Hop Hing (A Firm) v. Lam Pak

CACV000007A/1971

IN THE SUPREME COURT OF HONG KONG

(APPELLATE JURISDICTION)

CIVIL APPEAL NO. 7 OF 1971

(On Appeal from V.C. J. Action No. 4372 of 1970)

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Coram: Huggins and Pickering, JJ.

Date of Judgment: 24th December 1971

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JUDGMENT

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Huggins, J.:

1. This is an appeal by a defendant tenant against a judgment of a District Judge whereby the tenant was ordered to give up possession of premises situate at and known as 574 Canton Road, ground floor, Kowloon. The action was brought for forfeiture on the ground of breach of the covenant for payment of rent implied by s.6 of the Tenancy (Notice of Termination) Ordinance. That section reads:

"          In the absence of any express covenant for the payment of rent and condition for forfeiture, there shall be implied in every tenancy a covenant to pay the rent on the due date and a condition for forfeiture for non-payment within fifteen days of the due date."

It was not in dispute that the tenant had not paid the rent for upwards of five months but it was contended (a) that the premises were controlled by virtue of the Landlord and Tenant Ordinance so that the District Court had no jurisdiction to order the eviction of the tenant and (b) that the landlord had waived her right to forfeiture. There was a third defence alleged, namely that the rent demanded was in excess of the lawfully recoverable rent, but that was superfluous in relation to the claim for possession because it depended upon the provisions of the Landlord and Tenant Ordinance and if that Ordinance applied the District Court had no jurisdiction in any event. The third defence was, however, material to the claim for arrears of rent.

2. The ground of exception from the Landlord and Tenant Ordinance which was relied upon by the landlord was that the premises had remained continuously untenanted after 16th August, 1945 and had after 23rd May, 1947 (the date of the commencement of the Ordinance) been rendered habitable by extensive repairs. The relevant provision of the Ordinance is s.3(1), which reads in part:

It is clear that before premises can be found to come within this paragraph there must have been premises in existence on 16th August, 1945 which were capable of being "repaired": see Kai Nam v. Ma Kam Chan⁽¹⁾. Although in the present case there was evidence upon which it would have been possible for the learned judge to conclude that the premises formed part of an entirely new building and therefore to say he was not satisfied that they were repaired premises, this matter never seems to have been drawn to his attention. If the premises did form part of an entirely new building then by virtue of s.3(1)(a) they would have been excepted from the provisions of the Ordinance only if there were an occupation permit issued under the provisions of the Buildings Ordinance after 16th August, 1945, as to which no evidence was given. It is a little surprising, in view of the nature of the evidence given, that this aspect of the case was not ventilated in the court below, but the question which now arises is whether it is open to the Appellant to take in this Court for the first time the point that a building which had ceased to exist as a building could not be "repaired" so as to bring it within s.3(1)(d).

3. So far as is humanly possible this Court will endeavour to see that justice is done between parties who come before it and will, at least in civil matters, not allow technical points to prevent its deciding the real issues on the merits, unless to ignore the technical point would itself create injustice. To this end the Court will, as a general rule, always allow a new point to be taken on an appeal where

see HO Kwok-chu v. Chung Ying Boarding House⁽²⁾ and the cases there cited. Those conditions are not satisfied in the present case but counsel for the Appellant has argued that the Court will nevertheless always take or allow to be taken even on the hearing of an appeal any point which goes to the jurisdiction of the Court. The basis of this argument is the principle that the parties cannot by agreement give the Court a jurisdiction which it does not have. What is said here is that the parties have, by not raising expressly the issue whether a repairable building existed, allowed the Court to assume a jurisdiction which, if a repairable building did not exist, it did not have. The argument really comes to this, that if (as is well established) the parties cannot by consent give the Court a jurisdiction which it does not have nor can they agree the existence of facts which do not in truth exist but which if they did exist would give the Court jurisdiction: if they cannot thus agree the existence of facts which do not in truth exist nor can they give the Court jurisdiction by default, i.e. by not putting the true facts before the Court: consequently it must be open to a party at any time to adduce evidence to show the true facts.

4. At first sight this argument has a certain plausibility but the cases cited in support of it do not go so far. The case which comes nearest to supporting it is Sharpe v. Nicholls⁽³⁾. The landlord of premises protected under the Rent Acts died and his personal representatives brought an action for possession on the ground that the widow, who was one of the personal representatives, required the premises as a residence for herself. An order was made giving "the plaintiff" possession "subject to plaintiff allowing defendant a Rent Act protected tenancy" of part of the premises. The tenant appealed. No point had been taken before the County Court judge that unless, for a number of possible reasons, the premises had vested in the widow she as one of the two landlords could not recover possession on the ground that she alone required the premises as a residence: the whole case had been fought upon the question of greater hardship. Morton, L.J. said at p.387:

"It seems to me that, unless the plaintiffs alleged and proved the necessary facts to bring them within para. (h) of sch. I to the Act of 1933, it was not within the power of the county court judge to make an order for possession, and that this is a point of law which is open to the defendant in this Court."

He went on to say that as the plaintiffs had expressly pleaded that they were "the owners as personal representatives" they were precluded from now alleging that the widow was beneficially interested. Lawrence, L.J. regarded it as "a matter of very great doubt whether the defendant ought to be allowed to raise [this] point again", it having been implicitly admitted that the widow was the landlord and far from thinking that it was not open to the tenant to take the new point on appeal it was only with hesitation that he agreed to a new trial rather than dismissing the appeal, his reason for agreeing being that the case was tried "in the County Court where matters of proof and of form are not gone into with the same particularity as they are in the High Court". Although MacKinnon, L.J. referred to the facts' having been "totally unascertained" as a result of the failure to take the point below, he came to the conclusion that a new trial ought to be ordered "in the circumstances of this case". The circumstances included the fact that in any event the judge had made an order which he ought not to have made and it is not clear that the learned Lord Justice would have ordered a new trial if this other ground of appeal had not also existed: it is possible to construe his judgment as indicating that he was only allowing the new point to be taken on the rehearing because the case had to go back in any event. There is certainly nothing in any of the judgments to suggest that a party has almost a right to a new trial where the possibility exists that on such a new trial it might be proved that the true facts were different from the facts which were assumed or found at the first trial and that on the true facts the Court did not have jursidiction.

5. The other cases cited to us appear to me to decide no more than what was said by Goddard, L.J. in Davies v. Warwick⁽⁴⁾:

I fully accept that as a correct statement of the law but it does not necessarily follow that, where an appellate court finds that the case is one in which the trial judge would have been debarred from granting an order for possession if the facts had been other than those expressly or impliedly found by him, a new trial will be ordered for the purpose of confirming the correctness of the previous findings. It seems to me that three cases have to be considered. The first case is where on the facts found there was no jurisdiction. In such a case the appellate court will not close its eyes to the absence of jurisdiction simply because no point was taken in the court below: Francis Jackson Developments Ltd. v. Stemp⁽⁵⁾. The second case is where on the facts found it is doubtful whether the court had jurisdiction. Thus in Selwyn v. Hamill⁽⁶⁾, no point having been taken before him, the judge did not consider whether the alternative accommodation which he found had been offered to the tenant was as a matter of law "suitable alternative accommodation", in view of the fact that it consisted of two parts of a building which were separated by another part. Tucker, L.J. said at p.71:

The third case, which is the one before us, is where on the facts found (and, it may be, found not expressly but only by implication) it is clear that the court had jurisdiction but where, although there was evidence to support the findings, it is suggested that the judge did not appreciate the relevance of the facts because their relevance was not drawn to his attention and that he made his findings per incuriam. The contention that in such a case there ought to be a new trial seems to me to go far beyond any of the cases cited to us and to lead on to most dangerous ground. We are not to assume that the learned judge did not appreciate the significance of his findings. The fact that he did not expressly make a finding that there was a building capable of being repaired may be due not to the fact that he failed to see the importance of such a finding but rather to the fact that, counsel having taken no point as to this, he thought the matter did not call for express mention. I confess that I would have felt happier had he adverted to what was an important issue whether any point was taken or not, but just as where the language used by a judge in a civil action is capable of two equally possible constructions one of which would be a misdirection the benefit of the doubt will be given to the judge (per Lord Greene M.R. in Norman v. King⁽⁷⁾) so I think the benefit of any doubt must be given to the judge in a case such as this: the onus is on the Appellants to show that the failure of the judge to make an express finding was due to his overlooking the fact that a finding was necessary. Even if the reason counsel did not address the judge on this aspect of the case was that they overlooked the necessity for such a finding that does not justify an inference that the judge overlooked it nor does the absence of an express finding tilt the balance in the Appellant's favour.

6. Counsel for the Respondent further contended that the point ought not to be allowed to be taken on appeal in view of the manner in which the case was presented in the court below. The Respondent having pleaded that the premises had been extensively repaired the Appellants put that matter in issue. They went on to allege that in previous proceedings the Respondent had alleged that the premises were "a new building within the meaning of the Landlord and Tenant Ordinance" and they "repeated the same dispute in this action". That was an odd way of pleading in a case where the Respondent was not alleging that the building was new. However, the Appellants were themselves denying that the premises were part of an entirely new building and it is said that they should not now be allowed to allege what they have expressly denied. I accept that para. (a) and (d) of s.3(1) are mutually exclusive in the sense that a structure which is not "a building" at all cannot be a building which has been "extensively repaired" and that a structure which incorporates what is itself "a building" cannot be "entirely new". But in the event every structure must be either a building (which can be repaired) or not a building. I think there is no reason why a party should not plead these exceptions in the alternative if an occupation permit has been issued: it may well be doubtful whether what remained before any work was done on it constituted in law a building or not. Here the Respondent did not plead in the alternative: she elected to rely on para.(d), thus committing herself to one line of attack. In their Defence the Appellants chose to admit the existence of a building which could be repaired and to contend merely that the repairs were not extensive. They emphasised their admission by expressly denying what had been alleged by the Respondent in the previous proceedings but not in these, namely that the building was entirely new. This puts beyond doubt that it is not open to the Appellants to suggest that the building is entirely new without amending their pleading.

7. It can still be asked whether there was any evidence which would support the implicit finding that the premises were repaired in the manner contemplated by the Ordinance and whether, if there was such evidence, the finding was nevertheless against the weight of the evidence. If the only evidence showed that what remained after the war was something less than "a building", as that word is commonly understood, then the Respondent would have failed to discharge the onus of proof which was upon her: MA Kam-chan v. Kai Nam⁽¹⁾. The matter was certainly not investigated as fully as one could have wished and it will be necessary to refer in some detail to the evidence which was given. Before doing that, however, I must deal with an issue raised concerning the admissibility of some of the evidence.

8. Before the District Judge the Respondent adduced the record of some proceedings which took place in the Tenancy Tribunal in 1954. In those proceedings the then tenants of the premises sued the Respondent's husband for what has always (though usually erroneously) been called "a variation of the rent payable". The proceedings followed upon a similar suit brought against the tenants by the sub-tenant, as a result of which the tenants were in danger of finding themselves receiving a controlled rent from their tenant but having to pay an uncontrolled rent to their landlord. Counsel for the Appellants stigmatizes the suit of which the record was adduced as "a friendly action", by which he appears to mean a collusive action designed to defeat the claim of the sub-tenant. He points out that the record discloses no cross-examination of the two witnesses who gave evidence; that the first witness called was indeed the wife of the landlord (the present Respondent), who was, by permission of the learned President, actually representing the landlord in the proceedings; that the second witness was a building contractor who had been employed by the landlord; and that no attempt appears to have been made by the applicants to show that the Tribunal had jurisdiction. Counsel's first contention, however, is that the evidence given by the Respondent in those proceedings is shown by her evidence before the District Judge to have been hearsay: although she said in 1954 "I had the premises repaired", "we approached a contractor ...... to have the premises repaired" and so forth, she admitted in cross-examination in 1971 that "the whole thing was handled by [her] husband": "I myself do not know what repairs were carried out. It was all in the hands of my husband": "I agree that I don't know if the prices quoted in the estimate are correct prices. All that was handled by my husband". It is to be observed that in his submission before the learned District Judge counsel for the Respondent is recorded as having said "record of Tenancy Tribunal produced primarily for evidence of CHEUNG Fat who is now dead". The submission is that if it was produced even incidentally with the intention that the evidence given by the Respondent in 1954 could be used to corroborate or to add to the evidence she gave in 1971 that was not proper unless that part of the record was a statement which was admissible under the provisions of s.38D of the Evidence Ordinance and, even if the evidence would normally have been admissible under s.38D, it was not admissible once it was shown that the statement was in any event a record of hearsay. No point was taken on an absence of the notice required under r.3 of the Evidence (Hearsay) Rules and on a breach of s.38D(2). In my view the record was admissible under s.38D and if any part of the Respondent's evidence as recorded was hearsay that goes only to the weight which should be attached to the record. In so far as the record contained the evidence of the contractor and, as an exhibit, the contractor's estimate and receipt, no possible objection can be taken to its admission under s.38D.

9. Turning to the weight which could properly be attached to the Respondent's evidence in 1954 I agree that to the extent that it was shown to be hearsay no weight ought to have been given to it but the mere fact that it was the husband who handled the business does not mean that the Respondent knew nothing at all about what was going on: she might not be able to give details of what was done to the premises but she must have seen for herself the general condition they were in. Indeed for my part I would think that her evidence in 1954 as to the state of the building was more likely to be accurate than her recollection in 1971 when (now aged 85 years) she said "There was a balcony and a wall and nothing else ....... It was like a piece of deserted land" (not, as the learned judge said in his judgment, "a mere shell-one or two walls and a seriously damaged roof"). Her evidence in examination-in-chief was also difficult to reconcile with her statement in cross-examination that "the upper part of the premises was in a shabby condition". Her evidence in 1954 was much more consistent with the evidence then given by the contractor, a person whose qualifications would render him the more likely to be able to give an accurate picture of the premises as he found them.

10. The evidence of the contractor was that "there was nothing left except the four walls and part of the roof". The estimate contains no reference to anything which could be "repairs" to the roof, although the roof is expressly mentioned, and no reference to any re-building of either internal or external walls. On the contrary in that it refers to "plastering internal and external walls" at all levels it corroborates the contractor's oral evidence. Incomplete as the investigation no doubt was I am quite unable to say that the conclusion of the learned judge that a repairable building existed was against the weight of the evidence, let alone unsupported by any evidence at all.

11. Next it is said that it was not sufficiently proved that the premises remained continuously untenanted after 16th August, 1945 and that they were rendered habitable after the commencement of the Ordinance. Clearly the onus of proof was upon the Respondent: Tang Sai On v. Tang Kwok Yim⁽⁸⁾. Although the learned judge said that the Respondent and her husband "abandoned" the house during the Japanese invasion it is not suggested that the abandonment was other than merely physical: they returned to Hong Kong in 1945 and the husband exercised his right of ownership. In fact the only evidence was that they left Hong Kong "during World War II" and it may not have been during the invasion at all. The judge continued:

He did not deal expressly with the possible existence of a tenancy. If he assumed that a house which was uninhabitable could not be tenanted then with the utmost respect I oould not agree: there is no principle of law which prevents the letting of a tumble-down house. I think we must again give the judge the benefit of the doubt and conclude that he inferred the absence of a tenancy not merely from the condition of the premises but also from the absence of any evidence of a tenancy before the Respondent and her husband left Hong Kong during the war, the unlikelihood that they would have let premises while they were absent from Hong Kong and the fact that no tenancy can have existed when they let the premises to SIN Pui-ying in about 1947. There was then the evidence of the Principal Rating Valuation Surveyor, who was able to say from the records in his custody.

He was not asked what he meant by "shortly afterwards" and "at a much later date", although no doubt he would have been able to give exact dates if asked. He inferred, as would anyone conversant with the law of rating, that the ground floor must have been both habitable and occupied when the new assessment was made. In the absence of any precise date, however, this evidence does not show that the premises were habitable before 23rd May, 1947, far less that they were tenanted. The contractor said in 1954 that in 1947 "the property was quite uninhabitable". In the result I think there was enough evidence to warrant a finding that the premises remained untenanted during the material period.

12. What repairs were done to the premises? It is submitted that there was altogether insufficient evidence of the repairs done to this ground floor even if, as did the learned District Judge, one accepts the evidence of the repairs done to the building as a whole, which evidence counsel says is itself unreliable. The only evidence is that contained in the record of the Tenancy Tribunal proceedings and it cannot be gainsaid that it is far from strong. The contractor said:

"I remember that the total cost [in respect of the whole house] was about $16,000. About $5,000 was spent on the ground floor including workmanship and materials ...... I am quite sure that not less than $5,000 was spent on the ground floor. ...... All the repairs I did were necessary for making the property habitable. No money was spent on what was unnecessary".

That evidence may well have been true, but when one looks at the estimate one sees at once that there was in it much material for cross-examination of the contractor. One item of $1,060 was for "Ground floor, staircase walls, staircase risers and treads, one flight, amount for labour and materials". Although this work was at ground floor level it clearly was not in the ground floor premises which are the subject matter of this case. Another item related to a wooden cockleft and it is quite possible that this was an addition rather than reinstatement of what had been there before. If his evidence that before he started work "there was nothing left except the four walls and part of the roof" was true how did it come about that the estimate contained no item for reinstating a floor at first floor level (which would supply a ceiling to the ground floor premises) or for reinstating the rest of the roof? How much of the $16,000 was in fact referable to the roof? The learned President appears to have accepted the estimate at its face value and without careful scrutiny. The learned District Judge also appears to have made no attempt to apportion the total spent on the whole house between the ground floor premises and the other parts of the building but we are in as good a position as he was at the time he came to give judgment to make such an apportionment. If one takes the figure of $5,157.50 which is given for the ground floor, corrects the addition to $5,156.50 and deducts the items of $1,060 already mentioned as not being referable to the premises, one still gets a figure which is more than $3,528, the amount of seven years' standard rent, and the repairs to the premises are therefore "extensive repairs", subject to what I shall say in a moment about their being "necessary". Even if one deducts $532 for the wooden cockloft the remainder is $3,564.50. Another doubtful item is the sum of $185, which includes "drains". Whether these were solely attributable to the ground floor premises we do not know but as the item contains also "cooking range, sink, latrine, any deduction for drains not attributable to the ground floor premises might reasonably not exceed $36.50. It also seems not unreasonable to suppose that some figure, however small, ought to be added in respect of such work done to the roof (and some clearly was done) as would have benefited the ground floor. This was perhaps the weakest link in the evidence on behalf of the Respondent and it is unfortunate that the learned District Judge despite the discrepancy between her evidence at the trial and all the evidence in the Tenancy Tribunal proceedings, including her own, relating to the structure which remained before repairs started described the Plaintiff's evidence as "unshaken". Nevertheless, I conclude that the evidence as to the extent of the repairs to the ground floor premises is just enough to support the conclusion which he reached.

13. I have already referred to some of the evidence on the question whether the repairs done were necessary to render the premises habitable. If they were in fact habited before 23rd May, 1947 that would effectively defeat the Respondent's claim. There was evidence, which the learned judge obviously accepted, that the premises were both unhabited and unhabitable before the repairs were carried out. It would, indeed, have been interesting to know where the Respondent and her husband lived on their return to the Colony after the war, but she was not asked that either in the Tenancy Tribunal proceedings or in the present action. However, on this point the Plaintiff was, as the learned judge said, unshaken and it is impossible to say he was wrong to accept her evidence, supported as it was by the contractor's evidence. As to the necessity for the repairs actually done I have already pointed out those items upon which any doubt could exist and I think there is no reason to disagree with the conclusion of the learned judge that "extensive" repairs were necessary to render the premises habitable.

14. One final difficulty arises in that the repairs must be shown to have been "at the expense of the landlord". Even accepting that the estimated cost of the repairs to the whole building were $16,010.50 (the correct total) and that they were carried out in full, the receipt endorsed on the estimate appears from the translation to have been for only $15,000. The Respondent said in evidence "the sum of over $16,000 was paid" and "...... the contractor got his pay ...... and the contractor was paid according to the agreed price". However, the price was agreed between her husband and the contractor and she "would not know if the work had been done differently to what is stated in the estimate". The contractor was not asked in the Tenancy Tribunal proceedings what sum he received. While I would not attach much weight to most of the evidence given by the Respondent in those proceedings there is one piece of evidence she gave which I think is different from the rest: she said "it is included in [the receipt] that a deposit $5,000 was paid on 26.9.47 that $3,000 was paid in 28 Nov. 1947 another $2,000 on 5 Dec. 1947 ......". When one looks at the original Chinese document one finds that it does show a payment of $2,000 on 5th December, 1947 although the translation, as I have said, gives the figure of $1,000 which was referred to throughout the argument. We did not, of course, have any evidence on this but justice demands that we should not act upon a translation which according to our information is incorrect and if counsel had not been able to agree that the error existed we would have had to call an official translator and, if desired, to hear any other evidence which might have been tendered as to the meaning of the document. However it has now been argued that the receipt does in truth confirm that the $16,000 was paid. Even assuming that the $10.50 not covered by the receipt was never paid the proportion of this attributable to the ground floor premises is in the circumstances negligible.

15. The last complaint made on behalf of the Appellants is that the learned District Judge did not consider what was the "user" of the premises, the contention being that unless the premises were proved to be premises for the purposes of the Rent Increases (Domestic Premises) Control Ordinance the Appellants were entitled to protection under that Ordinance, even if the premises were not protected under the Landlord and Tenant Ordinance. As I understand this contention it is that protection would arise by virtue of Part II of that Ordinance. However, if the Appellants desire to claim the protection of that Ordinance it is for them to prove that the premises are domestic premises and not for the Respondent to prove that they are not. The Appellants did not plead that the premises were domestic premises and the matter was never investigated. There is nothing in the evidence which would support a finding that the Appellants' tenancy was a "domestic tenancy" within the meaning of s.5. Had this point been raised the Respondent could in any event have applied to amend so as to allege in the alternative that if the tenancy were a domestic tenancy an identical right of forfeiture arose by virtue of s.6(3) and s.7(1)(b). This is another new point which it is now too late for the Appellants to raise. It was submitted that there was no need to plead s.6 of the Tenancy (Notice of Termination) Ordinance or s.6(3) of the Rent Increases (Domestic Premises) Control Ordinance since the condition for forfeiture is implied as a matter of law. But how is a defendant to know whether the condition for forfeiture relied upon by a plaintiff is alleged to arise from contract or to arise from the statute? This is information which he is entitled to have so that he may know what case he has to meet.

16. In the course of his judgment the learned judge said that the previous "judgment of the Tribunal must be binding upon itself to the extent of and in the event of other parties applying in respect of the same premises". He went on to refer to "the very floor of the same premises" and it seems, therefore, that he sometimes used the word "premises" to indicate the building and not merely the premises as defined in the Landlord and Tenant Ordinance. When thereafter he referred to "the very same premises" it is not entirely clear what he meant and I merely wish to say that if his conclusion was that a tenancy of one part of a building could not be protected when a tenancy of another part of the building was unprotected I could not agree. The meaning of "a judgment in rem" in proceeding under the Landlord and Tenant Ordinance was considered by Judge Charles in Feng v. Julyan⁽⁹⁾.

17. I think I have dealt with all the matters which were raised in the course of the argument and in my view this appeal should be dismissed.

Representation:

B. Bernacchi, Q.C. and M. Asome (T.S. Tong & Co.) for Appellants

D. Chang (P. Poon & Co.) for Respondent.

(1) 1956 A.C. 358

(2) 1965 H.K.L.R. 894

(3) 1945 K.B. 382

(4) 1943 1 All E.R. 309, 313.

(5) 1943 2 All E.R. 601

(6)1948 1 All E.R. 70.

(7) 1946 1 All E.R. 339, 441.

(8) 1957 H.K.L.R. 150, 153.

(9) 1953-55 H.K.D.C. L.R. 111, 117.