LAU KOON FOO v. CHAMPION CONCORD LTD AND ANOTHER

CACV 232/2010 and CACV 233/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 232 OF 2010

(ON APPEAL FROM HCCL NO. 1 OF 2010)

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BETWEEN

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 233 OF 2010

(ON APPEAL FROM HCCL NO. 5 OF 2010)

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BETWEEN

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J U D G M E N T

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Hon Rogers VP:

1.  This is an appeal from a judgment of Mr Justice Stone given on 22 June of this year, and it concerns two Order 86 applications which, as the judge said, mirrored each other.

2.  The matter in issue is whether Champion Concord Limited, who I shall refer to as the Plaintiff, is entitled to judgment in respect of the purchase of a property known as 82 Ng Fai Tai, Clearwater Bay Road, Sai Kung, on Lot 258 Remaining Portion in Demarcation District 238.

3.  The judge set out the history of the matter in paragraphs starting at paragraph 11 of his judgment.  Insofar as it is relevant to this case, one can take it up on 17 January 2006.  This was not the first matter between the clients, but that was the date on which the agreement which really founds this action was entered into between Mr Lau Koon Foo and Champion Concord Limited.  It provided for the sale of the property at a price of $6 million and the completion date was to be on or before 14 May 2007.

4.  The agreement was in a very short form.  It is only necessary to say that there was apparently a side agreement, which is not disputed, that any premium to be paid would be paid by Champion Concord in addition to the purchase price and, as a result of the agreement, Champion Concord and the 2^nd Plaintiff, Craigside Investments Limited, took possession under two leases.

5.  The property was subject to a building licence which imposed conditions against alienation and that required the payment of a premium to the Hong Kong Government if there was to be a sale to a non‑villager.

6.  Unbeknownst to the Plaintiff at the time, the District Lands Officer had informed Mr Lau on 25 February 2006 that he would consent to the assignment of the property by 17 March 2006 if there was a payment of a premium of $470,200, plus a fee of $650.  Failing that payment and compliance, the offer would lapse.

7.  What transpired, however, is that Mr Lau did not wish to sell the property and he communicated that by letter on 21 March 2007.  The First Plaintiff avers that that constituted a repudiation.  Thereupon it commenced proceedings against Mr Lau; they were commenced on 11 July 2007.

8.  At the suggestion of the Master, the matter went to mediation.  The settlement agreement which resulted on the second day of the mediation, 10 March 2009, is the matter which gives rise to the controversy in this case.  It has to be said that we were informed that the settlement agreement was drafted by the mediator.

9.  The crucial part of the mediation agreement which is the subject of the dispute today relates to the time provisions, because in clause 2 of that agreement, the parties had agreed to vary the terms of the agreement of 17 January according to the terms of the settlement agreement.  In clause 3 it was provided that the agreement of 17 January 2006 would be affirmed and Mr Lau would sell the property to Concord.  The purchase price was to remain at $6 million and there were provisions for the deposit.

10.  Clause 13 of the agreement read:

“The completion of the sale and purchase of the Property (‘Completion’) in accordance with the terms and conditions herein shall take place on the Completion Date which shall be on or before the 30^th day from the date on which the DLO consent is obtained provided that such day shall in any event be not later than 10 months from the date of this Settlement Agreement (‘Long Stop Date’) or, if Clause 16 applies, not later than the expiry of 12 months extension period as provided in clause 16 below (‘Extended Long Stop Date’) (collectively ‘the Completion Date’).

14. If the 1^st party fails to proceed with the Completion on the Completion Date, the 3^rd party is entitled to forfeit the Deposit, and the sale and purchase of the Property hereunder shall be automatically cancelled.

15. Subject to Clauses 16 and 17 below, if, for any reason, the DLO consent is not obtained by the Long Stop Date, the sale and purchase of the Property agreed hereunder shall be automatically cancelled; and within 30 days from the date when the District Lands Office indicated that the DLO consent is not granted or from the Long Stop Date, whichever is the earlier:

(1) the 3^rd party shall return the Deposit to the 1^st party; and

(2) the 1^st first party and the 2^nd party shall deliver vacant possession of the property and the private garden on the adjoining Lot No. 258 R.P. in D.D.238 to the 3^rd party.”

11.  Pausing there for a moment, the importance of the provisions is that the Long Stop Date is defined as being 10 months from the date of the settlement and, according to clause 13, the DLO consent had to be obtained in any event not later than that 10-month period.  Clause 15 also refers to that in that the first two lines make clear that if for any reason the consent is not obtained by the Long Stop Date, the sale and purchase of the property shall be automatically cancelled.  The remainder of clause 15 in fact confirms that, because it provides for two occasions or two instances which would trigger the return of the deposit:  first of all, the date when the District Lands Office indicated that the DLO consent is not granted; secondly, the Long Stop Date.  So the Long Stop Date, according to clauses 13 to 15, in my view, is not dependent upon the DLO doing anything or indicating its refusal; it is simply dependent upon no consent being obtained.

12.  One then passes to clauses 16 and 17.  Clause 16 provides that:

“In the event that on or before the Long Stop Date the District Lands Office decided not to give the DLO consent and the 1^st party decided to contest such decision of the District Lands Office, the parties agree that the Long Stop Date shall be extended for a further period of 12 months (‘Extended Period’) on conditions that:”

It is unnecessary to recite those conditions, save that Mr Scott SC, in the course of argument, has drawn this court’s attention to condition (5), which reads:

“The 4^th party shall personally indemnify the 3^rd party against any losses or claims or damages or legal costs and disbursements that the 3^rd party may incur as a result of any steps taken by the 1^st party to contest the decision of the District Lands Office not to give the DLO consent.”

And he says that that provision in itself confirms the reading of clauses 13 to 15.  Clause 17 reads:

“In the event that Clause 16 is triggered and for any reason the DLO Consent is not granted during the Extended Period notwithstanding any step taken by the 1^st party to challenge the decision of the District Lands Office for refusal to grant the DLO consent on or before the Extended Long Stop Day, the sale and purchase of the property agreed hereunder shall be automatically cancelled within 30 days from the date when the aforesaid contest of the District Lands Office decision fails or from the Extended Long Stop Date, whichever is the earlier.”

13.  On this appeal, Mr Wright, who has argued as valiantly as he could in the face of what seems to me to be a clear document, has relied on three essential propositions.  First, that the document should be read contra proferentem in this case against Mr Lau, who is seeking to rely on it.  But in my view, the contra proferentem reason does not arise in this case, because it only arises where there is an ambiguity. Where the document is clear, although this court may not necessarily consider that one party has acted particularly honourably in the transaction, nevertheless, if the document is clear, the document is clear.

14.  Mr Wright also relied on the proposition that the vendor was obliged to perform the contract. That is true, but if he has acted in accordance with the wording of the contract, unfortunately, that proposition will not be of assistance.

15.  Finally, it was said that read together, all these clauses showed that there was an intention to give 22 months for the DLO consent to be obtained and that was the underlying rationale of this agreement.  It is true that there was an extended period which would take the matter up to 22 months, but the wording of clauses 13 and 15 is, in my view, clear: the Long Stop Date was the date to be relied upon and it was only if an adverse decision of the DLO were obtained, which a purchaser wished to set aside, that the extended Long Stop Date would come into existence.

16.  I have set out, perhaps in somewhat lengthy form, my view of the matter, which accords with that of the judge below and, in my view, I see no alternative but to dismiss this appeal.

Hon Le Pichon JA:

17.  I agree.