Tai Da Trading (HK) Co Ltd v. Chan Wai Kuen
Read the full judgment text of HCA 812/2012 on BabelCite. This High Court CFI judgment was delivered on 3 May 2013.
1. This case involves a conveyancing dispute between the plaintiff as purchaser and the defendant as owner/vendor in respect of a property known as Workshop W on the 11 th floor of Block 11 of Kin Ho Industrial Building, Nos.14-24 Au Pui Wan Street, Shatin, New Territories, Hong Kong (“ Property ”) under a formal agreement for sale and purchase dated 8 March 2012 (“ FASP ”). The third party (“ HN ”) is the defendant’s solicitors for the conveyancing transaction.
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HCA 812/2012 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 812 OF 2012 _________________________ BETWEEN
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_______________ D E C I S I O N _______________ I. BACKGROUND 1.This case involves a conveyancing dispute between the plaintiff as purchaser and the defendant as owner/vendor in respect of a property known as Workshop W on the 11th floor of Block 11 of Kin Ho Industrial Building, Nos.14-24 Au Pui Wan Street, Shatin, New Territories, Hong Kong (“Property”) under a formal agreement for sale and purchase dated 8 March 2012 (“FASP”). The third party (“HN”) is the defendant’s solicitors for the conveyancing transaction. 2.The plaintiff claims that although they were at all material times ready, willing and able to fulfill their obligations under the FASP, in breach of the FASP the defendant failed and/or refused to complete the sale and purchase of the Property and the plaintiff therefore suffered loss and damages in the sum of HK$8,700.00 comprising mortgage interest payable to Honyip Credit in the sum of HK$5,200.00 and legal costs paid to the mortgagee’s solicitors Messrs Siao, Wen and Leung (“SWL”) in the sum of HK$3,500.00. 3.On 16 May 2012, the plaintiff commenced the present action against the defendant to claim for:
4.On 28 June 2012, the defendant issued a Third Party Notice against HN. 5.On 10 August 2012, the plaintiff issued a summons for summary judgment against the defendant for the reliefs in paragraph 3(a)-(f) above (“Summons”). 6.On 5 September 2012, Master Levy granted leave for HN (a) to file/serve their affirmation in opposition to the Summons and (b) to appear at the hearing of the Summons and be bound by the outcome. 7.The plaintiff filed two affirmations of their director Leung Kit Han (“Mr Leung”) on 10 August and 8 October 2012 respectively in support of the Summons. The defendant filed her two affirmations in opposition on 29 August and 20 September 2012 respectively. HN filed the affirmation of their solicitor Wilbert Neo (“Mr Neo”) in opposition on 25 September 2012. 8.The Summons was heard by Master de Souza on 21 December 2012. The learned Master dismissed the Summons and ordered that costs of the application (including any costs reserved) be costs in the cause of the suit with certificate for counsel to be taxed if not agreed (“Order”). 9.On 2 January 2013, the plaintiff filed Notice of Appeal seeking to set aside the Order and to enter judgment in their favour against the defendant for the reliefs set out in paragraph 3(a)-(f) above. On 18 January 2013, the defendant filed her Defence. The hearing of the appeal against the Order came before me on 11 April 2013. II. LEGAL PRINCIPLES 10.Mr Hu, Mr Wong and Mr Sheppard, counsel for the plaintiff, the defendant and HN respectively, have no essential quarrel over the legal principles on applications for summary judgment. A plaintiff may invoke the procedure under Order 14 of the Rules of the High Court where there is no valid defence to his claim or otherwise a triable issue. The rationale is set out in Hong Kong Civil Procedure 2013 Vol.1, para.14/4/1 at p.247:
11.In Ng Shou Chun v Hung Chun San [1994] 1 HKC 155, Godfrey J noted it was not appropriate to embark on a mini-trial of the action on affidavit evidence. The court should ask itself the question whether what the defendant says is credible or believable. If so, he must have leave to defend; if not, the plaintiff is entitled to summary judgment. 12.Hong Kong Civil Procedure 2013 Vol.1, para.14/4/9 at pp.251 goes on to say that:
13.It is also trite that an appeal from the master to judge in chambers is dealt with by an actual rehearing of the application which led to the order under appeal, and the judge treats the matter as though it came before him/her for the first time. The judge will give the weight it deserves to the previous decision of the master; but he/she is in no way bound by it (see Hong Kong Civil Procedure 2013 Vol.1 para.58/1/2 at p.1018). III. BACKGROUND FACTS 14.The defendant purchased the Property on 2 June 2011 in her sole name for the price of HK$1,238,000.00. HN acted for her in respect of her purchase of the Property. The purchase price was fully paid by the defendant and the Property was not subject to any mortgage. So the defendant did not ask HN to return the title deeds and documents of the Property (“Title Deeds”) to her after registration. The Title Deeds were all along in the possession of HN until the defendant sold the Property to the plaintiff. For the sake of convenience, the defendant instructed HN to act for her in the conveyancing transaction. 15.By a provisional agreement for sale and purchase dated 27 February 2012 made between the plaintiff as purchaser and the defendant as owner/vendor (“PASP”), the defendant agreed to sell and the plaintiff agreed to purchase the Property for the price of HK$1,340,000.00 payable in the following manner:
16.The PASP expressly provided that the Property was sold subject to a two-year tenancy from 15 March 2011 to 14 March 2013 at a monthly rent of HK$4,000.00, and further recorded that the plaintiff paid the Initial Deposit of HK$30,000.00 to the defendant by cheque. 17.However, the cheque for the Initial Deposit was dishonoured upon presentation. The estate agent told the defendant that the plaintiff would pay the Initial Deposit directly into her bank account. But upon checking her bank account twice before 8 March 2012, the defendant discovered that the Initial Deposit had not been deposited into her bank account. 18.On/about 7 March 2012, the plaintiff instructed Messrs K B Chau & Co (“KBC”) to act for them in respect of the conveyancing transaction. On the same day, KBC wrote to HN to request for the draft formal agreement for sale and purchase and the Title Deeds for perusal, and HN replied by enclosing the draft agreement. 19.Under cover of KBC’s letter dated 8 March 2012, the plaintiff paid to the defendant through HN the Initial and Further Deposits in the total sum of HK$134,000.00 by way of solicitors’ cheque. 20.On 9 March 2012, KBC wrote to HN enclosing HN’s draft formal agreement for sale and purchase duly approved by them with amendments. The parties then entered into the FASP dated 8 March 2012 and the following were express terms thereof:
21.On 14 March 2012, HN returned to KBC the FASP duly signed on behalf of the plaintiff and attested by HN for stamping and registration. 22.On 26 April 2012, the plaintiff via the estate agent requested to postpone the scheduled completion for 9 days until 17 May 2012. On the same day, KBC wrote to ask HN to postpone the agreed completion under the FASP which was to “take place on or before 8 May 2012” to “19th May 2012”. Such letter did not ask for delivery of the Title Deeds. 23.The defendant disagreed and through her younger sister informed HN to so reply to the plaintiff. HN therefore did not agree to postpone the completion date. 24.The plaintiff intended to obtain a mortgage to finance the purchase of the Property. On 2 May 2012, SWL wrote to KBC (as solicitors for the plaintiff as mortgagor) stating they had instructions to prepare the mortgage of the Property and requesting delivery of the Title Deeds to them as soon as possible. A written authorisation dated 2 May 2012 signed by the plaintiff for such purpose was enclosed with such letter. 25.On 3 May 2012 (ie 5 days before the completion date specified in the FASP), KBC wrote to HN as follows:
26.The defendant claimed that although clause 38 of the FASP provided she shall allow the plaintiff to inspect the Property and clause 39 of the FASP provided that she would deliver vacant possession of the Property upon completion of the sale and purchase of the Property, it was agreed that the Property was sold subject to existing tenancy (see clause 20 in the PASP and clause 40 of the FASP – see paragraphs 16 and 20 above), so the plaintiff should have known they would not be able to inspect the Property before or after entering into the PASP. 27.At about 3:39pm on 3 May 2012, KBC received HN’s letter enclosing the Title Deeds for their perusal and requesting provision of the draft assignment of the Property at least 3 days prior to the date of completion for HN’s approval on behalf of the defendant. 28.From the land search conducted on 22 May 2012, it appeared that the plaintiff further sold the Property to a Chan Kam Chuen under an agreement for sale and purchase dated 4 May 2012 for the consideration of HK$1,330,000.00. 29.The plaintiff claimed that upon receipt of the Title Deeds, KBC had to check the Title Deeds themselves and to forward them to the mortgagee’s solicitors SWL for their perusal and for them to raise requisitions. 30.By a letter dated 5 May 2012 (Saturday), KBC wrote to HN as follows:
31.The defendant claimed she was unaware of the aforesaid request by KBC made on behalf of the plaintiff for postponement of the completion date to 11 May 2012. 32.At about 9:32 am on 8 May 2012, KBC received HN’s letter dated 7 May 2012 that gave particulars of the split cheques required upon completion and requested for “your draft letter of undertaking and draft Assignment for our approval”. At 9:53am on 8 May 2012, HN sent a fax to KBC enclosing the apportionment account in respect of the Property for their verification. 33.On 8 May 2012, SWL wrote to KBC to raise requisition as follows:
34.At about 12:30pm on 8 May 2012, HN received a fax from KBC raising the same requisition as raised in paragraph 1 of SWL’s letter in the above paragraph, and reserving the plaintiff’s “rights to raise further requisitions upon receipt of your reply herein”. 35.At about 1:09pm on 8 May 2012, KBC received HN’s faxed letter dated 8 May 2012 replying to the requisition raised as follows:
36.On the same day, KBC replied to SWL by providing the same answer as given by HN to the requisition raised by SWL and sending the original agreement for sale Memorial No.12031900280299 for their perusal. 37.Up to 8 May 2012, the caption for all correspondence from HN to KBC bore reference to “Completion Date: 8th May 2012”. But completion did not take place on 8 May 2012. In the copy of the letter in the above paragraph, there was a handwritten notation as follows: “confirmed with Mr Wong of [SWL] [requisition okay] 9/5/2012 [illegible]”. On 9 May 2012, the defendant gave instructions to HN to forfeit the Initial and Further Deposits due to the plaintiff’s wrongful repudiation of the FASP in failing to pay the Balance Price to her on 8 May 2012. 38.At about 10:10am on 10 May 2012, KBC received a faxed letter from HN (with a caption that referred to the Completion Date on “8th May 2012”) as follows:
39.At about 1:28pm on the same day, KBC received a faxed letter from HN (with a caption that referred to the “Completion Date: 10th May 2012”) as follows:
40.HN received KBC’s letter dated 10 May 2012 at 2:45pm enclosing the draft assignment and draft letter of undertaking for approval. A further copy of such letter was received by HN at 3:11pm. 41.At about 3:43pm on 10 May 2012, KBC received a further faxed letter from HN (marked “without prejudice and subject to contract” but with the completion date stated as “8th May 2012” in the caption) as follows:
42.On 10 May 2012, KBC delivered by hand to HN their letter enclosing solicitors’ cheques for the Balance Price. Such letter was stamped as received by HN at 2:00pm on 10 May 2012. However, Mr Neo in his affirmation stated that such letter was in fact received after 5:00pm on 10 May 2012. He claimed it was inconceivable for HN to have received such letter at 2:00pm when KBC’s letter in paragraph 40 above was only received by HN at 2:45pm. 43.At about 11:35am on 11 May 2012, KBC received a letter from HN under the caption “Completion Date: 10th May 2012” returning the assignment signed by the plaintiff and various cheques, and further stating as follows:
44.On 11 May 2012, KBC wrote to HN again returning the assignment and cheques and enclosing a copy of the letter referred to in paragraph 42 above with a time chop at 2:00pm. 45.On 12 May 2012, HN replied by letter (with a caption that referred to “Completion Date: 10th May 2012”) stating that their receptionist had failed to update the time on the time stamp which resulted in the letter referred to in paragraph 42 above being incorrectly stamped as received at 2:00pm. HN claimed that such letter was in fact received after 5:00 pm and both Yvonne Lai and Mr Neo of HN could attest to this. HN reiterated that the plaintiff was in breach of the FASP for failing to complete the purchase of the Property on 8 May 2012, and that the defendant was not willing to accept completion out of time. KBC’s letter of 11 May 2012 (with enclosures) was returned, and HN asked for return of the Title Deeds. 46.On 14 May 2012, KBC wrote to HN stating it was clear that both parties had extended completion to 10 May 2012 as evident from the caption in HN’s letter in paragraph 45 above, and that HN’s allegation that their staff forgot to update the time clock was beyond belief. IV. PLAINTIFF’S CASE 47.The plaintiff claimed that by reason of the defendant’s acceptance of the Initial and Further Deposits, she had waived her right to terminate the FASP by reason of late payment of the Initial Deposit. Mr Hu submitted it would be unfair to hold the plaintiff to ransom by saying that they could not complain or rely on the defendant’s subsequent breach of the FASP as a result of her late payment of the Initial Deposit. 48.The plaintiff claimed that despite clauses 38 and 39 of the FASP the defendant failed to reply to their request made on 3 May 2012 for inspection of the Property on/before the scheduled completion date of 8 May 2012. Notwithstanding clause 20 of the PASP and clause 40 of the FASP (see paragraphs 16, 20 and 26 above), Mr Leung in his affirmations still insisted that the plaintiff had the right to inspect the Property to ensure vacant possession would be given upon completion. However, at the hearing before me Mr Hu did not rely on these assertions. 49.Mr Hu submitted that the key questions were whether the plaintiff was entitled to have 7 working days after 3 May 2012 (ie date when KBC received the Title Deeds) to peruse the Title Deeds and raise requisitions, and if so whether the plaintiff fulfilled their obligations under the FASP by presenting the requisite documents (eg signed letter of undertaking) and completion monies to the defendant on 10 May 2012 in advance of the postponed completion date on 11 May 2012. 50.Mr Hu argued that as part of the defendant’s obligation to show and prove good title to the Property she had a duty to produce the Title Deeds (see section 13(1) of the CPO). Here, there should not have been any difficulty in providing the Title Deeds to KBC since they were all along in HN’s possession, yet they were not delivered to KBC until 3 May 2012. There was no duty on the part of KBC to request production of the Title Deeds, but KBC did request for them on 7 March and 3 May 2012 and their conveyancing clerk did telephone HN’s Mr Andrew Wong on various occasions for such purpose but to no avail. 51.Mr Hu submitted that under clause 16 of the FASP the plaintiff was entitled to 7 working days after receipt of the Title Deeds to peruse them and raise requisitions. Since the Title Deeds were delivered on 3 May 2013 and the plaintiff did not have sufficient time to check title to the Property in advance of the contractual completion date of 8 May 2012, they were reasonably entitled to 7 working days after receipt of the Title Deeds (which comprised no less than 26 items) to consider them, and completion would be postponed to a reasonable time thereafter. Even though KBC only raised a single requisition on 8 May 2012 (see paragraph 34 above), the plaintiff claimed it was unreasonable for the defendant and HN to now say with the benefit of hindsight that the duty to show good title was fulfilled when no other requisitions were raised. 52.It was suggested in Mr Leung’s affirmations that (a) the land search records showed the Property had prior encumbrances that needed to be perused before title could be accepted, (b) the intermediate root document for the Property was an assignment, mortgage or charge that fell on 8 March 1997, ie the mortgage to The Yien Yieh Commercial Bank dated 15 May 1995 registered with Memorial No.ST816200, and (c) “[it] is now apparent” from comparing the schedule of the Title Deeds provided by the defendant through HN on 3 May 2012 and the land search records for the Property that the defendant had failed to produce 5 memorial documents (ie various charging orders nisi and absolute in High Court legal actions issued by BOC Credit Card (International) Limited and Pacific Finance (Hong Kong) Limited against a previous owner of the Property). However, these contentions do not feature in Mr Hu’s written and/or oral submissions. Mr Hu’s non-reliance on these matters is understandable since it is not easy to see how the plaintiff even on their own case can rely on these alleged defects which were never raised on or before 11 May 2012. 53.Mr Hu submitted that neither the plaintiff nor KBC received any objection from HN or the defendant regarding KBC’s notification to HN to postpone the completion date from 8 May 2012 to 11 May 2012. He said it was clear that all parties concerned were proceeding on the basis that completion was to take place on 11 May 2012. Of particular relevance was HN’s letter on 8 May 2012 whereby they answered the plaintiff’s requisition and asked for the draft undertaking letter and draft assignment for approval. When read in light of HN’s earlier letter of 3 May 2012 that asked for the draft assignment for approval at least 3 days prior to the date of completion, such request was supportive of the plaintiff’s case that completion was postponed to 11 May 2012. 54.Mr Hu submitted that the plaintiff did attempt to complete the transaction by presenting the completion cheques and signed undertaking letter to HN on 10 May 2012 in advance of the postponed completion date of 11 May 2012, thereby fulfilling their obligations under the FASP. The plaintiff was at all material times ready, willing and able to complete on or before 11 May 2012, and it was the defendant who was in breach of the FASP by failing to complete the transaction. Mr Hu further submitted that in view of the time stamp on the face of KBC’s letter dated 10 May 2012 (see paragraph 42 above), HN’s assertion that such letter was received after 5:00pm was an unbelievable bare assertion. Anyway, such assertion was neither here nor there because the plaintiff had until 11 May 2012 to complete the sale and purchase of the Property. 55.Further, notwithstanding the defendant’s purported termination of the FASP and forfeiture of the Initial and Further Deposits. HN’s subsequent letters on 10 May 2012 (see paragraphs 39 and 41 above) that requested for payment of the Balance Price (which request was duly complied with by the plaintiff) were clear acts of approbation that evinced an intention on the part of the defendant to proceed with the sale and purchase of the Property. The plaintiff claimed it was the defendant who was in wrongful breach of the FASP. Mr Hu submitted that the plaintiff was therefore entitled to an order for specific performance of the FASP. V. DEFENDANT’S AND HN’S CASE 56.The defendant and HN complained that the plaintiff did not press for the Title Deeds until 3 May 2012 (see paragraph 25 above). Mr Wong submitted that Mr Leung’s assertion that KBC’s conveyancing clerk telephoned HN’s Mr Andrew Wong to request the Title Deeds to no avail was suspicious because there was no affidavit evidence from such clerk that verified such assertion and/or the circumstances that led to such calls. 57.It was suggested that since clause 20 of the FASP provided that time shall in every respect be of the essence, the plaintiff by accepting the Title Deeds had waived their right to having 7 working days to peruse the Title Deeds and raise requisitions. Mr Wong submitted that the plaintiff was bound to complete the purchase of the Property on the agreed completion date (see First Shanghai Enterprises Ltd v Dahlia Properties PTE Ltd [2002] 3 HKLRD 461). Indeed, there was no complaint until 5 May 2012 when KBC stated that the plaintiff would like to exercise their right under clause 16 of the FASP to postpone the completion date. 58.Mr Wong argued that since there was no express provision in the FASP that the Title Deeds must be delivered to KBC 7 working days before the completion date, there was no breach of the FASP even if the Title Deeds were delivered to KBC on 3 May 2012. Mr Wong and Mr Sheppard submitted that clause 16 of the FASP merely gave the plaintiff a right to raise requisitions, but did not impose any obligation on the part of KBC to deliver the Title Deeds to KBC or to answer requisitions raised within a specified timeframe (see Summit Link Limited v Sunlink Group (HK) Ltd [2000] 2 HKLRD 724). 59.It was further suggested that in the absence of any special provision in the contract good title had to be shown prior to completion, the defendant only had to show good title upon completion provided that the defendant must give the plaintiff reasonable time to consider what was offered to him, which meant that the former would have to show a good title and answer requisitions within a reasonable time before completion (see Chow Yim Woon v Lam Ying Ming [2000] 3 HKLRD 373). 60.Mr Wong argued that what amounted to reasonable time depended on the legal and factual matrix that could only be resolved at trial, and such matters should not be amenable to any summary judgment application. He submitted that in the present case, there would be reasonable and sufficient time for a reasonably competent firm of solicitors to review the Title Deeds and raise requisitions between receipt of the Title Deeds on 3 May 2012 until the agreed completion at 5:00pm on 8 May 2012. However, KBC sat on the Title Deeds and did not raise any requisition until 8 May 2012, which Mr Wong submitted was a tactical move on the part of the plaintiff for the purpose of seeking to postpone the completion. 61.Mr Wong further contended that the plaintiff’s purported explanation for the delay, ie KBC had to send the Title Deeds to SWL for their perusal, was belied by the fact that SWL only had instructions on 2 May 2012 and KBC did not send the Title Deeds to SWL until 7 May 2012. But it only took SWL one day to review the Title Deeds and to raise a single requisition on 8 May 2012, which was promptly answered by HN when it was forwarded to them by KBC. 62.The defendant and Mr Neo in their affirmations claimed that the sole requisition raised by KBC was absurd and unnecessary, that no prudent conveyancing lawyer would overlook the power to sell in clause 16 of the relevant power of attorney, and that the raising of such requisition was plainly an attempt to delay the completion of the sale and purchase. It was suggested that the plaintiff’s attempts to postpone completion was due to their lack of funding to complete the purchase of the Property on 8 May 2012. Indeed, SWL confirmed on 8 May 2012 that the mortgagee had not granted the mortgage loan (which loan was eventually granted 10 May 2012) in favour of the plaintiff (see paragraph 33 above). It was suggested that the plaintiff purported to rely on clauses 16 and 38 of the FASP to seek postponement of the completion date via the backdoor because they were not able to complete the transaction in the absence of the mortgage loan on 8 May 2012. After all, there was no implied condition precedent to the plaintiff’s obligation to pay the Balance Price that the defendant shall first have to show good title (see Yeung Kwok Leung v Lam Cheuk Lai [1991] 2 HKLR 557). 63.The defendant claimed that even though the defendant had no obligation to answer requisitions that were unnecessary, frivolous or vexatious, HN did sufficiently and satisfactorily answer KBC’s requisition in a timely fashion out of courtesy and to avoid any delay to completion. No other requisition was raised, and there was no suggestion that the defendant’s title to the Property was bad. On such basis, the defendant had shown and proved good title to the Property by 8 May 2012 (see Summit Link Limited), and it was the plaintiff who unreasonably relied on the alleged entitlement to 7 working days after receipt of the Title Deeds to raise requisitions to defer completion. 64.Mr Wong submitted there was never any agreement to postpone the agreed completion and the plaintiff was plainly not ready to complete the transaction on/before 8 May 2012 since the mortgage loan was not available as yet for payment of the Balance Price, hence it was the plaintiff rather than the defendant who wrongfully failed to complete the transaction on 8 May 2012. As was clear from the correspondence, the defendant was entitled (a) to accept the wrongful repudiation by the plaintiff, (b) to exercise her right to forfeit the Initial and Further Deposits, and (c) to be discharged from further obligations to perform the FASP. 65.Mr Wong further submitted that in any event the plaintiff was not entitled to the relief for specific performance. Since specific performance is an equitable and discretionary remedy, the plaintiff must show that (a) they had performed or had been ready and willing to perform all terms and conditions then to be performed by them, (b) they are ready and willing to perform all terms and conditions thereafter to be performed by them, (c) they had not acted in contravention of the essential terms of the FASP, and (d) they must come with clean hands and show that their past record in the transaction was clean (see Snell’s Equity (32nd ed) para.5-015 at pp.112-114 and Chitty on Contract 30th ed Vol.I para.27-035 at pp.1740-1741). 66.Mr Wong argued that the plaintiff failed to satisfy these requirements. First, the plaintiff’s cheque for the Initial Deposit was dishonoured and she only eventually made payment on 8 March 2012 after failing to meet her promise to deposit the Initial Deposit into the defendant’s bank account, yet she did not offer any explanation for such breach of the PASP. Secondly, although the plaintiff well knew the sale and purchase of the Property was subject to existing tenancy, she required inspection of the Property under clauses 38 and 39 of the FASP. It appeared that such request for inspection was no longer pursued, and it was not even suggested that the proposal for postponing completion was conditional upon inspection of the Property. Thirdly, the plaintiff was not in a position to complete the transaction on 8 May 2012 despite the fact there was no defect in title. They were only able to secure the mortgage loan on 10 May 2012 which contradicted their assertion that they were always ready, willing and able to complete. Fourthly, the plaintiff made several attempts to postpone completion without justification as discussed above. In all the circumstances, Mr Wong submitted that the plaintiff failed to come with clean hands and they did not act in good faith, hence specific performance should be refused. VI. DISCUSSION 67.The main plank of Mr Hu’s submissions rests on the three authorities discussed below, which he said supported the plaintiff’s stance that she was entitled to have 7 working days after receipt of the Title Deeds on 3 May 2012 to raise requisitions, and hence completion of the sale and purchase of the Property should be postponed to a reasonable time thereafter, ie on 11 May 2012. It is essential for Mr Hu to make good this point because the evidence before me is that the mortgage loan for payment of the Balance Price was only available on 10 May 2012 (ie after the original agreed completion date on or before 8 May 2012). 68.The first case that Mr Hu relied on is Yeung Sau Chuen Sammy v Chung Chun Ting & anor [1997] 4 HKC 34. In that case, the contract provided for completion of the sale and purchase of the subject property on 31 December 1992. The solicitors for the plaintiff purchaser raised requisition on 20 July 1992 for photocopies of certain documents of title. No such photocopies were delivered before the date of completion. But papers purported to be certified copies of the documents requisitioned were sent to the plaintiff’s solicitors on 29 December 1992. The plaintiff did not complete on 31 December 1992, and the defendant vendors sought to treat the plaintiff in repudiation of the contract and to forfeit the deposit. Godfrey J at p.36 held as follows:
69.In Wong Bik Ching v Yu Hon Chung & anor [1997] 4 HKC 38, the contract expressly provided that the vendors should provide all the title deeds by 7 August 1996, 13 days before the completion date of 21 August 1996. The solicitors for the defendant vendors provided the plaintiff with a number of title deeds by 7 August 1996, 13 days before the completion date of 21 August 1996. On 5 and 6 August 1996, the solicitors for the plaintiff purchaser asked for 6 title deeds that were missing. Some were provided, but by 21 August 1996 the defendants’ solicitors undertook to provide certified copy of one title deed and the original of another 90 days after completion. There was also disagreement as to whether certain of the requested documents were part of the title deeds. The defendants did not ask for completion to be postponed. Instead they asked for a draft copy of the assignment for their approval in their letter dated 20 August 1996, which letter did not reach the plaintiff’s solicitors until 21 August 1996. The plaintiff’s solicitors wrote on 21 August 1996 raising a number of requisitions in relation to the title documents provided to them on the same day, indicating that they would not accept the proposed undertaking, and suggesting that completion should be postponed on the basis that the plaintiff should have sufficient time to consider the missing documents and raise requisitions. Eventually, on 21 August 1996, the defendants’ solicitors wrote to say that as time was of the essence of the agreement, the plaintiff having failed to complete on that day was in repudiation of the agreement, and the deposit was forfeited. 70.In that case, clause 19(a) of the contract provided that “[any] requisition or objection in respect of the title shall be delivered in writing to the Vendor’s solicitors within 7 working days after the delivery of the title deeds to the Purchaser’s solicitors”. Recorder Edward Chan SC at p.46 accepted the proposition that as a result of such provision, if the vendor omitted to send some title deeds and only sent those missing title deeds later, then notwithstanding the date of completion stated on the agreement, the vendor could not compel the purchaser to complete before the expiration of 7 working days from the date the last missing title deeds were sent. He found that the defendants were in breach of the contract and the plaintiff was entitled to accept repudiation and terminate the contract as the plaintiff did by letter dated 28 August 1996. 71.In Wise Mark Technology Ltd & anor v Wincome Holdings Ltd & anor [2001] 1 HKLRD 298, the vendor sent the title deeds to the purchaser who then sought to raise requisitions out of time by requesting inter alia title documents that had not been delivered. Clauses 4 and 5 of the contract provided that the vendor shall in accordance with section 13 of the CPO give and prove good title and furnish such documents of title as may be necessary to complete such title, and that any requisitions shall be raised within 7 working days after the date of receipt of the title deeds. It was held that the combined effect of these two provisions was that in order to show good title the vendor had to deliver the necessary title documents, and the title documents had to be delivered sufficiently in advance of the completion date so as to give the purchaser a proper opportunity to consider them and raise requisitions. DHCJ Poon (as he then was) referred to Yeung Sau Chuen Sammy and said as follows at pp.305-306:
72.Mr Hu suggested that Yeung Sau Chuen Sammy as endorsed by Wong Bik Ching and Wise Mark Technology Ltd & anor were on all fours with the present case in view of the terms of clause 16 of the FASP and the delivery of the Title Deeds on 3 May 2012 which was less than 7 working days before the agreed date for completion. 73.When KBC wrote to HN on 3 May 2012 (see paragraph 25 above), there was less than 7 working days before completion and they had not yet received the Title Deeds. If Mr Hu is right about the legal principles to be elicited from Yeung Sau Chuen Sammy, Wong Bik Ching and Wise Mark Technology Ltd & anor, KBC on behalf of the plaintiff should have 7 working days after receipt of the Title Deeds to raise requisitions. But as at 3 May 2012 KBC only “reserved [the plaintiff’s] right to postpone the time for completion” pursuant to clause 16 of the FASP. 74.The Title Deeds were received in the afternoon on the same day (ie 3 May 2012), and two days later (ie on 5 May 2012) KBC wrote to say that the plaintiff thereby exercised their right under the clause 16 of the FASP to raise requisitions within 7 working days after receipt of the Title Deeds, and to further say that completion was not required “unless and until within a reasonable time after a good title to the Property shall have been provided by [the defendant]”, ie until 11 May 2012. 75.Had (as the defendant argued) the plaintiff waived their right to raise requisitions within 7 working days after the receipt of the Title Deeds by accepting delivery of the Title Deeds on 3 May 2012 (see paragraph 57 above)? 76.In this respect, Mr Wong prayed in aid First Shanghai Enterprises Ltd. In that case, the contract signed on 22 October 1997 provided for completion on 31 October 1997. Title deeds were delivered to the purchaser’s solicitors at about 5:00pm on 24 October 1997 (Friday). On 30 October 1997, the purchaser’s solicitors complained about the late supply of the title deeds; they raised requisitions and asked for missing title documents. The vendor’s solicitors denied the allegations, and responded to the requisitions by forwarding further documents at about 7:30pm on 30 October 1997. The purchaser failed to complete and the vendor forfeited the deposit. The contract in that case (like the FASP in the present case) did not provide that the title deeds should be delivered within 7 working days before completion, but it did provide that any requisitions or objections in respect of the title shall be delivered “as soon as practicable” within 7 working days after receipt of the title deeds (unlike the FASP in the present case) and if the vendor shall be unable or unwilling to remove or comply with the same the vendor shall be at liberty on giving 3 working days’ notice to annul the sale (similar to the FASP in the present case). 77.It was held in First Shanghai Enterprises Ltd that since (a) the parties had set the date for completion 9 days after the contract on 31 October 1997 and made time of the essence, (b) requisitions must be raised at the latest 3 days before completion in order to allow the vendor (if it wished) to opt out of the transaction by giving 3 days’ notice, (c) the completion date could not be adhered to if the purchaser was allowed 7 working days to raise requisitions, and (d) the requirement of 7 working days to raise requisitions had to be considered in the context of “as soon as practicable” proviso and the tight schedule within which the parties intended the transaction to be completed, the parties’ objective intention must be that the purchaser would not have 7 working days to raise requisitions. It was also held that the vendor was not in breach in delivering the title deeds on 24 October 1997, but even if the vendor were in breach, the purchaser had waived its right to terminate the agreement. When the title deeds were delivered they were not rejected, and there was no conduct inconsistent with the continuation of the contract. 78.The factual background in First Shanghai Enterprises Ltd was far removed from that in the present case. Here, the FASP was entered into more than 2 months before the date of completion. There was no apparent difficulty for delivery of the Title Deeds to KBC at a time earlier than 3 May 2012 had the defendant so wished since the Title Deeds were all along in HN’s possession. There was no “as soon as practicable” proviso in clause 16 of the FASP. I am not persuaded that First Shanghai Enterprises Ltd gives support to the proposition that plaintiff by accepting delivery of the Title Deeds waived their right to raise requisitions within 7 working days thereafter. Such argument also does not sit well with the principles elicited from the Yeung Sau Chuen Sammy trilogy of cases referred to above. 79.Although Mr Wong suggested there was nothing wrong for HN to deliver the Title Deeds to KBC only on 3 May 2012, I do not see this as a ground of complaint by Mr Hu for the purpose of the Summons. Rather, the focus of his argument was that irrespective of when the Title Deeds were received the plaintiff should be allowed 7 working days after such receipt to raise requisitions, and the agreed completion date would have to be deferred to accommodate this. 80.It will be noted that in Chow Yim Woon the vendor responded to the purchaser’s request for the title deeds by saying that the duty to show good title was within a reasonable time before completion and as there was no time limit for completion the purchaser’s request was premature. The purchaser then alleged the vendor had repudiated the agreement which he accepted and demanded repayment of the deposits paid. The Court of Appeal held that the vendor only had to show good title upon completion, but they also agreed that the vendor must give the purchaser reasonable time to consider what was offered to him, which meant the vendor would have to show good title and answer requisitions within a reasonable time before completion. But here, there was an agreed completion date on 8 May 2012 and clause 16 of the FASP required the plaintiff to raise requisitions within 7 days of receipt of the Title Deeds. So even if the defendant were required to answer requisitions within a reasonable time before completion as suggested in Chow Yim Woon, it seems arguable that the Title Deeds should be supplied in good time ahead of the agreed completion date for requisitions to be raised and answered or alternatively (as suggested in Yeung Sau Chuen Sammy, Wong Bik Ching and Wise Mark Technology Ltd & anor) the completion date would have to be postponed to enable requisitions to be so raised and answered. 81.A further point was made by the defendant and HN that the plaintiff failed to press for the Title Deeds. However, the obligation to show and prove title was on the defendant, and I doubt whether the plaintiff had any positive duty to call for the Title Deeds. 82.But as explained in paragraph 79 above and notwithstanding the discussion in paragraphs 80-81 above, the thrust of Mr Hu’s submissions for the purpose of the Summons is not a complaint of late delivery of the Title Deeds but rather the plaintiff should have 7 days after receipt of the Title Deeds to raise requisitions even if such time period would only expire after the agreed completion date. 83.Mr Wong also submitted there was no time limit for answering the requisition raised by KBC, but for the purpose of the Summons this is again not a complaint relied on by Mr Hu. After all, HN answered the sole requisition in/about 40 minutes (see paragraph 35 above). In fact, Mr Hu’s essential complaint concerned the time period for raising (rather than answering) requisitions. 84.Thus, as at 3 May 2012 when HN delivered the Title Deeds to KBC, it is in my view quite arguable on the strength of Yeung Sau Chuen Sammy, Wong Bik Ching and Wise Mark Technology Ltd & anor that the plaintiff should (if they so wished) have 7 working days after 3 May 2012 (even if such period would extend beyond the agreed completion date on 8 May 2012) to raise requisitions. Mr Wong relied on Chow Yim Woon to suggest that time allowed for the plaintiff to consider the Title Deeds was not 7 working days but “reasonable time” which would be fact-sensitive and might vary from case to case. He argued that the plaintiff already had “reasonable time” from 3 to 8 May 2012. But in my view such argument ignores the fact that there was no contractually specified time for completion and for raising requisitions in Chow Yim Woon whereas the FASP here specified a contractual completion date (ie on or before 8 May 2012) and imposed a time for the plaintiff to raise requisitions (ie 7 working days after receipt of the Title Deeds). 85.Nevertheless, in my view, events that occurred thereafter raised a factual matrix that upon close scrutiny is arguably different from that in the three authorities relied by Mr Hu. In Yeung Sau Chuen Sammy, in the shortness of time between the late provision of the title deeds and the agreed completion date the purchaser had not been able to raise any requisition as yet. In Wong Bik Ching, requisitions raised after the late provision of some missing title deeds had not been sufficiently or satisfactorily answered. In Wise Mark Technology Ltd & anor, the facts were far removed from the present case since it involved two sets of requisitions of which the first was answered by the vendor and the second set was raised outside the 7 working days’ time limit. 86.It will be immediately evident that in the above authorities the matter of requisitions on title had not been resolved by the time of the agreed deadline for completion in those cases. But here, apart from the matter of inspection of the Property (which I shall return to below), the plaintiff and/or KBC did not of themselves have any requisition arising from the Title Deeds. In fact, the sole requisition was raised by SWL on 8 May 2012 (see paragraph 33 above) and KBC passed on such requisition to HN (see paragraph 34 above). HN answered such requisition within 40 minutes (see paragraph 35 above), and KBC adopted HN’s answer in their response to SWL’s requisition (see paragraph 36 above). Despite the reservation set out in KBC’s letter dated 8 May 2012 (see paragraph 34 above), there is no suggestion on the evidence before me that HN’s answer to such requisition was insufficient or unsatisfactory. Indeed, there was no follow up query from KBC whether on 8 May 2012 or thereafter. That being the case, question immediately arises as to whether the plaintiff by their solicitors KBC in raising the sole requisition, accepting HN’s answer thereto without any further query, and forwarding such answer as their own sufficient and/or satisfactory response to SWL’s requisition had arguably waived any entitlement they might have under clause 16 of the FASP for an extended period of 7 working days after receipt of the Title Deeds to raise requisitions. After all, the applicability of legal principles elicited from the authorities necessarily turns on the unique facts and circumstances of each case. I do not think such question can be lightly brushed aside by Mr Hu’s suggestion that it is raised with the benefit of hindsight. 87.In my view, this lays an arguable foundation for the defendant’s contention that completion should still take place on 8 May 2012 as agreed under the FASP. I note that even after HN’s letter dated 5 May 2012 (see paragraph 30 above), HN’s correspondence with KBC on 7 and 8 May 2012 in paragraphs 32 and 35 above still bore reference to the completion date as of 8 May 2012. It therefore follows there is a triable issue as to whether on the basis of the aforesaid arguable foundation the plaintiff was in wrongful repudiation of the FASP in failing to complete the purchase of the Property on 8 May 2012 and the defendant was thereby entitled to accept repudiation and forfeit the Initial and Further Deposits. 88.In my view, the aforesaid question of whether there has been any waiver must be considered in light of the factual matrix to be canvassed at trial. Likewise, the events on 10 May 2012 also raised issues that ought properly to be explored and canvassed at trial. 89.First, the terms of the KBC’s letter on 10 May 2012 in paragraph 38 above appear to be an unequivocal acceptance of the plaintiff’s repudiation and forfeiture of the Initial and Further Deposits, but subsequent letters from HN on the same day dealt with payment of the Balance Price and other conveyancing documents (eg undertaking letter and assignment) and referred to completion date of 10 May 2012 (see paragraphs 39 and 41 above). Can there be approbation of the FASP at all after what appears to be an unequivocal acceptance of repudiation already communicated to the plaintiff’s solicitors KBC? Did the defendant by HN’s subsequent letters on 10 May 2012 waive HN’s earlier letter on the same day which on its face had already accepted the plaintiff’s repudiation? The answers to these questions can only be obtained from considering such acts in the context of the relevant factual matrix as a whole. 90.Secondly, and more importantly, Mr Hu submitted that the postponed completion date is 11 May 2012. In this he relied on (a) KBC’s letter dated 5 May 2012 (see paragraph 30 above) which specifically referred to 11 May 2012 as the postponed completion date, and (b) HN’s request for the draft undertaking letter on 8 May 2012 which he argued should be read with HN’s earlier request on 3 May 2012 for such draft to be provided for approval at least 3 days before completion (see paragraph 53 above). However, HN’s letter dated 10 May 2012 in paragraph 39 above and the apportionment account annexed to HN’s letter dated 10 May 2012 in paragraph 41 above referred to completion date on 10 and not 11 May 2012. In fact, KBC’s own undertaking letter dated 10 May 2012 (see paragraph 42 above) expressly referred to the split cheques being tendered “in order to complete the purchase of the [Property] on 10th May 2012 (“the Completion date”)”. Further, KBC in their letter dated 14 May 2012 claimed that “it is clear that both parties have extended completion to the 10th May and this is evident from the caption in [HN’s] letter under reply” (see paragraph 46 above). So even if the defendant did approbate (which matter should be left for resolution at trial), this raises an immediate query as to whether the postponed completion date was 10 May 2012 (as has been referred to in inter partes correspondence) or 11 May 2012 (as claimed by Mr Hu and in KBC’s letter dated 3 May 2012). In my view, this query can only be resolved at trial and not on affidavit. 91.This query is significant because if the defendant did approbate (which matter should be tried) and further if the postponed completion date were 10 May 2012, then there is factual dispute between the parties as to whether the Balance Price was tendered on 10 May 2012 before or after 5:00pm on 10 May 2012 (see paragraph 42 above), 5:00pm being the time deadline for completion. In my view, this again is a matter that can only be resolved at trial for it requires a determination as to whether the manually operated time stamp or Mr Neo’s assertion in his affirmation represents the correct time of tender of the completion monies. 92.In all the circumstances, I am not persuaded that this is a clear and obvious case for summary judgment. The issues both factual and legal ought to be canvassed and resolved at trial. In light of the above analysis, it is not necessary for me to further consider Mr Wong’s and Mr Sheppard’s submissions that the sole requisition raised was absurd and unnecessary or that any rush of time on 8 May 2012 was caused by KBC or the plaintiff sitting on the Title Deeds before giving them to SWL only on 7 August 2012. 93.I come to the question of the inspection of the Property. The plaintiff suggested that under clauses 38 and 39 of the FASP they were entitled to request for inspection of the Property by KBC’s letter dated 3 May 2012 (see paragraph 25 above). But in fact the plaintiff well knew the Property was sold subject to a sitting tenancy as evident from clause 20 of the PASP and clause 40 of the FASP. That being the case, the defendant’s contention that the plaintiff should have known that vacant possession of the Property would not be delivered upon completion and/or they would not be able to inspect the Property does have arguable merit. Indeed, Mr Hu conceded that this point was not pursued by the plaintiff after 3 May 2012. 94.Mr Wong and Mr Sheppard also questioned whether the plaintiff was ready, willing and/or able to complete on 8 May 2012. Mr Hu accepted there was no evidence before me that the mortgage loan for payment of the Balance Price was available on 8 May 2012. However, split cheques were tendered to HN for payment of the Balance Price on 10 May 2012 suggesting that the funds were in place by that time. In light of the state of the affirmation evidence before me, the true issue is still whether completion should have taken place on 8 May 2012 notwithstanding the delivery of Title Deeds to KBC on 3 May 2012 (in which case it may be arguable that the plaintiff was not yet ready to complete) or whether completion has been postponed, and this issue has been discussed above. However, the availability or otherwise of the completion monies on or after 8 May 2012 must be relevant to the overall factual matrix for considering the triable issues. 95.In light of my above views, it is also unnecessary for me to consider Mr Wong’s and Mr Sheppard’s arguments as to why specific performance is not an appropriate remedy even if the plaintiff were able to establish breach of the FASP on the part of the defendant (see paragraphs 65 and 66 above). 96.In the circumstances, I agree with the decision of the learned master and dismiss the appeal against the Order. I grant a costs order nisi that the costs of the appeal be the defendant’s and HN’s costs in the cause in respect of the main action in these proceedings to be taxed if not agreed. This means that if the defendant succeeds in her defence in the main action, both the defendant and HN will recover costs of this appeal against the plaintiff. Although HN is the third party, they were granted leave to participate in the Order 14 proceedings in the main action, and they have successfully assisted the plaintiff’s application for summary judgment.
Mr Derek Hu, instructed by K B Chau & Co, for the plaintiff Mr Brian M W Wong, instructed by Carol Lam & Co, for the defendant Mr Andrew Sheppard, instructed by Hoosenally & Neo, for the third party |
Cases cited in this judgment
Further hearings and rulings under HCA 812/2012