ATTORNEY GENERAL v. SUPER POINT CO LTD

1988, No. A4926

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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ASSESSMENT OF DAMAGES

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1. This assessment is pursuant to interlocutory judgment which I ordered entered against the defendant under Order 14, rule 3.

2. The plaintiff's claim is in respect of the tenancy of shop B12 at Hong Kong International Airport.

3. It is the second such claim in respect of this particular shop in recent times.

4. The background to the claim is not in dispute. Briefly, the position is that in 1985 the Government decided to seek tenders for the tenancy of shop B12. It delegated the task to its Civil Aviation Department. At least three tenders were received. The highest tenderer was Ruby Profit Co. Ltd. in the sum of $1,760,009.00 per month, the next highest the defendant with a tender of $1,210,000.00 per month, and finally a tender of $1,050,000.00 per month was received from Leone Finance Co. Ltd. It is pertinent to note that apart from requiring the deposit of $150,000.00, no inquiries appear to have been made by the Civil Aviation Department into the ability of the tenderers to make good their tenders. It simply accepted the highest tender.

5. First, Ruby Profit Co. Ltd. failed to make good its tender and subsequently the defendant did likewise. It was only when the Civil Aviation Department approached Leone Finance Co. Ltd. that it found a tenderer which was willing and able to take up the tenancy. This it did, according to the evidence before me, on the 23rd December, 1985.

6. Thereafter, the Civil Aviation Department, not knowing what to do, did nothing until prodded into action by the Director of Audit in 1988 when it caused proceedings to be instituted against both Ruby Profit Co. Ltd. in Civil Action No. 4927 of 1988, and the defendant.

7. Ruby Profit Co. Ltd. took no part in the proceedings against it, hence the action came before Master Jones for assessment of the plaintiff's damages in November 1988. In that action the plaintiff claimed, and Master Jones awarded the full rental for the period from the projected commencement date of Ruby Profit Co. Ltd.'s tenancy, i.e. 18th October 1985, to the date Leone Finance Co. Ltd. actually occupied the shop, and thereafter, until the expiration of its notional tenancy, the difference between Ruby Profit Co. Ltd.'s tender and the actual rent paid by Leone Finance Co. Ltd.

8. Ruby Profit Co. Ltd.'s tenancy was to be for a year and accordingly would have expired on the 17th October 1986.

9. Although disputed by the defendant I have previously found, and repeat that finding, that, on the evidence before me, the defendant's tenancy should be deemed to have commenced on the 29th November 1985 and accordingly it would have expired on the 28th November 1986.

10. Whilst the plaintiff has judgment in respect of shop B12 against Ruby Profit Co. Ltd. in the sum of $1,760,009.00 per month for the period 18th October 1985 to the 22nd December 1985 and $710,009.00 per month from 22nd December 1985, it seeks to apply the same formula in this assessment against this defendant. The precise calculation is set out in paragraph 14 of Mr. Ho Tin-ching's affirmation.

11. Miss Datwani advised me that she could find no authority at all for the proposition that one can obtain what amounts to double damages against two entirely separate defendants, under two separate contracts in respect of the same premises for contemporaneous tenancies. She sought to equate the defendant's position to that of a creditor and guarantor, but, with respect to her, that is clearly wrong.

12. Similarly, Mr. Lo was unable to find any authority directly on point, but submitted that it would be wrong for two inconsistent judgments to stand and, inter alia, relied on United Australia Ltd. v. Barclays Rank Ltd. A.C. [1941] 1 where Lord Atkin said a page 30, when dealing with alternative remedies in contract and tort:-

"I therefore think that on a question of alternative remedies no election arises until one or other claim has been brought to judgment. Up to that stage the plaintiff may pursue both remedies together, or pursuing one may amend and pursue the other: but he can take judgment only for the one, and his cause of action on both will then be merged in the one."

13. It is a perfectly simple matter to distinguish the present action from United Australia in that here we do not have alternative claims, but two entirely separate actions against different defendants, the only uniting factor being that they are in respect of tenancies of the same shop for periods which overlap. Hence, the judgment against Ruby Profit Co. Ltd. is not inconsistent, simpliciter, with the judgment in the present action.

14. However, in default of any authority directly on point, I consider that I can derive some assistance from the words of Lord Atkin. Thus, whilst I find nothing inconsistent in the fact that there are two judgments, I do consider that it would be inconsistent, and, by hypothesis, wrong to award damages against the defendant for a period when the plaintiff already has judgment against Ruby Profit Co. Ltd. for a greater sum.

15. In my judgment it makes no difference that the plaintiff has so far failed to enforce his judgment against Ruby Profit Co. Ltd., or that Miss Datwani was prepared to give an undertaking to account to the defendant for any damages recovered in excess of the plaintiff's claim against Ruby Profit Co. Ltd.

16. In short, I consider that the only way in which the plaintiff could have recovered his claim in full from this defendant would be if, in his claim against Ruby Profit Co. Ltd., he had limited that claim to the difference between the tenders of Ruby Profit Co. Ltd. and the defendant. The plaintiff did not do so he went for the greater sum by obtaining judgment for the difference between the tenders of Ruby Profit Co. Ltd. and Leone Finance Co. Ltd. Hence, he made his election and is, applying the dictum of Lord Atkin, bound by it.

17. In my judgment, all the plaintiff is entitled to recover from this defendant is the difference between the tender of the defendant and the actual amount paid by Leone Finance Co. Ltd. from the notional end of Ruby Profit Co.Ltd.'s tenancy to the notional end of the defendant's tenancy, i.e. 17th October 1986 to 28th November 1986.

18. This I calculate to be $220,931.36. In paragraph 14 of Mr. Ho's affirmation, to which I have previously referred, the plaintiff gave credit to the defendant of $150,000.00 in respect of the deposit paid upon submission of its tender. Hence after taking this sum into account I duly award the plaintiff damages in the sum of $70,931.36.

19. I now turn to the question of interest. The plaintiff claimed interest prior to the date of judgment at the rate of 8% per annum and post judgment interest at 8.125% per annum.

20. It is interesting to note that the plaintiff only claimed 6.125% up to the date of the writ in Civil Action No. 4927 of 1988, which is exactly the same date as the commencement of this action.

21. However, before I determine the rate of interest to be paid, clearly I must determine whether, in an action of this nature, it is payable at all. It is discretionary and in exercising my discretion I must consider the actions of the parties and the effect on both of them of the making of such an award or not as the case may be.

22. I have to say that I am wholly unimpressed by the manner in which the Civil Aviation Department undertook this tendering exercise. By making no, or no adequate, enquiries about tenderers and requiring the payment of what is, given the extraordinary rentals such small shops appear to command at the Airport, no more than a nominal deposit it was asking for trouble.

23. Furthermore, when problems arose the Civil Aviation Department should have taken reasonably expeditious action to remedy the situation. In the event, as indicated earlier, it did nothing at all for nearly 3 years.

24. On their own, these factors are not necessarily fatal to a claim for interest, but in the present case there is an additional factor to weigh in the balance.

25. The defendant company is a small company. Subsequent to its failure to take up its tenancy the company was sold to its present owners. It would appear that the present owners had no idea of this potential claim when they purchased the company and indeed knew nothing about it until the defendant received a letter of demand from the plaintiff on the 14th May 1988.

26. There is no evidence to show whether the previous owner of the company deliberately concealed the tender from the present owners or felt that it was not worth mentioning because he had heard nothing further from the Civil Aviation Department and regarded the matter as being at an end with the forfeiture of the deposit. I will not speculate, but I can say that I consider that the latter proposition is as likely to be true as the former.

27. The reality of the situation is that the present owners of the defendant have faced a claim for over $3,000,000.00, including interest and must have had an extremely worrying twelve months. They have also had to incur legal costs which are irrecoverable. All this apparently through no fault of their own.

28. Thus, in the exercise of my discretion I decline to award interest to the plaintiff prior to the date of judgment. However, with judgment the die is cast and the plaintiff shall have interest at the judgment rate from that date to the date of payment.

29. I will hear from counsel on the question of costs.