Union Eagle Ltd v Golden Achievement Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 03 February 1997 |
| Date | 03 February 1997 |
| Court | Privy Council |
Vendor and Purchaser - Completion - Delay in completion - Purchaser tendering purchase price 10 minutes after time for completion - Time expressed to be of essence of contract - Vendor rescinding contract - Whether purchaser entitled to specific performance
By a written agreement the purchaser agreed to buy a flat and paid 10 per cent. of the purchase price as a deposit. The agreement specified the date, time and place of completion. Time was to be in every respect of the essence of the agreement and if the purchaser failed to comply with any of its terms and conditions the vendor had the right to rescind the contract and forfeit the deposit. The purchaser failed to complete by the stipulated time and tendered the purchase price 10 minutes late. The vendor rescinded the contract and forfeited the deposit. The purchaser brought an action in the High Court of Hong Kong claiming, inter alia, specific performance of the agreement. The judge dismissed the action and the Court of Appeal of Hong Kong by a majority upheld that decision.
On the purchaser's appeal to the Judicial Committee: —
Held, dismissing the appeal, that failure to complete on time was a repudiatory breach of contract rendering performance by the purchaser impossible and entitling the vendor to reject the late tender of the purchase price and to rescind the contract; that equity would not normally intervene when an ordinary contract for the sale of land was rescinded for non-compliance with an essential condition as to time, and the fact that the purchaser was only slightly late in completing did not justify departure from that general principle even though the result of the rescission was that the purchaser had forfeited the equitable interest in the land arising under the contract; and that, accordingly, relief by way of an order for specific performance had properly been refused (Post, pp. 343H, 344A–B, 346A, 348E–F, F–G).
Quaere. Whether the way to deal with problems arising in cases with regard to any penalty, or the vendor being unjustly enriched by improvements made at the purchaser's expense, or the vendor's conduct having contributed to the breach of contract, or the transaction being in substance a mortgage, was by relaxing the principle that relief by way of specific performance would not be granted where there was breach of an essential condition as to time, or by development of the law of restitution and estoppel (post, p. 348D–E).
The following cases are referred to in the judgment of their Lordships:
Benedict v. Lynch (
Brickles v. Snell [
Campbell Discount Co. Ltd. v. Bridge [
Dagenham (Thames) Dock Co., In re; Ex parte Hulse (
Hill v. Barclay (
Howe v. Smith (
Kilmer v. British Colombia Orchard Lands Ltd. [
Kreglinger (G. and C.) v. New Patagonia Meat and Cold Storage Co. Ltd. [
Legione v. Hateley (
Scandinavian Trading Tanker Co. A.B. v. Flota Petrolera Ecuatoriana (The Scaptrade) [
Shiloh Spinners Ltd. v. Harding [
Steedman v. Drinkle [
Stern v. McArthur (
Stockloser v. Johnson [
Taylors Fashions Ltd. v. Liverpool Victoria Trustees Co. Ltd. (Note) [
Vernon v. Stephens (
Workers Trust & Merchant Bank Ltd. v. Dojap Investments Ltd. [
The following additional cases were cited in argument:
Barclay v. Messenger (
Dawson Enterprises Ltd. v. Talisteam Ltd. [
Starside Properties Ltd. v. Mustapha [
Appeal (No. 15 of 1996) with leave of the Court of Appeal of Hong Kong by the plaintiff purchaser, Union Eagle Ltd., from the judgment of the Court of Appeal of Hong Kong (Litton V.-P. and Ching J.A., Godfrey J.A. dissenting) given on 29 November 1995 dismissing the purchaser's appeal from the judgment of Cheung J. delivered on 27 April 1995 in the High Court of Hong Kong, whereby he had dismissed the purchaser's action against the defendant vendor, Golden Achievement Ltd., for, inter alia, specific performance of an agreement dated 1 August 1991 for the sale of certain property by the vendor to the purchaser.
The facts are stated in the judgment of their Lordships.
Michael Lyndon-Stanford Q.C. and Amanda Tipples for the purchaser.
Mark Hapgood Q.C. and Roger Masefield for the vendor.
3 February 1997. The judgment of their Lordships was delivered by Lord Hoffmann.
The conveyancing transaction which gave rise to this appeal was, save in one respect, entirely commonplace. The appellant (“the purchaser”) entered into a written agreement dated 1 August 1991 to buy a flat on Hong Kong Island from the respondent (“the vendor”) for H.K.$4.2m. In accordance with the contract, the purchaser paid a deposit of H.K.$420,000 to the vendor's solicitors, Robert C.K. Tsui & Co., as stakeholders.
Completion was to take place on or before 30 September 1991 and before 5 p.m. on that day. Time was to be in every respect of the essence of the agreement. Clause 12 provided that:
“If the purchaser shall fail to comply with any of the terms and conditions of this agreement the deposit money and any part payment of purchase price so paid shall be absolutely forfeited as and for liquidated damages (and not a penalty) to the vendor who may (without being obliged to tender an assignment to the purchaser) rescind this agreement and either retain the property the subject of this agreement or any part or parts thereof or resell the same …”
The purchaser failed to complete by 5 p.m. on 30 September 1991 and the vendor declared that the contract was rescinded and the deposit forfeited.
The only unusual feature was that the purchaser tendered payment of the purchase price 10 minutes after the time for completion had passed. The purchaser refused to accept that so venial a lapse should result in the loss of the contract and commenced proceedings for specific performance. Cheung J. dismissed the action and his decision was affirmed by the Court of Appeal [
The chief question in the case is whether the court has, and should have exercised, an equitable power to absolve the purchaser from the...
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