Lee Yuk Lin v. Lok Sui Wing and Another

Case No.CACV 4/1984

Court

Court of Appeal

Date—

Judge—

Case Document

100%Judiciary

CACV000004/1984

IN THE COURT OF APPEAL

1984, No. 4
(Civil)

BETWEEN

	LEE YUK LIN	Plaintiff
	AND
	LOK SUI-WING alias LOK KIN-WANG	1st Defendant
	LEE CHUN-YEE	2nd Defendant

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Coram: Sir Alan Huggins, V.-P., Yang & Barker, JJ.A.

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JUDGMENT

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Sir Alan Huggins, V.-P.:

1. The 1st and 2nd Defendants appeal by leave of this court, but the Notice of Appeal does not clearly set out the ground of appeal which led the court to give Leave. (The 3rd Defendant has not appealed). Originally leave was sought on the basis of no less than 10 grounds, but upon the application counsel relied upon one only. That one ground was in these terms:

"10.	The learned trial Judge erred in law in finding that clause 2(j) in the tenancy agreement dated 18th July 1979 governed the relationship of landlord and tenant between the Plaintiff and the 1st Defendant.
(a)	Both 1st and 2nd Defendants were protected tenants by virtue of section 50 of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7 since 1975, prior to the purchase of the suit premises in February 1976 by the Plaintiff and her husband.
(b)	There was no delivery of actual physical possession by the 1st and 2nd Defendants to the Plaintiff of the premises in suit, in the premises, the written agreement entered into by the 1st Defendant and the Plaintiff on 18th July 1979 in so far as clause 2(j) conflicted with the incident of that protected tenancy were necessarily void and of no effect."

The first paragraph of the first ground stated in the Notice of Appeal eventually filed was merely this:

"The Learned Judge erred in law in finding that :-

(i)	The relationship of landlord and tenant between the Plaintiff and the 1st and 2nd Defendants is governed by the tenancy agreement dated 18th July 1979, in particular clause 2(j) of the said tenancy agreement."

It is not surprising that counsel for the respondent Plaintiff was taken by surprise by the argument which has been addressed to us.

2. The matter arises like this. The Plaintiff sued the 1st Defendant and alleged that the 1st Defendant was her tenant under an agreement in writing dated 18th June 1979, that he had sublet to the 2nd Defendant and 3rd Defendant in breach of the agreement and that by reason thereof the tenancy was forfeit. The Defence filed by the 1st Defendant admitted that he was tenant of the premises but did not admit holding under the terms of the written agreement. It did not, however, suggest any alternative basis for the existence of a tenancy and, in particular, did not allege that the 1st Defendant was a protected tenant. The grounds of defence were (a) that the subletting was with consent and (b) that, if the 1st Defendant was in breach of the agreement, the breach had been waived. The 2nd and 3rd Defendants obtained leave to be joined as defendants in the action.

3. The judge found that the Plaintiff and her husband purchased the Premises in February 1976. She became sole owner upon her husband's death in 1977. In July 1974 the 1st Defendant had become tenant of the person from whom the Plaintiff and her husband purchased the premises, one Tang. Tang gave the 1st Defendant a general consent to sublet. As I understand the judgment, the judge accepted that the 1st Defendant sublet to the 2nd Defendant some time in 1975 and to the 3rd Defendant between 1st January 1976 and 16th June 1977. Mr. Wong submits that this is by no means clear since the judge expressly found that "there was subletting in breach of clause 2(j) of the Tenancy Agreement by the 1st Defendant", that Agreement being the one dated 18th June 1979. The judge did not there name the sub-tenant or sub-tenants. Moreover, there was no credible evidence of a subletting to either the 2nd Defendant or the 3rd Defendant after 16th June 1979, the date on which any tenancy created by the Agreement of 18th June 1979 commenced. The Plaintiff called no evidence at all as to the date of the sublettings and the 1st Defendant was adamant that the 2nd and 3rd Defendants were already sub-tenants before 1977. What led me to think that the judge was satisfied that the 2nd and 3rd Defendants were sub-tenants at least before February 1976 was his assertion:

The question is whether the plaintiff knew there were (sic) subletting at the time of purchase or thereafter. I find the plaintiff had no such knowledge at any time prior to September, 1981".

Although the first sentence in that passage may by itself be ambiguous, in the context it must mean that the question was whether the Plaintiff came at the time of purchase to know of the sublettings or whether she was ignorant of them until some later date. Thus the question which the judge thought to be decisive of the case was one which presupposed that the sublettings were in fact at a date or dates prior to the purchase. If he thought there was any live issue remaining as to the dates of the subletting, I think he would have referred to the relevant evidence and made an express finding upon it. The argument addressed to the judge both at the trial and upon the 1st Defendant's application for leave to appeal reinforces my belief that the dates of the sublettings were never a live issue.

4. The judge then found that on or about 16th June 1977 the Plaintiff, by an agreement in writing, granted a new tenancy to the 1st Defendant for a term of 2 years. Although that Agreement was not produced, it was common ground that it contained an absolute covenant against subletting. On 18th June 1977 the Plaintiff and the 1st Defendant executed a further agreement in writing for a term of 3 years from 16th June 1979, which also contained an absolute covenant against subletting, with a power of re-entry for breach. That is the Agreement which the Plaintiff pleaded in the Statement of Claim. The 2nd and 3rd Defendants did not vacate their premises, and the 1st Defendant did not vacate the premises retained for his own use, at any material time. The premises were domestic premises to which Part I of the Landlord and Tenant (Consolidation) Ordinance had no application.

5. There were in fact three issues argued before the District Judge: (1) whether the Plaintiff knew at the time she and her husband purchased the flat that there were sub-tenants in the premises; (2) whether the 1st Defendant signed the Agreement of 18th June 1979 in circumstances which entitled him to contend it was not binding upon him; and (3) whether the written consent to subletting given by Tang bound the Plaintiff. We are not concerned with the second and third issues, which were decided against the Defendants and have not been raised again in this court.

6. On the first of those issues the judge found that the Plaintiff had no knowledge of any subletting prior to September 1981, but I think he was misled when he concluded that this was a relevant issue. The correct issues on the pleadings were (a) whether the 1st Defendant was holding by virtue of the Agreement dated 18th June 1977; (b) if so, whether there had been a subletting after the date of the Agreement; and (c) if so, whether the written consent to subletting given by Tang bound the Plaintiff.

7. The judge held that the relationship of landlord and tenant between the plaintiff and the 1st Defendant was governed by the Agreement of 18th June 1979, although it would appear that no one had contended before him that the relationship arose in any other way. No argument to the contrary was advanced before the District Judge upon the application to him for leave to appeal, but that is not surprising as the applicants were not professionally represented. It was not until counsel appeared before this court that the Appellant first contended that the 1st Defendant became a protected tenant on or before 15th June 1977, that being the day before the first known tenancy agreement in writing was executed by the 1st Defendant.

8. What Mr. Benjamin Yu submits is that, whatever was the first contractual tenancy granted to the 1st Defendant, the Plaintiff cannot sue for possession simply because the 1979 agreement has expired. Section 52(1) formerly read:

Save as provided in sub section (2) and section 53, no tenancy or sub-tenancy, whether created before or after 15 December 1973, shall terminate during the continuance in force of this Part.”

If the original tenancy granted to the 1st Defendant was a periodic tenancy it must be assumed that the parties purported to terminate it before the new agreement was entered into in 1977. However, it was in law terminable only in one of the five ways prescribed by s.53 and would still be subsisting. Assuming on the other hand, as is perhaps more likely, that the 1st Defendant originally held under a tenancy for a fixed term (as in 1977 and 1979), he became a protected tenant upon the expiry of that term. He could not contract out of the protection afforded to him and the fact that he entered into the further agreement did not defeat the protected tenancy. Whether the 1st Defendant was a contractual periodic tenant or a protected tenant the Plaintiff's claim was misconceived.

9. Counsel relied upon Capital Land Investment Co. Ltd. v SE Mong-kai 1973 H.K.L.R. 371. In that case the plaintiff claimed possession of a flat on the basis that the defendant was a trespasser, a tenancy having expired by effluxion of time. The defendant contended (i) that she had had a previous tenancy for a term of one year before the tenancy alleged by the plaintiff; (ii) that upon the expiration of that previous tenancy she had held over and the pla plaintiff had accepted rent thereby creating a new monthly tenancy; and (iii) that as the monthly tenancy existed on 5th June 1970 – the date of commencement of the Rent Increases (Domestic Premises) Control Ordinance (which contained the predecessor of s.52 of the Landlord and Tenant (Consolidation) Ordinance) - she was a protected tenant, for the monthly tenancy would be continued until determined in one of the ways permitted by s.7 (the predecessor of s.53). The Full Court held that the defendant's contention was correct and that her protected tenancy could not be destroyed by any subsequent agreement by which the parties thought they had become bound. McMullin, J. (as he then was) said at p. 379:

As it seems to us, the clear intention of the Legislature in its present enactment was that the requirements of section 7(1)(a) would not be satisfied by anything less than the return by the tenant to the landlord of physical possession of an empty house. In the result the two written agreements which succeeded the monthly tenancy by holding over in so far as their provisions conflict with the incidents of that protected statutory tenancy were necessarily void and of no effect."

10. Mr. Wong has submitted that we are not bound by this decision of the Full Court and, in the alternative, that it is distinguishable. Whilst I agree that we are not bound by the decision, I am very far from persuaded that it was wrong. Moreover, it seems to me to be directly in point and not to be distinguishable upon any material point. Although this defence was not clearly adumbrated in the court below, that is an omission which can be compensated for by an order for payment of the Plaintiff's costs. It would be wrong that we should deny to the Appellants the benefit of a protection which the Legislature intended that they should have.

11. I would allow the appeal.

Yang, J.A.:

12. For the reasons advanced by my lord the Vice President I would also allow the appeal.

Barker, J.A.:

13. I agree.

2nd April 1984