Leung Kit Hing v. Wah Foo Enterprises Co. Ltd.

LDNT 55/2000 Review

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Application No.: LDNT No. 55 of 2000 (Review)

_________________

JUDGMENT

_________________

1. Background

The Tribunal granted orders on 7th December 2000 regarding the terms of the new tenancy of the Premises known as the First Floor of No. 109 Lockhart Road, Wanchai, Hong Kong ("the Premises"). They are as follows:

1. New Tenancy for 2 years from 3rd May 2000;

2. New rent at $4,650 per Lunar calendar month (exclusive of rates); leave to the Applicant to pay the Respondent the arrears of rent within 1 month;

3. The other main terms of the tenancy, above from the rent, commencement date and the duration are as follows:

(1) The landlord to keep the structure and exterior of the Premises in reasonable and proper state of repair and condition provided that the landlord shall not be liable for breach of this Clause unless and until written notice of any serious defect or want of repair which is not within the responsibility of the tenant has been given to the landlord by the tenant and the landlord has failed to take reasonable steps to remedy the same.

(2) The tenant to keep the interior of the Premises clean and tidy throughout the tenancy, fair war and tear excepted.

(3) The tenant to permit the landlord and all persons authorised by the landlord at all reasonable times with prior appointment during the term hereby created to enter into and upon the said premises to view the state and condition of the same and to carry out any repairs to the Premises which the landlord considers necessary or proper to be done.

(4) The tenant paying the said rent and performing and observing the tenant's terms and conditions herein contained may peaceably hold and enjoy the said Premises without any interruption by the landlord or any person or persons lawfully claiming through or in trust for him.

(5) In case the Premises or any part thereof shall at any time during the said terms be destroyed or damaged by typhoon, fire, earthquake or hostilities so as to be wholly or partially unfit for use and occupation, the rent hereby reserved or a fair proportion thereof according to the nature and extent of the damage sustained shall be suspended until the same Premises shall again be rendered fit for use and occupation.

4. The Applicant do pay one third of the Respondent's costs for the hearings dated 24th August 2000 and 17th October 2000, to be taxed if not agreed.

2. The Applicant applied on 6th January 2001 for "overall review as per my affidavit attached." It was fixed for hearing on 23rd February 2001. During the hearing on 23rd February 2001, the Applicant applied that the review application be adjourned sine die with liberty to restore. The ground for adjournment was that the Applicant required more time to obtain the transcripts of previous hearings. The Applicant submitted that there be no order as to costs since this was provided for in the Ordinance for new tenancy application. On the other hand, the Respondent submitted that the costs be in the cause. At the end, the Tribunal gave the following orders:

" 1. On application by the Applicant, hearing for the review application be adjourned sine die with liberty to restore;

2. Costs be in the cause. "

3. A summons application was made by the Respondent on 18th April 2001 seeking an order that:

"1. The adjourned Application of Review taken out by the Application by her summons dated the 6th day of January 2001 be struck out; and

2. The costs be to the Respondent in any event. "

4. The summons application was fixed for hearing on 9th May 2001. At the end, it was decided that:

" 1. Application by the Respondent to strike out the Application's review application dated 6th January 2001 be dismissed;

2. Costs of the Respondent's summons application to the Applicant, to be taxed if not agreed. "

5. At the end of the hearing on 9th May 2001, the Tribunal was advised that the Applicant would apply to list the review application for hearing after the Applicant received all the required transcripts. After the hearing, the Assistant Registrar was directed by the Tribunal to reserve a date for the review hearing. Recently, the Assistant Registrar was further directed by the Tribunal to write to both parties and inform them that the hearing for the review, previously adjourned by the Orders dated 23rd February 2001, will be restored by the Tribunal on 29th August 2001.

6. The review application

The Applicant submitted a 17 pages "statement" with exhibits in support of her application prior to the hearing on 29th August 2001. At the beginning of the review hearing, the Applicant produced a bundle of documents as well. However, the Respondent submitted that the bundle of documents should not be allowed for the purpose of review because the Applicant produced the bundle in the last minute. The Respondent was taken by surprise and was prejudiced by the Applicant's move. The Respondent said that the Applicant first applied for review on 6th January 2001 and used many excuses to delay the hearing. So, the Applicant should not be allowed to twist the rules again.

7. After being told by the Tribunal that the documents in the Respondent's bundle appeared to be documents that had either be part of the documents (such as Forms and Affidavits) filed or produced by the parties before, the Respondent agreed to read the documents and reconsider their position. The hearing was adjourned for a while after which the Respondent submitted that apart from a page marked 6 & 7, the Respondent did not object the rest of the Applicant's bundle.

8. After hearing the parties' submission on the admissibility of the said page, the Tribunal ruled that the Respondent's application to disregard the page marked 6 & 7 in the Applicant's bundle was agreed. The reason for the ruling was that the Applicant should adhere to the rules and should not be allowed to produce a document prepared by a director of a building surveyors firm in the last minute, thus depriving the Respondent the opportunity of seeking expert advice on the contents of that document. Should the document be accepted and if the Respondent required an adjournment so that they could study the document, the costs occasioned by the adjournment would certainly have to be borne by the Applicant since the adjournment was caused by the Applicant. However, the Tribunal agreed with the Respondent that the review hearing should not be adjourned further since the original orders were granted on 7th December 2000. Therefore, the said document was disallowed.

9. Details of the Applicant's review application

In the review application (Form 1) filed by the Applicant on 6th January 2001, the Applicant applied for an order to be made that "applications for overall review as per my affidavit attached." Her affidavit is reproduced below:

(1) "To take leave to review Order of 13/6/2000....

(2) To take leave to review Cost Order on 7/7/2000(Pursuant to Section 48, 119D, 117) To clarify Order Part IV (Part IV or Continued/Renewed or New Tenancy);

(3) To take leave to review Cost Order 9/10/2000....

(4) To review Judgment handed down on 7/12/2000....

(5) Alternatively, review Cost Order of 24/8/2000 and 17/10/2000.

10. It was not clear what Orders the Applicant wished to review and how should the Orders be reviewed. There were differences between what were stated in the Interlocutory Application (Form 1) filed on 6 January 2001 and the "statements with exhibits" dated 28th August 2001 and submitted by the Applicant on the same date, and the bundle of documents submitted by the Applicant in the beginning of the review hearing held on 29th August 2001. Upon questioned by the Tribunal, the Applicant advised that she intended to and also applied for both this review application and an ex-parte application for "overall review" before, but was advised that the ex-parte application was refused. Therefore, the Applicant agreed that her review application could be summarised as follows:

1. Term of the new tenancy --
The original order no. 1 (i.e. "new tenancy for 2 years from 3rd day of May 2000" be replaced by "a new tenancy for 3 years which is a continued / renewed tenancy under Section 117 of Part IV originally formed by oral agreement prior to March, 1946 (the written lease is lost)."

2. Rent --
The original order no. 2 be changed to "New rent calculated at Standard Rent of $40 X 85 times, i.e $3,400 per month (exclusive of rates); leave to the Applicant to pay the Respondent the arrears of rent within 1 month"

3. Regarding the original order no. 3, the following supplements or additional clauses be added -
Clause (2) - the following words be added at the end - "provided that the Tenant is not suffered from the damages, which is the responsibility and control of the landlord, in the Premises;
Clause (5) - the following words be added after the word "hostilities"- "or water leakage or over-flow of water";
New clause (6) (To sub-let with the landlord's consent) - "The landlord hereby consents the tenant to sub-let the Premises or part thereof";
New clause (7) (Demolition clause) - "The landlord should inform the tenant that redevelopment is likely within the period of the letting prior to commencement of the Tenancy and compensate the tenant for redevelopment in accordance with the Ordinance."

4. The original order no. 4 be replaced by "there be no order as to costs for the hearings dated 24th August 2001 and 17th October 2001.

11. The Applicant did not elaborate as to why the duration of the tenancy should be varied as set out above. The Respondent submitted that the original duration of the new tenancy should remain unchanged. The Respondent pointed out that the Applicant's proposed term still made reference to his deceased father's tenancy. This should not be accepted since it did not accord with the provisions of the Ordinance. Also, the valuation of the Premises was made on the basis of a 2-year term tenancy, which was also the usual term of new tenancy granted under Part IV of the Ordinance. In the circumstances, since the Applicant failed to provide sufficient ground for the variation of the duration of the new tenancy, the Applicant's application to vary the term of the tenancy must fail. The order no. 1 of the original Orders dated 7th December 2000 shall remain unchanged.

12. Although the Applicant suggested that the Tribunal should consider the rental references of 109 Lockart Road 3rd floor, 111 Lockart Road 1st floor and 111 Lockart Road 3rd floor, she at the end still concluded that the Tribunal should adopt the rent of $3,400, being the product of "Standard Rent" of $40 and a factor of 85. Apart from saying that this was the statement given by the Respondent's Surveyor during the past hearing, the Applicant did not explain why the Tribunal should adopt her method of calculation in the determination of the Prevailing Market Rent ("the PMR") under the Ordinance. This was refuted by the Respondent who submitted that the Applicant had not given any acceptable reason for the variation of this term of the new tenancy originally determined by the Tribunal. Moreover, the Respondent submitted that if the Applicant's proposal to base the "Standard Rent" in assessing the PMR were accepted, there would be no need to refer the matter of determination of the PMR to the Tribunal under the Ordinance in the first place. Therefore, the originally assessed rent of $4,650 should be maintained. After taking into account the definition of the PMR under Part IV of the Ordinance, the evidence adduced in the original hearing as well as the lacking of any new, acceptable evidence from the Applicant regarding the level of the PMR for the Premises, the Tribunal agrees with the Respondent that the PMR in the original order no. 2 dated 7th December 2000 shall remain unchanged.

13. However, the Respondent did agree with the Applicant that the rent should be on the usual calendar month basis, instead of the previous Lunar month basis. On checking from the records of the original hearing, it was found that the originally suggested term of "Lunar month" was in fact requested by the Applicant. The submission by the Respondent is accepted by the Tribunal and the order no. 2 of the original Orders dated 7th December 2000 will be varied as follows: that the word "Lunar" be deleted.

14. Regarding the suggested addition of clauses (2) and (5) of the original order no. 3, the Applicant explained that they were needed in light of the state of repair of the Premises. On the other hand, the Respondent submitted that the original clauses were based on standard clauses used in the market. Besides, the additions were considered by the Respondent to be superfluous. The Tribunal considers that since the original clauses were standard clauses in typical tenancy agreements used by landlords and tenants in the market, their wordings should be retained.

15. Regarding the suggested addition of two other clauses of the new tenancy, the Applicant submitted that due to safety reason, the Applicant should be allowed to sub-let the Premises with the consent of the landlord, hence the addition of clause (6) to the original order no. 3 as stated above. In response to this argument, the Respondent submitted that this was an unusual term for a new tenancy and should therefore not be allowed by the Tribunal. Besides, any sub-letting of the Premises could pose an even greater risk to the Applicant who otherwise resided alone in the Premises. The Tribunal agrees with the Respondent's submission and decided that this suggested additional clause be not allowed.

16. As to the proposed additional clause no. (7) (the demolition clause) to the original order no. 3, the Applicant submitted that this should be added in order to safe-guard the Applicant's interests as a tenant. On the other hand, the Respondent submitted that this was unnecessary because the Applicant's interests as a tenant would already be protected by the Ordinance. The Tribunal agrees with the Respondent that this suggested additional clause be not allowed.

17. In her lengthy written submission (from page 6 to page 16), the Applicant summed up the history of the original hearings and submitted that the Applicant should not be required to bear one third of the costs of the original hearings dated 24th August 2000 and 17th October 2000. Therefore, the Applicant submitted that the original order no. 4 be amended to "costs be responsible by the Respondent or no order as to costs.", in light of the provisions of section 119R of the Ordinance.

18. The Applicant submitted that her review application in respect of the costs order for the hearings of 24th August 2000 and 17th October 2000 were based on the her "draft statement on p.3 III cost order submitted on 23/2/2001". Also, whilst the Respondent's solicitor quoted 4 reasons in the Respondent's final written submission, the Applicant submitted that the Respondent's allegation, upon verification by her using the Court Tapes and Notes of Proceedings, were found to be incorrect. The Applicant went on to give a detailed break-down of how the Court's time should be attributed. In summary, the Applicant concluded that she had not wasted the Court's time in the hearings. In any event, the Applicant claimed that "whatever Court's time wasted on 7/7/2000 and 9/10/2000 were due to the mis-statement of the Respondent's solicitor on 13/6/2000 and 24/8/2000."

19. The Respondent stated that section 119R of the Ordinance provides that the Tribunal shall not make any order as to costs "unless that party has conducted his case in a frivolous or vexatious manner". The Respondent submitted that on exercising the power to award costs in the Judgement dated 7th December 2000, "the Tribunal does so at its discretion having gone through all the circumstances and in particular, the manner the case was conducted." Order 62, Rule 2(4) of the Rules of High Court provides the basis of how the discretion should be exercised. In the present case, the Respondent submitted that the Tribunal had, before coming up with the Judgement, considered thoroughly the demeanors of the parties, the evidence as well as all circumstances of the case. On the other hand, the Applicant had not shown any evidence that "she was playing as a reasonable litigant". At the end, the Respondent submitted that the Applicant had failed the Costs Order review totally. If indeed the Tribunal is to vary the Costs Order, the Respondent asked that the Applicant should pay more than one third of the Respondent's costs for the two hearings dated 24th August 2000 and 17th October 2000.

20. Although the Applicant had provided a very detailed breakdown of the matters raised/spoken before the Court, the Tribunal finds that she failed to justify the proposed change in the Costs Order for the hearings dated 24th August 2000 and 17th October 2000. This may partly stem from her mis-understanding of the nature of application before this Tribunal when hearing the case of an application for a new tenancy for the Premises on the aforesaid two dates. It is noted that all along in the aforesaid two hearings and even in the present review hearing commencing on 29th August 2001, the Applicant has consistently opined that the matter before the Tribunal should not be (a) the granting of a new tenancy but the granting of a "continued/renewed" tenancy and (b) that the PMR to be determined should still be based on a multiplier of "Standard Rent" (taken to mean a notional rent estimated by the Government for pre-war premises decades ago for the purpose of processing rent increase applications for pre-war premises in the past. This the Tribunal must say is erroneous in law simply if the relevant sections of the Ordinance are referred to. These are reproduced below:

Section 117 (Part IV of the Ordinance). Continuation of tenancies and grant of new tenancies

"A tenancy shall not come to an end unless terminated in accordance with this Part; and a tenant may apply to the Lands Tribunal for a new tenancy -

(a) if the landlord has given notice under section 119 to terminate the tenancy; or

(b) if the tenant has made a request for a new tenancy under section 119A."

(underline added)

Section 115 of the Ordinance. Interpretation

"Prevailing market rent" means "the rent, exclusive of rates at which the premises the subject matter of a tenancy to which this Part applies might reasonably be expected to be let, at the date on which the current tenancy would, apart from section 119N, have come to an end under section 119(1) or section 119A(5), on the terms of the new tenancy granted under this Part, but disregarding the effect of this Ordinance." (underline added)

21. So, the Tribunal could only grant "a new tenancy" to any applicant, including the Applicant of the present case. And, the rent payable under a new tenancy granted by order of the Tribunal shall be "such as may be agreed between the landlord and tenant or as, in default of such agreement, may be determined by the Tribunal, or by a valuation surveyor appointed by the Tribunal, to be a prevailing market rent" (section 119K of the Ordinance refers). Comparing the provisions of the Ordinance as quoted above, the terms of the new tenancy requested all along by the Respondent and the persistent attitude of the Respondent in the hearings of 24th August 2000 and 17th October 2000, it is evident that the Tribunal did not err when deciding in the Judgment of 7th December 2000 that the Applicant should bear one third of the costs of the Respondent for the hearings held on 24th August 2000 and 17th October 2000.

22. In the final analysis, after considered all the evidence and submission of the parties, the Tribunal failed to see why the original Costs Order (i.e. order no. 4 of the Orders dated 7th December 2000) should be amended.

23. Costs of the review hearing

The Applicant submitted that for this review, there should be no order as to costs. On the other hand, the Respondent submitted that firstly, for the hearing dated 23rd February 2001 in which the cost order was "costs be in the cause", the Tribunal should award costs to the Respondent; and secondly, for this review, the Tribunal should also award costs to the Respondent. The Respondent also added that although the Applicant clarified during the hearing of this review application on 29th August 2001 the extent of her review and in particular, the exact manner and wordings in which she sought to vary the original Orders given on 7th December 2000, the Applicant chose to include a number of other applications in her review application and attached affidavit filed on 6th January 2001 (the details of which were reproduced in paragraph 9 above). The Applicant did not seek and obtain leave, before 29th August 2001, to amend her review application. As a result, the Respondent had prepared the case on the basis of the Applicant's application filed on 6th January 2001. Therefore, the Respondent submitted that this would be another reason that the Applicant should bear the Respondent's abortive costs of preparing the case. All in all, the Respondent asked that the costs of 23rd February 2001 and 29th & 30th August 2001 be awarded to the Respondent

24. The review hearing was heard in pursuant to the Applicant's application under Section 11A. Review of decision of the Lands Tribunal Ordinance (Cap. 17). Under the same Ordinance, section 12 provides that,

"....the Tribunal may award costs to and against any party to any proceedings...."

25. Therefore, the rules applicable to the award of costs for this review are different from the rules applicable to the award of costs for the original new tenancy application. In this review hearing, the usual rules on costs apply. That being the case and since the Applicant do not succeed in varying or amending any of the terms of the original orders as proposed in her review application filed on 6th January 2001 (as amended), the Tribunal decides that the Applicant should bear the costs of this review application.

26. Applicant's summons application dated 28 August 2001

The Applicant filed a summons application on 28th August 2001, applying for an order to be made:

"- for payment into court pending outcome of DCCJ6598/2001 (Former HCA1949/2000) action; the sum being rent for 5 months and rates demanded by Landlord during the period of rent increase;

- certain proportion of the rent should be deducted due to the damages suffered;

- future rent should also be made payment into court pending outcome of DCCJ65098/2001 action;

- alternatively, pursuant to section 8A of the Lands Tribunal Rules, to transfer the said sum and future rent to District Court (DCCJ6398/2001)"

27. The summons application was fixed to be heard on 29th August 2001, the date scheduled to hear the Applicant's review. On 29th August 2001, the Tribunal advised the parties that the summons by both parties would only be heard after the completion of the review hearing. During the hearing of this summons application on 30th August 2001, the Applicant applied to drop the last paragraph of her Application. This amendment was not objected to by the Respondent. The Applicant also advised the Tribunal that the summons application was made in pursuant to the provisions of section 48, section 119D , section 115A of the Ordinance and section 8(A) of the Lands Tribunal Ordinance. However, the summons application as amended was objected to by the Respondent on the grounds that this was wrong in law, the Tribunal had no power to stop the judgment sum from being paid out of court and that the quoted sections of the Ordinance and section 8A of the Lands Tribunal Ordinance did not apply to the Applicant's summons application.

28. After checking the above quoted sections of the said Ordinances and the details of the summons application, the Tribunal finds that those sections are not applicable to the Applicant's summons application. Also, the Orders given by this Tribunal on 7th December 2000 were related to the terms of the new tenancy of the Premises as determined by the Tribunal. Therefore, the summons application taken out by the Applicant does not relate to the terms of the new tenancy. In fact, the application to vary the terms of the new tenancy granted was the subject matter of this review application, which has been dealt with in the earlier part of this Judgment. Therefore, the Tribunal does not have the jurisdiction in the present proceedings to consider the Applicant's summons application (as amended). This summons application as amended must be dismissed with costs of and incidental to the application to the Respondent, to be taxed if not agreed.

29. Respondent's summons application dated 21 August 2001 as amended.

The Respondent filed a summons application on 21 August 2001 seeking an Order that:

" (I) that the Applicant do pay the Respondent arrears of rent in the sum of HK$23,250 for the period 3rd April 2001 to 2nd September 2001 at the rate of HK$4,650 per month within 7 day from the date of this Order;

(ii) that the Applicant do pay the Respondent government rates in the sum HK$1,470 for the period 1st April 2001 to 30 September 2001 at the rate of HK$735 per quarter within 7 days from the date of this Order; and

(iii) that the costs of and incidental to this application be the Respondent in any event.

30. The summons application was fixed on 29th August 2001, the date scheduled to hear the Applicant's review. On 29th August 2001, the Tribunal advised the parties that the summons by both parties would only be heard after the completion of the review hearing. During the hearing of this summons application on 30th August 2001, the Respondent stated that in view of the Applicant's summons application dated 28th August 2001, the course previously taken by the Respondent had been overtaken by events. Therefore, the Respondent applied for leave to amend the aforesaid summons in the following manner:

"(I) that the Respondent shall have leave to apply for payment HK$24,720 out of court in settlement of the arrears of rent and government rates; and

(ii) that the costs of and incidental to this application be to the Respondent in any event."

31. The Respondent submitted that despite the Judgment dated 7th December 2000 and repeated reminders, the Applicant has not paid rent from 3rd April 2001 to 2nd September 2001 in the sum of HK$23,250 or rates from 1st April 2001 to 30th September 2001 in the sum of HK$1,470 (totaling HK$24,720). There was no excuse on the Applicant's part not to pay the rent or the rates. The Respondent submitted that the Application was made pursuant to Order 22 Rule 8 of High Court Ordinance (Cap. 4) and that Applicant should pay costs of and incidental to this summons application to the Respondent.

32. The Tribunal decides that the quoted section of High Court Ordinance had no application here. Also, the original application of this case is an application by the Applicant for a new tenancy under Part IV of the Ordinance. The Orders given by this Tribunal on 7th December 2000 were related to the terms of the new tenancy of the Premises as determined by the Tribunal. Therefore, the summons application taken out by the Respondent did not relate directly to the original new tenancy application. The Tribunal does not have the jurisdiction in the present proceedings to consider the Respondent's summons application. This summons application as amended must be dismissed with costs of and incidental to the Application to the Applicant, to be taxed if not agreed.

33. Orders

1. Upon review, the Tribunal orders that the original order no. 2 of the Orders made by this Tribunal on 7th December 2000 be varied by deleting the word "Lunar";

2. Upon review, apart from above, all other terms of the Orders made by this Tribunal on 7th December 2000 shall remain unchanged;

3. The Applicant do pay costs of the Respondent for the review hearings dated 23rd February 2001, 29th August 2001 and 30th August 2001, to be taxed if not agreed;

4. The Applicant's summons application dated 28th August 2001 (as amended) be dismissed with costs to the Respondent, to be taxed if not agreed;

5. The Respondent's summons application dated 21st August 2001 (as amended) be dismissed with costs to the Applicant, to be taxed if not agreed.