LIFTON INVESTMENT LTD v. PANG CHOR YING ANNIE

[A vendor under a contract for the sale of land cannot insist on completion on.the date fixed for completion unless he is himself then ready, willing and able to perform his part of the contract. If, therefore, the property the subject of the contract of sale includes chattels, and the vendor removes some of those chattels between the date of the contract and the date fixed for completion, the purchaser is entitled to refuse to complete the purchase unless those chattels are replaced; and the vendor is not entitled to treat the purchaser's refusal to complete unless the chattels are replaced as a repudiation of the contract by the purchaser].

1990 No. A2346

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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J U D G M E N T

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1. In this action, a vendor and purchaser have become embroiled in a dispute which blew up on the date fixed for completion of the transaction because the vendor, having agreed to include in the sale certain items of furniture, was said by the purchaser to have removed them from the premises, thus entitling the purchaser to refuse to complete until the missing items of furniture were replaced.

2. The facts are as follows.

3. The contract was a contract for the sale to the plaintiff ("the purchaser") by the defendant ("the vendor") of Flat C, 31st Floor, Glory Heights, No. 52 Lyttelton Road, Hong Kong ("the property") together with certain items of furniture. The date of the contract was 17th February 1990. The purchase price was $2,140,000. An initial deposit of $20,000 had been paid by the purchaser to the vendor before the contract was signed. A further deposit of $194,000 was paid by the purchaser, on the signing of the contract, to the vendor's solicitors as stakeholders. The balance of the purchase price was accordingly $1,926,000. -This was to be paid by the purchaser to the vendor before 5 o'clock in the afternoon on the day fixed for completion, which was 15th March 1990. The contract provided that time should, in every respect, be of the essence of the agreement.

4. So far as the items of furniture which I have already mentioned are concerned, the position is governed by Clause 8 of the contract. This is divided into two parts, A and B. B is itself divided into three parts: (a), (b) and (c); (c) is irrelevant and I shall not read it. Clause 8 reads as follows:

"8.A. Vacant possession of the Property including such furniture, fixtures and fittings (if any) more particularly described in Part VIII of the Schedule hereto shall be given to the Purchaser on Completion.

B. (a) It is hereby agreed and declared that the Vendor will sell and the Purchaser will purchase the Property together with the said furnitures, fixtures and fittings now installed in the Property without any addition of purchase price.

(b) The Vendor shall deliver and hand over to the Purchaser the said furniture, fixtures and fittings mentioned in sub-clause (a) hereof in good repair and, condition on the date of delivery of vacant possession to the Purchaser as mentioned in sub-clause A hereof (fair wear and tear excepted).'

(c) ................,

5. Part VIII of the Schedule contained a list of the items of furniture included in the sale under the heading "Furniture, Fixtures and Fittings". These were: (1) three air-conditioners; (2) one refrigerator; (3) one washing machine; (4) one bed; and (5) one table with four chairs.

6. The contract contained a provision to the effect that the agreement was to supersede all previous agreements whether oral or in writing, expressed or implied, made by the parties or their agents.

7. On 26th February 1990, before the date fixed for completion, the purchaser sub-sold the property and the items of furniture to one Yuen Hei Yeung, John ("the sub-purchaser"). The sub-sale price was $2,330,000, an improvment of $190,000 on the price to be paid by the purchaser.

8. The history of the transaction before 17th February 1990 is as a matter of law, irrelevant. But I have received evidence, which I accept, that there had been some discussion between a director of the purchaser on the one hand, and the vendor on the other hand, about furniture. I find that although the purchaser was pressing for certain items of furniture to be included in the sale, the vendor was uninterested. Her position was that if there were any items of furniture which she did not want, on the date fixed for completion she would simply leave those items of furniture behind. Nevertheless, it is the case that she executed the agreement of 17th February 1990 and, quite rightly, no attempt has been made to suggest that she is not bound by its terms, including those which related to the furniture.

9. I am satisfied, having heard evidence about the matter, that the vendor was aware that the sale was to include the listed items of furniture. The list is not such as clearly to identify the items; but as counsel for the purchaser pointed out, the items are described as items "now installed in the Property". The antecedent of "now" in this description must be 17th February 1990, the date of the contract. The vendor's own evidence was that the refrigerator, which was item 2 in the list, and the one table with four chairs, which was item 5 in the list, were items of furniture which were in the property on 17th February 1990, but which she had removed from the property by 15th March 1990, the date fixed for completion. I am sure that this was entirely innocent, and that, consistently with her previous attitude, the vendor had formed the view that the matter of the furniture was really of no great importance.

10. Nevertheless, the fact remains that, on 15th March 1990, the refrigerator, and the dining table and the four chairs, included in the sale were no longer in the property because they had been removed. That was a fact that was discovered by a director of the purchaser, when, on 15th March 1990 he received the keys as part of the process of completion; attended at the property; and found these items of furniture missing. He immediately alerted his own solicitors to the problem and they contacted the solicitors for the vendor. There were a number of telephone conversations between the conveyancing clerks on either side; the details are of no importance.

11. The end result was that completion was aborted. Although the purchaser had tendered cheques at the request of the vendor to discharge the obligation to pay the purchase price, and although the purchaser had tendered, for execution by the vendor, an assignment which would have assured the property via the purchaser to the sub-purchaser; and although the keys of the property had been passed to the purchaser, all as part of the process of completion, by 5 o'clock the whole process had juddered to a halt, the purchaser indicating that it was not prepared to complete while the matter of the missing items of furniture remained unresolved. The purchaser's solicitors confirmed this by a letter dated 15th March 1990, a facsimile of which was trasmitted a few minutes after 5 o'clock to the vendor's solicitors. It was in these terms:-

"We refer to our letter to you of even date enclosing therewith four cheques for the total sum of $1,926,475.00 being balance of purchase price and your costs and disbursements.

We wish to draw your attention to the fact that your client is in breach of the terms and covenants contained in the Agreement for Sale and Purchase dated the 17th February 1990 entered into between our respective clients. As you understand, the purchase price shall also include the furniture, fixtures and fittings as more particularly described in Part VIII of the said Agreement. It comes to our client's notice that your client has replaced a damaged refrigerator in the said premises and that your client has also removed the furniture under item 5 of Part VIII of the said Agreement for Sale and Purchase.

In the circumstances, we are instructed by our client to give you notice, which we hereby do, that you are requested to withhold all the balance of purchase price and not to release same to your client unless and until your client has fulfilled her obligations under the Agreement for Sale and Purchase."

12. This letter was plainly not a letter which evinced an intention on the part of the purchaser no longer to be bound by the contract. On the contrary, it was an assertion by the purchaser that it regarded the contract as still subsisting and regarded the vendor as under an obligation to replace the missing items of furniture so that the contract" could be carried into effect in accordance with its terms.

13. Nothing that the purchaser had done or said prior to this letter, and nothing in the letter itself can, in my judgment, be construed as a repudiation of the contract. Of course, if there had been noting in the purchaser's point, and if all the furniture had been present on the property when completion was due to take place, the conduct of the _.purchaser would have amounted to a repudiation because the purchaser would then have failed to perform its most important duty, of coming up with the purchase money by 5 o'clock. (The purchaser's solicitors had made it plain that any authority the vendor's solicitors might have had to present the cheques for payment was withdrawn, in the light of the events which had happend, so the situation is the same as if the cheques had never been tendered at all.)

14. Was the purchaser entitled to act as it did? In my judgment, it was. The fact is that these items, i.e., the refrigerator and the table and the four chairs, were missing from the property when the purchaser inspected it just before 5 o'clock on the date fixed for completion. The result is that the vendor cannot say that she was ready, willing and able to complete the contract in accordance with its terms; accordingly she was not entitled to demand completion by 5 o'clock. The vendor, however, did not see the matter in' that way. She instructed her solicitors to write a letter on 16th March 1990, denying any breach of the terms and conditions of the agreement dated 17th February 1990; returning the assignment and the purchaser's cheques; calling for return of the keys; and purporting to forfeit the purchaser's.deposit. That letter of 16th March 1990 was plainly a repudiation of the contract, which was, as I have held still subsisting. In those circumstances, the purchaser, still willing to complete the transaction, instituted this action for specific performance.

15. However, before the matter came to trial, arrangements were very sensibly made whereby the sale and sub-sale were completed, and $190,000, representing the improvement on the purchase price, was put on ice to await the result of the action. If the purchaser was to win theaction the $190,000 would be released to the purchaser. Further, the purchaser would be entitled to an adjustment in the price or - if it becomes neccesary to describe it in this way - to damages for the failure of the vendor to give to the purchaser title to the missing items of furniture.

16. Since I have held that the purchaser did not receive the missing items of furniture, and that the vendor was mistaken in assuming that she was entitled to forfeit the purchaser's deposit, the action succeeds. The purchaser is entitled to the release of the $190,000, and to compensation for the missing items of furniture which the purchaser had agreed to buy and the vendor had agreed to sell. The parties have senibly agreed that the value of this furniture should be assessed at $9,000. Accordingly, I shall make an order which enables the purchaser to have released to it the $190,000, and an order for payment by the vendor to the purchaser of $9,000, the agreed value of the furniture. The vendor must pay the purchaser's costs of the action.