NG TAM YUE v. HO HON FU ALEXANDER

LDPD 2854/2004

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Application No.: LDPD No. 2854 of 2004

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JUDGMENT

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Background

1.  The Applicant is the landlord and the Respondent the tenant of the suit premises known as Flat A, Ground Floor, 95 Po Wah Yuen, Yung Shue Wan (“the Premises”) in Lamma Island.  It was agreed between the parties that by a written Tenancy Agreement dated 1 August 2002, the premises was let by the Applicant to the Respondent for a term of 2 years commencing from 1 August 2002 to 31 July 2004 for the purpose of residence of the Respondent or his family only, at the rent of $3,500 per month, payable in advance without deduction whatsoever on the 1^st day of each and every calendar month.  There was also a “rider” (supplementary agreement) in writing signed by the parties on the method of paying the rent and deposit, which was to be paid in stages by the Respondent, at the sum of $1,000 per month from 1 September 2002 to 1 March 2003, in addition to his paying the monthly rent of $3,500.

2.  Both parties also did not dispute that the Respondent had paid and the Applicant had received the sum of $3,500 at the signing of the Tenancy Agreement, being the rent for the month of August 2002.  Also, both did not dispute that the Respondent had not, up to the last day of hearing on 28 February 2005, paid any other rent or deposit to the Applicant.

3.  The Applicant applied on 25 October 2004 to the Lands Tribunal for possession of the Premises on the ground that the Respondent had failed to pay the arrears of rent from 1 September 2002.  He sought to recover possession of the Premises and the payment of arrears of rent/mesne profits, the 2 months’ deposit in the total sum of $7,000 and the costs of proceedings.

4. The Applicant applied on 12 November 2004 for a default judgment under Rule 15 of the Lands Tribunal Ordinance (Cap. 17).  The Tribunal granted the orders as sought on 22 November 2004.  Subsequently, the Respondent filed on 29 November 2004 an interlocutory application to set aside the order.  After hearing the parties, the Tribunal decided to grant leave to the Respondent to file a Notice of Opposition out of time.

5. The Respondent did file a Notice of Opposition on 29 December 2004, setting out the following grounds:

“	(1)	Paragraph 1 of the Notice of Application Form 22 is denied.
	(2)	The Respondent avers that there was a telephone conversation between the Applicant and the Respondent in or about December 2002 wherein the Applicant requested the Respondent to abandon the Respondent’s complaint to the Police.
	(3)	The Applicant’s words were taken to mean that if the Respondent did not pursue with the complaint the Respondent may stay in the premises for such period as the Respondent would like and free of rent.  Relied on the Applicant’s words as interpreted aforesaid, the Respondent did nothing further about the said complaint.
	(4)	In the premises, the Applicant is estopped from claiming for arrears of rent from 1st September 2002 until the date hereof.
		Further, the Applicant is barred from taking vacant possession of the premises.”

6. In the 2^nd Affidavit dated 4^th January 2004 (which was filed by the Respondent in another previous Lands Tribunal case of LDPD 2854 of 2004 but produced again by the Respondent in this case, marked as Exhibit R5), the Respondent made the allegations that the Applicant had forged a “vacation of flat” document; that the Applicant had made complaint to the social welfare department causing the latter to stop paying comprehensive social security allowance (CSSA) including rental allowance to the Respondent; that the Premises had been poorly maintained and that the Applicant had interfered with the peaceful enjoyment of the Premises by himself and his wife as well as the Applicant’s previous attempt of unlawful harassment and eviction of his wife from the Premises.

The Applicant’s case

7. The Applicant gave evidence himself on 7 January 2005.  He recalled that the Respondent went to view the Premises after seeing his advertisement in a Chinese newspaper.  Both parties agreed the terms of the tenancy for the Premises following which the Respondent and he went to the Applicant’s residence, also in Lamma Island, to sign the tenancy agreement immediately, and with the keys and possession given to the Respondent at the same time after receiving one month’s rent of $3,500 from the Respondent.  It was also agreed by the parties that the Respondent would in future go to the Premises to collect the rent, which would be paid in cash.  The Respondent assured him that the Respondent, being a recipient of CSSA, would pay the rent on time.  On and after 1 September 2002, the Applicant went to the Premises to collect the rent for the month of September 2002 but the Respondent did not pay any rent and did not even allow him to enter into the Premises.  He denied having contacting the Respondent and agreeing that the latter did not have to pay rent but could stay for as long as he wished.  Furthermore, the Respondent applied for an injunction in the Lands Tribunal (reference LDPD 2376 of 2002) but Deputy Judge Wong at the end rejected the Respondent’s application.

8. The Applicant added that subsequently, in year 2003, he went to the Premises about 5 to 6 times asking the Respondent for payment of rent but the latter still refused to pay.

9. In the hearing on 7 February 2005 and afterwards, the Applicant was represented by counsel, Mr. Victor Luk.  On the ground of promissory estoppel raised by the Respondent in his Notice of Opposition (Form 7), Mr. Luk submitted that the Respondent’s allegation of estoppel was totally groundless as the Applicant denied that he had ever made any such promise to the Respondent at all.  Mr. Luk added, “even assuming the purported oral agreement did exist, which was denied by the Applicant, there was no moving of consideration from the Respondent to the Applicant as the alleged promise was only forbearance to complaint but not forbearance to sue.  Alternatively, there was no evidence that the Respondent had altered his position to his detriment at all.”  As for the other allegations raised by the Respondent in his 2^nd affidavit dated 4^th January 2004, Mr. Luk submitted that the Respondent had failed to discharge his burden of proof on any of these allegations, which were all made up by the Respondent as excuses for not paying rent and deposit.

The Respondent’s case

10. The Respondent gave evidence himself.  The essence of the Respondent’s evidence was that on 17 December 2002, the Applicant gave him a telephone call at the then Respondent’s office of Messrs. Patrick Wu & Co, solicitors.  The Applicant during the call requested the Respondent to abandon the latter’s complaint to the Police that the Respondent had produced forged documents which were discovered by the Respondent during the proceedings of the said case of LDPD 2376 of 2002.  When being questioned by the Tribunal as to what were the wordings used by the Applicant to indicate his promise, the Respondent said that the Applicant assured him over the phone, in Cantonese, “ 世侄，你點話點好。” (This meaning I agree with whatever you said.)  Because of these wordings, the Respondent did not continue to take action regarding his complaint to the Police on the understanding that the Applicant would be estopped from getting any rent of the suit Premises from the Respondent for as long a period as the Respondent wished to stay.  In support of this statement, the Respondent said that it was clear that the Applicant did not pursue any action for the recovery of arrears of rent until the present application, 25 October 2004.

11. The Respondent said that during 2002 and afterwards, the Applicant had not come to the Premises to collect rent in person and the Applicant had also never, by himself or through any lawyer, sent him any letter in writing to demand the rent.

12. As to the issue of promissory estoppel, the Respondent asked if the principle of the Central London Property Trust Ltd. V. High Trees House Ltd.[1947] K.B. 130 should apply in this case, in his favour.

13. The Respondent also gave evidence that his CSSA had been abruptly cancelled as a result of a complaint, supported by forged document, made by the Applicant to the Social Welfare Department.  For this reason, he gave notice to the Tribunal that he would summon a staff of social welfare department to give evidence.

14. On 28 February 2005, the Respondent called for the evidence of Ms. Leung Lai Sim, Senior Welfare Assistant, his case officer in the Central, Western & Islands Social Security Field Unit of the Social Welfare Department.  Ms. Leung gave evidence that she recognized the Respondent who had been an applicant and recipient of comprehensive social security assistance including rental allowance assistance from about September 2002.  According to Ms. Leung, the Respondent applied for and obtained the said assistance during different intervals of time during the period.  Sometimes, the Respondent was not eligible for the assistance but then after some months, he applied again and was eligible at that time due to the changes in personal and family circumstances.  Ms. Leung also recognized the Applicant, the landlord of the Premises as she said it was the Applicant who had contacted her back in September 2002 complaining that the Respondent had not paid him rent from September 2002.  She took up the Applicant’s complain and carried out an investigation as part of her normal work in the department.  She said that as a result of that investigation, the department stopped the payments to the Respondent.   The Respondent succeeded in an appeal to the appeal board, reversing the previous decision.  She confirmed that as a result of this the Respondent had been given cash assistance of some 6,000 dollars being the rental allowance for 3 months.  However, subsequently, it came to her office’s notice again that the Respondent had in fact not paid any rent for the leased Premises from 1 September 2002 onwards.  Therefore, her office has been seeking a refund of the over-payments from the Respondent.  However, she confirmed that before the hearing, there was still an outstanding sum due from the Respondent. 

15. Ms. Leung agreed that the Applicant had shown her a “vacation of flat” document purportedly signed by the Respondent, a copy of which document was shown in Exhibit R5. 

Tribunal’s findings

16. Although the Respondent was granted leave to file Notice of Opposition out of time, he only raised the ground of “promissory estoppel” as his reason for staying in the Premises but not paying any rent since 1^st September 2005.  He did not include in the Notice of Opposition any of the allegations he stated in his 2^nd Affidavit dated 4^th January 2004 he filed by him in the previous case of LDPD 2854 of 2004.  Therefore, I do not find it necessary to consider these grounds in details.  In any event, I agree with counsel for the Applicant that the Respondent did not in the hearing discharge his burden of proof for any of these allegations.  Hence, I dismiss all the grounds stated in the said Affidavit.

17. On the ground of promissory estoppel, I find and agree with counsel for the Applicant that the Applicant did not give the promise as suggested by the Respondent back in December 2002.  On balance of probabilities, I do not find that the oral evidence of the Respondent could be trusted.  From the evidence of both parties, which was not disputed, the Respondent did not pay any rent of the Premises from 1^st September 2002.  Yet, he still applied for CSSA (including rent allowance) from the Social Welfare Department.  He even succeeded in his appeal and was given the allowance of 3 months’ rent.  However, he did not voluntarily notify the Department and refund the sum.  In fact, according to the evidence of Ms. Leung, the Respondent still owed the Treasury money that he should not be entitled in the first place.  Moreover, the Respondent admitted during cross-examination that before leasing the Premises, he had not long ago been evicted by the Court’s bailiff from another premises in Lamma Island after being ordered by the Court to leave for non-payment of rent.  All in all, I do not find the Respondent to be a credible witness. 

18. The Respondent also said that the Applicant never asked him to pay rent since December 2002.  Under the lease, the Respondent had to pay rent that was due.  There was no need for a landlord to serve a written notice to a tenant demanding payment of rent every month.  It was also most unlikely that the Applicant as a landlord would be prepared to waive receiving rents for as long as the Respondent wished to stay.  I do not believe this piece of evidence by the Respondent, on the balance of probabilities. 

19. The Respondent admitted that he had signed on the original copy of the said “vacation of flat” document after being asked by the Applicant to pay the rent in arrears from 1^st September 2002.  But the Respondent stated that the Applicant had forged the said “vacation of flat” document since during the hearing of the previous case of LDPD2376 of 2002, he discovered that there were two different versions of the said document, both with his same signature but bearing 2 different dates.  On this evidence alone, I find that there is not sufficient evidence that someone has forged the document.  I gave an example to the parties that maybe after signing of the document by the Respondent with the date left empty, someone has made copies of this document but inadvertently put down different dates on these copies.  When being cross-examined, the Respondent admitted that the Police had never charged anyone on the Respondent’s allegation that someone had forged the said “vacation of flat” document.  In any event, whether someone has forged a document will not deprive the Applicant’s right to collect the rent, failing which he of course could apply to this Tribunal for recovery of possession and arrears of rent/mesne profits.

20. On the ground of promissory estoppel raised by the Respondent, I do not agree that the principle of the decision of the High Trees case could apply here.  In that case, the promissory estoppel (or equitable estoppel) was based on a promise not conduct (as for the common law estoppel).  However, as I have decided before in this Judgment on the finding of facts, there was no promise at all as alleged by the Respondent, the decision of the High Trees case cannot be applied.  Other than this reason based on my finding of facts; there are more important reasons that the doctrine of promissory estoppel cannot be applied in this case.  I will now set out the reasons below.

21. In Snell’s Equity by John MsGhee (30^th Edition, Sweet & Maxwell 2000), the rule of the doctrine of promissory estoppel was stated in paragraph 39-08 as,

“Where by his words or conduct one party to a transaction freely makes to the other an unambiguous promise or assurance which is intended to affect the legal relations between them (whether contractual or otherwise), and, before it is withdrawn, the other party acts upon it, altering his position to its detriment, the party making the promise or assurance will not be permitted to act inconsistently with it….”  (underline added)

22. Similarly, in Chitty on Contracts, Vol. 1 (Sweet & Maxwell, 1999), it was said in paragraph 3-090 that,

“It must be ‘inequitable’ to go back on the promise.  This requirement cannot be defined with anything approaching precision, but the basic idea is that the promisee must have acted in reliance on the promise in one of the ways just described, so that he cannot be restored to the position in which he was before he took such action.  If the promisee can be restored to that position, it will not be inequitable for the promisor to go back on the promise….” (underline added)

23. Moreover, in paragraph 3-091 of Chitty on Contracts, Vol. 1, it was stated that,

“The equitable doctrine, like the common law doctrine of waiver, generally does not extinguish, but only suspends rights.  The landlord in Hughes v. Metropolitan Ry. (1877) 2 App.Cas. 439 was not permanently debarred from enforcing the covenant to repair.  He could have enforced it by giving reasonable notice to the tenant requiring him to repair.  The reason for the general rule is that equity confers a discretion on the court to give such remedy as is just and equitable in all the circumstances; and in cases such as Huges v. Metropolitan Ry.  It would be neither equitable nor in accordance with the intention of the parties to treat the promisor’s rights as having been wholly extinguished.”  (underline added)

24. According to the Respondent, the Applicant gave him the promise in December 2002 that he could stay for as long as he wished without his paying the rent further for the period from 1 September 2002 to the Applicant.  In return, the Respondent agreed not to complain to the Police about an alleged wrongdoing of the Applicant.  Even if the Respondent acted upon the alleged promise and did not complain further to the Police, I cannot see how this act (or inaction) of the Respondent had altered the position of the Respondent to his detriment.  It is plain that he Respondent would not suffer whether the Respondent complained or not complained to the Police.  For this reason, the principle of promissory estoppel cannot apply as suggested by the Respondent.

25. Next, even if there was the verbal promise by the Applicant as alleged by the Respondent and the Respondent acted (or refrained from acting) in reliance on that promise by the Applicant, there was nothing to prevent the Respondent to complain to the Police anytime after he found that the Applicant did not keep the alleged promise.  Since the Respondent as the promissee can be restored to the position before the alleged promise, it will not be inequitable for the Applicant as the promisor to go back on the alleged promise.  For this reason, the principle of promissory estoppel cannot apply as well.

26. Finally, it was well known that the equitable doctrine, like the common law doctrine of waiver, generally does not extinguish, but only suspends rights.  Therefore, the principle of promissory estoppel as suggested by the Respondent could not permanently deprive the Applicant’s rights to forfeit the lease on the ground of non-payment of rent by the Respondent since 1 September 2002, over 2 years before the date of lodging this application by the Applicant in the Tribunal.

Conclusion

27. In light of the above findings, the Tribunal decides that all the grounds raised by the Respondent fail and that the Applicant shall after the relief period granted to him by virtue of section 21 F of the High Court Ordinance (Cap. 4) recover vacant possession of the suit premise from the Respondent.  As the rent/mesne profits outstanding dated from 1^st September 2002, I decide that a relief period of 7 days for the Respondent is appropriate.

Costs

28. Both parties submitted that in principle, the general rule that costs follow the event should apply.  Mr. Luk, counsel for the Applicant submitted that costs to the Applicant should be on “indemnity basis” for the dates of hearing of 7 and 27 February, 2005, instead of the normal “party and party basis”.  He argued that after he took up the case in the hearing on 7 February 2005, it was very obvious that the Respondent adopted a delaying tactics.  The Respondent did not prepare for the examination and cross-examination of witnesses.  He wasted a lot time in finding the relevant document and asked the Tribunal’s indulgence in adjourning the hearing so that he could prepare his case.  On the other hand, the Respondent in submission objected saying that there was no basis that the costs should be assessed on an indemnity basis.

29. After reviewing the conduct of the parties during the hearing of this case, I do not agree with Mr. Luk that costs of this case should be assessed on “indemnity basis”.  There was insufficient evidence that the Respondent had deliberately wasting the Tribunal’s time during the hearing.  The Respondent might not have the same skill of cross-examination as a lawyer, but I do not agree that for this reason alone, the Tribunal should punish him by awarding costs to the Applicant on “indemnity basis.”  Therefore, I order costs to be awarded to the Applicant on the normal “party and party basis.”

Orders

1.	The Orders dated 22 November, 2004 of the Tribunal be set aside;
2.	The Applicant shall after the 12th March, 2005 (“hereinafter called “the Payment Deadline”) recover vacant possession of the suit premise from the Respondent;
3.	The Respondent do pay the Applicant arrears of rent/mesne profits from the 1st day of September, 2002 to the date of delivery up of vacant possession at the rate of $3,500 per month;
4.	The Respondent do pay the Applicant the deposit of $7,000;
5.	The Respondent do pay the Applicant the costs of this Application on party and party basis at District Court scale, to be taxed if not agreed with certificate for counsel;
6.	If the Respondent should pay to the Tribunal all the arrears of rent/mesne profits stated in paragraph 3 above (including all arrears of rent/mesne profits due on or before the date of payment) on or before the Payment Deadline, the Respondent shall continue to hold the suite premises according to the original lease without any new lease, the order for recovery of vacant possession of the suit premises in paragraph 2 above will also cease to have effect;
(This Tribunal may extend the Payment Deadline under section 21F of the High Court Ordinance, Cap. 4)
(In default of the Respondent paying into the Tribunal the sum in paragraphs 3 in accordance with paragraph 6 on or before the Payment Deadline (or such date as may be extended by this Tribunal), the orders in paragraphs 2 to 5 may be enforced, and so long as this order remains unreversed, the Respondent shall be barred by the said section 21F from all relief.)
7.	Payment out to the Applicant after payment of the same into the Tribunal by the Respondent.
(Payments pursuant to this order should be made in cash, by cashier orders issued by the banks in Hong Kong or by cheques drawn by firms of solicitors in Hong Kong.  This Tribunal does not accept any other mode of payment pursuant to this order.