HINGOLD INVESTMENTS LTD. v. KADESY DEVELOPMENT LTD. and Others

1995, M.P. No. 1311

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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J U D G M E N T

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1. This is a vendor and purchaser summons and the Plaintiff is the purchaser and the Defendants are the sellers of what can be referred to as the 26th Floor of King Kong Commercial Building. The matter which falls for the decision today, however, is solely the question of costs. I bear in mind, of course, that the question of costs can be a very important question for the parties.

2. The Sale and Purchase Agreement was entered into on 28th June 1994. However, the building to which it related was in the course of construction and so completion was not imminent at that time.

3. On 22nd February 1995, the Plaintiff/purchaser raised a large number of requisitions of which five in particular lingered on. There was intervening correspondence between the parties in which the Defendants attempted to answer those requisitions but not, unfortunately, to the satisfaction of the Plaintiff.

4. On the 10th May, the Defendants' solicitors wrote to the Plaintiff's solicitors saying that, "We are instructed by our developer client that the occupation permit for the building may be issued later this month. We are therefore enclosing our draft proforma Assignment and draft undertaking letter for your use. Also enclosed is a copy of the draft Deed of Mutual Covenant and Management Agreement for the building." That letter was received on 11th May. No doubt it caused some consternation. The Plaintiff's solicitors, I am not sure whether they had by then fully taken on board this letter that was received on 11th May, themselves issued a further letter on 13th May repeating some of the requisitions, taking the correspondence one stage further than it had already been taken. Again these five matters which were the specific subject to today's hearing and the application were raised.

5. The letter of the 10th May, however, produced what I consider was something of a knee-jerk reaction from the Plaintiff's solicitors. They wrote on the 17th May in fairly bald terms saying that, "We have instructions to issue a Vendor and Purchaser Summons against your client" and asking for confirmation that the Defendants' solicitors had instructions to accept service. They do not set out these specific requisitions which they say remain unanswered. Neither does this letter say "We have got instructions to issue a summons but will hold off doing so if you give us your undertaking not to give notice to complete until our requisitions have been answered."

6. In my view that was the first wrong turn which this matter took. I fully understand that conveyancing matters cannot be left in limbo; that if there was a likelihood that the occupation permit was to be issued some time later in May then a 14 day notice to complete could be served and the completion day could be brought on very quickly. In a conveyance of this size, it is reasonable, it seems to me, that if parties are to take a stand that requisitions are valid and have not been complied with, that they get the matter aired in court before they commit themselves and their clients to what could be a costly stand.

7. Be that as it may, it seems to me that there were other things that could have taken place as I have suggested other than an immediate issue of a summons. But that is what happened on the next day.

8. There are two matters that I will comment about the summons.

9. First, as Mr. Chan Q.C. has pointed out on behalf of the Defendants, it was issued in what is called the expedited form. In other words, it was issued with a date for hearing fixed on the issue of the summons rather than simply a summons to which the Defendant would enter an appearance and then a date would be fixed and so on and so forth. Again one cannot lay down hard and fast rules in conveyancing matters since no doubt things cannot be left in abeyance and obtaining court fixture date is not always all that simple and so I have no doubt, in many circumstances it is justified to obtain a date immediately. But there are procedures for obtaining an expedited hearing if that becomes necessary.

10. The hearing today was largely taken up with a discussion of the merits of the various issues which have been raised by the Plaintiff. I do not propose to go into those in any great detail. But it does seem to me that there was one issue which did need clarification and about which the Plaintiff could express its dissatisfaction with the answer the requisitions until 1st June. That was in relation to matters relating to Tai Lung Shi which has been referred to as requisition number 4. That was, in my view, answered on the 1st June.

11. The question which I am faced with today is what should happen about the costs today. Now it seems to me that if I disregard pretty well all the relief apart from an amended form of the relief in prayer number 2 in the summons which Mr. Chan says is the only thing to which the Plaintiff could have been entitled, and still hold it was justified to issue a summons, precpitate though it might have been, the Plaintiff would be entitled to the costs of the summons up to 1st June. But, as I have indicated, that appears to me to have been issued in the wrong form. It was issued in the expedited form which gave a hearing date. If it had been issued in the correct form, it would not have had a hearing date. It was clear from the correspondence which followed afterwards that it would have been unlikely that they would have obtained an expedited hearing date because the imminence of the completion of the building and the issue of the occupation permit subsided very quickly after the summons was issued. The Plaintiff was notified of that by the Defendants' solicitors. Hence, if an application for an expedited hearing date had been made I doubt, looking at it with hindsight, that it would have been granted.

12. Hence it seems to me that the Plaintiff is entitled to the costs of the summons up to the 1st June but not the costs of and occasioned by the fixing of today's hearing because that should not have taken place.

13. The next question is what I should do about the costs of today's hearing. In my view, as I have said if things had gone correctly there would have been no hearing today and then the costs of the summons would have been almost negligible, certainly compared with the consideration payable on the conveyance.

14. I consider, however, that the Defendants should get the costs of today. Since the Plaintiff did not inform the Defendants until yesterday that the only matter for argument was costs, it seems to me that I should allow the normal order for costs in open court to go ahead which would allow the Defendants to tax costs for two counsel.