HCMP3698/1997 LO MIU LING CINDY and Another v. TAM HUNG PING - LawHero
HCMP3698/1997
高等法院（雜項）Sakhrani, J17/6/1998
HCMP3698/1997
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INST ANCE
MISCELLANEOUS PROCEEDINGS NO. 3698 OF 1997
____________________
IN THE MATTER of an agreement
of 19th June 1997 for the sale and
purchase of the property known as
Flat A, 2nd Floor, including the
Corresponding Portion of the Roof,
Lot No. 248, Demarcation District
227, Sai Kung, New Territories
and
IN THE MATTER of an agreement
of 19th June 1997 for the sale and
purchase of the property known as
Flat B, 2nd Floor, including the
Corresponding Portion of the Roof,
Lot No. 248, Demarcation District
227, Sai Kung, New Territories
and
IN THE MATTER of Section 12 of
the Conveyancing and Property
Ordinance, Cap. 219
____________________
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BETWEEN
LO MIU LING CINDY and
LO HAU CHIU Plaintiff
and
TAM HUNG PING Defendant
____________________
Coram: Hon. Sakhrani, J in Court
Dates of hearing: 8th, 10th & 18th June 1998
Date of judgment: 18th June 1998
_______________
JUDGMENT
_____________
This is a vendor and purchaser summons.
The Plaintiffs were the purchasers of two properties in Sai
Kung in the New Territories and the Defendant was the vendor. By an
agreement for sale and purchase dated 19th June 1997 the Plaintiffs as
purchasers agreed to buy and the Defendant as vendor agreed to sell Flat
A on the 2nd floor including the corresponding portion of the roof in the
building at Lot no. 248 in Demarcation District 227, Sai Kung, New
Territories. By another agreement of the same date, the Plaintiffs agreed
to buy and the Defendant agreed to sell another flat in the same building,
namely Flat B, 2nd floor including the corresponding portion of the roof,
Lot 248 in Demarcation District 227, Sai Kung, New Territories.
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Both agreements for sale and purchase contained identical
terms, save for the price and the particular flat purchased. The purchase
price under the first agreement was $1,600,000 of which an initial deposit
of $20,000 had been paid and a further deposit of $140,000 was paid on
the signing of the first agreement. The purchase price under the second
agreement was $1,900,000 of which an initial deposit of $20,000 had
been paid and a further deposit of $170,000 was paid on the signing of
the second agreement. The Plaintiffs therefore paid to the Defendant a
total sum of $350,000 as deposit under both agreements. Completion
under the agreements was to take place on or before 24th September 1997
and by clause 8 thereof it was provided that time should in every respect
be of the essence of the agreements.
This summons relate to two requisitions raised by the
Plaintiffs’ solicitors and which they say were not satisfactorily answered
by the Defendant or his solicitors and that the Defendant has failed to
prove a good title before completion. They ask for declarations and the
return of their deposit together with consequential relief. The Defendant
says that the requisitions have been satisfactorily answered and that good
title has been shown. The Defendant says that the deposit has been
forfeited for non-completion by the Plaintiffs.
Clause 15(1) of the agreements expressly imposed an
obligation on the Defendant to give good title to the property in
accordance with section 13 of the Conveyancing and Property Ordinances
(Cap. 219). It is clear that the vendor has an obligation to show good
title. The obligation to show good title includes the obligation to answer
requisitions satisfactorily before completion.
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Two requisitions were raised by the Plaintiffs in their
solicitor’s letter dated 12th August 1997 to the Defendant’s former
solicitors. The first requisition was a request for the supply of a certified
copy of the Block Crown Lease covering Lot 248 in Demarcation District
227 (“the Block Crown Lease”) which was not among the deeds supplied.
The second requisition was a request for a certified copy of the
occupation permit of the building issued under the Buildings Ordinance.
The first requisition
I shall first deal with the first requisition raised. In their
reply, the Defendant’s solicitors in their letter dated 14th August 1997
said that they would let the Plaintiffs’ solicitors have a certified copy of
the Block Crown Lease in due course and would send a copy thereof on
receipt from the Land Registry. They also enclosed a copy of a letter
from another firm of solicitors Anthony Kwan & Co. advising, inter alia,
that certified and plain copy Crown Lease could be obtained from the
Land Registry.
By letter dated 8th September 1997, the Plaintiffs’ solicitors
sent to the Defendant’s solicitors a copy of a letter dated 15th January
1993 from the Sai Kung District Land Registry addressed to another firm
of solicitors. That letter made it clear that the Block Crown Lease was
not available for inspection. It went on to say that the Block Crown
Lease was found to have been mislaid or lost sometime in July 1987 but
had never been retrieved since then and that there was available in the
Land Office a photocopy reproduced from a “plain” photocopy of the
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Block Crown Lease which members of the public might borrow for
reference only. It also stated that a certified copy of the Block Crown
Lease could not be supplied under the circumstances.
As the Defendant’s solicitor had in their earlier letter dated
14th August 1997 said that they would let the Plaintiffs’ solicitors have a
certified copy of the Block Crown Lease in due course, the Plaintiffs’
solicitors in their letter dated 8th September 1997 enquired of the
Defendant’s solicitors whether in the light of the matters set out in the
said letter dated 15th January 1993 from the Sai Kung District Land
Registry a certified copy of the Block Crown Lease had been obtained
and if not, how they would procure to let them have a certified copy
thereof to complete title.
In reply by a letter dated 19th September 1997 the
Defendant’s present solicitors sent what was stated to be a certified copy
of the Block Crown Lease to the Plaintiffs former solicitors. It is,
however, accepted by the Defendant that this was not a certified copy
obtained as a result of an examination of the original Block Crown Lease.
It was a certified copy of a plain copy of the Block Crown Lease as was
pointed out by the Plaintiffs’ solicitors in the letter dated 23rd September
1997. The point was made that the requirements of section 13 of the
Conveyancing and Property Ordinance and clause 15 of the agreements
had not been complied with. The Defendant’s solicitors took the view
in their letter dated 23rd September 1997 that the document that they had
supplied was sufficient to prove title. In their reply by a letter of the
same date, the Plaintiffs’ solicitors took issue with this and maintained
the view that a certified copy of a plain copy of the Block Crown Lease
was not sufficient in proving title.
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Section 13(1) of the Conveyancing and Property Ordinance
provides, inter alia, that unless the contrary intention is expressed, a
purchaser of land shall be entitled to require from the vendor as proof of
title to that land production of the Crown Lease relating to the land sold.
This must mean the original Crown Lease. Section 13(2) provides as
follows:
“Where this section requires the production of any document,
it shall be sufficient to produce a copy –
(a) ...............................
(b) certified by a public officer or a solicitor,
to be a true copy.”
Thus, by this subsection the vendor can instead of producing
the original Crown Lease produce a copy certified by a public officer or a
solicitor.
It cannot be doubted that unless the contrary intention is
expressed, the vendor’s obligation is to produce as proof of title the Block
Crown Lease or as permitted by Section 13(2) of the Ordinance a copy
certified by a public officer or a solicitor to be a true copy. This has
been decided in a number of cases see Chan Kam Shing and another v.
Lam Ping Ping [1990] 1 HKC 373 a case where Deputy Judge Findlay (as
he then was) was dealing with the same Block Crown Lease as in this
case. See also Wong Wai Ming v. Tang Tat Chi [1993] 1 HKC 341.
The document that was supplied in this case by the
Defendant’s solicitors was a photocopy of the Block Crown Lease. At
the third page of the document, there is a notation “examined and
certified to be correct” with a signature. It appears that at some stage
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the original Block Crown Lease dated 27th March 1905 had been
examined and the copy was certified to be correct. At the fourth page of
the document supplied, these words appear “ the original of this Block
Crown Lease was lost or mislaid. This is only a copy” with the
signature of Miss Sophia Yiu for Land Registrar and dated 29th
November 1995. There is a certification at the last page of the
document supplied that the document was a certified true copy with the
date 10th September 1997 and the signature of Miss Alice Leung for
Land Registrar. In view of the fact that on the evidence the original
Block Crown lease had been mislaid or lost sometime in July 1987, there
can be no doubt that what Miss Alice Leung was certifying as a true copy
was based not from an examination of the original Block Crown Lease
but from an examination of a photocopy reproduced from a plain
photocopy of the Block Crown Lease. This was the document available
in the Land Office as evidenced by the letter dated 15th January 1993
from the Sai Kung District Land Registry which I have referred to above.
It has been submitted on behalf of the Defendant that
production of that document was a sufficient compliance of his obligation.
In my judgment, that cannot be right. The obligation to produce
documents under section 13(1) of the Ordinance is to produce the original
document or as is permitted by subsection (2) a copy certified to be a true
copy. The question is: a true copy of what? It must mean, as matter of
construction, a true copy of the original document. It is, in my judgment,
incumbent on the public officer or solicitor who certifies a copy to be a
true copy of an original document to examine the original document and
to satisfy himself that what he is satisfying is indeed a true copy of the
original document.
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I would also refer to what Patrick Chan J., (as he then was)
said in Wong Wai Ming v Tang Tak Chi (supra) at page 346:
“It is the duty of the certifying public officer or solicitor to
ensure that the document which he certifies is a true copy of
the original. He compares the copy with the original and if
he is satisfied they are the same, he can certify as to that.”
In my judgment, the document that was produced was not a
sufficient compliance of the Defendant’s obligation under section 13 of
the Conveyancing and Property Ordinance as proof of title.
It was also submitted that by the clause 15(2) of the
agreements a contrary intention was expressed and production of the
document that was supplied was a sufficient compliance of the vendor’s
obligation. As I have said earlier, clause 15(1) of the agreements
expressly imposed an obligation on the Defendant to give good title to
the property in accordance with section 13 of the Ordinance. Clause
15(2) of the agreements provided as follows:
“Notwithstanding the above sub-clause in the event that any
of above documents are not in the Vendor’s possession then
for the purposes of proof of title, the Purchaser shall accept a
plain copy issued by the appropriate Land Registry provided
that the Vendor shall undertake to provide the Purchaser with
a certified copy thereof on receipt from the appropriate Land
Registry.”
This provides for the situation where the original document is not in the
vendor’s possession. In that case, the purchaser shall accept the plain
copy issued by the Land Registry provided the vendor undertakes to
provide a certified copy on receipt of the same from the Land Registry.
In my judgment the intention of the parties is clear. When
the certified copy of the document is received by the vendor from the
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Land Registry it should be provided to the purchasers. That is the
reason for the vendor’s undertaking and in the meantime the Plaintiffs
have to accept the plain copy issued by the Land Registry. Here, the
Defendant could not properly give and perform an undertaking to provide
the Plaintiffs with a certified copy of the original Block Crown Lease
from the Land Registry. That would involve an examination of the
original Block Crown Lease which was not possible in view of the fact
that it was mislaid or lost in July 1987. In my judgment, a contrary
intention has not been expressed by clause 15(2) of the agreements. It
also noteworthy that the Defendant did not rely on this sub-clause in his
solicitors’ letters in dealing with the requisition raised before completion.
Furthermore, as regard clause 15(2) of the agreements, I
accept the submission made by counsel for the Plaintiffs that before the
Defendant can rely on the clause in the agreements to restrict or limit his
obligation imposed by law i.e. under section 13 of the Conveyancing and
Property Ordinance, there must be full disclosure by the Defendant
before the agreements were entered into so as to enable the Plaintiffs to
consider and determine whether a reduced obligation was acceptable to
them. It was never disclosed to the Plaintiffs before the agreements
were entered into that the original Block Crown Lease had been mislaid
or lost and that the document which would be produced as proof of title
would not be a certified copy based on an examination of the original
Block Crown Lease but based on an examination of a photocopy. If this
was not known to the Defendant at the time, it was something that he
ought to have known as his solicitors could easily have ascertained what
the position was as regard the Block Crown Lease before the agreements
were entered into.
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I derive assistance from what Danckwerts L.J. said in Becker
v. Patridge [1996] 2Q.B. 155 at 171:
“There is no doubt that by a clearly drawn special condition
put in the contract by a vendor who acts in good faith, and
disclosing a possible defect in the title, the purchaser may be
compelled to accept the title offered by the vendor. But the
vendor must have disclosed the defects of which he knew.
In this case the vendor did not know of the breaches which
would give rise to forfeiture. But he ought to have known
that such breaches might exit.”
At page 172, Danckwerts L.J. said:
“The position is covered by the decision of Byrne J. in In re
Haedicke and Lipski’s Contract [1901] 2 Ch. 666. In a
reserved judgment Byrne J. ordered return of the deposit with
interest and the costs of investigation of title on the ground
that a purchaser has a right to assume when a condition of
this kind is inserted that the vendor has disclosed what it is
his duty to disclose. That case has stood for over sixty
years and, so far as we know, has not been criticised.
In our view the principle was stated by Lord Eldon in
Bousfield v. Hodges (1863) 33 Beav. 90, 94, in a passage
quoted by Byrne J., namely, that there should be no surprise
upon the purchaser, and that there has been a full and fair
representation as to the title on the part of the plaintiff.”
In my judgment, the first requisition was not satisfactorily
answered and the Defendant failed to prove a good title before
completion.
The second requisition
It is common ground between the parties that the relevant
Ordinance applicable to the properties was the old Buildings Ordinance
(Application to the New Territories) Cap. 322. Section 21 of the
Buildings Ordinance (cap. 123) requires an occupation permit to be
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issued by the Building Authority in respect of a new building before it
can be occupied. Under the Buildings Ordinance (Application to the
New Territories) Regulations, the provisions of section 21 of the
Buildings Ordinance does not apply to any building situated in the New
Territories provided it does not exceed a certain height. In this case, it
is common ground that the building exceeded that height. In the
circumstance, an occupation permit issued by the Building Authority was
required. Hence, the second requisition was raised.
The stand taken by the Defendant was that an occupation
permit was not required. In their letter dated 14th August 1997 the
Defendant’s then solicitors enclosed the said letter from Anthony Kwan
& Co. also of the same date. The view was taken that an occupation
permit was not required and a letter said to be dated 8th April 1982 from
the District Lands Office was enclosed and the point was made that the
District Office had waived the breach if any, by the acceptance of $5,000.
The letter from the District Lands Office, is in fact dated 28th April 1982
and was addressed to another firm of solicitors. The point was made in
that letter that by virtue of payment of a fine of $5,000.00, the writer of
the letter was not prepared to take further action under the lease
condition.
In their letter dated 15th August 1997, the Plaintiffs’ former
solicitors maintained the view that an occupation permit was required and
insisted on production of the same. By a letter dated 25th August 1997,
the Defendant’s solicitors again sent another letter from Anthony Kwan
& Company of the same date and in answer said that the building having
been in existence for over 15 years, no action for demolition would be
taken and if it was regarded as an illegal structure, an action for
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demolition would have long been taken before that.
By their letter dated 25th August 1997, the Plaintiffs’
solicitors took the view that the risk of Government enforcement action
still existed even though the building had been in existence for over 15
years. By a letter dated 6th September 1997, the Defendant’s solicitor
took the view that the risk of enforcement action was not real but fanciful.
In their letter dated 8th September 1997, the Plaintiffs’ solicitors referred
to the case of Lui Kwok Wai and another v. Chan Yiu Hing and another
[1995] 1 HKC 197 where it was held that an occupation permit was a
relevant and necessary document to prove title whenever the Buildings
Ordinance applied. It was also mentioned in that letter that as an
occupation permit could only be issued by the Director of Buildings, the
letter dated 28th April 1982 from the District Lands Office could not be
construed as an indication that the District Lands Office had assumed the
statutory authority of the Director of Buildings and come to a view that
an occupation permit was not necessary. The point was made also that
there was no written confirmation from the Buildings Department that no
enforcement action would be taken in respect of the building and that
therefore, a good title had not been shown. In the correspondence that
followed, that point was not answered by the Defendant’s solicitors.
They simply reiterated the point that an occupation permit was not
necessary and in their letter dated 19th September 1997 the Defendant’s
present solicitors enclosed a letter dated 14th June 1982 from the District
Lands Office. This was another letter from the District Lands Office
advising that the writer of the letter had no objection to the house being
occupied but it went on to say that the letter was given without prejudice
to all or any rights of the Crown whether under the conditions of the
Block Crown Lease under which the Lot was held or otherwise, in
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respect of any breach or failure to observe any of the conditions which
may exist at the date thereof or which may thereafter occur. And in
then their letter dated 22nd September 1997, the Plaintiffs’ solicitors took
the point, rightly in my view, that the letter dated 28th April 1982 from
the District Lands Office could not be construed as an indication that the
District Lands Office has assumed the statutory authority of the Director
of Building and come to a view that an occupation permit was not
necessary.
There was further correspondence, and in the letter dated 23rd
September 1997 from the Defendant’s solicitors to the Plaintiffs’ present
solicitors, they expressed the opinion that the property was an exempted
house upon payment of penalty and said it was sufficient to prove that the
property has complied with conditions of the Crown Lease and no further
documentary evidence was necessary. This does not deal with the
requisition raised at all because the point was made by the Plaintiffs’
solicitors that the District Lands Office did not have the authority to
assume the statutory function of the Building Authority. The parties
maintained their positions and on 24th September 1997, the Plaintiffs’
solicitors gave notice to the Defendant’s solicitors saying that they had
failed to prove a good title before completion and asking for the return of
their deposit. On 25th September 1997, the Defendant’s solicitors wrote
saying that they had forfeited the deposit paid.
The case that was referred to by the Plaintiffs’ solicitors in the
correspondence was Lui Kwong Wai and another v. Chan Yiu Hang and
another (supra). As I have said it was held there that an occupation
permit was a relevant and necessary document to prove title. It also
held that it was wrong to rely on a letter in that case from the District
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Lands Office as an indication that the Crown had waived the requirement
for an occupation permit or that the District Lands Office had assumed
the statutory authority of the Director of Building and come to a view
that an occupation permit was not necessary. It was after all for the
Building Authority to issue the occupation permit.
That case was followed by Le Pichon J. in the case of Wong
On v. Lam Shi Enterprises Limited HCMP 2549 of 1995. She also said
at page 6 and 7 of her judgment as follows:
“In the absence of any provision which empowered the DLO
to make decisions on behalf of, or to override the Building
Authority where the subject matter is the development of
small houses in the New Territories or any evidence that this
was in fact the practice, there is nothing to warrant the
conclusion or inference that the DLO had authority to assume
the statutory functions of the Building Authority and make
decisions that are solely within the domain of the Building
Authority under the relevant statutory provisions.”
This was certainly the point that the Plaintiffs’ solicitors were raising
with the Defendant’s solicitors but no satisfactory answer was given.
Although the risk of enforcement action by the Government in this case
is not great, there is nevertheless a risk. I do not see why the purchasers
should endure that risk. I cannot say that I am satisfied beyond
reasonable doubt that the purchasers would not be at risk in the absence
of any evidence that the Building Authority has said that no enforcement
action would be taken. In the circumstances, the second requisition has
not been answered satisfactorily and again good title has not been shown.
The Plaintiffs are, in my judgment, entitled to judgment. I
grant a declaration that the Defendant was not entitled to forfeit the
deposit paid by the Plaintiffs under the two agreements dated 19th June
1997 made between the Plaintiffs and the Defendant in respect of the sale
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and purchase of the properties known as (i) Flat A, 2nd Floor including
the corresponding portion of the roof Lot No. 248 Demarcation District
227 Sai Kung New Territories; and (ii) Flat B, 2nd Floor including the
corresponding portion of the roof, Lot No.248 Demarcation District 227
Sai Kung New Territories (“properties”) by reason of the failure of the
Defendant,
(a) in showing a good title by the time of
completion on account of the Defendant’s
failure to answer satisfactorily the requisitions
raised in the letter dated 12th August 1997 from
the Plaintiffs’ solicitors as to the occupation
permit for the properties;
(b) In complying with the requirement of section
13 of the Conveyancing and Property
Ordinance, in respect of the production of the
Block Crown Lease relating to the properties.
I also grant a declaration that the Defendant wrongfully
repudiated the agreements by purporting to forfeit the deposit paid by the
Plaintiffs in the letter dated 25th September 1997 from the Defendant’s
solicitors to the Plaintiffs’ solicitors. I make an order for repayment of
the deposit in the total sum of $350,000.
As to stamp duty, conveyancing legal costs and commission, I
am of the view that the correct order to make is to give the Plaintiffs
liberty to apply for assessment of damages arising out of any loss of
stamp duties and claim by the estate agent for commission. I order that
the Defendant reimburse the Plaintiffs in respect of conveyancing legal
costs in the sum of $17,770 upon production of a receipt.
I also grant the declaration that the Plaintiffs have a lien over
the properties for the said sum of $350,000. I make an order that the
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costs of the proceedings be paid by the Defendant to the Plaintiffs to be
taxed if not agreed.
(Arjan H. Sakhrani)
Judge of the Court of First Instance
Mr. Johnson Lam, instructed by M/s. Fung & Liu for Plaintiff
Mr. C.Y. Li instructed by M/s. Hau, Lau Li & Yeung for Defendant
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INST ANCE
MISCELLANEOUS PROCEEDINGS NO. 3698 OF 1997
____________________
IN THE MATTER of an agreement
of 19th June 1997 for the sale and
purchase of the property known as
Flat A, 2nd Floor, including the
Corresponding Portion of the Roof,
Lot No. 248, Demarcation District
227, Sai Kung, New Territories
and
IN THE MATTER of an agreement
of 19th June 1997 for the sale and
purchase of the property known as
Flat B, 2nd Floor, including the
Corresponding Portion of the Roof,
Lot No. 248, Demarcation District
227, Sai Kung, New Territories
and
IN THE MATTER of Section 12 of
the Conveyancing and Property
Ordinance, Cap. 219
____________________
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BETWEEN
LO MIU LING CINDY and
LO HAU CHIU Plaintiff
and
TAM HUNG PING Defendant
____________________
Coram: Hon. Sakhrani, J in Court
Dates of hearing: 8th, 10th & 18th June 1998
Date of judgment: 18th June 1998
_______________
JUDGMENT
_____________
This is a vendor and purchaser summons.
The Plaintiffs were the purchasers of two properties in Sai
Kung in the New Territories and the Defendant was the vendor. By an
agreement for sale and purchase dated 19th June 1997 the Plaintiffs as
purchasers agreed to buy and the Defendant as vendor agreed to sell Flat
A on the 2nd floor including the corresponding portion of the roof in the
building at Lot no. 248 in Demarcation District 227, Sai Kung, New
Territories. By another agreement of the same date, the Plaintiffs agreed
to buy and the Defendant agreed to sell another flat in the same building,
namely Flat B, 2nd floor including the corresponding portion of the roof,
Lot 248 in Demarcation District 227, Sai Kung, New Territories.
- 3 -
Both agreements for sale and purchase contained identical
terms, save for the price and the particular flat purchased. The purchase
price under the first agreement was $1,600,000 of which an initial deposit
of $20,000 had been paid and a further deposit of $140,000 was paid on
the signing of the first agreement. The purchase price under the second
agreement was $1,900,000 of which an initial deposit of $20,000 had
been paid and a further deposit of $170,000 was paid on the signing of
the second agreement. The Plaintiffs therefore paid to the Defendant a
total sum of $350,000 as deposit under both agreements. Completion
under the agreements was to take place on or before 24th September 1997
and by clause 8 thereof it was provided that time should in every respect
be of the essence of the agreements.
This summons relate to two requisitions raised by the
Plaintiffs’ solicitors and which they say were not satisfactorily answered
by the Defendant or his solicitors and that the Defendant has failed to
prove a good title before completion. They ask for declarations and the
return of their deposit together with consequential relief. The Defendant
says that the requisitions have been satisfactorily answered and that good
title has been shown. The Defendant says that the deposit has been
forfeited for non-completion by the Plaintiffs.
Clause 15(1) of the agreements expressly imposed an
obligation on the Defendant to give good title to the property in
accordance with section 13 of the Conveyancing and Property Ordinances
(Cap. 219). It is clear that the vendor has an obligation to show good
title. The obligation to show good title includes the obligation to answer
requisitions satisfactorily before completion.
- 4 -
Two requisitions were raised by the Plaintiffs in their
solicitor’s letter dated 12th August 1997 to the Defendant’s former
solicitors. The first requisition was a request for the supply of a certified
copy of the Block Crown Lease covering Lot 248 in Demarcation District
227 (“the Block Crown Lease”) which was not among the deeds supplied.
The second requisition was a request for a certified copy of the
occupation permit of the building issued under the Buildings Ordinance.
The first requisition
I shall first deal with the first requisition raised. In their
reply, the Defendant’s solicitors in their letter dated 14th August 1997
said that they would let the Plaintiffs’ solicitors have a certified copy of
the Block Crown Lease in due course and would send a copy thereof on
receipt from the Land Registry. They also enclosed a copy of a letter
from another firm of solicitors Anthony Kwan & Co. advising, inter alia,
that certified and plain copy Crown Lease could be obtained from the
Land Registry.
By letter dated 8th September 1997, the Plaintiffs’ solicitors
sent to the Defendant’s solicitors a copy of a letter dated 15th January
1993 from the Sai Kung District Land Registry addressed to another firm
of solicitors. That letter made it clear that the Block Crown Lease was
not available for inspection. It went on to say that the Block Crown
Lease was found to have been mislaid or lost sometime in July 1987 but
had never been retrieved since then and that there was available in the
Land Office a photocopy reproduced from a “plain” photocopy of the
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Block Crown Lease which members of the public might borrow for
reference only. It also stated that a certified copy of the Block Crown
Lease could not be supplied under the circumstances.
As the Defendant’s solicitor had in their earlier letter dated
14th August 1997 said that they would let the Plaintiffs’ solicitors have a
certified copy of the Block Crown Lease in due course, the Plaintiffs’
solicitors in their letter dated 8th September 1997 enquired of the
Defendant’s solicitors whether in the light of the matters set out in the
said letter dated 15th January 1993 from the Sai Kung District Land
Registry a certified copy of the Block Crown Lease had been obtained
and if not, how they would procure to let them have a certified copy
thereof to complete title.
In reply by a letter dated 19th September 1997 the
Defendant’s present solicitors sent what was stated to be a certified copy
of the Block Crown Lease to the Plaintiffs former solicitors. It is,
however, accepted by the Defendant that this was not a certified copy
obtained as a result of an examination of the original Block Crown Lease.
It was a certified copy of a plain copy of the Block Crown Lease as was
pointed out by the Plaintiffs’ solicitors in the letter dated 23rd September
1997. The point was made that the requirements of section 13 of the
Conveyancing and Property Ordinance and clause 15 of the agreements
had not been complied with. The Defendant’s solicitors took the view
in their letter dated 23rd September 1997 that the document that they had
supplied was sufficient to prove title. In their reply by a letter of the
same date, the Plaintiffs’ solicitors took issue with this and maintained
the view that a certified copy of a plain copy of the Block Crown Lease
was not sufficient in proving title.
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Section 13(1) of the Conveyancing and Property Ordinance
provides, inter alia, that unless the contrary intention is expressed, a
purchaser of land shall be entitled to require from the vendor as proof of
title to that land production of the Crown Lease relating to the land sold.
This must mean the original Crown Lease. Section 13(2) provides as
follows:
“Where this section requires the production of any document,
it shall be sufficient to produce a copy –
(a) ...............................
(b) certified by a public officer or a solicitor,
to be a true copy.”
Thus, by this subsection the vendor can instead of producing
the original Crown Lease produce a copy certified by a public officer or a
solicitor.
It cannot be doubted that unless the contrary intention is
expressed, the vendor’s obligation is to produce as proof of title the Block
Crown Lease or as permitted by Section 13(2) of the Ordinance a copy
certified by a public officer or a solicitor to be a true copy. This has
been decided in a number of cases see Chan Kam Shing and another v.
Lam Ping Ping [1990] 1 HKC 373 a case where Deputy Judge Findlay (as
he then was) was dealing with the same Block Crown Lease as in this
case. See also Wong Wai Ming v. Tang Tat Chi [1993] 1 HKC 341.
The document that was supplied in this case by the
Defendant’s solicitors was a photocopy of the Block Crown Lease. At
the third page of the document, there is a notation “examined and
certified to be correct” with a signature. It appears that at some stage
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the original Block Crown Lease dated 27th March 1905 had been
examined and the copy was certified to be correct. At the fourth page of
the document supplied, these words appear “ the original of this Block
Crown Lease was lost or mislaid. This is only a copy” with the
signature of Miss Sophia Yiu for Land Registrar and dated 29th
November 1995. There is a certification at the last page of the
document supplied that the document was a certified true copy with the
date 10th September 1997 and the signature of Miss Alice Leung for
Land Registrar. In view of the fact that on the evidence the original
Block Crown lease had been mislaid or lost sometime in July 1987, there
can be no doubt that what Miss Alice Leung was certifying as a true copy
was based not from an examination of the original Block Crown Lease
but from an examination of a photocopy reproduced from a plain
photocopy of the Block Crown Lease. This was the document available
in the Land Office as evidenced by the letter dated 15th January 1993
from the Sai Kung District Land Registry which I have referred to above.
It has been submitted on behalf of the Defendant that
production of that document was a sufficient compliance of his obligation.
In my judgment, that cannot be right. The obligation to produce
documents under section 13(1) of the Ordinance is to produce the original
document or as is permitted by subsection (2) a copy certified to be a true
copy. The question is: a true copy of what? It must mean, as matter of
construction, a true copy of the original document. It is, in my judgment,
incumbent on the public officer or solicitor who certifies a copy to be a
true copy of an original document to examine the original document and
to satisfy himself that what he is satisfying is indeed a true copy of the
original document.
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I would also refer to what Patrick Chan J., (as he then was)
said in Wong Wai Ming v Tang Tak Chi (supra) at page 346:
“It is the duty of the certifying public officer or solicitor to
ensure that the document which he certifies is a true copy of
the original. He compares the copy with the original and if
he is satisfied they are the same, he can certify as to that.”
In my judgment, the document that was produced was not a
sufficient compliance of the Defendant’s obligation under section 13 of
the Conveyancing and Property Ordinance as proof of title.
It was also submitted that by the clause 15(2) of the
agreements a contrary intention was expressed and production of the
document that was supplied was a sufficient compliance of the vendor’s
obligation. As I have said earlier, clause 15(1) of the agreements
expressly imposed an obligation on the Defendant to give good title to
the property in accordance with section 13 of the Ordinance. Clause
15(2) of the agreements provided as follows:
“Notwithstanding the above sub-clause in the event that any
of above documents are not in the Vendor’s possession then
for the purposes of proof of title, the Purchaser shall accept a
plain copy issued by the appropriate Land Registry provided
that the Vendor shall undertake to provide the Purchaser with
a certified copy thereof on receipt from the appropriate Land
Registry.”
This provides for the situation where the original document is not in the
vendor’s possession. In that case, the purchaser shall accept the plain
copy issued by the Land Registry provided the vendor undertakes to
provide a certified copy on receipt of the same from the Land Registry.
In my judgment the intention of the parties is clear. When
the certified copy of the document is received by the vendor from the
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Land Registry it should be provided to the purchasers. That is the
reason for the vendor’s undertaking and in the meantime the Plaintiffs
have to accept the plain copy issued by the Land Registry. Here, the
Defendant could not properly give and perform an undertaking to provide
the Plaintiffs with a certified copy of the original Block Crown Lease
from the Land Registry. That would involve an examination of the
original Block Crown Lease which was not possible in view of the fact
that it was mislaid or lost in July 1987. In my judgment, a contrary
intention has not been expressed by clause 15(2) of the agreements. It
also noteworthy that the Defendant did not rely on this sub-clause in his
solicitors’ letters in dealing with the requisition raised before completion.
Furthermore, as regard clause 15(2) of the agreements, I
accept the submission made by counsel for the Plaintiffs that before the
Defendant can rely on the clause in the agreements to restrict or limit his
obligation imposed by law i.e. under section 13 of the Conveyancing and
Property Ordinance, there must be full disclosure by the Defendant
before the agreements were entered into so as to enable the Plaintiffs to
consider and determine whether a reduced obligation was acceptable to
them. It was never disclosed to the Plaintiffs before the agreements
were entered into that the original Block Crown Lease had been mislaid
or lost and that the document which would be produced as proof of title
would not be a certified copy based on an examination of the original
Block Crown Lease but based on an examination of a photocopy. If this
was not known to the Defendant at the time, it was something that he
ought to have known as his solicitors could easily have ascertained what
the position was as regard the Block Crown Lease before the agreements
were entered into.
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I derive assistance from what Danckwerts L.J. said in Becker
v. Patridge [1996] 2Q.B. 155 at 171:
“There is no doubt that by a clearly drawn special condition
put in the contract by a vendor who acts in good faith, and
disclosing a possible defect in the title, the purchaser may be
compelled to accept the title offered by the vendor. But the
vendor must have disclosed the defects of which he knew.
In this case the vendor did not know of the breaches which
would give rise to forfeiture. But he ought to have known
that such breaches might exit.”
At page 172, Danckwerts L.J. said:
“The position is covered by the decision of Byrne J. in In re
Haedicke and Lipski’s Contract [1901] 2 Ch. 666. In a
reserved judgment Byrne J. ordered return of the deposit with
interest and the costs of investigation of title on the ground
that a purchaser has a right to assume when a condition of
this kind is inserted that the vendor has disclosed what it is
his duty to disclose. That case has stood for over sixty
years and, so far as we know, has not been criticised.
In our view the principle was stated by Lord Eldon in
Bousfield v. Hodges (1863) 33 Beav. 90, 94, in a passage
quoted by Byrne J., namely, that there should be no surprise
upon the purchaser, and that there has been a full and fair
representation as to the title on the part of the plaintiff.”
In my judgment, the first requisition was not satisfactorily
answered and the Defendant failed to prove a good title before
completion.
The second requisition
It is common ground between the parties that the relevant
Ordinance applicable to the properties was the old Buildings Ordinance
(Application to the New Territories) Cap. 322. Section 21 of the
Buildings Ordinance (cap. 123) requires an occupation permit to be
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issued by the Building Authority in respect of a new building before it
can be occupied. Under the Buildings Ordinance (Application to the
New Territories) Regulations, the provisions of section 21 of the
Buildings Ordinance does not apply to any building situated in the New
Territories provided it does not exceed a certain height. In this case, it
is common ground that the building exceeded that height. In the
circumstance, an occupation permit issued by the Building Authority was
required. Hence, the second requisition was raised.
The stand taken by the Defendant was that an occupation
permit was not required. In their letter dated 14th August 1997 the
Defendant’s then solicitors enclosed the said letter from Anthony Kwan
& Co. also of the same date. The view was taken that an occupation
permit was not required and a letter said to be dated 8th April 1982 from
the District Lands Office was enclosed and the point was made that the
District Office had waived the breach if any, by the acceptance of $5,000.
The letter from the District Lands Office, is in fact dated 28th April 1982
and was addressed to another firm of solicitors. The point was made in
that letter that by virtue of payment of a fine of $5,000.00, the writer of
the letter was not prepared to take further action under the lease
condition.
In their letter dated 15th August 1997, the Plaintiffs’ former
solicitors maintained the view that an occupation permit was required and
insisted on production of the same. By a letter dated 25th August 1997,
the Defendant’s solicitors again sent another letter from Anthony Kwan
& Company of the same date and in answer said that the building having
been in existence for over 15 years, no action for demolition would be
taken and if it was regarded as an illegal structure, an action for
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demolition would have long been taken before that.
By their letter dated 25th August 1997, the Plaintiffs’
solicitors took the view that the risk of Government enforcement action
still existed even though the building had been in existence for over 15
years. By a letter dated 6th September 1997, the Defendant’s solicitor
took the view that the risk of enforcement action was not real but fanciful.
In their letter dated 8th September 1997, the Plaintiffs’ solicitors referred
to the case of Lui Kwok Wai and another v. Chan Yiu Hing and another
[1995] 1 HKC 197 where it was held that an occupation permit was a
relevant and necessary document to prove title whenever the Buildings
Ordinance applied. It was also mentioned in that letter that as an
occupation permit could only be issued by the Director of Buildings, the
letter dated 28th April 1982 from the District Lands Office could not be
construed as an indication that the District Lands Office had assumed the
statutory authority of the Director of Buildings and come to a view that
an occupation permit was not necessary. The point was made also that
there was no written confirmation from the Buildings Department that no
enforcement action would be taken in respect of the building and that
therefore, a good title had not been shown. In the correspondence that
followed, that point was not answered by the Defendant’s solicitors.
They simply reiterated the point that an occupation permit was not
necessary and in their letter dated 19th September 1997 the Defendant’s
present solicitors enclosed a letter dated 14th June 1982 from the District
Lands Office. This was another letter from the District Lands Office
advising that the writer of the letter had no objection to the house being
occupied but it went on to say that the letter was given without prejudice
to all or any rights of the Crown whether under the conditions of the
Block Crown Lease under which the Lot was held or otherwise, in
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respect of any breach or failure to observe any of the conditions which
may exist at the date thereof or which may thereafter occur. And in
then their letter dated 22nd September 1997, the Plaintiffs’ solicitors took
the point, rightly in my view, that the letter dated 28th April 1982 from
the District Lands Office could not be construed as an indication that the
District Lands Office has assumed the statutory authority of the Director
of Building and come to a view that an occupation permit was not
necessary.
There was further correspondence, and in the letter dated 23rd
September 1997 from the Defendant’s solicitors to the Plaintiffs’ present
solicitors, they expressed the opinion that the property was an exempted
house upon payment of penalty and said it was sufficient to prove that the
property has complied with conditions of the Crown Lease and no further
documentary evidence was necessary. This does not deal with the
requisition raised at all because the point was made by the Plaintiffs’
solicitors that the District Lands Office did not have the authority to
assume the statutory function of the Building Authority. The parties
maintained their positions and on 24th September 1997, the Plaintiffs’
solicitors gave notice to the Defendant’s solicitors saying that they had
failed to prove a good title before completion and asking for the return of
their deposit. On 25th September 1997, the Defendant’s solicitors wrote
saying that they had forfeited the deposit paid.
The case that was referred to by the Plaintiffs’ solicitors in the
correspondence was Lui Kwong Wai and another v. Chan Yiu Hang and
another (supra). As I have said it was held there that an occupation
permit was a relevant and necessary document to prove title. It also
held that it was wrong to rely on a letter in that case from the District
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Lands Office as an indication that the Crown had waived the requirement
for an occupation permit or that the District Lands Office had assumed
the statutory authority of the Director of Building and come to a view
that an occupation permit was not necessary. It was after all for the
Building Authority to issue the occupation permit.
That case was followed by Le Pichon J. in the case of Wong
On v. Lam Shi Enterprises Limited HCMP 2549 of 1995. She also said
at page 6 and 7 of her judgment as follows:
“In the absence of any provision which empowered the DLO
to make decisions on behalf of, or to override the Building
Authority where the subject matter is the development of
small houses in the New Territories or any evidence that this
was in fact the practice, there is nothing to warrant the
conclusion or inference that the DLO had authority to assume
the statutory functions of the Building Authority and make
decisions that are solely within the domain of the Building
Authority under the relevant statutory provisions.”
This was certainly the point that the Plaintiffs’ solicitors were raising
with the Defendant’s solicitors but no satisfactory answer was given.
Although the risk of enforcement action by the Government in this case
is not great, there is nevertheless a risk. I do not see why the purchasers
should endure that risk. I cannot say that I am satisfied beyond
reasonable doubt that the purchasers would not be at risk in the absence
of any evidence that the Building Authority has said that no enforcement
action would be taken. In the circumstances, the second requisition has
not been answered satisfactorily and again good title has not been shown.
The Plaintiffs are, in my judgment, entitled to judgment. I
grant a declaration that the Defendant was not entitled to forfeit the
deposit paid by the Plaintiffs under the two agreements dated 19th June
1997 made between the Plaintiffs and the Defendant in respect of the sale
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and purchase of the properties known as (i) Flat A, 2nd Floor including
the corresponding portion of the roof Lot No. 248 Demarcation District
227 Sai Kung New Territories; and (ii) Flat B, 2nd Floor including the
corresponding portion of the roof, Lot No.248 Demarcation District 227
Sai Kung New Territories (“properties”) by reason of the failure of the
Defendant,
(a) in showing a good title by the time of
completion on account of the Defendant’s
failure to answer satisfactorily the requisitions
raised in the letter dated 12th August 1997 from
the Plaintiffs’ solicitors as to the occupation
permit for the properties;
(b) In complying with the requirement of section
13 of the Conveyancing and Property
Ordinance, in respect of the production of the
Block Crown Lease relating to the properties.
I also grant a declaration that the Defendant wrongfully
repudiated the agreements by purporting to forfeit the deposit paid by the
Plaintiffs in the letter dated 25th September 1997 from the Defendant’s
solicitors to the Plaintiffs’ solicitors. I make an order for repayment of
the deposit in the total sum of $350,000.
As to stamp duty, conveyancing legal costs and commission, I
am of the view that the correct order to make is to give the Plaintiffs
liberty to apply for assessment of damages arising out of any loss of
stamp duties and claim by the estate agent for commission. I order that
the Defendant reimburse the Plaintiffs in respect of conveyancing legal
costs in the sum of $17,770 upon production of a receipt.
I also grant the declaration that the Plaintiffs have a lien over
the properties for the said sum of $350,000. I make an order that the
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costs of the proceedings be paid by the Defendant to the Plaintiffs to be
taxed if not agreed.
(Arjan H. Sakhrani)
Judge of the Court of First Instance
Mr. Johnson Lam, instructed by M/s. Fung & Liu for Plaintiff
Mr. C.Y. Li instructed by M/s. Hau, Lau Li & Yeung for Defendant