LAM SUK FUN v. CHOY YING KEUNG KENNY

CACV 2013/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 2013 OF 2001

(ON APPEAL FROM DCMP 3678 OF 2000)

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REASONS FOR JUDGMENT

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Hon Mayo VP (giving the reasons for judgment of the Court):

1. This is an appeal from a judgment of H.H. Judge Carlson. He was hearing a vendor and purchaser summons. The plaintiff was the purchaser. The Judge dismissed her claim.

2. The plaintiff's solicitors Messrs Kenneth C.C. Man & Co. after receiving the title deeds from the defendant's then solicitors Messrs Yaddy Cheung & Co. raised some requisitions on the title to the property. One of these requisitions was directed towards the arrangements which had been made by the defendant's predecessor-in-title to comply with the requirements laid down in section 17B of the Housing Ordinance Cap. 283.

3. The property in question was Flat 15 on the 18th floor of Block B, Lung Poon Court, Kowloon.

4. It was originally purchased by Yip Sui-ming from the Hong Kong Housing Authority under the Home Ownership Scheme.

5. Yip Sui-ming entered into a sale and purchase agreement dated 2 April 1997 with Chow Yuk-shan. On 3 June 1997 Chow Yuk-shan entered into a sub-sale agreement with the defendant which provided for completion to take place on or before 15 July 1997.

6. The property was assigned to the defendant by an assignment which was dated 14 July 1997.

7. The parties entered into a sale and purchase agreement dated 18 October 2000. The plaintiff agreed to purchase the property for HK$1.62 million and it was provided that completion should take place on 13 November 2000. A total deposit of 10% of the purchase price was paid by the plaintiff.

8. As has been stated the property had been purchased from the Housing Authority.

9. Section 17B is in these terms:

"(1) Where-

(a)	(i) land in an estate is sold under section 17A; or
	(ii) land in respect of which the Authority is authorized to nominate purchasers is sold and the person selling the land acts without the written permission of the Authority; and

(b) the person to whom the land is sold purports to mortgage or otherwise charge the land or to assign or otherwise alienate it; and

(c) that person acts in breach of-

(i) any term or condition of the agreement for sale and purchase or any covenant in the deed of assignment relating to the land; or

(ii) in the case of such a mortgage or other charge, any term authorized under paragraph 4(a) of the Schedule as regards the mortgage or other charge,

the purported mortgage, other charge, assignment or other alienation, together with any agreement so to mortgage, charge, assign or otherwise alienate, shall be void.

(2) Where-

(a) land described in subsection (1)(a)(ii) is sold with the written permission of the Authority; and

(b)	(i) the person to whom the land is sold purports to mortgage or otherwise charge the land and has not the written permission of the Authority so to mortgage or otherwise charge; or
	(ii) the mortgagee or the person in whose favour the charge is executed acts in breach of any of the terms on which the mortgage or other charge was authorized under paragraph 4 of the Schedule,

the purported mortgage or other charge, together with any agreement so to mortgage or otherwise charge, shall be void."

10. The problem which the plaintiff's solicitors referred to was that the letter evidencing the removal of the alienation restriction was dated 15 July 1997 and the date of the assignment to the defendant was 14 July 1997. There was a similar problem in respect of the mortgage which was secured on the property.

11. If these dates correctly recorded the situation it appeared that the requirements laid down in the section had not been complied with. If this was the case the Assignment to the defendant was void and consequently this constituted a defect in title. According to the plaintiff a defect of this nature entitled her, under the terms of the Sale and Purchase Agreement, to repudiate the contract and demand the return of the deposit which had been paid.

12. The way that Messrs Yaddy Cheung & Co. sought to resolve this outstanding situation was to write to the solicitors who represented the defendant when the property was purchased, Messrs Gary K.W. Tam & Co., to ascertain whether they could assist in the matter. Mr Gary Tam was the sole principal in this practice.

13. Mr Tam explained that the assignment and mortgage had been mistakenly dated 15 July 1997 by one of his clerks. They should have been dated 14 July 1997. Mr Tam submitted a draft form of statutory declaration which it was contended would rectify the situation. This was passed on to Messrs Kenneth C.C. Man & Co.

14. Correspondence was exchanged between the solicitors but Messrs Kenneth C.C. Man & Co. maintained their objection to the title to the property.

15. Mr Tam modified the terms of his proposed statutory declaration. The draft is relatively short and is in these terms:

"I, Gary K.W. Tam, Solicitor of the High Court of the Hong Kong Special Administrative Region of Suite 607, 6th Floor, Bank of America Tower, No. 12 Harcourt Road, Central, Hong Kong hereby solemnly sincerely and truly declare and say as follows:-

1. I am the sole proprietor of Messrs Gary K.W. Tam & Co. ('My firm').

2. My firm acted for the Purchaser in completing the Assignment Memorial No.7232326 on 15th July 1997 ('the said Assignment') under a Sub-Sale Agreement dated 3rd June 1997 signed between the Vendor and the Purchaser. Under the said Sub-Sale Agreement, it was stipulated that completion shall be on or before 10.00 a.m. on 15th July 1997. Furthermore, Clause 30 of the said Sub-sale Agreement provided that the balance of the purchase price was to be paid by the Purchaser to the Vendor on or before 14th July 1997. There is now produced and marked 'A' a true copy of the said Sub-sale Agreement.

3. My firm sent the duly executed Assignment, and the balance of the purchase price to Messrs Ng, Tam, Ko & Chan acting for the Confirmor Vendor on 14th July 1997 and intending to complete the transaction with the Vendor before 10.00 a.m. on 15th July 1997.

4. Inadvertently, the handling conveyancing clerk of my firm had dated the Assignment and the Mortgage now respectively registered by Memorial No.7232326 and 7232327 according to the date of the payment of the balance of the Purchase price under the said Sub-sale Agreement. I hereby declare and confirm that the sale and purchase transaction was in fact completed on 15th July 1997, and the said Assignment and Mortgage should have been dated the 15th July 1997, pursuant to the completion date under the Sub-Sale Agreement.

5. I declare that the contents of this my Statutory Declaration are true to the best of my knowledge information and belief."

16. It should perhaps be added that as Messrs Kenneth C.C. Man & Co. did not accept that the statutory declaration would rectify the alleged defects in title it was never formally declared by Mr Tam and submitted to the solicitors.

17. The main issue for determination before the Judge was whether a statutory declaration in the proposed form would rectify the defects in title which had been identified by Messrs Kenneth C.C. Man & Co.

18. It has to be said immediately that the statutory declaration proposed was not a satisfactory document.

19. Perhaps the most obvious deficiency is the fact that Mr Tam does not anywhere state that he had any personal knowledge of the transaction in question. It may well be the case that he has limited knowledge and is simply reconstructing what should have been done.

20. Even if this is the case it would appear that Mr Tam has to an extent misapprehended the position.

21. As noted in the statutory declaration Mr Tam states in para. 2 "Under the said Sub-Sale Agreement it was stipulated that completion shall be on or before 10.00 a.m. on 15th July 1997."

22. The sub-sale agreement says no such thing. It is stated in the 6th Schedule that the completion date is to be "on or before the 15th July 1997 before 10.00 a.m. (Monday to Friday)/before 10.00 a.m. (Saturday)".

23. This was an important matter which went to the root of the issue which was the subject matter of the defect and it hardly inspires confidence in the reliance which can be placed on other matters which are deposed to.

24. The fact of the matter was that completion could under the terms of the sub-sale contract have taken place prior to 15 July 1997.

25. There is another matter which calls in question the accuracy of the declarations made by Mr Tam.

26. In para. 2 of the statutory declaration he states that the balance of the purchase price was to be paid on 14 July 1997. He refers to clause 30 in the sub-sale agreement to support this. This is very misleading. Clause 30 provides for a situation where the sub-purchaser is permitted to enter the premises to undertake decorative work. There is no evidence that this clause was ever invoked.

27. Besides these textual deficiencies there are other highly unsatisfactory aspects of the matter.

28. The clerk who is alleged to have made this mistake is not identified. Nor is any explanation forthcoming as to why he does not give direct evidence concerning the mistake he is supposed to have made. Mr Tam also does not give any particulars of the instructions he gave to the clerk or the scope of the authority reposed in him.

29. There is also no contemporary correspondence exhibited to the statutory declaration which would provide some support for the bare assertion that the completion took place on 15 July 1997. Over and above this no statutory declaration has been obtained from the solicitors representing the vendor or purchaser of the property corroborating Mr Tam's evidence.

30. It needs to be borne in mind that evidence should be adduced to establish beyond a reasonable doubt that completion did take place on 15 July 1997 and that the dates recorded on the Assignment and mortgage were indeed in error.

31. The evidence which was adduced in the proposed statutory declaration fell far short of this. This being the case the plaintiff was fully justified in refusing to accept the title which was adduced to her.

32. At the conclusion of the hearing we informed the parties of our decision and our intention to hand down our reasons in due course. These are our reasons.

33. The appeal is allowed. The plaintiff will have the relief sought in the vendor and purchaser summons.

34. We also make an order nisi that the plaintiff is to have her costs both here and in the court below. The plaintiff's costs will be taxed in accordance with the Legal Aid Regulations.