Au Kin Fan v. Wong Bik Har
Read the full judgment text of DCCJ 3929/2008 on BabelCite. This District Court judgment was delivered on 6 December 2010.
1. This is a tenancy dispute. Au , the Plaintiff, was the landlord; and Wong , the Defendant, was the tenant. Both parties allege that the tenancy was terminated as a result of the other’s wrongful repudiation. They claim damages against each other.
Cites 3 cases
|
DCCJ 3929/2008 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 3929 OF 2008 ____________
Coram: His Hon Judge Leung in court Date of hearing: 27-29 September 2010 Date of judgment: 6 December 2010 J U D G M E N T 1.This is a tenancy dispute. Au, the Plaintiff, was the landlord; and Wong, the Defendant, was the tenant. Both parties allege that the tenancy was terminated as a result of the other’s wrongful repudiation. They claim damages against each other. Background 2.The property in question consists of a residential unit on the 5th Floor of Tower 5, Lakeview Garden, Shatin, New Territories (“the Unit”) and a car parking space on the Ground Floor (“the Car Parking Space”) (where appropriate, collectively referred to as “the Property”). Au was and is the registered owner of the Unit while the Car Parking Space was and is registered in the name of Madam Chim Chor Lai. Wong and her husband have been the owners and residents on the First Floor of the same building since 2002. 3.In June 2006, Wong was looking for a flat for her mother returning from abroad. Through the management office, Wong became aware of the availability of the Property for letting. After viewing the Property, on 17 June 2006, Wong tendered the cheques for one month’s rent in advance and rental deposit equivalent to two months’ rent. On the same day, Wong took the keys to and hence possession of the Property. 4.The parties then signed a written tenancy agreement dated 24 June 2006 (“the Tenancy Agreement”). By the Tenancy Agreement, Au agreed to let and Wong agreed to rent the Property for a term of 24 months commencing on 1 July 2006. The monthly rent was HK$15,000, inclusive of management fee in the sum of HK$2,364 and rates in the sum of HK$836. The amount was payable monthly in advance. 5.The Unit came with fitted lightings, air conditioners, cooking stove and water heaters. Clause 22 of the Tenancy Agreement referred to Annex 1, which set out these fixtures and fittings included in the tenancy:
6.Essentially, it was agreed that the maintenance of these fixtures and fittings in the Unit were not included in the rent. The landlord and the tenant should discuss, in case of breakdown of or damage to these fixtures and fittings. 7.By letter dated 18 June 2007, Wong, through her then solicitors, gave notice to Au of her intended termination of the Tenancy Agreement on 30 June 2007. The reason was the alleged repudiation on the part of Au by refusing to discuss with her the repair of the air-conditioner and the cooking stove. By letter dated 26 June 2007, Wong, through solicitors, informed Au’s then solicitors that she had already moved out of the Unit. A couple of the keys were returned. 8.Through his then solicitors, Au denied Wong’s allegations; and put on record that Wong had informed her of the intention to terminate the Tenancy Agreement by notice even before she raised her allegations in her solicitors’ letter dated 18 June 2007 mentioned above. 9.By letter from his then solicitors on 3 July 2007, Au put on record that Wong’s purported termination of the Tenancy Agreement amounted to wrongful repudiation. Au accepted such repudiation and reserved the right to claim for the loss and damage as a result of the premature termination of the Tenancy Agreement. 10.By another letter to Wong on the same day, Au put on record the alleged damage to the interior of and various fixtures and fittings in the Unit that he discovered when he retook possession. 11.About 10 months later, by a tenancy agreement dated 29 April 2008, Au successfully let the property to another tenant. 12.The above background is not in dispute. Issues 13.Au claims against Wong for damages including:
14.Wong claims by way of counterclaim for the return of the rental deposit and damages. 15.The issues to be tried are agreed. They could be grouped into the following categories:
Au’s capacity as the landlord 16.Wong contends that Au was never the owner and hence had no capacity to grant a tenancy in respect of the Car Parking Space. There was said to be no binding tenancy agreement between the parties in respect of the same. 17.The principle is trite. The tenant is estopped from raising as defence to the enforcement of the tenancy agreement by denying the landlord’s capacity to grant the tenancy or to sue on the tenancy agreement. 18.The fact was that Madam Chim, the owner of the Car Parking Space, is Au’s partner and the mother of their child. They live together. Madam Chim actually signed as a witness to the Tenancy Agreement. There is simply no question of authority of Au to enter into the Tenancy Agreement as the landlord in respect of both the Unit and the Car Parking Space. 19.The alleged misrepresentation of Au’s capacity to enter into the Tenancy Agreement as the landlord has no merit at all. I also reject Miss Ng’s argument that Au has no capacity to claim for any loss relating to the tenancy in respect of the Car Parking Space. The fact that Au may have to account to Chim for any damages awarded herein in relation to the tenancy in respect of the Car Parking Space is none of Wong’s concern. The air conditioner and the cooking stove 20.Of all the fixtures and fittings in the Unit, Wong’s major complaint is about one of the air conditioners and the cooking stove. It is alleged that the knob of the temperature control switch of the air conditioner in the master bedroom fell out and hence the control was lost. 21.There is no dispute that this was a composite stove consisting of 4 stove heads and an oven. By pleading, it is alleged that there was no safety device and gas leaked if the switch controlling the stove heads was turned on slightly. 22.On this basis, Wong pleaded the following causes against Au:
The alleged representation 23.Wong contends that in order to induce her to enter into the Tenancy Agreement, Au assured her that all the electrical appliances and furniture were in good and satisfactory condition. The representation is said to be false in fact. The representation is said to be made fraudulently or recklessly in not caring whether it was true or not. 24.In his evidence, Au described that the Unit has undergone fair wear and tear since its occupation in 1995. It would therefore be inappropriate to suggest that he gave such assurance of the condition of the fixtures and fittings as alleged by Wong. Being the owner and resident of the same building, Wong also confirmed that those were the original air conditioners and cooking stove that came with the Unit purchased from the developer. 25.In my view, any representation by Au as to the condition of the fixtures and fittings of the Unit, before Wong agreed to take up the tenancy, must be understood in these circumstances. What then was the condition of the air conditioner and the cooking stove? The condition of the air conditioner and cooking stove 26.According to Au, the Unit used to be occupied by another tenant until late August 2005. After that tenant had moved out, Au had various parts of the Unit renovated. The various invoices and receipts at the time evidence that. In particular, there was a job record issued by the nominated contractor of the supplier of the cooking stove, Whirlpool. It recorded that the igniters of the stove were replaced. Fire test and leakage test were carried out and the results were normal. 27.Another 10 months had passed before Wong rented the Unit. According to Au, Wong viewed the Unit on 10 June and 17 June 2006. He had also switched on the air conditioner and the cooking stove in her presence. On the latter date, Au handed over the keys to the Unit at Wong’s request. According to Au, Wong even suggested renting the Unit for 4 years, though he did not agree. 28.At Wong’s request, Au had disposed of certain electrical appliance and furniture items at the commencement of the tenancy. She used to deny that by pleading; but admitted that in court. She also agreed that it was only after inspection did she request Au to dispose of those items. 29.Au did not at all deny having conversation with Wong after the commencement of the tenancy regarding the condition of the air conditioner and the cooking stove. For non-payment of the rent for October 2006, Au telephoned Wong on 13 October 2006. It was during that telephone conversation when Wong mentioned that the switch knob of the temperature control of the air conditioner in the master bedroom had fallen off. Wong also mentioned about the cooking stove; but only to say that it was not as good in roasting as the one that she had used before. 30.Following that telephone conversation, Au sent a letter dated 20 October 2006 to Wong. The letter referred to the above telephone conversation. Au also complained that his telephone calls to Wong on the previous 2 days were not answered. He demanded for the rent for October 2006 in arrears. According to Au, he had heard no more complaint from Wong about the air conditioner or the cooking stove since then. The rent in arrears was also paid. 31.According to Wong, which was not disputed, her mother actually moved into the Unit in about April 2007, some 10 months after the signing of the Tenancy Agreement. Two months later, in early June 2007, Wong proposed to terminate the tenancy at the end of the month. 32.A meeting between the parties was later held at the Unit. There is dispute as to the date of that meeting. Au was certain in his evidence about the date (i.e., 9 June 2007) and the persons present. The same cannot be said about Wong’s evidence. According to Au, Wong’s husband indicated that they had decided to move out of there at the end of the month; and suggested that the rental deposit be treated as compensation for the early termination. No conclusion was reached at the end of the meeting. 33.This was followed by the letters from the then solicitors on behalf of Wong dated 18 June 2007 and 26 June 2007 mentioned above. Wong (or her mother) also moved out of the property by 27 June 2007. 34.Au retook possession in early July 2007. The Property was subsequently let to a new tenant in May 2008 for another 2 years until this year. 35.Au confirmed, and it was not challenged, that neither the tenant prior to Wong nor the new tenant after Wong has ever made any complaint like that Wong now makes about the risk of accidental gas leakage from the cooking stove. This is surprising, if there is any truth in Wong’s allegation. 36.According to Wong, gas leaked immediately if the switch of the stove was accidentally turned on. During cross-examination, it was put to Au that this happened to one of the stove heads. However, when Wong came to give evidence, she suggested that not just one but all four stove heads had the same problem and danger of gas leakage. Her evidence in court as to when, how and who allegedly discovered the problem also came in substantially different versions. 37.Wong’s pleaded case is that the stove supplier, Whirlpool, and the gas company, Shell, had inspected the cooking stove. The result was that the cooking stove could not be repaired and had to be replaced. In court, her evidence as to the sequence of inspection and the precise scope of inspection by these companies was confusing and inconsistent. At one point, she even denied the accuracy of the content of her court documents in this respect. 38.The fact is that despite repeated written requests to Whirlpool and Shell for confirmation of the alleged inspections, both companies replied in the negative. Whirlpool even pointed out that the fee that Wong had allegedly paid to the technician sent by them was not what Whirlpool would have charged for the alleged work. Whirlpool and Shell gave the same replies to similar enquiries made by Au’s solicitors subsequently. 39.To extricate her case from the adverse state of the evidence, Wong sought to amend her pleaded case at a late stage by changing to say that it was “some repairmen” other than Whirlpool and Shell who inspected the cooking stove and advised that the spare parts for repairing the cooking stove were no longer available. 40.In court, Wong explained that it was the technician from the engineering department of the estate who gave her the advice, after her report to the management office. Such allegation has never been raised in pleading or witness statement before. Nor is there any document from the management office to confirm the new allegation or even any attempt by Wong to obtain such confirmation from the management office. 41.In July this year, the solicitors for Wong requested to have the cooking stove inspected by Shell at her expense. The request was refused by the solicitors for Au, who by letter explained that the Unit had been let to a new tenant, who had also used the cooking stove, for 2 years since May 2008. Inspection of the current condition of the cooking stove would serve no purpose. 42.The explanation of Au’s solicitors must be right. I reject Miss Ng’s suggestion that such inspection might well be able to cast light on the condition of the cooking stove back in 2006 and 2007. If this was indeed the belief held, Wong would have applied for the court’s directions for adducing expert evidence. The fact is that there is no expert evidence. 43.According to Au, when he retook possession of the Unit, he discovered that the ignition jump spark for the cooking stove did not work properly and hence the stove had to be ignited manually. He put this on record in his letter to Wong dated 3 July 2007 mentioned above. Au had consulted the nominated contractor of the supplier of the cooking stove but was informed that the parts needed for the repair were no longer available. Eventually, repair of the cooking stove was carried out by the company that Au engaged to carry out interior renovation of the Unit. Only HK$400 was incurred for replacing the igniters. Fitness for human habitation 44.There is no implied covenant on the part of the landlord that the tenanted property is fit for human habitation or for the purpose for which the property is let. In the case of a furnished property, the law implies a covenant that it is reasonably fit for human habitation at the commencement of the tenancy. The implied term does not extend to unfurnished property or throughout the term of the tenancy. See for instance, Chan, Allen Kin Hong v Sung Lai Ping, DCCJ 3176/2008 (23 December 2009). 45.In law and in fact, such a term will not be implied to the Tenancy Agreement in the present case. As mentioned above, Wong actually requested Au to remove certain electrical appliance and furniture from the Unit at the commencement of the tenancy. Besides those set out in Annex 1, the Tenancy Agreement made no mention of any other furnishings. By making clear in Annex 1 that he did not undertake the maintenance of the items set out there, Au could not be taken to have warranted their condition after the commencement of the tenancy either. 46.Miss Ng suggested that it was dangerous to live in the Unit since the gas might leak at any time. This however went further than what her client actually said, namely that gas might leak, if the switch was accidentally turned on. Miss Ng also suggested that it was inhumane to let a person sleeping in the master bedroom where the temperature of the air conditioner could not be adjusted. This, in my view, is sheer exaggeration. Conclusion 47.I find that apart from the fallen off switch knob during the term of the tenancy, the air conditioner in question had no functioning problem. There is in fact no real dispute in this respect. It eventually took Au HK$100 only to replace 2 switches. 48.As to the condition of the cooking stove, Wong’s evidence is simply unreliable. I prefer Au’s evidence to that of Wong in this respect. Apart from the failure of the igniters during the term of the tenancy, I am not satisfied that there was the alleged danger of gas leakage from the cooking stove in the ordinary course of events. 49.In the circumstances, I find that the alleged misrepresentation on the part of Au, fraudulently or otherwise, is not proved. I say the same in respect of the alleged breach of implied term as to reasonable fitness for human habitation. Which party was in breach 50.It is alleged that Au was under an obligation to discuss with Wong in case of breakdown of or damage to the fixtures and fittings set out in Annex 1 of the Tenancy Agreement. The existence of such a contractual obligation should not be in dispute. 51.Wong had allegedly offered to repair the air conditioner and to replace the cooking stove at her own expenses, but Au or Madam Chim was said to have rejected her proposal. By allegedly refusing to discuss after Wong’s complaint about the condition of the air conditioner and the cooking stove, Au is said to have wrongfully repudiated the Tenancy Agreement. 52.Miss Ng criticised Au for not caring to inspect the cooking stove after the letter from her client through her then solicitors on 18 June 2007. However Au explained that Wong was actually determined to terminate the tenancy during the meeting on 9 June 2007. The letter dated 18 June 2007 was in fact Wong’s formal notice of termination of the Tenancy Agreement. By letter dated 26 June 2007, Wong through her then solicitors reported that Wong had already moved out of the Unit. I accept Au’s evidence. 53.Whether Au came forward to inspect the cooking stove after the letter dated 18 June 2007 could be of no significance to the unequivocal termination of the Tenancy Agreement by Wong communicated to Au by then. 54.In view of the above finding in respect of the condition of the air conditioner and the cooking stove, the factual basis for finding the alleged repudiation on the part of Au does not exist. It was Wong who wrongfully repudiated the Tenancy Agreement by seeking to terminate it early. Loss and damage Damage to the Unit 55.According to Au, upon re-taking possession of the Property, he inspected the Unit and observed various damage to the Unit and the fixtures and fittings therein. By letter dated 3 July 2007, Au informed Wong of the damage discovered:
56.By her then solicitors’ letter in July 2007, Wong specifically denied having drilled any holes at any part of the Unit. It was said that the Unit, when surrendered, was in the same condition as when she took possession at the commencement of the tenancy in 2006. 57.What Wong suggested is contradicted by the photographs depicting the damage to the Unit that, according to Au, were taken on 2 July and 5 July 2007. The dates recorded on these photographs indeed evidence that. In court, Wong suggested that except for a crack at the sink which she mended, none of the damage depicted in the photographs existed when she surrendered possession of the Unit a few days before these photographs were taken. 58.Au was not really cross-examined in respect of the apparent dispute as to the damage to the Unit allegedly found after Wong had moved out. But the inevitable inference from what Wong said in court is that the damage was somehow done to the Unit during the few days after she had moved out and before these photographs were taken. On the balance of probabilities, I rule out this suggestion. 59.I accept Au’s evidence in this respect and find that the damage to the Unit was not pre-existing when Wong took possession in June 2006; and that the damage did exist as it appeared when Au retook possession in July 2007. 60.Clause 15 of the Tenancy Agreement stipulated the tenant’s obligation to yield up the property and all fixtures and fittings in tenantable repair and condition at the expiration or sooner determination of the agreement. In view of the above finding, I find Wong to be liable. The repair cost 61.To repair the damage to the Unit mentioned above, Au had obtained quotation from a contractor amounting to a sum of HK$2,760. The invoice and receipt evidence that the work done and the quoted cost paid. I find that the reasonableness of the work and its cost is beyond challenge. Damages for early termination of the Tenancy Agreement 62.Au claims for the rent, management fees and rates as well as utilities paid since 1 July 2007 until the Property was let on 14 May 2008. Though pleaded as amounts in arrears, they could only represent the damages as a result of termination of the Tenancy upon Au’s acceptance of Wong’s repudiation. Au also claims for the expenses incurred in re-letting the Property, which include the estate agent’s commission and stamp duty. 63.I accept the evidence, both documentary and verbally, adduced by Au in proof of the various items of claim in relation to the re-letting of the Property. The real dispute between the parties lies in whether Au has mitigated such loss and damage. It is the burden of Wong to show that Au has not done so. 64.Au was not under any obligation to do anything other than in the ordinary course of business. The standard is not a high one:
See Chitty on Contract, Vol.1 at 26-104; and what this court said in Hang Lung Real Estate Agency Limited & Anor v Du Win Garments Company Limited, DCCJ 3212/2006 (12 June 2008) (at paras.61-63). 65.Miss Ng mainly questioned the reasonableness of the time lapse before the Property was re-let in May 2008. There was a lapse of more than 10 months. Miss Ng queried why Au had not listed the Property with more estate agents; and why he had not considered offering to let the Unit and the Car Parking Space separately. She also questioned the reasonableness of the asking rental. 66.The documents evidence that upon retaking possession of the Property, Au proceeded to list the Property with the estate agents, namely, Centaline, Midland Realty and Ricacorp, on 2 July 2007. There was absolutely no delay on the part of Au to take steps to mitigate his loss. 67.As Au explained in court, these were at the material time three of the major estate agencies in Hong Kong. I accept that he had reasonable basis for having confidence in their being able to introduce willing tenants to him. 68.Unless the estate agents actually advised so, it was not unreasonable for Au not to devise any specific strategy such as that suggested by Miss Ng to separate the Unit from the Car Parking Space for the purpose of re-letting. The advantage of such strategy is, in my view, more perceived than substantiated. 69.Miss Ng questioned the asking rental of HK$20,000 for re-letting the Property, which was higher than the rent she paid under the Tenancy Agreement. This, in my view, is not per se unreasonable. Au explained that the asking amount was negotiable. The fact was that the Property was successfully re-let at HK$18,500 (all inclusive), which was HK$3,500 higher than the rent under the Tenancy Agreement. See also my comment in Hang Lung Real Estate Agency Limited (above) (at para.64). 70.Miss Ng submitted that 3 months would have been reasonable time for locating a willing tenant for the Property. But she lacked the evidence of the market situation of the estate at the relevant times. 71.I am not satisfied that Au ought to be criticised for failing to mitigate his loss and damage as a result of the premature termination of the Tenancy Agreement. In the circumstances, Au is entitled to damages in respect of the following items:
The rental deposit 72.No mention was made of the rental deposit in the statement of claim. It was only in reply to the counterclaim for the return of the deposit when Au pleaded that the breach on the part of Au disentitled her from having the deposit back. Yet no claim for forfeiture of the amount, or its right, was expressly pleaded. 73.During the trial, Mr Jim made clear that Au claims to have forfeited the rental deposit in addition to the damages for the loss and damage as a result of the early termination of the Tenancy Agreement. 74.In the present case, the Tenancy Agreement is the kind of standard draft agreement obtainable from the stationery shops and consists of a Chinese and an English text. The Chinese text of the agreement, which the parties signed, contained clause 2 in the following terms:
75.Relying on this, Mr Jim submitted that upon the wrongful repudiation and hence early termination of the Tenancy Agreement, the deposit was treated as forfeited. The clause indeed speaks of the tenant’s agreeing to abandon the right to the return of the deposit upon the early termination or breach of the agreement. However, two things should be noted. 76.First, clause 15 of both the Chinese and the English sides of the agreement provides that the Chinese version is an abridged version of the English text. In the event of any difference between the two, the English text shall prevail. The English text of clause 2 reads as follows:
77.The Chinese and the English texts of the agreement are not exactly the same. The English text that shall prevail provided for the return of the deposit subject to the due payment and compliance with the obligations of the tenant under the agreement. Unlike the Chinese text, it did not provide for the right of the landlord to forfeit the deposit upon any early termination or breach of the agreement. 78.Second, under neither text were the parties said to have agreed to treat the forfeiture of the deposit as liquidated damages for the loss and damage as a result of the early termination or breach of the agreement. 79.In Hang Lung Real Estate Agency Limited (above), I was faced with a similar contention on behalf of the plaintiff landlord. Reference was made to Orient Bright International Limited v Hiang Kie Hong Kong Limited, CACV 220/2004 (11 May 2005) where the appellate court held that the landlord was entitled to forfeit the deposit on top of its claim for mesne profit. I found this was a matter of construction of the relevant provision in the tenancy agreement. At the end, I held that the relevant clause in the tenancy agreement in Hang Lung Real Estate Agency Limited, properly construed, differed from that in Orient Bright International Ltd and I found that credit should be given to the deposited forfeited (see paras.70-75). 80.The prevailing English text of the Tenancy Agreement in the present case differs from those in both Orient Bright International Ltd and Hang Lung Real Estate Agency Limited. Though the return of the deposit was made conditional upon the full and due observance and performance of the terms of the Tenancy Agreement, the right to forfeit the deposit and that being additional to the right to claim for the loss and damage upon breach were not actually spelt out. Likewise, I reject the submission of Miss Ng that Au’s remedy was limited to forfeiture of the deposit as liquidated damages and no more. 81.I find that Au may retain the deposit upon Wong’s breach of the Tenancy Agreement; but only to the extent of the loss and damage occasioned by the breach. In other words, credit should be given to the deposit when the loss and damage is assessed. 82.Giving credit to the deposit , the damages are assessed as HK$(167,829.50 – 30,000) = HK$137,829.50. The counterclaim 83.In view of my finding adverse to Wong, I need not deal with the counterclaim. It suffices to say this: Whether it had been the misrepresentation or breach of the Tenancy Agreement alleged, restitutio in integrum would have been impossible. The claim for rescission would have failed in any event. Miss Ng acknowledged that in her submission. 84.Besides the rental deposit, Wong also put forward 10 other items of alleged loss and damage. During the pre-trial review, Miss Ng already indicated that her client would abandon 9 out of the 10 items of claim. In view of the above finding, the basis for the counterclaim for the remaining item falls away too. Order 85.Judgment is entered against Wong in the sum of HK$137,829.50 with interest thereon at 1% above HSBC prime rate from the date of writ until today; and thereafter at the judgment rate until full payment. The counterclaim is dismissed. 86.Wong shall pay Au’s costs of this action, including any costs reserved. Costs shall be taxed, if not agreed, with certificate for counsel. In the absence of application within 14 days to vary, this costs order shall become absolute.
Mr Jacky JIM instructed by Messrs Tang & Lee for the Plaintiff Miss NG Siu Ling, Rowena of Messrs Bennett Chan & Co for the Defendant Please refer to HCMP104/2011 for the relevant appeal(s) to the Court of Appeal. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment