WONG WAI SHING v. SAE YAB VICHIEN

HCMP7733/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.7733 OF 1999

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J U D G M E N T

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1. This is a Vendor-Purchaser Summons. The plaintiff as purchaser entered into an Agreement to Purchase dated 1 April 1997 with one Yip Tim Choy as the agent of the defendant ("the Agreement") to purchase from the defendant the 2nd floor including the balcony adjacent thereto and the roof of the building ("the Premises") erected on all that piece or parcel of ground situate lying and being at Fanling, New Territories, Hong Kong known and registered in the North New Territories Land Registry as Section L of Lot No.2049 in Demarcation District No.76 ("the Land") at the agreed purchase price of HK$2,150,000.00. The defendant was at all material times the registered owner of the Land.

2. Pursuant to the Agreement, the plaintiff paid a deposit of $322,500.00 on 20 May 1997 and a further installment payment being part payment of the purchase price of a further sum of $322,500.00 on 24 November 1997.

3. It is not disputed that completion date for the sale was fixed for 13 December 1999.

4. On 30 November 1999, the defendant delivered one set of title deeds and documents to the plaintiff's solicitors purporting to show and prove a good title to the Premises. In response thereto the plaintiff's solicitors raised three requisitions on title to the Premises.

5. I shall deal with the requisitions and the answers thereto in compartmentalized fashion for convenience.

The 1st requisition

6. The land search records on Lot No.2049 show that by a Succession Memorial No.28523 dated 14 December 1914 Hau Tsz Lam (with Hau Wun Chau as trustee) succeeded the interest of Hau Wun Ming, deceased, in Lot No.2049. Only Hau Wun Chau had signed that Succession Memorial. The next transfer of interest in Lot No.2049 was by a Sale Memorial No.28571 dated 21 December 1914 whereby Hau Tz Tsung (again with Hau Wun Chau as trustee) sold Lot No.2049 to Ng Yuk Ying. On that Sale Memorial the signature of both Hau Wun Chau and Ng Yuk Ying appears.

7. By a letter dated 3 December 1999 the plaintiff's solicitors raised the following requisition : -

"In Succession Property M/N 28523, one Hau Tsz Lam (with Hau Wun Chau as trustee) succeeded to the estate of Hau Wun Ming deceased. However, in Sale M/N 28571, one Hau Tz Tsung (with Hau Wun Chau as trustee) as Vendor sold inter alia, Lot No.2049 (the parent lot of the above lot) to Ng Yuk Ying. Please let us have documentary evidence to show the said Lot No.2049 has been assigned to Hau Tz Tsung. Copies of the said Succession and the said Sale are enclosed herewith."

8. The defendant's solicitors replied by letter dated 7 December 1999 as follows : -

"Please note that by Sale Memorial No.28571 Hau Wun Chau as the trustee assigned the property to Ng Yuk Ying. Consent to the assignment of the property was deemed to be given by the District Officer to the trustee by reason of the fact that the District Officer signed his name on the relevant memorial box. Further the intermediate root of title of the property commenced from Mortgage Memorial No.107411."

9. As the purported answer did not address the requisition sought by the plaintiff's solicitors in their letter of 3 December, so on 9 December, the plaintiff's solicitors repeated that requisition in these terms : -

"We repeat our requisition raised on our letter dated 3-12-99 and requested you to furnish us with documentary evidence to show Lot No.2049 has been assigned to Hau Tz Tsung (with Hau Wun Chau as trustee) by Hau Tsz Lam (with Hau Wun Chau as trustee)."

10. This drew a further reply from the defendant's solicitors by letter dated 10 December 1999 as follows : -

"We repeat our view that Sale Memorial No.28571 is a pre-root document and as such our client is not obliged to deal with your requisition relating thereto. However, for the sake of discussion and not by way of concession, we would like to point out that the fact that Hau Wun Chau in his capacity as the trustee (i.e. the legal owner of the property) signed his name on the said Sale with the consent of the District Officer as shown by his signature on the Sale memorial box is in itself sufficient to confer a good title to the Ng Yuk Ying the purchaser named in the said Sale. The signature of the beneficiary is not required. As such the discrepancy in the name of the beneficiary in Sale Memorial No.28571 from Succession Memorial No.28523 cannot possibly raise any doubt as the validity of Sale Memorial No.28571 whereby the said property was transferred to the said Ng Yuk Ying."

11. On 13 December 1999 (i.e. date of completion) the plaintiff's solicitors replied by letter in the following terms : -

"1. a. It is settled law that the obligation of a vendor to answer a requisition on title is not limited by Section 13 of Conveyancing and Property Ordinance Cap.219 which governs the way vendor may prove his title and the documents to be produced. A missing link in the chain of title must nevertheless be accounted for, whether it is out of the intermediate root or not.

b. It seems that you have not understood our requisition herein. We do not question the absence of the signature of the beneficiary concerned. Rather, we note that the name of the person who derived title by succession under Succession to Property Memorial No.28523 is described as Hau Tsz Lam whereas the name of the Vendor in the document of title that immediately follows, namely the Sale registered by Memorial No.28571, is described as Hau Tz Tsung. There is no evidence to suggest that Hau Tsz Lam and Hau Tz Tsung were one and the same person. Nor is there any evidence to show how the former interest of Hau Tsz Lam in Lot No.2049 came to be vested in Hau Tz Tsung who purported to sell and convey the same under the said Sale. There is therefore a missing link in the chain of title yet to be accounted for by your client."

12. On the same day the defendant's solicitors replied as follows : -

"We refer to your letter dated 13th December 1999 and wish to point out that Succession Memorial No.28523 took place on 14th December 1914 and Sale Memorial No.28571 took place on 21st December 1914 (i.e. 7 days after the said Succession). Both the said documents were handled by the District Officer. Furthermore the District Office also confirmed in its Letter dated 8th December 1999 that the consent of District Officer should be deemed to be given for the sale of the property from the trustee Hau Wun Chau to Ng Yuk Ying. However we have no doubt that the two names Hau Tze (sic) Lam and Hau Tze (sic) Tsung should refer to one and the same person otherwise the District Officer would not have approved the sale of the property by the trustee to a third party 7 days after Hau Wun Chau had been appointed as the trustee of the property. As such we are of the view that the validity of Sale Memorial No.28571 cannot be challenged."

13. The short point taken by the plaintiff on the 1st requisition is that the defendant has failed to satisfactorily answer that requisition.

14. The starting point here must be the fact that where two different names are used (in this case Hau Tsz Lam and Hau Tz Tsung), prima facie it refers to two different persons.

15. There is not one iota of evidence that Hau Tsz Lam and Hau Tz Tsung are one and the same person. Nor is there anything to show how Hau Tsz Lam passed his interest in Lot No.2049 to Hau Tz Tsung.

16. In the answers given by the defendant's solicitors to the 1st requisition sought by the plaintiff's solicitors, the consent of the District Officer given to the sale as shown by his signature on Sale Memorial No.28571 was relied upon and also the fact that the 1st requisition relate to a pre-intermediate root of title.

17. In so far as the consent of the District Officer was concerned, that signature of the District Officer was put on the Sale Memorial immediately below the following words : -

"Received at the District Office at Tai Po and certified as a correct Memorial and Registered as Memorial No.28571 on Monday the 21st day of Dec. 1914 at 10.40 o'clock in the forenoon according to section 17 of Ordinance No.3 of 1905."

Ordinance No.3 of 1905, entitled the New Territories Land Ordinance is expressly stated to be "An Ordinance to facilitate the transfer of land in the New Territories and for settling disputes in respect thereof and for other purposes". Section 17 thereof reads as follows : -

"For the purposes of this Ordinance it shall not be necessary for a memorial of any deed, will or other instrument to be verified upon oath, but every memorial shall in lieu thereof be certified by the Land Officer as correct".

18. It is therefore clear from the words of section 17 of Ordinance No.3 of 1905 that the signature of the District Officer on the Sale Memorial is to certify that Memorial to be correct. It does not certify the propriety of the transaction which the memorial relates. As such, in my view, the signature of the District Officer on Sale Memorial No.28571 per se, does not, contrary to what was suggested by the defendant's solicitors, confer a good title on Ng Yuk Ying in so far as that sale is concerned.

19. The answer given by the defendant's solicitor concerning the pre-intermediate root of title is concerned, namely, that Sale Memorial No.28571 being a pre-root title, the defendant is not obliged to answer the 1st requisition is clearly wrong. The vendor is obliged to show and to prove good title. Section 13 (1) of the Conveyancing and Property Ordinance, Cap.219 did not preclude a purchaser from showing from another source that a pre-intermediate title was defective such that the purchaser was entitled to raise requisitions as to the defect. (see Lo Shea Chung v. Lo Hung Biu [1997] 2 HKC 723 following Kok Chong Ho v. Double Value Development Ltd [1993] 2 HKLR 423).

20. In the present case, the defect in title came in the form of the total absence of anything to indicate how the interest of Hau Tsz Lam in Lot No.2049 had passed to Hau Tz Tsung. Without that missing link there is here a defect which goes to the root of the title.

21. Accordingly, the plaintiff was entitled to raise that 1st requisition but which the defendant had failed to or could not sufficiently answer.

22. At the hearing, Mr Cheung who appeared for the defendant attempted to also argue the point by relying on section 20 of the Limitation Ordinance to say that in the absence of fraudulent breach of trust to which the trustee is privy, the limitation period of six years for an action for breach of trust (assuming that was the case on the part of Hau Wun Chau) had long expired by the time the sale between the plaintiff and the defendant was entered into.

23. The short answer to that contention must be that it was not the answer given by the defendant's solicitors to the 1st requisition and in any event, in the absence of any evidence indicating one way or the other, it is impossible to say whether or not, assuming there to have been a breach of trust by the trustee, such breach was fraudulent. In my view, that argument on limitation does not assist the defendant.

The 2nd and 3rd requisitions

24. Among the documents of title delivered by the defendant to the plaintiff's solicitors were certified copies of a Mortgage Memorial No.107411 dated 5 January 1940 and a Redemption Memorial No.110977 dated 20 January 1941. This prompted the plaintiff's solicitors requesting, by their 2nd and 3rd requisitions, to be provided with certified copies of the relevant Mortgage and the Redemption instead of just the memorials.

25. The defendant's solicitors replied by letter dated 7 December 1999 as follows : -

"We wish to advise that the certified copy documents supplied to you are actually documents certified by the North New Territories Land Registry. The original instruments or copy thereof are not available in the North New Territories Land Registry. Please refer to the Judgment made by the Kok Yun Kuen v. Au Yeung Bik Tai and Lo Lung Pui (High Court Action No.2021 of 1991)"

26. The plaintiff's solicitors wrote back by letter of 9 December 1999 as follows : -

"With due respect, we disagree with your view. It is well established that a Memorial will not suffice as a substitute for the Deed. We insist to have certified copies of the said Mortgage document and the said Redemption document for proof of good title by your client."

27. The defendant's solicitors answered by letter dated 10 December 1999 in the following terms : -

"2. & 3. We advise that we are only able to supply you with a certified copy of the memorial box of Mortgage Memorial No.107411 and a certified copy of the memorial box of Redemption Memorial No.110997 and not the certified copies of the actual instruments. We are prepared to make a Statutory Declaration of loss of title deeds. Please refer the case Wu Wing Kuen v. Leung Wai Lin Cindy in Civil Appeal No.273 of 1999 in which it was ruled that secondary evidence of a document of title is admissible."

28. This drew a further reply from the plaintiff's solicitors as follows : -

" 2. & 3. a. We note your reliance on the recent Court of Appeal's judgment in Wu Wing Kuen v. Leung Kwai Lin Cindy CACV240/1999. While it is accepted, based on that judgment, that secondary evidence may be adduced where neither the original nor a certified copy can be produced and the non-production can be satisfactorily accounted for, your draft Statutory Declaration sent with your letter dated 13 December has not fulfilled the need to prove due execution as required in the said judgment."

29. The stance taken by the plaintiff at the hearing of this matter was that while the non-production of the originals of the Mortgage and the Redemption may be accounted for by the draft Statutory Declaration, nevertheless the defendant has still not satisfactorily dealt with the problem of due execution.

30. My own view of the matter is that such a stance, if taken by the plaintiff at the time of the requisitions in December 1999, can still be understandable because in December 1999 the Court of Appeal's judgment in Wu Wing Kuen v. Leung Kwai Lin Cindy CACV240/1999 was to that effect. However, since then the decision of the Court of Appeal on that point has been overturned by the Court of Final Appeal when that case went to the CFA on appeal from the judgment of the Court of Appeal. (see Leung Kwai Lin Cindy v. Wu Wing Kuen [2001] HKC 567). Effectively, by its decision in that appeal, the CFA ruled that the presumption in section 23 of the Conveyancing and Property Ordinance can still apply in an appropriate case where the original document of title is missing or lost.

31. Applied to the present case, where there are produced the certified copies of the Mortgage Memorial and Redemption Memorial, both certified by the District Officer to have been correct, and the signatures of the mortgagor and the mortgagee appear on the respective documents together with that of the witness on both documents, I take the view that a strong presumption of due execution of both the Mortgage and the Redemption have been made out.

32. I also hold that in the present case, looking at Mortgage Memorial No.107411 and Redemption Memorial No.110997, on the face of those documents there are sufficient cogent secondary evidence of the contents of the missing Mortgage and the missing Redemption. In so holding I fully agree with and find support in the judgment of Godfrey J (as he then was) in the case of Kok Yun Kuen v. Au Yeung Bik Tai [1991] 2 HKC 522.

Conclusion

33. For the reasons given, I have come to the conclusion that on the 2nd and 3rd requisitions, the defendant have adduced sufficient secondary evidence (in the form of the certified copies of the respective memorials) to prove due execution and also the contents of the missing Mortgage and the missing Redemption. I should add that the only reason why the draft Statutory Declaration remained a draft and was never formalized was due to the fact that the plaintiff's solicitors never accepted that the defendant had sufficiently proved due execution and contents of the missing documents of title.

34. All this in relation to the 2nd and 3rd requisitions is, of course, academic in view of my holding, for the reasons given above, that the defendant has failed to sufficiently answer the 1st requisition and has therefore failed to show or prove good title to the Property.

35. In so far as damages are concerned, it was agreed between the parties that I should defer the question of damages until the rights between the parties have been determined. In the circumstances I shall now give leave to the plaintiff to fix a date to deal with the question of damages if no agreement can be reached between the parties. I shall also deal with costs after hearing the parties on the issue of damages.