YIU PING FONG AND ANOTHER v. LAM LAI HING LANA

HCMP 3617/98

H E A D N O T E

Original of title deed lost - purported statutory declaration made in Taiwan to explain loss - whether valid statutory declaration under Oaths and Declarations Ordinance cap. 11 - whether s.13(2) Conveyancing and Property Ordinance cap. 219 excuses vendor from producing original title deed - purchasers' right to possession of original title deeds.

Held: -

(1) A declaration purportedly declared under the Oaths and Declarations Ordinance cap. 11 but declared in Taiwan was not a valid statutory declaration.

(2) A person described as a notary public in Taiwan was not "a person authorized by law to administer an oath" under s.12 Oaths and Declarations Ordinance cap. 11.

(3) In any event, the identity and authority of a foreign notary public should have been verified by the British Consulate (now by the Consulate of the People's Republic of China).

(4) A vendor has an obligation to make or give a good title. The 2 steps in the making or giving of title are: first, to show a good title, and secondly, to prove the title by producing title deeds and by proving such other facts as are necessary to make a good title.

(5) s.13(2) C.P.O. facilitates the proving of title. The vendor's solicitor can simply send certified true copies of title deeds and documents instead of originals. But s.13(2) does not exonerate the vendor from producing at completion the originals of such title deeds and documents, at least those that relate exclusively to the property being sold.

(6) A vendor's solicitor can as part of proof of title under s.13(1) C.P.O send certified true copies without having to prove the originals are lost. But a vendor cannot make or give good title by handing over only certified true copies at completion without an adequate explanation as to why the originals cannot be handed over (Ip v The Norwegian Missionary Society [1998] 1 HKLRD 94 considered).

(7) A purchaser of land is entitled as a matter of proprietary right to possession of the original title deeds. Further it is important to have possession so that he can be sure that the property is not subject to an equitable mortgage and to avoid constructive notice of facts that would be disclosed as he would be placed on inquiry.

HCMP 3617/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.3617 OF 1998

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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 Plaintiffs are the Purchasers and the Defendant is the Vendor of an apartment and car parking space ("the Property"). Completion is scheduled for 30 September 1998.

Chain of title

2. The Property was first assigned by the developer to Lin Su Hsian ("Lin") in 1986. Lin then assigned the Property to Chiu Pi Yun ("Chiu") in 1990. Chiu in turn assigned the Property to the present Vendor in 1996.

The Taiwan declaration

3. In the process of proving title to the Property, the Vendor sent the Purchasers a certified copy of the 1986 Assignment from the developer to Lin, together with a document described as a "Chinese Statutory Declaration dated 16 April 1996 given by Chiu Pi Yun".

4. In this document, Chiu states that she had bought the Property from her mother Lin in 1990, and says why she does not have the original of the 1986 Assignment: she says she had in 1990 deposited at her brother's office all the title deeds she had collected from the solicitors handling the transaction, but in 1994 found only a copy of the 1986 Assignment.

5. This "Chinese Statutory Declaration" purports to be one made pursuant to the Oaths and Declarations Ordinance of Hong Kong, and appears to follow, for the most part, the form in force in 1996 for statutory declarations prescribed in cap.11.

6. However, it was expressly made in Taiwan, and purports only to have been "certified" according to "clause 6 of Section 4 of the Notarisation Law" at the Notarisation Office, Taipei District Court, Taiwan by Mr. Ma Yau Min, who is described as a notary public. The identity and authority of Mr. Ma was not verified or authenticated by the British Consulate. I shall refer to this document hereafter as "the Taiwan declaration".

Requisitions

7. The Purchasers' Solicitors raised 2 requisitions. The first concerned the validity of the Taiwan declaration as a statutory declaration under the Oaths and Declarations Ordinance cap.11.

8. The second dealt with proof of Lin's identity - in the certified copy of the 1986 Assignment, she had been identified on the basis of a Taiwanese passport bearing a certain number. In the Assignment by Lin to Chiu in 1990, she had been identified on the basis of another Taiwanese passport bearing a different number, which had been issued after 1986.

Taiwan declaration not a valid statutory declaration under Oaths and Declarations Ordinance cap.11

9. The first issue I have to consider was whether the Taiwan declaration was a valid statutory declaration under the Oaths and Declarations Ordinance cap. 11. In my judgment, it is not, primarily because it was declared outside Hong Kong, and also because Mr. Ma (described as a notary public) was not a person authorized by law to administer an oath under cap. 11.

10. Section 12 of the Oaths and Declarations Ordinance provided in 1996 (as it still does now) that "a justice, notary commissioner or other person authorized by law to administer an oath may take and receive the declaration of any person made before him in the manner provided by section 14".

11. The manner provided by s.14 is that "a declaration shall be in one of the forms set out in the First Schedule". This provision is mandatory.

12. When one refers to the form set out in the relevant schedule, it is clear that the statutory declaration must be declared in Hong Kong and before a justice of the peace, a notary public or commissioner for oaths.

13. Accordingly, the declaration of Chiu having been declared in Taiwan cannot be a valid statutory declaration under the Oaths and Declarations Ordinance of Hong Kong.

14. Another reason why the Taiwan declaration cannot be a valid statutory declaration is because Mr. Ma was a notary public only in Taiwan. It was argued on behalf of the Vendor that a Taiwanese notary public could be included as a "person authorized by law to administer an oath" in s.12. I cannot accept that proposition.

15. When those words are interpreted within the context of the Oaths and Declarations Ordinance, it is clear that they refer to s.3, which provides that a court and persons acting judicially may administer an oath. This latter category of persons is in turn defined in s.2 to mean a tribunal, commission or other person having by law power to receive evidence on oath.

16. I cannot accept the Vendor's argument that this includes persons authorized by foreign law to administer an oath. If it were so, much clearer language would have been used. As comparison, one can refer to the explicit language used in s.11 of cap.11 and Order 41 rule 12(2) when referring to persons authorised by foreign countries to administer oaths.

17. The Vendor also submitted as an alternative argument that if the Taiwan declaration was not a valid statutory declaration under the Oaths and Declarations Ordinance cap. 11, it could nevertheless still be used as a statement attested by a notary public.

18. However, Mr. Ma being a foreign notary public, his authority and signature (or in this case, his chop) should have been verified by the British Consulate and that had not been done. The declaration here appears to be a private document, but even if it were to be regarded as a public document, it would still have to have been legalised, as Taiwan was not a party to the Hague Convention Abolishing the Requirement of Legalisation of Foreign Public Documents.

19. Accordingly, there was no valid statutory declaration explaining the loss of the original 1986 Assignment.

Effect of s.13(2) Conveyancing and Property Ordinance cap. 219

20. The next issue was the effect and extent of s.13(2) of the Conveyancing and Property Ordinance cap. 219.

21. Section 13(1) provides:

"Unless the contrary intention is expressed, a purchaser of land shall be entitled to require from the Vendor, as proof of title to that land, only production of the Crown lease relating to the land sold and -

(a) proof of title to that land -

(i) ...

(ii) in any other case, extending not less than 15 years before the contract of sale of that land commencing with an assignment, a mortgage by assignment or a legal charge, each dealing with the whole estate and interest in that land; ... "

22. Section 13(2) then provides :

"Where this section requires the production of any document, it shall be sufficient to produce a copy -

(a) attested, before 1 November 1984, by 2 solicitor' clerks; or

(b) certified by a public officer or a solicitor, to be a true copy".

23. There has been much debate in this court as to the true meaning and effect of s.13(2), and a number of authorities have been quoted to me, in particular Ip Fung Yee v The Norwegian Missionary Society [1998] 1 HKLRD 94, which on one reading seems to suggest that so long as certified true copies are produced, it is not necessary for a Vendor to explain the loss of original title deeds.

24. In my view, the real position is this. Unless there are express stipulations exonerating him from so doing, a vendor has an obligation to make or give a good title. There are 2 steps in the making or giving of good title.

25. The first is to show a good title. In England, that is done by the vendor's solicitor producing an abstract of title. The title shown by that abstract is then proved by producing the title deeds and by proving such other facts as are necessary to make a good title.

26. In Hong Kong, as a matter of practice, no abstracts are produced, and the 2 steps of showing and proving title are telescoped into 1 by the vendor's solicitor sending title deeds and documents to the purchaser's solicitor for his perusal of title.

27. The proving of title by the production of title deeds and documents is therefore but one step in the making or giving of title, and proving of title is not to be equated with making or giving title. A vendor does not make or give title simply by producing the documents referred to in s.13(1).

28. The effect of s.13(2) is, in my view, to facilitate the proving of title when the vendor's solicitor sends title deeds and documents to the purchaser's solicitor for perusal after the Formal Agreement for Sale and Purchase is executed. The Vendor's Solicitor can simply send certified true copies of title deeds and documents instead of originals.

29. Section 13(2) does not, in my judgment, exonerate the Vendor from producing at completion the originals of such title deeds and documents, at least those that relate exclusively to the property being sold.

30. That is clearly so because s.13(1) refers (only) to proof of title. And s.13(2) provides explicitly that it is only "where this section requires the production of any documents" that it would be sufficient to produce certified true copies. The words which I have emphasised show clearly the limited circumstances in which s.13(2) applies.

31. When s.13(2) is understood this way, I do not think my view conflicts with that of the learned deputy judge in The Norwegian Missionary Society case. A vendor's solicitor can as part of proof of title under s.13(1) send certified true copies of title deeds and documents to the purchaser's solicitor for perusal, without having to prove that the originals are lost. However, a vendor cannot make or give good title, by handing over only certified true copies at completion without an adequate explanation as to why the originals cannot be handed over.

32. The handing over of original title deeds and documents (or at least those whish relate exclusively to the property being sold) is an important part of the vendor's obligation in a sale of land. That obligation is well-established in the common law.

33. A purchaser of land is entitled as a matter of proprietary right to possession of the original title deeds (Williams on Title, 4th ed. p.547), which is the best evidence of ownership.

34. Further, it is important for him to get possession of the original title deeds so that he can be sure that the property is not subject to an equitable mortgage by deposit of title deeds. If the deeds are in the hands of some person other than the vendor, the purchaser is thereby placed on enquiry as to the reason for this, and he has constructive notice of the facts which such enquiry would disclose (Emmet on Title, §5.147).

35. Where, therefore, as in this case, the Vendor has given notice that she would not be able to produce the original 1986 Assignment on completion, it is legitimate for the Purchaser to examine whether there is sufficient conveyancing evidence to explain its loss.

Effect of clause 17

36. Sir John Swaine SC counsel for the Vendor submitted that clause 17 in the Agreement for Sale and Purchase excused the Vendor from producing the original title deeds and documents.

37. Clause 17 provides:

"The Vendor shall show and give a good title to the Property pursuant to Section 13 of the Conveyancing and Property Ordinance Cap.219 at his own expenses and he shall at the like expense make and furnish to the Purchaser such attested or certified copies of any deeds or documents of title, wills and matters of public record including Occupation Permit as may be necessary to prove such title. The costs of verifying the title by inspection and examination including search fees shall be borne by the Purchaser."

38. With respect to Sir John, I cannot read that clause as expressing any intention by the parties that the Vendor is to be absolved from producing the original title deeds and documents. Much clearer language would have to be used. That clause, in my view, does no more than stipulate specifically that when the Vendor's Solicitor prove title by supplying attested or certified copies, the expenses of so doing are to be borne by the Vendor.

No sufficient conveyancing evidence to explain loss

39. The loss of the original documents must be proved, and in England, there is case law that a statutory declaration to this effect would usually suffice (Emmet, §5.091). I do not see why it should be different in Hong Kong, and indeed this practice has been recognised in all the authorities quoted to me.

40. It was further submitted on behalf of the Vendor here that even if the Taiwan declaration is not a valid statutory declaration, the Vendor herself has made a statutory declaration in Hong Kong declaring that she did not have the original 1986 Assignment, and that would suffice, together with the Taiwan declaration.

41. I cannot accept that proposition. The purpose of the statutory declaration accompanying a missing title deed is to explain the circumstances in which the deed was lost and to show how the person who ought to have custody of it could not find it despite proper endeavours. The Vendor here can only say that she personally never had the original 1986 Assignment. She cannot of her own knowledge explain the circumstances of the loss because she was not the person who had custody of it. That was Chiu, and as I have held, there was no valid statutory declaration made by Chiu.

Not just question of blot on title

42. Sir John's "fall-back" submission was that even if the Vendor has failed to provide sufficient conveyancing evidence of the loss, the loss of the 1986 Assignment was not that important. He submitted that the likelihood of Lin effecting an equitable mortgage by deposit of her title deed at some stage between 1986 and 1990 was so small as to be fanciful. No-one has come up in the last 8 years to claim an interest in the Property.

43. However, in my view, the loss of the title deed does not just give rise to a question of possible adverse interests in the Property. It is well-established that ownership of the title deeds pass by conveyance of the land. The Purchasers here have a proprietary right to ownership of the title deeds when they complete. If they are told that one will be missing, they are entitled to decline to complete unless provided with satisfactory evidence that the missing title deed is lost and unlikely to re-emerge.

44. An example can be found in In re Duthy and Jesson's Contract [1898] 1 Ch 419, referred to in Emmet §5.091. The parties knew where the title deeds and documents were (with solicitors for deceased mortgagees who had been paid off). There were no adverse claims to the title. Nevertheless the Purchaser declined to complete until the deeds were handed over and the Court upheld his stand.

No substance in 2nd Requisition

45. As a matter of completeness, I would add that I do not see any substance in the Purchasers' 2nd requisition concerning Lin's identity.

46. Section 23 of the Conveyancing and Property Ordinance provides for the presumption of due execution. It has not been asserted by the Purchasers that they consider the signatures in the 1986 and 1990 assignments different. It is true that the passport numbers stated are different, but the Solicitor handling the 1990 assignment from Lin to Chiu had endorsed on the assignment that the passport used had only been issued in 1989. There is therefore, in my view, nothing in the point of the different passport numbers.

Conclusion

47. I find that the Purchasers are entitled to regard their requisition on the missing 1986 Assignment as insufficiently answered, and to insist on the production at completion of the original 1986 Assignment or a valid statutory declaration from Chiu to explain its loss.

48. I fully understand the Vendor's difficulty in this regard. I am told that Chiu is in Taiwan and has refused to come to Hong Kong to make a statutory declaration here. It may also be difficult for the signature and identity of the Taiwan notary to be verified by the relevant officials of the People's Republic of China.

49. I would only note that it would appear to me that since there is litigation now pending in this court, the Vendor could take advantage of the laxer rules for attesting of affidavits under Order 41 rule 12(2) of the Rules of High Court of Hong Kong to have an affidavit from Chiu in place of the Taiwan declaration. However this is of course only a possibility for the Vendor to consider and should not be regarded as part of my judgment.

Order

50. I would therefore make a declaration in terms of paragraph (1) of the prayer in the Originating Summons save that the reference to requisition No. 3 should be deleted. As completion date has not yet arrived and the Purchasers have not terminated the Agreement so far, I do not consider it appropriate to make any declarations in terms of paragraph (2), or to give any orders or directions in terms of paragraph (3), save to say that if the Vendor is unable to produce the original 1986 Assignment or a sufficient statutory declaration close to completion date, I do not see how the Vendor can have any defence to the reliefs sought in paragraph (3). As for the costs of the Originating Summons, I would make an order nisi that the costs be to the Plaintiffs.

51. Finally I would like to thank both counsel for their assistance.