Time generally of the essence in Hong Kong Conveyancing

The time for payment of the initial deposit payable under the terms of a Provisional Sale Agreement is usually of the essence in Hong Kong.

In Sun Lee Kyoung Sil v Jia Weili ([2010] 2 HKLRD 30) the purchaser’s cheque for the initial deposit under a Provisional Sale Agreement bounced. The purchaser had the money but, by mistake, had not transferred it to the right account to be ready to honour the cheque. The next day the purchaser proffered a cashier order for the deposit but the seller refused to accept it, preferring to treat the failure to pay the deposit on the due day as a repudiatory breach. The court decided that he was entitled to do so and, in accordance with the terms of the agreement, to forfeit the deposit. The nature of the subject matter (real estate in Hong Kong) and the surrounding circumstances indicated that time was to be treated as being of the essence and equity could not relieve from the defendant from a duty of strict compliance. In any event, the purchaser had no defence to an action on the cheque (though the seller could not recover twice),