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HCA008215/1997
IN THE HIGH COURT OF HONG KONG
COURT OF FIRST INSTANCE |
HCA 8215 OF 1997 |
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| BETWEEN |
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NGAN INTERNATIONAL LTD. |
Plaintiff |
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AND
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LEUNG MAN KIT JOHN and POON CHOI TAI MAGDALENE |
Defendants |
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Coram: The Hon. Mr. Justice Waung in Chambers
Date of Hearing: 27 and 28 November 1997
Date of Delivery of Judgment: 28 November 1997
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JUDGMENT
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1. This is an appeal by the Plaintiff against the Summary Judgment entered by the Master in favour of the Defendants under the Defendants' Counterclaim.
2. By Contract dated 25th June 1997 ("Contract"), the Plaintiff purchaser ("Purchaser") agreed to purchase the property therein described from the Defendants vendor ("Vendor") at the price stated therein with completion to take place on 25th August 1997. Clause 11 is the usual forfeiture clause which provides for forfeiture of the deposit if the Purchaser fails to complete the purchase of the Property in accordance with the terms of the Contract. Clause 31 of the Contract provides that:
"The Vendor shall on or before the 15th July 1997 allow the Purchaser or their agents to enter into the Property for the sole purpose of decoration the Property and in the following terms and conditions:-
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(a) |
the Purchaser shall occupy the Property as a licensee only of the Vendor; |
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(b) |
the Purchaser shall from the date on which vacant possession of the Property is delivered be responsible for the payment of all outgoings of the Property; |
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(c) |
In the event that the Purchaser shall for any reason (other than by the default of the Vendors) fail to complete the purchase of the Property in accordance with this Agreement, the Purchasers shall vacate and deliver up vacant possession of the Property to the Vendor forthwith and shall make good all damages made to the Property caused by the decoration works carried out by the Purchaser and the Vendor shall not be liable for any loss or expenses incurred by the Purchaser for the decoration works made in the Property." |
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3. There is no dispute that two deposits were paid in June 1997. It would seem that the property market had moved somewhat down after the signing of the original agreement and particularly after the policy speech by Mr. Tung on or about the 1st of July 1997. On the 15th July 1997, the Solicitors for the Vendor caused to be sent the keys to the Property to the Solicitors for the Purchaser. The keys were accepted by the Solicitors for the Purchaser. This was at or shortly before 5 p.m. on the 15th July 1997. Very unusually, instead of ringing up the other side, the Solicitors for the Purchaser returned the keys by messenger boy to the office of the Solicitors for the Vendor on the basis that "we have no file in relation to the property". This was at about 5.30 p.m. on 15th July 1997. Solicitors of the Vendor however redelivered the keys to the Solicitors for the Purchaser but such redelivery was unsuccessful because either the Solicitors for the Purchaser refused to accept the keys according to the Vendor's version or because the Purchaser's Solicitors so called receptionist had left the office and therefore there was purportedly no one to receive the keys, according to the Purchaser's version. This was at about 6.00 p.m. on 15th July 1997. The Solicitors for the Vendor then took the precaution of writing a letter/fax dated 15th July 1997 to the Solicitors for the Purchaser putting on record the fact that there were refusals by those acting for the Purchaser to accept delivery of the keys. This was further followed up by letter dated 17th July 1997 from Solicitors for the Vendor putting on record the events of the 15th July 1997 to refute the suggestion in the letter dated 15th July from Solicitors for the Purchaser in which it was suggested that the receptionist had left the office at 5.30 p.m. and that the Solicitors for the Purchaser knew nothing about the second delivery of the keys. By letter dated 21st July 1997, the Solicitors for the Vendor wrote and said that the keys had always been available and asked if the Solicitors for the Purchase would accept the keys. By letter dated 21st July 1997 from Solicitors for the Purchaser, the Purchaser notified the Vendor that the Contract was terminated as the Purchaser regarded the non delivery of the keys on the 15th July 1997 as being repudiation by the Vendor which repudiation was accepted by the Purchaser.
4. On the 6th of August 1997, the Purchaser issued the present proceedings claiming for the return of the deposits. There was of course on the 25th August 1997 no completion by the Purchaser of the purchase as required by the Contract.
5. The question on this appeal is a simple one, namely whether the Vendor repudiated the Contract by the events of 15th July 1997 and subsequent days so as to entitle the Purchaser firstly to treat the Contract as being repudiated and secondly to accept the repudiation of the Vendor. Before the Master the case was argued on the basis whether there was breach of said Clause 31 by reason of the unsuccessful delivery of the keys to the Purchaser's Solicitors on 15th July 1997. In my view, the case can be decided much more decisively against the Purchaser on the following three basis:-
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There was clearly no breach of Clause 31 because in my judgment the obligation of the Vendor was not to deliver vacant possession of the Property or the keys on 15th July 1997 but only to permit the Purchaser to enter the Property (as licensee) on or before the 15th July 1997 for the purpose of decoration. Mr. Coleman argued that Clause 31 provides a positive obligation on the part of the Vendor to deliver vacant possession of the Property on the 15th July 1997. I disagree. He ignored Clause 7 which provides that vacant possession of the Property is to be given on completion, which is of course the 25th August 1997. I do not of course ignore Clause 31(b) and 31(c) which provides respectively for responsibility for outgoings from the date on which vacant possession of Property was delivered to the Purchaser and for obligation to deliver vacant possession back to Vendor if there was no completion. What Clause 31 envisages is that the Vendor must allow the Purchaser to go into the property by 15th July 1997 to do decoration but it gives the right of the Vendor to deliver vacant possession to the Purchaser at any time before completion on 25th August 1997 and if that was done, then responsibility of the Purchaser for outgoings will commence from such date of delivery of vacant possession [31(b)] and if there is no completion, then Purchaser must redeliver vacant possession back to the Vendor [31(c)]. The obligation of the Vendor under Clause 31 is limited to allowing the Purchaser into the property as licensee to do decoration. There was no obligation to deliver vacant possession on 15th July which obligation only arises on completion on 25th August as laid down in Clause 7. The evidence clearly shows that the Vendor never denied the Purchaser permission to enter into the Property as no attempt was ever made by the Purchaser or its decorator to enter the Property that day. On my reading of Clause 31, there was clearly no breach of Clause 31. |
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In my judgment, even if there was a breach of Clause 31, the alleged breach is minor in the circumstances and does not go to the heart of the Contract as to amount to repudiation of the Contract, namely a clear intention on the part of the Vendor not to continue with the Contract. It is clear that whatever acts or omissions which might be alleged against the Vendor, such acts or omissions were not repudiatory but were wholly consistent with an intention to perform the Contract. It is to be noted that on the 15th July 1997, there was delivery of the keys but which was returned and that the Purchaser knew very well from the 16th to the 21st July 1997 that the Vendor was willing to deliver the keys but it was the Purchaser who was unwilling to receive the keys. For me therefore on the facts even on the basis of the second delivery of keys as alleged by the Purchaser, there was no clear act of the Vendor which could be said to be repudiatory of the Contract. There might be failure by the Vendor which might give rise to claim for damages but there were no acts which entitle the Purchaser to terminate the Contract. On the 21st July 1997, there was simply from the acts of the Vendor, no repudiation of the Contract by the Vendor for the Purchaser to accept. |
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In my view, on the facts, there was a delivery of the keys to the Purchaser's Solicitors on the 15th of July 1997 and there was therefore permission to enter the Property by the Vendor. In my judgment, the attempted defence that there was no first delivery of keys failed. The events of the first delivery of the keys are clear. There was delivery of the keys to the office of the Solicitors for the Purchaser and the keys were accepted. This was at 5.00 p.m. on 15th July. Then about half an hour later, the Solicitors for the Purchaser caused the keys to be returned to the office of the Solicitors for the Vendor. In my judgment this does not cause what was otherwise a perfectly good delivery of the keys into a bad delivery of keys for the purpose of Clause 31. It is true that the keys were sent to the Solicitors of the Purchaser under cover of a letter dated 15th July 1997 where the captioned address was wrongly typed. But this letter bears the correct file reference numbers of both sets of Solicitors and furthermore the same mistaken captioned address and correct file reference numbers also appeared in the earlier letter of Yip, Tse & Tang dated 4th July 1997 enclosing the signed Agreement. For me there is no doubt that any reasonable solicitors of the Vendor and of the Purchaser would have known in the circumstances that the keys delivered at 5.00 p.m. was for the Property and for the purpose of Clause 31. A clerk or a solicitor at the office of Solicitors for the Purchaser if he was ignorant or did not want to see or know, could obviously find any basis to return the keys. But the test is whether there was a reasonable delivery of keys which ought to have been received and accepted by any reasonable solicitor in these circumstances. I have no doubt that the answer is yes. For me therefore, there was a perfectly good delivery of keys at 5.00 p.m. on 15th July. In the circumstances as I find that there was a good delivery of keys at 5.00 p.m., it is unnecessary for me to go on to consider the somewhat more controversial second delivery of keys one hour later. |
6. I am clear that on the totality of the material put before the Court that the Purchaser has no defence and no merit, notwithstanding the most attractive arguments advanced by Mr. Coleman. The Master was right in entering Judgment against the Purchaser Plaintiff. The Purchaser did not wish to complete or failed to complete on 25th August 1997 (it does not matter which) and it follows that the Purchaser is not entitled to the return of the deposits and that this Appeal of the Plaintiff Purchaser fails. The Plaintiff Purchaser must pay the costs of the appeal to the Defendants Vendor.
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William Waung |
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Judge of the Court of First Instance
High Court |
Representation:
Mr. Russell Coleman instructed by Messes Ng & Co. for the Appellant Plaintiff
Mr. Lawrence Ng instructed by Messrs Yip, Tse & Tang for the Respondents Defendants
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