IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO. 20930 OF 1998
|CHIEN NGAN SANG
|LAI KAM HING
Coram: Deputy High Court Judge Lam in Court
Dates of Hearing: 12 November 2001 and 4 January 2002
Date of Handing Down Judgment: 14 January 2002
J U D G M E N T
1. By an agreement dated 15 October 1997 ["the Agreement"] the Plaintiff, as vendor, agreed to sell to the Defendants, as joint purchasers, the property known as Flat 6 on the 6th Floor of Block C, Hilton Plaza, Nos. 3 - 9, Sha Tin Street, Sha Tin, New Territories ["the Property"] at the price of $2,650,000.00. That agreement was the formal sale and purchase agreement entered into by the parties pursuant to a provisional sale and purchase agreement dated 28 September 1997. A sum of $100,000.00 was paid by the Defendants on 28 September 1997 as initial deposit and a further sum of $165,000.00 was paid upon the signing of the formal sale and purchase agreement. Hence the total amount of the deposit paid was $265,000.00 which was 10% of the purchase price.
2. Clause 4 of the formal agreement provided that completion of the transaction should take place on or before 31 March 1998 and clause 6 provided that time would in every respect be of the essence. Clause 13 reads as follows:
"If the purchaser shall fail (other than by the default of the Vendor) to complete the sale and purchase in accordance with the terms and conditions of this agreement the Vendor may forthwith determine this Agreement by giving notice of termination in writing to the Purchaser or its solicitors to such effect and the deposit money paid shall be absolutely forfeited to the Vendor who may (without being obliged to tender an Assignment to the Purchaser) rescind this Agreement and either retain the Property or any part or parts thereof or resell the same, either as a whole or in lots, and either by public auction or by private contract, or partly by the one and partly by the other, and subject to such conditions and stipulations as to title or otherwise as the vendor may think fit. Any deficiency in price arising from such resale and all expenses attending the same or any attempted resale shall be made good and paid by the Purchaser as and for liquidated damages, and any increase in price realized by any such resale shall belong to the vendor. This clause shall not preclude or be deemed to preclude the Vendor from taking other steps or remedies to enforce the Vendor's rights hereunder or otherwise. On the exercise of the Vendor's right of rescission hereunder the Vendor shall have the right, if this Agreement shall have been registered in the relevant Land Registry to register at the said Land Registry as instrument signed by the Vendor alone to rescind the sale of the Property and to vacate the registration of this Agreement. This clause shall not prevent the Vendor from recovering, in addition to liquidated damages, damages representing interest paid or lost by him by reason of the Purchaser's failure."
3. The Defendants did not complete on 31 March 1998. On 26 March 1998, Messrs.Day & Chan (solicitors for the Plaintiff) wrote to Messrs.C.K. Mok & Co. (solicitors for the Defendants) asking for a draft Assignment for approval to facilitate completion. On 30 March 1998, Messrs.C.K. Mok & Co. replied that they had no further instructions to deal with the matter and returned all relevant title deeds. The Defendants did not appoint any solicitors to act for them and did not pay the balance of the purchase price on 31March 1998.
4. By a letter dated 21 April 1998 from Messrs Day & Chan, the Plaintiff accepted the repudiation by the Defendants and exercised his right under Clause 13 of the Agreement and forfeited the deposit in the total sum of $265,000.00. On 29 May 1998, the Plaintiff executed a memorandum pursuant to Clause 13. The said memorandum of rescission was registered in the Sha Tin New Territories Land Registry by Memorial No. 1039221 on 6 July 1998.
5. On 23 June 1998, the Plaintiff entered into a provisional agreement with Chau Ping and Chung Li Yin to sell the Property to them at the price of $1,650,000.00 ["the Resale"]. Formal agreement was signed on 7 July 1998 and the Resale was duly completed on 3 August 1998.
6. On 8 December 1998, the Plaintiff commenced the present action and claimed the sum of $755,260 as damages. The action was settled as between the Plaintiff and the 1st Defendant by a Consent Order of 5 January 2001. A sum of $280,000 was paid by the 1st Defendant to the Plaintiff. The trial before me only concerns the liability of the 2nd Defendant. At the trial, counsel for the Plaintiff Mr Peter Wong indicated to me that the Plaintiff would give credit to the 2nd Defendant for the said sum of $280,000. The claim of the Plaintiff against the 2nd Defendant therefore becomes $475,260, particulars of which were as follows,
|(a) Sale price
|(b) legal costs (for the aborted sale)
|(c) commission for the resale
|(d) price of Resale
|(e) deposit forfeited
|(f) settlement sum from 1st Defendant
7. At the trial of this action, the Plaintiff and his niece (who handled the sale to the Defendants through agent) gave evidence before me. Although the 2nd Defendant was absent, I have tested their evidence as I would have done even if the 2nd Defendant was present in the light of the fact that he was acting in person. I am satisfied that they were truthful in their evidence and reliable.
8. The Plaintiff produced a receipt from Ricacorp Properties Limited dated 23 June 1998 to show that in respect of the Resale, a commission of $16,500.00 was paid by the Plaintiff. With regard to the legal cost for the aborted transaction, a bill issued by Messrs Day & Chan, solicitors who acted for the Plaintiff in the conveyancing transaction was produced to show that a sum of $3,760.00 was paid by the Plaintiff to the said solicitors.
9. In the Defence and Counterclaim of the 2nd Defendant filed on 27 January 1999, three points were put forwarded.
(a) wrongful neglect and/or refusal of the Plaintiff to allow inspection by surveyor appointed by banker of the Defendants;
(b) failure to mitigate on the part of the Plaintiff;
(c) if liable, the 2nd Defendant was only liable for half of the claim.
10. It should be noted that the burden of proof on the matters set out in Paragraph 9(a) and (b) above falls squarely on the 2nd Defendant. Despite the direction of Master Lung made on 3 April 2000 that parties do file and serve witness statements within 42 days, no witness statement has been filed by the 2nd Defendant. Nor did he file any List of Documents as directed by Master Lung. He did not attend the trial to give evidence or to call any witness. In the absence of any evidence adduced by the 2nd Defendant, he could not discharge the burden of proof placed on him.
11. Further, on the first line of defence, viz. regarding inspection of the Property, I have the evidence of the Plaintiff and his niece. The effect of their evidence is that they did not refuse nor neglect to allow inspection. The niece of the Plaintiff was residing at the Property until January 1998. She had given her home telephone as well as mobile phone numbers to the agent. She told the agent that inspection could take...