LU SHU HUI v. CHEER QUALITY INDUSTRIES LTD.

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CIVIL ACTION NO. HCA 1620 OF 1999

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J U D G M E N T

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1. This is an assessment of damages following an aborted transaction in respect of a domestic unit.

2. The facts of the case are as follows:-

3. The plaintiff, Madam Lu Shu Hui, entered into a provisional agreement for sale and purchase on 15 July 1998 with the defendant to purchase from the defendant a flat known as Flat F1, 6th Floor, Block F and Carport No. 14 at Car Park No. 4, Beverley Hill, No. 6, Broadwood Road, Hong Kong at the price of $8.7 million. The agreement was for the purchase of the flat with car park on vacant possession basis.

4. This agreement, Exhibit P2, envisaged that completion would occur on or before 31 August 1998. That day came and went and the defendant failed to convey the property as agreed.

5. Pursuant to the provisional sale and purchase agreement, the plaintiff had paid deposits to the defendant as well as stamp duty on the transaction. These were respectively $260,000 and $239,250.

6. It was the original intention of the plaintiff to pursue specific performance of the agreement in this case but matters were somewhat taken out of her hands when the property was sold by the mortgagee.

7. The plaintiff brought suit for damages and other relief and on 17 June 1999 obtained interlocutory judgment for damages to be assessed.

8. The defendant did not appear in these proceedings before me, so the plaintiff was put to strict proof of her case which, in any event, was a simple one.

9. PW2, Madam Lau, is the surveyor instructed by the plaintiff to produce the necessary valuation for today's purpose. Her valuation report is Exhibit P1. The contract price for the property was $8.7 million and on Miss Lau's evaluation, as at the date of the contemplated completion of the contract for sale and purchase of the property, that is to say 31 August 1998, the property had an open market value of $10.5 million.

10. The plaintiff now pursues as damages the loss of bargain following the defendant's repudiation of the contract. She claims as damages the difference between the original contract price of $8.7 million and the enhanced value of the property as at the date of completion, namely $10.5 million. In short, she seeks $1.8 million as damages.

11. As a matter of general principle, I find that she is entitled to damages, premised upon the difference between the original contract price and the open market price of the property with vacant possession as at the date of completion. That she would suffer such damages by way of loss of bargain owing to the rise in the property value in the interim is well-founded on the authorities. Her loss, I find, is well within the reasonable contemplation of the parties at the time of contract as flowing directly and naturally from such a breach.

12. In conclusion, I assess the plaintiff's damage and loss at $1.8 million and award her that sum in this assessment.

13. She will also be entitled to costs of the assessment against the defendant, taxed if not agreed on a party to party basis.