LAM WAI MAN v. NG KEUNG TOMMY

HCA 1033/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1033 OF 2014

_________________________

_________________________

__________________________

ASSESSMENT OF DAMAGES

__________________________

1.  On 4 September 2014, interlocutory judgment was entered in favour of the plaintiff for damages to be assessed on ground that no notice of intention to defend has been given by the defendant.  The hearing on assessment of damages took place before me on 8 July 2015.  Evidence adduced took the form of a witness statement and oral testimony of the plaintiff.  The plaintiff filed a List of Documents on 22 September 2014 and a Supplemental List of Documents on 2 December 2014.  The documents so disclosed were referred to by the plaintiff at the hearing.  The case of the Plaintiff is set out below.

2.  In or around 1991, the plaintiff orally agreed with the defendant to purchase jointly the property in a tenement building known as 2/F, No 146, Camp Street, Shum Shui Po (“Property”).  The parties agreed orally to each contribute 50% of the funding for the purchase of the Property which was then worth HK$680,000.  Being a close friend of the defendant at the time, the plaintiff agreed that the defendant would be in charge of all the administrative arrangements for the purchase of the Property and the Property would be held in the sole name of the defendant.

3.  The land search of the Property shows that by an assignment dated 28 May 1991, the Property was assigned to the defendant at a consideration of HK$680,000.  According to the plaintiff, the deposit of HK$10,000 and the initial down payment of HK$58,000 were paid by the plaintiff first.  Repayment to the plaintiff of 50% of the amount, that is HK$34,000, was later made by the defendant. As regards the rest of the down payment of HK$340,000, it was split equally and each party paid half of the balance.

4.  According to a copy of the Assignment of the Property executed by the then vendor to the defendant, the then vendor was represented by C P Lai & Co.  A bank form dated 20 May 1991 for application for a cashier order made out in favour of C P Lai & Co for the initial down payment of HK$58,000 has been produced and that matches with the withdrawal of the same amount from the plaintiff’s bank account as shown on his passbook.

5.  The remaining purchase price of the Property was financed by Shanghai Commercial Bank Limited for 7 years, with the mortgage payment being approximately HK$7,000 per month.  The land search of the Property has a record of the execution of a Legal Charge by the defendant in favour of Shanghai Commercial Bank Limited for a consideration of HK$340,000 and the discharge of the Legal Charge in 1998.

6.  The legal fees for the conveyance of the Property were also paid by the parties in equal shares.  In addition, the parties each contributed 50% of the costs of the renovation of the Property which was carried out by the defendant’s brother.

7.  With the agreement of the plaintiff, the defendant and his family occupied the Property in return for the defendant’s payment of the mortgage.  The defendant was paying half of the mortgage payments as the defendant’s own share of the contribution and the other half would be treated as the monthly rental payable to the plaintiff.  To the knowledge of the plaintiff, the average monthly rental for similar properties in the Shum Shui Po area was then approximately HK$6,000 per month.

8.  After the mortgage had been paid off in 1998, the parties agreed that the defendant could continue to stay at the Property but then the defendant would have to pay the plaintiff HK$4,000 as monthly rental until the Property was sold.  The defendant and his family did remain in occupation of the Property and the defendant paid the rental of HK$4,000 per month, but only up to 29 January 2003.  The attempts of the plaintiff, whether through phone calls or face to face meetings with the defendant, to chase for outstanding monthly rental after that date were futile.

9.  There are no formal receipts for the rental received, but the informal notes kept by the plaintiff relating to some of the payments in 1999 and 2000 have been produced.  The notes were handwritten and kept on loose leaf pages of desk top diaries.  One entry (the one made on 20 February 2000) was actually a reminder to collect rent from the defendant and that was followed by an entry on the following day about the defendant needing more time.  Only two entries recorded the amount received, one on 20 November 1999 showing receipt of $12,000 as payment of three months’ rent, and another on 22 November 2000 showing receipt of $10,000, but the rental period covered by the $10,000 was not stated.

10.  The agreement between the parties was that the rental would be payable in arrears every three months.  The plaintiff did explain that payment had become unsteady in 2000 when the defendant stopped working as an employee and started his own business, but he confirmed that the agreement for payment of the rental remained the same.

11.  In late 2012, it came to the attention of the plaintiff that the Property was sold to a developer.  The land search of the Property shows that the Property was sold by the defendant to Rich System Investments Limited (“Rich System”) for HK$6,500,000, with the agreement for sale and purchase signed on 6 July 2011 and the assignment executed on 29 August 2011.  Not only was the sale of the Property by the defendant carried out without the knowledge of the plaintiff, the defendant has also not accounted to the plaintiff for 50% of the sale proceeds according to the agreement made between them.  The Property no longer exists as the place has since then been re-developed.

12.  In the Statement of Claim, the plaintiff claims damages for

(a) HK$3,250,000 being the plaintiff’s share of the sale proceeds;

(b) Outstanding rental of HK$408,000 for the period from February 2003 to July 2011 at the rate of HK$4,000 per month; and

(c) Half share of any other profits or monies received by the defendant from the sale of the Property.

At the hearing, Mr Tang confirmed that the claim for damages under (c) above would not be pursued by the plaintiff.

13.  On the basis of the uncontroverted evidence before me, I accept that the agreement made between the plaintiff and the defendant was that they were to each share 50% in the investment in the Property.  That being the case, the plaintiff is entitled to a half share in the proceeds from the sale of the Property to Rich System, which is simple mathematics.  Based on the purchase price of the assignment in favour of Rich System as recorded in the land search of the Property, HK$3,250,000 represents the half share that the plaintiff is entitled to.

14.  I also accept that there was an agreement between the plaintiff and the defendant for the payment of rent at the rate of HK$4,000 per month by the defendant for the occupation of the Property by him and his family after the mortgage was paid off, and that such rent was to be paid in arrears every three months. Although it is the plaintiff’s case that the last payment of rent was made by the defendant on 29 January 2003, Mr Tang has quite rightly abandoned the claim for the monthly rental which had been unpaid for more than 6 years from 4 July 2014, the date of issuance of the Amended Writ of Summons, to take into account the limitation period. 

15.  4 June 2008 is therefore adopted as the commencement date for this head of claim.  As regards the end date for the claim, Mr Tang was prepared to adopt 6 July 2011, being the date of the Sale and Purchase Agreement made between the defendant and Rich System, instead of the date of assignment of 29 August 2011 because of the reference to July 2011 in the prayer of the Statement of Claim.

16.  I accept the calculation proposed by Mr Tang to represent the damages suffered by the plaintiff under this head.  I award the sum of HK$148,374.19 to the plaintiff as damages for outstanding rental, details of the computation are set out in the table on page 5 of Mr Tang’s Skeleton Submissions, which is reproduced below.

17.  The damages assessed as being payable by the defendant to the plaintiff is therefore HK$3,398,374.19 (HK$3,250,000+ HK$148,374.19).

18.  I award interest on the sum of HK$3,250,000 at 4% per annum from 29 August 2011 to date of judgment and thereafter at judgment rate until full payment, and interest at 4% per annum on such part of the sum of HK$148,374.19 that had accrued on the first day of each calendar quarter as from 1 July 2008 to date of judgment and thereafter at judgment rate until full payment.

19.  Costs of the assessment, including all costs reserved, shall be paid by the defendant to the plaintiff, to be taxed if not agreed, with certificate for counsel.