Super Mate Ltd. v. Tang Oi Mei

HCA002620/2000

HCA 2620/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2620 OF 2000

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Coram: Before Master M. Yuen in Court

Date of Hearing: 21 & 22 January 2002

Date of Delivery of Judgment: 26 April 2002

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ASSESSMENT OF DAMAGES

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1.The plaintiff was the developer of a residential block known as Bellevue Place situated at U Lam Terrace, Mid Levels, Hong Kong. Bellevue Place is a residential development of a single block with 27 stories. There are 4 units on each floor.

2.In November 1997 the plaintiff put the project up for sale. A number of buyers, including the defendant, signed up agreements to acquire the units in the development. Each of the buyers was required to pay an initial deposit of 10% of the purchase price upon signing of the agreement to purchase. Further payments were required, each amounting to 5% of the purchase price, on 2 January 1998, 1 April 1998, 1 July 1998 and 1 October 1998 respectively. The balance of the purchase price of the unit was to be paid within 14 days upon notification of the issuance of the occupation permit.

3.With the drop in the property market towards the end of 1997, some of the buyers approached the plaintiff to negotiate for reduction of the purchase price. In response to the requests, the plaintiff wrote to the purchasers on 28 March 1998 indicating that the plaintiff would reimburse the buyers 8% of the purchase price and the stamp duty upon completion of the transaction. The payment due days on 1 April, 1 July and 1 October were postponed to 1 May, 1 August and 1 November 1998 respectively.

4.More than 20 buyers defaulted payment.

5.The defendant was the purchaser of Flat 11-A. The agreement was signed on 13 October 1997 for a purchase price of HK$4,608,000. The defendant paid the initial deposit of HK$460,800 and a further deposit of HK$230,400 on 2 January 1998.

6.In default of further payments, the plaintiff sued the defendant on 21 January 1999 for the outstanding deposits and the interests in HCA-1190/99. In default of notice of intention to defend, judgment was granted to the plaintiff on 7 October 1999 in the following terms:-

(a) further deposits of HK$691,200 due on 1 May 1998, 1 August 1998 and 1 November 1998 ( 3 x HK$230,400 );

(b) interest on the said sum at the rate of 2% per annum above the prime rate specified by the Hongkong and Shanghai Banking Corporation Limited from their respective due days to the day of the order and thereafter at judgment rate until the date of payment; and

(c) costs of HK$2,050.

7.Occupation permit was issued on 30 August 1999. On 28 September 1999 the plaintiff notified the defendant of the issuance of the occupation permit and requested the defendant to complete the purchase within 14 days. As the defendant failed to make payment or take delivery of the property, on 5 January 2000 the plaintiff exercised its contractual right to terminate the agreement. On 13 March 2000 the plaintiff initiated the present proceeding to recover from the defendant the damages in respect of the defendant's breach. In default of notice of intention to defend, interlocutory judgment was granted to the plaintiff on 2 August 2000 for damages and costs to be assessed.

8.The property was re-sold on 27 December 2000 for HK$2,100,000.

9.According to the valuation report prepared by FPD Savills (Hong Kong) Limited the open market value of Flat 22-A on 5 January 2000 was HK$2,550,000. The loss of bargain suffered by the plaintiff was HK$2,058,000 (HK$ 4,608,000 - HK$2,550,000). Costs of the surveyor for the preparation of the surveyor report would be a head of costs incurred towards the assessment. Giving credit for the payments made by the defendant and the installment payments awarded to the plaintiff in HCA-1190/99, the damages suffered by the plaintiff is assessed at HK$675,600 (HK$4,608,000 - HK$2,550,000 - HK$460,800 - HK$230,400 - HK$691,200).

10.This court did entertain some concern about the date of valuation of the property for the purpose of assessing the plaintiff's loss of bargain. Relying on the House of Lords decision in White v Carter [1961] 3 All ER 1178 the plaintiff argued that the plaintiff had no obligation to accept the defendant's anticipatory breach and was entitled to hold the defendant to her contractual obligation until 5 January 2000 when the plaintiff elected to terminate the agreement. How much would a strict adherence to the White v Carter principle water down a person's obligation to mitigate his damages in the volatile property market? Since there was no clear evidence before court of the defendant's intention to repudiate her contractual obligation, a determination of the plaintiff's reasonableness in refusing to accept the defendant's repudiation is hypothetical.

11.Judgment is awarded to the plaintiff in the sum of HK$675,600.

12.Basing on the decision of Komala Deccof [1984] HKLR 219 the plaintiff also sought the award of commercial interest. In light of the present economic climate and the verbal testimony of the surveyor that the current mortgage loan rate was normally granted at 2.2%-2.5% below prime rate, I am of the opinion that the award of 2% below prime lending rate is reasonable to cover the loss of profit situation in sale of residential units.

13.Commercial interest is awarded on the judgment sum 2% below prime lending rate from the date of the writ until judgment. Judgment interest accrues from the date of judgment at judgment rate until payment.

14.I also award costs of this assessment hearing to the plaintiff against the defendant, to be taxed if not agreed.

Representation:

Miss R. Mak of Messrs. Sit, Fung, Kwong & Shum for the Plaintiff

Defendant in person, absent