LEE LAM WAI v. WAN SIU WAN CARRY

DCCJ 6897/2019

[2020] HKDC 1258

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 6897 OF 2019

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DECISION

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Introduction

1.  The present dispute between the parties arises from a written sale and purchase agreement dated 5 August 2019 (“the Agreement”) whereby Madam Wan agreed to sell to Mr Lee her property known as 18^th floor (including the balcony thereof) of Tower 2B, Park Yoho Venezia of Phase 1B of Park Vista Development, No. 18 Castle Peak Road Tam Mi, Yuen Long, New Territories, Hong Kong (“the Property”) in consideration of HK$6 million.  Completion was fixed for 3 October 2019 (“the Completion Date”). The transaction has not been proceeded to completion. Mr Lee alleges that Madam Wan has committed a repudiatory breach of the Agreement and he commenced these proceedings primarily for a decree of specific performance of the Agreement.

2.  Each of the parties has taken out a summons to be dealt with by this court on this occasion. First in time is Mr Lee’s summons dated 9 July 2020 issued under Order 19 rule 7 of the Rules of the District Court (“the Default Judgment Summons”) for default judgment to be entered against Madam Wan by reason of her failure to file her defence.

3.  The Default Judgment Summons was first heard on 26 August 2020. At that hearing, Madam Wan appeared in person and indicated that she wished to contest the application. She was advised to make an application to file her defence out of time as soon as possible.

4.  Subsequently, on 6 October 2020 Madam Wan by her solicitors took out a summons for leave to file her Defence and Counterclaim dated 25 September 2020 (“the Leave Summons”). The return day of the Leave Summons is the same as that of the Default Judgment Summons and the estimated hearing is stipulated to be 2 hours. In support of her application, she filed an affirmation dated 6 October 2020 (“the Affirmation”).

5.  Mr Michael Lee, counsel for Mr Lee, rightly submits, and I accept, that in accordance with the established principles[1], it is appropriate to consider the Leave Summons first.

The Leave Summons

6.  There is no dispute that for leave to be granted, an overriding consideration is the merit of the defence advanced by Madam Wan. She has to show that she has at least an arguable defence. In discharging this duty purportedly, she filed the Affirmation, which only contains 16 short paragraphs and the defence is not apparent from this document.

7.  Ms Lau, counsel for Madam Wan, failed to file any skeleton submission before this hearing to explain the defence. She accepts that she has a duty to do so pursuant to Practice Directions 5.4. She makes two points. First, Madam Wan should amend the time estimate of the Leave Summons. Second, she has actually prepared her skeleton submission which is ready to be handed up.

8.  I can neither understand nor accept her explanations. Practice Directions should not be lightly treated and practitioners cannot expect that they can avoid their obligations thereunder without any adverse consequences. I indicated that I should not allow Ms Lau to make oral submissions on the merit of the defence for want of written skeleton submissions. Ms Lau asked for a break and came back to inform this court that she would make no further oral submission after her discussion with Madam Wan.

9.  In a nutshell, the core complaint of Mr Lee is that despite his payment of the initial and further deposit pursuant to the Agreement in the total sum of HK$827,000 (“the Payment”), Madam Wan refused or neglected to accede to the requests made by his solicitors to allow him or his representative to inspect the Property and verify vacant possession thereof before completion. It is an express term of the Agreement that Mr Lee should have the right to inspect the Property immediately prior to the completion: Clause 26 thereof. Mr Lee says this was a repudiatory breach on the part of Madam Wan.

10.  To explain the importance of Clause 26 of the Agreement, Mr Michael Lee refers to this court the following dictum of Ching PJ and Bokhary PJ in Twinkle Step Investment Ltd v Smart International Industrial Ltd (1999) 2 HKCFAR 255:

(1)“In the absence of an acceptance by the purchaser that the premises are in fact vacant it is impossible to understand how it can be thought that he should not be allowed to take obvious and reasonable steps to ascertain that the vendor can discharge and is in fact discharging his obligation to give vacant possession.”(at 262E-F per Ching PJ)

(2)“Difficulties may arise if a purchaser has not investigated whether or not there are other interests disclosed by persons being on the premises and in any event it appears to be absurd that the purchaser should be forced to complete only to find that he must take legal action immediately thereafter.” (at 262G per Ching PJ)

(3)“All that the respondent purchaser wanted to do before parting with his money was to take a look at what he was being given in order to see if it was what he had agreed to buy. His entitlement to do that simple thing must be implied in order to maintain the transaction at a commercial level and prevent it from sagging to the level of something approaching a lottery.”(at 263G per Bokhary PJ)

11.  It was held by the Court of Final Appeal that the refusal by a vendor to allow a purchaser to inspect the premises prior to completion was conduct that justified the purchaser not to completing the purchase as observed by Mayo VP and Sakhrani J in Plus Lucky Ltd v Chin Yuk Lun [2002] 3 HKLRD 199 at §46.

12.  I then turn to the purported defence and the Affirmation. In the defence, whilst Madam Wan admits that Mr Lee has made the Payment, she alleges that on the Completion Date, she did agree with one Ms Li acting for Mr Lee that she could inspect the Property at 1 p.m.. She waited for Ms Li until 2 p.m. and yet Ms Li was nowhere to be seen. Therefore, Madam Wan left the Property. Despite the absence of an express denial, it seems that the case of Madam Wan is that she did allow and indeed make herself available for an inspection of the Property by Ms Li on behalf of Mr Lee on the Completion Date. Ms Li is the mother of Mr Lee.

13.  In the Affirmation, there is only one paragraph to substantiate her defence. She said this,

“Furthermore, I believe there is a real prospect of success for my defence and potentially counterclaim. While it has all along been the plaintiff’s case that checks for the balance of purchase price for the subject property allegedly delivered to my previous solicitors Lee & Co., I have evidence to support that claim was completely false and that the Plaintiff is dishonest and unreliable.”

14.  Madam Wan exhibited a screen capture of the WeChat messages exchanged between Ms Li and her on the Completion Date.

15.  I have read the exhibit. At 10:35 p.m., Ms Li said that since Madam Wan did not allow inspection of the Property, her solicitors did not allow the release of the purchase money and the solicitors for Madam Wan did not agree to hand over the key. Ms Li then requested Madam Wan to inform her solicitors to send someone to facilitate her inspection of the Property.

16.  At 10:45 p.m., Ms Li sent a follow up message to Madam Wan. She said if Madam Wan feared Victor, she could go to the Property and inspect the same on her own without Mr Lee on the following day. Otherwise, her solicitors would not agree to release the money to Madam Wan.

17.  In this exhibit, I could not see any reply message from Madam Wan.

18.  I am unable to see how the exhibit could support the allegation of Madam Wan in the Affirmation and the Defence. If anything, it only supports the claim of Mr Lee. 

19.  For completeness, I have also considered the reply evidence of Mr Lee in the form of an affirmation made by Ms Li dated 19 October 2020. There, she explained that she made an arrangement with Madam Wan to inspect the property at around 1:30 p.m. on the Completion Date but due to traffic congestion, she was unable to make it on time. She made an effort to inform Madam Wan of her likely lateness over the phone but her calls were ignored by Madam Wan. Eventually, she arrived at 1:45 p.m. but Madam Wan was not there. She finally got hold of Madam Wan on the phone at 2:06 p.m. and Madam Wan told her that she could only return at about 4 or 5 p.m.. When asked whether she could inspect the Property, Madam Wan simply hang up the phone. Thereafter, Ms Li made a number of phone calls to Madam Wan but she was ignored.

20.  Ms Li exhibited her call records which apparently support her allegations. Madam Wan has filed no reply affirmation to deal with all these allegations.

21.  In the circumstances, I can see no merit in the purported defence of Madam Wan. Her case is not even supported by her own documentary evidence. It is clear that Mr Lee did not pay the balance of the purchase money only because Ms Li was denied inspection of the Property on the Completion Date and this amounts to a repudiatory breach.

22.  In the absence of a reasonable defence to the claim of Mr Lee, Madam Wan’s application for leave cannot be granted. I need not consider her explanation for her default strictly speaking. Suffice it to say that I am not persuaded that she has any acceptable excuses for her failure to file her defence within time in the Affirmation.

The Default Judgment Summons

23.  There is no issue about the validity of service of the Writ of Summons and the Statement of Claim. Madam Wan received them though she was out of town when the latter reached her mailbox.

24.  I need not set out the procedural history of this matter. Madam Wan accepts that she has failed to file her defence within the prescribed time.

25.  Without looking at the evidence, on the basis of the pleaded matters alone, I have no difficulties in concluding that Madam Wan was in breach of the Agreement and the case of Mr Lee is made out.

26.  The next issue is the relief to be granted to Mr Lee following the establishment of his claim.

27.  Clause 26 of the Agreement as pleaded in the Statement of Claim provides that either party is entitled to bring an action and obtain a decree for specific performance of the Agreement either in lieu of damages or in addition to such damages as the party bringing such action might have sustained by reason of the breach by the other party.

28.  Mr Michael Lee presses for a decree of specific performance. He helpfully refers this court to the requirements set out by Lord Millet PJ in Chan Peggy v Ma Hing Nam (2010) 13 HKCFAR 226 at §46. He said this,

“A plaintiff who seeks a decree of specific performance must show: (a) that he has in the past performed or been ready to perform all the essential terms and conditions of the contract to be then performed by him; (b) that the is ready, willing and able to perform all such terms and conditions thereafter to be performed by him.”

29.  On the matters pleaded in the Statement of Claim, I am satisfied that Mr Lee has all along been ready, willing and able to perform the Agreement. I am satisfied that Mr Lee has not accepted the repudiaton of Madam Wan and a decree of specific performance is still available to him.

30.  I am convinced that Mr Lee is entitled to a decree of specific performance in light of all of his allegations in the Statement of Claim, which are taken to be true.

31.  In the Default Judgment Summons, Mr Lee also asks for an account. This claim is well-founded. The rationale of such an account was explained by Mr Justice Chan NPJ in Wise Think Global Ltd v Finance Worldwide Ltd (No 2) (2014) 17 HKCFAR 190 at §14 in the following terms:

“It is well established that after the contractual date of completion, the purchaser becomes entitled in equity to the property and so becomes entitled to the rental income and profits less outgoings after that date. Thus, where completion takes place on a date other than that specified in the contract, the vendor is liable on completion to account to the purchaser for such income.”

32.  I am satisfied that the accounts sought by Mr Lee are necessary and consequential to a decree of specific performance.

33.  Likewise, Mr Lee’s claim for an inquiry as to damages is also justified.

Conclusion and Dispositions

34.  For the reasons given, the Leave Summons must be dismissed and the Default Judgment should be granted.

35.  I direct that the solicitors for Mr Lee do lodge with this court and serve on Madam Wan within 14 days from the date of this Decision a draft order giving effect to the foregoing conclusions for my approval.

36.  There is no reason why costs should not follow the event. I make a costs order nisi that Madam Wan should pay Mr Lee his costs of this action including that of these two Summonses and any costs previously reserved, with certificate for counsel, to be taxed if not agreed.

37.  Lastly, I thank Mr Michael Lee for his able assistance.