Fuk Lai Ling v. Poon Shu-wan
Read the full judgment text of CACV 45/1983 on BabelCite. This Court of Appeal judgment.
1. Barker, J.A. has authorised me to say that he agrees with the reasons I am about to give.
Cited by 5 cases
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CACV000045/1983 Landlord & tenant - action for forfeiture for non-payment of rent - rent not recoverable by action by reason of failure to comply with s.54(1) of Landlord & Tenant (Consolidation) Ordinance - action for forfeiture not an action to recover rent - nor is action for mesne profits - landlord entitled to possession. Mr. B. Chain (H.M. SO & Co.) for Appellant/Plaintiff. Respondent/Defendant not appearing.
BETWEEN
------ Coram: Sir Alan Huggins, V.-P., Yang & Barker, JJ.A. Date of Judgment: 27th May 1983 ________________________ REASONS FOR JUDGMENT ________________________ Sir Alan Huggins, V.-P. : 1. Barker, J.A. has authorised me to say that he agrees with the reasons I am about to give. 2. The question we have to decide is whether a failure to pay a rent which is irrecoverable by action can be made the basis of a forfeiture. 3. On 20th October 1981 the parties entered into a Tenancy Agreement in writing which contained the following term:
The plaintiff Landlord failed to comply with s.54 (1) of the Landlord & Tenant (Consolidation) Ordinance, which provides:
The effect of that failure is laid down by ss. (3):
4. The defendant Tenant failed to pay rent "since 1st July 1982" and the Landlord sued in the District Court for possession, arrears of rent and/or mesne profits. The Tenant filed no defence and the Landlord applied for judgment in default of defence. The Deputy Registrar drew attention to the provisions of s.54(3) and that application was withdrawn. A fresh application was then made for judgment in default of defence but limited to the claims for possession and for mesne profits. That application was referred to a judge. 5. The learned judge did not, of course, have the benefit of argument on behalf of the Tenant - neither did we - but he very properly considered whether the Landlord was entitled to the judgment for which he was asking. He was satisfied that the claims were properly brought in the District Court rather than in the Lands Tribunal but he dismissed them on the ground that it would be absurd if the Landlord could forfeit the tenancy for non-payment of a rent which she was "not entitled under the law to recover". That view may otherwise be stated in this form, that a rent which was not recoverable by action could not be "in arrears" within the meaning of the condition for forfeiture. The judge felt supported in his view by what he saw to be a difficulty if an order for possession were made and the Tenant sought relief against forfeiture under s.69(1)(b) of the District Court Ordinance: he thought the court would have to make an order which would be in conflict with s.54(3) of the Landlord & Tenant (Consolidation) Ordinance. 6. I will deal first with this second point. It seems to me, with respect, that the suggested difficulty is more apparent than real. The material part of s. 69(1) of the District Court Ordinance is as follows:
It seems to me that there is no scope here for any "order" 'for the payment of the rent in arrear: the tenant has a free choice whether he will comply with the condition that the arrears be paid or suffer the enforcement of the forfeiture. If he chooses to pay, he will not ipso facto be paying an illegal rent or recovering the rent by action. It is well established that a contract may be unenforceable by action without being void. Thus in Leroux v Brown (1852) 2 C .B 801, 824 Jervis, C.J. having set out the terms of s.4 of the Statute of Frauds, continued:
.It was a natural consequence of that principle that a deposit paid under an unenforceable agreement could, not be recovered by the party who paid it: Monnichendam v Leanse (1923) 39 T.L.R. 445. Equally, where rent has been paid although the landlord could not have recovered it by action, the tenant cannot successfully sue for its return. 7. What I have just said is relevant also to the argument that it would be absurd if the Landlord could forfeit the tenancy for non-payment of a rent which she was "not entitled under the law to recover". I have placed the last six words in inverted commas to emphasise that payment of the rent is not illegal: the Landlord is not "entitled to maintain an action to recover" it. In so stating, I appreciate, I am already giving a broad interpretation to x.54(3), because what that subsection says is irrecoverable by action is the "rent stated in the notice mentioned in ss.(2)" and if there is no such notice (as here) ss (3) cannot on a strict interpretation be. applicable at all. Section 54 is not happily drafted. In particular, it requires a landlord to lodge a notice signed by himself "and the tenant" and, whilst providing that the notice "shall be signed" by the tenant, makes no provision for compelling the tenant to sign nor even prescribes a penalty for a refusal to sign. Nevertheless I do not think the Legislature can have intended to allow the protection which s.54 was designed to afford to be stultified entirely by the device of deliberately failing to lodge the notice mentioned therein. 8. However, there must be some limit on the liberality of the approach to the interpretation of the section, especially as it deprives a landlord of rights which he would .have under the general law. Subsection (3) refers to maintaining an action to recover rent and it must be assumed that the Legislature meant what it said. By recovering the rent otherwise than "by action'' the landlord does not contravene the subsection. An action for possession on the ground of forfeiture for non-payment of rent is not an action to recover rent and, if successful, brings to an end the tenant's liability to continue to pay rent. The apparent absurdity which weighed so heavily with the. learned judge is, I venture to think, only superficial. The interpretation which he adopted might also produce absurdity if a tenant, once in possession, declined to sign the notice required to be lodged with the Commissioner: the tenant could neither be successfully sued for rent nor evicted from the premises. I cannot believe that such a monstrous injustice was intended by the Legislature as the penalty for failing to lodge a notice which few of the in habitants. of Hong Kong are probably aware is required or could reasonably be expected to foresee would be required. 9. No specific argument was addressed to us in relation to the claim for mesne profits, but in its nature such a claim is not a claim for rent, albeit that a rent agreed between the parties is often taken as the strongest evidence of the appropriate measure of damages for unlawful use and occupation. 10. I have found no case where a court has had to consider a forfeiture for non-payment of rent which was irrecoverable by virtue of a statute of limitation. That is not surprising for three reasons. First, landlords are usually not slow to protect themselves against bad-paying tenants. Secondly, the right of re-entry will itself become statute barred very shortly after the rent has become irrecoverable under the statute. Thirdly, where statute barred rent is owed, a forfeiture would in any event be supportable on the ground of non-payment of rent for a later period, a new right to re-enter having accrued (Barratt v Richardson 1930 1 K.B. 686), so that the issue would not arise. 11. For the reasons I have given I came to the conclusion that the appeal should be allowed and the plaintiff Landlord permitted to enter judgment in default of de fence for possession and mesne profits as claimed. Yang J. A .: 12. I have read the learned Vice-President's Reasons for Judgment in draft, with which I entirely agree and I have nothing that I can usefully add. 27th May 1983 Representation: Mr. B. Chain (H.M. SO & Co.) for Appellant/Plaintiff. Respondent/Defendant not appearing. | |||||||||||||||||
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