Washington International Ltd v. Wong Mee Ching and Another

HCMP001256/1983

1983, No. 1256

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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BETWEEN

Coram: Hon. Power, J.

Date: 11th August, 1983.

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JUDGMENT

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1. In this matter the plaintiff, Washington International Limited, has made application, pursuant to Order 88 rule 1 of  the Rules of the Supreme Court, for delivery of possession of Flat B1 on the 25th floor of Pearl City Mansion, by Wong Mee Ching and Universal Enterprise Co., the 1st and 2nd defendant, on the .ground that as mortgagee thereof, it is entitled to the exclusive use, occupation and enjoyment of the said premises.  The application was supported by an affidavit from a Mr. Wong Yum Fai, a Vice-President of the plaintiff, in which he said that by a mortgage dated the 5th January 1983, made between the 1st defendant, as mortgagor, Tatu Company Limited, as borrower, and the plaintiff, the subject premises was mortgaged by the 1st defendant to the plaintiff to secure credit loan facilities to the extent of $750,000 granted to Tatu Company. The mortgage contained the usual default provisions and the plaintiff granted a loan of $400,000 to the Tatu Company repayable by 60 equal monthly instalments. The said company since the 25th April 1983 has failed led to repay those instalments and, pursuant to the plaintiff's rights as mortgagee, it did, on the 26th April 1983, request the 2nd defendant, who was and is in occupation of the said premises, to pay rent direct to the plaintiff. The plaintiff said that when the mortgage was executed on the 5th January 1983, the 1st defendant produced to the plaintiff a copy of a tenancy agreement dated 26th September 1981 (the first tenancy agreement) made between the 1st defendant, as landlord, and the 2nd defendant, as tenant, which stipulated that the property was let to the 2nd defendant for a period of 2 years from the 1st October 1981 to the 30th September 1983 at a monthly rent of $6,000. It was with knowledge of this agreement that the plaintiff on the 26th . April 1983 requested the 2nd defendant by letter to pay the rent direct to the plaintiff, his mortgagee. On the 12th May 1983, the 2nd defendant's solicitors sent the plaintiff a copy of a tenancy agreement, dated the 23rd April 1981, (the second tenancy agreement) which purported to be made between the 1st and 2nd defendant letting the property to the 2nd defendant for a term of 5 years from the 1st August 1982 at a monthly rent of $3,000.

2. As to the first tenancy agreement the defendants denied ever having made it saying that the signature thereon was a forgery. The second tenancy agreement, although for a period of 5 years, was never registered in accordance with the Land Registration Ordinance.

3. Mr. Lee who appears for the 2nd defendant does not contend that the 2nd agreement is valid against the plaintiff. He concedes that, being unregistered, it is, by virtue of s.3(2) of the Land Registration Ordinance, "absolutely null and void to all intents and purposes" as against the plaintiff.

4. Miss Yu, who appeared for the plaintiff, argued this appeal upon the basis that, even if the second defendant's assertion that the second agreement was the one he entered into with the first defendant, she was nonetheless entitled to judgment against him. She accepted, for the purposes of the appeal, that the second defendant had been a protected month to month tenant immediately before he entered into the 5 years lease. Mr. Lee submitted that the 2nd defendant had acquired the status of a protected tenant and that as he had never relinquished possession of the premises he still retained that status.   In making this submission he relied upon Capital Land Investment v. Madam Se Mong-Kai ⁽¹⁾. He also referred to Bolton Building Society v. Cobb and Others ⁽²⁾. He contended that this status came into being prior to the entry by the 1st defendant into the mortgage and that the second defendant has never lost this status.  He argued that the mortgagee, having stepped into the shoes of the landlord, was bound by the Landlord and Tenant Ordinance and must observe the rights thereunder of the 2nd defendant as a protected tenant. He referred further to the definition of Landlord in Section 49 of the Landlord and Tenant Ordinance submitting that the mortgagee was clearly a person "entitled to receive rent in respect" of the premises and was, therefore, a landlord within the meaning of that term as it is used in the Ordinance.

5. Mr. Lee submitted that if his primary argument, set out above, failed he was nonetheless entitled to remain in occupation. He submitted that this was so as the mortgagee, having exercised his right to enter into possession and having demanded rent from the 2nd defendant which the 2nd defendant had, on the 18th May 1983, tendered to him, the 2nd defendant' had become the monthly tenant of the plaintiff. Because of the view I take of the 1st argument advanced by Mr. Lee, I do not need to consider this 2nd point.

6. Miss Yu who appeared for the plaintiff submitted the Landlord and Tenant Ordinance had been substantially and materially amended since the date of the Capital Land Investment Company case and that that case had no application to the Ordinance in its present state. In this regard she referred in particular to the amended s.52. I am unable to accede to her argument in this regard. I am satisfied that the authority of the Capital Land Investment Company case stands unaffected by the amendments to s.52. I am satisfied that the 2nd defendant in the present case acquired the status of protected tenant in exactly the same way as the defendant did in the Capital. Land Investment Limited case. Miss Yu argued that even if this was so the mortgagee was in no way caught by the Landlord and Tenant Ordinance. She contended that any status which the 2nd defendant. had would only assist him when the person seeking to dispossess him was himself subject to the Landlord and Tenant Ordinance.  She submitted that the tenant's right to occupy was null and void as against the plaintiff as the plaintiff's right to possession did not come from the landlord, which would have brought him within the orbit of the Ordinance, but came to the plaintiff as a mortgagee. She submitted that the plaintiff did not claim by standing in the shoes of a landlord, but claimed as a mortgagee simpliciter and that, as the claim was against a person who had been stripped of his right to possess, that person must be regarded as a trespasser. I am unable to accede to these arguments. I am satisfied that the Landlord and Tenant Ordinance does have application. I am satisfied that the mortgagee mist be regarded as a person claiming through and standing in the shoes of the owner/landlord and that he second defendant must be regarded as a person who has acquired the status of a protected tenant and is entitled to the protection of the ordinance. I am satisfied, therefore, that the application as against the 2nd defendant must be dismissed.

7. This, of course, leaves unresolved the question as to the rent due from the 2nd defendant to the plaintiff. Should the plaintiff succeed in establishing the validity of the 1st tenancy agreement, then the rent would, it seems to me clear, be in the sum of $6,000 a month. If the plaintiff does not establish the validity of that agreement, given that the 2nd  tenancy agreement is null and void, then the issue of the rent will be open for determination. This is, however, not a matter which is presently before me and I mention it. only to make it clear that I have not made any finding except that, on the facts before me, the 2nd defendant is a protected tenant. I have made no finding as to which of the two tenancy agreements governed the relations between the 1st and 2nd defendant.

8. The parties having requested that directions be given as to the trial of issues outstanding between them I order that a Statement of Claim is to be filed by plaintiff within 14 days after commencement of term. Times to run there after in accordance with the rules. Liberty to apply.

(1)    (1973) H.K.L.R. 371.

(2)    (1966) 1 W.L.R. 1.

Representation:

Mr. S. Lee (Leonard K.L. Heung & Co.) for 2nd Defendant.

Miss A. Yu (Poon, Yeung & Li) for Plaintiff.