XCHRX LEE SHIN WAH LINDE v. DWI TOUR & TRAVEL SERVICE (H.K.) LTD.

DCCJ8387/2000

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 8387 OF 2000

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JUDGMENT

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1. This is an action on a dishonoured cheque for $102,800 drawn by the Defendant in favour of Augustine C.Y. Tong & Co., solicitors, as agents for the Plaintiff. The Plaintiff seeks summary judgment against the Defendant under Order 14.

2. The background to this matter can be stated shortly. On the 23rd March 2000 the Plaintiff entered into an agreement in writing ("the agreement") to sell a property at Austin Road, Kowloon to Tang Li Li and Tjetjep Endang (being husband and wife) for 3.760 million dollars. The following terms of the agreement are material:-

"2. The purchase price .... shall be $3,760,000 which shall be paid by the Purchaser to the Vendor as follows:

(a) $10,000 shall be paid upon signing of this agreement as deposit.

(b) $263,200 shall be paid upon signing of formal agreement for sale and purchase on or before the 6th April 2000 as balance of deposit.

(c) $102,800 shall be paid on or before 24th March 2000 as further deposit.

(d) $3,384,000 shall be paid on completion on or before 25th April 2000 as balance of the purchase price ....

6. Should the purchaser fail to complete the purchase in the manner herein contained the deposit shall be forfeited to the Vendor and the Vendor shall then be entitled at his absolute discretion to sell the premises to anyone he thinks fit ....

8. All deposits payable by the Purchaser shall be paid to the Vendor's solicitor as stakeholder who shall not release the deposits to the Vendor unless it is proved to the satisfaction of the Purchaser's solicitor that the balance of the purchase price is sufficient to discharge the existing charge in respect of the said premises."

3. Pursuant to this agreement the intended purchasers paid the Vendor (the Plaintiff) $10,000 in cash upon signature. Then on the following day the cheque, which is the subject of this action, was handed to the Plaintiff's solicitors to hold as stakeholders. It should be noted that the Defendant company is partly owned, as shareholder, by Tang Li Li one of the intended purchasers of the property. Madam Tang has deposed in her affirmation of the 20th October 2000, at paragraph 5(c), that she procured the issuing of the cheque by the Defendant company because she did not have a current account in Hong Kong. Accordingly, she arranged for the amount of the cheque to be transferred into the Defendant company's bank account and she then signed the cheque on behalf of the Defendant company, as an authorized signatory, on the company's account. She then delivered the cheque herself at 5 p.m. on the 24th March to the Estate agent for onward transmission to the Plaintiff's solicitors. The following day, Madam Tang having decided with her husband not to proceed with the purchase of the property, directed the bank to stop payment, which it duly did, hence this action on the cheque.

4. The Plaintiff submits that in the usual way, a cheque being as good as cash, she must succeed on the dishonoured cheque.

5. The Defendant takes two points. Firstly, that because the Defendant was the drawee of the cheque and because the Defendant was not the prospective purchaser of the property, nor a signatory of the agreement, there is no consideration moving from the Plaintiff to it to support the payment of the cheque and accordingly the Defendant has a good defence to the action.

6. Secondly, that the sum of $102,800 represented by the cheque, does not qualify for forfeiture because on a true construction of the Agreement this amount is not the deposit referred to in clause 6 of the agreement, that being only the $10,000 referred in paragraph 2(a), and that in any event as the amount of $102,800 was never paid it is not possible to forfeit an amount which has not been paid.

7. Before I consider each of these defences separately I should indicate that in asking for summary judgement the Plaintiff is bound to show that there is no reasonable doubt that she is entitled to judgment. She must demonstrate that there is plainly no defence to the claim.

8. I take the two defences raised in turn.

A failure of consideration?

9. Mr. C.K. Wong, who appears for the Defendant, submits that as there is no privity of contract between his client and the Plaintiff in respect of the agreement and the proposed sale of the property the Plaintiff has given the Defendant no consideration for the cheque and therefore the Defendant has a defence to the claim, or at the very lease that the point is sufficiently arguable to justify a trial of the action.

10. Whilst, at first blush, the point appears compelling I have decided that it cannot succeed. It is clear that consideration in a contract must move from the promisee, in this case the Plaintiff, who has agreed to sell the property it need not move to the promisor in this case the actual drawer of the cheque (the Defendant). Consideration in this arrangement has moved to the proposed purchasers of the property Madam Tang and her husband Mr. Tjetjep. The basis for this proposition is summarized at 3-037 page 187 of Volume I of Chitty 28th Edition. The promisee (the Plaintiff) has suffered a detriment at the promisor's (the Defendant's) request by agreeing to sell the property to the purchasers and by agreeing to receive the cheque as part payment of the deposit in compliance with Clause 2(c) of the agreement, although conferring no actual benefit on the promisor (the Defendant), who would fall away from the proposed sale of the property and who has been reimbursed by the purchasers in respect to the amount of the cheque. See paragraph 5(d) of the affirmation of Tang Li Li dated the 20th October 2000.

11. I have no doubt that this part of Mr. Wong's submission does not begin to get off the ground. Had this been so any intended purchaser of a property faced with the prospect of losing a deposit by virtue of a provisional sale agreement could hedge his bets by getting a third party to issue a cheque on his behalf and arrange for payment of the cheque to be stopped if he changed his mind.

12. This part of Mr. Wong's case therefore fails.

The next issue raised by Mr. Wong is that this payment of $102,800 does not qualify for forfeiture under Clause 6.

13. He submits that on a true construction of Clause 2 in all its parts together with Clause 6 that the only deposit which qualifies the forfeiture is the initial payment of $10,000. He has drawn to my attention what he says are discrepancies between the English and the Chinese version of the agreement, particularly in Clause 6, where the Chinese version is to the effect that the right to forfeit the deposit only extends to the deposit already paid.

14. He also submits that as the payments are described in the agreement as "deposit" in relation to the $10,000 and as "further deposit" as to the $102,800 I must apply a restrictive interpretation, as against the Plaintiff who relies on the agreement in bringing this claim, and so hold that the deposit must mean the smaller amount. I disagree. One must look at the agreement as a whole. It is very clear that "the deposit" must refer to a deposit payable in three parts as set out in Clause 2 (a), (b) and (c) being 10% of the total purchase price, with the balance of the purchase price of $3,384,000 payable on completion.

15. So I am against Mr. Wong as to how one should construe the word "deposit". In this agreement it refers to all three payments.

Another hurdle

16. The next hurdle that Mr. Wong seeks to erect comes from the Chinese version which appears to be at odds with the English version and which is to the effect that in the Chinese version of the agreement the amount of $102,800 is referred to as "part payment of the purchase price" rather than "deposit". A part payment is in my view a very apt description for a deposit; see the Oxford Dictionary. There is nothing in that point.

The last hurdle

17. Mr. Wong also relies on the Chinese version of Clause 6 which refers to forfeiture of a deposit already paid. From that he submits that as this cheque was countermanded the deposit was never paid and therefore it cannot qualify for forfeiture. If that were right the Defendant and the purchaser could rely on their own breach of contract to avoid the consequences of that very breach. That cannot be so.

Conclusion

18. I am satisfied that there is simply no defence to this claim and accordingly that there must be judgment to the Plaintiff in the amount claimed with interest thereon as from the date of the writ until judgment at half the judgment rate and as from judgment until payment at the judgment rate. Costs will also follow the event, but this part of the order will be an order nisi in the usual way.