CHAN YUK LIM AND ANOTHER v. LEUNG PO SHING

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J U D G M E N T

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Nazareth, J.A. (giving the judgment of the Court):

1. This is an appeal against the order of the Lands Tribunal (HH Judge Beeson, Presiding Officer) ordering the two Appellants to deliver up vacant possession of certain premises to the Respondent and to pay arrears of rent. The premises are the 6th floor, 18 Larch Street, Kowloon and the matter arose in the following way. The Appellants have occupied the premises for the last 17 years or so, having moved in within months of each other under oral monthly tenancies.

2. About July 1989, as a result of two changes of ownership of the premises, the Respondent, who is the managing director of a real estate agency, became the owner. The rent at that time was $1,420 per month. About a month or two after he purchased the premises, the Respondent decided to increase the rent. He approached the Appellants, who would not go along. So the Respondent on 1st August 1990 applied to the Commissioner for Rating and Valuation for a rent increase. The application was granted by the Commissioner who assessed an increased rent of $2,485. The two Appellants were not happy with the increase and refused to pay the additional amount. They appealed to the Lands Tribunal which, on 25th June 1991, affirmed the increased rent. The Appellants remained unhappy and continued to pay the old rent of $1,420.

3. On 11th July 1991 the Respondent filed an application in Form 13 in the Lands Tribunal for arrears of rent and an order for possession. The matter was heard by HH Judge Beeson sitting as the Presiding Officer on 30th September 1991. Both parties were unrepresented. The Presiding Officer ordered first, that possession of the premises be granted to the Respondent; second that the Appellants pay the Respondent arrears of rental "in the total sum of $7,445.00 within 14 days" and rental in the sum of $2,485 per month until vacant possession of the premises was given; and third, that the Appellants deliver up vacant possession of the premises on or before 30th November 1991.

4. The Appellants then applied for a review of the case which was heard by the Presiding Officer on18th October 1991. She affirmed the order.

5. On the same day the Appellants applied for legal aid which was granted on 7th November 1991. On the 14th November 1991 the Appellants paid the total amount of the arrears of rent to their solicitors, who in turn paid the Respondent on 22nd November 1991.

6. On 23rd January 1992 an application for relief under s 69(1) of the District Court Ordinance Cap. 336 was made to the Lands Tribunal. It came before HH Judge Downey who declined to interfere with the earlier decision but granted a stay pending the hearing of the appeal to this court, notice of which had been filed on 12th December 1991.

7. The Appellants' perfected grounds of appeal filed on 27th January 1992 are that:

"(I)    The Learned Presiding Officer erred in law in not considering whether the Lands Tribunal had jurisdiction to hear the Application for Possession:

(ii) The Learned Presiding Officer failed to consider whether the above-mentioned contractual tenancies between the Respondent and the two Appellants had been terminated.

(II) The Learned Presiding Officer erred in law in failing to consider Section 8(9) of the Lands Tribunal Ordinance Cap. 17 and Section 69(1) of the District Court Ordinance Cap. 336 when granting an order for possession while:

(i) the only ground for order for possession was for non-payment of rent; and

(ii) there might be contractual periodic tenancies between the Appellants and the Respondent."

The relief sought by the appellants was that:

"(1) The order for vacant possession be set aside;

(2) The Appellants be granted relief against forfeiture for non-payment of rent pursuant to s 8(9) of the Lands Tribunal Ordinance Cap. 17 and s 69(1) of the District Court Ordinance Cap. 336 that if within four weeks from the date of such order to be made herein the Appellants do pay into the Lands Tribunal all the rent in arrear, together with such sum as would have been payable as rent as if there had been no re-entry or forfeiture, the Appellants shall hold the premises according to the tenancy in question without any new tenancy; and

(3) The costs of the appeal be to the Appellants."

8. In summary, the submissions of Mr. Louis Chan for the Appellants were as follows. The Appellants' tenancy was a Part II tenancy under Cap. 7 and the Presiding Officer appeared to have accepted that and to have acted under s 8(7) of Cap. 17 in making her order. However, he submitted, the jurisdiction under s 8(7) is in express temps conferred only where the tenancy has been terminated. The Presiding Officer had not addressed that requirement. Had she done so she would have concluded that the tenancy was a periodic tenancy which in the particular circumstances could only be determined by notice to quit, of which there was no evidence. Therefore the Lands Tribunal had no jurisdiction to order possession under s 8(7). However, Mr. Chan conceded, that there could be jurisdiction to order forfeiture under common law for failure to pay rent, and that upon that basis, prior determination of the periodic lease was not necessary. But, he added, upon that basis jurisdiction would be under s 8(8) of Cap. 17 and, by virtue of s 8(9), the Tribunal had "same jurisdiction as the District Court" has. Under s 69(1)(b) of the District Court Ordinance, if rent has not been paid, and is not paid within such further time not less than four weeks as the Court may order, forfeiture has to be ordered. But if so paid, the tenancy continues. Implicit in that jurisdiction, Mr. Chan submits, is first, a requirement for the exercise by the Presiding Officer of the discretion to fix the period within which the defaulting tenant would have to pay; and second, the opportunity to pay within that period and avoid forfeiture. Neither was met or provided and consequently, he submitted, the order was invalid.

9. Mr. Paul K.N. Wu for the Respondent, while unable to concede that the tenancy is a Part II tenancy does not dispute that. On the contrary he invites this court to make a finding and concedes that the evidence points to the tenancy being a Part II tenancy.

10. Clearly all the evidence and considerations point to the tenancy being a Part II tenancy. Indeed, as noted, the Presiding Officer appears to have proceeded upon that basis although not specifically recording such a finding. We have no difficulty in concluding that the tenancy was a Part II tenancy.

11. There is also no record of whether the Presiding Officer considered the question of whether the tenancy was a periodic tenancy. It is not disputed before us that the tenancy must have been a periodic tenancy, and that conclusion in our view is inescapable on the evidence.

12. It is helpful at this stage to refer to the provisions of sub-sections (7), (8), and (9) of section 8 of Cap. 17:

"(7)    The Tribunal shall have jurisdiction to make orders for possession or for ejectment in relation to premises to which Part I, or tenancies or sub-tenancies to which Part II, Part IV or Part V of the Landlord and Tenant (Consolidation) Ordinance applies were the contractual period of a tenancy or sub-tenancy has been terminated by forfeiture, by surrender or by notice to quit given by the landlord to the tenant, the tenant to the landlord, the principal tenant to the sub-tenant or the sub-tenant to the principal tenant.

(8)    The Tribunal shall have jurisdiction, in any application for possession or for ejectment, under the Landlord and Tenant (Consolidation) Ordinance or otherwise, and in any application for a new tenancy under Part IV of that Ordinance, whether or not it grants any such application, to make orders for the payment of rent, mesne profits, including interim payments of rent and mesne profits, and for the payment of any other money which is due under the tenancy or sub-tenancy.

(9)    In the exercise of its jurisdiction, the Tribunal shall have the same jurisdiction to grant remedies and reliefs, equitable or legal, as the District Court."

13. Mr. Chan submits, and we accept, that under s 8(7) the tenancy, as a periodic tenancy, must be determined by a notice to quit (Ngai Sau-ying [1982] HKLR 256, 265 D,F). In response, Mr. Wu makes two submissions. First, he says in reliance upon Wong Ching-lan v Leung Fat [1987] HKDCLR 40, that the combined effect of s 52(l) and (3) of Cap. 7 relieves the Respondent from the necessity to determine in the context of forfeiture under common law as distinct from under Cap. 7. Mr. Chan did not seek to dispute that submission, preferring instead to rely upon s 69 of Cap. 336 read with s 8(9) of Cap. 17. We accordingly propose, without deciding that submission, to proceed upon the assumption that it is right.

14. Second, Mr. Wu submits in the alternative, that the Respondent's Form 13 application for possession had the effect of and can be treated as a notice to quit, effectively determining the tenancy. We reject that submission. The application did not give the Plaintiff any notice to quit; in particular, it failed to specify any date by which that was to be done. Moreover, in conferring jurisdiction, s. 8(7) of cap. 17 clearly envisaged the prior termination of the tenancy.

15. Turning then to Mr Chan's reliance on s 69(1) of Cap. 336, he submits that s 8(9) of Cap. 17 applies to the Lands Tribunal the same jurisdiction as the District Court has, in particular that provided by the mandatory provisions of s 69(1). Those provisions are in the following terms:

"69. (1)    Where a lessor is proceeding by action in the Court [District Court] (being an action in which the Court has jurisdiction) to enforce against a lessee aright of re-entry or forfeiture in respect of any land for non-payment of rent, the following provisions shall have effect -

(a)    if the lessee pays into court not less than 5 clear days before the return day ... ; [no such payment was made and this paragraph          does not apply]

(b)    if the action does not cease as aforesaid and the Court at trial, or the Registrar in the case where an application is made to enter judgment in default of defence, is satisfied that the lessor is entitled to enforce the right of re-entry or forfeiture, the Court or the Registrar shall order possession of the land to be given to the lessor at the expiration of such period, not being less than 4 weeks from the date of the order, as the Court or the Registrar thinks fit, unless within that period the lessee pays into court all the rent in arrear, together with such sum as would have been payable as rent if there had been no re-entry or forfeiture, and the costs of the action as endorsed on the writ or as may be fixed by the Court or the Registrar;

(c)    if within the period specified in the order, the lessee pays into court all the rent in arrear, together with such sum as would have been payable as rent if there had been no re-entry or forfeiture, and the costs of the action, he shall hold the land according to the lease without any new lease, but if the lessee does not, within the said period, pay into court all the rent in arrear, together with such sum as would have been payable as rent if there had been no re-entry or forfeiture, and the costs of the action, the order   shall be enforced in the prescribed manner, and so long as the order remains unreversed the lessee shall be barred from all relief."

16. Mr. Wu very properly conceded that if Mr. Chan's submission were right the appeal would succeed; but he submits that the exercise of the same jurisdiction as that of the District Court by the Lands Tribunal, is discretionary on the part of the latter, and furthermore that the Presiding Officer has exercised that jurisdiction.

17. In our view these competing submissions can readily be resolved in the context of s 69 (1), by reference to its terms. Viewed in the light of their mandatory requirements and the automatic consequences that follow, we confess to having some difficulty in understanding Mr. Wu's submission, a fortiori in accepting it. The jurisdiction of the District Court is subject to a mandatory requirement to give the tenant a period of not less than four weeks to pay, and implicitly requires the exercise of discretion to fix that period, upon which the duty to order possession, or alternatively statutory continuation of the tenancy automatically follows. That the composition, rules and procedure of the Lands Tribunal are different from those of the District Court, urged upon us by Mr. Wu, in our view is no reason to curtail the application of the jurisdiction of the District Court, that is by s 8(9) clearly bestowed and imposed upon the Lands Tribunal. In addition we are unable to agree with Mr. Wu that the Presiding Officer did exercise the discretion under s 69(1) to fix the period for payment. It follows that because of the failure to meet the mandatory requirements of s 69(1), the order of possession cannot stand and that the appeal must be allowed.

18. We see no reason why the Appellants should be denied their costs. Accordingly, we allow the appeal, set aside the Presiding Officer's order, and order nisi that the Appellants are to have their costs of the appeal, and that the Appellants' own costs are to be taxed in accordance with the Legal Aid Regulations.