DIAMOND JUBILEE INVESTMENT LTD v. CHAN YIU CHUNG SIDNEY

CACV 228/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 228 OF 2009

(ON APPEAL FROM DCCJ NO. 5370 OF 2008)

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J U D G M E N T

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Hon Ma CJHC :

1.  In the Amended Notice of Motion (for which leave has not been given but which we look at de bene esse), the Defendant seeks leave to appeal to the Court of Final Appeal from our judgment dated 6 January 2010 (Reasons for Judgment were handed down on 19 January 2010) under section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance, Cap. 484.  The point of law of great general or public importance is said to be whether or not Clause 16(3) of the Sale and Purchase Agreement dated 28 November 2006 (on which the judgment for $156,408, interest and costs was based) was, as a matter of law, a liquidated damages clause.  It was held in our judgment that it was.  Mr Kevin Fung (who appears for the Defendant today) submits that there are conflicting Court of Appeal decisions on this point, relying on Joseph Yen v Luen Cheong Hong (1952) 36 HKLR 215, a case dealing with a sale of goods transaction.

2.  In my view, there are no conflicting Court of Appeal decisions on the type of clause with which the present case was concerned.  In a sale of land, clauses such as Clause 16(3) have consistently been treated by the courts as liquidated damages clauses and certainly regarded as enforceable : see Broad Money Development v Industrial Engineers [2000] 2 HKC 825; Woomera v Provident Centre Development [1985] HKLR 263, among others.

3.  Even if, for the sake of argument, Clause 16(3) was not, strictly speaking, a liquidated damages clause, there is no question of its validity.  And if there were, and mitigation issues thereby arose, the Defendant has gone nowhere near demonstrating that the Plaintiff has failed to mitigate its loss; in this connection the reasoning contained in our judgment at paragraphs 11, 18 and 23 to 26 is relevant.

4.  As for the other grounds in the Amended Notice of Motion, they relate to arguments that were not even run before us in the substantive appeal.  It is also worthwhile noting that in my view these grounds were based on provisions in the wrong contract.  Reliance is placed on the Provisional Sale and Purchase Agreement signed by the parties on 27 November 2006 when this was overtaken by the Sale and Purchase Agreement dated 28 November 2006, on which both parties relied (as is clear from the affidavit evidence filed in this action).  The Defendant’s submissions are also premised on the terms of the resale being the same as the agreement between the Plaintiff and the Defendant.  I see no justification whatever for this premise.  Moreover, on the basis of the provisions relied on in the Provisional Sale and Purchase Agreement (even if it were  possible to take it into account, as it was submitted we should), the damages that would then have been awarded to the Plaintiff would have become substantially more than was claimed by it in the first place,  and as were adjudged due.

5.  In my view, the application for leave to appeal should be dismissed.

Hon Le Pichon JA :

6.  I agree.

Hon Stone J :

7.  I also agree with the judgment of the Chief Judge.