WONG YIP v. COMMISSIONER OF RATING & VALUATION AND ANOTHER

Landlord and Tenant. Distinction between business and domestic premises. Appeal to the Court of Appeal from a determination of the Commissioner of Rating and Valuation under section 3(2) of the Landlord and Tenant (Consolidation) Ordinance(Cap. 7).

The Commissioner found. the user of certain premises to be a business user for the purposes of Part I of the Ordinance. The Lands Tribunal found to the contrary. The landlord appealed to the Court of Appeal.

Chan Yuk-tong & Ors. v. Chu Sun-biu 1960 DCLR 43 and Chan Kwok-kwan v. Chan Cheong-wai 1980 HKLR 450 considered.

IN THE COURT OF APPEAL

BETWEEN

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JUDGMENT

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Kempster, J.A.:

1. This is the judgment of the Court on an appeal from a decision of the Lands Tribunal, in the person of Mr. Phillips, given on the 11th of April of this year to the effect that the. user of the ground floor of No. 32 Stanley Main Street, Stanley Village, was primarily domestic. That decision was itself given on appeal by the tenant from a determination of the Commissioner of Rating &Valuation to the contrary. Following the unsuccessful outcome of his application for review the landlord of the premises appeals to this Court for the reinstatement of the Commissioner's earlier determination. The Commissioner, who was also a party to the proceedings in the Lands Tribunal, supports neither side and has taken no part in the argument.

2. It has been important throughout the hearing for us to bear in mind that our jurisdiction to entertain an appeal in the circumstances is limited, by section 43 of the Landlord & Tenant (Consolidation) Ordinance and by section 11(2) of the Lands Tribunal Ordinance, to righting errors of law.

3. Taking the grounds of appeal in order a question arises on the reliance by the tribunal as a statement of law upon a passage in the judgment of Judge Huggins (as he then was) at p. 48 of Chan Yuk Tong v. Chu Sun Biu ⁽¹⁾ which reads:

"Even if it can be urged that the business and domestic users are equally balanced I think the proper view is that the domestic user is the primary user and that the business is in the nature of a 'cottage industry'."

Those words, used after the judge had found as a matter of fact that the primary user was one for human habitation, would appear to have been obiter dicta. Nonetheless it has been held by this Court in Chan Kwok Kwan v. Chan Cheong Wai⁽²⁾ at p. 455 that Judge Huggins was making a finding of fact and not of law. While naturally honouring what this Court has already ruled, we would emphasise that it was not suggested that had the proposition been one of law it was wrong. It is the general policy of the Landlord & Tenant (Consolidation) Ordinance, as observed this morning to Mr. Denis Yu, who appears for the appellant, to protect tenants in the occupation of their homes. In our view, therefore, where a balance between domestic and non-domestic user is shown the scales may properly be tilted in favour of the domestic side.

4. The second ground of appeal relates to the findings of the tribunal as to the user of particular parts of the premises. With the consent or at the instance of the parties Mr. Phillips used as a guide section 51(3)(c) which is to be found in a different part of the Ordinance; a part calculated to assist the tribunal in determining whether premises were or are being used as a dwelling and having relevance to the prima facie evidence contained in a certificate of primary user. We make no finding as to the propriety of so doing in the present context but in the circumstances will act on the footing that he properly directed himself. Section 51(3)(c) reads:

"- the following may be taken into account - normal' additional uses of premises consistent with the domestic nature of a tenancy or sub-tenancy having regard to the following -

We have found it difficult to imagine what really are normal additional uses of premises consistent with their domestic nature' other than what Judge Huggins described as cottage industries". If a housewife takes into her home mending or works at her sewing machine for reward such user may be thought consistent with the domestic nature of the tenancy. Likewise if she bottles fruit or makes jam to supplement the housekeeping. Totally inconsistent, for example, would be the influx of a number of workers not living on the premises in order to produce chemicals, garments, metal products or radios and electronic parts on a large scale. Now if and on the footing that Mr. Phillips was right to take section 51(3)(c) as a guideline it was important that he should consider not merely the active use by the family of different parts of the premises but also what we might call the passive use of space. Mr. Denis Yu is, we think, right when he points out that in the "Reasons for Decision" the tribunal has apparently failed to give weight to the user involved in storing goods such as cartons of soft drinks for the purposes of the trade in refreshments, cigarettes and tobacco being carried on in the front of the premises. On the other hand he properly considered the user all round the clock in relation to the shop itself, to cubicle A and to the kitchen; in all of which goods were stored

5. The third ground of appeal was amended at the outset of the hearing by leave and raises the question as to the time or times when the Lands Tribunal should examine the user. The first provision to which we should advert is section 3(1)(i) of the Ordinance which reads:

"This Part (i.e. Part 1) shall not apply to any premises which are, or since 4 May 1979 have been, business premises."

In order to resolve that issue sub-section 2 provides:

"In the event of any doubt or dispute as to whether any premises are excepted from the application of this Part by any of the provisions of subsection (1), the same may be determined by the Commissioner on the application of a landlord or tenant."

Both parties to this appeal, namely the landlord and the tenant, sought the determination of the Commissioner. He sent officers to inspect the premises and on the basis of their report made the determination to which we have already referred.

6. Section 32(aa) pursuant to which the landlord appeals to us next falls for consideration:

"The Tribunal on the application of landlord or tenant may hear any appeal from any decision, determination or assessment of the Commissioner made under this Part."

Though the report relied upon by the Commissioner was made on 16th November 1984 his determination is dated 12th December following and to the effect and only to the effect that the premises are excepted from the application of Part I of the Ordinance. That can only mean, having regard to the nature of the applications made to him, that he found that at the date of his determination the premises were or between 4th May 1979 and that date had. been, business premises meaning, again by section 2:

Accordingly it was open to the Lands Tribunal to consider evidence of user between those two dates which fixed the parameters for its inquiry. Any evidence which bore on user during that period would have been material and certainly if he was satisfied that conditions had not changed between 12th December 1984 and 9th March 1985, when he himself paid a visit to the premises, it would have been perfectly proper for Mr. Phillips to make that visit in order fully to understand and appreciate the relevant evidence. Further, evidence relating to the period we have just mentioned demonstrating a user for business purposes for a day or a week or a little longer would not stamp premises otherwise to be regarded as domestic with a business nature. They would not become business premises; though in every case it must be a matter of degree. We make this observation in case the conditions observed by the Commissioner's officers on a particular date on a particular inspection were shown to be wholly untypical.

7. While we reject the contention that Mr. Phillips should not have visited the premises at all it is not apparent to us that he relied upon his personal observations only insofar as they reflected user during the material period. He cannot be criticised for not telling us because the point was not canvassed before him.

8. In all the circumstances we feel that the decision of the Lands Tribunal must be open to question and in allowing the appeal make an order that the matter be remitted to Mr. Phillips to hold a fresh hearing in the light of the guidance we have sought to give. It may or may not have the same result as the last and may or may not be shortened by sensible agreement between the parties as to the evidence to be heard, read or accepted as common ground.

(1)    1960 DCLR 43

(2)    1980 HKLR 450