Hong Kong Bank Trustee Ltd v. Ho Mook Lam and Another

LDLA000288/1983

Headnote - Landlord's application for possession of premises on tenants' breach of tenancy agreement concerning the term "To use the said promises for the purposes of the tenants' own private residence".

Hold : Payment by tenants of rental of the suit premises which were solely occupied by their parents could not establish that those premises were tenants' own and usual place of residence. (Stoke-on-Trent Borough Council v. Cheshire  County Council" (1931) 3 K.B. 699) - Judgment to the landlord.

IN THE VICTORIA LANDS TRIBUNAL OF HONG KONG

V.L.T. NO. 288 OF 1983

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Coram: His Honour Judge H. Wong, Presiding Officer, in Court

Date of Judgment: 10th April 1984

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JUDGMENT

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1. The Applicant claims, under S. 53(2)(a) of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7, possession of the premises known as Flat 1305, 13th floor of Tung Sang Building, at Nos. 20-26, Johnston Road, Hong Kong (the suit premises) against Respondents for breach of tenancy agreement.

2. These facts are not in dispute. The late Sir Robert Ho Tung left a number of properties, including Tung Sang Building, to Applicant to manage on trust. On 24/4/71 that building was under construction and nearing completion when HO Mook-lam, the first-named Respondent (referred to as R1) applied to Sang Kee Rent Office (referred to as Sang Kee), the management arm of Applicant, to rent the suit premises. Discussion was held by the parties and it was agreed, apart from matters connected with rental, that use of the suit premises should be restricted to the two tenants, i.e., Respondents who were about to marry each other, R1's parents and younger brother. A tenancy agreement followed and was signed by Applicant and Respondents on 19/10/71 for a term of 3 years from 6/1/72. After the suit premises had been leased as aforesaid, Sang Kee always received monthly rental thereof by cheque. Nothing unusual had happened since the commencement of that contract until 15/8/74 when, at Sang Kee's suggestion, the parties agreed to increase rental of the suit premises from $365.00 to $430.00 a month. Letters to denote that the terms of the first tenancy agreement should continue to apply were exchanged between Sang Kee and R1 and an entry on that document to the effect that Respondents had paid an additional sum to cover the adjusted rent deposit was also made. Further increases in rental of the suit premises took place from time to time - usually at two years' intervals - for which more or less the same procedure as on the first occasion was adopted. Provisions of Part II of Landlord and Tenant (Consolidation) Ordinance, Cap. 7 are applicable to the suit premises.

3. The Applicant's case is that on 30/7/79 Sang Kee carried out a survey regarding the occupation of domestic premises of two of its buildings, including Tung Sang Building, and issued a questionnaire for that purpose. Respondents, like other tenants, were in substance asked to disclose: (a) the number of persons who lived at their flat; (b) those persons' names and identity cards and (c) their relationship with Respondents. Translation of R1's answer on R1's letterhead reads: -

4. HUNG Shek-chiu (A. W .1), manager of Sang Kee, stated that a tenant of domestic premises under his supervision could not simply move out and transfer the tenancy to someone else without Applicant's consent. In his words, the correct procedure would be for that tenant to write to him on the matter and, if the request was acceptable, Applicant would accept surrender of the tenancy and sign a fresh lease with that tenant's successor. In reply to defence counsel A.W.1 said that a new tenant would, before occupying premises rented from Applicant, be given circulars stating that he could not move large pieces of furniture out of his abode without an authorization issued by Sang Kee.

5. The sole evidence for the defence came from R1 who said that the suit premises were initially, i.e., in early January 1972, occupied by his parents, his younger brother and himself and, after his marriage to the other Respondent on 18/3/72, by his wife as well. On 2/8/74 whilst Respondents were moving out of the suit premises, they were stopped by two watchmen because the removed furniture included a bed, a wardrobe and a washing machine. An argument ensued and the interceptors' superior surnamed Lau came along, telephoned his own office and later let Respondents go. Since then Respondents have lived away from the suit premises and last year went to reside at a flat which they had purchased. According to R1, responsibility for rental of the suit premises first fell on him, then shifted to his younger brother until that brother's removal to alternative accommodation in mid-1980 when it reverted to R1 again. It is R1's admission that since mid-1980 the suit premises have been solely occupied by his parents.

6. As it was normal practice for Applicant to forward demand notes for rent of the suit premises in Respondents' names to Respondents at the address of those premises and there was none in September 1982, R1 proceeded to make inquiry on the matter. As disclosed in his letter of 27/9/82 to Sang Kee, he was informed by a female employee of Sang Kee's office that as he, tenant, had moved out of the suit premises and there was a resultant sub-letting, the case had been placed in the hands of Applicant's solicitor for action. That letter ended with R1's remark that he had taken the liberty of paying rent of the suit premises for September 1982 into Applicant's bank current account. The said payment was later refunded to Respondents by Applicant's lawyers together with a letter dated 26/10/82 in which they alleged that Respondents had breached clauses 2(g) and 2(j) of their tenancy agreement with Applicant and that Applicant had thereby exercised its right of re-entry under clause 4(a) thereof.

7. Those clauses read:-

8. It is my finding that the testimony of all witnesses, with the exception of part of R1's story on the events of 2/8/74 on which I shall shortly comment, is worthy of belief.

9. The main bone of contention on facts is on what had occurred on 2/8/74. In this regard I accept R1's admission that he and his wife vacated the suit premises on that day without a written permission from Sang Kee. I also believe that Respondents quietly moved out on that day and did not, as they claimed, take with them heavy items of furniture from the suit premises. Here I accept the evidence of LEUNG Chi, watchman of Tung Sang Building (A.W.2) and HUNG Shek-chiu, Sang Kee's manager (A.W.1) that they were not aware that Respondents vacated the suit premises on 2/8/74. My finding is further supported by R1's own evidence that :- (a) apart from the tenancy agreement which he signed with Applicant, he had all along dealt with Sang Kee in relation to the suit premises; (b) he has a good command of English and was familiar with the contents of the tenancy agreement and Applicant's circulars, ranging from alteration to the rented premises to restriction on the number and identity of occupants thereof; (c) he had made a point of writing to Sang Kee to seek permission of one kind or another, but did not do so on his moving out on 2/8/74; (d) for those applications and other correspondence with Sang Kee he used letterheads bearing these particulars:

(e) his younger brother's moving out in mid-1980 was the subject of Applicant's authorization and (f) he had sent a request to Applicant, which was refused, for his relative to reside at the suit premises. I am also drawn to the inference that R1 (i) intentionally used the said letterhead, which shows his address as being at the suit premises, in spite of the fact that he had lived away from those premises for many years, in order to mislead Applicant into believing that he was still residing there and (ii) purposely replied to Applicant's said questionnaire in an ambiguous manner which might represent that Respondents were still occupants of the suit premises.

10. From the evidence I have no doubt that although the parties had not signed new tenancy agreements or renewed the old ones, they had nevertheless agreed, even after Respondents had held over the tenancy on monthly basis, to be bound by the terms and conditions of the original contract. As it is not denied that R1's parents are not a party to the tenancy agreement, the fact that they were among the original occupants of the suit premises and had rent of the suit premises paid by R1 for their sole occupation of those premises would not change their status of being merely dependants of Respondents. With great respect to defence counsel, I disagree with his interpretation that clause 2(g) is a "user" clause and that it only and purely requires the suit premises to be used for domestic purpose. Here I hold that the words of clause 2(g) clearly mean what they say, i.e., that Respondents should themselves reside at the suit premises. The case "Hong Kong and Shanghai Bank Hong Kong (Trustee) Ltd. v. CHAN Lai-wah" (1980) H.K.L.R. 570 shows that where the words are perfectly clear the Court may not depart from their literal meaning and that, harsh as it may be, the term of a tenancy agreement whereby the newly-wed wife of a tenant's son was not allowed to live at the suit premises, had to be complied with. The present case is in one aspect distinguished from "Segal Securities Ltd. v. Thoseby" (1963) 1 Q.B. 887 because in the former the tenancy agreement contained the words that the suit premises should only be used by Respondents as their own private residence, whereas in the latter the expression "private residence" was adopted. Residence is defined in Stroud's Legal Dictionary as "a home of a person where at least he has a sleeping apartment or share one". In "Stoke-on-Trent Borough Council v. Cheshire Country Council" (1931) 3 K.B. 699, Ridley, J. said at p. 706 "The place of residence of a person is the place where he eats, drinks and sleeps". The Oxford Dictionary says that "own" is an adjective used to give emphasis to the idea of personal possession. Consequently, since those requirements were not obtainable in the present case Respondents cannot be said to have only used the suit premises as their own private residence (Clause 2(g) of tenancy agreement). Respondents' disregard of Clause 2(g) is not an isolated act but a continuing breach, as illustrated by " Segal Securities Ltd. v. Thoseby" (1962) referred to above. That is because Respondents had completely quitted residing at the suit premises for at least 8 years from 1974 to the date of the writ. In addition, non-observance of clause 2(g) appears to also entail infringement of clause 2(j) on the ground that R1's parents, not being a party to the tenancy agreement but have had the sole use of the suit premises, are deemed to have the tenancy of those premises sub-let or assigned or transferred to them. Furthermore, they cannot be regarded as coming within the definition of "R1 himself " or by extension "Respondents themselves" because it was laid down in "Smith v. Penny" (1947) 1 K.B. 230 that the "landlord himself" within the meaning of para. (b) of sch. I to the Rent and Mortgage Interest Restrictions (Amendment) Act 1933 denotes a situation where the landlord requires a house for the occupation of his wife and family (children) although he may himself he unable to live on the premises.

11. On the issue of waiver as raised by defence counsel, I hold that it does not arise because of my earlier finding that Applicant was not aware, either directly or through its employees, that Respondents moved out of the suit premises on 2/8/74. I further say that Applicant did not know that Respondents had given up residence at the suit premises until September 1982 and it was upon gaining that knowledge that Applicant initiated these proceedings.

12. In the light of the foregoing, I have come to the conclusion that Respondents have broken, and are in continuing breach of, clauses 2(g) and 2(j) of the tenancy agreement and that those infringements have given rise to a right of forfeiture of the tenancy and re-entry by Applicant. A case in point is "Dobbs v. Linford" (1952) 1 Q.B. 48. There will therefore be judgment to Applicant against Respondents for possession of the suit premises.

Representation:

Geoffrey Ma, instructed by Ronald Ho & Co. for Applicant.

Benjamin Chain, instructed by Y.Y. Fung & Co. for Respondents.