Doris Investment Co Ltd v. Taipan Agencies Ltd

DCCJ004490/1981

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CIVIL JURISDICTION

ACTION NO. 4490 OF 1981

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Coram: H.H. Judge Sharwood

Date: 7 July 1982

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JUDGMENT

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1. By a writ dated 12 June 1981, the plaintiff claims possession of premises known as units B and C on the ground floor of No. 6 Tung Shan Terrace, Stubbs Road, Hong Kong, on the ground that the defendant sublet the said premises without the consent in writing of the plaintiff, contrary to the provisions of a written agreement made and entered into by the predecessor in title of the plaintiff on the one hand and the defendant on the other, dated the 30 July 1979, for a period of 2 years commencing on 16 April 1979, and also contrary to Section 53(2)(e) of the Landlord and Tenant (Consolidation) Ordinance, Chapter 7.

2. There is no dispute that paragraph 2(v) of the said agreement prohibits subletting of the suit premises or any part thereof without the previous consent in writing of the landlord. The defendant, in its defence, admits paragraphs 1 and 2 of the particulars of claim, and at the trial, Mr. Young, (hereinafter referred to as Young) the managing director of the defendant company and authorised to act on its behalf, also admitted paragraphs 3, 4, 5, 6 and 7 of the said particulars. A defence had been filed on behalf of the defendant by solicitors, but at the trial Young appeared in person on behalf of the defendant. However, he displayed a knowledge and understanding of procedure, evidence and the law of Landlord and Tenant which was both surprising and impressive.

3. In the defence as originally filed, the defendant pleaded that it had first become a tenant on 16 April 1976 pursuant to a 3 year written agreement with a company known as Kam Yuen Investment Company Limited, (hereinafter referred to as Yam Yuen) the predecessor in title of the plaintiff, commencing on 16 April, 1976. The defendant further alleged that the said Kam Yuen had full knowledge of subletting since 1976, and that the plaintiff acquired title of the suit premises (in 1979) with notice of such subletting. Nevertheless, the plaintiff did not complain until 6 May 1981.

4. At the commencement of the trial, the defence was amended by the addition of a paragraph to the effect that the plaintiff by its agent David Poon (hereinafter referred to as Poon) affirmed and extended the tenancy until December 1982 and agreed that subletting could take place. This took place on 8 October 1981 during a conversation between the said Poon and the said Young on behalf of the defendant.

5. Because of all this, the plaintiff has, according to the defendant, waived such rights as it may have had under the written agreement, and under Chapter 7.

6. Young produced an authorisation from the defendant company of which he is a director (D1). He explained how he conducted the negotiations for the original lease in April 1976 and signed on behalf of the defendant. Likewise in relation to the second agreement for 2 years, signed on 30 July 1979, but commencing on 16 April 1979. Both agreements expressly prohibited subletting without the written consent of the plaintiff. Nevertheless subletting took place almost immediately. A person named Bunting moved into one unit, whereas Young lived in another. There were discussions with Yam Yuen about subletting, because. originally the defendant wanted to lease the whole building, namely 14 flats. Of these, the suit premises comprised only 2 flats and the remaining 12 were eventually let to the Hong Kong Government. However, in the context of the negotiations, says Young, it was understood that the defendant would be subletting. A man called Choo Kam Sam (hereinafter referred to as Choo) was the person negotiating on behalf of Kam Yuen, and during the talks, Young asked him to remove the prohibition on subletting, at least in relation to the 2 flats which Young, on behalf of the defendant, decided to lease. Choo made it known that this was not necessary because in the preamble to the agreement "tenant" embodied "sub-tenants", and the covenant was only necessary to prevent further subletting by sub-tenants.

7. I should like to make it clear at the outset that I do not accept Young's evidence on this matter. It is patently absurd. In the first place, Young runs the defendant company; he is the defendant company for all practical purposes. The company's business is that of estate agent, property trading and development, and most of all, leasing and then subletting. Young has obviously familiarised himself with the law of Landlord & Tenant, he is certainly no stranger to it. He cites authorities, and makes submissions on matters of law. He is very familiar with leases. For him to say, in those circumstances, that he accepted Choo's explanation that "tenant" in the preamble to the 1976 agreement "embodied" subtenant to the extent that he thought he could sublet pursuant' to the agreement, is quite unbelievable. So is his evidence that he has "only now" found out that sub-tenant means a lawful or permitted subtenant. So also is his evidence that "at the time it was of no great significance. Now it is." This last is especially unbelievable because it must surely have been of great significance at the time. Young is asking Choo to remove the prohibition against sub-letting and Choo is saying, in effect, "there is no prohibition, go ahead and sublet, tenant includes sub-tenant, but I must leave the prohibition in the agreement to prevent further sub-letting by the subtenants." Rather than being of no significance, it would seem that this must have been a major revelation to Young having regard to the type of business which he was involved in.

8. Young suggested that aside from this conversation with Choo, there were other incidents which pointed to knowledge by Kam Yuen of the sub-letting, to aquiescence by it, and therefore to waiver, at this stage, by it of its right to take action in respect of the breach by the defendant of paragraph 2(x) of the 1976 agreement. There was for example the time that Young erected a shelter as a storeroom. Choo objected and came to view. Mr. Ho, the caretaker, was there. Solicitors letters were sent. This and other incidents gave rise to a "mutual understanding and knowledge" about the fact that sub-letting was going on.

9. Then there was a problem about an overhanging tree. Mr. See (hereinafter referred to as See) of Kam Yuen was spoken to. The tree affected the light of one of the sub-tenants. "No secrets were kept." On one occasion, water seeped into a sub-tenants flat. It was made clear that the person affected was a sub-tenant. In fact, the landlord entered a flat several times to repair leaks.

10. Young would have it that all these incidents provided Kam Yuen with knowledge of the defendant's sub-letting. There were discussions with See, who was handling the affairs of the building and appeared to have authority from Kam Yuen. The fact of sub-letting was referred to throughout. However, no attempt has been made to trace this See because "lots of companies associated with Choo have gone into liquidation." Young produced various letters which he suggested were of assistance (D4, D5, D6, D11). In my opinion they are of no assistance whatsoever on the question of whether Kam Yuen knew about sub-letting. D11 states that Choo consented to the subletting, but Young does not allege that the plaintiff also knew about it. D11 is a reply to D10 which is an intimation by the solicitors for the plaintiff that sub-letting has been discovered, in effect for the first time, on 29 April 1981, that details of sub-tenants are required and that action is to be taken. Young, in D11 does not suggest that anyone knew of the subletting other than Choo. I find this surprising in view of Young's evidence that there was "mutual understanding and knowledge," and in view of the defence that the plaintiff had notice of the subletting. Young conceded that there was "nothing precise" and "nothing specific" which could be said to have given the plaintiff notice of subletting.

11. In cross-examination, Young admitted that in many other instances, the defendant had sublet, despite a prohibition to that effect in its leases. This was done deliberately; it was a calculated risk. The rationale was that most landlords would accept it. Invariably most landlords came to know about it anyway. It "virtually always emerged in the landlord and tenant dialogue." In any event, it was Young's "policy to have owners know that the premises have been sublet." To achieve these policy ends, Young caused endorsements to be made on the back of rental cheques to the effect that premises had been sub-let. However, there had been no endorsements in this case. He also issued "circulars" about this matter. But there is no evidence that a circular was issued either to Kam Yuen or the plaintiff. Young regarded prohibitions against sub-letting as a mere formality, something that landlords did not really care about, unless they realised that they could get more money by getting rid of their tenants.

12. It emerged that Choo had left Hong Kong some months after the 1976 lease, because of a "scandal with public companies", and was not therefore available to give evidence.

13. Young was asked why, as a sub-letting agent, he had not sought to formalise the arrangement whereby he was permitted to sub-let, by means of a simple letter. He replied that he thought that he had done so, but could not find the letter.

14. I have several observations to make about this. Firstly, If Young accepted that the agreement permitted sub-letting on its face, as he said he did, any letter would have been entirely unnecessary. If he though he needed a letter to formalise the arrangement, then either he did not accept Choo's explanation concerning the meaning of the agreement, as he claimed he did, or Choo did not say anything of the sort. Either way he is not telling the truth. Secondly, such a letter and any reply thereto would have been of crucial importance in the event of any future difficulties, and Young, on his own admission, is and was involved in much litigation, as the nature of his business might suggest. Nevertheless, he "can't find the letter." Several other letters were produced which were of little or no value; the vital correspondence cannot be found and no explanation is offered. Since Young agrees that in cases where there is an express covenant against sub-letting, his standard defence is waiver, I would have thought that any correspondence touching upon sub-letting and any consent thereto, would have been nearly as important as a certificate of title. It is a lame explanation, therefore that "I think we did. Can't find letter." It is significant that Young appears to have ripped out of a file such letters as he thinks might assist him. This is suggested by the holes and tears that are visible on the sides of these letters. How did important correspondence get lost when there is obviously a filing system?

15. On 27 August 1979, the plaintiff became the registered owner of the suit premises, as well as of the other 12 flats in the building. On the 1st September 1979, the defendant sublet to one Fox.

16. On the 23 August 1979, Young wrote on behalf of the defendant to Kam Yuen. It is obvious that he knew then that the plaintiff was about to become the new owner, because he sent a copy of the letter to the plaintiff. In cross-examination, Young said he knew that the plaintiff had become the landlord "shortly after the assignment." Thereafter he had no contact with the plaintiff or its agent, until he spoke to Poon of Sun Poh Shing Finance company, (hereinafter referred to as the managing agents), the company which managed the building containing the suit premises, on behalf of the plaintiff.

17. The defendant bears the burden of establishing waiver on the balance of probabilities. Young submits that the defendant was in the business of sub-letting, that it was "notorious" in "legal circles", and that both Kam Yuen and the plaintiff knew at all material times that the defendant had sub-let and was continuing to sub-let as and when a flat became vacant. He submits that the matter of sub-letting was discussed with Choo, and was mentioned many times over the years to See, to the caretaker and to others in the context of the "landlord and tenant dialogue", which covered such problems as a disputed shelter, leaking pipes and overhanging trees etc. He submits that the plaintiff must have known about these matters, because some of the problems continued after the plaintiff became registered as owners and in any event landlords almost inevitably come to know about subletting. In this case there was a full time watchman at the site, Lam Ko, employed by the plaintiff. His duties were sweeping floors, repairing light bulbs, and reporting back to Fung and Poon of the managing agents. Young submits that Lam must surely have brought it to the attention of Fung Lai Pun (hereinafter referred to as Fung, the Deputy Manager of the managing agents) and/or Poon, the General Manager, that the defendant was sub-letting.

18. Finally, Young submits that the course of conduct pursued by Fung and Poon, and the plaintiff's solicitors, was so odd and so unusual that the only inferences to be drawn from it plaintiff had already permitted subletting and therefore waived its rights both under the contract and under Chapter 7, it was necessary to embark on a series of fictions in order to make it appear as though the plaintiff had suddenly discovered sub-letting for the first time on 29 April 1979. Having done so, it could then proceed to take the action that it subsequently did.

19. The facts which Young relies upon as supporting this conspiracy are as follows. The second written lease expired by effluxion of time on the 15th April 1981. On the 9 April the plaintiffs solicitors wrote to the defendant reminding it that the agreement expired on 15 April 1981 and that failing the giving of vacant possession, legal action to recover would be taken (D8). (This was not a particularly sensible letter, because the threat by the solicitors would appear to have been somewhat hollow. There were simply no grounds for recovering possession at that time, having regard to the fact that the tenancy was a protected one.)

20. Young submits that this letter is the first act in a very sinster and subtle plot to get rid of the defendant. Fung, who gave evidence on behalf of the plaintiff, says that the letter was merely a method of initiating negotiations for a renewal of the lease. At that stage, there was no intention to take legal action. In fact, says Fung, it was intended to retain the defendant as a tenant.

21. I find both explanations less than convincing. I certainly do not accept the conspiracy theory of Young; on the other hand, this was a strange way of bringing the defendant to the negotiating table!

22. Young did not reply to this letter and the next thing do not accept the conspiracy theory of Young; on the other hand, this was a strange way of bringing the defendant to the negotiating table!

23. Young did not reply to this letter and the next thing that happened was on 29 April 1981, when Fung went over to the suit premises on a week day in the afternoon at about 3.30 p.m. to try and locate Young. The purpose was merely to talk to him about a new lease. Young had not responded to the solicitors letter of 9 April 1981, as expected, and since the lease had expired by effluxion of time on 15 April 1981, the managing agents felt that something should be done to locate Young and rationalise the situation.

24. Young made a great deal of this conduct both in cross-examination and in his final address. If the plaintiff had merely wanted to get in touch with him to discuss the lease, it could have written to him suggesting a meeting. Why go to the suit premises on a week day after lunch? Why write a silly letter in the first place? Young submits that the only explanation, the only rational explanation for this conduct is that there was a plot to create grounds for a subsequent eviction based on subletting without permission. However, since there had already been waiver, it had to be made to appear that sub-letting had suddenly been discovered, and on 29 April 1981, Fung pretended that he had for the first time discovered subletting.

25. There was much evidence from Fung and Poon about this incident. I have considered it all very carefully. I do not propose to analyse it further.

26. I am satisfied that Fung and Poon were not involved in a conspiracy, as suggested. I am satisfied that they are both somewhat unintelligent, especially Poon. I am satisfied that the plaintiff's letter of 9 April is a silly one, containing as it does an empty threat.

27. Having considered all the evidence and submissions in relation to waiver, I have come to the following conclusions:

28. In the result, I am not satisfied on the balance of probabilities that Kam Yuen had knowledge of any sub-letting by the defendant.

29. It follows therefore that I cannot be satisfied on the balance of probabilities that Kam Yuen informed the plaintiff that sub-letting had taken place but that Kam Yuen had chosen to ignore it.

30. I am not satisfied on the balance of probabilities that the plaintiff came to know about any sub-letting of whatsoever kind, from sources other than Kam Yuen.

31. I am not satisfied an the balance of probabilities that the plaintiff had any knowledge whatsoever of the subletting to Fox on 1 September 1979.

32. As I have indicated, there is direct evidence that Kam Yuen knew about the subletting, but I cannot rely upon it and I have not accepted it. There is no direct evidence that the plaintiff knew anything about sub-letting, and I have indicated that I am unable to draw any of the inferences which Young has submitted should be drawn from the evidence before me. In my view, such facts as have been proven, give rise to speculation and conjecture, and not to such inferences as would on a balance of probabilities support a factual finding in favour of the defendant.

33. I am therefore not satisfied on the balance of probabilities that the plaintiff waived the contractual prohibition to sub-let. I am satisfied on the balance of probabilities that the defendant sub-let without written consent as alleged. In the ordinary course, therefore, there should be judgment for the plaintiff.

34. However, a matter arose in this case after the issue of the writ which appeared at first glance as if it might have constituted a compromise to the action between the parties, and which therefore called in question my jurisdiction to try the case. It also gave rise, according to Young, to a waiver by the plaintiff through its managing agents, even though it took place after the issue of the writ.

35. I have adverted to the events of 29 April 1981, when Fung discovered sub-letting for the first time. Thereafter there followed some correspondence which I have already referred to. (D10 and D11). The writ was issued on 12 June 1981 and the defence followed on 24 June 1981. Then, in September, "a few weeks before 8 October" 1981, Young phoned Poon, the General Manager of the managing agents. The plaintiff has no other business other than this building and was formed to buy the building. Young heard about Poon from another man also called poon. He thought he had made earlier attempts to contact the plaintiff and/or its solicitors but he had lots of litigation and got "confused about the specifics of each case." Nevertheless, he was quickly able to get Poon to agree that the suit premises would be let to the defendant as storage space, and not as domestic premises. The rental would be $6,000 per month (as opposed to $2,640) and the term would run to December 1982. The subletting would be permitted to continue, and there would be a written agreement with a covenant against sub-letting. A letter would follow "documenting this agreement." The letter did not arrive and Young phoned Poon on 8 October 1981, and taped the conversation. The transcript was introduced into evidence as D13A and D13B. Later, Young heard from his solicitors that the plaintiff's solicitors wished to vary the agreement in ways which were not agreeable. The variations were that the covenant against sub-letting would remain and the new rent of $6,000 would be payable from the end of the old agreement.

36. There is little doubt that the taped conversation indicates the existence of an agreement of some sort between Young and Poon. Poon does not dispute that this conversation took place. However, he says that there was not yet a concluded agreement; the matter had to go to his solicitor for settlement. Young claims that there was a concluded agreement and that as far as he was concerned, it was binding.

37. The matter is of considerable importance because in Green v. Rozen [1955] 2 All ER 797 it was held that an original cause of action was superseded by an agreement between the parties comprised in the terms of settlement, and the court had no further jurisdiction in the matter; if the terms of the new agreement were not complied with, the remedy of the injured party was not by application to the court but by action upon the new agreement. If the principle of Green v. Rozen could be imported into the present case, it is conceivable that the agreement between Young and Poon might have superseded the original cause of action, and left me without jurisdiction and the injured party to an action on the new agreement.

38. I have come to the conclusion that there are several important differences between the facts of Green v. Rozen and other cases involving compromise, on the one hand, and the present case on the other.

39. In Green v. Rozen, the parties had actually settled the case. The judge was informed of this by counsel. The judge was also told of the agreed terms of settlement, which had been written on the brief of counsel for the plaintiff and signed by counsel on both sides. However the judge made no order, despite the fact that the signed terms of settlement stated that by consent, all proceedings had been stayed on terms endorsed on the briefs.

40. In McCallum v. Country Residences Ltd [1965] 2 All ER 264, the parties appeared, in an exchange of correspondence, to have settled an action for work and labour done for £900 with costs. The plaintiff applied for a Tomlin order, which is an order made by consent. The defendant did not consent because of uncertainty about costs. It was held, reluctantly, that the compromise agreement did not indicate a common intention that a Tomlin order be made. Therefore, the court had no jurisdiction to make such an order and it was necessary for the plaintiff to bring an action based on the new agreement.

41. In both these cases, the settlement of the original action had been formalised in writing. There was no doubt about the fact of settlement and indeed, very little about the terms of settlement. The settlement, or new agreement, thus totally superseded the original cause of action. It is significant, also, that an agreement for a compromise is liable to be enforced or set aside on the same grounds and in the same way as any other contract. (30 Halsbury's Laws (3rd Edn) 405)

42. In the present case, the parties were, in fact, very far from settlement. Young suggests by implication that the new rental of $6,000 per month was to be paid from some time in the future which such time is nowhere to found in the evidence, whereas Poon claims that the new rental was to be payable from 15 April 1981. Young says that the agreement allowed him to sublet generally whereas Poon says that the subletting was to be restricted to the existing sub-tenants. Young says that final agreement had been reached can all material matters whereas Poon says that the taped conversation makes it clear that the matter had to be submitted to his solicitors "to have the matter settled" and finalised.

43. Neither party indicates what was to be done about the pending action, and whether it was to be withdrawn, or settled on terms.

44. There is also much doubt surrounding the situation in October 1982. Young says that the rental would be $6,000 until October 1982 and thereafter there would be an increase, both for him and Poon. (In amending the defence Young said that Poon affirmed and extended the tenancy to December 1982) This seems to indicate that the parties were contemplating on option in the agreement for a further term from October 82. Poon also appears to contemplate that there would be a further term after October 1982, although there is very little indication of precisely what it might be.

45. I do not propose to analyse the evidence concerning this agreement any further. I am satisfied that the parties had agreed in general terms that there would be a new lease, but that they were not ad idem on a number of important matters, notwithstanding the finality and certainty expressed in some passages of the taped conversation.

46. In addition, such agreement as the parties did make was an agreement for a lease. By Section 5 of chapter 23 it is provided that "no action shall be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged, or by some other person thereunto by him lawfully authorised."

47. This section applies to a contract for any disposition of any interest in land, including a lease.

48. Section 7 requires a lease to be in writing unless it takes effect in possession and, is for a term of less than 3 years.

49. However, this concession applies only to the grant of an actual lease. A contract for a lease, or an agreement for a lease, however short, is unenforceable by action unless it is evidenced by sufficient writing or by part performance. This is settle law and has been for many years, both in Hong Kong and in England

50. Therefore this "agreement" between Young and Poon would be unenforceable unless the one who sought to rely on it could show that there had been some sufficient act of part performance. I can see nothing which could even remotely be described as part performance by either party. In order to justify this observation, it is necessary to briefly set out the last part of the history of this matter.

51. After the conversation of 8 October 1981, it seems, according to Jennifer Cheung, solicitor, that Poon's solicitors contacted Young's solicitors to "convey an offer to settle the action." However, she was informed eventually that Young was not willing to settle and wished to fight the case. Thus it was that Young and Poon had no further contact, except for a telephone conversation in March 1982. Young rang Poon after a notice had been posted by the managing agents on behalf of the plaintiff on the door of one of the flats (D7). It appears that Poon and Fung decided to put chains on the door of the said flat and post the notice when they ascertained that a sub-tenant (Fox) was leaving. They did it to prevent further sub-letting, but without taking legal advice.

52. This is another example of the incompetence of Fung and Poon, and their sheer ignorance. To interfere with the suit premises in such a way when the defendant was in lawful possession, and pending litigation, was the act either of ruthless and brutal men or of stupid and ignorant ones. I have no doubt that Fung and Poon were stupid and ignorant. Had they taken the elementary precaution of consulting a solicitor, they would never have blundered into such ill advised conduct.

53. Turning back to the doctrine of part performance, what could Young rely upon? In my view, absolutely nothing. He did not write any letters, he did not tender any increased rent, he did not contact poon again. Yet it seems that Poon had been so amenable and they had so easily come to terms!

54. Young submits that he once again sub-let in March 82 after the foolish conduct by Fung and Poon. He claims that this shows that he regarded the agreement as alive, and binding. But Poon says that the agreement was restricted to the subletting to the sitting sub-tenants. Young says a general right to sub-let can be inferred from the conversation that was taped. I cannot see this at all. At the bottom of page 2, Young says: "Now mention in there that the now existing tenants can stay until end of next year." (my underlining)

55. I do not propose to rule on this question for obvious reasons, but in my opinion, based on the evidence before me, Yeung could not enforce the agreement with Poon. It is an agreement which must be in writing to be enforceable and if it is not, there must be a sufficient act of part performance. I do not perceive such an act. Young's act of sub-letting in March 1982 was not referable to the new agreement, which more likely than not restricted or was intended to restrict the subletting to the existing sub-tenants. Such sub-letting was overwhelmingly referable to Young's defence that the plaintiff had always waived the prohibition against sub-letting, that it was permitted by Choo, by the words of the agreements, as understood by him, and by knowledge, consent and waiver over the years.

56. In considering Green v. Rozen, therefore, a further difference is the probability that the "agreement" between Young and Poon was unenforceable by the either of them. Can an unenforceable agreement supersede a cause of action? I would venture to suggest that this would lead to an absurdity, because it would mean that the parties could not go with the original action because it was superseded, and could not succeed in an action on the contract, because it was unenforceable!

57. Another difficulty which might face the parties in any action on this "agreement" would be the absence of certainty as to the commencement and ending of the lease. It is settled law (Harvey v. Pratt (1965 1 WLR 1025) that a valid agreement for a lease requires parties, property, length of term, rent end date of commencement to be defined. There is nothing in Young's evidence to suggest that he had fixed upon an actual commencement day, although there is evidence that Poon had fixed upon such a day, namely "the day we change tenancy" or the 15 April 1981. Young totally disagrees with that. As I have understood him, the actual date of commencement was at some day in the future, not yet ascertained, possibly from the time of receipt of a letter of confirmation from Poon's solicitors. In any event, it was not 15 April 1981, which would have been, incidentally, a most logic commencement date.

58. Harvey v. Pratt would seem to suggest that the agreement between Young and Poon was not a concluded contract, certainly at any rate, if young's version is to be accepted.

59. There is also the distinct possibility that agreement was obtained from Poon by virtue of the misrepresentation of Young. Young admitted that he was "less than frank" to Poon when he told him that his subtenants had the right to remain until October 1982. He did this to persuade Poon to give him a new tenancy. He agreed that he had no scruples about being less than frank. Later he claimed that October 82 referred to a time when an increase of rental would be due from the subtenants, and Poon would also get an increase. I must say that this later explanation is not consistent with the passage in the transcript of the tape where Young clearly asks Poon to mention that "existing tenants can stay until end of next year." (my underlining) I much prefer Poon's evidence on this aspect. He was asked why he changed his mind in September 1981, having previously been unwilling to settle. He said "Because you (i.e. Young) said on the phone you hoped I would settle." He said there were other reasons, namely that "you (Young) said existing people should be allowed to stay until the expiration of term of tenancy, i.e. October 1982." (my underlining)

60. There is a strong suggestion here that one of the reasons that Poon was willing to settle was because he accepted that the sub-tenants had leases which only expired in October, 1982. This was a statement about an existing fact which was not true. It may well have been material. It may well have been relied upon. The evidence suggests that it was.

61. Thus there is an agreement which was probably unenforceable, quite possibly not a concluded contract, and possibly also induced by a misleading representation.                                                

62. In all these circumstances, I have come to the view that the facts of the present case are so fundamentally different from a Green v. Rozen situation, as to make the principle there enunciated, inapplicable here.

63. I turn therefore to the final matter raised by the defendant, namely, the submission that the very fact of the agreement, whatever its effect as an agreement, amounted to a waiver. Young cited Evans v. Wyatt (1880) 43 LT 176 in which the plaintiff brought an action to recover possession of 3 houses on the grounds of rents being in arrears and other covenants being breached. The defence denied the breaches and pleaded that after the bringing of the action the plaintiff had accepted rent with knowledge of the breaches. It was held that if such facts could be proven, then they would be evidence of a new agreement, and the plaintiff could not rely on the forfeiture to eject the defendant.

64. Lindley J. said at p177: "If the facts here are true, they show an agreement for a new tenancy from year to year on the terms of the old lease. If such be proved the defendant could not be turned out."

65. Young also cited Doe v. Batten (1775) 1 LOWP 243, which had been referred to in Evans v. Wyatt (Supra). The headnote of this case, decided in 1775, reads as follows:

"The more acceptance of rent by a landlord, for occupation subsequent to the time when the tenant ought to have quitted according to the notice given him for that purpose, is not of itself a waiver on the part of the landlord of such notice but matter of evidence only to be left to the jury, under the circumstances of the case.

66. Lord Mansfield said, at p1067: "The single question is whether the landlord has, by any subsequent act or agreement, waived such his right, and consented that the tenant should continue the possession? If he has, no doubt but he will be bound by such agreement."

67. And later:

"The question therefore is, quo animo the rent was received, and what the real intention of both parties was. If the truth of the case is that both parties intended the tenancy should continue, there is an end of the plaintiff's titles: if not, the landlord is not barred of his remedy by ejectment."

68. The decisions should be contrasted with the later case of Civil Service Co-operative Society Limited v. Trustee of Sir J.R.D. McGrigor (1922) 2 CL 347, where Russell J. said at P358:

"Neither of those cases touches the real question - namely, whether the issue and service of a writ in ejectment is such a final election by the landlord to determine the tenancy that a subsequent receipt of rent is no waiver of the forfeiture. In my opinion the authorities establish that this is so. In JONES V CARTER Parke B. held that after ejectment brought, there being no evidence of actual re-entry by the landlord, the landlord could not sue for rent; and he cites with Approval a decision of Lord Tenterden that the receipt of rent after ejectment brought for a forfeiture was no waiver of such forfeiture: Doe v. Meux. To the same effect is the case of GRIMWOOD V MOSS, where it is definitely stated that the bringing of an ejectment action is an irrevocable election to determine the tenancy: See also Rex v. Paulson: and Evans v. Enever. I adopt the words of Lord Coleridge J. in Evans v. Enever when he says: "There is a series of cases which establish that if an action is brought for recovery of possession for breaches of covenants in the lease that is an irrevocable election to determine the lease, and that no subsequent acts of the plaintiff can be relied on as qualifying that position." (my underlining)

69. This would appear to be a conclusive answer to Young's submission that the very act of agreement amounts to a waiver, the cases of Evans v. Wyatt and Doe v. Batten to the contrary, notwithstanding. These cases in any event turn only on the effect of acceptance of rent.

70. But in this case, even a concluded and valid agreement could not have resulted in waiver. The new agreement, so far as both parties were concerned, was to be documented as a lease for storage purposes; i.e. a non-domestic lease, albeit that the premises were to be used for domestic purposes. Nevertheless, the probabilities are that the original action would have had to be settled on such terms as would have given possession to the plaintiff. Otherwise the plaintiff would not have been able to grant a new lease for storage purposes. The defendant would have continued as a protected tenant holding over. The position would be hopelessly confused. It is probable that the agreement for storage purposes would be void and of no effect if the plaintiff did not first obtain an order for possession, or vacant possession. A business lease for 18 months at $6,000 per month would appear to be in conflict with a statute protected domestic holding over at $2,640 per month. It is doubtful whether they could both exist at the same time! The first would have to be terminated to make way for the second. (Capital Land Investment Company Limited and Madam Se Mong Kai, 1973 H.K.L.R. P 371).

71. Thus a new agreement would have necessarily involved judgment for the plaintiff in the original action. That in turn would have required a concession by the defendant that he had sub-let without consent contrary to the terms of the agreement.

72. It follows therefore that the act of agreeing to grant a new lease, even had it been a valid and enforceable agreement, could not have amounted to waiver.

73. In the result, the plaintiff has proven his case on the balance of probabilities, and he is entitled to judgment and an order for possession.

74. I will hear the parties on costs.

Representation:

Miss Corrine Remedios instructed by Messrs Iu, Lai & Li for plaintiff.

Mr. Thomas Young, director of Taipan Agencies Ltd in person.