CHOW KIN HING v. WONG YUEN SHEUNG

HCA No. 2324 of 1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO. 2324 of 1999

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Assessment of Damages

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Introduction

1. This assessment arises from an abortive sale of Flat 1016, 10/F., Block F of Telford Gardens, No. 33 Wai Yip Street, Kowloon, Hong Kong ("the Property").

2. The Plaintiff was at all material times the registered owner of the Property. She entered into a sale and purchase agreement dated 12 March 1998 whereby she agreed to sell and the Defendant agreed to purchase the property at the price of HK3.19 million ("the Agreement"). Pursuant to the agreement, the Defendant had paid a deposit of HK$319,000.

3. Completion was scheduled on or before 2nd July 1998. However, in breach of the Agreement, the Defendant failed to complete. The Plaintiff forfeited the deposit and on 30th July 1998, entered into an agreement to resell the Property to a third party at the price of HK$2.42 million. Completion of the resale took place on 25th August 1998.

4. The Plaintiff commenced the present proceedings on 8th February 1999. On 16th April 1999, the Plaintiff obtained interlocutory judgment for damages to be assessed, the defendant having failed to filed any notice of intention to defend. She alleges to have suffered loss and damage as follows:

(1) Loss of profit, being the price difference between the Agreement and the Resale Agreement less the deposits forfeited: HK$451,000.

(2) Legal costs under the Agreement: HK$8,340.

(3) Loss of Mortgage interest from 4th July to 1st September 1998: HK$30,672.34.

(4) Management fee from 3rd July to 25th August 1998: HK1,332.58.

(5) Rates from 3rd July to 25th August 1998: HK$826.82.

(6) Government rent from 3rd July to August 1998: HK$575.52.

(7) Legal costs under the Resale Agreement: HK$6,000.

Evidence

5. The Plaintiff's evidence, in summary, is this.

6. The property market had dropped significantly at the time of the Defendant's breach. At the same time, the Government had put on sale its quarters in Telford Gardens at rather low prices. This adversely affected the price of properties there. Consequently, she was unable to sell the Property at a price similar to the original one. Initially, she received an offer of HK2.1 million. Then the purchasers under the resale offered HK$2.42 million. According to the estate agent, the purchasers who were Taiwanese were not familiar with the local property market. Thus this favourable offer was made. In the circumstances, the Plaintiff accepted it.

7. The mortgage interest, management fee, rates and government rent were incurred after the Defendant's failure to complete but prior to the resale. Thus, it is the Plaintiff's case that they were incurred as a direct result of the Defendant's breach. These items and the legal costs incurred in connection with both the Agreement and the resale were all supported by documentary evidence admitted by virtue of a hearsay notice.

8. The Defendant being absent, there is no evidence to contradict the Plaintiff's case.

Direct Loss

9. The immediate and direct loss suffered by the Plaintiff as a result of the Defendant's failure to complete is the difference between the price under the Agreement and the market value of the Property at the time of the completion: McGregor on Damages (16th Edn.), para. 992 at p.657. The market value is determined by the price obtained, or obtainable, on a resale within a reasonable time of the breach, but excluding any inflated price which the property might fetch by nursing it: Keck v. Faber, Jellet and Keeble (1915) 60 Sol. Jo. 253. In assessing damages, credit must be given for any deposit that has been paid: Ockenden v. Henry (1858) EB. & E. 485; Shuttleworth v. Clews [1910] 1 Ch. 176.

10. I accept that the resale on 30th July was within a reasonable time of the Defendant's breach. I note that there is no valuation report on the market value of the Property at the material time. However, I accept that it was a falling market and the resale price was the best price obtainable in the circumstances.

11. Accordingly, the Plaintiff's direct loss is the difference between HK$3.19 million and HK$2.42 million. Against this, credit must be given to the deposit of HK$319,000. The net loss is therefore HK$451,000.

Consequential Losses

12. It is trite law that the Plaintiff can also recover consequential losses. Such losses include incidental expenses and losses which flow necessarily from the breach of the Agreement: York Glass Co. v. Jubb (1926) 134 L.T. 36, CA.

13. Clause 6.01 of the Agreement provided, inter alia, that after completion, the Defendant as purchaser should discharge all outgoings of the Property. As the Defendant had failed to complete, the Plaintiff as a result had to pay the management fee, rates and government rent up to the completion of the resale. These losses are clearly incidental and flow necessarily from the Defendant's breach.

14. Further, had the Defendant not defaulted, the Plaintiff's obligation to pay the mortgage installments after completion on 2nd July 1998 would cease, and she would not have to incurred further legal costs for the resale. These items are clearly incidental losses flowing necessarily from the breach. However, the quantum of the additional mortgage interest should be calculated only up to the completion date of the resale, i.e., 25th August. Thus the amount should be HK$30,672.34 x 55/60 = HK$28,116.31.

15. However, the legal costs of the abortive sale stands in a different position. It is in fact the wasted expenditure of the abortive sale. In principle, a vendor is not entitled to recover in addition to damages his expenses incurred in connection with the abortive sale: Barnley's Conveyancing Law and Practice at p.654. For these expenses "would have been incurred even had the buyer not defaulted; putting the seller into the position he would have been in had the contract been performed still entails his having incurred these expenses": McGregor on Damages (16th Edn.), para. 995 at p.658.

16. Mr. Yeung has in the course of his submission conceded that his client is not entitled to this item.

Conclusion

17. The total amount of damages which the Defendant is liable to pay to the Plaintiff is therefore assessed as follows:

Items		Amount (HK$)
(1)	Direct loss	451,000.00
(2)	Additional mortgage interest	28,116.31
(3)	Management fee	1,332.58
(4)	Rates	862.82
(5)	Government rent	575.52
(6)	Legal costs for the resale	6,000.00
Total:		487,887.23

18. Accordingly, there will be judgment for the Plaintiff in the sum of HK$487,887.23 together with interest at the judgment rate from the date of the writ. i.e., 8th February 1999 to the date of payment.

19. I also make an order nisi that the Plaintiff shall have the costs of the assessment, to be taxed if not agreed. The order nisi will become absolute after the expiration of 14 days from the date of handing down this decision.