Giant Fortune (H.K.) Ltd v. Vinik, Steven Hilyard

DCCJ 4469/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4469 OF 2012

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

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

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

JUDGMENT

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

1.The plaintiff claims outstanding licence fees due and owing from the defendant.

Background

2.The plaintiff is the owner of a premise located at 52 Hollywood Road and is trading as Shama Hollywoodcarrying on business of leasing luxurious serviced apartments in Hong Kong.

3.The plaintiff as the landlord and the defendant as the tenant entered into two tenancy agreements on 25 September 2011 and 23 November 2011, for lease of an apartment, known as “Apartment 2” on the 2^nd floor of Shama Hollywood.  The 1^st lease commenced from 17September 2011 until 16October 2011 at a monthly rent of $44,000; the 2^nd lease commenced from 1December 2011 until 31May 2012 at a monthly rent of $39,600.

4.The defendant continued his stay in Apartment 2 after expiry of the 2^nd lease.  By way of a licence agreement dated 15 May 2012, the plaintiff granted the defendant a licence to occupy and use the same unit  from 1 June 2012 to 30September 2012 at a monthly licence fee of $39,600.  The defendant paid up two months’ licence fees, ie $79,200 to the plaintiff as security deposit.

5.In or about 16 June 2012, the defendant complained of water seepage in Apartment 2.  To facilitate the plaintiff to carry out repair works, the plaintiff arranged an alternative serviced apartment in Shama Central for the defendant’s temporary stay.  The said apartment was located in Peel Street, few blocks away from Shama Hollywood.

6.The defendant refused to be relocated to Shama Central and had subsequently moved into “Apartment 6” on the 6^th floor of the Shama Hollywood. He stayed in Apartment 6 from 23 June 2012 to 21July 2012. The defendant then moved back to Apartment 2 afterwards.  Both apartments are one bedroom suites save and except Apartment 2 has an open terrace but a small balcony in Apartment 6.

7.Upon expiration of the licence, the defendant vacated Apartment 2 on 30September 2012.  He failed to pay licence fees in the sum of $79,200 for the period of August 2012 and September 2012.  The plaintiff repeatedly demanded the defendant for payment but in vain.  The plaintiff deducted the licence fees of such period from the security deposit. 

The plaintiff’s claim

8.The plaintiff offered to reduce the monthly licence fees from $39,600 to $30,000 for the period of June 2012 to July 2012 when the defendant was being relocated to Apartment 6.

9.Apart from the outstanding licence fees for August 2012 and September 2012 (which has been deducted from the security deposit), the defendant failed settled the reduced licence fees, being $60,000, for June 2012 and July 2012. The plaintiff claims the defendant for such amount.  

The defence

10.The defendant pleaded in his Defence, amongst other things, Apartment 2 was not habitable at time of his stay: both the wooden decking on the open terrace and door locks of the sliding door leading to the open terrace were damaged; water seepage was found.  He complained  Apartment 6 was smaller in size and without an open terrace.  With dissatisfaction, the defendant claimed the plaintiff had agreed to reduce the monthly licence fees for the period from May 2012 to July 2012 to $20,000.  The defendant concluded, he has overpaid licence fees to the plaintiff during his stay, and therefore, the plaintiff is not entitled to demand $60,000 licence fees from him.

11.The defendant counterclaimed against the plaintiff for (i) the overpayment of rent / licence fees for the months in May 2012 and June 2012; (ii) return of security deposits; and (iii) loss and damages for failure of the plaintiff to maintain Apartment 2 in a habitable condition.

Events prior to trial

12.The defendant was legally represented since commencement of this action.  On 26 November 2013, he filed a Notice to Act in Person.

13.Subsequent to the filing of the Notice to Act in Person, the defendant failed to appear in both Case Management Conferences on 20 December 2013 and 29 April 2014.

14.In the 2^nd Case Management Conference, the learned Master made an unless order against the defendant, that “unless the defendant serve and exchange his witness statement within 21 days from the date of service of this Order, the defendant is debarred from adducing any evidence at trial”. The defendant failed to comply with the unless order, he was debarred from adducing evidence at trial.

15.Neither did the defendant appear in the Pre Trial Review on 3^rd June 2014.  The learned judge struck out the defendant’s counterclaim provisionally pursuant to Order 25 rule 4(2) of the Rules of District Court, Cap 336H.

16.The plaintiff’s solicitors have duly served all necessary documents, including but not limiting to questionnaires, notices of hearings, trial bundles and sealed copies of court orders to the defendant’s address as stated in the Notice to Act in Person.

17.I am satisfied the defendant was well notified and was aware of the progress and hearing dates of the proceedings.  I shall proceed with trial in his absence.

Issues at trial

18.The only issue at trial is whether the defendant is liable to pay the plaintiff $60,000 licence fees for the period of June 2012 and July 2012.

Evidence

19.The plaintiff called two witnesses, namely, Mr Delon Sham and Ms Mariefe B. Ugalde at trial.  Both Mr Sham and Ms Ugalde adopted their respective witness statements as evidence.

Analysis

20.It is agreed in the licence agreement that the defendant shall pay $39,600 per calendar month for the occupation and use of Apartment 2 for a fixed period of 4 months commencing from 1 June 2012 until 30September 2012.  The monthly licence fee shall be payable in advance.  (See Clause 4 of the licence agreement)

21.The plaintiff has a right to charge interest on arrears of payment of licence fees at 2% per month and such interest shall be calculated from the due date until actual payment.  (See Clause 6 of the licence agreement).

22.The plaintiff has a right to relocate the defendant to another unit at any time in substitution of Apartment 2 if the plaintiff thinks fit. (See Clause 2 of Schedule A[1] of the licence agreement)

23.The relocation of the defendant from Apartment 2 to Apartment 6 was carried out within the powers of the plaintiff. The plaintiff did it with reason because repair works of water seepage in Apartment 2 was in progress. The plaintiff provided an alternative apartment for temporary stay in Shama Central, only that the defendant has finally chosen Apartment 6.

24.Not being obligated, the plaintiff initiated a reduction of licence fees from $39,600 to $30,000 for June 2012 and July 2012, not to mention the period of temporary stay was only from 23 June 2012 to 21July 2012, less than one calendar month.

25.The defendant admitted he did not pay licence fees for both June 2012 and July 2012.  He is liable to pay such sum, he has no defence to the plaintiff’s claim.

26.In absence of defendant’s evidence, in fact, the plaintiff’s witness statements have answered his allegation in his defence.  For completeness sake, I accept the plaintiff’s evidence, as Mr Sham has stated in his witness statement, that Apartment 2 was habitable, the plaintiff as landlord has (i) replaced the wooden terrace decking on 3 February 2012; (ii) repaired the sliding door leading to the open terrace in May 2012; and (iii) replaced wooden floor planks immediately after the defendant’s complaint of water seepage. 

27.Mr Sham said, water seepage in Apartment 2 was not serious because it has affected the bathroom only, nevertheless, the plaintiff engaged contractors to replace all wooden floor planks in Apartment 2.  I could nowhere criticize the plaintiff, as a landlord or licensor, when Apartment 2 has been properly kept and maintained during the defendant’s stay.

28.The defendant’s argument of overpaying the plaintiff must fail. Both Mr Sham and Ms Ugalde confirmed there was no such agreement.  Mr Sham has further explained in his witness statement that it is implausible to have reduced the rent or licence fees of Apartment 6 substantially to $20,000 when the market rent of the unit was $35,500 per month.

29.I accept the evidence of both Mr Sham and Ms Ugalde, what they have stated are the facts.  The plaintiff has proved its case.  I give judgment to the plaintiff. 

Costs

30.The plaintiff shall be entitled to costs of this action.  Mr Siu, counsel for the plaintiff asked for a certificate for counsel.  The plaintiff’s claim is straightforward, this is not an appropriate situation that certificate for counsel is warranted.

Order

31.I give the following orders:-

(i) There shall be judgment in favour of the plaintiff in the sum of $60,000.

(ii) Interest on the judgment sum be awarded at 2% from 1 October 2012 until the date of judgment.

(iii) Interest on the judgment sum at judgment rate from the date of judgment until full payment.

(iv) The defendant shall pay the costs of the action, including defending counterclaim, to be taxed if not agreed.

(v) Paragraph (iv) above shall become absolute in 14 days in absence of any application by the defendant to vary.

Mr Patrick Siu, instructed by Kok & Ha, for the plaintiff

The defendant was not represented and did not appear