SIT SAU MING v. LEUNG MAY CHUN, ALISON ALIANCE formerly known as SHAM MAY CHUNG

DCCJ 4453/2008

[2020] HKDC 899

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4453 OF 2008

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BETWEEN

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DECISION

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1.  This is the defendant’s application for leave to appeal against my judgment handed down on 6 March 2020 (“the Judgment”).

The Judgment

2.  By way of background, the parties entered into a preliminary agreement dated 22 October 2007 homemade by the defendant for the sale and purchase of 6 car parking spaces in Tung Lo Court, Shek Kip Mei (“the CPS”) for the consideration of $660,000.  It was agreed that completion would take place on or before 2 January 2008.

3.  They engaged the same firm of solicitors (“MWC”) to act for them in the transaction and were mainly served by Mr Gordon Tsang (“Tsang”), a conveyancing executive of the firm.

4.  On 2 November 2008, they signed a formal agreement prepared by MWC which reiterated the agreed completion date and made time of the essence of the agreement.

5.  There was no completion on 2 January 2008 and the parties blamed each other for the non-completion. They claimed against each other in this action.

6.  According to the plaintiff, the parties had orally agreed via Tsang in the morning of 2 January 2008 to postpone completion to 9 January 2008 on account of some title defects identified by MWC.  The defendant later refused to complete on 9 January 2008 and, in a letter dated 2 June 2008, further evinced an intention not to proceed with the transaction.  The plaintiff therefore claimed for specific performance of the formal agreement in the action.

7.  At the trial, the primary case of the defendant was that the plaintiff had been in breach of the formal agreement by failing to complete on 2 January 2008.  She claimed to have accepted the plaintiff’s repudiation and counterclaimed for a declaration that the formal agreement had been terminated and that she had been entitled to forfeit the deposits.

8.  As to the plaintiff’s contentions, she denied there had been any agreement to postpone the completion date and argued that, in any event, the oral agreement alleged by the plaintiff was unenforceable by reason of section 3 of the Conveyancing and Property Ordinance, Cap 219 (“CPO”).  She further argued that the plaintiff was not entitled to the relief of specific performance because of laches.

9.  In the Judgment,

(a) I accepted the plaintiff’s case that there had been an oral agreement to postpone completion from 2 to 9 January 2008.  See paras 49-71 of the Judgment.

(b) I rejected the defendant’s case that the plaintiff had been in breach and found her case on acceptance of the plaintiff’s repudiation incredible.  See paras 72-76 of the Judgment.

(c) Applying the rule set out on p 581 in the 5^th edition (1984) of Meggary and Wade’s Law of Real Property (“the Rule”), I held that the plaintiff was entitled to enforce the formal agreement notwithstanding section 3 of the CPO.  See paras 77-95 of the Judgment.

(d) I rejected the defendant’s argument on laches.  See paras 96-102 of the Judgment.

(e) I entered judgment for the plaintiff and ordered specific performance of the formal agreement, and dismissed the counterclaim.  See paras 103 & 106 of the Judgment.

The intended appeal

10.  At the hearing on 20 May 2020, Mr Chain for the plaintiff complained that he did not have the benefit of the transcripts obtained by the defendant before the hearing.  I therefore directed the defendant to supply the transcripts and invited both parties to refer me to the relevant parts of the transcripts.  I am grateful for their further submissions.

11.  The defendant enumerated 5 grounds in the draft notice of appeal accompanying the summons.

12.  In Ground 1, the defendant submits that “[Tsang] could not have telephoned both parties in the morning and secured the alleged postponement agreement as found by the Judge” because “only until earliest after 3:19 pm on 2 January 2008 (if not until around 6 pm when MWC applied for the control card) the ‘serious title defect’ (ie the number … discrepancy) problem was discovered by MWC and/or [Tsang]”.

13.  I am startled by the starting premise of this ground, as it was also the defendant’s evidence that she had spoken to Tsang on the phone in the morning of 2 January 2008.  See para 50 of the Judgment.

14.  As to the content of their conversation, Tsang’s recollection (recited in para 49 of the Judgment) and the defendant’s recollection (recited in para 50 of the Judgment) were different.  In the end, I preferred Tsang’s evidence because:-

(a) Although the plaintiff was not privy to their conversation, Tsang’s evidence was, to a certain extent, corroborated by the plaintiff who confirmed that Tsang had also proposed to him in the morning of 2 January 2008 to postpone the completion.  At the trial, the defence did not seek to challenge this part of the plaintiff’s evidence.  See paras 52-53 of the Judgment.

(b) Tsang’s evidence was generally supported by documentary evidence.  In particular,

(i) Tsang made a contemporaneous note of the agreement; and

(ii) the postponement was corroborated by the entries in Tsang’s diary kept by his secretary.

See para 54 of the Judgment.

(c) The defendant’s evidence was contradicted by documentary evidence.  In particular,

(i) Her claim that she had personally delivered the original of her statutory declaration to Tsang at about noon of 2 January 2008 was denied by Tsang.  There was no trace of the original document in the conveyancing file of MWC. 

What is in evidence is a facsimile copy of the document bearing the time chop of “15:19”.  This tallies with Tsang’s evidence that he was surprised to have received the defendant’s fax in the afternoon. 

See paras 61-62 of the Judgment.

(ii) The defendant claimed that Tsang had told her in the afternoon of 2 January 2008 that her statutory declaration had been accepted by MWC.  This was contradicted by the second report prepared by Mr Choi (“Choi”), the conveyancing clerk of MWC who had scrutinized the defendant’s title.  See para 56 of the Judgment.

(d) The general circumstances as at 2 January 2008 were such that it was reasonable for Tsang to suggest to the parties to postpone the completion. 

(i) On 10 November 2007, Tsang had requested the defendant to provide some missing title documents for the purpose of the transaction. 

(ii) In November 2007, Choi had raised some requisitions after scrutinizing the defendant’s title for the first time and requested to see some further documents.

(iii) Not until 19 December 2007 did the defendant supply some of the missing/requested documents and instruct MWC to obtain certified copies of the remaining documents.

(iv) MWC began receiving certified copies of the remaining documents after the Christmas holiday in 2007.  There was not much time for MWC to verify the defendant’s title before the completion scheduled for 2 January 2008 right after the New Year.

See paras 13-19 & 68-69 of the Judgment.

(e) It was unlikely for Tsang to raise the “name discrepancy” with the defendant for the first time on the day of completion without suggesting any remedy as per the defence because:

(i) According to Tsang, he had noted the name discrepancy after conducting a land search on the CPS in October 2007.  He had alerted the parties to it in case anything would turn on it and included all the name forms in the formal agreement.  As things turned out, Choi raised no query on it when he scrutinized the defendant’s title for the first time in November 2007.  It served no purpose for Tsang to raise the name discrepancy again on the day of completion.

(ii) If Tsang had indeed raised the name discrepancy (for whatever reason) in the morning on the day of completion (as per the defence), it was unlikely for Tsang not to suggest a remedy or assist the defendant to resolve it given the deadline for completion. 

See paras 60 & 67 of the Judgment.

(f) By 2 January 2008, the “number discrepancy” had surfaced.  This was only later resolved when the plaintiff decided to accept the defendant’s title nonetheless in terms of the waiver letter.  If Tsang had seen fit to raise any discrepancy with the defendant for the purpose of completion on the day of completion, it was unlikely for him to omit the number discrepancy.  See para 67(b) of the Judgment.

(g) The actions of both the plaintiff and Tsang between 2 and 9 January 2008 were consistent with the plaintiff’s case. See paras 25-26 & 54(c) of the Judgment.

(h) On the other hand, the defendant’s action after 2 January 2008 was inconsistent with her case that she had terminated the agreement.  See para 75 of the Judgment.

15.  The defendant’s argument relates to (f) above and is premised on the assumption that Tsang could not have known the number discrepancy in the morning of 2 January 2008 because Choi’s second report that identified the discrepancy was only completed later.

16.  The number discrepancy, as I have noted in para 67(b) of the Judgment, was revealed through a comparison of the DMC and the OP.  The DMC was supplied by the defendant on 10 November 2007.  Choi had requested to see the OP in his first report.  As pointed out by the plaintiff from the transcripts, the evidence at the trial was that:-

(a) MWC obtained a certified copy of the OP at the end of December 2007.  See 33A-E & 65I-M of the transcripts.  This was apparently accepted by the defence in closing submission.  See 79S of the transcripts.

(b) The second report was prepared in stages.  Choi began to scrutinize the defendant’s title a second time at the end of December 2007 when he was given further documents to peruse (including the OP) and the process took several days to complete.  See 23B-E, 34F-M & 34U-35A of the transcripts.

(c) Tsang became aware of the number discrepancy by the end of December 2007 when his colleagues at MWC informed him so.  See 65T-U of the transcripts.

17.  Thus, the defendant’s assumption is not supported by the evidence, and her Ground 1 must fail.

18.  In Ground 2(a), (apart from repeating Ground 1) it is said that Tsang has contradicted himself by claiming in para 34 of his witness statement that he had notified the parties of the number discrepancy “in late December 2007” and “[i]mmediately after the Second Title Investigation”.

19.  Tsang’s evidence was that he had informed the defendant of the discrepancy by 31 December 2007.  See 65S-U & 66J-K of the transcripts.  At the trial, when it was put to him that he had been making things up as he went along, he denied the suggestion and replied that he could not be expected to remember the exact timing of events.  See 67F-G of the transcripts.  He was not cross-examined specifically on para 34 of his witness statement and not given a chance to explain the apparent inconsistency. 

20.  As I have observed in para 47 of the Judgment, it is understandable for anyone to make a mistake in recalling something that happened so long ago.  In my view, the glitch in para 34 of Tsang’s witness statement is not such as to affect his overall credibility which is verified by the contemporaneous documentation.

21.  Ground 2(b) criticizes me for accepting that the defendant had refused to complete the transaction on 9 January 2008.  This submission is simply not understood, as it was also the defendant’s evidence that she had refused to complete on 9 January 2008 because “我已經終止了上述車位的買賣”.  See para 19 of her witness statement at p 145 of Bundle A.

22.  In Ground 2(c), the defendant made the point that I have accepted Tsang’s evidence that he had informed the defendant of the name discrepancy before 2 January 2008 in ignorance of the plaintiff’s pleaded case (at para 9(a) of the Amended Statement of Claim) that the discrepancy “was discovered on or about 2.1.08”.

23.  Although Tsang was called by the plaintiff to testify at the trial, he was not on the plaintiff’s side (so to speak).  As I mentioned in para 41 of the Judgment, the defendant had previously commenced third party proceeding against MWC but the third party proceeding was later settled.  Tsang had been a witness of the third party and his witness statement had been prepared by MWC.  He was only called by the plaintiff after the withdrawal of MWC from the trial upon the settlement of the third party proceeding.  Thus, the plaintiff and Tsang have never been on the same side.  In fact, both the plaintiff and the defendant were very critical at the trial of MWC’s handling of the transaction and of Tsang’s performance in particular.  The fact that the plaintiff might not have appreciated MWC’s case fully does not, in my view, affect my evaluation of the evidence based on the contemporaneous documentation.

24.  I dealt with the defendant’s case on the statutory declaration fully in paras 56-67 of the Judgment, including the points made by the defendant and her counsel at the trial.  The submissions in Ground 2(d) do not take the defendant’s case any further:-

(a) I did not misapprehend the defendant’s evidence, which was recited verbatim in paras 50-51 of the Judgment. 

(b) I stand by my assessment at para 67 of the Judgment.

(c) In particular, my point at para 67(d) of the Judgment was that if Tsang had wanted to bring about completion in the afternoon by raising the name discrepancy in the morning (as per the defence), he would have assisted the defendant to resolve the discrepancy instead of leaving it to the defendant to deal with it herself (as per the defence) bearing in mind that that was the first time the defendant had engaged MWC in a conveyancing transaction. 

25.  In his oral submission on 20 May 2020, Mr Chan accepted my finding at para 61 of the Judgment and excused that the defendant had misremembered the fact that she had only faxed over her statutory declaration to MWC.  He argued that my finding actually dovetailed the defendant’s case that there had been no postponement.

26.  With respect, this latest argument is futile.  If the defendant had only sent a copy of her statutory declaration to MWC by fax for perusal at 15:19 and had subsequently been told that her statutory declaration was acceptable (see para 27 of her second supplemental witness statement at p 168 of Bundle A), she would have quickened her delivery of the original to MWC to beat the deadline of 5 pm instead of going to Tung Lo Court to look for the plaintiff (see para 28 of her second supplemental witness statement).

27.  In Grounds 3, 4 and 5(e)(i)-(ii), the defendant criticizes me for failing to make the following findings of facts in her favour:-

(a) there was in fact no defect in the defendant’s title and the plaintiff had failed to complete on 2 January 2008 on the erroneous ground that the defendant’s title was defective and/or required further clarification;

(b) the plaintiff had failed to prepare an assignment for the defendant’s approval or execution on 2 January 2008; and

(c) Tsang and those assisting him did not realise on 2 January 2008 that the plaintiff had already deposited the balance of the purchase price into MWC’s bank account.

28.  As explained by Tsang at the trial, MWC and the plaintiff had not worked towards completion on 2 January 2008 because of the postponement agreement.  See 49I-50G of the transcripts.  The findings suggested by the defendant would be inconsistent with my conclusion that the parties had in fact agreed to postpone the completion.

29.  Ground 5(a)-(d) is a rerun of the defendant’s argument at trial (based on Union Eagle^[1]) that the plaintiff should not be entitled to enforce the formal agreement after 2 January 2008 as that would be tantamount to unilaterally tendering performance according to some other terms.  Apart from submitting boldly that the Privy Council had, in the case of Chong Kai Tai Ringo,^[2] approved Hunter JA’s judgment in Camberra^[3] in ignorance of its earlier decision in Union Eagle, the defendant has not really explained why my reasoning in paras 77-95 of the Judgment is wrong.  As I have noted in the Judgment, the Rule is well settled and apt to prevent injustice that would otherwise result from the defendant’s refusal to complete by reason of s 3 of the CPO after orally agreeing to a postponement.

30.  Lastly in Ground 5(e)(iii), the defendant (in an attempt to explain her failure to attend MWC’s office on 2 January 2008 to complete) submitted for the first time that the parties had in fact adopted the usual Hong Kong method of completion by undertaking for the transaction.    

31.  As submitted by Mr Chain, it is not open to the defendant to raise this point on an appeal as it was not pleaded.  More importantly, it has no evidential basis.  Tsang has specifically denied that the transaction was on that basis.  See 53I-M of the transcripts.  And that was not the defendant’s evidence either, as she had been minded to attend MWC together with the plaintiff to complete the transaction.  See para 28 of her second supplemental witness statement at para 168 of Bundle A. So, neither the lawyer at the material time (ie MWC) nor the client (the defendant) proceeded on that basis at the time, and this belated submission is clearly an afterthought.

32.  Mr Chan took some other points in his oral submission.

33.  First, he criticised me for not making a specific finding in terms of para 10 of the Amended Statement of Claim that MWC had held a bona fide opinion on 2 January 2008 that the defendant had been unable to complete the transaction.

34.  In my view, that is implicit in my acceptance of Tsang’s evidence that he had proposed to the parties to postpone the completion and that there was, objectively, reasonable basis for him to do so. 

35.  Secondly, he criticised me for overlooking the possibility that a female staff of MWC could have told the defendant on 2 January 2008 that the plaintiff had not paid the balance of the purchase price.

36.  According to Tsang, it was unlikely for his secretary or those assisting him to give a reply in his absence based on the conveyancing file alone as they did not know what to look for in the file.  It was more likely that they would direct any enquiry to him. See 12R-13E of the transcripts.

37.  Thirdly, Mr Chan said that the contemporaneous note recited at para 54(a) of the Judgment actually supported the defendant’s case that Tsang had mentioned the name discrepancy to the defendant as it referred to “Name of V”.

38.  This is clearly an afterthought, as Tsang was not cross-examined on the note at all.  In general, a party is required to challenge in cross-examination the evidence of any witness of the opposing party if he wishes to submit to the court that the evidence should not be accepted on that point.  See para 12-12 of Phipson on Evidence, 19^th Edition (2018). 

39.  In my view, the writings “title problems (Amendment of ID in Ass, Name of V (no Deed Poll missing) etc” on the note may very well be a reference to requisitions (A)(1) and (E)(1) in Choi’s first report (pp 252-254 of Bundle A).  By those requisitions, Choi queried about the identity of the vendor in previous assignments who had used different HKID card number at different times.  As things turned out, Tsang has been deprived of an opportunity to explain his own writings at the trial. It would be most unfair to make a finding against him in such circumstances.

40.  Fourthly, it is said that MWC had in fact accepted the defendant’s statutory declaration as Choi had only commented on the signature but not the content of the document in requisition (H) of his second report (see para 56 of the Judgment).

41.  If that were true, then MWC would have asked the defendant to quickly prepare a fresh statutory declaration with the correct signature for the purpose of the completion instead of just informing her that her statutory declaration had been accepted as per the defence. 

42.  Fifthly, it is said that if MWC had found the statutory declaration problematic, Tsang would have followed up with the defendant.

43.  This submission is made without reference to my finding that the parties had already agreed to a postponement in the morning.  So there was no urgency for Tsang to follow up with the defendant when he suddenly received her fax in the afternoon.  Furthermore, as Choi had not raise any query on the name discrepancy in his first report, the statutory declaration (original or fax) was not relevant to the title investigation.

Disposition

44.  Leave to appeal should only be granted if the court is satisfied that the intended appeal has reasonable prospect of success or there are some other reasons that the intended appeal should be heard.  See section 63A of the District Court Ordinance, Cap 336.  Reasonable prospect involves the notion that the prospect must be more than fanciful without having to be probable.  See SMSE v KL [2009] 4 HKLRD 125 at para 17. 

45.  The Court of Appeal has repeatedly said in judgments such as Uni-creation Investments Ltd v Secretary for Justice [2018] 2 HKC 531 at paras 29-34 and ZJW v SY, CACV10/2017, 1 December 2017 at paras 25-34 cited by Mr Chain that it would not disturb findings of fact of the trial judge unless they are shown to be “plainly wrong”.  Under the “plainly wrong” test, the Court of Appeal must be satisfied that the trial judge had fallen into palpable error in his findings of primary fact under appeal before they would act.  Palpable errors that would justify the Court’s interference include misunderstanding the evidence, making a finding that was not supported by any evidence, or reaching a conclusion that no reasonable judge could have reached. 

46.  The crucial finding of fact in this case is that there was an agreement to postpone the completion.  The defendant has only challenged a few aspects of my decision leaving my analysis largely unscathed.  For the reasons set out above, these challenges have no merit.  In my view, the defendant does not come close to raising an arguable case and there is no other reason why the intended appeal should be heard. 

47.  The defendant’s application for leave to appeal is therefore dismissed with costs to be taxed if not agreed.