Hassan Sadee Lai Hop Siu v. Chung Lai-cheung and Others

DCCJ000944/1980

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT TSUEN WAN

CIVIL JURISDICTION

ACTION NO.944 OF 1980

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Coram: His Honour Judge Downey

Hearing Dates: 25th May 1981 - 1st June 1981

Date of Judgment: 4th June 1981

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JUDGMENT

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1. By a writ, issued on the 9th July 1980 and subsequently amended and re-amended, the plaintiff seeks to recover possession of domestic premises, consisting of flats 5 and 6 on the 5th floor of Yau Shing Building, 501, Castle Peak Road, Kwai Chung ("the premises"), which were allegedly let to the 1st defendant, Madam CHUNG Lai-cheung, at a monthly rental of $960 for a term of three years commencing on the 1st July 1977, by virtue of an agreement in writing dated the 1st July 1977 ("the third agreement") Paragraph 4 of the Particulars of Claim acknowledges that the 1st defendant's tenancy of the premises is governed by Part II of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7), and the plaintiff seeks to recover possession on three grounds, namely, subletting in breach of express terms of the aforesaid tenancy or an agreement, made in 1971, to the same effect, subletting without the plaintiff's written consent, contrary to section 53(2)(e) of cap.7, and because the plaintiff reasonably requires the premises for occupation as a residence for herself and her son. In other words, the plaintiff is seeking to invoke the court's jurisdiction under section 53(2)(a), (b) and (e) of Cap. 7.

2. It is common ground that the premises were first occupied by the 1st defendant and members of her family in June 1971, as a result of an agreement or arrangement made with the plaintiff at that time and later formalised by a written document, which I will refer to as "the first agreement". The parties to this agreement are stated to be the plaintiff and FUNG Shu-wing, who is the elder son of the 1st defendant. It is also common ground that the 1st defendant's occupation of the premises was continued, and was formally recognised by written agreements dated the 1st July 1974 ("the second agreement") and the 1st July 1977 ("the third agreement"), each made between the plaintiff and the 1st defendant.

3. It has been contended that Mr. Fung entered into the first agreement as agent for his mother, the first defendant, who was present when the agreement was signed. Fortunately, I do not have to resolve that question, because it was eventually conceded that, notwithstanding any cessation of the tenancy created by the first agreement which might have occurred upon any change in the identity of the tenant (of section 52(2) of Cap.7), the tenancy of the premises in existence on the 1st July 1974 then enjoyed the protection of Part II of Cap.7, and has continued to be so protected since that date. I am indebted to Mr. Mok for his very thorough and clear submissions no the effect of changes in the statute since 1970 and the application of the principle in Capital Land Investment Co., Ltd. v. SE Mong-kai [1973] H.K.L.R. 371. The result is that the tenancy or tenancies created before the 19th December 1975, when Ordinance No. 93 of 1975 was enacted, did not come to an end on the 1st July 1977, when the third agreement was entered into, with the consequence that the 1st defendant was not affected by the reintroduction of the exclusion of tenancies for a fixed term of three years by Ordinance No. 93 of 1975. Accordingly, the relevant time for the purposes of the plaintiff's second ground is "after 14th December 1973" (of. section 53(2)(e)(i). This is important, because the sub-tenancies admittedly entered into by the 1st defendant were all created before the 18th December 1979, and for reasons I will give later, I find as a fact that the 1st defendant did not sublet any part of the premises after that date.

4. Although it is not necessary for me to decide who was the tenant under the first agreement, the facts leading up to and surrounding the execution of that agreement are extremely relevant to each of the grounds on which possession is sought, and to the counter-claim for rectification of the tenancy agreements. Putting it very briefly, the plaintiff's case is that before the 1st defendant was allowed to occupy the premises in June 1971 it was orally agreed between the parties that there was to be no subletting of the premises, or any part thereof; that, in breach of that agreement or understanding, and without the plaintiff's permission or knowledge, the 1st defendant has sublet several rooms in the premises; and that she now requires the premises for herself and her son, who will be getting married on the 5th June 1981. At present she and her son share a very small room in Wanchai. In answer, the 1st defendant contends that, far from agreeing not to sublet, it was expressly agreed in June 1971 that she should be entitled to sublet, and on several occasions she has done so in reliance upon this agreement or the plaintiff's oral permission. She further contends that, in any event, the plaintiff has had full knowledge of the sub-lettings and waived any rights, contractual or statutory, she might have in respect thereof. She further denies that the plaintiff reasonably requires the premises for her own use and says that it would manifestly not be just and equitable to make an order on this ground.

5. The evidence relating to the prior negotiations and the signing of the first agreement is in a similar state of acute conflict. The 1st defendant and her son said that when they viewed the premises in June 1971; in response to an advertisement in a newspaper, they were told by Madam WONG Luen-luen, who is the plaintiff's sister-in-law, and Madam LAI Tai, a clan sister of the plaintiff, that the 1st defendant could sub-let the premises. This assurance was repeated when they visited the plaintiff at her home in Johnston Road, Wanchai, where the first agreement was written out by the plaintiff's son, HUI Cho-man, and signed by the parties. Later, the agreement was brought to the premises to be "witnessed" by LAU Yuet-wah, who was one of the sub-tenants and was introduced as such to the plaintiff. All of this is denied by the plaintiff, Madam Wong and Mr. Hui. Madam LAI Tai did not give evidence. The plaintiff and her witnesses said that no assurance or permission to sub-let was given on either occasion. The first agreement was not written out by her son at the plaintiff's home, but after that meeting by a street letter-writer. The agreement was not signed at the plaintiff's home, but at the premises, and the so-called "witness" was merely introduced as a friend of the 1st defendant. The circumstances surrounding the signing of the second and third agreements are similarly shrouded by conflicting evidence. It seems to me that the events of June/July 1971 are crucial to the issues between the parties, and I must endeavour to resolve these serious conflicts.

6. Having listened carefully to the evidence of these witnesses, and observed their demeanour in the witness-box, I regret that I am unable to treat any one witness as so totally truthful and reliable that by accepting or preferring his or her evidence. I can resolve these issues of fact speedily and shortly. I consider that they have honoured the first promise contained in the terms of their oaths and affirmations, but the rest is a complex mixture of untruths, half-truths, distortions and sheer defects of recollection. I must make considerable allowance for the latter, because the principal events occurred ten years ago and there has been no dispute or signs of discord between the various parties until May of 1980. On the contrary, during these nine years they seem to have got on well together and occasionally have mixed socially. In this situation, it seems to me that the most useful approach is to look first at those facts and circumstances which speak for themselves and any agreed or undisputed facts, and then consider the extent to which they are consistent with the oral evidence of the witnesses. Fortunately there are a number of useful facts in this category, which I set out as my findings in the following three paragraphs.

7. After purchasing the premises, in 1967, the plaintiff removed the party wall between the two flats and partitioned the combined area into eight bedrooms, three toilets and one kitchen. A new door to the premises was erected in the corridor, as indicated in red on the agreed sketch-plan. In addition to the electricity meter for the entire premises, the plaintiff installed sub-meters in the rooms which she rented to tenants. She could not remember whether they were installed in seven or eight of the rooms, but they have never been removed.

8. Each of the three agreements is handwritten. They do not appear to have been written by the same person. Their terms are identical, save for the figures for rent and the deposit. They contained no provision relating to subletting, and no express proviso for re-entry for any breach. They are in two parts. The original or top copy was kept by the 1st defendant, and the carbon copy was retained by the plaintiff. Both copies were stamped by the Stamp Office. This was done by the plaintiff, at the suggestion of the 1st defendant. The first agreement was stamped on the 3rd July 1971. It is common ground that it was "witnessed" by LAU Yuet-wah at the premises at the beginning of July 1971, some two or three weeks after the 1st defendant moved into the premises. The signatures of the parties are in black ball-point ink, whereas the terms of the agreement are in blue ball-point ink. The plaintiff prepared all agreements, or caused them to be prepared by someone on her behalf.

9. The plaintiff also owns a flat in Po Fu Mansion, Percival Street, which she let "some 10 odd years" ago under an oral agreement with permission to sublet.

10. In my view, there is substance in Mr. Mok's submission that the fact that the premises were in a state which made them eminently suitable for subletting when they were let in 1971 indicates that the plaintiff knew that there would be subletting and consented thereto. I do not think that an inference to that effect can be drawn from the fact that the plaintiff did not re-convert the premises into two flats. That would involve a major operation. But, I do think that the retention of the sub-meters in the bedrooms lends some support to such an inference. They are not the kind of fixture one would expect to find in premises let solely for the use of a tenant's family. I appreciate that they may have been kept in the rooms simply to avoid the expense of removing them, or from mere inertia on the plaintiff's part. But, their retention suggests, in my view, that the plaintiff contemplated that the premises would be occupied by persons who might be disposed to dispute the contribution they should make to the cost of electricity supplied to the premises as a whole. In normal circumstances, such disputes would be unlikely to arise between members of the tenant's family. But, they are very likely to arise between the tenant and "outsiders", either in the form of disagreements over the amount to be contributed by the occupants towards settlement of the monthly bills, or the inclusive rental to be paid by a sub-tenant.

11. The inference that the plaintiff consented to sub-letting from the very beginning can, in my view, be more easily drawn from the fact that the first agreement was silent on this point. Instead of using the standard form of printed agreement which, like rent receipts, are easily obtainable from any stationery shop, the plaintiff brought into existence a hand-written agreement, which contained no prohibition against subletting. She said that it was copied from, or based upon, a tenancy agreement she had borrowed from her brother, who used to live in the premises but moved into roof-top structures above the premises shortly before the 1st defendant occupied the premises. I think that that is probably true. But, it does not explain why the plaintiff did not indicate in the first agreement, or the subsequent agreements, her alleged opposition to any subletting of the premises. It would have been easy for her to impose her own terms upon the plaintiff. In my view, the state of the premises and the state of the first agreement, taken together, point to permission to sublet having been given to the plaintiff. I am satisfied that the 1st defendant did ask if she could sublet some of the rooms and that she was told by the plaintiff and Madam WONG Luen-luen that she could do so. My finding on this issue is reinforced by the fact that the plaintiff admitted that at that time she preferred to have one tenant rather than several tenants in the premises, because of her previous experience of tenants leaving without paying rent and other bills. I do not attach much significance to the fact that she gave the tenant of her flat in Percival Street permission to sublet, as it is not clear when that was done. By the phrase "some ten odd years ago", she may have been referring to 1971. But it could also have been as far back as 1962. She referred to her son as being only "ten odd years" of age in 1971, whereas he was then aged 17.

12. Having found as a fact that the plaintiff did give permission to sublet in 1971, I do not consider that the plaintiff withdrew her permission at any time before the letter from her solicitors dated the 27th May 1980. Nor do I think that their legal position was altered by the fact that printed rent receipts, in the form of Exhibit P7 were subsequently issued by the plaintiff. They could not, in my view, override the written agreements. Furthermore, clause 3 thereof only prohibits subletting of the whole premises, and without the permission of the landlord.

13. It is strictly not essential to reach any findings on precisely how the first agreement came into existence, since it does not touch upon any substantive issue. It may affect the credibility or reliability of the witnesses, but in this particular case I consider that the conflicts between them are due mainly to faulty recollection. From the circumstantial evidence I think that it is more probable that the first agreement was prepared by a street-writer, as the plaintiff said, and that it was signed by all parties at the premises at the beginning of July 1971. It may be the case that something in the form of a rough draft was prepared at the meeting in the plaintiff's flat in Johnston Road. I also think that the 1st defendant's explanation of the reason why her son was the party to the first agreement - that she did not have her identity card with her - is correct. It makes sense for the plaintiff to ask for such proof of identity. Looking at the top copy of the first agreement (Exhibit D1), it would appear that the identity card number of Mr. Fung was inserted by the person who wrote out that document, and not by any of the parties when the agreement was later signed at the premises.

14. Not only am I satisfied that the plaintiff gave oral permission to subletting, I am satisfied on the totality of the evidence, that she had full knowledge that some of the rooms had been sublet by the 1st defendant at all material times. I do not propose to refer to the evidence in any detail, but from the facts that the plaintiff visited the premises to collect rent each month until about 1978, when her son began to collect rent, the presence of her brother and sister-in-law in the roof-top premises, and the frequent contact between them and the 1st defendant and other occupants of the premises, and the fact that the second and third agreements were expressed in the same terms and signed at the premises, an inference of knowledge and approval on the plaintiff's part is in my view almost impossible to avoid.

15. What, I think, happened in May 1980 is that the plaintiff's sister-in-law gained a mistaken impression that the 1st defendant and members of her family had moved out of the premises, leaving them to be entirely occupied by sub-tenants, some of whom were probably unknown to Madam Wong, as they had only moved into the premises in 1979. When the plaintiff heard about this from Madam Wong, and was unable to contact the 1st defendant, she became alarmed by the prospect of having to face the same or similar problems she had before 1971 over the non-payment of rent etc. Although there is some slight suspicion that the 1st defendant may have been absent from the premises, I am satisfied on the balance of probabilities that she did not give up occupation of the rooms in which she and members of her family resided. Accordingly, the plaintiff has not, in my view, established her right to possession on either of the first two grounds. I should, perhaps add that, although there was a suggestion or suspicion of further sub-letting after the 1st defendant's married sons left to live elsewhere in 1980, I do not consider that there is any or sufficient evidence to support subletting at that time. I accept the 1st defendant's evidence that she took advantage of her sons' departure to give herself and her relatives a little more living space.

16. I turn now to the third ground on which possession is sought. With regard to the matters which are relevant to this part of the case, I consider that the parties and their witnesses have given me a sub-stantially true and accurate account of their circumstances and needs.

17. The plaintiff is a widow, and now lives with her son, aged 27, in one room in Wanchai. Its area is about 60 square feet for which she pays a rent of $500 per month. She works as a cleaner at Tamar earning $1,350 per month. Her son is a bookkeeper earning a basic salary of $1,400. He is to be married on the 5th June 1981, and it is the plaintiff's intention and desire that, after the marriage, she will live in the premises with her son and daughter-in-law. As I have said, she owns another flat in Percival Street, which has three bedrooms, a living room, kitchen and toilet. She agreed that this flat would be suitable for her and her son and daughter-in-law, but she does not know whether she could recover possession of it. She says that she prefers to live in the premises, because her relatives live there, and she has friends in Tsuen Wan and it is better to live in the New Territories, where she can have fresher air.

18. In respect of the question whether the plaintiff "reasonably requires" the premises for her own occupation, Mr. Mok has submitted that the plaintiff has not discharged the onus upon her. He points to the fact that no oral or written assertion of this desire was made until the writ was issued. He has referred me to page 286 of Megarry on the Rent Acts, where it is stated that the unexplained absence of such assertion may be of great importance. With respect, I would in general agree with that proposition. It is rather surprising that this reason for requiring the premises was not given in the letter dated the 27th May 1980 or that dated 11th June, 1980. But, in the absence of any other evidence suggesting that the plaintiff's desire is not genuine, I do not regard it as fatal to the plaintiff's case. This oversight or omission may be due to the fact that until August 1980, when her son decided to get married she may not have appreciated how pressing was her need for larger accommodation. The fact that she has put forward a claim, which I have found to be unsubstantiated, is a factor which I must bear in mind. But, in the circumstances of this case, it does not cause me to harbour any serious doubt about the genuineness of the plaintiff's present assertion of her needs. By some process, when she gave evidence I think that she had convinced herself in her own mind that she had not given permission to sub-let, and put forward that claim to bolster up her case based on her present need.

19. Mr. Mok has also submitted that it is not reasonable to require the premises from the 1st defendant when she has another flat which is more convenient, and when she has made no attempt to recover possession of that flat. If that flat were readily available, I would with respect agree with that submission. But, although I have not heard evidence as to the occupation of that flat, other than that the tenant has been there many years and has permission to sublet, it is not readily available. I do not know whether she would have a better prospect of regaining that flat than the present premises.But, in my view, her failure to make any attempt to recover possession does not mean that she does not "reasonably" require the premises. Where a landlord has two flats, occupied by tenants enjoying statutory protection against eviction, I consider that it is for the landlord to choose which flat he or she wishes to live in, I do not consider that he or she must launch proceedings simultaneously to recover both flats. To do so might result in both actions failing. In this case I am satisfied that the plaintiff has shown a genuine present need for larger accommodation than she presently enjoys. Her requirement is in my view reasonable. Insofar as the premises are greater than her real needs, and the fact that her decision to proceed against the 1st defendant rather than the tenant of her other flat can be criticised, I consider that these are factors which are more relevant to the question whether it would be manifestly unjust and inequitable to make an order. In all the circumstances, I am satisfied that the plaintiff reasonably requires the premises for her own occupation.

20. The first defendant is a housewife aged 54, She lives in the premises with her husband, who is aged 62 and retired, two daughters, one of whom is still at school in Kwai Chung, her mother, who is aged 89, deaf and partially blind, and her husband's aunt. She also said that one of her granddaughters lives with her at the premises, but I am not satisfied that this is the case. She and her family appear to occupy four rooms in the premises. Up to last year they occupied two rooms, but spread themselves out when her two sons vacated their rooms and moved to a flat in Clear-water Bay.

21. The 2nd defendant is a housewife, aged 27, and she lives in one room with her husband, who is an instructor in the Prisons Department earning $2,400.00 per month, and their two small children, aged 2½ years and 5 months.

22. The 3rd defendant is 23 and works in a garment factory earning $900-$1,000 per month. She occupies one room with her two sisters who each earns about $700 per month in a toy factory. She remits $600 to $700 each month to their parents in China.

23. The 4th defendant no longer lives in the premises. There is some mystery about her identity which was not really resolved at the hearing. Mr. Mok, who represented her, had never met her, and his instructing solicitors do not apparently know her correct name. Mr. Wong, in his final address, suggested that as the name of the 4th defendant had been supplied by the 1st defendant, and it was different from that by which the 4th defendant was known to the 1st defendant when she was living in the premises, this suggested that the 1st defendant had left the premises, and did not know who was living there. Although the mystery remains, I do not think that it supports the inference suggested. The 1st defendant was quite frank in saying that this person was known as Yim.

24. The 5th defendant is aged 21 and works in a garment factory earning $800 per month. He lives in one room with his two brothers, who each earns $600 to $700 as apprentices. He and, I think, his brothers have been in Hong Kong for two to three years.

25. On the evidence I have heard from these sub-tenants, which I accept, it is quite clear that, after all usual expenses have been met, they have little or nothing left from their respective incomes, and are not in a position to pay what is currently being asked for similar accommodation elsewhere. They are paying rents ranging from $200 to $380 for their present rooms, compared to $750 or $800, which is being asked for alternative accommodation they have looked for.

26. The 1st defendant receives $800 per month from her subtenants, $1,200 from her elder son, $1,000 from her younger son $500 from her daughter and $200 from her husband's aunt. She pays a rent of $960 for the premises, which have a total area of about 900 square feet. She has looked at premises ranging from 300 to 400 square feet, and has been asked to pay rents ranging from $2,000 to $3,500 per month.

27. In summary, a total of some 16 persons, now residing in the premises would have to be displaced in order to make way for three persons, whose actual needs could be met by two or three rooms. In my view, a just solution to the genuine needs of all these persons would be to let the plaintiff have two rooms in the premises. This would mean that the 1st defendant would have to give up the two rooms she and members of her family moved into last year. I do not know whether this has been considered. I have no evidence of any offer being made along these lives, and, accordingly, I cannot regard any refusal by either the plaintiff or the 1st defendant as a factor which I must take into account. Unfortunately, the ordinance does not permit me to make an order affecting only part of the premises. I can only make an order terminating the tenancy. Although, I have found that the 1st defendant did have permission to sub-let, so that the present sub-tenants are lawfully in occupation of their respective rooms, it seems to me, from a consideration of the decisions of the Court of Appeal in CHOW Wing v. YUEN Chi-hung, Civ. App. No. 145 of 1980, and LO Wah v. CHUI Fun, Civ. App. No. 152 of 1980, that they would have no independant substantive right to remain in the premises if the 1st defendant's tenancy were terminated. Their interests must be taken into account when considering whether it would be thoroughly unjust to make an order. Although I think that the 1st defendant might be able to afford to pay the current rent being asked for alternative accommodation, I am quite satisfied that that is not so in the case of the sub-tenants. The plaintiff need more than one room, and I think that, if her circumstances or those of her son are, or become, desperate, some space could be found in the rooftop premises, now occupied by her brother and his family. This would not be ideal, and does not amount to reasonable alternative accommodation to make her present requirement unreasonable. But it exists. Taking into account these and all the circumstances of the case, I think that the 1st defendant, largely with the did of the hardship to the subtenants, has established on the balance of probabilities that it would manifestly not be just and equitable to make an order for possession in this case. Accordingly, and with some considerable regret that I cannot make an order along the lines I have indicated, the plaintiff's claim for possession will be dismissed.

28. There is a Counterclaim for rectification of the "said" tenancy agreements, which presumably refers to the three agreements entered into in 1971, 1974 and 1977. The defendants ask for the addition of a term permitting the 1st defendant to sublet part or parts of the premises. In order to succeed in obtaining this discretionary remedy the defendants must adduce convincing proof that the agreements do not accord with the parties' true intentions at the time they were entered into. It must, in my view, be proved that the agreements are actually contrary to their intentions. That has not been proved in this case. The three tenancy agreements in the case are not contrary to the parties' intentions, as there is nothing to indicate or suggest that the 1st defendant could not sublet the premises or any part thereof. It might have been prudent to have inserted such a term, after subletting without a landlord's written consent became a ground for possession under what is now section 53(2)(e) of Cap. 7, but there is absolutely no evidence that either party had that consideration in mind at the time when any of these three agreements was entered into. Furthermore, I doubt whether it would be equitable to rectify a tenancy agreement when the contractual term has expired, but the tenancy continues by reason of a statutory provision which is aimed at protecting only one party. Accordingly, the counterclaim will also be dismissed.

Representation:

WONG Po-wing (Messrs. Walter Woo & Co.) for plaintiff.

Y.C. Mok (Messrs. T.S. Tong & Co.) for defendants.