Cheung Wong-shi v. Chan Fook-tai

DCCJ001059/1982

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT TSUEN WAN

CIVIL JURISDICTION

ACTION NO. 1059 OF 1982

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BETWEEN

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Coram: H.H. Judge Roy

Date: 20 August 1982

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JUDGMENT

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1. This action for possession is brought under Section 53 (2)(f) of Part II of the Landlord and Tenant (Consolidation) Ordinance Cap. 7. The subsection is worded in a negative way providing that an Order for possession shall not be made unless the Court is satisfied that the tenant or sub-tenant has used, or has suffered or permitted the use of the premises of which he is the tenant or sub-tenant, or any part thereof, for an immoral or illegal purpose.

2. The premises concerned in this action are of a domestic nature and are known as No. 35 Ho Pui Street, 2nd Floor and Rooftop, Tsuen Wan erected on all that piece of land registered in the District Office, Tsuen Wan as Section B of Lot No. 2035 in D.D. No. 449.

3. I am satisfied that the said premises form part of an entirely new building within the meaning of Section 3 (1)(a) of the Ordinance in respect of which an occupation permit was issued by the Building Authority after 16th August 1945 and by virtue whereof part I of the Ordinance does not apply to the premises.

4. It is alleged against the defendant, who holds the premises as principal tenant at a monthly rental of $700, that she used or caused the premises or allowed the same to be used for immoral or illegal purposes in breach of section 53 (2)(f) of the Ordinance and in breach of an implied covenant against suffering or permitting the premises to be used for any immoral or illegal purposes. Particulars cited in support of this allegation are that of five persons who were arrested by Police in a gambling raid on the premises on 8th July 1981 one was subsequently charged and convicted of operating a gambling establishment and the other four of gambling in a gambling establishment.

5. The defendant, who was unrepresented at the hearing, in addition to putting the Plaintiff to strict proof of the matters alleged, says that plaintiff before the commencement of the action by acceptance of rent from the defendant waived any breach of covenant and counterclaims for equitable relief against forfeiture if it is found that the Plaintiff is entitled to possession as claimed.

6. The court record of the Tsuen Wan Magistracy relating to the gambling offences was produced. It is clear that of those convicted on 9th July, 1981 both the operator of the gambling establishment and one of the gamblers resided in the roof-top portion of the suit premises, where the offences occurred.

7. The defendant who is an elderly uneducated lady, said that the premises comprised the second floor flat and a roof-top structure. She had been the tenant since 1975. At first she occupied the wooden but on the roof-top but later in 1976 she moved to the second floor and with the consent of the landlord sublet the roof-top hut to a tenant, Mr. LAM Kau, the same person who was later convicted of operating a gambling establishment on the roof-top. She said she did not become aware of gambling activities in the roof-top until 1980 she then warned the sub-tenant that he must discontinue this conduct, failing which she would stop sub-letting the premises to him. Subsequently she told the sub-tenant to move out but he refused. It is acknowledged by the Plaintiff that in addition she stopped accepting rent from the sub-tenant in December 1981.

8. The first question I have to decide is whether by this conduct the defendant did "suffer or permit" the use of the premises for an illegal or immoral purpose. There have been a number of judicial decisions dealing with the meaning of the phrase "permit or suffer".

9. In Hall v. Ewin 1887 37 Ch. 74 the Court of Appeal had to consider the effect of a covenant in a lease that the tenant would not use the premises, or permit or suffer them to be used by any person for any noisome or offensive business. The defendant Ewin was the assignee of an underlease of a house. He in turn granted a further underlease to a person who opened a wild been exhibition in the premises. In an action against win and his undertenant for an injunction to restrain the use of the house in that manner it was that Ewin was not liable either at law or in equity for not taking active proceedings against his undertenant to prevent him from opening the exhibition. There was no evidence to show that Ewin had consented to the use of the house for that purpose and it appeared that after complaints had been made he had requested the undertenant to discontinue the exhibition.

10. Lopes, L.J. at p. 82 had this to say :

"But it is said that the words of the covenant are that he would 'not permit or suffer' the house to be used for an offensive business. It appears to me that we are being asked to interpret those words as if they were 'hinder or prevent'. The covenant might, indeed, have been worded in that manner if the parties had thought fit, and then it might have been the duty of Ewin to prevent the house from being improperly used."

11. In Berton v. Alliance Economic Investment Co. 1922 1 K.B. 742 another Court of Appeal case the lessors of a dwelling house brought an action against assignees of the lease upon a forfeiture for breach of covenant in that they had permitted sublessees to use the premises otherwise than as a private dwelling house and for suffering to be done therein an act to the annoyance of the Plaintiffs. Atkin, L.J. at p. 759 said :

"To my mind the word "permit" means one of two things, either to give leave for an act which without that leave could not be legally done, or to abstain from taking reasonable steps to prevent that act where it is within a man's power to prevent it. Acts which fall short of that, though they may be acts of sympathy or assistance, do not amount to permission at any rate in the covenants with which we are dealing."

Later, at page 761 he said :

"For my part I am inclined to think that in certain circumstances a man may permit the continuance of an act if he can prevent it by taking legal proceedings and refrains from doing so ……. But all the circumstances must be taken into account and where there is a reasonable doubt whether legal proceedings to stop an act would be successful, then he does not permit the act by abstaining from legal proceedings".

12. These cases and the later case of Atkin v. Rose 1923 1 Ch. 522 seem to me to indicate that it depends on all the circumstances of each case a covenantor may reasonably be expected to take proceedings in order to stop a breach of covenant on the part of his sub-tenant.

13. In the present case as I have said the covenant is not one inter partes but is imposed by statute and is worded in a negative form which prevents the Court from making a possession Order unless it is satisfied that the tenant has permitted or suffered use of the premises for an illegal or immoral purpose. It is clear that the defendant here did everything short of taking proceedings against her sub-tenant. She warned him against it when she first heard of gambling taking place on the premises. Later she told him to leave. Still later she stopped taking rent from him. Is it reasonable that in Hong Kong in 1982 an elderly uneducated Chinese lady should also be expected to issue proceedings for possession against her sub-tenant in these circumstances bearing in mind that this would entail expense and that there would be little if any defence to such proceedings? The defendant was not cross-examined as to why she did not take proceedings against her sub-tenant. It is not for we to speculate what her answer to this question might have been.

14. After giving anxious consideration to the question I have posed I feel constrained to answer it in the negative. The defendant certainly wave no leave to her sub-tenant to carry out the acts complained of, she did not deliberately close her eyes to what was going on and abstain from taking any action nor to my mind did she "permit or suffer" the premises to be used for those purposes. I would have answered the question differently had she taken no active steps whatsoever. However, her acts and omissions were not those of one who acquiesces in the conduct complained of, but rather to the contrary. I am not satisfied that she did permit or suffer her sub-tenant to carry on illegal activities on the premises.

15. Although my decision in effect disposes of the action, in case I am wrong I shall now go on to consider the point as to waiver. The defendant pleads that the plaintiff before the commencement of this action, by subsequent acceptance of rent, waived any breach of covenant express or implied of the tenancy. I am not aware of the details of the rent payments accepted by the plaintiff but it is clear that the defendant has continued her rent payments both before and since the commencement of the action as if nothing had happened, for she said in her evidence that her rent was paid up to 1st September, 1982. A letter was sent by the plaintiff's solicitors to the defendant specifying the breach of covenant and purporting to terminate the tenancy, on 2nd December, 1981. The writ was issued on 4th May, 1982. The question is whether this continued payment and acceptance of rent constitutes a waiver of the alleged breach and of the forfeiture.

16. Mr. Tong for the plaintiff argued that the landlord's final decision to treat the lease as forfeited was manifested in the letter dated 2nd December, 1981 and the subsequent acceptance of rent would not amount to a waiver. He relies on Civil Service Co-operative Society Ltd. v. Trustee of Sir J.R.D. McGrigor, Bart 1923 2 Ch. 347. However it seems to me that case was decided in so far as waiver is concerned, on the principle that the landlord had shown a final determination to take advantage of forfeiture by commencing an action to recover possession and no subsequent act operated as a waiver. In the words of Russell J. at Page 358 :

"I adopt the words of Coleridge J. in Evans v. Enever (1920 2 K.B. 315) when he says : "There is a series of cases which establish that if an action is brought for recovery of possession for breaches of covenants in the lease that is an irrevocable election to determine the lease and no subsequent acts of the plaintiff can be relied on as qualifying that position'."

17. In the present case there was a lapse of five months between the issue of the notice and the issue of the writ, during which time rent was apparently accepted by the plaintiff. I would be most reluctant to extend the principle re-affirmed in the Civil Service Co-operative Society Case which referred only to the commencement of an action, by holding that a letter purporting to terminate a tenancy which may or may not be followed by an action expressed an irrevocable election to determine that tenancy. I know of no case, nor have I been referred to any, where the principle I have mentioned was extended or made referable to any act other than the commencement of an action. In my opinion the landlord with knowledge of the cause of forfeiture continued to accept rent thereby recognising that the tenancy continued to subsist and the landlord must be taken to have waived any forfeiture.

18. There will therefore be judgment for the defendant. There will be no order as to costs. The exhibits will be returned to the parties after the time limited for appeal has expired. Of course if there is an appeal the exhibits will await an order on appeal.