Wong Che (or Chu) v. Lee Kin Man and Others

LDLA014834/1982

Landlord & Tenant - claim for possession under section 53(2)(b) of Landlord and Tenant (Consolidation) Ordinance (Cap 7) - premises required by legal personal representative of deceased intestate for cooupation as a residence for one of daughters (over 18 years of age) of intestate - whether occupation of premises by one of several bene-ficiaries interested in residuary estate of deceased intestate would be breach of trust - oral "transfer" of tenancy by 1st Respondent (tenant) to 2nd Respondent - notice to quit served on 1st Respondent, but not on 2nd Respondent - whether oral transfer operated as assign-ment or sub-lease - Sections 6,7 & 8 of Law Amendment and Reform (Consolidation) Ordinance (Cap 23).

Held: (1) on facts, occupation by one of persons beneficially interested in estate of intestate would not be a breach of trust on part of legal personal representative: (2) oral transfer not an assignment of premises to 2nd Respondent; notice to quit served on 1st Respondent sufficient to terminate contractual tenancy.

Dates of Hearing: December 17, 1982; January 3, 19, 1983.

Date of Judgment : 4th February 1983

IN THE LANDS TRIBUNAL OF HONG KONG

HOLDEN AT KOWLOON

CIVIL JURISDICTION

ACTION NO. 14834 OF 1982

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BETWEEN

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Coram: Presiding Officer, Judge Downey

Date: 4th February, 1983

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JUDGMENT

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1. On the 1st September 1982, the plaintiff issued a writ, seeking recovery of possession of domestic premises on the 3rd floor of 250 Ki Lung Street, Kowloon, ("the premises"), on the ground that he reasonably required them for occupation as a residence for his daughter, Queenie Wong Sai Wah, aged over 18 years. The seven defendants were joined as parties on the basis that the premises had been let to the first defendant, who had sublet or parted with possession thereof to the other defendants. Only the second and sixth defendants filed a defence, by which they admitted that they were sub-tenants of the first defendant. On the first day of the hearing (17th December 1982) all defendants, except the fifth and seventh, were present. On the second day of the hearing (3rd January 1983) only the second and third defendants were present. They were the only defendants who gave evidence before me.

2. In substance and reality, the contest at the trial was between the plaintiff and the second defendant, who resisted tae plaintiff's claim on two main grounds, namely:

I will explain, later, how the second ground came to be canvassed, despite the admission in the second defendant's formal pleading.

3. The first ground should, perhaps be sub-divided into two points, one involving essentially a question of law, the other turning essentially on a question of fact. The first point, advanced by Miss Fung, on behalf of her clients, is that the plaintiff cannot succeed in these present proceedings because he is seeking to recover possession, as the administrator of the estate of his first wife ("the deceased ), of premises formerly owned by her, for the benefit of only one of the persons, beneficially entitled to the estate of his former wife, she having died intestate on the 11th March 1975. Her second point is that the plaintiff has not proved that he bona fide needs to recover the premises as a residence for his daughter; he is really seeking to get more rental income from the premises. (She relies on her first point, and the usual hardship to the occupants, to support her submission that it would be "manifestly unjust" to make an order.)

4. On the first point, I have had the benefit of argument on a namely number of English decisions, namely Sharpe v Nicholls [1945] KB382; Parker v. Rosenberg [1947] KB371; Patel v Patel [1981] IWLR 1342, [1982] 1ALL E.R. 68, and the recent decision of the Court of Appeal in Shek Yee-wan v. Leung Mui [1982] HKLR327. In my judgment, these authorities indicate that to succeed in obtaining an order under section 53(2) (b) of the Landlord and Tenant (Consolidation) Ordinance, cap 7, a legal personal representative must establish the following matters:-

5. In the present case, there is no doubt that the plaintiff has fulfilled the first two requirements. He is clearly the landlord (of. section 49 of Cap 7 and Shek Yee-wan v. Leung Mui, supra). The proposed resident is his daughter, who is now aged 25 years (See Exh. P. 5) The only question is whether her occupation of the premises as a residence for herself and her future husband, since she intends to marry if her father succeeds in this application, would constitute a breach of trust on the part of the plaintiff. Nothing turns upon the fact. that her intended husband is not a beneficiary under her mother's estate.

6. Miss Fung submitted that it would be a breach of trust, because the plaintiff's daughter is not the sole beneficial owner of the premises. Strictly speaking she is beneficially entitled to no more than one-sixth of the proceeds of sale of the residuary estate of the deceased, because the deceased left a surviving spouse, the plaintiff, and three children, namely Wong Sai Wah, Wong Yee Wah, now aged 27, and Wong Hin Kong, now aged 24. Accordingly, subject to the statutory charge in favour of the plaintiff in the sum of $25,000,he holds one half of the deceased's residuary estate, on the "statutory trusts" for Queenie and her siblings. (of sections 4(3), 5(1) and 9 of the Intestates' Estates Ordinance, cap. 73.) By virtue of section 62(1) of the Probate and Administration Ordinance (cap 10), it. seems to me that he holds such residuary estate on trust to sell and convert the same into money, but has power to postpone such sale and conversion "for such period as [he]....... may think proper," The extent of his power to appropriate any specific property or asset in specie, in satisfaction of any beneficiary's interest under the 'statutory trusts" is, in my view, not entirely clear. Section 7 of the Intestates' Estates Ordinance (and, perhaps, section 5(1)(d) thereof) appears to give a restricted power in respect of personal chattels only. Whether, in the case of an intestacy, section 54(4) of cap 10 gives a personal representative a much wider power to appropriate immovable property, comprised in the estate of a deceased, to one of several beneficiaries under the "statutory trusts", is a question which I am disinclined to answer in the context of the present case, as I have only had the benefit of argument on the effect of section 70 of Cap 10. Although I drew attention to section 65 of that Ordinance, I have not had the benefit of any argument on. it's scope. Nor have I been referred to any other statutory provisions which may affect the situation

7. I do not consider that the mere fact that Queenie's beneficial interest is, or may be confined to, a share of the proceeds of sale of the deceased's residuary estate, and that she may have no direct beneficial interest in the premises, is a sufficient reason for refusing an order in this case. If it were, Patel v Patel, supra would surely have been decided differently. Furthermore, to refuse an order for that reason alone would imply that the exercise of the legal personal representive's statutory power to postpone the sale and conversion of assets, forming part of the estate, would per se, be a breach of trust on his part. That might be so in some circumstances. But I do not think that retention of a dwelling, as a home or residence for the beneficiary or one of several beneficiaries, would be a breach of trust, unless the circumstances are very special or wholly exceptional. In my view, that would, in general, be a proper exercise of a trustee's statutory power of postponing a sale of trust property.

8. Having regard to the explanation of earlier English decisions in Patel v Patel, supra, and in Harrison v Hopkins [1950] 1 K.B. 124, it seems to me that a landlord-trustee, seeking to recover premises under section 53(2)(b) of Cap 7, should only be refused an order for possession in circumstances where it is clear and obvious that his intended user of the premises would be a breach of trust. This was the case in Sharpe v Nicholls, supra, because the widow-trustee would in the absence of evidence of any beneficial interest in the cottage, be in breach of her fiduciary duty not to profit from the trust, if she occupied the cottage. In Parker v Rosenberg, supra, the trustees would not have been guilty of a breach of trust by allowing Miss Marsh, the tenant-for-life, to live in the premises (unless the rule in Howe v. Dartmouth (1802) 7 Ves 137 could have been invoked). The claim failed because the trustees could not show that Miss Marsh was related to them, as paragraph (h) of Schedule 1 to the Act of 1933 required (i.e. the "second " matter which, in my view, a legal personal representative must establish in proceedings under section 53(2)(b) of cap 7). Miss Marsh could not rely on the statutory ground for recovery of possession for herself, because she was not the landlord of the premises.

9. The English decisions do not provide any guidance on the question whether it would be a breach of trust for a legal personal representative, or trustee, to allow one of several beneficial owners to occupy the premises in question. I think that it might be a breach of trust, because it is the duty of a trustee to hold the scales evenly and impartially between several beneficiaries, and not to favour one at the expense of another. Whether it would be a breach of trust in the instant case must, in my view, depend upon the circumstances of this case.

10. I do not think that I can regard Shek Yee-wan v. Leung Mui [1982] HKLR 327 as authority for the proposition that a landlord-trustee can reasonably require trust property for occupation as a residence by persons who are not solely or exclusively beneficially interested in the property in question. The report does not indicate whether the deceased landlord left a will or died intestate, or whether the members of "the family", who wished to break away, were the only persons beneficially entitled to the premises in question, or were members of a larger class entitled thereto. The decision turned solely upon the narrow question whether the personal representatives were landlords of the premises for the purpose of section 53(2)(b) of cap 7.

11. For the reasons I have given, I consider that I must decide whether, on the basis of the evidence before me, the plaintiff would be acting in breach of trust by allowing Queenie to occupy the premises, free of any charge. Insofar as Queenie's sole occupation of the premises might give her an unfair share of the deceased's estate, vis-a-vis the plaintiff's one-half share therein, I consider that there would be no element of breach of trust. By bringing these proceedings, the plaintiff would be regarded as acquiescing in any theoretical breach of trust. But, as there is absolutely no evidence that the other children of the deceased, i.e. Wong Yee Wah and Wong Hin Kong, have consented freely or at all, to the proposed use of the premises, I cannot assume that Queenie's sole occupation of the premises would not be a breach of trust. I cannot even assume that they have acquiesced in the manner in which the plaintiff appears to have utilised other assets of the deceased's estate, i.e. her interests in various business enterprises. (See items 9, 10, 11 and 12 of the schedule of assets contained in Exh. P. 2) But, I venture to suggest that the fact that the plaintiff may be guilty of breaches of trust, in the past, in regard to other assets of the deceased's residuary estate is not, necessarily, evidence that his intention to allow one of several beneficiaries to enjoy a retained asset would be a breach of his fiduciary duties. I consider that such a finding, which would be an adverse reflection on the character and integrrity of the plaintiff, should only be made if there is clear and obvious evidence that a breach of trust would result,

12. The evidence on this aspect is somewhat sparse. This may be due to the fact that it was not particularised as a specific issue by the pleadings, and my concern that these proceedings should not develope into a full-scale inquiry into the plaintiff's stewardship of the deceased's estate. However, it would seem that the plaintiff has continued to carry on the businesses of King's Investment Co. and Hop Shing Company, in. which the deceased had a 49% and 50% interest at the date of her death. I do not know whether the shares vested in the deceased have been sold or retained by the plaintiff. The flat at 213 Fa Yuen Street (item 14(a) in Exh. P. 2) was the former family home, but since the plaintiff's re-marriage, in 1976, it has been let to others. The rents payable by the tenants of that flat and the premises appear to have been received by the plaintiff, but I do not know how he has applied such income, or any other income from the assets in the deceased's residuary estate. He has kept control of the entire assets and income of the estate, and utilised the same for the benefit of himself, the three children of his first wife, his present wife, and their two sons. He has maintained Queenie during her studies in Canada. I think that I should assume that he has similarly maintained the other two children of his first marriage. He considers that, if Queenie is allowed to live in the premises, this would compensate for the benefits he has enjoyed from his control of the estate in the past. I do not know what rent has been received in respect of the flat in Fa Yuen Street. Having regard to the valuation thereof in 1975 (of. Exh. P. 2) and the fact that it was first let in 1976, whereas the premises have been let since 1968, at controlled rents, I think that I can infer that the rent for the flat is higher than the $1,020 per month, presently receivable in respect of the premises.

13. The evidence leaves me with the general impression that the plaintiff has dealt with the deceased's residuary estate as a kind of paterfamilias of a Chinese family, and that he intends to continue doing so. In that respect, he may not be strictly complying with the fiduciary duties imposed by the various statutes affecting succession, introduced in 1971. But, I do not think that the evidence before me shows clearly or obviously that Queenie's sole occupation of the premises would be a breach of these fiduciary duties. On the basis of the values of the deceased's assets given in Exh. P. 2, all items, excluding item 14, would be roughly equivalent to the plaintiff's statutory charge and his absolute half-share of the estate. Item 14 would have been sufficient to meet the children's beneficial interests. It may be that Queenie's sole enjoyment of item 14(b) (the premises) would give her more than her one third share of this portion of the residuary estate. But, on the evidence before me, it is not clear or obvious that she would receive preferential treatment at the expense of the other two beneficiaries. On the question whether her occupation of the premises would, or would not, be a breach of trust, I think that the evidence is evenly balanced.

14. Assuming that that is a fair assessment of the evidence, I consider that my decision on this aspect of the case must ultimately depend upon the proper allocation of the legal burden of proof. It is clear that the plaintiff bears the legal onus of proving that he is the landlord and that he reasonably requires the premises for occupation by the person or persons mentioned in section 53(2)(b) of cap 7. But, whether he bears the legal onus of also proving that his requirement would not involve any breach of trust, or whether the tenant bears a legal onus of showing that it would be a breach of trust, is not entirely clear. The judgment of Ormrod, L.J. in Patel v Patel [1981] 1WLR 1342 (at 1349); [1982] 1 All E. R. 68 (at 74) appears to suggest that the potential breach of trust is relevant to all three issues which the courts in England must consider, viz (i) does the plaintiff reasonably require the premises; (ii) is it reasonable to make an order and (iii) the issue of greater hard-ship. In Hong Kong, the statutory criteria are rather different. But, having regard to the way in which this question was framed by O'Connor L.J. in Patel v Patel [1981] 1WLR 1342 (at 1346); [1982] 1 All E.R 68 (at 72), I consider that, in England, its essential relevance is to the question whether it is reasonable to make the order sought. In the context of the legislation in Hong Kong, I consider that the "breach of trust" issue is one which falls to be considered as part of the first proviso to section 53(2)(b) of cap 7. It is clear that the legal onus of proof that it would manifestly not be just or equitable to make an order rests upon the tenant. Subject to the necessity of considering the other circumstances of the case, I am not satisfied that the tenant has discharged that onus by showing that the proposed occupation of the premises would be a breach of trust on the plaintiff's part,

15. Assuming that the plaintiff's only reason for bringing these proceedings is to provide a home for his daughter, Queenie, and her intended husband, I am satisfied that he has proved that he  reasonably requires the premises. After her return to Hong Kong she slept in the sitting-room of the premises now occupied by the plaintiff, his second wife and their two sons. Because of the obvious inconvenience, and incompatibility with her step-mother, she moved to her present accommodation, which consists of a room of 50 - 60 square feet. She said that her intended husband would not be permitted to live with her in that room. I am not satisfied that his presence would be objected to by her present landlord or landlady, but I am satisfied that such accommodation would be woefully inadequate for a young married couple. It may be the case that she and her intended husband could afford to rent larger premises elsewhere. She is now earning $2,500 per month. But, I think that it is reasonable for her to want to live in the premises, as I accept her evidence that her mother expressed an intention, before her death, to provide her with the premises on the occasion of her marriage.

16. But, as already indicated, Miss Fung challenged the bona fides of the plaintiff in making this claim. She contended that the evidence shows that the plaintiff's prime or sole motive is to achieve a substantial increase in rent for the premises, and that he has used the supposed need of his daughter as a pretext, or bargaining tactic, to achieve that purpose.

17. The factual basis for these submissions, if it exists at all, is to be found in the conflicting evidence of a meeting between the plaintiff and the second defendant. I must confess that this aspect of the evidence has caused me the greatest difficulty and anxiety, partly because some of the plaintiff's answers, and his demeanour, were not such as to instill complete confidence in his credibility as a witness. The same can be said of the second defendant's evidence. But, although it is a matter for considerable regret on my part, I feel bound to express my view that some, if not all of, my incipient, and lingering, doubts or suspicions regarding their credibility might have been totally erased, or satisfactory explained, if their professional advisors and advocates had taken more positive or timely steps to plug the gaps in the evidence, by adducing other evidence, or putting forward plausible explanations for these defects.

18. I do not wish to dwell upon this aspect of the present case. But, I venture to suggest that some of my difficulties might have been eased, or totally eradicated, if certain correspondence, referred to in paragraphs 5 and 6 of the Particulars of Claim, had been placed before me at the outset of the trial, That alleged correspondence might have assisted me in determining, not only when the plaintiff first met the second defendant, but more importantly, the principal purpose of such meeting. Was it arranged for the purpose of negotiating an increased rental for the premises? Or was it, merely, a necessary step, on the part of the plaintiff, to recover possession of the premises for Queenie's occupation upon, or after, her proposed marriage? Unfortunately, no effort was made to place such correspondence before me until after Miss Fung had embarked upon her final submission. As some of the parties were not then present, I considered that it would be contrary to the principles of natural justice to receive such evidence. Accordingly, I must resolve this particular issue on the basis of the evidence or information properly placed before me. In order to evaluate this material, it is necessary first to explain how the second defendant, as distinct from the first defendant, who is alleged to be the tenant of the premises, was the dominant defendant in these proceedings.

19. The second defendant gave evidence that the tenancy of the premises was "transferred" to him by the first defendant, in February 1980, for a sum of $10,000. Later, in answer to a question from me, he said that the consideration was $15,000. Thereafter he collected the rents from the sub-tenants, and paid $1,050 per month to the first defendant, who continued to pay the rent of $1,020 per month to the plaintiff by his own cheques. He admitted that the plaintiff did not know of this "transfer" until they met each other, in or about April 1982. He stopped making payments to the first defendant in May 1982, and thereafter sent his own cheques directly to the plaintiff. He received no receipts and his cheques were not returned. Nor were they cashed. The second defendant has never lived at the premises. His only interest in the premises is purely financial, i.e. the right to retain the rents paid by the occupants in consideration of his alleged payments to the first defendant.

20. The second defendant testified that when he met the plaintiff, in or about April 1982, the plaintiff first demanded payment of an increased rental of $3,200 for the premises. When the second defendant explained that he could not pay that amount, because it was far in excess of what he was receiving from the occupants, the plaintiff did not believe him, and, in effect, reinforced his demand by asserting that such increased rent could be obtained by regaining possession of the premises and re-letting them to his relatives. In order to demonstrate his inability to pay more than the increased rent demanded, the second defendant promised to comply with the plaintiff's request that he should send the plaintiff details of the names of the sub-tenants and the rents they were currently paying, so that they could negotiate further on this matter. He did so by a letter sent after this meeting,

21. The plaintiff gave a very different account of this meeting. He said that it took place in or about July or August 1981, but after Queenie had returned from Canada. He asserted that when he eventually met the second defendant, after attempting to locate the first defendant, he first mentioned that his daughter wanted to get married and live in the premises. He denied asking for an increased rent of $3,200. He also denied that he asked the second defendant to supply him with written particulars of the names of the sub-tenants and the rents payable by them. This information was supplied "voluntarily" by the second defendant by a letter sent in 1981. The second defendant explained that he could not "return" the premises because the present occupants were "very fierce", and suggested that he should collect the rents himself. He denied ever saying that he could get the increased rent by re-letting the premises to his relatives.

22. I am satisfied, first of all, that this meeting between the plaintiff and the second defendant took place in 1982, in or about April. I think that the plaintiff did not take steps to locate the 1st defendant until after Queenie had asked him, in August or September 1981, to recover the premises for her, because she was not happy with her living conditions. The plaintiff clearly experienced some difficulty and delay in locating the 1st defendant, and also the second defendant, upon discovering that he had taken over the role of "principal tenant" of the premises. From the fact that it was not until May 1982 that the second defendant stopped his payments to the first defendant, and sought to tender rent direct to the plaintiff, I think that it is abundantly clear that this meeting took place in 1982. On this issue, the plaintiff was clearly mistaken, possibly because, as he asserted at one stage, he was "giving answers from memory after being questioned so long by the counsels." I am flattered by the suggestion that his confusion was not caused by any questions from me, but it would be unfair to attribute his confusion to the legitimate efforts of Miss Fung and Mr Chan, especially as his "apology" was given in answer to one of my questions!

23. As to what was said at this meeting, however, I am satisfied that the plaintiff's account is to be preferred. I think that he did ask the second defendant to supply him with details of the names of the sub-tenants, and the rents they were paying, but I do not think that this was made in pursuance of an "opening" demand for more rent. I think that it only cropped up after the plaintiff had indicated that he wanted the premises for his daughter, and the second defendant had indicated that he would resist any such claim, and rely on the "very fierce" sub-tenants as a factor which might make it difficult, if not impossible, for the plaintiff to succeed in recovering possession of the premises. I was left with the distinct impression that the second defendant was anxious to preserve, or prolong, his purely financial interest in the premises, as a result of his informal arrangement with the first defendant. Furthermore, by the time the second defendant gave his evidence, I think that he may have realised that he had, perhaps, been "let down", to say the least, by the first defendant. Although this impression is not crucial to my assessment of the credibility of the parties to this conversation, and is to some extent somewhat speculative, I think that I should explain my reasons for that peripheral impression.

24. The plaintiff completed his evidence on the first day of the hearing (i.e. the 17th December 1982), when the first defendant was present. The first defendant never challenged the plaintiff's evidence that he ceased to collect rent from the first defendant in March of 1981. (Of course, this may be because the plaintiff was, in this respect, also confused or mistaken as to the precise year, when material events took place.) But, more significantly, he did not suggest that, once the plaintiff had located him, the plaintiff's sole concern was to obtain an increase in the rent for the premises. According to the second defendant, this was the sole purpose or object of the "message" he received from the plaintiff, via the first defendant, prior to the meeting in or about April 1982. To the extent that this tended to support his contention that the plaintiff's opening bid was solely concerned with more rent, it was not supported by the first defendant in any way. I appreciate that the first defendant was not legally represented, and that it was not practicable for him to give evidence, or be called as a witness for any party on the first day of the hearing, which ended at about 4.25 p.m. upon the closure of the plaintiff's case. But he did not attend the adjourned hearing; nor was any application made to secure his attendance. Miss Fung's unsuccessful application for an adjournment was made merely to enable the sixth defendant to be present.

25. For the reasons I have given, I am satisfied that the plaintiff has proved that he reasonably requires the premises for his daughter, Queenie, and that he has put forward that claim in good faith. In my view, the second defendant has distorted the tenor and content of what took place at his meeting with the plaintiff, solely in order to advance his financial interest in the premises. This particular attack upon the plaintiff's claim was not specifically pleaded, as I think it ought to have been. But, having regard to the majority decision in Ho Kui Wah v Yu Chow Say Mui (M. P. No 400 of 1982), I did not consider that I would have been justified in stopping Miss Fung from pursuing this manner of "putting the plaintiff to strict proof" of his claim.

26. Before I consider the second of the main grounds upon which the plaintiff's claim has been resisted, I must refer to the other circumstances of the case, in order to consider whether it would manifestly not be just and equitable to make an order in this case. If the first defendant is the tenant, I feel bound to conclude that he has wholly failed to discharge the onus on him of bringing the case within the proviso to section 53(2)(b). He. neither gave evidence nor called any witnesses. Assuming, however, that the second defendant is the tenant, I am not satisfied that he has shown that it would be manifestly unjust and inequitable to make an order. He does not live at the premises. The circumstances of the third and sixth defendants are not, in my view, such that they would suffer exceptional hardship if an order for possession were made. They are both single men, earning between $2,000 and $2,400 per month. They have lived at the premises for no more than 3 or 4 years. I have no evidence of the circumstances of the other occupants. But, even if they are similar, collectively they do not, in my view, constitute "manifest injustice" of the kind envisaged by the statute.

27. I must accept responsibility for raising what I, earlier, described as the second defendant's second main ground for resisting the plaintiff's claim. I did so because of facts which emerged in the course of the plaintiff evidence, and later elaborated upon by the second defendant, namely that the second defendant had taken over the role of "principal tenant" of the premises, and because the plaintiff was clearly aware of this change before the present proceedings were instituted. In this context I use the expression "principal tenant", as it is used in common parlance, to describe the managerial and other functions of the second defendant, as the person who actually collected rents from the occupants of the premises after February 1980, and not in the sense of the statutory definition to be found in section 49 of Cap 7. But, at the close of the evidence in this case, when the further hearing was adjourned to give Mr Chan and Miss Fung more time to consider and prepare their final submissions on other points of law, it seemed to me that it might be arguable that the second defendant had, as a matter of law, become the tenant by means of an informal assignment of the tenancy to him by the first defendant, because the law applicable in Hong Kong is not obviously the same as that in force in England. In England, it is clear that an assignment of a tenancy which is not required to be in writing, or evidenced by any writing, must be made by deed, in order to be effective. of section 52(1) Law of Property Act, 1925.

28. Strictly speaking, this question does not call for my consideration because of the admission in the Defence of the second and sixth defendants that they are lawful sub-tenants of the first defendant. No application was made for leave to amend this pleading. If an application had been made, I would have been favourably disposed towards allowing it, even at the stage of final submissions. However, having had the benefit of argument from Miss Fung and Mr Chan on this question, I feel that I should express my views on their submissions, for which I am greatly obliged.

29. I think that it is fair to say that both Mr Chan and Miss Fung accepted that, in general, the assignment of a valid parol lease must be in writing, because of the provisions of sections 6 and 7 of the Law Amendment and Reform (Consolidation) Ordinance (cap 23). However, Miss Fung submitted that, notwithstanding the parol nature of the alleged "transfer" of the tenancy by the first defendant to the second defendant in February 1980, the second defendant became the tenant of the premises because of an exception recognised by section 6(1)(a) of cap 23 or, alternatively, by reason of the provisions of section 7(1) of Cap 23. The material part of section 6 of cap 23. provides: -

The material part of section 7 provides: -

Miss Fung submitted that the second defendant's interest as tenant of the premises by way of assignment arose by operation of law. She contended that the first defendant's tenancy ceased to exist, under section 52(2) of cap 7, because of the change in the identity of the tenant, and a new tenancy arose by virtue of the plaintiff having acknowledged the second defendant as his tenant by meeting him, in or about April or May 1982, in order to discuss repossession of the premises and/or an increase of the rent to be paid in the future. Having regard to my findings of fact on what transpired at this meeting, I do not think that this particular submission can succeed. Although the second defendant tendered his own cheques as rent for the premises, after this meeting, they have not been accepted by the plaintiff. The evidence does not support a finding of any intention to enter into a new tenancy, or the creation of the same by operation of law,

30. In my view, there is, superficially, more merit in Miss Fung's second point that the transaction between the first and second defendants had the force and effect of an interest at will, which had not been terminated by any notice given by the first defendant to the second defendant. There is certainly no evidence that the first defendant has said or done anything to withdraw his consent to the second defendant taking over the role of "principal tenant" of the premises. On the contrary, there is clear evidence that he left the entire management and use of the premises, and any future negotiations concerning the same, to the second defendant. But, in my view, success on this point depends upon what precise interest, at will or otherwise, the first defendant intended to grant to the second defendant. Was an "estate" interest in the premises intended? Or, was the second defendant merely intended to enjoy a personal right. to collect rents from the sub-tenants?

31. Mr. Chan did not really address his submissions to the various statutory provisions on which Miss Fung relied. He relied mainly on the facts of the present case, and, in particular, the plaintiff's ignorance of the "transaction" between the first and second defendants until the meeting in 1982. The mere fact that the plaintiff was not notified that the first defendant had, presumably, assigned the tenancy to the second defendant in February 1980, is not, in my view, a sufficient answer to the contention that the second defendant was, in law, the tenant at the material time, i.e. when the notice to quit, dated the 10th June 1982, was served on the first defendant. I do not think that the failure of an assignee of a tenancy to notify the landlord of the fact of the assignment is, in itself, a defect affecting the validity of the assignment. Accordingly, I conceive that I have to consider whether the first defendant intended, or did create, such an interest in the premises when he allegedly transferred the same to the second defendant.

32. When the first defendant and the second defendant entered into their agreement for the "transfer" of the premises they clearly did not have in mind the precise legal effect or consequences of their arrangement. It was simply a pragmatic financial or business "deal" which offered both parties realistic benefits, so long as the landlord (owner) of the premises took no steps to recover possession of the premises. Although the parties may have thought that the transaction absolved the first defendant from all of his obligations to the plaintiff, I do not think that it has the effect of making the second defendant the tenant of the plaintiff. In my view, service of the notice to quit upon the first defendant (assuming that such is required to enable the plaintiff to succeed in these proceedings) was sufficient to support the plaintiff's present claim,

33. In coming to the conclusion that the first defendant did not create or even succeed by pure accident in creating, any interest or estate in the premises in favour of the second defendant, I rely upon the fact that, according to the second defendant, he has been paying a monthly sum of $1,050 to the first defendant, in addition to his initial "premium" of $10,000 or $15,000, for enjoyment of the receipt of the rents payable by the present occupants. The rent which the plaintiff is entitled to receive is $1,020 per month. If the first defendant had intended to create, in favour of the second defendant, precisely the same interest in the premises which he enjoyed prior to February 1980, one would expect the second defendant to tender $1,020 to the plaintiff, on the basis that the second defendant had become the tenant of the plaintiff. Instead, he has sought to tender a larger sum, which has not been accepted by the plaintiff. In my view, the legal effect of these informal dealings between the first defendant and the second defendant, if they have any effect in law, merely suggests that the first defendant created no more than a sub-lease, or under- lease, of the premises in favour of the second defendant. Accordingly, I do not consider that the fact that the second defendant was not given a notice to quit is fatal to the plaintiff's right to an order for possession of the premises,

34. Miss Fung also relied upon section 8(c) and (d) of Cap 23 to support her contention that the second defendant was the tenant of the premises, and entitled to receipt of a valid notice to quit. She also contended that, if writing was required by section 6(1)(a) of cap 23, such was supplied by paragraph 5 of the Particulars of Claim. In view of the conclusion I have reached on the nature of the transaction between the first and second defendants, I do not think that these provisions of section 8 of cap 23 assist Miss Fung. The mere recitation of the facts contained in paragraph 5 of the Particulars of Claim is not sufficient to confer on the second defendant the status of tenant,

35. The plaintiff has satisfied me that he reasonably requires the premises as a residence for his daughter, Queenie, and I am not persuaded that there is any other legal obstacle to his recovering possession of the premises. Accordingly, there will be an order for possession of the premises, to take effect on the 31st March 1983.

Representation:

Mr. Wincester Chan of Tsang Chow & Shuen for Applicant.

Miss Catherine Fung of Liu Chan & Lam for 2nd and 6th Respondents.

1st & 4th Respondents in person present on first hearing.

5th & 7th Respondents in persons absent.

3rd Respondents in person present on first and second hearings.