CHAN KWONG HO v. YEUNG CHI KEUNG, ERIC

[English Translation — 英譯本]
LDPD 1932/2012

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Application No. LDPD 1932 of 2012

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JUDGMENT

1.  The present case is replete with twists and turns in the course of its development.

2.  The case was commenced by the Applicant (Mr. Chan) in the capacity of a landlord, who claimed that by a tenancy agreement in the form of a “verbal agreement”, the suit property was leased to the Respondent (Mr. Yeung), and that Mr. Yeung “failed to pay the rent from 1 May 2012 onwards”.  Consequently, Mr. Chan applied to the Tribunal for repossession of the suit property and also claimed arrears of rent and mense profit from Mr. Yeung.

3.  Mr. Yeung did not file a Notice of Opposition, and on 29 August 2012 the Tribunal entered judgment in favour of Mr. Chan.

4.  Subsequently, Mr. Yeung applied to have the judgment set aside.   On 20 September 2012 I allowed the application, holding that the judgment should be set aside as it was irregular for the following reasons: (1) Mr. Yeung did not receive a Notice of Application; (2) the amount awarded was excessive; and (3) the judgment was obtained by deception.  I further held that, even if the judgment was regular, the grounds of objection raised by Mr. Yeung at that time — namely the denial that Mr. Chan was his landlord, the denial that there was a verbal tenancy agreement between them, and the objection to the outstanding amount — had a real prospect of success.

5. This is what I said at that time:

“8. … Mr. Yeung denies that Mr. Chan was his landlord. His evidence is that he had rented the suit property from one Chan Chun Sau (transliteration) since May 2006 and had signed three written tenancy agreements. A copy of the most recent tenancy agreement dated 5 June 2010 is adduced as evidence and marked Exhibit R1. Exhibit R1 states that the landlord and the tenant were Chan Chun Sau and Mr. Yeung respectively and the term of tenancy was from 1 June 2010 to 31 May 2012, with a monthly rent of $6,570.

…

12. … Mr. Chan admits that Chan Chun Sau is his mother and that the suit property is owned by Wing Hing Lee Investment Company Limited. At first the property was rented by her mother who then sub-let it to others. About four years ago, Mr. Chan started to rent the property. A copy of the latest tenancy agreement is adduced as evidence and marked Exhibit A1. Mr. Chan’s case is that, although he had become the principal tenant of the suit property in place of Chan Chun Sau when he and Mr. Yeung entered into the tenancy agreement R1, he did not inform Mr. Yeung and continued to use the form of the tenancy agreements signed previously between Chan Chun Sau and Mr. Yeung. As a result, in the tenancy agreement R1Chan Chun Sau was still named the landlord. He admits that Mr. Yeung had overpaid about $200 each month and such overpayments total $4,600, … he thought that the new rent that he put forward to Mr. Yeung was reasonable.

…

18. … Mr. Chan admits that he entered into the tenancy agreement R1 in the name of Chan Chun Sau with Mr. Yeung, with the term of tenancy to expire on 31 May 2012. He explains that he mistakenly thought that the suit property would continue to be leased to Mr. Yeung by verbal agreement after expiry of the term of tenancy and therefore he wrote the words “verbal agreement” on the Notice of Application. I do not accept Mr. Chan’s explanation. Mr. Chan’s claims in this case include a claim for arrears of rent for the month of May 2012, i.e. the rent for the last month of the term of tenancy under the tenancy agreement R1, and it is not something subsequent to the expiration of the express term of tenancy. In my view, Mr. Chan did not disclose the written tenancy agreement R1 because he was hoping to avoid paying stamp duty, and so he put down “verbal agreement” in an attempt to deceive the Tribunal.

19. Being an estate agent, Mr. Chan could not possibly have been unaware of legislative provisions requiring a landlord, as a contracting party, to pay stamp duty payable in respect of a tenancy agreement, and preventing a tenancy agreement not duly stamped from being given in evidence: see sections 4 and 15 of, and Schedule 1 to, the Stamp Duty Ordinance.

…

21. In any event, I find that Mr. Yeung’s grounds of objection have a real prospect of success.  Although Mr. Yeung admits in relation to the second issue that he has not paid the rent for the month of May, there is evidence that he has overpaid $4,600 in rent, thereby rendering  a set-off necessary. In any case, the person entitled to recover the arrears of rent from him should be his landlord, who, according to Exhibit R1, is Chan Chun Sau, not Mr. Chan. At this stage I do not have to make a final ruling on the second issue, and all relevant matters will be dealt with at trial.  However, I find that the grounds of objection raised by Mr. Yeung — namely the denial that Mr. Chan was his landlord, the denial that there was a verbal tenancy agreement between them, and the objection to the outstanding amount — are supported by evidence and have a real prospect of success.  Therefore, even if the judgment were regular, I would still set it aside and allow this case to proceed to trial.”

6.  After the judgment was set aside, Mr. Chan amended the Notice of Application by deleting the allegation that there was a “verbal agreement” between him and Mr. Yeung and amending his allegation against Mr. Yeung to “failed to pay the rent since 1 June 2012”.

7.  Thereafter, Mr. Yeung filed a Notice of Objection, raising the following 7 grounds of objection:

(1) “[The landlord stated in] the original contract is not Chan  Kwong Ho”;

(2) “Chan Kwong Ho failed to give any notice”;

(3) “There was a previous agreement that the extent of rent increase would be equal to the amount of rent increase imposed by the landlord (upon signing the tenancy agreement) (the original landlord’s tenancy agreement)”;

(4) “There was further overpayment before that, and so further compensation is payable therefor”;

(5) “Chan Kwong Ho is dishonest”;

(6) “The tenancy is to continue all the way in accordance with the original agreement”;

(7) “Amendment of this summons of accusation is objected to”.

8.  I will discuss Mr. Yeung’s grounds of objection one by one.

Discussion

9.  I will first deal with the 7^th ground of objection.  The Tribunal allowed Mr. Chan to amend the Notice of Application on 1 November 2012 and set the case down for trial.  As Mr. Chan has been allowed to amend the Notice of Application and the amendments have been made, it serves no purpose for Mr. Yeung to retell the past now.  The 7^th ground of objection fails.

10.  I will now deal with the 1^st and 5^th grounds of objection.

11.  According to the amended Notice of Application and the evidence given by Mr. Chan at trial, after expiration of the tenancy agreement between Mr. Yeung and Chan Chun Sau, Mr. Yeung refused to move out.  He (Mr. Chan) and Mr. Yeung negotiated a new tenancy but failed to reach an agreement.  In other words, Mr. Chan was applying to the Tribunal in the capacity of the lessee of the suit property, seeking eviction of the unauthorized occupant (i.e. Mr. Yeung) and compensation for loss and damage arising from Mr. Yeung’s occupation of the property.

12.  Mr. Chan’s case at the moment is consistent with the case he presented when Mr. Yeung applied to have the judgment set aside.

13.  On the other hand, at trial Mr. Yeung turned his back on what he said previously.  He suggested that:

(1) Mr. Chan had been his principal tenant throughout.  In an attempt to dupe him out of money, Mr. Chan, using the name of Chan Chun Sau, entered into the three tenancy agreements with him in respect of the suit property.

(2) Mr. Chan had orally promised to him that: “The amount of rent increase I impose will be the same as the amount of rent increase imposed by the landlord; and the tenancy can continue all the way except when the landlord repossesses the property (the contract expires)”.

(3) In respect of each of the three previous tenancy agreements, the amount of rent increase imposed by Mr. Chan on Mr. Yeung exceeded that imposed by the landlord on Mr. Chan.  For this reason, Mr. Yeung has been duped out of $20,000 to $30,000 by Mr. Chan.

(4) Mr. Chan also duped him into paying a refuse collection fee of $70 per month.

(5) In respect of the last tenancy agreement, Mr. Chan had even overcharged Mr. Yeung approximately $200 per month.

(6) The rent due and owed by Mr. Yeung since 1 May 2012 can be deducted from the deposit paid under the last tenancy agreement and from compensation payable by Mr. Chan.

(7) Mr. Yeung can no longer find anywhere in the rental market with a rent as low as that of the suit property, and his business will be affected if he is required to move out of the suit property.  But for the fact that he was duped by Mr. Chan, he could have purchased a property when the prices were low or rented another property at an even lower rent.  He estimates that he has incurred loss exceeding $100,000.

(8) Mr. Chan has to keep his oral promise by allowing Mr. Yeung to rent the suit property until it is repossessed by the landlord, and should also compensate Mr. Yeung for his loss.  At trial, he indicated on the one hand that he was willing to rent the suit premises from Mr. Chan at market rent, but on the other hand maintained that Mr. Chan had to compensate him for his loss and demanded a set-off with Mr. Chan.  In the end, the parties failed to reach a tenancy agreement over the suit property.

14.  In cross-examination, Mr. Chan admitted that he had, on behalf of Chan Chun Sau, indicated to Mr. Yeung that “[t]he amount of rent increase [I] impose will be the same as the amount of rent increase imposed by the landlord”.  However, he denied having made that statement in his own capacity or having indicated that Mr. Yeung “can continue all the way except when the landlord repossesses the property (the contract expires)”.

15.  The latest version of events presented by Mr. Yeung go against the evidence that he gave in relation to his application to have the judgment set aside.  His evidence is inconsistent in that he previously denied that a tenancy agreement existed between him and Mr. Chan and was adamant that his landlord was Chan Chun Sau, but now he says that Mr. Chan was his landlord.  I do not accept Mr. Yeung’s evidence at trial.

16.  As Mr. Chan’s claim has nothing to do with the tenancy agreement between Mr. Yeung and Chan Chun Sau, the 1^st ground of objection of Mr. Yeung fails.

17.  I did previously hold that Mr. Chan had obtained the judgment by deception.  However, that finding was based on the facts and evidence adduced by the parties at that time.  Mr. Chan’s current case is not in conflict with my ruling of 20 September 2012, and it is not open to me to reject the evidence now adduced by him solely because Mr. Chan have deceived the Tribunal, particularly in light of the fact that such evidence is consistent with the case he presented when Mr. Yeung applied to have the judgment set aside.

18.  Mr. Yeung also points out that Mr. Chan had given evidence that he (Mr. Yeung) had in fact failed to pay rent since February 2012, and this is inconsistent with the allegation in the not-yet-amended Notice of Application that rent has been due and unpaid since 1 May 2012 as well as the allegation in the amended Notice of Application that rent has been due and unpaid since 1 June 2012.  In my view, the discrepancies in the evidence of Mr. Chan in this regard are not such as to warrant a wholesale rejection of his evidence.  Furthermore, the matters to be determined in this case have nothing to do with whether or not rent was due from Mr. Yeung before 1 June 2012.

19.  Mr. Yeung’s 5^th ground of objection fails.

20.  The 3^rd and 4^th grounds of objection can be dealt with together.

21.  I accept the evidence of Mr. Chan that he had, on behalf of Chan Chun Sau, told Mr. Yeung that “[t]he amount of rent increase imposed on Mr. Yeung will be the same as the amount of rent increase imposed by the landlord”. If Mr. Yeung thinks that the rent set out in the previous three tenancy agreements in respect of the suit property is in breach of any agreement (note: this is not a matter to be determined in the present case and I make no ruling thereon), he can pursue it against Chan Chun Sau.  The 3^rd ground of objection fails.

22.  Similarly, if Mr. Yeung thinks that he has overpaid his ex-landlord in rent and refuse collection fee or that he should be compensated by his ex-landlord for his loss, he should seek recovery from his ex-landlord (i.e. Chan Chun Sau) and not from Mr. Chan.  Mr. Yeung’s 4^th ground of objection also fails.

23.  In the absence of a tenancy agreement between Mr. Chan and Mr. Yeung, there was no agreement between them that Mr. Chan had to give Mr. Yeung prior notice before he could repossess the suit property.  Mr. Yeung’s 2^nd ground of objection also fails.

24.  Finally, as the term of Mr. Yeung’s tenancy in respect of the suit property has expired, Mr. Yeung is not entitled to insist unilaterally that “the tenancy is to continue all the way in accordance with the original agreement”.  Even if Mr. Chan had on behalf of Chan Chun Sau indicated to Mr. Yeung that “the tenancy can continue all the way except when the landlord repossesses the property (the contract expires)” (note: I have already refused to accept the evidence given by Mr. Yeung at trial), this would be a matter between Mr. Yeung and Chan Chun Sau and would not concern Mr. Chan.  The 6^th ground of objection fails.

25.  All the grounds of objection raised by Mr. Yeung fail.

26.  In the present case, Mr. Chan, being the lessee of the suit property, is entitled to possess the property.  Mr. Yeung’s unauthorized occupation of the suit property since the termination of the tenancy agreement is wholly unreasonable; he should move out.

27.  The practice of the Lands Tribunal had all along been that it would only hear possession cases of the landlord-and-tenant type because, prior to the latest amendment thereto, section 8(6) of the Lands Tribunal Ordinance provided that:

“The Tribunal shall have jurisdiction to make orders for possession under the Landlord and Tenant (Consolidation) Ordinance (Cap 7), including an order for possession to take effect on termination of the current tenancy where it does not make an order for the grant of a new tenancy under section 119G of that Ordinance.”

For this reason, the general statements in the Tribunal’s forms applicable to possession cases (e.g. Form 22) catered only for landlord-and-tenant cases, and the Tribunal’s procedures did not include such specific procedures for recovery of possession as provided in Order 88 (Mortgage Actions) or Order 113 (Summary Proceedings for Possession of Land) of the Rules of the High Court or of the Rules of the District Court.

28.  Recently, section 8(6) was amended by the Civil Justice (Miscellaneous Amendments) Ordinance (Ordinance No. 3 of 2008) to read as follows:

“The Tribunal shall have jurisdiction to make an order for the recovery of possession of any premises or for the ejectment of a tenant from those premises, whether under the Landlord and Tenant (Consolidation) Ordinance (Cap 7) or otherwise.” (emphasis added)

Nevertheless, the Tribunal has by and large been continuing to use the existing forms (see Rule 68 of the Lands Tribunal Rules and the directions issued by the President of the Lands Tribunal for possession cases under the common law, LTPD: Tenancy No. 1/2007), and no other specific procedures for recovery of possession have been included.

29.  As the Court of Appeal pointed out in The Incorporated Owners ofMountain View Mansion v. Heart Cuisine and Others [2012] 4 HKLRD 628, the jurisdiction of the Lands Tribunal under section 8(6) is not confined to the landlord-and-tenant type of cases (see paras. 27-29 of the judgment).

30.  In the present case, in which both parties having been acting in person, the action started off as a landlord-and-tenant case and then developed into what it now is, namely a case in which a lessee is seeking to repossess property from an unauthorized occupant.  In general, the Lands Tribunal will consider transferring non-landlord-and-tenant type of cases to other courts so that they can be dealt with by way of more appropriate procedures available in the other courts.  However, given that the present case is approaching a conclusion, and bearing in mind the underlying objectives of increasing the cost-effectiveness of the practice and procedure of the court, ensuring that a case is dealt with as expeditiously as is reasonably practicable and promoting a sense of procedural economy, I have decided against transferring the present case to other courts.  This decision has been made in light of the exceptional circumstances of the present case, and other litigants should not regard the present case as an authority and insist on having non-landlord-and-tenant possession applications heard by the Lands Tribunal.

31.  Under section 8(9) of Lands Tribunal Ordinance, the Tribunal shall in the exercise of its jurisdiction have the same jurisdiction to grant remedies and reliefs, equitable or legal, as that of the Court of First Instance.  Now that the present case is within the jurisdiction of the Tribunal, the Tribunal shall have ancillary power to grant relief to Mr. Chan to compensate him for his loss arising from the occupation of the suit property by Mr. Yeung.  In general, the courts adopt the market rental value of a property for the purpose of calculating usual damages in respect of wrongful occupation or use of the property (see McGregor on Damages, 18^th ed. (2009), para. 34-044).  As requested by Mr. Chan, I adopt the figure of $6,570 per month, being the rent payable under Mr. Yeung’s last tenancy agreement in respect of the suit property, for the purpose of assessing damages.

Conclusion

32.  For the above reasons, I rule that the Respondent shall deliver vacant possession of the suit property, namely 1/F, 363 Shanghai Street, Yau Ma Tei, Kowloon, to the Applicant.  In addition, the Respondent shall pay damages in respect of the period from 1 June 2012 until delivery of vacant possession of the suit property, at a rate of $6,570 per month.

33.  There being no application by the Applicant for costs, I make no order as to costs.

Translated by the Judgment Translation Unit of the Judiciary and vetted by Mr. Edmund Cham, Solicitor.