Ng Lung Sang Anita v. Lam Yuk Lan

CACV 51/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 51 OF 1999

(ON APPEAL FROM HCA 14345 OF 1997)

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J U D G M E N T

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Godfrey, J.A. :

Introduction

1. This is an appeal from an order of Keith, J. made on 19 January 1999 giving unconditional leave to the defendant vendor, in the proceedings before him, to defend the plaintiff purchaser's action. The property the subject of the proceedings is Flat C, 10th Floor, 17 Nassau Street, Mei Foo Sun Chuen, Kowloon, Hong Kong. The purchaser agreed to buy this property on 19 September 1997, when she signed a form of provisional sale and purchase agreement providing for the sale and purchase of the property at the price of HK$4,380,000. The contract foundered because the purchaser became concerned that certain alterations to the property were unauthorised and that accordingly the title which the vendor was offering was defective. The purchaser accordingly refused to complete on the date fixed for completion, which was 23rd December 1997. The vendor refused to return the purchaser's deposit. Hence these proceedings.

Background

2. The purchaser's concern, to which I have already referred, was expressed in a letter dated 16 December 1997 from the purchaser's solicitors with which they enclosed a letter from an architect dated 15 December 1997. This suggested that, in relation to a bathroom window, there might have been an alteration for which the Building Authority's consent was required.

3. The solicitors' letter was expressed in terms which suggest that they understood the problem to relate to the bathroom, not specifically to the window. The solicitors' letter falls to be regarded as a requisition as to the vendor's title. This requisition requires an answer, if, but only if, the requisition was formulated with reasonable precision, avoiding confusion and obscurity (as the judge pointed out, referring to Chan Chik Sum v. Great Pearl Industries Limited [1997] 1 H.K.C. 27). If the requisition here was such a requisition, it is plain that it was not properly answered, because the only answer that was made to the requisition was that it was out of time, which would not have been a proper or sufficient answer.

The judgment below

4. Before the judge, the requisition was said to be unclear, because it did not identify with precision which alterations involving the bathroom rendered the bathroom an illegal structure, in the absence of approval from the Building Authority. So, the judge had to consider whether or not this requisition was, or was not, sufficiently clear as to call for a proper answer from the vendor.

5. The judge was of the opinion that the requisition was sufficiently confusing to justify the vendor's solicitors' refusal to answer it. He explained why he came to that conclusion. It is not necessary for me to rehearse his reasoning here. The judge also thought it arguable that, on its true construction, the requisition did not relate to the window. The judge thought that whatever the requisition had said, there was evidence suggesting a triable issue as to the risk of enforcement action. In all these circumstances, the judge was of the view that the case was one which ought to go to trial, not one fit for a judgement against the vendor on a summons under Order 86 of the Rules of the High Court, which is what he had before him.

The purchaser's appeal

6. The purchaser on this appeal has argued before us that the requisition is sufficiently clear to require a proper answer, but that, even if it was not, it was the duty of the vendor, if faced with a requisition which he considered unclear or confusing to say so, and to ask for clarification of the requisition. It is said on behalf of the purchaser that it was wrong for the vendor to divert the purchaser's attention away from the true nature of the problem by taking a bad point, such as was taken here, as to the requisition being out of time. It is said that, having done so, the vendor had waived any right to object to the requisition on the ground that it was not sufficiently clear to require an answer. The purchaser says that, in the present case, it was never suggested by the vendor that the requisition was unclear or confusing and that the vendor should be taken as having understood it perfectly well.

Conclusion

7. These are powerful points, but the question is not whether the purchaser is right or wrong. It is whether the vendor ought to be driven from the judgement seat, without having been given an opportunity to present his defence. Yet this case has led to a submission to this court, by the purchaser's counsel, of a skeleton argument of no less than 12 pages, and of a list of authorities of no less than 6 in number, some of which were cited to us. All this is on a point under Order 86, which is available only for the summary disposal of plain and obvious cases in which the defendant clearly has no defence.

8. The judge thought it right here to grant unconditional leave to defend. This court is not here to allow unsuccessful plaintiffs who have been unable to persuade a judge to give summary judgment in their favour a second bite at the cherry, and it is as well to recall what was said on this point by Sir John Donaldson, M.R. in Lloyds Bank Ltd. v. Ellis-Fewster [1983] 1 W.L.R. 559. It was then said by the Master of the Rolls, on the question whether the judge was entitled to form the view that there was a triable issue, that :-

"In a case where the triability of the issue depends upon evidence as opposed to law, I would think it a very surprising situation if the Court of Appeal was prepared to disturb the judge's view. If one judge thinks there is a triable issue, it would be surprising if two or three judges think there is not. It is quite different if you are dealing with a triable issue which arises as a matter of law. When it arises as a matter of evidence and fact, it is most unlikely that the Court of Appeal would interfere with the discretion of the judge below. Of course, it is only recently that it has been possible to appeal at all against the decision of the judge of first instance that there should be unconditional leave to defend. I cannot believe that it was ever intended that the Court of Appeal should move into a new era in which it regularly questions decisions of judges to grant leave to defend on the basis that there is a triable issue of fact."

9. Much the same was said by Robert Goff, L.J. in European Asian Bank A.G. v. Punjab Bank (No. 2) [1983] 1 W.L.R. 642. At page 654, Robert Goff, L.J. said this :-

"We wish however to conclude with this comment. If the judge has already decided, on the evidence, that there is a triable issue on a question of fact, it must in the very nature of things be unlikely that this court will interfere with his decision and decide that no trial should take place; because, where such a conclusion has already been reached by a judge, this court will be very reluctant to hold that there is no issue or question which ought to be tried."

10. Finally, in R.G. Carter Ltd. v. Clarke [1990] 1 W.L.R. 578 Lord Donaldson of Lymington, M.R. at p.583 said this :-

"Unconditional leave to defend under Order 14

An order for summary judgment in respect of the whole or part of a claim or the grant of leave to defend only upon conditions derogates from a defendant's normal right to have his defence fully considered upon the trial of the action. Accordingly, summary judgment is never ordered if the defendant satisfies the court that

'there is an issue or question in dispute which ought to be tried or that there ought for some other reason to be a trial of that claim or part:' see Ord. 14, r. 3(1).

By contrast, the dismissal of an application for summary judgment or, which is the same thing, the making of an order giving unconditional leave to defend leaves the rights of both parties wholly intact and the parties with everything to play for. All that has happened is that the court has declined to take a short cut."

11. Here, the issues between the parties require a proper consideration of the solicitors' letter of 15 December 1997, the architect's letter enclosed with it of 13 December 1997, and the facts to which they relate. This case also requires, as it seems to me, a proper consideration of what I consider to be the very important question raised by the purchaser here, that is to say, whether it is indeed the duty of a vendor who does not understand a requisition to say so and to ask for clarification rather than to refuse to answer it. This is a point which merits mature consideration. It is not an appropriate point to decide on an application for summary judgment.

Result

12. The judge, in the exercise of his discretion, thought this was a case which ought to go to trial. The purchaser has been able to demonstrate that the purchaser has a strong case. But that is not enough to justify us in depriving the defendant, who does have an arguable case, of his right to a trial. In those circumstances, we must dismiss this appeal.

Rogers, J.A. :

13. I agree there are clearly triable issues in this case which should go to trial.

14. I would like to say, however, a few words about the procedure which has been adopted. No doubt, the purchaser wishes to retrieve the deposit plus the costs and expenses which have been incurred and it is in everybody's interest this matter is disposed of quickly. It is, however, a myth to consider that Order 86, or even Order 14, proceedings will necessarily speed matters up.

15. A short perusal of the history of this case shows that that is not so. The writ with a statement of claim was issued on 31st December 1997. The defence was filed some time later on the 25th March. The summons in this application was taken out on 27th April followed shortly by the reply and defence to counterclaim. The summons was returnable on the 12th May. On that day, the Master made directions for filing of affidavits but he adjourned the matter to a Judge, not earlier than 42 days later, for further directions. The defendant filed her affidavit on the 2nd June and on the 3rd September, Deputy Judge Li made an order allowing expert witness evidence. Eventually that was finally completed, on the 6th January more than a year after the filing of the statement of claim and the hearing took place on the 8th January, that is more than 6 months ago. On the 19th January, judgment was handed down and a Notice of Appeal was filed on 10th February.

16. If this matter had proceeded in the normal way of an Originating Summons, not only could the Originating Summons have been heard and disposed of, but if necessary and thought fit, an appeal could have been brought. Those advising clients ought to be very cautious before commencing Order 86 and Order 14 proceedings. They are there only for clear and obvious cases. The old adage that if you have to sit down, it is not a case for Order 14 is equally applicable today as it was when it was first coined.

17. I too would dismiss this appeal.

Godfrey, J.A. :

18. As to costs, we will order that the appeal of the purchaser be dismissed with costs, and we will order that the cross-appeal of the vendor (contending that the purchaser's summons ought to have been dismissed) be dismissed with costs. We will not disturb the order as to costs made below.