CHAN FU WA AND ANOTHER v. CHU BON MOK AND ANOTHER

1993, No. M.P.280

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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J U D G M E N T

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1. This is a vendor and purchaser summons. The parties entered into a sale and purchase agreement on the 25th November 1992 when the defendants agreed to sell to the plaintiffs the premises known as 345th part of Kiu Fat Building, Queen's Road West. A deposit of $98,000 was paid together with a sum of $50,000 in respect of some furniture. Completion was fixed for the 15th December, 1992, but it did not take place because some requisitions on title raised by the plaintiff's solicitors had not been answered.

2. Subsequently, by a letter of the 4th January 1993, the plaintiffs' solicitors purported to rescind the contract on the grounds that the requisitions had not been answered. However, in later correspondence, the plaintiffs' solicitors resigned from this position.

3. Accordingly, upon the facts the contract had not been rescinded on the 4th January 1993 as alleged in the originating summons for which a declaration was sought, nor indeed can the contract be deemed as contended in the alternative by Mr Chiu, counsel for the plaintiff to have been rescinded on the filing of the originating summons unless it has been established that the defendant has not shown a good title.

4. The other declarations claimed by the plaintiffs relate to allegations that the defendants have not established a good root of title.

5. The first objection to the title related to the declaration of trust dated the 8th August 1975 which stated that Tam Jap Chou and Lau Kan Fat held the property in trust for partners for the time being and from time to time of Ng Fung Hong as the purchase price was provided entirely by Ng Fung Hong. It was submitted on behalf of the plaintiffs that the deed is defective as only the then partners of Ng Fung Hong who had actually put up the purchase money had a right to cause a trust to be set up in favour of future partners who may be different persons from the then partners. The setting up of the trust was required to be evidenced in writing and in support of this submission, reliance was placed upon s.5 of the Conveyancing and Property Ordinance, Cap.219 which where relevant reads :-

"5. (1) ...

(a) ...

(b) a declaration of trust respecting land or any interest therein shall be manifested and proved in writing signed by the person who is able to declare such trust or by his will.

(2) ..."

However, the partnership of Ng Fung Hong was subsequently acquired by Ng Hong Limited which in turn assigned the property to the defendants. No suggestion was made on behalf of the defendants that there is any partner who has threatened to sue and apart from the fact that a claim is quite unrealistic, any claim is in any event statute barred. Further, by s.23 of the Partnership Ordinance, property bought with partnership money is deemed to have been bought on account of the firm unless there is a contrary intention. Accordingly, I reject the submission made on behalf of the plaintiffs.

6. The second objection relates to the signatures of Lau Kan Fat in the assignment and declaration of trust dated the 8th August 1975 which it is claimed are different to the signatures of Lau Kan Fat in the declaration of trust and assignment dated the 17th July 1984. Further, the assignment dated the 8th August 1975 contains the identity card number of Lau Kan Fat which does not appear in the other documents. Although there does appear to be a difference in the signatures, the documents in 1984 were executed nine years later and signatures are likely to change. However, the person who executed the document in 1984 is said to be the same person who executed the previous documents and his signatures were witnessed by Madam Liu Yiu Chu, a solicitor who acted in the transaction. The identification by a solicitor who is an officer of the court should have satisfied the plaintiffs' solicitors with regard to the identity of Lau Kan Fat. I therefore reject the second ground of objection.

7. The third objection refers to the fact that Lau Kan Fat in the declaration of trust dated the 17th July 1984 declared that at the direction in writing of Ng Fung Hong, he held the property in trust for China Resources (Holding) Company Limited. It was submitted on behalf of the plaintiffs that the written direction signed by all the then partners of Ng Fung Hong or their authorised agent is necessary to effect the disposal of the equitable interest under s.5 of the Conveyancing and Property Ordinance. Further, it was contended that it is also material because the assignment dated the 17th July 1984 was declared to be made at the request of the purported beneficiary, China Resources (Holding) Company Limited. As no proof was given of the written direction properly signed, the effectiveness of the disposal of the equitable interest and the subsequent transactions are therefore open to doubt.

8. I have been informed by Mr Cheung on behalf of the defendants that the document requested is not in any event available. Nevertheless, I accept Mr Cheung's submission that it is not necessary for the document to be in writing and that he is entitled to rely upon s.23 of the Conveyancing and Property Ordinance with regard to the presumption as to due execution. Accordingly, I reject this ground.

9. The fourth ground was that the assignment dated the 6th June 1987 was defective as the deed was executed only by Zhu Tiecheng purportedly appointed by the Board of Directors of Ng Fung Hong Limited whereas clause 77 of the Articles of Association of the company provides that the seal of the company shall be affixed inter alia only in the presence of a director and the secretary or such other person as the directors may appoint for the purpose, and be signed by both persons. It was therefore contended that the deed was not properly executed and could not pass a legal estate in the property. However, I accept Mr Cheung's interpretation of article 77 that in the alternative either a director and the secretary are entitled to sign or any other person who may be authorised by the board of directors who can authorise a single director to do so. Accordingly, I am satisfied that Mr Zhu was entitled to execute the deed. This ground of objection is therefore rejected.

10. I am therefore satisfied that the objections that have been raised to the title are without merit and the defendants have shown a good title to the property. I am also satisfied that the claim in respect of the $50,000 for the furniture does not fall for determination by a vendor and purchaser summons.

11. The originating summons is therefore dismissed with costs to the defendants.