JOIN WINNER INVESTMENT LTD. v. PO WAI CHING

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CIVIL ACTION NO. HCA10169 OF 1997

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J U D G M E N T

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Background

1. On 15 April 1999, Madam Justice Beeson, following trial, entered judgment for the plaintiff against the defendant for breach by the defendant of an agreement for sale and purchase dated 22 May 1997. The property that would have been conveyed, had the defendant fulfilled her bargain, was a property known as sub-section I of Section L of Lot No. 4665 in Demarcation District No. 104, and as house 115, 5th Street, section L, Fairview Park, Yuen Long, New Territories.

2. The plaintiff company was the purchaser and the defendant the intended vendor. The completion did not take place owing to the inability of the defendant to meet certain requisitions raised in respect of title. The breach by the defendant was accepted by the plaintiff and in the judgment of the High Court, the defendant was ordered to return the deposit of $538,000 to the plaintiff within 14 days from the date of judgment which was 15 April 1999, together with interest thereon at judgment rate from the date of payment by the plaintiff to the defendant to the date of repayment to the plaintiff. I am not concerned with that amount as that is an adjudged quantum which has adequately been dealt with before the High Court.

3. In today's hearing, the plaintiff seeks quantification of damages pursuant to the order of Madam Justice Beeson. It seeks assessment under several items. First of all, there is allegedly a consequential loss in the sum of $420,000, an amount representing the difference between the value of the property per the evaluation report, P3, and the contract price at the date of completion which was 17 September 1997. The plaintiff pursues the difference between those two prices as the loss of bargain suffered following naturally from the defendant's failure to complete.

4. In addition, it can be seen from the original sale and purchase agreement that the plaintiff had incurred stamp duty which had been paid in the amount of $147,950.

5. The final item of consequential loss, which it is urged upon me as not being too remote, concerns the agency commission which had also been paid by the plaintiff in the aborted sale and purchase. That amounts to $26,900 and adequate proof of that can be found in Exhibit P2.

6. That essentially sums up the quantum of damages and the heads in relation to that issue that I have to adjudicate upon this morning.

7. Dealing first with the loss of bargain, it is plain on the authorities and the law is adequately summarised in MacGregor on Damages, 16th edition at page 964, which counsel has referred me to. The learned author had this to say:

"The normal measure of damages is the market value of the property at the contractual time for completion, less the contract price. This measure has been awarded in cases from Engell v Fitch [1869] LR 4 QB 659."

8. This is still good law and provides the method for quantifying the loss of bargain.

9. In the sale and purchase agreement, the plaintiff had committed itself to purchase the property in question for $5,380,000. That would be the amount that would have been paid over by 17 September 1997 had the purchase been successfully completed.

10. In the evaluation report, P3, which is admissible evidence for these proceedings for the purpose of calculating the loss of bargain, it is quite plain that the open market value as at the date of completion of the property was $5,800,000. I do not propose to go into the report itself. Suffice it to say that the basis for valuation has been adequately set out there and it is generally accepted as the proper approach to assessment of property values in Hong Kong.

11. Therefore, it is plain that had the contract for sale of the property reached fruition, the plaintiff would have at the date of completion received a property of considerably higher value than what it had contracted to pay for. That represents, in my view, the loss of bargain which flowed directly from the breach. The difference in value is an amount which I consider to be right and proper to award to the plaintiff.

12. Stamp duty has been paid and that also represents an item of loss which was reasonably foreseeable as flowing from the breach in question. The same could also be said without any difficulty in regard to the agency commission that was incurred whether or not the property was conveyed as contemplated by the sale and purchase agreement. So those two items of damages are fully recoverable, and I adjudge that they be paid by the defendant to the plaintiff as well.

13. To summarise, I order judgment for the plaintiff in the amount of $420,000 plus $147,950 plus the agency fee of $26,900. Total damages for the plaintiff are assessed at $597,550. This is, of course, in addition to the return of the deposits which has already been ordered. There shall be interest on this amount at the judgment rate until payment. Interest on the amount that I have quantified shall run from 17 September 1997 at the judgment rate until payment.