Super Mate Ltd. v. Grand Town Investment Ltd.

HCA 2631/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2631 OF 2000

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ASSESSMENT OF DAMAGES

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1. The plaintiff was the developer of a residential block known as Bellevue Place situated at U Lam Terrace, Mid Levels, Hong Kong. Bellevue Place is a single block of 27 stories with 4 units on each floor.

2. In November 1997 the plaintiff put the project up for sale. A number of buyers, including the defendant, signed up agreements to acquire the units in the development. Each of the buyers was required to pay an initial deposit of 10% of the purchase price upon the signing of the agreement to purchase. Further payments, each amounting to 5% of the purchase price, were payable on 2 January 1998, 1 April 1998, 1 July 1998 and 1 October 1998 respectively. The balance of the purchase price of the unit was to be paid within 14 days upon notification of the issuance of the occupation permit.

3. With the drop in the property market towards the end of 1997, some of the buyers approached the plaintiff to negotiate for the reduction of the purchase price. In response to the requests, the plaintiff wrote to the purchasers on 28 March 1998 indicating that the plaintiff would agree to the reimbursement of 8% of the purchase price and the stamp duty upon completion of the purchase. The payment due days on 1 April, 1 July and 1 October were postponed to 1 May, 1 August and 1 November 1998 respectively.

4. More than 20 buyers defaulted payment.

5. The defendant was the purchaser of Flat 10-A. The agreement to purchase was signed on 13 October 1997 for a purchase price of HK$4,548,000. The defendant paid the initial deposit of HK$454,800 and further deposits of HK$682,200 on 2 January 1998, 1 May 1998 and 1 August 1998 (3 x HK$227,400).

6. In default of the last installment payment, the plaintiff sued the defendant on 5 June 1999 for the outstanding deposit together with interests in HCA-9284/99. When the defendant filed no notice of intention to defend the action, the plaintiff proceeded to enter judgment on 2 July 1999 in the following terms:-

(a) Payment of the sum of HK$227,400;

(b) interest on the said sum of HK$227,400 at the rate of 2% per annum above the prime rate specified by the Hongkong and Shanghai Banking Corporation Limited from their respective due days to the day of the order and thereafter at judgment rate until the date of payment; and

(c) costs of HK$1,550.

7. Occupation permit was issued on 30 August 1999. On 28 September 1999 the plaintiff notified the defendant of the issuance of the occupation permit and requested the defendant to complete the purchase within 14 days. As the defendant failed to make payment or take delivery of the property, the plaintiff exercised its contractual right to terminate the agreement on 5 January 2000. On 13 March 2000 the plaintiff initiated the present proceeding to recover from the defendant the damages in respect of the defendant's breach. In default of notice of intention to defend, plaintiff obtained interlocutory judgment against the defendant on 2 August 2000 for damages and costs to be assessed.

8. Flat 10-A was not re-sold until 25 September 2000 for the consideration of HK$2,400,000.

9. According to the valuation report prepared by FPD Savills (Hong Kong) Limited the open market value of Flat 10-A on 5 January 2000 was HK$2,540,000. The loss of bargain suffered by the plaintiff was HK$2,008,000 (HK$ 4,548,000 - HK$2,540,000). Costs of the surveyor for the preparation of the surveyor report would be a head of costs incurred towards the assessment hearing. Giving credit for the payments made by the defendant and the outstanding installment payment already awarded to the plaintiff in HCA-9284/99, the damages the plaintiff suffered is assessed at HK$643,600 (HK$4,548,000 - HK$2,540,000 - HK$454,800 - HK$682,200 - HK$ 227,400).

10. This court did have some concern about the date of valuation of the property for the purpose of assessing the plaintiff's loss of bargain. Relying on the House of Lords decision in White v Carter [1961] 3 All E.R. 1178 the plaintiff argued that the plaintiff had no obligation to accept the defendant's anticipatory breach and was entitled to hold the defendant to its contractual obligation until 5 January 2000 when the plaintiff elected to terminate the agreement. How much would a strict adherence to the White v Carter principle water down a person's duty to mitigate his damages? As there was no evidence before this court on the defendant's clear intention to repudiate his contractual obligations, a determination of the plaintiff's reasonableness in refusing to accept the defendant's repudiation is hypothetical.

11. Judgment is awarded to the plaintiff in the sum of HK$643,600.

12. Basing on the decision of Komala Deccof [1984] HKLR 219 the plaintiff also sought the award of commercial interest. In light of the present economic climate and the verbal testimony of the surveyor that the current mortgage loan rate was usually granted at 2.2%-2.5% below prime lending rate, I am of the opinion that the award of 2% below prime lending rate is reasonable to cover the plaintiff's loss of profit.

13. Commercial interest is awarded on the judgment sum at 2% below prime lending rate from the date of the writ until judgment. Judgment interest accrues from the date of judgment at judgment rate until payment.

14. I also award costs of this assessment hearing, to the plaintiff against the defendant, to be taxed if not agreed.