Hong Kong Case Law: Decisions & Judgments

Topic

Liquidated damages vs penalty

Legal area

Court

14 Jun 2024

CHAO CHIUNG YO, the executor of the Estate of Madam LEUNG HING SHAN, deceased v. SAM YU LIK ERIC

Citation

[2024] HKCFI 1377
Court

Court of First Instance
Case number

HCMP12/2023

The Vendor failed to show good title and did not satisfactorily answer material requisitions (notably the Vendor lacked effective power to sell the parking space absent rectification of the will/probate by completion date and had not produced a certified carpark layout plan); that failure amounted to repudiatory breach which the Purchaser validly accepted; clause 7 was not a penalty and the Purchaser was entitled to liquidated damages of HKD 2,100,000; the Purchaser is entitled to indemnity for any estate agent commission if it becomes payable; equitable lien is subsumed by the security paid…
14 Jun 2024

SAM YU LIK ERIC v. CHAO CHIUNG YO (趙祟岳), the sole executor of the estate of LEUNG HING SHAN (梁慶珊),deceased

Citation

[2024] HKCFI 1377
Court

Court of First Instance
Case number

HCMP15/2023

The Vendor failed to show good title and did not satisfactorily answer requisitions (in particular the Vendor's lack of clear power to sell the parking space under the Will), thereby committing a repudiatory breach which the Purchaser validly accepted; clause 7 providing liquidated damages of HKD 2,100,000 was not a penalty and is enforceable; the Purchaser is entitled to liquidated damages, interest and an indemnity in respect of any estate agent commission payable; equitable lien need not be declared because security had been paid into court.
6 Nov 2023

THE INCORPORATED OWNERS OF SHUN CHI COURT v. CITI-PRO PROPERTY SERVICES COMPANY LTD

Citation

[2023] HKCFI 2880
Court

Court of First Instance
Case number

HCA2237/2019

Court found IO proved damages of HK$1,888,738.94 for breach but was not entitled to rely on the disputed liquidated damages/penalty provision; entered judgment for that proved sum with interest at HSBC best lending rate plus 1%; awarded costs to IO on an indemnity basis to be taxed if not agreed and directed enhanced interest on costs not exceeding 10% above judgment rate because Citi-Pro failed to show it would be unjust to make the enhanced orders under O.22 r.24.
8 Jan 2021

AIR CHARTER SERVICE (HK) LTD v. 美拓国际物流(上海)有限公司(also known as MEGA-TRANSPORTER SHANGHAI CO., LTD.)

Citation

[2021] HKCFI 56
Court

Court of First Instance
Case number

HCA974/2018

The court held plaintiff entitled to judgment for the first charter price of US$488,000 as time for payment was of the essence; the Cancellation Clause applies to charterer-initiated cancellations and does not convert into payable liquidated damages upon plaintiff's termination under clause 9; clause 10 indemnifies plaintiff only for losses actually incurred and does not automatically make the Cancellation Clause payable on termination; plaintiff was entitled to damages for loss of bargain for 98 flights at US$8,000 each plus legal costs of US$1,732.50; contractual default interest applies pr…
6 Nov 2020

SO MAN KUEN AND ANOTHER v. WONG MAN HON FREDERICK AND ANOTHER

Citation

[2020] HKCFI 2757
Court

Court of First Instance
Case number

HCMP1875/2019

The court held that the Plaintiffs validly rescinded the PSPA under clause 4 for breach of the Defendants' representation about legal proceedings; clause 16(b) was not the operative provision for that situation and, in any event, would be unenforceable as a penalty; clause 17(b) governs non-completion due to default and an indemnity in favour of the Plaintiffs for estate agent commission was ordered insofar as the commission becomes payable and has been paid by the Plaintiffs; Plaintiffs awarded return of Deposit with interest, HK$50,000 damages for wasted costs, and costs on 75% basis agains…
28 Jun 2018

MERIT ACT LTD v. CHUBB HONG KONG LTD

Citation

[2018] HKDC 717
Court

District Court
Case number

DCCJ2527/2012

Court found defendant had warned plaintiff that a firefighting system was required for the server room and plaintiff expressly instructed removal of the FM200 item from the Quotation; an implied term that installations be fit for purpose would otherwise have arisen but was displaced by that express instruction; therefore defendant did not breach the contract; defendant entitled to outstanding balance of HKD56000 with pre‑judgment interest; clause 9 would be enforceable as liquidated damages but was not applied to award plaintiff recovery given findings on liability and mitigation.
8 Feb 2018

YEUNG & YOUNG MEDICARE CENTRE LTD v. 潘贊生

Citation

[2018] HKCFI 272
Court

Court of First Instance
Case number

HCSA55/2017

The court held there were no arguable points of law: penalty doctrine did not provide an arguable basis to upset forfeiture of a deposit where the law treats deposits differently from sums payable on breach; the DPO correctly applied authority that forfeitable deposits are generally enforceable absent unconscionability; there was no evidence of waiver; factual findings on breach of Clause 6 were within the scope for reasonable minds to differ and not perverse, so leave to appeal was unarguable and refused.
30 Sept 2016

A.V.C. PROPERTY DEVELOPMENT CO LTD v. JOYFUL GRACE TRADING LTD AND ANOTHER

Citation

A.V.C. PROPERTY DEVELOPMENT CO LTD v. JOYFUL GRACE TRADING LTD AND ANOTHER
Court

Court of First Instance
Case number

HCA529/2013

Plaintiff failed to prove that the 2nd defendant consented to the post‑Guarantee variation that increased the guarantor's liability; the variation therefore altered the underlying transaction to the guarantor's prejudice and the guarantor could not be held liable for the increased obligation. Consequently the plaintiff's claims against the 2nd defendant are dismissed; additionally, the contractual interest provision was held to be a penalty and unenforceable if relied upon, but dismissal was founded principally on lack of proven consent and deficient pleading/evidence.
19 May 2015

SUNRISE GROUP CORPORATION v. HONEST FAME (HONG KONG) LTD

Citation

SUNRISE GROUP CORPORATION v. HONEST FAME (HONG KONG) LTD
Court

Court of First Instance
Case number

HCA232/2014

The application to set aside the default judgment was dismissed because service at the defendant's registered office was valid and the defendant failed to demonstrate a prima facie meritorious defence: the contemporaneous documentary evidence established a genuine contract and the intermediary's role in forming it, and the 20% clause was a legitimate pre-estimate of loss rather than a penalty.
21 Jul 2014

SHANGHAI YIDU INVESTMENT CONSULTANTS CO LTD v. MANDARIN INTERNATIONAL CORPORATE FINANCE LTD AND ANOTHER

Citation

SHANGHAI YIDU INVESTMENT CONSULTANTS CO LTD v. MANDARIN INTERNATIONAL CORPORATE FINANCE LTD AND ANOTHER
Court

Court of First Instance
Case number

HCA1791/2010

The court found the documentary evidence (Confirmation Letter and Acknowledgement Letter) established the debt and the 2nd defendant’s guarantee; the defendants' pleaded defences (illegality, mistake, alleged settlement) failed on the evidence; the 0.1% per day additional breach payment was not a genuine pre-estimate, produced an exceptionally large increase relative to contractual interest and was therefore a penalty and unenforceable; accordingly judgment was entered for the plaintiff for HK$29,241,010.51 as at 15 May 2014 with interest thereafter at the judgment rate and costs, liability j…