LAI FUNG TIN v. JOHN, DONALD CHUKWUZITERE

CAMP 238/2021

[2022] HKCA 423

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 238 OF 2021

(ON AN INTENDED APPEAL FROM LDPE 376 of 2021)

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D E C I S I O N

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Hon G Lam JA (giving the Decision of the Court):

1.  This is the Respondent’s renewed application for leave to appeal from the judgment (“the Judgment”) of Mr Lawrence Pang, Member of the Lands Tribunal, on 3 June 2021, whereby he entered judgment for the Applicant for vacant possession of the suit property together with arrears of rent and mesne profits, and granted relief against forfeiture to the Respondent on payment of the arrears of rent and mesne profits by 21 June 2021.

2.  Having considered the written materials, we are of the view that it is appropriate to determine the Respondent’s application based on written submissions only, pursuant to Order 59 rule 2A(5)(a) of the Rules of the High Court (Chapter 4A of the Laws of Hong Kong) (“RHC”).  This is our determination based on the submissions made in the parties’ written statements respectively supporting and opposing the application.

Background

3.  By a written tenancy agreement signed on about 28 December 2020 (“the Tenancy Agreement”), the Applicant agreed to let to the Respondent a shop, namely, Shop 8, 2/F, Mirador Mansion, 58 Nathan Road, Kowloon (“the Property”) for a term of 2 years from 15 January 2021 to 14 January 2023 at a rental of $9,000 per month.

4.  On 30 March 2021, the Applicant commenced the action below in the Lands Tribunal alleging that the Respondent had failed to pay rent for the period from 15 February 2021 onwards. The Applicant claimed for (i) vacant possession of the Property; and (ii) rent or mesne profits at $9,000 per month from 15 February 2021 until delivery up of vacant possession.

5.  The Respondent defended the action on the grounds that (i) the Applicant had promised that the Property would be installed with electricity supply; (ii) in any event, after the execution of the Tenancy Agreement, the Applicant agreed to cancel the Tenancy Agreement and refund the deposit that the Respondent had paid; and (iii) the Applicant had also agreed, subsequent to the execution of the Tenancy Agreement, to exempt the Respondent from paying rent until electricity was installed.

6.  The case was tried in the Tribunal before Member Pang on 20 May 2021. On 3 June 2021, the Tribunal handed down the Judgment allowing the Applicant’s claims.  Specifically, the Tribunal found that:

(1)  No one had told the Respondent that the Property was not installed with electricity supply (see Judgment [17]).

(2)  Neither the Applicant nor Ms May Choi, the estate agent who brokered the deal, had promised to fix the electricity supply before the commencement of the tenancy since, among other reasons, if such a promise had been made it would have been expressly recorded in the Tenancy Agreement (see Judgment [17]-[23]).

(3)  At common law, there is in general no implied warranty on the part of a landlord that the demised premises are fit the purpose for which they are taken.  The intending tenant is presumed to make his own inquiries as to their condition and, in the absence of a special stipulation, he takes the premises as they stand, even without electricity supply (see Judgment [24]).

(4)  There was no subsequent agreement between the parties to cancel the Tenancy Agreement and refund the deposit.  It was the Respondent himself, not the Applicant, who made this suggestion.  In any case, the Respondent made a counter-offer (that the Applicant should bear all expenses including the costs of the workers he called in) which, in law, had the effect of rejecting the Applicant’s offer (see Judgment [27] and footnote 10).

(5)  Although the Applicant had at one point suggested postponing the commencement of the lease until after electricity was fixed, the Respondent did not accept the proposal but instead tried to further negotiate with the Applicant (see Judgment [29]-[30]).

7.  The Respondent applied to the Tribunal for leave to appeal to the Court of Appeal.  On 21 June 2021, the Tribunal dismissed the Respondent’s application. By a summons dated 2 July 2021 (“the Summons”), the Respondent renewed his application for leave to appeal before this Court.

Grounds of Appeal

8.  Attached to the Summons is a 4-page document setting out the Respondent’s proposed grounds of appeal, which may be summarised as follows.

9.  By Ground 1, entitled “Falsity in the witness statement made by the [Applicant]”, the Respondent contends that the Applicant had (i) falsely claimed that she had told the Respondent the Property was not equipped with electricity supply, and (ii) falsely denied having expressly promised to fix the electricity supply.  It is said that the Applicant was not a trustworthy witness, and that the Tribunal should not have accepted her evidence.

10.  By Ground 2, entitled “The extension of the lease-free period was never rejected”, the Respondent seeks to challenge the Tribunal’s finding that the Respondent had rejected the Applicant’s offer to postpone the commencement of the lease until after electricity was fixed.  The Tribunal is said to have wrongly interpreted the evidence, specifically the WhatsApp messages exchanged between the parties.

11.  By Ground 3, entitled “Wrong interpretation of some evidence”, it is said that the Tribunal was wrong to find that it was the Respondent, rather than the Applicant, who proposed to cancel the Tenancy Agreement.

12.  By Ground 4, entitled “Unreasonableness to expect provision of electricity to be written into tenancy contracts”, the Respondent seeks to challenge the Tribunal’s observation (at Judgment [19]) that if the Applicant had promised to fix the electricity supply, such promise would have been recorded in the Tenancy Agreement.  Such observation, the Respondent says, is contrary to common commercial practice and the common expectation that the Property (being a shop) would be equipped with electricity supply.

13.  By Ground 5, entitled “I had a right to repudiate the contract due to the mistake”, the Respondent contends that he should be entitled to rescind or cancel the Tenancy Agreement by reason of the Applicant’s concealment of the fact that the Property was not equipped with electricity supply.

Discussion

14.  Under section 11(2) of the Lands Tribunal Ordinance (Cap 17) (“LTO”), an appeal lies from the Tribunal to this Court only in respect of an error of law.  In other words, there is generally no appeal on the facts except where the alleged error of fact involves an error of law.

15.  Under section 11AA(6), leave to appeal from the decision of the Lands Tribunal shall not be granted unless the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard.

16.  For the reasons set out below, we are of the view that none of the proposed grounds of appeal enjoys a reasonable prospect of success.

17.  Under Ground 1, the Respondent has simply set out the evidence and argued again the Applicant was not a trustworthy witness and the Tribunal should not have accepted her evidence.  This seeks to challenge the Tribunal’s factual findings raising no error of law, which is not permissible.  In fact, the Tribunal did not simply adopt the Applicant’s evidence wholesale.  He evaluated the parties’ credibility and specifically found (at Judgment [16]) that the Applicant was not an entirely reliable witness.

18.  Likewise, Ground 2 seeks to attack the Tribunal’s factual finding without raising any error of law and, for this reason alone, must be rejected.  In any event, we see no apparent flaw in the Tribunal’s finding that the Respondent did not accept the Applicant’s proposal to postpone the commencement of the tenancy.  We do not see any error in the Tribunal’s understanding or interpretation of the WhatsApp messages recited in Judgment [9].

19.  Ground 3 again seeks to challenge the Tribunal’s factual finding, alleging that it misinterpreted certain recordings as showing that the Respondent initiated the cancellation of the Tenancy Agreement.  There is no point of law involved, and therefore no permissible ground of appeal. Further, irrespective of who first suggested cancelling the Tenancy Agreement, we see no apparent flaw in the Tribunal’s conclusion (in Judgment [27]) that since the Applicant did not agree to the Respondent’s demand to reimburse his expenses, no binding agreement was reached between the parties.

20.  In respect of Ground 4, insofar as the Respondent seeks to attack the Tribunal’s finding that the Applicant did not expressly promise to fix the electricity supply, this is a pure challenge against the Tribunal’s factual finding which cannot be entertained.  In any event, we see little prospect in the Respondent’s argument, having regard to the reasons given by the Tribunal for finding that no such promise had been made, including the lack of reference to such promise in the Tenancy Agreement and the absence of reference to such promise in the subsequent WhatsApp exchanges between the parties and the estate agent.

21.  As regards the Respondent’s assertion that the “common expectation” was that the Property would be equipped with electricity supply, we are prepared to treat this point as an argument of law that the Tenancy Agreement contained an implied term that the Property would be equipped with electricity supply.  A term may be implied into a contract “in law” or “in fact”, as recently discussed in Lau Chun Ming v Deloitte Touche Tohmatsu [2021] 2 HKLRD 706 at [21].  However, this point is not arguable on either basis because:

(1)  There can be no implication in law of a term into the Tenancy Agreement that the Property would be let to the Respondent equipped with electricity supply.  Such implication would be inconsistent with the wider and well-established principle that the common law does not imply into a lease a condition or term that the property is fit for the purpose for which it is let: see Hill & Redman’s Law of Landlord and Tenant (Issue 133, December 2021), Division A at [3007]; Merry, Hong Kong Tenancy Law (6^th ed) p.70; Golden Sunrise Ltd v Lee Kwok Hung & Another [2005] 1 HKC 466 at [37]; Greens Nursery & Tree Planting Design Ltd v Secretary for Justice [2018] HKCFI 2558 at [71].  The Respondent may not have been aware of this legal rule, but this is a “fundamental principle” of the common law as between landlord and tenant: see Southwark London Borough Council v Tanner [2001] 1 AC 1 at 7H-8B, where another passage from Edler v Auerbach [1950] 1 KB 359, 374 was cited: “It is the business of the tenant, if he does not protect himself by an express warranty, to satisfy himself that the premises are fit for the purpose for which he wants to use them …”.

(2)  Nor can the proposed term be implied in fact. An implied term in fact must be, among other things, necessary to give business efficacy to the contract and so obvious that “it goes without saying”: see Kensland Realty Ltd v Whale View Investment Ltd (2001) 4 HKCFAR 381 at [23].  It is not enough to show that the proposed term is “reasonable”: Liverpool City Council v Irwin [1977] AC 239 at 254F & 256G, 258A-D, 262B-H & 265C-266D; Rank Profit Industries Ltd v Secretary for Justice[2009] 1 HKLRD 194 at [20]-[24], [61].  Here, the proposed implied term is in our view neither necessary nor obvious.  There is no suggestion that the premises were incapable of being equipped with electricity supply.  There is no suggestion that it was somehow impossible or impracticable for the Respondent to arrange for electricity installation himself.  On the contrary, the evidence was that the Respondent had engaged electricians to do the necessary works and the Applicant had made arrangements for China Light & Power to come and install an electricity supply.  There were more than two weeks between the signing of the Tenancy Agreement and the commencement of the term, during which the Respondent was already let into possession.  It is true that the Respondent would have to incur time and expenses to fix the electricity supply, but this is a far cry from saying that the Tenancy Agreement would be rendered futile and inefficacious without the implied term.

22.  Ground 5 has no reasonable prospect of success because, as noted in Judgment [25], there was no duty on the Applicant to disclose the lack of electricity supply in the Property.  There is nothing to suggest that the Applicant did anything untoward to conceal the absence of electricity supply, such as by placing fake electrical installations there to deceive the Respondent.  The absence of electrical switches, sockets, wiring and a mains box would have been detectable, if not obvious, on an inspection. In the context of tenancy agreements, the rule of caveat emptor applies and the tenant has to rely on his own inspection of the property: see Fortune Global Development Ltd v Shung Cheong Food Trading Ltd [2002] 2 HKLRD 447 at [72]-[84].

Conclusion

23.  In conclusion, we do not find any error of law in the Judgment and there cannot be any appeal against factual finding in an appeal from the Lands Tribunal without an error of law.

24.  For the above reasons, we refuse leave to appeal and dismiss the Summons.

25.  As the present application is totally without merit, we further make an order under Order 59 rule 2A(8) of the RHC that no party may request the determination to be reconsidered at an oral hearing inter partes.

26.  The Respondent has to pay the Applicant’s costs of the application, if any.  Since the Applicant has acted in this application without legal representation, her costs will generally not be allowed at a rate more than $200 per hour: see RHC Order 62 rule 28A(3).  If the Applicant does seek costs, she should, within 14 days from the date hereof, lodge with this Court and serve on the Respondent a written statement of her costs, with details of the time and expenses incurred; the Respondent may within 14 days thereafter, if he wishes, lodge with this Court and serve on the Applicant a written statement of his reasons for opposing those costs or any part thereof.  The Court will then assess the Applicant’s costs on the basis of the written materials.