Hon Hong v. Fong Shu-hoi

HCA001040/1974

IN THE SUPREME COURT OF HONG KONG

(ORIGINAL JURISDICTION)

ACTION NO. 1040 OF 1974

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Coram: Cons, J.

Date of Judgment: 14 January 1975

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JUDGMENT

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1. The defendant has been for many years the tenant of certain premises in Pei Ho Street, Kowloon. I shall refer to him simply as "the tenant". Some time in 1972 the plaintiff acquired the reversion of those premises and thereby became the landlord of the tenant, I shall call him "the landlord". In May of 1973 the landlord and tenant signed an agreement whereby the tenant in consideration of a total sum of $6,200 agreed amongst other things to surrender the premises to the landlord on or before the 31st July following. $2,000 was paid to him on the signing of the agreement which provided for the balance to be paid upon delivery of vacant possession. In fact a further $1,000 was paid towards the end of June. The tenant did not vacate the premises on 31st July 1973. He still remains there and the present writ prays amongst other matters for an order for possession.

2. I have no hesitation in rejecting that prayer. It is accepted by both sides that the tenancy is subject to Part II of the Landlord and Tenant (Consolidation) Ordinance, Cap.7. The joint effect of sections 52(1) and 53(1) is that the tenancy can be brought to an end only in one of two ways, i.e. by the delivery up of vacant possession or by an order of the District Court which order can only be made the satisfaction of certain conditions. Neither of those ways is open to the landlord in this instance. And as long as the tenancy continues there is no reason for this court to deprive the tenant of his possession.

3. It was suggested in argument for the landlord that what is sought is not really an order for possession but an order for specific performance of the contract which would not be restricted by the law applicable to landlord and tenant. To put it in other words the court is asked to grant a mandatory injunction against the tenant personally requiring him to abide by the terms of his contract and surrender vacant possession to the landlord. The effect of the delivery up would thus bring the tenancy to an end and the landlord could recover possession without difficulty.

4. The short answer to this suggestion is that it is nowhere mentioned in the statement of claim. Otherwise the argument is on the face of it not without some attraction. English authority that such an agreement is unenforceable on the part of the landlord, i.e. Barton v. Fincham⁽¹⁾ is of little assistance. The English system of control is different from that imposed by Part II of the Hong Kong Ordinance. It is similar to that of Part I and is effected by declaring that no order for recovery of possession of protected premises shall be made except in certain circumstances. The view taken is that it is thus a matter of jurisdiction and the parties cannot by private contract confer upon the court a jurisdiction which it does not possess. This would not apply to tenancies subject to Part II where the control is imposed not by restricting legal process but by keeping the tenancy alive. It provides that the tenancy shall come to an end only in certain defined circumstances. Delivery up by the tenant is expressly made one of them. Thus an order to do so is in no way contrary to the provisions of the Ordinance. And it might be difficult to argue that the agreement is void as contrary to public policy in view of the decision in Rajbenback v. Mamon⁽²⁾. In that case the agreement was held enforceable in favour of the tenant. However as the question was not properly pleaded or argued I do not express any firm opinion upon it.

5. The next claim of the landlord is for the return of $2,000 being part of the money paid to the tenant under the agreement. This claim must succeed. The tenant has completely failed to carry out his part of the bargain. He sought to prove that the failure was in fact the landlord's own fault, that he was ready and willing to deliver possession on the due date but that the landlord failed to pay over the balance of the money. There was considerable conflict of evidence as to what happened at the material time and neither story is without difficulty of some kind. However, on full consideration of both and also taking into account the impression made on me by the witnesses I have come to the conclusion that this attempt of the tenant fails. I am not satisfied that when he and his wife went to the solicitor's office on the afternoon of the 31st July he was prepared or able to deliver vacant possession in accordance with the terms of the agreement. I accept that he had to some extent vacated that portion of the premises which he occupied himself, but I think it probable that he did not intend to vacate even that part completely until after the money had been paid. More importantly there were still some of his sub-tenants retaining possession of other parts of the premises. It was suggested that these had by agreement become the direct responsibility of the landlord. I do not think there is merit in this suggestion. Firstly it is contrary to the express terms of the written document. Secondly, I prefer the landlord's evidence that the matter of the sub-tenants was concluded with the tenant himself and settled by an increase of the consideration at the last moment. This is supported by the obvious alterations in the figures of the Schedule to the written agreement. Furthermore I think it unlikely that in such circumstances any landlord would have dealt directly with the sub-tenants.

6. The fourth paragraph of the written agreement provides that in the event that the tenant should fail to deliver up possession as agreed he would be liable to pay liquidated damages to the landlord thereafter at the rate of $300 per day. The rent at that time was $300 per month. No evidence was given as to what rent the premises might be expected to realise on the open market but I find it hard to believe that it would be 30 times greater. I am satisfied that the clause was introduced by way of a penalty and not as a genuine pre-estimate of the damage likely to be suffered.

7. Counsel asked, although again the statement of claim does not, that if I should take this view then I should make an award of general damages. I am not disposed to do so because no damage other than the payment of the consideration money has been proved. I have no evidence to show how much greater is the open market rent than the rent now recoverable from the tenant or perhaps double that amount: (see Flannagan v. Shaw⁽³⁾).

8. For these reasons judgment is entered for the plaintiff in the sum of $2,000. I am willing to hear argument as to costs.

Representation:

Peter Chan (S.C. Mok & Co.) for plaintiff.

Jimmy Kwong (W.K. Poon & Co.) assigned for defendant.

(1) [1921] 2 K.B. 291

(2) [1955] 1 Q.B. 283

(3) [1920] 3 K.B. 96.