LAGUNA PROPERTIES LTD v. NEW TREND INVESTMENT LTD

HCA19128/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.19128 OF 1998

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J U D G M E N T

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1. This is an application by the plaintiff for an order under Order 29, rule 2, to preserve the property in situ so that it can be inspected by the plaintiff's experts within 42 days of the Order : "for the purpose of preparing an expert report on the legality of the overall and individual structures of the property".

2. In this action, the plaintiff was the purchaser and claims against the defendant, the vendor, for the return of monies paid and expenses incurred arising out of the sale and purchase of the property. The Sale and Purchase Agreement was entered into on 22 July 1997, completion was to take place on 7 January 1998 but it was later extended under a supplemental agreement to 2 March 1998. It seems that the property was purchased subject to a lease-back arrangement and there was a tenancy agreement between the plaintiff as landlord and the defendant as tenant for a term of three years commencing 7 January 1998.

3. By a letter dated 20 February 1998, the plaintiff's solicitors, Messrs Philip T.F. Wong & Co. raised requisition regarding the extension erected in the garden adjacent to the living room and inquired whether the extension had been approved by the Building Authority or the management company of Discovery Bay. The requisition was made more than four months after time for requisitions had expired under the Sale and Purchase Agreement. This extension is the so-called garden extension. This requisition is pleaded in the Statement of Claim, at para.8. The defence in relation to this requisition is manifold and they include delay and estoppel.

4. By an amendment made in October 1999, the plaintiff further alleged that the defendant had failed to give good title because of the illegal extension of the living room by an aluminum framed glass panel or door - I think this is the so-called living room extension. This amendment came about after the plaintiff instructed its architect, a Mr Leung, to inspect the property in May 1999. However, this was never the subject of any requisition. The making and timing of requisitions relating to illegal structures are particularly important because if made on a timely basis the vendor might be able to remedy the situation prior to completion.

5. It is now May 2004, the proceedings have proceeded to the stage that the plaintiff also seeks an order for the exchange of witness statements today and it is against such background that I consider the plaintiff's application.

6. Now, as I understand from Mr Chau who appears for the plaintiff that the purpose of the application is to enable the plaintiff to discover whether there are other illegal structures on the property. Of course only illegal structures existing prior to completion would be relevant to this proceeding. The sale was aborted as early as March 1998, the present action was commenced in November 1998, and the Statement of Claim was last amended on 12 October 1998 where the living room extension plea was raised for the first time.

7. This application for preservation and inspection is not confined to the living room extension or the garden extension. Indeed, it is not the plaintiff's case that inspection is needed for either plea. The plaintiff seeks inspection in order to find out whether there are other illegal structures, in their words, "in the overall and individual structures of the property."

8. The defendant has described the application as a fishing expedition. The purpose of the inspection is to enable the plaintiff's expert to go through the property to see if they could come up with anything. I think it is in the nature of a fishing expedition and not one which should be allowed so late in the proceedings. No doubt if the inspections were permitted and any illegal structures are allegedly found, there would be an application to further amend the Statement of Claim thereby delaying the proceedings further.

9. Whether an order should be made under Order 29, rule 2 is discretionary. Order 29, rule 2 is there to secure a just and proper trial of the issues. In all the circumstances, I will not make the order sought. The application is made so late that if granted it would delay the proceedings further. I am also of the view that although I cannot say that even if further illegal structures or further alleged illegal structures were found on inspection, they cannot possibly assist the plaintiff's case, I do not believe any claims based on them are of sufficient merit to justify the further inevitable delay to the proceedings. I will not grant the order sought and it follows that the summons for preservation and inspection are dismissed.

10. Costs should follow the event, against the plaintiff.

[Discussions on paragraphs 5 and 7 of the draft order]

11. The application for preservation and inspection is dismissed with costs. Order in terms of paragraphs 5 and 7 of the draft order. Costs in relation to paragraphs 5 and 7 to be costs in the course.