Sunic Consultants Ltd v. Star Verve Co Ltd
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Landlord and Tenant – Part IV – negotiations achieved agreement on all issues other than rent where the gap between the parties during May 1993 was narrowed to $27,000 - $30,000 – Tenant applied for new tenancy on 27th May 1993 when a Form CR101 purported to terminate the tenancy on 30th June 1993 – at trial Respondent opposed new tenancy on ground that Applicant had failed to serve Form CR102 – whether Form CR101 dated 8th December 1992 was served on Applicant before 31st December 1992 - alleged service by registered post but Applicant denied receipt of any notice until Respondent’s solicitors faxed a copy to him after 30th June 1993 – whether Tribunal had power to enlarge time for service of Form CR102- whether Applicant’s letter of 12th April 1993 satisfied the requirements of Form CR102 and if so could and should time be enlarged – whether negotiations established waiver or estoppel against Respondent in respect of Applicant’s obligation to serve Form CR102 – Held : 1. Tribunal does have power under Section 10(2)(d) Cap.17 to enlarge time to serve Form CR102 – Tribunal’s judgment exercising such power in Speakman v. Huang Investment Ltd LT No.401/86 previously only supported by dissenting judgment in Ram Isardas Mahtani v. Wong Kwok-tai (1989)2 HKLR 296 now unanimously upheld in recent Court of Appeal judgment of Law Chee-sing v. Lau Kwong-kun Civil Appeal No. 102/93. 2. On facts contents of letter of 12th April 1993 did not substantially comply with Form CR102 requirements. 3. Jurisdiction cannot be conferred by waiver or estoppel but they may otherwise arise under Part IV. 4. Unnecessary to consider waiver and estoppel further as Applicant’s evidence rebutted the prima facie presumption of service by post. 5. As the current tenancy had not been duly terminated under the Ordinance the Applicant was entitled to remain in possession at the old rent. 6. There being no agreement by both parties under which a new tenancy could be granted under Section 119C the application for a new tenancy was dismissed on these jurisdictional grounds. IN THE LANDS TRIBUNAL OF HONG KONG L.T. Application No. 2059 of1993 -----------------
----------------- TRIBUNAL : His Honour Judge Cruden, Presiding Officer ------------------ JUDGMENT ------------------ 1. The Applicant is the tenant and the respondent the landlord of domestic premises being Flat H, Oak Mansion, 15th Floor, Taikoo Shing, Hong Kong which are subject to the provisions of Part IV of the Landlord and Tenant (Consolidated) Ordinance, Cap.7. The Applicant first went into possession under a written tenancy agreement for a duration which commenced on 31st October 1992 and contractually expired on 30th June 1993. The suit premises have been occupied throughout that time by the Applicant’s Director, Mr. Chan Shu-kai. 1. On the evidence it is clear, that from at least 31st March 1993 to 25th May 1993, the parties were negotiating for a new tenancy to commence on 1st July 1993. The correspondence shows that by 25th May 1993, both parties had agreed, in their language, “to renew” the tenancy. The Applicant sought a renewal for one year to 30th June 1994. The only term of the new tenancy on which there was apparent disagreement concerned rent. The Applicant considered the new rent should be in the range of $26,000 to $27,000. The Respondent sought $30,000 per month. So more than one month before expiration, the parties had narrowed down the rental issue, to a difference of $3,000 per month. 2. The Applicant also pointed out that if a new tenant were willing to pay $30,000, there would be an interval between the two tenancies, for the reasons set out in the Applicant’s letter of 12th April 1993, so effectively the Respondent would even in that event, still net a return of less than $30,000 per month. The rental difference between the parties were approaching the relatively small difference of $1,000 to $2,000 per month, which in this sector of the rental market, can reasonably divide two experienced independent chartered surveyors. In any event, by 27th May 1993 the parties had not bridged this gap and the Applicant on that day, applied to the Lands Tribunal for a new tenancy pursuant to Section 117(1) of the Ordinance. 3. Since then the issue of a new tenancy has become embroiled in the complex provisions of Part IV. Before considering other factual matters and the lengthy and helpful submissions of Counsel for the Respondent, I would pause to record the factual position as at 25th may 1993. At that date the correspondence indicates that the parties had reached agreement on a “renewed” tenancy except as to rent. On the basis of that agreement, it would have been open for either of them to have applied to the Tribunal, to determine the new rent, pursuant to Section 119C of the Ordinance. Under that Section the parties do not have to comply with any of the other complex provisions of Part IV. However, neither party applied under Section 119C. 4. I also record that on 29th June 1993, the Respondent filed an interlocutory notice, pursuant to Rules 5 and 16 of the Lands Tribunal Rules, Cap.17, for the application for a new tenancy to be struck out on the ground that after it had served Form CR101 terminating the tenancy on 30th June 1993, the Applicant had failed to serve a Form CR102. The interlocutory notice came on for hearing on 28th July 1993. The Tribunal then indicated that in accordance with prior Tribunal judgments and established practice, the issue raised by the notice should more properly be disposed of during the hearing of the substantive application on 13th October 1993. The interlocutory notice was therefore adjourned to the latter hearing to abide the result of the substantive application. 5. At the substantive hearing, the Applicant appeared in person while the Respondent was represented by solicitors who instructed Counsel. When Mr. Chan Shu-kai of the Applicant gave evidence, he produced a photo-copy of a Form CR101 issued by the Respondent’s former solicitors. He stated that he had negotiated during March, April and May 1993 over the new rent, with a Mr. Eric Chan for the Respondent, when no mention of any Form CR101 or Form CR102 was made. Mr. Chan further stated that this was the first tenancy he had entered into and at that stage, he was unaware of Form CR101 and subsequent pre-application notice procedure. He alleged it was not until after 30th June 1993, when he was faxed a copy of the Form CR101 dated 8th December 1993 purporting to terminate the tenancy on 30th June 1993, that he became aware of the existence of that Form CR101. 6. Counsel for the Respondent put to Mr. Chan that he had received the original Form CR101 during December 1992 and certainly no later than 31st December 1992. Counsel referred to an affirmation filed by the Respondent’s former solicitors, that the original Form CR101 had been sent to the Applicant by registered post on 8th December 1993. I record that the affirmation exhibits the solicitors covering letter but does not exhibit any Certificate of Registered posting. Mr. Chan denied that he had received the original Form CR101 during December 1992. He repeated that the first time he saw a Form CR101 in those terms, was the copy faxed to him, after 30th June 1993. Mr. Chan was obviously a witness of intelligence. He entered the witness box with a large well arranged file, containing documents relevant to the present dispute. His evidence was characterized by its clarity and reasonableness. 7. Mr. Chan stated that whenever prior to December 1992, the Respondent’s former solicitors sent any documents relevant to the tenancy to his Company, they enclosed a duplicate letter for him to countersign and return as evidence of actual receipt. From his file Mr. Chan then produced, letters confirming that practice from the former solicitors, dated 7th December 1992 in respect of the original tenancy agreement and dated 12th January 1993 relating to the copy Form CR109 applicable to the original tenancy agreement. Mr. Chan stated that he had neither received the original Form CR101, or any letters in accordance with that prior practice, during December 1992. The Respondent’s proof of service of Form CR101 rested entirely on the affirmation. 8. Although it was common ground that no Form CR102 had been served by the Applicant, the Tribunal noticed that the Applicant’s letter dated 12th April 1993, contained some of the matters provided for in the specified form. In accordance with the Practice Direction applicable when an unrepresented party appears, the Tribunal pointed out that if that letter could be treated as a Form CR102, then it would have been out of time. Because the Tribunal accepted Counsel for the Respondent’s submission that a registered letter posted on or about 8th December 1993 would certainly, in the ordinance course of post, have been received by 31st December 1992. If so, the last day, under Section 119(4), for the Applicant to serve in reply a Form CR102, would have been 28th February 1993. Service by post is, of course, a proper method of service and is now expressly provided for in Section 119Y. This new Section on 1st July 1993, replaced the more tortuous but equivalent position, achieved by Section 120 which earlier incorporated by reference, Part II’s Section 74. I dwelt on some of these matters in Law Chee-sing v. Lau Kwong-sun LT No. 1334/93 and do not propose to repeat them here. 9. On the assumption that the letter of 12th April 1993 satisfied the requirements of a Form CR102 notice, Mr. Chan then applied, pursuant to Section 10(2)(d) of the Lands Tribunal Ordinance, Cap.17 for time for service of that letter to be enlarged to 30th April 1993. Counsel for the Respondent strongly opposed that application, submitting that the Tribunal had no power to enlarge time for a Form CR102 notice under Section 10(2)(d). Counsel cited the Court of Appeal judgments in Sin Hua Trust, Savings & Commercial Bank Ltd v. Ng Yee May Civil Appeal No. 137/85 and Ram Isardas Mahtani v. Wong Kwok-tai (1989)2 HKLR 296 in support of his submission that the statutory time limits are mandatory and inflexible. 10. The Tribunal pointed out that both those judgments were concerned, not with pre-application cross-notice time limits, but with the time limits for applying for a new tenancy. The former Court of Appeal judgment was concerned with Section 119D (3)(a)(iii) and the latter with Section 119D (3)(a)(ii) of the Ordinance. After the former Court of Appeal decision, this Tribunal sought to draw a distinction between the time limits for pre-application cross-notices under Section 119 and the time limits for applying to the Tribunal for a new tenancy under Section 119D. In relation to the latter time limits, the Tribunal was, of course, bound by the Court of Appeal decisions. 11. This distinction was first articulated by the Tribunal as long ago as 1986, when in Speakman v. Huang Investment Ltd L.T. No.401/86, after considering the then recently delivered former Court of Appeal decision, I held that the Court of Appeal’s judgment on Section 119D did not apply to pre-application notice time limits under Section 119. I further held that the power to enlarge under Section 10(2)(d), applied to Section 119 and enlarged the time for serving Form CR102. In that case the applicant had applied for a new tenancy before the Form CR101 date of termination but his intervening Form CR102 had been served out of time. The practice of this Tribunal, since 1986, has followed Speakman v. Huang Investment Ltd. Time for serving pre-application notices, has frequently been enlarged, subject to the applicant for enlargement showing “good cause” under that Section. 12. The Tribunal’s post-1986 practice was reinforced as a result of the Court of Appeal’s judgments in Ram Isardas Mahtanti v. Wong Kwok-tai. The Court of Appeal, decided by a majority, that Section 10(2)(d) did not apply to Section 119D(3)(a)(ii). The dissenting judgment of Power JA, was to the contrary. However, Power JA., in a vigorous judgment went on to consider the Section 119 pre-application notice time limits, when highlighting what he considered to be the strength of his dissenting judgment, on Section 119D. Power JA held that Section 10(2)(d) did empower the Tribunal to enlarge Section 119 time limits. On the Section 119 issue both the majority judges were silent. 13. Although the practice of the Tribunal in enlarging time for pre-application notices may not, according to some commentators, have been entirely satisfactory, its validity was affirmed last month by the Court of Appeal in Law Chee-sing v. Lau Kwong-kun Civil Appeal No. 102/93. After examining at length the two earlier Court of Appeal judgments also cited in this application to the Tribunal, it found the dissenting judgment of Power JA “particularly apposite……” In this very recent judgment of the Court of Appeal, delivered by Barnett J., it was held that the Tribunal does have power under Section 10(2)(d) to enlarge the Section 119 time limits for pre-application notices. Any earlier occasional expressions of doubt whether the Tribunal has this power have therefore new been removed. 14. I would add that Section 10(2)(d), only includes a power to enlarge not abridge. The power to large will, in practice, tend to help tenants rather than landlords. In the majority of cases tenants seek enlargement. So far as landlords are concerned they usually, to the contrary, require abridgment. There is no power to abridge pre-application time limits. In fact in Law Chee-sing v. Lau Kwong-kun, the unsuccessful landlord would have needed to obtain abridgment not enlargement, to rectify his defective Form CR101, but there is simply no statutory power to assist a landlord in that position. The limited enlargement power in Section 10(2)(d), may be contrasted with Rule 30 of the Lands Tribunal Rules. Rules 30 includes both the power to abridge and enlarge. However, while that power assists the Tribunal to abridge and enlarge times under the Rules once an application is filed, it has no relevance to pre-application notices. 15. Counsel for the Respondent’s remaining submission on the enlargement issue, was that the power cannot be exercised, after the date of termination in a valid Form CR101 has expired. This accords with Tribunal practice not to enlarge time to a date after the date of termination. This, in turn, is founded on the two earlier Court of Appeal judgments, that upon and after the date of termination, an applicant no longer has the status of tenant. So he cannot take advantage of the Ordinance’s statutory protection for tenants. In this application, the tenant did apply for a new tenancy to the Tribunal on 27th May 1993, which was well before the date of termination. However, the application to enlarge the intervening Form CR102 was made after the date of termination. 16. A similar position arose in Speakman v. Huang Investment Ltd. I would continue to hold that in such factual circumstances, the Tribunal does have power to enlarge. Counsel also adverted to the different factual position where an applicant who has not served a Form CR102 or applied for a new tenancy before the date of termination, applies for enlargement of the time to serve a Form CR102, after the date of termination. I appreciate that different considerations may apply in those circumstances. No doubt it could be strongly argued that an applicant would then be too late to seek enlargement. 17. However, that is not the factual position before the Tribunal and I expressly decline to express any opinion thereon until the issue comes directly before the Tribunal. If that issue were to come before the Tribunal in the future, the relevant matters which would have to be considered would no doubt include Section 72 of the Interpretation and General Clauses Ordinance, Cap. 1. The Applicant raised the other pre-application notice issue, namely that the Respondent never served a Form CR105. However, that does not assist the Applicant. This is because while where a landlord takes the initiative, Forms CR101 and 102 are mandatory, whether he later serves a Form CR105 is entirely discretionary. 18. After considering Counsel for the Respondent’s submissions and reviewing the relevant authorities, I hold that the Tribunal does have power to enlarge time for service of a Form CR102. In particular I hold that if time had expired on 28th February 1993 and service was only effected on 30th April 1993 but application for a new tenancy was made on 27th May 1993 before the date of termination namely, 30th June 1993, the power to enlarge would exist. 19. It remains to consider whether the Applicant’s letter of 12th April 1993 satisfies the requirements of a prescribed Form CR102. Section 119(4) does not expressly refer to Form CR102 but obliquely uses the phraseology “in the specified form……” Initially, this drafting approach caused problems. However, at the request of the Tribunal, the Law Draftsman has ensured in more recent years, that a note appears after the Sub-section, referring to the Form CR102 being G.N.3919 in Gazette No. 53/81. The note does not form part of the Section but clearly Form CR102 is the prescribed form. 20. I appreciate that the 12th April 1993 letter does include some of the matters provided for in Form CR102. I am also aware that in some cases where the prescribed form, is served, it is often substantially altered by additions and amendments. In the case of Tribunal forms under the Rules, it is expressly provided that it is sufficient that any document filed is “substantially” in accordance with the prescribed forms. Form CR102 and the other pre-application forms are not prescribed forms under the Rules. However, Section 37 of the Interpretation and General Clauses Ordinance, can be resorted to in order to validate deviations which do not vary the substance of a Form CR102 or other prescribed form. I am satisfied that any documents substantially in accordance with Form CR102 or any other of the prescribed pre-application forms would be valid. It is not necessary, although it is desirable, to use the printed Form issued by the Commissioner of Rating and Valuation. 21. Under a Form CR102, in the prescribed form, a tenant gives notice to a landlord, which is expressed to be in response to the landlord’s prior notice of termination. The tenant must then go on to indicate in his notice which of two options he intends to exercise. These are either to give up possession or alternatively a refusal to give up possession together with a declaration of his intention to apply to the Lands Tribunal for a new tenancy. Obviously if a tenant gives an informal notice, he runs the grave risk that it may not substantially accord with the prescribed form. The validity of each informal notice, must be construed on the basis on its actual contents and it is undesirable to generalize. However, if an informal notice otherwise substantially complies with the prescribed form’s requirements, I would doubt whether failure to state that it is in reply to a Form CR101, would lessen its effect. On the other hand, I do consider it essential that an informal notice should clearly indicate to the landlord that the tenant is either willing to vacate or proposes to remain in possession and apply to the Tribunal for a new tenancy. 22. The Applicant’s 12th April 1993 letter makes it clear that he wishes to remain in possession and “renew” the tenancy but it is silent whether he proposes to apply to the Lands Tribunal for a new tenancy. What is the effect of this omission? I consider this to be a material omission, because it is a matter upon which, as a matter of law, the landlord is entitled to have precise information. The information may affect the landlord’s negotiating position. If he wishes to grant a new tenancy, he may do so by agreement without recourse to the Tribunal. If the parties can agree upon all the terms except the new rent, then the tenant does not have to make the common application under Section 117 but either party may be apply under Section 119C. In this instance the Applicant also was not attempting to give an informal statutory notice to the landlord but was merely continuing existing correspondence between the parties, on the possibility of a renewal of the existing tenancy. For all these reasons, I hold that the letter of 12th April 1993 did not satisfy the requirements of a notice in the prescribed form or in substantially the prescribed form. 23. The next issue raised in Counsel for the respondent’s submissions, was whether the negotiations from March 1993 to May 1993 amounted to waiver or raised any estoppel against the Respondent’s assertion that the Applicant was obliged to serve Form CR102. I had the benefit of a skeleton argument on this issue, being tendered by Counsel and his further detailed submissions. Counsel reminded the Tribunal that it was for the Applicant to establish a clear and unambiguous representation that the Applicant did not have to serve a Form CR102 and that relying on such representation it had acted to its determent. Further, relying on Chiu Ming-kian v. William Lee Shung (1991) 1HKLR 230, Counsel reminded the Tribunal of the well settled law that the jurisdiction cannot be conferred by estoppel. 24. In cases where jurisdiction is not in issue, there is authority that estoppel and waiver can arise in relation to some of the statutory provision under the Ordinance. For many years that has been the position under Parts I and II. In relation to Form CR105, the Court of Appeal in Lei San Fong v. Tai Wai Ying Civil Appeal No. 95/90, referred to the question of estoppel but on the facts before the Court found it unnecessary to rule on the matter. In this application too, I consider it unnecessary to find if there was a clear and unambiguous representation which the Applicant acted on to its detriment. Further, if so whether as a matter of law, estoppel or waiver could arise in relation to Form CR102. 25. Instead, it is only necessary to return to the alleged service of Form CR101 and make findings of fact upon that evidence. This was another application where the Respondent had elected to effect service by post. The evidence of posting is less satisfactory than usual, as a Certificate of Posting issued by the Post Office, has not been exhibited. On affirmation, there is merely the covering letter from the Respondent’s then solicitors, with that firm’s own chop marked “Registered” endorsed on the letter. I am just prepared to find that establishes that the letter was sent by registered mail on or about 8th December 1992. I also accept that to the knowledge of the affirmant, the letter with Form CR101 enclosed, has not been returned undelivered by the Post Office. 26. On those findings of fact the Respondent can rely on the prima facie position under Section 119Y of the Ordinance and the service presumption under Section 8 of the Interpretation and General Clauses Ordinance, Cap. 1. Under the latter Section it would be necessary to find on what date a letter sent by registered post on 8th December 1992 would be received by the addressee Applicant, in the “ordinary course of post.” I accept Counsel’s submission on this point and find that it should have been received during that month and certainly no later than 31st December 1992. If so, service would have compiled, with the statutory minimum notice period of 6 months imposed by Section 119. 27. So this was not a case where a witness attempted to tailor his evidence, in order to strengthen his position. I remind myself that it is unusual for undelivered registered letters not to be returned to the sender by the Post Office. But exceptionally this does occur. For example, earlier this year, a solicitor in a different firm, filed an affirmation and was later cross-examined on his allegation, that a registered letter had not been returned undelivered. Yet at an adjourned hearing, a Post Office Inspector was called, who produced evidence that the letter had been returned. On further enquiry, it appeared that the returned letter had been received by the Mail Department of the solicitors but not referred on to the solicitor concerned with the relevant application. 28. On the present facts, the Tribunal does not know nor will it speculate, on the fate of the 8th December 1992 registered letter. However, the Tribunal is satisfied, on the balance of probabilities, that the letter dated 8th December 1992 together with the Form CR101, was never received by the Applicant. From that finding of fact, it follows as a matter of law, that the tenancy which commenced on 31st October 1992 had not been duly terminated under the Ordinance. I record that the contractual tenancy agreement was expressed to expire on 30th June 1993. However, Section 117 adopts for Part IV, the same concept of statutory continuance of a contractual tenancy, which for so long, has been an important characteristic of Part II. 29. The contractual tenancy therefore will continue in terms of Section 117(1) “unless terminated in accordance with this Part”. Such a statutory continued tenancy, may finally be terminated by a duly served valid Form CR101, where a tenant does not elect to take advantage of the statutory protection of Part IV. Otherwise it is not terminated until an order of the Tribunal is made for a new tenancy or alternatively for vacant possession in favour of a landlord. I am aware that in Law Chee-sing v. Lau Kwong-kun, the Court of Appeal appears to have reached a contrary conclusion. However, in that appeal, both parties were unrepresented and the Court’s attention was apparently not drawn to the statutory continuance of a contractual tenancy by Section 117. 30. Accordingly, I hold that the contractual tenancy has not been duly terminated under Part IV and so still continues. The Applicant is therefore entitled to continue in possession, subject to paying the contractual rent of $26,000 per month in terms of the tenancy agreement. A rental complication is that this Tribunal, at an interlocutory stage, made an order for interim payment of rent until further order, at the rate of $28,000 per month from 1st July 1993. In the event, as neither an order for a new tenancy nor for vacant possession has been made, that interim order is no longer appropriate. I confirm that from 1st July 1993 the Applicant is only liable to pay the statutory continued contractual rent of $26,000. The Respondent will therefore have to refund any overpayment made under the interim order. I therefore make the following orders :
DATED this 20th day of October 1993.
The Applicant in person Mr. Anderson Chow instructed by Johnson, Stokes & Master for the Respondent |