Lam Pak v. Hop Hing (A Firm)
Read the full judgment text of CACV 7/1971 on BabelCite. This Court of Appeal judgment.
2. The primary ground of appeal is that this finding in regard to section 3(1)(d) of the Landlord & Tenant Ordinance was unfounded; that the premises in fact constitute "an entirely new building" and, no occupation permit having been issued in respect of the premises, section 3(1)(a) of the Ordinance does not apply to exclude them from the provisions of the Ordinance with the result that in fact the District Court Judge had no jurisdiction to try the case.
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CACV000007/1971 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) -----------------
----------------- Coram: Full Court (Huggins and Pickering, JJ.) Date of Judgment: 24th December, 1971. ----------------- JUDGMENT ----------------- Pickering J.: The appellant firm was the tenant of ground floor premises at 574 Canton Road, Kowloon, and was sued by the respondent landlord for possession, $2,000, being arrears of rent for five lunar months and for certain mesne profits. The District Court Judge made an order for possession and for payment of the rent and mesne profits claimed, finding that the premises were exempted from the provisions of the Landlord & Tenant Ordinance under section 3(1) (d) thereof as being premises which, after the 16th day of August, 1945, had remained continuously untenanted and which, after the commencement of that Ordinance, had been rendered habitable by extensive repairs effected at the expense of the landlord. 2. The primary ground of appeal is that this finding in regard to section 3(1)(d) of the Landlord & Tenant Ordinance was unfounded; that the premises in fact constitute "an entirely new building" and, no occupation permit having been issued in respect of the premises, section 3(1)(a) of the Ordinance does not apply to exclude them from the provisions of the Ordinance with the result that in fact the District Court Judge had no jurisdiction to try the case. 3. The suggestion that the premises constitute "an entirely new building" is a completely new allegation and runs contrary to the argument directed to the District Judge on behalf of the appellant firm, which was to the effect that the ground floor of the building, which is that part of the building with which we are concerned, never in fact suffered substantial damage so that it could not have been said to have been extensively repaired at the expense of the landlord. 4. The argument that the premises constituted an entirely new building, being an approach never made in the District Court, Mr. Chang, for the respondent, argued that the point could not be taken before us in the Full Court and relied upon the line of cases of which Smith v. Baker(1), though not the earliest in that line, is perhaps the most frequently quoted, as authority for the proposition that the raising of the point of law at the trial is a condition precedent to any appeal on that point from the decision of (in England) the County Court. That principle has frequently been recognised in Hong Kong in regard to appeals from the District Court and it is sufficient to refer to the case of Lee Bing Keung v. Wong Hiu Kwan(2), where a number of the English authorities are reviewed. 5. Mr. Bernacchi, for the appellant firm, however argued that this line of authorities has no application where the new point sought to be taken goes to jurisdiction and quoted a number of authorities to that effect. Whilst I do not consider it necessary to consider all these authorities, it might be observed that in the case of Sharpe v. Nicholls(3), relied upon by Mr. Bernacchi, Lawrence L.J. was merely prepared to concur in the decision of Mackinnon L.J. to order a new trial whilst, in view of the fact that in the court below the inference was that the defendant admitted that the plaintiff was in fact the landlord, he expressed "great doubt whether the defendant ought to be allowed to raise that point again". It is difficult to appreciate why, having regard to this clearly expressed doubt the learned Lord Justice concurred in the decision of Mackinnon L.J. and it is notable that Morton L.J. dissented from the decision to order a new trial. 6. In the present case, unlike Sharpe v. Nicholls(3), the circumstances go far beyond a tacit admission in the court below that the facts were such that the court had jurisdiction. In the District Court the appellant put forward a positive case the effect of which was to exclude all possibility of the existence of the case now sought to be propounded. Thus in the District Court, it was argued that these ground floor premises were never substantially damaged. In this Court it is sought to argue that the building had ceased to exist as a building. Before us, Mr. Bernacchi frequently advanced the proposition that the respondent could not eat her cake and still have it - a reference to her isolated description of the premises as consisting of a balcony and a wall. That particular piece of gastronomic logic however, as it seems to me, lies ill in the mouth of the appellant who now seeks to deal with his own cake in precisely that manner. 7. Another distinction between the present case and that of Sharpe v. Nicholls(3) is that in the latter case it was apparent on the face of the plaintiff's own pleadings that the Court had no jurisdiction to make the order which it had made. She had sued as personal representative and not as beneficial owner of the premises in dispute and it should have been apparent to the Court from the very beginning that in that former capacity she could not claim possession for her own occupation under the Rent and Mortgage Interest Restrictions (Amendment) Act 1933. There was nonetheless the strongest likelihood that the plaintiff in that case was in fact the beneficial owner, and that had the matter been properly pleaded, the Court would have had jurisdiction. The case was accordingly sent back to ascertain the plaintiff's true status in regard to the premises. No such lack of jurisdiction was ever apparent in the present case. 8. Again in Davies v. Warwick(4), despite some observations of Goddard L.J. (as he then was), it is apparent from the judgment of Scott L.J. that the appellant was allowed to put forward an argument based upon the 1939 Rent and Mortgage Interest (Restrictions) Act, precisely because, in the court below there had been reference to that Act, so that the point taken in the Court of Appeal was not in fact a new point. In that case, as in Sharpe v. Nicholls(3), the point upon which the case was decided necessarily arose in the court below because, as Goddard L.J. said, it was apparent on the pleadings. In our case, a mere assertion in the Statement of Defence that the premises are subject to the provisions of the Landlord & Tenant Ordinance, does not make it apparent that the contention is that this is so because they constitute "an entirely new building" within the meaning of s.3(1)(a), in respect of which no occupation permit has been granted after the 16th August 1945-nor indeed was that allegation ever raised until the case reached this Court. 9. My reason for saying that it is unnecessary to consider all the cases put forward by Mr. Bernacchi is that the fresh approach which he endeavours to put before this Court cannot in fact go to jurisdiction unless and until a different set of facts from either those found by the District Judge or those contended for by the appellant firm in the District Court, is substituted. 10. Basically, what the appellants are urging, is that if the learned judge had not arrived at the conclusion at which he did arrive, namely that the premises had been rendered habitable by extensive repairs effected at the expense of the landlord, but had reached a quite different conclusion, that is, that they constituted "an entirely new building", he would have had no jurisdiction. However, the judge reached the conclusion which he did reach and there is no basis for asking this court to send the case back to him with an invitation to reach a diametrically opposed conclusion. On the basis of the decision in Lau Lin v. Cheung Fong(5) Mr. Bernacchi urged that sections 3(1)(a) and 3(1)(d) are mutually exclusive so that premises which are part of a new building not exempted under s.3(1)(a) cannot be exempted under s.3(1)(d) as being extensively repaired premises. Whilst that view is not binding upon us, it is one which we accept. I find it difficult, however, to appreciate just how this argument helps the appellant firm for if the two circumstances are mutually exclusive and the judge has found the one, then logically the other cannot arise. As I see it the argument now advanced that the premises are "entirely new premises" is not merely a new argument but it is a new point, not only never relied upon in the court below, but there shut out from all possibility of presentation by virtue of the excluding argument advanced, i.e., that the ground floor portion of the building had never been very substantially damaged. 11. As to what constitutes a new point as opposed to a new argument upon an old point, Evershed, M.R. said in United Dominions Trust v. Bycroft(6)
12. In my view the argument sought to be raised is a new point and not only a new point but one which cannot go to jurisdiction unless and until wholly new facts are found. What then would be our justification for sending the case back to the learned judge to find new facts? 13. Before it can be said that the court had no jurisdiction by virtue of s.3(1)(a) of the Landlord & Tenant Ordinance, it must be demonstrated that this was "an entirely new building" in respect of which no occupation permit had been issued. Accepting that latter fact (for the respondent has not produced any occupation permit), it has to be demonstrated by evidence that the building was in fact "an entirely new building" and not a repaired building. The appellants, defendants in the court below, made no effort in that court to show this: indeed their whole contention was that these ground floor premises were not very substantially damaged. On the other hand, on the part of the plaintiff, there was evidence upon which the learned judge could reach the conclusion that extensive repairs had been effected so as to bring the building within s.3(1)(d). Various sources of evidence were available to the learned judge to permit him to reach such a conclusion - notably the evidence of the contractor in the Tenancy Tribunal proceedings, where ...(illegible) spoke of the building as having consisted of "four walls and a roof", and that of the plaintiff in those same proceedings. The evidence of both was supported by the estimate and receipt, Exh. P2A and the estimate speaks of "repairs" to the building and contains references to both external and internal walls. 14. It is true that the judge appears to have placed his reliance primarily upon the evidence of the plaintiff in the District Court; true also that that evidence was ambiguous in that at one juncture she described the building as consisting upon her return from China after the war, of "a balcony and a wall and nothing else" and, at another point, said "the upper part of the premises was in a shabby condition" - a description which suggests that the upper part existed but was dilapidated. It is not clear why the learned judge apparently relied, in the first instance, upon this evidence and referred to the contractor's evidence as providing strong corroboration of the plaintiff's case". One would have thought that his approach would have been from the other direction and that his primary reliance would have been upon the evidence of the contractor to which he was perfectly entitled to give full weight. However that may be, there was ample evidence upon which the learned judge could find that the premises fell within s.3(1)(d) and there could be no justification for our returning the case to him to consider making a finding which is automatically excluded by the finding which he did make. It is perfectly apparent that the judge was of the opinion that on the site there had stood a building, totally uninhabitable. 15. The evidence of Mr. Berger of the Rating Department also suggests that the building was not beyond repair but I am unable to accept the contention of the appellants that his evidence is sufficient to establish that the premises must have been tenanted because the rating assessment, having been cancelled after the cessation of hostilities, was "continued shortly afterwards" in respect of the ground floor whereas it was only at a much later date that an assessment was returned in respect of the whole house. The shortcoming of this evidence was that it was not pursued and explained; the court was not made aware of how long after the cessation of hostilities the assessment was cancelled nor what was meant by its resumption "shortly afterwards" in respect of the ground floor. Had Mr. Berger been asked to particularise dates, a definite picture might have emerged, but the evidence as it was left, falls far short of refuting the plaintiffs' evidence that the premises remained continuously untenanted after the cessation of hostilities until the completion of the repairs in 1948. 16. A further contention of the appellants was that no apportionment was made by the learned judge as between the total cost of repairs to the building as a whole and the proportion thereof which related to the ground floor premises which are the premises with which we are concerned. Accepting that the ground floor is the subject of a separate letting and constitutes "separate premises" for our present purpose, it is apparent that had the learned judge made the apportionment, the absence of which is now criticised, he must have come to the conclusion that an amount in excess of seven years standard rent had been expended upon the ground floor premises. A perusal of the estimate; Exh. P2A, reveals that some $5,156.50 was spent upon the ground floor; it is legitimate to deduct from this the sum of $1,060.00, the cost of the staircase from the ground floor to the upper floors which cannot be said to be exclusively referable, or perhaps even referable at all, to the ground floor. The deduction results in some $4,096.50 having been spent upon the ground floor and from this resultant sum it is appropriate to deduct one-sixteenth thereof; this, because although the amount of the estimate was fractionally in excess of $16,000.00, the amount actually proved to have been paid, amounted to only $15,000.00; one sixteenth of $4,096.00 is $256.00 which leaves a net balance of $3,840.00 expended upon the ground floor and this is in excess of the sum of $3,528.00 which represents seven years standard rent of that floor. The appellants seek to whittle down further this sum of $3,840 with the suggestion that some $532.00, spent upon the erection of a wooden cockloft, might well have been an added amenity rather than expenditure reasonably necessary to render the premises habitable. However, the existence of wooden cocklofts in ground floor pre-war premises is so very much a feature of such premises that in my view, on the balance of probabilities, this was not an added amenity but a construction necessary to render the premises reasonably habitable for the type of tenant likely to occupy such premises. 17. As for the suggestion that some of the expenditure upon the ground floor might well have been directed towards added attractions rather than to what was reasonably necessary to render the premises habitable, a perusal of the individual items in the estimate does not suggest that the expenditure was for anything other than necessities. 18. For my part, I am satisfied that a sum in excess of the equivalent of seven years standard rent was expended upon the premises for purposes wholly necessary to render them reasonably habitable. In so concluding, I have acted upon the basis of the translated receipt, produced in the court below, showing payments totalling only $15,000. Since making the calculations set out above, it has come to my notice that the original Chinese receipt reveals payments totalling $16,000. On the basis of the original receipt, the expenditure on the ground floor was even greater than shown in my calculations. 19. In the appellant's Notice of Motion, it was alleged that Exh.P2A, the estimate for repairs (on which was endorsed the receipt for monies paid to the contractor in connection therewith) and Exh. P1, the record of Tenancy Tribunal Application No. K2057 of 1954, should not have been admitted in evidence, or alternatively, should not have had any weight placed upon them. In the argument before us, it became apparent that the real contention was not as to admissibility but to the weight which could legitimately be placed upon the contents of these documents. I propose to say no more upon this subject than that I agree with the observations made by the President in his judgment, which I have had the advantage of reading. 20. Finally, in his reply to Mr. Chang's submission for the respondent, Mr. Asome argued that it was for the respondent to satisfy the court that the Rent Increases (Domestic Premises) Control Ordinance, Cap. 338, did not apply to the premises. I am unable to agree with that argument. The common law rule is that the onus of proof is always upon a party seeking to rely on an exemption or exception and there is nothing in the Ordinance to show that the legislature intended, when it introduced exemptions to the generality of the application of the Ordinance, to depart from that principle. Moreover the appellants were five months in arrear in payment of rent and in the light of that fact could not rely upon the protection of the Ordinance. On the contrary, s.6(3) thereof, whether specifically pleaded or not, operated to imply a condition for forfeiture of the tenancy once the rent was in arrear for fifteen days. 21. For all these reasons, I would dismiss the appeal with costs against the appellant firm here and in the court below. 24th December, 1971. Representation: Bernacchi, Q.C. and Asome (T.S. Tong & Co.) for appellants D. Chang (P. Poon & Co.) for respondent. (1) 1891 A.C., 325 (2) 1961 H.K.L.R., 242 (3) 1945 2 A.E., 209 (3) 1945 2 A.E., 55 (4) 1943 1 A.E., 209 (5) (1960) D.C.L.R. 274 (6) (1954) 3 All E.R. 455 @ 459. |