SHIN HYUN SOOK v. HO PIK KEI ISAKAREN AND OTHERS

DCCJ 2056/2014

[2026] HKDC 604

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2056 OF 2014

-----------------------------------

-----------------------------------

-----------------------------------

JUDGMENT

-----------------------------------

I.  INTRODUCTION

1.  This dispute concerns an attempted sale and purchase of a landed property known as “1/F including the Balcony, 24E Tong Tau Po Tsuen, S-B of Lot No 3258 in DD 116, Yuen Long, New Territories, Hong Kong” (“Property”). P is and was at all material times the registered owner of the Property. No formal Sale and Purchase Agreement (“SPA”) had been signed and completion did not take place on 8 April 2014 pursuant to the Provisional Sale and Purchase Agreement (“PASP”) dated 25 February 2014.

II.  BACKGROUND

2.  By a Power of Attorney dated 2 October 2013, D1 was appointed as the lawful attorney of P to sell the Property.

3.  By a Provisional Agreement for Sale and Purchased dated 25 February 2014 (“PASP”), signed by D1 as the lawful attorney of P as Vendor, P agreed to sell the Property to D2 for a sum of HK$2,000,000.00. Completion was to take place on 8 April 2014.

4.  The PASP was amended by the sole initials of D3. It is alleged that the amendment has the effect that D3 became the purchaser of the Property in substitution of D2 (“Amended PASP”) pursuant to novation. It has been alleged that D2 is the wife of D3’s cousin.

5.  The Amended PASP was registered in the Land Registry against the Property by Memorial No 14031401270016 on 14 March 2014.

6.  The Power of Attorney was revoked by P on 6 March 2014.

7.  No formal sale and purchase agreement was signed between P (whether by herself or D1) and D2 or D3. Completion did not take place on 8 April 2014.

8.  Under Clause 2 of the PASP, it is stipulated that Purchaser shall pay to the Vendor in the following manner:

(1)  The initial deposit in the sum of HK$500,000.00 (the “Initial Deposit”) shall be paid upon the signing of the PASP;

(2)  A further deposit in the sum of HK$500,000.00 upon the signing of the Formal Agreement or on or before 4 March 2014;

(3)  Balance of the purchase price in the sum of HK$1,000,000.00 shall be paid upon completion on or before 8 April 2014 at Vendor’s solicitors.

9.  Clause 7 of the PASP further stipulated:

“Should the Purchaser fail to complete the purchase in the manner herein contained, the deposit shall be forfeited to the Vendor and the Vendor shall then be entitled at his absolute discretion to sell the said premises to any one he thinks fit and the Vendor shall not sue the Purchaser for any liabilities and/or damages or to enforce specific performance”.

10.  It is P’s case that D2 had failed to complete the transaction in the manner contained in Clause 7 of the PASP and the initial deposit, if made, should be forfeited.

11.  It is also P’s pleaded case that D1, having issued a receipt for the initial deposit, purportedly made by cheque No 931237, fails and refuses to pay the sum of HK$500,000.00 initial deposit to P despite repeated demands. It was by an amendment to the printed standard form PASP initialed by D1 and D2 that the requirement for the deposits to be paid to the Vendor’s solicitors as stakeholder was crossed-out to enable the initial deposit to be made to D1.

12.  The Plaintiff pleaded that the Amendment to the PASP to substitute D3 for D2 as purchaser to the Property was made without her knowledge nor consent. As shown by the Amended PASP at HB/154, it was made by crossing-out the name of D2 Cheng Lan Ying and insertion of the name D3 Lee Yim Mui as the Purchaser by hand to and on the original PASP, and by the adding of the initial Lee (李) in Chinese character next to where there were the initials of D1 and D2. The Amendments to the original PASP had been made unilaterally without the counter-signatures or initials of D2 and D1. The original PASP as amended was also not dated to show when the amendments were made.

III.  PLAINTIFF’S CLAIM

13.  The Plaintiff claims are summarized as follows:

(i)  As against D1 for a declaration that the Initial Deposit in the sum of HK$500,000.00 was held by D1 on behalf of P;

(ii)  As against D2 for breach of the PASP and for forfeiture of the Initial Deposit;

(iii)  As against D3 for a declaration that the Amended PASP is null and void and unenforceable; and if the Amended PASP is valid and enforceable as between P and D3, for a declaration that D3 is in breach of the Amended PASP and P is entitled to forfeit the initial deposit paid in the sum of HK$500,000.00; and

(iv)  For an order to set aside the registration of the Amended PSAP.

14.  As D1 had not complied with the Order of Master Lui (司法常務官雷健文) of 18 October 2022, Judgment was rendered by Master Soong against D1 on 11 January 2023 [HB46-47], in which D1’s Defence and Counterclaim were struck-off and D1 was ordered to pay to the sum of HK$500,000.00 to P with interests and costs.

IV.  D3’S DEFENCE

15.  D3 pleaded at §6 of ADAC that the PASP was amended on 26 February 2014 by the consent of all the parties to the PASP and this constituted novation of the PASP in favour of D3.

16.  At D3’s Opening, D3 referred to §§15-22 of D3’s Amended Defence & Counterclaim (“ADCC”), in which D3 counterclaims that P committed repudiatory breaches of the Amended PASP by failing to show good title of the Property and/or did not complete the sale and purchase of the Property on 8 April 2014. D3 therefore claims against P for the return of the Initial Deposit and agreed liquidated damages in the sum of HK$500,000 under Clause 8 of the Amended PASP.

V.  WITNESSES

17.  P’s witnesses were Shin Hyun Sook who filed her witness and supplemental statements and her former husband 陳志超 (Mr Chan) also with two statements.

18.  D3 herself was the only factual witness testifying for her case at the Trial. She has filed two witness statements.

19.  The most important issue central to this case is that of the alleged substitution of D3 for D2 as the purchaser with the consent of all parties on 26 February 2014, framed as novation by an amendment to §4 of the DACC.

20.  On this issue the evidence of both Mr Chan and P do not assist, as both of them were not parties to the substitution communications and documentation in support of the alleged substitution/novation. Mr Chan was involved on only two occasions in the afternoon and evening on 25 February 2015 and on those occasions, he was there only to let Agent Cheng (with D1, D3 and her husband) entry to view the Property. As to P, she is Korean (and outside of Hong Kong on 25 February 2025) and she was not conversant with Chinese characters or Chinese orally. It was her evidence that she had very limited understanding of punti and that she could not fully understand content of the documents explained to her. She said she had to use google translate to assist. It is P’s evidence she was not informed of the PASP at the material time D1 signed the PASP and the amendments to the PASP with D3’s initials.

21.  But since the parties admit that P had authorized D1 to be her lawful attorney by a Power of Attorney dated 2 October 2013 (“PA”) to inter-alia sell the Property, even though P may not have fully understood the scope of authority granted to D1, she is nevertheless bound by it.

“BY THIS POWER OF ATTORNEY made this 2^nd day of October 2013 by me HYUN SOOK SHIN, holder of Hong Kong Identity Card No. P023869(8), of 1/F., E24 Tong Tau Po Tsuen, Yuen Long, New Territories, Hong Kong, I the said HYUN SOOK SHIN do hereby appoint and authorize my friend HO PIK KEI ISAKAREN (何碧琪), holder of Hong Kong Identity Card No.C656098(7), of the same address (“my Attorney”) to be my lawful attorney to do and execute all acts, deeds and things and exercise all my rights and powers in relation to ALL THAT FIRST FLOQR of No. E24 Tong Tau Po Tsuen, Yuen Long, New Territories, Hong Kong (“the Property”) on my behalf or in my own name including but not limited to approving signing sealing delivering and/or otherwise executing all such deeds or assignments or agreements or contracts or documents whatsoever to sell or let out or otherwise dispose of or deal with or manage or take possession of the Property in favour of other person or party at such price or in such consideration and upon such terms and conditions as my Attorney shall in his discretion think fit and just.”

22.  Missing in the hearing as witnesses are (i) 鄭漪漣 (Agent Cheng), (ii) D2 and (iii) Annie Suen (the clerk of AYCHT) that handled the transaction as directed by Agent Cheng from 4 March 2014. Their evidence can shed light and fill the gap as to the alleged novation as well as the issuance of letters by AYCHT including the letter dated 4 March 2014 to RCKY, to which was attached the original PASP in which D2 was named as the purchaser. In all the other letters issued by AYCHT to RCKY to postpone the signing of the Formal ASP, D3 had not been identified as the purchaser.

Evidence of D3

23.  It was D3’s evidence that by the time of February 2014, she had been a property agent for more than 10 years. When questioned in Court, she agreed that the act of countersigning by the signatories to the amendments is to confirm their agreement to the content of what had been amended. In her evidence, D3 agreed that in property transactions, adherence to the black letter content is of utmost importance. When pressed to answer under what circumstances could a property transaction contract be validly varied in practice without the signature of all the parties to the contract, D3’s repeated answer was that “it is not necessary for all parties to sign, but only the ‘key person’. This defies logic and common practice. It was her testimony that mere silence or failure to object would constitute consent. Of course, one scenario is that those parties, such as D2 and P, might not have had knowledge of the amendments, such as the amendment to substitute D3 for D2. Surely, P and D2 as the original parties to the PASP on record must have been ‘key persons’ and D3 and Agent Cheng, both property agents, should have ensured that the substitution of D2 by D3 as purchaser was signed off by them, by the putting of their initial where amendments were made. D3’s aforesaid answer casts a shadow over her credibility as a witness as she had under repeated questioning, denied the need to have D1 or P and D2 initial the amendments to the PASP.

24.  D3 alleges she was the back-up buyer for D2 on her second visit to the Property at the night of 25 February 2014, after the first visit on the same day. It was D3 that paid the deposit of HK$500,000.00 for D2 on the spot. D3 claimed she had communicated in the presence of all on the 2^nd visit that D2 might be unable to obtain a mortgage for the balance of the price. I find the allegation not credible.

25.  D3 agreed there was no urgency for D2 to buy the Property, yet unexplained, D1 and D2 rushed to sign the PASP night of 25 February 2014. D1 and D2 could have waited and signed the PASP on 26 February if her bank indicates to D2 that mortgage for the balance is possible. The cheque issued by D3 to D1 to secure the transaction in any case could only be deposited upon the opening of bank offices in the morning of 26 February 2014.

26.  D3 also said she did not consider her own financial ability and her financial obligation to pay under the PASP had she substituted herself for D2. In fact, it was her evidence she had liquidity problem as some of her deposits had been locked up as time-deposits. I find D3’s account of what happened 25, 26, 27 February 2024 to be fanciful.

VI.  LIST OF UNDISPUTED FACTS AND OTHER RELEVANT MATERIAL FACTS

27.  Undisputed Facts dated 1 December 2025 were jointly filed by P and D3 [HB 58-59]. The Agreed Undisputed Facts are:

“(1)  At all material times since 13 March 2012, the Plaintiff is and was the registered owner of the property situated at 1st Floor including the balcony of 24E, Tong Tau Po Tsuen, Section B of Lot No. 3528 in Demarcation District 116, Yuen Long, New Territories (“the Property”).

(2)  By a Power of Attorney dated 2 October 2013 (“PA”), the Plaintiff authorized the 1st Defendant as her lawful attorney to sell the Property.

(3)  A provisional agreement for sale and purchase dated 25 February 2014 was entered into by the 1st Defendant with the 2nd Defendant, agreeing to purchase the Property at a consideration of HK$2,000,000 (“PASP”).

(4)  In the PASP, the 1st Defendant as the Plaintiff’s attorney, acknowledged receipt of the initial deposit in the sum of HK$500,000 (“Initial Deposit”).

(5)  The PASP was subsequently allegedly amended to the effect that the 2nd Defendant was substituted by the 3rd Defendant as the purchaser of the Property in the PASP (“the Alleged Amended PASP”). The Alleged Amended PASP is dated the same date as the PASP, i.e. 25 February 2014.

(6)  The PA was subsequently revoked by the Plaintiff by a Notice of Revocation of Power of Attorney dated 6 March 2014.

(7)  The Alleged Amended PASP was registered in the Land Registry against the Property by Memorial No.14031401270016 on 14 March 2014.

(8)  The sale and purchase of the Property was not completed by 8 April 2014.

Undisputed facts identified by the 3^rd Defendant

(A)  The Plaintiff entered into another provisional agreement for sale and purchase agreement to sell the Property to another purchaser at a consideration of HK$2,000,000 on 14 March 2014.”

VII.  LIST OF AGREED ISSUES

28.  The List of Agreed Issues for adjudication are:

“(1) Whether the alleged Amended Agreement for Sale and Purchase (“The Alleged Agreement”) as regards the 1st Floor including the balcony of 24E, Tong Tau Po Tsuen, Section B of Lot No. 3528 in Demarcation District 116, Yuen Long, New Territories, Hong Kong (“Flat”) by which the 2nd Defendant was substituted by the 3rd Defendant as the purchaser is valid and enforceable against the Plaintiff.

(2) In the event that the Alleged Agreement is valid and enforceable, whether the Plaintiff repudiated the Alleged Agreement by failing to show and prove good title to the 3rd Defendant and/or complete the sale and purchase of the Flat by 8 April 2014.

(3) In the event that the Alleged Agreement is valid and enforceable, whether the 3rd Defendant was in breach of cl.2 of the aforesaid Agreement by failing to pay the further deposit in the sum of HK$500,000 by 4 March 2014.

(4) In the event that the Plaintiff repudiated the Alleged Agreement, whether the 3rd Defendant is entitled to the return of the initial deposit in the sum of HK$500,000 together with agreed liquidated damages in the sum of HK$500,000 from the Plaintiff pursuant to cl.8 of the aforesaid Agreement.”

VIII.  DISCUSSION

Agreed Issue 1: Whether the alleged Amended PASP by which D2 was substituted by D3 as the purchaser of the Property is valid and enforceable against P?

Contemporaneous Documents and Correspondences

29.  On this issue, it is D3’s pleaded case at §§5A-6 of the ADCC that D3 was validly substituted as the purchaser of the Property on 26 February 2014 by consent of all parties. However, the correspondences between solicitors for P and AYCHT never showed or identified D3 as the substituted purchaser of the Property.

(i)  In AYCHT’s[1] letter for the purchaser to RCKY[2] for the vendor dated 4 March 2014, the PASP attached was the original PASP with the name of D2 as the purchaser;

(ii)  In the subsequently other letters from AYCHT to RCKY dated 4 March, 11 March and 18 March 2014 for the postponement of the date of the signing of the Formal ASP, D3 was not shown by AYCHT to be the purchaser. In these letters, it was alleged that “our respective clients have agreed to postpone the date of signing of the Formal Agreement for Sale and Purchase” without identification of D3 as the client/purchaser.

30.  It is the evidence of D3 given orally in Court that she had no knowledge and did not know why the aforesaid communications were drafted by AYCHT that way and that she only saw the correspondences once the present proceedings commenced.

31.  This is a serious allegation against AYCHT if indeed what she said in Court is true, and AYCHT would have breached the Hong Kong Solicitors’ Guide to Professional Conduct Vol 1 in that amongst other breaches, these letters issued to extend/postpone the date of signing the formal ASP were issued without client instruction, if D3 was the client.

(i)  It is improbable for such letters to be issued by AYCHT without client instruction. This again impacts D3’s credibility as a witness and the question who was the client/ purchaser of the Property.

(ii)  The other breaches, if D3 was client, were the failure of AYCHT: (a) to regularly inform client of the progress of the transaction; (b) to explain to D3 about the terms of the ASP proposed by RCKY; (c) to explain why an extension of time to sign the ASP was required; (d) to correct D3 as the purchaser instead of D2 by writing to RCKY.

32.  D3 also gave evidence that she had no idea who, for whom and by whom was the Amended PASP registered in the Land Registry. Likewise, it is also alleged AYCHT did not inform D3 that the PA for D1 had been revoked on 6 March 2014.

33.  When JWC[3] was instructed by P in replacement of RCKY, by a letter dated 31 March 2014, she wrote and asked AYCHT “which party are you acting for and the current status of the said sales and purchase”. AYCHT’s reply of 1 April 2024 only stated that the “provisional agreement dated 25 February 2014 is valid and enforceable”, without answering as to the identity of the client.

34.  In AYCHT’s letter dated 3 March 2014, RCKY was asked to have a Formal ASP prepared for AYCHT’s approval together with all title deeds and documents pursuant to the original PASP.

(i)  By RCKY’s reply dated 4 March 2014, identifying D2 as the purchaser, a draft formal ASP in respect of the Property was submitted for approval. It was further written: “Should you approve our draft Agreement without amendment, kindly treat the same as engrossment and return them to us duly signed by your client and attested together with your firm’s cheque /cashier order for further deposit therein mentioned”.

(ii)  There was no response at all to the draft ASP. AYCHT did not write back to say that the purchaser was D3 in place of D2.

Circumstances of the alleged substitution of D3 for D2 as purchaser

35.  P's case is that there had not been any valid substitution of the purchaser. In §10 of her SOC, P avers that the PASP was amended without P’s knowledge or consent and made on a day unknown to her.

36.  On the other hand, D3’s case at §§5A-6 her ADCC is that she was validly substituted as the purchaser of the Property on 26 February 2014:-

(i)  D3 alleges that before signing the PASP on 25 February 2014, she and D2 had informed D1 that the purchaser of the Property might later need to be substituted as D2 might not be able to obtain a mortgage loan to facilitate the purchase of the Property.

(ii)  D3’s evidence is that on 26 February 2014, D2 confirmed that she would not be able to obtain a mortgage loan as she was unemployed and had no proof of income.

(iii)  It is D3’s pleaded case that the original PASP was then amended on 26 February 2014 by the consent of all parties with the effect that D3 substituted D2 as the purchaser of the Property.

(iv)  D3 alleged such amendments made to the PASP was confirmed by D1 in writing as P’s lawful attorney. D3 says this constituted a novation of the PASP in favour of D3. The PASP was therefore extinguished and replaced by the Amended PASP.

(v)  However, if the Amendment PASP was signed 26 February, it was before D3 had sight of the Confirmation Letter detailed below.

37.  The document entitled《確認書》(the “Confirmation Letter”) is reproduced:-

“本人何碧琪HO PIK KEI ISAKAREN, HKID #C656098(7), 有關出售元朗塘頭埔村26E 1/F連露台之物業，於25-02-2014本人所簽訂之臨時買賣合約、曾經修改或刪除的部份包括更改買方由CHENG LAN YING改為LEE YIM MUI JILL均是經本人同意之下而修改．” (emphasis added)

38.  It is D3’s evidence by oral testimony that Agent Cheng provided her with the Confirmation Letter only when they met on 27 or 28 February 2014 and not before.

39.  Further, the content of the Confirmation Letter is very open ended, with D1 agreeing to all the added and deleted parts of the PSAP. D1, before she had sight of what would be deleted and what would be added. This is risky, commercially unreasonable and improbable.

40.  As to the insertion of D3 as the substitutable purchaser, D3’s evidence is that when she met Agent Cheng on 27 or 28 February 2014:

(i)  Agent Cheng told her that the Amended PASP had not been signed by D1, for the reason Agent Cheng had forgotten to bring along with her the Amended PASP for the signature of D1.

(ii)  Due to this, Agent Cheng had the Confirmation Letter prepared to show D1’s consent to the substitution of D or by D3. However, it was only shown to D3 on 27 or 28 February 2014.

(iii)  And D3 signed/initialed the PASP with the amendments.

41.  At §5 of the Amended Reply, P denies that the PASP was amended on 26 February 2014 with the consent of all parties to the PASP. She avers that the PASP was unilaterally altered on a date unknown to and without consent of P after 4 March 2014 (but on or before 14 March 2014 when the Amended PASP was lodged with the Land Registry for registration).

42.  D3 at §4.3 of her Supplemental witness statement alleged that she signed off the Amended PASP on 27 or 28 February 2014.

43.  The absence of Agent Cheng, D2 and Annie Suen to give evidence as to the alleged novation is a blow to D3’s case - how and when the amendments to the PASP was made, and whether it was bona fide and in good faith are of concern.

(i)  Annie Suen and Agent Cheng were both staff of AYCHT and should have been asked to give evidence.

(ii)  There is no evidence that D3 had requested D2 or Annie Suen to come forth to come forth. D2 is a relative of D3, and D3’s reason for Agent Cheng’s absence is also strained.

44.  It is also noted that D3 having written out the deposit cheque:

(i)  D3 had not been active in pursuing its Defence and Counterclaim (D&CC), that was file dated 26 August 2014.

(ii)  D3 had been absent in procedural hearing such as that on 11 January 2023 before Master Soong.

(iii)  The D&CC was only amended some 10 years later on 29 October 2024.

Applicable legal principles

45.  Issue of variation, the relevant principles:

  Chitty on Contract (36^th Edn, 2025) at §26-034-035

“Variation The parties to a contract may effect a variation of the contract by modifying or altering its terms by mutual agreement. In Berry v Berry a husband and wife entered into a separation deed whereby the husband covenanted to pay to the wife a certain sum each year for her support. His earnings proved insufficient to meet this obligation, so they agreed in writing to vary the financial provisions. It was held that this variation was valid and enforceable, being supported by consideration, and that it could be set up by the husband as a defence to an action against him on the original deed. A mere unilateral notification by one party to the other, in the absence of any agreement, cannot constitute a variation of a contract. The scope of a contractual power to vary the terms of a contract is a question of interpretation of the particular contract term which contains the power to vary the contract.

Form of variation As in the case of a rescission of a contract, the terms of a deed or written instrument may be varied by a subsequent agreement, whether oral or written. This may be reconciled with the rule that extrinsic evidence is not admissible to vary or qualify the terms of a written instrument, for that rule only relates to the ascertainment of the original intention of the parties, and not to a subsequent variation. A contract required by law to be made in or evidenced by writing can only be varied by writing, although, as we have seen, it can be rescinded by parol. In Goss v Lord Nugent the plaintiff agreed in writing to sell to the defendant certain plots of land. In an action by the plaintiff against the defendant for the purchase-money, the defendant pleaded that the title to one of the plots was defective. To this plea the plaintiff replied that the defendant had orally agreed to waive the defect and to accept the existing title. The court held that, since the contract was one which was required by law to be evidenced by writing, the oral variation was not admissible and the defendant was entitled to succeed on the ground that a good title had not been made”. (emphasis added)

46.  Issue of Novation the relevant principles at Wing Hing (1956) Company Limited v Nissin Foods Company Limited [2021] HKCFI 638 at §67:

“67. Novation is a consensual act requiring the objective manifestation of consent by the existing contracting parties. As stated in Chitty on Contract (33rd edn, 2018) at §19-087:

“Novation takes place where the two contracting parties agree that a third, who also agrees, shall stand in the relation of either of them to the other. There is a new contract and it is therefore essential that the consent of all parties shall be obtained: in this necessity for consent lies the most important difference between novation and assignment.” (my emphasis)

68. Acceptance of novation may be inferred from acts and conducts which amounted to the performance of obligations of the agreement novated: Enterprise Managed Services Ltd v Tony McFadden Utilities Ltd [2011] 1 BCLC 414 at §24 (Coulson J).

69. A party asserting novation must however “clearly establish” it by evidence. As David Steel J explained in The Tychy (No.2) [2001] 1 Lloyd’s Rep 10(at 24):[5]

“(a) Novation involves the creation of a new contract where an existing party is replaced by a new party. (b) Thus, novation requires the consent of all parties, including in particular the party which is thereby accepting a new person as his debtor or as his counterpart under an executory contract. (c) The consent may be apparent from express words or inferred from conduct. (d) The consent must be clearly established on the evidence as being only consistent with the intent of achieving a novation.””

47.  It is trite that: (i) A contract required by law to be made in or evidenced by writing can only be varied by writing; and (ii) Section 3(1) of the Conveyancing and Property Ordinance (Cap 219) requires Land contracts to be in writing. Hence for the valid substitution of D3 for D2 in the PASP by novation, the consent of P/D1, D2 and D3 in writing was necessary. Contrary to para 45.2 of D3’s Closing Submissions, the Amended PASP was not duly signed by P or D1 the party to be sued under D3’s Counterclaim.

48.  The combined effect of the all the above indicate to me that D3 had not been validly inserted D3 as the substitute purchaser in place of D2, with the consent of all on 26 February 2016. In short, D3 has not discharged her burden of proving the alleged variation or novation on 26 February to the required standard.

49.  On Issue 1, it is my finding that that the Amended PASP is not valid and not enforceable against P.

Agreed Issue 2: In the event the Alleged Agreement is valid and enforceable, whether P repudiated the Amended PASP by failing to show and prove good title to D3 and/or complete the sale and purchase of the Property by 8 April 2014? and

Agreed Issue 3: In the event the Alleged Agreement is valid and enforceable, whether D3 was in breach of Clause 2 of the Amended PASP by failing to pay further deposit by 4 March?

50.  Issue 2 is relevant to both D3’s defence to P’s claim and her own counterclaim. Given my conclusion as to Issue 1, P could not have repudiated the Amended PASP that has been found to be invalid. What remains is the original ASP between P and D2.

51.  For completeness, I will refer to correspondences between RCKY and AYCHT that may be relevant to the issue of repudiation. It is still uncertain who AYCHT acted for at the material time of the alleged Amended PASP.

52.  D3 submits that a provisional agreement is immediately binding on the parties and it is perfectly possible for the parties to proceed to completion without a formal agreement: citing See To Keung v Sunny Way Ltd [2009] 5 HKLRD 300 at §4(a)-(e) per Yuen JA.

53.  It is also trite that a vendor in a property transaction in Hong Kong will need to show a good title: Active Keen Industries Limited v Fok Chi Keong [1994] 1 HKLR 396 at 405 per Litton JA.

54.  In AYCHT’s letter dated 3 March 2014, RCKY was asked to have a Formal ASP prepared for AYCHT’s approval together with all title deeds and documents pursuant to the original PASP. By RCKY’s reply dated 4 March 2014, identifying D2 as the purchaser, a draft formal ASP in respect of the Property was submitted for approval. There was no response at all by AYCHT or D2 or D3 to the draft formal ASP.

55.  Further, there were other letters from AYCHT to RCKY dated 4 March, 11 March and 18 March 2014 in which it alleged postponement of the date of the signing of the Formal ASP with these words: “We refer to the above property and would like to confirm that our respective clients have agreed to postpone the date of signing of the Formal Agreement for Sale and Purchase …”. At the very least, there is no evidence D3 had knowledge of these letters and it was her evidence she had not asked for the postponement letters to be issued.

56.  Thus, it would appear that the signing of the Formal ASP was a step expected by the Purchaser to be part of the conveyancing steps and timelines in Clause 2 of the PASP (whether original or amended), to such as to precede the payment of the further deposit with proof of title and completion of the transaction as stipulated in the PASP.

57.  It is D3's case that:-

(i)  In breach of the Amended PASP, P wholly failed to show good title of the Property by delivering any title deeds of the Property to either D3 or D3’s solicitors AYCHT and/or complete the sale and purchase of the Property on 8 April 2014. Such acts constituted a repudiatory breach of the Amended PASP.

(ii)  Accordingly, D3 accepted P’s repudiatory breach by her solicitors’ letter dated 9 April 2014 and demanded for the return of the Initial Deposit and agreed liquidated damages.

(iii)  This is pursuant to Clause 8 of the PASP referred to in 4(c) of the Judgment of Yuen JA on See To Keung v Sunny Way Ltd as the “Escape Clause”.

58.  In §6B(iv) and §12(a) of the Amended Reply, P rebuts that D3 was in breached a condition by failing to sign the formal agreement and to pay further deposit on or before 4 March 2014 or 21 March 2014 upon postponement. P says that this amounted to a repudiatory breach by P of the Amended PASP and D3 is not entitled to rely on her own breach to bring the contract to an end.

59.  In evidence is another undated 確認書 produced by AYCHT to P’s former lawyer JWC, with these words at HB/114 “買賣雙方同意上述有關物業之定金港幣50萬元正原定於2014年3月4日或以前繳付，買賣雙方同意該定金於成交時一倂繳付收取”. This is the document D3 relies to justify deferring payment of the further deposit mandated by Clause 2 of the PASP to be paid on 4 March 2014. This is yet another undated dubious document signed by D1.

60.  The English version of Clause 2(b) of the Amended PASP provides that “Upon signing of the Formal Agreement for Sale and Purchase on or before 4 MAR a further deposit shall be paid in the sum of HK$500,000”.  D3 alleges that there is no express term in the Amended PASP requiring a formal agreement to be signed by the parties and D3 cited Man Wing Fun Stephen and Anor v Ho Ching Yee Susanna (unrep, HCA  3724/1997, 25 February 1999). There the relevant clause provides that “Upon signing of the Formal Agreement for Sale and Purchase on or before 4-12-96 further deposit shall be paid in the sum of HK$260,000”. Recorded Edward Chan, SC held at §31 that:-

“It is now well settled that a clause in the form of clause 2 of the present case did not have any effect of imposing any legal or contractual obligation on the part of either the vendor or the purchaser to enter into a formal sale and purchase agreement (see Man Sun Finance (International) Corporation v Lee Ming Ching Stephen [1993] 1 HKC 113 at 124, Luxebond Investment Ltd v Super Asian Investment Ltd [1998] 2 HKC 308).”

61.  The distinguishing fact in this case is that it was the purchaser who asked for the Formal Agreement and for the signing of the Formal Agreement to be deferred to 21 March 2014. There was no communication to the vendor that indicated that the purchaser wish to abandon its request for Formal ASP and will proceed upon the PASP.

62.  Further, D3 argues it is well settled by a number of Court of Appeal judgments that if a provisional agreement provides that “upon signing the formal sale and purchase agreement, a further deposit of $X shall be paid”, the purchaser is not obliged to pay the further deposit if the formal agreement is not signed: See To Keung (supra) at §4(d) per Yuen JA. See also Wise Think Global Ltd (supra) at §§26-34 per Tang VP and §§65.1-65.2 per Yuen JA.

63.  Accordingly, D3 says it did not commit any repudiatory breach of the Amended PASP in failing to approve (and sign) the Formal ASP and make the further deposit of HK$ 500,000 on or before 4 March 2014.

Correspondences between P’s solicitors and solicitors on behalf of unidentified purchaser

64.  The series of letters began with JWC’s letter to AYCHT dated 31 March 2014. In that Letter, AYCHT was asked “which party you are acting for” and “the current status of the said sale and purchase”.

65.  By a letter dated 1 April 2014, AYCHT, without addressing which party it was representing, went on to say “the provisional agreement dated 25 February 2014 is valid and enforceable” and that “our client is willing to complete the sales and purchase at any time.”

66.  JWC’s letter to AYCHT dated 1 April 2014 in reply wrote: “With reference to telephone conversation with your Ms. Suen and our Ms. Jessica Wong this afternoon, your Ms. Suen has confirmed to us that Messrs. Raymond Chan, Kenneth Yuen & Co. was representing [sic] Ho Pik Isakaren. Since the power of Attorney dated 2^nd October 2013 in favour of the said Ho Pik Kei Isakaren has been revoked, please let us have all the correspondences between you and the said solicitors for our further handling” and a copy of the Notice of Revocation of the Power of Attorney dated 6 March 2014 was disclosed to AYCHT. In the last paragraph of the same letter, JWC wrote “As … the completion of the sale and purchase will be taken place [sic] on 8^th April 2014, please let us have all the correspondences in this transaction without further delay.”  

67.  There was no reply to the request nor evidence that AYCHT had provided the requested correspondences.

68.  Following the above, the law firm of Lam Pui King & Co (“LPK”) wrote to JWC on 8 April 2014. This letter of 8 April 2014 is dated the date of completion stipulated stated in Clause 2 of the PASP. In this letter LPK did not identity the name of its client, only the name of the vendor. Unexplained is how LPK came to be aware of the two letters to AYCHT. In this letter it is written “as the two keys of the Property and the initial deposit were given to us by our client, please inform us how the above [is] to be handled …”.

69.  Then on the next day, 9 April 2014, AYCHT wrote to JWC: “We refer to our letter dated 8^th instant and has been informed that completion will take place on 8^th April 2014. However, up to now we still have not received all the title deeds and documents in respect of the above property for completion. You [sic] are hereby demand to return to our client the initial deposit for the sum HK$500,000 together with the liquidated damages and the estate agency commission before 12:00 noon on 10^th April 2014”. This letter was copied to LPK.

70.  D3 pleaded at para 16A of the ADCC that by a letter issued on behalf of D3 dated 9 April 2014, D3 had accepted P’s repudiatory breach.

71.  Then on 10 April 2014, AYCHT issued a letter before action and demand unless the deposit of HK$500,000 together with liquidated damages were paid on or before noon of 11 April 2014, “the client shall take legal proceedings against your client without further notice”.

72.  It is clear it was D2 or alternatively D3 that was attempting, to get out of the transaction: delay and further delay to sign the Formal ASP, delay to pay the further deposit of HK$500,000 under the dubious確認書signed by D1 and the Final amount of HK$1,000,000 upon completion.

73.  Issue 2: It is my finding that upon all the evidence that P did not repudiate the PASP or the Amended PASP (that has been found to be invalid and not enforceable) “by failing to show and prove good title to D3 and/or complete the sale and purchase of the Property by 8 April 2014”. As the correspondences showed, P was waiting for AYCHT’s approval of the Formal ASP or further instruction. At no time, did D3 indicate it has abandoned the requirement of Formal PASP and suggested to proceed directly upon the PASP.

74.  Issue 3: D2 or D3 on the other hand did not evince an intention to complete the purchase of the Property and instead attempted by Clauses 8 and 8A (the Escape Clause) of the PASP to get out of the PASP or Amended PASP and the obligation to pay further deposit by 4 March or by the dubious Confirmation確認書 (see para 16A, 18 and 18A of D3’s ADACC at para 59 above) to defer the date of payment of the further deposit of HK$500,000 to the date of completion.

75.  Issue 4: In the event that P had repudiated the Amended PASP, whether D3 is entitled to the return of the Initial Deposit in the sum of HK$500,000 together with agreed liquidated damages of HK$500,000 from P pursuant to Clause 8 of the Amended PASP?

76.  At para 34 of D3’s Opening, D3 agreed that Issue 4 rises and fall with Issue 2. Having failed in respect of Issue 2, D3’s Issue 4 claims against P for the return of the Initial Deposit and for liquidated damages also fail.

IX.  CONCLUSION

77.  For the reasons above, as against D3:

(i)  It is declared that the Amended PASP is invalid and in any case unenforceable;

(ii)  An Order is made to enable the setting aside of the registration of the Amended PASP against the Property, registered in the Land Registry by Memorial No. 1403140270016;

(iii)  D3’s counterclaims are dismissed.

(iv)  Costs to follow the event, with D3 liable for P’s costs, payable to P by D3, on party to party basis, to be taxed if not agreed.

78.  It remains for me to thank the parties’ counsel for their assistance.