Kader Industrial Co Ltd v. Ho Yung-kai
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CACV000183/1980
----------------- Coram: McMullin, V.-P., Li, J.A. & Silke, J. Date of Judgment: 30th January, 1981. ----------------- JUDGMENT ----------------- McMullin, V.-P.: 1. I am asked by Silke, J. to say that he is in agreement with the judgment which I am about to deliver. 2. The appellant company sought possession of premises owned by it at 48, Kai Yuen Street, Hong Kong. The claim was dismissed by the District Judge on the 26th of August 1980 and the company now appeals against that decision. 3. Kader Industrial Co. Ltd. is a private limited company owned by the Ting family. It carries on a manufacturing process the nature of which has never emerged either at the trial or in the course of this appeal. Until his death in 1976 the company was effectively under the control of the managing director, Mr. H.C. Ting. 4. The premises of which the company seeks possession are part of the ground floor of a multi-storey residential block constructed by the company about 1967 on a plot of land owned by the company on which is sited, in addition to these new buildings, the factory of the Ting family and the Ting family residence. The arrangements whereby the defendant became possessed of the portion of the premises which the company now seeks to recover were of an elastic and rather informal nature so that the precise area of the premises said to be in unlawful occupation by the defendant is neither identified in the pleadings nor described with mathematical rigour in the evidence. No point is made of this however and the judge, while adverting to the difficulty accepted that the disputed occupation includes an area known as the management office (200 sq. ft.), the sleeping quarters of the defendant and his family (150 sq. ft.) together with a toilet, bathroom and kitchen immediately adjoining. 5. The defendant, HO Yung-kai, came to Hong Kong many years ago and worked at various jobs. In 1957 he entered the employment of H.C. Ting as a gardener. Between 1957 and 1968 he and his family consisting of his wife and several children resided in a stone hut under a bridge which connected the lower portion of the Ting family residence with an upper portion referred to as a penthouse. There is some evidence that during those years his wife and perhaps some of the family also performed some domestic services for the family in addition to the services performed by the defendant himself as Mr. Ting's personal gardener. No rent was paid for this stone hut. 6. In 1967 the company constructed the buildings known as 46 and 48, Kai Yuen Street and in the course of the construction the stone hut occupied by Mr. Ho and his family became unsafe and at the direction of H.C. Ting they removed to a building owned by the company known as No. 16 Tanner Hill Road which was used as a hostel for workers of the company and there he and his family resided for several months rent free and continued to perform their services for the Ting family. 7. In early 1968 the new building 46 and 48, Kai Yuen Street was completed and in April of that year a change took place in the nature of the employment of the defendant. There is a dispute as to the nature of this change. Mr. Li for the appellant maintains that the evidence shows that thereafter the respondent worked for the company although continuing to perform some duties for Mr. H.C. Ting personally while Mr. Ching for the respondent says that the evidence is insufficient to establish that the respondent was working for the company. Alternatively, he says, that evidence is equivocal and at best to be interpreted as showing that he was employed both by the company and by Mr. Ting. This contention was used by counsel to ground an argument under s.50(6)(d) of the Landlord & Tenant (Consolidation) Ordinance - the section with which we are concerned in the present case - to the effect that the appellant had failed to attract the exclusionary effect of that provision upon which it relies by failing to prove either that the respondent was employed by the appellant company or that his tenure of the premises which he occupies rests upon the terms of that employment. I refer to this part of the argument at this stage only to dispose of it. Mr. Li did indeed object to any such contention being advanced upon the hearing of the appeal since it had evidently found no favour with the trial judge, although advanced before him, and since there was no respondent's notice to entitle the respondent to ask us to affirm the decision of the judge upon this additional ground. I say nothing of the merits of that technical objection because I think it is implicit in the judge's conclusions that he was satisfied that the respondent was employed by the company after April 1968 and moreover I think the evidence supports that view. I take the view that this appeal stands or falls by reference to the single issue disposed of by the trial judge in rejecting the appellant's claim for possession and to that issue I will come when I have completed the recital of the facts necessary to the understanding of it. 8. Some time in April 1968 Mr. H.C. Ting proposed to the respondent that he should move to Kai Yuen Street and there carry out, in addition to his duties to the Ting family, the duties of watchman and gardener for No. 48 which at that time and for some time thereafter was devoted mainly to the housing of the staff of the company. The negotiations which followed constitute the core of the dispute between the parties but the only direct evidence we have as to the nature of the arrangements eventually agreed to between the respondent and Mr. H.C. Ting is that given by the respondent himself. The several witnesses called for the plaintiff three of whom were employees of the company and one Dennis Ting, a director at that time, testified to their understanding of the result of these negotiations but none of them was present at the discussion between Mr. Ho and Mr. Ting. It may fairly be said, I think, that the judge accepted in the main the account given by the respondent of these negotiations. Mr. Ho said that he objected to Mr. Ting's proposal his principal objection being that it would be impossible for him to work as a gardener by day and a watchman by night. In addition, he was reluctant to move to 48, Kai Yuen Street because he had heard that it was likely that he would be charged a substantial rent. Accordingly, he declined the offer and actually withdrew his services altogether from H.C. Ting for several days. There was then a delegation of three members of the staff of the company including P.W. 3, LAU Sai-kwan, then a rent collector, who went to see the respondent at the request of Mr. Ting and who asked Mr. Ho to go and discuss the matter further with Mr. Ting. He did so and according to Mr. Ho, it was arranged that his father would do the night watchman duty while he would do the gardening work and "keep an eye to" No. 46 and 48. He and his family were to reside in the ground, floor of No. 48 occupying the area to which I have referred earlier which was originally one large room but which, prior to his occupation of it, and in order to fit it for domestic residence, was divided up by partitions into the several areas indicated upon the rough sketch (Exh. P.3) supplied to the court by one of the witndeses in the course of the trial. For this he was to pay a rent of only $10 per month plus water and electricity charges the sum of rent to be deducted from his monthly wage. He accepted these terms and moved in and continued to reside there carrying out these duties although it would appear from the evidence that his father ceased to act as night watchman some two years after the initiation of the new arrangements. He was dismissed from the service of the company on the 20th of September 1979. On the 2nd November 1979 a letter was directed to him in the following terms signed by the director and general manager of the company, Mr. Ting Ng-sau:
The respondent refused to move out and action was commenced in the District Court by writ dated the 19th of December 1979. 9. The appellant's case is that the effect of the arrangements between the respondent and Mr. H.C. Ting was to create what amounts to a service tenancy. It has never been argued that the respondent was not a tenant but only a mere licensee. The respondent as a tenant claims the protection of Part II of the Landlord & Tenant (Consolidation) Ordinance. The appellant company says that he is excluded from that protection by virtue of the provisions of section 50(6)(d) which is in the following terms :
10. Paragraph 2 of the particulars of the plaintiff's claim is in the following terms:
At the trial counsel who then appeared for the appellant company sought to argue that there was an express term, excluding the protection of the Ordinance. Clearly this was not so and the judge so found. Mr. Li upon the hearing of the appeal made it clear that he was not advancing any such contention. What he says is that the circumstances are such that the court must perforce imply into the contract between the parties a term to the effect that upon leaving the employment of the company the respondent must also quit the premises. 11. There was never a formal tenancy agreement but on the 24th of April 1968 Mr. H.C. Ting the managing director made out a kind of memorandum - presumably for purposes of record - indicating the new terms upon which the respondent was prepared to continue his services. We do not have the original of this document but a copy thereof cobbled together by several hands including some figures added in red by H.C. Ting himself, some words written by the director of the company called Chow and some words and figures in pencil by an employee called LAU Cheung-yuen, was put in and is conceded to be in substance a true copy of the original. It reads as follows:
While this says nothing expressly about the tenancy it clearly denotes the changed conditions of service and can scarcely be interpreted otherwise than as an acknowledgement that the respondent is thenceforward to work as a company employee on the company pay roll while still continuing to perform personal services for the managing director. 12. There is no doubt that the respondent regarded his conditions of occupancy as vitally altered by the arrangement which he entered into with Mr. H.C. Ting in April of 1968. In his evidence he stressed the fact that he had never paid rent before not even when he was at Tanner Hill Hostel premises in which other workers were obliged to pay a rent. He did not go so far as to say that Mr. H.C. Ting had postively promised him that he would remain secure in possession of the premises even if he should leave the service of the company. He said that he was aware that if he had left the company's employment while in the Tanner Hill Road premises he would have had no right to remain on in occupation thereof and in substance his evidence in respect of the Kai Yuen Street premises was that he asked to pay a rent so that he should be regarded as a tenant for security of tenure. It has been suggested that this is a suspicious embellishment of his narrative inasmuch as in the year 1968 such domestic premises did not fall within the protection of the Ordinance so that the emphasis he lays upon his character as tenant must be regarded as an attempt to fortify his account of his dealings with Mr. Ting. That does not necessarily follow. Admittedly, Mr. Ho, a layman and a worker with humble background, would not be expected either in 1968 or presently to be well instructed in the niceties of the law but even to one such as he the status of a rent paying tenant would seem preferable to any right of occupancy which was manifestly one of grace and favour arising from a contract of service. 13. There is no doubt that there are questionable aspects to the respondent's case. Mr. Ching concedes as much when he says that the evidence for a protected tenancy may not be strong while emphasizing that the appellant's case is weaker still in that the burden of proving the existence of an implied term to remove after termination of employment lies upon the appellant company, a burden which, he maintains, the company has wholly failed to discharge. The trial judge found that there was no such term either express or implied. He was however alive to the oddities of the situation. He said:
I think we must accept the picture of Mr. H.C. Ting - a picture to which all the witnesses contributed in one way or another - as a highly autocratic person who regarded the company as his own property and who regulated the terms of his employees as he saw fit. Against that background the judge found that the evidence disclosed that the respondent had been treated as a very special case. That there was another and a very generous side to Mr. H.C. Ting's character was conceded by his son, P.W.4. Dennis Ting, who having said in cross-examination that his father was authoritarian in his management of the business added that he had done many charitable works and replied "yes" to the following question: "If he had a loyal employee he would look after that employee well, return loyalty for loyalty gratitude for gratitude." Immediately after the passage from the judgment which I have just quoted the judge went on to consider those features of the relations between Mr. Ho and Mr. Ting which he regarded as establishing the former as a special case and he says:
He concluded a few lines later:
14. Mr. Li seeks to turn certain of these findings to his own advantage. He suggests that the judge was to a certain extent supporting the appellant's own view of the matter in the passage which I have just quoted. Firstly, he notes that the premises which the respondent seeks to retain were not originally of a nature suitable for domestic purposes at all. They were at first a single large room outside the door of which was painted the legend "Watchman's Room". This room itself leads off a common area which gives upon the outer courtyard by a large doorway flanked by a pillar on which are written the words "Management Office". Within the Watchman's Room there is an area containing a desk and a telephone and although that area is used as a "teng" or sitting room by the whole family it is frequented by other persons although one of the witnesses went so far as to say that Mr. Ho was entitled to exclude persons who wished to enter it. 15. Mr. Li points to the rent of $10. This he says, in relation to the substantial character of the premises is a rent so wholly nominal that, in effect, and even allowing for the payment of water and electricity charges, the respondent's occupancy should be regarded as for all intents and purposes rent free as had been the case at Tanner Hill Road and in the stone hut before that. He does not take issue with the description of Mr. H.C. Ting's character as autocratic and generous but he asks us to say that common sense must set a limit to that generosity. He enlists the well-known passage in the judgment of Scrutton, L.J. in Reigate v. Union Manufacturing Co. (Ramsbottom)(1) where the learned judge describes the principles which ought to apply in any case in which it is alleged that a term ought to be implied into a contract where it is silent on some matter of importance. It is from this passage, often resorted to in later cases, that we derive the assistance of that "officious bystander" whose useful presence has become a familiar means of testing the intention of parties who clearly wishing to contract have left some matter open to question. Familiar as they are the words are well worth repeating:
Looking at all the circumstances of the relationship between Mr. Ting and Mr. Ho from the years 1957-1968 Mr. Li asks us to project ourselves in imagination into the scene of discussion between Ho and Ting in April 1968 and, assuming the role of the officious bystander, to put to those parties the question "What will happen if, while still occupying these premises, the tenant should be dismissed by the company or leave its service?" To this question, Mr. Li suggests, there can only be one answer: the tenancy is at an end, the tenant must remove. He suggests that Mr. H.C. Ting, autocratic, generous but every inch a business man would have applied the test of business efficacy and would never have envisaged a situation in which his employee, performing services partly for himself and partly as watchman for the company, would be permitted to continue in occupation of premises which were in part at least the Watchman's Office once his employment as watchman had been terminated. And he suggests this would have been equally evident to the respondent. We are however confronted with the fact that a tenancy was created albeit at a nominal rent. Prior to that there is no doubt that the respondent's situation was that of a licensee a fact of which he was himself clearly aware. It would have been simple to perpetuate that situation by permitting him to reside as watchman in the Kai Yuen premises without payment of rent as before. Perhaps Mr. H.C. Ting, better instructed in the law as it then stood than was his employee, was aware that even in creating a tenant as distinct from a licensee he could, should the need arise, turn him out by serving him with one month's notice to quit. He was not to foresee that a change in the law might render such a tenancy onerous from the company's point of view. On that view the business efficacy of the arrangement between the parties would by no means have been impaired in the eyes of the employer by the absence of an express clause stating that upon termination of his employment the employee must leave the premises. We have to deal with the intention of the parties such as it must have been at the moment of their contracting. Moreover we are confronted with findings of fact by the judge which are difficult to disturb. He finds that Mr. Ting had made a special case of the tenancy of his long time employee. There is much to support that view in addition to the facts expressly relied upon by the judge himself. Here was a servant, evidently a faithful servant, who had lost his original dwelling as a result of the works which attended the building of No. 46-48, Kai Yuen Street. When that came about Mr. Ho and his family were instantly housed in the company hostel on terms materially different from other residents therein in that they paid no rent at all. Mr. Ting was so eager to retain his services both personally and for the company that when his employee resigned in face of an offer which was not palatable to him he sent a deputation of three of his employees to persuade him to come and parley. There after he permitted him to reside with his family in a part of the premises wherein only company staff were housed and furthermore directed that an agreement to cover the situation should be drawn up. Although that was never done it marked one further distinction between the way in which other worker employees were dealt with and the way in which Mr. Ting dealt with this respondent. What he did bears all the marks of the kind of largesse which one would expect of an autocratic employer who intended to secure and reward his employee - an employee who continued to perform personal services for himself - without for a moment envisaging what might happen should he pre-decease the employee thus rewarded. 16. The grounds of appeal have focused upon various observations of the witnesses who gave evidence for the plaintiff company. All of these are to the effect that the interpretation placed by those witnesses on the circumstances surrounding the respondent's occupancy of the premises led them to suppose that his occupancy of the Watchman's Room must necessarily terminate when he ceased to be watchman. I cannot say that any of this evidence is sufficient to dislodge the inference drawn by the trial judge from the direct evidence of the respondent and the documentary evidence upon which the judge relied. 17. I do not think that the officious bystander can be allowed to ask too many questions. It may be that if he were so permitted and if in this case he were to ask "What will happen if the employer dies before the employee and if the law should change so that protection is extended to a domestic monthly tenancy and if the employee thereafter should leave the company's employment and then refuse to leave the premises?" the answer would then be, at least on Mr. Ting's side, "In that case he must go". But on what may reasonably be imagined to have been in the minds of the parties at the time when they did contract I cannot say that a case has been made out for the necessary implication of such a term as the plaintiff company contends for. 18. For these reasons I would dismiss the appeal. Li, J.A.: 19. I have the benefit of reading the judgment delivered by My Lord the Vice-President with which I concur to its entirety. However, I like to add that once the case is argued on the basis that the respondent is a tenant, albeit a service tenant, and once accepted that the provisions of the Landlord and Tenant Ordinance had no application to the then post-war buildings in 1968, the question of an implied term as suggested by Mr. Li would not arise. 20. Even if the officious bystander of the Reigate case were to ask the question "What happen when the respondent's service is terminated?", in 1968 both the late Mr. Ting and respondent would have said that was of no consequence. All Mr. Ting had to do was to give one month's notice. 21. No one in 1968 could foresee that, in 1970, the Government had to extend rent control in respect of pre-war buildings to post-war buildings. By being a tenant the respondent had a windfall bestowed upon him, however unintentionally, by the Legislature. No one can blame him for taking advantage of it. 22. The appeal must be dismissed. 23. Irrespective of the result of this appeal I would like to thank and congratulate counsel for both parties for their succinct and interesting arguments which reflect the high standard of the Bar. Representation: Andrew Li & Hin Lee Wong instructed by (P.C. Woo & Co.) for the appellant. Charles Ching. Q.C. & Patrick Fung instructed by (H.H. Lau & Co.) for the respondent. (1) (1918) 1 K.B. at p.605. |