Uncontroverted claim of breach of DMC: grant of an injunction

In Park Vale (Management) Ltd v Tang Wing Kin ([2013] HKEC 342, LT) Park Vale was the manager of a residential estate and T was the owner of one of the flats on the estate. Park Vale adduced evidence to show that T was in breach of the DMC (through installations T had added to the external walls of the flat and adjoining terraces that formed part of the common parts). Park Vale’s letters to T had not resulted in an end to the breaches. T had not opposed Park Vale’s application. Park Vale was granted the injunctions it sought requiring T to remedy the breaches and not to commit them in the future.

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Licence coupled with a grant: injunction available

In James Jones & Sons Ltd v Earl of Tankerville ([1909] 2 Ch. 440) D entered into a contract with P under which P had the right to cut trees on D’s land and remove the timber. D repudiated the contract and took back possession. P sought an injunction restraining D from preventing due execution of the contract. The question was whether this was possible or whether P was restricted to damages only. The injunction was granted:

‘A licence to enter a man’s property is prima facie revocable, but is irrevocable  even at law if coupled with or granted in aid of a legal interest conferred on the purchaser, and the interest so conferred may be a purely chattel interest or an interest in realty.’ (Parker J. at 442)

The same applies even where the interest was not created under seal so that the interest is purely equitable (443). In any event, it was arguable that P had a legal interest in the timber (444).

Break clause and forfeiture

In Far East Consortium v Full Wealthy International Ltd ([2006] HKEC 968, CA) T occupied property under a three year lease that gave the landlord the right to break the lease on six months’ prior written notice. The landlord served notice pursuant to this break clause. After service, but before the notice period had elapsed, the landlord served forfeiture proceedings on T. The court refused to deal with the matter under order 14. It was at least arguable that the service of the forfeiture proceedings prevented the landlord from relying on the break clause even though the notice to quit had been served before the forfeiture proceedings.

Distress: were goods in the apparent possession of the sub-tenant or the intermediate landlord?

In Fort Crown Investments Ltd v Tam Virginia V ([2006] HKEC 63, CA) there was a lease and a sub-lease of property. The head landlord levied distress on goods owned by the sub-tenant. The Court of Appeal decided that since the goods were actually owned by the sub-tenant, and the head landlord had notice of the sub-tenant’s claim to them, they were not in the apparent possession of the intermediate landlord.

Service of the writ, not its issue, amounts to re-entry

In Canas Property Co Ltd v K.L. Television Services Ltd ([1970] 2 Q.B. 433, CA (Eng)) T assigned a lease to M. When the assignee fell into arrears with the rent, the landlord issued forfeiture proceedings. M disappeared and the summons could not be served on him. The landlords then began proceedings in the High Court against the original tenant seeking the rent arrears both for the period before the issue of the earlier proceedings against the assignee and for the period after that. The original tenant argued that the issue of the earlier proceedings brought the lease to an end and that it had no liability to pay rent for the period after the date of issue. This failed. It was not enough to issue the proceedings; the lease only came to an end when they were served.

Lord Denning M.R. said:

‘My conclusion is that where a tenant has been guilty of a breach which has not been waived, then, in order to effect a forfeiture, the lessor must actually re-enter, or do what is equivalent to re-entry, namely, issue and serve a writ for possession on the lessee or assignee, as the case may be. If the lessee or assignee is a partnership (or joint tenants) service on one of them is enough for that purpose … The lease is determined as from the date on which the writ is served. The rent is payable up to the date of service. Mesne profits are payable after the date of service.’ (442)

Where the lessee cannot be found there may be no need to serve provided the election to bring the lease to an end is clear and unequivocal (441). Further:

‘If the lessee has left the premises and cannot be found, service can be effected by affixing a copy of the writ to some conspicuous part of the land.’ (441).

Forfeiture: rent / mesne profits where tenant has already given up possession when the landlord applies to court

In Wong Chun Yu v Kwong Siu Yin ([2004] HKEC 115 (LT) a tenant was in arrears with the rent. She claimed that she had given up possession in January 1991 (although there was no evidence that the landlord had accepted a surrender). In March 1991, the landlord applied to the court for possession because of the tenant’s default. The landlord sought rent / mesne profits for the period up to August 1991 (when he formally took back possession pursuant to a court order). In these proceedings, the tenant sought (among other things) leave to defend the landlord’s claim. There was some doubt as to whether she had indeed vacated the property by January 1991. The Tribunal held that if she had done so then she would have no liability to the landlord for rent or mesne profits for the period after the landlord applied to the court. The tenant was given leave to defend on this basis.

Single co-owner can distrain without the other’s authority

In Au Wing Lun v Cheung Chun Wah ([2010] 4 HKLRD 670, CA) A and B were the joint executors of X’s will and X had died. A obtained a warrant of distress against X’s tenant in respect of unpaid rent. The tenant applied to discharge the warrant and B applied to be joined as a defendant (there was a dispute as to the validity of the will but this had no impact on the tenant’s liability). The Court of Appeal confirmed that the judge below had been right to reject the applications. Executors are entitled to apply for warrants to distrain (Landlord and Tenant (Consolidation) Ordinance, s.106). One co-owner was entitled to apply in his own name and that of the other co-owner (Landlord and Tenant (Consolidation) Ordinance, s.107). The fact that the proceedings had been brought in the name of only one of the executors was a mere procedural irregularity and of no consequence.

Duty to mitigate loss

In Win Profit Corp Ltd v World Orient Investment Limited ([2012] 2 HKLRD 1053) P entered into a contract to sell D a large area of prime office space in Tsim Sha Tsui. D then backed out of the transaction. P forfeited the deposit and several months later it resold the property for a considerably lower sum than D had agreed to pay, the Lehman Brothers crisis having intervened. P sought to recover the difference between the price offered by D and the price eventually received but giving credit for the deposit. The contract with D seemed to entitle it to do this. P failed however. The contractual term preserving P’s right to recover any loss beyond the deposit was subject to P’s duty to mitigate its loss; it had to resell the property with due diligence and to make reasonable efforts to mitigate its loss. Immediately after the transaction with D fell through it had a number of offers and there was great interest in the property as it was rare and potential buyers perceived the opportunity to get it at a reduced price. Some firm offers were made, P discarded other offers and took few active steps to market the property. The court found that had P acted reasonably it would have achieved a price equal to 90% of the price offered by D. Thus, having forfeited the deposit P had suffered no further loss that could be recovered from D. The further loss was the result of its own delay. This was not a case of a seller seriously trying to sell but faced with the difficulty of a falling market.

Distress where the goods are not owned by the tenant

In Chung Ho Co Ltd v Net Power Holdings Ltd ([2012] HKEC 779) the tenant of shop premises was in arrears with the rent and a warrant of distress was issued. While the bailiffs were at the shop, W called to claim that he, rather than the tenant, was the owner of the goods. The bailiffs were not convinced. They seized the goods and took out an interpleader summons. The District Court held that the goods were in the apparent possession of the tenant and so the bailiffs had been entitled to seize them (Landlord and Tenant (Consolidation) Ordinance, section 87). W had not been able to demonstrate to the court’s satisfaction that he was the owner. Even if W had been able to prove that he was the owner, that would not necessarily have resulted in a judgment in his favour: ownership was only one factor to be considered.  If W was later able to prove that he was the true owner, his remedy would be to seek reimbursement from the tenant.

Obstruction of a right of way

An injunction will be granted against anyone who obstructs a right of way so as to prevent its reasonable enjoyment.

In Thorpe v Brumfitt ((1872 – 73) L.R. 8 Ch. App. 650, CA (Eng)) M had granted P a right of way over a passage  ‘for all purposes’ over his land for the purpose of getting to and from P’s Inn. M’s tenants obstructed the passage so that potential customers could not get to the Inn operated by P’s tenant. An injunction was granted against all of the parties causing the obstruction. There was an argument that the words  ‘for all purposes’ meant that the claimed easement did not benefit any specific land and so was invalid. This argument was rejected: the words clearly meant ‘for all purposes connected with the use of P’s land.’