ONG KENG v. CHEUNG KWAN LOK

DCCJ 626/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 626 OF 2015

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J U D G M E N T

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Introduction

1.  This is the assessment of damages of the Plaintiff’s claim against the Defendant in respect of the Defendant’s breach of a written agreement signed between the parties dated 20^th August 2014 (“the Agreement”).

2.  Interlocutory Judgment was entered on 23^rd April 2015 for damages to be assessed with costs upon the Defendant’s failure to give notice of intention to defend and with the Plaintiff having abandoned the claim for “an account of the monies and assets of the partnership formed as a result of the Agreement” as pleaded in paragraph 3 of the relief of the Statement of Claim.

3.  The Plaintiff’s application by way of Notice of Appointment for Assessment of Damages was filed on 24^th April 2015.

4.  On 21^st July 2015, the Defendant took out application by way of Inter-partes Summons for an order, inter alia, that the Judgment dated 23^rd April 2015 be set aside.  The application was adjourned for argument to 26^th October 2015. 

5.  The Defendant was present at the argument hearing dated 26^th October 2015 before Master David Cheung.  The application was dismissed and it was further ordered, inter alia, that (a) the Defendant do file and serve a list of documents; (b) parties do file and exchange witness statements; and (c) case management summons hearing be fixed on 4^th January 2016.

6.  The Defendant was absent for the hearing dated 4^th January 2016.  No list of documents or witness statement was filed by the Defendant.  By an Order of Master Daniel Tang dated 4^th January 2016, the assessment of damages hearing was fixed to be heard on 24^th February 2016. 

7.  The Order dated 4^th January 2016 was served upon the Defendant by ordinary post to the last known address of the Defendant.  There is the Affirmation of Ng Sau Kwan Alice filed on 3^rd February 2016 confirming such service.  The Notice of Appointment for Assessment of Damages filed on 4^th January 2016 returnable on 24^th February 2016 was served to the Defendant by leaving the same at his last known address on 5^th January 2016.  The Plaintiff’s Written Opening Submissions were served to the Defendant by ordinary post to his last known address on 19^th February 2016.  I am satisfied that notice of the assessment of damages hearing dated 24^th February 2016 had been duly given to the Defendant and therefore I proceed with the assessment of damages in the absence of the Defendant. 

The Plaintiff’s Case

8.  At all material times, the Plaintiff is and was an amateur investor in the purchase and resell of used vehicles, and the Defendant is and was engaged in the business of purchasing and reselling used vehicles in Hong Kong. 

9.  On or about 20^th August 2014, the Plaintiff and the Defendant entered into the Agreement in forming a business partnership between the parties to purchase and resell used vehicles in Hong Kong for a profit.  It was agreed, inter alia, that :-

(a) The Plaintiff is to provide the Defendant with funds to purchase used vehicles on a case by case basis, while the Defendant will be responsible to acquire, insure, maintain, store and prep the vehicle for sale. (Clause 1 of the Agreement)

(b) The partnership between the parties may be dissolved at any time by agreement of any of the parties with a 10 day notice.  In which event the parties shall proceed with reasonable promptness to liquidate the business of the partnership.  The Defendant will return all monies provided by the Plaintiff within 10 days of the notice. (Clause 7 of the Agreement)

10.  Prior to signing the Agreement, :-

(a) On or about 16^th August 2014, the Plaintiff was invited by the Defendant to invest in the purchase and resell of used vehicles by providing funding for the purchase of such vehicles.  The Defendant represented to the Plaintiff through, inter alia, WeChat messages that he intended to purchase a 2008 Black GTR (“the Car”) for the sum of HK$493,000 and to resell it in the second-hand market for the sum of HK$600,000, thus making a profit of around HK$50,000 to HK$70,000.

(b) On or about 17^th August 2014, upon the Plaintiff’s enquiry, the Defendant confirmed and indicated that he would charge 15% of the total profit as his commission.  The Defendant further represented to and assured the Plaintiff that the said Car was going to fetch a sale price of around HK$600,000 and it was impossible that the Defendant could not resell the Car after he had acquired it.  In the Defendant’s own words, it was going to be a “win win” deal.

(c) On or about 18^th August 2014, upon the Defendant’s representations, the Plaintiff agreed to advance a sum of HK$490,000 to the Defendant to fund the purchase of the Car.

11.  The Agreement was therefore signed on or about 20^th August 2014, with a view to reflect the communication between the parties and to regularise the future relationship between the parties in form of a business partnership.

12.  On or about 21^st August 2014, the Plaintiff drew a cheque in the sum of HK$490,000 in the Defendant’s favour being the funds for purchasing the Car pursuant to the Agreement (“the Fund”), and the Defendant acknowledged receipt of the same.

13.  The Plaintiff was later informed that the Defendant did not use the Fund to purchase the Car.  Instead, the Defendant allegedly used the Fund to purchase several other vehicles without the Plaintiff’s prior consent or knowledge.

14.  On or about 19^th November 2014, the Plaintiff wrote to the Defendant, inter alia, giving him 10 day notice to dissolve the partnership and requested the Defendant to return the Fund and the profit arising out of all transactions during the course of the partnership business.

15.  In breach of the Agreement and despite the expiry of the 10 day notice, on 29^th December 2014, the Defendant has wrongfully failed and/or refused to repay the Fund and the profit to the Plaintiff.  The Plaintiff claims for damages to be assessed, interest, further and/or other relief and costs.

Issue

16.  The only issue for the assessment of damages is the quantum of damages which the Defendant should pay to the Plaintiff. 

Legal principles

17.  The Plaintiff’s claim is based on the breach of contract.  It is trite law that in the measure of damages for breach of contract, the claimant is entitled to be placed, so far as monetary award can do so, in the same position as if the contract had been performed in accordance with its terms.

18.  The principle is applicable subject to, inter alia, the test of remoteness of damages for breach of contract and the amount of damages is limited to those which may be regarded as being within the contemplation of the parties. 

Discussion

19.  Mr. Ong Keng, the Plaintiff, gave evidence.  In essence, his evidence was consistent with the pleaded case.  The Plaintiff has suffered damages by reason of the breach of the Agreement by the Defendant.

20.  For the amount of damages to be assessed, it was submitted that the Plaintiff claims :-

(a) repayment of the Fund in the sum of HK$490,000; and

(b) anticipated profit.

21.  The Plaintiff had paid the Fund in the sum of HK$490,000 to the Defendant pursuant to the Agreement, intended to be used for the purchase of the Car.  The Plaintiff had produced a copy of the cheque drawn in favour of the Defendant.  In the subsequent WeChat messages, the Defendant acknowledged having received the Fund from the Plaintiff. 

22.  By reason of the Defendant’s breach in the failure to purchase the Car and pursuant to Clause 7 of the Agreement, it is obvious that the Plaintiff be entitled to be repaid this sum. 

23.  For the anticipated profit of HK$89,250 as stated in the Plaintiff’s Written Opening Submissions (which should be calculated as HK$93,500), it was submitted that when the parties entered into the Agreement, it was within the parties’ reasonable contemplation that if the Agreement was properly performed, the Plaintiff would have reaped a profit. 

24.  The basis for the Plaintiff’s claim for the anticipated profit was because the Defendant had “assured” the Plaintiff that the Car could fetch a resale price of HK$600,000.  The net profit derivable from the transaction would have been HK$110,000 (ie. HK$600,000 – HK$490,000).  Taking into account the 15% commission payable to the Defendant in the sum of HK$16,500 (ie. HK$110,000 x 15%), the Plaintiff is therefore entitled to be paid the anticipated profit of HK$93,500 (ie. HK$110,000 – HK$16,500).

25.  During the hearing, Mr. Ong was asked to clarify how the Defendant made the said assurance to him.  Mr. Ong gave evidence that the said assurance was made orally and evidenced in the WeChat messages.  In gist, Mr. Ong’s evidence in Court was that he recalled the Defendant said something orally to him to the extent that “we can get about HK$600,000”.  He further confirmed that what the Defendant said orally, as far as he remembered, was consistent with the WeChat messages. 

26.  The WeChat messages were provided by the Plaintiff.  During the hearing, Mr. Ong was asked to indicate the WeChat messages he relied on, saying that the Defendant assured him the Car would be resold at HK$600,000 (which is the basis of calculating the anticipated profit).  Some of the WeChat messages are as follows :-

(before 17 Aug 2014, 2:37 pm)

Defendant:	“You want to get a GTR for earn some money? I can get one which is 2008 Black with $493,000”
	“Selling on 28car and car8 like 600,000”
	“I think we make at lest 50,000 – 70,000 profit”

(17 Aug 2014, 2:55 pm)

Defendant:	“If the car earn $70,000 than I will get $10,500 commission
	“I mean the profit”
Plaintiff:	“And if can’t sell?”
Defendant:	“That’s impossible ……”
	“Easy to sell because hot item”

(17 Aug 2014, 3:08 pm)

Plaintiff :	“OK. Let’s try”
Defendant:	“OK win win ……”
Plaintiff:	“Let’s try”
	“When do u need the money”

(17 Aug 2014, 3:16 pm)

Defendant:	“Not now maybe next Sunday”
	“I have to check the car before we buy”
Plaintiff:	“OK”
	“U go do it”
Defendant:	“Thanks I won’t let you disappoint”

27.  With careful consideration of the WeChat messages individually, they expressed no more than an estimation of the sale price of the Car.  The words used were “like 600,000”, “I think”, “win win” and “I won’t let you disappoint” etc.  I am of the view that these expressed no more than a prospect of profit, with no guarantee or agreement as to the amount of profit to be made.

28.  Even with consideration of all the WeChat messages as a whole and considering at the same time the background, communication between the parties and the context of the WeChat messages, there is still no promise or certainty of the amount of profit to be made.  Hence, I am not satisfied that there is evidence to prove quantum for the anticipated profit.

29.  I have further considered the terms of the Agreement.  As stated in the preamble of the Agreement, the Agreement was signed with the parties “intend to purchase and resell used vehicles in Hong Kong for a profit”.  There is no guarantee as to how much profit or the range of profit to be generated in the Agreement. 

30.  I accept that parties entered into the Agreement intending to make a profit and then to share the profit accordingly, with the Defendant having made representations to the Plaintiff both orally and in WeChat messages as to the prospect of profit. However, there is no guarantee in making profit when doing business, and I am of the view that that is why parties did not specify in the Agreement the amount or range of profit to be made. 

31.  Based on the aforesaid reasons, I assess the Plaintiff’s damages in the sum of HK$490,000 (being the repayment of the sum the Plaintiff had given to the Defendant), with interest and costs.  I do not allow damages for the anticipated profit.

Orders

32.  I now make the following Orders :-

(a) Damages assessed in the sum of HK$490,000 pursuant to the Interlocutory Judgment dated 23^rd April 2015 to be paid by the Defendant to the Plaintiff.

(b) The Plaintiff is entitled to interest on the said sum at judgment rate from the date of Writ until date of Judgment and thereafter at judgment rate until payment; and

(c) Costs of this action, including costs of this assessment of damages hearing, be to the Plaintiff, to be taxed if not agreed.