LEUNG KA YUNG AND ANOTHER v. TUO WEI WEI

HCA 39/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 39 OF 1998

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J U D G M E N T

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The parties entered into a formal sale and purchaser agreement ("the agreement") dated 25th September 1997 for the Plaintiffs to purchase from the Defendant Flat B, 1st Floor and the Flat Roof of Lee King Building, Yuen Long ("the Property") in the New Territories. Pursuant to the agreement, the Plaintiffs paid advanced stamp duty at HK$40,200 and to the Defendant a total deposit in the sum of HK$268,000.

2. There is no dispute that the Property had an illegal structure in the form of an unauthorized extension to the Flat Roof. Evidence from the Plaintiffs says that they did not know until the agreement had been signed that the extension was unauthorized. After discovery of the illegal nature of part of the Property, solicitors for the Plaintiff acting in the conveyance raised requisition in that regard. There is no evidence at all that the Defendant gave any answer to the requisition. In fact, the Defendant did not appear at the trial nor was she represented to present any evidence or arguments.

3. In the premises, on the ground that the Defendant failed to answer requisition satisfactorily, the Plaintiffs are entitled to judgment for return of deposit paid and reimbursement of expenses incurred. Since property prices have fallen, it seems very unlikely that the Plaintiff can prove damages as prayed. I do not, therefore, order inquiry as to damages. The Plaintiffs pray for a declaration that they are entitled to a lien on the Property. There can be no lien on immovable property and so such declaration should not be made. On the matter of costs, Mr Mui for the Plaintiffs cited a number of High Court Masters' decisions to the effect that interests from issue of the writ to the date of judgment should be at judgment rate. Hence counsel asked for an order to the same effect. With respect, this is wrong. The applicable interest rate should be the short term investment rate. See Jefford v. Gee [1970] 2 Q.B. 130 and my judgment dated 20 January 2000 in Polyset Limited v. Panhandat Limited, HCMP 1840 of 1998.

4. Accordingly, I give judgment for the Plaintiffs for:-

(i) $268,000 being the deposit paid.

(ii) $40,200 being stamp duty paid.

(iii) $5,000 being fee for architect's report.

(iv) interest on all amounts from the date of issue of the writ to the date of judgment at short term investment rate of any fully licensed bank in Hong Kong and interest after date of judgment at judgment rate until payment.

(v) costs of the action to the Plaintiffs to be taxed if not agreed.