HANG TAK CO LTD v. CHU YING LUN AND OTHERS
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IN THE SUPREME COURT OF HONG KONG
ORIGINAL JURISDICTION
ACTION NO. 1493 OF 1964
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| BETWEEN | Hang Tak Company Limited | Plaintiffs |
| and | ||
| (1) Chu Ying Lun | Defendants | |
| (2) So Shung Kai | ||
| (3) Wing Wah Jade Ware Co.Ltd. |
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Coram: McMullin, J.
Date of Judgment: 21 May 1970
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JUDGMENT
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1. This matter comes before me by way of appeal from an assessment of damages by the Deputy Registrar made on the 21st of January 1970 pursuant to an order of Blair-Kerr J. dated 17th of July 1965 in the original action. The history of the matter is as follows: The present appellant - the Hang Tak Company Ltd. is the owner of a 24 storey building in Queen's Road Central, Hong Kong. The plot where this building now stands was previously occupied by six pre-war houses numbered 184, 184A, 186, 188, 190, 192 Queen's Road Central. In 1964 there were several tenants inhabiting the premises among them the 1st and 2nd defendants who are directors of the 3rd defendant company and who were then carrying on the business of that company on the ground floor of No.184A. This property they held under lease from the plaintiff company the latter having become in 1963 the assignee of the residue of the Crown lease of No.184 and 184A subject to existing lettings and tenancies including the 3rd defendant company's lease. It was a term of this lease, which had originally been made with the 1st and 2nd defendants as lessees before the formation of their limited company, that the defendants would waive their protection against ejectment under the Landlord and Tenant Ordinance. The lease expired on the 30th of November 1964.
2. The exclusion order, covering the other premises upon the site, had been obtained on the footing of a scheme presented to the Tenancy Tribunal embodying the plaintiff company's expressed intention of developing the site by erecting thereon a building of 16 storeys to be used as to the ground floor premises for shop space and as the upper floors for offices. The order dated 27th of November 1964 required the plaintiff to commence work on the site within six months thereof. So far as the tenants of the other premises were concerned no difficulty appears to have arisen and all these tenants had vacated their several premises by the end of December 1964. The defendants and the defendant company however, notwithstanding the covenant in their lease, refused to give up possession although they had been warned by letter in late November of the plaintiff company's intention to demolish and rebuild and of the possibility that the defendants would be held responsible for any loss which might arise upon the failure to deliver up possession at the conclusion of the term. Following upon a letter couched in similar terms in early December the 3rd defendant company through its solicitors claimed that the plaintiff company's predecessors in title had by letter, prior to the assignment of the lease to the plaintiff company, given to the defendants and the defendant company an option to renew the five years' term for another like period.
3. The plaintiff company sued for possession claiming in addition $850 arrears of rent for November 1964 and mesne profits at a rate to be assessed by the Court from the 1st of December 1964 until Judgment or possession. This writ was issued on the 8th of December 1964. The defendant and the defendant company pleaded the option by way of defence and, by way of counterclaim, asked for a declaration that the 3rd defendant company was entitled to the grant of a further lease of five years and two months commencing from the 1st of December 64. The defence and counterclaim were filed on the 1st of March 1965. There were some further pleadings and the action came on for hearing before Mr. Justice Blair-Kerr on the 21st of June 1965. The hearing, which occupied a number of days, concluded on the 1st of July 1965 and judgment was reserved.
4. Such is the outline of the facts and history of the case up to trial. They appear in very much greater detail in both the judgment of Mr. Justice Blair-Kerr and in the ruling on assessment of damages delivered by the Deputy Registrar on the 21st of January 1970 pursuant to the Judge's order. This somewhat abbreviated outline of the facts is, however, sufficient for the purpose of sketching in the background to the present appeal and only one further matter of detail need be mentioned. On the first day of the trial, the statement of claim was, with the leave of the Court, amended to include, among other matters, particulars of damage in the following terms: "Damages resulting from delay in commencing and effecting the redevelopment of Nos.184, 184A, 186, 188, 190 and 192 Queen's Road Central namely:-
(a) any fine premium or penalty which may be imposed by the Hong Kong Government;(b) loss of rents and profits from the building to be constructed on the abovesaid property at $73,193 per month."
The prayer was consequentially amended by adding, in relation to this head of damage, a prayer claiming: "in the alternative, a declaration that the defendants are liable to pay such damages to the plaintiff."
5. The learned trial Judge rejected the defendants allegation as to an option and dismissed the counterclaim depending thereon. He accepted the plaintiff company's contention that the redevelopment scheme presented to the Tenancy Tribunal had been held up by the defendants' holding over unlawfully and in breach of covenant after the expiration of their lease. He gave judgment for the plaintiff for possession and he made orders for arrears of rent and mesne profits as claimed in items 2 and 3 of the prayer at the conclusion of the writ. Mesne profits under this head were confined to a sum equivalent to the monthly rent of the ground floor of 184A from the 30th of November to the date of recovery of possession at the rate of $850 per month. It is not in dispute that the keys to the premises were in fact given up by the defendants to the plaintiff company sometime in June 1965 during the course of the hearing, the defendants having vacated the premises by then. Nor is it disputed that since the conclusion of the hearing before the trial judge mesne profits up to the date of delivery of possession have in fact been paid by the defendants to the plaintiff company.
6. When he came to confront the assessment of damages other than the mesne profits awarded, however, the learned trial judge found himself in some difficulty. Because the 16-storey building was yet unbuilt he preferred, in view of the many variables in the market situation to make no prospective award. He contented himself, therefore, with making the declaration claimed by the plaintiff company in its alternative pleading and further ordered that the 1st, 2nd and 3rd defendants should pay to the plaintiff such damages for their holding over as might be assessed by the Registrar on the completion of the new building.
7. It was pursuant to this order that the Deputy Registrar, Mr. Oliver held his inquiry. It commenced on the 18th of November 1969 continued on several days thereafter and concluded on the 24th of November. In a lengthy ruling delivered on the 21st January, 1970, he awarded nominal damages in the sum of $1 to the plaintiff.
8. The principal witness for the plaintiff company, both at the trial of the action and at the subsequent inquiry by the Deputy Registrar, was Mr. T.H. Chan, one of the company's directors. His testimony indeed involves the greater part of the record of the evidence in both proceedings. And from these two bodies of evidence emerges the central peculiarity of this case which has given to the appeal the feeling of an exercise in paradox. The paradox resides in the fact that Mr. Cheung for the plaintiff company has had to approach the Court for the assessment of the quantum of a loss which strictly speaking has never recurred. The facts are these: the defendants held over in breach of their covenant to vacate and did so wrongfully, as the trial judge found, for a period of six months after the expiry of their lease. Throughout those six months, between December and June when the trial concluded, the plaintiff company was in possession of approved plans permitting it to commence the construction of a 16-storey building. In February, 1965, however, with the failure of the Canton Trust Bank there commenced that series of commercial alarms and crises which so gravely disturbed the economic stability of the Colony for the next two years and which, at the hearing of this action, as in colloquial usage generally since that time, has been familiarly referred to as "the bank crisis". Sometime after the bank crisis and before the trial of the action the plaintiff company, alarmed by the omens of the market, conceived an alternative scheme of 24 storeys to offset the loss anticipated upon the general fall in rentals and in March 1965 alternative plans for such a building were actually submitted to the Building Authority for approval.
9. At the commencement of the trial therefore there were, to put the matter neutrally, two alternative building schemes in prospect. It is to be noted that these were true alternatives in the fullest legal and technical senses. It was not the case that the plaintiff company might have embarked upon the smaller scheme and then, if the occasion demanded, have permitted that scheme, as it were, to grow beyond the original compass of 16 storeys. The two schemes were different and mutually exclusive in that different ground plans and plot ratios would need to be submitted and approved. And also the individual flats were different in area and layout. This is a factor of the greatest importance in relation to the plaintiff company's interpretation of the trial judge's order for assessment of damages. The extraordinary fact is that at the trial no whisper of this alternative 24 storey scheme was ever permitted to reach the ears of the trial judge. He had of course, mainly been concerned with the question of lawful possession, but when he came to direct his attention to the assessment of damages for wrongful holding over did so on the basis of evidence which was wholly restricted to the 16 storey scheme. So far as he was concerned the matter was clear enough in that regard. The defendants had held over and were continuin to hold over during a time when the plaintiffs were fully ready to commence the demolition of the existing building and to proceed thereafter with the erection of the sixteen storey scheme. Once the trial judge, therefore had found that the defendants were in wrongful possession, the plaintiff company's right damages other than mesne profits was complete and the only question remaining was quantum. He declined to consider quantum because of a natural hesitation in relation to the possible performance of the market between the date of his order and the conclusion of the scheme. In leaving the assessment of damages to the Registrar he may be assumed to have done so because it seemed obvious that by the time the Registrar came to consider the matter answers to all the necessary economic questions would be readily available. No doubt he did not consider that the Registrar would be presented with any very difficult task.
10. When the matter came on before the Deputy Registrar however Mr. T.H. Chan gave evidence that the 16-storey scheme had been abandoned and the 24 storey scheme had been implemented and the 24 storey building had finally been completed in 1968 the occupation permit having been issued in October of that year. Confronted with this situation the learned Deputy Registrar was not unnaturally afflicted with doubts as to his position. To these he gave expression in the following terms at paragraph 6 of his ruling.
"6. Having heard the evidence and listened to counsel for 4 days, I propose to do my best to assess damages. I do so, however with some misgiving. It may well be that a strict interpretation of the declation which Mr. Justice Blair-Kerr made restricts the reference to a 16-storey building, and as it was not built, it is not open to me to assess damages now that a different has been erected."
He resolved these doubts, however, by reference to certain legal principles relating to remoteness of damage and at paragraph 8 of his ruling he said as follows:
"8. I interpret my position as that of an assessor who has been directed by a judge that the wrongful holding over was capable of giving rise to a claim for damages, and it is now for me as an assessor to find as a fact whether particular heads of damage have in fact arisen and further what damage has been suffered."
11. With this part of the ruling, though with very little else that appeared therein, Mr. Cheung for the plaintiff company is in whole-hearted agreement. He has boldly and fairly appreciated the somewhat artificial character of his client's claim and has sought to pursue its implications to a logical conclusion. Initially he made it clear that his clients were not seeking consequential damage arising from any delay in the completion of the 24 storey scheme. Further he not merely admits but proclaims that the alteration from the 16 to 24 storey scheme was in no way attributable to anything done by the defendants. This was the result of his clients' own choice after the bank crisis and to that decision the delay occasioned by the defendants holding over has in no way been a contributory cause. In other words, he accepts the view that the trial judge's finding as to consequential damage is referable wholly and solely to the 16 storey scheme. He is not disconcerted by the fact that the 16 storey building has not been completed and he asks me to accept the evidence which was put before the Deputy Registrar that had the 16 storey scheme proceeded and had the defendants not impeded it by holding over, it would have been successfully completed by the month of July 1966. What I must do therefore, he says, is what the Deputy Registrar declined to do viz: to make a finding on the figures put before the Deputy Registrar as to what units in such a building would have fetched by way of rent between July 1966 and December of that year. The total thus arrived at on the basis of $1.20 per square foot for office space and $4.50 per square foot for ground floor shop space comes to some $230,000 odd. He says that a sum in the region of this figure is a true and proper award made in accordance with the direction given by the learned trial judge. He acknowledges the fact that, as it transpired, his clients' foresight in altering the scheme and erecting a 24 storey building had left him with a more profitable asset at the time of the Deputy Registrar's assessment and that his clients' financial position at that date was better than it would have been had he completed the 16 storey scheme. Since, however, the alteration to the latter scheme was not in any way due to the act of the defendants the fruits of his acumen should be regarded as res inter alios acta or, as the case law otherwise puts it, they were the result of a transaction wholly collateral to the defendants' wrongful act. These profits were therefore not to be brought into account in assessing the amount of damage which the defendants' act would have done had the 16 storey building been built.
12. Notwithstanding his hesitations, the Deputy Registrar pursuant to the duty cast upon him by the trial judge, undertook the task of carving out of the existing 24 storey building a notional 16 storey building completed in July 1966 and of ascribing to units therein average rental values based on evidence concerning real buildings in and around that period and that place. He did not however make the award sought by the plaintiff company but he escaped from the general unreality of the situation by pursuing the game of makebelieve to what he conceived to be its logical conclusion. The plaintiff company had made it clear that it was basing its claim on the proven rental values for flats in such a building. On the basis of evidence which showed that the plaintiff company, in many other development schemes, adhered to a policy of selling rather than renting, the Deputy Registrar refused to believe, notwithstanding their contentions to the contrary, that they would ever have engaged upon a different policy in relation to this particular building. Since, therefore, prices in 1966 were disastrously low and since the company was on the date of assessment, in possession of a number of flats in the new 24 storey building which were still unsold despite a highly favourable market, he preferred to assume that they would have done likewise had the 16 storey building been completed in 1966. In other words he held that, pursuing their policy of sale, they would have held on to the 16 storey flats until the market recovered.
13. The logical consequence of this view was that since, on the evidence before him, the market at the date of assessment was as favourable to developers as it had been in January 1965, before the bank crisis, the plaintiff company had effectively lost nothing by being held out of possession. For that reason he awarded nominal damages of $1 to the plaintiff company.
14. In the upshot the award has satisfied neither party. Mr. Cheung, for the plaintiff company, although he upholds the Deputy Registrar's decision to implement the direction of the trial judge by endeavouring to wring an assessment of damage from this compositum of hypotheses, vigorously disagrees with his finding that the plaintiff company did not intend to rent the flats in the 16 storey building and would have sold them. He fortifies his other objections to this finding, based on a detailed examination of the evidence, by observing that it appears to be in conflict with a finding of fact by the trial judge viz: that a rent producing building was in contemplation at the time of the trial.
15. Mr. Zimmern, on the other hand, although the award has wholly relieved his client from the anxiety of a huge judgment debt, is equally ill pleased with the course taken by the Deputy Registrar and has with equal vigour pressed upon me the view that he was, in the circumstances, not entitled to make any award at all. Both counsel have informed me that the Deputy Registrar, at the commencement of the hearing before him, did express doubts as to his jurisdiction to assess damage on the basis of an order which referred to a wholly different set of circumstances from those before him. Mr. Zimmern who appeared on behalf of the defendants did not take the point of jurisdiction in limine but he told me that he did urge it upon the Deputy Registrar at the conclusion of the evidence as a necessary consequence of that evidence and as a total answer to the plaintiffs' claim. Indeed it seems to me that there are good reasons why the Deputy Registrar should not have dealt with the point as a preliminary point in relation to jurisdiction. Until the evidence before him was well advanced it would not have been possible for him to say to what degree the alternative scheme had proceeded; what new plans had been required what delay might have attributable to the approval of such plans or what relationship that delay might bear to the delay allegedly occasioned by the holding over having regard to the development scheme as a whole.
16. For my part I take the view that the key to this peculiar puzzle is to be found in the language used by the learned trial judge in giving his direction. At page 12 of his judgment he adverts to the fact that there are many factors to be considered in estimating the question of damages and he says:-
".... and there is no doubt that damages could be assessed with far greater accuracy when the building has been completed and rented to the new tenants. It would then be possible for the whole redevelopment scheme to be viewed in proper perspective and the real extent of the damage caused by the defendants will be capable of being assessed much more accurately than at present."
Earlier, at the beginning of that page, he summarizes the results of the defendants' breach of covenant in the words: "the whole scheme has been held up." To my mind, it is abundantly clear that in these passages he is referring to the 16 storey scheme, the only scheme in respect of which there was any evidence before him, and also that he was purporting to make an exhaustive provision for the assessment of damages on the basis of that evidence. It is equally certain that, had any suggestion been made before him that there was an alternative scheme in the wind, his order as to assessment must necessarily have reflected this alternative possibility.
17. The undisputed evidence of Mr. T.H. Chan before the Deputy Registrar was that the plaintiff company had, at the beginning of March, submitted plans to the Building Authority for a 24 storey building and were at that time, because of the bank crisis, seriously contemplating substituting this scheme for the former. Yet at the trial the plaintiff company through its witness maintained a total silence unbroken by even the most oblique reference to this alternative possibility. It is scarcely surprising that Mr. T.H. Chan was subjected to rigorous cross-examination on the subject of this extraordinary silence. It is clear that counsel there took the line which he has taken before me and which was that the plaintiff company had altered its plan immediately after the bank crisis and had effectively abandoned the original scheme. Both counsel dwelt at some length upon answers given by the witness in the course of this cross-examination. Mr. Zimmern asks me to say that Mr. T.H. Chan is quite simply a liar and he points out that there is a very good reason why the witness, if he wished to recover these damages, should willfully conceal the plaintiff company's true intention at the time of the trial. The keys of the premises together with possession thereof had been returned to the plaintiff company in the course of the trial which took place in June 1965. At that date the plaintiff company presenting its case on the basis of a 16 storey scheme for which the plans had been approved had not yet received the approval of the Building Authority for the 24 storey building plan without that approval they were not in a position to set the new scheme in motion. If therefore, they were to ask the judge for additional damages for delay to their building scheme resulting from the holding over, they were confronted with the difficulty that the holding over while still an invasion of the company's rights as proprietor was an effective cause of delay only in relation to the 16 and not to the 24 storey scheme. As it transpires, the Building Authority approved the new plans in July, about a month after the conclusion of the action before Blair-Kerr J. the plaintiff company, therefore, for something over one month after they had recovered possession were still unable to start upon the scheme which was the one they eventually chose and which was completed in 1968. Mr. Zimmern therefore asks with some justice where is the damage resulting from the defendants' holding over.
18. Mr. Cheung fairly admits the strangeness of his clients' stance in asking for these damages. But his position has been consistant throughout and whatever it may lack in the feeling of reality it has at least been maintained with an unswerving logic. He asks me to discern in the solid building which is now standing on the site a ghostly, notional building of 16 storeys. He asks me to do so because this is the building which the trial judge directed the Registrar to concern himself with. The order of the trial judge must be implemented and, approached from the angle of this legal imperative it is the present building which is insubstantial; it is that building which intrudes like a ghost upon the territory created by the Judge's order. Counsel will, I trust, forgive me, for putting the matter fancifully but it is difficult to state it clearly without finding oneself drawn into fantasy. Indeed I could not help feeling that Mr. Cheung himself, in making his submission on the question of causation, found his argument, insensibly, drawn in the same direction. In this connection he cited the case of Baker v. Willoughby (1970) 2 Weekly Law Reports p.50. That was an action on a claim for damages for personal injuries. The plaintiff had, through the tort of the defendant, incurred an injury to his knee which caused it to be stiff. Subsequently, and before the trial of the action, he was the victim of a shooting incident involving bank robbers and as a result the injured log had to be wholly amputated. It was argued for the defendant that the result of his tort had been obliterated by the later wrongful act which was therefore be considered the sole cause of the total degree of his disability at the time that he appeared before the court. The court rejected this view and I do not find it necessary to discuss the reasons given for doing so. Mr. Cheung himself admitted that he could at best draw analogical support from this decision. He conceded that it could only be made to apply to the circumstances of this case if one were to make alterations in a certain number of the essential features of the case. Thus it could be said to be of direct assistance, if, in particular, one were to consider that the 16 storey building had actually been completed and that its completion had been delayed not alone by the overholding of the defendants but in addition by the act of some third party as, for instances, the negligence of some contractor engaged upon the construction of it. Although he was not relying upon this decision as direct authority for the proposition he put in relation to double causation, nevertheless the concession he felt it necessary to make in respect of applying it seems to me to have a peculiar relevance in pointing up the flaw in his client's position. That flaw may be described by saying that the company complains of damage caused by the defendants in delaying the completion of a building scheme which was not even commenced although it is admitted that the cause of non commencement had nothing to do with any act of the defendants.
19. Mr. Cheung has made it clear that he deprecates the silence of his clients on the topic of the 24 storey building when he was giving evidence to the trial judge. He asks me to say nevertheless that even had that evidence been given, the trial judge would nevertheless have made an order in exactly the same terms as that which he made viz: that at the conclusion of the building scheme the Registrar should assess damages if any. I find it impossible to accept this contention. It seems to me that Mr. Zimmern has got close to the root of the matter when he points out that on the basis of a 24 storey scheme the judge would have to found it impossible to make any award of consequential damage in favour of the plaintiff company. To that contention there is however one possible reservation. It has been accepted by both sides that before the developer commences the actual work of putting up a building he must have in his possession plans approved by the Building Authority. It is accepted that as far as the 24 storey scheme is concerned the plaintiff company was not in possession of such plans at the date upon which the defendants had returned possession of the premises to them. The evidence however showed that the holding over had delayed not merely the commencement of the building but also the demolition of the existing buildings upon the site. It appears to be agreed that no special permission has to be obtained for this demolition. It would therefore strictly speaking be open to the plaintiff company to say that although possession was returned in the month of June and although the approval of plans for the 24 storey building had not come through until about a month later the company nevertheless suffered from the holding over to the extent that they were unable to demolish to building until late in June. Evidence, which I think has been uncontested, was given to the effect that demolition of the existing building would take perhaps two and a half months. If all these facts had been placed before the trial judge, he might, therefore, have been able to find that, even in relation to the 24 storey scheme, some degree of damage might have accrued from the holding over if it should later transpire that the building plan for that scheme had been approved by the building authority earlier than two and a half months from the handing back of possession by the defendants to the plaintiff company. It might therefore have been as, Mr. Cheung suggests, that even if all the evidence had been before him, trial judge might yet have made an order concerning assessment of damages by the Registrar.
20. It is true of course, that the plaintiff company did not approach the Registrar, and it does not approach me, asking for an assessment of damages based upon the 24 storey scheme but there is this advantages to be gained for the plaintiff company if I were to accede to Mr. Cheung's contention that, the matter being at large before me, I might feel impelled to make an award on such a basis, ut magis valeat quam pereat, taking the view that the trial judge's direction was one for assessment of damages in relation to whatever form the scheme finally took.
21. There has been no want of agreement between counsel on both sides as to the basic principles upon which damages should be awarded. In particular both proclaim the root principle that a defendant must be made liable for all such damage and only for such damage, as he must have foreseen as likely to flow from the act complained of. Again, counsel have pressed upon me that this appeal is by way of rehearing. It might be said therefore that, if there is a discernable method whereby, upon the evidence placed before the Deputy Registrar, the direction given by the trial judge could receive a reasonable implementation, I should do so although having no direct instruction from the trial judge on the question of the 24 storey scheme. I take it therefore that Mr. Cheung in drawing my attention this point relating to time for demolition of the building has done so in order to invite me to say, even if the plaintiff company has suffered no loss in relation to the 16 storey scheme, there has nevertheless been a real loss in relation to the 24 storey scheme or possibly that there has been a real loss whether one looks at the scheme as one for 16 or for 24 storeys. I think I would feel some reluctance in so finding more especially as, in order to make an assessment, it would be necessary to take further evidence relating to many new factors concerning the 24 storey scheme although the case has throughout been presented upon the basis of the 16 storey scheme. But even if I were to conclude that I have the right so to interpret the direction of the trial judge it seems to me that there are good reasons why I should not do so.
22. Mr. Zimmern invited to me to take the view that the order obtained from the trial judge by the plaintiff company was obtained by a course of conduct which was no better than trickery. The most vigorous part of the cross examination of T.H. Chan was designed to show that the plaintiff company from March 1965 at the latest had already altered its intention in relation to the building scheme and had decided upon putting up a 24 storey building. He asked me to conclude that because they realized, when the case came on for trial, that, since no building lan had yet been approved for the new scheme, they were in difficult in claiming any consequential damages on the basis of delay to that scheme, they therefore quite brazenly pretended that they were proposing to continue the 16 storey scheme i.e. the scheme in respect of which their right to such consequential damage was already perfected. If that was Mr. Chan's position at the trial then his concealment of it cannot be regarded as other than a grave abuse of the process of the Court. However, while it is unmistakable upon the record that Mr. Chan was extremely uncomfortable in this part of his cross-examination, I am not wholly convinced that his replies, surprising as many of them seem, are to be interpreted as a total breakdown of his original contention or a final admission under pressure, of an intention contrary to that upon which his claim was originally based. I think that the evidence at large is equally consonant with the view, which the witness strove to put forward, that he and his company at the date of the trial had not yet finally determined upon the nature of the scheme. I think it is not improbable that, at that period, full of speculation and uncertainty as it was on both the political and economic fronts, the company may have wished to provide for two possible schemes without, at that stage, being finally committed to either of them. Even if this be the truth however the evidence of Mr. Chan can scarcely escape criticism. Even if it was not down right untrue it is vitiated by a most unfortunate economy in that matter which would clearly have been of the greatest interest and assistance to the trial judge was deliberately omitted therefrom. It is true that the issue of consequential damage played a very subordinate part in the trial of the action and it may be therefore that the evidence given by Mr. Chan to the trial judge reflects the fact that at that stage the 16 storey building was still the leading possibility. It may be also, as Mr. Cheung has intimated, that the omission was made without an appreciation of the significant inferences which now seem apt to be drawn therefrom and that it was the result of ill advice on the part of the plaintiff company's solicitors in the belief that to introduce evidence concerning the alternative scheme, while that was still tentative, would unnecessarily complicate what was a subsidiary issue and, on relfection I prefer to regard this omission as the result of bad advice rather than bad faith.
23. The plaintiff company however, having completed the larger and more profitable scheme, has sought to pursue an order which can only have been granted to them on the basis of this omission. It must be obvious that of all the possible orders which Mr. Justice Blair-Kerr might have made had the evidence been fully before him, the only one of which one can say with some degree of certainty that it would not have made was that which the plaintiff now seeks to enforce viz: an order wholly restricted to consequential damage arising from a 16 storey scheme. The plaintiff company therefore can scarcely complain if it has forfeited the sympathetic consideration of the court in relation to the possible alternative of an assessment on the basis of a 24 storey scheme. I must however consider that possibility. If it were the case, as Mr. Zimmern suggests, that the plaintiff company had decided upon the new scheme in March of 1965 then it would follow that they have been held out in possession for a period of about 4 months from the date of that decision by the defendant's overholding. There are two possibilities resulting therefrom which could be urged in their favour. Firstly there is the point I have already mentioned, that even although plans had not been approved for the 24 storey building, the company was prevented from demolishing the existing building. And this, as I have pointed out, might have left them with a good claim to damages for delay to that scheme for a period of perhaps a month and a half prior to recovery of possession on the basis of two and a half months demolition time. The answer to this however is that, on the evidence, even when they got back possession in the month of June, a further four months elapsed before any steps were taken to demolish those buildings. Even if their alternative view of the matter were adopted therefore and even if it could be said that they had established a bare right damages in respect of the 24 storey scheme there could no good claim in equity to such damages in view of the conduct of the plaintiff company itself. Indeed in this regard Mr. Zimmern's contention was more favourable to the plaintiff company's case than was the opposing contention of counsel for the plaintiff company. For if the company had changed its mind already in March it might have been left with some legal claim to damages in respect of the delay to the 24 storey scheme whereas in fact Mr. Cheung argued that the decision to change the scheme came only after plans for the 24 storey building had been approved. If that was the case then even that slender basis for an award is removed.
24. At the commencement of the hearing before me Mr. Cheung in outlining the facts, said that between October 1965 and February 1966 the plaintiff gave instructions to his contractors to put up a 24 storey building. This would certainly seem to account for the otherwise inexplicable delay in demolition once possession had been recovered by the plaintiff company. What seems to emerge finally from these contentions and from the evidence on which they are based, is that, as late as October 1965, some four months after recovery of possession, the entire building scheme, whether regarded as a 16 or 24 storey scheme, was being delayed neither by the holding over nor yet by the failure to obtain approval for plans but by the plaintiff company's own state of indecision. If that is the truth there can be no question of any consequential damage to the either scheme arising from the holding over since it has never been suggested that it was the holding over which caused the plaintiff company to hesitate.
25. It seems to me that Mr. Zimmern's surprise, and even his indignation, at the conduct of the plaintiff company in approaching the Deputy Registrar for an assessment of damages is, in the circumstances, justified. What it amounts to is that the plaintiff company, either by careless omission, or else by culpable suppression of facts, obtained from the trial judge an order that it was entitled to damages. That order was referable to one only of two possible and mutually exclusive sets of circumstances which, though the fact was not disclosed, were in contemplation at the time of the trial. The trial judge prudently declined to assess prospective loss and the subsequent trend of events has amply justified his caution. Had all these facts been placed before him, the consequential order or assessment, if any such order were made, could only have been made in terms which reflected the uncertainty of the entire situation. In other words, it would have been an order for the assessment by the Deputy Registrar of damage occasioned to the plaintiff company by the holding over of the defendants in relation only to the 16 storey scheme should that scheme be the one which eventuated.
26. It seems to me that the plaintiff company is fairly caught on the horns of a dilemma conjured up by itself. It had an order for the assessment of damages from the trial judge which it wished to implement. That Order related to consequential damage from a delayed building scheme. It could not, however, ask the Deputy Registrar to assess damages for delay to the later scheme because, (a) the trial judge's order clearly related to the 16 storey scheme; (b) the defendants could, in any event, only be made liable to such damages as they could have foreseen to be the likely result of the act in holding over and they have been specifically warned by the plaintiff company that the likely result was the holding up of the 16 storey scheme; (c) no damage could be shown to have resulted to the 24 storey scheme arising directly from the defendants' holding over. But basic to the appellant company's difficulty was the fact that the 16 storey scheme never achieved reality. It was this, I am convinced, which caused them to adopt a contradictory attitude in relation to the damage which they claimed. This may be more readily appreciated if one looks at the situation which would have arisen had the plaintiff company decided, after the trial of the action, not to go with any building scheme at all. Assuming this change of plan had been equally unconnected with the holding over as was the 24 storey scheme it seems very unlikely that they would ever have sought damages on the basis of what had not occurred. It seems obvious that the reason they have done so is because a building eventually was built on the site to replace the existing properties. Yet the damage done to the 16 storey scheme by the holding over is no less illusory in the context of a new but wholly different building then it would be in the context of no new building at all. Damages on the grounds they are looked for here cannot easily be fitting into any of the usual categories. They are neither past, continuing nor prospective. They might best be described as wholly suppositious.
27. Mr. Cheung argued that I should not be inhibited merely by the fact that I was asked to deal with a notional building. He said that even if the 16 storey building had been completed, the Deputy Registrar, in coming to his task, would, in any event, have been dealing with a notional building since the period which would have been vital to his assessment would have been the 6 month period during which a rentable 16 storey building should have stood upon the plot and had not done so because of the holding over. There should therefore, he says, be little more difficult in estimating the value of such a building for such a period now. But the difference is that in the former case he would have been dealing with a real building. All that would have been notional would have been the time of its completion. Not only would the building have been real but the condition of the market relevant to the assessment, though dealing with time elapsed, would also have been real. This second reality remains but it is on its own, insufficient to give flesh to the national ghost of a building which was never completed because it was never started. In the entire history of the redevelopment of this plot of land the only factor arising from the holding over which remains common to both schemes and relevant to the abandoned scheme is that the plot itself was withheld from its rightful owners. For this withholding the defendants have already paid in mesne profits. The further foreseeable loss which the plaintiff company claims as deriving from the defendants' wrongful act could only accrue if that which had been foreseen had also come to pass.
28. The true reason why this appeal must fail that is there was on the facts placed before the Deputy Registrar nothing upon which he might legitimately implement the direction of the trial judge. The separate and cognate considerations as to mitigation, remoteness and res inter alios acta do not therefore fall to be considered since my finding is that there is wanting upon the facts as they now appear any degree of damage such as might have necessitated resort to those considerations.
29. It is true, of course, that had the plaintiff company alleged and proved that the abandonment of the earlier scheme was the result of the defendants holding over, it might reasonably have claimed the consequential loss irrespective of whether it had abandoned every scheme or else completed a different building. In the latter case the company would, of course, have needed to show that the completed building was, on other grounds, res inter alios or else be compelles to bring the profits of it into account.
30. I am indebted to counsel for very full arguments which ranged over a wider spectrum of topics than I have covered in this judgment. If I have not referred to the greater part of the cases cited to me and upon which counsel sought to rely it is not through want respect either for those authorities or for the arguments in which they were deployed. None of those authorities however was addressed to the point which seems to me to be the decisive one and upon which I have concluded the appeal.
31. The plaintiff company was the appellant in this case and in effect, as Mr. Zimmern said that the outset, the respondent was cross-appealing against the Deputy Registrar. Accordingly I dismiss the plaintiff company's appeal and allow the cross-appeal. The order for nominal damage in the sum of $1 is set aside and the defendants, the respondents in this appeal, will have the costs of the appeal and also the costs of the hearing before the Deputy Registrar. Certificate for counsel.
| (A.M. McMullin) Puisne Judge |
Representation:
O.V. Cheung, Q.C. & Swaine (Woo & Kwan) for appellants/plaintiffs.
A. Zimmern (Lo & Lo) for respondents/defendants.