CHANWAY SHATIN NEW TOWN DEVELOPMENT LTD v. WONG TAK KWONG FRANCIS AND OTHERS

1988, No. A6930

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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ASSESSMENT OF DAMAGES

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1. The Plaintiff is the landlord of the premises known as Shop Nos. 1A to 1D, Ground Floor, Chanway Shopping Centre, Shatin, New Territories. The Defendant's were the tenants of the said shops under a Tenancy Agreement dated 21st September 1987 for a term of 2 years from 4th September 1987 at a monthly rental of $37,000.00. The Defendants operated a video game centre at the said shops. The Defendants started failing to pay for the rentals, air-conditioning charges, service charges and rates since 1st July 1988 and in or about early September 1988 it was discovered that the said shops had been deserted. Hence, the Plaintiff brought these proceedings against the Defendants and had obtain judgment in default of a Notice of Intention to Defence on 31st January 1989 in the sum of $126,566.00 for lose suffered up to 30th September 1988 and interest thereon at the rate of 2% per month from 1st October 1988 to the date of judgment and costs. Interlocutory judgment for further damages to be assessed was also obtained. The Defendants were absent at the assessment.

2. The Plaintiff called one Yettie Ng Wai Han, the manager of Kwong Li Nam Investment Agency Ltd. (the attorney of the Plaintiff under a Power of Attorney dated 18th March 1987, P.1), who was the only witness. Various documentary evidence was produced by her in support of the Claims of the Plaintiff as set out in a statement of the accounts (P.5). I accept her oral testimony, insofar as the same relates to factual matters, and the documentary evidence so produced.

3. Though it was alleged in the Statement of Claim that the shops were found to be deserted "in or about early September 1989" (Papa. 9) and that the tenancy "is forfeited" (para. 11), no evidence was led as to the precise time when the Plaintiff had accepted the abondonment of the tenancy and effected the re-entry. The Plaintiff managed to relet shop No. 1A for a term of 2 years from 6th January 1989 (with a rent-free period of 21 days) at a monthly rental of $19,000.00, and shop Nos. 1B - D for a term of 2 years from 14th February 1989 (with a rent-free period of 14 days) at a monthly rental of 30,000.00. The Plaintiff claims:-

4. * (The writ herein being issued on 20th October 1988).

5. The loss suffered by the Plaintiff as per the claims under heads (a), (b), (c), (d), (e), (f) and (h) have been duly verified by documentary evidence and are recoverable.

6. The Plaintiff has made no claim at all in the Statement of Claim for any rates. The claim for rates under head (g) covered the period prior to the date of the re-entry as well as after. If pleaded, the rates prior to the date of the re-entry would have been included in the default judgment. Rates, being an item of special damage, must be specifically pleaded before it can be recoverable at the trial (see Ilkiw v. Samuels [1963] 1 W.L.R. 991). No evidence can he adduced without the special damage being pleaded and particularised in the pleadings (see Hayward v. Pullinger and Partners Ltd. [1950] 1 All E.R. 581). The Plaintiff's claim for rates thus failed for lack of pleadings.

7. The new tenancies were for periods extending beyond September 1989 when the Defendant's tenancy would have expired but for the early termination. The combined new rentals for the shops is substantially higher than the $37,000.00 under the Defendant's tenancy resulting in a higher agency commission. In the premises, Plaintiff's solicitor was prepared to concede half of the claim under head (h) for agency commission of a month's rental i.e. $24,5000.00. There was no oral testimony from the Plaintiff as to under what circumstances were the said commission paid. I have noted that under the said Power of Attorney the said attorney has irrevocable authority to let out the shops upon such terms as it thinks fit. The appointment was presumably to protect the interest of the Nanyang Finance Co. Ltd. who was described as having made a loan of $20,000,000.00 to the Plaintiff by a Loan Agreement. However, there is no evidence at all as to how the rate of a month's rental was fixed and whether such commission is reasonable in quantum in the circumstances. The Power of Attorney did not provide for any renumeration or commission to the said attorney for the discharge of its duty or power thereunder. There is no evidence that the said attorney was also appointed or did act as "estate agent" in addition to being attorney of the Plaintiff in finding new tenants. In the absence of any basis being established for the payment of such "agency commission", the Plaintiff's claim under head (h) must necessarily fail.

8. Paragraph 7 of the Statement of Claim sets out the particulars of the costs and expenses incurred by the Plaintiff in the said distraint action in the total sum of $13,650.00. It was further pleaded that the net proceeds of sale amounted to $1,650.00. In support of the claim the Plaintiff only produced a receipt dated 22nd August 1988 for the deposit for watchman fee in the sum of $4,200.00 (P.2). There was no evidence adduced documenting or explaining the various items as pleaded. But P.W.1's unchallenged evidence is that cots in distraint proceedings amounted to $13,650.00 and a "refund" of $8,879.00 was received from the District Court. It is not clear if the said "refund" included the said net proceeds of safe. No credit has been given to the said $1,650.00 in the default judgment. I am not satisfied that the said net proceeds of sale formed part of the refund in the absence of any evidence. In the premises, the sum of $1,650.00 will come out of the $13,650.00 leaving a balance of $12,000.00.

9. As the precise date of termination of the tenancy is not known, it becomes impossible to ascertain for what period the loss represents arrears of rental, if at all, between 1st October 1988 and 20th October 1988. The loss after the issue of the writ on 20th October 1988 must necessarily be mesne profits. As mesne profits represents damages for the loss of use and occupation of the shops, it would not he appropriate to award interest on it under s.48 of Cap.4, nor could such interest be recoverable under the contract. As the air-conditioning and service charges are disbursements, interest is recoverable on them. There will be interest on the following disbursements from the following dates of payment:-

(1) On the sum of $5,202.00 (for October 1988) under receipt dated 17.10.1988 (P.6) from 13.10. 1988;

(2) on the sum of $5,202.00 (for November 1988) under receipt dated 4.1.1989 (P.7) from 4.1.1989; and

(3) on the sum of $10,270.50 (for December 1988 to February 1989) under an undated receipt (P.8) from 26.2.1989;

to the date of this assessment at the rate of 1% per annum over the prime rate.

10. In the premises, damages are certified in the sum of $69,006.36 ($23,870.97 + $2,285.16 + $1,070.97 + $140,771.89 + $11,791.74 + $5,526.63 + $5,755.00 + $12,000.00 - $8,879.00 - $125,187.00) with interest on the said disbursements as set out hereinabove. Interest on the sum of $69,006.36 will run at judgment rate after the date of assessment until payment. Costs of the assessment is to be borne by the Defendants.

11. Dated this 13th day of April 1989.