Grand Hotel Group Ltd. v. Commissioner of Rating and Valuation

LDMR000050/2000

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Miscellaneous Reference Application No. LDMR 50 of 2000

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Coram: Deputy Judge TONG sitting with Member W.K. LO

Dates of Hearing: 25 May 2001

Date of Judgment: 28 September 2001

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J U D G M E N T

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Background

1.The Appellant Grand Hotel Group Limited is the manager and the ratepayer of the development known as the Bay Bridge complex. The development consists of 438 rooms or suites, a variety of service facilities including restaurants, a pool, a 'business centre', a lounge on the ground floor and 3 floors of garages with parking spaces. The Respondent Commissioner of Rating and Valuation made an interim valuation over the premises in November, 1999 under section 25 of Rating Ordinance (the Ordinance) and notified it to the owner as provided for in section 26(1) of the Ordinance. The demand notes were issued for the two rating years i.e. $38,332,080 for 1998/1999 and $31,662,000 for 1999/2000. On 6th December, 1999, objections were raised under section 40 within the 28 days time limit. On 28thApril, 2000, the Respondent issued notices under section 40(2)(b) of the Ordinance to notify the Appellant of the former's decision in rejecting the latter's objection. Section 42(1) of the Ordinance provides that the Appellant may appeal to the Lands Tribunal within 28 days. The Appellant did not file its appeals for the two assessment years until 1st December, 2000. As the Appellant was out of time, it now seeks this tribunal to exercise its discretion to enlarge time under section 10(2)(d) of the Lands Tribunal Ordinance. The Appellant has also filed appeals within time against assessments over other subsequent years in this tribunal. Those appeals were adjourned pending the outcome of the present application.

The Issues

2.It is common ground that the Appellant's notice of appeal for the years 1998/99 and 1999/00 were late by about 6 months. It is also common ground that this tribunal has a discretion to enlarge time for filing such appeal. However, the parties are at issue as to the governing principles over which this tribunal should have in mind when considering whether or not such discretion is to be exercised. The requirement in section 10(2)(d) is only "for good cause". The Appellant contends that this expression only requires a reason for this tribunal to enlarge time. The reason need not be a satisfactory reason because so long as the tribunal finds it "just" or "consistent with attaining justice", the tribunal should exercise its discretion to allow the application. Mr. Kat argues that the fundamental test applicable to the extension or abridgement of time under Order 3 Rule5 of the Rules of High Court should be equally applicable to the present case. On the other hand, the Respondent contends that the test applicable to Order 3 Rule 5 of the Rules of High Court has no application to the present case. Mr. Fitzpatrick for the Respondent said as this tribunal is exercising an appellate jurisdiction as opposed to original jurisdiction exercised by the High Court in an Order 3 Rule 5 case, the tests to be applied should be analogous to those applicable to the extension of time for appealing a civil judgment. Such tests were spelt out in the Birkenhead Properties & Investments Ltd. v Leung Yiu & Others [1998] 1 HKLRD 528 which in turn adopted the approach of the English Court of Appeal in Norwich and Peterborough Building Society v Steed [1991] 1 WLR 449. These cases required the discretion exercising court to consider four factors; namely: (1) the length of delay, (2) reasons for the delay, (c) chances of succeeding if the application for extension of time is granted, and (4) the degree of prejudice to the respondent if the application is granted. While Mr. Fitzpatrick conceded that on the merit, there is an arguable case for the Appellant if the application is granted, the Appellant is guilty of long delay without good reasons. Furthermore, granting of the application would seriously prejudice the Respondent. Hence, Mr. Fitzpatrick urged the tribunal to dismiss this application.

What should the test be:

3.The condition precedent in section 10(2)(d) of the Lands Tribunal Ordinance for the Lands Tribunal to grant an application for an extension of time is simply "for good cause".

4.Order 3, r.5 does not spell the test for discretion exercising court on whether or not to grant an extension of time or abridgement of time. The provision only says "The Court may, on such terms as it thinks just, by order extend or abridge the period ........". In Mobil Petroleum Co. Inc. & Anor. v Registrar of Trade Marks [2000] 4 HKC 670, Hartmann J. quoted Sir Thomas Bingham MR's approach in Costellow v Somerset County Council [1973] 1 WLR 263-264:

"Ord. 3 r.5 should not in most cases be very different. Save in special cases or exceptional circumstances, it can rarely be appropriate, on an overall assessment of what justice requires, to deny the plaintiff an extension (where the denial will stifle his action) because of a procedural default which, even if unjustifiable, has caused the defendant no prejudice for which he cannot be compensated by an award of costs. In short, an application under Ord.3 r5 should ordinarily be granted where the overall justice of the case requires that the action be allowed to proceed."(underline added)

His Lordship then summarized at page 683:

"In summary, as I understand it, Costellow did not approve a mechanistic' approach in which, before the exercise of discretion, there must first be an adequate explanation for the delay placed before the court. To the contrary, all relevant matters were to be considered by the court in the exercise of its discretion so that the `overall justice' of the case would be met."

5.Instead of confining its consideration to only 4 factors as outlined in paragraph 2 above, the Court of First Instance is more relaxed in granting an application for extension of time made under Ord. 3 r.5.

6.Mr. Kat for the Appellant attributed the different approach adopted by the Court of Appeal to the fact that:

"In O.59 r.10 cases, there have been interlocutory stages, a trial in which the parties' contentions of law and fact have been fully ventilated and a judgment rendered on the merits." (see page 7 paragraph 26 of Mr. Kat's skeleton argument.)

The "Appeal" made to Lands Tribunal:

7.It cannot be argued that before the appeal against the Respondent's decision is heard in the Lands Tribunal, the case has never undergone a proper judicial process. There has been paper representations made to the Respondent by the Appellant but the Appellant has no chance of testing the evidence of those expert witnesses on whom the Respondent relies. Furthermore, those witnesses on whom the Respondent relies to reject the Appellant's objection are staff working in the Respondent's own department. As such, we agree that the "appeal" made by the Appellant to the Lands Tribunal is in fact the commencement of a judicial process for the first time. Therefore, the argument that the Lands Tribunal should adopt a more relaxed approach in allowing extension of time should have some support.

8.Another way of looking at the question as to how discretion should be exercised in section 10(2)(d) of the Lands Tribunal Ordinance is by looking at what the provision was created for. Apart from granting extension of time for filing notice of appeal against the decision of the Commissioner of Rating and Valuation, the provision also governs the granting of extension of time for filing notices of opposition in a large variety of actions in the Lands Tribunal. Those other actions include applications for repossession orders made by landlords against tenants who defaulted to pay rent. They also include applications for compensations over lands resumed by the government or other statutory authorities. Finally, building management applications would also be governed by the same provision if the parties wish to seek extension of time. To say that the same tribunal should employ a different test for extension of time for filing an "appeal" as opposed to filing other applications or notices of opposition made under the same provision would be an absurd suggestion. Equally absurd would be to say that this tribunal should employ the same stringent test as those employed by the Court of Appeal for all time applications made.

9.In the end, we are convinced that "good cause" in section 10(2)(d) means no more than for good reason. What then is good reason on which the Lands Tribunal may exercise its discretion. In our judgment, while the four limbs test spelt out in the Birkinhead Properties case would be relevant considerations when the Lands Tribunal is engaged in the process of ascertaining whether "good cause" exist, "good cause" cannot be so confined. The Lands Tribunal, being charged with the statutory duties to hear disputes relating to land matters mainly as judicial body at first instance, should adopt a more flexible approach when considering time applications so that an action would not be "stifled" prematurely. After all, the Lands Tribunal enjoys great flexibility in adopting informal procedures whenever it is consistent with attaining justice (section 10(5)(a) of the Lands Tribunal Ordinance) and in admitting evidence when it is appropriate in the circumstances (section 10(6) of the Lands Tribunal Ordinance). To employ criteria as strict as the Court of Appeal when considering time application would be a deviation from the underlying tone behind the tribunal's constitution. For these reasons, it is our judgment that "good cause" in section 10(2)(d) simply means that the tribunal, having looked at all the circumstances of the case, is satisfied that there is good reason to exercise its discretion. The overriding principle which the tribunal should employ to measure whether there is a good reason must be that it is in the interest of justice to grant the application. As such, we find that the test used by the court in considering a time application made under Ord. 3 r.5 to be useful guidelines to a similar application made under section 10(2)(d) in the Lands Tribunal.

Factors considered in the instant case:

10.The length of delay is about 6 months. Considering the statutory period of 28 days, such delay is long. However, in our judgment looking at the length of delay can only be meaningful when we are considering it in the context of the explanation given by the delaying party and in the context of possible prejudice caused to the innocent party.

11.The explanation given by the Appellant can be seen in Mr. Lai's affidavit. Mr. Lai, the Appellant's accountant had an honest but mistaken idea on the deadline before legal advice was sought. This explanation can account for the delay of 6 months but the blame should rest squarely on Mr. Lai and no one else.

12.On prejudice, the Respondent raised two points. Firstly, if the Appellant is allowed to make its appeal out of time, the Respondent would have to put in efforts to prepare the case to meet with the Appellant's arguments. Bearing in mind that there are at the moment pending appeals made by the Appellant on rating assessments over the same property, the Respondent would have to meet the Appellant's case in any event. We fail to see how the Respondent could be prejudiced.

13.The second point raised by the Respondent was a floodgate argument. The Respondent worried that should the Appellant be successful in the present time application, this case would serve as a bad precedent and would encourage numerous other rate payers to take the same course to challenge the Respondent's decision out of time. We are not convinced of this argument. Under the law, an appellant would have to pay the rates as assessed even though he is going to make an appeal. Hence, the sooner he could secure a successful appeal, the lesser he would suffer on interest loss on his advance rate payment. For this reason, nobody would deliberately lodge a late appeal. Furthermore, the granting of the time application depends on the circumstances of individual case before the tribunal which assumes full discretion over the matter. For example, a hopeless appeal could never obtain leave to proceed out of time. Such control would be a sufficient clog on a potential floodgate. Finally, unless an appellant can show that he is blameless in causing the delay, he would have to shoulder all the costs occasioned by the time application. This too would be another effective clog on the floodgate envisaged by the Respondent. All in all, we do not find that Respondent would suffer from any prejudice "for which he cannot be compensated by an award of cost."

14.In the end, we understand that the Appellant has at least an arguable case to place before the tribunal. Applying the test spelt out by Hartmann J above, we grant the Appellant this application.

Costs:

15.On the issue of costs, we remember that we have agreed with Mr. Kat's suggestion that we shall hear him first before we reach our decision. However, bearing in mind that one of us has already been posted out of the Lands Tribunal and that this matter is more than 3 months old. We have decided to grant an order nisi in favour of the Respondent on the ground that this application would never have been necessary should Mr. Lai for the Appellant have not committed such procedural default.

Orders:

Representation:

Mr. Nigel KAT, Counsel instructed by M/S Johnson Stokes & Master, for the applicant

Mr. David FITZPATRICK, Counsel on fiat for the Secretary for Justice, for the respondent