Annie Chan v. Lam Mou-sang and Others

DCCJ001272/1975

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT TSUEN WAN

CIVIL JURISDICTION

ACTION NO. 1272 OF 1975

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Coram: S.H. Mayo, District Judge

Date of Judgment: 9th July 1976

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DECISION

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1. This application is made to me by a sub-tenant and 2 sub sub Tenants for an order that they be added as defendants in this action and that they be allowed to appear and assert their rights in the action and in particular their right to security of tenure as sub Tenants pursuant to the provisions contained in sec. 53(5) & (6) of Cap. 7. There is also an application that the judgment obtained against the defendant who is the original Tenant should be set aside. As will be seen hereafter the main issue which arises under this application is the question of the terms under which the sub Tenant and sub sub Tenants are entitled to remain in the premises and I am satisfied that this issue is separate and distinct from the situation which prevails between the Plaintiff, the landlord and the defendant the Head Tenant and accordingly I do not propose making an order setting aside the judgment.

2. The circumstances of this case are slightly unusual in that the sub Tenants and sub sub Tenants did not seek any redress when the Plaintiff served notices at the premises to the effect that a judgment had been obtained against the defendant and that vacant possession of the premises was being sought. In the normal course of events the Court Bailiff should have proceeded to enforce the order for vacant possession when it was obtained but this was not done.

3. Mr. Gregory Chan who represents the sub Tenant and sub sub Tenants argued that his clients were entitled to security of tenure by virtue of the provisions contained in s. 53(5) & (6) of Cap. 7 and in particular drew my attention to the wording of subsection (6) which states that where there has been a lawful subletting (which it was conceeded in this case was so) the sub Tenant "shall be deemed to become the Tenant of the landlord on the same reasons as he would have held from the Tenant if the Tenant's tenancy had continued".

4. The problem which arises in this case is that the defendant owed arrears of rent at the rate of $400 per month from the 20th May, 1973. It is Mr. Lam's contention that the sub Tenant and sub sub Tenants are entitled to stand in the shoes of the defendant but are not obligated to discharge all the arrears of rent which are due and owing to the landlord. So far as I am aware this issue has not been judicially determined in Hong Kong. The issue is of importance in the present proceedings as I am informed that the sub Tenant and sub sub Tenants do not have the financial capacity to discharge the said arrears and if an order is made for them to be given security of tenure conditional upon the arrears of rent being discharged they would be unable to comply with such conditions and thereupon would forfeit the protection afforded to them by s. 53(5) & (6) through no fault of their own.

5. Mr. Choi, who acts for the landlord, in an able submission to me argued that s. 53(5) & (6) was based s. 18 of the Rent Act 1968 which is consolidating legislation of previous U.K. Rent Acts including the Increase of Rent and Mortgage Interest (Restrictions) Act 1920. He therefore submitted to me that it was appropriate to cite English case law on the subject. He cited 2 cases to me which were relevant to this situation. The first case was Gray & Bonsall.¹ This case established the general principal that relief against forfeiture should be granted upon the condition that the sub Tenant should pay all rent in arrear in respect of the said property. This case was decided prior to the 1920 Act and accordingly is dubious authority for the proposition that a similar condition should be imposed where the security of tenure being claimed arises from a statutory right. However the principals laid down in this case were followed in the case of Chatham Empire Theatre (1955) Ltd. and Ultrans Ltd. & Others.² In addition to this principals were propounded to provide for a situation arising similar to the position in the present proceeding where there is multiple occupancy of the interests in the land. It was held that sub Tenants who only held a part of the premises were liable to contribute the proportion their rent was to the rent of the whole of the premises. In the present proceedings the rent under the Head tenancy is $400 per month and the rent payable by the sub Tenant is $700 p.m. Clearly the rent payable by sub sub Tenants should be calculated on the rent payable under the sub lease rather than the Head lease.

6. Mr. Chan argued that the Chatham Empire Theatre case related only to business premises and therefore could not be adopted as an accurate analogy to the present proceedings which concern domestic premises. I do not agree with this.

7. I am satisfied that the 2 cases I have referred to are of assistance to me and that it is proper for the principals laid down therein to be applied to the present case. It would be quite wrong for me to provide the sub Tenants and sub sub Tenants with security of tenure without protecting the interests of the landlord. I have considered the overall text of sec. 53 and it is evident to me that there is no inconsistency in my holding that the security of tenure for the sub Tenant and sub sub Tenants shall be conditioned upon all the arrears of rent I have referred to being discharged by them in accordance with the aforesaid principals. I therefore grant this application on the following terms:

Representation:

Mr. J. Choi of (K.C. Yung & Co.) for Plaintiff.

Mr. G. Chan of (Lau Wong & Chan) for Applicants.

1. 1KB 1904 P. 601.

2. 2AER 1961 381.