CHUI CHI TANG v. EDICO DEVELOPMENT LTD AND ANOTHER

DCCJ3239/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3239 OF 2005

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D E C I S I O N

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1.  The defendant applies to strike out the plaintiff’s statement of claim by summons dated 9 September 2005.  This application is opposed by the plaintiff.

2.  The plaintiff’s claim in this action is for the refund of a deposit paid under an agreement between the plaintiff and the 1st defendant, dated 7 October 1991 (hereinafter referred to as “the said agreement”).   The said agreement was for the procuring of the transfer of ownership of a property at Tai Wan Village, Lot 771 in Demarcation District 216 in Sai Kung for the sum of $4.5 million (hereinafter referred to as “the said property”).

3.  $1 million was paid upon signing of the agreement.  It is stipulated in the said agreement that a building of three storeys would be constructed within 10 to 14 months of the said agreement and that the defendant would pay the sum of $500,000 within 30 days of completion of the building works. 

4.  The said agreement was witnessed by the 2nd defendant who signed as a “保證人” (translated as “guarantor”), but his guarantee was limited to guaranteeing the title of the said property and the terms of the said agreement (as stated under the name of the 2nd defendant in the said agreement).

5.  The three-storey building was not completed until some time in 1998.  It is the plaintiff’s case that during 1991 to 1998 he had various meetings with the 1st defendant, Madam Lai, or her daughter, at the Sai Kung Rural Committee Office to discuss the delay in completion, and Madam Lai had explained the reason to the plaintiff for the delay, which the plaintiff accepted.  The plaintiff further claims that he accepted that these meetings had effectively affirmed the said agreement and the parties’ intention to treat the said agreement as subsisting and valid.

6.  The defendant’s application is based on section 4(1) of the Limitation Ordinance, that the plaintiff’s action is time-barred as the plaintiff failed to institute any legal proceedings within the six-year time limit, and the plaintiff, therefore,  no longer has the right to enforce the said agreement because the plaintiff’s action was commenced on 8 July 2005 and there was, therefore, a lapse of 12 years between the date of the agreement and date of issue of the writ.

7.  The defendant denied there was any agreement to extend the said agreement.  The defendant also criticised the plaintiff’s allegation of meetings between 1991 and 1998 for lack of particulars.  It claimed that even if there were such meetings there were no agreements reached; and even if they were agreements for completion of construction and transfer of the said property to the plaintiff, such agreements are void for uncertainty. 

8.  As to whether there were any agreements to extend the said agreement of 7 October 1991, and what were the terms of the extension agreements, it is obvious that such matters have to be seen at a later stage for no particulars have been disclosed by the plaintiff. 

9.  It follows that whether these agreements are void for uncertainty remained to be seen after full particulars are disclosed.   It is certainly true the plaintiff failed to disclose any particulars in the plaintiff’s affirmation in opposition of the defendant’s application. 

10.  On 22 November 2000 the defendant wrote a letter to the plaintiff’s then solicitor, and in this “without prejudice and subject to contract” letter, it referred to the said agreement and claimed the said agreement to be no longer enforceable because of section 4(1) of Limitation Ordinance due to the lapse of time. 

11.  This letter, however, further offered to the plaintiff the completion of the transfer of the property by referring to the terms that effectively meant the continuation of the said agreement  with references of the terms which are similar to clauses 4, 6 and 7 of the said agreement.  On 19 December 2000, the plaintiff’s solicitor replied to the defendant denying the defendant’s allegation that the said agreement can no longer be enforced by legal means because of time bar, and the plaintiff suggested and asked for inspection of the property under clause 5 of the agreement before the plaintiff would consider the defendant’s proposal.   

12.  Based on the defendant’s letter of 22 November 2000, it is clear to both parties that the said agreement was the foundation and basis of the proposal of the defendant.  Although the letter was headed “Without prejudice and subject to contract”, clearly that the defendant was asking for the said agreement to be completed, and the defendant did not ask for any further conditions or terms that were not already set out in the said agreement in the said proposal. 

13.  I am satisfied, therefore, that on the basis of this letter from the defendant, the plaintiff has shown a prima facie case to regard the terms of the said agreement have been affirmed.

14.  According to the author of Chitty on Contracts, he has this to say under Chapter 24 paragraph (3):

“Affirmation.  Where the innocent party, being entitled to choose whether to treat the contract as continuing or to accept the repudiation and treat it himself as discharged, elects to treat the contract as continuing, he is usually said to have “affirmed” the contract.  He will not be held to have elected to affirm the contract unless, first, he has knowledge of the facts giving rise to the breach, and, secondly, he has knowledge of his legal right to choose between alternatives open to him.  Affirmation may be express or implied.  It will be implied if, with knowledge of the breach and of his right to choose, he does some unequivocal act from which it may be inferred that he intends to go on with the contract regardless of the breach or from which it may be inferred that he will not exercise his right to treat the contract as repudiated.  Affirmation must be total: the innocent party cannot approbate and reprobate by affirming part of the contract and disaffirming the rest, for that would be to make a new contract...Equally, a party cannot affirm the contract for a limited period of time and then abrogate it on the expiry of that period of time.”

15.  Under the defendant’s letter of 22 November, the defendant did not set a time limit within which the plaintiff should make the $500,000 deposit and move into the premises.  According to Chitty, if there was an affirmation there should not be any time limit. 

16.  On the aforesaid basis, I will not grant the defendant’s application to strike out the statement of claim. 

17.  As to the 2nd defendant, the plaintiff has conceded that its claim against the 2nd defendant should be dismissed, and I would therefore allow the statement of claim against the 2nd defendant be struck out.

18.  I order that costs be in the cause.