CHAN PO KING v. YAU WAI YIN

CACV119/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO.119 OF 2014

(ON APPEAL FROM LDPD 216 OF 2014)

_______________

_______________

_________________________

REASONS FOR JUDGMENT
AND DECISION ON COSTS

_________________________

Hon Chu JA (giving the Reasons for Judgment and Decision on Costs of the Court):

1. This is the respondent’s appeal against the judgment of Mr Alex Ng, Member of the Lands Tribunal (“the Judge”) given on 19 February 2014 whereby the respondent was ordered to: (1) deliver to the applicant vacant possession of the plot of land situated at Lots 2465 and 2466 in D.D. 76 (“the Property”); and (2) pay to the applicant mesne profit at HK$3,675 per year from 1 January 2014 until delivery of vacant possession together with costs at HK$135.

2. The question of law raised by this appeal is whether a tenant-in-common may without joining the other tenants-in-common sue to recover possession upon the expiration of a tenancy by effluxion of time. 

3. After hearing submissions, we dismissed the appeal with costs reserved. We now give our reasons for judgment and our decision on costs.

The facts

4. By an assignment dated 21 August 2009, the applicant together with Tong Wai Han (唐慧嫻) (“Tong”) and Lo Tsan On (羅燦安) became the registered owners of the Property as tenants-in-common, holding 15%, 15% and 70% respectively of the interest in the Property.

5. In May 2010, Tong assigned half of her interest in the Property to Ng Shui Ying (吳瑞瑛). In August 2012, she assigned the remaining half of her interest in the Property to Lo Chung Yee April (羅仲兒).

6. By a Chinese tenancy agreement (“Tenancy Agreement”) dated 22 December 2011, the applicant and Tong as landlords let to the respondent as tenant the Property for a term of 24 months from 1 January 2012 to 31 December 2013 at a yearly rent of HK$3,675. In the Tenancy Agreement, the applicant and Tong were described as Party A and the respondent was described as Party B.  

7. At the time of the signing of the Tenancy Agreement, the applicant and Tong were two of the four tenants-in-common. The materials before us do not show whether the other tenants-in-common were aware of and/or had agreed to the letting.

8. Clause 1 of the Tenancy Agreement provides, inter alia, that if Party B intends to renew the tenancy upon its expiration, she shall contact Party A one month before the tenancy expired.

9. Clause 8 of the Tenancy agreement provides that if Party B does not renew the tenancy or moves out, she shall return the land to Party A.

10. The tenancy between the parties expired on 31 December 2013. It had not been renewed. The respondent has not moved out of the Property or paid for her occupation of it.

LDPD 216/2014

11. On 25 January 2014, the applicant commenced proceedings in the Lands Tribunal to recover possession of the Property on the basis that the tenancy had expired. She also claimed for mesne profit.

12. In her Notice of Opposition, the respondent stated that she had tried to renew the tenancy before it expired, but the other side was not able to produce the authorisation document and therefore she could not pay rent. The respondent asked to renew the tenancy.

13. On 19 February 2014, the Judge entered judgment for the applicant as claimed[1]. The respondent’s application for leave to appeal was refused by the Judge in his decision handed down on 3 April 2014.

The appeal

14. The respondent renewed her application to the Court of Appeal.[2] On 22 May 2014, the Court of Appeal granted leave to appeal and ordered a stay of the judgment pending the determination of the respondent’s appeal.

15. The core ground of the respondent’s appeal is that the applicant is not a proper party to the proceedings in the Lands Tribunal and/or that the applicant has no locus standi to sue.

16. By her Respondent’s Notice filed on 18 June 2014, the applicant contended that the judgment of the Judge should be affirmed on the ground that the applicant, being one of the co-owners of the Property (as a tenant-in-common) was entitled without joining the other co-owners to sue to recover possession of the Property from the respondent, after her tenancy had expired by effluxion of time.

The applicant’s right to sue

17. The thrust of the argument of Mr Lam, who appeared for the respondent, is that under clause 8 of the Tenancy Agreement, the respondent’s obligation to return the Property upon the expiration of the tenancy was owed to Party A, which comprised both the applicant and Tong; hence, the right to recover possession under the Tenancy Agreement had to be exercised by the applicant jointly with Tong or Tong’s successors-in-title.

18. Mr Lam drew support for his argument from the legal position of a tenant-in-common. It was said that as a tenant-in-common is free to deal with his share in the interest of the property and may lease it or dispose of his right of possession to a stranger without the concurrence of the other tenants-in-common: Chin Lan Hong & Others v. Cheung Poh Choo & Others [2005] 3 HKLRD 811 at §§31, 32, 34 and 35, it follows that if only one of the tenants-in-common decides to recover possession in respect of his share and the other tenants-in-common decide not to, then possession granted by the other tenants-in-common cannot be recovered from the tenant. Accordingly, one tenant-in-common alone is not entitled to the return of vacant possession of the property. It also follows, Mr Lam argued, that the tenant is not obliged to pay mesne profit to the only tenant-in-common who seeks to recover possession.

19. Mr Lam further submitted that it is necessary to join Tong as a party to the Lands Tribunal proceedings in order to ensure that she is bound by any judgment given by the Tribunal.

20. In Chin Lan Hong & Others v. Cheung Poh Choo & Others, supra, at §32, Le Pichon JA, with whom other members of the Court of Appeal agreed, pointed out that the position in Hong Kong with regard to the rights of legal tenants-in-common, is similar to that in Australia and New Zealand and in the United Kingdom prior to the Law of Property Act 1925. It is that a tenant-in-common is entitled to deal, in whatever way he desires, with his own undivided share; he may lease it or dispose of his right of possession to a stranger as he likes without the concurrence of the other tenants-in-common.

21. In coming to this conclusion, Le Pichon JA had referred to the New Zealand High Court’s decision in U-Needa Laundry Ltd v. Hill [2000] 2 NZLR 308 at § 24, which held that a tenant-in-common could lease his own interest against the wishes of his co-tenants since the interest of each tenant-in-common was separate and distinct and each tenant could deal with his own share as he saw fit.

22. Her Ladyship also had regard to the first instance judgment in Incorporated Owners of Chungking Mansions v. Shamdasani Murli Pessumal & Others [1991] 2 HKC 342, in which the plaintiffs, who were the owners’ incorporation, sought to enforce their rights as tenants-in-common of the building against the defendant, who was one of the owners in the building, for converting some of the common parts in the building to his exclusive use. The defendant raised a number of defences, including limitation and adverse possession. High Court Deputy Judge Jerome Chan (as he then was) held that for the period before the incorporation of the owners, it was necessary for the defendant to show adverse possession against each of the co-owners because it was an essential feature of tenancies in common that the interest of each co-tenant was separate and distinct. In rejecting the defendant’s submissions that once there was an infringement of the right to joint possession, a cause of action would accrue and time would begin to run in favour of the defendant so that it was not necessary to establish the commencement of the running of time against each co-tenant individually, His Lordship said (at 352G-353B):

“I am unable to accept the defendant's submissions. Firstly, one essential feature of a tenancy in common is that apart from the unity of possession, the interest of each is separate and distinct. It is generally open to a tenant in common to deal in whatever way he desires with his own undivided share. He can lease his share or dispose of his right to possession to a stranger as he likes. “And if tenants in common all joined in one lease, it operated as a lease by each of his respective shares, and a confirmation by each as to the shares of the others” (see Woodfall on Landlord and Tenant, Vol.1, p.58, para.1-0134). Likewise, each tenant in common is entitled to enforce his interest in the land on his own without joining the other co-tenants. Thus, a tenant in common, being entitled to possession of the entirety of the land, can maintain an action for trespass on his own against a trespasser. A tenant in common is entitled likewise to enforce his legal rights against another co-tenant without joining all other co-tenants. He is entitled to sue on his own one of several co-tenants who had ousted him from the land. Or, in days prior to Cap 344, to sue on his own one of several co-tenants who had breached a covenant in a deed of mutual covenants.”

(Emphasis supplied)

23. Similar view was expressed by the New Zealand Court of Appeal in Te Peehi v. Smith (1909) 29 NZLR 171, which held that tenants-in-common who were lessors had the right to sue separately for rent or breach of covenant under the lease without joining the other lessors.  Chapman J delivering the judgment of the Court explained (at 179):

“… in ejectment for breach of conditions in a lease the lessors, being tenants in common, cannot be compelled to act together or to take the same course, as the demise is a demise by each of his share, and no one or more can control the others and compel them to forfeit. Yet if one could not sue alone he would lose one of the most important rights which a lessor possesses. His right to sue alone is inherent in the very nature of the estate which he has, and that which is here created by the lease.”

24. In the present case, when the tenancy created by the Tenancy Agreement expired on 31 December 2013, the respondent’s right to remain on the Property under the Tenancy Agreement came to an end. There was no renewal of the tenancy. The respondent’s assertion that she had wanted to renew the tenancy is irrelevant. Whatever may have been her intention, the fact is she did not exercise the option given in clause 1 of the Tenancy Agreement within the time prescribed by the clause and the tenancy had not been renewed. There was, as accepted by Mr Lam, no statutory holding over. Neither was there a periodic tenancy as the respondent has not paid any rent after 31 December 2013.

25. There is no evidence in the case to suggest that the respondent has the agreement or authority of the co-owners to remain on the Property. We do not agree with Mr Lam that it could be inferred that Tong or her successors-in-title did not object to the respondent remaining on the Property. The fact that Tong or her successors-in-title have not joined in the claim is no basis for drawing such inference. It is also irrelevant that the respondent acted in person in the Lands Tribunal. If it is her case that she had the permission of the other co-owners to stay on the Property, she ought to adduce evidence to support it.

26. In short, on the materials before the court, the respondent has no right to remain on the Property after the tenancy expired by effluxion of time. This being the case, the applicant must be entitled, in exercise of her right and interest to possession as a tenant-in-common, to claim possession from the respondent.

27. Mr Lam’s reliance on Clause 8 of the Tenancy Agreement is misplaced in that the applicant is not suing for possession or rent under the Tenancy Agreement. The applicant is entitled, by reason of her interest as one of the tenants-in-common, to recover possession from the respondent, who is a trespasser after the tenancy expired, and to claim for payment of mesne profit on account of the respondent’s occupation and use of the Property.  The applicant is entitled to do so without the concurrence of the other tenants-in-common or joining them as parties to the proceedings.   

28. Mr Lam sought to argue that the applicant did not sue for trespass in the Lands Tribunal. In our view, it is irrelevant whether the applicant claimed possession and mesne profits against the respondent on the basis of trespass or on account of the expiration of the tenancy. In either case, the essence of the applicant’s case is that the respondent has no right to remain in possession of the Property after the tenancy expired by effluxion of time.

29. For these reasons, we dismissed the respondent’s appeal.

Costs

30. Normally, costs should follow the event. In this case, we note that at the hearing of the application for leave to appeal before the Court of Appeal, while the respondent acted in person, the applicant was represented by counsel (not Mr Yip who appeared in the appeal). The applicant’s counsel, however, did not draw the court’s attention to the fact that the co-ownership in question is a tenancy-in-common and not a joint tenancy, which has a material bearing on the prospect of the respondent’s appeal and in turn the merits of her leave application. In the circumstances, we consider it is appropriate to depart from the normal rule and to make no order on the costs of the leave to appeal application.

31. As to the costs of the appeal, having regard to the fact that the respondent is legally represented and has chosen to proceed with the appeal and fails, the normal rule should apply and the respondent should pay the applicant the costs of the appeal, to be taxed if not agreed.