Kwok Chun-hang and Another v. Leung Kar-wo

DCCJ007083/1980

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CIVIL JURISDICTION

ACTION NO. 7083 OF 1980

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Coram: H.H. Judge Caird in Court.

Date of Judgment: 27 March 1981

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JUDGMENT

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1. The plaintiffs, husband and wife, are the owners of premises known as 1st floor and car parking space No. 9, No. 54A Conduit Road, Yee Lin Mansion, Victoria in the Colony of Hong Kong standing on all those pieces or parcels of ground knowing as the Remaining Portion of Section A of Inland Lot No. 1661, the remaining portion of Section B of Inland Lot No. 1661 and the remaining portion of Section C of Inland Lot No. 1661.

2. The plaintiffs claim possession pursuant to Section 53(2)(b) of the Landlord and Tenant (Consolidation) Ordinance Cap. 7 and assert that the premises are reasonably required for occupation as a residence for their son Alex Kwok, who is over the age of 18. Mr. Larry Ko appearing for the defendant, a medical officer, did not call any evidence and accepted that the only issue to be determined by the Court was whether the plaintiffs can prove that these premises were ".......... reasonably required ........ as a residence ........" for Alex Kwok.

3. The plaintiffs reside at Flat B9, No. 20 Blue Pool Road, Happy Valley, premises owned by them which comprise approximately 700 sq. ft. in floor area. No other persons reside with them, and evidence was given by both the plaintiffs that the husband had an operation in August of 1978, after he suffered a stroke. Although no medical evidence was called the matter was not put into in dispute by Mr. Ko and it emerged from the evidence that the defendant, Dr. Leung had taken an interest in this. Indeed he had asked which doctor had performed the operation. This on the 31st of July 1979 when Madam Kwok visited the suit premises.

4. The Conduit Road premises are somewhat larger and are approximately 1,300 sq. ft. in area. These premises were purchased about 1966 and have never been occupied by the plaintiffs or any members of their family. During cross-examination, Madam Kwok claimed that the premises had been purchased for her son's occupation, when the intention to purchase was formulated in 1966. This when Alex Kwok was aged 14.

5. Madam Kwok explained there are 3 children of their marriage including Alex Kwok, all of whom are single and reside in Canada. She claimed that she did not know whether these children had applied for Canadian Citizenship. I found her lack of knowledge, as alleged, to be somewhat surprising and I also observed that she denied any knowledge as to what the fair market value for a month's rent was in respect of the Conduit Road premises. These answers adversely affected my view as to her credibility.

6. The Conduit Road premises are let at $2,665 per month, and according to the plaintiff's evidence, other than some assistance from the children, there was no other family income.

7. Madam Kwok also said that she did not know whether or not her son's fiancee had lived in Hong Kong, further the witness was evasive in answering questions relating to her son saying such questions should be put to the son.

8. There were no other properties owned by either plaintiff.

9. The other plaintiff Mr. Kwok Chun-hang also give evidence. He too didn't know what his son's job was in Canada, and didn't know what kind of company had offered Alex employment in Hong Kong.

10. The main witness for the plaintiff, was Alex Kwok. He is a young man aged 28, possessed of a Hong Kong Identity Card. He received his tertiary education in Canada and works as a Computer Programmer for the City of Calgary. He said he wished to return to Hong Kong and pursue his own business, eventually becoming self-employed. He claims that he had told his parents of this desire. Another reason for him to come back to Hong Kong was he was "born here and used to life style here, better to pursue ones own business here. Tax good here, also my fiancee likes Hong Kong". He claims that there would be no difficulty in finding a job and produced a letter purporting to offer him employment as a Computer Consultant at a monthly salary of $4,000.

11. His present income is Canadian $22,000 per annum which according to his evidence equals HK$8,066 per month with deductions from this totalling 27% i.e. $2,178 leaving his with a take home pay of $5,888 per month. These deductions comprise federal tax, provincial tax, unemployment insurance, Canada pension, City pension, (employers) medical deduction, and Union deduction.

12. The Hong Kong salary offered is $4,000 per month for 14 months per annum (2 bonuses) giving a net pay of $4,533 per month. Accordingly there is a deduction in round figures, of 25% in income if he were to accept the employment offered in Hong Kong. Of course as the witness observed, his income if increased in Canada brings about an increase in the rate of taxation and there would be a greater percentage deducted from the gross income.

13. He claimed that his reason for obtaining Canadian Citizenship 1974 or 1975 was "this enables me to work at many levels of Government in Canada". In other words it broadened his employment opportunities. "After my degree unable to find a job in my field, Citizenship helped."

14. The witness explained that he sent home to his parents the sum of $1,000 whenever he could afford it, and he tried to do this every two months. However on occasion he failed to meet this self-imposed commitment. Alex claimed that his fiancee should be able to obtain employment in Hong Kong and that she too was in gainful employment in Calgary, and that he doesn't envisage any difficulty in her obtaining employment in Hong Kong. I am of the view that she may have more problems in finding employment than he testified to. She is at present only learning Cantonese.

15. It had been said at least twice during the hearing that Alex is a Chinese wanting to return to Hong Kong to help his parents. However on the figures adduced by him his income drops by 25%. He would occupy the flat which at present provides the sole regular source of income to the parents (other than family contributions) and accordingly there would be an instant diminution of income of $2,665 available to the parents. This on the plaintiffs' and their witnesses's own evidence.

16. Such was the evidence of the plaintiffs and as was succinctly put by Mr. Ko, the real issue is whether the plaintiffs had made out their case "it all hinges on credibility, which is entirely a matter for the Court". He went on to submit that the plaintiffs' witnesses were not be believed. Mr. Ko argued that the son Alex Kwok made his "over all" decision before 1978. Then his father had his stroke in August of 1978 and yet after this the son proceeded to take up a new job. Mr. Ko also urged upon me that the Blue Pool Road premises could accommodate 4 persons despite the evidence of Alex Kwok that at present, at the time of hearing while he was residing there with his parents, during leave, he has to sleep on the settee in the living room.

17. I think it slightly relevant that Alex Kwok is returning to Canada to resume his employment before making any arrangement to come to Hong Kong and take up employment here. The Canadian connection has not yet been severed.

18. Reasonably required

19. I agree with my brother de Basto, when he stated that by introducing the word "reasonably" in the Section under review, that is Section 53(2)(b) of the Landlord & Tenant (Consolidation) Ordinance, Cap. 7 that the legislature has "interposted the protective element of objectivity" Lusher v. Hillard.⁽¹⁾ The onus of proving that the premises are reasonably required for the use as a residence of the landlord or the other persons nominated in the legislation rests clearly upon the landlord. He must establish by positive evidence not only that he is acting bona fide, but also that he reasonably requires possession.

20. The most oft quoted landlord and tenant case on the construction of the words "reasonably required" is that where Sheriff Blades K.C. said.

"My difficulty has been to determine whether the pursuer required the house reasonably, in the sense that she had a genuine present need for the house for her own occupation or has been moved by considerations or preference and convenience merely; for I think the words "reasonably required" connote something more than desire, although at the same time something much less than absolute necessity will do." Aitken v. Shaw ⁽²⁾

21. This view was approved of by the English Court of Appeal in Kennealy v. Dunne ⁽³⁾.

"The position seems to be that for a dwelling house to be reasonably required it must be the subject of a genuine present need on the part of the landlord."

22. In determining whether an application is bona fide I believe it is important for the Court to be cognisant of the fact that considerations, other than those stated in evidence, may well apply. I take judicial notice that when premises shelter under the umbrella of Part II of the Landlord & Tenant (Consolidation) Ordinance such premises would, if vacant possession is available, attract a great deal more rent than when a tenant is enabled to claim the protection of Part II as in most such instances the current market rental value is considerably greater that the amount paid by a protected tenant. This of course in a time of inflation. Also it would be unrealistic for any Court to ignore the situation, that in most instances when a vendor of property is able to give vacant possession the value of such property for sale purposes is considerably enhanced, in comparison with identical premises which if offered for sale are subject to tenancy. Even more so, in the case of domestic premises where the tenant enjoys the protection from Termination, of Section 53.

23. The legislature, of course, has not ignored these possibilities and has introduced sanctions in Section 53 i.e. Subsections (7) and (8) and also by the provisions of Sections 53(7B), (7C), (7D), added by Ordinance No. 6 of 1980 Section 5.

24. It is, if not notorious, obvious, that it is possible for a landlord to obtain possession, then to reside in such premises or even leave the premises vacant and then after 24 months sell such premises. In these circumstances it would be possible to obtain in many circumstances the henefit of a very substantial capital gain albeit there has been a delay of 2 years.

25. In approaching the question of "reasonably" a Court must I consider, bear in mind that Section 53 defines and limites a landlord's right to regain possession of premises from his tenant and as such the legislature has by this very section introduced statutory protection to tenants, despite contractural arrangements to any different effect entered into by the parties.

26. The cases make it clear that the landlord must prove a genuine present need and that this must be something more than a "desire". Of course, a family's needs may change as the family develops, and physical, emotional, financial and social conditions change for better or worse.

27. Conclusion

28. The key, of course, is the position of Alex Kwok, a young man with steady employment in Canada, a country whose citizenship he enjoys, engaged to a Canadian National, enjoying the benefits, albeit most are future benefits, available from the contributions deducted from his salary, claiming a desire to assist his parents, when by assisting his parents in the manner proposed he would have to contribute $2,665 per month (from a net income of $4,533 per month, not including his present contribution of $500 per month) merely to keep them in the position they now occupy. It was explained, perhaps unnecessarily, that he is Chinese and as such wishes to help his parents. There was a positive endeavour to project him as a filial Chinese son.

29. It may have been more practical and realistic had the plaintiffs sought possession of the Conduit Road premises for themselves and their son thus freeing the Blue Pool Road premises for letting at current market value, thereby effecting a change in their situation but still maintaining an income from the letting of property. This alternative was not pursued before me, nor another alternative as raised by Mr. Ko in his submission, namely whether four people could share the Blue Pool Road premises. In Hong Kong sharing accommodation is not uncommon, and indeed to many people of this territory 700 sq. ft. shared among four people would appear luxurious just as to others 700 sq. ft. shared among four people would be intolerable. There was no evidence before me as to this aspect.

30. I had considerable reservations as to the credibility of the plaintiffs' witnesses, in the context of "reasonably required" and reject the evidence of the plaintiffs and their witnesses. With the view I have formed as to credibility, I do not accept that the plaintiffs have even established a bona fide "desire". I am also of the opinion that even if I were to accept the evidence of all three witnesses unreservedly, the plaintiffs can establish nothing more than a "desire" for the premises. I observe there has been no evidence before me as to there being any motivation on the part of the plaintiffs other than as communicated to me during the course of evidence.

Representation:

(1) V.C.J. 1910 of 1980

(2) (1933) S.L.T. (Sh. Ct.) 21@22

(3) 1977 1 Q.B. 837 @ 844