FUNG SHUI KI AND ANOTHER v. CHANG HSIN PING

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CIVIL ACTION NO. HCA21812 OF 1998

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J U D G M E N T

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1. This is an assessment of damages following the entry of interlocutory judgment for damages to be assessed against the defendant on 2 February 1999.

2. As to the background of this case, the following matters are not in dispute, there being no contrary evidence adduced by the defendant, Madam Chang Hsin-ping, who has, for reasons best known to herself, decided not to defend these proceedings. I am satisfied that she has been duly served with the notice of appointment for assessment of damages, and upon the undertaking of Mr Lam Hin-chiu, solicitor for the plaintiffs, to file an affirmation of service by the close of business today, I have decided to proceed with the hearing.

3. The plaintiffs were the registered owners of Unit 3 on the 15th Floor of Tower C at Fortress Metro Tower. By agreement dated 27 April 1998, they contracted with the defendant to sell the said property to the defendant at the price of HK$3,100,000.

4. Pursuant to the sale and purchase agreement, the defendant paid deposits totalling $310,000 for which the plaintiffs will give due credit.

5. The completion date contemplated was on or before 31 July 1998. That date came and went. In the event, the defendant had reneged on her obligations under the sale and purchase agreement, and her breach was accepted by the plaintiffs who subsequently launched a suit in the High Court claiming the recovery of consequential damages and loss.

6. Steps were taken by the plaintiffs to minimise and mitigate their losses through resale of the property. On 23 October 1998 the plaintiffs succeeded in reselling the property by private contract to a third party for $2,050,000. There is clearly, therefore, a differential of $1,050,000 which forms one of the several heads of damages claimed.

7. Under the aborted agreement for sale and purchase, the plaintiffs had incurred agency commission of $31,000. This sum represents half the agency fees that had been paid at the time.

8. In respect of the resale, legal expenses were incurred and these amount to $6,000.

9. The final item of damages claimed consists of the estate agent commission under the resale of $20,500. Mr Lam for the plaintiffs quite rightly questioned whether that amount is strictly recoverable. With that, I am in agreement, but more later.

10. In summary, the plaintiffs' claim consists of the following items and amounts:

1. The difference in value between the contract price and the resale price of $1,050,000.

2. Estate agent commission under the aborted agreement of $31,000.

3. Legal expenses incurred in the resale of the property of $6,000.

4. Estate agent commission under the resale of $20,500.

11. Giving full credit for the deposits forfeited amounting to $310,000, the full claim stands at $797,500.

12. Under clause 19 of the sale and purchase agreement signed between the parties, upon the default of the defendant, the plaintiffs are entitled to recover loss flowing from that breach.

13. In my considered judgment, the difference between the contract price and the subsequent resale price represents the loss of bargain which the plaintiffs are entitled to recover, both under clause 19 of the agreement as well as under the general common law principles for assessment of damages. That differential represents the loss and damage flowing from the breach of the contract which were plainly contemplated at the time of contract by the parties as a consequence of the defendant's default.

14. I am satisfied that diligent efforts have been made to secure a subsequent buyer and to reduce loss. I am also satisfied that the resale price was the best price to be obtained in the circumstances.

15. There is no evidence that the resale was otherwise than a bona fide transaction and represented the best price that the plaintiffs could attain at the time. A survey report is available in the papers and it does confirm that matter. I therefore allow the full sum of $1,050,000.

16. In respect of the second item, namely, estate agent commission paid under the agreement, that is recoverable. I see no reason why the $30,000 paid by the plaintiffs should not be recovered.

17. The same applies to the legal expenses incurred in the resale. This amount is claimed at $6,000 and I allow it in full.

18. I will, however, totally discount the estate agent's commission paid under the resale because the plaintiffs are entitled, as it were, to secure repayment of their share of the commissions paid under the breached agreement. It would not be right for them to seek this amount and be paid it as well. Were it otherwise, the plaintiffs would have been able to sell the property and not have to pay any agency commission in either transaction.

19. In sum, the following amounts will be allowed: the loss of bargain, namely, the difference in the two sale prices of $1,050,000; agency commission paid under the agreement, $31,000; legal expenses incurred in the resale, $6,000. From those items we deducted the deposits which have been forfeited of $310,000. The final sum which I assess to be damages incurred amounts to $777,000.

(Discussion re costs)

20. The plaintiffs are entitled to their costs in respect of the assessment of damages, taxed if not agreed, against the defendant. There shall also be interest on the adjudged quantum at the rate of 13 per cent per annum from the date of the writ until today, and thereafter at judgment rate until full payment.