FU’S COACH LTD v. GOLDEN CHAMPION TRAVEL CO LTD t/a GOLDEN CHAMPION BUS INVESTMENT CO

HCA 608/2020

[2021] HKCFI 533

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 608 OF 2020

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D E C I S I O N

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Introduction

1.  This is the 1^st Defendant (“D1”)’s appeal against the summary judgment granted by Master Sara Tong whereby D1 was ordered to pay the Plaintiff (“P”) the sum of $2,760,000 with interest at 1% above the HSBC prime rate from 31 December 2019 to the date of judgment and thereafter at judgment rate until payment with costs.

2.  In short, the sum of $2,760,000 represents the unpaid balance of the purchase price of a public bus sold by P to D1.  D1 argues mainly that P is not entitled to payment because the parties have entered into a settlement agreement.

P’s claim

3.  P’s claim may be summarized as follows:

(a)  P was the owner of a single-deck, white Toyota 27-seater public bus with model number XZB59RZEMQY5 and chassis number JTGEP538506000088 bearing registration number PG8019 (“the Public Bus”) and a Passenger Service Licence (type: A-08, no. PSL00015501A) in respect of the Public Bus (“the PS Licence”).

(b)  On 8 May 2019, P and D1 entered into a written sale and purchase agreement whereby P agreed to sell the Public Bus with the PS Licence to D1 at $3,260,000 to be paid as follows: $500,000 as deposit (“the Deposit”), and the balance of $2,760,000 to be paid on the completion date which should be no later than the end of October 2019 (“the Agreement”).

(c)  On the same day, D1 paid the Deposit.

(d)  By a written supplemental agreement dated 2 July 2019, P and D1 agreed that the Public Bus and the PS Licence should be assigned to D2.

(e)  On about 30 July 2019, P delivered possession of the Public Bus to D1, its agents or servants.

(f)  P and D1 originally intended to complete the transaction on 2 September 2019.  On that day, P handed over a Notice of Transfer of Ownership signed by it to D1; in return, D1 gave a cheque of $2,760,000 (“the Cheque”) to P as the balance of the purchase price.  However, D1 asked P not to present the Cheque as it needed time to arrange for funds.

(g)  On about 3 September 2019, P transferred the ownership of the Public Bus and the PS Licence to D2.

(h)  By another supplemental agreement dated 23 September 2019, P and D1 agreed to postpone the completion date to 10 October 2019 but D1 asked P to withhold presentation of the Cheque again on 10 October 2019.

(i)  By yet another supplemental agreement dated 14 October 2019, P and D1 agreed to postpone the completion date further to 25 October 2019, and that if completion were to be further postponed, D1 shall pay 1% of $2,760,000 ie $27,600 per month to P.  However, D1 asked P again to withhold presentation of the Cheque on 25 October 2019.

(j)  On about 23 December 2019, the Cheque was dishonoured upon presentation.  At the same time, D1 informed P that it did not intend to pay the balance of the purchase price.

(k)  On 31 December 2019, P, through solicitors, accepted D1’s repudiation of the Agreement.  Hence, P was entitled to recover possession of the Public Bus and have the PS Licence re-registered in its name; and if rescission became impossible, P should be entitled to damages.

(l)  In about December 2019, P and D1 compromised P’s potential claim arising out of it being deprived of the use of the Public Bus pending the return thereof by agreeing that D1 shall pay $20,000 per month to P until P had recovered possession of the Public Bus and the PS Licence being re-registered in its name (“the Compensation Agreement”).

(m)  On 9 April 2020, D1 made part payment representing the agreed compensation up to 28 February 2020.  But compensation from 1 March 2020 up to 12 May 2020 when the writ was issued in the total sum of $48,000 has remained unpaid.

(n)  Despite repeated demands, the Public Bus has not been returned to P, and the PS Licence has not be re-registered in P’s name.

4.  P claims against both D1 and the 2^nd Defendant (“D2”) (a) a declaration that the Agreement was rightly rescinded on 31 December 2019; and (b) steps be taken by Ds to effect the rescission including but not limited to delivery of possession of the Public Bus to P, and applying or executing all necessary documents for registration to effect the transfer of the Public Bus and the PS Licence back to P.  As against D1, P also claims the sum of $48,000; a declaration that the Deposit was rightly forfeited; as well as damages, interests and costs.

D1’s defence

5.  D1’s Defence and Counterclaim may be summarized as follows:

(a)  On or about 2 September 2019, the physical possession and ownership of the Public bus and the PS Licence were transferred to D2.

(b)  While it is admitted that the Cheque was dishonoured, D1 denies that it had informed P that it did not intend to pay the balance of the purchase price.

(c)  In about mid-December 2019, Ms Fu Hin Kam (“Fu”) on behalf of P and Chan Tung Yeung Andrew (“Chan”) of D1 orally agreed by telephone the following settlement agreement (“the Settlement Agreement”):

(i)  D1 would try to procure D2 to re-assign the Public Bus and the PS Licence to P;

(ii)  If the intended reassignment was unsuccessful, D1 shall arrange to transfer to P a public bus of the same specifications as and in a condition at least equivalent to the Public Bus, and a passenger service licence in the same category as the PS Licence at nil consideration;

(iii)  In the meantime, D1 shall pay to P $20,000 a month as rental for the use and enjoyment of a public bus with a passenger service licence;

(iv)  Upon completion of either a successful reassignment or substitute assignment, P shall be entitled to forfeit the Deposit;

(v)  P shall waive all its rights under the Agreement (as varied by the supplemental agreements) and the Cheque.

(d)  Relying on the same facts, D1 contends that there is an estoppel by representation.  Relying on P’s representation, D1 paid P monthly rental up to February 2020 by bank deposit on 9 April 2020; and since around March 2020, as the intended reassignment could not be done, Chan made proposals to P regarding the details of the substitute assignment which had been rejected by P.

(e)  D1 also claims that P breached the Settlement Agreement by stopping the negotiations with D1 in relation to the substitute assignment in about April 2020, and commencing this action on 12 May 2020.

(f)  D1 accepted P’s repudiation of the Settlement Agreement.

(g)  D1 counterclaims for injunctions to restrain P from suing on the Agreement (including by this action) and damages.

6.  Although P has discontinued its claim against D2, I shall summarise D2’s defence as follows:

(a)  D2 denies that it was in possession of the Public Bus.  It had only bought a public bus bearing a registration number JN6139 (which has now become VR708) pursuant to a written agreement dated 30 May 2019 from D1.

(b)  Upon paying the purchase price, on about 2 October 2019, D1 delivered possession of JN6139 to D2.

The summary judgment application

7.  On 1 September 2020, P took out a summary judgment application.  The application was supported by an affirmation made by Fu, a director of P, on the same day.  Apart from verifying the facts pleaded in the Statement of Claim, Fu, noting that D2 denied that it had ever obtained possession of the Public Bus, pointed out that a vehicle search regarding PG8019 showed that there was no longer such registration.  Therefore, it was unlikely that P could recover the Public Bus and the PS Licence.  In the circumstances, to simplify P’s claim, P elected to seek summary judgment for the sum of $2,760,000 equivalent to the unpaid balance of the purchase price under the Agreement.

8.  Chan made an affirmation in opposition on 23 October 2020. He was the sole director of D1 but had resigned on 12 June 2020.  He referred to the contemporaneous records, in particular WhatsApp messages, between Ms Josephine Law (“Law”), a clerk of D1; Ms Serena Fu (“Serena”), P’s representative; Fu and him at the material time.  Chan explained that, in fact, D2 had on 3 September 2019 became the owner of the Public Bus and the PS Licence.  However, for reasons that are irrelevant for the present purpose, the Public Bus was then transferred to one Bright Way Investment Co Ltd on 2 October 2019, and then Chun Wo Bus Services Ltd on 27 November 2019 with a new registration number HU8845. The registration mark PG8019 had been returned to the Transport Department. He admitted that D1 was in financial difficulties and was unable to honour the Cheque on time.  He described the terms of the Settlement Agreement as follows:

(a)  D1 would try to procure the assignment of a passenger service licence to P and procure Chun Wo for reassignment of the Public Bus back to P;

(b)  In case the reassignment could not be procured, D1 would arrange to transfer to P a public bus of the same specifications and in a condition at least equivalent to the Public bus and a passenger service licence (type A-08) at nil consideration;

(c)  In the meantime, D1 shall pay P $20,000 a month as rental for the use and enjoyment of a public bus with a passenger service licence;

(d)  Upon completion of the intended reassignment or substitute assignment, P shall be entitled to forfeit the Deposit;

(e)  P shall waive all its rights under the Agreement (as varied by the supplemental agreements) and the Cheque.

He further stated that D1 paid to P a sum of $138,968.13 by bank deposit on 9 April 2020, which represented the monthly rental between August 2019 and February 2020 with interest.  He said that Chun Wo refused to return the Public Bus.  He then made various proposals to carry out the substitute assignment on a without prejudice basis with P’s solicitors.  However, P rejected all those proposals. There were further negotiations even after the issuance of the writ in which D1 proposed to transfer a public bus bearing registration number TD2306 with a passenger service licence to P, which again was rejected by P.

9.  On 11 December 2020, Master Sara Tong granted summary judgment.

10.  On 28 December 2020, D1 filed a notice of appeal, which is the matter now before me.

11.  It is trite that an appeal from a master to judge in chambers is a hearing de novo.  The legal principles applicable to summary judgment applications are well established as set out in the authorities cited by the parties.  The burden is on the defendant to show a triable issue.  However, if the court has doubts or suspicion as to the plaintiff’s case, the correct course is to give unconditional leave to defend.  In relation to factual assertions made by a defendant, the test is whether they are believable.  The court should not conduct a mini-trial on affidavit evidence.  That said, the court is not obliged to suspend its critical faculties and assume that the defendant’s evidence is true and accurate.  The court is entitled to consider inherent probability, contemporaneous documents and any other relevant circumstances in deciding whether the defendant’s assertions are believable.

Analysis

12.  The key issue is whether D1’s assertion that the parties have entered into the Settlement Agreement is believable so as to raise a triable issue or an arguable defence.  D1’s defence based on estoppel by representation does not, in substance, add anything as it is based on the same factual allegations.

13.  In general, whether the parties intended to enter into a concluded contract is a matter to be looked at objectively (World Food Fair Ltd v Hong Kong Island Development Ltd (2006) 9 HKCFAR 735 at §35; Lucy Michaels v Harbour Grand Hong Kong [2020] HKCA 705 at §65). Having considered all relevant evidence and circumstances objectively, for the following reasons, I have come to the conclusion that D1’s assertion that the parties have reached the Settlement Agreement is unbelievable.

14.  To begin with, it is surprising that there is no documentary record whatsoever (including WhatsApp messages) to support the existence of the Settlement Agreement.  The parties had signed a number of written agreements.  In addition, according to the WhatsApp messages, in December 2019 when it was clear that D1 was unable to pay the balance of the purchase price, a draft written cancellation agreement had been prepared by D1.  It is clear that the parties had the practice of reducing their agreements into writing.  The importance of the Settlement Agreement, if true, was obvious.  It is incredible that the parties would reach a concluded settlement agreement as alleged by D1 without any written record at all.

15.  The WhatsApp messages exchanged between the parties in December 2019 are telling:

(a)  On or about 6 December 2019, D1 provided answers to a list of questions raised by P relating to not just the Public Bus but also two other buses.  Question no. 6 was when D1 would pay the balance of the price for the Public Bus.  D1 answered that D1 would cancel the transaction, and would return the Public Bus and the PS Licence.  It also stated in the answer to question no. 7 that it would prepare a draft agreement.

(b)  The same answers were re-sent on 11 December 2019.

(c)  On 13 December 2019, P asked whether the ownership of the Public Bus had been transferred; if not, D1 should return all transfer documents signed by P.  D1 replied that ownership of the Public Bus had already been transferred.

(d)  On 14 December 2019, P asked D1 to confirm whether D1 intended to return both the Public Bus and the PS Licence to P, and stated that P demanded the return of both at the same time.

(e)  On the next day ie 15 December 2019, P chased for a reply.

(f)  On 16 December 2019, P stated that D1 should pay $34,382 (being the monthly rentals of $40,000 for October and November 2019 minus agreed repair costs of $5,618) with interest for late payment of the rental.  In view of the seriousness of the matter, P also chased for a reply within that day as to whether D1 would transfer both the Public Bus and the PS Licence back to P.  In the absence of any reply, P then stressed that D1 must return the Public Bus and the PS Licence together to P.  P threatened to call the police and commence civil proceedings if D1 evaded the issue.  D1 said it needed time to seek legal advice; P replied that it was unnecessary to consult lawyers to return the Public Bus and the PS Licence to P.

(g)  On 17 December 2019, D1 sent a draft cancellation agreement to P.

(h)  On 19 December 2019 (which was the date when Chan joined the chat group), D1 asked for more time to consider the matter.

(i)  On 20 December 2019, D1 sent a revised draft cancellation agreement to P, which provided that D1 would return to P unconditionally the Public Bus and the PS Licence; the transfer documents would be signed before 20 January 2020; the Deposit could be forfeited; and that D1 shall pay $20,000 a month pending the transfer back.

(j)  On 23 December 2019, there were arguments on how much D1 should pay P.  In particular, P insisted that D1 should pay $34,382 plus interest for late payment of the rental.  Apparently, a revised draft cancellation agreement was again sent by D1 to P.

16.  Pausing here, it clear that, up to the end of December 2019, the WhatsApp messages do not support that any settlement agreement as alleged by D1 had been reached.  Although a draft cancellation agreement had been circulated by D1, none had been signed.

17.  P then decided to instruct solicitors to help.  Its solicitors issued a demand letter on 31 December 2019.  The letter referred to two other vehicles other than the Public Bus.  It stated that, pending completion of the Agreement, on 31 July 2019, D1’s related company, Grand Tour Bus Services Ltd, agreed to rent the Public Bus at $20,000 a month.  §8 of the letter put on record that, notwithstanding that the ownership of the Public Bus had been transferred to a third party on 3 September 2019, D1 had failed to pay the balance of the purchase price.  §9 read:

“You then informed our client of your intention to repudiate the sale and purchase agreement for PG8019. Our client accepted your wrongful repudiation on the condition that your deposit of $500,000 would be forfeited. It was agreed that rental at $20,000/month would be payable until the ownership of PG8019 is successfully transferred back to our client.”

§10 then stated that D1 failed to pay the rental since October 2019, and as at 31 December 2019, D1 owed to P a total sum of $54,507. Hence, P demanded D1, by 3pm on 7 January 2020, to (a) pay $54,507; and (b) return the physical possession of the Public bus in good repair condition to P.  D1 was also demanded to procure the transfer of the ownership of the Public Bus from the third party to P no later than 20 January 2020.

18.  On 6 January 2020, P WhatsApp a copy of its solicitors’ letter to D1 and asked D1 to reply by the next day ie 7 January 2020 which was the deadline stated in the solicitors’ letter.  Chan acknowledged receipt of the letter.  On 8 January 2020, P put on record that D1 did not reply by the deadline on 7 January 2020, and stated the legal action would be taken without further notice if there was still no reply by 3pm on 10 January 2020. However, D1 had never replied to P’s solicitors’ letter.

19.  The absence of any reply from D1 to P’s solicitors’ letter is crucial.  First, it is incredible that, if the parties had in fact entered into the Settlement Agreement, D1 would fail to refer to it to rebut P’s demands. Second, D1 had not denied P’s claim that it was agreed that a monthly rental of $20,000 would be payable until the ownership of the Public Bus was successfully transferred back to P. This is the Compensation Agreement pleaded by P.

20.  After the commencement of this action by P on 12 May 2020, on 31 July 2020, D1’s solicitors issued an open letter marked “Subject to contract”.  They mentioned the Settlement Agreement and stated that it was:

“reached by our respective clients in December 2019 whereby it was agreed that our client will cause to be transferred to your client a public bus of similar condition as the Public Bus PG8019 as well as a Passenger Service License (Type a-08).”

They stated further that they had been instructed by D1 to offer a public bus bearing registration number TD2306 with a passenger service licence; and also payment of $100,000 as the agreed rental compensation for the loss of use of the Public bus between 1 March 2020 and 31 July 2000 within 7 days of P’s agreement to take TD2306. If P accepted the offer, D1 also further offered to pay $20,000 a month from 1 August 2000 till completion of the transfer or 31 December 2020 (whichever was the earlier), and allow P to forfeit the Deposit.

21.  This is the first time the Settlement Agreement was ever mentioned in any document by D1.  However, it was lacking in particulars ie without naming how, between whom and when it was reached.  The terms of the Settlement Agreement were also different from the version pleaded by D1 in its Defence or that stated in Chan’s affirmation; in particular, there was no condition that D1 should try to procure the return of the Public Bus and PS Licence to P first; and only upon failure to do so, another public bus with a passenger service licence would be transferred to P.  The terms were also uncertain in that it was unclear what was meant by a public bus of “similar condition” as the Public Bus.

22.  Up receiving this letter, P’s solicitors, by letter dated 31 July 2020, asked D1’s solicitors to disclose the Settlement Agreement by 11am on 3 August 2020.  In reply, on 5 August 2020, D1’s solicitors stated that they were instructed that, in or around mid-December 2019, Chan and Fu reached a verbal agreement in the following terms:

(a)  D1 would try to procure D2 for re-assignment of the Public Bus and the PS Licence to P.

(b)  If such procurement was unsuccessful, D1 shall arrange to transfer to P:

(i)  a public bus of the same specifications as and in a condition at least equivalent to the Public Bus; and

(ii)  a Passenger Service Licence (type A-08), which was of the same category of the PS Licence, at nil consideration.

(c)  Pending the procurement and/or arrangement of the transfer of another public bus with another passenger service licence, D1 shall pay $20,000 per month as rental for the use of the Public Bus with the PS Licence until the same were transferred to P.

(d)  Upon completion of the intended transfers, P shall be entitled to forfeit the Deposit.

(e)  P shall waive all other rights in relation to the Agreement and the Cheque.

23.  This letter was issued about 1.5 month before D1 filed its Defence and Counterclaim on 18 September 2020.  This was the first time D1 provided particulars of the Settlement Agreement in line with its pleaded case, which was about 9 months after December 2019 when the Settlement Agreement was allegedly concluded and almost 3 months after P commenced this action.

24.  On the same day ie 5 August 2020, P’s solicitors, on behalf of P, denied D1’s allegation that the parties had entered into the Settlement Agreement.

25.  In the meantime, on 17 July 2020, D2’s solicitors informed P’s solicitors that D2 had only purchased JN6139 from D1 and had only received that bus.  As a result, on 17 August 2020, P’s solicitors asked D1’s solicitors to give a definite answer by 19 August 2020 as to “whether the 1^st Defendant has ever passed physical possession of PG8019 to the 2^nd Defendant?  If so, when?”.  D1, however, did not reply.

26.  P’s solicitors’ letter dated 17 August 2020 is important.  First, D1’s pleaded case is that, under the Settlement Agreement, D1 would try to procure D2 to deliver back the Public bus to P.  However, D1 could not possibly agreed to procure D2 to transfer the Public Bus to P when it clearly knew that D2 was not in possession and not the owner thereof by December 2019.  Second, the version of the Settlement Agreement stated in Chan’s affirmation is that D1 would try to procure Chun Wo to reassign the Public bus to P, implying that P knew back in mid-December 2019 that the Public Bus had been transferred to Chun Wo.  This is plainly untrue because, if P knew this fact, P’s solicitors would not have asked.

27.  As just mentioned, the terms of the Settlement Agreement as pleaded in D1’s Defence are materially different from those stated in Chan’s affirmation. In particular, while it was pleaded in the Defence that D1 should procure D2 to return the Public Bus and the PS Licence to P, it was stated in Chan’s affirmation that D1 should procure Chun Wo to do so.  Chan acknowledged in §47 of his affirmation that there were discrepancies between D1’s pleaded case and his evidence.  He said that “upon checking the files and the records of [D1]”, he confirmed that his evidence was correct and he would apply to amend the Defence.  However, he had not explained what files or records he had checked which could explain the discrepancies. It must be borne in mind that his affirmation was made on 23 October 2020, which was only about 1 month after the Defence filed on 18 September 2020. Moreover, Chan signed a statement of truth to confirm that the facts stated in the Defence were true and correct.

28.  D1 contends that its subsequent conduct supports the existence of the Settlement Agreement, namely, Chan tried to procure the re-assignment of the Public Bus and the PS Licence to D1, Chan tried to conduct without prejudice negotiations with P’s solicitors in carrying out the substitute assignment, and D1 paid $138,968.13 to P on 9 April 2020.  First, the evidence does not support that D1 had in fact tried to return the Public Bus and the PS Licence to D1 (which appeared to be impossible). Second, the fact that Chan had tried to negotiate with P about transferring another vehicle with a passenger service licence is equally consistent with D1’s attempt to negotiate a settlement agreement with P (rather than performing a settlement agreement which has been concluded). Third, the payment of $138,968.13 is equally consistent with P’s case concerning the Compensation Agreement.  In principle, is it important to bear in mind that acts which are consistent with the existence of a concluded contract may not prove its existence, in particular, if they are equally consistent with other real possibilities in the relevant circumstances (World Food Fair Ltd v Hong Kong Island Development Ltd (2006) 9 HKCFAR 735 at §§27-28).

29.  D1’s main argument is that P’s case on the Compensation Agreement is weak; and, hence, P is not entitled to summary judgment.  In particular, D1 pointed out that the Compensation Agreement was not supported by any document, and there was no deadline for the return of the Public Bus and the PS Licence under the Compensation Agreement. However, there is no dispute that, all along, D1 paid a monthly rental of $20,000 for the use of the Public Bus and the PS Licence.  As evidenced by the contemporaneous records in December 2019, the parties proceeded on the common ground that a monthly sum of $20,000 remained payable by D1.  When it was obvious that D1 could not pay the balance of the purchase price, it was inherently probable that P would want to have the Public Bus and the PS Licence back with payment of a monthly rental at the same rate as before.  Most importantly, as mentioned, P’s solicitors referred to the Compensation Agreement expressly in their letter dated 31 December 2019 but D1 had not denied it at all.  Chan has not explained in his affirmation why D1 had not replied to this important demand letter.  In the circumstances, I do not see any doubt or suspicion in P’s case which justifies granting unconditional leave to defend to D1.

30.  As I am not satisfied that D1’s case on the Settlement Agreement is believable in fact for reasons considered together as mentioned above, it is unnecessary for me to consider P’s other arguments in detail.  I shall deal with them briefly for the sake of completeness.

31.  I am inclined to agree with P that, the Settlement Agreement as pleaded, is void for uncertainty.  First, in commercial reality, it is highly unlikely that the parties intended to conclude a settlement agreement as pleaded by D1 without fixing the two important dates for performance: the deadline by which D1 should try to procure the return of the Public Bus and the PS Licence; and, failing which, the deadline by which D1 should transfer another comparable public bus with the same type of licence to P.  Second, in respect of the intended substitute transfer, it is difficult, if not impossible, to ascertain what is meant by transferring a public bus “in a condition at least equivalent to the Public Bus”.  There are different criteria to determine the condition of a vehicle including but not limited to its age, its mileage, its appearance, its roadworthiness (which would in turn depend on many factors).  It is hard to see, without any clear provision, how a comparison can or ought to be made to determine whether D1 had performed its obligation under the alleged Settlement Agreement.

32.  I also tend to agree with P that D1’s present stance is rather startling.  On the one hand, D1 argues that, because of the Settlement Agreement, P can no longer sue on the Agreement as all potential causes of action arising out of the Agreement have been waived.  On the other hand, in §16 of the Defence, D1 pleaded that it accepted P’s repudiation of the Settlement Agreement and is therefore discharged from further performance of the Settlement Agreement.  If D1 is correct, it would mean that it does not need to pay the balance of the price; or return either the Public Bus with the PS Licence or, alternatively, another public bus with a passenger service licence to P; or pay any damages.  This cannot possibly be correct.  In law, it is incorrect to say that a settlement agreement will necessarily put an end to potential rights under the original contract.  While it would depend on the exact terms and effect of a particular settlement agreement, in Xpoly Recycling Ltd v Gold Leader Enterprise Ltd [2011] 4 HKLRD 230 at 234, §21, Lam J (as he then was) held that:

“A party faced with a breach of a settlement agreement has two options: (a) insisting on the performance of the settlement agreement (in which case he has to perform his part of the bargain); and (b) accepting the repudiation of the agreement and reverting back to the original remedies available to him as if there were no settlement, see Lam Fung Ying v Ho Tung Sing [1993] 2 HKC 436.”

In the circumstances, to be realistic, it was most improbable that P would agree to abandon its rights under the Agreement irrespective of whether D1 had performed its obligation under any settlement agreement.  And when D1 had evinced an intention not to perform the Settlement Agreement as alleged (if existed), P must be entitled to revert to its rights under the Agreement.

33.  At this juncture, I shall consider the implication of the Compensation Agreement on P’s claim. I have already explained above why D1’s denial of the Compensation Agreement does not give rise to any triable issue.  Under the Compensation Agreement, D1 was obliged to return the Public Bus with the PS Licence to P, and pay $20,000 monthly rental pending such return.  Had D1 performed the Compensation Agreement, P would not be entitled to claim the balance of the purchase price.  However, after P started this action and D2 stated its stance, it became clear that D1 would not be able to perform the Compensation Agreement because it cannot procure the return of the Public Bus and the PS Licence to P.  In the circumstances, I agree that, in law, P is entitled to elect to put an end to the Compensation Agreement (which is a form of compromise agreement), and revert to its rights under the Agreement.  Under the Agreement, having performed its obligation to transfer possession and ownership of the Public Bus together with the PS Licence to and as directed by D1, there is no doubt that P was and is entitled to the balance of the purchase price in the sum of $2,760,000.

34.  P only elected to claim the balance of the purchase price when it applied for summary judgment on 1 September 2020.  As a matter of fact, D1 has paid monthly rental up to February 2020. In the circumstances, I disagree that interest on the balance of the purchase price should start to accrue from 31 December 2019 as ordered by the Master.  I take the view that interest should only run from 1 September 2020.

Conclusion and order

35.  For the above reasons, the Master was correct in granting summary judgment.  I would affirm her order save that pre-judgment interest on the sum of $2,760,000 should run from 1 September 2020 only. Subject to this minor variation to the Master’s order, D1’s appeal is dismissed with costs to be taxed if not agreed.