Hang Seng Bank Ltd v. Woo Kay-yun

HCA001246/1971

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 1246 OF 1971

-----------------

-----------------

Coram: Li, J. in Court

Date of Judgment: 18th December, 1972

-----------------

JUDGMENT

-----------------

1. This is an action for possession of a flat known as flat B, on the 4th floor of 186, Nathan Road, Kowloon, By their statement of claim the plaintiff alleges that the defendant was at all material times their monthly tenant of the premises at the rental of $600 per month, payable in advance on the 15th of each month. It is also alleged that the premises is part of an entirely new building and that it was let as business premises or were used as business premises by the defendant. The plaintiff on the 12th November, 1970 served upon the defendant a notice of termination expiring on the 14th May, 1971. In addition, such notice of termination was posted on the entrance or main door of the said premises on three successive days, both in Chinese and English language. The defendant refused to move on expiration of the notice of termination, namely, on the 14th May, 1971; hence, this action. By his defence the defendant admits that he had always been a tenant on monthly terms at the rate of $600 payable on the 15th of each month. He also admits that the premises are part of an entirely new building. However, he denies that the plaintiff are entitled to possession of the premises. He has not, though, denied or disputed that the plaintiff are the registered owners of the premises concerned. He denied, however, that the premises were used for business purpose. He further takes the point that the notice to quit has not been valid because the expiration date of the notice does not fall in with the expiration date of the monthly tenancy. He also contends that, apart from the notice of termination, no valid notice to quit has been served upon him. Thus, the issue between the plaintiff and the defendant is relatively simple. The first issue is whether at the material time the premises had been used for business purposes or had been let to the defendant for business purposes; secondly, assuming that it had been so let for business purposes, whether such notice of termination was valid. I shall dispose of the second issue first.

2. Mr. Chang, counsel for the plaintiff directs my attention to the case of Cheng On and another v. Leung we Wo Foreing Wine otherwise known as May Wo Wine Merchant in 1964 Hong Kong Law Report, 455, and contended that the legislature obviously had in mind the law relating to common law notices to quit when enacting section 3 of the Tenancy (Notice of Termination) Ordinance No.14 of 1962, which appeared to be in roughly the same language as the Tenancy (Notice of Termination) Ordinance in the same section. It is not without significance that in sub-sectionsl and 2, the use of the expression "notice to quit" has been avoided and the expression "notice of termination "has been used and the law governing such a notice is contained in these sub-sections. It was in that case held that the Ordinance did not interfere where tenant was already entitled to more than 6 months' notice which is this case, but where he was entitled to less, sub-sections 1 and 2 required 6 months' calendar notice to be given. The tenant was entitled to more than 6 calendar months' notice and the tenant was not entitled, however, to rely on the common law rule to demand a notice of longer than 6 months. In other words, the tenant is no longer entitled to insist, like a common law tenant is entitled to insist, that the expiration of the notice of termination must fall on the same day as the expiration of the tenancy. Secondly, in the case of Wong Shui-chong and another v. Tse Sui-fong in 1966 Hong Kong law Report, 655, it was held by my brother Wylie that a separate notice to quit was not required in the case of Tenancy (Prolonged Duration) Ordinance, 1962, and that once a notice under that, there was no necessity to serve a separate notice to quit. Accordingly, the defence on the second issue must have failed on a point of law.

3. The one remaining issue is whether on the evidence before me I find that the premises was let or at the material time used by the defendant for business purposes. On the part of the plaintiff, there is evidence that on the 13th November, 1970, a certain Mr. Huen of the plaintiff's company went with a photographer to take pictures of the premises - of the interior of the premises. No less than eleven pictures were produced in the form of Exhibit A, showing that a great portion of the premises were used as a tailor's workshop. There is no escape from that description. There were half tailored suits hanging about. There were work benches. There were sewing machines. There were people at work. According to the photographer he found no partition in the premises which looked like an open space except one small room in which he could see there were beds, a television set and a table. There was a toilet and a kitchen of approximately 80 sq. ft. The bedroom was about 70 sq. ft. Mr. Lee of the plaintiff company gave evidence that the premises in question belonged to the plaintiff company by producing Exhibit B, the deed of assignment. The occupation permit was produced to show that it was an entirely new building. He also mentioned that on the 9th July, 1970, the plaintiff did apply to the Rating and Valuation Department for an increase in rent on the basis that the premises were domestic premises. However, such application was withdrawn. He also produced a copy of the notice of termination dated 12th November, 1970 which was served upon the defendant. He also produced a certificate of the Rating and Valuation Department stating that the user - the primary user of the premises - was that for business purposes in Exhibit E.

4. On the part of the defendant, his evidence is that the premises were at all times used for domestic purposes. He lived there with his wife and children. Back in 1968 he had employment, but what he earned was not sufficient for the up-keep of the family. As a result, his wife started what I understand the defendant to mean some sort of domestic industry, and that some work was brought home for her. Friends of the defendant helped her from time to time, and the defendant, when he had spare time, also helped his wife. In that way they earn some extra money to augment the income. He said that at no time did he make any structural alteration, and that the family lived in the premises. Such are the evidence before me.

5. First of all, I have to consider the certificate that was issued by the Commissioner of Rating and Valuation in Exhibit E. This certificate was issued purportedly under the provisions of sub-section 4 of section 5 of the Rent Increases (Domestic Premises) Control Ordinance, chapter 338. This sub-section provides that:

"Where a dispute arises as to whether a tenancy or sub-tenancy is domestic, the landlord, tenant, principal tenant or sub-tenant may, if primary user is relevant to the dispute, apply in the specified form to the Commissioner for his certificate as to the primary user of the premises."

The following sub-section, sub-section 5, provides that:

Sub-section 6 of section 5 provides that:

"A certificate issued by the Commissioner under sub-section (5) shall be prima facie evidence of the facts set out therein and of the primary user of the premises on the day on which they were inspected."

Exhibit E dated 12th January, 1972 refers to the day of inspection on the 24th December, 1970. Thus, if the certificate is of evidential value. It could prove at least a month and twelve days after the notice of termination was served upon the defendant the premises were being used for primary for business purposes as certified in Exhibit E. Unfortunately in the Ordinance authorizing the issue of such certificates there is no procedure whatever that the other party who has not applied for the certificate but vitally affected by such a certificate is to be notified. In this case, of course, the defendant, through the normal disclosure of documents, knew that a certificate was in the hands of the plaintiff, but the schedule does not inform him as to what the certificate was about viz: whether the premises was being used as a domestic premises or being used as a business premises. Therefore the defendant, although he had a right to apply for review of the certificate, was never any wiser until the day when the certificate was produced in court. Indeed, he could have asked for inspection of the document, but he did not do so. The unfortunate fact remains that a party who can be vitally affected by the certificate is not informed as to the contents of this certificate afterwards. I can see the intention of the legislature is such that when an inspection of the premises is to be made, the tenant should not be warned so that he could pre-arrange his affair to make it look like either the premises being used as domestic premises or as business premises. However, I fail to see why no procedure is laid down that after the inspection, after the certificate has been drawn up, that the person's premises which had been inspected and subject matter of the certificate is never informed by either the applicant for the certificate or by the Commissioner of Rating and Valuation. In view of that, I shall give no weight to this document as evidence of user of the premises.

This leaves me to fall upon the evidence between the photographer and the defendant himself. On the part of the plaintiff there is the photograph Exhibit A which shows that the premises were used extensively as a workshop - a tailor's workshop. On the part of the defendant he contends, with some force in his arguments, that as not very long ago as July 1970 the plaintiff applied for an increase in rent, and in the application it was stated the premises were used as a domestic premises. The fact that subsequently the application was withdrawn because the defendant was agreeable to the desired increase is neither here nor there. A statement was made by the plaintiffs themselves to the fact that the premises were used as a domestic premises. It may well be so in July, but according to the defendant himself the premises had been used for some tailoring work ever since 1968. It is on the balance of these two sets of evidence that I have to decide whether the primary user of the premises was in fact domestic or business. On the balance of probability, I find that the premises were used for that of business purpose for the following reasons. Despite the plaintiff's statement in July 1970, it is established that the defendant had no less than five sewing machines at his home, three of which were in a functional state. One has to have one look at the photographs in Exhibit A to show that a great portion of the premises were used as a tailor's workshop. Furthermore, although the defendant said that his friends helped them free of charge or rather helped his wife free of charge, I can hardly accept that evidence because it seems their help was very regular ever since 1968. It so happened on the 13th November, 1970 when the photographer went to take pictures, there were at least three or four of these persons working in the premises. Some were even seen working in these pictures. This is very different from the case that was decided by Mr. Justice Mills-Owens in 1971 in the case of Shirlien Light v. Wan Bing-wong in which he said that, although the user of sewing business was a user within the meaning of section 5(3)(a) of the Rent Increases (Domestic Premises) Control Ordinance, but they were one consistent with the domestic nature of the tenancy. On the facts of that case I respectfully agree that the only conclusion he could come to was such. In the present case one can see at one glance of the photographs, coupled with the evidence of the photographer, that the premises as such were used primarily as a tailor's workshop. The fact that the defendant and his family lived there in a small room and that there was a kitchen does not affect the primary user of the premises which was that for business purpose. For these reasons I feel that I have to give judgment to the plaintiff with costs. I take it that the plaintiff also claim for mesne profits in this case at the rate of $600 per month as from the 15th May. 1971 until possession.

Representation:

Denis Chang (C.Y. Kwan & Co.) for plaintiff

Defendant in person

Oral judgment reduced into writing