WING HING PROVISION WINE & SPIRITS CO LTD v. EASY KEY LTD

DCCJ 4722/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4722 OF 2014

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J U D G M E N T

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1.  This is the trial of the Plaintiff’s claim against the Defendant for damages as a result of the latter’s repudiation of a renewed tenancy agreeemnt, such renewal being denied by the Defendant; and the Defendant’s counterclaim for return of rental deposit.

Brief Background

2.  The Plaintiff and the Defendant are in the relationship of landlord and tenant. The Plaintiff is the registered owner of 13^th Floor, Wing Hing commercial Building, 16 Sutherland Street, Hong Kong (”the Premises”). The Defendant was the tenant of the Premises pursuant to a tenancy agreement concluded on 10 February 2012 for a term of 2 years from 15 February 2012 to 14 February 2014 at a monthly rent of $15,000, inclusive of management fee and Government rates (“old tenancy agreement”). A sum of $30,000 being rental deposit had been paid to the Plaintiff under the old tenancy agreement. There is no dispute that the Defendant has paid its monthly rental punctually, at least to the satisfaction of the Plaintiff for the entire term of the old tenancy.

3.  What is in dispute is whether the old tenancy has been renewed for a further term of 2 years after its expiry.

4.  It is the Plaintiff’s case that the old tenancy had been renewed for another 2 years from 15 February 2014 to 14 February 2016 with all terms agreed upon. Its case is that the agreement was concluded through negotiation between Mr Yip of the Plaintiff and a Ms Law of the Defendant. The new rent for the renewed tenancy was $23,888 per month, inclusive of management fee and Government rates. The Plaintiff then prepared the contract in duplicate, with its part duly signed, and sent the same to the estate agent, one Miss Betty Chui of Netproperty Consultants Limited (“Netproperty”) for passing over to the Defendant for signature. The Defendant even paid the first month’s rent of $23,888 on 12 February 2014. It was also confirmed through Netproperty that the duly signed contract had allegedly been sent back, though the Plaintiff had never got a copy.

5.  The Defendant’s case is diametrically different. Its case is that Ms Law and Mr Yip reached no agreement on the renewal because the rent demanded by the plaintiff was too high. Since they required time to move out, the parties reached an agreement that the old tenancy would be extended for only 6 weeks. The rent for this period was agreed at $23,900. It was paid on 12 February 2014. It was the Defendant’s case that they moved out of the Premises on 13 March 2014[1]. The Defendant counterclaimed for return of the $30,000, being rental deposit paid under the old tenancy agreement. The Defendant also counterclaimed for a sum of $138,000 being the repair expenses which it had incurred during the term of the old tenancy on the ground that the Plaintiff had failed to effect repair despite request. Even if, which is denied by the Defendant, there was any concluded renewed tenancy, the Defendant asked for the counterclaimed amount be applied to set-off the damages claimed by the Plaintiff.

6.  The Plaintiff’s defence to the counterclaim is that the rental deposit of $30,000 paid under the old tenancy agreement has been transferred to the renewed tenancy pursuit to the parties’ agreement, and it had been forfeited. No credit should be given to it for damages according to the terms of the renewed agreement. Further the Defendant is not entitled to claim any repair as alleged or at all because the Premises was leased to the Defendant on an “as is” basis. The old tenancy agreement provided that it was the responsibility of the tenant for any repairs and maintenance of the Premises.

The absence of Defendant’s Witness and Dropping of Part of Counterclaim

7.  At the commencement of trial, Mr Lok, solicitor for the Defendant, informed the Court that the Defendant’s only witness, Ms Brigitte Susanne Rumstadt, who signed a witness statement dated 30 December 2015, had decided not to attend trial to give evidence. In addition, the Defendant would drop its counterclaim save and except its claim for return of the rental deposit. On the other hand, Mr Wong acting for the Plaintiff dropped its claim for contractual interest at the rate of 28% per annum. He relied only on sections 49 and 50 of the District Court Ordinance.

8.  The Plaintiff is therefore put to strict proof of its case. Mr Lok admitted that he had only a very limited scope of cross-examination, perhaps limiting to testing the credibility of the witnesses based on their own evidence.

9.  Mr Yip Shu Lam (葉樹林) and Sze Chun Kuen (施振權), who had each made two prior written statements for the Plaintiff, testified for the Plaintiff. In addition, one Ms Chui Wai Yin, also known as Betty Chui was subpoenaed to attend Court to give evidence. According to Mr Wong, Ms Chui refused to testify unless compelled despite having given a prior written statement in favour of the Plaintiff.

10.  The parties, particularly the Plaintiff, did not define their issues clearly in their pleadings though they confirmed in their respective checklists that they saw no problem with pleadings. At the pre-trial review, the parties were asked to file a statement of agreed issues to be disposed of at trial. The same was filed on 3 May 2016.

11.  After reading the said agreed statement, this Court does not consider it necessary to repeat the same here. Suffice it to say that they agree the dispute centres on, as a matter of fact, whether the parties have come to agreement on the renewed tenancy as alleged by the Plaintiff or at all. If the Court finds for the Plaintiff, whether there a repudiatory breach on the part of the Defendant entitling the Plaintiff to accept such breach and sue for damages, and what its quantum is. No matter what, whether the Plaintiff is entitled to forfeit the rental deposit of $30,000 without giving credit to it when suing for damages. The Defendant does not take issue whether repudiatory breach has been sufficiently pleaded.

The Evidence

Ms Betty Chui

12.  Ms Chui was a director of Netproperty. She was shown a signed statement written in Chinese dated 8 April 2015[2] (exhibit P-1). Initially she said outright it was not her statement. She later clarified that although the signature on it was subscribed by her, there was neither heading nor her description above the numerated paragraphs of the statement when she signed it. The heading might therefore have been added by the Plaintiff later.

13.  There were only 5 paragraphs in the statement. She was taken to them paragraph by paragraph. It is fair to say that she basically confirmed the content of the statement save and except two matters, namely, (i) she could not recall the amount of the rent agreed on by the parties and whether and if so, when it was paid; and (ii) she could not recall the identity of the Plaintiff’s staff who asked her to send over the tenancy agreement to the Defendant for signature.

14.  She confirmed that her company acted as the estate agent for the parties in respect of the old tenancy. Shortly before the expiry of the old tenancy the Defendant requested her to approach the Plaintiff with a view to renewing the old tenancy for another two years. Through her effort, the parties agreed on rent of certain amount with other terms same as before. She confirmed that she was instructed by someone from the Plaintiff to send over the tenancy agreement to the Defendant by email, and asked the latter to sign and return the same as soon as possible. However, the boss of the Defendant had indicated to her that, because of urgent business, she needed to go abroad, and would sign the same soonest after her return.

15.  Ms Chui was shown several emails exchanged between her and a person named Susann Rumstadt, which she identified as the boss of the Defendant, between 19 and 20 March 2014[3]. She confirmed these emails were copied to the Plaintiff upon the Plaintiff’s request. In her email dated 19 March 2014, she said to Susann that the Plaintiff “… wondered if she still wanted to renew the lease”, and “they [the Plaintiff] didn’t receive any TA [she explained meaning tenancy agreement] copy from and the rental for this month [March] either”. On the next day Susann relied as follows:

“Hi Betty,

I am terribly sorry for having kept you waiting. I left German directly heading to Michigan because of an unfortunate family incident. I don’t want to send the TA by email and I already sent the TA by Post to my office. Unfortunately my staff is back to HK on 28^th March at the earliest. My assistant will hand over the contract to you, she will call you to make an appointment.” (Emphasis supplied)

16.  Ms Chui said that she was unable to hand the hard copies of the renewed tenancy agreement to the Defendant for signature. She should have already sent over a soft copy to Susann for consideration, and probably around the time when the old tenancy expired, otherwise Susann would not be able to get a copy and sent back the same. She agreed that from the email, it could be inferred that Susann had already signed the tenancy agreement. She said the soft copy might have been sent to her by the Plaintiff. She said the copy she sent over to the Defendant was more or less the same as that at Bundle B/132-136.

Mr Yip Shu Lam

17.  Mr Yip basically confirmed what he had said in his two statements made on 8 December 2015 and 9 April 2016. He was the director and general manager of the leasing department of the Plaintiff. In brief, he confirmed that on or around 12 December 2014, he was informed by Mr Sze Chun Kuen, a manager of the leasing department that the Defendant would like to renew the tenancy of the Premises. A few days after 12 December 2014, he called Ms Law. Through negotiation over the phone for over 3 times they finally came to terms on the renewed tenancy: the term was for two years expiring on 14 February 2016; the monthly rent being $23,888 (inclusive of management fee and Government rates)[4] with all other terms remaining the same as the old tenancy agreement. The rental deposit of $30,000 paid under the old tenancy agreement would be transferred as rental deposit under the renewed tenancy agreement. The Defendant would, upon signing of the renewed agreement, pay the shortfall of $17,776. They came to terms in or about early January 2014. Ms Law told him that she would be going to Taiwan soon. Her boss was also out of town but would sign the agreement on return. She would arrange for payment of the first month rental under the renewed tenancy. Ms Law even left her Hong Kong and Taiwan phone numbers with him.

18.  After preparing the agreement in duplicate, he signed the same on or about 10 January 2014. He then asked Mr Sze to pass the two signed copies to Netproperty for onward transfer to the Defendant for signature.

19.  According to the Plaintiff’s record, a sum of $23,900 was received by the Plaintiff via its banker, namely, Bank of China (Hong Kong), on 12 February 2014. It was remitted from HSBC for the Defendant. After deducting bank charge of $12 by the Plaintiff’s bank, a net sum of $22,888 was credited[5]. It is Mr Yip’s evidence that it was the Defendant’s practice in the past that $12 being the Plaintiff’s bank charge would be sent together with the rent for a month[6].

20.  He said in or about 16^th or 17th March they found out that monthly rent for March/April 2014 remained unpaid. In order to chase for payment the Plaintiff’s representative attended the Premises. It was found out that the Defendant had vacated the Premises. The doors were even left unlocked. They therefore put in lock of the Premises. The purpose was not to allow any trespasser entering the Premises.

21.  A new tenant was finally found and the new tenancy for a period of 3 years commencing 21 July 2017 was signed on 1 August 2014. The new rent was at $22,888 which was inclusive of management fee but exclusive of Government rates. There was also a rent free period from 21 July to 31 August 2014.

Mr Sze Chun Kuen

22.  Mr Sze was the manager of the Plaintiff’s leasing department. He confirmed his two statements respectively of 26 October 2015 and 9 April 2016 to be true and correct. He confirmed that on 12 December 2014, he received a phone call from Ms Law of the Defendant, requesting renewal of the tenancy for the Premises for a further term of two years. He immediately reported the matter to Mr Yip Shu Lam who had thereafter taken over the negotiation with Ms Law. He was later told by Mr Yip that agreement had been reached. The renewal was for 2 years immediately after expiry of the old tenancy. Save and except that the rent would be revised to $23,888 (inclusive of management fee and rates), all other terms remained unchanged.

23.  He was directed by Mr Yip to liaise with Ms Law concerning signing of documents and payment. He handed over to Netproperty the renewed tenancy agreement (in duplicate) with the Plaintiff’s part as landlord duly signed. On cross-examination, he confirmed he only contacted Netproperty after Mr Yip had successfully come to agreement with Ms Law. He said that the main role of Netproperty was to contact the Defendant for a signed copy of the tenancy agreement, as the Defendant was introduced to them by Netproperty. He also made a photocopy of the agreement and tried to send the same to the Defendant at the Premises. He could found no one there. He therefore inserted the same into the Defendant’s letterbox. He later received a phone call from Ms Law informing him that her boss was then out of town on urgent matters. They would sign the same immediately after return of her boss.

24.  He confirmed that the revised rent for the first month of the renewed tenancy had been duly paid.

25.  He testified that Betty Chui of Netproperty had also told him that the responsible person of the Defendant was out of town on urgent matters, and could sign the tenancy agreement after returning to Hong Kong. He said Ms Betty Chui might have probably scanned the tenancy agreement and sent it over to the responsible person by email. In January 2014, he was told by Ms Chui that the said renewed agreement had been signed as the responsible person had so confirmed with her over email.

26.  At trial, he said that he personally attended the Premises on 15 March 2014 with a view to collecting rent. However, he found out that the Defendant had already moved out without any prior notice. The door was unlocked and lights switched off. All office furniture such as desks, chairs, computers, fax machines, telephones, etc, had been removed. He called Ms Law but her line could not be put through. He immediately reported the matter to Mr Yip. He also asked Betty whether she knew anything about the moving out.

27.  He admitted he immediately asked a locksmith to change the lock, but said it was entirely a measure to guard against trespassers. He said that it was not until 25 March 2014 that they formally retook the Premises because they were unable to locate any responsible person of the Defendant, and that rent had remained unpaid. A letter for termination had also issued to the Defendant though the same was not in the trial bundle. On that date, they issued notices to, inter alia, estate agents that the Premises was available for leasing.

Discussion

28.  Despite Mr Lok’s cross-examination of the witnesses, the witnesses were unshaken in their evidence. Apparently, Mr Lok would like to establish that Ms Law had no authority to make a binding contract on the Defendant’s behalf. However, such line of cross-examination is totally unimpressive and, as a matter of evidence, cannot be substantiated. It is because according to the Defendant’s own pleaded case, it is Ms Law who represented the Defendant to negotiate with Mr Yip of the Plaintiff for the terms of the renewed tenancy[7]. It was only when they failed to agree on the rent that she then agreed with the Plaintiff on the 6-week extension. This Court considers the assertion that Ms Law has no authority is totally groundless.

29.  The Defendant puts in no evidence to substantiate its defence and counterclaim. In any event, Ms Rumstadt’s statement is too general and lack particularities to be believable, e.g. who on behalf of the Plaintiff come to the agreed rate of $24,000 (or $23,900, or $22,888), and how this sum was fixed. Further she did not deny the agreement as alleged by her was in fact reached by Ms Law and the Plaintiff, but Ms Law was not called to testify. In the Court’s judgment, even if her statement were to be confirmed and admitted, on balance this Court would still attach little weight, if any, to her evidence.

30.  On a balance, this Court accepts as facts the following. Ms Law had the necessary authority to represent the Defendant to negotiate and agree on the terms of the renewed tenancy. Through her negotiation with Mr Yip, the parties came to agreement to renew the tenancy of the Premises for 2 years commencing upon expiry of the old tenancy agreement from 15 February 2014 to 14 February 2016 at a monthly rent of 23,888 (inclusive of management fee and Government rates) with all other terms remaining the same as the old one; and that the rental deposit of $30,000 paid under the old tenancy agreement would be transferred to the renewed one as rental deposit thereunder.

31.  This Court accepts that a soft copy of the renewed tenancy agreement signed by the Plaintiff had been sent by Ms Betty Chui to Ms Rumstadt via email. The fact that Ms Rumstadt had confirmed that the renewed tenancy agreement had been returned shows that the Defendant had accepted the terms of the renewed tenancy as set out therein, otherwise she would have expressed otherwise and asserted the 6-week time extension[8]. From Ms Rumstadt’s email, it can be inferred she had already signed on them. Although the signed copy never reached the Plaintiff, this Court accepts the terms of the renewed tenancy between the parties should be the same as the one already signed by the Plaintiff as per Trial Bundle B/132-136.

32.  This Court rejects the Defendant’s allegation that the $23,888 paid was for a short extension of 6 weeks. First of all, there is totally no evidence from the Defendant to support this. Such allegation has never been mentioned in any contemporaneous documents including emails exchanged between Netproperty and Susann. Secondly, the money paid over, according to the bank remittance advice produced by the Plaintiff, was $23,900, not $24,000 as alleged by the Defendant[9]. The net sum received by the Defendant after deduction of bank charge, is $23,888, not 23,900. Thirdly, as evidenced from the Customer Credit Advices issued by the Plaintiff’s banker Bank of China (Hong Kong)[10], this Court accepts that in the past when the Defendant remitted its rent for a particular month it had the habit of including a sum of $12 being the handling charge of the Plaintiff’s bank. Accordingly, it is more likely than not that the amount intended to be remitted this time is $23,888, which tallied with the Plaintiff’s case, and not $23,900 as alleged by the Defendant. Finally, it is noted in each of the remittance for rent for a month, the Defendant used to adding a message in their remittance. This message was shown at the bottom of the Custom Credit Advice issued by the Plaintiff’s bank. The purpose for which the money is remitted can normally be identified by reference to this note: namely, either “FROM EASY KEY LTD. RENTAL FEE: [month] [year]” or simply “FROM EASY KEY LTD. RENTAL FEE”. In the bank advice issued on 12 February 2014 for $23,888, the following message was stated: “FROM EASY KEY LTD. RENTAL FEE FEB 2014”. This note is no different from its other notes when the Defendant remitted money for rent of a particular month. This Court believes that had the Defendant intended the rent to cover six weeks instead of only for February 2014[11], a more accurate description would have been stated.      

33.  By reason of the payment aforesaid, it is the finding of this Court that Defendant had part performed the renewed tenancy agreement.

34.  This Court also accepts Mr Sze’s evidence that he did attend the Premises on 15 March 2014 and found that by then, the Defendant had already moved out. In fact according to the Defendant’s pleaded case, the Defendant moved out on 13 March 2014.

35.  In the Court’s judgment, the moving out, leaving the Premises unattended and unlocked, together with its failure to pay rent for March 2014 evinced a clear and unequivocal intention on the part of the Defendant to abandon the Premises and give up the tenancy at least as at 15 March 2014. It amounts to a repudiation of the renewed tenancy during its term by the Defendant. This Court accepts that, after the chasing after of Susann by Ms Betty Chui but to no avail, on or about 25 March 2014 the Plaintiff accepted the Defendant’s repudiation and terminated the renewed tenancy by serving on the Defendant a notice[12], re-entering the Premises and putting it up for lease again. The effect of this is that the Plaintiff is entitled to remedies same as common law damages for breach of contract.

36.  Mr Lok does not seek to argue that the remedy of damages followed from breach of contract is inapplicable to breach of tenancy. Following the Court of Appeal decision in Well Century Holdings Limited v Leung Kam Yu[13], this Court considers that the common law damages remedies and the forfeiture remedies can co-exist, and the Plaintiff can claim common law damages against the Defendant for its repudiatory breach of the tenancy agreement.

Quantum of the Damages

37.  The Plaintiff’s evidence on quantum is basically unchallenged. This Court accepts the same in its entirety. This Court accepts that;

i) the Defendant moved out of the Premises without reinstating the Premises, acting in breach Clause N of the renewed tenancy agreement. As a result the Plaintiff has to incur $20,700 in appointing its contractor to restore the Premises to its original state;

ii) the Plaintiff, upon acceptance of the Defendant’s repudiation on 25 March 2014, started to instruct estate agents to re-let the Premises. There was no delay on the part of the Plaintiff to put the Premises on market for lease again, but it was only on 5 July 2014 that the Plaintiff managed to find a new tenant for the Premises through estate agent Sun Property Consultants Limited (新信物業顧問有限公司). Pursuant to the tenancy agreement signed between the Plaintiff and the new tenant dated 1 August 2014, the term is for 3 years commencing 21 July 2014 until 20 July 2017 with rent-free period from 21 July to 31 August 2014 at a monthly rental of 22,888, inclusive of management fee. This Court accepts Mr Yip’s evidence that the new rent aforesaid is exclusive of Government rates[14].

38.  Accordingly, the Plaintiff’s loss of rental during the renewed tenancy period:

i)	15 March 2014 to 31 August 2014:
	HK$23,888 x 5 17/31 = HK$132,540
ii)	1 September 2014 to 14 February 2016
	HK$ (23,888 - 22,888) x 17 14/28 = HK$17,500
	LESS
iii)	Rates saved by the Plaintiff during the renewed tenancy period:

	a)	21/7/2014 - 30/9/2014	HK$0
	b)	1/10/2014 - 31/12/2014	HK$2,175
	c)	1/1/2015 - 31/3/2015	HK$2,175
	d)	1/4/2015 - 30/6/2015	HK$0
	e)	1/7/2015 – 30/9/2015	HK$0
	f)	1/10/2015 – 31/12/2015	HK$2,362
	g)	1/1/2016 – 14/2/2016	HK$2,363 x 45/90
			=HK$1,181.5
			----------------
		Total:	HK$7,893.5

39.  The total loss of rental during this period is HK$142,146.5[15].

40.  Since the measure of damage is the loss of rental and the amount to restore the Premises to its original state as if the Defendant has performed the contract, the total damages suffered by the Plaintiff are therefore HK$162,846.5, being the aggregate of HK$142,146.5 and HK$20,700.

Forfeiture of the Deposit

41.  Clause E of the renewed tenancy between the parties provides:

“No construction fee or transfer fee is due from the Tenant but it shall pay to the Landlord the Security Deposit equivalent to 2 months’ rental and management fee of HKD36,716 and HKD11,060 respectively for the due observance and performance of the terms and conditions therein contained and on his part to be observed and performed. Provided that there is no antecedent breach of any of the terms and conditions herein contained, the Landlord shall refund the Security Deposit to the Tenant without interest within 30 days from the date of delivery of vacant possession of the Premises to the Landlord and after full settlement of all outstanding payments owed by the Tenant to the Landlord. If the Tenant shall commit a breach of any of the terms and conditions herein contained, this Agreement shall automatically be terminated and the Security Deposit paid under this clause shall be absolutely forfeited. However, this shall not prejudice against any right of action or any remedy allowed to the Landlord in respect of such breach by the Tenant.” (Relevant part highlighted)

42.  In light of this Court’s conclusion that it is the Defendant who has breached the tenancy agreement and that damages exceeding HK$30,000 have been suffered by the Plaintiff, it is beyond doubt that the Defendant would have no ground asking for refund of the deposit. The question is whether the said deposit should be applied to set off against the damages, or that it can be forfeited absolutely and no credit needs be given for it. The Plaintiff contends it is entitled to its forfeiture absolutely, and the Defendant does not make any submission.

43.  Mr Wong relied on the Court of Appeal decision of Orient Bright International Ltd v Hiang Kie Hong Kong Ltd[16] to support his proposition that a landlord is free to forfeit the deposit if it is so provided in the tenancy agreement, and the common law does not bar such forfeiture even it is on the top of the damages claimed.

44.  In Orient Bright, the Court of Appeal was dealing with a tenancy agreement with a term of 4 years and a rental deposit representing 3 months’ rent and management fees. It was provided that the deposit was to secure the performance and observance by the tenant of the tenancy agreement, and the landlord is entitled “… to forfeit the said deposit absolutely but without prejudice to the Landlord’s right to claim from the Tenant damages or monetary losswhich the Landlord may incur as a result of such non-observance or non-performance by the Tenant…”.

45.  Relying on earlier decisions such as Wong Kam Tong v Intercontinental Mercantile Co[17] and McConnell v Bak Ling Enterprises Ltd[18], Hon. Le Pichon, while recognizing a right to forfeit a deposit absolutely, considered the Court had a power to grant relief against forfeiture. After balancing the circumstances of the case, the learned judge considered that there is nothing unconscionable in forfeiting the deposit in that particular case.

46.  In the present case, it is the Defendant who asked for a renewed term. The parties agreed on 2 months’ rent and management fees as deposit which is the same as the deposit required of for the last term. In fact the said level of deposit is the usual rate found in most of the tenancy agreements in Hong Kong. There appears nothing out of the ordinary in the amount requested. The amount is stipulated to be money to secure performance of the obligations of the Defendant as tenant under the agreement, and is forfeitable absolutely in case of breach on the part of the Defendant. The parties are free to make the bargain. There is no evidence of any oppression or abuse of position as landlord by the Plaintiff in the bargain. The Defendant has neither pleaded nor stated in the agreed statement of issues in dispute that the forfeiture of the deposit amounts to penalty or is otherwise unconscionable. As a matter of fact, the Defendant in the present case basically absconded on 13 March 2014. The Plaintiff asked its estate agent Ms Betty Chui to chase after by email at least on 19 March 2014. It is not until 25 March 2014 that the Plaintiff accepted the Defendant’s repudiation and retook possession of the Premises. In the Court’s judgment, there are simply no circumstances of this case that warrant any equitable relief. The provision relating to forfeiture of deposit here is no different from that of Orient Bright. This Court accepts that the Plaintiff is entitled to forfeit the deposit of $30,000 absolutely, and not to use it to set off against the damages it suffers.

47.  In fact similar conclusion was reached in another Court of Appeal decision in The World Food Fair Limited and other v Hong Kong Island Development Limited[19]. In that case, there was dispute as to whether a tenancy agreement had been concluded despite the fact that a sum of HK$200,000 had been paid as deposit or earnest money and the premised already handed over to the tenant. The Court of Appeal reversed the decision of the Court of First Instance. Both Hon Ma CJHC (as the CJ then was) and Hon Cheung JA considered that a tenancy agreement had been concluded. It was decided that the landlord was entitled to forfeit the deposit on the top of damages payable. The deposit, which had been returned as a result of the first instance decision, was directed to be paid back to the landlord Plaintiff on the top of the assessed damages: see §§22-24, 112,115 and 119(2) of World Food.

Disposal

48.  By reason of the above, this Court do order that the Defendant to pay the Plaintiff a sum of HK$162,846.5, being damages for breach of the renewed tenancy agreement in respect of the Premises. Certain parts of the damages accrue after the date of the writ. The damages accrue to its full amount only shortly before trial. This Court therefore considers interest will be negligible given the relatively small size of damages and accordingly, is not prepared to grant any pre-judgment interest. The Defendant’s counterclaim for return of HK$30,000, being rental deposit is hereby dismissed.

49.  This Court cannot see why the usual rule of costs following the event not applicable. Accordingly this Court makes an order nisi that the Defendant do pay the Plaintiff’s costs of the action, such order nisi be made absolute if within 14 days there is no application to vary the same.