Au Tak Yuen v. or Chek Lam

DCDT000027/1970

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CIVIL JURISDICTION

DISTRAINT NO. 27 OF 1970

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Coram: Derek Cons, D.J. in Court

Date of Judgment: 15 April 1970

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(JUDGMENT)

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1. For convenience I will call the parties to these proceedings the plaintiff and the defendant respectively.

2. The plaintiff is the principal tenant of ground floor premises known as 10 Sin Hing Street in which he lives and carries on business connected with the printing trade. The premises include a shop front, of the right-hand side of which the defendant is the sub-tenant. He moved into that portion of the premises sometimes towards the end of 1960. There is a conflict of evidence as to the precise circumstances in which he was permitted to make that move, to which I shall have to refer later. Suffice it for the moment to say that even at that time differences soon arose between the parties resulting in an application by the defendant to the Tenancy Tribunal for a variation of tenancy. However, a compromise was reached by which the defendant agreed to withdraw his application upon the plaintiff's granting to him a business lease for 5 years and I month. Despite this inauspicious beginning, the parties seem to have existed together without trouble from that time right up until July of last year. The original lease, which expired on the 14th March, 1966, was renewed upon similar terms save that in view of the increase in the cost of living the rent was raised from $100 to $150 per month.

3. In the middle of July last year trouble started again. Apparently it was the custom of the plaintiff or his wife and the defendant, as might be expected in the circumstances, to help each other in the shop by taking telephone messages or receiving money from the other's customers, if that other should happen to be out of the shop at the appropriate moment. The messages or money would naturally be passed on when that other returned. Unfortunately, on the 13th, the plaintiff so accepted $15 on behalf of the defendant, but did not immediately account to the defendant on his return. When the fact did become known it led to a violent quarrel which grew to include various matters connected with the tenancy and the rent. After this the defendant declined to pay any further rent. On the 7th August the plaintiff caused a solicitor's letter to be sent demanding rent which he claimed to be in arrears since the 15th January. The defendant did not reply but there seems to have been some discussion with the local City District Officer. Then the plaintiff attacked again by cutting off the electricity supply to the defendant's portion. At this stage both parties sought the aid of this Court (Actions 3245 and 3253 of 1969) and appeared before myself on Call-Over on the 19th September. I find it difficult now to understand the reasons I then recorded as the basis of the discussion between the three of us, but whatever may have been said at the time the result was that each party discontinued his action and the electricity supply was restored.

4. On the 2nd October, the defendant, together with another sub-tenant of the same premises, a Mr. Hung Ki Cheung, took out a second application before the Tenancy Tribunal to vary the rent, which application came on for hearing on the 29th. The defence pleasded by the plaintiff, who was then represented by a solicitor, was that the premises were excluded from the operation of the Landlord and Tenant Ordinance by reason of the business lease for more than 5 years. The validity of that lease appears to have been questioned by the learned President, but, instead of deciding the issue, it was agreed that the matter should be adjourned sine die, the plaintiff indicating an intention to litigate the issue in this Court. In fact he did nothing, that is until he swore out an affidavit for a distress warrant in January, 1970. In that affidavit, he again alleges that the premises were by the lease excluded from the provisions of the Ordinance. The present proceedings arise from the application of the defendant to discharge the warrant that was issued and in due course executed.

5. After hearing argument upon the application I adjourned the matter into court for the trial of two particular issues. The first of these is whether or not the defendant was the monthly tenant of the plaintiff before the 16th February, 1961, that is, the date of commencement of the first lease. This fact was at that time thought important because upon it rested the argument put forward by the defendant's solicitor that the defendant still remained a monthly and therefore protected tenant. A decision on this matter is no longer necessary, for at the very end of the trial, I was referred to an authority which is on all fours with the present case and shows quite clearly that the defendant is entitled to the protection of the Landlord and Tenant Ordinance: Chan Sang v. Choi Yuk⁽¹⁾. But in case it should at any time become material I would say that on balance I think the story of the plaintiff that there was some sort of business partnership between the two of them, is slightly to be preferred. I find it difficult to accept that a person genuinely believing himself to have a protected tenancy would so lightly and with no material advantage give up all the rights that that implies.

6. The second issue related to the date up to which the contractual rent of $150 per month had been satisfied. The plaintiff puts it at the 14th January, the defendant the 14th July. Apart from their oral testimony, upon which I am inclined to place little or no reliance, the plaintiff has produced a book of printed receipts (Ex.9) the counterfoils showing payment from the 15th of May, 1967, up to the date he now puts forward, together with a completed but unissued receipt for the following month; the defendant has produced a notebook containing the accounts of his own firm for the year 1969, which show that a payment of rent was made in each month from January to June inclusive, although the entries do not state to which period the amounts paid relate. The other sub-tenant of the premises, to whom I already referred, also gave evidence. He was, with respect to him, not an educated man, but I have no reason to think that he was telling lies, or that his memory was at fault. His evidence was important in two respects. Firstly he overheard part of the quarrel between the plaintiff and the defendant in the middle of July. My note of his evidence reads:-

7. Secondly, it shows that if the plaintiffs claim is a fraud, it was a fraud that was conceived and put into operation remarkably quickly. Mr. Hui has obviously long been a protected sub-tenant of the courtyard in the premises. The plaintiff has adopted a rather naive form of rent receipts in an attempt to remove that sub-tenancy from the ambit of the Landlord and Tenant Ordinance, which may in due course come to be tested before the Tenancy Tribunal. I cannot help feel that it is doomed to failure. But apart from this, in July last year the plaintiff and Mr. Hui entered into leases in respect of two further portions of the premises, leases in respect of which proper printed rent receipts were issued, at least, until the filing of the application in the Tenancy Tribunal. The first of these is dated the 15th July, and is taken from the same book that contains the counterfoils relating to the defendant. The receipts are not numbered, but the first counterfoil for Mr. Hui appears immediately after the counterfoil for the unissued receipt to the defendant. The plaintiff appears to have the habbit of dating his receipts at the time payment should be made rather than on the date that payment is actually made, but there is no suggestion that Mr. Hui was unduly late with that particular payment. It follows from this that the plaintiff must have conceived his plan to extort a further six months' rent from the defendant very shortly after their quarrel, and proceeded immediately to prepare evidence to support a possible action. I do not think this is likely. For these two reasons I am satisfied that the rent of $150 per month has been paid only up until the 14th July, 1969.

8. I turn now to the question of whether or not the defendant's premises, even though they are protected premises within the Ordinance, have a standard rent. If so, the plaintiff cannot recover more than the permitted rent calculated therefrom. Standard rent is itself calculated in accordance with Section 2 of the Ordinance. It depends primarily upon the rate at which the premises were let on the outbreak of war, or, if they were not let at that time, upon the last rent payable before the war. If the premises were not let until after the war the standard rent has to be assessed by a Tenancy Tribunal. The question in this case is not without difficulty. The law is clear with regard to premises which fall within the third category, that is, those that were not let at or prior to the commencement of the war; there can be no standard rent unless and until it has been fixed by a Tenancy Tribunal: Lam Sou Kan and another (No.2) v. Siu Ping Sheung⁽²⁾ Wong Cheong Yee v. Fu Yuen Hing Kee.⁽³⁾ The order of the Tenancy Tribunal has no retrospective effect, and until it is made the landlord is entitled to recover in any way he pleases the arrears of the contractual rent. But what is the position if the premises had not been let individually prewar, but form part of larger premises which were so let, and of which the standard rent is known? If that standard rent be more than the contractual rent for the smaller portion of the premises, it would not seem unreasonable to argue that the most that the landlord can recover is the permitted rent of the larger premises, on the general principle that the greater must include the lesser. Some support for their propositions may be derived from the comment of Blair-Kerr J. in the first of the above two cases, where at page 223 he says:-

"In Leung Yuk Po's case, the standard rent of the whole flat of which the premises in dispute form a part, was known".

The case to which he referred, Leung Yuk Po v. Ko Chee Pong⁽⁴⁾, turned basically on whether the non-payment of rent by a tenant was attributable to his own fault; but the comment appears to distinguish data by Gould J. the acting C.J., to the effect that in the circumstances now under discussion there would in law be at all times a standard rent, even though its precise amount remained to be determined. If this were so one would expect the application to the Tribunal to be for an "apportionment" of rent under Sec. 21(b) of the Ordinance rather than for a "fixing" under the previous paragraph. That particular application was in fact as a general application "to vary the rent payable" but it is not without significance that the learned President at first instance deliberately refused to determine the rent by reference to the standard rent for the whole floor. Moreover, both he and Gould J. expressly refer to the standard rent as falling within the third category of the definition. This is confirmed by the use of the words "actually let" in the other two categories: I can find no meaning for the adverb if it is not to contain the categories to those very premises which had a factual rent on the appropriate date. This would of course leave it theoretically possible for a Tribunal to fix a rent for a portion of premises at a figure greater than that for which the whole was let prewar. But the circumstances to warrant this, if they exist at all, would have to be so unusual that they would undoubtedly support an application to increase the rent for the whole under Sec. 19. I am satisfied therefore that the principle that no standard rent exists with regard to premises not let prior to or at the commencement of the war until it is determined by a Tribunal applies equally whether these premises did or did not form part of other premises which were so let.

9. It follows that if the premises as now rented to the defendant were not themselves let at that time the plaintiff is entitled to recover the overdue rent at the rate of $150 per month. However, I do not know what was then the position. I know that the plaintiff has lived on the premises since 1925 and that he is now the principal tenant of the whole of the ground floor. From his remark that the defendant did well in business in "my" shop, one may speculate that until that time he occupied that portion of the shop himself. But I am constrained from upholding his distress in this instance by the case of Lo Shum Ming v. Shuen Yu Chow,⁽⁵⁾ which places upon him the onus of showing that the rent claimed is lawfully recoverable. That onus cannot be discharged by mere speculation. It might be that the requisite evidence is easily to hand and would have been adduced had the plaintiff been legally represented. But in its absence there is no alternative but to discharge the warrant that was issued by this Court on the 26th day of January this year. Even if my speculation is correct, this may not be an unreasonable decision for in any event the plaintiff has failed to substantiate the ground upon which he relied in his affidavit. Furthermore, although debarred from levying a second distress for the same rent he may do so in respect of further rent or take other steps for recovery.

10. The sum of $500 standing in Court is to be paid out to the defendant or his solicitor and he shall have his costs for these proceedings, to be taxed on Scale V and in accordance with the Legal Aid Ordinance.

15 APR 1970

Representation:

Plaintiff in person.

W. Chu of Peter Mo & Co. for defendant

(1) 1963, Hong Kong Law Reports 476.

(2) 1962 Hong Kong Law Reports 215, at page 224

(3) 1967 Hong Kong Law Reports, page 265

(4) 1955 39 Hong Kong Law Reports, page 124

(5) 1966, Hong Kong Law Reports 51