Tin Shui Wai Development Ltd v. Li Sing Choi and Another

DCCJ 1297/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1297 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 Defendants, pursuant to Order 18, r. 19 of the Rules of the District Court, and to enter final and interlocutory judgment against the Defendants. 

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 Defendants, the Plaintiff as the vendor agreed to sell and the Defendants as the purchaser agreed to buy the property known as Flat E on 2^nd floor of Block 3 of the Development (“the Property”) at the price of $2,593,000.00.

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

(1)   the amount of $259,300.00 (10%) has been paid as deposit on signing the agreement preliminary to the Agreement;

(2)   a further amount of $259,300.00 should be paid within 14 days of the date of the Agreement;

(3)   a further amount of $259,300.00 should be paid on or before 1^st November 1997; and

(4)   a sum of $1,815,100.00 being balance of the Purchase Price, shall be paid within 14 days of the date of notification to the Defendants that the Plaintiff is in a position validly to assign the Property to the Defendant.

The Defendants paid a total of $777,900.00 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 Defendants that the Plaintiff is in a position validly to assign the Property to the Defendants.

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 Defendants by a letter dated 10^th July 1998 from Messrs. Woo, Kwan, Lee & Lo, the solicitors then acting for the Plaintiff, that it was in a position to validly assign the Property to the Defendants.  The Defendants were 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.  However the Defendants failed to complete the purchased within the required period.

6.By a letter dated 3^rd August, 1998 from its solicitors Messrs. Woo, Kwan, Lee & Lo, the Plaintiff issued a notice to the Defendants, calling upon them to make the necessary payment and to complete the purchase within 21 days.  The Defendants 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 22^nd September, 1998 from its solicitors Messrs. Hobson & Ma whereby the Agreement was determined and the Plaintiff claimed its rights under Clauses 16(2) and 16(3) of the Agreement.

7.The Defendants plead the following defence to resist the Plaintiff’s claim:-

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

(2)   they signed the Agreement because of representation made by the Plaintiff, and they failed to rescind the Agreement because of misrepresentation made by the Plaintiff; there was delay in completing the Development;

(3)   they were  under no obligation to complete.

The breach of an Implied Term

8.The Defendants plead that it is an implied term of the Agreement (“the Implied Term”), in order to enable them to exercise the rights of rescission given to them 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 Defendants plead 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 1998, the Defendants were 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.

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

Particulars

By a letter dated 25^th July 1998, the Plaintiff purported to notify the Defendants the Plaintiff was in a position to validly assign the Property to the Defendants and require the Defendants to pay the balance of the purchase price and other monies and to complete the purchase of the Property within 14 days thereafter.”

Failure to answer requisition

11.Under paragraph 3 (23) of the Defence, the Defendants aver that “Wrongfully and in breach of the Implied Term, the Plaintiff failed to answer the Defendants’ questions or requisitions concerning whether the Development had been completed in accordance with clause 4(1)(c) by 31 December1997.”  But there is nothing pleaded in the Defence to show that the Defendants made the alleged questions or requisitions concerning whether 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 this regard cannot stand. 

Misrepresentation

Under paragraphs 3 (18) and (19) of the Defence, the Defendants aver that: -

“ … … … 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.”

The Defendants have not shown what renders the representation made on or about 30^th March 1997 to be a misrepresentation.  There is nothing to show at that time that the Plaintiff knew or ought to have known that the Development would not be completed by 3^rd December, 1997.

The Defendants plead that, in or about early January 1998, they enquired the Plaintiff’s staff about when the Property would be delivered to the Defendants for them use; the staff represented to them to the effect that the possession of the Property would be delivered to them on schedule and asked them to wait for further notice.  Acting on the faith and truth of the said representation, they did not exercise their rights under clause 4(4)(a) of the Agreement to rescind the Agreement.  The Defendant have since discovered and the fact is that the Plaintiff failed to complete the Development in accordance with clause 4 (1)(c) on or before 31^st December, 1997.

The Defendants have not shown what the misrepresentation is.  The Plaintiff did not deliver possession of the Property to them before 31^st December, 1997.  The Defendants were aware of this fact.  That cannot be a misrepresentation.  The Defendants referred to the fact that in or about January, 1998 they were 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 about January 1998, 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.  The Defendants have failed to identity the misrepresentation.  So this argument cannot stand.

Delay in completing the Development

12.According to clause 4(4)(a) of the Agreement, if the Vendor fails to complete the Development by the date specified on 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.  Clause 4(4)(b) of the Agreement provides that if the Purchasers do not rescind the Agreement, they shall be deemed to have elected to wait for completion of the Development.  The Defendants did not rescind the Agreement, so I cannot see how the delay can constitute a ground for refusing to complete the purchase.

13.The Defendants plead that the substantial delay is 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 the Defendants 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 contractual rights given by the Agreement. 

In my judgment, the Defendants were under a contractual obligation to complete the purchase of the property, but they failed to discharge that duty.

14.The Defendants have not demonstrated that they have a reasonable defence.  The grounds for 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 for damages to be assessed.

Costs

15.I make an order nisi, to be made absolute in 14 days’ time, that the Defendants 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.