TOP ABLE INTERNATIONAL HOLDINGS LTD v. NG PUN KEUNG AND ANOTHER

HCA 2659/2017

[2019] HKCFI 498

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2659 OF 2017

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J U D G M E N T

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The Plaintiff sought an assessment of damages it suffered as landlord against the 1^st Defendant, as tenant of a premises in Yuen Long. The tenant used the premises as a restaurant. The 1^st Defendant rented the premises pursuant to the Tenancy Agreement dated 16^th November 2015 for a fixed term of two years from 18^th December 2015 and 17^th December 2017 at the monthly rental of HK$168,000. By a Guarantee dated 12^th November 2015^[1], the 2^nd Defendant, as primary obligor, unconditionally guaranteed the due performance of obligations undertaken by the 1^st Defendant in the Tenancy Agreement.

The 1^st Defendant failed to pay rent since 1^st April 2017 and other outgoings as it had obliged to pay under the Tenancy Agreement. (The 1^st Defendant had covenanted to pay such the rental and outgoings on the first day of each month under Clause 3.1(a) of the Tenancy Agreement.) Following distraint of rent proceedings (No. 1170 of 2017), the Plaintiff exercised its right to re-enter the premises on 8^th June 2017 thereby accepting the 1^st Defendant’s wrongful repudiation of the Tenancy Agreement. On 20^th November 2017, the Plaintiff commenced this action against the 1^st and 2^nd Defendants, on account of breaches of the Tenancy Agreement and the Guarantee, which resulted in interlocutory judgment being entered against both Defendants, on 29^th December 2017, in default of their filing of acknowledgment of service.

At the first hearing of the assessment of damages application on 7^th June 2018, the 1^st Defendant appeared in person. I am satisfied that the notice of this hearing had been properly served on both Defendants. In such circumstances, I proceeded to assess damages at this hearing in the absence of attendance of both Defendants.

The Defendants have not filed any evidence to contest these proceedings. By an order of Master dated 13^th September 2018, the Defendants was ordered to file witness statements by 11^th October 2018, failing which the Defendants be taken as having opted for not adducing any evidence. The Defendants have not filed any witness statement, and I am satisfied, in absence of any evidence from and arguments made by the Defendants, that there is effectively no objection to the claims of the Plaintiff in the assessment proceedings.

I have nevertheless carefully scrutinized all items claimed by the Plaintiff, and I have cautiously examined the Plaintiff’s evidence, led by way of the oral evidence of Ms Choi, the director of the Plaintiff: -

(A)  I am satisfied that, save advertising fee for re-letting at HK$4,593.40, and commission paid to estate agent at HK$73,500, all heads of claim have been incurred and are losses caused to the Plaintiff by reason of the 1^st Defendant’s wrongful repudiation of the Tenancy Agreement. Regarding my rejection of the advertising fees and agent commission, it is because the commencement of the new tenancy term largely coincided with the end of the original tenancy. The Plaintiff needed to look for a new tenant anyway at similar time. Despite the respectable arguments of Mr Chiu to the contrary, I find that the advertising fees and agency commissions needed to be spent anyway and was not a result of the 1^st Defendant’s wrongful repudiation.

(B)  The Plaintiff has re-let the premises to a new tenant for a term commencing on 15^th November 2017 at the monthly rental of HK$147,000. It took about 5 months to get the new tenant. There being no argument raised nor any evidence against the reasonableness of such time incurred in getting the new tenant, I do not need to examine whether all reasonable steps have been taken by the Plaintiff to mitigate its loss. In any event, I am satisfied that the Plaintiff’s starting to place newspaper advertisements promptly and repeatedly since mid-2017 demonstrated reasonableness.

(C)  The natural end of the 1^st Defendant’s tenancy was 17^th December 2017, and the commencement of the new tenancy was 15^th November 2017. Potentially, the Plaintiff did not suffer loss of rental during this month (between 15^th November to 17^th December 2017). The Plaintiff nevertheless claimed damages under rental up to the end of the original tenancy on the basis that there was 45 days of rent free period given to the new tenant such that between 15^th November and 17^th December 2017, the new tenant did not pay rent but only management fees, government rent and rate. I have examined this aspect and asked the witness about this aspect. I am satisfied that the rent free period to the new tenant was in the ordinary course of business; and the Plaintiff is entitled to damages on account of rental for this period as well.

(D)  I have also examined the invoices for the various reinstatement costs and asked the Plaintiff’s witness to confirm details thereof. I am satisfied that they were duly incurred, in particular reference to the fact that the premises had been used as a restaurant before.

I allowed the claims which are under the heads as follows: -

(a)  rental loss (ie up to and inclusive of 17^th December 2017), and management fees, government rent and rates (up to and inclusive of 14^th November 2017, since when the new tenant started to pay);

(b)  costs incurred by the Plaintiff for the reinstatement of the premises which the 1^st Defendant has undertaken to do upon delivering up under Clause 3.22 of the Tenancy Agreement; and

(c)  costs and expenses of distraint action.

The amount of damages outlined above and allowed are set out on below hereto at the total amount of HK$1,314,053.88 after giving credit to the balance of deposit (which, upon examining the Plaintiff’s evidence, I am satisfied that it stands at HK$52,641.71).

Rent
from 9th June 2017 to 30th June 2017 [HK$168,000.00 x (22/30) month]	HK$123,200.00
from 1st July 2017 to 30th November 2017 [HK$168,000.00 x 5 months]	HK$840,000.00
from 1st December 2017 to 17th December 2017 [HK$168,000.00 x (17/31) months	HK$92,129.03	HK$1,055,329.03
Management fee
from 9th June 2017 to 30th June 2017 [HK$4,238.55 x (22/30) month]	HK$3,108.27
from 1st July 2017 to 14th November 2017 [HK$4,238.55 x (4 14/30) months]	HK$18,932.19	HK$22,040.46
Government rent and rates
from 9th June 2017 to 30th June 2017 [HK$28,680.00 x (22/30) month]	HK$21,032.00
from 1st July 2017 to 14th November 2017 [HK$28,680.00 x (4 14/30) months]	HK$128,104.00	HK$149,136.00
Other loss and damage
Distraint
Costs and expenses of distraint action in DCDT1170/2017 ($35,150.00 being money on account for distraint action - $24,255.80 being amount refunded from Court)	HK$12,994.20
Reinstatment
Reinstatement cost to DAI YAT MAINTENANCE	HK$46,500.00
Reinstatement cost to DAI YAT MAINTENANCE	HK$3,880.00
Reinstatement cost to HUGE LUCKY CO.	HK$73,050.00
Water meter charge	HK$380.00
Water charge during reinstatement	HK$134.90
Insurance payment during installation of electric system to Ever United Advisers Ltd.	HK$1,400.00
Repair costs for water pipe of Shop No.L19	HK$600.00
Electricity charge	HK$1,251.00
		Total HK$1,366,695.59
LESS : HK$52,641.71 being remaining
Balance of the Deposit		HK$52,641.71
Damages as assessed		HK$1,314,053.88

The 1^st and 2^nd Defendant do pay damages in the sum of HK$1,314,053.88 to the Plaintiff, with interest at prime rate plus 1% from date of Writ ie 20^th November 2017 up to the date of this judgment, and after this judgment at judgment rate until actual payment.

Costs should follow the event. The 1^st and 2^nd Defendant do pay the Plaintiff’s costs of these proceedings which are summarily assessed at HK$65,000 (as assessed downward after scrutinizing the Plaintiff’s Statement of Costs).

The 1^st and 2^nd Defendants are at liberty to arrange with my clerk for an interpretation of this judgment in Punti, within 28 days of the handing down.