RAMADOUR INDUSTRIES LTD v. BULLEN CHRISTIAN ANTHONY

LDPD 1912/2015

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO LDPD 1912 OF 2015

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DECISION ON REVIEW

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1.  The applicant filed a 2^nd application against the respondent for recovery of possession of the suit premises because of non-payment of rent. At the conclusion of the hearing on 15 October 2015, I ordered the respondent to (1) deliver vacant possession of the suit premises to the applicant but subject to a stay of execution until 29 October 2015; and (2) pay the applicant arrears of rent / mesne profits, rates and Government rent, and costs but no 2^nd relief against forfeiture was granted.

2.  This is the respondent’s application to review my above judgment. He submitted that the tribunal should grant him a 2^nd relief against forfeiture in the present proceedings.  He also submitted that there was a waiver of forfeiture for non-payment of rent.

3.  It is not in dispute that (1) a relief against forfeiture for non-payment of rent had been granted once by the tribunal on 25 June 2015 in the previous action no LDPD1047 of 2015; and (2) the respondent had not paid rent since 1 July 2015 when the present application was filed on 5 September 2015.

Judgment dated 15 October 2015

4.  On the condition that the respondent admitted non-payment of rent, the parties argued over mainly grant of a 2^nd relief at the hearing.

5.  The respondent said that he had cash flow problems but he maintained regular contact with the applicant and had offered / tendered rent or part of rent to the applicant on various occasions before the order in the previous action and in the course of the present proceedings too.

6.  The respondent submitted that even if there was no 2^nd relief under section 21F of the High Court Ordinance, the tribunal should grant him an equitable relief.  He relied on §E1/21F/3 of the Hong Kong Civil Procedure 2016 that “In Far East Land Holdings Ltd v Empire Asian Ltd [2011] 4 HKLRD 472, the court held that it retains equitable jurisdiction to grant relief against forfeiture for non-payment of rent even if s.21F does not apply.  The court in exercising its discretion, which under s.21F or the equitable jurisdiction pays no regard to previous defaults”. 

7.  The respondent invited the tribunal to look into the conduct of the parties, especially that he had offered / tendered rent or part of rent to the applicant on various occasions.  The respondent further submitted that in accordance with Gill v Lewis [1956] 2 QB 1, the courts in all but exceptional cases would grant equitable relief against forfeiture and late payment of rent on a previous occasion would not be considered exceptional. The applicant objected to the grant of a 2^nd relief and said that the respondent did not have any good cause.

8.  I agree that the tribunal retains equitable jurisdiction to grant relief against forfeiture for non-payment of rent even if s.21F does not apply.  However, no matter “good grounds” under equitable jurisdiction as quoted by the respondent, or “good cause” in s.21F of the High Court Ordinance that is similar, there should have good reasons at all for grant of further relief.

9.  I consider that tight cash flow of the respondent is not a good ground / good cause for grant of further relief as otherwise this would defeat the purpose of signing contract.  As noted from the evidence of the parties, the respondent’s late payment of rent was not due to mistake but financial difficulties.

10.  Although the respondent had made offers to settle the outstanding rent before and at the call-over hearing, I consider that it is not a good ground / good cause because otherwise the contract system would not be equitable to the parties, if the tenant could get away from making payment on time by just making an offer for payment only. In fact, although the respondent had made offers for payment, the respondent had not made any actual payment to the applicant and / or the tribunal unless and until there were court orders.

11.  Since the respondent had not shown any good ground / good cause, I refused to grant a 2^nd relief against forfeiture.

Respondent’s Grounds for Review

12.  The respondent filed an application for review on 11 November 2015.  The respondent submitted 9 grounds for grant of an equitable relief against forfeiture and said that the tribunal erred in not applying Far East Holdings Ltd v Empire Asian Ltd.  The respondent had also submitted orally at the hearing that there was a waiver of forfeiture for non-payment of rent.  The applicant opposed to the review and grant of a 2^nd relief in the present action, and disagreed that there was a waiver of forfeiture.

13.  The respondent repeated most of his arguments in the previous hearings.  Nevertheless, the respondent who was not legally represented raised some new grounds, new evidence and / or new interpretation of the evidence in the review.  In summary, his 9 grounds for review are as follows: -

(1) While the respondent had carried out major repairs to the suit premises, the applicant demonstrated flexibility by its tolerance of and acquiescence to the respondent’s late payment of rent;

(2) While the respondent had carried out extensive repairs to the suit premises and expected that he could stay at the suit premises until lease expiry, the applicant would be unjustly enriched if the lease is early terminated;

(3) The respondent had tendered all the rent and offered to pay all costs one week before the hearing in the previous proceedings;

(4) The respondent had tendered all the rent and costs before the hearing / judgment and the applicant had accepted the proposal, but the applicant mistakenly quoted an amount that was higher than the amount claimed in the action;

(5) In the past hearings including that of the previous proceedings, the applicant could not positively confirm that there were any prejudice to the applicant if there was relief against forfeiture;

(6) The applicant had admitted that the rent outstanding was not excessive;

(7) Although the applicant had billed for rates and Government rent lately after 3 years of tenancy, the respondent had already paid all the sums due;

(8) There was a tacit agreement or quasi agreement between the applicant and the respondent about rent and repairs to the house that the respondent was given some leeway on the timing of rental payments provided that he maintained the suit premises at his cost; and

(9) All the past due rent including that for October 2015 and rates had been paid and accepted by the applicant.

Discussions: Grounds (1), (2) and (8)

14.  These are new grounds that have not been discussed in the previous hearings. The respondent also submitted some emails between the parties to support his assertion.  The applicant opposed to the respondent’s submissions of new grounds and new evidence in review.  Nevertheless, the applicant agreed that in accordance with section 11A(4) of the Lands Tribunal Ordinance, the tribunal may in any review hear and receive any evidence it thinks fit for the purpose of determining the issue between the parties.

15.  Whatever, I accept the applicant’s submissions that the respondent has failed to summit any proof of the acquiescence and / or the quasi-agreement and acceptable argument on the legitimacy of his expectation, and the enrichment to the applicant if any would have been caused by the respondent’s default in payments only.  Even if some indulgence were shown by the applicant towards the respondent in the late payment of rent, I agree that it constituted no waiver or acquiescence of the respondent’s breach.  In fact, the applicant had repeatedly recourse to the Small Claims Tribunal and Lands Tribunal for orders to recover the rent in arrears and other sums due under the tenancy.  I consider that even if these new grounds are accepted for the review, they are not the good cause for grant of a 2^nd relief.

Discussions: Grounds (3), (4), (7) and (9)

16.  Grounds (3) and (4) had been considered in my judgment dated 15 October 2015 but were rejected as the good cause for grant of a 2^nd relief, and I do not repeat the reasons here.  Nevertheless, the respondent further supplemented in the review hearing that the tribunal had accepted his offer for payment which was raised by him at the call-over hearing on 2 October 2015 in addition to his email / offer to the applicant on 29 September 2015.  He also said that the tribunal acting as the agent of the applicant had accepted his offer.  He had then paid on 5 October 2015 three months’ rent from 1 July 2015 to 30 September 2015, and therefore a 2^nd relief should be granted.

17.  I consider that the respondent had misunderstood my orders of 2 October 2015 for interim payment payable by the respondent.  Since it was not in dispute that there were arrears of rent / mesne profits and the case had to be adjourned for further call-over because the respondent would argue over the grant of a 2^nd relief, I then decided that it is fair and equitable for the respondent to pay the applicant at least parts of the rent / mesne profits for his past occupation of the suit premises before the further call-over hearing.  This was nothing related to the offer made by the respondent.  The tribunal had not accepted his offer and the tribunal is not the agent of the applicant too.  In fact, no matter whether a 2^nd relief was granted, the respondent should pay rent / mesne profits for his occupation of the suit premises.

18.  The payments in Grounds (7) and (9) were made by the respondent after the judgment dated 15 October 2015.  These should not be considered in the review of the judgment. Anyhow, making payment that is due is a duty not a credit.

Discussions: Grounds (5) & (6)

19.  Although Mr Cheng, counsel for the applicant in the call-over hearing, in his skeleton submissions had mentioned that “…… bearing in mind that the outstanding rent in concern covers for a 3-month period only”, this statement was a comment on the then financial position of the respondent. The applicant had not admitted that the rent outstanding was not excessive.  Anyhow, even if the rent outstanding was not excessive, it is the background and one of the considerations only and it alone is not a good cause for grant of a 2^nd relief.

20.  On the other hand, even if the applicant had not submitted any prejudice when a relief against forfeiture was considered by the tribunal, I agree with Ms Sum, counsel for the applicant in the review hearing, that the burden is not on the applicant to show prejudice but on the respondent to show that he has a good cause in asking for a 2^nd relief. 

Discussions: Waiver of Forfeiture

21.  The respondent submitted that there was a waiver of forfeiture when the applicant demanded for rent and / or accepted his offer for payment in the emails dated 29 September 2015 and at the call-over hearing on 2 October 2015. 

22.  No matter whether there was demand for and / or acceptance of rent by the applicant on 29 September 2015 and / or 2 October 2015, I consider that there could be no waiver after the bringing of proceedings for forfeiture, whether by acceptance of rent or otherwise.  In fact, the two incidents as submitted by the respondent to prove waiver of forfeiture happened after the application on 5 September 2015. 

23.  I consider that an equivocal claim for possession operates as a final election to determine the lease.  Accordingly, if the landlord brings proceedings for forfeiture, and afterwards accepts rent, there is no waiver.  See Woodfall on Landlord and Tenant, Volume 1, para 17.100.  This principle was held by the High Court in the case Mixwell Properties Limited v Lee Wan Yuen HCA 12483 of 1996, 20 February 1997.  Hence, there is no need to discuss and decide whether there was demand for and / or acceptance of rent after the application.

Discussions: Application of Far East Holdings Ltd v Empire Asian Ltd

24.  The respondent submitted that the High Court had granted a 2^nd relief against forfeiture in Far East Holdings Ltd, and therefore the tribunal is bound to grant him a 2^nd relief in the present proceedings.  He also submitted that the obiter of this judgment “Tenant should be well advised that, having applied twice for forfeiture, further indulgence from the court was unlikely were it to default again” applies in the consideration for grant of a 3^rd relief and onwards only.

25.  In fact, a 2^nd relief was granted in Far East Holdings Ltd because it was found that the tenant had shown good cause, whether under s.21F of the High Court Ordinance or the equitable jurisdiction.  There was no decision that a 2^nd relief is mandatory, which the tribunal should follow. 

Discussions: Equitable Relief and/or Relief under s.21F(1A) of the High Court Ordinance

26.  In the review hearing, the respondent submitted repeatedly that the courts will in all but exceptional cases grant equitable relief (Gill v Lewis) and there is no exceptional case in the present proceedings. 

27.  This issue had not been discussed in details in the previous hearings and I had not given the reasons for my judgment in this connection.  In dealing with this review application, I have the opportunity to revisit it.

28.  The applicant submitted that Gill v Lewis was decided under section 46 of the Supreme Court of Judicature (Consolidation) Act 1925, an English Act which does not have an equivalent provision as s.21F (1A) of the High Court Ordinance in Hong Kong.  Although it was held in Gill that the courts will in all but exceptional cases grant equitable relief against forfeiture, I agree with the applicant that the operation of s.21F (1A) in Hong Kong has shifted the burden (in an application for a 2^nd relief against forfeiture) from landlord in proving an exceptional case for not granting a 2^nd relief to the tenant in proving a “good cause” to justify the granting of such.  Even though the tribunal retains equitable jurisdiction, I consider that s.21F (1A) of the High Court Ordinance is applicable in the present proceedings that the tribunal should follow.

Conclusion

29.  The respondent had not shown any good cause for grant of a 2^nd relief against forfeiture.  He could not establish that a 2^nd relief is mandatory and / or there was a waiver of forfeiture too.  In the circumstances, the orders of the tribunal dated 15 October 2015 should be confirmed in the review.

Costs

30.  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 the review 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.

31.  If the parties cannot agree on the costs of the review, 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.