Leases

Professor S H Goo
HKU
 “Term of years absolute” includes 'a term for less than a year, for a
year or years and a fraction of a year and from year to year’
 Must have a certain beginning: “when it becomes vacant” is
sufficiently certain (Brilliant v Michael)
 Must have a certain ending: “until the end of the war” not certain
(Lace v Chantler [1944] KB 368); “so long as the company is
trading” (Birrell v Carey (1989) 58 P & CR 184 at 186); 'for as long
as the tenant is not in breach of covenants' as (Har Sio Ying v
Chung Yau Cheung [1987] HKLR 411, at 415H); to `continue until
the land is required by the council for road widening’ (Prudential
Assurance Co Ltd v London Residuary Body [1992] 2 AC 386, HL)
 Must give tenant ‘exclusive possession’
 Looks at tenancy agreement
 Label not decisive
 Look at totality of evidence: Lam Man-yuen v Lucky Apartment [1964] HKLR 689, furnished
rooms, rooms cleaned and bed linen laundered by amah, hot water supplied, keep key at entrance,
need to rouse the watchman at night to get in, no cats and dogs allowed, occupant claimed to have
security of tenure, held licence. If the evidence is divided, it is necessary to weigh the various
factors as in May King Development Co v Young Ching-huo Ltd [1981] HKLR 280 (Crown lease
says “shall not use or allow to be used the said premises for any purposes other than private
residential purposes …”. And DMC says “The said building shall be used for private residential
purposes only and the owners thereof shall not use or cause or permit the said building or any part
thereof to be used as an inn, hotel, boarding house, apartment house, lodging house or for religious
purposes……” Rooms with bathroom facilities but no kitchen, furnished, bed linen, soap and water
provided, rooms cleaned and common areas looked after, occupant had key to room and main door,
held leases, not “lodging”, so no breach )
 Terms must be genuine: eg Antoniades v Villiers [1990] 1 AC 417
 Exceptions: family arrangement, act of friendship /generosity, charity, service occupancy,
gentlemen’s agreement
 Difference between lease and licence used to be important because of protected tenancy law (with
security of tenure and rent control), and now important again in tenancies of sub-divided units (Part
IVA of LTCO as added by s 4 of LTCAO 2021, effective from 22 Jan 2022)
 Does term of years have to be absolute? If absolute, can be legal. And if by deed legal (s 4) unless s
4(2)(d) exception applies. If not absolute, equitable
 Fixed term: no notice required when expires. Can take back after
expiry (except SDU). Cannot terminate earlier unless there is
break clause (or statutory right to do so)
 Periodic tenancy: no need to renew, renews automatically, can
give full period of notice to terminate (unless becomes regulated
tenancy in SDU), right to give notice cannot be taken away.
 Formality for creation
- Fixed term: (i) not exceeding 3 years taking effective in
possession at best rent without premium: no formality required (s
4(2)(d) CPO); (ii) everything else: by deed (s 4 CPO), otherwise
equitable if in writing or evidenced in writing or partly
performed (s 3 CPO)
- Periodic tenancy: (i) by express agreement (no formality: s 4(2)
(d) exception), (ii) by tenant moving in and paying rent on
periodic basis
 summaries
 If there is a deed for fixed term: legal tenancy for fixed
term
 If no deed, but there is express written agreement or
evidence in writing or part performance, and no
discretionary bar: equitable tenancy for fixed term
 If there is discretionary bar, but tenant has moved in and
paid rent: implied legal periodic tenancy
 Surrender requires landlord’s consent, accepting new tenancy
or variation operates as a surrender
 Can be terminated by forfeiture
- Must have express (forfeiture clause) or implied right of
forfeiture (s 117(3) LT(C)O)
- must not have waived the breach
- If breach relates to non-payment of rent, must make demand
first
- If breach relates to other breaches, must give notice to tenant
stating the breach, and if remediable ask to remedy it, and if
wants compensation ask for it (s 58 CPO)
- Tenant can apply for equitable relief
 If tenant bankrupt, trustee in bankruptcy can disclaim
tenancy
 Tenancy may be frustrated (obligations comes to an end by
frustration by external events, through no fault of parties,
making performance impossible or substantially different)
eg landslide
 SDU
 https://www.rvd.gov.hk/doc/en/Regulated_Tenancies_at_a_Glance_eng.pdf
 Domestic tenancy granted after 22 Jan 2022, of a sub-divided unit, for
tenant’s dwelling, and tenant is natural person, and not an excluded tenancy
(eg employee quarters, owner’s room, Government/HA/HS tenancy, social
services organization tenancy) is a regulated tenancy under Part IVA of LTCO
 Periodic tenancy granted before but existing on 22 Jan 2022 is covered and
turned into regulated tenancy, and commences as first term tenancy when the
new period commences on or after 22 Jan
 Tenant of regulated tenancy is entitled to security of tenure (2+2 tenancy,
landlord to offer second term tenancy within two months but not less than a
month before tenancy expires) (ie in the penultimate month) and rent control
(no increase in first term tenancy, follow index for second term tenancy but
not more than 10%)
 If tenancy oral, tenant can ask landlord to issue written agreement.
 Landlord has implied obligations to repair drains, pipes,
electrical wiring, windows, fixtures and fittings provided
 Landlord must stamp agreement and submit notice of tenancy to
RVD
 Tenant has implied obligations to pay rent, not use premises for
illegal or immoral purpose, not to cause annoyance,
inconvenience or disturbance, not to make structural changes,
must not assign or sublet
 Landlord has implied right of forfeiture for breach of implied
obligations above