Cheung Man Hing and Another v. Chung Wai Man

CACV000119/1988

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Coram: Kempster, Clough & Macdougall, JJ.A.

Date of hearing: 3 May 1989

Date of delivery of judgment: 16 May 1989

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J U D G M E N T

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Clough, J.A. delivering the judgment of the court:

1. This is an appeal against the order made on the 22nd September 1988 by the Lands Tribunal (Presiding Officer His Honour Judge Downey) dismissing the applicants' application for possession of a tenanted flat in kowloon. The applicants are the landlords of the flat. They claimed possession under section 53(2)(b) of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7) on the ground that the flat was reasonably required by them for occupation as a residence for themselves.

2. The Tribunal held that the applicants had established reasonable requirement of the flat for the purposes of section 53(2)(b) but that the respondent tenant in possession of the premises had satisfied him for the purposes of proviso (i) to section 53(2)(b) that in al I the circumstances of the case it would manifestly not be just and equitable to make an order for possession against her.

3. The applicants now appeal under section 68A of the Ordinance on the ground that the Tribunal s decision was erroneous in point of law. In their amended grounds of appeal the applicants contend that (a) the Tribunal failed to adopt the correct test when arriving at his finding that it would manifestly not be just and equitable to grant possession to them and (b) that finding is not supported by or is contrary to the weight of evidence. It is also contended that in coming to his finding the Tribunal took into account irrelevant factors and failed to take into account all relevant factors particularly the circumstances of the applicants.

4. Once a landlord has established that premises are reasonably required by him the onus shifts to the tenant to establish that it would manifestly not be just and equitable to make an order for possession against him. The authorities show that that the onus is a heavy one to discharge but that if the Tribunal, having directed himself correctly and applied the correct test, holds that the tenant has discharged the onus, this court will be reluctant to interfere and will only do so pursuant to Order 59 rule 10(3) if the Tribunal has clearly drawn the wrong inferences from the evidence.

5. As to the meaning of the expression "manifestly, not be just and equitable", soon after the introduction of the proviso (which replaced the former "greater hardship" test in the case of a tenancy) another division of this court in Chow Wing v. Yuen Chi-hung [1980] HKLR 788 (C.A.) at p.790 approved the comment of Judge de Basto in Lusher v. Hillard (1980) D.C.L.R. 25 (as modified by them) to the effect that to discharge the onus imposed by the proviso clear, cogent and impelling reasons were required having regard to all the circumstances of the case and that the expression was to be construed to contemplate a situation where, if a possession order were made one would expect an ordinary person who was apprised of all the circumstances of the case to throw up his hands in dismay and exclaim that cannot be right". The same court observed at p.790:

"We suggest that the question to be asked is whether it would be thoroughly unjust to make the order. Unless the tenant establishes that it would be thoroughly unjust to make an order for possession, such an order should follow, once the landlord has satisfied the burden of showing that he reasonably requires the premises for his occupation."

6. The nature of the test thus adumbrated was again emphasised in Lam Chuk-ying v. Chan Kwok-kwan [1981] HKLR 661 (C.A.) by two members of the same division of the Court of Appeal as decided Chow Wing's case. At p.662 Leonard V.-P. observed:

"To simplify the test this court suggested that the question to be asked was whether it would be "thoroughly unjust" to make an order emphasizing both words. There is, then, no longer a question of greater hardship. That test has, in so far as Premises in the ownership of the landlord are concerned, been abandoned by the Legislature. Yet it is one to which, we notice, District Judges constantly tend to hark back. Extreme hardship to the tenant may be a dominant factor in refusing possession. But in my view hardship of itself seldom can be, for the overriding factor will almost inevitably be the right an owner to exercise the privileges of ownership. Clearly the Legislature wishes that right to be interfered with as little as possible.

In this case the trial judge considered whether the hardship incurred by the tenant was of sufficient degree to establish that it would manifestly not be just and equitable to require the defendant to vacate. That is not the test. The question is whether the tenant has satisfied the court that in all the circumstances of the case it would manifestly not be just and equitable to make an order."

7. Cons J.A (as he then was) agreeing, also commented that District Judges were wrongly continuing to apply the earlier test of greater hardship instead of the correct test. He added:

"That is what the learned trial judge has done in the present case. He arrived at the wrong conclusion. If he had asked himself the right question he would have seen immediately that there was only one answer. There will undoubtedly be financial disadvantage to the tenant. But the circumstances are nowhere near such that the ordinary man would throw up his hands in dismay."

8. In Chow Wing's case at p.790 Rcberts C.J. stated that the effect of the proviso was to place on the tenant the normal civil burden of showing that it would be thoroughly unjust to make the order. However the stringency of the test was emphasised and the method of its application was analysed in Chan Lau v. Wong Sui-mai [1982] HKLR 334 (C.A.). In considering what was involved in the discharge of the onus which the proviso imposed upon the tenant Sir Alan Huggins V.-p. Observed at p.335:

"It involves first that the tenant must, where they are not otherwise established prove on a balance of probabilities any primary facts on which he relies for the contention that it would manifestly not be just and equitable to make an order for possession. Then he must persuade the judge that manifest injustice or inequity would result ..."

9. After going on to refer to the test laid down in Chow Win's case Sir Alan Huggins said:

"That test excludes any balancing of the interests of the parties as a matter of probabilities at this stage."

The same point was emphasised by Macdougall J. (as he then was) in the following concluding passage of his judgment at p.339:

"....the correct test to apply is whether the tenant has satisfied the tribunal that it would be "thoroughly unjust" to make an order for possession. Such a standard clearly cannot be equated with one of on the balance of probabilities. Once this is realised, it should be clear that it is only in relation to proof of the primary facts on which the tenant relies for his contention that it would not be just and equitable to make an order, that the standard on the balance of probabilities' applies."

10. As to the circumstances in which this court may interfere with the decision of the Tribunal on the discharge or otherwise of the onus imposed upon a tenant by the proviso, Roberts C.J. observed at p.790 in Chow Wing's case:

"We do not consider that it would be helpful to attempt to lay down those matters which are relevant in deciding whether or not it is just and equitable to make an order. This is a matter that is best left to the trial judge to decide, in the light of the facts before him. Similarly, it is very much a matter for him to assess the weight which he should attribute to the various relevant factors which he has taken into consideration."

11. This passage is not to be understood as meaning or implying that a Tribunal is not to be faulted on appeal if it can be shown to have applied the wrong test (as in Lam Chuk-ying's case) or to have given weight to irrelevant matters (as in the unreported case of Luk Chor-sang v. Kwok Lui-kit (Civil Appeal No. 140 of 1981) mentioned at p.336 in Chan Lau's case) or not to have given any weight to relevant matters (as in Lam Chuk-ying's case).

12. However in the absence of any such misdirection this court will be reluctant to disturb the finding of the Tribunal pursuant to its powers under Order 59 rule 10(3) unless the Tribunal has clearly drawn the wrong inferences from the evidence. Thus in the unreported case Kam Shing Ki v. Fan Kam & Ors (Civil Appeal No. 34 of 1983) where the Court of Appeal was considering a case in which the Tribunal had held that it was not manifestly unjust to make an order for possession in favour of a landlord, Sir Alan Huggins had this to say:

"Whether extreme hardship amounts to manifest injustice or inequity must always be a matter of fact for the trial judge and this court will be reluctant to interfere with his decision provided that he has not misdirected himself by considering irrelevant matters or by ignoring relevant matters.....This was a difficult case and it might be that another judge would have come to a different conclusion - we do not say we would have done so - but that did not mean that the trial judge was necessarily wrong. In our view there was evidence upon which he could find that no manifest injustice or inequity would result. He weighed the matter with great care and it would have been entirely wrong for us to interfere."

13. In this passage the reference to "evidence" is clearly intended to mean sufficient evidence.

14. It is in the light of the princip1es of law applied in those authorities that the facts of this case and the arguments on appeal require to be considered.

15. The applicants are husband wife. They have three daughters whose ages range from three to about ten years. They have lived for the last six years in a low cost housing unit for which they pay a monthly rent $400 and which the Tribunal described as consisting of about 220 square feet and a kitchen. The husband earns an average of $6,000 per month as a decoration worker. The wife looks after the children. She does not go out to work. They all live in one room. Some of them sleep on the floor as there is insufficient space.

16. The applicants acquired the flat which is the subject of these proceedings in December 1986. The unchallenged evidence in chief of the husband was that it comprised 400 odd square feet and included two bedrooms. Furthermore the Tribunal seems to have accepted the substance of this evidence because he found, (and this finding is not challenged), that the applicants had a genuine need for more accommodation and greater privacy. This was the reason for the applicants' application and the basis for the Tribunal's finding that they had established reasonable requirement of the flat for their own occupation.

17. The respondent has lived in the flat since 1974 under a succession of tenancies. The last tenancy agreement was entered into in March 1986 and was the subject of a notice to quit dated the 22nd September 1987 requiring her to quit on the 28th February 1988. The respondent began by paying a monthly rent of $800. She currently pays $1,760 per month. She lives in the flat with her husband aged 52 who is a casual painter earning not more than $4,000 per month. They have an adopted son aged 14 who lives wlth them.

18. The respondent also has a married daughter who lives in a flat comprising 200 square feet with her husband and 12 year old daughter. The daughter gave evidence. The Tribunal expressed himself to be "satisfied that there is really no scope for assistance from that quarter".

19. Since infancy the respondent's adopted son has suffered from hyperkinesis (hyper activity). The Tribunal referred to an electroencephalogram from the Baptist Hospital dated the 11th June 1984 produced by the respondent in which the son is described as a slow learner and the opinion is expressed that he may have suffered minimal brain damage.

20. The respondent sustained a fractured thigh in 1985 and requires the assistance of a stick for walking. She produced appointment cards, to which the Tribunal referred as showing that both the respondent and her adopted son were and had for some time been receiving medical treatment at the Prince of Wales Hospital in Shatin at the United Christian Hospital. The son goes to a school in Tokwawan. There is evidently a terminus near the flat from which the respondent and her son find it convenient to travel to hospital and to school.

21. In March 1987, before receiving notice to quit, the respondent applied to the Housing Authority for public housing. The Tribunal accepted her evidence that she took this course because she hoped to obtain accommodation which was cheaper than the rent of the flat and other private sector accommodation. She had been told that despite her circumstances her application would be likely to take three to four years before it could succeed. The Tribunal was prepared to take judicial notice of the fact that it takes a long time for people to allocated public housing, particularly when, as in the respondent's case, they apply fairly late in life.

22. The Tribunal accepted that the genuine present need of the applicants for larger accommodation, more particularly for greater privacy from their children, and the fact that the applicants wished to live in property which they owned, were important matters "in the general of balancing the interests of both parties". He made these observations immediately after his finding that the applicants had established their reasonable requirement of the flat.

23. After considering the circumstances of the respondent and her family the Tribunal observed that it was most unlikely, having regard to the respondent's family means, that they would be able to afford "alternative private sector accommodation" without having to pay a very substantial part of their monthly income by way of rent, but he rightly accepted that that was "not in itself sufficient to constitute the very exceptional hardship which can occasionally discharge the burden upon a tenant of showing that it would be manifestly unjust and inequitable to make an order".

24. The Tribunal then made his crucial finding in the following terms:

"But, I think the medical situation of the Respondent and her adopted son are matters which do make this one of those rare cases where there is exceptional hardship to the tenant and that the tenant would suffer by exceptional hardship by having to give up possession of the premises, which has been their home for some 14 years. Her need for treatment and the consequent restriction of movement, coupled with special needs of their child, indicate, in my view, the importance to them of having a secure and settled home, which is what they have enjoyed for some 14 years....  I do not overlook the genuine need of the Applicants for more accommodation and for greater privacy, although the latter is something that might (sic) able to achieve by some form of partition of their present unit. But, looking at all the circumstances, I do not think that these outweigh the very exceptional hardship which would be caused to the tenant, having regard to their medical conditions and their needs, and the fact that there is no realistic prospect of getting alternative accommodation within the next 6 months or 12 months. I have no idea what the Housing Authority's policy would be towards somebody such as Madam Chung with regard to any priority in public housing. On the facts now before me today, I am satisfied that she has discharged the burden of showing it would be thoroughly unjust to make an order in this case." (Emphasis added)

25. In our judgment the Tribunal was here purporting to ask himself the right question, namely had the respondent discharged the burden of showing that it would be thoroughly unjust to make an order for possession, whilst at the same time demonstrating by the words which we have underlined that he was in fact carrying out a greater hardship test and, in the course of doing so, erroneously placing the burden on the applicants instead of the respondent.

26. The factors he said that he did not overlook were the genuine need of the applicants for more accommodation and greater privacy. He did not mention in this crucial passage (as he had rightly done earlier) the fact that the applicants sought to exercise their rights as owners of the flat. This is such an important factor that Leonard V.-P. regarded it in Chow Wing's case at p.662 as being almost inevitably the overriding factor in these cases. Having omitted to bear in mind this factor he then clearly seems to have asked himself "looking at all the circumstances" whether the specified two needs of the applicants were such as to "outweigh" the "very exceptional hardship" which would be caused to the tenant by an order for possession. Having initially embarked on a balancing exercise he was here giving no weight to a critical factor in favour of the applicants and inadvertently putting the burden on the wrong parties.

27. At the end of his judgment when he was dealing with other matters the Tribunal indicated that he considered that the respondent had "shown such exceptional hardship as to override gratification of the Applicants' need", but this was after the crucial and decisive part of his judgment where he had expressed himself in different terms and cannot cure the fundamental errors which were made at that earlier stage in an extempore judgment.

28. In our judgment, any reasonable Tribunal giving due consideration to the importance of the ownership factor in conjunction with the very real need of a family of five including three growing girls living in a public housing unit comprising about 220 square feet and a kitchen, and then asking himself whether the tenant had established that in all the circumstances it would manifestly not by just and equitable to make an order for possession in this case, would answer the question in the negative.

29. The only factor that takes this case out of the ordinary in term of hardship is the relative disability of the respondent and her adopted son. The respondent's husband is the only earner in the family and he is fit. We examined the appointment cards produced by the respondent. They show that she attends hospital as an out patient about once a month. Her adopted son attends hospital about once every 3-5 weeks. There was no evidence that he attended anything but an ordinary school or that he was unable to travel to school on his own.

30. In all the circumstances this is not in our judgment a case in which a Tribunal properly directing himself could reasonably conclude that an ordinary person apprised of all the circumstances would be induced by the making of an order for possession to throw up his hands in dismay and exclaim: "That cannot be right."

31. Accordingly we allow this appeal and propose to make an order for possession in favour of the applicants in appropriate terms.

Representation:

Kenneth C.L. Chan (Yaddy Cheung & Co.) for Appellants/Applicants

H.Y. Wong (Chan & Chuk) for Respondent/Respondent