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Cheung Wong Oi Chu v. Choi Yick Ming and Others

Read the full judgment text of DCCJ 530/1972 on BabelCite. This District Court judgment.

1. This is an application for possession of premises under Section 7(7) of the Rent Increases (Domestic Premises) Control Ordinance (now incorporated into Part II of the Landlord & Tenant (Consolidation) Ordinance, Cap. 7 (Section 54(7)), counter notices having been served by the Principal tenant and by six subtenants. Originally the application was brought naming only the principal tenant as a respondent, but leave was subsequently granted to one sub-tenant to be joined as a respondent. Later a

Case No.DCCJ 530/1972
Court
District Court
Date—
Judge—
Case Document
100%Judiciary

DCCJ000530/1972

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CIVIL JURISDICTION

RENT INCREASES APPLICATION NO. 530 OF 1972

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BETWEEN
CHEUNG WONG OI CHU alias WONG LAI WAH Applicant
and
CHOI YICK MING 1st Respondent
LAM OI WAH 2nd Respondent
TANG LENG 1st Co-Respondent
CHUNG SHUK HING 2nd Co-Respondent
NG YICK TING 3rd Co-Respondent
HUI LEUNG SUEN 4th Co-Respondent

LAM MEI YIM

 5th Co-Respondent
YAK PAK KEUNG 6th Co-Respondent

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Coram: N.B. Hooper, D.J.

Date of Judgment: 24th September 1973

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RULING

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1. This is an application for possession of premises under Section 7(7) of the Rent Increases (Domestic Premises) Control Ordinance (now incorporated into Part II of the Landlord & Tenant (Consolidation) Ordinance, Cap. 7 (Section 54(7)), counter notices having been served by the Principal tenant and by six subtenants. Originally the application was brought naming only the principal tenant as a respondent, but leave was subsequently granted to one sub-tenant to be joined as a respondent. Later at the hearing of this application, leave was further given for the remaining six sub-tenants to be joined, and the hearing was adjourned to a new date for service of the amended notice of application to be served on those sub-tenants not present and for more time to be reserved for the hearing.

2. At the resumed hearing, it became apparent that two of the sub-tenants had moved out and were no longer contesting these proceedings. Two other of the sub-tenants showed no interest in the proceedings, and did not contest the matter. The parties still resisting the landlord's application were therefore the principal tenant 1st Respondent (through his wife) and three sub-tenants (namely 2nd Respondent and 1st and 5th Co-Respondents). Of these three sub-tenants only the first two had been in possession of the premises let to them at the time when the legislation came into operation on the 5th June, 1970, but only the latter two had served a counter notice.

3. Mr. Cheuk appeared for the principal tenant and those three sub-tenants and Miss Kelly represented the landlord/ applicant. The attention of the parties was drawn to two conflicting written decisions by District Judges on the scope and interpretation of this piece of legislation. The first was the decision of Judge Addison in LI Yit-kwei reported in 1971, D.C.L.R. at page 29, while the second one was an unreported decision of Judge O'Connor in R.D.C. Civil Jurisdiction Action No. 8163 of 1972.

4. The first of these decisions was on an application under the Ordinance and has therefore a direct bearing upon the present application. The second was an action brought by subtenants after an order for possession was made by consent against the tenant, he being the only respondent, in which the subtenants claimed that not having been served by virtue of Section 7(3) (Now Section 54(3)), they were not affected by the order for possession and sought a declaration that they were the tenants of the landlord.

5. Having drawn the attention of the parties to these two decisions I invited submissions on the arguments advanced therein. I felt this desirable as there is no appeal from this Court, and as I am aware that there are conflicting views held by the Judges as to the scope and construction of this Ordinance. It is obviously desirable that there should be uniformity and success should not depend upon the administrative act of setting down a particular case before a particular judge.

6. The views of both judges are persuasively expressed. The legislation is not as clear as it might be, and other legal opinions expressed in the Hong Kong Law Journal by Mr. McElney and Mr. Downey have both recognized the difficulties of construction. Miss Kelly for the landlord/applicant has argued that the subtenants have no right to dispute the landlord's notice to quit, no right to serve a counter notice, and no right to be heard on an application brought under this Ordinance. She advanced an argument similar to that advanced by Mr. Chang in LI Yit-kwei's case. She referred to a passage in the judgment of Huggins, D.J. (as he then was) in MOK Wai-bun's case, at page 62, where he said there would be no point in giving notice to sub-tenants in this manner (Section 54(3)) unless it were possible for subtenants to be made parties to the proceedings. She disagreed with this passage and submitted that there would be a point. She argued that unless there was provision for the service of the Notice to Quit on sub-tenants, the landlord might obtain an order against a tenant under Section 54, yet he would have to take separate proceedings by way of writ of possession against the subtenants. Therefore, there is a point in giving notice to subtenants.

7. Mr. Chang appearing to present the legal arguments for the Respondents, submitted that Section 54(3) suggests continuation of sub-tenancies. He submitted that Section 54 is exhaustive of the ways in which a sub-tenancy to which the Ordinance applies may terminate and relies on the proviso to Section 54(1)(d). He argued that this proviso means a radical departure from Common Law Principles and that in a case where the Notice to Quit is served and no counter notice is served by the tenant, but a counter notice is served by the sub-tenant, the proviso saves the sub-tenancy and then an order from the Court is required. The proviso saves a sub-tenancy where there is no posting up and where other events in Section 54(1) have not occurred. In support, he relied on passages in the opinion expressed by Mr. McElney in the Hong Kong Law Journal (1971) 1 H.K.L.J. at page 45. He contended that where a Notice to Quit expires before the hearing, the contractual tenancy is at an end and there is a statutory right of irremovability. He suggested that the answer to the problem is to be found in the proviso to Section 54(1)(d) which he says has not been referred to in the judgments of the Courts and the other opinions. He referred also to Section 73, drawing attention to the fact that Section 54(1)(d) is made an exception to the Law that nothing in this Part should afford to any sub-tenant, any security of tenure more extensive than that enjoyed by his Principal Tenant. He also noted that in Section 54(6) the right of a sub-tenant to serve a counter notice depends on his being a sub-tenant of "The premises affected" by the notice to quit and argued that this is a wide formula. He argued that once it is accepted that a sub-tenant has a status of irremovability, it is wrong to suggest that it is a right without a remedy. I am grateful to the both Mr. Chang and Miss Kelly for the assistance they have given me.

8. I am in favour of the view that a sub-tenant has a locus standi, and is entitled to serve a counter notice and be joined and be heard. Not only does this appear to be the predominant view expressed in the judgments and written comments on the law, but it seems to me to be the right intention to be extracted from the wording of Section 54(3), (6) and (7).

9. Miss Kelly's second point was that if the sub-tenants do have these rights, they may only be heard on procedural matters and that they are not entitled to be heard on substantive matters and in particular on the question of hardship. She relied on a passage from the Judgment of Judge O'Connor in the case referred to above. The passage is set out below :-

"My approach to the Ordinance is that common law rights are not to be taken away save by express terms or by clear and necessary implication. I find it difficult to accept that the law as to privity of estate and relations between landlord tenant and sub-tenant would be altered by mere ambiguous, imprecise language which does not provide for the effects of that alteration. In my view the law as to landlord and tenant and privity of estate should not be considered altered by an Ordinance except in so far as is necessary to give the Ordinance its proper effect.
          The arguments indicating that the Rent Ordinance did not confer benefits on sub-tenant viz-a-viz head landlord were put cogently by Mr. CHENG in :
          LI Yit-kwei v. YUEN Koon-man supra
and are set out in the judgment. They appeal to me with the reservation that I consider a sub-tenant has a right to serve a counter-notice under S. 7(6). Further I consider he has right to serve such counter-notice even if S. 7(3) has not been complied with. I should mention that at least one District Judge considers that a sub-tenant has no right to serve a counter-notice save when the notice to quit has been served by the principal tenant as distinct from the head landlord. This view point holds that references to sub-tenant means viz-a-viz principal tenant.
          However my view is that a sub-tenant can serve a counter-notice whenever premises of which he is sub-tenant are affected by a notice to quit. I take the view that the sub-tenant is not however given any substantive as distinct from procedural rights where the head landlord serves a notice to quit. The Ordinance provides a quick method by which without pleadings the question of the effectiveness of a notice to quit can be resolved. It is to be noted that not only is it intended to be a simple and quick procedure but also intended to be final without right of appeal, and provides for only a three month delay in the order for possession taking effect. It would not therefore be surprising if the legislature had considered the likely effect on this quick simple final procedure if it were after judgment to be subject to applications by persons in possession such as are dealt with in the -
          Minet v. Johnson 1890 63 L.T. 507
          CHAN For v. Lee Shing Land Investment Co. 1963 H.K.L.R. 499 line of cases.
          It was I think in order to avoid the complication of such applications delaying the execution of judgment that provision was made by S. 7(3) for giving notice to sub-tenants of the notice to quit. A Minet v. Johnson type application could be made whether or not S. 7(3) has been complied with but obviously if S. 7(3) has been complied with any person in possession would pretty well have the ground cut from beneath their feet in relation to such type of application. True S. 7(3) is not very well worded to give effect to this meaning, but then on any view of the Ordinance I find it difficult to construe it consistently. I would not construe S. 7(3) as in its context implying that a failure to comply with it will continue the subtenancies. It is to be noted that S. 7(2) states that a notice to quit shall, subject to certain subsections, take effect as if the Ordinance were not enacted. However subsection 3 of section 7 is not one of the said subsections. It appears to follow that even without S. 7(3) having been complied with a notice to quit will take effect as if the Rent Ordinance did not apply to it. Of course if it did so take effect it would terminate sub-tenancies."

10. This view conflicts with the judgment of Judge Addison in LI Yit-kwei's case, nor is it shared by Mr. McElney in his article. Miss Kelly argued that there is nothing in the Ordinance to indicate that the rights of sub-tenants should be as extensive as of the principal tenant. She also based her argument on the doctrine of privity drawing support from the words of Mr. Downey in his comment on LI Yit-kwei's case in the Hong Kong Law Journal (1972(2) H.K.L.J. at page 228) that if you construe the Ordinance literally, there is much force in an argument based on the doctrine of privity. She maintained that sub-section 3 of Section 54 enabled the superior landlord to avoid difficulties in obtaining possession. She argued that the sub-tenants had no right to be heard on hard ship, because the Ordinance had failed to give them that right, and that it must not be implied. She referred particularly to Section 54(7) and argued that there is nothing which shows that hardship viz-a-viz the landlord must be taken into account.

11. Having considered the judgments and opinions expressed, and closely examined the legislation, I respectfully support the finding of Judge Addison in LI Yit-kwei's case that hardship is a ground for declining possession to the landlord where the hardship of the tenant or sub-tenant, or both, outweighs that of the landlord provided of course their respective tenancies are ones to which this Part applies.

12. It seems to me that the subtenant's protection is very real and that he can not only defend proceedings arising out of an application under subsection (7) and thereby prevent the termination of a superior tenancy (and so his own), but in some circumstances even when termination has occurred he is afforded protection by the creation of a new tenancy by operation of law under the proviso to subsection (1)(d).

13. This Ordinance should be construed in accordance with Section 19 of the Interpretation and General Clauses Ordinance which provides as follows :-

"An Ordinance shall be deemed to be remedial and shall receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Ordinance according to its true intent, meaning and spirit."

14. This piece of legislation (Part II), and its predecessors were passed to curb the rapid rise in rents in certain types of property. This was the mischief to be remedied. It was obviously necessary to give persons to be protected by the law security of tenure. This was necessary to prevent landlords from terminating tenancies with a view to creating new tenancies which would not be protected. In Hong Kong where several families may be crowded into a single flat and where it is common for a principal tenant to sublet domestic premises to many sub-tenants, termination of the principal tenancy would at common law lead to the termination of all derivative tenancies and the ejectment from their homes of a large number of people who would fall prey to landlords not bound by this Part. If these persons were to be protected from the high rents which could thus be charged, it would be necessary also for this legislation to provide for security of tenure for sub-tenants as well.

15. On a fair large and liberal construction of this piece of legislation, I think that is what it has done.

16. Section 53(1) provides -

"Save as is provided in Section 54, no tenancy or sub-tenancy existing on the 5th day of June, 1970 shall terminate during the continuance in force of this Part."

This subsection therefore provides for continuation of all such tenancies or sub-tenancies during the continuance in force of this Part except where terminated under section 54. Section 54 is therefore exhaustive of the methods by which a tenancy or sub-tenancy may be determined. It is to be noted that in sub-section (1) of Section 54, Common Law methods of termination have been replaced in every way by a statutory method, sometimes similar, sometimes varying from the Common Law Rule. It will be observed that sub-section (1)(d) provides that a sub-tenancy shall terminate where the tenancy out of which the sub-tenancy was created is itself terminated. In the event of this happening however, the proviso gives protection to tenancies arising "by operation of law". These words surely cannot refer to the Common Law, because that has been ousted in relation to termination of a tenancy. It would not therefore be possible for tenancies to arise by operation of Common Law where the tenancy was determined by operation of this statute. In my view the answer is that the words must refer to this piece of legislation, or any other statutory enactment with which it may be read.

17. It is necessary therefore to look at the statutory law and to see if there is any provision which will create a tenancy on termination of a sub-tenancy under Section 54(1)(d). I think it is important to appreciate at this point, that there is no question of the sub-tenancies not being determined, when the tenancy out of which they have been created has been determined. What in fact may occur, however, is the creation of a new tenancy "by operation of Law" to which by virtue of the proviso this piece of legislation will apply.

18. Such a tenancy would seem to arise only in the case where termination results from the service of a notice to quit.

19. Section 54(1)(c) provides for termination by notice to quit given under Sub-sections (2) and (4) and provides that such termination shall occur where such a notice to quit or an order of the Court takes effect. Section 54(2) provides that such a Notice to Quit may be served and shall, subject to sub-sections (5)(6) and (7) take effect "as if neither this part nor part 5 (formerly the Tenancy (Notice of Termination) Ordinance) had been enacted". Sub-section 5 requires at least in part a particular form to be used designed to inform all persons bound by it of their rights to protection under the Ordinance and of a time limit for serving counter notice and where the notice to quit is on grounds set out in Section 54(2)(a) the rule regarding greater hardship set out in sub-section (7). It is to be noted that the validity of this notice to quit depends upon the rights of the tenant and sub-tenant being fully set out in the Notice to Quit. There would be no point in so informing a sub-tenant of these rights, if they did not exist.

20. Sub-section 6 empowers any tenant or sub-tenant of the premises affected by the Notice to Quit to serve a Counter Notice within 14 days of service of the Notice to Quit. It is to be noted that the word "any" is used which implies that the right is not restricted to only the immediate tenant.

21. Sub-section (7) must be read with sub-sections (5) and (6), and in my view, it is a fair construction of these three sub-sections to hold that they give sub-tenants not only the right to be heard on an application under subsection (7), but where the Notice to Quit is under Section 54(2)(a) require that the Court should consider the question of hardship of all the parties including the sub-tenants before deciding whether to grant or refuse the order. This view seems to be supported by Dicta of Huggins D.J. (as he then was) in Mok Wai Bun's case 1964 D.C.L.R. 59 at pages 62 and 63.

22. Although the matter is not without some difficulty, it appears to have been the intention of the legislature in subsections (5), (6) and (7) to, inter alia, enable persons holding tenancies created out of other tenancies to know their rights clearly and to dispute any notice to quit served on the superior tenant under subsections (2) and (4).

23. When the notice to quit is under subsection (4), since it can only be served by a principal tenant on a subtenant and in special circumstances that are likely to be known to the other occupants, possibly it was not thought necessary or practical to provide for 'posting' of the notice to quit to ensure that persons holding tenancies derived from the tenancy of the subtenant should be in this way informed of their rights and to provide for any possibility that they were unaware of them. In any event the number of such tenancies would be small.

24. When on the other hand the notice to quit is under subsection (2) and could therefore be served by a landlord or principal tenant, in circumstances which might not become known to those holding derivative tenancies, it was no doubt felt necessary to make some provision for this possibility.

25. It seems that subsection (3) was enacted with this in mind. The very fact that an absolute time limit for serving a counternotice has been provided and that the validity of the notice to quit depends upon full details of the relevant sub-sections being set out therein, suggests very strongly that it was intended that all such tenants should be aware of their rights to serve a counter notice and should exercise that right within the fourteen day period or not at all. As Mr. Downey remarked in his comment, this subsection suggests a legal relationship between the superior landlord and a subtenant. Failure to serve a counter notice would end such tenant's right to defend unless a counter notice had been served by another tenant and such tenant had been joined in the resulting proceedings.

26. It will be observed that under subsection (2) termination will occur when a notice to quit takes effect or an order of the Court takes effect.

27. If such a notice to quit is served, but no valid counter notice is served and the procedure in subsections (6) and (7) has not therefore been commenced, the notice to quit will take effect as if this Part had not been enacted and will therefore terminate the tenancy in respect of which it is served without the need for an application to the Court under subsection (7) and without the need to comply with Part V. However, it would seem that the subtenancies are still under the control of this Part and can only be terminated in accordance with sub-section (1). Subsection (1)(d) provides for their termination in those circumstances by reason of the termination of the tenancy out of which they are created. Under the proviso a new tenancy may arise by operation of law. It would seem that whether such a tenancy would arise by operation of law would depend upon whether the subtenant had been bound by 'posting' under subsection (3). If he had the notice to quit would take effect on his subtenancy as well. If he had not, then a new tenancy will arise.

28. If such a notice to quit is served and a valid counter notice is served termination will only occur when an order of the Court takes effect (unless of course termination occurs in one of the other ways prescribed in subsection (1)). If the party who serves a counter notice is successful in disputing the applicant's entitlement to possession on the ground specified in the notice to quit, then no termination of any tenancies will occur by this method. If the notice to quit is served under subsection (2)(a), then even though the applicant may succeed in proving his entitlement to possession on the ground specified in the notice to quit, the respondent or respondents may still be successful by establishing greater hardship. In this event again no termination will occur of any tenancies by this method.

29. If on the other hand the applicant is successful in obtaining an order from the Court, then the tenancy in respect of which the notice to quit was served will terminate when the Court order takes effect. In this event subtenancies are also terminated under subsection (1)(d). Whether a new tenancy arises by operation of law may again depend upon whether the subtenant had been bound by posting or was a party to the proceedings in which the order was made.

30. It is possible that a Court order might be made without the Court knowing of the existence of subtenants and without the subtenants knowing about the Court proceedings, for example in a case where there was no 'posting' under subsection (3) and the subtenants were not joined in the proceedings. An order might be made where the immediate tenant serves a counter notice but does not defend and the party serving the notice to quit satisfies the Court of his entitlement to possession, or where the case is settled by agreement between the immediate tenant and the landlord.

31. In such a case although the principal tenancy (if I may call it that) is terminated on the date the Court order takes effect, and all subtenancies are therefore terminated under sub-section (1)(d), it would appear that the subtenants are still protected.

32. It would appear to be the intention of the legislature that in these circumstances, further protection is afforded by the creation of a tenancy arising by operation of law under the proviso to Section 54(1)(d).

33. This view seems to be supported by S. 73(b) which appears to indicate that this legislation by virtue of S. 54(1)(d) may afford to any subtenant security of tenure more extensive than that enjoyed by his principal tenant. But S. 54(1)(d) requires one to look at the law (i.e. Part II and all statutes which may be read with it) and the relevant law includes the whole of Section 54.

34. This view also seems to be supported by the definition of subtenant which includes not only persons "in possession of premises, to which this Part applies, on 5th day of June, 1970", but also 'a person who shall retain possession of any premises by virtue of this Part'. i.e. a person with a 'right of irremovability' as Mr. Chang so appropriately put it.

35. It is perhaps appropriate to look at a number of situations which may arise under the Ordinance

(1) 'A' lets premises to 'B' for business purposes who sublets a room therein for domestic purposes to subtenant 'c', both tenancies being in existence on 5th June, 1970.
          As the principal tenancy is not protected it will terminate in accordance with the law as if this Part had not been enacted.
          On its termination the subtenancy which is a protected subtenancy will be determined under S. 54(1)(d).
          No new tenancy will arise by operation of law because the subtenancy does not enjoy the protection in these circumstances of subsections (3), (5), (6) and (7).
(2) 'A' lets premises to principal tenant 'B' for domestic purposes who sublets a room therein for business purposes to subtenant 'C' both tenancies being in existence on 5th June, 1970.
          As the principal tenancy is protected it may only be determined in accordance with this Part. This, however, does not give subtenant 'C' the protection afforded by subsections(3),(5), (6) and (7) because his subtenancy is not a subtenancy to which this Part applies.
          I don't think an intention to protect such a subtenant should be inferred, from the use of the words 'any premises' in paragraph (b) of the definition of Tenant or Subtenant. Obviously there is no necessity under legislation concerned with domestic tenancies to provide for protection of tenancies for business purposes. In my view para. (b) of that definition was designed to cover tenants or subtenants of tenancies arising by operation of law under this Part, for example under S. 54(8) or under the combined effect of S. 54(2), the proviso to subsection (1)(d) and subsections (3), (5), (6) and (7).
(3) 'A' lets premises to principal tenant 'B' for domestic purposes, who after 5th June, 1970 sublets a room to subtenant 'C' for use for domestic purposes. Again as the principal tenancy is protected it may only be determined in accordance with this Part. This does not give subtenant 'C' the protection afforded by subsections (3), (5), (6) and (7) because his subtenancy is not a subtenancy to which this Part applies.
          Again I do not think the omission of the material date in paragraph (b) of the definition of subtenant was intended to give protection to subtenancies coming into operation since that date except by operation of law under this Part.
(4) 'A' lets premises to principal tenant 'B' for domestic purposes who sublets a room to subtenant 'C' for domestic purposes who in turn sublets a bed space to subtenant 'D' only the principal tenancy being in existence at the material date (5th day of June 1970).
          In the event of an attempt at termination of the principal tenancy by 'A' under S. 54(2)(a) none of the subtenancies will enjoy the protection afforded by subsections (3), (5), (6) and (7).
          Furthermore neither 'B' nor 'C' may serve notices under S. 54(2)(a) on their respective tenants because this Part does not apply to their subtenancies.
(5) In the example in (4) above if both the principal tenancy of 'B' and the subtenancy of 'C' were in existence on the material date (5th June, 1970). In the event of such an attempt at termination of the principal tenancy by 'A', the subtenancy of 'C' will enjoy the protection afforded by subsections (3), (5), (6) and (7) but not that of 'D'. 'B' may also serve a notice to quit under subsection (2) on 'C', but 'C' may not do so on 'D'.
(6) If 'A' lets premises to principal tenant 'B' for domestic purposes under a lease for a term of two years, the expiry date of which is after the material date (5th June, 1970), then such tenancy can only be terminated under S. 54.
          If 'B' has sublet to 'C' then the position will be the same as in the above examples.

36. It appears to me that tenancies arise by operation of law within the meaning of the proviso to S. 54(1)(d) where a notice to quit under Section 54(2) or an order of the Court has been effective to terminate the principal tenancy and thus all subtenancies have been terminated but there are still subtenancies to which this Part applies entitled to protection by virtue of subsections (3), (5), (6) and (7).

37. This view appears to be in accordance with the opinion expressed by Mr. McElney in his Article in (1971) 1 H.K.L.J. at page 45 by his example (a).

38. His example (b) raises difficulties because it seems open to the argument that in that example there would be no termination at all under S. 54. Death would apparently not result in termination of a tenancy even though no person is left to inherit it under Section 3(3) (now S. 50(3)).

39. Furthermore I don't think tenancies arising by virtue of S. 54(8) fall within this proviso because those tenancies do not arise upon termination of the superior tenancy but by independent acts of the parties to which that subsection applies. Indeed, there appears to be no provision for tenancies arising by operation of law on termination of a superior tenancy except where that termination of a superior tenancy except where that termination has occurred as a result of the service of a notice to quit. Persuasive though Judge O'Connor's judgment is, I feel that to adopt his construction renders the proviso to subsection (1)(d) meaningless, because in every case the subtenancy would terminate with the superior tenancy and there would be no need for a new tenancy to arise.

40. Summarising then it is my view

(1) A notice to quit under S. 54(2)(a) may only be served if the tenancy or subtenancy is one to which this Part applies, namely a domestic tenancy or a domestic subtenancy existing on the 5th day of June 1970 ..... etc. or such a tenancy or sub-tenancy which has since arisen by operation of law. (That is in accordance with this Part or any enactment with which it may be read)
(2) Where such a notice to quit is served, not only the immediate tenant, but any subtenant whose tenancy is derived therefrom, is able to rely on the protection afforded by subsections (3), (5), (6) and (7) provided his tenancy or subtenancy is one to which this Part applies.
(3) In such circumstances where such a notice to quit has been served on a superior tenant, but the subtenant has not been bound by posting in accordance with subsection (3) and termination occurs because no counter notice has been served, then the subtenancy is terminated as well. However in these circumstances a new tenancy arises by operation of law between the landlord who served the notice to quit and the sub-tenant.
(4) Where such a notice to quit has been served on a superior tenant and a valid counter notice has been served, then termination by this method can only occur when an order of the Court takes effect. When such an order takes effect termination occurs also of the subtenancy, but in these circumstances a new tenancy will arise by operation of law if the subtenant has not been bound by the notice to quit and is not therefore aware of it and has not been joined in the proceedings.
(5) Once a subtenant has been bound by posting under subsection (3), then to secure the protection afforded by subsections (5), (6) and (7), he must serve a counter notice within the prescribed period, or, if a counter notice has already been served by another tenant or subtenant, he must be joined in the proceedings.
(6) The prescribed period is fourteen days from the service of the notice to quit on the immediate tenant.
(7) In considering whether to grant or refuse the order, the Court should consider the hardship of the immediate tenant and all subtenants protected by this Part who have been joined in the proceedings whether or not they served counternotices.
(8) Once a subtenant has acquired a tenancy by operation of law upon the termination of his old subtenancy under subsection (1)(d), it can only be terminated in accordance with this Part. This may result in the landlord having to serve another notice to quit.

41. Having expressed my view on the law, I will apply it to the facts of the present case and give verbal ruling.

(N. B. Hooper)
District Judge
24 September 1973

Representation:

Miss Kenny (D. Biergin) for applicant.

Mr. Cheuk (H.A. Lo) assigned for 1st & 2nd respts 1st & 5th to co-respts.