TREASURE MILES LTD. v. LUCKY POOL LTD.

1997 No. MP3435

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS

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J U D G M E N T

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1. This is a vendor and purchaser summons taken out by the purchaser. It concerns a property known as Suite No. 18 on Level 3 and Car Park Space No. 5 on Level 6, Elite Villas, No. 22 Shouson Hill Road, Hong Kong ("the Property"). Elite Villas has for the common use of its residents a swimming pool with an adjacent building serving it. I will refer to that swimming pool and that building together as "the Swimming Pool". As we shall see the only requisition now relied upon by the purchaser relates to the Swimming Pool.

2. The purchase price was $21.5 million. By the time when the agreement for sale and purchase ("the Agreement") was signed on 17th June 1997, the purchaser had already paid $1.1 million by way of initial deposit and part payment of the purchase price. Upon the signing of the Agreement, it paid a further $2.125 million by way of further deposit and part payment. $18.275 million, being the balance of the purchase price, was to be paid upon completion. Completion was to be on or before 3rd September 1997.

3. None of that $18.275 million was paid. Completion has not - and will not - take place.

4. A number of requisitions on title were raised by the purchaser. The purchaser has refused to complete: rightly it says; wrongly the vendor says.

5. As I have indicated, only one requisition on title is now relied upon by the purchaser with the view to justifying its refusal to complete, and it relates to the Swimming Pool.

6. That requisition was raised in the following way in a letter dated 22nd August 1997 from the purchaser's solicitors to the vendor's solicitors:

"2. In Modification Letter Memorial No.4529115 (copy enclosed), it stipulates that the Lessee shall not erect or construct ... any structures or structures within the pink hatched black area of Plan A annexed thereto except with the prior written approval of the Director of Buildings and Land.

Upon perusal of the said Plan and the Block Plan annexed to Assignment Memorial No.5753275 (copy enclosed), we note that a swimming pool and a building was erected on the Pink hatched black area. Please therefore let us have the said written approval of the Director of Buildings and Lands for our perusal.

3. Please also let us have documentary evidence to show that the conditions proposed by the said Modification Letter have been complied with."

7. The first point taken by the vendor against that requisition is that it is out of time. Clause 9 of the Agreement provides:

"Any requisition or objection in respect of the title shall be delivered in writing to the Vendor's solicitors within SEVEN (7) WORKING DAYS after the receipt of the title deeds by the Purchaser's solicitors otherwise the Purchaser shall be deemed to have waived its right to raise requisition or objection (in which respect time shall be of the essence)."

8. It is not in dispute that the title deeds were received by the purchaser's solicitors on 10th July 1997 and that the time for raising requisitions expired on 18th July 1997. I have considered the cases cited by counsel and their arguments thereon. I am satisfied that there is no case which prevents the operation of Clause 9 according to its plain wording. Accordingly, I hold that the purchaser is deemed to have waived its rights to raise the requisition which it now seeks to rely upon.

9. That is sufficient to dispose of the issue in the vendor's favour. But in any event, it can be seen that, quite apart from being too late, the requisition is groundless on its merits. That can be explained quite briefly.

10. When the vendor's solicitors wrote to the purchaser's solicitors on 26th August 1997 in reply to their letter of 22nd August 1997, they did not only take the point on time but also said :

"Please note that occupation permit has been issued by the Director of Buildings and Land which are self-evident of compliance of the modification letter."

11. In the course of argument, counsel for the vendor, emphasising the justice and commercial sense of time limits for the making of requisitions, pointed out that the building plans for Elite Villas which the Building Authority approved show the Swimming Pool. (At the material time, the Building Authority was of course the Director of Buildings and Lands by virtue of s.2 of the Buildings Ordinance, Cap. 123.) Had the requisition been made in time, all of this could have been pointed out, if it needed pointing out.

12. In the result, I hold that the purchaser is in repudiatory breach of the Agreement. The total of $3.225 million already paid to the vendor exceeds 10% of the purchaser price by $1.075 million. Clause 26(a) of the Agreement provides as follows:

"If the Purchaser shall fail to observe or comply with any of the terms and conditions contained herein or if the Purchaser shall fail to make payment of the balance of purchase price or any part thereof on or before the Completion Date, then 10% of the purchase price already paid to the Vendor as deposit shall be absolutely forfeited to the Vendor who may also retain any balance of such deposit as security for damages which may be suffered by the Vendor as result of the Purchaser's failure aforesaid and the Vendor may thereupon by notice given to the Purchaser but without tendering an Assignment to the Purchaser determine this Agreement. Notwithstanding the said forfeiture, the Vendor shall also be entitled to claim against the Purchaser for any damages arising from the Purchaser's breach of this Agreement."

13. Save to the extent of that $1.075 million the money already paid to the vendor is forfeited to it; and it is entitled to retain that balance of $1.075 million as security for the damages which it seeks by way of counterclaim. In paragraph 14 of the Affirmation dated 2nd December 1997 of its director Lai Wan-yan, the vendor says this as to its entitlement to damages by way of counterclaim:-

"Due to the breach of the Agreement by the [purchaser], the [vendor] has suffered the following losses and damages:-

		Amount
(1)	Differences between the contract price and the market value of the Property as at 3rd September 1997 or within a reasonable time thereafter	to be assessed
(2)	Agents' commission	$215,000.00
(3)	Legal costs for handling the sale	$43,665.00
(4)	Rates for the Property since 3rd September 1997	$9,485.00 per quarter
(5)	Management fees for the Property in 3rd September 1997	$6,285.00 per month
(6)	Interest on mortgage repayment since 3rd September 1997	varies
(7)	Loss of interest on the amount of the balance of purchase prices in excessive of the redemption money since 3rd September 1997	varies"

14. I am satisfied that the vendor is entitled to an assessment of such damages. In that regard, there is in this case an Order of Yuen J. dated 17th December 1997 which provides as follows in paragraph 2:

"That [after the filing of the purchaser's Affidavit in reply] parties be at liberty to apply in writing to Court for a date to be fixed for full hearing of the Originating Summons with an agreed estimate of length of the hearing save that assessment of the quantum of damages on the Defendant's counterclaim be left to a Master;"

15. Accordingly the assessment of the damages suffered by the vendor will be before a Master as per Yuen J's Order.

16. I will now hear the parties as to costs and any directions which may arise.

(V. Bokhary)

Judge of the Court of First Instance,
High Court