Read the full judgment text of HCA 001786/1999 on BabelCite. This High Court CFI judgment was delivered on 18 March 2002 before Deputy High Court Judge Fung (B.W. Fung).
Civil law – landlord and tenant – sub-tenancy of ground floor warehouse unit – common parts (sewage pipe, manhole, hollow space) accessible only through demised premises – incorporated owners' weekly inspection and clearing arrangement – implied covenants – quiet enjoyment – non-derogation from grant – fitness for purpose – implied term to repair common parts – non-disclosure as misrepresentation – duty to disclose – caveat emptor in tenancy – rescission – affirmation of contract by conduct – election – costs on District Court scale. A principal tenant sub-let a below-street ground floor unit to a food storage sub-tenant; inside the unit, accessible only through it, was a hollow space enclosing a common sewage pipe and manhole, which had overflowed in 1996/97. Before the sub-tenancy, the principal tenant had arranged for the incorporated owners' worker to enter the unit weekly to inspect and clear the pipe. After the sub-tenant took possession, the worker told the sub-tenant's director of the arrangement and the need to continue it; the sub-tenant initially cooperated but then denied access, after which the pipe blocked and the unit was flooded with sewage. The sub-tenant paid no rent from 1 October 1998, took alternative storage in November 1998, and eventually surrendered possession on 21 December 1999. The court held that the weekly inspection did not breach the implied covenant for quiet enjoyment, the implied obligation of non-derogation from grant, or the sub-tenant's right to exclusive possession, because clause 3(e) of the Deed of Mutual Covenant and section 40(1) of the Building Management Ordinance (Cap.344) empowered the incorporated owners to enter the unit, the inspections were short, and the sub-tenant had originally agreed to allow access. There was no implied warranty of fitness for purpose for a tenancy of unfurnished premises (Elder v. Auerbach [1950] 1 KB 359), and no implied duty on the landlord to repair the common parts, since the incorporated owners were responsible under sections 16 and 18(1) of the Building Management Ordinance (Liverpool City Council v. Irwin [1976] QB 319; [1977] AC 239). The non-disclosure of the prior sewage overflow, the common parts inside the unit and the inspection arrangement did not amount to actionable misrepresentation: the duty to disclose defects in title applicable to a sale of land (Nottingham Patent Brick and Tile Co. v. Butler; Chi Kit Co. Ltd v. Lucky Health International Enterprise Ltd [2000] 2 HKLRD 503) does not extend to a tenancy, caveat emptor applies, and the four recognised categories of actionable non-disclosure do not include a tenancy. Even if there had been a right to rescind, the sub-tenant had affirmed the tenancy by allowing inspections, remaining in possession, depositing the key with the incorporated owners in February 1999, and reserving its rights in correspondence from November 1998 (Peyman v. Lanjani [1985] 1 Ch 457 distinguished). The flooding was caused by the sub-tenant's own default in denying access to the cleaning worker. Judgment for the plaintiff for rent and menses profits of HK$410,967.74, with credit for the HK$56,000 rental deposit, interest at the judgment rate, and costs on the High Court scale (not the District Court scale, as the counterclaim included unparticularised heads that could exceed the District Court limit).
Legal issues: Breach of implied covenant for quiet enjoyment by weekly inspection of common parts · Non-derogation from grant and breach of implied warranty of fitness for purpose · Implied duty on landlord to repair common parts · Misrepresentation by non-disclosure of sewage history before signing the tenancy · Whether the defendant affirmed the tenancy and lost the right to rescind · Assessment of costs on District Court scale
Outcome: Judgment for the plaintiff. The defendant's counterclaim is dismissed.
Cited by 22 cases