HOME FOOD AND DRINK HOLDINGS LTD v. DRAGON TRADE (HONG KONG) LTD

HOME FOOD AND DRINK HOLDINGS LTD v. DRAGON TRADE (HONG KONG) LTD

Service was effective and clause 4(aa) rendered guarantors immediately liable for rent arrears without prior demand; however guarantor liability under that clause is confined to sums due while the tenancy remained vested in the tenant and does not extend beyond the date the landlord forfeited the tenancy (12 October...

Source-derived case information.

Citation
HOME FOOD AND DRINK HOLDINGS LTD v. DRAGON TRADE (HONG KONG) LTD
Parties
Plaintiff (original Action); 1st Defendant (by Counterclaim): Home Food and Drink Holdings Limited; Defendant (original Action); Plaintiff (by Counterclaim): Dragon Trade (Hong Kong) Limited; 2nd Defendant (by Counterclaim); Guarantor: Kwok Yik; 3rd Defendant (by Counterclaim); Guarantor: Pang Ka Lun; 4th Defendant (by Counterclaim); Guarantor: Lau Yau Shing; 5th Defendant (by Counterclaim); Guarantor: Cheuk Chi Man
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
8 May 2013
Case Number
HCA1337/2012
Procedural Posture
Civil Landlord and Tenant; Guarantor Liability; Counterclaim / Application to Set Aside and Vary Default Judgment; Decision on Summons
Outcome
Default judgment dated 16 November 2012 varied in part
Legal Topics
Forfeiture, Default Judgment, Service of Process, Guarantor Liability, Set Off, Deposit Forfeiture, Mesne Profits, Interest
Source Language
en
Landlord and Tenant Contract Civil Procedure Guaranty and Suretyship Debt Recovery Forfeiture Default Judgment Service of Process +5 more

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Parties

Home Food and Drink Holdings Limited

Plaintiff (original Action); 1st Defendant (by Counterclaim)

Dragon Trade (Hong Kong) Limited

Defendant (original Action); Plaintiff (by Counterclaim)

Kwok Yik

2nd Defendant (by Counterclaim); Guarantor

Pang Ka Lun

3rd Defendant (by Counterclaim); Guarantor

Lau Yau Shing

4th Defendant (by Counterclaim); Guarantor

Cheuk Chi Man

5th Defendant (by Counterclaim); Guarantor

Procedural Posture

Civil Landlord and Tenant; Guarantor Liability; Counterclaim / Application to Set Aside and Vary Default Judgment; Decision on Summons

Legal Issues

  1. 1 Whether the default judgment was entered as a result of irregular service
  2. 2 Whether clause 4(aa) required a prior demand before guarantor liability arose
  3. 3 Whether guarantor liability extends beyond forfeiture/termination of the tenancy

Ratio Decidendi

Service was effective and clause 4(aa) rendered guarantors immediately liable for rent arrears without prior demand; however guarantor liability under that clause is confined to sums due while the tenancy remained vested in the tenant and does not extend beyond the date the landlord forfeited the tenancy (12 October 2012). Equitable set-off and credit for forfeited deposit were rejected on contractual grounds. The default judgment therefore required variation to remove post‑forfeiture items.

Court Disposition

Default judgment dated 16 November 2012 varied in part

Orders

  • The 2nd, 3rd, 4th and 5th defendants by counterclaim to pay the plaintiff by counterclaim the sum of HK$504,277.39
  • The 2nd, 3rd, 4th and 5th defendants by counterclaim to pay the plaintiff by counterclaim the sum of HK$20,311.04