ELSUN LTD v. CHIN MARGARET

DCCJ 361/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 361 OF 2008

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DECISION

1.  On 28 July 2008, I handed down the judgment in Elsun (the Plaintiff)’s O.86 application for judgment against Chin (the Defendant) in this conveyancing dispute.  I granted an order for specific performance whereby Chin as the vendor is to complete the sale of her property in Sai Kung, New Territories.  She now applies for leave to appeal and stay of execution of the judgment.

THE TRANSACTION

2.  For the background, the judgment (paras.2-15) may be referred to.  For the purpose of the present application, I highlight the following:

(1)  The preliminary agreement was dated 24 September 2007.

(2)  Parties agreed to sign the formal agreement on or before 8 October 2007 when the further deposit would be paid.

(3)  Completion would take place on 5 November 2007* when the balance of the price would be paid.

(4)  The formal agreement was not signed on 5 October 2007 or at all; yet Elsun still tendered the further deposit.

(5)  The parties chose to proceed.  On 27 October 2007, Chin’s solicitors supplied the title deeds and documents in respect of the property to Elsun’s solicitors.

(6)  On 2 November 2007, Elsun’s solicitors raised various requisitions.  The requisitions in issue were Nos. 4(b) and 7.

(7)  Completion did not take place on 5 November 2007; but parties continued to deal with the outstanding requisitions.

(8)  On 12 November 2007, Chin’s solicitors demanded the return of the title deeds for onward return to Chin’s mortgagee bank.

(9)  Elsun’s solicitors gave notice to complete on or before 24 December 2007.

(10) Past the deadline, Chin’s solicitors ceased acting for Chin.

(11) Chin has been keeping the 10% deposit paid by Elsun.

THE DISPUTE

3.  Chin essentially puts forward the following defence:

(1)       Elsun failed to complete on the scheduled completion date and was guilty of unreasonable delay.

(2)       She has already exercised her right to cancel the deal pursuant to clause 18 of the preliminary agreement: “如樓契不完整買賣相方有權取消合約交易”.

RULINGS

4.  I made the following rulings:

(1) The requisitions by Elsun’s solicitors were reasonably raised: see paras.24-25 of the judgment.

(2) Chin’s solicitors have failed to satisfactorily answer the requisitions on or before the scheduled completion date: see paras.26-28 of the judgment.

(3) Neither party sought to cancel the deal after the scheduled completion date until a week later when Chin’s solicitors demanded for the return of the title deeds: see paras.29-33 of the judgment.

(4) Chin never communicated to Elsun that she sought to invoke clause 18 of the preliminary agreement to cancel the deal: para.38 of the judgment.

(5) Clause 18 did not confer the right on the parties to unilaterally cancel the deal: see paras.35-37 of the judgment.

(6) Even if clause 18 conferred the right on either party to cancel the deal, Chin was not entitled to invoke the clause without showing that the title deeds were incomplete for the purpose of the clause: see paras.39-41 of the judgment.

(7) Chin had not validly or effectively cancelled the transaction as alleged.

(8) By its notice to complete and the present action, Elsun opted to press for the performance of the agreement: see paras.33; 43-44 of the judgment.

(9) There is no suggestion or evidence to show that specific performance should not be decreed in the circumstances of this case: see para.44 of the judgment.

THE INTENDED APPEAL

5.  Leave to appeal would normally be granted unless the grounds of the intended appeal have no realistic prospect of success: Smith v Cosworth Casting Processes Ltd [1997] 1 WLR 1538; Ma Bik Yung v Ko Chuen, HCMP 4303/1999; Hong Kong Civil Procedure 2008 Vol.1 at 59/14/7.

6.  In her Chinese affirmation in support of this application and her submission in court, Chin proposed the following grounds of appeal:

(1) There is bias or discrimination (“歧視” as she put it) or error in the judgment.

(2) She was willing to sell the property at a low price on condition that completion must be punctual (“準時成交” as she put it).

(3) The requisitions could have been resolved by affirmation (or “宣誓” as she put it) without delaying the completion.

(4) Any fault was that of the solicitors, not hers.

(5) The dispute should not be resolved summarily.

DISCUSSION

7.  The so-called bias is that this court has failed to fully take into account her interest or what she described as her loss in the deal.  What I can discern from her explanation in court is that she agreed to sell the property at an allegedly low price only if the completion would be punctual.  If she is still required to complete the deal now, the price should be re-negotiated.  In this respect, she sought to adduce into evidence an advertisement of (allegedly her neighbours’) properties by certain estate agent.

8.  For leave to adduce additional evidence on appeal against a final judgment on merits, stringent conditions need to be satisfied: see Ladd v Marshall [1954] 1 WLR 1489; Hong Kong Civil Procedure 2008 Vol.1 at paras.59/10/8–59/10/13.

9.  I see no justification for granting such leave.  The additional evidence would have been immaterial because there was no dispute that the parties did agree on a contractual completion date; and at the time of the agreement, such date was meant to be adhered to.

10.  In any event, there is no place for the argument that the price should be re-negotiated, if Chin is required to complete the sale and purchase of the property after the contractual completion date.

11.  To show that she had decided to cancel the deal at the time, Chin sought to adduce into evidence several letters from her mortgagee bank to her solicitors during the period between November 2007 and February 2008.

12.  The principles in Ladd v Marshall above apply and I again see no justification for leave to adduce these letters.  The fact that Chin’s mortgagee bank requested for the return of the title deeds was indeed considered in the judgment.  These letters would not have caused any material difference to the consideration.

13.  The suggestion of fault on the part of the solicitors, whether that of her solicitors in the previous conveyancing or this transaction or even the solicitors for Elsun, is neither specific nor in my view relevant.

14.  None of the above suggests a realistic prospect of success on appeal.

15.  But Chin suggested that it was unreasonable for Elsun to insist on their requisitions and that she was entitled to cancel the deal pursuant to clause 18 of the preliminary agreement.  She also submitted that such issues in dispute should not be disposed of summarily, referring to Ng Lung Sang Anita v Lam Yuk Lan, CACV 51/1999, 11 June 1999.

16.  This court’s decision in respect of the requisitions, the construction of clause 18 and whether Chin might invoke, and has invoked, the clause inevitably involved questions of law.  I am not prepared to rule out the prospect that the appellate court may take a different view in respect of these questions.  This is particularly true in an O.86 application like the present one where a defendant only needs to show triable issues in order to resist a judgment.  I decide not to deny leave to appeal.

CONDITION

17.  On Elsun’s behalf, Mr Yao submitted that any leave to appeal should be made subject to condition.  No doubt the court has such discretion under O.58, r.2(7) of the Rules of the District Court.  This is not a monetary claim and therefore there is no question of payment of any disputed amount of claim into court.  What Mr Yao for Elsun asked was that Chin pays into court Elsun’s costs in the sum of about HK$160,000.

18.  No affirmation has been filed in support of such contingent application.  Mr Yao only proposed to submit a bill of costs at the hearing.  Chin had no proper opportunity of dealing with such application.  I am not minded to consider allowing such application this way.  If there is good ground, nothing should prevent Elsun from applying for security for costs in due course.

STAY OF EXECUTION

19.  Chin asks for stay of execution of the judgment.  Realistically this could only mean one pending the intended appeal.  Mr Yao for Elsun submitted that the test for such stay is more stringent than that for leave to appeal: see Hong Kong Civil Procedure 2008, Vol.1 at para.59/13/1.  In principle, I agree.

20.  Mr Yao submitted that the appeal would not be rendered nugatory in the absence of the stay.  Chin will not be financially ruined.  Chin could also expect the property to be re-conveyed to her in the event that she succeeds on appeal.  In the meantime, she could also register the pending appeal against the property so as to disable Elsun from further disposing of the property.

21.  In my view, ultimately the court embarks on a balancing exercise and uses its common sense, bearing in mind the starting point that the successful should not be deprived of the fruit of judgment.  Considering the nature of the decree made and all the circumstances including those of the parties, I am inclined to grant the stay pending appeal.  In the event of failure or delay in prosecuting the appeal or other change in circumstances, Elsun may always consider applying to lift the stay.

ORDER

22.  I therefore order that:

(1)  there be leave to appeal;

(2)  execution of the judgment dated 28 July 2008 be stayed pending the determination of the intended appeal or further order of the court;

(3)  costs of this application be in the cause of the intended appeal; and for clarity, I certify the engagement of counsel for this hearing.

23.  As before, parties have no objection to this decision being handed down in English.

* Reference in paragraph 7 of the judgment to 5 October 2007 as the scheduled completion date is a typographical error.  The correct date should be 5 November 2007.

Representation: