which they allegedly depicted, which would have been portions behind the surface of the ceiling of the Premises.

(2)  In relation to other of the Photos, the plaintiff admitted that some were of the external wall of a building (“the Wall Photos”)[7], and that 2 other of the Photos depicting an apparently deceased rodent (“the Roof Photos”)[8] seemed to be taken on the flat roof of the Premises.

(3)  Finally, the plaintiff disagreed with the suggestion that other of the Photos, which showed some sort of “dirt/darkened areas/spoilt areas” on the interior ceiling of the Premises (“the Marks Photos”)[9] showed the interior ceiling of the Premises.  He also said he had no idea whether such would show that the Premises were not in good and tenantable condition.  However he accepted in cross-examination that he had not mentioned, in giving evidence about his pre-Inspection cleaning, that he had also cleaned the ceiling of the Premises as part of such.  He also said that at the time of the handover to Ms Ho, he “冇理由” (which was translated as “did not notice”) that the interior of the ceiling was in the condition depicted in the Marks Photos and confirmed that his stance was that there was no problem with the interior at the time, referring again to Ms Ho’s inspection.

(4)  He disagreed with the suggestion (premised on Ms Hui’s apparent claims as made in the WhatsApp messages regarding the value of the Premises, the plaintiff’s time spent living there, and the distress of the third party) that he had caused the rodent issue, which the defendant suggested was demonstrated from the Photos as a whole.  The plaintiff said there was no proof that he had caused such, and that he had only lived there for 2 years, other residents having lived there beforehand.  He also testified that during the term of the tenancy, neither he nor his family had seen any rodents in the Premises, done anything to cause the hoardings of the ventilator (wire mesh) to be slacked/slackened, nor done anything to cause the marks in the Marks Photos.

(5)  When cross-examined about the state of the Premises when he moved in, the plaintiff said that he had not paid attention to the areas apparently depicted by the Stains Photos.  He denied that he had made up evidence on this front, and disagreed with the suggestion that he had moved in after noticing that it was in good condition.  He also said he did not know, and had no idea, as to whether there was a rodent problem when he moved in.  In re-examination, he said such inspection as carried out at the time had only been to inspect whether the electrical appliances were in working order, whether there were any damaged windows, any problem relating to flushing, the water pipes, the doors to cabinets/wardrobes/rooms, and locks.

46.When the plaintiff was cross-examined further on his WhatsApp messages of 11 May 2017 onward, it was suggested that after seeing the Photos he did not state that they did not show the Premises, but rather had accepted that the Photos showed the state of the Premises.  In response, he referred to how he had been shocked, as mentioned in the Whatsapp messages, but reiterated that he did not know whether the Photos depicted the interior of the Premises, as he had already moved out of them and the third party had said that it was he who had taken the Photos.  The plaintiff said that he would not have climbed up to the portion of the ceiling depicted in the Photos (which in the context of the previous answers above and the plaintiff’s 11 May 2017 WhatsApp must have been a reference to the Pellet Photos), and hence could not recognise or confirm their contents.

47.It was also suggested that the plaintiff’s behaviour in late June 2017 (see paragraph 41(11) above) reflected an admission of fault on his part.  The plaintiff denied this and explained that although he had no idea as to the existence of the alleged issues, given the lack of response from the third party, his main purpose in so acting was to merely attempt to settle the matter.

48.The plaintiff also admitted that he knew Ms Ho’s contact details and that he could contact her through that or by going to her branch.  However, he did not agree that she acted for him, claiming instead that she had acted as an intermediary to help him convey his message to the third party.  He said that he had asked Ms Ho to be his witness, although he was not asked (whether in cross-examination or otherwise) and there is therefore no evidence as to, her response.  Nor was there any evidence as to why she did not testify orally before me.

49.The defendant also adopted his witness statement as his evidence-in-chief.  He confirmed the rental of the Premises to the plaintiff pursuant to the Tenancy Agreement, the receipt of the Deposit from the plaintiff, and the steps he had taken to sell the property in around September and October 2015, including the attendant entering into of the Preliminary SPA and Formal SPA between himself the third party at around that time (dated 23 September and 6 October respectively), and that pursuant to the latter the third party agreed to provide an undertaking and indemnity in respect of the defendant’s liability in respect of the Deposit.

50.The defendant confirmed that he had at the time told the plaintiff that the Property was going to be sold, and rejected the suggestion that he had not so informed the plaintiff.  He claimed that the plaintiff was very unhappy about it, since there was still a lot of time before the Tenancy Agreement would expire.

51.The defendant further testified that the Deed of Indemnity had eventually been executed between him and the third party.  He said that it was common practice, from his past experience with selling leased residential properties, to transfer the rental deposit to a new owner since it would be hard for him to keep track of the status of the Premises after they were transferred away from him and said that this was why the Deed of Indemnity had been entered into to afford him protection.  He rejected Mr Chan’s suggestion that the Deed of Indemnity had been entered into because the defendant had understood the risk of being sued by the plaintiff, and hence to protect him against such potential liability, or that he had been aware of such potential liability at the time.

52.The defendant’s evidence as contained in his witness statement was also that he first came to know of the alleged attempt by the plaintiff to return the Deposit subject to a HK$5,000 deduction, and allegations of a rodent infestation and blocked pipes in the Premises, via a Mr Paul Chan of Midland in or around November 2017, by which time the plaintiff had commenced the action against the defendant.  He said further that it was he who had telephoned the third party, who had in turn informed him of the said deduction due to there being “mice in the 3 rooms of the [Premises] and the water pipes of the [Premises] were blocked”, and who had claimed to have “taken photographs and prepared a surveyor report”.

53.Under cross-examination, the defendant confirmed that the plaintiff was not the first tenant or resident of the Premises, but could not say for sure how long previous tenants/residents had resided in them for.  In re-examination he mentioned that this was because he had handed all matters arising from the rental of the Premises to his agent, but that such timeframe could be easily traced.  He said that upon talking to the third party in November 2017 he had asked to see the photographs and surveyor report, but his request had not been entertained.  No reasons had apparently been given by the third party for not providing such to him, and while he had attempted to ask about such, the third party was “not in Hong Kong most of the time”.  He frankly admitted that he could not confirm whether the alleged photos and surveyor report (as mentioned by the third party) existed, and that he could not confirm whether the Photos (which he said he had only seen at the commencement of the trial) were in fact the photos mentioned to him by the third party.  He also admitted that the only thing he could say for certain was that the third party was unwilling, due to his dissatisfaction, to return the Deposit in full to the plaintiff, and that in telephoning the third party he hoped to be able to mediate between the plaintiff and the third party and avoid court.

Has the defendant discharged its evidential “burden”?

54.I can now turn to the first issue that I have to decide, namely whether on the evidence before me, the defendant has adduced evidence that is sufficiently cogent and probative to raise the issue of whether there was an antecedent breach by the plaintiff of Clause 6 of the Premises.

55.In that respect, the defendant submitted that the evidence which I have referred to above (including in particular the Third Party’s Cheque dated 9 May 2017, and the Photos received by the plaintiff on 11 May 2017) demonstrated that there had, self-evidently, been[10] a rodent infestation/nuisance above the ceiling of the Premises, including or resulting in rodent faeces) as shown in the Pellet, Wall, and Roof Photos, as well as stains/“dirty marks/dirty condition” on the ceiling of the Premises as shown in the Marks Photos.  Mr Ma further placed reliance on the plaintiff’s statements as made in the Whatsapp messages, including in particular those from 11 May 2017 onward, submitting that the plaintiff’s testimony as to the contents of those photos (including not accepting responsibility for the condition and/or that they represented portions of the Premises) was evasive, including when he had said he was not aware or sure of the matters set out in the Pellet and Marks Photos and had sought to blame Park Island management.

56.In context, I accept that the plaintiff had placed the Photos (and the Third Party’s Cheque) in evidence only to show the fact of his receipt of them, and that it is the defendant who relies on the Photos (and also apparently the Third Party’s Cheque) as hearsay evidence for the truth of their contents (ie to show the status of the Premises as at the handover on 14 April 2017) and who should hence justify both their admissibility and weight: see Phipson on Evidence (19^th edition)§6-04 at page 160.  In my view the same approach must necessarily apply if and insofar as the defendant seeks to rely on the Third Party Cheque and/or the Mesh Receipt.

57.The plaintiff gave evidence, in the course of his cross-examination, that apparently the new landlord had taken the Photos[11]. However, and although such was not challenged by the defendant, there was no other supporting evidence to support that assertion.  In any event, there was also no evidence to directly establish when they were taken.  No party appears to have sought to call the third party (who for reasons I mention elsewhere in this decision I find and accept had notice of but elected not to appear in the present proceedings), or to issue a hearsay notice in relation to the Photos.  There was also no evidence or suggestion as to the apparent cause of the stains/marks in the Marks Photos.  Nor was there any attendance or oral evidence before me from the other authors of the WhatsApp messages, including the apparent Xenia Wong of building management, Ms Hui, Ms Ho (who the plaintiff had submitted was a representative of the new landlord, ie the third party in or around April and May 2017, but whom the defendant in its closing submissions suggested also acted for the plaintiff based at least in part of the contents of the Inspection Document), or from the estate agent Mr Paul Chan from Midland.

58.Turning firstly to admissibility, I do not accept that I should exclude, as suggested by the plaintiff, the Photos (or indeed the WhatsApp message of Xenia Wong to which they were apparently attached) on the grounds that they are hearsay pursuant to s 47 Evidence Ordinance (Cap 8), as I am not satisfied in the circumstances that so excluding them would not prejudice the interests of justice.

59.Although the defendant did not explicitly explain why he had not called the photographer (apparently the third party) to give evidence, it was made clear to me that the Photos had been only disclosed by the plaintiff to the defendant on or just before the first day of the trial, and indeed they were only submitted to the court for inclusion on the morning of the first day of trial.  The explanation given by the plaintiff for this behaviour was that they were apparently cut-off, for technical reasons, in the original WhatsApp messages as disclosed earlier.  Their true import to the defendant would only have been obvious at that stage, particularly when it was the defendant’s unrefuted evidence (which I accept) that he had only seen the Photos for the first time at trial.  I therefore do not think it would be proper to exclude such evidence on the grounds that they are hearsay evidence relied on by the defendant, even absent a hearsay notice.  Indeed and on the contrary, I am of the view that to exclude them would unduly prejudice the interests of justice in favour of the plaintiff.

60.Insofar as may be necessary, I also disagree with Mr Chan’s submission that it would be prejudicial to the interests of justice if the plaintiff was deprived of the opportunity to cross-examine the photographer, given the fact that the Photos were apparently in his possession since 11 May 2017, the manner and context in which the Photos were apparently provided to the plaintiff, who was obviously able to contact both Ms Ho and the Park Island service centre (who had apparently sent him the Photos), and his own evidence that it was the third party who had taken them.

61.Similarly, and insofar as may be necessary, I also find that the photographic evidence contained within the WhatsApp messages (particularly those of the existence of the Third Party Cheque and the Mesh Receipt) and the remainder of those same messages, to be admissible.  After all, the various enlargements of such photographs were only apparently disclosed by the plaintiff and included in the bundle at or in a similarly late stage/circumstances.  I am similarly not satisfied that in the circumstances I can exclude them without prejudicing the interests of justice.  As for the WhatsApp messages authored by individuals other than the plaintiff, I have reached the same conclusion given their relationship to and the context of the other admissible hearsay evidence dealt with above.

62.I am also prepared to accord some, and not merely minimal, weight to the Photos (which must also be considered alongside the contemporaneous WhatsApp messages mentioned above) as constituting prima facie evidence as to the status of the Premises at the point in time they were taken by applying the criteria in s 49 Evidence Ordinance (Cap 8).  This is for the following reasons:-

(1)  When questioned on his WhatsApp messages regarding his conversation with Park Island building management (see paragraph 41(8) above), the plaintiff stated, which was not apparently disputed or challenged by the defendant, that the Photos had been taken by the third party.  I note also that the third party claimed to the defendant in November 2017 that he had taken “photographs”, although it is unclear as to whether the third party was at the time referring to the Photos (notwithstanding that I accept as truthful the defendant’s evidence of his conversation with the third party).

(2)  Given the above evidence, and the manner in which the Photos were adduced in evidence (by the plaintiff but relied on primarily by the defendant), as well as the point in these proceedings at which their apparent source was revealed, I do not think it would be proper to rely on the factors at s 49(2)(a), (c), (d), (e) and/or (f) Evidence Ordinance (Cap 8) to accord only minimal weight to the proposition that the Photos demonstrated the condition of the portions of the ceiling (both interior and otherwise), wall, and roof of the Premises at the time they were taken.  Even if the third party (assuming he was the photographer) would have had a motive to conceal, misrepresent, or edit the Photos for his own purposes, as set out in paragraph 41(8) above there was on the WhatsApp messages clearly a conversation on 11 May 2017 between the plaintiff and Park Island building management in which the context of the Photos had been explained (including their having killed the rodent and found the cause of its infestation without charge) to the plaintiff, and that he had understood the Photos as being said to concern, at the very least, portions of the ceiling of the Premises.  There is also the admission of the plaintiff as regards the Roof Photos.

63.However, the salient question is whether the Photos, viewed alongside the other evidence relied on by the defendant, constitute sufficiently cogent and probative evidence to raise the issue of whether there was an antecedent breach by the plaintiff of Clause 6 of the Tenancy Agreement.  In that regard, I find that they do not, and that for me to conclude otherwise would be wrongly engaging in conjecture under the guise of drawing an inference, as the evidence relied on at best merely gives rise to suspicious circumstances.  This is for the following reasons.

64.Firstly, although there is no direct evidence before me as to exactly when the Photos were taken, and hence the date on which they depict the state of the Premises, in my view the Photos must, even when considered in isolation, have been taken at some point before they were sent to the plaintiff on 11 May 2017.

65.Secondly, it could also be suggested that I should accept (given inter alia the context of the WhatsApp messages demonstrating discontent by the third party) that the Third Party Cheque and the Mesh Receipt constitute prima facie evidence that the Photos – in particular those depicting a rodent, and/or what were alleged to be rat faeces – would have been taken by or around 27 April 2017 (being the date on the face of the Mesh Receipt).  This would be premised on the assumption (given in particular the contents of the WhatsApp messages of 11 May 2017) that the rodent would have been killed by the Park Island building management before the work indicated by the Mesh Receipt was carried out, and also the assumption that the Photos were all taken at or around the same time.  This might be said to constitute prima facie evidence that the Premises were in the state depicted in the Photos by sometime on or around 27 April 2017 at latest.

66.Thirdly, and however, taking an overall view of the matter, I do not think that such evidence, even when approached as set out above, is sufficiently cogent and probative so that I can infer that there is an issue to be tried as to whether Clause 6 Tenancy Agreement was so breached:-

(1)  Even if I were to make the assumptions expressed in the sub-paragraph above, I am still unable to find or infer a specific date on which the Photos were taken.  I can at best only conclude that they may have been taken at some point on or before 27 April 2017 (which date was itself some 2 weeks after the handover of the Premises on 14 April 2017).  Given this, and the obvious motive of the third party (as photographer) to misrepresent their context and implications, I consider that it would be inappropriate to place any weight on the Photos as hearsay evidence indicating the condition of the Premises at, or even close to the time of the handover (ie 14 April 2017).

(2)  Moreover, and more importantly, Clause 6 of the Tenancy Agreement provides an exception for “fair wear and tear and damage caused by inherent defect”.  This is of major importance given that the only available and contemporaneous evidence, which I accept, indicates that the “slacked” hoarding was the cause of the rodent infestation (and hence any associated issues), and that on the defendant’s own evidence it was clear that the plaintiff was not only the first occupant of the Premises, but had by April 2017 the rented the Premises for nearly 2 years.  In that context there is in my view no, or insufficient, cogent or probative evidence which raises the issue of whether such problems arose other than in the course of fair wear and tear, or indeed even inherent defect.

(3)  The position is a fortiori as to the issues that are said to have arisen in relation to the Marks Photos, since there did not appear to me to be any cogent or probative evidence before me, or suggestion made, as to their cause.

(4)  I cannot see how the evidence given by the plaintiff sufficiently enhances the cogency or probative value of such evidence to the requisite level.  This is particularly so when I accept, on balance and given the contents of the contemporaneous WhatsApp messages, that the plaintiff had given a truthful account of what the inspection comprised on 14 April 2017, and that he was first made aware on 10 May 2017 of a potential complaint by the third party.

(5)  The matter is taken no further by the defendant’s evidence of his conversation with the third party in November 2017, in which the third party apparently complained about the stains/marks on the interior ceiling of the Premises, and even if the Photos are included in or are part of the underlying photos/documents referred to by the third-party in that conversation. Insofar as other photos (if any), or documents were said to exist, those have not been put in evidence before me, and I decline to accord their alleged existence or contents any weight, particularly given the considerations at ss 49(2)(b), (c), and (d) Evidence Ordinance (Cap 8).

67.As for the third-party’s oral complaint to the defendant of “blocked pipes” in November 2017, I do not think I can logically and reasonably draw an inference from such that such gives rise to an issue as to whether Clause 6 Tenancy Agreement had been breached by the plaintiff:-

(1)  What is most telling is that there is no evidence of such complaint from the third-party prior to November 2017 (which was several months after the inspection and handover on 14 April 2017), even though the third-party had raised and complained about other specific issues with the plaintiff in WhatsApp messages from April to June 2017.

(2)  Moreover, not only is there no evidence as to the cause or extent of the allegedly blocked pipes, but such matters should be seen in light of the proviso in Clause 6 of the Tenancy Agreement, and the evidence of the history of occupation of the Premises.

(3)  I do not think the other evidence before me is sufficiently cogent or probative so as to enable me to draw such inference.  On the contrary, any such inference would be contradicted by the evidence of the plaintiff as to the inspection of the Premises on 14 April 2017, which it was said had covered inspection/testing of the toilets (and their flushing) and water pipes, and which concluded without complaint or finding of any defect.  I accept that evidence as being truthful and accurate given his responses under cross-examination regarding the inspection[12], and also the Inspection Document  (which was signed by the plaintiff and Ms Ho) as contemporaneous documentary evidence of the outcome of that inspection.

68.I also do not accept that the apparent proposal by the plaintiff in late June 2017 that he would accept a return of only HK$75,000 out of the Deposit (ie a deduction of HK$8,000, see paragraphs 41(11) and 47 above) is sufficiently cogent or probative (whether on its own or viewed alongside the other matters above) in relation to the question of evidential “burden”, or that it represents some admission of fault on the part of the plaintiff.  In my view, such conclusion is gainsaid by the context (including preceding exchanges) of the dealings between the parties, and of the amount in dispute between the plaintiff and the third parties.

69.I should make it clear that I have reached the above conclusion notwithstanding that I decline, given the context and timing of disclosure of the Photos, to draw adverse inferences against the defendant for not having called (or apparently sought to call) the third party and/or the staff of Park Island building management as witnesses.  Nor have I based this conclusion on any adverse inference against the defendant stemming from the failure to obtain (or to try and obtain) other evidence from the third party, and/or the apparent issuer/author of the Mesh Receipt[13]. I also decline Mr Chan’s invitation to draw an adverse inference against the defendant for not calling Ms Ho as a witness.

Has the plaintiff discharged its legal burden to prove no antecedent breach of Clause 6 Tenancy Agreement?

70.I have found that there is insufficient evidence to raise the issue of the plaintiff’s antecedent breach of Clause 6 Tenancy Agreement.  Hence, and strictly speaking, I do not need to consider the issue of whether the plaintiff has discharged his legal burden of satisfying me that he had, in fact, duly performed his obligations under Clause 6 Tenancy Agreement.  However in case it should become relevant, and in deference to the arguments made before me, I record that I am persuaded that on balance, and in any event, that the plaintiff has so discharged such burden.

71.Firstly, and for the avoidance of doubt, I find on the evidence as a whole that the inspection as carried out on 14 April 2017 encompassed the matters spoken to by the plaintiff in his evidence, but was an initial or preliminary inspection, which was subject to further checking by the third party as landlord.  I also decline to find, as suggested in the plaintiff’s closing submissions, that the 18 April Voice Message and prior related context proves that any further inspection by the third party or his agents had been finalised beforehand.  On its face, that discussion merely concerned the mechanics for the return of the Deposit, and I decline to find that this was because the third party had, in the interim, inspected and “accepted” the Premises.  I have reached the latter conclusion given that the allegation was only raised in the plaintiff’s oral evidence at trial, the plaintiff has not called Ms Ho to give evidence on the topic (which would be to his benefit), and as there is no evidence before me which explains her absence.

72.Secondly, and notwithstanding such, I accept that the evidence before me establishes, on the balance of probabilities, that vacant possession of the Premises was delivered in “good and tenantable condition” (fair wear and tear or inherent defects excepted) on 14 April 2017.  This is for the following reasons:-

(1)  The evidence, when holistically considered, indicates that it is more likely than not that Ms Ho, as an estate agent, was clearly acting “on behalf of the landlord” (as was also clearly stated within the Inspection Document), particularly in relation to the delivery up (and associated inspection, preliminary/initial as it may have been) of the Premises to the landlord.  I do not agree with the defendant’s submission that on the evidence Ms Ho was also acting on behalf of the plaintiff.  Such contradicts the express contents of the Inspection Document.  Moreover, when that and the communications in the WhatsApp messages are considered as a whole and in context, they are more consistent with the plaintiff’s evidence that her role vis-à-vis him was as an intermediary to help him convey his messages to the third party, rather than that she was acting on his behalf (in particular, in relation to the inspection).  Accordingly, and notwithstanding the apparently initial/preliminary nature of that inspection, I find it inherently likely she would have mentioned or identified any obvious defects or irregularities in the Premises at the time of the inspection on that date in the Inspection Document.

(2)  Further to such, and in relation to the Marks Photos, and having had regard to the plaintiff’s evidence (which I have accepted) as to her conduct of that inspection, and the extent and appearance of the stains/ marks as appear on the interior ceiling of the Premises, I consider it inherently improbable that Ms Ho would have failed to notice such or record such as being issues had they been present during the inspection.  Rather, I consider it inherently likely that they would (if they were there at the time of the inspection) have been noticed and noted/revealed during the inspection.  It is therefore also unsurprising that the plaintiff’s evidence (which I accept) was that he had “not noticed” the said alleged stains/marks in the Marks Photos during the inspection.  On balance, I therefore find that those issues as apparent from the Marks Photos would not have been present on 14 April 2017.

(3)  In my view, similar reasoning applies to the third party’s complaint to the defendant of blocked pipes.  A fortiori given that I accept the plaintiff’s evidence as to the contents and tests carried out during the inspection on 14 April 2017, and upon his moving into the Premises in 2015, which are to be contrasted with the complaint having been first, and apparently only, raised by the third party several months later in November 2017.  This also applies regardless of whether the inspection was “preliminary/initial” in nature.

(4)  As to any other, apparently rodent-related, issues raised in the Photos, I appreciate that there is no direct evidence as to the condition of the roof, the outer walls, or exterior ceiling of the Premises at the time of the inspection, all of which were said to relate to the rodent infestation.  However, at the same time, the inspection by Ms Ho did not reveal any such obvious irregularities with the Premises from the interior thereof, as also evidenced by the Inspection Document.  Bearing in mind that all Clause 6 requires is that the Premises be in “good and tenantable repair and condition (fair wear and tear and damage caused by inherent defect excepted)”, rather than in perfect condition, I therefore consider that there is, on the whole, sufficient evidence to establish on the balance of probabilities that the plaintiff had duly performed his obligations under Clause 6.  In doing so I have borne in mind the undisputed evidence that the rodent infestation was apparently caused by the “slacked” hoarding, and that the plaintiff was not the first occupant of the Premises and had by April 2017 the rented the Premises for nearly 2 years.  I also accept (such being inherently probable and supported by the contemporaneous documentation, including the plaintiff’s WhatsApp messages reacting to the Photos) that the plaintiff was telling the truth when he gave evidence that during his tenancy neither he nor his family had seen any rodents in the Premises, or done anything to cause the hoardings of the ventilator to be slacked/slackened.  In those circumstances it seems to me that on balance of probabilities, the “slacked” hoarding falls under the exception of “fair wear and tear and damage caused by inherent defect”, as would any logically related issues (such as the rodent infestation) caused by such.  Hence and in the particular circumstances of this case, even if the Photos raise an issue as to whether there was a rodent infestation at the time of the handover, I find and conclude that on balance, the Premises were delivered to the third party on that date in accordance with Clauses 6 and 7 Tenancy Agreement.

(5)  The plaintiff’s apparent proposal as made to the third party in late June 2017 does not contradict the above conclusions when it is properly assessed in the context (including preceding exchanges) of the dealings between the parties, and of the amount in dispute between the plaintiff and the third parties.

73.For the sake of completeness, I also record that Mr Chan did submit that the relevant landlord would have been under a liability under Clause 9 Tenancy Agreement to keep the main drains, pipes and cables in a state of repair.  However, I cannot see how such is relevant to the issues before me, as there was no evidence or suggestion before me that the requisite conditions set out in Clause 9 had been satisfied so as to impose such liability on either landlord.  In particular, there was no evidence or suggestion that the plaintiff had ever provided either of his landlords, during the term of the tenancy, with any written or email notice of any relevant defect or want of repair.

Conclusion in relation to Issues 2, 2A and 3

74.Given the aforesaid matters, I conclude that:-

(1)  The third party had attempted to refund the Deposit, less HK$8,000 to the plaintiff on or around 10 May 2017 (hence amounting to HK$75,000), due to the latter’s alleged failure to keep the interior thereof in good and tenantable repair and condition, but the plaintiff had refused to accept such.

(2)  The defendant is liable to pay the Deposit to the plaintiff as there has been no failure of the plaintiff to keep the interior of the Premises in good and tenantable repair and condition (fair wear and tear and damage caused by inherent defects excepted) in breach of Clause 6 Tenancy Agreement, and vacant possession was delivered to the third party on 14 April 2017 in accordance with Clause 7 Tenancy Agreement.  Accordingly, there was no reason for the plaintiff to accept any offer from the third party to return only HK$75,000 or HK$78,000 (as claimed by the defendant) out of the Deposit, and to then dispute any shortfall with the third party.

75.Given the above conclusion, I do not see a need to delve into the question of whether the third party (as new landlord) was entitled to forfeit the Deposit without commencing forfeiture proceedings.  In any event, I cannot at present see any reason for suggesting that the lack of any such proceedings by the third party is somehow relevant to the issues before me.

ISSUE 4: WHETHER THE THIRD PARTY SHOULD FULLUY INDEMNIFY THE DEFENDANT FOR ALL THE CLAIMS, INTERSTS, AND COSTS THEREOF & DEFENDANT’S APPLICATION FOR DEFAULT JUDGMENT AGAINST THE THIRD PARTY

76.Pursuant to Mr Ma’s submissions, the evidence contained in the affirmations of Ha Cheuk Man (which I accept), my findings above that the defendant is liable to the plaintiff, and the defendant’s evidence (which I also accept) as to the entry and contents of the Deed of Indemnity between himself and the third party, I am satisfied that:-

(1)  The writ of summons (with Statement of Claim attached) was issued on 20 September 2016, that the Third Party Notice (with the relevant form for Acknowledgement of Service) was issued on 4 January 2018 before the service of the Defence the same day, and that there was hence no need for leave to issue the Third Party Notice.

(2)  The Third Party Notice (with the relevant form for Acknowledgment of Service) was served on the third party’s address Villa 2A, 2^nd Floor Block 35, Park Island, No 8 Pak Lai Road, Man Wan, New Territories, Hong Kong, by insertion in that letterbox, and that hence that such would have come to the knowledge of the Third Party within 7 days after the date of such insertion (see RDC O 10 rr 2(a)b), (3)).

(3)  The Third Party has not up till now filed any Acknowledgment of Service (nor for that matter, any notice of intention to defend).

(4)  By reason of the Third Party’s failure to file such Acknowledgment of Service, the defendant had applied for default judgment in terms of the Default Judgment Summons.

(5)  The third party is therefore deemed to admit the claim stated in the Third Party Notice, and I therefore have jurisdiction to enter judgment at this trial for an indemnity pursuant to RDC O 16 r 7 (see Hong Kong Civil Procedure 16/5, 16/5/2, 16/5/3, 16/7/2, 16/7/3).  While it is clear, given the lack of any notice of intention to defend, that there is no need to serve the Default Judgment Summons on the third party (see Hong Kong Civil Procedure 16/7/3), I also accept and find, if and insofar as may be necessary, that on the evidence before me such was sent to and served on the third party by way of ordinary post.

77.I will therefore make orders as requested pursuant to the Default Judgment Summons and the Third Party Notice, which details I set out below.

CONCLUSION AND ORDERS

78.I therefore grant judgment in favour of the plaintiff against the defendant for the sum of HK$83,000.  I also grant default judgment in favour of the defendant against the third-party for an indemnity against the plaintiff’s claim.

79.As to costs, since the plaintiff has prevailed in relation to the action as a whole, I see no reason why the plaintiff should be deprived of his costs of the action as against the defendant.  I am also satisfied that the pre-trial reviews and the trial of this action justified the instruction of counsel.  I therefore make an order nisi that the defendant do pay the plaintiff’s costs of the action (including all costs previously reserved or ordered to be in the cause), with certificate for counsel for the pre-trial reviews and the trial of the action, such costs to be taxed if not agreed.  Such order nisi will become absolute if no application is made to vary such within 14 days hereof.

80.I also order that the third party do pay the defendant his costs of or in relation to the Third Party Notice (including of the Default Judgment Summons) on a full indemnity basis.

81.In relation to pre-judgment interest of the plaintiff’s claim against the defendant, I see no reason to depart from the usual rate of P+1% per annum. I so order and shall leave it to the parties to calculate the sum in question. I also hold that the plaintiff is also entitled to post-judgment interest, on the judgment sum, at judgment rate from the date of my judgment until payment.

82.I also order that the third party do pay the defendant pre-judgment interest at the usual rate of P+1% per annum, and hold that the defendant is entitled to post-judgment interest, on the judgment sum, at judgment rate from the date of my judgment until payment.

83.Lastly, I thank both counsel for their unfailingly courteous assistance.

Mr David L K Chan, instructed by Kelvin Cheung & Co, for the plaintiff

Mr Billy N P Ma, instructed by Tse Yuen Ting Wong, for the defendant

The third party was not represented and did not appear