Ho Sam v. Cheng Yan Hing

HCA000641/1973

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 641 OF 1973

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Coram: Trainor, J.

Date of Judgment: 13th March, 1974.

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JUDGMENT

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1. The plaintiff in this case is the registered owner of Flat No.2 on the first floor of the premises 280, Tung Chau Street in Kowloon. The premises form part of an entirely new building within the meaning of Section 3(1)(a) of the Landlord and Tenant Ordinance and in respect of which an Occupation Permit was granted on the 16th of August 1945.

2. It is the case of the plaintiff that an agreement written in Chinese was entered into between herself and the defendant on the 1st of February, 1970 whereby the defendant became the tenant of the premises for a term of three years commencing on the 1st of February, 1970 at a monthly rent of $420 payable in advance. The plaintiff says that the Tenancy (Notice of Termination) Ordinance and the Rent Increases (Domestic Premises) Control Ordinance do not apply to these premises. The plaintiff says that the agreement expired by reason of effluxion of time on the 31st of January, 1973 and, despite per repeated demands for possession, the defendant retains the premises and refuses to yield up vacant possession.

3. The defendant filed a defence, drafted by himself, in which he said that the former owners of the premises of whom he was a tenant had received from him a sum of $4,200 as construction money. He said that in 1970 the premises in question were sold by then to the plaintiff and that he paid a sum of $5,000 by way of key money to her.

4. There is a third paragraph in the defence which refers to the existence of sub-tenants, a total of 20 residents, but I do not think it is relevant by way of defence.

5. The plaintiff gave evidence and said that she purchased the premises about four years ago and it was conceded by the defendant and substantiated by the Deed of Assignment that they were purchased in January 1970. She said that she became aware of the premises being on the market through the defendant; or to put it more correctly she said that she was making enquiries, heard of a flat to sell, went to see them and the defendant, who was in occupation told her about them. She said that the defendant asked her to pay him $5,000 to move out but she didn't have that money. She said that as an alternative, the defendant said that he would move out unconditionally on the expiration of three years. She said that she consented to this and subsequently a document was produced by the defendant and is a document exhibited in court. A counter-part of this document was also produced by the defendant.

6. The document states that the premises are let by the plaintiff to the defendant for the rent to which I have already referred and that at the expiration of the term of three years, the premises will be yielded up to the plaintiff if either of the parties are unwilling to renew the tenancy. This document is, in fact, the agreement in Chinese earlier referred to.

7. The plaintiff in evidence denied that she ever received $5,000 from the defendant as alleged by him or all, and to support this she produced her bank book which showed no deposit of such a sum, although there is a deposit of $3,000 in the month of February; to be precise on the 13th of February, The plaintiff said that the defendant remained in occupation until, the expiration of the term fixed and that she demanded possession. She said that the defendant told her that she would have to pay him $8,000 before he would leave.

8. The defendant in his cross-examination of the plaintiff suggested to her that the original price sought for the premises by the vendors was $45,000. He suggested that she only paid $40,000 and that the $5,000 difference paid represented the sum which he had paid as key money or construction money to the previous landlord when he first entered the premises. Although he did not say so categorically, he appeared to suggest that the koy or construction money was to have been refunded to him by his former landlords and the plaintiff had assumed responsibility for it; or, alternatively, that she had received $5,000 which might be considered as having been paid to the use and benefit of the defendant and it was retained by her as tea money.

9. I was somewhat at a loss to understand or to follow the cross-examination by the defendant, having regard to the fact that in his defence he pleaded he had paid $4,200 to the original landlord and later said so to him. He then explained to me that he had received $800 to make up the balance; which did not, mathematically, help from the vendors to the plaintiff. However, the position is, as established by the Deed of Assignments, that the plaintiff in fact paid $38,000 for these premises, a price which, she said, was the price first asked for by the vendors and paid by her.

10. In his evidence the defendant maintained that as he was the principal tenant of these premises when they were purchased by the plaintiff, he was approached by the plaintiff who wished to purchase his right as such principal tenant. what exactly was meant by this, I am not sure but I did see a document which he had and which he tried to put to the plaintiff but which wasnot admitted because it was irrelevant, and was something of which the plaintiff was completely unaware. In fact it was a letter from the vendors to the defendant giving him a priority to purchase the flat over anyone else. I understand the defendant's evidence at that stage to be that he sold this priority to the plaintiff for $5,000. He did say that as a result of the plaintiff agreeing to purchase this priority they went to the vendors and they signed some documents. No documents were produced in court to substantiate this nor was any evidence led to that effect.

11. Further in his evidence, the defendant said that after the sale was closed, the plaintiff proposed to him that she would let him stay on in the premises if the claim for $5,000 which she had promised to pay him was foregone.

12. May I say here and now that, to put it mildly, I was far from impressed by the defendant. Where his evidence differed from that of the plaintiff I had little hesitation in accepting what she said.

13. There is really only one issue in this case and that is was key money paid to the plaintiff by the defendant or not. The position as I believe it to be was as follows:

14. The plaintiff after purchasing the premises asked the defendant to leave; the defendant said that he required $5,000 to do so; and that the plaintiff said she was unable to pay this amount but would allow the defendant to remain in possession for three years instead. That being so, the question of key money does not arise. Key money is a consideration given by a potential tenant of premises to a potential landlord in return for which he is granted a tenancy. If the position is as I have stated the transaction here was that the plaintiff, instead of receiving money, was paying money's worth to entice the defendant to quit the premises; something which in my opinion she was perfectly entitled to do. The defendant persistently returned to what he said in his defence and in an affirmation filed in the proceedings before the Registrar on an application made under Order 14 of the Rules of the Supreme Court; that in fact he paid $5,000 to the plaintiff. I am satisfied that no such sum was over paid. I am equally satisfied that no consideration was ever given to the plaintiff as a result of which the relationship of landlord and tenant was established between her and the defendant. In the circumstances I grant the relief sought by the plaintiff in her statement of claim.

Representation:

Mayne (F. Zimman & Co.) for Plaintiff.

Defendant in person.