Lau Wang Kei Terrence and Another v. Yu Fung Lin
Read the full judgment text of DCCJ 6779/2004 on BabelCite. This District Court judgment.
1. This is an application by the Defendant under O. 14 for judgment on her counterclaim.
|
DCCJ6779/2004 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 6779 OF 2004 -------------------- BETWEEN
-------------------- Coram : His Honour Judge Longley in Chambers Dates of Hearing : 25th and 28th November, 2005 Date of Handing Down Judgment : 30th December, 2005 ______________ JUDGMENT ______________ 1.This is an application by the Defendant under O. 14 for judgment on her counterclaim. 2.Both the Plaintiffs’ claim and the Defendant’s counterclaim arise out the same agreement, a sub-sub-sale and purchase agreement dated 16 August 2004 between the Defendant as vendor and the Plaintiffs as purchasers of a flat in a new development knows as Banyan Garden in Lai Chi Kok Road. 3.There were two anterior sale and purchase agreements in respect of the same flat. A “Head Agreement” dated 31 August 2002 between the developers and a couple who sold on as confirmors by virtue of a sub-sale and purchase agreement to the Defendant before completion. 4.The scheme of the sub-sale agreement and the sub-sub-sale agreement envisaged that completion under those agreements would occur on the same date as completion under the Head Agreement. Indeed that was expressly stated in clause 24 of the sub-sub-sale agreement signed by the Plaintiffs and the Defendant. By virtue of clause 11 (a) of the same agreement the Plaintiff as purchaser undertook to “observe and perform all the terms and conditions contained in the” Head Agreement and the sub-sale agreement “as if they are the purchasers in those agreements except the payment of the purchase price in those agreements”. 5.None of the three agreements specified a particular date for completion but all contained terms specifying the completion date to be either within 14 days of the developers being in a position validly to assign the property to a purchaser or, in the case of the sub-sale and sub-sub-sale agreements the vendors under those agreements being informed of such fact (see clause 5 of the Head Agreement, clause 3 and schedule 7 of the sub-sale agreement and clause 3 (a) and schedule 6 of the sub-sub-sale agreement). In respect of each of the agreements time was specified to be of the essence. 6.The dispute between the parties on the pleadings as now drafted arises as follows:- On 1 December 2004 the Defendant’s solicitors notified the Plaintiffs’ solicitors that the occupation permit and certificate of compliance in respect of the property had been issued and therefore set the date for completion as or on before 13 December 2004. 7.The Defendant’s complaint in her counterclaim is that the Plaintiffs in breach of the sub-sub-sale agreement wrongly failed to complete the sale and purchase of the property on 13 December 2004. She seeks a declaration that the Plaintiffs were in breach of the sub-sub-sale agreement and damages in respect of the interest she allegedly incurred in borrowing money in order to meet her obligations to her vendors under the sub-sale agreement and her loss of profit on the transaction. 8.The Plaintiffs’ defence to counterclaim (and indeed their claim) on the other hand are premised on the basis that the Defendant’s solicitors only purported to complete their answers to requisitions sent by their solicitors to the Defendant’s solicitors on Thursday 9 December 2004. The Plaintiffs allege that they had insufficient time to examine the Defendant’s answers to the requisitions before 2 p.m. on the following Monday, 13 December 2004 as the Defendant’s solicitors required. They claim that by virtue of clause 11 (a) of the sub-sale agreement (which the parties agreed for the purpose of this application to be applicable to the obligations of the Plaintiffs and the Defendant), they were entitled to 7 working days to consider the Defendant’s answers. They allege that therefore they were entitled not to complete on 13 December 2004 but that when they attempted to complete on 15 December 2004, as they claim they were entitled, the Defendant refused to complete the sale. They claim for the return of the deposit and other expenses arising from the Defendant’s refusal to complete on 15 December 2005. 9.The issue in both the claim and the counterclaim is thus whether the Plaintiffs were entitled to postpone completion from 13 to 15 December 2004. It appears therefore to follow that if I was to find for the Defendant on this O. 14 summons in respect of the Defendant’s counterclaim I would have also decided the issues material to the Plaintiffs’ claim against the Defendant. Curiously the Defendants’ solicitors did not also take out a summons to dismiss the Plaintiffs’ claim to be heard concurrently with this summons. Mr. Lau for the Defendant has informed the court that is the course he would have advised if he had been advising at an earlier stage. However, in the circumstances the only matter for consideration is the Defendant’s counterclaim. 10.At one stage it appeared that the Plaintiffs’ might be suggesting that the Defendant agreed to postpone the completion date. Mr. So for the Plaintiffs conceded that he did not take that point. 11.Clause 11 (a) of the sub-sale agreement provides:-
12.It should be noted that there is no express term that the Purchasers are automatically entitled to postponement of the completion date until 7 days after receive the answer to any requisition made by them. 13.Dicta of Godfrey J., as he then was, in Yeung Sau Chuen, Sammy v. Chung Chun Ting and another 1997 4 HKC 34 if takes out of the context of that case might appear to suggest that such a term would be implied. But Godfrey J.’s comments have to be taken in the context of the case in which they were decided. 14.Le Pichon J., as she then was, said in Lee Chat v. China Roll Industries Ltd. 1998 1 HKC 269: “I do not think that Yeung Sau Chuen laid down any immutable rule that in every such case, forfeiture may not occur during the seven days following delivery of the title deeds. Situations may arise where requisitions are in fact raised and satisfactorily answered during that seven-day period and the right to raise further requisitions may, in appropriate circumstances, be spent. Whether it is so would depend on the actual circumstances and generalisations are unlikely to be of assistance”. 15.It appears from the correspondence that the Plaintiffs’ solicitors took the view that they were entitled to an automatic 7 days postponement of completion date (see for instance the letters of the Plaintiffs’ solicitors dated 9 December 2004 and 11 December 2004). Indeed as I understand Mr. So for the Plaintiffs that is the position for which he still contends. 16.I am satisfied that no such term would be implied in this sub-sub-sale agreement particularly against the background of the Plaintiffs knowing of the Head Agreement and the sub-sale agreement and undertaking the obligations of the purchasers in the Head Agreement and sub-sale agreement and expressly agreeing by clause 24 of the sub-sub-sale agreement to complete on the same completion date as the completion date under the Head Agreement and sub-sale agreement. 17.In the context of this sub-sub-sale agreement I am satisfied that the purchaser would not be entitled to postponement or further postponement of completion where requisitions have been raised and satisfactorily answered and the purchaser had had sufficient time to consider such answers. 18.I have been taken through the correspondence in this matter. Documents of title were provided by the Defendant on 8 September 2004 and then, pursuant to a requisition dated 14 September 2004, on 1December 2004. A further requisition was made by the Plaintiffs’ solicitors on 4 December 2004 (but the letter was mistakenly dated 14 September 2004). This letter made no complaint that the Defendant had failed on 1 December 2004 to answer the requisitions raised on 14 September 2004 save to the extent that it asked for the power of attorney given by the developers to their attorney Yip Kin Ming to sign the DMC and the assignment of the common areas. This document had been referred to in a list attached to the Defendant’s solicitor letter of 1 December 2004 but the solicitors had allegedly omitted to send it. 19.It was upon failure of the Defendant’s solicitors to reply to the letter of 4 December 2004 that the Plaintiff’s solicitors sent a letter of 9 December 2004 claiming to be entitled automatically to postpone completion until 7 days after receiving a satisfactorily reply to their requisitions. The Defendant’s solicitors thereupon replied by letter of 9 December 2004 sent by hand the same day enclosing inter alia a copy of the power of attorney in question. 20.It follows from the fact that the Plaintiffs’ solicitors attempted to complete on 15 December 2004 without raising further requisitions that they were satisfied that their requisitions had been answered by 9 December 2004. 21.I am satisfied that even if the Defendant’s solicitor’s letter of 9 December 2004 was not received until the end of that day, there was nothing in the letter or its attachments that could not have been fully and properly considered the following day, a Friday, let alone by 2 p.m. the following Monday, 13 December, the agreed date for completion. Indeed in his submissions Mr. So for the Plaintiffs did not attempt to suggest to the contrary. 22.Furthermore the fact that in a letter dated 10th December the Plaintiffs’ solicitors were alleging that the same day they had entered into an agreement with the Defendants’ solicitors to complete on 15 December 2004 (i.e. before the expiry of 7 days from 9 December 2004) suggests that, whatever they may have said subsequently about “reserving their rights”, they were satisfied with the answers provided by the Defendant’s solicitors. I find that in the circumstances of this case the Defendant had satisfactorily answered the requisitions raised by the Plaintiffs’ solicitors and that the right raise further requisitions had been spent before 13 December 2004. 23.I find that although the Defendant did not accept the Plaintiff repudiation until 16 December 2004 nothing done or not done by the Defendant in the interim amounted to an affirmation of the contract. I find that there is no triable issue on the Plaintiffs argument that they were entitled to a postponement of the completion date beyond 13 December 2004. 24.According on the pleadings as they now stand and on the matter raised in the affirmation filed I find that the Plaintiffs have not shown any triable issue on the Defendant’s counterclaim. 25.I would therefore on the pleadings have made a declaration of the Plaintiffs were in breach of the sub-sub-sale and purchase agreement and given judgment for the Defendant on the counterclaim with damages to be assessed. 26.However during the course of his submission, Mr. So for the first time raised a new argument which he admitted was not raised on the pleadings, but which he said he would advise his client to raise by amendment of the pleadings. The argument is based on the fact that the breach of contract currently alleged by the Defendant on the pleadings is a failure to complete the sale and purchase of the property on 13 December 2004. Mr. So points out that in a letter dated 11 December 2004 from the Plaintiffs’ solicitors to the Defendant’s solicitors, they asked for instructions as to how they should split their cheque so as to comply with the practice directions contained in the Law Society’s circular No. 18/82 dated 22 March 1982. There is no dispute that the Defendant’s solicitors did not reply to this question at any stage. 27.Relying upon the authority of Kensland Realty Ltd. v. Whale View Investment & Another [2001] 4 HKCFAR he argued that although there was no express term relating to split payments in any of the 3 sale and purchase agreements such a term would be implied and that by failing to give split cheque directions the Defendant was both in breach of the implied term and also unable to show good title. In so far as the counterclaim is concerned Mr. So argues that the Defendant cannot complain of a breach of contract by the Plaintiffs in failing to complete on 13 December 2004 when the Defendant herself was in anterior breach of an obligation to give instructions regarding the splitting of cheques. 28.I do not propose to comment on the strength of these submissions save to say that on the basis of the way the Defendant has currently pleaded her case (i.e. that the breach of contract by the Plaintiffs was their failure to complete on 13 December 2004), the matter is at least arguable at least in so far as the argument that the Defendant was in anterior breach is concerned. If the Plaintiffs obtained leave to amend their pleadings it may well be that the Defendant would wish to amend her pleadings. It would seem to be wrong for me to anticipate amendments to pleadings that the Defendant might or might not feel able to make. 29.In view of this potential application by the Plaintiffs to amend their pleadings I am not prepared to give immediate judgment to the Defendant on her counterclaim. 30.I do however refuse the Plaintiff leave to defend the counterclaim on the basis of the allegation of the extension of time for completion beyond 13 December 2004 as at present raised on the pleadings. 31.I give leave to the Defendant to enter judgment on the counterclaim for a declaration that the Plaintiffs were in breach of the sub-sub-sale and purchase agreement and entitled to damages to be assessed with costs unless the Plaintiffs obtain leave to amend their pleadings to raise an arguable defence on the counterclaim, such leave to amend to be applied for within 14 days. 32.I make the following order nisi as to costs, that unless either party applies to be heard on the question of costs within 14 days, the costs of and incidental to be O. 14 summons be to the Defendant in any event.
Mr. K.C. So instructed by Messrs. Tai, Mak & Partners for the Plaintiffs. Mr. Raymond Lau instructed by Messrs. Wong & Yip for the Defendant. |