Chui Fun v. Lo Wah and Another
Read the full judgment text of DCCJ 1186/1980 on BabelCite. This District Court judgment.
1. This is a claim by the plaintiff as landlord for possession of the premises at Flat 7, 10th floor, Luen Tak Apartment, No. 45 Smithfield Road, on the grounds of they were unlawfully sublet by the 1st defendant to the 2nd defendant.
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DCCJ001186/1980 IN THE DISTRICT COURT OF HONG KONG HOLDEN AT VICTORIA CIVIL JURISDICTION ACTION NO. 1186 OF 1980 -----------------
----------------- Coram: H.H. Judge Hooper Date of Judgment: 20th June, 1980. ----------------- JUDGMENT ----------------- 1. This is a claim by the plaintiff as landlord for possession of the premises at Flat 7, 10th floor, Luen Tak Apartment, No. 45 Smithfield Road, on the grounds of they were unlawfully sublet by the 1st defendant to the 2nd defendant. 2. It is common ground that the plaintiff is the registered owner of the suit premises and that they are situated in a new building and that the tenancy is a protected tenancy under Part II of the Landlord & Tenant (Consolidation) Ordinance, Cap. 7. It is common ground that the suit premises were let to the 1st defendant for domestic purposes by a tanancy agreement in Chinese dated 15th May 1976 for a term of three years commencing on 15th May 1976 and terminating on 14th May 1979. The rental of $700 per calendar month was payable in advance on 15th day of each and every calendar month. It is common ground that after the expiration of the said tenancy, the said premises were let to the 1st defendant on a monthly basis at the same rental and on the same terms as the said agreement. 3. The said Chinese agreement has been admitted into evidence as document No3 of an agreed bundle Exh. P1 and it contains the following term:-
Paragraph 3 of the said Chinese agreement provides, inter alia, -
4. It cannot therefore be disputed that the tenancy agreement contained a clause against subletting and provided for termination in the event of breach. 5. In paragraph 5 of his Particulars of Claim the plaintiff alleged that the 1st defendant in breach of the said term in the agreement, wrongfully sublet the whole or part of the said premises to the 2nd defendant there by committing a breach of that particular term in the tenancy agreement. 6. The basis of the plaintiff's claim is contained in paragraphs 6 & 7 of the Particulars of Claim which are set out below -
7. Paragraph 8 of the Particulars of Claim merely sets out the allegation that the annual rental or rateable value of the said premises does not exceed $15,000. This is however an unnecessary pleading in view of the fact that it is common ground that Part II of the Landlord & Tenant (Consolidation) Ordinance applies and the District Court therefore has jurisdication whether the annual rental or rateable value of the said premises exceeds $15,000 or not. 8. So far as paragraph 6 of the Particulars of Claim is concerned it is my view that this is misconceived. A tenancy which is protected by Part II is not terminated by the issue of the writ. It may however be terminated under Section 53 where the plaintiff relies upon a breach of the tenancy agreement. He can sue under subsection (2)(a) of that section. In addition to this he may also sue on a statutory ground provided by subsection (2)(e). 9. These two provisions are set out below -
10. By virtue of subsection (1)(b) of Section 53 the tenancy will not terminate until the order of the Court under subsection (2) takes effect. Therefore even though there may be breaches of the original tenancy agreement, the tenancy will continue under the provisions of Part II until the order of the Court takes effect. The order for possession takes effect on such date as the Court may order, but cannot be later than three months from the date of such order. (Subsection (4)). 11. Although the plaintiff has not made it clear that he is suing for possession under subsection (2)(a), he has made it clear that it is his contention that the 1st defendant has committed a breach of the term against subletting and that his remedy under the agreement is to recover possession. Since the tenancy is protected by Part II, the plaintiff must proceed under Section 53(2)(a) in respect of a breach of the agreement which but for this part would have been a cause for forfeiture. 12. Has the plaintiff succeeded in establishing a ground for possession under Section 53(2)(a)? 13. It is my view that he has not. There is clear evidence before me that both the 1st defendant and his family and the 2nd defendant and his family are residing in the suit premises. There is clear evidence that only one room in the suit premises has been sub-let by the 1st defendant to the 2nd defendant. Mr. C.P. Lai for the defendants contends that a subletting of part of the premises does not constitute a breach of the term in the agreement. He supported this argument by reference to Halsbury's Laws of England 3rd Edition Volume 23 para. 1336 and in particular to the following part of the text -
14. He also relies upon two authorities, namely Cook v. Shoesmith(1) and Esdaile & others v. Lewis,(2) which bear out this proposition. 15. Mr. Francis Chong for the plaintiff has argued that the Court should not apply these cases in Hong Kong where the conditions are quite different from the conditions in Britain. It is however my view that the authorities quoted by Mr. C.P. Lai are extremely persuasive and that the principles enunciated in those cases should be applied in Hong Kong. It is up to the parties to say what they mean in the tenancy agreement and if the landlord wants to restrict the tanant in such a way that he cannot sublet the whole or a part of the premises, then this must be clearly spelt out in the tenancy agreement. After all at common law there is no implied term against subletting. 16. I therefore hold that by subletting a single room in the suit premises to the 2nd defendant, the 1st defendant did not commit a breach of the tenancy agreement and that any claim under Section 53(2)(a) must fail. 17. Has the plaintiff succeeded in establishing a ground for possession under Section 53(2)(e)? 18. When the original tenancy was created, being a tenancy for a fixed term of three years it was not protected by Part II. However it is common ground that when the fixed term terminated on 14th May 1979 by the effluxion of time, a periodic tenancy was created on a monthly basis to which Part II applied. That tenancy has therefore been continued as a result of the provisions of Part II. It is common ground that this tenancy is one to which Part II applied immediately prior to the 18th December 1979. Its determination is therefore governed by Part II as recently amended. It would thus appear to be the law that the plaintiff would be entitled to an order for possession if he could show that the 1st defendant, sublet a part of the premises to the 2nd defendant after 14th December 1973 without the written consent of the plaintiff. Mr. C.P. Lai has argued that the plaintiff cannot succeed under this subsection because the subletting occurred before the premises became protected by Part II at a time when it was perfectly lawful for the 1st defendant to sublet to the 2nd defendant under the agreement. 19. There is clear evidence before this Court that the sub-tenancy was originally created back in 1976 on the 21st June. This evidence consists of the rent receipts issued by the 1st defendant to the 2nd defendant, (Exh. D1 and Document No. 4 of Exh. P1) and the evidence of both the defendants. This evidence was not challenged at all and I am satisfied that it does establish that the 2nd defendant has been the sub-tenant of the 1st defendant continuously since 21st June 1976. Since the principal tenancy in 1976 was not a protected tenancy, and since the sub-letting of a part of the premises was not in breach of the term in the tenancy agreement, the sub-tenancy of the 2nd defendant was not an unlawful tenancy at the time when it was created. It was a periodic tenancy from month to month at a rent of $220 per month. It was therefore, itself, a protected sub-tenancy under Part II. It could itself only be terminated in accordance with the provisions of Part II. 20. Now it is trite law that a sub-tenancy cannot be created for a longer term than the tenancy out of which it has been created. When therefore the sub-tenancy was created in June 1976 it could not be granted for a longer term than the fixed term of the principal tenancy. It is my judgment that when the principal tenancy terminated by the effluxion of time on the 14th May 1979, then the sub-tenancy also terminated. This is because Section 53(1)(c) provides that a sub-tenancy shall terminate where the tenancy out of which the sub-tenancy was created is itself terminated. 21. There is a proviso however that upon such termination Part II shall apply to any tenancy thereupon arising by operation of law which would of course be a lawful tenancy. 22. It is my view that this proviso does not assist the sub-tenant in the present case. His sub-tenancy terminated on 14th May 1979 and there was no lawful sub-tenancy thereupon arising by operation of law. What happened was that the 1st defendant, by holding over, with the consent of the landlord (plaintiff), having paid rent which was accepted by the landlord, became a tenant who for the first time was protected by Part II. If he wanted to avoid giving the landlord a ground for possession under Section 53(2)(e) at that stage he should have applied for the written consent of the landlord to continue the sub-tenancy which had terminated on 14th May 1979. The fact that he did not do so put him in breach of the provision's of Part II and gave the plaintiff a potential ground for possession. 23. I am satisfied that, subject to what I say on the Defence of waiver, the plaintiff has succeeded in establishing a ground for an order for possession under Section 53(2)(e). 24. Waiver 25. It has been specifically pleaded in the amended statement of the defence of both defendants that if the sub-tenancy constituted a breach of the terms of the tenancy (which was denied) it had been waived by the plaintiff. The defendants in their evidence maintained that the plaintiff was aware of the sub-tenancy and in fact had given express permission orally to the 1st defendant to sublet before the 1st defendant's tenancy had been created. It was, on the other hand, the plaintiff's contention that he knew nothing about the sub-tenancy until the 17th January 1980 when he and his two sons went to the suit premises to 'clarify' a dispute which had arisen concerning the payment of rent, and when he discovered for the first time that the premises had been sublet to the 2nd defendant. 26. The Law 27. There is clear authority that waiver is a defence which may be raised where the plaintiff aeeks an order for possession under Section 53. See CHUK Yau-cheong & LEE Miu-ying.(3) In the course of his judgment the learned Chief Justice had this to say -
I have also been referred to SUNG Hing-chuen v. CHEUNG Chui(4) in which a claim for possession was brought under Section 53 for breach of a condition that the premises should be used for domestic purposes. The learned trial judge considered the defence of waiver, and whilst he appeared to recognize that it was available where possession was sought under Part II, he nevertheless exercised his discretion against granting relief from forfeiture, having regard to the defendant's behaviour which he considered was a flagrant disregard of the tenant's obligations. 28. It appears to have been overlooked by everybody in that case that the defendant by using the premises primarily for industrial purposes, albeit in breach of the agreement nevertheless took the tenancy out side the protection of Part II. This is because, by virtue of Section 51(2)(b), premises which were originally let as a dwelling, are deemed to have been let for non-domestic purposes if the user is changed at some subsequent time to non-domestic user. When the plaintiff in that case filed his action it appears from the judgment that the tenancy was a non-domestic tenancy and therefore not governed by Part II and that an order could not therefore be made under Section 53. 29. However the law with regard to waiver in respect of tenancies enjoying protection under the rent control legislation, is neatly set out in that judgment. 30. I have reached the conclusion that there was no waiver in the present case. Had the landlord been aware of the fact that the 1st defendant had a sub-tenant in the premises, it seems surprising that he would not have sought possession on this ground before he said he became aware of it on 17th January 1979. He clearly wanted the premises back and had refused to accept rent as from 15th December 1979. I disbelieve the defendant when he says that the plaintiff went to the suit premises with his two sons on 17th January 1979 for the purpose of collecting the rent for the two months, December and January. I am satisfied that since the defendant's wife was claiming to have paid the rent for December to the plaintiff's daughter-in-law, and since this was disputed by the plaintiff, this was the reason why the plaintiff and his two sons went to the suit premises on 17th January 1980. I am satisfied that the plaintiff discovered the presence of the 2nd defendant as a sub-tenant on this occasion. It was then that he demanded that the rent receipt should be handed over and although the plaintiff denied that it was mentioned that the receipt was required to be handed over to the Inland Revenue Department, I am satisfied that he did give some sort of explanation along these lines, rather than reveal the real purpose for which he wanted the receipt, which was of course that it should be produced as evidence in Court. I am not satisfied that it has been proved on a balance of probabilities by the defendant that the plaintiff was aware of the sub-tenancy of the 2nd defendant at any time from the time when the fixed term tenancy expired on 14th May 1979 and the time when he and his two sons went to the premises on 17th January 1980 or before that date for that matter. D2's evidence that the plaintiff bad met him before that date was far from convincing. I am satisfied that the rent receipt Document 4 of Exh. P1 was only handed over to the plaintiff on condition that he would accept two months' rent in respect of the rent which became due on 15th December 1979 and 15th January 1980. The fact that the plaintiff accepted the rent in these circumstances does not amount to a waiver. He brought this action on 26th February 1980 within a reasonable time after discovering the presence of the sub-tenant in the premises. 31. I therefore hold that the plaintiff has succeeded in establishing a ground for possession of the suit premises under Section 53(2)(e) and that the defendants' defence of waiver does not succeed. 32. I therefore order possession of the suit premises for the plaintiff under Section 53(2)(e) with costs to be taxed on the upper scale, I order that the 1st defendant pay to the plaintiff rent and/or mesne profits at the rate of $700 per month from 15th February 1980 till vacant possession is delivered up.
Representation: Mr. Francis Chong of Tsang & Chau for Plaintiff. Mr. C.P. Lai of C.P. Lai for both defendants. (1) 1951 1 K.B. 752 C.A. (2) 1956 2 All. E.R. 357 C.A. (3) Civil Appeal No. 14 of 1979. (4) 1978 D.C.L.R. 67 |