FUNG SUEN LAI JACQUELINE v. GREAT TIME INTERNATIONAL LTD.

HCA 3909/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3909 OF 1998

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Assessment of Damages

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1. The Plaintiff was the registered owner of the property known as Flat A, Ground Floor of Jardine Court together with the Garden Space appurtenant thereto and Car Port No. 24 at Nos. 24-38 Mount Butler Drive, Hong Kong (" the Property").

2. By an Agreement made between the Plaintiff and the Defendant dated 23rd October, 1997, the Plaintiff agreed to sell and the Defendant agreed to purchase the Property at the price of $23,300,000. The completion date was on 31st December, 1997. A deposit in the sum of $2,330,000 was paid by the Defendant to the Plaintiff.

3. On the scheduled completion date, the Defendant failed to complete the transaction. By a Writ of Summons issued on 13th March, 1998, the Plaintiff claims against the Defendant for damages for breach of the Agreement. On 4th June, 1998, Interlocutory Judgement was entered in favour of the Plaintiff against the Defendant with damages to be assessed. This is the hearing for the assessment of damages.

The Assessment

4. At the assessment hearing, the Plaintiff claimed for damages under 3 items of loss namely:-

1) Damages in the sum of $9,500,000 being the difference between the contract price and the resale price;

2) Mortgage interest paid by the Plaintiff for the Property from date of breach to date of resale; and

3) Legal costs in the sum of $8,225 for the abortive sale.

At the hearing, the Plaintiff and her mother Madam Leung Siu Kuen ("Madam Leung") were called to give evidence. They adopted their respective witness statements as their evidence-in-chief. They confirmed that the Defendant had failed to complete the sale on the scheduled completion date. Pursuant to the Sale and Purchase Agreement, the Plaintiff forfeited the deposit in the sum of $2,330,000 paid by the Defendant.

5. After the transaction with the Defendant had fallen through, Madam Leung had, on behalf of the Plaintiff, placed the Property with various property agencies for sale. According to Madam Leung, the Property was subsequently resold to a Mr. Sze Kwok Yiu Larry at the price of $13,800,000. The formal sale and purchase agreement was signed between the said Mr. Sze and Madam Leung, on behalf of the Plaintiff, on 12th March, 1998. The transaction was completed on 24th April, 1998.

6. The surveyor, Mr. Lo Hon Cheung was also called to give evidence for the Plaintiff. He produced his two valuation reports as exhibits P4 & P5 respectively. In his report, Mr. Lo had adopted and analysed 4 comparables in the vicinity. Two of them were within the Jardine Court development where the Property situates. These two comparables were Flat A on 2nd floor ("Flat A") and Flat H also on 2nd floor ("Flat H") of the Jardine Court. Mr. Lo found that these 2 flats were sold at the respective unit rate of $10,716 and $10,036 per square foot. Flat A was sold in July 1997 and Flat H in June 1997. Having considered these comparables and taken into account of the adjustment factors, Mr. Lo assessed that the open market value of the Property as at 31st December, 1997 (i.e. the completion date) was $10,600,000 or about $7,900 per square foot. Mr. Lo further explained that because of the economic turmoil, there was a drop of 20% in price in the property market from about October 1997 to December 1997. This mainly accounted for the reduced rate of $7,900 per square foot for the Property as at 31st December, 1997. Having considered the evidence of Mr. Lo and his valuation reports, I accept and find that the open market value of the Property as at 31st December, 1997 was $10,600,000.

7. At common law, the normal measure of damages for breach of sale and purchase agreement is the contract price less the market price at the contractual time fixed for completion. (see McGregor on Damages 16th edition, Para 992). As for the present case, although the market value for the Property was at $10,600,000, the Plaintiff was able to fetch a higher resale price of $13,800,000. In the circumstances, I award damages in the sum of $9,500,000 as claimed which represents the difference between the contract price and the resale price. (i.e. $23,300,000 - $13,800,000 = $9,500,000)

8. The Plaintiff also claimed for mortgage interest that she had paid in respect of the Property for the period from 31st December, 1997 to 12th March, 1998 (i.e. the date of breach to date of resale) . She stated in her own witness statement that the said mortgage interest amounted to $364,652.57. However, there is no evidence from the Plaintiff nor from Madam Leung as to how this mortgage interest was calculated and arrived at.

9. In the witness statements of both the Plaintiff and Madam Leung, they referred the Court to the bank statements for the mortgage interest calculation. However, the bank statements in the Plaintiff's bundle of documents (at pages 166 to 168, and pages 172 to 175) are in fact letters from the Standard Chartered Bank to a limited company known as Panorama Distributions Co. Ltd.. One of the said letters refers to a current account overdraft and a fixed loan facility. There is no evidence from the witnesses to explain the contents of these letters nor the connection between the said limited company and the mortgage interest payment for the Property. Moreover, no Hearsay Notice has been served in relation to those bank letters. I therefore rule that those bank letters are not admissible as part of the Plaintiff's evidence. On the whole, I am not satisfied that the Plaintiff has proved her claim for mortgage interest on a balance of probabilities and I disallow such item.

10. In respect of the Plaintiff's claim for legal costs incurred for the abortive sale in the sum of $8,225, I find the same as reasonable and I allow such item.

Summary

11. In the above premises, the total amount of damages awarded to the Plaintiff would be as follows:-

(1)	Damages for breach of the Agreement	$9,500,000.
(2)	Legal costs incurred	$ 8,255.
		$9,508,225.
	Less deposit forfeited	$2,330,000.
		$7,178,225.

Accordingly, I give judgment for the Plaintiff for the sum of $7,178,225 plus interest thereon at the judgment rate from 13th March, 1998 until full payment. I also make an order nisi that the Defendant do pay the costs of the Plaintiff for the assessment hearing such costs to be taxed if not agreed with Certificate for Counsel. The order nisi to be made absolute upon the expiration of 14 days from the handing down of this decision.