Swank Investments Ltd v. Match Power Investment Ltd

DCCJ 5922, 5923 & 5924/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION DCCJ NO. 5922 OF 2004

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BETWEEN

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IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION DCCJ NO. 5923 OF 2004

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BETWEEN

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IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION DCCJ NO. 5924 OF 2004

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BETWEEN

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Coram  :  His Honour Judge Chow, sitting in Chambers

Date of hearing  :  1^st September, 2005

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

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DECISION

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1.This is the consolidated hearing of the striking out applications made by the Defendant in DCCJ Nos. 5922, 5923 and 5924 of 2004.

2.The Plaintiffs in all these 3 actions are the purchasers of units (“the units”) in a property developed known as Beacon Hill, No. 1 Beacon Hill Road, Kowloon (“the Development”).  The Defendant was the developer and vendor of the Development.

3.The 3 actions were instituted on 11.11.2004.  In all the 3 actions, the Plaintiffs claim that the Defendant was in breach of Clause 4(1)(c) of the relevant Sale and Purchase Agreements of the units, on the ground that the Defendant failed to complete the Development on time.  By reason thereof, the Plaintiffs are entitled to interest at the rate of 2% per annum above the prime rate quoted by Hongkong and Shanghai Banking Corporation Limited on all the amounts paid under the Sale and Purchase Agreements, pursuant to Clause 4(4)(b) of the said Agreements.

4.On 31.8.2004, 28.8.2004 and 31.8.2004 respectively, each of the Plaintiffs executed a document (“the August agreements”) respectively with the Defendant, which provides: -

“Re : One Beacon Hill

The property comprises Car Parking Space No. …… on Car Park ……… and Flat ………. Floor, Block ………. One Beacon Hill.

The purchaser, namely ………………………………… 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 …………………… 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. ……………. 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 ……………………………… and signed by …………………… its authorized signatory

Sealed with the Common Seal of ……………………………… and signed by …………….. its authorized signatory              ”

5.The Defendant submitted that each of the August Agreements expressly provides that the Defendant would pay the legal costs for preparing the formal agreement for sale and purchase and the assignment of the relevant car parking spaces, and it is not disputed that the Defendant has done so.  The promise to pay, followed by actual payment of legal costs (which the Defendant was not otherwise obliged to do) plainly constitutes good consideration for the August Agreements.

6.The Defendant’s application is supported by the affirmations of Yip Kin Ming, (the Chief Legal Manager of Cheung Kong (Holdings) Limited), dated 7^th April, 2005 and 18^th May, 2005 respectively.  There is no allegation in both affirmations by the Defendant that the Plaintiff is under a duty to pay such legal costs.  Furthermore, in the 1^st affirmation the Defendant did not refer to such a ground for the striking out application.

7.In the August agreements, the payment of such legal costs is not expressed to be linked up with the full and final settlement of the purchasers rights relating to the purchase of the property (namely, the residential unit and the car park).  The settlement agreement appears to cover the exercise of the car parking space purchase option letter only.  If the payment of the legal costs is linked up with the settlement agreement, it should have been included in the paragraph relating to the August agreement, and be shown to be connected with the settlement agreement.

8.The Defendant submitted that the August agreement constituted a commitment by the Defendant to allocate and assign the car parking space specified.  That commitment constitutes good consideration.  But under the Car Parking Space Purchase Option letter entered into between the parties, the Plaintiffs had a right to enforce and require the Defendant to sell and assign a car park to them at the consideration of $1.  Thus when the option letter was exercised, namely, when the Defendant allocated and assigned a car parking space to the Plaintiff, it appears to be no more than an implementation of the Plaintiffs′ rights to have a car parking space to be allocated to each of them.  There is no evidence to show that there is any additional consideration moving from the Defendant to support the settlement agreement.

9.In its written submission, the Defendant did not advance any argument as to why the August Agreement constituted “deeds”.  Judging from the copies of the documents, I cannot see that they have been sealed with any common seal.  Further there is no reference in the document about the delivery of the document.  There is no reference to the word “deed”.  Instead the document refers to phrases “By signing this letter” and “This letter”.  If it was intended as a deed, it should be referred to as “the deed” instead of “the letter”.  It contains the sentence “This letter is part of the formal agreement.”  It is not clear what the formal agreement is.  The sentence which immediately follows 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” then it is questionable whether the letter is a deed.  The formal agreement for sale and purchase of a property is usually an agreement and not a deed.  If it is merely a formal agreement and not a deed, then it is questionable whether the letter forming part of the formal agreement should be a deed.  Therefore it is doubtful whether the letter was intended to be a deed.

10.By reason of the matters above-said, I adjudge that it is not a clear case that the claims should be struck out.  I therefore dismiss the Defendant’s applications in these 3 cases.

Costs

11.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 these applications to the Plaintiffs, to be taxed, if not agreed, with certificate for Counsel.

The Plaintiffs : represented by Mr. Thomas Au instructed by M/S Fairbairn Catley Law & Kong, Solicitors

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