NG SHUNG WING, RAYMOND AND ANOTHER v. TAGGART INVESTMENT COMPANY LIMITED

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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JUDGMENT

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1. The plaintiffs' claim in this case is for the sum of US$54,168.00 in respect of payments made under or in connection with an agreement which was concluded with the defendant in December, 1980.

2. Dr. Ng, the first plaintiff, is the holder of a Certificate of Identity. In 1980 he was, and still is, worried about the future for himself and his family. He was anxious to obtain a full nationality, which of course he does not have at present, and citizenship. In December, 1980 he saw an advert which had been placed by the defendant for the purchase of property in the Dominican Republic following which, as Dr. Ng said in his evidence, an agent could apply for citizenship of the Republic by naturalization.

3. Dr. Ng and his wife, who are the plaintiffs, went to the defendant's office and there saw the defendant's Manager, a Mr. Kwan, and his Assistant Manager who was called peggy. The plaintiffs were told that once they had bought a house they could get permanent residence in the Dominican Republic by naturalization.

4. I must pause here, I think, to say that the terms 'permanent residence' and 'naturalization' have been used rather indiscriminately throughout this case. They have been used to describe separate forms of status and permanent residence has been described or used to describe an off shoot of naturalization. Nothing actually turns on this because Dr. Ng has made it plain throughout, and I find it as a fact, that what he wanted was some form of permanency to assure the future for him and his family, and I equally find it as a fact that the defendant was aware of this.

5. Anyway the plaintiff was told that it would take some six months to a year to become a citizen by naturalization. The procedure would be first to apply for permanent residence and six months later applications could be made for naturalization. The process, therefore, was in two stages; that is what the plaintiffs were told. They were also shown a document, so Dr. Ng said,, which appeared to be a letter from the President of the Dominican Republic confirming that citizenship would be available. Although necessary notices have been given this document, however, has not been discovered or produced. It was also made clear to Dr. Ng that only one visit to the Republic would be necessary. Dr. Ng understood that this would be a visit at which he would complete the naturalization formalities and take the appropriate oath.

6. The plaintiffs thought that the proposal was an attractive one, decided to proceed and paid an immediate deposit of HK$5,000. Further terms of payment were discussed with Mr. Kwan and these were incorporated in a form of provisional agreement which appears on page 2 of the bundle. These terms were agreed because the house, which it was proposed the plaintiffs should buy, was already some 50% complete. Although Dr. Ng did not say so, it is clear that it would otherwise have made a nonsense of the terms which now appear in the formal agreement which was subsequently signed. That formal agreement, which appears in the bundle starting on page 8, was signed on the 18th of December 1980 when the plaintiffs went to the offices of the solicitors Messrs. Foo & Li who became the mutual solicitors for the two parties. Again there is a document which refers to both permanent residence and naturalization.

7. The important clause in that agreement is Clause 4 and it reads as follows :-

"Within 75 days after the Purchaser has signed all the necessary application forms and documents and produced all the required testimonials papers certificates photographs for the purposes as mentioned in Clause 3 above, the Purchaser will be informed by the Vendor in writing whether his application for permanent residence status has been granted. This Agreement is conditional upon the granting of the said permanent residence status by the Dominican Republic to the Purchaser and members of his immediate family, If such status shall hot be granted within 75 days as aforesaid for any reason whatsoever the said deposit of 20%  paid by the Purchaser under Clause 2(a) hereof shall be refunded to the Purchaser without deduction together with such interest as shall be paid by a registered bank in Hong Kong with whom the money shall be deposited as the Vendor in its absolute discretion shall decide whereupon this Agreement shall absolutely cease to be binding and neither party shall have any claims against the other for any loss or damages whatsoever."

If I can pause there again, this clause has been described both as a condition precedent and condition subsequent. I think the true construction is that it is a condition subsequent because quite clearly the agreement was binding upon both parties but would cease to be so in the event that permanent residence visa not granted within 75 days of the necessary documents being produced. So a condition subsequent it is, but again I do not think very much turns upon that.

8. There is one other clause in the agreement which is of some importance; that clause is Clause 19 which reads :

"Time shall in every respect be of the essence of this agreement."

9. After signing the agreement the plaintiffs took the documents that were needed in connection with their application for permanent residence to the defendant's office on the same day. It is interesting to note, although again nothing turns on it, that at the office both plaintiffs signed a separate agreement in Spanish for the purchase of the house in question. As Mr. Clayton queried, did it mean this property had in fact been sold twice.

10. A week later, the necessary letters from the Consulate of the Dominican Republic were available which would make it possible for the plaintiffs to apply to the Hong Kong police for a Certificate that no criminal convictions had been recorded against them, a Certificate which has been referred to as one of good conduct. The plaintiffs went immediately to the defendant's office, collected these letters and went forth-with to Police Headquarters to make formal applications for the Certificate. Dr. Ng received his letter from the police, a certificate in the form of a letter which was dated the 6th January, 1981; no doubt he received it in the post a day or two later and took it immediately to the defendant. Dr. Ng's wife received her letter from the police a few days later. This was also taken to the defendant's office. Dr. Ng was told by the defendant that as soon as the certificate of good conduct had been chopped, by which I suppose he means legalized, by the Consulate of Dominican Republic, the applications for permanent residence could proceed. Dr. Ng said that he understood that he would hear something within 75 days in accordance with the wording of Clause 4 of the agreement. Accordingly, he phoned Peggy at the defendant's office some time in April when he was told that everything was delayed and would take some time.

11. At the end of April Peggy phoned Dr. Ng and said that the Dominican Republic would probably change some of its policy in relation to permanent residence and naturalization and Dr. Ng would have to go to the Republic to sign the documents relating to permanent residence. Dr. Ng said he was rather unhappy about this because it would mean 2 visits instead of one. Peggy said that she was awaiting confirmation of the procedure.

12. Dr. Ng then phoned Peggy in early June. He was told that the permanent residence document was ready but that he had to go to Republic to sign; that 5 days would be sufficient for this and that he should bring his own and his wife's travel documents to the defendant so that the necessary visas could be obtained and then he should go to the Republic on the date specified in the visa.

13. Dr. Ng took the documents to the defendant's office in June and subsequently in July, a Miss Ching of the defendant's company phoned Dr. Ng and said that the visas were ready. Dr. Ng collected the visas and saw that the period stipulated was mid-July and mid-September. These visas appeared on pages 68 and 68a of the bundle. It now appears, although Dr. Ng did not realize that at the time, that the visas were business visas. Dr. Ng and his wife flew to the Dominican Republic where they arrived on the 3rd September 1981.

14. In the Republic they were received by defendant's local Manager, Mr. LEE Kwan-chi, who explained that the procedure was that the house should be purchased (that of course had already been done by way of the agreement signed in the previous December), applications could then be made for a business visa to enter the Dominican Republic (that too as we can now see had been done although Dr. Ng did not realize it at the time) that applications could then be made for residence and re-entry permits, and six months after that applications could be made for naturalization.

15. Dr. Ng said he assumed that when Mr. Lee spoke of "residence" he meant permanent residence as that was what had been discussed with the defendant in Hong Kong and what was mentioned in the agreement which he had signed.

16. The following day the plaintiffs went though formalities at the Republican Immigration Department which were, as Dr. Ng understood, for residence meaning permanent residence. Nothing further of significance happened, no permit was forthcoming, so the plaintiffs returned to Hong Kong on the 10th September. However, the day before they left Mr. Lee had said that upon returning to Hong Kong they should take their travel documents to the defendant's office where arrangements would be made to et an endorsement of residence at the Dominican Republic Consulate. Upon returning to Hong Kong , Dr. Ng duly took these documents to the defendant's office.

17. In October and November Dr. Ng telephoned Miss Ching, who said that the endorsements were not ready. It was not until the 17th December 1980 that Miss Ching phoned Dr. Ng to say that the endorsements were ready. On that day Dr. Ng collected them from the defendant's office and discovered that the visas had expiry dates. These visas appear at pages 70 and 70a of the bundle. Dr. Ng was, of course, expecting some form of permanent residence status so he went to see the solicitor, Mr. Li to ask why he had visas which had an expiry date. According to Dr. Ng, Mr. Li then had a long talk on the telephone with Mr. Kwan and it was then he discovered there had been a policy change, that only a temporary residence was being granted, but the defendant would still apply for permanent residence on behalf of the plaintiffs if they wanted it. Dr. Ng of course still wanted permanent residence or naturalization so that he and his family could stay in the Dominican Republic. He understood that it would take a further six months but he thought this was acceptable and agreed that the matter should proceed on this basis.

18. There is of course some question as to whether or not the defendant knew about this arrangement. Mr. Ismail took the point that this was hearsay but I was unable to agree for the reasons that I indicated this morning. I find as a fact that the defendant through Mr. Kwan knew about this visit by the plaintiff to Mr. Li's office and the subsequent discussion on the telephone. I say this for two reasons. First, Mr. Li gave evidence. Although his evidence was somewhat indeterminate in that he could not remember, he said he would have passed on any message accurately. There is no reason to doubt that Dr. Ng is making anything up. I think there is probably sufficient there for me to say that that evidence is not hearsay, but even if I am wrong about that then, again, Dr. Ng on the advice of Mr. Li went forth-with to the defendant's office where among, other things, he got confirmation from Mr. Kwan about the telephone call.

19. Dr. Ng went to the defendant's office to get some form of documentary proof about the telephone conversation and the arrangements that were made. This was on the advice of Mr. Li. Dr. Ng was not successful. All he could obtain from Mr. Kwan was a form of personal guarantee or promise that Mr. Kwan would do his best to get Dr. Ng's money back if defendant could not get permanent residence for him. At the same time Mr. Kwan asked for the 2nd deposit to be paid to enable him to do something for Dr. Ng. Seven days later Dr. Ng paid 25% purchase price, that is, some US$14,985 (the receipt for this is at page 32 at the bundle) and also a sum of US$2,000 for land tax and other miscellaneous charges and again there is a receipt for this sum.

20. At the end of March 1982, Dr. Ng received a debit note from the defendant seeking the 3rd payment because the house was 50% complete.

21. Dr. Ng phoned Miss Ching and told her of the arrangements made with Mr. Kwan in the provisional agreement which varied the terms of payment set out in the formal agreement. In cross-examination Dr. Ng said when Miss Ching heard of this she said that Dr. Ng must be right. Nonetheless in April he received another debit note for 25%. This time he phoned to enquire why he should receive this when the provision was that the next payment should be six months after the second payment and Miss Ching said that she could do naturalization earlier if it was paid. She said that things take a long time, airmail taking at least two weeks between Hong Kong and Dominican Republic. She also said that in August or September there would be a change of President and if the money had not been paid in advance this would also help to delay the application.

22. Dr. Ng found this explanation to be reasonable. He wanted his application for naturalization or permanent residence to go forward and to be processed as soon as possible. So 7 days later he paid the sum of US$15,135 and also a sum of US$10,000 for some Hurricane Bonds. The receipts for these appear on pages 34 and 35. The matter of Hurricane Bonds I shall have to deal with in more detail later.

23. The meeting which Dr. Ng had with Mr. Li in December 1981 had contained a reference to a period of six months for naturalization. So six months after that, that is in June 1982, Dr. Ng phoned Miss Ching who said that the application was being processed in the Dominican Republic. He phoned again in August and Miss Ching said that the president would change in September but everything would be alright before then, that Dr. Ng could book air tickets and make all necessary arrangements. Dr. Ng did this. Miss Ching was, however, unable to confirm that there should be a visit in September but she said that everything will be alright. The confirmation was not forthcoming and subsequently Dr. Ng cancelled the tickets and arrangements which he had made. He heard nothing further, so on the 26th October 1982 he again went to see the solicitor, Mr. Li. Mr. Li was not there so Dr. Ng wrote him a letter, which appears on page 55 of the bundle, a letter which effectively said that if he did not get permanent residence by the 15th November 1982 he wanted his money back. That was a period of perhaps 20 days for the matter to be resolved. Mr. Li the solicitor phoned Dr. Ng that evening and at Mr. Li's request Dr. Ng agreed to another two or three weeks to the time limit set by his letter, giving the defendants to the end of November or the beginning of December to produce permanent residence.

24. In the middle of December Mr. Li Kwan-chi, the defendant's manager in the Dominican Republic phoned and arranged to meet Dr. Ng in Mr. Li's hotel. He explained the difficulties which the defendants were having and sought further time, but at this stage Dr. Ng had lost all patience and said that he wanted his money back.

25. That was the evidence of Dr. Ng. His wife and also the solicitor, Mr. Li gave brief evidence, but I do not think they added anything to what Dr. Ng said.

26. Mr. Ismail on behalf of the defendant did not call any evidence. To be fair to him I think I must remind us that this was not by choice; he did seek an adjournment on the first day to give him the opportunity to try to locate the various witnesses whose names I mentioned in rehearsing Dr. Ng's evidence, but I refused that application. As it has not been effectively challenged, I accept Dr. Ng's evidence of the events that occurred.

27. For the defendant, Mr. Ismail said that the plaintiffs by their evidence had proved simply an agreement for the sale and purchase of land in the Dominican Republic and there is no allegation that the defendants had failed to procure the purchase of the land by the plaintiffs. Therefore, the case rests on the breach of a condition, which I find to be a condition subsequent, to obtain permanent residence or naturalization for the plaintiffs in the Dominican Republic.

28. Now, Mr. Ismail has done his best although, as he said on the opening day of this trial, he is really conducting the defence with two hands tied behind his back. There is no real dispute, I think, that the plaintiffs forbore to exercise their rights under clause 4 of the Agreement; their rights, of course, being to say that the agreement is at an end and the money paid should be refunded to them together with interest. There is not, and Mr. Clayton had conceded this, any question of variation of the agreement itself. So the crucial issue and the only issue is whether, when Dr. Ng's patience finally became exhausted in October 1982 and he Save notice by his letter again making time the essence of the agreement, whether the time he gave was a reasonable time. The time which he gave, as extended, was some 5 or 6 weeks.

29. I have been taken through the leading cases in connection with this principle Charles Richards Ltd. v. Oppenheim, which makes it clear that the court must consider all the circumstances at the date when the notice was given; and Stickney v. Keeble & Anor's, which makes it plain that the plaintiff's attitude is a matter which the court must take into consideration. And Mr. Ismail drew from the evidence in the documents a number of matters upon consideration of which, he suggested, it would not be possible for me to find that the time given must be reasonable.

30. First, he pointed out the period of time which had previously been allowed. The original agreement provided for a period of 75 days for permanent residence to be obtained and there had been extensions of six months given by the plaintiffs. Compare this, he said, with the relatively short period given by way of ultimatum.

31. Secondly, our case is not one strictly relating to land, as was the Stickney case.

32. Thirdly, he pointed out that a 3rd party is involved in this case, namely, the Government of the Dominican Republic and, really collateral with that, he pointed to the difficulties of communication with the Dominican Republic itself. He pointed out that the plaintiffs throughout had been able to act freely and no pressure had been brought to bear upon them and that the 1st plaintiff, from his evidence, was aware of the changing requirements of the Dominican Republic and also that the President himself was being changed at the critical time.

33. He also said that it is not a case of the defendant sitting back and doing nothing. As I have already mentioned, there is no suggestion that the defendant did not proceed with that past of the agreement which related to the purchase of the house and, in addition, it is clear that the defendant obtained visas, albeit business and temporary visas, and something was being done about processing the application for permanent residence. There is also the question of the bonds - the telex dated the 28th October 1982 sent by the defendant to the office in the Republic shows that they were pursuing the purchase of this.

34. Mr. Ismail also pointed out that the 1st plaintiff's final notice, that is, 26th October 1982 letter, simply said 'naturalization or money back' it did not say 'when am I going to be able to go and make my second visit to the Republic and I realize I have to go a second time, please make arrangements.'

35. Finally, he said that there was no evidence of necessity that the permanent residence should be provided within the relatively short time span allowed at the end by the plaintiffs. I think I have done no disservice to Mr. Isnail if I say those were the points which he made and I have them all in mind.

36. Now, it is quite clear as I have said at the outset that Dr. Ng and his wife were principally concerned with permanent residence or naturalization and, I think, it is also clear that they were not concerned whether it was residence or naturalization as long as they got some form of permanency. The important think was that they wished to get their future settled and this was made quite plain to the defendant and I am satisfied that the defendant knew of this throughout the proceedings between them. The original agreement provided for a period of 75 days within which permanent residence should be obtained. Generous extensions were given by the plaintiffs but it must be observed that the 1st plaintiff pressed for results throughout the period of relationship between parties.

37. Dr. Ng said that it was not until December 1981, when he recovered from the defendant the plaintiffs' travel documents that he realized that what he had then obtained was not a visa for permanent residence but a visa for temporary residence. I accept that evidence. The fact remains that until Dr. Ng went to Mr. Li's office and sought an explanation, the defendant took no steps to explain that what was being applied for at that stage was temporary residence and not permanent residence.

38. Thereafter, in spite of making further payments to show his good faith, Dr. Ng was fobbed off with repeated statements that permanent residence was being processed. In my view the defendant has not at any stage explained satisfactorily either to the plaintiffs or to the court what the difficulties were that they were encountering in obtaining permanent residence or what remains to be done to get permanent residence or naturalization.

39. Looking at the points which Mr. Ismail made and looking at the circumstances to which I have just alluded, and particularly in the absence of any explanation from the defendants I am unable to say that in the circumstances of this case notice amounting to weeks rather than days was unreasonable.

40. I must deal with the matter of Hurricane bonds. Mr. Ismail said quite rightly there is no allegation in the re-amended statement of claim concerning these bonds nor do they constitute part of the written agreement between the parties. There is no evidence that these were conditional or continent upon permanent residence being obtained. There is no evidence that they were not purchased on behalf of the plaintiffs by the defendant. The purchase, said Mr. Ismail, stands in isolation and therefore there is no basis for a claim for the return of the US$10,000 paid for the purchase of these bonds. Well now, it is quite true that the evidence concerning the bonds is somewhat sketchy. Dr. Ng simply said that he paid US$10,000 for them in April 1982. But this money, a not insubstantial sum of money, was paid by Dr. Ng without protest and is supported by a receipt (at page 35 of the bundle) the wording of which is "Emergency Certificates of the Hurricane David Serie 1995 before acquiring the Dominican Nationality", and I emphasize the last 5 words. Taking all the circumstances into account, it seems to me that the only reasonable inference is that the purchase of this bond was an inherent part of the whole transaction between the parties.

41. If it is not an inherent part of the transaction then, as Mr. Clayton submitted this morning, the sum was certainly be recoverable as an expense.

42. So for the reasons which I have given I find in December 1982, after proper and reasonable notice given by the plaintiffs, the defendant failed to fulfil a condition of the Agreement. The plaintiffs were entitled to treat that, going as it did to the essence of the Agreement, as repudiation. They are, therefore, entitled to r cover all sums paid by them together with all expenses.