Tang Kwai Cheung v. Yeung Sze Ting
Read the full judgment text of HCMP 1287/2020 on BabelCite. This High Court CFI judgment was delivered on 3 November 2022.
1. These proceedings, which were commenced by an Originating Summons dated 24 August 2020 under section 12 of the Conveyancing and Property Ordinance [1] but converted into a writ action by order of Au-Yeung J on 12 May 2021, concern a piece of land in Yuen Long, namely Lot No 417 in Demarcation District 125. [2]
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HCMP 1287/2020 [2022] HKCFI 3329 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 1287 OF 2020 ________________
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________________ J U D G M E N T ________________ A. INTRODUCTION 1.These proceedings, which were commenced by an Originating Summons dated 24 August 2020 under section 12 of the Conveyancing and Property Ordinance[1] but converted into a writ action by order of Au-Yeung J on 12 May 2021, concern a piece of land in Yuen Long, namely Lot No 417 in Demarcation District 125.[2] 2.The parties have agreed a “Statement of Agreed Facts in Narrative Form” dated 18 July 2022 (“SAF”). I find the matters stated in the SAF as facts and I adopt the abbreviations used therein. I set out the SAF in full:
3.In addition to the facts stated in the SAF, I should mention that following the withdrawal of his application for letters of administration of the estate of the Deceased (“the Estate”) (SAF [16]), the plaintiff, who was the Deceased’s son, commenced proceedings[4] on 5 March 2021 seeking the removal of Tang Cheung as the executor of the Estate, which was granted by B Chu J by order dated 28 April 2021. By the same order, the plaintiff was appointed the administrator of the Estate. However, no formal grant of letters of administration by the Probate Registry has been made. 4.A portion of the Property was resumed by the Government on 24 October 2020. The total area resumed is 5,035 square feet, at HK$1,348.80 per square foot. The total sum for the resumption of the half share of the part of the Property resumed is HK$3,395,604.[5] The unresumed part of the Property is 1,934.6 square feet, with the Estate owning half of it. 5.The SPA, which is stated at Schedule 1 to be made between “TANG KWAI CHEUNG (鄧桂長), the intending administrator of the estate of TANG SIU WAN (鄧紹穩), deceased” as the Vendor and the defendant as the Purchaser, contains a clause 35 as follows:
6.On the SPA, it was stated that it was interpreted to the vendor (i.e. the plaintiff), and to the purchaser (i.e. the defendant), by NKY, whose signatures in relation thereto were verified by a solicitor of LK. 7.The SPA contains the following schedules:
8.While the SPA is dated 3 November 2017, it is the evidence of the plaintiff, the defendant and TCL that they attended the office of LK on 2 November 2017 to sign it. The defendant and TCL went together, while the plaintiff went separately. For the purpose of clause 35(c), the nine-month period for the plaintiff to obtain letters of administration of the Estate expired on 2 August 2018, and the extended period of three months expired on 2 November 2018. There is no dispute that by 3 November 2018, no letters of administration of the Estate had been granted to the plaintiff. The right of the plaintiff to rescind the SPA under clause 35(c) therefore arose on 3 November 2018. 9.The plaintiff having purported to exercise the right to rescind the SPA by letter dated 4 August 2020, at a time when no letters of administration of the Estate had been granted, the primary question before me is whether the plaintiff was at that time entitled to rescind the SPA under clause 35(c). The defendant says he was not, by reason of the fact that after the extended deadline for completion (i.e. 2 November 2018), in January 2019, the plaintiff requested, and was paid, a sum of HK$100,000 as further deposit by the defendant (SAF [10]-[11]). Therefore, the defendant says, by such conduct, the plaintiff had waived his right under, or was estopped from enforcing, clause 35(c), or clause 35(c) was otherwise spent and no longer enforceable. 10.The defendant also takes a prior point regarding clause 35(c). She says that LK, which acted for both the plaintiff and the defendant in the sale and purchase of the half share of the Property, wrongly included clause 35(c), as the parties had not discussed or agreed on a right of rescission and neither party gave LK instructions to include such a clause in the SPA. Further, neither party was aware of clause 35(c) as it was not interpreted to either of them before they executed the SPA. She counterclaims, inter alia, for an order that the SPA be rectified by deleting clause 35(c) therefrom. I note here that the defendant is not taking issue with the inclusion or validity of clause 35(a) and (b), or any other clauses in the SPA. 11.In response, the plaintiff denies that clause 35(c) was wrongly included and he avers that it was interpreted to him before execution. 12.The plaintiff further avers that any alleged agreement to amend or to waive the terms of the SAP, being a land contract, had to be in writing to be signed by both parties under section 3(1) of the C&PO. This was not done in case of clause 35(c). He also denies that clause 35(c) was otherwise spent or had become unenforceable. 13.The parties have agreed that the following are the issues for resolution at this trial:
14.The implied terms or implied agreement referred to at [5(a)] of the list of issues are pleaded at [13]-[14] of the Re-Amended Defence and Counterclaim as follows:
15.At the trial, the plaintiff gives evidence on his own behalf. For the defendant, apart from herself, she calls three other witnesses, namely her husband, TCL, and two clerks from LK, NKY (also known as Karen) and Leung Ka Ling (also known as Amy) (“LKL”). B. DISCUSSION B1. Should clause 35(c) be deleted? 16.The first issue for me to decide is whether clause 35(c) is a term which was included in the SPA by mistake, so that it should be deleted by rectification. 17.It is not in dispute that when the SPA was entered into, the factual context known to all concerned was that the half share of the Property was still registered in the name of the Deceased, and the plaintiff had not been granted representation of the Estate. Hence the express reference to the plaintiff being selling as the intending administrator of the Estate. Indeed, in his affirmation, TCL confirms that when he gave instructions to NKY for the transaction, he informed her[8] that the half share of the Property was still registered in the name of the Deceased “so completion could only take place after the vendor had obtained grant of representation to enable him to transfer the [half share]”. This is consistent with NKY’s evidence in this respect, as well as the written instructions she provided to her colleague, Kerry Tsang (“Kerry”), so as to prepare the SPA. 18.The written instructions from NKY to Kerry, dated 27 October 2017, are as follows:
19.It is not in dispute the plaintiff and the defendant (or TCL) had never met to negotiate or discuss the sale and purchase. On the plaintiff’s side, it was a nephew of his, Tang Yu Yeung (“TYY”), who had contact with TCL. On the other hand, on the purchasing side, it was TCL who negotiated and decided on all matters in relation to the sale and purchase, as well as giving instructions to and dealing with LK. TCL, however, decided to name his wife, i.e. the defendant, as the purchaser on the SPA. As stated by the defendant in her affirmation:
20.It seems fair that the intention, knowledge and conduct of TCL in relation to the sale and purchase of the half share of the Property can and should be attributed to the defendant. 21.According to the affirmations of TCL (which the defendant says accords with the factual situation as far as she is aware and which she adopts):
22.The defendant reiterates in her affirmation that clause 35(c) was not explained to them by Sandy,[10] and there was no way they would agree to it as it would defeat the purpose of the purchase of the half share of the Property. She asks for rectification of the SPA by deleting clause 35(c) therefrom. 23.In her affirmation, NKY says she received instructions from TCL on about 4 October 2017 regarding the sale and purchase. She says that TCL told her that the registered owner of a half share of the Property had passed away, and under a family arrangement, the plaintiff was to inherit the half share. He asked LK to act for both sides in the transaction, as well as for the plaintiff in obtaining letters of administration of the Estate. Completion would take place within 30 days of grant of letters of administration. 24.According to NKY, it was she who, on about 30 October 2017,[11] explained the essential terms of the SPA to the defendant and TCL at the office of LK. She says she did not explain each and every word or sentence to them, nor did she read the contents thereof in detail herself, as she was generally familiar with the contents of a sale and purchase agreement. What she did explain to them were that the defendant was purchasing a half share of the Property from the plaintiff; the price and terms of payment; completion to take place within 30 days of the plaintiff being granted representation of the Estate by the High Court; vacant possession to be delivered on completion; provisions on failure to complete by the plaintiff and by the defendant respectively; stamp duty; provision on resumption by the Government; and sale on an “as is” basis. 25.NKY says she also explained the same matters to the plaintiff when he attended the office of LK on 2 November 2017. 26.In particular, NKY says she did not notice, and therefore did not explain, clause 35 at all to the defendant, TCL and the plaintiff. During her testimony, she says she explained the completion date to them by reference to Part II of Schedule 3. 27.NKY says that she had never received any instructions to include the one-year time limit for completion in the SPA. The inclusion of such a provision by her colleague was a mistake. No drafts or copies of the SPA had been provided to the parties before their execution thereof. 28.In his affirmation in reply, the plaintiff says that when NKY attended to him at the office of LK on 2 November 2017, she explained to him various terms of the SPA, including the terms of clause 35(c). He says that given that he was a layman with no experience in conveyancing, he was very cautious with the entering into of the SPA, and whether he had the right to sell the half share and the consequences of him not getting the letters of administration, and so he had a clear recollection of him being explained the contents of clause 35(c) before signing, and he would not have signed the SPA had clause 35(c) not be present. 29.In his testimony before me, the plaintiff says:
30.In my judgment, clause 35(c) is a valid and binding provision between the plaintiff and the defendant, and the defendant’s claim that it was included by mistake must be rejected. I say so for the following reasons. 31.The defendant’s case is that there was no discussion or agreement on such a provision between her (or TCL) and the plaintiff, and the same was not interpreted or explained to her, TCL or the plaintiff. I accept and find that there was no discussion or agreement, and therefore no express instructions given by either the plaintiff or the defendant (or TCL) to LK, on such a provision. But this, in my judgment, is not sufficient to establish a common or mutual mistake, as claimed by the defendant. The defendant is not relying on unilateral mistake. 32.In a transaction for the sale and purchase of real property, as a general rule, and in the overwhelming majority of cases, there will be a formal agreement in writing signed by the parties setting out in detail the terms of sale.[12] The agreement usually contains detailed terms (such as those referred to in [21(8)] above) dealing with the rights and obligations of the parties which are of a legal and technical nature, which the vendor and purchaser, especially if they are both not qualified or trained in law, would not have agreed or discussed amongst themselves. They would generally agree on the “basic” terms, such as the subject matter, the price, terms of payment, and completion date, and then leave it to their solicitors to work out (and, if each side has his or her own solicitors acting, to agree on) the detailed terms of the agreement. 33.In his affirmation, TCL says that he informed (and thus gave instructions to) NKY of four matters only ([21(1)] above), which NKY then asked Kerry to prepare the SPA accordingly ([18] above). NKY says she did not give Kerry any further instructions as to what were to be included or not included. Of course, the actual SPA contains many more provisions than what TCL told NKY, and what NKY told Kerry. This is because, as TCL confirms in cross-examination, he would leave it to LK to decide what were the terms to be included in the SPA, and he would not know about many of the terms of the SPA. He says that he was only concerned with the basic terms of the SPA, and did not care about the technical terms thereof. 34.In his testimony, the plaintiff says that he trusted LK. He says that if LK said that it was alright to sign the SPA, then he would. It is clear that he also entrusted LK to prepare an agreement with provisions which LK considered appropriate. 35.In her testimony, NKY also confirms that it was for LK, acting for both sides, to include terms which ought fairly to be included to deal with the rights and obligations of the parties. NKY confirms that it was Kerry who decided, when drafting the SPA on her instructions, to include clause 35(c), so it is at least Kerry’s view that clause 35(c) was a fair clause to be included. In my judgment, such a view cannot be said to be an unreasonable one to take, because without it the SPA arguably remains no matter how long the delay in the application process is (and leaving it as an implied term that a right to rescind arises after a reasonable time will just create uncertainty and dispute). NKY’s evidence is that she did not even bother to check the clauses of the SPA which Kerry had prepared, but just the Schedules. 36.Having so entrusted the drafting of the SPA to LK (via TCL), unless the SPA contains something inconsistent with what was in fact agreed between the parties (such as the price: LK could not, of course, put in any figure other than HK$1,000,000 as the price), or otherwise with an express instruction given, in my judgment the defendant must be bound by the terms of the SPA so included. This is especially so as the defendant confirms in cross-examination that when she and TCL attended the office of LK to sign the SPA, she could see the SPA in front of her which contained many clauses, but only the most basic terms were explained to them by NKY. Neither the defendant nor TCL bothered to ask NKY to explain to them the other clauses. The defendant was happy to sign the SPA in such circumstances because she trusted the solicitors. In such circumstances, I do not see how the defendant is not bound by what she signed. As G Lam J (as he then was, giving the judgment of the Court of Appeal consisting also of Lam VP (as he then was) and Cheung JA) in Tsang Wing Kwai v The Personal Representative of the estate of Chan Chung Han, the Deceased:[13]
37.In Bank of China (Hong Kong) Ltd v Fung Chin Kan,[14] referred to by G Lam J, Litton NPJ (with whom Bokhary PJ, Chan PJ, Mortimer NPJ and Lord Cooke of Thorndon NPJ agreed) said:
38.In Ming Shiu Chung v Ming Shui Sum,[15] also referred to by G Lam J, Ribeiro PJ (with whom Bokhary PJ, Chan PJ, Fuad NPJ and Sir Thomas Eichelbaum NPJ agreed) said:
39.In light of the evidence from the defendant, TCL and NKY that NKY did not interpret clause 35(c) to TCL and the defendant, and in particular this failure to interpret is against the interests of NKY and LK in that arguably NKY was failing to discharge her, and LK’s, duty of care in acting for the defendant by not reading through, and explaining and interpreting, the contents of the SPA save for those in the Schedules, I find that, on a balance of probabilities, NKY did not interpret clause 35(c) to the defendant and TCL on 2 November 2017, when the defendant signed the SPA at the office of LK. There is no suggestion or evidence that anyone (including NKY) did so at any other time. 40.The way NKY handled the interpretation of the SPA, that is, she only explained and interpreted the basic terms, appears to be her modus operandi, as well as that of LKL, her colleague in LK. It would therefore appear to me that, on a balance of probabilities, NKY also did not interpret clause 35(c) to the plaintiff either. As stated, it would be surprising if she did, but then lies about it and thereby admitting to a possible breach of duty owed to the plaintiff which she did not commit. 41.I also accept the submissions on behalf of the defendant that what happened on 27 July 2020 supports the finding that the plaintiff was not explained clause 35(c) on 2 November 2017. It is the plaintiff’s evidence that around that time, there was news that the Government would resume land in the area, and so he called LK and asked about his rights under the SPA, and he also sent TWK to get a copy of the SPA. Obviously, the plaintiff was ascertaining if he could get out of the SPA. The plaintiff says that TWK told him that at the office of LK, TWK was explained clause 23 of the SPA, which only gives the defendant (but not the plaintiff) a right to terminate on resumption. This largely accords with the evidence of NKY and LKL in this regard. As submitted, if, as the plaintiff says, he was explained clause 35(c) on 2 November 2017 and he remembers it so clearly even now in 2022, it would be odd if he needs to consult LY at all, or that clause 35(c) was not mentioned by the plaintiff with LK directly or through TWK (who was obviously not just going to the office of LK to get a copy of the SPA as he was explained clause 23) on 27 July 2020. 42.In so finding, I have not overlooked the inconsistencies between the evidence of the defendant, TCL and NKY, in particular as to what happened when the former two met with the latter at the office of LK, which I have outlined above. However, I take into account the fact the transaction took place a few years ago and it is only natural that their respective memories on details may be different. 43.The plaintiff also submits that as the defendant and TCL accept that they were explained clause 35(a) and (b), and so it is odd if they were not explained clause 35(c). However, their evidence is that NKY explained to them the completion date being within 30 days of the grant. I do not think they have expressly agreed that clause 35(a) and (b) were interpreted to them. On this, it is quite possible that they were in fact, as NKY says, being explained Part II of Schedule 3, rather than clause 35(a) and (b). It would be quite unlikely for them not just to recall what was explained, but the actual provision from which the explanation came from. I would not place much weight on these parts of their testimony. 44.I have also taken into account the firm evidence of the plaintiff that NKY interpreted clause 35(c) to him and why he says he remembers clearly why that was so. However, in the light of the conflicting evidence I have to make a finding based on inherent probabilities, and for reasons above I find that that NKY did not interpret clause 35(c) to the plaintiff, the defendant and TCL is more likely than not to be the case. 45.As for the interpretation clause in the SPA, which the plaintiff says estops the defendant from saying that clause 35(c) had not been interpreted to them, I note that the clause is a clause signed by NKY only. TCL’s evidence, which I have no reason to disbelieve, is that when the defendant signed the SPA, the interpretation clause on the same page, saying “INTERPRETED to the Purchaser by:-” had not been signed or stamped with the name of NKY. In such circumstances, whatever is the effect of this clause, I do not see why it should bind, or give to any estoppel against, the defendant. 46.However, even if NKY did not explain and interpret clause 35(c) to the plaintiff, the defendant and TCL, that does not mean that clause 35(c) is included by mistake, or that it is not valid and binding. As LK was entrusted by both sides to prepare the SPA with terms which in LK’s judgment ought to be fairly included, both of them are bound by the terms put in by LK so entrusted unless the parties themselves have actually agreed not to include a particular provision (rather than simply not having agreed, dealt with or considered a matter themselves at all),[17] or agreed something different, neither of which was the case here. That is, there is no “outward expression of accord”[18] that something like clause 35(c) should not be included, or that something inconsistent with clause 35(c) should be included. The parties themselves simply had no common intention or agreement in relation to the subject of clause 35(c) at all. The case of the defendant that the common intention of the parties was that there should be a “simple sale” is not only unpleaded, but is entirely unclear as to what it entails sufficient to support a case of clear accord. Rather, clause 35(c) was properly included by someone entrusted and authorised by both parties to include whatever terms it considers fair to do so as long as they are not inconsistent with any express agreements or instructions, and they are bound by it by their signatures. 47.NKY alleges in her testimony that she does not consider clause 35(c) to be a fair provision to be included, and would have deleted it had she known about it. However, the fact remains that she did not delete it, when the person entrusted by NKY to include whatever clause that ought to be fairly included (with NKY herself not bothering to check) clearly took the view that a clause like clause 35(c) ought to be fairly included, either by adopting the precedent in the tso context (according to NKY, LK had such a precedent in that context), or by drafting clause 35(c) herself (according to LKL, LK had no such precedent at all). Further, I do find NKY’s reasons for deletion, had she known about it, unconvincing. When asked by me for the reason, she first says that the period of twelve months in total is clearly insufficient for letters of administration to be obtained. When queried that that should mean that a longer period should be allowed rather than deleting it altogether (as without clause 35(c) that would mean that there is no express time limit at all for letters of administration to be obtained), she then says that to impose a time limit would allow a vendor who has subsequently received a better offer for the property to delay the application for letters of administration deliberately, so as to allow himself to rescind the transaction after the time limit has expired. This rapid change of reasoning is unconvincing and would be contrary to her own evidence that a clause such as clause 35(c) does appear in sale and purchase agreements from time to time and is in the precedents kept by LK, albeit in the context of sales by a tso, but if her second reason is valid then I do not see how that is fair in the tso context either. 48.NKY also says that clause 35(c) is wrongly included as there were no instructions from the parties thereon. She, however, accepts that other clauses are valid and binding although there were no instructions from the parties either. She explains that that is because clause 35(c) is not a standard clause like the others. However, in my judgment, that cannot be correct. Instructions can be given at any time, including when the agreement is being interpreted to the parties just before execution. NKY’s view, if correct, would mean that the validity of a clause would ultimately depend on the view of the person involved, that is, it is for the person (in the position of NKY) to decide whether a clause is not standard enough to require interpretation, or specific instructions, with the result that the validity of the clause would depend on whether he or she is correct or not in making that decision. This cannot be correct as that is a recipe for dispute and litigation, at which the question will become whether a clause is “standard” enough to require specific instructions or interpretation. This is especially so if the person, as in the case of NKY, on her own admission, does not even bother to read the contents of the agreement (save for the Schedules containing the basic terms) to see if there are “non-standard” clauses which require instructions or interpretation. 49.Indeed, in his cross-examination, TCL goes as far as saying that none of the clauses which had not been interpreted to him (including those referred to at [21(8)] above) and the defendant is binding. This is of course wrong as a matter of law, and is contradictory to his own evidence that he left it to LK to put in the terms, and the defendant’s own evidence that she did not ask NKY to interpret the other terms to them. 50.Indeed, if the defendant, TCL and NKY are correct in that clause 35(c) was included by mistake and should not be binding, since on their case there was only agreement, instructions and interpretation on the basic terms, almost all (if not all) of the terms in the body of the SPA are similarly included by mistake and should not be binding. This cannot be correct. 51.For these reasons, I see no basis to find that the inclusion of clause 35(c) was due to any mistake, or that there is any basis for rectification. It was included by LK (via Kerry) which was duly authorised by both the plaintiff and the defendant to do so. The question of whether there should be a time limit for the plaintiff to obtain the letters of administration was simply not in the minds of the plaintiff or the defendant (or TCL) at all, but clause 35(c) was put in by LK as their properly instructed solicitors entrusted with the preparation of a proper SPA with terms fair to both sides. Even if, as the defendant alleges, she signed without knowing about clause 35(c), she remains bound by it. And so is the plaintiff. I simply see no legal basis for me to delete it. B2. Payment of the $100,000 and its effect on clause 35(c) 52.The next issue is whether, by asking for and accepting the $100,000 as further deposit in about January 2019, when the time under clause 35(c) had expired and the plaintiff’s right to rescind had arisen, the plaintiff had somehow lost that right, so that the purported rescission of the SPA by the plaintiff by letter dated 4 August 2020 is of no effect. 53.The facts surrounding this further payment are not really in dispute: see SAF [10]-[11]. I make the following findings as well from the evidence of the parties:
54.Both parties, in their pleadings, describe the $100,000 as “further deposit”.[22] This is also the description used in the SAF. 55.The defendant’s case is that, by asking for and accepting the HK$100,000 as further deposit at a time when the right to rescind under clause 35(c) had arisen, the plaintiff had waived his right to rescind, or was otherwise estopped from relying thereon. Both estoppel by convention and estoppel by representation are relied upon. 56.In my judgment, the defendant cannot rely on waiver or estoppel, given that, as I found above, the plaintiff, and, more importantly, the defendant herself and TCL (which is also her own case), were not explained or interpreted clause 35(c) when the SPA was executed. There is no evidence to suggest that any of those three persons had, after the SPA was executed but before the request for and payment of the further deposit, acquired knowledge of clause 35(c). On that basis, whatever was done in January 2019 regarding the HK$100,000 was done by the plaintiff, the defendant and TCL without any reference to, and in ignorance of, the existence of clause 35(c) and the plaintiff’s accrued right to rescind thereunder. TCL confirms in cross-examination that the payment of $100,000 had nothing to do with clause 35(c). 57.As far as waiver is concerned, which in this case means an abandonment of a right by the plaintiff, there must be:
58.On my finding, the plaintiff did not have knowledge of the facts, namely the existence of clause 35(c) giving him a right, after 2 November 2018, to rescind the SPA. 59.As for estoppel by convention and estoppel by representation, the case of the defendant is put in her closing submissions as follows:
60.The difficulty for the defendant is that, on my findings, and indeed on her own case, clause 35(c) was not in the minds of the plaintiff or the defendant (or TCL) at all in January 2019. It is therefore hard to see how the acts of requesting and accepting the HK$100,000 by the plaintiff, and the payment of that sum by TCL on behalf of the defendant, can be construed or understood as giving rise to any assumption, representation or understanding by any person concerned as to the continued existence or enforceability or otherwise of clause 35(c), or that TCL or the defendant, in paying the HK$100,000, was acting under, or relying upon, any particular assumption or basis induced by any representation by words or conduct made by or on behalf of the plaintiff, in relation to clause 35(c). 61.In the premises, the case for waiver or estoppel must be rejected. Clause 35(c) remained, after 7 January 2019, a right exercisable by the plaintiff. B3. Did the plaintiff validly rescind the SPA on 4 August 2020? 62.Clause 35(c) does not on its terms say when the plaintiff must exercise the right to rescind. It may be argued that: (i) the plaintiff must exercise the right within a reasonable period of time; and (ii) by 4 August 2020, the reasonable period time had expired. However, the aforesaid has not been pleaded. 63.The defendant submits that she should be allowed to argue that the time for the plaintiff to exercise the right to rescind under clause 35(c) had expired by 4 August 2020, notwithstanding the fact that this point is not pleaded. I decline to do so, because, at least in relation to the question of what is a reasonable period of time, it is fact-sensitive, the answer to which depends on all the factual circumstances of the case, in relation to which the plaintiff is deprived of the opportunity to deal with in a focused manner. 64.In the premises, there is no basis for me to find that by 4 August 2020, the plaintiff has lost his right to rescind the SPA under clause 35(c). That leaves the defendant’s point that the plaintiff did not, when purporting to rescind, tender HK$400,000 as a return of the deposit paid. 65.The letter dated 4 August 2020 from TNTL materially states as follows:
66.The defendant’s case is that the letter of 4 August 2020 only constituted an “offer” by the plaintiff to rescind, and without an actual tendering of the payment of the sum of HK$400,000, and without paying of interest, that letter was not a proper exercise of the right to rescind. The defendant had rightly refused the offer. 67.As far as I understand, the defendant is not saying that as a matter of law, a rescission of an agreement like the SPA must be accompanied by a tendering of the amount which is to be returned. It is a matter of interpretation of the agreement to see what is the scope of the right to terminate.[24] 68.Thus, for example, in Looney v Trafigura Beheer BV,[25] the relevant clause read as follows:
69.In such a clause, the payment of the early termination fee is expressly made one of the two conditions (the other being the service of a written notice) that have to be fulfilled before the agreement is validly terminated. This is to be contrasted with clause 35(c), which, as far I can see, does not make the return of the deposit, or a tendering thereof, a condition to be fulfilled before the SPA is validly rescinded. The plaintiff has a right to rescind thereunder, whereupon, i.e. upon the rescission, the deposit paid is to be returned. That is, the return of the deposit is not a condition for rescission, but is a consequence upon valid rescission. 70.Nor do I read the letter of 4 August 2020 as merely an “offer” to rescind. This does not make sense as the right to rescind is a unilateral right, not dependant upon the agreement or acceptance of the defendant. Nor is the 4 August 2020 couched in terms of an offer. The letter says that the plaintiff decides to rescind, not that the plaintiff decides to offer to rescind and asks for the acceptance of the defendant. The rest of the letter deals with what was to be done upon rescission. B4. The implied term/agreement 71.The defendant also pleads that, upon the payment of the further deposit of HK$100,000, there arise the implied terms or agreement as pleaded at [13]-[14] of the Re-Amended Defence and Counterclaim ([14] above), which the plaintiff has breached, causing her loss and damage. 72.The law as to the implication of a term in a contract was reviewed by the Supreme Court of the United Kingdom in Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd.[26] I adopt the summary of Mr Adrian But,[27] counsel for the plaintiff:
73.I would also add the following from the recent judgment of the Court of Appeal (Lam VP, Cheung and Barma JJA) in Lo Yuk Sui v Fubon Bank (Hong Kong) Ltd formerly known as International Bank of Asia Ltd:[28]
74.Regarding the alleged implied term referred to at [13(a)] of the Re-Amended Defence and Counterclaim, there is no allegation that it has been breached. I therefore fail to see its relevance whatsoever. Indeed, the defendant has sent notice of these proceedings to the siblings of the plaintiff, but none of them has indicated any intention or interest in joining these proceedings. If the defendant is of the view, or is advised, that their position regarding the sale by the plaintiff as the intended administrator ought to be clarified, and should be bound by the judgment herein, it is really for her to apply to join them as parties. Further, the alleged implied term does not make sense as it was known to all that as at the date of the SPA, the plaintiff did not have letters of administration granted to him, so it would not be right to suggest that the plaintiff had impliedly agreed or warranted that he had the beneficiaries’ authority to sell. The beneficiaries were not in a position at the time to authorise anything. On the other hand, the plaintiff did not need their authority as completion would take place only upon grant of representation to him, and he would then have the authority to sell as the administrator, such authority being derived from the letters of administration. This alleged implied term is absolutely without merit and utterly devoid of relevance herein. 75.As for the alleged implied term under [13(b)] of the Re-Amended Defence and Counterclaim, I do not see how that can be implied. The SPA does not just provide for an end result, namely the assignment of the half share of the Property by the plaintiff to the defendant, leaving the manner of how it is to be achieved open. It prescribes the exact manner in which the completion of the sale and purchase is to be achieved: i.e. if and when the plaintiff obtains letters of administration of the Estate. Completion is conditional upon that event, as per clause 35(a). Further, clause 6 of the SPA expressly states that the plaintiff is to assign as personal representative. The alleged implied term suggests that if the plaintiff can work round the condition, and can somehow procure the assignment of the half share of the Property to the defendant, albeit without any grant of letters of administration and so he is not assigning as personal representative, he has a duty to do so. This is, in my judgment, rewriting the SPA, so as to render the condition not a condition at all. This may, arguably, improve the SPA for both parties, who were presumably, before the plaintiff rescinded the same, willing and eager to complete. But this is not what an implied term is supposed to do. Nor can one say that this term is necessary to make the SPA works by catering for the situation where the condition is not or cannot be fulfilled, as the SPA itself already provides for the scenario where the condition is not or cannot be fulfilled. It can also be said that the alleged implied term, by providing for completion by alternative means without the fulfilment of the express condition in clause 35(a), is inconsistent therewith, as well as clause 6. 76.I am therefore of the view that the term stated in [13(b)] of the Re-Amended Defence and Counterclaim cannot be implied. 77.As for the implied agreement alleged in [14] of the Re-Amended Defence and Counterclaim, it is to be noted that what is pleaded is not an implied term in the SPA, but a separate agreement arising upon the request for, and payment of, the further deposit, with the term as suggested. This is confirmed by Mr Ian Chau, counsel for the defendant. 78.Leaving aside the question of formalities as required by section 3 of the C&PO, a point taken by the plaintiff, I do not see how an implied agreement on such a term can be considered to have arisen. I have set out the factual circumstances above, which are simple. The plaintiff, through TWK, requested TCL, on behalf of the defendant, to pay over a sum as further deposit for a sale and purchase transaction governed by an existing agreement. The defendant has to assert that a new agreement arose because if the payment of the further deposit for the existing sale and purchase, that is most probably a variation of the SPA which itself would require some writing when there is none. 79.Assuming in favour of the defendant that there, as she has pleaded, arose a separate agreement by conduct, in my judgment that agreement was simply that the defendant agreed to pay the plaintiff HK$100,000 as further deposit, which is to be repaid later by deducting from the balance of the purchase price payable at completion of the SPA, if and when it takes place. A further necessary term of this implied agreement is that if completion of the SPA does not take place, the plaintiff is to return the HK$100,000 along with the HK$300,000 already paid. 80.Apart from the aforesaid, I do not see how the alleged term of the plaintiff “thenceforth” taking all reasonable steps with due diligence to procure letters of administration of the Estate to be granted to him can be implied. The basis for implying such a term is absolutely unclear. It cannot have arisen from the bare circumstances I have outlined. If there is somehow some basis to imply such a term under the principles referred to by the authorities, that term ought to have been implied in the SPA itself, with the duty to take reasonable steps etc arising from the execution of the SPA. Yet no such term has been pleaded or said to have been breached.[29] In such circumstances, even if some implied agreement is considered to have arisen by reason of the request for, and payment of, the HK$100,000, I do not see how I am to imply such an obligation on the plaintiff, thenceforth, meaning that the obligation arose there and then. Either the plaintiff was already under such an obligation already under the SPA, in which case there is no basis to imply such a term in the implied agreement thenceforth, or there is no basis to imply such a term at all in either the SPA or the implied agreement. On either case, the implied agreement cannot contain such a term. 81.I would add that I do not think that the defendant has shown that the plaintiff had breached this implied agreement in the terms as alleged, even if it exists. I do not think that there is sufficient evidence to show what should have been the time required, counting from 7 January 2019, to obtain a grant of letters of administration of the Estate for the plaintiff, in light of the complication that there was already a grant to Tang Cheung, who had lost the original grant. Of course, TNTL, when it took over around August 2020, managed to get the Order removing Tang Cheung and appointing the plaintiff in April 2021, but that was with the benefit of what LK had done before August 2020, and the question is whether the whole process could have been completed between 7 January 2019 and 4 August 2020 with the exercise of due diligence. I do not think that there is sufficient evidence for me to find one way or another. I note that apparently Kerry thought that twelve months is a fair period, given that that is the period she puts in at clause 35(c), but NKY disagrees, and that is on an application without particular complication, and in this regard the evidence, as far as it goes, is also in conflict. Further, there is evidence that LK did apply for estate duty clearance of the Estate sometime in 2019, and it is the evidence of NKY that this process takes time and cannot be expedited. B5. The application to amend the Amended Defence and Counterclaim 82.By Summons dated 23 August 2022, i.e. between the second and the third days of the trial, after all witnesses have given their evidence save for the defendant, she applies for leave to amend the Amended Defence and Counterclaim. I allowed some minor amendments which were not opposed, but disallowed the substantive amendments asked for, after hearing the parties on 29 August 2022. These are my reasons. 83.The application is said to be prompted by the testimony given by the plaintiff, that by a family arrangement made before the death of the Deceased, he was given the half share of the Property. (I pause to note here that that there was an arrangement in the plaintiff’s family affecting the half share of the Property is not, according to the evidence of TCL and NKY, something unknown to TCL before the plaintiff’s testimony: see [21(2)] and [23] above). By reason of the family arrangement and the transfers of other properties to the plaintiff’s siblings pursuant thereto, the defendant now seeks to allege, by way of the proposed substantive amendments, that the plaintiff was and is the sole beneficial owner of the half share of the Property, and none of the siblings is entitled to apply for a grant of letters of administration of the Estate since they have no beneficial interest therein. In the premises, the SPA took effect as a sale of the half share of the Property by the plaintiff as the sole beneficial or absolute owner. 84.This, in my judgment, is another attempt to rewrite the SPA which cannot be allowed:
85.The proposed substantive amendments are unarguable and leave to amend in relation to it is therefore declined. 86.For the same reasons, all the submissions in the closing of the defendant on the consequences of the family arrangement being that the plaintiff was as at the date of the SPA the sole beneficial owner of the half share of the Property cannot in any event assist the defendant regarding the nature and effect of the SPA and the operation of clause 35(c). I shall not deal with them. I should point out that I do not understand why those submissions are made in the closing submissions of the defendant even though I have already dismissed the application to amend the Amended Defence and Counterclaim in that regard. C. DISPOSITION 87.For the above reasons, the plaintiff succeeds in his action, and the counterclaim is dismissed. I have dealt with all the issues on the Agreed List of Issues which I need to. Some issues do not arise as a result of my findings above, and I do not propose to deal with them. 88.I make the following orders:
89.The plaintiff also asks for an order that the parties do execute a cancellation agreement. I am not sure if a cancellation agreement is necessary given the declaration I make which is registrable at the Land Registry, but if the plaintiff deems it necessary for a cancellation agreement to be executed for whatever reason, I am willing to consider it if written submissions therefor are filed and served within 14 days of the date of this Judgment (and if so the defendant is to respond to the submissions (if so desired) by filing and serving written submissions within 14 days hereafter, and the plaintiff is to reply (if so desired) by filing and serving written submissions within 7 days hereafter). 90.The plaintiff also asks for an order that the SPA be withdrawn from the register kept at the Land Registry. I am not sure if I have the jurisdiction to make such an order, even if the SPA is not in fact registered but is pending registration. In any event, I do not think that this is an appropriate order to be made. The effect of having the SPA on the register is to be undone by the declaration I make and, if necessary and appropriate, by a cancellation agreement, and not by removal. 91.I thank counsel for their assistance.
Mr Adrian But and Mr Abel Lam (except 29 August 2022), instructed by Tung Ng Tse & Lam, for the plaintiff Mr Ian Chau, instructed by Wong Hui & Co, for the defendant [1] Cap 219 (“C&PO”). [2] In these proceedings, the term “Property” is sometimes used to describe the entire Lot (for example, in the plaintiff’s first affirmation), and sometimes used to describe the half share of the Lot being sold by the plaintiff as intending administrator (for example, in defendant’s affirmation). For the sake of consistency, I shall use the term to describe the entire Lot in this Judgment. [3] The defendant agrees to “capacity as intended administrator” only to the extent that Schedule 1 to the SPA states that the plaintiff is “the intending administrator”. [4] HCMP 286/2021. [5] 5,035 x 0.5 x HK$1348.80. [6] Cap 117. [7] The plaintiff’s stance is that the defendant should not be allowed to run her case on “mistake” on the basis that it was not or improperly pleaded in her Defence and Counterclaim, and reserves his right to make further written and oral submissions on this during trial. [8] However, in his testimony, TCL says it was NKY who, after conducting a search, told him that the Property was registered in the name of the Deceased and another person, and TCL then told NKY that the former had passed away. Nothing turns on this. [9] NKY says there had been at least eight to ten such transactions. [10] In her testimony, the defendant says it was a Ms Ng who attended to them on 2 November 2017. [11] In her testimony, NKY says she cannot remember the exact date on which TCL and the defendant went to the office of LK to sign the SPA, but she recalls that it was not on the same date as the plaintiff. [12] I note also section 3(1) of the C&PO. [13] CACV 216/2015 (9 May 2016). [14] (2002) 5 HKCFAR 515 at [51]. [15] (2006) 9 HKCFAR 334 at [84]. [16] Ibid at [87]. [17] The case of Kent v Hartley (1966) 200 EG 1027, cited by the defendant, can be considered to be an example where the parties, in the circumstances, are considered to have actually agreed not to include a particular provision. In that case, the parties originally agreed a lease for five years, with an option for another five years. The parties subsequently agreed, before the execution of the lease, instead a lease for ten years with a break clause after five years. In the lease executed, the term was for ten years, but the five-year option was not deleted. By agreeing the new term, clearly the parties actually agreed and intended that there would be no option. Ungoed-Thomas J was satisfied that “both parties intended to execute the lease without that provision”. [18] Snamprogetti Ltd v Phillips Petroleum Company UK Ltd [2001] EWCA Civ 889 at [32] per Tuckey LJ (giving the judgment of the Court of Appeal consisting also of Schiemann LJ and Hale LJ (as she then was)); Hodge, Rectification: The Modern Law and Practice Governing Claims for Rectification for Mistake (2nd ed, 2016) at [4-24]. [19] 「咁可否攞住十萬蚊比我爸過年先」。 [20] 「其實你係咪怕我有咩古怪，我叫我爸同你對，只是在條數扣」「希望你幫一幫我，我們等錢用才平賣給你們，希望你明白」「雖然只是扣我們的數，呢個人情債我一定還」。 [21] It is not very clear whether the plaintiff actually took the cheque of HK$100,000 from LKL on 7 or 8 January 2019 but nothing turns on that. For convenience I shall use the date of 7 January 2019. [22] The HK$100,000 is also described in various places as further part payment. Nothing turns on this: the point is that it was a payment referable to the transaction under the SPA. [23] Wilken and Ghaly, The Law of Waiver, Variation and Estoppel (3rd ed, 2012) at [4.05], citing Motor Oil Hellas (Corinth) Refineries SA v Shipping Corporation of India (The “Kanchenjunga”) [1990] 1 Lloyd’s Rep 391 at 397-399 per Lord Goff of Chieveley (with whom Lord Keith of Kinkel, Lord Brandon of Oakbrook, Lord Templeman and Lord Griffiths agreed). [24] Chitty on Contracts (34th ed, 2021) at [25-050]. [25] [2011] EWHC 125 (Ch). [26] [2016] AC 742 at [14]-[31] per Lord Neuberger of Abbotsbury (with whom Lord Sumption and Lord Hodge agreed). [27] Appearing with Mr Abel Lam. [29] For this reason, the unpleaded allegation that the plaintiff is not allowed to take advantage of his own wrong, namely his failure to apply for any letters of administration within twelve months of the signing of the SPA, must also be rejected. | |||||||||||||||||||||||||||||
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