Yangtzekiang Garment Manufacturing Co Ltd v J.n. Roland Deneault And Scott Ltd And Another

CourtHigh Court (Hong Kong)
Judgment Date30 July 1976
Subject MatterCivil Action
Judgement NumberHCA1923/1975
HCA001923/1975 YANGTZEKIANG GARMENT MANUFACTURING CO LTD v. J.N. ROLAND DENEAULT AND SCOTT LTD AND ANOTHER

HCA001923/1975

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

ACTION NO. 1923 OF 1975

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BETWEEN
YANGTZEKIANG GARMENT MANUFACTURING COMPANY LIMITED Plaintiffs
and
J.N. ROLAND DENEAULT and SCOTT LIMITED 1st Defendants
LOWE, BINGHAM & MATTHEWS 2nd Defendants

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ACTION NO. 2389 OF 1975

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BETWEEN
YANGTZEKIANG GARMENT MANUFACTURING COMPANY LIMITED Plaintiffs
and
J.N. ROLAND DENEAULT 1st Defendants
SCOTT LIMITED 2nd Defendants

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Coram: Trainor, J.

Date of Judgment: 30th July, 1976.

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JUDGMENT

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1. The plaintiffs carry on business at 22 Tai Yau Street and, it would appear, its business operations are under the control of an executive director, a Mr. Chan, and its financial director, a Mr. Leung.

2. The defendants are co-owners of the adjoining property No. 20 Tai Yau Street. The 1st defendant is the nominal holder of a share in the 2nd defendant, and a Mr. Young of the firm of accountants Lowe, Bingham & Matthews is the nominal holder of another share. The other shareholders, it would appear from the evidence presented before me, are three brothers called Dinsman who live in America, but the every day working of Scott Limited is controlled by the 1st defendant.

3. The plaintiffs being interested in expanding their business entered into negotiations with the defendants some time in 1975 for the purchase of No. 20 Tai Yau Street. By reason of conditions that were imposed on the sale, the negotiations fell through. Later, in the month of July 1975, the plaintiffs, being of the impression that operations had ceased in No. 20 Tai Yau Street, contacted Mr. Young with the purpose of negotiating a purchase.

4. The premises comprise a 5-storey building but there are in existence plans to raise it by a further four stories. The plaintiffs asked Mr. Young to forward to them the plans as they wished to study them, in particular as to the feasibility of connecting No. 22 with No. 20. Having ascertained that this was feasible and that there was in existence approval by the Public Works Department for the raising of the height of No. 20 they again contacted Mr. Young and an appointment was made to meet the 1st defendant, Mr. Deneault.

5. On the 22nd July, 1975 Mr. Deneault and Mr. Young met Mr. Chan and Mr. Leung. After an examination of the premises No. 20, or at least part of it, they all repaired to Mr. Deneault's office where, after what, I think, was a relatively brief negotiation, it was agreed by Mr. Deneault on his own behalf, and he and Mr. Young on behalf of the 2nd defendants to sell No. 20 Tai Yau Street for the sum of $2,200,000, and Mr. Chan and Mr. Leung accepted this on behalf of the plaintiffs.

6. There was a further discussion which resulted in an agreement between the parties that a deposit of a $300,000 would be paid; and it was further agreed that vacant possession would be yielded up within four months. It was also agreed that should the plaintiffs proceed with the development of No. 20 and engage the architect who had drawn the plans and had had them approved by the Public Works Department, the plaintiffs would be responsible for any fees due to him for supervising the work to be done. If, however, the architect was not engaged by the plaintiffs to that end then the fees due to the architect for obtaining the approval of the Public Works Department would be paid by the plaintiffs.

7. On the 23rd July, that is the day following the meeting, the following letter was sent on behalf of the 2nd defendants. It is addressed to the Directors of the plaintiffs:

" 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$1,100,000.
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 Scretaries"

8. An identical letter was sent by Messrs. Lowe, Bingham & Matthews on behalf of the 1st defendant. It would appear, in fact, that both letters emanated from Mr. Young. The duplicate copies which accompanied these letters had endorsed on them the words: "We Agree and Confirm the above purchase". These letters were brought to the plaintiffs' premises where Mr. Chan signed the endorsement on the duplicates and they were duly returned to the defendants.

9. On the 24th July, 1975 Messrs. Yung, Yu, Yuen & Co. solicitors for the plaintiffs, wrote to the two defendants, but marked the letters for the attention of Mr. J.N. Roland Deneault, the 1st defendant, as follows:

" Dear Sirs,
Re: N.K.I.L. No.4735
(No. 20 Tai Yau Street, Sanpokong)

We have instructions from our clients, Yangtzekiang Garment Manufacturing Company Limited, that you have agreed to sell the above property to our clients on the following terms and conditions:-

1. Purchase price .... HK$2,200,000.
2. Deposit .... HK$300,000 to be paid upon signing agreement for sale and purchase.
3. Balance .... HK$1,800,000 (sic) to be paid upon completion of the sale and purchase.
4. Date of completion .... within 4 months from the date of signing Agreement for sale and purchase.
5. Vacant possession to be given by the Vendor to the Purchaser on or before the date of completion.
6. 2 ¼% stamp duty on Assignment to be paid by the Purchaser solely.
7. The above property is sold subject to the existing plans and specifications prepared by Mr. Raymond Y.K. Kan under P.O.O. Ref. No. 2/4482/73 on conditions that the Vendor shall pay all architect's fee up to the date hereof.
If the above terms and conditions are agreeable to you, please forward us all the title deeds and documents relating to the above property to enable us to prepare the Agreement for sale and purchase for your signature at your convenience.
We would like to mention that our clients had (sic) deposited with us the sum of $300,000 for the purchase of the above property.
Yours faithfully,
Sgd. Yung, Yu, Yuen."

10. Before a reply was received the solicitors telephoned to the 1st defendant and ascertained the name of his and the 2nd defendants' solicitors, Messrs. Zimmern & Co., and having spoken to Mr. Frank Cheung of that firm wrote to them on Friday, 25th July, the following letter:

" Dear Sirs,
Re: N.K.I.L. No. 4735 (No. 20 Tai Yau Street, Sanpokong)

We have instructions from our clients, Yangtzekiang Garment Manufacturing Company Limited, that your clients, Scott Limited and Mr. J.N. Roland Deneault, have agreed to sell the above property to our clients subject to contract on the following terms and conditions:-

1. Purchase price .... HK$2,200,000.
2. Deposit .... HK$300,000 to be paid upon signing agreement for sale and purchase.
3. Balance .... HK$1,900,000 to be paid upon completion of the sale and purchase.
4. Date of completion .... within 4 months from the date of signing Agreement for sale and purchase.
5. Vacant possession .... to be given by the Vendor to the Purchaser on or before the date of completion.
6. Stamp duty on Assignment .... to be paid by the Purchaser solely.
7. The above property is sold subject to the existing plans and specifications prepared by Mr. Raymond Y.K. Kan, authorised architect, and approved by the Building Authority under P.O.O. Ref. No. 2/4482/73 on conditions that the Vendor shall pay all architect's fees up to the date hereof.
8. Each party shall pay its own Solicitors' costs of and incidental to the Agreement for S/P & Assignment.

Please take instructions from your clients and forward us the draft Agreement for sale and purchase in respect of the above property for our approval on behalf of our clients together with the relevant title deeds and documents for our perusal at your convenience.

Yours faithfully,
Signed. Yung, Yu, Yuen."

11. That letter was received by Messrs. Zimmern in the afternoon of the same date and on 29th July they replied as follows:-

" Dear Sirs,
N.K.I.L. 4735 No. 20 Tai Yau St. San Po Kong

We thank you for your letter dated 25th inst. We enclose herewith Agreement for sale and purchase in respect of the above property for your approval. We also send herewith a set of approved plans under Building Authority reference No. B.O.O. 2/4482 of 1973.

Yours faithfully,
(Sgd.) F. Zimmern & Co."

12. On 1st August the solicitors for the plaintiffs returned the agreement signed by their clients with the following covering letter:

" Dear Sirs,
Re: N.K.I.L. 4635 No. 20 Tai Yau Street, San Po Kong, Kowloon
With reference to your letter dated the 29th ultimo and to the subsequent telephone conversation between your Mr. F.C.Y. Cheung and our Mr. P. Yuen, we return herewith Agreement for Sale and Purchase (in duplicate) in respect of the above property duly signed by our client and witnessed for your clients' signatures.
We also send herewith our cheque for $300,000 being the deposit money payable by our client to your clients under the said Agreement for sale and purchase. Our said cheque is sent to you against your strict undertaking not to release the same to your clients until you have forwarded us all the title deeds and documents relating to the above property and have our
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