Sharma v Prices and Incomes Board [1977] FJSC 14; Criminal Appeal 092 of 1976 (25 March 1977)

Fiji Islands - Sharma v Prices acomes Bmes Board - Pacific Law Materials

IN THE SUPREME COURT OF FIJI

APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 92 OF 1976

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BETWEEN:

AMBIKA PRASAD SHARMA
s/o Ganpat Maharaj
Appellant

AND:

P AND INCOMES BOARD
Respondent

The appellant was convicted by the Magistrates' Court Suva on the 28th day of October, 1976 on two counts of Failing to Comply with Paragraph 2 of the Counter- Infl (Application of Section 15on 15) Order, 1973. He was fined $150 on each count. He appeals against conviction.

There is also a cross appeal by the Crown against the refusal of the trial Magistrate to make any compensation orders in favour of Asesala Sadole and Pratap Singh, who were tenants of the appellant.

I will deal first with the appeal.

There were originally four grounds of appeal as follows:

"1. That the learned trial Magistrate erred in law in holding that there was a restriction in law forbidding landlords to increase rents.

2. The learned trial Magistrate erred in law in not holding that a person who gave no notice at all to the Prices and Incomes Board could increase his rent.

3. The Counter-Inflation (Application of Section 15) Order 1973 does not create any offence whatsoever, and only requires that the landlord may not increase his rent within the six weeks period of the notice.

4. The learned trial Magistrate erred in law in not holding that the Counter-Inflation legislation was penal in its nature and ought to have been construed strictly."

At the hearing on the 7th March, 1976 the appellant sought and was granted leave to add two additional grounds of appeal as follows:

"1. There was in law no increases of rent within the meaning of the Counter-Inflation Act, and thereby no offence was committed.

2. The Counter-Inflation Act only applies to letting and continued letting, and does not apply to any new lettings or changes of tenants: thus, the appellant did not commit any offence."

There is no dispute about the facts in this case.

The appellant was at all relevant times the owner of a freehold property in Mead Road Tamavua on which was erected a two storey building comprising a shop, garage and bulkstore on the ground floor and living quarters on the first floor.

On 21st February 1973 under the terms of a written agreement the appellant let the ground floor of the premises comprising the store garage and bulkstore to K.N. Vuibau Ltd., for a term of 6 years at a monthly rental of $190.00 until the end of February 1975 and thereafter at a rental of $200.00 a month.

Prior to this agreement being entered into one Karaisitiani Vuibau rented the whole of the premises for $350 a month but when this tenancy commenced is not known.

By 25th July 1973 the two storey building had become a three storey building and on that date one Shiu Chand entered into an agreement with the appellant to rent the two top floors for a period of two years at a rental of $200 a month. Some time prior to the 11th December 1974 Shiu Chand surrendered his tenancy and by this date K.N. Vuibau Ltd., had also surrendered its tenancy.

On the 11th December 1974 the appellant entered into an agreement with Asesala Sadole for the letting of the whole of the premises for a term of five years at an annual rental of $5400 payable by equal monthly payments of $450.

This tenancy gave rise to the first count. The prosecution alleged the annual rental ($450 a month) under this tenancy was an increase of rent from $390 a month. This $390 a month was the total of the rentals paid by K.N. Vuibau. Ltd. ($190 at that time) and $200 paid by Shiu Chand to which prior tenancies I have already referred. Sadole appears to have surrendered his tenancy before the expiry of the term provided in the agreement.

On the 30th April 1975 the appellant entered into an agreement with one Pratap Singh to rent the whole of the premises for a term of five years from 1st April 1975 at an annual rental of $7200 payable by equal monthly payments of $600. This is the tenancy which gave rise to the second count alleging an increase of rent from $450 to $600 a month.

In respect of both Sadole's and Pratap Singh's tenancies the appellant did not give prior notice to the Prices and Incomes Board of the proposed increases in rental which the prosecution contended should have been given as required by paragraph 2 of the Counter-Inflation (Application of Section 15) Order 1973.

In a lengthy and well considered judgment on the above facts the trial Magistrate found the offences proved and convicted the appellant on both counts.

The main defence put forward at the trial was to the effect that prior to the letting to Sadole the appellant had converted the first and second floor to flats. In other words the premises were different in nature from those previously rented. In respect of Pratap Singh his tenancy also included the benefit of a liquor off licence although no separate value was placed on the benefit of this licence in the tenancy agreement.

For the purpose of this appeal it is not necessary to consider the defence or submissions raised by defence counsel at the trial. The trial Magistrate in his judgment covered all matters raised at the trial and I am entirely in agreement with the reasons he gave for not accepting the defence.

However defence counsel raised no argument as how "increases in rent" in section 14 of the Act should be interpreted and whether, on the facts, section 15 and the order made by the Board thereunder had any application. Nor did the trial Magistrate in his judgment consider this issue.

When this appeal first came on for hearing on the 14th January, 1976 an adjournment requested by counsel was granted. The Court then advised counsel that the Court wished, when the appeal was heard, to hear argument on the question whether there had in the instant case been any increases of rent within the meaning of the term in section 14(1) of the Act. This gave rise to the appellant raising the two further grounds of appeal to which I have already referred.

It is necessary to consider both sections 14 and 15 Counter-Inflation Act before the introduction of the Counter-Inflation Act 1973 (Amendment) Act 19 of 1975 as the alleged offences were committed in the instant case before the introduction of the amending Act. To avoid having to quote the section again when I come to consider the amended section I have bracketed and underlined the words "with the approval of the Minister". The sections read:

"14. (1) Subject to the provisions of section 36 of this Act, but notwithstanding the provisions of any other written law, the Board may [with the approval of the Minister] by order, restrict increases of rent in respect of the letting or continued letting by any person or class of persons (including the Crown) of any premises under any tenancy.

(2) Any order made under the last preceding subsection may include provisions excluding, adapting or modifying any provisions contained in, or having effect under, any written law which relates to rent, and in the exercise of any power to make subsidiary legislation under any such written law regard may be had to matters connected with the operation of this section.

15. (1) The Board may [with the approval of the Minister] in any case as appears appropriate, by order, make provision to require that at least six weeks' written notice is given to it by any person of any proposed increase in any price, charge, remuneration, dividends, or rent in time to consider whether the Board should exercise the powers conferred by this Act in order to restrict those increases.

(2) Any order made under the provisions of the last preceding subsection may provide that, until the end of the period given for consideration of the proposed increase by the Board, any implementation of the increase constitutes a contravention of the order."

The two sections must be considered together as the increase in rent referred to in section 15 can only have reference to increases of rent referred to in section 14(1). The relevant order made by the Prices and Incomes Board is the Counter Inflation (Application of Section 15) Order 1973 (Legal Notice No.71). This order was amended by the Counter Inflation (Application of Section 15) (Amendment) Order 1973 (Legal Notice No.85).

The order in para 3 provides that any implementation of the increase of rent constitutes a contravention of the order but this has no application in the instant case as it is common ground that the appellant gave no notice of proposed increase of rent.

The order was revoked and replaced by the Counter Inflation (Application of Section 15) Order1976 (Legal Notice No.122). The 1976 order provides for 12 weeks written notice to the Board of any proposed increase of rent whereas the 1973 Order required 6 weeks notice.

It is breaches of the 1973 Order by the appellant which is alleged in the instant case.

Section 14(1) of the Act has first to be considered. By this section the Board is empowered by order to "restrict increases of rent in respect of the letting or continued letting by any person or class of persons (including the Crown) of any premises under any tenancy."

The phrase "increases of rent" is not defined in the Act, but the wording of the section indicates it is confined to increases of rent in respect of the letting or continued letting of premises under any tenancy. Nor is there anything in section 14 or elsewhere in the Act which fixes rental values of properties or freezes rents at existing levels and requiring a landlord to obtain prior approval of the Board to any proposed rent increases. It is clear, that subject only to the requirement of prior notice to the Board required by an order made under section 15, a landlord can freely increase rent on the expiry of the 6 weeks notice, the relevant period in the instant case. An increase of rent indicates that there is a rent which is increased and section 15 providing for notice of a proposed increase of rent also indicates that there must be a rent which it is proposed to increase. This would appear to be an obvious statement but the interpretation of section 14(1) has given rise in the instant case to considerable confusion because of different interpretations put on the word "rent". Does "rent" refer to rent under an existing tenancy or can it also refer to rent paid under a prior tenancy?

The prosecution contended, on the first count, that the appellant having previously rented his premises under two tenancies for a total of $290 a month increased the rent when he entered into a new tenancy agreement with a different tenant at a rental of $450 a month and similarly in the second count when he entered into another agreement at a rental of $600 a month he increased the rent from $450 to $600 a month and prior notice of those increases should have been given to the Prices and Incomes Board and were not given.

In short what the prosecution contended was that on the facts in this case as the premises had been previously let that rent under that prior letting is what section 14(1) refers to and any later letting of the premises at a higher rent is an increase of that rent.

In seeking to interpret section 14(1) of the Act it is of assistance to first consider the history of the Act which came into force on the 30th day of June, 1973 immediately after the expiry of the Counter-Inflation (Temporary Provisions) Act 1973 which I shall hereinafter refer to as the temporary Act.

The present Act was designed to give permanent effect to the controls provided in the temporary Act. Section 4(4) of the temporary Act which dealt with rents and which section 14 seeks to replace reads as follows:

"4(4) Subject to the provisions of the two next succeeding subsections and of section 12 of this Act, but notwithstanding the provisions of any other written law, no person (including the Crown) shall let or continue to let premises under a tenancy at a rent or on terms which exceeds or are more onerous to the tenant than those on which the premises were last let before the appointed day."

This section effected a freeze on rents and a closer examination of its provisions is of assistance in considering section 14(1) of the Act. The section specifically refers to a letting of premises before the appointed day which is, under the temporary Act the 1st of April, 1973. Any letting at a rent which exceeded the rent paid under a letting last let before the appointed day was prohibited by the section. The section did not apply to the first initial letting of premises, after the appointed day nor in respect of that first letting was the landlord prohibited from increasing the rent. As the temporary Act only had a life of 90 days such an apparent defect or loophole was of no moment.

When the legal draftsman was considering the provisions of the Act he was no doubt aware of the defect I have referred to and considered how best to achieve the object of the Act which, as regards rents, is to make provision for controlling rents so as to counter inflation.

It would have been open to the legislature to continue a freeze on rents in which event provisions would have been made for machinery enabling rents in justifiable circumstances being increased. Such an approach to control of rents was not adopted by the Act instead an entirely different approach was adopted. The Act imposes no freeze, but as we will see later a freeze can be enforced by order of the Board. Instead a landlord is free to increase rent under a letting provided he first complied with any order made by the Prices and Incomes Board under section 15 of the Act but subject to any order the Board may make under section 14(1) restricting such increase. Not only was the method of control provided by the temporary Act discarded but the method of ascertaining whether rent had been increased which is readily ascertainable under section 4(4) of the temporary Act does not appear to have been carried forward into section 14(1) of the Act. Section 14(1) does however partially cover the defect or loophole I have referred to. While it still does not cover the first letting of premises it does cover any increase of rent under that letting.

This highlights an important issue which is relevant to this appeal and that is the limits of the control sought to be imposed under the Act as regards rents and the powers given to the Board to achieve such control.

Apart from the very many tenancies outside the ambit of the Act by virtue of section 36, section 14 clearly can have no application to a tenancy of premises that have never been let before since there cannot in that case on the first letting be any increase in rent - the rent whether highly inflationary or not is the initial rent.

It is also clear from the wording of section 14(1) that any increase of rent under an existing tenancy can be restricted where the increase is of the rent provided under the terms of the existing tenancy. Where doubt has arisen is whether the rent provided under the terms of an existing or proposed tenancy is an increase of rent ascertained by reference to the rent payable under a prior tenancy of the same premises in a case such as the instant case where no restriction order had been made under section 14(1) limiting an increase of rent in respect of the appellant's premises.

I have already drawn attention to the fact that the legislature discarded a method of ascertaining whether rent had been increased by reference back to a prior letting as provided in section 4(4) of the temporary Act. There is no similar provision in section 14(1) nor has "increase of rent" been defined by the Act to cover the situation where the rent on a later letting is higher than the rent on a prior letting. Had there been such a definition it would have been necessary to limit the time which had elapsed between two lettings, as it would be illogical and possibly unjust to provide that there had been an increase of rent which should be controlled in a case where the last letting prior to the letting under consideration was say 10 or more years previously, to take an extreme case. Section 14 (1) does however state what increases of rent are sought to be controlled. There can be an increase of rent in two situations. Firstly in respect of the letting of the premises under any existing tenancy and secondly in respect of any continued letting under any tenancy. A situation can arise where there is an apparent increase of rent in a case where there is a restriction order in force to which I will refer later. I do not consider it at this stage because the appellant's premises were not the subject of any restriction order at the times he entered into new tenancy agreements.

So far as the first situation is concerned it is clear that an increase of rent refers to an increase of rent payable under a tenancy, an existing tenancy and not a prior tenancy.

Where doubt can arise is on consideration of the second situation that is increase of rent in respect of a continued letting under any tenancy. Is this letting the same letting referred to in the section and covered by the first situation? This question leads to consideration of what is implied by the words "continued letting".

In section 4(4) of the temporary Act the words used are "let or to continue to let premises". In section 14(1) the words are "the letting or continued letting of ………..premises". "Continue" in the first quotation means "carry on" or "persist in". In the second quotation, however, "continued" in its context means "carried on without cessation" (The Shorter Oxford English Dictionary). If ‘continued letting’ is intended to cover a new letting then more appropriate language would have been to refer to a reletting or a further or subsequent letting.

But whatever sense the word "continued" bears in its context in section 14(1) it implies a course of conduct carried on without a break or cessation. To hold that a letting many years after a prior letting was a continued letting would be to ascribe to that term a sense not borne by the word "continued". The second letting is a separate letting. It would be no different in my view if the two lettings were only a month apart. If I am correct in this view then it matters not that one letting ceases and another commences shortly thereafter although the closer the two lettings are together the more there is of a continuation of letting of premises if the act of letting is considered in isolation and without reference to any particular tenancy. There is no need in my view to strain the language of section 14(1) to give shifting meanings to the words "rent" and "letting" to fit changing facts. A reasonable interpretation of the section is that the two words bear the same meanings. "Rent" is the rent under an existing tenancy and it is the same rent which has to be considered when the letting is continued. "Letting" where first used in the section is the same letting which is continued.

A continued letting of premises in the sense that there is a letting which is carried on without cessation is not uncommon.

A continued letting under a tenancy would cover a monthly tenancy which is a letting from month to month or an annual tenancy - a letting from year to year. If these periodic tenancies carry on from month to month or year to year without being determined there would be continued lettings. In the case of a tenancy for a term of years if that tenancy was by agreement extended for a further period that would be a continued letting under that tenancy.

In all these cases if during the currency of the tenancy it is sought to increase the rent payable thereunder then the landlord must comply with the order made by the Board under section 15 and give the required notice of a proposed increase of rent. No practical problems arise for the landlord as the tenancy continues at the old rent until the period of 12 weeks (the period now required) elapses or after that period if the Board by order restricts the increase of rent to the existing rent.

If however section 14 bears the meaning which the Crown alleges that a new letting of premises which are let at a higher rental than under a previous tenancy involves an increase of rent then serious practical problems arise for a landlord and this arises because of section 15 of the Act.

To give an example of one such problem. If a monthly tenant gives one month's notice of termination of his tenancy and on expiry of that tenancy the landlord intends to relet the premises at a higher rental to another tenant he would now have to give the Board 12 weeks prior notice of the proposed new letting at a higher rental. By virtue of section 15(2), which the Board has incorporated in its order, the landlord cannot relet the premises until the 12 weeks has expired. If he proceeded to grant the tenancy within the 12 weeks period he commits an offence carrying a penalty of up to $2000. Since a landlord can only increase rent by agreement with his tenant and this agreement in practice is unlikely to be sought or obtained 12 weeks before the tenant seeks to occupy the premises the landlord has two options open to him either to relet at the old rental or not to relet until he knows he can safely do so at the increased rental which would be at the expiration of the 12 week period. The premises in the latter event could remain vacant for 12 weeks.

No problems on the other hand are created if the words "increases in rent" used in sections 14 and 15 are interpreted to mean increases in rent in respect of an existing tenancy or continuation of that tenancy.

In interpreting section 14(1) I have considered the principles to be applied. The trial Magistrate in his judgment quoted two authorities and Maxwell on Interpretation of Statutes although he did not apply those quotations to the point in issue which I have been considering because the issue was not raised before him. He did however consider the meaning of "rent". I repeat portion of the trial Magistrate’s judgment in which the quotations appear.

"It was said in the case of Nokes v. Doncaster Amalgamated Collieries Limited (1940) A.C. 1014 per Viscount Simon at page 1022, that, "If the choice is between two interpretations, the narrower of which would fall to achieve the manifest purpose of the legislation, we should avoid a construction which would reduce the legislation to futility and should rather accept the bolder construction based on the view that Parliament would legislate only for the purpose of bringing about an effective result."

Again in Shannon Realities, Limited v. Ville de St. Michel (1924) A.C. 185 per Lord Shaw at pages 192 and 193 it was said:

"Where alternative constructions are equally open, that alternative is to be chosen which will be consistent with the smooth working of the system which the statute purports to be regulating; and that alternative is to be rejected which will introduce uncertainty, friction or confusion into the working of the system."

These two decided cases indicate with a high degree of clarity the requirement for legislation to be effective and certain. In this manner those persons affected by it know exactly where they stand.

It has been said that "the office of Judge is to make such construction as will suppress the mischief, and advance the remedy, and to suppress all evasions for the continuance of the mischief". See "Maxwell on the Interpretation of Statutes", 12th edition, at page 137.

So far as the principles enunciated in Noke’s case are concerned adopting the interpretation of section 14(1) that "increases of rent" refer to rent under an existing tenancy does not reduce the legislation to futility. All existing tenancies other than those specifically exempted by virtue of section 36 of the Act are effectively covered. A new letting of premises previously let would not however be covered.

A new letting of premises which has not previously been let is not covered by section 14(1) as I have already pointed out. The only difference between the two new lettings is that in one case the premises have been let previously.

If it is considered whether the legislature intended to legislate only for the purpose of bringing about an effective result it must be borne in mind that rents in respect of native land leased by the Native Land Trust Board and rents in respect of agricultural land are specifically excluded. In addition new lettings of premises not previously let are not covered.

The legislature has chosen to limit its control of rents for the purpose of countering inflation and such limitation can only result in partial control. Within such limitation, however. control is effective if section 14(1) covers, as it does, increases of the rent payable under all existing tenancies other than those specifically excluded.

It is when the principles enunciated in Shannon's case are considered that it is possible to decide which Interpretation of section 14(1) should be accepted. As Lord Shaw has said that interpretation "is to be rejected which will introduce uncertainty, friction or confusion" into the working of the system. If "increases of rent" are confined to increases of rent payable under an existing tenancy the system works smoothly. A landlord knows that his rent can be controlled if he seeks to increase that rent during the currency of the tenancy. He must if he increases that rent first comply with any order made under section 15 of the Act.

If, however, "increase of rent" is interpreted to mean not only increase of the rent payable under an existing tenancy but also an increase of rent ascertained by comparing that rent with the rent paid under a prior tenancy then in my view "uncertainty. friction or confusion" would be introduced.

I have already referred to the practical problems such an interpretation would cause for a landlord and also his tenant. Section 14(1) makes no reference to any prior letting as has section 4(4) of the temporary Act. Is a Court to assume that any prior letting whenever it occurred the rent of which is deemed to have been increased by the higher rental under the present tenancy is within section 14(1). A proper assumption would be the last letting before the present letting but this would be an arbitrary assumption. Again must it also be assumed the prior letting is by the person who subsequently relet the premises. If it is immaterial who was the prior person who let the premises then any person who purchased a property, other than Agricultural land, occupied by the owner would be put on inquiry as to whether the property had been previously let as he could commit an offence if he decided to let the property and failed to give notice of his intention to let the property at an "increase of rent". Acceptance of the second interpretation would in my view certainly introduce "uncertainty, friction or confusion" and should be rejected in favour of the first interpretation.

Finally in considering the quotation from Maxwell the "mischief" is the effect on the economy of uncontrolled inflationary rents and the first interpretation does not allow the Board to control any new tenancy. Lettings of premises not previously let are not now subject to control whichever of the two interpretations is adopted. The Act does not apply to rents of native land in respect of leases or licences by the Native Land Trust Board or rent in respect of Agricultural land as defined by the Agricultural Landlord and Tenant Ordinance whether it is rent in respect of a head lease or sublease. Only a small segment of property owners has been singled out as subject to control and in this respect the Act, so far as rent control is concerned, is discriminatory but it is not discrimination within the meaning of section 15 of the Constitution. It is not an "evasion" in my view to interpret sections 14 and 15 so as to exclude new lettings of premises which had been let previously. The first interpretation effectively covers the bulk of existing urban lettings in the areas where inflation is most rampant, and permits of control being exercised in respect of increases of rent under those lettings.

I referred earlier in this judgment to the fact that a situation can arise where an apparent increase of rent is ascertained by reference to a prior letting. It can arise where the Board has made a restriction order under section 14(1) and there has been another letting at a higher rental.

If the Board has made an order restricting any increase of rent in respect of an existing tenancy it would depend on the terms of the order whether the restriction was confined to the rent payable under the existing tenancy or whether it covered that and any other subsequent letting under any other tenancy. The use of the word "restrict" indicates that a proposed or actual increase can be totally or partially restricted. In other words there can be a total freeze at the time of the existing rent or a partial increase can be approved and rent frozen at that increased rent.

It is again necessary to interpret section 14(1) in view of this situation but this time the interpretation is not concerned with "increases of rent" but with the words "order" and "any tenancy" and what powers the Board is given by the sections.

With reference to those words section 14(1) is capable of two further interpretations.

Firstly the Board is given power by order specifically to restrict increases of rent in respect of the rent payable under an existing tenancy or alternatively under that or any other letting of the premises (which would include a new letting) and secondly the Board either alternatively or additionally is given power to restrict increases of rent generally with regard to lettings of all premises and whether under existing tenancies or new lettings under any tenancy.

These different interpretations arise because of the language used in section 14(1). "Premises" can mean "a house or building with its grounds and other appurtenances" and can also mean more than one house and building.

"Any person" can mean "a person no matter which or what person" or "every person". "Any tenancy" can similarly mean "a tenancy" or "every tenancy".

Before the Act was amended by the 1975 amending Act section 14(1) was also capable of being interpreted in these two different ways. The amending Act however throws doubt on which interpretation was initially intended or whether the amendment has altered the acceptable interpretation originally intended.

The Board was originally a three member Board. The amending Act reduced the Board to a single member Board. The legislature obviously considered that while a three member Board could be given unrestricted powers to control rents a single member Board should first obtain the approval of the Minister before exercising its powers. This resulted in amendments (inter alia) to sections 14 and 15 of the Act which I have underlined when earlier quoting the sections. In so amending the sections it appears to me the legislature took the view that section 14(1) enabled the Board to make an order restricting increases of rents generally and such power was not limited to restricting an increase in respect of a particular letting under a tenancy.

The further interpretation of section 14(1) which give rise to two further possible meanings of the section is possible if section 15 is totally ignored and section 14(1) is considered in isolation. Whichever interpretation is accepted it is clear that when an order is made it could restrict an increase of rent in respect of an existing tenancy and, any increase of that rent whether under the existing tenancy or a new letting could be a breach of the order and an offence under section 33 of the Act.

Either interpretation would remove the confusion which I have referred to when considering the meaning of "increases of rent" and achieves the object of the Act. New lettings would be covered. There are advantages and disadvantages whichever interpretation is considered.

The choice of interpretations is between a specific power to limit an increase of rent in respect of a particular letting or a general power in respect of all lettings.

Before amendment of section 14(1) the Board could make an order without reference to the Minister but since amendment the Minister’s prior approval is necessary.

It can hardly have been intended that if the power is specific and not general the Minister must first be consulted and approve of all and every order made restricting an increase of rent under a tenancy. It appears to me that by the amendment the legislature has altered the meaning of section 14(1) and has indicated in no uncertain terms that the power given by section 14(1) is now by virtue of the amendment a general power to limit increases of rent requiring only one approval of the Minister in respect of each order made. A general power would, however, include a specific power to restrict increases of rents.

Even ignoring section 15 section 14(1) is capable of being logically interpreted to mean that the order restricting increases of rent confers a specific power to restrict increases of rent.

If however sections 14(1) and 15 are read together as they must be in my view, there is no doubt in my mind that section 14(1) before amendment did not give the Board general power by one order to restrict increases of rent in respect of all lettings and such was the intention of the legislature.

The purpose of section 15 is to provide the procedure to be followed to give the Board notice of a proposed increase in time to consider whether it should exercise its powers of limiting the increase by order.

With the approval of a Minister the Board can make an order which requires any person seeking to increase rent on that person's premises to give prior notice of any proposed increase of rent. If any order is made restricting that increase it is an order referring only and solely to that proposed increase and the Minister must first approve that order.

The amendment has increased the confusion that already exists but effect must be given to the amendment.

The section can be interpreted in two ways and neither of the two interpretations should in view of the amendment be rejected. The power given to the Board by section 14(1) to restrict rents must be held to be both specific and general and in every case where an order is made the prior approval of the Minister is necessary.

Where the Board has made a specific order, and by specific I mean in this judgment an order restricting an increase of rent in respect of an existing tenancy, the terms of that order would indicate whether the increase of that rent was restricted to the rent under that tenancy or that tenancy and any other tenancies.

If increases of rent in respect of that and all other tenancies involving the same premises is restricted by an order any letting at a higher rental would be an offence but it would not be logical to expect a person to comply with an order made under section 15. An increase of rent within the meaning of the term in section 15 must be a proposed legal increase of rent. A purported increase of rent in breach of a restriction order is illegal and section 15 does not in my view require where a restriction order has been made notice of a purported illegal increase of rent. Section 15 can have no application where an order is in force restricting an increase of rent where rental is increased on a subsequent letting. In a sense that increased rent is an increase of rent related to the prior letting but it is not an increase of rent in relation to the existing tenancy.

Before I summarise my views expressed in an already too lengthy judgment and at the expense of making it even more lengthy I would refer to the manner in which sections 14 and 15 are operating in practice.

There is a very considerable public misunderstanding and by those who have to apply the Act. In the main this has arisen because the legislature has not provided in the Act guidelines which would have made it clear what was intended by sections 14 and 15, and how they were to operate and be applied. There is no machinery provided which would enable a person to apply for a justifiable increase of rent when there is in force an order restricting any increase of rent. It can only be assumed that if a landlord can persuade the Board to revoke the restriction order a justifiable increase of rent may be achieved.

In practice a person seeking to increase the rent of his premises writes to the Board for approval of the increase. It is not the function of the Board to grant approval. An order under section 15 requires notice to be given to the Board and the function of the Board is either to restrict the increase by an order or not to restrict the increase in which event it would advise the waiver of the notice of that fact or if it did not do so the increase would be implemented.

It is apparent from the record in this case that where the Board does not agree with the increase it advises the landlord that the increase is not approved and in practice the increase is not implemented.

However it is the Board's duty to make an order under section 14(1) if it does not approve a proposed increase. If it does not follow that procedure despite written notice of the Board's non approval of a proposed increase of rent a landlord who has given the required notice can with impunity implement the increase. The Board could then make an order under section 14(1) but on my interpretation of section 14(1) the order could only restrict any increase of the rent then payable under the tenancy that is the rent payable after the landlord has implemented the increase.

To summarise my views:

Where no restriction order has been made by the Board either specifically restricting an increase of rent payable under a particular tenancy or generally in respect of all lettings an order made by the Board under section 15 of the Act must be complied with in respect of proposed increases of rent under existing tenancies not excluded by the Act. New lettings whether of premises previously let or not are not covered by the Act unless there is a restriction order in force covering such lettings. A new letting of premises previously let at any prior time does not involve an increase of rent within the meaning of sections 14 and 15 and no notice need be given of any apparent increase of rent. Section 14(1) of the Act gives the Board power to restrict increases of rent either specifically in respect of an existing tenancy or generally in respect of all tenancies and depending on the terms of any order made thereunder can apply to existing lettings or any subsequent lettings of the premises. In all cases the Board must make an order or orders restricting any increases and the Minister must approve of the order in each and every case. Section 15 and any order made thereunder can have no application to rented premises where there is in force a restriction order. Any purported increase of rent in respect of controlled premises is a breach of the restriction order and is not a breach of an order made under section 15.

In the instant case there were no restriction orders in force affecting the appellant's premises when he entered into two new lettings at rentals higher than he charged under prior tenancies.

These higher rentals were not "increases of rent" within the meaning of the term in the Act and he was not obliged to comply with paragraph 2 of the Counter Inflation (Application of Section 15) Order 1973. The higher rentals would have been increases within the meaning of the terms of any restriction order if there had been in force any such order restricting any increase of rent above the rent payable under the letting in existence at the time the order was made. It follows he should not have been convicted.

The convictions are quashed and the fines if paid are to be refunded to the appellant.

It also follows that the cross appeal cannot be entertained and it is dismissed.

R.G. Kermode
JUDGE

Suva,
25th March, 1977.