Oceania Manufacturing Co and Anotehr v. Pang Kwong-hon and Others
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CACV000099/1978
Coram: Roberts, C.J., Huggins, J.A., and Yang, J. Date of Judgment: 23 July 1979 ----------------- JUDGMENT ----------------- Roberts, C.J. Facts 1. This is an appeal from a judgment of Mr. Justice Cons dated the 7th November, 1978 by which he ordered that the first and second appellants should surrender to the respondents possession of the 5th floor, 6th floor and roof of 932 Cheungshawan Road Kowloon and should pay mesne profits at the rate of $9,500 per month from the 1st February, 1978 to the date of surrender of possession of the premises. 2. In January, 1976 a company called Winning Enterprises Limited was the registered owner of the premises in question. On the 15th January of that year, Winning Enterprises granted a two year lease of the 5th and 6th floors and roof to the first appellant, Oceania Manufacturing Company. 3. About March, 1976 the first appellants sub-let part of the premises to the second appellants, Oceania Brothers Manufacturing Company Limited. A Mrs. LAM Wai-hing was the sole proprietor of the first appellants and a major shareholder and director of the second appellants. 4. Between March 1976 and June 1977, Winning Enterprises Limited came to know of the sub-letting by the first appellants to the second appellants of part of the premises but took no action to prevent it. Indeed, with knowledge of the sub-letting they continued to accept rent and thereby waived the breach committed by the first appellants of the covenant against sub-letting contained in the lease of 15th January, 1976. 5. On the 23rd June, 1977, Winning Enterprises assigned the 5th floor of the building to the first respondents and the 6th floor and roof to the second respondents. Each assignment referred in terms to the existing tenancy created in favour of the first appellants by the lease of 15th January, 1976. The rent of $9,500 a month payable by the appellants was to be divided equally between the first and second respondents. 6. On the 5th July, 1977, the respondents through their solicitors, C.C. Lee & ;Co., sent a notice of termination to the first respondents by registered post, in purported compliance with section 122 of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7. 7. It is common ground that the tenancy with which we are concerned is one which falls within Part V of that Ordinance. The notice of 5th July was posted on the premises, in accordance with section 122, on the 6th, 7th and 8th July 1977. It has not been argued on behalf of the appellants that the service of the notice was inadequate. 8. The notice of the 5th July read as follows:
9. On the 2nd August, 1977 another firm of solicitors Yung, Yu, Yuen & Co. wrote to the Oceania Manufacturing Company, again by registered post, informing them as follows :
10. During the course of the hearing, there were exhibited six rent receipts signed on behalf of Yung, Yu , Yuen & Co., for the receipt of monthly rent of $9,500 from Oceania Brothers Manufacturing Company Limited. These receipts covered the period August, 1978 to January, 1979 inclusive. Attornment 11. The principal ground of appeal argued by counsel for the appellants was that the notice of termination issued on the 5th July was ineffective at law because, there being no attornment by the tenant to his new landlords, the assignees of the reversion, the latter were not entitled as new landlords to issue the notice. 12. Counsel referred us to various old English authorities, the effect of which was that at common law it was necessary, before the assignee of a reversion could enforce the covenants of a lease, for the tenant to have attorned. 13. The origin of this rule could be found from the fact that at one time the relationship of landlord and tenant carried feudal obligations, whereby a tenant was under a duty to perform services for the landlord. In addition, attornment was thought to be necessary to protect the tenant against the danger that he might pay his rent to the wrong landlord. Therefore, at common law, the assignment of a reversion was not complete until there had been an attornment by the tenant. 14. The common law rule was effectively abolished in England by a Statute of Queen Anne. (4 Anne, C. 16). Thereafter the attornment by the tenant was no longer necessary to perfect an assignment. 15. We were referred to the Application of English Law Ordinance (Cap. 88) and to the schedule to that Ordinance, which contains a list of pre-1843 English Acts which were applied to Hong Kong by section 3 of that Ordinance. The Statute of Queen Anne does not appear in that list. 16. It was argued, therefore, that the need for an attornment still remains in Hong Kong, in spite of the fact that in England, by virtue of the Statute of Queen Anne, no attornment is required. 17. Counsel for the respondents, in reply, argued that, by virtue of section 5 of the Supreme Court Ordinance, 1873 attornment ceased to apply in Hong Kong (even if it had not already ceased by virtue of an earlier provision, similar to section 5, in a previous Supreme Court Ordinance), because section 5, introduced the Statute of Queen Anne into Hong Kong Law. It reads:
18. I believe that that section is in such terms as to include the Statute of Queen Anne by implication and am therefore satisfied that that Statute was in force from 1873 to 1966. 19. The Application of English Law Ordinance (Cap. 88) was enacted in 1966. Its object was clearly to replace the system of incorporation into Fong Kong law of a large number of English Acts by a general reference. This was a vague and unsatisfactory formula, leaving much doubt as to what English Acts were in force in Hong Kong. 20. The Application of English Law Ordinance replaced that system, listing those pre-1843 English Acts which were to be in force. This Ordinance repealed section 5 of the 1873 Ordinance and thus repealed by inference the Statute of Queen Anne, in its application to Hong Kong. 21. From this it follows that section 23 of Interpretation and General Clauses Ordinance (Cap. 1) will apply. 22. Section 23(a) of the Interpretation and General Clauses Ordinance states that the repeal of an Ordinance shall not revive anything which was not in force or existing at the time at which the repeal takes effect. This, in my view, must mean that where an earlier Ordinance replaced the common law (as section 5 of the 1873 Ordinance did) the repeal of that earlier Ordinance does not revive that part of the common law which was not in force at the time of the repeal. 23. The doctrine of attornment not being in force at the time when section 5 of the 1873 Ordinance was repealed, I find that there is no need for attornment in Hong Kong for an assignment of a reversion to be perfected. Severance 24. The second main ground of appeal was that the judge was wrong in holding that where the reversion of interest in property is severed after the granting of a tenancy, the respective owners of the reversion could give to the tenants a joint notice having effect on the whole property, without specifying in the notice their respective proprietary holdings. 25. We were referred to the case of Bebington's Tenancy(1). This is authority for the proposition that where a reversion is severed, a notice by one of the assignees to deliver up part of the tenancy and not the whole is invalid, and will not become valid even if it is later followed by a notice given by the other assignee. We were also referred to Prince v. Evans(2) which decided that a notice to quit part of the premises served on a tenant was invalid, and that it was improper for the landlord to attempt to sever part of the tenancy. 26. This is good common sense, for it is clear that a tenant must be assured, if he acts on a notice to quit, that he will not be subject to further claims from any other person who purports to be entitled to the reversion. 27. Accepting therefore that a notice to quit cannot be severed, who can properly give it? Surely it must be by all the owners of the reversion of the property concerned. In the notice of 5th July all the reversioners through their solicitors did join in the issue of the notice in respect of the whole of the property. Was the notice under section 122 valid ? 28. The section requires that a notice be given by a "landlord", but the term is not defined in that part of the Ordinance. It would appear that the respondents could not be described as "landlords" by reference to the tenancy agreement of 15th January, 1976 because it made no mention of the "assigns" of the landlord. 29. It is beyond doubt that by 5th July, when the notice was issued, the reversion had been assigned to the respondents. What is not sure is whether, at that date, the appellants knew that the reversion had been assigned by Winning Enterprises to the respondents. It seems likely, from the evidence of Mr. Chan, who was authorized to give evidence for both respondents in the court below, that he did know, and so it follows that the appellants also knew, because he said that the first respondents and one of the second respondents visited the factory in June or July and that he then knew that they were the landlords. Unfortunately, the point was not pursued before the trial judge, so that it remains uncertain as to whether the appellants knew of the assignment before the notice of termination was issued. 30. Assuming that the appellants did not know, does such ignorance invalidate the notice of termination? Only, I think, if it can be said that the respondents were not landlords, vis-a-vis the appellants by 5th July i.e. the date of the notice of termination. 31. In my view such a relationship must have arisen when the assignment of the reversion was completed on 23rd June 1977. As to that point, whatever other burdens and benefits may have passed to the reversioners by reason of the assignment alone, it is not disputed that they had the right to recover the rent. In the absence of any definition of landlord in Part V, I am content to find that, in the absence of anything pointing to a contrary interpretation (and there is none) in that Part, the relationship of landlord and tenant was created when the assignment was completed. So the plaintiffs were entitled to issue a notice of termination under section 122. Contents of notice 32. This leaves the question of whether the notice contained sufficient information. 33. If, as I have assumed above, the appellants did not know before the notice of the existence of their "new landlords", could the notice itself plug the gap; and if so, did the notice contain enough information to do so? 34. I see no difficulty in the proposition that a notice of termination can itself amount to notice of the assignment, so as to satisfy the requirement that the tenant should be informed of a change of landlord before he can be required to pay rent or perform other covenants in favour of the new landlord. 35. The notice of 5th July made it clear that-
36. I cannot see that the absence, in the notice, of a description as to how the four reversioners had come to be owners could have misled the tenants, or omitted a fact of such fundamental importance as would invalidate the notice of 5th July. 37. The letter of the 2nd August from the new owners' solicitors made it clear that the four appellants had purchased the premises from Winning Enterprises, and asked the appellants to pay rent until the end of the tenancy to the solicitors. Whilst this letter, with which the appellants complied, does not affect the validity of the notice of 5th July, it was a sufficient guarantee that they would be sufficiently protected against claims from anybody else in relation to the premises which they occupied and removes any suggestion that they could have been subject to any difficulty in complying with the notice. 38. Section 122(5) of that Ordinance provides that-
39. The case of Winning Enterprises Ltd. v. The Peking Restaurant Ltd., (3) supports the proposition that no particular form is required for a notice to quit or for a notice of termination under Chapter 7. 40. The general principle applicable to notices to quit is that they must be clear and unambiguous and that the tenant must not be misled. The terms of the notice must be such that the tenant knows what it is that he has to comply with. 41. The notice to quit seems to me to be clear enough in its effect, for the reasons I have given above. It is by its terms issued under the tenancy created on the 15th January, 1976; an agreement which, as the appellants knew, was due to determine on 31st January, 1978. 42. In the result I would dismiss the appeal with costs.
Yang. J. 43. I agree and have nothing to add. Representation: van Buuren (H.H. Lau & Co.) for appellants. R. Tang (C.C. Lee & Co.) for respondents. (1) (1921) 1 Ch. 559, at 562-563 (2) (1874) 29 L.T. 835 (3) (1971) H.K.L.R. 240. Tenancy - division of reversion and assignments of parts - assignees giving notice of termination of tenancy under Part V of Landlord and Tenant (Consolidation) Ordinance - no previous notice of assignments - whether attornment necessary - notice of termination naming assignees as landlords - notice valid.
----------------- Coram: Roberts, C.J., Huggins, J.A. and Yang, J. Date of Judgment: 23 July 1979 ----------------- JUDGMENT ----------------- Huggins, J.A.: 44. This appeal is against a judgment of Cons, J. The second paragraph of the formal judgment filed is ambiguous, but nothing turns upon that. 45. The argument on behalf of the Appellants was:
46. The Respondents have not asserted that the Appellants did attorn tenants before the date of service of the notice of termination, nor do they contest that, if attornment was necessary to create the relationship of landlords and tenants, then the notice was bad. The substance of their case is that the necessity for attornment has never existed in Hong Kong. As a second line of defence, however, Mr. Tang seeks to argue that it is not open to the Appellants to rely upon any necessity for attornment, because the point was not taken in the court below. Had this objection been taken as a preliminary objection, it might have had greater force, although Mr. van Buuren maintains that the point was implicit in the plea that the notice of termination was invalid. In the event we have heard argument on the point and I think we must deal with it. 47. Although Mr. Tang has suggested the contrary, I have always understood, and still believe, attornment to be a concept of the Common Law and not a creature of statute. It was based upon the freedom of a vassal to choose whom he would serve. Thus, where a lord purported to assign his rights of seigniory, the assignment was incomplete until the vassal agreed to transfer his fealty to the assignee. That was not a universal rule in feudal times, but it was the rule in England. The Graunties of Reversions Act 1540 provided that the grantee by deed of a reversion should have the same rights as the grantor himself if and when the tenant attorned, but it was still necessary for the tenant to attorn. The statute 4 Anne Cap. 16 made it unnecessary for the tenant to attorn in order to give the assignee all the rights of the grantor. That statute does not now apply in Hong Kong, but it did prior to 7th January 1966, when the Application of English Law Ordinance came into force. That was the position at least from the date when the Supreme Court Ordinance 1873 was passed. The question is whether the exclusion of that statute from the Schedule to the Application of English Law Ordinance had the effect of reviving the Common Law rule that a tenant was not bound to accept an assignee of the reversion as his landlord. The answer lies in s. 23 of the Interpretation and General Clauses Ordinance:
The repeal of s. 5 of the Supreme Court Ordinance 1873 and the exclusion of the statute of Anne from the Schedule do not, therefore, revive the old Common Law rule and the necessity for attornment does not exist here. 48. That being so, the Respondents became landlords of the Appellants upon execution of the assignments. As such they were entitled to serve notice of termination upon the Appellants. This is not a case where the Respondents were merely "lords of the soil" in the sense in which that phrase was used in Churchward and Blight v Ford (1857) 2 Hurl. & Nor. 446. 49. The only remaining question is whether a notice of termination served by the Respondents before the Appellants were given notice of the assignments to the Respondents could be valid. The contention that it could not is based upon the alleged rule that a tenant served with such a notice must be able to decide at the time it is received whether or not he ought to comply with it. Mr. van Buuren relies upon the passage in Hill and Redman's Law of Landlord and Tenant (13th edition) 518 (385), which was a cited with approval by Briggs, J. in Winning Enterprises Ltd. v Peking Restaurant Ltd. 1971 H.K.L.R. 240, 247:
What I understand Mr. van Buuren to suggest is that, because the Appellants had not been given notice of the assignments, they were misled and that, because the Appellants did not (in consequence) know of any right whereby the givers of the notice could serve a valid notice of determination, they were entitled to light their pipes with the notice: see per Blackburn, J. arguendo in Prince v Evans (1874) 29 L.T. 835, 837. Assuming that the Appellants did not know of the assignment at the material date (and the judge has not found that they did), I think the answer to this argument is that the Appellants were given all the information they needed to have. No doubt the notice could have been better worded, and had it recited the assignments the present appeal might never have been brought, but the solicitors named their clients and asserted that their clients were the Appellants' landlords. That assertion was true in fact and in law. Accordingly the notice was a sufficient compliance with the statute and no question of validation arises. 50. I also would dismiss the appeal. 23rd July 1979. |