Fung Wing-kwong v. The Queen
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CACC001091/1981 Re-letting premises in breach of condition of court order obtained pursuant to Sect. 53 of the Landlord and Tenant Ordinance - No defence even if offence committed due to misunderstanding of warning by defendant's own legal advisor - Presumption in Sect. 53(7G) considered - Such misunderstanding may be mitigating factor for purposes of penalty. In imposing a fine judge should not consider the capital value of the suit premises - As to forfeiture the proper assessment is the difference between the new rent and what would be the legitimate rent if the old tenancy had not been terminated - The scale of compensation payable by offending landlord should be the difference in rent which the evicted would have to pay if the tenancy were not terminated and the new rent the evicted tenant has to pay for his new premises plus removal expenses - Evicted tenant entitled only to compensation for higher rental in new premises comparable with suit premises only.
BETWEEN
_____________ Coram: Roberts, C.J., McMullin, V.-P., and Li, J.A. Date: 26 February 1982 _______________ J U D G M E N T _______________ Li, J.A.: Preliminary 1. The appellant was convicted of a charge of breach of condition in termination of tenancy under a court order contrary to section 53(7) of the Landlord and Tenant Ordinance. 2. It was alleged that, on the 10th day of December 1980 he, having obtained an order for possession of the suit premises known as 4 Sun Street, 4th Floor, Wanchai on the 13th of August 1980 from the Victoria District Court under section 53(2) paragraph (b) of the Landlord and Tenant (Consolidation) Ordinance, let the premises without the consent of the court within 24 months from the date of the said order. 3. For that there was imposed on him a fine of $35,000 or imprisonment for 6 months in lieu and the forfeiture of a sum of $30,000 to be paid by monthly instalments of $2,000 each. In addition, he was ordered to pay compensation to the amount of $25,000 to his ex-tenant. 4. The appellant applied for leave to appeal against conviction as well as against sentence. Leave to appeal against conviction was refused by a single judge, who granted leave to appeal against sentence so that this court might assist in giving guidance as to matters of sentence. The appellant now renews his application for leave to appeal against conviction. He also appeals against sentence. Facts 5. The facts of the case may be summarized as follows. The appellant is the owner of the suit premises at Sun Street, which is subject to Part II of the Landlord and Tenant Ordinance. As such, he would only be able to obtain possession of the suit premises on one of the grounds specified in section 53(2). He sought possession, under that section 53(2) paragraph (b), on the ground that the premises were reasonably required for his own occupation. 6. HUI Tat was a protected tenant of the suit premises at the material time. His 2 years tenancy was due to expire on the 31st December, 1979. Thereafter, his tenancy would be protected, subject to the provisions of section 53(2)(b) of the Ordinance. 7. There was a protracted negotiation between the appellant and HUI Tat, first relating to sale of the suit premises to HUI Tat and then a re-letting at a much higher rental. There was evidence that, before he issued a writ, the appellant offered to extend the tenancy at the rent of $1,350 per month. The previous monthly rental in the then existing tenancy was $820. HUI Tat was, of course, entitled to resist the illegal demand for an increase in rent to $1,350. Negotiations eventually broke down. On the 25th of February 1980, the appellant issued a writ claiming possession for his own occupation. The Settlement 8. The case was set down for trial on the 13th of August 1980. Prior to the hearing of the case, the appellant and HUI Tat came to a settlement. The terms of the settlement were made an order of the court endorsed by a judge in that very morning. The court order read as follows:
9. The tenant, HUI Tat, duly rendered vacant possession by the end of October 1980. On the 10th of December, the appellant re-let the suit premises to one HUNG Hon-ki at the monthly rental of $2,000 per month. Defence 10. The defence of the appellant in the court below was that his lawyer had misled him. In his evidence in chief he said that, before the settlement was reached, his lawyer told him that after he obtained possession as a result of the compromise and settlement he could resell and re-let the suit premises. But he also said that, after he signed to confirm the terms, he was told by the solicitor's clerk that if he committed any breach of that court order, there would be a maximum fine of $500,000. 11. A second line of his defence was that HUI Tat had left the premises in 1977 and that only his mother and his uncle lived in the suit premises. 12. Section 53(7G) provides that:
13. The trial judge refers to the evidence that the appellant had been warned by his own lawyer that he would be subject to a fine of $500,000 if he committed any breach of the order. The appellant's evidence, however, was that he was told by his lawyer that if he obtained possession by virtue of a compromise, he could re-let or resell. 14. Before us, the appellant says that the lawyer gave him no warning whatsoever as to the fine, though he did not see fit call the lawyer to support this assertion. 15. We do not believe that the appellant's lawyer never warned him, though we are prepared to accept that what the solicitor said may have been misunderstood by the appellant. 16. It is true that had he obtained possession by a compromise which was not confirmed by a court order, he could have resold or re-let his premises with impunity. However he obtained possession by virtue of that court order. 17. What it was explained to him that. if he committed any breach of the court order he would be liable to a fine, it might not have been clear to him that any re-letting of the suit premises would be in breach of the court order in view of what he thought that his lawyer had told him earlier. Nevertheless, even if there was such a misunderstanding the appellant cannot thereby be relieved of the consequences in law which flow from his re-letting of the premises in contravention of the section. There was in evidence that HUI Tat had left the premises by 1977. This was put to Hui by the appellant in cross-examination and denied by Hui. There was no other evidence to support the allegation and it was properly rejected by the trial judge. Indeed the appellant admitted that HUI Tat's mother still lived in the suit premises at the relevant time. 18. We see no reason to interfere with the conviction and leave to appeal against conviction is refused. Fine 19. The trial judge, at page 2 of his Reasons for Sentence, said:
20. After the conviction of the appellant, Crown Counsel produced a document, which was addressed to him by the Rating and Valuation Department and headed 'Notes for Crown Counsel', relating to the capital value of the premises at the material time. 21. In this document, the capital value of the suit premises was assessed as "$300,000 with the present tenant in possession and $380,000 with vacant possession." This document is not admissible in evidence. In any event, in assessing the fine to be imposed, the judge should not have taken into consideration the capital value of the premises. The amount of the fine should depend on the culpability of the convicted person; for instance, how deliberately he misled the tenant or the court, how serious was his lie and how much he gained by such lie, how much he should be held responsible for these lies, the way he obtained possession, and whether there were any mitigating factors. 22. On the question of liability, ignorance of the law is no defence. But it is a mitigating factor, if genuine. We accept that the appellant might have committed the offence due to a misunderstanding of his lawyer's advice. And having regard to the mentality and approach of people of his class, he might be ignorant of the law indeed. 23. In view of these mitigating factors and the wrongful admission of evidence of capital value in relation to the fine, we reduce the fine of $35,000 to $10,000. 24. Section 53(7B) paragraph (a) provides that the judge may award a forfeiture of up to 24 months of the new rental which the appellant will receive as a result of his breach of the court order by the re-letting of the suit premises. 25. The judge reached a forfeiture of $30,000 by taking a period of 15 months, at $2,000 per month which was the rent the appellant received upon his re-letting the suit premises. 26. We observe that, by the end of 1979 the appellant, not having raised his rent for 2 years previously, would have been entitled to raise the then existing rent by 21%, i.e. the rent of $820 could have been increased to $992. We round it up to the sum of $1,000. So when he received a rent of $2,000 a month, his illegitimate gain was $1,000 a month. 27. The sub-section provides merely that the judge could award a forfeiture of the new rental without providing any guidance. We are of the opinion that a forfeiture is auxiliary to the fine imposed and must reflect the appellant's illegal gain. Otherwise his new rental becomes, in effect, an additional fine. 28. We feel that the amount of forfeiture should be the difference between the new rent and rent which he would have been entitled to receive from the evicted tenant after a legitimate increase. We reduce the amount of forfeiture to $1,000 a month for 15 months, a total of $15,000, though it would be proper for a court to order the whole amount of forfeiture on the whole period of 24 months. Compensation 29. Section 53(8) provides as follows:
30. The trial judge worked out the formula for the compensation of $25,000 as follows. 31. The tenant was obliged to move out by the 31st of October 1980. For 10 months he lived in premises in Third Street, Sai Ying Pun and paid the rental of $2,200. The judge adopted the old rent of $820 as the standard and found a difference of $13.800 for this award. Having found that the landlord would have been allowed to charge $992 per month (rounded up to $1,000) had the tenant remained in occupation, the difference should be $1,200 a month and not $1,380 per month for the first 10 months - i.e. $12,000. 32. After his 10 months residence in Third Street, the evicted tenant, Mr. Hui, moved to larger premises where he paid a rent of $2,600 per month. The trial judge multiplied the difference between $2,600 and $820, ($1,780) by 8 to reach the sum of $14,240. There was no evidence of the floor area of the suit premises or of the floor area of either of the other premises to which the evicted tenant moved. Nor was there evidence that Mr. Hui was forced to move out of the premises in Third Street. We do not think that a landlord should be obliged to compensate an evicted tenant for more expensive premises than those which were available to the tenant, if the latter are reasonably comparable to the suit premises. There was, as is noted above, very little evidence to help the judge on this aspect of the case. We therefore base our calculation on the assumptions (a) that the premises in Third Street were reasonably comparable to the suit premises, (b) that the tenant could have stayed there but chose to leave them for more expensive premises. 33. We see nothing wrong with the taking by the judge of 18 months as the period for which the appellant should pay compensation. But we take the difference of rental as being $1,200 per month for the whole period, i.e. $21,600. Credit 34. The judge omitted one item for which the appellant should have been given credit. As a term of the settlement, the appellant was obliged to forego 10 months rent and mesne profits, at the rate of $820 per month. The judge failed to give the appellant credit for this when he worked out the compensation. 35. The appellant should have been given credit of $8,200, as well as a further $6,000 for the compensation which he had to pay the evicted tenant. Thus $14,200 should be deducted from $21,600, leaving $7,400. We see no objection to the award of removal costs of $1,000. The total of compensation due to the tenant is therefore $8,400. 36. In reaching his award of $25,000 compensation, the judge allowed the legal fees which the evicted tenant had to pay in the action for possession, to his solicitors, on a solicitor and client basis. But one of the terms of the settlement was that there was no order as to costs, so that legal costs should not be included in the award of compensation. 37. The end result is that the compensation due to the tenant should be $8,400, which we will round down to $8,000. Summary 38. The appeal against sentence is allowed. The fine is reduced to $10,000. The forfeiture is reduced to $15,000. The compensation payable to the evicted tenant, Mr. Hui, is reduced to $8,000. These total $33,000. 39. It is ordered -
Representation: Appellant in person. Mr. Dick (Crown) for respondent. |