Yoshiya Property Management Ltd v. Ng San Wan, Lawrence

DCCJ 1174/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1174 OF 2007

--------------------

BETWEEN

--------------------

Coram : His Honour Judge Chow

Date of hearing : 20^th July, 2007

Date of handing down Decision : 12^th September, 2007

DECISION

1.This is the Defendant’s application to strike out the Statement of Claim in this action under O.18 r.19 of the Rules of the District Court.  In this case the Plaintiff claims against the Defendant for the recovery of possession of the premises situated at 4^th floor, 238 Chatham Road North, Kowloon, Hong Kong (“the Premises”), arrears of rents and mesne profits.

2.Paragraph 1 of the Statement of Claim states as follows:-

“

By a Tenancy Agreement in English dated 1st September 2000 (“the Tenancy Agreement”), the Plaintiff as the Landlord let to the Defendant as the Tenant the premises known as 4th Floor, 238 Chatham Road North, Kowloon, Hong Kong (“the Premises”) for a term of 3 years from 1st September 2000 to 31st August 2003 at the rent of $3,000.00 per month …… with an option of renewing for a further term of 3 years.”

In his affirmation, the Defendant admitted this paragraph.  His complaint is that the Plaintiff had at no time been the registered owner of the Premises.  He said that when the Tenancy Agreement was signed, the Plaintiff held itself out as the rightful owner of the Premises whereas it was not.  He was misled to have signed the Tenancy Agreement by the Plaintiff’s misrepresentation that it was the rightful owner of the Premises and had the entitlement to confer the right to occupy the Premises him.  The Plaintiff’s director, Mr. Eric Hui, denies the allegation.  Whether there was such a misrepresentation is a matter for trial.

3.The Defendant’s counsel submits that the Plaintiff’s reliance on the doctrine of “tenancy of estoppel” is misconceived.  He submits that ‘if a person has no legal estate in a land, he of course has no right to create an interest which is greater than what he has in that land in favour of another ……… Notwithstanding that he has no legal estate in the land, the alleged landlord who relies upon the doctrine of “tenancy of estoppel” must show that he has some interest in the land or right to use the land.’

4.The Defendant relies on the case of Fung Siu Kam & Ors. v. Lo Shun Cheung [1984] HKC 107 to support his contention.  That case concerns an action for forfeiture of a tenancy and for rent and mesne profits.  The argument put forward by the Defendants before the Court of Appeal was that the Defendants should be allowed to contend that the agreement under which the Plaintiff sued was illegal and that the court should not lend its aid to enforce an illegal agreement.  That is the issue the Court of Appeal had to decide.  The issue does not touch on the doctrine of “tenancy by estoppel”.  The second case relied upon by the Defendant is Brutton v. London & Quadrant Housing trust [2000] 1 AC 406.  In that case, the House of Lord said, at P.416 of the judgment, that “It therefore seems to me that the question of tenancy by estoppel does not arise in this case.  The issue is simply whether the agreement is a tenancy.”  As the above two cases do not deal with the doctrine of “tenancy by estoppel”, they do not support the Defendant’s submission.

5.The Plaintiff submits that the Tenancy Agreement creates a tenancy by estoppel in respect of the Defendant vis-à-vis the Plaintiff.  This doctrine of estoppel is clearly set out in the case of Tang Man Kit & Foo Tak Ching & Hip Hing Timber Company Limited (CACV 137/02).  In that case, the Court of Appeal stated:-

“	52.	As pointed out by the editors of Hill and Redman’s Law of Landlord and Tenant （17th Ed.） Para 88, this estoppel has two aspects –
		(1)	A tenant is prevented or estopped from denying the right of his landlord to grant the lease and, conversely, a landlord is prevented or estopped from denying the title of his tenant under the lease.
		(2)	A person who has no legal estate in the land may nevertheless purport to grant a lease of that land; in that event, there is created between him and his purported tenant a tenancy by estoppel which binds them and their respective successors in title just as if the landlord had a sufficient interest to grant the lease.
		The position is best stated by Lord Denning MR in Industrial Properties (Barton Hill) Ltd and Others v Associated Electrical Industries Ltd [1977] 1 QB 580:
			‘	If a landlord lets a tenant into possession under a lease, then, so long as the tenant remains in possession undisturbed by any adverse claim – then the tenant cannot dispute the landlord’s title.  Suppose the tenant (not having been disturbed) goes out of possession and the landlord sues the tenant on the covenant for rent or for breach of covenant to repair or to yield up in repair.  The tenant cannot say to the landlord: “You are not the true owner of the property.”  Likewise, if the landlord, on the tenant’s holding over, sues him for possession or for use and occupation or mesne profits, the tenant cannot defend himself by saying: “The property does not belong to you, but to another.’ ”

6.The doctrine of “tenancy by estoppel” appears to apply in the present case.  I cannot find any justification to strike out the Statement of Claim.  Accordingly I dismiss the Defendant’s application.

Costs

7.I make an order nisi, to be made absolute in 14 days, that the Defendants do pay costs of this application to the Plaintiff, to be taxed, if not agreed with, Certificate for Counsel.