WONG PUI CHING v. WU MEI FONG AND OTHERS

BETWEEN

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J U D G M E N T

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1. On 21st March 1991 the plaintiff agreed to purchase from the first defendant her interest in a property at North Point (the property) held under a formal contract of purchase and sale with the developer. The plaintiff now seeks an order for the specific enforcement of this agreement (the agreement).

2. At the time of the agreement, the property was a unit in an unfinished domestic development for which the first defendant and the developer had signed their contract on 4th September 1990. The vendor/developer is the second defendant and its sale price to the first defendant was $892,050, whereas the first defendant's sale price to the plaintiff under the agreement was $990,000.

3. A handwritten addendum to the agreement stipulated that the parties would attend the office of the developer's agent on or before 8th April 1991 to "to complete and effect the change of name". For the purposes of this trial, this is agreed to mean that on the change of name-

a) The first defendant would cancel her own agreement with the second defendant as the developer;

b) The plaintiff would then enter into a direct agreement with the developer;

c) The plaintiff would pay to the developer 20% of the purchase price by way of deposit and pay the balance of the purchase price on completion of her agreement with the developer; and

d) The plaintiff would pay the first defendant her profit, being the difference between the price agreed on sale from the first defendant to the plaintiff and the price agreed on sale from the second defendant to the first defendant,

and that the plaintiff was not purchasing the property from the first defendant by a sub-sale, (i.e. a confirmor sale).

4. By an agreement dated 3rd April 1991 the first and second defendants purported to cancel their agreement of 4th September 1990. By another agreement of 3rd April 1991 the second defendants purported to sell the property to the third defendants for the original contract price of $892,050.

5. These agreements were precepded by the first defendant's pleaded rescission on 22nd March 1991 of her agreement with the plaintiff, which the plaintiff says was ineffective. Thereafter the first and third defendants entered into an agreement on 24th March 1991 for the sale and purchase of the property for the sum of $1,068,000. This agreement was in turn followed by the two agreements mentioned of 3rd April. 1991.

6. The issue is whether or not the first defendant passed a beneficial interest to the plaintiff, and if so, has she revested that interest in herself by rescinding the agreement. The plaintiff contends that the agreement was enforceable and that clause 5 did not give the first defendant the option of rescission on payment. Alternatively, assuming that the contract was susceptible to rescission, the plaintiff argues that the first defendant did not rescind as she failed effectively to tender compensation pursuant to clause 5.

7. The first defendant's case, adopted by the third defendants, is that she rescinded the agreement and that the subsequent cancellation revested her interest in the second defendant. She pleads entitlement to rescind on the proper construction of the contract and also from a collateral oral contract when the agreement was signed. This collateral contract is said to permit withdrawal at any time before the stipulated date for completion.

8. The second defendant pleads that the matters in dispute are outside its knowledge and that it is willing to assign the property to whomsoever the court may order. By a consent, order of 14th May 1992 the attendance of the second defendant at trial was dispensed with.

9. By the same consent order, proofs of evidence of all witnesses to be called by the plaintiff and by the first and third defendants were ordered to stand as examination in chief. This procedure was confirmed and followed at the trial.

10. Although the first defendant had been represented up to the closure of pleadings, on 17th October 1991 she filed a notice to act in person. She did not however attend trial and an attempt to subpoena her was unsuccessful. Counsel declined to pursue the matter and the case concluded without her evidence.

11. The third defendants' case is that they were unaware of the agreement between the plaintiff and the first defendant at the time they themselves contracted with the first defendant on 24th March 1991. They maintain that the agreement between the plaintiff and the first defendant was validly rescinded and that accordingly the plaintiff has no interest in the property.

12. The third defendants also counterclaim against the plaintiff for an order that the plaintiff should vacate her registration of the agreement of 21st March 1991. The agreement was registered on 9th April and the plaintiff claims priority back to 21st March by reason of section 5 of the Land Registration Ordinance, Cap. 128. The immediate effect of this registration has been that the third defendants are unable to take assignment of the property as they cannot raise a mortgage. They are therefore incurring interest to the second defendant (the developer) during the delay in paying the balance, for which they also counterclaim from the plaintiff.

13. The third defendants counterclaim in the alternative against the first defendant for damages for breach of contract in the event that the plaintiff should obtain specific performance. This covers loss of profit on the increased value; loss of the amount, paid; loss of interest on that sum, and costs incurred or which they may be ordered to pay.

14. Leaving aside for the moment the third defendants' counterclaim, Mr. Chain for the plaintiff has identified four issues between the plaintiff and the third defendants. These may be summarised as -

(a) On the construction of the agreement of 21^st March 1991, did the first defendant have an option to rescind on payment of $40,000.

(b) If so, has the first defendant, on the facts, validly exercised that option.

(c) Does the contemplated mode of performing the 21st March agreement (cancellation and a new agreement), plus first defendant's cancellation with second defendant and second defendant's new agreement with third defendants, preclude the plaintiff's specific_ performance of her agreement.

(d) If not, is the plaintiff otherwise entitled to specific performance as an equitable remedy.

15. Mr. Wong for the third defendants has no quarrel with Mr. Chain's analysis of the issues, save for emphasis and for lack of reference to the pleaded collateral contract. Mr. Wong's emphasis point concerns his contention that issue (c) is the fundamental one since it strikes at the plaintiff's claim to an interest in the property. This goes to the root of the dispute and falls for consideration in priority, as a decision unfavourable to the plaintiff would be fatal to her claim.

16. Mr. Wong argues that the third defendants' title, through their agreement with the second defendant, is unimpeachable by the plaintiff who did not acquire an interest in rem. The 21st March agreement conferred on the plaintiff only a provisional right as against the first defendant, whether or not the first defendant was entitled to rescind that agreement. It did not confer on the plaintiff, argues Mr. Wong, any interest in the property itself, whether legal or equitable.

17. Mr. Wong adduces the intended mode of performance of the 21st March agreement; namely cancellation of the first defendant/second defendant agreement and a new contract between the plaintiff and the second defendant. In this situation he says, the developer is not obliged to enter into the new contract with the plaintiff, even though in commercial reality it would almost certainly do so. Accordingly, the court could not specifically enforce the 21st March agreement because it cannot oblige the developer to enter into a new contract with the plaintiff. For this reason, concludes the argument, no beneficial interest in the property was capable of passing to the plaintiff.

18. Mr. Wong argues that a vendor's qualified trusteeship reaches maturity and relates back to the original transaction only on payment of the price with nothing remaining save execution. He cites Halsbury at paragraph 184 to this effect, and argues that if the agreement is rescinded or is otherwise not open to specific enforcement, then the vendor is deemed never to have been trustee and the purchaser never equitable owner. The effect of this, says Mr. Wong taking his argument further, is that even with a true sub-sale, once the first defendant's contract with the second defendant is cancelled, she has no equitable interest to pass. She is regarded as never having had an equitable interest, and if she had none the plaintiff could not have one either.

19. I would not presume to dispute Halsbury's statement of the law on the nature of beneficial ownership and qualified trusteeship in the persons of purchaser and vendor respectively. However, Mr. Wong may be incorrect in assuming that the agreement could not pass a beneficial interest to the plaintiff/purchaser capable of defeating a subsequent purported alienation of that interest by the first defendant. This observation leaves to one side the separate issue of the rescission of the agreement.

20. Mr. Chain argues that such agreements are indeed contracts for the sale of an interest in land and capable of passing an equitable interest from vendor to purchaser. He suggests that Mr. Wong's argument has confused the chosen mechanics of the contractual process with the legal effect of the agreement. The legal effect of transferring the interest in land was not diminished by the means chosen to do so.

21. Mr. Chain then addressed the argument of the developer's lack of obligation to contract with the plaintiff after the cancellation of its agreement with the first defendant. He said the two agreements were indivisible and the cancellation agreement did not realistically have a life of its own leaving the developer revested with a freely disposable interest. He adduced the indivisible transactions of completion and charge in Abbey National Building Society v. Cann [1991] A.C. 56, when the House of Lords found that a prior agreement to grant a charge on the legal estate gave a purchaser only an equity of redemption.

22. The issue is initially resolved therefore on enquiring if the agreement of 21st March operated to transfer a beneficial interest in land from the first defendant to the plaintiff. If so, apart from rescission, the first defendant's purported disposal of her interest by the 3rd April cancellation cannot relate back and retrospectively deprive her of a disposable interest capable of transfer to the plaintiff.

23. To state the obvious, a purchaser's beneficial ownership under a contract for the sale of land depends on the prior existence of an interest capable of passing to him. If that interest has already passed to another purchaser (the plaintiff here) then, leaving aside the right to rescind, it cannot be in the second defendant by the cancellation agreement of 3rd April. The first defendant simply has no interest to pass because it remains in the plaintiff. It therefore turns the logic of events on its head to say that the first defendant's purported disposal of her interest by the 3rd April cancellation agreement effectively deemed her never to have had that interest.

24. I repeat that this leaves aside the disputed right to rescind the 21st March agreement, which I shall address in due course. It does however mean that if the 21st March agreement did transfer a beneficial interest in land, then short of rescission, the first defendant thereafter had no disposable interest.

25. The agreement of 21st March between the plaintiff and the first defendant is a standard estate agents' form of contract. After reciting the parties and the property, which is described as "the said premises", the principal purpose of the agreement is stated in clause 1:

"The vendor shall sell and the purchaser shall purchase the said premises through the agent subject to the terms and conditions herein contained."

26. It requires no difficult analysis to conclude that the first defendant is purporting to transfer a beneficial interest in the flat to the plaintiff. It is a beneficial interest which she enjoys under her contract of 4th September 1990 with the second defendant, and which she is now transferring to the plaintiff. Subject again to the argument on the right to rescind, the plaintiff's beneficial interest became indefeasible on her registering the agreement on 9th April.

27. I agree with Mr. Chain that the method proposed for the eventual transfer, by cancellation and change of name, relates only to mode of performance and not to the agreement's legal effect. The cancellation and change of name are in effect a single transaction and the second defendant would be susceptible to an order for specific performance.

28. Specific performance of the agreement has not therefore been excluded by its intended mode of performance coupled with the first defendant's subsequent attempt to cancel her own agreement with the second defendant. There remains for consideration the first defendant's purported rescission of the agreement. She has pleaded firstly a collateral oral contract allowing her to withdraw, and secondly, that she was anyway entitled to withdraw on a proper construction of the agreement itself.

29. Although the first defendant has pleaded the collateral oral contract, she has not given evidence. Of those who were there at the time the agreement was signed, the plaintiff, Mr. Edwin Kwok and Miss Winny Wang have testified. The plaintiff has denied receiving a detailed explanation of the vendor's right to withdraw, and Mr. Kwok and Miss Wong, respectively a director and senior negotiator of the agents, have said otherwise. However, a mere explanation, detailed or not, of written contractual terms will not without more sustain a collateral oral contract. The collateral contract issue cannot anyway survive Mr. Kwok's evidence that the written agreement executed in his presence constituted the whole of the agreement between the parties.

30. I therefore find that the collateral contract has not been proved and the issue of the purported rescission of the agreement must depend on the construction of the agreement itself.

31. Clause 5 is the provision under which the first defendant pleads that she exercised her option to pay and rescind. It reads:

"Should the vendor after receiving the initial deposit paid hereunder fail to complete the sale in the manner herein contained the vendor shall immediately compensate the purchaser with a sum equivalent to the amount of the initial deposit as liquidated damages together with the refund of the initial deposit."

32. It is undisputed that parties to an agreement may stipulate to extinguish both their common law rights and their equitable remedies. Equally, counsel accept that the mere inclusion of a liquidated damages or similar clause will not necessarily give a vendor the option either to perform or to rescind on paying compensation. It is a matter of the construction of the individual contract.

33. Two relatively recent cases have come before this court on similar facts but rather different wording. They are Lee Tat Kwong v. Choi Pui Kei HCA 1991 No. 2338 before Godfrey J., and Wong Lai Fan v. Lee Ha 1991 MP No. 1024 before Mayo J. Both cases were decided in favour of the vendor's right to pay the stipulated sum in lieu of performance, Mayo J.'s decision being upheld on appeal at [1992] 1 HKLR 125. The learned judge in either case accepted the classic distinction between a contract with an option to perform by paying a sum, and a contract for a certain act annexing a sum to secure performance. In the former case equity will not intervene, and in the latter it may.

34. As the facts in these cases are similar to those in issue, an examination of the relevant wording and of the judicial reasoning may be helpful. In the case before Godfrey J. the clause in issue was worded in this way:

"If the purchaser does not within the stipulated time go to the solicitors' office to deal with the procedures, the vendor is entitled to forfeit the provisional deposit, and further has the right to resell the property or retain it for his own use. If the vendor in breach of contract failed within the stipulated time, to go to the solicitors' office to deal with the procedures, the vendor shall compensate the purchaser by twice the amount of the provisional deposit in the total sum of HK$40,000 and the purchaser is not entitled to dispute that. If the vendor in breach of contract failed immediately to compensate the purchaser by the amount of the deposit, the purchaser shall be entitled to take legal action to enforce the purchase by specific performance, and also to claim for any loss consequential thereupon."

35. The learned judge noted the lack of mutuality in the failure to exclude the vendor's claim to specific performance, if a construction were to be adopted excluding the purchaser's claim. He concluded however that a distinction between the rights of the parties was not fatal to a construction upholding that distinction if it can be shown to be intended by the words used.

36. The learned judge noted that the provisions for the vendor's breach up to the start of the final sentence indicated the exclusion of specific performance, but contained some ambiguity. What he found decisive however was the final sentence of the clause, giving the purchaser the right to specific performance "if the vendor failed immediately to compensate...". He found that these words necessarily implied the converse also to be the case, namely that the purchaser would be deprived of specific performance if the vendor did "immediately compensate" him. The learned judge found these words sufficiently clear in the circumstances envisaged to exclude specific performance and refused the remedy on finding that timely compensation had been made or offered.

37. In the case before Mayo J. the disputed clause read:

"Should the vendor after receiving the initial deposit paid hereunder fail to complete the sale in the manner herein contained the vendor' shall immediately compensate the purchaser with a sum equivalent to the amount of the initial deposit as liquidated damages together with the refund of the initial deposit and the purchaser shall not take any further action to claim for damages or to enforce specific performance."

38. The learned judge observed that the initial question was whether or not the parties intended to extinguish their common law rights and equitable remedies. He then noted the mutuality between that clause and the wording of its counterpart dealing with limitation of the vendor's rights in the event of the purchaser's breach. In this he found a clear attempt to provide a financial solution to problems arising should either party decide not to proceed with the formal sale and purchase agreement. That being so, he found that the remedy of specific performance otherwise open to the purchaser had been excluded.

39. I turn to the wording of clause 5 in this case, which, with its counterpart covering the purchaser's breach reads -

"4. Should the purchaser fail to complete the purchase in the manner herein contained the deposit shall be forfeited to the vendor and the vendor shall then be entitled at his absolute discretion to sell the said premises to anyone he thinks fit.

5. Should the vendor after receiving the initial deposit paid hereunder fail to complete the sale in the manner herein contained the vendor shall immediately compensate the purchaser with a sum equivalent to the amount of the initial deposit as liquidated damages together with the refund of the initial deposit."

If clause 5 is construed as excluding the plaintiff's claim to specific performance, there would be a clear lack of mutuality with the vendor's position under clause 4. The vendor's claim to specific performance is not expressly excluded, and the words "shall then be entitled at his absolute discretion to sell..." suggest that other remedies remain available.

40. Lack of mutuality is not of course fatal to a construction upholding it if such is clearly intended on the wording, as Godfrey J. observed in Lee Tat Kwong v. Choi Pui Kei. It is however a factor in construing that wording. Nazareth J.A. made this point in upholding on appeal Mayo J. 's decision in Wong Lai Fan v. Lee Ha when he said:

"..it is sufficient to note that mutuality lends some support to the construction that produces it and conversely, its absence militates against a construction which does not produce it."

41. Apart from lack of mutuality, there is also a lack of express wording in clause 5 capable of excluding remedies for the purchaser other than those provided. This situation may be contrasted with that before Mayo J., where the first part of the clause was identical to clause 5, but the final sentence expressly excluded specific performance. It may also be contrasted with Godfrey J.'s case where the exclusion of specific performance was found to be a necessary inference from its express inclusion in the converse situation.

42. This lack of exclusion, either expressly or by necessary inference, recalls a passage cited by Godfrey J. from Szymonowski and Company v. Beck and Company [1923] 1 K.B. 457. Dealing with the exclusion of rights otherwise available to a contracting party, Bankes L.J. said (at p. 464):

"A buyer has, in the event of his seller breaking his contract, a prima facie right to avail himself of one or other of several alternative remedies, and if the seller desires by a clause in the contract to restrict the buyer's right to those remedies he must say plainly whether he intends to deprive the buyer in certain events of all those remedies or only of one or more of them, and if so of which."

43. Mr. Wong argues that the absence from clause 5 of the final exclusionary sentence of the otherwise identical wording considered by Mayo J. is not fatal to his case. He finds support from the provision for return of the deposit, arguing the inconsistency of returning a portion of the purchase price, whilst continuing to contemplate performance of the contract. Mr. Wong also seeks support from Abdul Cader Abdeen v. Abdul Careem Mohammed Thaheer [1958] AC 116. In that case, as in ours, there was a provision far liquidated damages and return of deposit on the vendor's refusal to complete. Again, as in the instant case, there was no express exclusion of the purchaser's remedy of specific performance. Nonetheless the court found on the construction of the contract that the purchaser's claim for specific performance had been excluded.

44. I accept that the mere absence from clause 5 of the final sentence of the clause considered by Mayo J. is not of itself fatal to Mr. Wong's case. The clause has to be considered in its context and its meaning drawn from a proper construction of the contract as a whole. The foreshortened terms of clause 5, without the explicit exclusion, do however at the least give Mr. Wong a more difficult case to argue. Neither can he demonstrate any necessary inference from the explicit inclusion of specific performance in the converse case, as relied upon by Godfrey J.

45. Moreover, Abdul Cader Abdeen is readily distinguishable from the present case, being decided on appeal from the Supreme Court of Ceylon where the principles of Roman-Dutch Law obtain. Unlike the common law, the Roman-Dutch System gives to a willing contracting party a prima facie legal right to demand performance from the other party. It is not a remedy in equity granted at the discretion of the court. In this context, the express and precise provision for liquidated damages militates strongly towards exclusion of specific performance, for there would otherwise be no reason to be so explicit. It is this that I take Lord Keith to mean when he says (at page 124) -

"First, where the right in general of a party to insist on specific performance of his contract or to claim damages is so clear under the Roman-Dutch Law, their Lordships have difficulty in appreciating why the parties should introduce into the contract the detailed and meticulous provisions of clauses 8 and 9 merely to fix the amount of damages in the event of the court finding itself unable or unprepared to give decree of specific performance."

I do not therefore find Abdul Cader Abdeen to be of assistance.

46. Both the words themselves of clause 5 and the necessary inferences to be drawn from them are very limited. I cannot find, neither from the words nor from I the whole agreement including the handwritten addendum, that the parties intended to give the vendor an option to pay and rescind. The provision for return of the deposit, argued as inconsistent with continuance of the contract, merely provides a method of calculating damages and is too flimsy a peg upon which to hang a contrary conclusion. As a matter of construction, the plaintiff therefore has available to her the remedy of specific performance of the agreement.

47. Whilst it is the wording of the contract which is to be construed, I should briefly mention the conflicting evidence as to the explanations of its effect. Mr. Kwok and Miss Winny Wong both testified that they gave to the parties a detailed explanation of the contractual terms at the time the contract was entered into. The plaintiff on the other hand has denied this and the first defendant has not given evidence.

48. Mr. Kwok and Miss Wong are respectively director and senior negotiator of the agents named in the agreement as the third party. They are not disinterested parties insofar as they have purported to interpret the terms of their own standard form agreement against the plaintiff's present contentions. They also have a clearly perceived financial interest in the rescission of an earlier agreement followed by another agreement at a higher price with a second purchaser. The agents stand to receive two lots of commission instead of one, which was indeed the case here.

49. I have seen Mr. Kwok and Miss Wong in the witness box and I am satisfied they have not been completely frank in their evidence. Mr. Kwok's partiality was also disclosed at an early stage, when he declined to give a statement to the plaintiff's. solicitors, whilst doing so to the first defendant's. The plaintiff seemed an honest witness, although at times confused and forgetful. When the plaintiff says that a detailed explanation of the contractual terms was not given, I accept, that and disbelieve the evidence to the contrary of Mr. Kwok and Miss Wong.

50. Mr. Chain has argued that the first defendant's actions in purported rescission were ineffective to rescind the agreement, even assuming that the construction of the contract would permit it. Whilst this argument is redundant on my recent finding, I should nonetheless consider it in case my construction of the contract be proved wrong. The argument concerns the construction of the words "immediately compensate" in clause 5 in relation, to the vendor's obligations to the purchaser on her failing to complete.

51. On the first defendant's understanding that she was entitled to rescind, she entered into a second sale and purchase agreement with the third defendants on 24th March 1991. This was a mere two days after the plaintiff paid the balance $15,000 of her deposit under the 21st March agreement.

52. The evidence of the first defendant's purported rescission is confusing. Mr. Kwok said a colleague told him that another potential purchaser appeared on 22nd March, after the plaintiff had paid her deposit, who was prepared to pay a higher price. The first defendant agreed to rescind the agreement when he contacted her. Miss Wong of the agents said she telephoned the plaintiff many times to come to collect the $40,000. This however related to the period after a letter of 28th March was sent, as appears from paragraph 12 of Miss Wong's witness statement. Miss Wong also said that she was aware that the first defendant had contacted the plaintiff many times.

53. The plaintiff testified that she contacted the first defendant on 25th March to see if completion could take place earlier than 8th April. The first defendant declined and said she, would attend for completion pursuant to the agreement, on 8th April. The plaintiff then said she suspected the first defendant wanted to withdraw and said she wanted $40,000 compensation, but the first defendant assured her she would proceed with the agreement. At this point, according to the plaintiff, she decided she no longer wanted compensation and insisted on completion of the contract. The plaintiff denied in cross-examination that the first defendant had telephoned her on 22nd March saying she would no longer sell and asking her to collect the $40,000. The first defendant has not given evidence, and I accept the plaintiff's testimony on this point.

54. The plaintiff then said that at about 7 p.m. on 25th March Miss Wong told her that the first defendant would compensate her as she would not complete the sale. She said this was the first time she had heard this and she did not have occasion to meet the first defendant between then and 8th April. The plaintiff said she told Miss Wong that she would refuse the compensation and insisted on purchasing the property. She also said that she was not offered a cheque at any time, including on the 8th April.

55. On 28th March the first defendant sent a letter through the agents advising the plaintiff to come to the agents to collect the $40,000 compensation before 8th April. On receiving this letter the plaintiff said she placed the matter in the hands of her solicitors.

56. Subsequently the plaintiff and the first defendant met at the agent's office on 8th April, which was the original date stipulated for completion. At this stage the plaintiff's evidence conflicts with that of Mr. Kwok and Miss Wong.

57. The plaintiff said that the first defendant offered to pay her $40,000 and refused to complete the transaction. The plaintiff said she declined and insisted on completion, which the first defendant likewise refused. The plaintiff denied ever seeing the cheque said to have been tendered, which is photocopied at page 98 in her bundle.

58. The first defendant has not given evidence, but Miss Wong said that the first defendant produced and tried to hand to the plaintiff the cheque in question. According to Miss Wong, those present were the plaintiff, the first defendant and her son, and Miss Wong herself; Mr. Kwok was not however present. She said the plaintiff refused the cheque.

59. This is a matter of potential importance on which neither the first defendant nor her son has given evidence. Between Miss Wong and the plaintiff, I have no hesitation in preferring the plaintiff' s evidence that the first defendant only offered to pay the money. There was therefore no tender at the meeting of 8th April and the first defendant cannot be said to have attempted to "immediately compensate" the purchaser on her failure to complete It is beyond question that there was no tender prior to that date, as a mere invitation to call to collect the compensation cannot suffice.

60. Mr. Chain has argued that anyway a cheque is insufficient tender to discharge the vendor's obligations and has cited Chitty, 26th Edition, at paragraph 1559 to this effect. There may be some force in his argument but in the circumstances I find it unnecessary to decide the issue.

61. Assuming therefore that my finding on the construction of the agreement was wrong I nevertheless find that the first defendant has not complied with clause 5 in her purported rescission. Either way, the plaintiff's remedy of specific performance has not been excluded and there remains the issue of the court's discretion in applying it.

62. Mr. Chain has argued that the third defendants are not bona fide purchasers. This contention is based on their having entered into the agreement with the first defendant on 24th March, whereas there was an unidentified buyer available on 22nd March. This buyer, Mr. Chain argues, must have been the third defendants and he asks the court to find a probability that they knew of the plaintiff's prior agreement. Mr. Cheung, the first named third defendant, however denied this when it was put to him in cross-examination.

63. Mr. Cheung gave his evidence well and seemed an honest witness. I cannot find him to be lying merely from the existence of an unidentified potential buyer plus the coincidental proximity in time of his appearance on the scene. The third defendants therefore rank as purchasers for value without notice in the matter of the exercise of the court's discretion.

64. Given that finding, the issue of hardship to the third defendants arises in relation to the enforcement of the plaintiff's agreement. The competing arguments of the plaintiff and the third defendants are set out in full in the third defendants' defence and the plaintiff's reply.

65. I do not propose to analyse in detail the hardship adduced by the third defendants in resisting specific performance at paragraph 9A of their defence. In relation to sub-paragraph (b) however I do not find any significance in the plaintiff's registration of her agreement on 9th April, rather than earlier. She was entitled to register within one month of the agreement and by doing so gave herself priority as of 21st March 1991. The third defendants are moreover entitled to damages from the first defendant and would anyway recover the capital sum of the purchase price from the developer on the plaintiff's completion. Should I refuse specific performance, plaintiff would also have to find an alternative flat no doubt at a higher price, and I do not see why she should have to do so.

66. I find nothing in the circumstances adduced by the third defendants to displace the usual rule that contracts for the sale of land are unique and specifically enforceable by a purchaser. There will accordingly be an order for specific performance of the agreement between the plaintiff and the first defendant of the 21st March 1991. This order will also comprehend the second defendant to the extent that it will complete all formalities to substitute the plaintiff for the first defendant in the agreement of 4th September 1990. It will thereafter assign the property to the plaintiff on receipt of its outstanding dues.

67. The plaintiff is also seeking damages and such order is duly made against the first defendant, the damages to be assessed by a Master. Sub-paragraph (d) of the Statement of Claim has been acknowledged by Mr. Chain to be inapplicable and is dismissed. I will leave the question of costs, as I understand that counsel may wish to address me, after considering the judgment, on the question of a Bullock or Sanderson order.

68. It follows from the order in favour of the plaintiff that the third defendants' counterclaim against the plaintiff is dismissed. I will again leave the question of costs pending consideration by counsel. The third defendants also counterclaim alternatively against the first defendant for loss of profit on the increased value, loss of the purchase price and interest, plus their own legal fees and costs they may be ordered to bear.

69. The third defendants' right to damages against the, first defendant depends on their establishing that the first defendant was in breach of her warranty that she had title to pass. I find this breach established on the evidence and as a necessary consequence of my finding that she passed her interest to the plaintiff on 21st March and was unable thereafter to rescind that transaction. The third defendants are therefore awarded damages against the first defendant in terms of paragraphs (4) and (5) of the prayer. The damages so awarded will be assessed by a Master.

70. I make the further order in relation to this award that the third defendants' own legal fees, in terms of sub-paragraph (d) of paragraph 16 of the counterclaim, are to be assessed as indemnity costs. The issue of recoverable costs as between party and party again I shall defer until counsel have time to consider their positions.

71. Any further orders consequential on those now made, and in particular as to the second defendant's costs, will also be reserved until later.

72. I conclude by echoing the criticism of agreements such as this one by Keith J. in Wong Shiu Hung v. Kwok Sing Leung, 1991 No. A2516. They are a potential trap for the unwary purchaser designed unsuccessfully in this case) to maximise the returns to estate agents by facilitating successive transactions and withdrawals, with commissions payable on each one. That was clearly Mr. Kwok's interpretation of his own company's form of agreement and it represents a disreputable practice which should be stopped.