HCA9539/1991 D.H. SHUTTLECOCKS LIMITED v. KEUNG SHIU TANG - LawHero
HCA9539/1991
高等法院（民事訴訟）Rhind J. in Court, delivering a written judgment reserved pursuant to O.42 r.5B2/12/1993
HCA9539/1991
1
1991, No. A9539
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HEADNOTE
----------------------
PROPERTY LAW - CONVEYANCING - CONVEYANCING LAW AND PRACTICE -
CONVEYANCING AND PROPERTY ORDINANCE, S.13, 35 AND PART II OF FIRST
SCHEDULE - SO-CALLED "PROVISIONAL SALE & PURCHASE AGREEMENT"
SIGNED BY BOTH PARTIES PROVIDING FOR "FORMAL AGREEMENT" - BINDING
AGREEMENT - FAILURE TO AGREE TERMS OF "FORMAL AGREEMENT" - OPEN
CONTRACT - POWER OF ATTORNEY - POWER OF ATTORNEY ORDINANCE,
SECTION 5(2)(4) & (6) - CONTRACT SIGNED ON BEHALF OF VENDOR BY
ATTORNEY - REQUISITIONS ON TITLE - WHETHER PURCHASER UNDER OPEN
CONTRACT PRECLUDED FROM RAISING REQUISITIONS ON POWER OF
ATTORNEY TO CONVEY - NON-REVOCATION OF POWER OF ATTORNEY -
WHETHER TIME OF ESSENCE - PURPORTED FORFEITURE OF DEPOSIT - PARTY
IN BREACH.
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1991, No. A9539
IN THE SUPREME COURT OF HONG KONG
HIGH COURT
-------------------
BETWEEN
D.H. SHUTTLECOCKS LIMITED Plaintiff
and
KEUNG SHIU TANG Defendant
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Coram : Hon Rhind J. in Court, delivering a written judgment reserved pursuant
to O.42 r.5B
Dates of Hearing : 8th and 9th November 1993
Date and time of Judgment : 3rd December 1993 at 2:15 pm
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JUDGMENT
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The Plaintiff, ("the Purchaser"), by the present proceedings commenced by writ, seeks
specific performance, or such other relief as is just, in respect of the following agreement in
writing, made on 12th September, 1991, with the Defendant, ("the Vendor"), for the sale and
purchase of the Third Floor of No.45 Granville Road, Kowloon, ("the Provisional Sale &
Purchase Agreement") :-
"Provisional Sale and Purchase Agreement
No.45 Granville Road
Kowloon
3
This Agreement signed between KEUNG SHIU TANG (the Vendor) of
3/F, 45 Granville Road, Kowloon and D.H. SHUTTLECOCKS
LIMITED (the Purchaser which shall includes it assignees and nominees)
of 1102-3 Taikoktsui Centre, 11-15 Kok Cheung Street, Taikoktsui,
Kowloon for the sale & purchase of the above-mentioned property on the
following main terms and conditions :-
1. Sale Price
HK$1,080,000.000 (HONG KONG DOLLOARS ONE
MILLION AND EIGHTY THOUSAND ONLY) subject to
good title and vacant possession and free from encumbrances.
2. Terms of payment
i) An initial deposit of HK$200,000.00 payable on the signing
of this Agreement. (The said deposit shall be held by F.
ZIMMERN & CO the Vendor's Solicitor, as stakeholder
money and shall not be released to the Vendors unless and
until the signing of the formal Sale & Purchase Agreement).
ii) A further deposit of HK$400,000.00 payable on the signing
of formal Sale & Purchase Agreement within 5 working
days after the date of receipt of the title deeds by the
Purchaser's Solicitor.
iii) The balance of HK$480,000.00 payable on completion of
Sale.
3. Completion of Sale
Within 2 weeks from the signing of formal Sale/Purchase
Agreement or 11th October 1991 whichever the later.
4. Legal Costs
Each party shall bear its own costs.
5. Stamp Duty
To be borne solely by the Purchaser.
6. Remarks
The premises is to be sold in its existing conditions.
Notwithstanding anything contained herein to the contrary, upon receipt of
the initial deposit by the Vendors, this Agreement shall have binding effect
and neither party can rescind from the Agreement with the exception that
should the title of the property be defective, the Purchaser shall have the
right to terminate this Agreement and thereupon, the said initial deposit
shall be returned to the Purchaser but without interest.
4
If the Purchaser shall fail to sign the Sale & Purchase Agreement on or
before the date specified as mentioned in paragraph 2 above for reasons
other than defective title, the initial deposit mentioned herein and all other
payments (if any) made by the Purchaser shall be absolutely forfeited to
the Vendor as liquidated damage and thereupon this Agreement shall be
terminated and neither party shall have any further claims against the other
and the Vendor shall be at liberty to resell the premises.
Dated this 12th day of September 1991
For and on behalf of
D.H. SHUTTLECOCKS LIMITED (the Purchaser)
------------------------
Authorized Signature(s)
For and on behalf of
Keung Shiu Tang (The Vendor)
------------------------ (Signing as Attorney for the Vendor)
Keung Wai Ming [I.D. No.E943720(0)
We confirm receipt of an initial deposit of HK$200,000.00 from D.H.
Shuttlecocks Limited by Cheque No.455477 of Hong Kong Bank dated
12th September 1991 drawn in favour of F. Zimmern & Co.
For and on behalf of
MEMFUS WONG SURVEYORS LIMITED (the agent as witness)"
Memfus Wong Surveyors Limited, ("Memfus Wong"), are estate agents : they drew
up the Provisional Sale and Purchase Agreement signed by the parties on 12th September,
1991.
F. Zimmern & Co., who were the Vendor's solicitors from the outset, duly received
the $200,000 initial deposit from Memfus Wong.
Despite the inclusion of the word "Provisional" in the title of that document signed by
the parties on 12th September 1991, there can be no doubt about its being a fully binding
contract. Not only is there ample authority for a document in this form being binding (see e.g.
Link Brain Ltd. v. Fujian Finance Co. Ltd. [1990]2 H.K.L.R. 353; Yui Yau Ping v. Fong
Yee-lan [1992]2
5
H.K.L.R. 167; and Chu Wing Ning v. Ngan Hing Cheung, H.C. Action No.A9409/1991, an
unreported decision of Mr Robert Ribeiro, Q.C., sitting as a Deputy Judge.) but, also, both
parties insist they are bound by it, even though they differ on how it should be interpreted.
It was not until 16th September, 1991 that Messrs Clayton Wong & Co., the solicitors
who, by then, had been instructed by the Purchaser to act for it, wrote and faxed F. Zimmern &
Co., asking for the draft formal Sale and Purchase Agreement, ("the Formal Agreement"),
together with the title deeds.
In somewhat leisurely fashion, F. Zimmern & Co. waited a couple of days until 18th
September 1991 before sending Messrs Clayton Wong & Co. the title deeds, (Agreed Bundle
page 39), and, then, the following day, 19th September, sent the draft Formal Agreement as
well.
In the light of events occurring subsequently, it is of interest to note that, in its letter of
18th September accompanying the title deeds, F. Zimmern & Co. wrote they were sent to
Clayton Wong & Co. ".... on your undertaking to hold the same to our order and to return the
same on demand. Please acknowledge receipt by signing and returning to us the duplicate of
this letter to us." Although there was no explicit reference in the Provisional Sale & Purchase
Agreement to the Purchaser's solicitor having to give any such undertaking, Messrs Clayton
and Co. impliedly gave one, as requested, by signing and returning the duplicate to F. Zimmern
& Co., without any fuss : (Agreed Bundle, page 41). Solicitors' undertakings of one sort or
another are a commonplace of conveyancing, and play a useful role in the smooth and
expeditious despatch of conveyancing business.
It is common ground that, as a matter of computation, the "5 working days after the
date of receipt of the title deeds by the Purchaser's Solicitor" in Clause 2(ii) of the Provisional
Sale & Purchase Agreement expired at midnight on 25th September.
At or about 3 p.m. on 25th September, F. Zimmern & Co. received from Clayton
Wong & Co. two letters each marked "URGENT". The first read as follows :
"25th September 1991
Messrs. F. Zimmern & Co.,
6
Solicitors
Hong Kong
SUBJECT TO CONTRACT
Dear Sirs,
Re : No.45 Granville Road 3rd floor Kowloon
We refer to your letter of the 19th September 1991 and return to you herewith
your draft Agreement for sale and purchase duly approved by us on behalf of our
client, the purchaser, as amended in red.
Please send us engrossment of the amended Agreement for our client's signature
as soon as possible.
Yours faithfully"
Enclosed with that first letter was the draft Formal Agreement, as amended by Clayton
Wong & Co.
On the view I take of the case, it is only necessary to consider in detail one of the
amendments proposed by Clayton Wong & Co. to the draft Formal Agreement. As Part IX of
the First Schedule to the draft Formal Agreement, F. Zimmern & Co. had included the
following :-
"PART IX
Special Stipulations :
(a) The Vendor is selling the Property under a Power of Attorney,
granted on 13th November 1990.
(b) The Power is valid and subsisting and has not been revoked.
(c) A certified true copy of the Power will be handed over on
Completion.
(d) The Purchaser having been supplied with a copy of the Power
shall raise no objection or requistion relating to it."
On the occasion of sending back the draft Formal Agreement to F. Zimmern & Co.
with the first letter of 25th September 1991, Clayton Wong & Co. had amended Part IX by
deleting the whole of (a), (b), (c) and (d), and, against "Special Stipulations", had inserted the
word, "Nil". (See Agreed Bundle, page 55).
Suffice it to say at this point - I will elaborate later - the Vendor who, by the
Provisional Sale and Purchase Agreement, had contracted to sell ".. .
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subject to good title ..." was not within his rights in trying to impose those "Special
Stipulations" on the Purchaser in the draft Formal Agreement.
I will now set out the content of the second letter Clayton Wong & Co. sent F.
Zimmern & Co. at the same time as the first letter :
"25th September 1991
Messrs. F. Zimmern & Co.,
Solicitors,
Hong Kong SECOND LETTER
SUBJECT TO CONTRACT
Dear Sirs,
Re : No.45 Granville Road 3rd floor Kowloon
We refer to our letter to you of the today's day and now send you herewith our
cheque for $400,000.00 in your favour as stakeholders being the further deposit for
the sale and purchase of the above property payable pursuant to the Provisional
Agreement for Sale and Purchase made between our respective clients.
The said cheque is sent to you against your undertaking as follows:
1. to hold the said sum of $400,000.00 to our order and not to release the
same to your client unless and until a formal Agreement for Sale and
Purchase duly approved by us on behalf of our client is signed by our
respective clients subject however to the terms and conditions therein
stipulated, and
2. To send to us within the next three days engrossment of the Agreement for
Sale and Purchase as approved by us for our client's signature.
3. to return the said sum of $400,000.00 to us on demand if signing of the said
formal Agreement for Sale and Purchase shall fall through for whatever
reason.
We have to add that nothing is binding on our client unless and until a formal
Agreement for Sale and Purchase is delivered to you after it has been approved by us
and signed by our client provided that nothing herein shall affect or prejudice the
validity and/or enforceability of any documents previously signed by our respective
clients.
Yours faithfully,"
Accompanying that second letter was a cheque for $400,000 drawn on Clayton Wong
& Co.'s Client Account with the Hong Kong Central Branch of Banque Nationale de Paris in
favour of F. Zimmern & Co.
8
Yet a third letter was received by F. Zimmern & Co. from Clayton Wong & Co. that
afternoon. This one, which arrived a few minutes before 4 p.m., was as follows :-
"25th September 1991
Messrs. F. Zimmern & Co.,
Solicitors,
Hong Kong SUBJECT TO CONTRACT
Dear Sirs,
Re : No.45 Granville Road 3rd floor Kowloon
We refer to your letter of the 18th September 1991.
Having perused the title deeds and documents relating to the above property
forwarded to us under cover of your said letter, we have raised the following
requisitions on your client's title to the above property :
1. We note that no identity document of your client appears in the title deeds.
Please let us how your client can be identified to be the owner of the above
property by his Hong Kong identity card No.XXXXXXX(X).
2. Please furnish us with the floor plan of the subject property.
3. Please let us know how the donor Keung Shiu Tang understands the effect
of Section 7 of the Powers of Attorney Ordinance when executing the
General Power of Attorney in Canada.
4. Please furnish us with certified true copies of the following documents to
complete your client's title :
(a) Conditions of Regrant No.8825
(b) Occupation Permit.
We send you herewith photostatic copy of the said General Power of Attorney for
your further handling.
Our client reserves the right to raise further requisitions on title after the required
documents are sent from you for our perusal and after the requisitions are purported to
be complied with by your client.
Yours faithfully."
It is not clear the precise time when, but, certainly after receiving Clayton Wong &
Co.'s second letter that day, F. Zimmern & Co. faxed the following riposte to Clayton Wong &
Co. :
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"25th September 1991
Messrs. Clayton Wong & Co.,
Room 1435, Central Building,
Pedder Street
Hong Kong 1st Letter
BY FAX & BY HAND
Dear Sirs,
Re : No.45 Granville Road. 3rd Floor. Kowloon
We refer to your second letter of today's date enclosing your cheque for
$400,000.00 made payable to us.
We are instructed to give your client notice through your goodselves that neither
you or your client is entitled to unilaterally impose the undertaking on us.
Unless you forthwith withdraw the undertaking and arrange for your client to sign
the Agreement for Sale and Purchase within today, our client shall treat the provisional
agreement as repudiated by your client.
Yours faithfully,"
The stance taken by F. Zimmern & Co. in that letter could not be justified under the
terms of the Provisional Sale & Purchase Agreement, by which both sides acknowledged they
were bound.
The time for payment by the Purchaser of the further deposit of $400,000 under
Clause 2(ii) of the Provisional Sale & Purchase Agreement had not yet arrived when F.
Zimmern & Co. sent its first letter on the afternoon on 25th September, and, in fact, never
arrived, since the Vendor at no stage signed a Formal Agreement. Without the Vendor's
signature there could be no Formal Agreement : there would only be a worthless piece of paper
on which happened to be typed, "Formal Agreement".
If the Vendor's solicitors chose not to give the undertaking requested, that was their
own affair, but it in no way relieved the Vendor of his obligation to sign a Formal Agreement as
a prerequisite for the further deposit of $400,000 becoming payable by the Purchaser.
At page 174, between letters E and F, of the Link Brain case, the Court of Appeal
observed in relation to the clause there in issue, requiring that a payment be made "upon
signing the Sale and Purchase Agreement", that the clause "... could only mean what it said ...,"
with the result that the seller in that
10
case was in no position to insist upon payment because he had not signed the Sale and Purchase
Agreement on which he sought to rely.
Needless to say, the construction of any written agreement depends upon the
particular words used, and the particular factual matrix. That said, I can discern no material
difference in the contract with which I am concerned, and that in Link Brain, which would
justify my holding the words in Clause 2(ii) of the Provisional Sale & Purchase Agreement : "A
further deposit of $400,000 payable on the signing" (of the Formal Agreement), mean other
than what they say.
True, the third paragraph of Clause 6, headed "Remarks" of the Provisional Sale &
Purchase Agreement reads as follows :-
"If the Purchaser shall fail to sign the Sale & Purchase Agreement on or
before the date specified as mentioned in paragraph 2 above for reasons
other than defective title, the initial deposit mentioned herein and all other
payments (if any) made by the Purchaser shall be absolutely forfeited to
the Vendor as liquidated damage and thereupon this Agreement shall be
terminated and neither party shall have any further claims against the other
and the Vendor shall be at liberty to resell the premises."
On the view I take, any failure by the Purchaser to sign a Formal Agreement will only
attract the operation of that paragraph in circumstances where the Vendor has himself signed
the Formal Agreement, for, without the Vendor's signature, no Formal Agreement comes into
existence.
More needs to be said about the third paragraph of the first letter dated 25th
September 1991 from the Vendor's to the Purchaser's solicitor. That paragraph reads :
"Unless you forthwith withdraw the undertaking and arrange for your
client to sign the Agreement for Sale and Purchase within today, our client
shall treat the provisional agreement as repudiated by your client."
That paragraph, in my view, by itself amounts to an anticipatory breach of the
Provisional Sale & Purchase Agreement by the Vendor. For reasons I have already stated, the
request by the Purchaser's solicitors for an undertaking from the Vendor's solicitors, in the
circumstances existing at the time
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it was made, afforded no ground entitling the Vendor to treat the Provisional Sale and Purchase
Agreement as repudiated.
Nor was the Vendor's solicitor any more justified in threatening that, unless the
Purchaser signed the Formal Agreement that very same day, the Vendor would treat the
Provisional Sale & Purchase Agreement as repudiated.
While making much of the supposed mote in the eye of the Purchaser failing to sign
the Formal Agreement, F. Zimmern & Co. chose to ignore the beam in the eye of their own
client who never got around to signing any Formal Agreement.
If both sides failed to sign any Formal Agreement, the only consequence would be the
Provisional Sale and Purchase Agreement remaining in force. In that case, instead of the
Purchaser having to pay the Vendor a further deposit of $400,000, the Purchaser would then
have to pay the Vendor that same sum, plus the balance of the purchase money, on completion.
Even assuming that time had been of the essence under the Provisional Sale &
Purchase Agreement - and I do not think it was - the Vendor was in no position to complain as
at 25th September 1991 about non- performance on the part of the Purchaser through failing to
sign the Formal Agreement, since the draft Formal Agreement tendered to the Purchaser's
solicitor at all material times failed in at least one essential respect to conform with the
requirements of the Provisional Sale & Purchase Agreement, namely, the insistence by the
Vendor's solicitors, already referred to, that the draft Formal Agreement had to include the
following Special Stipulations :
"PART IX
Special Stipulations :
(a) The Vendor is selling the Property under a Power of Attorney
granted on 13th November 1990.
(b) The Power is valid and subsisting and has not been revoked.
(c) A certified true copy of the Power will be handed over on
Completion.
(d) The Purchaser having been supplied with a copy of the Power shall
raise no objection or requisition relating to it."
12
The Provisional Sale & Purchase Agreement had been signed on behalf of the Vendor,
Keung Shiu Tang, by Keung Wai Ming, "Signing as Attorney for the Vendor" (see Agreed
Bundle, p36), so the Purchaser presumably knew that Keung Wai Ming was purporting to sign
the Provisional Sale & Purchase Agreement on behalf of the Vendor under a Power of Attorney.
There was, however, nothing in the Provisional Sale & Purchase Agreement fixing the
Purchaser with any particular knowledge of the terms of any Power of Attorney, nor limiting
the Purchaser's entitlement to raise requisitions on it.
One of the documents of title furnished by the Vendor's solicitors to the Purchaser's
solicitors on 18th September 1991 was a certified copy of a General Power of Attorney
conferred by the Vendor, Keung Shui Tang, on Ms. Keung Wai Ming, the signatory of the
Provisional Sale and Purchase Agreement. The terms of that Power of Attorney are as follows :
"THIS GENERAL POWER OF ATTORNEY is made this 13th day of November,
1990 by KEUNG SHIU TANG Gentleman (Holder of Hong Kong Identity Card
No.B448083(5) of 2438 East 27th Avenue. Vancouver, BC V5R 1M8, Canada.
I appoint KEUNG WAI MING Spinster (Holder of Hong Kong Identity Card
No.E943720(0) of 3rd Floor, 45 Granville Road, Kowloon, Hong Kong to be my
attorney in accordance with section 7 of the Powers of Attorney Ordinance, Chapter
31 of the Laws of Hong Kong.
IN WITNESS whereof I have )
hereunto set my hand and )
seal in the presence of )
WILLIAM GEE
NOTARY PUBLIC
#203-10E. PENDER STREET
VANCOUVER, B.C. V6A 1T1"
There is no dispute that, by virtue of the Power of Attorney Ordinance, Cap.31, the
Power of Attorney in the present case operated to confer on Ms. Keung Wai Ming authority to
do on behalf of the Vendor anything which can be lawfully done by an attorney.
If the Purchaser's solicitors had allowed the Special Stipulations in Part IX to become
part of the Formal Agreement, the consequences could have been highly prejudicial to the
Purchaser in the event of the revocation of the
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Power of Attorney on account of the Vendor's becoming bankrupt, suffering mental incapacity
or dying during the interval between the signing of the Formal Agreement and the Completion
Date. Suppose that knowledge of such a catastrophe came to the Purchaser's attention during
that interval before completion : the Purchaser could then find itself in the unenviable position
of being forced to complete without being entitled to object that the Power of Attorney was no
longer valid and subsisting. Because of such knowledge, the Purchaser would forego the
protection of s.5(2) of the Powers of Attorney Ordinance in respect of claims brought against it
by the estate of the deceased, bankrupt or mentally incapable Vendor, as the case might be.
S.5(2) is as follows :
"(2) Where a power of attorney has been revoked and a person, without
knowledge of the revocation, deals with the donee of the power, the
transaction between them shall, in favour of that person, be as valid as if
the power had then been in existence."
A further consequence could be the inability of the Purchaser to pass a good title to
anyone other than a "purchaser" within the meaning of sub- sections (4) and (6) of s.5 of the
Powers of Attorney Ordinances :
"(4) Where the interest of a purchaser depends on whether a transaction
between the donee of a power of attorney and another person was valid by
virtue of subsection (2), it shall be conclusively presumed in favour of the
purchaser that that person did not at the material time know of the
revocation of the power if -
(a) the transaction between that person and the donee was
completed within twelve months of the date on which the power
came into operation; or
(b) that person makes a statutory declaration, before or within three
months after the completion of the purchase, that he did not at the
material time know of the revocation of the power.
(6) In this section -
'Purchaser' means-
(a) a purchaser in good faith for valuable consideration;
(b) a lessee, mortgagee or other person who for valuable consideration
acquires an interest in property; and
(c) an intending purchaser; and
'valuable consideration' includes marriage but not a nominal consideration
in money."
14
Simply because the Purchaser knew that the Vendor signed the Provisional Agreement
through his attorney in no way curtails the Purchaser's entitlement to as good a title as if the
Vendor himself had signed.
Nothing in the Provisional Sales & Purchase Agreement limits the title the Vendor is
required to show : there is explicit provision it has to be a, "good title".
There is no scope for disputing that the Provisional Sale & Purchase Agreement is in
the nature of an "open contract", attracting the operation of the Conveyancing and Property
Ordinance, Cap.219, and also the general law, to imply usual terms where the contract is silent.
The combined operation of s.13 and s.35, together with Part II of the First Schedule,
of the Conveyancing and Property Ordinance bring about the result that the Vendor is required
to prove the validity and non-revocation of the Power of Attorney, in the usual way, as an
essential link in the title. There is no basis in law to justify the Vendor's attempt by the "Special
Stipulations" to deny the Purchaser the right to raise objections or requisitions concerning the
validity and non-revocation of the Power of Attorney.
Insistence by the Vendor's solicitor on the inclusion of their "Special Stipulations" in
the draft Formal Agreement put their client in breach of the conditions implied by the
Conveyancing and Property Ordinance in the Provisional Sale & Purchase Agreement to show
a good title.
So long as the Vendor remained in breach of the Provisional Sale & Purchase
Agreement by wrongfully insisting upon the "Special Stipulations", the Vendor was in no
position to complain about any failure on the Purchaser's part to sign any Formal Agreement
and pay the further deposit of $400,000.
In response to the first letter from the Vendor's solicitors on 25th September 1991, the
Purchaser's solicitors sent their fourth to the Vendor's solicitors that day, the content being as
follows :
"25th September 1991
Messrs. F. Zimmern & Co.,
Solicitors,
15
Hong Kong FOURTH LETTER
SUBJECT TO CONTRACT
Dear Sirs,
Re : No.45 Granville Road 3rd floor Kowloon
We refer to your letter dated the 25th September 1991 and faxed to us at 3:54
p.m. today.
While awaiting from you the engrossed Agreement for Sale and Purchase with
such amendments made by us, we fail to see how our client can sign the Agreement
for Sale and Purchase today.
We reserve our right to reply to paragraph 2 of your letter under reply.
In the meantime, our client reserves all its rights under the Provisional Agreement
for Sale and Purchase made between our respective clients.
Yours faithfully,"
That letter in no way sought to rescind the Provisional Sale & Purchase Agreement by
which the parties were bound. Reasonably, as I see it, the Purchaser's solicitors wanted to
continue negotiating with the Vendor's solicitors to see if a Formal Agreement could be agreed,
but, meanwhile, affirmed the existing Provisional Sale & Purchase Agreement.
Back came the faxed second letter from the Vendor's solicitors that day, setting out
details of why the Vendor's solicitors thought nine amendments proposed by the Purchaser's
solicitors to the draft Formal Agreement were unacceptable. On the view I take, it is
unnecessary to set out all nine of the ways in which the Vendor's solicitors found the
amendments unacceptable. It is enough to mention one of them, the "Special Stipulations",
which the Vendor's solicitors insisted must be kept intact.
The sting lay in the penultimate paragraph of that letter :
"Please note that pursuant to the Provisional Agreement for Sale and
Purchase dated 12th September 1991 the Formal Agreement for Sale and
Purchase should be signed today, please arrange your client to sign the
same today failing which our client shall treat the said Provisional
Agreement as repudiated by your client."
16
This was another unilateral attempt on behalf of the Vendor's solicitors to repudiate
the Provisional Sale & Purchase Agreement and forfeit the initial deposit of $200,000.
As the Vendor's solicitors correctly noted in the final paragraph of that letter :
"Nothing in this letter or the Formal Agreement for Sale and Purchase
shall prejudice the said Provisional Agreement unless and until the formal
Sale and Purchase Agreement is signed."
The third letter from the Vendor's to the Purchaser's solicitors that same day enclosed
"... our engrossment of the Formal Agreement for Sale and Purchase in duplicate for your
handling." That engrossment was the Vendor's solicitors' version of the Formal Agreement,
disregarding all nine proposed amendments which the Vendor's solicitors, in their second letter
that day, had declared to be unacceptable. Featuring in the engrossment were the "Special
Stipulations," (Agreed Bundle, pages 91 and 92).
Then came the Vendor's solicitors' fourth and last letter for the day :
"25th September 1991
Messrs. Clayton Wong & Co
Room 1535 Central Building
Pedder Street
Hong Kong SUBJECT TO FORMAL CONTRACT
Dear Sirs,
Re : 3rd Floor, No.45 Granville Road. Kowloon. Hong Kong
Your fourth letter of today's date refers.
The draft Agreement was sent to you on the 19th instant and you chose not to approve
the same until your first letter of today's date received by us at 3:00 p.m.
We have replied to your proposed amendments at the earliest possible time i.e. 5:00
p.m. today by fax.
We have by separate cover sent you the engrossment and repeat the last paragraph of
our first letter of today's date.
We further note that up to the moment of writing this letter, you have not withdrawn
the undertaking. Accordingly we return herewith your said cheque for the sum of
HK$400,000.00
We hereby reiterate the second last and the last paragraphs of our second letter of
today's date.
17
Yours faithfully,
F. Zimmern & Co."
By repeating the comminations in the last paragraph of their first letter of the day and
the penultimate paragraph of their second, the Vendor's solicitors purported to treat the
Purchaser as in breach of the Provisional Sale & Purchase Agreement, whereas the reality was
the fault lay with the Vendor.
Midnight on the evening of 25th September 1991 found the Vendor's solicitor still
dutifully at her desk in case the Purchaser's solicitors turned up to hand over (1) the Vendor's
solicitors' version of the Formal Agreement signed by the Purchaser, and (2) $400,000 by way
of further deposit, with no strings attached such as requiring the Vendor to have signed, too.
On 26th September 1991, the Vendor's solicitors wrote to the Purchaser's,
"..... in breach of the Provisional Agreement dated 12th September 1991
your client has failed to sign the Agreement for Sale and Purchase and pay
the further deposit.
Pursuant to the said Provisional Agreement our client hereby forfeits the
initial deposit paid thereunder and terminates the said Provisional
Agreement."
Whatever the Vendor's solicitors might have thought the position to have been, the
Vendor was not, in my judgment, entitled, in the events which had occurred, to walk away from
the contract embodied in the Provisional Sale & Purchase Agreement, pocketing the $200,000
initial deposit as he went.
At no time had the Purchaser evinced any intention not to be bound by the Provisional
Sale & Purchase Agreement, and, in reply to the Vendor's solicitors' letter of 26th September,
the Purchaser's solicitors, on behalf of their client, refused to accept the Vendor's purported
repudiation of the Provisional Sale & Purchase Agreement.
From the Vendor's solicitors' letter of 27th September, 1991 one sees the Vendor's
solicitors treating the whole matter as closed with the forfeiting
18
of the Purchaser's initial deposit, and announcing, "... we do not see any need for any further
correspondence in the matter."
That view was not shared by the Vendor's solicitors who, on their client's behalf,
persevered with trying to get the Vendor to perform the Provisional Sale & Purchase
Agreement, but in vain. Hence, the present proceedings.
It still remains for me to explain why I do not think that time was of the essence in
relation to the payment of a further deposit of $400,000. Generally, time is not of the essence
under conveyancing contracts, and I fail to detect anything special about the circumstances of
the Provisional Sale and Purchase Agreement in the present case to take it outside the general
rule.
The "5 working days after the date of receipt of the title deeds by the Purchaser's
solicitor", referred to in paragraph 2(ii) of the Provisional Sale and Purchase Agreement as the
time for paying a further deposit of $400,000 was no more than a target date, rather than a
condition. Failure to meet that target date would not by itself bring the contract embodied in the
Provisional Sale and Purchase Agreement to an end. Given the relatively short period of five
working days for settling the terms of the Formal Agreement, as well as for the raising and
answering of requisitions on the title, I do not think it would have been within the contemplation
of the parties on signing the Provisional Sale & Purchase Agreement that, the failure by the
Vendor to sign the Formal Agreement on or before 25th September notwithstanding, the
Vendor would, nonetheless, be entitled to forfeit the initial deposit because the Purchaser had
not paid the Vendor a further deposit of $400,000 by that date. Mutatis mutandis, everything
said by Nazareth J.A. in Yiu Yau Ping v. Fong Yee Lan [1992]2 H.K.L.R., 167, 175, lines 12 to
35, in relation to the contract he was there considering applies with equal force to the
Provisional Sale & Purchase Agreement in the present case.
In my judgment the Vendor, through his solicitors, wrongfully attempted to rescind the
Provisional Sale and Purchase Agreement, and must now accept the legal consequences.
19
I now enter interlocutory judgment in the Purchaser's favour, but, on a date to be fixed,
would like to be addressed on remedies, unless the parties can reach agreement on that.
This being a written Judgment reserved pursuant to O.42, r.5B, I make a 14 day order
nisi in the Purchaser's favour for costs.
The topic of costs prompts one final thought.
In the light of such decisions as Link Brain, Yiu Yau Ping, Chu Wing Ning and now
the present one, it well behoves conveyancing solicitors to urge caution on any seller tempted
by the prospect of getting something for nothing in the form of a deposit forfeited on the basis
of an alleged departure by a buyer from a conveyancing time-table. Except in indubitably clear
cases, the biter needs alerting to the considerable risk of finishing up the bitten in the form of
having to pay both his own and his opponent's litigation costs.
(J.J. Rhind)
Judge of the High Court
Mr Walter Lau (inst'd by M/s L.H. Kwan & Co.) for the Plaintiff
Mr Alfred Fung (inst'd by M/s Lo, Wong & Tsui) for the Defendant
1
1991, No. A9539
---------------------
HEADNOTE
----------------------
PROPERTY LAW - CONVEYANCING - CONVEYANCING LAW AND PRACTICE -
CONVEYANCING AND PROPERTY ORDINANCE, S.13, 35 AND PART II OF FIRST
SCHEDULE - SO-CALLED "PROVISIONAL SALE & PURCHASE AGREEMENT"
SIGNED BY BOTH PARTIES PROVIDING FOR "FORMAL AGREEMENT" - BINDING
AGREEMENT - FAILURE TO AGREE TERMS OF "FORMAL AGREEMENT" - OPEN
CONTRACT - POWER OF ATTORNEY - POWER OF ATTORNEY ORDINANCE,
SECTION 5(2)(4) & (6) - CONTRACT SIGNED ON BEHALF OF VENDOR BY
ATTORNEY - REQUISITIONS ON TITLE - WHETHER PURCHASER UNDER OPEN
CONTRACT PRECLUDED FROM RAISING REQUISITIONS ON POWER OF
ATTORNEY TO CONVEY - NON-REVOCATION OF POWER OF ATTORNEY -
WHETHER TIME OF ESSENCE - PURPORTED FORFEITURE OF DEPOSIT - PARTY
IN BREACH.
2
1991, No. A9539
IN THE SUPREME COURT OF HONG KONG
HIGH COURT
-------------------
BETWEEN
D.H. SHUTTLECOCKS LIMITED Plaintiff
and
KEUNG SHIU TANG Defendant
---------------------
Coram : Hon Rhind J. in Court, delivering a written judgment reserved pursuant
to O.42 r.5B
Dates of Hearing : 8th and 9th November 1993
Date and time of Judgment : 3rd December 1993 at 2:15 pm
---------------------
JUDGMENT
---------------------
The Plaintiff, ("the Purchaser"), by the present proceedings commenced by writ, seeks
specific performance, or such other relief as is just, in respect of the following agreement in
writing, made on 12th September, 1991, with the Defendant, ("the Vendor"), for the sale and
purchase of the Third Floor of No.45 Granville Road, Kowloon, ("the Provisional Sale &
Purchase Agreement") :-
"Provisional Sale and Purchase Agreement
No.45 Granville Road
Kowloon
3
This Agreement signed between KEUNG SHIU TANG (the Vendor) of
3/F, 45 Granville Road, Kowloon and D.H. SHUTTLECOCKS
LIMITED (the Purchaser which shall includes it assignees and nominees)
of 1102-3 Taikoktsui Centre, 11-15 Kok Cheung Street, Taikoktsui,
Kowloon for the sale & purchase of the above-mentioned property on the
following main terms and conditions :-
1. Sale Price
HK$1,080,000.000 (HONG KONG DOLLOARS ONE
MILLION AND EIGHTY THOUSAND ONLY) subject to
good title and vacant possession and free from encumbrances.
2. Terms of payment
i) An initial deposit of HK$200,000.00 payable on the signing
of this Agreement. (The said deposit shall be held by F.
ZIMMERN & CO the Vendor's Solicitor, as stakeholder
money and shall not be released to the Vendors unless and
until the signing of the formal Sale & Purchase Agreement).
ii) A further deposit of HK$400,000.00 payable on the signing
of formal Sale & Purchase Agreement within 5 working
days after the date of receipt of the title deeds by the
Purchaser's Solicitor.
iii) The balance of HK$480,000.00 payable on completion of
Sale.
3. Completion of Sale
Within 2 weeks from the signing of formal Sale/Purchase
Agreement or 11th October 1991 whichever the later.
4. Legal Costs
Each party shall bear its own costs.
5. Stamp Duty
To be borne solely by the Purchaser.
6. Remarks
The premises is to be sold in its existing conditions.
Notwithstanding anything contained herein to the contrary, upon receipt of
the initial deposit by the Vendors, this Agreement shall have binding effect
and neither party can rescind from the Agreement with the exception that
should the title of the property be defective, the Purchaser shall have the
right to terminate this Agreement and thereupon, the said initial deposit
shall be returned to the Purchaser but without interest.
4
If the Purchaser shall fail to sign the Sale & Purchase Agreement on or
before the date specified as mentioned in paragraph 2 above for reasons
other than defective title, the initial deposit mentioned herein and all other
payments (if any) made by the Purchaser shall be absolutely forfeited to
the Vendor as liquidated damage and thereupon this Agreement shall be
terminated and neither party shall have any further claims against the other
and the Vendor shall be at liberty to resell the premises.
Dated this 12th day of September 1991
For and on behalf of
D.H. SHUTTLECOCKS LIMITED (the Purchaser)
------------------------
Authorized Signature(s)
For and on behalf of
Keung Shiu Tang (The Vendor)
------------------------ (Signing as Attorney for the Vendor)
Keung Wai Ming [I.D. No.E943720(0)
We confirm receipt of an initial deposit of HK$200,000.00 from D.H.
Shuttlecocks Limited by Cheque No.455477 of Hong Kong Bank dated
12th September 1991 drawn in favour of F. Zimmern & Co.
For and on behalf of
MEMFUS WONG SURVEYORS LIMITED (the agent as witness)"
Memfus Wong Surveyors Limited, ("Memfus Wong"), are estate agents : they drew
up the Provisional Sale and Purchase Agreement signed by the parties on 12th September,
1991.
F. Zimmern & Co., who were the Vendor's solicitors from the outset, duly received
the $200,000 initial deposit from Memfus Wong.
Despite the inclusion of the word "Provisional" in the title of that document signed by
the parties on 12th September 1991, there can be no doubt about its being a fully binding
contract. Not only is there ample authority for a document in this form being binding (see e.g.
Link Brain Ltd. v. Fujian Finance Co. Ltd. [1990]2 H.K.L.R. 353; Yui Yau Ping v. Fong
Yee-lan [1992]2
5
H.K.L.R. 167; and Chu Wing Ning v. Ngan Hing Cheung, H.C. Action No.A9409/1991, an
unreported decision of Mr Robert Ribeiro, Q.C., sitting as a Deputy Judge.) but, also, both
parties insist they are bound by it, even though they differ on how it should be interpreted.
It was not until 16th September, 1991 that Messrs Clayton Wong & Co., the solicitors
who, by then, had been instructed by the Purchaser to act for it, wrote and faxed F. Zimmern &
Co., asking for the draft formal Sale and Purchase Agreement, ("the Formal Agreement"),
together with the title deeds.
In somewhat leisurely fashion, F. Zimmern & Co. waited a couple of days until 18th
September 1991 before sending Messrs Clayton Wong & Co. the title deeds, (Agreed Bundle
page 39), and, then, the following day, 19th September, sent the draft Formal Agreement as
well.
In the light of events occurring subsequently, it is of interest to note that, in its letter of
18th September accompanying the title deeds, F. Zimmern & Co. wrote they were sent to
Clayton Wong & Co. ".... on your undertaking to hold the same to our order and to return the
same on demand. Please acknowledge receipt by signing and returning to us the duplicate of
this letter to us." Although there was no explicit reference in the Provisional Sale & Purchase
Agreement to the Purchaser's solicitor having to give any such undertaking, Messrs Clayton
and Co. impliedly gave one, as requested, by signing and returning the duplicate to F. Zimmern
& Co., without any fuss : (Agreed Bundle, page 41). Solicitors' undertakings of one sort or
another are a commonplace of conveyancing, and play a useful role in the smooth and
expeditious despatch of conveyancing business.
It is common ground that, as a matter of computation, the "5 working days after the
date of receipt of the title deeds by the Purchaser's Solicitor" in Clause 2(ii) of the Provisional
Sale & Purchase Agreement expired at midnight on 25th September.
At or about 3 p.m. on 25th September, F. Zimmern & Co. received from Clayton
Wong & Co. two letters each marked "URGENT". The first read as follows :
"25th September 1991
Messrs. F. Zimmern & Co.,
6
Solicitors
Hong Kong
SUBJECT TO CONTRACT
Dear Sirs,
Re : No.45 Granville Road 3rd floor Kowloon
We refer to your letter of the 19th September 1991 and return to you herewith
your draft Agreement for sale and purchase duly approved by us on behalf of our
client, the purchaser, as amended in red.
Please send us engrossment of the amended Agreement for our client's signature
as soon as possible.
Yours faithfully"
Enclosed with that first letter was the draft Formal Agreement, as amended by Clayton
Wong & Co.
On the view I take of the case, it is only necessary to consider in detail one of the
amendments proposed by Clayton Wong & Co. to the draft Formal Agreement. As Part IX of
the First Schedule to the draft Formal Agreement, F. Zimmern & Co. had included the
following :-
"PART IX
Special Stipulations :
(a) The Vendor is selling the Property under a Power of Attorney,
granted on 13th November 1990.
(b) The Power is valid and subsisting and has not been revoked.
(c) A certified true copy of the Power will be handed over on
Completion.
(d) The Purchaser having been supplied with a copy of the Power
shall raise no objection or requistion relating to it."
On the occasion of sending back the draft Formal Agreement to F. Zimmern & Co.
with the first letter of 25th September 1991, Clayton Wong & Co. had amended Part IX by
deleting the whole of (a), (b), (c) and (d), and, against "Special Stipulations", had inserted the
word, "Nil". (See Agreed Bundle, page 55).
Suffice it to say at this point - I will elaborate later - the Vendor who, by the
Provisional Sale and Purchase Agreement, had contracted to sell ".. .
7
subject to good title ..." was not within his rights in trying to impose those "Special
Stipulations" on the Purchaser in the draft Formal Agreement.
I will now set out the content of the second letter Clayton Wong & Co. sent F.
Zimmern & Co. at the same time as the first letter :
"25th September 1991
Messrs. F. Zimmern & Co.,
Solicitors,
Hong Kong SECOND LETTER
SUBJECT TO CONTRACT
Dear Sirs,
Re : No.45 Granville Road 3rd floor Kowloon
We refer to our letter to you of the today's day and now send you herewith our
cheque for $400,000.00 in your favour as stakeholders being the further deposit for
the sale and purchase of the above property payable pursuant to the Provisional
Agreement for Sale and Purchase made between our respective clients.
The said cheque is sent to you against your undertaking as follows:
1. to hold the said sum of $400,000.00 to our order and not to release the
same to your client unless and until a formal Agreement for Sale and
Purchase duly approved by us on behalf of our client is signed by our
respective clients subject however to the terms and conditions therein
stipulated, and
2. To send to us within the next three days engrossment of the Agreement for
Sale and Purchase as approved by us for our client's signature.
3. to return the said sum of $400,000.00 to us on demand if signing of the said
formal Agreement for Sale and Purchase shall fall through for whatever
reason.
We have to add that nothing is binding on our client unless and until a formal
Agreement for Sale and Purchase is delivered to you after it has been approved by us
and signed by our client provided that nothing herein shall affect or prejudice the
validity and/or enforceability of any documents previously signed by our respective
clients.
Yours faithfully,"
Accompanying that second letter was a cheque for $400,000 drawn on Clayton Wong
& Co.'s Client Account with the Hong Kong Central Branch of Banque Nationale de Paris in
favour of F. Zimmern & Co.
8
Yet a third letter was received by F. Zimmern & Co. from Clayton Wong & Co. that
afternoon. This one, which arrived a few minutes before 4 p.m., was as follows :-
"25th September 1991
Messrs. F. Zimmern & Co.,
Solicitors,
Hong Kong SUBJECT TO CONTRACT
Dear Sirs,
Re : No.45 Granville Road 3rd floor Kowloon
We refer to your letter of the 18th September 1991.
Having perused the title deeds and documents relating to the above property
forwarded to us under cover of your said letter, we have raised the following
requisitions on your client's title to the above property :
1. We note that no identity document of your client appears in the title deeds.
Please let us how your client can be identified to be the owner of the above
property by his Hong Kong identity card No.XXXXXXX(X).
2. Please furnish us with the floor plan of the subject property.
3. Please let us know how the donor Keung Shiu Tang understands the effect
of Section 7 of the Powers of Attorney Ordinance when executing the
General Power of Attorney in Canada.
4. Please furnish us with certified true copies of the following documents to
complete your client's title :
(a) Conditions of Regrant No.8825
(b) Occupation Permit.
We send you herewith photostatic copy of the said General Power of Attorney for
your further handling.
Our client reserves the right to raise further requisitions on title after the required
documents are sent from you for our perusal and after the requisitions are purported to
be complied with by your client.
Yours faithfully."
It is not clear the precise time when, but, certainly after receiving Clayton Wong &
Co.'s second letter that day, F. Zimmern & Co. faxed the following riposte to Clayton Wong &
Co. :
9
"25th September 1991
Messrs. Clayton Wong & Co.,
Room 1435, Central Building,
Pedder Street
Hong Kong 1st Letter
BY FAX & BY HAND
Dear Sirs,
Re : No.45 Granville Road. 3rd Floor. Kowloon
We refer to your second letter of today's date enclosing your cheque for
$400,000.00 made payable to us.
We are instructed to give your client notice through your goodselves that neither
you or your client is entitled to unilaterally impose the undertaking on us.
Unless you forthwith withdraw the undertaking and arrange for your client to sign
the Agreement for Sale and Purchase within today, our client shall treat the provisional
agreement as repudiated by your client.
Yours faithfully,"
The stance taken by F. Zimmern & Co. in that letter could not be justified under the
terms of the Provisional Sale & Purchase Agreement, by which both sides acknowledged they
were bound.
The time for payment by the Purchaser of the further deposit of $400,000 under
Clause 2(ii) of the Provisional Sale & Purchase Agreement had not yet arrived when F.
Zimmern & Co. sent its first letter on the afternoon on 25th September, and, in fact, never
arrived, since the Vendor at no stage signed a Formal Agreement. Without the Vendor's
signature there could be no Formal Agreement : there would only be a worthless piece of paper
on which happened to be typed, "Formal Agreement".
If the Vendor's solicitors chose not to give the undertaking requested, that was their
own affair, but it in no way relieved the Vendor of his obligation to sign a Formal Agreement as
a prerequisite for the further deposit of $400,000 becoming payable by the Purchaser.
At page 174, between letters E and F, of the Link Brain case, the Court of Appeal
observed in relation to the clause there in issue, requiring that a payment be made "upon
signing the Sale and Purchase Agreement", that the clause "... could only mean what it said ...,"
with the result that the seller in that
10
case was in no position to insist upon payment because he had not signed the Sale and Purchase
Agreement on which he sought to rely.
Needless to say, the construction of any written agreement depends upon the
particular words used, and the particular factual matrix. That said, I can discern no material
difference in the contract with which I am concerned, and that in Link Brain, which would
justify my holding the words in Clause 2(ii) of the Provisional Sale & Purchase Agreement : "A
further deposit of $400,000 payable on the signing" (of the Formal Agreement), mean other
than what they say.
True, the third paragraph of Clause 6, headed "Remarks" of the Provisional Sale &
Purchase Agreement reads as follows :-
"If the Purchaser shall fail to sign the Sale & Purchase Agreement on or
before the date specified as mentioned in paragraph 2 above for reasons
other than defective title, the initial deposit mentioned herein and all other
payments (if any) made by the Purchaser shall be absolutely forfeited to
the Vendor as liquidated damage and thereupon this Agreement shall be
terminated and neither party shall have any further claims against the other
and the Vendor shall be at liberty to resell the premises."
On the view I take, any failure by the Purchaser to sign a Formal Agreement will only
attract the operation of that paragraph in circumstances where the Vendor has himself signed
the Formal Agreement, for, without the Vendor's signature, no Formal Agreement comes into
existence.
More needs to be said about the third paragraph of the first letter dated 25th
September 1991 from the Vendor's to the Purchaser's solicitor. That paragraph reads :
"Unless you forthwith withdraw the undertaking and arrange for your
client to sign the Agreement for Sale and Purchase within today, our client
shall treat the provisional agreement as repudiated by your client."
That paragraph, in my view, by itself amounts to an anticipatory breach of the
Provisional Sale & Purchase Agreement by the Vendor. For reasons I have already stated, the
request by the Purchaser's solicitors for an undertaking from the Vendor's solicitors, in the
circumstances existing at the time
11
it was made, afforded no ground entitling the Vendor to treat the Provisional Sale and Purchase
Agreement as repudiated.
Nor was the Vendor's solicitor any more justified in threatening that, unless the
Purchaser signed the Formal Agreement that very same day, the Vendor would treat the
Provisional Sale & Purchase Agreement as repudiated.
While making much of the supposed mote in the eye of the Purchaser failing to sign
the Formal Agreement, F. Zimmern & Co. chose to ignore the beam in the eye of their own
client who never got around to signing any Formal Agreement.
If both sides failed to sign any Formal Agreement, the only consequence would be the
Provisional Sale and Purchase Agreement remaining in force. In that case, instead of the
Purchaser having to pay the Vendor a further deposit of $400,000, the Purchaser would then
have to pay the Vendor that same sum, plus the balance of the purchase money, on completion.
Even assuming that time had been of the essence under the Provisional Sale &
Purchase Agreement - and I do not think it was - the Vendor was in no position to complain as
at 25th September 1991 about non- performance on the part of the Purchaser through failing to
sign the Formal Agreement, since the draft Formal Agreement tendered to the Purchaser's
solicitor at all material times failed in at least one essential respect to conform with the
requirements of the Provisional Sale & Purchase Agreement, namely, the insistence by the
Vendor's solicitors, already referred to, that the draft Formal Agreement had to include the
following Special Stipulations :
"PART IX
Special Stipulations :
(a) The Vendor is selling the Property under a Power of Attorney
granted on 13th November 1990.
(b) The Power is valid and subsisting and has not been revoked.
(c) A certified true copy of the Power will be handed over on
Completion.
(d) The Purchaser having been supplied with a copy of the Power shall
raise no objection or requisition relating to it."
12
The Provisional Sale & Purchase Agreement had been signed on behalf of the Vendor,
Keung Shiu Tang, by Keung Wai Ming, "Signing as Attorney for the Vendor" (see Agreed
Bundle, p36), so the Purchaser presumably knew that Keung Wai Ming was purporting to sign
the Provisional Sale & Purchase Agreement on behalf of the Vendor under a Power of Attorney.
There was, however, nothing in the Provisional Sale & Purchase Agreement fixing the
Purchaser with any particular knowledge of the terms of any Power of Attorney, nor limiting
the Purchaser's entitlement to raise requisitions on it.
One of the documents of title furnished by the Vendor's solicitors to the Purchaser's
solicitors on 18th September 1991 was a certified copy of a General Power of Attorney
conferred by the Vendor, Keung Shui Tang, on Ms. Keung Wai Ming, the signatory of the
Provisional Sale and Purchase Agreement. The terms of that Power of Attorney are as follows :
"THIS GENERAL POWER OF ATTORNEY is made this 13th day of November,
1990 by KEUNG SHIU TANG Gentleman (Holder of Hong Kong Identity Card
No.B448083(5) of 2438 East 27th Avenue. Vancouver, BC V5R 1M8, Canada.
I appoint KEUNG WAI MING Spinster (Holder of Hong Kong Identity Card
No.E943720(0) of 3rd Floor, 45 Granville Road, Kowloon, Hong Kong to be my
attorney in accordance with section 7 of the Powers of Attorney Ordinance, Chapter
31 of the Laws of Hong Kong.
IN WITNESS whereof I have )
hereunto set my hand and )
seal in the presence of )
WILLIAM GEE
NOTARY PUBLIC
#203-10E. PENDER STREET
VANCOUVER, B.C. V6A 1T1"
There is no dispute that, by virtue of the Power of Attorney Ordinance, Cap.31, the
Power of Attorney in the present case operated to confer on Ms. Keung Wai Ming authority to
do on behalf of the Vendor anything which can be lawfully done by an attorney.
If the Purchaser's solicitors had allowed the Special Stipulations in Part IX to become
part of the Formal Agreement, the consequences could have been highly prejudicial to the
Purchaser in the event of the revocation of the
13
Power of Attorney on account of the Vendor's becoming bankrupt, suffering mental incapacity
or dying during the interval between the signing of the Formal Agreement and the Completion
Date. Suppose that knowledge of such a catastrophe came to the Purchaser's attention during
that interval before completion : the Purchaser could then find itself in the unenviable position
of being forced to complete without being entitled to object that the Power of Attorney was no
longer valid and subsisting. Because of such knowledge, the Purchaser would forego the
protection of s.5(2) of the Powers of Attorney Ordinance in respect of claims brought against it
by the estate of the deceased, bankrupt or mentally incapable Vendor, as the case might be.
S.5(2) is as follows :
"(2) Where a power of attorney has been revoked and a person, without
knowledge of the revocation, deals with the donee of the power, the
transaction between them shall, in favour of that person, be as valid as if
the power had then been in existence."
A further consequence could be the inability of the Purchaser to pass a good title to
anyone other than a "purchaser" within the meaning of sub- sections (4) and (6) of s.5 of the
Powers of Attorney Ordinances :
"(4) Where the interest of a purchaser depends on whether a transaction
between the donee of a power of attorney and another person was valid by
virtue of subsection (2), it shall be conclusively presumed in favour of the
purchaser that that person did not at the material time know of the
revocation of the power if -
(a) the transaction between that person and the donee was
completed within twelve months of the date on which the power
came into operation; or
(b) that person makes a statutory declaration, before or within three
months after the completion of the purchase, that he did not at the
material time know of the revocation of the power.
(6) In this section -
'Purchaser' means-
(a) a purchaser in good faith for valuable consideration;
(b) a lessee, mortgagee or other person who for valuable consideration
acquires an interest in property; and
(c) an intending purchaser; and
'valuable consideration' includes marriage but not a nominal consideration
in money."
14
Simply because the Purchaser knew that the Vendor signed the Provisional Agreement
through his attorney in no way curtails the Purchaser's entitlement to as good a title as if the
Vendor himself had signed.
Nothing in the Provisional Sales & Purchase Agreement limits the title the Vendor is
required to show : there is explicit provision it has to be a, "good title".
There is no scope for disputing that the Provisional Sale & Purchase Agreement is in
the nature of an "open contract", attracting the operation of the Conveyancing and Property
Ordinance, Cap.219, and also the general law, to imply usual terms where the contract is silent.
The combined operation of s.13 and s.35, together with Part II of the First Schedule,
of the Conveyancing and Property Ordinance bring about the result that the Vendor is required
to prove the validity and non-revocation of the Power of Attorney, in the usual way, as an
essential link in the title. There is no basis in law to justify the Vendor's attempt by the "Special
Stipulations" to deny the Purchaser the right to raise objections or requisitions concerning the
validity and non-revocation of the Power of Attorney.
Insistence by the Vendor's solicitor on the inclusion of their "Special Stipulations" in
the draft Formal Agreement put their client in breach of the conditions implied by the
Conveyancing and Property Ordinance in the Provisional Sale & Purchase Agreement to show
a good title.
So long as the Vendor remained in breach of the Provisional Sale & Purchase
Agreement by wrongfully insisting upon the "Special Stipulations", the Vendor was in no
position to complain about any failure on the Purchaser's part to sign any Formal Agreement
and pay the further deposit of $400,000.
In response to the first letter from the Vendor's solicitors on 25th September 1991, the
Purchaser's solicitors sent their fourth to the Vendor's solicitors that day, the content being as
follows :
"25th September 1991
Messrs. F. Zimmern & Co.,
Solicitors,
15
Hong Kong FOURTH LETTER
SUBJECT TO CONTRACT
Dear Sirs,
Re : No.45 Granville Road 3rd floor Kowloon
We refer to your letter dated the 25th September 1991 and faxed to us at 3:54
p.m. today.
While awaiting from you the engrossed Agreement for Sale and Purchase with
such amendments made by us, we fail to see how our client can sign the Agreement
for Sale and Purchase today.
We reserve our right to reply to paragraph 2 of your letter under reply.
In the meantime, our client reserves all its rights under the Provisional Agreement
for Sale and Purchase made between our respective clients.
Yours faithfully,"
That letter in no way sought to rescind the Provisional Sale & Purchase Agreement by
which the parties were bound. Reasonably, as I see it, the Purchaser's solicitors wanted to
continue negotiating with the Vendor's solicitors to see if a Formal Agreement could be agreed,
but, meanwhile, affirmed the existing Provisional Sale & Purchase Agreement.
Back came the faxed second letter from the Vendor's solicitors that day, setting out
details of why the Vendor's solicitors thought nine amendments proposed by the Purchaser's
solicitors to the draft Formal Agreement were unacceptable. On the view I take, it is
unnecessary to set out all nine of the ways in which the Vendor's solicitors found the
amendments unacceptable. It is enough to mention one of them, the "Special Stipulations",
which the Vendor's solicitors insisted must be kept intact.
The sting lay in the penultimate paragraph of that letter :
"Please note that pursuant to the Provisional Agreement for Sale and
Purchase dated 12th September 1991 the Formal Agreement for Sale and
Purchase should be signed today, please arrange your client to sign the
same today failing which our client shall treat the said Provisional
Agreement as repudiated by your client."
16
This was another unilateral attempt on behalf of the Vendor's solicitors to repudiate
the Provisional Sale & Purchase Agreement and forfeit the initial deposit of $200,000.
As the Vendor's solicitors correctly noted in the final paragraph of that letter :
"Nothing in this letter or the Formal Agreement for Sale and Purchase
shall prejudice the said Provisional Agreement unless and until the formal
Sale and Purchase Agreement is signed."
The third letter from the Vendor's to the Purchaser's solicitors that same day enclosed
"... our engrossment of the Formal Agreement for Sale and Purchase in duplicate for your
handling." That engrossment was the Vendor's solicitors' version of the Formal Agreement,
disregarding all nine proposed amendments which the Vendor's solicitors, in their second letter
that day, had declared to be unacceptable. Featuring in the engrossment were the "Special
Stipulations," (Agreed Bundle, pages 91 and 92).
Then came the Vendor's solicitors' fourth and last letter for the day :
"25th September 1991
Messrs. Clayton Wong & Co
Room 1535 Central Building
Pedder Street
Hong Kong SUBJECT TO FORMAL CONTRACT
Dear Sirs,
Re : 3rd Floor, No.45 Granville Road. Kowloon. Hong Kong
Your fourth letter of today's date refers.
The draft Agreement was sent to you on the 19th instant and you chose not to approve
the same until your first letter of today's date received by us at 3:00 p.m.
We have replied to your proposed amendments at the earliest possible time i.e. 5:00
p.m. today by fax.
We have by separate cover sent you the engrossment and repeat the last paragraph of
our first letter of today's date.
We further note that up to the moment of writing this letter, you have not withdrawn
the undertaking. Accordingly we return herewith your said cheque for the sum of
HK$400,000.00
We hereby reiterate the second last and the last paragraphs of our second letter of
today's date.
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Yours faithfully,
F. Zimmern & Co."
By repeating the comminations in the last paragraph of their first letter of the day and
the penultimate paragraph of their second, the Vendor's solicitors purported to treat the
Purchaser as in breach of the Provisional Sale & Purchase Agreement, whereas the reality was
the fault lay with the Vendor.
Midnight on the evening of 25th September 1991 found the Vendor's solicitor still
dutifully at her desk in case the Purchaser's solicitors turned up to hand over (1) the Vendor's
solicitors' version of the Formal Agreement signed by the Purchaser, and (2) $400,000 by way
of further deposit, with no strings attached such as requiring the Vendor to have signed, too.
On 26th September 1991, the Vendor's solicitors wrote to the Purchaser's,
"..... in breach of the Provisional Agreement dated 12th September 1991
your client has failed to sign the Agreement for Sale and Purchase and pay
the further deposit.
Pursuant to the said Provisional Agreement our client hereby forfeits the
initial deposit paid thereunder and terminates the said Provisional
Agreement."
Whatever the Vendor's solicitors might have thought the position to have been, the
Vendor was not, in my judgment, entitled, in the events which had occurred, to walk away from
the contract embodied in the Provisional Sale & Purchase Agreement, pocketing the $200,000
initial deposit as he went.
At no time had the Purchaser evinced any intention not to be bound by the Provisional
Sale & Purchase Agreement, and, in reply to the Vendor's solicitors' letter of 26th September,
the Purchaser's solicitors, on behalf of their client, refused to accept the Vendor's purported
repudiation of the Provisional Sale & Purchase Agreement.
From the Vendor's solicitors' letter of 27th September, 1991 one sees the Vendor's
solicitors treating the whole matter as closed with the forfeiting
18
of the Purchaser's initial deposit, and announcing, "... we do not see any need for any further
correspondence in the matter."
That view was not shared by the Vendor's solicitors who, on their client's behalf,
persevered with trying to get the Vendor to perform the Provisional Sale & Purchase
Agreement, but in vain. Hence, the present proceedings.
It still remains for me to explain why I do not think that time was of the essence in
relation to the payment of a further deposit of $400,000. Generally, time is not of the essence
under conveyancing contracts, and I fail to detect anything special about the circumstances of
the Provisional Sale and Purchase Agreement in the present case to take it outside the general
rule.
The "5 working days after the date of receipt of the title deeds by the Purchaser's
solicitor", referred to in paragraph 2(ii) of the Provisional Sale and Purchase Agreement as the
time for paying a further deposit of $400,000 was no more than a target date, rather than a
condition. Failure to meet that target date would not by itself bring the contract embodied in the
Provisional Sale and Purchase Agreement to an end. Given the relatively short period of five
working days for settling the terms of the Formal Agreement, as well as for the raising and
answering of requisitions on the title, I do not think it would have been within the contemplation
of the parties on signing the Provisional Sale & Purchase Agreement that, the failure by the
Vendor to sign the Formal Agreement on or before 25th September notwithstanding, the
Vendor would, nonetheless, be entitled to forfeit the initial deposit because the Purchaser had
not paid the Vendor a further deposit of $400,000 by that date. Mutatis mutandis, everything
said by Nazareth J.A. in Yiu Yau Ping v. Fong Yee Lan [1992]2 H.K.L.R., 167, 175, lines 12 to
35, in relation to the contract he was there considering applies with equal force to the
Provisional Sale & Purchase Agreement in the present case.
In my judgment the Vendor, through his solicitors, wrongfully attempted to rescind the
Provisional Sale and Purchase Agreement, and must now accept the legal consequences.
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I now enter interlocutory judgment in the Purchaser's favour, but, on a date to be fixed,
would like to be addressed on remedies, unless the parties can reach agreement on that.
This being a written Judgment reserved pursuant to O.42, r.5B, I make a 14 day order
nisi in the Purchaser's favour for costs.
The topic of costs prompts one final thought.
In the light of such decisions as Link Brain, Yiu Yau Ping, Chu Wing Ning and now
the present one, it well behoves conveyancing solicitors to urge caution on any seller tempted
by the prospect of getting something for nothing in the form of a deposit forfeited on the basis
of an alleged departure by a buyer from a conveyancing time-table. Except in indubitably clear
cases, the biter needs alerting to the considerable risk of finishing up the bitten in the form of
having to pay both his own and his opponent's litigation costs.
(J.J. Rhind)
Judge of the High Court
Mr Walter Lau (inst'd by M/s L.H. Kwan & Co.) for the Plaintiff
Mr Alfred Fung (inst'd by M/s Lo, Wong & Tsui) for the Defendant