Lam Chi v. Yip Ching

CACV000125/1982

Headnote

The Appellant granted to the Respondent successive tenancies of land in which he himself no longer had any proprietary interest, his Crown Land Permit having been already cancelled. The Respondent defaulted in payment of rent for which the Appellant distrained.

In proceedings to challenge the legality of the distress the Respondent took the point that the tenancy agreements exhibited to the Appellant's affirmations had not been stamped and were inadmissible by reason of Sec. 15(1) of the Stamp Duty Ordinance. The District Judge refused to accept the Appellant's solicitors' undertaking to stamp out of time under the proviso to that subsection and took the view that without the benefit of the agreements or an equally inadmissible rent receipt the affirmations filed were not sufficient to establish the Appellant's right to distrain.

BETWEEN

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Coram: Hon. Leonard, V.P., Cons & Fuad, JJ.A.

Date: 14 December 1982

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JUDGMENT

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Cons, J.A. :

1. We allowed this appeal on the 1st December, deferring our reasons to be handed down later, which we now do.

2. In June of this year the plaintiff in the proceedings below applied to the Tsuen Wan District Court for a Warrant of Distress in respect of certain premises situate at Tuen Mun in the New Territories. In the affirmation in support he described himself as landlord and affirmed that the defendant was justly and truly indebted to him in the sum of thirty-six thousand dollars as rent for the said premises for the period from the 1st February to the 30th June a warrant was duly issued and executed with the result that the bailiff became possessed of a sum a little in excess of forty thousand dollars which he then held pending the decision of a summons taken out by the defendant to have the warrant discharged.

3. In anticipation of the, hearing of that summons the defendant filed an affirmation. He claimed to be a partner in a firm making rubber bands on the premises. He did not deny the tenancy but disputed the right of the plaintiff to receive rent. He suggested that the premises belonged to the Hong Kong Government and that by a letter of the 12th May the District Land Officer of Tuen Mun had offered to let the premises to the defendant's firm on the terms and conditions mentioned therein and that his firm had accepted the offer on the 18th.

4. We should perhaps mention now that Mr. Clayton, who appeared for the plaintiff, took the point in his argument that whereas the plaintiff's dealings were with the defendant personally, the tenancy subsequently taken from the Crown - for the offer of the 12th May was in effect "subject to contract" - was with the defendant's firm. However for the purposes of these proceedings we have treated the defendant and his firm as being one and the same.

5. The final paragraph of the defendant's affidavit put forward an alternative answer to the plaintiff's claim :

"If (which is not admitted) the Plaintiff is entitled to payment of rent, the Plaintiff is put to strict proof of the amount of rental in arrear. There is now produced to me and marked Exhibit "YC-3" a rental receipt (with its English translation) for the sum of $7,200.00 being rental payable for the month of February."

6. On the day of the hearing, that is the 2nd July, the plaintiff filed a further affirmation. He alleged that the defendant had been his tenant since so long ago as the 1st November 1975, and exhibited to his affirmation copies of two tenancy agreements, one dated the 25th October of that year and the other the 1st November, 1980, the latter purporting to expire on the 31st October, 1983. Both agreements were written in Chinese characters but the plaintiff had attached his own English translations. He promised to file certified translations as soon as they became available.

7. He also exhibited the copy of letter sent by his solicitor to the District Officer of the Tuen Mun District Office in May 1980. It is a long letter, setting out in plaintive detail his problems with that office since he had first obtained a Crown permit to the land some time in 1973. It makes interesting reading, but has no relevance to the question which was to come before the Court below.

8. Further the plaintiff admitted that rent had in fact been received for the month of February and apologised for his mistake.

9. At the hearing itself the solicitor who then represented the defendant first put the plaintiff to strict proof of his right to demand rent. He followed by making two points that the two tenancy agreements had not been stamped and were therefore not admissible by reason of Section 15(1) of the Stamp Duty Ordinance Cap. 117; and that the defendant was not liable to pay rent to the plaintiff because in accepting the Government's offer the defendant had, in effect, been evicted by title paramount.

10. We find it surprising that the point on the Stamp Duty Ordinance was taken in this way. We had always understood that by convention stamp points were not taken at the bar of the Court. , However counsel then appearing for the plaintiff was content to accept the position and rely solely upon the actual contents of the affirmations, together with the rent receipt exhibited to that of the defendant.

11. The learned Deputy Judge reserved the matter for consideration and one month later gave his decision in favour of the defendant, discharging the warrant, and ordering repayment of the monies held by the bailiff. His judgment may we think be fairly summarized thus :

12. For some reason not expressed the judge must have disbelieved those bald assertions, for he found himself "unable to make any finding as to the relationship between the parties", and the burden being on the plaintiff to establish his right to distrain, the plaintiff accordingly failed.

13. The plaintiff asked the judge to review his decision. The application came on for hearing on the 21st September. By that time the plaintiff had filed a third affirmation to which he exhibited duly certified translations of the two agreements. The originals of the agreement themselves were, we are told, on hand in Court. The judge eras presumably satisfied on these aspects for he does not refer to them in the reasons he recorded for refusing the application. His decision at this stage was based entirely on the stamp point. The solicitor for the plaintiff had offered an undertaking to have the agreements stamped out of time in accordance with Section 15(1), which provides :-

Nevertheless the judge refused to accept that offer. He said:

"Because the Commissioner for stamp duty has power to refuse to stamp a document tendered for late stamping I will not accept a Solicitor's undertaking to stamp documents, lest he be embarrassed."

With every respect to the judge that view is quite wrong. The Commissioner has no power to refuse. Section 5 provides that ".... every instrument chargeable with stamp duty shall be presented to the Collector for stamping and, upon payment of the stamp duty, he shall stamp such instrument or cause it to be stamped ....". The section is subject to Section 9 which deals with late stamping, but the only discretion which is given is to ".... remit the whole or any part of any penalty payable ...". Moreover a discretion to refuse to stamp at all under that section would make nonsense of the proviso to Section 15.

14. If the judge had looked at the documents at that stage he could not have avoided the conclusion that the parties stood to each other in the relationship of landlord and tenant and that the defendant had acknowledged that position as late as February this year. However we are satisfied that even without the documents, - that is, as matters stood at the first hearing, - there was ample evidence in the affirmations - themselves to support the same conclusion. It is true that the plaintiff had no title whatsoever out of which he was legally able to carve tenancies in favour of the defendant. But it is well settled that in circumstances of that kind a tenancy by estoppel arises as a matter of law, a tenancy which bears the characteristics of a normal tenancy, including the right of the landlord to distrain for unpaid rent : see Morton & others v. Woods and others ⁽¹⁾ and generally, Megarry & Wade's Law of Real Property, 4th Edition at p. 646 and Woodfall on Landlord & Tenant at 1-0026 et seq.

15. Counsel for the defendant sought to rely on 27 Halsbury paragraph 238:

"In order to constitute an eviction by a person claiming under title paramount, it is not necessary that the tenant should be put out of possession, or that proceedings should be brought. A threat of eviction is sufficient, and if the tenant, in consequence of that threat, attorns to the claimant, he may set this up as an eviction by way of defence to an action for rent, subject to his proving the evictor's title. There is no eviction, however, if the tenant gives up possession voluntarily."

16. Mr. Clayton tentatively submitted that the authorities quoted in that paragraph do not truly support the proposition suggested and that what we may for convenience call "constructive eviction" is not sufficient to determine the "landlord's" right to rent. We entertain some doubt as to the validity of his submission but need express no concluded opinion thereon for the facts in the present case were quite insufficient to support "constructive eviction". What the defendant relied on was this :-

"The reason why the tenancy granted is retrospective is that in or about April 1980, we were informed by an officer of the Tuen Mun District Land Office called Man Pui Tak that the said premises we were occupying was Crown Land and that we had no right to occupy the same. He further informed us that the Government of Hong Kong had the right to claim against us for trespassing the said premises."

17. We need only comment that if that paragraph correctly represented what had occurred - and we note that no mention of this matter was made until a very late stage in the exchange of affirmations - the conduct of the land officer can hardly have amounted to a "threat" to evict. And if it did, it was singularly ineffective. Some six months later the defendant was content to renew his "tenancy" with the plaintiff and continued actually to pay rent for a further two years.

18. It was alternatively argued that the tenancy granted  by the Government to the defendant on the 28th July this year, but which was expressed to take effect as from the 1st April, 1980, thereby operated in some way or another to determine the relationship between the plaintiff and the defendant as from that time.

19. We cannot accept that submission. In reality tenancy by estoppel is no more than a rule of evidence operative only as between the parties to it. It cannot be affected by the conduct of a third party unless that conduct brings about constructive eviction, a situation that in this instance we have already rejected.

20. A third argument was at one stage put forward that the plaintiff had no right to distrain, an argument based on Lewis v. Baker ⁽²⁾ where that right was refused to landlords. The point had not been taken in the Notice of appeal and was withdrawn upon objection. However we feel it was unlikely to have succeeded. Neither in that case itself, nor in the two cases mentioned in the judgment, did the relationship of landlord and tenant exist, the "landlord" having been taken in each to have assigned his interest to the tenant.

21. For these reasons we take the view that the distress levied by the plaintiff was lawful and that the learned Deputy District Judge ought to have rejected the defendant's application to discharge the warrant. We therefore allowed the appeal and made the necessary consequential orders.

(1)    (1869) 4 L.R. Exchequer at 293 at 305

(2)    (1905) 1 Ch. 46

Representation:

Peter D. Clayton (M/S John Ku & Co.) for Appellant/Plaintiff.

H.Y. Wong (M/S C.Y. Kwan & Co.) for Respondent/Defendant.