YEUNG YIN WA v. CHAN HO CHUEN AND ANOTHER

cacv 386/2004

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 386 of 2004

(on appeal from DCCJ NO. 3428 of 2004)

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REASONS FOR JUDGMENT

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Hon Yeung JA (giving Reasons for Judgment of the Court):

1.  On 11 May 2005, we dismissed both the appeal and the cross-appeal with no order as to costs. We indicated that we would give our reasons in writing and this we now do.

Background Facts

2.  By a sale and purchase agreement dated 10 May 2004 (the agreement), the plaintiff agreed to purchase and the defendants agreed to sell the property at Flat E, 10/F, Block 6, Tung Chung Crescent in Tung Chung (‘the property’).

3.  Clause 3(1) of the agreement obliged the parties to complete the sale between 9 a.m. and 5 p.m. on 21 June 2004 and clause 5 also provided, as a condition precedent, “that vacant possession of the property shall be given to the Purchaser on the actual day of completion (Emphasis added).

4.  By an undertaking contained in a letter dated 18 June 2004, the defendants further undertook, inter alias “ to forward to us (the purchaser) or advise the estate agent to forward to the purchaser direct forthwith the keys of the property so that possession can be taken without delay”.

5.  The defendants’ solicitors did not actually sign the undertaking letter, modified and delivered by the plaintiff’s solicitors on 21 June 2004.  However, the binding effect of the letter was agreed.

The Issues

6.  The plaintiff sought to rescind the agreement on the basis that the keys of the property were only delivered to her solicitors at 5.15 p.m. on 21 June 2004.

7.  The plaintiff claimed against the defendants for the return of the deposit and damages.

8.  The defendants denied that the delivery of the keys of the property to the plaintiff at 5:15 p.m. on 21 June 2004 constituted any breach of the agreement.

9.  The defendants contended that the plaintiff had repudiated the agreement and hence claimed for the right to forfeit the deposit, and for damages.

10.  In her reply and defence to counterclaim, the plaintiff alleged an oral agreement reached in the morning of 21 June 2004 that “the giving of the keys and hence vacant possession of the property to the plaintiff to be carried out at and through the Estate Agent’s office upon the defendants’ solicitors receiving payment of the balance of the purchase price…”, which agreement in fact led to the slight modification of the letter of undertaking.

11.  Despite the fact that the plaintiff’s solicitors had informed the defendants’ solicitors that the completion documents and the cheque for the balance of the purchase price would be delivered to the defendants’ solicitors not later than 4 p.m. on 21 June 2004, which they did at 3:57 p.m., the defendants failed to deliver the keys of the property before 5 p.m. on the completion date and was thus in breach of the agreement.

12.  The plaintiff further suggested that the conduct of the defendants between 4 and 5 p.m. on 21 June 2004 evinced an intention not to be bound by the agreement.

The Applications

13.  On 23 August 2004, the plaintiff took out an Order 14 summons, seeking judgment on her claim against the defendants. On 30 September 2004, the defendants took out an Order 14A summons, seeking a determination on the following points of law:

“Whether under a Hong Kong style of completion, possession of the property does not have to be given simultaneously with a receipt of the price such that plaintiff’s only right is to receive personal undertakings from the defendants’ solicitors to, inter alias, procure the delivery of the keys/possession of the property within a specific time” and

“That if the said question of law be answered in the affirmative, then… whether the undertaking to forward ‘forthwith’ the keys of the property in the undertaking letter dated 21 June 2004, properly construed, envisages some postponement in the giving of possession after completion and is validly honoured by handing over the keys to the plaintiff’s solicitors at or about 5.15 p.m. on the day of completion.”   

The Decisions

14.  The two summonses went before Judge Chow in the District Court (the judge) on 30 September 2004. By a judgment handed down on 18 November 2004, the judge dismissed both summonses with costs.

15.  The judge took the view that irrespective of the terms of the agreement, the undertaking given in the letter prepared by the plaintiff’s solicitors had superseded the agreement.

16.  Referring to Wellift Investment Ltd v Poly Commence Ltd [1997] HKLRD 857, the judge concluded that “forthwith” could mean “as soon as practicable” and as the defendants had delivered the keys of the property to the plaintiff shortly after 5 p.m. on the day of completion, the defendants had an arguable defence to the plaintiff’ claim.

17.  The defendants’ Order 14A summons was dismissed on that basis the questions of law stated therein had not been properly framed.

The Plaintiff’s Appeal

18.  The plaintiff appealed the judge’s decision and said he was wrong in deciding that the undertaking superseded the agreement. The plaintiff also suggested that as the case involved no complex factual dispute, the judge “ought to have determined that question of construction in (her) favour”.

19.  Ms Chow, counsel for the plaintiff, indicated that for the purpose of the appeal, the oral agreement referred to in the reply and defence to counterclaim would not be relied upon.

The Defendants’ Application

20.  By a Respondents’ Notice filed on 29 December 2004, the defendants sought to uphold the judge’s decision in dismissing the plaintiff’s claim for summary judgment on the basis that completion of the agreement did not require the delivery of keys before 5 p.m. on 21 June 2004.

21.  It was suggested that under the agreement the defendants had no obligation to deliver possession of the property to the plaintiff before 5 p.m. on 21 June 2004.

22.  The defendants further argued, by way of cross appeal, that the judge should have ruled in their favour on the two points of law set out in their Order 14A summons.

Discussion

23.  We were not persuaded at all that the defendants had formulated any proper question of law suitable for an Order 14A determination.

24.  The court only adjudicates disputes between the parties to an action and will not provide advice to the profession. An Order 14A application is only suitable when a determination of a question of law “arising in any cause or matter” is suitable without a full trial and will finally determine the entire cause or matter.

25.  The question of law framed by the defendants referred to “a Hong Kong style of completion”. The purported meaning of “a Hong Kong style of completion” is not sufficiently clear.

26.  Indeed, we also have difficulty in understanding precisely the meaning of the framed questions of law.

“The question of law or construction to be determined by the court under the Order should be stated or formulated in clear, careful and precise terms, so that there should be no difficulty or obscurity, still less any ambiguity, about what is the question that has to be determined” (Hong Kong Civil Procedure 2004 page 188).

27.  The primary question of law framed by the defendants, couched in ambiguous terms, refers to a general practice and not to the factual situation relating to the disputes between the parties.

28.  The court can only adjudicate the disputes between the plaintiff and the defendants on the pleadings and the evidence presented by both parties.

29.  Primarily, the case rests on the parties’ obligations and liabilities under the agreement and the undertaking given by the defendants. In the reply and defence to counterclaim, the plaintiff has raised the further issues of an oral agreement and whether the defendants’ conduct on 21 June 2004 evinced an intention not to be bound by the agreement.

30.  The primary issue, particularly the impact of the undertaking given by the defendants on such issue, is fact sensitive.

31.  In the light of the matter raised by the plaintiff in the reply and defence to counterclaim, the proposed questions of law certainly will not finally determine the issues in dispute.

32.  The judge was right, in the exercise of his discretion, to dismiss the defendants’ Order 14A application.

33.  Clause 3 of the agreement refers to time (before 5 p.m.) and manner of completion. A separated clause 5 provides that “vacant possession…shall be given …on the actual day of completion”.

34.  However, the agreed undertaking only required the defendants “…to forward to (the purchaser) or advise the estate agent to forward to the purchaser direct forthwith the keys…” We agree with the judge that it was arguable that the defendants were only required to deliver or cause to be delivered the keys as soon as practicable and that delivery by 5:15 p.m. on 21 June 2004 was within such time frame.

35.  Moreover, we believe it is arguable that failure to deliver or cause to be delivered the keys at or before 5 p.m. would not entitle the purchaser to rescind the sale and at least to that extent, the provisions of the agreement have been modified.

36.  Thus even if Ms Chow is right that under the agreement, vacant possession and hence the keys must be delivered at or before 5 p.m. on 21 June 2004, there remains other issues to be resolved.

37.  We are of the view that delivery of the keys at 5:15 p.m. could be argued as delivery “as soon as practicable”. It is a question of fact that should be determined at trial.

38.  The alleged oral agreement and the parties’ conducts on 21 June 2004 are also relevant.

39.  Those matters are all fact sensitive and can only be properly resolved after trial.

40.  For obvious reasons, it is neither necessary nor desirable for us presently to express a view upon the merits of the parties’ cases. Suffice it for us to say that the issues involved in the dispute require further and mature consideration by the trial judge, who will be in the position to make appropriate findings of fact upon which he will base his decisions of law.

41.  In our view, the judge was also right in dismissing the plaintiff’s application for summary judgment.

42.  The appeal and cross-appeal were both misplaced, and the matter clearly should have proceeded to trial in the normal manner.

43.  We therefore dismissed both the appeal and the cross-appeal, and made no order as to costs.