Explorer 1881 Ltd v. Concept 1 Ocean (Hong Kong) Ltd
Read the full judgment text of LDPD 246/2024 on BabelCite. This Lands Tribunal judgment was delivered on 3 May 2024.
1. This is an interlocutory application taken out by a third party (hereinafter called “the Intended Respondent”) dated 15 March 2024 seeking to be joined as the 2 nd respondent to the proceedings.
Cites 4 cases
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LDPD 246/2024 [2024]HKLdT 37 IN THE LANDS TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION APPLICATION NO. LDPD 246 OF 2024 ________________
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___________________ DECISION ___________________ 1.This is an interlocutory application taken out by a third party (hereinafter called “the Intended Respondent”) dated 15 March 2024 seeking to be joined as the 2nd respondent to the proceedings. Background 2.By a Notice of Application (Form 22) filed to the Lands Tribunal (“the Tribunal”) on 29 February 2024, the applicant sought recovery of possession of 3/F, 23 Plantation Road together with carparking space No B1 (“the Premises”) on the ground that a tenancy of the Premises granted to the respondent had expired on 30 November 2023 (“the 2020 Tenancy”) and that in addition, the respondent had failed to pay the rent reserved in the 2020 Tenancy for the period since 1 August 2023. 3.The 2020 Tenancy referred to was attached to the Notice of Application. It was in Chinese and dated 29 November 2020 whereby the applicant, Explorer 1881 Ltd, was supposed to have let the Premises to the respondent for a term of three years commencing from 1 December 2020 to 30 November 2023 at a monthly rent of $170,000 inclusive Government rent and rates but exclusive of management fees. 4.Insofar, the respondent had not filed any Notice of Opposition. Affirmation of the Intervener 5.By an affirmation filed by the Intended Respondent attached to the interlocutory application, the Intended Respondent stated that:
The 2014 Tenancy 6.The 2014 Tenancy, which as registered in the Land Registry, shows that the Premises were let by Wah Fung Forest Resources Limited[3], the predecessor in title, to the Intended Respondent for a term of 2 years from 1 September 2015 to 31 August 2017 at a monthly rent of $80,000 inclusive of management fee, Government rates and Government rent. Prior to that there was also another tenancy agreement registered in the Land Registry dated 30 August 2013 whereby the Premises were let by Wah Fung Forest Resources Limited to the Intended Respondent for a term of 2 years from 1 September 2013 to 31 August 2015. This latter tenancy agreement was also preceded by another two dated 16 February 2009 and 31 May 2011 respectively between the same parties for a term of 2 years from 1 September 2009 to 31 August 2011 and another term of 2 years from 1 September 2011 to 31 August 2013. 7.In other words, by reference to the record of the Land Registry, the Intended Respondent had been the tenant of the Premises since as early as from 1 September 2009. 8.These earlier tenancies had not been produced in court but by reference to the 2014 Tenancy, there existed a clause 12 which stated as follows:
9.The validity of such a clause which is tantamount to grant a perpetual lease is subject to challenge. The clause which contains the commencement and duration of the term must also be precise.[4] 10.In Berrisford v Mexfield Housing Co-operative Ltd [2011] UKSC 52 where the tenancy agreement commenced “from 13 December 1993 and thereafter from month to month until determined as provided in the Agreement” and clauses 5 and 6 thereof set out the means by which the parties could terminate the tenancy, the English Supreme Court held that while the tenancy could not take effect according to its terms as its duration was uncertain at its inception, the tenancy being in writing (and the tenant being an individual as opposed to a corporation) would be treated in common law prior to the enactment of the Law of Property Act 1925 as a tenancy for the life of the tenant[5], determinable before her death pursuant to the term of the tenancy. However, the English Supreme Court did not support jettisoning the certainty requirement as state in Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386 that an arrangement such as that embodied in the Agreement could not be a valid tenancy as a matter of law, as it was for an uncertain, potentially perpetual, duration.[6] 11.Goo and Lee, Land Law in Hong Kong, 4th Ed also states at p 583 as follows:
12.Fortunately in the present case, I do not have to provide a definitive answer to the challenge because upon expiry of a tenancy for a fixed term, ie the 2014 Tenancy on 31 August 2017 or even earlier if the 2014 Tenancy was invalid, given that there was no express agreement on renewal or on any other terms, the fixed term would automatically be converted to a periodic tenancy by operation of law by virtue of the payment of rent by the Intended Respondent and its acceptance by the then landlord since September 2017. 13.As stated recently in Yim Yau Ying v Wong Che (or Chee) Sing, DCCJ 1899/2019 (unreported, dated 19 April 2024) at §45, “a periodic tenancy does not expire without notice at the end of the period or each succeeding period which is determined only by a proper notice to quit (Halisbury’ Laws of Hong Kong [235.191])”. 14.There is before me no evidence of payment of rent by the Intended Respondent since September 2017 but there is neither any evidence of notice to quit served by the registered owner of the Premises, Horn King Industrial Limited or its predecessor in title. At least, the Intended Respondent may have continued in possession as tenant at will. 15.More particularly, the Intended Respondent is able to produce the following evidence (in original) in support of its current possession or occupation of the Premises:
16.In respect of the (3) and (4) above, Mr Wong Chor Cheung (“Mr Wong”), the representative of the Intended Respondent, explained that the domestic portion of the Premises have been sublet to 5 different persons on short terms. This coincides with what I found during the joint inspection with the parties on 23 March 2024 though Mr Wong had not produced any such short-term tenancy agreements. 17.On the other hand, Mr Lo Hung Chiu (“Mr Lo”), the representative of the applicant, produced also the following:
18.Mr Lo however failed to produce any other evidence in support of the occupation by Concept 1 Ocean (Hong Kong) Ltd especially during the period of the 2020 Tenancy. Explorer 1881 Ltd 19.In the present case, Mr Lo had argued that the 2014 Tenancy was invalid in law. Either the Intended Respondent had departed from the Premises or in any way surrendered its tenancy so that the landlord has let the Premises to a different tenant, ie the respondent by granting the 2020 Tenancy. 20.Mr Lo alleged that in any event Concept 1 Ocean (Hong Kong) Ltd must have obtained vacant possession in pursuance of the 2020 Tenancy but with respect, this was not necessarily the case. One such example can be seen in 萬士盛有限公司 v 鄧子禎, LDPE 426/2013 (unreported, 25 September 2013. 21.Alternatively, where it is alleged that a new tenancy has been granted to someone other than the original tenant, there must be a change of possession. While a change of possession need not be a change of physical occupation, which is (or may be) different from legal possession, there is no evidence to support the case here. Discussion 22.Wah Fung Forest Resources Limited, who granted the 2014 Tenancy, was the predecessor in title as registered in the Land Registry. At the relevant time, however, the Premises had been subject to the following mortgages or charges:
23.It appears that Marcellotino Limited as the 3rd Mortgagee exercised its power of sale in favour of China Sea Investment Group (Hong Kong) Limited vide memorial 16112801930058 dated 14 November 2016. China Sea Investment Group (Hong Kong) Limited then changed its name to Horn King Industrial Limited on 9 November 2018 vide memorial 19011602470010. 24.As commented by the Court of the First Instance in Hong Kong Finance Company Limited v Wah Fung Forest Resources Limited, Horn King Industrial Limited & Jirong (HK) International Development Holdings Limited, HCA 1694/2020 (unreported, dated 7 June 2023) at §30, “it is perplexing why (Horn King Industrial Limited) would see fit to buy (the Premises), which was subject to two Legal Charges, the 3rd Mortgage, and most importantly, (the 2014 Tenancy), which on its face gave (the Intended Respondent) the right to occupy (the Premises) indefinitely.” However, leave to appeal against this judgment was granted on 4 September 2023. 25.Up to then, Explorer 1881 Ltd, the applicant in the present case, had not been in the picture. At trial on 22 March 2024, Mr Lo on behalf of the applicant produced a company structure diagram which is attached as Appendix 1 at the end of this judgment. That is, it is suggested that Explorer 1881 Ltd is the parent company of Horn King Industrial Limited, the registered owner of the Premises. 26.Be it as it may, it is dubious that Explorer 1881 Ltd instead of Horn King Industrial Limited saw fit to grant the 2020 Tenancy to Concept 1 Ocean (Hong Kong) Ltd without care of whether the latter had obtained vacant possession. On the one hand, there is no evidence of occupation by Concept 1 Ocean (Hong Kong) Ltd during the 2020 Tenancy. With respect, the electricity bill and the bill of water charges produced by Mr Lo do not assist him when they were dated quite recently, practically not in the name of Concept 1 Ocean (Hong Kong) Ltd. In any event, Mr Lo failed to explain the relationship between Concept 1 Ocean (Hong Kong) Ltd and Ms Huen. It appears that Mr Lo was only able to obtain those electricity bill and the bill of water charges when Ms Huen had moved out of the domestic portion of the Premises or in any event changed her corresponding address to a letter box. 27.On the other hand, Mr Wong on behalf of the Intended Respondent was able to get hold of those original copies of the bills of the public utilities for the period since, for instance, 24 July 2020, ie before the 2020 Tenancy was granted. Mr Lo tried to give a short shrift by suggesting that Concept 1 Ocean (Hong Kong) Ltd passed or left this to Mr Wong. But with respect, why should Concept 1 Ocean (Hong Kong) Ltd do so? On the balance of probabilities, the Intended Respondent has remained in possession of the Premises despite expiry of the 2014 Tenancy.[8] 28.While Mr Wong tried to paint the picture that the respondent is fictitious or that the 2020 Tenancy was a sham, he cannot point to any direct evidence proving that either. 29.It would be unrealistic to expect this Tribunal to make a finding of fraud on the paper without cross-examination. This being a joinder application, the Intended Respondent does not in fact need to establish fraud at this interlocutory stage. In any event, the applicant fails to prove that the Intended Respondent had been evicted or displaced by Concept 1 Ocean (Hong Kong) Ltd after the 2014 Tenancy. I agree therefore the Intended Respondent should be admitted as a respondent in this case. Jurisdiction of the Tribunal 30.Having ruled that, however, under section 8(8) of the Lands Tribunal Ordinance, Cap 17, the Tribunal shall have jurisdiction only in an application for possession or for ejectment, under the Landlord and Tenant (Consolidation) Ordinance (Cap. 7) or otherwise. 31.On the one hand, the applicant is not the registered owner of the Premises. As stated by Woo J (as he then was) in Good Profit Development Ltd v Leung Hoi [1993] 2 HKLR 176 at 183:
32.On the second hand, there is no evidence before me that the applicant had granted possession to Concept 1 Ocean (Hong Kong) Ltd whilst in contrast, the Intended Respondent had obtained possession from the predecessor in title. 33.For these reasons, I consider the present case falling outside the jurisdiction of the Tribunal. Conclusion 34.In conclusion, I dismiss the application for recovery of possession of the Premises by the applicant. Notwithstanding this, it will be up to the applicant to decide how to pursue remedy, if any, against Concept 1 Ocean (Hong Kong) Ltd under the 2020 Tenancy. 35.In the present circumstances, I shall make no order as to costs of the interlocutory application taken out by the Intended Respondent.
The applicant, not legally represented, represented by Mr Lo Hung Chiu appearing in person The respondent, absent The Intended Respondent, not legally represented, represented by Mr Wong Chor Cheung appearing in person Appendix 1
[1] According to the record of the Land Registry, the Premises was registered in the ownership of China Sea Investment Group (Hong Kong) Limited since 28 November 2016. On 9 November 2018, China Sea Investment Group (Hong Kong) Limited has changed its name to Horn King Industrial Limited, which is not the applicant. [2] Concept 1 Ocean (Hong Kong) Ltd had a registered office at Flat G5, 24/F, Block 3 of Golden Dragon Industrial Centre, 172-180 Tai Lin Pai Road, Kwai Chung, New Territories since 1 December 2015. [3] Wah Fung Forest Resources Limited was the predecessor in title prior to the exercise of power of sale by Marcellotino Limited as the 3rd Mortgagee to China Sea Investment Group (Hong Kong) Limited on 14 November 2016. See also Hong Kong Finance Company Limited v Wah Fung Forest Resources Limited, Horn King Industrial Limited & Jirong (HK) International Development Holdings Limited, HCA 1694/2020 (unreported, dated 7 June 2023) at §§26-31. [4] Malcolm Merry, Hong Kong Tenancy Law (6th ed) at p 62. [5] There is no equivalent statutory provision in Hong Kong to convert a life tenancy into a fixed term as section 149(6) of the Law of Property Act 1925 does. [6] See §35 of the judgment. [7] The background in relation to the three mortgages can be found in the judgment of Cheung Hing v Wong Chor Cheung & Wah Fung Forest Resources Limited, HCA 336/2008 dated 13 August 2015. [8] See also Hong Kong Finance Company Limited v Wah Fung Forest Resources Limited, Horn King Industrial Limited & Jirong (HK) International Development Holdings Limited, HCA 1694/2020 (unreported, dated 7 June 2023) at §§13-14. | ||||||||||||||||||||||||||||||||
Cases cited in this judgment