LO YING MAN v. ANYIM EGBERT UMUNNA AND ANOTHER

LDRT 89/2025

[2025] HKLdT 34

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO LDRT 89 OF 2025

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BETWEEN

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J U D G M E N T

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1.  This application concerns a subdivided unit under Part IVA of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7 (“the Ordinance”). The applicant is Lo Ying Man (“applicant”). The 1^st respondent is Anyim Egbert Umunna (“R1”) and the 2^nd respondent is Musrini (“R2”, collectively “the respondents”).

THE APPLICATION

Form 22

2.  The Form 22 Notice of Application dated 4 March 2025 particulars are as follows:

(1) Applicant landlord: Lo Ying Man.

(2) Respondent tenants: Anyim Egbert Umunna and Musrini.

(3) Address of premises: Room 3, Flat H, 11^th Floor, 1A Shek Kip Mei Street, Shamshuipo Building, Kowloon (“Premises”).

(4) Duration of tenancy: From 1^st October 2024 to 30 September 2026.

(5) Existing rent $6,160.

(6) The suit premises consist of a subdivided unit.

(7) Nature and particulars of Application: Application for recovery of possession of the suit premises and rent as the respondents have failed to pay rent from the 1^st day of March, 2025 and the application for order for mesne profits (to the date of delivery of vacant possession of the suit premises) and costs.

(8) Other grounds: Outstanding balance of rent $3,477 from 1 February to 28 February 2025.

Form 7

3.  The Form 7 Notice of Opposition dated 7 March 2025 is signed by R1 on his own behalf and as the representative of R2. Grounds and particulars are that the landlord increased the house rent 3 times in one year, $5,390 to $5,600 and again to $6,160. For this the landlord has to give R1 notice, but did so without informing him. The respondents also ask for refund of their overpayments.

PART IVA OF THE LANDLORD AND TENANT (CONSOLIDATION) ORDINANCE, CAP.7

4.  Part IVA of the Ordinance applies to specific regulated domestic tenancies. Section 120AA, Interpretation definitions include that “tenancy” means a lease entered into orally or in writing and includes (a) an agreement for a tenancy; and (b) sub-tenancy. The “term” in relation to a regulated cycle of tenancies for a subdivided unit, means the first term or second term of the regulated cycle for the subdivided unit.

5.  Material sections of the Ordinance include:

(1) Section 120AAB Application of this Part

(1) Subject to subsection (2), this Part applies to a tenancy—

(a) that commences on or after the material date;

(b) that is a domestic tenancy;

(c) the subject premises of which are a subdivided unit;

(d) the tenant of which is a natural person; and

(e) the purpose of which is for the tenant’s own dwelling, even though the tenancy contains any provision purporting generally or specifically to exclude the application of this Part. …

(2) Section 120AAO Regulated cycle of tenancies

(1) A regulated cycle of tenancies for a subdivided unit is to comprise 2 consecutive regulated tenancies for the subdivided unit, each for a term of 2 years.

(2) The term of the first regulated tenancy is to be 2 years commencing on—

(a) the date of the creation of the tenancy; or

(b) if the parties have agreed on a later date for the commencement of the tenancy—that date.

(3) The term of the second regulated tenancy is to be 2 years commencing on the date immediately after the expiry of the first regulated tenancy.

(4) The landlord and tenant of a subdivided unit may enter into one or more regulated cycles of tenancies for the subdivided unit.

(3) Section 120AAP First term tenancy

A landlord and a tenant may enter into a first term tenancy for a subdivided unit at a rent agreed by the parties.

(4) Section 120AAQ Deemed first term tenancy

(1) This section applies if—

(a) a landlord and a tenant enter into a domestic tenancy for a subdivided unit;

(b) the tenant is a natural person;

(c) the purpose of the tenancy is for the tenant’s own dwelling; and

(d) the tenancy is other than one—

(i) entered into by the parties by way of a Form AR1; or

(ii) taken to be granted under section 120AAW(2)(b). …

(5) Section 120AAR Tenant is entitled to second term tenancy

(1) A tenant of a first term tenancy for a subdivided unit is entitled to a second term tenancy of the regulated cycle for the subdivided unit to be granted in accordance with Subdivision 2.

(2) Without limiting section 120AAZI, the landlord must grant the tenant the second term tenancy for the subdivided unit if the tenant accepts the second term offer in accordance with section 120AAU.

(3) The terms and conditions of the second term tenancy offered and granted by the landlord are to be the same as those contained in the first term tenancy, except those relating to—

(a) the period of the tenancy; and

(b) (if applicable) the amount of rent.

(6) Section 120AAS Second term offer

(1) Without limiting section 120AAZI, a landlord of a first term tenancy for a subdivided unit must, within the offer period—

(a) make a second term offer to the tenant; and

(b) serve the offer on the tenant,

for a second term tenancy of the regulated cycle for the subdivided unit.

(2) The second term offer may only be made in Form AR1.

(3) The landlord must—

(a) state the proposed amount of rent for the second term tenancy in Form AR1; and

(b) sign the Form.

(4) The proposed amount of rent must not exceed the maximum amount of rent for the second term tenancy that is permitted under section 120AAZE.

(5) The second term offer must not include any terms or conditions other than those contained in the first term tenancy.

(6) Subject to section 120AAT, a second term offer, once made, remains open for acceptance by the tenant before the expiry of the first term tenancy, and the landlord may not withdraw the offer. …

(7) Section 120AAU Tenant’s acceptance of second term offer

(1) This section applies if a landlord of a first term tenancy for a subdivided unit serves a second term offer in Form AR1 (served Form) on the tenant within the offer period under section 120AAS.

(2) The tenant may accept the second term offer any time before the expiry of the first term tenancy.

(3) If the tenant accepts the second term offer, the tenant must notify the landlord of the tenant’s acceptance in the served Form containing the offer by signing the served Form and serving it on the landlord before the expiry of the first term tenancy.

(4) If the tenant disagrees with the landlord on the proposed amount of rent for the second term tenancy, the tenant may negotiate with the landlord for the amount before accepting the second term offer. …

(8) Section 120AAW Deemed second term offer by the landlord

(1) This section applies if a landlord of a first term tenancy for a subdivided unit fails to serve a second term offer on the tenant under section 120AAS.

(2) The landlord is taken to have made a second term offer to the tenant on the expiry of the offer period, and the tenant is taken—

(a) to have accepted the second term offer; and

(b) to be granted the second term tenancy on the expiry of the first term tenancy.

(3) For the purposes of subsection (1), a landlord fails to serve a second term offer on the tenant if—

(a) the offer is not served on the tenant within the offer period;

(b) the offer is not made in Form AR1;

(c) the landlord has not signed the Form AR1 sent to the tenant;

(d) the proposed amount of rent for the second term tenancy is not stated in the offer;

(e) the proposed amount of rent for the second term tenancy stated in the offer is higher than the maximum amount of rent for the second term tenancy permitted under section 120AAZE; or

(f) any terms or conditions other than those contained in the first term tenancy are included in the offer.

(4) Subject to subsection (5), the renewed rent for the second term tenancy is to be the amount of rent last payable by the tenant for the first term tenancy.

(5) If the control percentage ascertained in accordance with section 120AAZE for the rent for the second term tenancy is a negative figure, the renewed rent for the second term tenancy is to be reduced by that percentage. …

(9) Section 120AAZC Rental deposit

(1) This section applies if a tenant of a regulated tenancy for a subdivided unit is required to pay to the landlord a rental deposit for the tenancy.

(2) Despite any provision of the tenancy, the rental deposit payable by the tenant may not be more than 2 months’ rent under the tenancy.

(3) If a provision of the tenancy requires the tenant to pay a rental deposit of more than 2 months’ rent, the provision is taken to be requiring the tenant to pay a rental deposit equal to 2 months’ rent only.

(4) Despite any provision of the tenancy, the rental deposit paid by the tenant is to be retained by the landlord during the term of the tenancy and is, subject to subsection (5), to be returned to the tenant free of interest no later than—

(a) if—

(i) the term is a first term followed by a second term—the expiry of the term; or

(ii) the term is a second term, or a first term not followed by a second term—the expiry of 7 days after the tenant’s delivery of vacant possession of the subdivided unit to the landlord on—

(A) the expiry of the term; or

(B) an early termination of the tenancy; or

(b) the expiry of 7 days after the settlement of any outstanding money payable by the tenant to the landlord under the tenancy,

whichever is the later.

(5) The landlord may deduct from the rental deposit the amount of any arrears of rent, or costs, expenses, losses or damages sustained by the landlord as a result of any breach of the tenancy by the tenant.

(6) In this section—

2 months’ rent (2個月租金), in relation to a tenancy, means 2 times the amount of the monthly rent payable at the commencement of the tenancy.

(10) Section 120AAZD Alteration in rent

(1) Subject to subsection (3), despite any provision of a regulated tenancy or any subsequent agreement between the landlord and tenant, the amount of rent payable by the tenant for the term of the tenancy—

(a) must remain the same; and

(b) may not be altered during the term.

(2) An alteration of the amount of rent during the term is void and has no effect. …

(11) Section 120AAZE Renewed rent for second term

(1) The landlord and tenant of a first term tenancy are to agree on the amount of rent for the second term tenancy of the same regulated cycle in accordance with this section.

(2) The maximum percentage for an increase of rent for the second term tenancy is to be the lower of the following—

(a) the control percentage ascertained in accordance with the following formula—

…

(b) 10%.

(3) The control percentage is to be rounded down to 1 decimal place.

…

(7) In subsection (2)(a)—

commencement month (開始月份), in relation to a first term tenancy or second term tenancy of a regulated cycle, means the calendar month in which the tenancy commences; …

(12) Section 120AAZF Mandatory terms implied for every regulated tenancy

(1) The provisions in Schedule 7 are to be impliedly incorporated into every regulated tenancy.

(2) The provisions incorporated into a regulated tenancy (incorporated provisions) because of this section –

(a) bind the landlord and the tenant of the tenancy; and

(b) prevail over any other provision of the tenancy that is in conflict or inconsistent with the incorporated provisions to the extent of the conflict or inconsistency.

(13) Section 120AAZZB Costs

In any proceedings under this Part, the court must not make any order as to costs against a party unless that party has conducted the case in a frivolous or vexatious manner.

(14) Section 120AAZZH Service of documents

(1) Service of any specified document under this Part may only be effected—

(a) by personal service;

(b) by post or courier, addressed to the last known place of business or residence of the person to be served; or

(c) if it is to be served on a tenant—

(i) by leaving the specified document with an adult occupier of the premises in which the tenant resides and to which the document relates; or

(ii) by affixing a copy of it to a prominent part of the premises in which the tenant resides and to which it relates.

(2) …

(3) Subsection (1)(c)(ii) does not apply if the specified document is a tenancy in writing or Form AR1.

(4) In this section—

specified document (指明文件) means any notice (other than a notice under section 120AAZJ(2)), form, application, certificate or other document.

6.  Schedule 7 mandatory terms implied for every regulated tenancy include:

…

2. Stamp duty to be borne by landlord

The stamp duty on the tenancy agreement for a regulated tenancy is to be borne by the landlord solely.

3. Stamping of tenancy agreement by landlord

The landlord must, after receiving the tenancy agreement for a regulated tenancy signed by the tenant –

(a) cause the tenancy agreement to be stamped under the Stamp Duty Ordinance (Cap. 117); and

(b) within 30 days, return to the tenant a counterpart of the stamped tenancy agreement signed by the parties.

4. Landlord’s return of stamped tenancy agreement

(1) If the landlord fails to return a counterpart of the stamped tenancy agreement under section 3(b) of this Schedule, the tenant may withhold the payment of rent until the landlord has done so. …

7.  The tenants obligations during the term include:

7. Payment of rent

The tenant must pay the rent to the landlord on or before the due date.

THE EVIDENCE

Witnesses

8.  The applicant filed and served a witness statement dated 25 April 2025 (“AWS”).

9.  R1 and R2 filed a joint witness statement signed by them both, dated 25 April 2025 (“RWS”), rather than filing separate statements as directed. The applicant claimed not to have been served with the RWS. R1 said he did send his witness statement to the applicant. The applicant maintained that he did not receive it. They each sought to explain. The case was stood down for the applicant to be provided with a copy and to read the RWS, after which he was content to proceed and give his oral reply from the witness box, which he did in evidence-in-chief.

10.  At the trial R1 elected to give evidence and wished to speak on behalf of R2. R2 confirmed she would not give oral evidence. The applicant agreed that their combined witness statement be admitted as their evidence-in-chief without calling R2 and only R1 giving oral evidence. On that basis the AWS and the joint RWS stood their evidence-in-chief.

The applicant’s evidence

11.  The AWS sets out the applicant’s case. Three tenancy agreements were signed and stamped, which he describes as follows:

(1) Agreement signed on 26 September 2022 (AWS Attachment 1a, 1b). The applicant and R1 signed a 2 year agreement for the period 1 November 2022 to 31 October 2024, the monthly rent being $5,390, but there was no tenant named and only R1 signed as tenant (“R1 TA”).

(2) Agreement signed on 29 September 2022 (AWS Attachment 2a, 2b). The applicant and both R1 and R2 “re-signed” a 2 year agreement, with the term and period revised to be from 1 October 2022 to 31 September 2024 and the monthly rent revised to $5,600 (“1^st R1 & R2 TA”).

(3) Agreement signed on 11 September 2024 by the applicant and R2 on behalf of both respondents (AWS Attachments 3a, 3b). This agreement renewed the tenancy for the period 1 October 2024 to 30 September 2026 with monthly rent of $6,160 (“2^nd R1 & R2 TA”).

12.  The applicant’s account is that in mid-September 2022, the previous tenant of the Premises, Mr Obi Ikenne (“Obi”), intended to move out and introduced R1 to the applicant as a new tenant. Obi was not involved in the discussion or signing of the new agreement with R1. On 26 September 2022 R1 and the applicant signed the agreement for 2 years, with monthly rent of $5,390, namely the R1 TA. The “tenant” of this agreement had not been filled in, and only R1 signed it. After the signed R1 TA was stamped, R1 requested the applicant to change the commencement date from 1 November 2022 to 1 October 2022. The applicant says they then negotiated and signed another agreement, 3 days later on 29 September 2022 at the International Social Service (“ISS”) Kwun Tong Office, with the new commencement date and a revised monthly rent of $5,600. The applicant says both of them agreed on the revised monthly rent before signing, which is disputed. This agreement was signed by both R1 and R2, namely the 1^st R1 and R2 TA.

13.  Thereafter the respondents have been paying the monthly rent of $2,000 themselves, together with ISS subsidy of $3,600 each month, being a total of $5,600 per month. The applicant relies on this to show the respondents well knew, agreed to and in fact paid, the revised rent.

14.  On 9 September 2024, R1 asked the applicant when to renew the agreement. Before it expired, on 11 September 2024 they signed a 2 year agreement with monthly rent of $6,160, namely the 2^nd R1 & R2 TA. Only one of the tenants, R2 attended on that day and said that the other tenant, R1, could not come. The applicant asked if she could represent the other tenant and she said yes. She then printed both of their names and their identification numbers on the tenant signature space and signed.

15.  On 13 September 2024 the applicant delivered the stamped 2^nd R1 & R2 TA to the respondents. Three days later, on 16 September 2024, R1 asked why there was such an increment and sent a WhatsApp of what the applicant calls the “ineffective agreement”, being the R1 TA. At that moment the applicant was a bit confused and not sure if he was basing on the correct agreement to renew the rent, so he said that he might have made a mistake. But after going home to check the agreement, he then told R1 the next day that the previous agreement of $5,600 rent was correct, so there was no need to revise anymore.

16.  R1 argued via WhatsApp that the basis of 10% increment should be from the previous tenant rent of $4,800 (actually $4,900). The applicant explained that Obi was the previous tenant and had nothing to do with the current agreement with R1 and that they had signed the new agreement. R1 and R2 had been paying monthly rent of $2,000, with an ISS subsidy of $3,600 that complied with the agreement of $5,600 monthly rent. R1’s reference to the previous tenant and the ineffective agreement reflects his breaking his promise and not a dispute on rent.

17.  The applicant says that the current agreement, namely the 2^nd R1 & R2 TA was duly signed and stamped, implying its legality and effectiveness, yet again the respondents raised a defence argument based on an ineffective agreement, R1 TA ignoring the current affective one, when being sued for arrears of rent.

18.  In fact the respondents had never fully paid the outstanding amount each month in the current agreement period. Particulars are at AWS Attachment 13. As far as the applicant knows R1 does not have a job and he doubts if the respondents can pay the full rent and outstanding charges each month. The longer the period they delay settling the rent and charges the more loss to the applicant landlord.

19.  The applicant claims the sum of $14,350 is the amount outstanding. In February 2025 he sought payment of arrears or delivery of vacant possession. He said as at a hearing on 8 April 2025, based on the 2^nd R1 & R2 TA monthly rent of $6,160, the outstanding as at March 2025 was $6,095. Of the monthly rent of $6,160, the respondents needed to pay $2,560 because $3,600 is paid by ISS each month on their behalf. From April to June 2025, the period of 3 months, the sum due is $8,255 ($2,560 X 3 + $575). The total sum due at the date of trial was therefore $14,350 ($8,255 + $6,095). The respondents do not dispute the sums or arithmetic but seek repayment of $9,280 as set out herein. The applicant’s claim for October 2024 included the sum of $1,308 for “Deposit difference and stamp duty”. Each item “deposit” and “stamp duty” must be considered separately in light of the provisions of Part IVA of the Ordinance.

The respondents’ evidence

20.  The RWS sets out their account. A few years ago R1 met an African in Hong Kong, Obi with whom he maintained a friendship. In early September 2022 Obi informed R1 that he would be moving out from his then residence, being the Premises. Obi asked R1 if he would be interested in sub-letting the Premises. R1 said yes, but that Obi had to inform the landlord, if he approved the Premises being sub-let, then R1 would be keen to lease the Premises.

21.  Thereafter, Obi arranged a meeting with the landlord, being the applicant and R1. Obi informed the applicant that he will be leaving the Premises and asked the applicant whether he could sub-let the Premise to R1. The applicant agreed that R1 could sub-let from 1 October 2022 until the end of the agreement of Obi, which was 1 November 2022. The applicant accepted that R1 should continue with the existing rent of $4,800. The new tenancy agreement would commence after the expiry of Obi’s agreement and would attach 10% increase, which R1 agreed. The applicant then provided a new agreement in advance which was to commence on 1 November 2022 with the rent of $5,390. The agreement was signed on the 26 September 2022 to commence on 1 November 2022, namely the R1 TA.

22.  R1 says he quickly brought to the attention of the applicant that the 10% increase would amount to $5,280 but not $5,390, an excess of $110. The applicant promised that he would correct the mistake. There are WhatsApp messages in September 2024 where the applicant mentioned the 10% increase and R1 also refers to a telephone conversation. Thus says R1, on the documents the applicant could not keep his word.

23.  However, in October 2022, the respondents went to ISS to report to ISS that they had changed their address. ISS demanded their new agreement. When they produced it, with stamp duty paid, ISS rejected it because the agreement was to commence on 1 November 2022 and demanded the agreement be amended to the date of October 2022. For this reason they went back to the applicant to inform him of the request from ISS, that the agreement be amended.

24.  Three days later the applicant amended the agreement dated 29 September 2022. R1 says that the new agreement has been changed to commence 1 October 2022 with a different rent of $5,600 within the space of 3 days, which is unreasonable. That means there was a 17% increase from the initial $4,800.

25.  Again they complained to the applicant and he claimed there was a mistake and promised that he would correct the mistake. R1 says clearly the applicant admitted his mistakes on the telephone and WhatsApp on 17 September 2024, where he said “Oh I might make a mistake, the amount should be $5,929, please return and I’ll sign a new one for you”.

26.  The applicant on the same date, 17 September 2024 asked “Are you ok tomorrow 12.30 pm to sign an amended contract at the same restaurant as last time”. The respondents went to the restaurant and waited for the applicant but he did not show up. When R1 called him, the applicant then said that he had changed his mind, claiming that R1 had signed the agreement, he will no longer amend the agreement, nor refund R1 the balance, which they have been paying for over a year.

27.  R1 says that the applicant, knowing about their status in Hong Kong, decided to take advantage of their situation. The applicant threatened to sue if they failed to continue making rental payment on the “fraudulent contract”. R1 believes that the applicant had defrauded them on the basis of the agreement signed between the 26 September 2022 and 29 September 2022. He considers that it is unacceptable and unreasonable to adopt three different payments amounts within a space of these days. The applicant had taken advantage of their situation and should therefore return the excess of the amount he had defrauded from them.

28.  The respondents are willing to pay all their outstanding rent to the applicant as long as he will refund the amount that he had defrauded from them.

Cross-examination of the applicant

29.  R1 cross-examined the applicant at some length. The evidence adduced included the following. R1 put that they had agreed before the R1 TA was signed, that the rent was going to be $5,390, which was written in the agreement and stamped, but the applicant suddenly changed it. The applicant replied that the reason was that this was a new agreement. They signed the new agreement because R1 wanted to change the commencement date from 1 November to 1 October. R1 said they went to the ISS office, the applicant agreed the date change, they and ISS never agreed the rent change, which was denied. R1 put that what ISS told the applicant was just change the date, that’s all and the applicant said he was traveling abroad, which he denied.

30.  R1 put that the day they signed the 1st R1 & R2 TA in ISS office the applicant gave them a blank agreement to sign, they signed in ISS office but the applicant did not, he took it, promising to meet them, he post-dated it when the respondents were not around, he filled it in and sent it by post to them. The applicant said that was absolutely not the truth.

31.  R1 says trusting the applicant they signed a blank agreement. After he posted it to them they discovered the discrepancy, which R1 told the applicant on the telephone and which he agreed to amend. The applicant denied this and asked whether R1 would dare to sign on a blank agreement?

32.  R1 put that the $5,390 agreement was signed at Dragon Centre, and the applicant paid the entire stamp duty, which were not disputed. When they took it to ISS, they said just amend the date. R1 asked should a change from November to October warrant the applicant putting an additional $290? The difference is $210 ($5,600 - $5,390) but R1 often mistakenly said $290. The applicant only agreed that he went to the ISS office to sign the new agreement with the two respondents.

33.  R1 referred to the rent of $4,900 and that it should be $4,800. The applicant asked why he was reverting to the rent paid by the former tenant and agreement with Obi, asserting it was nothing to do with the respondents. R1 recounted going to the Premises and agreeing that after Obi left the rent would be $5,390. The applicant disputes the respondents’ version and relies on the signed agreements.

34.  R1 repeated that they signed because they thought the applicant was going to put exactly the figure they agreed. The applicant was adamant that he clearly recalled that apart from the commencement date, he also made amendment to the rent of $5,390 to $5,600 and that R1 agreed to the new rent. R1 denies agreeing to that amount. The applicant asked R1 if he did not agree to that amount why did he sign on the agreement? R1 said there was no information on it, when they signed the new one for $366, they thought the applicant would put the same figure, but when he posted it they discovered the amount increased. The applicant explained that the $366 is only the stamp duty. The rent figure is $5,600. The applicant denied R1’s allegations that the respondents signed a blank agreement that he filled in subsequently, because it was not like that. He said “I clearly recall this agreement signed at the ISS office with you and I said amount increased to $5,600, after a short while you did agree to the new rent, with both of you present.”

35.  R1 said nothing changed in 3 days, prices didn’t go up. The applicant explained first, he just said that the rental market was on a rising trend. Second, the respondents did comply with the agreement. They had been paying the new rent in accordance with this new agreement, which shows they agreed to it and the terms. R1 said when he discovered the discrepancy he WhatsApp the applicant who agreed to amend the agreement, which the applicant disputes. R1 referred to a 16 September 2024 message notifying the discrepancy and screen capture of part of the $5,390 agreement. The applicant replied that he told R1 that he had to go home to check against the document. After the check he replied to R1 the following day, 17 September 2024, in a message when he told R1 that the agreement was correct and that there was no need to make any change, so he did not promise to change.

36.  R1 put various allegations to the applicant, including that he saw R1 as a black man, said he did not have money, and after being taken to ISS the applicant saw a big company and he did it as a result of greed. The applicant disagreed replying “If you recall what I said. At the time you requested to have the date changed, I also requested to have the rent adjusted a little upwards. Before it was revised every year. Now every two years. I said upwards, just $200. If you disagreed with that you could have refused to sign it.”

37.  Again R1 raised what Obi was paying and the applicant replied that they were two different tenants and agreements. R1 insisted that the rent had been changed more than 2 times since he became a tenant. The applicant repeated the reason for adjustment, it was a new agreement between him and a new tenant. The previous one was with just R1 and was already void. R1 said the landlord did no renovations during the period, which the applicant agreed, so asked why increase the rent? The applicant explained that the rent level of sub-divided flats in Hong Kong had experienced adjustment on a yearly basis or there would be no legislation targeting these premises. There is no relationship with renovations.

38.  R1 continued, alleging the applicant put the rent amount without R1’s knowledge, that the applicant called ISS saying he increased the amount and ISS told him that was not their business. The applicant said “no”, they signed the agreement at the ISS office when he was face to face with R1 and that R1 agreed to that face to face.

39.  R1 put his case that $9,280 from the original claim namely, $290 per month, should be repaid to the respondents. So $14,350 less $9,280. What R1 should pay the applicant is the balance. The bone of contention is the $290 increased without R1’s knowledge. R1 agreed if the $290 the applicant added is taken from the original, what he should pay, and, is willing is the balance $5,070.

40.  The applicant said first, the grounds of the respondents’ claim amount is based on an invalid agreement, the R1 TA. Second, as far as the agreement for $5,600, R1 clearly knew of its existence. R1 and R2 were present and both of them signed on the agreement. R1 asked if he had asked R1 to pay any stamp duty on the $5,600 agreement? The applicant replied that his recollection was he did not and that the increase was due to adjustment of rental level, not stamp duty. After they all signed the agreement at the ISS office the applicant also provided the amended agreement to ISS, because they needed the document for record purposes.

41.  R1 put that what he was supposed to be paying together with his girlfriend, is $3,000 but because of electricity it is more. ISS was to pay the $3,000 and they added $600 for light and water. They are still paying water up to now. The applicant accepted that in fact ever since the 1^st R1 & R2 TA, ISS all along had been paying on their behalf $3,600. The ISS subsidy is $1,500 rent and $300 electricity and water for each person, the total subsidy is $3,600. After that there is still rent arrears. R1 agreed that ISS made known to the applicant that the rent subsidy for R1 was $1,500 and for R2 $1,500. Two ISS notifications show the ISS subsidy.

42.  R1 accused the applicant of taking advantage of his status and using his position as a Hong Kong person to intimidate them because they were foreigners and they had no one to complain to, which the applicant denied. R1 alleged that the applicant only liked Form 8 people, not Hong Kong residents as tenants because he liked ISS to pay. The applicant denied the allegation that he took a different view on ISS subsidised tenants. It was actually the opposite. Usually ISS tenants did not pay rent on time. R1 says the applicant did not issue receipts. He replied that he listed the deduction of ISS subsidy on rent in detail every month. After deduction only $2,560 had to be paid by the respondents for the rent part.

Cross-examination of the 1^st respondent

43.  R1 said his signature may appear on the 1^st R1 & R2 TA document but, some are agreed facts some not. Some they agreed face to face, some they did not agree. The applicant asked R1 whether he agreed that the agreement with the rent $5,600 overrode the previous agreement with rent $5,390? R1 answered that the procedure is if they had agreed that the landlord would now change the amount then he is supposed to retrieve from them the agreement. What they agreed to change is the date. His $5,600 change is egersis. R1 agreed the original $5,390. If they change from original the landlord should ask R1 to give back the old one, then stamp on the 2^nd one. The intention in signing the blank agreement was only to backdate, not increase the amount.

44.  The applicant asked if R1 claims they signed on a blank agreement, why did they not raise objection at the time they received the new agreement stamped? Why only raise objection after the application filed at court to peruse rent arrears? R1 claimed that he had much trust in the applicant. When the 1^st R1 & R2 TA was sent to their flat his girlfriend told him they got the 2^nd agreement. He didn’t check if the applicant did what ISS told him to do. He didn’t fear he amended the amount. He discovered that when he got the 3^rd agreement, the 2^nd R1 & R2 TA. Then he discovered the 2^nd agreement was different from the 1^st agreement. That’s when he discovered the discrepancy. He did not read the 1^st R1 & R2 TA and took it for granted that it backdated.

45.  The applicant put that despite R1’s version now, the fact was that ever since the agreement with $5,600 rent was signed, the respondents all along were paying part of the $5,600 stipulated on it. Therefore, how did R1 explain he was not aware of the new rent? R1 said no receipt was issued. From the receipt he would know how much he was paying. The applicant took advantage of the fact ISS paid separately.

46.  The applicant challenged R1’s claim that without any receipt he was unable to know the exact amount paid on his part. He was paying $2,000 per month. ISS was paying $3,600 per month. Added together it is $5,600 total. R1 was aware of the amount to be paid by ISS. R1 replied that he did not know $290 added to the 2^nd agreement. Sometimes he paid $1,000. Sometimes he paid more. He always trusted the applicant. Sometimes he overpaid and the applicant gave R1 back the balance. The applicant questioned R1’s claim that if he knew an increase he wouldn’t pay the rent, when he was paying such new rent? R1 repeated that he trusted the landlord. That’s why he was paying carelessly. Sometimes the applicant called them for rent and R1 said to R2 “ok pay the landlord”. R1 did not sit down and calculate. He only came to know the change, the additional money after the 3^rd agreement.

47.  The applicant asked R1 if he meant he just trusted the applicant and did not pay much attention throughout the 2 years tenancy period? His action of paying rent was exercising terms and conditions of the new agreement. R1 repeated how he came to know the applicant cheated him by adding money after R1 signed was through the 3^rd agreement. After R1 discovered it he started calling the applicant who started to avoid R1, stopped coming on a daily basis and communicating. He must have known he cheated R1. The applicant put R1 made up these things, that just on trust he made payments for 2 years and that he had no idea of the exact amount of rental or that he was not clear throughout the 2 year agreement. R1 denied making it up, saying that the applicant played tricks between him and ISS, was trying to deceive them and was hiding from R1, so R1 did not know the exact amount.

48.  R1 was not paying at the same time as ISS but on different occasions. The applicant was supposed to give a receipt saying $3,600 from ISS, $2,000 from R1, then R1 would know. That’s why it took 2 years to discover. The applicant put “but you did know that ISS was paying $3,600 to the landlord on a monthly basis and you know the balance paid by you was $2,000.” R1 agreed that ISS was paying $3,000 and light and water of $600. It added up to $3,600. R1 was paying the rest to complete the amount $5,600. He was paying based on what the applicant said he should pay. He did not go through the agreement to know he was supposed to pay less. He then discovered $290 added. He complained to ISS, who showed R1 what they were paying. The applicant put “since you just said you paid the rest of rent to make up rest to $5,600, you must have known rent $5,600.” R1 replied he took the landlord to ISS just to assure ISS this was his landlord to sign the agreement with ISS. If he knew ISS would ask to backdate and the landlord to increase, he would ask to pay October, not ISS. R1 thought only the date was amended. He did not know the applicant wanted to increase rent.

49.  The applicant put that when he and the respondents signed the agreement with rent $5,600, together with the ISS staff face to face, he also obtained R1’s verbal consent to the new rent, so R1 is lying. He did sign with date amended and the agreement bears both respondents signatures. R1 repeated that he took the applicant to ISS with the 1^st agreement for ISS to put their signature. The amount was $5,390, which was their agreement. When ISS said no, from October, the applicant agreed. A blank agreement was signed. The applicant took it, promising to return it stamped. When the applicant sent the 1^st R1 & R2 TA to the door of their house, R2 told R1 there was a letter. R1 did not care to look. He trusted the applicant and put it away. He did not know rent was $5,600. He was paying the difference for 2 years until the 3^rd agreement. Then, when he compared it with the 1^st agreement, he discovered he was paying the $290.

50.  The applicant said that R1 was denying the facts but that is what they did for the past 2 years. R1 replied if he discovered $290 added on to the agreement he wouldn’t sign it. $290 x 24 months is a lot, he does not have money. He took it for granted and did not look into the agreement. If a mistake, he signed thinking it their October amendment, not an increased amount. Before he took the applicant to ISS R1 did not have a job. He has immigration paper. He is not allowed to work. He receives money from their community in Hong Kong. The applicant also put that there has all along been rent in arrears, which R1 denied.

Respondents’ closing

51.  The respondents say that the applicant used a trick to trick them as to the rent they paid. R1 didn’t know the applicant was not sincere and not truthful. When R1 took the applicant to ISS the purpose was just to introduce him as his landlord when ISS instructed him only to backdate to October. He gave a blank agreement. R1 did not discover that the applicant added money until 3 years later. Instead of visiting R1’s house after putting it at the respondents’ door, he stopped coming to R1’s house, so he knew what he did. The respondents are not allowed to work in Hong Kong because they have a recognisance paper. R1’s community also supports him. R2 sometimes receives charity.

52.  R1 produced a document headed “International Social Service Hong Kong Administering and Delivery of Assistance for Non-Refoulement Claimants, Agreement on Administering and Delivery of Humanitarian Assistance” (“ISS Agreement”): Exhibit R1. R1 said this is relevant to show that the applicant collected money from ISS for water. R1 still pays a lot of money for water. He tried to settle amicably but, because the applicant had a hidden agenda, he run away from R1. R1 reported the matter to ISS after he discovered he paid extra money for 2 years. ISS is aware of the discrepancy and advised R1 to settle with the applicant. ISS has no power to settle the issue. ISS’s only instruction to the applicant was to backdate so how does it bring an additional $290? Right from the beginning the applicant knew R1 did not work. He knows ISS supported the respondents. Adding additional money is unfair. R2 confirmed she had nothing to add.

Applicant’s closing

53.  The agreements that the respondents deny are the 1^st R1 & R2 TA and the 2^nd R1 & R2 TA. Both bear the signatures of the respondents. The later was signed by R2 also on behalf of R1. Both agreements are stamped. The fact is that both the applicant and the respondents, signed the agreement with the rent of $5,600 together. At the time the agreement was signed the applicant clearly told the respondents that this new agreement with rent $5,600 replaced the old one with rent $5,390. After obtaining the verbal consent from the respondents, the applicant signed the agreement with the two respondents. It turned out they denied this and claimed they had no knowledge of the new rent.

54.  The applicant submits that was incredible. R1 made payment of rent, showing clearly he understands the rent was $5,600. If he disagreed with the rent, he cannot voice disagreement only after 2 years, after the applicant started to pursue the rent in arrears for the 2 years.

55.  R1 even claimed that he signed a blank agreement because he trusted the applicant. The applicant considers that ridiculous. As an adult R1 could not have signed a blank agreement with no rent written on it. If he knew it bears rent he should be held responsible, no matter how much the rent. It is analogous to signing a cheque with no indication of the amount. During cross-examination of the applicant, R1 showed he was not a naïve person, who was credulous to a stranger, the applicant and that he was not someone who would ignore his own rights. So it is hard to believe his claim he would just trust the applicant.

56.  The applicant replied to the allegations that he was playing tricks, using power and bias against recognisance holders that R1’s story is without grounds, but it also shows that R1 is not one who easily trusts all, let alone signing a very important agreement. He doubts R1’s integrity.

57.  During the 1^st R1 & R2 TA period the respondents very often made late payments of rent. During the 2^nd R1 & R2 TA period they never made rent or utility bills payment in full. They didn’t even make payment of deposit owing to the difference in rent, after the renewed agreement. R1 defaulted and concocted stories denying things previously admitted.

58.  Regarding water charges, the applicant did receive money from both ISS and the respondents. ISS paid the subsidy for water and electricity bills of $600 per month. He denied he had a hidden agenda.

59.  The applicant claims the amount due from March 2025 to present, during which period the respondents did not pay a penny, despite still living there. Great loss is caused to the applicant, with no knowledge of an end to the dilemma and with no definite amount he is expected to suffer. He submits that everything on the facts, evidence and also common sense supports his case. If it is easy to rescind a black and white agreement there would be no spirit of contract.

60.  The applicant claims all rent in arrears from the respondents. He asks that they settle all overdue balance rent arrears and other fees during validity period of the agreements a soon as possible. That is $14,350. If the respondents could settle the arrears within a short period then the applicant is willing to let the respondents stay in the Premises.

61.  For proof of payment of rent by the respondents during the last agreement period, when rent was $5,600 the applicant relies on deposit slips showing $2,000 deposited into his account, being the balance after deduction of $3,600 from ISS. For proof of the ISS subsidy, two notification letters from ISS to him give notice of the subsidy sums paid to his account. The notices are only given at the start of an agreement.

Credibility

62.  The tribunal must decide the outcome on the basis of facts and evidence as presented to it, according to applicable legal principles and not out of sympathy for any particular party. Assessment of whether a witness has been discredited over matters to which he has given evidence will be considered in assessing general credibility of a party’s case on any issue. Other relevant and important considerations are whether a party’s case is inherently plausible or implausible, and whether the case is in a material way contradicted by other evidence, documentary or otherwise, which is either undisputed or indisputable. I have considered the inherent plausibility of each of the parties’ case and whether it is contradicted in a material way by other undisputed or indisputable evidence and whether each witness has been discredited over matters he has given evidence on using that test. Memories are fallible, particularly when events happened some time ago. I place weight on contemporaneous documents. I found that the applicant gave a straight forward account that was consistent with the documentary evidence and entirely plausible. I accept his evidence. R1’s evidence was not consistent with, and in many instances was contrary to undisputed and indisputable documentary evidence. R1 contradicted himself between his written and oral evidence. I did not find him to be an entirely credible witness. His account was implausible in many respects, as addressed below. Where the respondents’ evidence differs from that of the applicant, I prefer and rely upon the evidence of the applicant.

THE DOCUMENTS

63.  The documents include 3 stamped tenancy agreements, proof of payment of rent and of the ISS subsidy as well as WhatsApp messages. I make the following findings.

(1) The R1 TA

64.  The R1 TA provides that it is an agreement made on 26 September 2022 between Lo Ying Man as the “the Landlord” on the one part but “the Tenant” is not named. The Premises are identified as the Premises under the agreement. The term and rent are expressly for “the term of twelve calendar months commencing from 1^st November, 2022 at the monthly rent of Hong Kong dollars exclusive of rates and Service charges $5,390”, payable in advance on the first day of each month. It is signed by the applicant as Landlord and R1 as “the Tenant”. R1 has variously alleged that the rent he agreed was the Obi rent plus 10% or $5,280, but he also says he agreed the rent of $5,390 rather than $5,600, which is the basis to claim repayment of $290 ($210) per month difference. I find that the R1 TA was made on 26 September 2022. It did not name a tenant. It was signed by the applicant as landlord and only R1 as tenant. The term was to commence on 1 November 2022. It was for a period of 12 months, not 2 years. The rent agreed was $5,390 per month.

(2) The 1^st RI & R2 TA

65.  The 1^st R1 & R2 TA provides that it is an agreement made on 29 September 2022 between Lo Ying Man as the Landlord on the one part and “Anyim, Egbert Umunna & Musrini (hereinafter called “the Tenant”)”. The Premises are identified as the Premises under the agreement. The term and rent are expressly for “the term of twenty four calendar months commencing from 1^st October, 2022 at the monthly rent of Hong Kong Dollars exclusive of rates and Service charges $5,600” payable in advance on the first day of each month. An additional paragraph 22 is added in manuscript providing “$300 of the deposit will be refunded to ISSHK upon termination of this contract”. It is signed by the applicant as “the Landlord”. Both R1 and R2 signed, with identification numbers, as the “the Tenant”.

66.  I find that the 1^st R1 and R2 TA was made on 29 September 2022 between the applicant as landlord and both respondents as tenant. The commencement date was 1 October 2022, the term 2 years and the monthly rent $5,600. The respondents knew and accepted that the monthly rent was $5,600. They did not sign on a blank form. The entire process took place at the ISS Kwun Tong office. It was open, with ISS staff present. It is highly improbable that the applicant would try to deceive the respondents in the circumstances where he knew that ISS was aware of the terms of the R1 TA, ISS staff were present when the 1^st R1 and R2 TA was signed by them, he knew they had ISS support, the applicant was providing ISS with a copy for their record and he would be returning a stamped copy to the respondents. The applicant did not only deal with the respondents alone, absent any third party, in circumstances where he could take advantage of them. It is inherently implausible that the applicant would be so brazen as to attempt to deceive the respondents for an extra $210 per month when he could so easily be found out and with very grave adverse consequences for himself if caught perpetrating such a deception. I have found the applicant to be a credible witness and accept his account, which is consistent with the documents. The R1 TA was for a period of 12 months but the 1^st R1 & R2 TA was for 2 years and under the new Part IVA, the applicant could not increase the rent for the 2 years, hence the higher rent.

67.  While R1’s account is inconsistent, internally, with what he said and with documents. For example, R1 claimed that before the R1 TA they agreed that the rent would be 10% above the Obi rent, being $5,280 but he also says that they agreed that the rent would be $5,390. He said that he took the R1 TA to ISS and when ISS rejected it he went back to the applicant and then took him to ISS signing 3 days later. Whereas, he also claimed he took the applicant to ISS to show he was their landlord then ISS asked him to backdate the agreement, suggesting it was on one and the same occasion. Significantly, the respondents admit that they had a stamped copy of the 1^st R1 & R2 TA from 2022 and they were paying the balance rent for 2 years, after deduction of their subsidies, yet R1 claims not to have known the rent until September 2024.

(3) The 2^nd R1 & R2 TA

68.  The 2^nd R1 & R2 TA provides that it is an agreement made on 11 September 2024 between Lo Ying Man as the Landlord and “Anyim, Egbert Umunna & Musrini (hereinafter called “the Tenant”)”. The Premises are identified as the Premises under the agreement. The term and rent are expressly for “the term of twenty four calendar months commencing from 1^st October, 2024 at the monthly rent of Hong Kong Dollars exclusive of rates and Service charges $6160” payable in advance on the first day of each month. The applicant signed as “the Landlord”. Both R1 and R2 identification numbers and the names “ANYIM and MUSRINI” appear, with the signature of Musrini as the “the Tenant”. I find that the 2^nd R1 & R2 TA was made on 11 September 2024 between the applicant and both respondents as tenants. The term is two years and the rent $6,160 per month. R2 also signed on behalf of R1, having actual and apparent authority to do so. The WhatsApp messages show how they entered into the 2^nd R1 & R2 TA. The parties do not rely on a Form AR1.

Payments

69.  For proof of payment by the respondents, in terms of the 1^st R1 & R2 TA, the applicant produced screenshots of the sum of HKD$2,000 being sent from an account to the applicant in February, March, May and June 2024. The payments are examples of the respondents paying rent pursuant to the 1^st R1 & R2 TA. Further, the 2 “Notification to Lessor” letters from ISS HK to the applicant dated 8 November 2024 confirm assistance to the named tenant, being R1 and R2 respectively, for the tenancy period 1 October 2024 to 30 September 2026, the approved assistance rent and utilities remained rental amount HKD1,500 and utilities amount HKD300 for each respondent to the payee the applicant. I find that at all material times the respondents knew that they were paying $2,000 per month (though not always timeously), that their ISS subsidy for rent was $1,500 each plus $600, which amounted to $5,600 and that they were paying rent in terms of and pursuant to the 1^st R1 & R2 TA.

ISS assistance

70.  The ISS Agreement produced by the respondents is signed by R1 on page 1 and 2. On page 1 R1 confirms, inter alia, that he is living in the Premises subject to the tenancy agreement which is valid “from (Day) 01 (month) 10 (Year) 2022 to (day) 30 (Month) 09 (Year) 2024” entered into between the lessor and him (“the Tenancy Agreement”). The total monthly rent for the Premises “is HK$5600.00”. Further, R1 declared:

“I understand and accept that my monthly accommodation assistance from ISS-HK is at HK$1500. I hereby declare that I shall take sole responsibility for all obligations as tenant of the Tenancy Agreement during the tenancy term and thereafter (if appropriate) and shall settle the monthly extra rent HK$750 with the assistance of my Sponsor”.

In respect of utilities assistance, R1 acknowledged that he understands that the maximum amount of utilities assistance, including, electricity, water and gas is HK$300 monthly per person. R1 declares that he takes sole responsibility to settle all outstanding accommodation and utility expenses and settle the monthly extra rent beyond the allowance level listed. R1 signed above the caption “As at January 2023”.

71.  The ISS Agreement, page 2 sets out other assistance provisions. R1 declares that he understands that the provision of assistance is conditional upon him executing the ISS Agreement. Thereafter R1 signs acceptance on 15 June 2023 at ISS-HK. The ISS Agreement is also signed by a Caseworker and states “As at January 2023”.

72.  The 1SS Agreement is documentary evidence produced by the respondents that R1 knew that as at January 2023 the 1^st R1 & R2 TA rent was $5,600 and that the subsidy he received from ISS was $1,500 for rent and $300 for utilities, to which terms he signed acceptance on 15 June 2023. I do not accept that the respondents only came to know the 1^st R1 & R2 TA dated 29 September 2022 monthly rent was $5,600 after return of the 2^nd R1 and R2 TA dated 11 September 2024, on 13 September 2024 or on or about 16 September 2024. The respondents obviously knew the subsidy that they were receiving from ISS in respect of both rent and utilities throughout and that the 1^st R1 & R2 TA monthly rent was $5,600.

Messages

73.  The other material documentary evidence comprises WhatsApp messages between the applicant and R1. The respondents rely on the messages to show, inter alia, that the applicant made admissions and their agreement with him in connection with rent from 2022. The messages exhibited are of exchanges between R1 and the applicant in 2024.

74.  The respondents allege that the applicant admitted, inter alia, that the rent should be 10% increase on the Obi rent but also that the rent for the first agreement should be $5,390 for the first two year term. I find that R1 did challenge the rent of the 2^nd R1 & R2 TA on 16 September 2024. R1 sent a screen shot of part of the R1 TA that recorded the rent of $5,390, without identifying the document or mentioning the 1^st R1 & R2 TA. The applicant initially did message that he might have made a mistake. However, when he went home and checked he confirmed that he had based the increase on the correct rental sum of $5,600 under the 1^st R1 and R2 TA. He promptly informed R1 on 17 September 2024 that the increase was correct and that there was no need to amend the agreement and so no need to meet. The applicant was misled by the part of the R1 TA sent by R1. His response was a frank honest acknowledgment that he might have made a mistake. Had the applicant all along been tricking the respondents he would know the rent or would at least wait until he got home to check the 1^st R1 & R2 TA, before he replied. He would not suddenly abandon the deception and concede he may be claiming an excessive sum, by saying he might have made a mistake. The messages enhance, rather than undermine, the applicant’s credibility.

75.  In the messages R1 was raising the Obi agreement rent and the applicant explained that the agreement he had previously with Obi was nothing to do with the respondents’ rent.

DISCUSSION

76.  Had the Premises and tenancy agreements not come under Part IVA of the Ordinance, on my findings of fact, the position would be as follows. The R1 TA dated 26 September 2022 between the applicant and R1, with the term to commence on 1 November 2022, never commenced but was superseded by the 1^st R1 & R2 TA dated 29 September 2022 between the applicant and both respondents. The R1 TA terms were varied as to parties, term length, commencement date and monthly rent. The 1^st R1 & R2 TA was for the longer 2 year term, commencing 1 September 2022, between the applicant and both respondents, for the new monthly rent of $5,600. Thereafter, they entered into the 2^nd R1 & R2 TA dated 11 September 2024 that commenced on 1 October 2024, for a term of 2 years with a monthly rent of $6,160, to which the respondents agreed.

Determination in light of Part IVA, Cap. 7

77.  In my view proper application of the Ordinance to the facts alters that position.

78.  Part IVA applies to the Premises and tenancies under the 1^st R1 & R2 TA and the 2^nd R1 & R2 TA. A regulated cycle of tenancies for a subdivided unit is to comprise 2 consecutive regulated tenancies, each for a term of 2 years. The term of the first regulated tenancy is to be 2 years commencing on the date of creation of the tenancy or “(b) if the parties have agreed on a later date for the commencement of the tenancy – that date”: section 120AAO(2)(b). The applicant and R1 had agreed that the R1 TA was to commence on 1 November 2022. Before the term commenced they entered into the 1^st R1 and R2 TA. The R1 TA term never commenced before it was superseded. Therefore, it was not the first term tenancy for the purposes of Part IVA. By the 1^st R1 & R2 TA dated 29 September 2022 the parties agreed a later date for the commencement of the tenancy, namely 1 October 2022. The 1^st R1 & R2 TA is the first term tenancy of the regulated cycle under Part IVA.

79.  The second term tenancy is to be 2 years commencing on the date immediately after the expiry of the first term tenancy: section 120AAO(3). The 2^nd R1 & R2 TA is the second term tenancy of the regulated cycle under Part IVA.

80.  The applicant and the respondents may enter the first term tenancy for a subdivided unit at a rent agreed by them. They agreed the rent of $5,600 per month: section 120AAP. If the tenancy of a subdivided unit is other than one “(1)(d)(i) entered into by the parties by way of a Form AR1” it is deemed to be a first term tenancy: section 120AAQ.

81.  The tenant of a first term tenancy is entitled to a second term tenancy of the regulated cycle for the subdivided unit to be granted in accordance with Subdivision 2. The landlord must grant the tenant the second term tenancy if the tenant accepts the second term offer in accordance with section 120AAU. The terms and conditions of the second term tenancy offered and granted by the landlord are to be the same as those of the first term tenancy, except those relating to the period of the tenancy and “(3)(b) (if applicable) the amount of rent.”: section 120AAR(1) - (3).

82.  Under section 120AAS the landlord of the first term tenancy must within the offer period make a second term offer to the tenant and serve the offer on the tenant, for a second term tenancy of the regulated cycle. Section 120AAS of the Ordinance clearly provides that “(2) The second term offer may only be made in Form AR1.” In my view upon a proper construction that is a mandatory requirement. The landlord must state the proposed amount of rent for the second term tenancy in Form AR1 and sign the Form: section 120AAS(3). The proposed amount of rent must not exceed the maximum amount of rent for the second term tenancy that is permitted under section 120AAZE: section 120AAS(4).

83.  Section 120AAU applies if the landlord serves a second term offer in Form AR1. No Form AR1 has been produced or relied upon here.

84.  Section 120AAW applies if the landlord of the first term tenancy “fails” to serve a second term offer on the tenant under section 120AAS: section 120AAW(1). The landlord is taken to have made a second term offer and the tenant is taken to have accepted the second term offer and to be granted a second term tenancy on the expiry of the first term tenancy: section 120AAW(2). For the purposes of subsection (1), a landlord “fails” to serve a second term offer on their tenant if “(a) the offer is not served on the tenant within the offer period;” and “(b) the offer is not made in Form AR1”: section 120AAW(3).

85.  Section 120AAW(4) provides that “… the renewed rent for the second term tenancy is to be the amount of rent last payable by the tenant for the first term tenancy”. Upon a proper construction of the Ordinance, if the applicant fails to serve a Form AR1 the renewed rent for the second term tenancy is the amount paid by the respondents for the first term tenancy. Here that is the 1^st R1 & R2 TA monthly rent of $5,600.

86.  Rental deposits may not be more than 2 months’ rent under the tenancy. The landlord may deduct from the rental deposit the amount of any arrears of rent as a result of breach by the tenant: section 120AAZC.

87.  Section 120AAZD provides for the alteration in rent. The rent must remain the same and may not be altered during the term. An alteration of the amount of rent during the term is void and has no effect. There was no alteration of the rent under the R1 TA “during the term”. The term never commenced. The respondents’ defence that there was an unlawful alteration of rent during the term or that it increased from $4,800 or $5,390 to $5,600 or to $6,160 without notice or 3 times in a year is not established. On the facts they cannot rely on the prohibition of alteration of rent during a term or Part IVA of the Ordinance to establish their pleaded defence.

88.  Section 120AAZE prescribes the maximum percentage for an increase of rent for the second tenancy. It shall be the lower of the control percentage ascertained in accordance with the statutory formula or 10%. Here the parties rely on the maximum increase being 10%. Had the proper procedure been followed and the prescribed Form served the applicant and the respondents could agree the amount of rent for the second term tenancy was to be an increase of 10%. That would be a monthly rent of $6,160 ($5,600 + 10%). The 2^nd R1 & R2 TA monthly rent is expressly $6,160. The respondents’ defence that the new rent under the second term exceeds the statutory maximum would fail. However, no Form AR1 was produced.

89.  Service of specified documents, including any notice, form or application may only be effected as provided by section 120AAZZH.

90.  The Schedule 7 mandatory implied terms include that the landlord must, after receipt of the tenancy agreement signed by the tenant, cause the agreement to be stamped and within 30 days “return to the tenant a counterpart of the stamped tenancy agreement signed by the parties”: section 3, Schedule 7. The applicant duly returned the stamped 1^st R1 & R2 TA and the stamped 2^nd R1 & R2 TA to the respondents.

Determination of the Application

91.  The burden of proof is on the applicant to prove his case. I have accepted that the applicant and the respondents entered into the 1^st R1 & R2 TA and 2^nd R1 & R2 TA. However, no Form AR1 was produced in respect of either the first term tenancy or, significantly, the second term tenancy of the regulated cycle. The parties have relied upon WhatsApp messages and their own accounts to establish the way in which they entered into each tenancy agreement.

92.  In respect of the 1^st R1 & R2 TA the applicant attended at the ISS Kwun Tong office with the respondents. He knew that ISS was aware of the terms of R1 TA. He agreed the 1^st R1 & R2 TA face to face with the respondents in the presence of the ISS staff, aware of ISS oversight regarding the subsidy. I do not accept that the applicant perpetrated the alleged deception. He did not take advantage of the respondents because of their circumstances. The respondents knew the rent was $5,600.

93.  I reject the respondents’ defence that the applicant increased the rent 3 times in one year from $5,390 to $5,600 and again to $6,160 without notice, when the landlord has to give R1 notice, but did so without informing him. The applicant did not defraud them with the agreements between 26 September 2022 and 29 September 2022. The 1^st R1 & R2 TA was not a “fraudulent contract”. The respondents’ admitted the sum claimed by the applicant, subject to repayment of $290 per month overpayment of rent under the 1^st R1 & R2 TA. The respondent did not make overpayments as claimed. Their claim for refund of overpayments, whether by way of set off or otherwise, is refused.

94.  I accept that before the 2^nd R1 & R2 TA, R1 asked the applicant when the renewed tenancy agreement would be entered into. The applicant then arranged to meet the respondents to agree and execute the renewed tenancy agreement. R2 attended and executed the 2^nd R1 & R2 TA on the respondents’ behalf. They did not follow the statutory procedure by service of an offer and return of acceptance using the prescribed Form. The consequence is, notwithstanding the fact that the respondents agreed and signed the 2^nd R1 & R2 TA, the new rent of $6,160 cannot be enforced. The rent under the second term tenancy must remain at $5,600.

95.  The applicant did not follow the statutory procedure in renewing the tenancy and did not use the prescribed Form. It was apparent from, inter alia, the applicant’s claim for stamp duty addressed below, that the applicant was not sufficiently familiar with the provisions of Part IVA. I have no hesitation in finding any omission was inadvertent. There was no dishonestly on the part of the applicant. The result, however, remains that the rent cannot be increased. This has an impact on the claim for arrears.

96.  The respondents’ obligation is to pay rent to the applicant on or before the due date: section 7 of Schedule 7. They were bound to pay the monthly rent of $5,600. They have not. They admit the claim sum of $14,350 but claimed that $9,280 should be repaid and are willing to pay the balance $5,070.

97.  The AWS Attachment 13 particulars of the claim arrears must be recalculated on the basis of the monthly rent of $5,600, not $6,160, from October 2024. The arrears of rent from April 2025 to June 2025 are thus $6,000 ($2,000 x 3). The claim for the sums outstanding, adjusted as permitted under the Ordinance which I accept, is tabulated below:

98.  The applicant’s claim for October 2024 included the sum of $1,308 for “Deposit difference and stamp duty”. The 2^nd R1 & R2 TA provides that all costs incidental to signing the agreement shall be borne by the parties in equal shares: clause 18. He said that $185(1/2 $370) of the $1,308 sum was to reclaim half the stamp duty he paid from the respondents. The applicant did not know that under Part IVA the stamp duty on the tenancy agreement for a regulated tenancy is to be borne by the landlord solely: section 2 of Schedule 7. The provision overrides the agreement term. Once he was informed that under Part IVA the landlord is not entitled to claim the stamp duty on a regulated tenancy from the tenant he readily said $185 should be deducted. The claim for increased deposit is also unsustainable because of the finding that the 2^nd R1 & R2 TA rent must remain $5,600. The deposit does not increase from the 1^st R1 & R2 TA deposit. Given that he cannot claim any stamp duty from a Part 1VA tenant and that the rent for the second term tenancy cannot be increased, I disallow the claim for $1,308 “Deposit difference and stamp duty”.

Disposition

99.  For the reasons set out above the respondents are in breach of their obligation to pay rent when it falls due. The applicant is entitled to vacant possession, all arrears of rent and mesne profits thereafter. I grant the respondents relief from forfeiture. If the respondents do pay into the tribunal within 14 days hereof all sums due to date of payment they shall be relieved from forfeiture. The order is set out below.

Order

100.  I make the following Order:

(1) Subject to paragraph 4 below, the respondents do deliver vacant possession of the suit premises known as “Room 3, Flat H, 11^th Floor, 1A Shek Kip Mei Street, Shamshuipo Building, Kowloon” to the applicant.

(2) The respondents do pay the applicant arrears of rent/ mesne profits as follows:

(a) Balance of arrears of rent from 1 March 2025 to 30 June 2025 in the sum of $7,369.

(b) Arrears of rent/ mesne profits at the rate of $5,600 per month from 1 July 2025 until delivery up of vacant possession.

(3) The respondents do pay the applicant water charges due from 1 March 2025 to 31 March 2025 in the sum of $58.

(4) If the respondents should on or before 16 July 2025 (“Relief Expiration Date”) pay into the tribunal all the arrears of rent/ mesne profits as stated in paragraph 2 above (including all arrears of rent/ mesne profits due on or before the date of payment) the respondents be relieved from the forfeiture incurred herein, and the lease of the suit premises be reinstated.

(5) Unless otherwise ordered, all sums ordered to be paid under this judgment shall be paid into the tribunal in cash, by EPS, by cashier orders issued by banks in Hong Kong or by cheques drawn by firms of solicitors in Hong Kong, and such sums received by the Tribunal shall be released to the applicant.

Costs

101.  Section 120AAZZB of the Ordinance provides that in any proceedings under Part IVA, the tribunal must not make any order as to costs against a party unless that party has conducted the case in a frivolous or vexatious manner. The applicant has obtained an order for vacant possession but I find that the respondents have not conducted the case in a frivolous or vexatious manner. Therefore, I make a costs order nisi that there be no order as to costs. Any party may apply to vary the costs order nisi within 14 days hereof, failing which the costs order nisi shall become absolute.