Swatch Group sued over HK$4.66m in rent arrears after closing down two stores in Central

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6th July 2020 – (Hong Kong) The anti-extradition protests and COVID-19 pandemic have impacted the local tourism for a year. Many restaurants, watch and jewellery shops were suffering badly in the last few months.

In Central, two major brands, Swatch and Blancpain (owned by Swatch Group) have pulled out from Central in Hong Kong. The flagship stores of Swatch and BLANCPAIN, both owned by Swatch group are located at 1 and 3, Queen’s Road at China Building respectively. The two shops occupy an area of ​​more than 1,000 square feet each, and the shops are located in the central downtown area of ​​the city.

Swatch was accused of owing management fees since April this year and it started to owe rent since June. For this reason, the owner of the shop filed an action in the High Court last Friday (3rd), demanded the vacant possession of the shop and rent arrears amounting to more than HK$4.66 million.

The plaintiff in this case was Vember Lord Limited and the defendant was The Swatch Group (Hong Kong) Limited. The plaintiff filed two lawsuits last Friday, one against Shop G1 on the ground floor of the China Building (previously occupied by Swatch) and the other against Shop G3-5 (previously occupied by Blancpain). According to the plaintiff’s filing, in August 2018, the defendant signed a three-year lease with the plaintiff to rent Shop G1 at a monthly rent of HK$1.35 million or 15% of turnover, whichever was higher. As for the lease of Shop G3-5, it was signed in March 2019. The lease term was also 3 years, and the monthly rent was HK$1.8 million.

The plaintiff now said that the defendant owed the management fee and air-conditioning fee of the shops starting from April this year. In addition, since June, the defendant has not paid the rent, government rates and other miscellaneous fees according to the contract. As of the time of filing the legal suit, the arrears of Shop G1 was close to HK$2.01 million while that of Shop G3-5 was more than HK$2.65 million. In addition, since 19th June, the plaintiff did not open the business from 10am to 8pm every day according to the lease agreement. As a result of the defendant’s actions described above, the plaintiff regarded the defendant as giving up the lease. The plaintiff therefore requested the defendant to give vacant possession and repay the arrears totalling more than HK$4.66 million.

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