Tsoi Ip Shi v. Cheung Yee Koo and Others

DCMP000021/1948

IN THE SUPREME COURT OF HONG KONG

TENANCY TRIBUNAL

APPEAL No. 21 of 1948

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(Applic. 233/1947)

Coram: Mr. Justice T.J. Gould.

Date of Judgment: 6 September 1948

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JUDGMENT

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1. This is an appeal against the refusal of a tenancy tribunal to make an order of eviction against the four respondents, all of whom are occupiers of portions of No. 414 Queen's Road, West, 2nd floor. The facts in brief are that the respondents were sub-tenants of their respective portions of this property and one Kwok Pak Hang was principal tenant. On the 24th May, 1947, the appellant by her solicitor gave the principal tenant notice to quit on or before the 30th June, 1947, and on the 31st May, 1947, gave notice to the respondents under section 12(2) of the Landlord & Tenant Ordinance, 1947 requiring them at the expiration of one calendar month after service, to pay their respective rentals directly to the landlord. The last mentioned notices contained also the somewhat peculiar intimation that "service of determination of the principal tenancy has been served upon Kwok Pak Hang." It must be assumed that the first word "service" in that quotation was intended to be "notice". On the 31st July, 1947, letters were sent to the respondents on behalf of the appellant referring to the notice of 31st May and asking for payment of rent for July, 1947. Prior to these notices, on the 30th April, 1947 Kwok Pak Hang, then principal tenant was fined by a Magistrate for charging the sub-tenants excessive rent. At that time the Magistrate made no order for ejectment of the principal tenant and it would seem that whatever he said on this subject has been relied upon by the respondents as entitling them to continue to pay their rent to the principal tenant, even after receiving the notices above referred to. In this the tribunal found that they had acted in good faith and refused to make an order for eviction.

2. The appeal against this refusal is on the ground firstly that there was no sufficient evidence that the respondents acted in good faith in paying their rent to the principal tenant, and secondly that the rent, being payable to the appellant and not to the principal tenant, was in arrears for more than 30 days and the tribunal had no discretion to refuse the order.

3. Before these matters arise for consideration, it is necessary first to decide whether the notices served on behalf of the appellant had the effect of creating in law a liability on the respondents to pay their rental direct to the appellant. This point was not taken before the Tenancy Tribunal by the respondents who were not legally represented there or in this Court. In view of the fact that a great many of the tribunals have no legally qualified members, it has been the practice of this Court, where a party has appeared before a tribunal in person, to permit a point of law to be taken on his behalf on appeal even though not taken before the tribunal. This concession would not of course be made in favour of a person whose conduct had in some way disentitled him to it, but I see nothing which would in any way incline me towards that view in the present case. From what I have seen and heard of the respondents, I agree with the Tribunal's opinion of their bona fides. It is therefore necessary to examine the effect of the notices given on behalf of the appellant with reference to section 12 of the Landlord & Tenant Ordinance, 1947.

4. The first two subsections of this section are as follows:-

5. The third subsection provides that from and after the expiration of "the said calendar month" the sub-tenant shall be deemed to hold as tenant of the landlord. The fourth subsection makes similar provision in respect of the principal tenant if he retains possession of the portion occupied by him.

6. The section is of course designed to provide a means whereby all tenancies and sub-tenancies held by various persons in particular premises may be converted into direct tenancies from landlord to occupier, the principal tenant becoming an ordinary tenant on the same footing as the rest. If it is taken advantage of, its operation involves interference with contractual relations and a variation of the position normally occupied by statutory tenants and sub-tenants. The procedure laid down must therefore be strictly followed. The steps required to be taken by a landlord who desires to take advantage of the section are three in number. First, he must determine the contractual tenancy of the principal tenant by giving him a valid notice to quit unless that has already been done. Secondly, he must after the notice to quit has expired serve the principal tenant with a further notice calling for delivery of possession at the expiration of one calendar month, save and except the part of the premises retained for his own use. It is obligatory that this second notice should give the principal tenant the option of giving up possession of such part of the premises or retaining it as tenant of the landlord. Thirdly, the landlord must immediately, upon giving that second notice, give notice to the sub-tenants that he had done so and calling upon the sub-tenants to pay their rent after the expiration of the calendar month to the landlord direct.

7. In the present case, there has been failure, presumably occasioned by a misreading of section 12, to give the second notice to the principal tenant. This vital step has been completely omitted. Therefore the principal tenant remained the statutory tenant of the whole premises. It was consequently impossible to give a valid notice to the sub-tenants under subsection 2 as it is obvious from the wording of that subsection that the giving of the second notice under subsection 1 is a condition precedent. It cannot be suggested that the Legislature contemplated the possibility of converting the sub-tenants into direct tenants of the landlord without divesting the principal tenant of his tenancy, even though only statutory, of the whole premises. In the present case, therefore, the notice to the sub-tenants, the condition precedent not having been observed, could have no legal effect.

8. The result is that the respondents did not become liable to pay rent direct to the landlord and were not liable to eviction on the application of the latter for failure to do so. The tribunal made an order for eviction against Kwok Pak Hang, within 30 days from the 4th June, 1948. Even if the tribunal had then regarded the respondents as sub-tenants it would obviously not have ordered their eviction: their position is therefore regulated by section 23 of the Ordinance and they must now be regarded as direct tenants of the appellant. Whether their direct tenancies should be deemed to commence on the 4th June or the 4th July depends on the construction of sections 22(b) and 23 of the Ordinance and has not been argued before me, but I think the better view is that the correct date is the 4th June.

9. Being of the opinion expressed above, I do not consider it necessary to decide the other point of law argued before me. The appeal is refused.