Siu Ling v Wong Sum-fai

CourtCourt of Appeal (Hong Kong)
Judgement NumberCACV70/1981
Subject MatterCivil Appeal



SIU LING Appellant
(1st Defendant)

WONG SUM-FAI Respondent

SIU LING Cross 1st Respondent
(1st Defendant)
SIU WAI Cross 2nd Respondent
(2nd Defendant)


Coram: Sir Alan Huggins, V.-P., Zimmern and Barker, JJ.A.

Date of Judgment: 2nd October 1981




Sir Alan Huggins, V.-P.:

1. In the event we are concerned with the assessment of damages against the 2nd Defendant for breach of warranty of authority. The agreement into which he entered was for the sale of a shop at a price of $1,470,000. It is contended on his behalf that the Plaintiff became aware almost immediately that the owner denied the 2nd Defendant's authority to sell and that, accordingly, he ought to have taken steps to mitigate his damage by purchasing elsewhere. Indeed, it is said that there was evidence of the availability of another shop next door to that which was the subject matter of the agreement. Counsel for the Plaintiff, on the other hand, submits that his client was under no duty to accept the assertion that the 2nd Defendant had no authority to sell, was justified in taking that matter to trial and could, therefore, properly claim the difference between the contract price ($1,470,000) and the value of the property at the date of judgment ($2,978,750), namely $1,508,750.

2. The measure of damages for breach of warranty of authority was stated by Lord Esher in Firbank's Executors v Humphreys (1886) 18 Q.B.D. 54, 60 as follows :

"The damages, under the general rule, are arrived at by considering the difference in the position he would have been in had the representation been true, and the position he is actually in, in consequence of its being untrue."

That is a specific application of the general principle stated in Johnson v Agnew 1979 2 W.L.R. 487, 499E where Lord Wilberforce said :

"The general principle for the 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."

He went on :

"Where the contract is one of sale, this principle normally leads to assessment of damages as at the date of the breach - a principle recognised 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."

Had the representation in this case been true the Plaintiff would have acquired the shop at a price of $1,470,000, but the position at the date of the trial was that he would have had to pay $2,978,750 for a similar property. As it seems to me the only question is whether it was reasonable for the Plaintiff to institute proceedings rather than to accept that the agreement had been made without authority and to go into the market for alternative accommodation without delay. The Plaintiff wanted the contract premises: I do not think it matters that the pleader initially did not ask for specific performance. It is true that the 1st Defendant told him on her return from abroad that the agreement had been made without her authority, but I do not see why he should be obliged to believe her assertion: as in Godwin v Francis (1870) L.R.5 C.P. 295 there was ground for suspecting that the defendants might be in collusion. In that case interrogatories were delivered and both the alleged principal and the alleged agent denied the agency on oath. Here the alleged principal would probably have denied the agency if interrogated, but the alleged agent was denying that he had held himself out as the 1st Defendant's agent and his denial has led to the Plaintiff's continuing the action and suffering additional loss, a loss which he should reasonably have contemplated.

3. Another way of looking at the matter is to be found in Bowstead (14th Edition) 386 Article 122(2):

"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 authorised and subsequently refused to perform the contract, together with the costs and expenses (if any) incurred in respect of any legal proceedings reasonably taken against him on the contract."

Support for that proposition is to be found in Godwin v Francis (supra) at p.306. Suppose, therefore, that the 1st Defendant had authorised the 2nd Defendant to contract on her behalf and that she had refused to convey the shop. An action would have lain against her for specific performance or for damages in lieu. On the authority of Wroth v Tyler 1974 1 Ch. 30 and Malhotra v Choudhury 1978 3 W.L.R. 825 the value of the property could properly have been assessed as at the date of judgment. In the present case there was no suggestion that the Plaintiff was guilty of any delay in pursuing his claim.

4. I conclude that the Plaintiff is entitled to damages against the 2nd Defendant in the sum of $1,508,750 and would enter judgment accordingly.

Zimmern, J.A. :

5. Mrs. Siu Ling the 1st defendant and appellant returned to Hong Kong from America after a short visit there with her husband on the night of 28th June 1979 and was met there by Mr. Siu Wai the 2nd defendant said to be a relative in that he was the husband of the 1st defendant's "sworn sister". In any event he was a good friend of the 1st defendant's husband. He told her that he had that day entered into a provisional agreement in writing signed by himself as attorney to sell her property being Shop A on Ground floor of Yue Wah Building No. 15 Cheung Sha Wan Road Kowloon to the plaintiff Wong Sum Fai for $1.47 million and handed her the agreement.

6. It came about this way. The plaintiff respondent was in the shoe business and was then minded to purchase a shop space in Cheung Sha Wan Road area for that business. A few weeks before the agreement he noticed a sign board outside No. 15 reading "FOR LET or SALE" and underneath a telephone number. He dialled that number and met up with a Mr. CHAN Wai a decorator. He told the plaintiff that the price was $1.5 million. The plaintiff inspected the premises and there was some bargaining between them. Somehow CHAN Wai mentioned the name of the 2nd defendant to the plaintiff as a relative of the owner. It turned out the plaintiff's brother was an old acquaintance of his. A meeting was arranged and no doubt after further meetings the 2nd defendant signed the provisional agreement I have mentioned.

7. The plaintiff was told the next day that the 1st defendant was not selling the property. There was a meeting of those involved a few days later, no agreement was reached and on 9th November, 1979 the plaintiff issued his writ against the 1st and 2nd defendants with the Statement of Claim endorsed thereon. He claimed as against both damages for breach of the agreement in writing signed by the 2nd defendant on behalf of the 1st defendant. There is mention in the Statement of Claim of a deposit of $50,000 paid by the plaintiff pursuant to agreement by way of a cheque made payable to the 1st defendant. Apparently the 2nd defendant that night handed the cheque to the 1st defendant who refused to accept it and that cheque was never presented for payment.

8. It is important to note the defences served and filed by the 1st and 2nd defendants. The 1st defendant was bold. She admitted that the 2nd defendant signed the agreement but denied that she had given the 2nd defendant any authority, express or implied to sell that property or any property on her behalf and that she had ever held out that he was such an agent. The 2nd defendant denied that he had warranted or held himself out to be the 1st defendant's agent.

9. The plaintiff on 26th February 1981 i.e. some 15 months after issue of the writ obtained leave to amend his Statement of Claim by adding a claim for specific performance and in the alternative damages against the 1st defendant. I set out in full a new paragraph 11 :

"The defendants now allege that the 2nd defendant was not authorised by the 1st defendant to enter into the said memorandum (which allegation is...

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