Orleans Estates Ltd v. Robert Jordan Inc (A Firm)

CACV000201/1980

IN THE SUPREME COURT OF HONG KONG

(Appellate Jurisdiction)

CIVIL APPEAL No. 201 OF 1980

(On Appeal From V.C.J. Action No. 3768 of 1980)

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Coram: Court of Appeal (Leonard, J.A. Silke and Barker, JJ.)

Date of Judgment: 10th April 1981

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JUDGMENT

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1. Silke J.:

2. On the 25th April 1977 the Respondent Robert Jordan Inc. ("the tenant") entered into a tenancy agreement with the Appellant Company ("the landlords") in respect of the premises Block E 2nd floor, 31 Wyndham Street for a term of two years running from the 20th August 1977 to the 19th August 1979 at a rent of $1,300 p.m. The premises are a post war premises.

3. At the time the agreement was entered into the tenant was a partnership. It later became the sole proprietorship business of Mr. Kelwani.

4. Mr. Kelwani refused at first to sign the tenancy agreement because he wanted permission to live on the premises and the suit premises were intended for a business letting only. He insisted upon, and the landlords agreed to, the user clause reading as follows: "(f) To use the said premises for the purpose of both trading and residence".

5. The tenant held over after the expiration of the term, the landlords claimed possession and, on the 29th October 1980, Judgment was given in favour of the tenant - the reason for the decision being that the Judge was satisfied "that this is a domestic tenancy". It would therefore be protected under the existing provisions of Part II of the Landlord and Tenant (Consolidation) Ordinance CAP 7.

6. The landlords appeal against that decision on what are for these Courts novell grounds - as is, I might say, the expressed user contained in the agreement for the Ordinance does not appear to contemplate such composite lettings.

7. The tenant was unrepresented both here and in the court below. Mr. Denis Chang Q.C., with him Mr. Mok, appeared for the Appellants at the hearing of this Appeal.

8. There is no authority on the point but it is Mr. Chang's basic contention that Part II does not apply to a tenancy let for composite use: unless the tenant shows that the premises are in fact primarily used for domestic purposes. Further that the tenant does not discharge his burden of proof merely by showing that he had incidentally used the premises for domestic purposes or even if he is able to show the premises are in fact jointly and equally used for both purposes.

9. In respect of his proviso, Mr. Chang thinks that he is in fact conceding more than he need.

10. Subsection (1) of Section 51 of the Ordinance defines "domestic tenancy" as meaning a tenancy of premises let as a dwelling.

11. In its subsection (2) Section 51 draws a clear distinction as between the purpose for which the premises are let and the nature of the tenancy.

12. I would interpolate here that English decided cases are of little assistance in the construction of these provisions of the Ordinance as the English legislation is predicated upon the concept of a dwelling house unit being protected. In Hong Kong it is the unit of tenancy which is protected. The English Rent Acts have express provisions for non exclusion by reason of part of the dwelling house being used for a shop or professional purpose and such like. We do not.

13. It is not disputed here that the tenant did use the premises for both trading and residence.

14. Mr. Chang would have us approach this first issue by treating the agreement as the purpose for which the premises were let: the premises themselves as the subject matter of the letting and by considering the user in determining the nature of the tenancy not-withstanding the purpose for which the tenancy was made.

15. He draws our attention to the definition of "business premises" as meaning "premises which are not domestic premises". I note the use of the word "premises": and that is defined as meaning the subject matter of any tenancy. Part II also defines "domestic premises" - and in precisely the same terms as the definition in section 2 of the Ordinance - as meaning "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".

16. Section 121 provides for the application of Part V of the Ordinance and it applies to every tenancy "save as otherwise provided". It "otherwise provides" that Part V shall not apply to a tenancy to which Part II applies. That latter part, in my view, applies to a "domestic premises" as well as to a "domestic tenancy" though as I have said the tenancy is that which is protected.

17. Mr. Chang submits that if the tenancy here does not come within the ambit of Part II then it must come within Part. V and his notice to quit is a valid and proper one. We are not concerned with any question of a common law tenancy.

18. He further submits that if it does come within Part II then it is necessary to go on to consider primary user - but not until then. He says that in any event the Judge made no findings of fact as to primary user for he held it to be irrelevant and held it to be so for the wrong reasons.

19. In Tsang Kwok To v. Chan Fung Yee⁽¹⁾the Full Court had for consideration a lease in writing which did not expressly state the "purpose of the tenancy or the nature of the premises". Gregg J., in delivering the Judgment of the Court at p618, having said that the Court was not concerned with any user in breach of covenant - as here- went on:

"Since the premises were not used wholly or primarily for human habitation they are not domestic premises as defined by the Ordinance. Consequently they are business premises in the sense in which that term is used in section 3(1)(c) of the Ordinance."

20. It seems to me by analogy that where one has a letting for both trading and residence then both are within the ambit of the agreement and one has to determine whether or not the letting resulted in the premises being used as a domestic premises before one can say that the nature of the tenancy was domestic and so protected. Therefore in my Judgment Mr. Chang's basic proposition is a correct one- that is bearing in mind his proviso. I would not agree with him that a composite tenancy of this type is per se outside the ambit of Part II as coming, from its nature, only within the definition of business premises being other than domestic.

21. It may well be as the Judge said "To the defendant each purpose is equally important" but that with respect to him is not the point. While the purpose for which the premises was let was composite use one cannot, in my view, divide the baby into solomonic halves one to the exclusion of the other. Primary user does fall to be considered and is relevant under the provisions of paragraph (b) of subsection (2) of section 51 for this is one of the five matters which a court must take into consideration in determining the nature of the tenancy -and thus the tenancy for the purposes of protection - notwithstanding the purposes for which the premises were let. And this, in my view, is the effect of the whole of the provisions of section 51.

22. It also may consider a Certificate from the Commissioner of Rating and Valuation as to primary user. None was produced here but as Li J.A. said in Chan Kwok Kwan v. Chan Cheong Wai⁽²⁾ (unreported):

"The Certificate of the Commissioner of Rating and Valuation is primary evidence of user but, in the circumstances of the case there being evidence to the contrary effect and the Certificate being demonstratedly wrong as to area and the compiler having been unaware of the after hours domestic use of the shop, the Judge was wrong, after all the evidence was in, to give any independent weight to the Certificate."

23. While that pronouncement related to the facts of the case before the Court of Appeal nevertheless it tends to show that such Certificate is not an essential where there is acceptable evidence as to user before a trial judge.

24. Li J.A. went on:

"In the circumstances it falls upon this court when evidence is available to look at the evidence and draw its own conclusions on the facts."

25. Here the Judge not having considered primary user and considering him wrong not to have done so, I think this court also to be entitled to look at the evidence and to "draw its own conclusions on the facts."

26. The facts in evidence before the court below were that: the area is 600 s.f.: it was let to a firm: it consists of a general office approximately 10' x 13', an interview room approximately 10' x 6' - a small room about 8' x 10' - a kitchen, a toilet and a passageway.

27. In the general office - where the tenant mostly sleeps - there are two desks, a telex machine, a typewriter, a refrigerator, a sofa or sofa bed. There is also a rack for samples.

28. In the interview room, in which at times he sees customers, there is a desk and the tenant keeps his files there. It contains a typewriter and the main telephone, for which there is an extension in the general office and in the toilet. The telephone account is rendered for a business telephone.

29. The previous tenant of the premises gave it in evidence that he used it purely for an office.

30. The tenant, who resided there alone, said he used the "office as a bedroom. During the day the sofa bed was folded up now since the sofa bed is broken I slept on the ground". And that is the only evidence which directly relates to domestic user.

31. At the hearing of this Appeal the tenant attempted to supplement and to alter this evidence but we felt bound by the evidence given in the court below and his attempt was rejected.

32. On this evidence, and the majority is that of the tenant himself, I have no difficulty in finding that the primary user of this premises was as a business premises. It does not fall within Part II of the Ordinance - it is not protected and the notice to quit is a valid one.

33. The tenant made complaint before us that he was misled by not being told by the landlord that the occupation permit for the building limited the second floor to non domestic use, Nothing in my view turns on this in the light of the specific composite letting.

34. He also made complaint that the Leave to Appeal was granted out of time and while he was not in the Colony. He has shown no prejudice to him by the exercise of his discretion by the Judge in the granting of leave and nothing in my view turns on this either.

35. I feel sympathy for the judge for these interesting arguments were not advanced in full before him. Had they been he might well have come to another conclusion, I, of course, cannot say.

36. In the event the appeal is allowed and a decree for possession as claimed granted to the Appellant/Plaintiff with costs here and below. Certificate for two counsel.

37. There was set down this morning a notice of motion lodged by the Appellant for further argument. This drew to the attention of the Court the provisions of Part V of the Ordinance relating to periods of notice in respect of business and domestic premises. It is somewhat strange to find these provisions in a part which specifically does not apply to part 11 tenancies but be that as it may the Respondent here has asked us in a prolix affidavit not to entertain the notice of motion. In any event the Judgment I have just delivered makes the point Mr. Chang very properly raised - it could well have been of assistance to the Respondent - unnecessary for decison.

Representation:

Mr. Denis Chang Q.C. & Mr. Y.C. Mok (D.W. Ling & Co.) for Appellant.

Mr. Chanshyam Kalwani, Respondent in person.

(1) [1959] H.K.L.R. 614

(2) C.A. 91/1979 (C.A.)