Hang Kwai Shan v. Tsui Ngan
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IN THE SUPREME COURT OF HONG KONG ORIGINAL JURISDICTION ACTION NO. 1633 OF 1971 ----------------- BETWEEN
----------------- Coram : Briggs J. in Court ------------------------ J U D G M E N T ------------------------ 1. The Plaintiff is the registered owner of certain premises situated at No.7 and 8 Fuk Kwan Avenue. The premises consist of a building divided into three floors consisting of 3 flats and three garages. Both the flats and the garages are let as separate units. 2. The building is a pre-war building and therefore a tenancy of any unit is prima facie controlled under the Landlord and Tenant Ordinance. At the moment the permitted rent of at least two of the single flats by reason of that Ordinance is $186 per month. 3. On April 10th 1969 the Plaintiff let the flat on the second floor of No.8 of the premises to the Defendant, a married woman, for a period of two years at the monthly rental of $700. This was sanctioned by the Tenancy Tribunal under the provisions of Section 17 of that Ordinance. Without such sanction the permitted rent would have been $186. 4. That lease expired on April 15th 1971. At some time during the course of the lease the parties had agreed that the monthly rent instead of being paid on the 16th of each month as expressly provided in the lease, should be paid on the first day of each month. The rent was payable in advance. At the date of the expiry of the lease half a month’s rent, or $350, remained unpaid according to the Plaintiff. Though the lease has expired the Defendant has remained in possession of the premises. In this action the Plaintiff claims possession of the premises, the sum of $350 as rent for the period of the first 15 days of April 1971 and mesne profits at the rate of $700 per month from April 16th 1971 until delivery up of possession. 5. The Defendant’s answer to this is simple. She says that the Plaintiff granted her a new lease in April 1971. It was a lease from month to month at the same rate as before, namely $700 per month. In addition a premium was paid to the Plaintiff of $10,000. The Defendant says that in consequence of this agreement the Plaintiff, on May 5th 1971, accepted the sum of $11,140. This was made up of the $10,000 premium already referred to, and the rent for two months namely, April and May 1971, at $700 per month. In addition she says she paid the rent for the month of June on June 29th 1971. 6. In these circumstances I directed the Defendant to begin. The Defendant by her defence sets up a new agreement for a lease and the onus of proof obviously lies upon her. 7. The Defendant originally acted in person but I am happy to say that she was granted legal aid and has been represented by experienced solicitors and counsel. 8. The issue between the parties, therefore, is this. Did the Plaintiff agree to grant a new lease at the same rent to the Defendant upon payment to him of a premium of $10,000? 9. The most important witness called on behalf of the Defendant was her husband, Wu Lit Pun. This gentleman is a broker working with a firmwhich manufactures ladies plastic hand bags in Shatin. He is paid $200 per month as a transport allowance and a commission of 1% on all business he brings to the Company. He told the Court that his average wage packet was between $700 and $800 per month. In addition, he receives a bonus at the end of each year of about $2,000. 10. In the original lease the wife of Mr. Wu was described as the tenant of the premises. But, it was clear that any business to be done between the landlord and tenant was done by Mr. Wu on the Defendant’s behalf. Thus he paid the rent, sometimes by check and sometimes by cash. 11. He told the Court that at the end of March 1971 the Plaintiff phoned him referring to the fact that the lease of 1969 was due to expire on April 15th 1971. The Plaintiff told him that if he wanted to renew his lease he must pay a premium. There were further discussions over a period of some twenty days. Finally, agreement was reached. $10,000 was to be paid as premium and the Defendant was to remain on the premises at the same rent in the old lease, i.e. $700 per month. 12. Accordingly on May 5th 1971 Mr. Wu handed the sum of $11,400 to the Plaintiff. Included in the amount was a check for $5,000 obtained from his employer as a loan and made payable to the Plaintiff. $10,000 represented the premium, the remainder of the money represented two months’ rent, for April and May 1971. He was given no receipt though he asked for one. 13. Mr. Wu said he obtained the money to pay this large sum in this way. He borrowed $5,000 from his employer, Madam Ho Chiu. He borrowed $2,000 from his younger brother: and a further $2,000 from his sub-tenant, a Mr. Chow Wai Sun. The rest of the money, $2,400 was his own. He also said that his wife, the Defendant was present during this transaction. In continuation of his evidence Mr. Wu also said he paid the rent for the month of June 1971 by check which was produced as an exhibit. 14. The Plaintiff’s case is that this transaction never occurred. He said that at the beginning of April 1971 he went to the Defendant’s flat and demanded the sum of $350 which represented the rent for April, untilApril 15th, the date of expiry and which was payable in advance under the lease. The Defendant was not there. So he left his receipt for this amount. This was in accordance with his usual practice. He collected the rent personally and always gave a receipt. If the Defendant was not available he would leave the receipt and the Defendant would send him the amount; usually this was in the form of one of Mr. Wu’s checks. Rent was payable in advance. 15. He did not receive the outstanding rent for April so hecalled again. On this occasion he asked Mr. Yu whether he intended to renew the lease at an increased rent. He, the Plaintiff, asked for $1,000 per month. He said that there was no mention of a premium. Mr. Wu said he would consider the matter. Some ten days later there were further negotiations. Mr. Wu suggested that the new rent should be $900 and promised to send a check for the outstanding April rent. 16. The Plaintiff said at the beginning of May 1971 he telephoned to Mr. Wu, who then told him that he did not wish to renew the lease and that he would move out to promises in Leighton Road within a month. 17. However he did not and has not. Nor has the April rent or any further rent been paid. The Plaintiff said that at the beginning of June 1971 he saw the Defendant and asked her about the April rent, that is the rent up to April 15th. She told him she would only pay him rent for the whole of April: this he refused to accept. He said that she told him that she would be moving out in about a month’s time on this occasion. This did not occur so the writ was issued. This was on July 27th 1971. 18. The Plaintiff emphatically denied receiving any money from the Defendant or from Mr. Wu on May 5th 1971. He also denied receiving the check for $5,000 on May 5th and the check for $700 in June 1971. 19. As I have said the onus of proof lies on the Defendant. The question is whether I can accept the evidence of the witnesses called on behalf of the defence as being true on the balance of probabilities. 20. The defence relied to a great extent in the alleged payment of the sum of $11,400 on May 5th 1971. The Defendant herself gave evidence about this and she painted a picture very different from that depicted by her husband. 21. She was certain that she herself paid the money to the Plaintiff and not her husband. She neither discussed the matter of an increase of rent nor the payment of a premium with the Plaintiff. Nor did she hear discussions about this between the Plaintiff and her husband. However she knew what the money was for: it was for a premium of $10,000 and two months’ rent at $700 per month. 22. The husband of the Defendant borrowed $5,000 from his employer Madam Ho Chiu. This lady gave evidence and said that she gave him a check made out to the Plaintiff. It was a bearer check and does not appear to have been endorsed, though it was cashed. Any one could have cashed it and by whom it was cashed nowhere appears. It is dated May 5th 1971 the date on which Mr. Wu and the Defendant state it was handed to the Plaintiff. The Defendant signed a borrowing note which was given to Madam Ho Chiu. I find this very unusual for it was Mr. Wu who was the borrower. Indeed. Madam Ho Chiu’s evidence is very strange. She lent one quarter of the amount then standing to her credit in her bank account to her employer without security on a note signed by his wife, which states that the money is repayable at six months. It has never been repaid. The witness said that she intended to recoup the amount from the bonus given to Mr. Wu by her firm at the end of each year. She did not do so last year and anyway the bonus payable is some $2,000 only. It would seem that despite the six months period mentioned in the borrowing note it would certainly be two if not three years before the money was repaid. When asked why the note was in the Defendant’s name Mr. Wu said it was because she dealt with the landlord, she was the tenant. But that borrowing note had nothing whatever to do with the landlord: it records a transaction between the Defendant and Madam Ho Chiu. 23. And this is not all. The Defendant gave a circumstantial and lengthy account of the circumstances in which she signed the note. She is illiterate. I was uncertain whether her son or her husband provided her with a specimen of her signature which she copied on to the note. She gave two conflicting accounts naming each of them. But she was emphatic that she did not know what she was signing. And that no one, including her husband told her what the import of the note was. She went so far as to say that she did not know she was liable to repay the $5,000 by reason of the wording of the borrowing note. Mr. Wu contradicted this with emphasis. Another curious fact is that the statement of defence, the list of documents of the Defendant and the original lease were all signed by the Defendant with a cross. The Defendant is not gainfully employed and was not worth $5,000 at the time so her signature on the note was not of much value. 24. I find the whole story of the $5,000 check and the borrowing note most dubious. And I must add that the demeanor of the Defendant was far from candid. She even went so far as to deny any knowledge of the other tenants occupying two of the garages, on the ground and second floors. It will be remembered that the building consists of three floors only. 25. Wu Luk Bun, the younger brother of the husband of the Defendant gave evidence to the effect that he lent his brother $2,000 in April 1971. He said he knew it was to be given to his brother’s landlord but added the statement that his brother never told him how much he had to pay the landlord. 26. Finally Chow Wai Sun gave evidence. Mr. Wu had said that he borrowed $2,000 from him as part of the money he collected to make up the $10,000 premium. Mr. Chow in effect denied this. He admitted having lent Mr. Wu $2,000 in 1969. And said he had never lent him any further sum. Mr. Chow is a sub-tenant of the premises and indeed was paying $600 per month for that privilege. He also said he was a friend of Mr. Wu and the Defendant. He struck me as a completely truthful witness. He was given every chance by counsel to correct the date of his loan to Mr. Wu if indeed the date he gave, namely 1969, was incorrect; but he reiterated that these had been but one loan and that, and I quote – “about 3 years ago”. 27. As to the two checks exhibited they were bearer checks and could have been cashed by any person. Mr. Wu said he provided $2,400 from his own money. At the relevant time there was $31.80 in his bank account. He and his wife were living on a very tight budget at the time. The evidence as to the capability of the production of so large an amount was not forthcoming. 28. It will be seen therefore that whenever the evidence of Mr. Wu is tested it is, if not wholly, at least in part, found to be unreliable. 29. I have stated the main lines of the case for the Plaintiff earlier in this judgment. He called three of his other tenants as witnesses all of whom said that they had not been asked to pay a premium. The Plaintiff said he had a policy of letting his flats for periods of fixed short terms - usually for one or two years - the rent being increased after negotiation each time a new lease was issued. For example he let the ground floor flat of No.7 to one Wang Kai Ting, in October 1966 for two years at $600 per month, again in December 1968 for two years also at $600 per month, again in January 1971 for one year at $1,000 per month, and yet again in January 1972 for two years at $1,400 per month The Plaintiff is well aware of the dangers to a landlord of the statutory provisions in Hong Kong designed to control the increase in rents, so noticeable in the case of Wang Kai Ting for example. It would not be to his advantage to have accepted apremium for to do so might have had the effect of creating a statutory tenancy. The Defendant could recover the amount of any premium paid and would probably be able to stand out for a lease at the permitted rent under the Landlord and Tenant Ordinance. 30. The Defendant also knew about this. And she knew that her original tenancy had been sanctioned by the Tenancy Tribunal. Three of the Plaintiff tenants are statutory tenants paying very small rents by present standards. The Plaintiff’s policy is naturally, to try to rid himself of such tenants and to ensure that any new tenant is not a statutory tenant. 31. It was suggested that the Plaintiff wanted a large sum of money at that particular time. The statement of his account with his Bank for the relevant time was placed before the Court. And there is no evidence that at that particular time the Plaintiff was more hard up than usual. Like so many businessmen in Hong Kong, he operates his affairs on an overdraft which at times is of a considerable amount. However at the beginning of May hisaccount was not overdrawn though it became so later in that month. 32. I found the Plaintiff to be a careful and a candid witness and I accept his evidence without reservation. 33. The Defendant has not satisfied me on the balance of probabilities that her story is true. She has not satisfied the burden of proof lying upon her. Indeed I believe the evidence of the Plaintiff that no premium was demanded and no premium was paid. 34. It follows that there must be judgment for the Plaintiff for possession of the premises and for $320 for the rent for April 1st - 15th 1971 and for $700 per month as mesne profits from April 16th 1971 until possession is delivered up. 35. There will be a stay of execution of the judgment until May 15th and a further stay of the order for possession until June 31st provided that all the rent and mesne profits outstanding are paid on or before May 15th. The Plaintiff is to have his costs. The Defendant’s costs are to be taxed under the Legal Aid Regulations. There will be an order for payment out to the Plaintiff’s solicitors of the money now lying in the Court.
C. Ching (B. Wong & Co.) for Plaintiff J. Swaine (J.N. Smart & Co.) for Defendant |