JOIN WIN HOLDINGS LTD v. CITY TARGET LTD AND ANOTHER

HCA 1188/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1188 OF 2015

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DECISION
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INTRODUCTION

1.  I have before me a summons issued by the 1^st defendant on 10 July 2015 seeking to strike out paragraphs 1, 2 and 3 of the Indoresment of Claim dated 29 May 2015 on the grounds that:-

(1) they disclose no reasonable cause of action; and/or

(2) they are scandalous, frivolous or vexatious; and/or

(3) they may prejudice embarrass or delay the fair trial of the action; and/or

(4) they are otherwise an abuse of the process of the court.

2.  The 1^st defendant also seeks an order that the registration of the writ of summons herein as a lis pendens against the property known as 8^th Floor, 726 Nathan Road, Kowloon, Hong Kong (“the Property”) in the Land Registry by memorial no 15060302199021 be vacated.

3.  In support of this application, the 1^st defendant has filed a total of 3 affidavits, namely, the 1^st affidavit of Chan Heung Wing and the affidavit of Cheung Shuk Man on 10 July 2015 and the 2^nd affidavit of Chan Heung Wing on 14 July 2015.

4.  Mr Leo Yu (for the plaintiff) has raised the preliminary point that there were only 5 business days between the date of the summons and today’s hearing, and that the plaintiff’s director, Ms Kwong Sze Ling, who would be able to give evidence in respect of what happened at the public auction on 12 May 2015 (as to which see further below) is not for the time being in a position to assist in the preparation of an affirmation on behalf of the plaintiff to resist the 1^st defendant’s application due to illness.  Mr Yu suggests that the court should give directions for the plaintiff to file evidence in opposition, which would necessarily lead to an adjournment of today’s hearing to another date to be fixed.

5.  The 1^st defendant invites the court to deal with the application today because the registration of the lis pendens means that the 1^st defendant cannot sell the Property, which it wishes to be able to do so.

6.  At the court’s invitation, Mr Lam (for the 1^st defendant) indicated that the 1^st defendant was prepared to proceed only with the first ground of striking out (ie that the Indoresment of Claim, in so far it concerns the 1^st defendant, discloses no reasonable cause of action) for the purpose of today’s hearing, with the consequence that evidence would not be admissible in support of the application.  I considered that to be a reasonable course to adopt, and I informed Mr Lam that should I reject that ground of the application, the remaining grounds would be dealt with on another occasion.  Mr Yu did not raise any objection to such proposed course of action.

7.  Accordingly, the only issue that I shall consider in this decision is whether the Indoresment of Claim, in so far as it concerns the 1^st defendant, discloses any reasonable cause of action.

The Indorsement of Claim

8.  In the Indorsement of Claim, the plaintiff seeks, inter alia, the following relief against the 1^st defendant:-

(1) a declaration that the plaintiff has at the public auction on 12 May 2015 concluded an oral contract with the 1^st defendant;

(2) an order for specific performance of the oral contract concluded between the 1^st defendant and the plaintiff at the public auction on 12 May 2015;

(3) an injunction order restraining the 1^st defendant from selling or otherwise disposing of or dealing with the Property;

(4) damages for breach of contract.

9.  Although the Indorsement of Claim does not indicate the nature of the oral contract, it is common ground that it relates to a contract for the sale and purchase of the Property.  This is made clear in the Statement of Claim dated 17 July 2015 apparently prepared by the plaintiff’s solicitors, a copy of which is attached to Mr Yu’s skeleton argument dated 17 July 2015.  A statement of truth regarding the facts stated in the Statement of Claim signed by Cheung Miu Chi Polly, a director of the plaintiff, appears on the seventh page of the Statement of Claim. The back sheet of the Statement of Claim states that it was filed on 17 July 2015. However, Mr Yu has informed the court that the Statement of Claim has in fact not been filed, although it is ready to be filed at any time.  On the other hand, Mr Lam accepts that the court can have regard to the contents of the Statement of Claim for the purpose of today’s hearing.

10.  The following facts, so far as relevant for the present purpose, appear in the Statement of Claim:-

(1) The 1^st defendant was and is the registered owner of the Property (paragraph 4);

(2) At a public auction held by the 2^nd defendant (City Target Limited CS Auctioneers Limited) on 12 May 2015, the 2^nd defendant on behalf of the 1^st defendant made a verbal offer to sell the Property at the price of HK$66,000,000 (paragraph 5);

(3) The said offer made by the 2^nd defendant on behalf of the 1^st defendant was immediately accepted by the plaintiff (paragraph 6);

(4) Upon the plaintiff’s acceptance of the said offer, there was a binding oral contract concluded between the 1^st defendant and the plaintiff for the sale and purchase of the Property (“the 1^st Oral Contract”).  The plaintiff has also pleaded a second oral contract (“the 2^nd Oral Contract”) allegedly concluded between the 2^nd defendant and the plaintiff for handling the sale and purchase of the Property (paragraph 7).  I pause to observe that it is not alleged that the 1^st defendant was a party to the 2^nd Oral Contract or bound by it.

(5) In furtherance of the 1^st Oral Contract, the plaintiff signed a Memorandum of Agreement, paid to the 2^nd defendant a sum of HK$5,000 in cash in partial payment of the deposit, and further gave the 2^nd defendant two cheques (subject to certain conditions mentioned in sub-paragraph (7) below), one in the sum of HK$6,595,000 made payable to the 2^nd defendant for payment of the balance of the deposit, and the other in the sum of HK$660,000 also made payable to the 2^nd defendant for payment of agency commission (paragraph 8).

(6) Under the 1^st Oral Contract, it was an implied term that the 1^st defendant shall promptly execute the Memorandum of Agreement and return the duly executed Memorandum of Agreement to the plaintiff (paragraph 9).

(7) Under the 2^nd Oral Contract, it was an implied term, inter alia, that:

(a) pending the return of a copy of a duly executed Memorandum of Agreement to the plaintiff, the 2^nd defendant shall stakehold the said sum of HK$5,000 and the two cheques (paragraph 10(c));

(b) the 2^nd defendant shall not present the two cheques for payment until after a copy of the Memorandum of Agreement duly executed by the 1^st defendant has been returned to the plaintiff (paragraph 10(d)).

(8) Wrongfully and in breach of the said implied duties under the 1^st Oral Contract, the 1^st defendant failed and/or refused to immediately execute the Memorandum of Agreement (paragraph 11).

(9) Wrongfully and in breach of the said implied duties under the 2^nd Oral Contract, and despite the protests of the plaintiff, the 2^nd defendant without proper authority or prior consent of the plaintiff presented the cheques for payment without having returned to the plaintiff a copy of the Memorandum of Agreement duly executed by the 1^st defendant (paragraph 12(b)).

(10) In total disregard of the rights and interests of the plaintiff as a successful bidder for the Property at the public auction on 12 May 2015, the 1^st defendant put up the Property for sale again at a further public action held by the 2^nd defendant on 29 May 2015 (paragraph 14).

11.  On the basis of the above pleaded facts, the plaintiff seeks the relief set out in the Indorsement of Claim.

12.  In passing, I should mention that it is not in dispute that the cheque drawn by the plaintiff for payment of the balance of the deposit was dishonoured upon presentation for payment on 15 May 2015.  The 1^st defendant says that it was for that reason that it did not sign the Memorandum of Agreement, while the plaintiff says that the 1^st defendant was obliged to sign the Memorandum of Agreement first before the cheque could be presented for payment.  For the present purpose, it is not necessary for me to decide who is correct on this matter.  I shall proceed on the basis of the facts as pleaded, and consider whether the Indorsement of Claim, as amplified by the Statement of Claim, discloses a reasonable cause of action as against the 1^st defendant.

The 1^st Oral Contract is not enforceable

13.  As pleaded in paragraph 7(a) of the Statement of Claim, the 1^st Oral Contract is a contract for the sale and purchase of land.

14.  By s3 of the Conveyancing and Property Ordinance, Cap 219, no action shall be brought upon any contract for the sale or other disposition of land unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged or by some other person lawfully authorized by him for that purpose.

15.  At the hearing this morning, Mr Yu informed the court that it is not in dispute that the 1^st defendant has never signed the Memorandum of Agreement.

16.  There is no plea in the Statement of Claim of the existence of any written agreement or memorandum or note of such agreement satisfying the requirements of s3 of the Conveyancing and Property Ordinance in the present case.

17.  It has also not been suggested that s3 of the Conveyancing and Property Ordinance has no application, eg because of “part performance” mentioned in paragraph 3(2) thereof or some other reason(s).

18.  Finally, although Mr Yu in his skeleton argument has referred to the possibility or likelihood that the plaintiff may apply for leave to amend the Indorsement of Claim or Statement of Claim after it has been duly filed, Mr Yu has not indicated the nature of the amendments which may be made.  There is therefore no material placed before me to suggest that the Indorsement of Claim or Statement of Claim can be cured by appropriate amendment.

19.  In these circumstances, I have no alternative but to strike out the Indoresment of Claim as against the 1^st defendant.  It follows that the registration of the writ of summons as a lis pendens against the Property in the Land Registry by memorial no 15060302199021 should also be vacated.

Disposition

20.  I make an order in terms of paragraphs 1(1) and 2 of the 1^st defendant’s summons dated 10 July 2015, and shall hear the parties on the question of costs.