NG SAU WAH SYLVIA v. KWAN LAI FAN AND ANOTHER

HCMP 1565/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1565 OF 2011

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BETWEEN

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J U D G M E N T

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I. Introduction

1.  This is a Vendor and Purchaser Summons.  The issue is whether requisitions by the Purchasers have been sufficiently answered.   

2.  By an Assignment dated 10 March 2004, Sylvia Ng acquired the relevant flat from Chan Ying Kong as confirmor and Meichiyeh Co. Ltd. as vendor.  Meichiyeh had previously acquired the flat by an Assignment dated 4 May 1979.  There is no dispute that the intermediate root of title to the flat commences from the May 1979 Assignment to Meichiyeh.   

3.  Wong Fung & Co (WFC) acted for Chan and Ng in the 2004 transaction.

4.  By an Agreement dated 7 June 2011 Ng agreed to sell the flat to Kwan Lai Fan and Cheung Yip Ming (the Purchasers) jointly for $2.04 million.  The Purchasers paid $204,000 by way of deposit and completion was to take place on 11 July 2011.

5.  On 20 June 2011 Ng’s then solicitors (Y S Lau & Partners (YSL)) sent certain documents to the Purchaser’s solicitors.  Those documents were:

(a) a certified copy of the Government Lease;

(b) a certified copy of the DMC;

(c) a certified copy of the March 2004 Assignment; and

(d) the statutory declaration of Catherine Fung Yuk Lin (a solicitor at WFC) dated 25 February 2009.

6.  Documents (a), (b) and (c) had all been certified by the Land Registrar on 8 May 2008.  Document (d) (Fung’s statutory declaration) stated that the original March 2004 Assignment had been lost.

7.  From the certified copy of the March 2004 Assignment which YSL produced, it was apparent that Chan had executed that document by an attorney named Cheung Yim King.  But no Power of Attorney authorising Cheung Yim King so to act was produced by YSL.

8.  The Purchasers’ solicitors raised requisitions for (among others):

(a) the missing Power of Attorney;

(b) the Agreement for Sale and Purchase dated 17 February 2004 between Meichiyeh and Chan (the 1st Agreement);

(c) the Agreement for Sale and Purchase between Chan and Ng (the 2nd Agreement); and

(d) evidence that stamp duty had been paid on the 1st and 2^nd Agreements.

9.  Ng has not produced any of the documents requisitioned.  Nor has Ng shown that stamp duty had been paid in respect of the 1st and 2^nd Agreements.  Instead, YSL proposed to obtain a second statutory declaration from WFC affirming that there had been a Power of Attorney authorising Cheung Yim King to act for Chan and such Power of Attorney was now lost.   

10.  A second statutory declaration by Fung to that effect was sent to the Purchasers’ solicitors on 11 July 2011.  The Purchasers, however, take the view that this further statutory declaration does not adequately answer their requisitions.

II. Discussion

11.  Under Conveyancing and Property Ordinance (Cap.219) s.13, a vendor is only required to produce “proof of title to ... land” from an intermediate root of title to a purchaser.

12.  Here the Purchasers assert that the Power of Attorney, the 1^st Agreement and the 2nd Agreements are all title documents which the Purchasers are entitled to require Ng to produce by way of proof of title.  Consequently, it is the Purchasers’ case that Ng must produce the originals or certified copies of these 3 documents.   

13.  The Purchasers accept that, to the extent that Ng cannot produce originals or certified copies of those 3 documents, then by way of secondary evidence, she can provide a statutory declaration to explain how those documents have come to be lost.  Any such declaration should:

(a) identify the material terms of the 3 now missing documents and the person who is last known to have had possession of the same;

(b) account for how the documents came to be lost; and

(c) summarise the reasonable efforts which have been taken to find the documents.

In the present case, the Purchasers say that neither of Fung’s statutory declarations offer any sufficiently clear or cogent account of how the 3 documents have come to be lost.

14.  There can be no doubt that the Power of Attorney is necessary to the proof of title.  That is because the document is needed to validate Cheung Yim King’s signature of the March 2004 Assignment on Chan’s behalf. 

15.  Ng proposed to remedy the failure to produce the Power of Attorney through the production of Fung's second statutory declaration.   

16.  In the latter Fung declared that she had been the handling solicitor at WFC acting for Ng and Chan in connection with the March 2004 assignment.  Fung wrote that she had “perused and read through the Power of Attorney” given by Chan in favour of Cheung Yim King. The Power of Attorney (according to Fung) was “in the form as provided under Section 7 of the Powers of Attorney Ordinance (Cap.31) [POA] which was given within one year from the date of the said [March 2004] Assignment”.

17.  Fung further observed that “Cheung Yim Kong had then duly executed the said Assignment as ... lawful attorney and everything in that connection was in order”.

18.  Fung explained that, following completion, the March 2004 Assignment along with the Power of Attorney and other documents had been sent “for stamping and registration with the Land Registry against the Property in the usual way”.  All title deeds had then been “kept in my file in my room in my office” after stamping and registration.

19.  But later, when she intended to return the title documents to her client, Fung discovered that the Power of Attorney and “some other documents” were missing from her office file. She then caused “diligent searches from every possible place for locating the said Power of Attorney”.  Unfortunately, the searches proved to be “in vain”.

20.  Fung concluded the 2011 statutory declaration by noting that the signing of the March 2004 Assignment by Cheung Yim King had been witnessed by her clerk (Wong Chi Hung) and Fung had verified Wong’s signature as witness.  Fung confirmed that Wong did not have a copy of the Power of Attorney.  Upon Fung’s asking Wong, the latter said that he “had also perused and satisfied the due execution, power and authority and validity of the said Power of Attorney”.   

21.  The Purchasers deny that Fung's second statutory declaration provides an adequate explanation of the loss of the Power of Attorney.  That is because:-

(a) Fung says nothing about the manner in which Chan executed the Power of Attorney;

(b) Fung does not explain why she could not produce “a fresh certified true copy of the Power of Attorney from the records kept in WFC’s old file”; and

(c) there is no evidence that WFC has attempted to locate Chan or Cheung Yim King to find out which firm of solicitors drew up or attested the Power of Attorney.

22.  In my view, the 2011 statutory declaration is a sufficiently clear and cogent explanation of the loss of the Power of Attorney, its contents and the attempts made to find the same.   

23.  Contrary to what the Purchasers argue, it is unclear to me what more the statutory declaration could say about Chan’s execution of the Power of Attorney.  Implicit (if not expressly stated) in the 2011 statutory declaration is an affirmation that Chan executed the Power of Attorney in Cheung Yim King’s favour as a general power to do anything which Chan could lawfully do by an attorney (see POA s.7).    

24.  It is equally unclear to me how (as the Purchasers submit) it should be assumed in the absence of a contrary assertion by Fung that somehow a “fresh certified true copy” of the Power of Attorney would likely be found in WFC’s old file.

25.  Nor do I see how communicating with the solicitors of Chan or Cheung Yip Ming to find out who drew up the Power of Attorney might be of any real assistance.  To begin with, the Power of Attorney being missing, it would be difficult to identify precisely who those solicitors were.  Indeed, in all likelihood the solicitors would have been WFC themselves, as WFC was acting for Ng and Chan in the relation to the March 2004 Assignment.  In any event, YSL wrote to Chan for assistance with the requisitions.  But YSL do not seem on the available evidence to have received any reply from Chan.

26.  The Purchasers suggest that there is a credibility issue.  Fung’s original statutory declaration does not refer to the missing Power of Attorney.  Nor does that first statutory declaration mention that other documents went missing.  If (the Purchasers ask rhetorically) it had long been known that those documents (including the Power of Attorney) were missing, why did not the first declaration specifically deal with them?  How (the Purchasers add) can it be supposed that Fung in 2011 might still remember the relevant Power of Attorney or its contents, after the lapse of some 7 years?

27.  The reality is that Fung is unlikely to have allowed the March 2004 Assignment to have proceeded if the Power of Attorney had not been duly executed by Chan in favour of Cheung Yim King.  There is no evidence to suggest that Fung acted carelessly as then handling solicitor.  In that circumstance, it can reasonably be inferred from the fact that the March 2004 Assignment went through and the fact that the Assignment has remained unchallenged for over 7 years since, that the transaction must have been validly carried out.  It does not seem to me that any extraordinary feat of memory on Fung’s part would have been involved in coming to such a conclusion.

28.  On the other hand, the first statutory declaration narrowly focused on explaining why the original of the March 2004 Assignment was missing.  Nothing can be deduced from the first declaration about other documents (including the Power of Attorney) being missing or not missing in 2009 when the first declaration was made.   

29.  The first declaration had a limited function.  By itself, it would have been inadequate as evidence that Cheung Yim King had been duly authorised to act for Chan.  In the event, as Ng acknowledges, there was a need for the 2011 statutory declaration.

30.  It follows from the foregoing that the requisition in relation to the Power of Attorney was adequately answered by the second statutory declaration.

31.  That leaves the requisitions for the 1st and 2^nd Agreements and for evidence that stamp duty on these documents had been paid.

32.  I do not think that the 1st and 2nd Agreements would prove or show title.  They are at best agreements to convey a legal interest in land.  They do not actually convey the title in land.   

33.  Nor would the fact that stamp duty had been paid in connection with either Agreement prove or show that good title to land has actually been given.   

34.  In those premises, I do not think that Ng was required to deal with the Purchasers’ requisitions in respect of the 1st and 2^nd Agreements or in respect of the stamp duty paid on either Agreement.

III. Conclusion

35.  There will be Declarations that the Purchasers’ requisitions have been satisfactorily answered and that Ng has shown good title to the relevant property.

36.  I shall now hear the parties on costs.