MUTTO PATRICK AND ANOTHER v. LIANG YING AND OTHERS

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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ASSESSMENT OF DAMAGES

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1. By a Sale and Purchase Agreement dated 6 May, 1992, between Turbo Profit Investment Co. Ltd. and the Defendants, the Defendants agreed to buy Flat A, 5th Floor, Wing Hing Court. It was agreed that the building should be completed before 31 July, 1993, subject to extensions of time. It was then provided that, if the vendor failed to complete the building within the specified period, and the Defendants elected to wait for completion of the building, the vendor shall pay to the Defendants interest at the rate of 1% per calendar month on all amounts paid under the agreement from the expiration of the specified period until the date of completion of the building.

2. By an agreement for Sub-sale and Purchase dated 3 August, 1993, the Defendants agreed to sub-sell the flat to the Plaintiff. That agreement provided that, if the Defendants vendor failed to complete the building within the specified period, and the Defendants elected to wait for completion, the Defendants shall on completion account and pay to the Plaintiffs all interest payable to the Defendants by their vendor due to delay in completing the building.

3. There was delay in completing the building and the Defendants elected to await completion of the building. Such completion took place on or about 26 October, 1994, and the 2 agreements were completed on 12 November, 1994.

4. Interest was paid to the Defendants by their vendor and they failed to pay it on to the Plaintiffs. In the Statement of Claim, it was said that the Plaintiffs could not specify the amount of the interest.

5. On 1 May this year the Plaintiffs obtained interlocutory Judgement, in default of service of defence, for payment by the Defendants of interest to be assessed.

6. The Defendants were present in Court and told me that the 2nd and 3rd named Defendants are the daughters of the 1st named Defendant. The Plaintiffs relied upon a letter written by the 1st named Defendant to Mr. Fung in which he indicated that the amount of interest received by the Defendants had been $130,000, and the Defendants told me that they agreed that the assessment should proceed on that basis. In view of this, Mr. Fung called no evidence.

7. The 1st named Defendant gave evidence. He explained that the developer of the building had completed it and then had to remove the top floor on the demand of the building authorities. This led to an unexpected year's delay in completion of the building, causing the Defendant to have to pay an extra $10,000 per month during that period. He said that a further 8 purchasers in the same building had found themselves in the same position, due to similar terms in their sale and purchase agreements as to payment on to their sub-purchasers of the interest received from their vendor. He said that those people had been allowed by their sub-purchasers to settle the matter by paying $26,000. The Defendant told me that he had offered to settle with the Plaintiffs in the sum of $30,000, and that he maintained that offer.

8. Clearly, the Defendants have had a very sad experience. Anyone speculating in the Hong Kong property market must expect to face the hazard that the market may go down after they sign their agreement to buy. In the present case, the hazard met by the Defendants was one that could not have been anticipated, and possibly a unique situation.

9. Mr. Fung confined himself in response to the defence evidence to making 2 obvious comments, namely that the Defendants had made a profit on their sale to the Plaintiffs, and that the Plaintiffs had also suffered damage in the sense that they had faced delay in getting possession of their flat.

10. In my view all these considerations are irrelevant to the assessment. The Defendants were in clear breach of the condition to which they agreed that they would pay to the Plaintiffs all the interest paid to them by their vendor.

11. I asses that interest in the admittedly received sum of $130,000. I further award interest on that sum at judgement rate from 12 November, 1994, being the date of completion when the Defendants should have accounted to the Plaintiffs for the interest and paid it.

12. Costs of this assessment to the Plaintiffs.