Super Mate Ltd. v. Celerich Ltd.

HCA 2618/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2618 OF 2000

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ASSESSMENT OF DAMAGES

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1. The plaintiff was the developer of a residential block known as Bellevue Place situated at U Lam Terrace, Mid Levels, Hong Kong. Bellevue Place is a residential development of a single block with 27 stories. There are 4 units on each floor.

2. In November 1997 the plaintiff put the project up for sale. A number of buyers, including the defendant, signed up agreements to acquire the flats in the development. Each of the buyers was required to pay an initial deposit of 10% of the purchase price upon signing of the agreement to purchase. Further payments were required, each amounting to 5% of the purchase price, on 2 January 1998, 1 April 1998, 1 July 1998 and 1 October 1998 respectively. The balance of the purchase price of the unit was to be paid within 14 days upon notification of the issuance of the occupation permit.

3. With the drop in the property market towards the end of 1997, some of the buyers approached the plaintiff to negotiate for reduction of the purchase price. In response to the requests, the plaintiff wrote to the purchasers on 28 March 1998 indicating that the plaintiff would reimburse the purchasers 8% of the purchase price and the stamp duty upon completion of the transaction. The payment due days on 1 April, 1 July and 1 October were postponed to 1 May, 1 August and 1 November 1998.

4. More than 20 buyers defaulted payment.

5. The defendant was the purchaser of Flat 22-A. The agreement was signed on 15 October 1997 for the purchase price of HK$5,538,000. The defendant paid the initial deposit of HK$553,800 and further deposits of HK$1,107,600 on 2 January 1998, 1 May 1998, 1 August 1998 and 1 November 1998 respectively ( 4 x HK$276,900).

6. Occupation permit was issued on 30 August 1999. On 28 September 1999 the plaintiff notified the defendant of the issuance of the occupation permit and requested the defendant to complete the purchase within 14 days. As the defendant failed to make payment or take delivery of the property, on 5 January 2000 the plaintiff exercised its contractual right to terminate the agreement. On 13 March 2000 the plaintiff initiated the present proceeding to recover from the defendant the damages in respect of the defendant's breach. In default of notice of intention to defend, the plaintiff obtained interlocutory judgment on 5 April 2000 for damages and costs to be assessed.

7. The property was re-sold on 27 February 2001 for the consideration of HK$2,326,520.

8. According to the valuation report prepared by FPD Savills (Hong Kong) Limited the open market value of Flat 22-A on 5 January 2000 was HK$2,920,000. Hence the loss of bargain suffered by the plaintiff was HK$2,618,000 (HK$ 5,538,000 - HK$2,920,000). Costs of the surveyor for the preparation of the surveyor report would be a head of costs incurred towards the assessment of damages. Giving credit for the payments made by the defendant the damages the plaintiff suffered is assessed at HK$956,600 (HK$5,538,000 - HK$2,920,000 - HK$553,800 - HK$1,107,600).

9. This court did have some concern about the date of valuation of the property for the purpose of assessing the plaintiff's loss of bargain. Relying on the House of Lords decision in White v Carter [1961] All ER 1178 the plaintiff argued that it had no obligation to accept the defendant's anticipatory breach and was entitled to hold the defendant to its contractual obligation until 5 January 2000 when the plaintiff elected to terminate the agreement. How much would a strict adherence to the White v Carter principle water down a person's duty to mitigate his damages in the volatile property market? As there was no evidence before this court on the defendant's clear intention to repudiate the contract, a determination of the plaintiff's reasonableness in refusing to accept the defendant's repudiation is hypothetical.

10. Judgment is awarded to the plaintiff in the sum of HK$956,600.

11. Basing on the decision of Komala Deccof [1984] HKLR 219 the plaintiff also sought the award of commercial interest. In light of the present economic climate and the evidence of the surveyor that the current mortgage loan rate was generally granted at 2.2% to 2.5% below prime lending rate, I am of the opinion that the award of 2% below prime lending rate is reasonable to cover the plaintiff's loss of profit.

12. Commercial interest is awarded on the judgment sum at 2% below prime lending rate from the date of the writ until judgment. Judgment interest accrues from the date of judgment at judgment rate until payment.

13. I also award costs of this assessment hearing to the plaintiff against the defendant, to be taxed if not agreed.