CAPACIOUS INVESTMENTS LTD. v. TANG WING HON ALAN

IN THE COURT OF APPEAL

1993, No. 160
(Civil)

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J U D G M E N T

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Godfrey, J.A.:

1. This is the judgment of the court in this appeal against a Master's order (on an assessment of damages) made on 10 August 1993. The facts, so far as it is necessary to recount them for the purposes of this appeal, may be quite shortly stated.

2. The plaintiff's claim in the action was a claim for specific performance of an agreement made between the plaintiff and Tang Man Sit on 20 March 1982, by way of compromise of a dispute between them (the detail of which is immaterial). Under this agreement, Tang agreed to assign 16 houses, in a development at Kam Tin in the New Territories, to the plaintiff. But instead of doing so, Tang converted the houses into a home for the elderly, and in 1985 let the home to a tenant at a substantial rent, which Tang pocketed.

3. The plaintiff instituted proceedings for specific performance on 18 December 1991 (two days after Tang's death), claiming in addition an account of "all secret profits in respect of the use and letting of the said 16 houses", and damages "pursuant to s.48 of the Supreme Court Ordinance". (Section 48 of that Ordinance is in fact concerned with interest, not damages; and the claim must have been intended as a claim for damages under s.17 of the Ordinance, which re-enacts in Hong Kong the statutory provision in England and Wales under which a court having jurisdiction to decree specific performance is given power to award damages in addition to specific performance.) Tang's estate is now represented by the defendant.

4. On 21 September 1992, the defendant (pursuant to an order of Mayo, J. made on 25 August 1992) assigned the 16 houses, still occupied as a home for the elderly, to the plaintiff. There remained outstanding the claims of the plaintiff for an account of profits, and for damages.

5. Before the assessment of damages came before the Master, the plaintiff elected to accept from the defendant a total of $1,997,758 on account of the profits made from letting the 16 houses as a home for the elderly. The plaintiff, having received this payment, cannot claim compensation for having been kept out of possession of the 16 houses By taking the profits arising from Tang's wrongdoing the plaintiff approbated what he had done, and debarred itself from subsequently reprobating it. When a wrong-doer has made a profit out of his use of your property, he is liable either to account to you for that profit or to compensate you in damages. If you think you could have done better than the wrong-doer, you can forego the account of profits and take compensation instead. But you cannot go for both. The plaintiff submitted to the Master that it was entitled to an assessment of its loss on income account, giving credit, against whatever sum might be certified to be due from the defendant to the plaintiff by way of damages, for the sum it had received on account of profits. The Master accepted that submission. But this was an attempt to have it both ways. It cannot be justified. It ignores the election, made by the plaintiff, between two inconsistent remedies. The submission must be rejected.

6. So far as the plaintiff's loss on income account is concerned, then, the plaintiff must be taken to have elected to go for an account of profits in lieu of damages, and cannot recover anything further from the defendant in respect of that loss. In so far as the Master proceeded on a contrary view, his order must in our judgment be set aside.

7. But that is not the end of the story.

8. In assigning the 16 houses to the plaintiff in their converted state as a home for the elderly, the defendant assigned to the plaintiff property worth less than it would have been but for the conversion. This caused a loss suffered by the plaintiff on capital account. In our judgment, the defendant is liable to compensate the plaintiff for this loss. We would reject the defendant's argument that the plaintiff's election to take an account of profits rather than compensation for its loss on income account shuts out the plaintiff from claiming compensation for its loss on capital account.

9. The Master, after carefully considering the evidence as to the plaintiff's loss on capital account, assessed this at $11,000,000. We see no reason to interfere with his assessment.

10. Accordingly, we will vary the Master's order so as to assess the plaintiff's damages at $11,000,000 with interest at 8% from the date of the writ (18 December 1991) to the date of the Master's order (10 August 1993) and thereafter at the judgment rate until payment.

11. The defendant's appeal having succeeded as to the claim by the plaintiff for loss and damages on income account, and having failed as to the claim by the plaintiff for loss and damages on capital account, we would propose making no order as to the costs of the appeal; if either party wishes to contend otherwise, the case will have to be restored to the list for argument as to costs.