KWOK WAH KIT AND OTHERS v. CERRONE CO LTD

1985, No. A2198

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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ASSESSMENT OF DAMAGES

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1. The plaintiffs claim damages for breach of contract. The plaintiffs being the purchasers of flats in a building known as Smith Court and the defendant the developer thereof.

2. The writ was issued on the 11th April 1985 and judgment was entered on the 7th October 1986.

3. Essentially, the facts of this case are very simple. The Agreements for Sale and Purchase of the flats were in common form. Clause 1 of each of the said Agreements stated that 'the saleable area' of each of the said flats was approximately 32.97 square meters.

4. Subsequently, when the plaintiffs completed the purchase of their flats they claimed that notwithstanding the fact that the flats were 'constructed in accordance with the plan annexed to the said Sale and Purchase Agreements, the actual 'saleable area' of each flat was only 31.02 square meters, the balance between that and the said 'saleable area', comprising what is variously referred as a 'flower bed' or "flower trough'.

5. In his judgment the learned Deputy Judge found for the plaintiffs on this point and ordered that damages be assessed.

6. In the hearing of this Assessment I was greatly assisted by Counsel. They agreed that the difference between the 'saleable area" as set out in the said Sale and Purchase Agreements and the actual 'saleable area' was 5.91446%. They further agreed that the effect of such a percentage reduction, on the purchase price, and consequential damages, should be as set out in the Schedule to Mr. Yu's Skeleton Argument. Finally, it was agreed that the construction cost of the flower bed to each flat was $4,200.00.

7. Hence the sole issue to be determined by me - I will deal with the question of interest later - is whether, in assessing the damages due to the plaintiffs I should, or should not, take into account the construction costs of the flower beds.

8. Mr. Yu submitted that I need look no further than Clause 21(i) of the said Sale and Purchase Agreements, which provides, inter alia, for a rateable reduction in the purchase price if the 'saleable area' decreases by more than 5%.

9. However, with respect to Mr. Yu, this submission cannot be right. Clause 21(i) is solely concerned with the effect on the purchase price of an alteration to the plans with a concomitant alteration in the "saleable area". The operative word being 'alteration'. Here it is common ground that there has been no alteration to the plans and that the flats have been constructed in accordance with the said plans.

10. In the alternative Mr. Yu submitted that if I were to be against him on that point, the plaintiff's position at common law would be the same. Here he relied in particular on the judgment of the Master of the Rolls in Hill v. Buckley (1811) 17 Ves. 394 where at page 401, he held that:-

"Where a Mis-representation is made as to the Quantity, though innocently ..... the Right of the Purchaser to be to have what the Vendor can give with an Abatement out of the Purchase money for so much as the Quantity falls short of the Representation".

11. Mr. Lee did not challenge that this general statement of the law still holds good, but sought to distinguish the same.

12. He submitted that in Hill v. Buckley the plaintiff, contracted to purchase 217 acres, which upon subsequent enquiry proved to be 191 acres, i.e. there was a shortfall, whereas in the present action there was no shortfall as such, but merely a misdecription of that which was conveyed in that the sum total of 'the saleable area' of the flat and the flower bed amounted to 32.97 square meters and the plan accurately delineated the flat and flower bed. This being so, he submitted that a rateable reduction simpliciter would be inequitable, because the plaintiffs had the exclusive use of their respective flower beds and that, at the very least, the defendant should be entitled to a credit for the cost of construction cost of their flower beds. If the defendant did not, so his argument went, the plaintiffs would, in effect, be obtaining something for nothing and would be in a better position than they would have been if the defendant had accurately described the property to be conveyed, i.e. to use the words of the learned author of McGregor on Damages at para. 632 "the normal measure of damages ..... (should be) the amount that will put the buyer into the position he would have been in had the warranty be satisfied".

13. This is, of course, correct, but in my judgment, it does not materially, assist the defendant's submission that he should be 'credited' for the construction cost of the flower beds.

14. Apart from the said Sale and Purchuse Agreements there is not one scintilla of evidence before me as to the state of the contracting parties' minds prior to entering into the same and neither is there any evidence as to how the purchase price was calculated.

15. Thus, I must turn to the said Sale and purchase Agreements themselves and in particular the description of the property to be conveyed. The property is described as follows:-

"ALL THAT FLAT ..... on the ..... FLOOR of the said Smith Court as shown and designated ' ..... ' on the Floor Plan hereto attached and thereon coloured pink the saleable area of which (my emphasis) is approximately ..... square meters (hereinafter collectively referred to as the said premises (again my emphasis)) ...... "

16. It is common ground that the area coloured pink includes the flower beds and no other part of Smith Court.

17. In my judgment the only reasonable interpretation of the words "the saleable area of which" and "collectively referred to as the said premises" is that the intention of the parties was that the flower beds be included in the property to be conveyed but be excluded from the saleable area.

18. This being so, the above finding clearly negates his submission that, if I were to assess the plaintiff's loss on a pro rata basis according to the shortfall in the saleable area, the plaintiff would obtain an unexpected windfall for nothing.

19. The simple fact of the matter is that there has been a shortfall which cannot be made up from elsewhere. Hence, in my judgment, the present action falls four square within principle so clearly set out in Hill v. Buckley and I propose to assess damages on that basis.

20. As I said at the outset of this assessment it is common ground that the shortfall, or deficiency, in the 'saleable area' is 5.91446%. It follows therefore that damages must be assessed by a rateable deduction in the various purchase prices for the said flats. This being so I assess damages as follows: -

1st Plaintiff - $17,707.92c.

2nd Plaintiff - $18,417.65c.

3rd Plaintiff - $21,183.26c.

4th Plaintiff - $18,772.52c.

5th Plaintiff - $18,949.95c.

6th Plaintiff - $19,127.39c.

7th Plaintiff - $17,843.95c.

8th Plaintiff - $19,659.69c.

9th Plaintiff - $22,432.39c.

10th Plaintiff - $22,588.53c.

11th Plaintiff - $17,707.92c.

12th Plaintiff - $16,424.48c.

13th Plaintiff - $18,062.78c.

14th Plaintiff - $16,956.78c.

15th Plaintiff - $17,270.25c.

16th Plaintiff - $17,489.08c.

17th Plaintiff - $19,127.39c.

18th Plaintiff - $19,482.26c.

19th Plaintiff - $20,014.56c.

20th Plaintiff - $20,191.99c.

21st Plaintiff - $20,369.43c.

22nd Plaintiff - $26,201.09c.

21. Finally, I turn to the question of interest. The Statement of Claim did not contain a prayer for the same. This was clearly an oversight by the Plaintiffs, but no attempt was made to rectify this omission until the 21st November 1986, i.e. long after judgment was entered.

22. Mr. Yu prayed s. 48 Supreme Court Ordinance, Cap. 4 in aid of his application to amend the Statement of Claim to include a prayer for interest. He conceded that a difficulty arose from sub-section (3)(c). In my judgment that difficulty is insuperable for whilst sub-section (3)(b) gives a Judge power to remedy this inadvertent omission of a prayer for interest, a Registrar's powers, after judgment, are limited by sub-section (3)(c) to two particular circumstances and this is not one of them.

23. Thus it follows that I declined to amend the Statement of Claim. However, it may be of assistance to the parties to know that had I felt able to do so I would have adopted the formula referred to in Clause 21(i) of the said Sale and Purchase Agreements and awarded interest at the rate of 1% per calendar month from the date of completion of the sale and purchase to the date of judgment and thereafter at the judgment rate.

24. Finally, I award costs to the plaintiffs, with certificate for counsel, to be taxed if not agreed.