XCHRX TIME PROPERTIES AGENCY CO. LTD. v. KEUNG HONG HUNG AND ANOTHER

HCA 5561/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 5561 OF 1998

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J U D G M E N T

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1. By a summons issued under O.14A, r.1 Rules of the High Court dated 5th June 1998, the Plaintiff asks for the following relief:

"1. There be a determination of the following questions of law pursuant to Order 14A Rule 1, the Rules of the High Court: -

(a) whether the request for return of deposits contained in a letter dated 5th March 1998 from the Plaintiff's former solicitors, Messrs. Poon & Cheung amounted to an anticipatory breach of the Agreement for Sale and Purchase dated 12th September 1997 signed between the Plaintiff and the Defendants ("the Agreement") entitling the Defendants to immediately put an end to the Agreement and forfeit all deposits paid by the Plaintiff thereunder;

(b) if the answer to (a) above be in the affirmative, whether the Defendants had waived the breach and kept the Agreement alive by tendering an Architect's letter on 5th March 1998 in response to the earlier requisition raised by the Plaintiff.

(c) If the answer to

(a) above be in the negative, or

(b) above be in the affirmative,

whether in the events that had happened, the Defendants were in breach of the Agreement by demanding the return of all title deeds and refusing to entertain the Plaintiff's request to proceed with the Agreement."

2. The Plaintiff was the purchaser of a flat pursuant to a Sale and Purchase Agreement it signed with the Defendants as vendor on 12th September 1997. Completion was to take place on 8th April 1998. The Plaintiff had paid the deposit in the sum of HK$699,800.00 and the balance was payable on completion. Title deeds were sent to the Plaintiff's solicitors and requisitions were raised by the Plaintiff's solicitors.

3. One of the requisitions raised related to an alteration made to the verandah of the property. The property was the Unit 01, 12th Floor, Highburgh House (Block G), Hunghom Bay Centre, No. 104 Baker Street, Hunghom, Kowloon, Hong Kong. The requisition was raised by letter dated 6th February 1998 from the Plaintiff's solicitors to the Defendants' solicitors. On 10th February 1998, in relation to that requisition the Defendants' solicitors said that they were taking instructions as regard the status of the verandah and would revert in due course. There was further correspondence and on 25th February 1998, the solicitors for the Plaintiff wrote to the solicitors for the Defendants asking, inter alia, for the estimated time that they would be able to produce the documents that they had requested and the satisfactory answer to their requisition raised in the letter.

4. By letter dated 5th March 1998, the solicitors for the Plaintiff wrote as follows: -

"We refer to our letter dated the 25th February 1998.

Up to the date hereof, you have failed to let us have a satisfactory or any answer to our requisitions relating to the illegal and/or unauthorised structure or alternation to the verandah of the above property. Therefore, we are now instructed by our client to ask for the return of all deposits paid to your client and a cancellation of the Agreement for Sale and Purchase.

Kindly let us have a Cancellation Agreement for our approval as soon as possible."

5. In the course of the hearing this morning, a list of agreed facts was put forward to me signed by counsel for the Plaintiff and counsel for the Defendants. However, it became apparent from the submissions of Mr. Miu that it was his contention that the solicitors for the Plaintiff made an honest mistake when they wrote that letter dated 5th March 1998. That essentially is a question of fact. That is not an agreed fact. It is a disputed fact.

6. Under O.14A, r.1, the court may, upon the application of a party determine any question of law or construction of any document where it appears to the court that:

(a) such question is suitable for determination without a full trial of the action, and

(b) such determination will finally determine, (subject only to any possible appeal) the entire cause or matter or any claim or issue therein.

7. The issue that the Plaintiff wishes to have determined under O.14A is the question of whether or not the letter dated 5th March 1998 amounted to an anticipatory breach of the Agreement for Sale and Purchase entitling the Defendants to immediately put the Agreement to an end and forfeit all deposits paid by the Plaintiff thereunder. In other words, did the solicitors by that letter repudiate the Agreement? It is essential, in my view, to determine whether or not there was an intention to abandon the contract. Whether or not there was an honest mistake must be a relevant factor to be taken into account.

8. In the case of Woodbar Investment Development Ltd. v. Wimpey Construction U.K. Ltd. [1980] 1 W.L.R. 277, a case which was on Mr. Miu's list of authorities, it was demonstrated that in considering whether there has been a repudiation by one party it is necessary to look at that party's conduct as a whole, i.e. one has to consider all the circumstances of the case. Whether or not the solicitors for the Plaintiff wrote that letter as a result of an honest mistake is a disputed question of fact. That being so, I do not think it is an appropriate procedure for the court to adopt O.14A proceedings to determine the question as applied for by the Plaintiff. This is a matter which is suitable for determination in a trial of the action where evidence is adduced to enable the court to arrive at a finding on the question of fact namely, whether or not there was an honest mistake.

9. Although the Defendants originally considered that O.14A was an appropriate procedure, Mr. Yau for the Defendants has submitted to me that it is not appropriate for the court to proceed as the arguments of Mr. Miu developed. I do not see why the Defendants are bound by what they had said earlier in agreeing that O.14A was an appropriate procedure. It was only this morning that Mr. Miu made a submission that the letter of 5th March was written by the solicitors for the Plaintiff as a result of an honest mistake. That, as I have said, is essentially a question of fact and a question of disputed fact.

10. In the circumstances, in the exercise of my discretion I dismiss the summons as I do not think that it is proper for the court to determine the question without having the facts decided.

[After hearing submissions]

11. It seems to me the proper order for costs is that costs should be in the cause. Both sides were prepared to argue the summons. It was only in the course of today's arguments that the Defendants felt that the O.14A procedure was not the appropriate procedure. In the circumstances, costs should be in the cause.