Bradstone Ltd. v. Carry Express Investment Ltd.

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HEADNOTE

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Property law - Landlord and Tenant - Domestic Premises - Landlord and Tenant (Consolidation) Ordinance, Cap. 7 Part IV, s. 119(5) - Notice of Termination of Tenancy - Form CR 101 - Failure to delete alternative of no opposition in specified form - Stated ground of opposition ambiguous - Costs.

By a notice of termination (Form CR 101) the landlord purported to terminate a residential tenancy. The notice, a prescribed form, contained two alternative paragraphs one of which is to be deleted to indicate for or against application to the Lands Tribunal for the grant of a new tenancy with a space provided for inserting the grounds of opposition. Neither paragraph was struck out but the space for grounds contained had inserted "the Tenant would not be granted a new lease owing to default payment of rent." The tenant contended that the notice does not comply with ss. 119(5) of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7 in that it did not indicate both the intention to oppose and the ground of opposition and that the inserted ground of opposition being so ambiguous as not capable of being treated as indication of intention to oppose.

Held: (1) Following English authorities, in construing the notice of termination, a liberal approach should be adopted. (2) By inserting a ground of opposition in the alternative paragraph for opposing application for new tenancy, the landlord has adopted the printed words in that paragraph indicating intention to oppose and satisfied ss. 119(5) of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7. (3) The power of the Tribunal to award costs under s. 12 of the Lands Tribunal Ordinance, Cap. 17 is fettered by the appropriate statute granting jurisdiction over the matter.

L.T. Case No. 764 of 1995

IN THE LANDS TRIBUNAL OF HONG KONG

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REASONS FOR DECISION

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1. The applicant and respondent are, respectively, owner and tenant of the residential property known as Flat 409 together with Carparking space No. 411 situated at Rockymount, 39 Conduit Road, Hong Kong ("the subject property"). By an inter partes interlocutory application the respondent seeks a preliminary ruling on the validity of the notice of termination ("Form CR 101").

2. According to the affirmation of Casinna Shiu Ka Sin filed on behalf of the respondent, on 24th September 1994 the respondent through its solicitors served the Form CR 101 dated 24th September 1994 on the applicant. On 19th November 1994, the applicant served a Form CR 102 on the respondent. On 9th March 1995 the applicant made an application to the Tribunal for the grant of a new tenancy. On 22nd March 1995 the respondent filed a Notice of Opposition with the Tribunal stating that subject to the determination of the market rent it would not oppose the grant of a new tenancy. None of these facts relating to the course of events is disputed by the applicant. What is in issue is the validity of the Form CR 101 which triggered the whole process.

3. According to Mr. Chan for the applicant, the Form CR 101 does not meet the requirements of s. 119 of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7 in that the respondent has failed to state categorically in the form that it would oppose the grant of a new tenancy. To understand the arguments of Mr. Chan, one has to study more closely s. 119 of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7 ("the Ordinance") and the actual Form CR 101 served by the respondent.

4. The relevant sub-sections of s. 119 of the Ordinance are in these terms,

(1) ....... the landlord may terminate a tenancy by a notice given to the tenant in the specified form stating the date of termination. (See Form CR 101)

(5) A notice under this section shall not have effect, unless it states whether the landlord would oppose an application to the Tribunal under this Part for the grant of a new tenancy and, if so, also states on which of the grounds mentioned in section 119E he would do so.

5. The relevant part of the Form CR 101 actually served in this case is like this:

"You are informed that:

*(1) I would not oppose an application to the Lands Tribunal for the grant of a new tenancy.

*(2) I would oppose an application to the Lands Tribunal for the grant of a new tenancy on the following grounds:

the Tenant would not be granted a new lease owing to default payment of rent.

*Delete the words which do not apply."

6. It is important to note that the Form CR 101 used is a standard printed form with blanks for particulars to be filled in. Sub-paragraphs (1) and (2) are supposed to be in the alternative so that one should be deleted as appropriate and there are 4 blank lines immediately under sub-paragraph (2) for grounds to be put there. What happened in this case was that the respondent did not delete sub-paragraph (1) but inserted the underlined words under sub-paragraph (2) as quoted verbatim above.

7. Mr. Chan says that by failing to delete sub-paragraph (1) the respondent had not stated as required by ss. 119(5) of the Ordinance whether it would oppose an application for the grant of a new tenancy. Furthermore, the ground inserted by the respondent is in itself ambiguous because it can be interpreted as "the tenant would not be granted a new tenancy by the landlord for default in payment of rent" leaving open the question of whether the landlord would oppose the grant of a new tenancy by the Tribunal (emphasis added). Mr. Chan contends that the "and" in ss. 119(5) of the Ordinance requires a landlord to indicate both opposition and the ground for opposition; in this case the inserted words, even if treated as the ground for opposition, do not constitute opposition.

8. Mr. Lin for the respondent has been unable to find any direct Hong Kong authority on the point. He referred to two English authorities. In Barclays Bank Limited v. Ascott [1961] 1 W.L.R. 717, Barry J. held that a notice of termination under ss. 25(6) of the Landlord and Tenant Act 1954 could be construed liberally, and provided that it gave the substance of the information required the mere omission of certain details or the failure to embody in the notice the full provisions of the section would not invalidate the notice. Mr. Lin urged the Tribunal to adopt a similar liberal approach. Mr. Lin says the Tribunal has in the past followed English authorities on issues concerning Form CR 101, see for example the decision of Cruden J. in TSUI Wing Chung v. Anna Ho, L.T. 405 of 1993.

9. Then in Lewis v. M.T.C. (Car) Ltd., [1974] 1 W.L.R. 1499, also a case on ss. 25(6) of the Landlord and Tenant Act 1954, the landlord there did exactly as the respondent here has done, i.e. left the alternative sub-paragraphs undeleted and inserted grounds under sub-paragraph (2). Templeman J., as he then was, held that the notice was valid because "no one reading that notice can be in the slightest doubt: the landlord accidentally failed to strike our the first [sub-paragraph (1)] and intended to oppose an application to the court for the reasons set forth in the notice." (p. 1501). Mr. Lin says the present case should be held likewise.

10. It is beyond dispute that ss. 25(6) of the Landlord and Tenant Act 1954 is a mirror image of ss. 119(5) of the Ordinance and there is no need to recite it here. However, Mr. Chan submitted that Lewis v. M.T.C. (Car) Ltd. should be distinguished from the instant one for the English case concerned a business tenancy. The applicant in this case under a residential tenancy should be given more protection as intended by the Ordinance.

11. It is the experience of the Tribunal that landlords often enough fail to complete the Form CR 101 fully and properly. It is now trite law that an invalid Form CR 101 would not have the effect of terminating the tenancy and, consequently, the tenant becomes entitled to occupy the property at the old rent until such time as a fresh valid form can take effect months later. This is why in this case even though the respondent has changed its position and agreed to the grant of a new tenancy the applicant still challenges the validity of the Form CR 101. Cruden J. has in TSUI Wing Chung v. Anna Ho, L.T. 405 of 1993 and Right Glory Investment Limited v. Trucidator Services (HK) Limited, M.R. 11 of 1994 alluded to quite a number of problems associated with the proforma CR 101. It cannot be over-emphasized that those professionals acting for landlords must take great care in ensuring that a valid Form CR 101 is served.

12. I see no reason to depart from the general approach elucidated in Barclays Bank Limited v. Ascott. Indeed Cruden J. in Right Glory Investment Limited v. Trucidator Services (HK) Limited has adopted the same attitude by allowing a prima facie defective Form CR 101 to be cured by a covering letter served with the form. The present case falls squarely within Lewis v. M.T.C. (Car) Ltd. but for the ambiguity in the words inserted as ground for opposition. But I do not think the ambiguity is fatal. Those inserted words should not be taken in isolation. They are part and parcel of sub-paragraph (2) in the form which together reads,

*(2) I would oppose an application to the Lands Tribunal for the grant of a new tenancy on the following grounds:

the Tenant would not be granted a new lease owing to default payment of rent.

13. In my view, the underlined words as the inserted part, although far from being a model of legal drafting, states the ground of opposition in sufficiently clear terms. These underlined words beginning with the in small letters must be a continuation of the printed part of sub-paragraph (2), the statement of opposition as printed must be treated as having been adopted by the respondent. The two parts taken together, therefore, satisfy ss. 119(5) of the Ordinance.

14. It is true that the Ordinance in general gives the tenant of domestic premises more protection than that of business premises. Nevertheless, this does not give the Tribunal licence to draw artificial distinction not expressly provided for by legislature.

15. Accordingly, I ruled that the Form CR 101 in this case is valid in this respect.

16. The respondent initially asked for costs to follow the event of this interlocutory application. The applicant asked for costs in its favour on the ground that this interlocutory application was occasioned by the unsatisfactory Form CR 101. In the end, Mr. Lin drew my attention to s. 119R of the Ordinance which provides that the Tribunal may not make any order as to costs against a party unless that party has conducted his case in a frivolous or vexatious manner. This injunction is re-inforced by s. 17 of the Lands Tribunal Ordinance, Cap. 17 which says costs may be awarded by the Tribunal "subject to the provisions of the Ordinance giving the Tribunal jurisdiction in [the] matter". I cannot say the respondent has conducted its case in a frivolous or vexatious manner. Hence, I made no order as to costs.

17. Dated this 11th day of May, 1995.