TONG SEAK KAN v. CORPORATE EXPRESS LTD AND ANOTHER

HCA 3074/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 3074 OF 2015

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ASSESSMENT OF DAMAGES

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Background

1.  On 17 March 2016, the plaintiff obtained interlocutory judgment against the 1^st and 2^nd defendants in default of their defence, whereby the 1^st defendant is adjudged to pay the plaintiff damages to be assessed for misrepresentation, breach of contract and/or deceit; and the 2^nd defendant is adjudged to pay the plaintiff damages to be assessed for deceit.  The present proceedings before me are for assessment of the plaintiff’s damages as aforesaid.

2.  The 1^st defendant was a travel agent and the 2^nd defendant was the sole shareholder and director of the 1^st defendant.  By its websites, the 1^st defendant represented that it was a registered member of The Travel Industry Council of Hong Kong (Membership No 22802) and the holder of Hong Kong Travel Agents Licence No 353788.

3.  On 7 April 205, the plaintiff emailed the 1^st defendant to obtain a quote for various air tickets that he intended to purchase for 4 passengers including the plaintiff himself.  By its emails dated 10 and 12 April 2015, the 1^st defendant sent 2 invoices to the plaintiff for the air tickets requested.  The 1^st defendant represented and warranted by its invoices that the “tickets are good for a year from the date of issue”.

4.  On 20 April 2015, induced by the 1^st defendant’s said representations, the plaintiff entered into a contract with the 1^st defendant to purchase a number of air tickets for 4 passengers including the plaintiff himself at the agreed aggregate price of US$33,475, which was duly paid by the plaintiff.

5.  Some of the air tickets purchased by the plaintiff through the 1^st defendant were successfully used by the plaintiff and the other passengers.

6.  However, when the plaintiff tried to change the date of some of the other air tickets, it was discovered that 10 air tickets purchased by the plaintiff through the 1^st defendant and issued by Singapore Airlines Limited could not be used by the plaintiff and the other passengers, as they were redeemed under the KrisFlyer redemption award programme in breach of the terms and conditions of such programme, in that the air tickets were issued to persons unrelated to the members of the programme who redeemed the air tickets.

7.  In addition, 2 other air tickets purchased by the plaintiff through the 1^st defendant were supposed to be business class tickets pursuant to the contract, but no such tickets were issued to the plaintiff for his passengers.  Instead, two economy class tickets were issued by Singapore Airlines Limited and then cancelled with refunds made to persons unknown to the plaintiff and for reasons unknown to the plaintiff or any of the passengers.

8.  As a result, the plaintiff had to purchase replacement tickets from Singapore Airlines Limited at the cost of HK$414,982.43.

9.  The plaintiff contends that the replacement cost was caused by the 1^st and 2^nd defendants’ deceit, the 1^st defendant’s misrepresentation and/or the 1^st defendant’s breach of contract, and hence claims for damages for the same.

10.  In sum, the plaintiff’s case for deceit, misrepresentation and breach of contract is that the air tickets in question were not good for a year from the date of issue; the 1^st defendant knowingly sold the redeemed tickets in breach of the terms and conditions of KrisFlyer programme and the redeemed tickets could not be used by the passengers; the 1^st defendant had in fact ceased to be a member of the Travel Industry Council of Hong Kong since February 2015 and a holder of Hong Kong Travel Agents Licence since January 2015, but continued to make representations that it was such a member and a holder of the licence when the plaintiff purchased the air tickets in April 2015; 2 business class tickets were never issued; and the 2^nd defendant had authorized, caused, permitted and/or procured the 1^st defendant to make the false representations and enter into the contract with the plaintiff.

11.  Thus, the plaintiff asks this court to assess its damages in relation to the 3 causes of action, namely, deceit, misrepresentation and breach of contract as aforesaid.

Evidence

12.  Both defendants were absent at the hearing and hence the evidence for the assessment of damages came solely from the plaintiff.  The plaintiff gave evidence at the hearing, but he simply adopted his 2 witness statements dated 27 May 2016 and 25 October 2016 respectively without any oral supplement.

13.  As the plaintiff’s evidence is unchallenged, I accept his evidence in full.  It is clear from his evidence that he spent a total sum of HK$414,982.43 to purchase the replacement tickets, and this is the amount that he is claiming against the defendants.

Damage for Deceit/Misrepresentation

14.  The leading authority on the measure of damages for deceit is the decision of the House of Lords in Smith New Court Securities Ltd v Citibank NA [1997] AC 254, which approvedand expanded upon the principles laid down in Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158.  The principles were also summarised in Dr Andrew Kee‑Suan Koh v Dr Vincent Kay‑Lo Ip, CACV 75/2000.  In sum, the aim of the measure of damages is to put the plaintiff into the position he would have been in if no false representation had been made.  Where a transaction is induced by fraudulent misrepresentation, the measure of damages is reparation for all the actual damage directly flowing from (ie caused by) entering into the transaction, less receipts obtained as a result of entering into that transaction.  Such damages are not limited to those which are reasonably foreseeable, but they must not be too remote.  They can include consequential loss but the plaintiff must take all reasonable steps to mitigate his loss.

15.  The measure of damages for misrepresentation is the same as it is encompassed within the broader measure of damages applicable to deceit.

16.  It is clear to me that the purchase of the replacement tickets was to put the plaintiff into the position he would have been in if no false representation had been made, and the cost of the replacement tickets is the direct and foreseeable loss resulted from the defendants’ deceit and/or misrepresentation.  The plaintiff has already mitigated his loss by purchasing the replacement tickets as he could reasonably have done.

17.  Thus, the plaintiff is clearly entitled to claim the cost of the replacement tickets in the sum of HK$414,982.43.

Damage for Breach of Contract

18.  It is trite that the measure of damages for breach of contract is to put the plaintiff back in the position as if the contract is fully performed (see Chitty: The Law of Contracts, 2015, 32^nd ed, paragraph 26‑001).

19.  Had the contract between the plaintiff and the 1^st defendant been performed, the plaintiff would be able to use all the tickets issued to him and the other passengers, and would also be given the business class tickets that were not issued.  There would not be any need to purchase the replacement tickets at all.  It is clear that the purchase of the replacement tickets is to put the plaintiff back in the position as if the contract is fully performed.

20.  Thus, the cost of the replacement tickets, namely HK$414,982.43, also represents the damages suffered by the plaintiff for the 1^st defendant’s breach of contract.

Conclusion

21.  I therefore assess the damages suffered by the plaintiff for the defendants’ misrepresentation, breach of contract and/or deceit to be in the sum of HK$414,982.43.

22.  The plaintiff is entitled to the costs of the assessment, and I grant the costs order nisi that the defendants do pay the plaintiff costs of the assessment of damages to be taxed if not agreed.