Colonial Treasurer Incorporated v. Fook Hong Enterprises Co Ltd
Read the full judgment text of HCMP 883/1984 on BabelCite. This High Court CFI judgment.
1. Prior to the coming into force of Ordinance No. 52 of 1981, post-war domestic premises in Hong Kong were, with very few exceptions, subject to the control of Part II of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7. Part II confers security of tenure and imposes a ceiling on the rent which the landlord can charge.
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HCMP000883/1984
Head-note Landlord and Tenant (Consolidation) Ordinance, Cap. 7 - Parts II and IV - Section 50(10) – Post-war domestic Premises - Valuation List - Date of ascertainment of rateable value - Lands Tribunal decision increasing rateable value - Direction to Collector of Rates to amend valuation list retrospectively - Whether such amendment effective for purposes of Section 50 of Cap. 7. A decision of the Lands Tribunal dated the 5th November 1983, directing the Collector of Rates to amend the valuation list by increasing the rateable value of post-war domestic premises to a figure above $60,000 with effect from the 1st April 1983 did not have the retrospective effect for the purposes of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7 of transferring those premises from Part II to Part IV of that Ordinance when, on the 10th June 1983, being date referred to in Section 50 (10(a), the rateable value contained in the valuation list was below $60,000.
IN THE SUPREME COURT OF HONG KONG HIGH COURT _______
BETWEEN
_____ Coram: Hon. Rhind, J. (in open Court) Dates of Hearing: 30th and 31st May, 1984 Date of Delivery: 13th June, 1984 at 9.30 a.m. _____________ JUDGMENT _____________ 1. Prior to the coming into force of Ordinance No. 52 of 1981, post-war domestic premises in Hong Kong were, with very few exceptions, subject to the control of Part II of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7. Part II confers security of tenure and imposes a ceiling on the rent which the landlord can charge. 2. Ordinance No. 52 of 1981 has had the effect of removing the premises to which it applies from the protection afforded by Part II. Once removed, such premises are then confined to the more limited protection afforded by Part IV of Cap. 7. Part IV does provide some security of tenure, but no rent control, so that there is no limit to the amount which the landlord can lawfully ask 3. The date when Ordinance No. 52 of 1981 first started freeing domestic premises from rent control was the 19th December 1981. Front that date, premises the rateable value of which was $80,000 or more, ceased to have the protection of Part II, and were confined, as I have said, to such protection as exists under Part IV. 4. The part of Ordinance NO. 52 of 1981 to which I have been referring to far became Section 50(6)(m) of Cap. 7. Sub-section (6) of Section 50 sets out the exemptions from Part II, and paragraph (m), as first enacted, was as follows:-
5. At the same time as sub-section (6) paragraph (m) was enacted, a new paragraph (10) was added to Section 50. This stated:-
6. Section 50(6)(m) has created a mechanism for the progressive de-control of domestic premises. Through the medium of Legislative Council resolutions, the rateable value threshold for removal from Part II to part IV can be lowered year by year. With effect from the 19th December 1982, domestic premises with a rateable value of $60,000 upwards found themselves transferred from Part II to. Part IV. By Ordinance No. 29 of 1983, the figure of $50,000 was substituted for $60,000 with effect from the 19th December 1983. 7. That Ordinance also brought about a legislative change in sub-section (10) of Section 50 of Cape. 7 in relation to the ascertainment of rateable values for the purposes of Section 50. 8. With effect from the 10th June 1983, Ordinance No. 29 of 1983 replaced the former sub-section (10) with the following:-
(For ease of understanding, I have also included the new sub-sections (11) and (12).) 9. The case presently before me involves the interpretation of that new sub-section (10) in the light of the circumstances I am now about to describe. 10. The defendant (hereinafter called "the Company") is the owner of sixty flats in Blocks 47 and 48, Baguio Villa at 550 Victoria Road, Hong Kong, which received their Occupation Permit on the 10th August 1977. The Colonial Treasurer Incorporated, the plaintiff in the present proceedings, became the first tenant of those sixty flats under a tenancy agreement which ran for the 5 year period from the 26th August 1977. The flats have been occupied as dwellings by public officers by virtue of their employment. After the contractual terancy of these post-war domestic premises came to an end in August 1982, the Colonial Treasurer Incorporated continued as a tenant, enjoying the statutory protection of Part II of Cap. 7. 11. At the time the Colonial Treasurer Incorporated entered into the contractual tenancy agreement, the tenements comprising the premises were neither assessable to rates, nor were any rates in fact paid upon them, by virtue of an immunity then enjoyed by the Colonial Treasurer Incorporated under the Rating Ordinance, Cap. 116. Such immunity from assessment ceased with the coming into force of Ordinance No. 33 of 1981, with effect from the lot July 1981. From that date forth, tenements of which the Colonial Treasurer Incorporated was tenant became liable for assessment to rates, although no actual rates had to be paid. 12. The Commissioner of Rating and Valuation (hereinafter referred as "the Commissioner") last declared a valuation list in accordance with Section 13 of the Rating Ordinance (Cap. 116) in March 1977, such list coming into force on the 1st April 1977. As the suit premises did not have an occupation ermit as at the 1st April 1977, they were naturally not included in that valuation list. 13. To get the tenements comprising the suit premises included in the valuation list through the medium of an amendment, there had to be an interim valuation in accordance with Parts II and VI of the Rating Ordinance. 14. On the 7th July 1982, the Commissioner duly served the Company with notices of interim valuation on the specified form in relation to all sixty of the tenements. The forms informed the Company that the Commissioner's proposal was that the two pent-houses should be valued at $43,000 each, whilst the remaining fifty-eight tenements were to be valued at $42,000 each, all with effect from the 1st July 1981. 15. No notice of objection having been received under Section 26(2) of the Rating Ordinance, the Collector of Rates ("the Collector") caused the valuation list to be amended by including rateable values of $43,000 for the two pent-houses and of $42,000 for the remaining fifty-eight tenements, with effect from the 1st July 1981, which was the date the Commissioner had determined (Section 28(1) of Cap. 116). 16. The earliest date the Company could take any step to get the valuations altered upwards was March 1983. In March of every year, an aggrieved party in respect of an existing valuation list is given the right by Section 37 of the Rating Ordinance to submit a proposal to the Commissioner for an alteration. Thus, on the 28th March 1983, the Company duly served proposals that the rateable values of the tenements should be increased to a figure which was in fact above the threshold to be passed for escape from Part II of Cap. 7. 17. The Company was following a trail blazed for it by the plaintiff landlord in the case of Mauriello v. The Commissioner of Rating, being Lands Tribunal Rating Appeal No. 9 of 1982. In its judgment, which was dated the 11th December 1982, the Lands Tribunal allowed the upward alteration of the rateable value of a domestic tenement to a point where the landlord in that case freed himself from the constraints of Part II of Cap. 7. 18. Pursuant to Section 39 of the Rating Ordinance, the Commissioner served the Company on the 7th June 1983 with a notice of decision that the rateable values of the two pent-houses were to be altered to $49,800 and the remaining fifty-eight tenements to $48,600. 19. Mr. Litton was at pains to show that Mr. Burdett on behalf of the Crown had got his affidavit wrong when he stated in his paragraph 6 that the Commissioner's notice of decision amended the valuation list. Undoubtedly, Mr. Litton was right when he explained that the Collector alone could amend the list, but as far as I could make out, this point was of no assistance to the Company. I cannot pin-point precisely when the Collector amended the list, but I do not see frankly how it matters. It might have mattered if the Commissioner's notice of decision had been to the effect that the rateable values were to be altered to $60,000 or above. Then the Company would have been only too happy to go along with the suggestion that the valuation list was amended by the Commissioner's notice of decision. 20. As the rateable values referred to in the interim valuation and in the notice of decision were both below the critical figure of $60,000, it does not matter from point of view of the Colonial Treasurer Incorporated if the higher value shown in the notice of decision failed to find its way into the valuation list. 21. Chronologically, the next significant date is the 10th June 1983 when, as I indicated earlier in this judgment, the new sub-section (10) of Section 50 of Cap. 7 came into effect. The rateable value contained in the valuation list on the 10th June 1983 in respect of the tenements, the subject matter of the present proceedings, was undoubtedly less than $50,000. That is a matter of simple historical fact. 22. Not being satisfied with the Commissioner's notice of decision, the Company, pursuant to Section 42 of the Rating Ordinance, exercised its right of appeal to the Lands Tribunal on the ground that the tenements had been valued below their proper rateable value. 23. By its decision dated the 5th November 1983, the Lands Tribunal found in the Company's favour, and fixed the rateable values of the penthouses at $67,200 and the values of the other tenements at $66,000. The Lands Tribunal directed the Collector to amend the valuation list accordingly with effect from the 1st day of April 1983. 24. If the rateable values fixed by the Lands Tribunal can qualify as the rateable values for the purposes of Section 50(10) of Cap. 7, the Colonial Treasurer Incorporated will have lost the protection of Part II, and unless a new rent can be agreed, the Company can repossess its promises. Already, on the 31st January 1984, the Company has purported to exercise powers under part IV by giving the Colonial Treasurer Incorporated notice of termination of tenancy in respect of the suit premises with effect from the 25th August 1984. 25. By the present proceedings, the Colonial Treasurer Incorporated seeks a declaration as to whether the suit premises are controlled by Part II or Part IV of Cap. 7. An inextricably linked question which the present proceedings pose is:- "Whether variations in the rateable value of premises determined by the Lands Tribunal and directed to take effect before 10th June 1983 (in pursuance of powers conferred upon it by the Rating Ordinance) in judgments dated later than 10th June 1983 can affect the rateable value of those premises for the purposes of Section 50(10) Landlord and Tenant (Consolidation) Ordinance?" 26. I do not think a judge could have an easier question to answer. The draftsman of the new sub-section (10) of Section 50 of Cap. 7 has expressed himself with commendable clarity in unmistakable terms. 27. If plain English is to be given its ordinary straightforward meaning, there is no conceivable way in which the new subsection (10) of Section 50 can be interpreted to the effect that judgments dated later than 10th June 1983 can affect rateable values for the purposes of section (50). I fail to see how the words "the rateable value contained in that list on 10th June 1983" can mean anything different from what they say. A rateable value fixed by the Lands Tribunal on the 5th November 1983 simply could not be contained in the list on the 10th June 1983. I do not wish to labour the obvious. 28. These tenements were included in the valuation list declared in March 1977, as amended by the interim valuation which occurred long before the 10th June 1983. In respect of such premises, for the purposes of Section 50 of Cap. 7, the rateable value is the one contained in that list on the 10th June 1983. As I showed in my chronological exposition of the facts, as at the 10th June 1983, the rateable value of all the tenements was less than $50,000. 29. For many purposes in the Rating Ordinance, it is necessary, in Mr. Litton's phrase, ''to wind the clock back". For example, the interim valuation which the Commissioner made in July 1982 should have been made according to the notional value of the tenements as at the 1st April 1977 when the valuation list first cane into effect. (see Section 7 of the Rating Ordinance). Where the clock is to be wound back, Cap. 116 says so in unmistakable language. Any language less apt to effect a winding back process than the new sub-section (10) of Section 50 of Cap. 7 is, in my opinion, difficult to imagine. I cannot envisage how the law draftsman could more clearly have expressed the concept that, for the purposes of Cap. 7, rateable values were to be frozen at the level shown in the valuation list on the 10th June 1983 than by saying what he in fact said. 30. For the purposes of the Rating Ordinance, the Lands Tribunal decision of the 5th November 1983 was effective, and the Company succeeded in getting its rating valuation increased. Were it not for the fact that the Colonial Treasurer Incorporated happened to be its tenant, the Company would have finished up having to pay more rates with effect from the 1st April 1983. However, for the purposes of Section 50 of Cap. 7, the Lands Tribunal's decision can be of no effect in the face of the clear wording of the new sub-section (10). 31. Although the proceedings before the lands Tribunal were only concerned with the narrow issue of interpreting the Rating Ordinance for the purpose of ascertaining whether there should be any alteration of the valuation list, the Lands Tribunal, no doubt in an endeavour to be helpful, also sought to spell out the practical consequences of its decision for landlords and tenants in the light of the new sub-section (10) of Section 50 of Cap. 7. 32. Unfortunately, the Lands Tribunal appears to have worked from an incomplete version of sub-section (10). The text on which the Lands Tribunal based its interpretation reads as follows:-
33. A comparison of that with the correct version of sub-section (10) reveals that the vital words "the rateable value contained in that list on 10 June 1983" are missing at the end of paragraph (a). 34. How the Lands Tribunal came to work from an incomplete version of sub-section (10) I do not know. Perhaps the person doing the "noting up" of the copy of Cap. 7 used by the Lands Tribunal was rather too enthusiastic with the scissors and cut off the words I have shown were missing. Once the full text of sub-section (10) is seen, there can be no doubt as to its interpretation. 35. Based on the truncated version from which it worked, the Lands Tribunal's interpretation was reasonable enough, but, inevitably, the missing words led to a distorted result.
36. Once effect is given to the missing words, there can be no doubt that the sixty tenements in the present case fall within paragraph (a) of sub-section (10), rather than paragraph (b), and that any alterations of rateable values made after the 10th June 1983 are to be ignored. 37. The Lands Tribunal's interpretation left the Company with some hope when really, on the full version of sub-section (10), it had no cause for hope at all. Perhaps if the Lands Tribunal had enjoyed the benefit of the correct version of sub-section (10), the Company might not have fallen into the error of imagining the tenancy could have moved into Part IV, and the present proceedings would have been unnecessary. 38. In view of the foregoing, my answer to the ultimate question posed by the present summons is that the tenancy of the suit premises is controlled by Part II of Cap. 7, so that there is judgment in favour of the Colonial Treasurer Incorporated.
Representation: Mr. John Burdett, C .C. (Legal Dept.) for plaintiff/applicant Mr. Henry Litton, Q. C. with Miss Maria Yuen instructed by Yung, Yu, Yuen & Co. for defendant |