LI KIM FUNG v. SPARKLE CHINA LTD.

CACV 177/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 177 OF 1998

(ON APPEAL FROM LDMR NO. 22 OF 1998)

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J U D G M E N T

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Liu, J.A.:

1. These proceedings have taken an unusual turn. It all began when the appellant (landlord) desired to terminate the tenancy of the respondent (tenant) under s. 119 of the Landlord and Tenant (Consolidation) Ordinance. The tenancy was sought to be terminated under s. 119 by serving what has been known as CR 101. The tenant had two months upon service of CR 101 to serve CR 102 in opposition to the landlord's application for possession and/or for a new tenancy. In the statutory regime devised by s. 119 in which a new tenancy may be applied for by CR 102 after termination of the existing tenancy by CR 101, the landlord in this case was enjoined by CR 101 to set out the grounds, if any, of his opposition to any application for a new tenancy by the tenant. In the CR 101 issued by the landlord and personally served on the sub-tenant, it was stated: "I would oppose an application to the Lands Tribunal for the grant of a new tenancy on the following grounds: where any rent has not been paid or where any covenant or condition of the tenancy has been broken or not performed which would normally have been a cause of forfeiture." It is on these purported grounds of opposition that the landlord sought to resist an application from the tenant for the grant of a new tenancy.

2. The tenant was late in filing his CR 102 and applied to the Lands Tribunal for an extension. It would appear that the landlord was in possession of a CR 102 served by the sub-tenant within two months of the service of CR 101 and that the sub-tenant proposed to challenge CR 101 in these terms "you have not give (sic) a suitable reason when you want to broken (sic) that tenancy". This court is told that the CR 102 filed by the sub-tenant was not before the Lands Tribunal. Therefore, the sub-tenant was, as known to the landlord, desirous of challenging the validity of CR 101 on its contents. No explanation was offered as to why the landlord objected to the tenant raising also the same issue, albeit belated. The sub-tenant's CR 102 is included in the Appeal Bundle. However, it is now clear that the CR 102 served by the sub-tenant had no role to play in this appeal.

3. The parties appeared before His Honour Judge Yung on the tenant's application to extend time to file CR 102. Suffice it to say that on reading pages 47J-K, 49T/U, 50D-F, K/L and 51A, B/E, H & K-L of the Appeal Bundle, being the Chinese transcript of the proceedings before the District Judge in the tenant's application for an extension of time to file CR 102, this transpired: the tenant had sublet; CR 101 was handed to the sub-tenant by way of service; the tenant did not come to know about CR 101 until very much later in time; he was beyond the two months as prescribed by s. 119(4) of the Landlord and Tenant (Consolidation) Ordinance for serving CR 102; the Presiding Officer, His Honour Judge Yung, was concerned as to whether personal service of CR 101 was disputed before him; the District Judge's approach had the blessing of logic: if the tenant continued to maintain the personal service of CR 101 on the sub-tenant as being invalid, it would be quite unnecessary for him to apply for any extension of time to file CR 102 to a CR 101 that had not been properly served; the focus was on the validity of the personal service as opposed to the validity of CR 101 on account of its contents; after protracted discussion, legal representative for the tenant conceded on instructions that service was no longer questioned; thereupon, the District Judge proceeded to hear the application for extension of time to file CR 102; for the reasons he gave, the application was denied. It is not relevant to embark upon the reasons given by the District Judge for refusing to grant an extension to file CR 102. That, in sum, is the total of what transpired before the Lands Tribunal presided by the judge.

4. The tenant was dissatisfied with the determinations of the judge. He chose to appear before Deputy Judge Lee on a different application for declaring invalid the CR 101 which allegedly failed to state grounds and reviewing the judge's refusal to extend. In that application before Deputy Judge Lee, the tenant attacked CR 101 not on the aspect of personal service as he had once attempted before the District Judge, but on the ground that CR 101 did not comply with s. 119. Deputy Judge Lee acceded to the tenant's application and declared CR 101 void. The need to entertain the application for review fell away in her determination.

5. It would be pertinent to set out s. 119(1), (4) and (5) of the Landlord and Tenant (Consolidation) Ordinance:

S. 119. Termination of tenancy by the landlord

(1) Subject to s. 119 N, the landlord may terminate the tenancy by a notice given to the tenant in the specified form stating the date of termination. (See Form CR 101)

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(4) A notice under this section shall not have effect unless it requires the tenant within two months after the giving of the notice to notify the landlord in the specified form whether or not at the date of termination, the tenant will be willing to give up possession of the premises comprised in the tenancy. (See Form CR 102)

(5) A notice under this section shall not have effect unless it states whether the landlord would oppose an application to the Tribunal under this Part for the grant of a new tenancy and if so, also states on which of the grounds mentioned in s. 119E he would do so.

6. S. 119E makes available a number of grounds for such an opposition to be mounted. In essence, s. 119 enables a landlord to apply to terminate a tenancy and to resist any application for the grant of a new tenancy by the former tenant. It is for these two purposes which s. 119 is designed to serve. Grounds of opposition, if any, must be stated for the latter purpose. It is plain, in the circumstances of this case, that CR 101 may be challenged as to validity for its improper service as well as for its non-compliance with the section, particularly its sub-section (5).

7. There is no dispute that CR 101 and CR 102 notices are to be read liberally. One looks at the document to see whether it complies with the provisions of s. 119 in spirit rather than in letter, as it was well said by Barry, J. in Barclays Bank Limited & Another v. Ascott, [1961] 1 WLR 717, at p. 722:

"The question which the Court really has to consider is whether the statement or notice given by the landlord has given the proper information to the defendant which will enable the tenant to deal in a proper way with their situation, whatever it may be, referred to in the statement of notice."

8. What, one might ask, is the proper information required by s. 119(5)? The landlord is enjoined to, inter alia, specify the grounds available to him for resisting the tenant's application for a new tenancy, failing which the sub-section would render a CR 101 ineffective.

9. Reverting to the CR 101 which was personally served on the sub-tenant in this case, it did not state any ground on which the landlord was proposing to meet the tenant's application for the grant of a new tenancy. It merely stated that opposition to any new tenancy to be applied for would be based on any arrear which happened to be outstanding or any covenant or condition of the tenancy which happened to be breached. These were clearly no grounds as envisaged by s. 119(5); nor did they provide the tenant with any or any proper information required of the landlord by the sub-section. The tenant was not told what the complaints were; nor did he know what case he had to meet.

10. Deputy Judge Lee before whom the validity of CR 101 was challenged on its contents concluded that: "Grounds for opposition must be clearly stated. This notice failed to do so." From her admirably concise decision, the landlord appeals. It would appear that the conclusion of the Deputy Judge cannot be flawed. The CR 101 in this case fell well below what was required of the landlord for opposing the tenant's application. If the tenant could not be shown to be in arrear or in breach of tenancy terms, the burden being on the landlord, the so-called stated grounds would be meaningless. If the landlord should succeed in pinning the tenant down for not observing some tenancy terms, these non-observances had not been set out in the CR 101. As to any application for a new grant, there was no sufficient material for the tenant to react to. S. 119(5) provides that in the absence of proper information as stated grounds in a CR 101 for opposing a grant of new tenancy, a landlord's notice shall have no effect and this is the conclusion I also unhesitatingly reach today.

11. Turning to the second Ground of Appeal, which maintains that all shortfalls had been waived, waiver and, for that matter, estoppel must be clearly established by cogent evidence. It is not to be forgotten that the tenant appeared before His Honour Judge Yung for an extension of time to file CR 102. The tenant may reasonably be assumed to wish to contest the landlord's application on, unless otherwise qualified, all fronts. The tenant's application for an extension of time to serve his CR 102 was a procedural application which did not seek to embark upon merits. It is inconceivable that the tenant could have waived anything not at issue.

12. From the transcript, what was, in fact, conceded for the tenant before His Honour Judge Yung was the validity of service of CR 101 which had been personally effected on the sub-tenant. Clearly, judged by the exchanges between Bar and Bench in the transcript, there was no concession made on the contents of CR 101. Moreover, the tenant has not been unmistakenly shown to challenge the validity of CR 101 on its contents. In conclusion, the defendant did not waive any invalidity of CR 101 for its inadequate contents nor could it be said that there were clear circumstances to support any or any such estoppel or waiver.

13. Counsel for the landlord, Mr Shum, in his succinct and well-structured submission invites this court to take note of the very application the tenant made for an extension of time to file CR 102. It is submitted that the application of itself constituted a waiver of any invalidity of CR 101. At the time when the tenant applied for an extension of time, there was no cogent evidence that the tenant was otherwise than wanting to question the CR 101 in full. He merely sought leave to do so out of time. His application for allowing him to argue fully on CR 101 was no abandonment of any right. Further, it would seem to be conceded by Mr Shum that a tenant may challenge a CR 101 either by applying for a declaration as to its invalidity as in the case before Deputy Judge Lee, or by filing a CR 102 for resolving all the disputes under s. 119 in a Lands Tribunal. On that concession, it becomes ill from the landlord to claim that the tenant had unreservedly waived his challenge to the validity of CR 101 on the merits. As a matter of fact, when the application for extension of time to file CR 102 came before His Honour Judge Yung, neither the judge nor legal adviser for the landlord ever queried the application as one which could of itself have the effect of waiving any invalidity of the CR 101, otherwise His Honour Judge Yung would not have had to press the legal representative for the tenant to make an election as regards service.

14. Finally, the plea of estoppel or waiver based on the mere making of an application by the tenant for an extension of time to file CR 102 does not seem to be open to the landlord on Ground 2 of the instant Notice of Appeal, which reads:

"Alternatively, the issue of the validity in proper service of CR 101 served by the respondent (landlord) on the applicant (tenant) on 22 November 1997 was conceded by the applicant (tenant) and decided accordingly in favour of the applicant (landlord) by Deputy Judge Yung at the previous hearing on 20 May 1998. Accordingly, the applicant (tenant) has waived a right on the issue and is estopped from asserting the said right." (Emphasis supplied).

15. Ignoring the difficulty in the use of "applicant" and "respondent", Ground 2 is grounded on the concession made by the tenant, not the very application he made for an extension of time to file CR 102.

16. For all these reasons, we need not call upon Mr Chung. The appeal must be dismissed and I would dismiss it.

Leong J.A.:

17. I agree. A notice of termination of tenancy under s.119 of the Landlord and Tenant (Consolidation) Ordinance must be in the specified form CR101 and must state the grounds on which the landlord will oppose an application for a new tenancy by the tenant. The grounds available are those set out in s.119E of the Ordinance.

18. The stated grounds in CR101 should "give the proper information to the tenant which will enable the tenant to deal in a proper way with the situation" (Barclay's Bank Limited & Anor v. Scott [1961] 1 WLR 717).

19. The Appellant's bare repetition of paragraph 5(a), merely descriptive of the nature of some grounds, which is given on the back of the form CR101 to assist and for general information of the landlord seeking to terminate the tenancy, without stating the specific grounds relied upon, is insufficient for the purpose of s.119(5).

20. The Deputy Judge was clearly right in concluding that the notice was invalid.

21. For the reasons given by my Lord, Liu, J.A., I also agree that the ground of the appeal on waiver and estoppel cannot be sustained.

22. I, too, would dismiss this appeal.

Pang, J. :

23. For the reasons given by Liu and Leong JJ.A., I, too, would dismiss this appeal.

Liu, J.A.: This appeal be dismissed with costs.