VIPAC ENGINEERS AND SCIENTISTS LTD v. MARK KARPOVICH AND ANOTHER

[Where an employee has enjoyed the right to occupy residential accomodation under his contract of employment, he must give it up when his employment is terminated, even if the termination was wrongful : Ivory v. Palmer [1975] ICR 340 followed]

1989, No. MP3093

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

IN THE MATTER OF 0.113 R.2 OF THE RULES OF THE SUPREME COURT

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J U D G M E N T

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1. This is an application under Order 113 of the Rules of the Supreme Court for an order for possession. Rule 1 provides :

"1.     When a person claims possession of land which he alleges is occupied solely by a person or persons not being a tenant or tenants holding over after the termination of the tenancy who entered into or remained in occuaption without his licence or consent or that of any predecessor in title of his, the proceedings may be brought by originating summons in accordance with the provisions of this order."

Rule 6 provides (so far as is material) as follows :

"6.    (1) A final order for possession in proceedings under this court shall, except in case of emergency and by leave of the court, not be made -

a)    In the case of residential premises less than five clear days after the date of service;

b)    ......

(2)    .......

(3)    Nothing in this order shall prevent the court from ordering possession to be given on a specified date in the exercise of any power which could have been exercised if possession had been claimed in an action begun by writ."

2. The jurisdiction conferred by Order 113 should be exercised only in "virtually uncontested" or "clear" cases. So much appears from the editor's notes to order 113 in the Supreme Court Practice 1989 Vo1. 1" 113/1 - 8/1 and also from the local case of Chong Hing Ham v. Ching Yau Keung [1989]1 HKLR 428. In that case a decision of the Court of Appeal, the writer of the headnote, in summarising the court's holdings, suggests that this summary procedure is "intended for uncontested and clear cases".

3. I have to say that this goes further than the judgments themselves and somewhat overstates the matter. If the case is a clear one, it cannot matter that the defendant has contested it. The right test, on my view, is whether the issue between the parties is one which the defendant is entitled to have sent to a trial -whether it be an issue of fact or of law. If the issue is seen on analysis to be capable of determination in only one way, in favour of the plaintiff; then as it seems to me, it is proper for the court to exercise the power conferred on it by order 113 and determine the matter, however vigorous the contest may have been.

4. The present case arises out of an agreement on the part of an Australian associate of the plaintiff for the employment of the 1st defendant. The 2nd defendant lives with the 1st defendant as his wife. The evidence before me as to the terms of the 1st defendant's employment consists of a letter of 19th July 1988 addressed by the Australian associate to the 1st defendant. I shall quote some relevant extracts from it :

Dear Mark,

Re : Position - Manager Hong Kong

Further to our discussion last week, we are pleased to offer you the above mentioned position ......

Duties

The duties are one of Manager of the Office, Project Manager, Senior Engineer and Project Engineer on projects emanating out of Hong Kong ....

Salary Package

As discussed we believe that this position will require you to be in Hong Kong for a minimum of 2 years from February, 1989. The salary package appropriate is as we explained, one which compensates you for the effort and possible inconvenience of living in a foreign country and the associated lack of support in terms of family and friends. The amount discussed was A$50,000.00 which would be payable in Hong Kong at the appropriate low tax rates applicable.

There are the additional benefits which go with the job namely, the provision of an apartment in Hong Kong, plus 1 return air fare economy excursion ticket to Australia or equivalent for every year of service whilst in Hong Kong."

5. The letter refers to the 1st defendant's previous employment and mentions that it is understood that the 1st defendant was required to give one month's notice to his previous employer It contains nothing else material to any question I have to decide.

6. The 1st defendant was dismissed on 25th September 1989. The accommodation which had been provided for him (by the plaintiff) pursuant to the letter which I have read was a flat known as Flat C3, 12th floor Elizabeth House Hong Kong. After the 1st defendant's dismissal the plaintiff sought to obtain possession of the flat; but the defendants, having nowhere else to go and being in difficult financial circumstances, have stayed on there. The flat is the subject of a lease to the plaintiff commencing on 16th March 1989 for a term expiring on 15th March 1991; so it is a rapidly wasting asset.

7. The plaintiff, anxious to obtain possession of the flat, has accordingly instituted these proceedings. The 1st defendant, accepting the reality of the matter, appreciates that sooner or later he will have to leave. The 1st defendant says that his dismissal was wrongful; and there is a bitter dispute as to the circumstances which led to the 1st defendant's dismissal. Serious accusations have been made by the plaintiff against the 1st defendant which he vigorously denies and it is of course impossible for me to embark on any inquiry into this dispute in these present proceedings. I propose therefore to treat the 1st defendant, for present purposes only, as having been wrongfully dismissed by the plaintiff. Whether or not, on the hearing of the 1st defendant's claim in that connection (which started off in the Labour Tribunal, but has now been transferred to this court) he will succeed is a matter for the future. For present purposes, however, I assume in favour of the defendant that he was wrongfully dismissed.

8. On that footing, says the 1st defendant, he must be entitled to reasonable notice before he can be required to give up the flat to the plaintiff in consequence of the termination of his employment. He says that such a reasonable notice should be a notice of six months. A notice of six months, says the 1st defendant, would have been the notice appropriate to terminate his contract of employment; and a notice of six months must accordingly be required for the termination of his right to occupy the flat.

9. The plaintiff does not accept this. It is prepared, I think, to accept that the 1st defendant would be entitled to what is sometimes called "packing up time", that is to say, a short time necessary after the termination of a licence to occupy premises to get yourself and your goods out of the premises. But, says the plaintiff, that is all. The plaintiff says that the effect of the termination of the contract of employment, even if that termination was wrongful, was to bring an end both to the contract of employment and to the licence which the 1st defendant had to occupy the flat. If it did not do so automatically, and there is some question whether it did or it did not (compare Gunton v. Richmond Borough Council [1983] W.L.R. 714), at any rate, the 1st defendant has accepted the position, i.e. that his contract of employment has indeed been terminated. In these circumstances, says the plaintiff, the only remedy that the defendant has is a remedy in damages. He is not entitled to any equitable relief nor, by a side wind, can he achieve such relief in relation to his licence to occupy which has been terminated along with his contract of employment.

10. In support of these submissions, the plaintiff relies on Ivory v. Palmer [1975] ICR 340, a case which I ventured to draw to the attention of the parties during the course of the argument. In that case the Court of Appeal in England held that the defendant, who had been told that he had a job for life and a house that went with it, had a contractual licence to occupy the house; but that that licence was ancillary to the contract of employment, and being ancillary, came to an end when the contract of employment was terminated, even though the plaintiffs had wrongfully repudiated the contract. Accordingly, the plaintiffs were entitled to an order for possession of the house.

11. The 1st defendant has argued, first, that that is a case of the Court of Appeal in England and I am not bound to follow it; and secondly, that it is distinguishable because the contract of employment there was a contract for life, whereas here it is for a much shorter term.

12. I accept that I am not bound to follow the decision (and indeed I do with some reluctance) but I think it is the right course for me to take. Further, I do not think the decision is distinguishable. The basis of it was, not that the contract was a contract for life, but that, the contract of employment having come to an end, the licence to occupy the premises enjoyed by the defendant as ancillary to that contract of employment fell with it.

13. There are some other points which were taken on the 1st defendant's behalf. He argued, on the basis of Hounslow London Borough Council v. Twickenham Garden Developments Ltd. [1971] 1 Ch. 234, that the Court will restrain an owner of land from wrongfully terminating or acting on the wrongful termination, of a licence to occupy. In Flegarry and Wade, The Law of Real Property, 4th Edn., the authors say this (at p.803) :

"The judicial consensus is now to the effect that a licensor has no right to eject a licensee in breach of contract even where equity will not assist the licensee, and that, if he does so forcibly, the licensee can sue for assault."

But this seems to me to have really no bearing on the matter which I have to consider. I have to consider simply whether the 1st defendant has shown any point which ought to go to a trial, and which would tell against the claim of the Plaintiff for possession.

14. I have come to the conclusion that this, although contested, is a clear case. The contract of employment has come to an end. The licence of the 1st defendant to occupy the flat has come to an end with it. It does not matter that the termination of the contract of employment may have been wrongful. It is the fact of the termination of the contract of employment which brings down the licence to occupy the flat. The defendants have here continued in occupation of the flat since 26th September 1989 (by which date the 1st defendant's contract of employment had come to an end) and have already therefore had some months of occupation to which, in my judgment, they were simply not entitled. However, they are in difficult circumstances. The plaintiff is willing to agree to an order in the conventional form, which is an order for possession within 28 days (that means 28 days from the date on which the order is perfected, so that aspect of the matter is in the hands of the plaintiff itself). But the defendants have asked for a longer period, in the event that I form the view which I have formed they say they ought not to be required to leave before Chinese New Year (which is at the end of January) and that the 1st defendant has some hopes of obtaining other employment shortly which would ease his difficulties.

15. I would be minded to make an order for possession which would enable the 1st and 2nd defendants to stay in the flat for a little longer than 28 days. But without the agreement of the plaintiff, I feel unable to accede to the suggestion that the defendants should be allowed to stay in the flat until the end of January. An order for possession within 28 days, even if drawn up immediately, will not in practice enable the plaintiff to obtain possession of the flat before early January in any case. I propose therefore to invite the plaintiff to consider assenting to my exercising the jurisdiction conferred on me by order 113, rule 6, by specifying, as the date on which it is to recover possession, 1st February 1990. It seems to make little difference to its commercial interests and would, in my judgment, be the decent thing to do.

16. I know that the plaintiff feels strongly about the conduct of the 1st defendant and I appreciate that Mr Scott, who appeared for the plaintiff before me, is not in a position immediately to obtain instructions in the matter. The best I can do is to make an order for possession within 28 days, but I shall make it clear that the 28 days will run only from the date on which the order is perfected, and not from today. I will, additionally, invite Mr Scott and his instructing solicitors to attempt to obtain instructions from the plaintiff which would enable me by agreement to insert in the order a date, that is to say, 1st February 1990, instead of a period of 28 days. I have laboured this point because I do not think I have any jurisdiction, in the absence of some such agreement, to make an order for possession in this case other than in the conventional form. I will hear counsel upon any questions as to costs or otherwise which arise as a result of this judgment.