Hong Kong Niiroku Ltd. v. Dawson Properties Ltd. and Another

HCA 11041/1996

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 11041 OF 1996

____________________

____________________

___________________________

ASSESSMENT OF DAMAGES

___________________________

1. The plaintiff (vendor) entered into written agreements with the 1st and 2nd defendants (purchasers) in July 1996 in which the plaintiff agreed to sell and the defendants agreed to buy a commercial premises on the ground floor, No. 22 Caine Road, Hong Kong, for the purchase price of HK$4,100,000. Completion date was scheduled on 12 September 1996.

2. Pursuant to the agreements deposits in the sum of HK$1,640,000 were paid by the defendants to the plaintiff in July 1996.

3. On 12 September 1996 Dawson Properties Limited refused to complete the said purchase and took out a vendor and purchaser summons in HCMP-3232/1996. At about the same time Hong Kong Niiroku Limited took out the present action HCA-11041/1996 to sue the defendant for their repudiatory breach. On 6 June 1997 in HCMP-3232/1996 Mr. Justice Cheung ruled in favour of the purchaser and found Hong Kong Niiroku Limited to have proved good title to the land. Costs of the vendor-purchaser summons was also awarded to Hong Kong Niiroku Limited. The issue about the forfeiture of the deposit was subsequently before Mr. Justice Gall who granted the following orders on 23 February 1998:-

(1) The Parties being in agreement as to the law, the deposit of HK$1.64 million together with interest rate thereof from the date of 12th September 1996 to the date of payment at the rate of 11.5% per annum shall be paid by Hong Kong Niiroku Limited to Dawson Properties Limited.

(2) The payment to be subject to a claim for common law damages in respect of HCA-11041 of 1996 and to be payable upon the determination of that action.

(3) Costs be to Dawson Properties Limited.

4. To mitigate its loss the plaintiff had attempted to sell the property to Creative Rick Holdings Limited. The plaintiff was unable to complete the sale, possibly on account of this pending litigation. The dispute between the plaintiff and Creative Rick Holdings Limited gave rise to 2 further litigations in HCA-3605 of 1997 and HCA-9605 of 1997.

5. On 23 July 1997 the plaintiff entered into another agreement for sale and purchase with Rise King Limited and the conveyance was completed on 23 September 1997 for a purchase price of HK$3,750,000.

6. In its statement of claim filed on 26 June 1998 the plaintiff claimed the following heads of financial loss:-

(a) loss of bargain in the sum of HK$350,000 (HK$4,100,000 - HK$3,750,000);

(b) Interest at 12% per annum on the balance of the purchase price;

(c) Loss of use of the property for 1 year at HK$50,000 per month;

(d) Legal costs in HCMP-3232/1996 in the sum of HK$500,000, subject to taxation;

(e) Abortive conveyance fees in the sum of HK$17,491.60;

(f) A sum of HK$37,000 of agency fees to effect re-sale;

(g) A sum of HK$378,260 of air fare for the directors to attend to the completion documentation;

(h) A sum of HK$23,706.22 of extra management fees, rates and outgoings for the year in which the defendant failed to take conveyance; and

(i) Less deposits of HK$1,640,000 received from the defendants.

7. On 12 November 2001 parties reached agreement and obtained the consent order of the court in the following terms:-

(a) interlocutory judgment be entered against the 1st defendant for damages to be assessed if not agreed.

(b) The 1st defendant do pay the plaintiff its costs of this action up to the date of judgment being entered to be taxed if not agreed and payable after damages are assessed or agreed.

(c) Leave be granted to the plaintiff to discontinue its action against the 2nd defendant; and

(d) there be no order as to costs of this action between the plaintiff and the 2nd defendant.

8. Upon the plaintiff's application, the assessment of damages was fixed to be heard on 10 May 2002. Three days prior to the hearing solicitor on behalf of the plaintiff obtained leave of the court to cease to act for the plaintiff.

9. The plaintiff has absent in the assessment hearing. As the hearing was set down by the plaintiff's solicitor on the instruction of the plaintiff, the plaintiff ought to have full knowledge of this assessment hearing. I grant leave for the assessment to be conducted in default of the appearance of the plaintiff.

10. Counsel on behalf of the defendant invited this court to bear reference to the information contained in the witness statement of the plaintiff filed in respect of the assessment hearing. Defence accepted the following heads of claims of the plaintiff to be reasonable:-

(a) loss of bargain in the sum of HK$350,000;

(b) Conveyance fees of HK$17,491.60;

(c) Agency fees of HK$37,500 in effecting re-sale;

(d) Rates in the sum of HK$9,310 for the period from October 1996 to September 1997; and

(e) Management fees in the sum of HK$23,820 for the period from October 1996 to September 1997.

11. Defence did not accept the necessity of the air ticket charges nor the claim for loss of use of the property. Defence also disputed with the plaintiff about the proposed interest calculation in respect of the loss of bargain.

12. As the plaintiff has not adduced any evidence on the necessity of the physical attendance of the plaintiff's directors in Hong Kong for the execution of the assignment; nor to substantiate the financial loss in respect of the loss of use of the subject premises, the plaintiff is non-suited on those 2 heads.

13. By the order of Mr. Justice Gall, the plaintiff was ordered, subject to payment of damages, to return the HK$1.64 millions deposit with interest at 11.5% from 12 September 1996 until the payment. Hence this assessment must be made on the basis that the deposits were returned since 12 September 1996.

14. The damages suffered by the plaintiff can be tabulated as follows:-

15. The defendant refused to take conveyance of the property on 26 September 1996. The issue about title had been adjudicated upon by Mr. Justice Cheung on 6 June 1997. The forfeiture of the $1.64 millions deposit was decided by Mr. Justice Gall on 23 February 1998. The plaintiff lodged its statement of claim on 26 June 1998. Parties obtained consent order on liability on 12 November 2001. Has the plaintiff proceeded to prosecute the claim with due diligence, the matter would likely be tried and resolved within 3 months from the date of the consent order. In exercise of my discretion I only award pre-judgment interest to the plaintiff from the date of the default or the filing of the statement of claim until 3 months after the consent order; i.e. on 12 February 2002.

16. Leaving aside the issue about costs, I assessed the damages suffered by the plaintiff as a result of the defendants' breach to be:-

Damages = (A) + (B) - (C) + (a) + (b) + (c) + (d) + (e)

(A) = HK$1,640,000 deposit + interest on HK$1,640,000 at 11.5% per annum from 12/9/96 until 12/2/2002

(B) = HK$2,460,000 balance + interest on HK$2,460,000 at 11.5% per annum from 12/9/96 until 12/2/2002

(C) = HK$3,750,000 re-sale price + interest on HK$3,750,000 at 11.5% per annum from 23/9/97 until 12/2/2002

(a) conveyance fees of HK$17,491.60

(b) agency fees of HK$37,500

(c) rates of HK$9,310

(d) management fees of HK$23,820

(e) interest on (a)+(b)+(c)+(d) at 11.5% per annum from the filing of the statement of claim on 26/6/98 until 12/2/2002

17. Costs of this assessment hearing is reserved until parties were given a chance to be heard on the equitable allocation of the costs.