Louis Cheng Ka Chi and Another v. Panasia Films Ltd
Read the full judgment text of HCA 380/1974 on BabelCite. This High Court CFI judgment was delivered on 1 March 1974.
1. This is an application for summary judgment by the defendant upon the counterclaim against the 1st plaintiff.
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HCA000380/1974
IN THE SUPREME COURT OF HONG KONG ORIGINAL JURISDICTION -----------------
----------------- Coram: Mr. Registrar Jones in Chambers. Date of Judgment: 1 March 1974 ----------------- DECISION ----------------- 1. This is an application for summary judgment by the defendant upon the counterclaim against the 1st plaintiff. 2. The 1st plaintiff is the holder of several contracts for the supply of cinematographic films for exhibition in Hong Kong and Macau as trustee for the 2nd plaintiff company in which he is the majority shareholder. On the 12th December 1973 the 1st plaintiff entered into an agreement with the defendant for himself and for the other shareholders in the 2nd plaintiff company whereby the defendant agreed to purchase 6,150 shares in the 2nd plaintiff company for the sum of $1,750,000. $200,000 was paid upon the signing of the agreement and the balance of $1,550,000 less any deductions provided for was to be paid on or before the 19th December 1973 the date fixed for completion of the transaction. On this date the defendant by agreement took delivery of the properties of the company. 3. As the parties were unable to complete on the 19th December 1973 they entered into a supplemental agreement which extended the completion date until the 15th January 1974 and provided for the defendant to carry on the business of the 2nd plaintiff company until completion. By this agreement Messrs. Johnson, Stokes & Master the plaintiffs' solicitors were to hold the balance of the sale price $1,550,000 in escrow on an interest bearing account pending completion, but during this period were permitted to release up to $550,000 of this sum to the 1st plaintiff which amount has in fact been paid over. It is common ground that completion did not take place as arranged on the 15th January 1974 which Mr. Duffy for the defendant says is due to a dispute with regard to the Charles Chaplin films referred to in the Second Schedule of the original agreement. However, having regard to the terms provided for in the agreement to which I will refer later, it is unnecessary for me to consider the cause of the failure to complete. 4. With completion due to take place on the afternoon of the 15th January 1974 the defendant that morning issued a writ in O.J. 185/74 against the 1st plaintiff claiming inter alia a declaration that they were entitled to complete or in the alternative damages for breach of contract. On the same day the defendant obtained an ex parte interlocutory injunction to restrain Messrs. Johnson, Stokes & Master from paying out a disputed amount of $600,000 to the 1st plaintiff. Neither the writ nor the injunction order was served upon the 1st plaintiff and the proceedings were discontinued on the 31st January 1974 although the notice of discontinuance was presented for filing on the 21st January 1974 but was not accepted in the Registry due apparently to some defect in the wording of the document. Neither the 1st plaintiff nor his solicitor had knowledge of these proceedings until they were disclosed during the course of the meeting to complete. As a result Mr. Wong for the 1st plaintiff contends that the defendant's conduct amounted to a fundamental breach entitling the 1st plaintiff to repudiate the contract. 5. Another action O.J. 273/74 was commenced by the defendant against the 1st plaintiff on the 22nd January 1974 claiming in effect the same relief as in O.J. 185/74. Criticism was made by Mr. Wong that the defendant had duplicated its claim for the return of the purchase money $1,750,000 both in the defence to this action which was filed on the 9th February 1974 as well as in the statement of claim in O.J. 273/74. However, the duplicity was cured by an amendment to the writ in O.J. 273/74 by deletion of this part of the claim on the 11th February 1974 with the result that I find nothing hinges on this point. 6. The statement of claim inter alia requests the Court to make a declaration that all the properties are the property of the 1st plaintiff and/or the 2nd plaintiff, an order for their delivery to the plaintiffs and damages for detention and/or conversion. The counterclaim seeks inter alia an order that the sum of $1,750,000 be returned to the defendant against the return to the plaintiffs of such of the properties as were received by the defendant. 7. The defendant claims that they offered to complete the purchase of the shares on the 15th January 1974 but avers that the 1st plaintiff was at all material times unable to perform his part of the transaction. Subsequent to the completion date the defendant alleges that notice was given in writing to complete on four occasions but the 1st plaintiff failed or refused to do so. In respect of the plaintiff's demand to return the properties the defendant on the 19th January 1974 offered to return them against the return to the defendant of the purchase price $1,750,000. The defendant admits that the properties are the properties of the 2nd plaintiff but that they have continued to use them in the conduct of the business in view of the plaintiff's failure to return the purchase money. 8. In resisting the application Mr. Wong submits that I should have regard to the defendant's conduct in issuing proceedings in O.J.185/74 and maintains thereby that the defendant was not ready, able and willing to complete the transaction on the 15th January 1974. The 1st plaintiff therefore claims he is entitled to forfeit the sum of $750,000 being part payment of the purchase price and to a lien on the balance of $1,000,000. Whether or not the defendant's action in taking proceedings in O.J.185/74 amounted to a fundamental breach, which I find highly improbable for they were upon the evidence before me willing to complete on the due date, I am satisfied that the parties have clearly provided for the eventuality of non-completion by clause (vii) of the agreement which reads as follows:-
9. In these circumstances it is not the Court's duty in this action to investigate the reasons for the failure of the parties to complete the transaction. 10. This provision does not bar either party from taking proceedings for damages for breach of contract, specific performance or any other remedy open to them for such rights are specifically referred to in clause (ix) of the agreement which provides:-
11. In such event the parties are bound by the terms of the agreement, and it is not open to the 1st plaintiff to deprive the defendant of the return of the purchase price by purporting to exercise a lien for an anticipatory loss which is properly the subject matter of other proceedings. For the same reasons the defendant must as they have saved to do return to the 2nd plaintiff the properties that they received in December for the purpose of conducting the business. 12. Accordingly the defendant is entitled to an order for judgment in the following terms:-
13. Dated this the 1st day of March, 1974.
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