WELL RISE (HONG KONG) LTD v. THE INCORPORATED OWNERS OF WESTLANDS CENTRE

DCCJ 253/2019

[2024] HKDC 1688

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 253 OF 2019

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BETWEEN

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DECISION

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1.  By Judgment dated 19 September 2024, I found D liable to compensate P in the following sums:-

1.1 Loss of rental for the following periods:-

(a) From 18.2.2017 to 17.2.2019 – $268,584;

(b) From 1.11.2022 to 31.10.2024 – $242,088;

1.2 Cost of Repair:-

(a) Wallpaper replacement (May 2017) – $6,000;

(b) Costs incurred in December 2018 – $51,956;

(c) Costs incurred in August 2022 – $43,000;

1.3 Cost of pre-action reports (18.1.2017) – $42,600;

1.4 Cost of future repair – $57,900.

2.  I also directed parties to lodge their submissions on interest calculation and this is my decision on interest.

3.  At the outset, parties are not in dispute that the total award as listed above should incur interest at judgment rate from the date of judgment herein (ie 19 September 2024). What is in dispute is both the interest rate to apply for the pre-judgment period and also the period(s) of pre-judgment interest accrual.

4.  Firstly, as to the rate of interest to apply, P submits that commercial rate should be applied and D submits that half judgment rate is to be applied.

5.  A number of authorities have been cited by each side to show that the interest rates they argued for had been applied, in cases of similar nature no less.

6.  Of interest, I note that the issue of interest rate did not seem to be specifically argued often and hence the judicial wisdom in adopting either was not apparent from the judgments cited.

7.  The most ink spilled on this issue was the judgement in Cheung Suk Lai v Wong Man Fai [2024] HKDC 1500, where the Court found that for water seepage cases, the interest rates applicable in personal injury cases (ie 2% p.a. for general damages and half judgment rate for special damages) are more appropriate than commercial rate.

8.  Although there was no further elaboration, I do find myself in agreement with the sentiment in Cheung Suk Lai: the way in which special damages arise in personal injuries (ie loss of earnings and various expenses) and water seepage cases (ie loss of rental and various expenses) are indeed similar:-

8.1 Loss of earnings and loss of rental are both recurring at regular intervals for a period of time, predominantly monthly;

8.2 Various expenses would have been spent every now and then when the need(s) for the same arose.

9.  It is for this reason the comparability of a plaintiff losing the use of a lump sum of money for other commercial purposes is lost, and in turn the rationale of applying commercial rate, ie the theoretical financing cost of replacing that lump sum of money.

10.  I therefore agree with D’s submissions that half judgment rate is the more appropriate rate to apply.

11.  Secondly, the parties diverge also on the period of interest accrual: P says interest is to accrue from the date of Writ to the date of judgment and D says it should accrue for each item from the time they were suffered.

12.  Bearing in mind the compensatory rationale, I take the view that interest accrual from the date of the relevant loss much closely reflect the rationale. Starting from only the time of the Writ would mean that a plaintiff would not be compensated in interest for potentially very substantial period of time, measured in years.

13.  As such, I in essence agree with D’s calculation of interest set out in paragraph 9 of its submissions on interest. I so order.

14.  As to costs of disposal of this interest issue, I make an order nisi that there be no order as to costs. The reason for this is that parties should have addressed this issue in their closing submissions so there should not have been extra costs incurred for separately dealing with this issue in the first place.

15.  Unless an application to vary the above costs order nisi is made within 7 days of the date of this decision by Summons, it will become absolute after 7 days of the date hereof.