CAPITAL LAND INVESTMENT CO LTD v. SE MONG KAI

HCA001917/1972

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 1917 OF 1972

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BETWEEN
CAPITAL LAND INVESTMENT COMPANY LIMITED Plaintiff
and
MADAM SE MONG KAI Defendant

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Coram: Li J. in Court

Date of Judgment: 16 February 1973

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JUDGMENT

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1. This is an action for possession of the premises known as No.9 Kingston Street, Clarke Mansion, Flat D, 1st floor, Causeway Bay hereinafterreferred to as “the premises”. The facts which are not disputed and therefore common ground between the plaintiff and the defendantare as follows:-

2. The premises is part of an entirely new building. By a tenancy agreement dated the 28th of March 1969 – Exh.1. The plaintiff granteda tenancy of the premises to the defendant commencing on the 5th of February 1969 for the period of one year at a rental of $500per month.

3. By paragraph 6 of Exh.1 there is an option to renew on the expiration of the tenancy subject to a revised rental. As from the 5thof February 1970, namely the expiration of the tenancy agreement, the defendant held over as a monthly tenant at the rental of $580per month. This position continued until the 28th of July 1970 when the defendant and the plaintiff signed another tenancy agreementfor the premises for another year commencing on the 1st of July 1970 expiring on the 30th of June 1971, at the monthly rental of$700 per month – Exh.1.

4. There is also an option to renew, subject to an agreed rent, between the parties as evidenced in Clause 6 of this agreement – Exh.2.The second tenancy agreement was sent by both of the parties, to the Secretariat of Home Affairs for ratification and which was dulyratified on the 29th of July 1970, – Exh.3.

5. On an expiration of the 2nd tenancy agreement, the party entered into another tenancy agreement on the 17th of July 1971 for anotheryear for the premises commencing on the 1st of July 1971 expiring on 30th of June 1972 – Exh.4. This agreement, Exh.4 was also forwardedby the party to the Secretariat for Home Affairs for ratification pursuant to Section 5(1) of the tenancy (Notice of Termination)Ordinance 1962 Cap.335. Exh.4 was also duly ratified.

6. However, there is no option granted in the third tenancy agreement dated the 17th of July 1971. On the 3rd of June 1972 the plaintiffwrote to the defendant stating that the tenancy agreement would expire on the 30th of June 1972 and that the defendant was requestedto deliver vacant possession of the premises on the 30th of June to the plaintiff – Exh.6.

7. In reply to Exh.6 the defendant wrote that the plaintiff had no right to give notice because she was a protected tenant of the premisesunder Rent Increases (Domestic Premises Control) Ordinance 1970. Hereinafter referred to as ‘the 1970 Ordinance’ – Exh.7.

8. By her defence the defendant further alleges that when she executed the tenancy agreement on the 28th or July 1970 – Exh.2 she washolding a tenancy in respect of other adjoining properties of which plaintiff was landlord and that she was under the impressionthat if she did not execute Exh.2 she would not be allowed to exercise her option to renew the tenancy agreement in respect of theother adjoining premises. Further, she alleges that the contents of Exh.2 were in English and never explained to her fully. I understandthis to be allegations of undue influence or duress or alternatively non est factum In reply, the plaintiff contended that the plaintiffhas done nothing whether by word or conduct to induce the defendant to sign Exh.2 and that once the defendant knew the purport ofthe contents in Exh.2 she was bound by the agreement.

9. At the commencement of the trial, counsel for the plaintiff as well as counsel for the defendant agreed that there is only one pointof law to be decided, namely, whether the provision of the 1970 Ordinance would apply to the agreement dated the 17th of July 1971so as to render the defendant a protected tenant of the premises. By this, I understand that the defendant has by now abandoned theplea of implied undue influence or duress or alternatively, non est factum. Mr. Asome for the plaintiff contends that the 1970 Ordinancehave no application to tenancy agreements created after the commencement of the 1970 Ordinance. He readily concedes that on the 5thof June 1970 when the 1970 Ordinance came into force the defendant then was a monthly tenant of the premises at the rent of $580per month. Had she done nothing and never signed the tenancy agreement in 1970, Exh.2, she would have been a protected tenant underthe provisions of the 1970 Ordinance.

10. However, in July 1970 she signed a tenancy for another year commencing on the 3rd of July 1970. By so doing, there must be deem tobe a surrender of her monthly tenancy by operation of law. But that was not all, because in 1971 she signed another tenancy in whichthere was no option to renew. To these two latter tenancy agreements the provisions of the 1970 Ordinance has no application. Insupport of this contention he directs my attention to the case of Foster v. Robertson(1) approved by a Privy Council case of Meeruppe Sumanatissa Terunnanse v. Warakapitiye Pangnananda Terunnanse(2). Mr. Miu for the defendant contends that she is in a very different position from that of the defendant’s in the case of Foster v. Robertson(1). He contends that the defendant in the present case is a statutory tenant in June 1970. The tenant in the Foster’s case was in aposition of a contractual tenant. He has cites various instances that tenants under the Rent Act in England had been treated in amore protected way and that they were not contractual tenants. He further contends that Sub-section (1) in Section 6 of the 1970Ordinance provides that save as is provided in Section 7 no tenancy or sub-tenancy existing at the date of the commencement of theOrdinance shall terminate during the continuance in force of this Ordinance. Sub-section (1) of Section 7 provides that:-

“A tenancy or sub-tenancy shall terminate where –
(a) vacant possession is delivered up;
(b) the landlord or principal tenant determines the tenancy or sub-tenancy by way of forfeiture for failure to pay rent or for the breachof any other …(illegible) or condition which, but for the enactment of this Ordinance, would have been a cause of forfeiture;
(c) a notice to quit given under subsection (2) or (4) or an order made under subsection (7) takes effect;
(d) the tenancy out of which the sub-tenancy was created is itself terminated:
Provided that upon such termination this Ordinance shall apply to any tenancy thereupon arising by operation of law;
(e) a notice to quit takes effect where it has been served by the landlord in order to comply with a contract made before the 30th dayof January 1970 under which the landlord has contracted to sell the premises the subject of the notice to quit and the contract hasprovided for the delivery of vacant possession of such premises.”

11. He relies strongly on paragraph (a) of subsection (1) in Section 7 in that at no material time had the defendant delivered …(illegible)possession to the plaintiff. It is thus his contention that the monthly agreement in June 1970 subsisted and that the defendant wasa protective tenant.

12. The point of law involved is therefore whether the defendant surrendered her monthly tenancy existing in June 1970 by executing furthertenancy agreement in 1970 and 1971. Perhaps it is significant to add that Mr. Miu does not argue that the 1970 Ordinance has anyapplication to tenancy created after the said Ordinance has come into operation. In this connection, it is significant to read theprovision of subsection (1) in Section 3 of the 1970 Ordinance which provides that save as otherwise provided in this section andin Section 4 this Ordinance shall apply to every domestic tenancy and domestic sub-tenancy existing at the date of commencement ofthis Ordinance in a post-war building whether the same be effected orally or in writing and notwithstanding any provision in suchtenancy or sub-tenancy including any provision purporting generally or specifically to exclude the provision of this Ordinance.

13. In the case of Foster v. Robertson(1) the defendant’s father was a tenant of a cottage of which the plaintiff was the owner at a yearly rent of £6-10 for the cottage.In May 1946, the defendant’s father owing to age and infirmity had ceased to work and it was verbally agreed between him and thelandlord that he need not pay any further rent but could continue to live in a cottage for the rest of his life rent free. Thereafterrent was neither demanded nor tendered. On the death of the defendant’s father the landlord attempted to recover possession and itwas held that the contractual tenancy had ceased to exist and the defendant’s father became a licensee with permission to occupythe cottage rent free for the rest of his life. It was held by the Court of Appeal that the agreement between the defendant’s fatherand the landlord in May 1946 was effectual to produce a surrender of the tenancy by operation of law and that the defendant was estoppedfrom asserting that the old tenancy continued to exist. It was further held that in determining the question whether there was asurrender by operation of law of premises within the control of the Rent Restriction Act, the same principle must be applied as thosewhich would be applicable to any other case. In his judgment in the Court of Appeal Raymond Evershed M.R. said at page 348 as follows:-

“Having so found, I can see no ground in principle why the transaction should not have the result the parties intended itshould have. I think it amounts to this, that the determination of the former tenancy was equivalent to delivery up of possessionunder that tenancy and then a resumption of possession under a new transaction immediately afterwards. I think, to use the languageof Cockburn, C.J., in Oastler v. Henderson (2 Q.B.D. 578) there was a virtual taking of possession. If the key had been handed over and then been handed back the next minute that would havesymbolished the delivery up and the grant of possession and I cannot think that it vitally matters that that performance was notgone through. That is the effect of a surrender by operation of law in such a case as the present and the learned judge has so found,and, there being evidence to support that finding, we would not be justified in differing from his conclusion as to fact, and, ifnot, it seems to me the conclusions which I have stated necessarily follow. The whole question is. Was the old contractual tenancydetermined? Was it determined as the result of surrender by operation of law? The learned county court judge found that it was, andI think that that is a finding supported by the evidence without any misdirection in law and that this appeal should be dismissed.”

14. Admittedly, the facts in the present case are not on all four with the case of Foster v. Robertson(1). Applying the principle however of the Foster’s case, I am of the opinion that in executing the tenancy agreement in 1970 and 1971the defendant is deemed to have notionally rendered vacant possession and surrendered her monthly tenancy which existed at the commencementof the 1970 Ordinance.

15. By her own conduct, she is estopped from denying that there had been any new tenancy since July 1970. The fact whether she surrendereda monthly statutory tenancy or a contractual tenancy is immaterial. Being wise after the event it may be argued she had nothing togain by surrendering the monthly statutory tenancy. But as a fully grown up and responsible person she saw fit to substitute a contractualtenancy of one year in term for her statutory monthly tenancy. She acted upon it and paid rent in accordance with the new tenancyfor a period of two years. This new tenancy has now expired by effluxion of time without any option for renewal. The landlord hasnow asked for possession. To my mind there is no answer in law to this action. However hard it may seem, and however reluctant Imay be, I cannot find any answer for the defendant and accordingly judgment must be given to the plaintiff as claimed with costs.

(Simon F.S. Li)
Puisne Judge

Representation:

M. Asome (Mak & Co.) for plaintiff

H.C. Miu (Lau, Chan & Ko) for defendant

Judgment handed Down

(1) [1950] 2 All E.R. 342

(2) [1968] 1 All E.R. 651