Madam Wai Mo Chun v. Wong Sik Chiu
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IN THE SUPREME COURT OF HONG KONG ORIGINAL JURISDICTION ACTION NO. 1709 OF 1971 ----------------- BETWEEN
----------------- Coram : Briggs, J. in Court ------------------------ J U D G M E N T ------------------------ 1. This is a claim by a landlord for possession of certain premises situated on the ground floor of No.15 Sheung Heung Road, Kowloon. 2. The Plaintiff first let the premises to the Defendant by a lease dated July 2nd 1963. The lease was in writing and was for a term certain of five years. It expired on June 30th 1968. The Defendant, the tenant, paid a premium of $8,000 at the commencement of the lease and the rent was $700 per month. 3. One covenant of this written lease reads that the tenant shall not “use the demised premises except for lawful business and domestic purposes”. 4. Upon the expiry of the lease the parties negotiated a second lease of the premises. This was for a period of three years from July 1st 1968 - June 1971.The rent wasincreased to $772. 5. This lease therefore expired on June 30th 1971. The Plaintiff gave the usual notice of terminationof the lease to the Defendant under the provisions of the Tenancy (Notice of Termination)Ordinance in the proper form. But the Defendant has held over. Hence these proceedings. 6. The Defendant in his defence relies upon three distinct matters. He says he is protected (1) under the Tenancy (Prolonged Duration) Ordinance and (2) under the Rent Increase (Domestic Premises) Control Ordinance. In addition he claims that an agreement for a third lease of the premises was entered into by the parties on or about July 3rd 1971. 7. The premises consist of a ground floor shop, part of which described as “a small space” is used for the purposes of cooking. There is also a lavatory. There is a cockloft erected inside the shop approached by a ladder. Photographs of the premises which are of excellent quality, were exhibited by both parties. 8. I will deal with each of the three issues raised by the defence in turn. The Defendant seeks protection under the Tenancy (Prolonged Duration) Ordinance on the ground that he paid a premium when his second lease was granted.That Ordinance applies to certain monthly tenancies. But byvirtue of Section 5(2)(b) it does not apply, and I quote:- “to any case in which the Court is satisfied by evidence that no key or construction money or other premium of a similar nature has been paid.” 9. The Plaintiff, the landlord, is a married woman but she allows her husband, Kwong Chow, to act as her agent in all matters concerning the tenancy of the premises in question. Thus he negotiated the leases on her behalf, and he collected the rent each month. 10. As I have said, a premium was paid by the tenant when the original lease was signed. Kwong Chow in his evidence was emphatic that no such sum was paid when the second lease was granted. He produced a rent receipt on which he briefly recorded the terms of the second lease and part of this reads as follows:- “No construction money nor deposit has been received in respect of the premises. This is proof.” 11. These words were written by Kwong Chow in the presence of the Defendant but the Defendant did not sign the document on which they were written. 12. They were written on a rent receipt dated July 1st. This was the receipt for the July rent, i.e. the receipt for the first rent under the new lease. The date of the new lease is August 3rd. It seems that the parties were negotiating the term up to that time. 13. The Defendant said that he paid $3,500 as construction money on that occasion. He said he knew of the terms being written on the back of the rent receipt. But the purpose of the inclusion of the statement that no premium had been paid was to deceive the Plaintiff. He, the Defendant did in fact pay the $3,500. The Defendant said that Kwong Chow received the money for himself. 14. This case largely depends upon the credibility of the witnesses. I heard both Kwong Chow and the Defendant give evidence and I watched their demeanour while they did so. I have no hesitation in saying that when their versions of any facts conflicts I prefer the evidence of Mr. Chow to that of the Defendant. Mr. Chow gave his evidence in a straight forward manner and I believed him. The Defendant on the other hand was prone to exaggeration and didnot impress me as a truthful witness. 15. I do not believe that Mr. Chow received a premium when the document dated August 3rd 1968 was made. There would be no need to write the words concerning the non payment of a premium even if Mr. Chow wished to deceive the Plaintiff - which I do not for one moment believe he wished to do. When the premium was exacted when the first lease was signed, its payment and its receipt were recited in the term of the lease itself. One would have expected that this would have been the case on the second occasion had a premium been paid in fact. I reject the evidence of the Defendant as to this issue and I am satisfied that no premium was paid on that occasion. It follows that the Tenancy (Prolonged Duration) Ordinance has no application to this case. 16. The second line of defence is that the premises were let as domestic premises and therefore the Defendant is protected by the Rent Increases (Domestic Premises) Control Ordinance. 17. Section 5 of that Ordinance deals with the meaning of ‘domestic’ tenancy. It is a long section and I will not set it out here. For our present purposes the purposes for which the premises were let and their present use are material. 18. There was no mention in the second lease of the use to which the premises were to be put. However the original lease did provide that they were for domestic purposes as well as business purposes. Andit is reasonable to suppose that the premises were let on the second occasion for the same purposes as they were let on the first occasion. 19. As to the present use of the premises, there is this to say. The premises is the registered place of business of a firm know as Chiu Sing Hing Provision Company which is a grocer’s shop. This is the business of which the Defendant is the sole proprietor. In his application made under the Business Registration Regulations, the Defendant gives as his residential as opposed to this business address an address in the Wang Tau Hum Resettlement Estate, Kowloon. 20. Kwong Chow said that the premises had always been let as business premises. The premises consist of one ‘shop’ in a row of shops forming the ground floor of a block of flats. He said he expected that a watchman would live on the premises. This is nearly always the case with premises of this type in Hong Kong. 21. The rent ofthe premises is much higher than the rents for the flats above them. This indicates that they were primarily rent for business purposes. 22. There is no doubt that the premises are being used and have always been used as business premises and that the Chiu Sing Hing Provision Company is carried on there. This is shown by the photographs very clearly. And the photographs show that the premises were constructed as a shop. 23. However the Defendant says that he and his family have always lived there. He said that some eight or nine persons shared the cockloft. The only parts of the premises used as domestic premises he said, were the cockloft and a space, described as very small, on the ground floor where cooking is carried on. There is also the lavatory. There is no proper kitchen and no bathing facilities. 24. The Defendant said that he is still the registered owner of the resettlement flat referred to in his application for registration under the Business Registration Regulations, which is now occupied by a brother and his mother. 25. The Defendant said that the area of the cockloft was about half the area of the ground floor. Mr. Chow put itas one third. 26. Mr. Chow used to collect the rent for the premises every month. He said he never saw the children of the Defendant on the premises. He saw the Defendant and his wife there upon some occasions, but not the children. The Defendant has five young children and the photographs exhibited by the Defendant which he says were taken in the evening before this case came to trial, showed some of them on the premises. And very handsome children they are. 27. There is no doubt in my mind that even if the whole of the Defendant’s family were living on the premises, and I am not wholly convinced that they were, the primary user of the premises was not domestic. 28. This is not a case like the case of Shirlien Light v. Wan Bing Wong(1) which deals with the normal additional user ofpremises consistent with a domestic user. It cannot be said that a large grocer’s shop is user consistent with the domestic use of the cockloft so as to reach a conclusion that the premises are primarily domestic. The premises are in my mind primarily indeed almost wholly used for business purposes. 29. I have dealt with this aspect of the case at some length because it formed a considerable part of the case of either side as presented in Court. 30. However it is really academic for the Rent Increases (Domestic Premises) Control Ordinance does not apply to those premises in any event by virtue of Section 3(5). This states that the Ordinance does not apply to, and I quote:‑ “a tenancy for a fixed term of three years or more the agreement for which contains no provision for earlier determination by the landlord ..... other than for breach of any of the provisions of the agreement.” 31. The tenancy in this case was a tenancy for three years exactly and there was no provision for earlier determination. Hence the Defendant cannot succeed on this issue either. 32. There remains the third and final issue. The Defendant said that when the second lease had expired he negotiated with Kwong Chow for a third lease. He said that this new lease was to be for a term of three years at the increased rent of $872: namely an increase of $100 per month over and above the previous rent. He further said that it was agreed that he would pay a premium of $3,000. He added that he did pay one sum of $872. In his pleading the Defendant said that he only tendered the $3,000 premium: but in cross-examination he said he actually paid it to Mr. Kwong. Later he said that Mr. Kwong came to the premises with the Plaintiff. The Plaintiff said she wanted $1,500 rent per month and offered to return the sum of $872 which had been paid. 33. But Kwong Chow and the Plaintiff denied this story. The Plaintiff said she never went to the premises at all. Kwong Chow said that the Defendant sent a person to him to ask for a renewal of the lease. He had discovered that the rent of the neighbouring shops was $1,500 per month. So he, Mr. Chow, told him that he would renew at that figure provided that two months rent was paid as a deposit. The Defendant did not agree to this and there were no further negotiations. 34. About this time, early in August 1971, the Plaintiff received a letter from the Defendant asking for a renewal of the tenancy of “the shop” [sic] at a reasonable rent. At first he said he wrote it, but later he said it was the idea of Kwong Chow that it should be written, and he went so far as to state that he had copied it from a draft which had been given to him by Kwong Chow. He also said in cross-examination that he paid Mr. Chow the $3,000 premium and that he, Mr. Chow told him not to let the Plaintiff know about this. None of this, however, was put to Mr. Chow. 35. There is nothing in writing to evidence either the agreement for a lease or the two payments. Again I have no hesitation in accepting the version of Kwong Chow in preference to that of the Defendant. The latter version is improbable in itself. Mr. Chow said that the rent was normally paid by post dated check. And the Defendant is a businessman who woulddemand a receipt for any rent paid. The normal practice between the parties was that Mr. Chow himself collected the rent and gave a receipt. There will therefore be judgment for thePlaintiff for possession of the premises. 36. Mesne profits to be paid at rate of $772 for months of May, June and July when they fall due. 37. Paragraph 7 of the Statement of Defence can be read as a counterclaim. Insofar as that is so, the counterclaim is dismissed. There will be a stay of execution until July 31st 1972, conditional upon payment of mesne profits as above. There will be the usual default clause. 38. The Plaintiff is to have her costs.
Mills-Owens (Johnson, Stokes & Master)for Plaintiff Michael Asome (John N. Smart & Co.) for Defendant (1) 1971 H.K.L.R. 145 |