BOSSINEY LTD. v. LIANG CHEUNG BIU, THOMAS

IN THE COURT OF APPEAL

1994, No. 145
(Civil)

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J U D G M E N T

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Litton, J.A.:

1. The appellant is the landlord of Flat B on 6/F of Magazine Heights, No 17 Magazine Gap Road. The respondent is the tenant of that flat. The tenancy expired on 19 April 1994 and the tenant wished to remain in possession. The statutory notices under Part IV of the Landlord and Tenant (Consolidation) Ordinance were duly served and eventually an application was made to the Lands Tribunal for a new tenancy to be granted under section 117(1) of the Landlord and Tenant (Consolidation) Ordinance.

2. The tribunal heard evidence concerning the state of repairs of the flat and entertained opinion evidence from experts on both sides regarding the prevailing market rent for flats in that locality. After a careful evaluation of all the evidence, including the opinion evidence of the experts, the tribunal ordered that a new tenancy be granted for two years from 20 April 1994 at $79,000 per month exclusive of rates and the management fees and that the new tenancy should otherwise be on the same terms and conditions as the previous tenancy, except for the deposit which was to be altered to reflect the new rent. The landlord now appeals to this court against that determination by the tribunal.

3. Before I deal with the grounds of appeal argued by counsel on behalf of the landlord it is worth stressing the policy considerations behind the statutory scheme. Questions of the "right" prevailing market rent are matters of degree, based upon a large number of factors. When experts give evidence and express opinions regarding the prevailing market rent, they apply their own experience and exercise judgment; they then estimate what in their opinion the flat might command if offered in the open market. These are pure matters of fact, and so are things like the actual condition and state of repairs of the premises. The tribunal, having evaluated all the evidence, then arrives at a conclusion. The intention of the legislature plainly is that, when such determination by a tribunal has been made, the matter should be final. Hence the section 117 application goes before a statutory tribunal. And under the provisions of section 11(2) of the Lands Tribunal Ordinance the right of appeal by either party to the Court of Appeal is limited to points of law.

4. The grounds of appeal which have been put forward are as follows:

(1) "The learned member was wrong in law in holding that the 'break clause' in question would have beneficial effects on the appellant (landlord);"

(2) "The learned member failed to obtain an undertaking from the appellant (landlord) to remedy the conditions of the property in question instead of deducting 10% of the prevailing market rent of the property in question."

5. As to the first ground of appeal, it is focussed on this passage of the tribunal's decision:

"The landlord did not oppose the granting of a new tenancy which is to be for two years from 20th April 1994 on the same terms and conditions as the previous tenancy which included a 'break clause' entitling the tenant to terminate the tenancy on three months' notice after one year. This is a clause which in a rising market can be an advantage to a landlord as well as a tenant. It should attract no added value."

6. I totally fail to see how the tribunal can be said to have erred in law in the way it evaluated the effect of the break clause in the tenancy. All that the tribunal was in effect saying is this: If the tenant should in fact exercise his right within the period of the tenancy to terminate the tenancy then, in a rising market, the likelihood is that the new tenant wishing to occupy the same flat would be willing to pay a higher rent. This seems to me to be a pure matter of common-sense. I would therefore reject as wholly untenable the first ground of appeal.

7. The second ground of appeal is focussed on this passage in the tribunal's decision:

"The tenant has leased the property since 1986. He said he refurbished the bathrooms at his own expense in 1986. Other than that no work has been done to the flat. Most other flats in the block which was built in 1971 have been extensively refurbished. He still has the original windows, some of which do not close properly, the original kitchen and, as he said, rusting plumping".

and then a little later the tribunal went on:

"However we now have the evidence of the tenant who resides in the building and more particularly the subject flat itself. His unchallenged evidence concerning its condition being more in keeping with the original finish than any other in the building, particularly with respect to the kitchen and the windows, leads me to make a deduction for this. A 10% deduction seems to me to be reasonable".

8. Here all that the tribunal was saying is this. By comparison with other flats in the same block the condition of Flat B on the 6/F was worst and this was with particular reference to the windows and the state of the kitchen; hence in using any comparables there should be a deduction in relation to the flat in question. I cannot see how it can be said that the tribunal has erred. I have even greater difficulty in seeing how the ground put forward can be said to be a proposition of law. Simply as a proposition this ground of appeal stultifies itself. Counsel has been unable to point to any power vested in the tribunal to "obtain an undertaking from the landlord" requiring him to remedy the condition of the flat. In my judgment this ground of appeal also totally fails.

9. The appeal must therefore be dismissed.

Barnett, J.:

10. For the reasons given by my Lord, I agree that the appeal must be dismissed.

Chan, J.:

11. I agree with the reasons given by my Lord and I have nothing to add.

Litton, J.A.:

12. The appeal is dismissed, with costs on a common fund basis.