Besan Ltd v. Everlight Commodities Ltd
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CACV000097/1982 Headnote Action was brought to recover possession of premises within Part II of the Landlord & Tenant (Consolidation) Ordinance on the ground of subletting contrary to Sec. 53(2)(e). The writ was is sued on 2nd July, 1981. At that date the contractual tenancy, which was for a fixed term, had not yet expired. The trial took place in June 1982. The judge found that lack of written consent had been proved partly by suspicious conduct on the part. of the tenant and partly by inferences of admission which he drew from the Defences pleaded, neither factor being in itself sufficient. He entered judgment for the landlord. Held on appeal : -
Dates of Hearing : 30th September, 1982; 1st October, 1982; 7th & 8th December, 1982 & 19th January, 1983. Date of handing down of judgment : 8th February, 1983. IN THE COURT OF APPEAL
BETWEEN
__________________ Coram: Hon. Leonard, V-P., Cons J.A. & Power J. Date: 8th February, 1983 ___________ JUDGMENT ___________ Leonard, V-P. : 1. This is an appeal from a judgment for possession of domestic premises consisting of a flat at Ridge Court on Repulse Bay Road under Section 53(2)(e) of the Landlord & Tenant (Consolidation) Ordinance Cap. 7. 2. It was common ground on the pleadings that the respondent's predecessor in title let the premises to the appellant for domestic purposes on the 30th September 1976 for a term of three years expiring on 15th October 1979 with an option to renew upon termination for a further period of three years "at a fair market rental". The option was exercised and proceedings were instituted to fix the rental. A consent order was made in these proceedings whereby it was declared that the tenancy had been renewed for a further period of three years commencing on the 16th October 1979 on the same terms save for the option to renew and ordered that a fresh tenancy agreement should be executed on those terms. None was executed but nothing turns on this. There was no prohibition against subletting in the original agreement. Part II of the Ordinance applied to the premises as from 18th December 1979 and the respondent .contended that on or about the 15th March 1981 the appellant had sublet to a Mr. Anderson without having obtained a consent in writing so to do. 3. In order to understand the conclusion at which the trial judge arrived it is desirable that I should at this stage refer with some particularity to the pleading. 4. The Writ was filed on 2nd July 1981 end paragraph 10 of the Particulars of Claim was in the following terms:
Paragraph 5 of the original defence read:
This paragraph was later deleted and replaced by the following:
This amendment was not made until the trial had actually commenced. It was the subject of objection which was overruled. The only witness called by the respondent was Mr. Anderson. His evidence was that on the 13th April 1981 he had at the behest of an agent of the appellant signed two documents, one a lease of the premises for a period of two years and the other purporting to be a licence to occupy the same premises both in favour of Mr. Anderson. These two documents were accompanied by a compliments slip of "Taipan Agencies Corporation" on which there was written "John. Please keep these agreements confidential from other parties, Tom". Mr. Anderson had first heard of these premises as the result of an advertisement in the daily press inserted in the name of Taipan Agencies apparently as Estate Agents. Mr. Anderson further gave evidence that he "got the documents from Taipan Agencies acting on behalf Besan Limited, my landlord". Mr. Anderson produced a further document which he had received from Taipan Agencies. This document is dated March 12, 1981 and advises as to "terms in regard to the intended tenancy". The following "special conditions" are listed:
Although required to become a director of Besan Ltd. Mr. Anderson had never acted as such. 5. From this elaborate charade I should have regarded the following inferences as irresistible.
It was therefore the respondent who was to be affected by the charade. It would have been needless to prepare for a claim by the respondent if the respondent's consent to the subletting had been obtained or was to be sought. 6. Therefore I should have found that the inference that the respondent had not consented to the subletting either in writing or at all was irresistible. Had I been sitting at first instance therefore I would have found on the evidence of Mr. Anderson (which was the only evidence called) and on the documents he produced that the onus on the respondent of showing the lack of consent had been discharged. The trial judge did not follow this course of reasoning. He said :
With respect I do not think that this can be right. Pleadings are not evidence save in so far as they consist of admissions. No admission of subletting without consent is contained in the pleadings. Changes of ground are evident. The original claim that Mr. Anderson was a licensee and not a sub-tenant was abandoned. Consent to and knowledge of the sub-tenancy was alleged in its place. Throughout, however, paragraph 10 of the Particulars of Claim was stated to be "not admitted" 7. As Cons J.A. said in Jim Mai-gi v. Choy Kwun-ping (1)
There is no admission to be found in the pleadings in the instant case and the learned trial judge was not entitled to find support from "the pleadings and inferences from them" as he did. Without that support he would not have found affirmative proof of absence of written consent. 8. No cross notice of appeal or counter-notice was filed and hence it was not open to the respondent to argue that the necessary inference from the evidence as distinct from the pleadings was as I have suggested earlier. For these reasons I would allow this appeal. 9. Having come to that conclusion I do not propose to deal in any length with the lengthy arguments advanced to the effect that Cheng So Shi v. Shing Ngan(3) was per incuriam and wrong. I am satisfied that it was neither for the reasons to be advanced by Cons J.A. with which I agree. I will content myself with quoting the following pass age from the judgment of the Judicial Committee in Yew Bon Tew also known as Yong Boon Tew & Another v. Kenderaan Bas Mara.(4)
10. Subsections (5), (6) and 6A of Section 53 of the Landlord & Tenant (Consolidation) Ordinance do far more than regulate the course of proceedings; they alter the substantive law to a remarkable degree. To say that they are procedural and therefore "retrospective" and that their use in Section 53 is to be regarded as a blanket indication that all the amendments in that section are to be regarded as "retrospective" is to be misled in the very manner of which the passage I have quoted warns.
(1) [1982] H.K.L.R. 674 (2)(1979) 2 A.E.R. 1185. (3)Civil Appeal 86 of 1982. (4)Privy Council Appeal No. 36 of 1980. Cons, J.A. . 11. I agree with my Lord the Vice-President that the appeal must succeed on the ground of failure to prove lack of written consent. I think, with every respect to the judge below, that he misapplied Jam Mai-gi v. Choy Kwun-ping(1). The denial of paragraph 10 of the Particulars of Claim is not a "general denial" of the kind we were there dealing with. It is a specific denial which put the plaintiff to positive proof of lack of consent. A matter such as that cannot be admitted by pleadings "to a degree". It must be all or nothing. In this instance it was nothing. 12. I do not think it possible for the plaintiff to derive any assistance from the dictum in Duke's Court Estates Ltd. v. Associated British Engineering Ltd.(2) on which counsel relied both here and below:-
13. That was in the present case an alternative plea which the tenant did not pursue. 14. Nor does Order 18 rule 8 help him. In my view it has no relevance to the straightforward denial of a material ingredient of a plaintiff's claim. 15. That is a short and simple point; susceptible of the clear and concise argument with which it was advanced. The bulk of the five days into which this appeal eventually stretched has however been taken up by argument which, with respect, cannot be so described, upon two other questions. The first is whether the judge applied the correct law to the facts before him m and arises in this way. 16. When the writ was issued Sec. 53(2)(e) was in these terms:-
17. Before the action came to trial substantial changes were made by the Landlord and Tenant Consolidation (Amendment) Ordinance (Ordinance 76/81). The Tenancy Tribunal was abolished and its functions transferred to' either the Commissioner of Rating and Valuation or to the Lands Tribunal. Part IV of the Ordinance, the successor to the Tenancy (Prolonged Duration) Ordinance, was repealed in its entirety and a new Part IV introduced, based on the United Kingdom Landlord and Tenant Act 1954. At the same time certain amendments were made to Part II. One of these was to delete the words, "without the consent in writing of the landlord" in Sec. 53(2)(e) and to replace them with the words "in breach of the contractual tenancy". Another amendment was to rewrite Sec. 52(1) to provide that the contractual tenancy had to come to an end before it could be "continued" under that part. 18. The application of the later amendment came for discussion in this court in Ngai Sau Ying v. Chu Kurok-keung, Henry (No. 2)(3), an action for possession brought under Sec. 53(2)(b). We concluded that the amendment had no effect upon any action instituted before the amendment was passed, even though the trial took place afterwards. We applied the well settled presumption that existing rights are not to be destroyed except by the clearest intention of the Legislature. That was in May last year. 19. In July, in Leung Chui-ying v. Chow Siu-kwan(4), we were again concerned with Ordinance 76/81, this time in relation to Sec. 53(2)(c) which provides that a landlord may recover possession if he "intends to rebuild the premises". That was all that originally he had to show. But the amendment, contained in a new section, Sec. 53A, introduced much stricter conditions. The landlord thereafter had to show that his rebuilding would result in the provision of more accommodation than before, or that it was in the public interest, or that it was not economically reasonable for him to keep up the present premises. In addition he had to pay compensation to the sitting tenants and the Lands Tribunal might impose further reasonable conditions on the rebuilding. The situation was very different from that we had to deal with in Ngai Sau Ying, and we concluded, for reasons that we there set out, that the Legislature had intended the new Sec. 53A to "take immediate effect and operate upon pending cases as well as any which might be commenced thereafter". 20. Cheng So Shi v. Madam Shing Ngan(5) was an action very similar to the present. It was brought upon Sec. 53(2)(e). The writ was issued before Ordinance 76/81, the trial took place afterwards. There had been no written consent to the subletting, but the landlord was unable to prove that it was in breach of the "contractual tenancy. For that reason he failed in the District Court. The judge refused him an order. We thought that the judge was wrong. The reason, which was agreed by all of us, was put this way : -
21. It is suggested by counsel for the present tenant that our decision was per incuriam. He concedes that it is not enough for him to put forward more convincing arguments than were then raised. But he submits that our decision was given without regard to other and inconsistent provisions within the same ordinance or to conflicting authority which is binding upon us, both of which are accepted criteria within the general rule laid down in Morrelle Ltd. v. Wakeling(7). 22. The statutory provisions we are said to have overlooked are the new subss. 53(5), (6), (6A) which have replaced the old subss. (5) and (6) -
23. The argument I think runs like this : -
24. If that is indeed the argument then for my part it fails, in that neither premise has been sufficiently made out. In particular the main argument in support of the second is that the subsections are "procedural". In my view that is simply not so. They are not concerned with the course of proceedings. They are concerned with the existence or otherwise of substantive rights, possibly in relation even to persons who have not been party to the proceedings. 25. It is then suggested that the actual choice of words implies an immediate effect without which difficulties would arise in practice. I must confess that I have been unable to grasp precisely what those difficulties might be. It is argued that where legislation requires the court to consider circumstances as they stand at the time of the hearing, that is an indication that the legislation is intended to apply to pending actions. That may well be so. The dicta in Harrison v. Hammersmith & Fulham London Borough Council(8) to which counsel drew out attention support that view, and it was a factor to which we had regard in Leung Chui Ying. But that does not assist us here. Paragraphs (b) and (c) in Section 53(2), which are the only two paragraphs of that subsection which require the court to adopt that approach, are expressly covered by ss.(6)(a). The other paragraphs apply to matters which, if they have occurred at all, can only have occurred in the past. I find nothing in the language or effect of these three subsections to persuade me that a retrospective interpretation to affect existing actions, in the words of their Lordships in Yew Bon Tew, to which my Lord the Vice-President has already referred, "is unavoidable". 26. The binding authority with which our decision in Cheng So Shi is said to be in conflict is Lam Wai v. Mak Yok Jan(9). It was concerned with a previous amendment to the Landlord and Tenant Ordinance, introduced by Ordinance 6/80 on the 15th February of that year. Parts of that ordinance were expressly given retrospective effect to a date some two months earlier i.e. 18th December 1979. The tenancy in question, which was a fixed term tenancy for three years and therefore, until the amendment, received no protection from Part II, expired on the 19th December 1979 but an action for recovery of possession had been commenced and originally concluded in the landlord's favour before the legislation was passed and made public. Naturally the judge could not have been expected in that circumstance to have had regard to the amending provisions. Shortly after the legislation had become known the tenant applied for a review of the decision. The judge still declined to apply the amendments. In his view the landlord had, when he originally granted the tenancy, acquired "a right of reversion" which was itself protected by Sec. 23(c) of the Interpretation Ordinance. That view was rejected on appeal, but the court went onto consider other matters raised by the case, in particular (1) the relationship of the doctrine of res judicata with courts which are given the power subsequently to review their own decisions, and (2) the effect of the amendments upon pending litigation. However it must be realised that the circumstances of that case were extremely unusual and as I read the subsequent portion of the judgment I am not able to discern any general principles which might assist or bind us in the construction of the particular legislation we are faced with. 27. The principle which counsel seeks to extract from that judgment, and I hope I express it correctly, is that where legislation reaches back to a particular date or dates in the past it must be given retrospective effect to include pending actions. The amendment there changed the date in Sec. 52(T) from the 15th December, 1973 to the 18th December, 1979 so that the subsection then read:-
28. Counsel I think relies on the fact that when that subsection is quoted on the last page of the judgment in Lam Wai, the words "whether created before or after" are put in italics. As my Lord the Vice-President, who was party to the decision in Lam Wai, has pointed out in Ngai SauYing(10) the words "whether created before or after" any particular date merely mean "whenever created". It seems to me that the particular date is inserted only as a form of emphasis. In any event the words we are concerned with do not take that form. In its fully amended version ss. (2)(e) reads as follows :-
I cannot see that the retention of specific dates in (i) and (ii) gives any indication of retrospective effect. Indeed when one looks back at the history of that paragraph, introduced for the first time in 1973, it would seem rather that the dates were put there then, and again in 1980, to ensure in favour of the sitting tenant that the paragraph should have no retrospective effect at all. 29. The second question upon which we have been addressed is this : if (as I find) the law as it existed at the time of the writ is the appropriate law, and in particular Sec. 53(2)(e), what effect did that section have upon a tenancy for a fixed term which had not then expired? 30. The possibility that an order for possession might be made during the continuance of the contractual tenancy was raised in Lo Wah v. Choi Fun (11). In that case a tenant for a fixed term had held over on its expiry and become a monthly tenant within Part II. The judge had granted the landlord an order for possession under Sec. 53(2)(e) on the ground that the tenant had sublet part of the premises without his written consent. 31. In dealing with an initial objection that the order ought not to have been made because the contractual tenancy had not first been determined by notice to quit, Huggins J.A., with whom Leonard J.A. and myself agreed, said this:
Later on, when considering a suggestion of consent to the subletting, he added :
32. Counsel does not contend that the result of that case was wrong. He prefers to see the order made by the judge as an example of judicial discretion correctly exercised. The discretion is said to be found in the doubly negative way in which the jurisdiction given by See. 53(2) is phrased. It was correctly exercised in the particular case because the tenant there needed to rely upon the tenancy given to him by Part II to have any standing before the court whatsoever. The court would not imply a "contractual" monthly tenancy on the previous terms by reason of the holding over and acceptance of rent: see Dealex Properties Limited v. Brooks(12). It would be otherwise where, as in the present case, a contractual tenancy with no prohibition against sub-letting still existed. In those, circumstances the discretion ought to be exercised in favour of the tenant. 33. Counsel was not able to refer us to any case in which a judge had expressly purported to exercise any such discretion. This of course is not conclusive, but it tends to confirm the view I tentatively expressed at page 849 -
Nothing that has been said in the present case inclines me to any different conclusion. 34. Counsel then seeks to draw assistance from the case of Lam Chun Kuen v. Wan Suk Ying(13). There a landlord hoped to obtain an order for possession of her premises on the ground that she reasonably required them as a residence for herself. Appreciating the inevitable delay between the date of the writ and the date of trial the landlord instituted her proceedings before the expiry of the lease, but timed them as best she could so that they would come on for hearing shortly after that event. The tenant objected strongly and moved to strike out the case. The District Judge eventually declined to do so and this court upheld his decision. During the course of his judgment Huggins J.A. said this :-
He was content to accept that concession -
But as can be seen, the concession was not necessary to the decision. The case is authority for no more than -that, as the law then stood, proceedings could be validly instituted during the continuance of a fixed term. 35. Finally counsel turns to Sec,. 74A. At the date of the writ it stood in this form : "74A. Nothing in this Part shall -
36. Paragraph (a) would seem to militate against counsel's argument, but it is on paragraph (c) that he pins his hopes. The tenant is entitled, so the argument runs, to quiet enjoyment of the property. That is an implied condition of the lease. That condition would be broken if the landlord physically ejected the tenant and the court would grant an injunction to restrain him. The position would be the same if the landlord tried to obtain the assistance of the court to eject the tenant. There would be no need for an injunction in that case for the court would simply refuse to assist; to do otherwise would be to assist the landlord to break his covenant. The rights and remedies arising from any term of the tenancy, not limited to those in favour of the landlord, are expressly not affected by Part II. They must therefore override the rights given by Sec. 53(2). 37. The reason behind paragraph (c), which dates from the original ordinance 1970, is not all that easy to discern. Conditions providing for re-entry in certain circumstances are in any event preserved by Sec. 53(2)(a). Yet if the words are meant to preserve a right of direct forfeiture, that would be inconsistent with Sec. 53(1), which is one of the prime operative sections of the statue. So too would be any covenant to yield up possession upon any date at all, provided of course that the date fell within the continuance of a the ordinance. 38. There are what some might consider sound practical reasons why the provisions of Sec. 53(2)(e) should have applied during the continuance of a fixed term. For example, the moment that premises were brought within the ordinance their re-sale value was bound to fall to some extent. It might not be thought unreasonable to grant the landlord some quid pro quo. 39. There are also technical arguments. Firstly it is well settled that the provisions applied during the continuance of a periodic tenancy. There was no need to terminate that tenancy first by serving a notice to quit. It is queried whether there is sufficient difference in principle between the two types of tenancy to warrant the application of the same legislation in such a completely different way. Secondly, if counsel's argument is correct, the amendment which added (aa) to Sec. 74A in July 1981 was not necessary. 40. All in all, and taking into account the whole of the section and not just paragraph (c) by itself, I am not persuaded that the paragraph is sufficiently clear to warrant the interpretation suggested. In my opinion the landlord was, in this action, entitled to rely upon Sec. 53(2)(e).
(1) (1981) H.K.L.R. 674 (2) (1948) 2 All England 137 at 139E (3) (1982) H.K.L.R. 256 (4) (1982) H.K.L.R. 419 (5) Civil Appeal 86 of 1982, unreported (6) Page 2 of the transcript (7) (1955) 2 Q.B. 379 at 406 (8) (1981) 1 W.L.R. 650 at 656 (9) (1980) H.K.L.R. 236 (10) at page 264 (11) (1980) H.K.L.R. 844 (12)(1966) 1 Q.B. 542 (13) Civil Appeal 47 of 1981 Power J: 41. I am in agreement with both of the foregoing judgments and have nothing further to add.
Leonard, V .P. 42. The order of this Court is therefore that the appeal. is allowed and the judgment for possession set aside. 43. We make an order nisi as to costs under Order 42 rule 5A(6). The appellant is to have his costs of the review proceedings before the District Judge and of this appeal, but in-view of the time taken on points which, if decisions had been necessary, would have been decided against him, we think it appropriate that his costs in the appeal be limited to two fifths of the taxed amount.
Representation: Y.C. Mok (M/S Wong, Hui & Souza) for Appellant. Mills-Owens, Q.C. & Mrs. Kaplan (M/S Denton, Hall & Burgin) for Respondent. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||