KWONG KAI HING and Another v. CHAN LIK

1995, M.P. No. 1529

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

____________

________________

J U D G M E N T

________________

1. This is a Vendor and Purchaser Summons taken out under Section 12 of the Conveyancing and Property Ordinance Cap. 219.

2. The Plaintiffs Kwong Kai Hong and Kwong Mei Yin are the registered owners of the premises known as Flat E, 7th Floor, Block A2, Shatin New Town, Sha Tin, New Territories. (hereinafter called the said premises).

3. By an agreement in writing dated the 14th of March 1995 between the Plaintiffs and the Defendant - Mr. Chan Lik, the Plaintiffs agreed to sell the said premises to the defendant at the price of $1,510,000.00 and in pursuant to such agreement, the defendant paid a deposit of $121,000.00 in addition to the initial deposit of $30,000.00, making a total deposit of $151,000.00 being 10% of the purchase price.

4. Completion was to take place on or before 13th of April 1995. Title deeds in respect of the said premises were delivered to the Defendant's Solicitors, Messrs. S.H. Chan and Co. on the 4th of April 1995 by the Plaintiffs Solicitors Messrs. Gary Chan and Co. Upon receipt of the title deeds, the Defendant's Solicitors raised a number of requisitions in a letter dated the 6th of April 1995 of which only the first one is relevant for the purpose of the present proceedings. The requisition in question is in the following terms :

"We note that the wording of the Nomination Memorial No. 231225 did not state clearly that Luk Pui Tai had relinquished her right under the Agreement for Sale and Purchase Memorial No. 218191 in respect of the above premises. It made no reference to who provided the deposit. In the premises, there would raise a doubt as to Luk Pui Tai still held the said property in trust for herself and Wong Kam On under the said Agreement and subsequent Assignment Memorial No. 231226 notwithstanding that Luk Pui Tai might have provided the balance of the purchase price. There is doubt on title to the above property due to the existence of a resulting trust in favour of Luk Pui Tai. Please let us have proof that there is no resulting trust in favour of Luk Pui Tai or other evidence to show that the above property is free from any right of Luk Pui Tai. Copy of the said Nomination is enclosed herewith for your reference."

5. The said property was purchased by Wong Kam On and Luk Pui Tai (the Nominators) from the developer under a Sale and Purchase Agreement dated the 1st of October 1982 under which an initial deposit of $22,820.00 being 10% of the purchase price was paid upon signing of the agreement with a further sum of $11,410.00 to be paid 7 days after the issue of the occupation permit. The balance of $193,970.00 was to be paid by 144 monthly instalments of $3,171.40 each commencing on the 1st of June 1982. The 10% deposit appeared to have been paid jointly by the Nominators.

6. The Nominators, by a Memorandum of Nomination dated the 3rd of May 1983 nominated Wong Kam On (the Nominee) to accept the Assignment of the said premises instead of the Nominators. The Memorandum of Nomination did not include the usual provision to the effect that the Nominators relinquished their right under the agreement and it is the Defendant's contention that the Plaintiffs had failed to show a good title to the said premises because of that.

7. The plaintiffs were of course obliged to show a good title to the defendant prior to the date for completion, namely the 13th of April 1995 and should the defendant's contention that the plaintiff had failed to do that was correct, the defendant was entitled to call an end to the transaction and ask for the return of the deposit paid to the plaintiff.

8. The defendant did not do that. Instead for a period of about one month from early April to early May 1995, there were quite a number of correspondence between the solicitors for the plaintiffs and the defendant pertaining to the question of taking out a Vendor and Purchaser Summons to determine the question of title to the said premises in addition to arguments as to whether the plaintiffs had in fact shown a good title.

9. On the 13th of April 1995, the scheduled date for the completion, the defendant's solicitors wrote to the plaintiffs' solicitors a number of letters containing the following:

"We are instructed to inform you that unless a satisfactory reply in this regards is received by us on or before 12.00 this morning, our clients is prepared to, if your client concur[s], to take out a Vendor and Purchaser Summons to seek an order from Court."

"Please be reminded that time is limit and unless we shall have received your written confirmation on or before 4.00 p.m. that your client concur to take out a Vendor and Purchaser summons in which case completion will have to be deferred pending the outcome of such summons, we shall have no alternative, but to advise our client to exercise his right to terminate the Agreement for Sale and Purchase on the ground of your client failing to discharge his duty in proving [sic] good title thereunder."

10. When the plaintiffs' solicitor indicated that the plaintiffs were agreeable to the defendant's taking out a Vendor and Purchaser Summons, the defendant's solicitor again wrote on the same day saying, 'We are pleased to acknowledge that you client is willing to take action in order to perfect the title of the property .... In view of the above, a Vendor and Purchaser Summons with no order as to costs will be taken out as agreed by our respective clients as soon as possible and the completion of the Sale and Purchase of the property which was originally scheduled on today would have to be deferred pending the hand down of judgement of the Vendor and Purchaser Summons.'

11. In the mean time, the plaintiffs' solicitor was trying to collect further evidence to show good title by writing to the solicitors who handled the sale of the said property to the Nominators.

12. The defendant appeared to have a change of mind as by a letter dated 27th of April 1995, he purported to terminate the agreement on the basis that the plaintiffs had failed to show or give a good title on or before the original completion date, namely the 13th of April 1995. The letter stated, 'As your client has failed to show or give good title of the property on or before the time scheduled for completion i.e. 13th of April 1995, we are instructed by our client to inform you that our client is entitled and is now exercising its right to determine the agreement.' The defendant also demanded for the return of the deposit and the payment of the stamp duty involved in the transaction.

13. By a further letter dated 29th of April 1995, the defendant's solicitor further suggested that the defendant was not obliged to take out any Vendor and Purchaser Summons and in any event the alleged defect in title was unlikely to be cured.

14. When it was pointed to the defendant's solicitor by the plaintiff's solicitor that an agreement had been reached that a Vendor and Purchaser Summons would be taken and the completion would be deferred pending the handing down of the judgment of the summons, the defendant's solicitor had the following to say,

"We write to make it clear to you that our suggestion of taking out a Vendor and Purchaser Summons in respect of the title of the property as per our letter of 13th April, 1995 was based on our mutual understanding that your client would produce to us a Statutory Declaration to be made ... in order to facilitate the Summon ....

.... our client was by no means bound to take out the summons ....

.... If at this very moment, your client is still advised or hold the view that they had discharged his duty of proof and give a good title of the property and insist to take out the Summons with a faint hope to achieve a declaration to that effect even at a risk of mass time and costs wastage, please let us know the exact time you will take out the Summons so that we can advise our client accordingly but in any event all the costs of such Summons (if any) would have to be borne by your client absolutely. Please be advised that our client would not tolerate any further delay in this matter and the Summons (if any) should be taken out within 2 days from the day of this letter or otherwise our client would decline to concur the same."

15. When the plaintiffs' solicitor made it clear that the plaintiffs were going to take out a Vendor and Purchaser Summons, the defendant's solicitor made a rather surprising reply in a letter dated 5th of May 1995 as follows,

"There was no agreement as to any extension to the completion date but just a mutual understanding that the completion date would be pending the outcome of a Vendor and Purchaser Summons. Your client should be therefore well advised that any steps taken or any new evidence adduced by your client after the crucial date i.e. 13th April 1995 could not retrospectively fulfil his obligation to prove good title of the property which obligation should have been fulfilled on or before 13th April, 1995 in order to bind our client to complete the Sale and Purchase of the property."

16. The present Summons was taken out by the plaintiffs on the 8th of June 1995 after further materials to prove good title had been obtained by the plaintiffs.

17. Quite surprisingly, Mr. Kwan on behalf of the defendant still took the same attitude as that of those instructing him and suggested that the crucial time was the original scheduled completion date and that the plaintiff must show and prove good title before that day.

18. I found such suggestion very difficult to accept in the light of the correspondence between the parties before and after the original scheduled completion date. The defendant must take a stand, a firm one as to whether he wanted the plaintiffs to show and prove good title before the completion date. If he agreed to allow the plaintiffs more time to show or prove good title or to take out a Vendor and Purchaser Summons and that the completion date be deferred until a decision of the court on the Summons was known, he could not be allowed to change his mind shortly thereafter and then suggested that the plaintiffs had not shown or proven good title before the original scheduled completion date.

19. On the correspondences between the parties, there could be no doubt that the defendant had not insisted on the original completion date. The defendant had clearly allowed the plaintiffs more time to show or to prove good title and that the completion date was to be put off until a result on the proposed Vendor and Purchaser Summons was known.

20. As long as the plaintiffs had taken reasonable diligence to take steps to show or prove good title and to take out the Vendor and Purchaser Summons, the plaintiffs must be allowed up to the hearing of the Summons to show or prove good title.

21. There can be no dispute that after the requisition was made by the defendant, the plaintiffs had taken reasonable steps to try to answer the requisition and then to take out the Vendor and Purchaser Summons after the defendant refused to do it himself.

22. Mr. Kwan's submission that the crucial date to consider was the original completion date must fail. It therefore fell upon the Court to decide whether the plaintiff had shown and proved good title before the Court.

23. Apart from the joint payment of the 10% of the purchase price of the said premises by the Nominators upon signing of the agreement on the 1st of October 1982, there was no indication that they had make any further payment. Payment receipts in respect of the purchase of the said premises obtained from Messes. Zimmern and Co. suggested that the Nominee had since July 1982, even before the signing of the agreement been making monthly payments for the purchase of the premises in question. Receipts to the total sum of almost $240,000.00 were made out to the Nominee. The joint payments of the $22,820.00 by the Nominators accounted for less than 10% of the total purchase price of the said premises and the share of each of the two Nominators would therefore be less than 5%.

24. The Nominators were Mr. Wong Kam On and Ms. Luk Pui Tai and the Nominee was Mr. Wong Kam On himself. There was evidence that Mr. Wong and Ms. Luk got married on the 13th of September 1984, about 15 months after the building in question was completed and in the marriage certificate, the said premises were described as the residence of Mr. Wong.

25. The said premises was sold by Mr. Wong on the 18th of September 1990 and up to the present moment there was no indication that Mr. Wong and Ms. Luk had divorced.

26. Since the nomination was made in May 1983, there had never been any indication that Ms. Luk tried to make any claim to be interested in any way in the property in question.

27. On the available evidence, the clear indication was that when the said premises was acquired in 1982, it was intended to be used as the matrimonial home for Mr. Wong and Ms. Luk after they got married and it was so used. They resided in the said premises until it was sold in September 1990 was an inescapable inference to be drawn.

28. Ms. Luk must be aware of the sale of the said premises in September 1990 and if she had any claim over the said premises, she would have come forward. I cannot help but echo the judgment of Finlay J. in Yeung Kit lam and another v. Lau Yiu Shing 1994, M.P. No. 3392 p.4,

"Any resulting trust in favour of Mr. Leung can be, on the evidence before me, no more than in respect a one-fortieth undivided share of the property. The assignment of the property to Mr. Lau and Madam Cheng was, it must be presumed, in equal shares. In the assignment, they were described as 'the purchaser', and it was said that the vendor had agreed to sell the property to them. In these circumstances, is there any reasonable possibility that, when Mr. Leung signed the nomination in favour of Madam Cheng, he intended anything other than to transfer to her all his interest in the property absolutely, in law and equity? I think not. I believe that Mr. Leung would be astonished to hear that the law might say, at this time, that he had a one-fortieth undivided share in the property. That he had no intention of retaining any interest in the property is supported further by the fact that he had taken no steps to exercise any rights. If he had intended to retain an interest, one would have expected him to wonder, from time to time, what was happening to the property in which he had such an interest. If he had taken the most elementary of steps, he would have found out that his 'trustee' sold the property in September 1986. If he had done so, we would have heard about it if he remained unsatisfied."

29. Much of what Findlay J. said had equal application in the present case. In my view, on the evidence, there was no real probability of Ms. Luk making any successful claim to be beneficially interested or otherwise in the said premises. The suggestion that she retained an equitable interest in the said premises is illusory.

30. I am satisfied that the plaintiffs had shown a good title to the said premises and I accordingly grant an order in terms of prayers No. 1 and 2 of the Summons. I further order that completion of the Sale and Purchase Agreement in question is to take place within one month after the handing down of this judgment and in that regard I grant the parties liberty to apply. I make an order nisi that each party is to bear its own costs and the order on cost is to be made absolute 7 days after the handing down of this judgment.