YUE PEI MEI v. TSANG HAU CHUNG

Landlord and tenant - Part I - application by landlady of domestic premises for occupation as her residence - statutory right to apply for possession on such ground in Part I exceptionally does not extend to persons who have become landlords by purchasing the premises after 1.9.46 - whether parol evidence admissible to establish that an assignment for an expressed money consideration in 1962 of premises by landlady's mother to landlady was in reality a gift - Held: 1. parol or other extrinsic evidence not admissible to vary or contradict the nature of the express consideration included in the deed of assignment; 2. Landlady not a person entitled to apply to recover possession of premises as her residence; Application dismissed - Section 33, 35 (Part I); 53(2)(b) (Part II); 119E (1)(b) (Part IV).

IN THE LANDS TRIBUNAL OF HONG KONG

Application No. L.T. K2 of 1986

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JUDGMENT

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1. The applicant has applied for possession of Part I domestic premises situate at 1 Cliff Road, Yaumati, Kowloon, pursuant to Section 35 of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7, on the ground that she requires them for occupation as her own residence. The 1st respondent took no step in the proceedings. The 2nd Respondent was represented and in his notice of opposition pleaded that the premises were not reasonably required by the applicant but if they were then, having regard to all the circumstances, greater hardship would be caused to the 2nd Respondent by granting than by refusing to grant the order for possession sought.

2. At the hearing Counsel for the 2nd respondent raised a preliminary jurisdictional objection. I was referred to the fact that in Part I a landlady's statutory ground for recovering possession for her own occupation is much more limited than the similar grounds under Section 53(2)(b) in Part II and Section 119E(2)(b) in Part IV. Under Section 35(1) of Part I a landlady may not apply if she has become the landlady as a result of purchasing the premises or any interest therein after 1st September 1946. The reason for the restriction, as to time, imposed in Section 35, is now mainly of historic interest. But the statutory effect of the restriction remains undiminished. Whether the time has now come for the restriction to be removed is a matter for the Legislature. If that course were followed, it would also remove one more apparently no longer justified but confusing difference, between Part I and other Parts of the Ordinance.

3. The landlady was unrepresented and when this point was raised at the first hearing did not have available the assignment of the promises. In reply to the tribunal, she stated that her mother Chan Sui Shum, purchased the premises in 1935 and assigned them to her by way of gift in 1962. If that were the position then the Tribunal would clearly have had jurisdiction under Section 35. For Section 35 only excludes a landlady who has purchased Part I premises after 1st September 1946, from recovering possession under that Section. A landlady who has become the owner after 1st September 1946, by way of gift or otherwise than by purchase, may proceed under Section 35.

4. The crucial issue was therefore whether in 1962 the applicant became the owner and consequentially the landlady, by way of gift, or because she had purchased the premises from her mother. If the assignment was by way of gift, she could clearly bring a claim under Section 35. If the assignment was by way of purchase, she had no claim under Section 35. In view of the applicant's indication I adjourned the proceeding to a future date, to enable the applicant to produce the assignment and any other collateral documents, which would clarify whether the premises were gifted to her.

5. At the resumed hearing the assignment dated 7th September 1962 was produced. The assignment was expressed to be for a consideration of $25,000. The solicitor who was the attesting witness to both mother and daughter's signatures also witnessed a receipt endorsed in common form on the assignment, certifying that the mother received the stated consideration of $25,000 from her daughter, the present applicant. On the face of the assignment the transaction was a sale and not a gift. However, while the majority of assignments by way of gift expressly provide that the premises were assigned in consideration of the natural love and affection of the assignor for the assignee, there are other conveyancing alternatives.

6. The applicant impressed me as an honest witness with a clear recollection of past events. I enquired whether she could produce any other relevant documents. Stamp duty is payable on assignments by way of gift on the market value of the premises. This assignment was stamped for its stated consideration which I infer reflected market value. Some conveyancers prefer where premises are gifted, to draft and have an assignment engrossed for a money consideration equal to the market value, which can then be stamped for its stated consideration. Where that alternative is adopted, the assignor contemporaneously executes a deed of gift in respect of the stated consideration in the assignment. It occured to me that course may have been followed in this case. However, the applicant could only produce an assignment in relation to another property, which she herself had gifted to her children. In passing I would record that the latter assignment was expressed to be in consideration of the assignor's natural love and affection for her children the assignees.

7. The only document in relation to the transaction between the applicant and her mother, produced at the hearing, was therefore the assignment for an expressed consideration of $25,000. Counsel for the 2nd respondent submitted that the assignment was a deed. I was referred to the well settled principle that parol evidence is not admissible to vary or contradict the terms of a deed. Accordingly extrinsic evidence was not admissible in the form of oral evidence from the applicant in any attempt to establish that the assignment was not for a cash consideration but was by way of gift.

8. The general evidential principle is referred to in 'Cross on Evidence' (6th Edn) 615. The application of that general principle would be fatal to the applicant. If the general principle applies clearly the nature of the transaction must be accepted, in the express terms of the assignment, as evidencing the purchase of the premises by the applicant. However, as 'Cross' points out at pages 618-624 there are exceptions to the general principle. It is therefore necessary to pause to consider whether the applicant's proposed evidence is admissible under any of those exceptions.

9. The facts do not give rise to exceptions based on fraud, illegality, mistake or misrepresentation. Nor does the transaction, although involving a deed, fall into the category of those which allow parol evidence to establish that an expressed nominal consideration was in fact more substantial - Turner v. Forwood (1951) 1 All ER 746. Indeed, here the applicant would be obliged to argue in support of the opposite principle but as 'Cross' at page 620 emphasises "There is no authority dealing with the admissibility of extrinsic evidence to vary a real consideration stated in a deed." Still less is there authority which permits evidence to establish, that a real consideration was in fact a gift, where additionally a written receipt is separately endorsed on the deed, signed by the assignor, that the stated real consideration has been received.

10. I have also considered cases such as Re Duke of Marlborough, Davis v. Whitehead (1894) 2 Ch 133 where Courts have been prepared to hold that the real nature of a transaction differed from that appearing on the face of a deed. In that particular case, the Court was prepared to hold that where a wife absolutely assigned a house to her husband by way of gift, she did so merely to make it available for him to secure a personal loan. Despite its terms the assignment was not absolute and the equity in redemption remained with the wife. However, that category of cases too, does not assist the applicant.

11. If with reluctance, I am obliged to hold that oral evidence to vary the meaning of the assignment is not admissible. From that conclusion it follows, on the facts, that the applicant, having become the landlady by purchasing the suit premises after 1st September 1946, may not bring an application to recover possession under Section 35. I have looked back to the alternative statutory grounds for recovering possession in Section 33 but none of them apply to the instant facts.

12. As the applicant is not a landlady entitled to apply for possession under Section 35(1), it follows that the present application must be dismissed. At the hearing both parties produced the whole of their evidence on the substantive issue to avoid the necessity of a further hearing, if I had held in favour of the applicant on the jurisdiction issue. Having had the advantage of hearing that evidence I would record, in case this matter goes further, that if I had reached the contrary jurisdiction conclusion, I would have gone on to hold that the suit premises were reasonably required by the applicant as her residence. On the evidence I would d have further held, that greater hardship would have been caused by refusing to grant an order for possession in the applicant's favour, than by granting the order. In that event she would have suceeded in recovering possession.

13. However, in view of my finding adverse to the applicant on the jurisdictional issue, the application must be dismissed. There will be no order as to costs.