Kingview Properties Ltd v. Match Power Investment Ltd

DCCJ 546/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 546 OF 2005

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BETWEEN

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Coram : H.H. Judge Chow in Chambers

Date of hearing : 20^th and 21^st February, 2006

Date of handing down Decision : 26^th May, 2006

DECISION

1.This is the Defendant’s application to strike out the Plaintiff’s claim; alternatively, the Defendant applies for trial of the questions or issues of mixed facts and law set out in the summons as preliminary issues in this action before the trial of the action.

The application to strike out the Plaintiff’s claim

2.On 24 March 2003, the Plaintiff entered into provisional sale and purchase agreements for the following two units at One Beacon Hill (“the Development”):-

(a)	Duplex E on 7th Floor and 8th Floor and Flat Roof on 7th Floor and 8th Floor immediately above Tower 1 of the Development (Property 1);
(b)	Flat F on the 7th Floor of Tower 1 of the Development (Property 2).

3.On or about 24 March 2003, the car parking space purchase option letters in relation to Property 1 and Property 2 were signed.  On 27 March 2003, the sale and purchase agreements of the Property 1 and Property 2 were made.

4.The sale and purchase transactions of the 2 properties were completed on 23 August 2004.  The Plaintiff alleges that there was a delay of the completion of the Development by the Defendant.  Hence it claims interests against the Defendant for Property 1 and Property 2.  The Defendant denies that there was any delay in the completion of the Development.  Its case is that the Development was completed within the time as extended.  It claims that by signing the Agreements all dated 28 August 2004 (“the August Agreements”), the Plaintiff compromised and waived its rights to claim interests from the Defendant.  The basic contents of the August Agreements are identical, except for the particulars of the properties, the car parking space numbers, car park number and the number of the car parking space purchase option letter.  The August Agreements read:-

“	Date: 28 AUG 2004
	Re : One Beacon Hill
	The property comprises Car Parking Space No. [                  ] on Car Park [             ] and Flat [           ], [          ] Floor, Block  [            ], One Beacon Hill.
	The purchaser, namely, [KINGVIEW PROPERTIES LTD ] 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. [          ] 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	Sealed with the Common Seal of
	Match Power Investment Limited	KINGVIEW PROPERTIES LTD
	and Signed by	and Signed by
	TAMMY HO and YIP KIN MING	LAM WAI KUEN
	its authorized signatory	its authorized signatory
	_____________________	____________________
		本人/我們已明白以上英文內容”

5.The Defendant submits that “there is plainly 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 August Agreements to the Plaintiffs.  Consideration can of course be constituted by a detriment to the promisor: ……..”  But under the car parking space purchase option letter entered into between the parties, the Plaintiff had the right to enforce and to require the Defendant to sell and assign a car parking space to them in the consideration of $1.  The said letter reads :-

“	To : KINGVIEW PROPERTIES LTD (The Purchaser(s))
	Dear Sirs,
	Re :	Property	: Flat ___ Floor ____ Tower ____, One Beacon Hill (“Development”)
		Purchase Price	: HK$__________ / Provisional Contract No. MATC01 ____________
		Special Benefit	: Offer to sell a car parking space of the Development at the price of HK$1.00
	We refer to your purchase of the Property and in consideration of which, the Vendor undertakes to offer to sell to you a car parking space of the Development at the price of HK$1.00 provided that the offer to sell herein shall be subject to and upon the following terms and conditions.  We will notify you of the arrangement for the sale of the car parking space once available.
	1.	You shall execute the formal Agreement for Sale and Purchase in respect of the Property (“Agreement”) within 3 days of signing the Provisional Contract by you and comply with all the terms and conditions therein contained.
	2.	You shall make full payment of the balance of the Purchase Price of the Property to the Vendor in accordance with the payment terms as specified in the Agreement.
	3.	This letter is an agreement independent of the Agreement and nothing in the contents of this Letter shall be deemed to supersede or vary any terms and/or conditions of the Agreement.  All the rights and remedies of the Vendor under the Agreement shall not be affected by this Letter.  This Letter constitutes an agreement between the parties hereto independent from your purchase of the Property, the Provisional Contract and the Agreement relating thereto and nothing herein contained or any failure by any party hereto to observe or perform any of its obligations hereunder shall in any way prejudice, vary or affect the operation, validity or enforceability of the Provisional Contract or the Agreement, or the rights duties or obligations of the parties to the Provisional Contract or the Agreement ………
	For and behalf of Cheung Kong Property Development Limited Sales Agent for the Vendor MATCH POWER INVESTMENT LIMITED			After due and careful consideration of the terms contained in this Letter, I/We agree to accept the same and be bound by the terms and conditions herein set out.	”

When the said letter was exercised upon the Defendant’s allocating and assigning a car parking space to the Plaintiff, it is no more than the exercising of the Plaintiff’s right to have a car parking space to be allocated to it.  There is no extra consideration moving from the Defendant when this took place.

6.The Defendant further argues that it is not (and cannot be) disputed that, by the August Agreements, the Defendant had agreed to 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 the Defendant.  Although the Plaintiff used its own solicitors in the end, it does not alter the fact that by the August Agreements the Plaintiff had been conferred the benefit of having the option to use solicitors designated by the Defendant for free.

7.But the payment of legal costs was not made at the request of or for any benefit of the Plaintiff.  It appears to be a gratuitous benefit offered by the Defendant, which the Plaintiff is not bound to accept.  The said payment is not expressed to be linked up with the full and final settlement of the Plaintiff’s rights relating to the purchase of the car parking space.  If it were so linked up, it should be included in the preceding paragraph, so that it was shown to be connected with the “settlement agreement”.  Hence, the offer to make the said payment stands by itself, unconnected with any agreement at all.  In the premises, I cannot accept the Defendant’s argument.

8.The Defendant submitted that it is provided in the August Agreements that each of the August Agreements is a “part of the formal agreement”.  Given that the relevant paragraph deals with the sale and purchase of the car parking spaces, the “formal agreement” clearly refers to the formal agreements of sale and purchase of the car parking spaces (which were yet to be executed).  It follows that the August Agreements are to be construed as a part of the formal agreements of sale and purchase of the car parking spaces.  It is beyond question that the formal agreements of sale and purchase of the car parking spaces are supported by goods consideration moving from the Defendant (e.g. the Defendant has undertaken further obligations in relation to appointment of receipt agents, rents; profits; policy of insurance; rights of the purchaser; no mortgage).  It is therefore beyond question that the August Agreements are also supported by good consideration moving from the Defendant.

9.When the August Agreement was signed, the formal agreements of sale and purchase of the car parking spaces were yet to be executed.  Therefore there is no basis to say that the formal agreements are supported by good consideration moving from the Defendant.  If it had been intended that such “good consideration” was to constitute consideration moving from the Defendant, it should have been expressly mentioned in the August Agreements.

10.The Defendant further submitted that the August Agreements have the following background:-

(1)	the fact that the parties have entered into a sale and purchase agreement over which the Plaintiff has asserted a claim for interest due to the alleged delay in completion;
(2)	the fact that the purchase of the Units have already been completed.

In light of the aforesaid background, the words “full and final settlement of the purchaser’s rights relating to the purchase of the property” are not reasonably capable of any dispute.  They must, objectively, construed, be a reference to the settlement of the dispute over a claim for interest for alleged delay.  According to the August Agreement, there is no implied or express reference to the settlement of the dispute over a claim for interest.  The key words are “By signing this letter, the car parking space purchase option letter between the purchasers and ……….. is hereby exercised as the full and final settlement of the purchaser’s rights relating to the purchase of the property.”  (Underlines added).   The settlement is the settlement of the purchaser’s rights, and not the purchaser’s dispute over the claim of interests.  Since it is the purchaser’s rights which are to be settled, there cannot be any consideration moving from the Defendant, because the purchaser’s rights are his entitlements.  The signing of the letter is merely an exercise of the Plaintiff’s rights.  If the drafter of this Agreement had intended to state that the purchaser’s “dispute” or the purchaser’s “alleged rights” should have been settled, then he should have used the word “dispute” or “alleged rights” instead of simply using the word “rights”.

11.Due to the above reasons, I dismiss all the Defendant’s contentions as set out above. 

12.The Plaintiff submitted that its director (Mr. Lam Wai Kuen (“Lam”)) was under a mistake as the meaning and legal effect of the August Agreements.  I accept the Plaintiff’s argument that the subjective intention of a party is irrelevant to the effect of a contract.

13.The Plaintiff further argues that Lam did not have the authority to sign the August Agreements.  Even if this is true, the Plaintiff proceeded to execute the agreements for the sale and purchase of the car parking spaces.  So the Plaintiff must have ratified Lam’s act in signing the August Agreements.

The application for trial of preliminary issues

14.The Defendant applies to have the following questions or issues of mixed facts and law be tried as preliminary issues in the action before the trial of the action:-

(i)	whether Mr. Lam Wai Kuen had due authority (actual or ostensible) to execute “the 3 Documents” (as defined in paragraphs 4(1) to 4(3) of the Reply) on behalf of the Plaintiff;
(ii)	Whether, on the true construction of the 3 Documents, the Plaintiff has waived or compromised all its present claims against the Defendant;
(iii)	Whether the agreement to compromise/waive the Plaintiff’s claims contained in the 3 Documents (if any) is unenforceable for want of consideration;
(iv)	Whether the agreement to compromise/waive the Plaintiff’s claims contained in the 3 Documents (if any) should be set aside on the ground of the Plaintiff’s mistake; and
(v)	Whether the agreement to compromise/waive the Plaintiff’s claims contained in the 3 Documents (if any) should be set aside on the ground that it is “unjust, unconscionable and/or inequitable for the Defendant to benefit from the Plaintiff’s mistake or to retain such benefit” (as pleaded in paragraph 4(4)(c)(x) of the Reply).

15.The main purpose of the trial of the preliminary issues is to determine whether the August Agreements have the effect of compromising any claims that the Plaintiff might have so that time and cost would be saved.  Such an order should be made if the preliminary issue decided in one way is likely to be decisive of the litigation.  Thus if the August Agreeme.nts constitute a waiver on the part of the Plaintiff of its rights to claim interests, such an order for trial of preliminary issue should be made, because it will effectively dispose of the whole case.  The Plaintiff submitted that the Defendant’s case on the August Agreement is strong.  I cannot agree that the Defendant has a strong case on the August Agreements.  If there is a preliminary trial, and if the Defendant fails and goes on appeal, that will prolong the proceedings.  An order for trial on preliminary issues will certainly not achieve the aim it was intended to have.

16.Due to the reasons stated above, I dismiss the two applications made by the Defendant.

Costs

17.I make an order nisi for costs, to be made absolute in 14 days’ time, that the Defendant is to pay costs of these applications to the Plaintiff, to be taxed, if not agreed, with certificate for Counsel.

The Plaintiff : represented by Mr. Simon Ho, instructed by Messrs. Lo, Wong & Tsui, Solicitors.

The Defendant : represented by Mr. Benjamin Yu, S.C. leading Mr. Bernard Man, instructed by Messrs. Allen & Overy, Solicitors.