Silver Mart Trading Ltd v. Hong Kong Four Seas Tours Ltd

HCA9559/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.9559 OF 1999

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BETWEEN

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Before : Hon Suffiad J in Court

Date of Hearing : 29 November 2004

Date of Judgment: 29 November 2004

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J U D G M E N T

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1.By its claim as contained in the Statement of Claim, the plaintiff claims against the defendant for specific performance of a Sale and Purchase Agreement dated 8 December 1998, by which the defendant agreed to sell and the plaintiff agreed to purchase Flat F, 12/F, and Portion F of the roof of Eastbourne Court, Nos. 5 & 7, Eastbourne Road, Kowloon Tong and carpark space No.71 on the ground floor at the purchase price of $3,200,000.  In the alternative, the plaintiff claims for return of deposit of $320,000 paid by the plaintiff and damages for breach of the agreement. 

2.At the trial, the defendant was absent and the plaintiff proceeded to formally prove its case.  In opening the case, counsel for the plaintiff informed me that the plaintiff did not wish to proceed with its claim for specific performance, but would be contented to proceed with the alternative claim for return of the deposit paid and damages for breach. 

3.The evidence in this case showed that the plaintiff had paid totally a deposit of $320,000 pursuant to the Agreement.  Completion was initially arranged for 8 March 1999.  By mutual agreement, it was extended to 8 May 1999, and later again by mutual agreement it reverted to back to 8 March 1999.  On 8 March 1999, the plaintiff tendered a cheque to the defendant’s solicitors for the balance of purchase price in the amount of $2,880,000.  That cheque was returned by the defendant’s solicitors the following day, namely 9 March 1999, on the basis that the defendant was unable or unwilling to complete the sale and purchase. 

4.On 8 May 1999, the plaintiff again tendered a similar amount being balance of the purchase price to the defendant’s solicitors.  Once again that amount was returned to the plaintiff by the defendant’s solicitors with the reply that they had no instructions from the defendant to proceed with the completion of the sale and purchase. 

5.When this action was started by the plaintiff, the defendant had filed a Defence raising by way of defence that the sale and purchase was an unconscionable bargain and/or that Mr Leung Hoi, the managing director of the defendant, had no authority to enter into the Agreement.  Because the defendant did not see fit to appear at the trial, no evidence had been presented by the defendant to substantiate these defences. 

6.Accordingly, I accept the evidence for the plaintiff and find that the defendant was in breach of the Agreement in failing to complete the sale.  

7.I turn to deal with damages now.  I accept the plaintiff had paid totally deposit of $320,000.  It follows that this deposit will have to be returned to the plaintiff by the defendant by reason of the defendant’s breach.

8.The plaintiff also claims damages which is put on two footing :

(1)    the difference between the market value and the contractual price of the property; and

(2)    the loss to the plaintiff, by way of loss of rental less the interest payment that the plaintiff would have to pay to the bank as a result of obtaining the mortgage from the bank. 

9.Evidence had been given by a surveyor called by the plaintiff as an expert witness, namely Mr Brian Li, that the open market value for the property today stands at $4,280,000.  The expert evidence also covers the open market rental value for the property which he gives to be $22,100 per month as at 8 May 1999, $20,300 per month as at 8 May 2001 and $19,700 per month as at 8 May 2003.  In the absence of any challenge to this evidence, I accept the entirety of the evidence of the plaintiff as well as the plaintiff’s expert in this matter. 

10.I also accept the submission by counsel for the plaintiff that there are good authorities contained in Snell on Equity and in Macgregor in Damages, that in a rising market, the material time to calculate the difference between the market price and the contractual price in cases of sales of land is at the date of judgment.  Accordingly, the damages are assessed as follows :

(1)     Difference between the market price as of today, namely, $4,280,000 and the contractual price of $3,200,000, that difference comes to $1,080,000.

(2)     As for the loss of rental profit to the plaintiff from 8 May 1999 to date as worked out by the plaintiff’s expert in his evidence :

(i)     for the two-year period, in respect of a two-year lease from 8 May 1999 to 7 May 2001, the calculated amount of loss comes to $160,800 as worked out on the basis of the total rental which the plaintiff would have received less the interest payment to the bank at prime rate upon the mortgage of 70% of the purchase price of the property;

(ii)     on a similar basis for the second two-year term of lease from 8 May 2001 to 7 May 2003, the difference comes to $151,200; and

(iii)     also worked out on a similar basis for the third two-year term lease (but only for 18 months up the date of judgment), the difference comes to $176,400. 

11.Accordingly, there will be judgment for the plaintiff for :

(1)    return of the deposit of $320,000;

(2)    damages for breach of agreement totaling $1,568,400;

(3)    costs of the action to the plaintiff, to be taxed if not agreed; and

(4)    the defendant’s counterclaim is dismissed with costs to the plaintiff, to be taxed if not agreed.

Mr Francis Yip, instructed by Messrs Ko & Chow, for the Plaintiff

The Defendant, in person, absent