Lo Shun Cheung v. Fung Siu Kam and Others
Read the full judgment text of CACV 151/1983 on BabelCite. This Court of Appeal judgment.
1. In an action for forfeiture of a tenancy and for rent and mesne profits the Defendants suffered judgment by default, having failed to give notice of their intention to defend. They took out a summons to set aside the default judgment, but this was dismissed by the Master. The Defendants appealed, and Mr. Justice Mayo upheld the decision of the Master. Before the judge's order was perfected the Defendant sought to re-open the appeal to the judge and applied for leave to adduce further evidence
Cited by 11 cases
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CACV000151/1983
BETWEEN
------------ Coram: Sir Alan Huggins, V.-P., Yang & Barker, JJ.A. Date of Judgment: 13th March 1984 ___________ JUDGMENT ___________ Sir Alan Huggins, V.-P. 1. In an action for forfeiture of a tenancy and for rent and mesne profits the Defendants suffered judgment by default, having failed to give notice of their intention to defend. They took out a summons to set aside the default judgment, but this was dismissed by the Master. The Defendants appealed, and Mr. Justice Mayo upheld the decision of the Master. Before the judge's order was perfected the Defendant sought to re-open the appeal to the judge and applied for leave to adduce further evidence which would enable them for the first time to raise a new ground for challenging the Plaintiff's claims in the action. The judge took the view that he had no jurisdiction to admit further evidence and dismissed the application. He stayed execution of the judgment pending the determination of an appeal to this court. 2. Although I think the judge, in making his order, clearly had in mind an appeal against the dismissal of the appeal from the Master, the Notice of Appeal originally filed in this court indicated an appeal against the judge's dismissal of the application to re-open the appeal and to adduce further evidence. That technical error has now been remedied and Mr. Chang concedes that the judge correctly declined the jurisdiction to rehear the matter on the basis of fresh evidence. 3. On the application to set aside the judgment the Defendants apparently proposed a number of technical defences, including one based on the description of them as Wing Hing (Hung Kee) Bleaching and Dyeing Factory, the name of the firm owned by the father of the fifth-named Defendant. The judge saw no merits in these technical points and they have not been argued before us. What has been argued before us is that the Defendants should be allowed to contend that the agreement under which the Plaintiff sues was illegal and that the court should not lend its aid to enforce an illegal agreement. It is a formidable contention if the evidence relied upon does in truth raise an arguable case of illegality. 4. Mr. Chang submits that illegality arises in this way. The Plaintiff does not hold any estate in the land but is, and has been at all material times, the holder of a permit from the Crown. Nevertheless in 1968 he purported to grant a tenancy to the father of the fifth named Defendant, who remained in occupation until 1982 under a series of agreements. The father, at least during part of this period, carried on business in the name of Wing Hing Bleaching and Dyeing Factory. The first tenancy agreement in writing was dated 1st April 1974 and was executed by the Plaintiff in the name Luen Cheong Hing Kee Bleaching and Dyeing Factory, and the tenant was named as the Wing Hing Bleaching and Dyeing Factory. In this Agreement it was formally declared that the subject matter of the tenancy was Crown land and that if the Government should resume possession during the subsistence of the tenancy the agreement would be determined. In 1982 the father sold to the Defendants the whole goodwill and undertaking of his business, including the use of the factory premises. He did so under the name Wing Hing (Hung Kee) Bleaching and Dyeing Factory, which was apparently the registered name of his firm, and the Defendants described themselves as Wing Hing (Hop Kee) Bleaching & Dyeing Factory. In the Assignment the Defendants acknowledged that the vendors had no legal right to the premises "but were only allowed to occupy the same from the Government since 1972 without a written licence", by which, no doubt was intended "but were only allowed to occupy the same since 1972 without a written licence from the Government", because the father was not in fact allowed by the Government to occupy the premises. It is then said that whatever the Crown permit may have provided- and the permit has not been exhibited - there were statutory provisions which prohibited any agreement for the occupation of the premises by a person other than the Plaintiff, and I turn to those provisions. 5. In 1968, when the Plaintiff first let to the father, the Summary Offences Ordinance contained a provision which read :
By agreeing to allow the father into occupation the Plaintiffs were, therefore, accessory to the offence of the father and it is common ground that neither side could have enforced the contract. On 1st October 1972 that provision was repealed and in its place there was enacted s.4 of the Crown Land Ordinance in these terms :
Thereafter it was no longer a criminal offence for a person to be in occupation of unleased Crown land without a Crown permit, but it is argued that it was still contrary to the prohibition in s.4 for the father to be in occupation and that an agreement the purpose of which was to give such occupation was still illegal. 6. Mr. Chang bases his argument on LI Wing-sun v WU Man 1978 H.K.L.R. 575. In that case the plaintiff obtained a judgment for rent and mesne profits. The defendant appealed. As in the present case the plaintiff had let the land for occupation by the defendant at a time when the defendant's occupation would be a criminal offence by virtue of the section of the Summary Offences Ordinance already cited. It was a monthly tenancy. The court held that, as the agreement had been made before the repeal of the offence-creating section, the agreement was illegal. The court rejected a further contention that, as the original agreement was illegal, it was void and that accordingly a tenancy at will arose upon the repeal of the section, which tenancy became a tenancy from month to month by reason of the payment and acceptance of rent: that was not the tenancy upon which the claim was founded. There was, however, a dictum which, it is submitted, indicated that the court was holding that occupation under a tenancy granted after the repeal of the section, being no longer a crime but merely prohibited by statute, would nevertheless be illegal. At p.576 I posited a new tenancy and said:
Mr. Justice Leonard did not consider what might have happened had the plaintiff acquired a new tenancy. He referred to a variation of the rent payable under the tenancy and took the view that the defendant held under "the original agreement as varied by the agreement to increase the rent", which he said was and remained illegal. He said at p. 579 :
It is argued that the emphasis there upon the continuity of the occupation showed that occupation begun under an illegal tenancy could never become lawful even if continued after the statutory provision creating the illegality had been repealed. I do not think the judge had any such proposition in mind. 7. The ordinary rule at Common Law is that a licensee has no estate out of which to carve a tenancy, although as between the licensee and a third party a tenancy by estoppel may arise. Such a tenancy does not give to the tenant any estate good against the licensor, but it does give to the tenant personal rights which, although not enforceable by action at his instance, can be raised by way of defence against a claim by the licensee. It is clear that the Plaintiff's Statement of Claim set up a good cause of action, to which we must now assume that the Defendants can raise no defence other than s. 4 of the Crown Land Ordinance. 8. It is not every contract prohibited by statute which is wholly unenforceable: see 9 Halsbury's Laws of England (4th edition) 290 (423). As in the interpretation of all statutes one must ask what was the intention of the Legislature in so far as that is ascertainable from the language it has used. We should not interpret a statute so as to deprive a subject of rights which he would have at Common Law unless it is clear that the Legislature intended to take away those rights. The question here is whether the prohibition against occupation of Crown land was intended for the benefit of the public at large or merely for the benefit of the Crown as a land owner. It seems to me that the former must be the correct view. The nature of a licence itself prevents the licensee from allowing another into exclusive occupation, so that the Crown as land owner would already have the right to terminate the Plaintiff's licence and thus to defeat any tenancy by estoppel created in favour of the Defendants. The statutory prohibition must, I think, have been intended to prevent any contract purporting to confer exclusive occupation of the land or any part thereof. "Unleased land" is defined in s. 2 as "land which is not leased land", and "leased land" is in turn defined as
It is common ground that this is "unleased land". It was occupied by the Plaintiff under a licence but, although occupied by the Defendants through the Plaintiff, was not occupied by them "under" the licence to him. The contract by which the Plaintiff agreed to let them into occupation was therefore prohibited. 9. Two results flow from that. First, the Crown at its pleasure could sue the Defendants for possession without previously terminating the licence of the Plaintiff. Secondly, the Plaintiff is barred from obtaining for himself any benefit under such contract and the court should decline to enter judgment in his favour for rent or mesne profits. That is enough to require us to allow the appeal. 10. It does not necessarily follow that the entire judgment must be set aside. In so far as the Plaintiff has framed his action for possession upon an alleged forfeiture, and therefore has relied upon the illegal contract, he must fail. However, if he had claimed by virtue of his title as licensee, the Defendants would have had no answer, for they could not raise the illegal agreement: see Singh v Kulubya 1964 A.C. 142. In such circumstances I do not think it right that we should set aside the judgment for possession, even though it was obtained upon a wrong basis. 11. As it is, I would allow the appeal and set aside the judgment to the extent that it relates to the claim for rent and mesne profits. As that claim must fail, I would order that it stand dismissed. 12. The Defendants having succeeded only in part upon the appeal, I propose that both parties pay their own costs of the appeal. Yang, J.A.: 13. I agree. Barker, J.A.: 14. I agree 13th March 1984 Representation: |
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