Cheung Yuet Kiu v. New Fund Development Ltd. and Chung Tim Fat (Third Party)

CACV 221 & 222/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS. 221 & 222 OF 1998

(On appeal from HCA No. 4660 of 1997)

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J U D G M E N T

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Godfrey, J.A. (giving the first judgment at the invitation of Nazareth, V-P) :

Introduction

1. This is an appeal from an order of Nguyen, J. made on 24 April 1998. The parties to the proceedings before the judge were one Cheung Yuet Kiu, the plaintiff, New Fund Development Limited, the defendant (which I shall call "the purchaser") and Chung Tim Fat, the third party (whom I shall call "the vendor"). The vendor was the vendor under a contract for sale and purchase made on 26 November 1996; the purchaser was the purchaser under the contract. The plaintiff, with whom we are not presently concerned, was a sub-purchaser from the purchaser.

2. The subject-matter of the contract was a property known as Flat 13, 16th Floor, Block F, Lung Poon Court, Kowloon, which had been the subject of a purchase by the vendor from the Hong Kong Housing Authority ("the Authority") under what is known as the "Home Ownership Scheme" constituted under the provisions of the Housing Ordinance, Cap. 283.

3. The relevant feature of the Home Ownership Scheme, for present purposes, is that a buyer from the Authority under that Scheme is in certain circumstances obliged, if he wishes to sell the property to somebody else, to pay a premium to the Authority for the right to do so. So the contract here provided for a completion date as follows :-

"COMPLETION

4. The purchase shall be completed at the office of Messrs. Albert Leung & Co., Solicitors, at 10th & 12th Floor, Crocodile House 1, 50 Connaught Road, Central, Hong Kong on or before the Completion Date specified in the Third Schedule hereto ('the Completion Date') when the residue of the purchase money shall be fully paid. ....."

4. The completion date as specified in the Third Schedule is defined as follows :-

"Completion Date

the 28th day of February 1997 or within 21 days from the date of notification of assessment of premium issued by the Director of Housing, whichever is the later. ....."

5. The dispute between the vendor and the purchaser concerns a letter which, as both parties agree, contains the relevant "notification of assessment of premium".

6. This letter is a letter from the Hong Kong Housing Authority bearing the date 10 February 1997. It is said, on its face, to have been dispatched by recorded delivery, and indeed that was the case. But it was not posted on 10 February 1997. It was posted on 13 February 1997. Notice of its receipt at the Post Office was given to the vendor by the Post Office on 17 February 1997, and it was collected from the Post Office by the vendor on 19 February 1997.

7. If the period of 21 days referred to in the contract is to be taken as having run from 10 February 1997, the completion date would be 3 March 1997. If any other period of 21 days is taken (from any of the dates I have already mentioned, 13 February 1997, 17 February or 19 February 1997) the completion date would be a date subsequent to 3 March 1997.

8. But 3 March 1997 is the crucial date; for, on that day, the vendor demanded that completion take place that day, and before the relevant time, which was 5 p.m. The purchaser failed to come up with the residue of the purchase money until 5.44 p.m. In those circumstances, the vendor, claiming that the purchaser was in fundamental breach of its obligations under the contract, called the contract off.

9. The purchaser protested, but to no avail; and we now have to decide whether the judge was right in coming to the conclusion, as he did, that the vendor was not entitled to call off the contract on 3 March 1997, and so had himself repudiated the contract, a conclusion on the basis of which the judge made the order against which the vendor now appeals.

The vendor's case

10. The vendor contends that the date referred to in the contract as "the date of notification of assessment of premium issued by the Director of Housing" means the date stated on the letter of 10 February 1997 as the date of the letter, i.e., 10 February 1997. If that contention is right, then 3 March 1997 was indeed the completion date; and the purchaser was indeed in breach of its obligations under the contract in failing to come up with the residue of the purchase money by 5 p.m. on 3 March 1997.

The purchaser's case

11. The purchaser, on the other hand, contends that the relevant date was either 13 February 1997 or 19 February 1997, the first being the date of issue (by posting) of the notification by the Director of Housing of his assessment of premium and the second being the date of receipt by the vendor of the notification issued by the Director of Housing of his assessment of premium.

The judgment below

12. The judge concluded, as I understand his judgment, that the first of these dates, the date of issue of the notification by the Director of Housing of his assessment of premium (13 February 1997, giving a completion date of 6 March 1997) was to be preferred. Clearly, the date on which the letter giving notification by the Director of Housing of his assessment of premium was issued was not 10 February 1997, because for 3 days after that it was still lying in the office. The date of issue must mean the date, at the earliest, on which the letter goes out from the office, not the date on which it is signed. If this is correct, 6 March 1997 was the correct date for completion of the contract.

Was the judge right?

13. It seems to me that in fact such a document as this is not issued to the person who is to receive it until it is delivered to him, which means it must pass either into his manual custody or under his control or into his legal possession so as to be at his command; cp. Koon Wing Lau v. Calwell (1949) 80 CLR 533, per Dixon J. at p.574. That was 19 February 1997, which would give a completion date of 12 March 1997. This is, I think, the judge's second preference.

14. But whether the completion date was 6 March 1997 or 12 March 1997 does not matter. The vendor can succeed only by persuading us that his date is the correct date, that is to say, the completion date was 3 March 1997, 21 days from the date appearing on the face of the letter, i.e. 10 February 1997.

Conclusion

15. For my part, I am satisfied that the judge was right to reject 10 February 1997 as the relevant date. The purpose of the disputed provision was plainly to give the vendor some extra time after 28 February 1997, if he needed it, to consider the effect of the amount of the premium in relation to his own finances. That purpose cannot be achieved if the date on which the letter is signed (but not issued) is the relevant date. It cannot be achieved simply by the posting of the letter, either. It seems to me that it was the date of receipt of the notification by the vendor which really matters for the necessary purpose.

16. Be that as it may, since I consider we should reject the vendor's contention that 3 March 1997 was the completion date, the vendor fails on his first point. We should uphold the judge on that point accordingly.

A second point

17. The vendor takes a second point. The vendor says that, even if he fails on the first point, his breach of contract, in demanding completion on 3 March 1997 when he was not entitled to do so, although a repudiatory breach, was only an anticipatory breach. It left the purchaser at liberty to elect whether to accept the repudiation and ask for its deposit back (and for any other moneys to which it might be entitled) or to claim specific performance of the contract. So far, I would accept this. The vendor goes on to say that the purchaser was then in breach of its own obligations by failing to complete the contract on the date when, according to its own case, the contract should have been completed, so that the purchaser, thus being in breach of its contract, is not entitled to claim any relief against the vendor.

18. This submission is completely misconceived. What in fact happened was that the defendant did elect to accept the vendor's repudiation of the contract. It elected to do so by issuing a summons on 5 February 1997 claiming, not specific performance, but the alternative relief I have described.

19. The purchaser was at that stage perfectly entitled to elect to abandon its claim for specific performance and to go for the alternative relief that, indeed, the judge eventually ordered. I do not regard the purchaser as having been, at any stage, in any way in breach of its own obligations under the contract. After rejection of the tender of the residue of the purchase money which it made on 3 March 1997 at 5.44 p.m., it was not obliged to tender the money again. That being so, the vendor's second point falls away completely.

Result

20. I would therefore uphold the decision of the judge. But as to the form of the order in favour of the purchaser which the judge made, I find some difficulties with this. The order made by the judge simply follows slavishly the terms of the purchaser's inter partes summons on which, on appeal from the master, the judge made his order. The order needs to be revisited. It lacks clarity, and contains inconsistencies. After my brethren have given judgment, I would propose, if they agree with me, that we invite further submissions on the form of the order which this court, although dismissing the appeal, ought to substitute for the judge's order.

Rogers, J.A. :

21. I agree.

22. I have no doubt also that the decision of the Judge below was correct. I only wish to add a few comments of my own.

23. The first is in relation to the fact that the Notice of Appeal was filed late. Had it not been for the fact that, as Godfrey, J.A. has just pointed out, it may be necessary for amendments to be made to the form of the order made below, I, for my part, would not have been prepared to extend time to allow this appeal to have been heard. On any footing, the Appellant was very late. Even taking into account a period of 42 days when legal aid was applied for, it appears that the Appellant was 3 weeks out of time in filing a Notice of Appeal the period for filing of which was 6 weeks. In those circumstances and without a proper explanation as to why the Notice of Appeal was late, this Court should not entertain the appeal.

24. The other matter which I would comment on is this. The Third Party's solicitors (the vendor's solicitors) wrongly, as Godfrey, J.A. has just indicated, interpreted the contract date for completion. They wrongly demanded completion by 5 p.m. on the 3rd March. The Third Party's solicitors then refused to complete, 44 minutes after the 5 p.m. deadline. That stance hardly command sympathy when the vendor is found to be wrong. This Court, of course, does not know whether the wrong construction was dictated by a possible desire by the vendor to take advantage of what he may have perceived to be a rising market at the time or whether it was a result of erroneous advice from the Third Party's former solicitors. It is a pity that money has been wasted on this appeal. It might have been better spent by the Third Party in pursuing redress against his former solicitors if that were appropriate.

Nazareth, V-P :

25. I also agree with Godfrey JA, and with what has fallen from Rogers JA.

26. At the heart of this matter is the meaning of the words "the date of notification of assessment of premium". I have no difficulty whatsoever in rejecting the construction advanced on behalf of the vendor that it was the date the letter was typed up or signed on behalf of the Director of Housing. It seems to me that it must be either the date of posting or more likely the date of receipt to which I would incline. If, of course, there was any difficulty in construing the expression, resort could be had to the purpose of the agreement. In that regard, it seems to me that the date of receipt accords best with the purpose of the provision in which the words appear and the purpose of the sale and purchase agreement.

27. The appeal is accordingly dismissed. We now invite counsel to address us on the order that was made below.