Lam Wai v. Mak Yok-jan

CACV000038/1980

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Coram: Roberts, C.J., Leonard & Li, JJ.A.

Date of Judgment: 2 April 1980

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JUDGMENT

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Introduction

1. The plaintiff in the action, who was the respondent in the appeal, was the registered owner of premises on the 5th floor of Lai Wah Mansion at 867, King's Road. He granted a tenancy to the defendant (the appellant) for a period of three years expiring on 19th January, 1980, at a rental of $1,200 per month payable in advance on the 20th day of each calendar month.

2. Before the tenancy was due to expire by effluxion of time, on the 19th January, 1980, the plaintiff (landlord) warned the defendant (tenant) that he would require possession of the premises on the termination of the period of the lease. However, when the tenant refused to deliver up possession, the landlord issued a writ, on the 21st January, 1980, claiming that he was entitled to possession, on the ground that the tenancy had expired by effluxion of time on the 19th January.

3. The tenant, then acting in person, filed a defence on 28th January, 1980, claiming that he had exercised an option to renew under the tenancy agreement, by letter dated 25th January, enclosing a cheque for $1,200 as rent for the period from 20th January to 19th February.

Hearings

4. On the 13th February, on the application of the landlord, Judge Bewley ordered that the defence be struck out and that judgment be entered for the landlord but with a stay of execution for two months. On 15th February, however, the Landlord and Tenant (Consolidation) (Amendment) Ordinance (No.6 of 1980) came into effect. It was thus in force on 4th March when Judge Bewley considered an application by the tenant that he should review his order of 13th February.

5. Having heard counsel for both parties on the application for review, the Judge reserved his decision until the 7th March, when he confirmed his earlier order of 13th February.

6. The solicitor for the tenant conceded, at the review, that there was no validity in the earlier defence put forward that the tenant had validly exercised an option to renew conferred by the three year lease. Instead, he argued that the premises concerned had become subject to the protection afforded by Part II of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7 (the "principal Ordinance") by virtue of Ordinance No. 6 of 1980, and that therefore the tenancy continued until terminated in the circumstances provided for by Part II of the principal Ordinance.

7. It is not disputed that this is a domestic tenancy of a post-war building. Thus, before Ordinance No. 6 of 1980 was enacted, Part II of the principal Ordinance would have applied, unless the tenancy fell within one of the exceptions listed in section 50(6) of the principal Ordinance, as it did. Paragraph (j) of section 50(6) excluded from Part II any tenancy or subtenancy created after the 31st December, 1975 for a fixed term of three or more years, the agreement for which contained no provision for earlier determination by the landlord of such tenancy or subtenancy other than for the breach of any of the provisions of the agreement.

8. The question which the judge had to decide was whether the amendments enacted by Ordinance No. 6 of 1980 on the 15th February, 1980 and given retrospective effect to 18th December, 1979, insofar as they altered section 50(6) of the Ordinance, had brought within the protection of Part II a tenancy for a fixed term of three years entered after 31st December, 1975 and before 18th December, 1979.

9. Judge Bewley said -

General effect of Ordinance No. 6 of 1980

10. In argument before us on the appeal, counsel for the landlord conceded that he no longer felt able to argue that 3 year tenancies created before 18th December, 1979 fell outside the protection of Part II of the principal Ordinance. It has therefore not been in issue before us.

11. Nevertheless, we feel obliged to deal with it firstly because Judge Bewley founded his decision upon it and secondly because of the importance to landlords and tenants generally of the effect of the Ordinance No. 6 of 1980. Before the enactment of Ordinance No. 6 of 1980, three main classes of tenancy had previously been excluded from the protection of Part II of the Ordinance (leaving out of account premises excluded by virtue of having a high rateable value). These were tenancies lasting for a minimum of three years, tenancies to Government departments or corporations, and tenancies in premises completed after the 14th December, 1973.

12. The Judge based his conclusion that the protection of Part II should not apply to tenancies of those kinds entered into before the 18th December, 1979, upon section 23(c) of the Interpretation and General Clauses Ordinance (Cap. 1) which is quoted above.

13. Section 2(1) of Cap. 1 states that Cap. 1 will only apply unless a contrary intention appears from any other Ordinance to which it is sought to apply Cap. 1. So section 23(c) (even if it were applicable to these facts, a matter which we will deal with later) would not apply if it were clear that an amending Ordinance was intended to interfere with rights of the nature described in section 23(c).

14. The central purpose of the principal Ordinance (Cap. 7) is to interfere with rights, whether these are common law rights or whether they are rights acquired under tenancy agreements between landlords and tenants, by imposing various forms of statutory control on rent, on right to possession and on other incidents of the relationship of landlord and tenant.

15. The obvious intention of the amendments to section 50, as derived from their wording, is to bring within the scope of Part II various tenancies which previously fell outside it. The special provisions of the amending Ordinance must therefore prevail over the general provisions of section 23(c). Moreover, in any event, we do not think that section 23(c) applies to this tenancy. Section 23(c) refers to rights or privileges accrued or incurred under an Ordinance which is repealed (or amended). But, the "right of reversion" which the Judge mentions, even if that were an accurate description of the landlord's right, arose not from section 50 of the principal Ordinance but from the terms of the tenancy agreement itself. Before section 50(6) was amended, this three year tenancy fell wholly outside the operation of Part II of the principal Ordinance and was thus subject to the general law of landlord and tenant, from which the parties rights were derived, and not to Cap. 7 at all.

16. It follows, therefore, that we are satisfied that this tenancy and all those which, on the 17th December of last year, fell within paragraphs (i), (j) or (k) of section 50(6), were brought within the ambit of Part II as from the 18th December, 1979. Thereafter, such newly protected tenancies could only be terminated in accordance with the provisions of Part II of Cap. 7.

Particular case

17. Having stated the general principle, we must next consider the unusual features of this case, though they are unlikely to recur in more than a very small number of instances. On 13th February the Judge made an order striking out the defence, basing his order on the law as he understood it to be on the 13th February. Nobody has argued that he was mistaken on that date, as the law then stood. This law was amended on 15th February, with retrospective effect to 18th December, 1979.

18. What law should the Judge have applied when he reviewed his order on the 4th March? Should he have applied the law as it was on 13th February or should he have applied the law as it became on 15th February? What he did was to apply the new law, but to apply it in a way which we think was incorrect.

19. The question of the law to be applied where there has been an alteration of it between the cause of action arising and the date of the hearing is dealt with in Hutchinson v. Jauncey⁽¹⁾, in which premises were brought within the protection of the Rent Acts between the issue of a writ for possession and the hearing of the claim. The headnote to the case reads -

"the law applicable was the law as it existed at the date of the hearing and as the tenancy was then protected by the provisions of the Rent Restriction Acts ... there was no jurisdiction to make an order for possession."

20. However, Mr. Chan has argued forcibly on behalf of the landlord that, while this may be the general principle, it does not cover the case in which the law changes after a judgment has already been delivered. Once this has happened, he submitted, an appellate court should not interfere with the judgment, even if the law on which that judgment was based has been retrospectively amended.

21. He relied, in particular, on In re A Debtor, ex parte Debtor⁽²⁾. At page 243, Lord Wright, Mr.R. said -

".... with regard to substantive rights it is well established that the Appellate Court must give effect to the same law as that which was in force at the date of the earlier proceeding....... A matter of substantive right which has become res judicata cannot be upset by a subsequent general change in the law, in the absence of precise intention to make the change so retrospective being evidenced in the Act."

22. Was the order of 13th February such as would support a plea of res judicata? It is to be remembered that, in his second order of 7th March, the District Judge was exercising the powers conferred by section 53 of the District Court Ordinance, Cap. 336, which permits him to review any order which he has made and to re-open and to re-try the case and reverse, vary or confirm his previous judgment or order.

23. In our view, so long as the judgment was open to review, the plaintiff could not be said to have obtained a final judgment which could not be upset; thus the matter was not res judicata.

24. Furthermore, In re A Debtor states that it would be right for this court to reverse the earlier order, if satisfied that a "precise intention to make the change so retrospective" can be derived from the amending Ordinance.

25. The same approach, as to pending proceedings, was set out by Bowen, L.J. in Quilter v. Mapleson⁽³⁾, at p. 676 -

"No doubt, as a general rule, a statute does not affect pending proceedings, but that rule is only a guide where the intention of the legislature is obscure, it does not modify the clear words of a statute. Many clauses of this statute contain provisions clearly retrospective, which lessens the presumption against any particular clause being retrospective."

26. In that case the Court of Appeal applied the law in force at the date of appeal and granted relief which was not available at the date of the trial of the action.

27. In Hutchinson v. Jauncey the Court of Appeal held that if the necessary intention of the Act is to affect pending cases, the Court would give effect to this.

28. What was the intention of the Legislature, as this may be derived from the words of Ordinance No. 6 of 1980?

29. The amendment to section 52 of the principal Ordinance reads -

"... no tenancy, whether created before or after the 18th December, 1979, shall terminate during the continuance in force of this Part."

30. This must be taken to mean - shall terminate during the continuance in force of this Part other than in accordance with the provisions of this Part.

31. Section 15 of the amending Ordinance contains detailed provisions governing tenancies, not previously subject to Part II, where there has been a new agreement affecting them, entered before but coming into force after the 18th December and providing for an increase in rent. Section 15 obliges the landlord to repay to the tenant excess rent tendered by the tenant during, what I might call 'the interim period'. Section 17(7) of the amending Ordinance deals with notices of termination served prior to the 18th December and due to expire after that date.

32. We have no doubt that the Legislature intended all tenancies of the classes described to fall within the protection of Part II from the 18th December, 1979, including those which were the subject of pending proceedings.

33. The orders made by the Judge on 13th February and 7th March are quashed and the landlord's claim for possession fails.

34. There will be no order as to costs in relation to the hearing on 13th February. The tenant (defendant) will have the costs of the hearings on 4th and 7th March, of the application for leave to appeal of 13th March and of the appeal.

Representation:

K.H. Woo (C.P. Lai & Co.) for appellant

Warren Chan (K.K. & Winston Chu) for respondent

(1) (1950) 1 K.B. 574.

(2) (1936) Ch. D. 237.

(3) (1882) Q.B.D. 677.