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

LDNT55/2000

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Application No.: LDNT No. 55 of 2000

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JUDGMENT

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Background

1. The Applicant is the tenant and the Respondent the landlord of the subject premises known as the First Floor of No. 109 Lockhart Road, Wanchai, Hong Kong ("the Premises"). The parties agreed that the building of which the Premises forms part is a building that was completed before 16th August 1945 and had never been substantially rebuilt since that date. They also agreed that the tenant has been paying an existing monthly rent of $1,400, exclusive of rates for some years.

2. The Applicant claimed that by an agreement made in about 1944 and entered into between the Respondent's predecessor-in-title, Li Po Chun, then the registered owner of the Premises on the one hand, and the Applicant's father, Leung Kwok Lung, on the other hand, the said Li Po Chun leased the Premises to the said Leung Kwok Lung for a terms of years from the date of commencement until the whole building of which the Premises forms part is demolished and rebuilt for domestic purpose. The Applicant further claimed that as the said Leung Kwok Lung died in about 1982 and the Applicant, being one of the members of the family and was at all material times residing in the Premises, the Applicant was the lawful tenant. Also, the Applicant claimed that for the Premises, Part I of the Landlord and Tenant (Consolidation) Ordinance ("the Ordinance") still applied to the lease entered between the said Leung Kwok Lung and the said Li Po Chun. By an application dated 24 February 2000 filed to the Lands Tribunal under the Ordinance, the applicant claimed:

"1. A declaration that the Lease is still subsisting for the period until the building of which the Premises forms part is demolished and rebuilt;

2. A declaration that the Form CR101 is invalid to terminate the lease;

2a Alternatively, a continued/ renewed tenancy;

3. Further or other relief; and

4. Costs."

3. The Respondent filed the grounds and particulars of opposition on 8 June 2000, stating, among other things that "the Applicant is not entitled to any declaration as claimed and further if a new tenancy of the premises is granted to the Applicant, the Applicant has to pay the prevailing market rent for the new tenancy."

4. In the hearing held on 13 June 2000, HH Judge CHOW made the following orders (translated from the original orders in Chinese):

1. Leave to the Respondent to file a notice of opposition out of time;

2. Service of the notice of opposition be dispensed with;

3. Leave to the Applicant to apply to adjourn the hearing;

4. Hearing be fixed to Court 1 on 7 July 2000 for one whole day;

5. Costs in the cause.

5. In the hearing held on 7 July 2000, HH Deputy Judge Lee made the following orders:

1. Application adjourned to 2:30p.m;

2. The suit property is now no longer under the protection of Part I, and has become a Part IV tenancy;

3. Application adjourned to 24th August 2000 at Court 3 at 10:30a.m. for Prevailing Market Rent;

4. The Applicant to pay the Respondent costs for today to be taxed if not agreed.

6. This Judgment is therefore in respect of the determination of the prevailing market rent (as defined under the Ordinance) of the Premises. Also, in the course of determination of the prevailing market rent, the Tribunal will also determine the commencement date, duration and the other terms of the new Part IV tenancy to be granted by the Tribunal. The parties have been advised of this by the Tribunal at the outset when the hearing of this application resumed on 24th August 2000. In particular, the parties have been reminded that should they be not satisfied with the orders made by the Presiding Officer, HH Deputy Judge Lee on 7th July 2000, they should apply for a review or an appeal to the Court of Appeal in the High Court. For example, there is no jurisdiction for the Tribunal to re-consider and re-determine whether the tenancy to be granted should be similar to the original Part I tenancy of the Premises. The hearing were heard on 24th August 2000 and 17th October 2000. In between, the Applicant made an interlocutory application on 3rd October 2000 which was heard on 9th October 2000.

7. The Tribunal made the following orders on 24th August 2000:

1. The Applicant to serve onto the Respondent a copy of each of marked "Exhibit A5-A12" documents on or before 31st August 2000;

2. Each party to file to the Court and to serve onto the other party a copy of each party's draft standard tenancy agreement for the suit premises on or before 14th Spetember 2000;

3. Hearing date to be adjourned to a date to be fixed by the Assistant Registrar, such date to be not earlier than 18th of September 2000; half day reserved;

4. Costs reserved.

8. As to the interlocutory application made by the Applicant and heard on 9th October 2000, the Tribunal made the following orders:

1. Application by the Applicant be dismissed;

2. Costs of this Application to the Respondent.

9. Finally, on 17th October 2000, the Tribunal at the end of the hearing made the following orders:

1. Leave granted today to the Respondent to file the draft standard tenancy agreement to the Court;

2. The Applicant to notify the Court and to the Respondent the correspondence address within 7 days from today;

3. Each party to file to the Court and to serve onto the other party written final submission on or before 21st November 2000;

4. Judgment to be handed down on 7th December 2000 (at 9:30a.m.):

5. Costs reserved.

10. Since then, the Applicant has filed the following written submissions to the Tribunal:

1. Final submission on 21st November 2000;

2. Supplement final submission on 23rd November 2000;

3. Second Supplement final submission on 30th November 2000 (including a response to the Respondent's final submission;

11. On the other hand, the Respondent filed a written submission on 20th November 2000.

12. The Applicant appeared in person for herself for the hearings from 24th August 2000 onwards. She has called Mr. Lee Chun Fat, a Registered Professional Surveyor (B.S.), an expert witness to give evidence on the existing condition of the Premises. The Respondent was represented by Ms. Vanessa SIEW of Messrs. Yung, Yu, Yuen & Co. The Respondent has called for the evidence of Mr. Tam Shiu Hong, a Registered Professional Surveyor (GP), an expert witness in valuation and Ms. Leung Siu Kwan, a staff of the Respondent responsible for the tenancy and accounting matters.

The Premises

13. The Premises is the first floor of a four storey tenement building located at No. 109 Lockhart Road, Wanchai, Hong Kong. It is a pre-war building, sharing a common staircase with the adjacent building No. 111 Lockhart Road. The ground floor of the building at Nos. 109 and 111 Lockhart Road is occupied for non-domestic purposes whilst on the upper floors, from first to third floors, there are two similar tenement units on each floor. There are some roof structures on the roof-top.

Applicant's case

14. It was the applicant's case that the long standing dis-repairs in the Premises had caused significant inconvenience, disruption and disturbance to the Applicant. To summarise, the applicant claimed that the respondent had not properly repaired and maintained the exterior and structure of the premises, despite of the applicant's repeated requests for repairs and maintenance, as well as the issuance of several Repair Orders by the Building Department over the years. As a result of this, the interior of the premises was in a very dilapidated state of repairs.

15. The Applicant in the opening claimed that since she could only utilize a space barely sufficient for an office desk and chair, which extended to only about one eighth of the floor area in the Premises, she should be paying a rental equivalent to about one eighth of the rent based upon Rateable Value of the Premises (being $62,400), i.e. a sum of $650 per month. She said that she tried to seek the advice of a valuation surveyor but was advised by the latter that no valuation estimate could be provided to her.

16. Mr. Lee Chun Fat gave evidence and produced a surveyor's report on the Premises (Exhibit A-2). According to the instructions from the Applicant, Mr. Lee and his colleague inspected the premises with a view "to investigate the general conditions of the premises and to investigate defects if found and also the cause and source of the defects in the premises." The report detailed Mr. Lee's findings, supported by a large number of photos taken inside and outside the Premises. At the end, Mr. Lee had the following conclusions:

"5.1 Based on our aforesaid findings, we are of the opinion that:-

The spalled concrete and defective plasters were commonly observed inside the subject premises which was caused by water penetration through front and side external facades. The rendering to front and side external facades were found deteriorated and cracks were found at the interfaces between the subject premises and the adjoining building which would lead to water leakage to the subject premises interior.

5.1.1 The electrical supply trunkings and conduits inside the subject premises were found rusted and damaged due to rainwater seepage from external wall surfaces. The detached fluorescent tubes was mostly caused by the rusted and corroded fixing screws enacted by rainwater deterioration.

5.1.2 The electrical supply cables were found exposed and not concealed inside metal trunkings in the common areas which would inevitably hazardous to residents. As commensurate with the building age, a thorough WR1/WR2 testing should be carried out.

5.2 We would like to conclude what our findings that the dilapidated conditions of the subject premises and electrical cables would undoubtedly endanger our client's life and properties and affected the full enjoyment of the subject premises as tenant of the subject premises."

17. The Applicant gave evidence herself, detailing the history of her own renovation works in the Premises as well as the lack of prompt and adequate response by the Respondent upon receiving "Repair Orders" from the Building Department in the past. She produced many photographs showing (i) the condition of the Premises in 1994 after the Applicant repaired and decorated the interior of the Premises as well as the interior condition of the Premises after the Applicant's decoration were ruined by the water leakage (Exhibits A-7 and A-8), (ii) the interior condition before and after the issuance of the "Repair Order" issued by the Building Department and the works by the Respondent's contractors (Exhibits A-9), (iii) the condition of the electrical wiring in the stairways (Exhibit A-10), (iv) the mini kitchen built by the Applicant at the front part of the Premises due to the poor condition of the original kitchen (Exhibit A-11) and (v) the existing concrete debris and electrical cable metal trunkings (Exhibit A-12).

18. In the final submission, the applicant asked the Tribunal to grant a tenancy on the following basic terms:

1. Tenancy of the Premises for "the term of the residue of years until the whole building of which the premises forms part is demolised; alternatively, 3 years renewable every three years until the whole building of which the premises forms part is demolished"; or further alternatively, "file the CR109 form to the Rating & Valuation Department with indications on the Original Lease being entered by the Applicant's late father sometime prior to March, 1946 and the period of 3 years renewable every 3 years until the whole building of which the premises forms part is demolished."

2. Tenancy commencing from 7th July 2000, the date that the Lands Tribunal granted a continued/renewal of the Original Tenancy.

3. Rent in the sum of $1,400 (exclusive of rates) per Solar Calendar month payable in advance on the 1st day of each and every Solar Calendar month. Tenant paying rates of $780 (payable per quarter currently).

19. In her submission, the Applicant submitted that the Comparable letting of 2nd floor of No. 109 Lockhart Road could not be used as a rental reference as that letting was a new letting commencing only a few months ago. On the other hand, the Applicant's original tenancy dated back to the time before March 1946. The Applicant's family "had already spent a lot of money in maintaining, repairing the suit premises not to mention the Applicant and her family's contribution in repairing, decorating had been frustrated due to breach of Respondent's implied duty to repair over the past years."

20. Likewise, the Applicant submitted that the other letting at the 3rd floor of No. 109 Lockhart Road could not be as a reference for three reasons: (I ) "the external wall to protect the water leakage had been repaired by the Respondent"; (ii) "squatter huts on the roof top protect the water leakage of the 3rd floor" and (iii) the 3rd floor enjoys the whole premises whereas the 1st floor's tenant is suffering by the illegal structure built on top of Ground Floor"

Respondent's case

21. Ms. Leung Siu Kwan, a staff of the Respondent gave evidence regarding the works undertaken by the Respondent in the past when the Respondent was served with Repair Orders by the Building Department.

22. Mr. Tam Shiu Hong produced a comprehensive valuation report of the Premises (Exhibit R-1) which contained 11 sections including Apendices A to I (with a large number of photographs, sketches and valuation schedules). The report included a detailed description of the internal condition of the Premises as well as the three comparable lettings in the building of Nos. 109 and 111 Lockhart Road.

23. Mr. Tam relied on the market lettings of three other tenement floors, each of same saleable area, in the subject building for the purpose of determining the prevailing market rent of the Premises under Part IV of the Ordinance. His analysis of the comparables and valuation were summed up in Appendix G of his report. At the end, his adjusted rents of the three comparables (2/F of No. 109, 3/F of No. 109 and 2/F of No. 111) were respectively $5,289, $4,960 and $4,505 per Lunar month. He finally valued the Premises at a rent of $5,000 per Lunar month, equivalent to about $61.12 per sq.m. of saleable area of the Premises.

24. Mr. Tam also attempted to check his valuation with the 2000/2001 Rateable Value (for the quarter commencing from 1st April 2000) for the Premises and the comparables (Exhibit R-1, Appendix H). He came to the conclusion that his assessed prevailing market rent of $5,000 was fair and reasonable.

Date of commencement and duration of new tenancy

25. Section 119I of the Ordinance provides-

" 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 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:..." (underline added)

26. The Applicant submitted that the tenancy should commence from 7th July 2000, the date of the orders made by HH Deputy Judge Lee. The Applicant also asked for the granting of a tenancy until the demolition of the building or alternatively, for a 3-year renewable for 3-year term until the demolition of the building. These terms are very unusual and are considered by the Tribunal to be not reasonable in all the circumstances. In particular, the alternative term of 3-year renewable for 3-year conflicts with the provisions of the Ordinance set out above. On the other hand, the Respondent submitted that the tenancy should commence from the 28th day of March Kang Sun Lunar year.

27. In the Form CR101 (Exhibit R-2), the Respondent terminated the tenancy on 28th day of March Kang Sun Lunar year. Therefore, having regard to the provisions of the Ordinance and all the circumstances of this case, it would be reasonable for the Tribunal to determine that the commencement should be the 29th day of March Kang Sun Lunar year (i.e. 3rd May 2000) being the day following the date of termination of the current tenancy under the Form CR 101 and, the duration should be for the usual two years term.

Tribunal's determination of the Prevailing Market Rent

28. Under Section 115 of Part IV of the Ordinance, "prevailing marekt 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)

29. The Applicant has not given any evidence to support her final estimate of the prevailing market rent for the Premises, a sum of $1,400 per month, on the basis of exclusive of rates. This differs from the applicant's estimate of the rent of $650 per month in her opening. This sum of $1,400 is the same as the existing rent of the Premises prior to the present application by the Applicant. However, there is no evidence adduced that this existing rent bears any relationship with the then prevailing market rent at certain point in the past, or to the present level of prevailing market rent for the Premises as defined in the Ordinance. Throughout the hearings, the Applicant stressed on the poor existing condition of the Premises and emphasised that that poor condition was due to the lack of appropriate action of repairs by the Respondent. The Applicant also submitted that the two comparable lettings in the same building could not be compared to the Premises.

30. The Premises is in a poor condition, yet it is very questionable if the Premises could only fetch a rent in the sum of only $1,400 in the market, bearing in mind that the Premises is conveniently located, in the busy area of Wanchai and has a saleable area of 81.8 sq.m. (about 880 sq.ft.). Some prospective tenants, who could not afford to pay a fair amount of rent elsewhere in a better quality flat, might be prepared to rent the Premises, despite of its poor condition of repairs. In the circumstances, the Tribunal should look for and rely on the market evidence in assessing the prevailing market rent of the Premises.

31. The Respondent has called for the evidence of Mr. Tam Shiu Hong, an experienced valuation surveyor. I could not find any reason to disagree with Mr. Tam's findings. In particular, Mr. Tam has compared the Premises with three recent lettings in the same building. This is obviously the correct approach in the direct comparison of valuation. What provides a better rental comparable for a pre-war flat in Wanchai? The answer is always the same: other pre-war flats in the vicinity, and if possible, other pre-war flats in the same building or in the similar pre-war buildings nearby. Therefore, in the present case, I am unable to understand the rationale of the Applicant in submitting that the other two lettings above the Premises could not be compared with the Premises. The reasons cited by the Applicant in respect of the two comparables are not sufficient for the Tribunal to discard these two comparables.

32. It is very unusual for a valuation surveyor to have the benefits of inspecting the comparable properties, in undertaking a valuation of a piece of real property in Hong Kong. At most, a valuation surveyor appearing before the Tribunal may draw his personal experience of inspecting other comparable properties at other instances. In the present case, the witness Mr. Tam had that rare opportunity as a result of which the Tribunal agrees that it should be to his advantage in executing his valuation work.

33. The Applicant raised the important question that these two comparable flats may well be maintained in a superior condition than the Premises. If this is the case, the two comparables may not serve as good comparables; or alternatively, substantial adjustments may be warranted in order to arrive at the prevailing market rent for the Premises. However, from the evidence adduced in the hearing, I cannot agree with the Applicant's argument. On the contrary, these two comparable flats are found, on a matter of findings of facts by this Tribunal, to be in a similar condition as the Premises.

34. Mr. Tam had considered a number of factors which might have a bearing on the prevailing market rent of the Premises. These were floor level, size, layout, view, aspect, timing of letting, repairs condition and the nuisance due to the rear canopy. Mr. Tam had attributed various percentage adjustments for the factors of floor level, layout, repairs condition and the nuisance due to the rear canopy. Bearing in mind that Mr. Tam is a very experience valuation surveyor and had the benefit of inspecting the Premise and all the comparables, I decide to accept all his adjustment factors and percentages, with the exception of the factor on layout differences. Based on what were described in Mr. Tam's report, I decide that no allowance should be made for this factor. Although the comparables were all partitioned into cubicles, the layouts should not adversely affect the value of the comparable flats.

35. As a result of this difference in adjustment, Mr. Tam's after adjusted monthly rents were re-calculated below:

36. Also, in the final analysis, the Tribunal agrees with Mr. Tam that greater weights should be given to the first two comparables as they all commenced in May 2000, same as the premises whilst the third comparable was let in 1997. are in view of the limited number of comparables, Therefore, having regard to the average of the two after adjusted monthly rents for Comparable Nos. 1 and 2, the Tribunal determines that the prevailing market rent of the Premises should be $4,650 per Lunar month.

37. In undertaking the valuation, Mr. Tam had assumed the following basis for other terms of the tenancy, same as before:

(1) the landlord (Respondent) being responsible for structural repairs;

(2) the tenant (Applicant) being responsible for decorative maintenance;

(3) the landlord paying Government rent and property tax;

(4) the tenant paying rates and utility charges.

38. This Tribunal was advised by the Respondent that for the comparable lettings, although the parties have not signed any written tenancy agreement, they were let on a similar basis.

Other terms of the tenancy

39. The Applicant has submitted a draft tenancy agreement which was specifically tailored made by the Applicant. The recitals in the beginning of the agreement was certainly wrong because it did not accord with the Order made by HH Deputy Judge Lee. As for the basic terms of description of premises, duration, rent and rates, the Applicant has also chosen to draft her own version, which is quite different from most of the standard form of tenancy agreement commonly adopted in the market.

40. On the other hand, the Respondent has also submitted a draft tenancy agreement. In the Respondent's final submission, the Respondent has also included three examples from the text, Hong Kong Tenancy Law (by Mr. Malcolm Merry): one used by the Hong Kong Housing Authority, another generally used by solicitors' firm and the third being available from stationers.

41. Section 119J of the Ordinance provides-

"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 by 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."

42. Having regard to the submissions by the parties, the terms of the current tenancy and to all relevant circumstances and in the absence of agreement between the parties, the Tribunal determines that it would be reasonable to adopt the following terms as to be the other terms of the new tenancy.

(1) Structural repairs- 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 repair or remedy the same.

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

(3) To view/inspect/repair the premises- 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) Tenant's peaceful enjoyment of Premises- 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) To suspend rent should Premises not fit for use and occupation- 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.

43. As to the other clauses suggested by the Applicant to be inserted as other terms of the new tenancy, I agree with the Respondent that they are very unusual and seldom found in the common forms of tenancy agreements used in Hong Kong. They either should not be included in a tenancy agreement or they impose unreasonable liabilities to the Respondent. They are not to be included in the new tenancy agreement for the Premises.

Costs

44. In the parties' submission, they have also addressed the Tribunal on the issue of costs. The Applicant however has made submissions regarding all the hearings connected with this new tenancy application, from 13th June 2000 onwards. As explained in the beginning of this judgment, the Tribunal will not have the jurisdiction to go back and decide on the issue of costs in the hearings held on 13th June 2000 and 7th July 2000 before HH Judge Chow and HH Deputy Judge Lee respectively. The order made on these dates already included the appropriate costs orders. Similarly, for the applicant's interlocutory application made on 3rd October 2000 and heard on 9th October 2000, the Tribunal already made a cost order on 9th October 2000 when the matter was decided. Therefore, I will only decide on the issue of costs for the hearings held on 24th August 2000 and 17th October 2000.

45. For the hearing held on 24th August 2000, the Applicant submitted that the costs should be borne by the Respondent because "the respondent's solicitor did not prepare, arrange any surveyor report nor expert witness" and "the respondent's solicitor informed the Court that she had another witness" towards the end of the hearing as a result of which the hearing had to be adjourned to 17th October 2000.

46. For the hearing held on 17th October 2000, the Applicant submitted that the Respondent should bear the costs because the Respondent's solicitor had wasted the court time. The Applicant alleged that the witness from the Respondent had unnecessarily repeated the same matters that had been presented to the Court many times during the previous hearing. Similarly, the Applicant claimed that "the Respondent's valuation surveyor gave evidence which the Applicant and the Applicant's Building Surveyor had already raised, answered and recorded in court during the hearing on 24/8/2000 many many times. The Respondent's Valuation Surveyor repeated the same issues over and over again."

47. The Respondent agreed that in a normal Part IV application, there should be no order as to costs. However, the Respondent submitted that in this case, the Respondent would ask for a costs order against A for the following reasons:-

"(1) Applicant has conducted the proceedings in an oppressive and unreasonable manner. She has on numerous occasions (on less than 20 times) addressed to this Court matters and her view regarding the hearings held on 13 June and 7 July 2000. Despite repeated attempts from the Court to stop her, Applicant has chosen to ignore and continue her own way of conducting proceedings.

(2) Applicant has advised this Court time and time again Respondent's alleged failure to comply with building orders..... The present proceedings have no relevance whatsoever to her allegations....

(3) Applicant's draft tenancy agreement has included terms previously rejected by this Court. Her inclusion as such displays her utter ignorance and frivolous attitude in the subject proceedings. ....Applicant is testing the Court's and Respondent's limites. Both the Court and Respondent have been very tolerant.

(4) ....."

48. In view of the above, the Respondent is claiming costs against the Applicant for her vexatious way of conducting the action.

49. The Tribunal disagrees with all the allegations by the Applicant that the Respondent's solicitor and witnesses had been wasting the Court's time by repeating the same issues that were the subject matter of other witnesses or other prior hearings (some of which were not heard by this Member of the Tribunal). It was mainly because the Applicant had stressed so much the poor state of repairs of the Premises that the Respondent's surveyor witness, like the Applicant and the Applicant's building surveyor witness, had spent considerable time in describing and illustrating with photographs and sketches the existing condition of the Premises. This is nothing wrong. This is most appropriate for any witness who give evidence to assist the Court, particularly when there are some seriously contested disputes as to the facts and opinion in connection with the subject matter of the application, which, in this case, is the determination of the prevailing market rent for the Premises.

50. On 24th August 2000, the hearing ended at 5:10p.m. At that time, the Respondent had finished the cross examination of the Applicant who gave evidence in person. The Respondent had not even started the process of giving evidence by the Respondent's witnesses. The Respondent solicitor applied to the Tribunal that Respondent would instruct a valuation surveyor to prepare a report and to give evidence in the adjourned hearing. Also, the parties have not yet given final submission regarding the rental assessment and their views on other terms of the new tenancy. The matter had to be adjourned anyway. It was certainly not the Respondent's fault that led to the adjournment. Similarly, the Tribunal finds that the Respondent's conduct in the hearing held on 17th October 2000 is very normal and reasonable.

51. On the contrary, the Tribunal concurs with the Respondent that the Applicant had conducted the proceedings on 24th August 2000 and 17th October 2000 in an oppressive, unreasonable, and vexatious manner. The Tribunal agrees with the reasons set out by the Respondent in the latter's final submission (which were extracted above) and that a cost order should be made against the Applicant.

52. This is because under Section 119R of the Ordinance, it was provided that "In any proceedings under this Part, The Tribunal shall not make any order as to costs against a party unless that party has conducted has case in a frivolous or vexatious manner."

53. However, having carefully assessed the time that were wasted in the hearings as a result of the Applicant's vexatious conduct in the hearings, the Tribunal determines that the Applicant should be responsible for one third of the Respondent's costs for these two hearings, to be taxed if not agreed.

Orders

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.