WEI JING v. CHEUNG PING YIN AND ANOTHER

HCMP 3314/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 3314 OF 2014

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D E C I S I O N
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1.  I have before me an originating summons issued by the plaintiff on 23 December 2014 seeking, inter alia, a declaration that the defendants were in repudiatory breach of a Provisional Agreement for Sale and Purchase dated 14 April 2014 (“the Provisional Agreement”) entered into between the defendants as vendor and the plaintiff as purchaser of the entire issued share capital in Nice Gate Limited (“the Company”), and return of deposits in the total amount of HK$6,080,000 paid by the plaintiff to the defendants pursuant to the Provisional Agreement.

2.  The Company is the owner of the property known as Flat A on 15^th Floor and Flat Roof adjacent thereto and Flat Roof immediately above of Tower 9, and Car Parking Spaces Nos 15 and 16 on Car Park C1, One Beacon Hill Road, Kowloon (“the Property”).

3.  Although the agreement took the form of a sale and purchase of the entire issued share capital in the Company, it is not in dispute that the plaintiff’s object or purpose of entering into the Provisional Agreement was to acquire the Property.

4.  Under the Provisional Agreement, the parties were supposed to enter into a formal sale and purchase agreement on or before 28 April 2014, and completion was scheduled to take place on or before 10 July 2014.

5.  As a matter of fact, no formal sale and purchase agreement was signed, and there was no completion on or before 10 July 2014 or at any time thereafter, because the plaintiff alleged that the defendants failed to answer various requisitions relating to the title of the Property, and further was in breach of (inter alia) clause 3(e) of the Provisional Agreement.  By a letter dated 11 July 2014, the plaintiff through his solicitors gave notice of termination of the Provisional Agreement to the defendants and demanded for the return of the deposits.

6.  As earlier mentioned, the originating summons herein was issued by the plaintiff on 23 December 2014.  The evidence now before me consists of two affirmations made by the plaintiff and an affirmation made by the plaintiff’s solicitor (Mr Lawrence Tse) on the plaintiff’s side, and an affirmation made by the 1^st defendant on the defendants’ side.

7.  From my reading of the papers and the skeleton submissions filed by the parties, there are essentially 4 issues to be determined in this case, namely:-

(1) whether the defendants answered or satisfactorily answered a requisition referred to by the parties as the “Mortgage Requisition”;

(2) whether the defendants answered or satisfactorily answered a requisition referred to by the parties as the “Liability Requisition”;

(3) whether the defendants were in breach of clause 3(e) of Provisional Agreement; and

(4) whether there was an agreement to extend the completion date.

8.  I am satisfied that the first issue can properly be disposed of on the basis of the existing affirmation evidence.

9.  However, as I mentioned at the beginning of the hearing this morning, I am concerned about the state of the evidence on the defendants’ side in respect of the remaining three issues.  This is because, according to the defendants, (a) certain oral agreements were reached between their solicitor (Mr Edwin Cheng) and the plaintiff’s solicitor (Mr Lawrence Tse) which are relevant to the 2^nd and 4^th issues, and (b) the defendants’ accountant provided explanations and documents to the satisfaction of the plaintiff’s accountant in respect of the accounts of the Company and such explanations and documents are relevant to the 3^rd issue.

10.  The difficulty, however, is that neither the defendants’ solicitor nor their accountant has made any affidavit or affirmation, and the relevant evidence is given through the 1^st defendant’s affirmation in the form of hearsay evidence.  In my view, the evidence of the defendants’ solicitor and accountant is critical to the defendants’ case and it would be inappropriate to resolve the relevant disputes of fact on affirmation evidence, still less hearsay evidence, alone.

11.  Prompted by the court’s observations, Mr Ng submitted that pleadings should be directed to be served, and the matter should continue as if the action had begun by writ.  Mr Ng also informed the court that the defendants’ solicitor and accountant would be available to give evidence at the trial in that event.  I expressed some reservation on this course of action because the present hearing was fixed pursuant to a consent order of the parties dated 4 September 2015 and one day had been reserved for the hearing.

12.  Notwithstanding my reservation, I consider that, in the interests of justice, I ought not to dispose of the present action on the basis of the existing affirmation evidence.  Having regard to the factual issues that have been raised by the defendants (including possible defences of waiver and estoppel), I consider that this action ought to continue as if it had begun by writ and pleadings should be directed to be served.  I shall hear the parties on the directions that should be given and on the question of costs.