Promotion Bus Ltd v. Chan Sik Ping and Another
Read the full judgment text of HCA 1467/2011 on BabelCite. This High Court CFI judgment was delivered on 5 September 2013.
1. Before me is an application for summary judgment.
Cited by 2 cases · Cites 1 case
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HCA 1467/2011 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1467 OF 2011 ____________ BETWEEN
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____________________ J U D G M E N T ____________________ Introduction 1.Before me is an application for summary judgment. 2.The action is in relation to certain agreements for the plaintiff to buy and the defendant to sell 9 buses. Completion of the sale failed to take place on the completion date stipulated in the agreement, nor on a subsequent date named in correspondence by the defendant giving 3 days of notice to the plaintiff to complete the purchase. The defendant by notice on the subsequently named completion date terminated the agreement and forfeited the deposit paid. The plaintiff took out the present action claiming for, inter alia, specific performance, or delivery up and/or transfer of the buses together with the corresponding passenger service licences, alternatively for the return of the deposit and for damages for wrongful repudiation. 3.The summons for summary judgment was issued on 27 September 2011, within a month of the issue of the writ endorsed with the statement of claim. Prior to the issue of the Order 14 summons no defence has yet been filed. 4.For the purpose of the application for summary judgment, the plaintiff has indicated that paragraphs 1 to 5 inclusive of the prayer for reliefs in the statement of claim are not pursued. In essence, the substantive reliefs sought by the plaintiff are now confined to the return of the deposit and damages. Undisputed Facts 5.The following are undisputed facts gleaned from the Statement of Claim and the inter partes correspondence in evidence:
Terms of the Preliminary Agreements 6.Clause 2 of each of the Preliminary Agreements provide as follows –
7.Clause 4 of the agreement enumerates 6 types of documentation required to be provided by the vendor to the purchaser to enable the purchaser to complete the process of the transfer of the vehicle licence and the passenger service licence, as well as a certificate regarding the previous ownership of the vehicle for the purchaser to arrange for finance. Terms of the Consolidated Agreement 8.In the preamble of the Consolidated Agreement it is stated that the parties have agreed that the vendor (the defendant) will transfer the partnership business of the vendor carried on under the name of “Professional Company (專業公司)” to the purchaser (the plaintiff), together with the goodwill of the said partnership business and all rights and interests and benefits of the business upon the completion of the sale and purchase of the buses. 9.The Consolidated Agreement contains, inter alia, the following terms –
Principles applicable to Summary Judgment Application 10.The following are well-established principles on applications for summary judgment –
Whether the Preliminary Agreements Remained in Effect 11.It is an issue in dispute whether the three Preliminary Agreements were superseded by the Consolidated Agreement. The plaintiff argues that the Preliminary Agreements continued to apply alongside the Preliminary Agreement. The defendant, on the other hand, argues that the Preliminary Agreements were superseded by the Consolidated Agreement, and the latter was the only binding contract prior to its termination on 1 August 2011. 12.The significance of this issue turns upon the plaintiff’s plea that the defendant has “failed or refused” to provide the plaintiff with “the necessary documents for completion, including but not limited to the documents referred to under §6(3) of the Statement of Claim”, in terms which were extracted from clause 4 of each of the Preliminary Agreements. 13.The defendant disputes the presence of such an obligation. The defence case is that under the Consolidated Agreement, what it was obliged to provide to facilitate transfer of the vehicles and their corresponding passenger service licences upon payment of the full purchase price have either been duly provided well before the date of completion, or would be provided upon completion, which was what clause 5 of the Consolidated Agreement required. 14.In §§ 14-15 of the Statement of Claim the plaintiff also referred to “repeated demands and requests” for the allegedly outstanding documents, which the defendant also disputes. 15.The defendant relies on the contents of the letters from the plaintiff’s solicitors as referring only to the Consolidated Agreement, and the evidence contained in the Affirmation of Yuen Yuk Tong Harry made on behalf of the plaintiff where he explained at length that the Consolidated Agreement became necessary due to the plaintiff’s inability to obtain funds in time for the original completion dates. Such evidence was said to be consistent with the provision in Clause 19 of the Consolidated Agreement making the plaintiff bear the costs thereof. Inferences were sought to be drawn from such evidence as to the status of the latter agreement in the eyes of the plaintiff and its solicitors. 16.In view of the parties’ conflicting stance on the status of the Preliminary Agreements, and in particular on the applicability and compliance of Clause 4 of the Preliminary Agreements, I do not find it appropriate for this court to conduct a mini-trial of the evidence or to decide on which view of the evidence to prefer. This is an issue to be resolved at trial. Whether the Defendant has Provided the Necessary Information to the Plaintiff 17.This is one of the most contentious issues in the action, and is at least partly dependent on any finding to be made at trial on the preceding issue identified. On the one hand, the plaintiff argues that its failure to complete on the stipulated date was due to the defendant’s default in providing the information it was contractually required to provide. 18.Further, one of the reasons the plaintiff relies on to say the notice to complete on 1 August 2011 is unreasonable is that the defendant was the party in default, and was not entitled to give such notice in an attempt to make time of the essence for completion under the Consolidated Agreement: Halsbury’s: as of Hong Kong, Vol 7 (2007 Re-issue) [115.292] and [115.296]. In Green v Sevin (1879) 13 Ch D 589, the long delay caused by the vendor disentitled him to limiting time for completion to a short interval in a notice to complete. 19.On the other hand, the defendant reads the late query of 29 June 2011 as but an excuse to delay completion, and that it was a complaint without substance to forestall completion in the absence of sufficient funds to complete. It stands by its substantive response to the query raised as contained in the letter of 13 July 2011, and rely on the absence of any further issue or questions raised on procedure as indicating that the last-minute query was disingenuous. The defendant further relies on the evidence of Tse Kwan Yin that between 27 to 28 June 2011, Mr Yuen of the plaintiff has informed him that the plaintiff had not been able to obtain the necessary financial assistance from finance companies to fund the purchase. Mr Tse’s evidence was that he was surprised to learn about the plaintiff’s query on procedure for completion and transfer as Mr Yuen was known as an experienced businessman in the field with particular experience in this type of transactions in the past. On the other hand, Mr Yuen denies that he or his brother has ever spoken to Tse on 27, 28 or 30 June 2011. 20.In view of the above, I am unable to dismiss this issue as not a triable one. I also bear in mind that there was no exchange of correspondence in the weeks running up to 29 June 2011 on the topic. The affidavit evidence did not help make the issue any less triable. Alleged Trade Practice regarding Discharge of Vendor’s Mortgage 21.The plaintiff pleads in §§13(2) and (3) of the Statement of Claim and relies on the existence of a practice in the trade to complete the conveyancing of vehicles by redeeming the vendor’s mortgage of the vehicles by the purchaser’s mortgaging financial institution directly. This is disputed by the defendant, whose evidence is that the practice was for the respective finance companies of the purchaser and the vendor to liaise between themselves to settle any outstanding sum. Extensive conflicting evidence were filed by both parties on this topic. 22.Further, the defendant regards this as yet another excuse put up to delay completion. The defendant points out that this alleged default was not even referred to in the letter of 29 June 2013, and therefore could not have been the real reason for not completing. The Court’s attention was drawn to the six letters that followed dated between 30 June 2011 to 3 August 2011, where the vendor’s mortgage or the necessity for related information was still not raised. The allegation of default in this regard was only first raised in a letter dated 6 August 2011. 23.The alleged practice in the trade is relied on as the foundation of the requirement for the details of the existing mortgage arrangement of the subject vehicles to be tendered prior to completion. The existence of such a practice is hotly disputed. The related commercial efficacy of the practice as alleged by the plaintiff is not apparent on the conflicting evidence. 24.I find that the existence or otherwise of the alleged trade practice, and the precise scope of the requirement with regard to provision of related documents to the purchaser as is alleged to arise by implication, are yet further issues which ought to be tried. Whether the Defendant was Entitled to Insist on Completion on 1 August 2011 25.This issue turns upon whether the notice to complete given on 29 July 2011 was reasonable. The plaintiff’s case, as set out in §19 of the Statement of Claim, is that it was plainly unreasonable due to –
26.As said in Crawford v Toogood (1879)13 Ch D 153 at 158 (per Fry J), when a notice purports to make time of the essence, the question is whether that notice was or was not a reasonable one. The question of reasonableness must be determined as at the date when the notice is given, and the court must consider the state of things when the notice was given. It is also necessary to consider what remains to be done to complete the purchase. 27.In my view, the events as reflected in the inter partes correspondence leading up to the giving of the notice are all relevant circumstances to be taken into account. In my view the correspondence exchanged between the parties’ solicitors between 29 June 2011 to 21 July 2011, and the lack of any meaningful response to the 21 July 2011 letter, was evidence capable of being relied on to demonstrate that there was simply no expectation of the necessary financial means in sight for the plaintiff to be able to complete the purchase, and the plaintiff was merely buying time indefinitely. 28.The main complaint is about the shortness of time. As regards venue and manner of completion, I do not see they are factors that will tip the balance on reasonableness. 29.The contemporaneous correspondence shows that the agreed completion date was forestalled by a last-minute lengthy general inquiry on procedure that came as a surprise. When the query was responded to substantively, the defendant also afforded the plaintiff the opportunity to demonstrate that there was a genuine intent to complete and the query was not just stalling tactic. However, the plaintiff sought an unduly long period for responding. When the moderately extended deadline came on 20 July 2011, the plaintiff cited other reasons for not providing such proof. When pressed further on the same day, the plaintiff made some bare assertion of availability of financial support with no documentary proof at all. 30.On the day prior to the date of the notice to complete, a 7-day period giving the plaintiff yet another opportunity to tender proof of its means to complete the purchase had again expired. There was no reply to this last invitation. The notice to complete within 3 days was issued in those circumstances. 31.I have already found that the allegations of default in providing various documents on the part of the defendant are triable issues, as is the existence and purport of the alleged trade practice giving rise to an implied obligation to produce some of them. When the correspondence exchanged between the parties is considered in the light of other points under the preceding headings, it is clear that there are triable issues as to the reasonableness of the notice bearing in mind the then current state of affairs. Whether the plaintiff is entitled to rely on the defendant’s alleged act of repudiation of 1 August 2011 32.Finally, the defendant argues that the act of repudiation now relied on by the plaintiff was an alleged breach that was not accepted by the plaintiff. By a letter dated 2 August 2011, the plaintiff’s solicitors purported to name a new completion date of 19 August 2011. When that was rejected on the basis that the agreement was at an end since 1 August 2011, a further letter was written in response proposing completion 5 days after provision of the documents said to be necessary. 33.In the circumstances, the defendant says that it was no longer open to the plaintiff to rely on the unreasonable completion notice and forfeiture of the deposit as acts of repudiation. 34.I am prepared to accept that this is an arguable defence on the merits that the defendant should be allowed to explore at trial alongside other issues. Conclusion 35.It follows that the plaintiff is not entitled to summary judgment. 36.The defendant urges upon me that it is a case where no application for summary judgment should have been taken out, and invite me to dismiss the summons with costs. Alternatively, it is said that the application should not have been proceeded with once the defendant’s evidence has been read. 37.If the matter is one in which the plaintiff ought to have known before the issue of the summons that the defendant has an arguable defence that would entitle it to unconditional leave to defend, he cannot properly invoke the jurisdiction of the court under O 14 to give him summary judgment, for neither he nor anyone on his behalf can make the affidavit in support stating that “in his belief there is no defence to the claim…”: Hong Kong Civil Procedure 2013 Vol 1 14/7/3. 38.In the present case, most if not all of the parties’ respective arguments and the stance they take in respect of the matters in dispute were extensively set out and rehearsed in the series of correspondence exchanged prior to the date of the writ. There were serious disputes over the issues, which were known to the plaintiff and those acting on its behalf. While the plaintiff may take a certain view on the reasonableness of the notice of completion, it was not unknown to them that the facts and circumstances against which reasonableness is to be judged were in dispute. 39.In the circumstances of this case, I am driven to the view that it is not an appropriate application to be made under O 14, and the jurisdiction of the court to grant summary judgment ought not to have been invoked. 40.The plaintiff’s summons is dismissed. 41.There will be a costs order nisi for the costs of this application to be paid by the plaintiff to the defendant, with certificate for Counsel. I would also order gross-sum assessment pursuant to O 62 r 9A, and for this purpose I give leave to the defendant to file its Statement of Costs within 14 days hereof, and for the plaintiff to file its Statement of Objections within 7 days thereafter.
Mr WS Lee of WK To & Co, for the plaintiff Mr Allen MY Lam, instructed by Ko & Chow, for the defendant |
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