DONALD CLINTON SPEAKMAN v. HUANG INVESTMENT LTD.

Landlord and Tenant - Part IV - prescribed pre-application statutory notices - whether incomplete first Form CR 101 served by landlord invalid - position where landlord serves two Forms CR 101 and tenant replies by serving two Forms CR 102 - whether Lands Tribunal has power to enlarge time where Form CR 102 served by tenant after expiration of statutory time limits - if so whether tenant satisfied requirement to show good cause - Held: 1. First Form CR 101 invalid as ambiguous; 2. First Form CR 102 was served in time in reply to second Form CR 101; 3. If not then in the alternative Tribunal does have power to enlarge time within which second Form CR 102 may be served; 4. Applicant had shown good cause: time enlarged accordingly; 5. Tribunal had jurisdiction to entertain application for a new tenancy - Sections 117, 119, 119D Landlord and Tenant (Consolidation) Ordinance; Cap. 7; Section 10(2)(d) Lands Tribunal Ordinance; Cap. 17.

IN THE LANDS TRIBUNAL OF HONG KONG

Application No. L.T. 401 of 1986

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JUDGMENT

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1. This is an application by the applicant for a new tenancy pursuant to Section 117 (1) of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7 in respect of domestic premises known as Flat A, 35A Seabird Lane, Beach Village, Discovery Bays, Lantau Island, Hong Kong. At the hearing the respondent raised the preliminary point that due to the applicant's non-compliance with the pre-application notice requirements of Part IV of the Ordinance, the lands tribunal had no jurisdiction to entertain the application and it should therefore be dismissed.

2. Before going on to consider the legal issues raised by this submission, it is necessary to recount the factual background to the present application. The applicant entered into possession of the suit premises under a written tenancy agreement granted by the respondent for a duration of 2 years from 15th February 1984 at a rent of $7,000 per month. The written tenancy agreement expired on 14th February 1986. It is undisputed that pursuant to Section 50(6)(o) the suit premises are subject to Part IV of the Ordinance.

3. A tenant of Part IV premises has the statutory right, under Section 117(1), to apply for a new tenancy, for a duration not exceeding 3 years subject to compliance with the statutory pre-application notice procedure. The scheme of Part IV is that the parties are prohibited from applying to the Lands Tribunal during the period of time which must expire under the pre-application notice procedure. This so called cooling off period may enable the parties to reach agreement upon a new tenancy or at least on some of its terms, before the time for making an application arises.

4. In this particular case the respondent took the first step on 1st October 1985 by serving Notice of Termination of Tenancy by Form CR 101. The notice provided that the existing tenancy would be terminated on 14th April 1986. The respondent failed to complete Form CR 101 correctly. The body of the statutory form includes two alternatives, namely a sentence which states that the landlord would not oppose an application to the lands Tribunal for the grant of a new tenancy, and a subsequent sentence which states that such an application would be opposed. In the latter event space is provided for setting out the grounds of opposition. Unfortunately, the respondent failed to strike out one of these alternatives. As a result the form was ambiguous on the important issue whether a new tenancy would be opposed.

5. After consulting solicitors the respondent apparently became aware of the error in its original Form CR 101 and on 15th November 1985 served through its solicitors a second Form CR 101. This form struck out the second alternative and expressly stated that the respondent would not oppose an application to the Iands Tribunal for the grant of a new tenancy. The date of termination under this second notice was 14th May 1986. This form also complied with Section 119(4) by requiring the tenant within 2 months of the giving of notice under Form CR 101, to notify the landlord, in the specified form, whether he would at the date of termination give up possession.

6. The factual position was that before the 2 months had expired under the first CR 101 the tenant had received the second Form CR 101. The 2 months limited under the second Form CR 101 for the applicant to reply expired on 15th January 1986. The tenant, within the latter time limit, namely on 11th January 1986, purported to complete the prescribed Form CR 102 and served such notice on the respondent. Form CR 102 also contains two alternatives and requires a tenant to delete the words which do not apply. Perhaps the instruction on the prescribed form would be clearer if instead of merely directing the tenant to "Delete the words which do not apply" it required a tenant to "Delete the alternative which does not apply. " The expressed alternatives are "I shall give up possession of the above premises at the date of termination specified therein" and "I shall not give up possession of the above premises at the date of termination specified therein and I intend to apply to the Lands Tribunal for the grant of a new tenancy."

7. The applicant stated in evidence that during the period the parties were serving these notices there were also negotiations for the new rent for a new tenancy. According to the applicant, on 11th January 1986 he had offered to pay $7,500 as the new rent and was waiting to receive a reply on that offer from the respondent. This was the applicant's explanation for completing Form CR 102 in the terms in which it was served on the respondent. The application crossed out the second alternative and added additional words thereunder so that the narrative section of the form read:

"I shall give up possession of the above premises at the date of termination specified therein. In the absence of any further response to our proposal of a $7,500 monthly rental fee."

8. It is not unusual for an unrepresented tenant to attempt to qualify his stance in Form CR 102. Some tenants seem not to be aware that even if they proceed successfully and obtain a grant of a new tenancy, they are not obliged to accept the tenancy. Section 119M(2) gives a tenant the opportunity to consider the terms of a new tenancy for 1 month after grant, during which period he may elect not to accept the grant. In practical terms, this is the escape provision for a tenant, where rent is not agreed, if he considers the Tribunal's determination higher than the rent he is prepared to pay.

9. On 24th January 1986 the solicitors for the respondent wrote to the applicant referring to the Form CR 102 and to the respondent's interpretation that the applicant would give up possession on 14th May 1986. The letter asked that on that day the keys to the suit promises be returned to the respondent's agent. The applicant stated that he was overseas from 25th January to 17th February 1986 and only received the letter on his return. After considering its contents and after further telephone communications with the respondent's agent, he elected on 3rd March 1986, to serve a second Form CR 102 in which the first alternative was struck out leaving the remaining alternative namely "I shall not give up possession of the above premises at the date of termination specified therein and I intend to apply to the lands Tribunal for the grant of a new tenancy".

10. The applicant also endorsed on this second Form CR 102 the following paragraph in the space provided on the form for "Other comments".

"This responds to your Form CR 102 dated 15th November 1985 which supersedes Form 102 dated Oct. 1 1985. My response to previous form is therefore null and void. Will accept your verbal offer of an increase of rent of $1,000 per month to a new rental of $8,000. Delay in my reply is due to confusion of two notices and being out of the Colony for an extended period of time."

The applicant subsequently applied to the Tribunal for a new tenancy on 12th March 1986, which was some time before the date of termination specified in the Iandlord's second Form CR 101, namely 14th May 1986. However, by the time the respondent filed the notice of opposition on 25th March 1985, it no longer wished to grant a new tenancy to the applicant.

11. These facts give rise to a number of legal issues. Was the first Form CR 101 a nullity? If so notice under the first Form CR 102 was given in time if it was in reply to the 'second Form CR 101. If the first Form CR 102 was only in reply to the first Form CR 101, could the applicant rely on the second Form CR 102 as a reply to the second Form CR 101. In the latter event the second Form CR 102 was not given within the prescribed 2 months of the second Form CR 101.

12. The applicant was unrepresented throughout these proceedings. In these circumstances I reminded myself that I was sitting in the lands Tribunal and not in a Court. Generally, I reminded myself of the statutory direction in Section 10(5)(a) that "The proceedings of the Tribunal shall be conducted with as much informality as is consistent with attaining justice, and for this purpose, the President may give directions as to the manner and form in which proceedings shall be conducted. " I was guided by the President's Direction No. 1 and in particular the following paragraphs:

13. One issue which on the facts had clearly arisen, was the possibility that the relevant Form CR 102 was the second form served on 3rd March 1986. If it were the relevant Form OR 102, it was served out of time. In that event the issue whether the Lands Tribunal had power to enlarge time would arise. Notwithstanding the informality of Tribunal proceedings, I considered it desirable and in the interests of both parties, that if that issue were to be determined, an express application for enlargement should be before the Tribunal. I therefore explained the position to the parties and enquired of the applicant if he wished to apply for time to be enlarged in respect of the second Form CR 102, to comply with the 2 months period specified in Section 119(4). The applicant thereupon applied for time to be enlarged pursuant to Section 10(2)(d) of the lands Tribunal Ordinance. The respondent opposed the application on the ground that the Tribunal had no jurisdiction to enlarge time and even if it did have jurisdiction, the applicant had failed, in terms of Section 10(2)(d), to show "good cause".

14. I now return to the first CR 101. Counsel for the respondent submitted that this notice served by the respondent was a nullity because both prescribed alternatives on the statutory form were left remaining on the copy served on the applicant. No Hong Kong cases were cited on the effect of serving a statutory Part IV notice containing, as in this case, both contradictory alternatives. However, Part IV of the Ordinance is based on Part II of the English Landlord and Tenant Act 1954. The latter Act relates only to business tenancies while our Part IV is limited to domestic tenancies. However, the English Part II sections and the prescribed forms have been transferred into our Part IV with minimal alteration. While the application of complex English business tenancy law to Hong Kong domestic tenancies, is increasingly creating practical problems, particularly for unrepresonted parties, it at least provides a substantial body of English case law to assist in the interpretation of the Hong Kong statutory provisions.

15. In England, landlords of business premises have at times served the English equivalent to our Form CR 101 and made the same mistake as the respondent initially made in this case by omitting to delete one of the two alternatives. That occurred in Lewis v. MTC (Cars) Ltd. (1974) 3 All ER 423. However, in that case the landlord had lower down in the form particularised grounds of opposition to the grant of a new tenancy. The Court held that the form was not a nullity, as it was clear from the whole of its contents that a new tenancy was being opposed. However, in Barclay's Bank Ltd. v. Ascott (1961) 1 WLR 717 it was not clear whether a new tenancy was opposed and the Court hold that the landlord's notice was invalid. In the instant case, the respondent neither deleted one alternative nor made any other endorsements which may have indicated its attitude to an application for a new tenancy. I therefore hold that the first Form OR 101 dated 1st October 1985 is invalid.

16. I further hold that the only valid Form CR 101 served by the respondent is the second form dated 15th November 1985. This form expressly states that the respondent would not oppose an application to the Lands Tribunal for the grant of a new tenancy. As I have already observed, it was necessary for the applicant to notify the respondent within 2 months of 15th November 1985, whether he was willing to give up possession on the specified date of 14th May 1986. Form OCR 102 is the prescribed form in which the applicant should give that cross notice.

17. The applicant in evidence stated that the first Form CR 102 dated 11th January 1986 was served in response to the second Form CR 101 within the statutory 2 months period. If that Form CR 102 was in response to the second Form CR 101, it would have complied with the statutory 2 months time limit. The applicant at once conceded the Point made by Counsel for the respondent, by way of submission, that the first Form CR 102 expressly refers to the date of the first Form CR 101 and not the second Form CR 101. The applicant attempted to counter this submission by his explanation of how the first Form CR 102 came to be completed. The applicant stated that from the beginning he was anxious to obtain a new tenancy. Among other factors, his wife is unable to live on upper floors of high rise buildings hence the ground floor suit premises are particularly suited to the applicant's family circumstances.

18. The applicant stated that on receipt of the first Form CR 101 his wife commenced to fill in the form and completed, in the spaces provided, the first part of the form relating to the respondent's name and address, the address of the suit premises and the date of the Form CR 101. The remainder of the form was left uncompleted and the negotiations between the parties continued. Shortly afterwards, the second Form CR 101 was received when Form CR 102 was still uncompleted. The applicant stated that he was fully aware that the cross notice, being Form CR 102, had to be served by him by 15th January 1986 to comply with the statutory time limits. The applicant stated that as that date approached, he completed the remainder of Form CR 102 but in doing so omitted to change the date, which referred to the first Form CR 101, to the latter date of the second Form CR 101. This Form CR 102 was served on 11th January 1986.

19. I find that the first CR 102 does expressly refer to the date of the first Form CR 101. The applicant asserts that the failure to amend that date was accidental. If the failure was accidental and the respondent could have been left in no doubt that the first CR 102 was in reply to the second Form CR 101 then by analogy with Lewis MTC (Cars) Ltd. v. Escott (supra), the applicant's present contention would at least be arguable. In considering the contents of the first CR 102, I do take into account, as Counsel for the respondent stressed, that the applicant is an intelligent person, English is his first language and as an editor he is experienced in using words accurately. I also take into account that in his second Form CR 102 the applicant comments are consistent with the conclusion that, at least as at 3rd March 1986, he was making the different allegation that his first Form CR 102 was in response only to the first CR 101. However, I am primarily concerned with the effect the first Form CR 102 would have had on the respondent. I record that if the applicant's first Form CR 102 had been served on the respondent, before the second Form CR 101 was issued, the applicant's contention would not have been arguable and could quickly have been rejected.

20. The undisputed fact is that the first Form CR 102 was served on the respondent after the second Form CR 101 was served on the applicant. As to time, it complied with the time limitation. As far as the applicant is concerned I give considerable weight to the time the form was sent, as reinforcing his bare oral assertion, that he intended it to be a reply to the second Form CR101. I accept his further explanation that he served the second Form CR 102 under pressure on his return to Hong Kong when to his surprise he learned that the respondent's solicitors presumed that he was prepared to vacate.

21. Returning to the effect of the service of the first Form CR 102 on the respondent, I take into account that the parties ware at this time in communication over the new rent for a possible new tenancy but no agreement on either issue had been reached. The respondent at this stage had proceeded on the basis that its first form was invalid and that only its second form was effective. Chronologically it was only after the second Form CR 101 was served that the first Form CR 102 was received. When I take into account the negotiating and chronological sequence, together with the other evidence, I find that the accidental failure to alter the date in the upper part of the first Form CR 102, was not material. In my view the respondent would have been left in no doubt that the first Form CR 102 referred to the current position, as at 11th January 1986, in the light of the respondent's second Form CR 101 dated 15th November 1985.

22. Indeed, any remaining doubt on this issue is conclusively removed by the letter from the respondent's solicitors, to the applicant, dated 24th January 1986. This is not the letter of an unrepresented party but the considered letter of the respondent's solicitors. The letter refers to the first Form CR 102 notifying that the applicant will give up possession at the date of termination "... specified in our client's notice dated 15th November 1985." In that solicitors letter the first Form CR 102 is in express terms, accepted as being in reply to the second Form CR 101.

23. In that event the applicant's Form CR 102 was served within the time relevant to Section 119D(2). Further, the subsequent application was made to the Lands Tribunal before the current tenancy had terminated in compliance with Section 119D (3)(a)(iii). I would therefore dismiss the respondent's preliminary objection and hold that the Tribunal has jurisdiction to hear the applicant's application under Section 117(1).

24. If I am wrong in my finding that the first Form CR 102 was in reply to the second Form CR 101, it would be necessary to consider the application for time to be enlarged in respect of the second Form CR 102. In view of the fact that I heard argument on this issue and submissions on the law from Counsel for the respondent, it is proper that I should also consider the position under this alternative.

25. Section 10(2)(d) of the Lands Tribunal Ordinance is expressed in unusually wide terms:

26. These enlarging powers wore enacted in 1983. Before then the Tribunal, under Rule 30, already had the more limited discretionary power to enlarge time under the Lands Tribunal Rules. The significance of the 1983 amendment to the Ordinance was that it considerably increased the power to enlarge time limitations. Two particular powers enacted by the amendment are indicative of the Legislature's wide intent. First, the amendment applies to times fixed by "any" Ordinance. Hence it extends to the Landlod and Tenant (Consolidation) Ordinance. Secondly and exceptionally, it extends not merely to pleading times but to the giving of notices "before" any proceedings have commenced. Normally, a Court or Tribunal is only given power to extend time for proceedings before the Court or Tribunal. The wide power to extend time for notices to be given before a hearing clearly extends to the pre-application prescribed notices published on 31st December 1981 under GN 3919 in 'The Hong Kong Government Gazette.' Furthermore, the enlarging powers may be exercised in respect of such notices in relation to premises which may not necessarily ever subsequently be the subject of an application to the Tribunal under Section 117 or otherwise.

27. Counsel for the respondent submitted that the time limits went to jurisdiction and could not be enlarged. I recognize that for a period in England the equivalent time limitations under the Landlord and Tenant Act 1954, were considered by some Courts to go to jurisdiction and non-compliance with those time limits was fatal to a party who failed to comply. However, it has been clear, at least since the House of Lords judgment in Kammins Ballrooms Co. Ltd. v. Zenith Investments (Qorquay) Ltd. (1971) AC 850, that the time limitations are not jurisdictional but are merely procedural. In that case application was made prematurely during the prohibited period before the time limited for the statutory pre-application notices had expired. However, the general principles enunciated by the House of Lords, apply equally to late as to premature applications. It may be noted that the English Section 29 corresponds with our Section 119D. The respondents before the House of Lords submitted that the provisions of Section 29 prohibited a court from entertaining any application made out of time, even if both parties asked the Court to deal with it. The County Court and the Court of Appeal had earlier accepted that submission finding for the respondents holding that the time limits went to jurisdiction. The House of Lords upheld the tenants appeal, that the time limitations were merely procedural and could be waived. Lord Raid at page 859, 860 declared:

"The words are that no application "shall be entertained" unless it is made within the prescribed period. This cannot in my view be read literally. It must mean entertained by the court and the natural meaning of entertained in this connection is taken into consideration ...

One argument was that Parliament has conferred a new right to apply for a new tenancy inherently qualified by a condition that the application must be made during the prescribed period. But in my view the right conferred is not the right to apply - it is the right to get a new tenancy if the landlord does not establish the ground of objection of which he had given notice.

The application to the court is merely a step in procedure. If this is a direction to the court forbidding it to entertain applications made out of time, then it is the duty of judges to scrutinise the very numerous applications made under this section so as to satisfy themselves that they are made within the time prescribed. It is most unlikely that Parliament would put such a burden on judges without very good reason and I can find none. So I am satisfied that the time limits in section 29 are not essentially different in character from ordinary statutory provisions limiting the time during which various procedural steps can be taken.

If the parties can agree to insist on a time limit then it was not disputed that one of them can waive his right to insist on it. "

28. In accordance with the Privy Council's advice in de Lasala v. de Lasala (1979 HKLR 214 extended rather than merely reinforced by its advice in Tai Hing Cotton Mill Ltd. v. Liu Ching Bank Ltd. (1985) 2 WLR 317, this Tribunal is obliged to hold that the time limits under Part N are merely procedural and not jurisdictional.

29. However, while only procedural and capable of being waived, the respondent has not been prepared to waive the time limit in this application. If the present position arose in England, the failure to observe the time limits, in view of the respondent's attitude, would be fatal to the applicant. But in England the Courts do not enjoy the wide discretion vested in the Lands Tribunal under Section 10(2)(d). However, the English Court of Appeal, no doubt following the approach of the House of Lards, is refusing to adopt a literal interpretation of the English provisions. For example, recently where an application was filed in the wrong Court and as a consequence the applicant was not able to file the application with the right Court in time, a County Court hold it had no jurisdiction. The Court of Appeal reversed the County Court finding and held that the error in choosing the wrong Court did not justify striking out on jurisdictional grounds - Sharma v. Knight (1986) 136 Now Law Journal 332.

30. The question is whether Section 10 (2) (d) empowers this Tribunal to extend the time limit for service of the applicant's second Form CR 102. The 2 months is a time limit prescribed under an "Ordinance." Form CR 102 is a statutory form "for the giving of ... notice ... before ... any proceedings have commenced. " Prima facie, the Tribunal, even on a literal interpretation of a very simple and clearly drafted provision, appears to have power, provided "good cause" were shown, to enlarge time.

31. Counsel for the respondent in submitting that Section 10(2)(d) does not enable time to be enlarged under Section 119D, cited the Court of Appeal judgment in Sin Hua Trust, Savings and Commercial Bank Ltd. v. Ng Yee May Civil Appeal No. 137/85. In that judgment the Court of Appeal held that Section 10(2)(d) did not enable time to be enlarged under Section 119D (3) (a) (iii). In that case the purported application was made after the current tenancy had expired. In the instant case application was made well before the current tenancy had expired. Hence in the case before the Court of Appeal the applicant had not complied with Section 119D (3) (a) (iii). In this case the applicant has fully complied with Section 119D(3)(a)(iii).

32. The Court of Appeal was therefore not concerned with the issue under Section 119D(2) which now faces the present Tribunal. Indeed, the Court of Appeal expressly limited its judgment to Section 119D(3)(a)(iii) Huggins, V. P. leaving open the position of Section 10(2)(d) in relation to Section 119D(3)(a)(i) and (ii) observing at page 2:

"Whether or not it relates to the earlier two paragraphs of sub-s.(3) it is not necessary for us to say ..."

33. The judgments are silent on the position under Section 119D(2). Further, adopting the phraseology of Cons JA, as he then was, in my view with respect, the proposition that the time fixed for serving the prescribed Form CR 102 is a time fixed by the Ordinance is unanswerable.

34. I appreciate that my present conclusion would result in Section 10(2)(d) allowing time to be enlarged under Section 119D(2) but not under Section 119D(3)(a) (iii). I recognise that this is an unfortunate distinction to introduce into Part IV. The number of Part IV premises, with rateable values under $30,000 is growing and probably a majority of the parties are now unrepresented. However, there is ample precedent for such a distinction. The same approach has already been followed by the Court of Appeal relating to retrospectivity, as it affected the different grounds of possession under Section 53 - Leung Chui Ying v. Chow Sui Kwan (1982) HKLR 419, Cheng So Shi v. Shing Ngan (1982) HKLR 500 and Ngai Sau Ying v. Henry Chue Kwok Keung (No. 2)(1982) HKLR 256.

35. I hold that I have a discretion to enlarge time for the purposes of Section 119D(2). Finally, Counsel for the respondent submitted that even if the Tribunal had jurisdiction to enlarge time in respect of the second Form CR 102, the applicant had not established "good cause" as required by the Section. I accept that the onus to establish good cause rests en the applicant. The undisputed evidence is that the first valid notice served by the respondent indicated that it was not opposed to the grant of a new tenancy to the applicant. Negotiations of a limited nature ensued between the parties during which at the beginning the only issue in dispute was the amount of the new rent. Subsequently the position became procedurally confused. This confusion stemmed initially from the respondent's own action in first serving a notice which it later accepted and I have held, was invalid. Throughout this period the applicant was and still is unrepresented and acting in person. At no stage has he indicated that he disputed any of the terms of a proposed new tenancy other than rent. The applicant has filed the application for a new tenancy before the current tenancy expired. The only apparent delay on his part occurred when he was out of Hong Kong. When I look at all the material facts including the form of his own notices, I am well satisfied that the applicant has shown good cause for the exercise of the Tribunal's discretion to enlarge time. Taking into account all factors relevant to the exercise of that discretion, I am satisfied that this is a proper case in which to exercise that power. I order that time for serving the second Form CR 102 be enlarged to 4th March 1986.

36. Time having been so enlarged the second Form CR 102 was therefore served within the period of enlargement. It fellows that the Tribunal also has jurisdiction under this second alternative to consider an application for a new tenancy pursuant to Section 117, the applicant having complied with Section 119D. On this alternative ground the respondent's objection is also dismissed.

37. Having disposed of the preliminary objection in the applicant's favour, the Tribunal may now proceed to the substantive hearing of the application for a new tenancy. The present proceedings are adjourned to a date to be fixed for the hearing of that application.