Chan Wing Wah v. Wong Sai Kuen and Others
Read the full judgment text of DCCJ 5506/1980 on BabelCite. This District Court judgment.
1. In these proceedings the plaintiff claimed possession of the domestic premises known as Flat A, No. 7 South Lane, Hong Kong from the defendants on the ground that the 1st defendant had sublet the premises to the 2nd and 3rd defendants without the prior written consent of the plaintiff. The plaintiff also pleaded the further and alternative ground that the premises were reasonably required for the plaintiff for occupation as a residence for himself and his family.
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DCCJ005506/1980 Landlord and Tenant - claim by landlord for possession of domestic premises on ground of unlawful subletting - whether on expiration of the term of a tenancy agreement the subsequent protected tenancy is a statutory tenancy or alternatively a statutory continuance of the term - whether facts arising solely during the earlier period of the tenancy agreement are available as sole ground of waiver in respect of the subsequent statutory continuance of the term - Section 52 and 53 Landlord and Tenant (Consolidation) Ordinance Cap. 7. IN THE DISTRICT COURT OF HONG KONG HOLDEN AT VICTORIA CIVIL JURISDICTION ACTION NO. 5506 OF 1980 -----------------
----------------- Coram: Judge Cruden in Court. Date of Judgment: 25th May, 1981. ----------------- JUDGMENT ----------------- 1. In these proceedings the plaintiff claimed possession of the domestic premises known as Flat A, No. 7 South Lane, Hong Kong from the defendants on the ground that the 1st defendant had sublet the premises to the 2nd and 3rd defendants without the prior written consent of the plaintiff. The plaintiff also pleaded the further and alternative ground that the premises were reasonably required for the plaintiff for occupation as a residence for himself and his family. 2. The premises were let to the defendant by the plaintiff from the 15th day of July 1978 pursuant to a written tenancy agreement for a period of two years at a monthly rental of $600. The written agreement has therefore expired. 3. The 1st defendant pleaded that she first rented the premises in 1974 from the plaintiff's predecessor in title who had knowledge of the subsequent subletting. When the premises were assigned to the plaintiff in 1978, the 1st defendant pleaded that the premises were already sublet and with such knowledge the plaintiff continued to accept rent. The plaintiff had therefore waived his right to claim possession on the ground of wrongful subletting. Further that if the premises were reasonably required by the plaintiff, it would manifestly not the just and equitable to make an order for possession in his favour. First ground for possession 4. I will first consider whether there has been an unlawful subletting. Clause 2 of the Tenancy agreement provided that the 1st defendant "shall not sublet or transfer the tenancy to others". The prohibition against subletting under the agreement, therefore only applied to a subletting of the whole of the premises. It was lawful for the 1st defendant to sublet part of the premises - LO Wah & Anor. v. CHUI Fun Civil Appeal No. 152 of 1980. 5. It was undisputed that the premises comprise 3 bedrooms and that only part of the premises were sublet. The middle bedroom was sublet to the 2nd defendant on 20th April 1979. The rear bedroom has been occupied by the 3rd defendant since 1st September 1979. But that occupancy is shared with the 1st defendant. The 1st defendant's son, his wife and children occupied the remaining bedroom. So the remaining bedroom is occupied by members of the tenant's family and is not a subletting. 6. The factual position therefore is that while the 2nd defendant has exclusive possession of the room which he occupies with his mother and is clearly a sub-tenant, the 3rd defendant merely shares a bedroom with the 1st defendant, only having exclusive possession of her bed therein. The 1st defendant is, of course, the tenant of the premises. Whether in these circumstances, the 3rd defendant is merely a lodger or perhaps a licensee, it is not necessary to decide. For in accordance with the principles referred to by Leathlean D.J., in SO Ho v. CHAN Chui-yip K.C.J. No. 8284 of 1979, her status is clearly less than that of a sub-tenant. The only sub-letting, I am therefore concerned with relates to the room occupied by the 2nd defendant and his mother and which, before them, was sublet to Mr. Tse. 7. I am satisfied that when the premises were purchased by the plaintiff in 1978, he personally attended at the premises and was introduced to the plaintiff, her family and Mr. Tse the then sole sub-tenant. The plaintiff continued to collect rent with knowledge of that sub-tenant. The rent was collected thereafter by the plaintiff's aunt. The aunt was not called by the plaintiff as a witness. The 2nd defendant stated that he has lived in the premises with his mother since 20th April 1979. While he first saw the plaintiff when he called at the premises on the 15th June 1980, he saw and spoke to the plaintiff's aunt on several occasions prior to that date. The aunt was a personal friend of his mother and she knew both the 2nd defendant and his mother long before they moved into the premises. I accept the 2nd defendant's evidence that the plaintiff's aunt was aware that the 2nd defendant and his mother were occupying part of the premises as sub-tenants during the period she collected rent down to the 14th day of June 1980. 8. During the period of the tenancy agreement, I find that there was a subletting but that it was not unlawful on the ground that the subletting was only of part of the premises. Even if the prohibition in the tenancy agreement against subletting had extended to a subletting of part only of the premises, I would in any event have held that the plaintiff had during the term of the tenancy agreement, by accepting rent with knowledge of such subletting, waived his right to treat such a breach of the agreement as a ground for determining the tenancy and recovering possession. As to knowledge, I have already found that on purchase the plaintiff was aware part of the premises were sublet. In addition his aunt who collected the rent continued to do so with knowledge of the subsequent subletting. The aunt not only collected the rent but also acted for the plaintiff generally in respect of the premises. On the plaintiff's own evidence it was the aunt who prepared the tenancy agreement and attended by herself upon the 1st defendant and had the agreement executed. Later she obtained the plaintiff's signature to the agreement. The aunt was therefore not a bare rent collector. I hold that her knowledge of the subletting as agent is deemed also to be knowledge on the part of the plaintiff as principal. 9. Curiously the first time the plaintiff returned to the premises after his initial attendance, when he purchased the premises in 1978, was on 15th July 1980, when he stated that his purpose was to collect rent. All the rent in the intervening period had been collected by his aunt. The 15th day of July 1980 is significant for two reasons. First, it was the first day after the expiration of the tenancy agreement so the 1st defendant was holding over after the expiration of the tenancy agreement. Secondly, on that day the plaintiff refused to accept rent because he stated that on arriving at the premises to collect rent, he suspected that the premises were sublet. It is undisputed that no rent has been accepted by the plaintiff since that date. Any monies received have been expressly received as mesne profits. The defendants concede that there are no acts of waiver on the part of the plaintiff since the 14th day of July 1980. 10. The continued occupancy by the defendants after the 14th day of July 1980 is, of course, subject to Part II of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7. Section 53(2)(e) thereof provides a ground for recovery of possession where a tenant, without the consent in writing of the landlord, sublets the premises "or any part of the premises". This statutory provision is therefore wider than the provisions of the tenancy agreement. Whatever the position during the term of the tenancy agreement clearly consent in writing was required for the continued subletting of part of the premises after the expiration of the tenancy agreement. After 14th day of July 1980, there was no such written consent. Waiver is, however, in such circumstances available to a defendant - CHUK Yau-cheong v. LEE Miu-ying Civil Appeal No. 14 of 1979 and CHAN Nam v. POON Siu-ping Civil Appeal No. 3 of 1980. Here the defendants expressly plead waiver. 11. The crucial issue arises whether the waiver which arose during the term of the tenancy agreement, enures in favour of the defendants for the period after the tenancy agreement expired and the defendants continued in occupation under the protection of the Ordinance. This issue squarely raises the nature of the defendants continued protected occupancy. 12. In Hong Kong there has been a sharp division of opinion reflected in judicial decisions as to the precise nature of that occupancy. Does the tenant remain in possession as a statutory tenant, as is the position in England under the Rent Acts, or does the tenant remain in possession by a statutory continuance of the existing term subject to the statutory conditions imposed by Part II? This is not simply a matter of semantics or a distinction without a difference. For from this distinction flow important and different practical legal consequences. For example, whether it is necessary to terminate any pre-existing contractual tenancy; whether an earlier factual relationship between the parties later gives rise to estoppel or evidences waiver on the part of a landlord of his rights against a tenant. 13. It appears that conflicting views on the actual nature of a continued occupancy largely stem from the fact that our Ordinance is an unhappy amalgam of the English Landlord and Tenant Act and the English Rent Restriction Acts. Those acts were drafted on very different principles. The conflicting fundamental principles of the two different English Acts and the problems which arise under the Hong Kong Ordinance are subject to a penetrating and helpful analysis in the recently published 'Report of the Committee of Review Landlord and Tenant (Consolidation) Ordinance' dated 13.2.81 (Hong Kong Government Printer) and in particular Part IV, Chapter 19, page 147. 14. Some of the problems therein considered are neatly raised in this case. For if a statutory tenancy replaced the contractual tenancy then it would be unlikely that a waiver which arose only during the contractual tenancy would be available to a defendant during the subsequent period of the statutory tenancy. In that event judgment on the first ground for possession, would no doubt follow in favour of the plaintiff. However, if no statutory tenancy arises and there is merely a statutory continuance of the contractual term subject to the imposition of statutory conditions, then it would be arguable that the waiver during the initial term of the contractual tenancy would survive the expiration of the tenancy agreement and be available in favour of a defendant. In that alternative event judgment on the first ground would follow in favour of the defendant. It is therefore necessary to consider the precise nature of the defendants occupancy since 15th July 1980. I am aware of the substantial arguments that can be advanced in favour of the replacement of the contractual tenancy by a statutory tenancy and certainly Section 53 can be cited in support of that view. However, I am of the opinion that the better view is that no statutory tenancy arises and have earlier expressed that view in CHEN Kui-chao Jean v. YIM Chung-ning V.C.J. No. 2511 of 1980. 15. The question has also more recently been considered by the Court of Appeal in LO Wah & Anor. v. CHUI Fun Civil Appeal No. 152 of 1980 where the Court was of the view that the position in Hong Kong is different to the position in England. In England, under the Rent Acts, a statutory tenancy arises after the contractual tenancy has expired or been determined. One wholly replaces the other. As to the position in Hong Kong Huggins J.A., with whose judgment Leonard J.A. agreed, declared:-
In the remaining judgment Cons. J.A. emphasised the different position in Hong Kong in these words:-
16. In other words, in England the original contractual tenancy is not altered but replaced by the statutory tenancy. In Hong Kong the contractual tenancy is not replaced. For here the contractual tenancy is continued by statute subject to its nature being changed, inter alia, by engrafting thereon as statutory conditions the provisions of Section 53. 17. I consider that whatever may have been the result of earlier conflicting decisions, the Court of Appeal has now put the question beyond doubt. Accordingly, I am of the view that in Hong Kong no statutory tenancy arises and all that happens is that there is a statutory continuance of the contractual term subject to the statutory conditions imposed by Section 53. It follows that the waiver which existed during the initial contractual term continues to be available to the defendants during the period of statutory continuance after the expiration of the contractual term expressed in the tenancy agreement. 18. Before coming to this conclusion, I have also considered that part of the judgment of Huggins J.A. in LO Wah & Anor. v. CHUI Fun which might suggest a contrary conclusion. In LO Wah's case the contractual tenancy was for 3 years and therefore was outside Part II which includes Section 53. As to an alleged waiver during that contractual tenancy Huggins J.A. disposed of that contention on several grounds. First, he considered that the landlord's daughter's authority, unlike the aunt's authority in the instant case, was merely to collect rent on a limited number of occasions. Secondly, and more importantly for present purposes, that only the continued occupancy after the expiration of the 3 years tenancy agreement was subject to Part II and that any waiver during the 3 years period when Part II did not apply could not be invoked by the tenant in respect of the latter period when for the first time, the premises became subject to Part II Huggins J.A. stated:-
19. The plaintiff argues that here too, the only waiver was before the expiration of the contractual tenancy on the 14th day of July, 1980 and nothing done before that date could constitute a representation by him that he could not enforce a right which did not then exist. The answer to that submission in the present case is that, as a matter of law, Part II did not apply to the contractual tenancy before the Court of Appeal as it was for a period of 3 years. Here the position is the opposite. The present contractual tenancy being for 2 years was always subject to Part II and those provisions continued to apply when the term was extended by statute. I therefore distinguish that portion of the judgment of Huggins J.A. on that ground. 20. Adopting the principle that the effect of Part II is to continue the term of the tenancy subject to the statutory conditions imposed by Section 53, it follows equally as a matter of principle, that the existence of the defence of waiver which arose during the contractual term may similarly be extended to apply to the statutory continuance of the term. 21. I have taken into account that during the contractual term only part of the premises were sublet, so there was no breach of the tenancy agreement and that therefore the defendants could rely on their positive contractual rights and did not have to fall back on waiver. The further question therefore arises whether the defendants can invoke facts which arose during the contractual term, but which were then of no legal significance, as the sole factual basis of the waiver which they wish to raise during the statutory continuance of the term after the contractual tenancy has expired. I appreciate that this is going very much further than using facts from the earlier period which were also legally significant during that earlier period to support waiver during the period of the statutory continuance of the term after the contractual period has expired. However, in principle I can see no objection to applying those same facts to the latter period even though they were of no legal significance during the earlier period when they actually arose. First, the facts have not changed. Secondly, the relationship of landlord and tenant has not changed. Thirdly, the principle of statutory continuance of the term and the rejection of a separate statutory tenancy overwhelmingly supports such a conclusion. I firmly come to this conclusion even after recognising that during the whole of the period when those facts arose, the landlord was not yet possessed of any rights prohibiting subletting of part only of the premises, which those facts could have waived. At that earlier period, when those facts arose, there simply were no rights to waive. 22. For these reasons, I hold that those facts which arose during the term of the tenancy agreement may, as a matter of law, be invoked by the defendants to support their plea of waiver during the period of the protected tenancy after the expiration of the contractual tenancy. 23. It therefore follows that the plaintiff's first ground for possession fails. Second ground for possession 24. The plaintiff also claimed that he reasonably required the premises for occupation as a residence for himself and his family. I therefore considered this claim in terms of Section 53(2)(b) of the Ordinance. 25. The plaintiff is a married man but his wife and 5 children aged from 17 to 4 years are in China. He came to Hong Kong 8 years ago and has a monthly income of $1,850 including the rent of $600 from the suit premises. At present he lives with the aunt who collected the rent for the suit premises. The aunt's premises are 700 sq. ft. divided into 2 bedrooms. The aunt and her husband occupy one bedroom and her son, his wife and 3 children the other bedroom. The plaintiff sleeps on a sofa in the living room. However, according to the plaintiff, friction frequently developes between himself and the other occupants. Recently, his aunt ordered him out and he claims that for a time he slept in parks but has now returned to his aunt's premises. I accept that his presence causes real inconvenience to the other occupants and to himself. As to his family, he was vague as to their plans to come to Hong Kong or whether they have taken any formal steps to leave China. On the evidence, however, I am satisfied that he is seeking possession in good faith and wishes to reside therein by himself initially but is hopeful that his wife and children will join him. The latter fact can only be considered as a possibility at this stage. I do find that the plaintiff does reasonably require the suit premises for occupation as his residence. 26. Under Section 53 the onus now passes to the defendants to establish, in accordance with their pleading, that it would manifestly not be just and equitable to make an order for possession in the plaintiff's favour. I remind myself that the burden on the defendants is an onerous one as was emphasised by the Court of Appeal in CHOW Wing v. YUEN Chi-hung & Anor. Civil Appeal No. 145/80 where the Chief Justice said that the test of whether it would be manifestly unjust is "whether it would be thoroughly unjust to make the order." 27. The suit premises comprise three bedrooms. The 1st defendant shares one bedroom with the 3rd defendant. There was a suggestion by the plaintiff that the 1st defendant had moved. However, I accept the evidence of the defence witnesses that the 1st defendant is still resident in the suit premises. She shares that room with the 3rd defendant who is a 65 years old lady with no relatives in Hong Kong earning $500 to $600 per month in a factory. The 3rd defendant pays $180 per month for her share of the room and has been unable to find suitable alternative accommodation. However, I have already held she is not a subtenant so I have ignored no position in considering the circumstances relevant to the defence to the plaintiff's second ground for possession. 28. Another bedroom is occupied by the 1st defendant's son, his wife and their 3 children aged 11, 9 and 6 years. They have lived there together since 1975. The son earns $1,000 to $2,000 per month while his wife does tailoring work at home earning $700 per month. The wife gave evidence that they had looked for comparable accommodation but rents were $2,000 and over which were beyond their ability to pay. 29. The 2nd defendant lives in the remaining room with his mother and pays $250 per month rent. He gave no other details of his financial position or the particulars of the accommodation he required. 30. When I reviewed the whole of the evidence, I considered on the circumstance of hardship alone the 1st and 2nd defendants would suffer greater hardship than the plaintiff if an order were made against them. I appreciated that the position might be different if the plaintiff's family were in Hong Kong or if there were evidence from which I could find that their arrival in the near future was a probability. Not only was I satisfied on the facts that the defendants would suffer greater hardship but I was further satisfied that in all the circumstances that it would manifestly not be just and equitable to allow the plaintiff possession. The plaintiff's second ground for possession must also fail. 31. In the event there will be judgment for the defendants. 32. There will be no order as to costs. Leave is granted to the 1st defendant to pay any arrears of rent within 10 days. The exhibits may be returned to the parties producing them after the expiration of the time limited for appeal, in the event of there being no appeal, otherwise the exhibits will await an order on appeal. DATED this 25th day of May, 1981.
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