ELSUN LTD v. CHIN MARGARET

DCCJ 361/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 361 OF 2008

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BETWEEN

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D E C I S I O N

1.  The parties returned to this court for the enforcement of this court’s order dated 28 July 2008 for specific performance of the agreement for the sale and purchase of a village house in Sai Kung, New Territories. The property apparently is still held in the name of the Defendant (“Chin”) who is the vendor. Now the Plaintiff vendor (“Elsun”) applies for, among others, a vesting order in respect of the interest in the property.

2.  Because of the intervening typhoon on 29 September, the hearing was adjourned to today.  Chin was absent.  A lady was present in court who, according to Mr Yao’s understanding, was supposed to suggest that Chin was out of Hong Kong today.

3.  Chin was supposed to attend the hearing of this application on 30 September being the day following the typhoon in accordance with the standing directive of the court.  She was absent.  Giving her the benefit of the doubt, I adjourned the application with the specific direction that notice of hearing was to be served on her for the adjourned hearing.  She was obviously aware of today’s hearing.  Now instructing a non-party to come to court and expecting the court to accept her explanation for absence from court is hardly acceptable.

4.  I allowed Elsun to proceed.  At the end of the hearing, I gave an order in favour of Elsun.  I now give my reasons.

Background

5.  Briefly, Chin and Elsun entered into a preliminary sale and purchase agreement of the property in question dated 24 September 2007.  The particulars of the property and the background of the dispute between the parties could be found in my written judgment dated 28 July 2008.  I do not repeat them here.

6.  I made the following order:

(1) The agreement in writing dated 24 September 2007 mentioned in the writ of summons be specifically performed and carried into execution.

(2) Chin do pay Elsun its costs of this action, including the O.14 application and the costs of the Order, such costs to be summarily assessed by the Master in chambers or alternatively, to be taxed, with certificate for counsel.

(3) The said costs when assessed or alternatively taxed be deducted from the amount of the balance of purchase price to be paid by Elsun and the new balance certified.

(4) It appearing that Elsun has accepted the title of Chin to the property comprised on the agreement subject to Chin duly discharging the legal charge/mortgage in favour of HKCB Finance Limited (“HKCB”), Chin do within 7 days after service upon her of the Order execute all necessary documents for the purpose of carrying the Order into effect, including the execution of an assignment of the property as an escrow such assignment to be in the form of the draft assignment exhibited.

(5) Upon Elsun paying to Chin the net balance so certified at the office of Elsun’s solicitors a a date and time to be fixed by the court, Chin do at the same time and place redeem the said legal charge and deliver to Elsun the said assignment so executed and the legal charge duly receipted and discharged and all other deeds, writings and documents of title in her possession or power relating solely to the property.

(6) Chin thereafter shall give vacant possession of the property to Elsun.

(7) The parties have liberty to apply to carry the Order into effect.

7.  Chin has appealed my judgment; but the appeal has been dismissed.  For details, see the written judgment of the Court of Appeal dated 26 February 2010.  Chin was also ordered to pay Elsun’s costs of the appeal, including the costs of the first hearing on 7 July 2009 before the Court of Appeal.

8.  Despite attempts, Elsun has yet to secure Chin’s co-operation in completing the sale and purchase. Elsun therefore exercised its liberty to apply and turned to the court for assistance.  An order on 21 June 2010 directing HKCB to disclose the status of the legal charge over the property was made.

9.  Elsun further applied to the court; and was granted another order on 26 May 2011 whereby:

(1) the balance of purchase price to be paid by Elsun to Chin, after deducting the taxed costs of Elsun in this action and the appeal as ordered by the court, was certified to be HK$1,320,090;

(2) completion of the sale and purchase of the property was directed to take place on 27 June 2011 from 2 pm to 5 pm at the office of Elsun’s solicitors, when Elsun would pay to Chin the above balance of the purchase price while Chin would redeem and discharge the legal charge over the property as well as executing all necessary documents for carrying my order in July 2008 into effect; and

(3) upon completion as aforesaid, Chin shall give vacant possession of the property to Elsun.

10.  The parties were also given liberty to apply to carry the above order into effect.

11.  It turned out that Elsun had to apply again to the court, because completion did not take place on 27 June 2011 as directed.  According to Elsun’s solicitors, that was because Chin was unprepared with all the deeds and documents in accordance with the above order of the Master for the completion.

The application

12.  By summons dated 12 July 2011, Elsun applies for directions for HKCB to disclose the outstanding loan under the legal charge in respect of the property; for Elsun to redeem and discharge the legal charge in respect of the property by making direct payment to HKCB; and finally to be vested with the property.  For the part concerning HKCB, HKCB was heard as well.

13.  On 25 July 2011, the Master granted part of the order sought, namely, that upon Elsun giving 3 clear days’ notice (such notice to be given within 1 year), HKCB shall within 10 days file with the court and serve on Elsun an affidavit to disclose information of Chin’s account(s) maintained with HKCB in respect of the legal charge of the property, including information as to the redemption money standing as at the date specified by Elsun in its notice, the amount of the accruing daily interest, the amount of any penalty upon redemption, if any, and the amount they charge in preparing for the discharge of the legal charge.

14.  As to the part to do with the vesting order and the disposal of the purchase money, the Master adjourned that for argument before me.  The Master also gave leave to Chin to file affidavit in opposition and to Elsun to file one in reply, if any.

Discussion

15.  The evidence exhibited to its affidavit shows that prior to the completion date as directed by the court, Elsun, through its solicitors, have sought confirmation from Chin as to whether she would engage solicitors to assist her in the completion.  They have also reminded Chin of the specific documents that she was obliged to bring along for the purpose of completion.

16.  Chin has filed her affidavit dated 16 August 2011 but apparently not served on Elsun.  In any event, whilst she complained that the sale and purchase was not completed on 27 June 2011, she did not deal with what Elsun explained in its above affidavit.  She blamed Elsun for causing her multiple appearances in court.

17.  On the evidence, I am satisfied that Chin has never replied or constructively responded to the above letters from Elsun; and Chin has failed or neglected to comply with her part of the obligations under my order in July 2008 and the Master’s order in May 2011 for the purpose of completing the sale and purchase of the property.

18.  O.45, r.8 of the Rules of District Court provides that:

“If an order of mandamus, a mandatory order, an injunction or a judgment or order for specific performance of a contract is not complied with, then, without prejudice to its powers to punish the disobedient party for contempt, the Court may direct that the act required to be done may, so far as practicable, be done by the party by whom the order or judgment was obtained or some other person appointed by the Court, at the cost of the disobedient party, and upon the act being done the expenses incurred may be ascertained in such manner as the Court may direct and execution may issue against the disobedient party for the amount so ascertained and for costs.”

19.  Section 45(f) of the Trustee Ordinance, Cap.29 reads:

“In any of the following cases, namely-

……

(f) where a trustee jointly or solely entitled to or possessed of any interest in land …… had been required, by or on behalf of a person entitled to require a conveyance of the land or interest …… to convey the land or interest …… and has wilfully refused or neglected to convey the land or interest …… for 28 days after the date of the requirement;

……

the court may make an order (in this Ordinance called a vesting order) vesting the land or interest therein in any such person in any manner and for any such estate or interest as the court may direct ……

……”

Section 48 reads:

“Where any court gives a judgment or makes an order directing the sale or mortgage of any land, every person who is entitled to or possessed of any interest in the land, or entitled to a contingent right therein, and is a party to the action or proceeding in which the judgment or order is given or made or is otherwise bound by the judgment or order, shall be deemed to be so entitled or possessed, as the case may be, as a trustee for the purposes of this Ordinance, and the court may, if it thinks expedient, make an order vesting the land or any part thereof for such estate or interest as the court thinks fit in the purchaser or mortgagee or in any other person.”

Section 49 follows:

“Where a judgment is given for the specific performance of a contract concerning any interest in land, or…… the court may declare –

(a) that any of the parties to the action are trustees of any interest in the land or any part thereof within the meaning of this Ordinance; or

(b) ……

and thereupon the court may make a vesting order relating to the rights of those persons……as if they had been trustees.”

20.  In the present case, it cannot be said that the sale of the property was pursuant to a judgment or order of the court envisaged by section 48 of Cap.29. 

21.  However, being the vendor of the property under the preliminary sale and purchase agreement being specifically enforced, Chin no doubt stands in a position as a trustee of the property for the benefit of Elsun subject to the payment of the balance of the purchase price upon completion in accordance with the agreement.

22.  In the circumstances, O.45, r.8 and sections 45 and 49 of Cap.29 apply to provide the needed assistance to Elsun in carrying the order for specific performance into effect.

The order

23.  I therefore gave the order:

(1)    upon and in accordance with the information obtained from HKCB Finance Limited pursuant to paragraph 1 of the Order of Master Lui dated 25 July 2011, the Plaintiff do have leave to redeem the Legal Charge on behalf of the Defendant by making a payment directly to the said HKCB Finance Limited (“the Redemption Payment”) and thereupon to collect directly from the said HKCB Finance Limited the Legal Charge duly receipted and discharged and all other deeds, writings, and documents of title in their possession or power relating solely to the Property;

(2)    within 7 days thereafter, the Plaintiff shall lodge in the Court so much of the remainder of the amount certified by Master Lui in his Order made on 26 May 2011 to be payable by the Plaintiff to the Defendant in respect of the purchase of the Property after a deduction of the Redemption Payment (“the Remainder”);

(3)    upon the Plaintiff producing proof of the making of the Redemption Payment to the said HKCB Finance Limited and the receipt of lodgement of the Remainder, all the entire legal and beneficial estate, right and interest of the Defendant in the Property be vested in the Plaintiff absolutely pursuant to section 45 and/or Section 49 of the Trustee Ordinance and vacant possession of the Property be given to the Plaintiff;

(4)    the funds in Court shall be ascertained by certificate(s) of the Registrar and be dealt with as directed in the Payment Schedule hereto:

Payment Schedule

	Particulars of payments or other operations to be carried out	Payee	Amount
1	Pay the costs of HKCB Finance Limited to be taxed under the Order made by Master S. Lo in Chambers on 21st June 2010	HKCB Finance Limited	To be ascertained
2	Pay the Plaintiff’s costs to be taxed under the Order made by Master S. Lo in Chambers on 21st June 2010	The Plaintiff	To be ascertained
3	Pay the costs of HKCB Finance Limited summarily assessed at $4,700 and paid by the Plaintiff under the Order made by Master Lui on 25th July 2011	The Plaintiff	$4,700
4	Pay the Plaintiff’s costs of this application	The Plaintiff	as summarily assessed under paragraph (5) herein
5	Pay residue of funds	The Defendant	To be ascertained

(5)    the Plaintiff’s costs of this application, summarily assessed at HK$81,500, be paid by the Defendant to the Plaintiff;

(6)    costs of this application of HKCB Finance Limited summarily assessed at HK$4,700 and met by the Plaintiff under paragraph 6 of the Order made by Master Lui in Chambers on 25 July 2011 be borne by the Defendant;

(7)    the parties are at liberty to apply to carry this Order into effect.

24.  Consistent with what was said in my written judgment in July 2008, I hand down these written reasons in English.  Interpreter’s assistance may be arranged if requested by Chin in collecting these reasons.