CHING SHUI LIN v. LI LAM WAH

1996, No. A7889

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. The matter before me is an appeal pursuant to a Notice of Appeal dated 16th April 1997 from the Order of Master Muttrie dated 5th March 1997 whereby the learned Master ordered specific performance of an agreement contained in or evidenced by a Chinese Memorandum in writing dated 12th December 1991 entered into between the Plaintiff and the Defendant.

2. There is also before me a cross-summons dated 5th May 1997 taken out by the Plaintiff consequent upon that Order; this summons stands or falls with this appeal.

3. The Plaintiff's case is simply put. Pursuant to the Chinese Memorandum of 1991 the Defendant agreed to sell and the Plaintiff agreed to buy one 3-storey village house to be erected on Lot No. 991 in Demarcation District No. 375 in Tuen Mun, New Territories, at a price of HK$1,000,000.00. The purchase price has in fact been paid by three tranches, the last for HK$750,000.00 being paid on 16th January 1992.

4. It is claimed that the Defendant became the registered owner of the land in question by an assignment dated 27th January 1992, that he has since proceeded to build four 3-storey village houses on the land (which I understand has been partitioned into four sectors), and that despite repeated demands and requests the Defendant has failed to honour the Agreement and to assign one of the 3-storey village houses to the Plaintiff. Accordingly, a writ for specific performance was issued on 12th July 1996, followed by a Statement of Claim on 28th August 1996 with, as I have indicated, summary judgment being ordered by the learned Master on 5th March 1997 in terms of Minutes annexed to the summary judgment application.

5. Mr. Jeremy Cheung, who appears for the Defendant, asks me to set aside the judgment so ordered and to permit the matter to proceed to trial. He suggests that the circumstances looked at in the round rendered this case manifestly inappropriate for summary judgment. I think it is fair to say that he pitches his argument under three heads, which I summarise as follows: first, the absence of certainty in the Agreement with particular reference to the date of completion and the question of payment premium; second, the existence of third party (that is, government) interests regarding the land and the necessity to obtain relevant consents, for example, with regard to the letter of compliance with the conditions of grant, and the payment of the relevant premium; and third, an alleged monetary compromise between the parties with regard to the bargain struck in 1991. He says that these are not shadowy matters and he asks that they be ventilated at trial.

6. I confess that the appropriateness of trial had been very much my initial reaction upon a first reading of the papers. Such, however, was Mr. Chain's forcefulness and persuasiveness during argument that I felt it appropriate to briefly reserve in order to reflect upon the matter. Having now done so, I am inclined, albeit by a very short head, to follow my original instinct and to send this matter to trial; in the particular circumstances, however, I would look favourably upon any application for expedited pleadings, expedited discovery and an order for a speedy trial.

7. Amongst the several authorities to which I have been referred, Mr. Cheung has helpfully taken me to the Court of Appeal decision of Man Earn Ltd v. Wing Ting Fong, Civil Appeal No. 94 of 1995, in which the Court of Appeal (Hon. Litton V.-P., Godfrey and Ching JJ.A.) reviewed the utility of summary judgment procedure, including Order 86 applications for specific performance. In the course of his judgment, Godfrey J.A. observed as follows:

"I would express the hope that those practitioners, of whom there are too many, who appear to be prepared to advise every client with what seems to be a good case to invoke this extraordinary procedure, without reflecting on the fact that, if the attempt fails, the result will be to keep the plaintiff out of the judgment to which he may well be entitled for far longer than would have been the case if they had concentrated, instead, on bringing the matter to trial, will in future think twice before giving such advice. . . .",

the learned Judge then going on to consider in that particular case that there were indeed issues between the parties as to want of fairness in the contract and as to the certainty of the contract, both as to the time of completion and the subject matter of the sale.

In the same case, Litton V.-P. observed as follows:

"The reason for dismissing the plaintiff's application for summary judgment was simply because the case did not come within Order 86 r.l. In other words, the plaintiff had failed to satisfy the court that the defendant had no defence to the action. This meant, of course, that the matter must proceed to trial. . . .

The defendant is, in these circumstances, entitled to set up all the defences available to him legitimately to resist the plaintiff's claim: untrammelled by the judge's preliminary observations on the strength or weakness of his case. . . .

In my judgment, all that the judge was called upon to do - and all that he should have done - was to have stated in a few words why he concluded that the plaintiff had failed to satisfy him that the defendant had no defence. Any observations beyond that were unnecessary and otiose."

8. In accordance with those guidelines laid down by the Court of Appeal it is clearly inappropriate at this stage for me to do more than merely to observe that I have reflected upon all the aspects of the case as put forward by Counsel on both sides and upon the evidence that has been placed before me, and that after such reflection I do not consider in the circumstances that this is a case where I should permit the existing judgment to stand. I consider that the issues raised by Mr. Cheung are matters which should be permitted to go to trial, and that the case is not in the "practically moonshine" category, although I will permit myself to observe that I have certainly seen more persuasive cases at the interlocutory stage. But at the end of the day I think the parties, and in particular the Defendant, should have their day in Court; in this context I note that the Plaintiff's interest is currently protected by the registration of a lis pendens registered against the land in the Land Registry. I also bear in mind the period which has elapsed between the making of the Agreement and the payment of the monies thereunder on the one hand, and the issuance of the Writ and the Statement of Claim in a bid to enforce that Agreement on the other.

9. It is clear, therefore, that in advance of such hearing on the merits it is not helpful to say very much about what I perceive to be the strengths and weaknesses of the case; indeed, the trial Judge should hear the case unaffected by such comments. I would, however, note that I was particularly wary, in what Mr. Chain has termed an "open contract" situation, of simply dismissing the issue of government consents and associated problems with quite the facility that he urged upon me during this appeal. I have in mind particularly here the words of caution of Mr. Justice Megarry in Wroth v. Tyler [1973] 1 All ER 897 at 913:

"A vendor must do his best to obtain any necessary consent to the sale; if he has sold with vacant possession he must, if necessary, take proceedings to obtain possession from any person in possession who has no right to be there or whose right is determinable by the vendor, at all events if the vendor's right to possession is reasonably clear; but I do not think that the vendor will usually be required to embark on difficult or uncertain litigation in order to secure any requisite consent or obtain vacant possession. Where the outcome of any litigation depends on disputed facts, difficult questions of law or the exercise of a discretionary jurisdiction, then I think the court would be slow to make a decree of specific performance against the vendor which would require him to undertake such litigation. In such a case, the vendor cannot know where the litigation will end. If he succeeds at first instance, the defendant may carry him to appeal; if he fails at first instance, the purchaser may say that there ought to be an appeal. No doubt the line between simple and difficult cases will sometimes be hard to draw; and it may be that specific performance will be readily decreed only where it is plain that the requisite consent is obtainable without difficulty. The form of decree appropriate to such cases might specifically require the defendant to undertake such litigation; the court moulds the decree as need be. But it may be that the court will do no more than direct the defendant to procure the requisite consent: see Long v Bowring; Seton's Forms of Judgments and Orders." (Emphasis added).

10. I readily appreciate the different factual circumstances between the present case and the facts pertaining in Wroth v. Tyler. But I bear in mind that, as Mr. Justice Megarry has observed, the Court "moulds the decree as need be". Such moulding should take place, if indeed it takes place at all, after trial and after hearing evidence upon all aspects of the matter, and not in the face of such relatively sketchy affidavits as have currently been placed before me. At trial, for example, I would wish to find out a good deal more about the status of this land, the payment of premium, and the probability of obtaining the necessary consents before exercising my discretion to order a decree of specific performance.

11. In all the circumstances and not, as I have indicated, without some real degree of hesitation, I therefore allow this appeal and set aside the learned Master's Order. I will hear Counsel on any consequential directions and upon the issue of costs both here and below.

12. It follows from the foregoing, I think, that I should also dismiss the Plaintiff's cross-summons dated 6th May 1997. This summons was predicated upon the continued existence of the judgment, and since this judgment is now to be uplifted such summons is no longer of relevance.

[Submissions by Counsel]

13. I have now had the opportunity of hearing Counsel upon directions and costs.

My directions are as follows:

- the Defence to be filed within 7 days of today;

- a Reply, if any, to be filed within 7 days thereof;

- Discovery to take place within 14 days thereafter, with Inspection to follow a further 7 days thereafter; and

- Liberty to apply to the Commercial Judge at the completion of the foregoing process for liberty to set the case down.

14. I deliberately make no order with regard to Witness Statements. In my view, the trial can take place with expedition with the affidavits currently available standing as Witness Statements. In any event, this is one case where the Judge is likely to be paying more than usual attention to the quality of the viva voce evidence from the witness-box.

15. Turning now to costs, in the particular circumstances Mr. Chain asks for costs in the cause at both levels, that is here and below. Mr. Cheung robustly argues that, to the contrary, he should have costs at both levels. In this regard I regret that the Court is in the regrettable position of acceding to neither Counsel's submission.

16. In the very particular circumstances of this case, my costs order is as follows:

- the costs order of the learned Master below is quashed;

- the costs of and occasioned by the hearing below be in the cause; and

- the costs of and occasioned by this appeal be reserved to the trial judge, who will be in the best position to consider where the justice of this case truly lies, and to compare the evidence at trial with that presently placed before the Court.

17. As already indicated, I have dismissed the Plaintiff's ancillary summons dated 6th May. I think, in the circumstances, it is unlikely that this summons has caused any additional costs over and above the costs which were properly incurred in the fighting of the substantive appeal. So far as the latter costs are concerned, of course, I have reserved them. But with regard to Mr. Chain's ancillary summons, the appropriate course in my view is to dismiss it with no order as to costs.

18. Lastly, unless there are any outstanding matters of a consequential nature, I should like to record my thanks to both Counsel for a stimulating argument.