Pang Nina Wai Kit v. Woo Hon Ming
Read the full judgment text of HCA 1405/2017 on BabelCite. This High Court CFI judgment was delivered on 31 December 2018.
1. This is the hearing for assessment of damages. Interlocutory Judgment was entered on 14 September 2017 against the Defendant in favour of the Plaintiff. The Defendant did not take part in this hearing. I am satisfied that due notice has been given to the Defendant. The hearing accordingly proceeded in the absence of the Defendant.
Cites 1 case
|
HCA 1405/2017 [2018] HKCFI 2736 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1405 OF 2017 ________________________
________________________
________________________ JUDGMENT ________________________ 1.This is the hearing for assessment of damages. Interlocutory Judgment was entered on 14 September 2017 against the Defendant in favour of the Plaintiff. The Defendant did not take part in this hearing. I am satisfied that due notice has been given to the Defendant. The hearing accordingly proceeded in the absence of the Defendant. Background 2.On 16 February 2017, the Plaintiff and the Defendant entered into a Provisional Agreement for Sale and Purchase (the “Provisional Agreement I”) whereby the Plaintiff agreed to purchase and the Defendant agreed to sell the entire issued share capital of Daily Best Investment Limited (the “Company I”) and the entire shareholder’s loan due and owing by the Company I to the Defendant for a total consideration of HK$46,000,000. The Company I was the registered owner of Flat B on 28th Floor of Azura, No.2A Seymour Road, Hong Kong (“Flat 28B”) and this was claimed to be the only material asset of the Company I. 3.Completion of the sale and purchase was scheduled to take place on or before 12 May 2017. This was later postponed to 2 June 2017 by mutual agreement. The Plaintiff had already paid the Defendant through its solicitors the sum of $2,300,000 being the initial deposit and $2,300,000 being further deposit as stakeholder money held by the Defendant’s solicitors. 4.Clause 4 of the Provisional Agreement I provides that: -
5.It was alleged in §21 of the Statement of Claim that the Defendant committed various breaches: -
6.On 6 June 2017, the Plaintiff’s Solicitors sent a letter to the Defendant’s Solicitors. After reciting the postponement of completion to 2 June 2017 but yet the Defendant’s Solicitors still did not respond to the outstanding matters, this letter went on to state that: -
7.In reply, the Defendant’s solicitors sent a by letter of 7 June 2017 to the Plaintiff’s solicitors which states that: -
8.It is not in dispute that the Defendant’s Solicitors paid the sum of $4,600,000 being the refund of initial and further deposits to the Plaintiff through his solicitors on 7 June 2017, as no completion took place on 2 June 2017. 9.On 12 June 2017, the Plaintiff entered into another Provisional Agreement for Sale and Purchase (“Provisional Agreement II”), for the sale and purchase of the entire issued share capital of Huge Noble Limited (the “Company II”) and the entire shareholder’s loan due and owing by the Company II to the vendor for a total consideration of HK$50,000,000. The Company II was the registered owner of Flat B on 26th Floor of Azura, No. 2A Seymour Road, Hong Kong (“Flat 26B”) and this was claimed to be the only material asset of the Company II. 10.The parties did sign the formal Agreement for Sale and Purchase on 19 July 2017, as stipulated in Provisional Agreement II. 11.On 21 August 2017, the Plaintiff made a nomination (“Nomination”) wherein she declared and confirmed that: -
12.Completion for the acquisition of shares of and in Company II took place on 20 September 2017. Pursuant to the Nomination, all of the instrument of transfer, bought and sold notes and the Deed of Assignment of Loan were executed in favour of the Nominee, and not the Plaintiff. Expert Evidence 13.The Plaintiff apparently obtained 2 valuation reports in respect of the Flat 28B and Flat 26B. The Plaintiff took out a Summons for directions on expert evidence, but this was not granted by Master M Wong in the Order of 6 December 2017. As a result, the learned Master granted leave for the Plaintiff to withdraw the summons with no order as to costs. The Plaintiff did not take any steps to amend her pleadings, nor did she try to obtain further directions on expert evidence. The Plaintiff simply proceeded to file and serve List of Defendants and Witness Statement, and to set the case down for assessment. 14.Order 38 Rule 36 provides that: -
15.When Mr. Lam attempted to refer to the 2 valuation reports in this hearing, I referred him to the restrictions under Order 38 above and such expert reports were not admissible without directions. Mr. Lam did not seek to argue the otherwise as he confirmed that he would not refer to the expert reports as there was no direction on expert evidence. Plaintiff’s Claim 16.In the Statement of Claim, the Plaintiff claimed damages to be assessed, but she did not set out the basis of her claim, and how the damages should be assessed. In the Skeleton Submission of 7 June 2018, it is elaborated that the Plaintiff’s claim for damages is for: -
17.It is noted that under §4 of the Plaintiff’s witness statement of 3 October 2017, and the Fee Note issued by the Plaintiff’s Solicitors of 7 June 2017, the amount of the Solicitors fees and disbursements should be $41,100. Difference in Purchase Price 18.As explained above, Clause 4 of the Provisional Agreement I provides that in the event that the Plaintiff being the purchaser was not satisfied with the due diligence exercise on the Company I where its shares were the subject matter of the purchase, the Plaintiff would have the right to terminate and as a result, the vendor and/or his solicitors would have to return the initial and further deposits to the purchaser. The Plaintiff did not dispute that she had received full refund of her deposits. Mr. Lam confirmed that there was no other clauses in the Provisional Agreement I to support the Plaintiff’s claim for damages based on the price difference of acquiring the shares of the company which hold a similar flat within the same building as its asset. 19.In Wong Suk Ching v. Chow Ying Chu CACV 339/2006 (Unrep.), the purchaser was to purchase a residential unit at Park Island. The agreement provided that the vendor was to sell and the purchaser was to buy the property for the sum of $8,400,000, which would include the furniture and fittings set out in the checklist in the agreement. Of the 74 items set out in the checklist, the vendor removed 35 items upon completion for her own purposes, which included tables, chairs, curtains, and lamps. 20.Notwithstanding the missing furniture and fittings, the purchaser proceeded to completion as scheduled and paid the purchase price in full. Subsequently, the purchaser commenced proceedings for breach of contract and claimed damages against the vendor. The main item of the claim for damages was the sum of $797,000, which represented the difference between the agreed purchase price of the property and the estimated value of the property without the furniture and fittings in question. Liability was not in question as the vendor conceded the liability at an early stage. Surveyor evidence was called by the purchaser by reference to another transaction of a similar unit as the comparable, in order to show the value of the residential unit without the furniture and fittings. 21.Master Lung (as he then was) held, inter alia, that the Plaintiff’s claim for difference in property price as her damages was rejected. On appeal, the Court of the Appeal upheld the Master’s decision. Cheung JA delivered the Judgment of the Court and stated at §13 thereof that: -
22.The present case is not exactly on the same facts in the Wong Suk Ching decision as it was a sale of landed property in that case. In the present case, it was the sale and purchase of shares of and in Company I. Further, the purchaser’s main item in the Wong Suk Ching decision was for the difference in the price after the completion took place notwithstanding some furniture and fittings were missing, when in the present case the Plaintiff claimed her loss of the difference in acquiring a similar flat for a higher price after the purchase of initial flat did not procced to completion. However, it can be seen that the Court of Appeal did not find that the purchaser can claim the amount that she thinks she has overpaid as the basis of her loss. 23.The Plaintiff’s Skeleton Submission of 7 June 2018 only referred me to one single case, namely, Hadley v. Baxendale (1854) 9 Exch 341. I do not derive any help from this authority as it did not support the Plaintiff to claim her loss based on the price difference approach. According to Clause 4 of the Provisional Agreement I, the parties only agreed that Completion should be subject to and conditional on certain conditions and if those conditions were not fulfilled (or waived by the purchaser) on or before the Completion Date, “the Purchaser shall be entitled to cancel the transaction under this Agreement whereupon the Initial Deposit and Further Deposit shall be returned by the Vendor or the Vendor’s Solicitors to the Purchaser forthwith.” There is nothing in this Provisional Agreement I which would enable the Plaintiff to claim damages on the price difference approach as alleged, in addition to the refund of the initial and further deposits. 24.Further, the Plaintiff’s witness statement of 3 October 2017 stated that she claimed the difference of $4,000,000 for purchasing the shares of and in Company II. The Plaintiff further made another Witness Statement of 4 July 2018, in which the Plaintiff explained that by the Nomination of 21 August 2017, she appointed the Nominee to take up the entire issued share capital of Company II. The Plaintiff continued to explain that the Nominee eventually paid $5,124,098, being: -
25.In the assessment hearing, the Plaintiff verified her signatures over the documents, including the Statement of Truth of the Statement of Claim, the Statement of Truth of the Witness Statements. She also maintained her claim for the damages in the sum of $4,000,000, being the difference of the purchase price to acquire the shares of the Company II in Flat 26B and the purchase price for acquiring the shares of the Company I in Flat 28B. 26.In the witness box, the Plaintiff confirmed that: -
27.According to the Plaintiff, the Hong Kong property market required the Plaintiff as a purchaser to make decision and to sign provisional agreement for sale and purchase within a short space of time. The Plaintiff may need time to make arrangement for companies to be the ultimate shareholder. 28.The Plaintiff elaborated further that in the Provisional Agreement I signed with the Defendant, the money for initial and further deposits were also provided by her husband’s family. It was also her intention to appoint a company as the nominee. As the deal in Provisional Agreement I did not go ahead as planned, it had never advanced to the stage of preparing the nomination documents. 29.As set out in the Plaintiff’s oral evidence, all of the purchase price and expenses including the initial and further deposits were all paid for by her husband and her husband’s family, and not by herself. This piece of evidence was not consistent with what has been stated in the Plaintiff’s witness statements on the ownership of the shares of the Nominee. The Plaintiff did not plead her case, nor did she state in the witness statements, that she was the undisclosed agent nominated by her husband or her husband’s family. No evidence has been led as to the financial potency of the Plaintiff or her husband or her husband’s family. If I were to accept what the Plaintiff said in the witness box that money for the purchase of the Company II were money provided by the Plaintiff’s husband or his family, then there is no credible evidence to show who is the beneficial owner of the shares of Company II: is it the Plaintiff? Or is it the Plaintiff holding the shares of the Nominee on trust for her husband or his family? Or is it the Plaintiff’s husband or his family who indeed are the beneficial owners of the shares of the Nominee, and if so, who are they? If money for the purchase price for the shares in Company II were provided by the Plaintiff’s husband or his family, why would the Plaintiff become the beneficial owner of the Nominee? Because of such inconsistent stances when the Plaintiff gave evidence in the witness box, I am not satisfied that the Plaintiff is the beneficial owner of the shares of the Nominee. 30.I hold that by virtue of the Nomination, the Plaintiff had ceased to have any interest in the acquisition of the shares of Company II. The Plaintiff’s claim that she paid $50,000,000 to acquire Flat 26B was not proven, because Flat 26B was in fact purchased by the Nominee and not the Plaintiff. The Plaintiff failed to prove that she sustained loss as she paid $4,000,000 more for acquiring the shares of Company II which owed a similar flat within the same building, because the purchase price for acquiring Company II was in fact paid by the Nominee and not by herself. 31.As set out in §§21 and 22 above, I hold that the Plaintiff cannot claim the difference in price, or the amount that she thinks she has overpaid, as the basis of her loss. Further, I find that the difference of the purchase price in the sum of $4,000,000 was from the purported purchase by 2 different parties in 2 separate sales, and I find that the Plaintiff is unable to prove her loss as alleged. Costs and Disbursements 32.The Plaintiff’s another claim is for the legal costs and disbursements at $41,100. However, Clause 4 of the Provisional Agreement I did not set out that upon the conditions stated in the conditions precedent were not satisfied, the Plaintiff could claim legal costs and disbursements against the Defendant, in addition to the refund of the initial and further deposits. 33.The Plaintiff confirmed that in the negotiations for the purchase of the Company II, a clause was inserted to Clause 4 of the Provisional Agreement II, as follows: -
34.The Plaintiff acknowledged that this clause was inserted by mutual consent when Provisional Agreement II was under negotiation. These was no insertion made by the parties when the Provisional Agreement I was signed with regard to payment of legal costs and disbursements in the event of termination under Clause 4, to which the Plaintiff acknowledged that this was the case. Mr. Lam also conceded that there were no other provision under the Provisional Agreement I which would require the Defendant to be responsible for the Plaintiff’s legal costs and disbursements, in the event that the deal fell through. It would not be the function of the Court to rewrite the contract for the parties when there was nothing in the Provisional Agreement I to support a claim by the Plaintiff for legal costs and disbursements in the event that the deal fell through. The Plaintiff did not provide any legal authorities in support of this claim in the absence of the express terms in the Provisional Agreement I. 35.I hold that the Plaintiff’s claim for legal costs and disbursements for the sum of $41,100 incurred in the uncompleted transaction for the purchase of Company I was not proven on the balance of probabilities. Accordingly, the Defendant is not responsible for such expenses. Conclusion 36.I hold that the Plaintiff has failed to prove any of her claim for damages against the Defendant, and the Plaintiff’s claim for damages is dismissed. Costs 37.Costs should follow the event. As the Defendant did not take part in these proceedings, I make an order nisi that there be no order as to the costs of the assessment hearing, to be made absolute within 14 days if no application is made to this Court to vary the same.
Mr Alex Lam, of Chan, Lau & Wai, for the plaintiff Defendant was unrepresented and did not appear | ||||||||||||||||||||||||||||||||||
Cases cited in this judgment