Chan Hok Yin and Another v. Match Power Investment Ltd

DCCJ 6025/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 6025 OF 2004

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BETWEEN

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Coram  :  His Honour Judge Chow, sitting in Chambers

Date of hearing  :  5^th September, 2005

Date of handing down Decision  :  23^rd November, 2005

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DECISION

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1.This is an application by the Defendant to strike out the Statement of Claim.

2.The Plaintiffs are purchasers of a unit known as Flat B, 5^th Floor, Tower 2 (“the unit”) in a property development known as Beacon Hill, No. 1 Beacon Hill Road, Kowloon (“the Development”).  The Defendant was the developer and vendor of the Development.

3.On 13.5.2003, a provisional sale and purchase agreement was signed in respect of the unit, and a car parking space purchase option letter, an agreement independent of the Sale and Purchase Agreement (the Agreement) of the unit, was executed.  The Agreement was signed on 16.5.2003.

4.On 18.8.2004, the purchase of the unit was completed.  On the same day, the Plaintiffs sent a demand letter to the Defendant, alleging that the Defendant was in breach of the terms of the Agreement, and demanded a sum of HK$224,383.56.

5.The Plaintiffs claim that the Defendant was in breach of Clause 4(1)(c) of the Agreement, on the ground that the Defendant failed to complete the Development on time.  Hence they are entitled to interest at the rate of 2% per annum above the prime rate quoted by the Hongkong and Shanghai Banking Corporation Limited on all the amounts paid under the Agreement, pursuant to Clause 4(4) of the said Agreement.

6.On 31.8.2004, the Plaintiffs signed a document (“the document”) with the Plaintiff, which reads: -

“ Re : One Beacon Hill

The property comprises Car Parking Space No. [ P110 ] on Car Park [ A ] and Flat [ B ], [ 5 ] Floor, Block [ 2 ], One Beacon Hill.

The purchaser, namely, CHAN HOK YIN, HO SIN MING has selected the above  car parking space today.  The full purchase price of the above car parking space is HK$1.00.  By signing this letter, the car parking space purchase option letter between the purchaser and Match Power Investment Limited is hereby exercised as the full and final settlement of all the purchaser’s rights relating to the purchase of the property.  The car parking space purchase option letter No. [ BHCP – 1314 ] is hereby returned to Match Power Investment Limited for cancellation.  This letter is part of the formal agreement.

Match Power Investment Limited will pay the legal costs for preparing the formal agreement for sale and purchase and the assignment in respect of the above car parking space prepared by solicitors designated by Match Power Investment Limited.

Sealed with the common Seal of Match Power Investment Limited and signed by

Signed Sealed and Delivered by CHAN HOK YIN, HO SIN MING”

7.The Defendant submits that the document was executed as a deed.  It cited the case of First National Securities v. Jones [1978] 1 Ch 109, 121 in which Sir David Cairns said : -

‘.. I am sure that many documents intended by all parties to be deeds are now executed without any further formality than the signature opposite the words “Signed, sealed and delivered” usually in the presence of a witness, and I think it would be lamentable if the validity of the documents so executed could be successfully challenged.’

(underlines provided)

8.The issue is: was this document intended to be a deed?  This document does not refer to a “deed”.  Instead, it refers to phrases of “By signing this letter” and “This letter”.  Obviously, the use of such phrase indicates that the drafter of this document intended this document to be a letter.  If it was intended to be a deed, it should have referred to the word “deed” instead of “this letter”.  This document states:  “This letter is part of the formal agreement.”  It is not clear what the “formal document” is.  The sentence immediately following this sentence is:  “Match Power Investment Limited will pay the legal costs for preparing the formal agreement for sale and purchase and the assignment in respect of the above car parking space …..”  If the “formal agreement” is the formal agreement for sale and purchase of the car parking space, then it is questionable whether “this letter” is a deed, because an agreement for the sale and purchase of a property is very often not a deed.  At the time this document was executed the formal agreement for sale and purchase had not been created.  Therefore the said formal agreement cannot be a deed.  If it is not a deed, then there is no reason that the document should be a deed.

9.According to the Plaintiffs, before they signed the document, the Defendant’s agents said to them that the words (1) had no legal effects whatsoever, (2) are irrelevant to their entitlement to interest, and (3) refer to matters concerning the car parking space only.  The words in a deed have legal effect.  So it is arguable whether the Plaintiffs intended the document to be a deed because they were told that it had no legal effect.  When there is a doubt as to the parties’ intention as to whether they intended the document to be a deed, the proper way is for the issue to be tried.

10.The Defendant submits that there is consideration moving from the Defendant in allowing the Plaintiffs to select the car parking space and in the Defendant’s commitment to allocate and assign the car parking space specified in the document to the Plaintiffs.  But the selection of the car park and the allocation of the car park is the implementation of the Plaintiffs’ right to have a car park to be allocated to them under the car parking space purchase option letter.  I cannot see any extra benefit or consideration to be given to the Plaintiffs by the Defendant.

11.The Defendant submits that the document expressly and clearly provides that the Defendant would pay the legal costs for preparing the formal agreement for the sale and purchase and the assignment of the relevant car parking spaces.  In order for this to be a consideration moving from the Defendant, the Plaintiffs must be under an obligation to pay such costs.  But in its affirmations supporting its striking out application the Defendant has not said that the Purchasers are under an obligation to pay such legal costs.  If the payment of such legal costs is a consideration for the “settlement agreement” as referred to in the document, this should have been indicated in the document.  Instead, it is written independently of the paragraph relating to the “settlement agreement” in the document.  So it appears that such payment is not a consideration moving from the Defendant for the “settlement agreement”.

12.In my judgment, this is not a clear case that the Plaintiff’s claims are should be struck out.  I therefore dismiss the Defendant’s application.

Costs

13.I make an order nisi for costs, to be made absolute in 14 day′s time, that the Defendant is to pay the costs of this application to the Plaintiffs, to be taxed, if not agreed, with certificate for Counsel.

The Plaintiffs: represented by Mr. Kenneth K.Y. Lam instructed by M/S Anthony Sin & Co., Solicitors

The Defendant: represented by Mr. Benjamin Yu, instructed by M/S Allen & Overy, Solicitors