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J.n. Roland Deneault & Scott Ltd Lowe, Bingham & Matthews v Yangtzekiang Garment Manufacturing Co Ltd

Judgment Cited authorities 29 Cited in Precedent Map Related
Vincent
Judgment Date16 June 1977
Subject MatterCivil Appeal
Judgement NumberCACV39/1976
CourtCourt of Appeal (Hong Kong)
CACV000039/1976 J.N. ROLAND DENEAULT & SCOTT LTD LOWE, BINGHAM & MATTHEWS v. YANGTZEKIANG GARMENT MANUFACTURING CO LTD

CACV000039/1976

IN THE COURT OF APPEAL 1976 No. 39
(Civil)

BETWEEN:
J.N. Roland Deneault & Scott Ltd. Lowe, Bingham & Matthews Appellants
and
Yangtzekiang Garment Manufacturing Company Limited Respondent

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BETWEEN:
J.N. Roland Deneault Scott Limited Appellants
and
Yangtzekiang Garment Manufacturing Company Limited Respondent

Coram: Briggs, C.J., Huggins & Pickering, JJ.A.

Date of Judgment: 16th June, 1977.

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JUDGMENT

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1. The plaintiffs, the Yangtzekiang Garment Manufacturing Company, carry on business on premises situated at No. 22 Tai Yau Street, San Po Kong, Kowloon. In 1975 they were anxious to expand their premises and wanted to purchase the adjoining premises at No. 20 Tai Yau Street. No. 20 Tai Yau Street was jointly owned by the two defendants, J.N. Roland Deneault and Scott Limited.

2. On July 22nd, 1975 Mr. Deneault and a Mr. Young representing the two defendants met a Mr. Chan and a Mr. Leung who represented the plaintiffs. It was then agreed that the defendants would sell No. 20 Tai Yau Street to the plaintiffs for $2,200,000. There was further discussion as to other terms of the proposed sale. It was agreed that a deposit of $300,000 would be paid, that vacant possession should be given in four months. And there was an agreement about the liability for certain architects' fees.

3. On July 23rd, 1975 a letter in the following terms was sent to the plaintiffs by each of the defendants accompanied by a duplicate:-

"Dear Sirs,

The One Half Share of
N.K.I.L. No. 4735 known as
20 Tai Yau Street
-----------------
We are pleased to advise that the Company agrees to sell to you the One Half Share of the Company's property at N.K.I.L. No. 4735 known as 20 Tai Yau Street for a consideration of HK$1,1000,000.
We should be obliged if you would confirm the above by signing and returning to us the duplicate copy of this letter.
Yours faithfully,
SCOTT LIMITED
Strath Nominees Secretaries"

The plaintiffs signed the duplicates and "agreed and confirmed the purchase" in each case.

4. On July 24th, 1975 the plaintiffs, through their solicitors, sent a letter to the defendants setting out further terms of the sale. But before a reply was received the plaintiffs' solicitors sent another letter to the defendants' solicitors setting out the terms of the sale which were in some respects different from those contained in the letter of July 24th.

5. On July 29th, 1975 the defendants' solicitor forwarded an agreement for the sale of the premises to the solicitors for the plaintiffs. This was returned to the defendants' solicitors having been signed on behalf of the plaintiffs together with a cheque for $300,000 for the deposit.

6. On August 1st, 1975, the defendants wrote to the plaintiffs informing them that "the proposed sale and purchase has fallen through" and the plaintiffs' cheque for $300,000 for the deposit was returned.

7. On August 7th, 1975 the plaintiffs issued a writ for specific performance of the agreement contained in the two letters dated July 23rd, 1975. The action was given the number O.J. 1923 of 1975. The plaintiffs claimed specific performance of the contract contained in the letters of July 23rd and for damages in the alternative. In their claim, the plaintiffs refer to the letter of August 1st, 1975 in which the defendants stated that the sale had fallen through.

8. The defendants delivered a defence and counterclaim on September 17th, 1975. The defence denies that the letters of 23rd July, 1975 contained an agreement for the sale of the property. The defence admits that the defendants letter of August 1st which stated that the defendants would not proceed with "the sale", was sent to the plaintiffs and in paragraph 5 of the defence the terms of that sale or proposed sale are set out.

9. Paragraph 5 of the defence reads (in part) as follows:-

"On or about 22nd July, 1975, the .... defendants ..... orally agreed with ..... the plaintiffs, to sell to the plaintiffs the property ..... known as No. 20 Tai Yau Street ..... and the plaintiffs ......... orally agreed to purchase the same from the ..... defendants. The terms of the agreement were as follows:-

(a) Purchase Price - H.K.$2,200,000.00;
(b) Deposit of H.K.$300,000.00 to be remitted to the first defendants' solicitors F. Zimmern & Co. forthwith, who was to release the money to the first defendants when an agreement of sale and purchase had been signed by the plaintiffs and the first defendants;
(c) Balance of purchase price of H.K.$1,900,000.00 to be paid upon completion of the sale and purchase;
(d) Date of completion to be within 4 months from the date of signing of the agreement for sale and purchase;
(e) Vacant possession to be given by the vendor to the purchaser on or before the date of completion.
(f) The property was sold subject to the existing plans and specifications prepared by Raymond Y.K. Kan, the authorised architect, under B.O.O. Ref. No. 2/4482/73.

It was further a term of the agreement that a formal contract of sale and purchase drawn up by the solicitors of the plaintiffs and the defendants should be signed by both the plaintiffs and the defendants."

10. They then pleaded that the agreement was an oral agreement only, that it was not reduced to writing and was not evidenced by any proper or sufficient memorandum signed by the defendants. Hence the agreement was unenforceable by reason of section 5 of the Law Amendment and Reform (Consolidation) Ordinance.

11. The defendants also pleaded, in the alternative, that if there were an existing enforceable agreement of purchase and sale between the parties the plaintiffs were in breach of the terms - this referred to the payment of the deposit of $300,000 'forthwith'. Because of this breach the defendants had exercised their right to terminate the agreement which they did in their letter of August 1st, 1975.

12. The defendants counterclaimed for declarations that there was no enforceable agreement between the parties in existence and that the agreement for sale which was referred to in paragraph 5 of the defence was unenforceable in law.

13. Upon receipt of the defence and counterclaim the plaintiffs discontinued their action O.J. 1923 of 1975. But they commenced a second action, the present action, O.J. 2389 of 1975.

14. In the new Statement of Claim the plaintiffs aver that the parties came to an agreement for the purchase and sale of the property in the terms as set out in paragraph 5 of the defence as pleaded in the first action, the action which was discontinued by the plaintiffs. The Statement of Claim sets out the terms of agreement as stated in paragraph 5 of the defence but there is one difference which is of some significance. In the defence to the first action, the defendants pleaded that a deposit of $300,000 was to be paid 'forthwith'. In the second Statement of Claim the word 'forthwith' has been omitted.

15. Paragraph 3(b) of the plaintiffs Statement of Claim in O.J. 2389 of 1975 reads thus:-

"3. The said agreement is evidenced by the following matters:-

....................................................................................
(b) In O.J. Action No. 1923 of 1975, the Defendants through their solicitors filed a Defence and Counterclaim to the Plaintiffs' claim admitting the said agreement but alleging, inter alia, there was no or no sufficient memorandum. The plaintiffs have since discontinued the said O.J. Action No. 1923 of 1975 and say that the said Defence and Counterclaim constitutes a sufficient memorandum."

16. They also pleaded that they had paid the deposit of $300,000 to the defendants' solicitors but they admitted that this had been returned to them.

17. By an amendment the plaintiffs pleaded in the alternative that the two letters of 23rd July constituted a legally binding and enforceable agreement of sale and purchase, namely the plaintiffs incorporated the subject matter of their Statement of Claim in O.J. 1923 of 1973 into their new Statement of Claim in O.J. 2389 of 1975.

18. The defendants pleaded to the new Statement of Claim and again pleaded that the plaintiffs were in breach of the terms of the agreement referring to the payment of the deposit 'forthwith'. The defendants also alleged that it was a term of the agreement that the agreement was "subject to contract". The defendants again seek to rely upon the provisions of section 5 of the Law Amendment and Reform (Consolidation) Ordinance and specifically plead that their defence and counterclaim in the first action, O.J. 1923 of 1975 do not and cannot constitute a sufficient memorandum so as to satisfy that Ordinance.

19. In the counterclaim the defendants again pray for certain declarations.

20. I intend to deal first with the question whether the two letters dated July 23rd constitute a valid enforceable agreement. The trial judge found for the defendants on this issue.

21. This issue was the subject matter of a respondents notice. The plaintiffs' case is that the parties intended that the letters should be a binding agreement apart from any oral agreement which had been reached or was in the process of being reached. Mr. Leggatt, for the plaintiffs, pointed to the clear words of the letters themselves and remarked that on their face there was a clear agreement to purchase and to sell named premises for an agreed price. The purpose of such an agreement was, he said, to ensure that neither...

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