Lau Ko Fung v. Cho Yee and Another

HCA002915/1983

BETWEEN

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Coram: Hon. Power, J

Dates of Hearing: 23 - 26 January 1984

Date of Delivery of Judgment: 26 January 1984

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JUDGMENT

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1. In this matter the Plaintiff and both Defendants have appeared in person.

2. The Plaintiff states that in September 1982 he entered into a tenancy agreement to rent premises situated at 144 Lai Chi Kok Road, 1st floor, Kowloon. He says that at the time of entering into this agreement, he was told by the 1st Defendant that she and others including the 2nd Defendant were the owners of the premises, but that the 2nd Defendant would represent the owners when signing the agreement. He says that he believed this statement by the 1st Defendant and that his belief in the truth of the statement was re-enforced by the fact that the lst Defendant had entered into a provisional agreement to lease (Exhibit 1) some days before the signing of the agreement to lease in the office of the estate agents and that in this provisional agreement to lease she had represented herself to be the owner of the premises. The Plaintiff says that at the time when the tenancy agreement (Exhibit 3) was signed, the agreement showed the 1st Defendant as being the landlord. He says that the word "Landlord" was later deleted and the words "Principal Tenant" substituted therefor without his knowledge and that the tenancy agreement was then returned to him. Even if this were done, it does not seem that it posed any threat to the Plaintiff as no one was trying to take any advantage of it and no one was suggesting that he should not go on occupying the premises as tenant.

3. It is a little difficult to understand why he took the matter as seriously as he did. However that may be,it appears that he went  immediately to the Legal Aid Department and it appears, from the evidence of the 2nd Defendant, that a solicitor representing the Plaintiff wrote to the estate agents and that the 2nd Defendant and others were then interviewed by that solicitor on about the 8th October 1982.

4. It is the case of the 1st and 2nd Defendants that the premises are owned by the 1st Defendant and two friends and that the three owners sub-let them to the 2nd Defendant who in turn sub-let them to the Plaintiff. The 2nd Defendant says that he set out the position when he had the interview with the solicitor and that no legal action was ever taken by that solicitor and, indeed, that he never heard anything further from him. It appears that the Plaintiff, after the signing of the tenancy agreement,went into occupation of the premises and that he occupied them together with some other persons. Whether these others were his sub-tenants or his guests is not clear; however, it is clear that, as from about the end of September, he and the others moved in and occupied the premises.

5. It appears that the Plaintiff  did some decoration work, dividing up the premises into a number of rooms and a sitting room, and he claims that the cost of this work was $30,900. The Plaintiff also claims $12,200 being a deposit which he says he put down with his decorator, Mr. Lai of Lai's Design & Decoration Co., with respect to the' installation of signs which were to be erected at a total cost of $20,420 and which were to advertise his business as a herbalist.

6. The Plaintiff says that he intended to carry out this business on the premises and that is why it was agreed, in Clause 8 of the tenancy agreement, that the "premises shall only be used for commercial purposes". The Plaintiff says that he did not go on and erect the signs and use the premises as a herbal business because he heard, in about November 1982, that such use was not permitted.

7. It appears that between November 1982 and April 1983 when he vacated the premises he continued to occupy them but only paid rent when forced to do so after distrain proceedings. Initially in his evidence he said that he carried on his herbalist business during that period, however, later he denied emphatically that he had ever done any business on the premises.

8. His reason for not paying the rent was, according to him, because the 2nd Defendant was only prepared to issue him rent receipts signed by the 2nd Defendant as "principal tenant" and because of the uncertainty as regards the permitted user of the premises.

9. His explanation as to why he did nothing between November 1982 and April 1983, as regards what he says was a mis-representation as to user of the premises, is that he was seeking legal aid and was making enquiries. The Plaintiff says that in April 1983 he approached the Building Development Department and was told by that office that the occupation permit for the subject flat specified that it was for domestic use and that he would not be able to carry out his business at those premises. He says that he then wrote to the Building Development Department and received a reply dated 20th April 1983 (Exhibit 5) which stated "that the above premises is for domestic use". He says that in consequence of this information, he then vacated the premises.

10. The Plaintiff had, in March 1983, commenced this action and initially he asked the Court to "clarify the contract" and to give "fair compensation".

11. On the 18th April, at about the time when he vacated the premises, he filed a further statement of claim asking the Court to-

12. His claim as he now pursues it appears to be for a declaration that the 1st Defendant and the other two owners were parties to the tenancy agreement and for damages for breach of that agreement. As he has now repudiated the contract by leaving the promises and refusing to pay any further rent, he appears to be seeking damages upon the basis that the Defendants committed a breach of a condition of the contract when they failed to let him premises which were authorized for commercial use by the Building Development Department. He appears to be proceeding upon the basis that there was a fundamental breach of contract by the Defendants sufficient to justify him in treating himself as discharged from further obligations thereunder.

13. The Defendants say that the Plaintiff was at all times aware that the 2nd Defendant was the principal tenant and that the 2nd Defendant was the one who was actually renting the premises to the Plaintiff. The 2nd Defendant says that the words ''principal tenant'' were inserted by him in the tenancy agreement in the presence of the plaintiff before it was signed by either party. He asked, with some justification, what possible reason there could be for he and his mother not to have disclosed the true position to the Plaintiff. The 2nd Defendant says, as to the qualification in Clause 8 of the agreement that the premises shall only be used for commercial purposes, that whether the premises were used for domestic or commercial purposes was of no importance to him as all he wanted was payment of the rent and that that clause was inserted in the agreement at the insistence of the Plaintiff. This may be so, but that would not, of course, mean that the clause, once in the contract, was not binding upon the parties to it.

14. I turn now to look at the evidence. The Plaintiff was far from impressive witness. I formed the clear impression that he was not a witness of truth. Although in the outcome it will not be necessary for me to make any assessment as regards the damages claimed I feel constrained to observe that his witness Mr. Lai, who gave evidence as to the cost of the renovations was, to my mind, totally unworthy of credit.

15. I have no hesitation in accepting the evidence of the Defendants as to the form of the tenancy agreement at the time when it was signed. I am satisfied that the 2nd Defendant signed as principal tenant and that those words appeared thereon at the time of signing. I am satisfied that the tenancy agreement was  an agreement between the 2nd Defendant and the Plaintiff and that the Plaintiff is not therefore entitled to any declaration   that the 1st Defendant and the other 2 owners were parties to  the tenancy agreement.

16. Even if this be so, is the Plaintiff entitled, upon the evidence, to damages? The first question that must be asked in this regard is whether clause 8 was a condition of the contract i. e. a fundamental term of the contract which would entitle the Plaintiff to repudiate the contract and to sue for damages.

17. I am satisfied that it was not. All the 2nd Defendant was doing was warranting that the Plaintiff could use the premises for commercial purposes. If  the I Plaintiff had been prevented from so doing, he would have been entitled to sue for breach of warranty. He was, however, never at any time, prevented by anyone from using the premises for commercial purposes.

18. It is true that the occupation permit specifies the permitted use as "domestic". However, an occupation permit does not forbid other uses. It simply specifies the permitted use. If some use other than the specified use be made of  the premises, then, under section 25 of the Buildings Ordinance (Cap.123), the Building Authority may, if the building is not suitable for such other use, require the owner to discontinue that use.

19. It was never in the present case shown that the premises were not suitable for use as a herbalist's shop or that had such a use been made of them, the Building Authority would have taken any action to try to stop it. Indeed even if I had been satisfied that clause 8 was a condition of the tenancy agreement the Plaintiff would still have failed in his action as he has not shown that there was ever any breach of that condition. However that may be, I am satisfied that in law it was no more than a warranty and it has not been proved by the Plaintiff that he suffered any damage because of breach of that warranty. The 2nd Defendant having warranted that the Plaintiff could use the shop for commercial purposes might well have been liable in damages if the Plaintiff  had been stopped from so dong. The Plaintiff was, however, never stopped from so doing . Indeed, any doubts and difficulties that did arose in this regard were, it seems to me, of his own making. He says that he was told by the staff of the Building Development Department that he was prohibited from operating a herbal business on the premises. If he was so informed, then, as I have already indicated, he was wrongly informed. If an officer of the Building Development Department did give wrong information to the Plaintiff there is no way that any fault in that regard can be laid at the door of the 2nd Defendant. Plaintiff's action for damages must be dismissed.

20. I cannot leave this matter without saying that I have formed grave doubts as to the bona fides of the Plaintiff. The evidence as I have it does not satisfy me that he ever had any serious intention to set up a herbalist business. He seems to me throughout to have been trying to make use of matters of no real consequence which he thought he could turn to his advantage.

21. I cannot order payment out of the rent money held in the District Court, but I have no doubt that the 2nd Defendant armed with this judgment will be able to obtain an order in that regard.

22. The Plaintiff's action is dismissed. As there is no application in this regard there will be no order as to costs.

Representation:

Plaintiff in person.

1st and 2nd Defendants in person.