LIM'S DEVELOPMENT LIMITED v. BANG BANG FILMS COMPANY LIMITED

1983, No. 13050

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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ASSESSMENT OF DAMAGES

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1. The defendant makes films. The plaintiff distributes films throughout its circuit in Singapore and Malaysia. The plaintiff and the defendant agreed in writing on the 15th of July 1980 that the defendant would grant a licence to the plaintiff to show 7 of the defendant's films in the plaintiff's cinemas in Singapore and Malaysia for 5 years.

2. The particulars of those films appear in paragraph 3 of the Statement of Claim.

3. One condition in the agreement was that the plaintiff advanced to the defendant HK $500,000 which would be repaid by deductions from the next receipts of the 7 films.

4. The plaintiff advanced the $500,000 on the signing of the agreement.

5. On or about the 29th of July, 1980, the defendant delivered the first film "Do-Re-Mei" to the plaintiff and this film was shown in Singapore and Malaysia as from September 1980.

6. On or about the 17th of November 1980, the defendant delivered the second film "The Way to Hell" to the plaintiff. This film was shown in Singapore and Malaysia as from December 1980.

7. On or about the 5th of January 1981, the defendant delivered the third film "Charles' Bubbles" to the plaintiff. This film must have had some very interesting contents because it was banned by the censorship authorities in Singapore and Malaysia and was not shown. That film takes no further part in the assessment.

8. To cut a long story short, the defendant delivered no further films to the plaintiff. There was some attempt to renew the terms of the contract but these were unsuccessful and on the 19th of March 1981 the plaintiff's solicitors wrote to the defendant repudiating the contract.

9. The writ in the action was issued on the 27th of October 1983 and on the 13th of June 1984 interlocutory judgment was entered against the defendant with damages to be assessed. The assessment was before me on the 3rd of October 1986 and reserved until to-day.

10. All the documentation to which I was referred throughout the assessment was the subject of the appropriate notice under section 47 (and section 49) of the Evidence Ordinance and Order 38 of the Rules of the Supreme Court. That documentation is in great detail and justifies each and every assertion made by the plaintiff and each and every finding in the assessment. It is, in fact, possibly in too much detail and as I pointed out to Miss Kwan, who appeared for the plaintiff, that, in my view, Bundle D was superfluous and ought not to be charged for in the party & party costs which have been awarded to the plaintiff in the interlocutory judgment.

11. The plaintiff claims damages under four heads which can be found in the contents of the Particulars of Damages Claimed by the Plaintiff which were served pursuant to the order of Master Woolley on the 11th of March 1986.

1.             The deposit

12. As stated above, the plaintiff paid a deposit of $500,000. Pursuant to the repudiation of the contract, the plaintiff now claims this back. However, two films were delivered and under the contract, the defendant is entitled to credit for film rentals due to them in respect of the two films delivered.

13. The film rentals earned in respect of "Do-Re-Mei" were $8,088.80. The film rentals earned by "The Way to Hell" were $89,351.54.

14. This makes a total of film rentals of $97,440.34 for which the defendant must receive credit.

15. The accounting documents relating to the ascertainment of the two amounts of film rentals are to be found in Bundle B and Bundle C of the hearsay notice.

2.             Loss of distribution commission

16. As stated above, 4 films were not delivered. By Clause 6 of the agreement, the distribution commission of those films was to be 15% of the film rentals which were payable to the defendant.

17. In evidence before me, Mr. TEO Choong-nan, the films booking manager for a company associated with the plaintiff, stated that in fact the films were produced by the defendant and distributed elsewhere. They changed titles many times until the plaintiff lost trace of them.

18. Consequently, it is not possible to ascertain what the actual film rentals were on the 4 films which were not delivered.

19. The distribution commission earned by the plaintiff in respect of the film "The Way to Hell" was $19,754.08. This figure was also ascertainable by reference to Bundle C.

20. The plaintiff states that the damages under this head can be assessed by multiplying that figure by 4 on the basis that each of the undelivered films would, on the balance of probabilities, have earned them the same commission.

3.                 Loss of interest on deposit made under substitute contract

21. The 4 films were not delivered to the plaintiff. In anticipation of their delivery, I was told the plaintiff had entered sub-contracts for the distribution of those films around the Singapore and Malaysia circuit. These contracts can be seen in Bundle F.

22. The plaintiff had to meet its contractual arrangements with distributors or face heavy claims for damages. Accordingly, the plaintiff through its associated company, Overseas Movie Pvt. Ltd., entered into a contract (the substitute contract) with Golden Harvest (Hong Kong) Ltd. on the 11th of June 1981 to supply films in order that the plaintiff could mitigate the damage suffered by the defendant's failure to deliver. That contract is in Bundle E.

23. It was a term of the substitute agreement that the plaintiff deposited with Golden Harvest the sum of Singapore $1,000,000 which would be refunded free of interest at the expiration of the substitute agreement which, as it happens, was a period of 2 years after the commencement of the agreement.

24. A reference to Bundle E will show that the Singapore $1,000,000 was paid to Golden Harvest on the 17th of June 1981 and refunded to the plaintiff on the 17th of July 1983.

25. The plaintiff now claims the interest lost on that amount for that period. The damage under this head, I consider, should be recoverable and it is not too remote.

26. I accordingly award under this head interest on Singapore $1,000,000 from the 17th of June 1981 to the 17th of July 1983 at the Hong Kong and Shanghai Banking Corporation best lending rate (as it was from time to time during that period) plus 1%.

4.              Interest

27. As stated above, the plaintiff accepted the repudiation of the contract with effect from the 19th of March 1981. I accordingly award interest on the amounts set out at items 1 and 2 above from the 19th of March 1981 to the date hereof at the Hong Kong and Shanghai Banking Corporation best lending rate (as it was from time to time during that period) plus 1%.

28. From the date hereof, the principal sums referred to in items 1 and 2 above will attract interest at the judgment rate in accordance with section 49 of the Supreme Court Ordinance, Cap. 4.

29. The damages awarded under item 3 above are in the form of interest upon a capital sum. It falls to be considered whether in the light of section 48(2)(a) of the Supreme Court Ordinance, interest can be awarded upon this sum.

30. In the light of the authority of Bushwall Properties Ltd. v. Vortex Properties Ltd. [1975] 2 All ER 214, kindly supplied by Miss Kwan, I am satisfied that interest can be so awarded.

31. Oliver, J. at page 225F considers a provision in an English statute which is in identical terms to section 48(2)(a) of Cap. 4 and says :

"It appears to me that the (provision) was clearly aimed at the sort of case where an interest-bearing debt is sued for (for instance, a mortgage debt or an instalment of interest in arrear). In such a case the court is not to award interest on such part of the sum claimed as represents contractual interest. Although what is claimed here is simply a replacement of a sum of money, the quantum of which is calculated by reference to interest which the plaintiffs have had to pay, the sum so claimed is not in any relevant sense interest itself; it is the sum payable by way of damages for breach of contract, and I see no reason why it should not be capable of carrying interest in the ordinary way. "

32. Oliver, J. is describing a situation which is upon all fours with the plaintiff's claim under this head. The sum calculated to be due to the plaintiff under item 3 above shall, therefore, carry interest from the 17th of July 1983 to the date hereof at the Hong Kong and Shanghai Banking Corporation best lending rate (as it from time to time during that period) plus 1%. From the date principal sum due under item 3 as at 17th of July 1983 shall bear interest at the judgment rate in accordance with section 49 of the Supreme Court Ordinance, Cap. 4.

33. The plaintiff's costs in the assessment shall be paid by the defendant together with the costs in the action to be taxed if not agreed. There will be a certificate for counsel.