Yau Fau Sang and Another v. Chu Cheuk Wai Lan and Another

HCA001139/1972

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 1139 OF 1972

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Coram: Pickering, J.

Date of Judgment: 9 April 1973

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JUDGMENT

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1. In this action the plaintiffs claim vacant possession of the ground floor of No.4 Sai On Street, Aberdeen, together with arrears of rent from the first day of February 1972 to the 30th day of April 1972, at the rate of $2,000 a calendar month, and mesne profits.

2. The writ was issued against the first defendant only but subsequently the second defendant, who is in possession of a portion of this floor, applied to be added as a defendant in the action. It was ordered that he be added as a party and he was given liberty to appear in and to defend the action. In due course the 2nd defendant entered an appearance. Conversely, the first defendant entered no appearance and judgment in default of appearance was entered against her for possession of the whole floor, and for arrears of rent totalling $6,000 and mesne profits at the rate of $2,000 per month from the date of issue of the writ to date of possession. The present action, therefore, concerns only the plaintiffs and the second defendant.

3. It is not in dispute that the first defendant had been a monthly tenant of the plaintiffs but the second defendant, who is unrepresented, pleads a tenancy agreement for a term of four years expiring on the 21st January 1974, entered into between the first defendant and a firm called Sun Hing Woo Roast Pork, of which the second defendant claims to be managing partner. It will be immediately apparent that by any such tenancy agreement the first defendant was purporting to grant a lease of a portion of her premises for a term greater than that which she enjoyed.

4. It will be convenient at this stage to refer to the tenancy agreement pleaded by the second defendant; it is dated 13th February 1970 and purports to commence from the 23rd day of that month. In view of that date, it is not clear why the second defendant has pleaded that his four-year term expires as early as the 21st January 1974. The agreement, which is in fact and in law a tenancy agreement, takes a bogus form common in Hong Kong, of a management agreement under which a certain Mr. Leung Pang is appointed manager to carry on business in roast and preserved meat upon a portion of this ground floor, allegedly on behalf of the first defendant but, palpably, reading between the lines of the agreement, on his own behalf in consideration of a rental.

5. Whereas the second defendant pleads that this tenancy agreement was made between the first defendant and the Sun Hing Woo Roast Pork, this was not in fact the case and the agreement was with Mr. Leung Pang. The name Sun Hing Woo Roast Pork appears in the agreement only once, that is in Clause 12, where it is stipulated that the alleged roast and preserved meat department of the first defendant, to be operated under the bogus management agreement, was to use the name "Sun Hing Woo" and where it is further stipulated that the licence shall be in the name of Leung Pang. The name of the second defendant appears nowhere in the agreement nor is there anything contained therein (other than the spurious appointment of Leung Pang as "manager" for the first defendant, of a meat department) to suggest that the firm Sun Hing Woo is anything other than a sole proprietorship of Leung Pang. No hint of any partners of his appears throughout the document.

6. The statement of defence and counterclaim of the second defendant, which is a rambling document, goes on to allege a conspiracy between the plaintiffs, the first defendant and Mr. Leung Pang, pursuant to which the first defendant purposely refrained from paying rent to the plaintiffs with the purpose of effecting the eventual ejection of the second defendant from the premises.

7. There is no doubt that the second defendant is in possession of a portion of the ground floor where he operates a roast pork business; he claims to be the managing partner of that business and states that Mr. Leung Pang is his partner.

8. The pleading goes on to detail events said to be in furtherance of the conspiracy and thereafter alleges that on the 10th February 1972 the plaintiffs and the second defendant mutually entered into an oral agreement whereby it was agreed that the plaintiffs would let the whole of this ground floor in question to the second defendant upon terms which are set out in the pleading.

9. In his Statement of Defence the second defendant states that he has taken out a writ of summons (1148 of 1972) against the plaintiffs and the first defendant and against his partner, Mr. Leung Pang, for reliefs in connection with the alleged conspiracy. In his counterclaim he seeks an incongrous variety of reliefs, including an order that that action and the present action be consolidated, an order requiring the plaintiffs to finalise the alleged oral tenancy agreement, damages for conspiracy and, in the alternative, an order requiring the plaintiffs to accept payment of rent direct from the second defendant in respect of that portion of the floor which he is occupying; and, in the further alternative, an order that the plaintiffs should allow him to make use of the whole of the floor at a higher rental pending the outcome of the two O.J. actions.

10. In their Reply to Defence to Counterclaim, the plaintiffs deny any knowledge of any tenancy agreement between the first defendant and Sun Hing Woo Roast Pork or any other party; they deny knowledge of any management agreement between the first defendant and Leung Pang and disclaim any knowledge that Leung Pang was a partner in the roast pork business. The plaintiffs further deny any oral agreement with the second defendant for a tenancy of the whole floor and say that the alleged terms of that oral agreement were terms put forward by the second defendant and rejected by the plaintiffs. In the alternative they say that if there was an oral agreement they will rely on Part I of the Law Amendment and Reform (Consolidation) Ordinance Cap. 23 to say that there is no, or no sufficient, memorandum in writing of the alleged oral agreement. In their pleading the plaintiffs further resist the application for consolidation of the two actions, deny that the second defendant is entitled to any tenancy from them in respect of any portion of this floor or to any damages for conspiracy, and state that they are under no obligation to accept rent direct from the second defendant with whom they had no privity of contract and who is not entitled to the use of the premises.

11. At a subsequent stage of the proceedings the second defendant applied for an order that this action be consolidated with O.J. Action No. 1148 of 1972 - the writ in which had been issued one day after the writ in the present action and which sought a number of declarations and orders relating to the alleged partnership agreement and also damages for the alleged conspiracy in regard to the intended termination of his sub-tenancy. This application for consolidation of the two actions was dismissed by the Registrar.

12. Subsequently the second defendant took out a summons for extension of time within which to file notice of appeal to a judge in chambers from this decision of the Registrar. At the date of his last-mentioned summons the present action was already in the warned list and the matter was adjourned for consideration by the judge at the trial. When the matter came before me it transpired that this last mentioned summons had never been served upon the plaintiffs who declined to waive service with the result that I, in turn, declined to hear the application or to adjourn it for the purpose of service, having some sympathy with the contention of counsel for the plaintiffs that the defendant's tactics had the object of delay.

13. At the hearing before me there was no evidence whatever on the part of the second defendant as to the alleged oral agreement for a tenancy agreement between the plaintiffs and himself and his evidence as to an alleged conspiracy against him was so pitifully thin as to merit no credence.

14. His defence, when distilled, is simply that he is in possession of a portion of this ground floor by virtue of the 4-year tenancy agreement concluded between the first defendant and Leung Pang and that that agreement has not yet expired.

15. As we have seen, however, by that tenancy agreement, not only did the first defendant purport to bestow upon Leung Pang a term greater than that which she herself enjoyed, but the agreement contained no element of privity of contract with the second defendant. His status is that of a trespasser and nothing more - and that fact virtually disposes of the action.

16. At the hearing the matter was not presented to me upon this basis and I was treated by Mr. William Huang, for the plaintiffs, to a masterly exposition of the history and present state of the law regarding relief from forfeiture, both in England and in Hong Kong. In retrospect, I am not sorry that neither he nor I at that stage appreciated the true status of the second defendant in regard to these premises, for I enjoyed counsel's exposition.

17. The position is, however, as I have stated it. The second defendant has no locus standi upon the premises and must go.

18. I would add that had I come to a different view of the second defendant's status and found that he has in fact some tenuous relationship to the plaintiffs in the nature of a tenancy, I would not have been disposed to grant relief from forfeiture. In the first place, the second defendant has not asked for such relief (see Ta Shang Plastic Goods Co., Ltd. v. Green Island Cement Co., Ltd.⁽¹⁾) and secondly, any tenancy of the second defendant which might be said to exist, is inextricably bound up with the status of Mr. Leung Pang in the premises. Mr. Leung Pang is the person who entered into the sub-tenancy with the first defendant, and who is said by the second defendant, to be his partner in the roast pork business; and it was the second defendant's evidence that although at one stage Mr. Leung Pang gave notification of termination of the partnership, he in fact remains a partner. Mr. Leung Pang, however, is not a party to these proceedings and to give relief from forfeiture to the second defendant would be to saddle Mr. Leung Pang with a relief, and its concommitant obligations, which he has not sought and may well not want.

19. The plaintiffs are entitled to possession of that portion of the premises occupied by the second defendant. There being no privity of contract between the plaintiffs and the second defendant, their claim to rent up to the date upon which they obtained judgment for possession of the whole floor, against the first defendant, is a claim against her only. The second defendant was however paying to the first defendant the monthly sum of $1,300 in respect of the portion of the premises occupied by him and the plaintiffs are entitled to mesne profits in that monthly amount from the day after judgment was obtained against the first defendant, that is, from 1st June 1972 until the date when possession is actually given. The plaintiffs are also entitled to the costs of their claim.

20. The second defendant's counterclaim is dismissed with costs.

Representation:

William Huang (K.C. Yung & Co.) for Plaintiffs

Second Defendant in person.

(1) (1966) H.K.L.R. 24 @ 37/38.