RAYMOND ALAN MITCHELL v. LI LAI WA t/a WILFORD ANTIQUE CO

DCCJ13245/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 13245 OF 2001

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J U D G M E N T

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1. This is a claim for rescission of a contract for the sale of Chinese statues and other artefacts sold by the defendant to the plaintiff and the consequent return of the purchase price, and for expenses incurred by the plaintiff resulting from that sale. Alternatively, he claims damages for misrepresentation.

2. The matter can be stated very shortly. The plaintiff, who is a retired property developer, lives in Sydney, Australia. He says that he purchased 22 statues from the defendant who owns an antique shop in Hollywood Road, Hong Kong, on the basis that she had warranted that they were all antique pieces over 100 years old, variously of the Sui, Tang and Northern Qi dynasties. He paid $561,000 for them. When they arrived at Sydney, he had them inspected by an expert who told him that they were in fact modern reproductions. The expert concerned, Mr Cessna, has prepared a report, which is now agreed, to the effect that these are no more than modern reproductions.

3. The plaintiff's evidence is that they are worth no more than $105,000. The advice that he has received - and I have seen that advice - from a reputable auctioneer in Sydney is that they might achieve that price at auction, which is the most efficient way of trying to sell them, less 25% for the auction fee, which would give these statues in the plaintiff's hands a net worth of $78,750.

4. Once it was discovered that these were no more than modern reproductions, the plaintiff asked the defendant to take them back and give him his money back. She has declined to do so, hence this action.

5. The trial itself has taken a rather abbreviated course. I have already gone into the reasons for that following my refusal to adjourn the trial on the application of Mr Tso, the defendant's solicitor, and so I do not need to re-visit that aspect of the matter.

6. The plaintiff's evidence, which I can summarise, is this; that in July 1999 he visited Hong Kong with a friend of his, Mr Raymond Tregaskis, who is a Sydney antique dealer. The plaintiff had been looking to buy some antiques in order that they may form part of an investment portfolio that he had in mind. He hoped that they might, in the course of the years, appreciate in value and he might then be able to realise a profit on selling them. He has told me, and I accept, that he was only interested in buying genuine antiques. That was the whole object of the exercise; as an investment.

7. He went to the defendant's shop at Hollywood Road in the company of Mr Tregaskis, who, in fact, had recommended the shop to him as being a reliable place where he might buy genuine antiques in Hong Kong. Mr Tregaskis himself purchased a number of pieces on that occasion. He and Mr Tregaskis were entertained to lunch by the defendant and the defendant's shop manager, a lady known as Emily, who was able to speak English well and who did the interpretation for them. The defendant herself apparently does not speak very good English and Emily's interpretation was required.

8. I have absolutely no doubt, having heard the plaintiff, that he made it absolutely clear to Emily, and through Emily to the defendant, that he was only interested in purchasing antique items. He was reassured by the defendant that she only dealt in such items and in the course of the lunch there were some discussions. On the back of a business card, the defendant had written out a short list of items which were available for sale. The plaintiff was able to inspect some of these items at both of the defendant's premises, the shop in Hollywood Road and also another shop which she operated from in Cat Street. He was shown a number of items which interested him.

9. He then returned to Hong Kong in November 1999, where the matter was discussed further in the course of which he was shown a number of other items. He was told that some of the statues had been fairly recently dug up from a find in Shandong Province and most of them were bound for the museum at Beijing. Once he heard that, he was even more impressed about the likely authenticity of these items, thinking that the Beijing museum would certainly not be interested in anything other than the genuine article.

10. So he indicated that he was looking to buy a number of such genuine pieces. It was indicated to him more than once - of this I am satisfied - that anything that he purchased from the defendant would be genuine and she was prepared, and in fact did place her stamp of authenticity on the invoices indicating that these were genuine antiques being at least 100 years old.

11. So I find as a fact that in respect of all the items that are the subject matter of this action, there was the firmest possible representation from the defendant that she was selling him genuine Chinese antiques in the way that appears in the invoices, being variously of the Sui, Tang and Northern Qi dynasties.

12. There were further telephone conversations - I can take this part of the evidence shortly - between the plaintiff and Emily (the plaintiff was then in Sydney) and photographs were sent of some other items. Being entirely satisfied with the bona fides of what was being said to him, the plaintiff decided to buy these 22 statues after a process of negotiation where he was able to lower the price to what was acceptable to him. He paid $561,000 for them. In due course they were shipped to Sydney. He put them in a reputable warehouse where he expected them to remain for a period of time.

13. What then alerted him to some potential difficulties with what he had purchased was a telephone call made to him by Mr Tregaskis, who told him that he had received some artefacts from the defendant and that these turned out to be reproductions. Mr Tregaskis had succeeded in persuading the defendant to take these back and to reimburse his monies.

14. And so having heard this, the plaintiff asked Mr Tregaskis to look at what had arrived and he confirmed that these were not genuine. Further tests were carried out. There were appraisals by the expert, Mr Cessna. It then became clear to the plaintiff that what he had purchased were not genuine.

15. Attempts were made by him to persuade the defendant to return his money as indeed she had promised him in the course of their negotiations if it turned out that what she had sold him were not genuine antiques. He also enlisted the assistance of the Hong Kong Consumer Council, who, I am bound to say, did as good a job as might be expected of them, but faced with a rather elusive defendant, they, in the event, were not able to assist him as much as they would no doubt have wished to. Consequently he has been obliged to bring this action.

16. I find, as a fact, on the basis of the evidence, that, firstly, there was a representation of the most material kind that what he was being sold were genuine Chinese antiques in the way described in the invoices which are in the evidence. I find as a fact that that representation was not true and I accept the evidence of Mr Cessna that these are no more than modern reproductions worth far less than the plaintiff paid for them.

17. The primary claim is for rescission of the contract. That would mean that I would have to set the contract aside. The defendant would be required to take back the goods and return to the plaintiff what he had paid for them, and, in addition, other consequential expenses such as freight charges and the like which appear in the schedule to the statement of claim.

18. Rescission of course is a discretionary remedy. I am troubled by giving the plaintiff this relief simply because it does involve or it may involve third parties. These statues are now in storage in Australia. Strictly speaking, if I were to order rescission, the defendant would then be required to collect these items. That may create some real difficulties both for the plaintiff himself and also for the warehouse in Sydney, and I think that there are difficulties there which persuade me that I should not exercise my discretion in that way and give the plaintiff that remedy.

19. I propose to give him damages in lieu of rescission, damages for misrepresentation. The measure of damages is the difference between what he contracted for and what he got. What he contracted for were genuine Chinese antiques; all he got were modern reproductions.

20. And so the assessment of damages must be as follows. The starting point is the purchase price, $561,000, less the net worth of these items. I take the view that the proper approach here is to say that they would be most conveniently auctioned off by him. I have got expert evidence to the effect that their gross value would be $105,000, less the 25% auction fees, so that is $78,750. That produces therefore a net amount of damages for misrepresentation of $482,250. Added to that must be the miscellaneous charges which the plaintiff has incurred and which he would not have incurred but for the breach of contract. These have been set out in the statement of claim and they are amply supported in the documentary evidence. They amount to $38,888. That produces a total of $521,138. Those are the damages which the plaintiff is entitled to for the defendant's misrepresentation.

21. There will therefore be judgment to the plaintiff in that amount together with interest. The interest will be at half the judgment rate from the date of the writ until today, and thereafter at the judgment rate until payment, together with costs to be paid by the defendant to the plaintiff on a party and party basis.