SHUN YIP YET WAH CO LTD. v. CHONDALE LTD. AND ANOTHER

1989, No.A3621

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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R U L I N G

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1. The plaintiff and the 1st defendant entered into an agreement dated the 19th May 1989 for the sale and purchase of some offices. Completion was scheduled to take place on the 30th June. Time was made of the essence of the contract.

2. Came 30th of June, but vacant possession of the offices was not delivered by the 1st defendant to the plaintiff. The plaintiff warned the 1st defendant on 4th July, and finally on the 5th July the plaintiff complained of wrongful repudiation by the 1st defendant and treated the contract as rescinded, accepting the 1st defendant's repudiation.

3. Subsequently, on or about the 17th July, vacant possession was offered by the 1st defendant to the plaintiff. The plaintiff rejected the offer. The 1st defendant in turn complained of wrongful repudiation by the plaintiff and treated the contract as rescinded with a view to forfeiting the deposit and claiming damages.

4. The plaintiff and the 1st defendant had throughout been separately represented.

5. The 2nd defendant was at the material time solicitor for the 1st defendant. The plaintiff's estate agent for negotiating the terms of the sale was Knight, Frank Kan & Baillieu. The 1st defendant engaged Centaline. There has been some disagreement as to the capacity of Knight, Frank Kan & Baillieu, but it is reasonably clear that they played a substantial role in the negotiation of the terms for the sale and purchase of the offices in question.

6. One Roy Chan from Centaline allegedly confirmed to Madam Yam of the 1st defendant that the plaintiff agreed to extend the completion date of the 30th June.

7. Mr Ng, counsel for the 1st defendant, relies heavily on the last sentence of an Undertaking of the 10th May given by the 1st defendant to its estate agent, Centaline : "We also understand the Centaline Property Agent (Office) Limited is also charging commission from the purchaser of the premises and to this we shall have no objection". Charging a commission would not necessarily make the chargor an agent of the chargee. We know not whether any commission was in fact charged and, if a commission was charged, what its nature was. The passage is less than specific. It cannot be reasonably inferred therefrom that Mr Roy Chan or, to be more precise, Centaline Property Agency (Office) Limited was or had become an agent of as well the 1st defendant as the plaintiff. Once the inference of Mr Roy Chan's agency is shown to be unwarranted, he could not be accepted as the voice of the plaintiff. His bare alleged confirmation of a extension by the plaintiff cannot be admissible hearsay or can have at best negligible weight without the disclosure of the source of information.

8. The alleged confirmation of Roy Chan that the plaintiff had extended the time for completion could not assist the 1st defendant.

9. I pass then to the most substantive assertion of the 1st defendant. In para. 12 of her affirmation, Madam Yam stated the following :

"I am also informed by the 1st defendant's legal adviser and verily believe that an interview with Mr Roy Chan took place on or about 19th July 1989 in which he confirmed that he had spoken to a Miss Linda (sic) Lina Wong of the plaintiff's estate agent at least on or about 26th June 1989 when an extension was given on behalf of the plaintiff." (Emphasis added).

10. What is being alleged is that Mr Roy Chan had a conversation with Lina Wong of Knight, Frank Kan & Baillieu, at the latest - I believe that is what it means - on the 26th June, and that in that conversation, Lina Wong granted an extension on behalf of the plaintiff to the 1st defendant. Lina Wong denies such a conversation. She denies having had any authority at all from the plaintiff so to act. The plaintiff makes a similar denial.

11. But if, in fact, Lina Wong did have such a conversation with Roy Chan and if her statement to Roy Chan is accurate and if she was in fact telling the truth at the time, it must follow that she had an express authority from the plaintiff to grant an extension to the 1st defendant for completing the sale and purchase of the offices.

12. Lina Wong was, at the material time, a senior negotiator in Knight, Frank Kan & Baillieu. She was a person much involved with the sale and purchase of the offices. After the signing of the agreement for sale and purchase, she was singled out by Roy Chan as the person to approach on behalf of the plaintiff for extension. She allegedly granted an extension on behalf of the plaintiff.

13. If paragraph 12 of the affirmation of Madam Yam is admissible for the purposes of O.86, a triable issue has been, in my opinion, raised. A guiding factor for determining whether proceedings are interlocutory or final is : whichever way the Court had decided, the proceedings would have concluded and no further action would have continued. These proceedings would carry on, if I should hold in favour of the 1st defendant. The interlocutory nature of these proceedings can best be illustrated by the conclusion I have reached and the order I propose to make. The hearsay here is admissible.

14. I need not so to the other allegations of the 1st defendant. On the substantive assertion in paragraph 12 of Madam Yam's affirmation filed herein on the 1st August 1989, the 1st defendant has shown a triable issue for its case to proceed to trial. Leave, therefore, should be given to the 1st defendant to defend.

15. The Master granted unconditional leave. Mr Woo, leading Counsel for the plaintiff, has emphatically drawn my attention to various matters which, so counsel argues, demonstrate that the defence is a shadowy one and the mode of presentation is highly suspect. Among the many criticisms levelled at the manner in which the 1st defendant's defence is presented, it would be sufficient for me to refer to no more than three aspects : first, whilst Madam Yam in her paragraph 12 makes reference to the legal adviser of the 1st defendant and Roy Chan with respect to the substantive assertion of an extension, no explanation has been given as to why these gentlemen have not come forward to verify or corroborate Madam Yam's version.

16. Secondly, on the 30th June when completion was to be had under the agreement for safe and purchase, at the request of the solicitor of the 1st defendant, solicitor for the plaintiff sent over two separate cheques for the balance of purchase price. The purchase price was some $7.66M of which $2.29M had been paid as a deposit. The balance of the purchase price was $5.36M, represented by these two cheques sent over on the 30th June by solicitor for the plaintiff to the 2nd defendant, solicitor for the 1st defendant. Not only had the 2nd defendant, the solicitor for the 1st defendant requested the two cheques on completion date, the 30th June, but in the letter from the solicitor for the plaintiff, it was explicitly requested that keys of the offices were to be forwarded "forthwith" to the solicitor for the plaintiff or alternatively the necessary written authority to collect the keys was to be so forwarded to the solicitor of the plaintiff "so that possession (could) be taken without delay". The conduct of the 2nd defendant, solicitor for the 1st defendant, in requesting payment by the two cheques on completion date is certainly inconsistent with the substantive allegation now advanced by Madam Yam in paragraph 12 of her affirmation. There was also no known reaction from the 2nd defendant to the request for handing over of keys and for surrendering of vacant possession without delay.

17. Thirdly, after the plaintiff had rescinded the contract accepting the wrongful repudiation of the 1st defendant, in a letter dated the 5th July 1989 from the 2nd defendant, solicitor for the 1st defendant, to solicitor of the plaintiff, the 2nd defendant claimed in essence that a lady of the 1st defendant was to attend at his office to execute the assignment with keys to the offices for completion. The two paragraphs read as follows :

"We would place on record that at the time of completion on Friday on 30th June 1989, our client, the vendor, attended our office to sign the assignment and stated that she had forgotten the keys and would bring them to our office on Saturday, 1st July 1989."

"Unfortunately, our client has not yet handed over the keys."

18. That obviously is equally inconsistent with the present assertion of Madam Yam on behalf of the 1st defendant. If extension had been granted before the 30th June, the 2nd defendant, as solicitor for the 1st defendant, would not have attempted to finalise matters for the purposes completion. Indeed, both in the mode of presenting the 1st defendant's case a well as the nature of the allegation, the 1st defendant's version is suspect and the defence put up is indeed shadowy.

19. I have no hestitation, as invited by Mr Woo, leading Counsel for the plaintiff, to grant leave defend to the 1st defendant only upon conditions. I have in mind payment into court as suggested by Mr Woo of the total purchase price now in the hands of the 1st defendant. Mr Ng informs the court that part of the purchase price has been utilized for lawful purposes, in particular for redemption of the mortgage of the offices in question. Mr Ng intimates that should I feel disposed to grant conditional leave, he, as counsel for the 1st defendant, would like a further opportunity to address this court.

20. I therefore order (1) the 1st defendant do have conditional leave to defend; (2) conditions to be imposed be ordered after receiving, further arguments from counsel for the plaintiff and the 1st defendant; (3) subject to what counsel have to say, as I have not been able to please either party totally, costs of the appeal as well as costs before the Master be costs in the cause; and (4) subject to the order I have just made, the order of the Master is otherwise to stand.

21. There is a further summons on an O.14 application against the 2nd defendant. By consent that summons is to be heard separately. I further order : the summons against the 2nd defendant do stand adjourned for a further date to be fixed; estimated time to he supplied jointly by solicitors for both the plaintiff and the 2nd defendant and costs of the O.14 summons against the 2nd defendant by the plaintiff be reserved.

22. Lastly, these proceedings be further adjourned for a dated to be fixed by the clerk in-charge of the Lists, estimated time to be jointly supplied by the solicitor for the plaintiff and the 1st defendant, for further submissions to be made on the terms to be imposed in the conditional leave granted to the 1st defendant.