HOLLYWOOD PALACE CO. LTD. v. NICHIO INTERNATIONAL GROUP LTD.

HCA 18536/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 18536 OF 1998

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ASSESSMENT OF DAMAGES

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Background

1. The plaintiff was and is the registered owner and landlord of the premises known as Unit 1016, 10th Floor, Chinachem Golden Plaza, 77 Mody Road, Hong Kong ("the Premises"). By a lease dated 6 November 1997, the plaintiff let the Premises to the defendant for commercial purpose for 2 years from 3 October 1997 to 2 October 1999 at a monthly rent of $53,500.00 payable on the 1st day of each calendar month. The defendant was also responsible for paying the rates, air-conditioning charges and management fees. There was a rental deposit paid under the tenancy in the sum of $178,476.00.

2. Time went on until the defendant failed to pay rent and rates from September 1998 and further unilaterally surrendered the lease by surrendering possession of the Premises to the plaintiff on 21 September 1998. By their solicitor's letter dated 29 September 1998, the plaintiff accepted the repudiation and reserved the rights to claim damages.

3. The proceedings herein were commenced on 2 November 1998 by the plaintiff against the defendant in respect of the aforesaid matter. On 25 January 1999, default judgment was obtained by the plaintiff against the defendant, including

(a) Forfeiture of the said deposit of $178,476.00;

(b) Arrears of rent, management fee, air-conditioning charges and overdue interest in the total sum of $62,769.79;

(c) Further damages for breach of the lease by the defendant to be assessed;

(d) Costs.

4. On 18 November 1999, item 3(a) was set aside with costs reserved to be dealt with by the Master hearing the assessment of damages.

The Assessment

5. Pursuant to item 3(c) above, the plaintiff proceeded with its assessment of damages. The matter went on its usual course, including exchange of lists of documents, witnesses statements, and so forth. Messrs. Simon Ho & Co. were and still are the solicitors acting for the defendant according to the court record. However, they were instructed not to appear in both the hearings before me on 20 September 2002 and 1 November 2002 to oppose the assessment.

6. The assessment of damages was therefore conducted only by Mr. Chong Tin Chun of Counsel, instructed by the plaintiff's solicitors. Having carefully considered the evidence adduced before me, including the testimonies of Mr. Tam Wai Koon and the valuation report by DTZ Debinham Tei Leung Ltd, on balance of probabilities, I am satisfied that the plaintiff did fulfill the duty of mitigation and had tried its best endeavours to re-let the Premises from 30 September 1998 to 1 December 1998 including putting up advertisements, asking the estate agents for assistance and lowering the asking price. However, because of the downturn of the economy and slump of the property market including that of the commercial premises, the Premises could only be re-let from 1 December 1998 for a new lease for 2 years at a monthly rent of $42,800.00. The new tenant also paid rates, management fees and air-conditioning fees. But, for the month of December 1998 and January 1999, the new tenant enjoyed the Premises free of rent and air-conditioning fees.

7. Save that I have altered the cut-off date to 29 September 1998, I allowed Mr. Choy's suggestion in full. Since the defendant's repudiation was accepted by the plaintiff on 29 September 1998, the legal position of the parties became crystallized on that date. All payment to be recovered by the plaintiff after that date would become damages. Anyway, practically speaking, it does not have any difference in terms of the amount of money. The plaintiff suffered the following damages as a result of the said repudiation on the part of the defendant:

		$
(a)	Arrears of rent 22 Sept 1998 to 29 Sept 1998
	(53,500 x 8/30)	14,267.00
(b)	Arrears of rates 22 Sept 1998 to 29 Sept 1998	N/A
(c)	Arrears of management fee 22 Sept 1998 to 29 Sept 1998 (2,782 x 8/30)	741.80
(d)	Arrears of air-conditioning charges 22 Sept 1998 to 29 Sept 1998	856.00
(e)	Loss of rent (i) 30 Sept 1998 to 31 Jan 1999 (53,500 x 4 1/30) (ii) 1 Feb 1999 to 2 Oct 1999 (53,500 - 42,800) x 8 2/31	215,783.00 86,290.00
(f)	Loss of rates 1 Oct 1998 to 30 Nov 1998	4,500.00
(g)	Loss of management fee 30 Sept 1998 to 30 Nov 1998 (2,782 x 2 1/30)	5656.80
(h)	Loss of air-conditioning charges 30 Sept 1998 to 31 Jan 1999 (3,210 x 4 1/30)	12,947.00
		341,041.60
	Less: Deposit	178,460.00
		162,581.60 ========

8. There will also be interest for the plaintiff for the items 7(a) to (d) at the contractual rate of 3.5% per month from their respective due dates to the date of judgment, thereafter at judgment rate until payment. As to interest on items 5(e) to (h), interest shall carry at 13% per annum from the date of writ herein on 2 November 1998 until today, thereafter at judgment rate until payment..

9. Costs of the assessment of damages be to the plaintiff, with certificate for counsel for the hearings on 20 September 2002 and 1 November 2002. There be no order as to costs regarding the setting aside application on 18 November 1999.