Hultucktong Co Ltd v. Yeung Chim Fu

Case No.DCMP 1/1970

Court

District Court

Date31 Jul 1971

Judge—

Case Document

100%Judiciary

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CIVIL JURISDICTION

RENT INCREASES APPEAL NO.1 OF 1970

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	Hultucktong Company, Ltd.	Applicant
	and
	Yeung Chim Fu	Respondent

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Coram: W.S. Collier, D.J., assisted by Mr. P.C. Cotton, A.R.I.C.S., B. Sc. (Est. Man.) Lond., Assessor.

Date of Judgment: 31 July 1971

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Verbal Judgment Reduced into Writing

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1. This was an appeal by the landlord against a decision of the Commissioner of Rating and Valuation assisted by the Rent Increases Advisory Panel under subsections (3) and (4) of section 11 of the Rent Increases (Domestic Premises) Control Ordinance, No.56 of 1970.

2. Mr. P.C.Cotton was appointed as Assessor under the provisions of section 16 of the Ordinance.

3. Having viewed the premises and having discussed the provisions of this Ordinance with me at some length, and the written submission of the appellant corporation, Mr. Cotton put his advice in writing as follows:-

"	44, Wharf Road, North Point
	Ground Floor

	I have now had the opportunity of going into the case submitted by Mr. Ng Po cum on behalf of the appellants, Hultucktong Company Limited.
	The two main points made are:-
	(1) That the rateable value is $4,610 which is equivalent to a monthly rental of $450 per month inclusive of rates.
	(2) That as the sub-tenant has let the 'bath and laundry' at the rear for a figure of $90 per month it followed by proportion that the full rental value of the flat is $600 per month inclusive of rates.
	With regard to the first point it would appear that the rental value has been assessed for rating by comparison with other ground floor premises in the same street, most of which are used for light industrial, commercial and other non-domestic purposes. It seems to me that if we are to value the premises under the provisions of the Rent Increases (Domestic Premises) Control Ordinance 1970 we should only concern ourselves with the value for domestic occupation particularly as the Building Ordinance Occupation Certificate was issued in respect of a domestic unit. No doubt if the Ordinance had not been passed Mr. Ng's Company would have obtained possession and let it as a non-domestic unit but it would seem that the object of the Ordinance was to stop such an occurence taking place. Mr. Ng surely has his remedy by appealing against the rating assessment for a reduction and it would seem that there could be little against it.
	I do not agree with Mr. Ng's contention that the premises are worth $600 per month including rates. It is a fact that when premises are sub-divided into smaller units the total rent payable would be more than what one would consider to be a fair rental for the whole. However apart from this, I do not think that you would obtain a rental for these premises with a living area of only 387 sq. ft. of $600 per month inclusive. My own view is that a fair full market rent would be $400 per month inclusive of rates but in accordance with S.12 (5) of the Ordinance it is not only what is a fair rent but what is a fair increase in rent. I feel that 33-1/3%, a substantial figure, could not be regarded as a fair increase and consider that anything over 20% would, from my experience, be high. It is my view, therefore, that having regard to the circumstances of this case a rental of $360 per month inclusive of rates would be adequate in this case.
	Mr. Ng's argument regarding capital yield from that flat as compared with other flats in the block and compared with Bank Rate is also based on the fact that the rateable value of the ground floor is higher proportionately to the rent than the other floors and therefore the return is less. I think that I have already dealt with this matter previously.
	Another minor point is with regard to Mr. Ng's statement that the area has developed into a business area. If we are looking for a purely domestic rent it could be argued that domestic premises lose their value in such a change of character rather than improve it."

4. In my judgment, two matters need to be commented upon. Before the Rent Increases Advisory Panel, there was produced the occupation permit issued under the Buildings Ordinance in respect of these premises. The permit describes the premises as being for domestic use only. It appears however that the Commissioner of Rating and Valuation has assessed the premises upon a basis of their use for commercial purposes. I have not, of course, heard argument on behalf of the Commissioner of Rating and Valuation, who is not a party to these proceedings. It does, however, seem strange that ratepayers should be assessed to rates upon a basis of user of premises which is expressly forbidden by the Building Ordinance. Be that as it may, it was the assessment to rates which prompted the appeal in this case.

5. The other matter which calls for comment is that, as well be seen from the advice of Mr. Cotton, set out above, that he would have assessed a reasonable rent for domestic use at $360 per month, whereas the Commissioner, upon the advice of the Panel, assessed the rent at $345 per month. It therefore fell to me, assisted by Mr. Cotton to decided whether or not the certificate issued by the Commissioner should be confirmed or should be varied or set aside under the provisions of subsection (4) of section 12.

6. We agreed that the increase to $345 per month specified in the certificate was neither manifestly unfair or unreasonable when contrasted with Mr. Cotton's own assessment of $360.

7. In my judgment therefore, although I accept the assessment of Mr. Cotton of $360 per month as being a fair and reasonable increase, I was not able to hold that the increase to $345 per month specified by the certificate was "manifestly unfair or unreasonable" and I, accordingly, dismissed the appeal.

(W.S. Collier)
District Judge

31 JUL 1971