Case No.:

(COURT OF APPEAL)

Court:

Court of Appeal

Issue No.:

1962

 

Principles

·  Landlord and Tenant—Furnished restaurant—Not within purview of maximum rent provision of the Rent Restriction Ordinance

·  Landlord Ofl Tenant—Council of Ministers may not extend operation of Ordinance under Rent Restriction Ordinance, s. 6 (c), to cover tenancies beyond scope of ordinance

Landlord Ofl Tenant—Council of Ministers may not extend operation of Ordinance under Rent Restriction Ordinance, s. 6 (c), to cover tenancies beyond scope of ordinance

(ii) The Council of Ministers under Rent Restriction Ordinance, s. 6 (c) may not extend the operation of the Ordinance to cover tenancies and limit rents of premises not provided for by the Ordinance.

Judgment

(COURT OF APPEAL)

HUSSEIN TANON v. ESTATE OF ANASTASIOS AGAS

AC-REV-115- 1957

Advocates: Ahmed Suleiman and A. m. Abdel Wahab                                                                                               for defendant-appellant

R. C. Soni 1. December 8, x case was brought in the District Court at Khartoum (DC-CS-1873-1956) by the authorized agent of the estate of Anastasios Agas claiming from the defendant Hussein Tanon a certain premises in the city of Khartoum sub-leased to hi by the said Agas and for possession of those premises. The premises had been used for running a restaurant and had been given on lease with certain articles, which can be used for running the restaurant. The lease started from August r, i9 and was to run for one year. The action was brought at-the end of June 1956 before the expiry of one year. The rent was £S.6o a month, payable daily at the rate of £S.2 a day. Agas himself was riot the owner of the premises. He was himself a tenant of one Liountris and had taken this and some other premises from Liountris since February 1952. Hussein Fanon was a sub-tenant under Agas. Agas having died, the estate of the deceased is the plaintiff. The defendant admitted the sub-tenancy agree ment. There were various kinds of pleas which were put in issue which

Were:

(i) Is there any valid agreement between the landlord and the plaintiffs and for what rent?

(2) If yes. is the agreement, dated August i, i binding on the

defendant?

(3) If yes, did the agreement show a specific rent for the premises, and other for accessories?

(4) If yes, what is the standard rent of the premises?

(5)Is the defendant in arrears of rent, and for how much?

(6) Is this case covered by the Rent Restriction Ordinance?

(7) Relief

23

 

These issues were framed on January 20, 1957. It was urged before the court on February 11, 1957, by the plaintiff’s counsel that the case was not covered by the Rent Restriction Ordinance.

On March ix, 1957, there is an order of the court directing that a letter be sent to the Governor to assess the standard rent of the premises including the furniture and the goodwill of the restaurant. It is not clear how this letter got issued. It was stated before us at the hearing of the revision that counsel had agreed to such a letter being sent. Apparently the parties were not agreed as to the standard rent, it being alleged on November 20, 1956, in a reply to the statement of claim that standard rent for premises was £S. plus £S. for the utensils.

The Governor sent his reply which is dated April 21, 1957, in which the monthly standard rent for the premises is estimated at £S.18.86om/ms, and the monthly rent for the serviceable furniture at £S.6.I4om/ms, making a monthly total of £S25.ooom/ms, the unserviceable furniture is stated as being stored in a house of the defendant in Khartoum No. 3. The Governor’s letter said nothing about goodwill.

On March 3!, 1957, the court had said that “Mr. Suleiman (advocate for defendant) admits the whole issues except the standard rent which is referred to the Governor under Rent Restriction Ordinance 1953, 5. 4 (d).”

After the receipt of the Governor’s letter, there is nothing further done in the case except the delivery of the judgment. There is no evidence taken.

Even the sub-tenancy agreement is not on the file. The District Judge delivered his judgment on May 9, 1957, giving the plaintiff a decree for

arrears of rent at the rate of £S.2 a month. The plaintiff’s claim for arrears had amounted to £S.296.64om/ms. The trial court gave the figure of arrears up to October i 1956, as £S. The judgment then mentioned that the defendant had already paid for six months’ rent from August i, 1955 to January 3!, 1956, at the rate of £S.6o, and that as he would be entitled to set off the sum of £S.2io the overpaid rent, the defendant was not in arrears, and therefore the plaintiff was not entitled to possession. With these findings the trial court dismissed the action. (It should be mentioned that during the course of the case the plaint had been amended to bring on the date of arrears of rent as October 15, 1956.)

From the decree of the trial court, there was a petition for revision taken to the learned Judge of the High Court (HC-REV- The petition urged in the grounds of revision that though a reference had been made to the Commissioner of Khartoum under Rent Restriction Ordinance, 1953, s. 4 (d), yet that reference did not dispose of the case, as it left undecided two issues in the case, namely, issues 3 and 6; that the case was not covered in its entirety by the Ordinance, and that the fact whether the case was covered by the Ordinance could only be decided by taking evidence on the matter. It was urged further that the sub-tenancy agreement was not an agreement to take certain premises on rent without more, but that Agas had given on rent not only the premises, but also the utensils and accessories and also the goodwill of a restaurant as

going concern; and that all this took the case out of the scope of the Ordinance or in the alternative even if the Ordinance applied it was perfectly legitimate to fix an all round figure for all the items given out on rent covering (1) the standard rent and (ii) a reasonable sum in respect of the utensils and goodwill. It was further urged that the trial judge was wrong in thinking that a reference had been made to the Commissioner under Rent Restriction Ordinance 5. 4 (d) which had no bearing on the case, but that it was always contemplated by the parties that the reference had been made under Rent Restriction Ordinance 1953, S. 4 (d). (I suppose the reference in the grounds to the Commissioner is to the Governor.)

The learned judge of the High Court held that the trial court was wrong in holding that the question was merely of standard rent, but that the defendant had had the benefit not only of the premises, but also of the furniture, utensils and goodwill, and that he had taken on rent the premises as a restaurant as a going concern. The learned judge held that the Ordinance did not apply and that the parties must abide with the terms of their agreement. The learned judge therefore gave a decree with costs in favour of the plaintiff for a sum of £S.296.94om/ms being arrears claimed up to October i 1956. He also decreed the claim for possession of the premises, allowing defendant time for vacating them up to October 31, 1957.

Fro this decree of the learned judge of the High Court, which is dated August 3, z revision has been brought to the Court of Appeal. In the grounds it has been urged that the essence of the agreement is the hiring of the premises, and that the mere fact that accessories have been added does not change the fundamental substance of the agreement; that the intention of the legislature in passing the Ordinance was to prevent landlords from charging exorbitant rents, and that it was quite reasonable of the trial court to have treated the matter on the same basis as if it was a case covered by Rent Restriction Ordinance 1953, S. 16; and that the plaintiff was estopped from saying that the reference should not have been made to the Commissioner, as the matter was referred to him with his consent during the trial of the case.

We have heard learned counsel at length on the case. During the course of arguments reference was made by the court to the provisions of Rent Restriction Ordinance 1935 ss. 6 and 10, the latter section providing that if after July x, an agreement had been made providing for rent in excess of increases other than those permitted under Rent Restriction Ordinance 1953, s. 6, rent enhanced by such increase or such excess was

S.L.J.R.—5

declared irrecoverable from the tenant and, if paid by the tenant it was recoverable from the landlord.

I now proceed to examine the contentions of the two parties. But before I do so, I must express my dissatisfaction with the way in which the case was conducted. The sub-tenancy agreement was never brought on to the record by the trial court. Whether it was produced before it or before the learned judge of the High Court, cannot be known. In the judgments of both the courts there is no indication of it having been produced or examined. We asked for the agreement to be produced and got it.

It is the function of the trial court to gather all materials bearing on a case. It was essential to have the document, which is the basis of this case. It is not what the parties contend is the meaning of a document, but what the court holds it to be, and the court must have the document before it. It is also desirable for the trial court to take evidence on all issues before it, and to give its findings as this often saves a remand for taking further evidence, and shortens the time which a case takes for its final decision.

Having said that, let us proceed to find out what the parties did do, and how far the law allows the contract made by the parties to be operative. Looking at the sub-tenancy agreement, I notice that it says that it has for its object “Tassos Restaurant, No. 7 Zubeir Avenue.” Under clause i the period of the lease of the restaurant is one year, renewable

as later given. Under clause 2, rent of the restaurant including the accessories is settled at £S.6o a month. Clause deals with conditions of renewal. Under clause 4 it is agreed that the payment of the rent would be daily at the rate of £S.2 a day to be collected at the end of each day’s work. Under clause, provisions are made with regard to the repairs and maintenance of the buildings, which are specifically referred to as “the object of the tenancy.” Clause 6 deals with water and electricity charges in sub-clause (a); and in sub-clause (b) it is stated that all public health and other dues accruing to public health or other authorities except Government dues would be paid by the sub-tenant on the same basis as previously undertaken by the sub-letter. Clause 7 deals with the term of the tenancy being for the period August I, I955 to July 3, 1956, renewable for another year with a previous notice of 21/2 months. The last clause, clause 8, deals with the reservation for the sub-letter of the accessories given in the schedule to the agreement.

It will be noticed that the agreement is a composite agreement. The object of the tenancy as clarified in clause are the buildings let out. Accessories are supplied to run a restaurant. Profits are taken out of the daily earnings. It is not necessary to mention other particulars. A sum of £S.6o a month is payable to sub-lessor. No mention is made of any  goodwill, which has been introduced into the case purely as an argument by learned counsel. Letting as a going concern is not mentioned. That the restaurant was let as a going concern was, however, pleaded in the plaint, and was not denied by the defendant. In the arguments before us learned counsel for the defendant said that at the moment when the agree ment was made, the restaurant had not been working for a couple of months, but that it started working later. As no evidence was taken at all by the trial court, we have no means of knowing how long the restaurant had been working before the date the agreement was signed, nor when it did start working if it was not in working order at that date. It was stated by learned counsel for the sub-lessor that it had been working for 15

or 20 years before the date of the signing of the agreement and had acquired a goodwill. Now this fact, if true, that the restaurant had been working since 15 or 20 year has a bearing on the case. In Lindley, Partnership 585 (11th ed. i it is stated:

“The term goodwill can hardly be said to have any precise signification. It is generally used to denote the benefit arising from connection and reputation and its value is what can be got for the chance of being able to keep that connection and improve it. Upon the sale of an established business its goodwill may have a marketable value, whether the business is that of a professional man or any other person, but whether or not the goodwill has a saleable value is a question of fact to be determined in each case. But it is plain that goodwill has no meaning except in connection with a continuing business; it may have no value except in connection with a particular house, and may be so inseparably connected with it as to pass with it under a will or deed without being specially mentioned. In such a case the goodwill increases the value of the house; but the value of the goodwill of any business to a purchaser depends, in some cases entirely, and in all very much, on the absence of competition on the part of those by whom the business been previously carried on.”

We thus see that what the counsel called goodwill was in this case two distinct elements. As stated in 32 Halsbury, Laws of England, s. 733 at 450 (2nd ed. 1939):

“Goodwill is not a thing which can be separated and dealt with apart from the business out of which it arises; but it may be dealt with as an. entity separate from the particular premises in which such business has been carried on. Where, however, it is attached to the premises and enhances their value, it is inseparable from them

In 20 Halsbury, Laws of England, S. 333 at 294 (2nd ed. 1936):

“A tenant is entitled at the termination of the tenancy on quitting the holding to compensation from his landlord where he can show that by reason of the carrying on by him or by his predecessors-in-tital at the premises of a trade or business for a period of not less than five years what is termed goodwill has become attached to the premises, by reason whereof the premises could be let at a higher rent than they would have realised had no such goodwill attached thereto.”

This is the law in England. The details are to be found in the Landlord and Tenant Act. 1927, prevailing there. This Act has probably been replaced by a new Act now.

From these quotations it is evident that in the case we have to deal with, the sub-tenant agreed to give £S.6o as rent for (i) rent of the premises, (ii) rent for the accessories and (iii) a share in the daily earnings. Goodwill is due to two causes. One is the personal factor, i.e., the ability and competence of the persons running the business. Bad cooks, poor service, lack of attention, bad seating arrangements, bad ingredients of things made, bad crockery and cutlery, etc., would lead to a bad reputation and less custom; the converse to a good reputation and more custom. The other is the external factor, the premises and their situation. The second factor, what is called “goodwill,” may have become attached to it because of a particular kind of business having been well done there before.

Having cleared the ground regarding “goodwill” and its bearing on rent of the premises, and on the value of the business. I proceed to deal with the Ordinance. But before I do so it appears to me that in the present case’ there is no goodwill which is being let. I have heard of a sale of goodwill, but have not heard of lease of goodwill. What the sub-lessor is doing is two-fold. He is charging an increased rent because “goodwill” has been attached to premises; further, he is taking a share of the daily earnings. This is getting a contribution from what may be called “personal goodwill,” if such a thing can be leased. The two things are quite distinct. A house with a previous good reputation has an enhanced letting value. But such reputation of the business may be ruined by the personal factor, bad management. Bad management would lead to less intake. The share, which a good manager can give, is more and is given more readily. A bad manager has less to give, and gives grudgingly.

When we turn to the Rent Restriction Ordinance, the object for which it was enacted was to control the rent of premises. It purported to control premises, not other things. It does not aim at control of rent of furniture except in one case only, and that is in Rent Restriction Ordinance I9 S. i6, regarding dwelling-houses. It is perfectly possible for a person to run a boarding-house, in which case the price charged for food cannot be brought within the purview of the Ordinance. But it is quite possible to split up and discover the charges; so much for rent of the premises; so much for the furniture; and so much for the food or other services. The Rent Restriction Ordinance will apply by virtue of s. i6 to the first two, but not to the others. One can easily discover in this

Manner whether a landlord is improperly trying to.get round the Ordinance, by charging say £S.10 a day for early morning tea and breakfast in

addition to the rent for the premises and furniture allowed under the Ordinance. This is an example of a fraud on the Ordinance and would not be allowed by the courts. “Any attempt to contravene the policy of a public statute is illegal notwithstanding the absence of any express prohibition in the statute condemning the means adopted.” 2 Elliot, Contracts, s. 648 at 8, n. 23.

Again it is rent that is controlled by the Ordinance. This is dealt with in two ways. One is the rent of the buildings themselves. In Rent Restriction Ordinance 1953, S. 4, standard rent deals with old buildings, new buildings, old and new buildings mixed up, and other cases dealt in clause (d) by the Governor, but necessarily confined under the principle of ejusdemgeneris to the physical aspect, the brick and mortar, etc., of the building. Rent is dealt with in another way under Rent Restriction Ordinance I s. 6. Clause (a) deals with structural alterations and the like, necessarily a

physical aspect of the building. But (b) deals with something extraneous to the building. There are the rates, etc. Then under clause (c) an un defined power is left to Government. The Council of Ministers can regulate some cases. But these cases must necessarily deal with rent only, and rent of the premises only. I asked learned counsel for the sub-lessor what example he could give where the Council of Ministers could exercise their power validly. He gave us an example, the addition of sanitary arrangement to the building. In my opinion this is not a good example. It is covered by clause (a). An example was given by my learned brother. Nur J. This was when a house was approached by a narrow lane, but due to municipal action the approach roads had become wider and better and the letting value had become enhanced. I agree respectfully that this is a good example where the Council of Ministers may allow an increase of rent. I venture to suggest another example:

Where the landlord pays fire insurance premia for the building. The premia may, I guess, be allowed by the Government to be added to the rent. Similarly, in my opinion, where there comes to be added to the premises, that is to say to the building, an enhanced letting value due to situation, the Government may allow an additional rent to be charged. A building used for residential or business purposes in a quarter of the town may have a better rental value if situated in the busy part of the town than one situated elsewhere, though the amount spent on building in both cases be the same.

Arguing on this basis, it would in my opinion be a legitimate exercise of its powers by Government if it were to give or withhold its sanction for an increase in rent for premises to which by virtue of some “goodwill” of particular business being conducted in a Particular building situated in a particular locality, a better letting value has become attached. This is rent higher that what is chargeable on the basis on which rent is calculated under the provisions of Rent Restriction Ordinance 1953, S. 4, or allowed under s. 6 (a).

Where a trade or business has been carried on for a sufficiently long period of time, the person carrying on the trade or business or his predecessor may have been successful in creating goodwill. The landlord gets a benefit from it in the shape of increased rent without making any contribution of his own to gent. He gets an unearned increment without any exertion of his own but through the efforts of a tenant or of his predecessor in interest who improves the property or creates in the property and adherent to the property, a goodwill of which the landlord wants to take the benefit. This would in my opinion fall within the scope of the powers reserved to the Council of Ministers under clause (c).

It follows from this that if rent higher than what is allowed under Rent Restriction Ordinance 1953, 5. 4, or increases permitted under clauses (a) or (b) of s. 6 are charged from a tenant, the excess is irrecoverable under the provisions of s. 10 unless the Council of Ministers has given its permission to the increase in rent.

In the case before us, the standard rent of the building has been found. It is £S. a month. This is recoverable. The rent for accessories has been found by an agreed reference to the Governor. It is £S.6.I4om/ms a month. This, too, is recoverable, as the Ordinance does not deal with rent of such accessories when supplied to or added to buildings other than dwelling-houses. This leaves us with other elements of pure rent, due to (i) situation, and (ii) “goodwill” which has become attached to the building because the business of a restaurant being said to have been carried on in the premises for the last i or 20 years. In my opinion this excess of rent not having been permitted by the Council of Ministers is not recoverable.

The last component of the total rent of £S.6o is a share in the earnings. It is legitimate to make such an agreement unless it be unconscionable. If not unconscionable it would be recoverable. The Rent Restriction Ordinance does not deal with it. In my opinion we should have evidence in this case recorded for the purpose of telling the court all about the component parts of this amalgamated rent of £S.6o a month.

It was urged in the grounds of revision before the learned judge of the High Court that it was legitimate for the parties to enter into a valid agreement fixing an all round sum for all items of rent. In my opinion this is not always so. Any contract tainted with illegality is generally speaking unenforceable. If a contract has a distinct element in it, which is opposed to the policy of the law, it is not enforceable. 8 Halsbury, Laws of England, s. 256 at 147 (3rd ed. 1954) states:

 

“A promise cannot be enforced when the whole consideration for it is illegal, nor generally, can it be enforced when part of the consideration is illegal. If, however, the illegal consideration constitutes a subsidiary or minor part only of the total consideration, and if the illegality does not involve a criminal actor one contra bonos mores, the illegal part of the consideration may, it seems, be severed from the rest of the consideration, and the legal promises enforced.”

It is necessary to notice the great caution in which this paragraph is worded in Halsbury. The illegal portion should be subsidiary or minor, and it is said that “it seems” that the legal promises after severance could be enforced. There appears to be uncertainty in the law and the attitude of the courts regarding this. A recent example would illustrate this and be instructive. This is the case of Bennett v. Bennett, reported for the trial court in [2 K.B. 572, and reported for the judgment of the Court of Appeal in [ i K.B. 249. The head note giving the facts in the latter volume states:

“After a wife had presented a petition for dissolution of marriage, in which she also asked for alimony pending suit and maintenance for herself and a son, but before pronouncement of a decree nisi, her husband entered into a deed whereby he agreed, inter alia, to make financial provision for his wife and son, in consideration for which the wife covenanted not to proceed with the prayers for maintenance and to consent to their being dismissed, and not to present any further petition for maintenance. The registrar, on being informed of the deed, struck out of the wife’s petition the prayers for maintenance.

“In due course a decree nisi was granted to the wife and was made absolute. The husband falling into arrears with his payments under the deed, the wife brought the present action to recover the arrears. The action being dismissed, the wife appealed.

“Held: affirming the decision of the court below, that the covenants entered into by the wife, which purported to oust the jurisdiction of the Divorce Court over the whole field of maintenance, were the main consideration for the deed, which was therefore void and unenforceable as being contrary to public policy.”

This is a strong case. The parties had acted on the deed, yet when it came to enforcing it in a court of law, the courts refused to enforce it.

I take it, however, that if a contract be substantially good, then the contract as a whole is not void. The good part may be enforced.

Another example is afforded by the case of Stuchbery v. Genera! Accident and Life Ass. Corp., Ltd. [2 K.B. 256 where the Court of Appeal in England had before it the problem whether compensation for goodwill was due to a lessee carrying on a business or carrying on a profession when he was carrying on both. Evidence was given to find out in what manner the goodwill was formed. It was held that goodwill was due to a profession and was therefore personal. It would travel with the person and was not attached to the premises and therefore nothing was claimable for the goodwill.

For the reasons I have given I hold that the contract of sub-letting in the present case has a distinct element of rent, which has become attached to the premises due to its being run as a restaurant by the present and past sub-tenant. This distinct element is an increase in rent which unless permitted by the Council of Ministers under Rent Restriction Ordinance 1953, S. 6 (c), is not recoverable under s. 10. In these circumstances I would set aside the decree of the learned judge of the High Court and remand the case to the trial court for a fresh decision after evidence has been recorded as indicated in this judgment.

Before I conclude may I quote Scrutton L.J. from the case of Anderson, Ltd. v. Daniel [1924] 1 K.B. 114, 147:

“Where the policy of the Act in question is to protect the general public or a class of persons by requiring that a contract shall be accompanied by certain formalities or conditions, and a penalty is imposed on the person omitting those formalities or conditions, the contract and its performance without those formalities or conditions is illegal, and cannot be sued upon by the person liable to the penalties.”

This case was followed recently in B. and B. Viennese Fashions V.Losane [ 1952] 1 All E.R. 909.

In 8 Halsbury, Laws of England, s. 216 at 525 (3rd ed. 1954):

“If the illegality of a transaction is brought to the notice of the court, whether the contract ex facie shows illegality, or it appears in the course of the proceedings. and the person invoking the aid of the court is himself implicated in the illegality, the court will not assist him, even if the defendant has not pleaded the illegality and does not wish to raise that objection.”

M. I. El Nut J. December 17. 5957 —According to the tenancy agree ment between the parties this was not a sub-tenancy of the premises known as Plot No. i in Block No. 3 West, Khartoum, pure and simple, but it was rather a tenancy of the restaurant known as “Tassos Restaurant” long established by respondent in those premises including the furniture and cutlery, etc., necessary for its running as a restaurant. The agreement provided inter alia, in paragraph 6 thereof that during the continuance of the tenancy the tenant (applicant) shall pay for the electricity and water consumed in the working of the restaurant, and shall also meet all public  health and similar dues accruing to the public health and other authorities, which were previously undertaken by the latter.

In my view, the main and principal point in issue in this case is whether or not the Rent Restriction Ordinance 1953, is applicable to this form of tenancy.

It is clear from the tenor of the Rent Restriction Ordinance that it regulates and lays a limit on the rents of all unfurnished premises in the localities defined therein, excluding premises of which the Government is the landlord, whether those premises were commercial or otherwise.

The Rent Restriction Ordinance went further and laid a limit on premises let as furnished dwelling-houses, but laid no such limit on the rents of furnished commercial or other premises. It can therefore be safely said that the legislature intentionally excluded the application of the Rent Restriction Ordinance 1953, to furnished premises other than dwelling- houses.

I can imagine a case, which one usually comes across in life. A rent his big unfurnished premises to B for a long term without a condition against sub-letting or assignment. B installs, machinery and tools in these premises and makes it a workshop. After running that workshop for some time B rents the workshop to C for a lesser term than the term of his lease in the premises, at a monthly rent agreed upon between the parties, which is very high.

Is it open for C in these circumstances to come to court and say that the rent of the workshop he agreed to pay B was excessive and ask that the standard rent be fixed under the Rent Restriction Ordinance 5953?

I can answer without hesitation that such a tenancy agreement cannot be brought within the orbit of the Rent Restriction Ordinance. The analogy of Rent Restriction Ordinance, s. i6, to such a case is certainly out of the question.

The case before us is exactly the same as the case I just mentioned. I do not want to speak of the goodwill and the law governing it, which my learned brother Mr. Justice Soni ably exposed in his judgment. I do not think that it was necessary for bringing this present case out of the operation of the Rent Restriction Ordinance to plead that the tenancy in dispute included the premises, the furniture and the goodwill of the restaurant rented as “ lassos Restaurant.”

It was the tenancy of a restaurant fitted with all furniture, cookery, etc., as such. Throughout the tenancy agreement it was referred to by the parties as the restaurant, and not as the plot on which the restaurant was installed. The provisions in paragraph of the agreement regarding payment of the tenant of water and light consumed in the working of the restaurant during the tenancy as well as observance by him of the sanitary requirements and payment of public health dues while absolving him from liability for the payment of Government dues on the premises is significant. They clearly show that what was rented to applicant was the restaurant as a going concern which implies that the tenant cannot change its character and use it for any other purpose.

In my decided opinion therefore the tenancy in dispute is not at all covered by the Rent Restriction Ordinance Whether it is considered as tenancy of furnished premises other than a dwelling-house or a tenancy of a restaurant as a going concern, it is in my opinion excluded from the operation of the Rent Restriction Ordinance.

I do not agree that the Council of Ministers is empowered under Rent Restriction Ordinance, s. 6 (c), to extend the operation of that Ordinance to cover and limit the rents of premises not provided for by the Rent Restriction Ordinance. They can only under that power authorize increase of standard rent of premises already covered by the Ordinance.

Nor do I agree that respondent by putting some furniture and cookery in the premises in dispute and renting it as a restaurant intended to commit a fraud on the Ordinance by illegally enhancing the standard rent. It is in evidence that he instituted that restaurant and carried on business in it for the last 15 or 20 years, i.e., long before the Rent Restriction Ordinance was contemplated, and in 1955 rented it as a going concern.

For all above reasons I am sorry to have the misfortune of varying from the decision arrived at by my learned brother Mr. Justice Soni. I hold the opinion that the judgment of the learned judge of the High Court under appeal is correct and should therefore stand.

In my view, therefore, this application for revision should be dismissed with costs.

The Hon. Mr. Justice Soni and I sat as a Court of Appeal to deal with this revision. We unfortunately have not agreed. I therefore refer the matter to the Hon. Chief Justice for any order he may wish to make under Civil justice Ordinance, s. 1 (2).

M. A. Abu Rannat C.J. December i 19 have read the case and the two judgments made by M. I. El Nur and R. C. Soni JJ.

I agree with M. 1. El Nur J. that the Rent Restriction Ordinance does not apply to the facts of this case and I therefore order that the application for revision should be dismissed with costs.

APPLICATION FOR REVIEW

Babiker Awadalla 1. March 8, i application having been referred to me by the Hon. Mr. Justice Nur (the Acting Chief justice) for an opinion before reference to the Court of Appeal, I am of opinion that the Court of Appeal should refuse the application under Civil Justice Ordinance, Ord. XIV, r. 3.

Cummings j., in his notes, says that in this respect we are guided by the Indian Civil Procedure Code, Ord. 47. This rule, so far as relevant, reads: “Any person considering himself aggrieved . . . and who, from the discovery of new and important matter or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the decree was passed or order made, or on account of some mistake or error apparent on the face of the record, or for any other sufficient reason, desires to obtain a review of the decree passed or order made against him may apply for a review of judgment to the court which pa the decree.” The words “or any other sufficient reason” have been held by the Privy Council to mean a reason sufficient on grounds at least analogous to those specified immediately previously, i.e., excusable failure to bring to the notice of the court new and important matter or error on the face of the record. One of these is when the court comes to know rulings or decisions not referred to in the arguments and which in its opinion are decisive of the case.

As I understand it, this application raises two points:

(i) That the matter is not covered by the Rent Restriction Ordinance, and

(2) That if the respondents con they are entitled to an enhanced rent because of the “goodwill” attaching to the premises, then Such enhanced rent is not recoverable unless authorized by the (government under Rent Restriction Ordinance, s. 6 (c).

In my view both these points were fully considered in the judgment of the majority. At (1962) S.LJ.R. 33 the Hon. Mr. Justice Nur says about the first point: “I can answer without hesitation that such a tenancy agreement cannot be brought within the orbit of the Rent Restriction Ordinance,” and he said this after much argument which is clear throughout the judgment. As regards the second point, he says at the same page:

“I do not want to speak of the goodwill and the law governing it which my learned brother Mr. Justice Soni ably exposed in his judgment. I not think that it was necessary for bringing this present case out of the operation of the Rent Restriction Ordinance to plead that the tenancy in dispute included the premises, the furniture and goodwill of the restaurant rented as ‘Tasso Restaurant ‘.“

I entirely agree with the decision of the court that this case is not covered by the Rent Restriction Ordinance and I am also of the opinion that the question of goodwill is entirely irrelevant to the decision of the case.

As the application for review raises nothing which can be said to amount to “sufficient reason” justifying action by the court, I think that this application is groundless.

M. I. El Nur 1. March 13 1958: —This application for review of the Appeal Court majority judgment of December 17, I9 is submitted for your directions.

Personally I see no merit in this application.

Review can only be made on the discovery of a new and important matter or evidence which, after the exercise of due diligence was not within the knowledge of the applicant for review or could not be produced by him at the time when the decree was passed, or on account of some mistake or error apparent in the face of the Record, Civil justice Ordinance, Ord. 4, T. 1.

In my view therefore this application has no merits and should be dismissed as such.

M. A. Abu Rannat C.J. March 13. 1958: —I am in full agreement and therefore hereby summarily ‘dismiss this application for review.

Editor’s Note. —See Ahmed Mohamed Abbashar v. El Hadi El Hag El Amin, AC-REV-367-1960 (I962) S.L.J.R. 8i (Babiker Awadalla j.) and

El Hag Hassan v. Ahmed Dafa El Seed, AC (1962) S.L.J.R.

 

240 (Babiker Awadalla j.).

Court: M. Abu Rannat C.J. R. C. Soni J., M. I. El Nur J