Brothers v New Rui International Co, Limited

 [2026] HKCA 999, the Defendant (as purchaser) sought to rescind from an agreement to purchase a house in Sai Kung from the Plaintiffs (as vendors) on the ground of the Plaintiffs’ misrepresentations that the land lot and the house complied with the government lease conditions, in defence to the Plaintiffs’ application for summary judgment for the release of the escrow monies.

At first instance, the judge held that the Defendant had lost its right to rescission because it had through solicitors’ demand letters only sought to claim damages against the Plaintiff and so had by its words and conduct unequivocally affirmed the agreement.

The Court of Appeal (by a majority) reversed the decision and granted unconditional leave to defend to the Defendant. The Court held that:

The case highlights that an innocent party discovering a misrepresentation will be afforded a reasonable period to investigate, seek responses and assess its options before being deemed to have irrevocably elected to affirm a contract. What is reasonable is a fact-sensitive issue to be objectively construed.

, instructed by Johnson Stokes & Master, acted for the Defendant.

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