FPDSAVILLS (HONG KONG) LTD v. GOLDENWICK LTD

DCCJ 1643/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1643 OF 2008

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REASONS FOR DECISION AND DECISION ON COSTS

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1.  This case arose out of an aborted property transaction.

2.  By a provisional sale and purchase agreement dated 6 September 2004 (“the Agreement”), the Defendant, through the Plaintiff as estate agent, sold to the Standard Chartered Bank (HK) Ltd. (“the SCB”) the property known as Unit 42, Ground Floor, Nos. 37-39 Ma Tau Wai Road, Kowloon (“the Property”) at a price of $25,800,000.

3.  Clause 6 of the Agreement provided that, in consideration of the services provided by the Plaintiff, the Plaintiff was entitled to receive $258,000 from the Defendant and $258,000 from the SCB as commission.  Clause 7 of the Agreement further provided that, if in any case either the Defendant or the SCB failed to complete the sale and purchase of the Property in the manner therein contained, the defaulting party shall compensate to the Plaintiff at once the sum of $516,000 as liquidated damages.

4.  After the signing of the Agreement, there was a dispute between the Defendant and the SCB about the title of the Property, and as a result the sale was aborted.  The parties then commenced legal proceedings against each other in HCA Nos. 2634 & 2645 of 2004 (“the High Court Actions”).  On 20 March 2008, Poon J. held that the Defendant had failed to answer one of the requisitions raised by the SCB satisfactorily and had therefore failed to prove a good title to the Property.  Thus the Defendant was held to be the party in repudiation of the Agreement.

5.  By reason of such judgment, the Plaintiff commenced the present proceedings against the Defendant to claim for the commission or damages pursuant to clauses 6 and 7 of the Agreement.  The application I have to deal with at this stage is the O. 14 application taken out by the Plaintiff in respect of such claim.

6.  According to the claim framed by the Plaintiff, the party in repudiation of the Agreement would have to pay for the commission payable by both parties under the Agreement.  In such case, the Plaintiff will have to rely on the judgment of the High Court Actions to establish who was the party in default of the sale of the Property.  However, I understand that the Defendant has already lodged an appeal against the judgment of Poon J. with the hearing date fixed in March 2009.  As the Plaintiff’s claim wholly depends on the outcome of the appeal as to who was the party in repudiation of the Agreement, I am of the view that the present application should be adjourned pending the determination of the appeal, otherwise it would cause great embarrassment if the judgment of Poon J. is reversed on appeal.  I therefore so ordered in the hearing.

7.  There is then dispute between the parties about the costs of the hearing before me on 25 August 2008.  As the Defendant has already disclosed in the Defence and Counterclaim filed herein on 9 May 2008 that an appeal had been lodged against the judgment of Poon J., Mr. Li, counsel for the Defendant, submits that the Plaintiff should have waited for the result of the appeal in the High Court Actions, and it was too premature to take out the O. 14 application at this stage.  Mr. Li therefore asks the Plaintiff to pay for the costs of the hearing.

8.  There is some force in Mr. Li’s argument.  However, whether the Plaintiff should have waited for the outcome of the appeal depends on a number of factors, for example:

(i)    whether the Defendant has pursued the appeal in a diligent manner;

(ii)  whether the appeal, if dismissed, is regarded by the Court of Appeal as totally groundless; and

(iii)    whether the appeal, if dismissed, is considered as a tactic by the Defendant to delay the proceedings.

9.  I have no particular view about the possible outcome of the appeal, and indeed it is inappropriate for the court to explore such issue at this stage.  However, one must not ignore the possibility that the Court of Appeal may express a particular view about the conduct or the merits of the appeal.  Hence in order to maintain maximum flexibility, the court should defer the decision on costs until it has the opportunity of perusing the judgment of the appeal in the High Court Actions.  I therefore order that the costs be reserved at this stage.