LO WAI CHUEN v. CHAN WAH YING WENDY

DCCJ8574/2000

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 8574 OF 2000

__________________

J U D G M E N T

__________________

1. This is an action which relates to a proposed conveyance of a ground floor flat at Richview Villa, 20 Fung Fai Terrace, Hong Kong. The Plaintiff, together with his girlfriend, were interested in purchasing this property.

2. The Defendant is a lady who has lived in the United States of America for a period of some years now, and it was her husband, Mr Gen Franklin Yuen, who was then living at the flat and who had been charged by her, as her lawful agent and attorney, with the task of selling this property at the best price obtainable.

3. The particular feature of the property which appealed to the Plaintiff, apparently, was the existence of a covered yard which had been converted into a kitchen and so, as offered, the property came with two bedrooms, a separate drawing room and a dining area, and off that area was this covered yard which was the kitchen, and that rather appealed, as I say, to the Plaintiff and his girlfriend.

4. That area had also come to the notice of the Buildings Department and they had required things to be done in relation to the structures that had been put there with a view to covering this area. But there was correspondence between the Buildings Department and the Defendant and with a view to allaying the Plaintiff's fears that this was going to be an ongoing problem, the Plaintiff was shown this correspondence from the Buildings Department (and I have seen that correspondence) and the purpose of showing it was to indicate to the Plaintiff that all was well and there was no further duty to be cast upon the owner in relation to that covered area.

5. And in view of that, I am perfectly satisfied that that representation was made and that it was intended, amongst other things, to substantially persuade the Plaintiff to purchase this property. I find all the Plaintiff's evidence, unopposed as it is, to be true and accurate.

6. In fact, this was not true because it was absolutely clear that the Buildings Department required, in effect, substantial works to be done to the illegal structures there and the effect of it is that much of that area was going to have to go - it could not be used as a kitchen. This has all been looked at by a surveyor on behalf of the Plaintiff and from the analysis of the chartered surveyor, it is obvious that there was going to be a loss of just under 29 per cent of the yard area that was going to go.

7. From that, Mr Law, who appears on behalf of the Plaintiffs, submits that this is clearly a substantial defect in the title, that anybody who was going to purchase this property was going to buy, as he puts it, the potential of litigation and certainly of expense if the matter went wrong, because, no doubt, the Buildings Department would have insisted on these illegal structures being removed.

8. And so I find as a fact that the Plaintiff could not be put in a position of having to complete this purchase. There has been a breach of the agreement by the Defendants and I am going to award in favour of the Plaintiff in this way: Under paragraph 1, I find that the Plaintiff is entitled, on two bases:

1) Under the general law concerning the rescission of contract and indeed under paragraph 9 of the agreement, that he is entitled to the return of the deposit of $60,000 which is currently being held by the firm of Lau Chan & Company who hold this amount as stakeholders, and I order them to return this amount to the Plaintiff forthwith.

2) Under clause 9 of the agreement, I also award the Plaintiff liquidated damages in the sum of $60,000 which is provided for under that clause.

9. I am also going to make a declaration, not in the way that is pleaded under paragraph 4 of the prayer, but I am going to make a declaration that the Plaintiff is not liable under clause 12 of the agreement, or as a matter of law, to pay the estate agents, that is the firm of Sinopros Realty Consultants Company Limited, the sum of $30,240 as commission and/or as damages, and if they are so advised, they must look for that amount or any other amount which they may feel they wish to recover to the Defendants in this action.

10. There is also a prayer for interest and I shall award the Plaintiff interest at half the judgment rate on the deposit and that will run from the date of payment of the deposit on 9 June 2000 until judgment, that is until today, and thereafter at the judgment rate until payment.

11. I also award the Plaintiff interest on the amount of liquidated damages in paragraph 2 of the prayer. That will be at half the judgment rate from the date of the writ until today and thereafter at the judgment rate until payment.

12. The Plaintiff must, of course, also have his costs of the action with certificate for counsel.