TRIJOY INVESTMENTS LTD. v. CHAN KAM SHUN

HCMP2112/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2112 OF 1999

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J U D G M E N T

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1. On 12th April 1999, the Plaintiff Trijoy Investments Limited filed an Originating Summons in this court against the Defendant, a Mr. Chan Kam Shun. The summons seeks the determination of the Court on the following questions namely,

1. A declaration that the Provisional Sales and Purchase Agreement and Supplemental Agreement signed between the Plaintiff as vendor and the Defendant as purchaser dated January 18, 1992 and May 18, 1992 respectively in respect of the sale and purchase of the property be terminated and that the deposit in the total amount of $1m be forfeited by the Plaintiff on the ground that the Defendant has failed to complete the purchase in accordance with the said agreements.

2. An order that the registration of the Provisional Sales and Purchase Agreement between the Plaintiff and the Defendant dated January 18, 1992 with Memorial No. 5159591 at the Land Registry be vacated.

3. An order that the registration of the Supplemental Sales and Purchase Agreement between the Plaintiff and the Defendant dated May 18, 1992 with Memorial No. 5419060 at the Land Registry be vacated.

4. Costs.

2. The property is a flat in a residential building, viz. Flat A2 on the 10th Floor of a building known as Summit Court at Nos. 144-158 Tin Hau Temple Road, Hong Kong. The evidence shows that a document entitled a Provisional Sales and Purchase Agreement was entered into in January 1992 between the Plaintiff as vendor and the Defendant as purchaser. It was registered in the Land Office on 25th January 1992.

3. However, this document is a little abnormal in that the completion date has not been set out. Instead it provides that "the balance of the purchase price shall be paid upon completion on or before to be agreed".

4. Subsequently, on 18th May 1992 a Supplemental Agreement was entered into between the parties. This provided that a sum of $650,000.00 shall be paid by the purported purchaser to the purported vendor upon signing of the agreement as a "further deposit and in part payment of the purchase money" (thereby reducing the balance of purchase price payable on completion to $1m.) and the date of signing of the formal Sales and Purchase Agreement should be a date in November instead of a date in April as set out in the Provisional Agreement for Sale and Purchase. In other words, of the agreed purchase price of $2m., $1m had been paid to the vendor Plaintiff by May 1992.

5. However, nothing seems to have happened between that time and the time of the issue of this Originating Summons. In the Supplemental Affirmation of Chan Kok Wah, a director of the Plaintiff, he says that the reason for the delay in making the application in the present case was that he had many property transactions during the period and his manager had mismanaged the company. Therefore he had forgotten about this transaction until recently when he needed to clear up his business transactions and his new manager had discovered that there was a registration on the property.

6. A little more surprisingly, Mr. Chan says in paragraph 3 of the Supplemental Affirmation that when the Provisional Sales and Purchase Agreement was signed back in 1992, he was "personally aware that the Defendant had no intention of completing the Sales and Purchase Agreement at all" and therefore part 2(c) of the Provisional Sales and Purchase Agreement had no completion date and the completion date was inserted as "to be agreed".

7. Neither party appointed any solicitors to act for them because, as Mr. Chan says in his supplementary affirmation, "the Defendant expressed his intention to me of not completing the agreement". It is surprising to the extreme that a deposit of something like 50% of the total purchase price had been paid, and yet nothing had happened between May 1992 and March 1999 when this Originating Summons was issued.

8. Accordingly, I expressed my disquiet to the Plaintiff's counsel in that I am not confident that I should in these rather strange circumstances grant a declaration to the Plaintiff in terms of paragraph 1 as set out in its Originating Summons. However, I am satisfied that the registration of these documents should be vacated from the Land Registry. Accordingly, I would grant an order that the registration of the document known as Provisional Sales and Purchase Agreement dated 18th January 1992 and registered at the Land Office under Memorial No. 5159591 be vacated, and also I would grant an order that the registration of the document known as Supplemental Sales and Purchase Agreement between the Plaintiff and the Defendant and dated May 18, 1992 under Memorial No. 5419069 be vacated.

9. I should add that I have considered the possibility of the Defendant making a claim of a purchaser's lien on the return of the deposit. However, it would appear that if the parties never intended this to be a proper Sales and Purchase Agreement, then the Defendant as purchaser could not in any event have a lien on the property for his deposit anyway.

10. Accordingly, I felt confident in granting the orders as I have just referred to and the costs of this originating summons should be to the Plaintiff in any event.