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Land Law - A GRADE
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Lecture 5 – Remedies for Breach of CovenantsLandlord’s remedies
1) Recovery of rent
- Two ways – by action for non-payment and by distraint
o These remedies do not depend on a clause in the clause
- The landlord may in addition forfeit the lease from the tenant
o Where the lease contains a “forfeiture clause” permitting forfeiture if rent is unpaid
- Action for non-payment
o Unpaid rent is a debt to the landlord and therefore can be recovered by court actions
Landlord will usually couple a claim for rent arrears with a claim of possession
o Very often the tenant will have express covenanted to pay rent
o If not, such a covenant will be implied, provided that a rent is reserved
S117(3) LT(C)O – the covenant is implied in domestic tenancies
126 LT(C)O – the covenant is implied in other tenancies
o Four tribunals have jurisdiction to hear a claim for rent arrears
Small Claim Tribunal – case if $50,000 or less is involved
District Court – case of claim more than $50,000 but does not exceed $1 million
Court of First Instance – claim for more than $1 million
o When the claim for rent is coupled with a claim for possession,
Small Claim Tribunal – no power to order possession
District Court – where the rateable or annual value does not exceed $240,000
High Court – when the rateable value is greater than $240,00
o Where the premises fall within Part IV of the LT(C)O, claims of possession might be brought
in the Land Tribunal
o Subject to the Limitation Ordinance
In the case of rent, the limit is 6 years from the date the rent became due
So even where the landlord is the government
- Distress for Rent
o Regulated under Part III of the LT(C)O
Taking the levying of distress out of the hands of the landlord and put it into the hands
of the District Court bailiffs
Illegal to levy distress for rent except under Part III which describes the procedure
o Availability of Distress Procedure
Only a current landlord, and certain others effectively in the position of a
landlord, can use the procedure
Any person claiming to be entitled to arrears of rent or his agent (i.e. anyone
in the position of a landlord) may apply for a warrant
o E.g. joint landlords, mortgagees in possession can distrain provided
that they have accepted the tenant-landlord relationship
o The government however cannot distrain
Not available once the landlord ceases to own the land or to be entitled to receive rent
A landlord loses the right once he assigns his reversion to another or once his
land is resumed by the government (Lee Pui-leung v Lin I Ching)
The landlord can distrain only for rent, not for other charges e.g. management fees
Similarly, as to failure to pay charges in respect of a license to occupy land
, The rent must be owing in respect of the lease under which the tenant at present
holds
The landlord will lose the right to distrain for rent owed under an old lease if
he grants a new lease
He will lose the right if exercises a right to forfeit to lease
However, distress for arrears of rent is possible after termination of the
tenancy if the tenant continues in possession by virtue of section 102
Where there is an agreement for a lease but as yet no executed lease,
The landlord may distrain provided the tenant is in possession and the court is
willing to order specific performance of the agreement (Walsh v Lonsdale)
Rent due from a tenant which falls within Part IV of the LT(C)O can be distrained
E.g. increased rentals should be notified to the Commissioner of Rating and
Valuation
If not, they are irrecoverable by action
The rent must be in arrears
If the tenant pays or tenders the amount owing at any time before distress is
carried out, the goods are saved from seizure
This is so even the landlord has incurred costs in preparing for seizure
o Wong Goom v Wong Wan Tong
The landlord refused to accept rents in arrears offered after the
distress warrant was issued yet not been carried out
The refusal was wrongful and had to pay the cost of the distress
If the rent is not due because the tenant has a claim against the landlord which
maybe set-off against the landlord’s claim for rent, distress is unavailable
o Eller v Grovecrest Investments Ltd
Time limit on distraint
The rent arrears must not have been owing for more than 12 months at the
time the landlord applied to the court (section 79)
No room for distraint to be carried out except under Part III
Fuleekoo Co Ltd v Spiral Tubes International Ltd
Yet doubt arises from Standard Chartered Bank v Grow Up Trading
o The bank lent money to L on the security of a mortgage / parts of the
buildings were let the defendant T
o L got into financial difficulties and assigned the rent to the bank
o T was told to pay future rent to the bank but did not do so because it
had already given post-dated cheques for the rent to L
o When the rent was not paid, the bank applied for warrants of distress
o S106(f) in Part III says a mortgage in possession may apply for a
warrant
o S81 says that anyone claiming to be entitled to arrents of rent
o Held – the bank could not distrain
Base on common law that the right to distrain vests only in a
landlord of a tenant who is in arrears of rent and since in the
case the tenant had not accepted the bank as its landlord no
landlord-tenant relationship between
o Suggests that Part III is not comprehensive
o Procedure
District court // Warrant to bailiff // Hours // Forced entry // Impounding of goods //
Inventory and appraisement // Notice to T // Sale // Proceeds
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