FORCEPUT LTD. v. PATH VIEW LTD.

HCA572/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 572 OF 1998

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Judgment

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1. This assessment arises from interlocutory judgment for damages to the plaintiff as vendor following the defendant's failure to complete the sale and purchase contract between the parties. The subject property is Flat B, 7/F, Tower 1, Ruby Court, South Bay Road, plus one parking space, and the contract price was $34,850,000. The scheduled completion date was 29 October 1997, which is the effective date for this assessment. The plaintiff's evidence was given by Mr. Colvin Brown, who confirmed the contents of his witness statement and gave further oral evidence. The defendant was not present at the hearing and appears not to have shown interest in the proceedings since interlocutory judgment.

2. The plaintiff resold the property, with completion scheduled for 16 February 1998, for the sum of $26,000,000. The major part of the plaintiff's claim therefore reflects the price discrepancy on resale in the sum of $5,368,200. This figure is reached by crediting against the price difference the deposit received from the defendant of $3,485,000 and adding $3,200 for a minor repair at the suggestion of the plaintiff's estate agent.

3. The plaintiff's mitigation of its loss was supported by a valuation of the property as at the relevant date in the sum of $25,000,000. The valuation was in the form of two reports from Sallmans, Chartered Surveyors, which were produced by a director, Mr. David Pannach. The reports were in the usual form and considered a number of comparables in reaching the valuation. I am satisfied that they are reliable and correct and accordingly that the plaintiff has fully mitigated its loss in obtaining a resale price in excess of the valuation. I therefore award the sum of $5,368,200 as claimed in respect of the price discrepancy on resale.

4. Mr. Colvin Brown gave evidence of the plaintiff's further loss in the form of interest paid on the mortgage on the property from the intended date of completion to the date of completion under the resale contract. He also spoke of the plaintiff's need to obtain a bridging loan for the same period, as it has purchased another property after contracting to sell the subject premises to the defendant. I am satisfied that the interest claimed on the mortgage and on the bridging loan are direct consequences of the defendant's breach. These payments, together with a further sum claimed for rates over the relevant period, are set out in paragraph 9 of Mr. Brown's witness statement and amount in total of $496,440.11, which is duly awarded. The further amounts summarised at paragraph 10 of Mr. Brown's witness statement are also awarded. These represent legal expenses and commission paid on the aborted sale as well as the valuation charges paid to Sallmans.

5. Paragraph 7 of Mr. Brown's witness statement refers to the figures of $260,000 and $44,250, respectively representing estate agents' commission and legal charges paid in respect of the resale transaction. These items would not normally fall within the scope of damages flowing from the defendant's breach of contract. However, counsel for the plaintiff submitted that they were expressly recoverable under clause 15 of the contract between the parties which stipulates that "all reasonable expenses attending any such resale shall be borne by the purchaser". In the circumstances I find that commission and legal charges must reasonably have been within the contemplation of the parties in agreeing to this provision, and these amounts are therefore recoverable.

6. I therefore award the amounts set out in paragraph 10 of Mr. Brown's witness statement, together with the two items at paragraph 7 thereof relating to resale expenditure. The total award is accordingly $6,580,702.60, which will attract interest at the judgment rate from writ to payment. The plaintiff is also awarded its costs with a certificate for counsel.