Pepsi-cola International Ltd v. Charles Lee
Read the full judgment text of HCA 820/1973 on BabelCite. This High Court CFI judgment.
1. This action arises from the letting of a house known as 56 Chung Hom Kok Road. Before any evidence was called I was requested by both counsel to visit the house to obtain for myself a better impression of its situation than could be given by photographs or plans. I should say that I think the visit was well worth the time that was spent on it.
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HCA000820/1973 IN THE SUPREME COURT OF HONG KONG ORIGINAL JURISDICTION ACTION NO.820 OF 1973 -----------------
----------------- Coram: Cons, J. in Court. Date of Judgment: 18th January, 1974. ----------------- JUDGMENT ----------------- 1. This action arises from the letting of a house known as 56 Chung Hom Kok Road. Before any evidence was called I was requested by both counsel to visit the house to obtain for myself a better impression of its situation than could be given by photographs or plans. I should say that I think the visit was well worth the time that was spent on it. 2. Chung Hom Kok Road runs from north to south and the house is built on the western side, on a piece of land known as Rural Building Lot No. 814. The site commands a magnificent view of the sea and the islands to the southwest. It is roughly square, and where it fronts onto the road is level, but soon falls steeply away to the west with a kind of hump or spur in the middle. No. 56 is built towards the northeastern corner of the lot and occupies approximately one-third of the area. No. 58, a new house, not quite completed, stands very close next door and occupies almost all of the southern half. 3. The plaintiff company took the house for the benefit of a Mr. Rattigan, who was then about to assume charge of their far eastern operations. The letting was made through a firm known as the Sun Cheong Investment and Construction Company, which is admitted to be for this purpose the agent of the defendant. When Mr. Rattigan inspected the house to see if it was suitable for his needs No. 56 stood alone upon the plot. The remainder of the land was not divided in any ostensible way and was uniformly covered by wild scrub of the kind which can be seen on any uncultivated hillside in that area. There was also a considerable amount of junk and refuse which had been dumped on it from the road above. Most of the land was too steep to be of any practical use but it gave a feeling of space, and to some extent of privacy, for the land to the south was sheltered by the house itself while the nearest building on the other side had few windows that overlooked it. There was also one particular spot very close to a covered play area at the very bottom of No. 56 that Mr. Rattigan foresaw as a future sitting out or barbecue site. The rest, he thought, could be cleared and improved by proper landscaping. 4. During the course of the discussions preceding the taking of the house Mr. Rattigan enquired of Mr. Kim Lee, the person from Sun Cheong with whom he dealt, whether the vacant land was included in the tenancy. Mr. Lee categorically stated that the whole of the land went with the house and that Mr. Rattigan was free to do with it as he wished. A Mrs. Huntley overheard part of this conversation. She is a secretary of the plaintiff company, working not directly for Mr. Rattigan but now on the financial side. At the time she was concerned with the task, amongst others, of finding acceptable accommodation for the new man. She accompanied him and Mr. Lee on their visits to this and to other properties. 5. Mr. Rattigan and his family moved in in the month of August. He spent a large amount of money, $17,000 to be exact, in having the surrounding land cleared, filled and laid with turf. A more ambitious scheme proposed by the contractor and costing some $40,000 was deferred for the time being. Mr. Lee helped in this respect by introducing the contractor. It is not difficult to imagine the shock Mr. Rattigan must have received when only four months later a gang of men came and built another house right in what he thought to be his own garden. Naturally he raised objections, but the objections were not pressed very far and it is conceded now that the land on which No. 58 is built never has been included in the plaintiff's tenancy. The claim is one solely for damages for misrepresentation, that is, the false representation that it was. 6. Mr. Lee denies making that representation. The question of the inclusion of the land in the tenancy was not, he says, raised by Mr. Rattigan at any time. He admits that Mr. Rattigan asked about landscaping and that he assisted later in getting this done but he maintains that that was simply part of the service that his firm provides to all their overseas clients and was done without any consideration as to whether the land was part of the tenancy or otherwise. Indeed he goes further and says that at that time he did not know who the owner was. I find it impossible to believe him. Mr. Lee puts himself forward as a man of some knowledge in real estate. It is inconceivable that he would allow a client to expend a large amount of money upon land without the slightest enquiry as to the title to that land or at least without some warning as to the folly of proceeding with no enquiry. Apart from this I would, on a comparison of demeanour alone, have preferred the evidence of Mr. Rattigan and Mrs. Huntley to that of Mr. Lee. I also rule out any possibility of misunderstanding due to language difficulties. Mr. Lee's English is first class. I am satisfied that he represented to Mr. Rattigan that the whole of Lot 814 was included in the tenancy that he was offering. That representation was false. The owner had long before decided to build a second house utilising the remaining frontage to the road and his plans had been approved by the appropriate authority. He had no intention of including that land in the tenancy and he did not. It is suggested that the probability of further building should have been obvious to Mr. Rattigan from the circumstances of the locality, or should have been revealed to him by proper enquiries from his solicitors. With the first suggestion I certainly agree, but it does not alter the position. If it has any relevance at all, it merely confirms the probability that Mr. Rattigan would have made enquires. 7. I am also satisfied that Mr. Rattigan was induced by the representation to take the tenancy. He has a wife and four children in or approaching their teens. They need space. He is used to and fond of outdoor life and gardens. No. 56 may not have offered much in this way by American standards but it was something, and gave at least the occasional chance to get his children out of his hair. Without the land that he intended to make his garden I do not think he would have accepted the house. 8. Section 3(1) of the Misrepresentation Ordinance provides as follows:
I am told that there has yet been no reported case which illustrates the standard by which such damages should be calculated, but it seems clear from the language of the section itself that it would be the standard otherwise adopted in actions based upon deceit, that is what the plaintiff has paid, less the value of what he has received, together with damages for any consequential loss that is not too remote. In the present instance the plaintiff has paid for a three-year lease at the rate of $7,500 per month. The value he has received is less than that. Mr. Doran, a surveyor called on behalf of the plaintiff, estimated the reduction to be at the rate of $750 per month. An architect called by the defendant declined to estimate, saying that he had never before been asked to value a garden separately from the house to which it normally belonged. It is usual, he said, to take it as part and parcel of the house, but that generally speaking, a house and garden command a rent approximately 20% higher than would a flat of comparable size. Applied to his valuation of No. 56 as a house alone that would make the extra value of the garden $1,500 per month, but bearing in mind that this particular garden was of limited practical use it may perhaps be proper to divide that value in half. This brings one back immediately to Mr. Doran's estimate. In any event I prefer Mr. Doran when it comes to valuing land and assessing fair rents. He gave the impression of having a greater knowledge of these matters, which is consistent with his past employment in this Colony. What the plaintiff, therefore, received was a three-year lease of something worth $7,500 per month for four months and only $6,750 for the remaining thirty-two, that is he has suffered damage to the extent of $24,000. I was apprehensive at one stage whether he could recover that amount at this moment as the lease still has approximately eighteen months to run. He would appear to be getting damages for a loss that he has not yet suffered. But the case of Clarke v. Yorke(1) disposes of my fears. 9. A further loss directly consequent upon the misrepresentation is the money spent on landscaping. A small part of this still enures for the benefit of that portion of the garden which is still used by the plaintiff. Mr. Rattigan estimated this as between 10% and 20%. I think it would be fair to say that $14,000 of that money was wasted, making total damages of $38,000. 10. I was also asked to award damages in respect of the physical discomfort occasioned by one year of actual construction work. Mafo v. Adams(2) is authority for the proposition that damages of this kind are not too remote. But it appears to me that this would be giving damages twice over. I have accepted the estimate of Mr. Doran on the basis that the house was let without any control over the remaining land. It would have been obvious to him that that land was ripe for development and that there was every likelihood of the development taking place within the ensuing three years. Although the question was not expressly put to him I think he would have allowed for the attendant inconvenience when making his valuation. If I should be wrong in this, I would have awarded damages in this respect of $3,500, on a rough basis of $10 per day. 11. Judgment is, therefore, entered for the plaintiff in the sum of $38,000 and costs. In doing so it is fair to add that no personal impropriety has been alleged or established on the part of the actual defendant, that is the other Mr. Lee. He did not at any stage deal directly with Mr. Rattigan or the plaintiff company.
Representation: M. Asome (Wilkinson & Grist) for the plaintiff. H.Y. Leung (K.C. Yung & Co.) for the defendant. (1) [1882] 47 L.T.R. 381 (2) [1969] 3 All E.R. 1404 |