Tin Shui Wai Development Ltd v. Chan Tung

DCCJ 1122/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1122 OF 2004

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BETWEEN

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Coram: H.H. Judge Chow

Hearing date : 12^th February 2008

Date of handing down Decision : 10^th April 2008

DECISION

1.This is an application by the Plaintiff to strike out the Defence and Counterclaim of the Defendant, pursuant to Order 18, r. 19 of the Rules of the District Court, and to enter final and interlocutory judgment against the Defendant. 

2.The Plaintiff is the owner of the development known as Blocks 1 to 8 Maywood Court of Kingswood Villas, situate at Tin Shui Wai Town Lot No. 6, New Territories (“the Development”).  Under an agreement for sale and purchase (“the Agreement”) made on 3^rd April 1997 between the Plaintiff and the Defendant, the Plaintiff as the vendor agreed to sell and the Defendant as the purchaser agreed to buy the property known as Flat B on 6^th floor of Block 7 of the Development (“the Property”) at the price of $4,158,000.00.

3.Under Clause 3(1) and Schedule 4 of the Agreement, the purchase price is payable by the Defendant as follows:-

(1)   the amount of $415,800.00 (10%) has been paid as deposit on signing the agreement preliminary to the Agreement;

(2)   a further amount of $415,800.00 should be paid within 14 days of the date of the Agreement;

(3)   a further amount of $415,800.00 should be paid on or before 1^st November 1997; and

(4)   a sum of $2,910,600.00, being balance of the Purchase Price, shall be paid within 14 days of the date of notification to the Defendant that the Plaintiff is in a position validly to assign the Property to the Defendant.

The Defendant paid a total of $1,247,400.00 to the Plaintiff as deposit and part payments.

4.By virtue of Clause 5(2) of the Agreement, the sale and purchase of the Property shall be completed within 14 days of the date of notification by the Plaintiff to the Defendant that the Plaintiff is in a position validly to assign the Property to the Defendant.

5.On 17^th June 1998, a Consent to Assign in respect of the Property was issued by The Lands Department.  Pursuant to Clause 5(2) of the Agreement, the Plaintiff notified the Defendant by a letter dated 30^th June 1998 from Messrs. Baker & McKenzie, the solicitors then acting for the Plaintiff, that it was in a position to validly assign the Property to the Defendant.  The Defendant was required to pay the balance of the purchase price and other monies payable under the Agreement and to complete the purchase of the Property within 14 days of the date of the said letter. On the same day, Kingswood Property Services Limited for and on behalf of the Plaintiff confirmed by letter that the new completion date for the sole and purchase of the Property would be on or before 30^th September, 1998.  But the Defendant failed to complete the purchase with the required period.

6.By a letter dated 9^th October 1998 from its solicitors Messrs. Baker & McKenzie, the Plaintiff issued a notice to the Defendant, calling upon him to make the necessary payment and to complete the purchase within 21 days.  The Defendant failed to make good the default and to complete the purchase within the period as required.  Accordingly the Plaintiff exercised its right to determine the Agreement under Clause 16(1) of the Agreement and issued a notice of determination to the Defendant by a letter dated 3^rd November, 1998 from Messrs. Baker & McKenzie whereby the Agreement was determined and the Plaintiff claimed its rights under Clauses 16(2) and 16(3) of the Agreement.

7.The Defendant pleads the following defence to resist the Plaintiff’s claim:-

(1)   the Plaintiff was in breach of an implied term of the Agreement;

(2)   he signed the Agreement because of misrepresentation made by the Plaintiff’s salesman on or about 30^th March, 1997; he did not rescind the Agreement because of misrepresentation made by the plaintiff, and there was delay in completing the Development;

(3)   he was under no obligation to complete.

The breach of an Implied Term

8.The Defendant pleads that it is an implied term of the Agreement (“the Implied Term”), in order to enable him to exercise the rights of rescission given to him by Clause 4 of the Agreement meaningfully pursuant to the purpose of the Consent Scheme, that the Plaintiff was obliged to answer his questions or requisitions concerning whether the Development had in fact been completed in accordance with Clause 4 (1) (c) on or before 31^st December 1997.

9.Clause 4 (1) (c) of the Agreement provides that the Plaintiff shall complete the Development in all respects in compliance with the conditions of the government grant and the building plans on or before the 31^st day of December 1997 subject to such extensions of time as may be granted by the Authorized Person in accordance with sub-clause (5) (a).

10.Under paragraph 3 (22) of the Defence the Defendant pleads that:

“(a) The Plaintiff failed to complete the Development in accordance with clause 4(1)(c) on or before 31^st December 1997.

Particulars

In about January 1999, the Defendant was provided with a copy of a Bond given by the Bank of East Asia, Limited dated 4^th June 1998 (“the Bond”) and an Undertaking given by the Plaintiff to the Government on the same day (“the Undertaking”), which documents suggested that works in connection with the Development had not been completed even on 4^th June 1998, which was more than five months after 31^st December 1997.  Such information or evidence shows that the Plaintiff failed to have completed the Development in accordance with clause 4(1)(c) on or before 31^st December 1997.

……

(b) Further or in the alternative, the Plaintiff could only deliver possession of the Property to the Defendant in mid July 1998.

Particulars

By a letter dated 7^th July 1998, the Plaintiff purported to notify the Defendant the Plaintiff was in a position to validly assign the Property to the Defendant.”

Failure to answer requisition

11.Under 3 (23) of the Defence the Defendant pleads that in breach of the Implied Term, the Plaintiff failed to answer the Defendant’s questions or requisitions concerning whether the Development had been completed in accordance with clause 4(1)(c) by 31^st December 1997.  But there is nothing pleaded in the Defence as a matter of fact that the Defendant asked the Plaintiff requisitions concerning whether the Development had been completed by 31^st December, 1997.  Further, there is nothing pleaded in the Defence to show how the Implied Term came to be constituted.  It is a bare assertion.  Therefore the defence in these aspects cannot stand. 

Misrepresentation

Under paragraphs 3 (18) to (21) of the Defence the Defendant pleads that: -

“(18) … … in order to induce the Defendant to enter into the Agreement, the Plaintiff through its agent servant and employee represented to the Defendant that possession of the Property would be delivered to the Defendant in early 1998.

Particulars

The said representation were made by and are to be inferred from the oral statements made by the Plaintiff’s salesman to the Defendant on about 30^th March 1997.

(19) Acting on the faith and truth of the said representation, the Defendant signed the Agreeme4nt and paid the said money.

(20) Further, in about early January 1998 the Defendant enquired the Plaintiff’s solicitors Messrs. Baker & McKenzie by telephone about when the Property would be delivered to the Defendant for his use, the staff represented to the Defendant to the effect that the possession of the Property was ready for delivery to him and asked him to wait for further notice.

(21) Acting on the faith and truth of the said representation, the Defendant did not exercise his rights under clause 4(4)(a) of the Agreement to rescind the Agreement.”

The Defendant did not show how the alleged representation made by the Plaintiff agent, servant and employee on or about 30^th March, 1997 could be rendered as misrepresentation.  There is nothing to show that at that time the Plaintiff knew or ought to have known that the Development would not be completed on or before 31^st December.  He has not shown what the misrepresentation made in or about early January 1998 is.  The Plaintiff did not deliver possession of the Property to her before 31^st December, 1997.  He was aware of this fact.  That cannot be a misrepresentation.  He referred to the fact that in or about January, 1999 He was provided a copy of a Bond given by the Bank of East Asia Limited dated 4^th June 1998 and an Undertaking given to the Government by the Plaintiff on the same day.  These documents suggested that even on 4^th June, 1998, works in connection with the Development had not been completed.  As the alleged representation was made in or about January 1998, so the documents dated 4^th June 1998 were not in existence at that time and they could not have attributed to or supported the alleged representation which had been made 5 months ago.  Due to the matters above–said, the arguments relating to misrepresentation cannot stand.

Delay in completing the Development

12.Clause 4(4)(a) of the Agreement provides that if the Vendor fails to complete the Development by the date specified in sub-clause (1)(c) as extended by any extensions of time granted by the Authorized Person under sub-clause (5)(a), the Purchaser shall be at liberty to rescind the Agreement by notice in writing to the Vendor, and upon service of such notice, the Agreement shall be rescinded within 7 days thereafter.  According to clause 4 (4)(b) of the Agreement, if the Purchaser does not rescind the Agreement under sub-clause (4)(a), he shall be deemed to have elected to wait for completion of the Development.  The Defendant could have rescinded the Agreement pursuant to clause 4(4)(a) of the Agreement on the ground that there was delay in the completion of the Development, but he did not do so.  Accordingly I cannot see how the delay can constitute a ground for refusing to complete the purchase. 

13.The Defendant pleads that the substantial delay was not contemplated and that during the period of delay, the property market had suffered a severe downturn; it was unfair and inequitable for the Plaintiff to insist upon her to complete the purchase of the Property or to pay the balance of the price.  This is not a term of the Agreement.  So this is not a ground not to complete the purchase of the Property.  The Plaintiff is entitled to exercise its rights given by the Agreement. 

In my judgment, the Defendant was under a contractual obligation to complete the purchase of the property, but she failed to discharge that duty.

14.The Defendant has not demonstrated that she has a reasonable defence.  The Counterclaim is just a repetition of the defence.  I therefore order that the defence and counterclaim be struck out, and I enter judgment for the Plaintiff, with damages to be assessed.

Costs

15.I make an order nisi, to be made absolute in 14 days’ time, that the Defendant do pay costs of the action to the Plaintiff, to be taxed, if not agreed.

The Plaintiff : represented by Mr. T. Lee of M/S. Hobson & Ma, Solicitors.

The Defendant:   absent, unrepresented.