Dah Luen Investment Co Ltd v. Wing Tai Hang (A Firm)
Read the full judgment text of DCCJ 7377/1980 on BabelCite. This District Court judgment.
1. The plaintiff as landlord seeks possession of premises known as Rooms C and D, 11/F., Wah Tai Sang Commercial Building, 77/91 Queen's Road West, Victoria.
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DCCJ007377/1980 IN THE DISTRICT COURT OF HONG KONG HOLDEN AT VICTORIA CIVIL JURISDICTION ACTION NO. 7377 OF 1980 -----------------
----------------- Coram: Judge Caird in Court. Date of Judgment: 6th August ,1981 ----------------- JUDGMENT ----------------- 1. The plaintiff as landlord seeks possession of premises known as Rooms C and D, 11/F., Wah Tai Sang Commercial Building, 77/91 Queen's Road West, Victoria. 2. Originally the defendant was Tai Sang Land Development Ltd. and at the commencement of the hearing, the plaintiff sought to amend the particulars of claim by recording that Tai Sang Land Development Ltd. was suing as attorney for the landlord. I permitted the present plaintiff to be substituted when the application was damaged. It transpired in evidence that the plaintiff is a wholly owned subsidary of Tai Sang Land Development Ltd. 3. Contractual relations between the parties commenced when a tenancy agreement was entered into dated the 19th of September 1978, this for a term of 2 years. The agreement was in standard form as used by the plaintiff and Clauses 7 and 17 provide as follows:-
4. It was the plaintiff's case, that despite the terms of the tenancy agreement, the user of the premises was commercial and that the provisions of Part II of the Ordinance did not apply. The defendant's case was that the premises had been used as a dwelling in accordance with the agreement and that it enjoyed the protection of Part II of the Landlord & Tenant. (Consolidation) Ordinance, Cap. 7. 5. A notice to quit was issued pursuant to Section 122 of the Ordinance (P11), this was dated the 11th of March, and I hold that this was properly served. However, the contents of the notice are of some importance. The notice is addressed to Wing Tai Hong at the suit premises and reads as follows:-
6. It is of considerable importance that the holding company who is not actually the landlord had instructed the solicitors to issue the notice to quit and that they referred in the notice in the clearest and most unequival of terms as the holding company being "your landlord". I shall return to this later. 7. The plaintiff's evidence 8. Benedict KOO Kin-man, Manager of Tai Sang Land Development Co. Ltd. was the 1st witness called on behalf of the plaintiff. He explained the management relationship between these two companies, the plaintiff being a "100% subsidiary of Tai Sang". He stated that the whole block was commercial premises and that the occupation permit was issued for the premises to be used as commercial premises (P1). He believed the business of the defendant to be "a tea leaf shop". He produced the tenancy agreement, between the management company and the defendant as exhibit P3. His evidence was that the agreement was a standard form and that when premises were being used for commercial purposes the word "domestic" would be deleted and the appropriate user substituted. The agreement was typed by a female employee and there were some 50 to 60 tenants in the building, all commercial users. He claimed that all the agreements in the file produced by him had been changed except the present agreement P3 where there was a mistake in leaving the user as domestic. 9. The witness produced exhibits P4(a) and (b) to establish that the rateable value of the premises was $14,880 thus bringing the action in respect of recovery of the premises within the jurisdiction of the District Court. Mr. Koo went on to explain that no rent had been received or accepted since the agreement expired, and he also asserted that the current rental value for the suit premises is $5-7 per sq. ft. This in contrast with the original agreement providing for rent at $1 per sq. ft. In cross-examination, the witness agreed that his company let out premises in other buildings for domestic purposes. The witness also referred to receiving complaints as to delays in lift movements due to the transportation of tea leaves within the building. He disagreed when it was put to him that it was originally intended that the suit premises were to be used for domestic purposes. 10. During the lunch adjournment Mr. Young had an opportunity to inspect the bundle of tenancy agreements relating to the building after which he agreed that some agreements were amended so as to delete Clauses 7 and 17 but were not initialled. Others were initialled by both parties. Still others by only one party. Further in some agreements only one or other of the clauses were deleted and words denoting a commercial user substituted, or the words were deleted and nothing substituted. 11. This assessment by Mr. Young was accepted by Mr. Chain subject to re-examination. The witness was cross-examined about usage of rooms on the 4th and 5th floors and replied stating that as far as he could remember, they were used as a godown. 12. The 2nd witness Yam Cho Yam was caretaker of the Building. He stated that there were no bathroom in the whole of the building and that the main gate was locked from midnight to 6 a.m. that goods was going up and down lifts and that a Mr. Lau lived there. He said he had instructions from his company that no one was to live in the building. The witness when asked as to what was the meaning attributed by him to "live". He replied "living there at night working on the following day". 13. The 3rd witness for the plaintiff was Tse King Tim, a rent collector employed by Tai Sang Land Development Ltd. He stated that Wing Tai Hang was "residing" at Flat C and D on the 11/F. and that the last occasion he went to the premises to collect rent was in September of last year. That there was a wooden partition in the premises in December and there were goods namely tea leave stored and desks present in the premises. Prior to December 1980 there was no partition in the premises. The witness produced some photographs taken by him on the 17th day of July, the first day of hearing. (P10(a)-(c)) He acknowledged that there were some clothing shown hanging in front of the partition. He stated that he did not go behind the partition. He claimed that when collecting rent he never seen personal belongings or occupants inside the suit premises. He maintained that there were goods, desks, sofa and telephone. 14. The 5th witness called on behalf of the plaintiff was Hui Kwok Wai who was employed in a dual capacity by Tai Sang Land Development Ltd. as a Clerk and rent collector commencing his duties in January 1980. He claimed that the occupant of Flat C and D on 11th floor was "Wing Tai Hang" and that nobody "lives there". He explained that the premises were adjoining units and in the partition there was an opening. He said that he went to collect rent at Flat C because "goods were stored in Flat D". He observed inside the premises, desks, a sofa, a weighing machine and a large quantity of goods, and asserted there was no partitioning before September of 1980. He said that on occasion he was present while tea leaves were being weighed. He claimed that the partition was put up at the end of September or October. He stated that the 18th floor was being used for business and then a group of persons came and used it as a home. They were refugees and they had left after the company discovered the domestic user. 15. With regard to the 4th and 5th floors of the same building, he stated that this "could be a godown of Wah Kwok Restaurant" who occupies the ground floor. During cross-examination he agreed that he always went with Mr. Chui to collect rent and he also said in cross-examination that almost 70% of the floor area of the suit premises was occupied by boxes but that this varied. He maintained that there were always boxes there. He denied seeing personal belongings lying around the suit premises nor any kitchen utensils. He also claimed not to have soon any clothes hanging in the premises. 16. The evidence for the defendant 17. LAU Yin-chow - the proprietor of Wing Tai Hang gave evidence. He said that he moved in January 1979 and that he resides there with his wife and two sons. He claimed the agreement recorded the intention of both parties, that his wife did not work that both sons work, and that he had placed a small quantity of goods inside the suit premises because he wanted to run a business. He also claimed that in the building, there are a number of other units used for dwelling purposes. Flat D on the 11th floor, Flat C on the 16th floor, Flats C and D on the 19th floor and the whole floor on each of the 4th and 18th floors. That there was a White Russian on the 18th floor but he qualified this by stating he was not sure. He drew a plan of the premises and exhibited this, and went on to say that when rent collectors called there were cooking utensils and clothing displayed in the premises. He went on to say that the boxes of material and preserved foods were placed in the premises, because he had no where else to place them. Sometimes they could be put there for 3 months. During cross-examination he claimed that prior to living in these premises, he was in public housing and that this was not big enough, so he rented the suit premises in order to live there. That he gone to sea prior to January of 1979, and at this time he returned to Hong Kong every 10 odd days. Also at the time when the partnership of Wing Tai Hang was formed the idea was that the partners were to use the premises as a dormitory for fokis and for any partners who wanted to live there. Business had not commenced, so only his nephew and Leung, a foki lived there. He claimed that the partnership had no other premises. The partnership was dissolved in less than 2 months, this before any other place could be found from which to run the business. When he paid out his other three partners, the business was changed into a sole proprietorship. He asserted that he has no business interest at the present time, and that he is living of his children. He claimed that a foki moved in during October of last year and the partition was erected before the foki moved in and that it had not been necessary to erect it before. He went on to describe how he and his family all used a communal toilet drawing the distinction between gentlemen's and ladies toilets. He stated that when he had a bath there was a lock and privary could be obtained. He went on to explain that if anyone visited after the main door was locked at nights, he had a key to the gate and on occasion his friends telephoned for him to come down. He claimed that he greeted residents going "up and down" and afterwards made enquiry by going to upstairs to their premises and confirming their status. 18. I closely observed the demanour of the defendant, and I was unimpressed by him. I believe that some persons may be telling the truth despite and inability to face the persons they are talking to. Even giving him this benefit, I was unable to accept his evidence. I accept Mr. Koo when he stated that the intention was to let the premises for commercial use and that failure to amend the agreement was a mistake and I specifically reject the defendant's evidence, when he asserted that the letting of the premises for domestic purposes was the original intention. 19. However, the matter does not rest there. The original agreement expired on the 19th of September 1980; the defendant has remained in occupation and the provisions of Section 51(2) apply. It is worth setting out this provision.
20. From the terms of the agreement, there is prima facie evidence pursuant to Section 51(2)(a) that the premises were being used for domestic purposes. 21. Section 51(2)(b) can apply if I find as a fact that the premises are now being used primarily for commercial purposes. Then they shall be deemed to have been let for commercial purposes. The commercial user in this regard being the operation of a "Tea Leaf" business. 22. The proviso to Section 51(2)(b) must be considered only if the primary user is that of a dwelling. I also note the provisions of Section 51(2)(c), (d) and (e) and Section 51(3)(b) and (c), in particular (c)(iii). 23. I have also to consider the evidence of the two rent collectors and the caretaker. 24. I find both rent collectors to be telling the truth, when they describe the interior of the premises in question. What they observed projected all the hallmarks and atmosphere of a business. 25. The caretaker's evidence supports the defendant to some extent namely that there were persons occupying the premises overnight and as a fact I accept the defendant did occupy the premises in this way. The following matters bear upon my determination of the primary user of the premises:-
26. I appreciate that Section 51(3) is a section to be used in determining whether premises were let or being used as a dwelling and observe that the evidence of the occupation permit and of the furnishings, and fittings in contents of the premises. Sec.31(3)(b) and (c)(iii) respectively cannot be used as statutory aids to assist the plaintiff. However the position is such that I believe these facts amount to strong circumstantial evidence in favour of the plaintiff. 27. In my opinion despite the evidence of the defendant and those aspects of the caretaker's evidence supporting his contention, I believe and hold as a fact that the premises were being used primarily for the promotion of the business of Wing Tai Hang's Tea Leaves Business and accordingly the premises are deemed to have been let for commercial purposes (Section 51(2)(b)) 28. Notice to quit 29. The problem presented here is an interesting one. There is no doubt that an agent who is trusted with the management of an estate and who has authority to let and receive rents has general authority in respect of the tenancy and can give notice to quit. The power of attorney here constitutes clear authority and it is of interest that the attorney entered into the agreement with the defendant acting for "the landlord". I am presented with the position, as is not uncommon in Hong Kong that the landlord's identity is undisclosed in the actual tenancy agreement. Accordingly the defendant commenced his contractual relations with the attorney and agent of the landlord and these relations can be taken to have continued as between the attorney and the defendant at least up until the first day of the trial when the registered landlord was substituted as plaintiff. 30. The notice to quit, is on the face of it incorrect. The agent purports to be the landlord when in fact and in law he is not. 31. A decision of considerable interest and importance is Harmond Properties Ltd. v. Gajdzis, 1968 3 All E.R. 263 a decision of the Court of Appeal. The facts of that case are of interest in that a Mr. Harvey, Director of the plaintiff's company had instructed solicitors who wrote "on behalf of your landlord Mr. R.P. Harvey, we hereby give you notice to quit". In the original hearing evidence established that Mr. Harvey had carried out the letting and acted as if he was the landlord in every way. The County Court Judge decided that Mr. Harvey was a general agent and could therefore give a valid notice to quit and as stated by Russell L.J. on appeal "..... I add it is quite plain Mr. Harvey had acted as if he were landlord in every way. The defendant always thought of him as the landlord ....." His Lordship went on to hold "I think it would be wrong to introduce in a case such as this so technical an approach to the notice to quit in the present form which is in no way misleading and (which is the crucial point in the case). I have no doubt at all that the moment it was given it bound the true landlords Harmond Properties Ltd." 32. The views of Russell L.J. were concurred with by Fenton Atkinson L.J. and Willmer L.J. The later stated "on the main question as to the validity of the notice to quit I entirely agree with what Russell L.J. has said but I think it is desirable to emphasis as the facts of this case are rather peculiar, and the decision is based on the particular facts of this case". 33. I am fully conscious of the facts in the decision referred to above and that the decision was based on the particular facts of that case. 34. In the instance case, it appears to me that the important facts are:-
35. I entirely ignore the relationship between the landlord and the agent, i.e. the landlord being a wholly owned subsidiary as it is clear law that separate companies constitute separate entities. 36. I am of the view that the notice to quit at the moment, it was given bound the true landlord, namely Dah Luen Investment Company Ltd. and accordingly following Russell L.J.'s views, I am of the opinion on the facts of this case that it would be wrong to introduce in this case a technical approach to the notice to quit in the form as issued. 37. On the views, I have formed the plaintiff is entitled to possession of the premises in question. 38. As to ancilliary relief, there is one matter to which I drew the attention of counsel and that is the mesne profits at the rate assessed by Mr. Koo in evidence could be if the evidence was accepted between $5,710 per month and $7,994 per month, as from the 20th of September last. This should amount to a sum considerably in excess of $20,000 if the evidence of the plaintiff is to be accepted. 39. In view of my finding that the user of the premises was commercial and that the notice to quit was properly issued the claim was properly presented in the prayer to the writ as unliquidated. The mesne profits, of course, are the rent and profits which the defendant as trespasser should have made during his occupation of the premises and which therefore, he has to pay to the true owner as compensation for the tort which he has committed. 40. The question of the date from which mesne profits run is of interest and it was held in Elliott v. Boynton, 1924 1 CH. page 236 that when an action is brought by landlord against the tenant for breach of covenant pursuing a claim for re-entry and an order for possession was made that mesne profits are assessable from the date of the writ in the action and not from the date of the breach of covenant. 41. Although Elliott's case is not on all fours, nevertheless, I take the view that the proper date is the date of the writ. 42. The writ is dated the 29th of October and I would be prepared to assess mesne profits on the evidence before me at the rate of $5 per sq. ft. Accordingly, the amount claimed is considerably in excess of $20,000. I am grateful to counsel referring me to Smith & Co. Ltd. v. Kirby, 1947 1 All E.R. 459. It was there held by Hilberry J. in giving judgment for arrears of rent and mesne profits that the monetary claim could never been brought in the Country Court because it was outside the limit of the jurisdiction of the County Court notwithstanding an action for possession alone should have been brought in the County Court. 43. I believe the Court's Jurisdiction in the present case is governed by Section 32 of the District Court Ordinance not by Section 35 and 36, and accordingly unless Mr. Chain abandons any excess over $20,000, I decline Jurisdiction. 44. Accordingly there shall be judgment for the plaintiff as follows:-
Representation: Mr. B. Chain instructed by Yung, Yu, Yuen & Co. for plaintiff. Mr. J. Young of Job Young & Co. for defendant. |