Yee Fat Investments & Co. Ltd. v. David Charles Diniz

LDPD001945/2002

LDPD1945 OF 2002

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LANDS TRIBUNAL APPLICATION LDPD NO.1945 OF 2002

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Coram: Member C. Y. LAM, Member of the Lands Tribunal

Date of Judgment: 9 September 2002

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J U D G M E N T

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Background

1.The Applicant ( i.e. the landlord, Yee Fat Investments & Company Limited) lodged an application to this Tribunal on 20th July, 2002 requesting the grant of order for vacant possession of the premises known as 14th Floor, Lawison Building, No.39 Hillwood Road, Kowloon, Hong Kong on ground of non-payment of rent and other charges since 1st January, 2002. The application also seeks to recover from the tenant (i.e. the Respondent, David Charles Diniz) the money due and costs of proceedings in this Tribunal.

2.Since as early as 1996, the Respondent has been the tenant of Yee Fat Investments & Company Limited and the occupier of the subject premises. There was no agreement on the terms of tenancy upon expiry of the tenancy held under the agreement dated 29th October 1998. The Respondent, however, remained in occupation and continued to pay rent until the end of December 2001. Since 1st January 2002, the Respondent had paid no rent to the Applicant as he had lost his job and exhausted all his financial resources. The Applicant, however, agreed that the Respondent was always punctual in rent payment before 1st January 2002.

Dispute Arising From Rent Reduction

3.The basic terms of the said tenancy held under the agreement dated 29th October 1998 are as follows:

(a) Term	:A term of two years commencing from 1st November 1998 to the 31st October 2000.
(b) User	:Domestic purpose.
(c) Rent	:$13,000 per month (exclusive of rates and management fees) payable in advance.
(d) Deposit	:$49,500.

4.Notwithstanding the agreement, starting from the month of March 2000, the Respondent actually paid rent at $10,000 per month (exclusive of government rates and management fees) to the Applicant. This new rent was agreed to by the two parties following a series of telephone conversations between the Respondent and the Director of Yee Fat Investments & Company Limited, i.e. Madam Teresa Lim Wong, some time before March, 2000. Paragraph 3 of the paper entitled "Other Grounds and Particulars" and annexed to Form 22 (i.e. the application submitted by the Applicant to this Tribunal on 20th July, 2002) endorsed the existence of such agreement. Whereas the Applicant contested in court that it was an agreement to vary a term of the aforesaid written agreement, the Respondent was of the view that the intention of the two parties expressed in the telephone conversations was to create a new tenancy superseding the written agreement.

5.The Respondent's intention behind his argument is very obvious. He has stated in his Notice of Opposition (i.e. Form 7 submitted to this Tribunal on 2nd August, 2002) that the Form CR 109 was never received. In arguing that there was agreement for a new tenancy, he meant that the Applicant had breached Section 119L(1) of the Landlord & Tenant (Consolidation) Ordinance (Cap 7) for not lodging the Form CR 109 with the Commissioner of Rating & Valuation. Section 119L(1) provides that: -

"Where the parties (a) on or after 10 June 1983, enter into a tenancy to which this part applies; (b) agree a renewal of a tenancy under section 119C; (c) execute a lease or agreement for a new tenancy as determined by the Tribunal or agreed by them, the landlord shall lodge with the Commissioner a notice in triplicate in the specified form signed by the landlord; and the Commissioner shall endorse the fact of receipt on 2 copies of the notice and return 1 copy to the landlord and 1 copy to the tenant."

6.The consequence of the breach has been spelt out in Sub-section (2) of Section 119L, which provides that: -

"Subject to 51A(6), a landlord shall not be entitled to maintain an action to recover rent under an agreement mentioned in subsection (1) unless a notice relating to that agreement is endorsed by the Commissioner under that subsection."

Although the landlord is not entitled to maintain an action to recover the rent, the landlord's action to recover possession of the premises on account of rent in arrears is not to be barred as far as Sub-section (2) of Section 119(L) is concerned.

Evidence And Analysis

7.Both parties were unable to produce concrete evidence to substantiate their claim on whether there was agreement or not for a new tenancy, other than each attesting in open court. In arising at a conclusion on whether there was a new tenancy, regards therefore have had to the following factors: -

(a) If it is only a variation of rent, the need for lodging of the Form CR 109 is dispensed with. Therefore, it is logical that the Applicant has lodged no Form CR 109 with the Commissioner.

(b) The Applicant was under no contractual obligation to reduce the rent in so far as there was a written agreement dated 29th October 1998. The agreed rent equivalent to a reduction of $3,000 per month is to the advantage of the Respondent (otherwise, he needed to pay more for the residual term of tenancy). If there were an agreement for a new tenancy at a rent revised downwards by $3,000 per month and in the event of the Applicant failing to follow the statutory steps to document it, the Respondent would not likely handle the issue in such a light manner leaving behind the issue unrectified for more than two years. Instead, he would raise it as soon as possible with the landlord or the authority concerned to put the issue right to safeguard his own interest.

(c) The Respondent may argue that he had no imminent need at that time to rectify the anomaly in statutory procedure and documentation as rent receipts were issued by the Applicant, which are evidences to substantiate the level of rent. I consider the rent receipts are not perfect safeguard to the Respondent as there was always the risk that the Applicant might change her mind any time later on. The Applicant might, after the rent receipt for a particular month was issued, dispute that the revised rent was applicable for a particular month or specific months only and then asked that the original rent be paid with effect from a particular future month.

On balance of probability, I am inclined to consider that there was not an agreement for a new tenancy but a variation of the rent only.

Decision

The Respondent is in financial hardship. His situation warrants sympathy (he pleaded to the Tribunal for granting him approval for six more months) with rent payment deferred until he could find a job but there does not appear to be an alternative from this Tribunal that can be of assistance to him. I hereby order that:

(a) The Respondent shall deliver vacant possession of the suit premises to the Applicant.

(b) The Respondent shall pay the Applicant arrears of rent from 1st January 2002 to 31st July 2002 at the rate of $10,000 per month (totalling $70,000) plus arrears of management fees from 1st January 2002 to 31st July 2002 at the rate of $980 per month (totalling $6,860).

(c) The Respondent shall pay the Applicant mesne profits from 1st August 2002 to the date of delivery of possession at the rate of $10,000 per month.

(d) The Respondent shall pay the Applicant's costs of this Application.

(e) The Respondent shall pay the Applicant interest at 12% per annum for the arrears of rent and management fees referred to in paragraph (b) above as per clause 2(u) of the Tenancy Agreement dated 29th October 1998.

(f) Upon the Respondent paying to the Applicant the sums in paragraphs (b), (d) and (e) hereinbefore mentioned within 4 weeks from the date hereof, the Respondent is relieved from forfeiture and that the Respondent holds the suit premises according to the lease in question without any new lease and that all further proceedings in this Application are stayed.

(g) In default of the Respondent paying to the Applicant the sums in paragraphs (b), (d) and (e) hereinbefore mentioned within 4 weeks from the date hereof, the orders in paragraphs (a) to (e) herein may be enforced forthwith and the Respondent shall be barred from all relief.

(h) Payment out to the Applicant upon payment in by the Respondent, if any.

Representation:

Mr. Chang Sai Tak, instructed by Messrs Tsang, Chan & Woo, for the Applicant.

Mr. David Charles Diniz, the Respondent