Leung Hok-shing v. Lee Mang-tong and Another

HCA000817/1973

IN THE SUPREME COURT OF HONG KONG

(ORIGINAL JURISDICTION)

ACTION NO.817 OF 1973

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Coram: Cons, J.

Date of Judgment: 15 March 1974

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JUDGMENT

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1. This is a claim for possession of a flat on the third floor of the Marco Polo Mansion in Cleveland Street, Hong Kong. Originally it was brought against the 1st defendant alone but the 2nd defendant, who is the person in actual occupation, has since obtained leave to be joined and he alone has defended in the trial before me.

2. The 1st defendant moved into the premises in 1968 under a lease for one year commencing from the 1st January. He continued to live there with his family until the 14th August 1971 when he purchased for himself another flat in the same building. Each year in between the plaintiff landlord granted to him a fresh lease. Therefore, on the day that he moved out, his current lease had a further 4 ½ months to run. Taking sensible advantage of the rapidly rising property market he sublet to the 2nd defendant as from the 16th August, but for a term of one year and 4 ½ months. He may have deliberately ignored his insufficiency of title in order to tempt the 2nd defendant into a sub-lease, he may have been confident of a further renewal by the landlord, or he may have already negotiated the same. It is impossible to say. In any event at the end of 1971 the plaintiff did in fact grant a further lease, only on this occasion breaking the earlier practice by making it for a period of two years.

3. During all this time the plaintiff apparently was resident in the United States of America. His affairs were managed by his attorney in Hong Kong. The attorney tells me that sometime earlier in 1973 he received information from the plaintiff that he was returning to Hong Kong to get married and would need his flat for himself and his wife to live in. In March he broke the sad news to the 1st defendant asking for the return of the premises as soon as possible. The lease contained a simple clause against subletting and the 1st defendant felt, as he tells me now, that he was left with no alternative other than to own up to his wrongful conduct. As a result the attorney put the matter in the hands of his solicitors and a writ of possession grounded upon the unlawful subletting was served upon the 1st defendant on the 30th March.

4. Both the attorney and the 1st defendant are emphatic that March. 1973 was the earliest that the fact of the sub-lease was disclosed. However, the evidence of a friend of the 2nd defendant and of the 2nd defendant's sister-in-law is quite different. They put the date at sometime around July of the previous year, that is 1972, when the friend made contact with the attorney in the hope of renewing the lease at the end of the year directly to the 2nd defendant. The approach at that time came to nothing, but the friend tells me that he renewed the approach subsequently on more than one occasion.

5. Having heard the four witnesses on this matter I have no hesitation in finding as a fact that the existence of the sub-lease did become known to the plaintiff's attorney sometime in or about July 1972. There was contradiction between his evidence and that of the 1st defendant with regard to their conversations in the early parts of 1973 and the 2nd defendant was almost pathetic in his attempts to explain why, when his lease still had some 9 months to run he could not have stalled the attorney. It is also curious that in February, that is before he had even been, on their story, approached by the attorney, he had served a notice of termination upon the 2nd defendant.

6. The legal result of these transactions is a little curious and I am indebted to counsel for their arguments. It seems to me quite clear that the purported grant by the 1st defendant in August 1971 of a sub-lease for an estate greater than that which he actually held operated as an assignment. The last authority in this respect appears to be Milmo v. Carreras ⁽¹⁾. However, whatever he may have purported to do the 1st defendant could not in fact assign more than he actually held and the assignment was effective only until the end of that year. On the 31st of December the estate would automatically have reverted to the landlord. I see no reason then why the grant of a fresh lease to the 1st defendant as from the 1st of January of the following year did not take effect. The defendant has argued that the subsequent grant was a nullity but this argument is based upon what I think is the erroneous assumption that the assignment in some way bound the landlord for the whole of its purported term. There might be something in that argument if the attorney had known of the subletting at the time when the assignment was made, but his knowledge did not come until well after the new lease had been granted.

7. I do not think there is any actual evidence to this effect but it is reasonable to assume that the 2nd defendant continued to pay and the 1st defendant continued to receive rent from the 1st January 1972 up to at least the 28th February 1973. He became thereby a monthly sub-tenant of the 1st defendant, which fact is admitted in the notice of termination sent to the 2nd defendant on the latter day. The plaintiff's attorney, as I have already mentioned, was well aware of this sub-tenancy and must be taken to have waived any right the plaintiff may have had to re-enter for breach of covenant in this respect. The writ issued in March was therefore insufficient to effect a re-entry or bring the head lease to an end. That lease would in the normal course of events have continued to the end of the year. But the normal course was interrupted on the 7th of June by the Domestic Premises (Tenure and Rent) (Temporary Provisions) Ordinance of 1973 and then again on the 15th of December by the Landlord and Tenant (Consolidation) (Amendment) (No. 2) Ordinance of 1973. The 2nd defendant is entitled to the protection thereby granted and the action of the plaintiff as against him must therefore fail.

8. I should say that in coming to this conclusion I have expressly ignored a judgment of this court made on the 27th November 1973 whereby it was adjudged that the 1st defendant should give possession to the plaintiff and pay mesne profits as from the 1st of March this year. That matter was not raised in any way in the proceedings before me.

9. The 2nd defendant shall have his costs against the plaintiff.

Representation:

H.Y Leung (N.K. Tsang & Co.) for the Plaintiff.

R. Tang (Woo & Woo) for the 2nd Defendant.

(1) [1946] 1 K.B. 306