#6653 - Tang Man Sit V. Capacious Industries - Commercial Remedies BCL

Tang Man Sit v. Capacious Investments

Facts

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.

In 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.

Damages Claims: The claim was made under two heads. It was for a substantial amount. Head A was for damages for loss of use and occupation, comprising loss of market rental from January 1985 to January 1993. As later amended, the amount claimed was almost $8.6 million. The claim under head B was for $14 million, as damages in respect of the loss caused by the diminution in value of the property due to (1) the wrongful use and occupation and (2) the property having been wrongfully incumbered by the tenancies.

Holding

Damages and Account for profits are alternative claims

In agreement with the Court of Appeal their Lordships accept the defendant's submission that there is an inconsistency between an account of profits, whereby for better or worse a plaintiff takes the money the defendant received from the use he made of the property, and an award of damages, representing the financial return the plaintiff would have received for the same period had he been able to use the property. These remedies are alternative, not cumulative. A plaintiff may have one or other, but not both.

Did the claimant elect to pursue account of profits?

As already noted, to some extent at least the remedies claimed by the plaintiff included two alternative and inconsistent remedies. An account of the profits Mr. Tang had made from the lettings is an alternative remedy to damages for the loss of use of the houses. However, and this is the unusual feature of the present case, matters went awry at the time of summary judgment on 25 August 1992. The plaintiff should have been required, so far as the two remedies were inconsistent, to choose which it would take. If it chose an account of profits, it could have damages only so far as, on the facts of this case, an award of damages was not inconsistent. In the event, the plaintiff was not required to elect. Instead the order gave the plaintiff both remedies. The judge ordered the defendant to account for the estate's profits and also to pay damages. The latter order was expressed in unqualified terms.

What happened thereafter was that the plaintiff proceeded to enforce both remedies ordered...