Misrepresentation: a flat with a view in the Court of Appeal

Yang Dandan v Hong Kong Resort Co Ltd ([2016] HKEC 1722, CA) concerned the alleged misrepresentation made by Hong Kong Resort Co Ltd (‘the developer’) in the sales brochure for the flat bought from it by Yang Dandan (‘YD’). YD pointed to passages in the sales brochure to the effect that she was acquiring the top floor flats in a ‘high rise’ development. The same brochure indicated  that the planned development on nearby land also owned by the developer would be a ‘mid rise’ development. YD was acquiring a duplex on the top two floors of the high rise development. She argued that the descriptions in the brochure amounted to representations: (a) that the mid-rise development would not obstruct the view enjoyed from her property; and (b) that the developer had the intention of ensuring that the top floor flats would continue to enjoy an unimpeded sea view in the future. The mid-rise development was later built and did have a minor impact on the view from YD’s balcony.  YD argued that this meant that there had been a misrepresentation. This claim was rejected by the Court of First Instance.

The Court of Appeal (Kwan JA giving the main judgment) dismissed her appeal. First, there was too great a leap from the contrasting ‘high-rise’ / ‘mid-rise’ descriptions to the notion that a reasonable person with YD’s characteristics (a highly educated purchaser) would infer that there would be a significant difference in height between the top of the mid-rise development and YD’s flat. Differences in topography, for example, would have to be taken into account ([56] – [58]). Second, since the mid-rise development had yet to be built at the time of the sale to YD, the ‘representation’ was as to future intention and not present fact. There was no suggestion that the developer was dishonestly concealing its then (at the time of the sale) present intentions concerning the mid-rise development. ‘An honest statement of future fact or intention is simply a prediction or a promise, not a representation’ ([65] per Kwan JA). Third, several passages in the brochure concerning the mid-rise development contained qualifications making it clear that plans and descriptions of it in the brochure were liable to change in the future, that the developer reserved its right to alter its plans and that any plans would have to be approved by the relevant Government departments. These were not exclusion clauses. They did, however, affect the way in which a reasonable purchaser would understand the descriptions of the proposed mid-rise development.

Michael Lower

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