林玉芬及另一人 v. 姜滿盛

LDPD 734/2011

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Application No. LDPD 734 of 2011

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BETWEEN

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J U D G M E N T

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Background

1.  This is an application by the applicants for possession and payment of mesne profits of the premises at 1^st Floor, 19A Pak Kong, Section B of Lot No. 913 in Demarcation District No. 222, Sai Kung, New Territories (“the Property”) together with the costs of the application.   

2.  The main subject matter of the application i.e. possession of the property has been resolved as the respondent has voluntarily surrendered the property to the applicants on 15 May 2011.  The rent/mesne profits for the months of March and April 2011 had already been paid.  The parties had also agreed to treat half of the deposit held by the applicants in the sum of $2,000 as the rent/mesne profits for the period from 1to 14 May 2011.  The only outstanding issue is whether the applicants or the respondent should bear the costs of this application.  In addition, the respondent sought a refund of the balance of deposit in the sum of $2,000.

3.  Indeed, at a certain stage, the parties seemed to be able to come to a settlement.  A consent summons application was approved by the Tribunal on 30 May 2011 and the call-over hearing date of 31 May 2011 was vacated.  However, later on, as the parties could not agree on the costs of the application and the applicants applied to fix a date for hearing, another date was scheduled for call-over hearing.

4.  During the call-over hearing of 25 July 2011, the parties submitted that the only outstanding issue was the costs of the application.  The parties also agreed that there were basically no factual disputes.  The facts of the case of both sides had already been set out in the Affidavits/Affirmations of the parties’ witnesses.  Therefore, there is simply no need to fix another date for trial. With the consent of the parties, the Tribunal ordered that (1) the respondent be given leave to file an amended Notice of Opposition, service of which be dispensed with; (2) the parties do file and exchange the Written Submission and the schedule of costs by 8 August 2011; (3) the parties do file and exchange their Written Responses to the documents in paragraph (2) by 15 August 2011; and (4) judgment reserved.

5.  Subsequently the parties sought leave to file further Written Submission and Written Responses for which leave were given.

6.  This Judgment sets out the Orders of this application and the reasons.

Agreed facts of the case

7.  It is convenient to set out below the agreed events in the following chronological order:

(1)   The property was the subject matter of a renewal tenancy agreement (in Chinese) dated 7 November 2010 made between the parties (“the latest agreement”).  It was for a fixed term of 3 months from 1 December 2010 to 28 February 2011 at a monthly rent of $4,000. It contains, inter alia, a clause (2) that if the landlord wishes to take back possession of the property, the landlord shall also give one month’s advance notice to the tenant. The original wordings of the said clause (2) are, “…租約期滿, 住客如繼續租賃或退租, 須於壹個月之前以書面通知 (續租則另訂新租約方生效力), 否則租客須補償壹個月租金給業主。如業主須要收回樓宇, 亦須要壹個月前通知租客。”(emphasis added).

(2)   On 9 March 2011, the applicants’ solicitor sent a notice to quit in the form of a letter dated 9 March 2011 (“the NTQ”) by registered post to the respondent.  It was not disputed that the NTQ did not reach the respondent since the same (marked “unclaimed, return to sender”) was returned to the sender by the post office on 8 April 2011.  And, a copy of the same NTQ was handed to the respondent by the applicants’ solicitor on 15 May 2011, which was the first time the respondent received such a letter.

(3)   It was not disputed that the application by Form 22 was issued on 25 March 2011, the date of the seal on Form 22. On 11 April 2011, the applicants served Form 22 on the respondent.  This was evidenced by Form 30, filed on 25 July 2011.

(4)   The respondent delivered vacant possession of the property to the applicants pursuant to an agreement reached on 11 May 2011. 

(5)   The parties agreed that there was a telephone conversation after the Chinese New Year but the applicants did not submit that they have ever given any oral notice to quit (of one month’s notice period) to the respondent.  In paragraph 10 of the 2^nd applicant’s affirmation in Chinese, she only said,

“10. 於或約於2011年3月初, 本人指示上述陳志峰先生與答辯人聯絡要求他搬離該物業。然而, 陳先生告知本人, 答辯人仍拒絕搬出該物業。”

 (6)    The respondent submitted that prior to the service of Form 22 on 11 April 2011, the respondent had never received any form of notice to quit, verbal or in writing.  Further, although there was a telephone conversation between one of the applicants and the respondent on a day after the Chinese New Year, the respondent was neither requested to leave the Property nor asked to pay any specific new rent (per the respondent’s Affidavit).  Subsequent and in reliance of the said conversation, the respondent continued to stay in the property and paid two installments of rent ($4,000 each) for the months of March and April 2011 to the applicants’ bank account.

Issues

8.  At the hearing, oral arguments were made on behalf of both parties.  As summarized by the respondent in the written submission, the parties agreed and the Tribunal ordered that written submission be submitted to address specifically on the following two issues:

(1) Whether or not, and if so when, the service of the notice to quit by registered post was effective?

(2) Is the present action premature by reason of the fact that Form 22 was issued on 25 March 2011?

9.  The applicants raise the following issues in response to the respondent’s written submission:

(1) The Form 22 application was issued on 25 March 2011, after the expiry of the fixed term of the latest tenancy agreement at 28 February 2011.  The issue of premature action does not arise as the applicants were not required under the tenancy agreement and the current Laws of Hong Kong to issue any notice to quit.

(2) Even if the Tribunal decides it is necessary to serve a notice to quit under the latest tenancy agreement, the applicants submit that the applicant has already discharged their duty in giving the respondent a notice to quit.

10.  All these issues will be considered under the following headings:

(1) Notice to quit issue- Whether a notice to quit has to be issued by the applicants; whether the notice has to be in written form; and, from the evidence agreed by the parties, what notice the applicants have given to the respondent.

(2) Service of notice issue- Whether or not, and if so, when the service of notice by the applicants by registered post was effective?

(3) Notice of Application issue- Whether in considering the date of application, one should take the date of issue of Form 22 or the date of service of Form 22?  This may have a bearing on whether the application is pre-mature or not. 

Notice to quit issue

11.  The applicants submit that “the wordings of clauses 1 and 2 of the Tenancy Agreement are clear and unequivocal: they merely confer the respondent a fixed term tenancy for a period of 3 months with no option to renew.” 

12.  The applicants say that there is no statutory requirements under the current Laws of Hong Kong for a landlord to serve a notice to quit on the tenant “in the case of fixed term tenancy unless the contract otherwise provides.”  However, insofar as the contract terms in the latest tenancy agreement, the applicants contend that “clause 2 of the Tenancy Agreement is wholly redundant.” 

13.  The applicants further submit that there is no express agreement for a periodic tenancy after the determination of the fixed term in the absence of notice to quit.   No unilateral payment by the respondent to the applicants’ account could amount to forbearance when a fixed term lease expires.

14.  The applicants cited the Court of Appeal’s decision in Ng Hon-chi v Tang Chi-sheng [1965] HKLR 33 in support of the submission that no notice to quit is required to determine a fix a fixed term lease after expiry as follows:

“We respectfully agree with the learned District Judge that no notice was required to determine the lease, What then was the purpose of the six months’ notice required to be given if the respondent wanted to recover possession for his own use？ Counsel for the respondent says, and we think he is right, that it was not a condition precedent to the determination of the appellant’s interest but a collateral promise by the respondent to give the appellant ample warning that he would not get a further term…. “The failure to give notice of an intention to recover possession for the respondent’s own use might, as the District Judge has said, give a right to damages but it could not ipso facto confer a new interest in the land.” (emphasis added)

15.  On the other hand, the respondent cited the words of Malcolm Merry’s Hong Kong Tenancy Law 5^th Edition (2010) at 160 that there are conflicting decisions in Hong Kong in this regard.  The conflicting decisions are respectively obiter dictum in Ng Hong Chiu v Tang Chi-Sheung [1965] HKLR 33 and Ng Cheong Tong Ltd v Shaw Theatres Hong Kong Ltd [1975] HKLR 524.

16.  The respondent submits that the duty to serve one-month notice is clearly provided for under clause (2) of the latest tenancy agreement.  This requirement to serve notice can be read either as collateral promise or a prerequisite to expiry of the agreement.

17.  The respondent submits that the meaning of each contract turns predominantly on the construction of the words used.  Different cases are concerned with differently worded contracts applied to different facts.  It is trite law that “comparison of one contract with another can seldom be a useful aid to construction and may be…positively misleading” (Mitsui Construction Co Ltd v Attorney General [1987] 1 HKC 31, 42 (Privy Council))

18.  The respondent submits that the ordinary and natural meaning of the words in Chinese language in clause (2) of the latest tenancy agreement conveyed to a reasonable person must be that, after the fixed 3-months term expires, if the landlord wants to claim for vacant possession, he must serve a one-month notice to quit on the tenant.  Hence, as a corollary, one-month notice is a prerequisite to the expiry of the tenancy.

19.  The respondent also draws support of this interpretation by comparing the clause (2) of the latest tenancy agreement with the previous agreement dated 26 October 2003 made between the same parties. The above obligation to serve notice to quit by the landlord to the tenant is newly added in the latest tenancy agreement. The respondent submits that to interpret the clause (2) otherwise would in effect render such addition nugatory.

20.  I agree with the interpretation of clause (2) of the latest tenancy agreement by the respondent.  In addition, I note that clause (2) states that, on the one hand, upon expiry of the term (in Chinese, “租約期滿”), the tenant shall give one month’s notice in writing to the landlord if he intends to renew or surrender the tenancy and on the other hand, the landlord shall give one month’s notice to the tenant if he shall take back the premises.  Although there is no repetition of the words “upon expiry of the term” in the latter scenario (in Chinese, “租約期滿”), the existence of the word “also” (in Chinese “亦”) confirms beyond doubt that the latter scenario refers to the same situation of “upon expiry of the term” but not, for instance, before the expiry of the term.

21.  In addition, I find that under clause (2) of the latest tenancy agreement, while the tenant’s notice to the landlord has to be in writing, it is silent as to whether the landlord’s notice to the tenant has to be in writing.  Therefore, I decide that the one month’s notice by the landlord under clause 2 could either be in writing or could be given orally.  However, there is consensus evidence by both parties that even though there was a telephone conversation between one of the applicants’ representative and the respondent, the former has not given any oral notice to quit to the latter during the conversation.  The respondent in its written submission said that under Conveyancing and Property Ordinance (Cap. 219), the notice to quit has to be in writing.  I agree with the applicant that this is incorrect as the provisions in the said Ordinance only refer to leases of more than 3 years in duration.

22.  Summing up, I determine that under clause (2) of the latest tenancy agreement, the applicants have to give the respondent a month’s notice to quit.  Since there is no evidence that the applicants have given any oral notice to quit of one month notice, the applicants could only rely on the notice that they have sent out by registered post, or the copy of the notice which was personally served onto the respondent on 15 May 2011.        

Service of Notice issue

23.  The parties agreed that: (1) the NTQ sent on 9 March 2011 by registered post was returned as “unclaimed, returned to sender”; (2) there is no other mode of service of the NTQ until the same was personally handed to the respondent by the applicants’ solicitor on 15 May 2011.

24.  However, the applicants submit that since it is an undisputed fact that the NTQ had been sent properly to the usual and last known address of the respondent, the applicants have already discharged their duty of sending the NTQ (in this case, by registered mail through the post office, on 9 March 2011). It does not matter even if the registered NTQ was returned to applicants via the post office.  In addition, the applicants submit that the respondent’s submission and the reference to Section 8 of the Interpretation and General Clauses Ordinance (Cap. 1) are irrelevant because the service of NTQ does not concern with any statutory provision.

25.  I cannot agree with the applicants’ submission.  Firstly, the date of sending/posting the NTQ cannot be taken as the date of service.  I agree with the respondents in the calculation of the effective date of service in case of ordinary posting or registered posting.  Secondly, for the posting of the NTQ, if “the contrary is proved” (for example, as in this case when the document was returned and marked as “unclaimed, return to sender”), obviously it cannot be said that, “the service or notice shall be deemed to have been effected at the time at which the document or notice would have been delivered in the ordinary course of post.”  I agree with the respondent that the NTQ was only served by the Applicants to the respondent on 15 May 2011 but not earlier, based on the mutually agreed factual evidence.

Notice of Application issue

26.  There is a dispute between the parties as to whether in the present case, the date of issue of Form 22 or the date of service of Form 22 is relevant in determining whether the applicants’ application is premature.

27.  The applicants submit that the date of service is relevant but that the date of issue of Form 22 does not matter.  The English Court of Appeal has in Canas Property Co. Ltd. v. K. L. Television Services Ltd. [1970] 2 Q.B;. 433 held that “it is not the issue but the service which has the same effect as re-entry” (per Denning LJ at 442C).  The case of Canas has been approved by the Court of Appeal in Po Wai Ching & Ors. Pfeifer [1983] 1 HKC 204.

28.  The respondent disagrees submitting that issue of writ and service of writ are two distinct steps in civil litigation.  Also, the Respondent submits that English Law and Hong Kong Law proceedings are commenced by the issue of the proceedings rather than the service of process.  As such, it follows that the date of service is irrelevant in determining whether the present application is premature.

29.  I agree with the submission of the applicants.  It has been confirmed by the Courts in Hong Kong that an application for possession amounts to forfeiture of tenancy and re-entry of the premises by the landlord for which the date of service but not the date of issue of application is relevant.  Hence, in determining whether the applicants’ application is premature, the Tribunal has to compare the date of service of Form 22 (agreed to be 11 April 2011) with the effective date of notice to quit (determined by the Tribunal above, at 15 May 2011).

30.  In the circumstances, I determine that the applicants’ application is premature.

Costs

31.  There is no reason that the normal rule of costs follow the events should not be followed in the present case.  I therefore decide that the respondent shall be awarded the costs of the application.

32.  The parties have earlier filed and exchange their schedule of costs, as well as their grounds of objection in writing.  The respondent submitted that although the costs incurred by the respondent amounted to $40,453, the respondent had agreed with its solicitors the costs of $20,000.  The applicants submitted that under paragraph 62/App/3 of the Hong Kong Civil Procedure 2011, “where the recovery party has agreed with its solicitors on the amount of costs to be charged, that party is not entitled to receive upon taxation a sum larger than that agreed.  This is the indemnity principle…”  The applicants raised no objection to the costs of $20,000.

Orders

33.  I therefore make the followings orders: -

(1)  The applicants do refund to the respondent the balance of deposit in the sum of $2,000;

(2)  Costs order nisi: the applicants do pay the respondent costs of this application summarily assessed at $20,000;

(3)  If there is no application made within 14 days from today, the costs order will become absolute.