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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> DD Classics Ltd v Chen [2022] EWHC 1357 (Comm) (29 March 2022) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2022/1357.html Cite as: [2022] EWHC 1357 (Comm) |
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BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
LONDON CIRCUIT COMMERCIAL COURT (QBD)
Rolls Building, 7 Rolls Buildings, Fetter Lane, London, EC4A 1NL |
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B e f o r e :
(sitting as a Judge of the High Court)
____________________
![]() ![]() ![]() ![]() |
Claimant |
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- and - |
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KENT CHEN |
Defendant |
____________________
MR. J. VIRGO (instructed by Healys LLP) for the Defendant
____________________
Crown Copyright ©
If this Transcript is to be reported or published, there is a requirement to ensure that no reporting restriction will be breached. This is particularly important in relation to any case involving a sexual offence, where the victim is guaranteed lifetime anonymity (Sexual Offences (Amendment) Act 1992), or where an order has been made in relation to a young person.
Judge Keyser QC:
Introduction
CPR Part 24
"The court may give summary judgment against a … defendant on the whole of a claim … if –
(a) it considers that – … that defendant has no real prospect of successfully defending the claim …; and
(b) there is no other compelling reason why the case … should be disposed of at a trial."
"[I]t is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction..."
The Facts
Pre-Contract
The Contract
"2. Sales price
(1) The sales price is €3,200,00[0] (net) …
3. Payment of the sales price
(1) Payment of the sales price according to cl. 2 shall become due immediately upon the entry into force of this agreement.
(2) The parties agree that the buyer has to pay the sales price to the seller within 5 business days of the due date [viz. 24 March 2021] and confirmation that the car will be released to the buyer upon payment in full.
(3) A payment with debt-discharging effect can only be made as follows:
(a) An amount of €50,000 to the following account: [details stated]
(b) The remaining sales price in the amount of €3,150,000 to the following account: [details stated].
…
(5) If the buyer does not meet his payment obligations according to cl. 3 (1) and (2) of this agreement within 5 business days after the due date, the seller is entitled to withdraw from this contract without reminder or setting a deadline.
4. Transfer of ownership
The seller undertakes to transfer ownership of the Car to the buyer IMMEDIATELY upon receipt of the sales price. The seller will immediately upon receipt of the sales proceeds instruct Ferrari Cliente department to release the car toDD
![]()
Classics
Ltd as the new owner.
If for any reason Ferrari will not release the Car toDD
![]()
Classics,
then the seller must refund all of the purchase monies to the buyer within five working days with time of the essence.
…
6. Reservation of ownership
The object of sale remains the property of the seller until the payment for the car is made by bank transfer in full.
…
8. Place of jurisdiction
This contract will be subject to UK laws and in the very unlikely event of a legal dispute any actions would be subject to the UK High Courts of London.
9. Final provisions
This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements for the above purpose."
Post-Contract
"Daniel, I am treating this deal in good faith and tried all my best to close the deal with u, u want something I did my best to provide u, u got the contract signed, Ferrari replied u officially, we set a time line, u wire the balance and once received I inform Ferrari for the transfer. U got paid already, wire my part, u keep ur cut, everyone is happy. We got a contract signed with amount and time frame to be settled, why making everyone difficult, let's close it and everyone is happy isn't it."
Mr Donovan replied:
"I am being responsible. It is a lot of money and we have to be100 per cent satisfied. Would be exactly the same if you were buying something you cannot touch. You would want to be completely confident."
Mr Chen in turn replied at about 3.30 p.m. on 31 March:
"Yes I know. But I did everything to provide u as much as I could already. Ferrari officially replied u and we have contract signed! The only thing I can do is once u paid the remaining I do the transfer. Nothing else I can do.
Anyway mate, if u have concerns and don want to buy just let me know, u r busy and so I am, we can waive this deal anytime. Or just close the deal within time frame and we can close this deal today or tmw.
Thanks Daniel
So in conclusion u need to let me know if u will pay or not today or tmw, very serious otherwise we treat this deal is waived. The contract we signed is 5 biz working days.
Just let me know up front coz it is just a FXXK EVO[.] I can always to keep it as my collection."
"I won't say again if u r not happy let's waive this deal[.] we have contact signed and Ferrari replied officially, if u still don trust, we will waive this deal immediately. U paid the remaining as per time line agreed which the due date is today which maybe some time difference we can put it till tmw
Dear Daniel that's all I will like to say, if u not happy then don go ahead. I don mind if I don sell my car. Good night my friend, if u want to keep this deal, then just deliver what u need to deliver TODAY or TMW otherwise I will take this deal as an OFF."
"Hello Daniel, this is not buying aclassic
car or road car, it's a FXXK or special car from Ferrari. They will answer in their way which they did already. I am the owner of the #58, we have the contract signed, u paid the deposit. We finalize the balance and I do the transfer of the ownership! The transfer of the ownership can be done in just in an email. I am really tired of this looping and looping issue. Like I said, if u don feel okie, then don buy, it's okie, if u do want to close the deal, then please stick to the agreement and pay the balance tmw (Thursday) and send me the wiring proof, the minute I saw that in my bank, I will immediately inform Ferrari to do the transfer. U sent the contract to me and modified by your legal department or whatever, then we agreed then we signed. U got everything needed from me, official email from Ferrari (and all the head of XX division) and cc u in the email, if I am not the owner, they will not even bother to reply anything. That's all we can do. I am being pushy is because I want to put a conclusion on this, I have other biz to take care of, and so do u! It's your choice sir."
More emails followed later that morning, and at about 2 p.m. Mr Chen wrote:
"Alright Daniel, make up your mind, today is the final deadline sir, I been very helpful and everything, if u do not do the remaining balance within today I will official call this deal off! Thank you!"
"You are the only person who can claim the €3,105,000 which is sent to your account on your instructions to me. May bank can't reclaim it and your bank say it was credited to your account on the 9th. By ignoring me and telling Ferrari not to contact it seems you are intending to defraud me of the money. Please confirm that you have made proper attempts to clarify with your bank why the money has not shown up in your account if that is the case."
At about midday Mr Donovan wrote:
"There must be a written email or letter confirmation when dealing with such amounts of money. It is totally unacceptable to treat our €3,155,000 as if it is loose change!
Any bank will confirm in writing the situation with a bank transfer especially with the huge amount of money in this transaction. If you sent me the €3,155,000 and I told you I would only call the bank you would bombard me with emails, texts and voicemails day and night. This is not 3 grand we are talking about"
Mr Chen replied immediately:
"Dude, just pass me ur account info and I will wire the money back to next day I receive it.
No more deals.
Thank you".
The Issues
1) On a true construction of the Contract, time of payment of the price was of the essence: paragraph 7.1.
2) Mr Chen was entitled to withdraw from the Contract if the price were not wholly paid by the end of Tuesday 30 March 2021, being the 5th business day after the date of execution of the Contract (24 March 2021): paragraphs 7.2 and 7.3.
3) After payment of the deposit, the balance of the price was not paid before 31 March 2021 (or, indeed, at any time until 25 May 2021), and Mr Chen was entitled to withdraw from the Contract and did so on 13 April 2021: paragraphs 10 and 11.
4) Mr Chen is ready, willing and able to return the price, if onlyDDC
will nominate an account into which to receive payment: paragraph 13.
Time of the Essence
"The contract should be given the meaning it would convey to a reasonable person having all the background knowledge which is reasonably available to the person or class of persons to whom the document is addressed."
The ramifications of that approach have been discussed in detail in many recent cases. A helpful summation of the main points was provided by Carr LJ in ABC Electrification Ltd v Network Rail Infrastructure Ltd [2020] EWCA Civ 1645 at [17]-[19]:
"17. The well-known general principles of contractual construction are to be found in a series of recent cases, including Rainy Sky SA v Kookmin Bank [2011] UKSC 50; [2011] 1 WLR 2900; Arnold v Britton and others [2015] UKSC 36; [2015] AC 1619 and Wood v Capita Insurance Services Ltd [2017] UKSC 24; [2017] AC 1173.
18. A simple distillation, so far as material for present purposes, can be set out un-controversially as follows:
i) When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean. It does so by focussing on the meaning of the relevant words in their documentary, factual and commercial context. That meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the contract, (iii) the overall purpose of the clause and the contract, (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party's intentions;
ii) The reliance placed in some cases on commercial common sense and surrounding circumstances should not be invoked to undervalue the importance of the language of the provision which is to be construed. The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case, that meaning is most obviously to be gleaned from the language of the provision. Unlike commercial common sense and the surrounding circumstances, the parties have control over the language they use in a contract. And, again save perhaps in a very unusual case, the parties must have been specifically focussing on the issue covered by the provision when agreeing the wording of that provision;
iii) When it comes to considering the centrally relevant words to be interpreted, the clearer the natural meaning, the more difficult it is to justify departing from it. The less clear they are, or, to put it another way, the worse their drafting, the more ready the court can properly be to depart from their natural meaning. However, that does not justify the court embarking on an exercise of searching for, let alone constructing, drafting infelicities in order to facilitate a departure from the natural meaning;
iv) Commercial common sense is not to be invoked retrospectively. The mere fact that a contractual arrangement, if interpreted according to its natural language, has worked out badly, or even disastrously, for one of the parties is not a reason for departing from the natural language. Commercial common sense is only relevant to the extent of how matters would or could have been perceived by the parties, or by reasonable people in the position of the parties, as at the date that the contract was made;
v) While commercial common sense is a very important factor to take into account when interpreting a contract, a court should be very slow to reject the natural meaning of a provision as correct simply because it appears to be a very imprudent term for one of the parties to have agreed, even ignoring the benefit of wisdom of hindsight. The purpose of interpretation is to identify what the parties have agreed, not what the court thinks that they should have agreed. Accordingly, when interpreting a contract a judge should avoid re-writing it in an attempt to assist an unwise party or to penalise an astute party;
vi) When interpreting a contractual provision, one can only take into account facts or circumstances which existed at the time the contract was made, and which were known or reasonably available to both parties.
19. Thus the court is concerned to identify the intention of the parties by reference to what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean. The court's task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement. This is not a literalist exercise; the court must consider the contract as a whole and, depending on the nature, formality, and quality of drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to that objective meaning. The interpretative exercise is a unitary one involving an iterative process by which each suggested interpretation is checked against the provisions of the contract and its commercial consequences investigated."
"The agreement by the parties that 'time is of the essence' in relation to a particular term of the contract is another way of identifying the term as a condition of the contract so that any failure to comply with it will in principle entitle the other party to terminate further performance of the contract."
The basic propositions of law that are relevant can be taken from para. 27-029 of the same work (I omit the references in the footnotes):
Time is of the essence:
(1) Where the parties have expressly stipulated in their contract that the time fixed for performance must be exactly complied with, or that time is to be 'of the essence'.
(2) Where the circumstances of the contract or the nature of the subject matter indicate that the fixed date must be exactly complied with, e.g. … 'mercantile contracts', such as a contract for the sale of goods where a time is fixed for delivery, or for the sale of shares liable to fluctuate in value (where the contract stipulated a time for payment). … Whether a time limit is of the essence of a contractual provision is a question of interpretation of the provision in the context of the contract as a whole. The question is whether the time specified in the particular clause was (expressly or by necessary implication) intended by the parties to be essential, e.g. because they needed to know precisely what were their respective obligations. …"
The same paragraph continues:
"However, under the Sale of Goods Act 1979 s. 10, unless a different intention appears from the terms of the contract, stipulations as to time of payment are not deemed to be of the essence of the contract of sale."
"...the inclusion of an express right of withdrawal is an indication that payment of hire timeously is not a condition, since its inclusion would otherwise be unnecessary. On any view it does not make it clear that it is a condition."
Waiver/Affirmation
"It is common ground between the parties that if a vendor has once made time of the essence of the contract and then allows a further extension to a fixed date, the time remains essential."
Innominate terms
Contractual Right to Withdraw
Transcribed by Opus 2 International Limited Official Court Reporters and Audio Transcribers 5 New Street Square, London, EC4A 3BF Tel: 020 7831 5627 Fax: 020 7831 7737 civil@opus2.digital |