SUN HUNG KAI REAL ESTATE CONSULTANTS LTD v. VICTORIA HARBOUR CATERING GROUP LTD

DCCJ4974/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4974 OF 2006

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ASSESSMENT OF DAMAGES

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1.  This is an assessment of damages of the Plaintiff’s claim. 

2.  The Plaintiff is the owner of the Premises known as Shop No.  601 to 630 on Level 6, Tsuen Wan Plaza, Tsuen Wan, New Territories, Hong Kong (“the Premises”), and the Defendant was the former tenant of the Plaintiff at the Premises.

3.  By a tenancy agreement dated 10 November 2003 made between the said parties (“the Tenancy Agreement”), the Premises were let by the Plaintiff to the Defendant to operate as a restaurant for a term of 4 years commencing on 30 June 2002 and expiring on 29 June 2006.

4.  The parties also agreed that the base rent of the Premises was $369,530.10 per month, exclusive of rates, management charges and air-conditioning charges, payable in advance on the first day of each and every calendar month.

5.  However, in breach of the terms of the Tenancy Agreement, the Defendant vacated the Premises on 12 May 2006 and returned the keys  to the Plaintiff unilaterally without the Plaintiff’s consent

6.  On 13 May 2006, the Plaintiff, through its solicitors, sent a letter to the Defendant, notifying the Defendant that the Plaintiff accepted the Defendant’s repudiatory breach of the Tenancy Agreement and held the Defendant liable for all consequential damages arising from such breach including loss of rental income of the Premises.  The Plaintiff, therefore, brings the present action against the Defendant to claim for such damages.

7.  As the Defendant had failed to file any Notice of Intention to Defend, the Plaintiff obtained interlocutory judgment against the Defendant on 15 December 2006, and this is now the assessment of the Plaintiff’s damages.

8.  Ms Chau Lin-fan, Fanly, the Plaintiff’s authorised agent, gave a computation of the Plaintiff’s loss in paragraphs 18 and 20 of her affidavit.  Ms Chau also gave evidence in this hearing of assessment, and I accept her evidence as the truth.  She also gave a detailed explanation as to the breakdown of the damages, and each of the items of damages is supported by documents and is, in my view, reasonable.

9.  The Plaintiff claims for the outstanding rentals from 1 April 2006 to 29 June 2006.  Obviously, after the Plaintiff’s acceptance of the repudiation on the part of the Defendant, the damages after that should be claimed as mesne profits.  However, I accept that it would be quite reasonable for the Plaintiff to claim for the loss for the whole period because, taking into account that the Defendant had failed to reinstate the Premises to their former state, the Plaintiff would have to incur expenses and time would be spent for such kind of decoration and reinstatement work.  It would simply be impossible for the Plaintiff to rent out the Premises within such a short period of time.  Hence, all the outstanding rental, air-conditioning charges, management charges and rates and licence fees claimed by the Plaintiff are, in my judgment, reasonable.

10.  Ms Chau also gave evidence as to how the reinstatement costs were being calculated.  Since the Defendant did not reinstate the Premises to their former state, the Plaintiff had to engage contractors to carry out such work.  The awarding of the contract was made after a tendering process.  About 5 or more contractors had been invited to submit tenders for the work, and the present contractor offered the lowest tender for such work.  In such case, the expenses incurred were reasonable and I also allow the Plaintiff to claim for the reinstatement costs in full.  Further, the removal charges and the company registry and business registration search fees are reasonable losses as a result of the Defendant’s breach of the Tenancy Agreement.

11.  The Plaintiff also give credit to all the deposits and bank guarantees held by it under the Tenancy Agreement, and so I accept that the Plaintiff’s computation of the loss in the total sum of $663,023.75 as reasonable loss suffered by the Plaintiff, and I therefore assess the Plaintiff’s damages accordingly.

12.  I also allow the Plaintiff to claim interest at the existing judgment rate, 10.75 %,  from the date of the writ to the date hereof, but I only allow the Plaintiff to claim interests on the principal sum of $649,320.33.  I deduct the late payment charge of $13,703.42 from the total sum claimed by the Plaintiff because, if I award interest including that sum, it would mean that there would be interest on interest, and the court does not see it fit to do so.

Representation: