Queen Energy Ltd. v. Chan Shu Keung Raymond and Another

HCA 2476/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2476 OF 1998

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ASSESSMENT OF DAMAGES

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1. On 28 August 1997 the plaintiff signed a provisional agreement for the acquisition of unit D on the 10th and 11th floor of Tower 18, Parc Oasis at a purchase price of HK$19.6 millions with the completion date agreed on 16 January 1998. Three deposits in the total sum of HK$3,920,000 were paid and received by the defendants by 26 September 1997.

2. The time for completion was extended to 12 noon on 17 January 1998 as a result of requisition raised by the plaintiff concerning the construction of a store room adjoining the kitchen. Fourteen minutes before the time due for completion the plaintiff again objected to the construction of a toilet door. On the plaintiff's failure to complete, the defendants' solicitor terminated the agreement on 19 January 1998.

3. The liability issue was heard and determined by Deputy Judge To who ruled in favour of the defendants and granted the following orders on 25 April 2000:-

(a) the agreement was duly rescinded;

(b) the deposit in the sum of HK$1.96 millions to be forfeited to the defendants;

(c) Judgment entered in favour of the defendants in respect of their counterclaim with damages to be assessed. In assessing the damages, discount to be given to the plaintiff because of the alteration work done in the kitchen; and

(d) The lis pendens registered against the property be removed.

4. Messrs Chesterton, property consultant acting on behalf of the defendants, estimated the open market value of the property to be HK$15.15 millions on 17 January 1998 and was HK$8.73 millions on 25 April 2000. According to the surveyor's verbal testimony in court, there would be no change in value of the property on account of changes made to the partition of the store room and the toilet adjoining the kitchen.

5. In February 1998 the plaintiff entered a lis pendens against the said property for its potential claim against the defendants in the present action. The defendants were not in a position to sell the property in mitigation of their damages before the judgment date. The loss of bargain suffered by the defendants ought to be calculated with reference to the market value of the property the earliest by 25 April 2000 when the lis pendens could be vacated.

6. I accept the surveyor's evidence that the market value of the property was HK$8,730,000 on 25 April 2000.

7. The defendants acknowledged a sum of HK$6,000 was required in respect of the partitioning work done to the kitchen and accepted that the market value of the property ought to be reduced by the said sum of HK$6,000.

8. The defendants rented out the subject property to a tenant from 8 April 1998 till end of July 2001 at a monthly rental of HK$32,000. Of the rental received, the defendants had to shoulder a monthly sum of HK$3,120 in respect of rates, management fees and government rents. Hence the profits received by the defendants in respect of the renting out of the property was HK$693,120 [(HK$32,000 - HK$3,120) x 24 months from 8 April 1998 to 25 April 2000].

9. Credit ought to be given in respect of the total deposit of HK$3,920,000 received by the defendants from the plaintiff.

10. The defendants indicated they were waiving their claim of HK$11,010 legal costs pleaded in para 25(i) of their statement of counterclaim.

11. I award judgment in the sum of HK$6,250,880 (HK$19,600,000 - HK$6,000 - HK$3,920,000 - HK$8,730,000 - HK$693,120) with judgment interest from the day of judgment until payment.

12. The information made available at the adjourned hearing on 7th September 2001 ought to have been supplied on the last occasion, I award costs nisi to the defendants for the hearing on 25th May 2001 but make no order as to costs for the hearing on 7th September 2001. The quantum, if not agreed, is to be taxed.