Case Document

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LDPD 12/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO. LDPD 12 OF 2014

__________________________

BETWEEN

	KIND POWER LTD	Applicant
	and
	MR. TAKASHIMA KUNIO	Respondent

__________________________

Coram: Deputy Judge Tracy Chan, Presiding Officer of the Lands Tribunal

Date of Hearing: 21 May 2014

Date of Decision: 23 May 2014

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D E C I S I O N

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1.On 11 February 2014, I heard arguments on the respondent’s summons (“the Interlocutory Summons”) to set aside an order made by me on 17 January 2014 (“the Default Judgment”) and further sought leave to file a Notice of Opposition out of time.

2.When hearing the Interlocutory Summons, I was informed by the respondent that his intended defence was that the applicant had failed its duty to repair. I explained to him the applicable legal principles in this area in general and showed to him some authorities including Wu Chieh Yun v. Hideichi Nakamura DCCJ 4379/2012 and HCMP 1805/2013. Having considered the authorities, the respondent asked to withdraw the Interlocutory Summons but asked for extension of the Relief Expiration Date. In fact he had paid after the original Relief Expiration Date but before his attending court for the Interlocutory Summons. He had already paid the arrears on the 6 February 2014. Upon consent given by the applicant, his application was granted and the Relief Expiration Date was extended to 6 February 2014 from 4February 2014 upon his undertaking that he would pay the rent for February on or before 13 February 2014 (“the Extension Order”).

3.Now the respondent took out another interlocutory application for leave to appeal against the Default Judgment and the Extension Order. The ground relied on by the respondent is that the applicant had failed to lodge a Form CR 109 the concerning the tenancy agreement between them with the Commissioner for Rating and Valuation under s.119 L(2) of the Landlord and Tenant (Consolidation) Ordinance and it is therefore not allowed to maintain an action for arrears. He asks for return of rental paid on 6 February 2014.

The application for leave to appeal

4.The law applicable to the leave application has been summarized by HH Judge Ko in The Incorporated Owners Of Kadoorie Avenue Mansion v. Rising Dragon International Limited LDBM 201/2013:

	(a)	A party may only appeal to the Court of Appeal against a judgment, order or decision of the Lands Tribunal on the ground that such judgment, order or decision is erroneous on point of law: section 11(2) of the Lands Tribunal Ordinance (“LTO”).
	(b)	No appeal may be made under section 11(2) unless leave to appeal has been granted by the Lands Tribunal or the Court of Appeal: section 11AA(1) of the LTO.
	(c)	Leave to appeal shall not be granted unless the court is satisfied that either (i) the appeal has a reasonable prospect of success; or (ii) there is some other reason in the interests of justice why the appeal should be heard: section 11AA(6) of the LTO.

5.I would first point out that the intended ground of appeal the respondent now seeks to rely on has never been raised before. This is material because if this had been raised earlier, one of the options opened to the court would have been to allow the applicant to file a Form CR 109 out of time if the applicant so wished. This has been done before in other cases. For this reason alone I would dismiss the application for leave to appeal out of time.

6.Further the respondent had already paid the arrears. Before he attended court for hearing his application to set aside the Default Judgment, he had paid the arrears upto 31 January 2014 on 6 April 2014. As said earlier, he withdrew his application for setting aside but applied for extension of the Relief Expiration Date. His application was granted by consent of the applicant. Thus the applicant had by the same court order been deprived of the right to take possession of the suit premises which it was so entitled even in default of lodging a Form CR 109. I do not think it right for the respondent to take advantage of the relief against forfeiture under s.21 F (3) to the extent of having been benefited from the indulgence of the applicant and the court on extending the Relief Expiration Date on one hand yet on the other hand say that the applicant is not entitled to maintain a claim for arrears. I am of the view that it is inequitable now for the respondent to ask to have the Default Judgment and the Extension Order set aside by way of appeal on this ground.

7.If I am wrong on the above, the intended appeal would indeed serve little purpose for the respondent. First, it has been held in previous cases that whilst a landlord is not allowed to maintain an action against a tenant in default; the landlord could still ask for forfeiture of tenancy and claim possession and mense profit. Sir Huggins V-P has analysed the right of a landlord who had failed to lodge a Form CR 109, he said: -

“It seems to me that there is no scope here for any "order" 'for the payment of the rent in arrear: the tenant has a free choice whether he will comply with the condition that the arrears be paid or suffer the enforcement of the forfeiture. If he chooses to pay, he will not ipso facto be paying an illegal rent or recovering the rent by action. It is well established that a contract may be unenforceable by action without being void. Thus in Leroux v Brown (1852) 2 C .B 801, 824 Jervis, C.J. having set out the terms of s.4 of the Statute of Frauds, continued:

‘The statute, in this part of it, does not say, that, unless those requisites are complied with, the contract shall be void, but merely that no action shall be brought upon it: and, as was put with great force by Mr. Honyman, the alternative, 'unless the agreement, or some memorandum or note thereof, shall be in writing,' - words which are satisfied if there be any written evidence of a previous agreement, - shews that the statute contemplated that the agreement may be good, though-not capable of b[e]ing enforced if not evidenced by writing. This therefore may be a very good agreement, though, for want of a compliance with the requisites of the statute, not enforceable in an English court of justice’.

It was a natural consequence of that principle that a deposit paid under an unenforceable agreement could not be recovered by the party who paid it: Monnichendam v Leanse (1923) 39 T.L.R. 445. Equally, where rent has been paid although the landlord could not have recovered it by action, the tenant cannot successfully sue for its return.

What I have just said is relevant also to the argument that it would be absurd if the Landlord could forfeit the tenancy for non-payment of a rent which she was "not entitled under the law to recover". I have placed the last six words in inverted commas to emphasise that payment of the rent is not illegal: the Landlord is not "entitled to maintain an action to recover" it. In so stating, I appreciate, I am already giving a broad interpretation to x.54(3), because what that subsection says is irrecoverable by action is the "rent stated in the notice mentioned in ss.(2)" and if there is no such notice (as here) ss (3) cannot on a strict interpretation be applicable at all. …..

However, there must be some limit on the liberality of the approach to the interpretation of the section, especially as it deprives a landlord of rights which he would have under the general law. Subsection (3) refers to maintaining an action to recover rent and it must be assumed that the Legislature meant what it said. By recovering the rent otherwise than "by action'' the landlord does not contravene the subsection. An action for possession on the ground of forfeiture for non-payment of rent is not an action to recover rent and, if successful, brings to an end the tenant's liability to continue to pay rent.”

8.In Fong Chi Ching v. George Harper Adams, LDPD 475 of 2005, HH Judge Yung has said the same in paragraph 11 that: -

“The second complication is that no notice of entering to the tenancy agreement or to renew a tenancy agreement has been given to the Commissioner of Rating and Valuation. Therefore action to recover rent is not maintainable: section 119L(2). However failure to give such notice does not prejudice the right of the Applicant to forfeit the tenancy on ground of non-payment of rent. The date of forfeiture dates back to the date of Application. From that date, the Respondent is liable for mesne profits. Though I cannot order the Respondent to pay the arrears of rent, I can order him to pay mesne profits from the date of service of the Application to the date of delivery of possession. The Respondent filed his notice of opposition on 28 February 2005. The date of service must therefore be on or before that date. The fair assessment of mesne profit should be the same as rent. I order the Respondent to pay Applicant mesne profit at the rate of $6000 per month from 28 February 2005 to 24 May 2005 and costs of $1600.”

9.See further Cheung JA’s decision in黃鳳鳴訴劉永強 CACV 245/2005 upheld that the landlord is entitled to forfeit the tenancy and claim for mense profit even in default of filing a Form CR 109:

“7. 但本席認為盧先生就《業主與租客（綜合）條例》（香港法例第 7 章）第 119L 條的處理方法是符合上訴法庭於 Fuk Lai Ling v. Poon Shu Wan [1983] 1 HKC 126 的判決，這案說明就算業主未能符合第 119L 條的要求，他仍可以根據住客欠租的原因沒收租賃權及向住客追討中間收益。”

10.In the present case, the applicant is entitled to forfeit the tenancy by 17 January 2014 when the respondent received the Notice of Application after returning to Hong Kong from an overseas trip. So it could recover mense profit starting from that day. The difference would be arrears of rental from 1 December 2013 to 17 January 2014, ie. 1 month and 17 day.

11.Deputy District Judge Kwok (as he then was) has however ruled in Tse Pok Lok and another and Yuen Siu Hong, DCCJ 4830 of 2003 that although the landlord is not allowed to maintain an action to claim arrears of rent, he could, if there is rental deposit in his custody, deduct the arrears from the deposit at the termination or earlier determination of the Tenancy Agreement.

12.Having been given a chance to read cases like Fong and Tse mentioned above the respondent replied that in those cases, Form CR 109 was eventually filed after action had commenced. This was not the case here, he said. He further pointed out that up to the date of hearing the applicant had not filed any Form CR 109. When asked whether he would agree to allow time for the applicant to file a Form CR 109, he said he would oppose to any application for time for that purpose.

13.Madam Chen, representative of the applicant took the view that the applicant would have been more than willing to pay $320 to file a Form CR 109 had this been raised on or before 11 February 2014. More importantly, she would not have given consent to extending the original Relief Expiry Date and would have proceeded to recovery of possession direct. She found it most unfair for the respondent to take issue on the filing of Form CR 109 after he had stayed in the suit premises beyond the original Relief Expiry Date with her consent.

14.Having considered the above, I am of the view that the respondent could not after having paid the arrears and enjoyed relief against forfeiture granted but now says that the tenancy agreement is illegal and the applicant is not entitled to arrears of rent and asks for its return by way of appeal. I do not find that the appeal has a reasonable prospect of success; nor is there any other reason in the interests of justice that the appeal should be heard.

Conclusion

15.For the above reasons, I dismiss the respondent’s summons.

16.Costs should follow the event. In the circumstances, the respondent shall pay costs of the applicant. I assessed them summarily at $200.