XCHRX OCTORICH LTD. v. LIU SIN MING and Another

1992, H.C.M.P. No. 977

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H E A D N O T E

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1. "Workshop" in the context of the Occupation Permit stated the purpose for which the property was to be used.

2. S.41(3) of the Buildings Ordinance, Cap.123 permits building works to be carried out without application or approval from the Building Authority if they do not contravene any regulations.

3. Requisitions can be raised out of time if they go to the root of the contract or on matters which are not apparent from the documents of title but came to the knowledge of the purchaser through his own search or enquiry.

 

1992, H.C.M.P. No. 977

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 purchasers summons. The Plaintiff asks for the return of the deposit paid and the costs of investigating the title pursuant to a sale and purchase agreement dated 13th February 1991 in respect of the property known as 6th Floor of No. 69 Hung To Road Kowloon made between the Plaintiff as purchaser and the Defendants as vendors. The Plaintiff also prays for declarations that the Defendants had not shown good title and that the requisitions raised by the Plaintiff had not been sufficiently answered.

2. After execution of the Sale and Purchase Agreement the Defendants delivered to the Plaintiff a number of documents to prove title.

3. Clause 9 of the agreement provides:

"9. The Purchaser shall be deemed to have accepted the title of the Vendor to the Property 7 working days after delivery of title deeds and documents to the Purchaser's solicitors (notwithstanding that the said 7-day period may have already expired before signing of this Agreement), unless requisitions on title shall have been duly raised in which event question of the title of the Vendor to the Property shall only be limited to such requisitions already raised and the Purchaser shall be barred and estopped from raising further requisitions not concerning the requisitions which have already been duly raised and the Purchaser shall be deemed to have accepted title after the Solicitors have disposed of such requisitions. If the Purchaser shall insist on any objection or requisition in respect of the title or otherwise which the Vendor shall be unable or (on the grounds of difficulty, delay or expense or other reasonable grounds) unwilling to remove or comply with the Vendor shall notwithstanding any previous negotiation or litigation be at liberty on giving to the Purchaser or his solicitors not less than 5 days' notice in writing to annul the sale in which case, unless the objection or requisition shall have been in the meantime withdrawn, the sale shall at the expiration of the notice be annulled, the Purchaser being in that event entitled to a return of the deposit and other money already paid, if any, on account of the purchase money within 7 days after the expiration of the said notice but without interest, costs or compensation."

4. I am told at the hearing that pursuant to Clause 22 of the agreement the Plaintiff had been in occupation of that property from April 1991 to March 1992.

5. On the 6th January 1992, the Plaintiff by letter through its solicitors raised 2 requisitions arising out of the Occupation Permit and the Floor Plan annexed to the assignment.

6. The Occupation Permit permits the occupation of the 6th Floor for the following purposes:-

"Workshop, 2 stores and dining/rest room for non domestic use."

7. The 1st requisition was that according to the Occupation Permit there should be one workshop on the 6th Floor whereas according to the plan annexed to the assignment there were 2 workshops.

8. The 2nd requisition was that the original building plan did not include a partition of the workshop. The Plaintiff's solicitors asked the Defendants' solicitors to supply an architect's certificate to the effect that the partition was a non-structural alteration and approval from Building Authority was not required under S.41(3) of the Buildings Ordinance.

9. On the 8th January 1992 the Defendants' solicitors replied saying that the period for requisition had already expired and they were not obliged to answer such requisition but as a matter of courtesy and without prejudice to their clients' right under the agreement they answered that the Occupation Permit stated that the purpose of that property is for workshop purposes without specifying the number of workshops allowed.

10. By another letter on the 8th January 1992 the Defendants' solicitors said:

"We fail to understand your interpretation of the allowed purpose in the Occupation Permit as restricting the number of workshops for each floor and why an architect's certificate is required to prove our client's title to the above property".

11. It is in respect of these 2 requisitions that the Plaintiff now asks this Court to pronounce the Defendants had not proved good title and that the requisitions raised in the Plaintiff's letter dated 6th September 1992 had not been sufficiently answered.

12. In respect of the 1st requisition Counsel for the Plaintiff submitted that in the Occupation Permit it permitted occupation for the following purposes:

"Workshop, 2 storerooms ......."

13. The fact that it stated in no uncertain term that it permitted 2 storerooms in contrast to "workshop" which is in singular form instead of "workshops" indicated that it permitted only one workshop and not 2 or more workshops.

14. With respect it is non sequitur. I agree with the Defendants that the word "workshop" in the context of the Occupation Permit stated the purpose for which the floor is to be used i.e. to be used as workshop. If it were to be confined to one workshop then the numeral one would have been inserted before the word "workshop". I find that the Defendants had satisfactorily answered that requisition.

15. As to the 2nd requisition, Counsel referred to S.41(3) of the Buildings Ordinance Cap. 123 which states:

"S.41(3) Building works other than drainage works, ground investigation in the scheduled areas or site formation works not involving the structure of any building may be carried out in any building without application to or approval from the Building Authority:

Provided that nothing in this subsection shall permit any building works to be carried out in contravention of any regulation."

16. He construed the section to mean that any building work not involving the structure of any building may be carried out in any building without application to or approval from the Building Authority. He further submitted that the partition could affect the building as the load may be too heavy and then affect the structure. In the premises either an architect's certificate certifying that it did not require the approval of the Building Authority failing that an approval from the Building Authority is required.

17. Again with respect that was a wrong interpretation. S.41(3) merely states that all building works may be carried out without application or approval from the Building Authority if they are not in contravention of any regulations with the exceptions of: 1) drainage work, 2) ground investigation in the scheduled areas and 3) site formation works not involving the structure of any building. For site formation works involving structure of any building it is governed R.27A of the Building (Construction) Regulations. So it is obvious that the exceptions in S.41(3) did not include just any site formation works but only site formation works not involving the structure of any building.

18. That being the case, there is no necessity for any application or approval from the Building Authority for the erection of a partition.

19. In any event, the presence of a partition cannot in any way affect the title of property. It is only when there is any doubt or uncertainty in respect of title then the purchaser can raise it by means of a requisition.

20. In my judgment, when the Defendants by letter dated 8th January 1992 stated "We fail to understand ... why an Architect's Certificate is required to prove our client's title to the above property" they have adequately dealt with the Plaintiff's queries on this point.

21. Finally, Defence Counsel submitted that the time specified in the Sale and Purchase Agreement for raising requisitions is not final and binding. It does not prevent the raising of requisitions out of time. He cited the case of Giant River Ltd. v. Asie Marketing Ltd. [1990] 1 HKLR 297. In that case, the learned judge only stated the obvious that a requisition going to the root of the title will not be excluded by a condition purporting to limit the time for making the requisition.

22. In the present case, the Defendants sent the documents to prove title on 18th April 1991 and the Plaintiff went into possession as licensee from April 1991 to March 1992. The requisitions were in respect of matters stated in the Occupation Permit and from the plan annexed to the assignment. It is not something which a solicitor with reasonable diligence could not have discovered within that 7 days period provided in the agreement.

23. It is a bit far fetched now to argue that the Plaintiff is entitled to, after 9 months, raise requisitions on matters which, if relevant at all, can easily be discovered by the reading of those documents.

24. In my judgment, a purchaser can only raise requisitions out of time on matters which go to the root of the contract or on matters which are not apparent on the perusal of the documents of title, but only come to his knowledge through his own search or enquiry. But even then such requisitions should be made within reasonable time. Requisitions raised after 9 months by any stretch of imagination is hopelessly out of time.

25. For reasons above the summons is dismissed with costs.