GILMAN OFFICE AUTOMATION v. GL DESIGN LTD. & ANOTHER

GILMAN OFFICE AUTOMATION v. GL DESIGN LTD. & ANOTHER

The Adjudicator’s damages assessment was legally and factually unsupportable because she arbitrarily awarded opportunity costs without evidence and failed to determine whether the contractual payout provision was a genuine liquidated damages clause or a penalty; the correct approach is to decide first whether the clause is penal and, if so, assess compensatory damages as loss of profits (deducting maintenance costs and allowing for mitigation and apportionment), therefore the appeal is allowed, the award set aside and the matter remitted for retrial.

Citation
GILMAN OFFICE AUTOMATION v. GL DESIGN LTD. & ANOTHER
Parties
Claimant / Respondent on Appeal: Gilman Office Automation o/b Ricoh Hong Kong Ltd; 1st Defendant: GL Design Ltd; 2nd Defendant / Appellant: Hisano, Tomoyuki
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
25 January 2002
Case Number
HCSA33/2001
Procedural Posture
Small Claims Appeal (court of First Instance) / Hearing and Judgment on Appeal; Matter Remitted for Retrial by Small Claims Tribunal
Outcome
Appeal allowed; award of the Small Claims adjudicator set aside; case remitted to the Small Claims Tribunal for retrial by another adjudicator; no order as to costs of the appeal
Legal Topics
Liquidated Damages, Penalty Clause, Assessment of Damages, Guarantor Liability, Mitigation of Loss, Remittal
Source Language
EN
Contract Guarantee Damages Civil Procedure Remedies Liquidated Damages Penalty Clause Assessment of Damages +3 more

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Parties

Gilman Office Automation o/b Ricoh Hong Kong Ltd

Claimant / Respondent on Appeal

GL Design Ltd

1st Defendant

Hisano, Tomoyuki

2nd Defendant / Appellant

Procedural Posture

Small Claims Appeal (court of First Instance) / Hearing and Judgment on Appeal; Matter Remitted for Retrial by Small Claims Tribunal

Legal Issues

  1. 1 Whether the contractual payout/‘payout value’ provision (Clause 17) is a genuine liquidated damages clause or a penalty
  2. 2 Proper method to assess damages if clause is a penalty (measure of loss/profit)
  3. 3 Extent of guarantor’s liability under the guarantee

Ratio Decidendi

The Adjudicator’s damages assessment was legally and factually unsupportable because she arbitrarily awarded opportunity costs without evidence and failed to determine whether the contractual payout provision was a genuine liquidated damages clause or a penalty; the correct approach is to decide first whether the clause is penal and, if so, assess compensatory damages as loss of profits (deducting maintenance costs and allowing for mitigation and apportionment), therefore the appeal is allowed, the award set aside and the matter remitted for retrial.

Court Disposition

Appeal allowed; award of the Small Claims adjudicator set aside; case remitted to the Small Claims Tribunal for retrial by another adjudicator; no order as to costs of the appeal

Orders

  • Appeal allowed and Adjudicator’s award set aside
  • Matter remitted to Small Claims Tribunal for retrial by another adjudicator