MOTIONNING INDUSTRIAL CO LTD v. MAN KA WO t/a 3 MAN DESIGN CO

DCCJ558/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 558 OF 2004

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J U D G M E N T

1. Defendant has been absent all along.  There being no notice to defend file, defendant has been held to be liable.  Today’s hearing is for assessment of damages and costs if no further taxing is required.

2. Plaintiff claims for damages due to defendant’s failing to perform the contract.  The contract stipulates a clause of damages at $3,000 per day, but it is clear that it is a penalty clause without justification.  Such term is therefore not enforceable.

3. Plaintiff’s counsel then relies on the actual losses suffered by the plaintiff as the basis of the claim.  The claim is thus:

(1)  loss of rental in respect of the Cloudview Road premises in the sum of $60,000.

4. Plaintiff could have moved into the Wah Fung premises on time and let out the Cloudview Road property if not for the defendant’s delay in performing the contract.  Plaintiff could only get a replacement contractor to finish the works at the Wah Fung premises by 10 May 2004.  The delay was therefore as long as five months.

5. Given that a property will need some time to be let out successfully - and two months seems to be a reasonable grace period in the circumstance in relation to the Cloudview Road premises - plaintiff has therefore lost three months’ rental for that premises.

6. I accept Mr Chee’s evidence that the rental would range from $18,000 to $22,000 and thus $20,000 should be adopted as the probable rental plaintiff could have fetched per month.  Plaintiff’s loss under this head is thus $60,000, being $20,000 times three months, and I grant plaintiff this head of losses at $60,000.

7. The $60,000 rental would not come in one go.  It would be generated monthly.  Therefore, interest in respect of this sum should be calculated from an average date, say, 10 April 2004. 

8. I award interest at 8 per cent for the period between 10 April 2004 and the date of judgment, and then at judgment debt rate from the date of judgment until payment for this head - that is for this $60,000.

9. The second head of claim is the difference between the prices paid and the actual cost of the works done by the defendant.  It is calculated to be $81,934. 

10. I accept plaintiff’s evidence in this regard, including the expert’s report.  I thus grant plaintiff such claim of $81,934 with interest at 8 per cent for the period between 27 December 2003 and the date of judgment, and at judgment debt rate from the date of judgment until payment.

11. The third head of claim is expert fees for compiling the surveyor’s report.  The costs are $14,000, supported by receipts. 

12. Such expenses were necessarily incurred due to defendant’s breach of the contract.  I thus grant plaintiff such claim of $14,000 with interest at 8 per cent for the period between 12 January 2004 and the date of judgment, and then at judgment debt rate from the date of judgment until payment.

13. The fourth head of claim is for extra insurance premium pay, $3,500.  Again, such expenses were necessarily incurred due to defendant’s breach of the contract.  I also grant plaintiff this claim of $3,500 with interest for the period between 5 January 2004 and the date of judgment, and then at judgment debt rate from the date of judgment until payment.

14. In summary, plaintiff is awarded damages in the total sum of $159,434 with interest as announced.

(Submissions re costs)

15. I will grant plaintiff’s costs to be paid by defendant in the sum of $21,600, being solicitor’s costs, $16,800, and clerk’s costs, $4,800.