DIANA GEMING FU v. KEENDIC INDUSTRIAL LTD

LDNT138/2003

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Application No.: LDNT No. 138 of 2003

_______________

JUDGMENT

_______________

Background

1. Following the delivery of Judgment on 31 October 2003 ("Judgment"), the Applicant applied for review on 1 December 2003. According to the Affidavit of the Applicant and the written summary of her case, there were several grounds for the review:

1. Termination of tenancy by the landlord (i.e. the Respondent) was invalid because the absence of deposit, stated in the Form CR101 served by the Respondent, was not provided for as one of the valid grounds under Section 119E of the Landlord & Tenant (Consolidation) Ordinance ("Ordinance").

2. The Lands Tribunal did have the power to enlarge the time for the Applicant to file the new tenancy application although the application was actually made some months after the tenancy of the suit premises ("the Premises") had been terminated pursuant to the provisions of the Ordinance. Such power was given to the Tribunal both by virtue of Section 10(2)(d) of the Lands Tribunal Ordinance (Cap. 17) as well as the new Section 119D(4) of the Ordinance introduced by the latest amendment of the Ordinance in December 2002. Furthermore, the Respondent said that she had given evidence to support her case that there was overwhelming good cause to grant extension of time for her to file her new tenancy.

3. The Respondent all along prior to the hearing at the Tribunal maintained that their intention was not to force the Applicant to vacate the Premises. However, the Applicant alleged that the Respondent's true intentions were to deny the Applicant the rent reduction in keeping in line with the prevailing market rent level of the Premises, and /or to delay and use legal technicalities to get vacant possession of the Premises. The Applicant also alleged that the Respondent's conducts amounted to harassment as set out in Section 119V of the Ordinance.

2. The Respondent submitted that the Judgment of 31 October 2003 should remain unchanged. There was no reason that any of the Orders should be varied.

Is it appropriate to consider, in this review, whether the tenancy of the Premises had been duly terminated?

3. In the original hearing, the parties did not raise any dispute that the tenancy of the Premises had been terminated by the service of the Form CR101 dated 4 July 2003 by the Respondent onto the Applicant. There was therefore no need for the Tribunal to cast attention on this matter.

4. However in this review, the Applicant contended that the said Form CR101 was invalid because the ground stated by the Respondent therein was not one of the grounds allowed for by Section 119E of the Ordinance. In response to this, the Respondent denied that the said Form CR101 was invalid as all the details of the Form complied with the requirements of the Law. The Respondent submitted that since the Applicant responded by the service of a Form CR102 and did not challenge the validity of the said Form CR101 until the filing of the review application in December 2003, the Applicant should not be permitted to use the validity of Form CR101 as a ground of review now. I find that this argument of the Respondent cannot stand. The Applicant may not take note of the fine details of Form CR101 before and at the time of the original hearing. The Applicant may have concentrated on her case that she was late in applying and have assumed all along that both the Form CR101 and the Form CR102 of this case were valid. All in all, I do not agree that the Applicant should be barred from raising this issue in the review application.

5. On the contrary, the Ordinance provides that the tenancy of the Premises has to be terminated in accordance with the provisions of the Ordinance, regardless of the original term and expiry date of the current tenancy, whatever they are. And, if it can be shown that the current tenancy of the Premises had not been duly terminated under the provisions of the Ordinance, the tenancy will continue and the Tribunal cannot entertain the Applicant's application for a new tenancy any further.

Was the said Form CR101 (notice of termination of tenancy by the Respondent) valid?

6. Therefore, I agree with the Applicant that it is necessary to decide whether the current tenancy of the Premises had been duly terminated. There was no dispute on the service or on the date of termination of tenancy stated on the form as well as on the period between the date of termination of the tenancy and the date of the said Form CR101. The only dispute was whether the ground stated in the said Form was one of the grounds set out under Section 119E of the Ordinance.

The Respondent's submission that the ground stated in the said Form CR101 was one of the stated grounds

7. The Applicant claimed that the ground, in Chinese, written on the said Form CR101 was not one of the stated grounds. However, the Respondent said that it was one of the grounds stated in Section 119E and also shown on the back of the said Form CR101 (see Exhibit A2). The Respondent said that the Applicant's application was opposed on the ground (after translated into English) that where covenant or condition of the tenancy (to pay deposit) has been broken or not performed which would normally have been a cause of forfeiture.

8. After checking the original copy of the Tenancy Agreement date 12 September 1996, I find that it includes Clause 4.1 with a heading "re-entry on default". It states that any non-performance or non-observance of any agreements, stipulation, terms and conditions could lead to forfeiture. Since payment of deposit was provided for under Clause 12, I find that non-payment of deposit could be a cause of forfeiture. Therefore, I decide that the ground written in the said Form CR101, on the assumption that all the terms and the conditions of the new tenancy granted by the Lands Tribunal in March 2002 were the same as in the written tenancy agreement entered much earlier between the Applicant and the former landlord in September 1996, was one of the grounds permitted under Section 119E of the Ordinance.

9. The next question was, whether there was the term to pay deposit under the tenancy granted by the Tribunal in March 2002. The Applicant said that she had paid deposit to the former landlord at the commencement of the first tenancy. She pointed out that in the Agreement made on 12 September 1996 (Exhibit R4), the former landlord had confirmed the receipt of the said deposit. She denied that the deposit had been forfeited by the former landlord prior to the assignment of the Premises to the Respondent. The Applicant's evidence was that HH Judge Yung had said in the hearing in March 2002 that there was no need to pay deposit. The evidence from Mr. Kung was that this was not the case but that the Judgment of the Tribunal was only silent on this point.

The Respondent's evidence of the non-payment of deposit under the tenancy prior to its termination by the said Form CR101

10. In response to the Applicant's newly raised point that the Form CR101 was invalid, the Respondent said the deposit paid by the Applicant to the former landlord, Lee Lai Ping, had been forfeited by the former landlord. The Respondent produced a copy each of the letters dated 11 December 1997 and 15 February 2000 (Exhibits R5 and R2 respectively) from Messrs Poon & Cheung, Solicitors which supported the allegation that the Applicant had not paid the deposit under both (a) the written tenancy dated 1 November 1996 and (b) the new tenancy for 2 years commencing from 1 June 2001 at $20,000 per month as granted by the Lands Tribunal on 25 March 2002. The Respondent added that in the Orders of the Tribunal dated 25 March 2002, HH Judge Yung ordered, "the other terms remain the same as in the current tenancy". Therefore, although the Orders of the Tribunal was silent as to the payment of deposit, it follows that it should be the same as in the then "current tenancy", i.e. the statutory tenancy that continued after the expiry of the contractual tenancy dated 12 September 1996 and signed between the former landlord and the Applicant. A copy of this tenancy agreement dated 12 September 1996 was produced and marked as Exhibit R1.

Finding of the Tribunal on whether deposit was payable under the tenancy granted by the Tribunal in March 2002

11. I note and agree with the Applicant that in the Tenancy Agreement dated 12 September 1996, the former landlord acknowledged the receipt of deposit of $20,000 from the Applicant.

12. In the letter dated 11 December 1997 (Exhibit R4) from the Respondent's solicitors to the Applicant, it was stated, "it is our understanding that you have defaulted to pay rent since the 1st November 1997 in defiance of the said Tenancy Agreement..... As such the deposit of HK$20,000 previously paid by you under the said Tenancy Agreement has been forfeited to your former landlord." In the same letter, the Respondent's solicitors informed the Applicant, "We act for Keendic Industrial Limited, the registered owner which just acquired the above property on the 10th December 1997 subject to and with the benefit of the Tenancy Agreement with your goodself as the Tenant therein dated the 1st November 1996."

13. Therefore, even taking the contents of this document as entirely correct, although the original Tenancy Agreement dated 12 September 1996 contained a requirement to pay deposit, it was clear from Exhibit R4 that the former landlord, before assigning the Premises to the Respondent on 10 December 1997, had forfeited the Applicant's deposit. The former landlord did not forfeit the tenancy and seek possession of the premises. Instead, it was more probable than not that she then agreed to continue the tenancy with the Applicant under the revised term that no deposit was required. The Respondent as the new landlord, which assumed the rights and obligations of the former landlord so far as the tenancy of the Premises with the Applicant, also continued to accept the rent from the Applicant under the revised term that no deposit was required. This situation continued up to the time of the hearing of the new tenancy for the Premises before HH Judge Yung in March 2002. Otherwise, it is inconceivable that at the time of hearing before HH Judge Yung, the Respondent did not raise the issue of deposit as one of the explicit terms of the new tenancy ordered by the Tribunal.

14. In addition, the onus of proof that there was no change in the terms of the tenancy after the forfeiture of the deposit in late 1997 by the former landlord rested with the Respondent. I find that there was insufficient proof from the Respondent that there was no change in the terms of the tenancy after the said forfeiture of the deposit in late 1997.

15. As a result of the above finding, I conclude that there was no requirement to pay deposit under the tenancy granted by the Tribunal in March 2002, this being the last tenancy prior to the issue of the said Form CR101 in November 2002. Hence, the ground stated in the said Form CR101 by the Respondent was incorrect because if the tenancy did not contain a deposit clause, the non-payment of deposit could never be a cause of forfeiture in the present case. Therefore, I find the said Form CR101 to be invalid since it was incorrect. For this reason, I decide that the said Form CR101 had not duly terminated the tenancy of the Premises. As such, the application for new tenancy by the Applicant has to be dismissed.

16. Alternatively, if the Applicant were right and the said Form CR101 was invalid because, as alleged by the Applicant, the ground stated was not one of the permitted grounds, the end result would also be that the tenancy of the Premises had not been duly terminated. And, as such, the application for new tenancy by the Applicant has to be dismissed too because the current tenancy will continue under the provisions of the Ordinance.

Other matters including costs of the review

17. The Applicant submitted in the review hearing that she no longer sought a 2-year tenancy in order to avoid further harassment by the Respondent, and asked the Tribunal to grant her additional time for moving out. Also, the Applicant asked for a rent reduction during the period from June 2003 to the date of vacating the Premises. Finally, she asked for financial assistance in the sum of HK$200,000 as the renovation expenditure she had incurred over the years, being roughly equivalent to about 10 month's current rent. However, these requests are all outside the jurisdiction of the Tribunal in the proceedings of a new tenancy application such as the present case. As a result, all these requests have to be dismissed.

18. As to the costs of the review, I find that although the end result of the review is basically the same. That is, the application by the Applicant for a new tenancy has to be dismissed. However, the dismissal is due to a different reason. All in all, I find that it is appropriate not to award costs to either side. I therefore would make a cost order nisi that each party shall bear its own costs relating to this review.

Orders

1. Review application dismissed;

2. Cost order nisi that there be no order as to costs; if there is no further application in relation to costs within 14 days the costs order nisi shall become absolute.