POKFULAM DEVELOPMENT CO LTD v. TEAMWAYS LTD

HCA 788/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 788 OF 2010

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ASSESSMENT OF DAMAGES

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Introduction

1.  This is an assessment of damages by a landlord against its tenant for breaches of tenancy agreement.

Background

2.  The plaintiff was and is the registered owner and landlord of the premises known as Shops A & B, Ground floor, Beverly House, Nos. 93 – 107 Lockhart Road, Wan Chai, Hong Kong (“the Premises”).  By a tenancy agreement dated 21 October 2009, the plaintiff let the Premises to the defendant for commercial purpose for 2.5 years from 4 July 2009 to 3 January 2012 at a monthly rent of $200,000 payable in advance on the 1st day of each calendar month.  The defendant was also responsible for paying the rates, management fees and other utility charges.  There was a rental deposit paid under the tenancy in the sum of $623,158.30.

3.  On 28 May 2010, the plaintiff commenced the present proceedings against the defendant.  It was said that the plaintiff had been served with a formal notice informing that an offence of trafficking in dangerous drug was committed in the Premises.  The plaintiff therefore sought to terminate the tenancy and recover vacant possession of the Premises, loss of mense profits, damages as well as costs.

4.  Although unconditional leave was granted to the defendant to defend the proceedings herein, it failed this court in preparing a listing questionnaire and attending a case management conference, despite warning. On 3 May 2012, Master Ko ordered that:

“1. In pursuance of order 25 rule 1c (2) of the Rules of the High Court, the Defendant’s Counterclaim filed herein on 8^th July 2010 be provisionally struck out and in pursuance of Order 25 rule 6(3)(b) of the Rules of the High Court, the Defendant’s Defence filed herein on 8^th July 2010 be struck out; and

2. The Plaintiff having abandoned claim under prayer (i), (ii) and in pursuance of Order 19 rule 3 of the Rules of the High Court, Interlocutory Judgment be entered against the Defendant for damages to be assessed under prayers (iii), (iv) and (v) of the Plaintiff’s Amended Statement of Claim filed on 19^th December 2011 with costs.”

5.  Pursuant to the said order and on the same day, Judgment was entered by the plaintiff against the defendant:

“(i) Loss of rental income at the rate of HK$200,000.00 per calendar month from 1^st April 2011 to 15^th August 2011 and/or mesne profits and/or other damages for an amount to be assessed for such period and at such rate as this Honourable Court thinks fit as pleaded in paragraph 11 of the Amended Statement of Claim filed on 19^th December 2011[sic.2012] (‘the amended SOC”) herein;

(ii) Damages suffered by the Plaintiff as pleaded in paragraph 12A and 12C of the amended SOC herein or such sum of damages or in such amount as the Honourable Court deems fit and just;

(iii) Interest pursuant to section 48 and 49 of the High Court Ordinance, Chapter 4 of the Laws of Hong Kong at such rate and for such period as this Honourable Court may think fit; and

(iv) Costs.”

The Assessment

6.  Pursuant to the above order and judgment, the plaintiff proceeded with its assessment of damages.  The matter went on its usual course, including discovery and preparation of witness statements.  However, the defendant did not take any step in the assessment, including the substantive hearing before me, despite that due notice having been given throughout the whole process.

7.  The hearing of the assessment of damages was therefore conducted only by Mr. Adrian Leung of Counsel, instructed by the plaintiff’s solicitors.  Having carefully considered the evidence adduced, including the oral testimonies of Madam Katherine Sung, the new tenancy agreement entered by the plaintiff in respect of the Premises, photos of the Premises at the time when possession of the same was recovered by the plaintiff and the receipts showing the costs incurred by the plaintiff to reinstate the Premises, on balance of probabilities, I am satisfied that the plaintiff has taken reasonable steps in mitigating its loss and the reinstatement expenses spent is also appropriate in the circumstances.

8.  The plaintiff has proved to my satisfaction the following damages suffered as a result of the breaches on the part of the defendant.

	$
(a) Rent (1.4.11 to 15.8.11)	896,774.19
(b) Management fees (1.4.11 to 15.8.11)	19,666.71
(c) Government rates (1.4.11 to 15.8.11)	39,458.06
(d) Costs of reinstatement	217,061.00
	1,172,959.96
Less: Deposits held	623,158.30
	549,801.66
	==========

9.  There will also be interest for the plaintiff for the aforesaid sum at the rate of 8% per annum until today and thereafter at judgment rate until payment.

10.  Costs of the assessment of damages incurred from 3 May 2012 until the date hereof be to the plaintiff, including all costs reserved and certificate for counsel for the hearing on 19 November 2013, on indemnity basis (as per clause 2 (qq) of the subject tenancy agreement) and summarily assessed at $84,000.

	$	$
(a) Communications ($4,000 x 6)		24,000
(b) Professional works
(i) Documents ($4,000 x 6)	24,000
(ii) Hearings ($1,000 x 2)	2,000	26,000
(c) Counsel fees		30,000
(d) Disbursements		4,000
		84,000 ======