SHIRANNE HOLDINGS LTD v. NEW ASIA ASSOCIATES (HK) LTD

HCA 2125/2008

IN THE HIGH COURT OF THE

HONG KONG ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2125 OF 2008

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(Heard together)

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R U L I N G

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1.  The Plaintiff is the purchaser in respect of two properties, namely 31st floor and 32nd floor, Billion Plaza, No. 8 Cheung Yue Street, Cheung Sha Wan, Kowloon, Hong Kong.

2.  The Defendant in HCA 2125/2008, New Asia Associates (HK) Limited, is the vendor of the property on the 31st floor, and the Defendant in HCA 2126/2008, Sky Fox Investment Limited, the vendor of the 32nd floor.

3.  I have before me two summonses taken out by the Plaintiff pursuant to Order 86 for summary judgment on the ground that the Plaintiff has lawfully terminated the respective agreements for sale and purchase of these properties.

4.  Both Defendants have entered into voluntary liquidation.  The liquidators have not appeared at the hearing today.  They have previously indicated that they did not possess knowledge of the affairs of the Defendants to enable them to put forward a defence on their behalf.  The liquidators have also indicated that they would neither consent nor oppose the Plaintiff’s present applications.  They would not take any substantive steps in these proceedings and would abide by any court order made at the hearing.

5.  Neither the liquidators nor the Defendants have filed evidence for the purpose of this hearing.

6.  The two agreements in question are both dated 22 July 2008.  Under the agreements, the purchase price for each of the properties was stated to be $40 million, and a deposit of $20 million was payable in respect of each of the properties.  The completion date stated in both agreements was 22 October 2008, and in each case there was a provision to make time of the essence of the performance of the agreement.

7.  The deposits for both properties were duly paid by the Plaintiff by way of two cheques on 22 July 2008.  In the course of investigating title of the properties, the Plaintiff’s solicitors have raised certain requisitions with respect to title.  It appears from the evidence that because of the possible defects in the title, there had been negotiations between the parties for a downward adjustment of the purchase price for both properties.

8.  On 21 August 2008, the parties entered into two supplemental agreements for the respective properties by which the purchase price for each property was reduced from $40 million to $37.5 million.

9.  There has been correspondence between the legal representatives of both parties.  Eventually on 6 October 2008, provisional liquidators were appointed for U-Right International Holdings Limited, the ultimate holding company of the Defendants.

10.  On 20 October 2008, the provisional liquidators of U-Right wrote to the Plaintiff’s solicitors, telling them that they (the provisional liquidators) had taken control of the affairs of the respective Defendants.  The provisional liquidators also indicated that they desired to investigate into the transactions for the sale of these properties.  In the same letter, they further intimated that the Defendants would not proceed to complete the transactions on 22 October.

11.  The completion of the transactions did not take place on 22 October.  On 23 October, the Plaintiff’s solicitors wrote to each of the Defendants (and copied to the solicitors for the liquidators) intimating that because of the Defendants’ non-completion of the sale of the properties, the Plaintiff had accepted the Defendants’ wrongful repudiation of the agreements.

12.  In the evidence put before me there is nothing to indicate that the Defendants had any good reason or justification not to proceed to complete the transactions.  Accordingly, I find that the non-completion on their part amounted to wrongful repudiation of the respective agreements.

13.  I am satisfied that the Plaintiff is entitled to summary judgment against both Defendants in the respective actions.

14.  As for the relief, Mr Law for the Plaintiff has put before me a draft order in HCA 2125/2008.  I would make an order in terms of paragraphs 1, 2, 3, 4 and 5 under “The Orders”, and I would make a declaration in terms of paragraph 2 of the draft order under “Declarations”, but with the deletion of the words on the third line from “or otherwise” onwards to the fifth line, including those words “of the agreement”.

15.  I would also make an order in similar terms mutatis mutandis in HCA 2126/2008 in respect of the transaction of the 32nd floor.