Case No.:

HC-REV-467-1959

Court:

The High Court

Issue No.:

1961

Principles

·  Landlord and tenant—Land Settlement and Registration Ordinance, .s. 27 (9)—One year renewable lease is an encumbrance

·  Landlord and tenant—Rent Restriction Ordinance s. 11 (e)—Personal use—Not use of Corporation

A lease for one year renewable yearly if neither party gives notice two months before the expiry of the one year period is a for one year, and therefore is an incumbrancè on the land within the meaning of Land Settlement and Registration Ordinance, S. 27.(g)
Under Rent Restriction Ordinance, s. ii (e). a o per cent, stockholder In a Corporation may not recover possession of premises owned by the corporation for corporate use, since under this section landlord may apply• for repossession for personal use only.
 

Judgment

(HIGH COURT)

CECIL DWEK V. OSMAN OMER MUSA

HC-REV-467-1959

Advocate: Abdel Rahman Yousif………. for the applicant

S. M. Shibeika, District Judge, Khartoum. December 5.1959 (DC-CS 2409-1958) :—The plaintiff in this case is the landlord of Plot No. 7. Block No. F, West Khartoum, and defendant is the tenant thereof. Plaintiff is claiming eviction on the ground of personal use.

At the outset I must consider the question of the written leases which were made between the defendant and the ex-landlord of the shop in dispute. One of them is dated December 13, 1949. the other is dated December 1, 1952 The question is whether this lease dated December 1, 1952, is subsisting. The duration of the lease as provided by paragraph 1 of the lease was one year which could be renewed for another year if none of the parties gave two months’ notice before expiry of the one year period.

This contract was not terminated until the purchase of the shop by plaintiff i.e.. about 1955. In my opinion this lease is a lease for a term of one year only. After the end of every year the tenancy is deemed to be renewed for a term of another year. The fact that it continued for more than three years without termination does not mean that it is a lease for a term of more than three years. Each year is a distinct term for a separate tenancy. In order to be a lease for a definite term it must be explicitly provided so in the lease itself and the mode of the termination must be specified. I therefore think that the tenancy agreement is one for a term of less than three years. According to Land Settlment and Registration Ordinance , S. 27 (g). such a lease being for a term of less than three years is an incumbrance upon the land and the new landlord is bound by it.

I therefore think that the notice given by plaintiff to defendant on March 19. 1958, which was duly served did not terminate the tenancy as it ought to have been served two months before the first of January 1959. It therefore follows that the lease was renewed until the first of January 1960 No personal use can therefore be claimed during the duration of  a tenancy agreement.

However for the sake of obiter argument I shall consider the question of personal use I am satisfied that the evidence of plaintiff proved that it is essential for S A. Dwek (Sudan). Ltd.. to have the use of the shop in dispute for trade purposes. Rent Restriction Ordinance. s. ii (e), provides as follows:

The Landlord requires the premises for some purpose other than as a residence, for his own use, and the tenant is not using them as a residence, and the landlord proves to the satisfaction of the court that it is in all the circumstances essential for him to have the use of those premises for that purpose.”

The old subsection before the amendment of 1958 provided that the landlord may claim the premises for use by himself or one of his children. It to be noted that the new amendment removed the children of a landlord from the scope of the operation of the section.

NOW the crucial question is whether the plaintiff requires the shop for her own use. Plaintiff is claiming the shop for-the use of S. A. Dwek Co. which is registered under the Companies Ordinance. She owns , per cent. of the shares of the company, her husband owns 40 per cent. and the rest is owned by her children.

Rent Restriction Ordinance s. 11 (e), as amended, provides that the landlord must ,require the premises for his own use and omitted to give the children or the husband of the landlord this statutory right. The company is composed of plaintiff, her children and her husband, and therefore the use of premises will not be exclusively the use of plaintiff alone but other shareholders will be regarded as persons using the shop in dispute.

On the other hand the S. A. Dwek Co. is a corporate personality and has a separate legal existence independent of the persons who constitute it. The leading case of the practical consequences of this principle is Salomon v. Salomon(1867) A.C. 22. In this case the court refused to Identify a company with its controlling shareholder so that the latter could claim the preferential right of a bond holder against the company which was, in reality, himself to the detriment of genuine creditors. I shall follow this decision which is regarded as authority in English law.

Plaintiff in the present case is a shareholder in the company and I decline to identify her with the personality of the company. She does not require her shop for her own use but for the use of the company which is financially capable for renting convenient premises. I will not lift the veil of corporate personality to the detriment of the defendant and if I do I will find other persons who will share the use of the shop which is not their property.

I therefore dismiss the claim with costs.

Advocate costs shall be paid to defendant’s counsel.

Gala! Au Lutfi, Province Judge. May 21, 1961 is a pleasure to read such a comprehensive judgment by District Judge Khartoum ( judge Shibeika). I do agree with his sound argument that the appellant (plaintiff) must fail in her claim. The lease being a lease from year to year is subject to the operation of Land Settlement and Registration Ordinance, 5. 27 (g). And since no notice was served on the respondent on January I, 1958, the tenancy agreement was automatically renewed for a further year and Consequently it follows that this suit which was raised before the date of the expiry of the term of the lease is premature.

The other ground for possession which is personal use is not proved. The identity of the company for the use of which the order of possession is sought is totally different from the identity of its shareholders. The personal use- applied for is not for the landlord as a landlord but for the landlord as shareholder in a company.

According to the Rent Restriction Ordinance as amended a person can apply for possession for his personal use only and must not join the interests of others as grounds for such possession Because if an order of possession is granted for the use of a company the pr will be used by the

appellant and others who are not entitled to enjoy such a right. Application is therefore summarily dismissed.

(Application for Revision to the Court of Appeal was adjourned by the Chief Justice to the Court Appeal and then withdrawn by applicant. AC. REV-202 1961(-