Tsang Lau (or Lou) Foon v. Lau Yiu Kee and Another

DCCJ002028/1979

Summons by a stranger to ejectment proceedings for leave to be added as a defendant and to defend under Rule 22(8) District Court Civil Procedure (General) Rules - - - - right of a deserted wife to rented premises - - - effect of alleged contribution to rental payments in the form of domestic services - - - wife "in actual occupation" and as "a person in possession" - claim of a "direct right" to be joined.

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CIVIL JURISDICTION

ACTION NO. 2028 OF 1979

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Coram: H.H. Judge Liu, Q.C. in Chambers

Date of Judgment: 8 November 1979

Application on the part of the Applicant for an order that Judgment entered on 28.6.79 be set aside and that Applicant be added as defendant and that execution stayed.

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DECISION

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1. About eleven years ago, the suit premises, being a domestic flat in a post-war building, were let by the plaintiff to the defendant. It is common ground that it was a "condition" in the letting that the defendant should not use the suit premises for any illegal purposes. The defendant has been arrested for, charged with and convicted of an offence of "book-making" committed on the 6th January 1979 in the suit premises. It has further been conceded by the applicant that the said "condition" was thus breached.

2. On the 28th June, 1979, judgment was obtained by the plaintiff in default of defence, and whatever the turn of events that followed, which is not a subject-matter of complaint, on the 24th October 1979 execution on the default judgment was completed. On the same day, vacant possession of the suit premises was duly delivered by the bailiff to the plaintiff. Needless to say that the applicant and her family were thereby ejected.

3. On the very day of her eviction, the present summons of the applicant was filed praying for (1) a stay of execution, (2) an order to set aside the default judgment, (3) a joinder of the applicant as a defendant to this action and (4) relief against forfeiture.

4. The applicant is the wife of the defendant. The defendant has allegedly deserted the applicant after his conviction for "book-making". Rental for the suit premises was tendered by the applicant for the months of February and March 1979. The plaintiff was notified by the police on the 21st March 1979 of the defendant's conviction, and rental for April 1979 was refused.

5. It was submitted by the applicant's solicitor that by reason of her over eleven years' uninterrupted occupation, her contribution to the family in the form of domestic services and her own payment of the February and March rentals, she has acquired a "direct right" to intervene and to be added as a defendant to this action in ejectment.

6. Execution has been completed, and there remains no legal process to be suspended in the interim. The applicant may, in the assertion of her alleged right, apply for the writ of execution to be set aside for a good cause, coupled with an order for immediate restitution and restoration, but the prayer for a stay of execution would seem to be misconceived.

7. In addition to its statutory power to grant relief against forfeiture for non-payment of rent under Section 69 of the District Court Ordinance, the District Court may have, in the exercise of its inherent jurisdiction, power to grant relief on other breaches⁽¹⁾.

It is quite unnecessary in these proceedings to express a concluded view on the subject, as the sole claim of the applicant in this case is a share in the tenancy granted to the defendant and her right to apply for relief against forfeiture would be dependent ultimately on whether or not she could be let in to defend on her own. Therefore, this application falls to be decided, in the main, on her prayer to be added as a defendant with a consequential plea for setting aside the judgment insofar as she may be affected.

8. Reference has been made to Order 13 rule 9 of the Rules of the Supreme Court which deals exclusively with setting aside a judgment in default of appearance. In the High Court, Order 19 rule 9 prescribes for the procedure for setting aside a judgment in default of defence, but the principles referable to Order 13 rule 9 were embraced by solicitor for the applicant as providing the same parameter for the exercise of judicial discretion in the case of a judgment in default of defence. In the District Court, a like provision for setting aside a judgment in default of defence appears in Rule 22(8) of the District Court Civil Procedure (General) Rules. If the applicant should succeed in her application to be joined as a defendant, the judgment in default would be set aside insofar as it would affect her almost as a matter of course in the circumstances of this case which offer little novelty.

9. A further inroad into the relief sought by the applicant may be found in Rule 63(1) which preserves for the District Court the old "plea of possession" and seems to be inextricably tied to "direct right".

10. It is by these matters that the applicant's locus stand in her present application is to be judged: the applicant's alleged "direct right" and her alleged "possession" envisaged by Rule 63(1) which should not be examined in isolation, would oversee her prayer to be joined and Rule 22(8) would enable the Court to set aside the default judgment insofar as the applicant may be affected if and when she is allowed to be added.

11. Of the three elements on which the applicant founds her claim to a "direct right", her alleged uninterrupted occupation of land without "adverse possession" cannot create any legal title. Payments of rent by the applicant for the months of February and March last past can also have no legal consequences. The plaintiff was unaware of the defendant's conviction until the 21st March 1979. By then, the rental for February and March ought to have been and was in fact paid. The fact that such payments were made by the applicant with her own money can take the matter no further, particularly when there is no evidence that such rental was known to have been provided for with the fund of the applicant. After all, rent receipts were still being issued by the plaintiff in the name of the defendant.

12. The only submission worthy of serious consideration is the applicant's alleged contribution as a wife in the form of valuable services rended. The applicant sought to rely heavily on Williams & Glen's Bank Limited v. Boland & Brown⁽²⁾ in which the learned Master of the Rolls endorsed the decision of the House of Lords in Gissing v. Gissing⁽³⁾ to the effect that a wife who contributes "in money or money's worth" to the purchase of the matrimonial home will acquire a beneficial interest therein. Gissing v. Gissing was a case where a wife paid for some furniture and the improvement of the lawn as well as contributed to household expenses, the House of Lords declined to infer from such contributions a common intention for the wife to share in the beneficial interest in the matrimonial home. It stands to reason that domestic service so readily given by a wife would not of itself point to the conclusion that there was any such common intention. The case of Gissing places a wife's claim to a share in the matrimonial home on the correct basis of a resulting trust. On the aspect of domestic chores, the observation of Lord Morris at p. 783j to p.784a is enlightening:

"There may be services rendered in respect of which some reward was expressly or impliedly promised; there may be services rendered without any contemplation of any such result; there may be services rendered or payments made without any thought that any property rights could be or would be in any way affected."

The alleged payments by the wife applicant would, in my view, fall into the last of these categories.

13. Lord Diplock, in the same case, put a wife's contributions to household expenses into two neat compartments: one was for a common intention merely to share the recurrent expenses and the other a common intention to adjust her contributions to other expenses of the household so as to spare fund for the acquisition of the matrimonial home. Of these two main purposes, at p.793h and g respectively Lord Diplock described the wife's conduct as:

14. In Hargrave v. Newton ⁽⁴⁾ Lord Denning offerred a "simple test":

"Did the wife make a substantial contribution, direct or indirect, to the acquisition of the house or the repayment of the mortgage or the loan? If her efforts or her contributions relieved him of other expenses which he would otherwise have had to bear - so that he would not have been able to meet the mortgage instalments or the loan without her help - then she does make an indirect contribution."

15. In Hazell v. Hazell⁽⁵⁾ Megaw L.J. summed up succinctly that it would be sufficient to let the wife in to share the matrimonial home "if as a matter of common sense the wife's contributions ought to be treated as being a contribution towards the expenses of the acquisition of the matrimonial home."

16. Rendering domestic services as a wife would hardly, of itself, have made any reasonable husband realize that in doing so she was making a contribution for the purpose of acquiring a tenancy. In my judgment, the applicant's alleged contribution by way of wifely domestic services could not be said to be and was not referrable to the acquisition of the tenancy interest in the suit premises by her husband. It would be unrealistic to suggest that any of the alleged contributions made by the wife applicant in the nature of personal services in the household was such as to relieve the husband defendant of any expenditure which he would otherwise have had to bear in the obtaining of the tenancy of the suit premises from the plaintiff.

17. A wife's contribution in money's worth would not have necessarily become earmarked for payment of rent, but even assuming the applicant to have contributed in money or in service to the rental payments of the suit premises under the letting by the plaintiff to the defendant, it is still the law that such contributions would not give rise to a resulting trust in the tenancy interest for her benefit. In Savage & another v. Dunningham⁽⁶⁾ where three young chartered surveyors shared the rental of a furnished flat under a tenancy agreement in the name of one, it was held by Plowman J. that the contributions made to payment of the rental did not set up a resulting trust in the tenancy interest for the other two contributories. At page 432g, the learned judge had this to say:

"Then in a subsequent passage in Lewin there is the proposition under the heading 'Purchase by two in the name of the third':

Those propositions were well established and, though there is apparently no reported case in which the resulting trust of a tenancy for one year has been held to have arisen, I see no reason in principle why such a trust should not arise, for example where others have contributed to a premium paid by the tenant, although a premium in such a case is unlikely; but what is more significant is that there is no authority for the proposition that the expression 'purchase money' in the context of a resulting trust can include rent. Rent, unlike purchase money, is not paid for the acquisition of a capital asset, but for the use of a property during the term. In my judgment, therefore, the fact that the plaintiffs and the defendant shared the rent does not establish a resulting trust in favour of the plaintiffs."

18. Further, the House of Lords have also held in National Provincial Bank Ltd. v. Ainsworth,⁽⁷⁾ that a deserted wife enjoys no interest in equity in the matrimonial home.

19. The applicant is in occupation of the suit premises and was an occupier before the defendant's alleged desertion. Great play was made of certain observations of the learned Master of the Rolls, Lord Denning, in Williams & Glen's Bank Ltd. v. Boland & Brown⁽²⁾. That was a case of registered land in the United Kingdom which a purchaser would take free from all encumbrances save for, inter alia, two classes of interests. One of these classes of interests consisted of "overriding interests" defined in Section 70(1) (g) of the Land Registration Act 1925 as including the rights of a person "in actual occupation". The Court of Appeal differed from the view of Stamp J. expressed in Caunce and Caunce ⁽⁸⁾ that a wife was not "in actual occupation" of the matrimonial home as against the mortgagee when her husband was also an occupier. The Court of Appeal took the view that the wife could be and was herself equally in actual occupation. The applicant claims to have been deserted, and therefore her occupation would not be complicated by the presence of her spouse. But "actual occupation" was considered in Caunce's case under a wholly different enactment, as was the construction put on the word "possession" in a completely different local legislation ⁽⁹⁾, and it has never been challenged in this case that the applicant had been a person in occupation of the suit premises prior to her eviction in execution of the judgment against the defendant. Come what may, the decision to join a person "in possession" would depend ultimately on whether or not he has a title independent of that of the evicted tenant.

20. The "direct right" canvassed on behalf of the applicant was exhaustively ventilated before two Full Courts in conjunction with the notion of "a person in possession". Such "direct right" on which much emphasis has been laid was examined by Hogan, C.J. in CHAN For v. Lee Shing Lands Investment Co. & another⁽¹⁰⁾ under its synonym "independent right". In CHAN For's case, on a similar provision in our old Civil Code, the Full Court held that without any claim to statutory protection independent of the right of an evicted tenant, the person "in possession" could not be admitted to defend. In delivering judgment of the Full Court, Sir Michael acknowledged a judicial discretion in granting or refusing joinder of an applicant "in possession" but left open for future consideration the extent and scope of its exercise. The learned former Chief Justice observed at page 504:

"It may well be that, .......... an applicant who, having knowledge that proceedings for recovery of possession have been instituted, forbears to take any steps either to be joined in the proceedings or to have them arrested, should not be permitted to come in after judgment and execution have issued; but, as we do not think it necessary to decide this question in the present case, we would prefer to leave the matter open for fuller argument .........."

21. There is no evidence of any inordinate delay or misconduct on the part of the applicant in bringing her present application. The versions volunteered by both solicitors for explaining delay as being only apparent are not entirely unambiguous. No more need be said.

22. A similar question arose almost immediately in the same year for the consideration of the Full Court in the case of LUI Chi-wan v. WONG Wang-ying and others ⁽¹¹⁾ in which Hogan, C.J. reaffirmed the earlier decision in CHAN For's case. The decision of the Full Court was unanimous, but the members shared no parity of reasoning. Mr. Justice Huggins, as he then was, was of the considered opinion that a person "in possession" need show no more than "actual, personal or physical possession". I make no apology for quoting in extenso the entire passage in the judgment of the learned judge at pages 757 & 578:

"'Possession' for the purposes of Order 22 rule 3 (the predecessor to the now Order 15 rule 10(1) R.S.C. and Rule 63(1) of the District Court Civil Procedure (General) Rules - these words within brackets are mine) means no more that actual, personal or physical possession - call it what you will. Once that is shown .......... an applicant is prima facie entitled as a right to leave to appear and defend. There is nothing more for him to do. At the same time I think there is a limited discretion in the Court to refuse an order even to an applicant who has shown he is in possession and it is to be exercised when the respondent establishes good ground for its exercise. In reality it is no more than the inherent juris-diction of the Court to prevent abuse of its process. Thus the Court will not permit an order of ejectment to be frustrated by an applicant who, although he is in possession, is shown to be claiming by virtue of a title which is dependent solely upon the now defeated title of the judgment-debtor .......... If the Court had no power at all to refuse leave to an applicant who proved his possession, the judgment-debtor could deprive the judgment-creditor of the fruits of his victory by putting in possession of the premises a sussession of subtenants or even licencees. Similarly the order for ejectment might be frustrated by an applicant who knew of the action but deliberately allowed it to continue to judgment without revealing his claim (albeit a claim independent of the judgment-debtor) to be entitled to possession."

Whilst Hogan, C.J. leaned in favour of the existence of an "independent right" as one of the pre-requisites of success by an applicant "in possession", Mr. Justice Huggins, as he then was, would admit a mere occupier subject to the Court's inherent jurisdiction to prevent an abuse of its process by rejecting any claimant with an alleged right dependent solely upon the title of an evicted tenant.

23. It was conceded that the applicant made no contribution to the acquisition of the tenancy from the plaintiff save that, as it was submitted, in substance she might possibly have contributed towards the rental payments by her personal services rendered to the defendant tenant and the family. There is no real evidence to substantiate such alleged rental contribution, and contribution to payment of rent could not per se bring about any interest. Clearly, in my view the applicant has acquired no interest in the tenancy of the suit premises either in her own right or through the defendant. In conclusion, she has no right independent of that of the defendant's and has thus no locus stand. In fact, she has shown no right at all except for her mere occupation. Whichever one of the two approaches adopted in LUI Chi-wan's case is to be followed, this application must in the end be denied, as the applicant is either not endowed with an "independent right" to be added as a person "in possession", or being in "actual, personal or physical possession" she has no title independent of that of the judgment-debtor's and should therefore be excluded. The applicant cannot succeed. The application must therefore be dismissed with costs on the upper scale and costs for the applicant herself be taxed in accordance with the Legal Aid (Scale of Fees) Regulations also on the upper scale.

Representation:

Mr. Peter Hon of Messrs. Hon & Co. for Plaintiff.

Mr. Douglas Ng of Messrs. Raymond Tang & Co. assigned for Applicant.

Defendant absent.

(1) For equitable jurisdiction to grant relief in the High Court. See CHEUNG SO Yin-kay v. CHEUNG Biu, 1970 HKLR 383; KUNG Wai-ying v. A.G. 1974 HKIR 1. The District Courts seem to enjoy the same equitable jurisdiction under Ss. 37 & 48 of the District Court Ordinance.

(2) [1979] 2 A.E.R. 697.

(3) [1970] 2 A.E.R. 780.

(4) [1971] 3 A.E.R. 866 at p.869a.

(5) [1972] 1 A.E.R. 923 at p.928h.

(6) [1973] 3 A.E.R. 429.

(7) [1965] 2 A.E.R. 472; 1965 A.C. 1175.

(8) [1969] A.E.R. 722.

(9) S. 36 Landlord 7 Tenant (Consolidation) Ordinance. See also Willie Co. v. Lo Man & Welfare Co., 1957 HKLR 512 at p.536; Donald W. Shields v. Mary Chan 1971 HKLR 223 at p.229; Chan Chak & another v. Ng Lai 1959 DCLR 106.

(10) [1963] HKLR 499.

(11) [1963] HKLR 733.