Thomas Hong Chi Fat and Another v. Alexander Sung Wai Yip

DCCJ 3196/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO.3196 OF 2004

_______________

BETWEEN

_______________

Coram: Deputy District Judge K.W. Wong in Court

Date of Hearing of Assessment: 9^th, 10^th, 22^nd and 23^rd November 2005

Date of Handing Down of Assessment of Damages: 10^th March 2006

___________________________

ASSESSMENT OF DAMAGES

___________________________

1.Flat E, 7^th Floor and Car Parking Space No.30 on Lower Ground Floor, Fessenden Court, No.3 Fessenden Road, Kowloon (“Property”) are located in a popular residential area known as the Broadcast Drive Area. The flat is about 700 square feet in size. The Property is jointly owned by the Defendant and his younger sister, Miss Sung Ngar Wai Wendy (“Miss Sung”). This case is about an abortive sale to the Plaintiffs of the Property. The Defendant does not dispute liability and only contests the quantum of damages to which the Plaintiffs are entitled.

2.It is useful to set out the sequence of events giving rise to the Plaintiffs’ claim. It arises this way. On 26^th May 2004, the Plaintiffs entered into a provisional agreement for sale and purchase with the Defendant to purchase the Property at a price of $2,628,000.00. It was common ground that although the agreement is described as “provisional”, it is by no way provisional and is a binding agreement between the parties. Attached to this provisional agreement was a declaration executed by the Defendant in favour of the Plaintiffs declaring that he had got express authority from his sister Miss Sung to sign the provisional agreement on her behalf. The Defendant also warranted in this declaration that his sister would perform the terms of the provisional agreement and he would indemnify the Plaintiffs against all damages and costs arising out of such authorization. Upon the request of the Defendant, a cheque in the sum of $80,000.00, being initial deposit was drawn in favour of Miss Sung and given to the Defendant.

3.It is common ground that according to the provisional agreement, the parties were to sign a formal agreement for sale and purchase on 9^th June 2004. A sum of $182,800.00, being further deposit, would then be payable. Completion was scheduled to take place on or before 16^th August 2004.

4.Only 2 days after the signing of the provisional agreement, i.e. on 28^th May 2004, the Defendant, Miss Sung and their mother visited the 2^nd Plaintiff. The Defendant said that in fact he had no authority of his sister to sell the Property. Miss Sung confirmed to be so.

5.There is some dispute as to what has actually been discussed at this visit. Suffice to say that by a letter dated 31^st May 2004, Miss Sung informed the Plaintiffs that she had never authorized her brother nor had she ever consented to the Defendant entering into the provisional agreement with the Plaintiffs for sale of the Property. The cheque for the initial deposit of $80,000.00 was enclosed and returned to the Plaintiffs.

6.After receipt of this letter, the Plaintiffs instructed their solicitors, Messrs Au Thong & Tsang (“ATT”) to issue a letter of 4^th June 2004 to Miss Sung. By this letter ATT said that they suspected a fraud having been committed and had advised their clients to report the matters to the Police. Whether any report was made as alleged was not apparent in the evidence. Another letter of the same date holding the Defendant liable for damages for Miss Sung’s breach was also issued to the Defendant.

7.On 9^th June 2004, in respect of the Property a sum of $222,220.00, being stamp duty and further deposit, was deposited with ATT by the 1^st Plaintiff.

8.In response to the said letter from ATT, the Defendant’s solicitors, Messrs F. Zimmern & Co. (“Zimmern”) replied by their letter dated 10^th June 2004 that Miss Sung had not breached any agreement because the provisional agreement in respect of the Property was void for want of Miss Sung’s authority.

9.The provisional agreement was stamped on 15^th June 2004. On 18^th June 2004, a writ was issued by the Plaintiffs against the Defendant for, inter alia, stamp duty incurred and damages for breach of warranty of authority and undertaking. A copy of the stamped provisional agreement was delivered to the Land Registry for registration on 21^st June 2004.

10.In fact, two days after ATT’s letter alleging fraud, i.e. on 6^th June 2004 and prior to the date scheduled for formal agreement, the Plaintiffs entered into another provisional agreement for purchase of a residential unit in Jade Court in the same Broadcast Drive Area. The purchase price was $2,680,000.00. Completion was scheduled to take place on or before 6^th August 2004. This Jade Court Property includes a roof but not a car parking space. A formal agreement was signed on 21^st June 2004. Transaction of this unit was put through on 6^th August 2004.

The Pleadings

11.It is the Plaintiff’s pleaded case that by the said letter of 31^st May 2004, Miss Sung repudiated the provisional agreement by informing that the Defendant has not her authority to enter into the provisional agreement and by returning the cheque for initial deposit. The Defendant was accordingly in breach of his warranty of authority. The Plaintiffs also pleaded that by Zimmern’s letter of the 10^th June 2004, the Defendant had indicated his intention not to honour his undertakings in the said declaration. The Plaintiffs claim:

i)   stamp duty paid in the sum of $39,420.00;

ii)  damages for breach of warranty of authority, being the difference the contract price and the market price of the Property; or alternatively;

iii) damages for breach of the undertaking; and

iv) declaration that the Defendant is contractually bound to indemnify the Plaintiffs in respect of any damages and costs suffered by the Plaintiffs in respect of the Defendant’s authority to enter into the provisional agreement.

12.A defence was filed and served on 9^th August 2004. Although the Defendant admitted liability for his breach of declaration, he denied that the Plaintiff had suffered any loss and damages. Two grounds were put up: the market price was lower than the contract price and the stamp duty was refundable pursuant to section 29C(5A)(a) of the Stamp Duty Ordinance, Cap 117 (“SDO”). A consent order for final and interlocutory judgment on liability for the Plaintiffs against the Defendant with damages to be assessed was entered by the parties on 20^th October 2004.

13.At the commencement of the assessment, the Court was informed that no quantification had ever been exchanged and thus the issues in dispute not fully identified. I therefore invited counsel for the Plaintiffs to set out the heads of claims in a statement of damages and counsel for the Defendant to set out briefly reasons for objection, if any.

14.The following are the heads of damages identified by the Plaintiffs:

i)	price difference of the Property between 26th May 2004 (date of provisional agreement) and 16th August 2004 (date of agreed completion);	$142,000.00
ii)	loss of use of stamp duty and legal fee for application for its refund;	$4,000.00
iii)	rent paid by the Plaintiff from 23rd August 2004 to 10th October 2004; $13,630 x 49/56;	$11,926.25
iv)	legal costs in respect of the purchase of the Property.	$3,810.00
	Total:	$161,736.25
Alternatively, liquidated damages of $80,000.00 pursuant to the provisional agreement.

15.Clause 8 of the provisional agreement stipulates as follows:

“Should the Vendor after receiving the initial deposit paid hereunder fail to complete the sale in the manner herein contained, the Vendor shall immediately compensate the Purchaser with a refund of the initial deposit together with a sum equivalent to the amount of the initial deposit as liquidated damages and the reimbursement/payment (as the case may be) of the stamp duty of the said premises and the Purchaser shall not take any further action to claim for damages or to enforce specific performance.”

16.The following is the Defendant’s reply to the respective heads of claim of the Plaintiffs:

i)	date of valuation should be 9th June 2004	Nil (negative value)
ii)	stamp duty: a)     The Plaintiffs should not have presented the provisional agreement for stamping; b)    The Plaintiff should have applied for refund; c)     Legal fee for stamping already covered by item (iv)	Nil
iii)	rent: Defendant had no special knowledge of the Plaintiffs’ needs. It is the Plaintiffs’ own choice of buying the Jade Court Property	Nil
iv)	legal costs: The Defendant would be prepared to bear the legal costs claimed	$3,810.00
	Total:	$3,810.00

17.It is obvious that the Plaintiffs have conceded that they can apply for a refund of the stamp duty. The claim for stamp duty as originally pleaded is not pursued. Instead, the Plaintiffs now claim loss of use of the stamp duty. Furthermore, in the afternoon of the first day of the assessment, for grounds unknown to the Court, counsel for the Plaintiffs confirmed that the Plaintiffs did not intend to pursue the alternative claim of $80,000.00. In any event this is not pleaded expressly. So the issues that call for determination in this assessment can be summarized as follows:

i)   the applicable measure of damage for breach of warranty of authority and the reference date for assessment;

ii)  the valuation of the Property at the reference date;

iii) whether there is a loss of use of the stamp duty; and

iv)  whether loss of rental is recoverable.

18.The Plaintiffs have discovered a valuation report by a surveyor, one Miss Ellen Y.T. Lo of Dudley Surveyors Limited dated 27^th January 2005. Valuation for only one date was made. According to the Plaintiffs’ expert, the open market value of the Property as at the date of completion, i.e. 16^th August 2004 was $2,770,000.00.

19.The Defendant produced a valuation report by his appointed surveyor, one Mr. Ng Siu Lam Alex of Chesterton Petty Limited dated 4^th November 2005. Valuation of the Property on three different dates was made. They were 26^th May, 9^th June and 16^th August 2004 being respectively the date of provisional agreement, date on which formal agreement is scheduled to be signed and date of completion. The valuations for the three dates are the same and are assessed at $2,450,000.00. So Mr. Kwan, counsel for the Defendant, submitted that if the Court accepted the evidence of the Defendant’s expert, the relevant date would become an “academic” question, as the valuation throughout the period remains unchanged and is less than the contract price.

Evidence of Witnesses

20.At the assessment, the 2^nd Plaintiff testified for the Plaintiffs while Miss Sung for the Defendant. The facts stated from paragraph 2 to 10 above are basically undisputed. They both confirmed and relied on their witness statements exchanged prior to trial. Surveyors Miss Lo and Mr. Ng also gave evidence as experts and relied on their respective reports already filed and exchanged. There is also no dispute as to the authenticity of the documents contained in the assessment bundle.

21.The 2^nd Plaintiff testified that the 1^st Plaintiff was her ex-husband. They had divorced for about 10 years and lived apart since divorce. At the material time she was working as a secretary earning about $30,000.00 a month and the 1^st Plaintiff was working for the Housing Authority as a foreman. She was single and lived with her three children, aged respectively fifteen, seven and four.

22.According to the 2^nd Plaintiff, in 2004 she and her three children lived in a unit in Homantin which she rented at $7,500.00 a month. Her second child was about to enter Maryknoll Covent School for primary one the coming term. As the bus routes of the school did not cover Homantin, in or about May 2004 she decided to purchase a residential unit in the Broadcast Drive Area. It was her plan to move in the new unit by late August 2004 before new school term started on 1^st of September. She admitted that it was her first time in her life to purchase a landed property.  The Plaintiffs’ plan was that the 1^st Plaintiff would pay for the down payment and the rest be met by a mortgage loan. She would then be paying the monthly instalments of the mortgage. She said that she had lived in rented premises for many years and did not want to move frequently. She also wanted to improve the living environment of the family of four. After the purchase, the 1^st Plaintiff would still lived separate from them.

23.The 2^nd Plaintiff said that when she and the Defendant discussed about the completion date of the Property, she had expressly informed the Defendant of her particular need to move in during summer holiday and before school term started. She was told that the Defendant preferred to complete until his sister got marry later that year. After some negotiation the completion date of 16^th August 2004 was agreed.  

24.As regards the visit on 28^th May 2004, the 2^nd Plaintiff said that Miss Sung told her that the Property was bought with loan from the Housing Authority. It was subjected to a prohibition against disposal within the first three years.  Miss Sung also alleged to her that she had never asked the Defendant to offer the Property for sale nor did she agree to the sale. The Defendant together with Miss Sung intended to return the cheque for the initial deposit to her as if there was no contract. No compensation was offered by the Defendant. The 2^nd Plaintiff said that according to her understanding, there was no absolute prohibition as alleged. What they required in the circumstances was only approval of the Authority. She refused to accept the cheque and indicated that she wanted to purchase the Property. She told the Defendant and Miss Sung that if they refused to sell the Property, they should compensate her according to the provisional agreement.

25.The 2^nd Plaintiff said that the Jade Court Property was purchased as a “reserve”. The first 10% of the purchase price was paid by the 1^st Plaintiff and the remaining raised by bank mortgage. In order to protect her interest, she said that she sued the Defendant for breach of contract so that they could finally sell the Property to her. The 2^nd Plaintiff said that although on 9^th June 2004 there was no formal agreement signed as scheduled, the Defendant and Miss Sung could still go ahead with completion without a formal agreement if they changed their minds later. She was prepared to take the Property, even it was a delayed transaction, in addition to the Jade Court Property. The purpose of stamping the provisional agreement was to stop the Defendant and Miss Sung from selling the Property to others. If she finally got the Property from the Defendant and Miss Sung, she said she would sell or let out one of them as property price had gone up.

26.On cross-examination, when asked whether the 2^nd Plaintiff was prepared to pay $2.8 million for 700 square feet, the 2^nd Plaintiff said at most she could afford this price of $2.8 million and the lower the better. She also replied that as at 26^th May 2004, i.e. the date of the provisional agreement, she intended to buy one property only. She also admitted that in case Miss Sung changed her mind and sell the Property to her she would move to the Property and sell the Jade Court Property.

27.Miss Sung’s oral evidence was rather short and was insignificant for the purpose of disposing of the issues of this assessment. She said that at the meeting on 28^th May 2004 with the 2^nd Plaintiff, there had been a discussion on compensation but the 2^nd Plaintiff said she needed to consult the 1^st Plaintiff.

Measure of Damages and Reference Date for Valuation

28.Mr. Ho, Counsel for the Plaintiffs submitted that damages should be assessed by reference to the date of completion, i.e. 16^th August 2004. He submitted that it was the usual measure of damages. Mr. Kwan, Counsel for the Defendant, however, invited the Court to assess the damages by reference to a date other than the date of completion. His primary position is by reference to date of breach, contended by Mr. Kwan to be 28^th May 2004 when the family of the Defendant came to visit the 2^nd Plaintiff. Alternatively, Mr. Kwan contended that it should be 31^st May 2004, the date on which the initial deposit was returned as it was then clear to the Plaintiffs that Miss Sung had granted no authority to the Defendant.  Alternatively, he contended that it should be 9^th June 2004 when the formal agreement ought to have been signed but not signed.

29.In Bowstead & Reynolds On Agency (2001) 17^th edition, at paragraph 9-074, the learned author states the following proposition as the measure of damages for breach of warranty of authority:

“Where a contract is repudiated by the person on whose behalf it was made on the ground that it was made without his authority, such loss is prima facie the amount of damages that could have been recovered from him in an action if he had duly authorized and subsequently refused to perform the contract, together with costs and expenses (if any) incurred in respect of any legal proceedings reasonably taken against him on the contract.”

30.I consider it a correct proposition of law for normal measure of damages for breach of warranty of authority. The measure is the same as that in the event of a failure to complete. That is the starting point.

31.In McGregor On Damages (2003) 17^th edition, at paragraph 22-005, the learned author has this to say for the normal measure of a failure to complete a sale of landed property:

“The normal measure of damages is the market value of the property at the contractual time for completion less the contract price.”

32.The learned author goes on to say that in cases where the failure to complete has been other than through a defect in title, this measure has been awarded by the court from 1860s until the 1960s and will continue to be awarded. The English authorities of Engell v Fitch (1860) L.R. 4 Q.B. 659 and Diamond v Campbell-Jones [1961] Ch 22 are cited.  In fact according to Engell v Fitch, it is stated by Kelly C.B. that the usual measure for breach of contract is, namely, difference between the contract and the market prices at the date of the breach. If there has been an increase in value of the property, such increase may be taken to have been in the contemplation of the parties within the meaning of the classic case of Hadley v Baxendale (1854) 9 Ex. 341, and the reference date was date of completion.

33.In Johnson and Another v Agnew [1980] A.C. 367, Lord Wilberforce stated at page 400H that:

“The general principle for assessment of damages is compensatory, i.e., that the innocent party is to be placed, so far as money can do so, in the same position as if the contract had been performed. Where the contract is one of sale, this principle recognized and embodied in section 51 of the Sale of Goods Act 1893. But this is not an absolute rule: if to follow it would give rise to injustice, the court has power to fix such other date as may be appropriate in the circumstances.

In cases where a breach of a contract for sale has occurred, and the innocent party reasonably continues to try to have the contract completed, it would to me appear more logical and just rather than tie him to the date of the original breach, to assess damages as at the date when (otherwise than by his default) the contract is lost.” (emphasis added)

34.Lord Wilberforce cited with approval in his judgment a number of authorities to show that the date could be fixed by reference to the date when the innocent party went into the market or the date of hearing. In Johnson v Agnew, the date for assessing damages was fixed by reference to a later date on which the remedy of specific performance became abortive. In the present case, the Court is asked to bring it forward instead of to a later date on the ground of allegedly “special circumstances”.

35.While it is correct to say that the normal measure is that contended by the Plaintiffs, if it gives rise to injustice, the applicable principle should be that stated by Lord Wilberforce in Johnson v Agnew, namely, the date on which the contract is lost. As the guiding principle seems to be the date on which the contract was lost, I cannot see why it cannot work the other way round so as to bring the reference date earlier than the date of completion if the adoption of the usual date brings about injustice.

36.In the present case, with no disrespect to the 2^nd Plaintiff, given that it was her first time in her life to purchase a landed property and she was earning some $30,000 a month, I do not believe that she intended to buy Jade Court as a “reserve” and would like to buy the Property even she has already purchased Jade Court. It would mean that she would end up buying two properties with her ex-husband at the same time. I do not believe that they could financially afford to purchase two properties at one time. Without special reasons (which I heard of none at the assessment) I do not consider credible the 2^nd Plaintiff’s allegations that she was prepared to acquire two properties the very first time she purchased landed property with her ex-husband, whom she had divorced and lived apart for over ten years.

37.I also do not believe that she has the intention at all to wait until 16^th August 2004 for completion of the sale. Evidence shows that as at 6^th June 2004, some three days before the scheduled time for formal sale and purchase agreement of the Property, the Plaintiffs switched to Jade Court. Before the time for completion of the Property, they had decided to sue the Defendant, not together with Miss Sung for specific performance or failure to complete. Rather, they chose to sue the Defendant only for breach of warranty of authority. Such stance is totally inconsistent with the Plaintiffs’ stance that they were willing to wait with a view to completion. If the Plaintiffs suspected that the Defendant and Miss Sung had the every intention to conspire with a view to resell at a higher price and would like to press ahead for completion, one would expect that the Plaintiffs would have sued both the Defendant and Miss Sung for breach and asked for specific performance. That is not what they chose to do.

38.In the statement of claim, the Plaintiffs pleaded that by returning the cheque under cover of Miss Sung’s letter dated 31^st May 2004 with a notice that the Defendant was not authorized, the Plaintiffs was rendered unable to enforce the provisional agreement. The Plaintiffs also pleaded by Zimmern’s letter of the 10^th June 2004, there was clear indication that the Defendant had no intention to warrant or to indemnify Miss Sung performing the contract. So according to the Plaintiffs’ own pleaded case, at least as at 10^th June 2004 they consider there being clear evidence of breach, and the Plaintiffs had no hope to enforce the contract. When the writ was issued on 18^th June 2004, the Plaintiffs had elected to accept the Defendant’s repudiation of his warranty of authority. Accordingly, as at this date, it can be said that the Plaintiffs would for sure that their bargain was lost. They chose not to wait until 16^th August 2004, i.e. the date of completion to see whether the transaction would fell through. It is akin to a situation of acceptance of an anticipatory breach. I consider that by applying the principle of Lord Wilberforce in Johnson v Agnew, the provisional agreement was lost when the Plaintiffs issued the writ herein.

39.It will therefore be just to measure the loss of the Plaintiffs by reference to 18^th June 2004, the date of issue of the writ. There is no injustice by fixing the contract being lost at this date because according to the Plaintiffs’ evidence, they had ample opportunity to go into the market to buy a replacement property in order to minimize loss and protect their interest. The fact that they could acquire the Jade Court Property within a few days of the return of the cheque is self-evident of the availability of such opportunities.

40.Counsel for the Plaintiffs argued that there is no reason that the Plaintiffs are obliged to believe what Miss Sung has asserted. Miss Sung may have other interest to serve to repudiate the bargain. Even though no formal agreement is signed, the provisional agreement is still binding and the parties can still complete relying on the provisional agreement. It will therefore be fair and reasonable, as contended by Mr. Ho, to adopt the completion date when it will be crystal clear that contract is lost. This argument of Mr. Ho that Miss Sung might change her mind to complete is too speculative a possibility because there is simply no evidence at all to suggest even the slightest chance of Miss Sung changing her mind. Furthermore, apart from evidence of putting ATT with funds for stamp duty and further deposit, there was no evidence before this Court that the Plaintiffs have demanded completion or verification of title before 16^th August 2004. There may be other reasons for which the Plaintiffs stamped the provisional agreement or putting his solicitors in fund, e.g. to use it as evidence in the intended litigation, to exert pressure on the Defendant for compensation by registering the same against the Property or to cater for unforeseen tactical move by the Defendant. The facts that the solicitors were put in fund, without more, cannot help the Plaintiffs.

Valuation of the Reference Date

41.Both experts used a direct comparison analysis in order to arrive at a market value of the Property on dates of their choice. In arriving at a valuation, Miss Ellen Lo, expert for the Plaintiffs adopted 13 comparables along Marconi Road and Fessenden Road while Mr. Ng, expert for the Defendant, has adopted some 20 comparables in the Broadcast Drive Area, which included units other than along Marconi and Fessenden Roads.

42.Miss Lo’s approach was that she preferred to use only direct comparables along the two roads which were “internal streets” and had less traffic than the busy Broadcast Drive. It was because if other units in the Broadcast Drive were used, more adjustment needed be made. It would affect the accuracy of the valuation. The more adjustments that are made, the less accurate assessment it will become seems to be her principle. Her view was that there was a successful Government land auction on 25^th May 2004. After the auction, according to her experience and feel of the pulse of the property market by reading newspaper and talking direct to estate agents, the market sentiment was good. There was a substantial rise in property price. She considered that there was a rise of 5% from June to August in 2004. She said that her perception of the market was supported by her comparables after adjustment using, inter alia, Government statistics, namely Rating and Valuation Department’s Private Domestic – Price Indices by Class (Territory-side) (“Price Index”) and the Domestic Sales – Number of Sale and Purchase Agreements and Total Consideration (“Transactions Index”). Furthermore, the contract price of $2,628,000.00 was the market price of the Property at the date of contract.

43.After hearing evidence of the two experts, I prefer Mr. Ng’s evidence to that of Miss Lo on the following grounds:

i)   although Miss Lo said that she could tell there having been a rise in property price after the Government auction the date before the provisional agreement, her perception has not been supported by the Price Index, which Miss Lo agreed to be a well-accepted and relied on index for adjustment of property price by the profession. The Indices published by the Government for Class B, which covers flat size between 40 to 69 square metres to which the Property belong, show the following:

Month	Index
May	76.4
June	73.9
July	74
August	76.4

According to Government statistics, the property price in fact dropped from May to June and July and picked up again in August 2004 to the same level as May. The rise in property price from June to August was about 3.38% while Miss Lo’s assessment was 5%. The difference is significant but no explanation was advanced on why the Broadcast Drive area accounted for a higher rise than the average.

ii) Further, her perception of an optimistic market trend after the Government auction is not supported by the Transactions Index for that period:

Month	No. of transactions
May	7380
June	7362
July	6911
August	5716

There is shrinkage in volume of transaction after the land auction, coupled with a corresponding drop in property price, as reflected by the Price Index stated above. This is contrary to Miss Lo’s perception of the market.

iii)  n cross-examination, it became apparent that she did not prepare the said valuation report. She simply attended court to support a report compiled by her colleague. That may perhaps explain why she did not appear to the Court to have given firm and convincing answers, such as effects of Government indices on valuation and why certain percentages were applied to adjust certain factors of comparables. One of these examples was comparable 12 she used. This was a unit on exactly the same building with exactly the same size, layout plan and direction as the Property but situated on the 2^nd floor while the Property was located on the 7^th floor. The transaction was completed in 23^rd February 2004. The price per square feet is $2,893. For time adjustment Miss Lo applied a +15% despite the fact that the Price Index for February and August 2004 only shows a 5.52% increase (indices being 72.4 for February and 76.4 for August). Even assuming Miss Lo’s own adjustment is to be accepted, the net adjusted price using this comparable is still only $3,700 per square feet, which is substantially lower than the price now pitched for the Property as at date of completion, namely, $4,400 per square feet. This represents a difference of 18%. Without further explanation, I do not find Miss Lo’s opinion convincing.

44.As for the Defendant’s report, Mr. Ng explained that units along Fessenden Road were not much difference from the units on that part of the Broadcast Drive beyond Fessenden Road in terms of quietness because of the one-way traffic along Broadcast Drive. I consider his explanation reasonable and acceptable. He also used his experience and Government Indices to make adjustment to the comparables. There is no apparent inconsistency between the adjustments to the comparables used by Mr. Ng in his report and Government statistics.

45.Mr. Ng came up with a valuation of the Property as at 26^th May 2004, namely, the date of the provisional agreement being $2,450,000.00. He said that since there is only a time lapse of less than half a month between 9^th June 2004, the date of formal agreement, and 26^th May 2004, he was prepared to accept that the valuation remained unchanged during this period. As the Price Index for August 2004 rose back to that of May, his view was that the valuation of $2,450,000.00 remained unchanged on the date of completion.

46.I am therefore prepared to accept that the valuation of the Property for the period from 26^th May 2004 to 16^th August 2004 remained unchanged as stated by Mr. Ng. It is $2,450,000.00. Even though it is accepted that $2,628,000.00 is the price that the Property could actually fetch in the open market on 26^th May 2004 and therefore is, prima facie, the market price of the Property on the date of the provisional agreement, that cannot help the Plaintiffs for there is no rise in price as at the relevant date. 

47.Since the market value of the Property remains unchanged during the period from 26^th May to 16^th August 2004, accordingly, I find that the Plaintiffs have suffered no loss under their first head of claims.                                     

Loss of Use of Stamp Duty

48.The Defendant contended that section 29C(5A)(a) of the SDO is applicable. At the commencement of the assessment, the Plaintiffs accepted that they could apply for a refund of the stamp duty. However, it is contended on behalf of the Plaintiffs that they believed the provisional agreement to be binding and therefore it is reasonable for them to stamp it.

49.If the Plaintiffs accepted that section 29C(5A)(a) of the SDO is applicable, their contention simply cannot stand because the effect of this provision is to exempt stamp duty payment when the agreement is cancelled, annulled or rescinded or is otherwise not performed.  The fact is that by the writ dated 18^th June 2004, the Plaintiffs pleaded that they had been unable to enforce the provisional agreement. At least as early as the date of the writ, the Plaintiffs considered the agreement not going to be performed and accordingly sued the Defendant for loss for failure to enforce the contract. Why did they not apply for a refund then? If they have doubt as to whether an instrument is stampable, they can simply apply for adjudication by the Collector of Stamp Duty. What they assert now is inconsistent with what they asserted in the writ.

50.The Plaintiffs have not advanced other grounds as to why the provisional agreement must be stamped nor is there any explanation as to why they cannot apply for a refund earlier. The argument in respect of this head is mainly centred on whether stamp duty is payable or refundable for such an agreement. In light of the concession, I do not consider that the Plaintiffs have made out a good claim for loss of use of stamp duty. The claim for $4,000.00 must fail.

Loss of Rental

51.The 2^nd Plaintiff gave evidence to the effect that she had told the Defendant of her need to complete the transaction before commencement of school term on 1^st September 2004. The Defendant did not see fit to give evidence in rebuttal. I fail to see how Miss Sung’s evidence could contradict the evidence of the 2^nd Plaintiff in this respect, for she was simply not present when the 2^nd Plaintiff inspected the Property. How can she knew what had been exchanged between the 2^nd Plaintiff and the Defendant. However, the question is whether knowledge of the special need of the 2^nd Plaintiff can assist the Plaintiffs in their claim for loss of rental.

52.The Plaintiffs’ case is that since the Jade Court Property was in a poor condition, they have to renovate it before they could move in. As a result, they have to stay in their Homantin premises until renovation work in Jade Court Property was finished. Further rental payment have been incurred. As they were forced to accept the Jade Court because of the Defendant’s breach, the Defendant must be liable for the extra rent incurred.

53.It is noted that the claim of the Plaintiffs is equivalent to a loss of bargain as if in a case in which a vendor fails or refuses to transfer at all. It is not the same as in the case of delayed completion. In the later case, the innocent party may sue for loss of rental. Even so, very often if mortgage interest can be saved as a result of the delay in completion, the saving in interest needs be taken into account. As stated above, the measure of damages in the present case is equivalent to the difference between the contract and completion price, and in appropriate cases, the price on a date when the contract is lost. Such sum of money is to put the party who has been injured or suffered in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation. So by paying a sum being the difference in property price, the innocent party is restored to a position, by means of money, as if there was no breach of contract. So the Plaintiffs will be sufficiently compensated for the loss of bargain under their first head of claim for their loss of bargain. I do not consider the claim for loss of rental from 23^rd August 2004 to the date of moving in the Jade Court a recoverable head for the present breach.

54.Furthermore, this head of claim, if successful, will mean a double benefit to the Plaintiffs. It is not in dispute that the Plaintiffs knew of the conditions of the Jade Court Property before they decided to purchase it. The condition of the property and the time required to fix the defects, if any, should have properly been reflected in the price of the Jade Court Property. So if a party acquires a property which requires, say two months to make it habitable, in an open market the price that he has paid for it must have already been discounted for that purpose. Any compensation for rental in respect of the renovation period would be an additional benefit to the party. Such rental expenses do not flow directly from and is unrelated to the breach.

Total Damages

55.The damages that I award to the Plaintiffs in respect of the first three heads of claims are nil. The Plaintiffs claim a sum of $3,810.00, being legal costs wasted in the purchase of the Property. The Defendant admitted being liable under this head and to the same extent as claimed. I therefore award $3,810.00 under this head to the Plaintiffs. That is the only damages that I award to the Plaintiffs. As the Plaintiffs do not pursue their alternative claim under clause 8 of the provisional agreement, it is not necessary for me to deal with it.

Order and Costs

56.The damages to which the Plaintiffs are entitled are assessed at $3,810.00.

57.I also make the following order nisi as to costs: that unless either party applies to be heard on the question of costs within 14 days, the Defendant pays the Plaintiffs costs of the assessment together with a certificate for counsel, to be taxed, if not agreed.

Mr. Wycliffe W.C. Ho, instructed by Messrs. Au, Thong & Tsang for the Plaintiffs

Mr. Thomas T.H. Kwan, instructed by Messrs. F. Zimmern & Co., for the Defendant