GAINFIELD INVESTMENT LTD AND ANOTHER v. LAM YI LAI AND OTHERS

DCCJ 3736/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3736 OF 2014

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DECISION

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1.  At the pre-trial review (“PTR”) of this case before me on 6 June 2016, the parties raised an interesting jurisdictional point.

2.  In short, the plaintiff’s solicitors have recently discovered that the rateable value of the land in dispute, namely, the property situated at 4^th Floor, No 2B Tak Shing Street, Kowloon, Hong Kong (“the Property”) is at HK$257,400, which exceeds the HK$240,000 limit stipulated under s 35 of the District Court Ordinance, Cap 336 (“DCO”).  This raised the question of whether the District Court still has jurisdiction to hear this claim under s 35 of the DCO.

Brief history of the proceedings

3.  Before addressing this issue, it will be appropriate for me to set out the brief history to the present proceedings:-

(1)  On 11 December 2013, the plaintiffs commenced the present proceedings in the Court of First Instance of the High Court (“the CFI”) by issuing a writ under HCA 2418/2013 claiming, inter alia, possession of the Property;

(2)  On 26 February 2014, the 1^st defendant filed a defence & counterclaim;

(3)  On 16 April 2014, the plaintiffs filed a reply & defence to the counterclaim. 

(4)  There is no dispute that the rateable value of the Property at or around the time of issuing the writ in 2013 was at HK$191,760 and the plaintiffs’ claim therefore falls within the jurisdiction of the District Court under s 35 of the DCO;

(5)  By a consent summons filed on 22 September 2014, the plaintiffs and the defendants agreed to transfer HCA 2418/2013 to the District Court;

(6)  By an order made on 22 September 2014, Registrar Lung of the High Court ordered HCA 2418/2013 to be transferred to the District Court;

(7)  Upon the order given by Master M Lam of the District Court on 25 November 2015, the action was ordered to set down for trial before a judge on the fixture list. At that time, the rateable value of the Property was still below HK$240,000;

(8)  The action has been set down for a 6 day trial from 12 to 19 August 2016;

(9)  A PTR has been fixed at the same time for 6 June 2016;

(10)  It was only recently that the plaintiffs’ solicitors have discovered the rateable value of the Property for the year of 2016/17 (effective from 1 April 2016) has been increased to HK$257,400;

(11)  A letter dated 3 June 2016 was sent by the plaintiffs’ solicitors to the court drawing the court’s attention to this matter.

Discussion

4.  s 35 of the DCO provides:-

“The court has jurisdiction to hear and determine any action for the recovery of land, where the annual rent or the rateable value of the land, determined in accordance with the Rating Ordinance (Cap 116), or the annual value of the land, whichever is the least, does not exceed $240,000.”

5.  There is no dispute that the jurisdiction of this court is limited to the rateable value of $240,000 under s 35 of the DCO. The issue before me is whether the relevant time for determining the rateable value for the purpose of s 35 is at the commencement of the proceedings or at the time when the case is due for hearing or determination. 

6.  This involves a question of interpretation of s 35 of the DCO.

7.  The legal principles on statutory interpretation are not in dispute and are helpfully summarized by Deputy District Judge Winnie Tsui in Ng Cho Chu Judy v Chan Wing Hung [2016] 1 HKLRD 1073 at §76.  In a detailed and comprehensive review of the legislative history of the DCO (see §§79-85), its purpose (see §§86-95), the context under which it was enacted (§§96-104), the learned deputy judge said (at §94):-

“In summary, it is manifestly clear from the above that the purpose of the establishment of the [DC] and the ongoing enlargement of its civil jurisdiction throughout the years is to divert more civil cases to the [DC] from the [CFI] to the extent that it is feasible and appropriate to do so.”

8.  The particular statutory provision under consideration in Ng Cho Chu Judy is s 36 and not s 35 of the DCO, although the principles in relation to statutory interpretation are the same. Applying the principles set out in §76 of the Judgment, the learned deputy judge followed Ma Yu Cheung v Yu Wai Chun, DCMP 268/2001, unreported, 22 November 2001, a decision of HH Judge Andrew Cheung (as the Chief Judge of the High Court then was) and adopted the liberal approach in the interpretation of s 36 of the DCO.  See §118 of the Judgment.

9.  It should be noted that s 19 of the Interpretation and General Clauses ordinance, Cap 1 also provides that:-

“An Ordinance shall be deemed to be remedial and shall receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Ordinance according to its true intent, meaning and spirit.” [emphasis added]

10.  I agree with Mr Lawrence Ng, counsel for the defendants, that this court should adopt a liberal approach in the interpretation of s 35 of the DCO.

11.  In adopting the liberal approach, I agree with Mr Ng that the following factors point strongly to the conclusion that the rateable value of the property should be determined at the time when the proceedings were issued:-

(1)  First, it is the rateable value of the land at the time when the proceedings are commenced which a plaintiff will take into consideration in deciding whether to institute the claim in the CFI or the District Court.

(2)  Second, §4 of Practice Direction 27 imposes a requirement that all writs and originating summons “should contain a plea that the relief sought do fall within the jurisdiction of the District Court, specifying which section (2) of sections 32 to 39 of the [DCO] do apply to the case”.  Obviously, whether the relief sought fall within the jurisdiction of the District Court must be decided at the time of the proceedings are commenced.

(3)  Third, if the time for determining the rateable value of the land were at the time of trial, then given the ever increase in the value of real properties in Hong Kong over the past several decades, litigants would find themselves caught in the following unwarranted situation: whilst at the time when proceedings are commenced the District Court has jurisdiction to hear their claim, when it comes to the hearing or trial (which may sometimes be several years after the commencement of proceedings), the District Court has no jurisdiction to hear their claim.  This would defeat the purpose in establishing the District Court (see §7 above).

12.  Mr Anthony Chow, counsel for the plaintiffs, submits that the court should take a literal approach in interpreting s 35 of the DCO and that the court should determine the rateable value of the land at the time of hearing and determining of the case in accordance with the wordings of s 35.  He admits that the plaintiffs are not able to identify any authority directly on point.  Mr Chow further submits that while the plaintiffs are keen to proceed with the trial set down before this court in August, they are more concerned that the judgment to be made by this court upon trial is not open to challenge for lack of jurisdiction by the defendants. According to Mr Chow, that is the reason why the plaintiffs prefer to take a more cautious approach.

13.  The plaintiffs suggest this court to make an order to transfer the case to the CFI while keeping the scheduled trial dates in August 2016 in the District Court; then by consent the parties would seek an order of the CFI under s 44 of the DCO to transfer the present action back to the District Court; and then the parties to proceed with the trial in this court as scheduled.

14.  While I fully understand why the plaintiffs would take a cautious approach in the matter, I cannot agree with the suggestion that the proper date of determining whether the court has jurisdiction over the matter should be at the time of hearing and determining the matter for the following reasons:-    

(1)  It is clear that the date of hearing of a case will be different from the date of determining the matter.  It is not difficult to envisage a situation where a case will be heard (or tried) while the rateable value is still within the District Court jurisdiction and a few weeks or months later when the case is determined (ie when judgment comes out) it already exceeds the jurisdictional limit due to the fluctuation of the property market.  In such situation, it will be absurd to suggest that the District Court while having jurisdiction to try the case at the time of the hearing will have no jurisdiction to determine the matter at the time of delivering the judgment.

(2)  I do not think it would be the legislature intent that the parties should keep checking the rateable value of a property at different stages of the proceedings and to transfer the case in and out of the District Court each time when the rateable value has been changed by the Rating and Valuation Department. 

(3)  The legislature intent must be that there will be some sort of certainty for the parties to know in which court to issue the proceedings and to maintain that case in, according to a property’s rateable value.  In my judgment, the best time to do so must be at the time of issue of the proceedings.

(4)  It has been acknowledged that in many cases a transfer to the District Court would bring about more expeditious and more cost effective disposal of the case: see the comments of Johnson Lam J (as he then was) in Re Estate of Chow Nai Chee [2010] 5 HKLRD 640 at §42.  Therefore, it must be in the interest of justice and parties to keep the case in the District Court once the case has commenced.

(5)  This case started life in the CFI.  The writ was originally issued on 11 December 2013.  In the defence and counterclaim filed by the 1^st defendant on 26 February 2014, the defence raised the point that the rateable value of the Property from April to June 2013 was at HK$191,760 only.  The plaintiffs admitted this in the reply & defence to counterclaim. The case was then transferred to the District Court by consent.  In other words, this case ought to have been commenced in the District Court in the first place.  It will be absurd that just because a recent search indicates the rateable value of the Property has slightly exceeded the jurisdictional limit, the whole case should now be transferred back to the CFI just for the parties to obtain an order to have it transferred back to the District Court for trial.

(6)  The plaintiffs suggestion will not only add unnecessary costs and time to the proceedings, it will most likely frustrate the trial dates fixed for August as there is no guarantee that the parties will able to obtain the order of transfer under s 44 before the trial dates.  In my view, this will be against the spirit and underlying objectives under Order 1A of the Rules of the District Court.

Conclusion

15.  For the above reasons, I find that the District Court has jurisdiction to hear this claim. 

16.  I would like to thank the plaintiffs’ solicitors for bringing this matter to the court’s attention.  I consider that it was right and proper for them to do so.  As the parties have agreed, I think the proper costs order to make for the time spent in arguing this interesting jurisdictional point should be costs in the cause.

17.  I should also thank both counsel for their helpful assistance despite the shortage of time in preparing the submissions.