NG TSUI FONG PRISCILLA v. CHAU CHAM CHIU otherwise known as PETER CHAU CHAM CHIU

DCMP 593/2018

[2019] HKDC 867

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 593 OF 2018

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DECISION

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1.  On 29 January 2019, HH Judge MK Liu entered default judgment in this action ordering specific performance of the Agreement^[1] for the sale and purchase of the Car Parking Space^[2] in the following terms (“the Decision”):-

(1)   The Agreement be specifically performed and carried into execution.

(2)   The transaction in the Agreement be completed in the manner as prescribed in this order on a date to be agreed by the parties, and in the absence of such an agreement, on a date to be fixed by the court (“the completion date”).

(3)   The parties shall try to agree on the following sums within 28 days:-

(a) the sum due from the plaintiff to the defendant, which is the total of the further deposit and the balance of the purchase price and the interest therein as provided in this decision (“Sum A”);

(b) the sum due from the defendant to the plaintiff, which is the total of the rents and profits from the Car Parking Space and received by the defendant or by another person or persons by his order for the use and benefit of the defendant from 31 January 2018 to the completion date (if any) (“Sum B”);

(c) the net sum due from the plaintiff to the defendant after taking the aforesaid into account (“Sum X”)^[3].

(4)   In the absence of an agreement between the parties on the aforesaid sums within 28 days, those sums be assessed by the court.  The parties shall seek directions concerning the assessment exercise as soon as practicable after expiration of the 28 days.

(5)   The defendant do execute a conveyance of the Car Parking Space free from all incumbrances as an escrow to be delivered to the plaintiff.

(6)   On the completion date, upon the plaintiff paying to the defendant Sum X, the defendant shall at the same time deliver to the plaintiff:-

(a) The said conveyance so executed and all other deeds and writings in his possession or power relating solely to the Car Parking Space, and verified the same by an affidavit/affirmation made by the defendant; and

(b) Vacant possession of the Car Parking Space.

(7)   There be liberty to apply.

2.  By a letter dated 29 April 2019, the plaintiff’s solicitors reported to the court that the parties had not been able to reach an agreement in pursuance of the Decision.  The letter was placed before me as the civil listing judge for directions as Judge Liu has been posted out of the District Court. 

3.  On 20 May 2019, I set the matter down for a hearing and directed the parties to file and serve written statements on:-

(a)  What is the “completion date” proposed and the basis of the proposal?

(b)  Give an account of the calculation of Sum A or Sum B (as the case may be) with copy of the supporting evidence, if any.

4.  This is the hearing directed by me. 

5.  The defendant is absent today.  A copy of the letter dated 20 May 2019 informing the parties of my directions had been sent to the defendant at the address he provided in his acknowledgement of service.  That letter was retuned undelivered.  In addition, my clerk tried to contact the defendant by phone via the defendant’s numbers on the court’s record but to no avail.  On one occasion however, my clerk was given a fax number for the purpose of service and he did send the court’s letter dated 20 May 2019 to the defendant by fax. 

6.  Mr Cheung for the plaintiff confirms that the plaintiff does not have other means of contacting the defendant.  He said that the plaintiff has also encountered difficulties in contacting the defendant.  In the circumstances, I accede to his request to continue with the hearing as the defendant has been informed of my directions.

7.  The plaintiff’s position is set out in her solicitors’ letter dated 31 May 2019:-

(a)   “The Plaintiff proposes the completion to take place on 31 July 2019, which in our view should allow adequate time for the parties to prepare for completion.”

(b)   “The sum due from the Plaintiff to the defendant is $78,000 if based on the total consideration of HK$1,300,000.00 as the cheque for the initial deposit of HK$100,000.00 was never deposited by the Defendant.

If, however, pursuant to the Order made by His Honour Judge MK Liu dated 29^th January 2019, only the further deposit (HK$30,000) and the balance of the purchase price (of HK$1,170,000.00) will be taken into account…, the sum due from the Plaintiff to the Defendant is $72,000.00 ($1,200,000 x 4% per annum x 18 months).  A copy of the calculation is enclosed for Court’s reference.”

(c)   “To assist the Court for calculation of the rents and profits, the Plaintiff has obtained a Brief Valuation of the market rent of the Property from CS Surveyor Limited dated 29^th May 2019.”

8.  I have received nothing from the defendant.

9.  In pursuance of the Decision, I accept the only proposal before the court and set the “completion date” to be 31 July 2019 in the absence of an agreement between the parties. 

10.  In addition, I shall make the following assessment.

11.  In terms of “Sum B”, Mr Cheung argues that the plaintiff has been deprived of the use of the Car Parking Space.  According to his instructions, a car belonging to a resident of the building where the Car Parking Space is situated has been parked at the Car Parking Space.  There is, however, no evidence on the relationship between the resident and the defendant and, more importantly, no evidence that the defendant has received any rental income.  The expert evidence adduced by the plaintiff does not constitute evidence that the defendant has received any rental income either.  Judge Liu has directed an assessment of “… the total rents and profits from the Car Parking Space and received by the defendant or by another person or persons by his order for the use and benefit of the defendant … (if any)” (my emphasis).  As, there is no evidence that the defendant has actually received any rental income or profits since the contractual completion date, I assess “Sum B” to be nil.

12.  Turning to “Sum A”, Judge Liu said in para 5(1) of the Decision: “Following Wise Think Global Ltd v Finance Worldwide Ltd (No 2)^[4], the plaintiff would need to pay interest on the balance of the purchase price at the rate of 4% per annum from the original completion date as stated in the Agreement (ie 31 January 2018) to the new completion date provided in the order.  Since the defendant has returned the further deposit of HK$30,000 to the plaintiff on 31 January 2018, there should also be interest on this sum at the rate of 4% per annum from 31 January 2018 to the new completion date in the order.”

13.  Judge Liu was not informed of the fact that the cheque for the initial deposit of $100,000^[5] had not been deposited by the defendant.  That is why he did not direct any adjustment on the interest due on the initial deposit.

14.  In the authority cited by the learned Judge, the Court of Final Appeal said:-

“14. It is well-established that after the contractual date of completion, the purchaser becomes entitled in equity to the property and so becomes entitled to the rental income and profits less outgoings after that date. Thus, where completion takes place on a date other than that specified in the contract, the vendor is liable on completion to account to the purchaser for such income…

15. On the other hand, the purchaser who has not yet paid the vendor the balance of the purchase price because completion has been delayed should normally be liable to pay interest on such balance after the contractual date for completion because he has had use of the money during the meantime while the vendor did not have the benefit of the money which he would have received had the sale been completed on the agreed date.

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21. Thus, it has long been established that where the court has granted specific performance of a sale and purchase agreement, it has the power to make an order for adjustments to be made upon completion in respect of the rental income and profits (less outgoings) received by the vendor and the payment of interest by the purchaser since the contractual date of completion. See for example the decree made in Bridges v Robinson (1811) 3 Mer 694, 36 ER 266 and the minutes of order drawn up in North v Percival [1898] 2 Ch 128.

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27. In our view, the court is undoubtedly asked to exercise its equitable jurisdiction and we think that as a general rule, the purchaser should be ordered to pay to the vendor interest on the balance of the purchase price after the contractual date of completion unless it is unfair to do so. Ultimately, the court has to decide whether in the circumstances of the case, it would be unfair to deprive the vendor of such interest while requiring him to account for the rental income without getting paid the full purchase price, or to relieve the purchaser of the liability to pay interest while allowing him to have the benefit of the rental income for which he has not yet fully aid. (see the remarks made by Wilberforce J in Re Hewitt’s Contract as highlighted in [20] above.)

15.  Applying those principles to the present action, the plaintiff (as the purchaser) should be liable to pay interest on the whole balance of the purchaser price (including the initial deposit of $100,000) after the contractual date for completion (ie 31 January 2018) because she has had use of the money during the meantime while the vendor did not have the benefit of the money which he would have received had the sale been completed on the agreed date.  Mr Cheung does not submit otherwise.  I therefore assess “Sum A” to be $78,000 (as per the plaintiff’s calculation).

16.  With the completion date set and the assessment done, the parties should now proceed to completion as ordered by Judge Liu.

17.  The plaintiff has asked for costs in the sum of $29,500.  This hearing is caused by the non-cooperation of the defendant in pursuance of the Decision.  I see no reason why the defendant should not be liable for the plaintiff’s costs.  I therefore order the defendant to pay the plaintiff’s costs, summarily assessed at $29,500.