SOUND VIEW ENTERPRISES LTD v. CHAN KAI LUNG LERRY

LDPD 1477/2006

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Application No. LDPD 1477 of 2006

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JUDGMENT

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Background

1. This is an application by the Applicant for possession of the premises known as Flat C, 12^th Floor, Block 7, and Car Parking Space No.198 on Basement, Beverly Villas, No.16 La Salle Road, Kowloon, Hong Kong (“the Premises”).  The Applicant is the landlord of the Premises.  By a tenancy agreement written in Chinese and dated 15 April 2003, the Applicant let the Premises to the Respondent for a term of two years from 9 May 2003 to 8 May 2005 at the rental of $18,500.00 per month (“the Tenancy”).

2. Although the contractual term of the Tenancy expired on 8 May 2005, the Tenancy continues by virtue of the Landlord and Tenant (Consolidation) (Amendment) Ordinance 2004 (“the Ordinance”).  Section 5(2) of the Ordinance stipulates that:-

“On and after the commencement date, a tenancy to which Part IV applies and which is in existence on the day before the commencement date, but in respect of which no notice or request has been given or made before the commencement date under section 119 or 119A of the principal Ordinance, may, subject to subsections (4) ands (5), only be terminated by a transitional termination notice as provided for by section 6.”

3. There is no dispute that section 5(2) of the Ordinance applies to the Tenancy and hence a transitional termination notice is required to terminate it.  The Applicant did issue a transitional termination notice dated 8 May 2005 (“the TTN”) to the Respondent, and the Respondent did receive the same on 14 May 2005.  The Applicant relies on the TTN to say that the tenancy has been terminated and claim for possession of the Premises.  However, the TTN states that:-

“Pursuant to section 5(2) of the above Ordinance, I hereby notify you that the tenancy of the above premises will be terminated on May 8th , 2005.”

4. On the face of it, it seems that there was a mistake of the date of termination as it was the same date of the issuance of the notice.  However, it is not the Applicant’s case that the date “May 8th , 2005” was wrongly typed by clerical mistake or that it should be read as “May 8th , 2006”.  According to the evidence of the Applicant’s witness, Mdm. Chan Kwai Chuen, she did intend to put down the date “May 8th , 2005”, as she thought that she had to put down the date of expiration of the Tenancy.  Thus, there was no clerical mistake, but only a mistaken belief of Mdm. Chan.

5. Section 6(2) of the Ordinance stipulates that:-

“A transitional termination notice must be served-

(a)    by a landlord, not less than 12 months;

…

before the day on which it is to take effect.”

6. Despite Mdm. Chan’s mistaken belief, the Applicant argues that the TTN is a valid notice, as the Ordinance does not require the date of termination to be stated in the TTN, and once the Applicant has served the TTN, it can recover possession after 12 months.

7. The Respondent disputes the Applicant’s claim, as the TTN issued by the Applicant is not a valid notice.  The Respondent argues that the TTN must state a termination date by which the termination is to take effect and it cannot be less than 12 months from the date when the TTN was served.

8. Thus, the only issue in this case is whether the TTN is a valid notice.

Whether the TTN is a valid notice

9. Although, as submitted by the Applicant, there is no standard form for a transitional termination notice as prescribed by the Ordinance, it does not mean that the Applicant can give an ambiguous notice to the Respondent.  At common law, a notice must be clear and certain, so as to bind the party who gives it and to enable the party to whom it is given to act upon it, at the time when it is given (see Woodfall: Landlord and Tenant, Release 63, at para. 17.246).  The TTN issued by the Applicant is far from clear as to when the Respondent is to quit the Premises.  The date “May 8th , 2005” would not give the Respondent, or any reasonable man, a meaningful deadline by which the Respondent must quit.

10. The Applicant, however, argues that section 6(2) of the Ordinance does not require the date of termination to be stated in the notice and since the TTN has made reference to section 5(2) of the Ordinance, the Respondent should be able to refer to the Ordinance and know that the Applicant can recover possession after 12 months.  The Applicant contends that it can simply wait for 12 months after the notice was served and then recover possession thereafter even though the notice did not specify an effective date of the termination.

11. I totally reject this line of argument.  I think section 6(2) of the Ordinance makes it clear that a transitional termination notice must be served by a landlord not less than 12 months before the day on which it is to take effect.  Such a notice is equivalent to a notice to quit.  The purpose of a notice to quit is to notify the recipient when he has to quit.  A transitional termination notice must be interpreted in the same way.  So it must state when it is to take effect.  In other words, the date of termination must be mentioned in the notice or at least it is ascertainable from the notice the deadline by which the recipient must quit.  The reference to the Ordinance would not help the Applicant, as it would not give the deadline by which the Respondent must quit.  It only gives the earliest time the Applicant may recover possession, but it does not say that 12 months is the deadline for the Respondent to quit.  A landlord can always give a longer notice period than 12 months because section 6(2) only stipulates that the period cannot be less than 12 months.  So one would not know the deadline by reference to the Ordinance. 

12. The Applicant also argues that the Ordinance should be interpreted in a way that would give effect to the purpose of the legislation.  According to the Applicant, the purpose of the Ordinance is to ensure that a landlord can recover possession after 12 months.  I do not agree with the Applicant on this contention either.  As submitted by the Respondent, the purpose of the legislation is to give a transitional period for those tenants who would be affected by the Ordinance.  When the Ordinance took effect on 9 July 2004, a landlord would no longer be required to give any statutory notice to terminate a tenancy.  Section 5(2) and section 6(2) are to safeguard the position of those tenancies created before the commencement of the Ordinance.  I think the purpose of the legislation is to ensure that the tenants of such tenancies would have sufficient notice to quit and not affected by the new law during the transitional period.  Thus, the purpose of such transitional provisions in the Ordinance is to protect the tenants rather than the landlord.  On such purposive interpretation, I would also find in favour of the Respondent.

13. The Applicant refers to two cases mentioned by Mr. Malcolm Merry in his book “Hong Kong Tenancy Law 4^th edition”, at page 140, to support the contention that a notice to quit should be given a more liberal interpretation.  It used to be thought that notices should receive a strict or literal construction and the notice should be precise, but in Carradine v. Aslam [1976] 1 WLR 442, the court held that the test was whether the notice was clear to a reasonable tenant reading it: was it plain that he could not be misled by it?  In the Carradine case, a landlord was held to be entitled to break a lease in September 1975, when he had given notice to do so in September 1974, but mistakenly put down a date in September 1973.  As the date given was impossible, having already passed, it was clear that the landlord could not have meant September 1973.

14. The second case is Mennai Investment Co Ltd v. Eagle Star Assurance Co Ltd [1997] AC 749, where the House of Lords approved the test laid down in the Carradine case.  In the Mennai case, the lease contained a break clause permitting the tenant to end the lease by serving written notice of not less than six months upon the landlord to expire on the third anniversary of the term commencement date.  That date should be 13 January 1995, but the tenant gave the date of 12 January 1995 in the notice.  The House of Lords ruled that as the landlord would know the date of the third anniversary of the commencement of the lease, the landlord would not have been misled by the wrong date.  The House of Lords emphasized that the test was to be applied objectively, i.e. the question was not whether the notice was clear to the actual recipient but whether it would have been clear to a reasonable recipient. 

15. Although I agree with the test laid down in the Carradine case and approved by the Mennai case, I do not think that these cases and the test help the Applicant.  First of all, even according to the Applicant’s case, there is no clerical mistake in the present case.  The Applicant is not saying that the date should read 8 May 2006 instead of 8 May 2005.  The Applicant only stated the contractual expiry date of the Tenancy in the TTN, so no effective date of the notice was ever stated in the TTN.  By reading the date “8 May 2005” in the TTN, no reasonable recipient would know when the Tenancy is going to be terminated.  There cannot be such an interpretation that the Tenancy must end on 8 May 2006, as a landlord can give a notice that is more than 12 months.

16. The Applicant also submits that I should consider some of the telephone conversations and representations made between the parties, as these events are indicative of the parties’ comprehension of the situation.  These factual matters are in dispute by the parties.  However, I do not find that these factual disputes are relevant to the issue of the validity of the TTN.  The Ordinance requires a valid notice to be issued and it is my finding that the notice must state or indicate the effective date of the termination.  As there is no such date given or indicated, no valid notice has been given.  When there is no valid notice given, the Tenancy is not terminated and the Applicant cannot recover possession.  That should be the end of the matter.   I need not deal with these factual disputes at all.

17. In the circumstances, it is my finding that the TTN is not a valid notice.

Conclusion

18. By reasons aforesaid, the Applicant’s claim must fail and I order as follows:-

(1) The Applicant’s application herein be dismissed.

(2) Costs order nisi: The Applicant do pay costs of the application to the Respondent, to be taxed on District Court Scale if not agreed.  If there is no application for costs within the next 14 days, the costs order nisi herein shall become absolute.