WONG YIU SHEUNG SHIRLEY v. WHORRA, RAVEESH

LDPD 1456/2020

[2020] HKLdT 61

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO. LDPD 1456 OF 2020

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REASONS FOR DECISION

(APPLICATION FOR LEAVE TO APPEAL)

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1.  This is an interlocutory application taken out by the respondent on 4 December 2020 seeking (i) leave to appeal against my Judgment made on 24 November 2020 (“the Judgment”) and (ii) stay of execution of the writ for possession; (iii) extension of time to move out.  Having heard the submissions of the parties on 22 December 2020, I dismissed the interlocutory application. I now give the reasons.

Background

2.  The applicant commenced this action by filing a Notice of Application dated 19 October 2020, applying for recovery of possession of the Premises known as Room C, 3/F, Flat A2, United Mansion, 105-111 Shanghai Street, Kowloon.

3.  This application was premised on the ground that the respondent had failed to pay rent from 8 September 2020. In support of this application, the applicant provided a copy of tenancy agreement (which was both in English and Chinese[1]) dated 20 September 2020 (“the Tenancy Agreement”) whereby the applicant as the landlord let to the respondent as the tenant the Premises for a term of 2 years from 8 July 2020 to 7 July 2022  at a monthly rent of $6,300 inclusive of Government rates and management fee.

4.  By clause 2 of the Tenancy Agreement, the respondent as tenant “shall on signing of this Agreement pay to the Landlord by way of deposit” in the sum of $13,600.

5.  The respondent filed a Notice of Opposition (Form 7) on 30 October 2020 denying any rent was due because all rents for the four months from 8 July 2020 to 7 November 2020 had been fully paid. The respondent also alleged that “no valid tenancy agreement exists” (or stamped).

Hearing on 24 November 2020

6.  When the hearing took place on 24 November 2020, the applicant explained that the respondent paid altogether 3 months’ rental initially including a deposit of 2 months’ rental. The applicant acknowledged that one more month’s rental was paid on 7 October 2020. More recently, the respondent’s cheque dated 8 November 2020 was however bounced on 10 November 2020[2].

7.  The respondent confirmed that he paid 3 months’ rental on 3 July 2020 plus $1,000 as deposit for electricity and water charges[3]. There was then dispute on the electricity and water charges and after several meetings with applicant’s estate agent, Mr Terry Yiu (“Mr Yiu”), it was agreed on 11 October 2020 that the 3 months’ rental paid would be taken as the rental for the first 3 months and the respondent paid an extra month in October 2020. At the same time, the respondent issued a cheque in the sum of $6,300 as a deposit in case he stayed beyond 7 November 2020.  However, he found that the applicant had commenced this action on 19 October 2020 eight days after their last meeting (and understanding)[4] and therefore he stopped the cheque. Then the respondent learned that if the applicant had not filed form CR109 pursuant to section 119L of the Landlord and Tenant (Consolidation) Ordinance, no rent was due.

8.  In addition, the respondent alleged that the Tenancy Agreement was not stamped.

9.  The respondent also complained that there were many problems inside the Premises as it was one of the 5 sub-divided units, contravening the Buildings Ordinance etc. He also complained that the applicant did not provide him with her address anyway[5].

Analysis and Decision on 24 November 2020

10.  I explained to the respondent that it is trite that a tenant’s covenant to pay rent is regarded as independent of all other covenants or obligations under a lease, including, for example, the covenant for quiet enjoyment by the landlord[6]. Every day the tenant or occupier remains occupying the Premises, he is obliged to pay rent or mesne profits as the case may be. That the Premises were illegal or unauthorized was irrelevant. It would not be necessary for the applicant to rely on the illegality since all she needed to do was to point to the terms of the Tenancy Agreement[7].

11.  The respondent produced Exhibit R2 which was supposed to have recorded his discussion with Mr Yiu. However, there was nothing as regards what had been agreed by the parties on 11 October 2020, for instance. Then the respondent conceded that Mr Yiu suggested he could use up the deposit as rental on condition that he could leave the Premises by 7 November 2020. He refused but stated that he would only move out if he could find an alternative premises[8].

12.  The position of the respondent could be discerned from his email to Mr Yiu on 7 November 2020:

“--- We will NOT be able to “move out” today, 7 November 2020.

--- We will move out as soon as we are able to find another apartment.

I WILL INFORM YOU ACCORDINGLY.

--- As you know, ALL RENT has been already paid by me to the Landlord for 4 months from 8 July 2020 to 7 November 2020.

…

--- Any rent for the days from 8 November 2020 onwards will also be settled on our moving out.

--- I gave you a cheque on 7 October 2020, for HKD6,300.00

HSBC no 168330, dated 8-11-2020, Wong Yiu Sheung Shirley,

“TO KEEP ON HOLD” towards any rent payable for any days from 8 (EIGHT) NOVEMBER 2020 onwards, if any, until we move out.

THIS WAS AS ASKED BY YOU, AS PER OUR SEVERAL MEETINGS IN AUGUST, SEPTEMBER, OCTOBER 2020; the last of which meeting on 11 October 2020.”

13.  On the other hand, the applicant denied she or Mr Yiu ever having made such promise. Indeed, I agree with the applicant; otherwise she would not have commenced the present application when she had accepted the post-dated cheque of 8 November 2020. In any event, the respondent conceded later at the hearing there was no agreement with Mr Yiu or the applicant[9]. He maintained that he would only settle any outstanding rental by the time when he moves out of the Premises.

14.  In World Food Fair Ltd v Hong Kong Island Development Ltd (2006) 9 HKCFAR 735, [2007] 1 HKLRD 498, the Court of Final Appeal considered the terms essential to a tenancy agreement are:

(i)  the identity of the parties;

(ii)  the premises to be leased;

(iii)  the commencement and duration of the term; and

(iv)  the rent or other consideration to be paid.

15.  The respondent did not deny he having signed on the Tenancy Agreement which contains the terms above; he only maintained that the Tenancy Agreement was not finalized because it did not contain the address of the applicant and there were no initials on the different pages etc. In my opinion, such omissions or discrepancies were irrelevant for a binding tenancy agreement[10].

16.  The respondent’s allegation that the Tenancy Agreement was not stamped was not true. By reference to a stamp certificate, the Tenancy Agreement was stamped via the internet on 19 October 2020.

17.  Another ground relied on by the respondent is that the applicant had failed to lodge a Form CR 109  concerning the Tenancy Agreement 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 of rental. 

18.  In Fuk Lai Ling v. Poon Shu Wan [1983] 1 HKC 126, Sir Huggins V-P of the Court of Appeal analysed the right of a landlord who had failed to lodge a Form CR 109:

“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 CB 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’.

…

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.”

19.  In Fong Chi Ching v. George Harper Adams, LDPD 475/2005 (unreported, dated 8 June 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.”

20.  The Court of Appeal in黃鳳鳴訴劉永強, CACV 245/2005 (unreported, dated 23 September 2005) upheld that the landlord is entitled to forfeit the tenancy and claim for mesne profits even in default of filing a Form CR 109.

21.  A fortiori, under section 6 of the Conveyancing and Property Ordinance, a tenancy taking effect in possession for a term not exceeding 3 years (whether or not the lessee is given power to extend the term) at the best rent can be created by parol and not put in writing and signed by the persons creating the same. In his Notice of Opposition and throughout the trial, the respondent had affirmed or not in any way denied the essential terms as contained in the Tenancy Agreement which was for a term not exceeding 3 years.

22.  More recently, in Poon Lone Leo v Lei Iok Chan, HCSA 49/2015 (unreported, dated 28 January 2016), it was also held that the existence of a tenancy can be determined based on the evidence of the parties.

23.  Thus, while even a trespasser has to pay mesne profits[11], I made the Judgment as follows:

(1)  Subject to paragraph (4) below, the respondent do deliver vacant possession of the Premises to the applicant;

(2)  The respondent do pay the applicant arrears of rent/mesne profits at the rate of $6,300 per month from 8 September 2020 until delivery up of vacant possession;

(3)  The respondent do pay the applicant the costs of this Application which is summarily assessed at $365;

(4)  If the respondent should on or before 2 December 2020 (“Relief Expiration Date”) pay into the Tribunal all the arrears of rent/mesne profits as stated in paragraph (2) above (including all arrears of rent/mesne profits due on or before the date of payment) together with the costs referred to in paragraph (3) above, the respondent be relieved from the forfeiture incurred herein, and the lease of the Premises be reinstated; and

(5)  Unless otherwise ordered, all sums ordered to be paid under this judgment shall be paid into the Tribunal in cash, by EPS transfer, by cashier orders issued by banks in Hong Kong or by cheques drawn by firms of solicitors in Hong Kong, and such sums received by the Tribunal shall be released to the applicant.

24.  The applicant’s claim for the arrears of electricity and water charges was however dismissed as the basis of calculation of such was not stated in the Tenancy Agreement and the applicant also failed to provide any evidence in support.

Respondent’s Interlocutory Application

25.  In the respondent’s interlocutory application filed on 4 December 2020, he stated that the Judgment was erroneous. The respondent submitted that 3 months’ rental was paid to the applicant on 3 July 2020 plus another month’s rental having been paid on 7 October 2020. Therefore, the payments altogether covered the period from 8 July 2020 to 7 November 2020, there being no arrears of rent. “A tenancy agreement was prepared by (the applicant), 3 July 2020, and after the payment of HKD18,900.00 given to her, the KEYS to Room C were given to the RESPONDENT, the RENTALS STARTED from 8 July 2020.

26.  In his affirmation attached to the interlocutory application, the respondent complained also that problems were found in the weeks following 8 July 2020. For instance, he found that the Premises was “a sub-divided unit, ILLEGAL, no authorization from the Buildings Dept …” The respondent also suggested “it was agreed that (the Tenancy Agreement) changed to monthly durations, respondent would continue to pay rent until moving out”.

Leave to Appeal

27.  Under section 11(2) of the Lands Tribunal Ordinance,

“Subject to section 11AA and the provisions of any Ordinance relating to appeals from the Tribunal, any party to proceedings before the Tribunal may appeal to the Court of Appeal against a judgment, order or decision of the Tribunal on the ground that such judgment, order or decision is erroneous in point of law.”

28.  Section 11AA (6) of the Lands Tribunal Ordinance provides that:

“Leave to appeal shall not be granted unless the Tribunal, the Court of Appeal or the registrar hearing the application for leave is satisfied that –

(a)  the appeal has a reasonable prospect of success; or

(b)  there is some other reason in the interests of justice why the appeal should be heard.”

29.  The hearing of this interlocutory application took place on 22 December 2020. In effect, the respondent was repeating what he stated on 24 November 2020 and in his affirmation of 4 December 2020. Also included in his Bundle of submission[12] was a copy of the Tenancy Agreement in Chinese (中文租約內容).

30.  Even accepting the respondent’s submission to the highest, it is trite that the deposit of two months’ rental cannot be used for the payment of rental during the term of the tenancy and the four months’ rental payment made by him included 2 months’ rental deposit. The respondent’s argument that no rent was due was refuted by his concession made during the hearing on 24 November 2020.

31.  After considering what the respondent presented in his affirmation supporting his interlocutory application, and after hearing what the respondent supplemented in his oral evidence and submission, I decided that the respondent’s appeal had no reasonable prospect of success, and the respondent failed to satisfy that there was some other reason “in the interests of justice” why the appeal should be heard. 

32.  This was a simple application for recovery of possession and payment of outstanding rent/mesne profit.  Since I did not allow the respondent the leave to appeal, the consequential application by the respondent for setting aside the writ of possession dated 8 December 2020 of the Premises was therefore refused. The application for extension of time to move out was refused.

Conclusion

33.  The interlocutory application by the respondent to seek leave to appeal against the Judgment made on 24 November 2020, to stay of execution of the writ of possession dated 8 December 2020 and extension of time to move out were both dismissed. There be no order as to costs.