Attorney General v. Sun Lee Godown Co Ltd

HCA000227/1967

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO.227 OF 1967

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Coram: Mills-Owens J.

Date of Judgment: 23 March 1968

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JUDGMENT

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1. By an Agreement dated the 14th August, 1964 the Defendant company became a tenant of the Crown of buildings to be used as a godown, at a rent of $16,450 per month. The Agreement was a printed form with necessary 'blanks' for the insertion of particular terms of the tenancy. It was an immediate grant of a tenancy by virtue of the document; it is agreed that no further deed or other instrument was intended to be executed. The Defendant company duly entered into possession and held under the Agreement. The 'blanks' included a space for entry of the 'Term and date of Commencement (these words being in print). There was entered opposite these words the following - "On month to month basis commencing from 1.1.1964." Among the printed provisions was a usual form of proviso for re-entry and, more particularly, the following sub-clause (f) of clause 3 -

2. Some three years later, by letter dated the 7th July, 1967, the Crown intimated to the Defendant company that it was likely that the buildings would be required for a public purpose within the next three or four months and that the company would be given one month's notice to determine the tenancy in due course. Subsequently a number of notices to quit, in the usual common law form, were given to the company but for various reasons they were not in order or became inoperative by reason of acceptance of rent subsequently accruing due. Finally the Crown gave a notice dated the 8th December, 1966, determining, or purporting to determine, the tenancy at the end of the next complete month of the tenancy ensuing after the service of the notice. This form of notice, of course, was one appropriate for the termination of a monthly tenancy. It did not purport to be a notice given under the provisions of clause 3(f), either primarily or in the alternative.

3. The Defendant company did not vacate the premises and on the 22nd February, 1967 the Crown issued the writ in the present proceedings, claiming possession on the ground of the determination of the tenancy by virtue of the notice to quit dated the 8th December, 1966; alternatively, the Crown relied on clause 3(f), treating the same notice as a notice given for the purposes of that clause and alleging a tender of compensation (in terms which I need not enter upon).

4. Here I would interpose that it is not disputed that the tenancy arising under the Agreement was a monthly tenancy. Further, no question is raised as to the validity of the notice in point of form if the Crown was entitled to give a common law form of notice to quit. What is urged by the defence, to put it very briefly, is that by reason of the provisions of clause 3(f) the Crown imposed upon itself, or accepted, a prohibition of its right to determine the tenancy by the ordinary form of notice to quit; that the Crown's rights with respect to termination of the tenancy became restricted or limited to the use of clause 3(f) only; only in one of the events contemplated by the clause, and in accordance with the provisions of the clause, could the Crown determine the tenancy and recover possession, so the defence says.

5. It was agreed that I should hear argument on the foregoing point. If it were to be decided in favour of the Crown it would be unnecessary to enter upon the other matters in dispute. By amendment of the defence, the Defendant company brought a counterclaim for compensation, alternatively for damages. It is agreed that the Crown retook possession of the premises on the 1st May, 1967. The Crown's case is, of course, that it was entitled to do so upon the expiry of the notice to quit. As it appears to me, I need make no further reference to the pleadings; if the Crown fails on the preliminary point it may well be a question whether the Defendant company is entitled to compensation, or to damages, or to a declaration that the tenancy still subsists together with damages.

6. Mr. Sheratte, for the Crown, argued that to construe the effect of clause 3(f) as depriving the Crown of its ordinary right as a landlord whose tenant holds a monthly tenancy, to give a month's notice to quit expiring at the end of any month of the tenancy would mean that the tenancy, far from being a monthly tenancy, was one of indefinite duration; the contingencies mentioned in clause 3(f) (namely, requirement of possession for the purpose of improvement of the Colony or any other public purpose) might never arise; in any event the date upon which either such contingency might arise would be wholly uncertain. He referred, on this point, to Lace v. Chandler⁽¹⁾, the well-known case in which it was held that a tenancy for the duration of the war was of uncertain duration and therefore void. It would assist the Crown equally well, counsel argued, if the Court were to hold the Agreement wholly void, as the Crown could then rely on an implied monthly tenancy. But the primary proposition put forward on behalf of the Crown was that clause 3(f) was void as being repugnant to the nature of the tenancy; it was an inseparable incident of a periodic tenancy that it should be determinable by notice to quit. Here, Crown Counsel relied upon Doe d. Warner v. Browne⁽²⁾ and Cheshire Lines Committee Lewis⁽³⁾. In these cases an agreement not to disturb the tenant so long as he paid his rent or until the landlord required possession for his own purposes, respectively, were held void for repugnancy to the periodic tenancy.

7. Alternatively, it was argued on behalf of the Crown, clause 3(f) could stand as an added provision for determination, enabling the Crown to resume possession at any time, that is to say on a day other than the expiry of any current month of the tenancy.

8. The main contention put forward by Mr. Swaine on behalf of the Defendant company commenced with the point that the parties to a periodic tenancy are at liberty to make their own terms as to the termination of the tenancy; they are not bound to provide for a six months' notice for a yearly tenancy, a month's notice for a monthly tenancy, and so on. Here the Crown was, essentially, relying on an implied term, namely an implied right to give the ordinary common law month's notice. But, having made a special stipulation for the mode of determination of the tenancy, namely by clause 3(f), the maxim 'expressum facit cessare tacitum' applied and no such term could be implied. Doe d. Warner v. Browne⁽²⁾ was to be distinguished on the ground that in that case no room at all was left for the landlord to give notice to quit. The Cheshire Lines⁽³⁾ case was to be distinguished on the ground that in that case there was an express provision for weekly notice in addition to the express provision restricting the right to give notice, whereas in the present case one has only the express provisions of clause 3(f) with no express provision for a month's notice to quit. The proviso for re-entry and the special conditions appearing in the Agreement imposed onerous terms on the Defendant company and there was thus ample consideration for the cutting down of the Crown's rights as landlord. Mr. Swaine submitted that the effect of clause 3(f), coupled with the absence of an express power to give an ordinary notice to quit, was to enable the Defendant company as tenant to determine the tenancy by a common law month's notice, but to disable the Crown from determining the tenancy otherwise than under clause 3(f), or by forfeiture. He referred to Breams Property Investment Co. Ltd. v. Stroulger⁽⁴⁾ where a clause suspending, for the first three years of the tenancy, the landlord's right to give notice, except if the landlords required the premises for their own use, was held to be 'an added condition' not therefore void on the ground of repugnancy. In principle, he argued, the same applied in the present case, notwithstanding that clause 3(f) would operate throughout the tenancy; it was no more repugnant to restrict the landlord's right to give notice throughout the tenancy than to restrict it for a limited period. The effect of clause 3(f) was the same as that of the clause in question in Breams'⁽⁴⁾ case, namely to restrict the right to give notice simply in order to re-let or to raise the rent. Counsel for the Defendant company also referred to the case of Wembley Corporation v. Sherren⁽⁵⁾ where a provision in a lease enabling the landlord to resume possession for public purposes was held to enure for the benefit of the landlord on the tenant holding over and becoming a yearly tenant, it being held that the provision was not inconsistent with an annual tenancy. Mr. Swaine derived assistance from this case and also from the case of Soames v. Nicholson⁽⁶⁾ for the proposition, contrary to Crown Counsel's argument, that a clause such as clause 3(f) does not enable a landlord to resume possession at any time; in both those cases the clause in question expressly referred to resumption 'at any time'. I do not consider this to be very material; the value of a clause such as clause 3(f) lies as much in the right it gives to resume possession of part of the land, a point which Mr. Swaine very properly brought to my notice. He also referred to Lewis v. Baker⁽⁷⁾ and Allison v. Scargall⁽⁸⁾. From the practical aspect, counsel contended, it was impossible to suppose that the Crown retained a right to give a common law notice; if it did, clause 3(f) was entirely unnecessary because it provided for the like period of notice as would be required for a common law notice, namely one month. Indeed, clause 3(f) was onerous, because it restricted the right to resume possession to resumption for a public improvement or other public purpose and imposed an obligation to make compensation. There was no substantial advantage to the Crown in obtaining such a clause if it had the right to give a month's notice at common law.

9. The aspect of the matter which immediately strikes me is that this is an Agreement compounded of a printed form with written insertions. As Lord Evershed said in Addis v. Burrows⁽⁹⁾, at 178-9, -

"In approaching the construction of the document, I think it is legitimate to take note of the fact that the parties to the contract must, by the words they themselves chose to put in, be taken to have expressed by those words what they intended to achieve. That general proposition finds support in Halsbury's Laws of England, Hailsham ed., vo1. 10 p. 279, where the text is as follows:

"Where an instrument is in a printed form with written additions or alterations, the written words (subject always to be governed in point of construction by the language and terms with which they are accompanied) are entitled, in case of reasonable doubt as to the meaning of the whole, to have a greater effect attributed to them than the printed words.'"

(See also per Lord Greene M.R. at p.183). Upon that aspect, therefore, if any repugnancy or inconsistency does arise, as between the expression "On a month to month basis ....." in the First Schedule and clause 3(f), then clearly the answer is that the former prevails so that the monthly tenancy carries with it all the normal incidents of such a tenancy.

10. In truth, in my view, no repugnancy or inconsistency arises in the particular circumstances of this case. Here we have a clear statement of the form of tenancy which the parties wished to achieve, namely a monthly tenancy, arising from the completion of the blank space left in the First Schedule of the Agreement opposite the printed words "Term and date of Commencement". It is not inconsistent with such a tenancy that the landlord should have a special right to resume possession for a particular purpose. A clause such as clause 3(f) is common form in lettings by local and public authorities. As was pointed out, such a clause enables the landlord to resume possession of part only of the premises. The ordinary form of notice to quit can only, of course, be given with respect to the whole of the subject-matter demised. Further, I see no reason why the power of resumption may not be exercised at any time, that is to say not necessarily by a notice expiring with a current month of the tenancy. There is no need for me to come to a definite conclusion on that point, but I have considered whether some support for the view which I have tentatively formed can be found in the case of Wembley Corporation v. Sherren⁽⁵⁾. In that case, however, the resumption clause commenced with the words "If at any time". The learned judge, Finlay L.J., did not expressly place particular emphasis on those words, but no doubt was influenced by them because in giving judgment he referred to Soames v. Nicholson⁽⁶⁾ where the use of those words was a main feature of the decision. Even so, giving clause 3(f) a fair construction, it appears to me that prima facie it authorises resumption of possession at any time, there being no reason why the principle applicable to common law notices to quit, namely that such notices must expire with a current year, month or week of the tenancy, as the case may be, should apply to resumption clauses. However that may be, as I have said clause 3(f) was of substantial value to the Crown in that it enabled resumption of a part only of the premises demised.

11. Coming closer to the point in issue, I may refer to the following passage from Foa's Landlord and Tenant (8th Edn.) at pp.597-8 -

Undoubtedly, subject to the point of repugnancy, there is freedom of contract in this respect, that is to say the parties to a periodic tenancy may agree that it may be determined on whatever terms as to notice they like (see Re Threlfall⁽¹⁰⁾; King v. Eversfield⁽¹¹⁾; and H. & G. Simonds v. Heywood⁽¹²⁾ Thus, for example, in Allison v. Scargall⁽⁸⁾ a provision that the tenancy should determine on the 6th April (being the date of the expiry of the year of the tenancy) next following a sale of the premises by the landlord was held good.

12. The questions raised in the present case are (a) whether clause 3(f) of the Agreement was intended to deprive the Crown of its right as a landlord to determine the tenancy by an ordinary month's notice to quit or, on a fair construction is to be taken as so intended (which is the same thing); and, if so (b) whether the clause was repugnant to the nature of the tenancy and therefore void. In some of the relevant cases (as e.g. Doe d. Warner v. Browne⁽²⁾ and Cheshire Lines Committee v. Lewis⁽³⁾) the main question was as to the nature of the tenancy created. There were also subsidiary questions as to relief in equity (see Zimbler v. Abrahams⁽¹³⁾). In the present case these particular difficulties do not arise; it is agreed that the Agreement created a monthly tenancy by way of actual, present, demise. It then becomes a matter of construction whether clause 3(f) operated to deprive the Crown of its right to give a month's notice to quit. I see no reason to construe the Agreement in that way. The printed clause 3(f) had its advantages to the Crown, as I have endeavoured to show; there was a reason for it (which would be of more importance, of course, when the printed form was used to create tenancies of greater duration). In the Agreement now in question clause 3(f) was not expressed in so many words to be the only means whereby the Crown could determine the tenancy. There is no direct internal evidence in the Agreement that the Crown bargained away its right to determine the tenancy in the usual way, by notice to quit. In my opinion the case made by the Defendant company fails on this point. I see no reason to infer a bargain whereby the Crown relinquished the right to give notice to quit in exchange for clause 3(f). Further, if I had been of the opinion that clause 3(f) operated, whether by way of inferred bargain or otherwise, to deprive the Crown of the right to give the usual month's notice to determine the monthly tenancy, I would have held it to be void as repugnant to the nature of the tenancy expressly created. It would be clearly so repugnant, in my view, as amounting to complete inconsistency with the incidents of a monthly tenancy. It would be not a mere added condition, or a mere regulation of the conditions on which notice to quit might be given by the landlord. On the contrary, in my view it would have been a provision depriving the landlord of the right to determine the tenancy by a means inherently incident to the nature of the tenancy expressly created, namely by notice to quit. It would have amounted to an attempt to change the nature of the monthly tenancy, by destroying an essential incident of such a tenancy, not merely to regulate the length of notice or the terms on which it might be given. It would not be a question of regulation to a degree but of complete abrogation of the right to give notice. That in my view would necessarily be repugnant to the nature of the tenancy.

13. For these reasons I give judgment for the Crown plaintiff. It is agreed that it is unnecessary to give judgment for the relief asked for in paragraph (1) of the prayer, namely an order for possession. There will therefore be judgment for the plaintiff in the sum of $16,450 arrears of rent admitted to be due for the month of January, 1967 and for mesne profits at the same rate for the months of February, March and April, 1967, with costs.

23rd March 1968.

Representation:

Sheratte (Crown Counsel) for plaintiff.

Swaine (instructed by C.Y. Kwan & Co.) for defendant.

(1) (1944) 1 All E.R. 305.

(2) (1807) 8 East 165.

(3) (1880) 50 L.J.Q.B. 121.

(4) (1948) 2 K.B. 1.

(5) (1938) 4 All E.R. 255.

(6) (1902) 1 K.B. 157.

(7) (1906) 2 K.B. 599.

(8) (1920) 3 K.B. 443.

(9) (1948) 1 All E.R. 177.

(10) (1880) 16 Ch. D. 274.

(11) (1897) 2 Q.B. 475.

(12) (1948) 1 All E.R. 260.

(13) (1903) 1 K.B. 577 C.A.