Shun Ying Hing Ellen v. Far East Real Estate & Agency (HK) Ltd

HCA010664/1982

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Coram: Hon. Kempster, J.

Date: 14 February 1984

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JUDGMENT

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1. On the 2nd of December of last year Master Betts ordered the trial of a preliminary issue in this as in related actions as to whether, on the basis of the matters appearing in the pleadings and on the true construction of two agreements relating to the purchase and sale of land  known as Beverley Gardens, the defendants had failed to complete "the buildings", as defined in recital (h) of the substantive agreement, within the meaning of clause 3(iii)(b). It was common ground that the recreational club building and the swimming pool referred to in the recital had not been built or completed but had been excluded from the general building plans by approved amendments.

2. The background of the issue is that the plaintiff, by an agreement dated the 20th October 1980, obtained from the defendants an option to purchase an interest in the Beverley Gardens development. That option was exercised and the substantive agreement, which was exhibited to the preliminary agreement as Ex.A, took effect; apparently on the 31st August 1981. In substance this agreement provided for the purchase by the plaintiff of a number of undivided shares in the development as a whole. Those undivided shares, by agreement, also gave her the exclusive right to occupy a particular residential unit.

3. The agreement of the 31st August 1981 includes a number of definitions set out by way of recital. The first to which I will refer is (f) which reads as follows:

"'The saleable area'' shall mean the area of the unit (which shall include the area of any of the verandahs) the subject to this Sale and Purchase Agreement" measured as in this recital defined.

Then (g):

"'the said land' means all those parts, pieces or parcels of ground registered" as set out in the recital.

(h):

"'The said buildings' means the 120 residential units (each including the respective portion of the garden and flat roof and two car parks appurtenant to each unit) car park nos. 1 and 2 and 87 to 92 inclusive, Recreational Club building, Swimming pool and the garden thereof, tennis courts and other facilities now under construction on the said land in accordance with the building plans and intended to be known as Beverley Gardens."

(i):

"'The building plans' means the general building plans and specifications prepared by the Authorised Person and approved by the Building Authority under reference (number as given) and will include any approved amendments thereto."

The agreement goes on to recite that:

"1.

The Vendor (the defendants) shall sell and the Purchaser (that is the plaintiff) shall purchase all those seven equal undivided twelve hundredth parts or shares of and in the said land which for the purposes of identification is shown on the site plan attached hereto and thereon coloured pink, and of and in the said building (it should probably read in the plural) now under construction thereon to be known as Beverley Gardens together with the exclusive right to use, occupy and enjoy all that house number A17A (including car park nos. 243 and 244 and the garden thereof and a portion of the flat roof above the said house number A17A) of the said buildings (as shown and designated on the plan hereto attached and thereon coloured pink) the saleable area of which is approximately 696 sq. ft. for the house, 348 sq. ft. for the roof, and 1139 sq. ft. for the garden (hereinafter referred as 'the said premises')."

4. And then it goes on to provide for common rights.

5. The plaintiff has paid the instalments of the purchase price required under the agreement but the vendor has failed to complete either the recreational club or the swimming pool; excluded from the building plan by approved amendments. The plaintiff claims to have rescinded or to rescind because, in the absence of these amenities, the consideration now offered for the purchase price is not the consideration for which she agreed to pay.

6. I now turn back to the Master's Order and to clause 3(iii)(b) of the agreement. This reads:

"If the developer fails to complete the said buildings by the date specified - the purchaser shall have the option by notice in writing to the vendor either to rescind this agreement in which event the vendor shall repay to the purchaser all amounts paid by the purchaser hereunder together with interest (as particularised) or to wait for completion". And then alternative remedies are provided.

7. Was or is the plaintiff entitled to rescind by reason of the defendants' failure to complete "the said buildings"? The definition includes the recreational club and the swimming pool. It is pleaded on behalf of the defendants, however, that as the definition concludes with the words "in accordance with the building plans" this permits them so to amend such plans as, with due approval, to exclude the recreational club building and the swimming pool altogether. Unfortunately no defendants have been represented at this hearing.

8. Looking at the definition of "the building plans" I am satisfied that in their context they must so be construed as to mean building plans and specifications for a hundred and twenty residential units and the recreational club building and the swimming pool. Any other construction would indeed permit the vendor to provide the purchaser with something totally different from that which she agreed to buy. He could change the user and nature of the development from residential to industrial. He could change the character of the residential units into a high rise development. He could increase the density.

9. If, by way of alternative approach, I postulate the officious by-stander reading this agreement I have no doubt he or she would say to the defendants' suggestion that he could exclude such valuable amenities as recreational club building and a swimming pool without diminution of the purchase  price " of course, he can do no such thing."

10. In the circumstances I answer the question posed in this preliminary issue as follows: For the purposes of clause 3(iii)(b) of the Sale and Purchase Agreement there has been a failure by the vendor to complete "the said buildings" as defined in recital (h) in circumstances where the recreational club building and the swimming pool referred to in recital (h) have not been built or completed but have been excluded from the general building plans and specifications by an approved amendment to such plans.

11. Following my ruling on the preliminary issue of law Mrs. Clough, who appears for the plaintiff, has drawn my attention to the terms of R. S. C. 0.33 r.7 and to the matters alleged and admitted on the pleadings and invited me to give judgment for the plaintiff on the footing that no other issue remains for determination as between the parties. I find that by issue of writ the purchaser has exercised the option provided for in clause 3(iii)(b) of the Agreement for Purchase and Sale and has no need to rely on letters alleged in the Amended Statement of Claim but not admitted in the Defence.

12. Having regard to the terms of the second prayer in the Amended Statement of Claim I was satisfied that no injustice would be caused to the defendant by giving the plaintiff leave to re-amend the Statement of Claim by inserting after the word "disbursements" in paragraph 9 the words "together with interest". I gave leave accordingly.

13. It follows that the plaintiff is entitled to judgment which I accept the invitation to give. Looking at the prayer of the Re-Amended Statement of Claim, I order recision of the said agreement. I also order repayment of the sums admitted to have been paid being HK $121,810 and HK $615 respectively together with interest at the rate of 1% per month from the dates which such sums were respectively paid until repayment. The admitted dates of payment are  set out in paragraphs 4 and 5 of the Re-Amended Statement of Claim.

14. The further relief claimed by the plaintiff is a declaration that she is entitled to a lien on the property to be sold for the sums, including interest, just mentioned and for such costs as she may he awarded. In that context I refer to a passage from the judgment of Reginald Goff, J. in Lee-Parker v. Izzet ⁽¹⁾ at page 1106:

"I then have to determine the claim to liens. This is made first in respect of the deposit and interest theron and in my judgment is clearly sound because the contract has gone off through the default of the plaintiffs in repudiating it or at least without default or delay on the part of the 3rd and 4th defendants. A right to such a lien in such circumstances is well established by the following authorities - "

He then referred to a passage in Halsbury and to Whitbread v. Watt ⁽²⁾, which has been cited to me, and in particular to the judgment of Cozens-Hardy L. J.

15. I am satisifed that the plaintiff is entitled to a lien on the defendants' interest. in the property, whether freehold or leasehold, in respect of monies paid and interest. As to the propriety of an order for a lien covering costs Mrs. Clough referred me to Turner v. Marriott ⁽³⁾ where Malins V. C. granted such relief. The form of the minutes of order read:

"Declare that the defendant is entitled to a lien on such estate or interest as the plaintiff has in the hereditaments comprised in the said agreement for the amount of the said costs, and the said sum of £450, and interest thereon, as aforesaid; and it is ordered that the defendant be at liberty to apply in Chambers to give effect to the said declaration."

16. I grant the plaintiff the declaration sought for a lien to cover also the costs of the action which I order to be paid to her by the defendants.

Representation:

Mrs. Clough (Slaughter & May) for plaintiffs

No appearance on behalf of any defendant