FOREMAX DEVELOPMENT LTD v. TO NGAI EARTHWARE CO LTD

HCA 1568/2015 & 1569/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1568 OF 2015

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1569 OF 2015

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ASSESSMENT OF DAMAGES

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1.  This is the hearing for assessment of damages suffered by the plaintiffs pursuant to the judgments made by Master J Wong on 22 June 2016 in these 2 actions and the assessment shall be heard together pursuant to the orders made by Master Leong on 17 January 2017.

2.  The defendant in both actions has not filed any witness statement and was absent at the hearing for assessment.

BACKGROUND

3.  On 26 March 2015, the plaintiff in HCA 1569/2015 as purchaser and the defendant as vendor entered into a provisional agreement for sale and purchase in respect of the landed property, namely workspace no.5 on 19^th floor, Wing Fung Industrial Building, Nos. 10-50 Sha Tsui Road, Tsuen Wan, Hong Kong (“Workspace No.5”) in consideration of $4,000,000 subject to the existing tenancy.  An initial deposit for $200,000 was paid by the plaintiff in respect of the provisional agreement.

4.  On 27 March 2015, the plaintiff in HCA 1568/2015 as purchaser and the same defendant as vendor entered into another provisional agreement for sale and purchase in respect of another landed property, namely workspace no.7 on 19^th floor, Wing Fung Industrial Building, Nos. 10-15 Sha Tsui Road, Tsuen Wan, Hong Kong (“Workspace No.7”) in consideration of $4,000,000.  An initial deposit for $200,000 was paid by the plaintiff in respect of the provisional agreement.

5.  On 15 April 2015, another payment of deposit for $200,000 was further made by both of the plaintiffs in HCA 1568/2015 and HCA 1569/2015 in respect of each of Workspace No.5 and Workspace No.7 to the defendant.

6.  On 18 April 2015, the formal agreements were signed by the parties in respect of each of Workspace No.5 and Workspace No.7 and the stamp duty of $180,000 for each of them was paid by the plaintiffs on or about 24 April 2015 and 28 April 2015 respectively.

7.  On 15 May 2015, payment of 2^nd further deposit for $400,000 was made in respect of each of Workspace No.5 and Workspace No.7 to the defendant.

8.  On the date of completion i.e. 8 July 2015, the defendant failed to complete the transactions and returned all the cheques representing the balance of the purchase price to the solicitors for the plaintiffs.

9.  The plaintiffs then commenced these 2 actions against the defendant.  Originally, the plaintiffs prayed, inter alia, for the relief of specific performance in the statements of claim and successfully obtained the order for specific performance from Master K Lo on 31 August 2015.  Upon the application by the plaintiffs in both actions, the orders of Master K Lo dated 31 August 2015 were set aside/discharged and judgments with damages to be assessed were entered against the defendants by Master J Wong on 22 June 2016 respectively.

LEGAL PRINCIPLES

10.  It is well‑established that a vendor wrongfully refusing to complete a contract for sale and purchase of land is liable for damages, the measure being the loss sustained by the purchaser as flowing naturally from the repudiation of the contract by the vendor.  Such damages would include the return of any deposit paid by the purchaser with interest, expenses incurred in investigating title and other reasonable expenses that were foreseen by the parties[1].

11.  The general rule is that damages for breach of contract shall be assessed as at the date of breach[2].  However, the court has power to fix such date as may be appropriate in the circumstances if to follow the general rule would give rise injustice[3].

12.  In Topprak Mahsulleri Ofisi v Finagram Cie Commerciale[4], the court held that where the innocent party reasonably continues to press for performance after the agreed time, but finally elect to terminate on account of breach, damages can be assessed by reference to the date of termination.

EVIDENCE

13.  The witness statements of one Ho Ying Cheung Hornby, the sole director of the plaintiffs, were filed in these 2 actions and Mr Ho who attended the hearing adopted his witness statements as evidence for the plaintiffs.

14.  In respect of HCA 1568/2015, the plaintiff claims the return of deposit for the total sum of $800,000, stamp duty of $180,000 and legal costs for the conveyance for $7,660, totalling $987,660.

15.  In respect of HCA 1569/2015, the plaintiff claims not only the same amount of $987,660 but also the loss of rental for Workspace No.5 as it was sold subject to the existing tenancy at the monthly rent of $20,000.

16.  Originally in the witness statement of Ho Ying Cheung Hornby, the plaintiff claims the loss of rental of Workspace No.5 from the date of completion i.e. 8 July 2015 up to the expiry of the existing tenancy i.e. 30 June 2017.  After the discussion with Mr Chiu for the plaintiff, Mr Ho testified at the hearing that the plaintiff agreed to claim the loss of rental of Workspace No.5 from the date of completion i.e. 8 July 2015 only up to the date of judgment made by Master J Wong i.e. 22 June 2016.  The loss claimed is $230,000 (i.e. $20,000 x 11½ months).

DISCUSSION AND CONCLUSION

17.  I have no doubt to accept that the plaintiffs in both actions are entitled to the return of deposit for $800,000, stamp duty of $180,000 and the legal costs for the conveyance incurred for $7,660 since they are all flowing naturally from the repudiation of the contract by the defendant and I would allow them in full.

18.  Regarding the loss of rental for $230,000 in respect of Workspace No.5, I consider that the relevant date of termination of the sale agreement for the purpose of the assessment of damages is the date of acceptance of the defendant’s repudiation by the plaintiffs when the order of Master K Lo for specific performance was set aside/discharged and judgment with damages to be assessed was entered by Master J Wong, namely 22 June 2016. I accept that such loss flows naturally from the repudiation of the contract by the defendant and therefore assess the loss at $230,000 as claimed.

19.  To conclude, I assess the damages suffered by the plaintiff in HCA 1568/2015 in the sum of $987,660.

20.  Similarly, I also assess the damages suffered by the plaintiff in HCA 1569/2015 in the sum of $987,660 as well as the loss of rental for $230,000, making the total of $1,217,660.

COSTS

21.  I see no reason why costs shall not follow event.  I order the defendant to pay costs of the assessment in these 2 actions. Mr Chiu for the plaintiffs submitted a statement of costs for each of the actions for my summary assessment.  As I am aware that there is at least one costs order made by Master J Wong on 22 June 2016 against the defendant which has to be taxed if not agreed, I think that instead of assessing the costs summarily, I now order that costs of the assessment of damages be paid by the defendant in these 2 actions, to be taxed if not agreed so that all costs orders against the defendant can be done in one goal.

22.  Lastly, I thank Mr Chiu for his helpful assistance to me.