Wong Fook-hing and Others v. Chan Wan-yuk

DCMP000003/1974

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT KOWLOON

CIVIL JURISDICTION

TENANCY TRIBUNAL APPEAL NO.3 OF 1974

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Coram: J.J. Rhind, D.J.

Date of Judgment:

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JUDGMENT

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1. Before the Tenancy Tribunal the Respondent, who was then the Applicant landlord, obtained an order for possession of the ground floor of 235, Temple Street on the ground that his tenant, who was then the 1st Opponent and is now the 1st Appellant, had parted with possession of those premises to the 2nd and 3rd Opponents, who are now the 2nd and 3rd Appellants, without the consent in writing of the Respondent.

2. It is common ground between the parties that the 1st Appellant was the Respondent's monthly tenant of the suit premises which are pre-war so that by virtue of S. 36 in Part I of the Landlord and Tenant Consolidation Ordinance, Cap. 7 the Appellants would be liable to ejectment if the 1st Appellant had parted with possession as alleged. The sole point at issue in this appeal was whether the learned President was correct in holding that such a parting with possession had been proved.

3. From the out-set at the hearing of the appeal counsel for the Appellants conceded that the facts disclosed an apparent change in the occupancy of the suit premises with the result that S.38 of Cap. 7 came into play, shifting the onus of disproving a parting with possession to the Appellants. Thus, the sole grounds of appeal was narrowed down to whether the learned President had erred in holding that the appellants had failed to discharge that onus.

4. The undisputed facts which led the Appellants to concede that there had been an apparent charge of occupancy may be summarised as follows. In about 1950 the Respondent, who is the owner of the suit premises, let them to the 1st Opponent was from at least 1962 onwards used them for the purpose of running the Mee Chow Restaurant there. The 1st Opponent was the sole proprietor of that business, and in 1962 he made the standard form of application for his business to be registered under the Business Registration Regulations, declaring in his application that he had no partners and the nature of his business was a cafe. In about June 1973 the Respondent had a conversation with the 1st Appellant's wife and son from which she learned that the 1st Appellant, who was in poor health, was willing to discontinue his business and surrender his tenancy in exchange for payment of compensation by the Respondent. Agreement was not forthcoming from the Respondent on that proposal. Although evidence of that discussion would normally be excluded as hearsay, the learned President was entitled to rely on it under Rule 35 On the 8th August 1974 all three Appellants caused a newspaper advertisement under their own names to be published in the "Kung Sheung Daily News", a translation of the relevant parts of which reads as follows "Notice of Appointment concerning business of Mee Chow Cafe carried on by me at No. 235 Temple Street, Ground floor, Yaumati, Kowloon. As I can spare no time to look after (the same) I have especially appointed Mr. CHIU Shu-ching to be the manager and Mr. CHIU Wai-mo to help out. All the business and administrative matters will be planned and dealt with by Mr. Chiu himself. It is therefore specially notified in the press that all persons whether Chinese or foreigners who have claims for debts or other dealings etc. should come forward and finalize the matter before the 15th of August so that thereafter matters will not be mixed up with those of Mr. Chiu.

5. WONG Fook-hing

6. CHIU Shu-ching

7. CHIU Wai-mo".

At or about the same time as this newspaper advertisement was published the 1st Appellant's cafe business on the suit premises was discontinued. All business ceased on the premises for about twenty days while they were redecorated, and then the premises were re-opened for a completely different type of business, selling clothes. The old sign board for Mee Chow Cafe was removed and in its stead was a sign board in Chinese characters stating "Van Young Fashion" and the word "VAN" in English was also written on the front of the shop. On 11th August 1973 the second Appellant applied on the standard form to be registered as sole proprietor of Van Young Fashion, stating on the form that the address of the principal place of business was the suit premises, that he had no partners and the nature of his business was fashion. Once the Respondent became aware that the 1st Appellant had discontinued his cafe' business she refused to accept further rent from him, and initiated the proceedings giving rise to the present appeal.

8. In the statement of reasons accompanying the Respondent's original application to the Tenancy Tribunal the Respondent averred, "In or about August 1973 the 1st Opponent without the consent or authority in writing of the Applicant sublet, assigned or parted with possession of the said premises to the 2nd and/or 3rd Opponents". The material part of the Appellants "Answer" replied "The 1st Opponent by an instrument in writing dated the 13th day of August 1973 appointed the 3rd Opponent his attorney general. The 3rd Opponent is the cousin of the 1st Opponent".

9. That part of the Answer, when considered together with the advertisement which the Appellants caused to be inserted in the "Kung Sheung Daily News" on 8th August 1973, could only reasonably be interpreted as meaning that the 2nd and 3rd Appellants were managing the business run on the suit premises on the 1st Appellant's behalf. Of course, if that was all they were doing the 1st Appellant could not be said to have parted with possession of the suit premises.

10. At the hearing before the Tenancy Tribunal the 1st Appellant did not attend, although a solicitor appeared on his behalf, and I see no reason to dispute the evidence of the 2nd and 3rd Appellants that he had not returned to Hong Kong since leaving for America in October 1973. The 3rd Appellant did indeed produce a validly executed Power of Attorney in proper form whereby the 1st Appellant conferred an authority so wide-ranging on the 3rd Appellant that it would certainly have empowered him to run any business on the 1st Appellant's behalf, but this document in isolation availed the Appellants not at all. By itself the document is open to the objection that it is self-serving, and it would only be if there were other satisfactory evidence to show that the 3rd Appellant had handled the 1st Appellant's affairs in a way consistent with the 1st Appellant remaining in possession of the suit premises that this Power of Attorney might have some relevance.

11. However, at the hearing, the 2nd and 3rd Appellant saw fit to omit any reference in their evidence to acting for the 1st Appellant in a managerial capacity, but claimed instead that they were his partners in the "Van Young Fashion" business. Had the 1st Appellant continued in the new business as a partner, then on the authority of Willie Company v. Lo Man and Welfare Company 1957 H.K.L.R. 512 he would clearly not have parted with possession of the suit premises. The only evidence of this supposed partnership is the oral testimony of the 2nd and 3rd Appellants.

12. In his written judgment, the learned President commenced one of his paragraphs "The following are my findings of fact" and then proceeded to set down the facts which are in substance the same as those appearing in the earlier part of this judgment. Although in his record he noted down in detail what the 2nd and 3rd Appellant had to say about the 1st Appellant being their partner, he made no finding of fact that they were partners. On the other hand, he made no specific findings that they were not partners. Was the omission to find that the Appellants were partners due to an oversight tax his part, or was his silence on this point meant to be a pregnant one, indicating that his finding in this respect was in the negative? To my mind, it is inconceivable that the learned President would have failed to grasp the significance of the evidence about the Appellants being partners and the only reasonable explanation of his silence on this point is that he found that they were not partners. He stated what his positive findings were; by a process of elemination one can infer his negative findings.

13. Moreover the learned President had this to say about their evidence: "Both the 2nd and 3rd opponents gave evidence in an attempt to discharge the onus of proof cast upon all 3 opponents by S. 38 of the said Ordinance. However, the tribunal was not satisfied with their evidence". Counsel for the Appellants urges me not to regard this passage as an assertion by the learned President that he disbelieved the 2nd and 3rd Appellants. Because they were not contradicted in their evidence, Counsel contends that it would not have been reasonable to disbelieve them. According to Counsel, the learned President in opining that he was not satisfied with their evidence was referring to the sufficiency of their evidence rather than its credibility.

14. However, I have no doubt in the context of the present case that what the learned President was dissatisfied with was their credibility. Whether or not they rebutted the presumption arising under S. 38 hinged almost entirely on their credibility and I am sure that was the issue to which the learned President was directing his mind when he expressed dissatisfaction. The learned President did no more than adopt a euphemistic way of showing that he disbelieved the Appellants but the result is just the same as if he spelt this out in more robust words. Merely because evidence is uncontradicted does not mean that it cannot be disbelieved.

15. Of course, the facts are for the tribunal of first instance, and an appeal court will not generally interfere with those findings. Moreover in the present case the evidence points overwhelmingly in the direction of the conclusions of fact reached by the learned President, so there is not the slightest reason to interfere with those findings.

16. As the 2nd and 3rd Appellants failed on an issue of fact to persuade the learned President that they were partners of the 1st Appellant, it follows inevitably that the present appeal must fail.

17. Learned Counsel for the Appellants cited various reported District Court with which I will now deal. All of them relate to pre-war premises within the protection of Part I of Cap. 7, but all turn on their own particular facts and do not offer any real guidance in the present case which ultimately involved nothing more than a pure question of fact.

18. Reference was made first to Cheung Hei v. Yung Yee Kam 1958 D.C.L.R. 261 which was a case where various overt acts, such as the change of name of a shop, a change of the nature of the goods sold and the people selling them, led to the conclusion that there had been an apparent change in the occupancy of the shop. A business had originally been carried on at the suit premises under the name of "Ki Kee", and the tenant who was the 1st opponent in that case had applied to have that name entered on the Register of Business names. Subsequently the 2nd opponent in that case applied in respect of the same address to have the name "Ki Kee Haberadshery Shop" entered on the register. Counsel for the landlord in that case urged that the subsequent application for registration of the new business name should be treated as evidence of change of occupation. However, as pointed out by Counsel for the Appellants in the present case, Judge Huggins (as he then was) had this to say of that contention "I would not agree that these applications are direct evidence of an apparent change of occupancy and even less could I go so far as to hold that the applications for business registration alone are sufficient to show an apparent change of occupancy". On the strength of that extract, Counsel for the Appellants submitted that I should disregard the 2nd Appellants application for Business Registration of Van Young Fashions in considering whether there has been an apparent change of occupancy in the present case. However, as Counsel for the Appellants has conceded that the evidence before the tribunal did disclose such an apparent change, it would not make any difference even if I were prepared to ignore this piece of evidence.

19. In any event, as Counsel for the Respondent pointed out, if one continues the excerpt quoted from Judge Huggins one encounters the following passage which would surely apply to the facts of the present case, "But I think they (meaning the applications for business registration) are corroborative evidence showing that Ki Kee Haberdasbery Shop was not the business of the tenant....."

20. Next Counsel for the Appellants drew my attention to Lee Wah v. Lu Kam Lin 1963 D.C.L.R. 254. There the tenant had allowed his servant as part of his terms of employment to have occupation of the suit premises, and the question arose, which the court answered in the negative, whether the tenant had parted with possession. If I understand Counsel correctly there is a passage in that judgment at p. 259 in Roe of Dingley v. Sales 1M & S 297, certain expressions indicating that the courts have considered exclusive possession to be equivalent to legal possession but nowhere is there any suggestion that the mere permitting of sole occupation is a breach of the covenant a gainst parting with possession."

21. From this the court is asked to deduce that even if the 2nd and 3rd Appellants are in sole occupation of the suit premises now, this does not mean that the 1st Appellant has parted with possession. True, if the 2nd and 3rd Appellants could show that they occupied the suit premises in a capacity similar to that of an employee occupying his employer's premises i.e. a type of occupancy in the nature of a licence, they would have rebutted the presumption of parting with possession arising from apparent change of occupancy. However, the Appellants failed to show that the change of occupancy in their case did not arise from a relationship involving a parting with possession of the suit premises.

22. Heung Chik Him v. So Hak Ming 1964 D.C.L.R. 255 "was drawn to the court's attention for its head-note, para. 4 of which reads "The President made no express finding of a sub-letting nor of any of the alternatives which would amount to a parting with possession" and on the facts, despite an apparent change of occupancy, the presumption was rebutted.

23. From this, the court was asked to accept that because the learned President in the present case had failed to make an express finding of a sub-letting or of one of the other ways of parting with possession such as an assignment, he should have refused the order in the present case.

24. If the case really did mean that it would have the effect of rendering the presumption under S. 38 nugatory. However a reading of the whole judgment shows that the head-note, if read in the way suggested on behalf of the Appellants, is misleading.

25. In that case the landlord went away on holiday leaving his daughter in charge of the suit premises. As an act of charity she allowed a homeless arrival from overseas temporarily to occupy part of the premises rent-free while the tenant was away. The learned judge in that case categorised all the different ways in which a tenant could part with possession, and concluded that permitting a temporary occupant in the circumstances described in that case was not one of them for there could be no suggestion of granting a legal estate to such an occupant, and without the grant of a legal estate possession was not lost. Put simply, on the particular facts of that case, the tenant was able to rebut the presumption.

26. Reliance was placed by the Appellants on Chow Tze Wan trading as Messrs. Man Lee and others v. Mei Chik 1961 D.C.L.R. 17. There, the tenant changed his business from that of grocer to running a medical clinic called Man Lee Clinic where three doctors were in attendance. It is clear from the judgment that the court would have been willing to hold that, such a drastic change notwithstanding, there was no theoretical reason why the tenant could not arrange his affairs in such a way as to retain possession of the suit premises. As there was undoubtedly an apparent change of occupancy, the onus shifted to the tenant and the three doctors, who were also joined in as opponents, to show that the tenant had not in fact parted with possession. The court was willing to accept that the business application in respect of the Man Lee Clinic was in the tenant's name so there was no transfer of possession in so far as the Man Lee Clinic was concerned. The tenant and the Man Lee Clinic were the same legal persona. Also the court was satisfied that the tenant employed one of the doctors, so there was no transfer of possession of him. However, there was no satisfactory evidence of the relationship of the other two doctors with the tenant, so that the court held that those two doctors had failed to rebut the presumption of parting with possession as far as they themselves were concerned. Counsel for the Appellants appeared to interpret this case as a triumph for the tenant but as I understand it, the result was really a disaster for him. He, his clinic, and the three doctors would all have had to leave under the order for possession.

27. By analogy with that case, there is no theoretical reason why the 1st Appellant could not change his business from cafe to fashion store in the same way that a grocer might switch to a medical clinic without parting with possession, but the crucial question is, did the tenant in fact arrange his affairs in such a way that he did not lost possession of the suit premises? Where S. 38 operates, the opponents must satisfy the court the tenant has not parted with possession, and like the opponents on that case the Appellants in the present case have failed to rebut the presumption.

28. The final case prayed in aid by the Appellants was Lau Wing Kau v. Ho Yik Suk Wa 1956 D.C.L.R. 94. There, it was common ground that the tenant who was the first opponent, and the second opponent had entered into a written agreement conferring what amounted to a licence for the second opponent to occupy part of the suit premises for business purposes on payment of what were described as hire charges. The court rejected the landlord's contention that this agreement was a mere sham. Undoubtedly the whole point of having an agreement in that form was to avoid the consequences which ensue if a tenant parts with possession of pre-war premises, but, nonetheless, that was no reason for holding the agreement was a sham. The parties intended to carry out the agreement according to its tenor.

29. All that case illustrates is that it is possible for a tenant to arrange his affairs in such a way that he can allow third parties to occupy his premises for payment without necessarily parting with possession. However the facts of the present case failed to disclose that the 1st Appellant had arranged his affairs to similar effect.

30. As already indicated, the appeal is dismissed.

Representation: