Chung Kar Sun v. Chan Fat and Another
Read the full judgment text of HCA 1100/1978 on BabelCite. This High Court CFI judgment was delivered on 7 November 1979.
1. On 8th November, 1976, the 1st defendant, Chan Fat, entered into a memorandum of agreement with the Sun Hung Kai Real Estate Agency, Ltd., to purchase Flat No. 3 Wing Fat Mansion, 21st floor, Ma Miu Road, Yuen Long, New Territories. The price agreed upon was $76,500 and payment thereof was to be made as follows: $2,000 deposit upon signing the memorandum of agreement; $5,650 upon signing the formal agreement on 11th November, 1976; $7,650 within 7 days after the issue of the occupation permit
|
HCA001100/1978
----------------- Coram: Garcia, J. in Court Date of Judgment: 7 November 1979 ----------------- JUDGMENT ----------------- 1. On 8th November, 1976, the 1st defendant, Chan Fat, entered into a memorandum of agreement with the Sun Hung Kai Real Estate Agency, Ltd., to purchase Flat No. 3 Wing Fat Mansion, 21st floor, Ma Miu Road, Yuen Long, New Territories. The price agreed upon was $76,500 and payment thereof was to be made as follows: $2,000 deposit upon signing the memorandum of agreement; $5,650 upon signing the formal agreement on 11th November, 1976; $7,650 within 7 days after the issue of the occupation permit and the balance of $61,200 to be paid by instalments over a period of 10 years (120 instalments) at $878 monthly, principal and interest inclusive, from the 1st day of December, 1976. 2. On 15th November, 1976, the 1st defendant paid the sum of $5,650 as provided in the memorandum of agreement, plus $430 costs and disbursements to Messrs. Woo, Kwan, Lee & Lo, Solicitors for the Sun Hung Kai Real Estate Agency Ltd. On 11th December, 1976, a formal sale and purchase agreement was entered into between the 1st defendant and the Lark Investment Co., Ltd., in respect of his purchase from the company of the abovementioned flat. This agreement contains the following clause regarding the payment of the balance of the $61,200 set out in the terms of payment above:-
3. Clause 4 reads as follows:-
4. On 17th July, 1977, an occupation permit for the said building was issued by the Building Authority and on 27th July, 1977, the 1st defendant paid the sum of $8,925 to Messrs. Woo, Kwan, Lee & Lo, Solicitors, of which $7,650 was for part payment for the flat, and $1,275 was for charges and disbursements for preparing an assignment of the property in his favour. The 1st defendant never occupied the flat himself, and shortly after the issue of the said occupation permit, informed Mr. Tang Kam-wong who is employed by Hong Yip Services Co., Ltd., as a caretaker of the building in which the flat is situated, that he wanted to sell his flat and asked the latter to find him a buyer. As a result of this request, the plaintiff approached Mr. Tang some time in September, 1977, for the purpose of buying the said premises. 5. On 16th September, 1977, an appointment was made for the plaintiff to see the 1st defendant and at the meeting certain discussions took place between them in the presence of Mr. Tang and it appears from the latter's evidence that all that was discussed was the price of the flat itself before agreement was reached in the terms embodied in the following document drafted by Mr. Tang:-
6. This agreement was signed by both parties on the same day in the presence of Mr. Tang. In pursuance of the agreement and in a further oral agreement made between them the plaintiff paid the sum of $5,000 deposit to the 1st defendant in which was included the sum of $850 being 1% of the purchase price payable to the Hong Yip Services Co., Ltd., as commission. Following the signing of the agreement there were further discussions as to who should bear solicitors' costs in connection with the formalities mentioned in the agreement, and according to the plaintiff it was agreed that such costs should be paid by whichever party that the solicitors would at that time direct. Although there was some mention by the 1st defendant at that discussion that the change in the name of the owner of the property would be required to be effected, there was, however, no indication as to who would pay the fee for the change and in fact, the payment of such a fee was not, as events later turned out, even within the contemplation of the parties or of Mr. Tang Kam-wong himself. 7. According to the 1st defendant's evidence, there was an agreement at that discussion that solicitors' costs and miscellaneous expenses would be paid by the plaintiff while he himself would bear interest on three of the outstanding instalments due under the sale and purchase agreement mentioned earlier. A third version of what took place at the discussion on 16th September, 1977 was provided by Mr. Tang, and it is that the costs of re-assignment would be paid by the 1st defendant whilst miscellaneous charges would be borne by the plaintiff. From other evidence given by the 1st defendant and Mr. Tang, it is apparent that the 1st defendant was entirely unaware of the fact that before an assignment of the property could be made to the plaintiff or to any purchaser for that matter two requirements first of all had to be fulfilled:-
Neither the abovementioned memorandum of agreement dated 8th November, 1976 nor the sale and purchase agreement dated 15th November, 1976 mention any of these requirements, although the 1st defendant said in reply to a question put to him, these matters were discussed on 16th September, 1977, and that he had heard the requirements in (2) above from friends. These statements I do not believe in view of the following testimony given by the 1st defendant in the course of the trial:-
In the next breath he says:-
Further on he says:-
8. The question of the payment of costs of the re-assignment mentioned by Mr. Tang could hardly arise, because at the time, when the discussions after the Chinese agreement was signed, no mortgage of the property in question had yet been executed by the 1st defendant although he himself explains this quite unconvincingly that he was paying for the flat by instalments - hence the mortgage. In my view, the only additional term of the agreement which emerged from the discussion was that mentioned by the plaintiff that is that payment of solicitors' costs would be made by the party whom the solicitors would designate or direct, which was a rather vague and indefinite term itself. This term could not have been brought into operation until the conveyance of the property had been executed. However, on 5th October, 1977 in accordance with the terms of the agreement the plaintiff and the 1st defendant met in Yuen Long in the morning and both of them set out together for the offices of Messrs. Woo, Kwan, Lee & Lo in order to see Mr. Fung, whose name appears on the top of the agreement signed on 16th September, 1977, so as to complete the formalities. They waited a long time but failed to see Mr. Fung and they were eventually informed by another member of the staff of the solicitors' firm that in order to effect a change of the name of the registered owner they had to go to the offices of Sun Hung Kai Real Estate Agency Ltd., to have this done. Accordingly, they went to that company which was in the same building and were there informed that $765 had to be paid to the company for the change to be carried out. This information triggered off a dispute between the parties as to who should pay this fee and after consulting the person handling this matter on behalf of the company, it was suggested that the fairest way of solving the problem was that the parties should each bear half of the said fee. The 1st defendant, however, ignored what I consider to be an eminently reasonable and sensible suggestion in the circumstances, and he refused to pay his proportion of the fee while the plaintiff was unwilling to pay the whole of that amount. As no agreement could be reached on this payment the 1st defendant then returned to the offices of Messrs. Woo, Kwan, Lee & Lo in order to arrange for a mortgage to be executed by him in respect of the said premises as he was unable to meet the payment of the instalments. But before this was done the plaintiff had another discussion with him and it was finally agreed that the 1st defendant and the plaintiff would each pay his half share of the fee of $765. The parties then went to the offices of Sun Hung Kai Real Estate Agency Ltd., again for the purpose of effecting the change. They were then further informed that in addition to this fee, interest on the three instalments of the purchase price of the property had to be paid to the vendors before an assignment of the property to the 1st defendant could be obtained. Here again, the plaintiff says the 1st defendant refused to bear this further expense saying that the plaintiff should pay it. On the other hand the 1st defendant says that from the very beginning he had been willing to pay this interest. No agreement was reached that day and nothing further was done towards completion of the formalities mentioned in the agreement, and as the plaintiff himself says at the end of the day, "Nothing was concluded as to who should pay what on 5th October, 1977." 9. The 1st defendant thereupon went back to the solicitors' office in order to execute the mortgage which he had arranged earlier in favour of Hung Kai Finance Co., Ltd., to secure the principal sum of $58,417 and in doing so, he incurred costs of $1,077.50. The same evening both parties returned to Yuen Long and informed Mr. Tang Kam-wong that the transaction failed and after some discussion as to who should pay the fee for the change of the name of the registered owner and who should pay the interest for the three monthly instalments demanded by the assignor it was suggested that the plaintiff pay the fee and as the matter of obtaining the assignment from Lark Investment Co., Ltd., was the responsibility of the 1st defendant, he should be the one who should pay the interest on the three monthly instalments. However, the 1st defendant refused to entertain these proposals and insisted that the plaintiff pay a further $1,077.50 being costs which he had incurred in arranging for the execution of the mortgage of the said property in favour of the Hung Kai Finance Co., Ltd., before he would assign the property to the plaintiff. 10. According to the plaintiff, the 1st defendant added that he would not sell the property if he were going to suffer a loss on the sale and indeed he would have done so if he had to pay the fee and the interest considering the sums he had already paid out in costs and interest. It has been argued that because of this the 1st defendant reneged on his agreement to sell the said premises to the plaintiff, but looking at the circumstances prevailing between the 16th September, 1977 and the 5th October, 1977 he had already been three months late in completing the sale between himself and the Lark Investment Co., Ltd., since the occupation permit was issued to him on 17th July, 1977. He had either to sell the property or obtain a mortgage so as to pay the balance of the purchase price to the Lark Investment Co., Ltd. As the 1st defendant was not going to sell the plaintiff the property which he agreed to buy, he asked for the return of his deposit, the sum of $850 which he had paid to Hong Yip Services Co., Ltd., as commission, and the sum of $5,000 as damages for the time he had expended to negotiate a loan from the bank, but he was still prepared to buy the property, agreeing to pay the fee and the interest on the three monthly instalments. This latter offer was refused by the 1st defendant repeating that he would suffer a loss if he sold the property to the plaintiff. Whilst he had agreed to the return of the deposit and the $850 he told the plaintiff that he was not going to pay him the $5,000 damages. 11. If I understand it correctly the argument advanced on behalf of the 1st defendant is that the terms which were added during the discussion held after the signing of the agreement on 16th September, 1977 are collateral to the main agreement and their performance have first to be completed before liability could arise under the written agreement. On the other hand, it had been submitted for the plaintiff that all the terms and conditions of the contract are as stated in the written agreement and the plaintiff had performed his part of the contract by attending at the offices of Messrs. Woo, Kwan, Lee & Lo, Solicitors, to complete all the formalities and the default in so doing was entirely that of the 1st defendant's so that he should be held liable under the contract. 12. No definition of what formalities were required to be completed or performed has been given in any of the evidence adduced on behalf of either of the parties, although in a statement made by the plaintiff during the trial what he understood by that phrase was that he had to attend at a solicitors' firm to effect the change of names and "I had to pay the fee incurred." If, indeed, that was the sole meaning he assigns to the words "completing the formalities" in the written agreement, then by refusing to pay the $765 fee demanded he would appear to be in breach of the agreement. However, that understanding is clearly not a complete picture of what the formalities which were in the mind of the parties because on the one hand they had no idea what they were supposed to do in the solicitors' office once they were there, and on the other, it would seem that they were to be guided ad hoc as to the various formalities which were required to be performed, particularly in respect of the transfer of ownership of the property, by either party. There could be no real agreement between the two parties even after the discussion of 16th September, 1977 as to what each party was to do on 5th October, 1977 and the evidence of Mr. Tang Kam-wong has not been challenged that the 2nd last sentence of the written agreement was inserted at the behest of the plaintiff and this in some way reflects his cautious attitude towards the whole transaction and the interpretation of that sentence in the light of the evidence given by the parties, is clear. There were indeed difficulties because with each step to be taken there were some differences in opinion as to who should pay what and such differences could not be resolved on the date when the formalities were to be performed, i.e. 5th October, 1977. 13. It has also been submitted on behalf of the 1st defendant that looking at the written agreement itself, there were conditions precedent to be complied with before the main part of the agreement could be given effect to and that such conditions had to be performed on the date fixed for completion otherwise the agreement itself was null and void as stated in the 2nd last sentence of the agreement and put in expressly at the request of the plaintiff himself. (See Aberfoyle Plantations Ltd., v Cheng (1960) A.C. 115 and In re Sandwell Park Colliery Co. (1929) 1 Ch. 277.) In the judgment of their Lordships in the Privy Council delivered by Lord Jenkins in the later case - Aberfoyle Plantations Ltd., v Cheng - they say:-
14. The date of completion of the agreement was 5th October, 1977 and if the formalities were not completed by that date the phrase "return of the deposit" would have in my judgment referred to the only situation envisaged in the agreement, that is, that such agreement was null and void. Miss Wong points out however that according to the agreement, the formalities had to be completed in the offices of Messrs. Woo, Kwan, Lee & Lo and therefore the only difficulties in completing the formalities envisaged by that agreement, would be those which might occur in the said offices, and not those which had occurred in the offices of the Sun Hung Kai Realty Co., Ltd. In my view, there was no such geographical limitation imposed by the agreement. Moreover, the evidence reveals, and this is common ground, that both parties were directed by a member of the staff of the solicitors' firm to the offices of Sun Hung Kai Realty Co., Ltd., to effect a change of name of the registered owner before the other formalities, whatever they were, could proceed. It may be said on the evidence that that was one of the formalities required or directed to be performed at the request of Messrs. Woo, Kwan, Lee & Lo. It has also been submitted that the change of name of the registered owner was not included in the agreement but as has been pointed out earlier what was or was not included in the word "formalities" has not been delimited either by the agreement itself, or by the subsequent discussions between the plaintiff and the 1st defendant on 19th September, 1977 or by what they themselves say in evidence as to what their understanding of the word was so far as the agreement is concerned. A further submission has been made that attendance by both parties at the offices of Messrs. Woo, Kwan, Lee & Lo on 5th October, 1977 was a sufficient performance of the condition precedent implied in the agreement, and that there is no breach of any condition precedent which would lead to an avoidance of the agreement. There is no doubt that that was one of the conditions but not the only condition which was required to be performed before the agreement could be brought into effect - what were they going to do by just attending at the offices of Messrs. Woo, Kwan, Lee & Lo on that date? 15. In my judgment, the plaintiff's claim fails and there will be judgment for the 1st and 2nd defendants with costs to be taxed.
Representation: Miss Wong Hing-chun instructed by Alfred Lau & Co., for plaintiff Mr. William Lane instructed by Samuel Soo & Co., for 1st defendant Miss Chua Fi-lan instructed by H.H. Lau & Co, for 2nd defendant |