Lo Wah and Another v. Chui Fun
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CACV000152/1980 Landlord and Tenant - claim against tenant and sub-tenant under s.53(2)(e) of Landlord and Tenant (Consolidation) Ordinance - tenancy within Part II - sub-tenant paid a premium to tenant - whether sub-tenancy within Part II - contractual head-tenancy not determined - such determination impossible by virtue of s.52(1) - previous sub-letting consented to - person consenting had no authority to consent - valid consent would not have waived new right to sue for possession under s.53(2) in respect of new subletting because head-tenancy was not at time of consent within Part II - whether new sub-letting "unlawful" within meaning of s.53(5) - sub-tenancy not protected against claim of head-landlord.
----------------- Coram: Huggins, Leonard and Cons, JJ.A. Date of Judgment: 26 November 1980 ----------------- JUDGMENT ----------------- Huggins, J.A.: 1. The Defendants appeal by leave of the trial judge against an order for possession of Flat 7 on the 10th floor of Luen Tak Apartment, 45 Smithfield Road, Hong Kong. The claim was brought on two grounds:
It was common ground that the Plaintiff had let the premises to the 1st Defendant for a term of three years commencing on 15th May 1976 under an agreement in writing and that after the expiration of that tenancy the 1st Defendant held over as a monthly tenant. It was also common ground that this monthly tenancy was within Part II of the Ordinance. 2. The trial judge dismissed the claim under s.53(2)(a), and that part of his judgment is not in question before us. We are concerned only with the order made under s.53(2)(e). The Contractual Tenancy. 3. On behalf of the Defendants it is submitted that there was no ground for any order under that head, because the contractual tenancy had not first been determined by notice to quit. We were referred to the English equivalent of s.53(2), namely s.10 of the 1968 Rent Act, which has been held to be a restrictive and not an enabling section. Undoubtedly the two sections are substantially in similar terms but it has been conceded that in England there is no equivalent to our s.52(1), which is in these terms:
As it seems to me, the existence of this subsection is conclusive against the Defendants. There was no means by which the contractual tenancy could be determined otherwise than by an order under s.53(2). Under Part II, therefore, there is no need - as there is in England - first to determine the contractual tenancy and then to pursue the statutory remedy. In my judgment the wording of s.52(1) could not be more clear. It was argued that if an order for possession may be made under s.53(2) while the contractual tenancy is still in force injustice might be done to a tenant with a fixed term which had not yet expired if the landlord were to claim possession under para. (c). While recognising that such a case might present difficulty, I think it would not be insuperable. That is not this case. Quasi Estoppel. 4. Secondly, it was sought to argue that the Plaintiff was barred from recovering possession by reason of quasi estoppel or waiver. The contention was that during the currency of the original three-year term the Plaintiff's daughter had given oral consent to a sub-letting to the 2nd Defendant and that the 1st Defendant was thereby led to believe that the Plaintiff would not pursue any right to claim possession on the ground of sub-letting to the 2nd Defendant. I think there are several answers to this contention. First, there was no evidence that the daughter was authorised to do anything more than accept rent on a limited number of occasions. There was a finding by the judge that the Plaintiff did not know of the sub-letting until 17th January 1980, shortly after which proceedings were instituted. That finding has not been attached. Even if the daughter had been authorised to consent to a sub-letting, the sub-tenancy consented to came to an end on 14th May 1979. In truth, as it was a sub-letting of only part of the premises, it was not prohibited under the terms of the agreement: nor was the sub-tenancy which replaced it. However, whereas the original head-tenancy was not within Part II, the new head-tenancy was within that Part, and the carving out of a sub-tenancy would be a ground for possession under s.53(2)(e) unless there was written consent. In this respect the statute clearly overrides the contract between the parties. Such a right to possession could not exist in the Plaintiff before 15th May 1979 and nothing done before that date could constitute a representation by him that he would not enforce a right which did not then exist. The position of the 2nd Defendant. 5. The final point taken by Mr. K.H. Woo is more difficult: he submits that even if the judge was right to make an order for possession against the 1st Defendant he should not have made any order against the 2nd Defendant. The argument is that the 2nd Defendant is a sub-tenant to whom part of the premises has been "lawfully" sub-let and that he can claim the benefit of subsections (5) and (6) of s.53. I have already said that under the terms of the original agreement, and therefore under the monthly tenancy which succeeded the three-year term, the sub-letting of part of the premises was not prohibited. To that extent the sub-letting was lawful. On the other side it is submitted that the sub-letting was nevertheless unlawful because, it being without written consent, the granting of it was a ground for ordering possession in favour of the head-landlord. For my part I do not find it easy to call a sub-letting "unlawful" if (a) the contract between the parties allowed it (Hyde v Pimley 1952 2 Q.B. 506, 514) and (b) the statute does not expressly prohibit it. 6. However, I do not think it is necessary to decide this difficult question, because, even assuming the sub-letting to be "lawful" within the meaning of s.53(5), I would hold that s.53(5) and (6) do not assist the 2nd Defendant. All that subsection (5) provides is that an order for possession against a tenant shall not operate to give a right to possession against the sub-tenant: it does not prevent the making of an effective order for possession against the sub-tenant himself. 7. This view is consistent with the decision in Enniskillen Urban District Council v Bartley 1947 N.I. 177. There the tenant had sub-let the entire subject matter of the head-tenancy, as permitted by the agreement, but without the head-landlord's consent. Before the Court of Appeal it was conceded that the head-tenant had no right to hold over after the expiry of a valid notice to quit, by reason of his not being in occupation of any part of the premises. The question was whether the sub-tenant had any right to remain. She relied upon the equivalent of s.5(5) of the English Increase of Rent and Mortgage Interest (Restrictions) Act 1920 and upon s.15(3), which in turn were similar to our s.53(5) and (6). The English provisions read:
In the course of a masterly analysis of the case Black, J. said at p.184:
He went on to point out the absurdity if the sub-tenant were entitled to retain possession against the head-landlord despite the existence of circumstances enabling the head-landlord to evict his immediate tenant, an absurdity which would exist no less in Hong Kong because the result would be that a landlord who had a perfectly good claim to recover possession upon any of the grounds specified in s.53(2) could be effectively balked from recovering clear possession of his house by the tenant's making a sub-letting of a portion of it. Black, J. thought the Legislature could never have intended such a result. The true effect of s.5(5) was, as regards a sub-tenant, that the court would have to consider whether it was reasonable to make an order for possession against that sub-tenant and not merely whether it was reasonable to make an order against the tenant. That was the position whether the sub-tenant was joined as a defendant in the same proceedings as the tenant or separate and subsequent proceedings were brought against the sub-tenant. In both judgments in the Enniskillen Case emphasis was laid on the words "retain possession under this section" in s.5(5): the following words "or be in any way operative against any such subtenant" were treated as adding nothing. Black, J. cited the following passage from the judgment of Bailhache, J. in Lord Hylton v Heal 1921 2 K.B. 438, 449:
As to s.15(3) he said that the object of it "is to indicate the legal position of sub-tenants who continue in occupation merely by virtue of the protection afforded by s.5(5)". 8. It follows from what I have said that in my judgment an order for possession was properly made against the 2nd Defendant and he has no right to remain in the premises. 9. I would dismiss the appeal. 10. Leonard, J.A. has authorised me to say that he agrees with this judgment. Cons, J.A.: 11. I agree that the appeal should be dismissed and for the reasons already given. 12. I would only add, and with the very greatest respect, that in relation to the position of the 2nd Defendant alone I do not for my part share the hesitation to call the sub-letting unlawful. I am content to take section 53(2) as writing into the contract substantive rights in favour of the landlord. 13. I appreciate that this interpretation has not been adopted in England: see Hyde v Pimley 1952 2 Q.B. 506 at 513. But there are two important distinctions between the English and the Hong Kong legislation which must not be overlooked. 14. Firstly, in England the law does not interfere with the original tenancy. Protection is only given when the landlord has by one means or another brought that tenancy to an end. Then it is limited to the tenant himself or a few others tracing their rights through him. By contrast, in Hong Kong it is the nature of the tenancy itself that is changed. 15. Secondly, the English judge was not bound under the older statutes to make an order for possession even though the landlord had conclusively proved one or more of the conditions prerequisite under, for example, section 5 of the 1920 Act. The judge had then to consider whether it was also reasonable to make the order*. The Hong Kong judge is given no such discretion. Our legislation has adopted the general form of the opening part of section 5 of the 1920 Act but has omitted, deliberately as I see it, the discretionary qualification. Although that first part is phrased in what might perhaps be termed "the permissive negative" it is difficult to see on what ground a judge could refuse an order once a landlord had brought himself within one of the paragraphs (a) to (f). 16. On this view of the legislation there seems to be little point in the enactment of section 52(3), except perhaps as to the period of fifteen days. The situation would be sufficiently covered by section 53(2)(a). However, it may be a mere accident of history. The subsection was part of the original Ordinance (as section 6(3) of Cap. 56 of 70) under which a protected tenancy could be determined, inter alia, by an actual forfeiture for non payment of rent. We may now have to consider most of that subsection, like the words "or be in any way operative against any such sub-tenant" in section 53(5), as adding nothing. 26th November 1980. * The position is still the same although the wording of the relevant section in the present 1968 Act is considerably changed. |