Teo Chwee Geok v Ng Hui Lip & Co

• Jurisdiction: Singapore
• Judge: Chua F A J
• Judgment Date: 03 February 1967
• Neutral Citation: [1967] SGFC 4
• Docket Number: Civil Appeal No Y12 of 1966
• Date: 03 February 1967
• Published date: 19 September 2003
• Year: 1967
• Plaintiff Counsel: KE Hilborne (Hilborne & Co)
• Citation: [1967] SGFC 4
• Defendant Counsel: JF McWilliams (Laycock & Ong)
• Court: Federal Court (Singapore)
• Subject Matter: Civil Procedure,Agreements for leases,Prohibition in terms of tenancy between landlord and chief tenant against subletting or assignment – Whether prohibition binds subtenant,Findings of fact,Principles on which appellate court may interfere,Landlord and Tenant,Appeals

This is an appeal by the plaintiff against a declaration by the High Court that a judgment delivered by it in his favour for recovery of possession of the ground floor of premises known as No 202 Orchard Road, Singapore from the first defendants, Maynard & Co Ltd (who have not appealed and are hereinafter referred to as Maynard`s), was not enforceable against the second defendants, the respondents in this appeal.

The plaintiff is the chief tenant of the ground and first floors of the premises in question which are subject to the Control of Rent Ordinance (Cap 242) (hereinafter referred to as the Ordinance).

On 1 March 1960 he sublet the ground floor to one Peter Chong on a monthly tenancy at a rent of $120 per month through the good offices of an intermediary known as Lee Swee Hin, who was a pharmacist in the employment of Maynard`s of which Peter Chong was the chairman of the board of directors.

A few months after the death of Peter Chong in September 1960 the plaintiff granted the tenancy of the said ground floor to Maynard`s at the same monthly rent. On or about 6 June 1963 Maynard`s ceased to carry on the business of a dispensary on the ground floor which, at the end of August 1963 they are alleged to have sublet or assigned to the second defendants without the plaintiff`s consent at a rent of $132 per month.

The principal witnesses on either side were the plaintiff and Lee Swee Hin respectively who differed in their versions of the terms on which the ground floor was let to Peter Chong and later to Maynard`s.

According to the plaintiff, Lee Swee Hin, the representative of Peter Chong, promised him that on the latter`s ceasing to run a dispensary on the ground floor the premises would be returned to him.

Lee Swee Hin denied any such promise.

The significance of a finding as to who was telling the truth on this vital issue lies in the fact that the court, if satisfied that such a promise had been made, could have declared that the judgment for recovery of possession of the ground floor entered against Maynard`s was enforceable against the second defendants under s 26 of the Ordinance.

It may be useful, before dealing with the finding of fact relating to this issue to dispose of an argument which was presented by counsel for the plaintiff in his opening address to the learned trial judge but which was not, apparently, pursued later at the trial itself owing to the importance attached by all concerned to the factual finding as to the existence of the aforesaid promise - so much so that counsel for the plaintiff did not even raise a point, which he stressed before this court, that a covenant in a lease not to assign or sublet or part with possession of the premises demised ran with the land so as to bind all sub-lessees and assignees although not mentioned therein.

It should be noted that the terms of the tenancy between the superior landlord (whose agents were Estate and Trust Agencies Ltd) and the plaintiff contained a prohibition against subletting, assigning the tenancy or parting with the possession of the premises or part thereof (see p 78 of the record). The plaintiff was the tenant of the superior landlord of the ground and first floors. He had, without any doubt, sublet the ground floor to persons prior to Peter Chong`s sub-tenancy in 1960 to whom Peter Chong paid valuable compensation before Lee Swee Hin finalized the negotiations for the sub-tenancy, on his behalf, with the plaintiff. Estate and Trust Agencies Ltd agreed to these sub-tenancies including the sub-tenancy to Peter Chong and subsequently Maynard`s. They knew nothing however of the assignment or subletting to the second defendants, nor did the plaintiff himself until after the latter had been let into possession on Maynard`s effectively ceasing to carry on the business of a dispensary on the ground floor. The second defendants paid compensation in the sum of $22,000 to Maynard`s for this and accordingly did not acquire possession as a result of any charitable inclinations on the latter`s part. This however does not enhance their case vis-a-vis the plaintiff if Peter Chong and Maynard`s, through Lee Swee Hin, had bound themselves to return the ground floor to the plaintiff on their ceasing to run a dispensary or a chemist`s shop (as it is sometimes referred to) thereon.

I do not think that any prohibition (in the tenancy arrangements between Estate and Trust Agencies Ltd and the plaintiff) against subletting or assigning or parting with possession of the premises or part thereof ran with the land so as to bind Maynard`s. It is clear that they were not assignees of the plaintiff but only his sub-tenants in respect of the ground floor. They were not sub-tenants of the entire premises of which the plaintiff was the chief tenant. Had they been assignees of the plaintiff, the principle established by Goldstein v Sanders [1915] 1 Ch 549 might have applied so as to make such a covenant run with the land so as to bind Maynard`s as that case decided that such a covenant binds assignees although not mentioned. It does not, however, run with the land so as to bind subtenants.

In Mackusick v Carmichael [1917] 2 KB 561 it was held, according to the head-note, that `Where a lessee, who has covenanted for himself and his assigns that he will not sublet or part with possession of the premises without the consent of the lessor, sublets them, the lessor cannot, if the sub-lessee further sublets without his consent, complain of such further subletting as a breach of covenant by the lessee. A sub-lessee is not for that purpose an assign.`

I am not here concerned, of course, with the liability to the lessor of a lessee for breach of a covenant arising out of the act of a sub-lessee. The result of applying Mackusick`s case to the facts of this case is that, if the plaintiff had covenanted for himself and his assigns, his superior landlord could not have complained of the transfer of possession by Maynard`s to the second defendants as a breach of covenant by the plaintiff because Maynard`s were not the plaintiff`s assigns. Whether the second defendants were assignees or sub-tenants of Maynard`s is therefore irrelevant to that question although it may be relevant in relation to s 26(1) of the Ordinance which reads as follows:

Where any order or judgment for the recovery of possession has been obtained against any tenant of premises, such order or judgment shall not be enforceable against any sub-tenant of such tenant unless the court is satisfied that such tenant was prohibited by the terms of his tenancy from sub-letting or that such subtenant has used the premises for illegal or immoral purposes. Every order or judgment for possession made against any tenant shall declare whether it shall be enforceable against any sub-tenant or not.

It should be remembered that, although the plaintiff did not covenant for himself and his assigns, s 57 of the Conveyancing and Law of Property Ordinance (Cap 243) provides that assigns shall be deemed to be included in a covenant such as this.

I must, of course, not be taken to express any view, in this appeal, as to the effect of the decision in Mackusick`s case on the rights of the superior landlord (who is not a party) with regard to any of the parties in this action.

All that Mackusick `s case is authority for, on its facts, in relation to this appeal, is that a sub-tenant like Maynard`s cannot properly be regarded as an assignee of the plaintiff.

It follows that Maynard`s, as sub-tenants of the plaintiff, were not bound by any prohibition against subletting etc. imposed on the plaintiff. Had the position been otherwise, on the facts, this appeal would be decided firmly in favour of the plaintiff without any regard to whether the finding of fact by the learned trial judge, as to the existence of the promise to which I have referred, went one way or the other.

But the relevance of the promise only arises for consideration if it can be said that a factual finding as to its existence will bring the matter within the scope of s 26 of the Ordinance to which...