Hong Kong & Shanghai Bank Hong Kong (Trustee) Ltd v. Chan Lai-wah

CACV000035/1980

Landlord and tenant - condition that tenant would not permit or suffer any person not party to agreement to use the premises or any part thereof - tenant previously occupying premises with children - son married and joined by wife in premises - landlord entitled to forfeiture - relief granted.

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Coram: Huggins and Cons, JJ.A. and Bewley, J.

Date of Judgment: 1 August 1980

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JUDGMENT

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Huggins, J.A. :

1. The appellant Plaintiff sued for possession of a domestic flat of which it became the landlord under an agreement in writing for a term of three years. It was common ground that the premises were not protected under Part I of the Landlord and Tenant (Consolidation) Ordinance but were within the provisions of Part II. The agreement contained an undertaking by the tenant in these terms:

"Not to ...... permit or suffer any arrangement whereby any person who is not a party to this Agreement obtains the use or possession of the said premises or any part thereof irrespective of whether any rental or other consideration is given for such use or possession."

The Plaintiff contended that this undertaking had been broken and there is no dispute but that if that contention was right the Plaintiff was entitled to an order for possession, subject only to a claim by the Defendant for relief from forfeiture.

2. The facts upon which the claim was based are also not in dispute. The Defendant had, to the knowledge of the Plaintiff, lived in the flat with her husband and their six children from 1969 until the husband's death in 1971. A new agreement - the agreement which now governs the rights of the parties - was made in 1973. Three daughters have since been married and left the premises, but three sons have continued to live there with the Defendant. In 1978 one of the sons, having also married, brought his wife to live with him in the flat and it is her presence which is alleged by the Plaintiff to constitute a breach of the agreement.

3. On a literal interpretation of the material clause there can be no doubt but that the Defendant was in breach. Indeed, on that interpretation she may have been in breach from the commencement of the tenancy, because her sons were persons who were not parties to the agreement. Counsel for the Plaintiff argues that the presence of the sons was indeed a breach, but he says that the Plaintiff had been disposed to waive that breach. There are, he says, limits to the Plaintiff's tolerance and it has drawn the line between the son and his wife.

4. The trial judge accepted that the words of the clause were "perfectly clear and positive in themselves" but proceeded to look at the facts existing at the time the agreement was made and he concluded that the parties could not have intended, and did not intend, that the agreement be interpreted literally. He drew that conclusion from the fact that it was known to the Plaintiff that "the tenants" (by which I understand him to have meant the tenant and her husband and children) had already been in possession for some years.

5. It needs to be said once more that in interpreting contracts we are not concerned to ascertain the intention of the parties so much as to ascertain the intention expressed by the parties. If they have expressed their intention in words which are "perfectly clear and positive in themselves" the court may depart from the literal meaning only if it produces results which are repugnant or absurd. The judge apparently thought it would be repugnant and absurd if this agreement were interpreted so as to make the presence of the sons a breach of its terms. He also thought it would be repugnant and absurd if the agreement were interpreted so as to exclude another child of the marriage or an adopted child. Such exclusions might be unfortunate for the tenant and for the dependants concerned, but they cannot fairly be said to be repugnant or absurd in the sense that no reasonable parties could possibly have intended such consequences. It is not uncommon for small flats to be let upon a condition that no children shall reside there. Some persons may disapprove, but we have happily not quite reached the stage where it can properly be said that such a condition is.so outrageous that it is against public policy and will not be enforced.

6. Counsel for the Defendant has sought to persuade us that the Plaintiff intended that the presence of the sons should not constitute a breach at all. To do this he has in effect argued that what the parties really intended would have been more clearly expressed by inserting, after the words "any person who is not a party", the words "or who is not a member of the tenant's family". He has then gone on to interpret the word "family" and to submit that it is wide enough to include a daughter-in-law. Even if it be permissible to read into the clear words of the agreement words which are not there (and, for my part, I do not think it is permissible), it cannot be right to read in a word which is capable of many interpretations and then to give it one which cannot be shown to have been in the contemplation of the parties or to be such that it must have been the meaning intended if the parties were acting reasonably.

7. Mr. Cheung has submitted that the surrounding circumstances must be looked at for the purpose of interpretation even where the words are clear and where it is the surrounding circumstances which create the doubt: and he, of course, says that the vital circumstance is that the Plaintiff knew the sons had been living in the flat. He says "You cannot isolate the tenant." But why should a landlord not say to his tenant: "I know you have been using this flat as a residence for yourself, your spouse and your children, but in future you may use it only as a residence for yourself, and your family must find accommodation elsewhere"? In favour of the Defendant it can be said that the clause is open to an interpretation so narrow as would make life impossible for her. We instanced in argument the use of a lavatory in the flat by a plumber who was called in to repair a leaking pipe. This presents no real difficulty because one could deal with it either on the basis that the breach was de minimis or on the basis that the use by the plumber was really use by the tenant. However, once one holds that one licensee is, for this purpose, using the premises on behalf of the tenant it becomes difficult, with one possible exception, to exclude any other licensee and I think it is clear that there was no intention to admit all licensees. The one exception is a licensee who is also a dependant of the tenant whom she is legally bound to maintain. It is not necessary in this case to decide whether the presence of the sons was, or now is, a breach of the agreement. I have no doubt but that the presence of the daughter-in-law is such a breach.

8. That leaves the question of relief from forfeiture. Although relief has been formally opposed I am of opinion that it ought to be granted. It was, I understand, very properly conceded in the court below that a condition of relief should be that the breach was not continued. I would order relief on condition that the daughter-in-law moves out within three months. I would hear counsel as to any other conditions.

Cons, J.A. :

9. I would also allow the appeal for the reasons given by My Lord President and give relief upon the same term.

Bewley, J. :

10. I agree.

1st August 1980.

Representation:

Mills-Owens, Q.C. & Miss J. Leong (Helen A. Lo & Co.) for Appellant.

P. Cheung (Liu, Chan & Lam) for Respondent.