Spring Triumph Holdings Ltd and Another v. Save Entertainment Ltd and Another
Read the full judgment text of HCA 1550/2021 on BabelCite. This High Court CFI judgment was delivered on 19 December 2022.
1. The Plaintiffs commenced this action in respect of a commercial tenancy dispute over the premises known as 7 th Floor of MW Plaza, No 40 Kimberley Road, Kowloon, Hong Kong of ALL THAT piece or parcel of ground registered in the Land Registry as The Remaining Portion of Kowloon Inland Lot No 6836 and ALL THAT piece or parcel of ground registered in the Land Registry as Section A of Kowloon Inland Lot No 6836 (the “ Premises ”).
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HCA 1550/2021 [2022] HKCFI 3686 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1550 OF 2021 _______________
_______________ Before: Master Connie Lee in Court Dates of Hearing: 6 December 2022 Date of Judgment: 19 December 2022 ___________________ J U D G M E N T (on assessment of damages) __________________ A. Introduction 1.The Plaintiffs commenced this action in respect of a commercial tenancy dispute over the premises known as 7th Floor of MW Plaza, No 40 Kimberley Road, Kowloon, Hong Kong of ALL THAT piece or parcel of ground registered in the Land Registry as The Remaining Portion of Kowloon Inland Lot No 6836 and ALL THAT piece or parcel of ground registered in the Land Registry as Section A of Kowloon Inland Lot No 6836 (the “Premises”). 2.In short, the Plaintiffs’ case is that the 1st Defendant had failed and/or refused to pay the rent, management fees and rates as stipulated in the tenancy agreement in respect of the Premises (the “Tenancy Agreement”) since 30 July 2021. The Plaintiffs therefore commenced the present action to recover vacant possession of the Premises, the outstanding rent, management expenses and government rates in arrears as well as damages for breach of the tenancy agreement. The Plaintiffs also sought to hold the 2nd Defendant liable for such sums due and owing as well as damages together with interest and costs under an irrevocable guarantee executed in favour of the Plaintiffs in consideration for them to enter into the Tenancy Agreement. 3.On 31 December 2021, the Plaintiffs obtained Final and Interlocutory Judgment (the “Judgment”) against the Defendants. Pursuant to the Judgment, the 1st and 2nd Defendants were ordered to pay to the Plaintiffs:-
4.On 28 January 2022, the 1st Defendant delivered vacant possession of the Premises to the Plaintiffs. 5.The assessment of damages was fixed to be heard before me on 6 December 2022. 6.Despite the Defendant’s absence at the hearing, I was satisfied on a Mr Cheung Sai Ho’s 6th Affirmation of Service filed on behalf of the Plaintiff that sufficient notice had been given to the Defendants of the hearing. It was therefore appropriate to hear the Plaintiffs’ evidence and submissions. 7.Further, at the hearing before me, the Plaintiffs sought leave to adduce a supplemental list of documents containing only 1 document, that is the government rates demand note for the period 1 October 2021 to 31 March 2022. The summons seeking leave and the supplemental list of documents both dated 30 November 2022 was served on the Defendants at their respective last known address. As the document is relevant, I granted leave for the same to be admitted into the Plaintiffs’ evidence. 8.This is my judgment on the assessment of damages. B. Material Factual Background 9.The Plaintiffs were at all material times the registered owner of the Premises. 10.The Plaintiffs and the 1st Defendant entered into the Tenancy Agreement dated 1 August 2019, by which the Premises was let to the 1st Defendant for commercial purpose for a fixed term of 3 years commencing from 30 July 2019 and expiring on 29 July 2022 (both dates inclusive) at the rent of HK$55,000 per month and management fee at HK$8,855 subject to review from time to time (exclusive of rates, air-conditioning charge(s) and other outgoings) payable in advance on the 1st day of the term in each and every calendar month. 11.In consideration of the Plaintiffs entering into the Tenancy, the 2nd Defendant, a director of the 1st Defendant, executed a guarantee dated 21 August 2019 (the “Guarantee”) and irrevocably guaranteed to the Plaintiffs that he would on demand in writing of the Plaintiffs pay to them all moneys and liabilities where due and owing or incurred by the 1st Defendant by reason of the Tenancy Agreement together with all costs and expenses incurred by the Plaintiffs for recovery thereof on a full indemnity basis. 12.Further, the Guarantee shall take effect from and inclusive of 30 July 2019 and shall remain in full force and effect subject to the renewal of the tenancy up to 29 July 2022. Notwithstanding any early determination of the tenancy for whatever reasons, the 2nd Defendant shall remain liable in accordance with the terms of the Guarantee during such effective period. 13.In breach of the Tenancy Agreement, the 1st Defendant had failed and/or refused to pay rent, management fees and rates since 30 July 2021. 14.Notwithstanding the Plaintiffs had via their solicitors demanded the 2nd Defendant to perform his obligations under the Guarantee to pay the outstanding rent, management fees and rates in arrears, the 2nd Defendant had not made payment for the same or any part thereof. 15.The Plaintiffs accordingly commenced this action on 3 November 2021. C. The Evidence 16.For the purpose of this assessment, the Plaintiffs has filed a witness statement on quantum of Ms Angel Lau (“Ms Lau”) who was the manager of the Plaintiffs. 17.Ms Lau attended the assessment hearing on 6 December 2022, adopted the contents of her witness statement and provided clarifications on the relevant matters to the court. 18.Apart from the above background matters, Ms Lau’s evidence essentially focused on two areas:- (1) first, the steps taken by the Plaintiffs in mitigation of loss; and (2) second, the loss and damage suffered by the Plaintiffs. A brief summary of her evidence is provided below. C1. Mitigation of Loss 19.After the 1st Defendant had delivered vacant possession of the Premises on 28 January 2022, the Plaintiffs made efforts to secure a new tenant by its estate agents including Cushman & Wakefield (HK) Ltd and Knight Frank Hong Kong. 20.Eventually, the Plaintiffs managed to re-let the Premises to a Yoou Beauty Limited at the monthly rental of HK$56,000 pursuant to a tenancy agreement dated 31 March 2022, with the new tenancy commencing from 1 April 2022. C2. Loss and Damage 21.On the above basis, and as set forth in Ms Lau’s witness statement and clarified in her oral testimony, the Plaintiffs have quantified the loss and damage as follows. 22.First, under Paragraph (ii) of the Judgment, mesne profit in the sum of HK$195,161.29 from 12 October 2021 to 28 January 2022:-
23.Second, under Paragraph (iii) of the Judgment, management fees in the sum of HK$31,420.96 from 12 October 2021 to 28 January 2022:-
24.Third, under Paragraph (iv) of the Judgment, rates in the sum of HK$5,213.01 from 12 October 2021 to 28 January 2022:-
25.Fourth, under Paragraph (v) of the Judgment, mesne profit, management fees, and rates from 29 January 2022 to 31 March 2022 in the total sum of HK$136,903.41:-
26.In the circumstances, the Plaintiffs have quantified the total loss and damage under Paragraphs (ii) to (v) of the Judgment to be HK$368,698.67. D. Assessment of Damages 27.Where a landlord accepts a tenant’s repudiation, the landlord is entitled to recover damages reflecting the rent of the unexpired term of the tenancy agreement, service charges, rates and reinstatement costs. This is subject to a duty on the landlord to mitigate, and the landlord is expected to act reasonably and to take such steps as are necessary to re-let the vacant premises at market rent. The duty to mitigate is not onerous, and the landlord is not required to do anything other than in the ordinary course of business. The burden rests on the tenant to show that damages has not been mitigated: Silvercord Limited v High Performance Sports Limited HCA 1774/2018 (Unrep) 30.7.2020 at §9. 28.If a defendant wishes to set up a positive case to show that the plaintiff failed to mitigate his loss or damage, such allegations must be specifically pleaded with supporting particulars: Hong Kong Civil Procedures 2023 Vol 1 at §18/8/23. In the present case, the Defendants have not put forward any positive case to raise the issue of failure to mitigate. 29.In any event, based on the unchallenged evidence of Ms Lau as set out above, I am satisfied that the Plaintiffs have taken reasonable steps to mitigate their loss in that within only a period of around 2 months after the 1st Defendant delivered vacant possession of the Premises, the Plaintiffs already managed to enter into a new tenancy agreement with Yoou Beauty Limited. D1. Loss of Rent, Management Fees, Rates From 29 January 2022 to 31 March 2022 30.In the circumstances, I also accept Ms Lau’s evidence as clarified at the hearing and agree that the Plaintiffs have suffered loss of rent, management fees and rates since recovering vacant possession of the Premises until 31 March 2022 when a new tenancy agreement with Yoou Beauty Limited was executed. The particulars of loss as per the Plaintiffs’ calculation, have been set out in Paragraphs 25 to 26 above. 31.I therefore accept the amount as calculated by the Plaintiff in full and assess the damages under Paragraph (v) of the Judgment to be HK$136,903.41 together with interest at judgment rate from the date of Judgment until payment. D2. Arrears of Rent, Management Fees, Rates from 12 October 2021 to 28 January 2022 32.For the sake of completeness, I also accept the quantum calculated by the Plaintiffs as per Paragraphs (ii) to (iv) of the Judgment. 33.If and insofar as it is necessary, I accept that Plaintiffs are entitled to claim the following sums from the Defendants together with interest at judgment rate from the date of Judgment until payment:-
E. The Deposit Retained By The Plaintiffs 34.The Plaintiffs have retained a deposit in the amount of HK$199,815 as required under the Tenancy Agreement. At the hearing before me, the Plaintiffs’ counsel accepted that the said deposit should be taken into account and invited me to make an order that the Plaintiffs be at liberty to use the same to set off against any damages to which the Plaintiffs are entitled. F. Conclusion 35.In the circumstances, I make an order that:-
36.Insofar as costs is concerned, there is no reason why costs should not follow the event. I make an order that costs of this action, including costs of this assessment of damages summarily assessed at HK$53,000, be paid by the Defendants to the Plaintiffs forthwith. For the avoidance of doubt, I also grant a certificate for counsel for the attendance of the hearing of the assessment of damages. 37.It remains for me to thank the Plaintiffs’ counsel for her assistance.
Ms Becky Wong, instructed by Chung & Kwan, for the 1st and 2nd plaintiffs The 1st and 2nd defendants were unrepresented and absent |
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