Joseph Edward Hotung v. Jimmy's Kitchen Ltd

HCMP000276/1982

Landlord and Tenant - construction of s.121(2)(a) of Cap. 7 - clause in lease reserving right to landlord to determine the lease if premises become uninhabitable due to typhoon, fire etc. is a provision for earlier determination which is not for a breach of any of the provisions of the agreement, within the meaning of s.121(2)(a) and therefore Part V of Cap. 7 (requiring notice of termination) applies.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Coram: Fuad, J.

Date: 19 March 1982

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JUDGMENT

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1. This originating summons concerns the true construction of s.121(2) a of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7) in its application to a tenancy agreement by which the plaintiff let certain business premises to the defendant company for a term of five years from the 1st April 1977. The landlord contends that there is nothing in the lease which renders Part V of the Ordinance applicable to the tenancy. For his contrary contention the tenant relies on either or both of two clauses in the agreement. It is common ground that if that Part does indeed apply, by virtue of s.122 of the Ordinance, the tenancy does not cease at the end of the fixed term unless written notice of termination is served by the landlord not less than six months before the end of that term [the tenant is allowed to give one month's notice]. Another consequence is that during what I will call for convenience "the statutory extension", the rent reserved in the original tenancy is that which is payable by the tenant.

2. The only part of s.121 of the Ordinance which is relevant to the issue that divides the parties is in the following terms -

3. It will be convenient here, too, to set out the first of the two clauses upon which the tenant relies for his stand -

4. As regards the effect upon the statute of clause 4(a), the landlord relies on authority which binds this Court. Unfortunately although the files have been examined, and the library searched, no trace of the majority decision of the Court of Appeal which upheld the judgment of Trainor J. in Yue Wan Estates Ltd. v. Ding Kwei Tsoh (H.C.A. No. 932 of 1976) is now available. The court file of Civil Appeal No. 36 of 1976 merely indicates that the Court of Appeal comprised Briggs C.J., Huggins and Pickering JJ.A. and that the appeal was dismissed on the 23rd December 1976, with Huggins J.A. dissenting. The dissenting judgment is before me and I have also been provided with a copy of the first instance decision of Trainor J. who had followed the earlier decision of Briggs J. (as he then was) in Winning Enterprises Ltd. v. Peking Restaurant Ltd. [1971] H.K.L.R. 240. In that case Briggs J. was impressed by, and adopted, the argument that the mischief at which s.2(2)(a) of the Tenancy (Notice of Determination) Ordinance [now consolidated in identical language in Cap. 7] was aimed, was to prevent parties side-stepping the provisions of the Ordinance which prescribed the minimum length of notice by the inclusion in the lease of an option to determine. The Ordinance, he held, was of limited scope and it only gave protection to a tenant by forcing a landlord to give six months' notice before determining a tenancy in certain circumstances.

5. About the Winning Enterprises case Trainor J. had this to say -

6. The following later passage in Trainor J.'s judgment reveals his general approach to the interpretation of the relevant legislative provisions -

"Where legislation purports to interfere with the contractual arrangements between parties the legislation must be strictly interpreted so that no greater interference is allowed than that intended by the Ordinance. It is clear that Part V of the Ordinance intended to limit its interference to tenancies of less than three years; it did not intend to affect any bona fide agreement for a term of three years or more. But it did intend to catch any tenancy agreement which introduced a subterfuge to avoid such protection as the Ordinance provided. In the instant case there is no such subterfuge in Clause 4(a) of the tenancy agreement. There is an agreement by the defendants that if they do or permit an act that might result in the tenancy ceasing to be what it is, one between themselves and the plaintiff, or an act that might destroy the landlord's security the tenancy is to determine. That in my opinion is a provision well within the ambit of Section 121(2) (a). In my opinion Part V of the Ordinance does not apply to the tenancy under consideration."

7. It is unusual and, perhaps, somewhat uncomfortable for a Court to be faced by a binding authority when the reasons for the decision are no longer available. But in the special circumstances present here I conclude that I am bound by the decision of the Court of Appeal in the Yue Wan Estates Ltd. case for these reasons. The statutory provisions construed by Trainor J. are, as we have seen, in identical terms to those that fall for construction before me. Although the clause in the agreement before Trainor J. was not set out fully in his judgment, it is plain that its effect was precisely similar to clause 4(a) of the lease here. Since the issue was within such a narrow compass, by dismissing the appeal, it must irresistibly be inferred that the Court of Appeal held that a clause of the kind before me in a lease was not a "provision for earlier determination of the same other than for the breach of any of the provisions of the agreement". I therefore hold that clause 4(a) cannot assist the tenant since it does not render Part V of the Ordinance applicable.

8. I now set out the second clause which the tenant prays in aid in support of his contention:-

9. In relation to this clause, the plaintiff relies on an unreported decision of Williams J. in Fu Hop Investment Co. Ltd. v. Chen Hong Man and Others (H.C.A. No. 680 of 1969). In that case the learned judge had to consider a very similar clause in its effect upon s.2(2) (a) of the Tenancy (Notice of Termination) Ordinance then in force. This is what Williams J. said -

10. I will say at once that on any view I do not think it can reasonably be argued that in my consideration of this clause and its effect upon the Ordinance, I am bound by the decision of the Court of Appeal which upheld that of Trainor J. in the Yue Wan Estates Ltd. case. The clause is very different and assuming that Trainor J.'s reasoning was approved it seems to me that his decision was principally founded on the fact that in his view by subscribing to the clause "the tenant was by implication [agreeing] not to permit certain things to happen and [agreeing] that certain rights which the landlord might otherwise lose are preserved to him."  No such considerations arise here. He was also influenced (as was Briggs J. in the Winning Enterprises case) by his view that the Ordinance "did not intend to affect any bona fide agreement for a term of three years or more. But it did intend to catch any tenancy agreement which introduced a subterfuge to avoid such protection as the Ordinance provided."  With respect, in my judgment the matter cannot be resolved on this basis.

11. The landlord invites me to adopt the same approach and in considering the mischief aimed at by the Ordinance to hold that the clause was not "a provision for earlier determination" as contemplated by the legislature. Here, it is said, all the parties had done was to provide in a special and limited way for an extraordinary event outside the volition of the parties. Even without it, in certain of the circumstances envisaged, there might be a determination of the lease on the doctrine of frustration.

12. Williams J., as indicated by the passage from his judgment in the Fu Hop Investment Co. case that I have quoted, seems to have decided the issue by considering whether or not the clause was a provision for the landlord's benefit. With the utmost respect to him there seems to me no justification in the wording used in the statute for introducing concepts of that kind.

13. It is, of course, my duty to give effect to the ordinary meaning of the words used in s.2(2) (a) of the Ordinance in the general context of the statute, applying the injunction contained in s.19 of the Interpretation and General Clauses Ordinance.

14. It is well established that one of the ways in which a tenancy may determine is by the operation of a condition subsequent. Examples may be given - it may be provided in a lease that the tenant's interest is determined when he ceases to be employed by his landlord or on the death of the tenant or some other person. To give effect to the meaning of the words used in s.121(2) (a), I can find no warrant for limiting their application to a provision for the exercise of an option to determine, nor can I see why, if as conceded by the landlord, a provision for termination on death would be one for earlier determination of the tenancy other than for a breach of one of the terms of the agreement, Clause 4(g) should be regarded any differently. However unlikely it might be that the conditions set out in the clause would be fully satisfied, nonetheless, if they are, then the landlord has an absolute right to determine the lease before it would normally expire. How can it then be maintained that the agreement does not contain a provision for earlier determination? Or that the clause is not a provision for determination other than for the breach of any of the provisions of the agreement? In my view to read the section otherwise would be to do violence to the language employed. In my judgment the position here is covered by the following passage on p.29 of MAXWELL ON THE INTERPRETATION OF STATUTES (12th Edition) -

"Where the language is plain and admits of but one meaning, the task of interpretation can hardly be said to arise. 'The decision in this case,' said Lord Morris of Borth-y-Gest in a revenue case, 'calls for a full and fair application of particular statutory language to particular facts as found. The desirability or the undesirability of one conclusion as compared with another cannot furnish a guide in reaching a decision.' Where, by the use of clear and unequivocal language capable of only one meaning, anything is enacted by the legislature, it must be enforced however harsh or absurd or contrary to common sense the result may be. The interpretation of a statute is not to be collected from any notions which may be entertained by the court as to what is just and expedient. Words are not to be construed, contrary to their meaning, as embracing or excluding cases merely because no good reason appears why they should not be embraced or excluded. The duty of the court is to expound the law as it stands, and to 'leave the remedy (if one be resolved upon) to others."

15. On these grounds, at the conclusion of the hearing on the 17th March 1982, I declined to grant the plaintiff any of the declarations he sought, and gave judgment in favour of the defendant company. I now "hand down" copies of my reasons to the parties in accordance with 0.42 r.5A, and make an order nisi for costs against the plaintiff.

Representation:

Denis Chang, Q.C. & Robert Tang (J.S.M.) for Plaintiff.

Michael Bunting (D.H. & B.) for Defendant.