CERTAIN WAY INVESTMENT LTD. v. FULLY GAIN ENTERPRISES LTD.

HCMP 6533/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 6533 OF 1998

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J U D G M E N T

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1. This is an application, first to amend the Originating Summons first issued in 1998, and further to that, for substantive relief. The background of the proceedings is as follows.

2. In July 1997, an agreement for sale and purchase of certain property in Central was entered into between the Plaintiff as vendor and a company called Charm Pacific Development Limited ("CPD") as purchaser. The purchase price was agreed to be HK$258 million. Completion was agreed to be on 4 December 1997. The Plaintiff was and remains the registered owner of the property.

3. About three months later, in October 1997, CPD agreed to sub-sell the property to the Defendant at a reduced price of HK$196 million. This agreement to sub-sell was by way of a "Form of Tender". This Form of Tender was registered at the Land Office on 15 October 1997. Thereafter the parties proceeded in accordance with the agreement for sale and purchase and the Form of Tender.

4. However, it would appear that thereafter the Defendant was not in a position, or was unwilling, to proceed with the purchase. In November 1997, the Defendant, having failed to pay a further deposit as provided for under the Form of Tender, had the Form of Tender rescinded: CPD rescinded the sub-sale by way of a notice of rescission.

5. About two weeks later, however, on 20 November 1997, the Defendant issued a writ against CPD in HCA No. 12530 of 1997. It should be noted that the writ by the Defendant against CPD does not ask for specific performance of the sub-purchase agreement. The claim is for an order that the sum of HK$5 million, being a deposit paid to CPD pursuant to the Form of Tender, be repaid to the Defendant by CPD. Further or alternatively, there is a claim for damages for misrepresentation and damages for wrongful rescission and damages for breach of agreement. (It would appear that in relation to this writ, there has been no further action since 1998 when the solicitors came off the record).

6. On 27 November 1997, this writ was registered at the Land Office as a lis pendens.

7. In April 1998, CPD having failed to complete notwithstanding the postponement of the completion date, the Plaintiff forfeited the deposits paid by CPD, and on 5 May 1998 the Plaintiff issued a memorandum of rescission rescinding the sale and purchase agreement.

8. Therefore at that stage, the Plaintiff had a property without any buyers but with two documents registered against the property in the Land Register, first being the Form of Tender whereby CPD had agreed to sub-sell the property to the Defendant, and also the lis pendens issued by the Defendant against CPD.

9. The present Originating Summons was issued in December 1998 and it sought the following relief - an order that the registration by the Defendant of the Form of Tender and the lis pendens be vacated.

10. The matter then first came before me in July 1999 pursuant to a notice of appointment to hear the Originating Summons, which notice was issued in June 1999. In July 1999, I heard the notice of appointment and gave leave to the Plaintiff to file further evidence as to service of the proceedings on the Defendant, the Defendant having at that time not taken any steps in these proceedings.

11. However, the Plaintiff did not further proceed with the matter. According to the affirmation of its manager filed on 16 January 2001, that was because the Plaintiff had by then decided to rent out the property and therefore it was considered not necessary to proceed with the proceedings so that the register would be cleared of the Form of Tender and the lis pendens.

12. However, it would appear that in October 2000, the Plaintiff, having rented out the property previously, decided to sell the property. Accordingly, these proceedings were revived, so to speak, and the Plaintiff has thereafter taken various steps, writing to the Defendant to inform it of these new procedural steps. However, again the Defendant has chosen not to take any further steps in the proceedings notwithstanding that various documents have been served on it by leaving them at the Defendant's registered office.

13. It is clear from the matters set out above that as far as the Defendant is concerned, it has no interest whatsoever in the property which is the property of the Plaintiff. In the first instance, the agreement which is embodied in the Form of Tender had apparently been repudiated by the Defendant. As far as the sub-sale agreement between CPD and the Defendant is concerned, that has been rescinded. Furthermore, the agreement between the Plaintiff and CPD has also been rescinded.

14. Before me today, Mr Thong has asked for an amendment of the Originating Summons. It is first sought to delete the reference to vacating the lis pendens because a more recent search of the Land Office Register shows that that lis pendens no longer appears; therefore I do not need to be concerned with vacating of the lis pendens.

15. Mr Thong has also sought the amendment of the Originating Summons for a declaration that the Form of Tender has ceased to have effect on the said property. In my view, it is clear from the chronology of the matters set out above that that must be so and I am prepared to give the said declaration.

16. As far as the registration of the Form of Tender is concerned, the form of the order sought is "an order that the registration by the Defendant of the Form of Tender against the property in the Land Office Register be vacated". I am reluctant to make an order in that form which on its face may be said to be an order directed against the Registrar of the Land Office Register who is of course not a party to these proceedings. What I am prepared to give is an order against the Defendant that it cause or procure the vacating of the Form of Tender against the property. In my view, that should suffice to protect the Plaintiff in relation to its title.

17. Accordingly, in relation to this Originating Summons, I would make the following orders:

1) An order that the Defendant do cause or procure the vacating of the Form of Tender for Sub-Sale and Purchase dated 7 October 1997 at the Land Registry against the properties known as Units 2201, 2202-4, 2205A and 2205B on the 22nd Floor of Nine Queen's Road Central, Hong Kong erected of Section A of Marine Lot No. 101, Section B of Marine Lot No. 101, the remaining portion of Section C of Marine Lot No. 101, the remaining portion of Marine Lot No. 101, the remaining portion of section A of Marine Lot No. 102, Section C of Marine Lot No. 103 and the remaining portion of Inland Lot No. 514 by Memorial No. 7295816.

2) A declaration that the said Form of Tender for Sub-Sale and Purchase dated 7 October 1997 has ceased to have effect on the said properties.

18. I am also prepared to give the Plaintiff an order that the costs be to the Plaintiff.