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Multi Star Investment (Group) Ltd v De Monsa Investments Ltd

Judgment Cited authorities 6 Cited in Precedent Map Related
Vincent
Judgment Date17 November 2010
Year2010
Judgement NumberHCA1004/2009
Subject MatterCivil Action
CourtHigh Court (Hong Kong)
HCA2723A/2008 PROBUS LTD v. TREBLE & TRIPLE LTD AND ANOTHER

HCA 2723/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2723 OF 2008

____________

BETWEEN

PROBUS LIMITED Plaintiff
and
TREBLE & TRIPLE LIMITED 1st Defendant
MIDLAND REALTY INTERNATIONAL LIMITED 2nd Defendant

(By Original Action)

AND BETWEEN

TREBLE & TRIPLE LIMITED Plaintiff
and
PROBUS LIMITED 1st Defendant
MIDLAND REALTY INTERNATIONAL LIMITED 2nd Defendant

(By Counterclaim)

____________

AND

HCA 167/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 167 OF 2009

____________

BETWEEN

FORTUNE ASSET DEVELOPMENT LIMITED Plaintiff
and
DE MONSA INVESTMENTS LIMITED 1st Defendant
CENTALINE PROPERTY AGENCY LIMITED 2nd Defendant

(By Original Action)

AND BETWEEN

DE MONSA INVESTMENTS LIMITED Plaintiff
and
FORTUNE ASSET DEVELOPMENT LIMITED 1st Defendant
CENTALINE PROPERTY AGENCY LIMITED 2nd Defendant

(By Counterclaim)

____________

AND

HCA 1004/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1004 OF 2009

____________

BETWEEN

MULTI STAR INVESTMENT (GROUP) LIMITED Plaintiff
and
DE MONSA INVESTMENTS LIMITED Defendant

____________

(Heard together)

Before: Hon Reyes J in Court

Dates of Hearing: 1-3, 8 & 12 November 2010

Date of Judgment: 17 November 2010

______________

J U D G M E N T

______________

I. INTRODUCTION

1. This trial involves 3 related actions.

2. The Plaintiff Vendors in each action (Probus, Fortune Asset, and Multi Star) entered into agreements for the sale of real property to one or other of the Defendant Purchasers (Treble in the case of Probus, De Monsa in the cases of Fortune Asset and Multi Star). As a result of the Purchasers defaulting on their obligations, the Vendors brought their actions claiming damage.

3. The Purchasers are property investment companies. At the relevant times, all decisions on the sale and purchase of properties by the Purchasers were taken by Lauw Senior. He was then over 80 years old. The Purchasers had one other director, Lauw Senior’s son, sometimes known as Lauw Junior. But Lauw Junior carried on the family business in Indonesia and his involvement in the Purchasers’ day-to-day business was minimal.

4. In each action, the Purchasers say in defence that, when Lauw Senior agreed on the Purchasers’ behalf to buy properties, Lauw Senior was suffering from dementia and could not understand what he was doing. The Purchasers say that Lauw Senior’s actual authority to act on their behalf ceased upon his becoming demented. The Purchasers contend that, as a result, the sale and purchase agreements upon which the Vendors sue were all void (or at least voidable by the Purchasers). Subject to questions as to Lauw Senior’s apparent authority or as to whether the Purchasers ratified Lauw Senior’s acts, the Purchasers say that the Vendors’ actions are not viable.

5. Probus and Fortune Asset have joined the estate agents involved (Midland and Centaline respectively) as defendants. The claim is that, insofar as the Purchasers are held liable, the estate agents breached their duties to Probus and Fortune Asset by not informing them of Lauw Senior’s dementia.

6. The Purchasers have in turned sued the estate agents, seeking to be indemnified against whatever the Purchasers may have to pay to Probus or Fortune Asset.

7. Finally, Midland sues Treble for unpaid liquidated damages.

II. BACKGROUND

A. Probus Action

8. By 4 Principal Agreements of 23 March 2007 Probus agreed to buy Flats A and B and Car Parks A and B (the Bel-Air Properties) from Cyberport. The Bel-Air Properties (then still under construction) formed part of the development known as Bel-Air on the Peak. The total consideration for the Bel-Air Properties was $56,109,000.

9. On 18 October 2007 Probus entered into Provisional Agreements to sell the Bel-Air Properties to Treble in 2 lots (one consisting of Flat A and Car Park A, the other of Flat B and Car Park B). The Provisional Agreements stated that Probus was selling the Bel-Air Properties as confirmor. The Provisional Agreements stipulated that the parties were not obliged specifically to perform the same.

10. The evidence suggests (and I accept) that on 18 October 2007 Mr. Au Kin Cheong of Probus signed Estate Agent Agreements in relation to the 2 lots of Bel-Air Properties being sold to Treble. The Estate Agent Agreements were signed on behalf of Midland by Mr. Frankie Lau and Ms. April Tong respectively. On their face, the Estate Agent Agreements appointed Midland as Probus’ agent (in the case of the 2nd lot of Bel-Air Properties, Probus’ exclusive agent) for the marketing of the Bel-Air Properties from 1 October 2007 to 31 December 2008.

11. The total consideration under the Provisional Agreements was $122,017,800. Upon the signing of the Provisional Agreements, Treble paid an initial deposit of 5% by way of cheques signed by Lauw Senior.

12. On 8 November 2007 Treble’s solicitors (Lovells) sent to Probus’ solicitors (JSM), Formal Agreements for the sale and purchase of the Bel-Air Properties. Lovells’ covering letter noted that the Formal Agreement had been “duly signed by our client, the Purchaser and attested for your client’s execution”. Treble also paid a further deposit of 10% for the Bel-Air Properties.

13. In July 2008 Lovells raised requisitions regarding the Bel-Air Properties. These were answered by JSM.

14. On 25 November 2008 JSM sent notices of completion to Lovells. These notices informed Treble that completion would take place on or before 9 December 2008.

15. Treble failed to complete on 9 December 2008. It gave no reasons for its failure.

16. Probus completed the purchase of Car Parks A and B from Cyberport on 23 December 2009. But Probus did not proceed with the purchase of Flats A and B. As a result, Probus forfeited its deposits under the Principal Agreements. Cyberport then re-sold Flats A and B (each with carpark) for a total consideration of $46,000,000.

17. Neither Mr. Au nor Ms. Verona Lai (Mr. Au’s wife) (the 2 directors of Probus) have ever met Lauw Senior. The sale and purchase of the Bel-Air Properties were effected through Mr. Frankie Lau. It was Mr. Frankie Lau who persuaded Lauw Senior to buy the Bel-Air Properties and Ms. April Tong who persuaded Ms. Lai to agree to selling the same.

B. Fortune Asset Action

18. By a Preliminary Agreement dated 4 November 2007 Fortune Asset agreed to sell and De Monsa to buy the 20th to 23rd floors of Silver Fortune Plaza in Central. The total consideration was $163,568,400 and completion was to take place on 15 May 2008.

19. On 3 December 2007 De Monsa sub-sold the 20th to 23rd floors at $186,432,800, thereby earning a profit of nearly $23,000,000.

20. On 7 December 2007, by another Preliminary Agreement, De Monsa agreed to buy the 11th, 12th, 13th and 15th floors (there being no 14th floor) of Silver Fortune Plaza from Fortune Asset. The total consideration was $211,056,000 with completion to take place on 30 June 2008.

21. Both Preliminary Agreements were signed by Lauw Senior. The sales of the floors at Silver Fortune Plaza to De Monsa were effected through Ms. Emily Wong and Ms. Fiona Cheung of Centaline. No one from Fortune Asset’s personnel ever met Lauw Senior during the relevant period.

22. In relation to the purchase of the 11th to 15th floors, a Formal Agreement was signed on 2 July 2008 following much negotiation between the parties. The Formal Agreement stipulated a completion date of 31 December 2008 at the latest. Pursuant to the Preliminary and Formal Agreements, as at 30 July 2008 De Monsa had provided deposits and part payments totalling $42,211,200.

23. Shortly before completion, K C Ho & Fong (De Monsa’s solicitors) unsuccessfully asked for an extension of time.

24. On 31 December 2008 De Monsa failed to complete. Fortune Asset accepted De Monsa’s repudation by letter dated 2 January 2009.

C. Multi Star Action

25. On 6 December 2007 Multi Star agreed by a Head Agreement to buy an Office at the Lippo Centre from Winfull at $33,480,000. Multi Star paid a deposit of $4,017,600. Completion was to take place on 5 pm on 21 July 2008.

26. On 8 January 2008 Multi Star sub-sold the Office by entering into a Provisional Agreement with De Monsa. The consideration was $38,329,200. De Monsa paid a deposit of $4,599,504. Completion was to take place by 3 pm on 21 July 2008.

27. The Provisional Agreement declared that Midland was “the Agent for both the Vendor and the Purchaser”. The sub-sale of the Office to De Monsa was effected through Ms. Zoe Hui and Ms. Kanee Fung of Midland.

28. De Monsa failed to complete on 21 July 2008. Multi Star terminated the Provisional agreement on 23 July 2008. It treated De Monsa’s deposit as forfeited in consequence.

29. Multi Star in turn failed to complete under its Head Agreement with Winfull. Multi Star’s deposit was forfeited to Winfull. Winfull later re-sold the Office to Hatton for $20,217,600.

D. Lauw Senior

30. Although Lauw Senior was jointly interviewed by the parties’ psychiatric experts (Prof. Felice Lieh Mak for the 3 Vendors, Midland and Centaline; Dr. Jenny Tsang for the 2 Purchasers), he did not give evidence before me.

31. Oral evidence as to Lauw Senior’s state of mind at the time of the relevant agreements was instead given by Lauw Junior, Mr. Law Wai and Ms. Liza Ho. Mr. Law is the General Manager of...

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