Shing Yip Co Ltd v. Lai Choi-wan

DCCJ003189/1978

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CIVIL JURISDICTION

ACTION NO. 3189 OF 1978

-----------------

-----------------

Coram: Judge Hooper in Court

Date of Judgment: 21st October 1978

-----------------

JUDGMENT

-----------------

1. This is an action for possession of property. The Plaintiff sues as landlord of Flat A on the 6th floor of the Shing Yip Building, No. 46 Lockhart Road, Wanchai in the Colony of Hong Kong on the grounds that the Defendant, as tenant, is in breach of terms of the Tenancy Agreement.

2. The Tenancy Agreement has been admitted as an exhibit and sets out a number of covenants by which the tenant is bound and in particular the terms upon which the Plaintiff's action is based. It is common ground that this is a domestic tenancy which commenced on the 1st July, 1972 initially for a term of 3 years, but that it has been continued under the provisions of Part II of the Landlord and Tenant (Consolidation) Ordinance. The Plaintiff seeks an order for possession under section 53(2)(a) of that Ordinance. This sub-section enables the Court to make an order for possession where it is satisfied that any covenant or condition of the tenancy has been broken or not performed, and that such breach or non-performance would, but for Part II of the Ordinance have been a cause of forfeiture.

3. It is common ground that Clause 2(b) of the Tenancy Agreement placed the Defendant under an obligation to keep all the interior of the suit premises including the flooring in good, clean and tenantable repair and condition and properly preserved. It is also common ground that by Clause 2(f) of the Tenancy Agreement the Defendant was placed under a further obligation not to cut, maim or injure any walls or any part of the fabric of the said premises nor any of the plumbing or sanitary apparatus or installations included therein. It is also common ground that the said Agreement contained a proviso for re-entry entitling the Plaintiff to re-enter and take possession of the said premises in case the Defendant should make fault in the performance of any of the terms of the Agreement upon her part to be performed. The Plaintiff maintains that the Defendant has committed breaches of both the two above-mentioned Clauses. Its claim is based on three defects:-

The Plaintiff has pleaded in its Particulars of Claim that it served a Notice on the 10th May, 1978 on the Defendant specifying the particular breaches of the Agreement complained of and requiring the Defendant to remedy such breaches and requiring her to make good any damage caused. It further claimed that a reasonable time has elapsed for the Defendant to have remedied such breaches as were capable of remedy and to have made reasonable compensation in money to the satisfaction of the Defendant without the Defendant doing so.

4. In her amended Statement of Defence and Counterclaim the Defendant has pleaded "Some time in the year of 1972, the water pipes connected to the kitchen basin taps accidentally burst, and consequently the Defendant was deprived of water supply for a few days. The said water pipes were subsequently replaced and re-connected by new pipings in the bathroom by the plumbers of the Management Unit of the Plaintiff". So far as the other alleged breaches are concerned the Defendant pleads "The remedical works in respect of the loosened flooring and the rusted window frames of the said premises were duly made at the beginning of August, 1978". The Defendant therefore maintains that the Plaintiff has given express or implied consent to the alleged breaches. The Defendant also relies upon an alternative pleading that the Plaintiff has by reason of the matters to which I referred and by the acceptance of rent for the said premises waived the alleged breaches or is otherwise estopped from complaining. The Defendant has also counterclaimed that if, contrary to her contention, it should be found that the Defendant has become liable to forfeiture, the Defendant seeks to be relieved from forfeiture on such terms as the Court may think fit.

5. The Plaintiff has in fact led evidence to the effect that there are four breaches committed by the Defendant against the terms of release. The fourth alleged breach is that the walls were dirty and were scratched. However since this has not been relied upon in the pleadings I will ignore this particular breach.

6. So far as the other breaches are concerned there can be no doubt that the Defendant was in breach of Clause 2(b) of the Tenancy Agreement in failing to keep the window frames in good, clean, tenantable repair and condition and properly preserved and painted. Indeed I think there is an implicit admission in the Defendant's pleading that the window frames were rusted and that the remedial work was carried out at the beginning of August, 1978. This is of course after the filing of the action in July. A similar admission would appear to be implicit in respect of the loosened flooring. Although it is common ground that the window frames had been painted at least by the beginning of October, there is a dispute about whether the loosened flooring had been properly remedied.

7. The main complaint of the Plaintiff appeared to be in respect of the water piping which had been installed in the premises. There is no disputing the presence of the piping in the premises but the bulk of the evidence has been directed to the question as to whether the pipes were installed by the Plaintiff's representative or by the Defendant. The Defendant has given direct evidence that some time round about October or November of 1972 the water piping in the premises burst and the floors became soaked with water. As it was an emergency situation she telephoned Mr. Lau who was then in the Manager's Office on the 2nd floor of the Shing Yip Building and he immediately sent somebody along to switch off the valve. This was done and she was then without any water at all. However the next day somebody came along to re-connect the pipe and it was then that the exposed pipes were installed. She was told at this time that the arrangement was a temporary one and that later on people in the Emergency Section, when they had time, would come along and do it properly. The Defendant denied that she had had the pipes put in and maintained that Mr. Lau knew all about it and that the work had been carried out by the Plaintiff's representative.

8. The Plaintiff has not called Mr. Lau to rebut this evidence of the Defendant. Furthermore although it is implicit in the Defendant's evidence that the pipes were installed by a plumber of the Plaintiff company, the Plaintiff has only called one plumber, although it is admitted that there are four plumbers in the company all of whom are still working with the company and were working for the company in 1972. The Plaintiff are really asking the Court to draw an inference that the Defendant's evidence is either inaccurate or false because there is no evidence of such work in the books and records of the Plaintiff company. It has also led evidence as to the company's policy in respect of the sort of work which would have been required to remedy the situation of the burst water pipes, and so that by reason of such policy and practice records should have been maintained in respect of that particular job. The evidence of Mr. Wong Kam Wah did not show that the partition wall to the bathroom had been cut through as pleaded out that the piping went through holes in the doors.

9. Although the Defendant may have exaggerated her evidence somewhat particularly in relation to the loosened flooring, I do not think that she is a dishonest witness. Her evidence as to what happened in 1972 is uncontradicted by any other sworn testimony, and in the circumstances I accept that her version is correct. I do not therefore think that the Plaintiffs are entitled to sue for possession on this particular breach of the Agreement.

10. Although the Defendant has a difference of opinion with the Plaintiff over the extent of the area of loosened floor blocks, I think I can safely rely upon the evidence of Mr. Hung the General Manager of the Plaintiff company (PW1) that the breach of the Tenancy Agreement in respect of the loosened floor related to most parts of the dining room floor. I also accept Mr. Hung's evidence and also that of Mr. Wong the Assistant to the Engineer of the company (PW3) that when they both inspected the suit premises on the 3rd of October this year they found that the parquet flooring had not been repaired satisfactorily. I therefore hold that at the time when the Plaintiff company brought this action against the Defendant, the Defendant was in breach of the Clause 2(b) of the Tenancy Agreement in that she had failed to keep the flooring and the window frames in good, clean, tenantable repair and condition and properly preserved.

11. The Plaintiff has pleaded that Notice was served on the Defendant on the 10th May, 1978 specifying the particular breaches complained of and requiring the Defendant to remedy such breaches. It is expressly provided in Clause 4(j) of the Tenancy Agreement that any Notice required to be served under the Agreement shall, if to be served on the tenant, be sufficiently served if addressed to the tenant and sent by prepaid post to or delivered at the suit premises or the tenant's last known place of business or residence in Hong Kong.

12. There was in fact no such evidence to the effect that the Notice referred to by the Plaintiff was served in this way. Furthermore although at one stage of the hearing the Plaintiff company sought to introduce secondary evidence as to the contents of this Notice and although it was provisionally accepted subject to argument later, in the final event it was not admitted into evidence. There is therefore no evidence before me to the effect that the Notice was properly served on the Defendant or what the terms of that Notice were.

13. The question arises whether it is necessary for the Plaintiff company to give Notice to the Defendant. In England the position is covered by the Law of Property Act of 1925 and before that by the Conveyancing Act neither of which apply in Hong Kong. There is thus no statutory requirement in Hong Kong that a Notice to Repair should be served on the Defendant before action is brought. There is however a helpful paragraph to be found in Hill v. Redman's Law of Landlord and Tenant 6th Edition at p.235. Paragraph 146 deals with the necessity for a Notice to Repair and I set out the paragraph:-

"Formerly it was usual to insert in the lease a general covenant to the lessee to repair, and also a covenant to repair on notice; that is, to do within a prescribed time repairs covered by the general covenant, of which the lessor should give notice. Such covenants, if grammatically separate, were construed as independent covenants, the first being broken by the mere want of repair, and the second by the failure to comply with the notice. A notice given in accordance with the second covenant that is, to repair specified defects within the prescribed time, operated as a waiver of any forfeiture for breach of the general covenant; but if the notice departed from the terms of the second covenant, and required repair 'forthwith' or 'in accordance with the covenants in the lease' it is deemed to be given under the general covenant, though not strictly necessary, and there was no waiver."

14. The fact that the Plaintiff purported to serve a Notice on the Defendant in the present case under Clause 2(d) of the Tenancy Agreement does not in my view, relying upon the above passage, amount to a waiver of breaches under the general covenant. Clause 2(d) does not provide for the giving of a prescribed period of time for the carrying out of works or repairs, but requires the tenant to "forthwith to put in hand and execute the same with all possible dispatch and without any delay". I therefore hold that the failure of the Plaintiff company to prove service of the Notice in the present case is not fatal to the Plaintiff's claim.

15. Mr. Wong for the Defendant has argued that the Plaintiff is not entitled to an order for possession because it has waived the branches of the Tenancy Agreement by reason of the acceptance of the rent for the months of May and June, after the company had full knowledge of the breaches. There can be no doubt that in fact the company was aware of the breaches on the 3rd of May this year and that it accepted rent for May on the 12th of May and subsequently for the month of June. Mr. Lo attacks the defence' contention first by reference to the Tenancy Agreement and secondly by reference to the law of waiver. Clause 4(c) of the Tenancy Agreement specifically provides that acceptance of rent by the landlords shall not be deemed to operate as a waiver by the landlords of any right to proceed against the tenant in respect of any breach, non-observance or non-performance by the tenant of any of the agreements, stipulations and conditions contained in the lease and on the tenant's part to be observed and performed. Since it would seem to have been the intention of the parties that the Defendant should not be entitled to set up a waiver on this ground, that would seem enough to dispose of the defence' argument on this matter. I do however think that even if that Clause did not exist in the Tenancy Agreement, Mr. Lo is clearly right when he argues that the acceptance of the rent in the circumstances of this case would not give rise to a waiver. There is a general proposition that there can be no waiver in the case of a continuing breach, though there appears to be an exception where the breach is of such magnitude (such as the coverting of the demised premises from residential into shops, and that covenant has been waived in the past) that it must be regarded as a waiver of that covenant once and for all. (See the Judgment of Pickering J.A. in the case of China Chem Investment Co. v. Chung Wah Weaving and Dyeing Factory Ltd. Civil Appeal No. 40 of 1977).

16. In the present case the breaches were not of such magnitude that they could not be remedied quickly, and in my view the acceptance of rent by the landlord did not waive the covenant. Indeed at the time Mr. Hung accepted the rent he believed the repairs would be carried out.

17. The Plaintiff was clearly entitled to an order for possession at the time when it filed the writ in the present case. The writ was in fact filed on the 17th of July this year.

18. Since the filing of this writ however the Defendant has had the window frames repaired satisfactorily and also the walls of the premises. The only matter which is apparently still outstanding is that of the repairing of the floor in the dining room by properly fixing in place the loosened wooden parquet floor tiles.

19. Although the Defendant has counterclaimed for a relief against forfeiture, no argument or submission has been presented to this Court in respect of that. I am however assisted on this matter by the Judgment of Mr. Justice Li in Kung Wai-ying v. The Attorney General 1975 H.K.L.R. in which he reviewed the authorities on this subject. The learned Judge at page 8 had this to say

20. The present case is one of laying out money on property. Further on his lordship has this to say:-

"The suggestion that relief could not be granted against forfeiture for breach of other covenants was not one that followed from either case: relief was so granted in Bargent v. Thomson. Equally in Barrow v. Isaac & Son, a case of a covenant against under-letting without consent, a high water mark of the strict doctrine, the emphasis is not so much on the nature of the breach which may or may not be relieved against, but on the argument that it is enough to show that compensation can be given:

'... it was soon recognised that there would be great difficulty in estimating the proper amount of compensation; and, since the decision of Lord Eldon in Hill v. Barclay, it has always been held that equity would not relieve, merely on the ground that it could give compensation, upon breach of any covenant in a lease except the covenant for payment of rent.' '

21. At page 103, Lord Simon has this to say:-

"With reference to the fifth question -whether this is a case where a court of equity might grant relief against exercise of the right of entry - I agree that Sanders v. Pope and Hill v. Barclay are not in themselves inconsistent authorities; nevertheless, they seem to me to be the respective culminations of a more liberal and a stricter attitude towards equity's jurisdiction to relieve against forfeiture. Lord Eldon LC's inclination, with its emphasis on strict respect for contractual rights and obligations, was more congenial to the following age, and came to be followed. Barrow v. Isaacs & Son was a natural consequence; and I am bound to say that it seems to me to demonstrate an abnegation of equity, and to show that the trail from Hill v. Barclay leads into a juristic desert. Since what was said by Lord Cairns LC in Hughes v. Metropolitan Railway Co was obiter, and merely reflects the acceptance then generally current none of the authorities binds your Lordships. The last 100 years have seen many examples of relaxation of the stance of regarding contractual rights and obligations as sacrosanct and exclusive of other considerations: although these examples do not compel equity to follow - certainly not to the extent of overturning established authorities - they do at least invite a more liberal and extensively based attitude on the part of courts which are not bound by those authorities. I would therefore myself hold that equity has an unlimited and unfettered jurisdiction to relieve against contractual forfeitures and penalties. What have sometimes been regarded as fetters to the jurisdiction are, in my view, more properly to be seen as considerations which the court will weight in deciding how to exercise an unfettered jurisdiction (of. Blunt v. Blunt and Kara v. Kara and Holman). Prominent but not exclusive among such considerations is the desirability that contractual promises should be observed and contractual rights respected, and even more the undesirability of the law appearing to condone flagrant and contemptuous disregard of obligations. Other such considerations are how far it is reasonable to require a party who is prima facie entitled to invoke a forfeiture or penalty clause to accept alternative relief (e.g. money payment or re-instatement of premises) and how far vindication of contractual rights would be grossly excessive and harsh having regard to the damage done to the promise and the moral culpability of the promisor. (I do not intend this as an exhaustive list). It is these internal considerations which may limit the cases where courts of equity will relieve against forfeiture, rather than any external confine on jurisdiction.' "

22. Having considered the arguments of counsel for the Defendant in that case Mr. Justice Li went on -

"Having regard to Shiloh's case and the judgment of the House of Lords, I am of the opinion that the court has jurisdiction to grant, in appropriate cases, equitable relief against forfeiture on the ground of breach of covenant other than a covenant to pay rent. The criterion whether such relief will be granted at all is based on the circumstances which have been partly listed in Lord Simon's judgment."

23. I am of the view, having regard to the above comments, that this is a case where it is reasonable to require the Plaintiff to accept re-instatement of the premises and that this court should on reasonable terms grant relief against forfeiture.

24. I am an order for possession to take effect in 3 months time. This order shall be subject to relief against forfeiture provided the Defendant before that date has re-instated the parquet flooring in the dining room to a reasonable condition, and compiled with all other obligations under the tenancy agreement.

Representation:

Mr. Clement Lo (Helen A. Lo & Co.) for Plaintiff

Mr. Charles Wong (Raymond Tang & Co.) for Defendant

N.B. The conditions upon which relief was given were altered by consent of the parties to more specific terms.