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HCA 953/2003
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO. 953 OF 2003
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BETWEEN
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SUPREMEM RIGHT LIMITED,
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Plaintiffs |
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FURTHER GOOD DEVELOPMENT LIMITED |
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and PYTHON COMPANY LIMITED |
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And |
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CHIANG YEN KING and CHIANG YEN KING, |
Defendants |
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THE PERSONAL REPRESENTATIVE OF |
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CHAN MUI KWAN, DECEASED |
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_________________________
Coram : Before Master K.H. Hui in Court
Date of Hearing : 21 July 2004 & 7 August 2004
Date of Judgment : 17 September 2004
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ASSESSMENT OF DAMAGES
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Background
1.In their Writ of Summons filed herein on 14 March 2003, the Plaintiffs claim against the Defendants for the sum of HK$10,151,326.68 being damages for the breach of the Sale and Purchase Agreement dated 21 October 1997 on the part of the Defendant.
2.Interlocutory judgment on liability was obtained on 20 November 2003 with damages to be assessed.
The Plaintiffs’ case
3.At all material times, the Plaintiffs were the registered owners of the property known as Flat B, 10th Floor, Tower 2, and Car Parking Space No. 45 on Basement Level 2, the Regalia, No. 33 King’s Park Rise, Kowloon, Hong Kong (“the Property”).
4.By a Sale and Purchase Agreement in writing dated 21 October 1997, the Defendants agreed to purchase the Property at the sum of HK$17,449,000 (“the Agreement”).
5.Clause 3(1) of the Agreement provides that:
“(1) The purchase price shall be the sum set out in Schedule 4 and shall be paid by the Purchaser to the Vendor’s solicitors as stakeholders in the manner set out in Schedule 4.
6.Clause 3(6) of the Agreement stipulates that:
“(6) Subject to sub-clause (3) but without prejudice to any other remedy hereunder, the Vendor shall be entitled to demand and receive payment of interest on the amount of any part of the purchase price not paid on its due date at the rate of 2% per annum above the prime rate specified by The Hongkong and Shanghai Banking Corporation Limited from time to time calculated from the date on which the same ought to have been paid by the Purchaser to the date of actual payment.”
7.Other material provisions are:
“ SCHEDULE 4
The purchase price mentioned in Clause 3(1) shall be HK$17,449,000.00 and shall be paid by the Purchaser to Messrs. Johnson, Stokes & Master as follows:-
(1) the amount of HK$500,000.00 has been paid as initial deposit and in part payment of the purchase price on signing the agreement preliminary to this Agreement;
(2) a further amount of HK$1,244,900.00 shall be paid as further deposit and in further part payment of the purchase price on the signing of this Agreement;
(3) a further amount of HK$1,744,900.00 shall be paid as further deposit and in further part payment of the purchase price on or before the 14th day of November 1997;
(4) a further amount of HK$1,744,900.00 shall be paid as further deposit and in further part payment of the purchase price on or before the 14th day of December 1997;
(5) the amount of HK$12,214,300.00 being balance of the purchase price shall be paid on completion hereunder.”
“5. The sale and purchase shall be completed at the office of Messrs. Johnson, Stokes & Master during office hours on or before the 14th day of February 1998.”
“16. Time shall in every respect be of the essence of this Agreement.”
“17. (1) Should the Purchaser fail to observe or comply with any of the terms and conditions herein contained or to make the payments in accordance with Schedule 4 or any interest payable hereunder within 7 days of the due date, the Vendor may give to the Purchaser notice in writing calling upon the Purchaser to make good his default. In the event of the Purchaser failing within 21 days from the date of service of such notice fully to make good his default, the Vendor may by a further notice in writing forthwith determine this Agreement.
(2) Upon the determination of this Agreement pursuant to sub-clause (1):-
(a) all sums paid by the Purchaser as part payment or further part payments of the purchase price shall be forfeited to the Vendor; and
(b) where the Purchaser has entered into possession of the Property, the Vendor shall become entitled to re-enter upon the Property and repossess the same free from any right or interest of the Purchaser therein and to receive from the Purchaser as occupation fee a sum equal to interest at the rate of 2% per annum above the prime rate specified by The Hongkong and Shanghai Banking Corporation Limited from time to time on the unpaid balance of the purchase price for the period during which the Purchaser was in occupation.
(3) Upon determination of this Agreement, the Vendor may resell the Property either by public auction or private contract subject to such stipulations as the Vendor may think fit and any increase in price on a resale shall belong to the Vendor. On a resale, any deficiency in price shall be made good and all expenses attending such resale shall be borne by the Purchaser and such deficiency and expenses shall be recoverable by the Vendor as and for liquidated damages Provided That the Purchaser shall not be called upon to bear such deficiency or expenses unless the Property is resold within 6 months of the determination of this Agreement.
(4) On the exercise of the Vendor’s right to determine this Agreement as aforesaid the Vendor shall have the right, if this Agreement shall have been registered at the Land Registry to register at the Land Registry an instrument signed by the Vendor evidencing determination as aforesaid of the sale of the Property. Upon registration of such an instrument in the Land Registry, a tenant, purchase, mortgagee or any other person dealing with the Vendor shall not be bound to see or enquire whether the Vendor was entitled to determine or rescind this Agreement and so far as regards the safety and protection of such tenant, purchaser or mortgagee or any other person this Agreement shall be deemed to have been duly terminated and the remedy (if any) of the Purchaser against the Vendor shall be in damages only.”
“33. (1) The Purchaser hereby covenants with the Vendor that without prejudice to the Vendor’s right to enforce for specific performance and its other rights under Clauses 17 and 18A, if the purchase is not completed pursuant to the terms of Clause 5 hereof due to the failure of the Purchaser to execute the Assignment within the period specified in Clause 5 hereof, the following provisions shall apply as from but excluding the date of completion referred to in Clause 5 hereof (hereinafter called “the Default Date”) notwithstanding that the purchase is not completed and notwithstanding the provision of Clause 7 hereof relating to clearance of all outgoings by the Vendor up to the date of completion:-
(a) the Purchaser shall be responsible for and shall pay all outgoings including rates, property tax, crown rent, insurance premium in respect of the Property, expenses for maintenance and upkeep of the Property and/or the Development and other expenses (if any) or a due proportion thereof and all amounts payable by an Owner under the terms of the Deed of Mutual Covenant which he would have been liable to pay if he had completed the purchase and executed the Assignment subject to and with the benefit of the Deed of Mutual Covenant;
(b) when the execution of the Assignment in respect of the Property does eventually take place, the Purchaser shall be deemed to have taken possession of the Property will full knowledge of its existing state and condition as at the Default Date and shall be deemed to have accepted the Property in such state and condition and the Purchaser shall waive all his statutory, contractual and common law rights and claims (if any) against the Vendor in respect of any existing or future defect in or damages to the Property to the intent that the Vendor shall as from the Default Date be fully and absolutely relieved and released of and from all obligations and liabilities (if any) in respect of any such defects;
(c) the Purchaser shall not hold the Vendor responsible as from the Default Date for the care, maintenance and management of the Property.
(2) If the circumstances referred to in sub-clause (1) above shall occur then irrespective of whether or not the Vendor shall have paid the amounts referred to in sub-clause (1)(a) above to the Manager, the Vendor shall be entitled as a condition precedent to the execution of the Assignment in respect of the Property in favour of the Purchaser or his nominee(s) or sub-purchaser(s), to require the Purchaser or his nominee(s) or sub-purchaser(s):-
(a) to pay, or (where the Vendor has paid the amounts referred to in sub-clause (1)(a) above to the Manager) to reimburse the Vendor (in addition to all such payments required to be made by the Purchaser on completion plus interest at the rate of $1.50 for each $100.00 or part thereof remaining unpaid for each period of thirty (30) days or part thereof commencing from the Default Date) all such amounts as are referred to in sub-clause (1)(a) above payable during the period from the Default Date to the actual date of completion and which are unpaid plus interest and collection charges chargeable by the Manager pursuant to the terms of the Deed of Mutual Covenant. In respect of such of the amounts referred to in sub-clause (1)(a) above as are not calculable at the time of execution of the Assignment, the Vendor shall be entitled to require the Purchaser or his nominee(s) or sub-purchaser(s) to pay to the Vendor an estimate of such amounts to be determined by the Vendor in its absolute discretion, provided that upon the relevant amounts being ascertained, any excess in payment shall be refunded by the Vendor to the Purchasers without interest whilst any shortfall in payment shall forthwith be paid by the Purchaser to the Vendor; and
(b) to execute an Undertaking in the form approved by the Vendor (the costs and expenses in respect of the preparation and completion of which shall be borne by the Purchaser solely) to keep the Vendor fully indemnified against all losses, claims, damages, costs, expenses and liabilities sustained or to be sustained by the vendor arising out of or in connection with or resulting directly or indirectly from the delay by the Purchaser in completing the purchase of the Property on or before the Default Date.”
8.The Defendants had only paid a total sum of HK$1,744,900 to the Plaintiffs being deposit and further part payment of the purchase price on or before the signing of the Agreement (see page 27 of the Bundle of Documents).
9.The Defendants had failed to complete the transaction on or before 14 February, 1998.
10.Relying on clause 17, written notice to make good default (dated 23 February 1998) was sent to the Defendants by the Solicitors for the Plaintiffs (see page 29 of BD).
11.The Defendants made no positive response, if any, to this letter.
12.The Plaintiffs did not follow up the matter until sometime in 2002. By a letter dated 13 June 2002 (see page 31 of BD), the Plaintiffs, pursuant to clause 17 of the Agreement, gave notice to the Defendants to, inter alia, determine the Agreement.
13.The Plaintiffs resold the Property at HK$5.8 million and the re-sale was completed on 27 July, 2002.
14.The Plaintiffs now claim against the Defendants, inter alia, for the sum of HK$10,151,326.68 pursuant to clause 17(3) and clause 33(1)(a) of the Agreement. Their breakdowns are as follow:
“ PARTICULARS
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HK$
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HK$
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Difference between the purchase price of the Property under the Agreement and the resale price
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Purchase price under Agreement
Less: Resale price
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$17,449,000.00
($5,800,000.00)
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$11,649,000.00
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Conveyancing costs for resale
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$14,500.00
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Commission paid for resale of the Property
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$10,000.00
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Management fees from 14.5.1998 to 26.7.2002
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$121,638,84
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Rates from 14.5.1998 to 26.7.2002
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$59,297.89
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Government rent from 14.5.1998 to 26.7.2002
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$41,789.95
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$11,896,226.68
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LESS: Deposit paid by the Defendants which has been forfeited
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($1,744,900.00)
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$10,151,326.68”
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Evidence
15.The Plaintiffs only called one witness, and he is Mr. John Graham Cattermoul, as their expert witness, to give evidence in relation to the valuation of the Property. Indeed, Mr. Cattermoul had prepared a valuation report which can be found at page 105 of the Bundle of Documents.
16.Mr. Cattermoul’s expertise was not challenged by the Defendants who were not represented at the hearing.
17.Mr. Cattermoul’s evidence was simple and straightforward in that he adopted what were stated in his report with a bit of elaboration.
18.Mr. Chiang, during cross examination, had asked questions about valuation of the flat alone without taking into consideration of the value of the car park. Further, he sought to rely on certain land search records which had never been disclosed.
19.Ms. Chan, Solicitor for the Plaintiffs, opposed to any reference to the said land search records on the grounds that they had never been disclosed and the Defendants should have no difficulty in obtaining them well before the trial.
20.Having taken into consideration that the Defendants were not represented, I granted leave to the Defendants to rely on the land search records of Flat 6B, 7B, 8B, 11B, 15B, 16B, 17B and 18B of Tower 2 of The Regalia. I also adjourned the hearing so that the Plaintiffs could have time to consider the land search records.
21.When the hearing resumed, Mr. Chiang challenged the report of Mr. Cattermoul in that he had not annexed the land search records of the comparables stated in his report. While Mr. Cattermoul accepted such omission, he confirmed the selling prices of the comparables stated in his report were true and correct.
22.Mr. Chiang elected to give evidence but calling no other witness. He accepted the liability to pay damages but contended that the Plaintiffs should have sold the Property much earlier. The delay of the disposal of the Property until 2002 caused him great difficulties as his wife, Madam Chan Mui Kwan, being the major income earner of the family, had passed away and that he had to support his children who were pursuing tertiary education.
23.Mr. Chiang also complained that the Property was sold to the staff member of the Plaintiffs and thus queried if the selling price was the then prevailing market price. He further dispute the liability of paying government charges, management fee and legal fee incurred in the re-sale. Mr. Chiang made no reference to the land search records when he gave evidence.
Ruling
Deficiency in Price
24.This is the most important head of the Plaintiffs’ claim. I accepted the evidence of Mr. Cattermoul and found that the selling price of the Property at $5.8 million was the then prevailing market price. There was no evidence that the Property was sold to the staff member of the Plaintiffs. The issue I then have to deal with is whether the Plaintiffs are entitled to the deficiency in price.
25.Ms. Chan submitted that although clause 16 of the Agreement provided that “time shall in every respect be of the essence”, clause 17 expressly gave the right to the Plaintiffs to issue written notice to make good default.
26.It should be noted that the Defendants had only paid $1,744,900 as deposit and part payment of the purchase price under Schedule 4, which in fact provided that a total sum of HK$5,234,700 should be paid as deposit and part payment on or before 14 December, 1997. Obviously, the Plaintiffs did not take any action against the Defendants but just wait for completion scheduled to take place on 14 February, 1998.
27.In the present case, the Plaintiffs issued a written notice dated 23 February, 1998 pursuant to clause 17 of the Agreement. It meant that the Plaintiffs did not regard the Agreement being determined by reason of the default on the part of the Defendants to complete. This, according to Ms. Chan, gave a chance to the Defendants to make good their defaults within 21 days from the date of the notice.
28.The inaction on the part of the Plaintiffs after the expiry of the 21 days period meant that, as submitted by Ms. Chan, the Agreement was still enforceable by both parties until and unless the Plaintiffs gave a further written notice to determine the Agreement. Since such notice was not given until 13 June 2002, the Agreement was not terminated until then. For this reason, the re-sale of the Property in July 2002 fell within the 6 month period provided by clause 17(3).
29.As I can find no flaw in such submission, I found that the Plaintiffs are entitled to claim for the deficiency in price.
Conveyancing cost etc
30.Under this head, the Plaintiffs claimed for HK$14,500 and another sum of HK$10,000 being commission for re-sale.
31.Clause 17(3) provided that: “… all expenses attending … resale shall be borne by the [Defendants]”. I can see no reason not allowing these claims and I therefore also allow them.
Management fee etc
32.The Plaintiffs also claimed for management fee, rates and government rent pursuant to clause 33(1). Once again, I can find no reason to disallow the claim and I found that the Plaintiffs are entitled to the same.
Conclusion
33.For the reason aforesaid, the Plaintiffs are entitled to HK$10,151,326.68 as claimed.
34.Further, the Plaintiffs are also entitled to interest on HK$15,704,100 (unpaid balance of purchase price) at the rate of 2% per annum above the prime rate from 14 February 1998 to 26 July 2002 and on HK$9,904,100 (unpaid balance of purchase price after resale) at the same rate from 27 July 2002 to the date of judgment and thereafter at judgment rate until full payment.
35.I also make an order nisi in respect of costs. The Defendants shall pay costs of this hearing to the Plaintiffs to be taxed if not agreed. This order shall become absolute within 14 days after the handing down of this decision. Liberty to apply.
Ms C. Chan of Johnson, Stokes & Master for the Plaintiff
Defendants Chiang Yen King and Chiang Yen King, the personal representative of Chan Mui Kwan, deceased appearing in person
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