Li Sau v. Siu Yuet Tai and Another

LDPA000004/1982

Landlord and tenant - Part I pre-war domestic premises - landlord claiming possession for occupation as his own residence - twofold onus on landlord to establish: 1. premises reasonably required; 2. greater hardship would be caused to landlord than to tenant if possession not granted to landlord - so different test to that applicable under Part II - Section 35(l) landlord and Tenant (Consolidation) Ordinance, Cap. 7.

IN THE LANDS TRIBUNAL OF HONG KONG

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Coram: TRIBUNAL: His Honour Judge Cruden, President and M.W. Philips, Esq., Member, in Court.

Date: 10 September 1982

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JUDGMENT

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1. In this consolidated application the applicant is the owner of pre-war domestic premises being Hut 2 and Hut 3, Kam Shan Village, Taipo, New Territories. The 1st respondent is the tenant of Hut 2. The 2nd respondent is the tenant of Hut 3. The applicant has applied, pursuant to Section 35(1) of the Landlord and Tenant (Consolidation) Ordinance, Cap.7, for recovery of possession of the suit premises on the ground that he reasonably requires the premises for occupation as his residence.

2. We are satisfied that the premises are pre-war domestic premises to which Part I of the Ordinance applies. For many years the applicant, who is now 88 years of age, lived in other domestic premises owned by him situate at No. 3A Papaya Orchard, Taipo. Those premises were separated, only by a stream from the suit premises. However, the Crown has recently resumed the premises at No. 3A Papaya Orchard. Under the resumption the applicant was offered a tenancy of a residential unit being Flat 2027,20th floor, Tai Yuen House, Tai Yuen Estate, Taipo. The applicant moved to those premises in March 1982 together with members of his household and that is where he presently resides.

3. The applicant's household comprises in addition to himself his two wives and a grand-daughter. The premises at No. 3A Papaya Orchard comprised a residential village house of approximately 400 square feet partitioned into two bedrooms, a cockloft used as another bedroom and a living room. A second building was used as a kitchen while a third Structure provided a further room. The premises had an area of several thousand square feet including a large garden and orchard. The new Flat 2027 comprises approximately 300 square feel in a new Housing Authority development. The monthly rent is $325. The applicant's granddaughter earns $3,000 per month as a secretary and pays the applicant $625 per month. According to the applicant this is his principal source of income and he pays the rent and his othar living expenses out of that sum. In addition he receives $40 per month being the rent for Hut 2 and $50 per month being the rent of Hut 3.We also infer that he received a sub-stantial capital sum from the Crown as compensation on the resumption of No. 3A Papaya Orchard although the evidence of quantum was not particularly clear.

4. The applicant stated in evidence that he required possession of the suit premises for several reasons. First, the physical characteristics of his new 20th floor fiat were very different and inferior to his former Village house. Secondly, he was unable to use the lift by himself and relied on other users to ensure he alighted at the right floor. Thirdly, the rent for Flat 2027 was beyond his income resources.

5. Under Section 35(1) the onus is clearly first on the applicant to satisfy us that his requirement to recover possession of the suit premises is reasonable. There appear to be no reported decisions on Section 35(1). Until the 11th day of June 1982 jurisdiction under Part I of the Ordinance, including Suction 35, was vested in the Tenancy Tribunal. However, the Landlord and Tenant (Consolidation) (Amendment)(No.2) Ordinance No. 76/81 provided that the former jurisdiction of the Tenancy Tribunal was to be transferred to the Lands Tribunal on a day to be appointed by the Governor. The 11th day of June 1982 was subsequently the day appointed by the Governor; notice thereof being published in Volume CXXIV Hong  Kong Gazette on the 28th day of May,1982 under Legal Notice 185 of 1982.

6. This is the first application this Tribunal has heard under Section 35(1) since we assumed jurisdiction for Part I. While there are no reported decisions of the principles to apply under Section 35(1) the section is similar to the sane ground upon which landlords may apply to recover possession of Part II properties for their own occupation as a residence, namely Section 53(2)(b). The provisions of Section 53(2)(b), following a series of recent Court of Appeal decisions, are now well settled. As under Section 53(2)(b), so under Section 35(1), we must first determine whether the landlord reasonably requires the premises for occupation as his own residence. In considering that first and separate issue we are nut concerned with the position of the tenants. We are solely concerned with whether the landlord's requirement is reasonable - Chow wing  v. yuen chi-hung & Anor (1980) H.K.L.R. 788 C.A.

7. The facts here are that the applicant owns two adjoining village huts which are tenanted by the respondents. He himself, with his household of 4 persons, lives in a flat which he rents from the Housing Authority. If we take into consideration his capital position we are not satisfied that he is unable to pay the rent for this present flat. However, we do accept that moving at his age from his other former village house to an unpartitioned flat on the 20th floor of a new building represents a major chenge in his living pattern. It consitutes a completely different environment. He now wishes to occupy, as his home, properties long owned by him. Leaving aside the question of the size of the suit premises we are satisfied that his requirement to live in his own premises is reasonable. For on the issue of reasonableness we consider That the principles enunciated by the Court of Appeal relating to reason-ableness under Section 53(2)(b) are equally relevant to Section 35(1) - HO Cheung-hing v. LI Tat-chi Civil Appeal No. 37/81; Bokhary v. Bremner Civil Appeal No. 87/81; CHAN Lau v. WONG Sui-mai Civil Appeal No. 36/82, WONG Chun-ming v. CHOY Tai-tung Civil Appeal No.42/82.

8. During the evidence it appeared that at least the 1st respondent's occupancy of Hut 2 has recently been recorded by the Crowd in relation to an apparent proposal for the Crown to also resume the suit premises. The lst respondent therefore submitted that if the applicant were given possession he would only be able to reside in the suit premises for a short period before the property was resumed. The evidence on the possibility of a further Crown resumption was minimal but we are prepared to assume, for the purposes of this judgment, that it is likely. However, we are able to take judicial knowledge of the fact that a period of several years may elapse between the time the Crown takes steps to record the names of existing occupiers and the date it finally resumes. When in cross-examination this possibility was put to the applicant he replied that if that did occur "That is my business. " We agree entirely with that terse response. For any resumption may be years from implementation. Even if it were to occur earlier and the applicant had to face up to the inconvenience of a further move, that is a risk for him to measure and does not reduce the otherwise reasonableness of his requirement. If there had been evidence that within a short period the Crown were to resume the suit premises the position, of course, might be different.

9. The remaining matter at this stage relates to the size of the suit premises in relation to the applicant 's requirements. The suit premises comprise two separate self-contained village houses. Each of the houses has an area of 300 to 400 square feet divided into a bedroom, a living room and a kitchen. Hut 2 is at present occupied by 7 persons and Hut 3 by 9 persons. All the evidence suggested that one only of those two huts would be adequate for the applicant's household's requirements. This fact was conceded by him in cross-examination and in Counsel's closing submissions a similar concession, if expressed in the alternative, was also made.

10. After reviewing the whole of the evidence relevant to the applicant's requirements to recover the suit premises for his residence we are, on the balance of probabilities, satisfied that he has had established such a requirement but for one only of the two huts.

11. The applicant having discharged the initial onus placed on him by Section 35(l), we now turn to consider the proviso to that sub-section. The proviso deals with the position where an applicant has satisfied us that his requirement for the premises is reasonable and is expressed in these terms:

12. It is immediately obvious that this is a very different test to that contained in the proviso to Section 53(2)(b). Under Section 53(2)(b) the proviso affecting tenants expressly places the onus on them of satisfying the Court that it would manifestly not be just and equitable to allow the landlord to recover possession. The law is well settled under Section 53 that where the landlord satisfies the Court that he reasonably requires the premises for occupation as a residence, a tenant is only able to discharge the heavy onus placed on him under the proviso, where the circumstances are exceptional and it would be thoroughly unjust to order the tenant to vacate.

13. The position under the proviso to Section 35(1) is quite different. The decisions on the first proviso to Section 53(2) are therefore not only of no assistance on the proviso to Section 35(1) but, because they impose a much heavier burden on the tenant, could be seriously misleading. The proviso to Section 35(1) is similar to the former provision which preceded the present first proviso to Section 53(2)(b). The proviso prescribes the relative test of greater hardship. It may be noted that this provision still survives, but in relation to sub-tenancies only, in the second proviso to Section 53(2)(b).

14. We remind ourselves too, that the onus under the Section 35(1) proviso is on the landlord and not on the tenant, to satisfy us that even though his requirement is reasonable, we may only make an order in his favour if greater hardship would be caused to the landlord by refusing him an order than would be caused to the tenant if he were required to yield up possession.

15. To determine whether the applicant, landlord has discharged the onus on this second issue it is necessary to turn and consider the position of the respondent tenants and then compare their positions with that of the applicant.

16. The 1st respondent is the widow of Mr. CHAN Fuk-lee. Mr. Chan resided in Hut 2 at least as long ago as the end of the Second World War up until his death about 10 years ago. At present the 1st respondent lives in Hut 2 together with 6 members of her family namely her son Mr. CHAN Tse-yee, his wife and daughter; a married daughter and her husband; and a single daughter who suffers from some physical or mental disabilities. Mr. CHAN Tse-yee gave evidence. He produced as Exhibit R.1 a written memor-andum which purported to record an agreement reached between the applicant and Ir. CHAN Fuk-lee. Mr. CMAN Tse-yee stated he was present during a discussion in 1967 and that the memorandum accurately recorded the agreement reached. The applicant denied that he had reached or signed pay agreement. The memorandum recites that Hut 2 was then in disrepair snd that the repairs would be effected by the tenant Mr. CHAN Fuk-lee. In return, so long as Mr. CMAN Fuk-lee lived there, the rent would not be increased and the applicant could not recover possession. Mr. CHAN Fuk-lee is, of course, now deceased. There is no provision in the memorandum conferring similar contractual rights on the widow to remain in possession. However, she has the protection and status of a tenant under Part I by virtue of Section 2 of the Ordinance which provides:

17. We accept the evidence of Mr. CHAN Tse-yee that his mother has resided at the premises continuously since when her husband first went into possession. However, her status as the current tenant does not restrict the applicant's right to bring prooeedings under Section 35.Nor in our view is the memorandum by itself sufficiently widely expressed to enable the widow to rely on its terms to defeat the applicant's present claim.

18. However, in "having regard to all the circumstances" in terms of Section 35(1),we are entitled to take into account the fact that the 1st respondent's husband effected repairs to the premises in consideration, inter alia, of being allowed to remain in possession for the remainder of his life and that since his death the widow has continued to reside in the premises as the family home. Last year she received $35,000 compensation from the Crown when some village land was resumed. She pays rent of $40 per month. She is dependant on assistance from her children for her living expenses.Her son, Mr. CHAN Tse-yee is an owner-driver of a light van earning $2,000 approximately per month. Of his three children one is deceased, another has recently entered a Caritas institution because of permanent disabilities and the remaining child lives at the suit premises. Last year Mr. CHAN Tse-yee's wife commenced working as a school helper at $1,500 per month. The lot respondent's married daughter and her husband, who both work, are self-sufficient. The single daughter is unemployed and the family is entitled to certain Social Welfare Department assistance because of the disabilities of that daughter and for the 1st respondent's granddaughter who is at the Caritas institution. No members of the 1st respondent's family own any residential property.

19. At present the 1st respondent and her family are paying a nominal rent and certainly have a family income which would permit them to pay a higher rent and perhaps even look for alternative accommodation elsewhere. However, a major reason for the 1st respondent's opposing the application clearly related to the registration by the Crown of the family as occupants of premises which are likely to be resumed in the future. We are prepared to accept the evidence of Mr. CHAN Tse-yee that upon the suit premises being resumed, the 1st respondent's family will, by virtue of such registration and continued occupancy to the dace of resumption be eligible, as a matter of practice, to be supplied by the Crown with alternative accommodation. Without that eligibility they would have to apply for such housing as members of the public and would have to wait many years before any accommodation was available. We remind ourselves that the applicant's recent move to Flat 2027 was pursuant to a similar eligibility. Given the pressure on domestic housing in Hong Kong we recognise that if the 1st respondent were obliged to vacate at this stage then her family would forfeit a very substantial contingent right.

20. Hut 3 was occupied many years ago by a Madam LEE Fuk. Since 1961, however, the 2nd respondent has occupied the premises with his family. For many years he has paid the rent to the applicant through Madam LEE Fuk. However, we are satisfied that Madam LEE Fuk has merely been an intermediary for the collection of rent and has no status as tenant. Mrs. LEE Fuk agreed that she was not the tenant when she appeared and withdrew from the present proceedings. The status of the 2nd respondent is therefore that of a tenant; he is not a sub-tenant. It seems, however, that while he pays Madam LEE Fuk $95 per week the rent actually received by the applicant for Hut 3 is $50 per month. Whether the difference is retained by Madam LEE Fuk as commission or otherwise, is not a matter it is necessary for us to enquire into or to determine.

21. The 2nd respondent is a retired tailor who formerly carried on his own business in Taipo. The 9 persons at present residing in Hut 3 are the 2nd respondent, his wife, his son, his daughter-in-law and 5grand children. His son formerly worked for the 2nd respondent in his tailor's shop but for the past year has worked for the Housing Department. None of the fauily own any residential property. The son earns $1,300 per month while the daughter-in-law also has her own income as a metal worker. Their joint incomes largely finance the household's living expenses.

22. Again a major factor to take into account is the probable entitlement of the 2nd respondent to alternative accommodation if Hut 3 were resumed by the Crown. The 2nd respondent impressed as a reasonable person who wished to co-operate as much as possible with the applicant. He even offered to exchange Hut 2 with the applicant's present tenanted premises at Flat 2027.In view of the terms of tenure of Flat 2027 from the Housing Authority that is not a practical alternative.

23. Clearly both the respondents would suffer at least some financial hardship if they had to vacate. As between them, the financial position of the 1st respondents family is very much stronger than that of the 2nd respondent's family. However, while they have both been tenants for very long periods the 1st respondent's family have occupied Hut 2 longer than the 2nd respondent has occupied Hut 3. The major hardship both respondents would suffer would be that if they have to move now, they would forfeit any eligibility for alternative accommodation upon the suit premises being resumed by the Crown. While the evidence on that issue was less precise than we would have preferred, it is sufficiently established for us to take it into account as one of the relevant circumstances.

24. Turning to the applicant's position it is true that he has suffered, at his advanced age, a major change to his living environment and has very cogent reasons for desiring to recover possession of at least one of his two properties. We have already found that to be a reasonable requirement. As far as his financial position is concerned, at least when his capital position is taken into account, it is very much stronger than that of the respondents.

25. In the light of all these factors we have considered the whole of the evidence and having regard to all the circumstances, have compared the relative hardship of the parties under the alternative orders that are, as a matter of law, open to the Tribunal. Having done so we are not satisfied that greater hardship would be caused to the applicant by refusing to grant him possession than would be caused to the respondents, or either of them, by granting an order in the applicant's favour. To the contrary greater hardship would be suffered by the tenant respondents. We therefore do not have to go on to consider the difficult question of which of the respondents would have the lesser claim to remain in possession if one only had to vacate. We would add that even where hardship, as between the landlord on the one hand and the tenants on the other hand, is equal, a landlord must, in terms of the proviso to Section 35(1), fail. A landlord must always prove greater hardship.

26. Accordingly the application is dismissed and there will be judgment in favour of the respondents. There will be no order as to costs. Liberty to apply is reserved.

DATED this 10th day of September, 1982.

Representation:

Mr. Thomas Lai instructed by Ford Kwan & Co. Or applicant.

Mr. CHAN Tse-yee, by leave, for 1st respondent.

2nd respondent in person.