Lau Tak Kuen v. Ho Yee Sing

HCA001728/1973

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 1728 OF 1973

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Coram: Trainor, J.

Date of Judgment: 7th December, 1973.

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JUDGMENT

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1. The plaintiff in these proceedings claims: that the defendant is his tenant of the cockloft in the premises No.157 Pratas Street, Kowloon as from the 10th March, 1973 at the monthly rent of $700 payable in advance; that at the date of the issue of the writ three months' rent was due; that the premises are part of an entirely new building within the meaning of Section 3(1)(a) of Landlord and Tenant Ordinance; and, conse quently, that the plaintiff is entitled to: possession of the premises, the arrears of rent, mesne profits until vacant possession of the premises is yielded up and costs. By his Defence the defendant admits he is the tenant of the plaintiff and that the premises are part of an entirely new building. He alleges, however, that the plaintiff let the premises to him at the monthly rent of $460 in consideration of him paying $500 as "team money" and paying one month's rent in advance and four months' rent as a deposit. The defendant claims he paid the $500 "tea money" and a sum of $2,300, being the month's rent in advance and four months' rent as deposit, and received a receipt for the $2,300. He further alleges that he has tendered the rent for the subsequent months but the plaintiff has refused to accept it. The defendant counterclaimed for a declaration that:

2. There exists between himself and the defendant an agreement for a monthly tenancy at the monthly rent of $460 inclusive of rates; that the plaintiff holds the sum of $1,840 as a deposit by the defendant of four months' rent; and that the tenancy is protected by the provision of Part IV of the Landlord and Tenant (Consolidation) Ordinance.

3. The plaintiff in his Reply to the Defence admitted receiving the sum of $500 from the defendant but not as "tea money". He alleged that the $500 was paid as a deposit when the tenancy was agreed. He said that a receipt was issued for this amount on which was written some of the terms and conditions of the tenancy, among which was that the tenancy was to be for two years, that the defendant should pay one month's rent in advance and three months' rent by way of deposit and would attend at the plaintiff's solicitors office to sign an agreement. The plaintiff said that the sum of $500 together with the $2,300 paid by the defendant represented one month's rent of $700 in advance and the deposit of three months' rent. He further alleged that despite repeated requests the defendant refused to attend the offices of the plaintiff's solicitors to sign the tenancy agreement although he had agreed so to do. The plaintiff said he refused to accept the tendered rent because it was not the rent agreed.

4. In his evidence the plaintiff said that he authorised his cashier, a Mr. Wong Kam Woo, who is also his uncle, to negotiate the letting of the cockloft in question and he, the plaintiff, later spoke to the defendant on the telephone. He said he told the defendant that the letting would be for a term of two years at the monthly rent of $700 and that the tenant would be required to pay a month's rent in advance and to deposit three months' rent. He said he told the defendant that he would have to attend the office of Messrs. Wong & Co. to sign a tenancy agreement containing these conditions. He said that he also told the defendant that he was to pay $500 as a deposit and produce his identity card. As a result the defendant brought his identity card and paid $500 on the 5th March, 1973. The plaintiff said he instructed his solicitors on the same day to prepare a tenancy agreement. The plaintiff said he never actually met the defendant but the defendant brought his identity card and a cheque for $500 to Mr. Wong who gave the defendant a receipt for the money on which were written the conditions of the tenancy. On the 10th March the defendant said he received from his cashier a further cheque from the defendant for $2,300.

5. The plaintiff denied that he ever let his premises for $460 or that he ever received $500 "tea money".

6. In cross-examination the plaintiff conceded that the cockloft was a bare four walls with a ceiling height of about 7'6". He said he had never actually entered into it but he knew that a previous tenant had partitioned part of it to make a toilet and bathroom because he had to pay $400 as compensation for these facilities when he took over the premises. He further said he could not give any description of the condition of the floors because it was covered with dirt and rubbish, and conceded that the premises were really dirty and required a lot of repairs and decoration. As to whether part of the floor which was concrete was broken and pitted with holes, and the walls were dirty with the plaster falling off the plaintiff said he had not noticed as he had not entered. As to electric wires being rotten and hanging around so as to be dangerous he said he had no idea. In further cross-examination the plaintiff said he had seen a lavatory in the premises; but how he did so is difficult to visualise as he described it as being behind a partition.

7. When the plaintiff was asked why did he not stipulate a deposit of $700, a month's rent, instead of $500 as a deposit he said the amount was up to the defendant and he only wanted to ensure that the defendant would really take the premises. He said he would have been prepared to accept even $400. This was an answer not without interest as only a few moments earlier the following cross-examination had taken place.

8. The plaintiff said the defendant having paid the $500 on the 5th March (sic) he, the plaintiff, wrote out a receipt and added some of the conditions of the tenancy. He corrected this almost immediately and said it was Mr. Wong did so. On the same day he phoned his solicitors and instructed them to prepare a tenancy agreement. A copy of the alleged receipt with the conditions annexed, which the defendant denied having received, was produced. It was dated the 3rd March. When the plaintiff was shown the receipt by his counsel he said he received it from Mr. Wong on the 4th March. The plaintiff said that he received a cheque for $2,300 from the defendant through Mr. Wong on the 10th March and sometime between the 10th and 15th March he attended his solicitor's office and signed the tenancy agreement, produced by consent, which included a receipt for $2,100 being three months' rent as deposit.

9. The plaintiff give me the impression of being extremely hazy about the whole transaction. Whether this was deliberate or because, as appears to be the case, Mr. Wong dealt with practically everything it is hard to say, but he did say that on the telephone he gave the defendant a week's grace to clean up the premises and that the tenancy was to commence on the 10th March. It was common case that the defendant's wife collected the key of the premises on the 4th March.

10. There was no doubt that the sum of $2,300 was paid to the plaintiff by the defendant but there was a good deal of cross-examination as to it. It transpired that the plaintiff had never seen the receipt given for it and a copy was shown to him which was dated the 7th March. The explanation given was that this had been prepared by Mr. Wong from memory at the request of the plaintiff solicitors as being a copy of what had been given to the defendant. In fact the defendant did have an original receipt for this amount dated the 10th March. I do not think anything much turns on this point but if what the plaintiff says is true it was highly improper of the plaintiff's solicitors to have the plaintiff prepare a document for the purposes of these proceeding - a copy of the receipt - which had not previously been in existence. It was quite incorrect to refer to it in the documents discovered as an original receipt.

11. There was a very protected cross-examination on the payment of these two amounts and much of it was very confusing but the plaintiff maintained that a $500 was paid as a deposit to clinch the deal and the defendant was given a free period to clean up the premises; that the keys were handed over on the 4th March; and that on the 10th a further $2,300 was handed over making a total of $2,800 being one month's rent and three months' deposit.

12. Mr. Wong gave evidence of meeting the defendant and a Mr. Cheung towards the end of February with regard to the letting of the premises. He said he told the defendant what the terms and conditions were. He repeated what they were and they were as outlined by the plaintiff in his evidence save that the tenancy was to commence on the 1st March. He said that on the 3rd March he received $500 from the defendant and wrote out and gave to the defendant in the presence of Mr. Cheung a receipt for this amount and set out in it the terms and conditions, one of which was that the tenancy was for a period of two years to commence as from the 10th. It was also stated in the document that it only constituted a provisional contract "the lease is effective only on the execution of an official agreement". The following day he said he gave the keys to the defendant's wife who signed a receipt for them which he had prepared.

13. The witness said that when he received the $500 there was a discussion as to the signing of an agreement and he told the defendant he wanted to see his identity card and told him he would have to call on the plaintiff's solicitors to sign a tenancy agreement. He said he wrote the solicitor's name and telephone number on a sheet of paper and gave it to him. The witness said that a few days later he received a phone call from the plaintiff's solicitors as a result of which he went to the premises to see the defendant to tell him to go to the solicitors office. He said he only saw the defendants wife and he left a message for the defendant to call on the solicitors. The witness said this was about the 5th or 6th March and two days later he phoned the solicitors to ascertain if the defendant had called. On being told that he had not he began called on the defendant but he was not in.

14. At this particular stage there is what I considered a most peculiar jump or switch in this witness's direct examination. Having spoken of that call to see the defendant he said "After the 10th March 1973 I did not see (the defendant) again but I did urge him to go to sign the agreement many times after he paid the deposit "and then switched to why the date was the 7th March on the receipt for $2,300 disclosed in the plaintiff's documents and not the 10th. He gave the explanation already given by the plaintiff. He made no reference whatever to the actual payment, or why he should have accepted it despite the fact that the defendant had, apparently, persisted in his failure to call on the solicitors to sign the agreement.

15. In cross-examination the witness said that after the 10th of March he continued to urge the defendant through his wife to call on the solicitors. He said that eventually, about the 25th or 26th March, he contacted the defendant (despite his earlier direct evidence to the contrary) who said he would go to the solicitors "as he had already paid money to me".

16. The witness was cross-examined about telling the defendant on the 3rd March of the necessity to call on the solicitors. It was pointed out that the solicitors had not then received instructions. To this the witness said he told the defendant to go to the solicitors "after a few days" when the agreement would be ready.

17. It was put to this witness that it was only on the 26th of March, when the premises had been cleaned up and decorated, that a rent of $700 was first mentioned. The witness said that was not so; it was fixed at the time of the payment of the deposit.

18. An interesting cross-examination ensued that I think is worth quoting.

19. It was put to him that on this visit the witness with the other man went into the cockloft, saw the premises had been decorated and partitioned and said that it was very presentable and that the rent should be $700. This he denied. He also denied that this was the first time $700 was mentioned and that as a result a heated argument arose during which the defendant was threatened.

20. The defendant is a van driver earning on average about $1,200 a month. His evidence was that as a result of an advertisement he telephoned Mr. Wong towards the end of February after the premises had been seen on his behalf. He said that Mr. Wong told him the premises were available at $460 a month; that a month rent was payable in advance and four months' rent had to be paid by way of deposit. He later went to see the premises with Mr. Wong; and a Mr. Cheung, who is a builder and decorator, went with them. He said the premises were in extremely had state of repair and decoration and he asked Mr. Wong who would rehabilitate them and he was told the tenant was responsible. He said he asked to have the rent reduced but Mr. Wong said this was impossible. He said he told Mr. Wong he would let him know his decision in a day or two. At the time of this interview the defendant said he had had an estimate of $8-9,000 for making the premises habitable from Mr. Cheung. He said Mr. Cheung later undertook to do the work for about $7,000 and he decided to take the premises. He said he telephoned Mr. Wong who told him $500 tea money would have to be paid. The defendant said he agreed to this and was told to bring it and his identity card to Mr. Wong the next day. He did this, he said, and Mr. Wong took the cheque for $500 and jotted down some details from the identity card. He denied receiving any receipt. He said Mr. Wong told him to collect the key next day. He said he suggested to Mr. Wong that the tenancy should commence when the repairs were completed but Mr. Wong said that was a matter for the landlord. As a result of this conversation the defendant said he telephoned the landlord who fixed the 10th March as the date for the commencement of the tenancy.

21. The defendant said he paid a month's rent in advance and four months' rent as deposit on the 10th March and got a receipt for $2,300. He said he asked for a receipt for the month's rent and was told that it was included in the receipt for $2,300 and he would receive a receipt for current rent when he paid the next month's rent. At no time, he said, was he asked to go to a solicitor's office. The defendant said the work on the premises was completed on the 24th March and on the 26th he had a visit from Mr. Wong who was accompanied by another man. He said Mr. Wong looked around the premises and said they were beautifully decorated and added "Mr. Lau wants you to pay $700 rent". He said he told Mr. Wong that the rent had been fixed at $460 whereupon the stranger intervened to say "Yes, you have to pay $700. If you fail to do so I would not stand on ceremony". The defendant said he understood this to be a threat to assault him if he refused. As a result of this, he said, he went to his solicitors who wrote to the plaintiff on the 4th April. In that letter (which was an agreed document) the solicitors set out the terms of the letting, stating that on the 10th March the defendant had paid $2,300 being a month's rent in advance and four months' deposit; and they enclosed a cheque for $460, being the rent from the 10th April to the 9th May.

22. I think I might digress from the defendant's evidence to say that there was a reply (also an agreed document) from the plaintiff's solicitors. This was dated more than a month later - the 14th March. The delay was explained by the plaintiff by the fact that he was out of the colony until the 16th April and did not see the latter until the 18th April. In that letter the solicitors told their opposite number that they had received instructions on the 5th March, 1973, from the plaintiff to prepare a tenancy agreement; and the main terms of it were set out in the letter and were substantially as the plaintiff had outlined in Court. They returned the cheque for $460.

23. The defendant was cross-examined as to the effect of paying "tea money" and he said he understood the effect to be that a tenant got some sort of government protection. He said he did not ask for a receipt when he gave the $500 because "It was tea money. It was given for tea. I just considered it to have been lost". He was asked about the rent he paid for previous tenancies and he said they had varied from $200 to the $130 which he was paying in his last premises. He was asked why was he prepared to pay $430 for premises which would require so much to be spent on repairs and decoration and he said that his previous accommodation was a very small cubicle and he wished to leave as his wife was pregnant. He later told me that having created three cubicles he was able to sub-let two of them for $150 and $120 respectively.

24. In further cross-examination the defendant denied a fixed term was ever mentioned or that a receipt with the conditions of the tenancy incorporated was ever given to him. He said that despite the fact that no term was mentioned he was prepared to expend $7,000 as he considered that having spent that amount and paid $500 tea money he was under government protection.

25. At the conclusion of the cross-examination it was formally put to the defendant that Mr. Wong had frequently called to his premises to persuade him to go to the solicitors to sign the agreement. The defendant denied this and repeated that after 10th March he only saw Mr. Wong again on the 26th March when the $700 was mentioned for the first time and he was threatened. It was formally put to him that on that occasion Mr. Wong came about the signing of the agreement and that defendant was not threatened. This was denied.

26. The defendant's wife's evidence was that due to illness she has not worked for a long time and only left her house occasionally. She said after collecting the key from Mr. Wong she never saw him again.

27. Mr. Cheung Wai Lam, a building decorator, was called by the defence. He described the condition of the premises when he first saw them and it appears to have been deplorable. They were full of rubbish which when removed revealed broken floor boards where the floor was wooden and broken cement where the floors were of cement. The walls were filthy and the plaster was falling off. Electric wires were hanging down and were dangerous. There were no partitions and there were no toilet facilities. There was a pipe with a tap attached but no water was available. He said he cleaned the premises, did the necessary repairs and decoration and installed a Chinese type flush lavatory with concrete bowl and proper flushing and installed a waste system. Altogether he was occupied for three weeks and was paid $7,620 on the 24th March as most of the work was then completed.

28. This witness said he was present at a meeting between Mr. Wong and the defendant and heard the defendant ask Mr. Wong what the rent of the premises would be. He said he heard Mr. Wong say $460. He said he saw the defendant hand over a cheque to Mr. Wong on the 3rd of March and produce his identity card but he did not see for how much the cheque was made out. He was asked if anything was given to the defendant by Mr. Wong on this occasion and he replied "nothing at all".

29. The witness was cross-examined as to the strength of his friendship with the defendant. He said he was a friend now but at the time in question he had only just met him as a result of having done some work for the principal tenant who introduced them. In further cross-examination it was put to the witness that he had never heard $460 mentioned. To this the witness replied "In actual fact I did hear Mr. Wong say rent was $460" and added "and that four months' rent deposit required and one month in advance". When asked why he had not previously mentioned this addendum he replied that he had not been asked. It was then put to him that what he heard was a rent of $700 and a deposit of three months. To this he replied "I did not hear that".

30. The witness denied that there was a toilet and drainage in the premises when he first saw them.

31. When I first saw the pleadings in this case it seemed obvious to me that if it were to proceed along the lines indicated by the pleadings perjury was inevitable by one side or the other, and nothing that transpired during the hearing has altered my first impression. I considered directing that the papers be sent to the Attorney General but I feel that there is not sufficient in them to establish to the standard of proof necessary the guilt of any one so I have decided against it.

32. It has been extremely difficult to decide where the truth in this case lay. When the plaintiff was giving his evidence there was an aura of truth about him and it was only as a result of little things that the aura was diminished. It was when he persisted in maintaining the existence of these small but non existing things that were of little significance to his case that niggling doubts as to his overall veracity began to arise, e.g. when he persisted that he saw toilet facilities in the premises behind a partition having previously said he had not gone into the premises and that he knew of their existence because he had paid $400 for them. I thought at first his candour in admitting the filth and dilapidation of the premises was much to his credit; and had he admitted that there was no toilet I might have been very favourably inclined towards him. But when he persisted in saying that there were partitions behind one of which he saw a toilet my opinion began to change. What he said in this regard was completely dissipated by the evidence of the last defence witness.

33. But perhaps the most important piece of evidence and what had a very considerable influence on me was that concerning the incident on the 26th March. Mr. Wong had said in his direct evidence that after the 10th March he had not seen the defendant again. He repeated this in cross-examination and said he continued to urge the defendant through his wife to go to the solicitors.

34. He later varied this by saying he eventually saw him on the 26th March and that the defendant said he would go to see the solicitors as he had already paid. As the cross-examination proceeded about this meeting of the 26th March the witness became more and more embarrassed and more and more hesitatant in answering. He was asked was there any reference to $700 and he said at first that there was not. This he corrected a moment later saying "That day I brought that person and the situation was this, rent of $700 was maintained".

35. In the further cross-examination questions were put to the witness which suggested that an effort had been made to intimidate the defendant. This was a very serious allegation indeed and the allegation also implied that the plaintiff and the witness had committed perjury. One person who might have cleared up the matter was the stranger who was "brought" by the witness to see the defendant but he was not produced. Ominously I thought no effort was made to explain who he was or why he was brought.

36. I was completely satisfied with the evidence of the plaintiff's wife and believe her when she said that she never saw Mr. Wong after she collected the keys. I accept the story of the defendant that from the time he paid over the sum of $2,300 he never saw Mr. Wong or heard from him until he arrived just after the reconstruction and decorations were completed. I believed the builder-decorater who said he heard Mr. Wong say the rent was $460 and who said also that there were no partitions or toilet faoilities in the premises until he installed them.

37. In arriving at my conclusions I have found considerable support from the surrounding circumstances. I cannot easily visualise a man earning $1,200 a month entering into an agreement to pay $700 of it in rent. Granted that he did sublet, and I am sure always intended to do so, nevertheless the rent he would have to pay would be $700 but taking into consideration what he receives from his sub-tenants would be $470. On the other hand the net rent payable by him at a rent of $460 would be $190. This is $60 more than he was paying for the cubicle which he had left because it was too small and because of his wife's pregnancy. A rent of $460 makes sense. Another point, though I do not lay too much stress on it, is why would a landlord ask for or accept, $500 deposit rather than $700 if the tenancy was to commence in a matter of days if one month's rent of $700 was payable in advance.

38. I am satisfied that the defendant paid $500 tea money and that he paid $2,300 being one month's rent in advance and four months' deposit. I dismiss the plaintiff's claim and find for the defendant on his counterclaim. I award costs to the defendant on the claim and counterclaim.

Representation:

Mr. H. Y. Leung (K.B. Chau & Co.) for Plaintiff.

Mr. Patrick Woo (K.Y. Woo & Co.) for Defendant.