HCA006282/1997
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
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BETWEEN
Lee Siu Wai Florence
Plaintiff
AND
Priway Investments Limited
Defendant
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Coram: Mr. Registrar Betts in Court.
Dates of Hearing: 16 March and 15 June 1998
Date of Handing Down:
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ASSESSMENT OF DAMAGES
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1. These proceedings arise from an Agreement under which the Defendant was to sell, and the Plaintiff was to buy, Flat B on the 26th Floor of Fu Shan Mansion, Kao Shan Terrace, Tai Koo Shing at a price of $4,800,000.00.
2. After the parties had signed the Sale and Purchase Agreement a third party, claiming an alleged earlier contract, issued a Writ and registered a lis pendens against the property.
3. Not unreasonably the Plaintiff in this action required the lis be removed from the Register before completion, which was to be on or before 15 January 1997. That the Defendant failed to do and, so far as I am aware, it remains to this day.
4. Pursuant to the terms of the contract the Plaintiff was re-paid the deposit.
5. On her evidence, which I accept, she still hoped the problem would be resolved and the flat could be hers. She maintained that stance up to 22 October 1997. The significance of which date I will deal with later. The Defendant also continued to express willingness to complete; but subject to the lis pendens. This unrealistic stance found no favour with the Plaintiff.
6. The Writ herein was issued on 13 June 1997 and a Defence filed on 7 July. In August the Plaintiff issued a Summons under O.86 seeking an order for specific performance of the contract or alternatively damages. The Summons was adjourned for evidence to be served and filed and then came before Master Kwan for hearing on 22 October 1997.
7. At that hearing the Plaintiff abandoned her claim for specific performance and sought only the alternative of damages to be assessed. After a full hearing the Master made an Order in favour of the Plaintiff. The terms of that Order are significant and paragraph 1 reads:-
"1. Interlocutory Judgment be entered against the Defendant for damages for breach of the Sale and Purchase Agreement as mentioned in paragraph 18 (e) of the Statement of Claim, to be assessed, with interest, if any, as therein claimed."
I have no doubt it's effect was to give Judgment to the Plaintiff in terms of the relief sought by paragraph 18 (e) of the Statement of Claim.
8. It is worth setting out the whole of paragraph 18:-
"18. By reason of the matters aforesaid, the Plaintiff suffers loss and damages.
Particulars
Damages in addition to specific performance
(a)
Damages resulted from delay in completion to be assessed.
HK$
(b)
Agency commission
48,000,00
(c)
Stamp Duty
132,000,00
(d)
Conveyancing expenses
16,940,00
(e)
In the alternative to (b), (c) and (d) difference between the contract price under the S/P Agreement and the market price of the property or comparable property at a time to be decided by this Court to be assessed."
9. The Defendant appealed from that Order. On 1 December 1997 Le Pichon J. heard and dismissed that appeal. The penultimate sentence of her Judgment is also of particular significance:-
"There is no defence to the Plaintiff's claim for damages which, pursuant to the Master's Order, are to be separately assessed."
The added emphasis is mine. I have no doubt that the basis for this assessment, therefore, is contained in the formula expressed in Clause 18 (e) of the Statement of Claim. The two matters left for resolution being the date to be used and the value of the property or a comparable one at that date.
10. I have dealt with the basis of assessment at some length because Mr. Mumford, S.C., for the Defendant has submitted that the circumstances giving rise to this action came within the rule laid down in Bain v Fothergill (1874) LRD HL 158 and was not within any of the exceptions. He also urged that the rule had not been abolished in Hong Kong by the decision in Rosarie Ltd. v West River Development (Chan Lau & Wai (a Firm). Third Parts [1933] 2HKC 404 and even of it had I should still follow it. I will not rehearse Mr. Mumford's objections to the decision in Rosarie but confine myself to the observations that I cannot read the Judgment of Barnett J. as other than deciding that the rule in Bain v Fothergill does not apply in Hong Kong and that I am bound by that decision. The appropriate time for that point to be raised was before Le Pichon J. and I cannot go behind the order giving rise to this assessment. I will deal separately with the two matters to be decided.
1.
The time at which the value of the property or a comparable property is to be assessed.
Three dates have been canvassed.
First 28 January 1997 when the first notification purporting to rescind the contract was served. This is not, in my view, appropriate. The Defendant was still expressing willingness to complete albeit subject to the lis pendens. The Plaintiff was still hoping the lis would be removed and she could buy. At this stage she was not under any duty to mitigate.
Second 13 February 1997 when the deposit was returned. In normal circumstances this would be an end of the matter. The correspondence between the respective solicitors, however, shows that the Defendant was taking steps in the litigation in respect of which the lis was registered and was claiming, or so they said, that the lis was wrongly registered and should be removed. The property market was at that time rising and it was not unreasonable for the Plaintiff to preserve a claim for specific performance in the hope or expectation the lis would be removed within a reasonable time.
She maintained that stance in the Writ which was issued on 13 June 1997 and up to the third relevant date. That was 22 October 1997 when her Summons for Judgment came before the Master. Then she abandoned her claim for specific performance and elected to seek damages only.
I hold that in all the circumstances she was entitled to do so and was not obliged to seek an alternative property earlier.
She did, in fact, purchase another property on 27 September 1997 but that is not relevant. She is not limited to one property and was entitled to continue to seek her bargain in this one. The date for valuation is the date she abandoned her claim for specific performance, i.e. 22 October 1997.
2.
The market price of the property or comparable property on 22 October 1997.
Each party presented a professional valuation and the maker of each gave evidence and was cross-examined. The Plaintiff's valuation was $6,040,000.00 and the Defendant's $5,840,000.00. In a matter as inexact as this the figures are remarkably close. On the whole I am in agreement with Mr. Li for the Plaintiff that the evidence in the Plaintiff's report stood up better to close examination than that for the Defendant. In particular the adjustments made for comparables and the choice of comparables was more convincing. The Defendant's report described, the internal condition of the property as "fair" which the surveyor in evidence said meant "poor". I found this approach unconvincing and accept the evidence on behalf of the Plaintiff that the value of the property or comparable property on 22 October 1997 was $6,040,000.00. Deducting from that figure the contractual price of $4,800,000.00 the damage suffered by the Plaintiff is $1,240,000.00 which I award.
The parties have not addressed me on the questions of interest or costs. Accordingly I make an Order Nisi that the award shall carry interest at judgment rate from the date of the Writ. The Defendant shall pay the Plaintiff's costs to be taxed if not agreed and with a certificate for counsel.
(Julian Betts)
Registrar, High Court
Representation:
Mr. C.Y. Li instructed by Messrs. Paul C.W. Tse & Co. for the Plaintiff.
Mr. E.C. Mumford, S.C., and Mr. D. Tang instructed by Messrs. Peter Kimpton Wong & Co. for the Defendant.