BONNY ACE LTD v. KR SPACE (HK) LTD

HCA 614/2019

[2022] HKCFI 3301

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 614 OF 2019

_______________

_______________

___________________

J U D G M E N T

(on assessment of damages)

__________________

A.   Introduction

1.  The plaintiff commenced this action by Writ of Summons issued on 8 April 2019 in respect of a commercial tenancy dispute over premises known as the whole of 11/F, 12/F, 15/F, 16/F, 17/F, 18/F and 19/F, One Hennessy (“Building”), No 1 Hennessy Road, Hong Kong (collectively, “Premises”). 

2.  The plaintiff’s claim is straightforward.  It contends that, despite having executed a written contract agreeing to take up a 5-year lease of the Premises from it, the defendant had eventually failed or refused to do so as a result of which it has suffered loss and damage in the form of rental income, expenses and various other items. 

3.  On 11 May 2020, Master Dick Ho ordered that:-

(1)  Final judgment on liability be entered in the plaintiff’s favour with damages to be assessed;

(2)  The defendant’s counterclaim be struck out and dismissed;

(3)  Costs of the plaintiff’s application for judgment and the proceedings be to the plaintiff, to be taxed if not agreed. 

4.  The assessment of damages was fixed to be heard before me on 8 June 2022. 

5.  Despite the defendant’s absence at the hearing, I was satisfied on the affidavits of service filed by the plaintiff that sufficient notice had been given to the defendant of the hearing and it was appropriate to proceed to hear the plaintiff’s evidence and submissions. 

6.  This is my judgment on the assessment of damages. 

B.   FACTUAL BACKGROUND

7.  The plaintiff was at the material times the registered owner of the Premises. 

8.  By an offer letter dated 30 April 2018 issued by Chinachem Agencies Limited (as the plaintiff’s agent) and countersigned by the defendant on 9 May 2018, the plaintiff as lessor agreed to let and the defendant as lessee agreed to take up the lease of the Premises for a term of 5 years at a monthly rent of HK$7,395,811.00 (“Agreement”). 

9.  The Agreement provides, inter alia, as follows:-

(1)  The area of the Premises is 83,099 square feet lettable, subject to change as announced by the plaintiff from time to time (clause 4);

(2)  The lease shall be for a term of 5 years commencing from the actual date of handing over / delivery to the defendant possession of the Premises after an occupation permit or written permission is issued by the Building Authority (clauses 5 and 28); 

(3)  A rent of HK$7,395,811.00 is payable per calendar month (clause 7), save that no rent will be charged for the 1^st, 2^nd, 13^th, 14^th, 25^th and 26^th months of the term (clause 8); 

(4)  The initial charge for management fee and air-conditioning will be at HK$8.50 per square foot per month lettable which shall be subject to review (clause 10);  

(5)  Rent, management fee and air-conditioning charges are payable monthly in advance on the first day of each calendar month (clause 13); 

(6)  Government rates will be charged to the defendant’s account quarterly in advance on the first day of January, April, July and October throughout the said term; prior to formal assessment by the Rating and Valuation Department these will be charged at 5% on the monthly rent, subject to adjustment after formal assessment (clauses 11 and 13); 

(7)  Stamp duty and registration fee shall be shared equally between the parties (clause 27);   

(8)  Possession of the Premises shall be handed over and delivered to the defendant after the issuance of an occupation permit or written permission issued by the Building Authority; the plaintiff shall serve a 30 days’ prior written notice to the defendant for the handover and delivery of possession of the Premises in accordance with clause 24 of the Agreement (clause 28(a));

(9)  Within 15 days upon receipt of notice by the plaintiff that the occupation permit in respect of the Premises has been issued, the defendant is obliged to sign a formal lease; and if the defendant fails to do so, the plaintiff is entitled to (i) proceed to stamp the Agreement and deem the grant of a new lease; (ii) forfeit payments made by the defendant under the Agreement; and (iii) treat the Agreement and the lease as terminated, without prejudice to its rights to claim loss and damage (clause 29); 

(10)  The defendant shall pay an initial deposit of one month’s rent upon signing of the Agreement, and two months’ rent plus three months’ management fees and air-conditioning charges as further deposit upon signing of the formal lease (clause 12); 

(11)  The Agreement is legally binding on both parties once accepted and duly executed by them (clause 30). 

10.  On 10 May 2018, the defendant paid the plaintiff’s agent the initial deposit in the sum of HK$7,395,811.00 pursuant to clause 12 of the Agreement. 

11.  On 14 February 2019, the Building Authority issued an occupation permit in respect of the Building.  

12.  Accordingly, on 18 February 2019, the plaintiff through its solicitors issued a written notice to the defendant, pursuant to clause 28 of the Agreement, stating that the lease of the Premises shall commence on 1 April 2019 and end on 31 March 2024.  The plaintiff’s solicitors also requested that the defendant execute the enclosed deed of lease and return the same together with the agreed further deposits by 5 March 2019.

13.  On 4 March 2019 and 11 March 2019, the defendant sent two emails to the plaintiff respectively confirming, in Chinese and English, that it would no longer be taking up the lease of the Premises and that the plaintiff may let the Premises to any third party. 

14.  By a letter dated 22 March 2019, the plaintiff through its solicitors informed the defendant that its failure to take up the lease under the Agreement amounted to a unilateral repudiation of the Agreement.  The plaintiff therefore accepted the defendant’s repudiation and forfeited the initial deposit paid by the defendant. 

C.   EVIDENCE

15.  For the purpose of this assessment, the plaintiff has filed a witness statement on quantum of Ms Wong Hoi Yi Vicky (“Ms Wong”) who was the Assistant Manager – Leasing of the Chinachem Group. 

16.  Ms Wong attended the assessment hearing on 9 June 2022, adopted the contents of her witness statement and provided elaborations on the relevant matters to the court. 

17.  Apart from the above background matters, Ms Wong’s evidence essentially focussed on two areas:- (i) first, the steps taken by the plaintiff in mitigation of loss; and (ii) second, the loss and damage suffered by the plaintiff.  A summary of her evidence is provided below. 

C1. Mitigation of loss

18.  Shortly after the termination of the Agreement, the plaintiff through its solicitors wrote to the Commissioner of Stamp Revenue and explained the late stamping of the Agreement by reference to the defendant’s failure to take up a lease by 5 March 2019. 

19.  Having considered the plaintiff’s representations, the Commissioner of Stamp Revenue imposed a late-stamping penalty of HK$117,500.00 on top of the stamp duty of HK$797,874.00 which was assessed to be payable in respect of the Agreement. 

20.  As regards locating replacement tenants, the plaintiff engaged professional agents in marketing and advertising the Premises for re-letting.  These include household names such as Jones Lang LaSalle, Colliers, Centaline and Cushman & Wakefield.  

21.  With the aforesaid effort, the plaintiff eventually succeeded in re-letting all floors of the Premises to third party replacement tenants: the 19/F by July 2019, the 18/F by October 2019 and the 11/F, 12/F, 15/F, 16/F and 17/F (“Remaining Floors”) by November 2020. 

22.  The lease of the whole of the 19/F was granted to one Amber Hill Holdings Limited under a Tenancy Agreement dated 5 July 2019 (“19/F TA”).  Under the 19/F TA, inter alia:-

(1)  The term of tenancy was for 3 years commencing on 1 June 2019 and expiring on 31 May 2022 (both days inclusive), with an option to renew for a further 3-year term at the then open market rental to be agreed;

(2)  The monthly rental during the initial 3-year term is HK$1,007,085.00, with a 2-month rent-free period from 1 June 2019 to 31 July 2019 (both days inclusive);

(3)  Monthly management fee and air-conditioning charges of HK$100,946.00 shall be paid in advance on the 1^st day of each calendar month, subject to revision. 

23.  As to the replacement tenancy for the whole of the 18/F, it was granted to one FIS Systems (Hong Kong) Limited under a Deed of Lease dated 24 October 2019 (“18/F Lease”).  Under the 18/F Lease, inter alia:

(1)  The term of tenancy was for 6 years commencing on 1 November 2019 and expiring on 31 October 2025 (both days inclusive); 

(2)  The monthly rental (i) for the period from 1 November 2019 to 31 October 2022 (both days inclusive) is HK$1,009,460.00; (ii) for the period from 1 November 2022 to 31 October 2025 (both days inclusive) is HK$1,068,840.00.  A 2-month rent-free period would be granted from 1 November 2019 to 31 December 2019; 

(3)  Monthly management fee and air-conditioning charges of HK$100,946.00 shall be paid in advance on the 1^st day of each calendar month, subject to revision. 

24.  As for the Remaining Floors, a replacement tenancy agreement was entered into with the Government in the name of Financial Secretary Incorporated under an Agreement dated 16 November 2020 (“Government TA”).  Under the Government TA, inter alia:-

(1)  The term of tenancy was for 3 years commencing on 5 November 2020 and expiring on 4 November 2023 (both days inclusive), with an option to renew for a further 3-year term at the then open market rental to be agreed; 

(2)  The monthly rental during the initial 3-year term is HK$4,153,000.00, with rent-free periods from (i) 5 November 2020 to 20 December 2020 (both days inclusive); (ii) 5 November 2021 to 4 December 2021 (both days inclusive); and (iii) 5 November 2022 to 4 December 2022 (both days inclusive); 

(3)  Monthly management fee and air-conditioning charges of HK$504,237.00 shall be paid in advance on the 1^st day of each calendar month, subject to revision. 

C2. Loss and damage

25.  On the above basis, and as set forth in Ms Wong’s witness statement, the plaintiff has quantified the loss and damage suffered by it as follows:-

Head of Damage	Period	Calculation	Amount claimed
(A) Government TA: 11/F (11,843 sq. ft); 12/F, 15/F, 16/F and 17/F (11,876 sq. ft each) (i.e. the Remaining Floors)
(1) Loss of rent for period left vacant (counting the rent-free period of the Government TA[1])	1 April 2019 to 20 December 2020	HK$7,395,811.00 x (59,347 / 83,099) x (54/60) x (20 + 20/31) months	HK$98,140,793.81
(2) Loss of rent for the remainder term of the Agreement (up to 4 November 2023)	21 December 2020 to 4 November 2023	HK$7,395,811.00 x (59,347 / 83,099) x (54/60) x (11/31 + 34 + 4/30) months – HK$4,153,000.00 x (11/31 + 34 + 4/30) months	HK$20,716,862.15
Loss of rent for period left vacant after the expiry of the Government TA (assuming the option to renew will not be exercised)	5 November 2023 to 31 March 2024	HK$7,395,811.00 x (11,876/83,099) x (54/60) x (25/30 + 4) months	HK$4,597,793.40
(3) Loss of management fee and air-conditioning charge for period left vacant before the commencement of the Government TA	1 April 2019 to 4 November 2020: HK$8.5 per sq. ft as per clause 10 of the Agreement	HK$8.5 x (11,843 + 11,876 x 4) x (19 + 4/30) months	HK$9,651,800.43
Loss of management fee and air-conditioning charge for period left vacant after the expiry of the Government TA at the rate of HK$8.5 per sq. ft or at such other adjusted rate(s) (assuming the option to renew will not be exercised)	5 November 2023 to 31 March 2024	HK$8.5 x (11,843 + 11,876 x 4) x (26/30 + 4) months	HK$2,454,987.57
(4) Loss of rates (less rates concession, if any) for period left vacant before the commencement of the Government TA	1 April 2019 to 4 November 2020; 1 April 2019 to 30 June 2020		No record of payment
	1 July 2020 to 30 September 2020	(HK$137,200.00 + HK$136,450.00 + HK$137,200.00 + HK$137,950.00 + HK$138,700.00) x 1 quarter	HK$687,500.00
	1 October 2020 to 4 November 2020	(HK$137,200.00 + HK$136,450.00 + HK$137,200.00 + HK$137,950.00 + HK$138,700.00) x 35/92 quarter	HK$261,548.91[2]
Loss of rates (at the above-mentioned rates without rates concession or at such other rates as may be assessed by the Rating and Valuation Department) for period left vacant after the expiry of the Government TA (assuming the option to renew will not be exercised)	5 November 2023 to 31 March 2024	(HK$142,200.00 + HK$141,450.00 + HK$142,200.00 + HK$142,950.00 + HK$143,700.00) x (54/92 +1) quarter	HK$1,130,706.52
(5) Legal fees incurred for preparing the Government TA;			Nil
Half share stamp duty paid by the plaintiff for stamping the Government TA			HK$124,590.00
(6) Future stamp duty after the expiry of the Government TA (if any)			To be assessed
		Total under this head (A)	HK$137,766,582.79 + future stamp duty after the expiry of the Government TA to be assessed
(B) 18/F Lease (11,876 sq. ft)
(1) Loss of rent for period left vacant (counting the 2-month rent-free period of the 18/F Lease)	1 April 2019 to 31 December 2019	HK$7,395,811.00 x (11,876/83,099) x (54/60) x 9 months	HK$8,561,408.40
(2) Loss of rent for the remainder term of the Agreement (up to 31 March 2024)	1 January 2020 to 31 March 2024	HK$7,395,811.00 x (11,876/83,099) x (54/60) x 51 months – (HK$1,009,460.00 x 34 months + HK$1,068,840.00 x 17 months)	(HK$3,977,272.40)
(3) Loss of management fee and air-conditioning charge for period left vacant	1 April 2019 to 31 October 2019	HK$8.5 x 11,876 x 7 months	HK$706,622.00
(4) Loss of rates for period left vacant (rates payable)	1 April 2019 to 31 October 2019		No record of payment
(5) Legal fees incurred for preparing the 18/F Lease including half share stamp duty paid by the Plaintiff for stamping the 18/F Lease			HK$65,132.50
(6) Agency fee payable for arranging the 18/F Lease		(HK$1,009,460.00 + HK$1,068,840.00) / 2 x 0.4 month	HK$415,660.00
		Total under this head (B)	HK$5,771,550.50
(C) 19/F TA (11,876 sq. ft)
(1) Loss of rent for period left vacant (counting the 2-month rent-free period of the 19/F TA)	From 1 April 2019 to 31 July 2019	HK$7,395,811.00 x (11,876/83,099) x (54/60) x 4 months	HK$3,805,070.40
(2) Loss of rent for the remainder term of the Agreement (up to 31 May 2022)	From 1 Aug 2019 to 31 May 2022	HK$7,395,811.00 x (11,876/83,099) x (54/60) x 34 months – HK$1,007,085.00 x 34 months	(HK$1,897,791.60)
Loss of rent for period left vacant after the expiry of the 19/F TA (assuming the option to renew is not exercised)	1 June 2022 to 31 March 2024	HK$7,395,811.00 x (11,876/83,099) x (54/60) x 10 months	HK$9,512,676.00[3]
(3) Loss of management fee and air-conditioning charge for period left vacant;	1 April 2019 to 31 May 2019	HK$8.5 x 11,876 x 2 months	HK$201,892.00
Loss of management fee and air-conditioning charge at the rate of HK$8.5 per sq. ft or at such other adjusted rate(s) for period left vacant after the expiry of the 19/F TA (assuming the option to be renew will not be exercised)	1 June 2022 to 31 March 2024	HK$8.5 x 11,876 x 22 months	HK$2,220,812.00
(4) Loss of rates for period left vacant;	1 April 2019 to 31 May 2019		No record of payment
Loss of rates for period left vacant after the expiry of the 19/F TA (assuming the option to renew will not be exercised)	1 June 2022 to 31 Mach 2024		To be assessed
(5) Legal fees incurred for preparing the 19/F TA including half share stamp duty paid by the Plaintiff for stamping the 19/F TA			HK$32,996.50
(6) Agency fee payable for arranging 19/F TA		HK$1,007,085.00 x 1.25	HK$1,258,856.20
(7) Future stamp duty after the expiry of the 19/F TA (if any)			To be assessed
		Total under this head (C)	HK$15,134,511.50 + rates payable after the expiry of the 19/F TA to be assessed + future stamp duty after the expiry of the 19/F TA to be assessed
(D) STAMPING COSTS
(1) Half share of stamp duty for the Agreement			HK$398,937.00
(2) Penalty for late-stamping			HK$117,500.00
		Total under this head (D)	HK$516,437.00
(E) SUMMARY
		Sub-total (A) - (D)	HK$159,189,081.79 + rates / stamp duty to be assessed
		Less: Initial Deposit	(HK$7,395,811.00)
		Total:	HK$151,793,270.79 + rates / stamp duty to be assessed

D.   ASSESSMENT OF DAMAGES

26.  Where a tenant fails to take up a lease as per the terms of an agreement, the landlord is entitled to recover damages representing rent, management fees and air-conditioning charges, and rates which it would otherwise have received for the term of the lease subject to the deduction of any loss it could have avoided by taking reasonable steps to mitigate: Kin Tong Land Investment Co Ltd v Capella Ltd [2019] HKDC 65 at §24; World Light Limited v MegaSuper Market Limited [2018] HKCFI 2864 at §§28-30.  

27.  The onus of proving the plaintiff’s failure to have acted reasonably in taking steps to mitigate its loss consequent upon the breach is on the defendant: Chitty on Contracts (32^nd ed) §§26-081 to 26-082.  In the present landlord and tenant context, the plaintiff landlord is under no obligation to do more than reasonably necessary to market the premises: Wing Siu Co Ltd v Goldquest International Ltd. (unrep, HCA 4145/2001 & HCA 3183/2001, 18 August 2006) per Master de Souza at §15. 

D1. Loss of rent for periods left vacant prior to replacement tenancies

28.  The first item claimed for each floor of the Premises is the loss of rent for the periods left vacant, from the date on which the defendant was obliged to take up a formal lease of 1 April 2019 to the respective starting date of the replacement tenancies (after the expiry of any rent-free periods granted under such replacement tenancies). 

29.  On the evidence, the plaintiff took around 3 months (19/F), 7 months (18/F) and 20 months (Remaining Floors) respectively to re-let to replacement tenants.  The defendant has adduced no evidence taking issue with the time taken for the re-letting, or suggested that the terms of the replacement tenancies were in any way unreasonable. 

30.  The plaintiff’s calculation for this item takes into account the 6 months of rent-free period under the Agreement and seeks to arrive at an effective average monthly rent as the basis of calculation.  This approach is in my view acceptable. 

31.  On the plaintiff’s above calculation, I accept the claimed damages in the amounts of HK$3,805,070.40 (19/F), HK$8,561,408.40 (18/F) and HK$98,140,793.81 (Remaining Floors) under this head. 

D2. Loss of rent for remaining term of the Agreement

32.  The second item claimed relates to any loss of rent for the remainder term of the Agreement.  This essentially represents any reduction from the effective average monthly rent under the Agreement to the rent under the respective replacement tenancies. 

33.  Starting with 19/F, the period claimed is from 1 August 2019 (after the expiry of the 2-month rent-free period under the 19/F TA) to 31 May 2022 (expiry of the initial 3-year term under the 19/F TA).  On top of it, the plaintiff claims loss of rent for the period left vacant from 1 June 2022 until the expiry of the term under the Agreement (31 March 2024).  During her testimony, Ms Wong confirmed that the relevant tenant for 19/F did not exercise the option to renew, and that no new tenant was interested to take up the floor as of the date of the hearing.  I accept the plaintiff’s calculation and assess this item in the net amount of HK$7,614,884.40 (ie HK$9,512,676.00 – HK$1,897,791.60). 

34.  As to 18/F, the period claimed is from 1 January 2020 (after the expiry of the 2-month rent-free period under the 18/F Lease) to 31 March 2024 (expiry of the term under the Agreement).  On the plaintiff’s calculation, I assess this item in the amount of -HK$3,977,272.40 which is to be deducted from damages awarded under other heads. 

35.  As regards the Remaining Floors, the period claimed is from 21 December 2020 (after the expiry of the rent-free period on 20 December 2020 under the Government TA) to 4 November 2023 (expiry of the initial 3-year term under the Government TA).  On top of it, the plaintiff claims loss of rent for the period left vacant from 5 November 2023 until the expiry of the term under the Agreement (31 March 2024), on the assumption that the option to renew under the Government TA will not be exercised. 

36.  At the hearing, Ms Wong informed the court that the Remaining Floors were rented under the Government TA to serve as Government offices.  She accepted that there is no basis for her to assume that the option to renew under the Government TA will not be exercised.  As she explained, as the question of renewal would only come up for discussion around 9 months before the expiry of the initial term, the issue of option to renew had not yet come up for discussion with the tenant.  

37.  Given the uncertainty of the evidence, I see no basis to assess damages in respect of the Remaining Floors on the assumption that the option to renew will not be exercised.  In view of the nature of the tenant and the total floor space, it is not unlikely that the option to renew will be exercised.  However, as the evidence stands I would err on the side of caution and proceed on the basis of an even chance that the option will be exercised upon expiry of the initial term.  Indeed the plaintiff has made no submission specifically against this approach.  Based on the plaintiff’s revised calculation lodged after the hearing, I assess this item for the Remaining Floors in the amount of HK$24,477,449.29 (ie ((HK$20,716,862.15 + HK$4,597,793.40) + HK$23,640,243.03[4]) / 2))

D3. Loss of management fees and air-conditioning charges

38.  Under clause 10 of the Agreement, the defendant was obliged to pay a monthly management fee and air-conditioning charge at the minimum rate of HK$8.50 per square foot.

39.  The periods in respect of which these items are claimed for the different floors mirror those claimed for the loss of rent under Sections D1 and D2 above.  As for the loss of rent for the remaining term of the Agreement, the plaintiff lodged a revised calculation for these items in respect of the Remaining Floors on the alternative assumption that the option to renew under the Government TA will be exercised[5]. 

40.  Adopting the same approach, I assess the plaintiff’s loss under this head as follows:-

(1)  For 19/F: HK$2,422,704.00 (ie HK$201,892.00 + HK$2,220,812.00);

(2)  For 18/F: HK$706,622.00; and

(3)  For the Remaining Floors: HK$10,879,294.22 (ie ((HK$9,651,800.43 + HK$2,454,987.57) + HK$9,651,800.43) / 2).

D4. Loss of rates (less any rates concession)

41.  Under clause 11 of the Agreement, the defendant was obliged to pay government rates quarterly in advance at 5% on rental payable per month with necessary adjustments made upon formal assessment by the Rating and Valuation Department.  

42.  Due to the rates concessions made by the Hong Kong Government in the financial years 2018/2019 and 2019/2020, the plaintiff has submitted no claims for loss of rates up to and including 30 June 2020.  Apart from this, the periods in respect of which these items are claimed mirror those claimed for the losses under Sections D1 to D3 above. 

43.  As for the loss of rent for the remaining term of the Agreement, the plaintiff lodged a revised calculation for loss of rates in respect of the Remaining Floors on the alternative assumption that the option to renew under the Government TA will be exercised. The plaintiff also lodged further evidence showing the rates payable for 19/F from 1 June 2022 to 31 March 2024.[6]

44.  Applying the same approach, I assess the plaintiff’s loss under this head as follows:-

(1)  For 19/F: HK$830,431.32 (ie HK$145,931.32 + HK$225,500.00 + HK$459,000.00);

(2)  For 18/F: HK$0.00 (no record of payment); and

(3)  For the Remaining Floors: HK$1,514,402.17 (ie HK$687,500.00 + HK$261,548.91 + (HK$1,130,706.52 / 2)).

D5. Legal fees including half-share stamp duty for replacement tenancies

45.  The plaintiff next claims the legal fees incurred and/or the half-share of the stamp duties paid in respect of the replacement tenancies. 

46.  I consider these items to have been reasonably incurred following the defendant’s breach of the Agreement and find that they are recoverable. 

47.  In the absence of evidence to the contrary, I hold that the quantum claimed by the plaintiff to be reasonable and award the sums of HK$32,996.50 (19/F), HK$65,132.50 (18/F) and HK$124,590.00 (Remaining Floors, half-share stamp duty only) in full. 

D6. Agency fees

48.  The plaintiff further claims agency fees paid to Jones Lang LaSalle Limited for arranging the replacement tenancies for the 19/F TA and the 18/F Lease.  No claim for agency fee has been made in respect of the Government TA. 

49.  I accept that agency fees were reasonably incurred by the plaintiff for the purpose of finding replacement tenants for the Premises. In the absence of evidence to the contrary, I hold the quantum claimed by the plaintiff to be reasonable and award the respective sums of HK$1,258,856.20 (19/F) and HK$415,660.00 (18/F) in full. 

D7. Future stamp duty after the expiry of the replacement tenancies

50.  In respect of 19/F and the Remaining Floors, the plaintiff also claims future stamp duty after the expiry of the respective replacement tenancies at a sum to be assessed. 

51.  The apparent basis for claiming this item is the assumption that the option to renew under the 19/F TA and the Government TA will not be exercised, and in the event that new tenants are found for the relevant floors, the plaintiff will incur stamp duty expenses in relation to those further tenancies for the remaining term of the Agreement.

52.  In relation to the Remaining Floors, I have already explained that it cannot be assumed that the option to renew under the Government TA will not be exercised.  In relation to both the 19/F and the Remaining Floors, the claim for such future stamp duty is too speculative at present.  It is also not supported by any evidence in the amount claimed. 

53.  I am not satisfied that this head of claim should be allowed. 

D8. Stamping costs for the Agreement

54.  Finally, the plaintiff claims the stamping costs incurred in respect of the Agreement itself.  This includes HK$398,937.00 being the half-share of the stamp duty paid by the plaintiff for the defendant, and HK$117,500.00 being the late-stamping penalty. 

55.  Clause 27 of the Agreement stipulates that the stamp duty payable shall be borne by the plaintiff and the defendant in equal shares.  By the fact that the late-stamping penalty was only incurred because of the defendant’s refusal to execute a formal lease, it is also reasonable that the defendant shall be made liable to pay the late-stamping penalty. 

56.  I would therefore allow these sums in full.  

E.   CONCLUSION

57.  In summary, I assess the damages payable by the defendant as follows:-

(1)  For 19/F: HK$15,964,942.82 (ie HK$3,805,070.40 + HK$7,614,884.40 + HK$2,422,704.00 + HK$830,431.32 + HK$32,996.50 + HK$1,258,856.20);

(2)  For 18/F: HK$5,771,550.50 (ie HK$8,561,408.40 - HK$3,977,272.40 + HK$706,622.00 + HK$65,132.50 + HK$415,660.00);

(3)  For the Remaining Floors: HK$135,154,529.49 (ie HK$98,140,793.81 + HK$24,477,449.29 + HK$10,879,294.22 + HK$1,514,402.17 + HK$124,590.00);

(4)  Stamping costs for the Agreement: HK$516,437.00 (ie HK$398,937.00 + HK$117,500). 

58.  After deducting the initial deposit paid by the defendant in the sum of HK$7,395,811.00, the net total amount of damages payable by the defendant to the plaintiff is therefore HK$150,011,648.81 (ie HK$15,964,942.82 + HK$5,771,550.50 + HK$135,154,529.49 + HK$516,437.00 – HK$7,395,811.00). 

59.  The plaintiff also claims interest on the assessed damages at the rate of 1% per annum above the prime rate from the date of the Writ of Summons (ie 8 April 2019) to the date of final judgment and thereafter at judgment rate until payment in full. 

60.  I find this claim for interest to be reasonable and so order. 

61.  Finally, the plaintiff claims costs of this assessment of damages in the total sum of HK$147,818.00.  Having reviewed the plaintiff’s statement of costs for summary assessment and in the absence of any comments from the defendant, I consider this amount of costs to be largely reasonable and assess the plaintiff’s costs at HK$135,000.00. 

62.  It remains for me to thank Ms Pang for her assistance.