YUNG MEI FUN v. LING LEUNG WAH

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Judgment

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Introduction

1. In these proceedings, the plainfiff's claims are for damages with interests and costs for fraudulent, alternatively negligent misstatements allegedly made by the defendant with the purpose of inducing her into entering into a sub-lease of a shop premises. The plaintiff in essence claims to be entitled to recover all moneys she had expended in setting up her cafe by reason of such misrepresentations. The defendant has counterclaimed, inter alia, for arrears of rent and mesne profits and a proportion of the rates and utility charges attributable to the plainftiff under the sub-tenancy agreement.

The plaintiff's case

2. In very broad outline, it was the plaintiff's case that she had been a friend of Madam Chin May Ling ("the defendant's wife") for a number of years since they first became acquainted as fellow part-time employees of the then Royal Hong Kong Jockey Club. Since about 1993, they occasionally met to socialise. At one point, the plaintiff mentioned her interest in running a restaurant although she had no experience in such matters. According to her, the defendant's wife then suggested that she would try and find a shop space for her.

3. In early February 1994, the plaintiff said she was notified by the defendant's wife that just such a shop suitable for operating a restaurant had become available. The premises in question was situated at No. 222 Temple Street, Kowloon. It comprised of two levels, a ground floor shop area and a mezzanine floor each of about 520 sq. ft. The ground floor area subsequently sub-let to the plaintiff forms the subject matter of her claim.

4. The plaintiff further stated that she was taken to the premises on two occasions by the defendant's wife. On one of the visits, she again reiterated her lack of experience of the restaurant trade and queried whether the structure of the premises was suitable for establishing a restaurant business and whether the requisite licence could be granted. It was her contention that the defendant's wife then orally represented to her that the premises was structurally suitable and fit for running such a business and a licence could be granted by the relevant authority.

5. Following the visits, the plaintiff said there was a meeting in a restaurant in either Yaumatei or Mei Foo at which she, the defendant and his wife were present. Negotiations for the sub-letting of the shop took place, during which the plaintiff once again sought assurance on the suitability of that portion of the premises that she was hoping to take over. She said the defendant then informed her in terms similar to the oral representation previously made by his wife. Induced by and acting upon such representations of the defendant and his wife, she said she agreed to sub-let the ground floor space. It is to be noted that misrepresentation by the defendant's wife had formed no part of the plaintiff's case as pleaded until the plaintiff led evidence to that effect in chief.

6. It was common ground that she took possession of the shop on 1 March 1994 and almost immediately thereafter set about decorating it, engaging a decorator, Mr. Yip for the purpose. The following additional matters were also not disputed. Decoration was completed on or about 24 April 1994 and on the same day, the restaurant began operation under the name of Timbo Restaurant. She was the sole proprietress and her friend, Madam Woo Wai Kwan (PW2) assumed the role of manageress. This was despite the fact that her application for a restaurant licence previously submitted had yet to be approved by the Urban Services Department. She was apparently prepared to run the risk of going ahead with the renovation and then operating the restaurant in the absence of a licence as this was the done thing in the trade.

7. Since taking over the shop premises, she said she had repeatedly asked to be shown the principle tenancy agreement and for the sub-tenancy agreement to be drawn up. Her requests were consistently ignored by the defendant, a fact he took issue with. It was against this background that she admittedly intentionally refused to tender the rent on time. She said the rental for March and April 1994 was paid on 12 April 1994 only after the defendant had assured her that her request would be met. When the defendant reneged on his promise, she again refused to pay the rent for May. That month's rental was paid on 27 May 1994 after a further assurance from the defendant that the sub-tenancy agreement would be formalized. In the event, that agreement was signed on 28 May 1994 and backdated to 1 March 1994.

8. Following the signing of the sub-tenancy agreement, a letter dated 26 May 1994 was received on 29 May 1994 from the Urban Services Department advising that her application for a General Restaurant Licence had not been approved by the Urban Council. It stated that the revised plan submitted on 13 May 1994 was considered unsatisfactory with the advice that certain stipulated unauthorised structural works had to be remedied or reinstated within three months thereof or the application would be cancelled. These further matters had not been challenged.

9. Frustrated by this unexpected turn of event and clearly at wit's end, she said she was determined to give up the restaurant. An informal arrangement was accordingly entered into with a friend's friend whom she simply named "Ah Di" to take over her business. It was agreed between herself and Ah Di that the restaurant would only be transferred when the licence was issued. No money changed hands and the business was handed over at the end of May or early April.

10. It was the plaintiff's case that her attempts to secure the licence by carrying out remedial work on the premises with the assistance of an architect/ surveyor were frustrated by the obstructive behaviour of the defendant and his staff. The relationship between the parties became increasingly fractious, resulting in a fracas between their staff on 30 September 1994 when the police was summoned to the premises. There was no dispute the restaurant ceased operation in October 1994 and no licence had been granted.

11. The plaintiff said she was summoned twice and fined for operating a restaurant without a licence and furthermore had suffered damage consequent upon acting upon the misrepresentations made to her. In her Amended Statement Of Claim, she pursued compensation for all renovation expenses incurred which, with the addition of the architect's fee, as particularised amounted to $618,640. In evidence, it was clear that she was in reality claiming a lesser sum of $570,890. The further or alternative claims for damages premised upon the difference between the reserved rent and the market rental (of which no evidence had been adduced) for a shop not suitable for her purpose and for breach of collateral warranty were in the result not pursued at trial.

The Defendant's Case

12. Faced with a declining tailoring business, the defendant said he began to seriously explore the option of starting up a laundry business in early 1994 when his thoughts turned to other modest business opportunities. It was said by his wife that the idea was first introduced by the plaintiff who had once remarked after a trip to China on the attractive nature of such cash business. According to the defence, events began to unfold quickly when the defendant noticed a newspaper advertisement for sale of a laundry on or about 20 January 1994. An arrangement was then made by his wife to view to premises that evening.

13. Later that night, the defendant said he, his wife and the plaintiff visited the suit premises where a discussion took place with the laundry's proprietor, a Mr. Chau ("Mr. Chau") on the terms of taking over the laundry. It was tentatively agreed the business would be transferred for a reduced price of $70,000 to be equally shared by the plaintiff and defendant subject to the consent of the landlord, a Mr. Lai Kam Hoi ("Mr. Lai") with whom a later meeting was to be arranged. It was the defence contention that the plaintiff had agreed from the start to take a share in the new venture and had to that end been actively involved in the negotiations with Mr. Chau. There was never any question of the plaintiff wanting merely to sub-let a portion of the premises for running her own restaurant from the start.

14. Some 2 to 3 days later, Mr. Lai met Mr. Chau and the proposed new tenants at the premises. Following discussions, the terms of a new tenancy agreement to be signed at a later time were agreed between the parties ("the principal tenancy agreement"). It was the plaintiff's case that she had never met the landlord before the signing of the principal tenancy agreement and was totally oblivious of its terms and any discussions concerning the purchase of the laundry. She did, however, admit that she had viewed the suit premises twice and had held discussions with Mr. Chau, but that these had taken place solely for the purpose of renting the ground floor area for a proposed restaurant, a fact clearly known to the defendant and his wife.

15. The defendant further said that it was agreed by all concerned that the principal tenancy agreement was to be signed on 4 February 1994 at the suit premises. On that day prior to the appointed time, the plaintiff allegedly contacted either the defendant or his wife by telephone intimating that she was otherwise engaged and proposing that the defendant should press ahead and sign the principal tenancy agreement with Mr. Lai in her absence. This the defendant said he duly did. He also paid as previously agreed, $35,000 representing one-half of the purchase price to Mr. Chau.

16. About 2 days later, an unstamped copy of the principal tenancy agreement was said to have been shown to the plaintiff which she read and suggested should be retained by the defendant. A stamped copy was subsequently shown to her after it had been received from Mr. Lai. The plaintiff's position was very much to the contrary as she said she had to resort to withholding rental payment in order to force the defendant into showing her the principal tenancy agreement, her continual requests for a sub-tenancy agreement and sight of the principal tenancy agreement having been persistently ignored.

17. After the signing of the principal tenancy agreement, the defendant asserted there had been frequent contacts between himself and the plaintiff. At one stage before the laundry was handed over, the defendant stated that the plaintiff apparently went back on her agreement to purchase and run the business as a joint venture on the pretext that it would not be profitable. According to him, on that occasion and for the very first time, the plaintiff suggested that they should operate a restaurant on the ground floor instead. She also informed him that she knew a decorator who could guarantee the issue of a restaurant licence. This new proposal was rejected and negotiations between them then began in earnest for splitting the premises up with the plaintiff taking the ground floor area for her restaurant and the defendant retaining the mezzanine floor and a small area at ground level for his laundry business. The defendant said the terms of the sub-tenancy agreement were eventually agreed upon and incorporated into the sub-tenancy agreement signed on 28 May 1994. Approval for the sub-letting arrangement was subsequently given by Mr. Lai.

18. The defendant said the original oral agreement struck in late February stipulated that the plaintiff's rent for the lower portion of the premises was $16,000 pm but that it had been subsequently raised to $18,000 pm after further negotiations and agreement to take into account her refusal to contribute to Mr. Chau's take-over price.

19. It was the defence case that no oral misrepresentations as alleged or at all relating to the structural fitness of the premises for operating a restaurant or the issue of a restaurant licence had ever been made by either the defendant or his spouse. Furthermore, if the oral misstatements were found to have been made, no reliance on them could be demonstrated as the plaintiff had engaged her own decorator, Mr. Yip upon whom she had clearly relied to carry out decoration or renovation and to submit plans for application of a restaurant licence.

20. She had agreed that in her Amended Defence And Counterclaim to Mr. Yip's claim for unpaid fees under District Court Action No. 10030 of 1994 that she had averred in paragraph 3(2) & (3) that:

21. When it became apparent that certain unauthorised work was behind the Urban Services Department's refusal of a licence, the plaintiff had turned not to the defendant but to a Mr. Say Swee Kwong, an architect and "Authorised Person" for advice and assistance to handle the remedial work. The defendant also stated that it was the alterations to the premises performed by Mr. Yip pursuant to his quotation to the plaintiff that contributed to the plaintiff's difficulties. It had nothing to do with him and such structural changes had been quite unnecessary if the entire premises had been turned into a laundry as originally envisaged and agreed.

22. As for the alleged damages and loss, had the plaintiff waited for the outcome of her licence application as a prudent individual would have done, considerable expenditure could have been avoided. Finally, it was said that there were aspects of the alleged loss unsupported by any documentation.

The Facts and Evidence

23. Save as otherwise indicated, the facts are as I find them. In coming to my conclusions, I have considered the evidence and credibility of all the witnesses and the submissions advanced. As will become apparent in due course, I did not find that the plaintiff, the defendant and his wife have told the complete truth when they took the witness stand.

24. The friendship between the plaintiff and the defendant's wife harked back to the days of their employment with the Jockey Club. Over the ensuing years it grew closer through occasional visits to each other's home and games of mahjong. Their common interests however went deeper. Since about 1992, with joint investment opportunities in mind, they would from time to time view properties with a view to purchase. By all accounts, they had known each other better than the plaintiff had known the defendant and vice versa. This was not surprising as they had only met several times. It was against this backdrop that the defendant noticed an advertisement for sale of a laundry business at the suit premises on or about 20 January 1994. With his tailoring business going progressively downhill, he had for some time been contemplating other options and an opportunity of starting up a laundry business at this time clearly had its particular attraction. What transpired thereafter was mired in controversy and factual resolution was made the more difficult by half-truths and outright lies told on each side.

25. The defence testimony had the plaintiff actively involved throughout in discussions and negotiations with Mr. Chau and Mr. Lai respectively for the purchase of the laundry business and the grant of a new lease. He said it was their common intention to run such a business together. This the plaintiff had wholly rejected.

26. Her evidence was that when she was informed by the defendant's wife of the poor state of the defendant's business, she was asked if she was interested in jointly taking over and sharing a shop space should one become available. This proposition was first raised either at the end of 1993 or early 1994. She indicated that she would be provided a suitable premises could be found for a cafe or food business that she was toying with. Her lack of interest in any other type of business was then made abundantly clear to the defendant's wife. Not long thereafter she was informed by the defendant's wife that a suitable shop space had been located. She said she was taken to the suit premises for a viewing. In all, 2 visits were made during which discussions with Mr. Chau had taken place. She denied ever having been involved in talks for the purchase of the laundry business then run by Mr. Chau. She also repudiated the suggestion that she had subsequently met Mr. Lai and held discussions with him together with the defendant for a new lease. I accept her evidence in this regard for the following reasons.

27. The defendant had admitted under cross-examination that he had a partner for some 20 years in a Mr. Chin Po Hing for his tailoring business. It was their stated intention even before the advertisement appeared to purchase a laundry and run it as a partnership. This significant fact was never disclosed to the plaintiff as it did not "concern" her. If it was ever the plaintiff's and the defendant's agreement to run such a business together, the defendant was at the very least guilty of bad faith as it was apparent on his testimony that Mr. Chin's participation would not have been disclosed. He further admitted that the plaintiff would have had to bear one-half and not one-third of the expenses for the laundry. I have no hesitation in concluding that the plaintiff had been kept in the dark about the existence of Mr. Chin and his involvement simply because it was never intended or agreed that she would come in on the laundry business. As the defendant had himself put it, it did not concern her. This piece of information was indeed irrelevant to her as the defendant knew from the very beginning that she was only interested in locating and sharing accommodation for her proposed restaurant undertaking. There had never been any question of her withdrawing from an agreement to jointly acquire and operate a laundry. I wholly reject the contention that the plaintiff had somehow changed her mind about the viability or profitability of the laundry business after the signing of the principal tenancy agreement by declaring her intention for the first time to start up a restaurant on the ground floor of the suit premises. If further justification for this finding is required, the evidence surrounding the purchase monies paid to Mr. Chau for the take-over of the laundry and the plaintiff's absence at the signing of the principal tenancy agreement is especially revealing.

28. The defendant claimed that the plaintiff following negotiations with Mr. Chau in which she had allegedly fully participated had agreed to pay one-half of the cost of buying the laundry and associated machinery at the signing of the principal tenancy agreement scheduled for 4 February 1994. He testified that the plaintiff's share was to have been $35,000, but at the last minute she had telephoned saying that she was too busy to attend and further suggesting that it would be in order if he went ahead and signed the principal tenancy agreement in her absence. She countered that she had done no such thing and had never even met Mr. Lai, let alone negotiate with him on the terms of the new lease.

29. In evidence, the defendant said that the $35,000 he paid to Mr. Chau had been on behalf of himself and the plaintiff; yet his witness statement dated 13 March 1995 had suggested that it was "payment for my share of the buying price". When pursued for an explanation for the difference, he insisted he had not made a mistake in the witness statement, adding that it was a cryptic way of expressing that the payment made had been "on behalf of the 2 of us". He also testified that when he pressed the plaintiff for her contribution for the purchase monies, she had consistently refused to oblige, countering that the washing machines had nothing to do with her. In my judgment, the plaintiff's stance was fully justified and consistent with her understanding of the facts. It closely reflected the reality of the situation. She was, as she maintained, in no way concerned with the purchase of the laundry business and the defendant and his wife were only too well aware of that fact.

30. As regards the principal tenancy agreement, it does seem inconceivable and also highly improbable that the plaintiff, a proven businesswoman engaged with her sister in a business trading in printed circuit boards for T.V. games would deliberately absent herself from its signing if indeed she had been actively involved in discussions with Mr. Chau and Mr. Lai with a view to becoming a partner in a new laundry venture, the partnership details of which had apparently not even been discussed or disclosed on the evidence. Apart from a brief answer in cross-examination that the expenses would be split equally between himself and the plaintiff, the defendant had led no evidence whatsoever of how the supposed partnership was to have been operated.

31. The evidence of the arrangement to meet Mr. Lai and the date of his alleged first meeting with the plaintiff and the defendant was all but consistent or clear cut. In examination in chief, the defendant suggested that it was Mr. Chau who had arranged the appointment on their behalf, whereas in his affirmation dated 13 December 1995, he stated that he and the plaintiff had made the approach themselves, but no date was given. The date stated in his witness statement was 25 January 1994. He further affirmed that subsequently on or about the evening of 4 February 1994 there was a meeting at the suit premises with Mr. Lai to sign the lease and that the plaintiff had rather unexpectedly and contrary to their prior agreement telephoned to excuse herself. As will be recalled, the plaintiff said there was no truth in any of these allegations. Mr. Lai's own recollection of this meeting was vague and totally unhelpful. His testimony was characterized by a near complete absence of any useful detail. He was unable to recall where the meeting took place. Other than saying that he had met Mr. Chau, the defendant and his partners on that occasion, he gave no evidence of ever having discussed the terms of the new lease with the plaintiff at any time. He did, however, state in some considerable detail in his witness statement dated 25 February 1998 that he first met the plaintiff and the defendant one or two days prior to 4 February 1994 and following discussions with them had agreed to grant them a new tenancy on terms which he proceeded to set out. It was, therefore, all the more surprising that his account of the events rendered just under a week later was as hazy and imprecise as it was.

32. Furthermore, the terms of the principal tenancy agreement and the sub-tenancy were strongly supportive of the plaintiff's case that she had never agreed to lease the suit premises for the purpose of operating a laundry there in partnership with the defendant or had met Mr. Lai to discuss the terms of the new lease. If she had been so involved from the very beginning as alleged, she would have fully appreciated that the principal tenancy agreement was for two years with an option to renew for a further year. She would also have known that it prohibited sub-letting. As she pointedly asked, would she enter into a binding agreement to sub-let the ground floor area for a fixed term of three years with no option of earlier determination in those circumstances?. Plainly she would not have so acted in my view. I find there was every justification for her complaint that she had been repeatedly refused sight of the principal tenancy agreement by the defendant despite her frequent requests after she moved in and began to run her cafe. As she further testified, to force the defendant's hand to show her that agreement and to enter into a formal sub-letting arrangement with her, she deliberately delayed paying rent for March, April and May 1994. It was in those circumstances that the sub-tenancy agreement came into existence on 28 May 1994 and Mr. Lai subsequently issued a formal waiver in respect of the sub-letting.

33. I find that the plaintiff's testimony in this regard was both truthful and credible. To the extent that the defendant's version was at variance with the plaintiff's evidence, I find that both he and his wife had deliberately lied in a vain attempt to bolster up their case.

Was there misrepresentation?

34. In order to mount her case for damages for dishonest misrepresentation successfully, the plaintiff has the burden of establishing on a balance of probabilities that there had been an oral representation of fact made to her by the defendant as alleged with knowledge that such representation was false or at least made in the absence of any genuine belief that it was true or recklessly without caring whether it was true or false with the intention that it should be acted upon by her in the manner which resulted in damage to her. It must be demonstrated that she had acted upon the false misstatement and had sustained loss in consequence. Authority for this proposition is to be found in Deny v Peek (19890 14 App. .Cas 337.

35. As respects the alternative claim for negligent misstatement, s 3(1) of the Misrepresentation Ordinance, Cap. 284 provides:

36. The measure of damages recoverable under s 3(1) is the same as that for deceit. Damages for deceit is the tortious and not the contractual measure and the basis for awarding damages is to put the successful litigant in the position he would have been had the representation not been made: Long Year Development Ltd v Tse Fuk man Norman & ors [1991] 2 HKC 393.

37. The original Statement of Claim dated 5 September 1994, the subject of an application to strike-out for non-disclosure of any reasonable cause of action, broadly summarised, had simply averred that there had been an oral agreement between the plaintiff and the defendant to sub-let latterly reduced into writing, that the sub-let area was unfit or unsuitable for the operation of a restaurant business and that the plaintiff had in consequence suffered loss and damage. The allegation of oral representation by the defendant was introduced for the first time in the Reply And Defence To Counterclaim filed on 4 October 1994. The particulars stated that "during the oral negotiation on or about the 7th February 1994, in order to induce the Plaintiff to rent the said premises, the Defendant or ally represented and/or warranted to the Plaintiff that the said premises was structurally suitable and fit for restaurant business and could be granted a restaurant licence by the Urban Services Department".

38. This new claim was later repeated in identical terms in the Amended Statement Of Claim in November 1994. It is to be noted that before the trial began, no allegation of any similar oral representation by the defendant's wife had ever been made. As the defence very properly observed, the claim against the defendant's wife was asserted for the first time when the plaintiff took the witness stand. Hitherto, there had been no complaint on the pleadings or in the correspondence passing between the parties' legal representatives that the defendant's wife was a party to such alleged inducement. Yet in evidence, she was said to have misrepresented "no less than 3 times".

39. In cross-examination, the plaintiff agreed that she had stated in her witness statement dated 13 January 1995 that the defendant had orally assured her that the said premises was structurally suitable and fit for restaurant purpose and a licence could "easily" be obtained. When queried about the difference, she endeavoured to explain that "in Cantonese one will say a licence can be easily obtained and people say that". She further added the oral representation had been repeated by him many times.

40. When the alleged inducement was first touched upon in chief, the plaintiff had squarely attributed it to the defendant's wife. She testified that following a suggestion in late 1993 or early 1994 by the defendant's wife to jointly rent and share premises for their own business ventures the defendant's wife had telephoned her saying "there is a ground floor shop suitable for running a food business and structurally suitable for getting a licence. She said she found a shop and would take me to look. I went along with a friend and Miss Chin (the defendant's wife). I asked is this shop really suitable: I have no experience in this area and really don't know. She said no problem". Later on, on one of her two visits to the suit premises for viewing, the defendant's wife was said to have repeated that assurance to her.

41. It was her evidence that the sub-tenancy agreement was principally negotiated and agreed with the defendant's wife. This was patent from the following excerpts from her examination in chief:

42. Then much later in chief, she said:

"The wife was heavily involved in negotiation for the defendant on the sub-tenancy agreement. Both of them were involved because I remember before the signing, we had tea in a restaurant in either Mei Foo or Yau Ma Tei for discussing the renting of the shop and introducing kitchen worker to me. We talked of rent, how much space of the ground floor shop I could occupy and I remember the wife, I remember it should be her who told me this property would have no problem and you should get a licence for running a food business and there is no problem with the structure and you can get a food business licence."

43. It was suggested to the plaintiff that her claim had not been pursued with any vigour, there having been a lengthy delay in setting the matter down for trial, for the simple reason that no misrepresentation had ever been made as alleged. Her reply was "well partially, anyway they have been my friends for over 10 years and I don't want the whole thing to come to such a state". In re-examination, she explained the reply was meant to convey her reluctance to press on with the litigation on account of their friendship, her principal concern being to recoup her investment through settlement and to secure an apology from-the defendant for the injuries suffered by a member of her-staff on 30 September 1994.

44. Having considered her testimony in light of the above matters, I am not satisfied that the defendant or his wife had been guilty of misrepresentation as claimed or at all. In reaching this finding, I have also taken into consideration the absence of any reference by the plaintiff to such inducement in her defence to the defendant's claims under Small Claim nos. 25770 and 30181 and in the exchanges between their respective lawyers. She had afterall been legally represented since 4 September 1994. Had there been any substance in her complaints, doubtless mention would have been made and made earlier than they in fact were. The plaintiff's claims must therefore fail. They are dismissed with costs to the defendant.

Had either the defendant or his wife ever commented on the suitability of the premises or the likelihood of a licence being issued?

45. During the viewing of the suit premises and the ensuing negotiations for the sub-tenancy agreement, it was more than likely that the defendant and/or his wife had commented on the suitability of the premises for the plaintiff's purpose. They were afterall on the market for accommodation to share and such expressions of opinion were not the least surprising when premises suitable to their individual needs had been identified. They were merely expressions of opinion not intended to be representations of fact to induce contract nor were they so understood by the plaintiff in my considered view.

46. I am equally satisfied that neither the defendant nor his wife had assured her that a restaurant licence could be obtained with no difficulty. There had been no evidence that they possessed the necessary experience or knowledge in such matters. Furthermore, the plaintiff must have appreciated that licensing was a matter entirely for the relevant authorities to determine. Had the converse been true, she would have run her case quite differently from the start.

47. On the evidence, even if I were to be wrong in so holding, the plaintiff had clearly not placed any reliance upon such representations. She was fully aware that the defendant had been involved in the tailoring trade for a considerable number of years and had even admitted to having been unclear if he was familiar with the restaurant business. She was at all times an experienced businesswoman in her own right and it would have been inconceivable for her to risk a substantial capital outlay on the strength of such representation as she alleged. She would and I find, did satisfy herself as to the suitability of the suit premises by other means. The evidence disclosed that she had engaged Mr. Yip to carry out, inter alia, the decoration of the restaurant and to consult another company for the purpose of her application for a General Restaurant Licence. What is even more telling is the complaint in paragraph 3(2) of her Amended Defence And Counterclaim to Mr. Yip suit for the balance of unpaid fees for work done that has been previously set out.

48. The circumstances of the case clearly showed that the plaintiff had, as indeed any business person with any common sense would have done, taken steps to ensure that the restaurant would be set up properly to meet the licensing requirements. She had plainly relied on Mr. Yip to this end and not upon anything said by the defendant or his wife.

49. For completion, I propose to also deal with that aspect of her claim as to damages.

50. As was earlier stated, if she were to enjoy success in the prosecution of her claims based on fraudulent or negligent representation, she would have been entitled to recover such damages as would put her in the position she would have been had the oral misstatement not been made. Putting it another way, all actual loss flowing from the misrepresentation i.e. moneys expended by reason thereof will have to be made good by the defendant: Doyle v Olby (Ironmongers) Ltd [1969] 2 QB158, CA.

51. The total capital outlay claimed to have been incurred in the Amended Statement Of Claim amounted to $618,640. Generally speaking, it encompassed the setup cost of the restaurant. With the abandonment of the claim for the architect's fees of which only $5,000 had admittedly been paid, and after adjustment by a surveyor or loss adjuster, damages on the plaintiff's evidence eventually came to $570,890. That is the level of reparation that the defendant would have make together with costs were she to have succeeded.

The defendant's Re-Amended Counterclaim

52. The plaintiff's obligation under the sub-tenancy agreement was to punctually pay the reserved rent and a specified proportion of the rates and utility charges. This she had failed to do on the evidence of the defendant which I wholly accept. Distraint proceedings have had to be issued for the rental arrears for the months of July, August and September 1994. The net profits of distraint realised under Distraint Action No. 4204 of 1994 had amounted to $7,420. The plaintiff had paid no further rent since August of that year. Although she had reimbursed the defendant for her two-thirds share of the rates for March, no further rates had been paid by her since 1 April 1994. On or about 19 September 1994, the sub-tenancy was forfeited. On 18 October 1995, the defendant obtained an order for vacant possession from Master Woolley. Vacant possession was delivered on the same date. This was followed by an order in June 1996 requiring the plaintiff to pay into court a sum of $277,696 representing the arrears of rent and rates and mesne profits.

53. The quantum of the defendant's claim is clearly set out in his solicitors' letter to the plaintiff's legal representatives dated 28 November 1995 exhibited to his affirmation affirmed on 13 December 1995. The amount sought by way of damages was $291,555. This sum was made up as follows:

54. The defendant is entitled to be reimbursed for this amount of $291,555 with costs against the plaintiff and judgment is entered in his favour accordingly.

Conclusion

55. My orders follow.