TSAND SHEK TO AND ANOTHER v. NG LEE FOOK

H.C.A. NO. 12446 OF 1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CIVIL ACTION NO 12446 OF 1998

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ASSESSMENT OF DAMAGES

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Introduction

1. The Plaintiffs were the vendors of the property, namely Flat H on 22nd floor, Block 31 of Laguna City, Kowloon (the Property) and the Defendant was the purchaser under an Agreement for Sale and Purchase dated 2nd March 1998 (the Agreement, Exh. P4). The Plaintiffs claimed against the Defendant for breach of the Agreement. The Defendant had filed no defence. On 5th November 1998, Final and Interlocutory Judgment was entered against the Defendant. The Defendant was adjudged to pay to the Plaintiff damages to be assessed with interest and costs to be taxed.

2. By an order dated 28th April 1999, the matter was ordered to be set down for assessment of damages. A Notice of Appointment of Assessment of Damages before Master dated 19th May 1999 was issued and served on the Defendant on 20th May 1999 as per an Affirmation of Service dated 20th May 1999. The return date for the assessment hearing was scheduled at 2:30 p.m. on 9th July 1999. The Defendant did not appear at the scheduled date and time for the hearing of the assessment of damages. Having been satisfied that due notice had been given to the Defendant, who had given no reason for being absent, I proceeded to hear the Plaintiffs' counsel on the assessment of damages in the absence of the Defendant.

Damages to be Assessed

3. Under the Agreement, the Defendant agreed to purchase the Property for the price of HK$5,080,000.00. The Defendant had, pursuant to the Agreement, paid deposit and part-payment for the total sum of HK$508,000.00. The Defendant had failed to pay the balance of the purchaser price for the sum of HK$4,572,000.00 on the date of completion on 16th June 1998.

4. In exercise of the right under the Agreement, the Plaintiffs had, on 13 August 1998 by an Assignment sold the Property to Lau Yue Kwong Victor and Hau King Wai (the new purchasers) for the price of HK$3,600,000.00 (see Exh.P7). The Plaintiffs now claim the deficiency in the price of the Property and the reasonable expenses incurred by them for the resale of the Property. The total amount claimed is HK$1,033,000.00, which is made up of the following items:

The Evidence

5. Counsel for the Plaintiffs called Madam Chan Lai Fong Viola, one of the Plaintiffs and the surveyor Mr. Kenneth C. Y. Cheung as the witnesses.

6. Madam Chan had submitted her statement filed on 10th April 1999 pursuant to Order 38 of the Rules of the High Court. She had confirmed that the contents of her statement were true and correct. In her statement, she said Mr. Tang Shek To, the other Plaintiff was her husband. They had agreed to sell the Property to the Defendant for HK$5,080,000.00. A provisional agreement for sale and purchase of the Property was signed, followed by the signing of the Agreement. Pursuant to the Agreement, the Defendant had paid the deposit and part-payment of HK$400,000.00 on 16th February 1998 and a further deposit and part-payment of HK$108,000.00 upon signing of the Agreement, leaving a balance of HK$4,572,000.00 to be paid upon completion on 16th June 1998. Clause 6 of the Agreement provided that time was the essence of the Agreement. However, the Defendant had failed to paid the said balance of the purchase price on the date of completion. The Plaintiffs had on 17th June 1998, through their solicitors given notice to the solicitors acting for the Defendant to terminate the Agreement. On 23rd June 1998, the Plaintiff had by their solicitors registered a Memorandum of Termination in the Land Office to terminate the Agreement (see Exh. P5)

7. In order to mitigate the damage, the Plaintiffs had between 25 June 1998 and 7 July 1998 advertised the Property in Sing Tao Daily News (Exh. P6). The Plaintiffs also instructed the Laguna City Branch of Centaline Property Agency Limited (Centaline) to sell the Property. On 13 July 1998, through Centaline, the new purchasers were introduced to the Plaintiffs and they had signed the agreement for the sale of the Property to the new purchasers. The Plaintiffs had obtained a valuation report from the surveyor Mr. Kenneth Cheung of Ricacorp Surveyors Limited. Mr. Cheung had given his opinions on the value of the Property in his report (Exh. P2). In his opinion, the value of the Property was 3.7 million as at 16th June 1998 (date of completion) and 3.6 million as at 13th July 1998 (date of the resale agreement). The transaction of the resale was finally put through. The Plaintiffs had to pay the agency fee, the fee for the valuation report and the legal fees for the resale as set out in the above account.

8. Mr. Kenneth Cheung, the surveyor who had compiled this valuation report, was also called to give evidence. He confirmed that he had compiled the valuation report by comparing the other properties on the same block of building of similar views. He confirmed that the contents of his report were true and correct. He also said that the price of the property market was at that period of time falling.

9. Having considered the evidence of the above witnesses, I have come to conclude that they were reliable witnesses. I accept their evidence as the fact for this assessment of damages.

Reasons for Decisions

10. Under the Agreement, the Defendant should pay the balance of the purchase price of HK$4,572,000.00 upon completion on or before 16th June 1998 (see page 13 of Exh. P4). The Defendant was in breach of this condition. Paragraph 20 of the Agreement provides:

"(a) If the Purchaser shall for any cause (other than the default of the Vendor) fail to complete the purchase of the Property in accordance with the terms and conditions of this Agreement or if the Purchaser shall fail to make payment of the balance of purchase price or any part thereof on or before the Completion Date, the Vendor may ...forthwith determine this Agreement by giving notice of termination in writing to the Purchaser or his solicitors to such effect... .

(b) Upon termination or rescission of this Agreement, the Vendor may resell the Property (and the Furniture and/or Appliance) ...by public auction or by tender or by private contract ...as the Vendor may think fit and any increase in price on resale shall belong to the Vendor. Without prejudice to the Vendor's right to recover the actual loss which may flow from the Purchaser's breach of this Agreement, on such resale any deficiency in price shall be made good and all reasonable expenses attending such resale shall be borne by the Purchaser and such deficiency and expenses shall be recoverable by the Vendor as and for liquidated damages. Provided that such resale is made within 6 months from the completion...."

11. It is on the above basis that the Plaintiffs claim damages for the loss and expenses as a result of the breach of the Agreement by the Defendant.

12. The normal measure of damages is the contract price less the market price at the contractual time fixed for completion. This measure is first clearly stated in Laird v. Pim [1841] 7 M. & W. 474 Parke B.:

"The measure of damages ... is the injury sustained by the plaintiff by reason of the defendants not having performed their contract. The question is, how much worse is the plaintiff by the diminution in the value of the land, or the loss of the purchase-money, in consequence of the non-performance of the contract?"

13. The first relevant price, therefore is the contract price. The second relevant price is the market price at the contractual time fixed for conveyance. (see para. 992 on page 993 McGregor on Damages 16th edition)

14. According to the valuation report of Mr. Kenneth Cheung, the market price of the Property as at 16th June 1998, the date for completion was 3.7million and that on 13th July 1998, the date the Property was agreed to be sold was 3.6 million. Now the Plaintiffs asked this court to adopt the resale price for the assessment of the damages.

15. Having considered the evidence above stated and the general principle as stated above, I decide to make the assessment on the basis on 3.6 million, that is the price as at the date of the resale of the Property. My reasons are as follows:

1. it is expressly provided in para 20(b) of the Agreement that the Plaintiff is entitled to recover the deficiency in price on the resale provided that such resale is made within 6 months from the completion.

2. The resale was made within 2 months from the date of completion.

3. According to Mr. Kenneth Cheung, the property market at the time of completion was falling. This was shown by the difference of HK$100,000.00 in his valuation of the Property over the period of less than one month between the date of completion on 16th June 1998 and the date of resale on 13th July 1998.

4. The Plaintiffs had taken reasonable steps to terminate the registration of the Agreement and to resell the Property by advertising the Property for sale on 25th June 1998 and thereafter instructed the property agent to sell the Property.

5. In Keck v. Faber [1915] 60 S.J. 36, C.A. the court held that the price to be taken was the selling price realized within a reasonable time of the breach.

16. As to the other expenses the Plaintiffs claimed for the resale, they were reasonable expenses necessarily incurred for the resale of the property by the Plaintiffs. They are supported by receipts : Exh. P8, receipt of the property agency, Exh. P9, receipt of the surveyor's firm and Exh. P10, the receipt for the legal fees. I allow them to be damages as consequential loss suffered by the Plaintiffs and they are entitled to such damages as provided in paragraph 20(b) of the Agreement.

Decision and Orders

17. I now make an award to the Plaintiffs for the sum of HK$1,033,000.00 for the damages with interest at judgment rate from the date of issue of the Writ until payment.

18. I also make an order nisi that the Defendant pays the costs of this assessment to the Plaintiffs, with certificate for counsel; such costs shall be taxed if not agreed. The order nisi is to be made absolute after the expiration of 14 days from the date of the handing down of the assessment.