IN THE DISTRICT COURT OF HONG KONG
HOLDEN AT KOWLOON
RENT INCREASES ACTION NO.306 of 1971
||LI Yit Kwei
|YUEN Koon Man
|TAM Lau Ching
Coram: Judge Addison.
Date of Judgment: 22.11.1971
1. This application for possession brought by the landlord under section 7(7) of the Rent Increases (Domestic Premises) Control Ordinance, Cap.338 raises the vexed problem of the rights of sub-tenants under that Ordinance where the claim by the landlord is made under section 7(2)(a) thereof.
2. The sub-tenant in this case served a counter notice and in the application he has been joined as a party in the form of 2nd respondent. Notwithstanding his joinder it is nonetheless submitted by Mr. CHENG, who appears on behalf of the landlord, that the sub-tenant has no locus standi and his argument in support of this contention, is as follows.
3. Firstly he says that at Common Law the landlord is not concerned with sub-tenants as there is no privity of contract or estate between a superior landlord and a sub-tenant. His only concern is with his immediate tenant. Thus the sub-tenant cannot have a greater security of tenure than that enjoyed by the principal tenant and the destruction of the interest of the principal tenant involves automatic destruction of the interest of the sub-tenant.
4. This resultant effect is in fact enacted in the Ordinance in section 7(1)(d) which provides:-
"A tenancy or sub-tenancy shall terminate where -
||the tenancy out of which the sub-tenancy was created is itself terminated:
Provided that upon such termination this Ordinance shall apply to any tenancy thereupon arising by operation of law."
Next it is submitted that by reason of the presence in various sections in the Ordinance of the words "landlord", "tenant", "principal tenant" and "sub-tenant" in the juxtaposition as they appear a sub-tenant has no locus standi against a landlord.
5. I do not think it necessary to set out these sections seriatim but a reference to subsections (2), (6) and (7) of section 7 illustrates the argument.
6. Mr. CHENG also maintains that it is not competent for a sub-tenant to serve a counter notice on a landlord and it was also in this context that he referred me to section 7(6) and 7(7) of the Ordinance.
7. Section 7(6) enacts -
"Within fourteen days of service of a notice to quit under subsection (2) or (4) any tenant or sub-tenant of the premises affected by the notice to quit may serve a counter notice in the specified form on the landlord or principal tenant as the case may be, disputing the right of the landlord or principal tenant to serve notice to quit."
8. Section 7(7) provides, inter alia, that the landlord or principal tenant, "as the case may be", may, upon receipt of a counter notice apply to the court for an order for possession of the premises.
9. It is inherent in his argument that the word "or" in these subsections cannot mean "and" having regard to the additional words, "as the case may be".
10. Again it is envisaged that only one counter notice is served and Mr. CHENG additionally argued that it must emanate from either the tenant in the case of an application being made by the landlord or from a sub-tenant where it is the principal tenant who is seeking possession.
11. Mr. CHENG conceded that the sub-tenant may have a right to be heard, save as to hardship, so far as stay of execution in writ proceedings are concerned, but this did not entitle him in an application for possession brought by the landlord under the Ordinance to pitch his hardship against that of the landlord. He said that if the landlord let the premises as business premises to a principal tenant it would not be open to a sub-tenant to say vis a vis the landlord that his user was domestic and that the Ordinance applies. The rights of a sub-tenant to dispute the tenancy is a domestic one is in fact conferred upon section 5(4) but notwithstanding this Mr. CHENG would argue that his contention is unaffected because its mainspring is based on privity of contract.
12. It is trite law that in order to set the machinery of the Ordinance in motion a landlord seeking possession must serve a notice to quit. The Ordinance clearly has in mind the service of such a notice either by the landlord on his tenant when the landlord seeks possession or by the principal tenant on a sub-tenant in case where the principal tenant seeks possession.
13. Inasmuch as service of a notice by the landlord will not affect a sub-tenant provision is made in the Ordinance for certain steps to be taken by the landlord whereby a sub-tenant will be affected. The provision is section 7(3), which reads as follows -
"Where a notice to quit in English and Chinese, is served under subsection (2) and is displayed for three successive days upon the main door or entrance of the premises affected, such notice to quit shall take effect also on any sub-tenancies created under the tenancy to which it...