Tang Man Sit (Personal Representatives of) v Capacious Investments Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 18 December 1995 |
| Court | Privy Council |
Trusts - Trustee - Breach of trust - Trustee letting houses without consent of equitable owner - Plaintiff claiming account of secret profits and damages for breach of trust - Whether remedies alternative - Judge awarding both - Payment in respect of profits accepted - Whether plaintiff electing for account of profits not damages - Whether plaintiff entitled to damages for both loss of use and diminution in value
By a deed a landowner agreed to assign certain houses to the plaintiff. No assignment was executed and the landowner subsequently let the houses without the plaintiff's knowledge or consent. After the death of the landowner the plaintiff brought an action against his personal representative. On an application by the plaintiff for summary judgment the judge granted the plaintiff a declaration that from at least the date of the deed it was the equitable owner of the houses, and he ordered the defendant to assign them to the plaintiff free of incumbrances, to furnish an account of all secret profits in respect of the use and letting of the houses and pay such profits to the plaintiff, and to pay damages for breach of trust to be assessed. The defendant assigned the houses but not with vacant possession and they were not in a good state of repair. The defendant having disclosed receipts in relation to some of the tenancies the plaintiff sought to enforce payment and was paid a sum in respect of those profits. The defendant paid further amounts in respect of current rental payments received from the tenants. The plaintiff proceeded with the assessment of damages claiming damages for loss of use and occupation, comprising loss of market rental for the period in question but deducting the amounts received from the defendant in respect of the account of profits and current rental payments, and damages for the loss caused by the diminution in value of the houses due to the wrongful use and occupation and the houses having been wrongfully incumbered by the tenants. The master awarded damages under both heads deducting the sums already received. The Court of Appeal of Hong Kong allowed the defendant's appeal in part holding that by receiving the payments on account of profits the plaintiff had elected to take that remedy and could not recover damages for loss of profits, because those two remedies were inconsistent, but that it was entitled to damages for dimunition in value.
On the defendant's appeal and the plaintiff's cross-appeal to the Judicial Committee: —
Held, (1) allowing the cross-appeal, that an account of profits in respect of the money received by the deceased from letting the houses was not cumulative but alternative to damages for loss of use and occupation and, provided that the plaintiff had all the necessary information, it should have been required when summary judgment was entered to make an election to the extent that the remedies were inconsistent; that since the judge's order was for both an account of profits and damages, in all the circumstances the plaintiff's acceptance of the payment in respect of profits did not constitute an election and the payment had not been made by the defendant under the misapprehension that the plaintiff had made such an election; that the plaintiff had therefore been entitled to proceed with the assessment of damages and had subsequently made a choice in favour of damages for loss of use and occupation, giving credit for the amounts which it had received from the defendant, instead of an account of profits; and that, accordingly, the Court of Appeal had erred in concluding that the plaintiff had elected for an account of profits rather than damages (post, pp. 200G–H, 201B–C, 202A).
(2) Dismissing the appeal, that the plaintiff was entitled to damages both for its loss of the market rental which it could have received during the period in which the houses were being let by the landowner and also for the loss resulting from the decrease in value of the houses caused by the landowner's wrongful use of the houses, which had badly deteriorated through over-occupation, and the loss occasioned by them not being assigned to the plaintiff free from incumbrances; and that, accordingly, the master's order would be restored (post, p. 202B–D).
The following cases are referred to in the judgment of their Lordships:
Henderson v. Henderson (
Island Records Ltd. v. Tring International Plc. [
Johnson v. Agnew [
Mahesan s/o Thambiah v. Malaysia Government Officers' Co-operative Housing Society Ltd. [
United Australia Ltd. v. Barclays Bank Ltd. [
The following additional cases were cited in argument:
Cross, In re; Hartson v. Tenison (
Heathcote v. Hulme (
Neilson v. Betts (
Simms, In re; Ex parte Trustee [
Appeal (No. 7 of 1995) with leave of the Court of Appeal of Hong Kong by the personal representatives of Tang Man Sit deceased, the defendant, Tang Wing Hon Alan having been appointed to represent the deceased's estate, and cross-appeal by the plaintiff, Capacious Investments Ltd., from the judgment of the Court of Appeal of Hong Kong (Macdougall V.-P., Godfrey J.A. and Sears J.) given on 29 April 1994 allowing in part the defendant's appeal from the judgment and order of Master Woolley on 10 August 1993 in the High Court of Hong Kong, whereby he had assessed that the damages for breach of trust to which the plaintiff was entitled amounted to H.K.$7,934,955 (damages for loss of use and occupation) and H.K.$11 million (diminution in value of the 16 houses in question less H.K.$1,997,758 already paid by the defendant to the plaintiff). The Court of Appeal had varied that order so as to reduce the award of damages to H.K.$11 million.
The facts are stated in the judgment of their Lordships.
David Oliver Q.C. and Jacqueline Crawford for the defendant.
Christopher McCall Q.C. and Michael Gibbon for the plaintiff.
18 December. The judgment of their Lordships was delivered by Lord Nicholls of Birkenhead.
This appeal arises out of breaches of trust committed by Mr. Tang Man Sit from 1985 onwards. In 1978 Mr. Tang and Mr. Kung Yerk Man engaged upon a joint venture for the construction of 22 houses on a piece of land at Kam Tin, Yuen Long, New Territories. Mr. Kung acted through a company controlled by him, Capacious Investments Ltd., the plaintiff in these proceedings. Mr. Tang owned the land, and the plaintiff provided the money.
The houses were finished in about September 1981. By a deed dated 20 March 1982, replacing an earlier agreement, the parties agreed that Mr. Tang would assign to the plaintiff 16 of the houses. The deed specified which these houses would be. By this date Mr. Kung had died.
No assignment was executed. The houses stood empty. There were complications over Mr. Kung's estate. In 1985, in circumstances which it is unnecessary to relate, Mr. Tang proceeded to let some and progressively all of the 16 houses. They were used as homes for the elderly. The plaintiff did not know or approve of the lettings at the time.
The history of the proceedingsIn December 1991 the plaintiff started this action. Mr. Tang died two days before the writ was issued, and the defendant is his personal representative. The plaintiff claimed (1) an order that the defendant do assign the 16 houses to the plaintiff free of incumbrances, (2) a declaration that the plaintiff was from at least 20 March 1982 the equitable owner of the 16 houses, (3) an account of all secret profits in respect of the use and letting of the 16 houses, and payment of all such secret profits, and (4) damages for breach of trust.
On 25 August 1992, on an application by the plaintiff for summary judgment, Mayo J. made orders as sought. He ordered the defendant to assign the 16 houses free of incumbrances. He made a declaration as asked. He...
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