HO TIN HONG v. CHAN YUK LIN

DCCJ 4325/2020

[2022] HKDC 349

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4325 OF 2020

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BETWEEN

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DECISION

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1.  The disputes between the plaintiff and the defendant in these proceedings arising out of the sale and purchase between the plaintiff as purchaser (“P”) and the defendant as vendor (“V”) of a property known as Flat D, 9^th Floor, Tower 5, Sky Tower, No 38 Sung Wong Toi Road, Kowloon (“the Property”). On 14 May 2020, the parties entered into a provisional sale and purchase agreement (“the PSPA”). On 27 May 2020, the parties entered into a formal sale and purchase agreement (“the SPA”).

2.  By a summons dated 23 September 2021 (“P’s Summons”), P has made two applications:-

(1) an application for summary judgment under Order 14 of the Rules of the District Court (“RDC”);

(2) further or alternatively, an application for determination of the two questions set out in the summons under Order 14A of the RDC.

3.  It is an agreed fact that the rateable value of the Property at the commencement of these proceedings is less than HK$320,000. Accordingly, the disputes in these proceedings are within the jurisdiction of this court.

4.  Before this hearing, I have asked the parties whether the court may treat this hearing as the trial in these proceedings and determine all the issues in one go in the hearing. P has agreed to this approach. However, V submitted that there are two factual disputes in these proceedings which can only be resolved after hearing oral evidence. In view of the position taken by V, I directed that this hearing should remain as the substantive hearing of P’s Summons. In this hearing, P is represented by Mr Leonard Chow of counsel, and V is represented by Mr Joshua Choy of counsel.

Essential facts

5.  The SPA has the effect of superseding the PSPA.[1]

6.  As per the SPA, the sale and purchase should be completed on or before 5 pm on 31 July 2020 (“the Completion Date”).[2] Further, the Property was subject to a legal charge (“the OCBC Mortgage”) in favour of OCBC Wing Hang Credit Limited (“OCBC”) dated 6 June 2017.[3] Time shall in every respect be of essence of the SPA.[4]

7.  V shall at her own expense prove, give and show a good title to the Property in accordance with ss.13 and 13A of the Conveyancing and Property Ordinance (“CPO”).[5] If P has raised a requisition which is substantial, V would have the duty to answer the requisition by disclosing the material facts known to her reasonably before completion. The point has been made clear by the Court of Appeal in Active Keen Industries Limited v Fok Chi Keung[6], in which Litton JA (as he then was) said:-

“Obviously, if a purchaser raises a substantial objection as to the vendor’s title and there are facts within the vendor’s knowledge which, if revealed, might meet the objection, and the vendor chooses to withhold that from the purchaser, the vendor clearly cannot, on the day fixed for completion, turn round and say to the purchaser: “Now I will both show you a good title and make you good title; you pay the balance of the purchase price today or I will rescind.” The purchaser must be given reasonable time to consider the title of the vendor and his own position; the implied obligation of showing a good title would not have been discharged by disclosure on the day fixed for completion.

…………

…… But the vendor’s solicitor must act with total candour, so that the purchaser can be reasonably certain that there are no facts and material relevant to the requisition known to the vendor which have not been disclosed.”

8.  Sometimes, a vendor having a good title may have failed to show a good title. Active Keen is a classic example on the point.

9.  In the sale and purchase transaction, V is represented by the law firm Lee & Associates Law Office (“LALO”), and P is represented by the law firm Messrs Lau, Chan & Ko (“LCK”).

10.  On 15 July 2020, LALO sent some title deeds and documents to LCK for perusal. On 16 July 2020, LCK raised some requisitions. Thereafter, there have been correspondence passing between the two law firms.

11.  On 16 July 2020, LCK wrote to LALO to request for further documents to complete the chain of title. One of the documents requested by LCK is a release dated 5 January 2018 with the memorial no 18020101180012 (“the Release”). On 29 July 2020, LALO provided a certified copy of the Release to LCK.

12.  On 29 July 2020, LCK wrote to LALO and raised, inter alia, a requisition concerning the Release (“the due execution issue”):-

“We note that [the Release] was executed by the Lender (“the Company”) by one of its authorized persons. Kindly let us have documentary evidence of the Lender …… for our perusal to prove due execution. Copy of the same is enclosed for your reference. ……”

13.  On 30 July 2020, LCK wrote to LALO and said:-

“Please be informed that pursuant to Clause 10 of [the SPA] and in view of the decision of the case Yeung Sau Chuen Sammy v. Chung Chun Ting & Another [MP No.4080 of 1992], we would have seven working days to consider the outstanding documents sent by you. In order to allow us sufficient time to peruse the title deeds and all the outstanding documents to be sent by you, we suggest that the completion date be postponed to within 7 working days after good title of [the Property] has been proved and shown to our[7] satisfactorily.”

14.  On 31 July 2020 at about 11:53 am, LALO wrote to LCK and said:-

“We refer to [LCK’s letter dated 30 July 2020] in which stating that in order to allow you sufficient time to peruse the title deeds and all the outstanding documents to be sent by us, you propose to postpone the Completion to within 7 working days after good title be proved and our side agrees to the postponement to 10 August 2020 upon subsequent telephone with your firm.

However, we are informed by your firm this morning that your client changes stance to proceed to Completion today. Our client hereby reserves all her rights for the same.

Without waiving our client’s rights aforesaid, we refer to [LCK’s letter dated 29 July 2020] and answer your requisitions as follows:-

1) …… For your requisition on [the Release], please see S.23 and S.23A of the Conveyancing and Property Ordinance.”

If your client insists any requisitions, please advise your client to remain his stance to postpone the Completion to within 7 working days after good title be proved as proposed in [LCK’s letter dated 30 July 2020] or to 10 August 2020 as discussed in our telephone conversation.”

15.  On the same date, at about 4:43 pm, LCK replied and said, inter alia, that they did not accept the answer given by LALO on the due execution issue (“LCK’s 1^st Letter dated 31 July 2020”). At 5:08 pm, LCK wrote to LALO (“LCK’s 2^nd Letter dated 31 July 2020”) and said that V had failed to show, prove and give a good title to the Property and had repudiated the SPA. LCK said that P accepted the repudiation and rescinded the SPA, and demanded the refund of the deposits paid under the SPA, being HK$798,000.

16.  There is no dispute that LCK’s 2^nd Letter dated 31 July 2020 was sent out and received by LALO at a time after 5 pm on 31 July 2020.

17.  On 3 August 2020, LALO wrote back to LCK and said that all the requisitions had been answered satisfactorily and V had always been ready and willing to complete on 31 July 2020, and it was P’s fault causing the non-completion. V therefore gave P “FIVE working days’ notice of rescission” that V would forfeit the deposits without prejudice to V’s right to claim further losses and damages against P.

18.  It would not be necessary to set out the subsequent correspondence passing between the two law firms. Suffice to say that each law firm maintained their own position.

19.  On 19 August 2020, P commenced these proceedings. In the statement of claim, P pleaded that on or around 25 August 2020, P was told by an estate agent of Midland Realty that a “Notice to Occupier to Quit” in relation to an action commenced by OCBC against V (DCMP 3228/2019, “the OCBC action”) was found being fixed on the front door of the Property. P said that V had concealed the OCBC action and did not reveal the fact to P before the parties entering into the PSPA.

20.  In her affirmation filed on 9 November 2021 (“V’s affirmation”), V said that she had disclosed the OCBC action to the estate agent in May 2020, and P had knowledge of the OCBC action before entering into the PSPA. V also said that the OCBC action was the enforcement action taken by OCBC to enforce the OCBC Mortgage. At [14] of the affirmation, V said:-

“…… Had [P] duly proceeded with completion, the sale proceedings would first be applied by LALO to pay to OCBC, and the Property would not have been taken as OCBC has agreed to withhold the recovery action of the Property until completion date as scheduled on 31 July 2020.”

21.  One of the affirmations filed by V in opposition to P’s Summons is the affirmation made by Mr Lee Ka Kui (“Mr Lee”) on 8 November 2021 (“Lee’s Affirmation”). Mr Lee is the sole proprietor of LALO. In that affirmation, Mr Lee said:-

“19. Since the completion date was scheduled on 31 July 2020, LCK on 30 July 2021 requested the completion to be postponed to within 7 working days after good title of the Property has been proved and shown to their satisfaction. Through a telephone conversation between LALO and LCK in which LCK made some conditions for postponement, the parties came to an agreement that the completion be postponed to 10 August 2020.”

Overview

22.  With no disrespect to counsel, although counsel have put forward submissions on various matters, I am of the view that this is an open-and-shut case. In my judgment, V has failed to provide a satisfactory answer on the due execution issue before completion. For this reason, P is entitled to have summary judgment against V.

23.  Mr Choy submits that there are two factual matters which should be investigated by hearing oral evidence, namely:-

(1) whether the Completion Date has been postponed by an agreement between the parties; and

(2) whether V has concealed the OCBC action as claimed by P.

24.  For the reasons set out below, it is unarguable that the Completion Date has been postponed by a binding agreement between the parties. Further, matters concerning the OCBC action are not relevant to the due execution issue, and would not affect the analysis of the due execution issue in any way. There is no reason to refuse summary judgment because of the factual disputes alleged by V.

25.  Since P is entitled to have summary judgment, there would be no need to consider the Order 14A application made by P.

No postponement of the Completion Date

26.  It is trite that in an application for summary judgment, it is for the defendant to condescend to particulars.[8] In my view, D has failed to show an arguable defence that there is a binding agreement between the parties having the effect of postponing the completion to 10 August 2020.

27.  As recorded in the correspondence, on 30 July 2020, LCK proposed that “the completion date be postponed to within 7 working days after good title of [the Property] has been proved and shown to our satisfactorily” (“LCK’s offer”). With respect, LCK’s offer is ambiguous. It is not clear whether LCK is suggesting to postpone the Completion Date by 7 working days. If that is the case, LCK is suggesting that LALO may have further time to show a good title.

28.  However, it is not V’s case that LCK’s offer has been accepted. V’s case is that in a telephone conversation between LCK’s representative and LALO’s representative on 31 July 2020, the parties have agreed to postpone the Completion Date to 10 August 2020.[9] In [19] of Lee’s affirmation, Mr Lee said “…… Through a telephone conversation between LALO and LCK in which LCK made some conditions for postponement, the parties came to an agreement that the completion be postponed to 10 August 2020.” (Emphasis added)

29.  According to V’s case, LCK has not unconditionally agreed to postpone the Completion Date to 10 August 2020. LCK’s agreement to the postponement is subject to some conditions. Obviously, since the agreement is subject to conditions, the agreement would have effect only if the conditions are fulfilled. However, there is no evidence from V explaining what are the conditions, and whether the conditions have been fulfilled. In the absence of all these, V has failed to show an arguable defence that there is a binding agreement between the parties postponing the completion to 10 August 2020.

30.  Further, there is an inexplicable point in V’s case. In V’s affirmation, V said at [14] that “OCBC has agreed to withhold the recovery action of the Property until completion date as scheduled on 31 July 2020”, and hence had P completed the sale and purchase as scheduled, the Property would not be taken by OCBC. According to the evidence produced by V, OCBC has only agreed to withhold enforcement action until 31 July 2020. That being the case, V must obtain fund to repay the debt owed to OCBC no later than 31 July 2020. V would have no room to wait for a few more days. In these circumstances, to say that V would agree to postpone the completion to 10 August 2020 is something inexplicable.

31.  In my judgment, the completion date remains as the one stipulated in the SPA, i.e. on or before 5 pm on 31 July 2020.

Due execution of the Release

32.  On 27 August 2017, a second legal charge (“the Second Legal Charge”) and a rental assignment (“the Rental Assignment”) concerning the Property were executed by V in favour of the Company. The Release is a document purportedly executed by the Company on 5 January 2018 releasing the Second Legal Charge and the Rental Assignment. On its face, the Release was executed by a Mr Koo on behalf of the Company and sealed by the Company’s common seal. On the execution page of the Release, the following phrases appear, namely (a) “SEALED with the Common Seal of the Lender and SIGNED by [Mr Koo]”; and (b) “its authorised signatory(ies) duly authorised by the Board of Directors of the Lender whose signature is/are verified by ……” A solicitor’s signature also appears on the execution page. Mr Koo’s signature has been verified by the solicitor.

33.  The Release, if it has been duly executed by the Company, would have the effect of discharging the Second Legal Charge and the Rental Assignment. The discharge of the Second Legal Charge and the Rental Assignment is essential, for the Second Legal Charge and the Rental Assignment are encumbrances on the title and must be discharged before completion. Otherwise, V would not be able to give a good title to P upon completion.

34.  On the due execution issue, V has attempted to answer the requisition by LALO’s letter dated 31 July 2020, and the only answer provided is ss.23 and 23A of the CPO. In my judgment, this is not a satisfactory answer to the requisition.

35.  Firstly, s.23A of the CPO is clearly inapplicable, and Mr Choy has not relied upon that section in his submissions. S.23A of the CPO provides:-

“(1) A deed purporting to be—

(a) executed prior to the commencement[10] of section 9 of the Law Amendment and Reform (Miscellaneous Provisions) Ordinance 2003 (14 of 2003) by or on behalf of a corporation aggregate; and

(b) attested by a signatory or more than one signatory, where the signatory or each of the signatories, if more than one, is a person who could have been authorized under the articles of association or other instruments of the corporation,

shall, until the contrary is proved, be presumed for the purposes of proof of title to any land to have been duly executed by the purported signatory or signatories, as the case may be, with the authority conferred by the articles of association or other instruments of the corporation, whether or not the source of the authority or the means by which such authority was purportedly conferred is apparent from the deed.

(2) Where any deed is or has been produced by a vendor as proof of title to any land and that deed purports to have been executed by a corporation aggregate not less than 15 years before the contract of sale of that land, it shall for the purposes of any question as to the title to that land be conclusively presumed—

(a) as between the parties to that contract; and

(b) in favour of the purchaser under that contract as against any other person,

that the deed was validly executed.

(3) This section applies only to deeds produced as proof of title to any land pursuant to contracts for the sale of such land entered into on or after the commencement of section 9 of the Law Amendment and Reform (Miscellaneous Provisions) Ordinance 2003 (14 of 2003).” (Emphasis added)

36.  As said in the above, the Release was purportedly executed by the Company on 5 January 2018, i.e. not prior to the time specified in s.23A(1)(a) of the CPO. The parties entered into the SPA on 27 May 2020. Hence, the Release was purportedly executed by the Company at a time less than 15 years before the SPA. Obviously, both s.23A(1) and s.23A(2) of the CPO are not applicable.

37.  Secondly, in my view, s.23 of the CPO cannot be a satisfactory answer to the requisition. That section provides:-

“An instrument appearing to be duly executed shall be presumed, until the contrary is proved, to have been duly executed.”

38.  By merely looking at the Release itself, and without anything more, the presumption as to due execution in s.23 of the CPO would not be triggered. The same point in fact has been dealt with by Anthony Chan J in Liu Xiaodong v Chase Eagle Development Ltd[11]. In that case, the learned judge said:-

“28. Both SW Branch and Cinda SZ were Mainland entities. For a Hong Kong company, one can examine its Articles of Association to see the number of signatures required for the due execution of a deed by that company. There is no evidence on the constitution of those Mainland entities. Hence, [counsel for the defendants] submitted that the single signature found on the 1^st and 2^nd Transfers does not satisfy section 20(1) of the CPO and a written authorisation is required to show that the person signing the document was duly authorised to do so alone. There is no such authorisation he says.

29. In answer, [counsel for the plaintiff] relies on section 23 of CPO and submitted that “if the execution was done by a person described on the face of the instrument by the magic phrase ‘duly authorized by the Board of Directors’, section 23 applies”. In dealing with a foreign corporation, “the equivalent magic phrase is ‘duly authorised by the governing body’”. ……

30. In respect of [counsel’s contention], he relies on two authorities – Grand Trade Development Ltd v Bonance International Ltd, CA, [2001] 2 HKLRD 759 and Tread East Ltd v Hillier Development Ltd, unrep, HCA 907/91. I am unable to see that any one of these authorities supports [counsel’s] “magic phrase” argument.

31. In Grand Trade Development Ltd, the articles in question provided that every document required to be sealed with the company seal was deemed to be properly executed if sealed with the company seal and signed by the Chairman of the Board, or such other person(s) as the Board might authorise. The disputed document had been sealed with the company seal but had only been signed by one director and there was no Board resolution relating to the document. It was in that context that the Court of Appeal held that “Had the relevant signatory signed with the description such as ‘the person duly authorised by the Board of Directors’ rather than simply as one of its directors, s.23 would have been engaged”. In other words, a “magic phrase” in that case would have served to resolve the question whether the signatory was properly authorised to sign the document in place of the Chairman in accordance with the articles.

32. This authority does not suggest that the use of a “magic phrase” in conjunction with a single signature would generally constitute due execution. Tread East Ltd does not take the matter any further. In that case, the disputed document was signed by one director described as “one of [the vendor’s] Directors as directed and authorised by the Board of Directors to sign”. It was held that section 23 of CPO was applicable despite the requirement in the articles that all deeds and instruments requiring the seal of the vendor had to be “signed by two of its directors or in such manner as the directors shall from time to time by resolution determine”.

33. Properly understood, the ratio of these authorities is that where the articles allow the board of directors to appoint a person to sign an instrument on behalf of the company and it appears on the face of the instrument that the person who signed it had been so appointed, then anyone relying on the document is entitled to invoke the presumption of due execution provided under section 23 of CPO.

34. In the premises, I do not accept that without more a single signature together with a “magic phrase” would engage the presumption of due execution.

35. In my view, the legal position is as follows. Where the execution of a deed was attested by two directors or one director and an officer of the company, a person relying on the instrument may pray in aid the deeming provisions under section 20(1) of CPO. However, where the deed was attested by a single director or other person authorised by the company, it is necessary to examine the articles (certainly in respect of a Hong Kong company) to confirm due compliance therewith – see Hong Kong Conveyancing and Property Law Handbook by Nield and Da Roza, 3rd edn, p 163 and Hong Kong Conveyancing Law and Practice, vol 1(A), p VI 63P.” (Emphasis added)

39.  Before the Completion Date, V has not told P whether the Company is a company incorporated in Hong Kong or a foreign company. V has not provided the articles of the Company to P to show that a deed can be duly executed by the Company by the attestation of one single authorised signatory. V has also not provided evidence to show that in accordance with the law of the place of incorporation of the Company (assuming that the Company is a foreign company), the Release can be duly executed by the Company in this way.

40.  Mr Choy relies upon Leung Kwai Lin v Wu Wing Kuen[12] and submits that the requisition has been satisfactorily answered. In Leung Kwai Lin, Sir Anthony Mason NPJ said at 67E-G:-

“…… [s.23 of the CPO] is beneficial and facilitating. So it should receive a liberal construction. Such a construction entails that a rebuttable presumption arises once evidence establishes that the instrument appears at any time on its face to have been duly executed. It is that fact and that fact alone which attracts the statutory presumption. Other circumstances may serve to reinforce the presumption or to rebut it. ……

On the other hand, the maxim Omnia praesumuntur rite esse acta is applied, as demonstrated by the authorities already cited, in the light of all the circumstances of the case. ……” (Emphasis added)

41.  Mr Choy submits that by the operation of s.23 of the CPO, or alternatively by the maxim omnia praesumantur rite et solemniter esse acta (“the maxim”), the Release is presumed to have been duly executed.

42.  With respect, I do not agree that there is sufficient evidence showing that the Release appears on its face to have been duly executed. By looking at the Release, one can only know that Mr Koo is an authorised signatory of the Company, duly authorised by the Board of Directors to sign the Release. However, one cannot know in accordance with the articles of the Company and/or the law of the place of incorporation of the Company, whether a deed could be executed by the Company by one single authorised signatory. In my judgment, there is insufficient evidence to trigger the presumption in s.23 of the CPO.

43.  On 20 April 2022, I issued a direction, drawing the parties’ attention to the Liu Xiaodong case. In the late afternoon, LALO[13] sent a copy of the Company’s Articles of Association (“the Articles”) to the court. Clause 20 of the Articles provides:

“Unless otherwise determined by the Directors, every document required to be sealed with the Seal of the Company shall be deemed to be properly executed if sealed with the Seal of the Company and signed by such person or persons as the Board of Directors shall from time to time appoint.”

44.  Had Clause 20 of the Articles been provided by LALO to LCK at a time reasonably before completion, I would have had held that the requisition on the due execution issue had been satisfactorily answered. However, the Articles have never been produced by LALO before completion, and were only supplied by LALO one day before this hearing. With respect, the production of the Articles long after P’s rescission of the SPA would not serve any meaningful purpose.

45.  Mr Choy submits that although LALO had not provided Clause 20 of the Articles to P before completion, V could still rely upon the same, for the Articles would be a public document and P could certainly find out the same by conducting a search in the Companies Registry. With respect, this submission cannot be accepted.

(1) Clause 7 of the SPA provides:

“(1) Such of the documents of title as are necessary to prove and give title of the Property the subject of this Agreement shall be delivered to the Purchaser. ……

(2) …… The Vendor shall at his own expense prove, give and show his title to the Property in accordance with [s.13 of the CPO] and shall at own expense make and furnish to the Purchaser such certified copies of any deeds or documents of title, wills and matters of public record as may be necessary to prove and give such title. ……”

(2) Clearly, it would be the contractual duty of V to furnish a certified copy of the Articles to P before completion for the purpose of showing a good title. V cannot say that P should himself go to the Companies Registry to find a copy of the Articles.

(3) Further, before completion, V had not told P whether the Company is a company incorporated in Hong Kong or a company incorporated in a foreign place. P would not know whether conducting a search at the Companies Registry would reveal anything concerning the Company.

46.  V has not tried to answer the requisition by the maxim before completion. Accordingly, whether the maxim can be a satisfactory answer to the requisition is neither here nor there. For the sake of completeness, even if V can rely upon the maxim, I am of the view that V cannot derive assistance from the same.

(1) By reason of the deficiencies identified in [42] above, one cannot say that in all the circumstances of this case, the maxim can have any application.

(2) There are further reasons militating against the operation of the maxim in this case.

(a) The Second Legal Charge and the Rental Assignment are securities provided by V to the Company to secure the loans advanced by the Company. Naturally, those loans would be loans provided to V or related to V. V should be in possession of documents showing the full repayment of those loans, if those loans have actually been fully repaid. However, V has not asserted that those loan had been fully repaid, let alone providing documents to show the full repayment.

(b) The Release is a recent document, which was only executed about 2 years and 4 months before the SPA. Not a very long period of time has elapsed. This is also an adverse factor in considering whether there would be a real risk that the Company or someone else (for example, the Company’s liquidators) may come forward to challenge the execution of the Release at a time in the near future.

(3) Taking all the aforesaid into account, V cannot derive any assistance from the maxim in any event.

47.  I hold that V has failed to answer the requisition on the due execution issue before completion and has therefore committed a repudiatory breach of the SPA. P has accepted the repudiation by LCK’s 2^nd Letter dated 31 July 2020 and has thereby rescinded the SPA. P is entitled to have summary judgment against V.

Reliefs

48.  Judgment on liability be entered in favour of P and against V. I make the following order:-

(1) There be a declaration that V has failed to show a good title to the Property in accordance with the SPA, and P has duly accepted V’s repudiation and terminated the SPA on 31 July 2020.

(2) V do forthwith return all the deposits paid under the SPA together with all the interest accrued thereon to P.

(3) There be liberty to apply.

49.  P also seeks damages. I direct that damages are to be assessed.

50.  P further seeks a declaration of an equitable lien on the Property. Notwithstanding Mr Chow’s submissions, I am of the view that in the circumstances of this case, it would not be appropriate to make this declaration.

(1) On 25 February 2021, OCBC has signed an agreement to sell the Property to a new owner (“the New Owner”). On 26 April 2021, OCBC executed an assignment to assign the Property to the New Owner. Based upon the evidence before me, it can be concluded that OCBC has exercised the power of sale in the OCBC Mortgage and assigned the Property to the New Owner.

(2) P’s claim for a lien on the Property would affect the interest of the New Owner. Since the New Owner is not a party in these proceedings, no order affecting the New Owner should be made.

(3) It cannot be disputed that the OCBC Mortgage has priority to the SPA. However, Mr Chow submits that the New Owner’s interest in the Property would still be subject to P’s lien in these circumstances. With respect, I doubt the correctness of this submission. It would not be necessary for me to make a definite ruling on the issue in this judgment. If P pursues his claim for a lien on the Property, a proper application against the New Owner should be taken out. The court would only make a ruling on the application after hearing both P and the New Owner.

51.  I dismiss V’s counterclaim.

Costs

52.  After announcing that I would allow P’s application for summary judgment, I have invited the parties to make submissions on costs.

53.  Mr Choy does not object that costs should follow the event. However, Mr Choy submits that in P’s written submissions, P has spent much time to focus on other matters and not the due execution issue. For this reason, P’s costs should be discounted. I do not accept this submission. I find that my ruling on the alleged postponement of the Completion Date and the due execution issue would be sufficient for the purpose of disposing this case, and hence there would be no need to go into the other matters. P cannot be criticized for making submissions on other matters in the written submissions. There is no reason to depart from the general rule that costs should follow the event.

54.  Since I have allowed P’s application for summary judgment, the costs awarded to P would be costs of these proceedings up to the date of this judgment, including costs of P’s Summons and all costs reserved. Prior to P’s Summons, there are some other interlocutory applications in these proceedings. Costs of those interlocutory applications are either reserved or in the cause. Those interlocutory applications are not heard by me. In these circumstances, in my view, it would be more desirable to have taxation rather than summary assessment.

55.  At the end of the hearing, Mr Chow has made two applications:

(1) an application for a wasted costs order against Mr Lee personally to require Mr Lee to bear some costs incurred in these proceedings; and

(2) an application against V for indemnity costs.

56.  As to the application for a waster costs order against Mr Lee personally, I decline to deal with that application in this hearing. I am of the view that P should take out a proper application against Mr Lee. Thereafter, Mr Lee should be given an opportunity to adduce evidence and to offer explanations. Mr Lee would also be entitled to retain a solicitor and/or a counsel to represent him in that application. The court would only determine the matter after considering all the evidence and submissions, including the evidence filed and the submissions made by Mr Lee or on his behalf.

57.  As to the application against V for indemnity costs, Mr Chow has referred me to some correspondence passing between Messrs. Cheung & Choy (“CC”), the solicitors representing P in these proceedings, and LALO. Mr Chow submits that:

(1) By a letter marked “without prejudice save as to costs” dated 12 October 2020 (“the Offer Letter”), P has made an offer (“the Offer”) to V to settle these proceedings in accordance with the terms set out in that letter. The Offer has not been accepted by V. The terms of the judgment now obtained by P are better than the terms of the Offer. Accordingly, there should be indemnity costs against V.

(2) Further or alternatively, as shown in the correspondence, P has always intended to resolve the dispute amicably, but V has kept on unreasonably refusing to have a settlement with P.

58.  Regarding the Offer Letter, I am persuaded by Mr Choy that I should not take that into account by reason of the provision in Order 62, rule 5(1)(d).

(1) Order 62 rule 5(1)(d) provides:

“(1) The Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account –

……

(d) any written offer which is expressed to be “without prejudice save as to costs” and which relates to any issue in the proceedings, but the Court may not take the offer into account if, at the time it is made, the party making it could have protected his position as to costs by means of a sanctioned payment or a sanctioned offer under Order 22 ……” (Emphasis added)

(2) Mr Chow relies upon Hong Kong Civil Procedure 2022, Volume 1, §22/1/2 and submits that this action is not an action for debt or damages, and hence Order 22 would have no application. Hence, the court may still consider the Offer Letter, and the prohibition in Order 62 rule 5(1)(d) is irrelevant.

(3) Hong Kong Civil Procedure 2022, Volume 1, §22/1/2 reads as follows:

“This Order applies only to actions for “debt or damages”, and not to actions for account …… but it applies to actions where debt or damages are sought together with other relief ……” (Emphasis added)

(4) The reliefs sought by P are set out in the statement of claim, which include damages. Accordingly, there is no reason to say that Order 22 is inapplicable.

(5) In my view, the objection raised by Mr Choy is valid and correct. I would not take the Offer into account in considering costs.

59.  As to the conduct of V, I do not see any sufficient reason in support of indemnity costs. Each side could not persuade the other side in the correspondence, and hence the dispute has to be resolved in the court. Ultimately, P has succeeded in his claim. However, I am of the view that there is no special feature or reason warranting the award of indemnity costs in these proceedings.

60.  P has failed in his application for indemnity costs against V. Considerable time has been spent on this application in the hearing today. In my view, to reflect P’s failure in this application, P’s entitlement to costs in these proceedings should be reduced by HK$7,000.

61.  I order that subject to the reduction set out in the paragraph above, costs of these proceedings up to the date of this judgment, including costs of P’s Summons and all costs reserved, be paid by V to P, with a certificate for counsel. Those costs are to be taxed if not agreed.

Deposition

62.  P’s Summons is disposed of in the way set out in the above.

63.  I thank counsel for the assistance rendered to the court.