WONG MOON SHEUNG v. LEE NGAN YUK

LANDLORD and TENANT - possession - oral monthly tenancy governed by Part IV of Landlord and Tenant (Consolidation) Ordinance (Cap. 7) notice of termination (CR 101) served on tenant on 11th March 1987 to take effect on 15th September 1987 - failure by tenant to serve counter-notice (CR 102) - writ issued from District Court on 25th May 1987 seeking order for possession on the ground that defendant had ceased to be tenant and was a trespasser - action struck out on ground that no complete cause of action existed at date of writ.

Lam Chun Kuen v. Wan Suet Ying (Civ. App. No. 47 of 1981; 26th June 1981) distinguished and doubted

IN THE DISTRICT' COURT OF HONG KONG

CIVIL JURISDICTION

ACTION NO. 6625 OF 1987

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REASONS FOR DECISION

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1.By a writ issued on the 25th May 1987 the plaintiff sought to recover possession of premises which had been let to the defendant for domestic purposes. Judgment in default of defence was entered on the 15th September 1987. An application for a writ of possession came before me on the 15th October 1987. As it appeared that the writ had been issued prematurely, the Plaintiff was asked to show cause why the judgment should not be set aside. At the hearing, after hearing submissions from Mr. Chan, I set aside the judgment and struck out the writ and Particulars of Claim, and undertook to put my reasons into writing, which I now do.

2. The Plaintiff’s claim to possession of the premises is based upon a termination of the monthly tenancy in accordance with section 119 of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7). A notice of termination (form CR 101) was served on the defendant on the 11th March 1987, stating that the tenancy would be terminated on the 15th September1987, and that the premises were reasonably required by the plaintiff for occupation as a residence for the plaintiff. It was also stated that the defendant had filed to pay rent. It was also alleged that the defendant had not notified the plaintiff, within the two months specified in form CR 101, whether or not the defendant would give up possession. As the defendant did not apply to the Lands Tribunal for the time for giving the statutory counter-notice (form CR 102) to be enlarged, the tenancy came to an end on the 15th September 1987. The plaintiff did not seek to recover possession on the basis of a forfeiture for non-payment of rent. Indeed, he could not do so in the absence of an express proviso for re-entry, since the tenancy was a monthly tenancy governed by Part IV of Cap. 7, which contains no implied condition for forfeiture.

3. In these circumstances, it seemed to me that the plaintiff's cause of action to recover possession did not exist at the date of writ, but only arose on the 16th September 1987. Mr. Chan sought to support the default judgment by relying on the decision of the Court of Appeal in Lam Chun Kuen v. Wan Suet Ying Civil Appeal No. 47 of 1981. In that case the landlady issued her writ some two and half months before a: term of 3 years was due to expire, on the ground that she reasonably required the premises for occupation as a residence for herself under section 53(2)(b) of Cap. 7. As she was not asking for an immediate order for possession; but only one to take effect after the expiry of the agreed term, the Court considered that she was entitled to bring the action when she did. In my respectful view, that decision has been overruled by amendments to Cap. 7 made since it was decided.

4. Lam Chun Kuen v. Wan SuetYing, supra was decided in June 1981. At that time, and until, at least, the enactment of Ordinance No. 76/81, the more authoritative body of judicial opinion considered that the only way a landlord could terminate a tenancy governed by Part II of Cap. 7, as that enactment was then expressed, was to obtain an order for possession based on one of the grounds set out in section 53(2) of Cap. 7. A notice to quit was unnecessary and ineffective to terminate a periodic tenancy. A tenancy could not be terminated by forfeiture. A fixed term would not come to an end by effluxion of time. In short the "contractual bargain" between the parties was completely overridden or overreached by the legislative provisions, and could be disregarded, see Ngai Sau-ying v. Henry Chue Kwok-keung (No. 2) [1982] HKLR 256, 258-9.

5. All that has changed since the enactment of Ordinance No. 76/81. The present provisions of Parts II and IV restore a number of contractual rights to the parties. In the case of Part II tenancies, landlords can exercise their statutory and contractual rights to forfeit periodic and fixed term tenancies. Furthermore, it is now abundantly clear that the statutory grounds for possession only arise after the contractual tenancy has came to an end by effluxion of time or by act of the landlord, e.g. notice to quit in the case of a periodic tenancy.

6. In the case of Part IV tenancies, the intention of the legislature that greater recognition should be given to the parties freedom of contract is more amply demonstrated. The contractual tenancy can be terminated by forfeiture, surrender, notice to quit given by the tenant or notice of termination given by the landlord. The only restrictions on the common law or usual contractual rights of a landlord are the requirement that he must give a notice of termination of at least 6 months in respect of periodic and fixed term tenancies, and his inability to refuse a renewal of the tenancy, unless he can establish one of the statutory grounds for opposing the grant of a new tenancy specified in section 119E(1) of Cap. 7.

7. The position now is that any domestic tenancy can be terminated during its contractual period by a variety of methods, none of which requires the landlord to obtain an order from a court or the Lands Tribunal. An order is only necessary, in the case of a Part II tenancy, if it is "continuing" under section 52(1); or, in the case of a Part IV tenancy, if the tenant has applied for a new tenancy, in which case the notice of termination only operates to terminate the tenancy at the expiration of 3 months from the final disposal of the application Cf. section 119N.

8. In the present case, the plaintiff did not seek an order on one of the statutory grounds specified in Section 53(2) or Section 119E(1) of Cap. 7. Indeed, if he had done so, his action would have to be dismissed because the District Court no longer has jurisdiction to make such orders. He alleged that by reason of the notice of termination (CR 101) the defendant "ceased to be the tenant and is therefore a trespasser". He is relying on a cause of action which can only arise if the tenancy has come to an end. On that basis alone, Lam Chun Kuen v. Wan Suet Ying, if still good law, is clearly distinguishable. However, since the tenancy did not come to an end until the 15th September 1987, the writ and Particulars of Claim disclosed no cause of action, and no permissible amendment could cure that fundamental defect.

9. One can sympathise with a landlord's desire to minimise the inevitable delay between commencing proceedings and obtaining an order for possession. But, that is an inevitable feature of our procedure which must be tolerated by all plaintiffs. For the reasons I have given, there is no longer any special reason for treating applications by landlords for possession of their premises as exceptions to the general requirement that a cause of action must exist and be complete at the date when proceedings are commenced.

10. Now that jurisdiction in respect of disputes between landlords and tenants is distributed between the Lands Tribunal and the Small Claims Tribunal and the ordinary, courts, there is, perhaps, a greater need for adherence to this general requirement. In the present case, the plaintiff's claim is made on the assumption - erroneous in my view that his cause of action arose when the defendant failed to give him the form CR 102 within the two months specified in the from CR 101 and by section 119D(2). Quite apart from the fact that procedural features of the machinery for exchanging notices may be waived by the parties, there is always the possibility that the tenant may apply to the Lands Tribunal for the time for giving the CR 102 to be extended, so as to enable him to apply to the Lands Tribunal for the grant of a new tenancy before the notice of termination takes effect. In that event, there would be an undesirable multiplicity of proceedings and, perhaps, inordinate expenditure of time and money in presenting or defending such proceedings, some of which might not be recoverable in the usual way, because of the restrictions imposed by sections 68B and 119R of Cap. 7. The Lands Tribunal, faced with an application for enlargement of time, based on good cause and within its jurisdiction, might discover that the landlord has already obtained a judgment in the District Court or the High Court, depending upon the rateable value of the premises. Presumably, in that kind of situation all further proceedings before the courts or tribunals exercising original jurisidction would  have to be adjourned or stayed, pending appeals to the Court of Appeal

11. One of the virtues of adhering to the general principle, that a cause of action must exist and be complete at the date when proceedings are commenced, is that these kinds of procedural and jurisdictional problems, as well as unnecessary costs are completely avoided or largely diminished because once the tenancy has been terminated, the lands Tribunal has no jurisdiction to enlarge time or to entertain an application for a new tenancy. See Sin Hua Trust Savings and Commercial Bank Ltd. v. Ng Yee Man (Civ. App. No. 137 of 1985). If the inevitable delay between writ and judgment is to be eliminated, it will have to be achieved by legislative amendment to long-standing familiar procedures.