Court Awards CNY 70,440 in Property Management Fee Dispute

A court in Eastern China City has ruled in favor of a property management company, ordering a corporate client to pay outstanding service fees, late payment penalties, and contractual damages totaling CNY 70,440. The dispute arose from a物业管理 services agreement where the defendant failed to make timely payments over several months. The court found the defendant in breach of contract and upheld the plaintiff’s claims for arrears, liquidated damages, and a two-month penalty.

The plaintiff, a property management firm represented by Mr. Xie as its legal representative, entered into a物业管理 service contract with the defendant company, represented by Mr. Ji, in January 2010. The contract ran from January 22, 2010 to January 22, 2011, with a monthly service fee of CNY 24,000. In April 2010, the parties signed a supplemental agreement reducing the monthly fee to CNY 18,855. The contract included an automatic renewal clause for one year if neither party objected within 30 days before expiration. Starting in March 2010, the defendant began falling behind on payments. Despite repeated demands, the defendant paid only partial amounts after the plaintiff terminated the agreement in late February 2011. The plaintiff claimed a remaining balance of CNY 18,842 in service fees, plus liquidated damages of CNY 14,435 calculated at 0.1% per day, and a contractual penalty of two months’ fees equal to CNY 37,710.

The case proceeded to a public hearing on February 28, 2012. The plaintiff’s attorney, Mr. Li, appeared in court, while the defendant failed to attend despite proper legal notice. The court conducted the trial in the defendant’s absence. The plaintiff submitted key evidence including the original物业管理 service contract, the supplemental agreement, and payment records. These documents showed the defendant’s partial payments between September 2010 and March 2011, covering amounts for March 2010 through March 2011 but leaving a shortfall of CNY 18,842. The court accepted this evidence after examination during the hearing.

The court held that the物业管理 service contract and supplemental agreement were valid and legally binding, as both parties had entered into them voluntarily and they did not violate any mandatory laws or regulations. Since the plaintiff had provided the agreed物业管理 services, the defendant was obligated to pay the full service fees. The evidence demonstrated that the defendant had indeed failed to pay CNY 18,842. Accordingly, the court granted the plaintiff’s request for payment of this outstanding amount. The court further found that the defendant’s late payments constituted a breach of contract. Under the contract’s liquidated damages clause, the defendant must pay a penalty of 0.1% per day on overdue amounts from the day after each payment was due until full settlement. After calculation, the court fixed this amount at CNY 13,888.

The court also applied the contract provision that if the defendant delayed payment for more than 30 days, the plaintiff had the right to terminate the agreement and demand a penalty equal to two months’ service fees. Since the defendant’s delay clearly exceeded 30 days, the plaintiff was entitled to this contractual penalty of CNY 37,710. The court rejected the plaintiff’s calculation of liquidated damages as slightly inflated and adjusted it downward from CNY 14,435 to CNY 13,888. Based on the Chinese Contract Law and Civil Procedure Law, the court issued a judgment ordering the defendant to pay the service fee of CNY 18,842, liquidated damages of CNY 13,888, and the breach penalty of CNY 37,710 within five days of the judgment becoming effective. The defendant was also ordered to bear the litigation costs.

This case highlights the importance of clear contractual terms for fees, liquidated damages, and termination penalties in commercial property management agreements. Courts in China generally uphold such provisions when they are freely negotiated and comply with legal standards. The defendant’s absence at trial did not prevent the court from rendering a decision based on the evidence presented. Businesses should note that failure to honor payment obligations can lead to cumulative financial liabilities including service fees, daily penalties, and fixed contractual damages. Prompt payment and good-faith dispute resolution remain the most effective ways to avoid such outcomes.

Disclaimer: This article is for informational purposes only and does not constitute legal advice.