Read the full judgment text of CACV 205/2012 on BabelCite. This Court of Appeal judgment was delivered on 14 June 2013 before Fok JA, Lam JA, McWalters J.
Civil appeal – contract law – sale and purchase of property – summary judgment under O.14 – abuse of process – extended doctrine of res judicata – re-litigation of decided issues – mental capacity of contracting party – dementia – liquidated damages clause – repudiation by anticipatory breach – property at No. 31 Robinson Road comprising Flats 38A, 38B and car parks 215, 216, 217 and 218 – sale price HK$124,865,000 – De Monsa failed to complete – King's City served notice to complete and then notice of termination – resold for HK$100,000,000 – King's City claimed HK$9,407,940 in damages – three defences raised by De Monsa: (1) Lauw Senior, De Monsa's controlling director, was suffering from dementia when he signed the agreement so it was not binding, (2) King's City disabled itself from performing by pre-selling car park 218 to Wong, and Flat 38B and car park 215 to Tin Chak Enterprises, (3) clause 17(3) proviso precludes claim because the relevant resales took place outside the 6-month resale period – whether clause 17(3) proviso excludes common law claim for damages – held: clause 17(3) is a liquidated damages clause and does not exclude common law damages, following Woomera Co Ltd v Provident Centre Development Ltd and Goldspeed Investment Ltd v Easy Success Enterprises Ltd – Diamond Jubilee Investment Ltd v Chan Yiu Chung Sidney also confirmed it is a liquidated damages clause and not a penalty – clause provides an alternative remedy, not an exhaustive statement of the vendor's rights – King's City can claim common law damages at the assessment of damages – whether pre-sales to Wong or Tin Chak amount to repudiation – held: no – the test from Alfred C Toepfer International GmbH v Itex Itagrani Export S.A. applies, requiring inability to perform rather than merely inconsistent obligations – subsequent equitable interests cannot defeat De Monsa's prior equitable interest under the rule that where equities are equal, the first in time prevails – whether De Monsa's attempt to re-litigate Lauw Senior's mental capacity is an abuse of process – held: yes – extended doctrine of res judicata applies per China North Industries Investment Ltd v Chum and Calyon v Michailaidis – Probus actions (HCA 167/2009 and HCA 1004/2009) had determined that Lauw Senior was not suffering from dementia and had the mental capacity to enter into property transactions in the period from October 2007 to July 2008, which encompasses the 25 March 2008 PS&PA – Reyes J at first instance and Tang VP on appeal both found the evidence of mental capacity overwhelming – 25 March 2008 PS&PA falls within the same material period – same evidence in substance relied upon – two additional medical items (Dr Norman Chan's 22 June 2012 letter and Professor Cheung's 19 June 2012 report) added nothing of substance – allowing re-litigation would bring the administration of justice into disrepute contrary to the public interest in the finality of litigation and the proper use of judicial resources – potential for the same issue to be tried repeatedly on the same evidence across multiple actions involving the De Monsa Group – many property transactions in the Group were terminated by non-performance – no special rule for defendants compared to plaintiffs in the abuse of process analysis – striking out the defence is a proper exercise of the court's power in the circumstances – appeal dismissed – order nisi that De Monsa pay the costs of the appeal to King's City, to be taxed if not agreed.
Legal issues: Construction and effect of clause 17(3) proviso · Whether pre-sales to third parties constituted repudiation · Whether re-litigation of Lauw Senior's mental capacity is an abuse of process
Outcome: Appeal dismissed. The judgment of Reyes J granting summary judgment on liability to King's City with damages to be assessed is upheld.
Cited by 1 case · Cites 3 cases