Lucky Project Development Ltd v. The Collector of Stamp Revenue

DCSA 6/2017

[2018] HKDC 273

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

STAMP APPEAL NO 6 OF 2017

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DECISION

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BACKGROUND

1.This is an appeal brought by the appellant against stamp duty assessments both dated 16 February 2017 made by the respondent in respect of a memorandum of agreement dated 6 March 2013 (“the Agreement”) and an assignment dated 29 April 2013 (“ the Assignment”) relating to the property known as Shop A, Shop B and Shop C on Ground Floor, First Floor and Portion of Flat Roof on 5^th Floor, Kam Heung Building, No 128 Aberdeen Main Road, Hong Kong (“Property”) pursuant to section 14 of the Stamp Duty Ordinance (“the Ordinance”).

2.By order of Hang Seng Bank Limited (“Vendor”), a set of “Particulars of Sale by Public Tender” was issued to invite tenders for the purchase of the Property before the deadline of 31 January 2013.  Pursuant to such invitation, the appellant submitted its duly completed “Form of Tender” (“Tender”) on 31 January 2013.  By its Tender, the appellant offered to buy the Property from the Vendor at a consideration of $128,380,000, and signified its acceptance of the “Conditions of Sale by Tender” (“Conditions”).  The following terms are included in the Conditions:-

“1.(a)   Each person desiring to purchase the property (“tenderer”), particulars of which are as contained in Condition 2 hereof (the “Property”), shall fill in and sign with his name and address on the form of tender (“Tender”) at the end of these Conditions (“Conditions”) and shall send a copy of these Conditions having the said form of tender so filled in and signed (all in duplicate), and where any tenderer is not an individual, together with the minutes, resolutions and other documents evidencing the authority of the signatory(ies) to submit and sign the Tender on behalf of such tenderer, all in a sealed plain envelope marked “TENDER FOR SHOPS A, B AND C ON GROUND FLOOR, THE WHOLE OF THE FIRST FLOOR AND PORTION OF THE FLAT ROOF ON THE FIFTH FLOOR OF KAM HEUNG BULDING – CYYA/12405829” to Messrs. Mayer Brown JSM, 18th Floor, Prince's Building, No. 10 Chater Road, Hong Kong as Solicitors for the Vendor, HANG SENG BANK LIMITED (hereinafter referred to as the “Vendor”) at or before 12:00 noon on 31 January 2013 (the “close of tenders”).

…….

3.   The person whose Tender is accepted by the Vendor shall be the purchaser (the “Purchaser”) of the Property and the acceptance of the Tender (if any) shall be by way of a copy of the Form of Tender with the Acceptance of Offer thereon (the “Vendor’s Acceptance”) signed and completed by the Vendor sent to the Purchaser by prepaid letter post to the address given in his Tender and despatched not later than I March 2013 and every letter so sent shall be deemed to have been received in the due course of post.

4.   Each tenderer shall together with his Tender send a cashier order for a sum of HK$8,000,000 (the “Tender Payment”) issued by a bank licensed under the Banking Ordinance (Cap. 155) and made payable to the order of the Vendor, “HANG SENG BANK LIMITED”.  In the event of any Tender in respect of the Property being accepted, then, should the successful tenderer fail to sign the Memorandum of Agreement hereinafter mentioned and pay the full deposit as mentioned in Condition 6 hereunder, the Tender Payment shall be absolutely forfeited, and such successful tenderer shall pay all stamp duty (if any) on the agreement constituted by the Vendor's Acceptance and shall keep the Vendor fully indemnified in respect thereof but without prejudice to any other rights or remedies available to the Vendor.

5.   Those tenderers whose Tenders are not accepted will be so informed not later than 6 March 2013 by letters addressed to them at the addresses given in their Tenders and at the same time their cashier orders shall be returned without any interest and entirely at the risk of the tenderers.

6.   In the event that the Vendor shall accept a Tender the Purchaser shall, between the hours of 9:00 a.m. and 1:00 p.m. (for Monday to Friday) on or before 6 March 2013 or within 3 business days from the date of the Vendor’s Acceptance, whichever is earlier, sign and deliver to the Vendor’s Solicitors in duplicate a Memorandum of Agreement for Sale and Purchase with these Conditions attached thereto, such Memorandum to be in the form annexed hereto (the “Memorandum of Agreement”) and pay to the Vendor, “HANG SENG BANK LIMITED”, a further sum which, when aggregated with the Tender Payment, will make up a deposit of 10% of the purchase price, by way of cashier order in manner as stipulated in Condition 4 hereof.  Upon the Purchaser signing the Memorandum of Agreement, the Tender Payment shall be treated as part payment of the deposit pursuant to the Memorandum of Agreement.

7.(a)   The Purchaser shall pay the entire balance of the purchase money and complete the purchase on or before 29 April 2013 (the “Completion Date”) at the offices of Messrs. Mayer Brown JSM, Solicitors, 18th Floor, Prince’s Building, No. 10 Cháter Road, Hong Kong between the hours of 9:00 a.m. and 3:00 p.m. on a weekday and time shall in every respect be of the essence of the contract.

……

19.   The risk of and in the Property shall for all purposes pass to the Purchaser upon the date of the Vendor’s acceptance.  The Purchase shall be bound to complete the purchase notwithstanding that the Property or any part therefore may be destroyed or damaged on or prior to completion by fire or other accident, non-occupation or otherwise or that the Property or any part therefor may be resumed or compulsorily purchased by the Government or any body empowered to do so.  The Vendor does not warrant that any or any adequate policy of insurance exists relating to the Property or, if such policy exists, that it will be renewed on expiration.  The Vendor will not transfer the insurance policy (if any) on the Property or the benefit thereof to the Purchaser.

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21.(a)   Should the Purchaser fail to observe or comply with any of the terms and conditions herein contained … the Vendor may (without tendering an assignment to the Purchaser) forthwith or at any time thereafter determine the contract hereunder by giving notice of termination in writing to the Purchaser or his solicitors to such effect and the Vendor shall thereupon be entitled to re-enter upon the Property and repossess the same if possession shall have been given to the Purchaser free from any right or interest of the Purchaser therein and the Vendor shall be entitled to forfeit the Tender Payment and any further deposit paid to the Vendor absolutely without prejudice to any other rights and remedies of the Vendor. … Upon such determination of the contract the Vendor may resell the Property…Without prejudice to the Vendor’s right to recover the actual loss which may flow from the Purchaser’s breach of the contract, on such resale any deficiency in price …shall be made good and all expenses attending such resale or attempted resale shall be borne by the Purchaser and such deficiency and expenses shall be recoverable by the Vendor from the Purchaser …

21.(b)   Nothing in this contract shall be so construed as to prevent the Vendor from bringing an action and obtaining a decree for specific performance of the contract either in lieu of the aforesaid damages or in addition to such damages as the Vendor may have sustained by reason of the breach by the Purchaser of the contract.

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26.   All stamp duties and registration fees payable on the Memorandum of Agreement, the agreement constituted by the Vendor’s Acceptance and any prior agreement for sale as defined in Section 29A of the Stamp Duty Ordinance (Cap.117) between the parties hereto in respect of the Property and/or the subsequent Assignment shall be wholly paid by the Purchaser, and the Purchaser shall keep the Vendor fully indemnified in respect thereof.  In the event of the consideration stated in the relevant documents between the parties hereto relating to this transaction not being accepted by the Collector of Stamp Revenue as representing the true value of the Property the excess or additional stamp duty charged in accordance with his valuation of the Property and the additional Land Registry registration fees (if any) shall be borne by the Purchaser solely and the provisions of this Condition shall survive completion of the sale and purchase of the Property.

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39.   The Vendor reserves the right not to accept the highest or any Tender.  No Tender will be considered unless both unqualified and of a fixed specific amount.

…….

43.(a)   In consideration of the promise by the Vendor contained in Condition 43(b) each tenderer shall be deemed to accept these Conditions and to have undertaken that his Tender is made in accordance with them and that his Tender will remain unvaried and open for acceptance until, and may not be withdrawn before, the close of business on 1 March 2013.

43.(b)   In consideration of the undertaking by each tenderer referred to in Condition 43(a) the Vendor promises to pay each tenderer HK$10.00 upon receipt of a written demand from such tenderer,”

3.The Vendor signified its acceptance of the Tender on 28 February 2013.  On 6 March 2013, the Vendor and the appellant entered into the Agreement that provides, inter alia, as follows:-

“(a) The [appellant] acknowledged that the Tender for the Property at the price of $128,380,000 has been accepted and the [appellant] has paid the sum of $12,838,000 by way of deposit and in part payment of the purchase money to the Vendor. The [appellant] agreed to pay the balance of purchase money of $115,542,000 in accordance with and be bound by [the Agreement] and the Conditions.

(b) The Vendor acknowledged receipt of the deposit of $12,838,000 and ratified and confirmed the sale of the Property to the Appellant.

(c) Both the Vendor and the [appellant] warranted and represented to and undertook with the other that the information specified in the Schedule annexed thereto was in all respects accurate insofar as within the knowledge of each party.”

4.The Schedule of the Agreement has the following stipulations:–

(a)   The Property comprises non-residential property within the meaning of Section 29A(1) of [the Ordinance].

(b)   The date of any preceding unwritten sale agreement or agreement for sale made between the parties on the same terms:-

offer of Purchaser by tender dated 31^st January 2013 and accepted by Vendor on 28^th February 2013 (under the Tender Conditions, the Purchaser’s offer remained open for acceptance until 1^st March 2013).

5.The conveyance of the Property from the Vendor to the appellant was completed upon execution of the Assignment on 29 April 2013.

6.On 22 February 2013 the Government announced proposed measures to further address the overheated property market by amending the Ordinance through the Stamp Duty (Amendment) Bill 2013 (“the Bill”).  The Bill was introduced into the Legislative Council on 5 April 2013 and was passed and enacted as the Stamp Duty (Amendment) Ordinance (No 2) 2014 (“the Amendment Ordinance”).  Section 1(2) of the Amendment Ordinance provides as follows:-

“(2) Except as provided in subsections (3) and (4), this Ordinance is deemed to have come into operation on 23 February 2013.”

It is common ground that subsections (3) and (4) of Section 1 of the Amendment Ordinance are not relevant to the present appeal.

7.A sum of $5,456,150 was paid as stamp duty on the Assignment on 8 May 2013.  On 20 August 2014, a sum of $5,456,150 was paid as additional stamp duty charged under the amended Ordinance.  Stamp duty in the amount of $100 was paid for the Agreement under section 29D(2)(b) of the Ordinance.  The appellant has confirmed that, if the new scheme of stamp duty introduced by the Amendment Ordinance is applicable to the present case, it does not dispute the amounts of the stamp duty that have been paid on the Agreement and the Assignment as being chargeable on those documents.

Grounds of appeal

8.In the Notice of Appeal five grounds of appeal (grounds (a) to (e)) have been set forth.  The appellant has since abandoned grounds (c) and (e)(i).  The remaining grounds of appeal are reproduced below:-

“(a) The Collector erred in applying the provisions of the Amendment Ordinance to the Assignment and charging the Assignment with ad valorem stamp duty at Scale 1 rates for the following reasons.

(b) The Collector failed to recognize that:-

(i) A contract was formed at the time when the purchaser submitted the Tender Form on 31^st January 2013 in response to the Conditions for Sale;

(ii) For the purpose of section 29A(1)(a) of the Ordinance, the relevant Agreement for Sale should be the Conditions of Sale and the Tender Form collectively;

(iii) The date of acquisition of the subject property should pre-date the deemed effective date of the Amendment Ordinance, and the provisions introduced by the Amendment Ordinance had no application.

(d) Further or alternatively,

(i) A contract for the purchase and sale of the Property was concluded before 23 February 2013;

(ii) The obligation to execute an Agreement for Sale chargeable with stamp duty was created under section 29B before the commencement of the Amendment Ordinance; and

(iii)   The consequential obligation to pay stamp duty ought to arise from the provisions of the Ordinance prior to the commencement of the Amendment Ordinance.

(e)(ii)   Further or alternatively, provisions of the Amendment Ordinance ought not to be applied to the Assignment because the acquisition of the Property consists of a series of events beginning on 31 January 2013 when the irrevocable Tender Form was submitted and the Amendment Ordinance only came into effect subsequently.”

Relevant provisions of the Ordinance

9.A number of the provisions of the Ordinance have been referred to in the course of argument.  Those that pertain to this decision are set forth below for easy reference.

“4. Charging of, liability for, and recovery of stamp duty

(1) Subject to this Ordinance, every instrument, wherever executed, specified in the First Schedule shall be chargeable with the stamp duty specified in respect thereof in that Schedule, and the headings, notes and explanations in that Schedule shall have effect accordingly.

…

29A. Interpretation and application of Part IIIA

(1) In this Part and the First Schedule—

…

agreement for sale (買賣協議) means—

(a) an instrument in which a person contracts to sell or purchase immovable property;

…

(2)   An agreement for sale and an unwritten sale agreement may be enforceable or unenforceable, absolute or conditional, formal or informal, temporary or permanent, provisional or non-provisional.

…

29AE.   Dates of acquisition and disposal of immovable property: general provisions

(1)   For determining the stamp duty payable on an instrument under this Part (except sections 29CA and 29DA) and head 1 (except sub-heads (1AA) and (1B)) in the First Schedule—

(a)   the date a person acquires or disposes of immovable property is determined according to this section and sections 29AF and 29AG;

…

(e)   a reference to the date of an instrument—

(i)   is a reference to the date the instrument is executed; and

…

(2)   The date of acquisition by a person of immovable property is as follows—

(a)   subject to sections 29AF and 29AG—

(i)   if there is an agreement for sale that provides for the conveyance of the property to the person—the date of the agreement;

(ii)   if more than one such agreement is made between the same parties and on the same terms in respect of the property—the date of the first of those agreements; or

(iii)   if the agreement consists of 2 or more instruments—the date of the first of those instruments; or

…

29B.   Duty to execute agreement for sale

(1)   Each purchaser and vendor under an unwritten sale agreement or an agreement for sale shall, not later than 30 days after the relevant date, if he has not already done so, execute an agreement for sale containing the matters specified in subsection (5).

…

(3)   For the purposes of subsections (1) and (2), the relevant date means—

…

(c)   in the case of an agreement for sale preceded by one or more than one unwritten sale agreement, or agreement for sale, made between the same parties and on the same terms, the date on which the first of such agreements was made; and

71.   Transitional provisions for Stamp Duty (Amendment) (No. 2) Ordinance 2014

(1)   In this section—

…

Amendment Ordinance (《修訂條例》) means the Stamp Duty (Amendment) (No. 2) Ordinance 2014 (14 of 2014);

applicable instrument (適用文書) means an instrument that is—

(a)   executed on or after 23 February 2013 and before the gazettal date; and

(b)   chargeable with stamp duty under Scale 1 of head 1(1), or Scale 1 of head 1(1A), in the First Schedule;

gazettal date (刊憲日期) means the date of publication of the Amendment Ordinance in the Gazette;

pre-amended Ordinance (《未經修訂條例》) means this Ordinance as in force immediately before 23 February 2013.

(2)   ...

(3)   The amendments made by the Amendment Ordinance do not apply in relation to an instrument specified in subsection (4), and the pre-amended Ordinance continues to apply in relation to the instrument as if those amendments had not been made.

(4)   The following instruments are specified for the purposes of subsection (3)—

(a)   an instrument that was executed before 23 February 2013;

(b)   an agreement for sale that supersedes another agreement for sale made between the same parties and on the same terms before 23 February 2013;

(c)   a conveyance on sale that is executed in conformity with an agreement for sale made before 23 February 2013.

Note 3 under Head 1(1A) of the First Schedule –

Subject to Note 2, if 2 or more agreements for sale are made between the same parties and on the same terms –

(a)   For the purposes of Part IIIA and this sub-head, all of the agreements are deemed to be made on the relevant date (within the meaning of section 29B(3))…”

Ground (a)

10.As pointed out by the respondent, ground (a) is an overarching ground of appeal which does not set out any substantive ground in support.  I will only address the substantive grounds (b), (d) and (e)(ii).

Ground (b)

11.As framed by Mr Chan, counsel of the appellant, the questions before me are firstly, what makes an instrument liable to be stamped, and secondly whether the document in the form of the Tender, and with the Conditions incorporated, is an instrument liable to be stamped.  I agree with Mr Chan that in answering these questions, what matters is the content and effect of the instrument, but not the terminology.

12.Section 4 of the Ordinance is the main charging provision and it refers to the instruments specified in the First Schedule.  Conveyances on sale and agreements for sale are among the types of instruments specified in Head 1 of this First Schedule; hence they are instruments that are chargeable with stamp duty.

13.Next to consider is the definition of “agreement for sale” under section 29A(1) of the Ordinance.  Paragraph (a) in that definition refers to an instrument in which a person contracts to sell or purchase immovable property.  Mr Chan placed great emphasis on the use of the word “or” in that paragraph instead of “and”.  It is his submission that the statutory provision is not referring to two parties coming to consensus ad idem, hence the court only has to consider whether the appellant had contracted to purchase the Property under the Tender that it submitted.  If the answer to this question is yes, then the appellant was liable to pay stamp duty on the Tender. 

14.On the nature of the Tender, the general position is as noted in the passages drawn to my attention by the respondent in para 115.035 in Vol 18 of Halsbury’s Laws of Hong Kong and in para 2-013 of Treitel: The Law of Contract (2015), which I have reproduced below:-

Halsbury’s Laws of Hong Kong

“An advertisement that goods or services are to be bought or sold by tender is not, prima facie, an offer to sell to the person making the highest tender. Normally, the actual tender will amount to an offer…It follows that in the usual case, acceptance of such a tender concludes a binding contract.

Because a tender is an offer, the general rule is that the invitor/offeree is under no obligation to accept or even to consider it …

A tender which states that the highest (or lowest) tender will be accepted may amount to a unilateral offer which will be accepted by any offeree who performs the requested act (viz, submitting a conforming tender with the highest or lowest bid as the case may be).”

Treitel: The Law of Contract

“At common law, a statement that goods are to be sold by tender is not normally an offer to sell, so that the person making the statement is not bound to sell to the person making the highest tender. Similarly, a statement inviting tenders for the supply of goods or for the execution of works is not normally an offer. The offer comes from the person who submits the tender and there is no contract until the person asking for the tenders accepts one of them. The preparation of a tender may involve considerable expense; but the tenderer normally incurs this at his own risk. The position is different where the person who invites the tenders states in the invitation that he binds himself to accept the highest offer to buy (or, as the case may be, the lowest offer to sell or to provide the specified services). In such cases, the invitation may be regarded either as itself an offer or as an invitation to submit offers coupled with an undertaking to accept the highest (or, as the case may be, the lowest) offer; and the contract is concluded as soon as the highest offer to buy (or the lowest offer to sell, etc.) is communicated”

15.The appellant sought to rely on the discussions of the Supreme Court of Canada in The Queen (Ontario) v Ron Engineering & Construction (Eastern) Ltd [1981] 1 SCR 111 and of the Hong Kong Court of Appeal in Wincheer Investments Ltd v Lobley Co Ltd (unreported, CACV 82/1996, 3 October 1996).  The following parts of the judgment in The Queen (Ontario) v Ron Engineering case are quoted in the skeleton submissions of the appellant–

“… Contract A (being the contract arising forthwith upon the submission of the tender) comes into being forthwith and without further formality upon the submission of the tender …

The tender submitted by the respondent brought contract A into life.  This is sometimes described in law as a unilateral contract, that is to say a contract which results from an act made in response to an offer, as for example in the simplest terms, ‘I will pay you a dollar if you will cut my lawn’.  No obligation to cut the lawn exists in law and the obligation to pay the dollar comes into being upon the performance of the invited act.  Here the call for tenders created no obligation in the respondent or in anyone else in or out of the construction world.  When a member of the construction industry responds to the call for tenders, as the respondent has done here, that response takes the form of the submission of a tender, or a bid as it is sometimes called.  The significance of the bid in law is that it at once becomes irrevocable if filed in conformity with the terms and conditions under which the call for tenders was made and if such terms so provide.  There is no disagreement between the parties here about the form and procedure in which the tender was submitted by the respondent and that it complied with the terms and conditions of the call for tenders.  Consequently, contract A came into being.  The principal term of contract A is the irrevocability of the bid, and the corollary term is the obligations in both parties to enter into a contract (contract B) upon the acceptance of the tender…”

16.I am not persuaded that the definition of “agreement for sale” in section 29A(1) is to be interpreted in the manner suggested by Mr Chan.  Although the legislation uses the word “or”, it still refers to a person contracting to sell or purchase.  Without the acceptance of an offer, no contract can be formed.  I do not therefore agree that the provision has dispensed with the basic requirement of consensus ad idem.

17.As for the passages in The Queen (Ontario) v Ron Engineering case, I am not sure how they can be of assistance to the appellant.  The construction contract (contract B) in that case was not signed by the tenderer of the lowest bid who, in the action, tried to recover the deposit paid.  The court refused to allow such recovery on the basis of the irrevocability of the tender being the principal term of contract A. 

18.In the present case, contract A arose between the appellant and the Vendor but that contract was not one for the sale of the Property.  Under this contract A, the appellant was only obliged not to revoke the tender until the date stipulated in the Conditions, while the Vendor and the appellant both had the obligation, upon acceptance of the Tender, to sign the Memorandum, the contract B under the analysis in The Queen (Ontario) v Ron Engineering case.  There was no transfer of any beneficial interest in the Property to the appellant under this contract A.

19.Seen in this light, The Queen (Ontario) v Ron Engineering case did not change the position about the Tender being an offer only and the contract to be concluded upon completion of the tender process (contract B) only forming upon acceptance of one the offers by the party calling for tenders.  The other contract governing the rights and obligations of the parties during the tender process (contract A) is not the contract for sale of the Property.  

20.In the Wincheer case, it was said that “…An offer to sell property in this way constitute[s] a unilateral contract with each offeree, which gives rise to a bilateral contract with the highest conforming bidder…”.

21.There is a material difference between the terms of the tender process in the present case and those in the Wincheer case.  In Clause 39 of the Conditions, there is an express reservation by the Vendor of its rights not to accept the highest offer or any offer at all.  The Tender under consideration in this case is not the exception mentioned in Halsbury’s Laws of Hong Kong and Treitel.

22.Given that section 29A(2) of the Ordinance provides that an agreement for sale may be enforceable or unenforceable, absolute or conditional, formal or informal, temporary or permanent, provisional or non-provisional, Mr Chan put it to me that the Tender ought to be regarded as an agreement for sale, it being an agreement that was conditional, temporary and arguably provisional as well.  For the appellant to avail itself of section 29A(2), the document in question has to first qualify as an agreement for sale.  

23.I understand the appellant to be submitting that the contract A in the present case amounts to an instrument in which the appellant contracts to purchase the Property, within the meaning of “agreement for sale” under section 29A(1) of the Ordinance. It is trite that a contract is only concluded upon acceptance of an offer.  That the Tender was only an offer and there could be no contract conferring any interest in the Property to the appellant until it was accepted by the Vendor was clear under Clause 39 of the Conditions, where there is the express reservation by the Vendor of its right not to accept the highest offer or any offer for that matters.  The submission of the Tender by the appellant did not therefore give rise to an agreement for sale that comes within the definition of section 29A(1) of the Ordinance.

24.Other provisions of the Conditions also support such interpretation.  The Tender is described as the offer and the document signifying acceptance of the Tender by the Vendor is entitled “Acceptance of Offer”.  The terms “the tenderer” and “the Purchaser” are used distinctively in the Conditions and only the person whose tender is accepted by the Vendor would, according to Clause 3 of the Conditions, be regarded as the Purchaser.  Risk of and in the Property was, under Clause 19 of the Conditions, to pass to the Purchaser, and not a tenderer, and only upon the date of the Vendor’s acceptance.

25.Further, under Clauses 4 and 26 of the Conditions, the liability for stamp duty covered is that of the successful tenderer only.  It is true that, according to Mr Chan, the appellant could be sued for specific performance under Clause 21(b) of the Conditions if it failed to execute the Agreement pursuant to the Tender.  Indeed, other rights of the Vendor in such event were also specified in Clause 21(a) of the Conditions. Nonetheless, such rights of the Vendor could only arise upon acceptance of the Tender.  That the formation of the contract for the sale or purchase of the Property was conditional upon acceptance by the Vendor does not render the offer from the appellant a contract for the sale or purchase of the Property itself. Being merely an offer, the Tender does not come within section 29A(2) of the Ordinance, even if it was only conditional, temporary or provisional.  

26.Another provision in the Conditions considered relevant by the appellant is Clause 43(a) and (b).  Mr Chan pointed out to me that under that clause, the consideration for the irrevocability of the offer was provided for.  The agreement for sale constituted by the Tender is therefore, Mr Chan submitted, a complete contract, with the identity of the parties, the identity of the Property, the price and all other terms being certain, with nothing further that had to be done by the appellant.  He stressed that the appellant could not get out of the contract so formed.  

27.The consideration provided for in Clause 43(b) of the Conditions is that for the undertaking of each tenderer not to vary or withdraw his tender before close of business on 1 March 2013.  Whether this contract is referred to as contract A, as in the Ron Engineering case, or a unilateral contract, as in the Wincheer case, it is a separate and distinct contract from the contract of sale of property or provision of services for which the tender was issued, which in the present case is the sale of the Property.  Every tenderer, successful or unsuccessful, had entered into such a contract with the Vendor, but that is not a contract for sale or purchase of the Property. 

28.I agree with Mr Suen, counsel for the respondent, that all the legal consequences set forth in the Conditions for default of the Purchaser in executing the Agreement turned on the acceptance of the tender offer by the Vendor.  Looking at the matter from the perspective of an unsuccessful tenderer, the forfeiture of the deposit, the possible liability for specific performance and the other remedies available to the Vendor under the Conditions would not be visited upon him if he fails to execute the Memorandum of Agreement, the reason being a contract for the sale or purchase of the Property had not been concluded between him and the Vendor.

29.One other argument relied on by the appellant is that the Agreement could not arise without the earlier unilateral contract and it was entered into pursuant to the unilateral contract on the same terms; hence the unilateral contract ought to be considered as the preceding agreement for sale.  Pointing to the date of acquisition as provided under section 29AE(2)(a)(ii) of the Ordinance, Mr Chan emphasized that the Agreement is only one of a series of agreements, which can be traced back to the Tender.

30.It can be said that the signing of the Agreement was a step taken pursuant to the Tender.  However, as pointed out by the respondent, this argument is misconceived as such causal relationship exists in almost every contract formed by offer and acceptance, but the nature of an offer will not be altered because of the existence of the causal relationship.  The Tender remains an irrevocable offer notwithstanding the presence of such causal relationship.  No agreement for sale of the Property could be constituted without acceptance of a tender.  For the same reasons, section 29AE(2)(a)(ii) of the Ordinance is not applicable as the Tender could not be an agreement for sale when no beneficial interest in the Property was conferred.  It was not one of a series of agreements for sale. 

31.Although not dwelt upon in great depth by Mr Chan, I have considered the effect of section 29AE(2)(a)(iii) of the Ordinance as well, which applies where the agreement for sale consists of 2 or more instruments.  Under this sub-paragraph (iii), the date of acquisition is the date of the first of those instruments.

32.The Tender was dated 31 January 2013 while the acceptance by the Vendor was dated 28 February 2013. Nonetheless, I note from the hearing bundle that the “Particulars of Sale by Public Tender”, the Tender and the acceptance of the Vendor were all parts of one single composite instrument, with the Tender being page 23 of the instrument and the acceptance of the Vendor being page 24 thereof.  The Tender and the acceptance were signed by the appellant and the Vendor separately and on different dates, but altogether they form one single instrument.  The appellant cannot therefore avail itself of section 29AE(2)(a)(iii).

33.For the above reasons, Ground (b) should be dismissed. 

Grounds (d) and (e)(ii)

34.There can be no dispute that the acquisition of the Property consists of a series of events.  As for the first of such events, that would be the issue of the “Particulars of Sale by Public Tender” by the Vendor, and not the submission of the Tender on 31 January 2013, as stated in ground (e)(ii) of the grounds of appeal.

35.On the basis of there being such chain of events, the appellant proceeded to argue that, as it had by the submission of the Tender irrevocably imposed an obligation upon itself to enter into the sale and purchase agreement upon acceptance of the Tender, it had an obligation, as at 31 January 2013, to execute an agreement for sale under section 29B of the Ordinance upon the Tender being accepted, and the obligation to pay stamp duty for that agreement for sale under the provisions of the Ordinance as they were before the effective date of the Amendment Ordinance.

36.It is submitted on behalf of the appellant that the agreement for sale in the present case is not affected by the Amendment Ordinance and stamp duty should be charged under the old rates. It is also put to me that such interpretation is consistent with section 71 of the Ordinance which provides that the Amendment Ordinance shall not apply to instruments made before 23 February 2013. 

37.The flaw in this argument of the appellant lies in the reference to certain obligations having accrued before the effective date.  As shown in the analysis above, the only obligations that had accrued upon submission of the Tender related to the tender process, but those obligations did not constitute an agreement for sale within the meaning of the Ordinance.  An agreement for sale of the Property only came into existence upon acceptance of the Tender. 

38.I have already explained in the above why there was no contract for the sale or purchase of the Property at the time of the submission of the Tender.  By the same token, whether the Tender was revocable or not, it remains an offer from the appellant only.  The agreement for sale of the Property was formed not on 31 January 2013 when the appellant submitted the Tender.  It was only formed upon acceptance of the Tender by the Vendor on 28 February 2013.  There is no obligation on the appellant to comply with section 29B of the Ordinance or to pay stamp duty until such acceptance took place, the point of time when an agreement for sale came into existence.

39.Grounds (d) and (e)(ii) therefore are also dismissed. 

Conclusion

40.Whilst I have every sympathy for the situation that the appellant finds itself to be in, the court has to give effect to the clear wording of the legislation.  As the appellant fails on all the grounds of appeal relied on, the appeal is dismissed.

Costs

41.Both parties agree that costs should follow event in this case. I therefore order the appellant to pay the costs of this appeal to the respondent, to be taxed if not agreed. 

Mr Kenneth CL Chan and Mr Dixon Co, instructed by Kitty So & Tong, for the appellant

Mr Suen Sze Yick, of Department of Justice, for the respondent