LEE WOON TONG AND ANOTHER v. KWAN PUI LUI AND OTHERS

DCMP 3045/ 2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 3045 OF 2005

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JUDGMENT OF VENDOR AND PURCHASER SUMMONS

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JUDGMENT

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Introduction

1. The present case arose out of the presence of a preceding sale and purchase agreement (“the Preceding Agreement”), between preceding parties (Yu as purchaser and Tse & Kwok as vendor) unrelated to the present transaction, registered in the land search record.  The defendant purchaser (“the Purchaser”) raised requisition concerning that agreement.  The plaintiff vendor (“the Vendor”) provided an answer, which could not satisfy the Purchaser.  This is the only outstanding requisition.  The parties are willing to postpone the completion date pending a decision of the Court on the vendor and purchaser summons taken out by the plaintiff vendor (“the Vendor”).

Facts

2. On 10 Feb 2004, the Property was assigned to the Vendor [BE 2].

3. On 6 Apr 2005, the Vendor and the Purchaser signed a Sale and Purchase Agreement (“the S & P Agreement”) [BE 7-28].  The certified copy carried a blurred date of instrument [BE 34].  Various features, however, could still be made out.  The purchase price was $800,000 [BE 43].  Upon the signing of the sale and purchase agreement, $20,000 as initial deposit and $80,000 as part payment, and another 10% part payment of $168,000, were receipted [BE 43].  Time was to be of the essence [BE 38 para. 14].  Completion was to take place on or before 19 February 1992 [BE 44].  The agreement was registered on 3 May 1991 [BE 47].  The memorial of instrument recited the Date of Instrument as “19 March 1991” [BE 33].

4. There is no evidence on any development of that agreement.

5. During requisition for a good title, the Purchaser’s solicitors, B.C. Chow & Co. (“BCCC”), required the plaintiffs to produce its original.  The Vendor’s solicitors, Tam and Partners (“TP”), replied that the Vendor had never had knowledge of, or been in possession of, it.  TP regarded the production of its certified copy sufficient to prove a good title and refused to provide a statutory declaration for the circumstances of its unavailability [BE 61]. 

Vendor’s submissions

6. Mr. Lau for the Vendor accepts that a sale and purchase agreement confers on a purchaser a right to claim specific performance or damages.  He submits, however, firstly that the long lapse of time, from 1992 to 2005, indicates that Yu had abandoned the Preceding Agreement. 

7. I agree with this submission.  The property market has always been volatile and fast.  It is unrealistic to suppose that Yu would have failed to claim any reliefs in the past 13 years. 

8. Mr. Lau submits secondly that in any event, Yu’s right to claim had expired in 1997, being 6 years afterwards, by virtue of section 4(1)(a) of the Limitation Ordinance, Cap. 348, Laws of Hong Kong.

9. I agree, and Mr. Chow for the Purchaser does not contend otherwise, that with Yu’s potential claim has become time-barred. 

10. Mr. Lau submits thirdly that the original of the agreement was not a title deed and would not affect title.  Mr. Chow for the Purchaser submits that it was a title deed.

11. Whilst I agree that this preceding sale and purchaser agreement is not a title deed, I think that it will affect title.  Yu had paid Tse & Kwok (the vendors in the Preceding Agreement) $100,000 under it.  It is theoretically possible for Yu to use the original of the document to claim specific performance and damages.

12. TP regarded the production of its certified copy sufficient to prove a good title and refused to provide a statutory declaration for the circumstances of its unavailability [BE 61].  I agree with TP.  If available, the statutory declaration will afford the purchaser the status of “a purchaser without notice” of the agreement.  However, as Yu’s potential claim has become time-barred, this issue is academic.

Purchaser’s Concerns

13. Mr. Chow’s client has the worries that his client will be buying a lawsuit even though Yu’s case has become time-barred.  I refer to MEPC Ltd. v. Christian-Edwards [1981] AC 205, where L. Russell of Killowen stated:

In my opinion, if the facts and circumstances of a case are so compelling to the mind of the court that the court concludes beyond reasonable doubt that the purchaser will not be at risk of a successful assertion against him of the incumbrance, the court should declare in favour of a good title.

I regard the Purchaser’s worries as unfounded.

Conclusion

14. I grant the declaration as sought.  I shall make no order as to costs, as requested by both parties.

Dated this 19 December 2005