Wu Ka-lau Frank v. Chan Tin-su John

DCCJ000004/1982

Landlord and Tenant - claim based on forfeiture for non-payment of rent of domestic premises during unexpired contractual term of tenancy agreement - whether Part II apllies - if not and rateable value of premises beyond general civil jurisdiction of District Court whether action otherwise within the jurisdiction the District Court - Sections 52, 53 landlord and Tenant (Consolidation) Ordinance, Cap.7, Sections 35, 39 District Court Ordinance, Cap. 336.

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CIVIL JURISDICTION

ACTION NO.  4 OF 1982

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Coram: His Honour Judge Cruden in Court.

Date: 7 June 1982

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JUDGMENT

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1. The plaintiff claims possession of the domestic suit premises on the ground of non-payment of rent. The particulars of claim aver that the failure to pay the rent has caused unnecessary inconvenience under Section 53(2)(d) of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7 and further plead that Clause 7(b) of the Tenancy Agreement between the parties contains a forfeiture clause.

2. Paragraph 4 of the Particulars of Claim pleads that the defendant is in possession of the plaintiff's suit premises as tenant, under a tenancy agreement dated the 22nd day of July 1981 whereby the premises were let by the plaintiff to the defendant for a period of 3 years commencing on the 1st day of September 1981. On the basis of those pleadings it is clear that the contractual period under the tenancy agreement has yet to expire. The particulars of claim also aver that Part II of the Ordinance applies.

3. However, Counsel for the plaintiff has raised a preliminary issue whether, notwithstanding the pleadings, the District Court has jurisdiction to hear this action. He concedes that Part II of the Ordinance and in particular Section 53, cannot apply to this action. That concession is based on the changes to Part II effected by the Landlord and Tenant (Consolidation) (Amendment) Ordinance (No.2) Ordinance No. 76/81.

4. The amendments to Sections 52 and 53 have made it clear that a tenancy agreement cannot, during its term, be terminated under Section 53(2). I have already considered this question and came to that same conclusion in Leung Wai Han v. Lau Fung Ying & Ors. VCJ No. 3700/81. I appreciate that it is even arguable that the former Section 74AA, enacted as Section 9 of the Landlord and Tenant(Consolidation) (Amendment) (No. 1) Ordinance No. 52/81, leaving forfeiture to one side, earlier achieved that position. What is now clear, as a consequence of the new Section 52(1), is that a fixed term tenancy cannot be terminated under Section 53(2) during its term. It can only be terminated under Section 53(2) after the fixed contractual term has expired. In that event, unlike a periodic or monthly tenancy, no notice is needed for it terminates by effluxion of time. But unless the tenant delivers up vacant possession in terms of Section 53(1)(a) the tenancy, even though the contractual period has expired, does not come to an end until the Court, as provided for in Section 53(1)(b), makes an order for possession in favour of the landlord under Section 53(2)

5. The plaintiff therefore submitted, that as the contractual period under the tenancy agreement has not yet expired by effluxion of time, no cause of action can arise under Section 53(2). Accordingly, it is submitted none of the statutory powers under Part II in favour of a landlord can be invoked by the plaintiff nor'can the defendant avail himself of any of the protection afforded to tenants under Part II.

6. In that event it is open to the plaintiff to proceed, not under Part II, but under the common law and bring an action for forfeiture for non-payment of rent for which there is express contractual provision under Clause 7(b) of the tenancy agreement.

7. If the plaintiff were to adopt that course the particulars of claim would need to be amended. Apart from the references to Part II being inapplicable further complications would arise from the fact that under the general civil jurisdiction of the District Court Ordinance, Cap. 336 the jurisdiction in relation to claims for land is limited to $15,000.

8. I was informed from the Bar that the rateable value of the suit premises exceeds $15,000. Therefore, if the action were to continue on the suggested emended basis, it could not proceed in this Court but would have to be transferred to the High Court.

9. Counsel for the defendant felt unable to disagree with the plaintiff's view that an action founded on forfeiture was not subject to Part II and therefore the general limited provisions as to this Court's civil jurisdiction applied. However, he pointed out that the defence disputed the legality of the pleaded tenancy agreement. If it were vitiated by fraud then the defendant's status was that of a tenant under a monthly or periodic tenancy. In that event, notice to terminate would be required, in accordance with the Court of Appeal's decision in Ngai Sau Ying v. Henery Chue Kwok Keung Civil Appeal No. 30/81. No notice had been given.  I was invited to consider deciding this issue too, at a preliminary stage. However, apart from having to hear evidence in order to make the necessary finding of fact, that question would also only arise after I was first satisfied that I had jurisdiction. I therefore decided that the proper course was first and separately to determine the issue of jurisdiction.

10. Counsel for the plaintiff agreed that before the 1981 Amendment the District Court had jurisdiction, whatever the rateable value, to grant possession for non-payment of rent under the common law or the previous Section 53(2)(a). Authority for that proposition may be found in Kong Ho (Hong Kong) Ltd. v. Lau Hung Kwan (1976) H.K.L.R. 62 and more recently Leung Sau Han v. Chan Loy Fat H .C. Action 1263/80.  The former Section 52(1) provided that no tenancy should terminate other than under Section 53(2).   The former Section 53(2)(a) remains unaltered and then and now provides that the Court may make an order for possession if it is satisfied that: -

11. Major changes have been made, however, under the 1981 Amendment to Section 52(1). In relation to the Amendment I am prepared to hold that the intention of the legislature, under the Amendment was, in part, to make it clear that, pursuant to Section 53(2) the Court could not terminate a tenancy during the contractual term of an existing tenancy agreement where the tenant was not in breach of the terms of the written tenancy agreement. Earlier suggestions to the contrary are to be found in the Court of Appeal's judgment in Lo Wah & Anor. v. Chui Fun (1980) H.K.L.R. 844 and elsewhere. However, it seems that the legislature may have gone further than that for the new Section 52(1) includes these provisions: -

12. The previous Section 53(1) was very widely expressed to provide that "A tenancy or sub-tenancy shall terminate" in the circumstances, including an order under Section 53(2), specified in the Section. However, the new Section 53(1) is much more restrictive. It provides:-

(Underlining added)

13. The previous Section 52(1) applied to Part II tenancies generally.

14. The significant change effected by the 1981 amendment is that it is not so wide. It only applies to tenancies "continuing under Section 52(1)". To return to Section 52(1), the only tenancies which continue under that Section, subject to being terminated under Section 53, are:-

15. So the only tenancies which are not afforded the statutory protection of continuance under Section 52 are those which are terminated by forfeiture.  Further, whereas the former Section 53 applied generally to tenancies which fell within Part II, now such tenancies as are terminable by forfeiture are excluded from the provisions of Section 53. This means that in forfeiture cases the landlord has no statutory right to recover possession under Section 53 and the tenant loses whatever statutory protection he may have enjoyed under Section 53.

16. The parties common law and contractual rights, of course, remain unaltered. The landlord's right to recover possession under any tenancy agreement, which includes such a forfeiture provision, continues unaffected by Part II. But as to jurisdiction, if the rateable value of the suit premises exceeds $15,000 then, pursuant to Section 36 of the District Court Car 336, such an action would, in the absence of any special provision, be beyond the general jurisdiction of this Court.

17. Is the District Court's former exclusive landlord and tenant jurisdiction, whether statutory or at common law affected? On this point I was referred to Section 68(6) of the Landlord and Tenant (Consolidation) Ordinance. I accept that Section 68(6) merely gives the District Court exclusive jurisdiction for actions falling within Part II.  For such actions the limitations otherwise imposed upon the jurisdiction of the District Court, where land is involved, do not apply. But that provision does not help the plaintiff if Part II does not apply to forfeiture actions brought during the contractual term of a tenancy agreement as distinct from a landlord, during the subsequent period of a continued tenancy, seeking a statutory termination of the continued tenancy under Section 53(2)(a). If possession is recovered under Section 53(2)(a) it is not done so as the result of an action based on forfeiture. Possession is instead recovered pursuant to a statutory cause of action which, at most, is analogous to forfeiture, but clearly is not forfeiture. As the present tenancy agreement has not yet expired and therefore no statutory continued tenancy has commenced, the statutory cause of action under Section 53(2)(a) is simply not yet available to the plaintiff. As Part II does not apply to the present action, the provisions under Section 68(6), giving the District Court exclusive jurisdiction, whatever the rateable value of the land in dispute, is of no relevance in this action. The two earlier Hong Kong authorities, already cited, to the contrary, no longer apply due to the nature of the 1981 Amendments to Sections 52 and 53.

18. In that event a common law action for recovery of possession Founded on forfeiture cannot be brought under Part II. It must be brought in either the High Court or the District Court according to the general principles of their civil jurisdiction. In the instant case, as the rateable value of the suit premises exceeds the limited general civil jurisdiction of the District Court, the action should have been brought in the High Court.

19. For the foregoing reasons I am satisfied that the present action is beyond the jurisdiction of the District Court. It should have been brought in the High Court.

20. I recognise that one of the incidental consequences is that the tenant will lose the benefit of the statutory provisions for relief against forfeiture for non-payment of rent, under Section 69 of the District Court Ordinance. However, under Sections 12 and 16 of the Supreme Court Ordinance, Cap. 4 I am satisfied that the High Court has similar, if not express, powers. Any doubts to the contrary were removed by the Full Court in Ta Sheung Plastic Goods Co. Ltd. v. Green Island Cement Co. Ltd. (1966) H.K.L.R. 24. I also note that our R.S.C. Order 14 Rule 10 preserves a tenant's right to apply for relief against summary judgment on the ground of forfeiture for non-payment of rent, on the same basis as in England,

21. I appreciate that my conclusion also means that upon the Governor appointing the appropriate day under Section 1(2)(b) of the 1981 Amendment (No. 2), the Lands Tribunal will thenceforth have exclusive jurisdiction for all applications for recovery of possession under Section 53(2) while the High Court and the District Court will retain a contemporaneous jurisdiction to hear actions for recovery of possession, in respect of the very same premises, where the ground is forfeiture. This may be a less streamlined and more complicated procedure than was intended. However, it seems to me that the provisions of Sections 52 and 53 are so clear that, at least for this Court, no other interpretation is possible.

22. Parenthetically, I might perhaps be excused from observing, that this conclusion may not be without a little joy to at least some my brethren in the District Court. For if the question of jurisdiction is reargued in the High Court, then it would mean that a judge of that Court would, at least, at first instance, have to grapple with the intricacies of the Landlord and Tenant (Consolidation) Ordinance which for long have been the monopoly of the District Court.

23. A number of consequential matters now arise. First, it is open to the plaintiff to apply to have the instant proceedings transferred to the High Court pursuant to Section 39 of the District Court Ordinance. Secondly, before trial substantial amendments to the present particulars of claim will be necessary. These are matters which need the consideration of Counsel. I am not disposed to make any consequential orders concerning them without hearing Counsel further. Liberty to apply for that purpose is therefore expressly reserved.

Dated this 7th day of June 1982.

Representation:

Mr. W. Chan instructed by Sit Fung Kwong & Co. for the plaintiff.

Mr. G. Rodway instructed by Peter Mo & Co. for the defendant.