NG WAI LIN v. NG SAU CHING

Headnote

Landlord and Tenant - Application for final judgment - Part IV of Landlord and Tenant (Consolidation) Ordinance - Statutory Notice of Termination - Common law notice to quit - Extension of time for applying for a new tenancy.

IN THE DISTRICT COURT OF HONG KONG
CIVIL JURISDICTION
ACTION NO. 12110 OF 1992

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J U D G M E N T

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Facts

1. In this application the Plaintiff is seeking final judgment against the Defendant for possession of the premises known as the 1st Floor, No.23A Haven Street, Hong Kong ("the premises") and mesne profits for the use of the premises at US$100 per month from 6th June 1992 until the date of delivery of vacant possession.

2. The Plaintiff is the registered owner of the premises. According to the Particulars of Claim, on or about 1st August 1985 the premises was let to the Defendant for domestic use on a monthly basis at the rent of US$100 per month inclusive of rates. The premises is subject to Part IV of the Landlord and Tenant (Consolidation) Ordinance, ("the Ordinance"). The Plaintiff by a Notice of Termination of Tenancy (Form CR 101) ("the Notice") dated 3rd December 1991 notified the Defendant that the tenancy of the premises would be terminated on 5th June 1992. The Notice also contained a statement that the Defendant was required to notify the Plaintiff within two months after the giving of the Notice whether or not she would be willing to give up possession of the premises on 5th June 1992. In response, the Defendant served on the Plaintiff a Tenant's Response to Landlord's Notice of Termination of Tenancy (Form CR 102) dated 31st January 1992 stating that she would not give up possession of the premises and that she intended to apply to the Lands Tribunal for a new tenancy of the premises.

Parties' contention

3. The Plaintiff claimed that the tenancy was terminated by the Notice on 5th June 1992 and no application under Section 117(1) of the Ordinance for the granting of a new tenancy was taken out by the Defendant within the prescribed time. As a matter of fact, an application was only taken out by the Defendant on the same day of the filing of the Defence in this action. The application for a new tenancy and the Defence was filed on 6th July 1992 by which time the time limit imposed by Section 119D(3) (a) (iii) of the Ordinance had expired. Under this sub-section it is provided that no application under Section 117(1) i.e. application by the tenant for a new tenancy shall be entertained if it is made after the termination of the current tenancy in accordance with Part IV.

4. The Defendant denied that she is a monthly tenant. She claimed to be a yearly tenant, alternatively a quarterly tenant. She claimed that on 24th July 1985, the Plaintiff let the premises to her at a rental calculated at US$100 per month. According to paragraph 6 of her Affirmation she stated that,

"although the tenancy when first created on the 24th July 1985 was a monthly tenancy it became a yearly tenancy since the 1st January 1986 when I was informed that I only need to pay her once every year at a yearly rent of US$1,200 per year. The amount of the rent is also fixed by reference to one whole calendar year at US$1,200 per year agreed on the basis that it was formerly US$100 per month."

5. At paragraph 8 of the Affirmation she stated that,

"I however remember that since the tenancy became a yearly one I was asked to pay the annual rent in arrears at the end of the yearly term which expires on the 31st of December."

6. Notwithstanding this claim of a yearly tenancy she also claimed that she had been advised by her legal advisers that the tenancy when first created and before it became a yearly one was in fact a quarterly tenancy as evidenced by the payment of rent on a quarterly basis.

7. She claimed that the Notice of Termination did not terminate her tenancy on the last day of its unexpired term and was therefore invalid.

8. Mr. Li Counsel for the Plaintiff relied on the case of Bhagwandas Kewaleran Murjani and Others v. Bank of India [1991] HKLR 286 ("Murjani") and invited me to test the credibility of the Defendant's case against the conduct of the Defendant and contemporary documents.

9. The Plaintiff had previously instituted another action in the District Court, namely District Court Action No. 14065/90, seeking to recover possession of the premises from the Defendant. In that action the Plaintiff claimed that she had requested the Defendant, who is her niece, to look after the premises during her absence from Hong Kong. In October 1989 she requested the Defendant to return the premises to her and the Defendant agreed to do so by the end of May 1990. Despite the promise, the Defendant failed to return the premises to her. The defence raised by the Defendant was that she was occupying the premises as a tenant on a monthly basis and that the tenancy was subject to the provisions of Part IV of the Ordinance. The action was not proceeded upon by the Plaintiff. The Defendant explained that in the previous action she claimed to be a monthly tenant because at that time she had not received the benefit of counsel's advice. She was represented by a firm of solicitors in that action.

10. According to the affidavits, the first payment of rent by the Defendant was on 31st January 1986 when she paid the rent for 1st October 1985 to 31st December 1985. The second payment was made on 2nd January 1987 when she paid the rent for 1st January to 31st December 1986 at US$1,200. The next payment was in February 1988 when she paid the rent for the whole of 1987. In early 1989 she paid the rent for 1988. In October 1989 she paid the rent for 1989. On 31st March 1990 she paid the rent for 3 months in respect of January, February, March 1990. In June 1990 she paid the rent for April, May and June 1990. In August 1990 she paid the rent for July, August, September 1990. On 16th November 1990 she paid the rent for October, November, December 1990. In June 1992 she paid the rent for January to June 1992.

11. The Defendant further claimed that while the Plaintiff had indicated to her that she wanted to recover the premises for her own use, the Plaintiff's relative told her that the Plaintiff wanted to sell it. In August 1990 the Plaintiff offered to sell the premises to her. The Defendant offered to purchase it at US$32,000. The Plaintiff however took no action and no agreement was reached between them. She claimed that because of the disagreement over the sale price and the disposal of the premises, the relationship between the parties "became soured and strained" and she was asked "to settle the yearly rent at a three months interval four times a year, calculated on the basis and or by reference to the annual rental of US$1,200 per annum".

12. In March 1990 when the Defendant paid the rent for January, February and March 1990, she wrote a letter dated 28th March 1990 to the Plaintiff (Exhibit NWL4 to the Affirmation of the Plaintiff). In this letter no reference was made to the purchase of the premises and the Defendant merely stated that she had deducted US$116.67 from the rent in order to settle the expenditure for electrical works in the premises.

The Murjani Approach

13. I accept the principle in Murjani and I have to test the credibility of the Defendant's evidence against the contemporary documents. These documents clearly show that the Defendant's contention of a yearly tenancy or a quarterly tenancy is not sustainable.

14. The fact that the defence in the previous action was not drafted by counsel does not mean that the Defendant had not received the benefit of legal advice. In any event the pattern of payment of rent does not indicate that there was a yearly tenancy or a quarterly tenancy. At Paragraph 6 of the Defendant's affirmation, she did not disclose who had informed her that she only need to pay the Plaintiff once a year at a yearly rent of US$1,200. Mr. Wong, Counsel for the Defendant, submitted that it was implicit in this paragraph that it was the Plaintiff who had made such a suggestion. The source of information in an affidavit must be disclosed and the Defendant had not done so in the present case. This apart, the contention that the yearly tenancy commenced on 1st January 1986 was not borne out by the fact that the first payment of rent by the Defendant on 31st January 1986 was rent for 3 months, namely from 1st October 1985 to 31st December 1985. No explanation was given why after the Plaintiff had agreed to accept rent on a yearly basis the Defendant should pay the 3 months rent on 31st January 1986. According to the Defendant, after the deterioration of relationship between the parties as a result of the disagreement over the purchase price of the premises, the Plaintiff requested her to pay rent on a quarterly basis. It is noted that commencing from March 1990 rent was already paid on a quarterly basis. This was earlier than the time suggested by the Defendant when the parties' relationship became sour. Furthermore, in June 1992, the Defendant paid rent for 6 months. No explanation was given why she would make such a payment when the Plaintiff had asked her to pay rent on a quarterly basis.

15. I am not satisfied that the Defendant has raised a triable issue that the tenancy in question was a yearly or a quarterly one. The pattern emerged from the payment of rent was that the Defendant paid the rent at her convenience and at such time as she pleased. The payment was obviously not referable to any agreement between the parties. I concluded that on the evidence as disclosed the Defendant was a monthly tenant.

Statutory Notice of Termination and Common Law Notice to Quit

16. Mr. Wong contended that even if the Defendant was a monthly tenant, the Notice of Termination was not valid. He claimed that the length of notice must end on the last day of the periodic term. As the tenancy commenced on 24th July, the Notice must terminate the tenancy on its last day, namely 23rd of July. In the present case the Notice required the Defendant to leave the premises on 5th June 1992 and as such the Notice was invalid. Mr. Wong referred me to a number of cases including Precious v. Reedie [1924] 2 K.B. 149 dealing with the time required for terminating a monthly tenancy by a common law notice to quit. I accept that if a monthly tenancy is to be terminated by a common law notice to quit the notice must end on the last day of the monthly term. However, in the present case we are not concerned with a common law notice to quit but a statutory Notice of Termination under Part IV of the Ordinance. Under Section 119(2), such a notice shall have no effect unless it is given not more than 7 and not less than 6 months before the date of termination. There is no requirement that it must terminate on the last day of the tenancy. A qualification is contained in Section 119(3)(a) which provided that,

"In the case of a tenancy which apart from this part could have been brought to an end by notice to quit given by the landlord, the date of termination shall not be earlier than the earliest date on which, apart from this part, the tenancy could have been brought to an end by notice to quit given by the landlord on the date of the giving of notice under this section."

17. This sub-section obviously is not applicable to the present case. The date of termination under the Notice of Termination, namely 5th June 1992, was not earlier than the earliest date on which the monthly tenancy could have been brought to an end by a notice to quit. For a notice to quit issued on 3rd December 1991 (i.e. the date of the service of the Notice of the Termination), the earliest date on which the monthly tenancy could be determined would be 23rd January 1992.

18. I am not satisfied that the common law position concerning the termination of a periodical tenancy by notice to quit is applicable to a Part IV tenancy. Section 119 is modelled on Section 25 of the English Landlord and Tenant Act, 1954 ("the Act"). The length of notice under Section 25 is not more than 12 and not less than six months before the date specified therein. In Commercial Properties Ltd. v. Wood [1968] 1 Q.B. 15, the tenant was a monthly tenant and the rent was payable in advance on the first day of each month. The landlord on 4th October 1965 served a notice pursuant to Section 25, terminating the tenancy on 11th April 1966. The tenant argued that the notice did not expire at the end of or on the commencement of the month, as would have been required of a contractual notice to quit at common law. The Court of Appeal rejected this contention. It held that since the Act substituted a statutory mode of termination of tenancies to which that Act applied, any contractual method of termination was irrelevant, and there being nothing in the section requiring a statutory notice of termination to expire on the anniversary of the tenancy, the landlord's notice was valid. The same reasoning applies in the present case and accordingly I find that the tenancy has validly been terminated by the Notice.

Extension of time for applying for a new tenancy

19. The Defendant has not made any application for extension of time to lodge the application for a new tenancy under Part IV of the Ordinance. The application by the Defendant in the Lands Tribunal for a new tenancy appears to be a futile exercise. If, according to her contention, the tenancy has not been properly terminated, I fail to see the necessity for making such application at all. In any event, according to the Court of Appeal's decision of Sin Hua Trust, Savings and Commercial Bank Ltd. v. Ng Yee May, Civil Appeal No. 137 of 1985 and Ram Isardas Mahtani v. Wong Kwok Tai, [1989] 2 HKLR 296, the Lands Tribunal has no jurisdiction to extend time for applying for a new tenancy if Section 119(D) (3) (a) is not complied with.

Conclusion

20. The Defendant has not disclosed any reasonable cause of defence and I shall give judgment to the Plaintiff accordingly.

21. There shall be judgment to the Plaintiff for possession of the premises and mesne profits at US$100 per month from 6th June 1992 until the date of delivery up of vacant possession of the premises. Cost nisi of the action and of the application to the Plaintiff with a certificate for counsel. Parties are at liberty to apply in respect of matters that may arise as a result of my decision.