Tin Shui Wai Development Ltd v. Chan Sap and Others
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DCCJ 2961/2004 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 2961 OF 2004 ____________ BETWEEN
____________ Coram: H.H. Judge Chow Hearing date : 12th February 2008 Date of handing down Decision : 14th 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 3rd 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 A on 10th floor of Block 5 of the Development (“the Property”) at the price of $3,914,000.00. 3.Under Clause 3(1) and Schedule 4 of the Agreement, the purchase price is payable by the Defendants as follows:-
The Defendants paid a total of $1,174,200.00 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 17th 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 30th June 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. 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 sale and purchase of the Property would be on or before 30th September, 1998. However the Defendants failed to complete the purchased within the required period. 6.By a letter dated 9th October, 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 3rd November, 1998 from its solicitors Messrs. Woo, Kwan, Lee & Lo 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:-
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 and intent of the Consent Scheme, that the Plaintiff was obliged to answer their questions or requisitions concerning whether the Development had in fact been completed in accordance with Clause 4 (1) (c) on or before 31st 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 31st 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 (20) of the Defence the Defendants plead that:
Failure to answer requisitions 11.Under paragraph 3 (21) 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 as a matter of fact in the Defence that the Defendants made the alleged questions or requisitions concerning whether the Development had been completed by 31st 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. 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 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 by notice in writing to the Vendor to rescind the Agreement, 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 Purchasers do not rescind the Agreement, they shall be deemed to have elected to wait for completion of the Development. No extension of time was granted by the authorized person under clause 4(1)(c) of the Agreement. The Defendants did not rescind the Agreement pursuant to clause 4(4)(a) of 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. Misrepresentation 14.Under paragraph 3(18) and (19) of the Defence the Defendants plead that, in or about early January 1998, they enquired the Plaintiff’s solicitors Messrs. Woo, Kwan, Lee & Lo by telephone about when the Property would be delivered to the Defendants for their use; the staff represented to them to the effect that the possession of the Property was ready for delivery to them 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 31st December, 1997. 15.The Defendants refer 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 4th June 1998 and an Undertaking given to the Government by the Plaintiff on the same day. These documents suggested that even on 4th June, 1998, works in connection with the Development had not been completed. As the alleged representation was made in or about January 1998, the documents dated 4th 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. 16.The Defendants allege that the Plaintiff made the representations fraudulently, and either well knowing that they were false and untrue or recklessly not caring whether they were true or false. But there is nothing pleaded as a matter of fact in the Defence that the staff who answered the Defendant’s telephone was dishonest in her/his belief in giving the answer through the telephone. There is nothing to support the allegation of fraudulent misrepresentation. 17.The Defendants aver that so soon as they discovered the said representations were untrue through their solicitors they notified the Plaintiff’s solicitors by a letter dated 14th December 1999 that they accepted the Plaintiff’s breach of the Agreement and/or exercise their right to rescind the Agreement. 18.Even if the alleged representations were untrue, they were made after the Agreement had been reached. So the Agreement could not be rescinded on this ground. The Defendants say that they accepted the Plaintiff’s breach of the Agreement. The alleged breach is that the Plaintiff could only deliver possession of the Property to the Defendants in mid July 1998. But they failed to rescind the Agreement, pursuant to clause 4(4)(a) of the Agreement, and by reason of clause 4(4)(b) of the Agreement they were deemed to have elected to wait for completion of the Development. The Defendants admit paragraph 8 of the Statement of claim. So they admit that Kingswood Property Services Limited notified them that the completion date for the sale and purchase of the Property would be on or before 30th September, 1998. They also admit that the Plaintiff’s solicitors notified them by a letter dated 30th June, 1998 that the Plaintiff was in a position to validity assign the Property to them. If the Plaintiff had completed the Development by 31st December, 1997, there is no reason why the completion of the sale and purchase of the Property would take place in July, 1998. If the Defendants had relied on the Plaintiff’s misrepresentation to rescind the Agreement, they should have done so shortly after receiving the Plaintiff’s letter dated 30th June, 1998, but they only did so on 14th December, 1999, which is more than a year after 30th June, 1998. Clearly, they did not rely on the Plaintiff’s “misrepresentation” to rescind the Agreement. Therefore the defence in this respect must fail. 19.In the counterclaim, they ask for:-
In respect of prayer (1), it is meaningless to make such a declaration, because the Defendants were deemed to have elected to wait for completion of the Development. In respect of prayer (2), by their letter dated 14th December, 1999 to the Plaintiff, the Defendants accepted the Plaintiff’s breach of the Agreement and / or exercised, their rights to rescind the Agreement. If the Agreement was rescinded by them on 14th December, 1999, an order in respect of prayer (2) cannot be made, because the order so made would be inconsistent with the fact of the rescission of the Agreement. 20.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 21.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. |