Kwong Cheung Sun v. Ko Wing on

CACV000037/1982

Landlord and Tenant (Consolidation) Ordinance. Primary user of premises. Form of Certificate issued under section 7A by Commissioner of Rating and Valuation. Notes leading to the issue of the Certificate are not part of the Certificate which is in a form prescribed by the Commissioner and is prima facie evidence of primary user Chan Kwok-kwan v. Chan Cheong-wai (1980) H.K.L.R. 450 distinguished.

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Coram: Hon. Leonard V-P, Cons & Zimmern JJ.A.

Date: 27 July 1982

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JUDGMENT

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Leonard, V-P:

1. We allowed this appeal at the conclusion of the hearing and said we would give reasons in writing. The appellant's claim was under Part V of the Landlord & Tenant (Consolidation) Ordinance and alleged non-domestic use of the premises while the respondent alleged domestic use and claimed that Part II of the Ordinance applied. The only dispute therefore was whether or not the premises were used wholly or primarily for domestic purposes.

2. The appellant armed himself in the Court below with the certificate dated the 19th September, 1980 of the Commissioner of Rating and Valuation issued under section 7A of the Ordinance which by virtue of the operation of section 7A(4) was prima facie evidence that the premises were business premises on the date on which they were inspected namely the 10th September, 1980. On the face of the certificate the respondent was informed that he might make application, within one month from the date of its service, to the District Court for a review of the certificate. He had not done so.

3. At the hearing then the appellant had prima facie evidence as to the user of the premises and might well have been content with producing the certificate and waiting for the respondent to prove that the user of the premises was not as certified. He was not content to do so and his taking of the course which he did take may well have confused the trial judge as to the burden of proof. He gave evidence himself and on all material points the trial judge preferred that evidence to that of the defence witnesses. He struck the trial judge as an "honest witness" in contradistinction to the defence witness who "were not only evasive and contradictory but guilty of downright lies".

4. The appellant then having apparently put in the certificate called two valuation officers for whose attendance he had issued subpoenas. This he could not have done in the District Court for section 68(1), (1A) and (2) read as follows:

"68(1)        Subject to subsections (1A) and (2), neither the Commissioner nor any public officer employed in the Department of Rating and Valuation nor any member of a tribunal appointed under section 59(2) shall be called to give evidence in proceedings before the Court and no subpoena shall be issued against the Commissioner or such public officer or member.

(1A) The Commissioner or any public officer employed in the Department of Rating and Valuation may be called to give evidence in any proceedings on an appeal to the Court under section 60.

(2) Notwithstanding subsection (1), a subpoena duces tecum may be issued against the Commissioner requiring him to produce in any proceedings an application under section 51(4), 51(4A), 56A(1), 57(1), 59(1), 62(1) or 63(1), and a subpoena issued under this sub-section shall be deemed to be complied with by the production of any document specified in the subpoena by any public officer employed in the Department of Rating and Valuation."

5. However the "Court" there referred to is the District Court (Section 2).

6. Two valuation officers had compiled a report making notes to do so but they had not prepared the certificate of user issued under section 7A. That had been done by their superior officer on information given by them but the notes were attached to the certificate. This also led to confusion for these notes and their report together with the certificate were indiscriminately referred to as "the Certificate" by one of the valuation officers. Of the valuation officers the trial judge has this to say:

"The valuation officer, Mr. Lo and Miss Wong, who gave evidence for the plaintiff, have no axe to grind in this matter. Their evidence largely amounted to a refreshing of memory from current notes and, as such, is eminently reliable. I accept the evidence of their eyes, although I do not entirely agree with their conclusions.

The measurements in the plan attached to the certificate of primary user were made by the valuation officers themselves. They are also responsible for the remarks under the headings 'general description of user' and 'other relevant findings', but the concluding remarks and findings are those of the rent officer, with whom the valuation officers discussed the case and who has not given evidence.

There is a curious contradiction in the percentage of total area stated in the certificate to be non-domestic. The valuation officers put it at 57.1% and their calculations are tube seen on the document itself, whereas the rent officer gives the figure as 51.63%, but gives no indication as to how he arrived at this percentage. It does not seem to bear any relationship to the other figure or percentages. This does not matter, in fact, as I have concluded that both figures are wrong."

7. There was in fact no "percentage of total area" mentioned in the certificate which is in a form which has been gazetted by the Commissioner in pursuance of powers given to him. It reads as follows:

"Premises: 28 HO Man Tin Street, ground floor

I certify that in my opinion the primary user of the above premises on 10th September, 1980 (date of inspection) was non-domestic."

8. So far as we can see from the judgment the trial judge having come to the conclusion that "both figures were wrong" thereafter disregarded the certificate and no longer regarded it as prima facie evidence.

9. He examined the evidence of the valuation officers with a fine tooth comb. He considered the premises room by room by garden by backyard and passage ways paying particular attention to the areas of each unit and according equal importance to each unit except a garden which he was content to use "as a make weight if necessary" and found that out of a total area excluding the garden 62% was used for domestic purposes. "This" he said "puts a different complexion on matters, but is not of itself decisive". With some lack of scepticism he accepted accounts submitted by the respondent (whom he had already dismissed as "guilty of downright lies") to Inland Revenue as accurately showing the net profits of the respondent from the business he carried on. Whatever these may have been it is clear even accepting the accounts as accurate that the gross profits of the business amounted to some 12 years rental as Mr. Chang has pointed out to us and it is to gross profits that the Ordinance bids us look (section 51(3)(e)(iv)). He concludes that the business carried on was no 'cottage industry' which we take to mean that the respondent was carrying on a substantial business. He undoubtedly was. Although the profit shown approximated to the rent of the premises the accounts show a turnover well exceeding one million dollars per annum. One of the business expenses shown in these accounts was the total rent paid by the respondent to the appellant. That the total rent was put forward as a business expense would suggest that the respondent himself was prepared to accept that the premises were business premises. The trial judge concludes his judgment with the following passage:

"I am left, it seems, with an inconclusive state of affairs. The matter is delicately balanced, in that there is only a slight preponderance of domestic over non-domestic user. The tenancy was originally a domestic one. The plaintiff alleges that its nature has changed. The situation is different from that obtainint in Chan Kwok-kwan v. Chan Cheong-wai,⁽¹⁾ in which the suit premises were originally let as a garage and it was held that the trial judge was wrong to place the burden of proof on the plaintiff landlord. Here it is up to the plaintiff to show that, because of the change of user, Part II of the Ordinance no longer applies.

I am bound to say that he has failed to do so. There will be judgment for the defendant with costs."

10. We would gather from this passage that the trial judge concluded that once it was shown that the premises were let for domestic purposes it was for the appellant to show a change of user. Despite the strennous argument of Mr. Chang to the contrary we think that this must be so. The appellant must show a change of user. The certificate did so. These certificates are, we consider, having regard to the statutory provisions relating to them of great evidential worth which is in no way lessened by the care evinced by the staff of the Department of Rating and Valuation in their preparation. It must not be overlooked that before the certificate is issued the premises have been visited. True, the officials concerned measure the individual parts of the premises and attribute to each part a percentage user and they may well be wrong (as the trial judge thought they were here) in their attributions. They, also, however, have an opportunity by their visit of assessing the overall effect of the occupancy, an advantage not enjoyed by the trial judge. When the intimation (as to the right of appeal) to the tenant endorsed on the certificate is ignored his position becomes the more untenable. The trial judge is, of course, entitled to look at all the evidence to see if the prima facie evidence afforede by the certificate is rebutted but it was for the respondent to show that it is rebutted not for the appellant to show that it is not.

11. Had the trial judge looked at the matter in this light he would we are convinced, have decided otherwise for the correct formulation would then have been:

"It was for the plaintiff to show that the nature of the user has changed. He has prima facie established by production of the certificate that it has so that it is now for the defendant to show that Part II of the Ordinance still applies".

12. We note that in Chan Kwok-kwan v. Chan Cheong-wai⁽¹⁾ the head-note states "The certificate of primary user was prima facie evidence which should only be put in the scales if the evidence considered by itself indicated the matter of primary user was in equilibrium". The certificate there was to the effect that the user was domestic but the initial letting was for non-domestic purposes. The reference to the certificate occurs in the following passage at page 455 of the report:

"The Certificate of the Commissioner of Rating and Valuation is primary evidence of user but, in the circumstances of the case there being evidence to the contrary effect and the certificate being demonstrably wrong as to area and the compiler having been unaware of the after hours domestic use of the shop, the judge was wrong, after all the evidence was in, to give any independent weight to the certificate. After all the evidence was in the judge put the legal burden on the wrong side of the scale and put the prima facie evidence of the certificate on the scale. Having done se he found the case in equilibrium. These two matters should only have been put on the scale had the evidence, when considered by itself, indicated that the matter was in equilibrium. Indeed we have considerable doubt whether the certificate, once there is evidence to the contrary fit to be left to the trial of fact, has any evidential weight at all."

(Regina v. National Insurance Commissioners ex ante Richardson⁽²⁾ .

13. The facts in that case were, of course, very different for there it was the tenant who was relying on the certificate and adducing it in evidence after the landlord had already brought evidence contrary to the certificate. Again unless the certificate was in a form very different from that used in our case the Court appears to have been confused between the certificate and the report given in connection with it. We cannot regard the doubt expressed in the final sentence as other than obiter and cannot find support for it in the case of Regina v. National Insurance Commissioners ex parte Richardson.⁽²⁾ For that was a case turning on the interpretation of the words "in the absence of evidence to the contrary" in section 7(4) of the National Insurance (Industrial Injuries) Act 1946 the relevant portion of which reads "on accident arising in the course of an insured person's employment shall be deemed, in the absence of evidence to the contrary, also to have arisen out of that employment" which it was held menat "no more than that if there is evidence ....... that the accident does not arise out of or in the course of the employment then there is no presumption at all ........." It in no way effects the evidential value of a certificate in such a case as this. The evidential value of a certificate in the hands of a tenant (defendant) may be small once the landlord (plaintiff) has given acceptable evidence contrary to it but it is a very different matter when a landlord relies on it. At the very least it passes the onus to the tenant. In Chan Kwok-kwan v. Chan Cheong-wai⁽²⁾ the Court was dealing with the reverse situation and our case is entirely distinguishable.

14. Taking a broad view of the evidence here we are left in no doubt but that the certificate was correct and that a non-domestic user was clearly established.

(1) (1980) H.K.L.R. 450

(2) (1958) 2 All E.R. 689

Representation:

Mr. D. Chang Q.C. & Mr. S. Lee (Philip K.H. Wong & Co.) for appellant

Mr. M. Lee Q.C. & Mr. A. Fung (Hastings & Co.) for respondent