LUI LAI TUEN v. LEUNG KWAI HING OMANGO

HCA 1193/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1193 OF 2008

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BETWEEN

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D E C I S I O N

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(I) BACKGROUND

1.  The Plaintiff and the Defendant entered into a provisional sale and purchase agreement (“the Agreement”) in August 2007 for the purchase by the Plaintiff of a property (“the Property”) for an agreed price of $1,950,000. The Plaintiff paid a deposit of $300,000 (“the Deposit”) upon the signing of the Agreement.

2.  The Defendant, having received the Deposit, failed to complete on the stipulated date.  The Plaintiff in June 2008 issued the writ indorsed with a statement of claim seeking for a decree of specific performance of the Agreement.

3.  The Defendant never took part in the proceedings, and the Plaintiff obtained judgment (“the Judgment”) in August 2008 under Order 86 by which a Master granted a decree of specific performance of the Agreement to the Plaintiff, and gave consequential directions in connection with the completion of the sale and assignment of the Property.

4.  Notwithstanding the obtaining of the Judgment for specific performance, the Plaintiff was unable to enforce the Judgment as result of the sale of the Property by the mortgagee under an order for sale granted by court in another mortgagee action.

5.  After the sale of the Property, the mortgagee paid into court the surplus of the sale proceeds in the sum of HK$396,230.41.  The money in court led the Plaintiff to issue, initially, a summons for payment out.

6.  As the Judgment was not a money judgment, the Plaintiff realized that she would not be able to obtain an order for payment out without a money judgment.  The Plaintiff therefore issued two further summonses, one of which is for variation of the Judgment under Order 86, and the other for the amendment of the Statement of Claim by adding an alternative claim of rescission of the Agreement, and for return of the Deposit.

7.  The summonses for payment out and for variation of the Judgment have been stood over until the disposal of the summons for amendment.

(II)  ISSUES

8.  The application to amend requires this court to resolve two issues:

(A)   Whether the court is empowered to grant leave to amend after a party has obtained a final judgment by allowing the Plaintiff to add new relief after judgment?

(B)   If so, whether leave should be granted?

A.   WHETHER THE COURT IS FUNCTUS OFFICIO?

A1.   The Plaintiff’s submissions

9.  When a judgment is sealed, a court is functus, and would have no competent jurisdiction to do with matters arising from the case.

10.  In this respect, Miss Chan submits that this court is not functus, and the proposed amendments to add an alternative claim for rescission should be allowed.

11.  In respect of the power of a court to grant amendment to pleadings after judgment, Miss Chan relied on the cases of Wing Han Trading Co. Ltd. v Tang Yan Kit[1] and Nam Kwong Medicines & Health Product Co. Ltd v China Insurance Co. Ltd.[2] and submitted that under Order 20 rule 5 of the Rules of the High Court (“RHC”), the court has jurisdiction to allow amendment at any stage of proceedings even after judgment.

12.  In support of her submission that the Plaintiff should be granted leave to amend to add a relief of rescission of the Agreement, Miss Chan referred to the English authorities of Capital and Suburban Properties Ltd. v Swycher & Others[3] and Johnson v Agnew[4], and submitted that it has always been open to the Plaintiff as the purchaser of the Property to accept repudiation or to pursue specific performance when the Defendant had breached the Agreement to complete.

13.  Miss Chan further submits that since the Plaintiff, by electing for specific performance at the time of issuing the writ, the Judgment for specific performance will not preclude the Plaintiff to apply to the court to dissolve the order of specific performance because the Agreement in such case remains in effect, and is not merged in the Judgment[5].

A2.   Discussion

14.  Order 20 rule 5, RHC, empowers the court to grant leave to amend pleadings at any stage of proceedings, including after judgment.  I accept Miss Chan’s submission that this court has jurisdiction to amend.

15.  It is established that in a contract for sale of land, an innocent party can pursue either the equity remedy of specific performance or common law remedy of rescission of the contract and recovers damages[6].

16.  I am therefore in agreement with Miss Chan that since the Judgment for specific performance has now become impossible, it would be open to the Plaintiff to ask for rescission of the Agreement so that her obligations for further performance of the Agreement under it would be discharged.

17.  The answer to issue (A) would be in the affirmative.

B.   WHETHER LEAVE SHOULD BE GRANTED?

18.  It is submitted on behalf of the Plaintiff that it would result in unjust enrichment to the Defendant if the latter were allowed to keep the Deposit after the breach of the Agreement should leave to amend be refused.

19.  When the Plaintiff issued the summons for payment out in respect of the proceeds of the sale of the Property now retained in court, the Defendant also issued (probably upon realizing there were monies left in court after the sale of the Property by the mortgagee) a summons for payment out in the mortgagee action.

20.  After the court had directed the Defendant’s payment out summons to be heard together with the Plaintiff’s summonses mentioned above, the Defendant however has since been absent despite several adjournments to ensure the Defendant be given sufficient opportunity to appear. 

21.  However, in spite of several adjournments and that evidence shows that she has been properly served with all the necessary documents, the Defendant has neither appeared to oppose the application nor made any written submission to answer the application.  In the circumstances, I am satisfied that it is just to exercise my discretion to allow the Plaintiff’s application to amend.

22.  I also answer Issue (B) in the affirmative.

23.  For the reasons above, I grant order in terms of the Plaintiff’s summons to amend the Statement of Claim save and except that I require the Plaintiff - given the Defendant’s absence- to serve the amended statement of claim.

(III)   DIRECTIONS

24.  Upon the Plaintiff having filed with the court and served on the Defendant a copy of this order and the amended statement of claim, I direct the Plaintiff to restore the other two summonses that have been stood over for further directions.  Notice of the hearing should also be given to the Defendant.