GRANDWIDE LTD v. BONAVENTURE TEXTILES LTD

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JUDGMENT

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Penlington, J.A.:

1. This is the judgment of the Court.

2. The appellants herein (Grandwide) issued proceedings, arising from an agreement for the sale and purchase of land, against the respondent (Bonaventure), by specially endorsed writ dated the 13th October 1989. The statement of claim was amended on the 21st November 1989. By a summons filed on the 9th November 1989 Grandwide sought judgment under Order 14 rule 1 and by an order dated the 7th December judgment for the return of its deposit and for damages to be assessed was awarded by the Master. In the meantime Bonaventure filed a defence and counter claim. Bonaventure also appealed against the Master's decision and in a judgment dated the 23rd February 1990 Jones, J. allowed the appeal and set aside the order. He did not however specifically give leave to defend.

3. Grandwide now appeals against that decision.

4. By a written contract dated the 18th May 1989 Bonaventure agreed to sell and Grandwide agreed to purchase for the sum of $68,700,000 the lower six floors, together with ten carparking spaces on the ground floor, of an industrial building at Cheung Sha Wan known as the Bonaventure Industrial Building. Under the terms of the agreement deposits totalling $13,740,000 were paid by Grandwide to Bonaventure. The completion date specified in the contract was on or before the 30th September 1989 and it was to take place at Bonaventure's solicitors' offices. As the 30th September 1989 was a Saturday the contract also provided that completion was to take place before 12 noon. The contract stated, as is common in conveyancing contracts in Hong Kong, that time was to be of the essence of the contract. As has happened in other cases this has caused the difficulties which have been encountered here and we can only repeat what has been said in this Court on previous occasions that it is difficult to understand why this clause is included in conveyancing contacts.

5. It was not in dispute that prior to the 30th September Grandwide had re-sold all the property which it had agreed to purchase. There were three such sales and notice had been given to Bonaventure calling for the conveyances to be made direct to these sub-purchasers and that Bonaventure would execute as confirmor. The completion date for each of these sub-purchase agreements was also the 30th September. The other events which occurred between the date of the contract and the date for completion were those in China in June 1989 which caused a drop in property prices in Hong Kong. As a result of this the amount to be paid to Grandwide by their sub-purchasers was some $14,000,000 less than the purchase price payable to Bonaventure.

6. Some days before the 30th September Bonaventure began to move their machinery and equipment from the premises. It is not now in dispute that Grandwide did not require the removal of fittings such as partitions, air conditioning ducts and furniture which was fixed to the building. However clause 21 of the contract on which Grandwide relies provided that vacant possession should be given at. the date and time of completion. The dispute between the parties revolves virtually entirely around what is meant by "vacant possession" and whether this was or was not given to Bonaventure on the 30th September 1989 at 12 noon. It is Grandwide's claim that such vacant possession was not given because at that time Bonaventure were still in the process of moving out and the ground floor carparks in particular were occupied by office equipment, motor vehicles and other goods belonging to Bonaventure thus preventing Grandwide from having access to the upper floors to which they were entitled.

7. A large number of photographs were taken by employees of Bonaventure on the 30th September both before and after 12 noon showing the condition of the premises at those times. It would seem clear from those photographs that there was a considerable amount of Bonventure's goods still in the premises by mid morning but it is also clear that by approximately 3 p.m. virtually all of those goods had been removed. Grandwide however takes the strict legal point that under the terms of the contract it was entitled to vacant possession at 12 noon and not at 3 p.m. It relies for the proposition that there can be no question of de minimis in relation to time when it is made of the essence of the contract on the dicta of Lord Shaw in Maclaine v. Gatty [1921] 1 A.C. 376 at 393 where he said:

while these matters always have to be looked at with common sense and delay of pernaps a few minutes might not entitle a party to repudiate a contract, that general position has been accepted. Bonaventure do not dispute the general proposition that de minimis does not apply to time but argue that it does apply to the question of whether physical vacant possession was or was not made available at 12 noon on the 30th September. Furthermore they argue that this is a question of fact to be decided when the matter goes to trial and the parties' witnesses are heard by a trial judge.

8. In a letter of the 29th September, the day before completion, solicitors acting for one of the sub-purchasers, Gloss Express Limited, wrote to Granawide's solicitors, Messrs. Baker & McKenzie, stating that their clients were doubtful that vacant possession would be available to them the following day because of the state of the premises. This letter referred to the fourth and fifth floors and also to the carpark spaces. These complaints were then incorporates in a letter which Baker & McKenzie in turn sent to Bonaventure's solicitors, Messrs. Johnson, Stokes & Master. Somewhat surprisingly in view of the fact that agreement had been reached that fixtures could remain the complaint referred to such things as false ceilings, overhead lights and air conditioning pipes. There was however complaint about chairs and rubbish on the floors and that the carpark spaces were obstructed or blocked by rubbish or other heavy materials.  It seems that this letter was received by Johnson, Stokes & Master at approximately 11:30 on the 30th.  The immediate reply was sent to Baker & Mckenzie denying that Bonaventure was in default in delivering vacant possession. It was alleged that on the contrary Grandwide had failed to complete in terms of the agreement. An offer was however made to complete the matter on the following Monday, the 2nd October. This offer was declined.

9. The first of the photographs of the premises were taken at about 9:30 a.m. on the 30th September by Mr. Jack Lau and his driver, a Mr. Ma Hing Keung. Mr. Lau said that the carpark spaces on the ground floor were all full of either goods or motor vehicles and Mr. Ma had to park their car outside.  The photographs, which were taken clearly, snow a considerable amount of goods of all sorts, which were not the property of the plaintiffs, on all the floors which were the subject of the agreement and also on the ground floor. If that position had remained undoubtedly the plaintiffs would have had a very strong claim that they were not able to take up vacant possession. However further photographs were taken at about 1 p.m. and they also clearly show that almost all these goods had been removed by then. Indeed no real complaint is now made that the first to sixth floors were themselves so obstructed that vacant possession was not available. Mr. Chien Hung Fong, the assistant factory manager of the defendant, has sworn an affidavit in which he has gone through the photographs and has indicated on them the articles which he says were in fact removed prior to noon. This evidence is not challenged.  What is however now the plaintiffs' case is that the photographs taken at 1 p.m. or shortly thereafter do show that the carparks were obstructed and there were vehicles on the ground floor engaged in   removing Bonaventure's goods. Mr. Michael Thomas, leading counsel for Grandwide, lays great emphasis, and it is now his case, that because Grandwide were not able to park their vehicles in these spaces they were not therefore able to unload their own goods and to gain proper access with their goods to the upper floors. He lays emphasis on Mr. Jack Lau's affidavit in which he said that at l p.m. there was no room to park his van anywhere on the ground floor of the premises and, at the direction of the caretaker, it had to be parked in the street.

10. Mr. Chien in his affidavit has referred to the photographs taken on behalf of Bonaventure and in relation to the ones taken at 9:30 has indicated by means of superimposed arrows those articles on the various floors which were removed before 12 noon.  Other ones he has marked as being still there at 1 p.m. It seems that the workmen who were engaged in doing the removal work had gone away for lunch at about 12 noon.  Mr.Chien has also produced sketch plans of the various floors of the building including the ground floor and I have found these sketches to be very informative.  He has delineated on these sketches where goods were still placed and it is clear from them that there were very little, if any, of Bonaventure's goods on any of the floors apart from the ground floor.

11. Of the actual carpark spaces it would seem that spaces 10, 11, 12 and 13 were half occupied by goods and there was an area between carpark spaces I and 2, 3 and 5 which appears to be a common area which no doubt was used for the loading and unloading of goods as it was adjacent to lifts. This area however was not part of the building which was being sold to Grandwide.  It also seems that two motor vehicles, which may have been Bonaventure's, were parked in one of the carparking spaces, probably no. 5. There was one truck in the common area loading goods.

12. The leading authority on the question of vacant possession and the only one which I feel we need refer to is Cumberland Consolidated Holdings Limited v. Ireland [1946] 1 K.B. 264. There a disused warehouse had been sold but it was found that on the date when vacant possession was to be given the cellar was substantially full of bags of cement which had gone hard. The cement was quite valueless but its presence prevented the use of the cellars for any purpose. Mr. Thomas relies on what Lord Greene M.R. said at 270:

13. We are of the view that here there is a substantial issue to be tried as to whether Bonaventure's goods occupying, as they did, part of the carpark spaces (and by goods I include the motor cars although that is not specifically pleaded) did constitute such a substantial impediment to Grandwide as to interfere with the right of possession of the upper floors. There is evidence on either side fit to be considered at a trial of this action and we agree with Jones, J. that those issues cannot be determined on affidavit evidence.

14. This is not a case which is so plain and obvious that we would hold that there can be no defence to the claim.  We dismiss the appeal and, to avoid any doubt, grant Bonaventure unconditional leave to defend. We also make an order nisi that Bonaventure is to have its costs of the appeal.