TIN SHUI WAI DEVELOPMENT LTD v. YIU SUN HUNG

DCCJ569/2003

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 569 OF 2003

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J U D G M E N T

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1.  This is an application for leave to appeal from my decision given on 17 December 2004 striking out the defence of the defendant and ordering damages to be assessed for the plaintiff.

2.  The application was made out of time by 12 days and hence, at the prompting of the respondent, the applicant made an application for an extension of time so as to make the application for leave.

3.  Mr Lee, S. C. who appears with Mr Cheung accepts that he has to show a real prospect of success on the merit in order to obtain extension of time.  By “merit”, it is merit of the appeal itself.

4.  Mr Yu S. C. for the respondent says that I should not extend the time because there is no proper explanation for the delay.  Mr Yu also argues that the appeal has no merit or no arguable chance of success.

5.  I am happy to assume that Mr Lee is right in that he should be  given extension of time if he can show a real prospect of success on the appeal.  A number of grounds have been raised for argument on appeal.

6.  On the implied terms, one of the points made by Mr Yu in the striking out hearing was that the terms sought to be implied should not be implied because it is not necessary to have it, at least not necessary to have it at all stages of the construction of the premises, because if the construction had only reached, say, the 15th floor when the building should have 20 storeys, then it is obvious to the defendant that the plaintiff had failed to complete by the date in question and hence the defendant could rescind.  Therefore, if the term is not necessary for the performance of a contract or for the exercise of the right to rescind, then it should not be implied.

7.  I accepted this argument in my judgment and held that the term should not be implied because there was no degree of certainty on when the term would bite.  Mr Lee’s argument is that the term should be implied as soon as the contract was made although the defendant may not need to rely on it in certain situation, but she could rely on it in some other situation.  The fact that she does not need to rely on it in all situations would not in law render the term incapable of clear expression. 

8.  I cannot agree with that.  If the term sought to be implied need not be invoked at a certain stage of the construction, then for that stage, it should not be implied at all, because a term should only be implied if it is necessary to have it for the performance of a contract.  Hence, the term cannot be formulated with precision as to when it is necessary to have it.

9.  The next point Mr Lee has taken is my judgment on imprecision, because I accepted Mr Yu’s argument that there are at least four ways to formulate the implied term.  I think Mr Lee has a point there.  If there are four ways to express the implied term, then he can plead them in four alternatives and it is a matter for the trial judge to decide at the end of a trial on whether one or more of these alternatives or none of which should be implied.

10.  The next point of the implied term that Mr Lee has taken is the “goes without saying” test. I did not accept that the term sought to be implied could pass this hurdle and I still do not think Mr Lee has supplied sufficient reason for me to think that I might have gone wrong there or it is arguable that I was wrong in coming to that conclusion.

11.  Since Mr Lee has to succeed on all these three points and I only think that he has an arguable point on the alternative formulations, I therefore do not think I can grant him leave to appeal on the implied term.

12.  On the prevention principle, and in particular when this principle is considered in isolation from the implied term, I again do not agree that it is arguable that I might have gone wrong. I do not accept that it is arguable that the wrong referred to in Kensland Realty Ltd. v. Whale View Investment Ltd. & Another [2002] 1 HKLRD 87 can be a wrong outside a contractual context.

13.  Finally, Mr Lee also takes the point about the notice to complete being defective.  Again, I do not think he has surmounted the hurdle to show that it is arguable on appeal that I have gone wrong.

14.  Since I have found against Mr Lee on the merits of the appeal, I would also dismiss the application for extension of time. I therefore formally dismiss both applications.

15.  Since the respondents have been served with both application as well as the skeletal submissions.  I think even though such proceedings could have taken place on an ex parte basis, it is appropriate in this case to award costs and to award it to follow the event.  I therefore order that the (defendant) applicant in these two applications should pay costs to the (plaintiff) respondent with certificate for counsel.