THE WORLD FOOD FAIR LTD AND ANOTHER v. HONG KONG ISLAND DEVELOPMENT LTD

FACV No 6 of 2006

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO 6 OF 2006 (CIVIL)

(ON APPEAL FROM CACV NO 398 OF 2003)

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DETERMINATION

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Mr Justice Ribeiro PJ :

1.  The plaintiff’s action against the defendant for damages for breach of an alleged agreement for the grant of a tenancy was dismissed by Deputy High Court Judge Carlson (11 November 2003, HCA 4602/2000).  That judgment was reversed on 23 March 2005 by the Court of Appeal (Ma CJHC, Cheung JA and Burrell J [2005] 1 HKLRD 665) which held that the plaintiffs were entitled to damages in the sum of $3,114,492.00 with costs.

2.  The defendant unsuccessfully applied for a stay of execution and accordingly made the following payments in satisfaction of the Court of Appeal’s judgment, namely: the judgment sum of $3,114,492.00 (on 14 September 2005);  interest thereon in the sum of $1,189,905.83 (on 16 December 2005) and taxed costs in the amount of $783,660.25 (on 26 May 2006).

3.  On 8 December 2006, this Court allowed the defendant’s appeal with costs, ordering that the judgment of the Court of Appeal be set aside except in respect of forfeiture of the deposit and the counterclaim (see [2007] 1 HKC 387).  Consequently, on 12 December 2006 and 29 December 2006, the defendant demanded the return of the sums it had paid in satisfaction of the Court of Appeal’s judgment (save for the sum of $200,000 representing the deposit).  

4.  No money having been returned, on 5 February 2007, the defendant took out a summons before a single permanent judge under section 46(2) of the Court’s statute, seeking an order that the plaintiff do pay the outstanding amounts with interest thereon for such period and at such rate as the court shall think just. 

5.  I gave directions on 7 February 2007 that such summons should be dealt with on the papers and that the plaintiff should within 14 days file any submissions showing cause why the orders or any of them should not be made, with a right given to the defendant to reply.

6.  On 21 February 2007, Messrs Louis K Y Pau & Co wrote to the Court saying that the plaintiff did not have any submissions showing cause why the orders sought by the defendant should not be made.

7.  However, on 23 February 2007, the defendant in any event filed a submission to refer to the decision of this Court delivered a week earlier in Man Ping Nam v Man Fong Hang FACV 5 of 2006 dealing with repayment of sums paid under a judgment later reversed on appeal and with interest (which was allowed at 1% over the HSBC best lending rate prior to judgment and thereafter at judgment rate).  In the light of that judgment, the defendant claims interest on the three sums paid (less $200,000 for the deposit) from the respective dates of payment until judgment at the same rate of interest, that is, at 1% over the HSBC best lending rate.

8.  In the light of these submissions and the defendant’s reliance on the recent decision in Man Ping Nam, I directed on 26 February 2007 that the plaintiffs should be at liberty, if so advised, to make written submissions indicating whether the orders seeking interest were resisted and if so, on what grounds.

9.  On 12 March 2007, Messrs B C Chow & Co wrote to the court saying they had taken the case over from Messrs Louis K Y Pau & Co and alleging on their clients’ instructions that the latter firm’s letter of 21 February declining to make submissions had been written without instructions.  They sought and were given an extension of time to deal with the summons.

10.  Submissions have now been filed in which the plaintiffs accept that they must repay the specified sums and interest at the judgment rate from the date of judgment.  They seek only to dispute the rate of interest to be ordered from the date of each payment until judgment.  They argue that New World, being in a financially strong position, could borrow at a lower rate than 1% over the HSBC best lending rate and submit that interest should be awarded instead at the Hong Kong Dollar savings deposit rate at HSBC.  They also submit that there should be no order as to costs in respect of the present application.

11.  As I stated in the Determination on interest and costs in Polyset Ltd v Panhandat Ltd (FACV No 28 of 2000, 25 April 2002):

“To compensate a successful plaintiff for being kept out of his money, the general practice in Hong Kong has, at least since 1984, been to award interest reflecting the theoretical cost to the plaintiff of borrowing the sums withheld. This is a rate taken to be prime plus 1% unless the evidence in a particular case makes adoption of another rate appropriate: see Komala Deccof & Co SA v Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Pertamina) [1984] HKLR 219.”

12.  There is no reason in this case to depart from the usual practice and accordingly the applicable rate of interest should be 1% above the HSBC best lending rate from the date of each relevant payment until judgment.  There was simply no excuse for the plaintiffs’ failure to refund the principal sums paid pursuant to the Court of Appeal’s judgment after its reversal by this Court.  No viable grounds were advanced to justify an unusual interest rate.  They must therefore bear the costs of and occasioned by the summons taken out by the defendant on 5 February 2007, to be taxed if not agreed.

13.  I therefore order that the 1^st and 2^nd plaintiffs do forthwith pay to the defendant:

(a)  the sum of $2,914,492.00 with interest thereon:

(i)   at the rate of 1% over the HSBC best lending rate for the period from 14 September 2005 to 8 December 2006; and,

(ii)  at the judgment rate from 9 December 2006 until the date of full payment; and,

(b)  the sum of $1,189,905.83 with interest thereon:

(i)   at the rate of 1% over the HSBC best lending rate for the period from 16 December 2005 to 8 December 2006; and,

(ii)  at the judgment rate from 9 December 2006 until the date of full payment; and,

(c)  the sum of $783,660.25 with interest thereon:

(i)   at the rate of 1% over the HSBC best lending rate for the period from 26 May 2006 to 8 December 2006; and,

(ii)  at the judgment rate from 9 December 2006 until the date of full payment; and,

(d)  the costs of and occasioned by the summons taken out by the defendant on 5 February 2007, to be taxed if not agreed.

Written submissions submitted by: