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DCCJ 4722/2023
[2025] HKDC 65
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO 4722 OF 2023
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BETWEEN
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TRILLION STAR (ASIA) LIMITED |
Plaintiff |
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and
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GAIN FORTUNE CORPORATION LIMITED |
Defendant |
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| Before: |
Deputy District Judge Alfred Cheng in Chambers (Open to Public) |
| Date of Hearing: |
3 January 2025 |
| Date of Decision: |
16 January 2025 |
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DECISION
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1.The defendant appeals against the Decision given by a Master on 5 September 2024, by which she entered summary judgment against the defendant for HK$998,000.00, with interest at HSBC prime rate plus 1% from the date of the writ up to the date of the decision, and at judgment rate thereafter. The defendant argues that unconditional leave to defend should be granted.
Background
2.The defendant is the owner of Ground Floor, No.6 Tit Hong Lane, Hong Kong (“the Property”).
3.It is the plaintiff’s case that:
3.1. In early 2023, it intended to acquire land, of which the Property formed part, for redevelopment purpose;
3.2. It appointed Reputation (Shop) Agency Limited (“Reputation”) as its agent for the acquisition;
3.3. On 16 February 2023, Mr Kwong Mong of Reputation met Mr Yeung Shiu Cheng of the defendant in a restaurant. On that occasion, Mr Kwong passed a cheque of HK$1 million issued by Gavison Group Holdings Limited in favour of the defendant, and an unsigned provisional sale and purchase agreement in relation to the Property to Mr Yeung;
3.4. At that meeting, Mr Yeung took the cheque, signed the provisional agreement and an undertaking in Chinese on the defendant’s behalf. The defendant acknowledged in the undertaking that:
3.4.1. It received HK$1 million from the plaintiff as earnest money for purchasing the Property;
3.4.2. If the plaintiff decided not to proceed with the purchase of the Property, the defendant irrevocably undertook to, after deducting a sum of HK$2,000.00 from the earnest money as compensation, refund HK$998,000.00 to the plaintiff within 10 days upon receipt of the plaintiff’s written notice[1].
3.5. On 3 July 2023, Reputation wrote to inform the defendant that the plaintiff decided not to proceed with the purchase of the Property. This letter requested the defendant to refund HK$998,000.00 to the plaintiff as per the terms of the undertaking.
3.6. However, the defendant has been refusing to pay the plaintiff any part of the HK$998,000.00 to date.
4.The defendant accepts that it received HK$1 million from the plaintiff. It also agrees that the meeting between Mr Kwong and Mr Yeung did take place on 16 February 2023. However, it argues that the plaintiff is not entitled to seek the refund of HK$1 million by relying on the undertaking. It argues that:
4.1. The undertaking itself is invalid for want of consideration, or it is supported by past consideration;
4.2. Irrespective of the above, there was a concluded agreement between the plaintiff and the defendant when Mr Yeung signed the provisional agreement in triplicate and returned them to Mr Kwong on 16 February 2023. Further, the defendant was later sent copies of the provisional agreement showing that the plaintiff also signed on it. On the conclusion of the provisional agreement, the undertaking lapsed in its effect;
4.3. As there was part performance of the provisional agreement, the parties’ bargain remain extant. Since the HK$1 million was part of the deposit for purchasing the Property, any obligation to repay the deposit (if any at all) has not arisen;
4.4. The defendant did not receive Reputation’s letter of 3 July 2023. In any event, since the undertaking lapsed in its effect, the defendant is not obliged to refund HK$998,000.00.
This appeal
5.It is trite that I am not bound by the reasons given by the learned Master, although I can give weight to them as I think proper. Indeed, the parties have not even included the learned Master’s reasons in the hearing bundle.
6.The principles in relation to the grant of a summary judgment are celebrated. I see no reasons to repeat them here. It suffices to state that I have considered the principles recited by the parties in their respective written submissions; I detect no serious dispute between them.
7.Mr Kelvin Liu, counsel for the defendant, submits that the plaintiff has not even begun to show that it is entitled to summary judgment based on the undertaking. I understand his submissions are two-fold:
7.1. The undertaking was not properly executed by the defendant; and
7.2. It was not supported by any valid consideration.
8.First, Mr Liu relies on section 127 of the Companies Ordinance (Cap.622), and submits that the undertaking was not properly executed by the defendant. Since the defendant has 2 directors (Mr Yeung and another corporate director) at all times, Mr Liu submits that the defendant could only validly execute the undertaking as a written document as per section 127(3)(b):
“(3) A company may also execute a document –
…
(b) in the case of a company with 2 or more directors, by having it signed on the company’s behalf by –
(i) the 2 directors or any 2 of the directors; or
(ii) any of the directors and the company secretary of the company.”
9.Mr Liu further submits that the ambit of section 127 has not been exhaustively considered in previous cases. This also serves as a reason why the defendant should be given unconditional leave to defend the plaintiff’s claim.
10.I am not convinced by the defendant’s arguments on the defective execution of the undertaking. My reasons are as follows:
10.1. Section 127 is a provision regulating the execution of documents by a company when it does not have a common seal, or when it decides not to use the common seal when it has one. When a company satisfies the requirements therein, the document is treated to have the same effect as if the common seal is used;
10.2. Therefore, even if the term “document” under section 127 may be wide enough to cover the undertaking (as a written contract) in the present case, I do not agree with the defendant that section 127 restricts the ways in which the defendant may enter into a binding contract;
10.3. Mr Liu refers me to the commentaries in Volume 1 of Paul Kwan, Hong Kong Corporate Law. I note that, in [1001] of the commentaries, it is reasoned that:
“A document is ‘signed’ by a company if it is signed by a duly authorized agent or officer of the company in that person’s own name, acting within the scope of his or her authority and on behalf of the company in its course of business: UBAF Ltd v European American Banking Corp [1984] QB 713.”
10.4. The above commentary is separate and distinct from the discussion of the effect of section 127. I am of the view that section 127 could not have been intended as an exhaustive code on the formality of contracts for corporate entities;
10.5. In the present case, Mr Yeung signed on the undertaking with the defendant’s rubber stamp stating it was the authorized signature. In my decision, Mr Yeung was given the ostensible authority to bind the defendant to the undertaking as a contract. Section 127 simply does not apply. I do not think the present case is a proper venue to hear arguments on the ambit of section 127.
11.Secondly, based on the following reasons, I disagree with Mr Liu that the undertaking was not supported by consideration:
11.1. It seems to me obvious that the undertaking was supported by good consideration. In exchange of the defendant’s promise to return the earnest money upon notice, the plaintiff agreed that the defendant could deduct HK$2,000.00 from the earnest money if it was indeed to be returned. There can be no suggestion that the consideration given by the plaintiff was not valid because it was insubstantial;
11.2. Since good consideration was shown on the face of the undertaking, it is strictly irrelevant to consider the terms of the provisional agreement;
11.3. In any event, I do not agree that consideration is lacking even when one does consider the terms of the provisional agreement. The undertaking and the provisional agreement were signed by Mr Yeung contemporaneously. Even if one takes into consideration clause 24 of the provisional agreement, which gives the plaintiff a right to be repaid the earnest money within 10 days if the government only allows redevelopment at a plot ratio of less than 15[2], the undertaking can be said to have varied the provisional agreement by allowing the defendant to retain HK$2,000.00 out of the earnest money as compensation. I do not accept Mr Liu’s submissions that there was only past consideration, as the undertaking does not concern the defendant’s entitlement of the HK$1 million paid by the plaintiff to begin with.
12.Next, the defendant argues that there is a triable issue as to whether it is obliged to return HK$998,000.00 to the plaintiff, as the undertaking, properly interpreted, lapsed when the parties concluded a contract as per the provisional agreement.
13.I agree with Ms Pauline Leung, counsel for the plaintiff that, on the face of it, the undertaking does not contain any term stating that its effect would lapse upon certain conditions. Therefore, insofar as the defendant asserts that the undertaking has lapsed in its effect, it must put forward sufficient evidence to show that the interpretation it prefers is at least arguable.
14.Based on the following reasons, the defendant fails to show that its interpretation of the undertaking is at least arguable:
14.1. Taking the defence to the highest, it is argued that the undertaking lapsed because clause 2(a) of the provisional agreement treated the earnest money as part of the 1st deposit upon the parties signing it. So, the defendant’s logic goes, the earnest money subsumed under the provisional agreement;
14.2. Setting aside the argument whether the defendant is entitled to rely on the provisional agreement because it has not been stamped, and whether the condition under clause 24 has been met, that clause clearly contemplates that the earnest money is not deemed to have subsumed as part of the deposit under the provisional agreement. I do not think the defendant’s interpretation can be right when the provisional agreement is considered as a whole;
14.3. The defendant has not put forward other evidence to support its interpretation. On the contrary, the plaintiff pointed to an earlier undertaking signed by the defendant, by which it promised the return of HK$150,000.00 it then received as earnest money in relation to an earlier agreement it entered with the plaintiff concerning the sale of the Property. The defendant does not dispute the fact that it returned without protest HK$150,000.00 to the plaintiff, when the latter decided to terminate the earlier agreement. In my decision, this reinforces the plaintiff’s argument that the defendant’s interpretation is untenable.
15.As to the defendant’s allegation that it did not receive Reputation’s letter of 3 July 2023, I again agree with Ms Leung that the defendant’s allegation remains a bare one despite the plaintiff’s reliance of Mr Kwong’s WhatsApp record. If the defendant had any valid ground to doubt the plaintiff’s case that the letter was at least sent through WhatsApp messaging, it could well have put forward Mr Yeung’s WhatsApp record to contradict the plaintiff. In absence of documentary evidence in corroboration, I refuse to accept the defendant’s allegation as believable. In any event, I am of the view that the commencement of the present case must operate as sufficient notice for the defendant to return HK$998,000.00 to the plaintiff within 10 days.
16.The learned Master rightly concluded that the defendant has not raised any triable defence; nor has it shown any reason why the present case should go on to trial. The plaintiff is entitled to summary judgment as sought.
Conclusion
17.The defendant’s appeal is dismissed with costs to the plaintiff, together with a certificate for counsel. I summarily assess the plaintiff’s costs at HK$97,000.00.
18.The above costs order is nisi. Any application for variation should be made by letter within 14 days of this Decision, and shall be dealt with on paper.
19.I thank Ms Leung and Mr Liu for their helpful assistance.
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( Alfred C P Cheng ) |
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Deputy District Judge |
Ms Pauline Leung, instructed by Chow, Griffiths & Chan, for the plaintiff
Mr Kelvin K H Liu, instructed by Marie Tsang, Dustin Chan & Co, for the defendant
[1] The original in Chinese reads: “若 貴公司因任何理由不進行該物業買賣，本公司不可撤銷地承諾於收到 貴公司及／或 (1) 名成（店舖）代理有限公司 (REPUTATION (SHOP) AGENCY LIMITED)；及／或 (2) 聯安代理人有限公司(UNION HONEST AGENCY LIMITED) 之書面通知至[sic]十天內，本公司將所收取的誠意金於扣除HK$2,000.00作為補償後之餘款HK$998,000.00元正退還予 貴公司代表律師 – MESSRS. CHOW, GRIFFITHS & CHAN, SOLICITORS（鄒祈陳律師事務所）。”
[2] The original in Chinese reads: “賣方知悉買方已委托 [sic] 認可人士向屋宇署查詢有關“該地址”重建時可獲准許之地積比率。賣方向買方作出承諾，若“該地址”重建項目獲政府相關部門及／或屋宇署批准之地積比率少於15倍，則買方可選擇放棄購入該物業。當賣方或賣方代表律師收到買方確實放棄購入該物業的通知日起計10天內必須退還買方已付的所有誠意金及所有訂金（不計利息）予買方代表律師樓。在此情況發生時本合約隨即自動宣告取消及無效並買賣雙方均不能再向對方作出任何追討損失。”
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