Nanji and Another v Nandhra (Civil Suit No. 729 of 1955) [1956] EACA 30 (1 January 1956)

ORIGINAL CIVIL

Before Rudd, J.

TAJDIN GULAMHUSSEIN NANJI AND ANOTHER. Plaintiffs

AMAR SINGH NANDHRA, Defendant

Civil Suit No. 729 of 1955

Landlord and tenant—Landlord and Tenant (Shops and Hotels) (Temporary Provisions) Ordinance, 1954—Sections 9 and 10—Application by statutory tenant for a new lease refused by competent court-Whether tenant could oppose claim for mesne profits on grounds rejected by Court—Whether res judicata—Whether tenancy extended by section 10.

The defendant was a statutory tenant occupying business premises, the property of the plaintiffs, at 25th December, 1954, when the Increase of Rent (Restriction) Ordinance, 1949, expired in its application to such premises. The defendant remained in possession but on 2nd June, 1955, his application to a competent court for the grant of a new tenancy under section 9 of the Landlord and Tenant (Shops and Hotels) (Temporary Provisions) Ordinance, No. 57 of 1954, was rejected. The application was refused on the ground that the section did not apply to the tenancy because the premises were not used for retail trade. The defendant vacated the premises on 4th July, 1955. The plaintiffs claimed mesne profits from 25th December, 1954, to 4th July, 1955. The defendant maintained that, for the purposes of the suit, he carried on business as a retail shop and should be held to come within the provisions of section 9 of Ordinance No. 57 of 1954 and even if his statutory tenancy was not a tenancy to which section 9 applied, nevertheless it was extended to 2nd July, 1955, by virtue of section 10.

Held $(26-11-56)$ .—(1) The decision of the competent court that the statutory tenancy was not a tenancy to which section 9 of Ordinance No. 57 of 1954 applied was binding upon the defendant in the present case as *res judicata*. In fact, the defendant had not used the premises for the purpose of retail trade and was not protected by section 9 of the Ordinance.

(2) Section 10 of Ordinance No. 57 of 1954 was to be read with section 9 thereof. The words "expiring tenancy" appearing in subsection 9 (1) was restricted to a tenancy to which the section applied. Subsection 9 (2) states the tenancies to which the section $\frac{1}{2}$ applied and as the suit premises were in fact or in law not covered by the terms of<br>subsection 9 (2) the tenancy was not an "expiring tenancy" within the meaning of the Ordinance and therefore section 10 could not be applied so as to extend the tenancy up to 4th July, 1955.

(3) The defendant was liable to mesne profits within the statutory meaning of section 2 of the Civil Procedure Ordinance, Cap. 5.

D. N. Khanna for the plaintiffs.

Hunter for the defendant.

JUDGMENT.—The plaintiffs are the owners of premises which the defendant occupied as a statutory business tenant up to 25th December, 1954, when the Increase of Rent (Restriction) Ordinance, 1949, expired as regards its application to business premises. The defendant remained in possession after 25th December, 1954, claiming to be entitled to a new tenancy under the Landlord and Tenant (Shops and Hotels) (Temporary Provisions) Ordinance, 1954. An application to the appropriate court for the grant of a new tenancy under section 9 of the Ordinance of 1954 was refused on 2nd June, 1955, on the grounds that the statutory tenancy which had existed up to 25th December, 1954, was not a

ν.

tenancy to which the section applied. The defendant gave up possession of the premises on 4th July, 1955, and the plaintiffs now claim to be entitled to mesne profits from 25th July, 1954, to this 4th July, 1955. There is a further claim for damages for failure to repair the premises and for delivering up the premises in a dilapidated condition. $\sim$

- At the start of the hearing three issues were framed: $-$ - 1. Was the defendant in wrongful possession or not, up to 2nd July, 1955, or 4th July, 1955. - 2. If the answer to the first issue is in the affirmative what mesne profits should be paid by the defendants to the plaintiffs? - 3. Is the defendant liable for any damages for the condition of the premises at the time he vacated them. If so, what damages?

The third issue is quite separate from the others and I will deal with it after considering and deciding the first two issues.

The Court which refused the defendant's application for a new tenancy under section 9 of the Ordinance of 1954 held that the premises were used as an office and store for a building contractor and the balance was a joinery manufactory. That the Ordinance was not drafted to include factories and the court considered that the premises did not come within the scope of the Ordinance and that it was not in a position to make an order for a new tenancy. Nothwithstanding this finding by a competent court the defendant attempted to maintain that for the purposes of the present suit he carried on the business of a retail shop in a portion of the premises and that for the purpose of this case he should be held to come within the provisions of section 9 of the Ordinance of 1954, and it was further argued that even if his statutory tenancy was not a tenancy to which section 9 applied, nevertheless that tenancy was extended to 2nd July, 1955, by virtue of section 10 of the Ordinance.

In my opinion the decision of the court, which refused the application for a new tenancy, that the statutory tenancy was not a tenancy to which section 9 of the 1954 Ordinance applies in binding upon the defendant in the present case as res judicata. Apart from that I find as a fact on the evidence before me that no part of the premises consisted of a shop as defined by the Ordinance of 1954. Under that Ordinance a shop means premises occupied wholely or mainly for the purpose of a retail trade or business. I find on the evidence that the premises were used as to the front portion as a building contractor's office and store and as to hinder part as a building contractor's joinery. There may have been an occasional retail sale in the front portion but such as there were few in number and no port of the premises was used mainly for purposes of a retail trade or business.

As regards the second part of the argument on behalf of the defendant, section 10 of the 1954 Ordinance provides in subsection 1 that an application under Part 2 of the Ordinance for the grant of a new tenancy shall be made within certain limits of time there set out, and subsection 2 provides that where such an application is duly made and "the expiring tenancy" would, apart from this section, come to an end before the relevant date then the expiring tenancy shall be treated as continuing until the relevant date, subsection 3 provides that the relevant date for the purposes of subsection 2, unless the application is withdrawn, is the date one month after the date on which the proceedings on the application are finally determined. In this case the proceedings on the application were finally determined on 2nd June, 1955, and the defendant claims that the relevant date is, therefore, 2nd July, 1955, and that the previous tenancy was continued by virtue of section 10 until 2nd July, 1955. In my opinion the argument fails. It could only apply if the defendant's statutory tenancy were an expiring

tenancy within the meaning of the Ordinance. Section 10 must be read in conjunction with section 9, subsections 1 and 2, which are in the following terms:—

9. (1) The provisions of this Part of this Ordinance shall have effect for enabling the occupier under a tenancy to which this section applies (hereinafter referred to as "the expiring tenancy") to apply to the court for, and subject to the provisions of this Ordinance to obtain, the grant of a new tenancy where, apart from the provisions of section 10 of this Ordinance, the expiring tenancy would come to an end on the 24th day of December, 1954, or within the period of two years beginning with that date, or would so come to an end by effluxion of time or by operation of law, or by the expiration of a notice to quit given by the landlord whether before or after the commencement of this Ordinance.

- (2) This section applies to a tenancy the subject of which— - (a) consists of a shop or an hotel; or $(a)$ - (h) consists of a shop and of office accommodation occupied wholly or $\frac{1}{2}$ mainly by the tenant for the purposes of the retail trade or business carried on in the shop; or - (c) includes a separate part which consists of a shop or which consists of $\frac{1}{2}$ a shop and of such office accommodation as is mentioned in paragraph $(b)$ of this subsection.

In my opinion under section 9 (1) the words "the expiring tenancy" is $\frac{1}{2}$ clearly confined to a tenancy to which the section applies. Subsection (2) then states the tenancies to which the section applies and I hold that neither the suit premises nor any part of them was in fact or in law covered by the terms of subsection (2). The defendant's tenancy was not an expiring tenancy within the meaning of the Ordinance and section 10 cannot be applied so as to treat the tenancy as continuing up to the relevant date. In these circumstances the plaintiffs are clearly entitled to mesne profits for the period from 25th December, 1954, to 4th July, 1955. Although mesne profits are in the nature of damages they are not to be assessed on the basis of the loss which has been occasioned to the plaintiff. The term is defined in section 2 of the Civil Procedure Ordinance as follows-

"mesne profits' of property means those profits which the person in wrongful possession of such property actually received or might with ordinary diligence have received therefrom, together with interest on such profits, but shall not include profits due to improvements made by the person in wrongful possession."

There is no satisfactory evidence as to the profits which the defendant actually received from the premises, therefore, the Court has to assess them upon the basis of the fair return in respect of these premises. The premises were not built to a high standard of building construction; the finish was rough and they were to some extent dilapidated. Nevertheless there is evidence that they could demand a relatively high rent from persons engaged in the motor trade and £100 per month was offered for them by an auctioneer and valuer. The plaintiff had no difficulty in finding tenants quickly at a rent of £160 per month, after some repair and renovation had been effected. In my opinion a fair rate of mesne profits for the premises in the state that they were at the time the defendant vacated would not be less than £100 per month which was offered by Mr. Sauvage who wanted the premises in connexion with his business as an auctioneer and I believe that a higher rent could have been obtained from someone engaged in the motor trade. I assess the mesne profits as £130 per month which is about Sh. 1 per square foot of the internal area together with simple interest at 8 per cent per annum up to the date of the decree. This amount will be calculated and there will be a decree accordingly for the plaintiffs with costs thereon.