HKCB FINANCE LTD v. PYRAMID DISPLAYS & DESIGN LTD AND OTHERS

DCCJ4372/2002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4372 OF 2002

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J U D G M E N T

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1. This is a hearing for assessment of damages.

2. The plaintiff is and was at all material times a company incorporated in Hong Kong with limited liability and is carrying on business as a deposit-taking company licensed under the Banking Ordinance in Hong Kong.

3. By a lease agreement No. 0010018727000 dated 26 May 2000 and made between Newcourt Credit (Hong Kong) Limited, the plaintiff's predecessor, as the lessor of the one part and the 1st defendant as the lessee of the other part ("the agreement"), the plaintiff's predecessor agreed to let and the 1st defendant agreed to take on lease one set of new "JEI" scanner with other accessories ("the goods") on the terms and conditions set out therein.

4. By a guarantee in writing dated 26 May 2000 ("the guarantee") signed and given by the 2nd and 3rd defendants in favour of the plaintiff in consideration of the plaintiff's predecessor having at their request entered into the agreement, the 2nd and 3rd defendants have agreed to guarantee on demand as primary obligor the due payment by the 1st defendant of each and every sum that should from time to time become due under the agreement and the due observance and performance by the 1st defendant of each and every term and condition of the agreement and undertook to indemnify the plaintiff on demand against all costs, losses, damages or expenses which the plaintiff might sustain by reason of the neglect of the 1st defendant to observe and perform any of the said terms and conditions of the agreement.

5. By an assignment dated 30 June 2000 made between the plaintiff and the plaintiff's predecessor, all the rights, titles, interests, benefits, claims, powers and authorities of the plaintiff's predecessor in or under the agreement and the guarantee were assigned to the plaintiff.

6. By a notice in writing dated 30 June 2000, the plaintiff gave notice to the 1st, 2nd and 3rd defendants of the said assignment.

7. Under the agreement the 1st defendant agreed to pay to the plaintiff an initial sum of $112,991 on 26 May 2000 followed by 35 equal monthly rentals of $13,391 each commencing from 26 June 2000 and thereafter on the 26th day of each succeeding month until full payment.

8. Since the commencement of the agreement the 1st defendant has only paid the initial sum of $112,991 and 21 monthly rentals in the total sum of $281,211 totalling $394,202 and has thereafter in breach of the agreement not paid any rental to the plaintiff despite the plaintiff's repeated requests and demands.

9. By a letter dated 14 June 2002 to the 1st defendant, the plaintiff terminated the leasing of the goods and the agreement. The 1st defendant has further, in breach of the agreement, failed to deliver up the goods to the plaintiff. The plaintiff is still unable to repossess the goods up to the date. The plaintiff has therefore suffered loss and damages as a result.

10. By two other letters both dated 14 June 2002, the plaintiff demanded the 2nd and 3rd defendants as the guarantors payments of the sums due by the 1st defendant under the agreement. Despite the said demand, the 2nd and 3rd defendants have failed to make any payment under the guarantee.

11. Judgment was entered by Registrar Chow on 26 August 2002 that the defendants do pay the plaintiff (1) the sum of 49,876.16 together with interest thereon at the rate of 2 per cent per month from 14 June 2002 to the date of the order and thereafter at judgment rate until payment; (2) damages to be assessed; and (3) costs.

12. The plaintiff has filed a witness statement of Mr Chan Wai-cheung who confirms the truth of the contents of this statement today. The 1st defendant has up to the date failed to deliver up the goods to the plaintiff and subsequently the plaintiff has made various attempts to locate the goods but all in vain, and the present whereabouts of the goods is still unknown to the plaintiff.

13. In the circumstances the plaintiff has suffered loss as the plaintiff is now unable to re-let the goods for the whole of the period between the date of termination and the end of the lease period at a rate of rental substantially equivalent to the rental as provided for in the agreement, i.e. $13,391 per month.

14. Furthermore, the plaintiff is unable to sell or dispose of the goods in order to minimise its loss. According to the agreement, if the plaintiff is unable to repossess the goods for any reason, the plaintiff is entitled to payment of the primary residual value of the goods, i.e. $200 as stated in the agreement.

15. As at the date of termination of the agreement, i.e. 14 June 2002, there were 11 rentals not due totalling $147,301.

16. After the judgment made by Registrar Chow, the plaintiff received from an unknown person six post-dated cheques in the total sum of $80,346 drawn by the 1st defendant. And taking into account of the aforesaid sum of $80,346, the plaintiff has still suffered loss in the sum of $66,955.

17. Damages of the plaintiff is therefore assessed as $66,955 with interest from the date of judgment at judgment rate until payment.

18. Costs of the action be to the plaintiff.