Chu Kit Yuk and Another v. Country Wide Industrial Ltd and Others

HCA006389/1991

1991, No.A6389

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Coram: Deputy Judge YEUNG in Court

Dates of hearing: 31 May and 1, 2, 3, 6, 7, 8, 9, 22, 23 June 1994

Date of handing down of judgment: 5 July 1994

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J U D G M E N T

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1. This case arose out of the ever-changing property market in Hong Kong when properties change hands from one buyer to another when they are still being constructed.

2. The 1st Defendant, Country Wide Industrial Ltd. (Country Wide) by two memorandum for sale both dated 28.1.91 agreed to purchase 2 flats from Overture Co. Ltd.(Overture), a subsidiary of Sun Hung Kai Properties Ltd. at the price of about $1.3 million each.

3. The 2 flats are adjacent to one another and are known as Flat E, 6th Floor, Block 3 of the New Town Plaza, Phase III Shatin, New Territories (the first flat), and Flat F on the same floor in the same block (the second flat). A deposit of 10% of the purchase price was paid for each of the 2 flats and formal sale and purchase agreements in respect of the 2 flats were executed on 6th of February 1991 which agreement provided that the balance of the purchase price had to be paid on or before 26th of February 1991.

4. Country Wide did not pay the balance of the purchase price on the due day. Instead, by 2 provisional sale and purchase agreements both dated 11th of March 1991, Country Wide agreed to sell the first flat to the 1st plaintiff (Chu Kit Yuk) and the second flat to the 2nd plaintiff (Chu Kit Ha).

5. Chu Kit Yuk and Chu Kit Ha (the Plaintiffs) are sisters and they wished to live close to one another so that they could better look after their mother.

6. Under the said provisional sale and purchase agreements, Chu Kit Yuk and Chu Kit Ha had to pay an initial deposit of $50,000.00 each and the balance of the 10% deposit had to be paid on 12th of March 1991 when the formal sale and purchase agreements would be signed at the developer's office.

7. The prices for the 2 flats agreed between the plaintiffs and Country Wide were the same as those payable by Country Wide to Overture except that the Plaintiffs agreed to pay a further sum of $160,000.00 each to Country Wide as "position queuing fees" on 12th of March 1991 when they went to the developer's office to perform the necessary procedure.

8. If everything went well, Country Wide stood to make a profit of more than 100% of their outlay within a period of about six weeks.

9. Unfortunately, the procedure of the transfer of names had not been successfully effected on 12th of March 1991 as Overture required that the entire outstanding balance of the purchase prices together with interest thereon of the 2 flats had to be paid first.

10. Under the memorandum for sale between Overture and Country Wide, the balance of the purchase prices for the 2 flats had to be paid on or before 26th of February 1991 and in default interest would be chargeable.

11. There were disputes between the Plaintiffs and Country Wide as to who should be responsible for such overdue interest.

12. The very next day, on the 13th of March 1991, Country Wide by two provisional agreements for sale and purchase purported to sell the first flat to the second defendant (Tam Ho Yin) and the second flat to the third defendant (Tsui Yim Chu).

13. The prices agreed to by the Tam Ho Yin and Tsui Yim Chu were the same as those agreed to by the Plaintiffs, namely $160,000.00 on top of the original prices charged by Overture for each of the 2 flats. In addition, both Tam Ho Yin and Tsui Yim Chu also agreed to pay the overdue interest from 26th of February 1991 charged by Overture.

14. Formal sub-sale agreements between Tam Ho Yin, Tsui Yim Chu and Country Wide were executed on the 19th of March 1991 and completion was due to take place on 23rd of March 1991.

15. In the meantime, the Plaintiffs had on the 16th of March 1991 registered with the Land Office their respective provisional sale and purchase agreements against the 2 flats in question.

16. The Plaintiffs commenced the present proceeding against Country Wide on 21st of August 1991 for specific performance, damages in lieu of specific performance and/or for breach of the agreements.

17. An ex parte injunction order was granted by Mr. Justice Gall on 4th of November 1991 restraining Country Wide from assigning, mortgaging or otherwise disposing of the 2 flats as confirmor or otherwise which injunction order continued under a consent order dated 11th of November 1991.

18. Tam Ho Yin and Tsui Yim Chu subsequently applied and were allowed to be joined as parties to the proceeding.

19. Country Wide counterclaims against the Plaintiffs for recession of the agreements dated 11th of March 1991 and a declaration that the Plaintiffs are liable to indemnity it against the claim by Tam Ho Yin and Tsui Yim Chu.

20. Tam Ho Yin and Tsui Yim Chu by their counterclaim seek specific performance of the sale and purchase agreements between themselves and Country Wide date the 19th of March 1991. They also counterclaim against the Plaintiffs and Country Wide for damages to be assessed.

21. It is the parties' agreement that the Court should only deal with the question of liability and in whose favour the decree of specific performance ought to be granted and the question of damages is to be dealt with at subsequent hearings.

22. The stance taken by Country Wide is the same as that of Tam Ho Yin and Tsui Yim Chu and by some last minute amendments, their defence and counterclaim against the Plaintiffs are identical. This is perhaps not difficult to understand because if the Plaintiffs' claims against Country Wide fail, Tam Ho Yin and Tsui Yim Chu's claims for specific performance and damages are bound to be successful.

23. It is the Plaintiffs' case that after the price of the 2 flats had been agreed upon and before the signing of the two provisional sale and purchase agreements in question on 11th of March 1991, Mr. Edwin Hai (P.W.4) on behalf of the Plaintiffs suggested that the transactions were to be completed by way of sub-sales. Ms Lam Yuet Kam Meyor, Country Wide's representative, however insisted that the transactions should be completed by means of `change of names' or `novation' so that the Plaintiffs would substitute Country Wide as direct purchasers of the 2 flats from Overture. It was suggested that the change of name method would be more convenient and cheaper as far as Country Wide was concerned. However, according to Edwin Hai, it had been agreed that if the change of name method was not viable, the transactions would then be completed by way or sub-sales.

24. On the 12th of March 1991, when the parties arrived at the office of Sun Hung Kai Properties Ltd., it was learned that as the deadline for the payment of the balance of the 90% of the purchase prices of the 2 flats by Country Wide had expired on 26th of February 1991, Sun Hung Kai would not agree to have the Plaintiffs substituting Country Wide as direct purchasers of the 2 flats in question. It was further suggested that the `names change' could only be effected if the balance of the purchase prices and the accrued interest thereon from 26th February 1991 were paid.

25. Mr. Hai said in accordance with the prior agreement they had, the transactions were to be completed by way of sub-sales and both parties agreed to approach their respective lawyers in order to effect such sub-sales as soon as possible.

26. However, Country Wide indicated on 13th March 1991 that the Plaintiffs were required to bear the costs of the sub-sales despite the terms of the provisional sale and purchase agreements to the contrary.

27. Mr. Hai subsequently agreed to it. But on 14th March 1991, Country Wide again requested the Plaintiffs to bear the accrued interest on the overdue balance of the purchase prices. Mr. Hai on behalf of the Plaintiffs was only prepared to pay such accrued interest as from 11th March 1991. Mr. Hai also mentioned an unfounded suggestion by Country Wide's agent that the two cheques of $50,000.00 each paid to Country Wide as deposits for the 2 flats had been dishonoured which suggestion caused doubt to Mr. Hai as to the sincerity of Country Wide.

28. The Plaintiffs shortly afterwards found out that Country Wide had entered into two separate provisional sale and purchase agreements on 13th of March 1991 to sell the 2 flats to Tam Ho Yin and Tsui Yim Chu respectively. The matter was then referred to the Plaintiffs' solicitors resulting in the registration of the provisional agreements between the Plaintiffs and Country Wide with the Land Office on 16th March 1991

29. The Defendants have raised substantial dispute as to facts, in particular in the following areas:

1. The Defendants allege that throughout the negotiation, it had been made clear to Mr. Hai on behalf of the Plaintiffs that Country Wide would make a `clean profit' of $160,000.00 for each of the 2 flats in question and thus the Plaintiffs were liable for all the expenses that Country Wide incurred in respect of the 2 flats, including the overdue interest and the legal expenses.

2. Ms. Lam Yuet Kam Meyor of Country Wide suggested that it was Mr. Hai who insisted to proceed with the transactions by way of `change of names' and not by way of `sub-sales' in order to save trouble and to that extent, Mr. Hai had assured her that the suggested method was possible.

3.Ms. Lam also said she had not told Mr. Hai that if the transactions could not be effected by way of `change of names', it would then be completed by `sub-sales'.

30. The Defendants further contend that when the parties went to the office of the developer on 12th of March 1991 and when they were told that the developer would not agree to any change of names, Mr. Hai refused to pay for the overdue interest and the legal expenses and hence they were unable to complete the transactions by way of sub-sales.

31. In so far as the provisional sale and purchase agreements in question provide terms inconsistent with the agreement of the parties, the Defendants suggest that such provisional agreements, had failed to record correctly the terms reached by the parties.

32. On the major disputes as to facts, I have considered carefully the evidence as well as Counsel's submission, I have little difficulty in finding against the Defendants.

33. If Country Wide was so concerned about making a `clean profit' of $160,000.00 on each of the 2 flats and Ms Lam had spent so much time and effort in bringing this home during the negotiation with Mr. Hai as she claimed, it was impossible for the agent to have failed to record such `important' matter in the provisional sale and purchase agreements.

34. There was no evidence to show how Country Wide got hold of the 2 flats and Ms Lam did not tell Mr. Hai what were the precise expenses involved other than the suggestion that Country Wide wanted to make a `clean profit' of $160,000.00 for each of the 2 flats.

35. It is in my view most unlikely that Mr. Hai would agree to such vague suggestion of being responsible for all the expenses incurred by Country Wide in respect of the 2 flats, particularly when Mr. Hai is clearly a rather shrewd businessman, being himself also in the real estate business. If Mr. Hai had agreed to be responsible for the overdue interest and the legal expenses on behalf of Country Wide on 11th of March 1991, it was somewhat surprising that he should have a completed change of attitude the very next day when clearly he was very anxious to buy the 2 flats.

36. On the evidence, it was also clear that at the material time, Country Wide was anxious to dispose of the flats and disappear with whatever profits it could make out of them. A `change of names' method would be ideal for Country Wide whereas `sub-sales' necessitated it to remain in the picture to act as `confirmor' at completion until which time Country Wide would have contractual obligation towards both the Plaintiffs and the developer.

37. The legal expenses involved for Country Wide would also be higher in the case of `sub-sale' than `change of names'. On the other hand, if the transactions were to be completed by way of `change of names', the Plaintiffs were liable to pay the developer a `cancellation fee' of 1% of the prices for each of the 2 flats and thus would increase their expenses.

38. In the circumstances, the Defendants' contention that it was Mr. Hai who insisted on a `change of name' method is not likely to be true and it is more probable that it was Ms Lam who rejected Mr. Hay's suggestion of `sub-sales' and insisted on carrying out the transactions by way of `change of names.'

39. On the evidence, I also accept Mr. Hai's evidence that the question of the alternative method of completing the transactions had been mentioned and agreed upon if `change of names' could not be effected. Clearly both. parties were anxious to complete the deals and it would be natural to discuss all necessary methods to achieve that, particularly Mr. Hai himself was also working in the estate agent business at that time.

40. Ms. Lam's evidence that the question of `sub-sale' did not arise and was not discussed is most unconvincing. Such evidence is, as rightly pointed out by Mr. Wong on behalf of the Plaintiffs, a departure from Country Wide's pleaded case and not consistent with the contents of some of the affirmations filed by Tam Ho Yin and Tsui Yim Chu in connection with the interlocutory applications. Her evidence also contradicted that of the other witness of Country Wide, Mr. Winson Leung Chi Fai who was at the material time the agent of Country Wide and it was Mr. Leung who in fact drew up the provisional sale and purchase agreements in question.

41. Mr. Leung was quite emphatic that the question of `sub-sale' had in fact been raised during the meeting on 11th of March 1991 and he also suggested that at some stage of the negotiation, it had been discussed and agreed that if `change of name' was not possible, `sub-sale' should be used as it would be the only viable alternative method. Such evidence is clearly consistent with that of Mr. Hai on this particular aspect.

42. On the evidence, I am driven to the only reasonable conclusion that at the material times, the parties were anxious to complete the transactions of selling the 2 flats as soon as possible. Miss Lam on behalf of Country Wide was eager that the transactions should be completed by way of `change of names', but if that proved to be not viable, the alternative method of `sub- sale' should be adopted.

43. I find that there was no agreement that the Plaintiffs should be responsible for all the expenses of Country Wide to enable it to make a `clean profit' of $160,000.00 for each of the 2 flats. Indeed I am of the view that Miss Lam probably did not realise the liability on the part of Country Wide to pay the overdue interest until the next day when the matter of overdue interest was raised by the developer. The agreement on the prices of the 2 flats simply was that a sum of $160,000.00 described as `queuing fees' should be added to the original price for each of the 2 flats.

44. The provisional sale and purchase agreements are printed form contracts prepared by Country Wide's agent, Century Property Consultants and were completed by Mr. Winson Leung.

45. The original printed forms contain terms applicable to both the `change of name' and the `sub-sale' arrangement. Some of the terms apply only to one situation and some apply only to the other situation and are therefor mutually exclusive. All those terms are allowed to remain in the provisional sale and purchase agreements in question which is also a good indication of the parties' intention and agreement.

46. On the factual dispute between the parties, all matter raised by the Defendants fail.

47. I shall now deal with the question of law. The defence filed by the Defendants is somewhat lengthy, convoluted and not easy to understand. But if I understand them correctly, Mr. Westbrook on behalf of Country Wide and Mr. Chan on behalf of Tam Ho Yin and Tsui Yim Chu make the following points in their final addresses.

1. That there was no concluded agreements between the Plaintiffs and Country Wide for the sale and purchase of the 2 flats in question. The suggestion is that the parties only agreed to invite the developer to effect changes of names and should such step be successful, the transactions would then continue. The arrangement was nothing more than a conditional agreement or an agreement to agree and since the changes of names could not be effected, the originally arrangement came to an end. As the parties had not been able reach any new agreements after 12th of March 1991, Country Wide was therefore entitled to sell the flats to Tam Ho Yin and Tsui Yim Chu again on 13th of March 1991.

2. In so far as the Plaintiffs rely on the agreements that the transactions were to be completed by way of `sub-sales' when `change of names' became not viable, such agreements contradicted the written term of the provisional sale and purchase agreements and were therefore caught by the parole-evidence rule.

3. Further the `sub-sales' arrangement, being a material term of the contract for the sale or other disposition of land, have not been evidenced in writing and would not be enforceable by reason of S.3 of the Conveyancing and Property Ordinance Cap. 219

4. Mr. Westbrook also suggests that there had been misrepresentation on the basis that Mr. Hai had wrongly informed Ms. Lam that the transactions could be carried out by way of `name change' which in fact was not possible. He further submits that when the developer refused to allow a `name change', the contract would be frustrated.

48. The suggestion that there was no concluded agreement for the sale of the 2 flats in question and that the agreement was just a conditional agreement or an agreement to agree is difficult to accept. What cannot be ignored is that the subject matters of the contracts were the 2 flats and not the way in which the selling of the flats was to be carried out. As Parker J. pointed out in Hatzfeldt-Wilfenburg v. Alexander [1912] Ch. 284 at p.288:

"It appears to be well settled by the authorities that if the documents or letters relied on as constituting a contract contemplate the execution of a further contract between the parties, it is a question of construction whether the execution of the further contract is a condition or term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through. In the former case there is no enforceable contract either because the condition is unfulfilled or because the law does not recognise a contract to enter into a contract. In the latter case there is a binding contract and the reference to the more formal document may be ignored."

49. Whether there had been a concluded contract between the parties is ultimately a question of fact. In the instant case, clearly Country Wide was anxious to sell the 2 flats and the Plaintiffs were anxious to buy them. There is no dispute that after some negotiation, Mr. Hai on behalf of the Plaintiffs agreed to buy and Ms. Lam on behalf of Country Wide agreed to sell the 2 flats and the Plaintiffs and Country Wide were named as the Purchasers and the Vendor in the respectively provisional sale and purchase agreements. The prices for the 2 flats had been set out and the liability to pay the agency fee was also specified. The particulars of the 2 flats were clearly stated and in the remarks column the parties took the trouble of stating that the transactions would be completed the very next day by way of a `name-change'.

50. Much of the confusion arose out of the use of a printed form provisional sale and purchase agreement which was intended to be used in all forms of property transaction in Hong Kong, including the `name-change' and `sub-sale' method. Some of the provisions applicable to one form of transaction and not to another had not been deleted but that was clearly consistent with the Plaintiffs' contention that it was the parties' agreement that if the `name-change' method was not viable, the alternative method of `sub-sale' would be adopted.

51. On the facts as found by the Court, there is no room for the suggestion that there had not been any concluded agreement for the sale of the 2 flats in question and the same must be rejected.

52. I also reject the suggestion that the agreement that should the `change of name' method was not viable, the transactions were to be completed by way of `sub-sale' contradicted the written terms of the provisional sale and purchase agreements.

53. It is true that the remarks column of the provisional sale and purchase agreements provided that `both parties agreed that they should go to the Developer Sun Hung Kai Properties on 12th of March 1991 to perform the procedure for transfer of names and the Purchaser agreed to pay to the Vendor Hong Kong Dollars One Hundred and Sixty Thousand as `position queuing fees' and have not expressly stipulated that should the `name change' method be not possible, `sub-sale' should be used, the written documents do contain terms applicable to both situations. Indeed looking at such documents and bearing in mind the circumstances in which they were executed, they are clearly consistent with the Plaintiffs' contention that it was within the parties contemplation that `sub-sale' would be an alternative mode of completing the transactions for the sale of the 2 flats.

54. If necessary, I would not have any hesitation in admitting Mr. Hai's oral evidence to establish terms additional to those contained in the written documents. In so far as they have failed to include the alternative mode of completing the transactions, they are not intended to express the entire agreement between the Plaintiffs and Country Wide.

55. On the statutory defence under Section 3 of the Conveyancing and Property Ordinance, I accept the points raised by Mr. Wong on behalf of the Plaintiffs. The alternative mode of sale by way of `sub-sale' in my view is not a material term. Very often, in agreement for the sale of flat, it is not even necessary to set out the manner in which the sale is to be completed.

56. Each party will be required as a matter of law to do what is reasonably necessary to completed the transaction. After all the subject matters of the agreement were the flats and not the manner in which the sale was to be effected. After all, the provisional sale and purchase agreements in question had set out the identities of the Vendors and Purchasers, the particulars of the flats, the prices, the payment of the deposits and the agency fees and as the building was still being constructed, the date of vacant possession was stated as `according to Developer's instruction' etc.

57. Mr. Chan on behalf of Tam Ho Yin and Tsui Yim Chu argues that the mode of completing the transaction was material as it had certain bearing on the financial implication in that in `change of name' situation the Vendor was only required to pay the legal costs for the cancellation of his agreement, an amount of about $2,000.00 whereas `sub-sale' would involve a legal fee of over $10,000.00.

58. I do not consider a sum of $10,000.00 significant in the context of selling a flat worth $1.4 million. In any event, clause 2 of the provisional sale and purchase agreements provides that `each party will bear his own cost' which I find to apply only in `sub-sale' situation. Such express agreement between the parties completely defeats the argument on the cost implication of the two different mode of transactions.

59. Even if I am wrong in holding that the `sub-sale' is immaterial, the conclusion reached by the Court that clause 2 of the provisional sale and purchase agreements that `each party will bear his own cost' only applies in `sub-sale' situation must necessary mean that the term is indeed evidenced in writing and S.3 of the Ordinance had been complied with. The Defendants' argument on S.3 of the Ordinance also fails.

60. Counsel have not advanced much argument on the question of misrepresentation and/or frustration. With respect, on the facts as found by the Court, the question of misrepresentation and/or frustration do not arise at all.

61. The parties had agreed to the sale and purchase of the 2 flats and that should the `change of name' method was not viable, `sub-sale' should be used. Having reached such an agreement, the parties would be obliged to do what was reasonably necessary to complete the transaction, be it `change of name' or `sub-sale'. It was not open for Country Wide to argue that when the developer refused to `change the names', its contractual obligation came to an end and that it could then sold the 2 flats again the next day.

62. Indeed there is evidence that according to the developer, `change of names' was possible if Country Wide was in a position to pay up all the balance of the purchase price as the due day for the payment of such balance had expired. Counsel for the Defendants seek to block such evidence by saying that it is hearsay evidence. Such evidence may well be hearsay, but there is no other evidence to contradict such suggestion. If Country Wide was able and prepared to pay up the entire balance of the purchase prices of the 2 flats, there was hardly any reason for the developer not to agree to the suggested `change of names'.

63. In any event, the burden of proving a frustration of the agreements in question must fall on the Defendants which burden had not been discharged.

64. None of the matters raised in the defence of the Defendants and in Counsel's submission constitutes any valid defence by Country Wide against the claim by the Plaintiffs.

65. I have no difficulty in finding in favour of the Plaintiffs against Country Wide on the question of liability.

66. I shall now deal with the question of what is the appropriate remedies to be granted to the Plaintiffs, in particular whether they should be granted specific performance of the agreements in question. The Defendants' suggestion is that the agreements provide for remedies should either party be in default and the remedies should be limited to those provided in the agreement. The Defendants rely on clause 4 of the provisional sale and purchase agreement which provides:

"If the Vendor fails to perform this agreement, the Vendor should pay double of the deposit to the Purchaser. i.e. HK$100,000.00. Neither party shall have any further claim against each other"

67. Similar provisions in provisional sale and purchase agreement have been considered in quite a number of cases. Clearly on the authorities, the aforesaid provision can have the effect of limiting a party's claim to a liquidated amount so that the claim for specific performance will fail.

68. Mr. Wong on behalf of the Plaintiff does not seek to argue otherwise. What Mr. Wong contents is that in order to rely on such clause, Country Wide must show that it intended to rely on such clause by offering to pay the liquidated amount within a reasonable time and as Country Wide only offered to return the 2 cheques given to it by the Plaintiffs and had not offered to pay the additional sums equal to the amount of the deposits until almost 9 months later it cannot rely on the clause at all. Mr. Wong relies on the case of Soo Kok v. Tsui Yat Ming H.C. Action No. A 4614 of 1991 and The Thompsett Mind Limited v. Triumph Field Limited H.C. Action No. A1826 of 1992.

69. Authorities on similar issues would be helpful, but ultimately it is a question of the construction of the clause in question. Under clause 4 of the Provisional sale and purchase agreements, Country Wide's obligation would only be absolved if a liquidated damages of double the deposit was paid to the Plaintiffs.

70. There is no dispute that Country Wide made no attempt to exercise the `escape clause' under the agreement after the 2 flats were sold to Tam and Tsui again on 13th of March 1991 other than the return of the 2 cheques paid by the plaintiffs as deposits.

71. Country Wide only offered to pay to the Plaintiffs the liquidated damages sometime in December 1991, after the Writ had been issued and the Injunction Order by Gall J. had been granted.

72. On such evidence, I accept Mr. Wong's submission that Country Wide could no longer rely on clause 4 of the agreement to limit the Plaintiffs' claim to the liquidated damages stated therein.

73. The conclusion aforesaid does not necessary mean that the Court should then grant specific performance of the agreements in question in favour of the Plaintiffs when it involves prejudice or hardship to third parties.

74. Mr. Wong submitted that the relief of specific performance is refused by the Court only in exceptional cases where considerations of prejudice or hardship to third person are so disproportionately great, as against prospective prejudice or hardship to the Plaintiff, as to render specific performance unjust in all the circumstances. Mr. Wong relied on the case Wong Lai Ha v Chung Sau Wah and others H.C. Action No. A4845 of 1991 where Deputy Judge Wesley Wong granted specific performance in favour of the first buyer of the property even the new purchaser had in fact taken possession of the property and had been residing there with the family for a period of more than three years before the trial.

75. There was one single outstanding feature in that case which the learned Deputy Judge clearly placed significant reliance on. He said at Page 21 of his judgment:

"The Plaintiff had at all times been ready, willing and able complete the sale. She sold her own flat immediately after signed the agreement. As a result she has now to rent a place to live. In other words she had been deprived of having her own home."

76. What the Court cannot ignore is that financially, the Plaintiffs had not made any commitment to the 2 flats at all whereas Tam and Tsui's commitments are considerable. After they signed the provisional agreements on 13th of March 1991, the formal agreements were executed on 19th of March 1991. They had made arrangement with banks to finance their purchase of the 2 flats and but for the dispute between the Plaintiffs and Country Wide, the transactions would have been completed.

77. They subsequently paid for the price of the 2 flats by their own money or money borrowed from others for which they have been paying interest over the past four years. If they had not paid the purchase price for the 2 flats, the developer would no doubt have taken them back by way of forfeiture under the agreements with Country Wide in which event the 2 flats would not be available for the Plaintiffs any way.

78. On the other hand, other than paying the two cheques deposit to Country Wide which cheques were never cashed any way, the Plaintiffs had not tied up any of their funds and they could have purchased other flats when they knew that Country Wide had sold the 2 flats again to Tam and Tsui.

79. Mr. Wong suggested that Tsui Yim Chu did not intend to use the 1st flat as residence for her family and was aiming at quick profit when she purchased the flat. To some extent I agree with his observation. Indeed I find it very difficult to accept any of her evidence at all. It was most probable that her name was only used by her husband to acquire the 1st flat in order to make a quick profit.

80. On the other hand, the same observation also applied to the Plaintiffs. I find it difficult to accept their evidence that they purchased the 2 flats which are adjacent to one another because they wished to live next to one another in order to better look after their mother.

81. The dealing was handled completely by Mr. Hai. From the time when Mr. Hai became aware of the 2 flats to the time he signed the agreements on behalf of the Plaintiffs as purchasers, the Plaintiffs had not even been informed of such dealing and indeed both of them knew very little, if at all about the 2 flats. They were only told to go to the office of the developer on 12th of March 1991 to sign certain documents. They had not brought along any money which they had to pay under the agreement. Everything would be left to Mr. Hai according to both of them.

82. I am of the view that in all probability, the Plaintiffs' names had also been used by Mr. Hai, who was then working as an estate agent as well, to acquire the 2 flats in order to make a quick profit.

83. Mr. Wong further submitted that by reason of the registration of the agreements with the Land Office, the Plaintiffs have priority over the 2 flats by reason of the Land Registration Ordinance. I do not think such priority has much bearing on the issue of whether I should grant specific performance in favour of the Plaintiffs in the circumstance of the present case. On the evidence, when Tam and Tsui signed the provisional agreements with Country Wide, they did not and could not have knowledge of the earlier agreements between the Plaintiffs and Country Wide.

84. Under the provisional agreements, Country Wide could have paid the Plaintiffs a liquidated damages of double the deposit in which event the Plaintiffs could not have insisted on specific performance. They could have, as I have said, chosen to buy other flats after they knew that Country Wide had sold the 2 flats to others.

85. It will be naive to pretend not to know that price of property had gone up very substantially since 1991 and refusal of specific performance to the Plaintiffs may be substantial financial loss. But having considered the entire circumstances of the case, I am firmly of the view that it will not be fair and equitable to order specific performance in favour of the Plaintiffs to the detriment of Tam and Tsui and the Plaintiffs' application to that effect will not be entertained.

86. To give effect to the decision by the Court, I make the following orders :-

1. Judgment for the 1st and 2nd Plaintiffs by original action against the 1st Defendant, Country Wide on liability with damages to be assessed.

2. Judgment for the 1st and 2nd Plaintiffs by counterclaim against the 1st Defendant, Country Wide with damages to be assessed in addition to the orders of specific performance.

3. Specific performance of the formal sub-sale agreement by the 1st Defendant by counterclaim with the 1st Plaintiff by counterclaim.

4. Specific performance of the formal sub-sale agreement by the 1st Defendant by counterclaim with the 2nd Plaintiff by counterclaim.

87. I also make the consequential orders as follows:

1. The registration of the agreement dated 11th of March 1991 between the 1st Plaintiff by original action and the 1st Defendant against the property known as Flat E, 6th Floor, Orchid Court, New Town Plaza, Phase III Sha Tin, New Territories at the District Land Office, Shatin be vacated.

2. The registration of the agreement dated 11th of March 1991 between the 2nd Plaintiff by original action and the 1st Defendant against the property known as Flat F, 6th Floor, Orchid Court, New Town Plaza, Phase III Sha Tin, New Territories at the District Land Office, Shatin be vacated.

3. The Injunction Order of Mr. Justice Gall dated 4th of November 1991 and the order of Mr. Justice Leong dated 11th of November 1991 be discharged.

88. I also make an order nisi that the 1st Defendant, Country Wide to pay the costs of the proceeding of the Plaintiffs by original action and by counterclaim to be taxed if not agreed and the such order on costs is to be made absolute 7 days after the handing down of this judgment.

Representation:

Mr. Charles T.C. Wong instructed by M/s. Lee, Ng & Lam for the Plaintiffs by original action.

Mr. Simon Westbrook instructed by M/s. Peter Mo & Co. for the 1st Defendant.

Mr. Louis K.Y. Chan instructed by M/s. Howell & Co. for the Plaintiffs by counterclaim.