CENTALINE PROPERTY AGENCY LTD v. SUNTON LTD AND ANOTHER

HCSA 31/2019

[2020] HKCFI 1189

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

SMALL CLAIMS TRIBUNAL APPEAL NO 31 OF 2019

(ON APPEAL FROM SMALL CLAIMS TRIBUNAL

CLAIM NO 45005 OF 2018)

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J U D G M E N T

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Language of the hearing

1.  Despite the fact that both the trial before the Small Claims Tribunal and the leave application before me were conducted in Chinese, counsel for both sides have prepared their written submissions in English.  They also requested to use English when making their oral submissions.  I see no in‑principle objection to that.  The appeal was as a result conducted in English.  I now give this Decision in English.

Leave to appeal

2.  On 26 November 2019, I handed down my Decision (the “Leave Decision”) granting the defendants (“D1”, “D2” and collectively “Ds”) leave to appeal on one of the proposed grounds.  That ground, as put forward by Ds in their Form 9 and as summarized by me in the Leave Decision, is whether “暫委審裁官誤閱D2證人陳述書內容，以致就被告人有否違反臨時租約及業主是否有權停止履行合約作出錯誤判斷 ”.

Relevant facts

3.  I have set out the factual background of the disputes between the parties in the Leave Decision.  I refer to them.  I highlight the salient facts as follows.

4.  The claimant (“C”) is an estate agent.  In respect of the transaction relevant to this appeal, C’s representative was Peter Ho.

5.  On 31 December 2012, 4 parties entered into a provisional tenancy agreement (“PTA”) for the lease of a property (the “Property”). Those 4 parties were (1) Wang Xun (“Wang”) being the landlord, (2) D1 as the tenant; (3) D2, being the director and shareholder of D1, as the guarantor, and (4) C as the estate agent.

6.  The PTA contained the following relevant terms:

“ 3a. The terms of the Tenancy shall be two years commencing from 10/02/2013 …

3b. The Tenant shall be entitled to a rent free period of 9 days from 01/02/2013 to 09/02/2013 …

…

5. The monthly rent for the said premises shall be HK$40,000 …

6. Rental deposit shall be HK$80,000.

7. Part of the rental deposit HK$40,000 shall be paid by the Tenant to the Landlord as deposit upon signing this Agreement.

8. Upon signing of the formal tenancy agreement the Tenant shall pay:

(a) The balance of rental deposit HK$40,000.

(b) The rent for the first month HK$40,000.

…

12. If for any reasons either the Landlord or the Tenant fails to complete the deal in the manner herein contained, the defaulting party shall compensate at once the Agent HK$40,000 as liquidated damages …”

7.  Upon execution of the PTA, Ds paid deposit in the sum of HK$40,000.  The balance of HK$40,000 (the “Balance”) remained payable.

8.  Ultimately, the parties failed to agree upon a formal tenancy agreement (“FTA”), and none had therefore been signed.

9.  The Deputy Adjudicator ruled that although no FTA had been agreed upon, the PTA remained binding upon the parties. 

10.  According to Clause 8(a) of the PTA, the time for the payment of the Balance was set to be the date when the FTA was entered into.  The PTA otherwise contained no provision as to when that Balance should be paid in the case of the parties failing to agree upon a FTA.  In the absence of any express term in that regard, the Deputy Adjudicator read into the PTA an implied term to the effect that the Balance had to be paid within a reasonable time.

11.  As to what that reasonable time should be, the Deputy Adjudicator ruled that it should be before the delivery of the keys to the Property by the Landlord.

12.  The Deputy Adjudicator then considered the evidence.  He formed the view that D2 had insisted that the Landlord should deliver the keys first before Ds would pay the Balance.  According to §§81 to 85 of the Reasons for Decision (“Reasons for Decision”) handed down by the Deputy Adjudicator:

「 81. 本席認為租約抵押金的目的是給予業主就交樓後租客對業主做成的損失作保障，因此本席認為合理的時間是於業主交出鎖匙之前租客需要支付$40000的按金餘額。

82. 但第二被告人的證人供詞有以下陳述：

『 大約晚上八時，我透過Peter向業主提出要求她執行臨約並把鎖匙交出。Peter曾經問我怎樣處理那張八萬元的支票，我反問作為專業地產經紀的他，臨約有沒有指定要即時交出八萬元，他表示沒有，他也沒有給予其他意見。於是我清晰指示Peter：等佢交鎖匙先講。』

83. 雖然第二被告人於2019年6月10日的聆訊中指被告人一方從來都不沒有認為不用支付按金，亦認為餘下$40000按金餘額是可以與業主商討什麼時候支付，但本席認為從他上述的供詞內容顯示他於2013年2月1日晚上給予何維進的指示是待業主交出鎖匙後才商討什麼時候繳付該筆款項，即『等佢交鎖匙先講』。

84. 本席認為這違反了他交付餘下$40000按金的責任，因為正如上文陳述，因此本席認為合理的履行責任時間是於業主交出鎖匙之前租客需要支付$40000的按金，而非業主交出鎖匙之後。但本席認為被告人或第二被告人並沒有這樣做。

85. 在上述事實背景上，本席認為業主是有理據不交出物業控制權而被告人待業主交出鎖匙後才商討支付按金餘額的行為是違反臨時租約。」(Emphasis added)

13.  The Deputy Adjudicator hence ruled that D1 was the defaulting party.  He allowed C’s claim against D1 as the tenant and D2 as the guarantor for payment of the Balance, together with interest and costs.

14.  However, the Deputy Adjudicator’s recitation of D2’s witness statement appears to contain an error.  D2 in his witness statement did not say “…於是我清晰指示Peter：等佢交鎖匙先講 ”.  His actual words were “…於是我清晰指示Peter：等佢肯交鎖匙先講 ”. The word “肯” was missing.

15.  Translated into English, the two versions are:

     (a)     the version recited by the Deputy Adjudicator:

“… therefore I gave Peter clear instructions: wait till she delivers the keys before talking”; and

     (b)     D2’s actual words in his witness statement:

“… therefore I gave Peter clear instructions: wait till she is willing to deliver the keys before talking”.

16.  The ground I granted leave on is therefore whether the Deputy Adjudicator has misread D2’s witness statement, thereby erred in ruling that Ds were the defaulting parties.

An additional ground of failure to investigate

17.  Mr Chow appears for Ds in this appeal.  In addition to the ground upon which I have granted Ds leave to appeal, Mr Chow in his written submissions puts forward a new ground[1], to that effect that the Deputy Adjudicator has failed to make proper inquiry into various matters (which Mr Chow summarises at §9 of his written submissions).  He submits that the Deputy Adjudicator has failed to discharge his statutory duty to investigate. 

18.  I have granted Ds leave to proceed on only one ground.  It does not cover this new ground.  I agree with Ms Leung, counsel for C, that Ds should not be permitted to be heard on this new ground.

What constitutes “a question of law”

19.  Section 28(1) of the Small Claims Tribunal Ordinance (the “Ordinance”) provides that:

“ (1) Any party who is aggrieved by a decision of the tribunal—

(a) on any ground involving a question of law alone; or

(b) on the ground that the claim was outside the jurisdiction of the tribunal,

may apply to the Court of First Instance for leave to appeal and the Court of First Instance may grant such leave if it thinks fit.”

20.  The leave in the present appeal was granted pursuant to the question of law limb under s 28(1)(a).

21.  What appears to be a question or error of fact may in fact be a question or error of law.  As Bokhary PJ explained in Kwong Mile Services Ltd v Commissioner of Inland Revenue (2004) 7 HKCFAR 275 (in the context of appeals from the Board of Review (Inland Revenue Ordinance) on questions of law, but equally applicable to appeals from the Small Claims Tribunal):

“ 31. Appeals from the Board of Review to the courts lie only on questions of law. But intervention in an appeal on law only is not confined to instances in which it is apparent on the face of the record that the determination appealed against resulted from a specifically identifiable error of law. Just because there is no appeal on facts, it does not mean that the appellate court is precluded from detecting and correcting errors of law buried beneath conclusions ostensibly of fact. Sometimes, as Lord Radcliffe put it in Edwards v Bairstow at p.36, ‘the true and only reasonable conclusion contradicts’ the determination appealed against. If so, the appellate court will assume that the determination resulted from an error of law. And that opens the way for the appellate court to intervene on the ground of an error of law.

32. Mr John Griffiths SC for the Commissioner placed reliance on — although not solely on — what Lord Millett said in his speech in Runa Begum v. Tower Hamlets LBC [2003] 2 AC 430 at p.462G-H. There Lord Millett summarised the Edwards v Bairstow basis of appellate intervention in this way:

‘ A decision may be quashed if it is based on a finding of fact or inference from the facts which is perverse or irrational; or there was no evidence to support it; or it was made by reference to irrelevant factors or without regard to relevant factors. It is not necessary to identify a specific error of law; if the decision cannot be supported the court will infer that the decision‑making authority misunderstood or overlooked relevant evidence or misdirected itself in law.’

33. Mr Kotewall said that taking irrelevant factors into account and leaving relevant ones out of account are grounds for judicial review as explained by the English Court of Appeal in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 rather than grounds for appellate intervention on the Edwards v Bairstow basis. I can see Mr Kotewall’s point. But, as it seems to me, taking irrelevant factors into account or leaving relevant ones out of account can lead a fact‑finding tribunal so far astray as to reach a conclusion contrary to the true and only reasonable one.

34. Lord Radcliffe, having noted various ways of putting it, ultimately preferred to put it in terms of the determination appealed against being contradicted by the true and only reasonable conclusion. And I respectfully share that preference. But I of course acknowledge, as he did, that there are other ways of saying the same thing. To impugn a determination by saying that a contrary conclusion is the true and only reasonable one is in substance the same as saying that there was no evidence upon which the impugned determination could be reached. An observation to this effect appears in Viscount Simonds’s speech in Griffiths v J.P. Harrison (Watford) Ltd [1963] AC 1 at pp.10-11. It is of course well‑established that whether there is evidence upon which to find a fact is a question of law. The essence of the exercise was, if I may say so, neatly captured by Nourse J (as he then was) in Cooper v C&J Clark Ltd [1982] STC 335. Building on the reference in Lord Simon of Glaisdale’s speech in Ransom v Higgs [1974] 1 WLR 1594 at p.1619 C‑D to ‘a ‘no‑man’s land’ of fact and degree’, Nourse J said (at p.341d) that the appellate court ‘can only interfere where the degree of fact is so inclined towards one frontier or the other as to lead it to believe that there is only one conclusion to which [the fact‑finding tribunal] could reasonably have come.’

35. Yet another way of putting it is to be found in the judgment of the English Court of Appeal in Coker v Lord Chancellor [2002] IRLR 80 delivered by Lord Phillips of Worth Matravers MR. At p.82 the Master of the Rolls said that an error of law can ‘consist in a finding of fact which is perverse’.

…

37.   In an appeal on law only the appellate court must bear in mind what scope the circumstances provide for reasonable minds to differ as to the conclusion to be drawn from the primary facts found.  If the fact‑finding tribunal’s conclusion is a reasonable one, the appellate court cannot disturb that conclusion even if its own preference is for a contrary conclusion.  But if the appellate court regards the contrary conclusion as the true and only reasonable one, the appellate court is duty‑bound to substitute the contrary conclusion for the one reached by the fact‑finding tribunal.  The correct approach for the appellate court is composed essentially of the foregoing three propositions.  These propositions complement each other, although the understandable tendency is for those attacking the fact‑finding tribunal's conclusion to stress the third one while those defending that conclusion stress the first two.”

22.  Kwong Mile Services was followed and applied in 馮皓嵐對威達製品有限公司及另一人 (unrep, HCLA 6/2011, 14 October 2011), where Au‑Yeung J observed at observed at §39 that:

「 處理上訴的法庭不能純粹因對事實的觀點與原審審裁官不同而推翻對事實的裁定。若處理上訴的法庭另有唯一合理及真實的結論，則它有責任取代原審判決。被上訴的裁斷若是偏離正軌或毫不理性地就事實裁斷或推論、或沒有證據支持、或考慮了無關痛癢的因素、或沒有考慮相關的因素，則可被推翻。如果被上訴的裁斷無法被支持，則處理上訴的法庭會推論該審裁者誤解或忽略相關證據或在法律上錯誤引導自己，而無需辨別一個明確的法律謬誤。」

23.  馮皓嵐was in turn applied by Marlene Ng J in 謝詠儀對陽華集團有限公司(unrep, HCLA 1/2017 & HCLA 2/2017, 26 October 2017 at §§12-13).

24.  I apply the above principles when considering the present appeal.

Powers of Court of First Instance on appeal

25.  According to s 29 of the Ordinance:

“ (1) On an appeal for which it has granted leave under section 28, the Court of First Instance may—

(a) allow the appeal;

(b) dismiss the appeal; or

(c) remit the matter to the tribunal with such directions as it thinks fit, which may include a direction to the tribunal for a new hearing.

(2) On an appeal for which it has granted leave under section 28, the Court of First Instance may—

(a) draw any inference of fact; and

(b) make such order as to costs and expenses as it thinks fit,

but may not—

(i) reverse or vary any determination made by the tribunal on questions of fact; or

(ii) receive further evidence.”

Indeed an error in the recitation of the evidence

26.  On the face of the Reasons for Decision, the recitation of the relevant parts of D2’s witness statement by the Deputy Adjudicator at §82 is indeed not accurate.  The word “肯” was missing.

27.  That error does not appear to be the result of a typographic error. That same error has been repeated at §83 of the Reasons for Decision.

28.  Ms Leung does not dispute that there has been an error.  Her submissions focus rather upon the effect of the error.  She submits that[2]:

“ 36. Reading from the [Reasons for Decision], it is clear that Deputy Adjudicator ruled that [D1/D2] had been the defaulting party because they had failed to pay $40,000 before delivery of vacant possession.

37. [D2’s] evidence that “等佢肯交鎖匙先講” merely explained his reason for not paying the balance of the rental deposit. Although Deputy Adjudicator had mistakenly stated the reason relied on [D1/D2] for not paying $40,000, the mistake would not affect the ruling that [D1/D2] were the defaulting party for failing to pay before delivery of vacant possession. Deputy Adjudicator did not have to rely on [D2’s] reason as to why he did not pay $40,000. Such mistake is not sufficiently material which would warrant the interference of the Appellate Court: Ng Koon Fai v Lau Siu Hang Thomas & anor [[2019] HKCFI 1276 at §21].”

The effect of the error

29.  The result of this appeal turns on the effect of the error.

30.  Mr Chow submits that there is a clear distinction between the two versions.  The one in D2’s witness statement concerns Wang’s willingness to deliver (or earnest (誠意) in delivering) the keys, whereas the version recited by the Deputy Adjudicator concerns Wang’s actual delivery of the keys.

31.  Mr Chow has indeed pointed me to parts of the trial transcript which support his submissions that it was “willingness or earnest” (as opposed to actual delivery) which D2 was emphasizing on:

     (a)     D2’s cross‑examination of Peter Ho[3], that:

「 問： 係，我哋對處理80,000鈫嘅立場持開放態度，我哋接受由即時畀，或者一手交錢，一手交鎖匙，到遲啲畀，我哋都可以接受。關鍵係，業主要顯示到佢肯交鎖匙嘅誠意。

官： 同唔同意呀？

答： 唔同意。

官：   係，繼續。」

Although Peter Ho disagreed with what D2 put to him, the question is still indicative of what Ds’ case was, and is consistent with what D2 has said in his witness statement (namely “等佢肯交鎖匙先講”).

    (b) D2’s submissions to the Deputy Adjudicator, that

「 …我個供詞裡面，由D10‑D15頁，由16至到26嗰度，其實每一句呢，其實都反映咗我呢個開放嘅立場嘅。

咁先講第16。16，你問我喇，『等佢肯交鎖匙先講』，好明顯嘅，咁其實嗰陣時Peter問我條問題就話，嗰80,000鈫嘅支票點處理，我正話提過喇，咁其實80,000鈫-- 80,000鈫嘅支票，如果你話首月租金係2月10號交，嗰個--嗰個--嗰個叫咩嘢呀？訂金嘅餘款如果係即時交嘅，咁佢冇可能將呢張支票搣一半畀人㗎，咁如果佢畀$40,000人，留返40,000鈫畀我，我都要開過張cheque㗎喇，咁所以將張支票畀番我，其實本身係一個好合理嘅做法嚟嘅。咁就另外佢問我點樣處理張支票，我咪同佢講囉，話『你等--你等個業主肯交鎖匙先至講喇。』因為其實你睇返呢，由頭到尾，我--咁其實呢個係冇爭議嘅，即係我哋同申索方冇爭議嘅，咁其實業主曾經話過係要喺2月4號--即係話將嗰個交鎖匙日期推到去2月4號先交鎖匙畀我哋嘅，咁其實你好--好合理地，即係你--同埋加上2月1號發生咁多事呢，你好合理地，你會質疑業主對於嗰個交鎖匙嗰個誠意喺邊度呀，咁所以就係如果你顯示到佢有誠意嘅，咁咪大家傾囉，咁所以個意思就係話，等佢肯交鎖匙先講囉。

咁跟住你睇返D15第17條，『之後多過電話裡面，我重複問Peter，業主願唔願意交鎖匙』，咁其實呢個呢，我係不斷咁樣透過Peter去探聽業主嘅誠意，到底佢有冇交鎖匙嘅誠意。Peter其實由頭到尾淨係話業主唔肯交鎖匙，但係又冇同我講業主有咩原因唔肯交鎖匙嘅，即係佢講到話--誓言旦旦，話--上一庭喇，上一次佢做證人嗰陣，話業主因為要收80,000鈫喇，收唔到唔肯交喇，呢一庭就話呢--收40,000鈫喇，收唔到唔肯交喇，咁佢兩個version都唔緊要，最緊要就係事發當晚，即係六年前嘅2月1號晚，咁其實佢係--Peter從來冇話畀我聽業主點解唔肯交鎖匙，咁唔知道唔肯交鎖匙嘅原因，淨係知道佢唔肯交鎖匙，咁我咪繼續去through Peter嗰度探聽囉。

  咁就--之後喇，即係正如我講，18，第18嗰個--D15第18嗰度，業主--『由於業主一直拒絕交出鎖匙，不肯透露原因』，咁所以其實就--咁其實我都開始知道佢根本冇乜誠意嘅，即係根本佢唔係好想--即係唔係好想履行個租約嘅，咁所以咪話咩嘢囉，咁呀，咁一係你咩嘢喇，一係你退番40,000鈫畀我，大家當冇事喇 …」

32.  I accept Mr Chow’s submission in this regard.  There is indeed a clear distinction between the 2 versions.

33.  The Deputy Adjudicator’s reading of D2’s witness statement played an important role in the Deputy Adjudicator’s reasoning process leading to his conclusion that Ds were the defaulting party:

(a) the Deputy Adjudicator recited at §82 of the Reasons for Decision what he thought to be D2’s evidence, ie “…等佢肯交鎖匙先講 ”;

(b) he reasoned then at §83 that “…本席認為從他上述的供詞內容顯示他於2013年2月1日晚上給予何維進的指示是待業主交出鎖匙後才商討什麼時候繳付該筆款項，即『等佢交鎖匙先講』”; (Emphasis added)

(c) he then stated his view at §84 that “…這違反了他交付餘下$40000按金的責任…”; (Emphasis added)

(d) at §84, he reiterated his view that “合理的履行責任時間是於業主交出鎖匙之前…，而非業主交出鎖匙之後…”;

(e) the Deputy Adjudicator then concluded at §85 that “…本席認為…被告人待業主交出鎖匙後才商討支付按金餘額的行為是違反臨時租約 ”. (Emphasis added).

(f) In reaching that conclusion, the Deputy Adjudicator based himself predominately upon his reading of D2’s witness statement.  Because of the unfortunate error, he did not consider Mr Chow submits that the emphasis of Ds’ case is willingness as opposed to the actual delivery of keys

34.  In my view, the conclusion and findings reached by the Deputy Adjudicator is vitiated by the misreading of D2’s witness statement.  This constitutes an error of law which this Court has jurisdiction to intervene.

Whether to remit

35.  I have considered whether I can rule on the matter on the evidence before me, or whether I should remit the matter to the Tribunal.

36.  Whether D1 was the defaulting party was the single most important issue before the Deputy Adjudicator.  It is an issue of mixed law and fact.  My conclusion reached above means that the Tribunal has not reached any valid finding on that single most important finding.  In the circumstances, it is in my view not appropriate for this Court exercising appellate jurisdiction on a question of law to substitute instead a finding in that regard.

Disposition

37.  For the reasons set out above, I remit the case to the Tribunal.  I direct that there be a trial de novo, to be conducted before a different Adjudicator.

Costs 

38.  I make a costs order nisi that C is to bear the costs of this appeal (excluding those relating to the ex parte leave application), to be taxed if not agreed.