FANTASY GIFT INTERNATIONAL CO LTD v. GOLD LUCK INTERNATIONAL LTD

CACV 289/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 289 OF 2008

(ON APPEAL FROM HCA NO. 2548 OF 2007)

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1.  I agree with the reasons for judgment of Le Pichon JA.

Hon Le Pichon JA:

2.  This was an appeal from an order of 9 September 2008 of Burrell J.  The judge granted summary judgment to the defendant on its counterclaim against the plaintiff, declaring that the defendant had validly rescinded a provisional agreement dated 16 November 2007 (“the provisional sub-sale agreement”) for the sale and purchase of a workshop unit (“the property”) and had validly forfeited the initial deposit.  At the conclusion of the hearing the appeal was dismissed with reasons to be handed down, which we now do.

3.  The sole issue before the judge was one of title, specifically, the identity of the vendor under the provisional sub-sale agreement. It arose in this way.

The facts

4.  When, on 17 August 2007, the defendant entered into a provisional agreement (“the provisional head agreement”) to purchase the property from Loyal Channel Ltd (“the head vendor”), it was correctly named in that agreement as “Gold Luck International Ltd” with business registration number 35239268.  Completion was scheduled for 28 November 2007.  Cheung Chui Kan (“Ms Cheung”), a director of the defendant, signed the provisional head agreement on behalf of the defendant.  Her signature appears underneath the defendant’s company chop which reads “Gold Luck International Ltd 金彩國際有限公司”.

5.  However, in the agreement for sale and purchase of 14 September 2007 (“the head agreement”) between the head vendor and the defendant, a typographical error appeared to have crept into the spelling of the name of the defendant: it was named (“Good Luck …” instead of “Gold Luck …”).  The error went unnoticed.  The head agreement was then registered in the Land Registry.

6.  Two months later, on 16 November 2007, the defendant entered into the provisional sub-sale agreement.  Unfortunately, the error in its name which first appeared in the head agreement was carried through to the provisional sub-sale agreement which described it as “Good Luck …” rather than “Gold Luck …”, thus giving rise to the title issue.

7.  The plaintiff issued a cheque for the initial deposit made out to “Good Luck International Limited” and gave it to the defendant who banked the cheque the same day, i.e. 16 November.  It is common ground that the cheque was cleared and paid into the defendant’s account.  Again, the error went unspotted even, it would seem, by the bank.

8.  The defendant’s present solicitors (who had been instructed to act in the head agreement) received instructions on 17 November to act also in the sub-sale which stipulated for completion by noon on 28 November 2007.  On 21 November they received a cheque from the plaintiff in respect of the further deposit made out to “Good Luck International Limited”.  On this occasion, the defendant’s solicitors noticed the error.  They immediately wrote to the plaintiff’s solicitors asking that another cheque, drawn in favour of “Gold Luck International Limited”, be issued in its place.  Enclosed with that letter were copies of the defendant’s business registration certificate and the provisional head agreement.

9.  On the same day, an amended head agreement initialled by the defendant’s attesting solicitor was lodged at the Land Registry and re-registered the following day.  Certified copies of the amended head agreement and lodgement receipt issued by the Land Registry were supplied to the plaintiff on 26 November 2007.

10.  The plaintiff raised the title issue for the first time on 26 November 2007, some five days after it had been informed of the typographical error in the head agreement and the provisional sub-sale agreement and less than 48 hours before completion was due.  The plaintiff refused to complete on the ground that the problem was not resolved to its satisfaction prior to the appointed time for completion.  Two days later the defendant terminated the contract by accepting the plaintiff’s repudiation and forfeited the deposit.

11.  The judge concluded that the defendant had good title to the property and considered illusory any risk of good title being subsequently challenged.

This appeal

Whether good title shown

12.  Mr Lee Yee Hung who appeared for the plaintiff submitted that the judge erred in holding that good title had been shown.  Mr Lee relied on the same arguments that had not found favour with the judge.  In essence, it was said that the possibility of a company by the name of Good Luck International Ltd being the vendor under the provisional sub-sale agreement could not be ruled out altogether and, hence, good title had not been shown.

13.  In my view, the judge’s conclusion is unassailable and he was quite right to have rejected the plaintiff’s arguments.

14.  Prior to completion, the plaintiff had been provided with, inter alia, the provisional head agreement, the head agreement, the amended head agreement, the provisional sub-sale agreement, and the defendant’s business registration certificate.  The judge accepted that those documents established the following unassailable facts:

“ 22. …

  (a)  The provisional head agreement named Gold Luck International Limited as the purchaser.  It also quoted Gold Luck’s correct business registration number.

  (b)  The head agreement identified the purchaser’s Chinese name correctly.  It also quoted the same business registration number and Gold Luck’s correct registered address as in the business registration certificate.  It was in this head agreement that the purchaser’s English name was first mistyped as “Good” instead of “Gold”.

  (c)  In the provisional [sub-sale] agreement … Gold Luck’s correct business registration number again appeared, although the mistyping of “Good” persisted.

  (d)  All three agreements were signed by the same director of “Gold Luck” and all three agreements were chopped with Gold Luck’s company chop which showed the company name in both English and Chinese.

  (e)  All three agreements were attested properly.

  (f)  The head agreement had been correctly amended from “Good” to “Gold” and initialled by the defendant’s solicitors.

  (g)  The Land Registry had received and acknowledged the amendment.  Certified copies of the amended head agreement and receipt by the Land Registry had also been sent to the plaintiff’s solicitors.”

15.  The identity of the purchaser under the provisional head agreement can admit of no doubt.  There is simply nothing that could conceivably support a suggestion that the purchaser under the provisional head agreement was not Gold Luck International Limited, i.e. the defendant.

16.  Turning to the head agreement, the description of the purchaser appeared in Schedule 1 as follows:

“	Part B: The Purchaser
Name :	GOOD LUCK INTERNATIONAL LIMITED (金彩國際有限公司)
Business Registration No.:	35239268
Registered Office:	Unit 6, 8th Floor, Kinox Centre, 9 Hung To Road, Kowloon    ”

Notwithstanding the naming of the purchaser as “Good Luck International Limited”, the Chinese name, business registration number and registered office of the purchaser corresponded to those of the defendant as stated in the defendant’s business registration certificate.  In my view the irresistible and only inference that could be drawn from that fact coupled with the execution page of the head agreement which bore the defendant’s company chop showing its name in English and Chinese, is that “Good” was a pure typographical error for “Gold”.

17.  The fact that there is a company called “Good Luck International Limited” can hardly assist the plaintiff when its Chinese name, registered address and business registration number are entirely different and bear no remote resemblance to those of “Gold Luck”.

18.  For all those reasons, I agree with the judge that the defendant had good title to the property and none of the reasons advanced by the plaintiff as justifying non-completion has any merit.

The alternative case

19.  At the hearing, the plaintiff advanced an alternative case, namely, that the defendant had waived his right to accept the plaintiff’s repudiation by electing to affirm the provisional sub-sale agreement.  It relied on a letter dated 28 November 2007 from the defendant’s solicitors which read:

“However, on a without prejudice basis, we enclose herewith copy of the Provisional Agreement dated 17 August 2007 for your reference, from which you would note that the name of the purchaser is “Gold Luck International Limited”.  Further, the business registration number (copy of certificate of Business Registration is enclosed) of our client has been mentioned in the Agreement for Sale and Purchase Memorial No.07101102810114.  In this connection, your allegation of the change of party is impossible.  It is sufficient to prove there is a clerical mistakes.  Production of Statutory Declaration is not necessary.”

20.  The defendant’s primary objection is based on the fact that the alternative case was never advanced below: it was never pleaded and it was never raised in the plaintiff’s affirmation.  In any event, the defendant’s case is that the passage relied on did not amount to a waiver at law.

21.  I am inclined to agree.  The phrase “on a without prejudice basis” is plainly a reservation of legal rights, in contradistinction to an unequivocal abandonment of those rights.  I do not therefore consider that there is any merit in the plaintiff’s alternative case.