Wong Shiu-chun v. Au Pui-man and Another

HCA002022/1972

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 2022 OF 1972

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Coram: Morley-John, J.

Date of Judgment: 26th March, 1974.

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JUDGMENT

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1. In this action the plaintiff, WONG Shiu-chun, is claiming inter alia possession of the premises known as No. 2 Cheung Lok Street, 1st floor, Kowloon, of which he is the registered owner, on the grounds that the defendant as his then tenant was in breach of a covenant contained in the tenancy agreement in that he unlawfully sublet, or parted with the possession of, the said premises to LAI Check-pang (who later became the 2nd defendant) and SZETO Sze-din.

2. No appearance having been entered for the defendant in the action, by judgment dated 30th August 1972 the plaintiff obtained possession of the said premises together with mesne profits until delivery of possession.

3. By an order dated 8th December 1972 the said judgment was set aside and LAI Check-pang was added as a defendant to this action. The issue in this action is now between the plaintiff and the 2nd defendant, LAI Check-pang. The 2nd defendant in his statement of defence alleges that the premises were let by the plaintiff to himself, the 1st defendant (hereinafter refer to as AU Pui-man or Mr. Au) and one SZETO Yiu as joint tenants. In the alternative, if which is denied, payment of rental was to AU Pui-man by way of being his sub-tenant, that the plaintiff is estopped from relying on the breach of covenant as alleged as he had continuously known and acquiesced in and/or waived his right to forfeiture from the offer and acceptance of the appropriate monthly rents from July 1969 until June 1972 by continuously letting or permitting the subletting or occupation of the said premises by the tenants.

4. The 2nd defendant also counterclaims for a declaration that he is lawfully in possession of the said premises and a declaration that the Rent Increases (Domestic Premises) Control Ordinance, 1970 applies to the said premises and the tenancy.

5. The issues before this court are in effect two-fold. Firstly, did the plaintiff let the premises in question to Mr. AU Pui-man as sole tenant as he, the plaintiff, alleges, or by way of verbal agreement did the plaintiff agree to let the said premises to Mr. Au, the 2nd defendant and Mr. Szeto as joint tenants as alleged by the 2nd defendant. Secondly, if the plaintiff did let the said premises to Mr. Au as sole tenant, having done so, did he acquiesce in the 2nd defendant and Mr. Szeto becoming sub-tenants of Mr. Au.

6. The plaintiff agreed that in June 1969 he agreed to let the said premises to Mr. Au for two years commencing on 1st July 1969 at a monthly rental of $450. The tenancy agreement was produced and the plaintiff agreed that this agreement was witnessed by Mr. Szeto. He said that he had not seen Mr. Szeto since the signing of this agreement. He said that he went to the premises himself to collect the monthly rent which was paid to him either by Mr. Au or Mr. Au's wife. The plaintiff agreed that in July 1971 he entered into a second tenancy agreement whereby he agreed to let the premises to Mr. Au for a further twelve months at the monthly rental of $510 per month. This tenancy agreement was also produced and the plaintiff agreed that this agreement was witnessed by the 2nd defendant, LAI Check-pang, whom he said was a friend of Mr. Au. The plaintiff said that before the signing of the second agreement he had never seen the 2nd defendant and that after the agreement had been signed he had never again seen the 2nd defendant until he saw him in court. Both agreements contained a covenant that the tenant would not sublet or assign the premises to other persons without the prior written consent of the landlord.

7. The plaintiff said that after the second agreement had been entered into he still used to go to the premises every month to collect the rent, but that this was only paid to him by Mr. or Mrs. Au. The plaintiff said that it was not until he had a discussion with Mr. Au in June 1972 with regard to Mr. Au vacating the premises that he became aware that persons other than Mr. Au and his wife lived in the premises. He did say that he did not think that the Au's had any children but he admitted that he had seen some children on the premises from time to time. He also said that when he entered into the preliminary negotiations in connection with the first tenancy, such as payment of deposit and water deposit, these negotiations were entered into between himself and Mr. Au alone.

8. The plaintiff also agreed that on two occasions in 1972 Mrs. Au paid him the rent partly in cash and partly by cheque. The two cheques were produced which were purported to be signed by the 2nd defendant but the plaintiff said that he did not notice the signature on the cheques. Under cross-examination it was suggested that the plaintiff read the signatures on those cheques and he was asked whether the signature on the cheque meant anything to him, and his reply was that he did not think of that. I compared the signature on the cheques and the signature of the witness to the second agreement and they both read "LAI Check-pang".

9. The 2nd defendant gave evidence that before 1969 he, Mr. Au and Mr. Szeto all lived together in a flat at No. 9, Shek Pik Road, but that in June 1969 the landlord re-possessed the premises and they had to move. That the three of them then searched for alternative accommodation on the understanding that they would all continue to live together in the new premises if they were successful in finding any. He said that Mr. Au found the premises in question and that the three of them went to see the plaintiff and after they had all viewed the premises they agreed with the plaintiff to rent the premises jointly and they each paid the plaintiff initially $100 each as deposit. He said that the plaintiff prepared the tenancy agreement but that he said that he did not want the agreement to be in their joint names and asked them to choose one of their number as their representive. They first suggested Mr. Szeto who said that he thought he was too old, so they decided that Mr. Au should sign this agreement and Mr. Szeto agreed to sign as a witness. The 2nd defendant described how after they had taken possession of the premises what arrangements they had made to divide up the premises for their individual accommodation. He said that originally Mr. Au and his wife shared one room, Mr. Szeto and his wife shared another, and that he shared the third room for the first two months of occupation with Mr. Szeto's grandson. He said that they shared the kitchen, bathroom and tang, or sitting-room, and that the latter was furnished with Mr. Szeto's furniture. He said that for the first six months the plaintiff used to collect rent on the 3rd day of every month, and they would each pay to him their share of the rent, but as Mr. Au's pay day was on the 5th of each month the plaintiff agreed there-after to collect the rent on the 6th day of every month. He said that he usually paid the plaintiff in cash but on two occasions in 1972 he paid the plaintiff by cheque. He identified his signature on the two cheques and the issue of these cheques was later confirmed by a representative of the 2nd defendant's bank, The Kwong On Bank Ltd., who produced the 2nd defendant's bank statements.

10. The 2nd defendant said that he got married on 15th November 1969. The marriage certificate was produced which gave the address of the 2nd defendant as the premises in question. He also produced the birth certificates of his two children, one born in July 1970 and the other born in October 1971, and in each his address was given as the premises in question as was the address on a letter dated 19th August 1970 from the Hong Kong Telephone Co. when they installed a telephone in his name in those premises. This letter was also produced. I am quite satisfied as a fact that the 2nd defendant lived in the premises in question from 1969 onwards.

11. The 2nd defendant described how at the expiry of the first tenancy they all asked the plaintiff for a further tenancy of three years but that the plaintiff only agreed to a further tenancy of one year and again he said that the tenancy agreement need only be in the name of Mr. Au. It was agreed that the 2nd defendant signed as witness to this second agreement. The 2nd defendant also said that the rent agreed to in the first agreement was $450 per month but that in the second agreement the plaintiff wanted to increase the rent to $520 per month but they said that that sum would be difficult to split into three shares so the plaintiff agreed to a rent of $510 so that they could each contribute $170 and the 2nd defendant said that they paid this rent to the plaintiff in the same manner as previously. The 2nd defendant said that in June 1972 he and his colleagues asked the plaintiff if they could rent the premises for a further period of three years but that the plaintiff only agreed to re-let the premises to them for one year but that he wished to raise the rent to $630 per month. The 2nd defendant said that they asked that the premises should be let to them at a lower rent but that the plaintiff told him and Mr. Szeto that if they did not like the new terms they could move out as their names did not appear in the tenancy agreement. The 2nd defendant said that Mr. Au left the premises in October 1972 as he had obtained a new flat for himself, but that for three months after June they all three contributed to the old rent which they tried to send to the plaintiff by way of postal orders. He also said that in about August 1973 Mr. and Mrs. Szeto went to Canada for a holiday but that their two grandsons still lived in the premises. The 2nd defendant was asked why he was not calling Mr. Au to give evidence in support of his case and he said that he and Mr. Szeto had had a quarrel with Mr. Au because Mr. Au had got his new flat and did not tell them that he was going to vacate the premises in question until the night he moved out and that this was in September or October 1972.

12. Counsel for the plaintiff submitted that the plaintiff entered into both tenancy agreements with Mr. Au and with Mr. Au alone and that the plaintiff could have gone to the premises collecting rent each month for three years without knowing that the 2nd defendant and his family and Mr. and Mrs. Szeto were living in these premises. He suggested that it would not be a difficult job for them to keep out of the way when the plaintiff came to collect the rent. From the evidence adduced I have already said that I am satisfied that the 2nd defendant lived quite openly on those premises from the time that the tenancy agreement in 1969 was entered into. He made no attempt to disguise the fact as is seen, inter alia, from his marriage certificate and the birth certificates of his children. If the 2nd defendant wished to keep from the plaintiff the fact that he was a tenant of those premises why should he pay his share of two months' rent by cheques made out in the name of the plaintiff. If he was not a co-tenant with the knowledge and consent of the plaintiff why should he make out these two cheques in the name of the plaintiff. If he was a sub-tenant of Mr. Au surely he would have paid his rent to Mr. Au and if he paid by cheque he would make out that cheque in the name of Mr. Au and not in the name of the plaintiff. Counsel for the 2nd defendant has also suggested that if Mr. Au was in fact the principal tenant was it not strange that he would not charge his sub-tenants more rent than just exactly a third of the total monthly rent of the premises. He has also suggested that the 2nd defendant must have been present during the preliminary negotiations for the renting of the premises in question as from his evidence it was clear that he knew all the details of these negotiations. Counsel for the plaintiff suggested that Mr. Au could have given details of the negotiations to the 2nd defendant in order to assist him with this case. However this seems unlikely to me, as the 2nd defendant said that Mr. Au had quarrelled with Mr. Szeto and himself when asked why Mr. Au had quarrelled with Mr. Szeto and himself when asked why Mr. Au was not giving evidence on his behalf. Counsel for the 2nd defendant further pointed out that the premises in question was a very small flat, that not only did Mr. and Mrs. Au lived there, but also Mr. Szeto who was 80 years of age and his wife, and also the defendant, his wife and later his two children, and that over a period of three years which would entail at least thirty-six visits the plaintiff would not fail to miss seeing all these people. He has further pointed out that the plaintiff only took action to re-possess the premises one month before the tenancy was due to expire and that when the tenants opposed an increase in the rent the only way the plaintiff could recover possession was to allege this breach of covenant as the premises were by this time protected by virtue of the provisions of the Rent Increases (Domestic Premises) Control Ordinance, 1970 (which in fact has now been consolidated into the Landlord and Tenant (Consolidation) Ordinance, Cap.7).

13. The 2nd defendant also produced a number of rent receipts purported to have been issued by the plaintiff, but as no translations of these receipts, which were written in Chinese Characters, were produced, I attach no weight on them.

14. I believe the evidence of the 2nd defendant and I am satisfied that the plaintiff did rent these premises to the 2nd defendant, Mr. Au and Mr. Szeto as alleged by the 2nd defendant and, therefore, the plaintiff's claim must fail, and, therefore, the plaintiff's claim is dismissed with costs to the 2nd defendant.

15. The 2nd defendant by way of counterclaim claims for (1) a declaration that the 2nd defendant is lawfully in possession of the said. premises, and (2) a declaration that the Rent Increases (Domestic Premises) Control Ordinance, 1970 applies to the said premises and tenancy.

16. I am satisfied that in June 1972 at the time of the alleged breach of covenant the 2nd defendant was lawfully in possession of the premises in question, that is No. 2, Cheung Lok Street, 1st floor, Kowloon, and therefore that the 2nd defendant is successful in his claim under para.1 of the counterclaim to the extent that I declare that he was lawfully in possession at the time of the alleged breach of covenant.

17. As to the claim in para.2 of the counterclaim for a declaration that the Rent Increases (Domestic Premises) Control Ordinance, 1970 applies to the said premises and tenancy no evidence has been adduced before me in this case to enable me to make the declaration sought in this paragraph, it is therefore refused.

18. I therefore give judgment for the 2nd defendant to the extent that I have indicated as claimed in para.1 of the counter-claim together with costs. Defendant's costs to be taxed in accordance with the Legal Aid Regulations.

Representation:

P. Fung (Deacons) for plaintiff.

M. Huang (Yu, Tsang & Loong) for 2nd defendant.