Sit Sau Ming v. Leung May Chun, Alison Aliance（梁美春）formerly Known As Sham May Chun（岑美春）

DCCJ 4453/2008

[2020] HKDC 137

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4453 OF 2008

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JUDGMENT

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INTRODUCTION

1.This case is about the sale and purchase of six car parking spaces in Tung Lo Court, Shek Kip Mei (“the CPS”).  The defendant is the vendor and the plaintiff is the purchaser.

2.The special feature in this case is that both parties engaged the same firm of solicitors, Gary Mak, Dennis Wong & Chang (“MWC”), to act for them in the transaction.

3.As it turned out, there was no completion on the agreed completion date of 2 January 2008.  The parties now blame each other for the non-completion.

BACKGROUND

4.The plaintiff and the defendant have known each other for a long time. The plaintiff’s late-husband was involved in the management of the basement of Tung Lo Court where over 40 car parking spaces are located.  In about 2000, the plaintiff began managing the basement on a full time basis.  She ceased working in that capacity in about 2010 when the Incorporated Owners of Tung Lo Court (“the IO”) took over the management of the basement.

5.In about October 2007, the defendant told the plaintiff that an estate agent had offered to purchase her (ie the defendant’s) car parking spaces at Tung Lo Court at $90,000 each and asked if she (ie the plaintiff) would be interested in acquiring them.

6.After some negotiation, the defendant agreed to sell the CPS to the plaintiff at the price of $660,000.  On 22 October 2007, the parties signed a handwritten agreement in Chinese drafted by the defendant (“the preliminary agreement”).

7.According to the preliminary agreement:-

(a)     The defendant agreed to sell and the plaintiff agreed to purchase the CPS at the price of $660,000.

(b)     The plaintiff agreed to pay the purchase price by three instalments: initial deposit of $200,000 payable upon the signing of the preliminary agreement; further deposit of $300,000 payable on or before 2 November 2007; and the balance of $160,000 payable through the solicitors on or before 2 January 2008.

(c)     The defendant agreed to execute the assignment at the solicitors’ office on or before 2 January 2008.

8.Pursuant to the preliminary agreement, the plaintiff paid $200,000 to the defendant.

9.After signing the preliminary agreement, the plaintiff instructed MWC to act for her in the transaction.  The defendant also engaged MWC in the interest of cost.  The parties were mainly served by Mr Gordon Tsang, a conveyancing executive of MWC.

10.It was MWC’s practice not to act for both the vendor and the purchaser in a conveyancing transaction.  Tsang obtained approval from his supervising principal (Mr Dennis Wong) to make an exception to represent both the plaintiff and the defendant in the transaction as the agreed consideration was under $1 million[1] and given the close relationship between the parties.  Wong, however, reminded Tsang that should any conflict of interest arose, MWC should cease to act for both parties in the transaction.  According to Tsang, he duly informed the plaintiff and the defendant and they both agreed to the arrangement.  This is disputed by the defendant.

11.On 2 November 2007, the parties signed a formal agreement prepared by MWC for the sale and purchase of the CPS (“the formal agreement”).  The formal agreement basically reiterated the terms of the preliminary agreement.  In addition, it provided that:-

(a)     Of the further deposit of $300,000, $120,000 should be paid to the defendant and $180,000 should be paid to MWC as stakeholder, who should not release the money unless there was sufficient money to discharge the existing encumbrances and good title had been proved and given.

(b)     Completion should take place at the office of MWC on or before 2 January 2008 (between 9:30 am and 5 pm on weekdays) except Saturdays, Sundays and Public holidays.[2]

(c)     Time should in every respect of the agreement be of the essence.

(d)     The conditions set out in Part A of the 2^nd Schedule to the Conveyancing and Property Ordinance, Cap 219 (“CPO”) were incorporated into the agreement.

12.In pursuance of the formal agreement, the plaintiff paid $120,000 to the defendant and $180,000 to MWC.

13.On 10 November 2007, the defendant provided some title documents to Tsang.  This was evidenced by the receipts issued by MWC enumerating the documents received from the defendant.  Upon checking, Tsang noted some missing documents and requested the defendant to supply the same.  That included a missing assignment in relation to car parking space No 15.

14.It was one Mr Choi, a conveyancing clerk of MWC, who actually scrutinized the defendant’s title.  Choi examined the title for the first time in November 2007 against the documents then available to him.  His handwritten notes for that exercise are at pp 252-254 of Bundle A (“first report”).  In his first report, Choi requested to see 10 documents (including the Occupation Permit of Tung Lo Court (“the OP”)) and raised a number of requisitions.  Choi also enquired if the plaintiff and the defendant should be separately represented: “請根據 requisition (B) in page 2 問老闆 V&P 是否要分開代表！” It may be noted that requisition (B) related to the missing assignment that Tsang had requested the defendant to provide.

15.According to Tsang, after Choi’s first report had been cleared by Wong he informed both the plaintiff and the defendant in late November 2007 that a conflict of interest had arisen and urged them to seek separate legal representation.  He recalled the defendant telling him that she would continue to look for the missing assignment without addressing the issue of separate representation.

16.On 19 December 2007, the defendant provided some more documents to MWC (including the missing assignment mentioned above[3]) and instructed Tsang to obtain certified copies of the remaining documents.  At Tsang’s request, the defendant paid $5,000 to MWC as money on account to cover the cost of obtaining certified copies.  This is evidenced by the attendance note jotted down by Tsang and MWC’s receipt.[4]

17.On that occasion, according to Tsang, he also brought up the issue of separate representation with the defendant.  He referred her to Kong & Chang, a firm of solicitors conveniently located in the same building as MWC, and even offered to waive the professional fees of MWC to facilitate the defendant migrating to another firm of solicitors. 

18.Later on 24 December 2007, the defendant told Tsang that she would split instructions from the plaintiff and let “Ricky” of Kong & Chang handle the transaction for her.  This is evidenced by Tsang’s attendance note.[5] As mentioned before, the defendant denies that Tsang had raised the issue of separate representation with her.  She also denies having contacted Ricky or Kong & Chang.

19.According to Tsang, he only managed to obtain certified copies of the remaining documents after the Christmas holiday.  Choi then scrutinized the defendant’s title for the second time, and his handwritten notes are produced at pp 261-264 of Bundle A (“second report”).  Similar to his first report, he enumerated his requisitions in his second report.

20.There was initially a dispute between the parties as to whether the plaintiff had in fact paid the balance of the purchase price ($160,000) to MWC on 31 December 2007.[6] That payment is in fact evidenced by two pay-in slips dated 31 December 2007 and MWC’s receipts dated 3 January 2008.  At trial, the defendant’s counsel (Mr Edward Chan SC leading Mr Andy Hung) no longer challenged the payment but made submissions on the timing of when it had come to the knowledge of MWC.

21.As to why there was no completion on 2 January 2008, the parties have different explanations.

THE PLAINTIFF’S CASE

22.According to the plaintiff, MWC identified three defects in the defendant’s title and was of the bona fide opinion that the defendant would not be able to convey a good title to the plaintiff by the agreed completion date of 2 January 2008. 

23.The title defects identified by MWC were as follows:-

(a)     Two of the CPS were registered under “Leung May Chun Alison Aliance”, whereas the remaining four were registered under “Leung May Chun Alison Aliance formerly known as Sham May Chun” (“the name discrepancy”).

(b)     The number of car parking spaces as shown in the OP and the deed of mutual covenant of Tung Lo Court (“the DMC”) were different (“the number discrepancy”).

(c)     There were encumbrances registered by the IO against the CPS.

24.On 2 January 2008, both parties agreed, at the suggestion of MWC, to postpone the completion date from 2 January 2008 to 9 January 2008 to enable MWC and the defendant to take steps to rectify the defects.

25.Thereafter:-

(a)     On 2 January 2008, the defendant made a statutory declaration in these terms:

“本人現時用「梁美春LEUNG MEI CHUN ALISON ALIANCE」同前名「岑美春」是同一人 現在不再用，同一樣身份証ID No XYYYYYY(Y)[7]。”

There is a dispute over how the defendant brought the statutory declaration to the attention of MWC on that day.

(b)     On 7 January 2008, MWC wrote to the solicitors representing the IO (“the IO solicitors”) to confirm the amount required to discharge the encumbrances, enclosing a draft undertaking for the latter’s approval. 

Prior to that, MWC had been informed by the IO solicitors in November 2017 that a total sum of $265,806 would be payable for the discharge of the encumbrances and in respect of a Building Order for the repair of the common parts of Tung Lo Court, and MWC had been urged to enquire again before sending the money over.

By a letter dated 8 January 2008, the IO solicitors confirmed that the amount outstanding remained the same and approved the draft undertaking as amended by them.

(c)     On 8 January 2008, the plaintiff signed a waiver letter to confirm that she had been advised by MWC of the number discrepancy and that she had decided to proceed with the transaction nonetheless.

26.The plaintiff executed an assignment for the sale and purchase of the CPS in escrow on 8 January 2008, but the defendant refused to sign it on 9 January 2008.

27.By a letter dated 20 May 2008, the plaintiff’s subsequent solicitors, Chan Wong & Lam (“CWL”), demanded the defendant to complete the transaction by 4 June 2008.

28.In their reply dated 2 June 2008, the defendant’s then solicitors wrote:

“We are instructed that wrongfully and in breach of agreement, your client had failed to perform his obligations, pay the balance of purchase price and/or execute the assignment deed by the completion date of 2 January 2008. Due to your client’s said default, the transaction had been terminated. Accordingly, our client is not now obliged to sell the Car Parks to your client.”

29.By this action, the plaintiff is primarily seeking specific performance of the formal agreement.  Alternatively, the plaintiff asks for the return of the $320,000 retained by the defendant.[8]

THE DEFENDANT’S CASE

30.The defendant’s pleading is a bit convoluted.  For example, the defendant denied in para 15 of the Re-Re-Amended Defence and Counterclaim (“RRAD&CC”) that MWC had been acting for her on 31 December 2007 but that was certainly not her case at trial.

31.In paras 8-10 of the RRAD&CC, the defendant also contended that the plaintiff had failed to raise any valid requisition in accordance with clause 7(1) in Part A of the 2^nd Schedule to the CPO.[9] In his closing submissions, however, Mr Chan dropped that contention and accepted that where the vendor and the purchaser were represented by the same solicitor, it would be unrealistic to expect the solicitor to raise written requisition directing to himself.

32.The defendant’s case at trial, as argued by her counsel, is as follows.

33.The defendant denies that her title was defective.[10] In gist, Mr Chan argued that:-

(a)     As to the name discrepancy, there was no reasonable doubt about the identity of the defendant as the assignee of the CPS.  In any event, there could be no objection to having two assignments to be drawn up to give effect to the agreement between the parties, one using one name form and the other using the other name form.

(b)     As to the number discrepancy, it was not the plaintiff’s case that (i) the CPS were not shown in the OP or the DMC; (ii) the CPS did not carry any undivided share in the land; (iii) the plaintiff was not aware of the location of the CPS; and (iv) the CPS were built on any unauthorized structure.  On the authority of Active Keen Industries Limited v Fok Chi-keong [1994] 1 HKLR 396, such discrepancy could not render the defendant’s title defective.

(c)     The encumbrances were merely a matter of conveyance.

34.Pausing here, it may be noted that at the trial the plaintiff’s counsel (Mr Benjamin Chain leading Ms Joyce Chan) did not really defend MWC’s stance that the above amounted to title defects but rather maintained that it had been the bona fide opinion of MWC that completion could not take place on 2 January 2008.

35.The defendant denies she had agreed to any postponement.[11] She introduced a last minute amendment to her pleading to raise the point that the oral agreement to postpone the completion date alleged by the plaintiff was unenforceable by reason of section 3 of the CPO.[12] 

36.The defendant says that the plaintiff is not entitled to the relief of specific performance in any event by reason of laches.[13]

37.The primary case of the defendant is that the plaintiff was in breach of the formal agreement for not completing on 2 January 2008 by (i) wrongly asserting that there were title defects; (ii) not preparing and tendering an assignment for her execution; and (iii) not tendering the balance of the purchase price.[14]

38.She accepted the plaintiff’s repudiation and terminated the agreement.[15] When she was later asked by MWC on 9 January 2008 to execute an assignment, she refused to do so.[16]

39.She therefore counterclaims for a declaration that the formal agreement was terminated and that she is entitled to forfeit all the deposits paid by the plaintiff (ie $320,000) or at least 10% of the purchase price (ie $66,000).[17]

40.In his opening, Mr Chan opted to forfeit 10% of the purchase price only.[18] When it came to his closing submissions, Mr Chan revised the defendant’s position and said that the defendant would not resist an order for the return of the deposits but would, in view of Workers Trust & Merchant Bank Ltd v Dojap Investments Ltd [1993] AC 573, ask for an inquiry as to the damage (if any) suffered by her by reason of the plaintiff’s failure to complete the agreement.  In response, Mr Chain submitted that there was no order for split trial and no evidence that the defendant had suffered any damages given the sharp rise in the market value of the CPS since 2007/2008.

41.Previously, the defendant had issued third party proceedings against MWC. But the third party proceedings have since been settled on terms that have not been disclosed to this court. 

THE TRIAL

42.Given the way the battle lines are drawn, the broad issues that require determination are:-

(1)     Why was there no completion on 2 January 2008? 

(2)     What was the legal consequence?

(3)     In terms of the claim, whether the plaintiff is barred from the relief of specific performance because of laches?

(4)     In terms of the counterclaim, whether the defendant is entitled to an order for an inquiry in terms of Workers Trust?

43.At the trial, the plaintiff testified and called Tsang and Wong to give evidence.  She also tendered Mr Ling Ho-fung, a legal executive formerly of CWL, for the defendant’s cross-examination. 

44.Only the defendant gave evidence for the defence.

45.There is no dispute over the documentary evidence, including the transcripts of the first trial.[19] Both parties made reference to the evidence of the first trial during the course of this trial.

46.The parties spent much effort (especially at the first trial) in canvassing the oral evidence of the plaintiff and the defendant on matters such as the movement of the defendant on 2 January 2008 and what was said by them on that day.

47.This case happened over 10 years ago.  I accept that it must be difficult for anyone to recall clearly something that happened so long ago.  In assessing the evidence, I take guidance from the following judgment of Stock JA:-

"Comparison with contemporaneous documentation is always an aid to reliability of oral testimony, unless there is reason to believe that the documentation is contrived or materially incomplete; but where the passage of time between events and trial is as long as it was in the present case, and where there is such a host of contemporaneous documentation, as there was in this case, the documentation must, I would have thought, assume a special importance...  I do not say that an assessment of the character of a witness plays no part in the fact-finding process, but it is a task that may sometimes be elusive even to the best trained eye and ear, and I would venture to suggest that the truth, in so far as one is able to reach it or, as is sometimes the case, to reach a version of it that is more likely to be correct than not, can best be tested by reference to contemporaneous documentation where it exists, or to its absence where one could expect it to have been created, as well as to inherent improbabilities (though bearing in mind that there may be occasions where the truth may run against that particular grain) having regard to all the facts that are known...  This is not to say that the documentation should have been treated as if it stood on its own, not to be explained, contradicted or supported by oral testimony…   That documentation, as well as conflicts within the evidence, inherent probabilities, and a study of how matters were originally pleaded and asserted in witness statements – these are the factors which in a trial such as this, so long removed from the time of the events in question, were likely to be of particular use in assessing the facts..."[20]

48.Having regard to the contemporaneous documentation in this case and the discussion below, I find the plaintiff and her witnesses to be generally reliable.  Their evidence (in particular, that of Tsang) is well supported by contemporaneous documents and in accordance with common sense.  On the other hand, the defendant’s testimony rings hollow as it is not corroborated by documentary evidence.

DISCUSSION

Issue 1: Why was there no completion on 2 January 2008? 

49.According to Tsang:-

“On 2 January 2008, I telephoned [the plaintiff] to remind her that this was the agreed completion date. I asked [the plaintiff] if she would agree to postpone the completion date by 7 days to 9 January 2008 for the reasons previously discussed. Leung said that she had no problem with extending the completion date to 9 January 2008.”

“I also telephoned [the defendant] on 2 January 2008 to remind her of the completion date and to ask if she would consent to extending the completion date to 9 January 2008. She also said she had no objections.”

50.On the other hand, it is the defendant’s evidence that:-

“在2008年1月2日早上，曾先生在電話中向我交代有關上述車位業主姓名的業權問題，我才得悉在土地註冊處上述車位登記業主姓名存有差異的情況。在我得悉有關事宜後，我隨即往九龍城民政事務處辦了一份宣誓聲明，澄清我的前名是「岑美春」，而「梁美春」與「岑美春」是我同一人。我並在當日中午時分將那份宣誓聲明親身送到麥黃張律師行交予曾先生。我亦問他是否已有轉讓契（Assignment）可給我簽。他說要先問過律師。”

51.She later clarified in her second supplemental statement that:-

“當日下午我致電曾先生，曾先生當時表示律師已接受宣誓聲明（statutory declaration）。”

“其後在下午，我前往東盧大廈，本來是想和原告人一起前往律師樓完成成交手續。當我到達東盧大廈之後，我致電律師樓找曾先生，不過未能找上他。我問接電話的女職員當天車位的成交，她告訴我原告人仍未入數（即完成交易的餘款）給律師樓，轉讓契仍未能簽署。我當時不肯定是否款項是以支票形式過戶，故在下午３時半前銀行未能確認過數。我再次澄清，是接電話的女職員告訴我原告人仍未入數，不是曾先生。”

“之後，我在東盧大廈地庫停車埸找到原告人，我再打電話上律師樓，但女職員仍說未收到成交的餘款，未能簽署轉讓契。當將已下午4時多，我於是說當天不成交我不賣車位了。我告訴原告人，律師樓仍未收到成交的餘款，她只含含糊糊說交了給律師樓，她給我的印象是漠不關心，我因此和她說不成交我殺訂了。那時候已約下午5時或過後。我澄清，我不是接近下午5時才到達東盧大廈和找到原告人。”

52.The plaintiff was not privy to what transpired between Tsang and the defendant on 2 January 2008.  On this crucial issue, I prefer Tsang’s evidence.

53.First, Tsang’s evidence is, to a certain extent, confirmed by the plaintiff.  According to the plaintiff, Tsang had advised her in late December 2007 that there were title problems and that completion might be delayed.  In the morning of 2 January 2008, Tsang called her and suggested postponing completion to 9 January 2008 to allow for more time to deal with the title problems and she raised no objection to the suggestion.  At the trial, Mr Chan did not really dispute the plaintiff’s evidence that she had agreed to a postponement. There is no discernible reason for Tsang to put the suggestion to one side only. 

54.Secondly, Tsang’s evidence is generally supported by documentary evidence.  I have made references to some of the documentation above.  More specifically in relation to the postponement:-

(a)     According to Tsang, he made a note of his conversations with the plaintiff and the defendant regarding the postponement.  His attendance note, bearing the date of 2 January 2008 and his initial, is in evidence:-

“Talked to V & P

postponed completion pending certified copies fr Land Office & title problems (Amendment of ID No in Ass, Name of V (no Deed Poll missing) etc

GT 2/1”

(b)     Tsang’s secretary generally kept a diary for Tsang’s appointments. 

On the page for 2 January 2008, there was an entry for the transaction.  The entry was marked “→ postpone?”. Tsang explained at the first trial that his secretary must have made the remark upon realizing that the transaction was unlikely to be completed as scheduled but before learning of the new completion date.[21]

More importantly, she also made an entry for the transaction on the page for 9 January 2008.  This tallies with Tsang’s evidence that completion had been postponed to 9 January 2008.  This entry carried the remark “← 8-1-08簽定” against the reference to the plaintiff.  This is consistent with the evidence that the plaintiff attended MWC on 8 January 2008 to execute the assignment in escrow. 

The reference to the defendant was also remarked “? → postpone”.  Tsang has learnt from his secretary that the defendant had in fact turned up at MWC in the afternoon of 9 January 2008 but she left upon learning that Tsang was not immediately available.  Tsang explained at the first trial that his secretary had raised a query because of that and thought there had been another postponement.[22]

In my view, the entries in Tsang’s diary generally support Tsang’s evidence. Such entries cannot be explained by the defendant’s evidence.

(c)     Tsang continued to prepare for completion after 2 January 2008, as evidenced by: (i) the receipts dated 3 January 2008 to acknowledge receipt of the balance of the purchase price from the plaintiff; (ii) the letter dated 7 January 2008 sent to the IO solicitors to confirm the amount required to discharge the encumbrances; (iii) the waiver letter dated 8 January 2008 drafted for the plaintiff’s signature; and (iv) the assignment signed by the plaintiff in escrow on 8 January 2008. 

All these efforts would be superfluous if the parties had not agreed to a postponement.

55.It may be noted here that after the defendant had commenced third party proceedings against them, MWC delivered the conveyancing file for the transaction to the solicitors representing their insurer.  However, the conveyancing file was misplaced and what is now in evidence are photocopies made by the insurer’s solicitors before the file was lost.  The long and short of it is that there was not much opportunity for anyone to tamper with the documentary evidence.

56.On the other hand, the defendant’s case is not borne out by the evidence.  Contrary to her claim that her statutory declaration had been accepted by MWC, there is in fact evidence that her statutory declaration was found to be problematic.  In his second report, Choi raised the following requisition on the defendant’s statutory declaration:-

“Parking Lots Nos 7, 15, 24, 25, 32 and 40

We note that the signature of the Declarant in the Statutory Declaration dated 2^nd January 2008 made by Leung May Chun Alison Aliance (梁美春) is apparently different from those in the Assignment Nos 2001205, 2070492, 1087468, 1078725, 1972530 and 2043111 (extract copy enclosed).  Therefore, the said Statutory Declaration is not acceptable by us.  Please let us have a proper Statutory Declaration before completion.  Meanwhile, please let us have your draft Statutory Declaration for our perusal. (請給我看)”

57.Despite the above, the defendant and her counsel tried to find support from the fact that the defendant had attended the District Office on 2 January 2008 to make her statutory declaration.

58.First, the defendant asked rhetorically in her evidence why she would do that but for the fact that Tsang had informed her of the name discrepancy in that morning. 

59.When Tsang was confronted with the defendant’s allegation, he denied he had mentioned the name discrepancy to her on 2 January 2008.  He also denied meeting her in person on that day or receiving the original statutory declaration from her. 

60.According to Tsang, he was surprised when he suddenly received a copy of her statutory declaration by fax in the afternoon.  It was the standard practice of MWC to conduct a land search on the subject property upon receiving instructions to act in a conveyancing transaction, and that was how (according to Tsang) he became aware of the discrepancy in October 2007.  He recalled that he had informed the defendant of the discrepancy before 2 January 2008 and had told her that the lawyers at MWC would consider her title and she might be asked to make a statutory declaration in due course. 

61.A fax copy of the defendant’s statutory declaration bearing the time chop of “2-JAN-2008 15:19” is in evidence.  The existence of the fax runs counter to the defendant’s evidence that she had only provided the original to Tsang.

62.After the transaction had fallen through, MWC provided the conveyancing file for the transaction to CWL to enable the latter to advise the plaintiff.  There was no mentioning of any statutory declaration (original or fax) in the list of documents provided by MWC to CWL,[23] but the statutory declaration was alluded to in CWL’s letter dated 20 May 2008 to the defendant.[24]  At the trial, Ling confirmed that he had seen a copy of the defendant’s statutory declaration but not the original.

63.Mr Chan suggested that if Choi had only been provided with a fax copy, he would have asked for the original in his second report.  I accept Tsang’s explanation that since Choi had found the defendant’s statutory declaration problematic, there was no point in requesting the original.

64.In the premises, I accept Tsang’s evidence that he did not mention the name discrepancy to the defendant on 2 January 2008 and that he had only received a copy of the defendant’s statutory declaration by facsimile transmission.

65.Secondly, Mr Chan argued that the defendant had been moving heaven and earth on 2 January 2008 to procure her statutory declaration and deliver it (or at least a fax copy of it) to MWC for the scheduled completion.  What was the hurry, asked Mr Chan, if the defendant had already agreed to a postponement?

66.Mr Chan was very critical of Tsang in his closing submissions.  He said that Tsang had repeatedly ignored the instruction of his superior (Wong) to withdraw from representing both parties in the transaction and had simply left things too late for the parties to complete on 2 January 2008.  It was more likely than not, so he argued, that Tsang would do anything – by hook or by crook if necessary – to make sure that the transaction would be completed successfully.

67.In my view, it was rather unlikely for Tsang to send the defendant on an errand on 2 January 2008 to deal with the name discrepancy:- 

(a)     As said before, Tsang became aware of the name discrepancy in October 2007.  The name discrepancy involved the defendant using different names at different times in previous conveyancing transactions.  Tsang explained, under cross-examination, that his thinking at the time had been that it would be all right if he included all the name forms in the documentation.  That was why the vendor was identified as “LEUNG MEI CHUN ALISON ALIANCE (梁美春) (formerly known as SHAM MAY CHUN (岑美春))” in the formal agreement.  He alerted the defendant of the name discrepancy nonetheless just in case anything would turn on that.  As it turned out, Choi raised no query on the name discrepancy in his first report.

(b)     By 2 January 2008, the number discrepancy had surfaced which Tsang described in his evidence as “a serious title defect”. [25]

One of the documents requested by Choi in his first report was the OP.[26] According to Tsang, he applied for a certified copy of it on 24 December 2008 after obtaining money on account from the defendant but only obtained the document after the Christmas holiday.  This is evidenced by the correspondence between MWC and the Buildings Department in evidence.[27] 

The first requisition Choi raised in his second report was the number discrepancy.  It was in these terms:-

“Parking Lots Nos 7, 15, 24, 25, 32 and 40

Occupation Permit re K180/60 (copy enclosed)

We note that the above Permit provided that “41” carparks erected on the Basement were permitted for non-domestic use. However, the “Basement Carpark Plan” attached to the Deed of Mutual Covenant Memorial No 325611 (extract copy enclosed) shown that there were 60 carparks erected on the Basement. Please therefore let us have the Approval Letter by the Building Authority for the alteration of the erection of the carparks from “42” to “60” on the Basement Carpark. (請給我看)”

According to Tsang, MWC had thought that the control card of Tung Lo Court might shed light on the discrepancy. They applied to the Land Registry on 2 January 2008 and obtained a copy of it on 7 January 2008 but it turned out not being useful in answering the requisition. The discrepancy was only “resolved” on 8 January 2008 in terms of the plaintiff’s waiver letter.

(c) Given (a) and (b) above, I find it unlikely for Tsang to raise the name discrepancy with the defendant on 2 January 2008 without mentioning the number discrepancy as per the defendant’s case.

(d) In any event, I do not believe Tsang would have given the defendant a free hand in drafting her own statutory declaration even if he was still concerned about the name discrepancy. After all, all that Tsang had hoped for (according to the defence) was successful completion. On that premise, Tsang should have given the defendant very specific instruction as to what was required of her. MWC could even have prepared the statutory declaration for her (just as they had prepared the waiver letter for the plaintiff’s signature) and there was no need for her to attend to the formalities at a District Office.[28]

As it turned out, the statutory declaration homemade by the defendant raised more questions than answers as noted above.

68.I accept Tsang’s evidence that he was prompted by the circumstances to suggest to both parties on 2 January 2008 to postpone the completion.

69.As said before, Choi had (by his first report) requested to see additional documents.  The defendant only confirmed that she did not have those documents and put MWC in funds on 19 December 2007 to apply for certified copies.  It took time for the defendant’s cheque to clear and given the intervening Christmas and New Year holidays, MWC did not have much time to deal with the requisitions raised in Choi’s first report.  Not surprisingly, Choi reiterated many of his earlier requisitions in his second report.  In the meantime, “a serious title defect” (ie the number discrepancy) had arisen.  Under such circumstances, it was rather unlikely for completion to take place on 2 January 2008 after the long weekend.  Even Tsang’s secretary could see it coming.  I find it reasonable for Tsang to suggest to both parties on 2 January 2008 that completion be postponed.

70.All these tie in with Mr Chain’s point that the defendant should have no difficulty in agreeing to a postponement as she had already received the bulk of the purchase price.

71.All in all, I reject the defendant’s case.  Based on Tsang’s evidence, I find that the defendant had agreed to postpone completion to 9 January 2008. There was no completion on 2 January 2008 because both parties had agreed (through Tsang) to a postponement.

Issue 2: What was the legal consequence?

72.It is the defendant’s case that the plaintiff was in breach of the formal agreement by refusing to complete on 2 January 2008.  Given the above findings, there is no factual basis for such contention.    

73.In any event, I find the defendant’s case on acceptance of the plaintiff’s repudiation incredible. 

74.To start with, her evidence is at odds with her pleaded case:- 

(a)     In para 11(c) of her RRAD&CC, she pleaded that: “on the next day, 3 January 2008, the Defendant called the Firm [ie MWC] again and asked whether the Plaintiff had paid the balance of the purchase price on 2 January 2008.  She was told by a lady staff that the Plaintiff had not done so. Accordingly, she told the lady staff of the Firm that the S&P [ie the formal agreement] was terminated and she would forfeit the deposits.” (emphasis supplied)

(b)     However, she claimed in her evidence that she had, on 2 January 2008, told a female staff of MWC over the phone as well as the plaintiff directly at Tung Lo Court that she would not proceed with the sale and would forfeit the deposits.  She explained at the first trial that she had called MWC on 3 January 2008 out of curiosity to enquire why the transaction had fallen through.[29]

The inconsistency was highlighted in Mr Chain’s opening but never resolved by the defence at trial. 

75.Secondly, the defendant is an experienced property dealer with ready access to legal advice.[30] If she had already terminated the formal agreement (on 2 or 3 January 2008), it is incredible that: (i) she would have done nothing to protect her interest, such as by instructing Chan & Tsui to put on record on 8 January 2008 that she had accepted the plaintiff’s repudiation; and (ii) she would have attended an unknown firm of solicitors on 9 January 2008 in furtherance of the transaction.  Let me elaborate:-

(a)     According to Tsang, he was contacted on 8 January 2008 by one Ms Yau of Chan & Tsui, a firm of solicitors,who claimed to have instruction to act for the defendant in the transaction.  At no time did Ms Yau assert that the defendant had already terminated the agreement.  Tsang’s account is corroborated by his attendance notes:-

“8/1 5 pm (陳/崔 Ms 尤律師act for梁美春)”

“V intend to change Sol and instruct Chan & Tsui (10/F, CIG Bldg) call me (手提) for completion tommr.”

In the end, he did not receive any formal notice of change of solicitors from Chan & Tsui and so his firm continued to act for the defendant in the transaction.

The defence does not dispute the fact that Chan & Tsui had contacted MWC on the instruction of the defendant. The defendant explained in her evidence that she had asked Chan & Tsui to clarify with MWC but Chan & Tsui had refused to act for her.  That begs the question of why Chan & Tsui would contact MWC in the first place.

(b)     The defendant claimed that someone from MWC had called her on 9 January 2008 and asked her to attend another firm of solicitors in the same building as MWC to attend to some formalities.  When she turned up, a male staff claimed that his firm represented her in the transaction and asked her to execute an assignment.  She refused and said that she had already terminated the agreement.  She could not recall the name of the firm or the name of the staff.

Why would she willingly attend an unknown firm of solicitors in furtherance of the transaction if she had already accepted the plaintiff’s repudiation?

76.All in all, I reject the defence case that the plaintiff was in breach of the formal agreement.  The counterclaim should therefore be dismissed and there is no need to consider issue (4).

77.Turning to the plaintiff’s case, the defendant amended her pleading at the beginning of the trial by adding the following defence to para 12 of her RRAD&CC:

“If which is denied, that there was an agreement of postponement of the completion date from 2 January to 9 January 2008 as alleged, the alleged agreement varied the Sale and Purchase Agreement without complying with Section 3 of the Conveyancing and Property Ordinance Cap 219 and accordingly the alleged agreement was not enforceable.”

78.The plaintiff pleaded in reply that:

“21A. The agreement to postpone the completion date from 2^nd January 2008 to 9^th January 2008 was a variation of the sale and purchase agreement and is a valid agreement.

21B. The parties acted on it and as a result no completion took place on 2^nd January 2008.

21C.    The fact that the variation has not been evidenced by a written memorandum and might be unenforceable does not affect the validity and enforceability of the sale and purchase agreement which is what the Plaintiff now seeks to enforce.”

79.Section 3(1) of the CPO is in these terms:-

“Subject to section 6(2) [which does not apply to this case], no action shall be brought upon any contract for the sale or other disposition of land unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged or by some other person lawfully authorized by him for that purpose.”

80.In Kwan Siu Man v Yaacov Ozer (1997-98) 1 HKCFAR 343, the Court of Final Appeal referred to the 5^th edition (1984) of Meggary and Wade’s The Law of Real Property and some dated English authorities and commented (at p 359) that:-

“As is well-known, this provision has its origins in the Statute of Frauds 1677 s 4, which bars legal remedies for contracts for the sale of land not evidenced in writing.”

81.Mr Chain likened this case to Camberra Investment Ltd v Chan Wai-tak [1989] 1 HKLR 568.  He referred to the judgment of Hunter JA and submitted that notwithstanding section 3 of the CPO, the formal agreement had remained on foot and enforceable by the plaintiff.

82.Mr Chan invoked Union Eagle Ltd v Golden Achievement Ltd [1997] AC 514 to dispute the plaintiff’s entitlement to enforce the formal agreement after 2 January 2008 as that would be tantamount to unilaterally tendering performance according to some other terms.  He said that Camberra had been impliedly overruled by the Privy Council in Union Eagle. 

83.I do not think Camberra has been overruled.  Shortly after their decision in Union Eagle, the Privy Council specifically approved Hunter JA’s judgment in Camberra in the case of Chong Kai Tai Ringo v Lee Gee Kee [1997] HKLRD 461 at 470A-E. 

84.In my view, neither Camberra nor Union Eagle is apposite although this case is more akin to Camberra.

85.In Camberra, the Court of Appeal allowed the purchaser’s claim for specific performance because (in the words of Hunter JA):-

“I regard the point as fundamental and very relevant as revealing both parties to have been at fault. Their obligations under clause 3 were mutual. The duty of the defendant to tender an executed assignment and that of the plaintiff to tender the balance of the purchase price were concurrent conditions. Neither performed: neither tendered: neither triggered the corresponding obligation of the other. The defendant neither executed nor tendered an assignment before 1 pm and thereafter was denying his obligation so to act and preventing his solicitor from taking any step to that end. The plaintiff tried to tender and failed. The cheque constituted at most conditional payment and not the ‘full’ payment required. An effective tender required cash or its equivalent, neither of which was available that Saturday afternoon.

In my judgment this contract remained uncompleted at midnight on 28^th February by the fault of both parties.  It did not then terminate as was at one time suggested.  It remained on foot with the substitution of a reasonable time for the failed express condition.”

86.In Union Eagle, the purchaser failed to complete by the stipulated time and tendered the purchase price 10 minutes late but before the vendor had rescinded the contract.  In dismissing the purchaser’s claim for specific performance, the Privy Council said (at 518B-D):-

“Mr Lyndon-Stanford [for the purchaser] submitted that when performance was tendered at 5:10 pm the contract was still on foot. Although failure to perform in time was a repudiatory breach, the vendor had not yet accepted the repudiation and rescinded. Meanwhile, the contract remained alive for the benefit of both parties. At 5:10 pm the purchaser was still entitled to complete the contract by performance and had tendered to do so. Failure to accept his tender was a repudiatory breach by the vendor.

This argument attracted Godfrey JA [1996] 1 HKC 349, 358-359, but their Lordships think it is quite untenable. It is true that until there has been acceptance of a repudiatory breach, the contract remains in existence and the party in breach may tender performance. Thus a party whose conduct has amounted to an anticipatory breach may, before it has been accepted as such, repent and perform the contract according to its terms.  But he is not entitled unilaterally to tender performance according to some other terms.  Once 5 pm had passed, performance of the contract by the purchaser was no longer possible.  The vendor could be required to accept late performance only on the grounds of some form of waiver or estoppel.”

87.Unlike the purchaser in Camberra or the purchaser in Union Eagle, the plaintiff here was not at fault.  She could not be blamed for not completing on 2 January 2008 given the agreement to postpone the completion date.  By 9 January 2008, the plaintiff had paid the balance of the purchase price and tendered an assignment (which had been executed by her in escrow) for the defendant’s execution. 

88.The plaintiff is presently unable to enforce the agreement to complete on 9 January 2008 as that agreement was not evidenced in writing.  In my view, the plaintiff’s predicament is caught by the following rule set out on p 581 of the 5^th edition (1984) of Meggary and Wade:-

“If the term not recorded in writing was not part of the original contract, but was introduced by way of variation after a complete memorandum of the original contract had been made, the original contract remains enforceable and the oral variation is disregarded.”

89.The learned editors referred to the judgment of Lord Haldane in Morris v Baron & Co [1918] AC 1 and commented that:-

“Strictly speaking, this is illogical, for after the variation the true contract between the parties is the contract as varied, and this is not wholly evidenced in writing. But the rule is now well settled.”

90.In Morris v Baron, Lord Haldane said this (at pp 16 & 18):-

“… a further construction is now firmly settled which bases both the 4th and 17th sections of the Statute of Frauds upon a special rule of evidence. That rule is that where an agreement is validly entered into which has had to comply with the Statute of Frauds, and variations are afterwards sought to be introduced by parol or by a document which does not comply with the statute, these variations cannot be set up even by a defendant as an answer in proceedings to enforce the original agreement. This rule was so laid down by Sir William Grant in Price v Dyer 17 Ves 356, 363, and again by a later Master of the Rolls Lord Lyndhurst (at that time Sir John Copley) in Robinson v Page (1826) 3 Russ 114, 121. These authorities were followed not long since in Vezey v Rashleigh [1904] 1 Ch 634 by Byrne J. It shows how definite the principle thus based on the statute was considered to be that in these cases, which related to the specific performance of contracts for the sale of land, the rule was applied, notwithstanding the tenderness towards defendants which the element of discretion in decreeing specific performance sometimes admits of…

… the authorities in equity to which I have referred established the principle clearly as regards the 4th section of the Statute of Frauds and of the Sale of Goods Act.  No doubt it is not to be found in the expressed words of the sections.  But if the construction placed by the Courts on such words is not accepted injustice will result.  For it would then be in the power of a defendant to insist that the contract to be sued on by the plaintiff must be the entire new contract comprising the old one with the parol variations, and then to defeat the plaintiff by setting up the statute.  The Courts, in order to avoid this result, have read the language as implying that the original formal contract is not, in any question of evidence in proceedings, to be treated as varied by a subsequent contract which is informal, and therefore of imperfect obligation.”

91.In the present case, the defendant, having agreed to vary the completion date to 9 January 2008, refused to complete the transaction on 9 January 2008 and sets up section 3 of the CPO to foil the plaintiff’s attempt to enforce the agreement.  This is precisely the “injustice” Lord Haldane said the courts should strive to avoid by allowing the innocent party to enforce the original agreement.[31] Accordingly, I hold that the plaintiff is entitled to enforce the formal agreement albeit the date agreed for completion has already passed.

92.In Lau Suk Ching Peggy v Ma Hing Lam (2010) 13 HKCFAR 226, there was an agreement whereby the plaintiff was granted an option to purchase a flat from the defendants on or before 28 September 2004.  At issue was whether the plaintiff had validly exercised the option by giving notice of her intention to exercise the option without completing the transaction by the specified date.  The Court of Final Appeal held (in the words of Lord Millett NPJ) that:

“39. … the Plaintiff validly exercised the option and that a binding contract was concluded for the sale and purchase of the flat. It also follows that, since 28 September was not the date for completion, the contract contained no agreed completion date. Contrary to the finding of the Recorder, neither party was in breach of contract by failing to complete on 28 September.

40.   The Recorder correctly held that where no date for completion is fixed by the contract the parties are obliged to complete within a reasonable time of the conclusion of the contract.”

The Court cited Behzadi v Shaftesbury [1992] Ch 1 (CA), 12 in support of the holding of the Recorder mentioned in para 40 of the judgment.

93.In the later case of Fong Yin Hing v Fong Kwan Pui [2016] 2 HKLRD 825, Anthony To J explained (at para 80) that:

“… the preponderance of English authorities, subject to there being a finding of a concluded contract, is that where no date for completion is fixed by the contract the parties are obliged to complete within a reasonable time of the conclusion of the contract. See: Behzadi v Shaftesbury Hotels Ltd. When there is a failure to complete within a reasonable time, a breach of the contract occurs. The innocent party may issue a notice fixing a new completion date and making time of the essence. In a later decision of the Court of Final Appeal, Lau Suk Ching Peggy v Ma Hing Lam, Lord Millett NPJ, with whom Bokhary PJ agreed, adopted the English Court of Appeal decision in Behzadi v Shaftesbury Hotels Ltd.”

94.In the present case, there is certainly a concluded contract for the sale and purchase of the CPS in terms of the formal agreement.  I do not need to decide what is reasonable time for the parties to complete the formal agreement, as Mr Chain and Mr Chan are in agreement that one party to a contract may commence proceedings for specific performance even before the contractual date for performance has arrived if the other party has evinced an intention not to perform the contract.[32] The defendant has clearly communicated an intention not to proceed with the transaction by the letter dated 2 June 2008.

95.For the above reasons, subject to the short point on laches, I hold that the plaintiff is entitled to enforce the formal agreement by specific performance.

Issue 3: Whether the plaintiff is barred from the relief of specific performance because of laches?

96.I can dispose of this issue quickly.

97.The defendant complained that the plaintiff had been dilatory, making reference to the three Notices of Intention to Proceed filed by the plaintiff in these proceedings.  She said that up to the commencement of the first trial, there had been a delay of almost 9 years during which time property prices in Hong Kong had risen sharply.

98.That prompted the plaintiff to explain that notwithstanding the case management directions of the court, all the parties (including the defendant and MWC as Third Party) had taken time to procure expert valuation of the CPS and to mediate.  When the mediation turned out to be unsuccessful in August 2015, the parties then proceeded to prepare for trial.

99.Both counsel agree that mere delay is not sufficient to defeat a claim for specific performance.  To amount to laches, the delay must be sufficient to be evidence of the abandonment of the contract by the plaintiff or it must be coupled with some other factor which makes it unjust to the defendant to order specific performance.[33]

100.The plaintiff commenced this action on 10 October 2008, shortly after the defendant’s letter dated 2 June 2008.  It is not Mr Chan’s submission that there was any conduct on the part of the plaintiff since the commencement of these proceedings that had led the defendant to believe that the plaintiff was going to abandonment the contract or ask for damages only. 

101.I accept Mr Chain’s submission that rise in property prices per se is not sufficient to bar the plaintiff from seeking specific performance.  In my view, there is nothing that would make it unjust to the defendant to order specific performance.

102.I therefore rule against the defendant on the issue of laches. 

DISPOSITION

103.For the above reasons, I enter judgment for the plaintiff and order the formal agreement to be specifically performed and carried into execution. 

104.I direct the parties to agree on the terms of the order to be made and to jointly lodge in a minutes of order for my approval within 21 days from the date of this judgment. 

105.In the absence of an agreement, (i) the plaintiff do lodge in court and serve on the other side minutes of the order sought by her within 28 days from the date of this judgment; (ii) the defendant do lodge in court and serve on the other side a succinct statement of her objections within 7 days thereafter; and (iii) the plaintiff do lodge in court and serve on the other side a succinct statement in reply within 7 days thereafter.  Unless otherwise directed, I shall resolve their differences on the papers.

106.The counterclaim is dismissed.

107.Costs normally follow the event.  I make an order nisi that the defendant do pay the plaintiff the costs of this action (including the costs of defending the counterclaim) to be taxed if not agreed.

108.I thank counsel for their assistance.

Mr Benjamin Chain leading Ms Joyce Chan, instructed by Pansy Leung Tang & Chua, for the plaintiff

Mr Edward Chan SC leading Mr Andy Hung, instructed by Chong & Yen, for the defendant