Standard Chartered Finance Ltd. v. Chan Shui Hung Victor and Another

HCA NO. 17568/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 17568 of 1998

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Assessment of Damages

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Introduction

1. This is an assessment of damages following the entry of interlocutory judgment on liability for Standard Chartered Finance Limited ("the plaintiff") against the 1st and 2nd defendants for damages to be assessed. The 2nd defendant did not appear at the hearing whereas the 1st defendant, Mr. Chan Shui Hung Victor ("Mr. Chan") represented himself throughout. The plaintiff's claim was for damages and loss arising from Mr. Chan's undisputed breach of a hire-purchase agreement with the plaintiff in respect of a used 1993 Jaguar XJS 4.0 coupe. The 2nd defendant, Mr. Chan's guarantor, was sued under a letter of guarantee and indemnity that he had furnished the plaintiff dated 10 April 1997.

The plaintiff's claim

2. Under the hire-purchase agreement, Mr. Chan had contracted to pay the total hire purchase price of $650,547 by an initial payment of $142,515 and the balance by 36 equal monthly instalments of $14,112 each commencing 10 May 1997 and thereafter on the 10th day of each succeeding month. The balance of the hire purchase price was made up of the sum of $400,000 being the balance of the cash price plus the hire charges in the amount of $108,032. As happened, Mr. Chan only made the initial payment and paid a number of monthly instalments totalling $155,232. No further payments followed from April 1998 onwards and the plaintiff repossessed the car which it then proceeded to sell by public auction for $100,000, leaving itself with a shortfall of $236,238.24 (as per the writ) after factoring in certain expenses relating to the recovery, storage and sale of the vehicle and overdue interest. Mr. Chan's principal complaint concerned the price at which the car was sold. He considered that it had been sold at considerable undervalue in view its condition and age. To that end, he called a witness from Jaguar Hong Kong, a Mr. Bill Ho ("Mr. Ho").

What is the best price for the Jaguar?

3. The evidence from Mr. Ho revealed that the jaguar coupe was imported new into Hong Kong in 1993 and was eventually sold to a customer in 1996 at a reduced price, it being intended as a raffle prize in aid of a charity, Orbis, the flying eye hospital. Mr. Chan then became the 2nd "owner" under the hire-purchase arrangement with the plaintiff on 10 April 1997.

4. According to the plaintiff's adjuster, PW2 Mr. Ng Kuen Hong ("Mr. Ng") who had examined the vehicle for the purpose of valuation, the forced value and the then current value in July 1998 were respectively $40,000 and $90,000. Following advertising for public tender, the vehicle realised a higher sale price of $100,000.

5. Mr. Ho's testimony was to the following effect. As sales representative with Jaguar Hong Kong since 1984, he was familiar with the new and second-hand markets for this make of vehicles. From the company records, he was able to say that the vehicle in question was manufactured in 1993 and was first registered for use in Hong Kong in 1996. For some 3 years, it had remained unsold in storage, a situation Mr. Ho agreed under cross-examination that could possibly have been attributed to the lack of demand for this particular model. This model was replaced with a newer XK8 in 1996.

6. Mr. Ho admitted that he did not have the benefit of examining the vehicle and any opinion offered as to the resale price was necessarily premised on his perusal of Mr. Ng's report and his knowledge of the market. This was a fair concession on his part. The number of owners and the condition of the vehicle were considerations material to an assessment of its worth in his view. He considered that the number of owners had less impact on the realisable price than the actual condition of the vehicle. He assessed that the vehicle could have been sold for $180,000 less 10%. In arriving at his valuation, he had not taken into account the fact that the jaguar had been re-possessed, a fact counsel for the plaintiff urged should further reduce its value on resale. There was no evidence that re-possessed vehicles were less attractive to buyers and should be further discounted for that fact alone.

7. Much time and costs have been expended on this aspect of the case, largely through Mr. Chan's inability to arrange for his own expert evidence on valuation in good time. The trial, otherwise straightforward, could have been disposed of expeditiously. In my opinion, the evidence of Mr. Ng is to be preferred to that of Mr. Ho. Mr. Ng, specifically instructed to provide a valuation, had examined the vehicle and was fully aware of its condition. I accept his valuation and find that the actual price received was the best market price that could reasonably have been obtained at the time of the public tender. That the plaintiff had acted reasonably throughout with diligence in mitigation of its loss cannot be doubted on the evidence.

Other losses

8. These comprise the following. Overdue interest at 2% per month amounting to $2,352.50 is pursued under clause 1 of the hire-purchase agreement. This amount is recoverable. Equally recoverable are the costs of advertising, repossession, towing and storage charges, respectively in the amounts of $196.30, $560, $850, and $3,888. These items were reasonably and necessarily incurred and their quantum was appropriate for the work done. For the same reason, I will also allow the claims in respect of key duplication of $1,000, trolley fee of $750 and the surveyor's fee of $450. In essence, the plaintiff has succeeded in its various claims.

Quantification of the final award

9. Mr. Chan is adjudged liable to pay damages as calculated below.

Amount advanced under the finance agreement	$400,000
Add hire charges	$108,032
Sub-total	$508,032
Less rental paid	$155,232
Sub-total	$352,800
Less rebate interest	$32,831.35
Sub-total	$319,968.65
Add:
Overdue interest at 2% pm	$2,352.50
Advertising fee	$196.30
Repossession charges	$560
Storage charges	$3,888
Towing charges	$850
Key duplication	$1,000
Trolley fee	$750
Survey fee	$450
Sub-total	$330,015.45
Less sale proceeds	$100,000
Net loss	$230,015.45

Conclusion

10. Final judgment is entered against Mr. Chan and the 2nd defendant for the sum of $230,015.45 in favour of the plaintiff with costs of the assessment on party and party basis, taxed if not agreed, together with interests at judgment rate from the date of the writ until full payment. Although counsel for the plaintiff has offered much assistance to the court, with no disrespect to her, the matter could just as well have been continued by her instructing solicitor. The circumstances do not warrant a certificate for counsel. The order for costs is nisi in the first instance with 21 days from the date hereof for the parties to urge other orders, if so advised.