LAM SHUN KWAN v. CHIEFART INVESTMENTS LTD

HCA9240/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.9240 OF 1999

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J U D G M E N T

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THE PLAINTIFF’S CLAIM

1.  The plaintiff’s claim in summary is for the sum of $420,000 which is twice the amount of the deposit of $210,000 paid by the plaintiff to the defendant as the initial deposit under a provisional tenancy agreement dated 18 July 1998 whereby the plaintiff agreed to lease the suit premises for three years from 1 February 1999 to 31 January 2002.  This claim is based on clause 9 of the said agreement which states “should the landlord repudiate the contract, the landlord shall pay to the tenant double the amount of the initial deposit already paid to the landlord”.

2. The plaintiff also claims the sum of $12,600 being the cost of stamping the said agreement and the sum of $1,300 being the penalty for late stamping of the agreement, and interest on all sums claimed.

THE DEFENCE

3. The defence is basically one of a denial of the material facts in the plaintiff’s case which have not been expressly admitted.  I do not intend to enumerate the points in issue, these will be apparent on reading my assessment of the evidence which appears hereinafter.  In particular, however, the defendant denied (as alleged by the plaintiff) that it was an anticipatory breach of the agreement when on 14 October 1998 it instructed its solicitors to write to the plaintiff informing him that the sitting tenant would remain in possession until October 1999.  The defendant admits that it has not returned the deposit to the plaintiff and up-to-date, has not given possession of the suit premises to the plaintiff.  The defendant says it is entitled to forfeit the deposit by reason of the failure of the plaintiff to reply to its letter dated 30 April 1999 within seven days as stipulated in the letter.  In that letter the defendant’s solicitors said that the defendant would only agree to return the initial deposit of $210,000 without any compensation and asked the plaintiff to choose between receiving that amount or waiting until October 1999 for vacant possession to be surrendered.  The letter also said that if the plaintiff did not reply within seven days, the defendant would treat the provisional agreement as null and void for lack of certainty regarding delivery of vacant possession.

THE EVIDENCE

The plaintiff’s evidence

4. The plaintiff gave evidence that in mid-1998 he approached the Hang Fung Real Estate Agency where he dealt with one Pun Kam (“Pun”).  He told Pun that he needed a place for running a home for the elderly and Pun took him to view premises and eventually recommended the suit premises. 

5. This was at the beginning of July 1998.  The rent was $210,000 per month and the initial deposit of $210,000 was payable on the signing of the provisional tenancy agreement.  Upon signing the formal tenancy agreement, another two months’ rent amounting to $420,000 was payable as the deposit.  The commission payable to the agent was $105,000 by the plaintiff and another $105,000 by the defendant.  The plaintiff had not paid $105,000 to the estate agent and he thought he would not be liable to pay, if the landlord repudiated the contract.

6. Under clause 9 of the provisional tenancy agreement, the parties agreed that should the landlord repudiate the contract, the landlord shall pay to the tenant an amount double the initial deposit paid to the landlord.  There had been no conversation between the plaintiff and Pun regarding the $420,000 compensation which was in fact not the plaintiff’s idea but was a condition printed in the proforma provisional tenancy agreement form.  The plaintiff’s estimation of his loss if the landlord should repudiate was $270,000 to $280,000 per year and this was based on his business previously done in this field.

7. The provisional tenancy agreement was signed on 18 July 1998 by the plaintiff at about 2:00 p.m. in Pun’s office.  When Pun gave the plaintiff the tenancy agreement to sign he said that the landlord wanted to add one clause stating that possession of the premises would be postponed to 1 April 1999.  Pun said that the landlord was worried that the sitting tenant Madam Wong would not have enough time to move out, so two more months should be given to her.  Pun also said that the landlord was worried that the tenant would still be unable to move out on 1 April so one to two more weeks should be given for the tenant to move out.  This was to enable the elderly people living in the home for the aged which was run by the then tenant to move out because when some of these people had to move out, they might be emotionally troubled.  Pun did not talk about what would happen after one to two weeks after 1 April.  

8. However Pun had said that vacant possession would be delivered to the plaintiff on 1 February 1999 and Pun said that the landlord had told him that the surrender by the tenant would definitely be done by that day.  The plaintiff had asked Pun when the present tenancy of the premises would end and Pun said 1 February 1999.  He and Pun did talk about what would happen if some of the elderly people could not move out one to two weeks after 1 April 1999 and the arrangement was that perhaps the plaintiff could arrange for those people to be admitted to the home for the elderly which the plaintiff intended to start at the suit premises. 

9. It was important to the plaintiff that he should have possession delivered to him by 1 April because he was very busy and had to go to the Mainland very often to manage his factory there and also in the middle of 1999 the factory would require the addition of some machines and the plaintiff had to handle those matters.

10. After the plaintiff signed the provisional tenancy agreement, in the same month, July 1998, he received a draft of the formal agreement.  He knew that the landlord wanted him to sign the formal tenancy agreement and also wanted him to pay the further deposit of $420,000.  Pun also asked him to sign but he did not want to because, as stated in the provisional tenancy agreement, the formal agreement could be signed on or before 1 February 1999.

11. On 14 October 1998 the plaintiff received a letter from the defendant’s solicitor which stated that the sitting tenant would remain in the property until October 1999.  The plaintiff was very angry because he said this would mess up the whole of his business and the defendant was offering no compensation to him.  If the suit premises could not be delivered to him by 1 April, he would have no time to find another place.  The plaintiff had run other homes for the elderly and he said that normally it would take several months to find suitable premises because there were not many places which were suitable for running such institutions and some premises did not comply with regulations governing homes for the elderly. 

12. After the plaintiff received the letter of 14 October 1998 he asked Pun to speak to the landlord to get some compensation for him.  The outcome was there was no reply from the landlord.  Up to the present time the landlord has still not delivered possession of the premises to the plaintiff.  In the plaintiff’s solicitor’s letter to the defendant’s solicitor dated 29 April 1999, there was mention of the defendant agreeing to pay $30,000 as compensation.  The plaintiff, up to the time of giving evidence, had not received such compensation nor his deposit of $210,000. 

13. Under cross-examination, the plaintiff said that after he received the letter of October 1998 he did ask Pun to look for alternative accommodation, but none was found.  He said that the tenancy agreement was signed by him on a Friday afternoon and the land search by Pun was done on Monday morning. 

14. After the land search Pun informed the plaintiff that the existing tenancy would not expire until 31 October 1999.  The plaintiff took no action to terminate the tenancy agreement because Pun told him that the landlord still maintained that possession would be delivered to the plaintiff on 1 February 1999.

15. Pun did not chase the plaintiff for payment of the agency fee and the plaintiff did not pay it to Hang Fung because the plaintiff felt that the landlord had not delivered possession to him so the landlord had breached the contract.

16. The plaintiff confirmed that what he said in his statement was correct when he said :

“I would not have entered into the provisional tenancy agreement if I was informed that the vacant possession could only be delivered in October 1999 or if I was told that Madam Wong’s tenancy would only end on 1^st October 1999.”

He said that even by 24 December 1998 when his solicitor had written to the defendant’s solicitor to the effect that the defendant’s anticipatory breach had been accepted by the plaintiff, if possession could still be delivered, he would have taken it up. 

The evidence of Pun Kam

17. Pun gave evidence that prior to working for Hang Fung, he worked in another company under Tsui She Foon (“Tsui”) who in the transaction, the subject matter of this case, was the representative for the defendant company.  He worked under Tsui for about two years and their relationship was very good.  When the plaintiff discussed the suit premises with Pun, the plaintiff requested that vacant possession should be delivered to him in early 1999.  Pun then contacted Tsui and she was the only person that he contacted in this transaction.  Tsui told Pun that the existing tenancy agreement could expire on 1 February 1999.  She also said that possession could be delivered on that date.  Pun did not do a land search before asking the plaintiff to sign the provisional tenancy agreement because he had acted as a real estate agent for the defendant company and so he knew that the defendant company was the landlord of those premises. 

18. On the morning of 18 July 1998 Pun telephoned Tsui and said that the tenant was prepared to pay the deposit.  Over the telephone Tsui asked him to add the clauses which now appear in the “remarks” column of the tenancy agreement.  She said that the present tenant was running a home for the aged and the tenant was afraid that the old people might be unwilling to move out. 

19. Clause 3 of the “remarks” column said :

“If the existing tenant could not deliver up vacant possession to the landlord on 1^st February 1999, the tenant shall wait for a period of two months for the delivery of vacant possession and after the said two months, if the existing tenant still could not deliver vacant possession, the tenant and the landlord shall further negotiate to make arrangements.”

20. Pun said that the purpose of this clause was that if after two months, some elderly people could not move out, then the new tenant would take them in or he would give them one to two weeks to move out.  Pun also gave evidence that he told Tsui that if the existing tenant did not move out by 1 April, the landlord would be in breach of the agreement. 

21. Pun said that the gist of the wording in the remarks column came from Tsui but it was he who wrote it out.  He said that she had given him the gist almost word-by-word.  There was no more space in the remarks column so he could not put in other words.  He said that both he and the plaintiff believed that possession could be delivered by 1 February so there was no need to elaborate on the phrase “the tenant and the landlord shall further negotiate to make arrangements”.

22. Pun said that the land search was done on Monday morning, 20 July.  That afternoon he took the tenancy agreement to Tsui’s office for her to sign.  By that time he already knew that it was not true that Wong’s lease would expire on 1 February.  He asked Tsui about that and she said that it had already been changed to 1 February and the new tenant should not bother about it and possession could be delivered on 1 February.  Pun asked her if any cancellation of the tenancy agreement had been signed and she said that it had been handled.  He again reminded her that his client wanted to take up possession at the beginning of the year because he would be busy as from the middle of the year and she said there would be no problem.

23. The plaintiff had asked him about clause 3 in the remarks column and Pun said it was the landlord’s idea.  The plaintiff accepted it because he said it was a commercial tenancy agreement so he would definitely be able to take up possession.  He also agreed that if necessary he would take into his new home the elderly people who did not move out.  The plaintiff did not mind the two months’ extension from 1 February because he expected the decoration to take 50 days which was the rent-free period agreed in the tenancy agreement so that if possession was delayed till 1 April, he would still have enough time to decorate the premises. 

24. Pun said that he did not ask the plaintiff to pay the commission but he did ask Tsui on 1 February 1999 to pay the $105,000 commission.  When the plaintiff received the draft formal tenancy agreement from the landlord, he came to see Pun and Pun advised him that if there was no problem, the plaintiff could sign it.  After the plaintiff received the letter of 14 October 1998, he was very angry and very unhappy and he asked Pun if he could be compensated and if he could get a refund of the deposit.  He also asked Pun to discuss with the landlord to see if possession could be delivered on 1 April.  Pun did that and the outcome was that possession could not be delivered on 1 April. 

25. When it finally transpired that possession could not be delivered by 1 April and the plaintiff would not wait until October 1999, compensation was discussed with the defendant.  Eventually Tsui agreed to pay $30,000 as compensation. 

26. In cross-examination Pun said that in relation to his writing clause 3 in the remarks column, Tsui had been speaking in Cantonese and that had to be converted into written form.  He said that what was happening was it was very close to Tsui dictating verbatim to him for him to write.  After he had written it he faxed it to her for her to read and she did not change it. 

27. In relation to the remarks column in the provisional tenancy agreement, Pun had said in his witness statement that Tsui requested him to write down the wording of that proviso as dictated by her.  In court, he confirmed that sentence in his statement was correct and that she did dictate for him to write, but he said sometimes she used Cantonese words which he converted into written form.  He admitted that clauses 1 and 2 in the remarks column were dictated by her.  The phrase in clause 3 in Chinese, which translated into English reads “the tenant and the landlord shall further negotiate to make arrangements” was dictated to Pun by Tsui and he wrote it out. 

28. Pun said that the plaintiff chose the suit premises mainly because of the time factor, in that possession would be delivered to him at the beginning of the year and he felt that the time factor was right.  He said the plaintiff had five other places on his recommendation to choose from.  Pun said that if he had known that vacant possession could only be delivered on 31 October 1999 rather than 1 February 1999, he would not have done this particular deal and have to wait for so long for the commission.  He said he had five other places that he could have offered to his client, the plaintiff.     He said that if the plaintiff did not know whether possession would be delivered on 1 February or 31 October the plaintiff would not have rented this place. 

29. Pun said that one to two weeks after 1 April would be required if some old people refused to move out because the plaintiff would need to discuss with Wong, the existing tenant, to see if the plaintiff could take up some of these old people and there had to be exchange of information about these people concerning their medical histories and what treatment they required.  Pun said that he felt that the landlord had breached the tenancy agreement because the landlord had failed to deliver possession on 1 February.  He thought that once the landlord prepared the formal tenancy agreement for execution they must have been prepared to deliver vacant possession by 1 February.  He said that if he had known that Wong’s tenancy would only expire on 31 October and there was no cancellation of that tenancy agreement, he would have recommended the plaintiff to lease somewhere else because he said “who would wait for a period of nine months just to have a lease?” 

30. Pun disagreed with the suggestion that the plaintiff knew the fact that there was a possibility that the defendant might not be able to deliver up vacant possession to the plaintiff.  He also disagreed with the suggestion that the defendant through him had informed the plaintiff that Madam Wong, the tenant, might not be able to deliver up vacant possession of the premises to the defendant on 1 February 1999 and therefore the plaintiff might have to wait in order to take vacant possession of the premises.  Pun said that if the defendant had informed him of that he would not have carried on with this transaction.  He also disagreed with the suggestion that despite repeated requests by the defendant’s solicitor and himself, the plaintiff never gave any reply to the defendant as to whether he wanted to have vacant possession of the premises on 1 April 1999.  Pun said that he did discuss with Tsui the question of delivery of vacant possession.

31. In re-examination, Pun said that the phrase in clause 3 of the remarks column which translated into English reads “The tenant and the landlord shall further negotiate to make arrangements” was to enable the problem of the old people not moving out to be discussed, for example, to either let them live in the new home or to give them one to two weeks to move out.

32. In answer to the court, Pun said that the final date for the defendant to give possession to the plaintiff was 1 April.  He said that if by 1 April Madam Wong had moved out but there were still some old people remaining, the plaintiff would regard that as possession having been delivered.  He said he wrote the phrase mentioned above because that was what Tsui asked him to write.  He did not realize then that what he had written was capable of meaning that it was open-ended when the defendant had to give up possession to the plaintiff.

The defence evidence

33. The defence called Madam Tsui She Foon to give evidence.  She said that the old tenancy would expire on 31 October 1999 but the tenant requested a reduction of the rent which was refused by the landlord so the tenant decided to look for a new place.  She said that the tenant told her that she hoped she could move out by the end of 1998.  Tsui then told this to Pun.  She told Pun that the new lease could commence at the end of 1998 or in February 1999 but the old tenant did not finalize on the date of moving and she was in the process of making application to move.  The tenant said that the date of moving might be later and Tsui told Pun about the possible postponement.  She said that Pun told her that his client knew the situation about this property but he was very interested in renting it and as to the date of delivery of vacant possession, his client could wait.  Later, she and Pun agreed that it was possible that the date of delivery of possession could be 1 February.  Later, she told Pun that the tenant might require two more months to move out because there were many formalities to comply with.  The result of the discussion between her and Pun was that if by 1 April vacant possession could not be delivered, then they would make further arrangements and conduct further negotiations.

34. As regards the “remarks” column of the tenancy agreement, Tsui said she discussed the matter with Pun over the phone and it was Pun who wrote out those clauses.  After he wrote the provisional tenancy agreement, he faxed a copy to her and she told him that he had to tell his client that the timing of delivery of possession might be different.  Pun’s response was that there was no problem and his client was very clear about the situation.

35. As regards the letter of 14 October 1998 from the defendant’s solicitors to the plaintiff, Tsui said that in October the tenant informed her that she had difficulty in moving out and might have to delay, so she told Pun that once they knew they would inform the plaintiff. 

36. After the defendant’s solicitors received the plaintiff’s solicitors’ letter of 24 December 1998, Tsui telephoned Pun and asked him to find out from his client whether he wanted to have the property on 31 October 1999 or by 1 February or 1 April 1999.  She told Pun that if his client was not satisfied with having to wait, then he could get back his deposit.

37. As regards the return of the deposit, Tsui said that they had made preparations to do that but while they were making the arrangement, they received the writ of summons from the plaintiff.  The other reason was that the property was registered in the name of a boss who happened to be out of Hong Kong at the time.  In cross-examination she said the sole signatory of the defendant’s bank account was the wife of the owner of the defendant company who was not in Hong Kong because she had emigrated.

38. In cross-examination, she confirmed that the tenant had told her that she would manage to move out on 1 February and she told Pun about that.  She also confirmed that by July 1998 the tenant had agreed verbally with her that she would move out earlier.  She again reiterated that when Pun first telephoned her to ask about the property, she told him that the lease would not expire till 31 October 1999.  She did not agree that she had told Pun that the lease would expire on 1 February and the property would be available then.  She said that she thought the plaintiff would be willing to wait till 31 October 1999 if he really liked the premises even though he would have to deposit $630,000 and get a licence from Social Welfare Department and decorate and furnish the property and employ people to work in the home for the aged.  She said that the plaintiff would not have to wait till 31 October 1999 because if the tenant did not move out by 1 February or 1 April, the plaintiff would not be bound by the provisional tenancy agreement.  She had told Pun that if by 1 April the circumstances on either side changed, then new terms could be discussed.

39. Tsui also testified that as early as 12 July 1998, Pun had told her that his client could pay the deposit on the property.  She insisted that clauses 2 and 3 in the remarks column were drafted by Pun but she agreed to those clauses.  She maintained that if the defendant could not deliver on 1 April the tenancy agreement was of no use because the parties would have to re-negotiate afresh.  She insisted that Pun knew that the old lease would expire on 31 October 1999 and there was no cancellation of that lease, yet he asked his client to pay $210,000 deposit and his own commission was not secured because Tsui had told him that if on 1 April possession could not be delivered, the lease could not start and he should not ask her for his commission.  However, she said that they all felt that possession could be delivered by 1 February and if not by 1 April.  

40. Tsui maintained that if possession could not be delivered to the plaintiff on 1 April, the defendant would have no liability to deliver possession because the parties needed to negotiate.  There was a similar clause in the draft formal tenancy agreement. 

41. If the tenant, Wong, delivered possession after 1 February 1999 then the defendant was not obliged to surrender possession because under the tenancy agreement, the plaintiff had to wait until 1 April.  However if Wong did not surrender possession, Pun would not be able to get his commission.  She maintained that the phrase in clause 3 of the remarks column that the parties “shall further negotiate to make arrangements” includes the intention that there should be fresh negotiations between the parties.  She admitted that the tenancy agreement did not say that if Wong did not deliver possession by 1 April, Pun would not get his commission. 

42. Tsui was of the opinion that the plaintiff was entitled to his deposit back and she never thought that the defendant was entitled to forfeit his deposit.  In October 1998, Madam Wong, the tenant, had informed Tsui that she would not move out until 31 October 1999.  She told Tsui that she was still discussing with the Social Welfare Department and she still hoped that she could move out earlier.  She said that both she and Pun felt that the tenant could move out on 1 February or 1 April at the latest.  She said they all knew that the tenancy agreement of Madam Wong would expire on 31 October 1999, which was why clause 3 in the remarks column was written. 

43. In re-examination, she said that from all the things that Madam Wong did, she had the impression that the tenant wanted to leave.  She also said that she would carry on the discussion with the Social Welfare Department. 

44. In answer to the court, she agreed that she was the only person in the defendant company who discussed compensation with Pun and she said that she never agreed to pay $30,000 or any other amount as compensation.  She said that the $30,000 compensation mentioned in the plaintiff’s solicitors’ letter of 29 April 1999 was a fabrication by either the plaintiff or Pun. 

45. She said that as far as she was concerned, the proposed tenancy with the plaintiff was going to start after the tenant had moved out.  On 20 July 1998 when she signed the tenancy agreement, she expected the tenant to move out on 1 February 1999, and that was because the tenant had asked the defendant company if she could move out in January 1999 and that permission was granted.  At that time, she said she had no reason to think that the tenant would not move out by January 1999.  Looking back, she agreed that if the tenant had not changed her mind about when to move out, the present litigation probably would not have occurred.  

ASSESSMENT OF THE EVIDENCE

46. On a balance of probabilities, I prefer the evidence of the plaintiff and Pun to that of Madam Tsui, the defendant’s representative.  Despite the parties in their respective pleadings both saying that Pun was the agent of the defendant, I find that in this particular transaction, Pun was acting as the agent of the plaintiff and the defendant throughout was represented by its agent, Madam Tsui.  I do not accept Tsui’s evidence that when Pun first telephoned her to ask about the property, she told him that the lease would not expire till 31 October 1999.  I do not accept her evidence that Pun knew the old lease would only expire on 31 October 1999 and that there had been no cancellation of that lease.  It seems abundantly clear to me that what happened was the sitting tenant wanted to prematurely determine the lease because she requested the landlord to reduce the rent and when this was refused, she decided to look for a new place.  The landlord agreed to her moving out earlier; however, the sitting tenant could not move out earlier because apparently she was unable to get the requisite permission from the Social Welfare Department.  The defendant initially did not think that the tenant would be unable to move out earlier and until it was told by the tenant in October 1998, proceeded to look for a new tenant to commence a new tenancy at the end of 1998 or on 1 February 1999 at the latest.  The rental was $210,000 per month and the defendant was anxious that it should continue to receive this rent.  Throughout the material time, the parties proceeded on the basis that the plaintiff’s tenancy could start on 1 February 1999.  This view is reinforced by the defendant instructing its solicitors to prepare a formal tenancy agreement to commence on 1 February 1999.  The extension of the date of delivery of possession to the plaintiff to 1 April 1999 or if necessary, another two weeks thereafter, was a clause added to the provisional tenancy agreement by Tsui which she dictated to Pun, to protect the defendant in case the sitting tenant was, or some people in the home for the aged that she was running were, unable to vacate the premises by 1 February 1999.  I find that if the plaintiff and Pun knew that possession would not be delivered until October 1999, the plaintiff would not have been interested in renting the premises and Pun would not have recommended those premises to him.  After all, according to Pun, he had five other premises that he could have recommended to the plaintiff.  Furthermore, Pun would not have been willing to wait for such a long period of time to receive his commission.  I therefore find that when the provisional tenancy agreement was signed, both parties intended that the lease should start on 1 February 1999 or 1 April 1999 at the latest.

THE DEFENCE IN LAW RELIED ON BY THE DEFENDANT

47. The main case relied on by counsel for the defendant was the House of Lords’ decision in Prenn v. Simmonds [1971] 1 WLR 1381, where it was held that in construing a written agreement evidence of negotiations or of the parties’ intentions ought not to be received by the court, and that evidence should be restricted to evidence of the factual background known to the parties at or before the date of the contract, including evidence of the “genesis” and objectively the “aim” of the transaction.  Lord Wilberforce, delivering the main judgment with which the other learned law Lords agreed, said at page 1384 :

“… We must, as he said, inquire beyond the language and see what the circumstances were with reference to which the words were used, and the object, appearing from those circumstances, which the person using them had in view. …

… There were prolonged negotiations between solicitors, with exchanges of draft clauses, ultimately emerging in clause 2 of the agreement.  The reason for not admitting evidence of these exchanges is not a technical one or even mainly one of convenience, (though the attempt to admit it did greatly prolong the case and add to its expense).  It is simply that such evidence is unhelpful.  By the nature of things, where negotiations are difficult, the parties’ positions, with each passing letter, are changing and until the final agreement, though converging, still divergent.  It is only the final document which records a consensus. …”

I am of the view that the evidence adduced in this trial was but evidence of the factual background known to the parties at the date of the contract and was permissible in law.  Furthermore, my assessment of the evidence is that even though the plaintiff signed the provisional tenancy agreement, he was under the impression that the longest he would have to wait was until 1 April 1999.  His evidence was he and Pun did talk about what would happen if some of the elderly people could not move out one to two weeks after 1 April 1999 and the arrangement was that perhaps the plaintiff could arrange for those people to be admitted to the home for the elderly which the plaintiff intended to start at the suit premises.  It can hardly be said that he was agreeing to the interpretation now sought by the defendant, namely, that if the existing tenant still could not deliver vacant possession by 1 April 1999, the provisional agreement became null and void and the parties had to “further negotiate”.  In Chitty on Contracts, 28^th edition at 12-070 under “Effecting the Intention of the Parties” the learned author said “But if, from the document itself and the admissible background, the intention of the parties can reasonably be discerned, then the court will give effect to that intention even though this involves departing from or qualifying particular words used”.  He then quoted Kelly C.B. in Gwyn v. Neath Canal Co. (1865) LR 3 Ex 209 at 215 :  

“The result of all the authorities is, that when a court of law can clearly collect from the language within the four corners of a deed, or instrument in writing, the real intentions of the parties, they are bound to give effect to it by supplying anything necessarily to be inferred from the terms used, and by rejecting as superfluous whatever is repugnant to the intention so discerned.”

48. In my judgment, what the parties here intended was that if vacant possession could not be delivered by 1 April 1999, the parties would have to negotiate further to discuss how to deal with the old people still remaining, namely whether they could be absorbed into the plaintiff’s new home to be set up in the premises.

THE RETURN OF THE $210,000 DEPOSIT

49. I am of the opinion that the plaintiff was entitled to his deposit back.

THE STIPULATED DAMAGES OF $210,000 A “PENALTY”?

50. This was agreed by the parties in clause 9 of the provisional agreement.  I am of the view that the $210,000 damages as stipulated was a genuine pre-estimate and was not and should not be regarded as “a penalty”.  The plaintiff in his evidence also estimated his loss, if the defendant should repudiate, at $270,000 to $280,000 and this was based on his previous business results in this field.

THE CLAIMS OF $12,600 FOR STAMPING OF THE AGREEMNT AND $1,300 BEING THE PENALTY FOR LATE STAMPING

51. It was held by the Court of Appeal in Kwok Chung Hon & Another v. Lo On Wa [1997] HKLRD 980 that the plaintiff was not entitled to claim a refund of the money which he had to pay out by way of stamp duty in order to render the document admissible in evidence.  The same reasoning would apply to the claim for the penalty for late stamping.  These claims are therefore dismissed.

JUDGMENT AND COSTS

52. Based on my findings above, I give judgment for the plaintiff in the sum of $420,000.  The jurisdiction of the District Court was increased to $600,000 on 1 September 2000.  I take the view that having regard to the final stance as adopted by counsel for the plaintiff when the trial commenced which thereby limited the claim to less than $600,000, the plaintiff should have applied for the action to be transferred to the District Court.  Allowing for a reasonable time to take steps to have the action transferred after 1 September 2000, I award costs to the plaintiff incurred up to 31 December 2000 on the High Court scale and thereafter on the District Court scale with a certificate for Counsel.  I also award interest on the $420,000 at 1% above prime lending rate from 14 October 1998 to date of judgment and thereafter at judgment rate to date of payment.