CHOI YAU SUET AND ANOTHER v. WANG NGAN MUI AND OTHERS

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JUDGMENT

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Fuad, V.-P.:

1. This is an appeal from a decision of Judge Scriven dated 8th September last year, while sitting as a Presiding Officer in the Lands Tribunal, whereby he dismissed an application made by Mr. Choi Yau Suet and his wife under section 53(2)(b) of the Landlord and Tenant (Consolidation) Ordinance, Cap.7, for possession of a flat on the 11th floor of the Welcome Mansion in Paterson Street. . In their application they asserted that they reasonably required the premises for occupation as a residence for themselves, their son now aged 10, their daughter now aged about 8 1/2 and for the husband's 70-year old mother. The appellants bought the flat in February 1987 for $580,000. There was evidence that had the flat been sold with vacant possession,its price would have been in the region of $1 million.

2. The assignment was subject to an existing tenancy, the tenant being the 1st respondent Madam Wang Ngan Mui. The new owners continued to let the flat to her until August 1988 at a rental of $2,600 a month, and on 19th July 1988, they gave due notice of their requirement of possession to their tenant through their solicitors. Vacant possession was not delivered on the due date which was 20th August 1988 and Madam Wang and her sub-tenants remained in possession.

3. The male appellant, who is an estate agent, owns two other flats, one in Electric Road and one in King's Road. He and his family have been living in the King's Road flat since towards the end of 1980. That flat has a net usable area of about 300 sq.ft. and comprises two bedrooms and a small sitting room. He and his wife use one bedroom for themselves and the children and their grandmother share the other. They eat in the 7' x 9' sitting room and the children do their homework there. The grandmother is in poor health and suffers for some form of heart trouble.

4. The flat in Electric Road is rented out and has a net usable area of some 600 sq.ft.. It, too, has two bedrooms and a sitting room. It has been poorly maintained and, as the pictures show, it is not in a very salubrious neighbourhood.

5. The flat in Paterson Street which the appellants hoped to occupy has a net usable area of between 900 and 1000 sq.ft. and has four bedrooms and a balcony. It is near the shops and near a public park. If the family were able to live there, the children and the grandmother would be able to have separate rooms.

6. The application was opposed by the six respondents. The 1st respondent, Madam Wang Ngan Mui, has been a widow since 1976 and has lived in the flat since about July 1965. She is solely supported by her youngest daughter who earns about $4,000 a month plus commission. The girl lives with her, the last of her children living at home. The 2nd respondent is the girl's "live-in" boyfriend and he has been there since about 1987. Madam Wang's four sub-tenants also live there. They include a couple aged 80 and 72 respectively on public assistance. Two of the sub-tenants have been with Madam Wang since January 1977 and the other two since November 1987, which is after the date upon which the appellants acquired the premises. Madam Wang receives a rent of $1,700 per month from the 3rd and the 4th respondents and $930 a month from the 5th and 6th, which makes a total of $2,630 per month.

7. In his reserved judgment, the learned Presiding Officer began by indicating that he had predicated his decision on the basis that an owner of property was entitled to resume possession upon the due termination of his tenant's interest; that was a basic proposition of principle which had so often been re-stated by this Court. He went on to say that Mr. Choi had bought the premises in February 1987, without prior inspection and on the recommendation of a friend, because it was in a better location than his present residence and because of its larger size. He knew that it was "tenanted" when he bought it. The Presiding Officer said that he found it difficult to accept, that before buying the new flat with a view to obtaining vacant possession, Mr. Choi had not made further enquiries to find out the exact position of the tenants and sub-tenants and then he continued "... but he has only himself to blame that he found later, not only tenants but sub-tenants there."

8. The Presiding Officer reviewed the evidence led by the appellants about their own needs and about the illness of Mr. Choi's mother and said that he had come to the conclusion that the appellant had "exaggerated the matters of the difficult sleeping arrangements and of his mother's illness; of course, the family desires to move to the more spacious suit premises for that was why [the appellants] had purchased [the flat]."

9. The Presiding Officer went on to remark that he found it somewhat surprising that the appellant had asserted that he would spend $300,000 in improving the flat if he got possession, because the appellant had also said that he could not afford to buy another flat even with the aid of mortgage on the open market. He then added:

10. This is a difficult passage to understand and to reconcile with the authorities. It is clear that for premises to be reasonably required they must be the subject of a genuine present need on the part of the landlord; and the cases show that there must be something more than desire although at the same time something much less than absolute necessity will suffice. This approach has been adopted by the Courts in Hong Kong for quite some time and is based mainly on the observations of Stephenson, L.J. in Kennealy v. Dunne [1977] 1 QB 837 at p.844. (See the judgment of Sir Alan Huggins, V.P. in Ma Hon v. Andy Mahtani [1981] HKLR 570 at p.572.)

11. Then the Presiding Officer said:

12. With very great respect, again I find this passage difficult to understand, and impossible to uphold. It must vitiate the Presiding Officer's decision on the first issue before him. I entertain no doubt whatever that on the evidence as a whole a Tribunal properly directing itself would inevitably have found that the appellants had shown that they reasonably required the flat in Paterson Street within the meaning of section 53(2)(b) of the Ordinance.

13. As regards the first proviso to section 53(2)(b) (which provides that the Tribunal may not make an order by reason only of the circumstances that the case falls under that sub-paragraph if the tenant satisfies the Tribunal that in the circumstances of the case it would manifestly not be just and equitable to do so) in his judgment, the learned Presiding Officer said "I can give very slight weight to the fact of the landlord becoming landlord by purchase nothing more" and cited Mak Yee Hang and another v. Fung Yip Sang and Others [1987] HKLR 1037. In that case, at page 1039, Silke V.P. referred to the observations of Cons, J.A. (as he then was) when delivering the judgment of the Court in Leung Kin Hung v. Cheng Mui [1982] HKLR 383 after he had referred to the legislative changes in the Ordinance which had omitted, as the judge put it, "the prior restriction as to the time of purchase". This is what Cons, J.A. said:

14. As far as I am aware that observation, adopted by Silke, V.P., has never since been doubted. Having said that he would give only very slight weight to the fact that the landlord had bought the flat with sitting tenants, the Presiding Officer said that it was not the mere proven fact that Mr. Choi was a recent landlord by purchase which concerned him; Mr. Choi had "targetted" the premises without giving a thought to the occupants before purchase. Then he said that in his judgment "the entirety of the circumstances here which inevitably bring the Applicants' purchase back into account when considering the respondents' burden of proof" (sic). He concluded his judgment (in the penultimate paragraph) as follows:

15. I will not review the authorities on the heavy onus cast upon a tenant to show that it would manifestly not be just and equitable to make an order for possession once reasonable requirement by the owner has been shown. They are most helpfully collected and discussed by Clough, J.A. giving the judgment of the Court of Appeal in Cheung Man-king v. Chung Wai-man [1989] 2 HKLR 342. With very great respect to the Presiding Officer, although he acknowledged the principle that little weight, if any, must be given to the fact that the flat was bought with sitting tenants he seems, by that passage, to have elevated the matter to the point when it became almost decisive of the second issue that he had to resolve.

16. In these circumstances, I find it impossible to uphold his decision. In viewing the evidence as a whole and applying the law as it has been explained in many cases, I would hold that the respondents had fallen short of establishing that it would manifestly not be just and equitable to make an order for possession in favour of the appellants and, therefore, I would allow the appeal and propose that an order for possession be made. The question of a stay can be discussed later.

Hunter, J.A.:

17. I agree. The Presiding Officer to my mind does not seem to have addressed himself to the real question which is whether or not this appellant had a genuine and reasonable need for these premises. Upon the issue of manifest injustice, sadly, the only reason that he gives in support of his conclusion is the inadmissible reason of the recent purchase. No other is advanced. For these reasons, I reach the same conclusion as my Lord.

Penlington, J.A.:

18. It seems to me that the occupation of the appellant as an estate agent and the fact that there was a purchase only two and half years ago have played much too important a part in the Presiding officer's decision and I also agree that this appeal should be allowed.

[Order for possession made. By consent, stay granted for 3 months on terms.]