CHRISTIAN ANTHONY BULLEN v. TAM YEE NI

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

1998, No. 14
(Civil)

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J U D G M E N T

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Liu, J.A.:

1. This is a landlord and tenant dispute. The relationship was an unhappy one. There were disagreements in rental increase, maintenance and repairs. As far as the lady landlord is concerned, the whole affair has been a total frustration. In the course of the instant application, she has been dragged through the courts six times. The appellant tenant had previously been, at least once, in arrear of rent and an order for possession was made against him in 1996. Rates are said to be still outstanding. Wanton damage had been allegedly done to the demised premises. She was also troubled by the tenant's dilatory payment of water and electricity charges. Non-payment of water charges led to the suspension of water supply. It is complained before us that the tenant reconnected illegal water supply for his consumption. Her submissions made to-day are, to say the least, emotive.

2. Turning to the tenant, he voices grievances of his own. He complains of an incredibly unjustified increase of rent by 50% with no adequate supply of services and facilities. Other complaints are lodged with this court as to lack of repairs and absence of cooperation in other landlord and the tenant matters.

3. In response, the landlady accuses the tenant of misleading the court in the 50% rental increase. There were good reasons, so she says, for the additional rent, and the lawful increase had finally to be determined by the Lands Tribunal in 1995.

4. It is not unusual in a landlord/tenant relationship to find a great many complaints, real or imagined. But this court must converge on matters of law. Let me first account for the background of the case as given, some by the tenant and others by the landlady. There are no prepared Appeal Bundles. Therefore, the dates supplied by the parties may not be altogether accurate. The present dispute between the landlady and the tenant came to a head when the parties appeared before the Lands Tribunal. The Presiding Officer decided in favour of the landlady on 10 December 1997, and on the tenant's failure to pay rent, possession was ordered forthwith together with other consequential orders, including one for costs. What was not provided by the Presiding Officer was time to vacate and some form of relief against forfeiture, that is to say, an opportunity for the tenant's status to be later reinstated upon payment of arrears and expenses.

5. The tenant felt aggrieved, particularly by the absence of any provision for time to vacate and restoration of his tenant's status upon payment of arrears and expenses within that time. An application was instantly made by the tenant for a review by the Presiding Officer. That application, we are told, was made promptly on the same day, 10 December 1997. The review application was heard on 5 January 1998 and was thereupon dismissed. Written reasons for the dismissal were given by the Presiding Officer on 19 February 1998, in which his expressed opinion was that the giving of time to vacate and an opportunity to reinstate the tenant's forfeited tenancy interest was a matter of discretion. On the tenant's past failure to pay rent and his avowed intention not to pay up the arrears, the Presiding Officer found in his original decision ample justification for not granting to the recalcitrant tenant time to vacate and an opportunity to restore his status or forfeited estate. In sum, that was the very reason for the peremptory possession order and for the judge's dismissal of the application for a review. After the dismissal, the course this case took was not uneventful and can be briefly stated as follows: Later, a part payment, we are told, in the sum of $10,000 was made by the tenant and accepted by the landlady. On 13 January 1998, the same day when the tenant caused to be lodged his notice of appeal to this court, he applied to a single judge for a stay. The application was heard by a single Justice of Appeal on 16 January 1998 and stay was granted until the determination of the tenant's appeal. It was granted conditionally upon, among other things, a payment to the landlord of $19,000 on or before 4.30 p.m. on 23 January 1998. After the part payment made to the landlady, apparently the tenant found himself in some difficulty. Thereupon the tenant applied to a single Justice of Appeal for the payment of the $19,000 to be deferred from 23 January 1998 to 30 January 1998. The application for further time to pay was heard and dismissed by a single Justice of Appeal on 23 January 1998. It was either shortly after the dismissal or perhaps on the following day, the balance of the outstanding arrears was paid in full by the tenant to and accepted by the landlady.

6. As the position now stands, there are no outstanding arrears of rent. There is an alleged unpaid sum as accumulated rates. But it should not be overlooked that arrears of rates were not a subject-matter of complaint before the Lands Tribunal. The order of the Presiding Officer made in the landlady's application, did not consequently include an order for payment of rates. In any case, liability is being contested by the tenant. There is also the question of to whom the rates demand notes had been sent.

7. What is the law relating to a claim for possession on the ground of non-payment of rent? In the High Court, it is governed by s. 21 F of the Supreme Court Ordinance which codifies, at least in part, the equitable jurisdiction to relieve against forfeiture. S. 21 F reads:

"(1) This section has effect where a lessor is proceeding by action in the High Court to enforce against the lessee a right of re-entry or forfeiture in respect of any land for non-payment of rent."

"(3) If -

(b) the Court at the trial is satisfied that the lessor is entitled to enforce the right of re-entry or forfeiture,

the Court shall order possession of the land to be given to the lessor at the expiration of such period, but not being less than 4 weeks from the day of the order, as the court thinks fit, unless within that period the lessee pays into court all the rent in arrear and such sum as the Court shall direct on account of the costs of the action" (Emphasis supplied).

8. What is the position with the Lands Tribunal? S. 10(1) of the Lands Tribunal Ordinance provides:

"(1) The tribunal shall have the powers which are vested in the High Court in the exercise of its civil jurisdiction in respect of the following matters -

(g) the enforcement of decisions, judgments and orders;

and, so far as it thinks fit, may follow the practice and procedure of the High Court in the exercise of its civil jurisdiction." (Emphasis supplied).

9. The Presiding Officer of the Lands Tribunal held that the provision in s. 21 F(3)(b) of the Supreme Court Ordinance for some form of relief against forfeiture was a matter of practice and procedure, which might or might not be, in the exercise of his discretion, followed as it is expressly stated at the end of s. 10(1) of the Lands Tribunal Ordinance.

10. The issue central to this appeal is, therefore, whether s. 21 F(3)(b) of the Supreme Court Ordinance confers a power or whether it merely serves to regulate the practice and procedure of the High Court. S. 10(1) of the Lands Tribunal clearly introduces like powers vested in the High Court for the Lands Tribunal. If the power so vested in the High Court under s. 21 F(3)(b) Supreme Court Ordinance and transmitted to the Lands Tribunal by s. 10(1) of the Lands Tribunal Ordinance is mandatory, which the Presiding Officer is enjoined to exercise, then it would seem that the Presiding Officer was in error in making his order for possession without providing for time to vacate and an opportunity to restore the tenant's status. But if, in fact, s. 21 F(3)(b) of the Supreme Court Ordinance is directory, then whether or not the matters therein relate to power or practice, the Presiding Officer was arguably correct in refusing to put into execution what in his view was a matter of discretion.

11. S. 21 F(3)(b) of the Supreme Court Ordinance is codification, in a set form, of equitable relief against forfeiture. It was introduced to the Ordinance as a substantive law and is not included in the Rules of the High Court as part of the practice and procedure of that court. It confers upon a tenant in default a right affecting property, which he would not otherwise enjoy at common law. It is not a rule to facilitate a fair and proper settlement of a dispute in court for, so to speak, holding the ring. S. 21 F(3)(b) would appear to be a mandatory power which obliges the court, in making an order for possession for non-payment of rent, to order possession to be returned to the lessor at the end of an appropriate period, not less than four weeks, within which the tenant may pay the arrears together with expenses for restoring his forfeited tenancy interest. That is known in legal terms as relief against forfeiture. The words "shall order" should be noted. It is a mandatory power vested in the High Court. By s. 10(1) of the Lands Tribunal Ordinance, the Lands Tribunal "shall have the powers vested in the High Court". The Lands Tribunal in turn inherits a mandatory power from s. 21 F (3)(b) of the Supreme Court Ordinance. It is a power that the High Court must exercise; as a borrowed power so must the Lands Tribunal.

12. The High Court must exercise its mandatory power to grant a form of statutory relief against forfeiture so as to enable the tenant to have his status reinstated. Our District Courts enjoy a similar power. It is inconceivable that the Lands Tribunal should be deprived of such a sensible provision. In my judgment, s. 21 F(3)(b) confers a mandatory power which the High Court is enjoined to exercise. S. 21 F(3)(b) is not directory, and in assuming the position of the High Court for s. 21 F(3)(b), the Lands Tribunal likewise must exercise it upon making an order for possession for non-payment of rent.

13. For an order for possession for non-payment of rent, the failure to comply with the requirement of s. 21 F(3)(b) of the Supreme Court Ordinance would render it invalid or vitiated. See Bennion on Statutory Interpretation 2nd Edn pp. 28 & 29. This situation has been considered in the United Kingdom and Hong Kong. See Sergeants Homes v. Glantal, [1971] WLR 1514. Mr Justice Mayo, as he then was, followed Sergeants Homes in Lau Wing Kam, Raymond v. Chan Ki Yan, an unreported case in the High Court of the then Supreme Court entitled Action No. 4914 of 1989, the judgment of which was delivered by Justice of Appeal Mayo, as he now is, on 9 February 1990.

14. Clearly, the order for possession made by the Presiding Officer of the Lands Tribunal cannot stand and it should be, in my view, set aside. All the arrears have been tendered to and accepted by the landlady. Alleged arrears of rates is a matter to be resolved. What I would describe as statutory relief against forfeiture upon payment of all arrears within a reasonable time is no longer a live issue. There is presumably an outstanding sum representing fixed costs, and I would be content to accept an undertaking from the tenant to pay to the landlady within 5 days from today, costs (if outstanding) for the proceedings before the Presiding Officer as fixed by his order dated 10 December 1997, that is to say, $1,000. I would allow the appeal, set aside the order for possession made by the Presiding Officer on 10 December 1997. This appeal calls for no further order to be made.

Chan, CJHC :

15. There are provisions in the Supreme Court Ordinance, Cap.4, (section 21F) and the District Court Ordinance, Cap.336, (section 69) which impose an obligation upon a judge when making an order for possession for non-payment of rent to provide for relief against forfeiture. It is therefore somewhat suprising that there is no similar express provision in the Lands Tribunal Ordinance, Cap.17, except for section 10 which brings the powers of the High Court to the Lands Tribunal. If the learned Presiding Officer's construction of section 10 were accepted, this would create an anomaly in that whereas the High Court Judge and the District Court Judge are obliged to grant a form of statutory relief against forfeiture provided that all arrears are paid within, say, 4 weeks, the Presiding Office in the Lands Tribunal is given a discretion. With respect, this cannot be right. I do not think the Presiding Officer has a discretion. The granting of statutory relief against forfeiture affects the substantive rights of the landlord and the tenant. It is not a matter of practice and procedure on which the Presiding Officer retains his discretion..

16. For the reasons given by Liu JA, I agree that the appeal should be allowed. I also agree with the orders proposed by his Lordship.

17. It is most unfortunate that such a tenancy dispute has ended up in the Court of Appeal. I am sure that there are a great many other landlords and tenants whose relationship is less than pleasant and sometimes can even be acrimonious. This case is certainly not the worst of its kind. It is only hoped that with a little goodwill on the part of both the landlord and tenant, disagreements such as this can be kept to a minimum if not altogether avoided.

Leong, J.A.:

18. Section 10 of the Lands Tribunal Ordinance cannot be examined in total disregard of the impact of section 21F of the Supreme Court Ordinance and section 69 of the District Court Ordinance. The Presiding Officer should have given the tenant an opportunity to pay arrears of rent and thereupon obtain relief against forfeiture in his order for possession. All of the rents have now been tendered to and accepted by the landlord. I agree that this appeal should be allowed and that the Presiding Officer's order for possession should be set aside.