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Anstalt Nybro v Hong Kong Resort Co Ltd

Judgment Cited authorities 20 Cited in Precedent Map Related
Vincent
Judgment Date16 August 1978
Year1978
Judgement NumberCACV46/1978
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV000046/1978 ANSTALT NYBRO v. HONG KONG RESORT CO LTD

CACV000046/1978

IN THE COURT OF APPEAL
1978 Nos. 45 and 46
(Civil)

BETWEEN
ANSTALT NYBRO (formerly named ANSTALT SORO) Appellant
and
HONG KONG RESORT CO. LTD. Respondent

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Coram: Huggins and Pickering, JJ.A., and McMullin, J.

Date of Judgment: 16th August 1978.

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JUDGMENT

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Huggins, J.A.:

This appeal relates to an agreement in writing for an option to share in the development and management of land and is against orders of a judge in chambers the vital parts of which direct the vacation of two entries in the Land Register, one of an estate contract and one of a lis pendens.

2. The Hong Kong Resort Co. Ltd. (HKR) are the lessees of a large area of land in the New Territories under what, for the purpose of clarity, I prefer to call the Crown Agreement. That Agreement requires them to develop the land at a cost of not less than $600,000,000 in accordance with a "Master Layout Plan" which was to be prepared by HKR and approved by the Secretary for the New Territories. Such a plan was duly prepared and approved but was confusingly headed "Master Plan". HKR then entered into the option agreement in writing with Anstalt Soro, who subsequently changed their name to Anstalt Nybro (Nybro). The Option Agreement was concerned with specified sections of HKR's land. The consideration for the option was $50,000, which has been paid. The option itself was in these terms:

"to participate in the ownership, development and subsequent management operation and exploitation of the said twelve sections in the manner hereinafter set forth."

The option was originally to be exercised on or before 31st January 1977 but was extended by mutual consent to 1st March 1977. Nybro claim to have exercised the option by a letter dated 24th January 1977, which reads:

"re.: Ta Yue Shan Option Agreement 11/10/76 We refer to your letter of 1st December, 1976 confirming the agreement to extend the Option until 1st March, 1977 and now give you Notice that we wish to exercise the option on 1st March, 1977."

HKR ran into financial difficulties and eventually new directors took over. These new directors, believing (so they say) that the option had not been exercised and had lapsed, agreed with the Secretary for the New Territories a new Master Layout Plan which was substantially different from the first one. Some months later Nybro registered the Option Agreement and the letter purporting to exercise the option as an estate contract. Immediately thereafter HKR issued a writ claiming declarations that the Option Agreement was so vague as to be unenforceable and that the option had not been validly exercised. A month after that Nybro instituted an action against HKR for declarations that the Option Agreement was enforceable and that the option had been validly exercised and for specific performance. On the same day the action was registered as a lis pendens. There were before the judge two summonses, one by Nybro for declarations in the terms of their writ and one by HKR for vacation of the entries in the Land Register.

3. If these actions come to trial there will be one main issue of fact and two main issues of law: (1) whether the option was validly exercised: (2) whether the Option Agreement was void for uncertainty: and (3) whether the contract between the parties was a contract affecting land within the meaning of the Land Registration Ordinance.

4. The first of those issues includes three subordinate issues, (a) whether the letter of 24th January 1977 was ever delivered at all; (b) if it was, whether it amounted to an exercise of the option; and (c) if it did, whether such exercise was subsequently cancelled by agreement of the parties. As to (a) it will be contended that the letter was not delivered and that the copy which has been produced by Nybro is a sham. Before the judge it was conceded that this could not be decided until all the evidence had been adduced at the trial but he appears to have misunderstood and to have thought that he was being asked to decide that issue of fact on the affidavits. He rightly declined so to do. What in fact was submitted, and was submitted again before us on a Respondent's Notice, related to issues (b) and (c), which are to some extent based on the same evidence. The letter itself does not take the form one would expect of an immediate, unconditional and irrevocable exercise of the option but purports to exercise the option with effect from 1st March. It is suggested that this was no more than a notice that Nybro intended, by a further notice to be dated 1st March, to exercise the option. HKR put this forward as one of two possible explanations of subsequent events. There is evidence that on 25th February 1977 there was a board meeting of HKR at which it was reported that Nybro was seeking an extension of time within which to exercise the option and that it was thereupon resolved to grant an extension until 30th June 1977. Although it is common ground that minutes of that meeting were sent to Nybro as soon as they wrote indicating that they regarded the option as having been exercised, Nybro neve wrote a formal protest, but it is said that the Chairman of Nybro (Mr. Burgess) spoke to the Chairman of HKR (Mr. Edward Wong) in London and that Mr. Wong promised to sort out the muddle. Mr. Wong appears never to have mentioned the matter to anyone else and Mr. Burgess did nothing more. Therefore, assuming in Nybro's favour that the letter was delivered, HKR contend that it is apparent that in February 1977 neither side regarded itself as bound to proceed with the suggested joint venture, whether because the option had never been validly exercised at all or because of an agreement to reopen the option, which no one says has been exercised again. Mr. Hunter did ask us to consider whether this argument was open to HKR on the pleadings. It is enough to say that it was addressed to the judge without objection and that if necessary I would give leave to amend. We were invited by Mr. Nourse to adopt "a certain robustness of approach" to the evidence and he suggested that, even in the light of the further evidence which has been admitted before us, Nybro was left with no arguable case that the option was, in the end, validly exercised. The alleged board meeting of 25th February 1977 will itself have to be the subject of careful scrutiny. There is now direct evidence that no extension beyond 1st March was asked for and that the purported exercise of the option on 24th January 1977 was not cancelled. No useful purpose will be served by reviewing the evidence in detail. There is much that will require explanation in due course on both sides and I am not prepared to hold that on the whole of the evidence Nybro does not have an arguable case.

5. So far, of course, I have assumed that a valid exercise of the option was possible. The main argument which found favour with the learned judge was that the option could not be validly exercised because the Option Agreement was void for uncertainty. The uncertainty contended for related to three matters: (1) uncertainty as to Articles of Association of the three companies to be formed; (2) uncertainty as to the manner in which the land was to be developed; and (3) uncertainty as to (a) the payments (if any) to be made to Nybro for managing the estate and (b) the nature of the management services to be rendered.

6. The learned judge was persuaded that the absence of draft Articles of Association was not fatal, because, if no Articles were registered, the regulations contained in Table A would be the Articles of the companies by virtue of s. 11(2) of the Companies Ordinance. HKR has challenged that conclusion. It is true that the promoters might adopt part or the whole of Table A and that if no Articles were registered at all the company would not be left without Articles, but there is no immediate certainty as to what the Articles would be. It is as if the parties had expressly said that the Articles were to be agreed or, in default of agreement, were to be the regulations contained in Table A, for we should assume that the parties realized the necessity for Articles of some kind. Would that be sufficient? In a sense there would be uncertainty as to what the Articles would eventually be, but in my judgment there would be that degree of certainty which is required for the formation of a contract. Id certum est quod certum reddi potest. The case is analogous to Foley v. Classique Coaches Ltd. 1934 2 K.B. 1 save that the part performance in the present case as yet consists in nothing more than the payment of the price of the option. On this point I would respectfully agree with the learned judge and if the participation in the "ownership" were the only matter upon which uncertainty was alleged, would hold that the option Agreement was not void for uncertainty.

7. In the view of the learned judge, however, HKR was bound to succeed on the basis that the nature of the option was uncertain in relation to both the development and the management: as the put it, "the terms of development and management are left in a vacuum". He was concerned that this was a complicated venture and that before it was complete many details would have to be decided for which there was no provision in the Agreement. There is a dispute as to the degree of detail for which provision has been made, since Nybro contend for a liberal construction of the Option Agreement: they submit that the development agreed upon is development not only in accordance with the Master [Layout] Plan No. 3.5, which is all that is mentioned in Clause (3), but also with the Crown Agreement. For my part I am not at all...

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