YU, MICHAEL TSE LIM v. NGAI TIK YU

DCCJ 3211 / 2007

 IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3211 OF 2007

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Date of Hearing: 31 December 2007

Date of Handing Down Judgment: 31 December 2007

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JUDGMENT

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Introduction

1.  The Plaintiff Mr Yu as purchaser entered into a preliminary sale and purchase agreement dated 29 June 2007 with the Defendant Mr Ngai as vendor for the purchase of a flat known as Flat F, 58th Floor, Tower 5, Sorrento, No 1 Austin Road West, Kowloon, Hong Kong.  The purchase price was HK7,820,000.00.

2.  When he signed the preliminary agreement, Mr Yu paid the initial deposit of HK$391,000.00.  When the parties were supposed to sign the formal agreement on 10 July 2007, Mr Ngai did not proceed to do so.  He also soon afterwards through his then solicitors returned Mr Yu’s cheque for the intended payment of a further deposit.   The parties eventually did not enter into the formal sale and purchase agreement nor complete the sale at all, and Mr Ngai further repaid Mr Yu the initial deposit.

3. Mr Yu by now seeks summary judgment against Mr Yu for the payment of HK$391,000.00 as liquidated damages pursuant to clause 9 of the preliminary agreement.  Alternatively, he asks for damages to be assessed.  At the hearing, Mr Yu through his counsel abandons the relief for a declaration that he is entitled to a lien on the flat to the extent of the liquidated damages and that he is entitled to be indemnified against all liabilities arising from Mr Ngai’s breach of the preliminary agreement. 

Mr Ngai’s Defence

4. Mr Ngai does not dispute the essential facts as set out above.  He also does not dispute that he is the registered owner of the flat.  Through his draft Defence and opposition affirmation, he however says he is entitled to defend the claim based on the following allegations.

5. First, he says he is only a trustee of his parents in holding the interest of the flat.  In support of this allegation, he relies on a Chinese authorization letter and a Chinese memorandum on the purchase of the flat written on a paper bearing at its left bottom the name of a well known solicitors’ firm.  There is however no reference to any names or signature of a solicitor.

6. Second, he says he is forced not to be able to complete the sale of the flat because of his wife Ms Chan unreasonably refused to leave the flat.  He says in his opposition affirmation that he intends to join her as a Third Party in these proceedings as she was the cause of his inability to complete the sale of the flat to Mr Yu.  Mr Ngai formally commenced divorce proceedings with Ms Chan on 25 September 2007.

7. At the hearing, Mr Ngai’s counsel, Mr Li confirms that he is only pursuing the defence based on Ms Chan’s refusal to leave the flat rendering Mr Ngai’s inability to proceed with the sale.

Concession of liability

8. However, in the middle of the hearing, Mr Ngai through his counsel concedes liability on the payment of the liquidated damages, but instead seeks a stay of execution of any judgment entered.

9. Given that there is no dispute on the quantum, I will therefore give judgment against Mr Ngai for the sum of HK$391,000.00 with interest.  The next question I have to consider is whether I should grant a stay of execution as sought.

 Stay of execution

10. The Court is given a discretionary power to stay the execution of a judgment pursuant to the rules under O. 45 r 11, O 47 r 1 and O 59 r 13.  In order to be successful, the applicant has to first satisfy the Court that he meets the requirements laid down under these rules.  

11. The Court also has an inherent jurisdiction to grant a stay of execution.  However, the exercise of it has to be made in accordance with principles (and not to be contrary to the rules), and while it would not be right to set out an exhaustive list of relevant factors for the exercise of the inherent jurisdiction in this context, it is important to bear in mind that the jurisdiction will only be activated in exceptional circumstances, such as where an injustice would otherwise be caused, to prevent abuse, to preserve the dignity of the court or to facilitate the administration of justice. The general principle is that where, a party (the judgment creditor) has obtained a judgment against another party (the judgment debtor), the starting (and often, finishing) point is that the judgment creditor should be able to take all legitimate measures to enforce that judgment.   See:  Credit Lyonnais v SK Global Hong Kong Ltd (unrep., CACV 167/2003, 30 July 2003, Ma CJHC, Rogers VP and Cheung JA), at paras 3 and 4 per Ma CJHC.

12. Mr Li for Mr Ngai says there should be a stay of execution to allow Mr Ngai to take out proceedings to claim and obtain a determination against Ms Chan for an indemnification of his liability towards Mr Yu.  Mr Li says it is unjust for his client to be required to pay immediately Mr Yu, when the wrong is caused allegedly by Ms Chan.  Mr Li prays in aid of O 47 r 1 and, I believe, also the inherent jurisdiction of the Court.

13. Under O. 47 r 1, Mr Li has to show special circumstances to render it inexpedient to enforce the judgment or that Mr Ngai is unable from any cause to pay the money.

14. However, a stay of execution under O 47 r 1 will not ordinarily be granted simply because the defendants bring a cross claim in another action against the plaintiff.  See:  Hong Kong Civil Procedure 2008, para 47/1/1.   In the premises, a fortiori I do not think a potential action against Ms Chan (whose alleged liability is unrelated to Mr Yu’s claim) demonstrates a special circumstance to justify a stay under the rule. 

15. Mr Li also says Mr Ngai is in financial difficulty and has difficulty to pay.  However, there is simply no evidence before me to justify the submissions.  I therefore do not accept the same.

16. Insofar as the inherent power to stay is concerned, given the starting principle for a judgment creditor to obtain the fruits of the judgment by enforcement as mentioned above, I do not see a potential claim against Ms Chan offers the exceptional situation to justify the exercise of it.  I do not think there is anything unjust to allow Mr Yu to enforce judgment without having regard to Mr Ngai’s potential claim against Ms Chan.  There is simply no reason why Mr Yu should wait for Mr Ngai to try to obtain judgment against Ms Chan, the period and result of which are in any event entirely uncertain. It is also unclear whether Ms Chan is in a position to pay, even if she if found liable to Mr Ngai. More importantly, Ms Chan’s liability, if any, to pay Mr Ngai is entirely unrelated to Mr Yu.

17. For the above reasons, I refuse Mr Ngai’s application for a stay.

Conclusion

18. I therefore grant an order that:

(1) There be a declaration that Mr Yu has lawfully rescinded the preliminary sale and purchase agreement.

(2) There is judgment against Mr Ngai for the sum of HK$391,000.00, together with interest at 1% above the prime rate as from time to time quoted by the Hong Kong and Shangahi Bank from the date of the Writ to the date of this judgment, and thereafter at judgment rate until full payment.

19. I further make an order that costs of the action and this application be to Mr Yu to be taxed if not agreed, with certificate for counsel.