PHIPNIC INVESTMENT LTD v. MATSUMOTO HEAVY INDUSTRIES (INTERNATIONAL) LTD

LDPE 257/2003

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Part V Possession Application No. LDPE 257 of 2003

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D E C I S I O N

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1. The originating application made on 3.3.2003 was heard on 9.4.2003, 2.5.2003 and 5.5.2003 with decision given on 19.5.2003. The Tribunal ruled in favour of the Applicant. The Respondent was ordered to pay back the arrears and costs of application within 28 days. If the order is complied with, the relief from forfeiture given under s. 21F of the High Court Ordinance, Chapter 4 applies.

2. The Respondent is not satisfied with the decision, in particular, paragraph 11 of the judgment dated 19.5.2003, which ruled that the Tribunal had no jurisdiction under s.8 of the Lands Tribunal Ordinance, Chapter 17 to administer the Respondent's claims against the Applicant and setting off of claims against the rent in arrear. The Respondent, through Fan & Fan Solicitors, requested on 13.6.2003 for a review of the decision and at the same time, stay of execution of the Order for possession dated 19.5.2003, which is necessary if the decision on the review cannot be finalized by close of play on the hearing day. Costs in favour of the Respondent were also requested.

Grounds of Application

3. The Respondent considered the Tribunal erred in its decision on 19.5.2003. In support of the review application, the solicitor acting for the Respondent cited the following cases of precedents/opinion in law book: -

(1) Plotio Development [HK] Limited v Ralph Sprenger [LDPD 963 of 2002]

(2) Circus Capital [Asia] Limited v Panoramic Properties Limited [LDMP 3 of 2003]

(3) Page 112, Hong Kong Tenancy Law, Malcolm Merry, 1997

(4) British Anzani v. International Marins [1979] 2 ALL ER 1063.

4. In the case of Plotio Development [HK] Limited v Ralph Sprenger [LDPD 963 of 2002], the diminution in enjoyment during the period pending repair of the ceiling seepage was assessed by the Tribunal with the assessed sum allowed to be set off from the rent. The solicitor drew analogy to this case and considered that the Tribunal should allow similarly the Respondent's claim on the cost of re-locating the Spraying Chamber, the cost of repairing the damages to certain motor-vehicles and cost for some other minor items be set off from the arrears.

5. In the case of Circus Capital [Asia] Limited v Panoramic Properties Limited [LDMP 3 of 2003], H.H. Judge CHOW agreed that under s. 8(9) of the Lands Tribunal Ordinance, Chapter 17, the Tribunal is empowed to grant remedies and relief, equitable and legal, as the High Court. H.H. Judge CHOW considered that such power to grant remedies etc. should be exercised if the Tribunal had exercised its jurisdiction under s. 8(1) to 8(8). Since the Applicant's application dated 3.3.2003 is within one of the above Tribunal jurisdictions, the solicitor accordingly considered that s. 8(9) should apply and therefore, the Respondent's claims should be set-off from the rent as a remedy/relief to the Respondent.

6. The solicitor' above view was said to be strengthened by Malcolm Merry's opinion in Page 112 of the Hong Kong Tenancy Law, which is reproduced hereunder: -

" ...... Can I pay for the repairs myself and deduct the cost from future rent? The answer in law, as it so often is, is complicate. If it is clear that the landlord is responsible for the repairs and that the amount to be spent is reasonable and certain, it is safe to do so...."

7. In the case of British Anzani v. International Marins [1979] 2 ALL ER 1063, it was inter alia so written in the judgment that "at common law there could be what amounted to a set-off against a claim for rent if the tenant paid money on repair which the landlord had failed in breach of covenant to carry out or if the tenant paid money at the landlord's request to fulfil the latter's obligations...."

8. With all these decisions and opinion, the solicitor came to the conclusion that he saw no reason why the Tribunal did not allow the set-off.

The Applicant's Views

9. The Applicant held a different view and accepted the Tribunal's decision dated 19.5.2003 in full. The Applicant was not represented by any lawyer.

The Tribunal's Analysis

10. Firstly, the Tribunal does not consider that the solicitor has made a thorough study of Plotio Development [HK] Limited v Ralph Sprenger [LDPP 963 of 2002]. Part of the case background which is of importance, had not been made known in the review hearing. The Tribunal did not in that case, take the initiative to carry out assessment for the two parties concerned. On the contrary, the assessment was carried out because the Applicants had agreement to such set-off. The Applicants accepted that the Respondent could set off from the rent for the damages arising from the Applicants' breach of the tenancy conditions (paragraph 21 of Member LO's judgment dated 18.11.2002 refers). The two parties in fact, failed to reach consensus only on the quantum. Based on the Applicant's agreement, the Tribunal exercised its function and determined the amount for setting off. In the present case, there was no such prior agreement from the Applicant.

11. Secondly, the Tribunal does not agree with the solicitor's interpretation of H.H. Judge CHOW's analysis/conclusion in respect of s. 8(9) of the Lands Tribunal Ordinance, Chapter 17, in the case of Circus Capital [Asia] Limited v Panoramic Properties Limited [LDMP 3 of 2003]. H.H. Judge CHOW only advised that he could only invoke the power under s. 8(9) to rule on the validity of the Form CR101 served when the Tribunal was in the exercise of its jurisdiction under s. 8(1) to 8(8). H.H. Judge CHOW did not advise on the nature of remedies and reliefs under s. 8(9). The remedies under the subject application should be forfeiture of tenancy and order (by the Tribunal) for possession etc. given to the landlord (i.e. the Applicant). Such remedies are not meant for the tenant (i.e. the Respondent). Naturally, the relief under the subject application is meant for the tenant. It is the relief to be given in order to relieve the tenant from forfeiture (of tenancy) and/or what the Tribunal, e.g. possession, has ordered. Therefore, the Tribunal does not find it appropriate to follow the solicitor's view and allow the Respondent's claim to be set-off from the rent in arrears.

12. As regards Malcolm Merry's view and the decision in the case of British Anzani v. International Marins [1979] 2 ALL ER 1063, the solicitor has failed to note that as distinct from other law courts, the Tribunal's jurisdiction originates from the Lands Tribunal Ordinance, Chapter 17. Even though the said view and decision were to be perfectly correct, the Tribunal is bounded by the aforesaid Ordinance and cannot allow the proposed set-off in its Order(s) dated 19.5.2003.

13. In conclusion, the application for review should be dismissed.

14. Orders

(1) The orders made on 19.5.2003 should be up-held; and

(2) The Respondent to pay the Applicant costs of this application, which if not agreed, should be taxed at District Court Scale.