Lee on and Another v. Choi Kam Shui

HCA002061/1970

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 2061 OF 1970

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Coram: Leonard J. in Court.

Date of Judgment: ...(illegible)

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JUDGMENT

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1. In this case the plaintiff claims possession of the premises known as No. 10, Tai Uk Wai, Ground floor, Tsuen Wan, In his statement of claim, he alleges that the defendant was a monthly tenant of the premises for business purposes at a monthly rent of $500 payable on the first day of each calendar month, that the Landlord and Tenant Ordinance does not apply to the premises and that the defendant's tenancy was correctly terminated in accordance with the Tenancy (Notice of Termination) Ordinance. The defendant, in a sloppy pleading, admits the monthly tenancy and admits its termination and that the Landlord and Tenant Ordinance does not apply to the premises. However, he claims to be in lawful possession under an oral agreement entered into on or about the 1st May 1957 whereby the plaintiffs agreed to let the premises for a fixed term of 20 years at a monthly rent of $500 per month in consideration of the payment of $1,000 deposit and $20,000 "construction money". He claims that a total sum of $21,000 in cash was paid by him to the 1st plaintiff and that the 1st plaintiff signed the Chinese receipt to which I will refer in detail later. The defendant further claims to be entitled by reason "of the provisions of sections 2(a) and 3(ii) of the Tenancy (Notice of Termination) Ordinance, to security of tenure until the 30th April 1977" and then claims that that Ordinance does not apply to the tenancy! What he clearly means is that he is entitled to security of tenure by reason of the oral agreement earlier alleged.

2. In their reply, the plaintiffs plead the Statute of Frauds. In their Rejoinder filed and served with the permission of the court, the defendant claims that there has been a sufficient part performance of the oral agreement to take the case out of the application of the Statute of Frauds "by reason of the said payment of $20,000 ......... and by reason further of the plaintiffs' permitting the defendant to remain in the premises as a result of the (oral) agreement". At the trial, the defendant, by consent, amended his rejoinder so as to allege "entry on" the premises as part performance in addition to "remaining thereon".

3. On these pleadings the onus of proof was clearly on the defendant and in an effort to displace it the defendant and his wife gave evidence which the plaintiffs in turn sought to meet by giving evidence themselves. The only evidence before me, therefore, was documentary evidence and that of interested parties.

4. The defendant alleged that towards the end of March 1957 he met the 1st plaintiff as a result of a street poster advertising the premises; that at this meeting, the plaintiff informed him that a tenancy agreement could only be signed when permission to occupy the premises was given, and that the defendant could in the mean time enter the premises on the understanding that in addition to rent he would pay a capital sum of $20,000 together with $1,000 as deposit. He alleged that the plaintiffs told him that he could have a 20 years lease on such payment. He further alleged that on the 1st May 1957, he, one Choi Yat Fan and his wife met the plaintiffs in a tea house in Castle Peak Road whereupon he paid to the 1st plaintiff the sum of $21,000 and received from him in return a receipt in the following terms:

"By this note Choi Kam Shui paid me HK$1,000 as deposit and furthermore construction money $20,000, tenancy to start from today for a term of 20 years."

This receipt purports to be signed by the 1st plaintiff and purports to bear his chop in addition to his signature. It was written on the back of a receipt to which I refer as the "school receipt" which in its turn purports to be issued by the Tai Uk Wai School for tuition fees received from Lee Chun Yau who, I am told, is one of the sons of the 1st plaintiff. The school receipt purports to bear the chop of the school in two places once on the body of the receipt and once in part on its extreme left hand side giving the impression that when it was affixed, it was affixed partly on the receipt and partly on its counterfoil. In support of his claim to have entered the premises pursuant to the alleged oral agreement, the defendant produced a number of rent receipts the first of which was dated the 1st April 1957. This receipt purportedly evidences the payment of $250 for rent in respect of the premises for the period from 1st April to 31st May. It bears or purports to bear the chop of the 1st plaintiff again in two places once on the body of it and once partially on its extreme left hand side again as if it had been stamped both on the receipt and its counterfoil. The defendant further produced a receipt dated the 1st of June 1958 for the sum of $250 as rent for the month of June 1958 and a receipt dated the 1st July 1960 for a similar amount in respect of that month both of which were similarly chopped. The defendant further produced further rent receipts issued in 1960 and 1961 the sum of which purported to be signed by the 1st plaintiff. He had failed to disclose any of the rent receipts in his affidavit of documents and claimed that his failing to do could be attributed to a failure to recognise their relevance in time to include them.

5. In explanation of the receipt for $21,000 the defendant stated that it was written on the back of the school receipt when that receipt was produced at the meeting of the 1st May 1957 from the pocket of the 1st plaintiff's son.

6. He further explained that the oral agreement was to the effect that original rent of $250 might be increased to a sum not exceeding $500 per month when the defendant's business profits permitted such an increase. He said that consequent on this arrangement by 1962 the rent was increased to $300 per month and by 1965 to $500 per month. The oral agreement alleged in evidence therefore differed considerately from that pleaded.

7. The 1st plaintiff in evidence denied that any such oral agreement was made, denied receipt of the sum of $21,000, denied that he had signed or placed his chop on the receipt for that sum and denied that he had signed or chopped any of the rent receipts produced by the defendant.

8. The second plaintiff, who was a son of the 1st plaintiff but not the son whose name appeared on the school receipt, gave evidence that the meeting in the tea house, at which the defendant said he had been, never took place. Choi Yat Fan who, according to the defendant, had been at that meeting was not called by either party to give evidence. To explain his absence the defendant alleged that he Choi had been seen twice by the 1st plaintiff since the issue of the writ.

9. I am, on the evidence, persuaded, on the balance of probabilities, and I find that a meeting took place between the defendant and the 1st plaintiff sometime immediately prior to 1st April 1957 and that at that meeting it was orally agreed that the defendant should enter into the premises on the 1st April 1957 the parties sharing the belief (which apparently proved correct) that permission to occupy would be granted by Government during the month of April. This finding is supported by the rent receipt dated the 1st April 1957 for the sum of $250 for the period from the 1st April to the 31st May. It seems clear from the later receipts that the monthly rent initially to be paid by the defendant was $250 per month and hence he was being permitted to occupy the premises for the two months - April and May 1957 - on payment of rent for the month May only. His occupancy during April was I find anticipatory of the grant of the occupation permit and of the payment of the sum of $21,000. Having heard the defendant and considered the first rent receipt which I have mentioned I find that the parties regarded the oral agreement to grant a lease as being, as it were, in escrow until occupation was permitted by government and the sum of $21,000 paid over. In the meantime during the month of April the defendant occupied the premises rent free but having paid rent for the month of May in advance.

10. The essential issue of fact separating the parties at the hearing was whether the defendant did pay to the 1st plaintiff the sum of $21,000 on the 1st May 1957 and whether the receipt for this sum is a genuine one duly signed by the 1st plaintiff. I was not impressed with the veracity of any of the witnesses called but, on the balance of probabilities I find for the defendant on this issue. It is impossible to believe that the defendant was so devious as to find and keep a school receipt, issued in April 1957, in order to use it subsequently as the basis for the forgery of the receipt for $21,000. I find it equally impossible to believe that he was so devious as to forge the school receipt itself. This would have necessitated the making of a special chop for the school. Furthermore the receipt was in the main a printed form, only parts being inserted in writing. As to the receipt for the sum of $21,000 this is written with two pens: the wording which relates to the deposit $1,000 with one pen and the balance relating to the payment of $20,000 with another. The plaintiff does not, however, allege that the words relating to the sum of $20,000 were added after he had signed and chopped the receipt. He alleges that he never signed and chopped the receipt at all. This I find quite impossible to believe. I therefore find that there was such an oral agreement as the defendant claims and that the parties regarded this oral agreement as completed only by the payment of the sum of $21,000 on the 1st May 1957 as arranged between the parties immediately before the premises were occupied.

11. On these facts the first question that I have to decide is whether there was part performance of this oral agreement sufficient to take the case out of the application of the Statute of Frauds. Mere payment of money has never been regarded as sufficient part performance since, firstly, a mere payer of money has no equity except the right to recover it and, secondly, a payment of money is not unequivocal and does not of its own nature demonstrate that some contract relating to land has been made. To constitute part performance, the act or series of act relied must be explicable only on the assumption that some contract relating to land has been made. Again, the decided cases distinguish between entry into possession (which in this case I have found to have taken place before the contract was completed) and remaining in possession because the existence of a contract relating to land can never be the only explanation of remaining in possession. In this case, however, we have a payment of money evidenced by the receipt which itself refers to a contract in relation to land. We have a tenant in possession of the particular premises in question together with rent receipts the first of which covers the months of April and May 1957 together with evidence of the plaintiff corroborated by later rent receipts that the initial agreed rent per month was $250. I find as a fact that these rent receipts are all genuine one and when all these factors taken together, I consider them to be sufficient part performance to take the case out of the Stature of Frauds so as to let in the oral contract. I therefore must consider whether the oral contract as proved would itself have been sufficient to found an action for specific performance had the defendant (as in my opinion he should have done) counterclaimed for that remedy. One of the matters which has caused me some difficulty in this connection is the manner in which the oral agreement is pleaded. The defence alleges that the oral agreement was one to let the premises for a fixed term of 20 years at a monthly rent of $500 per month; the defendant has stated in evidence that the oral agreement was to let the premises for the fixed term at a monthly rent of $250 subject to increases as his business improved provided that the total rent payable should not exceed $500 per month. Had there been any evidence from the plaintiff as to the terms of the oral agreement I might have found it difficult to accept the defendant's version of its precise terms. Certainly it was not as pleaded and no application has been made to me to amend the defence. Nevertheless the plaintiff has not been prejudiced by the fact that the oral agreement as proved differs from that pleaded. He has denied any agreement. I, therefore, consider that to do equity I must overlook these faults in what is an appeal to the equitable jurisdiction of the court. I would however comment that anything but the most perfunctory investigation by the solicitor for the defendant would have led to his discovering the early rent receipts which clearly show an initial rent of $250 per month. This discovery in its turn would have elicited what I have held to be the true oral agreement. As however, I am satisfied that an oral agreement was entered into, that the 1st plaintiff received $21,000 in pursuant of the oral agreement, and, by issuing the receipt which he claims is a forgery, put the seal of his approval on the earlier occupation of the premises by the defendant and that all the factors relied on as part performance when taken together and when the receipt for the sum of $21,000 is read with them show unequivocally that the oral agreement related to the premises, I consider that there is part performance which would have entitled the defendant to a decree of specific performance had he sought one. It would be highly unequitable to permit the plaintiff to succeed in this action. I accordingly dismiss it with costs.

Representation:

C. Ching (Woo & Woo) for plaintiffs.

M. Asome (Smart & Co.) for defendant.