Concrete producer Excel Concrete has won damages of nearly HK$7.5 million over a failed attempt to lease a piece of land in Yau Tong for use as a concrete batching plant.
In a written judgement released last week the Court of First Instance of the High Court awarded damages totalling HK$7,463,708.60 to Mega Yield International Holdings, the holding company of Excel Concrete, for various costs arising from the leasing dispute.
The dispute arose when the Excel Concrete was unable to take possession of the original plot of land at Yau Tong shipyards in 2008 and was forced to set up its plant at Aberdeen instead.
Mega Yield is a subsidiary of listed Wai Kee Holdings (0610), which also controls contractor Build King Holdings (0240).
There were various heads of claim of which the head for reliance loss (or wasted expenditure) totalled HK$5,954,748.60.
Among the various items in this head of claim, costs for waiver and administrative fee came to HK$2,168,420 while operational overheads was cut to HK$1,517,706.60 against the claimed sum of HK$5,671,371.
For the head of restitution interest, the court awarded HK$440,000 for the cost incurred with rental deposit.
As for the head of loss in reasonable attempt to mitigate, the Mega Yield was awarded HK$1,068,960 for the period of July to September 2009.
The biggest head of claim, for difference in rental value, and coming at a hefty HK$39,210,480 was disallowed by the court.
Deputy High Court Judge K H Woo said although the Aberdeen site permitted use of concrete batching plant and had a five year term lease unlike the Yau Tong site which required a government waiver and had only three years, this was not enough to convince him.
Judge Woo said for another site to be a true substitute for the original site, the plaintiff would pay no more than what it would pay for the original site and that the plaintiff had suffered no loss by having a substitute site.
“As such, the Aberdeen site could not properly be used for comparison with the Lot for assessing the plaintiff’s loss resultant from the defendant’s breach,” Judge Woo wrote in his judgement.
Mega Yield originally signed an option in 2007 to lease the Yau Tong site, at Yau Tong Marine Lots Nos 2, 3 and 4, for two years starting in late 2008 with an option for a third year.
However the owner of the site, Fonfair Company, was unable to deliver the site due to a sitting tenant who refused to have his lease determined earlier.
A prolonged exchange of letters followed between Excel and the owner as Excel attempted to take possession but in the end it was forced to look elsewhere.
In 2010, it entered the highest bid to Lands Department for a short term tenancy at Aberdeen for a site specifically permitting concrete batching use for a five year term at a quarterly rent of HK$ 7.95 million or HK$2.65 million a month.
By comparison the Yau Tong site was supposed to be leased at a monthly rent of only HK$220,000 including a royalty fee of HK$50,000 a month.
The Yau Tong lots were included as part of a planning application by a Henderson Land-led consortium for redevelopment of the shipyard area which received planning approval from the Town Planning Board last month.