CAREFUL CHOICE ENTERPRISES LTD v. CHAO ARCHAMBAUD PERCY

                 HCA 1525/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

ACTION NO. 1525 OF 2003

Before : Hon Sakhrani J in Chambers

Date of Hearing : 2 September 2004

Date of Judgment : 2 September 2004

J U D G M E N T

1.  This is an appeal from the order of Master Woolley made on 4 February 2004.  By his order he gave judgment in favour of the plaintiff in Order 14 proceedings in the sum of HK$13,117,919.20 with interest and costs of the action and the application to the plaintiff with certificate for counsel. 

2.  The hearing of the appeal first came before Deputy Judge To on 1 April 2004.  At that hearing the defendant applied by summons for leave to file a supplemental affirmation as well as a re-amended defence.  The judge gave leave to the defendant to file his supplemental affirmation and to file his re-amended defence a copy of which was attached to the summons.  The appeal was therefore adjourned to a new date to be fixed and costs were ordered against the defendant on an indemnity basis.  The hearing before me is the adjourned hearing of the appeal. 

3.  The plaintiff’s claim as pleaded is that as evidenced by two letters both dated 4 March 2002 and by conduct, the plaintiff agreed to sell and one Constrajaya Sdn. Bhd. (“CSB”) of Kuala Lumpur, Malaysia agreed to purchase the properties namely, Units 106, 107, 206, 207, 306 and 307 of Lot 14C, JB Waterfront City, Jahor Bahru, Malaysia (“the Premises”) at a total price of HK$14,117,919.20 (“the purchase price”) subject to, inter alia, the following terms and conditions :-

(a)          as a condition precedent, CSB should procure the defendant to execute a personal guarantee in favour of the plaintiff to guarantee the full payment of the purchase price and to indemnify the plaintiff for all loss and damage;

(b)          the purchase price should be paid by CSB by the instalments as pleaded in the amended statement of claim.

4.  In consideration of the plaintiff agreeing to sell and CSB agreeing to purchase the Premises, the defendant by a letter also dated 4 March 2002 confirmed and agreed to indemnify the plaintiff that in the event that any instalment payment of the purchase price was unpaid by CSB, the defendant shall be liable to pay the remaining outstanding balance of the purchase price to the plaintiff.

5.  CSB paid the first and second instalment payments in the total sum of HK$1,000,000.00.  However, it failed to pay the balance of the purchase price in the sum of HK$13,117,919.20 or any part thereof.  Therefore, the defendant became liable to pay the plaintiff the balance of the purchase price in the sum of HK$13,117,919.20.  Despite demands the defendant failed to pay the said sum and these proceedings were therefore instituted.

6.  By his letter dated 4 March 2002 the defendant wrote to the plaintiff referring to the letter that the plaintiff had addressed to CSB dated 4 March.  He made it plain there that “I hereby confirm and agree to indemnify your company that in the event of any of the aforesaid payment become due and/or unpaid by [CSB], I shall then be liable to pay the remaining outstanding balance of the purchase price in respect of the aforesaid payment, if any.”

7.  Originally, the defendant relied on one defence namely, that under the sale and purchase agreement the plaintiff agreed to deliver vacant possession of the premises to CSB on or before the completion date and that the plaintiff had failed to do so.  That defence was abandoned when the defendant sought leave to amend the defence. 

8.  The threshold onus in Order 14 applications is on the defendant to show a triable issue.  He must condescend upon particulars.  As Deputy Judge Reyes (as he then was) said in his judgment dated 10 April 2002 in Sumikin Bussan International (HK) Ltd. and The Precast Piling & Engineering Co. Ltd. and another in HCA 3814 of 2001 :

“  In my judgment D1 needs to do much more to overcome a defendant’s evidential threshold in Order 14 proceedings.  Faced with an Order 14 application, a defendant cannot be sparing of the particulars of his defence and then claim, as a result of his own parsimony in detail, that there is an obscurity which must await trial for illumination.”

9.  Mr. Sit, for the defendant, submitted that the only triable issue is whether the plaintiff as at 4 March 2002 was an owner in which the plaintiff had a right to sell the Premises as at that date.  The reason for this is that by his supplemental affirmation the defendant has exhibited a land search record dated 26 March 2004 and it was submitted that this shows that the Premises were registered in the name of another company and not in the name of CSB or the plaintiff.  The registration date as shown in the land search record is 29 October 1998.  It was submitted that because of this the defendant has shown a triable issue.

10.  The defendant’s assertions are contradicted by his own affirmation and by his own pleading.  He obtained leave to file his re-amended defence.  This was done at the same time as when he sought leave to file a supplemental affirmation.  In the re-amended defence the defendant himself avers certain matters in paragraph 3 :

“   The Defendant avers that :-

(a)               CSB was the owner of the Premises which were then still under construction until the Premises were sold to the Plaintiff on 15 August 1997.

(b)               On or about 15 August 1997, the Plaintiff agreed to purchase and CSB agreed to sell the Premises at a purchase of RM14,943,800.86.  It was further agreed that the completion of the construction of the Premises was on or before 31 August 2000.  The Plaintiff and the Defendant executed a Memorandum of Sale (“the said Memorandum of Sale”) on 15 August 1997.

(c)               Clause 1.01 of the said Memorandum of Sale stated that the purchase price of RM14,943,800.86 had been fully credited by CSB and the Plaintiff was not required to make any further payment to acquire the Premises.  Since then, the Plaintiff had been the owner of the Premises.”

11.  In his affirmation affirmed on 6 September 2003 the defendant affirms the very averments that he pleads in paragraphs 2 to 4 thereof.  In his supplemental affirmation he raises for the first time that the assertion that neither the plaintiff nor CSB was the owner of the Premises at all material times.  He therefore asserts that the plaintiff had no right to sell the Premises to CSB on 4 March 2002. 

12.  The defendant’s assertions are also contradicted by the Memorandum of Sale being Exhibit “CAP-1” to the defendant’s affirmation.  This is the document that the defendant himself produced and relied on.  The Memorandum makes it plain that CSB was the owner of the Premises as at 15 August 1997 which was then sold to the plaintiff by that Memorandum of Sale. 

13.  It seems plain to me that the defendant’s assertions are not believable.  It is contradicted by his own evidence and his own pleading as well as by the document that he himself has produced and relied on namely, the Memorandum of Sale being exhibit “CAP-1”. 

14.  It is clear that an express term of the agreement between the plaintiff and CSB was that CSB was satisfied with the title of the plaintiff to the Premises and should not raise any requisition in respect of the same.  There was an express term of the agreement between them.  As is pleaded in the re-amended defence the defendant seeks to rely on implied terms or conditions of that agreement namely, that the plaintiff shall have the right to sell the Premises and that the plaintiff shall show and give good title free from encumbrance to CSB.  Any such implied term is inconsistent with and contradicts the express term of the contract. That being so such a term would not be implied (paragraph 13-009 Chitty on Contracts 28^th Edn. Vol. 1).

15.  The defendant has failed to raise a triable issue.  In my judgment the appeal ought to be dismissed and I dismiss the appeal.  The appeal is dismissed with costs to the plaintiff.