FORDTIME INDUSTRIAL LTD v. YIP SHING LAM t/a TRADITIOAL CHINESE NOODLE

LDPE 757/2012

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO LDPE 757 OF 2012

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ASSESSMENT OF MESNE PROFITS

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Background

1.  This is the hearing of the assessment of mesne profits concerning the respondent’s use of the property known as Cockloft C on the Upper Part of the Ground Floor, Tsuen On Building, Nos 20-24 Lo Tak Court, Tsuen Wan (“Cockloft C”) after the tenancy agreement between the parties expired on 30 April 2011.

2.  The background and history of this case can be found in the judgment of this Tribunal dated 9 October 2013 (“Possession Judgment”), decision dated 7 February 2014 (“Review Decision”) and decision dated 23 May 2014 (“Leave Decision”) as well as in the decision of the Court of Appeal (“CA”) dated 25 July 2014 (“CA Decision”).  The abbreviations used in these previous judgment/decisions will be adopted in this assessment decision.

3.  In short, this Tribunal had found after trial in the Possession Judgment (§17-32) that the T/A between the applicant and the respondent is a valid one concerning Cockloft C with the floor slab being removed.  Upon expiration of the T/A, the respondent had been holding over without paying any rent or mesne profits (§47).  It is ordered in the Possession Judgment (§55-56) that the respondent should deliver vacant possession of Cockloft C to the applicant and to pay the applicant mesne profits from 1 May 2011 till delivery up of vacant possession.  Assessment of mesne profits is adjourned pending valuation report to be filed.

4.  The respondent applied for a review of the Possession Judgment and it was found in the Review Decision that the subject matter of the T/A was a Cockloft with the floor slab being removed and the parties were well aware of the fact that Cockloft C was rented out without a floor slab (§6-7).  The application for review was dismissed.

5.  The respondent applied for leave to appeal against the Review Decision which is also dismissed.  In the Leave Decision, this Tribunal confirmed its ruling that the subject matter is the Cockloft C with walls and ceiling but with the floor slab being removed (§13).

6.  And on the application by the respondent for leave to appeal, CA upheld the findings of this Tribunal on the subject matter of the T/A and found the applicant in effect denied itself the use of the airspace over Cockloft C with the floor slab removed for a price (§21-24).  The leave to appeal application was dismissed by CA.

7.  Upon the application by the applicant, a writ of possession was issued on 30 October 2014.  Notice to Occupier to Quit was posted up at the entrance of Cockloft C on 1 December 2014 (B/290).  As found in the Possession Judgment, there is an opening between Shop 1 and Shop C from the main road with a flight of staircase leading up to the common landing of Cockloft A to D and each Cockloft has its own doorway from the common landing (§7).  On 1 December 2014, the applicant discovered that a brick wall (“the Wall”) was built behind the door of Cockloft C preventing access or inspection of the Cockloft C (photo at B/273).

8.  By a letter dated 2 December 2014 (B/306), the respondent notified the applicant that it was free to take possession of Cockloft C with immediate effect.  The applicant caused a check on Cockloft C and found the Wall was still there.  The applicant then instructed its solicitors to send a letter dated 3 December 2014 (B/307) stating the fact about the Wall which was built by the respondent, denied vacant possession had been handed up and demanded such to be removed.

9.  By a letter dated 13 January 2015 (B/313-314), the respondent replied and said that :

(a)  neither this Tribunal nor the CA has made any order requiring the respondent to demolish the Wall;

(b)  vacant possession of Cockloft C had been delivered by dismantling all the pipes or ducts that were previously occupying Cockloft C on 2 December 2014; and

(c)  the Wall was built in or around mid-2012 by the respondent after an inspection carried out by representatives of the Buildings Department (“the BD”) since the doorway to Cockloft C had never been approved by the BD and had to be sealed, hence the respondent was not in a position to demolish the Wall as requested by the applicant.

10.  Solicitors for the respondent had also wrote to the BD on 13 January 2015 (B/330-331) seeking confirmation from the BD as to whether approval is required to demolish the Wall in order to create an access doorway as required by the applicant. The BD replied on 20 January 2015 (B/332) that the BD is processing the respondent’s request and will inform him the outcome in due course.  Despite further letters sent by the respondent (B/333 & 335), the last reply from the BD dated 10 July 2015 is that the request is still in process.  As at the date of this hearing, there is still no reply from the BD in answer to the letters of the respondent.

11.  On 6 March 2015, the applicant arranged for a contractor to demolish the Wall and the demolition work completed on 7 March 2015 (photo at B/357-371).  On 9 March 2015, the bailiff sent a letter to the applicant’s solicitors stating that the bailiff had delivered possession of the Cockloft C to the applicant on 9 March 2015.

12.  The applicant found a sewage/drainage pipe inside Cockloft C and such was removed by the respondent 2 or 3 days after 11 March 2015 upon the request of the applicant.  The applicant then arranged contractors to rebuild the floor slab of Cockloft C.

13.  The issue in dispute at this hearing is :

(a)  the date of delivery up of vacant possession, 9 March 2015 or 2 December 2014; and

(b)  the rental valuation regarding Cockloft C, assessed as a void space without the floor slab or as a Cockloft with floor slab.

Date of Vacant Possession

14.  Mr Lau for the applicant submitted that given the existence of the Wall which was built by the respondent which prevented an access to Cockloft C, this deprived the applicant of its right to actual unimpeded physical enjoyment of Cockloft C so no vacant possession had been delivered when the Wall was still there. Vacant possession was only delivered to the applicant by the bailiff on 9 March 2015 after the Wall was being demolished.

15.  Mr Nip for the respondent contended that the vacant possession order sought has to be read and understood in the context of the very specific case run by the applicant at the trial on liability.  The only allegation is occupation by the respondent by having A/C ducts and pipes in Cockloft C and it was never the pleaded case that the respondent failed to deliver vacant possession of Cockloft C by refusing to demolish the Wall.  The existence of the Wall was within the knowledge of the applicant in 2013 yet no amendment of pleadings had been sought.  It is too late now for the applicant to change its case on the meaning of “vacant possession”.  And had the applicant raised this at the trial in 2013, there would be ample time for the respondent to raise this with the BD in late 2012 or 2013 and could well have received a written response by now; the respondent is deprived of the opportunity to doing so and is clearly prejudiced in this regard.  Furthermore, the CA had found that the nature and ambit of the order for delivery up of vacant possession in this case is that the respondent is not allowed to occupy the airspace above the kitchen area (§29) and the ducts or pipes installed by the respondent which were occupying the airspace above the kitchen area must be removed.  Any suggestion that the scope of the order of delivery up would also involve the demolition of the Wall is clearly inconsistent with the ruling of the CA and amounts to a rewriting of the court’s order.  So, by removing the ducts or pipes and giving notice to the applicant, vacant possession had been delivered on 2 December 2014.

16.  I agree with the applicant’s contention that the Wall prevents the applicant from enjoying the Cockloft C and vacant possession cannot be handed back to the applicant before the Wall is being demolished.  So vacant possession should only be delivered on 7 March 2015 and not on 9 March 2015 or 2 December 2014.

17.  Mr Lau for the applicant had relied upon the judgment of Cumberland Consolidated Holdings Limited v Ireland [1946] 1 KB 264 in his submission.  This case had in fact been adopted by the court of appeal in Hong Kong.  According to the findings in the case of Toho Limited and Ng Sik Yu CACV 36/2004 (unreported, 29 October 2004), “the right to vacant possession means actual unimpeded physical enjoyment of the wall.  The impediment does not mean any impediment but one which substantially prevent or interferes with the enjoyment of the right of possession of a substantial part of the property” (at §11). 

18.  The plaintiff in Toho Limited had let the external wall of the columns and the space in between for the length of about 12 feet to the defendant named as the wall space in the judgment.    The defendant had erected a structure (the original stall) against the external side of the wall space for his business. On 15 March 2002, the defendant demolished the original stall and erected a new stall at a location of about 2.5 inches away from the wall space.  The plaintiff claimed that the demolition carried out by the defendant was in breach of the terms of the tenancy agreement and the defendant had failed to pay the monthly rent since 20 January 2002.  The plaintiff further claimed that the new stall precluded the plaintiff from letting out the wall space to other tenants and the trading activities of the defendant in the new stall had caused nuisance and annoyance to the plaintiff.

19.  The CA had said the followings and found no vacant possession of the wall space had been delivered by the defendant :

“In this case, the wall space let to the defendant is on the external wall of the property. If the defendant is to deliver vacant possession of the wall space let to him then has to do so in a way which will enable the plaintiff to have unimpeded use of that space. By demolishing the original stall, the defendant would, of course, have provided the plaintiff with unimpeded access and use of the wall space. However, by erecting the new stall in front of the wall space, the defendant in effect prevented the plaintiff from using that part of the external wall of the property. While the new stall is an independent structure away from the exterior wall, the gap in between this stall and the exterior wall is only about 2.5 inches. The plaintiff cannot gain access to the external wall of his property through that thin gap. This thin gap between the wall space and the new stall is meaningless in the context of giving vacant possession. Although the new stall is on government land, it substantially prevents and interferes with the plaintiff’s enjoyment of the right of possession of a substantial part of its property. If the principle on the giving of vacant possession is recognised and applied, then on no account can it be said that vacant possession had been given by the defendant.” (At §13)

20.  In a gist, the CA found that the defendant in Toho Limited had ceased using the wall space rented and yet no vacant possession had been delivered since further action, ie the erection of the new stall though an independent structure away from the exterior wall, had prevented the plaintiff from gaining access to the wall space.  I found such a fact is analogous to our case here. Even though the respondent had removed the ducts or pipes inside Cockloft C and ceased using the airspace as such, by building the Wall, this had prevented the applicant from gaining access to Cockloft C.  Applying the findings in Toho Limited, the respondent cannot be said to have delivered vacant possession since the applicant’s enjoyment of the right of possession of Cockloft C had been deprived.

21.  I do not agree with Mr Nip that the order of vacant possession should specify how and what amounts to vacant possession.  Neither should the applicant be required to specify in its pleadings as to what the respondent should do to deliver vacant possession.  Whether in a given case the tenant has in fact delivered up vacant possession is a question of fact.  The question is whether the landlord could occupy the rented premises without difficulty or objection.  By delivery up of vacant possession, the tenant must ensure that the landlord can do so without obstruction.  When making the order for vacant possession, it would not be necessary for the court or the landlord to pinpoint every alleged act in delivering vacant possession.  In the present case, the respondent was all along using the Cockloft C was a fact not in dispute at the trial on liability hence the applicant was alleging vacant possession had not been delivered upon expiry of the T/A and asked for an order for vacant possession.  It is the occupation by the respondent that matters and I don’t think in any case like this, the landlord should name the specific act of occupation.  And adopting the findings above about vacant possession, one would expect the respondent to demolish the Wall and allow the applicant to occupy the Cockloft C without difficulty.  Under such circumstances, why would it be necessary for the applicant to raise the same at the trial on liability.

22.  And even though the CA in the CA Decision had found that all the respondent needs to do in delivery up of vacant possession is to cease its occupation of the airspace, I found the fact that the respondent had built the Wall inside the Cockloft C is in a way still in occupation of the airspace.  In the case of Cumberland (supra), the English Court of Appeal found the vendor had failed to give vacant possession in a contract of sale of land when there were rubbish, in the form of many sacks of cement which had hardened in the property at completion.  The Wall is something not inside the Cockloft C but subsequently built by the respondent.  The respondent left the Wall inside Cockloft C, I fail to see how this is not an occupation by the respondent.

23.  As for the respondent’s allegation that the Wall was being built on the instructions of the BD and the demolition of the same required consent of the BD as well, I do not accept his evidence.    The respondent did not impress me to be a truthful and honest witness.  The allegation that a representative of the BD requested the respondent to seal the doorway of Cockloft C is just a bare assertion by the respondent.  One would be surprised not to see any building order or anything in writing from the BD for this.  And in the course of cross-examination, the respondent even said that the door was not there at the time he purchased Shop 1 on the ground floor in 2002 and someone installed the door without his knowing and he only discovered the same during a renovation in mid-2012.  This is something never raised during the trial on liability when the lay-out of the upper ground floor where the cocklofts located is one of the disputed issue before this Tribunal in the determination as to whether the Cockloft C did exist.  Nor had this been raised in the witness statement of the respondent filed for the purpose of this hearing.  If the door was never there and was originally a wall, would it not be crucial to support the respondent’s case for the door to be sealed?  In any event, there is nothing confirmed from the BD that the demolition of the Wall requires its consent so I cannot see how the respondent can make use of this as an excuse not to demolish the same and prevented the applicant from taking vacant possession.

24.  Having said so, I do not agree with the applicant that vacant possession is only delivered upon the bailiff’s letter dated 9 March 2015.  As stated above, the applicant had managed to get back vacant possession and regained control of Cockloft C by the time the Wall was being demolished which completed on 7 March 2015.  The applicant did not have to wait for the bailiff to confirm such a fact to amount to delivery up of vacant possession.  The contention that vacant possession is only handed up till confirmation by the bailiff is misconceived.

Rental Valuation

25.  Parties had engaged a joint valuation expert, Mr Siu to assess the mesne profits from 1 May 2011 to 7 March 2015.  Mr Siu was instructed to assess the market value of Cockloft C on two different basis, namely as a void space and as a cockloft with floor slab.  His assessment is that as a void space, the market rental for the period from 1 May 2011 to 7 March 2015 should be $194,000 (“Assessment I”) whilst as a cockloft, the market rental for the same period should be $405,000 (“Assessment II”) (B/221).

26.  The parties had no argument over the assessed sum and the only dispute is to the basis of the assessment, ie should it be assessed as a void space or as a cockloft with floor slab.

27.  Quoting the CA Decision, Mr Lau for the applicant submitted that:

“... the CA’s decision is that the subject matter of the tenancy is not just the void space. The respondent is willing to pay the monthly rental to ensure the Cockloft floor slab was not rebuilt by the landlord thus affecting his food business. Further, the subject matter also involves reinstatement of the floor slab on termination of tenancy by the respondent. The monthly payment is to compensate the applicant for the (sic) not to rebuild the floor slab and rent the Cockloft with the floor slab to other person on the market.

It is therefore clear that the parties entered into the tenancy and the respondent pay for market rental of Cockloft C to compensate the landlord as if the Cockloft was with floor slab, but the respondent made a special condition that the floor slab should not be rebuild during the tenancy period and he promised to reinstate so on termination of the tenancy. Accordingly, in measuring the loss suffered by the landlord, ie the mesne profits, the court should consider the factual matrix and the context and award damages or mesne profits to compensate the landlord as if the Cockloft was with a floor slab.” (At §32-33 Closing Submissions)

28.  Mr Nip for the respondent submitted that there are generally 2 alternative basis for measuring mesne profits, the restitutionary approach and the compensatory approach (Hill & Redman’s Law of Landlord and Tenant at page 5184-5191).  Assessment II should not be adopted since the applicant had adduced no evidence of any actual loss suffered and damages based on the construction of the floor slab, an illegal structure, cannot possibly said to be reasonably foreseeable in the present case.  Instead, the respondent made use of the airspace to house the ducts and pipes instead of occupying Cockloft C as one with any floor slab and that was the extent of the benefit which he derived from the use of the airspace.  So, the sum put forward under Assessment I should be awarded.

29.  I agree with the respondent that the restitutionary approach should be adopted in the assessment of mesne profits in this case and Assessment I should be adopted in the assessment of mesne profits.

30.  The following principles from the Hill & Redman’s is relevant:

“A[5185] ... The basic premise underlying the calculation of mesne profits, as with any other claim in trespass, is that a trespasser shall not to make use of another person’s land without properly compensating that landowner for that use. Mesne profits may be calculated on a restitutionary basis, seeking to identify the extent to which the former tenant has been unjustly enriched by his occupation.

A[5187] ... In making that assessment of what the tenant would pay, it is essential to identify and consider what benefits it receives, because the object of the exercise is to identify the benefit to the tenant of the wrong it is committing.

A[5191] ... Thus, the landlord cannot have both restitutionary damages and damages quantified by reference to his actual losses without there being double recovery.  However, there may be situations where the landlord’s losses outstrip the benefit to the tenant of the trespass... In circumstances where the actual losses suffered by the landlord outstrip any sum that might have been agreed in the hypothetical negotiation, the landlord is entitled to have compensation awarded by reference to these actual losses.  If this method is adopted, the landlord is entitled to recover damages for all reasonably foreseeable losses naturally arising out of the tenant’s failure to deliver possession.”

31.  I also found the judgment of Orient Bright International Ltd v Hiang Kie Hong Kong Ltd [2005] 2 HKC relied upon by Mr Nip is on the point.  It is found by Madam Justice Le Pichon that “regardless of the position with common law damages, the plaintiff’s claim here is essentially for mesne profits, which is measured by the value of the accommodation to the trespasser, rather than the actual loss to the landlord” (at page 669-G).

32.  Adopting the principles quoted above, the mesne profits in this case should be assessed on the basis of the benefits the respondent had acquired as a result of his holding over upon expiry of the T/A.  The benefit must be by reference to the use of the Cockloft C by the respondent.

33.  As stated above, the subject matter of the T/A is a cockloft without the floor slab so the use by the respondent must be a cockloft without a floor slab.  In the CA Decision, it is also found that the respondent was to pay for the right to maintain as a void space what used to be Cockloft C during the whole term of the tenancy (§20).  By remaining in occupation after the expiry of the T/A, the respondent had been unjustly enriched by the wrongful use of the Cockloft C, the use is a use without the floor slab.  So this should be the basis for the assessment of damages suffered by the applicant.  There is no evidence to show that the applicant had suffered actual losses that outstripped the mesne profits recoverable based on the use of the respondent so as to justify the compensatory approach.  On the contrary, Mr Chung who testified for the applicant confirmed that even though the floor slab had been reinstated now, such would be removed upon conclusion of this hearing.  This tends to rebut the argument of the applicant that he suffered losses to rent out the Cockloft C with the floor slab being reinstated.

Order

34.  It is ordered that :

(a)  The respondent should pay the applicant mesne profits from 1 May 2011 to 7 March 2015 in the total sum of $194,000;

(b)  Costs order nisi that costs of the assessment of mesne profits be no order as to costs.  Unless any of the parties apply by summons to vary it, the costs order nisi shall be made absolute upon expiry of 14 days.

LDPE 757/2012

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO. LDPE 757 OF 2012

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D E C I S I O N

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Background

1.  This is the application by the respondent by way of summons dated 21 February 2014 for leave to appeal against the decision handed down by this court on 7 February 2014 (“the Review Decision”) in refusing the respondent’s application for a review of my order dated 9 October 2013 (“the Possession Judgment”).

2.  The background to the underlying proceedings and the reasons for the Review Decision and the Possession Judgment have already been set out in the respective judgment and I am not minded to repeat the same here.  For convenience, I shall adopt the same abbreviations in my previous judgments.

3.  In a gist, this case involved a tenancy dispute with the applicant claiming against the respondent for a possession order upon termination of the T/A dated 20 April 2005 between them as well as ancillary order concerning mesne profits and specific performance for the respondent to reinstate the floor slab of the suit premises.  The premises named in the T/A is Cockloft C and there is a remark in the T/A that “both parties were aware of the fact that part of the floor slab of the cockloft had been demolished.  The tenant agreed, on termination of tenancy, to be responsible to rebuild the same and resinstate the floor slab of the cockloft to its original state”.

4.  For the Possession Judgment, it consists of the following order :

(a) the respondent should deliver vacant possession of Cockloft C to the applicant;

(b) the respondent should pay the applicant mesne profits from 1 May 2012 till delivery up of vacant possession;

(c) application for specific performance be dismissed;

(d) costs of this application be to the applicant, to be taxed at District Court scale if not agreed, with certificate for counsel.

5.  On 5 November 2013, the respondent takes out an application for review under section 11A of the Lands Tribunal Ordinance (“LTO”).  The grounds for the application for review are :

(a) there is no specific findings by this court as to whether the floor slab and Cockloft C did exist at the time of entering into the T/A;

(b) findings of other circumstantial evidence to point to the existence of Cockloft C at the time of the T/A or at any other time  are erroneous;

(c) since Cockloft C did not exist in 2005, there was no physical “premises” within the meaning of the LTCO for the Lands Tribunal to adjudicate the dispute; and

(d) the doctrine of tenancy by estoppel could have no operation in this circumstances.

6.  Upon hearing from the parties, the Review Decision was being handed down on 7 February 2014 with the application for Review being dismissed.

Leave to Appeal

7.  Section 11 (2) of the Lands Tribunal Ordinance (“LTO”) provides that :

“Subject to section 11AA and the provisions of any Ordinance relating to appeals from the Tribunal, any party to proceedings before the Tribunal may appeal to the Court of Appeal against a judgment, order or decision of the Tribunal on the ground that such judgment, order or decision is erroneous in point of law.”

8.  Section 11AA(6) of the LTO provides that :

“(6) Leave to appeal shall not be granted unless the Tribunal, the Court of Appeal or the registrar hearing the application for leave is satisfied that –

(a) the appeal has a reasonable prospect of success; or

(b)   there is some other reason in the interests of justice why the appeal should be heard.”

9.  The grounds of appeal raised by the respondent can be summarised as follows :

(a) Erred in failing to rule that the T/A was void and/or should not be given effect because of the uncertainty in its subject matter;

(b) Failed sufficiently to appreciate that a cockloft refer to a physical structure which presupposes the existence of a floor slab;

(c) Erred in ordering vacant possession of Cockloft C which is just a void space without exact parameters, but only estimates from the expert;

(d) Erred in finding that this Tribunal has jurisdiction to entertain the applicant’s application and wrongly distinguished the case of Gonwah Properties Ltd v Nam Ah Restaurant & Ors [1987] 3 HKC 371;

(e) Erred in taking into account other circumstantial evidence which is irrelevant; and

(f) Erred in finding that the doctrine of tenancy by estoppels had application in this case.

10.  The respondent’s appeal belongs to the “reasonable prospect of success” category and is not a matter of public interests.  Le Pichon JA in the Court of Appeal said in her judgment in SMSE v KL CACV111/2009 at §17 that :

“Reasonable prospect of success involves the notion that the prospects of succeeding must be ‘reasonable’ and therefore more than ‘fanciful’, without having to be ‘probable’”.

Ground (a) & (b)

11.  It is the submission of Mr. Ho for the respondent that since it is the finding of this Tribunal in the Review Decision that the subject matter of the T/A is Cockloft C with the floor slab being removed, this is tantamount to holding that the subject matter was some void space which was disavowed by the applicant at trial.  Cockloft in its natural ordinary meaning must be referring to a physical structure which presupposes the existence of a floor slab.  The Tribunal has erred in law in failing to rule that the T/A was void and/or should not be given effect because of uncertainty in its subject matter.    

12.  Mr. Siu for the applicant submitted in reply that the finding by the Tribunal is perfectly consistent with the remarks stated in the T/A and the parties to the T/A have expressly stated that the subject matter is Cockloft C without the floor slab, i.e. a physical structure but with the floor slab being removed. In any event, the contention by the respondent that once the floor slab of a property has been removed, it would become a void space or a void space can never form the subject matter of a tenancy agreement is unsupported by any authorities.

13.  I agree with the applicant.  The contention by the respondent that once the floor slab is no longer in existence, the cockloft ceased to exist cannot be right.  As found in §17-24 of the Possession Judgment and §6-7 of the Review Decision, the cockloft is always there but just with the floor slab removed.  Given the terms of the T/A also required the respondent to reinstate the floor slab, there is no uncertainty in the subject matter of the T/A.  Cockloft C did involve a physical structure with walls and ceiling but with the floor slab being removed.

Ground (c)

14.  It is the contention of the respondent that an order of possession must be predicated on the presence of some physical premises or structure in respect of which possession could be delivered.  Relying on the case of Lam Wing Ching & Ors v Chow Kum Wing [1985] 1 HKC 189 and JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419, it is submitted that possession required a sufficient degree of physical control over the property concerned.  And since a judgment for the giving of possession of land may be enforced by a writ of possession pursuant to O. 45 r.3 RHC, definition of “land” in S. 2 of the High Court Ordinance presupposes the existence of something physical.  And an order for vacant possession of a void space is clearly unenforceable by the bailiff’s office.  Hence, it is wrong in law to order delivery of vacant possession of some void space as it would be impossible to enforce and execute such an order.  In any event, the parameters of the purported Cockloft C were uncertain since there is no evidence of the same from the applicant and the evidence of Mr. Tse, the joint expert, in this regard was only estimates and cannot be taken as exact parameters of the space alleged to constitute Cockloft C.

15.  Given my ruling that Cockloft C cannot possibly be a void space, the respondent’s contention under this head has no merits at all.  As for the actual parameters of Cockloft C, this is only raised in the application for Review.  If the respondent is minded to raise such a new issue on review, this court is entitled to deal with it by naming the evidence in support of its own findings in this aspect as now appeared at §8 of the Review Decision. 

16.  It is the evidence of Mr. Tse that the actual parameters of Cockloft C can be ascertained by way of calculation (page 131 Leave to Appeal Bundle) and that the practice within their profession is to draw a line by adding 1 meter from the top of the male lavatory (6.75ft plus about l metre) to determine the surface of the Upper Ground Floor, i.e. 9 ft odd and less than 10 ft (page 133 of Leave to Appeal Bundle).  In any event, it is the evidence of Mr. Tse that he had taken measurement of the height between the staircase landing to the ceiling of the floor where the 4 cocklofts were situated, which measured 2.25 metres and the whole floor are of the same height (page 137 Leave to Appeal Bundle).  From the evidence of Mr. Tse quoted above, it is clear that the actual parameters of Cockloft C can definitely be ascertained and there is no uncertainty in this regard. 

17.  As for the fact that Mr. Tse had once mentioned that the situation at the back of Cockloft C and D may be different from Cockloft A and B (page 138 Leave to Appeal Bundle), this cannot be a finding by Mr. Tse since he had not been able to gain entry into Cockloft C and D. 

18.  As found in §22 of the Possession Judgment, “(I)t would be absurd for the floor slab to be built just for Cockloft B and D but not for Cockloft A and C.  From the description of Mr. Tse about what he saw on the site visit, one will have no difficulty in coming to the conclusion that the 4 cocklofts are there to form another level of the Building.”  And it would be against common sense if the landing of the 4 cocklofts are not of the same height to form another level.  Mr. Tse also testified that the floor slab for all 4 cocklofts should be the same, i.e. at 2.25m (page 137 Leave to Appeal Bundle).

Grounds (d) to (f)

19.  These grounds had been raised and dealt with at the Review application with nothing new raised at this Leave application. 

20.  I stand by my findings in §9-20 of the Review Decision. 

Conclusion

21.  Having considered all the argument and submissions, I found the respondent has failed to show a reasonable prospect of success in the appeal on the grounds raised by the respondent and the application must be dismissed.

22.  Costs should follow the event.   Costs order nisi that costs of this leave application be to the applicant, with Certificate for Counsel, to be taxed if not agreed on party and party basis at District Court scale.  Unless any of the parties applies by summons to vary it, the costs order nisi shall be made absolute upon expiry of 14 days.

LDPE 757/2012

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO. LDPE 757 OF 2012

_________________

_________________

_________________

D E C I S I O N

_________________

 

1.  This is the application by the respondent for a review of the order made in the judgment handed down by this court on 9 October 2013 (“the Judgment”) pursuant to Section 11A of the Lands Tribunal Ordinance.

2.  The background of this case and the reasons of the judgment have already been set out in the Judgment and I do not want to repeat the same here.  For convenience, I shall adopt the same abbreviations in the Judgment.

3.  In a gist, this case involved a tenancy dispute with the applicant claiming against the respondent for a possession order upon termination of the T/A dated 20 April 2005 between them as well as ancillary order concerning mesne profits and specific performance for the respondent to reinstate the floor slab of the suit premises.  By the Judgment, I made the following orders :

(a) the respondent should deliver vacant possession of Cockloft C to the applicant;

(b) the respondent should pay the applicant mesne profits from 1 May 2012 till delivery up of vacant possession;

(c) application for specific performance be dismissed;

(d) costs of this application be to the applicant, to be taxed at District Court scale if not agreed, with certificate for counsel.

4.  The grounds for this application for review are :

(a)   there is no specific findings by this court as to whether the floor slab and Cockloft C did exist at the time of entering into the T/A;

(b)   findings of other circumstantial evidence to point to the existence of Cockloft C at the time of the T/A or at any other time  are erroneous;

(c)   since Cockloft C did not exist in 2005, there was no physical “premises” within the meaning of the LTCO for the Lands Tribunal to adjudicate the dispute; and

(d)   the doctrine of tenancy by estoppel could have no operation in this circumstances.

Finding on Existence of Floor Slab at time of T/A

5.  It is the contention by the respondent that according to Woodfall’s Law of landlord and Tenant Vol. 1 at paragraph 4.016, the subject matter of a tenancy agreement must be certain.  The subject matter of the T/A is Cockloft C so one should look at the time when the T/A was being entered into to see if Cockloft C did exist.  A cockloft pre-supposed a floor slab with the area enclosed to form a cockloft.  Without the floor slab, there is no cockloft but only a void space.  There is a difference between renting out a cockloft and a void space. In the Judgment, it is the finding by this court that Cockloft C once had a floor slab, and the court had erred in failing to make a finding as to whether there was a floor slab at Cockloft C at the time of the T/A.  Without a floor slab, Cockloft C did not exist at the time of the T/A and the T/A lacked the stated subject matter.

6.  There is no specific finding in the Judgment that the floor slab did not exist at the time of the T/A since this is never an issue in dispute at trial.  In the Judgment, it is found that the floor slab of Cockloft C did once exist but had been removed (paragraph 17-32 of the Judgment).  As can be seen from paragraph 9-10 of the Judgment, no floor slab was being found missing by Venture King, the predecessor of the applicant back in April 2005 and the applicant had never denied such a fact.  The subject matter of the T/A was a cockloft with the floor slab being removed.  This also explains why the Remarks stated in paragraph 10 of the Judgment was being inserted in the T/A requiring the respondent to reinstate the floor slab upon termination of the T/A. 

7.  And the insertion and acceptance by the respondent of the Remarks on the T/A clearly showed that the parties were well aware of the fact that the Cockloft C rented out was without a floor slab and the respondent was responsible for the reinstatement of the same upon termination.  The subject matter of the T/A was never a void space but Cockloft C without the floor slab.  There is no uncertainty in the subject matter itself.

8.  It is also the argument by the respondent that since the floor slab was not being shown on the Building Plan and no floor slab existed ever, there is no way for the respondent to know what is to be delivered up to the applicant in compliance with the Judgment.  I agree with the applicant that the expert had testified about the measurement of the Upper Part of Ground Floor in his evidence, i.e. according to the Building Plan, the part above the male lavatory on the Ground Floor is where the Upper Part of Ground Floor should be and measured 8.75 feet from the floor of the shops. 

Other Circumstantial Evidence

9.  It is the contention of the respondent that this Tribunal had wrongly relied upon a number of so called circumstantial evidence to conclude that Cockloft C did exist at the time of the T/A.  These are :

(a) the Upper Part of Ground Floor shown on the Building Plan was where the 4 cocklofts were located (paragraph 18 of the Judgment) when the joint expert opined that the Upper Part of Ground Floor was just a void space;

(b) PHH had assigned 1 undivided share to each of the cocklofts (paragraph 19 of the Judgment) but in fact 1 share was being assigned to Cockloft B and C respectively whilst 2 shares were being assigned to Shop C together with Cockloft C;

(c) wrongly took into account the previous transactions of the cocklofts, which are irrelevant in evaluating the question of whether Cockloft C existed at the time of the T/A or any other time (paragraph 20 of the Judgment);

(d) reliance on the unauthorised staircase leading to Cockloft B and D to conclude that Cockloft C existed (paragraph 21 of the Judgment);

(e) erred in finding a partition wall built for Cockloft C (paragraph 21 of the Judgment); and

(f) erred in finding that Cockloft was not a void.

10.  I shall deal with this argument in seriatim :

(a) The expert opined that the Upper Part of Ground Floor was just a void space.  This is his opinion from reading the Building Plan.  But in his testimony, the expert said that there is a staircase built solely for the purpose of reaching the 4 units, namely A to D on the Upper Part of the Ground Floor.  It is also described in the assignments that the respective cockloft are portion of the Upper Part of the Ground Floor of the Building and identified on the Upper Part of Ground Floor Plan;

(b) Whilst this court may have mistaken about the number of undivided share assigned to Cockloft C, not 1 share to Cockloft C but 2 shares to Shop C and Cockloft C instead, it remains the fact that Cockloft C was being assigned part of the undivided shares.  If Cockloft C is just a void space, why would undivided shares be assigned to it?

(c)   As stated in the Judgment, previous transactions of the Cockloft B, C and D are relevant to show that it is more likely than not that all these cocklofts did exist to form a sale transaction with the purchaser prepared to spend a fortune in the acquisition;

(d) The staircase is not only leading to Cockloft B and D but to Cockloft C as well. Evidence from the expert as well as from Mr. Chung of the applicant confirmed the same;

(e) The partition wall built for Cockloft C can clearly be seen from the photographs taken by the expert in his Supplemental Report.  The assignment plan also showed the same;

(f) Judging from my rulings above, there are ample evidence for the inference to be drawn that Cockloft C can never be a void.   

Jurisdiction

11.  It is the argument by the respondent that since the so-called Cockloft C was only a void space without physical structure, this is not a “premises” within the definition of the LTCO which is the basis of this claim and from which the Tribunal acquired jurisdiction. 

12.  The contention by the respondent is that a premises required a physical structure. I have dealt with the same argument at paragraph 38-44 of the Judgment.  Given the widely worded definition of “premises” which means “the subject matter of any tenancy” and “domestic premises” include “a bed space”, I cannot see how the respondent’s contention that “premises” must involve physical premises with an enclosed area can stand.  Even if “premises” involved an enclosed area, given my finding that Cockloft C did have a floor slab which had been removed, this will not change the nature of Cockloft C being a premises. 

13.  The case of Gonwah Properties Ltd v Nam Ah Restaurant & Ors [1987] 3 HKC 371 relied upon by the respondent can be distinguished.   In Gonwah, the whole building was being demolished so the premises, subject matter of the order for possession, no longer in existence, hence it is found that the court has no jurisdiction over the newly built premises which is not the subject matter of the order for possession.  Cockloft C in this case is still there except with the floor slab removed.  I cannot see how one can say that without the floor slab, Cockloft C can be considered “ceased to exist in fact and in law” in the words of Downey DJ in Gonwah.

14.  It is also the contention of the respondent that it is not open to this court to found jurisdiction on the “or otherwise” basis under Section 8(6) of the LTO (paragraph 45 of the Judgment) since the applicant’s case has always been premised on Section 127A of the LTCO as particularised on the Notice of Application (Form 22) (“the NOA”) which stated “NOTICE OF APPLICATION UNDER LANDLORD AND TENANT (CONSOLIDATION) ORDINANCE Pursuant to section 127A” (page 1 of the Trial Bundle).

15.  Such a contention by the respondent had overlooked the statutory requirement under Rule 68 of the Lands Tribunal Rules (“LTR”) as well as the directions issued by the President of the Lands Tribunal for possession cases under the common law (LTPD: Tenancy No. 1/2007).

16.  Rule 68(1) of LTR reads :

“ (1) Proceedings under Parts I, II, IV and V of the Ordinance shall subject to Sections B and C of this part be commenced by the applicant filing with the registrar a notice of application substantially in accordance with Form 22.”

17.  LTPD : Tenancy No. 1/2007 reads :

“The practice and procedure set out in Rules 68, 69 and 70 together with Form 22 of the Lands Tribunal Rules (Cap. 17A), including any subsequent amendments thereto, shall apply to an application for possession or for ejectment under the Common Law, notwithstanding that the proceedings were not made under the Landlord and Tenant (Consolidation) Ordinance (Cap. 7).”

18.  So, whether the application for possession is one made under the LTCO or Common Law, Form 22 should be used to commence the application at the Lands Tribunal. This is what the applicant had done in this case.  The NOA lodged by the applicant is in line with the standard Form 22 with the same headings particularised in paragraph 14 above.  Given the provisions of the statutory requirement and the practice directions, the headings on the NOA should not be construed as confining the basis of the application.

Estoppel

19.  It is the contention by the respondent that the essence of the doctrine of estoppel is that it will not avail a tenant to deny his landlord’s title.  In this case, the respondent is not seeking to challenge the applicant’s title in these proceedings so the doctrine of tenancy by estoppel has no operation in such circumstances.

20.  I stand by my finding in paragraph 33-37 of the Judgment concerning this argument.  By alleging that the floor slab had never been in existence and the applicant had no title to it, the respondent is in effect denying the right of the applicant to grant the lease.  The respondent was well aware of the allegation that there was a floor slab for Cockloft C and Mr. Cheng of Venture King, the predecessor of the applicant had in fact alleged that the respondent was the one to remove it.  Being aware of this fact, the respondent still elected to enter into the T/A and also for the Remarks on the T/A to be inserted.  The respondent should be estopped from denying the existence of the floor slab and the validity of the T/A.

Conclusion

21.  Having considered all the argument and submissions, I found all the grounds raised by the respondent in this application for review cannot stand and the application must be dismissed.

22.  Costs should follow the event.   Costs order nisi that costs of this review application be to the applicant, with Certificate for Counsel, to be taxed if not agreed on party and party basis at District Court scale.  Unless any of the parties applies by summons to vary it, the costs order nisi shall be made absolute upon expiry of 14 days.

LDPE 757/2012

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO. LDPE 757 OF 2012

_________________

_________________

_________________

J U D G M E N T

_________________

 

Undisputed or IndisputableBackground

1.  By the New Grant No. 4931 (page 572-589 Bundle), Tsuen Wan Town Lot No. 195 was granted to Ping Hing Hong Limited (“PHH”) on 19 April 1971.  A building was being erected on the lot known as Tsuen On Building at No. 20-24 Lo Tak Court, Tsuen Wan (“the Building”).

2.  According to the Approved Building Plan dated 17 March 1971 (page 640-643 Bundle) and confirmed by the joint expert (“Mr. Tse”), the Building is of 6 storeys served by a common staircase opening onto a side lane and with no opening from the Building onto the main road.  There are 2 units on the Ground Floor level and 3 units on each of the upper floors.  From the Ground Floor Plan and Upper Part of Ground Floor Plan, there is no mezzanine floor or cockloft above the Ground Floor which has a floor-to-floor height of 16 feet 6 inches from floor to the underside of the floor slab of 1^st Floor.  Enquiries made by Mr. Tse with the Buildings Department showed that there was never any approved alteration and addition works requested in the Building (page 45 Bundle). 

3.  The Occupation Permit (“OP”) dated 24 May 1972 (page 134 Bundle) showed that there should be 2 shops for non-domestic use on the Ground Floor and 3 flats per floor on 1^st to 5^th floor for domestic use. 

4.  A Deed of Mutual Covenant (“DMC”) was made on 21 August 1973 (page 135-145 Bundle) vesting 1 undivided share of the Building to one Au Young Mo Ching (“AY”) for “Flat B on the 4^th Floor” of the Building and 21 undivided shares assigned to PHH for “All portions of the said building including the Roof and external walls (except Flat B on the 4^th Floor)”, making a total of 22 undivided shares.  The DMC is silent as to the breakdown of the undivided shares assigned to PHH.

5.  According to the land search record and/or assignment produced by the parties in this case, the Upper Part of Ground Floor had been assigned to different owners all these years.

Date	Description of Property as appeared on Land Search Record and/or Assignment	Page Reference
1 March 1978	Shop A & B & Mezzanine Floor A (also known as Shop 1) (2 shares)	94-101 & 602-609
31 March 1979	Shop C on G/F(including Cocklofts B, C & D); the External Walls (5 shares)	146-154
21 April 1981	Portion of Upper Part of G/F (Designated “Cockloft B”)(1 share)	66-76 &155-161
17 August 1990	Portion of Upper Part of G/F (Designated “Cockloft D”)(1 share)	77-87
4 April 2005	Shop C on G/F & Cockloft C on Upper Part of G/F (2 shares)	171-180 & 529-533
29 June 2009	Shop C & Cockloft C (2 shares)	433-440

6.  From the plans attached to the respective assignments, it can be seen that one of the 2 Ground Floor Shop had been divided into 2 parts, Shop A in the front portion and Shop B in the back portion.  Shop A and B together are known as Shop 1 whilst the other Ground Floor Shop is named Shop C.  1 Undivided share was being assigned to Shop 1 and Shop C respectively.  As far as the cocklofts are concerned, the Upper Part of the Ground Floor had been divided into 4 portions forming Cockloft A to D, each having 1 undivided share.  Cockloft B and D are on the upper part of Shop C, Cockloft A covered half of the Upper Part of Shop A and Cockloft C covered the entirety of Shop B and part of Shop A (page 161 Bundle).

7.  Apart from the entrance opened onto the side lane, the Building now stands had an additional opening between Shop 1 and Shop C from the main road with a flight of staircase leading up to the common landing of Cockloft A to D.  Each cockloft has its own doorway from the common landing (photo no. 7-13 of the Supplemental Expert Report Exhibit A2 and pages 48-50 and 57-59 Bundle).  Cockloft B is being occupied by a trading company whilst Cockloft D is being occupied by a beauty parlour.  Shop 1 is occupied by the respondent and Shop C was being rented out for the business of an electronic game centre.

8.  Shop 1 was assigned to Wide Famous Holdings Limited (“Wide Famous”) on 29 May 2002 and the respondent is one of the directors of Wide Famous.  Upon acquisition, Shop 1 was being used by the respondent for the business of a noodle shop and the layout of the shop had never been altered.  There was false ceiling on the front portion of Shop 1 which is being used as the dining area where customers were being served.  The kitchen is located at the back portion of Shop 1 with no false ceiling and with a ceiling height of over 16 feet (photograph 1- 6 Exhibit A2).

9.  In April 2005, a Mr. Cheng claimed to be representing Venture King, the owner of Cockloft C, came to Shop 1 with the Assignment and Floor Plan asking to inspect the space above the false ceiling inside Shop 1.  Upon inspection, Mr. Cheng said that the cockloft was no longer there and asked if the respondent had demolished the same.  The respondent denied and insisted that the premises was in that condition without any cockloft on his purchase.  Mr. Cheng offered to lease out Cockloft C to the respondent.  Since the respondent was well aware that he would not be able to obtain the food licence for the business with the cockloft built above the kitchen area, he agreed to the suggestion of a tenancy.  Hence, a tenancy agreement was signed by the wife of the respondent and Venture King on 20 April 2005 (“T/A”) (page 108 Bundle). 

10.  The T/A covered the period from 1 May 2005 to 30 April 2011.  The remarks of the T/A reads as follows :

“雙方知悉閣樓部份地面已被拆去, 租客同意終止租約時, 負責起回閣樓地面, 恢復原狀” (“the Remarks”)

which means both parties were aware of the fact that part of the floor slab of the cockloft had been demolished.  The tenant agreed, on termination of tenancy, to be responsible to rebuild the same and resinstate the floor slab of the cockloft to its original state.

11.  It is the case of the respondent that the Remarks was not on the T/A when his wife signed on it and it was only after the respondent received a copy of the signed T/A then he discovered that the Remarks was being added onto it.  In any event, it is the respondent’s evidence that upon enquiry with Mr. Cheng, the respondent accepted the terms of the Remarks, though not without reluctance.

12.  The applicant becomes the registered owner of Shop C and Cockloft C of the Building on 29 June 2009.  The acquisition is subject to the T/A.  The respondent had arranged for the rent to be paid to the applicant upon notified of the change of ownership.

13.  In February 2011, discussion about renewal of the T/A turned out to be unsuccessful.  The respondent failed to pay rent since 1 May 2011, i.e. upon expiry of the T/A.  And despite repeated demand from the applicant, the respondent remained in occupation till present.

14.  By a Notice of Application dated 7 August 2012, the applicant claims against the respondent for :

(a) an order that the respondent do deliver up vacant possession of the suit premises;

(b) arrears of mesne profits from 1 May 2011 until delivery up of vacant possession;

(c) an order for the respondent to reinstate the floor slab of the suit premises within 1 month, failing which the applicant shall be allowed to perform the same with costs/expenses to be reimbursed by the respondent;

(d) damages to be assessed; and

(e) costs of this application.

15.  The respondent, in its Amended Notice of Opposition filed on 11 September 2012, contended that the T/A was being signed under the misrepresentation by the representative of Venture King that Cockloft C did exist and was owned by it.  In fact, Cockloft C was never in existence since no cockloft ever appeared on the Building Plan, the OP as well as the DMC which rendered the T/A void and of no legal effect.

16.  At trial, the following issues are raised by the respondent :

(a) Cockloft C was never in existence, be it in the Building Plan, the OP, the DMC or in actual fact; and

(b) Cockloft C does not constitute “premises” for the purpose of Section 127A of the Landlord and Tenant (Consolidation) Ordinance (“LTCO”), hence this Tribunal does not have the jurisdiction to adjudicate this claim.

Existence of Cockloft C

17.  At this hearing, it is the contention of the respondent that Cockloft C had never been in existence.  I found this contention cannot stand in view of the circumstantial evidence in this case.

18.  Even though the Building Plan did not show a physical floor slab separating the cocklofts on the Upper Part of Ground Floor from the Ground Floor, the Building Plan did show the ground floor being divided into Ground Floor and Upper Part of Ground Floor.  There may not be a floor slab shown on the Building Plan, but one cannot deny the existence of the Upper Part of Ground Floor which is where the 4 cocklofts located. 

19.  It is clear from the land registration document that PHH had first assigned its interests in the Upper Part of Ground Floor which turned out to be the 4 cocklofts to different entities in 1978 and 1979.  No issue had been taken about PHH’s entitlement to assign its interests in the undivided shares to others.  According to the case of Hinex Universal Design Consultants C Ltd v Chan Lai Hing [1998] 1 HKC 317,

“a subsequent owner has the same unfettered right as the developer in the allocation of undivided shares vested in him subject to any prior prohibition which exists in the DMC or some other document” (at page 322).

It is silent in the DMC as to the allocation of undivided shares in respect of all the units held by PHH.  There is nothing in the DMC or any other document which prohibits PHH to assign its undivided shares in the Building.  And by way of assignment, PHH had assigned 1undivided share to each of the 4 cocklofts.  If the 4 cocklofts did not exist, why would there be such an assignment of undivided shares? 

20.  For the purposes of division of land, it was never the common law that any physical barrier was necessary to separate the divided lots of land.  But the 4 cocklofts were subject of a number of transfer after their first assignment by PHH, Cockloft A having 7 subsequent sales, Cockloft B having 5 subsequent sales, Cockloft C having 3 subsequent sales and Cockloft D having 4 subsequent sales.  It would be beyond belief that all those purchasers in these sale transactions would be prepared to spend a fortune in acquiring just a void in the Upper Part of Ground Floor.

21.  If the 4 cocklofts are only a void above the ground floor shop, why was there a need for another entrance and staircase to be built for access from street level to the cocklofts, and only to the cocklofts.  According to Mr. Tse, the entrance and the staircase are also unauthorised work since these were not found on the Building Plan.  There is also no dispute that there are partition wall built for Cocklofts B, C and D, each having its own doorway and with common staircase and landing erected on the Ground Floor and Upper Part Ground Floor level of the Building.  It would be absurd for all these structures to be built without a floor slab for the cocklofts separating them from the ground floor shops.  The only reasonable inference to be drawn must be that the 4 cocklofts are not void but each having partition and floor slab and its own doorway built to make it a separate unit with separate entrance and staircase distinct from the ground floor shops. 

22.  And Cockloft B and D did have a floor slab separating it from the Ground Floor shop. It would be absurd for the floor slab to be built just for Cockloft B and D but not for Cockloft A and C.  From the description of Mr. Tse about what he saw on the site visit, one will have no difficulty in coming to the conclusion that the 4 cocklofts are there to form another level of the Building.  It is more likely than not that there was a floor slab for each of the 4 cocklofts.

23.  And if there was never a floor slab for Cockloft C, why did Mr. Cheng of Venture King asked to see above the false ceiling on first visit and upon inspection, accused the respondent of removing the floor slab.  This must mean that there was originally a floor slab there to explain the conduct of Mr. Cheng.  And this also explained why the Remarks was being inserted into the T/A.

24.  All these circumstantial evidence points to the conclusion that, it is more likely than not that Cockloft C should have a floor slab but such had been removed.

25.  The creation of the 4 cocklofts on the Upper Part of Ground Floor may not be in line with the Building Plan or the OP.  Building plans merely tell how a building should be built and the OP just tells the purpose of use of the building.  Whilst the OP and the Building Plan are concerned with building regulation, there is nothing in the Building Plan or the OP to suggest that breach of the OP or contravention of the Building Plan would invalidate the creation of a tenancy agreement of these cocklofts. 

26.  As for the DMC, it is the respondent’s case that for the applicant to claim to be the rightful legal owner of Cockloft C and entitled to its vacant possession, the applicant must demonstrate to this court that it had obtained the proprietary interests in the Building and is entitled to the exclusive possession of Cockloft C.  Whether the owner is entitled to the exclusive possession of any part of a building is dependent upon the terms of the DMC (Kung Ming Tak Tong Co Ltd v Park Solid Enterprises Ltd (2008) 11 HKCFAR 403 at 421B).  It would be a prerequisite to the applicant’s claim for it to show that not only is it the owner of the undivided shares in the Building, it also acquired the exclusive possession to Cockloft C by way of the DMC.  The conferment of exclusive possession by the assignment is subject to the terms of the DMC.  The DMC of the Building could never intended to allocate any right to exclusive possession of Cockloft C to anyone since it did not physically exist at the time and nowhere in the First Schedule of the DMC mentioned anything about cocklofts. Had exclusive possession of the cocklofts been assigned to Cockloft C, this should have been specifically spelt out in the DMC.  What’s more, Clause 3(b) of the DMC (page 137-138 Bundle) had listed out other specific part of the Building but there is no reference to cockloft.  So it must be that the cocklofts were never in existence.

27.  I found such a contention by the respondent unfounded.  Mr. Nip for the respondent is relying heavily on the fact that Cockloft C had never been named or mentioned in the DMC.  The 1^st Schedule of the DMC is the provision which provided for the particulars of owners and the portion of the Building each owner is entitled to have exclusive use, occupation and enjoyment.  In the 1^st Schedule, PHH was assigned the exclusive possession of “all portions of the Building including the Roof and external walls” except the unit assigned to AY.  Although there is no detail as to what are the “all portions” of the Building, when one referred to the Building Plan, it must mean all the other parts referred to in the Building Plan.  The Upper Part of Ground Floor is specifically named in the Building Plan.  It must form “portion” of the Building.  So, even though the word “cockloft” is not being used in the DMC, it is clear from the DMC that the Upper Part of Ground Floor where the cocklofts were situated, was indeed included as part of the portion of the Building which PHH had the exclusive right of use, possession and enjoyment.

28.  As for Clause 3(b) relied upon by Mr. Nip, I do not agree that such a clause is defining the other “portion of the Building” referred to in the 1^st Schedule.  Clause 3(b) reads as follows :

“3. Each of the parties hereto shall pay his due proportion of :-

(a) …

 (b)  the cost of keeping in good and tenantable repair and condition the foundation, the side walks, main walls, supports, beams gutters, fences, chimneys and all external parts of the said building all the drains, well, electric pumps, pipes, conduits and all plumbing apparatus (if any) intended for the general service of the said building … and the common entrance-halls, staircases, landings and passages and the roof thereof. Provided that each of the parties hereto who has the sole and exclusive right to the use occupation and enjoyment of a particular portion of the roof of the said building shall be wholly responsible for paying the costs of keeping his particular portion of the roof in repair.”

29.  From the wordings of Clause 3(b), it is clear that it stipulated the obligation of each owner to contribute to the expenses of upkeeping certain part of the building. From the fact that each owner is required to contribute to the expenses named in the clause, the different parts of the building mentioned must be common facilities or common parts of the Building and is never intended to mean any part of the building which an owner has an exclusive right.  The proviso in Clause 3(b) to require the owner who had exclusive right to a particular part of the roof to be responsible for that particular part on his own supports the conclusion that the parts of the Building mentioned in Clause 3(b) are common parts instead of parts which an owner has exclusive possession.

30.  Moreover, Clause 6 of the DMC (page 139 Bundle) specifically provided for the obligation of each owner in paying for the expenses of upkeeping and maintenance of the part of the Building to which the owner had exclusive use occupation and enjoyment.  So Clause 3(b) cannot be referring to the other “portion” an owner had exclusive possession.

31.  In any event, it cannot be said that since no cockloft had been mentioned in clause 3(b), this means no cockloft had been in existence.  It is beyond argument that the Upper Part of Ground Floor was in fact in existence as shown on the Building Plan and Cockloft C forms part of the Upper Part of Ground Floor. 

32.  I found as a fact that Cockloft C did exist with a floor slab which had been removed at some stage.  The T/A between the applicant and the respondent is a valid one.

Estoppel

33.  In any event, I found the respondent should be estopped from denying the right of the applicant in granting a valid T/A.

34.  The doctrine of estoppel is clearly set out in the case of Tang Man Kit & Foo Tak Ching & Hip Hing Timber Company Limited (CACV 137/02 13 May 2005).  In that case, the Court of Appeal stated :-

“52. As pointed out by the editors of Hill and Redman’s Law of Landlord and Tenant (17^th Ed.) Para 88, this estoppel has two aspects –

(1) A tenant is prevented or estopped from denying the right of his landlord to grant the lease and, conversely, a landlord is prevented or estopped from denying the title of his tenant under the lease.

(2) A person who has no legal estate in the land may nevertheless purport to grant a lease of that land; in that event, there is created between him and his purported tenant a tenancy by estoppels which binds them and their respective successors in title just as if the landlord had a sufficient interest to grant the lease.

53. The position is best stated by Lord Denning MR in Industrial Properties (Barton Hill) Ltd and Others v Associated Electrical Industries Ltd [1977] 1 QB 580:

‘If a landlord lets a tenant into possession under a lease, then, so long as the tenant remains in possession undisturbed by any adverse claim – then the tenant cannot dispute the landlord’s title. Suppose the tenant (not having been disturbed) goes out of possession and the landlord sues the tenant on the covenant for rent or for breach of covenant to repair or to yield up in repair. The tenant cannot say to the landlord: “You are not the true owner of the property.” Likewise, if the landlord, on the tenant’s holding over, sues him for possession or for use and occupation or mesne profits, the tenant cannot defend himself by saying: “The property does not belong to you, but to another.’ ”

35.  Mr. Nip for the respondent submitted that the doctrine of estoppel is only applicable if the applicant had mistakenly believed that it was the owner or that the property belonged to a third party.  As can be seen from the passage quoted above, the principle of estoppel prevents a tenant from denying the landlord’s entitlement to the property.  It is applicable, not only in cases where there is a third party claim but also in circumstances where the landlord’s title is put in issue.  Under this principle, the right of the applicant as landlord and as person entitled to possession to recover the land can hardly be challenged.

36.  The respondent is alleging that since Cockloft C had never been in existence, the applicant had no title to it and not entitled to enter into a valid tenancy agreement.  In such circumstances, the doctrine of estoppel is clearly applicable to stop the respondent from denying the existence or validity of the T/A on these grounds.

37.  The respondent had entered into the T/A with Venture King since 2005 and had been performing the terms of the T/A all these years.  His use had never been disturbed by any adverse claim.  The respondent should be estopped from denying the existence of Cockloft C and/or a valid T/A now that the applicant exercised its right as the landlord for possession of Cockloft C.

Jurisdiction under the LTCO

38.  The respondent submitted that since this claim by the applicant is one brought pursuant to Section 127A of the LTCO, the Tribunal would only have jurisdiction to adjudicate this claim if Cockloft C constitutes “premises” which for the purpose of Section 127A required a physical part of a building.

39.  The following terms in Section 2 of the LTCO are relied upon by the respondent to support the contention that “premises” necessarily connotes a physical part of a building, such as a room or a cubicle :

 “premises” – “means the subject matter of any tenancy”

“domestic premises” – “means premises the subject of a separate letting (including any bed-space, cubicle, room, floor or portion of a floor or building) which are used wholly or primarily for human habitation : Provided that the following shall not be deemed to be domestic premises within the meaning of this definition-

(a) any building or portion of a building which is used for habitation only by caretakers or watchmen not exceeding 2 in number;

(b) any building or portion of a building which is used for habitation only by office attendants or their families;

(c) any particular portion of an hotel or boarding-house which is let by the keeper of such hotel or boarding-house to a guest of such hotel or boarding-house;”

“business premises” – “means premises which are not domestic premises”

40.  In view of my findings above that Cockloft C did exist and had a floor slab which had been removed, the respondent’s contention that Cockloft C is not physically in existence and cannot be “premises” under the LTCO must fail.

41.  Even if I am wrong in my findings above, I do not agree that the definition of “premises” under the LTCO must connote a physical part of a building, as submitted by the respondent.  The definition of “premises” under LTCO just referred to the “subject matter of any tenancy” and there is nothing touching upon any requirement as to the physical state of the premises.  And the definition of “domestic premises” includes “bed space” which apparently does not involve any physical part of a building.  I found the contention by the respondent not supported by these definitions.

42.  Cockloft C, being the subject matter of the T/A between the applicant and the respondent, must fall within “premises” under the LTCO, i.e. being the subject matter of the T/A.

43.  Mr. Nip also relied upon the judgment of Gonwah Properties Ltd v Nam Ah Restaurant [1987] 3 HKC 371 to say that the Tribunal in that case had also found that “premises” under LTCO required a physical building.  I beg to differ.  The case of Gonway involved an application for authorization to sell a piece of land after all tenants agreed to surrender their various premises in consideration for compensation payable by the landlord in that case.  The law stated that in such circumstances, the landlord is deemed to have obtained orders for possession under the LTCO and became subject to the restrictions against assigning the premises within 24 months.  The old building on the land was demolished subsequently with a new building erected.  In order to sell the land as well as the building under construction without contravention of the restriction, an order from the court is required.  Downey DJ drawing an analogy from the definition of “premises” in LTCO, found that the restriction was only to prohibit any dealing with the premises of the order for possession and not with the land or the new building erected, and concluded that the restriction is not applicable and no authorization is required.  It is also observed by Downey DJ that since the building had been demolished, the premises ceased to exist both in fact and in law.

44.  Downey DJ had not made any findings that the “premises” under LTCO must involve a physical part of a building.  Rather, it is only found that “the premises can only refer to the premises which form the subject matter of the order for possession or the order refusing to grant a new tenancy” (at page 374).  The observation about the existence of the premises is to justify the conclusion that since the subject matter of the order for possession is no longer in existence, the tribunal is given no jurisdiction to authorize any dealing in such premises.  In no way can this be understood to mean that “premises” under LTCO required a physical building.

45.  In any event, even if I am wrong in my findings concerning LTCO, the wordings of Section 8(6) of the Lands Tribunal Ordinance (“LTO”) reads :

“The Tribunal shall have jurisdiction to make an order for the recovery of possession of any premises or for the ejectment of a tenant from those premises, whether under the Landlord and Tenant (Consolidation) Ordinance (Cap. 7) or otherwise.” (emphasis added)

This conferred on this Tribunal the jurisdiction to deal with any application for recovery for possession, not only under the LTCO but also under common law. This is confirmed in the recent judgment of The IO of Mountain View Mansion v Lam lap Kei and another CACV 235/2011 (at paragraph 27-28).

46.  I found the respondent’s contention on jurisdiction must fail.

Conclusion

47.  Having considered all the arguments raised by the respondent, I found the relationship between the parties in this case are that of landlord and tenant governed by the T/A.  Upon expiration of the terms of the tenancy, the applicant is entitled to have vacant possession of Cockloft C.  Since the respondent had been holding over upon expiry of the T/A without any payment, the applicant is entitled to claim for mesne profits from the respondent.

Jurisdiction to grant an order for specific performance

48.  The applicant is asking for an order for the respondent to reinstate the floor slab of Cockloft C.  The respondent submitted that this Tribunal has no jurisdiction to grant an order for specific performance.  It is not in dispute that Section 8 (8) of the Lands Tribunal Ordinance (“the Ordinance”) is relevant in the determination of this argument on jurisdiction.

49.  Section 8 (8) of the Ordinance reads :

“The Tribunal shall have jurisdiction, in any application for possession or for ejectment, under the Landlord and Tenant (Consolidation) Ordinance (Cap. 7) or otherwise, … whether or not it grants any such application, to make one or more of the following orders –

(a) an order for the payment of rent and mesne profits (including interim payments of rent and mesne profits);

(b) an order for the payment of any other money which is due under the tenancy or sub-tenancy;

(c) an order for the disposal of any property left in the premises concerned by the tenant or sub-tenant; and

(d)   an order for the payment of damages in respect of any breach of a condition of the tenancy or sub-tenancy.”

50.  The applicant relied on Section 8(9) of the Ordinance in support of the contention that this Tribunal does have the jurisdiction to grant a specific performance order.

51.  Section 8(9) of the Ordinance reads :

“In the exercise of its jurisdiction, the Tribunal shall have the same jurisdiction to grant remedies and reliefs, equitable or legal, as the Court of First Instance.”

52.  I found the applicant’s contention misconceived. 

53.  Section 8(8) of the Ordinance confers on the Tribunal the jurisdiction to make those orders specified in Section 8 (8)(a)-(d) when the Tribunal is dealing with an application for possession.  Section 8(8) is the provision defining the Tribunal’s power to grant reliefs in its exercise of the jurisdiction in dealing with application for possession.  Section 8(8)(a)-(d) are the only reliefs that can be granted.  The provision of Section 8(9) empowering the Tribunal the same jurisdiction to grant remedies and reliefs as the Court of First Instance in the exercise of its jurisdiction.  So Section 8(9) does not confer any additional jurisdiction on the Tribunal to exercise jurisdiction of the Court of First Instance in an application for possession since all remedies and reliefs that can be granted had already been specified in Section 8(8).  To accept Mr. Siu’s submission that since the Tribunal has the jurisdiction to grant the remedies and reliefs as the Court of First Instance, the Tribunal must also have the jurisdiction to grant a specific performance order in an application for possession, is in total ignorance of the provision of Section 8(8) and treating Section 8(9) as conferring additional jurisdiction on this Tribunal.

54.  I found this Tribunal has no jurisdiction to grant the relief of specific performance in an application for possession.

Order

55.  It is ordered that :

(a)   the respondent should deliver vacant possession of Cockloft C to the applicant;

(b)   the respondent should pay the applicant mesne profits from 1 May 2011 till delivery up of vacant possession;

(c)   application for specific performance be dismissed;

(d)   costs order nisi that costs of this application be to the applicant, to be taxed at District Court scale if not agreed, with certificate for counsel. Unless any of the parties applies by summons to vary it, the costs order nisi shall be made absolute upon expiry of 14 days.

56.  As for the assessment of mesne profits, it is directed that :

(a)   parties to file a valuation report prepared by a jointly appointed expert within 4 weeks from this order;

(b)   assessment of mesne profits be set down for a call over hearing on a date not before 6 weeks from this order;

(c)   liberty to apply.