Lee Zoё v. Hui Pak Fong

HCMP 157/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 157 OF 2009

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BETWEEN

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Before: Hon Fok J in Court

Dates of Hearing:  10 and 11 February 2010

Date of Judgment: 19 February 2010  

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J U D G M E N T

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Introduction

1.This originating summons concerns an agreement between the plaintiff as purchaser and the defendant as vendor for the sale and purchase of a residential property. The plaintiff is seeking a declaration that she was entitled to rescind the agreement, on the ground that the defendant failed to deliver vacant possession of the property in accordance with the agreement, and consequential relief. The defendant maintains that vacant possession was delivered so that the plaintiff is not entitled to rescind the agreement. As an alternative, the defendant argues that the prevention principle operates to preclude the plaintiff from complaining of any failure to deliver vacant possession.

The facts

2.On 12 August 2008, the parties entered into a provisional agreement for sale and purchase of Flat E, 10/F Continental Mansion, 294 King’s Road, Hong Kong (“the Property”). The purchase price for the Property was HK$2.8 million and a deposit of HK$80,000 was payable by the plaintiff to the defendant on the signing of the provisional sale and purchase agreement.

3.On 20 August 2008, the parties entered into a formal Agreement for Sale and Purchase (“the Agreement”). At that time a further deposit of HK$200,000 was payable by the plaintiff to the defendant. This left a balance of HK$2,520,000 payable by the plaintiff to the defendant for the purchase of the Property. By the combined effect of clause 2 and Part II of the Third Schedule of the Agreement, the balance of the purchase price was to be paid by the plaintiff to the defendant on or before the Completion Date. The Fourth Schedule of the Agreement defined the Completion Date as follows:-

“On or before the 16th day of January 2009 between the hours of 10:00 a.m. to 5:00 p.m. should the day be a weekday except Saturday.”

The date specified for completion, 16 January 2009, was a Friday.

4.Under the Agreement the purchase price was to include the consideration for the purchase of the fittings and furniture set out in the Fifth Schedule, which was to be delivered to the plaintiff purchaser on completion. The parties agreed that the Chinese text setting out the fittings and furniture in the Fifth Schedule listed the following items:-

“4 air-conditioners, 1 water heater, 1 set of cooking burner, all built-in units in the Property and lighting”.

5.Clause 3 of the Agreement provided (amongst other things):-

“The purchase shall be completed at the office of Messrs. Fung, Law & Ng, Solicitors, on or before the date specified in the Fourth Schedule hereto when the residue of the purchase money shall be fully paid and on completion the Vendor and all other necessary parties (if any) will execute a proper Assignment of the said Premises to the Purchaser or his nominee or nominees or sub-purchaser or sub-purchasers subject as hereinafter appears but otherwise free from encumbrances. ...”

6.Clause 11 of the Agreement provided:-

“In the event of the Vendor (other than due to the default of the Purchaser) failing to complete the sale of the said Premises in accordance with the terms hereof, all moneys paid by the Purchaser to the Vendor pursuant to the provisions of this Agreement shall be returned forthwith to the Purchaser who shall also be entitled to recover from the Vendor damages (if any) which the Purchaser may sustain by reason of such failure on the part of the Vendor and it shall not be necessary for the Purchaser to tender an Assignment to the Vendor for execution.”

7.Clause 13 of the Agreement provided:-

“Time shall in every respect be of the essence of this contract.”

8.Clause 19 of the Agreement provided:-

“Vacant possession of the said Premises shall be given by the Vendor to the Purchaser on completion.”

9.Clause 25(c) of the Agreement provided (amongst other things):-

“The parties hereby agree that the completion of the sale and purchase of the said Premises shall be by way of undertaking on terms mutually agreed upon between the parties’ respective solicitors subject to such usual Law Society Qualification that may from time to time be in force …”

10.On 15 January 2009, the defendant vendor’s solicitors, Messrs. Fung, Law & Ng (“FLN”), wrote to the plaintiff purchaser’s solicitors, Messrs. Darin Leung & Partners (“DL”) requesting that the balance of the purchase price in the sum of HK$2,520,000 be split into two cheques, one of HK$6,500 payable to FLN and the other of HK$2,513,500 payable to the defendant. FLN also asked DL to provide the draft Assignment and Undertaking Letter for their approval as soon as possible.

11.The draft Undertaking Letter provided for the completion of the purchase of the Property by the provision of an Assignment duly executed by the plaintiff to the defendant’s solicitors together with the balance of the purchase price (split in accordance with the defendant’s solicitors’ instructions) against FLN’s personal undertaking (subject to the usual Law Society qualifications) to do various things. One of the undertakings in question concerned the keys of the Property. The draft proposed two alternatives as follows:-

“5.  To forward to us forthwith the keys of the above property or the necessary written authority to collect the key (and in any event not later than 5:00 p.m. on the completion date) so that possession can be taken without delay.

OR

5.  To notify the estate agent release the key to our client (and in any event not later than 5:00 p.m. on the completion date) so that possession can be taken without delay.”

12.DL wrote to FLN on 15 January 2009, by a letter wrongly dated 16 August 2008, enclosing the draft Assignment and Undertaking Letter. FLN replied by letter dated 16 January 2009 to inform DL that their draft Assignment was duly approved without amendment and that the draft Undertaking Letter was approved as amended by FLN on behalf of the defendant.

13.In respect of the undertaking relating to the keys of the Property, FLN deleted the second alternative paragraph 5 so that the relevant undertaking in relation to the keys was therefore:-

“5.  To forward to us forthwith the keys of the above property or the necessary written authority to collect the key (and in any event not later than 5:00 p.m. on the completion date) so that possession can be taken without delay.”

14.On 16 January 2009, at about 3.30 p.m., DL delivered a letter to FLN at the latter’s offices (wrongly dated 15 January 2009) in the terms of the agreed Undertaking Letter enclosing an Assignment duly executed by the plaintiff together with a cheque in the amount of HK$6,500 in favour of FLN and a further cheque in the sum of HK$2,513,500 in favour of the defendant. It was not always clear that the plaintiff would be able to tender payment of the balance of the purchase price on before the time for completion and I shall have to return to the evidence relating to this later in this judgment.

15.There is a dispute between the parties as to the state of the Property at 5 p.m. on 16 January 2009, to which I shall have to return below. In short, the plaintiff maintains that the defendant had not vacated the Property by that time whereas the defendant maintains that the plaintiff was well aware that by 5 p.m. that day only a few small items were left and had been informed that these were to be discarded.

16.The keys of the Property were not delivered to the plaintiff’s solicitors before 5 p.m. on 16 January 2009. Instead FLN’s representative arrived at DL’s offices at about 5.05 p.m. and tendered the keys of the Property to a Miss Chan of DL. There is a dispute between the parties as to the time when the keys were tendered to the plaintiff herself, to which also I shall have to return below.

17.On the plaintiff’s instructions, DL sent a letter by fax to FLN at about 7:19 p.m. on 16 January 2009 (wrongly dated 16 August 2008) stating (among other things):-

“We are instructed by our client to give you/your client’s notice that in breach of clause 19 of the Agreement, your client have failed to deliver vacant possession of the above property to ours on or before 5:00 p.m. today, i.e. the completion date.  By virtue of clause 11 thereof, we are instructed to demand your client for the return of all deposits in the total sum of HK$280,000.00 forthwith and without prejudice all our client’s rights and interests under the Agreement.”

The letter also demanded the return of the cheques sent by DL earlier that day in payment of the balance of the purchase price.

18.By a letter to DL dated 16 January 2009, FLN enclosed the Assignment duly executed by the defendant. According to the evidence of the defendant’s son, Mr Chan Cheung, the defendant signed the assignment at around 4.50 p.m. It is to be noted that there is a received chop on this letter which appears to indicate that it was received by DL at 10.03 a.m. on 17 January 2009.

19.By letter dated 17 January 2009, further to its letter of the previous day referred to in paragraph 17 above, DL, on behalf of the plaintiff, returned to keys of the Property and repeated its demand for the return of the cheques that had been tendered the previous day.

20.By a second letter dated 17 January 2009, DL referred to the letter from FLN enclosing the Assignment executed by the defendant and returned the Assignment, stating:-

“We regret to inform you that we are instructed by the above named Purchaser to terminate the purchase of the above property as your client, the Vendor, was in breached of the terms of the formal Agreement for Sale and Purchase dated 20th August 2008 by failing to deliver vacant possession of the above property to our client on 16th January 2009 on or before 5:00 p.m.”

The parties’ respective cases and the issues arising

21.The plaintiff’s case is that, at 5 p.m. on 16 January 2009, the defendant was still in the process of moving out of the Property and that a lot of the defendant’s belongings were still inside the Property. Accordingly, she contends, vacant possession was not delivered as required by clause 19 of the Agreement. The plaintiff also maintains that the defendant failed to hand over the keys to the Property at or before 5 p.m. on 16 January 2009.

22.For the defendant, it is contended that vacant possession of the Property was duly delivered to the plaintiff at 5 p.m. on 16 January 2009. Although certain items remained on the Property at that time, it was submitted, on behalf of the defendant, that the Court should find that vacant possession had been delivered and that the items left behind should be disregarded on the de minimis principle.

23.The defendant contends that the keys were tendered to the plaintiff herself before 5 p.m. on 16 January 2009 at the Property. As to the requirement for FLN to forward the keys of the Property to DL before or at 5 p.m. on 16 January 2009, the defendant’s case is that this was not a term of the Agreement and was only a requirement contained in the Undertaking Letter, which latter document did not in any event require time of performance of any of the undertakings to be of the essence. The defendant therefore contends that the late delivery of the keys to DL at 5.05 p.m. on 16 January 2009 does not entitle the plaintiff to rescission of the Agreement.

24.In addition, the defendant maintains in the alternative that, if there was a failure to deliver vacant possession of the Property, this was caused by the acts and conduct of the plaintiff prior to the time for completion thereby excusing the defendant from the requirement to deliver vacant possession in strict accordance with the time limit stipulated in the Agreement. The defendant relies on the prevention principle discussed by the Court of Final Appeal in Kensland Realty Limited v. Whale View Investment Limited & Anor. (2001) 4 HKCFAR 381.

25.The following issues therefore arise for determination in this action:-

(1)  What was the state of the Property at 5 p.m. on 16 January 2009?

(2)  Were the keys of the Property delivered to the plaintiff by 5 p.m. on 16 January 2009?

(3)  Was vacant possession given by the defendant to the plaintiff at or before that time or, if not, was any failure to do so to be ignored on the basis that it was de minimis?

(4)  Alternatively, is the defendant entitled to rely on the prevention principle to excuse any failure on her part to deliver vacant possession of the Property?

(5)  Was the plaintiff entitled to rescind the Agreement and is she entitled to the declarations and orders sought in the originating summons?

26.For the sake of completeness, I record that an argument raised in the affirmation evidence filed on behalf of the defendant, namely that there was a waiver of the requirement for FLN to forward the keys of the Property to DL before or at 5 p.m. on 16 January 2009, was not relied upon in the closing submissions for the defendant and I therefore need not consider this argument.

Issue (1): what was the state of the Property at 5 p.m. on 16 January 2009?

27.The plaintiff attended at the Property itself during the afternoon of the day of completion on 16 January 2009. According to her evidence, she arrived at about 4.00 p.m. and found that the occupiers of the Property were just starting to pack their belongings. She says in her affirmation that by about 4.53 p.m. she noticed that only a few pieces of small furniture and some packed items had been moved out of the Property and put in the corridor outside. She took some photographs of the inside of the Property and these appear to show various personal belongings inside the Property, including a television screen and a picture hanging on a wall as well as various items of furniture in the bedrooms and sitting room and toiletries in the bathroom (at pp.68-69 of the Agreed Bundle). According to the plaintiff, she took those photographs between 5.03 p.m. and 5.04 p.m.

28.The plaintiff says that at about 5.40 p.m., notwithstanding the fact that there were still beds in each of the three bedrooms, wardrobes in two of the three bedrooms, a table and various other packed and unpacked items in the living room, the people inside the Property stopped packing and left. The manager of the estate agent acting for both the plaintiff and the defendant in respect of the sale of the Property, a Mr Lee, then locked the door of the Property and attempted to give the keys to the plaintiff. She did not accept them and left. She then went to the offices of DL.

29.The evidence for the defendant is that her personal effects and furniture began to be removed from the Property starting at 1:00 p.m. on 16 January 2009. According to Mr Chan Cheung, the defendant’s son, the plaintiff was at the property at around 3.00 p.m. and was aware that there were some items remaining in the property and was informed that those items were to be discarded. Mr Chan says that the photographs exhibited by the plaintiff were taken about an hour or two before 5 p.m. and that at 5 p.m. only a few small items were left as shown in photographs exhibited as “CC-2” (at pp.127-129 of the Agreed Bundle). It is common ground, however, that those photographs at “CC-2” were taken in March 2009, about six weeks after the date of completion.

30.The time when the plaintiff’s photographs were taken was sought to be supported by the information recorded in respect of the soft copies of those photographs which were kept on the plaintiff’s computer. Whilst it was the case that the properties of those soft copies of the photographs indicated the times of 5.03 p.m. and 5.04 p.m. on 16 January 2009, there was no evidence to corroborate whether those times were the times when the photographs were taken or were when they were uploaded onto or accessed on the computer. Furthermore, the times recorded on the photographs by the digital camera used by the plaintiff to take them and that recorded on the computer on which the soft copies were stored are only as accurate as the clock on either of the respective devices. Therefore, whilst those times recorded on the soft copies of the photographs provide some evidence of when they were taken, I propose to consider what other evidence there is that might enable me to make a finding of fact as to when they were taken.

31.In her oral evidence, the plaintiff recalled that she took the photographs after 5 p.m. on 16 January 2009 because her solicitor had told her to telephone him if she had not been given the keys and vacant possession of the Property by 5 p.m. that day. She recalls that when it was 5 p.m. she immediately telephoned her solicitor to inform him that it would not be possible for the defendant to remove all the belongings from the Property by the time of completion. She says that upon completing that telephone call she went inside to see how many items were still to be removed from the Property and it was then that she took the photographs.

32.It was submitted on behalf of the defendant that I should prefer the evidence of Mr Chan, the defendant’s son, on this issue and hold that the photographs taken by the plaintiff were taken one or two hours before 5 p.m.

33.Having heard the respective witnesses, namely the plaintiff herself and Mr Chan for the defendant, I accept the evidence of the plaintiff that she took the photographs at pp.68-69 of the Agreed Bundle at 5.03 p.m. and 5.04 p.m. on 16 January 2009.

34.I have borne in mind the evidence of Mr Chan that at about 3 p.m. to 4 p.m. his solicitor telephoned him to tell him that the plaintiff’s solicitor would be sending a cheque for completion. He says that at some time after 4 p.m. his solicitor received the cheque and confirmed to him that completion would proceed. Prior to that time there had been some question as to whether this would occur, a point to which I shall return below in discussing the defendant’s reliance on the prevention principle. This means that the defendant had a relatively short time, a matter of two hours or less, to back up her belongings in order to vacate the property as required under the Agreement. According to Mr Chan, the movers engaged to remove the defendant’s belongings from the Property only started to remove items after 3 p.m. There were 10 employees of the removal firm and the defendant also had two friends helping. In Mr Chan’s own words, the situation was “very hurried” and “chaotic”. He accepts that the larger items of furniture were left behind in the Property and these included beds in each of the three bedrooms of the Property as well as a wine fridge, a cabinet and a fridge. Each of these items, except possibly with the exception of a bed in one of the bedrooms, can still be seen in the photographs exhibited on behalf of the defendant (at pp.127-129 of the Agreed Bundle), which were taken on 2 March 2009.

35.I have also borne in mind the fact that, as a matter of common sense, the plaintiff would have been more likely to take photographs of the state of the Property at or immediately after 5 p.m. on the date of completion in order to assist her to demonstrate whether or not the defendant had complied with her obligation to deliver vacant possession by that time. I reject the suggestion that she, in effect, tendered untruthful evidence by putting forward photographs she had taken at 3 p.m. or 4 p.m. as photographs taken at 5.03 and 5.04 p.m. instead. Although she had apparently had concerns as to whether she would be able to tender the balance of the purchase price on completion, she was aware by the afternoon of 16 January 2009 that funds were available for her purchase of the property and had been tendered to the defendant’s solicitor.

36.There is a difference between the furniture shown in the photographs taken by the plaintiff on 16 January 2009 and those taken by the defendant’s son on the 2 March 2009. Since the defendant’s son maintained that the property was locked at 5 p.m. on 16 January 2009, it was suggested on behalf of the defendant that this demonstrated that the plaintiff’s photographs must have been taken earlier than 5 p.m. I reject this submission and find that it was not until sometime after the plaintiff took her photographs at 5.03 and 5.04 p.m. that the Property was locked and the keys tendered to the plaintiff. Even assuming the defendant did not have access to the Property between 16 January 2009 and 2 March 2009, there would have been time between the plaintiff’s taking the photographs and the Property being locked for the items which are not to be seen in the defendant’s photographs (as compared with the plaintiff’s) to have been removed from the Property.

37.I therefore find that the following items remained in the Property at 5 p.m. on 16 January 2009, namely:-

(1)  Beds in each of the three bedrooms and a stool in one of the bedrooms;

(2)  A television set and framed picture on the wall of the living room;

(3)  A wine fridge, cabinet, kettle and houseplant in the living room; and

(4)  Various toiletries and towels in the bathroom.

Issue (2): were the keys of the Property delivered to the plaintiff by 5 p.m. on 16 January 2009?

38.In Mr Chan’s affirmation, filed on behalf of the defendant, it was contended that the delivery of the keys by FLN to DL, albeit at 5.05 p.m on 16 January 2009, was not rejected by DL and so any breach of that requirement was waived. As I have noted above, the waiver argument is no longer pursued by the defendant.

39.It was only when Mr Chan was giving his oral evidence that it was suggested, for the first time, that the keys of the Property had in fact been tendered to the plaintiff at 5 p.m. on 16 January 2009 outside the Property when the agent, Mr Lee, locked the door at that time. It was put to the plaintiff that she left the Property shortly before 5 p.m., that Mr Lee and Mr Chan had chased after her downstairs after she had left and that Mr Lee had tried to give her the keys of the Property.

40.The plaintiff accepted in her evidence that Mr Lee and Mr Chan had chased her downstairs and tendered the keys to the Property there. She maintained that this was at about 5.40 p.m. before she set off for her solicitor’s office in Central.

41.I have already found above that the Plaintiff did not leave the Property before 5 p.m. and that she took photographs of the state of the Property at 5.03 and 5.04 p.m. after having spoken to her solicitor. The Property was clearly not yet locked at that time. On that basis, even assuming she went downstairs immediately to set off for her solicitor’s office, the time when Mr Lee and Mr Chan would have caught up with her to tender the keys would necessarily have been a few minutes after 5 p.m. and I so find. I reject Mr Chan’s evidence that the keys were tendered to the plaintiff at 5 p.m. His evidence to this effect only emerged at trial, after opening submissions for the plaintiff had addressed the question of whether the delivery of the keys by FLN to DL at 5.05 p.m. was within time or not, and for this reason was not, in my view, reliable.

42.In respect of the delivery of the keys by FLN to DL there is factually no dispute that the defendant was a few minutes late in the performance of this obligation. In respect of the physical tender of the keys to the plaintiff at the Property, my finding is that this also occurred a few minutes after the 5 p.m. deadline.

43.On the authority of World Ford Development Ltd. v. Ip Ming Wai & Anor. [1993] 1 HKC 98, there is no room for the operation of the de minimis principle in this context. In that case, Litton JA (as he then was) held at pp.102I-103A:-

“The first and fundamental rule is that the courts have no dispensing powers. When the parties are under no disability and have, with their eyes open, entered into a contract, the duty of the court is to give effect to it. When the parties have said that acts are to be performed ‘at or before 5 pm’, this does not mean ‘at about 5 pm’. Parties can, of course, contract for mutual tolerance, for example by agreeing that time is not of the essence of the contract. …”

And, later at p.106F-G, he held:-

“… if, factually, it is beyond all dispute that one or other of the parties was in truth a few minutes late, I cannot see how the court can relieve him of the rigour of his own contractual obligation. Any other approach means in effect that the court would simply be rewriting the contract for the parties – after the event, with the innocent party having no means of ascertaining what the new time limit might be until he comes to court and the court pronounced upon it.”

44.Insofar, therefore, as delivery of the keys of the Property was relied upon by the defendant as constituting the giving of vacant possession of the Property to the plaintiff on completion (as required by clause 19 of the Agreement), it is my conclusion that the defendant was late in this respect and therefore, subject to the question of whether vacant possession of the Property was in fact given (as to which see issue (3) below), the defendant was in breach of the requirement to complete the Agreement by 5 p.m. on 16 January 2009.

Issue (3): was vacant possession given by the defendant to the plaintiff at or before that time or, if not, was any failure to do so to be ignored on the basis that it was de minimis?

45.There was no dispute between the parties that the leading authority on the question of vacant possession is Cumberland Consolidated Holdings Ltd v. Ireland [1946] 1 KB 264, applied by the Court of Appeal in Grandwide Ltd v. Bonaventure Textiles Ltd, CACV 27/1990, unrep., 17.7.90. In the former case, at p.270, Lord Greene MR held:-

“Subject to the rule de minimis a vendor who leaves property of his own on the premises on completion cannot, in our opinion, be said to give vacant possession, since by doing so he is claiming a right to use the premises for his own purposes, namely, as a place of deposit for his own goods inconsistent with the right which the purchaser has on completion to undisturbed enjoyment.”

46.In Grandwide, the Court of Appeal noted that Lord Greene MR went on to say, at p.271, of his judgment in Cumberland:-

“When we speak of a physical impediment we do not mean that any physical impediment will do. It must be an impediment which substantially prevents or interferes with the enjoyment of the right of possession of a substantial part of the property. Such cases will be rare, and can only arise in exceptional circumstances, and there would normally be (what there is not here) waiver or acceptance of the position by the purchaser.”

47.It was common ground between the parties that the relevant test is whether or not what has been left behind by the vendor in the premises amounts to a physical impediment which substantially prevents or interferes with the enjoyment of the right of possession of a substantial part of the property.

48.I have made my findings as to the state of the Property as at 5 p.m. on 16 January 2009 under issue (1) above. The question therefore arises as to whether those items left behind in the Property constituted a physical impediment which substantially prevented or interfered with the plaintiff’s enjoyment of the right of possession of a substantial part of the Property or whether those items should be disregarded as being de minimis.

49.Counsel were unable to cite any authority which attempted any quantitative definition of what personal property left behind by a vendor might constitute a physical impediment substantially preventing or interfering with the purchaser’s enjoyment of the right of possession. The absence of such authority is perhaps not surprising since the circumstances in which this issue might arise will be entirely fact-sensitive and relative.

50.In this regard, Mr Lawrence Cheung, counsel for the defendant, submitted that the Court should take into account: the fact that the flat was about 1,100 square feet in size; there were three beds (one dismantled), a wardrobe in two of the bedrooms, a cabinet, a refrigerator and a foldable table in the living room (this being the state of the Property shown in the defendant’s photographs taken on 2 March 2009); the space occupied by these items; the fact they could have been removed if Mr Chan had been given one more hour to do so; the beds could be taken apart; all the remaining items were to be discarded; Mr Chan intended to pay for the removal of these items; the price under the Agreement was HK$2.8 million; the plaintiff intended to rent the Property out and there was no evidence she or a tenant was planning to move into the Property immediately; the Property was, according to Mr Chan, locked by the estate agent at 5 p.m. so that he could not go back in.

51.For her part, Ms Winnie Chan, counsel for the plaintiff, relied on Strong Beauty Ltd v. Gain Legend Industries Ltd, HCMP 2565/2006, unrep., 4.9.07, a decision of Mr Recorder A. Ho SC which applied the Cumberland test to determine whether vacant possession of a residential property had been given. In that case, the Learned Recorder found that “various objects and furniture remained present” in the property in question and that there was “plenty of furniture” inside the flat. At paragraph 24 of his judgment, he held:-

“I have borne in mind the observation of Lord Greene MR in Cumberland Consolidated Holdings (at p.271) that the right to vacant possession was denied only when the impediment in question was substantial. But having regard to the presence of the objects and furniture (described as plenty on the 5th Floor, as well as the situation seen in the photographs of the roof), I do not think it can be said that the plaintiff had delivered vacant possession of those parts of the Property. The presence of those items clearly interfered, in a substantial manner, with the defendant’s physical enjoyment of its right to the use and occupation of those parts. It is irrelevant whether the objects belonged to the plaintiff or someone else. Nor is it an answer to say that the defendant could easily have them removed. In my view, it is wrong to cast upon a purchaser who is entitled to vacant possession the burden of deciding how to deal with the chattels left on the premises and incurring the expenses of their disposal, unless, of course, it can truly and properly be described as de minimis (which is not the present case).”

52.I agree with the comments in that passage, although it is to be noted that there was no specific finding as to what objects and furniture were actually left behind and the case does not provide any quantitative statement as to what amount of chattels left behind might be de minimis.

53.Mr Cheung sought to distinguish Strong Beauty on the grounds that the finding in that case was that there was a lot of furniture left behind and no sign of the occupant’s moving out (see paragraph 18). In my view, the latter point was not well taken, since it is clear from the decision that the Learned Recorder proceeded on the basis that the tenant was no longer in occupation on the date for completion (see paragraph 20).

54.On the basis of my findings in respect of issue (1) above, I hold, applying the test of substantial prevention or interference with the enjoyment of the right to possession of a substantial part of the Property, that the defendant did not give vacant possession of the Property by 5 p.m. on 16 January 2009. I conclude that the items of furniture left behind in the Property are not to be disregarded as de minimis. I do not think it is fruitful to try to frame any quantitative definition of what amount of furniture exceeds the de minimis threshold. As I have noted above, this must depend on the facts and circumstances of any particular case.

55.I would add that, even on the defendant’s case as to the state of the Property at 5 p.m. on 16 January 2009, as reflected in the photographs taken on 2 March 2009, I would have come to the same conclusion. On that basis, as Mr Chan accepted in cross-examination, there were in any event at least two bedrooms still occupied by beds long after the completion date and various other items of loose furniture including at least a wine fridge, a cabinet, two framed pictures, a folding table and a stool. In my view, these items of personal property would, in respect of this particular property, satisfy the test of substantial prevention or interference with the enjoyment of the right to possession of a substantial part of the Property and should not be disregarded as de minimis.

56.It therefore follows and I hold that the defendant was in breach of the Agreement in failing to give vacant possession of the Property to the plaintiff by 5 p.m. on 16 January 2009, whether by way of actual delivery of vacant possession or by way of delivery of the keys of the Property to enable the plaintiff to take vacant possession.

57.In the light of this conclusion, it is unnecessary to consider the further arguments that were raised by Mr Cheung, namely that the requirement to deliver the keys of the Property by 5 p.m. on 16 January 2009 was not a stipulation of the Agreement but, rather, was only a requirement of the Undertaking Letter, that that the undertakings in question did not require time of performance by the solicitors to be of the essence and that, in any event, breach of the Undertaking Letter did not entitle the plaintiff to rescind the Agreement.

Issue (4): is the defendant entitled to rely on the prevention principle to excuse any failure on her part to deliver vacant possession of the Property?

58.In order to consider this issue, it is necessary to set out the acts and conduct of the plaintiff relied on by the defendant as excusing her from timely performance of the obligation to deliver vacant possession of the Property.

59.The defendant relies upon the following matters, namely:-

(1)  In December 2008, the plaintiff asked, through the estate agent acting for both parties, Mr Lee, whether the defendant would agree to a reduction in the purchase price for the Property of HK$300,000 in view of the falling property market.

(2)  At some point in time apparently after her initial request for a price reduction in December 2008 and early January 2009, the plaintiff requested, again through Mr Lee, whether the defendant would agree to reduce the purchase price by HK$100,000.

(3)  In early January 2009, the plaintiff asked Mr Lee to enquire with the defendant whether she would agree to cancel the sale and purchase since she was worried that, having only arranged a mortgage loan of HK$1 million from her bank, HSBC, the plaintiff would still have a shortfall of about HK$70,000.

(4)  The plaintiff was still trying to obtain finance to complete the purchase at about 4.30 p.m. on 15 January 2009 and, as she accepted in her affirmation, “so probably the Defendant might think that I would not be able to complete the purchase by 16th January 2009.”

(5)  The plaintiff’s bank’s surveyor did not inspect the Property until about 4 p.m. on 15 January 2009, the mortgage loan being subject to a surveyor’s report.

(6)  The plaintiff, apparently being worried that HSBC might not be able to release the mortgage loan on 16 January 2009 as the surveyor’s report would only be available on the morning of that date, went to the offices of DL after the inspection on 15 January 2009 and asked her solicitor to call the defendant’s solicitors to ask whether the defendant would agree to a postponement of seven days to complete the purchase.

60.In respect of each of the matters set out in the preceding paragraph, it is important to note as follows:-

(1)  When the plaintiff asked for a reduction in the purchase price of HK$300,000, Mr Lee told her that the defendant did not agree to this.

(2)  When the plaintiff asked again whether the defendant might agree to a reduction in the purchase price of HK$100,000, Mr Lee immediately told her that the defendant would not agree to this.

(3)  In response to the request in early January 2000, through Mr Lee, as to whether the defendant would agree to cancel the sale and purchase, Mr Lee told her that the defendant did not agree to a cancellation.  There is a dispute as to whether a Cancellation Agreement was in fact drawn up and as to which party refused to sign it.  No such document has been produced in evidence.  In any event, it is clear that no Cancellation Agreement was entered into between the parties.

(4)  The plaintiff’s request, through her solicitor, for a postponement of seven days to complete the purchase was refused by the defendant.

61.In my view, the evidence discloses that, whilst the plaintiff might have been concerned as to her ability to complete the purchase of the Property on time, all requests by her for either a reduction in the purchase price or a cancellation of the Agreement or a postponement of the time for completion were rejected by the defendant or did not result in any contractual postponement or cancellation. In short, the plaintiff was left in a position of having to proceed with the purchase, which for her part involved tendering the balance of the purchase price by 5 p.m. on 16 January 2009.

62.Mr Cheung submitted that the defendant was entitled to rely on the prevention principle discussed in the case of Kensland Realty Limited v. Whale View Investment Limited & Anor. (2001) 4 HKCFAR 381.

63.As Ribeiro PJ held in Kensland at §100:-

“In deciding how the prevention principle is to be given effect in any particular case, it is necessary to identify with some precision, the relevant breach, the factual consequences flowing from such breach and what, if any, advantage the contract-breaker seeks to take on the basis of such consequences. The principle aims specifically to deny the contract-breaker those particular advantages.”

64.Mr Cheung submitted, relying on Chitty on Contracts (30^th Ed., 2008) Vol.1 at para.13-012, that there was an implied term in the Agreement “that the parties will not do any act which would prevent performance or fulfilment of conditions under the [Agreement], including the delivery of vacant possession by the Defendant at completion”. It was his submission that the plaintiff was in breach of that term and that such breach was “a designed plan engineered by the Plaintiff aimed at preventing the Defendant from delivering vacant possession in time in accordance with the [Agreement]”.

65.Even accepting the existence of such an implied term, I do not think the prevention principle is engaged in the present case since the defendant is unable to complain that the plaintiff was in breach of her obligations relating to the completion. Further, even if the plaintiff had been late in tendering the balance of the purchase monies (which she was not), the defendant is unable to rely on the prevention principle, since her failure to deliver vacant possession could not have been said to have been caused by the antecedent breach of the plaintiff. The need for a relevant breach and a causal connection for the prevention principle to operate were addressed in §§94 and 95 of Ribeiro PJ’s judgment in Kensland. In my view, the acts or conduct of the plaintiff relied upon by the defendant neither constituted a breach of any obligation owed by the plaintiff to the defendant nor prevented the performance by the defendant of her obligation to deliver vacant possession of the Property by 5 p.m. on 16 January 2009.

66.In these circumstances, I do not see any merit in the defendant’s contention, relying on the prevention principle, that the plaintiff’s conduct was such as to excuse the defendant from timely performance of the obligation to deliver vacant possession of the Property. It is incumbent on a party who insists on strict performance of a contract by his counterparty that he should himself perform his side of the bargain if he wants to complain later of a failure to perform by the counterparty or lest his counterparty is in fact able to perform. In the present case, whilst the defendant might have had reason to be doubtful as to the plaintiff’s ability to compete the purchase, it was highly risky for her not to have put herself in a position of being able to complete the Agreement on her part, when at the same time she was requiring strict performance of the Agreement by the plaintiff. She ran the risk, which eventuated in the present case, that the plaintiff would in fact be able to perform her side of the Agreement but that there would be too little time for the defendant to do so.

Issue (5): was the plaintiff entitled to rescind the Agreement and is she entitled to the declarations and orders sought in the originating summons?

67.In the light of my conclusions above, I hold that the plaintiff was entitled to rescind the Agreement. Accordingly, the plaintiff is entitled to the declaration in terms of paragraph (1) of her originating summons, namely a declaration that she was entitled to rescind the Agreement and the Agreement was rescinded by the plaintiff on 16 January 2009 by a letter issued by DL on behalf of the plaintiff. The plaintiff is also entitled to a declaration in terms of paragraph (2) of her originating summons, namely a declaration that the Assignment in respect of Property dated 16 January 2009 and signed by the plaintiff and the defendant respectively is null and void.

68.I also make orders for the return by the defendant to the plaintiff of the deposits in the total sum of HK$280,000 and for the return of the two cheques tended by DL to FLN as the balance of the purchase price, in the terms of paragraphs (3) and (4) of the plaintiff’s originating summons.

69.As to the plaintiff’s claim for damages to be assessed, Mr Cheung had submitted in opening that, since there had not been any split trial application nor any evidence from the plaintiff as to the damages she may have suffered, they should not be a trial of the claim for damages. In his closing submissions, Mr Cheung sought to rely on the case of Mark Alexander Turner & Anor. v. Hung Hok Man, HCA 2387/2004, unrep., 13.3.07, at §§86 and 87, to support a proposition that the failure of the plaintiff to provide particulars of any loss suffered by her as a result of the defendant’s breach of the Agreement should be treated as an abandonment of her claim for damages.

70.I do not agree that the Turner case establishes that proposition since there was a direction in that case for the damages suffered by the plaintiffs be assessed by a Master. Instead, I accept the practice is that an innocent party claiming damages against a defaulter will first obtain a declaration that the defaulter has repudiated the contract and is liable for damages and then, having obtained a declaration, the innocent party will then take action to recover damages as assessed by the court: see Hong Kong Conveyancing Law and Practice, Sihombing and Wilkinson at XV [1452].

71.In the circumstances, I also direct that there be an assessment of the damages suffered by the plaintiff by reason of the defendant’s breach of the Agreement.

Conclusion and costs

72.I see no reason why costs should not follow the event and, accordingly, I make an order nisi that the defendant pay the plaintiff’s costs of this action to be taxed on the party and party basis, if not agreed.

Miss Winnie Chan, instructed by Messrs Wat & Co, for the Plaintiff

Mr Lawrence Cheung, instructed by Messrs Fung, Law & Ng, for the Defendant