HANG LUNG REAL ESTATE AGENCY LIMITED v. MATIMAK TEXTILES LIMITED

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 157 OF 2000

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ASSESSMENT OF DAMAGES

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1. The plaintiff in this action was the landlord of the premises known as Units 1505-70 on the 15^th floor of Shui On Centre, Nos.6-8 Harbour Road. By a tenancy agreement dated 31^st December 1997, the premises was let to the defendant for two years commencing from 1^st December 1997 at the rent of $123,255 per month. Special Condition 4 of the tenancy agreement provided as follows,

"[the Defendant] shall deliver up vacant possession of the said premises to [the Plaintiff] at the expiration or sooner determination of this Agreement in accordance with the provisions of this Agreement and to remove at [the Defendant's] expenses all additions erections alterations improvements fittings and fixtures upon or in the said premises whether such materials might have been made or installed prior to or after the commencement of the said term."

2. The tenancy expired on 30^th November 1999 and the defendant vacated from the premises. However, the defendant failed to comply with its obligations under Special Condition 4 despite demands and requests from the plaintiff. A writ was issued on 6^th January 2000 by the plaintiff to claim damages for breach of such obligations. No notice of intention to defend having been filed, interlocutory judgment for damages to be assessed was entered on 10^th February 2000. The assessment of damages was heard before me on 1^st September 2000.

3. The defendant did not appear by lawyers nor by any representative at the hearing. A notice of appointment of assessment was served on 22^nd June 2000 personally on the defendant by leaving the same at 5^th Floor Wing On Centre, 111 Connaught Road Central, Hong Kong. That was the registered office of the defendant according to a company search conducted by the plaintiff on 29^th June 2000. These are evidenced by an affirmation of service of Kwok Wai Nang William filed on 17^th August 2000. It is to be noted that that address was actually the office of an accountant firm, Deloitte Touche Tohmatsu as evidenced by a chop appearing on a copy of the covering letter (exhibit "KWN-2") together with which the Notice was served.

4. On the same date when the Notice of Appointment for Assessment was served, viz. on 22^nd June 2000 a M.Carsley wrote on behalf of one Matimak Trading Company to the Registrar of the High Court returning the set of documents sent to the defendant, including the Notice of Appointment of Assessment. That letter also pointed out that their company is called Matimak Trading Company Limited and claimed that they had notified the process server that he had served the wrong company. The latter point is of course contradicted by the chop appearing on the covering letter mentioned above which indicated the Notice was sent to the accountant firm instead of the office of this Matimak Trading Company at Suite 3018, Shui On Centre. They said they have never been called Matimak Textiles Limited.

5. At the beginning of the hearing, I brought this to the attention of Mr. Huang who represented the plaintiff. Mr. Huang showed me a company search in respect of the defendant (which was produced as '"P-l" at the hearing) which recorded that the defendant used to call Matimak Trading Company Limited. The company subsequently changed its name to Matimak Textiles Limited. A Marvin Carsley has all along been a director of this company. That person appears to be the same person who signed the Tenancy Agreement dated 31^st December 1997 on behalf of the defendant. By comparing the signatures, that person also appeared to be the writer of the letter of 22^nd June 2000 addressed to the Registrar. This showed that the defendant clearly had notice of the assessment heating. In any event, the Notice has been duly served on the defendant in accordance with Section 356 of the Companies Ordinance, Cap.32. Having been satisfied that the defendant had been duly served and had actual notice of the hearing (at least through Mr.Marvin Carsley), I conclude that the defendant deliberately chose not to attend the assessment hearing and the matter should be proceeded with in its absence.

6. At the hearing, apart from the Affirmation of Grace Kuok filed on 22^nd June 2000 (a copy of which had been sent to the defendant together with the Notice of Assessment), the deponent also went into the witness box to testify. Based on her evidence, which I accept to be truthful, I make the following findings.

7. When the premises was let to the defendant, it was handed over to it in a bare shell condition, viz. no decorations or fittings, only with some false ceilings and the wall was emulsion painted. Naturally, the defendant made partitions (it was an office premises) and made decorations. In the course of such decoration, the following alterations or additions were made to the premises,

8. I am satisfied by the evidence of Ms Kuok that all these fall within the meaning of "additions erections alterations improvements fittings and fixtures upon or in the said premises" which the defendant was obliged under Special Condition 4 to remove at its expenses at the end of the tenancy. The defendant was also obliged to restore the premises to the same condition as it was at the commencement of its tenancy, viz. the bare shell condition. The defendant failed to do so. On 1^st December 1999, when the premises was handed back to the plaintiff, all these additions were still there. The plaintiff demanded the defendant to comply with Special Condition 4. On 1^st December 1999, at the premises, Ms Kuok and one Ms Sally Chan of the plaintiff had demanded a Mr. Fred Liu of the defendant to do so. Mr. Liu maintained that the defendant would only hand back the premises as it was. Thereafter, the plaintiff's solicitors, Messrs. P.C. Woo & Co. wrote to the solicitors for the defendant Messrs. W.K. To & Co. on 3^rd December 1999 and 13^th December 1999 respectively with regard to the same point. Despite that, the defendant failed to remove those additions.

9. As a result, the plaintiff had to engage its own contractors to do the works. Such intention on the part of the plaintiff had been made known to the defendant by the two letters of 3^rd and 13^th December 1999. Three contractors were engaged. Nin Hing Electrical Engineering Company was engaged to remove the partitions, false ceilings, carpets. cupboards and shelves and to reinstate the false ceilings as per the bare shell condition. It was also engaged for painting the wall after the removal of the wall papers. The total cost involved was in the sum of $83,163 and the receipt was produced. Luen Shing Engineering Company Limited was engaged to relocate and reinstate the air grilles and return air louvres back to the bare shell distribution and a sum of $20,900 was incurred. This is evidenced by two receipts, one for $10,500 and one for $10,400, which have been produced at the hearing. Pyrofoe Engineering Limited was engaged to reinstate the distribution of the sprinkler system in accordance with the bare shell condition. The cost incurred by the plaintiff was $42,480 which is evidenced by a receipt, again produced at the hearing. The total costs incurred by the plaintiff is therefore $146,543.00. All these were incurred as result of the defendant's breach of Special Condition 4 and the expenses incurred by the plaintiff were a natural and probable consequence flowing from such breach.

10. Full information with regard to these items has been set out in the Affirmation of Grace Kuok filed on 22nd June 2000. Although a copy of that Affirmation has been served on the Defendant, the defendant chose not to challenge the same. Hence, the court is left with the plaintiff's evidence alone and there is nothing before me to suggest that the costs incurred by the plaintiff are unreasonable. I therefore assess the damages for the breach as pleaded in the Statement of Claim as $146,543.00. I further order the defendant to pay the said sum of $146,543.00 with interest thereon from 6^th January 2000 (the date of the Writ) to date of payment at judgment rate. The defendant also has to pay the costs of the assessment.