Hoey Fook Cheung and Others v. The Commissioner of Rating and Valuation
Read the full judgment text of DCMP 94/1973 on BabelCite. This District Court judgment was delivered on 14 August 1973.
1. This appeal concerns the rateable valuation of two tenements, ground floor and 1st floor of 16, Mongkok Road. The premises form part of a 4-stcrey building owned by appellants' father until 1969 when they became the property of appellants. By then 2nd appellant had gone to U.S.A. where he now lives. For many years 1st appellant has lived on 1st floor and operated a restaurant on ground floor. While his father owned the building 1st appellant paid his father, in respect of ground floor and 1st
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DCMP000094/1973 IN THE DISTRICT COURT OF HONG KONG HOLDEN AT KOWLOON CIVIL JURISDICTION MISCELLANEOUS PROCEEDINGS NO. 94 OF 1973 -----------------
----------------- Coram: E. de B. Bewley, D.J. Date of Judgment: 14 August 1973 ----------------- JUDGMENT ----------------- 1. This appeal concerns the rateable valuation of two tenements, ground floor and 1st floor of 16, Mongkok Road. The premises form part of a 4-stcrey building owned by appellants' father until 1969 when they became the property of appellants. By then 2nd appellant had gone to U.S.A. where he now lives. For many years 1st appellant has lived on 1st floor and operated a restaurant on ground floor. While his father owned the building 1st appellant paid his father, in respect of ground floor and 1st floor, rent which was controlled by the terms of the Landlord and Tenant Ordinance. 3rd floor and 4th floor of the building were 1st to strangers also at controlled rents. His father paid the rates. 2. Valuation of the suit premises were carried out in 1964, 1966, 1968 and lastly in December, 1972. For at least ten years the valuation of the whole building remained at $4,410 and this is explained by Mr. Tsang, the surveyor, by the fact that the rents were controlled. In 1969 1st appellant became an owner/occupier, no longer subject to controlled rent, and following his submission of a rating return (Ex.9) and inspection of the premises the valuation of ground floor and 1st floor was increased to $16,800.00. 3. There are three other buildings in the same block Nos. 10, 12 and 14 Mongkok Road which are similar in age and construotion but slightly inferior in quality; these premises are still subject to controlled rents. They were also subject to a valuation in 1972 but because of the controlled reuts that caluation was not increased. 4. Respondent has put in evidence the particulars of 9 other pre-war tenements in Kowloon in respect of which rents have been sanctioned by the Tenancy Tribunal. The rateable valuations of these tenements are roughly speaking on a par with the new valuation of the suit premises. Mowever these buildings are not in the immediate neighborhood of Mongkok Road. 5. The only factual dispute in this appeal concerns the position of 2nd appellant. He is a part-owner of the whole building but has lived in U.S.A. for many years and has since paid only two short visits to Hong Kong. 1st appellant says that he pays 2nd appellant, as co-owner, rent in respect of the suit premises which he occupies and a half-share of the rent which he receives from the tenants on 2nd floor and 3rd floor. He thus maintains that it is still in respect of the suit premises a statutory tenant and therefore not subject, in view of the treatment of neighbouring tenements, to a drastio increase in valuation. 6. The grounds of appeal are firstly that the suit premises are valued beyond their rateable value and secondly that the assessments put upon comparable properties are much lower. 7. The process of arriving at annual value for rating was described by Lord Denning, M.R., in R. v. Paddington (Valuation Officer) ex-parte Peachey Property Corp. Ltd. 1960 1 Q.B. 380 at p. 412. Thus:-
The definition in our Ordinance of rateable value uses the words:-
Apart from the word "tenement" instead of "heriditament", this is precisely the same as the definition in the 1925 Rating and Valuation Act. 8. I will deal with the issue of fact first. 1st appellant did not file a return in respect of the 1968 assessment but he did do so on 10th February 1972. In this (Ex.9) he stated that ground floor and 1st floor were occupied by the owner, that the premises were not let to him and that he paid no rent. His explanation in Court was that there was no space on the form to give an explanation and in any case he did not understand the form properly. He has put in evidence two bank documents (Exs.D10A-B) which indicate that he has sent to his brother $2,804.90 and $2,770.75 on 24th November 1971 and 8th January 1973 respectively. I do not accept his evidence that this represents rent in respect of all four floors, less reductions for repairs. He is unable to say which is the rent in respect of ground floor and 1st floor and his evidence that he did not pay his brother anything when he was in Hong Kong on a visit because the accumulated rent was too small did not ring true. Furthermore in examination-in-chief he said that he paid his brother rent every 13-14 months since the death of his father but in cross-examination, in order to extricate himself, he said he paid it to his mother until the autumn of 1970. I am satisfied that these payments were nothing to do with rent and that 1st appellant has not proved that he is a protected tenant. 9. What rent would a hypothetical tenant be reasonably expected to pay for ground floor and 1st floor in December 1972? Clearly it should be a great deal higher than $200 and $60 respectively, which, because of the Rating and Valuation Department's policy regarding premises with controlled rents, have been the past assessments. Ground floor is a restaurant with a cockloft and the building is on a corner formed by Sai Yeung Choi Street and Mongkok Road, two major thoroughfares. This is a distinct advantage for a restaurant. 1st floor looks out onto both streets and has a return balcony. 1st appellant thinks he could have got $300 per month for ground floor and $60 per month for 1st floor. Ground floor including the cockloft has an area of 748 sq. ft. Three blocks away in Sai Yee Street - also a desirable situation - two ground floor premises of 892 and 816 sq. ft. have been valued at $18,000 and $16,800 respectively. They are subject to tenancies which commenced on 1st March 1972 and 15th July 1971. Rents of $2,650 and $1,750 were sanctioned by the Tenancy Tribunal. Four blocks away in Sai Yeung Choi Street a 1st floor flat of 895 sq. ft. has been valued at $5,400.00. This tenancy commenced on 1st May 1971 and the sanctioned rent is $560.00. 10. Appellants' case is that these premises are not comparable and that one must look instead at Nos. 10, 12 and 14, Mongkok Road next door. The rateable value of these premises has remained unchanged at $5,040, $4,010 and $4,710 for each building respectively. 11. Mr. Tsang considers the market rental for ground floor and 1st floor of 16, Mongkok Road to be $1,200 and $200 respectively. In his view those for ground floor and 1st floor of Nos. 10, 12 and 14 would be slightly lower because of No. 16's corner situation and balcony and estimates them at approximately $1,000 and $150 respectively. It is the practice of the Rating and Valuation Department to assess rateable value on permitted rents, taking the view that in Hong Kong the permitted rent is the market rent. When a tenemont ceases to become subject to a controlled rent, as in the case of the suit premises, there may then be a substantial increase in the rateable value. Mr. Tsang says that rents and rateable values have increased substantially throughout Hong Kong but this factor is not applied to controlled premises. 12. The rule was stated by Scott L.J. in Robinson Bros. (Brewers) Ltd. v. Houghton & Chester-le-street Assessment Committee 1937 2 K.B.445 at p.469, thus:-
13. In Poplar Assessment Committee v. Roberts (1922) 2 A.C. 93 it was held that in arriving at the valuation for the purposes of the Valuation (Metropolis) Act 1869, of a hereditament to which the Increase of Rent & Mortgage Interest (Restrictions) Act 1920 applied, the maximum gross value to be assigned to the hereditament is not limited to the standard rent of the hereditament together with the additions thereto permitted by the latter Act. It was further held that the Act of 1920 was not to be taken into account in determining the valuation for rating purposes of the hereditaments to which it applied. The definition of gross value in the 1869 Act is similar to that in our Ordinance, being, "the annual rent which the tenant might reasonably be expected taking 1 year with another to pay for a hereditament if the tenant undertakes to pay all usual tenants' rates and taxes." The 1920 Rent Restriction Act was similar in effect and intention to the Landlord & Tenant Ordinance. 14. Mr. Leung submits that Foular v. Roberts does not apply in Hong Kong, pointing to differences between the 1920 Act and the Landlord & Tenant Ordinance and to the absurdity of possible results if it were followed. I am satisfied that the differences botween the two pieces of legislation are insufficient to permit me to ignore this case and the reasoning behind the decision, whatever results may follow. As Lord Sumner said at p. 116:-
This remark is equally pertinent when applied to the Landlord & Tenant Ordinance. I hold therefore that the controlled rents obtaining at Nos. 10, 12 and 14 Mongkok Road are by way of comparison of no assistance in the assessment of No. 16. Those rents approved by the Tenancy Tribunal which appear in Ex.12, on the other hand, particularly those in Sai Yee Street and Si Yeung Choi Street are of some assistance. 15. Where better evidence is lacking or in order to supplement other evidence it is permissible to look at comparable assessments: Howarth v. Price (Valuation Officer) 1969 R.R.C. 196 and Dointer v. Norwich Assessment Committee 1922 2 K.B. 471. Mr. Leung naturally again points to the assessments of Nos. 10, 12 and 14 which he says should at least be on a par with that of No. 16. However, in view of Mr. Tsang's evidence that the rateable value of these tenements was assessed on the basis of controlled rents, which since Poplar v. Roberts would appear to be the wrong approach, evidence of these assessments becomes valueless. In this connexion Crown Counsel relies on Ladies Hosiery & Underwear Ltd. v. W. Middlesex Assessment Committee 1937 2 K.B. 679 which I am pursuaded in view of the similarity between the Rating Ordinance and the 1925 Act (now repealed by the General Pate Act 1967) has relevance in Hong Kong. This case decided that where an assessment has been proved to be correct, evidence that other comparable hereditaments had been assessed at a lower figure was irrelevant and could not be used to justify a reduction of the assessment appealed against. In other words correctness of assessment must not be sacrificed in order to secure uniformity. However, in that case, appellants admitted that the valuation of the suit premises was correct and based their appeal on the ground of unfairness. In the present case no such admission is made. Scrutton L.J. said at p.690:-
16. I am left therefore with the evidence of 1st appellant and of Mr. Tsang concerning the beneficial value to the occupior of the suit premises, together with the rentals of the tenements in Exhibit 12. 1st appellant was most reluctant to give any figure for the rent which he might reasonably have obtained in the open market in December 1972. In cross-examination he gave as his answer, "several hundreds of dollars" and he gave the figure $300.00 in answer to the Court right at the end of his evidence. It is quite apparent that he is smarting under a sonse of injustice by virtue of the very large increase in the valuation rather than disputing the accuracy of Mr. Tsang's assessment. 17. Mr. Tsang is a Principal Surveyor with over 11 years experience in this field and he estimates the fair market rent as $1,200 and $200 for ground floor and 1st floor respectively. He has examined the suit premises and also the properties in Exhibit 12. He was cross-examined at length and nothing has been said that leads me to suspect that his valuation is wrong. It follows that appellants have failed to proved that the suit premises have been rated beyond their rateable value and the appeal is dismissed with costs on Scale IV. In conclusion, I would thank counsel on both sides for the considerable assistance they have given me in this case.
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