Tsang Cheung Kit and Others v. Hong Kong Housing Authority

HCA007451/1980

Contract - Sale of flats under Home Ownership Scheme - delay in completion varying in individual cases between 22 and 28 months - measure of damages - damages based on rent paid for accommodation during period of delay awarded - other consequential losses not allowed - on construction of agreements, extension of date for completion by architect's certificate given 20 months after that date was ineffectual.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Coram: Fuad, J.

Date: 20 May 1982

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JUDGMENT

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1. By this action the 15 plaintiffs who are beneficiaries of the enlightened and highly successful Home Ownership Scheme sue the Housing Authority for damages for breach of contract. I concluded that my judgment should be delivered in open court because I understand that these proceedings are in the nature of a test action for there are nearly 900 other purchasers who are awaiting the final outcome of the action to make up their minds what they should do. All the plaintiffs bought flats under the Scheme at Chai Wan in a number of blocks known collectively as Shan Tsui Court. Their claim for damages is founded upon the delay in completion of the premises and the assignment of the estate therein to them by the Housing Authority, which was the vendor in each case. The Writ, together with a Statement of Claim, was issued on the 29th of December 1980 and served on the Housing Authority on the following day. Plaintiffs obtained interlocutory judgment in their favour on the 23rd of January 1981 with damages to be assessed. It was later decided by the parties that the matters should be referred to a Judge in Chambers and so the matter has come before me.

2. The plaintiffs each signed sale and purchase agreements in standard form on different dates between August and December 1978. The agreements stated that the "building completion date" would be the 1st June 1979 "unless extended" and that the premises were sold subject to the terms and conditions of sale contained in a document called "Terms and Conditions for the Sale and Purchase of Flats under the Home Ownership Scheme". By Clause 9 of the Terms and Conditions it was provided that the premises were sold for a term of 75 years, renewable at the option of the purchaser for a further term of 75 years. Clause 14 stated that "as soon as practicable after the completion of the premises and the payment of the balance of the purchase price in full the vendor shall execute and complete the Deed of Assignment of the premises." Clauses 1, 3 and 4 are specially important to the issues in this case and so I will read them out in full -

3. I think I should now mention that the plaintiffs are in comparatively humble circumstances and could perhaps properly be included in the description "lower middle income group". At the time the flats were up for sale, the condition for eligibility was a family income of approximately $3,500 per month.

4. I will first deal with the contention by the Housing Authority that the date for completion, and therefore the date upon which the purchasers were entitled to possession, was extended by a valid architect's certificate to the 31st May 1980. Of course, if any damages are payable to any of the plaintiffs, the completion date assumes considerable importance. The architect's certificate was issued in the following circumstances. On the 16th February 1981 the Housing Authority wrote to the architect as follows:-

"The terms and conditions for the sale of the Home Ownership Scheme flats include a clause under which the Architect can grant an extension of time not exceeding 365 days for a number of reasons including default of the Contractor. I enclose a photocopy of this clause.

In connection with the delays which have occurred at Chai Wan A and the recent representations made by the purchasers in regard to the delays, it is necessary for me to ask you to grant an extension of time for the full 365 days in accordance with this Clause 3. You will appreciate that this extension is not to the building contractor, but to the vendor i.e. the Housing Authority. I am enclosing a draft of such an extension certificate and I shall be obliged if you will complete such a letter addressed to the Director of Housing for my use.

Given the urgency of the matter, I would appreciate your immediate attention to this so that you may pass the letter to Mr. Nutt tomorrow morning when you meet at Chai Wan."

5. The architect responded on the same date, and issued his certificate in these terms, following the precise wording suggested in the Housing Authority's letter -

"Pursuant to Clause 3 of the Terms and Conditions for the Sale and Purchase of Flats under the Home Ownership Scheme, an extension of 365 days is granted for the completion of the captioned development.

The Building Completion Date is thus extended to 31st May, 1980."

The architect did not give evidence but his affidavit was admitted in evidence before me. In it he states that he was contacted by an officer from the Housing Authority early in February 1981 who requested "an extension of the terms of contract for the sale of the units in the project", a request which was confirmed in writing soon after. He had personally assessed whether, within the conditions providing for extension of the completion date, the extension sought by the vendor was justified in all the circumstances. He was completely familiar with the course and history of the whole project because he had been continuously involved during its development in his capacity as Consultant Architect. He attributed the delay which merited the 365 days extension to several causes set out in Clause 3 of the agreement. Some delay had been due to each of the matters set out in paragraphs (a), (b) and (g) of the Clause, but in his opinion the most significant causes of delay were those covered in paragraphs (f) and (h). He therefore had concluded that the extension sought was justified and had issued his certificate. He added that regular site meetings had been conducted well prior to the due date with the Housing Authority representatives and the quantity surveyors always in attendance. The progress of the project had been under review and so all parties present were aware of the delay. It had been apparent well before the original completion date that the project could not be completed by the due date.

6. During the course of the hearing, Mr. Anthony Neoh for the plaintiffs and Mr. Peter Graham for the defendant Authority invited me to decide whether or not the certificate was valid so that they could consider whether or not the architect should be called to give evidence about the matter. I reached the conclusion that the certificate was invalid and of no effect, promising to give my reasons later in my judgment.

7. In building contracts provision is very often made for the architect to grant an extension of time for the completion of the work where delay has been due to certain specific causes. However it is unusual to include provisions expressed as they were in an agreement between a vendor and a purchaser. This may have led to some confusion of concept. However that may be, it is perfectly clear that if the architect had properly granted an extension this would fix a new date for completion and the obligation to assign for which provision was made by Clause 14.

8. Counsel cited a number of authorities to me on the point but agreed that everything would turn on the particular language used in the contract. Mr. Neoh submitted that the purported extension given by the certificate was out of time and of no effect because Clause 3 specifically envisaged that the architect should consider whether the circumstances justified an extension before the specified completion date arrived. He also argued that under an extension clause a certificate could only be given before the need for an extension arose and therefore the architect should have directed his mind to the circumstances before the 1st June 1979 and have issued his certificate on or before that date. Mr. Neoh further contended that this proposition was reinforced by the words "not exceeding in any event 365 days in the aggregated" which must have envisaged an intermittent review of the works by the architect to ensure that the building works were completed within the completion date or any extended time beyond that. He further submitted that since Clause 4 gave the purchasers an option to rescind the contract within 7 days of the completion date or an extended completion date, the parties must have envisaged, if Clause 4 were to have any effect, that as soon as the completion date arrived it should either be extended at that point or not at all. Put another way an extension given nearly two years after the 31st May 1979 would deprive Clause 4 of all efficacy. In Amalgamated Building Contractors Ltd. v. Waltham Holy Cross U.D.C. [1952] 2 All E.R. 452, the contractors were bound to complete the works by the 7th February 1949. On the 19th January they applied to the architect for a 12 months' extension due to various labour and materials difficulties. The request was repeated on the 27th January, but the architect merely responded with a formal acknowledgment. The contractors in fact completed the work on the 28th August 1950, and on the 20th December 1950 the architect granted his certificate extending the time for completion to the 23rd May 1949. The contract in that case provided that "If in the opinion of the architect the works be delayed ....... by reason of labour and material not being available as required ...... the architect shall make a fair and reasonable extension of time for completion of the works .......". The Court of Appeal held that the architect's extension was valid and Lord Denning (then Denning L.J.) who gave the leading judgment in the Court of Appeal held that this was a case where the cause of delay had operated partially but not wholly everyday until the works were completed. It therefore had to follow that an architect could not take a decision regarding the length of the extension until after completion. The parties must accordingly have intended that in such circumstances he could grant an extension retrospectively. This is what Lord Denning had to say at p.454 -

"The point in the case is therefore: Was the extension, given on Dec. 20, 1950, extending the time to May 23, 1949, valid or not? The contractors say that the words in cl. 18

'the architect shall make a fair and reasonable extension of time for completion of the works'

mean that the architect must give the contractors a date at which they can aim in the future, and that he cannot give a date which has passed. I do not agree with this contention. It is only necessary to take a few practical illustrations to see that the architect, as a matter of business, must be able to give an extension even though it is retrospective. Take a simple case where the contractors, near the end of the work, have overrun the contract time for six months without legitimate excuse. They cannot get an extension for that period. Now suppose that the works are still uncompleted and a strike occurs and lasts a month. The contractors can get an extension of time for that month. The architect can clearly issue a certificate which will operate retrospectively. He extends the time by one month from the original completion date, and the extended time will obviously be a date which is already past. Or take a cause of delay, such as we have in this case, due to labour and materials not being available. That may cause a continuous delay operating partially, but not wholly, every day, until the works are completed. The works do not stop. They go on, but they go on more slowly right to the end of the works. In such a case, seeing that the cause of delay operates until the last moment, when the works are completed, it must follow that the architect can give a certificate after they are completed. These practical illustrations show that the parties must have intended that the architect should be able to give a certificate which is retrospective, even after the works are completed."

Lord Denning distinguished Miller v. London County Council (1934) 50 T.L.R. 479 since in his view that case had turned on the very special wording of the clause which enabled the engineer "to assign such other time or times for completion as to him may seem reasonable". In Miller's case where the contractor had completed his work in July, and in November the engineer had granted an extension of time ante-dated until February, it was held that on the construction of the contract as a whole and having regard to the form of words employed, the contract contemplated an exercise of the power within a reasonable time of the cause of delay having ceased to operate and in the circumstances the exercise of the power had come too late.

9. With the utmost respect to the decision in the Amalgamated Building Contractors case, I permit myself to wonder whether Miller's case can so easily be distinguished. However, I find no difficulty whatever in distinguishing the Amalgamated Building Contractor's case from the instant case because, here, the issue of an architect's certificate was not a matter solely between the contractor and the employer. A third party was involved to whom Clause 4 gave the right to rescind the agreement within 7 days of the completion date as may legitimately have been extended. I agree with Mr. Neoh that however unlikely it was that the purchasers of these nice flats, priced well below their market value, would wish to take advantage of this Clause, it would be robbed of all its effect if the contentions put forward on behalf of the Housing Authority were to be accepted. In these circumstances, and as a matter of construction, a decision as to extension of time had to be made before the contract completion date had passed if the parties were to be certain about their rights under Clause 4. I do not see how the parties, had they thought about it, could have contemplated a delay of as long as 20 months between the original time for completion and the granting of the certificate.

10. It is to be noted that interlocutory judgment on the plaintiffs' claims had already been obtained when the certificate was applied for. However, I do not wish it to be thought that I am casting any doubts whatever on the genuineness of the reasons which prompted the architect to grant his certificate, or on the motives of the Housing Authority in seeking to obtain it. It was for these reasons that I held that the certificate was invalid and that any damages due to the plaintiffs should be assessed with effect from the 1st June 1979. It was not necessary for me to go into the alternative grounds upon which Mr. Neoh argued that the architect's certificate was ineffective.

11. Counsel agree that there is no distinction in principle between contracts for the sale of land and any other contract where the measure of damages for breach of contract falls to be decided. Any possible doubts on the matter have recently been resolved by the House of Lords in Raineri v. Miles & Another [1980] 2 All E.R. 145 where the House held by majority that failure to complete a contract for the sale of land on the date specified in the contract constituted a breach and entitled the other party to recover any damages properly attributable thereto, unless the failure to complete was due to some conveyancing difficulty or to some difficulty with regard to title, even where the time for completion was not expressed to be of the essence of the contract. In Raineri's case the plaintiff was awarded damages against the defendant for the expenses he had incurred due to the delay in completion and the cost of having to provide himself and his family with living accommodation during the month that had passed between the stipulated completion date and the date upon which he was let into possession of his new house.

12. The plaintiffs' devide their claims into two parts. They claim expenses which would not have incurred had the vendor delivered the premises on the contracted date for completion. These expenses they seek to recover include rent, travelling expenses and school fees which they say they would not have had to meet had they been able to move into their flats in time. The second part concerns the loss incurred by the plaintiffs for delay in conveying the estate of the premises to them. The only claim they make in this respect is for interest upon the deposits which they had paid as purchasers, their contention being that they have lost the use of the deposits for the duration of the delay for which they should receive some compensation. It is also said that as purchasers, because of the delay, they would be getting a shorter term of grant from the Crown and loss of interest in respect of the deposit paid (which would be taken into account as part of the purchase money) would represent appropriate compensation.

13. The plaintiffs were given possession of their individual flats after delays which varied between 22 and 28 months. They claim the rent they had to pay during the applicable period for the premises in which they lived, from 1st June 1979. The 7th plaintiff does not join in such a claim. Each of the plaintiffs, as has been mentioned, also claim interest on their deposits over the same period. The flats varied in price slightly but a typical example is one that cost the 13th plaintiff $111,100. Like the other purchasers he had to pay a 10% deposit ($11,110) on signing the agreement (on the 29th August 1978) and the balance of the purchase price had to be paid in full within 14 days of his being notified by the Housing Department that the completion certificate had been issued. The plaintiffs obtained mortgages repayable by 120 monthly instalments, over a period of 10 years.

14. Only six of the plaintiffs gave evidence before me, for counsel helpfully agreed that the Court should accept the figures (as finally confirmed in an agreed document) put forward by the plaintiffs in respect of the rent they had paid for their old premises, during the material time and the amount of the deposits they had paid on signing their agreements. This was done to save time because while Counsel for the Housing Authority wished to reserve his position in law, that the damages claimed were not properly attributable to the breach, he had no quarrel with the figures. The 2nd, 3rd, 5th, 9th and 15th plaintiffs gave evidence about additional claims that they made which did not concern rents or deposits.

15. The 2nd plaintiff told me that in March 1980 he applied for a place for his daughter in a kindergarten in Chai Wan within walking distance of the new flat he was expecting to occupy and started to pay fees there. When he visited the site he had seen that the building was progressing rather slowly and so he had decided that since his daughter was old enough to go to kindergarten, he had better send her to one at Wanchai where he was living at the time, and in June 1980 the child had started her schooling at Wanchai. He had not felt it safe to cancel the place he had secured for his daughter at the kindergarten near his new flat. The fees at the Wanchai kindergarten were $86 per month and so he sought to claim those fees from June 1980 to March 1981 inclusive. This plaintiff was the only one who was asked about visits to the site. He remembered visiting the site in June 1979 but although he could not remember how far the building had progressed, he did agree that it was readily apparent that it would be a long time before the flats could be completed. He said that he used to telephone the Housing Authority from time to time about progress and they would just tell him to be patient and that there might be a delay of 2 or 3 months. He pointed out that he was not a civil engineer and could not be certain how long it would be before the flats would be ready. I think I should say here that I do not think it can be held against this plaintiff that he went ahead with booking a place in a kindergarten convenient to his new flat although he must have realized that his flat might well not be ready for some time. School places are scarce and this was the act of a prudent and caring parent and it is a matter of common knowledge that buildings in Hong Kong can sometimes be finished in a remarkably short time.

16. The 3rd plaintiff told me that since he had expected, on information given by the Housing Authority, that his flat might be ready for occupation in September or October 1980, he had decided to send his two children to the kindergarten near his new flat from September 1980. He was not given possession of his flat until the end of May 1980 and so he claimed the children's travelling expenses to their kindergarten at Chai Wan until he was able to take possession. Since the children were then about 5 and 3 years of age respectively, his wife had to escort them to school and back.

17. The 5th plaintiff also claimed the travelling expenses of his son to the kindergarten near his new flat. In September 1979, when his son was about 3?, he had decided to send him to that kindergarten. He had been told by the Housing Authority people that the premises would be ready for occupation in about November 1979. He did not get possession of his flat until the beginning of August 1981 and so his claim covered the expenses of sending his child from Kowloon, where he was then living, to Chai Wan and back each school day.

18. The 9th plaintiff has a son who was aged about 16 in August 1979. When the lad was offered a choice of areas in which to serve an apprenticeship, the family decided to choose the Shaukiwan area because that would have involved a walk of only 15 to 20 minutes from his new home; and if public transport was used it would cost only about $1.60 a day. He did not get possession of his flat until the 30th June 1981 and so he claimed the difference for that period between the travelling expenses actually paid by the boy and those that would have been incurred had the new flat been ready on time.

19. The 15th plaintiff is the only one who claims to recover travelling expenses to and from work. He is employed by Dairy Lane in Pokfulam. He received possession of his flat in October 1981 and before that he was living in the Kwun Tong area. This meant that when he travelled to work by car, which he always did, he had to pay $10 a day in tunnel tolls which he would not have had to pay for the relevant period had his new flat been given him when promised. Apart from tunnel fees, although the journey from his old flat to work was longer than the journey he now had to undertake, he did not seek to base any claim on his greater petrol costs during the material time.

20. In determining the issues in this case I have, of course, to apply the law as formulated in Hadley v. Baxendale (1854) 9 Exch. 341, as developed and applied in Victoria Laundry (Windsor) Ltd. v. Newman Industries, Ltd. [1949] 2 K.B. 528 and The Heron II [1969] 1 A.C. 350. The defendant will be liable for any loss arising from the breach that is not too remote. In The Heron II the speeches used various expressions in stating the degree of probability required to satisfy the test of remoteness in contract but, in general terms, it may be said that a loss is not to be regarded as too remote if the probability of its occurrence should have been within the reasonable contemplation of both the parties at the time when the contract was made, having regard to their knowledge at the time. The defendant will be liable for any loss which occurs in the "usual (or ordinary) course of things" provided the probability of its occurrence meets the standard laid down in the cases. I may say that I do not think that the present action can be said to involve knowledge on the part of the Housing Authority of special circumstances so as to widen the parameters of contemplation properly attributable to them.

21. Counsel referred to me to para. 729 of McGregor on Damages (14th Edition) which discusses the measure of damages for delay in completion in cases outside the rule in Bain v. Fothergill. It is very short and so I read it out in full -

"The normal measure of damages is the value of the user of the land, which will generally be taken as its rental value, for the period from the contractual time for completion to the date of actual completion. This is so whether the delays is brought to an end by the voluntary action of an indolent seller or by a decree of specific performance against a recalcitrant seller. This measure was applied in Royal Bristol Permanent Building Society v. Bomash (1887) 35 Ch. D.390 where the plaintiff purchaser had agreed to let the property within five days of due completion and the delay resulted in this sub-contract falling through: the damages were assessed at the rent that the plaintiff would have received from his tenant on the basis that this represented the value of the user of the property.

Jones v. Gardiner [1902] 1 Ch. 191 illustrates recovery for consequential damage. The plaintiff there successfully claimed damages for loss of rent on the buildings which he would have erected or converted on the premises, Byrne J. saying: "I bear in mind that one of the lots was sold as for a building site, that both were sold as with possession, and that the purchasers intended to build and have been delayed in their work by the defendant's default." (at p.196). And in Grant v. Dawkins [1973] 1 W.L.R. 1406 the buyer, who had obtained specific performance but had had to pay off certain mortgages on the land, was held entitled to damages in respect of his payments up to the amount by which the value of the land exceeded the purchase price."

These principles are difficult to apply in the case before me because of the special rules applicable to the Home Ownership Scheme and the restrictions imposed on purchasers regarding renting out the flats or selling them. It was, no doubt for this reason that Mr. Neoh did not seek to advance claims on behalf of the purchasers based on the notional value of the user of the land, that is to say its rental value, or upon the change in the market value of the premises consequent upon the delay in assigning the estate.

22. I now turn to a consideration of the claims made by all but one of the 15 plaintiffs which relate to the rent they had to continue to pay for the premises in which they were then residing until they were given possession of their new flats. Mr. Graham accepts in principle that this could be a proper basis for a claim for loss due to the breach but contends that it would be too simplistic an approach simply to award the plaintiffs the total of the rental payments that they made. An interesting and helpful case from Zealand is in point. In Bow v. McGrath Builders Ltd. [1974] 2 N.Z.L.R. 442, Moller J., sitting at first instance in the Supreme Court, upheld a claim for rent which the plaintiff had incurred while waiting for the premises he had contracted to buy, the delay being due to the default of the defendant. This is what the learned judge said at p.453 –

"[Counsel] referred me to Hudson's Building and Engineering Contracts (10th ed) 595, where, at the end of a discussion headed "Delay and consequential loss", the following passage appears:

'In the case of an apparently ordinary dwelling-house required for personal occupation, damages recoverable within the first branch of the rule would include, it is submitted, the reasonable cost of living accommodation or living elsewhere and storing furniture, etc. if in fact expenses of this kind were incurred, but not rent from lodgens or paying guests, unless this in fact was brought to the attention of the builder in some way at the time of contracting.'

This edition of Hudson was published in 1970, and my own personal researches in respect of the following years until now have not disclosed any case directly in point. But I am prepared to adopt the passage that I have just quoted and apply it to the present case.

It therefore becomes necessary for me to calculate the figure that I consider I should allow for damages under this head. Mr. Hubble submitted that the award should cover the period from 1 October 1972 to the date of delivery of judgment. I am of the view that, for a number of reasons, this is a good deal too long, and that it should run from the beginning of October 1972 until the date upon which the original hearing of this action began, namely, 1 October 1973.

The rent which the plaintiff had to pay over the period concerned was, in round figures, $1,369.00. But from that must be deducted the interest earned during the same time on the investment of the sum of $21,000. The money was placed on deposit with a finance company at all; but this was not done until 22 December 1972. I propose crediting, against the amount of rent, interest from that date. I fix this at $730, and therefore, the damages under this head amount to $639."

23. Mr. Graham drew attention to the fact that in awarding the plaintiff damages based on the rent that he had paid over the material time, Moller J. had given credit to the defendant for the interest that the plaintiff had earned on the purchase price that he had invested and which had remained on deposit for longer than would have been the case had the amount been paid at the time due under the contract. Mr. Graham argued that to be able to award damages under this head the Court would need evidence that the rent paid by the plaintiffs during the relevant period was more than the monthly mortgage payments they would have made had they obtained possession when provided for in the agreement. In his submission, unless these matters were gone into (including perhaps the overall expenses related to the costs of running the old and the new premises), the Court could not be satisfied that there had been an actual loss.

24. Mr. Neoh submitted that this was not the right approach. The plaintiffs had to buy the flats with their own or borrowed money. In fact, they had each taken out a mortgage covering a period of 10 years. Whenever any of the plaintiffs might have had to begin making monthly payments under the mortgage, they would still have had to continue making those payments for the full period of 10 years. None of the plaintiffs in this case had money available to invest in the meantime, in contrast to the position of the plaintiff in the New Zealand case, and there was nothing any of them could have done to mitigate their loss. I would mention in passing that no suggestion was made that any of the rents they were paying was in any way out of the usual range to be expected for persons in the plaintiffs' station of life.

25. In my whole approach to this case, I am certain that it would be quite wrong to take into consideration the fact that the plaintiffs were extremely fortunate to be purchasers under the Home Ownership Scheme in that they obtained their flats at prices well below the market value and that they were assisted in obtaining mortgage facilities. I have no doubt that I should regard the transaction as a perfectly normal commercial one. Nor do I think it would be right to allow myself to be influenced by the fact that the flats are likely to increase greatly in value over the years or by the fact that the plaintiffs would be making mortgage payments over a comparatively long period in money which would be subject to gradual devaluation.

26. It need hardly be said that the one factor that anyone concerned with these transactions must surely have had in contemplation is that each purchaser would have to live somewhere, and in the vast majority of cases be paying out rent, until he was able to move into his new premises. On the evidence before me I can find no justification for making any deduction from the claims put forward and I therefore give judgment for each plaintiff (except the 7th plaintiff) for the sums I set out later in my judgment, which represent the amounts of what I would call "unnecessary rent" each had to pay.

27. I will now consider the claim for damages based on the interest on the deposits paid by each plaintiff at the time he entered into his agreement. Apart from the contentions made by Mr. Neoh which I have outlined above on this point, he also submits that the Housing Authority has had the benefit of the deposits during all the relevant time which they could have put to use. On this issue I have no difficulty in accepting Mr. Graham's contentions. The deposits had to be paid and had to remain with the Housing Authority unless a particular purchaser elected to exercise his option to rescind for late completion. I do not see how it can be said that the plaintiffs have incurred any losses, attributable to the breach, in respect of their deposits. Nor do I think it is to be relevant that the Housing Authority has had the use of the money represented by the deposits in the meantime; we are concerned with losses incurred by the plaintiff and not with any possible gains obtained by the Housing Authority. In my judgment the plaintiffs' claims under this head are wholly misconceived and must fail.

28. In this context I will return for a moment to the New Zealand case. It will be recalled that in Bow v. McGrath Builders, Moller J. gave credit to the defendant for the interest earned by the plaintiff on the purchase price he was able to retain in his hands awaiting payment under the contract. The learned Judge's task was made easier by the fact that Counsel had conceded that this should be done, but I would respectfully say that this was an understandable approach for he had to determine the actual loss suffered by the plaintiff by reason of the delayed completion. In this case, taking the 13th plaintiff again as an example, he handed over his deposit on the 29th August 1978 and expected completion on the 1st June 1979, that is to say 10 months later. But completion was delayed for 24 months. Let us suppose that he had been able to invest the money for 14 months (because a period of only 10 months was envisaged between the date the deposit was paid and the date of completion) then the interest he would have earned would, presumably, have to be deducted from the "unnecessary rent" he is claiming, and so it could not be said that he lost anything by paying the deposit over when he did.

29. This leaves only the claims for consequential losses relating to other expenses which would not have been incurred had the flats been handed over on time - school fees (the 2nd plaintiff); travelling expenses to take children to school (the 3rd and 5th plaintiffs); and travelling expenses in connection with an apprenticeship and a job (respectively the 9th and 15th plaintiffs). Of course, the fact that the flats would be occupied by working men and women, many with children of school age, was self evident. But can it reasonably be said that the Housing Authority could have foreseen the type or kind of loss for which compensation is sought? It seems to me that to succeed the plaintiffs would have to persuade the Court that their claims fall within what is sometimes called the second branch of the rule in Hadley v. Baxendale, so that the Housing Authority is deemed to have contemplated that that kind of loss was liable to arise in the usual course of things from the breach, having regard to the special circumstances of which they had actual or constructive knowledge. Hong Kong is small in area. A purchaser of one of these flats might be working anywhere. Public transport is cheap and plentiful. He might or might not change his job, and his place of work will not necessarily be governed by his choice of residence. Much the same can be said about the claims based on schooling. Some will have children who are too young to go to school and some will have children who have left school. Some children will be at fee paying schools and some will be taking advantage of free education. Not all the children would change their schools on moving into the new flats. Everything will depend on the special circumstances and aspirations of each family. As Mr. Graham rightly put it, there are simply too many imponderables and it would surely be unrealistic to attribute this measure of foresight to the Housing Authority; and in the context of these claims, it is as well to recall the words of Asquith L.J. in the Victoria Laundry case, where he said at p.539 –

"It is well settled that the governing purpose of damages is to put the party whose rights have been violated in the same position, so far as money can do so, as if his rights had been observed. ..... This purpose, if relentlessly pursued, would provide him with a complete indemnity for all loss de facto resulting from a particular breach, however improbable, however unpredictable. This, in contract at least, is recognized as too harsh a rule."

In my judgment the claims for damages under these heads are inadmissible and must be dismissed.

30. I therefore give judgment for the plaintiffs individually as follows -

31. I make an order nisi for costs in favour of the plaintiffs, under 0.42 r.5A.

Representation:

Mr. Anthony Neoh instructed by Kwan & Kwan for plaintiffs.

Mr. Peter Graham, s.c.c., Mr. N.F. Miller, c.c. and Miss J. Lewis, c.c. for defendant