Abdoolally Ebrahim & Co. (H. K.) Ltd. v. Formalex Ltd.

LDNT 43/2000

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

New Tenancy Application No. LDNT 43 of 2000

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D E C I S I O N

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1. The Applicant is the statutory tenant of the premises known as Flat E, 41/F., Block 3 and Car Parking Space No. 233 on 2/F., Estoril Court, 55 Garden Road, Hong Kong which were under a tenancy for 2 years, running from 16.4.1998 to 15.4.2000. The Respondent is the landlord of the premises.

2. By way of summons dated 19.2.2001, the Applicant applied to the Lands Tribunal ("the Tribunal") for leave to fix a date for the determination of the terms of the new tenancy ("the Tribunal's case").

Background

3. On 16.2.2000, the Applicant applied to the Tribunal for an order for the grant of a new tenancy at such terms to be determined by the Tribunal. The Respondent opposed the application on the ground, inter alias, that the Applicant had persistently failed to pay the rents punctually on due date(s) since July 1999, causing unnecessary inconvenience to the Landlord.

4. On 6.7.2000, a preliminary hearing was held by the Tribunal to determine whether the Respondent succeeded in establishing any ground to oppose the application. On 4.8.2000, the Tribunal held that the Respondent had failed to do so and it granted the parties the liberty to fix a date for the determination of the terms of the new tenancy. On 11.8.2000, the Applicant's solicitors fixed a hearing on 3.11.2000 for the said determination. On 18.8.2000, the Respondent's solicitors filed a Notice of Appeal against the judgment of the Tribunal delivered on 4.8.2000. On 5.10.2000, the Respondent took out a summons by which it applied for an order that the hearing date fixed on 3.11.2000 be vacated. I granted the application on 20.10.2000.

5. On 23.1.2001, the Court of Appeal dismissed the Respondent's appeal.

The District Court case

6. On 24.10.2000, the Respondent instituted in the District Court a claim against the Applicant for a sum of $158,000-, the relevant parts of which are set out hereinbelow : -

"4. By a Tenancy Agreement dated 21 April 1998, the Plaintiff let the said property to the Defendant for the term of two years from 16 April 1998 (hereinafter called "the said Tenancy Agreement")

5. Clause 2(e) of the said Tenancy Agreement expressly provided, inter alia, that the Defendant agreed to keep the air-conditioning plant and ducting in good clean tenantable substantial and proper repair and condition and will so maintain the same at the expense of the Defendant.

6. Clause 2(h) of the said Tenancy Agreement expressly provided, inter alia, that the Defendant agreed to well and sufficiently repair and amend all defects and wants of repair for which the Defendant is liable within 30 days after notice in writing thereof given to the Defendant and in the event of the Defendant's failure to comply with any such notice in all respects the Defendant will permit the Plaintiff and its agent with or without workmen to enter upon the said property to remedy all or part of such defects or wants of repair at the cost and expense of the Defendant.

7. ................................................

8. ................................................

9. In breach of the said Clause 2(e), the Defendant failed to properly maintain at its expense the air-conditioning plant and ducting installed in the said property, and yet complained from time to time about the alleged malfunction of the said air-conditioning plant.

10. The Plaintiff served a notice dated 15 June 2000 on the Defendant in exercise of its right under the said Clause 2(h), requiring the Defendant to repair the air-conditioning plant within 30 days from 15 June 2000.

11. The Defendant failed to comply with the said notice of repair. After repeated demands from the Plaintiff, consent of allowing access was finally given by the Defendant on 4 September 2000. On 5 September 2000, the Plaintiff with technicians and workmen entered upon the said property and carried out the repair works to the said air-conditioning plant. The repair works were completed properly on 15 September 2000.

12. The total repairing charges totalled HK$158,000.00 of which the Defendant was given prior notice.

13. The Plaintiff paid the total sum of HK$158,000.00 on behalf of the Defendant to Associated HVAC Contracting Company Limited, ........................

14. ................................................

15. ................................................

16. The Defendant has neglected or failed to reimburse or pay the same or any part thereof."

(Underlines added)

7. On 17.11.2000, the Applicant filed in a defence and a counter-claim to the claim. No date has been fixed for the trial of that claim.

8. On 8.2.2001, the Applicant's solicitors wrote to the Respondent's solicitors, asking the latter to confirm that the Applicant could proceed to fix a date for the adjourned hearing at the Tribunal. On 13.2.2001, the Respondent's solicitors wrote back, stating : -

"Referring to your request to fix a hearing date for fixing rent in the Tribunal, we understand from the Registry that 21st and 22nd May 2001 are available. This is convenient to our Counsel and Surveyor.

Please confirm if such dates are also convenient to you as soon as possible."

9. On 14.2.2001, the Applicant's solicitors wrote to the Registrar of the Tribunal, requesting for a date to be fixed for the determination of the Tribunal's case.

10. On 16.2.2001, the Respondent's solicitors wrote to the Applicant's solicitors : -

" We refer to your letter of 14 February 2001 addressed to The Registrar, Lands Tribunal concerning attendance at the Registry at the Land Registry on 19 February 2001 at 10 a.m. to fix dates.

Our client, Formalex Ltd. has been advised its claim in District Court Action No. 14886 of 2000 against your client, Abdoolally Ebrahim & Co. (H.K.) Ltd. for recovery of HK$158,000.00 is fundamental to the determination of the responsibility of maintenance of the Air-conditioning System at the suit premises.

As District Court's determination may well prove to be most relevant to the determination of prevailing market rent in the Lands Tribunal, the hearing dates for the determination of the terms of the new tenancy in the Tribunal should not precede the District Court judgment.

As the parties are not procedurally ready to fix hearing date in the District Court, it is inappropriate to fix hearing date in the Tribunal on 19 February 2001 notwithstanding the liberty to fix date as contained in the Order of 4 August 2000.

Whilst our client has interest in obtaining an early conclusion of both outstanding hearings, we nevertheless request you to postpone the 19 February 2001 appointment to fix hearing date in the Lands Tribunal pending a likely judgment date from the District Court."

(Underlines added)

11. On 19.2.2001, the Applicant's solicitors took out the present summons.

12. The Respondent's Counsel opposed the application on the ground that the determination of the claim in the District Court would be relevant to the determination of the prevailing market rent of the new tenancy in the Tribunal. Therefore the District Court claim should be heard and judgment obtained before a hearing date is fixed for the determination of the Tribunal's case.

13. The issue I have to determine is whether the decision of the District Court claim would be relevant to the Tribunal's case, and if so, whether the hearing of the Tribunal's case should be fixed after the conclusion of the District Court case. This must necessarily involve a consideration of the functions and duties of the Tribunal. Having determined the preliminary issue on 4.8.2000 that the Respondent had failed to establish any ground to oppose the application, the Tribunal will inevitably make an order for the grant of a new tenancy. What will then follow is the determination of the duration of the new tenancy, other terms of the new tenancy and the amount of rent payable under the new tenancy, as stipulated under sections 119I, 119J and 119K of the Landlord and Tenant (Consolidation) Ordinance. These 3 sections are set out below : -

" 119I. Duration of new tenancy

Where on an application under this Part the Tribunal makes an order for the grant of a new tenancy, the new tenancy shall be such tenancy as may be agreed between the landlord and the tenant, or, in default of such an agreement, shall be such a tenancy as may be determined by the Tribunal to be reasonable in all the circumstances, being a tenancy for a term not exceeding 3 years, and shall begin on the coming to an end of the current tenancy or such other date as may be agreed between the landlord and the tenant or, in default of such agreement, as may be fixed by the Tribunal:

119J. Other terms of new tenancy

The terms of a tenancy granted by order of the Tribunal under this Part (other than terms as to the duration thereof and as to the rent payable thereunder) shall be such as may be agreed between the landlord and the tenant or as, in default of such agreement, may be determined by the Tribunal; and in determining those terms the Tribunal shall have regard to the terms of the current tenancy and to all relevant circumstances.

119K. Rent under new tenancy

(1) 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."

14. In accordance with these three sections, the Tribunal has to ascertain if the parties will reach any agreement on the above-said matters. It is only in default of agreement that the Tribunal will proceed to do the necessary determination on these matters.

15. In the District Court case, the Respondent claimed against the Applicant for an amount of $158,000- for breach of Clause 2(e). I simply cannot see how this claim could have any bearing on the determination of the Tribunal's case. This claim covers the period between 15.6.2000 to 15.9.2000. Under Section 119I, in default of agreement between the parties, the Tribunal has to determine the commencement date of the new tenancy, which may be a date after 15.9.2000. Until this is known, it is premature to say that the outcome of the District Court case is relevant to the Tribunal's case. Under section 119J, when determining the terms of the new tenancy, in default of agreement between the parties, the Tribunal shall have regard to the terms of the current tenancy and to all circumstances. It is not known whether Clauses 2(e) and 2(h) of the current tenancy will be incorporated into the new tenancy. Unless and until this is known, it is premature to say that the District Court case will be relevant to the Tribunal's case.

16. The outcome of the District Court claim is not binding on the Tribunal. The Tribunal has the duty to determine the terms of the new tenancy in accordance with the evidence adduced before it.

17. The Tribunal's proceedings are part-heard proceedings which should be disposed of as soon as possible. The duration of the new tenancy cannot exceed 3 years. The usual duration granted by the Tribunal is 2 years. By the time this decision is handed down, nearly 1 year has elapsed since 15.4.2000, the expiry date of the current tenancy. It is not yet known when the parties will fix a trial date for the District Court case. It is highly undesirable to wait for the outcome of that claim when the Tribunal is fully competent to have all the matters in question determined by a Presiding officer and a Member who are specialized in adjudicating cases of this nature. There is absolutely no reason for the Tribunal to wait for the outcome of the District Court case before fixing a new hearing date. I therefore grant the Applicant's application and impose the following orders : -

1.) This case be heard on 21st and 22nd May, 2001 at 10:00 a.m., Court No. 2, before a Presiding Officer and a Member of the Lands Tribunal.

2.) Parties are at liberty to file and serve further expert report/witness statements (if any) on or before 15th May, 2001.

3.) The costs of and occasioned by this application be to the Applicant.