CHAN KING YING CECILIA v. LI KAM WAI AND ANOTHER

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. HCA 16578 OF 1999

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ASSESSMENT OF DAMAGES

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1. There are two defendants in this case, Li Kam-wai and Au Yeung Yin-ching, Aniter, both of whom have not appeared at today's hearing. There is an affirmation of service of notice of today's hearing upon them, but they have failed to appear. The court has also waited a good 15 minutes before commencing in their absence.

2. In point of fact, interlocutory judgment dated 28 December 1999 had been entered in favour of the plaintiff against the defendants for damages to be assessed, but the defendants have not chosen to defend these proceedings since their inception.

3. The background to this case is as follows: by a provisional agreement for sale and purchase dated 11 October 1997, in consideration of $4.96 million, the plaintiff agreed to sell the suit premises known as Flat G, 29th Floor of Hang Kin Garden, No. 9 Wing Fong Road, Kwai Chung, New Territories, to the defendants (the intended purchasers).

4. The formal agreement for sale and purchase followed on 24 October 1997. At the time, the defendants paid deposits totalling $496,000 or 10 per cent of the purchase price. As in other transactions of the same nature, time was of essence to the contract.

5. Completion was contemplated on 12 January 1998 when the balance of the purchase price was to have been paid by the defendants. In he event the defendants reneged on this contract and failed to take up title by completing the assignment. On 12 January 1998 the plaintiff, through her solicitors, wrote to the defendants accepting their repudiation of the contract and forfeited the deposits paid to date, as the plaintiff was clearly entitled to do under clause 11 of the agreement for sale and purchase.

6. The plaintiff, Madam Chan King-ying, gave evidence essentially adopting her witness statement which, I accept, represents the facts of this case. She had also instructed the second witness, Mr Liu, to provide a survey report on the property in question. The survey report is Exhibit P5. It indicated that the property had shown a drop in value by about $1 million by the time of the date for the completion of the contract. To be precise, as at 12 January 1998, the property was worth only $3.9 million.

7. The plaintiff now seeks damages which she urged should be calculated as the difference between the original sale price and the depreciated price at the date of completion, that is to say, $1.06 million. She will, of course, give credit to the defendants for the forfeited deposits. Thus, she seeks $564,000 by way of damages and costs.

8. Since the breach, the plaintiff quite truthfully indicated that no attempts had been made to sell the property until 23 August this year, when she entered into a provisional agreement for sale and purchase with new purchasers. The consideration of this subsequent contract for sale is $2.53 million.

Deficiency in the sale price

9. The plaintiff is not seeking to quantify her loss as being the difference between the contract price and the much reduced sale price that she was able to obtain on 23 August this year. This she is clearly not entitled to do, a fact that is well recognised by her. Had she done so, she would have failed abysmally on the issue of mitigation of damages. However, her claim for deficiency in the sale price is based, rightly, on the original contract price and the property's price at the time of the contemplated completion. She is entitled to claim on this basis and there is ample authority to that end.

10. In my considered view, the plaintiff has indeed suffered loss in the sum of $564,000. This is a loss flowing directly from the repudiation of the defendants, and is well within the contemplation of the parties as flowing from such a breach.

Conclusion

11. I award damages in the amount of $564,000 to the plaintiff against the defendants jointly and severally. This amount is calculated as follows: original contract price, $4.96 million less open market price at the date of breach of agreement, namely, 12 January 1998, $3.9 million, i.e. the difference amounting to $1.06 million less forfeited deposit, $496,000 thus the net balance is $564,000. There shall be interest on the sum of $564,000 from the date of the writ at judgment rate until full payment thereof. The plaintiff shall also have the costs of this assessment, taxed if not agreed.