XCHRX CITY CHAIN PROPERTIES LTD. v. SPEEDY PORT LTD.

1998, No. A2221

HEADNOTE

Practice and Procedure. Application to strike out certain paragraphs in Statement of Claim on ground that claim is frivolous, vexatious or otherwise an abuse of the process of the court. Claim for rectification alternatively, for declaration that the agreement is not binding for want of consideration. Court's approach. Whether plain and obvious case.

1998, No. A2221

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2221 OF 1998

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J U D G M E N T

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1. This an application by the Defendant to strike out certain paragraphs and prayers for relief in the Statement of Claim on the ground that the same is frivolous, vexatious or otherwise an abuse of the process of the court. The application is not founded on the ground that the said paragraphs do not show a reasonable cause of action.

2. The dispute between the parties relate to the sale and purchase of a shop unit namely, Shop 5 at Chungking Mansion in Tsimshatsui, Nathan Road, Kowloon. The Plaintiff is the registered owner of Shop 5 and is the vendor of that unit. The Defendant is the purchaser.

3. For the purposes of this application to strike out, I must assume the facts as pleaded to be true and which will be proved at trial. The Statement of Claim was amended on 14th September 1998 after the summons was issued. However, nothing turns on the amendments on this application.

4. According to the pleaded case, about a week before 15th August 1997 one Chu Kai Wah ("Chu") a director of the Plaintiff was approached by an estate agent Joseph Ng ("Ng") of Everbright Property Consultants Ltd who indicated that he had a client who was interested in purchasing Shop 5. It was disclosed that the intended purchaser was Tang Shing Bor ("Tang"). Tang and his son were and are directors of the Defendant. Chu was asked to offer a price. After an internal meeting of the Plaintiff, Chu informed Ng that the Plaintiff would offer to sell Shop 5 to Tang at the price of HK$120,000,000 on condition that Shop 5 would be leased back to the Plaintiff's associate company, namely City Chain Co Ltd at a monthly rent of HK$500,000 so that it could continue its retail business of selling watches there. This was agreed to by Tang. All the negotiations were conducted through Ng.

5. A Provisional Agreement for Sale and Purchase dated 15th August 1997 ("the Provisional Agreement") was entered into whereby the Plaintiff agreed to sell and the Defendant agreed to buy Shop 5 at HK$120,000,000. The Provisional Agreement set out the terms for further payments and for completion to take place on or before 5th January 1998. HK$3,000,000 had to be paid on signing the Provisional Agreement and HK$9,000,000 had to be paid on signing the Formal Agreement for Sale and Purchase on or before 1st September 1997. On signing the Provisional Agreement the Defendant paid HK$3,000,000. In the Provisional Agreement, the property was described as "Shop 5, Ground Floor, Chungking Mansion, 36-44 Nathan Road Tsimshatsui".

6. Pursuant to the Provisional Agreement, the parties instructed their respective solicitors to draw up a Formal Sale and Purchase Agreement. The Plaintiff instructed Messrs. Woo, Kwan, Lee & Co ("WKLL") and the Defendant instructed Messrs. Johnson Stokes & Master ("JSM").

7. A Formal Agreement dated 4th September 1997 ("the Formal Agreement") was executed by the parties and upon execution of the same, the Defendant paid to the Plaintiff a further deposit of HK$9,000,000. It was provided that the purchase should be completed on or before 5th January 1998.

8. The property was described in the Formal Agreement as follows:

"ALL THOSE 4 equal undivided 920th parts or shares of an in ALL THAT piece or parcel of ground registered in the Land Registry as THE REMAINING PORTION OF KOWLOON INLAND LOT NO 6817 ("the Lot") And of and in the messages erections and buildings thereon now known as CHUNGHING MANSION ("the Building") TOGETHER WITH the right to the exclusive use occupation and enjoyment of ALL THAT SHOP 5 on the GROUND FLOOR of the Building as shown and coloured Pink on the Ground Floor Plan annexed to an Assignment registered in the Land Registry by Memorial No. 1496425 ("the Assignment") AND TOGETHER with the right to use ALL THAT the WALL STALLS ON THE EXTERIOR OF THE BUILDING EXCLUDING THE NATHAN ROAD FRONTAGE of the Building".

It can be seen, therefore, that not only was Shop 5 included in the Formal Agreement but also the right to use all the wall stalls on the exterior of the building excluding the Nathan Road frontage of the building ("the wall stalls"). I shall come back to the wall stalls later.

9. Shortly before completion, the Defendant through Ng proposed to extend the completion date to 12th February 1998 in payment of a further deposit of 5% of the purchase price. This proposal was accepted by the Plaintiff and a Supplemental Agreement in Chinese was entered into between the parties dated 3rd December 1997 ("the Supplemental Agreement"). The property was described in the Supplemental Agreement as "Shop 5, Ground Floor, Chungking Mansion, Nos. 36-44 Nathan Road, Kowloon" without any mention of the wall stalls. The Plaintiff was paid a further sum of HK$6,000,000 making a total payment of HK$18,000,000 as deposit. Completion did not take place on the extended date for completion namely, 12th February 1998.

10. Prior to completion, the Defendant raised certain requisitions and queries through solicitors which included requisitions and queries as regards the wall stalls. The Defendant considered that the requisitions and queries that were raised were either not answered or not answered satisfactorily and contended that the Plaintiff failed to show good title before completion. It was also contended that the Plaintiff was unable to give good title in particular, in respect of the wall stalls. A purchaser has, of course, a duty not only to give good title but also to show good title before completion. In the circumstances, the Defendant alleged that the Plaintiff was in repudiatory breach of the Formal Agreement. This was accepted by letter from the Defendant's solicitors to the Plaintiff's solicitors dated 12th February 1998 and the Defendant demanded, inter alia, the return of the deposit.

11. By letter dated 13th February 1998 the Plaintiff's solicitors informed the Defendant's solicitors that the Defendant was in breach of the Formal Agreement by failing to complete the purchase on 12th February 1998 and accepted the Defendant's repudiation of the Formal Agreement. The Plaintiff also exercised its right under the Formal Agreement to forfeit the deposit paid and reserved its right to claim damages.

12. Thus, the battle lines were drawn between the parties by 13th February 1998. Neither party was seeking to proceed with the Formal Agreement. Each party treated the Formal Agreement as having been discharged by the other party's repudiation of the Formal Agreement which was accepted.

13. On 14th February 1998 the Defendant commenced proceedings by way of Originating Summons in Miscellaneous Proceedings No. 630 of 1998. That was a Vendor and Purchaser Summons seeking, inter alia, declarations and return of all sums paid to the Plaintiff as deposit and part payment. On the same day, the Plaintiff commenced these proceedings by Writ of Summons and claimed, inter alia, a declaration that the deposit paid has been forfeited and damages for breach of the Formal Agreement in view of the fall in property values in Hong Kong at the completion date.

14. On 24th February 1998 the Plaintiff's solicitors informed the Defendant's solicitors that the Plaintiff would apply to rectify the Formal Agreement. The Statement of Claim dated 14th March 1998 included a prayer for relief seeking rectification. Prayer (a)(i) is as follows:

"An order that Part VI of the First Schedule of the Formal Agreement be rectified by deleting the phrase "AND TOGETHER with the right to use ALL THAT the WALL STALLS ON THE EXTERIOR OF THE BUILDING EXCLUDING THE NATHAN ROAD FRONTAGE of the Building."

Prayer (a)(ii) is in the alternative and is as follows:

"A declaration that the purported agreement whereby the Plaintiff agreed to sell the Wall Stalls to the Defendant in the Formal Agreement is not binding for want of consideration."

The Indorsement of Claim had been amended on 12th March 1998 to include the above claims.

15. The application before me is to strike out the paragraphs in the Statement of Claim in support of the prayers for relief set out above namely, prayers (a)(i) and (ii) as well as to strike out the said prayers for relief. The relevant paragraphs of the Statement of Claim have been identified in the summons dated 3rd April 1998 as paras 3-9, 13-21, 26, 28, 29 and 61.

16. I am not concerned with the dispute between the parties as to whether or not the Plaintiff was required to answer the requisitions or queries raised, whether good title was shown before completion and whether the Plaintiff was able to give good title to the Defendant. Those are all matters which will have to be determined in the dispute between the parties at some future time. I am only concerned with the question of whether the said paragraphs of the Statement of Claim and the said prayers for relief should be struck out.

The Court's Approach

17. It is important to remember that the Defendant does not seek to strike out the paragraphs set out in the summons on the ground that the same do not disclose a reasonable cause of action. The only ground relied on is that the same is frivolous, vexatious or otherwise an abuse of the process of the court.

18. It is trite law that the court will exercise its power to strike out only in plain and obvious cases. It must be demonstrated to the court that the Plaintiff is bound to fail before the court will exercise its summary power to strike out and dismiss a claim.

19. The court should not embark on a mini-trial of the action based on affidavit evidence alone. In this context, I respectfully adopt what Danckwerts L.J. said in Wenlock v. Moloney [1965] 1 WLR 1238 at 1244:

"But this summary jurisdiction of the court was never intended to be exercised by a minute and protracted examination of the documents and facts of the case, in order to see whether the plaintiff really has a cause of action. To do that is to usurp the position of the trial judge, and to produce a trial of the case in chambers, on affidavits only, without discovery and without oral evidence tested by cross-examination in the ordinary way. This seems to me to be an abuse of the inherent power of the court and not a proper exercise of that power."

20. And as to whether an action or a claim is bound to fail, I consider as helpful the observations of Godfrey J. (as he then was) in Hutchvision Asia Ltd v Asia Television Ltd [1993] 2 HKC 510. Godfrey J. was dealing with an application to strike out the defence and having considered the considerable strength of the plaintiff's case, he said this at 514:

"That is a formidable case, no doubt. But any lawyer with any experience of private practice will be able to remember, only too well, those cases which appeared to be certainties but which, to his surprise, nevertheless failed and, by the same token, those cases which seemed bound to fail but which, to his surprise, nevertheless succeeded. It is for just this reason that the court will not embark, at this stage of an action, on a consideration whether the case of one side or the other is true or false. It will consider only whether the nature of the defence is such that it has to be characterized as an abuse of the process of the court, which is something else altogether."

The court was there dealing with an application to strike out the defence but the observations are, in my view, equally applicable where an application is made to strike out a claim on the ground that it is frivolous, vexatious or otherwise an abuse of the process of the court.

The Wall Stalls

21. Chungking Mansion is a multi-storeyed building in the heart of Tsimshatsui in Kowloon with a multitude of shops, restaurants, business premises and residential units. Apart from the many shops inside the building, the evidence shows that at all material times there are and were wall stalls on the exterior of the building. These were business stalls set up along the external wall of the ground floor of the building. They were not on the front of the building facing Nathan Road but on the side. Photographs of the wall stalls were adduced in evidence as was the ground floor plan attached to a surveyor's report showing the wall stalls. There were altogether seven walls stalls each of which was a self contained unit. The total floor area of the seven wall stalls was about 429 sq. ft. There was only one wall stall outside Shop 5. There were two wall stalls outside Shop 6 and four wall stalls outside Shop 1.

22. It has been demonstrated to me that the wall stalls were not included or mentioned in the Deed of Mutual Covenant dated 1st May 1962 in respect of Chungking Mansion. Four units in the land were allotted to Shop 5 under the Deed of Mutual Covenant. No units were allotted to the wall stalls.

23. The Plaintiff acquired Shop 5 in 1994. According to the affirmation of Chu made on 16th May 1998, he was advised at that time by the solicitor representing the Plaintiff that the wall stalls were included in the assignment of Shop 5 to the Plaintiff dated 31st March 1994. He was further advised that the exact location of the wall stalls could not be identified and that there may be problems as to the title of the wall stalls. He goes on to explain why in time the Plaintiff simply forgot that the Plaintiff in addition to being the registered owner of Shop 5 was also entitled to the right to use the wall stalls. As I have said, whether or not the Plaintiff had a good title to the wall stalls is not a matter for me to determine but for determination at some future time in the dispute between the parties. But it is clear that the wall stalls are prima facie valuable property rights comprising about 429 sq. ft. Shop 5 with an area of only about 753 sq. ft. was sold for HK$120,000,000 in August 1997.

Common Intention

24. It is the Plaintiff's case that the wall stalls were included in the Formal Agreement as a result of a mistake. The Plaintiff's case is that in the course of the negotiations between the parties through Ng leading up to the making of the Provisional Agreement, which is a legally binding contract, no mention was made by anyone of the wall stalls. The Provisional Agreement only mentioned Shop 5. Tang could hardly have failed to mention the wall stalls if he intended to buy the same. These were valuable property rights. Tang was an experienced and a well-known investor in real property, especially shop premises. He was nicknamed "king of shop premises". Also, Tang must have known of the presence of the wall stalls. He was a director of a company which had purchased Shop 1 in Chungking Mansion. Of the seven wall stalls, four were outside Shop 1. If Tang had wanted to buy the wall stalls as well, he could hardly have failed to mention this in the course of the negotiations leading up to the making of the Provisional Agreement.

25. The Provisional Agreement described the property only as 'Shop 5' without mentioning the wall stalls. Mr Tang S.C. for the Defendant submitted that 'Shop 5' as described in the Provisional Agreement was merely a shorthand description and it necessarily included the wall stalls just as it necessarily included the undivided parts or shares in the land. Wherever one purchases a flat or shop unit in Hong Kong, I accept that this necessarily means that he is purchasing the undivided parts or shares in the land attaching to the particular flat or shop unit together with the right to the exclusive use, occupation and enjoyment of that particular flat or shop unit. However, I do not accept that it necessarily also implies that all other property rights which the vendor has is also included such as the wall stalls in this case. At least, it is not plain and obvious to me that the wall stalls are necessarily included in the description of the premises as 'Shop 5' in the absence of an express inclusion of the same.

26. In my judgment, it is at least reasonably arguable that the common intention of the parties leading up to the making of the Provisional Agreement was that the wall stalls were not part of the bargain and that only Shop 5 was. I include, of course, the 4 equal undivided 920th parts or shares in the land attaching to Shop 5.

The Mistake

27. It is common ground between the parties that the Formal Agreement superseded the Provisional Agreement. But until the Formal Agreement was entered into, the parties already had a binding legal contract in the Provisional Agreement which arguably was only for Shop 5 and not the wall stalls. Mr Chan S.C. for the Plaintiff submitted that the wall stalls were included in the Formal Agreement by reason of mistake. He pointed out that the wall stalls were also not included in the subsequent Supplemental Agreement which was signed by the parties without their solicitors and submitted that this also reflected what the true common intention between the parties was.

28. Chu explains in paras 17 and 18 of his said affirmation why the wall stalls were included in the Formal Agreement. He said as follows:

"17. WKLL then conducted a land search. The land registry record showed the relevant address as:

"Shop 5 on G/F and wall stalls on the exterior of the building excluding the Nathan Road Frontage Chungking Mansion Nos 36-44 Nathan Road Kowloon."

As the wall stalls were not described in the Provisional Agreement at all, Ip and I had a telephone conversation whereby Ip informed me of this point."

Ip was the Plaintiff's solicitor handling the transaction for the Plaintiff. And in para 18 Chu said this:

"At that time, I could not recollect what the wall stalls were. In my mind, I thought that since the wall stalls were included in the Land Registry record, I believed and assumed that the Plaintiff was obliged to sell the wall stalls in addition to Shop 5 pursuant to the Provisional Agreement notwithstanding that they were not mentioned there. Without disclosing my belief and assumption, I simply confirmed to Ip that the tenancy agreement and the Formal Agreement should follow the land search record and include the wall stalls. It was only at a much later stage (explained in paragraph 40 below) that I discovered my belief and assumption to be mistaken."

29. In paragraph 40 of his affirmation he says this:

"On or about 17th February 1998, during an internal meeting of the Plaintiff, the discrepancy in the property description ie no reference to the Wall Stalls in the Provisional Agreement and Supplemental Agreement as opposed to a reference in the Formal Agreement was raised and I was asked as to the circumstances under which the Wall Stalls were included in the Formal Agreement. It was only then, for the first time, I disclosed to those at the meeting, and indeed anybody, my belief and assumption set out in paragraph 18 above. Subsequently, the Plaintiff's lawyers advised me that my belief and assumption was mistaken and erroneous and that, because of this, the Plaintiff was entitled to rectify the Formal Agreement by deleting the reference to the Wall Stalls. It was under these circumstances that the Plaintiff became aware of its right to rectification."

That is the reason why it was only on 24th February 1998 WKLL informed the Defendant's solicitors of the claim for rectification of the Formal Agreement.

30. The wall stalls were first mentioned in the description of the property in the letter dated 26th August 1997 from JSM to WKLL. Mr Tang S.C. said that it was not a mistake for JSM to include it in the description of the property in the letter. I am convinced that the correspondence between the solicitors does not reveal the whole picture. Did the solicitor in JSM make the same mistake and include the wall stalls in the description of the property because of the description of the address in the Land Registry record? Why the solicitor in JSM included the wall stalls in the description of the property in the correspondence with WKLL is surely a matter to be explored at trial with the benefit of cross-examination and pre-trial discovery, including interrogatories. It is, in my view, reasonably arguable that the wall stalls were inserted as a mistake.

31. In his written skeleton submissions, Mr Tang took the view that the wall stalls were included in the Formal Agreement but not the Provisional Agreement because the subject-matter of the premises was re-negotiated between the respective solicitors. This, however, was not pursued in his oral submissions to me. He submitted that the wall stalls had been included all along because the description of 'Shop 5' was merely a shorthand description to include the wall stalls as well. Counsel, of course, is not bound by his skeleton submissions in the same way as a pleading but this shift in the Defendant's position on this demonstrates that there can be no concluded view on the matter at this stage and that the matter should not be decided summarily without the benefit of all the evidence to be adduced at the trial as to what the parties' respective intention was. As I have said, it is reasonably arguable that the common intention between the parties was that Shop 5 without the wall stalls was the bargain between the parties and this common intention continued right up to the time of the execution of the Formal Agreement. It is reasonably arguable, in my view, that the inclusion of the wall stalls in the Formal Agreement was as a result of a common mistake between the parties and which did not reflect the true common intention of the parties according to the legally binding contract they had entered into, namely the Provisional Agreement.

32. It is stated in para 5-042 Vol 1 Chitty on Contracts 27th Ed. that:

"As a general rule in cases where a contract is sought to be rectified the mistake must be one of fact, not law, but this rule does not apply to a mistake as to private rights of property."

The mistake that was made in this case was not, in my view, a mistake of law so as to disentitle the Plaintiff to relief by way of rectification. It was, or at least it is reasonably arguable that it was, a mistake as to private rights of property. (See also Allcard v Walker [1869] 2 Ch. 369 and Solle v Butcher [1950] K.B. 671.)

33. Mr Tang also referred me to Kemp v Neptune Concrete 57 P. & C.R. 369. He relied in particular on what Purchas L.J. said at 377 regarding rectification in that case:

"However, before such relief can be obtained in the context of this appeal, three criteria must in my judgment be established: First, a mistake by the party seeking relief in executing the deed which does not translate that party's subjective intention at the time of the execution of the deed. I distinguish this from an intention which the party would have formed if either he or she had been properly advised, or had even applied their minds to the problem. In those circumstances it is clear that, from the passages I have already cited, the moment of time at which the subjective intention of the party seeking relief must be determined, is at, or immediately before, executing the deed. Thus, no ex post facto intention can be admitted in such circumstances.

Secondly, there has been no mistake by the party against whom relief is being sought, but who intends the result achieved by the deed, or has merely accepted that deed by execution.

Thirdly, there must be established awareness on the part of the party against whom relief is being sought of the other party's mistake at the time of executing the deed; and further, that in so standing back and allowing the other party to execute the deed, the conduct of the party against whom relief is sought was unconscionable behaviour on his part in inducing the party who is seeking rectification to execute the deed, or in standing by and allowing him so to execute it. In my judgment, equity will only intervene if all these three criteria are satisfied."

Mr Tang submitted that in this case the subjective intention was to include the wall stalls in the Formal Agreement. That was also the Defendant's intention and hence, the claim for rectification was bound to fail. That, however, in my view, begs the question. The question is why were the wall stalls included in the Formal Agreement? Was it as a result of a mistake which was common to both parties?

34. Purchas L.J. was dealing with a case, not on common mistake, but on unilateral mistake. Also the mistake there was one of pure fact unlike the situation here where there was a mistake as to private rights of property. That case is distinguishable. Also, I doubt that in the passage set out above Purchas L.J. was intending to lay down a general principle applicable to all types of situations where rectification is claimed. It is quite plain that he was dealing with the case on the facts as found after trial and "in the context of the appeal".

35. Also, in the cases of Allcard v Walker (supra) and Solle v Butcher (supra) I suppose it could be said that the subjective intention of the parties in those cases was to include the matters which were mistakenly inserted in the document. That did not prevent the court from granting equitable relief.

36. I also refer to what Stirling J. said in Allcard v Skinner (supra) at 381:

"Private right of ownership is a matter of fact; it may be the result also of matter of law; but if parties contract under a mutual mistake and misapprehension as to their relative and respective rights, the result is, that that agreement is liable to be set aside as having proceeded upon a common mistake."

37. In the above cases, rescission instead of rectification was claimed. But I see no reason why in principle the claim for rectification is bound to fail in this case.

38. The case of Frederick E. Rose (London) Ltd. v. William H. Pim Jnr. & Co. Ltd. [1953] 2 Q.B. 450 cited by Mr Tang does not, in my view, assist the Defendant. It was held in that case that as the concluded oral agreement between the parties was for horsebeans and the written contracts were in the same terms, rectification was not available to make new contracts for feveroles between the parties. In my view, that case is clearly distinguishable. The common intention between the parties in that case was to buy and sell horsebeans and on that basis there was no mistake in the written contracts unlike the situation in the present case. The matter is clearly set out in the judgment of Morris L.J. at 463 when he said:

"It seems to me clear beyond doubt that both parties proceeded on the basis that "feveroles" and "horsebeans" were the same. The plaintiffs' representative expressed the matter succinctly when he said: "I had agreed to buy because feveroles were "horsebeans and horsebeans were feveroles." In that belief the parties came to agreement, and the formal written contracts were prepared and signed. The parties had throughout a clear common intention and purpose of buying and selling horsebeans, and their written agreements faithfully embodied and exactly recorded what they had agreed. In these circumstances it seems to me that no claim for rectification can succeed."

In the present case, I have already found that it is reasonably arguable that the inclusion of the wall stalls in the Formal Agreement was as a result of a common mistake between the parties.

39. The Plaintiff's case in the alternative is that if the mistake was made by the Plaintiff unilaterally, the Defendant has had knowledge of the same and has wrongfully failed to draw the Plaintiff's attention to such mistake. On the question of unilateral mistake, Mr Tang also referred me to Agip S.p.A. v Navigazione Alta Italia S.p.A. (The "Nai Genova" and "Nai Superba" [1984] 1 Lloyd's Rep 353). Slade L.J. after reviewing some of the authorities on rectification because of unilateral mistake said this at 362:

"In all the various formulations of the relevant principle in the judgments in those cases, none of the members of the respective Courts suggested that rectification can properly be granted on account of unilateral mistake unless the defendant had actual knowledge of the existence of the plaintiff's mistake at the time when the contract was signed."

It was also submitted that in this case actual knowledge on the part of the defendant could not be shown and hence the claim based on unilateral mistake was bound to fail.

40. I disagree with counsel. Actual knowledge has been pleaded in para 20 of the Statement of Claim. It may be that the defendant is entitled to further and better particulars of that plea but that is not a reason to dismiss the claim summarily. It must be remembered that the application is not made on the ground that the pleading does not disclose a reasonable cause of action but only on the ground that it is frivolous, vexatious or otherwise an abuse of the process of the court.

41. Furthermore, I accept Mr Chan's submission that the law in this respect is still developing. Slade L.J. was not, in my view, laying down an exhaustive statement of the law as to when rectification is available on the ground of unilateral mistake. It was not in every case essential to show actual knowledge on the part of the defendant that the other party was mistaken (see e.g. Commission for The New Towns v Cooper (Great Britain) Ltd. [1995] Ch 259).

42. I am satisfied that the claim should not be dismissed summarily. Rectification is an equitable and discretionary remedy. The court no doubt will consider all the circumstances of the case before granting relief at trial.

43. It was further submitted by Mr Tang that it was too late to claim rectification where the Formal Agreement had already been discharged by 13th February 1998. He referred to Snell's Equity 29th Ed. where it is stated:

"Further, it is too late to claim rectification of a contract if it is no longer capable of performance ....."

The case of Borrowman v Rossell [1864] 16 C.B. (N.S.) 58 is cited as the authority in support of that statement. That is certainly a matter that the Defendant can put forward as a defence but does it mean that the Plaintiff's claim is bound to fail?

44. Mr Chan referred me to the Australian textbook 'Equity Doctrines and Remedies' 3rd Ed. by Meagher, Gummow and Lehane where at para 2619 it is stated:

"It is usually said in the textbooks on the subject that rectification will be refused if the contract sought to be rectified is no longer capable of performance. It is a general statement resting on the slender foundation of a dictum by one common law judge in an ancient case, and it is not universally true. Where, for example, the contract is no longer capable of performance because one party has terminated it for the other party's repudiation, rectification may still be ordered so that the innocent party may sue for damages for breaches which have occurred before repudiation of the contract as so rectified."

45. Also, Vol 7 'The Laws of Australia' in dealing with rectification in Australia at para 163 provides that:

"...... the fact that after a decree of rectification has been made the contract embodied in or evidenced by the rectified document can no longer be performed according to its terms is, in itself, no bar to rectification. The contractual document as rectified can be used as the basis for a claim for damages at common law."

This is a matter which ought to be resolved at trial. In my judgment, it is also not plain and obvious that the claim for rectification is bound to fail because it was raised after the Formal Agreement had already been discharged.

46. The claim in the alternative in prayer (a)(ii) is for a declaration that the purported agreement whereby the Plaintiff agreed to sell the wall stalls to the Defendant in the Formal Agreement is not binding for want of consideration. On the basis that the subject-matter of the property under the Provisional Agreement was for Shop 5 only without the wall stalls, the Defendant agreed to pay $120,000,000 for this under the Provisional Agreement. The price under the Formal Agreement was the same even though something extra was included, namely the wall stalls. In my judgment, it is reasonably arguable that the agreement for the wall stalls was not binding for want of consideration.

47. In the circumstances, in my judgment this is not a plain and obvious case where the court should exercise its summary power to strike out and dismiss the Plaintiff's claims as sought by the Defendant. I dismiss para 1 of the summons. Paras 2 and 3 are also dismissed. As to para 4, the Defendant is given leave to withdraw the summons taken out on 19th February 1998. Para 5 of the summons as to the filing of the Defence has already been dealt with by Master Kwan on 9th April 1998. I make an order nisi for costs of the application to be paid by the Defendant to the Plaintiff.