Lee Sheng Yuet v. Wu Wan Tat

DCCJ002138/1979

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT KOWLOON

CIVIL JURISDICTION

ACTION NO.2138 OF 1979

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Coram: E.C. Barnes, D.J.

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JUDGMENT

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1. At the conclusion of this action on the 5th of October 1979 I gave judgment and delivered orally at the time my reasons for the judgment I gave. I did not reserve my decision because I was convinced after hearing the submissions of Mr. Chan of counsel and Mr. Choy, solicitor, that the case was largely governed by the decision in the Capital Land Investment Company case. The parties however have asked me to reduce my reasons to writing and it is in deference to their wishes that I now do so.

2. The facts on which the decision is based were agreed between the parties and as agreed are as follows:-

3. On these facts the question was: whether as a result of the 3-year tenancy agreement dated 1st March 1976 Part II of the Landlord and Tenant (Consolidation) Ordinance ceased to apply to protect the tenant.

4. Mr. Chan in his argument, and for the purposes of his argument, conceded that before 1st of March 1976 the premises, being domestic premises, were subject to the provisions of the said Part II and that prior to that date the tenancy in respect of the premises could be terminated only under sections 52(2) and 53. That was so held in Capital land Investment Co. Ltd. v. Madam Se Mong-kai. ⁽¹⁾ But Mr. Chan's argument was that, although a tenancy to which Part II applied could be terminated only under those sections, premises which were subject to Part II could have the umbrella of that Part removed from them so that they were no longer protected under that Part. For example, premises originally let as a dwelling but subsequently used primarily for non-dwelling purposes are protected at the commencement of the tenancy but not protected once the primary user was for non-domestic purposes. Hence, it was not the position that once Part II applied it always applied: one had to look at the provisions of Part II itself to see whether, at any given time, a tenancy had the protection of Part II. In the instant case, Mr. Chan argued, the subject tenancy did not have that protection because it was exempted from Part II by virtue of section 50(6)(j).

5. Mr. Chan also argued that the Capital Land Case supported him. In that case the tenant entered into possession of the premises under a written agreement dated 28th March 1969. The term expired on 5th February 1970 but the tenant held over as a monthly tenant. On 5th June 1970, while the tenant was holding over the Rent Increases (Domestic Premises) Control Ordinance - that Ordinance eventually became, in effect, the Part II referred to in argument and in this judgment - came into operation. By that Ordinance the tenant acquired the status of a protected tenant. On 28th July 1970, however, the parties entered into a written agreement which, on its face, granted to the tenant a tenancy commencing on 1st July 1970 and concluding on 30th June 1971. In the course of his judgment Mcmullin J. (as he then was) said:-

"The case for the (landlord) is simply that, although the (tenant) acquired the status of a protected tenant following upon the commencement of the Ordinance ...... she lost that status by freely entering into the ..... written (agreement) on 28th July 1970. That agreement, counsel says, created a tenancy to which the Ordinance clearly does not apply since it was not a tenancy existing at the date of coming into force of the ordinance. There is no doubt that that is the correct view of the (tenancy) purported to be created by ...... the (written agreement of 28th July 1970) ......"⁽²⁾

6. I have added the underlining in the quotation from the judgment to indicate the part on which Mr. Chan so strongly relied. Relying on it. He went on to argue that McMullin J. was holding that the correct view of the written agreement of 28th July 1970 was that it created a tenancy to which the Ordinance did not apply.

7. With the greatest respect to Mr. Chan. I cannot accept his argument. If McMullin J. had omitted the phrase "purported to be" in the last sentence of the passage quoted I would agree. But the addition of that phrase is deliberate; as deliberate as an earlier usage of the term on page 373, fourth line, when narrating the history of the tenancy. Capital Land decided that a tenancy under the umbrella of Part II can be determined only by one of the methods laid down in that Part and, as the tenancy in that case had not been determined in any of those ways, it still subsisted notwithstanding the terms of the document executed on 28 July 1970. Thus that document could not create a tenancy - what is already existing cannot be the subject of a further act of creation - but could only purport to create one. In my view what McMullin J. was there saying was this: "There is no doubt that that is the correct view if the agreement of 28 July 1970 created a tenancy". The judgment makes it clear that he was holding that the agreement of 28 July 1970 did not create a tenancy; that it could not create one because the tenancy existing when the Ordinance commenced was governed by the Ordinance; that the Ordinance provided that that tenancy from then on could be determined only by one of the means provided in the Ordinance; that the only means so provided that the landlord could arguably say had determined it was that vacant possession had been delivered up. To support that contention counsel for the landlord had argued that the agreement of 28 July 1970 amounted to a "notional delivery of vacant possession". The Court would not accept "Notional delivery" as satisfying the requirements of the Ordinance and therefore held that the tenancy had not been determined before, during or after the signing of the agreement on 28 July 1970. That agreement did not create a tenancy. The words contained in it said that it did and so since it could not do what it was saying it was doing it was an agreement which purported to create a tenancy.

8. Similarly, here, the agreement is one which purports to create a tenancy. The tenancy was already in existence when the document was signed; that tenancy was not determined in accordance with any provision of Part II; since it is agreed Part II then applied the tenancy was still existing at the moment the document was signed. The document therefore purports to create a new tenancy but does not in law create one. As it only those tenancies created after 31st December 1975 which section 50(6)(j) excludes from the umbrella of Part II this tenancy has not been so excluded. Thus, the question in issue is resolved with this answer: Part II did not cease to apply as a result of the execution of the document dated 1st March 1976 purporting to create a three year tenancy.

(1) (1973) H.K.L.R. 371.

(2) p.375.