CROWNING SUCCESS LTD v. BRIGHTLAND CORPORATION LTD AND ANOTHER

    HCA 1540/2005 and HCA 1445/2005 (consolidated)

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS. 1445 OF 2005 AND 1540 OF 2005

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（Consolidated by order of Master Lung dated the 9^th day of June 2006）

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JUDGMENT

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1. Briefly, by way of background, the 2^nd defendant at all material times was the owner of the 45^th Floor of the Office Tower of Convention Plaza. 

2. By a preliminary sale and purchase agreement dated 30 December 2004 the 2^nd defendant agreed to sell a portion of the 45^th floor namely, Unit C in accordance with the plan attached to the agreement.  By a preliminary sale and purchase agreement dated 18 January 2005 the 1^st defendant agreed to sell Unit C as per the plan attached to the agreement.  Completion under both agreements was to take place on 22 July 2005. 

3. There was no completion of the agreements.

4. The plaintiff’s case is that Unit C as tendered was substantially different from what was provided in the agreement. 

5. The main complaint of the plaintiff is that the property which was tendered for completion on 22 July 2005 had a saleable area significantly less than 144.402 sq. m. as contracted for and had a different location as indicated on the plans.  The area excluded was approximately 200 sq. ft.  As a result of the exclusion of the area, the property tendered did not have the sea view which it would otherwise have had.  Obviously, this would affect the value of the property. 

6. There are disputes between the parties as to the actual saleable area of the property tendered on 22 July 2005 and as to the existence or extent of any sea view. 

7. The plaintiff claims damages against both defendants in respect of the failed transaction.  The claim against the 1^st defendant is in contract.   The claim against the 2^nd defendant is for damages for wrongfully procuring a breach of contract.

8. The matter before me is an appeal by the plaintiff against Master de Souza’s order of 22 February 2008.  The main complaint is paragraph 1 of the order where the master ordered that the plaintiff and the defendants in the consolidated action do mutually disclose property valuation reports dealing with the market value of Unit C as at two specific dates namely, 22 July 2005 and 22 January 2006.

9. The plaintiff had sought a direction for expert reports dealing with the market value of the property without specifying any specific valuation date.  It has prepared an expert report with a valuation given every three months from 22 July 2005 up to 22 January 2008.

10. It is common ground that the starting point for damages for breach of a contract for the sale of land is the date of breach.  However, in appropriate cases this may be departed from where this causes injustice.

11. There is a duty on the plaintiff to mitigate damages and a reasonable time is given to the innocent party to a breach of contract to mitigate damages. 

12. The date given by the master, 22 January 2006, is six months after the date of the alleged breach by which time, on the 2^nd defendant’s case, the plaintiff would have been expected to have mitigated its loss by entering into a substitute contract.

13. Mr Pao, however, has submitted that Unit C was a unique property and that it was not reasonable to mitigate by finding a substitute property in the six months’ period.  However, on the pleadings and the evidence placed before me, that is not a point that the plaintiff can run without specifically pleading the matter.  I think Mr Man is right.  There must be a basis put forward by the plaintiff for departing from the normal rule for the assessment of damages.  At present, there is no such basis pleaded nor is there any evidence provided to me.  That being so, I see nothing wrong in the order made by the master and I would dismiss the appeal.