Super Mate Ltd. v. Million Max International Ltd.

HCA 9285/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 9285 OF 1999

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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 on Hong Kong Island.

2. On 13 October 1997 the defendant entered into agreement (hereinafter called the 'Agreement') with the plaintiff to buy Flat A on the 8th floor of Bellevue Place (hereinafter called 'Flat 8-A') at a purchase price of HK$4,428,000 with the payment schedule agreed as follows:-

(a) a deposit of HK$442,800 to be paid upon the signing of the Agreement;

(b) further instalment sums of HK$221,400 each to be paid on or before 2 Jan 1998, 1 April 1998, 2 July 1998, 2 October 1998; and

(c) the balance of HK$3,099,600 to be paid within 14 days of the purchaser being notified in writing by the vendor that the occupation permit relating to the premises has been issued.

3. The first sum of deposit of HK$442,800 was paid upon the signing of the Agreement on 13 October 1997. Since 2 January 1998, despite repeated demands the defendant remained in default of payment. On 14 August 1998 the plaintiff exercised its contractual right stipulated in clause 19 of the Agreement and gave notice to the defendant to terminate the Agreement on the same day.

4. A writ was taken out on 5 June 1999. Default judgment was entered in favour of the plaintiff on 5 October 1999, inter alia, in the following terms:-

(a) deposit in the sum of HK$442,800 be forfeited to the plaintiff;

(b) interest on the outstanding further deposits up to 14 August 1998 in the sum of HK$29,640.31 and thereafter on the total outstanding further deposit of HK$664,200 till payment at the rate of 2% per annum above the prime rate of the Hong Kong and Shanghai Banking Corporation Limited; and

(c) damages for breach of the Agreement and interest referred to in the statement of claim to be assessed.

5. As a result of the defendant's breach, the plaintiff suffered the following loss:-

(a) Outstanding instalment payments in the sum of HK$664,200 due and payable on 14 August 1998 (3 x HK$221,400 = HK$664,200).

(b) Loss of bargain in the sum of HK$1,141,000 (purchase price of the property on 13 October 1997 at HK$4,428,000 - HK$442,800 deposit received - awards of HK$664,200 outstanding instalment payments - market price of the property at the date of termination of Agreement on 14 August 1998 which the surveyor assessed at HK$2,180,000).

6. In addition to the judgment sums the plaintiff obtained on 5 October 1999 I award judgment in favour of the plaintiff in the sum of HK$1,805,200 (HK$664,200 + HK$1,141,000).

7. The plaintiff also asked for the award of commercial interest from 15 August 1998 to the date of judgment in respect of the plaintiff's loss. Ever since the decision of Komala Deccof [1984] HKLR 219 it was conventionally accepted that 1% above prime would be the commercial rate of interest to be awarded in contractual damage. However, in light of the present economic climate, mortgage loans can often be obtained at 2-3% below prime. I am of the opinion that the award of prime rate is more than equitable to cover the loss of profit situation.

8. From the Land Registry record produced in a parallel litigation in respect of another flat of the same development, it was shown that the occupation permit of the premises was issued on 30 August 1999. In accordance with the payment schedule in the Agreement the earliest date that the plaintiff would be entitled to claim for the balance of the purchase price would be at the expiration of the 14 days after the issuance of the occupation permit; i.e. on 15 September 1999.

9. However no evidence has been tendered in respect of the efforts made by the plaintiff to mitigate its loss in securing either a re-sale or rental even though the premises had been left unoccupied for over 2 years since the granting of its occupation permit, I do not feel it just to grant the plaintiff the commercial interest in respect of its loss of profit.

10. Judgment interest at judgment rate for the judgment sum of HK$1,805,200 accrues from the date of judgment until payment.

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