Ng Ah Kiu and Another v. Lau Wing Keung
Read the full judgment text of CACV 169/1983 on BabelCite. This Court of Appeal judgment.
1. This is an appeal against assessments of means profits by Master Hansen in two actions which have now been consolidated.
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Civil Appeal No. 169 of 1983 Landlord and tenant - assessment of mesne profits. Where a landlord claims mesne profits he may recover the actual damages resulting from the defendant's trespass (here, the loss of rent he would have received under a tenancy agreement with a third party for the period of wrongful occupation) and is not limited to the market rental value. Courts, practice and procedure Where a landlord claims mesne profits by his original Statement of Claim, the Master has jurisdiction to grant leave to amend so that the landlord's actual loss is pleaded even after judgment (interlocutory in so far as it provided for the assessment of mesne profits) has been entered. Assessment of Master Hansen affirmed. Date of hearing: 5th and 6th April, 1984. Date of delivery: 6th April, 1984. Civil Appeal IN THE COURT OF APPEAL BETWEEN
AND BETWEEN
_______ Coram: Cons and Fuad JJ.A., and Kempster J. Dates of hearing: 5th and 6th April 1984 Date of delivery: 6th April 1984 ___________ JUDGMENT ___________ Fuad, J.A.: 1. This is an appeal against assessments of means profits by Master Hansen in two actions which have now been consolidated. 2. The background of the appeal is as follows. Mr. Chan King Choi and his wife Ng Ah Kiu own adjoining shops on the ground floor of premises in Hing Fong Road, Kwa Chung. Under separate tenancy agreements husband and wife let out their shops to Mr. Lau Wing Keung for five years from the 5th December 1977. The husband's shop was leased at a rental of $2,500 a month and the wife's at $3,500 a month. They each caused notices to quit to be served on Mr. Lau on the 3rd March 1982 requiring vacant possession of their shops at the expiration of the leases, i.e. on the 4th December 1982. Mr. Lau did not move out and so Mr. Chan and his wife issued separate writs against Mr. Lau on the 14th December 1982 . 3. The Statements of Claim which accompanied the writs (No. 12151 of 1982 was the husband's action, and No. 12150 was the wife's) were in identical terms when account is taken of the different rents. The two Plaintiffs claimed possession of their shops, arrears of rent, mesne profits, "further and other reliefs" and costs. Mr. Lau, it is common ground, moved out of both the shops on the 10th June 1983. 4. In each of the actions, on the 22nd February 1983, final judgment was entered in favour of the landlord for possession and arrears of rent; and interlocutory judgment for mesne profits to be assessed. 5. Both the Plaintiffs filed Amended Statements of Claim on the 3rd October 1983. The Master granted leave for the amendments to be made on that day. However, it is to be noted that the summonses for leave to amend were taken out on the 12th July 1983, returnable on the 26th September. They had then been adjourned for argument to the 3rd October. 6. The effect of the amendments in each Statement of Claim were to include averments that the shops were leased to a Mr. Tai Ka Ming for three years from the 5th December 1982 at monthly rentals of $15,000 and $10,000 respectively and that Mr. Lau had been informed of the lettings on the 3rd June 1982. In each case by the Amended . Statement of Claim the landlords claimed as special damages, and as an alternative to mesne profits, damages in respect of the lost rent that would have been received from Mr. Tai, $62,000 for the husband's shop and $93,000 for the wife's. 7. The hearing before the Master took place on the 3rd and 4th October 1983. He heard the evidence of the two Plaintiffs and that of a Surveyor called on their behalf. The Defendant in both actions, Mr. Lau, gave his evidence and his valuer, a Mr. Maguire, then testified. This is how his evidence was recorded -
8. The Master gave his decision on the 4th October. After reviewing the evidence, about Mr. Maguire he said this -
9. The Master accepted the Plaintiffs' evidence in preference to that of the Defendant where there was a conflict. He believed Mr. Chan when he said that he had told Mr. Lau about the new tenancy, agreements for the shops with Mr. Tai Ka Ming. He then stated- "I also accept the evidence of valuations given by Mr. Simon Tai..." . He had testified that the market rental value of the two shops would have been, respectively, $25,000 per month in June 1982 and $22,500 in December 1982, a drop of 10%. 10. The Master then went on to quote from the judgment of Megaw L.J. in Swordheath Properties v. Tabet [1979] l All E.R. 240 and when dealing with the rent for the shops that Mr. Tai had undertaken to pay said -
11. He assessed the mesne profits as follows -
12. For the Appellant it was contended that the Master should not have permitted the Statements of Claim to be amended after the interlocutory judgments had been entered on the 22nd February 1983, and while those judgments stood. These were, as we have seen, interlocutory judgments for mesne profits to be assessed and it is said that the Master had no jurisdiction to consider, in accordance with the alternative prayers in the amended Statements of Claim, "special" damages for the lost rent that Mr. Tai Ku Ming would have paid in respect of each shop. 13. In arriving at his figures, the Master said -
The phrase "ordinary letting value of the property" comes from the passage from the judgment of Megaw L.J. in Swordheath which the Master had earlier relied upon. When Megaw L.J. was discussing the measure of damages in cases such as this, he said "...and, in the absence of anything special in the particular case, it would be the ordinary letting value of the property that would determine the amount of damages." 14. It seems to me that the crucial issue in this appeal is what is meant by the expression "mesne profits". If it means only the market rental value there would be great force in Mr. Bernacchi's arguments to which I confess I was initially attracted. However, I was later satisfied, if I may say so with respect, that the law is correctly summarised in para. 255 of Vol. 27 of HALSBURY (Fourth Edition). The paragraph is in these terms (omitting the references to foot-notes) -
15. Here the landlords were able to prove the actual loss they suffered through being out of possession of their shops and therefore it was hot necessary to fall back upon the open market value to assess mesne profits. In my judgment, therefore, the Master did not go outside the mandate given him under 0.13 and by the terms in which the interlocutory judgments were couched. 16. I accept that amendments to the Statement of Claim were in fact necessary so that the Plaintiffs pleaded the special facts and circumstances giving rise to their precise losses, to enable the Defendant to know what case he had to meet. But I entertain no doubt that the Master had power to grant leave to amend particulars relevant to the assessment even after the interlocutory judgments had been entered. If the Defendant felt that he had been prejudiced, he could have appealed against the Master's Order timeously, and he did not. I do not see how the Master could be blamed for proceeding immediately to assess the mesne profits if, as happened, he was not asked for an adjournment. This court cannot now entertain any enquiry into the propriety of these amendments. I agree with Mr. Chang's submission that the fact that the Plaintiffs chose to categorise their actual loss as "special damages" could not prevent the Master from assessing mesne profits by reference to their actual loss. When the Master's judgment is read, it is clear that this is what he did. 17. On the question whether the Master was right in his approach to Mr. Maguire's proferred evidence, in the light of my views on the matters central to this appeal, it is not necessary to form a concluded opinion. I would say, however, that in my view the Master was perhaps too hasty in ruling the totality of Mr. Maguire's evidence to be inadmissible. I have already read out the reasons the Master gave for this decision. Apart from the question of weight,I see no reason why an expert valuer should not be permitted to give his opinion about the market rental value of shop premises he has not himself visited when he knows the location of the shop and its dimensions, provided his general or special experience has given him knowledge of comparable rents. I will, if I may be permitted to do so, suggest that the judgment of Megarry J. in English Exporters (London) Ltd. v. Eldonwall [1973] W.L.R. 435 is most helpful on the point. Of course, cross-examination of Mr. Maguire might have shown, as the Master seems to have thought, that he was really giving someone else's evidence for him and not giving opinion evidence about matters within his field of competence, although I am bound to say this is not the impression I formed from the bare record of his abortive testimony. 18. It was also urged upon us that the damages claimed and awarded did not in fact arise because if the leases to Mr. Tai Ku Ming were valid, the rental for three years commenced directly he was able to have vacant possession of the premises. I only mention this ground to dismiss it. I entirely agree with what Master Hansen said about this issue. 19. This disposes of the main issues in this appeal. Complaint is, however, also made about part of the order for costs that the Master made at the conclusion of the hearing - this is what he said in his judgment -
20. All that it is now necessary to say on this point is that when Mr. Chang, who appeared for the Respondents in this appeal, heard a statement from the Bar from Junior Counsel who had represented the Defendant before the Master about what had transpired on the 3rd October, he very fairly conceded that the Master's Order should not be allowed to stand. Junior Counsel had told us that late in the afternoon of the 3rd October, perhaps as late as 5 p.m., he had informed the Master that his valuation expert was not available. This was true for he had intended to call the person (if he could be found, for he had left the firm of valuers in the meantime) who had prepared the valuation report on which the Defendant intended to rely. And so the hearing was adjourned. On the following day when he realised he could not call that person for he still could not be found, he decided to make the best of the situation by calling Mr. Maguire. It seems likely that the Master did not have the matter fully explained to him or that he misunderstood the position. 21. I would therefore dismiss the appeal on the merits, but vary the costs Order, and direct that the Defendant should pay the Plaintiffs' costs for the hearing on the 4th October, on the usual basis - as between party and party. To that extent, only, I would allow the appeal.
Cons, J.A. : 22. I am in full agreement with the judgment of my Lord Fuad J.A. and with the order that he proposes. I would only add one very small point in relation to the argument put forward by Mr. Bernacchi and based on the clause in the Plaintiffs' agreements with their new tenants which provided for the term of the new leases to start either from the fixed date or from such time as the present tenant should vacate the premises. There is a suggestion that because of that term the Plaintiffs had no contractual right to occupation of the premises until the present tenant should think fit to move out. I agree with Fuad J.A. that the Master dealt adequately with what during argument I called "the mitigation aspect" of that submission. As to "the technical aspect" I think the true import of that term has been missed. The term was not there for the benefit of the present tenant. It was there only for the protection of the landlord. Without it, the landlord might well have found himself subject to an action for damages at the suit of the new tenant, when the present tenant failed to vacate. It cannot detract from the landlord's rights against him.
Kempster, J.: 23. The expression "mesne profits" means damages for trespass and includes all such damages. Normally they are assessed in terms of the market rental of the property in question during the period of unlawful occupation. When special, aggravated or exemplary damages are sought, however, leave to amend must be obtained if the relevant particulars do not appear in the original pleading. Further, no leave is new required to join a claim for mesne profits with one for the recovery of land. 24. Going no further into legal history than 1770 and to a case felicitously entitled Goodtitle v. Tombs(1). The Chief Justice, Wilmot, himself looked even further back, stating at page 120:-
and at page 121 :-
This last observation would now require consideration in the light of more recent authority on the subject of aggravated and exemplary damages. In Swordheath Properties Ltd. v. Tabet(2), cited by my Lord Fuad J.A., Megaw L.J. observed at page 242 :-
These words necessarily infer that it is open to the landlord to addace evidence that he could have let the premises to someone else if such evidence, as in the present case, is available. It is this plain that para. 255 of Halsbury's laws 4th edition Vol. 27 fairly and accurately states the relevant law. 25. Here the learned Master assessed mesne profits after he had validly given leave to amend the Statements of Claim which necessarily altered his approach to though not the nature of his remit. I say validly amended bearing in mind, among other considerations, that the defendant has not or has not been permitted to appeal against the orders giving leave to amend. The Master was acting within his jurisdiction in assessing what damages had been suffered by the plaintiffs during the period of the defendant's trespass. 26. The fact that the particular term granted to Mr. Tai will not be shortened is neither here nor there. None of us can gauge whether the level of rents will be greater or lesser on its expiry. 27. In the circumstances I agree with the order proposed by Fuad, J.A.
(1) 3 Wilson 118 (2) [1979] 1 All E.R. 240 Representation: Mr. B. Bernacchi Q.C. with Mr. R. Sujanani (Ip, Ku and Stoppa) for the Appellant. Mr. D. Chang Q.C., with Mr. H.Y. Wong (Lo, Wong and Tsui) for the Respondents. | |||||||||||||||||||||||||||||||||