Lee Chui Foon v. Great Mace Trading Co Ltd and Another

DCCJ008029/1981

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CIVIL JURISDICTION

ACTION NO. 8029 OF 1981

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Coram: H. H. Judge Cruden in Court.

Date: 12 August 1982

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JUDGMENT

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1. The plaintiff is the landlord of the domestic suit premises being Apartment No. 1, Block A3 together with Car Parking Space No. 40, Scenic Villas, Hong Kong. On the 11th day of September 1978, the plaintiff let those premises to the 1st defendant for a term of 3 years from the 25th day of August, 1978 at a monthly rental of $7,000.

2. Clause 2(e) of the tenancy agreement prohibited the tenant from assigning, subletting or parting with possession of the whole or any part of the premises. Clause 4(a) comprised the usual forfeiture clause in the event of any breach of the tenancy agreement on the part of the tenant. The plaintiff pleaded that in breach of Clause 2(e) the 1st defendant allowed the 2nd defendant to occupy the premises from the 1st day of April, 1980 to the 31st day of March 1982 upon payment of $15,000 per month for the first year increasing in the second year to $16,000 per month and thereafter at market value.

3. The plaintiff plead d that the premises were subject to Part II of the Landlord and Tenant (Consolidation) Ordinance cap. 7. The plaintiff further pleaded that by virtue of the 1st defendant's breach the tenancy had become forfeited to the plaintiff who is entitled to an order for possession under Section 53(2)(a) of the Ordinance or alternatively under Section 53(2)(e).

4. Judgment by default has already been obtained against the 2nd defendant so I am only concerned with the position on the 1st defendant.

5. The 1st defendant's defence pleaded that the 2nd defendant is a director of the 1st defendant, and is entitled to occupy the premises. Further and alternatively it was pleaded that if there were a sub-tenancy, the plaintiff has waived any covenant to the contrary. In an Amended Defence the 1st defendant particularised the waiver as being based on the plaintiff's agreement to am extension or renewal of the tenancy on the 15th September, 1981 and a demand for rental on the 22nd day of September, 1981.

6. At the commencement of the hearing, an Agreed Bundle of Documents was tendered. These included a power of attorney under which the plaintiff appointed her husband Mr. Ho Sum Wing, her attorney to act for her in relation to the suit premises. In fact he has carried out either personally or through his solicitors all the material acts relation to the remises on the plaintiff's behalf was the sole witness called by the plaintiff.

7. The agreed documents also included a letter from Taipan Agencies Corporation to the 2nd defendant, offering him the occupation of the suit premises on the terms pleaded in the particulars of claim, but subject to the further special condition that the 2nd defendant should be a director of the 1st defendant for the duration of his occupation of the premises.

8. This letter was signed by both Mr. Thomas Young on behalf of Taipan Agencies corporation and the 2nd defendant. The 2nd defendant is an officer of the Hong Kong Branch of the Credit Suisse. A Return of Directors of the 1st defendant filed with the Companies Registry of the Registrar-General's Department on the 26th day of May, 1980 shows that the directors of the 1st defendant were Mr. Young, his wife and the 2nd defendant.

9. During the hearing Mr. Young, who appeared as a representative of the 1st defendant by leave, pursuant to Section 15(1)(d) of the District Court Ordinance, Cap. 336, abandoned the interesting question whether the 2nd defendants undisputed occupation constituted a subletting or alternatively a parting with possession of the premises, and indicated that the let defendant relied solely on the defence of waiver. That concession narrowed down the issues considerably as Mr. Chang for the plaintiff had already opened on the subletting or parting with possession issue, citing particularly Somma v. Hazlehurst (1978) 2 All E. R. 1011 C. A. . I am therefore spared from having to consider the question of whether, approaching the arrangement between the 1st and 2nd defendants by either the "construction route" or the "disguise route" or the "sham route", that arrangement was in reality in breach of Clause 2(e). However, a number of complicated issues unfortunately remain.

10. Does the old or the new law apply?

11. The writ was issued on the 16th day of October, 1981 and the plaintiff submits that the old law applies and the claim is unaffected by the enactment of the Landlord and Tenant (Consolidation)(Amendment) (No. 2) Ordinance No. 76/81, which was assented to on the 10th day of December 1981 and subject to the exceptions set out in Section 1 thereof, came into force on the 19th day of December, 1981.

12. The law was therefore amended between the date of the writ and the date of hearing. The question arises does the old law existing before the Amendment or the new law enacted by the Amendment, apply to the. disposal of this action? This question is far from being mainly or wholly of academic interest, for depending on the answer, important different practical consequences follow. For that very reason Counsel for the plaintiff submits that the old law applies.

13. The general rule of statutory interpretation is that legislation is presumed not to be retrospective. If that general rule applied then the old law would be the relevant law to apply at the hearing. However, that general principle is subject to many exceptions. One particular exception of importance in the instant case arises from the fact that the writ is brought under Part II of the Ordinance which was enacted to protect the position of tenants whose common law or contractual right to possession of domestic premises had expired. This type of legislation is analogous to what in England are commonly called the Rent Acts. In England it has long been recognized that Courts approach that kind of legislation as a special class and demonstrate a willingness to hold that statutory amendments thereto are generally retrospective. A leading example of that approach is the English court of Appeal's decision of Hutchison v. Jauncey (1950) K. B. 574, C. A.. The question was whether certain provisions of the Landlord and Tenant (Rent control) Act 1949 were to have retrospective effect. The Master of the Rolls commences by setting out in some detail the authorities supporting the established general principle that amending legislation is not to have retrospective effect unless there is a clear contrary intention. However, he then goes on to to consider whether tenancy legislation of the kind this Court is now considering falls within a special class to which that general principle does not apply. After referring to the earlier decision of Remon v. City of London Real Property Co. Ltd. (1921) 1 K. B. 49 which held an amendment to be retrospective the Master of the Rolls continues:

"But that case seems to me to have laid down the application of a principle to this class of legislation generally, and I think, therefore that citations from authorities relating to wholly different subject-matters may not be so pertinent to cases of this character. "

14. Until recently our Landlord and Tenant (Consolidation) Ordinance, was considered on numerous occasions by the Hong Kong Courts to fall into the same special class of legislation as similar landlord and tenant legislation in England. It is therefore not surprising that on a number of occasions amendments to our Ordinance have been held to the retrospective. Once our Ordinance is held to fall within that special class of legislation this result is not surprising at least since the Privy Council in de Lasala v. de Lasala (1979) H. K. L. R. 214, emphatically declared that Hong Kong Courts should treat as binding House of Lords decisions on recent legislation common to both places.

15. A Hong Kong Court of Appeal decision where an amendment to the Ordinance was held to be retrospective was LAM Wai v. MOK Yok-jan (1980) H. K. L. R. 236. In that recent decision certain provisions of the Landlord and Tenant (Consolidation)(Amendment)Ordinance (No. 2) Ord. No. 6/80 were held to be retrospective.

16. After approaching that 1980 Amendment as falling within the special class of legislation referred to in Hutchison v. Jauncey, The Chief Justice then selected as the crucial words of the 1980 Amendment, which to him confirmed its retrospective quality, the following Amendment to Section 52:

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

17. After that Court of Appeal. decision on the 1980 Amendment in which those words were expressly held to be one of the major indicators that the enactment was retrospective, the Legislature enacted the 1981 Amendment. When it came further to amend the same important Section 52, the draftsman employed and the Legislative Council adopted, the same judicially approved and interpreted formula. For the 1981 Amendment (No. 2) of Section 52 was enacted in these terms:

"...tenancy whether created before or after 19th December 1981 . . . "

18. So this is not only the case of an Ordinance falling within the special class of legislation to which the presumption against retrospective legislation does not generally apply. For in addition shortly after this formula had been approved by the Court of Appeal as having retrospective effect, the Legislature has adopted the same formula. Normally a Court would accept this as a powerful independent indicator that the Legislature intended the provisions of the 1981 Amendment to have the same retrospective effect as the 1980 Amendment.

19. Certainly this was the view of many District Court judgments when the effect of the 1981 Amendment came to be determined in those Courts. In at least some of those judgments the Court of Appeal's decision in LAM Wai v. MOK Yok-jan dealing with an amendment using the same legislative formula, was cited as authority for the conclusion that the 1981 Amendment too was retrospective to the extent that the law to apply at the hearing of an action, commenced before the Amendment, but heard afterwards, was the new law.

20. However, when that question later came before a differently constituted Court of Appeal in NGAI Sau-ying v. Henry CHUE Kwok-keung Civil Appeal No. 30/82 it came to a contrary conclusion and held that the old law applied.

21. Clearly if the question in this action is the same, I am obliged to follow the Court of Appeal's decision in NGAI Sau-ying v. Henry CHUE Kwok-keung unless various alternative circumstances exist when I would not be so bound. Those circumstances are if the decision is per incuriam or if it conflicts with a Privy Council decision or if it can properly be distinguished.

22. The Court of Appeal never expressly considered whether our. , tenancy law continues to fall within the special class of legislation, in respect of which the general presumption that legislation is not retrospective , does not apply. Yet this exceptional quality of amendments to the Ordinance had hitherto been recognised in Hong Kong not only in decisions of our Courts from the Court of Appeal down, but also by academic commentators. For example Professor P. G. Willoughby in delivering one of the 'Law Lectures for practitioners 1982' sponsored by The Hong Kong Law Journal, Law Society of Hong Kong and School of Law, University of Hong Kong reviewed recent developments in the Landlord and Tenant (Consolidation) Ordinance. In that part of lecture dealing with the proper law to apply at the hearing where the factual position was the same as is disclosed in this action, he declared that it was the new law which applied.

23. Of the authorities cited to the Court of Appeal it placed most weight on the English Court of Appeal decision of National Real Estate and Finance Co. Ltd. v. Hassan (1939) 2 K. B. 61 which certainly held that certain statutory amendments it had to consider were not retrospective. However, that English decision was not concerned with the special class of Rent Acts Legislation. Instead, it was concerned with legislation affecting a tenant's liability to repair under the covenant of his lease, namely the Leasehold property (Repairs) Act 1938. Hassan's Case therefore did not fail within nay special class of legislation and is a predictable example of the general principle that legislation is not presumed to be retrospective, being applied to general legislation. That was the very reason, it may be inferred, why the English court of Appeal in Hassan's Case did not refer to its earlier decision of Remon v. City of London Real property Co. Ltd. (1921) 1 K. B. 49. For Remon's Case fell within a special class of case where the general presumption did not apply. Hassan's Case did not fall within that special class. So when later again, the English court of Appeal considered the issue of whether an amendment was retrospective in Hutchison and Jauncey, which dealt with legislation within the special class, it is not surprising that coversely Remon's Case was cited but Hassan's Case was not.

24. Yet, with respect, our Court of Appeal in NGAI Sau-ying v. Henry CHUE Kwok-keung does not refer to the fact that the tenancy case it was considering had hitherto been held to fall within a special class to which the presumption did not apply. To the contrary both judgments which gave full reasons relied upon Hassan's Case as their principal authority. Leonard J. A. was prepared to go even further. In disposing of Hutchison v. Jauncey his observations are certainly open to the inference that he considered Hutchison v. Jauncey a lesser authority, as Hassan's Case was not considered therein, for he points out:

"In Hutchison v. Jauncey ... The Court does not appear to have been referred to National Real Estate and Finance Co. Ltd. v. Hassan. "

25. The principle referred to in Hassan's Case was never in dispute in Hutchison v. Jauncey. The Master of the Rolls accepted that principle prima facie applied to the interpretation of a statute.  But he was concerned with a special class of case. The Master of the Rolls referred to the contrary general line of authority, of which Hassan's Case is but an example, in these words:

"I shall not, I hope, be thought unappreciative of his argument or disrespectful to the authorities cited; if I forbear from reference to all of them, because the principle in question is not in dispute. "

26. For the reasons already expressed it is at least arguable that, given the dichotomy reaffirmed by the Master of the Rolls in Hutchison v. Jauncey, then Remon's Case was of as little relevance in Hassan's Case as Hassan's Case would have been in Hutchison v. Jauncey. On this basis it is, with respect, arguable that Hassan's Case was equally of little relevance in NGAI Sau-ying v. Henry CHUE Kwok-keung. But the court of Appeal were still faced with its decision of the previous year dealing with the previous year's Amendment, namely LAM Wai v. MOK Yok-jan.

27. In LAM Wai v. MOK Yok-jan the Court of Appeal held the 1980 Amendment to have retrospective effect so as to include all proceedings pending at the date of its enactment. I have already referred to the fact that in addition to approaching the 1980 Amendment in accordance with Hutchison v. Jauncey the Court of Appeal considered that the provisions of the then Amendment showed that the intention of the Legislature was to affect pending actions; the Court of Appeal selected the words already cited as the principal indicia of tile Legislature's intent that the 1980 Amendment should be construed retrospectively; one year later the Legislature adopted that same judicially approved formula for the 1981 Amendment.

28. In those circumstances it might have been anticipated that LAM Wai v. MOK Yok-jan would be a very powerful authority to support the view that the 1981 Amendment also affected pending actions and the new law would apply. If one turns to consider the provisions of each Amendment perhaps the only difference between the Amendments express provisions is that the 1980 Amendment was enacted on the 15th day of February but made expressly retrospective to the 18th day of December, 1979. The 1981 Amendment was enacted on the 10th day of December 1981 and under Section 2(a) thereof cane into operation on the 19th day of December 1981.

29. So it is true that the operation of the 1980 Amendment was back-dated while the operation of the 1981 Amendment was ante-dated. However, that difference relates to the different procedural question of the date of operation of the Amendments. It does not deal with the proper substantive law to apply to pending actions. At most the 1980 Amendment has express reference to its retrospective effect but the 1981 Amendment does not have such a general reference. As to pending actions there is a reference in the transitional provisions of the 1981 Amendment, namely Section 59. The view of this particular Court was that those provisions merely deal with the otherwise competing jurisdiction of the District Court and Lands Tribunal in relation to pending actions, and are not relevant to the other issue whether the old or new substantive law applies to pending actions. While another District Court judge in CHOW Sui-kwan v. Estate Shum Yat Ming Deceased & Ors. VCJ No. 6035/80 came to the contrary conclusion, the view that Section 59 is limited to the issue of jurisdiction has been approved by Kempster J. in NGAI Sau-Ying v. Henry CHUE Kwok-keung. Chow's Cass has also now been reversed in LEUNG Chui- ying v. CHOW Sui-kwan Civil Appeal No. 38/82 which confirms the very limited effect of Section 59.

30. If all the provisions of the 1981 Amendment are considered both in isolation and together, major difficulties of interpretation arise if the Amendment is not construed so as to affect pending actions. Some of these provisions are particularised in the judgment of Downey D. J. in LEE Lai-bing v. NG Yu & Ors. KCC No. 9812/81 where he concludes:

"....I can only assume that the legislature intended all amendments to operate retrospectively, and to require pending proceedings to be determined in accordance with the law in force at the hearing. "

31. How then did the Court of Appeal in NGAI Sau-ying v. Henry CHUE Kwok-keung deal with its contrary decision of not less than two years earlier? Leonard J. A. is content merely to draw attention to LAM Wai v. MOK Yok-jan before going on to another matter. After referring to the provision that it was to operate retrospectively be further reduces its importance by limiting it to its own special facts:

"It was because of these unusual facts that the case. was decided as it was decided. "

32. As Cons J. A. was content to concur we do not have the advantage of his own discussion of this otherwise apparent conflict between these two Court of Appeal decisions. Kempster J. A. , did not acknowledge any difference in approaching Rent Acts Legislation, merely referring to the broader division between legislation which does not show a retrospective intention and legislation which does show such an intention. In his judgment he places Hassan's Case in the first category and LAM Wai v. MOK Yok-jan in the second category.

33. I recognize that there is much cogency in the argument that so far as pending actions are concerned there does not appear to be any real difference between the language used in the 1981 Amendment, and the language used in the 1980 Amendment. To the contrary there are striking similarities. Equally it is difficult to interpret the Court of Appeal's decision in LAM Wai v. MOK Yok-jan as doing other than enunciating general principles, which are at least wide enough to apply to subsequent similar amendments to the same Part II of the Landlord and Tenant (Consolidation) Ordinance.

34. However, the court of Appeal in NGAI Sau-ying v. Henry CHUE Kwok-keung was emphatic that upon the filing of a writ a landlord's right to possession under Section 53(2) crystallised and thereupon became an accrued right whereby he was entitled to have his action disposed of in accordance with the law which existed at the date the writ was filed. In coming to this conclusion considerable reliance was placed on the provisions of Section 23 of the interpretation and General Clauses Ordinance, Cap. 1.

35. The law relating to more existing rights on the one hand and accrued or vested rights on the other hand is complex. The position is not helped at times by the failure of judgments to distinguish between what may only be an existing rightand a right which has changed its character from an existing right and developed into an accrued right. The former may not survive an amendment. The latter does survive an amendment.

36. However, certain principles are tolerably clear. As far as the statutory provisions of Section 23 relating to accrued rights are concerned they do not necessarily apply in Hong Kong. For Section 2 provides that the general provisions of the Ordinance, such as Section 23, shall not apply to, for example, the 1981 Amendment, if that Amendment contains a contrary intention. Section 2 provides:

37. So before the provisions of Section 23 can be considered, a court must first find whether the general provisions of Section 23 have been excluded by the context of the 1981 Amendment. It is well settled that the Amendment does not expressly have to exclude Section 23. It all depends on the context of the Amendment. Here for the very reasons set out by Downey D. J. in LEE Lai-bing v. NG Yu & Ors. there is powerful evidence that the context of the Amendment does just that. The view that the context has excluded Section 23 is strengthened if the different principle of interpretation, applicable to the special class of the legislation of which the Amendment belongs, still applies in Hong Kong. For if the context of the Amendment is approached as being legislation falling within that special class, there are substantial indications that its provisions are sufficiently retrospective to affect pending actions.

38. If that is the position then Section 23 simply does not apply. It has been excluded by the context of the Amendment interpreted in accordance with the particular principles applicable to the special class of legislation of which the Amendment is a member. For completeness I might add that I appreciate that even if the Amendment were not part of that special class its provisions, even in isolation, are sufficiently clear and positive to constitute "the contrary intention" referred to in Section 2. So on that ground too, Section 23 might also be held to be inapplicable.

39. However, even if Section 23 were not so excluded that is not the end of the matter. For it would still be necessary to determine whether the plaintiff's right upon filing his writ constitutes an accrued right to have his action disposed of in accordance with the law existing at the date of filing notwithstanding that by the date of hearing the substantive law may have been changed by statutory amendment. It is to that question I will now turn.

40. Fortunately, this is an issue on which there is an abundance of authority and it was discussed by both Leonard J.A. , and Kempster J. , in NGAI Sau-ying v. Henry CHUE Kwok-keung. However, a leading Hong Kong authority on this question, the Privy council decision of Director of Public Works & Anor. v. HO Po-sang (1961) A. C. 910 was not referred to in any of the Court of Appeal judgments in NGAI Sau-ying v. Henry CHUE Kwok-keung. The Privy council was not only concerned with accrued rights under Section 23 but their existence in relation to our Landlord and Tenant Ordinance.

41. The effect of the Privy council decision was to emphasise the difference between more existing rights on the one hand and accrued rights on the other hand. The facts are complicated to the extent that one of the arguments. was able to be dismissed on the ground that even if the appellant discharged the burden placed on him by the Ordinance the final determination fell within the discretion of the Governor-in-Council. In the instant case the position is quite different for the plaintiff, on the establishment of certain facts, is entitled to an order even though Section 52 may have been expressed, to use the language of Cons JA, in LO Wah & Anor. v. CHUI Fun (1980) HKLR 844, 849 in "the permissive negative".

42. However, that distinction, while important, formed only one limb of the judgment. For the Privy Council went on to discuss what it considered to be the "more attractive submission" that upon making his application under the old legislation the applicant had an accrued right to have the matter taken into consideration. There was no question that under the old legislation the landlord had at the date of his application an "existing right" to apply. But this was not necessarily, as at the date of applying, an "accrued right" to have the application duly determined in accordance with the old law in force at the date he exercised his existing right to apply. If that right was more than an "existing right" and had matured into an "accrued right" then he would be entitled to have his application determined under the old law.

43. This same fundamental distinction is adverted to by all three Lord Justices in Hutchison v. Jauncey and it may be helpful to pause at this stage and refer to those judgments. Lord Evershed M. R. at page 583 declared:

"… and whether then the landlord must go on to say that the cause of action crystallised on the issue of the summons is something done, the full effect of which must on no way be minimised or otherwise effected by the Act. For the issue of the summons (if that be a thing done) is not, as such, in any circumstances affected. The landlord must go on to say when the summons comes to be heard (a thing not done when the Act was passed) that hearing must proceed as though the Act of 1949 had not been passed. I do not think that this is a fair or possible construction of ss. 9 and 10. "

44. At the same page Cohen L. J. observed:

"They establish that, in considering the problem then before the court, the law must be applied to the state of facts existing at the date of issue of the plaint. They are not relevant to the question before us, which is whether the law to be applied is that in force at the date of the issue of the plaint, or whether the result of the action is affected by an alteration of the law subsequent to that date...The issue of a plaint is no doubt an act done within s.10; but it is not equivalent to judgment. Remon's Case I think, shows  that nothing but delivery of possession or an order for possession can effectively deprive the occupying tenant of his possession. "

45. At page 584 Asquith L. J. limited his comments to referring to the limited and separate right of commencing the action:

"It is said that the issue of the plaint is something done; but, assuming that it is, the application of s. 9 to the letting does not invalidate or in any way affect the issue of the plaint. That is "affected" is something quite different, namely, the result of the action … "

46. To return to the Privy Council decision of Director of Public Works v. HO Po-sang Lord Morris said this :

"Was the lessee therefore possessed on April 9 of a 'right' (or privilege) within the meaning of the Interpretation Ordinance? In there Lordships view the entitlement of the lessee in the period prior to April 9 to have the petitions and cross-petition considered was not such a 'right. On April 9 the lessee was quite unable to know whether or not ha would be given a rebuilding certificate, and until the petitions and cross-petition were taken into consideration by the Governor in council no one could know. The question was open and unresolved. The issue rested in the future. The lessee had no more than a hope. or expectation that he would be given a rebuilding certificate even though he may have had grounds for optimism as to his prospects. "

47. Lord Morris goes on to emphasise that right protected under what is now Section 23 is not merely any right, but only a right which is acquired or accrued under the repealed enactment. So where a right under an enactment is repealed by, for example, an amendment it only survives the repeal in favour of a holder, if it is an accrued right. In a section of his judgment which is particularly relevant to the present action Lord Morris continued:-

"It may be, therefore, that under some repealed enactment a right has been given but that in respect of it some investigation or legal proceedings is necessary. The right is then unaffected and preserved. It will be preserved even if a process of quantification is necessary."

48. These words illustrate the very restricted nature of an accrued right. Here the right to commence proceedings is unaffected by the Amendment. The pre-amendment filed writ survives. However, the right to possession under the writ only comes into existence upon the Court making an order for possession. That order for possession is usually made at the end of the hearing except where judgment is entered by default. The latter position does not arise here. Lord Morris is at pains to point out that an accrued right may have arisen "even if" the value of that right has yet to be measured. Thus where under compensation or similar legislation a right to damages may have been determined on a contest as a liability, but the damages not assessed when the right to compensation was altered by statue.  The successful party is still nevertheless entitled under the old law to have his damages assessed. For his right to them was determined under the old law and that right thereupon accrued in his favour. In contrast, here there has before the Amendment been no order of the Court giving the landlord a right to possession. The position, of course, would have been different, if there had been such an order before the Amendment, but proceedings then adjourned, before the date of possession and related conditions were finalised. Clearly on the authority of Director of Public Works v. HO Po-sang, the right to possession would have accrued on the date of the Court's order. That right would be preserved even though the date of possession and other conditions including, if appropriate, the quantification of means profits and damages, had not yet been determined before the law was amended. The proceedings would continue on those outstanding matters, after the amendment, but in accordance with the old law.

49. It is important that these two separate concepts of existing rights and accrued rights are not blurred. This important distinction is further emphasised by Lord Morris when he continued his judgment in these words:-

"But there is a manifest distinction between an investigation in respect of a right and an investigation which is to decide whether some right' should or should not be given. Upon a repeal the former is preserved by the Interpretation Act. The latter is not. "

50. So where a right has yet to be acquired it cannot be accrued. On the other hand a right may have became accrued, even though the law has been amended before it could be quantified. Lord Morris cites with approval Hamilton Gall v. White (1922) 2 K. B. 422 as an example of this distinction which he summarises in these terms:

"The case of Hamilton Gell v. White furnishes an example of an accrued right and the facts are in contrast with the facts in the present case. In that case the landlord of an agricultural holding gave his tenant notice to quit: he gave it because he wished to sell. The tenant then became entitled  to compensation upon the terms and subject to the conditions of section 11 of the Agricultural Holdings Act, 1908. The tenant duly complied with one condition. He duly gave notice of his intention to claim compensation. Another condition was that he should make his claim within three months of quitting. But before the time for him to quit arrived section 11 was repealed. He did nevertheless make his claim within three months of quitting. It was held that his claim could proceed and that he could recover compensation under section 11. He had an accrued right which resulted from the fact of the landlord having given a notice to quit in view of a sale. The conditions imposed by section 11 were conditions mot of the acquisition of the right but of its enforcement. As he had an accrued right it was preserved by the operation of the Interpretation Act and, further, as he had am accrued right the repeal did not affect the investigation in respect of that right. The investigation was by arbitration. Scrutton L. J. said: 'In the course of that arbitration he would no doubt have to prove that that right in fact existed, that is to say that the notice to quit was given in view of a sale, and he would also have to prove the measure of his loss. But he was entitled to have that investigation, which had been begun, continue, for section 38 expressly provides that the investigation shall not be affected by the repeal'."

51. The Privy Council in considering the judgment of the Hong Kong Full Court, which was the subject of appeal, also approved this statement by Blair-Kerr J. who had presided over the Full Court below:

"It is one thing to invoke a law for the adjudication of rights which have already accrued prior to the repeal of that law; it is quite another matter to say that, irrespective of whether any rights exist at the date of the repeal, if any procedural step is taken prior to the repeal, then, even after the repeal the applicant is entitled to have that procedure continued in order to determine whether he shall be given a right which he did not have when the procedure was set in motion. "

52. On the basis of the Privy council decision, it seems that in the present proceedings, the only right the landlord has and exercises when he files his writ is the right to bring an action to determine whether he is entitled to an order for possession. It may well be that his right to bring am action becomes an accrued right upon filing the writ. But filing the writ does mot give him a right to possession. That right depends on a variety of factors both within and beyond his control. Whether he is to enjoy that right depends on the order the Court makes  whether in default of defence or at the end of a defended hearing.

53. Lord Morris has emphasised that a right may have accrued even though quantification is necessary. The position in the instant proceedings different to that example not merely in degree but in kind. In that example the right had accrued and its existence was not affected even though its value had yet to be determined. Here the right of possession has not even been determined. So I am not concerned with the case where an accrued right existed before the amendment but the subsidiary judicial exercise of quantification remained outstanding.

54. On the principles enunciated by the Privy Council, the landlord in the instant proceedings has an accrued right to bring proceedings, but does not have an accrued right to possession. At most he has an existing right to possession. Nor does he have an accrued right to have these proceedings heard in accordance with the old law if the date of hearing is after the old law was repealed.

55. If this is the right conclusion to be drawn from the application of the Privy council decision to the instant facts, then clearly there is a conflict between the Privy Council decision of Director of Public Works & Anor. v. HO Po-sang & Ors. and the court of Appeal's decision in NGAI Sau-ying v. Henry CHUE Kwok-keung. Earlier it appeared that an explanation of that conflict may have been that unfortunately the Privy Council decision was not cited to the Court of Appeal.

56. Whether or not that is the explanation, it is at least clear from the Court of Appeal's recent decision in LEUNG Chui-ying v. CHOW Sui-kwan (supra) delivered on the 30th day of July, 1982, just 10 days before I heard the present action, that Director of Public Works v. HO Po-sang was not cited to the Court of Appeal in NGAI Sau-ying v. Henry CHUE Kwok-keung. At page 3 of his judgment Cons J. A. states that the privy council opinion was an:

". . . . . authority to which our attention was not drawn."

57. If it were not for this recent decision of the court of Appeal, this Court would have been faced with the very difficult task of deciding whether there was a conflict between the Privy Council opinion and NGAI Sau-ying v. Henry CHUE Kwok-keung. If there were such a conflict then this Court under the established principles of stare decisis would clearly be obliged to follow the Privy Counsil and not follow the Court of Appeal. Fortunately the court of Appeal in LEUNG Chui-ying v. CHOW Sui-kwon has to some extent explained the position of its earlier decision.

58. NGAI Sau-ying Case and LEUNG Chui-ying's Case were both concerned with applications by landlords for recovery of possession of Part II domestic premises under Section 53(2). In both cases the Courts had to consider Section 53(2) after the 1981 Amendment (No. 2). The former case concerned an application for possession under Section 53(2)(b). The latter case concerned an application for possession under Section 53(2)(c).

59. In relation to the former case, the court of Appeal held on the 7th day of May 1982, that the Amendment was not retrospective and the old law applied. In the latter case, the Court of Appeal held on the 30th day of July 1982, that the Amendment was retrospective and the new law applied. It may be noted that two justices of appeal, Leonard, V. P. and Cons J. A. were members of both Courts of Appeal.

60. In an area of the law which is of great practical importance and in respect of an Ordinance which is probably litigated more than any other civil enactment, it would seem desirable, if possible, to fix broad, consistent general principles rather than allow the law to be fragmented; still less to introduce new technical distinctions within the confines of on Section. The court of Appeal apparently felt this was a course not open to them. Instead the Court of Appeal has now held that different principles apply to Section 53(2)(b) than apply to Section 53(2)(c).

61. It may be observed that in the earlier case, although concerned with Section 53(2)(b), the judgment of Leonard, J. A. , understandably considered Section 53(2) generally, on the question whether the Amendment was retrospective. He concluded that it was not. Cons J. A. gave a short concurring judgment. It is interesting that Kempster J. , the remaining member of that Court, when giving reasons for his concurring judgment also makes no distinction between different clauses of Section 53(2) and held the Amendment not to be retorpective. There is no hint in any of the judgments that the principles enunciated by the Court of Appeal as to the effect of the important 1981 Amendment (No. 2) only applied to some parts of Section 53(2) and not to others.

62. Turning to the latter judgment of the Court of Appeal in LEUNG Chui-ying's Case, it held contrary to its prior decision on Section 53(2)(b), that the provisions of Section 53(2)(c) were retrospective and therefore the new law applies to rebuilding applications.

63. Clearly to roach that different conclusion was no simple task, in view of the Court's earlier decision in NGAI Sau-ying Case. Cons J. A. who delivered the principal judgment, proceeded on the basis that Section 53A, which is a new Section placing certain restrictions on orders made under Section 53(2)(c), introduced "changes of great practical significance".

64. Contrary, with respect, to the expectation that in this very senstive area of legislation having important social and practical consequences, the Legislature would have attempted to enact relatively simple and consistent new provisions, Cons J. A. , in coming to his opposite conclusion when considering the different grounds for possession under Section 53(2) (c), gave this explanation:

"There is no reason to suppose that with such widely differing objectives the legislature necessarily intended that the effect of each upon actions which had already been commenced should be the same. "

65. With respect, but. for this judgment, it would not have appeared to this court to have been possible to hold that the provisions of one Clause of the same Section and the same Sub-section was retrospective while the provisions of the next succeeding clause of the same Section and the same Sub-Section was not.

66. Nor did the contrary conclusion in NGAI Sau-ying's Case cause the Court of Appeal any difficulty. In view of the very wide and general approach to the whole of the 1981 (No. 2) Amendment in the earlier decision, the conclusion that the Amendment was not retrospective might otherwise have been thought to cause any later court at least a little difficulty. Certainly that was the view of Counsel for the appellant who considered that before the Court of Appeal could uphold the appeal it would be necessary to hold its prior decision in NGAI Sau-ying's case per incuriam. counsel for the appellant invited the Court of Appeal to dispose of NGAI Sau-ying on that basis on the ground that the Privy Council decision of Director of Public Works v. HO Po-sang had not been cited to the prior Court of Appeal. As both appeals were concerned with the same Amendment in relation to tile same sub-sectioh, if different clauses thereof, the approach of Counsel was certainly understandable.

67. As the latest and perhaps only court of Appeal decision on whether the amendments to Section 53(2) were retrospective NGAI Sau-ying's Case may properly have been anticipated to be of considerable importance to any latter interpretation of Section 53(2)(c). It seems clear from the judgments that Counsel for the appellant's initial fear's must soon have evaporated. For example, at' page 4, Cons J. A. stated:

"However, it seems to me that the case of NGAI Sau-Ying  has no relevance to the matter now before us. "

68. On the other hand, as to the Privy council opinion in Director of Public Works v. HO Po-sang, Cons J. A. , did not think it would have assisted the earlier court of Appeal:

"With every respect I do not think Their Lordships opinion would have assisted ... In my view reference to that authority would have made no reference to our decision."

69. However, the judgment's attitude to the other submissions of Counsel for the appellant, that the prior judgment, quite apart from the Privy Council opinion, was also per incuriam in the wider sense, are most interesting. After acknowledging that these other arguments had not been put to the court of Appeal in NGAI Sau-ying's Case, Cons J. A. goes on:

"Whether they might have persuaded us to to a different conclusion is something upon which I propose to make no comment. But right or wrong our decision cannot be said to be per incuriam."

70. So whether, after hearing those new submissions the court of Appeal considered its prior decision in NGAI Sau-ying's Case still good law, was left open. All the judgment decides is that whether the prior decision was right or wrong, it certainly was not an example of a per incuriam decision as that term is usually defined. As to whether in a wider sense it is still good law, Cons J. A., raised that question but declined to provide us with an answer.

71. The remaining judgment, which gave reasons, was that of Leonard J. A. which was largely concerned with the dangers of ruling on preliminary points independently of hearing the whole action. As to the issue of. whether the old or new law applied, he agreed with Cons J. A. that it was not necessary to consider whether NGAI Sau-ying's Case was per incuriam. Leonard J.A. at page 8 went on to state what he considered was the question before the court of Appeal, in these terms:

"What called for decision was whether or not the new Section 53A should be applied . . . . . "

72. For completeness it might be added that Section 53A is not, however, a new Section empowering a Court to make an order for possession in favour of the landlord on the ground that he intends to rebuild. Before the Amendment the statutory authority was Section 53(2)(c) and the authority for that species of order remains with Section 53(2)(c). The new Section 53A is not a new empowering provision under which orders can be made in place of the former power under the old Section 53(2)(c). Under the new law the sole power to make an order for possession on the ground of rebuilding is under Section 53(2)(c). Section 53A merely sets out new certainly very different - additional restrictions on the making of an order under Section 53(2)(c). But Section 53(2)(c) is the provision under which the order is made. Significantly it is the provisions of Section 53(2)(c) which the Court of Appeal have now held to be retrospective. Although it should be emphasised the provisions of the new Section 53A, which relate only to Section 53(2)(c), were certainly a major factor in fading the Court of Appeal to its ultimate conclusion. 

73. What is the result of LEUNG Chui-ying's Case on the interpretation of the other clauses of Section 53(2)? To answer that question it may be helpful first to consider the principal recent cases in chronological order.

74. In 1980, the Court of Appeal in LAM Wai v. MOK Yok-jan held that prior similarly worded Amendment was retrospective. In 1982, the Court of Appeal came to the contrary conclusion in NGAI Sau-ying's Case in respect of the 1981 Amendment (No. 2). Subsequently in LEE Lai-bing v. NG Yu & Ors. Downey, D. J. substantially restricted what might otherwise have been considered to be the broad general principles enunciated in NGAI Sau-ying's Case. Now in the latest Court of Appeal decision, LEUNG Chui-ying's Case, the court of Appeal has come to a contrary conclusion in relation to Section 53(2)(c). This contrary conclusion, however, is consistent with its earlier decision in LAM Wai v. MOK Yok-jan. Further, it contains no criticism of LEE Lai-bing- v. NG Yu & Ors. While it is true that Section 53(2)(e) was not directly before the court of Appeal, if the learned District Judge's judgment was considered wrong then as Section'53(2). was generally under consideration, the occasion was appropriate to make any adverse observations on LEE Lai-bing v. NG Yu & Ors. if that was considered appropriate. None were made.

75. In summary the equivalent English Court of Appeal cases, our own Court of Appeal cases of LAM Wai v. MOK Yok-jan and LEUNG Chui-ying's as well as LEE Lai-bing v. NG Yu Ors., all fall into the same clear cut category of landlord and tenant decisions where it has consistently been held that various amendments have been retrospective, to the extent that at the hearing of actions pending when the amendments were passed, the new law is applied. The one exception to that strong line of authority is NGAI Sau-ying's Case which was decided between the other two Court of Appeal decisions cited.

76. In considering the present status of NGAI Sau-ying's Case very helpful assistance is provided by the court of Appeal's observations thereon in LEUNG Chui-ying's Case in which the Court of Appeal:

77. After considering NGAI Sau-ying's Case in the light of all these factors, it would first seem that at least in the wider sense advanced by Counsel for the appellant in LEUNG Chui-ying's Case, the earlier decision may be per incuriam.

78. Secondly, if it is not per incuriam in that wider sense, the further question arises whether, while not being per incuriam, is this court faced with a conflict between it and the Privy council decision in Director of public Works v. HO Po-sang. In my view, there is a conflict and it cannot simply be disposed of by resorting to legal niceties, sophisticated or otherwise, or by searching for minor points on which one decision may be distinguished from the other. If the two decisions are considered on the basis of the matters they substantially decide they cannot, on the present issue, properly be distinguished. If that is the position then in accordance with the strict principles of stare decisis, which at least bind this Court, the course is clear. I must follow the decision of the. superior Court, namely the Privy Council and, with respect, reject the court of Appeal decision in NGAI Sau-ying's Case. Accordingly, I would have to rule that the 1981 Amendment (No. 2) affects this action and I am therefore obliged to apply the new and not the old law.

79. Thirdly, if there is no such a conflict what course should this court follow? This final alternative might have caused real difficulty for it would only be in the most exceptional circumstances and in accordance with well established principles that this court would pause to consider whether it was bound by a particular Court of Appeal decision. However, the present position is much simplified by the Court of Appeal's subsequent decision in LEUNG Chui-ying's Case. That decision marks a return, at least for section 53(2). (c), to the principle that the new law applies at the hearing. Further, to put it at its lowest, the court of Appeal not only did not reaffirm its prior decision. but was at pains not. to extend the principle of that prior decision on Section 53(2)(b) to, Section 53(2)(c).

80. In the result this Court is directly encouraged by the Court of Appeal's decision in LEUNG Chui-ying's Case similarly not to extend NGAI Sau-ying's Case to Sections 53(2)(a) and 53(2)(e). For it is only the latter provisions and not section 53(2)(b) that I am concerned with in the present action. I am further encouraged by the Court of Appeal in following this course by the importance they placed on the fact that under the 1981 Amendment (No. 2) substantial changes had been made to the provisions under which an order might be made under Section 53(2)(c). On the other hand Section 53(2)(b) was not amended. As in the case of section 53(2)(c), so too in the case of sections 53(2)(a) and (e),. substantial amendments were either directly or indirectly made. Before the amendments Part II gave the District Court exclusive jurisdiction where forfeiture or any of the statutory grounds for recovering possession were invoked. Under the amendments, however, whether forfeiture actions during the contractual now proceed in the Nigh Court or the District Court depends on the general civil jurisdiction of those Courts. The District Court under the amendments has lost its former exclusive jurisdiction - WU Ka-lun v. CHAN Tin-sui VCJ NO. 4/82. Section 53(2)(a) therefore now only applies to tenancies during the period of statutory continuance. Section 53(2)(e) has also been materially amended by restricting unlawful sub-letting during the period of statutory continuance, not as formerly where the written consent of the landlord was not obtained, but subject only to the different and lesser test whether the subletting would have been a breach of the contractual tenancy - CHAN Pak-wai v. Thomas Young & Ors. VCJ No. 9443/81. For the reasons given in the two District Court judgments cited it seems to me that these changes to Section 53(2)(a) and Section 53(2)(e) fall within Cons J. A.'s category of "great public significance" which enabled him to come to his conclusion that the new law applies to Section 53(2)(c).

81. For all these reasons I hold that the new law also applies to Sections 53(2)(a) and 53(2)(e). I am therefore obliged to apply the new law to the hearing of this action.

82. Has the plaintiff waived her right to forfeiture?

83. The plaintiff has founded her action on three causes of action, namely forfeiture at common law, a statutory cause of action under Section 53(2)(a) and the statutory cause of action under Section 53(2)(e). As I have held that the new law applies I am not satisfied any common law cause of action is within the jurisdiction of this court and so will only consider the two statutory causes of action. No difficult arises in this action for the contractual period has expired and the 1st defendant is in possession by virtue of the statutory continuance of that tenancy.

84. The 1st defendant submits that waiver is established by :

85. I will deal with the telephone conversation first. I accept that any statements by Mr. Ho during that conversation were made within the authority conferred on him by the plaintiff under the power of attorney and are therefore binding upon the plaintiff.

86. The conversation was in Cantonese. The conversation was taped and the tape was transcribed into Chinese characters. That transcription was produced as Exhibit D1 and a certified English translation was produced as Exhibit D1A.

87. Exhibit D1 was put to Mr. Hon in cross-examination and he agreed that it accurately recorded the contents of the telephone conversation and I so find. The conversation also took place at a time after the plaintiff knew that the 2nd defendant was in possession of the suit premises and paying the 1st defendant the monthly sums pleaded in the particulars of claim.

88. From a perusal of Exhibit D1 and having considered the. oral evidence adduced I am satisfied on the balance of probabilities that on the 15th day of September 1981:

89. I am satisfied that the plaintiff agreed to offer a new tenancy under which subletting was allowed subject to the plaintiff's consent. The one issue which remained to be finalised was whether the plaintiff would approve the 1st defendant's proposal that such consent could not be withheld in the case of a respectable and responsible sub-tenant. I would observe that this remaining issue was one open to the let defendant to waive unilaterally as, if agreed to by the plaintiff, it would solely have benefited the 1st defendant.

90. Subsequent to that telephone conversation the plaintiff's solicitors on the 22nd day of September, 1981 sent to the 1st defendant a new draft tenancy agreement for a period of 2 years from the 25th day of August 1981 at $20,000 per month together with a consent to the premises bekng sub-let to the 2nd defendant with a provision that any farther subletting required the consent of the plaintiff. The tenancy agreement and form of consent to subletting corresponded with the prior telephone conversation except that the plaintiff did not agree to the inclusion of a provision that she would not unreasonably withhold her consent to subletting in the case of a respectable and responsible person. The tenancy agreement was never approved by the 1st defendant nor executed by the parties. The plaintiff's solicitor covering letter dated the 22nd day of September, 1981 contained the demand for payment of rent under new tenancy agreement which is the basis of the amended paragraph 4 of the Amended Defence. Certainly I am satisfied that the tender of the new agreement and the demand for the new rent were, on the part of the plaintiff, as at the 22nd day of September, 1981, unconditional. Mr. Young submitted that if, with notice of a cause for forfeiture, a landlord grants a new tenancy, the forfeiture is waived. Further, he submitted it was not necessary for a new tenancy agreement to be executed by both parties. It was sufficient if the landlord after notice offers the tenant in default, a new tenancy. He cited the following statement from 27 Halsbury (4th Edn. ) 334; para. 430:

91. The prior tenancy agreement expired on the 24th day of August, 1981. The new tenancy offered by the plaintiff was to commence on the 25th day of August 1981.

92. Mr. Young further cited Megarry & Wade's 'Law of Real Property' (4th Edn. ) 658:

"But a waiver will be implied where a landlord, with knowledge of the breach . . . agrees to grant a new lease to the tenant to commence from the normal determination of the existing lease. "

93. It may be noted that according to this authority it sufficient if the landlord agrees to grant a new tenancy agreement. It is not necessary for that offer to be accepted by the tenant.

94. Mr. Chang for the plaintiff submitted that mere negotiations could never constitute waiver. In his submission it would have been necessary for a new tenancy agreement to have been executed between the parties. He pointed out that the telephone conversation was punctuated by several references to the fact that solicitors would have to be consulted while the subsequently prepared tenancy agreement was never accepted by the 1st defendant or executed by the parties

95. I am satisfied that if that new agreement had been executed it certainly would have constituted waiver. As it was not executed what is the position? It is clear that with knowledge of the breach the plaintiff not only tendered the new tenancy agreement to the 1st defendant but also tendered a written form of consent to sub-letting the premises to the 2nd defendant. So in the documents unconditionally tendered by the plaintiff she indicated that she would now consent to a sub-tenancy to the very person whose previous occupation, as a subtenant first gave rise to the breach. While it is true that tenancy agreement was never executed, in the particular circumstances of this case, I am satisfied that the tendering of those documents evidences a definite election on the part of the plaintiff to waive.

96. On whether negotiations culminating in the plaintiff tendering documents of this kind may constitute a waiver Mr. Young also referred to Ward. v. Day (1864) 5 B. & S, 359.  That was a case heard on appeal by seven judges in the Exchequer Chamber presided over by Erle, C. J. After observing that issuing distress proceedings for rent, after a breach had occurred, was not evidence of waiver the Chief Justice went on:

'But after the distress actions were brought, and then a negotiation took place, as stated in paragraph sixteen of the case "for the granting of a new licence to Edgar Hall for a further term of twenty-one years . . . " That resulted in a verbal agreement on the part of the plaintiff to grant such new licence. The parties therefore had all come to an agreement. The arrangement indeed was not binding, and the plaintiff afterwards withdrew from it, but that is of no importance to the present question.  For he had agreed with the Halls that when the present term had expired, then a new licence should be granted to hold for a further term. This, in my opinion, was a recognition that the licence in question was still continuing. I consider that if a landlord, when he is in a position to take advantage of a forfeiture, elects not to take advantage of it, and so declares to the party against whom he has power to enforce the forfeiture, and at a later period acknowledges the continuance of the tenancy he thereby waives such forfeiture.'

97. So here too, there were negotiations culminating in an oral agreement for a new tenancy to commence immediately on the expiration of the prior tenancy. The oral agreement was equally not binding but was advanced to the stage where a new tenancy agreement was tendered by the landlady to the tenant for execution. It was not executed. However, I am well satisfied that the landlady's actions amounted to an election not to take advantage of the forfeiture. Her negotiations in respect of a new tenancy agreement went so far as tendering to the tenant a new tenancy agreement for execution. Whatever the position of the prior negotiations taken by themselves, the subsequent action of the landlady tendering the new agreement - and consent to subletting - to the tenant was an unequivocal declaration by the landlady to the tenant that the landlady had waived the forfeiture.

98. The crucial question is not whether a new tenancy agreement has been granted. The question is has there been a definite election or the part of the landlady to waive her right of forfeiture? The court's task is to review all the circumstances to ascertain whether such an election has been established. The evidence must be unequivocal. That is one reason why the entering into of a new tenancy agreement is usually decisive in favour of waiver. But it is not the only evidence a Court may properly act upon. I further remind myself that in deciding whether an election to waive has been made it is primarily the landlady's actions that are of importance. I have approached the evidence in accordance with these principles. I find in the result that the evidence does establish a definite election on the part of the plaintiff to waive her right of forfeiture.

99. There is one final matter I should comment upon. In opening Mr. Chang indicated that during an earlier interlocutory application he raised the fact that while the rent from the 1st defendant was $7,000 per month, the 1st defendant had received from the 2nd defendant payments which commenced at $15,000 per month and thereafter progressively increased. He had therefore sought an amendment to recover from the expiration of the tenancy agreement mesne profits equal to the monthly payments by the 2nd defendant to the 1st defendant. The 1st defendant opposed that application pointing out that the tenancy agreement was continued by statute until an order for possession was made at the rent payable under the expired tenancy agreement. Mr. Chang did not pursue his application for amendment. However, at the commencement of this hearing he pointed out that if the plaintiff succeeded in this action she would also later be commencing a separate action in the High Court - in view of this Court's limited civil jurisdiction - for loss of profits and other relief arising from the difference between the payments from the 1st defendant to the plaintiff and the payments from the 2nd defendant to the 1st defendant. I confirm that Mr. Chang gave that indication in opening which was recorded.

100. There will therefore be judgment for the 1st defendant. Leave is granted to the 1st defendant to pay any arrears of rent within 21 days. Liberty to apply in relation to any other consequential matters is also reserved.

DATED this 12th day of August, 1982.

Representation:

Mr. Denis Chang, Q. C. with him Miss Maria Yuen instructed by Ho and Wong for the plaintiffs.

Mr. Thomas Young, by leave, for the 1st defendant.