LUCKY HERO DEVELOPMENT LTD. v. WONG HOI MING

HCA19312/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.19312 OF 1999

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REASONS FOR JUDGMENT

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1. On 30 June 2000, I allowed the appeal. These are my reasons.

Facts

2. The plaintiff is the owner of the premises known as 3rd Floor, No.1H Marble Road, Hong Kong ("the premises"). On 2 January 2000, it obtained judgment against the defendant for possession of the premises and arrears of rent. The plaintiff pleaded that the defendant ("Mr Wong") was the tenant of the premises and had not paid rent from 1 August 1999 onwards. The cause of action was based on forfeiture.

3. On 3 February 2000, the master granted leave to the plaintiff to issue a writ of possession for the recovery of the premises. On 23 March, the applicant, Chan Mui Ngai (陳苗藝) ("the applicant"), applied by summons seeking time to move out from the premises. On 29 May 2000, the master dismissed the application with costs to the plaintiff. The applicant appealed against that decision.

The applicant's case

4. The applicant's case is that he was and still is a sub-tenant in the premises. He rented the premises from the principal tenant, namely Mr Wong who no longer resides at the premises. There was an agreement between him (i.e. the applicant) and the plaintiff that the plaintiff would rent the premises to him. The plaintiff had raised no issue that the applicant is not a lawful sub-tenant.

Part IV premises

5. Irrespective of whether there was an agreement between the applicant and the plaintiff on the granting of a new tenancy to him, the applicant clearly has certain rights provided by legislation by virtue of his capacity as a sub-tenant. Unless the tenancy (and the sub-tenancy as well) is properly terminated, the writ of possession cannot be executed on the premises. The applicant is in effect asking to be joined as a party to defend his right as a sub-tenant.

6. Although it is not expressly pleaded in the Statement of Claim, Mr Luk, who appear for the plaintiff, stated that the premises is subject to Part IV of the Landlord and Tenant (Consolidation) Ordinance. If the premises is subject to the provisions of Part IV, and unless there is an express forfeiture clause in the tenancy agreement between the landlord and tenant, then the plaintiff, as the landlord, cannot rely on common law forfeiture to terminate the tenancy : see Malcolm Merry, Hong Kong Tenancy Law, 2nd Ed., pages 241 - 242. The Statement of Claim does not plead any forfeiture clause.

7. A landlord of Part IV premises who has no right to forfeit and has a defaulting tenant can only terminate the tenancy by giving the six months' notice to expire at the end of the agreed term (suing for possession once the notice has expired, or opposing any application for a new tenancy) and claiming arrears of rent - although he cannot obtain arrears if he has not registered the agreement by filing form CR109 with the Commissioner (Merry at page 242). If this is the position, then clearly the applicant is entitled to continue his occupation of the premises until the plaintiff has properly terminated the tenancy.

Surrender of tenancy

8. On 19 June 2000 when the matter first came before me, after hearing the parties, I adjourned the appeal in order to enable the plaintiff and the applicant to negotiate. On 26 June 2000, at the resumed hearing, the plaintiff applied to amend the Statement of Claim to plead a case of surrender by Mr Wong of the tenancy to the plaintiff. By a letter dated 27 October 1999, Mr Wong informed the plaintiff that he would surrender the tenancy to the plaintiff in November 1999.

9. Mr Wong attended at that hearing pursuant to the summons to amend the Statement of Claim served on him. He stated that he had agreed with the plaintiff that he would give up his tenancy in November 1999 and the plaintiff would deal with the applicant directly. He indicated that he had no intention to defend the matter.

10. A surrender may be an express one or may arise by operation of law (see Merry at page 143). In this case it is not clear as to the relevance of the plea of surrender because although, on the one hand, the plaintiff pleaded that it had accepted the surrender "at the latest, by issuing and serving of this writ", on the other hand, it had also pleaded that despite the surrender, the defendant had failed to deliver up vacant possession of the premises to the plaintiff. The plea of surrender in fact was further contradicted by the plaintiff's own case on forfeiture.

The resumed hearing

11. I further adjourned the hearing to enable all the parties to reach an overall settlement. No agreement, however, was reached on the resumed hearing. By then the plaintiff seemed to have retracted from its earlier position that it had no interest to pursue the claim against Mr Wong and stated that it would seek to recover the arrears of rent from him and it is up to Mr Wong to pursue his claim against the applicant.

The Orders

12. Based on the reasons I have stated on the termination of the tenancy in a Part IV premises, the applicant was clearly to be joined as a party to defend his right. I allowed the appeal. I set aside the decision of the master and granted leave to the applicant to be joined as a second defendant in this action. I imposed no condition on the applicant because I did not see how such an order could be made against a sub-tenant, particularly when the plaintiff is still pursuing his claim for rental against Mr Wong. It is up to the plaintiff to make out a case for interim payment which was yet not lodged.

13. As the plaintiff had to formulate its claim against the applicant, I granted leave to the plaintiff to amend the Statement of Claim and serve and file the same within 14 days on the defendants. They will have 14 days to file and serve their defence. In view of my order, I make no order on the plaintiff's application to amend the Statement of Claim against Mr Wong. I ordered that each party should bear its own costs in this appeal and in the hearings before the master.

14. Mr Wong had admitted that he owed some rent to the plaintiff which he was prepared to pay. I had advised him to calculate the exact amount he owed to the plaintiff before the alleged agreement he reached with the plaintiff on the giving up of the tenancy in November 1999 and to pay the admitted sum into court in order to protect his position on costs in this action.