RIPPLE CORPORATION LTD v. ASHOK M. HEMANI

1982, No. 7636

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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ASSESSMENT OF DAMAGES

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1. On the 23rd September 1980 the plaintiff agreed to sell to the defendant two flats in a development known as Belair Gardens. The said flats were Flat C, 10/F, of Block D (also known as Dominion Heights) and Flat A, 10/F of Block D aforesaid. The purchase price for the said flats was $1,360,000.00 and $1,309,000.00 respectively.

2. The said agreements provided for the purchase monies to be paid by instalments, but after paying the first instalments of $68,000.00 for Flat C and $65,450.00 for Flat 'A' the defendant made no further payments.

3. On the 1st May 1982, the plaintiff accepted the defendant's repudiation of the said agreements and on the 8th August 1986 judgment was entered against the defendant in both actions.

4. Flat A was sold by the plaintiff to a third party on the 26th October 1986 for $832,500.00 and similarly Flat C was sold to a third party on the 21st August 1986 for $859,000.00.

5. As the sale of the flats were effected several years after the date of the defendant's repudiation of the said agreements, the sale prices were of no assistance in establishing the value of the flats as at the date of repudiation. This being so, the plaintiff called a valuer, a Mr. S.W. Ho from Messrs. Jones Lang Woolton, to give evidence. He tendered a valuation report, Ex. P.1., which he had prepared on the 5th December 1986. The methodology applied by Mr. Ho in assessing the value of the said flats is clear from Ex P.1, and I do not propose to repeat it here. Mr. Ho valued Flat A, 10/F, Block D at $802,000.00 and Flat C, 10/F, Block D at $812,000.00. He was vigorously, but fairly, cross-examined by Mr. Hoosenally, but his testimony remained undisturbed.

6. The defendant called a Mr. J. Lai from Messrs. Collier Petty. He gave evidence of the sale price of three flats in Belair Gardens, which he claimed to be comparable to Flats A and C aforesaid. The sales of the allegedly comparable flats took place at approximately the same time as the repudiation of the contracts for the purchase of Flats A and C aforesaid, i.e. the summer of 1982. These sales were at somewhat higher figures than Mr. Ho's valuation of Flats A and C aforesaid.

7. However, only one of the alleged comparables was in the same Block as Flats A and C and as Mr. Lai had not inspected the same I found this evidence to be of no assistance. One simply could not say with any degree of certainty whether he was comparing like with like. Similarly, the Rating and Valuation Index for 1982 was couched in much too general terms to be of any significant assistance in valuing particular flats in a particular development. Finally, I note that he had not carried out a valuation of Flats is and C aforesaid.

8. In my judgment, although Mr. Lai was undoubtedly an honest witness, his evidence in no way cast doubt upon the evidence or methodology of Mr. Ho. However, despite the above findings, I do not consider that I should simply accept Mr. Ho's valuation. If I am to accept the same I must be satisfied from reading his report, Ex. P.l., and considering his evidence that he has made a reasonable valuation.

9. In considering the same I took into account the fact that in May 1982 there was a substantial over supply of such flats and a loss of confidence in the property sector generally. In these circumstances, it is notoriously difficult to value property, even with the benefit of hindsight. It may be that it is more than a co-incidence that Mr. Ho's valuation of Flats A and C was precisely the same as a valuation made by his firm in August 1982, as part of a block finance valuation, but nonetheless I am entirely satisfied that his methodology was sound and that his valuation of Flats A and C was reasonable and as accurate as circumstances permitted. Accordingly, I find that as at 1st May 1982, the value of Flat A, 10/F, Block D was $802,000.00 and that of Flat C, 10/F, Block D was $812,000.00.

10. I turn now to the question as to whether in assessing the damages due to the plaintiff, I should take into account the fact that the said flats were subsequently sold at a slightly higher price than their valuation as at the date of repudiation.

11. Mr. Fung submitted that I should not. In support of his submission, he referred me to Jamal v. Moolla Dawood, Sons & Co. (1916) A.C. 175. This case refers to the sale of shares in the British Burma Petroleum Co. Ltd. and the contract notes contained a term providing that in the event of the buyer not making payment on the settlement day, the seller should have the option of reselling the shares by aution, and any loss arising should be recoverable from the buyer. In some cases, the words ran, "by auction at the Exchange at the next meeting".

12. The judgment of the Privy Council was delivered by Lord Wrenbury and at page 179, he held that in relation to the sale of negotiable securities:-

"If the seller retains the shares after the breach, the speculation as to the way the market will subsequently go is the speculation of the seller not the buyer; the seller cannot recover from the buyer the loss below the market price at the date of the breach if the market falls, nor is he liable to the purchaser for the profit if the market rises".

13. The facts of the present actions are very different from those of Jamal v. Moolla Dawood, Sons & Co. Here the subject matter of the actions is real property not negotiable securities in what must have been a public company. There is no suggestion that the flats were retained by the plaintiff for the purposes of speculation. Indeed it was not until the 8th August 1986, when judgment was entered, that the plaintiff obtained a declaration that it was entitled to re-sell the flats and finally, in the sale and purchase agreements of the flats there were provisions for the payment of interest by the defendant, in the event of him failing to complete the same, whereas there would not seem to have been such a provision in the contract notes in Jamal v. Moolla Dawood.

14. Thus, in my judgment, the present actions can, and should, be distinguished from Jamal v. Moolla Dawood and I propose to do so, by giving the defendant credit for the difference between the value of the flats on the 1st May 1982 and their sale prices earlier this year.

15. On the question of interest, there was no dispute between the parties that the appropriate rate of interest should be 1.4% per month and I agree that this is the correct rate to allow. However, the date from which interest should run was not agreed. Mr. Hoosenally submitted that it should run from the date of repudiation and that the delay prior to that date was as a result of lethargy by the plaintiff.

16. First, I will deal shortly with the point relating to the plaintiff's alleged delay. There is no evidence to support Mr. Hoosenally's submission and I reject it.

17. As to the dates from which the interest should run, the agreements between the parties provided for the payment of interest when the instalments became due and were not paid. I can see no basis at all for going behind the said agreements and decline to do so.

18. Thus in Action No. 7641/82, I assess the plaintiff's damages as follows:-

19. In Action No. 7636/82, I assess the plaintiff's damages as follows:-

20. At the conclusion of the assessment, it was agreed that costs would follow the event and that there would be a Certificate for Counsel. Thus, in conclusion, I award costs to the plaintiff with a Certificate for Counsel.