Tenancy Agreement Frustrated

This case shows once again the important hurdle that must be overcome to invoke the doctrine of frustration in Hong Kong. This is not a defence that can be invoked lightly, even in the face of the current global pandemic crisis. Unless there is striking evidence that the parties` commitments have been profoundly or radically altered in the light of unforeseeable events or that the leased premises have been rendered inaccessible for a significant period of time in relation to the term of the lease, the parties are always expected to comply with their legal obligations under the lease agreement. Even if it is possible to temporarily prevent the performance of a lease, it is unlikely to be completely prevented under a short-term lease or a leasing agreement. While the period during which a tenant is unable to occupy their premises due to the COVID-19 outbreak is likely to be short as part of the total rental term, it is unlikely, due to the following jurisprudence, that a tenant will be able to successfully argue that their lease has been frustrated. However, if a rental agreement expires immediately and the tenant is probably not reoccupied before expiration (or only for a very short period of time), we can argue that the lease has been frustrated. The doctrine of frustration was limited to renting in Hong Kong. It was reviewed more than a decade ago by the Hong Kong court regarding the onset of severe acute respiratory syndrome (SARS). In Li Ching Wing v Xuan Yi Xiong [2004] 1 HKC, the District Court rejected a tenant`s allegation that a two-year lease was foiled after the occupants of the premises were evacuated, in accordance with a 10-day isolation order from the Ministry of Health in the face of the outbreak of SARS. The Tribunal, while recognizing that the SARS outbreak was an unforeseen event, found that it did not materially alter the nature of the parties` outstanding contractual rights or obligations from what the parties could reasonably have envisaged at the time of performance of the lease.

With regard to the facts, the Tribunal found that the 10-day isolation order for the total use of the premises for a period of two years was quite insignificant. If a lease is considered frustrated, for example.B. in cases where a fire requires significant and long-term restoration work, the security of the mandate, including the first right to return to restorative work, is lacking. . . .

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