[1997] 3 CLJ Chong Kai Tai Ringo & Anor. v. Lee Gee Kee & Anor.

CHONG KAI TAI RINGO & ANOR. a

v.
LEE GEE KEE & ANOR.
PRIVY COUNCIL
LORD STEYN b
LORD HOFFMANN
LORD HOPE OF CRAIGHEAD
LORD CLYDE
LORD HUTTON
[PRIVY COUNCIL APPEAL NO: 27 OF 1996] c
17 MARCH 1997
CIVIL PROCEDURE: Pleadings - Point not pleaded - Point explored in
evidence in Court of first instance - No objection from opposing party -
Whether appeal Court in error in holding that point could not be
considered d

CONTRACT: Sale and purchase of property - Obligations of purchaser

and seller - Whether simultaneous - Normal rule - Whether can be
displaced by express or implied term to the contrary
e
CONTRACT: Time - Whether of the essence - Whether time ceases to be
of the essence if neither party can complete by completion date - Whether
reasonable time for completion should be allowed
CONTRACT: Specific performance - Clause providing for damages in
event of default by vendor - Vendor forfeits deposit because of purchaser’s f
failure to pay balance - Vendor also unable to complete by completion
date - Whether vendor entitled to rely on damages clause - Whether
purchaser can claim specific performance
The appellants (‘the purchasers’) entered into a written provisional agreement
in Chinese (‘the agreement’) on 6 July 1991with the respondents (‘the vendors’) g
for the sale and purchase of a flat in Hong Kong for HK$1,870,000 under
the terms of which the purchasers paid an initial deposit of HK$50,000 upon
signing and were to pay HK$137,000 on 12 July 1991 and the balance of
HK$1,683,000 on 17 July 1991. No formal agreement was entered into. The
terms of the agreement provided, inter alia, that if the purchasers were to h
default on payment, the initial deposit would be forfeited and if the vendors
were to default, double the amount of the initial deposit was to be paid as
compensation. The purchasers failed to make payment by 17 July and the
vendors purported to accept the repudiatory breach and forfeited the deposit.
i
 Current Law Journal
2 July 1997 [1997] 3 CLJ

a The purchasers sued for specific performance. In the High Court, it was held
that time was not of the essence of the agreement and the purchasers were
entitled to complete the transaction within a reasonable time after 17 July 1991.
On appeal to the Court of Appeal, it was held that taking into account the
very heated property market in Hong Kong at the time of the sale, time was
b of the essence and it was not necessary to imply that completion by the
vendors was to be simultaneous with payment by the purchasers. The Court
of Appeal found that the purchasers had been in breach by failing to pay the
balance before midnight on 17 July 1991 and accordingly were not entitled to
specific performance. The purchasers appealed.
c The issues in this appeal were: (i) whether the purchasers’ obligation to make
payment was concurrent with the vendors’ obligation to deliver a valid
assignment; (ii) whether the vendors were unable to complete by delivery of
the assignment before midnight on 17 July 1991; (iii) if so, whether they were
thereby debarred from claiming that the purchasers had repudiated the
d agreement by non-payment on that date; and (iv) whether the purchasers were
entitled to specific performance.
Held:
Per Lord Hutton
e [1] There is clear authority that the obligation of the purchaser to pay and
the obligation of the vendor to complete by giving an executed assignment
are to be carried out simultaneously unless there is an express or implied
term to the contrary. The correct approach is not whether it was
‘necessary’ or ‘possible’ to imply a term that payment and completion by
f the vendors were to be simultaneous, as stated by the Court of Appeal,
but whether there was an implied term that there would be a departure
from the normal rule that they would be simultaneous. In the present case,
there was nothing to displace the normal rule.
[2] The evidence established that the vendors were not in a position to
g
complete the transaction before midnight on 17 July 1991. The Court of
Appeal’s finding that this point was not pleaded or explored evidentially
in the High Court was incorrect as it had been explored in the evidence
and no objection was taken by the vendors that the point had not been
adequately pleaded by the purchasers.
h
[3] As the vendors were unable to deliver an executed assignment to the
purchasers on 17 July 1991, they were not entitled to claim that the
purchasers had repudiated the contract by failing to pay the balance of
the purchase money on that date. In the circumstances, time ceased to
i be of the essence of the contract and the parties had a reasonable time
in which to complete the transaction.
[1997] 3 CLJ Chong Kai Tai Ringo & Anor. v. Lee Gee Kee & Anor. 3

[4] Although the agreement provided for the return by the vendors of an a
amount equal to double the initial deposit in the event of their default, the
vendors never offered to pay the sum but claimed the contract was ended
by the purchasers’ repudiation. The vendors could not therefore now seek
to rely on the said clause to argue that the purchasers were not entitled
to specific performance. b
[Appeal allowed. Order of High Court for specific performance restored.]
[Bahasa Malaysia Translation of Headnotes]
PROSEDUR SIVIL: Pliding - Perkara tidak diplidkan - Perkara ditinjau
c
dalam keterangan dalam Mahkamah yang pertama - Tiada bantahan
daripada pihak yang membantah - Samada Mahkamah rayuan tersalah
dalam memutuskan bahawa perkara tidak boleh dipertimbangkan
KONTRAK: Jualbeli Hartanah - Kewajipan pembeli dan penjual - Samada
serentak - Kaedah biasa - Samada boleh berubah melalui terma nyata d
atau tersirat yang sebaliknya
KONTRAK: Perlaksanaan kontrak - Masa - Samada merupakan intipati
- Samada masa tidak lagi menjadi intipati jika tiada pihak boleh
menamatkan pada tarikh penyiapan - Samada masa yang wajar untuk
e
penyiapan harus dibenarkan
KONTRAK: Remedi - Perlaksanaan spesifik - Fasal memperuntukan
gantirugi sekiranya berlaku kemungkiran oleh penjual - Penjual
merampas deposit kerana kegagalan pembeli untuk membayar baki -
Penjual juga gagal untuk menyiapkan pada tarikh penyiapan - Samada f
penjual berhak untuk bergantung pada fasal gantirugi - Samada pembeli
boleh menuntut perlaksanaan spesifik
Perayu-perayu (‘pembeli-pembeli’) telah memasuki satu perjanjian sementara
bertulis dalam bahasa Cina (‘perjanjian tersebut’) pada 6 Julai 1991 dengan
responden-responden (‘penjual-penjual’) untuk penjualan dan pembelian sebuah g
rumah pangsa di Hong Kong pada harga sebanyak HK$1,870,000 di bawah
terma-terma yang mana pembeli-pembeli telah membayar deposit permulaan
sebanyak HK$50,000 ketika menandatanganinya dan adalah dikehendaki untuk
membayar HK$137,000 pada 12 Julai 1991 dan baki sebanyak HK$1,683,000
pada 17 Julai 1991. Tiada perjanjian rasmi telah ditandatangani. Terma-terma h
perjanjian tersebut memperuntukkan, antara lainnya, bahawa jika pembeli-pembeli
memungkiri pembayaran, deposit permulaan akan dirampas dan jika
penjual-penjual memungkiri, jumlah yang berganda daripada deposit permulaan
itu hendaklah dibayar sebagai pampasan. Pembeli-pembeli telah gagal untuk
i
 Current Law Journal
4 July 1997 [1997] 3 CLJ

a membuat pembayaran selewat-lewatnya pada 17 Julai dan penjual-penjual

dikatakan menerima kemungkiran penolakan itu dan merampas deposit tersebut.
Pembeli-pembeli telah mendakwa untuk mendapatkan perlaksanaan spesifik.
Dalam Mahkamah Tinggi, telah diputuskan bahawa masa tidak merupakan
intipati perjanjian itu dan pembeli-pembeli berhak untuk menamatkan transaksi
b
tersebut dalam tempoh masa yang wajar selepas 17 Julai 1991. Apabila dirayu
kepada Mahkamah Rayuan, telah diputuskan bahawa dalam mengambilkira
pasaran hartanah yang sebegitu menggalakkan di Hong Kong pada waktu
penjualan itu, masa merupakan intipati dan ianya adalah tidak perlu untuk
menunjukkan bahawa penyempurnaan oleh penjual-penjual hendaklah sama
c serentak dengan pembayaran oleh pembeli-pembeli. Mahkamah Rayuan
mendapati bahawa pembeli-pembeli telah melakukan kemungkiran dengan
kegagalan untuk membayar baki sebelum tengah malam pada 17 Julai 1991
dan berikutan itu tidak berhak kepada perlaksanaan spesifik. Pembeli-pembeli
telah merayu.
d
Isu-isu dalam rayuan ini adalah: (i) samada kewajipan pembeli-pembeli untuk
membuat pembayaran adalah wujud secara bersama dengan kewajipan
penjual-penjual untuk menghantar-serah satu serahanhak yang sah; (ii) samada
penjual-penjual gagal untuk menyiapkan melalui penghantar-serahan serahanhak
selewat-lewatnya sebelum tengah malam pada 17 Julai 1991; (iii) jika
e
sedemikian, samada mereka adalah dengan itu dihalang daripada menuntut
bahawa pembeli-pembeli telah menolak perjanjian itu dengan tidak membuat
pembayaran pada tarikh itu; dan (iv) samada pembeli-pembeli berhak kepada
perlaksanaan spesifik.

f Diputuskan:
Oleh Lord Hutton
[1] Terdapat autoriti yang jelas bahawa kewajipan pembeli untuk membayar
dan kewajipan penjual untuk menyiapkan dengan memberikan satu
serahanhak yang telah disempurnakan hendaklah dijalankan secara serentak
g
melainkan terdapat terma yang nyata dan tersirat yang bertentangan.
Pendekatan yang betul bukannya samada ianya “perlu” atau “mungkin”
untuk mengandaikan satu terma bahawa pembayaran dan penyiapan oleh
penjual-penjual hendaklah serentak, sepertimana yang dinyatakan oleh
Mahkamah Rayuan, tetapi samada terdapatnya terma tersirat bahawa akan
h berlaku penyimpangan daripada kaedah biasa, bahawa ianya akan berlaku
serentak. Dalam kes semasa ini, tidak terdapat apa-apa untuk menidakkan
kaedah biasa.

i
 Chong Kai Tai Ringo & Anor. v. Lee Gee Kee & Anor.
[1997] 3 CLJ Lord Hutton 5

[2] Keterangan menunjukkan bahawa penjual-penjual tidak mempunyai a

kedudukan untuk memenuhi atau menyiapkan transaksi itu sebelum tengah
malam 17 Julai 1991. Keputusan Mahkamah Rayuan bahawa perkara ini
tidak diplidkan atau ditinjau dalam keterangan dalam Mahkamah Tinggi
adalah tidak betul kerana ianya telah ditinjau dalam keterangan dan tiada
bantahan telah dilakukan oleh penjual-penjual tersebut bahawa perkara itu b
telah tidak diplidkan secukupnya oleh pembeli-pembeli.
[3] Oleh kerana penjual-penjual tersebut tidak berjaya menghantar-serahkan
suatu serahanhak yang telah disempurnakan kepada pembeli-pembeli pada
17 Julai 1991, mereka adalah tidak berhak untuk menuntut bahawa
pembeli-pembeli tersebut telah menolak kontrak itu kerana gagal untuk c
membayar baki wang pembelian pada tarikh itu. Dalam keadaan yang
sedemikian, masa tidak lagi menjadi intipati kontrak dan pihak-pihak tersebut
mempunyai masa yang munasabah untuk menyempurnakan transaksi.
[4] Walaupun perjanjian tersebut memperuntukkan pembayaran balik oleh d
penjual-penjual jumlah yang sekali ganda jumlah deposit permulaan
sekiranya mereka mungkir, namun penjual-penjual tidak pernah menawarkan
untuk membayar jumlah itu tetapi sebaliknya menuntut bahawa kontrak itu
telah ditamatkan oleh penolakan pembeli-pembeli. Dengan itu penjual-penjual
kini tidak boleh cuba untuk bergantung kepada fasal tersebut untuk berhujah
e
bahawa pembeli-pembeli adalah tidak berhak kepada perlaksanaan spesifik.
Cases referrd to:
Palmer v. Lark [1945] Ch. 182 (foll)
Edward Wong Finance Co. Ltd. v. Johnson, Stokes & Master (a firm) [1984] AC 296
(foll) f
Camberra Investment Ltd. v. Chan Wai-tak [1989] 1 HKLR 568 (foll)
Abdul Cader Abdeen v. Abdul Careem Mohamed Thaheer [1958] AC 116 (refd)

[Appeal from Court of Appeal, Hong Kong]

JUDGMENT
g
Lord Hutton:
The issue arising on this appeal is whether the Court of Appeal of Hong Kong
was right in setting aside an order made by the High Court for specific
performance of an agreement to sell a flat in the New Territories in Hong
h
Kong.
On 6 July 1991 the parties entered into a written provisional agreement (‘the
agreement’) in Chinese writing on a form produced by an estate agent whereby
the appellants agreed to purchase and the respondents agreed to sell Flat G,
38th Floor of Block 2, Belvedere Garden, Phase 3, Tsuen Wan. The purchase i
 Current Law Journal
6 July 1997 [1997] 3 CLJ

a price was HK$1,870,000. The agreement contained the following provisions for
payment:
Initial deposit will be paid
upon signing this provisional Initial
Sale and Purchase Agreement Deposit HK$50,000
b
The Purchaser must pay the
first payment at Solicitors
firm on 12th July 1991 First payment
HK$137,000

c The Purchaser must pay the

balance of the purchase price
on 17 July 1991 Balance HK$1,683,000

The agreement contained a number of clauses under the heading “Terms of

Agreement for both Parties”. There were nine clauses and the relevant clauses
d (as translated into English by the respondents whose translation did not differ
materially from the appellants’ translation) were as follows:
(3) Transaction by vacant possession before signing the Assignment.

(4) If in the midway the Purchaser does not perform this agreement, then the
e initial deposit paid would be forfeited by the Seller, who has the right to
resell the property in any way or to keep it for self-use, and the Purchaser
is not entitled to dispute.

(5) If the Seller fails to perform this agreement, a double amount to the initial
deposits must be paid to the Purchaser as compensation, Hong Kong
f Currency 100,000. The Seller is entitled to re-sell the property in any way
or for self-use, the Purchaser cannot dispute.

(6) The initial deposit paid by the Purchaser will be confirmed upon being
acknowledged by the Seller, otherwise it will be returned and there is no
claim on each other.
g
After the agreement had been signed on 6 July 1991, although there was some
correspondence between the respective solicitors about a formal agreement,
no such agreement was entered into between the parties.
The sale to the appellants was the last in a chain of sales and sub-sales. On
h 10 January 1990, when the building containing the flat had not been completed,
Ling Fung Development Limited (‘the developers’) and others agreed to sell
the flat to Wong Mui Chun and Chan Po Shan. On 7 March 1991 Wong
Mui Chun and Chan Po Shan agreed to sell it to Jiu Sze Man. On 10 April
1991, Jiu Sze Man agreed to sell it to Lee Gee Kee and Hung Ming Ming,
i the respondents.
 Chong Kai Tai Ringo & Anor. v. Lee Gee Kee & Anor.
[1997] 3 CLJ Lord Hutton 7

In the Court of Appeal Litton VP observed that the sale between the a
appellants and the respondents took place “in a very heated market” and Ching
JA stated:
There is an enormous amount of speculation in the sale and purchase of flats of
this type, probably undreamed of in other jurisdictions. When a new development
is put on the market people queue up, sometimes overnight, for flats. Some of b
them have neither the ability nor the intention to complete the purchase. They
queue up simply so that they can sell their places in the queue to those who
come later for many tens of thousands of dollars. Others sign a provisional
agreement and put down a deposit knowing that they do not have and will not
be able to obtain the finance to make subsequent payments, perhaps even the
c
first of them. Those who buy from them may be in a similar position and it is
not uncommon for there to be four or five sub-purchasers before there is an
assignment, usually at or about the time of the completion of the building. For
these reasons it is important to each of the vendors that payment should be
made on time.
d
The appellants duly paid the deposit of HK$50,000 and also made the first
payment of HK$137,000 on 12 July 1991.
Their Lordships consider it to be clear that after the signing of the agreement
on 6 July 1991 the solicitors for both the vendors and the purchasers treated
17 July 1991 as the date for completion. On 12 July 1991 the purchasers’ e
solicitors, Messrs. Lam, Lee and Lai, wrote to the vendors’ solicitors, Messrs.
Boris Lui & Co., and stated:
Please note that the date of completion mentioned in the above Provisional
Agreement for Sale and Purchase i.e. 17 July 1991 is approaching, we would
request at least 7 working days to peruse all the title deeds and documents and f
should be grateful if you would let us know whether your client would like to
postpone the completion date.

However, it is clear from the evidence of Miss Lam Chu Dik, a conveyancing
clerk in the office of the vendors’ solicitors, that they did not agree to this
g
request to postpone the completion date.
On 17 July 1991 the vendors’ solicitors wrote to the purchasers’ solicitors as
follows:
We refer to the telephone conversation between your Miss Chow and our Miss
Lam this morning. h

According to the Chinese Provisional Agreement for Sale and Purchase dated
6 July 1991, the completion of the sale and purchase of the above property will
be taken place on today. Therefore, we shall be obliged if you will let us have
your draft Assignment for our approval and let us have your cheque for the
sum of HK$1,683,000 on or before 4.00 p.m. today. i
 Current Law Journal
8 July 1997 [1997] 3 CLJ

a Your attention in this matter is highly appreciated.

On 17 July 1991 after receipt of this letter by fax the purchasers’ solicitors
wrote to the vendors’ solicitors and stated:
We refer to our letter to you dated 15 July 1991 and your reply letter dated
b 16 July 1991 which we received at about 11.00 a.m. on 17 July 1991.

We also refer to the numerous telephone conversation between your Miss Lam
and our Miss Chow in which your Miss Lam (threatened) us that if our client
could not send the balance of purchase price of our clients’ purchase of the
above property to your office in Yuen Long before 4.00 p.m., your client would
c forfeit all deposit paid by our client before and would treat the provisional
Agreement for Sale and Purchase dated 6 July 1991 as repudiated by our client.

We consider that such attitude taking by your client is very unreasonable on

the following grounds:

1. In our letter dated 15.7.1991, we have raised certain requisitions of your

d
client’s title to the above property and not until about 11.00 a.m. this
morning, you have given us a satisfactorily reply, which leaves us no time
to prepare completion.

2. At 3.31 p.m., you have faxed to us a letter to us requesting for a draft

Assignment for your approval and for a sum of HK$1,683,000 on or before
e
4.00 p.m. today. We consider that your requests are very unreasonable
without giving us time to prepare the draft Assignment and to obtain a
mortgage loan from our client’s proposed mortgagee. We would like to
confirm that we have received mortgage instructions as early as on 12 July
1991 to prepare a mortgage whereby the lender will finance our client to
f purchase the above property.

3. The Provisional Agreement for Sale and Purchase dated 6.7.1991 does not
make time is of the essence of the contract.

4. In all circumstances, we consider that our client is entitled to have a

reasonable time to complete their purchase of the above property.
g
Our Mr. Lam has tried to (contact) your Miss Lam by telephone twice but could
not get in touch with her. Neither does your Miss Lam give a return call to our
Mr. Lam even our Mr. Lam has left a message to her.

Anyway, we are now preparing the draft assignment and shall send to you for
h your approval as soon as we can.

If your client chooses to take an unreasonable attitude to terminate the Provisional

Agreement for Sale and Purchase, we are instructed to take all legal steps to
enforce our clients’ rights under the Provisional Agreement for Sale and Purchase.

i
 Chong Kai Tai Ringo & Anor. v. Lee Gee Kee & Anor.
[1997] 3 CLJ Lord Hutton 9

On 17 July 1991 the purchasers’ solicitors wrote a further letter to the vendors’ a
solicitors. This letter was not sent until the next day, 18 July 1991. It stated:
We refer to our letter to you of today’s date and now send you herewith our
draft Assignment in respect of the above property for your approval on behalf
of your client, the 3rd Confirmor herein.
b
Please let us have the following reply:

1. our draft Assignment in respect of the above property duly approved by

the Vendor, 1st Confirmor’s solicitors, 2nd Confirmor’s solicitors and yours;
and
c
2. your specific instructions as how should we split our cheques covering
the balance of purchase price.

On 18 July 1991 the vendors’ solicitors wrote to the purchasers’ solicitors

claiming that the purchasers had wrongfully repudiated the agreement and stating
that the repudiation was accepted by the vendors: d
We refer to our letter to you dated 17 July 1991 and up to this moment you still
fail to send us the balance of purchase price for the sum of HK$1,683,000.

According to the Chinese Provisional Agreement for Sale and Purchase dated 6
July 1991 made between our representative client completion of the Sale and
e
Purchase ought to take place on 17 July 1991. Your client has wrongly repudiated
the said Agreement which repudiation is accepted by our client. In the
circumstances, our client hereby forfeit the initial deposit paid by your client to
ours under the said Agreement and reserve all their rights in the above matter.

In the meantime, we enclose herewith a cheque for the sum of HK$137,000 drawn
f
in your favour being the further deposit and shall be obliged if you will return
all the title deeds and documents to us on or before 4.00 p.m. today.

The purchasers’ solicitors requested the vendors’ solicitors to withdraw their

letter of 18 July 1991 alleging repudiation of the agreement by the purchasers,
but the allegation was not withdrawn and on 29 July 1991 the purchasers issued g
a writ of summons claiming specific performance of the agreement.
In the High Court Deputy Judge Pang held that time was not of the essence
of the agreement and that the purchasers were entitled to complete the
transaction within a reasonable time after 17 July 1991. He therefore made
an order for specific performance. h

In the Court of Appeal all three members of the Court held that time was of
the essence, and this finding was not challenged by the appellants before their
Lordships’ Board. The majority, Litton VP and Ching JA, allowed the vendors’
appeal and held that, having regard to the circumstances obtaining in Hong i
 Current Law Journal
10 July 1997 [1997] 3 CLJ

a Kong, it was not necessary to imply that completion by the vendors was to
be simultaneous with payment by the purchasers, and that the purchasers had
been in breach by their failure to make payment of the balance of the purchase
money before midnight on 17 July 1991, but that the vendors had not been in
breach. Accordingly they ruled that the purchasers were not entitled to an order
b for specific performance.
Godfrey JA, dissenting, held that the obligation of the purchasers to make
payment was concurrent with the obligation of the vendors to deliver an
executed assignment on 17 July 1991, and that as the vendors were not able
to hand over the executed assignment on 17 July they could not treat the
c purchasers as having repudiated the agreement by not paying the balance of
the purchase price on that date.
Therefore three questions arise for the consideration of this Board. First, were
the obligations of the parties concurrent so that payment by the purchasers
d and delivery of the assignment by the vendors were to be simultaneous?
Secondly, were the vendors unable to complete by delivery of the assignment
before midnight (pursuant to the Hong Kong “midnight rule”) on 17 July 1991?
Thirdly, if the vendors were unable to make delivery of the assignment before
midnight on 17 July, were they thereby debarred from claiming that the
purchasers had repudiated the contract by non-payment on that date?
e
There is clear authority that the obligation of the purchaser to pay and the
obligation of the vendor to complete by giving an executed assignment are to
be carried out simultaneously unless there is an express or implied term to
the contrary. In Palmer v. Lark [1945] Ch. 182, 184 Vaisey J stated:
f
It is a fundamental principle that the payment of the purchase money and the
delivery of the conveyance are to be simultaneous acts to be performed inter-
changeably.

In Edward Wong Finance Co. Ltd. v. Johnson, Stokes & Master (a firm)
g [1984] AC 296, 303 delivering the judgment of this Board Lord Brightman
stated:
The normal method of completing a contract for the sale of land in England is
for the purchaser’s solicitor to deliver to the vendor’s solicitor a draft for the
balance of the purchase money in exchange for an executed grant of the land or
h interest in land contracted to be sold; if the property is subject to a mortgage,
the mortgagee will either be a party to the grant and receive the whole or part
of the purchase money by way of redemption; or he will execute a separate
release of his charge in return for the redemption money; if the property purchased
is to be financed by a new mortgage, the loan will be made against delivery of
the executed grant and instrument of charge. In other words, the payment of
i
 Chong Kai Tai Ringo & Anor. v. Lee Gee Kee & Anor.
[1997] 3 CLJ Lord Hutton 11

money and perfection of title are simultaneous transactions. This procedure is a

merely a reflection, in the context of a contract for the sale of land, of the
common-sense principle that, in the absence of an agreement for credit, the
purchase money is not handed over to the vendor or anyone else except in
exchange for the delivery of the subject matter of the sale, whether it be a loaf
of bread or a parcel of land; and, if a loan is made on security, the money
advanced is not handed over save in exchange for a charge executed by a person b
who can show a good title to the intended security.

Therefore their Lordships respectfully differ from the opinion of the majority
of the Court of Appeal who approached the point by asking was it “possible”
(Ching JA) or “necessary” (Litton VP) to imply a term that payment and
c
completion by the vendors were to be simultaneous and concluded against the
background of the very heated market that it was not. Their Lordships are of
opinion that under the principle stated by Vaisey J the question is not whether
the circumstances require the implication of a term that payment and completion
were to be simultaneous, but whether the circumstances require the implication
of a term that there would be a departure from the normal rule that they d
would be simultaneous, and their Lordships consider that there is nothing in
the discussions and correspondence between the parties and in the background
to give rise to the implication of such a term.
Mr. Oliver QC, for the respondents, submitted that the parties contemplated a e
“Hong Kong style” completion under which the vendors’ solicitors would not
hand over an executed assignment in return for the balance of the purchase
money, but would on or before receipt of the payment give undertakings
relating to the execution and delivery of the assignment and the giving of vacant
possession. However, as Godfrey JA pointed out, the agreement did not so f
provide and, moreover, there were no discussions or correspondence between
the parties as to the giving of undertakings or as to their terms, and their
Lordships consider that there was nothing to displace the requirement that the
executed assignment was to be delivered simultaneously with the payment of
the balance of the purchase price.
g
Their Lordships now turn to consider the second question whether the vendors
were unable to complete by delivering an executed assignment before midnight
on 17 July 1991. In their Lordships’ opinion the evidence established that the
vendors were not in a position to complete before that time. It had been
agreed in the correspondence between the solicitors that it was necessary that h
one of the parties in the chain of sales and sub-sales. Jiu Sze Man (referred
to as ‘the 2nd Confirmor’), should execute the assignment to the purchasers.
In a letter of 15 July 1991 the purchasers’ solicitors requested:

i
 Current Law Journal
12 July 1997 [1997] 3 CLJ

a Therefore the 2nd Confirmor is required to execute the Assignment to our client
personally as the 2nd Confirmor and as attorney for the 1st Confirmor if the 1st
Confirmor will not execute the Assignment personally.

By a letter dated 16 July 1991 the vendors’ solicitors agreed to this request
and stated:
b
We shall procure the 2nd Confirmor, Jiu Sze Man, to execute the Assignment
upon completion as the 2nd Confirmor and as attorney for the 1st Confirmor.

However the vendors’ answer to an interrogatory from the purchasers and

the evidence of Miss Lam, the conveyancing clerk employed by the vendors’
c solicitors, revealed that they had taken no steps to ensure that Jiu Sze Man
would be present in their office on 17 July 1991 to execute the assignment to
the purchasers. The answer was as follows:
To Interrogatory No. 7(a), namely, ‘Look at the letter of Lam, Lee & Lai dated 15
July 1991:
d
(a) In paragraph 2:

Did the 2nd confirmor attend your instructing solicitors’ premises in Yuen
Long at 4.00 p.m. or shortly thereafter for completion? If the answer is in
the negative, stated why he did not,’, I, to the best of my knowledge,
e information and belief and subject to further investigation, say:

No, because by their letter 16 July 1991 to Lam, Lee and Lai, Boris Lui & Co.
had replied that they shall procure the 2nd confirmor, Jiu Sze Man, to execute
the assignment upon completion as the 2nd confirmor and as attorney for the
1st confirmor. Further, the plaintiffs failed to pay the balance price of
f HK$1,683,000 on 17 July 1991.

In cross-examination Miss Lam said:

Q. You wrote on 16 July 1991, item 2:

‘We shall procure the second confirmor, Jiu Sze Man, to execute the
g
Assignment upon completion as the second confirmor as attorney for the
first confirmor’.

Do you see that ?

A. Yes.
h
Q. You didn’t arrange for him to attend at the completion at five to four, did
you?

A. Right.

i
 Chong Kai Tai Ringo & Anor. v. Lee Gee Kee & Anor.
[1997] 3 CLJ Lord Hutton 13

A little later in cross-examination Miss Lam said: a

Q. Now, Madam - so you would agree with me, would you not, that there
could be no completion taking place at 4 o’clock on that day ?

A. I will promise them that they would be done later.

b
In his judgment Ching JA stated that the purchasers had not pleaded in their
amended reply that the vendors were not able to complete on 17 July by
handing over an executed assignment, and that no evidence was given and
no cross-examination was carried out on this point. Litton VP also stated that
as the point whether the vendors were able to complete on 17 July had not
been explored evidentially in the High Court, it would not be right for the Court c
of Appeal to make a finding on the point. However their Lordships observe,
with respect, that the two passages from the cross-examination of Miss Lam
set out above make it clear that the point that the vendors were unable to
complete on 17 July was explored in the evidence and no objection was taken
by the vendors that this point had not been adequately pleaded by the d
purchasers in their reply.
Mr. West, for the purchasers, submitted that there were two further reasons
why the vendors were unable to perform their obligations under the agreement
before midnight on 17 July 1991. Clause 3 of the agreement provided:
e
Transaction by vacant possession before signing the Assignment.

Mr. West submitted that the evidence of Miss Lam in cross-examination made
it clear that the vendors’ solicitors had not made the necessary arrangements
to be able to give vacant possession before midnight on 17 July:
f
Q. Madam, the reason you imposed this time limit was you know that you
hadn’t asked for vacant possession of the flat from the developer, isn’t
that right ?

A. Right.
g
If the agreement presently under consideration had been made in England in
the English language relating to property in this country, their Lordships would
have been of opinion that this submission was correct. But in his judgment
Ching JA stated:
Attention was drawn to cl. (3) of the provisional agreement which, so far as it h
was not deleted, provided:

Transaction by vacant possession before signing the Assignment.

Whatever this may mean it is difficult to see how this assists the plaintiffs. The
words in the Chinese Language for vacant possession are perfectly well i
 Current Law Journal
14 July 1997 [1997] 3 CLJ

a understood. They mean that when the assignment is made there must be no
sitting tenant or other occupant.

As their Lordships would be slow to differ from a Judge in Hong Kong as to

the meaning of a clause in a contract written in the Chinese language, and as
the point is not vital to the decision of this appeal, their Lordships do not
b propose to express an opinion on this submission.
The decision of this Board in the Edward Wong Finance Company case
established that a solicitor for a purchaser buying a property subject to a
mortgage to be discharged from the purchase monies would be at risk of
c liability for professional negligence if he failed to split the completion cheque
between the vendor’s solicitor and the vendor’s mortgagee.
It was submitted by Mr. West on behalf of the purchasers that the vendors
were further in breach of their obligations because their solicitors had failed
to supply the purchasers’ solicitors with the necessary information as to splitting
d the cheque between the vendors and their mortgagee before midnight on
17 July 1991. In reply to this submission Mr. Oliver contended that there was
no obligation imposed upon the vendors’ solicitors to give this information before
the purchasers’ solicitors requested it, and that the purchasers’ solicitors had
not requested this information until 18 July on which date they transmitted their
e letter dated 17 July 1991. Having regard to their decision that the vendors
were unable to perform their obligation to deliver the executed assignment
before midnight on 17 July 1991, their Lordships consider it unnecessary to
express an opinion on this point.
In relation to the third question their Lordships consider it to be clear that as
f
the obligations of both parties were concurrent and as the vendors were unable
to deliver an executed assignment to the purchasers on 17 July, they were
not entitled to claim that the purchasers had repudiated the contract by failing
to pay the balance of the purchase money on that date. In those circumstances
time caused to be of the essence of the contract and the parties had a
g reasonable time in which to complete. The position was well stated by Hunter
JA in Camberra Investment Ltd. v. Chan Wai-tak [1989] 1 HKLR 568, 574:
I regard the point as fundamental and very relevant as revealing both parties to
have been at fault. Their obligations under cl. 3 were mutual. The duty of the
defendant to tender an executed assignment and that of the defendant to tender
h an executed assignment and that of the plaintiff to tender the balance of the
purchase price were concurrent conditions. Neither performed: neither tendered:
neither triggered the corresponding obligation of the other. The defendant neither
executed nor tendered an assignment before 1 pm and thereafter was denying
his obligation so to act and preventing his solicitor from taking any step to that
i end. The plaintiff tried to tender and failed. The cheque constituted at most
 Chong Kai Tai Ringo & Anor. v. Lee Gee Kee & Anor.
[1997] 3 CLJ Lord Hutton 15

conditional payment and not the ‘full’ payment required. An effective tender a
required cash or its equivalent, neither of which was available that Saturday
afternoon.

In my judgment this contract remained uncompleted at midnight on 28 February

by the fault of both parties. It did not then terminate as was at one time
suggested. It remained on foot with the substitution of a reasonable time for the b
failed express condition.

Accordingly, their Lordships have formed the opinion (for reasons which are
substantially the same as those given by Godfrey JA) that as the vendors were
not in a position to complete before midnight on 17 July 1991 they were not
entitled to claim that the purchasers had repudiated the agreement by not c
paying the balance of the purchase money before midnight on that date.
Their Lordships further observe that the decision of the majority of the Court
of Appeal that payment by the purchasers and completion by the vendors were
not to be simultaneous appears to have been influenced by two factual d
assumptions which their Lordships were informed were incorrect. These were
that the building was not completed at the time the parties entered into the
agreement of 6 July 1991, and that the earlier purchasers in the chain from
the developers were unable to make payment under their respective contracts
until the vendors in this case had received payment from their purchasers. But
e
their Lordships were informed on the hearing of this appeal that it was not in
dispute that the building had been completed and that the earlier vendors had
been paid before the agreement of 6 July 1991 was signed by the parties.
The final issue for determination is whether the purchasers are entitled to an
order for specific performance. It is not in dispute that they are ready and f
willing to perform their obligations under the agreement. But it is submitted
on behalf of the vendors that cl. 5 of the agreement (the terms of which are
set out in the earlier part of this judgment) operates to bar the remedy of
specific performance and restricts the purchasers to recovering $100,000, being
double the amount of the initial deposit. g
Mr. Oliver submitted that cls. 4 and 5 were to be read together and made
provision for the only remedies available if either the purchasers or the vendors
were in breach of their obligations under the agreement. He pointed to the
word “must” in cl. 5 and submitted that the clause was not drafted in terms
which gave the purchasers an option as to the remedies they could pursue, h
but that the clause restricted them to the receipt of double the amount of the
initial deposit. He further argued that the second sentence of the clause, stating
that the purchasers, could not dispute a resale by the vendors, was inconsistent
with a right in the purchasers to claim specific performance.
i
 Current Law Journal
16 July 1997 [1997] 3 CLJ

a The vendors’ reliance on cl. 5 gives rise to two questions. One question is
whether, even if cl. 5 would have barred a claim for specific performance if
the vendors had accepted that they were in default in performing their
obligations and had offered to pay $100,000 pursuant to the clause, they can
now rely on the clause having failed to offer payment under it and having
b claimed that the purchasers had repudiated the agreement. The other question
is whether, if they had offered to pay $100,000 timeously, cl. 5 would have
barred a claim for specific performance. Godfrey JA answered the first question
against the vendors and stated:
Are the purchasers entitled to specific performance?
c
In my judgment, they are. Although the agreement contained the familiar
provision providing in certain circumstances for the return by the vendors to
the purchasers of an amount equal to double the purchasers’ deposit, the right
to so is not a right which the vendors ever claimed to exercise. They purported
to forfeit the purchasers’ deposit altogether and to call off the transaction. Had
d they elected, instead, to pay to the purchasers the ‘double amount to the initial
deposits’ mentioned in the agreement, the case might have been very different.
But the vendors, having elected (without sufficient justification) to treat the
contract as at an end, cannot be allowed now to resile from that election.

Their Lordships are in agreement with this part of the judgment of Godfrey
e JA in relation to the first question and are of opinion that, as the vendors
never offered to pay the sum specified in cl. 5 but claimed that the contract
was ended by reason of repudiation by the purchasers, they cannot now seek
to rely on the clause.

f In relation to the second question Counsel cited the judgment of this Board in
Abdul Cader Abdeen v. Abdul Careem Mohamed Thaheer [1958] AC 116
and a number of judgments of the Courts in Hong Kong. In those cases the
decision whether a clause providing for the payment of a liquidated amount
barred specific performance was a matter of construction turning on the precise
wording of the individual clause. Having regard to their ruling on the first
g
question their Lordships consider it unnecessary to decide as a matter of
construction whether cl. 5 would have barred a claim for specific performance
if payment had been offered in due time.
Their Lordships will humbly advise Her Majesty that the appeal should be
h allowed, the order of the Court of Appeal set aside and the order of Deputy
Judge Pang for specific performance restored. The respondents will pay the
appellants’ costs before their Lordships’ Board and in the Court of Appeal.
Reported by Anne Khoo
i