Chow Nap Man v. Chung Wai Kwong

HCMP 3307/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 3307 OF 2016

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REASONS FOR JUDGMENT

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Dismissal of Originating Summons

1.On 24 May 2017, I dismissed the Originating Summons issued by Chow Nap Man (“Chow”) against Chung Wai Kwong (“Chung”) on 25 November 2016 with costs to be taxed on indemnity basis (if not agreed) and paid forthwith.

2.My reasons follow.

3.On 5 May 2010, Chung & Chow acquired Flat D on 5^th floor, New Lucky House, No 15 Jordan Road, Kowloon (the “Property”) as tenants in common.

HCA 1787/2015

4.On 7 August 2015, Chung issued the writ in HCA 1787/2015 against Chow claiming, among others:

(1)   an account of profits of a guest house which was being operated by Chow at the Property; and

(2)   an Order for sale of the Property.

5.By a Defence and Counterclaim dated 12 October 2015, Chow counterclaimed against Chung for:

(1)   ½ share of mortgage repayments;

(2)   ½ share of legal costs and estate agency fees; and

(3)   ½ share of the “expenditures” incurred by Chow for renovating the Property.

DCCJ 4437/2015

6.DCCJ 4437/2015 was an action commenced by Thai Thi Thanh Hong (蔡小紅) (“Chow’s wife”) against Chung.  Her application for summary judgment was heard on 26 May 2016. Judgment was handed down by the learned Deputy District Judge on 14 June 2016 granting Chow’s wife summary judgment as claimed, with interest and costs.

7.Costs were assessed by the learned Deputy District Judge by an Assessment of Costs handed down on 12 July 2016.

HCMP 3307/2016

8.On 25 November 2016, Chow issued HCMP 3307/2016 against Chung claiming:

“ (1) A declaration that there was a valid, binding and enforceable agreement between the parties on about 21-6-2016 as to their ownership of the Property;

(2) A declaration that the terms of the settlement agreement were that [Chung] agreed to sell his half share of the Property to [Chow] at the price of HK$2,000,000;

(3) Costs be to [Chow]; and

(4) Further or other relief that the Court deems fit.”

9.What was described by Chow as “the settlement agreement” read in its entirety as follows:

「 本人鐘偉光同意和周立民先生就佐敦道15号華豐大厦5樓D室業杈一事 [a character which is not discernible]外和解及同意將上址一半業杈以二佰萬元賣給另一半業主周立民先生或其家人、本人願意給予周立民先生或其家人時間 [a character which is not discernible] 備資金。

以此為據。

見証人: 21-6-2016

譚蘇  簽名 鍾偉光

周芷茵  副本」

10.(1) The document was silent on the date for completion of the sale.

(2) The document recorded that Chung was willing to allow Chow or his family member[s] time to raise capital.

(3) The document was silent on how much time Chow was allowed to raise capital.

(4) The document was silent on what was to happen if Chow was unable to raise capital.

11.It is common knowledge in Hong Kong, in 1998 and also in 2017, the property market was and is highly volatile.  In the Hong Kong of day, the date of completion is an essential term of any contract for the sale and purchase of land.  In Kwan Siu Man v Yaacov Ozer (1997–98) 1 HKCFAR 343[1], the Court of Final Appeal held at p 355 that:

“ Further, as is common knowledge in Hong Kong, the property market is highly volatile. Whatever might have been the position in England in the last century — when the concept of an ‘open contract’ was first developed in a climate of a stable pound sterling and no inflation — in the Hong Kong of today, the date of completion is an essential term of any contract for the sale and purchase of land: To the extent that in the case of a provisional agreement in the common form in use here, time for completion would normally be treated as of the essence of the agreement, even though no express provision to that effect is in the agreement: see Wong Wai Chi & Another v Cheung Kwok Fung & Others [1996] 3 HKC 287.”

12.Kwan Siu Man is binding on me.  There was no agreement in this case on the date of completion, an essential term of any contract for the sale and purchase of land.  The “settlement agreement” alleged by Chow was not enforceable or binding for want of agreement on an essential term, the date of completion.

13.Mr Wallace Cheung insisted that we were concerned with a “settlement agreement”; that a “settlement agreement” was different from a land contract; and that the “settlement agreement” was enforceable and binding. 

14.I asked Mr Wallace Cheung why was an agreement which was unenforceable valid as a settlement agreement.

15.He asked for time to consider his answer.  After the morning break, he said (written exactly as in Mr Wallace Cheung’s words):

“ Settlement agreement is different from a land contract. In our case, the parties entered into an agreement and the terms of the agreement is, firstly, to settle dispute out of Court, secondly, it’s term of the agreement that defendant will sell his ½ share of the Property to the plaintiff. It touches the land but this is not a land contract. Under the implied term of operation after the agreement, they need to agree to sort out how to implement the sale of the ½ share to the plaintiff. So at that point, it is up to them how to find things either by finding solicitor or enter into some sort of agreement to implement the term of selling his ½ share to the plaintiff and that is my answer.”

16.I was not persuaded that Chow had made out his case of any entitlement to any of the reliefs claimed in the Originating Summons.  This was an obviously unsustainable case and Chow should never have issued the Originating Summons and prosecuted it to the end.  I made the order recorded in §1 above.

Mr Wallace Cheung, instructed by Arthur K. H. Chan & Co, for the plaintiff

Ms Cindy Li, instructed by Jan Fung & Co, for the defendant