WAN LEE LEE v. WU MUK KWAI

A 5207 of 1994

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Assessment of Damages

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1. This assessment of damages arises out of an agreement for the sale and purchase of a property in the New Territories. Part judgment was obtained against the defendant on 21 November, 1994, in the sums of $150,000.00, $11,254.00, and $5,000.00. Final and interlocutory judgment was entered against the defendant on 23 January, 1995, in the sum of $30,000.00 with damages to be assessed. A notice of appointment of assessment of damages was filed and served on 21 July, 1995. The plaintiff's list of documents was filed and served on 7 September, 1995.

2. There are two claims in damages - loss of bargain as a result of the breach of contract and the estate agent's commission paid by the plaintiff.

3. The facts are that by a provisional agreement, dated 26 January, 1992, the defendant agreed to sell the property, being the second floor and roof of the building, to be constructed on a parcel of land in Tuen Mun, being Lot No.399 in DD No.385, including one carpark, to the plaintiff for $750,000.00. In accordance with the agreement, the plaintiff paid a total of $l50,000.00 deposit to the defendant.

4. In March 1992 at the request of the defendant, the plaintiff purchased sanitary fittings on the defendant's behalf for installation in the suit premises, in the sum of $11,254.00.

5. At various times in March 1992 the plaintiff paid the defendant $30,000.00 in cash to pay for certain fittings for the premises to upgrade those provided by the building contractor. In September 1992 the plaintiff paid the defendant a cheque for $5,000.00 to upgrade certain fittings for the premises.

6. The agreement provided that the plaintiff would be entitled to occupy the said premises when the building was available for occupation. In December, 1992, the construction of the building was completed and the defendant moved into the ground floor and 1st floor unit. The defendant refused to allow the plaintiff to occupy the suit premises. An offer of compensation was made by the defendant which was eventually withdrawn. In September, 1993, the defendant told the plaintiff that he would not refund any money to her or sell the premises to her. By a letter of 29 April, 1994, the plaintiff confirmed her acceptance of the defendant's repudiation.

7. At the assessment of damages, the defendant appeared in person. The plaintiff called two witnesses, and the defendant gave evidence.

8. Kelvin Hon-wing YIM, a chartered surveyor employed by Prudential Surveyors International Ltd., gave evidence and produced a valuation report. In his expert opinion the value of the property as at 29 April, 1994, was $1,750,000.00. In his evidence in cross-examination, Mr. YIM said that the valuation did not take account of the premium to be paid to the Government. His valuation was based on the price the property would fetch on the open market, and that value did not take into account any premium payable to the Government.

9. WAN Lee-lee, the plaintiff, gave evidence, and confirmed that she had paid the estate agent's commission in the sum of $7,500.00 on the sale of the property, and she produced the receipt for that payment. In cross examination, she agreed that she is a shareholder in the Hang Wo Property Agency. She denied that she had told the defendant that the property was worth $750,000.00, or that she had told him that the premium payable to the Government was $300,000.00. The defendant had approached her and quoted the price of $750,000.00 to her. The defendant is still not clear as to the premium payable, and cannot say whether the $2 million odd premium relates to the suit premises only or to the whole building, and he has made no effort to clarify the position.

10. The defendant put it to the plaintiff that subsequently she had declined to take possession of the property and sought his consent to assign the property to a third party, saying that she would pay the defendant $100,000.00 from the profit made on such an assignment and that she would keep the balance. The plaintiff denied this, and said that she did not understand the question because if the defendant had not defaulted she would have taken possession.

11. In his evidence, the defendant said that the plaintiff is an estate agent, and she would simply be paying the commission of $7,500.00 to herself. The plaintiff had made misrepresentations to him which has caused him to make mistakes in the sale. He is not a rich man, and whatever the court awards, he will need as much time as possible to make the repayments.

12. It is the defendant's contention that the property was not worth $1,750,000.00 as at 29 April, 1994, but he did not call any expert evidence in opposition to the plaintiff's expert evidence. It was also the defendant's contention that the plaintiff had misrepresented to him that he would only have to pay $300,000.00 by way of premium to the Government, which led him to believe that it was not unreasonable to fix the sale price at $750,000.00. It is his case that the commission paid by the plaintiff was in reality paid to her as she is a shareholder of the Estate Agency.

13. I find the plaintiff to be a credible witness. I do not accept the defendant as a credible witness. It is patently obvious that the defendant changed his mind about the transaction regarding the suit premises, and is trying to shift the blame to the plaintiff to evade the incidence of damages.

14. There is no fixed completion date in the contract, and the plaintiff submitted that the relevant date for the assessment of damages for loss of bargain should be the date of breach by the defendant, based on the authority of Sweet and Maxwell Conveyancing Practice, at paragraph 13-011. I was referred to a letter from the plaintiff's solicitors dated 29th April, 1994, which is pleaded in paragraph 13 of the statement of claim. There is no reference to this letter to be found in the defendant's homemade defence. I am satisfied that, in the absence of a fixed completion date, damages should be assessed as at the date of breach, and I accept the evidence of the letter of 29th April, 1994, as fixing the date of breach.

15. I accept the evidence of the valuation report produced by Mr. YIM, and I find that the value of the property as at 29 April, 1994, was $1,750,000.00. The purchase price in the agreement is $750,000.00, so that the difference of $1 million is the measure of damages suffered by the plaintiff for her loss of bargain, and I accordingly award damages of $1 million under that head.

16. I accept the evidence of the plaintiff that she paid the deposit of $7,500.00 to the company, Hang Woo Property Agency Co., of which she is a shareholder. I am satisfied that she is entitled to claim the payment of such commission as damages, and I make an award of $7,500.00 under that head.

17. I order that the defendant is to pay interest on the damages at judgment rate from the date of service of the Writ to the date of payment. The defendant is to pay the plaintiff's costs of the Action, including the costs of this assessment. The plaintiff's own costs to be taxed in accordance with Legal Aid Regulations.

(L. Cannon)
Master