Chan Nan Fong v. Chan Tak Wah

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CIVIL JURISDICTION

TENANCY TRIBUNAL APPEAL NO.2 OF 1970

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Coram: T.L. Yang, D.J. in Court.

Date of Judgment: 2 March 1971

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JUDGMENT

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1. This is an appeal by the tenant from the decision of a tenancy tribunal in which the learned President gave possession to the landlord under S. 22(1)(c) of the Landlord and Tenant Ordinance.

2. The matter first came before a tenancy tribunal (TTK 115/1969) in October, 1969 when an order, purported to be a consent order, was made in favour of the landlord for possession and for arrears of rent. On the tenant's appeal to the District Court (Tenancy Tribunal Appeal No.3 of 1969) on the ground that there had been no consent, an order was made remitting the case to another tenancy tribunal for a new hearing. The hearing de novo was concluded on 26th May 1970 and a decision was given on 17th June 1970 in favour of the landlord. It is this decision that forms the subject matter of the present appeal.

3. At all material times the landlord was represented by his mother and the tenant by his daughter in matters connected with the tenancy in question. According to the learned President's decision, the landlord's case before the tenancy tribunal was that his mother from time to time visited or telephoned the tenant's daughter to demand payment of the monthly rent, but she frequently asked for indulgence because of financial difficulties and sometimes made payments by means of post-dated cheques. The tenant insisted that the landlord had waived his right to cash payment of rent in advance because of the past conduct of the landlord's mother in accepting post-dated cheques after the accumulation of several months' rent. The landlord's mother stated in evidence that she had not waived her right to cash payment of the monthly rent in advance. It was not disputed that on the 1st February, 1969, the landlord's solicitors sent a letter to the tenant demanding payment within 30 days of the arrears of six months' rent for the period from 16th July, 1968 to 15th January, 1969 (Exh. CNF - 4). It is also clear from the evidence that on or shortly before the 2nd March 1969 the landlord's mother received from the tenant's daughter a cheque post-dated to the 15th March, 1969 covering the amount of rent demanded and also the rent for two additional months (Exh. CNF - 5). This cheque was rejected by the landlord's solicitors on instructions received, and returned to the tenant together with a second letter dated 4th March 1969 (Exh. CNF - 6) asking the tenant to comply forthwith with the demand made in the earlier letter. The tenant's case was that he had discharged his liability in accordance with the first letter from the landlord's solicitors by issuing and tendering the post-dated cheque was in question. The tenant's daughter said that when the post-dated cheque was returned to her together with the solicitors' second letter, she did not know what to do and she thought the landlord had refused to accept rent from her. It was argued on behalf of the tenant that the failure to pay rent as demanded by the letter of the 1st February, 1969 was not attributable to the tenant's own default.

4. Briefly, the grounds of the tenant's appeal are:

(1)	that the learned President was wrong in finding that the tenant's default in payment was not bona fide and was unreasonable,
(2)	that the learned President wrongly exercised his discretion under Section 22(1)(c) of the Landlord and Tenant Ordinance in making the order for possession in the light of past practice and procedure adopted by the parties as regards the method of payment of rent,
(3)	that the learned President failed to assess and/or draw the proper and reasonable inference of facts from the evidence (particularly the contents of the solicitors' letter dated 4th March, 1969 and the past practice and procedure),
(4)	that the learned President erred in holding that the landlord had not waived his right to cash and puntual payment of rent, and
(5)	that the landlord had by the solicitors' second letter dated 4th March, 1969 waived any breach that the tenant might have committed in failing to comply with the solicitors' first letter dated 1st February 1969.

5. The submissions of Mr. Sanguinetti, counsel for the tenant in this appeal, may be conveniently divided into two parts:

(1)	the jurisdiction of the District Court to grant relief to the tenant on appeal from a tenancy tribunal; and
(2)	the learned President's decision on the facts, i.e., the grounds of appeal summarized in the preceding paragraph.

6. Relying on Section 6 and Section 33(2) of the Landlord and Tenant Ordinance, and also Section 6 of the District Court (Civil Jurisdiction and Procedure) Ordinance, counsel for the tenant submits that the District Court in its appellate jurisdiction may grant the relief against forfeiture offered by Section 45(1)(b) of the District Court (Civil Jurisdiction & Procedure) Ordinance.

7. Section 33(2) of the Landlord & Tenant Ordinance provides:

"The practice and procedure on appeal shall be by motion and in all matters, save as expressly provided by this Ordinance or any rules made thereunder, shall be in accordance with the practice and procedure prescribed by the District Court (Civil Jurisdiction and Procedure) Ordinance as though such appeal were an action commenced in the court."

8. Section 45(1)(b) of the District Court Civil Jurisdiction and Procedure) Ordinance provides:

"If ................. the Court at the trial is satisfied that the lessor is entitled to enforce the right of re-entry or forfeiture, the Court shall order possession of the land to be given to the lessor at the expiration of such period, not being less than four weeks from the date of the order, as the Court thinks fit, unless within that period the lessee pays into Court all the rent in arrear and the costs of the action as endorsed on the writ or as may be fixed by the Court."

9. Counsel for the tenant argues that as all arrears and mesne profits to date, and security for costs have been paid into this Court, albeit pursuant to a court order, the requirements entitling the tenant to relief against forfeiture have been satisfied. That this argument is fallacious is apparent from Section 33(7)(a) of the Landlord and Tenant Ordinance which provides, inter alia, that the District Court upon the hearing of any appeal, whether by way of case stated or otherwise, may amend or alter such decision by making any order which the tribunal would have had power to make in the matter. As relief against forfeiture is not available in the tenancy tribunal, it follows that this Court in its appellate jurisdiction may not grant such relief though as a court of first instance it has the power to do so. Indeed it can hardly be the intention of the legislature to confer on a tenant, simply on his bringing an appeal to this Court and making payment into court, a benefit not otherwise available to him in the tribunal. The situation would inevitably open the door to many frivolous appeals by those who are in no way aggrieved by the decision of a tribunal and whose sole aim is to take advantage of the relief against forfeiture.

10. It is common ground that the tenancy now under consideration is a statutory tenancy. Where a statutory tenancy has arisen, the contractual tenancy having determined either by lapse of time or act of parties, the tenant's sole right to retain possession is that given him by the Landlord and Tenant Ordinance and other similar and related ordinances. He is not therefore in a position to claim relief against forfeiture under the District Court (Civil Jurisdiction & Procedure) Ordinance (vide Megarry on The Rent Acts, 10th Edition, Volume 1, at p.247; Brewer v. Jacobs (1923) 1 K.B. 528; per Jenkins L.J. in Dellenty v. Pellow (1951) 1 All E.R. 716).

11. In the days when tenancy appeals were heard by the Supreme Court in its summary jurisdiction, the practice and procedure on appeal were regulated by Section 26(2) of the then existing Landlord and Tenant Ordinance, which apart from its reference to the Supreme Court (Summary Jurisdiction) Ordinance is in every respect similar to Section 33(2) of the present Ordinance. Section 26(2) was explained in Li Tze Cho (No.3) v. Ching Hua Company (1961) H.K.L.R. 201. while this is a decision on the appellate judge's power to review a decision of a tenancy tribunal, Reece, J. made the following observations on the meaning of the words "practice and procedure" (at pp.206-207):

"The powers of the Court relating to practice and procedure on appeal are those set out above in sub-section (2) and it is not out of place here to consider what is meant by the words 'practice and procedure'. In Poyser v. Minors (1881) 7 Q.B.D. 329, at p.333, Lush L.J. speaking of the word 'practice' as it occurred in section 32 of the County Courts Act (1856), 19 & 20 Vict. C. 108 says,

In Lever Brothers Ltd. v. Keneale & Bagnall, (1937) 2 K.B. 87, at p.93 holding that an order for committal was made in a matter of practice and procedure Slesser L.J. cited the passage of Lush L.J. in Poyser v. Minors above and said:-

'The language of the section, which I read, in the Act of 1856, is not exactly the same as that of the order we have here to consider, but I think the definition of 'practice' which is there stated is one which properly can be applied here, and I ask myself, therefore, whether, within the meaning of these observations of Lush L.J. this order for committal is not a mode of proceeding by which a legal right is enforced. It appears to me clearly that is is so.'

From these two cases, it appears to me that the practice and procedure of the Court is merely the machinery by which the particular case is brought to a conclusion, the mode of enforcing the legal right. Under section 26 of the Landlord & Tenant Ordinance, the legal right to be enforced is the right of appeal and the machinery for enforcing it is to be found in the rules of practice and procedure prescribed in the Supreme Court (Summary Jurisdiction) Ordinance, where no provision is contained in the Landlord & Tenant Ordinance or rules made under it."

12. With great respect I follow this dictim, and come to the conclusion that a right of relief is a substantive right and not a procedural right. Section 33(2) does not go further than providing that in matters of procedure and practice an appeal from a tenancy tribunal is to be heard as if it were an action commenced in the District Court. It certainly does not grant any substantive right which the tenant is not entitled to under the Landlord and Tenant Ordinance. As such the tenant in this action is not entitled to the relief sought. Accordingly in my judgment the first part of the tenant's grounds of appeal fails.

13. In considering the second part of Mr. Sanguinetti's submissions, I have to refer to Section 22(1)(c) of the Landlord and Tenant Ordinance, which provides:

"It shall be lawful for a tenancy tribunal on the application of a landlord to make an order for the recovery of possession from or the ejectment of a tenant who, except for a cause which the tribunal shall deem sufficient to entitle the tenant to the continued protection of this Ordinance being a cause not attributable either to his own default or to lack of means, fails to pay within thirty days after demand the permitted rent which has accrued due."

14. The learned President in his decision stated:

"I have no doubt in my mind that the burden of proof of 'sufficient cause' is on the tenant."

Counsel for the tenant refers me to R. v. Spurge (1961) 3 W.L.R. 23 and submits that the burden of proof is on the landlord. Mr. Mills-Owens argues on behalf of the landlord that as the existence of a sufficient cause was within the special knowledge of the tenant the onus is on him to establish that fact. In R. v. Spurge, it was held that a mechanical defect in a motor vehicle may be a defence to a charge of dangerous driving if it caused a sudden total loss of control and was in no way due to any fault on the part of the driver, however the onus of establishing such a defence does not rest on the accused; the defence will not be considered by the court unless raised by him, but once raised, it must be considered with the rest of the evidence and the burden of proof still remains on the prosecution. It appears that this principle applies equally to civil actions. It is said in Cross on Evidence (3rd Edition, at p.80) that:

"All that can be said by way of generalisation with regard to the effect of peculiar knowledge is that it may mean that very little evidence is required to satisfy an evidential burden when borne by the party lacking such knowledge and that, where the affirmative of a negative averment is peculiarly within the knowledge of the opponent of that averment, he bears the evidential burden on the issue in the first instance."

15. Thus, in general all that the person making the averment needs to do is to give some prima facie evidence in order to cast the burden on his adversary (Phipson on Evidence,10th Edition, para.107, at p.55). And citing with approval Art. 96 of Stephen's Digest of the Laws of Evidence, 9th Edition, the Court of Criminal Appeal in R. v. Kakelo (1923) 2 K.B. 793, at p.795 said that the burden of proof may in the cause of a case be shifted from one side to the other, and in considering the amount of evidence necessary to shift the burden of proof the court has regard to the opportunities of knowledge possessed by the parties respectively (see also dictum of Bowen L.J. in Abrath v. North Eastern Railway Company (1883) 11 Q.B.D. 440, at p.457)

16. On those authorities, I would think that the tenant having raised the defence of sufficient cause, the landlord must discharge the initial burden of proof in that he has to produce some prima facie evidence showing the lack of "sufficient cause" on the part of the tenant, but this being a matter which is within the peculiar knowledge of the tenant, the burden of proof easily shifts onto him. In the present case, it will appear that the landlord had succeeded in shifting the burden onto the tenant, which the latter had failed to discharge.

17. I now come to the facts of the case. There are several conclusions which the learned President had drawn, presumably on the evidence adduced before him, but unfortunately he did not state the basis of those conclusions. He did not express an opinion as to the credibility of witnesses, nor did he give an indication as to whether his decision on the facts was based on a balance of probabilities. The following quotations comprise all the material conclusions which may be more properly called inferences from facts rather than findings of facts.

18. The learned President in his decision said, "In the present case when both parties referred me to the previous proceedings and the rent receipts, I cannot reasonably say that the applicant's attorney (i.e., the landlord's mother) has waived her right to insist on cash and punctual payment. Nor can I infer any variation of the tenancy agreement, as the payments were so irregular and any variation of the term will lead to uncertainty. When I examine the error or mistake of the opponent's (i.e. the tenant's) daughter, I find that her mistake is not bona fide and reasonable. When the applicant's attorney accommodated her in the past at her request, then this means to her that the applicant's attorney agrees to allow the monthly rent to accumulate for a period of time in future and to accept post-dated cheque for the same.

19. He went on to say,

"The mistake or error labouring in the mind of the opponent's daughter could not and did not stop here. The post-dated cheque was returned to her together with another letter requesting the opponent to comply with the previous demand and accordingly the previous demand remained running in favour of the opponent."

20. He continued,

"But the facts are that she did not know what to do and therefore did not make any payment of rent at all. Her mistake was that the landlord refused to accept rent. In other words, the tenancy had become a gratuitous one in her mind."

21. In conclusion, he said,

"Even assuming that I have found that her mistake as to facts was bona fide which also provided sufficient reason for a prudent tenant to withhold payment, the Tribunal has to examine the past conduct of both parties before exercising its discretion. Here, we have an obliging landlord versus an elusive tenant with a bad record for non-payment of rent. The Tribunal cannot reasonably exercise its discretion under these circumstances. Without going into the question of lacking of means, I find that the opponent had no sufficient cause for non-payment on the above reasons."

22. In his submission on the duties of the appellate judge as regards questions of facts, Mr. Mills-Owens cited a short passage in the Supreme Court Practice 1970 (59/1/13) which reads:

"Not to have seen the witnesses puts appellate judges in a permanent position of disadvantage against the trial Judge, and unless it can be shown that he has failed to use or has palpably misused his advantage - for example has failed to observe inconsistencies or indisputable fact or material probabilities - the higher Court ought not to take the responsibility of reversing conclusions so arrived at merely as the result of their own comparisons and criticisms of the witnesses, and of their own view of the probabilities of the case."

23. This is of course well settled law, but I might also refer to a few other authorities which deal with the rules which should be applied by the higher court in appeals raising questions of fact.

24. In The Glannibanta (1876) 1 P.D. 283, Baggallary J.A., said in the Court of Appeal (at p.287):

"Now we feel, as strongly as did the Lords of the Privy Council in the cases just referred to, the great weight that is due to the decision of a judge of first instance whenever, in a conflict of testimony, the demeanour and manner of the witness who have been seen and heard by him are, as they were in the cases referred to, material elements in the consideration of the truthfulness of their statements. But the parties to the cause are nevertheless entitled, as well on question of fact as on questions of law, to demand the decision of the Court of Appeal, and that Court cannot excuse itself from the task of weighing conflicting evidence and drawing its own inferences and conclusions, though it should always bear in mind that it has neither seen nor heard the witnesses, and should make due allowance in this respect."

25. And Lindley M.R., said in Coghlan v. Cumberland (1898) 1 Ch. 704 (at pp. 704-5):

"Even where, as in this case, the appeal turns on a question of fact, the Court of Appeal has to bear in mind that its duty is to rehear the case, and the Court must consider the materials before the judge with such other materials as it may have decided to admit. The Court must then make up its own mind, not disregarding the judgment appealed from, but carefully weighing and considering it; and not shrinking from overruling it if on full consideration the Court comes to the conclusion that the judgment is wrong. When, as often happens, much turns on the relative credibility of witnesses who have been examined and cross-examined before the judge, the Court is sensible of the great advantage he has had in seeing and hearing them. It is often very difficult to estimate correctly the relative credibility of witnesses from written depositions; and when the question arises which witness is to be believed rather than another, and that question turns on manner and demeanour, the Court of Appeal always is, and must be, guided by the impression made on the judge who saw the witnesses. But there may obviously be other circumstances, quite apart from manner and demeanour, which may shew whether a statement is credible or not; and these circumstances may warrant the Court in differing from the judge, even on a question of fact turning on the credibility of witnesses whom the Court has not seen."

26. Lord Halsbury in Montgomerie & Co. v. Wallace-James (1904) A.C. 73, said (at p.257):

"Where a question of fact has been decided by a tribunal which has seen and heard the witnesses, the greatest weight ought to be attached to the finding of such a tribunal. It has had the opportunity of observing the demeanour of the witnesses and judging of their veracity and accuracy in a way that no appellate tribunal can have. But where no question arises as to truthfulness, and where the question is as to the proper inferences to be drawn from truthful evidence, then the original tribunal is in no better position to decide than the judges of an appellate Court."

27. Much the same principles were stated by the House of Lords in Benmax v. Austin Motor Co. Ltd. (1955) 1 All E.R. 326, the headnote of which reads:

"An appellate court, on an appeal from a case tried before a judge alone, should not lightly differ from a finding of the trial judge on a question of facts, but a distinction in this respect must be drawn between the perception of facts and the evaluation of facts. Where there is no question of the credibility of witnesses, but the sole question is the proper inference to be drawn from specific facts, an appellate court is in as good a position to evaluate the evidence as the trial judge, and should form its own independent opinion, though it will give weight to the opinion of the trial judge."

28. Following these principles, I consider it my duty to examine the evidence before the tribunal as recorded by the learned President, consider his decision, particularly those parts touching upon the facts of the case, and if necessary draw my own inference of facts on the evidence. I could, I suppose, send the case back to the tenancy tribunal for the learned President to state his findings of facts, but the matter has dragged on for some considerable time and there has already been one appeal. In my opinion, justice will be better served if I were to find the facts from the evidence on record, and then decide whether the learned President's conclusions quoted above are supported by my findings.

29. Basically, the evidence adduced before the tenancy tribunal embraces two sets of facts, namely, the so-called past practice and procedure of the landlord in accepting late payments of arrears of rent by post-dated cheques, and the circumstances surrounding the letters of the landlord's solicitors dated the 1st February 1969, and 4th March, 1969 respectively.

30. The tenant's evidence was that on previous occasions, the landlord's mother had been prepared to accept long delayed payments of arrears of rent by means of post-dated cheques, and therefore this so-called past practice and procedure as regards the method of payment led the tenant to believe that the landlord had waived his right to insist on cash and puntual payments. The learned President found, in my opinion rightly, that there had not been any such waiver on the part of the landlord. The evidence shows that in May, 1964 the applicant made an application(TTK 123/1964) to a tenancy tribunal for determination of the standard rent and that in January 1965, he took out proceedings (TTK 2/1965) in a tenancy tribunal against the tenant for possession and arrears of rent. It was argued on behalf of the tenant that the failure to pay rent which resulted in the 1965 application was due to the fact that the landlord had overcharged him. It is not disputed that in that application the landlord claimed 30 months' rent and obtained judgment for a sum approximating 27 months' rent. It is also clear that there was no explanation whatsoever as to why rent for 21 months out of the 27 months were allowed to fall in arrears. It certainly cannot be said that because the landlord had over-charged to the extent of a few months' rent, the tenant was therefore entitled to withhold payment of arrears properly due, particularly as the arrears came to an amount several times in excess of the sum alleged to have been over-charged. The 1965 application revealed quite definitely the landlord's dissatisfaction with the tenant's record of payments.

31. Corroboration of the conclusion stated above may be found in evidence given by the landlord's mother that in 1964 the tenant had been owing rent for 30 months and that though irregular payments had been made by the tenant to cover arrears of rent, the landlord or the landlord's mother as his attorney, was reluctant to allow these delays. Indeed, she said in her evidence that by the 1st February, 1969 she had to go to her solicitors because "I could not bear any longer." The evidence shows that at least from 1962 there had been constant difficulties in collecting rent from the tenant. The evidence also shows that the landlord's mother expected payment every month and was all along reluctant to accept post-dated cheques and late payments of rent from the tenant. She said, "I did go there every month to collect the rent. In most cases when I got there he did not pay the rent for various reasons ......... Whenever I pressed him for the rent he said that payment of rent will be paid (sic) later. He always said that as an excuse." On the other hand, the tenant's daughter whilst admitting the late payments by post-dated cheques in the past, displayed a very casual attitude towards the tenant's obligation to pay rent punctually. This attitude is clearly discernible from the following questions and answers in cross-examination:

Three rent receipts (Ex. CNF-1, 2, 3) showed that from July 1967 to August 1967, the tenant had paid rent, all by post-dated cheques, on only three occasions. The first rent receipt was dated 3rd July, 1967 covering the period January 16, 1967 to 15th April, 1967; the second rent receipt was dated 20th December, 1967 for the period 16th April, 1967 to 15th December, 1967; and the third rent receipt was dated 17th July, 1968 for the period 16th December 1967 to 16th July, 1968. These rent receipts in my view corroborate the evidence of the landlord's mother that the tenant was often in arrears.

32. Mr. James Fu, solicitor for the landlord, gave evidence in the tenancy tribunal and said, inter alia, that the landlord had on previous occasions agreed to accept late payments, but on the 2nd March 1969, the landlord's mother instructed him to refuse late payment of rent. Counsel for the tenant suggests that the landlord had consistently agreed to accept late payments from the tenant and that it was only on the 2nd March 1969 that he, through his mother, changed his mind. This proposition is not borne out by the evidence of the landlord's mother. If her evidence was considered as a whole, one would clearly see that she had come to the end of her patience and that she had never been willing to allow the rents to fall into arrears. Indeed it seems very unlikely that any landlord would be so generous as to permit constant failures to make prompt payments of rent without great reluctance and perhaps also a good deal of protest.

33. On the evidence presented in the tenancy tribunal and on the balance of probabilities I find that the tenant at least since 1962 had had a very bad record of payment of rent, that he had regularly fallen into arrears, and that it was with great reluctance that the landlord's mother accepted late payments by means of post-dated cheques. There is ample evidence to support, and I confirm, the learned President's inference that there had been no waiver on the part of the landlord to insist on cash and punctual payment, and that "we have an obliging landlord versus an elusive tenant with a bad record for non-payment of rent."

34. I also confirm the tenancy tribunal's decision that in view of the irregularity of payments there had not been any variation of the terms of the tenancy agreement between the parties.

35. Counsel for the tenant further submits that there was a settled usage between the parties for late payment of rent. In the light of my finding I hold that there was no settled usage and therefore I do not propose to consider the authority cited in support of the argument thereon (i.e. Chartres v. Muldoon (1923) 57 I.L.T. 102).

36. Counsel for the tenant also submits that the special relationship between the landlord's mother and the tenant and his daughter as being personal friends and members of the same church must be considered. In my judgment this is hardly relevant in the circumstances under consideration, and I find no convincing evidence indicating that this special relationship, if indeed it was such, had in any way deterred the landlord's mother from asking for prompt payment of rent in the past, though she had refrained from enforcing her rights until her patience was exhausted. It was also suggested that the landlord is now estopped from demanding prompt payment of rent by cash. On the balance of probabilities I hold that the landlord's mother had done nothing whatsoever to lead the tenant to believe that he might disregard the contractual term of prompt payment of rent by cash.

37. The learned President in his decision referred to the case of Bird v. Hildage (1948) 1 K.B.D. 91, which decided that the fact that an act, such as the payment of rent, which has to be performed periodically under the contract, has, in the past, been performed unpunctually without protest does not justify the assumption that the irregularity will be waived in future, and so place on a landlord the obligation to give the tenant notice before exercising his remedies for a further breach. On this authority I would say that even if there had been a waiver as suggested on behalf of the tenant such waiver would not affect the landlord's right to demand punctual payment of future rents. On this premise, I proceed to examine the second set of facts.

38. According to the landlord's mother, she could not "bear any longer" the tenant's procrastinations, so she instructed her solicitors to write to the tenant demanding the payment of arrears. The solicitors' letter, dated 1st February 1969 (Exh. CNF - 4 supra), demanded payment within 30 days, i.e. on or before 2nd March 1969. On or shortly before the last day, the landlord's mother received from the tenant's daughter a cheque post-dated to 15th March 1969 for an amount sufficient to cover the arrears claimed and also two additional months' rent (Exh. CNF - 5 supra). This cheque was rejected and returned by the landlord's mother through her solicitors because she wanted prompt payment and because in her past experience, some of the post-dated cheques issued by the tenant had been dishonoured. The tenant's daughter said in evidence that because post-dated cheques had been accepted in the past she thought that the tender of a post-dated cheque was good payment and that she had fulfilled the terms of the solicitors' letter. Returned with the post-dated cheque was the solicitors' second letter dated 4th March, 1969 (Exh. CNF - 6 supra) which said, inter alia,

"Our client is not prepared to grant you further indulgence of time for settlement of your arrears of rent and unless you comply FORTHWITH with our said letter (i.e. the first letter dated 1st February 1969) legal proceedings will be instituted against you, etc."

The tenant's daughter said that she thought the landlord had refused to accept rent from her and she did not know what to do. She said she thought the cheque was tantamount to cash and she had paid by cheque because no one had asked her to pay cash. Though she did tell the tenancy tribunal at the hearing, en passant as it were, that she had tendered rent after the return of the cheque but "they" did not receive it, she did not give particulars of the alleged tender. However Mr. Fu, solicitor for the landlord, said in evidence that it was not until the 5th November 1969, after the consent order by a tenancy tribunal was made in October 1969 (i.e. TTK 115/1969), that the tenant's daughter offerred payment. It is more likely that Mr. Fu's evidence represented the truth, and I accept it as such.

39. It is not argued on behalf of the tenant that the payment by post-dated cheque was a valid tender sufficient to discharge the arrears of rent. The argument by counsel for the tenant runs on the following lines: The payment by post-dated cheque was in accordance with past practice, so that even though it was not strictly a valid tender, the tenant's mistake was bona fide and reasonable. The solicitors' second letter made an impossible demand because it was impossible for the tenant to comply "forthwith" with the first letter, for the last day given therein had already passed. The tenant and his daughter were therefore in a dilemma and decided to do nothing and left the matter to the tenancy tribunal. Counsel also refers to a sentence uttered by the landlord's mother when she was giving evidence of her instructions to her solicitors to write the first letter dated 1st February 1969: "I said to my solicitor that I would claim possession if rent was paid." It is argued that these words manifested her true state of mind in that she would require possession even if rent was paid. In my view, the word "not" has clearly been missed out and she must have said or meant to say that she would not insist on repossession if rent was paid. Having regard to the terms of the letter, this interpretation of her attitude must in my view be correct. In this connexion, I would observe that there are quite a number of typing errors in the learned President's notes of proceedings and decision, which could have been easily avoided if there had been more careful checking before the papers were sent up to this Court. As it was, these errors had caused difficulties, which though not serious, were nevertheless unnecessary.

40. As a consequence of the difficulties in obtaining the rents accrued due, the landlord instituted proceedings in the tenancy tribunal in the form of Application TTK 115/1969 (supra). The tenant's daughter quite openly admitted her avoidance of service of the Application, thereby necessitating substituted service thereof. The hearing of that application was as a result delayed for about 3 months till October 1969.

41. By her solicitors' first letter, it seemed that the landlord's mother was still prepared to allow the tenancy to continue if the tenant would pay up all the arrears within 30 days. When she received the post-dated cheque, it was not unnatural that she became suspicious of it (because as she said, some previous post-dated cheques had been dishonoured), and perhaps also very annoyed because she would not in any case obtain the money until about 2 weeks later. Nevertheless she was still prepared to give the tenant one last chance to pay up the arrears forthwith, accordingly the second letter followed. It is idle to say that the second letter cannot be complied with. Taking a commonsense point of view, it must be clear to any reasonable and bona fide tenant that the letter asked for an immediate payment and not an immediate compliance with the first letter. It is also idle to say that the tenant did not know what to do. Any reasonable and bona fide tenant would simply pay the arrears forthwith, but the tenant and his daughter chose to twist the meaning of the second letter and deliberately did nothing. In my view the learned President was correct in concluding that the tenant was not bona fide and reasonable, and this conclusion was amply supported both by the evidence before him and by a preponderance of probabilities.

42. Counsel for the tenant has advanced the proposition that by the solicitors' letter dated the 4th March 1969 the landlord had waived any breach that the tenant might have committed in failing to comply with the solicitors' letter dated 1st February 1969. This is not a correct view. The second letter refers to the demand made in the earlier one. It did not supercede or replace the earlier letter, and it certainly did not show any intention on the part of the landlord to waive the demand for the arrears. The second letter is nothing more than an extension of time for payment and must be regarded as such. I accordingly hold that the learned President was correct in saying that at the time the second letter reached the tenant, the previous demand remained running in favour of the tenant.

43. It is now necessary to consider the facts in conjunction with Section 22(1)(c) of the Landlord and Tenant Ordinance. Mr. Mills-Owens has briefly touched on the question of lack of means, but this was not an issue which was raised in the tribunal below, and I do not intend to consider it here. I shall confine myself to deciding whether or not the tenant's failure to comply with the landlord's demand was attributable to his own default.

44. The case of Dellenty v. Pellow (1951) 2 All E.R. 716 has been cited on more than one occasion in the course of submissions by counsel. Whilst this is a case on Section 3(1)(c) of the Rent and Mortgage Interest Restrictions (Amendment) Act, 1933, and Schedule I thereto, the following passage from the judgment of Jenkins, L.J. may well apply equally to the present situation:

"I would agree that, prima facie, where possession is sought on the ground of non-payment of rent in the ordinary case and the tenant pays the rent into court or tenders the rent before judgment, it would not be reasonable to make an order for possession if there was no more in the case than that. In the present case, however, the evidence showed that there had been a long history of default on the part of the tenant, and time after time it had been necessary to issue a summons against him before the rent could be extracted from him. This time again he allowed his rent to fall into arrear for more than a year and did not pay until the summons was issued and the case was about to be heard. Accordingly, in my view, in the particular circumstances of this case there was evidence on which the learned judge could come to the conclusion that, although the rent was actually paid into court before his judgment, nevertheless, it was a case in which it would be reasonable to make an order."

45. A case more directly in point is Leung Yuk Pui v. Ko Chi Pang (1955) 39 H.K.L.R. 124 where the phrase "a cause not attributable to his own default" was fully discussed. There Gould, Acting C.J. held that "own default" meant the wilful default of the tenant not due to a mistake as to his legal rights or a desire to protect his interests. He went on to say (at pp.132 - 133):

Having considered all that, the tribunal still has to consider whether a mistake was such as to provide sufficient reason for a prudent man to withhold payment of rent (vide p.134).

46. Following the judgment with the greatest respect, I hold that the tenant's failure to pay the arrears in compliance with the landlord's demand was a default and the default was wilful. I further hold that there was no mistake on the part of the tenant which warranted a withholding of payment of rent.

47. In fine, I say that the learned President's inferences as quoted above were supported by the evidence and by a preponderence of probabilities, accordingly each of the five grounds of appeal summarized above must fail.

48. It now remains for me to decide whether a tenancy tribunal is bound to make an order for possession or ejectment under Section 22(1)(c) of the Landlord and Tenant Ordinance. It is submitted on behalf of the tenant that in the light of the beginning phrase of the section, a tribunal has a discretion in the matter. The landlord's case however is that the section is mandatory. In considering the effect of Section 18(1)(c) of the then existing Landlord and Tenant Ordinance, which was in the same terms as Section 22(1)(c) of the present Ordinance, Gould J., held in Leung Yuk Pui v. Ko Chi Pang (1955) 39 H.K.L.R. 124 that section 18(1)(c) conferred the power to make an order for possession or ejectment upon a tribunal where the failure to pay arose from a cause which the tribunal deemed sufficient to entitle the tenant to the continued protection of the Ordinance, but the discretion conferred on a tribunal under that section must be limited to a cause "not attributable either to his (the tenant's) own default or to lack of means". The tribunal's power under Section 22(1)(c) is exactly the same. For this reason, I hold that the learned President in the tribunal below having drawn the conclusions on the evidence as he did, was correct in making the order for possession in favour of the landlord.

49. For the foregoing reasons I dismiss this appeal with costs on Scale V. Certificate for Counsel.

2 MAR 1971

Representation:

Mr. R. Mills-Owens, instructed by Messrs. Wai & Co. for Respondent.