WONG CHI KEUNG v. CHUI KA CHUN DICK

HCA 28/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.28 OF 2004

______________________

______________________

________________

J U D G M E N T

________________

The appeal

1. This is an appeal from the judgment of Master de Souza dated 15 July 2004, wherein the learned Master ordered that summary judgment be entered against the defendant herein.  This judgment was in two parts : first, that the defendant return to the plaintiff certain title documents, as particularized in the schedule to the judgment, and second, that the defendant do pay to the plaintiff damages to be assessed, together with costs of this action, to be taxed if not agreed.

2. The defendant is aggrieved by this judgment, and by Notice of Appeal dated 29 July 2004 seeks an order from this court that such judgment be set aside, and that the defendant do have unconditional leave to file and serve its Defence and Counterclaim within 21 days.  The costs of this appeal, and of the hearing below, are also sought in the Notice.

The factual background

3. This is not a matter which can be understood without brief reference to the facts which spawned this action.

4. This is a dispute about a New Territories property transaction which did not proceed.  Each side blames the other for this situation, which has resulted in the purported forfeiture by the plaintiff, by his solicitor’s letter dated 10 September 2003, of the defendant’s purchase deposit monies in the sum of HK$4 million.  It is this sum which provides the reason for this case.

5. No issue now arises in terms of the return of the title documents, which represents the first part of the judgment entered below, given that the title documents in question have been returned to the plaintiff by the defendant on 11 October 2004.

6. Technically there remains a claim open to the plaintiff for damages occasioned by the belated return of the title documents, together with a claim for damages for loss of bargain, but the reality is that the attention of the parties is focused upon the $4 million, which the plaintiff wishes to retain, and the defendant, via proposed counterclaim, wishes to recover.

7. On 2 June 2003 the plaintiff and the defendant entered into a Chinese provisional sale and purchase agreement, wherein the plaintiff agreed to sell 8 lots of New Territories land to the defendant for HK$36.8 million.  In fact, these were New Territories village houses which were in the process of being redeveloped.  Under the provisional agreement, the plaintiff was described as ‘Vendor’, although the names of the owners of the 8 parcels of land were stated in the schedule to the agreement.

8. Within 14 days after the signing of this agreement the defendant paid the deposits for the purchase in the total sum of HK$4 million.  Payment of this sum left a balance of $32.8 million outstanding.

9. Under the structure of this provisional agreement (clause 9) completion was to take place “within 30 days after the document for payment of premium of the Property has been issued”.  The idea was that the premium should first be paid by the purchaser, and that sum should be deducted from the purchase price upon completion.

10. In fact, the transaction foundered, and the defendant declined to complete because, it is said, the plaintiff had failed to demonstrate to him that he had the right and authority to sell all the 8 properties in question, and that “despite repeated requests” the plaintiff could not show good title by producing powers of attorney granted by the owners of all the properties in favour of the plaintiff.

11. Hence these proceedings, wherein the plaintiff, by writ issued on 6 January 2004, sought an order for the return of title documents, and damages to be assessed, whilst the defendant maintains that in the circumstances he was entitled not to proceed with the sale and purchase of the properties: a draft Defence exhibited to the papers counterclaims for the return of the deposit of $4 million, and damages to be assessed.

12. The plaintiff issued his summary judgment application on 5 February 2004, and the matter came before Master de Souza, who entered judgment, on 15 July 2004.  A Notice of Appeal was filed on 29 July 2004, and a number of affirmations on both sides have been placed before this court, including some last minute evidence which was put in by the defendant, absent objection, upon the basis that a further affirmation on behalf of the plaintiff also should go in.  Hence the evidential lines of demarcation were extensively drawn.

The issues

13. Two lines of argument emerged on appeal.  First, that which may be termed the ‘proof of title’ argument, and second, a submission that involved the argument that this provisional agreement was void or otherwise unenforceable by reason of breach of public policy, in that a misrepresentation had been made to the District Lands Officer and that this transaction infringed certain provisions of the Special Conditions of Grant of the land in question.

14. I do not think that there is any necessity on this appeal to condescend to this latter argument in light of my conclusion as to the proper course that this litigation should take.  Thus the question of breach of public policy, if such submission indeed has any basis, should be considered by the trial judge untrammelled by any observations of this court at this stage.

15. It strikes me that the main point in the case, as both counsel agree, is the issue of the plaintiff’s title to sell these properties, which in turn begs the question as to which of these parties can be said to have wrongfully repudiated this agreement, thereby entitling his contractual counterpart to pray in aid the remedies for breach which the law confers.

16. The defendant says that on the fourteenth day after the signing of the provisional agreement, that is, on 16 June 2004, three out of the eight owners concerned attended at the office of his former solicitor and executed a power of attorney in favour of the plaintiff, authorizing the latter to deal with their particular lot.  However, it is said, the remaining five owners refused to grant any such power of attorney in favour of the plaintiff, and despite repeated requests so to do, title to the remaining properties was not demonstrated.  On the other hand, however, the plaintiff nevertheless demanded that the defendant pay the full premium for all the properties — in fact, the plaintiff purported to extend the time for such payment —and to proceed to completion before the extended completion date.  It is a matter of record that, consequent upon the ensuing dispute, the defendant at first threatened relief in terms of specific performance, albeit such remedy now is not sought in these proceedings.

17. The defendant maintains, further, on a true construction of the provisional agreement that the plaintiff is required to show good title within a reasonable time prior to completion which, as earlier observed, was designed to take place within the 30 day period after the issuance of the premium demand notes, five of which were issued on 19 July 2003 — hence the date for completion should have been on or before 19 August 2003, and, so argues the defendant, the plaintiff thus should have shown good title within a reasonable time before that date.

18. For the plaintiff Mr David Wong submitted that the defendant’s allegation that he did in fact raise requisitions — through his agent, Mr Yip Fook Sang, to the plaintiff via a Mr Wong See Man — as to the plaintiff’s authority to sell the 8 lots, and that he had requested that he show him valid powers of attorney in respect of the sale, constituted an allegation based upon demonstrably shaky evidence, and was evidence that was incapable of belief in the circumstances; moreover, he said, it was an allegation that was not placed before Master de Souza, thus raising the spectre of recent fabrication.  Further, argued Mr Wong, the additional allegation that the five remaining owners (it is common ground that three powers of attorney were executed) all along had refused to grant such powers was but another bare assertion.

19. As to the construction of the provisional agreement, Mr Wong also argued that there was no express or implied term within the provisional agreement that the obligation on the defendant to make premium payments should not arise unless and until the plaintiff had shown a good title, a proposition with which Mr Siu for the defendant took strong issue.

Decision

20. Notwithstanding Mr Wong’s forceful criticism of the defendant’s case as now propounded, I am in no doubt that there are triable issues in this case.  It seems to me that absent cross examination, and in the face of contradictory affidavits as to who said what to whom, why and when, whether the issue of authority indeed was raised, as the defendant claims, and, at bottom, who was the repudiating party and who was entitled to treat the agreement as concluded, and thus is entitled to sue for the breach thereof, are simply not matters susceptible to summary conclusion in light of the extensive evidence placed before this court.  Nor do I consider that the provisional agreement safely can be construed in isolation absent findings of fact as to the factual matrix.

21. I have little hesitation, therefore, in allowing this appeal, in setting aside the judgment earlier entered, and in sending this case to trial.  In so doing I bear in mind, as is so often the situation in summary judgment cases, that the evidential case as presented to the judge on appeal has appeared rather different to that before the learned Master below, whose decision to grant summary judgment to the plaintiff effectively, and as if by a side wind, served to decide the only real issue remaining between these parties, namely the destination of the defendant’s $4million deposit which purportedly has been forfeited by the plaintiff.  I venture to suggest that had this case taken a somewhat different shape, with the present defendant suing qua plaintiff for the return of these monies, that in such circumstances it would have been highly unlikely that the defendant summarily would have been prevented from pursuing the return of his deposit, whether or not such suit would have attracted a counterclaim similar to the claim now prosecuted by the plaintiff in the present proceedings.

Order

22. The order of the court, therefore, on the defendant’s Notice of Appeal dated 29 July 2004, is as follows :

(i)      the appeal from the decision of Master de Souza be allowed,  and the judgment entered against the defendant on 15 July 2004 be set aside;

(ii)      the defendant do have unconditional leave to file and serve his Defence and Counterclaim within 14 days of the date hereof, and the plaintiff do file and serve his Reply and Defence to Counterclaim within 14 days thereafter;

(iii)     there be discovery by exchange of lists within 14 days after close of pleadings, and inspection within 7 days thereafter;

(iv)     there be liberty to apply to a Master of the High Court for further directions;

(v)     the costs of the Order 14 proceedings, including the hearing before the learned Master, are to be costs in the cause, save that the costs of this appeal are to be reserved to the judge seized with the trial of this action.

23. As to the latter part of this costs order, it strikes me that in the circumstances of this case the court should retain flexibility as to costs of this appeal, including the scale thereof, and to defer such decision to that stage when the veracity of certain of the matters presently canvassed on affidavit can better be determined.  Should this matter in fact proceed to trial little will be lost by thus delaying any final determination of these costs — such arguments as are good now will remain as good then — whilst the possibility remains that justice thus may be better achieved in light of findings of fact consequent upon receipt of viva voce evidence.