Triple Top Realty Ltd v. Mayland Co (A Firm)

HCA000886/1970

Action No. 886 of 1970

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Coram: B.L. Jones, Assistant Registrar in Chambers.

Date of Judgment: 6th January, 1971.

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DECISION

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1. This is an application for mesne profits to be assessed under Order 37 of the Rules of the Supreme Court 1967 pursuant to the judgment obtained by the Plaintiffs against the defendants on the 11th December, 1970.

2. Under the judgment the Plaintiffs obtained possession of the premises of which they are the registered owners, known as 21, Shop 2, Loong Wah Building, ground floor, Kowloon, together with costs of the proceedings to be taxed.

3. The premises were let by the Plaintiffs to the defendants under an agreement dated the 6th April 1967 for a term of 3 years from the 1st June 1967 to the 31st May 1970 at a monthly rental of $4,400.

4. The defendants' lease expired by effluxion of time on the 31st May 1970 but they have continued to hold over since that date. By the judgment of the 11th December 1970 the defendants were granted a stay of execution for possession until the 31st December, 1970.

5. The defendants have paid the sum of $4,400 per month as mesne profits to the Plaintiffs for their continued occupation of the premises since the expiry of the lease.

6. Mr. W.H. Hsu, the manager of Harriman Realty Co. Ltd., estate agents and valuers, gave evidence on behalf of the Plaintiffs and produced a rental valuation report of the premises dated the 28th September 1970.

7. Loong Wah Building is situated on the west side of Lock Road ...(illegible) across the street from the main entrance of the Hong Kong Hyatt Hotel. The building is both structurally sound and in a good state of repair. The shop front is 13' 6" wide with direct access to Lock Road and has an area of about 632 square feet with a private toilet in the backyard which is shared with the occupier of shop No. 1 on the ground floor. At the end of March 1967 Mr. Hsu said that a reasonable rent in respect of the premises exclusive of rates would amount to $4,400 per month which would continue to be so until the end of May 1969. At this time there was a turning point with regard to rentals for shop premises all over the Colony resulting in an increase of as much as 20%. Mr. Hsu assessed the reasonable rental of the premises as from the 1st June 1969 at the sum of $5,300 per month exclusive of rates. This figure was considered to be reasonable until the 1st May 1970 when the situation changed again. In May 1970 Mr. Hsu stated that the rent should be increased by a further 50% over the last increase arriving at a new rental of $8,000 per month exclusive of rates. This would be the economic rent of the premises as at the 1st May 1970 but since that time there have been further increases.

8. At a rental of $8,000 per month over an area of 632 square feet the rent per square foot would amount to $12.65.

9. Mr. Hsu was cross-examined by the solicitor for the defendants when reference was made to an adjacent shop 21A shop A called Alice which has the same area as the premises in question and which was previously let at a rental of $4,400 per month. This shop has been vacant for over seven months and under these circumstances it was contended that the new rent of $8,000 per month asked for by the Plaintiffs is too high. Accordingly the defendants' solicitor contended that the landlord would have to accept a tenancy of the premises at a lower figure. I cannot agree with this argument.

10. Mr. Timothy Chan, the solicitor acting for the Plaintiffs, produced the original of a lease made between the Plaintiffs and a Mr. Chen Wing Jeuk relating to shop No. 1 on the ground floor of 21 Lock Road which was let for a term of 1 year on the 30th December 1970 at a monthly rental of $7,500 exclusive of rates. There premises have been let at a corresponding rent to the amount calculated in respect of the premises, the subject matter of this application, but the area is less.

11. Three witnesses were called on behalf of the defendants but the evidence did not amount to more than challenging the present monthly rental of $8,000 as calculated by Mr. Hsu on the grounds that it is too high. No expert evidence was called by the defendants to contradict the evidence of Mr. Hsu.

12. If possession of the premises had been given by the defendants on the due date it may well have been the case that the Plaintiffs may not have been able to relet the premises immediately at the sum of $8,000 per month but this is a hypothetical question with which I am not concerned.

13. By virtue of the defendants' wrongful occupation of the premises the Plaintiffs have been deprived of re-letting at a reasonable rent. It is common knowledge that rents in Hong Kong over the last two and a half years have increased out of all proportion to those that were being charged in 1967. However, it is not my function to express an opinion as to whether the present day rentals are too high but to assess mesne profits upon the economic rental that the Plaintiffs would today be able to ask in the open market.

14. I am satisfied that the valuation made by Harriman Realty Co. Ltd. is the correct economic rental in the absence of evidence to controvert this figure.

15. Accordingly I assess mesne profits at the sum of $8,000 per month to be paid by the defendants to the Plaintiffs from the 1st June 1970 until vacant possession is given. Costs of the assessment will be paid by the defendants and there will be a certificate for counsel.

Representation: