UNIVERSE ARTISTE MANAGEMENT LTD v. KONG YI CHING ELANNE (FORMERLY KNOWN AS KWONG LING) AND ANOTHER

HCA 1225/2014

[2024] HKCFI 519

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1225 OF 2014

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D E C I S I O N

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1.  This is Part II of these proceedings. By an agreement between the parties (“the Agreement”, details of which are set out below), the only outstanding issue now is interest on the sum agreed by the parties. I have handed down the judgment in Part I on 18 February 2022 (see [2022] HKCFI 443, “Part I Judgment”), in which I have determined the liabilities. The background and my findings on liabilities have been set out in the Part I Judgment, and I shall not repeat the same herein. For ease of reference, unless otherwise indicated, the abbreviations used in the Part I Judgment are adopted herein.

2.  The parties have now agreed that (“the Agreement”)  as at 31 December 2021, the net sum due from D1 and D2 (“Ds”)  to P is HK$457,873.40 (“the Agreed Sum”).  The Agreement was reached by the parties on 7 July 2023.

3.  Since the parties have reached the Agreement, the parties have also agreed that it would not be necessary for the court to conduct an assessment of damages.  The court would only need to resolve the question of interest, on which the parties cannot have an agreement.

4.  Accordingly, the issue before me in this hearing is what should be the interest on the Agreed Sum.  In this hearing, P is represented by Mr Raymond Lau, together with Mr Stephen TO Ma.  Ds are represented by Ms Bianca SW Yu.

The parties’ respective positions

5.  On the question of interest, P have put forward different positions at different times.  At the end, in the hearing before me, the position adopted by P is that there should be pre-judgment on the Agreed Sum at 1% over the HSBC prime rate from the date of the writ of summons (ie 30 June 2014)  until the date of the Part I Judgment (ie 18 February 2022), and thereafter at the judgment rate until payment.

6.  Ds’ position is as follows:

(1)  There should be no pre-judgment interest.  Alternatively,
pre-judgment interest on the Agreed Sum should only run from 7 July 2023.

(2)  Post-judgment interest on the Agreed Sum should run from the date of the judgment to be given by the court in Part II, or alternatively, from 7 July 2023.

Discussion

7.  During the term of the Contract, P made some advancements to D1.  In accordance with the Part I Judgment, the Promotion and Production Costs should be borne by D1.  Accordingly, there would be some sums due from D1 to P.  On the other hand, all the incomes from D1’s music products during the term of the Contract after deducting the relevant expenses therefrom should be given to D1.  D1 may also claim damages against P by reason of the repudiatory breach of the Contract committed by P in the Feb 2014 Incident.  Proprietary claim may also be considered in Part II.

8.  No doubt the parties would have taken all the aforesaid into account in reaching the Agreement.  The parties have elected not to file any evidence for the purpose of Part II of these proceedings.  Accordingly, the only undisputed fact for the purpose of Part II is the Agreement.

9.  With the aforesaid in mind, with respect to Mr Lau, there is simply no basis for me to accede to the proposal made by P, for there is no evidence suggesting that as at 30 June 2014, there was a net sum due from D1 and/or D2 to P, and that sum was HK$457,873.40.  The Agreement is that the Agreed Sum was due from Ds to P as at 31 December 2021, not as at any other date.

10.  Given that the only undisputed fact for the purpose of Part II is the Agreement, I can only make a ruling on the basis of what has been agreed by the parties.  In other words, apart from the date specified in the Agreement, ie 31 December 2021, there is no evidence showing whether any net sum was due from one party to the other party on any date before 31 December 2021; if yes, what amount was due.  That being the case, any interest can only be interest on the Agreed Sum, and interest can only start to run on 31 December 2021 or on a later date, not on any earlier date.

11.  Ms Yu has helpfully referred me to Maysun Engineering Co Ltd v Wormald Engineering Services Ltd (CACV 199/2006, 11 January 2007), in which the Court of Appeal pointed out that the principle for judicial discretion for awarding interest was that as stated in Business Computers Ltd v Anglo-African Leasing Ltd [1977] 1 WLR 578, which was whether the defendant had “wrongfully withheld” the money from the plaintiff, and not whether the defendant had the use of the money (See [20] and [43] of the Court of Appeal’s judgment).

12.  I am persuaded by Ms Yu that interest should not start to run on 31 December 2021, for Ds did not know whether they were owing any net sum to P on or before that date.  As submitted by Ms Yu, one of the matters that Ds did not know at that time was the net incomes from D1’s music products during the term of the Contract.  Information and documents concerning the music incomes are matters within P’s possession and not in Ds’ possession.  Without knowing the net incomes from music products, it would not be possible for Ds to ascertain whether there would be any net sum due from them to P.  Without knowing whether there was any net sum due to P, it cannot be said that Ds have wrongfully withheld any sum from P on 31 December 2021.

13.  However, I am unable to accept Ds’ primary position as set out in [6(1)] above but would only agree to Ds’ alternative position.  In my view, on 7 July 2023, when the parties reached the Agreement, Ds would certainly know that in fact there was a sum, ie the Agreed Sum, due from them to P.  They should pay that sum to P at once, but they have not done so.  That being the case, Ds should be regarded as having wrongfully withheld the Agreed Sum from P as from 7 July 2023.  In my judgment, there should be pre-judgment interest on the Agreed Sum as from 7 July 2023.  Since an order requiring Ds to pay the Agreed Sum to P is only made in this decision, the pre-judgment interest would run until the date of this decision, and thereafter there be post-judgment interest on the Agreed Sum.  In the absence of any special circumstances, I would adopt the usual pre-judgment interest rate, ie 1% above the prime rate.  I would also use the judgment rate as the post-judgment interest rate.

Disposition

14.  I order that Ds do pay the Agreed Sum to P forthwith.  There be interest on the Agreed Sum at 1% above the HSBC prime rate from 7 July 2023 to the date of this decision, and thereafter at the judgment rate until payment.  Costs reserved.

15.  I further direct that any application for any costs in this case should be made by an inter partes summons within 14 days from the date of this decision.  Unless the court directs otherwise, the summons(es)  concerning costs would be dealt with by me.

16.  I thank counsel for the assistance provided to the court.