RAMADOUR INDUSTRIES LTD v. BULLEN CHRISTIAN ANTHONY

LDPD 1912/2015

APPLICATION NO LDPD 1912 OF 2015

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REASONS FOR DECISION
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1.  This is an interlocutory application filed by the respondent for (1) leave to appeal the judgment made on 15 October 2015 and the review decision made on 21 December 2015; and (2) stay of execution of the Writ of Possession.

2.  The decision on review was handed down on 21 December 2015.  I do not repeat backgrounds of the case and reasons for the review decision here.

3.  At the conclusion of the hearing on 5 January 2016, I ordered (1) the interlocutory application filed by the respondent on 28 December 2015 be dismissed; and (2) the decision on costs be reserved, with reasons to be handed down in writing.  I now do so and decide on costs too.

Grounds of Appeal

4.  In support of the interlocutory application for leave to appeal, the respondent set out 9 erroneous points of law in the review decision, which are summarized as follows: -

(1) Failed to apply the Far East Land Holdings Ltd v Empire Asian Ltd [2011] 4 HKLRD 472 (CFI) and Mui Lai Sze v Hau Chi Fai [2005] 2 HKC 367 (CA) when a 2^nd relief against forfeiture was considered;

(2) Erred in finding there is a significant or material legal distinction between statutory relief against forfeiture and equitable relief against forfeiture;

(3) Erred in finding the payment of rent by the respondent on 5 October 2015 and other dates as not being good cause;

(4) Failed to consider the legal significance of the applicant’s acts in affirming the lease;

(5) Erred in shifting the burden on the respondent to show good cause;

(6) Erred in concluding the respondent’s financial difficulties has a bearing in the consideration of granting the relief against forfeiture;

(7) Erred in applying law of waiver / acquiescence and failed to investigate those incidents of acceptance of late rent payment by the applicant;

(8) Erred in applying Gill v Lewis [1956] 2 QB 1; and

(9) Failed to consider that forfeiture is the security for rent.

5.  The respondent also submitted that an appeal might allow justice because forfeiture would shorten the lease term and was unfair.  The respondent alleged that the applicant had agreed the respondent to make repairs that were capital in nature and the repairs were not contemplated by the parties when the tenancy was renewed in 2014.

Grounds for Stay of Execution

6.  The respondent submitted that the tribunal should grant stay of execution of the Writ of Possession because (i) his appeal has reasonable prospect of success; (ii) it will save costs and time if he finally succeeds in the appeal that a 2^nd relief should be granted, (iii) he has already settled the rent and government rent / rates as ordered by the tribunal; (iv) his new accommodation do not have electricity supply at present and therefore is not ready for moving in; (v) the applicant should have no prejudice even if the respondent does not move out; and (vi) he has tried to negotiate a smooth handover in July 2016 but in vain.

The Applicant’s Position

7.  The applicant objected to the grant of (i) leave to appeal because the respondent has no reasonable prospects of success and the respondent’s ground about justice is neither an area of law that needs to be clarified nor a point involving public interest; and (ii) stay of execution of the Writ of Possession because “the successful party is not to be deprived of the fruits of his success” as set out in Wenden Engineering Service Co Ltd v Lee Shing Yue Construction Co Ltd, HCCT 30/199 (decided on 17 July 2002 by Ma J (as he then was) (CFI) at §5) .

8.  Mr Cheng, counsel for the applicant, submitted that the appeal on the original judgment on 15 October 2015 is improper.  He relied on the case CLP Power Hong Kong Ltd v Commissioner of Rating and Valuation [2013] 4 HKLRD 535 (LT) and said that it is meaningless to consider an application for leave to appeal against the original judgment since the review decision has confirmed the original judgment in full and superseded it completely.

9.  Mr Cheng further submitted that the respondent has no reasonable prospect of success because of the following reasons: -

(1) Ground 1 – the tribunal has correctly pointed out that Far East has not ruled that a 2^nd relief against forfeiture is mandatory.  Further, Mui Lai Sze is a case concerning a 1^st relief against forfeiture only.

(2) Ground 2 – the tribunal has fully considered both the statutory and equitable jurisdiction in granting relief against forfeiture and found that the respondent has failed to demonstrate good cause or good ground as required in either statutory or equitable jurisdiction. 

Comments

I agree that in equitable jurisdiction forfeiture is the security for rent and the courts will in all but exceptional cases grant equitable relief.  However, the operation of s.21F of High Court Ordinance in Hong Kong has shifted the burden from landlord in proving exceptional case for not granting a 2^nd relief to the tenant in proving a “good cause” to justify the granting of such (§28 of the review decision).

I consider that statutory jurisdiction prevails over equitable jurisdiction when a 2^nd relief against forfeiture is considered in the present case. The statutory law on the subject is explicit.

(3) Ground 3 – the tribunal has rightly rejected the said payments as good cause because they were paid unless and until there were court orders or after the judgment.

(4) Ground 4 – the tribunal has correctly concluded that there was no waiver or acquiescence and the applicant has in fact repeatedly recourse to the Small Claims Tribunal and Lands Tribunal for relief.

Comments

In any event, I consider that non-payment of rent is a continuing breach.  If a tenant fails to pay rent again after a waiver (if any), this will be a fresh breach and the right to forfeit will arise again.

(5) Ground 5 – same as Ground 2 above.

(6) Ground 6 – financial difficulties should not be considered as a good cause in law or else this would defeat the purpose of signing a contract.  Further, it would be absurd for the respondent to argue that the tribunal should not consider his financial difficulties in the application for relief against forfeiture when the respondent has actually relied on such ground in his Notice of Opposition.

Comments

In fact, I have not ruled that the respondent’s financial difficulties have a bearing in the consideration of granting a relief but have just ruled that tight cash flow of the respondent is not a good cause for grant of relief against forfeiture.

(7) Ground 7 – the tribunal has rightly summarized the law of waiver in §23 of the review decision.  In fact, the tribunal has already considered the various incidents as submitted by the respondent.

Comments

My comments on Ground 4 above also apply here.

(8) Ground 8 – Same as Ground 2 above.  Further, Gil v Lewis was applied in Far East at §18 to support the notion that the court pays no regard to previous default by the tenant when a 2^nd relief against forfeiture is considered.

(9) Ground 9 – same as Ground 2 above.  Further, the court’s indulgence is not unlimited and that is the reason for the incorporation of s.21F(1A) of High Court Ordinance requiring the tenant to show good cause when a 2^nd relief or further relief against forfeiture is sought.

10.  About the interest of justice as submitted by the respondent, I accept the applicant’s submissions that the respondent’s ground is neither an area of law that needs to be clarified nor a point involving public interest.  I have decided on this in §15 of the review decision.  I consider that the enrichment to the applicant if any would have been caused by the respondent’s default in payments only. The respondent’s ground is far from satisfying that there is a reason in the interest of justice.

Conclusion

11.  According to section 11(2) of the Lands Tribunal Ordinance (“the Ordinance”), 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. 

12.  Section 11AA(6) of the Ordinance stipulates 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.

13.  Subject to my clarifications and comments, I accept the submissions of the applicant above. I also agree that the review decision has already superseded the original judgment on 15 October 2015.  Since the appeals have neither a reasonable prospect of success nor any reason in the interests of justice, I refused to grant leave to appeal the review decision.

Stay of execution

14.  On the condition that the interlocutory application for leave to appeal was refused, I also dismissed the interlocutory application for stay of execution of the Writ of Possession. 

15.  I agree with Mr Cheng that “the successful party is not to be deprived of the fruits of his success”.  The applicant filed the present application for recovery of possession on 5 September 2015 and the possession order was granted by the tribunal on 15 October 2015 more than 2 months ago, after which the respondent applied for review and then leave to appeal.  I consider that the respondent should have prepared for vacation.  A stay of execution until 29 October 2015 has been granted once by the tribunal on 15 October 2015 allowing the respondent to prepare for relocation. It is not reasonable to further stay the execution because of the respondent’s personal reasons.

Costs

16.  Similar to the review decision, there is no reason why costs should not follow the event.  I therefore grant a costs order nisi that the respondent do pay the applicant costs of this interlocutory application on the District Court scale with certificate for counsel.  If there is no application to vary the order nisi within the next 14 days, it shall become absolute.

17.  If the parties cannot agree on the costs, the applicant shall lodge the skeleton bill of costs within 21 days from today and the respondent shall lodge the statement of opposition if any within the next 14 days.  The tribunal shall then assess the costs summarily on paper.