LEGAL PROBLEM Daisy Boutique is a distributor of organic cosmetics and is a tenant of Shop 108 in Omega (a shopping mall owned by Omega Ltd.) since 2020, the total rent being HK$100,000. The leasing contract contains a clause whereby Daisy Boutique should remain the only shop selling organic cosmetics in Omega. Daisy Boutique's performance has always been beyond expectations. However, on the 1 July 2020, a competitor called Grace Organic Ltd. opened a new shop located at the number 109, i.e. next to Daisy Boutique. On the 1 Sep 2020, Omega had increased the rent for 25% of its 50 shops. 25 of these shops could not bear such an increase and terminated the lease. As a result, on 1 Oct 2020, 25 premises were empty. On the 1 Nov 2020, Daisy Boutique's sales have seen a 50% drop. On the same day, Daisy Boutique made an application to renegotiate the terms of the existing lease. The review that was sought included provisions for the abatement of rent by a reduction of 20% commencing from the date in which Grace Organic Ltd. opened its shop. The day after, Mr. Fok (CEO of Omega) went to shop 108 and told the tenant: "fair enough, let's cut the rent off. 20%. I hate to see another empty shop! So, HK$80,000, starting from 1st Dec 2020". However, on 1 Jan 2021, the developer of a new luxury residence located next to Omega announced that 1,000 flats were released for sale. In view of this, Omega can expect to lease the 25 unoccupied shops to luxury brands. On the 1 Feb 2021, Daisy Boutique received a letter from Mr. Fok whereby the rent for Shop 108 is HK$100,000, not HK$80,000. Advise Daisy Boutique as to whether it is required to pay the rent of HK$100,000 instead of HK$80,000. LEGAL PROBLEM Daisy Boutique is a distributor of organic cosmetics and is a tenant of Shop 108 in Omega (a shopping mall owned by Omega Ltd.) since 2020, the total rent being HK$100,000. The leasing contract contains a clause whereby Daisy Boutique should remain the only shop selling organic cosmetics in Omega. Daisy Boutique's performance has always been beyond expectations. However, on the 1 July 2020, a competitor called Grace Organic Ltd. opened a new shop located at the number 109, i.e. next to Daisy Boutique. On the 1 Sep 2020, Omega had increased the rent for 25% of its 50 shops. 25 of these shops could not bear such an increase and terminated the lease. As a result, on 1 Oct 2020, 25 premises were empty. On the 1 Nov 2020, Daisy Boutique's sales have seen a 50% drop. On the same day, Daisy Boutique made an application to renegotiate the terms of the existing lease. The review that was sought included provisions for the abatement of rent by a reduction of 20% commencing from the date in which Grace Organic Ltd. opened its shop. The day after, Mr. Fok (CEO of Omega) went to shop 108 and told the tenant: "fair enough, let's cut the rent off. 20%. I hate to see another empty shop! So, HK$80,000, starting from 1st Dec 2020". However, on 1 Jan 2021, the developer of a new luxury residence located next to Omega announced that 1,000 flats were released for sale. In view of this, Omega can expect to lease the 25 unoccupied shops to luxury brands. On the 1 Feb 2021, Daisy Boutique received a letter from Mr. Fok whereby the rent for Shop 108 is HK$100,000, not HK$80,000. Advise Daisy Boutique as to whether it is required to pay the rent of HK$100,000 instead of HK$80,000
