Worldwide International Corp Ltd v Gloryluck Industrial Ltd [2024] 5 HKLRD 722, [2024] HKDC 1886

Lydia Leung represented the defendant in Worldwide International Corp Ltd v Gloryluck Industrial Ltd [2024] 5 HKLRD 722, [2024] HKDC 1886.

The landlord (L) of commercial premises refused to return to the tenant (T) the security deposit when the lease ended. L claimed to be entitled to deduct from it the costs of replacing the property’s damaged windows and mesne profits or loss of rental for the period of the repair works. Clause 3.04 of the tenancy agreements required T to be responsible for the cost of replacing all broken or damaged windows, regardless of whether the damage was out of T’s control. At issue was whether cl.3.04 should have been excluded from the tenancy agreements and the assessment of damages if T was found liable.

Held, granting judgment for L, that:

• (1) Clause 3.04 should not be excluded from the tenancy agreements. Despite admission from L’s witness that the clause was onerous and unusual, T failed to establish on unequivocal evidence that T was not given sufficient time to read the  contents of the tenancy agreements before execution, nor was the clause utterly inconsistent with the overall purpose of the commercial leases in general. The Court found T liable for the costs of repair of the damaged windows under the tenancy agreements (Tilden Rent-A-Car v Clendenning (1978) 83 DLR (3d) 400, Bank of China (Hong Kong) Ltd v Fung Chin Kan (2002) 5 HKCFAR 515, Citibank (Hong Kong) Ltd v Au Wing Lun (DCCJ 1816/2003, [2006] HKEC 34), Ming Shiu Chung v Ming Shiu Sum (2006) 9 HKCFAR 334, Wing On Properties and Securities Co Ltd v Wave Front Enterprise (HK) Ltd [2007] 2 HKC 54 considered). (See paras.30-31, 71, 76-79.)
• (2) The replacement of the windows was a more practical approach in the circumstances of this case. The Court adopted the amount spent ($68,500) as the costs of work, deducting certain items (in the total sum of $3,500); but applied a discount (25%) since the replacement was an overall betterment for L. The Court allowed an amount representing 1.5 months’ rental ($31,500) as loss of rental for L. In the end, T was found liable for ($68,500 – $3,500) x 75% + $31,500 = $80,250. L was granted judgment in the sum of $17,250 being the outstanding amount after deducting the amount of T’s liability from the security deposit ($63,000) (Wong Hon Kam Henry v Tak Yi Investment Ltd (DCCJ 345/2015, [2016] CHKEC 703) applied). (See paras.83-88.)

[The above is excerpted from the headnote to the report in HKLRD.]