XCHRX FEERNI DEVELOPMENT LTD. v. MAK HIN KWAN

1997 No. A10194

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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J U D G M E N T

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1. This is an appeal from the dismissal by Mr. Registrar Betts of the Plaintiff's summons for summary judgment under Ord. 14. Mr. Registrar Betts did not consider the application on its merits, because he took the view that the affirmation in support of the application made by the Plaintiff's solicitor was defective. He therefore dismissed the Plaintiff's summons, even though the parties had agreed a few days before the hearing that the hearing of the summons should be adjourned.

2. The Plaintiff's claim against the Defendant is straightforward. It owns a shop in a commercial building in Hankow Road. The shop is Shop J. It is leased to a company which sells photographic equipment. That company is also the lessee of the adjoining shop, Shop H. The Plaintiff claims that it agreed to sell Shop J to the Defendant for $24m. The Defendant paid an initial deposit of $500,000.00 by cheque. However, the following day the Defendant decided not to proceed with the purchase of the shop. He countermanded the cheque, and it was dishonoured when it was presented the next day. The Plaintiff claims the $500,000.00 from the Defendant. Two causes of action are pleaded: the dishonouring of the cheque on its presentation, and breach of the underlying agreement for the purchase of the shop.

3. The Defendant's case is equally straightforward. To the observer, Shops H and J appear to be one shop. Photographs of the two shops make that clear, especially as the photographs show that the two shops are described as Shop J on their fascia. Accordingly, when the Defendant viewed the premises, he thought that the premises which he was buying, Shop J, included the whole of the premises he viewed. The property agent, who for this purpose was to be treated as the Plaintiff's agent, did not tell him otherwise. He thought that the asking price of $24m. for what he thought he was buying was reasonable. He therefore agreed to buy Shop J (which he thought included what he now knows to be Shop H as well). It was only when he discovered that Shop H was not included in what he thought was Shop J that he countermanded the cheque.

4. Mrs. Katina Levy for the Plaintiff realistically accepts that if the Defendant really thought that Shop J included what the Defendant now knows to be Shop H as well, the parties were completely at cross-purposes, their underlying contract (pursuant to which the cheque was tendered) was void, and the Defendant was entitled to countermand the cheque because the consideration for the issue of the cheque had wholly failed. What she contends is that for a variety of reasons, the Defendant must have realised that the shop which he was buying did not include what he now knows to be Shop H.

5. The mere assertion by the Defendant that he thought that he was buying what he now knows to be Shop H as well as Shop J is not enough, of course, to enable him to obtain leave to defend the Plaintiff's action. What he asserts must be credible. The issue, though, is not whether what he asserts will, or is likely to, be believed at trial. The issue is whether it is possible that what he asserts will be believed at trial. Having listened carefully to the points made by Mrs. Levy, it is, in my view, quite possible that what the Defendant asserts will be believed at trial. It follows that the Defendant should be permitted to defend the action, and this appeal must be dismissed.