GOOD FORM COMPANY LTD v. CHEUNG WAI HAN

HCMP 3153/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 3153 OF 2014

(ON AN INTENDED APPEAL FROM DCCJ NO. 3816 OF 2013)

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

1.  The plaintiff as vendor and the defendant as purchaser entered into a sale and purchase agreement [“the Agreement”] for a shop unit in Smiling Plaza at Castle Peak Road. The defendant failed to complete and the deposit was forfeited. The plaintiff had re-sold the property and the re-sale price was substantially below that under the Agreement. The plaintiff sought to recover damages from the defendant in DCCJ 3816 of 2013. The defendant relied on a clause in the Agreement [“clause 19”] and advanced a defence that by reason of that clause the plaintiff could not recover anything further after forfeiting the deposit. On 21 March 2014, in an Order 14A application, Judge Andrew Li held in favour of the plaintiff in respect of the construction of clause 19 and entered interlocutory judgment against the defendant for damages to be assessed.

2.  Clause 19 is worded in terms similar to condition 10 in Part A of the Second Schedule of the Conveyancing and Property Ordinance Cap 219.  It reads:

“ If the Purchaser (other than the default of the Vendor) fail to complete the purchase in accordance with the terms and conditions herein contained the deposit shall be absolutely forfeited as and for liquidated damages (and not as a penalty) to the Vendor who may (without being obliged to tender an Assignment to the Purchaser) rescind the sale and either retain the Property the subject of this Agreement or any part or parts thereof or resell the same, either as a whole or in lots, and either by public auction or private contract, or partly by the one and partly by the other, and subject to such conditions and stipulations as to title or otherwise as the Vendor may think fit. Any deficiency arising from such resale and all reasonable expenses attending the same shall be made good and paid by the Purchaser as and for liquidated damages, and any increase in price realized by any such resale shall belong to the Vendor. This clause shall not preclude or be deemed to preclude the Vendor from taking other steps or remedies to enforce the Vendor’s rights under this Agreement or otherwise. On the exercise of the Vendor’s right of rescission hereunder the Vendor shall have the right, if this Agreement shall have been registered at the Land Registry, to register at the Land Registry an instrument signed by the Vendor alone to rescind the sale of the Property. This clause shall not prevent the Vendor recovering, in addition to liquidated damages, damages representing interest paid or lost by him by reason of the Purchaser’s failure.”

3.  The defendant applied for leave to appeal before the judge.  The judge refused leave on 24 July 2014.

4.  After a substantial lapse of time, the defendant applied to this court for leave on 3 December 2014.  Solicitor for the defendant accepted responsibility for the delay as it occurred due to an oversight on his part notwithstanding that the defendant had given him prompt instructions to seek leave from this court.  Even so, it is still a long delay and in-excusable.  In accordance with well established practice the court will need to consider whether there is any real prospect of success on the merits, see Secretary for Justice v Hong Kong & Yaumati Ferry Co Ltd [2001] 1 HKC 125.

5.  Though Mr Cheung (together with Ms Karen Cheung) argued valiantly on behalf of the defendant that the authorities did not rule out a construction in favour of his client, we are of the clear view that the point is well settled and the judge had reached the correct conclusion.  There are a series of authorities binding on us on this very point: Union Eagle Ltd v Golden Achievement Ltd [1997] AC 514; Board Money Development ltd v Industrial Engineer Ltd CACV 101 of 1999, 24 Sept 1999; Teng Fuh Co Ltd v Keen Lloyd (Holdings) Ltd CACV 193 of 1999, 5 Nov 1999; Polyset Ltd v Panhandat Ltd (2002) 5 HKCFAR 234.  We do not accept Mr Cheung’s submissions that the present case is distinguishable or that the conceptual confusion identified by him had somehow been overlooked in those cases.  The linchpin of Mr Cheung’s contention, Dawson Enterprises Ltd v Tallisteam Ltd [1995] 1 HKLR 93 was duly considered by Ribeiro PJ in Polyset Ltd v Panhandat Ltd, supra.  In the latter case, His Lordship rejected an argument which forms the backbone of Mr Cheung’s submissions: that the description of the deposit in clause 19 as “as and for liquidated damages” had the effect of transforming what in substance was a deposit into liquidated damages.

6.  In the circumstances, we are not satisfied that the intended appeal has any reasonable prospect of success. Nor do we see any other reason why leave should be granted in the interest of justice.

7.  We dismiss the application for leave with costs.  The judge had clearly explained in his judgment of 21 March 2014 and his decision of 24 July 2014 why the argument of the defendant is without merit.  This is indeed a hopeless application and, as this court had said previously, it is appropriate to order costs on indemnity basis, see Cheung Shuk Mei v Poon Kin Fai HCMP 1705 of 2014, 4 Sept 2014; Motorola Solutions Credit v Uzan HCMP 1237 of 2014, 26 May 2014 and Compania Sud Americana de Vapores SA v Hin-pro International Logistics Ltd HCMP 1932 of 2014, 16 Oct 2014.

8.  Solicitors for the plaintiff submitted a statement of costs in the total sum of $96,073.  We are of the view that it is a reasonable sum to be awarded on indemnity basis.  We fixed the costs accordingly.

9.  We are of the view that the application of the defendant is totally without merit and we make an order pursuant to Order 59 rule 2A(8) of the Rules of High Court that no party may request this determination to be reconsidered at an oral hearing inter partes.