CHAN PING KWONG v. LEE CHUNG YUNG DAVID

1992, No. A179

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. This is an action by the plaintiff for specific performance and damages in respect of a provisional agreement entered into with the defendant on the 28th July 1991 for the sale and purchase of a flat in Yuen Long.

2. It is not in dispute that by the provisional agreement the plaintiff agreed to purchase the flat for $420,000, and to pay an initial deposit of $15,000. The parties also agreed to enter into a formal agreement on the 19th August 1991 which was later changed, by agreement, to the 29th August 1991. It was further agreed by Clause (B)(6) of the Provisional Agreement as follows:-

"If the Vendor fails to sign the ... formal Agreement on schedule, he will be in breach of contract, and has to repay the ... initial deposit to the Purchaser together with an additional sum equivalent to the ... initial deposit. At the same time, the Purchaser will immediately pay HK$7,500.00 to Hing Yip Estate Co. as handling charges. "

Hing Yip Estate Company was the estate agent through whom the transaction was conducted.

3. A further term of the agreement was for vacant possession to be given on completion which was fixed to take place on or before the 19th December 1991 and it was stipulated under the item "Remarks" that the vendor was to be responsible for the vacation of the premises by the tenant.

4. Upon the signing of the provisional agreement by the defendant, Miss Chan who is the sole proprietor of Hing Yip, handed to the defendant a cash cheque for $15,000 as the initial deposit which had been drawn in his favour by the plaintiff. However the defendant, with regard to the cheque, wrote the following words into the agreement "to take effect upon being cashed". It is not in dispute that the cheque has never been cashed by the defendant.

5. Subsequently, the defendant decided not to proceed with the sale for he was unable to deliver vacant possession of the premises until June 1992 when a tenancy agreement with one of his tenants was due to expire. As a result, the formal agreement that had been arranged to be executed on the 29th August 1991 was not signed.

6. According to the plaintiff, no discussion ever took place with the defendant with regard to the payment of compensation. Further, the defendant not only admits that he is in breach of the agreement, but he concedes he has not tendered compensation in the amount that is provided for in clause (B)(6) of the provisional agreement. Miss Chan said that the defendant at first refused to pay any compensation, but later mentioned a figure of between  $5,000 and $7,500. However, no compensation was either tendered nor was any sum paid.

7. When the plaintiff was cross-examined by the defendant, he said he was prepared to offer the sum of $15,000 as compensation, but this sum was rejected. That offer was made far too late and, in any event it does not accord with the terms of the provisional agreement.

8. The defendant gave evidence that he did not cash the cheque of $15,000 because he believed problems would be caused by his tenants claiming too much by way of compensation. He said that he did not intend to cash the cheque until his tenants had vacated the premises. The premises have been vacated since the present proceedings were instituted, but the defendant has declined to complete the transaction and, as I have said, has not cashed the cheque for $15,000. The defendant said that he had made a proposal to pay $5,000 as compensation last year, but the offer was not accepted as the plaintiff wanted to proceed with the sale and purchase. The defendant has complained that the plaintiff and Miss Chan have conspired to cheat him, and he went on to say that the plaintiff was Miss Chan's dummy. He said that after the provisional agreement had been signed, he saw in the window of the premises of Miss Chan's estate agency an advertisement for the sale of his flat at the sum of $688,000. Madam Li, a friend of the defendant, who is an-elderly lady, corroborated this evidence and also claimed that she had been given two cheques each for $15,000 to be handed to Miss Chan if she was approached by her.

9. Suffice to say I have no hesitation in rejecting the evidence of both the defendant and Madam Li that such an advertisement was seen, nor do I accept the evidence of . Madam Li that she ever received two cheques for $15,000. Further, I do not accept the defendant's evidence that Miss Chan ever gave an oral-guarantee, as he alleged, on behalf of the plaintiff not to take legal proceedings. Even had she done so, she did so without any authority. I also reject the defendant's allegations of conspiracy or that the plaintiff was Miss Chan's dummy. I have no hesitation in accepting the evidence given by the plaintiff and Miss Chan and reject that of the defendant.

10. The defendant' is an intelligent man who is the manager of a company in Taipei that sells Mercedes Benz. Although he admitted being in breach of the agreement, he told an absurd story about the conspiracy in an attempt to 'wriggle out of his legal obligations. The defendant's failure to cash the cheque does not amount to a valid defence for he cannot rely on his own breach to avoid the contract.

11. As the defendant is in breach of the agreement and has never tendered nor paid the compensation under clause (B)(6), the only issue for determination is whether the plaintiff is entitled to a decree of specific performance. No reason has been advanced by the defendant to support his refusal to proceed with the transaction. The defendant lives in Taipei whilst the suit premises are, as I have said, now vacant. Indeed, no fault can be attributed to the plaintiff for the circumstances that have arisen in these proceedings. I am, therefore, quite satisfied that the plaintiff is entitled to a decree of specific performance as claimed.