METHONG PLASTIC (HK) LTD v. LAUREL LTD

LDNT 145 of 2004

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

NEW TENANCY APPLICATION NO. 145 OF 2004

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JUDGMENT

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Background

1. The Applicant is the tenant and the Respondent the landlord of the premises known as 4^th Floor, Block B, No. 26 Belleview Drive, Repulse Bay Garden, 18 – 40 Belleview Drive, Hong Kong and Car Park Space No. 201 (“the Premises”).  It was common ground that the parties had renewed the tenancy of the Premises in July 2003 for a term of 1 year from 1 July 2003 to 30 June 2004 at a monthly rent of $40,000.

2. It was commonly agreed by the parties that pursuant to the provisions of the Landlord & Tenant (Consolidation) Ordinance (Cap 7) (‘the principal Ordinance”), the Respondent had served to the Applicant a Form CR101 dated 11 June 2004 but there was a dispute as to the date of actual service.  Both parties also agreed that the Applicant, after receiving the said Form CR101, had served to the Respondent a Form CR102 dated 26 June 2004.  Subsequently, the Applicant commenced the present new tenancy application proceedings by filing to the Tribunal and serving to the Respondent a notice of application (Form 22) dated 8 September 2004.  The Respondent in response gave a notice of opposition (Form 7) dated 20 September 2004 in which the Respondent stated that she “did not oppose the Applicant’s application for a new tenancy save that the rent and other terms and conditions of the new tenancy shall be determined by the Tribunal.”  Meanwhile, however, the Respondent also served to the Applicant a Transitional Notice of Termination, a notice provided for under Section 5(2) of the Landlord & Tenant (Consolidation) (Amendment) Ordinance 2004 (“the  Amendment Ordinance”).  The said notice was dated 1 September 2004 and was given to notify the Applicant that “the tenancy of the above premises will be terminated on 31 August 2005.”

3. The Respondent applied on 6 December 2004 to fix the new tenancy application for hearing.  The hearing date was fixed on 25 January 2005 during which the Respondent was represented by her lawyer while the Applicant chose not to be legally represented.  The Applicant’s representative Mr. Jospe Michel Oscar (“Mr. Jospe”) gave evidence on the service of CR101.  He said that the Applicant only received the said Form CR101 on 14 June 2004, a Monday, but not on 11 June 2004, which is a Friday.  The Respondent did not call any witness but applied for an adjournment on the ground that the Respondent had only received a list of rental comparables very late.  At that time, the Respondent’s lawyer already indicated to the Tribunal that notwithstanding the service of a Transitional Notice of Termination by the Respondent, it was the Respondent’s position that the former Part IV provisions of the principal Ordinance applied in this case because before the enactment of the Amendment Ordinance, the Respondent had already initiated the new tenancy application proceedings by the service of Form CR101,  under the “old provisions” of the principal Ordinance. 

4. At the end of the hearing on 25 January 2005, the Tribunal granted the orders (i) to adjourn the hearing as sought by the Respondent, with costs reserved, and (ii) the parties do file to the Tribunal and serve on the other side witness statements in writing, if any, on or before 17 March 2005.  The hearing was eventually adjourned to 19 April 2005 during which the parties were both legally represented.

Preliminary issue to be determined by the Tribunal

5. During the hearing on 19 April 2005, it was mutually agreed by the parties that the Tribunal should firstly determine, as a preliminary issue, whether the old provisions of Part IV of the principal Ordinance or the new provisions of the Amendment Ordinance should apply in the present case.

Applicant’s case

6. The Applicant submitted that the Form CR101 served by the Respondent was defective.  According to the evidence of the Applicant’s representative Mr. Jospe, he only received the Form CR101 on 14 June 2004.  Since the Form  CR101 sought to terminate the then current tenancy on 13 September 2004, the period of notice given to the Applicant was 1 day shorter than the minimum 3 months period, as required by the provisions of the principal Ordinance prevailing at the time of service.  For this reason, the Applicant submitted that the Respondent had not duly terminated the tenancy of the Applicant by the service of the said defective Form CR101.  This was also the position of the Respondent when she chose to serve a Transitional Notice of Termination provided for under the Amendment Ordinance.  Otherwise, why would the Respondent serve such a notice to the Applicant if the Respondent believed that the Form CR101 was validly served and the “old provisions” under the former Part IV of the principal Ordinance applied?

7. Therefore, the Applicant submitted that the findings of the Tribunal on the validity of the said Form CR101 would be pivotal.  If the Tribunal finds that the Respondent failed to prove that the Form CR101 was served on 11 June 2004, then there was no valid Form CR101.  In the circumstances, the new provisions under the Amendment Ordinance but not the old provisions under the former Part IV of the principal Ordinance should apply.  In addition, the Applicant submitted that even if the Tribunal decided that the old provisions under the former Part IV of the principal Ordinance should apply, it would be necessary for the Respondent to serve a fresh Form CR101.  In this regard, the Respondent already confirmed during the hearing on 19 April 2005 that she would not serve a fresh Form CR101 even if the Tribunal were to find that the previous Form CR101 was invalid.

Respondent’s case

8. The Respondent on the other hand submitted that the Form CR101 served by the Respondent was valid whereas the Transitional Notice of Termination served by the Respondent was not invalid.  However, the Respondent did not call for any factual witness in support of her claim that the said Form CR101 was served on the date of the Form, i.e., 11 June 2004.

As to the validity of the Transitional Notice of Termination served to the Applicant, the Respondent’s case was at the time of service, the Respondent did not consult the lawyer and the service was clearly wrong in law because it was against Section 5 (1) and 5(2) of the Amendment Ordinance, which reads,

“	5	Savings in respect of Part IV
		(1)	In the case of a tenancy to which Part IV applies and which is in existence on the day before the commencement date, if
			(a)	the landlord has before the commencement date given notice under and in accordance with section 119 of the principal Ordinance to terminate the tenancy; or
			(b)	the tenant has before the commencement date made a request for a new tenancy under and in accordance with section 119A of the principal Ordinance,
		then on and after the commencement date-
			(c)	the provisions repealed by section 3 of this Ordinance shall continue to apply to the tenancy as if they were not repealed; and
			(d)	the enactments amended by sections 10 to 16 of and the Schedule to this Ordinance shall, if applicable, apply to the tenancy as if they were not amended.
		(2)	On and after the commencement date, a tenancy to which Part IV applies and which is in existence on the day before the commencement date, but in respect of which no notice or request has been given or made before the commencement date under 119 or 119A of the principal Ordinance, may, subject to subsections (4) and (5), only be terminated by a transitional termination notice as provided for by section 6.”

The Tribunal’s findings

9. Under the principal Ordinance, section 119 covers the termination of tenancy by the landlord (i.e. service of Form CR101 notice, as provided for in section 119(1)) whilst section 119A covers the tenant’s request for a new tenancy.  Therefore, it is clear from the above quoted section 5(1) of the Amendment Ordinance that the old provisions under the former Part IV of the principal Ordinance continues to apply to the subject tenancy if either the Respondent as the landlord has, before the commencement date of the Amendment Ordinance (i.e. 9 July 2004) given a Form CR101 notice in accordance with section 119 of the Principal Ordinance or the Applicant as the tenant has before 9 July 2004 made a request for a new tenancy under section 119A of the principal Ordinance.

10. It was not disputed that we are only concerned with the notice given by the Respondent as the landlord under section 119 of the principal Ordinance.  Firstly, I am not satisfied that the Respondent has shown sufficient evidence that the Respondent did serve the said Form CR101 on 11 June 2005.  Therefore, I agree with the Applicant that the said Form CR101 was not a valid notice as it did not comply with the minimum notice requirement of the principal Ordinance.  However, I do not agree with the Applicant that this would invalidate the whole process of termination of the tenancy under section 119.  The Applicant drew my attention to the case of Law Chee-sing v. Lau Kwong-kun (CACV102 of 1993) in support of the contention that the Tribunal could not enlarge the time of notice even if it was only short of 1 day.  However, I find from the last two paragraphs of the Judgment of the case that the Court of Appeal dismissed the Appellant landlord’s application for vacant possession only on the ground that the Tribunal was lack of jurisdiction.  On the contrary, the Court of Appeal deliberated on the academic point of “whether the Tribunal was correct in its ruling that it had no discretion to assist a party who had failed to comply with time limits prescribed under Section 119, Cap. 7.”  After citing in details the decision of the Court in the leading case of Sin Hua Trust Savings and Commercial Bank Limited v. Ng Yee-may [Civil Appeal No. 137 of 1985] and the majority decision of the Court in Ram Isardas Mahtani v. Wong Kwok Tai [Civil Appeal No. 156 of 1989], the Court emphasized that the decisions of the above 2 cases, by which the Court were bound, “were restricted to an interpretation of s.10(2)(d)(ii) and (iii) (of the Lands Tribunal Ordinance, Cap. 7) in relation to s.119D(3)(ii) and (iii) (of the principal Ordinance) upon an application by a tenant for a grant of a new tenancy”.  However, the Court stated that “we are satisfied that the Tribunal does have discretion under Section 10(2)(d) (of the Lands Tribunal Ordinance, Cap. 27) to enlarge the time for the giving of notice by the landlord under Section 119, Cap. 7” 

11. For the above reason, I find that the Court’s decision in Law Chee-sing v. Lau Kwong-kun [CACV102 of 1993] actually supports the view that this Tribunal does have discretion to enlarge the time for the giving of notice by the Respondent under Section 119 of Cap. 7.  Therefore, even though the said Form CR101 served by the Respondent was short of 1 day, this Tribunal could enlarge the time required under that provision of the principal Ordinance.

12. Moreover, the principal Ordinance was amended in 2002 in which an additional sub-section was added, as follows:

“119D (4) The Tribunal may for good cause entertain an application under section 117(1) notwithstanding that subsection (2) or (3) has not been complied with in respect of the application.  (Added 32 of 2002 s. 16)”

13. Having regard to the above, I find that the intention of the legislature seems clear to me that a liberal approach should be adopted here.  Therefore, notwithstanding that it was my finding of facts that the notice of the said Form CR101 was 1 day less the minimum 3 months’ period, the Tribunal may for good cause entertain such an application under section 117(1).

14. For the above reason, I decide that the old provisions under the Part IV of the principal Ordinance applies to the subject tenancy.   I will further give direction that the parties do exchange expert surveyors’ reports and/or witness statements, if necessary, within 4 weeks from today and that that the hearing be adjourned to a date to be fixed by the Assistant Registrar, Lands Tribunal.

Costs

15. The Applicant submitted that the Respondent should bear the cost of the hearing on 19 April 2005.  The Respondent opposed the claim from the Applicant.

16. This is one of the last few cases of new tenancy applications in which action had been initiated by the parties under the former Part IV procedure of the Ordinance prior to the enactment on 9 July 2004 of the Amendment Ordinance.  Therefore, the provision of Section 117R of the Landlord & Tenant (Consolidation) Ordinance (Cap. 7) that “In any proceedings under this part, the Tribunal shall not make any order as to costs against a party unless the party has conducted his case in a frivolous or vexatious manner” still apply.  

17. On the whole, after considering all the points made by the parties, I do not find that the Respondent had conducted herself in a frivolous or vexatious manner.  Therefore, I give an order that there be no order as to costs.

Orders

(1)	The hearing of the new tenancy application (including the determination of the Prevailing Market Rent of the Premises and the terms of the new tenancy to be granted) shall be adjourned to a date to be fixed by the Assistant Registrar, Lands Tribunal after consultation with the lawyers’ diaries;
(2)	The parties do exchange expert surveyors’ reports and/or witness    statements, if necessary, within 4 weeks from today;
(3)	No order as to costs for the hearing on 19 April 2005.